Industry

L&T’s rare criticism of Modi govt’s defence sector policies

  • Snapshot
  • L&T won military orders worth $81 million in Q2 of FY20, a 52% drop from corresponding quarter last year
  • International defence orders constitute 17% of total order inflow,

Mumbai: Indian multinational, multi-sector company, Larsen & Toubro, had won orders worth ₹573 crore ($81 million) through its defence engineering segment during the quarter ending Sep. 30 this year, representing a decline of 52 per cent over the corresponding quarter last year.

The company released its second quarter results for the financial year 2019-20 today, which showed that it had won new orders for the whole group worth ₹48,292 crore ($6.8 billion) during the second quarter this year, registering a year-on-year growth of 20 per cent.

Under its defence engineering segment alone, Larsen & Toubro’s international orders alone constituted 17 per cent of the total order inflow in the segment, a statement from the company said. The order book of the segment stood at ₹10,603 crore ($1.5 billion) as on Sep. 30, 2019, with the international order book constituting 16 per cent of the total.

“The sector continues to be plagued with policy inaction on allowing the private sector to participate in defence equipment/platform manufacturing and fabrication in a meaningful manner,” the statement said.

This was a rare criticism from the company of Prime Minister Narendra Modi‘s government and the lack of pro-active efforts over the last six year to boost the defence sector through sustained orders for the private sector defence companies to arm the Indian armed forces with modern weapons and systems.

Defence Engineering Segment recorded customer revenue of ₹1,016 crore ($144 million) registering a year-on-year growth of 9 per cent over the corresponding quarter of the previous year led by noteworthy progress in execution of a marquee order for tracked artillery guns. International revenue constituted 9 per cent of the total customer revenue of the segment.

The EBITDA margin of the segment at 17.9 per cent was lower for the quarter ended Sep. 30 this year, as compared to the margin during corresponding quarter of the previous year, due to stage of completion of a key job.

Group Performance

The company’s group level orders at ₹48,292 crore ($6.8 billion) also included international orders worth ₹16,675 crore ($2.4 billion), constituting 35 per cent of the total order inflow.

Large value order wins in Hydrocarbon, Buildings and Factories, and Power business were the major contributors to the order inflow during the quarter. On a cumulative basis, the order inflow for the half-year ended Sep. 30, 2019 stood at ₹86,992 crore ($12.3 billion), growing at 16 per cent over the corresponding period of the previous year.

With the surge in order intake, the company crossed the ₹3 lakh crore ($42.4 billion) order book milestone with the consolidated order book at ₹ 303,222 crore ($42.8 billion) as on Sep. 30 and with international orders constituting 22 per cent of the total order book.

L&T recorded consolidated gross revenue of ₹35,328 crore from continuing operations for the quarter ended Sep. 30, achieving year-on-year growth of 15 per cent. The International revenue during the quarter at ₹12,118 crore constituted 34 per cent of the total revenue. For the period April-September 2019, the consolidated gross revenue at ₹64,964 crore recorded a year-on-year increase of 13 per cent.

Consolidated Profit After Tax (PAT) from continuing operations for the quarter ended Sep. 30 at ₹2,309 crore registered growth of 10.3 per cent over the corresponding quarter of the previous year. The overall PAT at ₹2,527 crore, including the PAT from discontinued operations for the quarter ended Sep. grew by 13.3 per cent over the corresponding quarter of the previous year.

The parent company and some of the subsidiaries have computed their tax liability for the current year in accordance with the new provisions of Section 115BAA of the Indian Income Tax Act, applying the revised base rate of 22 per cent escalated by the applicable surcharge and the cess.

For the half-year ended Sep. 30, overall PAT including the PAT from discontinued operations at ₹4,000 crore registered an increase of 16.1 per cent over the profits for similar period last year.

1 reply »

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.