Sharp rise in L & T's Q1 profit

By Our Staff Correspondent

MUMBAI, JULY 18. Larsen & Toubro (L&T) has announced a net profit of Rs. 65.07 crores for the quarter ended June 2001 against a figure of Rs. 18.88 crores for the corresponding period of the previous year. Net sales for the period was Rs. 1,830.97 crores (Rs. 1,663.36 crores) and other income Rs. 45.67 crores (Rs. 32.61 crores).

Total expenditure for the period was at Rs. 1,615.54 crores (Rs. 1,516.54 crores). The operating profit was up at Rs. 261.1 crores (Rs. 179.43 crores) and the company provided Rs. 94.2 crores (Rs. 83.76 crores) for interest, Rs. 81.76 crores (Rs. 75.09 crores) for depreciation and Rs. 12.07 crores (Rs. 1.7 crores) for current tax and Rs. 8 crores (nil) for deferred tax.

According to Mr. A. M. Naik, CEO and managing director, L&T, ``Except some road projects, there is very little infrastructure activity and barely any developmental activity. L&T's performance has to be viewed in this perspective.''

Mr. Naik added that in the last two years, L&T has taken major initiatives outside India and developed a business plan for every strategic business unit. ``We have to come out of the single country focus. Also, it is now the time to assemble the best talent and upgrade skills. This will take 2-3 years time.''

Despite the continued economic slowdown and lacklustre business conditions, the Engineering & Construction (E&C) segment booked orders amounting to Rs. 1,304 crores for the quarter. The increased thrust on export growth helped secure further overseas orders. The revenues of the E&C segment amounted to Rs. 917 crores recording a marginal growth of 2 per cent over the corresponding period last year.

The cement segment reported an improved performance aided by sustained recovery in cement prices and a continuous focus on reduced costs. The company sold 3.09 million tonnes of cement with revenues worth Rs. 675 crores which accounted for 37 per cent of the company's sales; a 21 per cent jump over the corresponding period of the previous year. The average sales realisation per tonne during the period was Rs. 1,478 per tonne against Rs. 1,083 in the same period last year. Consequently, the operating margin of the business improved from 10.4 per cent to Rs. 22.8 per cent.

The project to set up a grinding unit at Durgapur, West Bengal is progressing and is expected to be commissioned in the next few months. With this, the total cement capacity will increase to 16 million tonnes and according to Mr. Naik, L&T has completed its investments in domestic projects.

Regarding the demerger of the cement division, Mr. Naik said that the three bidders had completed due diligence but the companies had global interests with the three players either completing other acquisitions or in the process of trying to acquire companies. ``Hopefully, we will see the bidding process completed by the end of August, 2001'', Mr. Naik said.

Mr. Naik said that last year, the company had booked Rs. 1,500 crores worth of order outside India and is targeting Rs. 2000 crores worth of orders outside India this year. Reacting to a query regarding L&T's plans to set up an asset management company (AMC), Mr. Y. M. Deosthalee, director, finance, said that there was no decision on the AMC as yet.

Tisco

Tata Iron and Steel Company has announced a net profit of Rs. 20.53 crores for the first quarter ended June 2001 against Rs. 101.40 crores in the corresponding period of the previous year.

Net sales for the quarter were lower at Rs. 1,611.41 crores against Rs. 1,728.27 crores. Total expenditure was Rs. 1,301.53 crores (Rs. 1,370.53 crores). The operating profit was lower at Rs. 309.88 crores against Rs. 357.74 crores. Other income amounted to Rs. 5.89 crores (Rs. 15.53 crores). The company provided Rs. 114.57 crores (Rs. 103.11 crores) for interest and Rs. 135.64 crores (Rs. 112.15 crores) for depreciation.

Extraordinary items accounted for Rs. 44.76 crores (Rs. 47.49 crores). The company provided Rs. 27 lakhs (Rs. 9.12 crores) for tax.

During the quarter, the company produced 8.19 lakh tonnes (8.34 lakhs tonnes) of steel and sold 6.86 lakh tonnes (7.25 lakh tonnes). Export turnover for the quarter was Rs. 121.27 crores (Rs. 177.42 crores). Exports of Indian steel were restricted due to the trade actions taken by the U.S. and other countries, the company said.

Also, according to the company, the first quarter witnessed the lowest flat product prices in the international price cycle which impacted on domestic flat product prices. As a result, these were much lower than the prices prevailing in the first quarter of the previous year.

Colgate's special dividend

The directors of Colgate-Palmolive (India) today decided to recommend a special dividend of Rs. 4.75 per share.

``In concluding this decision, the board considered the company's long history of rewarding its loyal shareholders in the past through bonus shares, which is not feasible at this time given the current level of capitalisation. Therefore, given the available surplus accumulated from previous years' and the healthy cash position of the company, the directors have recommended payment of one-time cash dividend out of the undistributed profits of the previous financial years, subject to shareholders' approval at the forthcoming annual general meeting to be held on August 29, for payment on or about September 3, 2001,'' stated a company release.

The total outflow will be Rs. 112.19 crores as dividend and Rs. 11.44 crores as dividend tax. After this payment, the company expects to have Rs. 1.96 crores carried forward as ``reserves'' and in excess of Rs. 90 crores as investible cash.

The special dividend of Rs. 4.75 per share recommended from prior years' accumulated profits and the final dividend of Rs. 3.50 per share recommended from profits for the year ended March 31, 2001 will mean that the shareholders will receive a total of Rs. 8.25 per share.

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