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Sharp fall in L & T's net profit

By Our Special Correspondent

MUMBAI, MAY 20. Larsen & Toubro has reported a decline in its net profit at Rs. 341.63 crores for the year ended March 31, 2000, against Rs. 470.74 crores in the previous year.

The company recorded a sales and services income of Rs. 7,423.81 crores showing a marginal increase of 2 per cent over the previous year. However, the profit before depreciation, interest and taxes, is higher at Rs. 995.09 crores against Rs. 869.92 crores as a result of the focussed initiatives taken by the company for reducing costs and improving productivity.

The profit before tax has declined to Rs. 382.13 crores from Rs. 522.24 crores. With the commencement of commercial production at the company's at Tadipatri cement plant in Andhra Pradesh, and captive power plant at Awarpur in Maharashtra, and increased level of investment and working capital, interest cost jumped to Rs. 322.35 crores from Rs. 160.66 crores, according to a company release. The company however continues to manage interest cost proactively at competitive rates, the release added. A major portion of high value bonds, contracted when interest rates were high, were refinanced during the year.In spite of an unfavourable business environment, the company booked orders worth Rs. 8,146 crores against Rs. 7,688 crores. The order backlog at the end of March 2000 at Rs. 6,819 crores is substantially higher than Rs. 5,870 crores on March 31, 1999 and provides a platform for a stable performance during 2000-01.

There are good prospects for new orders in refineries and power sectors. The construction business continues to grow at a reasonable pace with continuous flow of orders from infrastructure sectors. The growth in electricals business would depend on pick-up in new investments. The cement demand has slowed down and price realisation continues to be under pressure, due to drought conditions in some States. Hopefully, with the early onset of the monsoon and satisfactory rains, the situation is expected to improve.

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