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L&T bags slew of water supply orders; sees Q2 net up 23%

Mumbai : Engineering and construction major Larsen & Toubro has announced 23 per cent rise in consolidated net profit to Rs 2230 crore for the second quarter ended September 2018 even as it has bagged a slew of orders for water supply projects in recent weeks.

The company said jump in net profit came on the back of 21 per cent growth in consolidated revenue to Rs 32081 crore due to improved execution in project businesses and strong growth in service businesses. For the second quarter ended September 2017, the company had reported net profit of Rs 1820 crore while consolidated revenue was to the tune of Rs 26447 crore.

L&T said total order inflow was up 46 per cent with total orders worth Rs 41921 crore secured during the quarter due to a pick-up in domestic ordering activity.

Infrastructure, hydrocarbon and heavy engineering segments and the services sector pushed the company’s order inflow with the infrastructure segment securing orders worth Rs 23,406 crore. The 69 per cent growth in infrastructure sector order inflow was driven by new orders in the heavy civil infrastructure, buildings & factories and water treatments verticals.

Among the recent orders that L&T bagged are projects worth Rs 1157 crore from the Public Health Engineering Department of Rajasthan for execution of drinking water supply projects in Pali, Dungarpur and Banswara districts.

The scope of Rajasthan projects covers design, engineering and construction of intake structures, water treatment plants, water storage reservoirs, supply and laying of transmission and distribution pipelines, design and construction of village transfer chambers, public stand posts and cattle water troughs with associated electro mechanical and instrumentation works.

This was preceded by a Rs 415 crore order secured by L&T's water effluent treatment business in Tamil Nadu. The project was secured from the Tamil Nadu Water Supply & Drainage Board for providing underground sewerage scheme to Kurichi and Kuniyamuthur area of Coimbatore.

The scope of the project includes laying of sewer pipelines of 450 km, construction of RCC manholes, 30 pumping lifting stations and providing house sewer connections to 69,500 households.

The company has also bagged a major order in the GCC region. The Rs 710 crore water and effluent treatment order is a design and build project that has been secured from Public Works Authority (ASHGHAL), Qatar for the execution of 30 million litre per day (MLD) industrial area sewage treatment works-Phase III A.

The scope covers design, engineering, procurement, construction, testing and commissioning with advanced treatment technology and high-end control and automation. This is the third consecutive order from ASHGHAL for water business, following the successful completion of Doha South & Al Shamal Sewage Treatment works.

Despite the Qatar order, the company has witnessed a slight slowdown in order intake from the region. Overall international revenue during the September 2018 quarter stood at Rs 10630 crore, which was 33 per cent of the total revenue but marginally lower than 36 per cent in the corresponding quarter of previous year.

“International orders declined as Middle East is going through a transition, so we are selective about orders from Middle East and we are looking for orders in ASEAN and Africa to make up", said L&T CFO R Shankar Raman.

Raman said he believes orders in India will be driven by the public sector going forward as the private sector remains cautious of fresh investments.

The company has maintained its guidance of 10-12 per cent for order inflow and 12-15 per cent of revenue growth for the current year. Most of the large projects have got ordered out during the first two quarter of this fiscal, which is in line with L&T’s estimates given the fact that general elections are scheduled for 2019.

“The way we stand till half year, we do believe we will be there. Last year, we were at Rs 60000 crore till the first half and closed the year with Rs 150,000 crore of order inflows. Now, we are at Rs 78,000 crore, we should be able to reach our guidance of 10-12 per cent growth with Rs 78000 crore orders already in bag. At the beginning of the year, we anticipated that most large projects were ordered out in the first nine months considering an early elections. Now, we anticipate orders from rural electrification, water, irrigation, power transmission and distribution, as the election code of conduct will kick in last week of March,” Raman added.

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