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|August 6, 1998
L&T Q1 net down at Rs 720 million, ties up with John Deere for multi-billion-rupee tractor venture
Diversified industrial giant Larsen & Toubro has recorded Rs 14.7 billion in sales and service revenues for the first quarter ended June 30, 1998, showing an increase of 16 per cent over the corresponding quarter of the previous year.
However, due to higher incidence of interest and depreciation, the profit before tax at Rs 800 million and profit after tax at Rs 720 million were lower than those for the corresponding quarter of the previous year.
A substantial part of the company's revenue is derived from the engineering and construction business. The profitability in this business, to a considerable extent, depends upon the stage of execution of orders since the profits are reckoned only after a major portion of the jobs is completed .
The company claimed that order booking performance of the company for the first quarter was extremely good. The new orders booked at Rs 21.11 billion were higher by 37 per cent as compared to the corresponding quarter of the previous year. Consequently, order backlog at Rs 61.34 billion at the end of June 1998 was also higher by 38 per cent. This will lead to higher invoicing in the later part of the year.
L&T entered into a joint venture with John Deere & Co of the United States, a leading international agricultural machines company, to manufacture tractors.
Disclosing this at the 53rd Annual General Meeting of the company, L&T director S S Marathe said that the plant is located at Sanaswadi near Pune, would produce 30,000 tractors in the first phase to be completed by 2000 AD.
''The investment for the first phase is Rs 3.4 billion. We hope to double the capacity in the second phase,'' he said, and added that the choice of Pune for the plant was due to availability of highly-skilled manpower.
L&T holds 50 per cent stake in the venture with the balance being held by the foreign partner. The AGM was attended by L&T Managing Director S D Kulkarni and the 90-year-old chairman emeritus of the group H Holck Larsen. Anil Ambani and Mukesh Ambani of Reliance Industries, who hold a sizable stake in L&T, stayed away.
Marathe said that the group's information technology arm was turned into a separate subsidiary L&T Information Technology Limited on April 1, 1997. The total income of the IT company was Rs 910 million and net profit Rs 175 million. According to Marathe, the IT company is growing at the rate of 60 per cent per annum. And would be among the top 10 software exporters in three to five years.
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