Larsen & Toubro (L&T), the country's largest engineering and construction company, is expecting order intake to increase by 20% and revenues by nearly 15% in the current fiscal (FY15), as infrastructure projects are likely to get a strong push under the new government, group executive chairman A M Naik told reporters.
"While it may take few months for orders from infrastructure sector to come in, mood is upbeat, hope government will live up to expectations" Naik said. He expects order flow to pick up from September-October, but remained concerned about poor financials of the many customers which has been a key impediment in starting of new projects.
Around Rs 80,000 crore worth of infrastructure projects which have been stuck due to policy paralysis and general economic slowdown are likely to be cleared in this fiscal. Besides this, mega infrastructure projects like trans-harbour link in Mumbai are likely to be put on a fast track, Naik said.
Around 90% of orders which comes from government agencies encompassing sectors such as infrastructure, hydrocarbon, power and defence are likely to see uptick. But orders from private sector will take long time to revive. "I don't see private sector companies running to grab BOT (built operate and transfer) projects," Naik explained.
The Mumbai-based company's order book on a standalone basis in the fourth quarter of last fiscal was at Rs 1,62,952 crore, up 13% from a year ago quarter.
Announcing its results on Friday, the engineering major reported a whopping 69% increase in net profit for the fourth quarter at Rs 2,723 crore on a standalone basis mainly due to revival in orders. Its revenue rose 11% on year to Rs 20,229 crore due to various jobs under execution.
The company was also upbeat on the prospect of more privatisation in the defence sector. The new government is considering raising foreign direct investment cap in defence sector from current 26%. MV Kotwal, president heavy engineering, said that defence was a very sensitive sector and any increase in FDI limit may come up with pre-conditions. Naik said while hiking the cap from 26% to 49% was desirable, going beyond that was debatable. "If it (hike FDI cap in defense sector) happens, we are extremely well poised to take advantage.
The company has invested heavily in defence product manufacturing capability in past three years. It has developed strong capabilities in four sectors of defence-related opportunities namely-- ship building, field guns, missile launcher and defence electronics. "If these sectors open up, we are well prepared and it will be a very good opportunity," Naik said.
L&T also plans to list two of its arms L&T Infotech and L&T Technology services on the bourses in 2016. The company will start the process for listing in July. Both companies put together registered a turnover of $1.3 billion in the last fiscal, and expects to grow by 20% in the current fiscal.