Infrastructure major Larsen & Toubro (L&T) on July 22 posted 79 per cent decline year-on-year (YoY) registering consolidated net profit to Rs 303 crore for the first quarter ended June 30.

“The consolidated PAT attributable to shareholders of the company, including profits from discontinued business, is Rs 303 crore, reflecting a decline of 79 percent vis-a-vis PAT of Rs 1,473 crore for the corresponding quarter of the previous year,” L&T said.

The PAT was impacted mainly due to lower revenue, credit provisions in the financial services business and under-recovery of overheads.

The company had clocked a net profit of Rs 1,697.62 crore in the year-ago period, the engineering and construction conglomerate said in a regulatory filing.

Its total income fell 27.19 per cent to Rs 22,037.37 crore in April-June quarter, against Rs 30,270.94 crore in the year-ago period, the filing said.

Total expenses slipped to Rs 21,367.63 crore during the quarter under review, from Rs 27,615.71 crore in the corresponding period previous fiscal.

“This has been an unprecedented quarter for everyone. The revenues, while they are depleted as compared to a fully running quarter, it reflects the inability to work during the quarter, due to the Covid pandemic induced lockdown.

“Despite working for less than 30 days we have managed to contain the revenue drop to 28 per cent,” company’s Group Chief Financial Officer R Shankar Raman said during a media call.

The company expects the business to come back to normal levels in the next 45-60 days.

“Beyond the two and half months lockdown which the Centre had announced, various states like Gujarat, Maharashtra, Karnataka, Andhra Pradesh and Telangana announced various restrictions. We have our projects in south and west, but the labourers come from the east so we have huge backlog. Much of the work couldn’t be taken forward,” company’s CEO and MD S N Subrahmanyan said.

He also said that out of the 2.5 lakh workforce, 1.9 lakh have come back to work, which had reduced to nearly 70,000 by May.

“During the quarter, our engineering and procurement business did well but much of the orders from government, even where we were lowest bidders could not be taken forward as the clients were not equipped with online facilities. Many of the public sector enterprises were not able to even take decisions as their boards could not meet. We are hopeful these contracts will come back,” he added.

Despite the challenges, the order book position and execution strengths enabled the company to ride out the unprecedented crisis that the world at large is grappling with, Subrahmanyan added.

Raman further said the negative operating results, be it in terms of margins or working capital or all the consequent ratios like debt-equity and ROE is a result of the decline in revenues.

“But the company did well during the quarter through strong focus on cash flow and liquidity management and we have been able to add Rs 1,500 crore to its cash kitty through the quarter by collecting close to Rs 30,000 crore of cash from counter parties,” Raman added.

During the quarter, the company bagged orders worth Rs 23,574 crore at the group level, registering decline of 39 per cent, in a period characterised by low interest towards fresh investment and deferment of award decisions, the firm noted.

International orders during the quarter at Rs 8,872 crore constituted 38 per cent of the total order inflow.

The consolidated order book of the group stood at Rs 3,05,083 crore as on June 30, 2020, with international order book constituting 24 per cent of the total.

“The domestic orders are almost 50 per cent less as compared to a year ago largely due to lack of bidding opportunity. The order wins are largely in the infra space. Nearly 72 per cent of the order book is of infrastructure contracts,” Raman said.

He said that of the orders bagged, around 15 per cent was from the private sector, while the rest were from the public sector.

According to Subrahmanyan, the government capex will increase as it will have to spend on creating jobs and construction is one of the largest employment generating industry.

Total expenses slipped to Rs 21,367.63 crore during the quarter under review, from Rs 27,615.71 crore in the corresponding period previous fiscal.

When asked about the guidance for the fiscal, Raman said, “We are going through a different phase so it is difficult to predict the curve. We are working towards improving our revenues quarter on quarter, but the situation calls for responsible and conscious approach. It will take few more quarters to predict the situation”.

Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 21 billion in revenue.