Larsen & Toubro, in an investor presentation, has said that the pace of execution of orders has picked up in Q2 (July to September) of FY21. L&T attributed this to higher workforce availability and normalization of supply chain.
L&T also said that there has been an improvement in the order inflow position in Q2 of FY21, when compared with that in Q1 (April to June) of FY21. Though not specified in the presentation, some estimates put this quarter-on-quarter growth at around 20 per cent.
However, owing to the depressed performance in Q1 of FY21, the first half (April-September) of FY21 had a much lower order inflow when compared to that in H1 of FY20. Orders inflows during H1 of FY21 stood at Rs.516 billion, down 41 per cent from Rs.870 billion in H1 of FY20. Domestic order inflows were down 47 per cent year-on-year in H1 of FY21. By the same comparison, international order inflows were 26 per cent lower.
As of September 30, 2020, the outstanding order book position was Rs. 2,989 billion, marginally down from Rs.3,032 crore as of September 30, 2019.
The stagnation of outstanding order book position despite lower order inflows reflects slow pace of project execution during H1 of FY21. This, in turn, was due to COVID19-related challenges.
Infrastructure dominates
Around 50 per cent of the new order inflows of Rs.516 billion in H1 of FY21 came from the infrastructure segment, followed by services with a 40 per cent share. A healthy 63 per cent of the Rs.516-billion order inflow was from domestic projects. USA and Europe had a combined share of 21 per cent in the new order inflow in H1 of FY21. The Middle East region came next in significance with a share of 12 per cent.
As of September 30, 2020, around 74 per cent of the outstanding order book position related to infrastructure projects. Also, 76 per cent of the order book position came from domestic projects.
It may be mentioned that the infrastructure segment discussed above includes: buildings & factories; transportation infrastructure; heavy civil infrastructure; water & effluent treatment; metallurgical and material handing; and power T&D.
The individual shares of these infrastructure components were however not available in the presentation.
Power Generation
L&T also has a “Power” business that is associated largely with the power generation side. It includes EPC of coal and gas-based thermal power plants, electrostatic precipitators, power equipment (boilers and turbines), etc.
This Power sector accounted for an insignificant 0.2 per cent of the new order inflows in H1 of FY21, and around 5 per cent of L&T’s total outstanding order book position as of September 30, 2020.
Featured photograph showing a 400kV power transmission line built by L&T in Oman, is for illustration only.
