IIPM

The gross corporate revenues for the period April-December 2005 grew by 14% to Rs.102 billion. But despite profit after tax for the quarter ending December 31, 2005, increasing by 41% to Rs.1.8 billion, what motivates L&T to sell its stakes in its core business spaces? The answer could well lie in the number of order backlogs L&T has started suffering. The maximum order backlogs occurred in 2005, which surely isn’t a healthy sign. Not surprisingly, cash flows from operating activities have steadily declined from Rs.13.27 billion in 2002 to Rs.1.11 billion in 2005. Operating margin fell to 7.2% from 8.1% in the previous year. Without doubt, unless L&T starts controlling its operational costs, it would not be long before other assets also go up the auction banner.

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Source: IIPM Publication