Larsen & Toubro Ltd., India’s biggest engineering and construction company by sales, Wednesday posted a 7% fall in its January-March net profit, hurt by a weak economy that slowed down the implementation of infrastructure projects and high interest cost.
Net profit for the period, the company’s fiscal fourth quarter, fell to 17.88 billion rupees ($322 million) from 19.20 billion rupees a year earlier. Sales rose 10% to 202.94 billion rupees.
India’s economy is estimated to have expanded 5.0% in the fiscal year ended on March 31, the weakest pace in a decade. The slowdown and high borrowing cost because of the central bank’s efforts to cool inflation have affected infrastructure projects like construction of roads and power projects from where companies such as Larsen get most of their revenue.
Issues such as infrastructure bottlenecks, problems in the availability of resources and slow implementation of economic reforms are hurting the economy, the company said in a statement.
The company said its earnings before interest, taxes, depreciation and amortization for the quarter fell 4.2% to 24.51 billion rupees due to high interest cost and “competitive forces,” which it didn’t immediately explain.
Larsen said the company’s board approved a proposal to issue one free share to its shareholders for every two shares held.