L&T Calls Off Slow Moving Orders

Larsen & Toubro (L&T), an India based private sector company has clarified about writing off its slow moving orders worth Rs 15 thousand crore. The company said that it evaluates the order book regularly and the slow moving orders are removed to enable and carry forward the healthy backlogs of orders. L&T has also clarified that the removal of order does not have any financial impact. The new orders received by the company are being adjusted with the removal of slow orders. 

Due to long delays in securing clearances, regulatory hurdles, policy uncertainty and also due to predatory bidding the companies are unable to complete their projects in time. To get the contract the companies bid high and later on they seek raw materials at lower cost from the suppliers. And if they do not get the materials at lower cost they keep aside the project or sometime cancel the projects. This is not only seen in the infrastructure sector, but also in power sector, coal, highways etc. The companies get the orders but they are not able to complete their projects on time and then it gets cancelled from the customers.

This will be the second consecutive year that L&T will cut the orders. Last year the company has cut orders worth Rs 17,000 crore. This time again, it is in talks to reduce the order book by Rs 15000 crore.  Following this news the share of the company today closed down by 0.77% on BSE at Rs 1290 as compared to its previous close.