Larsen & Toubro’s electrical and automation unit recovering from note ban impact

MUMBAI: Larsen & Toubro’s electrical and automation business is recovering from the impact of demonetisation but the lack of orders from industrial clients continues to weigh on it, SC Bhargava, senior vice president and head of the business, told ET.

The electrical and automation business was among the worst hit segments for the $16-billion engineering conglomerate as much of the retail business transactions were in cash.

The Narendra Modi-led government’s move on November 8 to demonetise all Rs 500 and Rs 1,000 currency notes sucked cash out of the market and created panic which, in turn, affected demand.

“I am keeping my fingers crossed that it will not turn out to be as bad as we had anticipated. I am hopeful that we will be able to get over the impact that we saw due to demonetisation,” Bhargava said.

The E&A business accounts for around 5% of the engineering behemoth’s revenue. In the December quarter, the revenue of the business remained almost flat while operating profit margins improved. But the management had cautioned that due to liquidity constraints among customers, which was aggravated by demonetisation, the coming quarters may see some more impact.

“In November, all of us got shocked and the retail business was hit, but three months down the line we can say that the fears were much more than what actually happened. Business has been ok,” Bhargava said.