L&T slips in red following World Bank ban for six months

MUMBAI: Shares of Larsen & Toubro were down on profit booking after the World Bank barred the infrastructure major from doing any business with it or on projects funded by it for six months.

The debarment was announced after the World Bank found L&T’s senior executive had indulged in fraud way back in 2008.

“The employee who perpetrated the fraud resigned after being confronted with it and L&T hired a global consultant to beef up internal systems to prevent a repeat. Also, out of the inflows the company is aiming at for the next 6 months, WB related flows are sub 5 per cent, so there is unlikely to have any material impact on L&T,” said Morgan Stanley sales note.

The sanction order, dated March 7, said L&T's ineligibility would continue across the entire World Bank group and has been imposed on L&T "for fraudulent practices" as per the bank's Procurement Guidelines against Fraud and Corruption.

During the debarment period, L&T as well as any of the entities controlled directly or indirectly by it can't be nominated as a subcontractor, consultant, manufacturer, supplier or even service provider to an otherwise eligible firm being awarded a World Bank-financed project.

At 10:00 a.m.; the stock was at Rs 1,480.50, down 1.04 per cent, on the BSE. It touched a high of Rs 1,485.90 and a low of Rs 1,455.25 in trade today.