MUMBAI - Indian engineering giant Larsen & Toubro (L&T) is currently challenging tax fines imposed by Qatari authorities, which total Rs 238.9 crore, due to discrepancies in declared income for the fiscal years 2016-17 and 2017-18. The company has expressed confidence in obtaining relief through the appellate process.
The dispute was disclosed in a regulatory filing today, where L&T detailed its objections to the fines related to income misstatements for FY2017 and FY2018. This follows a recent penalty by the Reserve Bank of India (RBI) in October 2023, when L&T Finance, a subsidiary of the conglomerate, was fined Rs 2.50 crore for non-compliance with certain regulatory requirements.
Despite these setbacks, L&T has reported a strong financial performance for the July-September quarter of 2023. The company noted significant annual growth with profits soaring to Rs 3,223 crore and revenue climbing to Rs 51,024 crore. This robust financial health comes amid challenges but without any material financial adversity impacting the company's operations.
L&T's order book has seen considerable growth due to its substantial presence in the Middle East. In the first half of FY2023, orders from this region contributed impressively to the company's expansive order tally.
As of yesterday, L&T conveyed through a stock exchange filing that it does not foresee any severe financial consequences stemming from Qatar's tax fines. The firm's Gulf operations have been instrumental in bolstering its order intake, which significantly contributed to an extensive order book valued at Rs 4,50,700 crore by the end of Q2.
The construction behemoth's resilience in the face of regulatory challenges underscores its strategic positioning and operational strength in both domestic and international markets. The market will be closely monitoring the outcome of L&T's appeal against Qatar's tax fines as it progresses.
InvestingPro Insights
In light of the recent events surrounding Larsen & Toubro (L&T), InvestingPro data and tips offer some additional insights.
InvestingPro's real-time metrics reveal that L&T has maintained a perfect Piotroski Score of 9, indicating strong financial health. This supports L&T's confidence in overcoming the recent tax fines imposed by Qatari authorities.
Additionally, InvestingPro Tips highlights that L&T has been consistently increasing its earnings per share and that management has been aggressively buying back shares, demonstrating their confidence in the company's value. This is particularly relevant given the company's strong financial performance in the July-September quarter of 2023, with soaring profits and climbing revenue.
Another noteworthy InvestingPro Tip is that L&T has maintained dividend payments for 23 consecutive years. This record of consistent returns to shareholders further underlines the company's financial resilience despite the recent regulatory challenges.
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