L&T got a slight lift in early trades on Monday following the company's bagging a significant EPC order from Qatar Petroleum.

As a result, the scrip of the cement, engineering and construction major inched up 0.75% to Rs 187.95 on BSE. It had gained a good 1.2% to Rs 189.70 earlier. A total of 17,449 Larsen & Toubro shares changed hands on BSE in just over half-an-hour. The stock has moved in a band of Rs 185-210 over the last few weeks amid developments regarding Grasim's open offer for 20% stake in the company.

L&T has announced that it has bagged a $ 98.30 million (Rs 471 crore) EPC contract from Qatar Petroleum. The total contract duration is 24 months and facilities are scheduled for handover by early December 2004.

The contract is for engineering, procurement, installation and commissioning of one additional platform each in Maydan Mahzam and Bul Hanine fields, located off the cast coast of Qatar. The new platform will be connected by bridges to the existing platforms in the respective production complexes. The two new platforms to be installed by L&T are for relocation of the existing living quarters, provision of additional capacity for 45 persons, as also for upgradation of power generation capacity. A total of three jacket structures, four bridges, two 45-men living quarters, two helidecks and two power modules will fabricated and installed under this contract.

The company had earlier issued a guidance that the engineering and construction segment's revenues would grow over 20% for the full year. Operating margins are also expected to improve in the final quarter of 2002-03. Barring unforeseen circumstances, the company is optimistic about its performance for 2002-03 on the whole. The E&C segment has been vindicated by the substantial housing, road construction and infrastructure activities carried out in the country.

Directly, this has also boosted cement demand, another major area of operations for the company.

In mid-March 2003, Larsen & Toubro won a prestigious contract worth Rs 1,242 crore (Rs 12.42 billion) to engineer, procure, construct and commission a PTA (purified terephthalic acid) plant for Indian Oil Corporation. The plant is to be set up in IOC's refinery complex at Panipat in Haryana as part of its integrated paraxylene -PTA project.

However, analysts feel a little anxious that L&T has been garnering just low margin projects overseas.

L&T's other big business is that of cement. In mid-March 2003, Sebi had asked Grasim (the company that acquired quite a substantial stake in L&T over the past six months) to make a revised open offer for L&T. That, after the regulator said that it found nothing objectionable in the report by the investigating officer on the issue of control by Grasim of L&T. Sebi had earlier stayed Grasim's open offer for an added 20% stake in L&T and set an investigation on the matter of whether Grasim had acquired control over L&T after it bought a 10% stake in L&T from Reliance in November 2001.

After acquiring a 10% stake in L&T from Reliance, Grasim had mopped up further shares from the open market raising its stake to about 15% before it announced the open offer at Rs 190 in October 2002.

A professionally managed company, L&T has a large institutional holding (44% as on 31 December 2002). The consensus of institutions will now be crucial, if Grasim wants to boost stake in L&T.

For the third quarter ended 31 December 2002, L&T registered a 48% rise in net profit to Rs 80.67 crore compared to Rs 54.51 crore in the corresponding period last year. Total income increased by 31% to Rs 2,371.72 crore (Rs 23.71 billion) from Rs 1,809.77 crore (Rs 18.09 billion) in DQ 2001.

BSE code: 500510