L&T criticises "unhurried" reform pace as profit slides

By Tommy Wilkes and Aman Shah NEW DELHI/MUMBAI (Reuters) - Industrial giant Larsen & Toubro Ltd criticised on Friday the "unhurried pace" of government reforms for weakening investment in its home market, as it reported a 37 percent slide in first-quarter profit. Larsen, which makes everything from metro train lines to gas pipelines to parts for submarines, has been hoping for a rebound in India after several years of sluggish demand for its goods. The Mumbai-based company, which is viewed as a bellwether for the Indian economy, said in a statement that an improved fiscal deficit and lower interest rates should eventually support business, but that the investment climate remained subdued because of "global uncertainties and unhurried pace of reforms in India." "The speed and scale of the reforms that is required to push this trajectory into an investment-rich momentum is of a much higher order than what is currently on display," chief financial officer, R. Shankar Raman, told reporters. Indian companies have looked to the government of Prime Minister Narendra Modi, who was elected last year, to kick-start the economy by clearing stalled projects and bureaucratic delays that had slowed the investment cycle. Modi this year unveiled a big splurge on public infrastructure, hoping it would soon be leveraged by private funds to fire up the economy. But Larsen said private investment continued to be constrained by weak demand, low commodity prices and spare capacity. "The private sector today is in a very difficult situation ... It has soft demand, capacity underutilised, it has stretched balance sheets and generally, the supply chain is liquidity constrained," said Shankar Raman. He said orders from public sector companies had increased during the quarter as their balance sheets strengthened. The company reported a net profit of 6 billion rupees ($93.6 million) for the three months ended in June, lower than last year's 9.67 billion rupees, although those numbers were supported by gains from a series of divestments. The company said revenue grew 7 percent year-on-year, led by its infrastructure and power businesses. Larsen maintained its guidance for growth in revenue and order inflow for the full-year at 15 percent. Larsen also said on Friday that it was proposing to sell up to 15 percent of the shares it holds in Larsen & Toubro Infotech Ltd., its information technology services unit. Shares in the group closed up 1 percent on Friday, underperforming the Nifty. Its shares have risen about 20 percent this year. ($1 = 64.1300 rupees) (Editing by Subhranshu Sahu and Susan Fenton)