LARSEN & TOUBRO LIMITED Analyst Presentation Q1 FY11
Presentation Outline Q1 FY11 Performance Summary Segmental e Analysis s Performance of Key Subsidiaries Outlook 2
Presentation Outline Q1 FY11 Performance Summary Segmental e Analysis s Performance of Key Subsidiaries Outlook 3
Performance Highlights 63% Robust growth in Order Inflows driven by Power and Infrastructure 50% Healthy Order Book Position 6% Revenues 160 bps EBITDA Margin 15% Recurring PAT 4
Order Inflow & Order Book Q1 FY11 Sectoral Break-up Order Inflow: Rs. 156.26 Bn 25% 52% 7% 8% 8% Order Book: Rs. 1078.16 16 Bn 32% 33% 14% 15% 6% Infrastructure Power Hydrocarbons Process Others Infrastructure Roads & Bridges Ports & Harbours Airports Railways Buildings & Factories Urban Infra Water Power Generation Equipments Electrification / Transmission & Distribution Hydrocarbons Upstream Mid & Downstream Pipelines Valves Process Minerals & Metals Bulk Material Handling Fertilizer Others Shipbuilding Defense & Aerospace Construction & Mining Eqpt. Electrical & Electronic Products Technology Services 5
Order Inflow & Order Book Q1 FY11 Geographical Break-up 1% 2% Customer Profile 10% 5% 34% 13% 21% 47% 89% 93% 45% 40% Order Inflow Order Book Domestic Middle East Others Order Inflow Order Book Private Public (Incl. PSUs) Devl. Projects (L&T) 6
Performance Summary - Topline % Rs. Billion Q1 FY11 Q1 FY10 FY10 Change Net Sales 78.35 73.63 6% 366.75 --- Exports 10.47 15.32 64.4646 Other Operational Income 0.50 0.45 3.60 Total Net Revenues 78.85 74.08 6% 370.35 Revenue en e accruals als are along planned lines Sales growth driven by non-e&c segment Growth influenced by: Back-ended Order Inflows in FY10 (in initial stages of execution) Long-cycle jobs with lengthier contracted execution timelines Increased level of International Orders yet to translate into revenues 7 7
Performance Summary Operational Costs Q1 FY11 Q1 FY10 Particulars Rs Bn % to Total Net Revenues Rs Bn % to Total Net Revenues Manf., Cons. & Opex (MCO) 59.44 75.4% 57.32 77.4% Staff Costs 5.63 7.1% 5.11 6.9% Sales, adm. & other Exp. 371 3.71 47% 4.7% 3.3535 45% 4.5% Total Operational Costs 68.78 87.2% 65.78 88.8% Reduced MCO Expenses (% of Revenues), en es) net outcome of: Lower subcontracting costs Higher material consumption including effect of commodity price rise Operational efficiencies Increase in staff costs in line with manpower increase SGA expenses in line with sales. 8 8
Performance Summary Profitability % Rs. Billion Q1 FY11 Q1 FY10 FY10 Change EBITDA 10.07 8.30 21% 48.16 EBITDA Margins 12.8% 11.2% 13.0% Interest Expenses (1.42) (1.10) 10) 30% (5.05) Depreciation (1.14) (0.94) 22% (4.15) Other Income 2.26 2.25 9.10 Provision for Taxes (3.11) (2.73) (16.21) PAT before Exceptional Items 6.66 5.78 15% 31.85 Extraordinary & Exceptional Items (Net of tax) - 10.20 11.91 Profit after Tax 6.66 15.98-58% 43.76 Uptick in EBITDA margins driven by E&C business Interest costs in line with borrowing o level Q1 FY10 exceptional on account of gain on UltraTech stake sale 9 9
Performance Summary Balance Sheet Rs. Billion Jun-10 Mar-10 Increase / (Decrease) Net Worth 190.84 183.12 7.72 Loan Funds 79.30 68.01 11.29 Deferred Tax Liabilities (Net) 0.95 0.77 0.18 Total Sources 271.09 251.90 19.19 Net Fixed Asset 66.17 63.66 2.51 Current Investments 87.66 79.65 8.01 Invt./ICDs/Loans & Advances to S&A Cos 80.95 76.79 4.16 Other Investments 5.50 5.49 0.01 Net Current Assets 30.81 26.31 4.50 Total Applications 271.09 251.90 19.19 Gross D/E: 42% Capex Outlay: Rs. 3.63 Bn Increase in Segmental Net Working Capital as % of Sales from 7.6% to 9% Support to S&A Cos includes: L&T Power Rs. 1.46 Bn L&T General Insurance - Rs. 1.46 Bn L&T IDPL Rs. 1.18 Bn 10 10
Presentation Outline Q1 FY11 Performance Summary Segmental e Analysis s Performance of Key Subsidiaries Outlook 11
Segmental Break-up Q1 FY11 Electrical & Electronics 86% 8.6% (7.1%) Machinery & Industrial Products 6.6% (5.7%) Net Revenues Others 16% 1.6% (1.0%) Engineering & Construction 83.2% (86.2%) Electrical & Electronics 7.2% (7.9%) Machinery & Industrial Products 10.7% (10.6%) EBITDA Others 3.1% (0.6%) Engineering & Construction 79.0% (80.9%) Figures in the bracket indicate Previous Year s Composition 12 12
Engineering & Construction Segment Rs. Billion Q1 FY11 Q1 FY10 % Change FY10 Total Order Inflows 138.45 83.73 65% 638.99 --- Exports 14.61 4.38 29.31 Total Order Book 1,055.54 699.52 51% 983.86 --- Exports 75.37 96.08 71.28 Total Net Revenues 65.60 63.86 3% 318.42 --- Exports 8.50 13.51 56.26 EBITDA 8.94 7.60 18% 43.39 EBITDA Margins 13.6% 11.9% 13.6% Net Segment Assets 70.92 68.45 4% 62.91 Ordering Environment turning favourable in domestic market Export market showing signs of pick-up (mainly GCC) Longer execution cycles due to increasingly complex long cycle jobs Improvement in EBITDA margins through reduced MCO expenses and favorable job mix Increase in Net Segment assets due to Working Capital 13
Electrical & Electronics Segment Rs. Billion Q1 FY11 Q1 FY10 % Change FY10 Total Net Revenues 6.80 5.25 30% 26.94 ---Exports 0.53 0.52 2.74 EBITDA 0.82 0.74 11% 4.23 EBITDA Margins 12.0% 14.1% 15.7% Net Segment Assets 11.09 11.51-4% 11.32 Favourable Domestic Industrial climate driving higher sales Exports affected by project deferments in Middle east Margins under pressure due to higher commodity prices, change in product mix and lower price realisations Reduction in Net Segment Assets on account of better working capital management 14
Machinery & Industrial Products Segment Rs. Billion Q1 FY11 Q1 FY10 % Change FY10 Total Net Revenues 5.23 4.20 25% 21.35 ---Exports 0.31 0.58 2.06 EBITDA 1.20 0.99 21% 4.71 EBITDA Margins 23.0% 23.7% 22.1% Net Segment Assets 1.76 2.94-40% 2.24 Revenue increase anchored by allround industrial recovery barring valves business. Good Recovery in Construction and Mining business Export Order Inflow picking up in Valves and rubber processing businesses; translation to revenues in subsequent quarters Margins holding firm despite cost pressures Reduction in Segment assets achieved through lower Net Working Capital levels 15
Others Segment Rs. Billion Q1 FY11 Q1 FY10 % Change FY10 Total Net Revenues 1.22 0.77 58% 3.65 ---Exports 1.12 0.71 3.26 EBITDA 0.35 0.06 487% 0.52 EBITDA Margins 28.9% 7.8% 14.2% Net Segment Assets 2.03 2.15-6% 2.03 Mainly represented by Engineering Services Sales growth led by favourable market conditions in USA and Europe Smart improvement in margins due to better manpower utilisation and improved price realisation 16
Presentation Outline Q1 FY11 Performance Summary Segmental Analysis Performance of Key Subsidiaries Outlook 17
Performance of Key Subsidiaries Rs. Billion Q1 FY11 Total Income Q1 FY10 % Change Q1 FY11 Q1 FY10 % Change PAT Margins Q1 FY11 Q1 FY10 L&T Infotech 5.65 4.73 19% 0.79 0.61 30% 14.0% 12.9% L&T Finance 2.87 1.98 45% 0.58 0.24 145% 20.3% 12.0% L&T Infrastructure Finance 1.48 0.86 71% 0.48 0.22 118% 32.2% 25.3% PAT L&T Infotech Revenue and PAT growth indicative of IT sector recovery L&T Finance Growth driven by allround recovery Smart Increase in NIM Business Assets Rs. 80 Bn (PY: Rs. 50 Bn) L&T Infra Finance Growth driven by strong domestic demand for Infrastructure funding Healthy improvement in NIM Business Assets Rs. 45 Bn (PY: Rs. 30 Bn) 18
Developmental Projects Ports: Roads and Bridges: Portfolio: 15 projects; 7 operational, 8 under implementation Development: 5646 lane km Project Outlay: Rs. 132 Bn Portfolio: 3 projects; 1 operational, 2 under implementation Capacity: 45 Mn TPA Project Outlay: Rs. 53 Bn Urban Infrastructure: Portfolio: 19 projects; 6operational, 13 under implementation Area: 28 Mn sq. ft. Project Outlay: Rs. 89 Bn Power: Portfolio: 3 projects under implementation Capacity: 1479 MW Project Outlay: Rs. 110 Bn Total Project Cost (June 2010): Rs. 384 Bn Total Equity Commitment (June 2010): Rs. 74.8 Bn Total Equity Invested (June 2010): Rs. 33.5 Bn 19
Presentation Outline Q1 FY11 Performance Summary Segmental e Analysis s Performance of Key Subsidiaries Outlook 20
Outlook Government Policy Strong Balance Sheet Robust Fin. Metrics Sustainable Growth Capacity & Capability build up Stable Domestic Economic & Fiscal Environment; volatile global situation Business Model - Strategy & Growth Drivers 21
Thank You 22 22
Annexure 1: Details of Other Income Rs. Billion Q1 FY11 Q1 FY10 Interest Income 0.65 0.30 Dividend from S&A Companies 050 0.50 011 0.11 Income from Other Investments 0.56 0.64 Profit on sale of investments 0.01 0.82 Miscellaneous Income 0.54 0.38 Total - Other Income 2.26 2.25 23