Analyst Presentation Q1 09 July 28, 2008 1
Disclaimer This presentation contains certain forward looking statements concerning L&T s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition ( both domestic and international), economic growth in India and the target countries for exports, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions with respect to investments, fiscal deficits, regulations, etc., interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company. July 28, 2008 2
Presentation Outline Q1 09 Performance Summary Segment Analysis Performance of Key Subsidiaries Outlook July 28, 2008 3
Q1 09 Performance Summary July 28, 2008 4
Performance Highlights: Q1 09 Net Revenues Order Book Order Inflows Growth of 24% Growth of 53% Growth of 40% Recurring PBDIT Growth of 72% Manpower Net Addition of over 2300 July 28, 2008 5
Sectorwise Order Inflows & Order Book 20% 12% 33% 26% 9% Order Inflows (Rs. 122 Bn) Order Book (Rs. 582 Bn) 15% 22% 19% 34% 10% Process Oil & Gas Power Infrastructure Others Refineries Petrochemicals Minerals & Metals Bulk Material Handling Platforms Pipelines Valves Generation Renovation & Modernisation Equipment Electrification / Transmission & Distribution Roads, Bridges Ports, Airports Railways Industrial & Commercial Buildings Urban Infrastructure Ship Building Defense / Aerospace Electrical & Electronics Construction & Mining Eqpt. Others July 28, 2008 6
Performance Summary FY 08 Rs. Billion Q1 09 Q1 08 % Change 420.19 Order Inflows 122.34 98.81 24% 526.83 Order Book 581.95 416.34 40% 248.55 Net Sales 69.01 45.04 53% 5.88 Other Income 2.02 2.11 254.43 Total Net Revenues 71.03 47.15 51% Growth in Order Inflows led by Power & Process sectors Robust growth in Net Sales contributed by E&C segment Order Inflows Order Book Net Sales Export proportion 13.1% 16.4% 19.4% July 28, 2008 7
Performance Summary FY 08 Rs. Billion Q1 09 Q1 08 % Change 33.18 PBDIT (w/o gain on divestitures) 8.49 6.17 38% (0.38) Interest (Net) (0.28) 0.02 (2.12) Depreciation (0.66) (0.42) (9.68) Tax - (Incl Deferred & FBT) (2.53) (2.00) 21.00 PAT (w/o gain on divestitures) 5.02 3.77 0.73 Gain on divestitures net of tax - - 21.73 Profit After Tax 5.02 3.77 33% PAT (w/o Exchange Gain) 4.90 2.88 70% PBDIT Margins (w/o Exchange Gain): 11.7% (Q1 08: 10.6%) Interest Expenses: Rs. 0.38 Bn (Q1 08: Rs. 0.16 Bn) Capex Outlay: Rs. 3.65 Bn July 28, 2008 8
Segment Analysis July 28, 2008 9
Segmental Break-up 79% 69% Q1 09 7% 9% 9% 18% 5% 4% Engineering & Construction 74% 63% Electrical & Machinery & Electronics Industrial Products Net Revenues Others EBITDA Q1 08 11% 16% 9% 18% 6% 3% Engineering & Construction Electrical & Electronics Machinery & Industrial Products Others July 28, 2008 10
Engineering & Construction Segment FY 08 Rs. Billion Q1 09 Q1 08 % Change 353.92 Total Order Inflows 105.16 82.18 28% 59.50 --- Exports 13.35 16.71 509.32 Total Order Book 563.36 396.90 42% 82.10 --- Exports 90.58 63.18 189.51 Total Net Revenues 54.24 33.21 63% 32.02 --- Exports 10.41 5.08 24.18 EBITDA 5.70 3.19 79% 12.8% EBITDA Margins 10.5% 9.6% 41.07 Net Segment Assets 48.17 32.28 Healthy growth in Order Inflows despite challenging environment Bagged first order in the supercritical power equipment manufacturing space - Steam Turbine Generator package of 2 X 800 MW - from APPDCL Strong growth in Revenues across all business units Improvement in profitability contributed by selection of jobs with better margins, better contract management, effective cost management and adherence to quality & delivery schedules July 28, 2008 11
Electrical & Electronics Segment FY 08 Rs. Billion Q1 09 Q1 08 % Change 24.21 Total Net Revenues 5.21 5.03 4% 2.89 ---Exports 0.68 0.39 4.12 EBITDA 0.72 0.84-14% 17.0% EBITDA Margins 13.7% 16.6% 10.14 Net Segment Assets 10.53 7.65 Growth in revenues affected by Slowdown in industrial growth Lower sales in Petrol Dispensing Pumps & Metering business Lower volumes and spurt in inflation adversely impacted the margins July 28, 2008 12
Machinery & Industrial Products Segment FY 08 Rs. Billion Q1 09 Q1 08 % Change 23.28 Total Net Revenues 6.08 4.16 46% 4.84 ---Exports 1.57 0.88 4.41 EBITDA 1.49 0.92 62% 19.0% EBITDA Margins 24.6% 22.1% 4.39 Net Segment Assets 4.08 2.97 Revenue growth across all businesses Better price realisation and rupee depreciation led to improved profits July 28, 2008 13
Others Segment FY 08 Rs. Billion Q1 09 Q1 08 % Change 11.78 Total Net Revenues 3.53 2.65 33% 1.73 ---Exports 0.72 0.34 1.13 EBITDA 0.29 0.15 90% 9.6% EBITDA Margins 8.3% 5.8% 3.36 Net Segment Assets 3.02 1.35 Divestment of RMC business progressing towards completion Favourable movement in the exchange rates contributing to improvement in margins of Technology Services business July 28, 2008 14
Performance of Key Subsidiaries July 28, 2008 15
Performance of Key Subsidiaries Rs. Billion Total Revenues PAT Q1 09 Q1 08 Q1 09 Q1 08 L&T Infotech Limited 4.25 3.46 0.61 0.39 L&T Finance Limited 1.78 1.03 0.25 0.20 L&T Infrastructure Finance Limited 0.75 0.12 0.18 0.09 Strong growth in Revenues L&T Infotech: Rupee depreciation led to improvement in margins L&T Finance: Total Assets grew by 64% on YoY basis to Rs. 55.4 Bn Margins impacted by rising interest rates & investment in network expansion L&T Infrastructure Finance: Total Assets (June, 08): Rs. 21.23 Bn July 28, 2008 16
Outlook July 28, 2008 17
Outlook Challenging global & local conditions: High crude prices, inflation, credit squeeze, high interest rates, lower forecast of GDP However, Company is well positioned to mitigate the impact, due to its: Leadership position across diverse core growth sectors Strong revenue visibility Increasing global footprints Sound risk management framework backed up by thrust on operational excellence measures Capacity build-up underway for capitalising on increasing opportunities expected in the medium term Company maintains its guidance for the current year July 28, 2008 18
July 28, 2008 19
Annexure 1 - Major Orders Booked During Q1 09 Description Rs Bn ---- Domestic Supercritical Steam Turbine Generators & Auxiliaries for 2X800 MW plant of APPDCL 15.57 Cast Steel Wheel manufacturing plant in Bihar for Indian Railways 10.48 Blast Furnace for Tata Steel at Kalinga Nagar, Orissa 9.80 Crude oil insulated pipeline & gas pipeline from Barmer- Salaya for Cairns Energy 7.26 Six Lane structural bridge for NHAI at Chennai, Tamil Nadu 6.00 Zinc Smelter for Hindustan Zinc Limited at Rajasthan 5.18 LP / HP Feedwater Heater, Condensors, Deaerators for CGPL, Mundra - Tata Power 3.88 Water supply project in Rajasthan 3.70 400KV DC Transmission line project for PGCIL 3.44 Coal Handling Plant for Damodar Valley Corporation at Jharkhand 3.30 Reactors for HPC L-Mittal Energy Limited 2.43 Railway siding for Sterlite Industries at Jharsuguda, Orissa 2.03 ----- International 132/11 KV Substation at Jebel Ali Horse Race course at Dubai for DEWA 2.23 33/11 KV Primary Sub station & associated Cable at Abu Dhabi for ADWEA 2.10 July 28, 2008 20
Details of Other Income (Annexure 2) Rs. Million Q1 09 Q1 08 Other Operational Income 35 17 Miscellaneous Income 619 287 Interest Income 104 177 Dividend from S&A Companies / Trade Investments 435 25 Recurring /Operating Other Income (i) 1,193 506 Exchange Gain 177 1,335 Income from Other Investments 628 206 Miscellaneous Income 20 68 Non-operating Other Income (ii) 825 1,609 Total Other Income (i) + (ii) 2,018 2,115 July 28, 2008 21