L&T Performance for the Quarter Ended December 31, 2014

• Order inflow grows 19%

• Revenue up by 10%

• PAT growth at 9%

Larsen & Toubro recorded Consolidated Gross Revenue of Rs. 24033 crore for the quarter ended December 31, 2014, sustaining a y-o-y growth of 9.6%. The International revenue during the quarter at Rs. 6400 crore constituted 27% of the total revenue. The Consolidated Gross Revenue for the nine months period ended December 31, 2014 stood at Rs. 64487 crore registering a y-o-y growth of 9.9%.

The Company was successful in securing fresh orders worth Rs. 34580 crore at consolidated level during the quarter ended December 31, 2014, registering an impressive increase of 19% over the corresponding quarter of the previous year. The International order inflow during the quarter at Rs. 6300 crore constituted 18% of the total order inflow. Major orders during the quarter were secured by the Infrastructure segment.

On a cumulative basis, the order inflow for the nine-months period ended December 31, 2014 stood at Rs. 107785 crore, recording a healthy y-o-y growth of 16%. The order inflow during the nine-months period is predominantly driven by domestic orders bagged by Infrastructure and Power segments. The International order inflow constituted 26% of the total order inflow for the nine-months.

Consolidated Order Book of the group stood at Rs. 225788 crore as at December 31, 2014, higher by 17% on a y-o-y basis. International Order Book constituted 25% of the total Order Book.

The recurring consolidated Profit after Tax (PAT) for the quarter October to December 2014 at Rs. 867 crore recorded a significant y-o-y increase of 19%. Overall PAT for the quarter October to December 2014 grew by 9% over the corresponding quarter of the previous year, which included an exceptional gain.

Overall PAT in the nine-months period ended December 31, 2014 at Rs. 2695 crore registered an impressive growth of 31% on a y-o-y basis on the back of divestment gains.

Infrastructure Segment

Infrastructure Segment achieved Customer Revenue of Rs. 11553 crore for the quarter ended December 31, 2014 registering a smart y-o-y growth of 22%, driven by healthy execution. International sales constituted 22% of the total customer revenue of the segment during the quarter.

Infrastructure Segment secured new orders of Rs. 24032 crore consecutively during the third quarter of the year, recording a notable y-o-y increase of 26%. The order inflow during the quarter was mainly contributed by Heavy Civil Infrastructure, Water & Renewable Energy and Buildings & Factories businesses. International orders constituted around 13% of the total order inflow of the segment during the quarter.

The Order Book of the Segment grew 19% on a y-o-y basis and stood at Rs. 159543 crore as at December 31, 2014.

The segment recorded EBIDTA margin at 9.0% during the quarter ended December 31, 2014 vis-à-vis 10.4% recorded in the corresponding quarter of the previous year due to mix of the jobs under execution dominated by certain large jobs in their early stage of execution, yet to achieve the margin recognition threshold.

Power Segment

Power Segment recorded customer revenue of Rs. 1133 crore during the quarter ended December 31, 2014, registering a reduction of 30% over the corresponding quarter of the previous year due to low opening order book and delay in receipt of new orders.

Power Segment secured fresh orders of Rs. 185 crore for the quarter ended December 31, 2014, as against Rs. 619 crore secured in the corresponding quarter of the previous year.

The Order Book of the Segment grew 44% on a y-o-y basis and stood at Rs. 22368 crore as at December 31, 2014.

The segment EBIDTA margin stood at 19.7% for the quarter ended December 31, 2014 vis-à-vis 22.2% recorded in the corresponding quarter of the previous year, which included higher margins on jobs nearing completion

Metallurgical & Material Handling (MMH) Segment

The Customer Revenue of MMH Segment during the quarter ended December 31, 2014 at Rs. 690 crore, registered a reduction of 56% over the corresponding quarter of the previous year on account of lower executable order book.

MMH Segment secured fresh orders of Rs. 513 crore during the quarter ended December 31, 2014, registering a growth of 40% over the corresponding quarter of the previous year.

The Order Book of the Segment declined by 25% on a y-o-y basis and stood at Rs. 10580 crore as at December 31, 2014.

The EBIDTA margin of the segment declined to 9.3% for the quarter ended December 31, 2014 vis-à-vis 11.9% recorded in the corresponding quarter of the previous year.

Heavy Engineering Segment

Heavy Engineering Segment achieved Customer Revenue of Rs. 814 crore for the quarter ended December 31, 2014, registering a y-o-y decline of 25% over the corresponding quarter of the previous year mainly on account of lower opening order book and delayed order inflow. International sales constituted 40% of the total customer revenue of the segment

Heavy Engineering Segment secured fresh orders valued Rs. 733 crore, during the quarter ended December 31, 2014, recording a y-o-y growth of 21%. International orders constituted 43% of the total order inflow of the segment during the quarter.

The Order Book of the Segment stood at Rs. 8372 crore as at December 31, 2014.

The EBIDTA margin of the segment stood at 10.4% for the quarter ended December 31, 2014 vis-à-vis 15.3% recorded in the corresponding quarter of the previous year.

Electrical & Automation (E&A) Segment

E&A Segment recorded Customer Revenue of Rs. 1282 crore during the quarter ended December 31, 2014, registering a modest y-o-y increase of 3%. International sales constituted 29% of the total customer revenue of the segment for the quarter ended December 31, 2014.

The EBIDTA Margin of the E&A Segment stood at 16.0% for the quarter ended December 31, 2014 recording an increase over 13.9% earned during the corresponding quarter of the previous year due to favourable product mix and reduction in input prices.

Hydrocarbon Segment

Hydrocarbon Segment recorded Customer Revenue of Rs. 1778 crore registering an y-o-y decline of 26% over the corresponding quarter of the previous year mainly on account of delay in receipt of orders and lower opening order book. International sales constituted 52% of the total customer revenue of the segment for the quarter ended December 31, 2014.

Hydrocarbon Segment secured fresh orders valued Rs. 1777 crore, during the quarter ended December 31, 2014, registering a growth of 13% as compared to the corresponding quarter of the previous year. International orders constituted 23% of the total order inflow of the segment.

The Order Book of the Segment registered a y-o-y growth of 36% and stood at Rs. 15682 crore as at December 31, 2014.

The EBIDTA margin of the segment was negative at 4.8% for the quarter ended December 31, 2014 vis-à-vis positive margin of 1.6% recorded in the corresponding quarter of the previous year. The EBIDTA was negative on account of under-recoveries of overheads and additional cost overruns on jobs close out.

IT & Technology Services Segment

IT & Technology Services Segment achieved Customer Revenue of Rs. 1973 crore during the quarter ended December 31, 2014, registering a healthy y-o-y growth of 22%. International sales constituted 96% of the total customer revenue of the segment for the quarter ended December 31, 2014.

The EBIDTA Margin of the IT&TS Segment at 20.5% for the quarter ended December 31, 2014 recorded a marginal decline vis-à-vis 20.8% earned during the corresponding quarter of the previous year.

Developmental Projects Segment

Developmental Projects Segment registered Customer Revenue of Rs. 1145 crore during the quarter ended December 31, 2014, recording a significant y-o-y growth. During the quarter ended December 31, 2014, both the units of Rajpura Power Plant were fully operational and contributed substantially to the revenue growth.

The EBIDTA Margin of the Developmental Projects Segment for the quarter ended December 31, 2014 stood at 30.1%.

Financial Services Segment

Financial Services Segment recorded Customer Revenue of Rs. 1630 crore during the quarter ended December 31, 2014, registering a y-o-y growth of 23%, driven by growth in loan book and disbursements in retail as well as in wholesale finance business.

The operating margin of the Financial Services Segment for the quarter ended December 31, 2014 at 16.2% increased over 9.4% earned during the corresponding quarter of the previous year.

“Others” Segment

“Others” segment comprises Realty, Shipbuilding, Construction & Mining Equipment and Industrial Machinery & Product businesses.

Customer Revenue of Others Segment during the quarter ended December 31, 2014 at Rs. 2034 crore registered a significant increase of 60% over the corresponding quarter of the previous year, driven by growth achieved by Realty and Valves businesses. International sales constituted 12% of the total customer revenue of the segment.

During the quarter ended December 31, 2014, the segment EBIDTA margin improved to 27.7% as compared to margin of 17.5% earned in the corresponding quarter of the previous year aided by Realty business.

Outlook

Indicators are towards softening inflation and stable commodity prices. Recent measures taken by RBI are expected to ease liquidity position. The business sentiment has turned positive on the back of regulatory announcements and the Government’s resolve to create a business friendly environment in India. Once achieved, it would further strengthen the investor confidence and provide fillip to domestic manufacturing and infrastructure development. Early translation of various initiatives into sustainable & well administered policies and the ground level implementation of these would hold the key for broad based economic development.

While US economy remains resilient, global economic development remains subdued with Euro zone grappling under debt burden, slowing growth engine in China and Russia & Latin American countries reeling under the impact of falling oil prices. While investments in the Oil & Gas sector in the Middle East may get impacted due to decline in oil prices, it is expected that the spend on infrastructure development would continue in that region.

The Company, with its leadership position in multiple sectors and inherent capabilities, is well poised to capitalise on the upcoming business opportunities, particularly in the infrastructure, Power and Defence sectors, which are likely to benefit from the Government’s thrust.

Background:

Larsen & Toubro is a major Indian multinational engaged in technology, engineering, construction, manufacturing and financial services, with global operations. Its products and systems are marketed in over 30 countries worldwide. A strong, customer–focused approach and the constant quest for top-class quality have enabled L&T to attain and sustain leadership in its major lines of business for over seven decades.

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