Group Performance for the quarter ended December 31, 2016

Mumbai, Jan 28, 2017: Larsen & Toubro recorded Consolidated Gross Revenue of ₹26287 crore for the quarter ended December 31, 2016, registering an increase of 1.4% on a y-o-y basis. The International revenue during the quarter at ₹9590 crore constituted 36% of the total revenue. For the nine months April-December 2016, the Consolidated Gross Revenue at ₹73183 crore recorded a y-o-y increase of 5.9%.

The Company garnered fresh orders worth ₹34885 crore at the group level during the quarter ended December 31, 2016, amid subdued business environment. The International orders at ₹11865 crore constituted 34% of the total order inflow. On a cumulative basis, the order inflow for the nine months period ended December 31, 2016 stood at ₹95706 crore. Major orders were secured by Infrastructure and Hydrocarbon Segments.

Consolidated Order Book of the group stood healthy at ₹258585 crore as on December 31, 2016, higher by 1.4% on a y-o-y basis. International Order Book constituted 29% of the total Order Book.

Consolidated Profit After Tax (PAT) for the quarter ended December 31, 2016 at ₹972 crore, was higher by 39% y-o-y. For the nine months period ended December 31, 2016, the overall PAT was ₹3017 crore, higher by 59% y-o-y, as compared to ₹1898 crore recorded for the corresponding period of the previous year.

Infrastructure Segment

Infrastructure Segment achieved customer revenue of ₹12467 crore for the quarter ended December 31, 2016, registering a y-o-y growth of 6%. Delays in obtaining clearances and work slowdown, due to abrupt liquidity constraints of customers aggravated by demonetisation, impacted progress of jobs under execution especially in Buildings & Factories business. Transportation Infrastructure and Water & Effluent Treatment businesses contributed to the revenue growth during the quarter. International revenue constituted 37% of the total customer revenue of the segment.

During the quarter ended December 31, 2016, Infrastructure segment won fresh orders of ₹21516 crore despite sluggish investment climate. Some of the anticipated orders did not materialize due to delays in bid process. The order inflow during the quarter was contributed by Heavy Civil Infrastructure, Power Transmission & Distribution, Building & Factories and Water & Effluent Treatment businesses. International orders contributed to around 33% of the total order inflow of the segment during the quarter.

The Order Book of the Segment grew 2% on a y-o-y basis and stood at ₹194315 crore, as on December 31, 2016.

The segment recorded EBIDTA margin at 8.3% during the quarter ended December 31, 2016, vis--vis 7.2% recorded in the corresponding quarter of the previous year. The margin improvement during the quarter was driven by good progress on jobs under execution and cost optimization initiatives.

Power Segment

Power Segment recorded customer revenue of ₹1633 crore during the quarter ended December 31, 2016, registering a y-o-y decrease of 23%, due to lower order book. International revenue constituted 14% of the total customer revenue of the segment during the quarter.

Power Segment secured fresh orders of ₹297 crore for the quarter ended December 31, 2016. On a cumulative basis, the order inflow of the segment for the nine-month period ended December 31, 2016 stood at ₹2629 crore, registering a modest growth of 1% y-o-y. International orders constituted 23% of the total order inflow of the segment during the nine-month period ended December 31, 2016.

The Order Book of the Segment stood at ₹15684 crore as on December 31, 2016.

The segment EBIDTA margin for the quarter ended December 31, 2016 was lower at 1.5% vis--vis 5.4% recorded in the corresponding quarter of the previous year, reflecting the mix and stage of completion of jobs under execution.

Heavy Engineering Segment

Heavy Engineering Segment recorded customer revenue of ₹798 crore registering a y-o-y decrease of 8%, on account of deferral in award of targeted orders and tapering opening order book. International Revenue constituted 42% of the total customer revenue of the segment.

Heavy Engineering Segment secured fresh orders valued ₹601 crore during the quarter ended December 31, 2016, recording a y-o-y increase of 80% on a low base. International orders constituted 9% of the total order inflow of the segment during the quarter.

The Order Book of the Segment stood at ₹7494 crore as on December 31, 2016.

The EBIDTA margin of the segment improved significantly to 20.3% for the quarter ended December 31, 2016, on the back of better execution progress and cost savings vis--vis low margin of 1.5% impacted by cost and time overruns during the corresponding quarter of the previous year.

Electrical & Automation (E&A) Segment

E&A Segment recorded customer revenue of ₹1282 crore during the quarter ended December 31, 2016, registering a marginal growth of 1% y-o-y. Revenue accrual during the quarter was impacted, due to non-receipt of orders by Metering and Protection Systems business and delayed international order inflows. International Revenue constituted 27% of the total customer revenue of the segment for the quarter ended December 31, 2016.

The EBIDTA margin of the E&A Segment strengthened to 15.7% for the quarter ended December 31, 2016, recording an increase over 11.1% earned during the corresponding quarter of the previous year driven by favourable product mix and improved operational efficiencies.

The Order Book of the Segment registered a y-o-y decline of 2% and stood at ₹3300 crore as on December 31, 2016.

Hydrocarbon Segment

Hydrocarbon Segment achieved customer revenue of ₹2398 crore for the quarter ended December 31, 2016, registering a y-o-y growth of 14% over the corresponding period of the previous year. International revenue constituted 52% of the total customer revenue of the segment for the quarter ended December 31, 2016.

Hydrocarbon Segment secured fresh orders valued ₹2638 crore during the quarter ended December 31, 2016, taking the total order intake for the nine months ended December 31, 2016 to ₹11249 crore, which more than doubled on y-o-y basis. International orders during nine months ended December 31, 2016 constituted 74% of the total order inflow of the segment.

The Order Book of the Segment registered a y-o-y growth of 57% and stood at ₹20375 crore as on December 31, 2016.

Hydrocarbon segment recorded improvement in the EBIDTA margin at 7.8% for the quarter October to December 2016 vis--vis 1.5% recorded in the corresponding quarter of the previous year, as jobs under execution gained momentum. Legacy international jobs, which had impacted margins in the previous year, have been substantially closed out.

IT & Technology Services (IT&TS) Segment

IT & Technology Services Segment achieved customer revenue of ₹2454 crore during the quarter ended December 31, 2016, registering a y-o-y growth of 9%. International Revenue constituted 93% of the total customer revenue of the segment for the quarter ended December 31, 2016.

The EBIDTA margin of the IT&TS Segment was 21.5% for the quarter ended December 31, 2016 vis--vis 22.1% for the corresponding quarter of the previous year.

Developmental Projects Segment

Developmental Projects Segment registered customer revenue of ₹905 crore during the quarter ended December 31, 2016, vis--vis ₹1485 crore recorded in the corresponding quarter of the previous year.

The EBIDTA margin of the Developmental Projects Segment for the quarter ended December 31, 2016 stood at negative 10.6% vis--vis positive 5.8% earned during the corresponding quarter of the previous year due to provisioning towards certain disputed receivables.

Financial Services Segment

Financial Services Segment recorded customer revenue of ₹2108 crore during the quarter ended December 31, 2016, registering a y-o-y growth of 11%, driven by growth in loan assets and disbursements mainly in Microfinance & Housing finance and Wholesale Finance.

The PAT of the Financial Services Segment for the quarter ended December 31, 2016 at ₹123 crore was higher by 40% y-o-y compared to ₹88 crore recorded in the corresponding quarter of the previous year.

"Others" Segment

"Others" segment comprises Metallurgical & Material Handling Systems, Realty, Shipbuilding, Construction & Mining Equipment and Industrial Machinery & Product businesses.

Customer Revenue of "Others" Segment during the quarter ended December 31, 2016 at ₹2242 crore registered a moderate increase of 3% over the corresponding quarter of the previous year on the back of weak demand. International Revenue constituted 23% of the total customer revenue of the segment.

The segment margin for the quarter declined to 15.8% as compared to margin of 17.4% earned in the corresponding quarter of the previous year.

Outlook

Global economic revival hinges on the outcome of post Brexit events in the UK, change in the economic policy stance in the US, political developments in some of the major European countries and China's policy responses to slowdown. Recovery of commodity prices and oil price uptick have provided a positive twist to the global economic revival predictions.

Domestic growth appears to take longer time as investment momentum remains weak and the banking system is burdened by debt overhang. Government's initiatives to curb the parallel economy and make a transition to cashless economy has caused disruption whose impact on the business sentiment is yet to be conclusively assessed. The challenging business conditions are expected to continue in the next few quarters until the government moves to lift growth thru' infra spend and tax reforms take effect.

The Company's focus would be on selective pursuit of opportunities, working capital reduction, cost optimization thru' supply chain efficiencies and productivity enhancement thru' digitalization initiatives. Aided by these initiatives, the Company is hopeful of a satisfactory performance given the current business environment.

Background

Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 16 billion in revenue. It operates 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.

STATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2016

Unaudited Consolidated Segment-wise Revenue, Result, Assets and Liabilities in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015