Group Performance for the year ended March 31, 2017

Consolidated Results

PAT increases by 43%
Board recommends bonus issue 1:2 and
Pre-bonus dividend of ₹ 21 per equity share

Mumbai, May 29, 2017: Larsen & Toubro recorded Consolidated Gross Revenue of ₹110,011 crore for the year ended March 31, 2017, registering a y-o-y increase of 8%. The International revenue during the year at ₹37,653 crore constituted 34% of the total revenue.

The Consolidated Gross Revenue in the quarter January to March 2017 totalled ₹36,828 crore recording an increase of 12% on a y-o-y basis.

The Company successfully won fresh orders worth ₹142,995 crore at the group level during the year ended March 31, 2017 in the face of a challenging business environment. The International orders during the year at ₹41,507 crore constituted 29% of the total order inflow. Order wins in Infrastructure segment, Hydrocarbon and Heavy Engineering segments contributed to the orderflow during the year.

The order intake for the quarter ended March 31, 2017 at ₹47,289 crore grew by 9.6% y-o-y. International order inflow during the quarter at ₹9,044 crore constituted 19% of the order inflow for the quarter.

Consolidated Order Book of the group stood at a robust level of ₹261,341 crore, as at March 31, 2017, higher by 5% on a y-o-y basis. International Order Book constituted 27% of the total Order Book.

Consolidated Profit After Tax (PAT) for the year ended March 31, 2017 at ₹6,041 crore was higher by 43% y-o-y. The overall PAT for the quarter January to March 2017 stood at ₹3,025 crore higher by 29.5%, as compared to ₹2,335 crore recorded for the corresponding quarter of the previous year.

The Board of Directors has recommended for the approval of shareholders, the issue of bonus equity shares in the ratio of 1:2 [one bonus equity share of ₹2 each for every two equity shares of ₹2 each held].

The Board of Directors has recommended a dividend of ₹21.00 per equity share on the pre-bonus share capital. The bonus shares qualify for dividend. The post-bonus dividend per share works out to ₹14.00 per share.

Infrastructure Segment

Infrastructure Segment achieved Customer Revenue of ₹52,924 crore for the year ended March 31, 2017 registering a y-o-y growth of 8% on progress of jobs under execution. International revenue constituted 33% of the total customer revenue of the segment during the year. Execution impediments such as delayed payments and clearances, workfront availability and right of way issues impacted execution progress during the year. The pace of execution, however, gained traction during the quarter January-March 2017 with the Customer Revenue at ₹20,031 crore recording a y-o-y increase of 10%.

Infrastructure segment secured fresh orders of ₹78,492 crore during the year ended March 31, 2017. Bid deferrals, weak private investments in the domestic market and muted prospects in the international market adversely affected the order inflows of the segment. International orders at ₹14,711 crore constituted 19% of the total order inflow of the segment during the year.

During the quarter January-March 2017, the Segment recorded order inflow of ₹26,302 crore registering a decline of 9.6% over the corresponding quarter of the previous year.

The Order Book of the Segment grew 3.4% on a y-o-y basis and stood healthy at ₹193,796 crore as at March 31, 2017.

The EBITDA margin of the segment was lower at 10% during the year ended March 31, 2017 vis--vis 11% recorded in the previous year on account of additional cost incurred on extended stay and delays in award & commencement of a few projects.

Power Segment

Power Segment recorded customer revenue of ₹6,939 crore during the year ended March 31, 2017, registering a growth of 8% over the previous year with progress in coal & gas based projects under execution. International revenue constituted 19% of the total customer revenue of the segment during the year. For the quarter January-March 2017, the Customer Revenue was at ₹1,839 crore, recording y-o-y decline of 3%.

Power Segment secured fresh orders of ₹2,866 crore for the year ended March 31, 2017 lower by 1.2% y-o-y. International orders constituted 22.5% of the total order inflow of the segment during the year. Power sector continues to face multiple challenges and intense competition. Order Inflow of the Segment during the quarter ended March 31, 2017 stood at ₹237 crore.

The Order Book of the Segment stood at ₹13,824 crore as at March 31, 2017 recording a y-o-y decline of 25%.

The segment EBIDTA margin for the year ended March 31, 2017 was higher at 3.5% vis--vis 2.7% recorded in the corresponding previous year on execution progress, job mix and cost optimisation.

Heavy Engineering Segment

Heavy Engineering Segment recorded Customer Revenue of ₹3,149 crore registering a y-o-y growth of 2.2% over the previous year. International sales constituted 36% of the total customer revenue of the segment. The Customer Revenue during the quarter January-March 2017 stood at ₹937 crore recording a y-o-y decline of 2.3%.

Heavy Engineering Segment secured fresh orders valued ₹7,861 crore during the year ended March 31, 2017, which includes a major order in Defence sector. International orders constituted 14% of the total order inflow of the segment during the year.

During the quarter January-March 2017, the Segment recorded order inflow of ₹5,463 crore.

The Order Book of the Segment increased by 61% on a y-o-y basis backed by a healthy Order Inflow and stood at ₹11,997 crore as at March 31, 2017.

The EBIDTA margin of the segment improved significantly to 20% for the year ended March 31, 2017 vis--vis the margin of 0.6% in the previous year, on the back of operational efficiencies and cost savings. Margin in the previous year was adversely impacted by cost and time overruns on a few jobs.

While process plant and nuclear power equipment continues to witness global overcapacity , domestic defence and aerospace business is seeing improved traction.

Electrical & Automation (E&A) Segment

E&A Segment recorded Customer Revenue of ₹4,969 crore during the year ended March 31, 2017, registering a marginal growth of 0.6% y-o-y. International Revenue constituted 28.7% of the total customer revenue of the segment for the year ended March 31, 2017. The Customer Revenue during the quarter January-March 2017 stood at ₹1,552 crore recording a y-o-y increase of 7%.

The EBIDTA Margin of the E&A Segment strengthened to 15% for the year vis--vis 12.5% for the previous year due to benefits accruing from operational efficiencies.

Hydrocarbon Segment

Hydrocarbon Segment recorded Customer Revenue of ₹9,602 crore registering a y-o-y growth of 12% over the previous year, contributed by key projects witnessing strong execution. International sales constituted 49% of the total customer revenue of the segment for the year ended March 31, 2017. The Customer Revenue during the quarter January-March 2017 stood at ₹2,576 crore recording a y-o-y growth of 6%.

Hydrocarbon Segment secured fresh orders valued ₹18,525 crore during the year ended March 31, 2017, recording an impressive growth of 81% over the previous year on receipt of large international orders which constituted 67 % of the total order inflow of the segment. The order inflow for the quarter January-March 2017 stood at ₹7,276 crore, which more than doubled on vis--vis ₹4,962 crore recorded in the corresponding quarter of the previous year.

The Order Book of the Segment registered a y-o-y growth of 60% backed by healthy order inflow and stood at ₹24,823 crore as at March 31, 2017.

Hydrocarbon segment recorded improvement in the EBIDTA Margin at 6.8% for the year ended March 31, 2017 vis--vis 0.6% in the previous year as jobs progressed and achieved margin recognition threshold. Legacy international jobs, which had impacted margins in the previous years, have been substantially closed out.

IT & Technology Services (IT&TS) Segment

IT & Technology Services Segment achieved Customer Revenue of ₹9,731 crore during the year ended March 31, 2017, registering y-o-y growth of 10%. International sales constituted 94% of the total customer revenue of the segment for the year ended March 31, 2017. The Customer Revenue during the quarter January-March 2017 stood at ₹2,484 crore recording a y-o-y growth of 8%.

The EBIDTA Margin of the IT&TS Segment was 21.2% for the year ended March 31, 2017 vis--vis 20.5% for the previous year on account of improved manpower utilization & cost optimization.

Financial Services Segment

Financial Services Segment recorded Customer Revenue of ₹8,545 crore during the year ended March 31, 2017, registering a y-o-y growth of 11%, driven by growth in loan assets and disbursements in the focus areas of retail and wholesale finance business.

The operating margin of the Financial Services Segment for the year ended March 31, 2017 at 10.1% decreased as compared to 18.4% earned during the previous year due to higher provisioning for non-performing assets ahead of the statutory requirements.

Developmental Projects Segment

Developmental Projects Segment registered Customer Revenue of ₹4,028 crore during the year ended March 31, 2017, recording a 7% decline over the previous year.

The EBIDTA Margin of the Developmental Projects Segment for the year ended March 31, 2017 stood at 2.3% vis--vis 6.8% earned during the previous year due to provisioning for certain disputed receivables.

"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 year ended March 31, 2017 at ₹10,124 crore registered an increase of 11% over the previous year, driven by growth achieved by Metallurgical & Material Handling Systems and Realty businesses. International sales constituted 23% of the total customer revenue of the segment.

During the year ended March 31, 2017, the segment EBIDTA margin stood at 11% as compared to margin of 15% in the previous year due to revenue mix in realty business and inventory write down in shipbuilding business.

Outlook

Economic recovery in the country is expected to steadily improve in the current year backed by structural reforms and overcoming the short term effects of demonetization that happened last year. The government has emphasized its commitment to GST, increased private sector participation in defence business, higher allocation to infrastructure segments, and is moving ahead on key initiatives such as better tax compliance, restructuring the troubled power distribution sector, tackling NPAs of banks and plugging revenue leakages through measures like Aadhar and Jan Dhan bank accounts. Implementation of GST is expected to have far reaching effects by bringing large parts of the informal economy into the formal system where compliance and accountability standards are of a higher order.The government's thrust on key infrastructure sectors such as transportation, power, affordable housing, smart cities will be strong driver for stable economic growth. Supportive monetary policy aided by normal monsoon and contained inflation will provide the requisite stimulus.

The global economic scenario is marked by protectionist policies being adopted by developed countries. The outlook for Asia and Pacific region is encouraging with China & Japan expecting a healthy domestic demand in the near-term. Global growth could get a boost from economic stimulus in some large economies, particularly the United States. International oil prices are expected to be reasonably buoyant although range bound thus bringing down the level of budget deficits in Middle East and allowing the governments to have additional fiscal space to increase investments.

Amidst this backdrop, the Company continues to focus on profitable execution of the large Order Book, selective order picking, on-time deliveries & operational excellence through digitalization. The Company is also emphasizing on cost competitiveness, continuous optimization of working capital, restructuring of its business portfolio and value creation with an aim to enhance its Return on Equity.

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.

STATEMENT OF AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED MARCH 31, 2017

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