Group Performance for the quarter ended December 31, 2017

Consolidated Revenue up by 10%
Consolidated PAT increases by 53%

Mumbai, Jan 31, 2018: Larsen & Toubro recorded Consolidated Gross Revenue of ₹28,747 crore for the quarter ended December 31, 2017, registering an increase of 9.4% on a y-o-y basis, with some improvement in execution momentum and growth in services business. Adjusted for excise duty subsumed in GST, the revenue growth was 10%. International revenues during the quarter at ₹10,110 crore constituted 35% of the total revenue, vis--vis 37% in the previous year. For the nine months April-December 2017, the Consolidated Gross Revenue at ₹79,184 crore recorded a y-o-y increase of 8.7% adjusted for Excise Duty.

The Company won fresh orders worth ₹48,130 crore at the group level during the quarter ended December 31, 2017, registering a growth of 38%, with strong ordering activity witnessed during the quarter. International orders at ₹8,835 crore constituted 18% of the total order inflow, vis--vis 34% in the corresponding period of the previous year. On a cumulative basis, the order inflow for the nine months period ended December 31, 2017 stood at ₹103,213 crore, registering a growth of 8%. Major orders were secured by Infrastructure and Hydrocarbon Segments.

Consolidated Order Book of the group stood at ₹270,727 crore as on December 31, 2017, higher by 4.7% on a y-o-y basis. The International Order Book constituted 25% of the total Order Book.

Consolidated Profit After Tax (PAT) for the quarter ended December 31, 2017 at ₹1,490 crore was higher by 53% y-o-y. For the nine months period ended December 31, 2017, the overall PAT was ₹4,202 crore, higher by 39% y-o-y, as compared to ₹3,017 crore recorded for the corresponding period of the previous year.

Infrastructure Segment

Infrastructure Segment achieved customer revenue of ₹13,801 crore for the quarter ended December 31, 2017, registering a y-o-y growth of 11%. Transportation, Infrastructure, Water & Effluent Treatment and Heavy Civil businesses contributed to the revenue growth during the quarter. International revenues constituted 32% of the total customer revenue of the segment.

During the quarter ended December 31, 2017, Infrastructure segment won fresh orders of ₹26,797 crore, registering a growth of 25%, despite significant order deferrals. Order wins in the quarter include one large value order received by Heavy Civil business in addition to a mix of domestic and international orders being received by various other businesses of Infrastructure segment. International orders contributed to around 15% of the total order inflow of the segment during the quarter.

The Order Book of the Segment grew 3% on a y-o-y basis and stood at ₹199,297 crore, as on December 31, 2017.

The segment EBIDTA margin at 7.8% during the quarter ended December 31, 2017 was lower compared to the previous year at 8.3% reflecting the mix and stage of completion of jobs under execution.

Power Segment

Power Segment recorded customer revenues of ₹1,268 crore during the quarter ended December 31, 2017, registering a y-o-y decrease of 22%, due to lower order book. International revenues constituted 21% of the total customer revenue of the segment during the quarter.

Power Segment secured fresh orders of ₹1,720 crore for the quarter largely represented by an international gas-based power plant order received in Bangladesh. On the domestic front, this sector continues to witness muted ordering activity and aggressive competition.

The Order Book of the Segment stood at ₹10,716 crore as on December 31, 2017.

The segment EBIDTA margin for the quarter ended December 31, 2017 at 2.5% recorded improvement over previous year at 1.4%, with progress in international jobs under execution.

Heavy Engineering Segment

Heavy Engineering Segment recorded customer revenues of ₹923 crore registering a y-o-y increase of 16%, on the back of progress achieved in defence jobs. International Revenues constituted 23% of the total customer revenue of the segment.

Heavy Engineering Segment secured fresh orders valued ₹1,278 crore during the quarter ended December 31, 2017, recording a significant y-o-y increase over a low base. International orders constituted 21% of the total order inflow of the segment during the quarter.

The Order Book of the Segment stood at ₹12,507 crore as on December 31, 2017, registering a substantial growth over previous year on the back of good order wins in defence.

The EBIDTA margin of the segment marginally dropped to 18.8% for the quarter ended December 31, 2017, compared to 20.3% for previous period, reflecting stage of execution of jobs in the Order Book portfolio.

Electrical & Automation (E&A) Segment

E&A Segment customer revenues at ₹1,231 crore for the quarter ended December 31, 2017, dropped by 4% over previous year. On a like-to-like basis, revenues adjusted for Excise Duty grew by 3%. International Revenues constituted 28% of the total customer revenue of the segment for the quarter ended December 31, 2017.

The Order Book of the Segment registered a y-o-y decline of 13% and stood at ₹2,879 crore as on December 31, 2017.

The EBIDTA margin of the E&A Segment strengthened to 17.3% for the quarter ended December 31, 2017, from 15.6% for the corresponding quarter of the previous year, reflecting the benefits from the operational excellence initiatives undertaken.

Hydrocarbon Segment

Hydrocarbon Segment achieved customer revenue of ₹3,083 crore, for the quarter ended December 31, 2017, registering a robust y-o-y growth of 29% over the corresponding period of the previous year, on the back of a strong order book. International revenues constituted 63% of the total customer revenue of the segment for the quarter ended December 31, 2017.

Hydrocarbon Segment secured fresh domestic orders valued at ₹7,468 crore during the quarter ended December 31, 2017, registering significant y-o-y growth on low base. International orders during nine months ended December 31, 2017 constituted 34% of the total order inflow of the segment.

The Order Book of the Segment registered a y-o-y growth of 43% and stood at ₹29,172 crore as on December 31, 2017.

The segment recorded improved EBIDTA margin at 8.0% for the quarter October to December 2017 vis--vis 7.8% recorded in the corresponding quarter of the previous year, as jobs under execution gained momentum.

IT & Technology Services (IT&TS) Segment

IT & Technology Services Segment achieved customer revenue of ₹2,874 crore during the quarter ended December 31, 2017, registering a y-o-y growth of 17%. International Revenue constituted 94% of the total customer revenue of the segment for the quarter.

The EBIDTA margin of the IT&TS Segment was 21.3% for the quarter ended December 31, 2017 vis--vis 21.5% for the corresponding quarter of the previous year.

Financial Services Segment

Financial Services Segment recorded customer revenue of ₹2,634 crore during the quarter ended December 31, 2017, registering a y-o-y growth of 25%, driven by growth in loan book and disbursements in focused businesses. The Segment also witnessed a strong growth in its Investment and Wealth Management businesses.

Operating margin for the quarter increased to 14.6% vis--vis 12% during the corresponding quarter of the previous year on higher fee income and cost control measures.

Developmental Projects Segment

Developmental Projects Segment registered customer revenue of ₹1,031 crore during the quarter ended December 31, 2017, vis--vis ₹905 crore in the corresponding quarter of the previous year. The Companyߴs Metro Rail concession in Hyderabad was partially commissioned during the quarter.

The EBIDTA margin of the Developmental Projects Segment for the quarter ended December 31, 2017 turned positive 8.5% vis--vis negative 10.6% during the corresponding quarter of the previous year. The improvement is the outcome of revenue recognition resumption consequent to a favourable Supreme Court judgement in the case of Nabha Power.

❝Others❞ Segment

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

Customer Revenue of the Segment during the quarter ended December 31, 2017 at ₹1,902 crore registered a decline of 15% over the corresponding quarter of the previous year, mainly due to depleted order book in Valves and exclusion of revenues from two subsidiaries divested during the year. International Revenue constituted 16% of the total customer revenue of the segment.

The segment margin for the quarter marginally declined to 15.3% as compared to margin of 15.7% earned in the corresponding quarter of the previous year.

Outlook

The country has seen a slew of transformative reform measures in the last one year which are likely to yield medium to long term macro economic gains, though accompanied by shorter term disruptions. Measures like demonetisation, GST, RERA and the Insolvency and Bankruptcy Code are all aimed at enabling growth, facilitating a conducive business environment, widening the tax base and channelising investments in essential infrastructure needs of the country. All these measures along with faster implementation of supportive policies, are likely to be the vital levers of growth in a favorable economic environment and bodes well for the future of Indian economy.

Most major economies are witnessing growth conditions amidst volatile geo-political developments. Rise in oil and commodity prices are encouraging review of market expansion strategies and investment opportunities. Challenges to growth in global trade continue with protectionist economic policies and geo-political dynamics. Tax reforms in USA, Middle East and elsewhere are resetting the global competitive landscape.

The Company seeks to pursue interesting opportunities for growth both in domestic and international markets. The Company possesses the necessary capability to continuously rebalance its approach and strategy to benefit from the dynamic business environment.

Overall, the Company continues to focus on profitable growth, capital efficiency and productivity measures with the aim of enhancing Return on Equity.

Background

Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 17 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 CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2017

Consolidated unaudited segment-wise Revenue, Result, Total assets and Total liabilities in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended: