Robust Performance for the quarter ended September 30, 2007

Profit after Tax grows by 73% Sales rise by 47%

Mumbai, October 26, 2007: Larsen & Toubro Limited (L&T) reported strong performance registering a y-o-y growth of 47% in Gross Sales & Service Revenue at Rs. 5574 crore for the quarter ended September 30, 2007. The share of revenue from international operations during the quarter constituted 17% of the Gross Revenue. Order Inflow during the quarter at Rs. 7547 crore grew by 26% over the same period of the previous year signifying the Company’s sustained leadership position in construction and turnkey projects and high end manufacturing business.

A strong impetus to infrastructure sector supported by sizeable capital investment programs and a stable market share for Company’s products have contributed to robust growth in Sales and Order Inflow during the quarter.

Profit after Tax (PAT) at Rs. 348 crore for the quarter ended September 30, 2007 registered a healthy growth of 73% over the corresponding quarter of the previous year. Continued improvement in operational efficiencies and a judicious selection of orders with acceptable risk profile have enabled it to register an increase in the Operating Margins by 1.6 percentage point over the corresponding quarter of the previous year.

For the Half year ended September 30, 2007, Customer Order Inflow at Rs. 17428 crore has increased by 30% over the corresponding period of previous year. The Gross sales at Rs. 10148 crore and Profit after Tax at Rs. 725 crore also registered smart growth by 38% and 102% respectively, over the corresponding period of the previous year.

Engineering & Construction (E&C) Segment

Driven by a slew of opportunities in the infrastructure and the oil and gas sectors the E&C segment reported a healthy growth in its Order Inflow during the quarter over the corresponding quarter of the previous year. The Order Inflow at Rs. 5905 crore for the quarter ended September 30, 2007 registered an increase of 27% over the corresponding quarter of the previous year. The share of international orders booked during the quarter was 26% of the segment’s total Order Inflow. The quality and the complexity of the orders bagged reflect the Company’s technical skills and dominant position in the infrastructure and hydrocarbon sectors.

The segment revenue for the quarter ended September 30, 2007 at Rs. 4263 crore reflect an increase of 55% when compared to the same period of the previous year. The share of international revenue represented 17 % of the segment revenue. Cumulatively for the Half year ended September 30, 2007, the segment revenues at Rs. 7755 crore grew by 44% over the corresponding period of the previous year, reflecting continued growth momentum.

Backed by efficient contract management and better execution capabilities, the Segment registered a smart improvement in Operating Margin of about 3.1 percentage point during the quarter over the corresponding quarter of the previous year.

The segment ended the quarter with a healthy Order Book at Rs. 42028 crore. International Orders at Rs. 7274 crore represented 17% of the segment’s Order Book.

Electrical & Electronics Segment

Electrical & Electronics segment maintained a robust growth in its Order Inflow and Sales, reflecting the Company’s commanding position in this sector. The segment revenue at Rs. 672 crore for the quarter ended September 30, 2007 was higher by 44 % when compared to the corresponding quarter of the previous year. Electrical Standard Products & Systems, Control & Automation & Metering & Protection Systems businesses continued to pursue initiatives to upgrade production facilities, develop and improve product lines with a view to sustaining the leadership position in the market.

Machinery & Industrial Products Segment

The segment achieved Revenue of Rs. 592 crore from its businesses during the quarter ended September 30, 2007, registering a healthy increase of 36% over the same period of the previous year. Robust demand from industrial, infrastructure and construction sectors continues to benefit the businesses of this segment. The segment improved its profitability due to higher price realisation and better manufacturing efficiency.

Outlook

The fundamentals in the economy continue to support the strong growth trajectory of the capital goods sector with robust investments in infrastructure, power, hydrocarbon and minerals & metal sectors. On the back of strong oil prices, the Middle East region is expected to further ramp up investment in oil & gas production and distribution facilities. Given the favourable investment climate, the Company is expected to benefit from the order flows from these sectors. With a healthy Order Book, the Company is confident of sustaining the growth momentum both in terms of Revenue and Profitability in the near to medium term.

 

Unaudited Financial Results for the Quarter Ended September 30, 2007

Segment-wise Revenue, Result and Capital Employed in terms of Clause 41 of the listing agreement