Performance for the year ended March 31, 2008

Net profit for the year surges 55% Robust revenue growth of 41% during the year Declares 1:1 Bonus Issue

Mumbai, May 29, 2008: Larsen & Toubro Limited (L&T), the leading engineering and construction conglomerate, has reported excellent results for the year ended March 31, 2008, reflecting an all-round superior business performance. The Gross Sales & Service revenue registered a y-o-y growth of 40.7% at Rs. 25187 crore. The share of revenue from international operations constituted 16.4% of the Gross Revenue. Continuing the growth trend set in the past, the Order Inflow rose by 37% over the previous year, which validates the Company’s leadership
position in infrastructure-building, turnkey project execution and manufacturing businesses.

L&T’s premium market position and delivery leadership have enabled it to report healthy financials for the quarter ended Mach 31, 2008. While Order Inflow for the quarter registered a growth of 56%, Gross Sales & Service revenue at Rs.8578 crore for the quarter grew by 34.7%, when compared with the corresponding quarter of the previous year.

Profitability posted smart improvement aided by judicious selection of orders, timely execution of jobs and continuous cost optimization efforts, despite rising input prices. Profit after Tax (PAT) for the year, including exceptional gains, at Rs.2173 crore surged by 54.9% over the PAT of Rs. 1403 crore for the previous year. Excluding exceptional gains, PAT for the year ended March 31, 2008 grew by 51.6%

Similarly, PAT of Rs. 967 crore for the quarter ended March 31, 2008, grew by 38% over the PAT of Rs. 701 crore for the corresponding quarter of the previous year.Excluding exceptional gains, PAT for the quarter ended March 31, 2008 increased by 27%.

Operating Profits (EBITDA) for the year at Rs. 3405 crore grew by 54%, which translates into an improvement in the operating margins by 1 percentage point over the previous year. Strong infrastructure and industrial growth, buoyant market for capital goods sector and a sound risk management framework – all these factors together contributed to the robust growth in Revenue & Profitability during the year.

The Board of Directors has recommended a final dividend of Rs.15/- per equity share. Including the interim dividend of Rs.2/- per share already paid, the total dividend for the year works out to Rs.17/- per equity share.

The Board has also recommended for the approval of the shareholders, an issue of bonus equity shares in the ratio of 1:1 ( one bonus share of Rs.2/- each for every equity share held).

Group Financials

The strong financial performance of the Company was adequately complemented by the other companies in the Group leading to a growth in Group performance both in terms of Revenue and Profitability. The Group registered a y-o-y increase of 43% in the Total Income which stood at Rs. 29848 crore for the year ended March 31, 2008.

The Group PAT for the year 2007-08 excluding exceptional gains on divestitures stood at Rs. 2304 crore posting a healthy growth of 27% over the similar PAT of Rs. 1810 crore for the previous year.

Engineering & Construction (E&C) Segment

The core infrastructure and industrial sectors have attracted sizeable investment in the recent times, driven by sound fiscal and economic policies of the government. The manufacturing sector is also on a growth mode to meet not only the domestic demand but also provide a cost effective sourcing avenue to some of the global majors. Capitalizing on the opportunities provided by these sectors, the E&C segment reported a significant growth in its Order Inflows during the
year 2007-08 at Rs. 35392 crore and posted an increase of 40% over the previous year. The share of international orders booked during the year was 17% of the segment’s total Order Inflow.

E&C segment revenues for the year ended March 31, 2008 at Rs. 19377 crore registered an increase of 44% when compared to the previous year. The share of export revenues represented 16 % of the year’s segment revenues.

Driven by operational excellence initiatives and improved execution efficiencies, the segment Operating Margin saw a noteworthy improvement of 1.3 percentage point for the year ended March 31, 2008 over the previous year.


The segment ended the year with a healthy Order Book at Rs. 50931 crore. The international Order Book at Rs. 8210 crore represented 16% of the segment’s Order Book.


The details of the major orders secured during the year ended March 31, 2008 are given in Annexure I.

Electrical & Electronics Segment

Electrical & Electronics segment reported a steady growth in its Order Inflows and Sales, reflecting the Company’s dominant position in this sector. The segment revenues at Rs. 2663 crore for the year ended March 31, 2008 was higher by 29% when compared to the previous year. Electrical Standard Products and Systems, Control & Automation and Petrol Dispensing Pump businesses realized higher volumes and price differentials from the market so as to neutralize the adverse impact of rising input costs. In addition, capacity enhancement and improved product offerings enabled it to optimize the cost of production and distribution, thereby sustaining the profitability during the year.

Machinery & Industrial Products Segment

Backed by strong demand from the manufacturing and construction sectors, the segment posted gross revenues of Rs. 2411 crore during the year ended March 31, 2008 registering a healthy increase of 31% over the previous year. Increased
activity in the domestic industrial, infrastructure and construction sectors has benefited Industrial Valves, Construction Equipment and welding systemsbusinesses significantly. Besides increased volumes, higher price realization in the domestic market and improved manufacturing efficiencies for machinery businesses contributed to higher profitability of the segment.

Outlook

While macro economic fundamentals continue to inspire confidence, the recent slowdown in the industrial sectors, coupled with rising input costs, particularly oil price, and credit squeeze, may have an impact on the capital goods sector’s ability to sustain the growth momentum in the medium term. However, in view of the current pace of infrastructure development in the country and the neighbouring regions, the immediate prospects for growth appear promising. The company’s businesses are geared up to harness the full potential of the available opportunities. With a sizable order book, the company is reasonably confident of producing healthy results in the near term.

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED MARCH 31 , 2008

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