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Analysts Meet -May 2001

WELCOME. Analysts Meet -May 2001. Difficult Business Environment. Slowing Economy High fiscal deficits & limited government spending Investment Scenario not encouraging Fewer opportunities Slower pace of investments in Power and infrastructure sectors

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Analysts Meet -May 2001

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  1. WELCOME Analysts Meet -May 2001

  2. Difficult Business Environment • Slowing Economy • High fiscal deficits & limited government spending • Investment Scenario not encouraging • Fewer opportunities • Slower pace of investments in Power and infrastructure sectors • Many core sector industries still afflicted by excess capacity • Poor growth in capital goods and manufacturing sectors • Many states affected by drought and sparse rains

  3. Highlights of FY 2001

  4. Good performance in a challenging environment • Order Booking increases by 24% • Order backlog higher by 38% • Sales increase at 5% subdued due to low opening order backlog • Exports grow two-fold to Rs. 7.24 billion • Export of critical equipment Rs. 0.92 billion • Project Exports Rs. 3.7 billion • Cement/Clinker exports Rs. 2.09 billion • Substantial improvement in Q4 performance • Cement division returns good performance on the back of improved prices and operating efficiencies • E&C jobs cross threshold completion levels

  5. Engineering &Construction

  6. Major Orders Booked -Domestic Rs.Millions

  7. Major Orders Booked -Overseas Rs.Millions

  8. E&C - Financial Performance FY 2001 Rs. Billions FY 2001 FY 2000 % Change Order Booking 72.01 53.83 34% Sales 45.92 43.53 5% Order Backlog 96.82 70.29 38% PBDIT/Sales 11.7% 13.1%

  9. Cement

  10. Industry review • 2% negative growth in consumption • Low infrastructural / development expenditure • Severe drought conditions in certain states • Gujarat earthquake • Prices remained depressed till Nov’00 • Improvement in prices since Dec’00

  11. Divisional Performance - FY2001 • Volume growth of 8% • Margins improved due to price improvement in the last 4 months and cost reduction measures during the year • Margins could have been better but for increase in • Power & Fuel cost • Limestone royalty • Freight cost • Continued efforts on operating efficiencies • Arakkonam Grinding Unit commissioned in Dec’00 • Grinding unit at Durgapur under construction, expected to be commissioned by Dec’01

  12. Improving Power consumption

  13. CementFinancial Performance FY 2001 FY2001 FY2000 % Change Sales - Mio. Tons Domestic 8.95 9.02 (0.8%) Exports 2.36 1.49 58.4% Total 11.31 10.51 7.6% Sales - Rs. Billions. 21.94 19.35 13.4% Net Realisation - Rs/Ton 1251 1110 12.7% PBDIT/Sales 17.1% 12.5% PBDIT/Sales(incl.Fis.benefits) 19.0% 15.9%

  14. Other Segments

  15. EBG Financial Performance FY 2001 (Rs. Billions) FY2001 FY2000 % Change Sales 7.01 6.29 11% PBDIT/Sales 17.8% 21.1%

  16. Diversified Businesses Financial Performance FY 2001 (Rs. Billions) FY 2001 FY 2000 % Change Sales 3.39 5.07 (49.6%) PBDIT/Sales 5.3% 12.7% • Drop in Sales due to closure of Glass unit till July 2000, transfer of valves business to E&C and transfer of Pithampur unit to JV with Case • Drop in margin due to closure of Glass unit - impact Rs. 9 crores

  17. L&T Infotech

  18. LTITL back on growth trajectory • Year of consolidation and growth • Management team strengthened by drawing talents from L&T • CMM SEI Level 4 obtained • 60 new customers added • Several new alliances established with technology providers • Focus on domain offering • Telecom, financial services, power and related utilities, health care, manufacturing

  19. LTITL Rs. Billions FY 2001 FY2000 % Change Revenue 2.51 1.67 50% PBT 0.42 0.16 163% PAT 0.36 0.15 140%

  20. Summary Results FY 2001

  21. New Orders Booked

  22. Gross Revenues

  23. Order Backlog

  24. Segmentwise Revenue FY 2001 FY 2000

  25. Performance Indicators – FY 2001

  26. Balance Sheet

  27. Prospects FY 2002

  28. E&C Order Prospects Rs.Million

  29. E&C Order Prospects contd.. Rs.Million

  30. Outlook for Fiscal 2002 - E&C • Environment continues to be tough with limited opportunities • Current Order Backlog in excess of Rs. 95 bn • Good order booking prospects in power, infrastructure and refinery segments • Timing uncertain

  31. Outlook for Fiscal 2002 - Cement • Volume growth of 8% expected. • Key demand drivers being • Reconstruction work in Gujarat • Major concretising projects to be undertaken by NHAI • Further fiscal benefits extended to the housing sector • Demand may get a further boost with • Good monsoon • Improved spending on infrastructure • Price stability to continue in the medium term

  32. HR Thrust

  33. HR Challenges • Challenge of attracting talent • Attrition among the professionals, specially engineers • Need to nurture and retain talent/special skills • Need to identify and develop future Leaders • Improve productivity

  34. Multi-pronged strategy to Attract & Retain Talent MLP Career Avenues Movement to LTITL Compensation Increases for young talent Exceptional Professionals Very Good Performers & Hot Skilled Employees Competence Building Assessment Centres

  35. MTS & MLP Management Leaders (Nurturing talent from within L&T) Management Trainees (Taking talent from outside & nurturing within L&T) 250 MLs 40 MTs MANAGEMENT LEADERSHIP PROGRAMME (MLP)

  36. Efforts Towards Globalisation

  37. Globalisation Strategy • Pre–Qualification • Quality Accreditation • Country / Region Focus • Exploit JV relationships

  38. Prequalification • HED prequalified with • Refineries and oil & gas companies in Middle East, Far East, South Africa, Venezuala, Brazil and USA • International EPC contractors – Bechtel, Fluor Daniel, Chiyoda • E&C prequalified with Petronas, Mobil, Amoco • Construction group is well recognised in Middle East

  39. Quality Accreditation • Quality certification obtained for export to China, UK and Europe • Cement is manufactured to satisfy British and European standards • ECC’s international operations are ISO 9001 certified • Trained manpower conversant with quality standards of Australia, UK, Denmark, Germany and Canada • LTITL operations are SEI CMM Level 4 certified

  40. Regional Focus • Middle East • South East Asia covering ASEAN and SAARC countries

  41. Cement Restructuring Update

  42. Cement Restructuring -Current Status • Due diligence by potential candidates completed • JV Agreements and other documents are under discussion with potential candidates • Binding bids to be received after finalising the documents

  43. Thank You

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