Backed by a healthy order book, Larsen & Toubro Limited reported impressive financials for the quarter ended June 30, 2008. The Gross Sales at Rs. 6993 crore grew by 53% over the corresponding quarter of the previous year. The growth trend witnessed in the last fiscal in Order Inflow, continued during the first quarter of 08-09 with a rise of 24% over the corresponding quarter of the previous year. The Company’s leadership position and superior capability have aided in garnering fresh orders across its manufacturing, engineering and construction sectors.

Efficiency in project execution and effective cost management have enabled the Company to report good growth in profitability. Segment profitability has improved during the quarter in line with the higher margins realized on the company’s major business lines. Profit after Tax (PAT) for the quarter at Rs. 502 crore, grew by 33% over the corresponding quarter of the previous year.

The Company reported significant foreign exchange gain during the first quarter of the previous year. Excluding the incidence of such exchange gain, the net profit for the quarter grew by a robust 70% year-on-year basis.

Engineering & Construction (E&C) Segment

The E&C segment reported healthy growth in its Order Inflows during the quarter at Rs. 10516 crore registering an increase of 28% over the corresponding quarter of the previous year. The share of international orders booked during the quarter was 13% of the segment’s total Order Inflow.

E&C segment sales for the quarter ended June 30, 2008 at Rs. 5545 crore grew by 59% when compared with the corresponding quarter of the previous year. The share of export revenue represented 19% of the quarter’s segment revenue.

Astute contract management, a sound risk evaluation framework at all stages of project life cycle, strict adherence to quality and delivery deadlines and continuous cost optimization in executing large turnkey projects have enabled E&C Segment improve its operating margins to 10.5% during the quarter, compared to 9.6% of the corresponding quarter of the previous year.

As at the end of the quarter, the Segment’s Order Book stood at Rs. 56336 crore. International Order Book at Rs. 9058 crore represents 16% of the segment’s Order Book.

Electrical & Electronics Segment

The segment reported a modest growth in its Order Inflows and Sales, despite the sluggish demand prevailing during the quarter. The segment sales revenue at Rs. 578 crore for the quarter increased by 7% when compared with the corresponding quarter of the previous year. Export revenues constitute 12% of the segment revenues for the quarter. Spurt in input cost coupled with lower sales volume and competitive pressures have resulted in lower operating margins for the quarter.

Machinery & Industrial Products Segment

The segment achieved gross sales of Rs. 634 crore during the quarter, registering a healthy increase of 50% over the corresponding quarter of the previous year. The segment realized higher operating margins for the quarter due to improved performance by Valves, Industrial Machinery and Welding Systems businesses. Construction & Mining Equipment business continued to perform well during the current quarter.

Outlook

The robust order book of the Company provides healthy sales growth visibility over the next one to two years. Considering the importance of sustaining investments in critical sectors like infrastructure, power, hydrocarbon etc., the Company is optimistic of achieving growth in order inflows in the near to medium term. The Company will continue to look out for investment in growth enhancing opportunities. The Company’s focus on strategies and measures to counter inflation and changing economic conditions are expected to help sustain the profitability of its various businesses.

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