Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — FY2003 Earnings Presentation
37 slides from Larsen & Toubro's earnings presentation, May 2003
Slide 1: Performance for FY 2003
Larsen & Toubro Limited Performance for FY 2003 May 2003 1
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward looking statements concerning L&T’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The r
Slide 3: Strong performance in a difficult environment
Strong performance in a difficult environment Rs. Billions Good growth in order booking in FY 03 FY 02 % Change difficult circumstances Order Booking 132.11 108.20 22% Revenue growth reflects the strong Sales 98.70 81.67 21% order backlog at the beginning of the year Other Income 2.54 2.18 17% T
Slide 4: Balance Sheet
Balance Sheet Rs. Billions Marginal reduction in total assets 31-Mar-03 31-Mar-02 despite a 21% increase in sales SHAREHOLDERS' FUNDS – Focus on containing working capital Share Capital 2.49 2.49 – Capital expenditure contained to Rs. Reserves 33.14 30.95 970 million Net Worth 35.63 33.44 Reduct
Slide 5: Segment-wise revenues
Segment-wise revenues FY 03 FY 02 Others Others 4% Elect. 5% Elect. 8% 8% Cement Cement 26% 30% E&C 62% E&C 57% 5
Slide 6: Segment-wise share of EBITDA
Segment-wise share of EBITDA FY 03 FY 02 Others Others 3% Elect. Elect. 1% 11% 9% E&C E&C Cement 45% 48% Cement 45% 38% 6
Slide 7: Segment-wise share of EBIT
Segment-wise share of EBIT FY 03 FY 02 Others Others 1% Elect. Elect. 1% 11% 14% Cement 24% Cement 36% E&C E&C 52% 61% 7
Slide 8: A challenging economic environment
A challenging economic environment Growth % 98-99 99-00 00-01 01-02 02-03 (E) GDP 6.5 6.1 4.4 5.6 4.4 Industrial Growth 4.1 6.6 5.1 2.8 5.8 Manufacturing Sector 4.4 7.2 5.4 2.9 5.8 Capital Goods 12.6 7.0 1.7 (3.4) 10.7 Agriculture 8.1 (0.7) (6.7) 7.3 (3.1) Falling growth rates in India Low level
Slide 9: A vision to meet the challenges
A vision to meet the challenges ….L&T shall be an ….Indian multinational… …committed to enhancing shareholder value….. …constantly creating value and attaining global benchmarks….. 9
Slide 10: How we responded
How we responded Thrust on “internationalization” of operations to diversify markets – Build “L&T” as an international brand by creating awareness about L&T and its capabilities – Approved vendor status from owners, contractors, process licensors and inspection agencies – Formation of consortia wi
Slide 11: Strong growth in international business
Strong growth in international business Equipment exports to more than 45 countries including North America, UK, Europe, Middle East.. Success in securing turnkey contracts Growth in international business – Two gas based power plants in Oman and Sri Lanka Rs. million 16330 – Gas processing and
Slide 12: Enhancing capabilities
Enhancing capabilities Front-end Engineering and Design group at Vadodara – ISO 9001/ISOm1401 certified – Serves the process engineering requirements of Refinery, Petrochemicals and Fertilizer industries – Service capabilities include feasibility studies, process licensor selection, basic engineer
Slide 13: Improving cost competitiveness
Improving cost competitiveness Thrust on cost reduction – Global Sourcing – E-procurement – Value Engineering – Efficiency improvement in plant operations Delivery cycle reduced from 18-25 months to 8-11 months for many critical equipment Six Sigma processes in manufacturing activities to redu
Slide 14: Institutionalizing risk management
Institutionalizing risk management Size and complexity of orders are increasing even as delivery periods are becoming longer Exposure to international business is increasing – Target to increase international business to 25% of sales by 2006 Risk management module being evolved concomitantly a
Slide 15: Several HR initiatives for talent acquisition and management
Several HR initiatives for talent acquisition and management Creating a Performance Driven Culture – Focus on Value Creation Capability building and enhancement – Training as a conscious strategy and business decision for growing talent – Management Development Centre at Lonavla – a temple of tr
Slide 16: Tracking the results
Tracking the results 16
Slide 17: Sector-wise Order Booking
Sector-wise Order Booking 100% 14 15 28 31 80% 46 31 18 43 60% 26 11 6 18 40% 12 17 24 11 26 7 20% 8 21 24 25 24 9 5 0% '98-99 '99-00 '00-01 '01-02 '02-03 Process Oil & Gas Power Infrastructure Others 17
Slide 18: Sector-wise Order Backlog
Sector-wise Order Backlog 100% 13 9 17 29 80% 37 48 35 46 60% 29 17 10 40% 16 19 21 25 21 20% 10 16 8 17 17 17 10 8 5 0% '98-99 '99-00 '00-01 '01-02 '02-03 Process Oil & Gas Power Infrastructure Others 18
Slide 19: Cash Flow Statement
Cash Flow Statement Rs. Billion 1998-99 1999-00 2000-01 2001-02 2002-03 Operating Profit 8.06 9.34 9.44 9.76 9.02 Changes in Working Capital (3.64) (5.42) (3.14) 2.65 3.06 Operating Cash Flow 4.42 3.92 6.30 12.41 12.08 Direct Taxes Paid (1.49) (0.69) (0.68) 0.70 (0.41) Investments in Fixed Assets (6
Slide 20: Snapshot of historical performance
Snapshot of historical performance Rs Billion Rs. Billion 140 12 120 10 100 8 80 6 60 4 40 2 20 0 0 1998-99 1999-00 2000-01 2001-02 2002-03 Order Booking Total Income Total Assets PBDIT 20
Slide 21: Segmental review
Segmental review 21
Slide 22: Engineering & Construction
Engineering & Construction 22
Slide 23: Engineering & Construction
Engineering & Construction Good order booking in a slack Rs. Billion investment climate FY 03 FY 02 Change – Strong growth in export order Order Booking 95.02 73.54 29.2% booking Domestic 75.65 64.68 17.0% A few path breaking orders Export 19.37 8.86 118.6% – PTA project for IOC Sales (1) 61.48
Slide 24: E&C - Major orders received - Domestic
E&C - Major orders received - Domestic Rs. Mio IOCL PTA Project 12420 DHDT and Hydrogen Package for IOCL, Panipat 6120 Water Distribution System at Vizag 3360 Jaipur Kishengarh Expressway 2960 Karnataka State Highways-Improvement Project 2690 Orders for Water/Effluent/Sewerage Treatment
Slide 25: E&C - Major orders received - International
E&C- Major orders received - International Rs. Mio Songo Songo- Gas processing and pipeline Project, Songas Ltd. Tanzania 5160 Platform for Qatar Petroleum 4700 Equipment for OMIFCO, Oman 1560 400 KV Transmission Line, Fujairah, UAE 1520 Turnkey Services for Sulphur Recovery Unit for Kuwai
Slide 26: Electrical & Electronics
Electrical & Electronics 26
Slide 27: Electricals and Electronics
Electricals and Electronics Impressive sales growth in Rs. Billion the face of competition from MNCs FY 03 FY 02 Change – Helped by Metering Instruments and Petrol dispensing products Sales (1) 7.81 7.05 10.8% Margins improve Domestic 7.45 6.67 11.7% – Several cost reduction Exports 0.36 0.38 (5
Slide 28: Cement
Cement 28
Slide 29: Cement
Cement Rs. Billion Strong consumption growth of 9.5% FY 03 FY 02 % change – Industry capacity utilisation Sales-Mio Tonnes 13.32 11.93 11.7% at 85% Domestic 10.56 9.52 10.9% – Large supply overhang Exports 2.76 2.41 14.5% L&T volume grows by 11.7% Segment Sales (1) 25.83 24.86 Domestic prices
Slide 30: Continuous improvement in Operations
Continuous improvement in Operations L&T Heat Consumption – L&T Power consumption – K.Cal/ Kg.Clinker KWh/Tonne of Cement 99 740 100 730 726 94 91 91 720 714 708 88 710 701 699 700 690 80 98-99 99-00 00-01 01-02 02-03 98-99 99-00 00-01 01-02 02-03 Industry Comparison – FY 2002 Industry Comparison –
Slide 31: The ICBM Initiative
The “ICBM” Initiative Initiative launched in January 2002 to “Increase Cement Business Margins” Covered the following elements: – Network Optimisation: Analysis of Price / Demand / Constraints/ Cost of Constraints – Total Delivered Cost : Plant-Market Link ; How to serve at lowest possible cost
Slide 32: The ICBM Initiative: Gains so far
The “ICBM” Initiative : Gains so far Entire Cement Division aligned towards objective – Achievement of agreed tangible targets – Motivation to achieve ongoing improvements Some results: – Consistently improving jetty performance : Utilisation % projected to increase to 96% in FY04 vs. 87% in FY0
Slide 33: Outlook FY 2003-04
Outlook FY 2003 – 04 33
Slide 34: E&C – Outlook
E&C – Outlook Healthy order backlog at Rs. 136.87 billion – Good visibility of revenue and margins – Growing international presence Order prospects in the refinery, oil & gas and infrastructure sectors – Large investments in Oil & Gas in public and private sector – Investments in pipelines by GA
Slide 35: Cement - Outlook
Cement - Outlook Consumption growth expected at 8 – 10% with large investments in infrastructure and strong demand from housing sector Improving demand-supply situation – No major addition to capacity in the next two years – Artificial incentives for new capacity addition are withdrawn – Most ne
Slide 36: Electricals & Electronics - Outlook
Electricals & Electronics - Outlook Growth opportunities in transmission and distribution resulting from the ongoing reform process – New Electricity Bill – Accelerated Power Development Programme New opportunities in Metering-demand for intelligent meters Petrol Pumps business will see growth
Slide 37: Thank you
Thank you 37