Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Investor Presentation (August 2014)
58 slides from Larsen & Toubro's investor presentation, Aug 31, 2014
Slide 1: Investor Presentation
Investor Presentation 31st August, 2014
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: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 3
Slide 4: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 4
Slide 5: L&T - At a Glance
L&T - At a Glance India’s largest E&C company with interests in Projects, Infrastructure Development, Manufacturing, IT & Financial Services Professionally FY 14 Group Market Cap Credit Ratings Managed Revenues: (28th Aug’14): CRISIL: Company `851 Bn `1417 Bn AAA/Stable ICRA: (US$ 14.3 Bn) (US$ 24 B
Slide 6: L&T - At a Glance: Market Cap
Mar '02 45 Sept '02 42 Mar '03 46 Sept '03 80 Mar '04 71 Sept '04 106 Mar '05 129 Sept '05 200 Mar '06 334 L&T - At a Glance Sept '06 356 Mar '07 459 Sept '07 807 Mar '08 884 Sept '08 715 Mar '09 394 L&T Market Cap (Amt. ` Bn) Sept '09 989 Mar '10 979 Sept '10 1,237 Mar '11 1,007 Sept '11 830 Mar '1
Slide 7: L&T – Shareholding Pattern
L&T – Shareholding Pattern Mutual Funds Others, Major Shareholders % Shares & Pvt. 1.9% Insurance Cos., Govt. Life Insurance Corporation of India 16.9% 12.2% Financial Institutions Administrator of the SUUTI 8.2% L&T & Insurance Employee Companies, General Insurance Corp. of India 2.0% Welfare 29.8%
Slide 8: Experienced Management Team
Experienced Management Team A M Naik K Venkataramanan M V Kotwal Group Executive Chairman Chief Executive Officer Whole-time Director & BE [Mech] & Managing Director President (Heavy Engineering) Joined L&T in March 1965 BE [Tech] – IIT, Delhi BE [Mech], Univ. of Bombay Diverse and vast ex
Slide 9: Corporate Governance
Corporate Governance L&T’s essential character revolves around values based on transparency, integrity, professionalism and accountability Four-tier Governance Structure Board of Directors Executive Management Committee (EMC) Independent Company (IC) Board Strategic Business Group (SBG) / Business U
Slide 10: Journey Towards Excellence
Journey Towards Excellence Expansion & The Beginnings Seeds of Growth Consolidation Restructuring for Value (1938-60) (1960-90) Creation (2000-14) (1990-2000) 1938: Formed as a Emerged as leading & Entered into IT, Divested non - core business partnership acclaimed Financial services and (Cement, Tr
Slide 11: L&T’s Sustainability Initiative
L&T’s Sustainability Initiative The L&T Sustainability Report 2013 is a ‘GRI Checked’ , Externally Assured, Application Level A+ report. Sustainability Thrust Areas Climate Change Energy Water Material Carbon footprint Safety Community Conservation Conservation Management mapping Accolades One of th
Slide 12: Sustainability – Environment & Social
Sustainability – Environment & Social Green Buildings 19 L&T Campuses across India have L&T’s own – 1.96 million sq. ft. adopted zero wastewater Constructed for Clients – 25.4 million discharge approach sq. ft. Construction Skills Energy consumption Water consumption Direct Green House Gas emissions
Slide 13: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 13
Slide 14: L&T Sectoral Presence
L&T Sectoral Presence Infrastructure Hydrocarbon Power Metallurgical, Material Handling & Others 14
Slide 15: E&C Delivery Platform
E&C Delivery Platform One of Asia’s largest vertically integrated E&C Companies Design & Engineering EPC Projects Manufacture Construction & Fabrication Single point responsibility for turnkey solutions 15
Slide 16: Quality Customer Mix
Quality Customer Mix Indian Coastguard MIAL 16
Slide 17: Multiple Alliances & Joint Ventures
Multiple Alliances & Joint Ventures Alliances Joint Ventures Pre qualifications Befula Investments Note: Some of these are project specific alliances & pre qualifications 17
Slide 18: L&T’s Business Structure
L&T’s Business Structure LARSEN & TOUBRO LTD. BUSINESS VERTICALS – SUBSIDIARIES & INDEPENDENT COMPANIES (ICs)* ASSOCIATES BUILDINGS & FACTORIES L&T HYDROCARBON ENGINEERING** TRANSPORTATION INFRASTRUCTURE FINANCIAL SERVICES HEAVY CIVIL INFRASTRUCTURE IT & TECHNOLOGY SERVICES WATER & RENEWABLE ENERGY
Slide 19: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 19
Slide 20: Standalone P&L Summary – Sales & Costs
Standalone P&L Summary – Sales & Costs % ` Billion Q1 FY15 Q1 FY14 * FY14 * Change Net Sales / Revenue from 103.38 98.24 5% 565.99 Operations ----International Sales 12.89 15.36 -16% 91.29 Mfg, Cons. & Opex (MCO) 79.47 74.52 7% 433.46 Staff Costs 9.00 9.89 -9% 46.62 Sales, adm. & other Exp. 4.03 4.9
Slide 21: Standalone P&L Summary - Profitability
Standalone P&L Summary - Profitability % ` Billion Q1 FY15 Q1 FY14 * FY14 * Change EBITDA 10.88 8.92 22% 66.67 EBITDA Margins 10.5% 9.1% 1.4% 11.8% Interest Expenses (2.72) (2.42) 12% (10.76) Depreciation (2.61) (1.87) 40% (7.92) Other Income 4.88 4.87 0.2% 18.81 Provision for Taxes (3.20) (2.85) 12
Slide 22: Standalone Balance Sheet
Standalone Balance Sheet Incr / ` Billion Jun-14 Mar-14 * (Decr) Net Worth 345.99 336.62 9.37 Non-Current Liabilities 63.95 62.81 1.14 Current Liabilities 375.57 383.62 (8.05) Total Sources 785.51 783.05 2.46 Net Fixed Assets 79.89 82.37 (2.49) Investments / Loans to S&A Cos 184.46 188.91 (4.45) Con
Slide 23: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 23
Slide 24: Five Year Performance - Group
Five Year Performance - Group Net Sales Order Inflow* 851 941 745 816 643 760 644 Billion 520 ` Billion ` Billion 537 ` `Billion 440 FY 10 FY 11 FY 12 FY 13 FY 14 FY 10 FY 11 FY 12 FY 13 FY 14 Order Book* EBITDA 107.9 1,630 99.3 1,440 1,334 88.8 1,172 76.8 ` Billion 839 64.2 ` Billion FY 10 FY 11 FY
Slide 25: Group Performance Highlights – Q1 FY15
Group Performance Highlights – Q1 FY15 Order Inflow 11% PAT Order Book 111% 13% EBITDA Revenues 34% 10% 25
Slide 26: Order Inflow & Order Book
Order Inflow & Order Book Amount in ` Bn Order Inflow Order Book Geographical Breakup 334 1954 13% 300 11% 26% 1730 44% Q1 FY15 74% 56% Q1 FY14 Q1 FY15 Q1 FY14 Q1 FY15 Order Inflow Order Book Domestic International Order Inflows mainly from infrastructure, hydrocarbon and heavy engineering segment D
Slide 27: Group Performance Summary – Sales & Costs
Group Performance Summary – Sales & Costs ` Billion Q1 FY15 Q1 FY14 % Change FY14 Net Sales / Revenue from 189.75 172.41 10% 851.28 Operations ----International Sales 47.81 56.90 -16% 240.04 Mfg, Cons. & Opex (MCO) 133.24 126.54 5% 625.74 Staff Costs 17.51 15.65 12% 71.40 Sales, adm. & other Exp. 13
Slide 28: Performance Summary – Operational Costs & Profitability
Performance Summary – Operational Costs & Profitability Q1 FY15 Subcontracting Material cost, charges, 30.5% 19.8% (31.8%) (22.6%) Other Opex, 19.9% (19.0%) EBITDA, 13.3% (10.9%) Staff Costs, Sales, adm. & 9.2% other Exp., (9.1%) 7.3% (6.6%) Figures in bracket represent nos. for Q1 FY14 28
Slide 29: Group Performance Summary
Group Performance Summary ` Billion Q1 FY15 Q1 FY14 % Change FY14 EBITDA 25.15 18.73 34% 107.33 EBITDA Margins 13.3% 10.9% 2.4% 12.6% Interest Expenses (7.79) (7.11) 10% (31.41) Depreciation (8.07) (5.57) 45% (14.46) Other Income 2.77 2.64 5% 9.82 Exceptional Items 2.49 - 3.62 Provision for Taxes (4
Slide 30: Group P&L Summary
Group P&L Summary L&T L&T Group Devl. Fin. ` Billion IT & TS Parent & Projects Services * Q1 FY15 Q1 FY14 % Change Others Revenue from Operations 21.61 17.38 14.82 135.94 189.75 172.41 10% EBITDA 14.66 3.52 2.07 4.90 25.15 18.73 34% Interest Expenses (3.03) (0.01) - (4.75) (7.79) (7.11) 10% Deprecia
Slide 31: Group Balance Sheet
Group Balance Sheet L&T Group Devl. Fin. L&T & ` Billion IT & TS Projects Services * Others June-14 Mar14 Net Worth: Gross 89.27 46.30 26.49 318.43 387.33 377.12 Elimination - - - (93.17) Minority Interest 0.95 28.32 0.00 6.27 35.54 31.79 Borrowings 207.48 359.53 1.64 236.46 805.10 801.53 Deferred P
Slide 32: Group Cash Flow (Summarised)
Group Cash Flow (Summarised) ` Billion Q1 FY15 Q1 FY14 Operating Profit 23.74 21.45 Increase in NWC (4.26) (31.59) Direct Taxes (Paid) / Refund - Net (5.19) (6.61) Net Cash from Operations 14.29 (16.76) Investments in Fixed Assets (Net) (20.97) (21.21) Loan Repayment from Assc. Co. / Others 6.40 (0.
Slide 33: Segment Performance Analysis
Segment Performance Analysis 33
Slide 34: Segment Composition
Segment Composition Metallurgical & Infrastructure Power Heavy Engineering Hydrocarbon Material Handling Process Plant Building & Factories EPC – Coal & Gas Ferrous Upstream Equipment Thermal Power Plant Nuclear Power Plant Transportation Infra Non Ferrous Mid & Downstream Construction Equipment Hea
Slide 35: Segmental Breakup of Orders – Q1 FY15
Segmental Breakup of Orders – Q1 FY15 Hydrocarbon E&A MMH 17% 4% Power 1% Services 5% 16% HE 8% Others 6% HE Power 4% 9% MMH Infrastructure 5% Hydrocarbon 43% Order Inflow 7% E&A `334 Bn 2% Others 3% Infrastructure 70% Order Book ` 1954 Bn 35
Slide 36: Revenue Breakup – Q1 FY15
Revenue Breakup – Q1 FY15 Segmental Breakup Hydrocarbon IT & TS Fin. Services E&A 8% 9% 8% HE 5% Devl. Proj. 4% 11% MMH 5% Others 7% Power 5% Geographical breakup Infrastructure 25% 38% 75% Domestic International 36
Slide 37: Infrastructure Segment
Infrastructure Segment Amount in ` Bn Robust Revenue growth driven by large order backlog Large International Orders received in FY14 in preliminary stages Growth in EBITDA margins reflective of execution progress 37
Slide 38: Power Segment
Power Segment Amount in ` Bn Revenue dip due to depleting Order book in an investment constrained sector Strong EBITDA margins mainly contributed by profitable boiler manufacturing EBITDA brought down by high depreciation component 38
Slide 39: Metallurgical & Material Handling (MMH) Segment
Metallurgical & Material Handling (MMH) Segment Amount in ` Bn Fall in Revenue – pass through effect of a diminished executable Order Book in a challenging environment EBITDA margin weakness affected by under-utilisation 39
Slide 40: Heavy Engineering Segment
Heavy Engineering Segment Amount in ` Bn Muted Revenues due to static Order Book Margin increase through Improved performance of Process plant business EBITDA eroded by under-utilisation of Forgings Plant 40
Slide 41: Electrical & Automation (E&A) Segment
Electrical & Automation (E&A) Segment Amount in ` Bn Increase in Sales mainly driven by LV and MV Switchboards Industrial slowdown dampening growth in Standard Products sales EBITDA margins impacted by one-off item, sales mix and relocations 41
Slide 42: IT & Technology Services Segment
IT & Technology Services Segment Amount in ` Bn Robust Revenue growth through improved North American markets and new customer acquisitions Focus is on breadth & depth of client relationships; improving utilisation, optimising onshore-offshore mix and deeper skillsets EBITDA margins impacted by Sale
Slide 43: Others Segment
Others Segment Amount in ` Bn Increase in Revenues led by Realty and Shipbuilding business Growth in margins due to higher volumes in Realty business and improved Shipbuilding operations 43
Slide 44: Developmental Projects Segment
Developmental Projects Segment Amount in ` Bn Step up in Revenues & Margin due to value monetisation of stake in port concession (Dhamra) in line with business plan Step up in ‘Other Revenues’ obtained from newly commissioned thermal power plant & operational Road concessions 44
Slide 45: Concessions Business Portfolio – 28 SPVs
Concessions Business Portfolio – 28 SPVs Roads and Bridges: Portfolio: 19 projects (2248 Km); 11 Operational Project Cost: `232 Bn Power: Portfolio: 5 projects (2270 MW); 1 Operational Project Cost: `176 Bn Ports: Portfolio: 2 projects (18 MTPA) - Operational Project Cost: `21 Bn Metros: Portfolio:
Slide 46: L&T Finance Holdings
L&T Finance Holdings ` Billion Q1 FY15 Q1 FY14 % Change FY14 Lending Businesses (Retail & Mid-Market, Wholesale, Housing Finance) Disbursements 64.78 58.59 11% 259.59 NIM (%) 5.5% 5.6% -0.1% 5.5% Loans and Advances 407.64 343.40 19% 400.82 Gross NPA (%) 3.6% 2.5% 1.0% 3.2% Net NPA (%) 2.7% 1.7% 1.0%
Slide 47: Hydrocarbon Segment
Hydrocarbon Segment ` Billion Q1 FY15 Q1 FY14 % Change Net Segment Revenue 15.53 30.41 -49% --- International 7.93 19.12 -59% EBITDA (8.91) 1.72 -ve EBITDA Margins -ve 5.7% -ve Revenue drop due to lower opening Order book and execution challenges Losses include estimated future losses and prior year
Slide 48: Putting it all together: PAT Components
PAT Components Standalone PAT S&A Co. Div. Fin. 8.94 -1.43 1.95 Services IT & TS 2.43 Putting it all together Devl. Proj. 6.06 Divestment Gain Devl. Proj. Loss Rollback 5.48 / Prior Period Adj Dev. Projects -3.87 (Operational Projects) Shipbuilding -0.98 Special Steels -0.78 and Forgings Hydrocarbon
Slide 49: Presentation Outline
Presentation Outline L&T Overview Business Overview Standalone Performance Group Performance Sectoral Opportunities & Outlook 49
Slide 50: Infrastructure Segment
Infrastructure Segment Presence : Roads and Runways, Tunnels & Spl. Bridges, Ports, Airports, Railways, Metro Rail, Residential & Commercial Buildings, Factories, Water Infrastructure, Solar, Hydro & Nuclear Power, Power T&D – Transmission lines & substation projects Opportunities: Transportation
Slide 51: Power Segment
Power Segment Presence : EPC Projects in Power Capacity addition (Coal & Gas), Coal based Power Plant Equipment (Boilers, Turbines, ESP, Piping and other Power Auxiliaries) Opportunities: Base level capacity addition in Coal based Power Plants Challenges: Fuel supply Land acquisition Environ
Slide 52: Metallurgical & Material Handling Segment
Metallurgical & Material Handling Segment Presence : Construction capabilities for ferrous and non-ferrous plants, bulk material handling equipment and systems addressing mining, steel, power, railways and ports sectors Opportunities: Capacity addition in ferrous metals sector both from private an
Slide 53: Hydrocarbon Segment
Hydrocarbon Segment Presence : Offshore Platforms, Subsea pipelines, Floating Systems, Jackup Rigs, Subsea installations, Onshore Oil & Gas installations, Refineries, Petrochemical and Fertiliser Plants (EPC), Onshore pipelines, Regasification Terminals Opportunities: Promising International prosp
Slide 54: Outlook
Outlook Macro Economic Situation Fiscal and Infrastructure Monetary Policy & Industrial Spends What Global Competition Impacts Economy us Org Processes, Talent Pool, IT systems, Org. Learnings, etc Political Stability Execution Capability / Risk Management 54
Slide 55: Thank You
Thank You LARSEN & TOUBRO
Slide 56: Annexure 1: Consolidated P/L Summary – FY14
Annexure 1: Consolidated P/L Summary – FY14 L&T L&T Group Devl. Fin. ` Billion IT & TS Parent & % Projects Services FY14 FY13 Others Change Income from Operations 17.04 63.53 51.71 719.00 851.28 744.98 14% EBITDA 8.03 14.25 5.99 79.06 107.33 99.29 8% Interest Expenses (12.59) (0.31) - (18.51) (31.41
Slide 57: Annexure 2: Consolidated Balance Sheet – FY14 (Summarised)
Annexure 2: Consolidated Balance Sheet – FY14 (Summarised) L&T Group L&T Devl. Fin. ` Billion IT & TS Parent & Projects Services Others Mar-14 Mar-13 Inc/(Dec) Net Worth: Gross 87.97 45.88 24.84 307.10 377.12 338.60 38.52 Elimination - - - (88.68) Minority Interest 0.84 24.02 0.00 6.92 31.79 26.53 5
Slide 58: Annexure 3: Consolidated Cash Flows – FY14
Annexure 3: Consolidated Cash Flows – FY14 FY14 FY13 ` Billion Dev. Fin. L&T & IT&TS L&T Group L&T Group Projects Services Other S&A Operating Profit (net of tax paid) 8.04 2.90 11.41 60.00 82.35 78.08 Changes in Working Capital (28.95) (1.48) (2.27) (54.87) (87.57) (62.80) Net Cash from Operations
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