Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Investor Presentation (November 2014)
53 slides from Larsen & Toubro's investor presentation, Nov 7, 2014
Slide 1: Investor Presentation
Investor Presentation 7th November, 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 Group Performance Sectoral Opportunities & Outlook 3
Slide 4: Presentation Outline
Presentation Outline L&T Overview Business Overview 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: (7th Nov’14): CRISIL: Company `851 Bn `1534 Bn AAA/Stable ICRA: (US$ 14.3 Bn) (US$ 26 Bn
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 Sept '09 989 L&T Market Cap (Amt. ` Bn) 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, & Pvt. Major Institutional Shareholders % Shares 3.0% Insurance Cos., Govt. Life Insurance Corporation of India 16.9% 11.4% Financial Institutions Administrator of the SUUTI 8.2% L&T & Insurance Employee Companies, General Insurance Corp. of India 1.9%
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 Group Performance Sectoral Opportunities & Outlook 13
Slide 14: Builders to the nation
Builders to the nation Maruti Manesar (Haryana) Expansion 1320 MT FCC Regenerator – for RIL 88m Rail Bridge Jammu Udhampur Wankhede Stadium, Mumbai Baha’i Temple, Delhi Mumbai International Airport Oil & Gas Offshore Platforms 3rd Narmada High Kakrapar Nuclear Power Plant, Guj ITC Grand Chola Hotel,
Slide 15: International Footprint – Marquee Jobs
International Footprint – Marquee Jobs Stadium at Barbados Salalah Airport, Oman Glorei (Commercial Space), Muscat NMC Speciality hospital, Abu Dhabi Bhukara Hotel, Uzbeckistan World’s Longest Conveyer, Bangladesh Bulk Cement Terminal, Colombo Sabah, Malaysia Punatsangchhu HEP, Bhutan Sheikh Khalifa
Slide 16: 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 16
Slide 17: Quality Customer Mix
Quality Customer Mix Indian Coastguard MIAL 17
Slide 18: 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 18
Slide 19: 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 IN
Slide 20: Presentation Outline
Presentation Outline L&T Overview Business Overview Group Performance Sectoral Opportunities & Outlook 20
Slide 21: Three Year Performance
Three Year Performance Net Sales Order Inflow 851 1270 745 1029 643 793 Billion ` Billion ` Billion ` `Billion FY 12 FY 13 FY 14 FY 12 FY 13 FY 14 Order Book EBITDA 107.9 1,815 1,648 99.3 1,450 ` Billion 88.8 ` Billion FY 12 FY 13 FY 14 FY 12 FY 13 FY 14 21
Slide 22: Group Performance Highlights – Q2 / H1 FY15
Group Performance Highlights – Q2 / H1 FY15 Q2 H1 17% Order Inflow 14% 11% Revenues 10% 7% Profit After Tax 45% 14% Order Book 14% 22
Slide 23: Order Inflow & Order Book
Order Inflow & Order Book Amount in ` Bn Order Inflow Order Book Geographical Breakup 732 2144 640 14% 14% 17% 29% 27% 1876 398 340 Q2 83% Q1 71% 73% 300 334 H1 FY14 H1 FY15 H1 FY14 H1 FY15 Q2 Order H1 Order Order Inflow Inflow Book Domestic International 17% Growth in Q2 Order Inflows fuelled by Bu
Slide 24: Group Performance – Sales & Costs
Group Performance – Sales & Costs % Q2 FY15 Q2 FY14 % Change ` Billion H1 FY15 H1 FY14 FY14 Change Net Sales / Revenue from 211.59 191.31 11% 401.34 363.72 10% 851.28 Operations 65.62 59.58 10% ----International Sales 114.04 115.92 -2% 240.04 31% 31% - % of Total Sales 28% 32% -4% 28% 153.53 133.25
Slide 25: Performance Summary – Operational Costs & Profitability
Performance Summary – Operational Costs & Profitability Subcontracting Q2 FY15 charges, Material cost, 16.1% 37.3% (17.8%) (34.9%) Other Opex, 19.2% (16.9%) Staff Costs, 10.5% EBITDA, Sales, adm. & (10.5%) other Exp., 11.0% Subcontracting H1 FY15 (13.1%) charges, Material cost, 5.9% 34.1% 17.8% (6.8
Slide 26: Group Performance Summary Extracts
Group Performance Summary Extracts % Q2 FY15 Q2 FY14 % Change ` Billion H1 FY15 H1 FY14 FY14 Change 23.34 25.03 -7% EBITDA 48.49 43.76 11% 107.33 11.0% 13.1% -2.1% EBITDA Margin 12.1% 12.0% 0.1% 12.6% (6.90) (7.74) -11% Interest Expenses (14.69) (14.84) -1% (31.41) (5.49) (5.87) -7% Depreciation (13
Slide 27: Segment Performance Analysis
Segment Performance Analysis 27
Slide 28: Segment Composition
Segment Composition Metallurgical & Electrical & Infrastructure Power Heavy Engineering Material Handling Automation Process Plant Electrical Standard Building & Factories EPC – Coal & Gas Ferrous Equipment Products Thermal Power Plant Nuclear Power Plant Electrical Systems & Transportation Infra No
Slide 29: Segmental Breakup of Orders – H1 FY15
Segmental Breakup of Orders – H1 FY15 HE E&A MMH 4% 4% Hydrocarbon 4% 11% Power 13% Services 13% Others 5% Power 11% MMH HE 5% E&A Infrastructure 4% 2% 46% Order Inflow Hydrocarbon ` 732 Bn 7% Others 3% Infrastructure 68% Order Book ` 2144 Bn 29
Slide 30: Revenue Breakup – H1 FY15
Revenue Breakup – H1 FY15 Segmental Breakup Hydrocarbon IT & TS 8% 9% HE E&A Fin. Services 4% 5% 8% MMH Devl. Proj. 4% 8% Power Others 5% 7% Geographical breakup Infrastructure 28% 42% 72% Domestic International 30
Slide 31: Infrastructure Segment
Infrastructure Segment Amount in ` Bn Strong sales growth on the back of large Order Book and on-track execution All round growth across business verticals Margin decline primarily due to Job-mix change and extra claim settlement in Previous Year 31
Slide 32: Power Segment
Power Segment Amount in ` Bn Drop in sales owing to a depleted Order Book in an investment starved sector Margin decline due to Job-mix change and low capacity utilisation Current Year Order wins and probable uptick in Power Generation investments are likely to aid pick up in revenues 32
Slide 33: Metallurgical & Material Handling (MMH) Segment
Metallurgical & Material Handling (MMH) Segment Amount in ` Bn Sales decline due to depleted Order Book, lacklustre investments and sluggish execution conditions in metals and mining sectors Margin impacted by cost escalations and lower activity levels 33
Slide 34: Heavy Engineering Segment
Heavy Engineering Segment Amount in ` Bn Sales de-growth is an outcome of delayed award decisions EBITDA Margin stable Unabsorbed capacity costs in Forging Facility depress Segment Result 34
Slide 35: Electrical & Automation (E&A) Segment
Electrical & Automation (E&A) Segment Amount in ` Bn Modest Sales growth in line with industrial activity Stable margins due to benign commodity prices and operational efficiencies 35
Slide 36: IT & Technology Services Segment
IT & Technology Services Segment Amount in ` Bn Sales growth driven by scaling up of Technology Services business Margin drop on increased compliance costs, higher onsite revenue mix and building up of sales organisation 36
Slide 37: Others Segment
Others Segment Amount in ` Bn Shipbuilding and Industrial Valves business contribute to Revenue growth Uptick in segment margins primarily due to lower shipbuilding losses and increased contribution from Realty business 37
Slide 38: Hydrocarbon Segment
Hydrocarbon Segment Amount in ` Bn Q2 FY15 Q2 FY14 % Change ` Billion H1 FY15 H1 FY14 % Change 18.01 23.76 -24% Net Segment Revenue 33.54 54.17 -38% (0.02) 2.06 -ve EBITDA (8.93) 3.78 -ve -0.1% 8.7% -8.8% EBITDA Margins -26.6% 7.0% -33.6% Sales drop due to reduced Order Book and challenging executio
Slide 39: Developmental Projects Segment
Developmental Projects Segment Amount in ` Bn Segment comprises businesses in developing and operating infrastructure and power generation assets Sales & EBITDA increase mainly due to divestment gains and commencement of commercial production of Rajpura power plant (2x700 MW) 39
Slide 40: Concessions Business Portfolio – 26 SPVs
Concessions Business Portfolio – 26 SPVs Roads and Bridges: Portfolio: 17 projects (1764 Km); 11 Operational Project Cost: `184 Bn Power: Portfolio: 5 projects (2270 MW); 1 Operational Project Cost: `178 Bn Ports: Portfolio: 2 projects (18 MTPA) - Operational Project Cost: `21 Bn Metros: Portfolio:
Slide 41: L&T Finance Holdings
L&T Finance Holdings % H1 % Q2 FY15 Q2 FY14 ` Billion H1 FY14 FY14 Change FY15 Change 63 57 9% Networth (Excl. Pref. Cap.) 63 57 9% 58 383 321 19% Borrowings 383 321 19% 359 77 55 39% Disbursements 142 114 24% 260 428 355 21% Loans and Advances 428 355 21% 401 3.0% 2.9% 0.1% Gross NPA (%) 3.0% 2.9%
Slide 42: Presentation Outline
Presentation Outline L&T Overview Business Overview Group Performance Sectoral Opportunities & Outlook 42
Slide 43: 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 44: 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 EPC prospects for gas-fired power plants in Banglade
Slide 45: 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 a
Slide 46: Heavy Engineering Segment
Heavy Engineering Segment Presence : Equipment for process plants (mainly for oil and gas), Nuclear power plant equipment, Defense (mainly for navy and army) and Aerospace Opportunities: Oil & Gas equipment supply opportunities in India, Middle East, Far East, Russia, Europe and USA Nuclear Powe
Slide 47: Electrical & Automation Segment
Electrical & Automation Segment Presence : Low voltage switchgear, building electricals, metering & protection equipment, low and medium voltage customised switchboards, automation solutions Opportunities: Electrical switchgear in industrial units Large market for buidling electricals Electric
Slide 48: 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 49: Outlook
Outlook Sectoral Plays Political Macro (Indian Environment & Global) What Economics impacts us Financial Strength, Order Book Quality, Fiscal and Monetary Execution capability, Policies Talent 49
Slide 50: Thank You
Thank You LARSEN & TOUBRO
Slide 51: Annexure 1: Group H1 P&L Summary Extracts
Annexure 1: Group H1 P&L Summary Extracts Other L&T Group L&T Fin. Devl. Subsidiaries ` Billion IT & TS Parent Services * Projects & % H1 FY15 H1 FY14 Eliminations Change Revenue from Operations 230.54 35.91 30.87 31.31 72.71 401.34 363.72 10% EBITDA 24.29 6.87 4.27 16.22 (3.14) 48.49 43.76 11% Inte
Slide 52: Annexure 2: Group Balance Sheet Extracts
Annexure 2: Group Balance Sheet Extracts Other L&T Group L&T Fin. Dev. Subsidiaries ` Billion IT & TS Parent Services * Projects & Eliminations Sep-14 Mar14 Inc / (Dec) Net Worth 356.0 27.7 45.3 95.5 (128.4) 396.2 377.1 19.1 Minority Interest - 0.0 30.5 0.8 5.5 36.8 31.8 5.1 Borrowings 144.1 2.2 382
Slide 53: Annexure 3: Group Cash Flow (Summarised)
Annexure 3: Group Cash Flow (Summarised) ` Billion Q1 FY15 Q2 FY15 H1 FY15 Q1 FY14 Q2 FY14 H1 FY14 Operating Profit 23.74 23.96 47.71 21.45 27.13 48.58 Adjustments for NWC (4.26) (20.58) (24.84) (31.59) (30.10) (61.69) Direct Taxes (Paid) / Refund - Net (5.19) (8.56) (13.75) (6.61) (10.27) (16.88) N
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