Mumbai, July 31, 2003: Larsen & Toubro Limited achieved Gross Sales & Service income of Rs.2275 crore for the quarter ended June 30, 2003, recording a quarter-on-quarter (q-o-q) growth of 10%. Profit before tax and Profit after tax for the quarter amount to Rs.119.50 crore and Rs.83.20 crore respectively, showing an impressive increase of 83% and 86% over Q1-2002/03.

In accordance with Accounting Standard 26 'Intangible Assets', the Company has written off the compensation paid under Employee Voluntary Retirement Schemes, as against the practice hitherto of amortising the same over 5 years. This has resulted in an additional charge of Rs.9.87 crore for the quarter. Interest costs for the quarter at Rs.34.60 crore are significantly lower as compared to the similar period last year.

Engineering & Construction Segment
The Engineering & Construction (E&C) segment secured orders aggregating to Rs.1823 crore in the domestic market, as against Rs.1222 crore in the first quarter of 2002-03. Opportunities in Oil & Gas/Refinery sectors provided two large orders that helped raise the order booking level. The segment's export thrust also received a fillip with an order booking of Rs.183 crore during the quarter, vis-à-vis Rs.114 crore last year. The overall order booking at Rs.2006 crore, shows a robust growth of 50% q-o-q.

The order mix reflects the wide-ranging engineering, design and construction capabilities of the segment and underlines the increasing recognition of L&T in overseas markets as a leading supplier of process equipment.

The details of major orders secured during the quarter are:

E&C segment revenues for the quarter at Rs.1309 crore represent 57% of the Company's revenues and show a growth of 12% as compared to the previous year.
The order backlog as at 30th June 2003 at Rs.14220 crore continues to be robust.
The operating margin for the quarter is subdued, as margins do not accrue evenly in E&C business. The order booking in 2002-03 being significantly skewed toward the latter part of the year, margins are expected to improve in subsequent quarters of the current year as the jobs progress.

Cement Segment
The Cement segment recorded revenues of Rs.726 crore, registering a q-o-q increase of 5.8%. Domestic sales of Cement and Clinker during the quarter at 2.72 MMT were marginally lower by 1.4%, as compared to last year. Exports accounted for 0.74 MMT, vis-à-vis 0.52 MMT last year. Overall, the sales quantities showed a q-o-q increase of 5.3%.

During the quarter, cement prices showed some signs of firming up in Southern / Eastern markets, but remained weak in Western markets where the segment is a major player. The average domestic sales realisation improved 3.9% from Rs.1265 pmt to Rs.1314 pmt.
The increased sales realisation, coupled with savings in variable costs, resulted in improved operating margin of 21.5%, vis-à-vis 17.0% for the corresponding quarter of last year.

Electrical & Electronics Segment
The Electrical & Electronics segment's revenues for the quarter grew 23% to Rs.202 crore. While heightened activity in oil marketing provided volumes to petrol pump business, emphasis on power distribution efficiencies saw demand for metering products. More importantly, sales of switchgear products saw growth from new products introduced in the recent past.
Operating margin is stable at 9.8%, as the segment faces the challenge of maintaining volumes / market share without sacrificing margins.

Outlook
With a strong order backlog, the Company expects an increase of over 15% in E&C revenues for the year. Order booking for the year is expected to show a good increase on expectations of further opportunities in Oil & Gas, Refinery and Infrastructure sectors. Cement segment is expected to see better off-take as demand from Roads & Housing sectors remains firm.