L&T achieved Sales and Service income of Rs.2112 crore during the quarter ended 30th June 2002, reflecting a 15% growth over Rs.1831 crore reported for quarter ended 30th June 2001. Export sales at Rs.435 crore are significantly higher when compared with Rs.153 crore achieved during the quarter ended 30.6.2001. Profit before tax and Profit after tax for the quarter at Rs.65.23 crore and Rs.44.62 crore respectively are lower than the figures for the corresponding period of the previous year.

The subdued performance of the cement segment during the quarter, in line with the overall industry trend, adversely affected the overall profitability. Some of the low margin jobs being executed in the international markets by the E&C segment have also contributed to the lower profitability. The Company's proactive action in reducing debt in the last two quarters and managing the debt portfolio resulted in a saving of around Rs.35 crore in Interest Cost as compared to the quarter ended 30.6.2001 and helped mitigate the impact of lower operating profitability.

Engineering & Construction (E&C) Segment
With the core sector performance and especially, the capital goods sector not showing any signs of demand revival, the segment's major orders have largely been in the hydrocarbon sector and the infrastructure sector. The segment booked orders amounting to Rs.1278 crore during the period, the details of major orders being:

		Rs. crore
	Domestic
	Sulphur Block and Associated facilities for BPCL-Mahul, Mumbai	163
	Construction of Mass Housing Complex for MMRDA Rehabilitation programme (6087 houses)	73
	Refurbishing of 220 MW Steam Generator for Nuclear Power Corporation of India Ltd	60
	S3 package (Trunk - Sewers package) for Bangalore Water Supply & Sewerage Board	50
	Construction of Spaghatti Housing Scheme at Kharghar for City Industrial Development Corporation	49
	Construction of Jammu-Udhampur rail link for Northern Railway	38
	Construction of 100 nos Windmill Towers for Enercon (India) Limited	32
	Water Supply Canal Scheme from Kandaleru reservoir to Chennai City-Phase I for Sri Sathya Sai Central Trust	30
	Supply of Mobile Transfer Car (MTC) for Neyveli Lignite Corporation Limited	26
	Overseas
	Construction of AL Murroj Commercial Complex at Dubai, UAE for AL Ahamadiah Contracting & Trading	60
	Ethylene Oxide Reactor (600 MT) for BASF project, China and RG Boiler package for Sasol, South Africa	28

Revenues of E&C segment amounted to Rs.1216 crore during the period, recording a growth of 37% over corresponding period last year. The segment contributed to 57% of the Company's turnover. Export Sales of the segment have increased to Rs.378 crore from Rs.99 crore in the quarter ended 30.6.2001 as the power plant jobs being executed at Sri Lanka and Oman have made progress. The Order backlog as on 30.6.2002 amounted to a healthy Rs.11820 crore.

Cement Segment
The Cement Segment achieved Sales of Rs.653 crore, representing 31% of the Company's turnover. Sales quantities of cement and clinker in the domestic market increased to 27.6 lakh MT in quarter ended 30th June 2002 from 25.9 lakh MT in quarter ended 30.6.2001. While the volume growth of 8% is in line with the consumption growth in domestic market, in value terms, Sales registered a decrease of 9% as compared with quarter ended 30.6.2001. This is due to significantly lower levels of prices obtained during the quarter as compared with the quarter ended 30th June 2001. Average realisation fell by 17% to Rs. 1229 pmt from Rs. 1483 pmt for the quarter ended 30.6.2001, pulling down the operating margins. The segment continued its efforts in cost reduction both at factory level as well as in marketing & distribution. In spite of the substantial drop in prices, operating margin was 14.6% due to reduction in variable cost. The operating cost per tonne was Rs.956 as compared with Rs.1005 during the same period last year.

Electrical & Electronics
Sales of the Electrical & Electronics segment amounted to Rs.152 crore remaining static at previous year's level. With continuing thrust on new products / product-variants, cost reduction and manpower rationalization initiatives, the segment has improved its operating margin.

Outlook
On the backdrop of a healthy order backlog, the Company expects a good growth in Revenues for the year and the Operating margins for the year are expected to be better than the margins during the first quarter.
Given the thrust on infrastructure projects and the impetus for housing sector, the cement industry is expected to grow by 8% during the current year. The expected drought conditions could weaken the demand and result in a possible reallocation of funds from infrastructure sector to drought relief measures. The Company expects to grow in line with the industry, although price improvement / stability would be critical to increase the profitability during the year. The Company expects to see cement prices improving in the second half of the year and also realize significant cost savings in operations and logistics management.

The Company would continue its efforts to reduce debt during the current year and consequently, interest cost is expected to be lower.