L&T posted a 10% rise in net profit for the year ended March 31, 2002. Net profit rose to Rs.346.80 crore from Rs.315.06 crore.
The total Sales and Service income for the year at Rs. 8358.85 crore registered an increase of 6.8% over the previous year. The Company's efforts to create a global market for its products and services saw export sales increasing to Rs.1113 crore, a growth of 56% over the previous year.

During 2001-02, the Company's orders rose to Rs. 10922 crore, a growth of 4.7% over the previous year. The increase although modest, is encouraging in the wake of continued slowdown in the economy as evidenced by a meagre growth of 2% in core sector industries and a negative growth of 4% in the case of capital goods industry during 2001-02.
L&T prepaid Rs.339 crore of its total long-term debt of Rs.2761 crore and refinanced loans to take advantage of interest rate movements across maturities and currencies. Further, with the effective use of hedging products and control over fund management aided by a declining interest rate scenario, the Company achieved a substantial reduction in interest costs. Consequently, the operating profit after interest (PBT plus depreciation) increased to Rs.736.88 crore from Rs.628.19 crore and the Profit before tax at Rs. 400.70 crore is higher by 18% in comparison to the previous year.

In compliance with the new Accounting Standard AS 22: Accounting for Taxes on Income, the Company has made a provision of Rs. 29.36 crore for Deferred Tax for the year in addition to the current tax of Rs.24.54 crore. Despite the additional tax provision, the Profit after Tax at Rs.346.80 crore for the year was higher by 10% over the previous year.
For the quarter ended 31st March 2002, the Company reported a 14.1% increase in Sales and Service income over the corresponding period in the previous year. However, lower cement prices during the quarter January to March 02 as compared to the corresponding quarter last year resulted in reduced Profit before tax and Profit after tax of Rs. 210.66 crore and Rs.186.76 crore respectively, as compared to the corresponding quarter in the previous year.

Engineering & Construction
The E&C segment reported Sales income of Rs. 4898 crore for the year 2001-02, reflecting a marginal growth of 6.6% over the previous year. Limited opportunities due to poor investment climate, continued price preference to PSUs and intense competition from local and global players for the few available opportunities led to low order booking growth and pressure on margins.

Notwithstanding the unfavourable business conditions, the segment, during the year 2001-02, secured orders valued at Rs. 7456 crore, of which Rs.886 crore were export orders. Some of the major orders booked by the segment include :

The segment's thrust on exports and successful forays into atomic energy, nuclear and aerospace should diversify the product portfolio and reduce overdependence on other core sectors of the domestic economy. Significant progress has been made in getting the company accredited with global oil companies and EPC firms, which should help the segment, grow its export revenues. The segment's export sales for the year 2001-02 increased by over 75% to Rs. 848 crore from Rs. 484 crore in the previous year.

Cement
L&T's Cement Division continued to enjoy the leadership position, primarily due to its brand value and good quality. During the year, domestic sale of cement increased by 7% over last year to 9.4 million tonnes and the aggregate quantity of clinker and cement sold (including exports) to 11.9 million tonnes, registering an increase of 6% over the previous year. Sales revenue for 2001-02 at Rs. 2374 crore was higher by 8% as compared to the previous year. Despite an impressive domestic consumption growth of around 10% during 2001-02, the excess supply situation was aggravated by fresh capacity additions, through expansions and de-bottlenecking, asset sweating, etc. The cement prices were consequently volatile in particular the drop has been substantial in the fourth quarter.

Average ex-factory sales realization (net of taxes and duties, transportation discounts, etc) during 2001-02 improved by 4% to Rs. 1303 per MT. Increase in variable costs was contained to 1% and fixed costs were reduced by Rs. 32 crore, despite increases in fuel prices and power cost, and an increase in capacity.
Having become one of the lowest-cost producers in the country, the Company has now launched several initiatives to reduce the distribution cost to increase the net realization. Increasing direct dispatches to customers and use of operations research (OR) models assisted by information technology are expected to optimize the distribution network and significantly reduce the total delivered cost of cement to the customers over the next few years. Encouraging results have already been seen in this direction.

Electrical & Electronics Business
The segment recorded sales of Rs. 706 crore for the year 2001-02. The entry of multinationals in the domestic low tension switchgear and medical equipment businesses have intensified competition. Coupled with weak domestic demand, the sales income of the segment was stagnant with margins under strain. Most of the businesses in this segment maintained or improved their market share. The segment has stepped up its marketing efforts overseas and consequently has reported a higher export sales of Rs.37 crore during 2001-02.
Strategies for the future include increase in market share through faster introduction of new state-of-the-art products, quick response to market needs, cost consciousness and sustained thrust on exports.

Outlook
The Company is well positioned in its core businesses and thrust areas to take advantage of the emerging opportunities. Reasonable order booking prospects exist mainly in the infrastructure, defence, refinery, and oil & gas sectors. However, actual order booking could be subject to delays in decision making by customers. Capacity addition has slowed down as there are no significant greenfield or brownfield expansion plans. Domestic Cement demand is expected to grow at 8-10% during 2002-03 on the back of projected investment in the housing and infrastructure sectors, and the focus on construction of roads. The demand growth and deceleration in capacity addition would help in price stability.

Further the Company's strategy to de-risk by reducing dependence on domestic economy and accompanied by initiatives to strengthen presence in select overseas markets is expected to yield favourable results.
The Company has aligned its HR policies and practices to attract, nurture and retain technical and management talent. The new performance measurement system covering ROCE and Free Cash Flow and the linkage of employee rewards to achievement against these measures has reinforced the employee orientation to customer satisfaction and value enhancement.