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LARSEN & TOUBRO LIMITEDPerformance Review

Half-year ending September, 30 2004

October 25, 2004

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 risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition ( both domestic and international), economic growth in India and the target countries for exports, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions with respect to investments, fiscal deficits, regulations, etc., interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company.

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Performance highlights

• Sales for H1’05 increases 52% over H1’04• PBDIT improves 20% (pre-exceptional)• PAT improve 15% (pre-exceptional)• Special Dividend of Rs.10 per share declared• Outlook for the year positive with:

– E&C order booking expected to grow 20%– E&C revenues to grow 30%– E&C Margins to improve substantially

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Order Booking and Sales Q2 05 Q2 04 Rs. Billion H105 H104 %

Change FY04

28.37 35.09 Order Booking* 54.69 58.90 -7% 132.38

30.03 21.04 Sales 56.92 37.39 52% 98.07

Other Income

0.77 0.51 - Recurring/Operating 0.67 0.96 -30% 2.58

3.54 0.84 - Others 3.49 1.07 226% 1.39 34.34 22.39 Total Revenue 61.08 39.42 102.04

Order Backlog* 168.02 162.33 174.34 * Includes L&T's share of order booking through Integrated Joint Ventures

• Overall order booking growth slower• E&C order pick up is expected in the second half

• Strong revenue growth in E&C and EBG continues• Exchange losses of Rs. 495 million results in lower recurring other

income• Non-operating other income includes profit on sale of UltraTech

Cemco shares (Rs. 3.53 billion)

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Details of Other IncomeFY04 Rs. Million H1'05 H1'04

230 Hire Income from plant & machinery / lease rental 88 96447 RMC freight and pumping charges 316 166210 Commercial leadership fees from IJVs 67 101671 Exchange fluctuation on trade assets/liabilities (495) 268652 Miscellaneous Income 356 245237 Dividend from Subsidiaries 285 -135 Dividend from Associates 57 82

2582 Recurring/Operating Other Income 674 958

261 Exchange Gain (214) (23)42 Gain on debt extinguishment 13 12630 Income from Other Investments 6 483126 Profit on sale of investments 3538 44539 Profit on sale of fixed assets 68 11300 Miscellaneous Income 78 142

1398 Non-opertaing Other Income 3489 1070

3980 Total other income 4163 2028

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Net Income

Q2 05 Q2 04 Rs. Billion H105 H104 % change

FY04

1.72 1.45 PBDIT (Pre exceptional) 3.19 2.66 20% 8.91 5.6% 6.5% PBDIT/ Revenue (pre exceptional) 5.6% 6.7% 8.7%0.13 0.05 Interest 0.23 0.14 0.37 0.22 0.22 Depreciation 0.43 0.43 0.85 1.37 1.18 PBT 2.53 2.09 21% 7.69 0.53 0.44 Tax - Current 0.90 0.76 2.81

(0.02) (0.07) - Deferred (0.03) (0.12) (0.45) 0.86 0.81 PAT (Pre exceptional) 1.66 1.45 15% 5.33 2.86 - Exceptional Item net of tax 2.86 - - 3.72 0.81 Profit After Tax 4.52 1.45

29.90 6.54 EPS (Post exceptional) 36.34 11.65 6.91 6.50 EPS (Pre exceptional) 13.34 11.62 15%

• PBDIT/PAT (pre-exceptional) improves by 20%/ 15% even after absorbing the impact of :• E&C margins skewed towards second half• Negligible investment related income (H1’04 : Rs. 928

million) other than profit on sale of CemCo shares• Exchange loss (on loans) Rs. 214 million

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Segment-wise split of Income

E&C Elec. O thers Corp TotalTotal Sales 48.29 5.51 3.72 57.52 Inter-segment Sales - 0.23 0.37 0.60 Customer Sales 48.29 5.28 3.35 56.92 Excise Duty 0.38 0.45 0.05 0.88

Net Sales 47.91 4.83 3.30 - 56.04 Other Income 0.08 - 0.32 4.22* 4.62 Total Income 47.99 4.83 3.62 4.47 60.91 Segment PBDIT 2.32 0.69 0.47 3.33 6.81 Depreciation 0.28 0.06 0.04 0.05 0.43

PBIT 2.04 0.63 0.43 3.28 6.38

Segment Assets 29.67 4.30 2.51 11.34 47.82 *After setting off Rs.0.25 bill ion against segment costs

Business SegmentsRs. Billion

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Segmental Review

Segmental Revenues

Others8%

Elect.12%

E&C80%

E&C83%

Elect10%

Others7%

H1'05 H1'04

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Segmental EBITDA

Others10%

Electrical19%

E&C71%

Others14%

Electrical19% E&C

67%

H1'05 H1'04

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Engineering & Construction

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Engineering & ConstructionQ2 05 Q2 04 Rs. Billion H1 05 H1 04 % change FY 04

Order Booking :19.75 20.85 Domestic 34.77 38.69 (10%) 97.52 4.25 10.83 Export 10.96 12.66 (13%) 18.81

24.00 31.68 Total 45.73 51.35 (11%) 116.33 Gross Sales:

19.53 14.71 Domestic 38.05 25.96 47% 68.95 6.03 2.48 Export 10.24 4.27 140% 13.07

25.56 17.19 Total 48.29 30.23 60% 82.02 0.04 0.12 Other Income 0.08 0.19 0.50

25.60 17.31 Total Revenues 48.37 30.42 59% 82.52

Order Backlog 164.32 156.97 5% 172.64 Note : Total Revenues excludes Inter Segment Sales.

• Order booking levels higher than budget targets, though lower than previous year

– Strong pipeline expected to result in pick up in the second half• Sales growth continues to be robust• Backlog at healthy levels

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E&C – Major Domestic Orders in Q2

Rs. MillionCivil works Systems for construction of Airport Terminal, Building, Runway and other works for Bangalore International Airport 5000New excavation and lining of Polavaram right main canal for Department of Irrigation, Government of Andhra Pradesh 1800Construction of training centre and office block and electrification works for HSBC at Hyderabad 740Construction of dam, facilities and associated works across the river Kurket at Raigarh, Chattisgarh for Jindal Power Limited 540Architecture and finishing works in Delhi Central Secretarial railway station for International Metro Civil Contractors

440

Supply, erection, testing and commissioning of 400 kv DC Transmission Lines from Satna to Hatta in MPfor PGCIL

Construction of residential complex at Goregaon, Mumbai for Kingston Properties Private Limited

430

420

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E&C – Major International Orders in Q2

Rs. Million

Engineering, procurement , construction and commissioning of gasreinjection facility at Abu Dhabi for Bunduq Company Limited 2410

Manufacture and supply of 2 sets of Coal Gasifiers to China for Shenhua International Limited

1890

Manufacture and supply of Reactors for Petro Canada 280

Manufacture and supply of Naptha Hydrotreator to Calgary, Canada for Canada Natural Resources Limited 210

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Sector-wise Order Backlog

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10

19

17

37

88

25

46

13

5

17

21

48

9

17

21

10

35

17

19

20

14

30

17

16

19

12

35

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0%

20%

40%

60%

80%

100%

'99-00 '00-01 '01-02 '02-03 '03-04 'H1-05

Process Oil & Gas Power Infrastructure Others

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Engineering & Construction

Q2 05 Q2 04 Rs. Billion H1' 05 H1'04 % change FY 04

25.60 17.31 Total Revenues (1) 48.37 30.42 59% 82.52 0.15 0.26 Excise Duty 0.38 0.37 1.54

25.45 17.05 Net Revenues 47.99 30.05 80.98 0.99 0.91 EBITDA (2) 2.32 1.76 32% 6.69 3.9% 5.3% EBITDA/Tot. Rev. 4.8% 5.8% 8.1%0.85 0.78 EBIT 2.04 1.50 36% 6.13

Segment Assets (Net) 29.67 21.67 25.94 1. Total Revenues exclude inter-segment sales

2. EBITDA include share of profits from integ rated JVs

• Margins remain subdued due to some low margins jobs– Higher than budget targets– Margins would pick up in the second half

• Asset turnover ratios continue to improve. – 3.7 times, as against 3.2 as at H1’04 (moving average)

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Electricals & Electronics

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Electrical & ElectronicsQ2 05 Q2 04 Rs. Billion H1'05 H1'04

% change

FY'04

2.63 2.16 Domestic Sales 4.92 4.02 22% 8.960.19 0.22 Exports 0.36 0.27 33% 0.622.82 2.38 Total Revenues (1) 5.28 4.29 23% 9.58 0.24 0.18 Excise Duty 0.45 0.34 0.76 2.58 2.20 Net Revenues 4.83 3.95 22% 8.82 0.42 0.27 EBITDA 0.66 0.42 57% 1.23

14.9% 11.3% EBITDA/Tot. Rev. 12.5% 9.8% 12.8%0.39 0.24 EBIT 0.60 0.37 62% 1.13

Segment Assets 4.30 4.21 4.40

1 . Total revenue excludes inter-seg ment sales

• Continuing strong growth in revenues lead by standard products and electrical systems and equipments

• Margins improve on the back of higher realisations from electrical standard products and equipments, increased sale of new products and operational efficiencies

– Absorbed cost of developing the international markets• Continuing capital efficiencies, with asset turnover improving

from 2.1 to 2.4 times

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Other Businesses

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Diversified Businesses- “Others” SegmentQ2 05 Q2 04 Rs. Billion H1'05 H1'04

% change

FY'04

1.63 1.37 Domestic Sales 3.29 2.73 21% 6.170.02 0.06 Exports 0.05 0.13 -62% 0.300.17 0.08 Other Income 0.32 0.12 167% 0.381.82 1.51 Total Revenues (1) 3.66 2.98 23% 6.85 0.02 0.03 Excise Duty 0.05 0.07 0.15 1.80 1.48 Net Revenues 3.61 2.91 24% 6.70 0.21 0.16 EBITDA 0.47 0.21 124% 0.65

11.5% 10.6% EBITDA/Tot. Rev. 12.8% 7.0% 9.5%0.19 0.14 EBIT 0.43 0.18 139% 0.57

Segment Assets 2.51 2.32 2.67

• Revenues from the Welding & Industrial Products business grow substantially

• Significant increase in Other income being Freight & Pumping charges from the Ready Mix Concrete (RMC) business

– Increase of 54% in RMC revenues • Operating margins rise to 16% (H1’04: 10%) on the back of higher

realisations and better off-take

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Performance of Subsidiaries

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Larsen & Toubro Infotech LimitedFY 04 (Rs. Billion) H1'05 H1'04 % Change

3.78 Total Revenues 2.62 1.54 70%0.43 Operating Profit (PBDIT) 0.36 0.09 320%

11.4% % to Sales 13.6% 5.5%0.27 Depreciation/Amortisation 0.12 0.120.03 Financing Costs 0.05 0.020.13 PBT 0.18 (0.06)

0.12 PAT 0.16 (0.06) 3.3% PAT/Sales 6.2% (3.7%)

• Robust revenue growth helped by large orders received in the previous year

– Growth momentum to be sustained in the second half• Operating margins/Net Income show smart improvement with

the growth in revenues– Further improvements expected in the second half

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Summary Performance of SPVs

H1'04 Rs. Millions H1'05 % change1584 Total Income 1614 2%1428 PBDIT 1441 1%

405 PBT 510 26%248 PAT 393 58%

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Outlook

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Revenue and earnings for FY ‘05

• E&C Order booking growth expected around 20%

• Overall Revenue growth of 25%+– E&C revenues to grow by 30%– EBG revenues by more than 20%

• Margins to improve substantially in the second half for E&C segment

• EBG margins likely to be stable– Could show an improvement if realisation levels are

maintained and input costs are stable• Control over resources is a key focus area

– Efforts to improve the asset turns

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Thank You!