Dear Shareholders
 
 A multiplicity of business, economic and political factors made the
 year gone by among the most challenging in recent times. The global
 economy is seeking to recover from uncertainties centred on the
 European Union. Domestically, a deterioration in macroeconomic
 indicators and a marked deceleration in the investment momentum
 aggravated bearish sentiments in the capital markets. Infrastructure
 sectors have been hampered by resource constraints and other issues.
 Investment decisions, as a result, have seen prolonged deferment, with
 only a few projects being awarded.
 
 It is heartening, however, that the intrinsic strengths and embedded
 characteristics of the Indian economy still remain positive. GDP
 growth, at 6.5%, though sharply down from the levels that prevailed a
 couple of years back, still has the potential to revive.
 
 Performance Overview
 
 Against this backdrop, your Company has successfully steered a steady
 course and consolidated its position as Indias leading E&C player.
 Fresh Order Inflows at Rs 70,574 Cr enabled the year-end unexecuted
 Order Book position to increase by 11% to Rs 145,723 Cr, an all-time
 high for the Company. The slowdown in orders from the domestic market
 was partially compensated by growth in international orders, mainly
 from the Middle East region. International orders accounted for 18% of
 the full years Order Inflow.  L&T ensured on-track execution of
 projects that have been committed for delivery. This is reflected in
 the robust revenue of Rs 53,171 Cr, an increase of 21 % overFY11. Profit
 after tax, excluding exceptional and extraordinary items at Rs 4,413 Cr,
 translates to an increase of 20% over the previous year.
 
 At the group level, your Company recorded net revenues of Rs 64,313 Cr,
 an increase of 24% over FY11. Consolidated PAT, excluding exceptional
 and extraordinary items rose by 10% toRs  4,649 Cr during FY12.
 
 It gives me pleasure to announce that your Company has recommended a
 dividend of Rs 16.50 per equity share on a face value of Rs 2 per share
 for the year. The corresponding dividend during the previous fiscal
 stood at Rs 14.50 per equity share.
 
 Internationalisation
 
 Your Company is augmenting its presence in existing international
 markets such as Middle East and South East Asia Regions and expanding
 its footprints in new geographies like Australia, CIS and select
 African countries.  New offices have been set up at key locations such
 as Perth and Istanbul. A multi-cultural leadership team is being built
 through induction of expatriates with local knowledge, customer
 intimacy and domain expertise.
 
 Capacity Augmentation
 
 Over the last few years, your Company has built manufacturing
 capacities in areas of strategic significance and in low cost regions.
 Production at the state of the art manufacturing facilities for
 supercritical boilers and turbines, which were commissioned over a year
 ago, has been streamlined - thus enhancing productivity. This has been
 achieved through increased indigenisation of manufacturing processes.
 Facilities for manufacture of critical piping and Electrostatic
 Precipitators have recently been commissioned. A new switchgear
 manufacturing unit has been set up in Vadodara which is expected to
 lower cost of production. Greenfield and brownfield expansion of the
 manufacturing units for Low and Medium voltage electrical control panel
 are nearing completion in Ahmednagar (Maharashtra) and Coimbatore
 (Tamil Nadu). A shipyard capable of manufacturing a variety of
 specialised defence and commercial vessels is under commissioning.
 While some of the investments are capital intensive, the Company sees
 long term prospects for sustainable growth in these areas.
 
 Talent Management
 
 People are critical to L&Ts growth and enduring success.  Your Company
 has institutionalized a 5 Step Leadership Development initiative in
 association with a global consultancy firm to ensure a robust
 leadership pipeline. An expanded Leadership Development Academy forms a
 pivotal resource for this program. To address the needs of capability
 building at multiple levels, your Company also runs a world class L&T
 Institute of Project Management accredited by PMI of USA, and supports
 multiple CSTI (Construction Skill Training Institutes) across the
 country.
 
 Sustainable Development
 
 Sustainability remains high on your Companys agenda going forward. The
 Company is working actively on the green front, with considerable
 headway in energy conservation, renewable energy usage, water
 conservation and waste management. On the social development front, our
 thrust areas are mother & child health, education and skill building.
 In the last two years, your Companys sustainability reporting secured
 various national and international accolades, recognizing its
 significant efforts in this area.
 
 Succession
 
 To address demands of the changing business environment and future
 growth prospects, the Board of your Company decided to further
 strengthen the top leadership of the Company by elevating Mr K.
 Venkataramanan as CEO and Managing Director with effect from April 1,
 2012. This will enable the Executive Chairman to focus on value
 creation through portfolio restructuring, institutionalising the
 Independent Company structure, mentoring the leadership team to face
 global challenges and implementing the strategic plans as laid out in
 Lakshya 2016. A younger generation of Directors have been brought on
 the Board to ensure long term sustainable leadership.
 
 Outlook
 
 Despite the challenging macro environment, your Companys range of
 offerings straddling multiple areas in the infrastructure and energy
 sectors allows sighting of opportunities which could fructify into
 project awards.  Some segments within these sectors holding out promise
 of growth in FY13 are:
 
 1 Infrastructure
 
 a Roads - the program of road building continues and in FY13, NHAI is
 likely to bid over 8,000 km of road contracts, some through
 construction awards and the majority through BOT concessions.
 
 b Metro and Mono Rail - a number of Tier-1 and Tier-2 cities have
 kick-started projects to implement metro and / or mono rail systems,
 since this has proven to be one of the best solutions for decongesting
 urban traffic.
 
 The aggregate of these prospects presents a large and profitable basket
 of opportunities.
 
 c Railways Business - With the Dedicated Freight Corridor taking shape,
 large opportunities are expected to materialise commencing FY13. Indian
 Railways is also augmenting and upgrading its network, which gives rise
 to business potential in this area.
 
 d Water Projects - Standard water management facilities (bulk
 transmission, water treatment, effluent treatment, etc) as well as
 advanced water solutions such as Desalination and Reverse Osmosis
 plants provide good opportunity for growth. Apart from domestic
 markets, your Company expects good prospects in Qatar, Saudi Arabia,
 UAE and Oman by offering total water solutions.
 
 e Urban Infrastructure - Strong drivers such as population density,
 high nominal GDP growth, high domestic savings and increasing
 aspiration levels are driving an urban transformation. This is opening
 up opportunities in areas of residential housing, commercial office
 space, hotels, hospitals, educational institutions and shopping
 complexes in Tier 1, 2 & 3 cities.
 
 f Airports - The Aviation industry seems to be poised for sustained
 growth with increasing trends of both passenger and cargo traffic,
 annually. Opportunities are opening up with expansion plans of many
 non-metro airports in India and internationally in the Middle East,
 Asia, Africa and South East Asia.
 
 g International Markets - Your Company is targeting the Middle East and
 other Asian markets for infrastructure business in areas such as
 Airports, Roads, Bridges, Water Treatment and Power Transmission.
 
 2 Heavy Engineering
 
 Your Company is one of the worlds leading manufacturers of the
 technology-intensive custom-built equipment and expects to continue its
 growth in process equipment in FY13. Although the unfortunate Fukushima
 nuclear incident in Japan has reduced the pace of growth in this
 sector, your Company is targeting international prospects such as Spent
 Fuel storage equipment and decommissioning of Generation II plants. The
 defence sector shows good promise in the medium to long term - both in
 land and marine business segments. The Defence Offset Programme and
 recent Government initiatives for encouraging private sector for
 partnering with Defence Public Sector Undertakings provide a range of
 opportunities.
 
 3 Hydrocarbon
 
 Indias efforts to achieve minimum energy security can only be
 successful through investment in development of upstream assets. While
 capex spends on downstream facilities creation is likely to remain
 modest for some time, investment in deep sea projects and new pipeline
 networks are likely generate opportunity. Fertiliser capex is likely to
 revive in FY13 and should provide promising business opportunities.
 Your Companys thrust on international markets has yielded results,
 with several prestigious international project orders during the year.
 In addition to GCC markets, your Company is targeting select
 opportunities in new geographies like South East Asia, Australia,
 Africa & CIS through local country presence, strategic partnerships,
 etc.
 
 4 Thermal Power
 
 While power is one of the largest bottlenecks to economic growth,
 investment decisions to set up fresh capacity for coal and gas fired
 power plants remain uncertain due to constraints of coal / gas, land,
 water, environment clearance and long term finance. While boiler and
 turbine manufacturing capacities are likely to be well utilised for the
 current year, improved order inflow is critical for a robust FY14. Your
 Company, however, is geared to leverage its capabilities in the power
 sector both in India and nearby countries.
 
 5 Power Transmission & Distribution
 
 Your Company has demonstrated an impressive order book growth in FY12
 both in domestic and international markets, backed by strong EPC,
 fabrication, testing and execution capabilities. The increased
 investments in India by government undertakings and strengthening of
 transmission grids in GCC countries provide significant business
 opportunities for power transmission and distribution business.
 
 6 Metallurgical & Material Handling
 
 The short term outlook in this area remains challenging due to
 complexities of present mining policies, delays in land acquisition and
 environmental clearances.  The demand, however, for metals in the
 medium to long term is expected to grow, driven by capex plans by
 Integrated Steel Players, increased consumption and investments in
 infrastructure.  Material handling prospects are also looking up in
 areas of power, mining, steel and ports.
 
 7 Electrical & Automation
 
 Although sluggish offtake from industrial sectors led to muted overall
 growth in FY12, agriculture and buildings sectors are providing growth
 opportunities to this business. Business is focusing on forging ahead
 with world class contemporary products, and has filed 162 patent
 applications in FY12. The Electrical & Automation business can expect
 an upward momentum when the general economy improves.
 
 8 Machinery & Industrial Products
 
 Machinery & Industrial Products business has been affected by general
 slowdown, deceleration in industrial activity, and restrictions on
 mining. In Industrial Products, valves maintained the positive trend in
 FY12, registering a healthy growth in order inflow and sales. Sustained
 oil & gas project activities in the Middle East, North Africa and
 Australia provide good opportunities. The Construction Machinery
 Business successfully sustained the performance of the preceding year
 in a market which witnessed intense competition. The Business Unit has
 maintained its leadership position in the premium market segment and
 strengthened its position with new offerings in Large Size Mining
 Equipment.
 
 9 Information Technology & Integrated Engineering Services
 
 L&T Infotech, a wholly owned subsidiary, grew at 30% Y-o-Y on a
 consolidated basis with over 90% of its revenues from overseas clients.
 Profit after Tax grew by 33% in spite of withdrawal of STPI Tax
 benefits in FY12 through tax policy change. L&T Infotech has taken
 several initiatives for operational excellence, tapping new markets and
 forging strategic alliances to provide solutions in upcoming
 technologies.
 
 Integrated Engineering Services, an SBU within L&T and a provider of
 engineering services, is a global operator with 94% of its business
 from overseas. It has shown a robust growth of 64% in the revenues
 during the current fiscal, despite economic slowdown in USA, Europe,
 etc. With growing clientele, the business is poised for encouraging
 growth over the next few years.
 
 10 Financial Services
 
 L&T Finance Holdings Ltd. made its debut in Equity Capital Markets in
 FY12 through a maiden IPO which received overwhelming response from
 investors. The business continued its growth momentum during FY12 with
 a 42% growth in its consolidated Total Income and a growth of 16% in
 Profits after Tax. The Loans and advances extended by the Financial
 Services Companies have grown by 39% and stands at Rs 25,442 Cr at
 end-FY12. The Financial Services group is now a broad-based,
 diversified Financial Services provider and is benefiting from a solid
 growth platform.
 
 11 Developmental Projects
 
 Your company has built a significant portfolio of assets covering
 concessions, mainly in roads, ports, power generation and Metro rail.
 The majority of projects are in various stages of completion. While
 returns on developmental projects are typically back-ended, your
 Company would be seeking to unlock value through churning of mature
 assets within the portfolio and through equity partnership.
 
 Before ! conclude, I would like to thank all L&T-ites for their
 unstinted support and commitment during the challenging yet exciting
 period. I would also like to thank my fellow Board members for the
 support that they have unconditionally extended. I also extend my
 gratitude to our customers, supply chain partners and all other
 stakeholders for their continuous support. We remain committed to
 stakeholder value creation and will live up to the trust reposed in us.
 
 Thank you.
 
 A. M. Naik
 
 Chairman & Managing Director 
 
 Mumbai, May 14, 2012