Mar 31, 2023
The Directors have pleasure in presenting their 78th Annual Report and Audited Financial Statements for the year ended 31st March 2023.
V crore |
||
Particulars |
^^2022-23 |
2021-22 |
Profit before depreciation, exceptional items & tax |
11204.34 |
10913.91 |
Less: Depreciation, amortization, impairment and obsolescence |
1371.64 |
1172.50 |
Profit before exceptional items and tax |
9832.70 |
9741.41 |
Add: Exceptional Items |
- |
290.06 |
Profit before tax |
9832.70 |
10031.47 |
Less: Provision for tax |
1983.73 |
2152.02 |
Net Profit after tax |
7848.97 |
7879.45 |
Add: Balance brought forward from the previous year |
31131.14 |
25722.05 |
Less: Dividend paid for the previous year |
3091.42 |
2528.38 |
Add/(Less): Gain/(Loss) on remeasurement of the net defined benefits plans |
(25.37) |
58.02 |
Balance to be carried forward |
35863.32 |
31131.14 |
The total income for the financial year under review was ? 1,14,535.93 crore as against ? 1,04,613.06 crore for the previous financial year, registering an increase of 9.49%. The profit before tax excluding exceptional items was ? 9,832.70 crore for the financial year under review as against ? 9,741.41 crore for the previous financial year. The profit after tax excluding exceptional items was ? 7,848.97 crore for the financial year under review as against ? 7,612.16 crore for the previous financial year, registering an increase of 3.11%.
AMOUNT TO BE CARRIED TO GENERAL RESERVE:
The Company has not transferred any amount to the general reserve during the current financial year.
The Directors recommend payment of dividend of ? 24 (1200%) per equity share of face value of ? 2/- each on the share capital amounting to ? 3,373 crore, working out to a payout ratio of 43%.
The Dividend payment is based upon the parameters mentioned in the Dividend Distribution Policy approved by the Board of Directors of the Company which is in line with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Policy is uploaded on the Company''s website at
https://www.larsentoubro.com/corporate/about-lt-group/
During the year under review, the Company allotted 453,067 equity shares of ? 2/- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.
During the year, the Company repaid Non-convertible Debentures of ? 5,281 crore and short-term External Commercial Borrowings of USD 107 million, as per the repayment schedule.
The Company has issued and allotted on private placement basis, Unsecured, Rated, Listed, Redeemable Nonconvertible Debentures (NCDs) aggregating ? 2,000 crore during FY 2023. These NCDs are listed on the Wholesale Debt Market Segment of National Stock Exchange of India Limited. During FY 2023, the Company also received ? 450 crore (? 2.5 lakh each on 18,000 Debentures) towards the second call on partly paid-up Debentures issued by the Company in FY 2021. The funds raised through issuance of NCDs were utilized as per the objects stated in the Information Memorandum of the respective NCDs.
The Company has issued Commercial Papers amounting to ? 30,475 crore during FY 2023. As on date, the outstanding amount of Commercial Papers is ? 8,725 crore.
The Company has not defaulted on payment of any dues to the financial lenders.
The Company''s borrowing programmes have received the highest credit ratings from CRISIL Ratings Limited, ICRA Limited and India Ratings and Research Private Limited. The details of the same are given on page 340 in Annexure ''B''
- Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.
SALE OF CARVED-OUT BUSINESS OF SMART WORLD & COMMUNICATION:
During FY 2023, the Company entered into Business Transfer Agreement with L&T Technology Services Limited (LTTS), a listed subsidiary of the Company, for sale of its carved-out Business of Smart World and Communication Business Unit to LTTS for a consideration of ? 800 crore, subject to customary working capital adjustments as set out in the Business Transfer Agreement. The approval of the shareholders was received on 14th February 2023 and the sale was completed on 1st April 2023. The valuation report with the details of valuation metrics and cash flow projections was made available for inspection of the shareholders during the Postal Ballot.
AMALGAMATION OF MINDTREE LIMITED WITH LTIMINDTREE LIMITED (ERSTWHILE LARSEN & TOUBRO INFOTECH LIMITED):
During the year under review, the Scheme of Amalgamation of Mindtree Limited with Larsen & Toubro Infotech Limited (LTI), listed subsidiaries of the Company, was approved by the Hon''ble National Company Law Tribunal, Mumbai Bench and Bangalore Bench and became effective from 14th November 2022. The name of LTI has been subsequently changed to ''LTIMindtree Limited'' with effect from 15th November 2022. As on 31st March 2023, the shareholding of the Company in the merged entity is 20,31,69,279 equity shares of face value ? 1 each representing 68.68% of the total share capital of LTIMindtree Limited.
As at 31st March 2023, the gross value of property, plant and equipment, investment property and other intangible assets including leased assets, were at ? 19,937.14 crore and the net value of property, plant and equipment, investment property and other intangible assets, including leased assets were at ? 11,710.73 crore. Capital Expenditure during the year amounted to ? 2,396.90 crore.
During the year under review, the Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the rules framed thereunder. The requisite return for FY 2022 with respect to amount(s) not considered as deposits has been filed. The Company does not have any unclaimed deposits as of date.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / associate / joint venture companies. The details of investments / divestments in subsidiary companies during the year are as under:
A) Shares subscribed/ acquired during the year: |
||
Name of the |
Type of |
No. of shares |
Company |
Shares |
|
L&T Infrastructure |
Preference |
1,13,500 |
Developers Limited |
(Bonus Issue) |
|
L&T Network Services Private Limited |
Equity |
90,00,000 |
L&T Metro Rail (Hyderabad) Limited |
Equity |
220,00,00,000* |
PT. Larsen Toubro (Indonesia) |
Equity |
25,700 |
L&T Seawoods Limited |
Equity (Bonus Issue) |
4,19,91,050 |
L&T Energy Hydrocarbon Engineering Limited (Formerly known as L&T Chiyoda Limited) |
Equity |
45,00,000 |
* Subscribed to equity shares of face value ? 10 each and paid ? 6 per share on application. Balance ? 4 per share was paid on April 28, 2023 towards call money.
B) Companies Struck off/liquidated:
The approval is still awaited with respect to the application to the Ministry of Corporate Affairs for strike off under the provisions of Companies Act, 2013 of Kesun Iron and Steel Company Private Limited made on 15th December 2021.
Larsen & Toubro LLC (Delaware, USA) was liquidated on 13th September 2022.
C) Equity shares sold / transferred / reduced during the year:
Pursuant to the Order dated 13th January 2023, passed by the National Company Law Tribunal,
Mumbai bench, the equity share capital of L&T Power Development Limited, a wholly owned subsidiary was reduced by 82,30,36,795 shares aggregating to ? 823.04 crore by way of return of cash amounting to ? 220.09 crore and adjustment of ? 602.95 crore against capital not represented by assets.
The Company has signed an agreement on 16th December 2022 to divest its 51% stake in L&T Infrastructure Development Projects Limited (L&T IDPL) to a portfolio company of Infrastructure Yield Plus II, an infrastructure fund managed by Edelweiss Alternatives. The sale would be completed on meeting the closing conditions as per the agreement.
A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 682 to 692 of this Integrated Annual Report.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is placed on the Company''s website at https://www.larsentoubro.com/corporate/about-lt-group/corporate-policies/. The Company does not have any material subsidiaries as on the date of this report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under Section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in Note 57 forming part of the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
Pursuant to the amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has revised its existing Related Party Transactions Policy to align it with the requirements of the said Regulations.
The updated Related Party Transactions Policy has been uploaded on the Company''s website https://www.larsentoubro.com/corporate/about-lt-group/ corporate-policies/.
The Company has a process in place to periodically review and monitor Related Party Transactions.
All related party transactions entered during FY 2023 were in the ordinary course of business and at arm''s length.
The Audit Committee has approved the related party transactions for FY 2023 and the estimated related party transactions for FY 2024.
There were no Related Party Transactions that have conflict with the interest of the Company.
The Company is seeking an enabling approval for certain material related party transactions at the ensuing Annual General Meeting (AGM). Shareholders are requested to refer to the AGM notice at pages 285 to 305 of this Integrated Annual Report, for details of the proposed material related party transactions.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY,BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
Other than stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure ''A'' forming part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/RETIRED:
Mr. J. D. Patil ceased to be a Whole-time Director of the Company with effect from 30th June 2022 on account of superannuation from the services of the Company.
Mr. D. K. Sen ceased to be a Whole-time Director of the Company with effect from 7th April 2023 on account of superannuation from the services of the Company.
The Board places on record its appreciation towards the valuable contribution made by them during their tenure as Directors of the Company.
Pursuant to the recommendation of the Nomination and Remuneration Committee (NRC), the Board and shareholders have approved the appointment of Mr. Anil V. Parab as Whole-time Director for a period of five years with effect from 5th August 2022.
Mr. A. M. Naik has decided to step down as NonExecutive Chairman of the Company with effect from 30th September 2023. He has been conferred the status of "Chairman Emeritus" by the Board.
The Board, pursuant to the recommendation of the NRC, appointed Mr. S.N Subrahmanyan as Chairman and re-designated as Chairman and Managing Director of the Company with effect from 1st October 2023.
Based on the recommendation of the NRC, the Board at its Meeting held on 10th May 2023, has approved the appointment of Mr. Jyoti Sagar as Independent Director of the Company with effect from 10th May 2023 upto 18th March 2028 and Mr. Rajnish Kumar as Independent Director with effect from 10th May 2023 upto 9th May 2028, subject to the approval of shareholders through special resolution. The NRC considered the appointment of Mr. Jyoti Sagar and Mr. Rajnish Kumar as Independent Directors after evaluating the skills, knowledge and experience required on the Board as per the approved skill matrix.
Mr. A. M. Naik, Mr. Hemant Bhargava and Mr. M. V.
Satish, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.
The notice convening the AGM includes the proposal for appointment/ re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors are in compliance with the provisions of the Companies Act, 2013 and are placed on the website of the Company https://investors.larsentoubro.com/listing-compliance-disclosuresunderstatutes.aspx.
The Company has also disclosed on its website https://investors.larsentoubro.com/listing-compliance-disclosuresunderstatutes.aspx details of the familiarization programs to educate the Independent Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure ''B'' - Report on Corporate Governance forming part of this Report. Members are requested to refer to page 320 of this Integrated Annual Report.
The Company has constituted an Audit Committee in terms of the requirements of the Companies Act, 2013
read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 324 to 326 of this Integrated Annual Report.
STAKEHOLDERS RELATIONSHIP COMMITTEE:
The Company has constituted a Stakeholders Relationship Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 330 and 331 of this Integrated Annual Report.
NOMINATION AND REMUNERATION COMMITTEE:
The Company has constituted a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 326 to 330 of this Integrated Annual Report.
The Company has constituted a Board Risk Management Committee in terms of the requirements of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable provisions, if any. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 332 and 333 of this Integrated Annual Report.
COMPANY POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The NRC has formulated a policy on Directors'' appointment and remuneration including recommendation of remuneration of the key managerial personnel and senior management personnel, and the criteria for determining qualifications, positive attributes and independence of a Director. Nomination and Remuneration Policy is provided as Annexure ''F'' forming part of this Board Report and also disclosed on the Company''s website at https://www.larsentoubro.com/corporate/about-lt-group/ corporate-policies/. The NRC has also formulated a separate policy on Board Diversity.
The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from Independent Directors confirming that he/she is not disqualified from being appointed/re-appointed/continue as an Independent Director as per the criteria laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The same are also displayed on the website of the Company https://investors.larsentoubro.com/listing-compliance-disclosuresunderstatutes.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
The Independent Directors of the Company have registered themselves with the data bank maintained by Indian Institute of Corporate Affairs (IICA). In terms of Section 150 of the Companies Act, 2013 read with Rule 6(4) of the Companies (Appointment & Qualification of Directors) Rules, 2014, all Independent Directors are exempted from undertaking the online proficiency self-assessment test conducted by the IICA.
The Nomination and Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, Committees, Individual Directors, Chief Executive Officer & Managing Director (CEO & MD) and the Chairman has to be made.
All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual Directors, CEO & MD and the Chairman.
As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The same external consultant''s IT platform was used for the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Company''s IT system. This has enabled unbiased feedback.
The Board Performance Evaluation inputs, including areas of improvement for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meetings of the Nomination and Remuneration Committee and the Board of Directors held on 10th May 2023.
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder, are given in Annexure ''D'' forming part of this Board Report.
The information in respect of employees of the Company pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure ''G'' forming part of this report. In terms of Section 136(1) of the Companies Act, 2013 and the rules made thereunder, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of Internal Financial Controls to be followed by the Company and such Internal Financial Controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)(e) of the Companies Act, 2013. For the year ended 31st March 2023, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Company''s operations.
As the members are aware, the Company''s shares are compulsorily tradable in electronic form. As on 31st March 2023, 99.02% of the Company''s total paid up capital representing 1,39,16,53,296 shares are in dematerialized form.
Pursuant to amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, requests for effecting transfer of securities in physical form, shall not be processed by the Company and all requests for transmission, transposition, issue of duplicate share certificate, claim from unclaimed suspense account, renewal/exchange of securities certificate, endorsement, sub-division/split of securities certificate and consolidation of securities certificates/folios need to be processed only in dematerialized form. In such cases, the Company will issue a letter of confirmation, which needs to be submitted to Depository Participant(s) to get credit of the securities in dematerialized form. Shareholders desirous of availing these services are requested to refer to the detailed procedure for availing these services provided on the website of the Company at https://investors.larsentoubro.com/shareholder-services.aspx.
The Company has availed a special contingency insurance policy towards the risks arising out of the requirements relating to issuance of duplicate securities, pursuant to SEBI Circular dated 25th May 2022.
In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical form are advised to avail of the facility of dematerialization from either of the Depositories.
In adherence to SEBI''s circular to enhance the due-diligence for dematerialization of the physical shares, the Company has provided the static database of the shareholders holding shares in physical form to the depositories which would augment the integrity of its existing systems and enable the depositories to validate any dematerialization request.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company has been regularly sending communications to members whose dividends are unclaimed requesting them to provide/update bank details with Registrar and Transfer Agents (RTA)/Depository Participants/Company, so that dividends paid by the Company are credited to the investors'' account on time. Efforts are also made by the Company in co-ordination with the RTA to locate the shareholders who have not claimed their dues.
Despite these efforts, an amount of ? 10.84 crore which was due and payable and remained unclaimed and unpaid for a period of seven years, was transferred to Investor Education and Protection Fund (IEPF) as provided in Section 125 of the Companies Act, 2013 and the rules made thereunder.
Cumulatively, the amount transferred to the said fund was ? 57.64 crore as on 31st March 2023.
In accordance with the provisions of the Section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''IEPF Rules''), the Company has transferred 2,83,301 equity shares of ? 2 each (0.02% of total number of shares) held by 2,141 shareholders (0.15% of total shareholders) to IEPF. The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial year 2014-15. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules. The detailed procedure for claiming shares/dividend transferred to IEPF is made available on the Company''s website at https://investors.larsentoubro.com/Investor-FAQ.aspx.
The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers
providing the details of the shares due for transfer to enable them to take appropriate action. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend except rights shares shall be credited to IEPF.
CORPORATE SOCIAL RESPONSIBILITY:
The Company has constituted a Corporate Social Responsibility (CSR) Committee in terms of the requirements of Section 135 of the Companies Act, 2013 read with the rules made thereunder.
The CSR policy framework is available on the Company''s website at https://www.larsentoubro.com/corporate/ about-lt-group/corporate-policies/ and the Annual Action Plan is available on the Company''s website at https://investors.larsentoubro.com/listing-compliance-disclosuresunderstatutes.aspx.
A brief note regarding the Company''s initiatives with respect to CSR and the composition of the CSR Committee is given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Please refer to Pages 331 and 332 of this Integrated Annual Report.
The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming part of this Board Report.
The Chief Financial Officer of the Company has certified that CSR funds so disbursed for the projects have been utilized for the purposes and in the manner as approved by the Board.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company believes that every woman employee should have the opportunity to work in an environment free from any conduct which can be considered as Sexual Harassment.
The Company is committed to treating every employee with dignity and respect. The Company has formulated a policy on ''Protection of Women''s Rights at Workplace'' as per the provisions of the Sexual Harassment of Women
at Workplace (Prevention, Prohibition & Redressal) Act,
2013 and Rules, 2013 (POSH Act and Rules). The policy is applicable to all L&T establishments located in India. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees to ensure implementation and compliance with the provisions of the aforesaid Act and the Rules.
This Policy encompasses the following objectives:
⢠To define Sexual Harassment;
⢠To lay down the guidelines for reporting acts of Sexual Harassment at the workplace; and
⢠To provide the procedure for the resolution and redressal of complaints of Sexual Harassment.
A detailed procedure for making a Complaint, initiating an enquiry, redressal process and preparation of report within a stipulated timeline is laid out in the Policy document.
The Policy also covers Disciplinary Action for Sexual Harassment. The Policy is uploaded on the Company''s website at https://www.larsentoubro.com/corporate/ about-lt-group/corporate-policies/.
Training programs and workshops for employees are organised throughout the year. The orientation programs for new recruits include awareness sessions on prevention of sexual harassment and upholding the dignity of employees. Specific programs have been created on the digital platform to sensitize employees to uphold the dignity of their colleagues and prevention of sexual harassment. During FY 2023, about 12,473 employees have undergone training through the programs/ workshops including the awareness sessions held on digital platform.
There were 2 complaints received during the FY 2023. Both the complaints were redressed as per the provisions of the POSH Act and Rules.
⢠ESOP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The disclosure relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the Securities and Exchange Board of India (Share Based Employee Benefit and Sweat Equity) Regulations, 2021 (SBEB Regulations) is provided on the website of the Company https://investors.larsentoubro.com/listing-compliance-agm.aspx.
A certificate obtained from the Secretarial Auditors, confirming that the ESOP Schemes of the Company are in compliance with the SBEB Regulations and that the Company has complied with the provisions of the Companies Act, 2013 is also provided in Annexure ''B'' forming part of this Report.
⢠Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance with Corporate Governance requirements provided in the aforesaid Regulations, are provided in Annexure ''B'' forming part of this Report.
⢠Business Responsibility and Sustainability Reporting: As per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, the Business Responsibility and Sustainability Report forms a part of this Integrated Annual Report (refer pages 240 to 284).
⢠Integrated Reporting: The Company is complying with the applicable requirements of the Integrated Reporting Framework. The Integrated Report tracks the sustainability performance of the organization and its interconnectedness with the financial performance, showcasing how the Company is adding value to its stakeholders. The Integrated Report forms a part of this Integrated Annual Report.
⢠Annual Return: The Annual Return of the Company for the FY 2023 is available on our website https://investors.larsentoubro.com/listing-compliance-agm.aspx.
⢠Statutory Compliance: The Company has adequate systems and processes in place to comply with all applicable laws and regulations, pay applicable taxes on time and ensures statutory CSR spend.
⢠MSME: The Company has registered itself on Trade Receivables Discounting System platform (TReDS) through the service provider Receivables Exchange of India Limited. The Company complies with the requirement of submitting a half yearly returns to the Ministry of Corporate Affairs within the prescribed timelines.
⢠IBC: There are no proceedings pending against the Company under the Insolvency and Bankruptcy Code,
2016.
⢠KYC registration for holders of physical securities:
As per SEBI circular dated 16th March 2023, the Company has sent notice to all holders of physical securities asking them to furnish their PAN, details of
Nomination, Contact details (viz. address, mobile and E-mail), Bank Account details and specimen signature ("KYC information") to KFin Technologies Limited (RTA) on or before 30th September 2023. In case the shareholders fail to update KYC Information on or before 30th September 2023, their folios shall be frozen by the RTA as per above SEBI Circular and such shareholders will be eligible for payment of dividend or lodging any grievance or availing any service request from the RTA only after furnishing the KYC information as specified above.
All shareholders of the Company holding shares in physical form are requested to update their KYC information with RTA at the earliest.
The relevant forms for updating the KYC information are provided on the website of the Company at https://investors.larsentoubro.com/ DownloadableForms.aspx.
⢠Reporting of fraud: The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.
⢠Remuneration received by Whole time Director from subsidiary company: Mr. D. K. Sen, Wholetime Director of the Company (till 7th April 2023)
is also the Managing Director of L&T Infrastructure Development Projects Limited (L&T IDPL), a subsidiary of the Company. During the year 2022-23, part of the remuneration paid to Mr. Sen was charged to L&T IDPL. Accordingly, the Company has recovered an amount of ^ 2 crore from L&T IDPL for remuneration paid to Mr. Sen.
The Company has a Whistle Blower Policy in place since 2004. The Policy has been modified to meet the requirements of Vigil Mechanism under the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Whistle Blower Policy is available on the Company''s website https://www.larsentoubro.com/corporate/about-lt-group/ corporate-policies/.
Also see pages 333 and 334 forming part of Annexure ''B'' of this Board Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts
or tribunals impacting the going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors are pleased to attach the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS).
The Auditors'' report to the Shareholders does not contain any qualification, observation or disclaimer or adverse remark.
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure ''E'' forming part of this Board Report. The Secretarial Audit Report does not contain any qualification, reservation or disclaimer or adverse remark.
M/s. Deloitte Haskins & Sells LLP are the Statutory Auditors of the Company and shall hold office till the conclusion of 80th Annual General Meeting of the Company.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors attend the Annual General Meeting of the Company. Also see pages 334 and 335 forming part of Annexure ''B'' of this Board Report.
The provisions of Section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31st March 2023.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on 10th May 2023, has approved the appointment of M/s. R. Nanabhoy & Co., Cost Accountants, as the Cost Auditors for the Company for the financial year ending 31st March 2024 at a remuneration of ? 17 lakhs plus taxes and out of pocket expenses.
A proposal for ratification of remuneration of the Cost Auditor for the FY 2024 is placed before the Shareholders for approval in the ensuing Annual General Meeting.
The Report of the Cost Auditors for the financial year ended 31st March 2023 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.
The Directors take this opportunity to thank the Members, Customers, Supply Chain Partners, Employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory Authorities, Stock Exchanges and various other stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture Partners and Associates.
For and on behalf of the Board
Group Chairman (DIN: 00001514)
Date : 10th May 2023 Place : Mumbai
Mar 31, 2022
The Directors have pleasure in presenting their 77th Annual Report and Audited Financial Statements for the year ended 31st March 2022.
FINANCIAL RESULTS:
V crore |
||
Particulars |
^^2021-22 |
2020-21 |
Profit before depreciation, exceptional items and tax |
10913.91 |
9288.06 |
Less: Depreciation, amortization, impairment and obsolescence |
1172.50 |
1150.68 |
Profit before exceptional items and tax |
9741.41 |
8137.38 |
Add: Exceptional Items |
290.06 |
(2818.65) |
Profit before tax |
10031.47 |
5318.73 |
Less: Provision for tax |
2152.02 |
2171.42 |
Profit for the period from continuing operations |
7879.45 |
3147.31 |
Profit before tax from discontinued operations |
- |
11199.23 |
Less: Tax expense of discontinued operations |
- |
2548.75 |
Net profit after tax from discontinued operations |
- |
8650.48 |
Net profit after tax from continuing operations and discontinued operations |
7879.45 |
1 1797.79 |
Add: Balance brought forward from the previous year |
25722.05 |
16957.17 |
Add: Change on account of business combination |
- |
838.62 |
Less: Dividend paid for the previous year |
2528.38 |
1123.23 |
Less: Interim dividend paid during the year |
- |
2527.66 |
Add: Gain on remeasurement of the net defined benefits plans |
58.02 |
39.36 |
Less: Capital redemption reserve |
- |
260.00 |
Balance to be carried forward |
31131.14 |
25722.05 |
The total income for the financial year under review was R 1,04,613.06 crore as against R 90,61 5.77 crore for the previous financial year, registering an increase of 15.45%. The profit before tax from continuing operations including exceptional items was R 10,031.47 crore for the financial year under review as against R 5,318.73 crore for the previous financial year. The profit after tax from continuing operations including exceptional items was R 7,879.45 crore for the financial year under review as against R 3,147.31 crore for the previous financial year, registering an increase of 1 50.36%.
AMOUNT TO BE CARRIED TO GENERAL RESERVE:
The Company has not transferred any amount to general reserve during the current financial year.
The Directors recommend payment of dividend of R 22/-(1,100%) per equity share of R 2/- each on the share capital amounting to R 3,091.06 crore.
The Dividend payment is based upon the parameters mentioned in the Dividend Distribution Policy approved
by the Board of Directors of the Company which is in line with regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Policy is uploaded on the Company''s website at https://www.larsentoubro.com/corporate/about-lt-group/ corporate-policies/.
During the year under review, the Company allotted 473,826 equity shares of R 2/- each upon exercise of stock options by eligible employees under the Employee Stock Option Schemes.
The Company''s Authorized Capital increased from R 5,025 crore to R 8,037 crore pursuant to amalgamation of L&T Hydrocarbon Engineering Limited with the Company vide order dated 28th January 2022 passed by Hon''ble National Company Law Tribunal, Mumbai bench.
During the year, the Company repaid Non-convertible Debentures (NCDs) of R 450 crore and short-term External Commercial Borrowings (ECB) of USD 100 million as per the repayment schedule.
The Company has exercised the first call on the partly paid up Debentures issued in the FY 2021 and raised R 450 crore (R 2.5 lakh each on 18,000 debentures) during FY 2022. The funds raised through issuance of NCDs have been utilized for repayment of existing maturing NCDs.
The Company has issued Commercial Papers amounting to R 5,800 crore during FY 2022. As on date, the outstanding amount of Commercial Papers is R 2,000 crore.
The Company has not defaulted on payment of any dues to the financial lenders.
The Company''s borrowing programmes have received the highest credit ratings from CRISIL, ICRA and India Ratings. The details of the same are given on page 313 in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.
SALE OF DIGITAL BUSINESS (L&T NxT):
During FY 2022, the Company sold its digital transformation business, incubated and operated as L&T NxT, to Mindtree Limited, a listed subsidiary of the Company, for a consideration of R 198 crore.
SCHEME OF ARRANGEMENT BETWEEN THE COMPANY AND L&T HYDROCARBON ENGINEERING LIMITED:
The Board of Directors of the Company had approved a Scheme for Amalgamation of L&T Hydrocarbon Engineering Limited (LTHE), a wholly owned subsidiary, with the Company. The rationale for the Scheme was to create cost effectiveness by integrating the Hydrocarbon business of LTHE and Engineering, Projects and Construction (EPC) power business of the Company.
The Scheme of Arrangement (the "Scheme") was approved by the Hon''ble National Company Law Tribunal, Mumbai Bench and became effective from 7th February 2022. The Appointed date for the Scheme is 1st April 2021.
Subsequently all the subsidiaries of LTHE have become direct subsidiaries of the Company.
AMALGAMATION OF MINDTREE LIMITED WITH LARSEN & TOUBRO INFOTECH LIMITED:
Subsequent to the year under review, the Board of Directors of Mindtree Limited (MT) and Larsen & Toubro Infotech Limited (LTI), listed subsidiaries of the Company, have approved a Scheme of Amalgamation of MT with LTI. The said scheme is subject to approval of the Shareholders and creditors of these subsidiaries and the approval of applicable regulators and the Hon''ble National Company Law Tribunals having jurisdiction over these subsidiary companies.
As at 31st March 2022, the gross value of property, plant and equipment, investment property and other intangible assets including leased assets, were at R 16,837.38 crore and the net value of property, plant and equipment, investment property and other intangible assets, including leased assets, were at R 9,695.93 crore. Capital Expenditure during the year amounted to R 1,410.29 crore.
During the year under review, the Company has not accepted deposits from the public falling within the ambit of section 73 of the Companies Act, 2013 and the rules framed thereunder, and the requisite returns have been filed. The Company does not have any unclaimed deposits as of date.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review, the Company acquired 6,82,25,347 equity shares of L&T Finance Holdings Limited (LTFHL) and presently holds 163,92,29,920 equity shares representing 66.26% of the total share capital of LTFHL.
L&T Uttaranchal Hydropower Limited (L&T UHPL) ceased to be a subsidiary of the Company pursuant to the sale of entire stake by the Company and L&T Power Development Limited (a wholly owned subsidiary) to ReNew Power Services Private Limited (ReNew) for a total consideration of R 1,003 crore. The Company held 142,68,50,000 preference shares in L&T UHPL which were entirely sold to ReNew.
Kesun Iron and Steel Company Private Limited has applied to the Ministry of Corporate Affairs for strike off under the provisions of Companies Act, 2013 on 15th December
2021. The approval is awaited.
Pursuant to an order passed by the National Company Law Tribunal, Mumbai bench, the equity share capital of L&T Seawoods Limited, a wholly owned subsidiary, was reduced to the extent of 30,00,00,000 equity shares aggregating to R 300 crore by way of return of surplus cash on 7th April
2022.
A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 611 to 622 of this Annual Report.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and the same is placed on the Company''s website at https://www.larsentoubro.com/ corporate/about-lt-group/corporate-policies/. The Company does not have any material subsidiaries as on the date of this report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in Notes 57 and 58 forming part of the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
Pursuant to the amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has revised its existing Related Party Transactions Policy to align it with the requirements of the said Regulations.
The Audit Committee and the Board of Directors have reviewed and approved the amended Related Party Transactions Policy and the same has been uploaded on the Company''s website https://www.larsentoubro.com/ corporate/about-lt-group/corporate-policies/.
The Company has a process in place to periodically review and monitor Related Party Transactions.
During the year under review, all related party transactions were in the ordinary course of business and at arm''s length. The Audit Committee has approved the related party transactions for the FY 2022 and the estimated related party transactions for FY 2023.
There were no related party transactions that have conflict with the interest of the Company.
The Company proposes to enter into a material related party transaction with L&T Finance Limited for providing a line of credit of R 2,000 crore for a period of 5 years from FY 2023 till FY 2027. The transaction is not a material related party transaction as per the provisions of the Companies Act, 2013. However, the said transaction exceeds the materiality threshold of R 1,000 crore as provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has sought an enabling approval from the Shareholders by means of a Postal Ballot. The results of the Postal Ballot will be declared on or before 18th May 2022.
The Company is seeking an enabling approval for certain material related party transactions at the ensuing Annual General Meeting (AGM). Shareholders are requested to refer to the AGM notice at pages 258 to 279 of this Annual Report, for details of the proposed related party transactions.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY,BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
Other than stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure ''A'' forming part of this Board Report.
The Board Risk Management Committee comprises Mr. Adil Zainulbhai, Mr. Sanjeev Aga and Mr. Subramanian Sarma, Directors of the Company. Mr. Adil Zainulbhai is the Chairman of the Committee.
The Charter of the Committee is to assist the Board in fulfilling its oversight responsibilities of reviewing the existing Risk Management Policy, Framework, Risk Management Structure and Risk Management Systems.
The Committee periodically reviews the risk status to ensure that executive management mitigates the risks by means of a properly designed framework.
For further details on risk management, please refer to page 306 of this Annual Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED:
Mr. Subodh Bhargava ceased to be an Independent Director of the Company with effect from March 29, 2022 on account of completion of his tenure. The Board places on record its appreciation towards valuable contribution made by him during his tenure as Director of the Company.
Pursuant to the recommendation of the Nomination and Remuneration Committee (NRC), the Board at its Meeting held on March 24, 2022 has approved the appointment of Mr. Pramit Jhaveri as an Independent Director for a period of five years with effect from April 1, 2022 till March 31, 2027, subject to the approval of shareholders through special resolution. The approval has been sought by means of a Postal Ballot and the results will be declared on or before 18th May 2022. The NRC considered the appointment of Mr. Jhaveri as an Independent Director after evaluating the skills, knowledge and experience required on the Board as per the approved skill matrix.
The Board pursuant to the recommendation of the NRC and report of his performance evaluation, re-appointed Mr. S.N Subrahmanyan as Chief Executive Officer and Managing Director of the Company for a period of five years from July 1, 2022 upto and including June 30, 2027. His appointment shall be subject to the approval of the shareholders.
Mr. Subramanian Sarma, Mr. S. V. Desai and Mr. T. Madhava Das, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.
The notice convening the AGM includes the proposal for re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors are in compliance with the provisions of the Companies Act, 2013 and are placed on the website of the Company http://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has also disclosed on its website http://investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs to educate the Independent Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure ''B'' - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 293 and 294 of this Annual Report.
The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 298 to 300 of this Annual Report.
STAKEHOLDERS RELATIONSHIP COMMITTEE:
The Company has in place a Stakeholders Relationship Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to page 304 of this Annual Report.
COMPANY POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 300 to 303 of this Annual Report.
The Committee has formulated a policy on Directors'' appointment and remuneration including recommendation of remuneration of the key managerial personnel and senior management personnel, and the criteria for determining qualifications, positive attributes and independence of a Director. Nomination and Remuneration Policy is provided as Annexure ''F'' forming part of this Board Report and also disclosed on the Company''s website at https://www.larsentoubro.com/corporate/about-lt-group/ corporate-policies/. The Committee has also formulated a separate policy on Board Diversity.
The Company has received Declarations of Independence as stipulated under section 149(7) of the Companies Act, 2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from Independent Directors confirming that he/she is not disqualified from being appointed/re-appointed/ continue as an Independent Director as per the criteria laid down in section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The same are also displayed on the website of the Company http://investors.larsentoubro.com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
The Independent Directors of the Company have registered themselves with the data bank maintained by Indian Institute of Corporate Affairs (IICA). In terms of section 150 of the Companies Act, 2013 read with Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Independent Directors, except Mr. Pramit Jhaveri, are exempted from undertaking the online proficiency self-assessment test conducted by IICA. Mr. Pramit Jhaveri shall complete the online proficiency self-assessment test within the prescribed timelines.
The Nomination and Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, Committees, Individual Directors, CEO & MD and the Chairman has to be made. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual Directors, CEO & MD and the Chairman.
For the year under review, the questionnaire was updated suitably based on the comments and suggestions received from Independent Directors. As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The same external consultant''s IT platform was used from initiation and till conclusion of the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Company''s IT system. This has enabled unbiased feedback.
The Board Performance Evaluation inputs, including areas of improvement for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meetings of the Nomination and Remuneration Committee and the Board of Directors held on May 12, 2022.
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder, are given in Annexure ''D'' forming part of this Board Report.
The information in respect of employees of the Company pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure ''G'' forming part of this report. In terms of section 136(1) of the Companies Act, 2013 and the rules made thereunder, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of Internal Financial Controls to be followed by the Company and such Internal Financial Controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to section 134(5)(e) of the Companies Act, 2013. For the year ended 31st March 2022, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Company''s operations.
As the members are aware, the Company''s shares are compulsorily tradable in electronic form. As on 31st March 2022, 98.89% of the Company''s total paid up capital representing 138,93,93,268 shares are in dematerialized form.
Pursuant to amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with effect from January 24, 2022, requests for effecting transfer of securities in physical form, shall not be processed by the Company and all requests for transmission, transposition, issue of duplicate share certificate, claim from unclaimed suspense account, renewal/exchange of securities certificate, endorsement, sub-division/split of securities certificate and consolidation of securities certificates/folios need to be processed only in dematerialized form. In such cases the Company will issue a letter of confirmation, which needs to be submitted to Depository Participant(s) to get credit of the securities in dematerialized form. Shareholders desirous of availing these services are requested to refer to the detailed procedure for availing these services provided on the website of the Company at https://investors.larsentoubro.com/shareholder-services.aspx.
In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical form are advised to avail of the facility of dematerialization from either of the Depositories.
In adherence to SEBI''s circular to enhance the due-diligence for dematerialization of the physical shares, the Company has provided the static database of the shareholders holding shares in physical form to the depositories which would augment the integrity of its existing systems and enable the depositories to validate any dematerialization request.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company has been regularly sending communications to members whose dividends are unclaimed requesting them to provide/update bank details with Registrar and Transfer Agents (RTA)/Company, so that dividends paid by the Company are credited to the investor''s account on time. Efforts are also made by the Company in
co-ordination with the RTA to locate the shareholders who have not claimed their dues.
Despite these efforts, an amount of R 9,12,62,638 which was due and payable and remained unclaimed and unpaid for a period of seven years, was transferred to Investor Education and Protection Fund (IEPF) as provided in section 125 of the Companies Act, 2013 and the rules made thereunder.
Cumulatively, the amount transferred to the said fund was R 46,79,35,382 as on 31st March 2022.
In accordance with the provisions of the section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''IEPF Rules''), the Company has transferred 3,17,463 equity shares of R 2 each (0.02% of total number of shares) held by 1,530 shareholders (0.10% of total shareholders) to IEPF. The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial year 2013-14. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.
The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers providing the details of the shares due for transfer to enable them to take appropriate action. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend except rights shares shall be credited to IEPF.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility (CSR) Committee comprises of Mr. M. M. Chitale, Mr. R. Shankar Raman and Mr. D. K. Sen as the Members. Mr. Chitale is the Chairman of the Committee.
The CSR policy framework and Annual Action Plan for FY 2023 is available on the Company''s website at https://investors.larsentoubro.com/corporate-governance. aspx.
A brief note regarding the Company''s initiatives with respect to CSR is given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Please refer to pages 304 to 306 of this Annual Report.
The disclosures required to be given under section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming part of this Board Report.
The Chief Financial Officer of the Company has certified that CSR funds so disbursed for the projects have been utilized for the purposes and in the manner as approved by the Board.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company believes that every employee should have the opportunity to work in an environment free from any conduct which can be considered as Sexual Harassment.
The Company is committed to treating every employee with dignity and respect. The Company has formulated a policy on ''Protection of Women''s Rights at Workplace'' as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules, 2013. The policy is applicable to all L&T establishments located in India. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees to ensure implementation and compliance with the provisions of the aforesaid Act and the Rules.
This Policy encompasses the following objectives:
⢠To define Sexual Harassment;
⢠To lay down the guidelines for reporting acts of Sexual Harassment at the workplace; and
⢠To provide the procedure for the resolution and redressal of complaints of Sexual Harassment.
A detailed procedure for making a Complaint, initiating an enquiry, redressal process and preparation of report within a stipulated timeline is laid out in the Policy document.
The Policy also covers Disciplinary Action for Sexual Harassment. The Policy is uploaded on the Company''s website at https://www.larsentoubro.com/corporate/about-lt-group/corporate-policies/ .
Training programs and workshops for employees are organised throughout the year. The orientation programs for new recruits include awareness sessions on prevention of sexual harassment and upholding the dignity of employees. Specific programs have been created on the digital platform to sensitize employees to uphold the dignity of their colleagues and prevention of sexual harassment. During FY 2022, about 11,100 employees have undergone training through the programs/ workshops including the awareness sessions held on digital platform.
There were 2 complaints received during the FY 2022. Both the complaints were redressed as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules, 2013.
⢠ESOP Disclosures: There has been no change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The disclosure relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the Securities and Exchange Board of India (Share Based Employee Benefit and Sweat Equity) Regulations, 2021 ("SBEB Regulations") is provided on the website of the Company https://investors.larsentoubro.com/Listing-Compliance.aspx.
A certificate obtained from the Secretarial Auditors, confirming that the ESOP Schemes of the Company are in compliance with the SBEB Regulations and that the Company has complied with the provisions of the Companies Act, 2013 and the SBEB Regulations is also provided in Annexure ''B'' forming part of this Report.
⢠Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance with Corporate Governance requirements provided in the aforesaid Regulations, are provided in Annexure ''B'' forming part of this Report.
⢠Business Responsibility and Sustainability Reporting: As per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility and Sustainability Reporting forms a part of this Annual Report (refer pages 210 to 257).
zz Integrated Reporting: The Company is complying with the applicable requirements of the Integrated Reporting Framework. The Integrated Report tracks the sustainability performance of the organization and its interconnectedness with the financial performance, showcasing how the Company is adding value to its stakeholders. The Integrated Report forms a part of this Annual Report.
⢠Annual Return: The Annual Return of the Company for the FY 2022 is available on our website https://investors.larsentoubro.com/Listing-Compliance.aspx.
⢠Statutory Compliance: The Company complies with all applicable laws and regulations, pays applicable taxes on time, ensures statutory CSR spend and initiates sustainable activities.
⢠MSME: The Company has registered itself on Trade Receivables Discounting System platform (TReDS) through the service providers Receivables Exchange of India Limited. The Company complies with the requirement of submitting a half yearly return to the Ministry of Corporate Affairs within the prescribed timelines.
⢠IBC: There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016 (IBC).
⢠Reporting of fraud: The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under section 143(12) of the Companies Act, 2013.
⢠Remuneration received by Whole-time Director from subsidiary company: Mr. D. K. Sen, Wholetime Director of the Company is also the Managing Director of L&T Infrastructure Development Projects Limited (L&T IDPL), a subsidiary of the Company. During FY 2022, part of the remuneration paid to Mr. Sen was charged to L&T IDPL. Accordingly, the Company has recovered an amount of R 1,81,18,283 from L&T IDPL for remuneration paid to Mr. Sen.
The Company has a Whistle-blower Policy in place since 2004. The Policy has been modified to meet the requirements of Vigil Mechanism under the Companies Act, 2013. The Whistle Blower Policy is available on the Company''s website https://www.larsentoubro.com/ corporate/about-lt-group/corporate-policies/.
Also see pages 307 and 308 forming part of Annexure ''B'' of this Board Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts
or tribunals impacting the going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors are pleased to attach the Consolidated Financial Statements pursuant to section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, prepared in accordance with the provisions of the Companies Act and the Indian Accounting Standards (Ind AS).
The Auditors'' report to the Shareholders does not contain any qualification, observation or adverse comment.
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure ''E'' forming part of this Board Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
M/s. Deloitte Haskins & Sells LLP were re-appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 75th Annual General Meeting till the conclusion of 80th Annual General Meeting of the Company.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of ICAI.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors attend the Annual General Meeting of the Company. Also see page 308 forming part of Annexure ''B'' of this Board Report.
The provisions of section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended March 31, 2022.
Pursuant to the provisions of section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at
its meeting held on 12th May 2022, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants, as the Cost Auditors for the Company for the financial year ending 31st March 2023 at a remuneration of R 17 lakhs plus taxes and out of pocket expenses.
A proposal for ratification of remuneration of the Cost Auditor for FY 2023 is placed before the Shareholders.
The Report of the Cost Auditors for the financial year ended 31st March 2022 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.
The Directors take this opportunity to thank the Customers, Supply Chain Partners, Employees, Financial Institutions,
Banks, Central and State Government authorities, Regulatory Authorities, Stock Exchanges and all other stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture Partners/Associates.
For and on behalf of the Board
Group Chairman (DIN: 00001514)
Date : 12th May 2022 Place : Mumbai
Mar 31, 2021
Dear Members,
The Directors have pleasure in presenting their 76th Annual Report and Audited Financial Statements for the year ended 31st March 2021.
FINANCIAL RESULTS: Particulars |
2020-21 |
2019-20 |
V crore |
V crore |
|
Profit before depreciation, exceptional items and tax |
8282.04 |
7379.43 |
Less: Depreciation, amortization, impairment and obsolescence |
1025.62 |
1020.51 |
Profit before exceptional items and tax |
7256.42 |
6358.92 |
Add: Exceptional items |
(2818.65) |
626.99 |
Profit before tax |
4437.77 |
6985.91 |
Less: Provision for tax |
1751.28 |
961.15 |
Profit for the year from continuing operations |
2686.49 |
6024.76 |
Profit before tax from discontinued operations |
11199.23 |
865.38 |
Less: Tax expense of discontinued operations |
2548.75 |
210.93 |
Net profit after tax from discontinued operations |
8650.48 |
654.45 |
Net profit after tax from continuing operations and discontinued operations |
11336.97 |
6679.21 |
Add: Balance brought forward from the previous year |
16957.17 |
15046.99 |
Less: Ind AS 116 transition adjustment |
â |
3.97 |
Less: Dividend paid for the previous year (*Including dividend distribution tax) |
1123.23 |
*2754.94 |
Less: Interim dividend paid during the year |
2527.66 |
1403.89 |
Less: (Profit)/loss on remeasurement of the net defined benefits plans/Equity instruments through other comprehensive income |
(32.04) |
512.96 |
Balance available for disposal (which the Directors appropriate as follows) |
24675.29 |
17050.44 |
Less: Debenture Redemption Reserve |
- |
93.27 |
Balance to be carried forward |
24675.29 |
16957.17 |
The total income for the financial year under review was R 76,751 crore as against R 85,192 crore for the previous financial year, registering a decrease of 9.91%, primarily due to the disruption caused by the COVID 19 pandemic. The profit before tax from continuing operations, including exceptional items, was lower at R 4,438 crore for the financial year under review as against R 6,986 crore for the previous financial year. The profit after tax from continuing operations, excluding exceptional items, was R 2,686 crore for the financial year under review as against R 6,025 crore for the previous financial year, registering a decrease of 55%.
AMOUNT TO BE CARRIED TO RESERVES:
The Company has not transferred any amount to the reserves during the current financial year.
During the Financial Year ended 31st March 2021, the Company paid a special dividend of R 18/- (900%) per equity share as interim dividend amounting to R 2,527.66 crore on successful divestment of Electrical and Automation business to Schneider Electric India Private Limited.
The Directors recommend payment of a final dividend of R 18/- (900%) per equity share of R 2/- each on the share capital amounting to R 2528.20 crore.
The total dividend for FY 2021, including the special dividend, if approved by shareholders, would amount to R 36/- (1800%) per equity share.
The Dividend payment is based upon the parameters mentioned in the Dividend Distribution Policy approved by the Board of Directors of the Company which is in line with regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy is attached as Annexure ''F'' forming a part of this Board Report and also uploaded on the Company''s website at https://investors.larsentoubro.com/Listing-Compliance.aspx.
During the year under review, the Company allotted 663,275 equity shares of R 2/- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.
The Company''s Authorized Capital increased to R 5,025 crore, pursuant to the approval of the Scheme of Amalgamation of L&T Shipbuilding Limited with the Company. The authorised share capital of L&T Shipbuilding Limited has been added to the authorised
share capital of the Company, with effect from the appointed date i.e. 1st April 2019.
The Company repaid long-term borrowings (including External Commercial Borrowings [ECB] and NonConvertible Debentures [NCDs]), as per schedule, of R 5,084 crore during the year. The Company has further raised a short-term ECB of USD 100 million for partly refinancing a maturing ECB.
The Company has issued and allotted on private placement basis, Unsecured, Rated, Listed, Redeemable NCDs aggregating to R 9,000 crore during the FY 2021. The funds raised were utilized mainly for creation of liquidity reserve to tide over pandemic related uncertainty. These NCDs are listed on the Wholesale Debt Market Segment of National Stock Exchange of India Limited.
The Company has issued Commercial Papers amounting to R 20,895 crore during FY 2021. As on 31st March 2021 the outstanding Commercial Paper is R 2,775 crore. The Company has listed its Commercial Papers on BSE Limited.
The Company has not defaulted on any of its dues to the financial lenders.
The Company''s borrowing programmes have received the highest credit ratings from CRISIL, ICRA and India Rating. The details of the same are given on page 119 in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.
DIVESTMENT OF ELECTRICAL AND AUTOMATION BUSINESS:
The divestment of the Electrical and Automation (E&A) business undertaking was completed on 31st August 2020 after fulfillment of necessary conditions.
CAPITAL EXPENDITURE:
As at 31st March 2021, the gross property, plant and equipment, investment property and other intangible assets including leased assets, were at R 14,222.27 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at R 8,640.71 crore. Capital Expenditure during the year amounted to R 720.26 crore.
DEPOSITS:
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the rules framed thereunder during the year under review. The Company does not have any unclaimed deposits as of date.
Pursuant to the Ministry of Corporate Affairs (MCA)
Deposits) Rules, 2014, the Company has filed with the Registrar of Companies (ROC) the requisite returns for outstanding receipt of money/loan by the Company, which are not considered as deposits as per the Companies Act, 2013 and the rules framed thereunder.
As the members are aware, the Company''s shares are compulsorily tradable in electronic form. As on 31st March 2021, 98.78% of the Company''s total paid up capital representing 138,73,80,965 shares are in dematerialized form.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that transfers, except transmission and transposition, of securities are to be carried out in dematerialized form only. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories. Accordingly, any investor desirous of transferring shares (which are held in physical form) can transfer only after their shares are dematerialized.
Further in adherence to SEBI''s circular to enhance the due-diligence for dematerialization of the physical shares, the Company has provided the static database of the shareholders holding shares in physical form to the depositories which would augment the integrity of its existing systems and enable the depositories to validate any dematerialization request.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company has been regularly sending communications to members whose dividends are unclaimed requesting them to provide/update bank details with RTA/Company, so that dividends paid by the Company are credited to the investor''s account on time. Efforts are also made by the Company in co-ordination with the RTA to locate the shareholders who have not claimed their dues.
Despite these efforts, an amount of R 7,81,84,801 which was due and payable and remained unclaimed and unpaid for a period of seven years, was transferred to Investor Education and Protection Fund (IEPF) as provided in section 125 of the Companies Act, 2013 and the rules made thereunder.
In addition to the above, the Company has also transferred an amount of R 23,59,657 pertaining to sale proceeds of fractional entitlement of Bonus shares issued in 2013.
Cumulatively, since the inception till 31st March 2021, the amount transferred to the said fund was R 37,66,72,744.
In accordance with the provisions of the Section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''IEPF Rules''), the Company has transferred 10,54,705 equity shares of R 2 each (0.08% of total number of shares) held by 12,982 shareholders (0.95% of total shareholders) to IEPF. The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the FY 2013. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules. On receipt of the application, the Company sends an online verification report to the IEPF Authority after verifying all the necessary details which is duly certified by the Nodal Officer.
The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers providing the details of the shares due for transfer to enable them to take appropriate action. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend except rights shares shall be credited to IEPF.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / associate / joint venture companies. The details of investments / divestments in subsidiary companies during the year are as under:
A) Shares acquired during the year: |
|||
Name of the Company |
Type of Shares |
No. of shares |
|
L&T Uttaranchal Hydropower Limited |
Preference |
6,44,00,000 |
|
L&T Geostructure Private Limited (Note 1) |
Equity |
2,47,50,000 |
|
L&T Finance Holdings Limited |
Equity (in Rights Issue) |
29,34,84,370 |
1. L&T Geostructure LLP was converted into L&T
Geostructure Private Limited on 25th November 2020. Pursuant to the same, 2,47,50,000 equity shares of
R 10 each have been allotted to the Company in lieu of the capital contribution in the LLP.
B) Preference shares redeemed during the year:
Name of the Company |
Type of shares |
Number of shares |
L&T Hydrocarbon Engineering Limited |
Preference |
26,00,00,000 |
L&T Cassidian Limited was struck off by the Registrar of Companies, vide its approval dated 28th January 2021.
Larsen & Toubro Hydrocarbon International Limited LLC was liquidated on 16th May 2020.
Kesun Iron and Steel Company Private Limited has applied to the Ministry of Corporate Affairs for strike off from Register of Companies under the provisions of Companies Act, 2013 on 11th February 2021. The approval is awaited.
D) Performance and Financial Position of subsidiary / associate and joint venture companies:
A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 561 to 573 of this Annual Report.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 and the same is placed on the website at https://investors.larsentoubro.com/Listing-Compliance.aspx. The Company does not have any material subsidiaries.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under Section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in Note 58 forming part of the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy, specifying
the individual threshold limits for each transaction and the same has been uploaded on the Company''s website https://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has a process in place to periodically review and monitor Related Party Transactions.
All the Related Party Transactions were in the ordinary course of business and at arm''s length. The Audit Committee has approved the related party transactions for the FY 2021 and estimated related party transactions for FY 2022.
There were no material Related Party Transactions during the year.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
Other than stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
COMPANY''S RESPONSE TO COVID-19:
The COVID-19 crisis disrupted the operations of the Company across the country, majorly during Q1 of FY 2021. The Company resumed operations from 14th April 2020, after implementation of standard protocols in line with the guidelines prescribed. All the plants and office establishments started functioning after implementing necessary safety and hygiene protocols like wearing of face masks, social distancing norms, workplace sanitation and employee awareness programmes etc in compliance with the regulations of the local authorities.
All international sites also resumed work with employees and workmen working in a staggered manner, mandatory rotation on a periodic basis and in adherence to all the safety protocols as prescribed locally.
A Decision Response Team was formed by the Company which assessed the situation and took appropriate decisions with respect to issuing directives for protecting its employees including contract workers, supporting communities and also protecting the financial health of the business.
The later quarters of FY 2021 saw the economy opening up gradually resulting in the revival of demand. Our
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personal hygiene and need to wear mask to prevent infection and avoid the spread of the virus. The Company has taken steps to create awareness amongst the nearby communities on health and hygiene through periodical campaigns.
The Company, through various internal communication, has encouraged its employees to get themselves vaccinated and the Company has also taken several steps to facilitate the same. The Company has also setup a number of dedicated quarantine centres for all employees and their immediate family members, who are prescribed quarantine and not able to isolate at home.
The Company has rolled out various schemes for retention of workers and keeping them safe at workplace including creation of dedicated quarantine rooms in all its major labour camps.
Considering the shortage of oxygen faced by the various hospitals in India, in wake of the second wave of COVID 19, the Company has started working towards a long-term solution to meet medical grade oxygen demand in the country. It has planned to provide medium/large oxygen generators to various hospitals where the scarcity is most acute. These permanent units will serve the hospitals for the next 10-15 years. The Company is working closely with the Government and Municipal Authorities towards providing ventilators, small oxygen generators, N95 masks, sanitizers, PPE kits and other medical equipment as required and available.
As the COVID-19 scenario is still evolving, the Company is mapping the developments on a real-time basis to ensure the health and safety of all its stakeholders. The impact of the lockdown disruption is being constantly assessed.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts)
Rules, 2014 is provided in Annexure ''A'' forming part of this Board Report.
The Risk Management Committee comprises Mr. Adil Zainulbhai, Mr. Sanjeev Aga and Mr. Subramanian Sarma, Directors of the Company. Mr. Adil Zainulbhai is the Chairman of the Committee.
The charter of the Committee is to assist the Board in fulfilling its oversight responsibilities for review of the existing Risk Management Policy, Framework, Risk Management Structure and Risk Management Systems.
The risk assessment includes review of strategic risks at domestic and international level including sectoral developments, risks related to market competition, financial, geographical, political and reputational issues, environment, social and governance risks and cyber security risks. The Committee periodically reviews the risk status to ensure that executive management mitigates the risks by appropriate actions.
For further details on risk management please refer to pages 111 and 112 of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee comprises Mr. M. M. Chitale, Mr. R. Shankar Raman and Mr. D. K.
Sen as the Members. Mr. Chitale is the Chairman of the Committee.
The CSR policy framework is available on the website https://investors.larsentoubro.com/Listing-Compliance.aspx.
A brief note regarding the Company''s initiatives with respect to CSR is given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Please refer to pages 110 and 111 of this Annual Report.
The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming part of this Board Report.
The Chief Financial Officer of the Company has certified that CSR funds so disbursed for the projects have been utilized for the purposes and in the manner as approved by the Board.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED:
Mr. Shailendra Roy ceased to be the Whole-time Director of the Company with effect from 7th July 2020 on account of superannuation from the services of the Company.
Ms. Naina Lal Kidwai ceased to be an Independent Director of the Company with effect from 28th February 2021 on completion of her term as Independent Director.
Ms. Sunita Sharma resigned as a Director of the Company with effect from 3rd May 2021 pursuant to withdrawal of her nomination by LIC.
The Board places on record its appreciation towards valuable contribution made by them during their tenure as Directors of the Company.
The Board has appointed Mr. S. V. Desai and Mr. T. Madhava Das as the Whole-time Directors of the Company for a period of five years with effect from 11th July 2020 upto and including 10th July 2025.
Mr. Subramanian Sarma has been appointed as the Whole-time Director for a period of five years with effect from 19th August 2020 upto and including 18th August 2025. These appointments were approved by shareholders in the preceeding AGM.
The Board has re-appointed Mr. M. V. Satish as a Wholetime Director for a period from 29th January 2021 upto and including 7th April 2024 and Mr. R Shankar Raman as Whole-time Director for a period from 1st October 2021 upto and including 30th September 2026. Their appointments shall be subject to the approval of the shareholders at this AGM.
Mr. Sanjeev Aga was appointed as Independent Director of the Company with effect from 25th May 2016 upto and including 24th May 2021. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on 14th May 2021 has approved the re-appointment of Mr. Sanjeev Aga for a second and final term of five years from 25th May 2021 upto and including 24th May 2026, subject to the approval of shareholders through special resolution at this AGM.
Mr. Narayanan Kumar was appointed as Independent Director of the Company with effect from 27th May 2016 upto and including 26th May 2021. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on 14th May 2021 has approved the re-appointment of Mr. Narayanan Kumar for a second and final term of five years from 27th May 2021 to 26th May 2026, subject to the approval of shareholders through special resolution at this AGM.
Based on their skills, experience, knowledge and report of their performance evaluation, the Board was of the opinion that their association would be of immense benefit to the Company and it would be desirable to continue to avail their services as Independent Directors.
The Board has appointed Mrs. Preetha Reddy as an Independent Director for a period of five years with effect from 1st March 2021 upto and including 28th February 2026, subject to approval of shareholders.
Mr. Hemant Bhargava, Mr. D. K. Sen, Mr. M. V. Satish and Mr. R. Shankar Raman, retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment.
The notice convening the AGM includes the proposals for appointment/re-appointment of Directors.
The terms and conditions of appointment of
the Independent Directors are in compliance
with the provisions of the Companies Act, 2013
and are placed on the website of the Company
https://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has also disclosed on its website https://investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs to educate the Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure ''B'' - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 97 and 98 of this Annual Report.
The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 103 to 105 of this Annual Report.
COMPANY POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are
given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 105 to 109 of this Annual Report.
The Committee has formulated a policy on Directors'' appointment and remuneration including recommendation of remuneration of the key managerial personnel and senior management personnel, composition and the criteria for determining qualifications, positive attributes and independence of a Director. Nomination and Remuneration Policy is provided as Annexure ''G'' forming part of this Board Report and also disclosed on the Company''s website at https://investors.larsentoubro.com/Listing-Compliance.aspx. The Committee has also formulated a separate policy on Board Diversity.
The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 from Independent Directors confirming that he/she is not disqualified from appointing/ continuing as Independent Director as laid down in section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI Regulations, 2015. The same are also displayed on the website of the Company https://investors.larsentoubro.com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
The Independent Directors of the Company have registered themselves with the data bank maintained by Indian Institute of Corporate Affairs (IICA). In terms of Section 150 of the Act read with Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, the Independent Directors are exempted from undertaking the online proficiency self-assessment test conducted by the IICA.
As per the provisions of section 92(3) of the Companies Act, 2013, the Annual Return of the Company for the FY 2021 is available on our website https://investors.larsentoubro.com/.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)
(e) of the Companies Act, 2013. For the year ended
31st March 2021, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps could have a material effect on the Company''s operations.
DIRECTORS'' RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of internal financial controls to be followed by the Company and such internal financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, DIRECTORS AND CHAIRMAN:
The Nomination and Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, Committees, Individual Directors and the Chairman has to be made. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual Directors and the Chairman.
For the year under review, the questionnaire was updated suitably based on the comments and suggestions received from Independent Directors. As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The consultant''s IT platform was used from initiation till conclusion of the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Company''s IT system. This has enabled unbiased feedback.
The Board Performance Evaluation inputs, including areas of improvement, for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meetings of the Nomination and Remuneration Committee and the Board of Directors held on 14th May 2021.
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder, are given in Annexure ''D'' forming part of this Board report.
The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure ''H'' forming part of this report.
In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company believes that every employee should have the opportunity to work in an environment free from any conduct which can be considered as sexual harassment.
The Company is committed to treating every employee with dignity and respect. The Company has formulated a
2013 and the rules made thereunder and the SBEB Regulations together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided on the website of the Company https://investors.larsentoubro.com/Listing-Compliance.aspx.
The certificate obtained from the Statutory Auditors, confirming compliance with the Companies Act, 2013 and the SBEB Regulations is also provided in Annexure ''B'' forming part of this Report.
⢠Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, are provided in Annexure ''B'' forming part of this Report.
⢠Business Responsibility Reporting: As per
Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer to pages 28 to 53).
⢠Integrated Reporting: The Company has adopted the Integrated Reporting Framework as laid down by International Integrated Reporting Council.
The Integrated Report tracks the sustainability performance of the organization and its interconnectedness with the financial performance, showcasing how the Company is adding value to its stakeholders.
The Integrated Report encompasses areas such as Corporate Governance, the Integrated Reporting and Sustainability Structure, Sustainability Roadmap 2021, Risks and Opportunities, enhancement of Financial Capital, Manufactured Capital, Intellectual Capital, Human Capital, Natural Capital and Social & Relationship Capital and alignment to sustainable development goals. It also covers strategy, business model and resource allocation.
The Integrated Report for the FY 2020 is available on the Company''s website https://www.lntsustainability.com/integrated-report/ and the report for the FY 2021 shall be published shortly.
⢠Statutory Compliance: The Company complies with all applicable laws and regulations, pays applicable
policy on ''Protection of Women''s Rights at Workplace'' as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules, 2013. The policy is applicable to all L&T establishments located in India. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees to ensure implementation and compliance with the provisions of the aforesaid Act and the Rules.
This Policy addresses the following objectives:
⢠To define Sexual Harassment;
⢠To lay down the guidelines for reporting acts of Sexual Harassment at the workplace; and
⢠To provide the procedure for the resolution and redressal of complaints of Sexual Harassment.
A detailed procedure for making a Complaint and initiating an Enquiry to the redressal process, and finally the process of preparation of a report within a stipulated timeline is well laid out in the Policy document. The Policy also covers Disciplinary Action for sexual harassment and is a part of the Company''s Code of Conduct.
Training programs and workshops for employees are organised throughout the year. The orientation programs for new recruits include awareness sessions on prevention of sexual harassment and upholding the dignity of employees. Specific programs have been created on the digital platform to sensitize employees to uphold the dignity of their colleagues and prevention of sexual harassment. During FY 2021, about 13,400 employees have undergone training through the programs / workshops including the awareness sessions held on digital platform.
There were 3 complaints received during the FY 2021. All the complaints were redressed as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules, 2013.
⢠ESOP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The ESOP Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 ("SBEB Regulations").
The disclosures relating to ESOPs required to be made under the provisions of the Companies Act,
taxes on time, takes care of all its stakeholders, ensures statutory CSR spend and initiates sustainable activities.
⢠MSME: The Ministry of Micro, Small and Medium Enterprises vide their Notification dated 2nd November 2018 has instructed all the Companies registered under the Companies Act, 2013, with a turnover of more than Rupees Five Hundred crore to get themselves onboarded on the Trade Receivables Discounting system platform (TReDS), set up by
the Reserve Bank of India. In compliance with this requirement, the Company has registered itself on TReDS.
The Company complies with the requirement of submitting a half yearly return to the Ministry of Corporate Affairs within the prescribed timelines.
⢠IBC: There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.
⢠Remuneration received by Whole time Director from subsidiary company: Mr. Subramanian Sarma, Whole-time Director of the Company is also the Managing Director of a Wholly Owned Subsidiary,
L&T Hydrocarbon Engineering Limited. During the FY 2021, part of the remuneration received by Mr. Sarma was charged to L&T Hydrocarbon Engineering Limited (LTHE). Accordingly, the Company has recovered an amount of R 3.17 crore from LTHE for remuneration paid to Mr. Sarma.
As per the provisions of Section 177(9) of the Companies Act, 2013 (''Act''), the Company is required to establish an effective Vigil Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to encourage and facilitate employees to report concerns about unethical behaviour, actual/ suspected frauds and violation of Company''s Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Companies Act, 2013. The policy provides for adequate safeguards against victimisation of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The policy also establishes adequate mechanism to enable employees report instances of leak of unpublished price sensitive information. The Audit
Committee of the Company oversees the implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the Whistle Blower Policy on its website https://investors.larsentoubro.com/CorporateGovernance.aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.
Also see pages 112 and 113 forming part of Annexure ''B'' of this Board Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereof issued by the Ministry of Corporate Affairs in exercise of the powers conferred by section 133 of the Companies Act, 2013.
The Auditors'' report to the shareholders does not contain any qualification, observation or adverse comment.
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries, is attached as Annexure ''E'' forming part of this Board Report.
In view of the mandatory rotation of auditors'' requirement and in accordance with the provisions of Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP were re-appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 75th Annual General Meeting till the conclusion of 80th Annual General Meeting of the Company.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their independence, their arm''s length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors attend the Annual General Meeting of the Company.
Also see page no. 113 forming part of Annexure ''B'' of this Board Report.
The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.
The provisions of Section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31st March 2021.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost
Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on 14th May 2021, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost Auditors for the Company for the financial year ending 31st March 2022 at a remuneration of R 13 lakhs.
A proposal for ratification of remuneration of the Cost Auditor for the FY 2022 is placed before the shareholders.
The Report of the Cost Auditors for the financial year ended 31st March 2021 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.
The Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory Authorities, Stock Exchanges and all the various other stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture Partners / Associates.
For and on behalf of the Board
Group Chairman (DIN: 00001514)
Date : 14th May 2021 Place : Mumbai
Mar 31, 2019
Dear Members,
The Directors have pleasure in presenting their 74th Annual Report and Audited Financial Statements for the year ended 31st March 2019.
FINANCIAL RESULTS:
particulars |
2018-19 |
2017-18 |
Rs. crore |
Rs. crore |
|
profit Before Depreciation, exceptional items & tax |
9811.19 |
7881.31 |
Less: Depreciation, amortization, impairment and obsolescence |
1067.95 |
1049.46 |
profit before exceptional items and tax |
8743.24 |
6831.85 |
Add: Exceptional Items |
474.93 |
430.53 |
profit before tax |
9218.17 |
7262.38 |
Less: Provision for tax |
2540.47 |
1875.08 |
profit for the period carried to Balance Sheet |
6677.70 |
5387.30 |
Add: Balance brought forward from previous year |
14250.01 |
1 1225.53 |
Less: Ind AS 115 transition adjustment |
701.58 |
- |
Less: Dividend paid during the previous year (Including dividend distribution tax) |
2596.78 |
2278.69 |
Add: Gain/(Loss) on remeasurement of the net defined benefit plans |
(20.36) |
2.50 |
Add: transfer under scheme of arrangement |
â |
15.55 |
Balance available for disposal (which the Directors appropriate as follows) |
17608.99 |
14352.19 |
Less: Debenture Redemption Reserve |
81.32 |
102.18 |
Balance to be carried forward |
17527.67 |
14250.01 |
STATE OF COMPANY AFFAIRS:
the total income for the financial year under review was RS. 89,757 crore as against RS. 76,224 crore for the previous financial year registering an increase of 18%. The profit before tax from continuing operations including exceptional items was RS. 9,218 crore for the financial year under review as against RS. 7,262 crore for the previous financial year, registering an increase of 27%. the profit after tax from continuing operations including exceptional items was RS. 6,678 crore for the financial year under review as against RS. 5,387 crore for the previous financial year, registering an increase of 24%.
AMOUNT TO BE CARRIED TO GENERAL RESERVE:
The Company has not transferred any amount to the general reserve during the current financial year.
DIVIDEND:
The Directors recommend payment of dividend of RS. 18 (900%) per equity share of RS. 2/- each on the share capital amounting to RS. 2,759 crore (including DDT amounting to RS. 234 crore).
The Dividend is based upon the parameters mentioned in the Dividend Distribution policy approved by the Board of Directors of the Company which is in line with regulation 43A of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015. the policy is provided as Annexure âGâ forming a part of this Board Report and also uploaded on the Companyâs website at http://investors.larsentoubro.com/Listing-Compliance.aspx.
CAPITAL & FINANCE:
During the year under review, the Company allotted 13,59,929 equity shares of RS. 2/- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.
The Company repaid long-term borrowings of USD 233 million (approx. RS. 1610 crore including secured debentures of RS. 400 crore) during the year under review on scheduled due dates. on the other hand, the Company raised USD 100 million of foreign currency borrowings and RS. 90 Crore of Rupee term Loan as fresh unsecured long-term borrowings for meeting business requirements and certain capital expenditure.
The Company has not defaulted on any of its dues to the financial lenders.
The Companyâs borrowings are rated by CRISIL and ICRA. the details of the same are given on page 105 in Annexure âBâ - Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.
DIVESTMENT OF ELECTRICAL & AUTOMATION BUSINESS:
As disclosed in our previous Report, on 1st May 2018, the Company had signed, subject to regulatory approvals, definitive agreements with Schneider Electric, a global player in energy management and automation for strategic divestment of its electrical and Automation (E&A) business for an all-cash consideration of RS. 14,000 crore. The Company has been informed by Schneider electric that it has received a communication dated 18th April 2019 from the Honâble Competition Commission of India (CCI) approving the proposed combination subject to the amendment filed by Schneider electric. the Company is awaiting the detailed order of the CCI and the timelines for divestment cannot be ascertained as of now and are expected to be prolonged. In view of the above, the E&A business is disclosed as a continuing operation and has not been classified as discontinued operation as on March 31, 2019.
BUYBACK OF EQUITY SHARES:
the Company had proposed a buyback of up to 6,10,16,949 equity shares from its equity shareholders as on the record date, being october 15, 2018, on a proportionate basis by way of the tender offer route through the stock exchange mechanism at a price of RS. 1,475 per equity share, aggregating up to RS. 9,000 crore, in accordance with the applicable provisions of the Companies Act, 2013 and the Securities and exchange Board of India (Buy-Back of Securities) Regulations, 2018 (âBuyback Regulationsâ and such buy back herein after referred to as âBuybackâ), inter alia, considering the debt-equity ratio requirement on the basis of standalone financial statements, post buyback.
Pursuant to the approval of the Buyback by the shareholders of the Company, a draft letter of offer (âDLOFâ) was submitted to the Securities and exchange Board of India (âSEBIâ) in terms of Regulation 8(i)(a) of the Buyback Regulations, for their comments.
By way of a letter dated 18th January 2019, SEBI advised the Company not to proceed with the buyback offer since the ratio of the aggregate of secured and unsecured debts owed by the Company and its subsidiaries after buyback (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the Company based on consolidated financial statements of the Company.
Accordingly, the Company decided not to proceed with the buyback.
CAPITAL expenditure:
As at 31st March 2019 the gross property, plant and equipment, investment property and other intangible assets including leased assets, stood at RS. 12,174.29 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at RS. 7,934.32 crore. Capital Expenditure during the year amounted to RS. 1,571.41 crore.
DEPOSITS:
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013. The Company does not have any unclaimed deposits as of date. All unclaimed deposits have been transferred to Investor Education & Protection Fund.
Pursuant to the Ministry of Corporate Affairs (MCA) notification dated 22nd January 2019 amending the Companies (Acceptance of Deposits) Rules, 2014, the Company is required to file with the Registrar of Companies (ROC) requisite returns in Form DPT-3 for outstanding receipt of money/loan by the Company, which is not considered as deposits.
The Company would be complying with this requirement within the prescribed timelines.
DEPOSITORY SYSTEM:
As the members are aware, the Companyâs shares are compulsorily tradable in electronic form. As on 31st March 2019, 98.47% of the Companyâs total paid up capital representing 138,13,25,258 shares are in dematerialized form.
SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 mandate that the transfer, except transmission and transposition, of securities shall be carried out in dematerialized form only with effect from 1st April 2019. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories. The Company has, directly as well as through its RTA, sent intimation to shareholders who are holding shares in physical form, advising them to get the shares dematerialized.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company sends reminder letters to all shareholders, whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made by the Company in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.
During the year, the Company has transferred a sum of RS. 3,93,12,966 to Investor education & protection Fund (IEpF), the amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided in section 125 of the Companies Act, 2013 and the rules made thereunder. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund was RS. 24,34,13,796 as on 31st March 2019.
The Company has also sent communications to members whose dividends are unclaimed requesting them to provide/update bank details with RTA/Company, so that dividends paid by the Company are credited to the investorâs account on time.
In accordance with the provisions of the Section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor education and protection Fund Authority (Accounting, Audit, transfer and Refund) Rules, 2016 (âIEpF Rulesâ), the Company has transferred 3,634 equity shares of RS. 2 each (0.0003% of total number of shares) held by 257 shareholders (0.024 % of total shareholders) to IEPF.
The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial Year 2010-11. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.
The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers providing the details of the shares due for transfer so as to enable them to take appropriate action. The shareholder/ claimant can file only one consolidated claim in a financial year as per the IEPF rules. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend shall be credited to IEPF.
Subsidiary / associate / JOINT venture
COMPANIES:
During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / associate / joint venture companies. These subsidiaries include companies in power, defence and infrastructure sectors. The details of investments/divestments in subsidiary companies during the year are as under:
A) Shares acquired during the year:
Name of the Company |
Type of Shares |
No. of shares |
L&T Construction Machinery Limited |
Equity |
10,000 |
L&T Metro Rail (Hyderabad) Limited |
Equity |
22,01,98,631 |
L&T MBDA Missile Systems Limited |
Equity |
4,84,500 |
L&T Uttaranchal Hydropower Limited |
Preference |
24,94,00,000 |
The Company has entered into a share purchase agreement dated 18th March 2019 with Mr. V. G. Siddhartha, Coffee Day Trading Limited and Coffee Day Enterprises Limited (âSellersâ) for acquisition of 3,33,60,229 equity shares of Mindtree Limited aggregating to 20.32% of the paid-up equity share capital of Mindtree Limited.
The Company proposed to acquire, subject to the regulatory approvals, additional equity shares upto 15% of the voting share capital from the stock exchanges and make an open offer aggregating to 31% of the voting share capital of Mindtree Limited, in accordance with the requirements of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011. The Company has since received the approval from Competition Commission of India and Anti-trust authorities of US and Germany. Pursuant to the above, the Company has acquired 3,27,60,229 equity shares of Mindtree Limited from the Sellers on 30th April 2019. Further, 98,29,859 equity shares of Mindtree Limited have been acquired in the open market upto 9th May 2019.
Subsequent to the year under review, the Company has acquired entire stake held by Tamil Nadu Industrial Development Corporation (TIDCO) in L&T Shipbuilding Limited on 10th April 2019. With this acquisition, L&T Shipbuilding Limited is now a wholly owned subsidiary of the Company.
B) Equity shares sold / transferred / reduced during the year:
Name of the Company |
Number of shares |
Marine Infrastructure Developer Private Limited (Note 1) |
38,80,00,000 |
L&T Technology Services Limited (Note 2) |
87,71,569 |
Larsen & Toubro Infotech Limited (Note 2) |
1,29,09,603 |
L&T Seawoods Limited (Note 3) |
34,50,00,000 |
Note:
1. The Company has sold its entire stake in Marine Infrastructure Developer Private Limited, a subsidiary, to Adani Ports and Special Economic Zone Ltd.
2. The Company has sold shares of L&T Technology Services Limited and Larsen & Toubro Infotech Limited in the open market towards meeting its mandatory obligation to reduce promoter shareholding in these companies. With the above sale, the minimum public shareholding obligation in Larsen & Toubro Infotech Limited has been complied.
3. Pursuant to an order dated 13th December 2018 passed by the National Company Law Tribunal, Mumbai bench, the equity share capital of L&T Seawoods Limited, a wholly owned subsidiary, was reduced to the extent of 34.50 crore shares aggregating to RS. 345 crore.
Subsequent to the year under review, the Company has divested its entire stake in L&T Kobelco Machinery Private Limited, a subsidiary, to Kobe Steel, Ltd. on 17th April 2019.
C) Companies Struck off:
Pursuant to the application made in the previous year, the following companies were struck off by Ministry of Corporate Affairs under the provisions of Companies Act, 2013 during the year under review:
Name of the Company |
Date of Strike off |
Seawoods Retail Private Limited |
26th June 2018 |
Seawoods Realty Private Limited |
26th June 2018 |
L&T Trustee Company Private Limited |
8th August 2018 |
D) Performance and Financial Position of subsidiary / associate and joint venture companies:
A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 546 to 555 of this Annual Report.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 and the same is placed on the website at http://investors.larsentoubro.com/Listing-Compliance. aspx. The Company does not have any material subsidiaries.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 in Note 37 and Note 38 forming part of the financial statement.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy, signifying the threshold limits and the same has been uploaded on the Companyâs website http://investors.larsentoubro.com/ Listing-Compliance.aspx.
The Company has a process in place to periodically review and monitor Related Party Transactions.
All the related party transactions were in the ordinary course of business and at armâs length. The Audit Committee has approved all related party transactions for the FY 2018-19 and estimated transactions for FY 2019-20.
There were no materially significant related party transactions that may have conflict with the interest of the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
Other than stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure âAâ forming part of this Board Report.
RISK MANAGEMENT:
The Risk Management Committee comprises of Mr. S. N. Subrahmanyan, Mr. R. Shankar Raman and Mr. Subramanian Sarma, Directors of the Company.
Mr. S. N. Subrahmanyan is the Chairman of the Committee.
The Company has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment. The risk assessment includes review of geo-political developments, business environment, growth opportunities, geographical expansion, capability development, talent management, brand and reputation protection and enhancement, cyber security and risk minimization initiatives. The Committee periodically reviews the risk to ensure that executive management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review section of the Management Discussion and Analysis on pages 296 to 298 of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee comprises of Mr. Vikram Singh Mehta, Mr. R. Shankar Raman and Mr. D. K. Sen as the Members. Mr. Vikram Singh Mehta is the Chairman of the Committee.
The CSR policy framework is available on the website http://investors.larsentoubro.com/Listing-Compliance. aspx.
A brief note regarding the Companyâs initiatives with respect to CSR is given in Annexure âBâ - Report on Corporate Governance forming part of this Board Report. Please refer to pages 96 and 97 of this Annual Report.
The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure âCâ forming part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED DURING THE YEAR:
Mr. M.M Chitale, Mr. M. Damodaran and Mr. Vikram Singh Mehta were appointed as Independent Directors of the Company with effect from April 1, 2014 to March 31, 2019. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on March 5, 2019 has approved the re-appointment of Mr. M.M Chitale, Mr. M. Damodaran and Mr. Vikram Singh Mehta for a further term of five years from April 1, 2019 to March 31, 2024, subject to the approval of shareholders through special resolution.
Special resolution for continuation of Mr. M. Damodaran as an Independent Director, who would attain the age of 75 years during his current tenure forms part of the Notice being sent to the shareholders.
Mr. Adil Zainulbhai was appointed as Independent Director of the Company with effect from May 30, 2014 to May 29, 2019. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on March 5, 2019 has approved the re-appointment of Mr. Adil Zainulbhai for a further term of five years from May 29, 2019 to May 28, 2024, subject to the approval of shareholders through special resolution.
Based on their skills, experience, knowledge and report of their performance evaluation, the Board was of the opinion that their association would be of immense benefit to the Company and it would be desirable to avail their services as Independent Directors.
Mr. Subhodh Bhargava was re-appointed as Independent Director with effect from March 30, 2017 for a second term of five years which was approved by the shareholders through a special resolution. At the time of his re-appointment, he had attained the age of 75 years and accordingly he shall continue in his present term until March 29, 2022. His re-appointment is in compliance with regulation 17(1A) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 which was effective from 9th May 2018.
Mr. R. Shankar Raman, Mr. Shailendra Roy, Mr. M.V Satish and Mr. J. D. Patil retire by rotation at the ensuing AGM and being eligible offer themselves for re-appointment.
The notice convening the AGM includes the proposal for re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors are in compliance with the provisions of the Companies Act, 2013 and are placed on the website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx.
The Company has also disclosed on its website http:// investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs to educate the Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure âBâ - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 82 and 83 of this Annual Report.
AUDIT COMMITTEE:
The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure âBâ - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 88 to 90 of this Annual Report.
COMPANY POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure âBâ - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 90 to 94 of this Annual Report.
The Committee has formulated a policy on Directorsâ appointment and remuneration including recommendation of remuneration of the key managerial personnel and other employees, composition and the criteria for determining qualifications, positive attributes and independence of a Director. Nomination and Remuneration Policy is provided as Annexure âHâ forming part of this Board Report and also disclosed on the Companyâs website at http://investors.larsentoubro. com/Listing-Compliance.aspx. The Committee has also formulated a separate policy on Board Diversity.
DECLARATION OF INDEPENDENCE:
The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 from Independent Directors confirming that he/she is not disqualified from appointing/continuing as Independent Director. The same are also displayed on the website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
EXTRACT OF ANNUAL RETURN:
As per the provisions of Section 92(3) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as Annexure âFâ to this Report.
The Annual Return of the Company will be available on its website www.larsentoubro.com.
DIRECTORSâ RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of internal financial controls to be followed by the Company and such internal financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to Section 134(5) (e) of the Companies Act, 2013. For the year ended 31st March 2019, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Companyâs operations.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, DIRECTORS AND CHAIRMAN:
The Nomination & Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, committees, individual directors and the Chairman has to be made. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual directors and the Chairman.
For the year under review, the questionnaire was modified suitably, based on the comments and suggestions received from Independent Directors. As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The same external consultantâs IT platform was used from initiation and till conclusion of the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Companyâs IT system. This has enabled unbiased feedback.
The Board Performance Evaluation inputs, including areas of improvement, for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meeting of the Independent Directors held on 30th November 2018 and in the subsequent Meetings of Nomination and Remuneration Committee and the Board. The Group Chairman had a discussion with all the Independent Directors individually and the Chairman of Nomination and Remuneration Committee had a discussion with all the Executive Directors individually.
Most of the suggestions from the Board Evaluation exercise of FY 2017-18 have been suitably implemented such as meetings of Chairman of NRC with individual directors and Action Taken Report of Board decisions.
DISCLOSURE OF REMUNERATION:
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder, are given in Annexure âDâ forming part of this Board report.
The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure âIâ forming part of this report. In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company has formulated a policy on âProtection of Womenâs Rights at Workplaceâ as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees as per the above Act.
There were 4 complaints received during the F.Y. 2018-19. All the 4 complaints were investigated and appropriate action was taken.
Awareness workshops and training programs are conducted across the Company to sensitize employees to uphold the dignity of their colleagues at workplace specially with respect to prevention of sexual harassment.
OTHER DISCLOSURES:
- ESoP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The ESOP Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 (âSBEB Regulationsâ).
The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SBEB
Regulations together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided on the website of the Company http:// investors.larsentoubro.com/Listing-Compliance.aspx.
A certificate obtained from the Statutory Auditors, confirming compliance with the Companies Act, 2013 and the SBEB Regulations is also provided in Annexure âBâ forming part of this Report.
- Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, are provided in Annexure âBâ forming part of this Report.
- Integrated Reporting: Pursuant to SEBI Circular on Integrated Reporting, the Company is complying with the applicable requirements of the Integrated Reporting Framework. The Sustainability Report has been replaced by an Integrated Report which tracks the sustainability performance of the organization and its interconnectedness with the financial performance, showcasing how the Company is adding value to its stakeholders.
The Integrated Report encompasses areas such as Corporate Governance, the IR & Sustainability Structure, Sustainability Roadmap 2021, Risks & opportunities, enhancement of Financial Capital, Manufactured Capital, Intellectual Capital, Human Capital, Natural Capital and Social & Relationship Capital and alignment to sustainable development goals. It also covers strategy, business model and resource allocation.
The integrated Report for the Year 201718 is available on the Companyâs website http://www.larsentoubro.com/corporate/ sustainability/integrated-report/ and the report for the Year 2018-19 shall be published shortly.
- Statutory Compliance: The Company complies with all applicable laws and regulations, pays applicable taxes on time, takes care of all its stakeholders, ensures statutory CSR spend and initiates sustainable activities.
- MSME: The Ministry of Micro, Small and Medium Enterprises vide their Notification dated 2nd November 2018 has instructed all the Companies registered under the Companies Act, 2013, with a turnover of more than Rupees Five Hundred crore to get themselves onboarded on the Trade Receivables Discounting system platform (TReDS), set up by the Reserve Bank of India. In compliance with this requirement, the Company is in the process of registering itself on TReDS through one of the service providers.
The Company would be complying with the requirement of submitting a half yearly return to the Ministry of Corporate Affairs within the prescribed timelines.
VIGIL MECHANISM:
As per the provisions of Section 177(9) of the Companies Act, 2013 (âActâ), the Company is required to establish an effective Vigil Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to encourage and facilitate employees to report concerns about unethical behaviour, actual/ suspected frauds and violation of Companyâs Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Companies Act, 2017. The policy provides for adequate safeguards against victimisation of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The policy also establishes adequate mechanism to enable employees report instances of leak of unpublished price sensitive information. The Audit Committee of the Company oversees the implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the Whistle Blower Policy on its website http://investors.larsentoubro.com/corporategovernance.aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.
Also see page 98 forming part of Annexure âBâ of this Board Report.
BUSINESS RESPONSIBILITY REPORTING:
As per Regulation 34 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 20 to 41).
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 and prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereof issued by the Ministry of Corporate Affairs in exercise of the powers conferred by Section 133 of the Companies Act, 2013.
AUDIT REPORT:
The Auditorsâ report to the shareholders does not contain any qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT:
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure âEâ forming part of this Board Report.
The observation of the Secretarial Auditor is self-explanatory.
AUDITORS:
In view of the mandatory rotation of auditorsâ requirement and in accordance with the provisions of Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP were appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 70th Annual General Meeting till the conclusion of 75th Annual General Meeting of the Company.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their independence as well as their armâs length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors attend the Annual General Meeting of the Company.
Also see pages 98 and 99 forming part of Annexure âBâ of this Board Report.
REPORTING OF FRAUD:
The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.
COST AUDITORS:
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on 10th May, 2019, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost Auditors for the Company for the financial year ending 31st March 2020 at a remuneration of RS. 13 lakhs.
A proposal for ratification of remuneration of the Cost Auditor for the financial Year 2019-20 is placed before the shareholders.
The Report of the Cost Auditors for the financial year ended 31st March 2019 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.
The provisions of Section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31st March 2019.
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.
For and on behalf of the Board
A.M. Naik
Group Chairman
(DIN: 00001514)
Date : 10th May 2019
Place : Mumbai
Mar 31, 2018
Board Report
Dear Members,
The Directors have pleasure in presenting their 73rd Annual Report and Audited Financial Statements for the year ended 31st March 2018.
FINANCIAL RESULTS:
Particulars |
2017-18 |
2016-17 |
V crore |
V crore |
|
Profit Before Depreciation, exceptional items & Tax |
7881.31 |
7079.06 |
Less: Depreciation, amortization, impairment and obsolescence |
1049.46 |
1215.19 |
Profit before exceptional items and tax |
6831.85 |
5863.87 |
Add: Exceptional Items |
430.53 |
893.97 |
Profit before tax |
7262.38 |
6757.84 |
Less: Provision for tax |
1875.08 |
1304.10 |
Profit for the period carried to Balance Sheet |
5387.30 |
5453.74 |
Add: Balance brought forward from previous year |
1 1225.53 |
7710.27 |
Less: Dividend paid during the previous year (Including dividend distribution tax) |
2278.69 |
1842.71 |
Add: Gain/(Loss) on remeasurement of the net defined benefit plans |
2.50 |
(8.02) |
Add: Transfer under scheme of arrangement |
15.55 |
_ |
Balance available for disposal (which the Directors appropriate as follows) |
14352.19 |
11313.28 |
Less: Debenture Redemption Reserve |
102.18 |
87.75 |
Balance to be carried forward |
14250.01 |
1 1225.53 |
The Directors recommend payment of final dividend of R 16 per equity share of R 2/- each on 1,40,13,69,456 shares.
CAPITAL & FINANCE:
During the year under review, the Company allotted 16,38,898 equity shares of R 2/- each upon exercise
of stock options by the eligible employees under the Employee Stock Option Schemes.
The shareholders of the Company approved the issue of bonus shares in the ratio of 1:2 (1 bonus share for every 2 shares held) through postal ballot on 5th July 2017. The Company accordingly allotted 46,67,64,755 bonus shares on 15th July 2017.
The Company reduced long-term borrowings during the year under review by way of repayment of foreign currency borrowings worth US$ 171 million on scheduled due dates. Additionally, the Company refinanced USD 470 million of external commercial borrowings while retaining existing maturities, to take benefit of the prevailing interest rates in the market. The Company did not raise any fresh long-term borrowings during FY2017-18.
The Company has not defaulted on any of its dues to the financial lenders.
CRISIL has assigned AAA (Stable) rating for L&T''s long-term debt facilities. In addition, ICRA also has assigned AAA (Stable) rating for certain borrowings of the Company.
DIVESTMENT OF ELECTRICAL & AUTOMATION BUSINESS:
Subsequent to the year under review, on 1st May 2018, the Company has signed, subject to regulatory approvals, definitive agreements with Schneider Electric, a global player in energy management and automation for strategic divestment of its Electrical and Automation (E&A) business for an all-cash consideration of R 14,000 crore.
The divestment of E&A business is in line with the Company''s stated intent of unlocking value within the existing business portfolio to streamline and allocate capital and management focus for creating long-term value for our stakeholders. The Company believes that the partnership with Schneider is win-win for our employees, business partners and shareholders.
CAPITAL EXPENDITURE:
As at 31st March 2018 the gross property, plant and equipment, investment property and other intangible assets including leased assets, stood at R 10,935.39 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at R 7,593.40 crore. Capital Expenditure during the year amounted to R 1,136.78 crore.
DEPOSITS:
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013. The Company does not have any unclaimed deposits as of date. All unclaimed deposits have been transferred to Investor Education & Protection Fund.
DEPOSITORY SYSTEM:
As the members are aware, the Company''s shares are compulsorily tradable in electronic form. As on 31st March 2018, 98.2% of the Company''s total paid up capital representing 1,37,61,98,681 shares are in dematerialized form.
SEBI has proposed to prohibit transfer of shares in physical form. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company sends reminder letters to all shareholders, whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made by the Company in co-ordination with its Registrar to locate the shareholders who have not claimed their dues.
During the year, the Company has transferred a sum of R 3,24,69,075 to Investor Education & Protection Fund (IEPF), the amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided in section 125 of the Companies Act, 2013 and the rules made there under. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund was R 20,41,00,830 as on March 31, 2018.
Pursuant to SEBI circular dated April 20, 2018, the Company has sent communications to members whose dividends are unclaimed requesting them to provide/ update bank details with the RTA/Company, so that dividends paid by the Company are credited to the investor''s account on time.
In accordance with the provisions of the Section 124(6) and Rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''IEPF Rules''), the Company has transferred 12,88,543 equity shares of R 2 each (0.09% of total number of shares) held by 1 1,756 shareholders (1.25% of total shareholders) to IEPF. The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial year 2009-10. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.
The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in news papers providing the details of the shares due for transfer and for taking appropriate action. The shareholder/ claimant can file only one consolidated claim in a financial year as per the IEPF rules. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend shall be credited to IEPF.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / joint venture companies. These subsidiaries include companies in financial services, power, defence and infrastructure sectors. The details of investments/ divestments in subsidiary companies during the year are as under:
A) Shares acquired during the year:
Name of the Company |
Type of Shares |
No. of shares |
L&T Cassidian Limited |
Equity |
13,000 |
L&T Finance Holdings Limited |
Equity |
10,78,10,899 |
L&T Metro Rail (Hyderabad) Limited |
Equity |
14,47,84,161 |
L&T MBDA Missile Systems Limited |
Equity |
25,500 |
L&T Uttaranchal Hydropower Limited |
Preference Shares |
18,98,00,000 |
L&T Special Steels & Heavy Forgings Private Limited |
Preference Shares |
47,50,80,000 |
L&T Shipbuilding Limited |
Preference Shares |
61,83,29,988 |
B) Equity shares sold/transferred during the year:
Name of the Company |
Number of shares |
EWAC Alloys Limited (Note 1) |
8,29,440 |
L&T Cutting Tools Limited (Note 2) |
68,000 |
L&T Technology Services Limited (Note 3) |
4,68,292 |
Larsen & Toubro Infotech Limited (Note 3) |
10,56,363 |
L&T Devihalli Hassan Tollway Limited |
100 |
L&T Krishnagiri Walajahpet Tollway Limited |
2,600 |
Note:
1. The Company has sold its entire stake in EWAC Alloys Limited, a wholly owned subsidiary, to ESAB Holdings Limited.
2. The Company has sold its entire stake in L&T Cutting Tools Limited, a wholly owned subsidiary, to IMC International Metalworking Companies B. V.
3. The Company has sold shares of L&T Technology Services Limited and Larsen & Toubro Infotech Limited in the open market towards partly meeting its mandatory obligation to reduce promoter shareholding in these companies.
C) Companies merged / demerged during the year:
Spectrum Infotech Private Limited, a wholly owned subsidiary of the Company was merged with the Company. The Scheme of Amalgamation was approved by National Company Law Tribunal, Mumbai bench, vide order dated February 21, 2018, and by National Company Law Tribunal, Bangalore bench, vide order dated March 27, 2018. Appointed date was April 1, 2017 and effective date was May 10, 2018.
D) Companies Struck off:
During the year under review, the following companies applied to the Ministry of Corporate Affairs for strike off under the provisions of Companies Act, 2013:
E) Performance and Financial Position of each subsidiary/associate and joint venture companies:
A statement containing the salient features of the financial statement of subsidiary/associate/joint venture companies and their contribution to the overall performance of the Company is provided on pages 463 to 472 of this Annual Report.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the same is placed on the website at http://investors.larsentoubro.com/Listing-Compliance. aspx. The Company does not have any material subsidiaries.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under section 186 of the Companies Act, 2013 and Regulation 34(3) and Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 in Note 37 and 38 forming part of the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy and the same has been uploaded on the Company''s website http:// investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has a process in place to periodically review and monitor Related Party Transactions.
All the related party transactions were in the ordinary course of business and at arm''s length. The Audit Committee has approved all related party transactions for the FY 2017-18 and estimated transactions for FY 2018-19.
There were no materially significant related party transactions that may have conflict with the interest of the Company.
STATE OF COMPANY AFFAIRS:
The total income for the financial year under review was R 76,496 crore as against R 68,216 crore for the previous financial year registering an increase of 12%.
The profit before tax from continuing operations including exceptional items was R 7,262 crore for the financial year under review as against R 6,758 crore for the previous financial year, registering an increase of 7%. The profit after tax from continuing operations including exceptional items was R 5,387 crore for the financial year under review as against R 5,454 crore for the previous financial year, registering a decrease of 1%.
AMOUNT TO BE CARRIED TO RESERVE:
The Company has not transferred any amount to the reserves during the current financial year.
DIVIDEND:
The Directors recommend payment of dividend of R 16 (800%) per equity share of R 2/- each (previous year R 14) on the share capital amounting to approx. R 2,600 crore (including DDT amounting to R 358 crore).
The Dividend is based upon the parameters mentioned in the Dividend Distribution Policy approved by the Board of Directors of the Company which is in line with regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is annexed as Annexure ''G'' forming a part of this Board Report and also uploaded on the Company''s website at http://investors. larsentoubro.com/Listing-Compliance.aspx.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
Other than as stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the current financial year and the date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure ''A'' forming part of this Board Report.
RISK MANAGEMENT:
The Risk Management Committee comprises of Mr. S. N. Subrahmanyan, Mr. R. Shankar Raman and Mr. Subramanian Sarma. Mr. S. N. Subrahmanyan is the Chairman of the Committee.
The Company has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review section of the Management Discussion and Analysis on pages 230 to 232 of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee comprises of Mr. Vikram Singh Mehta, Mr. R. Shankar Raman and Mr. D. K. Sen. Mr. Vikram Singh Mehta is the Chairman of the Committee.
The CSR policy framework is available on its website http://investors.larsentoubro.com/Listing-Compliance.aspx.
A brief note regarding the Company''s initiatives with respect to CSR is given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Please refer to Page 80 of this Annual Report.
The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED DURING THE YEAR:
Mr. Sushobhan Sarker, nominee of Life Insurance Corporation of India, resigned as Director of the Company on 2nd May, 2018. The Board places on record its appreciation of the contribution by Mr. Sarker as Director of the Company.
The Board has appointed Mr. Hemant Bhargava as a Director in the casual vacancy pursuant to the resignation of Mr. Sushobhan Sarker with effect from 28th May 2018. Mr. Bhargava is the nominee of Life Insurance Corporation of India. As per the provisions of Section 161(4) of the Companies Act, 2013, Mr. Bhargava will hold office till the ensuing AGM and is eligible for appointment.
Mr. Subramanian Sarma, Mrs. Sunita Sharma,
Mr. A.M Naik and Mr. D. K. Sen retire by rotation at the ensuing AGM and being eligible offer themselves for re-appointment.
The notice convening the AGM includes the proposal for appointment / re-appointment of Directors.
Special resolutions for continuation of Mr. A. M. Naik as a Non-Executive Director, who has attained the age of 75 years, and for payment of remuneration to him which exceeds 50% of the total remuneration payable to all Non-Executive Directors taken together, forms part of the Notice being sent to the shareholders.
The terms and conditions of appointment of the Independent Directors are in compliance with the provisions of the Companies Act, 2013 and are placed on the website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx.
The Company has also disclosed on its website http:// investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs to educate the Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure ''B'' - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 70 and 71 of this Annual Report.
AUDIT COMMITTEE:
The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made there under and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 73 to 75 of this Annual Report.
COMPANY POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made there under and Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ''B'' - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 75 to 79 of this Annual Report.
The Committee has formulated a policy on Directors'' appointment and remuneration including recommendation of remuneration of the key managerial personnel and other employees, board diversity, composition and the criteria for determining qualifications, positive attributes and independence of a Director. Nomination and Remuneration policy is provided as Annexure ''H'' forming part of this Board Report and also disclosed on the Company''s website at http://investors.larsentoubro.com/Listing-Compliance.aspx. The Committee has also formulated a separate policy on Board Diversity.
DECLARATION OF INDEPENDENCE:
The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 from Independent Directors confirming that he/she is not disqualified from appointing/ continuing as Independent Director. The same are also displayed on the website of the Company http://investors.larsentoubro.com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
EXTRACT OF ANNUAL RETURN:
As per the provisions of Section 92(3) of the Companies Act, 2013, an extract of Annual Return in Form MGT-9 is attached as Annexure ''F'' to this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of internal financial control to be followed by the Company and such internal financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL:
The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)
(e) of the Companies Act, 2013. For the year ended 31st March 2018, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Company''s operations.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, DIRECTORS AND CHAIRMAN:
The Nomination & Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, committees and individual directors has to be made. All
Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual directors and the Chairman.
For the year under review, the questionnaire was modified substantially, based on the comments and suggestions received from Independent Directors. During the previous year(s) an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. Based on the experience gained, during the current year, the same external consultant''s IT platform was used from initiation and till conclusion of the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Company''s IT system. This has enabled unbiased feedback.
The Board Performance Evaluation inputs, including areas of improvement, for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meeting of the Independent Directors held on April 5, 2018 and in the subsequent Meetings of Nomination and Remuneration Committee and the Board.
DISCLOSURE OF REMUNERATION:
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made there under, are given in Annexure ''D'' forming part of this Board report.
The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure ''I'' forming part of this report. In terms of Section 136(1) of the Act and the rules made there under, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company has formulated a policy on ''Protection of Women''s Rights at Workplace'' as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (''the Act'').
This has been widely disseminated. During the year two complaints were received under the Act which have been investigated and disposed off after complying with due process.
Awareness workshops/training programmes are conducted across the Company to sensitize employees to uphold the dignity of their colleagues at work place specially with respect to prevention of sexual harassment.
OTHER DISCLOSURES:
- ESOP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The ESOP Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 ("SBEB Regulations").
The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made there under and the SBEB Regulations together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided on the website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx.
A certificate obtained from the Statutory Auditors, confirming compliance with the Companies Act, 2013 and the SBEB Regulations is also provided in Annexure ''B'' forming part of this Report.
- Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure ''B'' forming part of this Report.
- Integrated Reporting: Pursuant to SEBI Circular on Integrated Reporting, the Company shall be voluntarily complying with the requirements
of the Integrated Reporting Framework and shall release its integrated report on its website www.larsentoubro.com.
- Statutory Compliance: The Company complies with all applicable laws and regulations, pays applicable taxes on time, takes care of all its stakeholders, ensures statutory CSR spend and undertakes sustainable activities.
VIGIL MECHANISM:
As per the provisions of Section 177(9) of the Companies Act, 2013 (''Act''), the Company is required to establish an effective Vigil Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to encourage and facilitate employees to report concerns about unethical behavior, actual/ suspected frauds and violation of Company''s Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Act. The policy provides for adequate safeguards against victimization of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The Audit Committee of the Company oversees the implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the Whistle Blower Policy on its website http://investors.larsentoubro.com/corporategovernance. aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.
Also see pages 81 and 82 forming part of Annexure ''B'' of this Board Report.
BUSINESS RESPONSIBILITY REPORTING:
As per Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 19 to 38).
The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability. The Sustainability Report encompasses areas such as Corporate Governance, Stakeholder Engagement, People Performance, Environment Performance and Social Performance. Aspects relating to human rights & labour practices, employee development, occupational health and safety culture, supply chain management, environmental management, development of green products and services portfolio, initiatives with respect to energy, renewable energy, water, air emission, etc. are covered in the Sustainability Report.
The detailed Corporate Sustainability Report for 2016-17 is also available on the Company''s website http://www. larsentoubro.com/corporate/sustainability.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and prepared in accordance with the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.
The Auditors report to the shareholders does not contain any qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT:
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure ''E'' forming part of this Board Report.
The Secretarial Auditor''s report to the shareholders does not contain any qualification or reservation.
AUDITORS:
In view of the mandatory rotation of auditors'' requirement and in accordance with the provisions of Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP were appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 70th Annual General Meeting (AGM) till the conclusion of 75th Annual General Meeting of the Company.
The requirement to place the matter relating to appointment of Auditor for ratification by members at every AGM is done away with vide notification dated May 7, 2018 issued by Ministry of Corporate Affairs,
New Delhi. Accordingly, no resolution is proposed for ratification of appointment of Auditors, who were appointed in the AGM held on September 9, 2015.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their independence as well as their arm''s length relationship with the Company as well as declared that they have not taken up any prohibited non-audit assignments for the Company.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors attend the Annual General Meeting of the Company.
Also see pages 82 and 83 forming part of Annexure ''B'' of this Board Report.
REPORTING OF FRAUD:
The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.
COST AUDITORS:
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on 28th May 2018, has approved the appointment of M/s R. Nanabhoy & Co.,
Cost Accountants as the Cost Auditors for the Company for the financial year ending 31st March, 2019 at a remuneration of R 11.75 lakhs.
The Report of the Cost Auditors for the financial year ended 31st March 2018 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.
A proposal for ratification of remuneration of the Cost Auditor for the financial year 2018-19 is placed before the shareholders.
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.
For and on behalf of the Board
A. M. Naik
Group Chairman
(DIN: 00001514)
Date : 28th May 2018
Place : Mumbai
Mar 31, 2017
Dear Members,
The Directors have pleasure in presenting their 72nd Annual Report and Audited Financial Statements for the year ended March 31, 2017.
FINANCIAL RESULTS:
Particulars |
2016-17 Rs. crore |
2015-16 Rs. crore |
Profit Before Depreciation, exceptional items & tax |
7079.06 |
6692.74 |
Less: Depreciation, amortization, impairment and obsolescence |
1215.19 |
997.40 |
Profit before exceptional items and tax |
5863.87 |
5695.34 |
Add: Exceptional Items |
893.97 |
560.28 |
Profit before tax |
6757.84 |
6255.62 |
Less: Provision for tax |
1304.10 |
1256.04 |
Profit for the period carried to Balance Sheet |
5453.74 |
4999.58 |
Add: Balance brought forward from previous year |
7710.27 |
4522.65 |
Less: Dividend paid during the year (Including dividend distribution tax) |
1842.71 |
1647.02 |
Add: Gain/(loss) on remeasurement of the net defined benefit plans |
(8.02) |
(8.44) |
Balance available for disposal (which the Directors appropriate as follows) |
11313.28 |
7866.77 |
Debenture Redemption Reserve |
87.75 |
156.50 |
Balance to be carried forward |
1 1225.53 |
7710.27 |
The Directors recommend payment of final dividend of Rs. 21 per share of Rs. 21- each on 93,29,65,803 shares.
CAPITAL & FINANCE:
During the year under review, the Company allotted 14,86,958 equity shares of Rs. 21- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.
The Company reduced long-term borrowings during the year under review by way of repayment of Non-Convertible Debentures (NCD) worth Rs. 550 crore and External Commercial Borrowings (ECB) worth US$126 million on scheduled due dates. The Company did not raise any long-term borrowings during FY2016-17.
CRISIL Limited has assigned AAA (Stable) rating for L&Tâs long-term debt facilities. In addition, ICRA Limited also has assigned AAA (Stable) rating for certain borrowings of the Company.
HIVE-OFF OF COIMBATORE UNDERATKING:
Subsequent to the year under review, on April 20, 2017 the Company has received order of National Company Law Tribunal for hive-off of its Coimbatore undertaking engaged in valves manufacturing through a scheme of Arrangement between Larsen & Toubro Limited and L&T Valves Limited, a wholly-owned subsidiary of the Company and their respective shareholders and creditors under the provisions of section 230 to 232 of the Companies Act, 2013. The appointed date of the scheme was April 1, 2016 and the effective date of the scheme was April 22, 2017.
BONUS:
The Board of Directors of your Company at its Meeting held on May 29, 2017, has recommended for approval of the shareholders issue of bonus shares to the holders of the equity shares of the Company in the ratio of 1: 2 (i.e 1 (One) Bonus Equity Share of Rs. 21- for every 2 (Two) fully paid-up Equity Shares of Rs. 21- each held) by capitalisation of its Reserves. The approval of the shareholders will be sought through Postal Ballot.
CAPITAL EXPENDITURE:
As at March 31, 2017 the gross property, plant and equipment, investment property and other intangible assets including leased assets, stood at Rs. 9820.17 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at Rs. 7548.37 crore. Capital Expenditure during the year amounted to Rs. 749.02 crore.
DEPOSITS:
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013. The Company does not have any unclaimed deposits as of date. All unclaimed deposits have been transferred to Investor Education & Protection Fund.
DEPOSITORY SYSTEM:
As the members are aware, the Companyâs shares are compulsorily tradable in electronic form. As on March 31, 2017, 98% of the Companyâs total paid up capital representing 91,42,69,231 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company sends letters to all shareholders, whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.
During the year, the Company has transferred a sum of Rs. 2,59,71,351 to Investor Education & Protection Fund (IEPF), the amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided in section 125 of the Companies Act, 2013 and the rules made thereunder. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund was Rs. 17,16,31,755 as on March 31, 2017.
In accordance with the provisions of the Section 124(6) and Rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (IEPF Rules), the Company is required to transfer 12,13,804 equity shares of f 2 each held by 1 1,057 shareholders to IEPF. The said shares correspond to the dividend which has remained unclaimed for a period of seven consecutive years from the financial year 2008-09. However, the equity shares wherein, disputes are pending and Court Order(s) are available with the Company, shall be retained by the Company. All the remaining shares, as mentioned above, shall be transferred to IEPF. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) from IEPF in accordance with the prescribed procedure and on submission of such documents as prescribed under the IEPF Rules.
The Company has already sent a specific communication to the concerned shareholders at their address registered with the Company and also published notice in Financial Express and Loksatta providing the details of the shares due for transfer and to enable shareholders to take appropriate action. The Company is awaiting further directions on the transfer formalities from the Ministry of Corporate Affairs in terms of the amendment to the IEPF Rules dated 28th February, 2017. In the meantime, the concerned shareholders can approach the Company or its Registrar & Transfer Agent with necessary documents supporting their claims.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / associate / joint venture companies. These subsidiaries include companies in general insurance, power, real estate and infrastructure sectors. The details of investments/ divestments in subsidiary companies during the year are as under:
A) Shares acquired during the year:
Name of the Company |
Type of Shares |
No. of shares |
L&T General Insurance Company Limited |
Equity |
4,70,00,000 |
L&T Global Holdings Limited |
Equity |
79,000 |
L&T Metro Rail (Hyderabad) Limited |
Equity |
2,04,18,86,554 |
L&T Technology Services Limited |
Equity |
2,66,90,392 |
Marine Infrastructure Developer Private Limited (Note 1) |
Equity |
38,80,00,000 |
Seawoods Realty Private Limited |
Equity |
10,000 |
Seawoods Retail Private Limited |
Equity |
10,000 |
L&T Shipbuilding Limited (Note 1) |
Preference |
38,80,00,000 |
L&T Uttaranchal Hydropower Limited |
Preference |
9,65,00,000 |
L&T Electrical & Automation Limited (Note 5) |
Equity |
73,88,796 |
B) Equity shares sold/transferred during the year:
Name of the Company |
No. of shares |
Larsen &Toubro Infotech Limited (Note 2) |
1,75,00,000 |
L&T Technology Services Limited (Note 3) |
1,04,00,000 |
L&T General Insurance Company Limited |
75,20,00,000 |
(Note 4) |
|
Larsen Toubro Arabia LLC |
7,500 |
Note:
1. Pursuant to the Scheme of Demerger approved by National Company Law Tribunal (NCLT), the existing share capital of Marine Infrastructure Developer Limited held by L&T Shipbuilding Limited stands cancelled. The Company has now acquired 38.80.00.000 equity shares of Marine Infrastructure Developer Limited for a consideration of Rs. 388 crore from L&T Shipbuilding Limited. The acquisition has been completed on 31st March, 2017. Further, 38.80.00.000 equity shares of L&T Shipbuilding Limited held by the Company have been extinguished and 38,80,00,000, 9% non-cumulative, optionally convertible and redeemable preference shares of Rs. 10 each have been issued to the Company in lieu of the same on 29th March, 2017.
2. The Company has sold its 10.30% stake in Larsen & Toubro Infotech Limited (LTI), a subsidiary, through an Initial Public offering of LTI equity shares. LTI got listed on July 21, 2016.
3. The Company has sold its 10.23% stake in L&T Technology Services Limited (LTTS), a subsidiary, through an Initial Public offering of LTTS equity shares. LTTS got listed on 23rd September, 2016.
4. The Company has sold its entire stake in L&T General Insurance Company Limited, a wholly-owned subsidiary, to HDFC ERGO General Insurance Company Limited.
5. The scheme of arrangement between L&T Valves Limited and L&T Electrical & Automation Limited was approved by National Company Law Tribunal on April 27, 2017 with appointed date as November 1, 2016. Pursuant to the scheme L&T Electrical & Automation Limited issued 73,88,796 shares to Larsen & Toubro Limited as a consideration towards transfer of certain assets by L&T Valves Limited. Accordingly the value of investment in L&T Electrical and Automation Limited was increased by Rs. 40.31 crore and reduced in L&T Valves Limited by Rs. 40.31 crore during the year 2016-17.
The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the same is placed on the website at http://investors.larsentoubro.com/Listina-Compliance.aspx. The Company does not have any material subsidiaries.
C) Performance and Financial Position of each subsidiary/associate and joint venture companies:
A statement containing the salient features of the financial statement of subsidiary/associate/joint venture companies is provided on pages 471 to 480 of this Annual Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:
The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under Section 186 of the Companies Act, 2013 and Regulation 34(3) and Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 in Note 37 and 38 forming part of the financial statements
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy and the same has been uploaded on the Companyâs website http:// investors. larsentoubro.com/Listi ng-Com pi iance.aspx.
The Company has a process in place to periodically review and monitor Related Party Transactions.
All the related party transactions were in the ordinary course of business and at armâs length. The Audit Committee has approved all related party transactions for the FY 2016-17 and estimated transactions for FY 2017-18.
There were no materially significant related party transactions that may have conflict with the interest of the Company.
STATE OF COMPANY AFFAIRS:
The total income for the financial year under review was Rs. 68,273 crore as against Rs. 66,154 crore for the previous financial year registering an increase of 3%. The profit before tax from continuing operations including exceptional items was Rs. 6,758 crore for the financial year under review as against Rs. 6,256 crore for the previous financial year, registering a increase of 8%. The profit after tax from continuing operations including exceptional items was Rs. 5,454 crore for the financial year under review as against Rs. 5,000 crore for the previous financial year, registering an increase of 9%.
AMOUNT TO BE CARRIED TO RESERVE:
The Company has not transferred any amount to the reserves during the current financial year.
DIVIDEND:
The Directors recommend payment of dividend of Rs. 21 (1050%) per equity share of Rs. 2/- each on the pre-bonus share capital which works out to Rs. 14 per equity share post issue of bonus shares.
The Board of Directors of the Company has approved the Dividend Distribution Policy on 22nd November, 2016 in line with regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is provided in Annexure âGâ forming part of this Board Report and also uploaded on the Companyâs website at http:// investors. larsentoubro.com/Listi ng-Com pi iance.aspx.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure âAâ forming part of this Board Report.
RISK MANAGEMENT POLICY:
The Apex Risk Management Committee comprises of Mr. A. M. Naik, Mr. S. N. Subrahmanyan and Mr. R. Shankar Raman. Mr. A. M. Naik is the Chairman of the Committee.
The Company has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review section of the Management Discussion and Analysis on pages 225 to 227 of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee comprises of Mr. Vikram Singh Mehta, Mr. R. Shankar Raman and Mr. D. K. Sen as the Members. Mr. Vikram Singh Mehta is the Chairman of the Committee.
The details of the various projects and programs which can be undertaken by the Company as a part of its CSR policy framework is available on its website http://investors. larsentoubro.com/Listing-Compliance.aspx.
The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure âCâ forming part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED DURING THE YEAR:
Mr. Bahram Navroz Vakil resigned as Director of the Company on 1st August, 2016. The Board places on record its appreciation of the contribution by Mr. Vakil as Director of the Company.
Mr. Subodh Bhargava was appointed as an Independent Director of the Company with effect from April 1, 2014 to March 29, 2017. Pursuant to the recommendation of Nomination and Remuneration Committee, the Board at its Meeting held on January 28, 2017 has approved the re-appointment of Mr. Subodh Bhargava as an Independent Director for a further term of 5 years from March 30, 2017 to March 29, 2022, subject to the approval of the shareholders, since the Board was of the opinion that his association would be of immense benefit to the Company and it was desirable to avail services of Mr. Bhargava as an Independent Director.
The Board has appointed Mr. Arvind Gupta as an Additional Director representing Administrator of the Specified Undertaking of the Unit Trust of India with effect from July 1, 2017. Mr. Gupta will hold office till the ensuing Annual General Meeting (AGM) and is eligible for appointment.
The Board has appointed Mr. J. D. Patil as an Additional Director of the Company at its Meeting dated 29th May, 2017 with effect from 1st July, 2017. Mr. Patil will hold office till the ensuing AGM and is eligible for appointment. The Board has also appointed him as the Whole-time Director of the Company with effect from 1st July, 2017, for a period of five years subject to approval of the shareholders.
Mr. Sushobhan Sarker, Mr. R. Shankar Raman and Mr. Shailendra Roy retire by rotation at the ensuing AGM and being eligible offer themselves for re-appointment.
The current term of Mr. A. M. Naik as Group Executive Chairman ends on September 30, 2017. Your Board of Directors had requested Mr. Naik to provide advice, guidance and mentorship to the Companyâs executive management in the capacity of Non-Executive Chairman. Mr. Naik has acceded to the Boardâs request and shall continue as Non-Executive Chairman with effect from October 1, 2017 for a period of three years.
The Board has appointed Mr. S.N. Subrahmanyan as Chief Executive Officer and Managing Director with effect from 1 st July, 2017, for a period of five years subject to approval of the shareholders.
The notice convening the AGM includes the proposal for appointment / re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors are placed on the website of the Company http://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has also disclosed on its website http:// investors.larsentoubro.com/Listina-Compliance.aspx details of the familiarization programs formulated to educate the Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure âBâ - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 74 and 75 of this Annual Report.
AUDIT COMMITTEE:
The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure âBâ - Report on Corporate Governance forming part of the Board Report. Members are requested to refer to pages 77 to 79 of this Annual Report.
COMPANY POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure âBâ - Report on Corporate Governance forming part of the Board Report. Members are requested to refer to pages 79 to 81 of this Annual Report.
The Committee has formulated a policy on Directorâs appointment and remuneration including recommendation of remuneration of the key managerial personnel and other employees, board diversity, composition and the criteria for determining qualifications, positive attributes and independence of a Director. The Committee has also formulated a policy on Board Diversity.
DECLARATION OF INDEPENDENCE:
The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 from Independent Directors confirming that he/she is not disqualified from appointing/continuing as Independent Director. The same are also displayed on the website of the Company http://investors.larsentoubro.com/Listing-Compiiance.aspx.
EXTRACT OF ANNUAL RETURN:
As per the provisions of Section 92(3) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as Annexure âFâ to this Report.
DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis;
e) The Directors have laid down an adequate system of internal financial control to be followed by the Company and such internal financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL:
The Company has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to Section 134(5) (e) of the Companies Act, 2013. For the year ended March 31, 2017, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Companyâs operations.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS:
The Nomination and Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, committees and individual directors has to be made.
All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual directors and the Chairman. The questionnaire included inputs on composition, culture, functioning, information availability, compliance and governance, effectiveness etc. Questionnaire also covered, in the case of individual directors, qualitative assessment and in the case of Chairman additional criteria like leadership qualities and other key aspects of his role.
The Individual Directorsâ responses to the questionnaire on the performance of the Board, Committee(s), Directors and Chairman, were analyzed by an independent consultant, to arrive at unbiased conclusions.
The inputs, including areas of improvement, given by all the directors were discussed in the meeting of the Independent Directors held on April 6, 2017 and in the subsequent Meetings of Nomination and Remuneration Committee and the Board. The Group Executive Chairman had a discussion with all the Directors individually.
DISCLOSURE OF REMUNERATION:
The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder are given in Annexure âDâ forming part of this Board report.
The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure âHâ forming part of this report.
In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure.
Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.
PROTECTION OF WOMEN AT WORKPLACE:
The Company has formulated a policy on âProtection of Womenâs Rights at Workplaceâ as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. This has been widely disseminated. There were no cases of sexual harassment complaints received by the Company in the financial year 2016-17.
OTHER DISCLOSURES:
- ESOP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.
The ESOP Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ).
The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SBEB Regulations together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided on the website of the Company http://investors.larsentoubro. com/Listina-Compliance.aspx.
A certificate obtained from the Statutory Auditors, confirming compliance with the Companies Act, 2013 and the SBEB Regulations is provided in Annexure âBâ forming part of this Report.
- Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure âBâ forming part of this Report.
- No disclosure is required under Section 67(3)(c) of the Companies Act, 2013, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.
VIGIL MECHANISM:
As per the provisions of Section 177(9) of the Companies Act, 2013 (âActâ), the Company is required to establish an effective Vigil Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-Blower Policy in place since 2004 to encourage and facilitate employees to report concerns about unethical behaviour, actual/suspected frauds and violation of Companyâs Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Act. The policy provides for adequate safeguards against victimisation of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The Audit Committee of the Company oversees the implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the Whistle-Blower Policy on its website http://investors.larsentoubro.com/corporateaovernance.aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.
BUSINESS RESPONSIBILITY REPORTING:
The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.
As per Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 19 to 35).
The detailed Corporate Sustainability Report is also available on the Companyâs website http://www.larsentoubro.com/corporate/sustainabilitv.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and prepared in accordance with the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.
The Auditorsâ report to the shareholders does not contain any qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT:
The Secretarial Audit Report issued by S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure âEâ to this Annual Report.
The Secretarial Auditorâs report to the shareholders does not contain any qualification.
AUDITORS:
In accordance with provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, Sharp &Tannan (firm registration number 109982W) will complete their term as Statutory Auditors of the Company at the conclusion of the forthcoming Annual General Meeting. The Board places on record its appreciation for the services rendered by Sharp & Tannan as the Statutory Auditors of the Company.
In view of the mandatory rotation of auditor requirement and in accordance with the provisions of Companies Act, 2013, Deloitte Haskins & Sells LLP were appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 70th Annual General Meeting till the conclusion of 75th Annual General Meeting of the Company. A proposal for ratifying their appointment from the conclusion of the 72nd AGM till the conclusion of the 73rd AGM has been included in the Notice of the ensuing AGM.
Deloitte Haskins & Sells LLP, have informed the Company that their appointment would be within the limits prescribed under section 141 of the Companies Act, 2013.
The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.
The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.
The Auditors have also furnished a declaration confirming their independence as well as their armâs length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company.
REPORTING OF FRAUD:
The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.
COST AUDITORS:
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on May 29, 2017, has approved the appointment of R. Nanabhoy & Co., Cost Accountants as the Cost Auditors for the Company for the financial year ending March 31, 2018 at a remuneration of Rs. 11.75 lakhs.
The Report of the Cost Auditors for the financial year ended March 31, 2017 is under finalization and shall be filed with the MCA within the prescribed period.
A proposal for ratification of remuneration of the Cost Auditor for the financial year 2017-18 is placed before the shareholders.
DISCLOSURE ON SPECIFIED BANK NOTES:
The information is covered in Note 59 forming part of the Financial Statements forming part of this Annual Report.
ACKNOWLEDGEMENT:
Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.
For and on behalf of the Board
A. M. Naik
Group Executive Chairman
(DIN: 00001514)
Mumbai, May 29, 2017
Mar 31, 2016
Dear Members,
The Directors have pleasure in presenting their 71st Annual Report and
Audited Financial Statements for the year ended March 31, 2016.
FINANCIAL RESULTS
Particulars 2015-16 2014-15
Rs. crore Rs. crore
Profit before depreciation, exceptional
and extra ordinary items & tax 7127.71 7352.21
Less: Depreciation, amortisation, impairment
and obsolescence 998.88 1009.74
6128.83 6342.47
Add: Transfer from Revaluation Reserve - 1.59
Profit before exceptional and
extraordinary items and tax 6128.83 6344.06
Add: Exceptional Items 560.28 357.16
Profit before tax 6689.11 6701.22
Less: Provision for tax 1377.65 1645.04
Profit for the period carried to Balance
Sheet 5311.46 5056.18
Add: Balance brought forward from
previous year 3429.11 333.45
Less: Dividend paid for the previous
year (Including dividend distribution tax) 2.15 2.20
Less: Depreciation charged against
retained earnings 6.14 86.28
Add: Reversal of deferred tax on
depreciation charged against
retained earnings 2.13 29.33
Balance available for disposal 8734.41 5330.48
(which the directors appropriate
as follows)
Debenture Redemption Reserve 156.50 256.50
Proposed dividend 1699.95 1510.54
Dividend Tax 140.88 134.33
1997.33 1901.37
Balance to be carried forward 6737.08 3429.11
Dividend 1699.95 1510.54
The Directors recommend payment of
final dividend of Rs. 18.25 per
share of Rs. 2/- each on 93,14,78,845
shares.
CAPITAL & FINANCE
During the year under review, the Company allotted 19,16,784 equity
shares of Rs. 2/- each upon exercise of stock options by the eligible
employees under the Employee Stock Option Schemes.
The Company issued Non-Convertible Debentures (NCDs) worth Rs. 1,000
crore. At maturity, repayment of NCDs worth Rs. 600 crore was also
made. The Company tied up a long-term foreign currency loan of USD 25
million, and also completed part repayment of a foreign currency long
term debt of USD 5.83 million as per schedule. In addition, the Company
prepaid foreign currency loans worth USD 50 million.
CAPITAL EXPENDITURE
As at March 31, 2016 the gross tangible and intangible assets including
leased Assets, stood at Rs. 13,297.13 crore and the net tangible and
intangible assets, including leased assets, at Rs.7,668.59 crore.
Capital Expenditure during the year amounted to Rs. 776 crore.
DEPOSITS
The Company does not have any unclaimed deposits as of date. All
unclaimed deposits have been transferred to Investor Education &
Protection Fund.
DEPOSITORY SYSTEM
As the members are aware, the Company''s shares are compulsorily
tradable in electronic form. As on March 31, 2016, 97.90% of the
Company''s total paid up capital representing 91,18,73,781 shares are in
dematerialized form. In view of the numerous advantages offered by the
Depository system as well as to avoid frauds, members holding shares in
physical mode are advised to avail of the facility of dematerialization
from either of the depositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
The Company sends letters to all shareholders, whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
During the year, the Company has transferred a sum of Rs.1,51,31,245 to
Investor Education & Protection Fund, the amount which was due &
payable and remained unclaimed and unpaid for a period of seven years
as provided in Section 205C(2) of the Companies Act, 1956. Despite the
reminder letters sent to each shareholder, this amount remained
unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said fund was Rs. 14,56,60,404 as on March 31, 2016.
SUBSIDIARY/ASSOCIATE/JOINT VENTURE COMPANIES
During the year under review, the Company subscribed to/acquired
equity/preference shares in various subsidiary/ associate/joint venture
companies. These subsidiaries include companies in general insurance,
power, real estate, infrastructure and manufacturing sectors. The
details of investments in subsidiary companies during the year are as
under:
A) Shares subscribed/acquired during the year:
Name of the company Type of Shares No. of shares
L&T General Insurance Company Equity 8,50,00,000
Limited
L&T Global Holdings Limited, Equity 1,000
United Arab Emirates
L&T Hydrocarbon Engineering Preference 26,00,00,000
Limited
L&T Metro Rail (Hyderabad) Equity 4,92,643
Limited
L&T Power Development Limited Equity 38,34,00,000
L&T Realty Limited Preference 64,83,00,000
L&T Seawoods Limited Preference 13,22,50,000
L&T Shipbuilding Limited Preference 133,18,60,000
L&T Uttaranchal Hydropower Preference 60,47,50,000
Limited
LTH Milcom Limited Equity 1,13,340
Larsen & Toubro Saudi Arabia Equity 625
LLC, Saudi Arabia
Marine Infrastructure Developer Equity 9,990
Private Limited
B) Equity shares sold/transferred during the year:
Name of the Company Number of shares
L&T Finance Holdings Limited 8,52,26,706
L&T Infocity Limited 2,40,30,000
L&T Natural Resources Limited 50,000
L&T Powergen Limited 50,000
L&T Sapura Offshore Private Limited 6,000
L&T Sapura Shipping Private Limited 9,53,11,850
L&T Solar Limited 50,000
L&T-Gulf Private Limited 40,00,016
L&T-Valdel Engineering Limited 11,79,000
Larsen & Toubro International FZE, United Arab 1,829
Emirates
PNG Tollway Limited 2,15,43,340
JSK Electricals Limited 21,20,040
L&T-Chiyoda Limited 45,00,000
Rishi Consfab Private Limited 27,04,000
Salzer Electronics Limited 26,79,808
The Company has formulated a policy on the identification of material
subsidiaries and the same is placed on the website at
http://investors.larsentoubro.com/Listing- Compliance.aspx. The Company
does not have any material subsidiaries.
C) Performance and Financial Position of each subsidiary/associate and
joint venture companies:
A statement containing the salient features of the financial statement
of subsidiary/associate/joint venture companies is provided on pages
390 to 399 of this Annual Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR
SECURITY PROVIDED BY THE COMPANY
The Company has disclosed the full particulars of the loans given,
investments made or guarantees given or security provided on pages 263
to 265 of this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Audit Committee and the Board of Directors have approved the
Related Party Transactions Policy and the same has been uploaded on the
Company''s website http://
nvestors.larsentoubro.com/Listing-Compliance.aspx.
The Company has a process in place to periodically review and monitor
Related Party Transactions.
All the related party transactions were in the ordinary course of
business and at arm''s length. The Audit Committee has approved all
related party transactions for the FY 2015-16 and estimated
transactions for FY 2016-17.
There were no material transactions with related parties during the
year.
STATE OF COMPANY AFFAIRS
The gross sales and other income for the financial year under review
were Rs. 62,821 crore as against Rs. 59,841 crore for the previous
financial year registering an increase of 5%. The profit before tax
from continuing operations including extraordinary and exceptional
items was Rs. 6,689 crore for the financial year under review as
against Rs. 6,701 crore for the previous financial year, registering a
decrease of 0.18%. The profit after tax from continuing operations
including extraordinary and exceptional items of Rs. 5,311 crore for
the financial year under review as against Rs. 5,056 crore for the
previous financial year, registering an increase of 5%.
AMOUNT TO BE CARRIED TO RESERVE
The Company has not transferred any amount to the reserves during the
current financial year.
DIVIDEND
The Directors recommend payment of dividend of Rs. 18.25 (912.50%) per
equity share of Rs. 2/- each on the share capital.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE
REPORT
There are no material changes and commitments affecting the financial
position of the Company between the end of the financial year and the
date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information as required to be given under Section 134(3) (m) read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in
Annexure ''A forming part of this Board Report.
RISK MANAGEMENT POLICY
The Risk Management Committee comprises of Mr. A. M. Naik, Mr. S. N.
Subrahmanyan and Mr. R. Shankar Raman. Mr. A. M. Naik is the Chairman
of the Committee.
The Company has formulated a risk management policy and has in place a
mechanism to inform the Board Members about risk assessment and
minimization procedures and periodical review to ensure that executive
management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review
section of the Management Discussion and Analysis on pages 217 to 219
of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee comprises of Mr. Vikram
Singh Mehta, Mr. D. K. Sen and Mr. R. Shankar Raman as the Members.
Mr. Vikram Singh Mehta is the Chairman of the Committee.
The details of the various projects and programs which can be
undertaken by the Company as a part of its CSR policy framework is
available on its website
http://investors.larsentoubro.com/Listing-Compliance.aspx.
The disclosures required to be given under Section 135 of the Companies
Act, 2013 read with Rule 8(1) of the Companies (Corporate Social
Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming
part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/RESIGNED
DURING THE YEAR
Mr. K. Venkataramanan retired as the Chief Executive Officer and
Managing Director of the Company on September 30, 2015 pursuant to his
superannuation from the services of the Company. The Board places on
record its appreciation of the immense contribution by Mr. K.
Venkataramanan as the Chief Executive Officer and Managing Director of
the Company.
Mr. M. V. Kotwal retired as the Whole-time Director of the Company on
August 26, 2015 pursuant to his superannuation from the services of the
Company. The Board places on record its appreciation of the immense
contribution by Mr. M. V. Kotwal as a Whole-time Director of the
Company.
Mr. Swapan Dasgupta resigned as Nominee Director of the Company on May
15, 2016. The Board places on record its appreciation of the immense
contribution by Mr. Swapan Dasgupta as Director of the Company.
The Board has appointed Mr. Subramanian Sarma as a Non-Executive
Director of the Company w.e.f. August 19, 2015.
During the year the Board has appointed Mr. S. N. Subrahmanyan as
Deputy Managing Director and President of the Company w.e.f October 1,
2015 for a period of 5 years, subject to approval of the shareholders.
The Board has appointed Mr. D. K. Sen as a Whole-time Director w.e.f.
October 1, 2015 for a period of 5 years, subject to approval of the
shareholders.
The Board has appointed Mr. M. V. Satish as a Whole- time Director of
the Company w.e.f. January 29, 2016 for a period of five years, subject
to approval of the shareholders.
The Board has appointed Ms. Naina Lal Kidwai as an Independent Director
of the Company from March 1, 2016 to February 28, 2021, subject to the
approval of the shareholders. Ms. Naina Lal Kidwai, appointed as an
Additional Director, will hold office till the ensuing AGM and is
eligible for appointment.
The Board has appointed Mr. Sanjeev Aga as an Independent Director of
the Company from May 25, 2016 to May 24, 2021, subject to the approval
of shareholders. Mr. Sanjeev Aga, appointed as Additional Director,
will hold office till the ensuing AGM and is eligible for appointment.
The Board has appointed Mr. Narayanan Kumar as an Independent Director
of the Company at its Meeting dated May 25, 2016 with effect from May
27, 2016 to May 26, 2021, subject to the approval of shareholders. Mr.
Narayanan Kumar, appointed as Additional Director, will hold office
till the ensuing AGM and is eligible for appointment.
Mr. S. N. Subrahmanyan and Mr. A.M Naik retire by rotation at the
ensuing AGM and being eligible offers themselves for re-appointment.
Mrs. Sunita Sharma who was appointed as a Director in casual vacancy
caused due to the resignation of Mr. N. Mohanraj holds office till the
conclusion of the ensuing AGM and being eligible offers herself for
re-appointment.
It is proposed to re-appoint Mr. R. Shankar Raman as a Whole-time
Director of the Company for a period of 5 years from October 1, 2016 to
September 30, 2021, subject to the approval of the shareholders.
It is proposed to re-appoint Mr. Shailendra Roy as a Whole-time
Director of the Company for the period March 9, 2017 to July 7, 2020,
subject to the approval of the shareholders.
The notice convening the AGM includes the proposal for
appointment/re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors
are placed on the website of the Company
http://investors.larsentoubro.com/Listing- Compliance.aspx.
The Company has also disclosed on its website
http://investors.larsentoubro.com/Listing-Compliance.aspx details of
the familiarization programs formulated to educate the Directors
regarding their roles, rights and responsibilities in the Company and
the nature of the industry in which the Company operates, the business
model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
This information is given in Annexure ''B'' - Report on Corporate
Governance forming part of this Board Report. Members are requested to
refer to page 79 of this Annual Report.
AUDIT COMMITTEE
The Company has in place an Audit Committee in terms of the
requirements of the Companies Act, 2013 read with the rules made
thereunder and Regulation 18 of the SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015. The details relating to the
same are given in Annexure ''B'' - Report on Corporate Governance forming
part of this Board Report. Members are requested to refer to pages 81
to 83 of this Annual Report.
COMPANY POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Company has in place a Nomination & Remuneration Committee in
accordance with the requirements of the Companies Act, 2013 read with
the rules made thereunder and Regulation 19 of the SEBI (Listing
Obligations & Disclosure Requirements) Regulations, 2015. The details
relating to the same are given in Annexure ''B'' - Report on Corporate
Governance forming part of this Board Report. Members are requested to
refer to pages 83 to 85 of this Annual Report.
The Committee has formulated a policy on Director''s appointment and
remuneration including recommendation of remuneration of the key
managerial personnel and other employees, composition and the criteria
for determining qualifications, positive attributes and independence of
a Director. The Committee has formulated a policy on board diversity.
DECLARATION OF INDEPENDENCE
The Company has received Declarations of Independence as stipulated
under Section 149(7) of the Companies Act, 2013 from Independent
Directors confirming that he/she is not disqualified from
appointing/continuing as Independent Director. The same are also
displayed on the website of the Company www.larsentoubro.com
EXTRACT OF ANNUAL RETURN
As per the provisions of Section 92(3) of the Companies Act, 2013, an
extract of the Annual Return in Form MGT-9 is attached as Annexure ''F''
to this Board Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit of
the Company for that period;
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) The Directors have prepared the Annual Accounts on a going concern
basis;
e) The Directors have laid down an adequate system of internal
financial controls to be followed by the Company and such internal
financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has designed and implemented a process driven framework for
Internal Financial Controls ("IFC") within the meaning of the
explanation to Section 134(5) (e) of the Companies Act, 2013. For the
year ended March 31, 2016, the Board is of the opinion that the Company
has sound IFC commensurate with the nature and size of its business
operations and operating effectively and no material weakness exists.
The Company has a process in place to continuously monitor the same and
identify gaps, if any, and implement new and/or improved controls
wherever the effect of such gaps would have a material effect on the
Company''s operations.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS
The Nomination & Remuneration Committee and the Board have laid down
the manner in which formal annual evaluation of the performance of the
Board, Committees, Chairman and individual directors has to be made.
It includes circulation of questionnaires to all Directors for
evaluation of the Board and its Committees, Board composition and its
structure, its culture, its effectiveness, its functioning, information
availability, etc. These questionnaires also cover specific criteria
and the grounds on which all Directors in their individual capacity
will be evaluated.
The Individual Directors'' responses on the questionnaire on the
performance of the Board, Committee(s), Directors and Chairman were
analyzed by an independent consultant, to arrive at unbiased
conclusions.
The inputs given by all the Directors were discussed in the meeting of
the Independent Directors held on April 11, 2016, as per Schedule IV of
the Companies Act, 2013. The performance evaluation of the Board,
Committees, Chairman and Directors was also reviewed by the Nomination
& Remuneration Committee and the Board.
DISCLOSURE OF REMUNERATION
The details of remuneration as required to be disclosed under the
Companies Act, 2013 and the rules made thereunder, are given in
Annexure ''D'' forming part of this Board report.
The details of employees receiving remuneration exceeding Rs. 5 lakh
per month or Rs. 60 lakh per annum is provided in Annexure ''G'' forming
part of this report. In terms of Section 136(1) of the Act and the
rules made thereunder, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any Shareholder
interested in obtaining a copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL
MEETINGS
The Company has complied with Secretarial Standards issued by the
Institute of Company Secretaries of India on Board Meetings and Annual
General Meetings.
PROTECTION OF WOMEN AT WORKPLACE
The Company has formulated a policy on ''Protection of Women''s Rights at
Workplace'' as per the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition & Redressal) Act, 2013. This has
been widely disseminated. There were no cases of sexual harassment
received by the Company in 2015-16.
OTHER DISCLOSURES
There has been no material change in the Employee Stock Option Schemes
(ESOP Schemes) during the current financial year. The ESOP Schemes are
in compliance with SEBI (Share Based Employee Benefits) Regulations,
2014.
The disclosures relating to ESOPs required to be made under the
provisions of the Companies Act, 2013 and the rules made thereunder and
the SEBI (Share Based Employee Benefits) Regulations, 2014 are provided
on the website of the Company www.larsentoubro.com.
A certificate obtained from the Statutory Auditors, confirming
compliance with the Companies Act, 2013 and the above Regulations is
reproduced below :
Pursuant to the SEBI (Listing Obligations & Disclosure Requirements)
Regulations, 2015, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure ''B'' forming part of this Board Report.
VIGIL MECHANISM
As per the provisions of Section 177(9) of the Companies Act, 2013
(''Act''), the Company is required to establish an effective Vigil
Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to
encourage and facilitate employees to report concerns about unethical
behaviour, actual/suspected frauds and violation of Company''s Code of
Conduct or Ethics Policy. The Policy has been suitably modified to meet
the requirements of Vigil Mechanism under the Act. The policy provides
for adequate safeguards against victimisation of persons who avail the
same and provides for direct access to the chairperson of the Audit
Committee. The Audit Committee of the Company oversees the
implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the
Whistle Blower Policy on its website
http://investors.larsentoubro.com/corporategovernance.aspx. During the
year, no personnel has been declined access to the Audit Committee,
wherever desired.
BUSINESS RESPONSIBILITY REPORTING
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
As per Regulation 34 of the SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015, a separate section on Business
Responsibility Report forms a part of this Annual Report (refer pages
18 to 35).
The detailed Corporate Sustainability Report is also available on the
Company''s website http://www.larsentoubro.com/corporate/sustainability.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS
During the year under review, there were no material and significant
orders passed by the regulators or courts or tribunals impacting the
going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Section 129(3) of the Companies Act, 2013 and
Regulation 34 of the SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015 and prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India (ICAI), in this regard.
The Auditors report to the shareholders does not contain any
qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian &
Co., Practicing Company Secretaries is attached as Annexure ''E'' to this
Board Report.
The Secretarial Auditor''s report to the shareholders does not contain
any qualification.
STATUTORY AUDITORS
The Company''s auditors M/s. Sharp & Tannan, (firm registration number
109982W) have already completed more than ten years as Statutory
Auditors of the Company.
In accordance with provisions of Section 139 of the Companies Act, 2013
and the Companies (Audit and Auditors) Rules, 2014, the Company had
appointed them for a period of two years from conclusion of 70th Annual
General Meeting till the conclusion of 72nd Annual General Meeting. A
proposal for ratifying their appointment from the conclusion of the
71st AGM till the conclusion of the 72nd AGM has been included in the
Notice of the ensuing AGM.
In view of the mandatory rotation of auditor requirement and to ensure
smooth transition during this period, M/s. Deloitte Haskins & Sells LLP
[ICAI Registration No. 117366W/W-100018] was appointed as Statutory
Auditors for a period of 5 continuous years from the conclusion of 70th
Annual General Meeting till the conclusion of 75th Annual General
Meeting of the Company. A proposal for ratifying their appointment from
the conclusion of the 71st AGM till the conclusion of the 72nd AGM has
been included in the Notice of the ensuing AGM.
Both the Auditors will be jointly and severally responsible during the
financial year 2016-17.
Sharp & Tannan and Deloitte Haskins & Sells LLP, have informed the
Company that their appointment if made would be within the limits
prescribed under Section 141 of the Companies Act, 2013.
The Auditors have confirmed that they have subjected themselves to the
peer review process of ICAI and hold valid certificate issued by the
Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their
independence as well as their arm''s length relationship with the
Company as well as declaring that they have not taken up any prohibited
non-audit assignments for the Company.
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified
under Section 143(12) of the Companies Act, 2013.
COST AUDITORS
Pursuant to the provisions of Section 148 of the Companies Act, 2013
and as per the Companies (Cost Records and Audit) Rules, 2014 and
amendments thereof, the Board, on the recommendation of the Audit
Committee, at its meeting held on May 25, 2016, has approved the
appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost
Auditors for the Company for the financial year ending March 31, 2017
at a remuneration of Rs. 11 lakhs.
The Report of the Cost Auditors for the financial year ended March 31,
2016 is under finalization and will be filed with the MCA within the
prescribed period.
A proposal for ratification of remuneration of the Cost Auditor for
financial year 2016-17 is placed before the shareholders.
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the customers, supply
chain partners, employees, Financial Institutions, Banks, Central and
State Government authorities, Regulatory authorities, Stock Exchanges
and all the various stakeholders for their continued co-operation and
support to the Company. Your Directors also wish to record their
appreciation for the continued co-operation and support received from
the Joint Venture partners/ Associates.
For and on behalf of the Board
A. M. Naik
Group Executive Chairman
(DIN: 00001514)
Mumbai, May 25, 2016
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting their Annual Report and
Audited Financial Statements for the year ended March 31, 2015.
FINANCIAL RESULTS
2014-15 2013-14
Rs. crore Rs. crore
Profit before depreciation, exceptional
and extraordinary items and tax 7352.21 747183
Less: Depreciation, amortisation,
impairment and obsolescence 1009.74 793.36
6342.47 6678.47
Add: Transfer from Revaluation Reserve 1.59 0.94
Profit before exceptional and
extraordinary items and tax 6344.06 6679.41
Add: Exceptional items 357.16 588.50
Profit before tax 6701.22 7267.91
Less: Provision for tax 1645.04 1774.78
Profit for the period carried to Balance
Sheet 5056.18 5493.13
Add: Balance brought forward from
previous year 333.45 285.75
Less: Dividend paid for the previous year
(including dividend distribution tax) 2.20 2.78
Less: Depreciation charged against
retained earnings 86.28 -
Add: Reversal of deferred tax on depreciation
charged against retained earnings 29.33 -
Balance available for disposal 5330.48 5776.10
(which the directors appropriate as follows):
Debenture Redemption Reserve 256.50 44.00
Proposed Dividend 1510.54 1320.85
Dividend Tax 134.33 77.80
General Reserve - 4000.00
1901.37 5442.65
Balance to be carried forward 3429.11 333.45
Dividend 1510.54 1320.85
The Directors recommend payment of final
dividend of Rs. 16.25 per equity
share of Rs. 2/- each on 92,95,62,061 shares.
CAPITAL & FINANCE
During the year under review, the Company allotted 26,49,403 equity
shares upon exercise of stock options by the eligible employees under
the Employee Stock Option Scheme.
The Company tied up long term foreign currency loans of approximately Rs.
1,093.75 crore and issued Non-Convertible Debentures (NCDs) worth Rs.
1,150 crore. In addition, the Company also refinanced USD 200 million
foreign currency loan through a Foreign Currency Convertible Bond
(FCCB) issuance to reduce its interest cost. Apart from this, the
Company also repaid a part of its long term foreign currency debt of
USD 5.83 million.
CAPITAL EXPENDITURE
As at March 31,2015, the gross fixed and intangible assets, including
leased assets, stood at Rs. 12,784 crore and the net fixed and intangible
assets, including leased assets, at Rs. 7,981 crore. Capital expenditure
during the year amounted to Rs. 953 crore.
DEPOSITS
There were no deposits which were due for repayment on or before March
31, 2015. All unclaimed deposits were transferred to Investor Education
& Protection Fund during the year.
DEPOSITORY SYSTEM
As the members are aware, the Company's shares are compulsorily
tradable in electronic form. As on March 31, 201 5, 97.77% of the
Company's total paid-up capital representing 90,87,91,21 1 shares are
in dematerialized form. In view of the numerous advantages offered by
the Depository system, members holding shares in physical mode are
advised to avail of the facility of dematerialization from either of
the depositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
The Company sends letters to all shareholders, whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
Efforts are also made in co-ordination with the Registrar to locate the
shareholders who have not claimed their dues.
During the year the Company has transferred a sum of Rs. 1,47,21,816 to
Investor Education & Protection Fund, the amount which was due &
payable and remained unclaimed and unpaid for a period of seven years
as provided in Section 205C(2) of the Companies Act, 1956. Despite the
reminder letters sent to each shareholder, this amount remained
unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said fund was Rs. 13,05,29,159 as on March 31, 2015.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
During the year under review, the Company subscribed / acquired equity
/ preference shares in various subsidiary / associate / joint venture
companies. These subsidiaries include companies in general insurance,
real estate, infrastructure, engineering services and manufacturing
sectors. The details of investments in subsidiary companies during the
year are as under:
1. During the year, the Company acquired 50% stake in L&T
Infrastructure Engineering Limited (formerly known as L&T-Ramboll
Consulting Engineers Limited) from the Joint Venture partner, with this
acquisition, L&T Infrastructure Engineering Limited is now a wholly
owned subsidiary of the Company.
2. To comply with, inter-alia the minimum public shareholding
requirement in L&T Finance Holdings Limited by August 2014, the Company
has sold shares of L&T Finance Holdings Limited.
The Company has formulated a policy on the identification of material
subsidiaries and the same is placed on the website at
http://investors.larsentoubro.com/Listing-Compliance.aspx.
C) Performance and Financial Position of each
subsidiary/associate/joint venture companies:
A statement containing the salient features of the financial statement
of subsidiary/associate/joint venture companies is provided on pages
342 to 350 of this Annual Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR
SECURITY PROVIDED BY THE COMPANY
The Company has disclosed the full particulars of the loans given,
investments made or guarantees given or security provided on pages 222
to 224 of this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Audit Committee and the Board of Directors have approved the
Related Party Transactions Policy and the same has been uploaded on the
Company's website
http://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has a process in place to periodically review and monitor
Related Party Transactions.
All the related party transactions were in the ordinary course of
business and at arm's length. The Audit Committee has approved all
related party transactions for FY 2014-15 and estimated transactions
for FY 2015-16.
There were no material transactions with the related parties during the
year.
YEAR IN RETROSPECT
The gross sales and other income for the financial year under review
were Rs. 59,841 crore as against Rs. 59,045 crore for the previous
financial year registering an increase of 1.35%. The profit before tax
from continuing operations including extraordinary and exceptional
items was Rs. 6,701 crore for the financial year under review as against
Rs. 7,268 crore for the previous financial year, registering a decrease
of 7.8%. The profit after tax from continuing operations including
extraordinary and exceptional items of Rs. 5,056 crore for the financial
year under review as against Rs. 5,493 crore for the previous financial
year, registering a decrease of 7.96%.
AMOUNT CARRIED TO RESERVE
The Company has not transferred any amount to the reserves during the
current financial year.
DIVIDEND
The Directors recommend payment of dividend of Rs. 16.25 per equity share
of Rs. 2/- each on the share capital.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE
REPORT
There are no material changes and commitments affecting the financial
position of the Company between the end of the financial year and the
date of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information as required to be given under Section 134(3)(m) read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in
Annexure 'A' forming part of this Report.
RISK MANAGEMENT POLICY
The Company has constituted a Risk Management Committee comprising of
Mr. A. M. Naik, Mr. K. Venkataramanan and Mr. R. Shankar Raman and
concerned heads of Independent Companies as members. Mr. A. M. Naik is
the Chairman of the Committee.
The Company has formulated a risk management policy and has in place a
mechanism to inform the Board Members about risk assessment and
minimization procedures and periodical review to ensure that executive
management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review
section of the Management Discussion and Analysis on pages 182 to 183
of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility Committee
comprising of Mr. Vikram Singh Mehta, Mr. M. V. Kotwal and Mr. R.
Shankar Raman as the Members. Mr. Vikram Singh Mehta is the Chairman of
the Committee.
The details of the various projects and programs to be undertaken by
the Company as a part of its CSR policy framework is available on its
website http://investors.larsentoubro.com/Listing-Compliance.aspx.
The disclosures required to be given under Section 135 of the Companies
Act, 2013 read with Rule 8(1) of the Companies (Corporate Social
Responsibility Policy) Rules, 2014 are given in Annexure 'D' forming
part of this Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
APPOINTED/RESIGNED/RETIRED DURING THE YEAR
Mr. S. Rajgopal and Mr. S. N. Talwar, Independent Directors, retired at
the conclusion of the Annual General Meeting (AGM) held on August 22,
2014.
Mr. A. K. Jain, Nominee Director representing Administrator of the
'Specified Undertaking of Unit Trust of India' (SUUTI) resigned with
effect from February 10, 2015, consequent to the withdrawal of his
nomination.
The Board places on record its appreciation of the immense contribution
made by Mr. S. Rajgopal, Mr. S. N. Talwar and Mr. A. K. Jain to the
Company.
The Board has appointed Mr. Akhilesh Krishna Gupta as an Independent
Director of the Company from September 9, 2014 to September 8, 2019,
subject to the approval of the shareholders. Mr. Akhilesh Gupta,
appointed as an Additional Director, will hold office till the ensuing
AGM and is eligible for appointment.
The Board has appointed Mr. Bahram Navroz Vakil as an Independent
Director of the Company from March 16, 2015 to March 1 5, 2020, subject
to the approval of the shareholders. Mr. Vakil, appointed as an
Additional Director, will hold office till the ensuing AGM and is
eligible for appointment.
The Board has appointed Mr. Swapan Dasgupta as a Director in the casual
vacancy caused by the resignation of Mr. A. K. Jain as a Director
representing SUUTI, with effect from April 1, 2015.
The Board has appointed Mrs. Sunita Sharma as a Director in the casual
vacancy caused by the resignation of Mr. N. Mohan Raj as a Director
representing 'Life Insurance Corporation of India', with effect from
April 1, 2015.
The Board has appointed Mr. Thomas Mathew T. as an Independent Director
of the Company from April 3, 2015 to April 2, 2020, subject to the
approval of the shareholders. Mr. Mathew, appointed as an Additional
Director, will hold office till the ensuing AGM and is eligible for
appointment.
The Board has appointed Mr. Ajay Shankar as an Independent Director of
the Company from May 30, 2015 to May 29, 2020, subject to the approval
of the shareholders. Mr. Ajay Shankar, appointed as an Additional
Director, will hold office till the ensuing AGM and is eligible for
appointment.
Mr. Sushobhan Sarker, Mr. Shailendra Roy and Mr. R. Shankar Raman
retire from the Board by rotation and are eligible for re-appointment
at the forthcoming AGM.
The notice convening the AGM includes the proposal for appointment /
re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors
are placed on the website of the Company
http://investors.larsentoubro.com/Listing-Compliance.aspx.
The Company has also disclosed the Directors' familiarization programme
on its website
http://investors.larsentoubro.com/Listing-Compliance.aspx.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
This information is given in Annexure 'C' - Report on Corporate
Governance forming part of this Report. Members are requested to refer
to page 57 of this Annual Report.
AUDIT COMMITTEE
The Company has in place an Audit Committee in terms of the
requirements of the Companies Act, 2013 read with the rules made
thereunder and Clause 49 of the Listing Agreement. The details relating
to the same are given in Annexure 'C' - Report on Corporate Governance
forming part of this Report. Members are requested to refer to pages 59
to 61 of this Annual Report.
COMPANY POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION
The Company has in place a Nomination & Remuneration Committee in
accordance with the requirements of the Companies Act, 2013 read with
the rules made thereunder and Clause 49 of the Listing Agreement. The
details relating to the same are given in Annexure 'C' - Report on
Corporate Governance forming part of this Report. Members are requested
to refer to pages 61 to 63 of this Annual Report.
The Committee has formulated a policy on Director's appointment and
remuneration including recommendation of remuneration of the key
managerial personnel and other employees, board diversity, composition
and the criteria for determining qualifications, positive attributes
and independence of a Director.
DECLARATION OF INDEPENDENCE
The Company has received Declarations of Independence as stipulated
under Section 149(7) of the Companies Act, 2013 and Clause 49 of the
Listing Agreement from Independent Directors confirming that he is not
disqualified from appointing/continuing as an Independent Director. The
same are also displayed on its website
http://investors.larsentoubro.com/Listing-Compliance.aspx.
EXTRACT OF ANNUAL RETURN
As per the provisions of Section 92(3) of the Companies Act, 2013, an
extract of the Annual Return in Form MGT-9 is attached as Annexure 'G'
to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms that:
a) In the preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit of
the Company for that period;
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) The Directors have prepared the Annual Accounts on a going concern
basis;
e) The Directors have laid down an adequate system of internal
financial control to be followed by the Company and that such internal
financial controls are adequate and were operating efficiently; and
f) The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has designed and implemented a process driven framework for
Internal Financial Controls ("IFC") within the meaning of the
explanation to Section 134(5)(e) of the Companies Act, 2013. For the
year ended March 31, 2015, the Board is of the opinion that the Company
has sound IFC commensurate with the nature and size of its business
operations and operating effectively and no material weakness exist.
The Company has a process in place to continuously monitor the same and
identify gaps, if any, and implement new and/or improved controls
wherever the effect of such gaps would have a material effect on the
Company's operations.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS
The Nomination & Remuneration Committee and the Board have laid down
the manner in which formal annual evaluation of the performance of the
Board, Committees and individual Directors has to be made.
It includes circulation of questionnaires to all Directors for
evaluation of the Board and its Committees, Board composition and its
structure, its culture, its effectiveness, its functioning, information
availability, etc. These questionnaires also cover specific criteria
and the grounds on which all Directors in their individual capacity
will be evaluated.
The Individual Directors responses on the questionnaire on the
performance of the Board, Committee(s), Directors and Chairman were
analyzed to arrive at unbiased conclusions.
The inputs given by all the directors were discussed in the meeting of
the Independent Directors held on March 23, 2015, as per Schedule IV of
the Companies Act, 2013.
The performance evaluation of the Board, Committees and Directors was
also reviewed by the Nomination & Remuneration Committee.
DISCLOSURE OF REMUNERATION
The details of remuneration as required to be disclosed under the
Companies Act, 2013 and the rules made thereunder is given in Annexure
'H' forming part of this Report.
The Board of Directors wishes to express their appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The details of employees receiving
remuneration exceeding Rs. 5 lakh per month or Rs. 60 lakh per annum is
provided in Annexure 'E' forming part of this Report. In terms of
Section 136(1) of the Act and the rules made thereunder, the Report and
Accounts are being sent to the shareholders excluding the aforesaid
Annexure. Any Shareholder interested in obtaining a copy of the same
may write to the Company Secretary. None of the employees listed in the
said Annexure is related to any Director of the Company.
RECEIPT OF REMUNERATION BY MANAGING DIRECTOR FROM SUBSIDIARY COMPANY
Mr. K. Venkataramanan, Chief Executive Officer and Managing Director of
the Company, is also the Managing Director of a wholly owned
subsidiary, L&T Hydrocarbon Engineering Limited. During the year
2014-15, part of the remuneration received by Mr. Venkataramanan was
debited to L&T Hydrocarbon Engineering Limited. Kindly refer to page
242 of this Annual Report for details.
OTHER DISCLOSURES
The disclosures relating to Employee Stock Options required to be made
under the provisions of the Companies Act, 2013 and the rules made
thereunder and the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 together with a certificate
obtained from the Statutory Auditors, confirming compliance, is
provided in Annexure 'B' forming part of this Report.
Pursuant to Clause 49 of the Listing Agreement entered into with the
Stock Exchanges, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure 'C' forming part of this Report.
VIGIL MECHANISM
As per the provisions of Section 177(9) of the Companies Act, 2013, the
Company is required to establish an effective Vigil Mechanism for
Directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to report
concerns about unethical behaviour, actual/ suspected frauds and
violation of Company's Code of Conduct or Ethics Policy. The Policy has
been suitably modified to meet the requirements of Vigil Mechanism
under the Companies Act, 2013. The policy provides for adequate
safeguards against victimisation of persons who avail the same and
provides for direct access to the Chairperson of the Audit Committee.
The Audit Committee of the Company oversees the implementation of the
Whistle-Blower Policy.
The Company has disclosed information about the establishment of the
Whistle Blower Policy on its website
http://investors.larsentoubro.com/corporateaovernance.aspx.
BUSINESS RESPONSIBILITY REPORTING
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility Reporting forms a part of
this Annual Report (refer pages 18 to 35).
The detailed Corporate Sustainability Report is also available on the
Company's website http://www.larsentoubro.com/corporate/sustainability.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS
During the year under review, there were no material and significant
orders passed by the regulators or courts or tribunals impacting the
going concern status and the Company's operations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Section 129(3) of the Companies Act, 2013 and
Clause 32 of the Listing Agreement entered into with the Stock
Exchanges and prepared in accordance with the Accounting Standards
prescribed by the Institute of Chartered Accountants of India, in this
regard.
The Auditors report to the shareholders does not contain any
qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian &
Co., Practicing Company Secretaries is attached as Annexure 'F' to this
Report.
The Secretarial Auditor's report to the shareholders does not contain
any qualification.
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified
under the second proviso of Section 143(12) of the Companies Act, 2013.
AUDITORS
The Company's auditors M/s. Sharp & Tannan, (firm registration number
109982W) have already completed more than ten years as Statutory
Auditors of the Company.
In accordance with provisions of Section 139 of the Companies Act, 2013
and the Companies (Audit and Auditors) Rules, 2014, they can continue
as Auditors for a further period of two years i.e up to March 31, 2017.
It is proposed to appoint them from conclusion of 70th Annual General
Meeting till the conclusion of 72nd Annual General Meeting.
In view of the mandatory rotation of auditor requirement and to ensure
smooth transition during this period, it is also proposed to appoint
M/s. Deloitte Haskins & Sells LLP as Statutory Auditors for a period of
5 continuous years i.e., from the conclusion of 70th Annual General
Meeting till the conclusion of 75th Annual General Meeting of the
Company.
Both the Auditors will be jointly and severally responsible during the
first two financial years 2015-16 and 2016-17.
Sharp & Tannan and Deloitte Haskins & Sells LLP, have informed the
Company vide letters dated May 30, 201 5 & May 26, 2015 respectively,
that their appointment if made would be within the limits prescribed
under section 141 of the Companies Act, 2013.
Sharp & Tannan and Deloitte Haskins & Sells LLP, have confirmed that
they have subjected themselves to the peer review process of Institute
of Chartered Accountants of India (ICAI) and hold valid certificate
issued by the Peer Review Board of the ICAI.
Sharp & Tannan and Deloitte Haskins & Sells LLP, have also furnished a
declaration confirming their independence as well as their arm's length
relationship with the Company and declared that they have not taken up
any prohibited non-audit assignments for the Company.
COST AUDITORS
Pursuant to the provisions of Section 148(3) of the Companies Act, 2013
the Board of Directors had appointed M/s R. Nanabhoy & Co., Cost
Accountants, as Cost Auditors of the Company, for conducting the audit
of cost records for the financial year ended March 31, 2015. The audit
is in progress and report will be filed with Ministry of Corporate
Affairs within the prescribed period.
The Board, on the recommendation of the Audit Committee, at its meeting
held on May 30, 201 5, has approved the appointment of M/s R. Nanabhoy
& Co., Cost Accountants as the Cost Auditors of the Company, for
conducting audit of cost records for the financial year ending March
31,2016. There is an additional coverage of products under audit
during the year.
A proposal for ratification of remuneration of the Cost Auditors for FY
2014-15 as well as FY 2015-16 is placed before the shareholders.
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the customers, supply
chain partners, employees, Financial Institutions, Banks, Central and
State Government authorities, Regulatory authorities, Stock Exchanges
and all the various stakeholders for their continued co-operation and
support to the Company. Your Directors also wish to record their
appreciation for the continued co-operation and support received from
the Joint Venture partners / Associates.
For and on behalf of the Board
A. M. Naik
Group Executive Chairman
(DIN: 00001514)
Mumbai, May 30, 2015
Mar 31, 2013
To the Members,
The Directors have pleasure in presenting their Annual Report and
Accounts for the year ended March 31, 2013.
FINANCIAL RESULTS
2012-13 2011-12
Rs. crore Rs. crore
Profit before depreciation, exceptional 7,275.56 6,954.79
and extraordinary items and tax
Less: Depreciation, amortization and 819.42 700.45
obsolescence
6,456.14 6,254.34
Add: Transfer from Revaluation Reserve 0.95 0.99
Profit before exceptional and 6,457.09 6,255.33
extraordinary items and tax
Add: Exceptional items 175.95 55.00
Profit before extraordinary items and tax 6,633.04 6,310.33
Add: Extraordinary items 78.11 -
Profit before tax 6,711.15 6,310.33
Less: Provision for Tax 1800.50 1,853.83
Profit after Tax 4,910.65 4,456.50
Add: Balance brought forward from 152.39 105.68
previous year
Less: Dividend paid for the previous 2.71 3.89
year (including dividend distribution tax)
Balance available for disposal which the 5,060.33 4,558.29
directors appropriate as follows :
Debenture Redemption Reserve 50.25 44.00
Proposed Dividend 1,138.47 1,010.46
Dividend Tax 85.86 101.44
General Reserve 3,500.00 3,250.00
4,774.58 4,405.90
Balance to be carried forward 285.75 152.39
Dividend 1,138.47 1,010.46
The Directors recommend payment of final dividend of Rs. 18.50 per
equity share of Rs. 21- each on pre-bonus capital of 61,53,85,981
shares.
YEAR IN RETROSPECT
The gross sales and other income for the financial year under review
were Rs. 63,322 crore as against X 55,076 crore for the previous
financial year registering an increase of 15%. The Profit before tax
excluding extraordinary and exceptional items was Rs. 6,457 crore and
the Profit after tax excluding extraordinary and exceptional items of f
4,695 crore for the financial year under review as against Rs. 6,255
crore and Rs. 4,413 crore respectively for the previous financial year,
registering an increase of 3% and 6% respectively.
TRANSFER OF HYDROCARBON BUSINESS
The Board of Directors of the Company at its Meeting held on May 22,
2013 has approved a Scheme of Arrangement between Larsen & Toubro
Limited and L&T Hydrocarbon Engineering Limited, a wholly owned
subsidiary of the Company ("LTHE") and their respective Shareholders
and Creditors which inter alia envisages transfer of the Hydrocarbon
Business undertaking along with related assets and liabilities into
LTHE and other consequential matters under the provisions of Sections
391 to 394 of the Companies Act, 1956. The Appointed Date of the Scheme
would be April 01, 2013. There would be no issue of Shares by LTHE to
the Shareholders of the Company pursuant to transfer of Hydrocarbon
business.
ISSUE OF BONUS SHARES
To commemorate the occasion of the Platinum Jubilee of the Company, the
Board of Directors of the Company in its meeting held on May 22, 2013,
has recommended for approval of the shareholders issue of bonus shares
to the holders of equity shares of the Company in the ratio of 1:2
(i.e. one bonus equity share of Rs. 21- each for every two fully paid
up equity shares of Rs. 2/- each held). The approval of the
shareholders will be sought through postal ballot.
DIVIDEND
The Directors recommend payment of dividend of Rs. 18.50 per equity
share of Rs. 2/- each on the pre-bonus share capital which works out to
Rs. 12.33 per share post issue of bonus shares.
DEPOSITORY SYSTEM
As the members are aware, the Companys shares are compulsorily
tradable in electronic form. As on March 31, 2013, 97.39% of the
Companys total paid-up Capital representing 59,93,26,527 shares are in
dematerialized form. In view of the numerous advantages offered by the
Depository system, members holding shares in physical mode are advised
to avail of the facility of dematerialization from either of the
Depositories.
CAPITAL & FINANCE
During the year under review, the Company allotted 29,87,082 equity
shares upon exercise of stock options by the eligible employees under
the Employee Stock Option Schemes.
During the year under review, Rs. 250 crores were raised by the Company
via issuance of Non-Convertible Debentures. Further, the Company has
drawn down long term foreign currency loans in USD & JPY equivalent to
approximately Rs. 2,660 crores.
During the year, the Company repaid a part of its long term foreign
currency loans, equivalent to about Rs. 1,615 crore.
CAPITAL EXPENDITURE
As at March 31, 2013, the gross fixed and intangible assets, including
leased assets, stood at Rs. 12,582 crore and the net fixed and
intangible assets, including leased assets, at Rs. 8,902 crore. Capital
expenditure during the year amounted to Rs. 1,505 crore.
DEPOSITS
There are no deposits which were due for repayment on or before March
31, 2013. All unclaimed deposits were transferred to Investor Education
& Protection Fund during the year.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company sends letters to all shareholders whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
Efforts are also made in co-ordination with the Registrar to locate the
shareholders who have not claimed their dues.
During the year, the Company has transferred a sum of Rs. 73,11,898/-
to Investor Education & Protection Fund, the amount which was due &
payable and remained unclaimed and unpaid for a period of seven years,
as provided in Section 205C(2) of the Companies Act, 1956. Despite the
reminder letters sent to each shareholder, this amount remained
unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said Fund was Rs. 10,63,57,861/- as on March 31,
2013.
SUBSIDIARY COMPANIES
During the year under review, the Company subscribed to/ acquired
equity shares in various subsidiary companies. The details of
investments in subsidiary companies during the year are as under:
A) Shares acquired during the year:-
Name of the company No. of shares
L&T Aviation Services Private Limited 2,16,00,000
L&T-MHI Boilers Private Limited 71,40,000
L&T-MHI Turbine Generators Private Limited 4,61,55,000
L&T General Insurance Company Limited 9,00,00,000
L&T Power Development Limited 43,70,00,000
L&T Shipbuilding Limited 81,86,30,000
L&T Special Steels and Heavy Forgings Limited 6,66,00,000
Larsen Toubro Arabia LLC 7,500
L&T Metro Rail (Hyderabad) Limited 9,30,000
L&T Technology Services Limited 50,000
Audco India Limited (see Note 1) 7,81,630
B) Shares sold/transferred/reduction in face value during the year:
Name of the company No. of shares
L&T- Sargent & Lundy Limited (under buy-back) 9,09,092
L&T Plastics Machinery Private Limited (See Note 2) 1,60,00,000
L&T Power Limited (See Note 3) 51,157
Note:
1. During the year, the Company acquired 50% stake in Audco India
Limited. With this acquisition, Audco India Limited is now a wholly
owned subsidiary of the Company.
2. The Company has sold its entire stake in L&T Plastics Machinery
Private Limited during the year.
3. During the year, the face value of the share was reduced from Rs.
30,000 per share to Rs. 10 per share.
The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011
dated February 8, 2011, has granted general exemption under Section
212(8) of the Companies Act, 1956, subject to certain conditions being
fulfilled by the Company. As required under the circular, the Board of
Directors has, at its meeting held on January 25, 2013, passed a
resolution giving consent for not attaching the Balance Sheet of the
subsidiary companies. We have also given the required information on
subsidiary companies in this Annual Report. Shareholders who wish to
have a copy of the full report and accounts of the subsidiaries will be
provided the same on receipt of a written request from them. These
documents will be uploaded on the Companys Website viz.
www.larsentoubro.com and will also be available for inspection by any
shareholder at the Registered Office of the Company, on any working day
during business hours.
AUDITORS REPORT
The Auditors Report to the Shareholders does not contain any
qualification.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, relating to Conservation of
Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is
provided in Annexure A forming part of this Report.
OTHER DISCLOSURES
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, together with a certificate obtained
from the Statutory Auditors, confirming compliance, is provided in
Annexure B forming part of this Report.
Pursuant to Clause 49 of the Listing Agreement entered into with the
Stock Exchanges, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure C forming part of this Report.
PERSONNEL
The Board of Directors wishes to express their appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The information required under Section 217(2A)
of the Companies Act, 1956 and the Rules made thereunder, is provided
in Annexure forming part of the Report. In terms of Section 219( 1 )(b)
(iv) of the Act, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any Shareholder
interested in obtaining copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
BUSINESS RESPONSIBILITY REPORTING
SEBI, vide its circular CIR/CFD/DIL/8/2012 dated August 13, 2012,
mandated the top 100 listed companies, based on market capitalization
at BSE and NSE, to include Business Reponsibility Report as part of the
Annual Report.
Accordingly as per Clause 55 of the Listing Agreement with the Stock
Exchanges, a separate section on Business Responsibility Reporting
forms a part of this Annual Report (pages 22-37).
CORPORATE GOVERNANCE VOLUNTARY GUIDELINES
By complying with the provisions of the Companies Act, 1956 and Clause
49 of the Listing Agreement, the Company is complying with all the
major clauses of the Corporate Governance Voluntary Guidelines, 2009.
We have reported in Annexure "C" to the Directors Report- Corporate
Governance, the extent of our compliance of the Corporate Governance
Voluntary Guidelines, 2009 under the following heads:
1. Nomination & Remuneration Committee
2. Other Information
3. Audit Committee
4. General Shareholders Information
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES
MCA had released a set of guidelines on Corporate Social Responsibility
(CSR) in December 2009. The Company is substantially complying with the
guidelines laid down.
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
The activities carried out by the Company as a part of its CSR
initiatives are covered in the Business Responsibility Reporting
forming a part of this Annual Report. The detailed- Corporate
Sustainability Report is also available on the Companys website
www.larsentoubro.com.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed and there has been no material
departure;
ii. that the selected accounting policies were applied consistently
and the Directors made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2013 and of the profits of the Company for
the year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern
basis; and
v. that the Company has adequate internal systems and controls in
place to ensure compliance of laws applicable to the Company.
DIRECTORS
During the year under review, Mr. Ravi Uppal, Whole-time Director of
the Company resigned with effect from September 15, 2012.
Mr. V.K. Magapu, Whole-time Director of the Company retired on
September 30, 2012.
Mr. M. Damodaran was appointed as an Additional Director with effect
from October 22, 2012.
Mr. Vikram Singh Mehta was appointed as an Additional Director with
effect from October 22, 2012.
Mr. Thomas Mathew T., the Nominee Director of the Company representing
Life Insurance Corporation of India, resigned with effect from
November 19, 2012.
Mr. Sushobhan Sarker was appointed as the Nominee Director representing
Life Insurance Corporation of India with effect from December 15,
2012 to fill the casual vacancy caused by the resignation of Mr. Thomas
Mathew T. Mr. Subodh Bhargava, Mr. Shailendra Roy, Mr. R. Shankar
Raman and Mr. M. M. Chitale retire from the Board by rotation and are
eligible for re-appointment at the forthcoming Annual General Meeting.
Mr. M. Damodaran and Mr. Vikram Singh Mehta, Additional Directors of
the Company hold office up to the date of the forthcoming Annual
General Meeting and are eligible for appointment.
Mrs. Bhagyam Ramani, Nominee of General Insurance Corporation of India,
resigned w.e.f. May 8, 2012. Mrs. Bhagyam Ramani would have been
liable for retirement by rotation in ensuing AGM. The said vacancy is
not proposed to be filled at the ensuing AGM.
The notice convening the Annual General Meeting includes the proposal
for appointment/re-appointment of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into
with the Stock Exchanges and prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India, in this regard.
The Auditors Report to the Shareholders does not contain any
qualification.
AUDITORS
The Auditors, M/s. Sharp & Tannan (S&T), hold office until the
conclusion of the ensuing Annual General Meeting and are recommended
for re-appointment. Certificate from the Auditors has been received to
the effect that their re-appointment, if made, would be within the
limits prescribed under Section 224(1 B) of the Companies Act, 1956.
S&T has submitted the Peer Review Certificate dated September 21, 2010
issued to them by Institute of Chartered Accountants of India (ICAl).
COST AUDITORS
Pursuant to the Cost Audit Order dated January 24, 2012 issued by the
Ministry of Corporate Affairs (MCA), the Board of Directors has
appointed M/s. R. Nanabhoy & Co., Cost Accountants, as Cost Auditors
for audit of cost accounting records of "Engineering machinery
(including electrical and electronic products)", for the Financial Year
ended March 31, 2013. The appointment has been approved by the Central
Government.
The Report of the Cost Auditors for the Financial Year ended March 31,
2013 is under finalization and will be filed with the MCA within the
prescribed period.
Based on the Audit Committee recommendations, the Board of Directors at
its meeting held on May 22, 2013, has approved the re-appointment of
M/s. R. Nanabhoy & Co. as the Cost Auditors of the Company for the
Financial Year ending March 31, 2014, for applicable Product Groups
covered under MCA Cost Audit Order No. 52/56/CAB-2010 dated November 6,
2012. The appointment is subject to approval of the Central Government
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Government authorities,
Regulatory authorities, Stock Exchanges and all the various
stakeholders for their continued co-operation and support to the
Company. Your Directors also wish to record their appreciation for the
continued co-operation and support received from the Joint Venture
partners/Associates.
For and on behalf of the Board
A. M. Naik
Group Executive Chairman
Mumbai, May 22, 2013
Mar 31, 2012
The Directors have pleasure in presenting their Annual Report and
Accounts for the year ended March 31, 2012.
FINANCIAL RESULTS
2011-2012 2010-2011
Rs crore Rs crore
Profit before depreciation,
exceptional 6,954.79 6,167.78
and extraordinary items and tax
Less: Depreciation, amortization and 700.45 600.28
obsolescence
6,254.34 5,567.50
Add: Transfer from revaluation reserve 0.99 1.06
Profit before exceptional and 6,255.33 5,568.56
extraordinary items and tax
Add: Exceptional items 55.00 262.07
Profit before extraordinary
items and tax 6,310.33 5,830 63
Extraordinary items - 70.84
Profit before tax 6,310.33 5,901.47
Less: Tax expenses 1,853.83 1,943.58
Profit after tax 4,456.50 3,957.89
Add: Balance brought forward from 105.68 107.29
previous year
Less: Dividend paid for the previous 3.89 4.01
year (including
additional tax on dividend)
Balance available for disposal which 4,558.29 4,061.17
the directors
appropriate as follows :
Debenture redemption reserve 44.00 49.83
Proposed Dividend 1,010.46 882.84
Additional tax on dividend 101.44 112.82
General reserve 3,250.00 2,910.00
4,405.90 3,955.49
Balance to be carried forward 152.39 105.68
Dividend 1010.46 882.84
The Directors recommend payment of final
dividend of Rs 16.50 per
equity share of Rs 2/- each on
61,23,98,899 shares
YEAR IN RETROSPECT
The gross sales and other income for the financial year under review
were Rs 55,076 crore as against Rs 45,444 crore for the previous
financial year registering an increase of 21 %. The Profit before tax
excluding extraordinary and exceptional items was Rs 6,255 crore and the
Profit after tax excluding extraordinary and exceptional items of Rs
4,413 crore for the financial year under review as against Rs 5,569
crore and Rs 3,676 crore respectively for the previous financial year,
registering an increase of 12% and 20% respectively.
DIVIDEND
The Directors recommend payment of dividend of Rs 16.50 per equity share
of Rs 2/- each.
DEPOSITORY SYSTEM
As the members are aware, the Companys shares are compulsorily
tradable in electronic form. As on March 31, 2012, 97.19% of the
Companys total paid-up Capital representing 59,52,14,789 shares is in
dematerialized form. In view of the numerous advantages offered by the
Depository system, members holding shares in physical mode are advised
to avail of the facility of dematerialization from either of the
Depositories.
CAPITAL & FINANCE
During the year under review, the Company allotted 35,46,773 equity
shares upon exercise of stock options by the eligible employees under
the Employee Stock Option Schemes.
During the year under review, Rs 540 crore were drawn by the Company
under the partly-paid Non-Convertible Debentures issued in 2010-2011.
Further the Company tied up long term foreign currency loans equivalent
to approximately USD 145 million, half of which was drawn during the
year, the balance to be drawn in 2012-2013.
During the year, the Company repaid a part of the long term foreign
currency loans, equivalent to about Rs 615 crore and redeemed
Non-Convertible Debentures of Rs 250 crore.
CAPITAL EXPENDITURE
As at March 31, 2012, the gross fixed and intangible assets, including
leased assets, stood at Rs 1 1,295 crore and the net fixed and
intangible assets, including leased assets, at Rs 8,364 crore. Additions
during the year amounted to Rs 1,725 crore.
DEPOSITS
7 Deposits totalling Rs 71,000 which were due for repayment on or before
March 31, 2012 were not claimed by the depositors on that date. As on
the date of this report, none of these deposits have been claimed and
paid.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company sends letters to all shareholders whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
Efforts are also made in co-ordination with the Registrar to locate the
shareholders who have not claimed their dues.
As provided in Section 205C(2) of the Companies Act, 1956, dividend
amount which was due and payable and remained unclaimed and unpaid for
a period of seven years has to be transferred to Investor Education &
Protection Fund. Despite the reminder letters sent to each shareholder,
an amount of Rs 1,10,97,033/- remained unclaimed and was transferred to
Investor Education & Protection Fund by the Company during the year.
Cumulatively, the amount transferred to the said fund was Rs
9,90,45,963/- as on March 31, 2012.
SUBSIDIARY COMPANIES
During the year under review, the Company subscribed to / sold /
acquired equity shares in various subsidiary companies. These
subsidiaries are either SPVs executing projects secured through Build
Operate Transfer (BOT) route, or holding companies making investments
in companies such as those engaged in power and financial services
business. The details of investments in subsidiary companies during
the year are as under:
A) Shares acquired during the year:
Name of the company No. of shares
L&T Cassidian Limited 50,000
L&T Howden Private Limited 1,00,20,000
Larsen & Toubro Consultoria
E Projecto Ltda 96,819
L&T General Insurance
Company Limited 12,50,00,000
L&T Power Development Limited 3,20,00,000
L&T Infrastructure Development
Projects Limited 6,94,08,226
PNG Tollway limited 2,19,83,000
L&T Special Steels and Heavy
Forgings Pvt. Limited 11,10,00,000
L&T Kobelco Machinery Private Limited 1,02,00,000
L&T Metro Rail (Hyderabad) Limited 9,30,000
L&T Sapura Shipping Private Limited 1,72,911
L&T Infocity Limited 2,40,30,000
B) Shares sold / transferred during the year:
Name of the company No. of shares
L&T Cassidian Limited 13,000
L&T- Sargent & Lundy
Limited (under buy-back) 4,36,366
L&T Rajkot Vadinar Tollway
Limited 5,50,15,000
L&T Western India Tollbridge Limited 1,39,50,007
Raykal Aluminium Company Private Limited 2,250
L&T Power Limited* 7
*During the year the share capital of the Company was consolidated from
15,34,92,000 equity shares of Rs 10 each into 51,164 equity shares of Rs
30,000 each.
The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011
dated February 8, 2011, has granted general exemption under Section
212(8) of the Companies Act, 1956, subject to certain conditions being
fulfilled by the Company. As required under the circular, the Board of
Directors has, at its meeting held on January 23, 2012, passed a
resolution giving consent for not attaching the Balance Sheet of the
subsidiary companies. We have also given the required information on
subsidiary companies in this Annual Report. Shareholders who wish to
have a copy of the full report and accounts of the subsidiaries will be
provided the same on receipt of a written request from them. These
documents will be uploaded on the Companys Website viz.
www.larsentoubro.com and will also be available for inspection by any
shareholder at the Registered Office of the Company, on any working day
during business hours.
AUDITORS REPORT
The Auditors Report to the Shareholders does not contain any
qualification.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, relating to Conservation of
Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is
provided in Annexure A forming part of this Report.
OTHER DISCLOSURES
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, together with a certificate obtained
from the Statutory Auditors, confirming compliance, is provided in
Annexure B forming part of this Report.
Pursuant to Clause 49 of the Listing Agreement entered into with the
Stock Exchanges, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure C forming part of this Report.
PERSONNEL
The Board of Directors wishes to express its appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The information required under Section 217(2A)
of the Companies Act, 1956 and the Rules made thereunder, is provided
in Annexure forming part of the Report. In terms of Section 219(1
)(b) (iv) of the Act, the Report and Accounts are being sent to the
Shareholders excluding the aforesaid Annexure. Any Shareholder
interested in obtaining copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
CORPORATE GOVERNANCE VOLUNTARY GUIDELINES
By complying with the provisions of the Companies Act, 1956 and Clause
49 of the Listing Agreement, the Company is complying with all the
major clauses of the Corporate Governance Voluntary Guidelines, 2009.
We have reported in Annexure C to the Directors Report - Corporate
Governance, the extent of our compliance of the Corporate Governance
Voluntary Guidelines, 2009 under the following heads;
1. Nomination & Remuneration Committee
2. Other Information
3. Audit Committee
4. General Shareholders Information
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES
MCA had released a set of guidelines on Corporate Social Responsibility
(CSR) in December 2009. The Company is substantially complying with the
guidelines laid down.
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
The activities carried out by the Company as a part of its CSR
initiatives are briefly described on pages 14 to 19 and 106 of the
Annual Report. The detailed Corporate Sustainability Report is also
available on the Companys website www.larsentoubro.com.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms;
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed and there has been no material
departure;
ii. that the selected accounting policies were applied consistently
and the Directors made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2012 and of the profits of the Company for
the year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern
basis; and
v. that the Company has adequate internal systems and controls in
place to ensure compliance of laws applicable to the Company.
DIRECTORS
During the year under review, Mr. K. V. Rangaswami Whole- time Director
of the Company retired as Director of the Company on June 30, 2011.
Mr. S. N. Subrahmanyan was inducted as Whole-time Director of the
Company w.e.f. July 1, 2011.
Mr. Y. M. Deosthalee, Chief Financial Officer and Whole- time Director
of the Company retired on September 5,2011.
The Board has appointed Mr. R. Shankar Raman as Chief Financial Officer
w.e.f. September 6, 2011 and as a Whole- time Director of the Company
w.e.f. October 1, 2011.
Pursuant to the Articles of Association of the Company, Mr. A. M. Naik
is proposed to be appointed as a Director liable to retire by rotation,
with effect from October 1,2012, in the forthcoming Annual General
Meeting, in view of his appointment as Executive Chairman from October
1, 2012 upto September 30, 2017.
Mr. K. Venkataramanan is appointed as Chief Executive Officer and
Managing Director of the Company w.e.f. April 1, 2012 upto September
30, 2015. Pursuant to the Articles of Association of the Company he
will not be liable to retire by rotation.
Mr. Shailendra Roy was inducted as a Whole-time Director of the Company
w.e.f. March 9, 2012.
Consequent to her retirement from General Insurance Company Limited
(GIC), Mrs. Bhagyam Ramani resigned as a Director w.e.f. May 8, 2012.
Mr. Thomas Matthew T., Mr. M.V. Kotwal, Mr. V. K. Magapu and Mr. Ravi
Uppal retire from the Board by rotation and are eligible for
re-appointment at the forthcoming Annual General Meeting.
Mr. J. S. Bindra retires from the Board of Directors but has not sought
re-appointment at the forthcoming Annual General Meeting. Accordingly,
a suitable resolution will be placed before the shareholders for their
approval.
The notice convening the Annual General Meeting includes the proposal
for appointment/re-appointment of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into
with the Stock Exchanges and prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India, in this regard.
The Auditors Report to the Shareholders does not contain any
qualification.
AUDITORS
The Auditors, M/s. Sharp & Tannan (S&T), hold office until the
conclusion of the ensuing Annual General Meeting and are recommended
for re-appointment. Certificate from the Auditors has been received to
the effect that their re-appointment, if made, would be within the
limits prescribed under Section 224(1 B) of the Companies Act, 1956.
S&T has submitted the Peer Review Certificate dated September 21, 2010
issued to them by Institute of Chartered Accountants of India (ICAI).
COST AUDITORS
The Ministry of Corporate Affairs (MCA) has introduced The Companies
(Cost Audit Report) Rules, 2011 vide its notification no. GSR 430(E)
dated June 3, 2011. These rules make it mandatory for industries to
appoint a Cost Auditor within 90 days of the commencement of the
financial year. The Cost Audit Order No. 52/26/CAB/2010 dated January
24, 2012 covers engineering machinery (including electrical and
electronic products) due to which some of the Companys manufacturing
operations will get covered w.e.f. April 1, 2012.
Based on the Audit Committee recommendations at its meeting held on May
2, 2012, the Board has approved the appointment of M/s R. Nanabhoy &
Co. as the Cost Auditors of the Company for the financial year
2012-2013, subject to approval of the Central Government.
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Government authorities,
Regulatory authorities, Stock Exchanges and all the various
stakeholders for their continued co-operation and support to the
Company. Your Directors also wish to record their appreciation for the
continued co-operation and support received from the Joint Venture
partners / Associates.
For and on behalf of the Board
A. M. Naik
Chairman & Managing Director
Mumbai, May 14, 2012
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting their Annual Report and
Accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
2010-2011 2009-2010
Rs. crore Rs. crore
Profit before depreciation and tax 6,432.13 6,295.27
Less: Depreciation and amortization 600.28 415.90
5,831.85 5,87937
Add: Transfer from Revaluation Reserve 1.06 1.30
Profit before Tax and extraordinary 5,832.91 5,880.67
items Less: Provision for Tax 1,945.86 1,640.87
Profit after Tax (before extraordinary3,887.05 4,239.80
items)
Gain on extra-ordinary items
(net of tax) 70.84 135.72
Profit after Tax and extraordinary
items 3,957.89 4,375.52
Add: Balance brought forward from 107.29 700.50
previous year Less: Dividend paid for
the previous 4.01 2.39
year (including dividend
distribution tax)
Balance available for disposal
which the 4,061.17 4,473.63
directors appropriate as follows:
Debenture Redemption Reserve 49.83 43.34
Proposed Dividend 882.84 752.75
Dividend Tax 112.82 110.25
General Reserve 2,910.00 3,460.00
3,955.49 4,366.34
Balance to be carried forward 105.68 107.29
Dividend
The Directors recommend payment of 882.84 752.75
final dividend of Rs. 14.50 per equity share
of Rs. 2 each on 60,88,52,126 shares
YEAR IN RETROSPECT
The gross sales and other income for the financial year under review
were Rs. 45,738 crore as against f 39,381 crore for the previous
financial year registering an increase of 16%. The Profit before tax
excluding extraordinary and exceptional items was Rs. 5,571crore and the
Profit after tax excluding extraordinary and exceptional items of Rs.
3,676 crore for the financial year under review as against Rs. 4,806
crore and Rs. 3,185 crore respectively for the previous financial year,
registering an increase of 16% and 15% respectively.
DIVIDEND
The Directors recommend payment of dividend of Rs. 14.50 per equity share
of Rs. 2 each.
Equity Shares that may be allotted on exercise of Options granted under
the Employee Stock Option Schemes as also on conversion of outstanding
Foreign Currency Convertible Bonds (FCCBs) before the Book Closure for
payment of dividend will rank pari passu with the existing shares and
be entitled to receive the dividend.
DEPOSITORY SYSTEM
As the members are aware, the Company's shares are compulsorily
tradable in electronic form. As on March 31, 2011, 96.95% of the
Company's total paid-up Capital representing 59,02,88,225 shares are in
dematerialized form. In view of the numerous advantages offered by the
Depository system, members holding shares in physical mode are advised
to avail of the facility of dematerialization from either of the
Depositories.
CAPITAL & FINANCE
During the year under review, the Company allotted 66,56,718 equity
shares upon exercise of stock options by the eligible employees under
the Employee Stock Option Schemes.
During the year under review, the Company tied up Rs. 800 crore of debt,
through multiple issuances of Non- Convertible Debentures, which have
maturity of 10 years and are unsecured. Of this, f 260 crore have been
drawn in 2010-11, the balance Rs. 540 crore to be drawn in 2011-12. In
2011-12, for one of the issuances, the Company has an option to not
draw Rs. 270 crore and prepay Rs. 30 crore.
The debentures were issued for general corporate purposes. During the
year under review, the Company repaid a part of the long term foreign
currency loans, equivalent to about Rs. 430 crore.
CAPITAL EXPENDITURE
As at March 31, 2011, the gross tangible and intangible assets,
including leased assets, stood atRs. 9,770.61crore and the net fixed and
intangible assets, including leased assets, at Rs. 7,458.13 crore.
Additions during the year amounted to Rs. 1,705.68 crore.
DEPOSITS
22 Deposits totalling Rs. 0.03 crore which were due for repayment on or
before March 31, 2011, were not claimed by the depositors on that date.
As on the date of this report, deposits aggregating to Rs. 0.01 crore
thereof have been claimed and paid.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company sends letters to all shareholders whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
Efforts are also made in co-ordination with the Registrar & Share
Transfer Agent to locate the shareholders who have not claimed their
dues.
During the year under review, the Company has transferred a sum of Rs.
70,44,129 to Investor Education & Protection Fund, the amount which was
due & payable and remained unclaimed and unpaid for a period of seven
years, as provided in Section 205C(2) of the Companies Act, 1956.
Despite the reminder letters sent to each shareholder, this amount
remained unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said Fund was Rs. 8,79,48,930 as on March 31, 2011.
SUBSIDIARY COMPANIES
During the year under review, the Company subscribed to/acquired equity
shares in various subsidiary companies. These subsidiaries are either
SPVs executing projects secured through Build Operate Transfer (BOT)
route, or holding companies making investments in companies such as
power and financial services. The details of investments in subsidiary
companies made during the year are as under:
- 11,22,51,000 equity shares of Rs. 10 each in L&T-MHI Boilers Private
Limited.
- 12,75,51,000 equity shares of Rs. 10 each in L&T-MHI Turbine Generators
Private Limited.
6,34,32,835 equity shares of Rs. 10 each in L&T Finance Holdings Limited
(formerly L&T Capital Holdings Limited).
- 50,000 equity shares of Rs. 10 each in L&T Solar Limited.
- 3,24,00,000 equity shares of Rs. 10 each of L&T Infrastructure
Development Projects Limited.
114,90,00,000 equity shares of Rs. 10 each in L&T Power Development
Limited.
15,00,006 equity shares of Rs. 10 each in L&T-Gulf Private Limited.
17,10,00,000 equity shares of Rs. 10 each in L&T General Insurance
Company Limited.
2,600 equity shares of Rs. 10 each in L&T Krishnagiri Walajahpet Tollway
Private Limited.
100 equity shares of Rs. 10 each in L&T Devihalli Hassan Tollway Private
Limited.
- 2,40,00,000 equity shares of Rs. 10 each in L&T Aviation Services
Private Limited.
- 50,10,000 equity shares of Rs. 10 each in L&T Howden Private Limited.
- 34,40,000 equity shares of Rs. 10 each in L&T Metro Rail (Hyderabad)
Limited (formerly L&T Hyderabad Metro Rail Private Limited).
- 9,51,38,939 equity shares of Rs. 10 each in L&T Sapura Shipping Private
Limited.
6,000 equity shares of Rs. 10 each in L&T Sapura Offshore Private
Limited.
50,000 equity shares of Rs. 10 each in L&T PowerGen Limited.
4,14,720 equity shares of Rs. 100 each representing 50% stake of EWAC
Alloys Limited.
10,400 equity shares of Rs. 10 each in L&T Samakhiali Gandhidham Tollway
Private Limited.
- 1,53,00,000 equity shares of 7 10 each in L&T Kobelco Machinery
Private Limited.
- 11,10,00,000 equity shares of Rs. 10 each in L&T Special Steels and
Heavy Forgings Private Limited.
Further contribution in 67,69,518 partly paid-up equity shares in L&T
Infrastructure Development Projects Limited. With this contribution,
these shares have become fully paid-up.
During the year, L&T-Sargent & Lundy Limited issued to the Company
13,76,065 equity shares of Rs. 10 each as bonus shares.
The Company transferred 6,52,65,000 equity shares of Rs. 10 each in L&T
Halol-Shamlaji Tollway Limited to L&T Infrastructure Development
Projects Limited.
The Company transferred 6,30,15,000 equity shares of Rs. 10 each in L&T
Ahmedabad-Maliya Tollway Limited to L&T Infrastructure Development
Projects Limited.
The Company transferred 10,000 equity shares of Rs. 10 each in L&T
Transco Private Limited to L&T Infrastructure Development Projects
Limited.
The Company sold 500 equity shares of Rs. 10 each in Kesun Iron & Steel
Company Private Limited.
Three subsidiary companies had applied for strike off under the Easy
Exit Scheme, 2010 (EES 2010). We have received communication from ROC
that these companies have been struck off the register under Section
560(5) of the Companies Act, 1956 and they stand dissolved.
MCA, vide it's Circular No. 2/2011 dated February 8, 2011, has granted
general exemption under Section 212(8) of the Companies Act, 1956, for
not attaching annual reports of subsidiary companies subject to certain
conditions being fulfilled by the Company. As required under the
circular, the Board of Directors has, at its meeting held on April 6,
2011, passed a resolution giving consent for not attaching the Balance
Sheet of the subsidiary companies. We have also given the required
information on subsidiary companies in this Annual Report. Shareholders
who wish to have a copy of the full report and accounts of the
subsidiaries will be provided the same on receipt of a written request
from them. These documents will be put up on the Company's Website
viz. www.larsentoubro.com and will also be available for inspection by
any shareholder at the Registered Office of the Company, on any working
day during business hours.
AUDITORS' REPORT
The Auditors' Report to the shareholders does not contain any
qualification.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, relating to Conservation of
Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is
provided in Annexure 'A' forming part of this Report.
OTHER DISCLOSURES
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, together with a certificate obtained
from the Statutory Auditors, confirming compliance, is provided in
Annexure 'B' forming part of this Report.
Pursuant to Clause 49 of the Listing Agreement entered into with the
Stock Exchanges, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure 'C forming part of this Report.
PERSONNEL
The Board of Directors wishes to express it's appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The information required under Section 217(2A)
of the Companies Act, 1956, and the Rules made thereunder, are provided
in Annexure forming part of the Report. In terms of Section
219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure, Any shareholder
interested in obtaining copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
CORPORATE GOVERNANCE VOLUNTARY GUIDELINES
By complying with the provisions of the Companies Act, 1956 and Clause
49 of the Listing Agreement, the Company is complying with major
clauses of the Corporate Governance Voluntary Guidelines, 2009.
We have reported in Annexure 'C to the Directors' Report - Corporate
Governance, the extent of our compliance of the Corporate Governance
Voluntary Guidelines, 2009 under the following heads:
1. Nomination & Remuneration Committee
2. Other Information
3. Audit Committee
4. General Shareholders' Information
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES
MCA had released a set of guidelines on Corporate Social Responsibility
(CSR) in December 2009. The Company is substantially complying with the
guidelines laid down.
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
The activities carried out by the Company as a part of its CSR
initiatives are briefly described on pages 18 to 22 and 101 of the
Annual Report. The detailed Corporate Sustainability Report is also
available on the Company's website www.larsentoubro.com.
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed and there has been no material
departure;
ii. that the selected accounting policies were applied consistently and
the Directors made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2011 and of the profits of the Company for
the year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern
basis; and
v. that the Company has adequate internal systems and controls in place
to ensure compliance of laws applicable to the Company.
DIRECTORS
Mr. R. N. Mukhija and Mr. J. P. Nayak, Whole-time Directors of the
Company retired at close of working hours of October 23, 2010 and March
31, 2011 respectively. The Directors record their appreciation of the
valuable services rendered by Mr. R. N. Mukhija and Mr. J. P. Nayak.
The Board has inducted Mr. Ravi Uppal and Mr. S. N. Subrahmanyan as
Whole-time Directors of the Company w.e.f. November 1, 2010 and July 1,
2011 respectively.
Mr. S. N. Subrahmanyan has been appointed as a Director with effect
from July 1, 2011, in the casual vacancy to be caused by retirement of
Mr. K. V. Rangaswami and holds office of Director until conclusion of
the ensuing Annual General Meeting. Mr. K. Venkataramanan, Mr. S.
Rajgopal, Mr. A. K. Jain and Mr. S. N. Talwar retire from the Board by
rotation and are eligible for re-appointment at the forthcoming Annual
General Meeting. The notice convening the Annual General Meeting
includes the proposal for re- appointment of directors.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into
with the Stock Exchanges and prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India, in this regard.
The Auditors' Report to the Shareholders does not contain any
qualification.
AUDITORS
The Auditors, M/s. Sharp & Tannan (S&T), hold office until the
conclusion of the ensuing Annual General Meeting and are recommended
for re-appointment. Certificate from the Auditors has been received to
the effect that their re- appointment, if made, would be within the
limits prescribed under Section 224(1 B) of the Companies Act, 1956.
S&T has submitted the Peer Review Certificate dated May 6, 2009 issued
to them by Institute of Chartered Accountants of India (ICAI).
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Government authorities,
Regulatory authorities, Stock Exchanges and the stakeholders for their
continued co-operation and support to the Company. Your Directors also
wish to record their appreciation for the continued co-operation and
support received from the Joint Venture partners / Associates.
For and on behalf of the Board
A. M. Naik
Chairman & Managing Director
Mumbai, May 19, 2011
Mar 31, 2010
The Directors have pleasure in presenting their Annual Report and
Accounts for the year ended March 31, 2010.
FINANCIAL RESULTS
2009-2010 2008-2009
Rs. crore Rs. crore
Profit before depreciation and tax 6,295.27 4,246.40
Less: Depreciation and amortization 415.90 307.30
5,879.37 3,939.10
Add: Transfer from Revaluation
Reserve 1.30 1.31
Profit before Tax and extraordinary
items 5,880.67 3,940.41
Less: Provision for Tax 1,640.87 1,231.21
Profit after Tax 4,239.80 2,709.20
(before extraordinary items)
Gain on extraordinary items
(net of tax) 135.72 772.46
Profit after Tax and extraordinary
items 4,375.52 3,481.66
Add: Balance brought forward from 100.50 104.31
previous year
Less: Dividend paid for the
previous year 2.39 0.33
(including dividend distribution tax)
Balance available for disposal 4,473.63 3,585.64
which the Directors appropriate as follows:
Debenture Redemption Reserve 43.34 43.34
æ Proposed Dividend 752.75 614.97
Dividend Tax 110.25 101.83
General Reserve 3,460.00 2,725.00
4,366.34 3,485.14
Balance to be carried forward 107.29 700.50
Dividend
The Directors recommend payment of
dividend of Rs. 12.50 per equity share of
Rs. 21- each on 60,21,95,408 shares 752.75 614.97
YEAR IN RETROSPECT
The gross sales and other income for the financial year under review
were Rs. 39,381 crore as against Rs. 35,077 crore for the previous
financial year registering an increase of 12%. The Profit before tax
and extraordinary items (after interest and depreciation charges) of
Rs. 5,881 crore and the Profit after tax (before extraordinary items)
of Rs. 4,240 crore for the financial year under review as against Rs.
3,940 crore and Rs. 2,709 crore respectively for the previous financial
year, improved by 49% and 57% respectively.
DIVIDEND
The Directors recommend payment of dividend of Rs. 12.50 per equity
share of Rs. 21- each.
Equity Shares that may be allotted on exercise of Options granted under
the Employee Stock Option Schemes as also on conversion of outstanding
Foreign Currency Convertible Bonds (FCCBs) before the Book Closure for
payment of dividend will rank pari passu with the existing shares and
be entitled to receive the dividend.
DEPOSITORY SYSTEM
As the members are aware, the Companys shares are compulsorily
tradable in electronic form. As on March 31, 2010, 96.58% of the
Companys total paid-up Capital representing 58,16,17,239 shares are in
dematenalized form. In view of the numerous advantages offered by the
Depository system, members holding shares in physical mode are advised
to avail of the facility of dematerialization on either of the
Depositories.
CAPITAL & FINANCE
During the year under review, the Company allotted 52,20,861 equity
shares upon exercise of stock options by the eligible employees under
the Employee Stock Option Schemes.
During the year under review, the Company raised Rs. 1,873 crore in
india through the Qualified Institutions Placement route for general
corporate purposes. The Company also issued unsecured Foreign Currency
Convertible Bonds (FCCBs) of USD 200 million to international
investors. The FCCBs are convertible into equity shares of the Company,
and if not converted, are repayable at the end of 5 years. The FCCBs
were issued to finance capital expenditure, investment in overseas
subsidiaries and overseas acquisitions. For the same purposes, the
Company also raised a 3 year foreign currency loan of JPY 1.809 billion
(USD 20 million). During the year, the Company repaid a long term
Rupee loan of Rs. 85 crore.
CAPITAL EXPENDITURE
As at March 31, 2010, the gross tangible and intangible assets,
including leased assets, stood at Rs. 8,164.29 crore and the net
tangible and intangible assets, including leased assets, at Rs.
6,365.76 crore. Additions during the year amounted to Rs. 1,604.25
crore.
DEPOSITS
38 Deposits totalling Rs. 0.04 crore which were due for repayment on or
before March 31, 2010 were not claimed by the depositors on that date.
As on the date of this report, deposits aggregating to Rs. 0.01 crore
thereof have been claimed and paid.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company sends letters to all shareholders whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
Efforts are also made in co-ordination with the Registrar to locate the
shareholders who have not claimed their dues.
During the year, the Company has transferred a sum of Rs. 78,78,362 to
Investor Education & Protection Fund, the amount which was due &
payable and remained unclaimed and unpaid for a period of seven years,
as provided in Section 205C(2) of the Companies Act, 1956. Despite the
reminder letters sent to each shareholder, this amount remained
unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said Fund was Rs. 8,09,04,801 as on March 31, 2010.
SUBSIDIARY COMPANIES
During the year under review, the Company subscribed to / acquired
equity shares in various subsidiary companies. These subsidiaries are
substantially either SPVs executing projects secured through BOT route,
or holding companies making investments in companies such as power and
financial services. The investment in Larsen & Toubro International FZE
is mainly for onward investment in international ventures. The details
of investments in subsidiary companies made during the year are as
under:
- 137 equity shares of Dhs. 550,500 each in Larsen & Toubro
International FZE for Rs. 97.58 crores at par.
10,21,91,000 equity shares of Rs. 10 each in L&T Power Limited at par.
- 9,50,00,000 equity shares of 10 each in L&T Power Development Limited
at par.
- 12,50,005 equity shares of Rs. 10 each in L&T-Gulf Private Limited at
par.
2,19,80,400 equity shares of Rs. 10 each in PNG Tollway Private Limited
at par. 10,000 equity shares of Rs. 10 each in L&T EmSyS Private
Limited for a consideration of Re. 1.
- 50,000 equity shares of Rs. 10 each in L&T Technologies Limited at
par. 135,15,41,591 equity shares of Rs. 10 each in L&T
Capital Holdings Limited at par.
11,10,00,000 equity shares of Rs. 10 each in L&T Special
Steels and Heavy Forgings Private Limited at par.
6,42,55,100 equity shares of Rs. 10 each in L&T Halol- Shamlaji Tollway
Private Limited at par.
5,40,05,100 equity shares of Rs. 10 each in L&T Rajkot- Vadinar Tollway
Private Limited at par.
6,20,05,100 equity shares of Rs. 10 each in L&T Ahmedabad-Maliya
Tollway Private Limited at par.
- 10,000 equity shares of Rs. 10 each in L&T Aviation Services Private
Limited at par.
. 2,90,00,000 equity shares of Rs. 10 each in L&T General
Insurance Company Limited at par.
- 2,600 equity shares of Rs. 10 each in L&T Samakhiali Gandhidham
Tollway Company Private Limited at par.
1,12,50,000 equity shares of Rs. 10 each in L&T Infrastructure
Development Projects Limited for a consideration of Rs. 245 crore
purchased from IDF.
- Further contribution of Rs. 1.25 per share & premium of Rs. 131.25
per share on 22,50,000 partly paid-up equity shares in Larsen & Toubro
Infotech Limited amounting to Rs. 29.81 crore. With this contribution,
these shares have become fully paid-up with paid-up value Rs. 5/- and
premium of Rs. 524.995 per share.
During the year, International Seaport Dredging Limited issued to the
Company 9,420 equity shares of Rs. 10,000 each in in lieu of the 9,420
preference shares of Rs. 10,000 each and 10,000 equity shares of Rs.
10,000 each in lieu of an ICD of Rs. 10 crores. The Company
subsequently sold 10,298 equity shares of Rs. 10,000 each in
International Seaport Dredging Limited for a consideration of Rs. 10.30
crore.
The Company sold 15,00,000 shares representing 50% stake in Voith Paper
Technology (India) Limited on September 30, 2009 for a consideration of
Euro 10 million (Rs. 69.56 crore). The Company sold 10,000 equity
shares of Rs. 10 each in L&T Aviation Services Private Limited at par
to L&T Capital Holdings Limited.
The Companys subsidiary International Seaports Pte. Ltd., Singapore
has been liquidated during the year. During the year under review, the
Company also accepted the buy- back offers of the following companies:
- 65,500 equity shares of Rs. 10 each in L&T-Valdei Engineering Limited
for Rs. 2.10 crore. L&T-Valdel Engineering Limited has now become a
wholly owned subsidiary of the Company.
1,18,370 equity shares of Rs. 100 each in AUDCO India Limited for Rs.
27.22 crore.
The Company has applied for exemption from annexing the Audited
Statement of Accounts, the Reports of the Board of Directors and
Auditors of the Subsidiary companies as required under Section 212(8)
of the Companies Act, 1956 and the same is awaited.
AUDITORS REPORT
The Auditors Report to the Shareholders does not contain any
qualification.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, relating to Conservation of
Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is
provided in Annexure A forming part of this Report.
OTHER DISCLOSURES
The Company has disclosed in the notes forming part of accounts the
quantitative details in respect of sales, raw materials and components
consumed and inventories as required vide sub-paras 3(i)(a),
3(ii)(a)(1) and (2) and 3(ii)(b) of Part II of Schedule VI to the
Companies Act, 1956.
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, together with a certificate obtained
from the Statutory Auditors, confirming compliance, is provided in
Annexure B forming part of this Report, Pursuant to Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, a Report on
Corporate Governance and a certificate obtained from the Statutory
Auditors confirming compliance, is provided in Annexure C forming part
of this Report. PERSONNEL
The Board of Directors wishes to express their appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The information required under Section 217(2A)
of the Companies Act, 1956 and the Rules made thereunder, is provided
in Annexure forming part of the Report. In terms of Section 219(1
){b)(iv) of the Act, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any Shareholder
interested in obtaining copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
CORPORATE GOVERNANCE VOLUNTARY GUIDELINES
By complying with the provisions of the Companies Act and Clause 49 of
the Listing Agreement, the Company is complying with major clauses of
the Corporate Governance Voluntary Guidelines, 2009.
We have reported in Annexure "C" to the Directors Report - Corporate
Governance, the extent of our compliance of the Corporate Governance
Voluntary Guidelines, 2009 under the following heads:
1. Nomination & Remuneration Committee
2. Other Information
3. Audit Committee
4. General Shareholders Information
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES
The Ministry of Corporate Affairs has released a set of voluntary
guidelines on Corporate Social Responsibility (CSR) in December 2009.
The Company is proactively practicing the guidelines laid down. The
Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
Some of the activities carried out by the Company as a part of its CSR
initiatives are briefly described on page 87 of the Annual Report. A
broad note on the subject is featured on pages 16 to 20. The detailed
Corporate Sustainability Report is also available on the Companys
website www.larsentoubro.com.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed and there has been no material
departure;
ii. that the selected accounting policies were applied consistently and
the Directors made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2010 and of the profits of the Company for
the year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern
basis; and
v. that the Company has adequate internal systems and controls in place
to ensure compliance of laws applicable to the Company.
DIRECTORS
Mrs. Bhagyam Ramani, Mr. Subodh Bhargava, Mr. J. P. Nayak, Mr. Y. M.
Desothalee, Mr. M. M. Chitale and Mr. N. Mohan Raj retire from the
Board by rotation and are eligible for re-appointment at the
forthcoming Annual General Meeting. The Notice convening the Annual
General Meeting includes the proposals for re-appointment of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into
with the Stock Exchanges and prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India, in this regard.
The Auditors Report to the Shareholders does not contain any
qualification.
AUDITORS
The Auditors, M/s. Sharp & Tannan (S&T), hold office until the
conclusion of the ensuing Annual General Meeting and are recommended
for re-appointment. Certificate from the Auditors has been received to
the effect that their re-appointment, if made, would be within the
limits prescribed under Section 224(1 B) of the Companies Act, 1956.
S&T has submitted the Peer Review certificate dated May 6, 2009 issued
to them by Institute of Chartered Accountants of India (ICAI).
ACKNOWLEDGEMENT
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Government authorities,
Regulatory authorities, Stock Exchanges and the stakeholders for their
continued co-operation and support to the Company. Your Directors also
wish to record their appreciation for the continued co-operation and
support received from the Joint Venture partners / Associates.
For and on behalf of the Board
A. M. Naik
Chairman & Managing Director
Mumbai, May 17, 2010