The Directors have pleasure in presenting their 72nd Annual Report and AuditedFinancial Statements for the year ended March 31 2017.
|Particulars ||2016-17 ||2015-16 |
| ||Rs crore ||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 ||11225.53 ||7710.27 |
The Directors recommend payment of final dividend of Rs 21 per share of Rs 2/- each on932965803 shares.
CAPITAL & FINANCE:
During the year under review the Company allotted 1486958 equity shares of Rs 2/-each upon exercise of stock options by the eligible employees under the Employee StockOption Schemes.
The Company reduced long-term borrowings during the year under review by way ofrepayment of Non-Convertible Debentures (NCD) worth Rs 550 crore and External CommercialBorrowings (ECB) worth US$126 million on scheduled due dates. The Company did not raiseany long-term borrowings during FY2016-17.
CRISIL Limited has assigned AAA (Stable) rating for L&T's long-term debtfacilities. In addition ICRA Limited also has assigned AAA (Stable) rating for certainborrowings of the Company.
HIVE-OFF OF COIMBATORE UNDERATKING:
Subsequent to the year under review on April 20 2017 the Company has received orderof National Company Law Tribunal for hive-off of its Coimbatore undertaking engaged invalves manufacturing through a scheme of Arrangement between Larsen & Toubro Limitedand L&T Valves Limited a wholly-owned subsidiary of the Company and their respectiveshareholders and creditors under the provisions of section 230 to 232 of the CompaniesAct 2013. The appointed date of the scheme was April 1 2016 and the effective date ofthe scheme was April 22 2017.
The Board of Directors of your Company at its Meeting held on May 29 2017 hasrecommended for approval of the shareholders issue of bonus shares to the holders of theequity shares of the Company in the ratio of 1: 2 (i.e 1 (One) Bonus Equity Share of Rs2/- for every 2 (Two) fully paid-up Equity Shares of Rs 2/- each held) by capitalisationof its Reserves. The approval of the shareholders will be sought through Postal Ballot.
As at March 31 2017 the gross property plant and equipment investment property andother intangible assets including leased assets stood at Rs 9820.17 crore and the netproperty plant and equipment investment property and other intangible assets includingleased assets at Rs 7548.37 crore. Capital Expenditure during the year amounted to Rs749.02 crore.
The Company has not accepted deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013. The Company does not have any unclaimed deposits asof date. All unclaimed deposits have been transferred to Investor Education &Protection Fund.
As the members are aware the Company's shares are compulsorily tradable in electronicform. As on March 31 2017 98% of the Company's total paid up capital representing914269231 shares are in dematerialized form. In view of the numerous advantages offeredby the Depository system as well as to avoid frauds members holding shares in physicalmode are advised to avail of the facility of dematerialization from either of thedepositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
The Company sends letters to all shareholders whose dividends are unclaimed so as toensure that they receive their rightful dues. Efforts are also made in co-ordination withthe Registrar to locate the shareholders who have not claimed their dues.
During the year the Company has transferred a sum of
Rs 25971351 to Investor Education & Protection Fund (IEPF) the amount which wasdue & payable and remained unclaimed and unpaid for a period of seven years asprovided in section 125 of the Companies Act 2013 and the rules made thereunder. Despitethe reminder letters sent to each shareholder this amount remained unclaimed and hencewas transferred. Cumulatively the amount transferred to the said fund was Rs 171631755as on March 31 2017.
In accordance with the provisions of the Section 124(6) and Rule 6(3)(a) of theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 (IEPF Rules) the Company is required to transfer 1213804 equity shares ofRs 2 each held by 11057 shareholders to IEPF. The said shares correspond to the dividendwhich has remained unclaimed for a period of seven consecutive years from the financialyear 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 remainingshares as mentioned above shall be transferred to IEPF. Subsequent to the transfer theconcerned shareholders can claim the said shares along with the dividend(s) from IEPF inaccordance with the prescribed procedure and on submission of such documents as prescribedunder the IEPF Rules.
The Company has already sent a specific communication to the concerned shareholders attheir address registered with the Company and also published notice in Financial Expressand Loksatta providing the details of the shares due for transfer and to enableshareholders to take appropriate action. The Company is awaiting further directions on thetransfer formalities from the Ministry of Corporate Affairs in terms of the amendment tothe IEPF Rules dated 28th February 2017. In the meantime the concerned shareholders canapproach the Company or its Registrar & Transfer Agent with necessary documentssupporting their claims.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:
During the year under review the Company subscribed to / acquired equity / preferenceshares in various subsidiary / associate / joint venture companies. These subsidiariesinclude companies in general insurance power real estate and infrastructure sectors. Thedetails 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 ||47000000 |
|L&T Global Holdings Limited ||Equity ||79000 |
|L&T Metro Rail (Hyderabad) Limited ||Equity ||2041886554 |
|L&T Technology Services Limited ||Equity ||26690392 |
|Marine Infrastructure Developer Private Limited (Note 1) ||Equity ||388000000 |
|Seawoods Realty Private Limited ||Equity ||10000 |
|Seawoods Retail Private Limited ||Equity ||10000 |
|L&T Shipbuilding Limited (Note 1) ||Preference ||388000000 |
|L&T Uttaranchal Hydropower Limited ||Preference ||96500000 |
|L&T Electrical & Automation Limited (Note 5) ||Equity ||7388796 |
B) Equity shares sold/transferred during the year:
|Name of the Company ||No. of shares |
|Larsen & Toubro Infotech Limited (Note 2) ||17500000 |
|L&T Technology Services Limited (Note 3) ||10400000 |
|L&T General Insurance Company Limited (Note 4) ||752000000 |
|Larsen Toubro Arabia LLC ||7500 |
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&TShipbuilding Limited stands cancelled. The Company has now acquired 388000000 equityshares of Marine Infrastructure Developer Limited for a consideration of Rs 388 crore fromL&T Shipbuilding Limited. The acquisition has been completed on 31st March 2017.Further 388000000 equity shares of L&T Shipbuilding Limited held by the Companyhave been extinguished and 388000000 9% non-cumulative optionally convertible andredeemable preference shares of Rs 10 each have been issued to the Company in lieu of thesame 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 onJuly 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 on23rd September 2016.
4. The Company has sold its entire stake in L&T General Insurance Company Limiteda 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 2017with appointed date as November 1 2016. Pursuant to the scheme L&T Electrical &Automation Limited issued 7388796 shares to Larsen & Toubro Limited as aconsideration towards transfer of certain assets by L&T Valves Limited. Accordinglythe value of investment in L&T Electrical and Automation Limited was increased by Rs40.31 crore and reduced in L&T Valves Limited by Rs 40.31 crore during the year2016-17.
The Company has formulated a policy on identification of material subsidiaries in linewith Regulation 16(c) of the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 and the same is placed on the website athttp://investors.larsentoubro.com/Listing-Compliance. aspx. The Company does not have anymaterial subsidiaries.
C) Performance and Financial Position of each subsidiary/associate and joint venturecompanies:
A statement containing the salient features of the financial statement ofsubsidiary/associate/joint venture companies is provided on pages 471 to 480 of thisAnnual Report.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDED BYTHE COMPANY:
The Company has disclosed the full particulars of the loans given investments made orguarantees given or security provided as required under Section 186 of the Companies Act2013 and Regulation 34(3) and Schedule V of the SEBI (Listing Obligations & DisclosureRequirements) 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 PartyTransactions 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 toperiodically review and monitor Related Party Transactions.
All the related party transactions were in the ordinary course of business and at arm'slength. The Audit Committee has approved all related party transactions for the FY 2016-17and estimated transactions for FY 2017-18.
There were no materially significant related party transactions that may have conflictwith the interest of the Company.
STATE OF COMPANY AFFAIRS:
The total income for the financial year under review was Rs 68273 crore as against Rs66154 crore for the previous financial year registering an increase of 3%. The profitbefore tax from continuing operations including exceptional items was Rs 6758 crore forthe financial year under review as against Rs 6256 crore for the previous financial yearregistering a increase of 8%. The profit after tax from continuing operations includingexceptional items was Rs 5454 crore for the financial year under review as against Rs5000 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 financialyear.
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 issueof bonus shares.
The Board of Directors of the Company has approved the Dividend Distribution Policy on22nd November 2016 in line with regulation 43A of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015. The Policy is provided in AnnexureG forming part of this Board Report and also uploaded on the Company's websiteat http:// investors.larsentoubro.com/Listing-Compliance.aspx.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
There are no material changes and commitments affecting the financial position of theCompany 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 theCompanies (Accounts) Rules 2014 is provided in Annexure A' forming part of thisBoard Report.
RISK MANAGEMENT POLICY:
The Apex Risk Management Committee comprises of Mr. A. M. Naik Mr. S. N. Subrahmanyanand Mr. R. Shankar Raman. Mr. A. M. Naik is the Chairman of the Committee. The Company hasformulated a risk management policy and has in place a mechanism to inform the BoardMembers about risk assessment and minimization procedures and periodical review to ensurethat executive management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review section of theManagement 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 Chairmanof the Committee.
The details of the various projects and programs which can be undertaken by the Companyas 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 underSection 135 of the Companies Act 2013 read with Rule 8(1) of the Companies (CorporateSocial Responsibility Policy) Rules 2014 are given in Annexure C' forming part ofthis 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. TheBoard places on record its appreciation of the contribution by Mr. Vakil as Director ofthe Company.
Mr. Subodh Bhargava was appointed as an Independent Director of the Company with effectfrom April 1 2014 to March 29 2017. Pursuant to the recommendation of Nomination andRemuneration Committee the Board at its Meeting held on January 28 2017 has approved there-appointment of Mr. Subodh Bhargava as an Independent Director for a further term of 5years from March 30 2017 to March 29 2022 subject to the approval of the shareholderssince the Board was of the opinion that his association would be of immense benefit to theCompany 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 representingAdministrator of the Specified Undertaking of the Unit Trust of India with effect fromJuly 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 itsMeeting dated 29th May 2017 with effect from 1st July 2017. Mr. Patil will hold officetill the ensuing AGM and is eligible for appointment. The Board has also appointed him asthe Whole-time Director of the Company with effect from 1st July 2017 for a period offive years subject to approval of the shareholders.
Mr. Sushobhan Sarker Mr. R. Shankar Raman and Mr. Shailendra Roy retire by rotation atthe ensuing AGM and being eligible offer themselves for re-appointment. . The current termof Mr. A. M. Naik as Group Executive Chairman ends on September 30 2017. Your Board ofDirectors had requested Mr. Naik to provide advice guidance and mentorship to theCompany's executive management in the capacity of Non-Executive Chairman. Mr. Naik hasacceded to the Board's request and shall continue as Non-Executive Chairman with effectfrom October 1 2017 for a period of three years.
The Board has appointed Mr. S.N. Subrahmanyan as Chief Executive Officer and ManagingDirector with effect from 1st July 2017 for a period of five years subject to approvalof the shareholders.
The notice convening the AGM includes the proposal for appointment / re-appointment ofDirectors.
The terms and conditions of appointment of the Independent Directors are placed on thewebsite 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 programsformulated to educate the Directors regarding their roles rights and responsibilities inthe Company and the nature of the industry in which the Company operates the businessmodel of the Company etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
This information is given in Annexure B' - Report on Corporate Governance formingpart of this Report. Members are requested to refer to pages 74 and 75 of this AnnualReport.
The Company has in place an Audit Committee in terms of the requirements of theCompanies Act 2013 read with the rules made thereunder and Regulation 18 of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015. The detailsrelating to the same are given in Annexure B' - Report on Corporate Governanceforming part of the Board Report. Members are requested to refer to pages 77 to 79 of thisAnnual Report.
COMPANY POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The Company has in place a Nomination and Remuneration Committee in accordance with therequirements of the Companies Act 2013 read with the rules made thereunder and Regulation19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. Thedetails relating to the same are given in Annexure B' - Report on CorporateGovernance forming part of the Board Report. Members are requested to refer to pages 79 to81 of this Annual Report.
The Committee has formulated a policy on Director's appointment and remunerationincluding recommendation of remuneration of the key managerial personnel and otheremployees board diversity composition and the criteria for determining qualificationspositive attributes and independence of a Director. The Committee has also formulated apolicy on Board Diversity.
DECLARATION OF INDEPENDENCE:
The Company has received Declarations of Independence as stipulated under Section149(7) of the Companies Act 2013 from Independent Directors confirming that he/she is notdisqualified from appointing/continuing as Independent Director. The same are alsodisplayed on the website of the Company 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 theAnnual 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 AnnualAccounts the applicable accounting standards have been followed along with properexplanation relating to material departures; b) The Directors have selected suchaccounting policies and applied them consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for thatperiod; c) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d) The Directors have prepared the Annual Accounts on a goingconcern basis; e) The Directors have laid down an adequate system of internal financialcontrol to be followed by the Company and such internal financial controls are adequateand operating efficiently; f) The Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL:
The Company has designed and implemented a process driven framework for InternalFinancial Controls ("IFC") within the meaning of the explanation to Section134(5) (e) of the Companies Act 2013. For the year ended March 31 2017 the Board is ofthe opinion that the Company has sound IFC commensurate with the nature and size of itsbusiness operations and operating effectively and no material weakness exists. The Companyhas a process in place to continuously monitor the same and identify gaps if any andimplement new and/or improved controls wherever the effect of such gaps would have amaterial effect on the Company's operations.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS:
The Nomination and Remuneration Committee and the Board have laid down the manner inwhich formal annual evaluation of the performance of the Board committees and individualdirectors has to be made.
All Directors responded through a structured questionnaire giving feedback about theperformance of the Board its Committees Individual directors and the Chairman. Thequestionnaire included inputs on composition culture functioning informationavailability compliance and governance effectiveness etc. Questionnaire also covered inthe case of individual directors qualitative assessment and in the case of Chairmanadditional criteria like leadership qualities and other key aspects of his role. TheIndividual Directors' responses to the questionnaire on the performance of the BoardCommittee(s) Directors and Chairman were analyzed by an independent consultant toarrive at unbiased conclusions.
The inputs including areas of improvement given by all the directors were discussedin the meeting of the Independent Directors held on April 6 2017 and in the subsequentMeetings of Nomination and Remuneration Committee and the Board. The Group ExecutiveChairman had a discussion with all the Directors individually.
DISCLOSURE OF REMUNERATION:
The details of remuneration as required to be disclosed under the Companies Act 2013and the rules made thereunder are given in Annexure D' forming part of this Boardreport.
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) Rules2014 as amended from time to time is provided in Annexure H' forming part of thisreport. In terms of Section 136(1) of the Act and the rules made thereunder the Reportand Accounts are being sent to the shareholders excluding the aforesaid Annexure. AnyShareholder 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 theCompany.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS:
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries 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 (PreventionProhibition & Redressal) Act 2013. This has been widely disseminated. There were nocases of sexual harassment complaints received by the Company in the financial year2016-17.
??ESOP Disclosures: There has been no material change in the Employee StockOption Schemes (ESOP schemes) during the current financial year. The ESOP Schemes are incompliance with Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 ("SBEB Regulations").
The disclosures relating to ESOPs required to be made under the provisions of theCompanies Act 2013 and the rules made thereunder and the SBEB Regulations together with acertificate obtained from the Statutory Auditors confirming compliance is provided onthe website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx.
A certificate obtained from the Statutory Auditors confirming compliance with theCompanies Act 2013 and the SBEB Regulations is provided in Annexure B' forming partof this Report.
??Corporate Governance: Pursuant to Regulation 34 of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 a Report on CorporateGovernance and a certificate obtained from the Statutory Auditors confirming complianceis provided in Annexure B' forming part of this Report.
??No disclosure is required under Section 67(3)(c) of the Companies Act 2013 inrespect of voting rights not exercised directly by the employees of the Company as theprovisions of the said section are not applicable.
As per the provisions of Section 177(9) of the Companies Act 2013 (Act') theCompany is required to establish an effective Vigil Mechanism for directors and employeesto report genuine concerns.
The Company has a Whistle-Blower Policy in place since 2004 to encourage and facilitateemployees to report concerns about unethical behaviour actual/ suspected frauds andviolation of Company's Code of Conduct or Ethics Policy. The Policy has been suitablymodified to meet the requirements of Vigil Mechanism under the Act. The policy providesfor adequate safeguards against victimisation of persons who avail the same and providesfor direct access to the Chairperson of the Audit Committee. The Audit Committee of theCompany oversees the implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the Whistle-BlowerPolicy on its website http://investors.larsentoubro.com/corporategovernance.aspx. Duringthe 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 Indiato 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 ofthis Annual Report (refer pages 19 to 35).
The detailed Corporate Sustainability Report is also available on the Company's websitehttp://www.larsentoubro.com/corporate/sustainability.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS:
During the year under review there were no material and significant orders passed bythe regulators or courts or tribunals impacting the going concern status and the Company'soperations in future.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to Section 129(3) of the Companies Act 2013 and Regulation 34 of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 and prepared inaccordance with the applicable Accounting Standards prescribed by the Institute ofChartered Accountants of India in this regard.
The Auditors' report to the shareholders does not contain any qualificationobservation or adverse comment.
SECRETARIAL AUDIT REPORT:
The Secretarial Audit Report issued by S. N.
Ananthasubramanian & Co. Company Secretaries is attached as Annexure E' tothis Annual Report.
The Secretarial Auditor's report to the shareholders does not contain anyqualification.
In accordance with provisions of Section 139 of the Companies Act 2013 and theCompanies (Audit and Auditors) Rules 2014 Sharp & Tannan (firm registration number109982W) will complete their term as Statutory Auditors of the Company at the conclusionof the forthcoming Annual General Meeting. The Board places on record its appreciation forthe 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 theprovisions of Companies Act 2013 Deloitte Haskins & Sells LLP were appointed asStatutory Auditors for a period of 5 continuous years from the conclusion of 70th AnnualGeneral Meeting till the conclusion of 75th Annual General Meeting of the Company. Aproposal for ratifying their appointment from the conclusion of the 72nd AGM till theconclusion of the 73rd AGM has been included in the Notice of the ensuing AGM.
Deloitte Haskins & Sells LLP have informed the Company that their appointmentwould 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 reviewprocess of Institute of Chartered Accountants of India (ICAI) and hold valid certificateissued by the Peer Review Board of the ICAI.
The Audit Committee reviews the independence and objectivity of the Auditors and theeffectiveness of the Audit process.
The Auditors have also furnished a declaration confirming their independence as well astheir arm's length relationship with the Company as well as declaring that they have nottaken 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 againstthe Company by its officers or employees as specified under Section 143(12) of theCompanies Act 2013.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and as per theCompanies (Cost Records and Audit) Rules 2014 and amendments thereof the Board on therecommendation of the Audit Committee at its meeting held on May 29 2017 has approvedthe appointment of R. Nanabhoy & Co. Cost Accountants as the Cost Auditors for theCompany 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 underfinalization and shall be filed with the MCA within the prescribed period.
A proposal for ratification of remuneration of the Cost Auditor for the financial year2017-18 is placed before the shareholders.
DISCLOSURE ON SPECIFIED BANK NOTES:
The information is covered in Note 59 forming part of the Financial Statements formingpart of this Annual Report.
Your Directors take this opportunity to thank the customers supply chain partnersemployees Financial Institutions Banks Central and State Government authoritiesRegulatory authorities Stock Exchanges and all the various stakeholders for theircontinued co-operation and support to the Company. Your Directors also wish to recordtheir appreciation for the continued co-operation and support received from the JointVenture partners / Associates.
| ||For and on behalf of the Board |
| ||A. M. Naik |
| ||Group Executive Chairman |
| ||(DIN: 00001514) |
|Mumbai May 29 2017 || |
Annexure A' to the Board Report
Information as required to be given under Section 134(3) (m) read with Rule 8(3) of theCompanies (Accounts) Rules 2014.
[A] CONSERVATION OF ENERGY:
(i) Steps taken or impact on conservation of energy:
??Use of Induction lamps in place of mercury vapor lamps for bay lighting atKancheepuram factory??Replacement of electrical heating coil vaporizer used in thegalvanizing plant to vaporize the liquefied LPG from cylinders with heater less hot watervaporizer at Puducherry factory??Conversion of DOL Starter to Variable Frequency Drives(VFD) for Admin Building Chiller Primary pumps??Use of automatic switching off 50%Streetlights during night ??Installation of L&T VFD for mouldingmachine??Implementation of ISO 50001 across ESP MFG Plants??Energy audit and Energytraining provided at Ahmednagar Switchgear Works??Replacement of Natural gas heating withelectrical heating for heat treatment of jobs??Optimization of DG set capacity in Furnace??Process cooling tower Fan operation converted from manual mode to Automatic modeoperation through low cost automation ??Upgradation of coolant system of Asquith machineto eliminate 8 no's of motor along with VFD installation??Replacement of conventional MHLamps and fluorescent tube lights by LED lamps in working areas at projects as well as forstreet lights ??Installation of HVLS Fan ??Use of Flood light LED and power efficientMetal Halide lamps instead of Halogen in campuses??Retrofitting of LED fixtures in placeof CFL Fixtures??Cooling Tower Pump Energy Optimization??Conducted "SaveElectricity" campaign on campus
??Installation of motion sensors at floor areas to reduce the overall electricityconsumption??Installation of auto water level controller for domestic pumps??Use of EcoFuel which is a direct substitute to High Speed Diesel in Hot Mix Plant??Optimization ofAir Compressor operation by connecting 200 CFM Air Compressor exclusively for ShotBlasting Operation ??Replacing existing aged inefficient Split AC units with energyefficient units??Utilization of Chiller for HVAC System Campus FMD initiated andcontrol the chiller running hour for HVAC need during holidays and extended workinghours??Clubbing of charges in furnace during rolling process to improve loadingfactor??Replacement of rotor resistance controlled starter to Drive controller starter forEOT cranes resulting smooth operation and energy saving??Introduction of VSD basedcompressor ??Compressed air optimization ??Installation of diffusers and blowers in wastewater treatment plants instead of conventional surface aerators which will lead to energysavings by 12 - 15% ??Use of photo electric sensors for lighting control in IntegratedUrban Utility Projects / Industrial Township Projects??Use of Hybrid Lighting Masts ??Useof Recycled water from STP for sanitation and gardening??Use of Motion sensors and RTCtimers fixed at paint booth blowers HVAC clock room Rest Rooms Garden lights and Foodcourts??Introduced RTC timer for Domestic Water pump to avoid high pressure leakages inthe existing system??Dedicated team for monitoring the lighting system and staff trainedfor preventing excessive usage of power??Use of VFDs with auto monitoring of pressure andtemperature for compressor and blower
??Implementation of Cold phosphating pre-treatment process (Oxsilan process) in thepaint shop??Usage of Variable Speed Drive for better efficiency ??Installation of PLCcontrolled "Auto Mode" Plant and Office Lighting??Use of CNG for Bitumen Heatingas a substitute to High Speed Diesel in Hot Mix Plant at Delhi Agra Road Project??Usage ofEB power supply instead of DG for construction power supply??Installation of Digitalgateways at various P&M assets which enables us to monitor power consumption andreduce maintenance cost ??Installation of Fuel sensors to monitor the fuel consumption andoptimize its usage??Annual energy Savings in Kansbhal Factory Odisha is 8.19 Lacs KWH
??Replacement of Air Cooled Chiller with Water Cooled Chiller
(ii) Steps taken by the Company for utilizing alternate sources of energy:
??Shift towards usage of windmill power in the place of State Electricity Board atKancheepuram factory??Installing Solar panels on rooftop??Solar street at ESE campus ??Useof solar energy and natural lights in cafeteria??Purchase of Green Power from third partywind farm to reduce carbon footprint??Solar Panels installed at project sites??Powergeneration through Solar Roof top PV installation at campus??Shift towards usage of powergenerated through windmill power ??Use of high velocity burners in place of low velocityburners??Implementation of hoods for the pre heating??Conversion of weld edge preparationprocess from planning to milling operation
??Re-design impeller of industrial blower from backward curve to airfoil curve??In-house development of remote operated scissor arm for shifting and aligning the hotplate into rolling machine??Improvement is NUB design done to reduce weld deposition
(iii) Capital investment on energy conservation equipments:
??Energy conservation in Air handling units??Replacement of old welding machines withnew machines with inverter technology to reduce no load loss and overall consumption??Useof 100 kVA UPS for furnace to reduce diesel consumption of DG set for uninterrupted powersupply??Replacement of existing 400W MH lamps with 137W LED lamps for highbay lighting inHE East & West shops??Migrating from HPSV to LED light for BOT (Build OperateTransfer) projects with ESCOs (Energy Saving Companies) for energy conservation inPeripheral Lighting??PLC installation in heating process of LSR to have precise controland saving in NG consumption??Purchase of green power (Hydropower) for HE East &West??Use of grid supply for LSR to replace DG set hiring and running cost thereby savingdiesel consumption??Feasibility for infrared heating to be explored and implemented forheating operation??IOT projects for ESSC SAW and nozzle welding process to save energyand reduce cycle time The measures taken have resulted in savings in cost of productionpower consumption and processing time at all locations.
[B] TECHNOLOGY ABSORPTION:
(i) Efforts made towards technology absorption:
??Introduction of Digital Interfaces to monitor progress & cost of work through ERPSystem ??Development M20 and M40 structural grades of concrete with Recycled concreteaggregate (RCA) for residential commercial and infrastructure construction
??Development of IoT techniques for embankment structures near sea coast for continuousmonitoring
??Re-commissioning of State of art testing and analysis equipment for rebar strandsconcrete soil rock and asphalt after Chennai floods
??In-house developed self-compacting concrete was used in pile foundations of HEPChitapur Solar power project in Karnataka
??Development of evaluation and qualification of physical and mechanical properties ofEmbankment materials for SOU project
??Implementation of specially designed cement modified WMM mix in the internal roads ofApollo Proton Therapy and Cancer Treatment Hospital Project site which shall help to moveheavy duty medical equipment into the hospital building
??Development of A2O process at the 318 MLD Waste Water Treatment Plant (WWTP) atCoronation Pillar New Delhi wherein the Nitrogen & Phosphorus content in wastewateris treated to desirable limits
??Installation of Biomethanation of sewage sludge in the 318 MLD WWTP at CoronationPillar New Delhi which produces biogas used to generate electricity and run the WWTPfacility
??Installation of Micro-filtration (MF) system at Raichur power Plant which is designedto treat the river water without any conventional pre-treatment to give filtered water
??Implementation of Virtual reality (VR) / Mixed reality (MR) digital technologies forprojects which will enable the engineers from different disciplines to view their designas its final product and visualise the structure in real time scale
??Implementation of HTC Vive technology in projects which creates a virtual realityheadset designed to utilize "room scale" technology to turn a room into 3D spacevia sensors with the virtual world allowing the user to navigate naturally
??Implementation of Microsoft HoloLens which embraces virtual reality and augmentedreality to create a mixed reality??In-house development of MIS Dashboard to monitorproject costs departmental overheads inventory and vendor payables ??Development of 3Dmodel of components of ship in off shore patrol vessels to have better clash freeinterface between design and production??Adoption of Modular Construction Technology forthe erection of 6mm thick carbon steel liner panels for IC wall and top dome lining forKakrapar Nuclear Power Plant in Gujarat??Designed Bridge builder to erect precast segmentsby cantilever construction method for straight spans and curved spans upto 128m radius ofcurvature??Developed segmental bridge launching girder with hinge mechanism and adopted inmetro construction projects??Implementing BIM at EDRC Metros which aims at mappingon a GIS platform the various aspects and features of Metro Rail with their associatedinformation??Launched emergency response mobile surveillance control and command centrevehicle in Mumbai first of its kind in India which is capable of recording &transmitting live feed to the police control room??Implemented BIM for road project onpilot basis for a 5 Km stretch??Utilisation of Digital technology for topographic surveyssuch as vehicle based LIDAR survey??Implemented the 2D Grade Control system on few motorgraders in Delhi Agra Road Project??Manufacturing latest technology products in materialhandling equipment namely Tandem Tippler & Side Arm Charger High Capacity Stacker cumReclaimer Underslung Paddle Feeder Drag Plough for Coke Oven Bin Extractors??IntroducedNew Product Intensity (NPI) index which measures the sales of products introduced in themarket in last five years to the total sales in the financial year
??Development of various new products in the power distribution and motor controlsector namely AU range of final distribution products sub-main Distribution boards newratings in Omega range of Air Circuit Breakers and Busbar Trunking systems??Launchedsubmersible pump controllers for agriculture market and DC contactors in telecomapplications??Launched comprehensive product portfolio to provide solution for PowerQuality Management??Development of new cost-optimized meter platforms that offer betterfeatures development and integration of modules to facilitate remote communication ofmeter data over Radio / GSM and development of Pre-Paid Meters Smart Meters ProtectiveRelays and Panel Meters??Developed Smart and Pre-paid meter where each and every instancein power distribution will be recorded??Launch MV drives thus completing LV & MV driverange??Development of new cost-optimized meter platforms that offer better featuresdevelopment and integration of modules to facilitate remote communication of meter dataover Radio / GSM??Introduction of "SMART Comm" solution??Introduction of67"Hydraulic Tire Curing Press 750 T Bladder Press and Mixing mill??Introduction ofNew state-of-the-art Loader for Off The Road (OTR) Tire Curing Presses and automatic MoldHeight Adjustment for OTR Presses??Development of newer variants of Power Packs &Tipper Wet Kit??Development of Paver Pneumatic Tired Roller & Skid SteerLoaders??Introduction of 56.5" -2 position PCI for Domestic order??Introduction of64" -2 Position PCI with safety fence??Indigenization of various components forRubber Processing Machinery by designing developing specifications and adapting tointernational conditions
??Development of cement grouted bituminous macadam for high speed corridorsexpressways aprons and ports??Development of NABL accredited testing facility forgeotextiles and geo-synthetics used in sub soil strengthening??Industrial scale productionof stockpile all weather cold pot-hole mix for infra project sites??Development of lowcement and impermeable Plastic concrete for Dam structures ??Mechanical Studies on lightweight concrete for structural application and specially designed double blend structuralgrade??Development of polymer modified repair mortar for multilevel carparks??Execution ofTechnology Licensing & Assistance (TLA) Agreement with Chiyoda Corporation for FlueGas Desulphurization Technology??Development of Armored vehicle mobility simulationcapability Laser based optics simulation capability Intelligent Collaborative RoboticsSystem Unmanned / Autonomous Platforms & Systems Waterjet Propulsion Systems Field& Air Defence Gun Systems Laser based Beam directing tracking and pointing systemTrisonic Wind Tunnel Systems and other technics in the HED Sector??Introduction ofportable flux recycler at welding point to avoid ovens??Development of EFNARC and RILEMmethodologies in energy absorption of shotcrete panels.
??Triple blend shotcrete mix M40 has been used in Special projects for tunnels??Optimized concrete mix design solutions were implemented in PTDIC ??Development ofpre-packed concrete for remote site and inaccessible areas??Development of NABL accreditedtesting facility for fineness by Blaine Alkali Silica aggregates Non Destructive Testson concrete??Development of NABL test facilities for evaluating sealents used in expansionjoints of structures??Mechanical studies on water barrier disc tie rods
??Development of test facilities for MIG and TIG welded specimens for Fatigue andtensile strength on bronze alloy sculpture specimens??Creep studies on M65 gradeself-compacting concrete??Development of NABL testing facility for Bituminous Emulsionsused in flexible pavement construction??Development of High volume fly-ash concrete formass foundations??Development of lime and fly-ash stabilized mixes with recycled concreteaggregates for base and sub-base layers for light medium and heavy traffic pavements??Development of high flexural strength PQC with alternate materials for durable rigidpavements??Development of comprehensive online geotechnical databank as an effective toolfor designers and contract teams across ICs??Development of standard concrete mixes forcold weather concreting at sub-zero temperature??Development of Surface Technologies likeAlodine Chromic acid anodization and Electroless Nickel Plating to meet Internationalstandards ??Establishment of Facility & Development of Painting process to meetInternational Military standards with precise thickness and gloss requirements ??In-houseDevelopment of Form Rolling process with combination of Metallic and Non-metallicRollers??Development of Manufacturing process of High precision Gears with our Businesspartners??Development of precision mechanical & electronics integration testing &tuning of Fin Actuation Systems??Introduction of HIL (Hardware-in-the-loop) Simulation& Equipment validation - Equipment's testing under various environmental & loadconditions??Development of High Wear resistance process of Hard anodizing with Teflonimpregnation for Aluminium Parts with business partners
??In-house Development of Resistance spot welding of Thin Stainless Steel Sheet metalsections ??In-house Process development for manufacturing of Precision Thin Section AeroStructural parts??Development of Low Hydrogen Embrittlement Cadmium Plating process ofCarbon Steels??Development of Hot Bending Process for Fabrication of Titanium Sections forHSTDV program??Development of Micro-electronics assembly & testing for TGETFuses??Completed Airworthiness Qualification of Integrated Life Support System - On-boardOxygen Generation System for fighter aircrafts??Completed development and qualification ofOxygen System for Military Helicopters??L&T HE IC has entered into technologytransfer agreement with a leading Global technology provider for Titanium Cladequipment??Buildup capability in static and dynamic stability of amphibious trackedvehicle??Development of plasma welding of Maraging steel and Titanium??Launch of AutomaticTube and Tubesheet welding for Urea applications??Development of weld overlay proceduresfor super duplex stainless steels alloys 825 and alloy C-276??Development of Ultra Narrowgap GTAW process for closing seams of process plant equipment??Development of Flux-lessArc Spot Welding with mixed gases for Nuclear export orders??Development of Auto-TIGOverlay on Gasket Face and Split Ring for heat exchangers??Development of Robotic FCAW oftrunnions for Trans Nuclear projects ??Development of Automated High Sagita Nozzle WeldingSystem??Development of Trisonic Wind Tunnel Systems Thermal Management system for highpressure and high temperature flow environment
??Development of Underwater Weapon Launch Systems and Ka Band Feed using additivemanufacturing techniques ??Development of Driver Vision Enhancement for ArmouredVehicles??Development of Railless Helo Traversing Systems??Environment Protection measuresintroduced through Process change in bridging system Painting at Talegaon i.e BLTSarvatra SSBS and Modular Bridge were changed from Zinc Chromate primer to Zinc Phosphateprimer??Changed the design of pins using stainless steel material to reduce therework/rejection at site due to corrosion of pins in Bridging projects??Development of 3DPrinting for design and development of Micro wave guide component for Ka band telemetrythrough Metal 3D printing ??Adoption of bend plates and negotiating with Mills for supplyof extended length of plates for reducing welding in the Tilt beam of TCT-5 productionorder??Automated Welding process established for 7.5m long RT quality Aluminum Buttjoint??Development of Laser cutting process using Diode Laser machine for HSLA Steel &Aluminum??Developed in-house SPM for Hinge boring of BLT??In-house development bymodification in IGM Robot Gantry & Gulco trolley ??Development of Hydro-squeezingfixture development in HDP for riveting operation.??Developed U & Z extrusion cuttingslot milling & drilling fixtures for HDP
??Development of remote controlled motorized fixture for hot plate handling on rollingmachine ??Development of internal T-ring (Web to Flange) welding station using Auto GMAWand laser based seam tracking system ??Process development for long seam welding andoverlay using mechanized system for Coke Drum repairs??Import substitution for hydrostaticexpansion process of tube to tube-sheet joints in Heat Exchangers and EO Reactors
??Indigenous development of twin head Auto GMAW station with TAB based wireless controland seam tracking mechanism for welding of tube to ring joints in TWC project ??Indigenousdevelopment of SCADA based system for Hydro Pressure Test Automation ??Development ofMilitary Communication Products namely network simulation and emulation for Tacticalapplications network Management System for TCS user services fall back on TDM NetworkDesk Access Unit Radio Relay Modules manet based Wireless Node points Radio Gateway forCNR Radios legacy system interface and NEWN system interface for VLF
??Development of India's first indigenous chemical agent monitoring system inassociation with DRDE Gwalior viz. Portable Chemical Agent Detector (PCAD) and FixedChemical Agent Detector (FCAD) which can be used by the Army Navy Air Force and NDMAPara-military forces SPG and other security agencies??Development for Network simulationand emulation for Battlefield Management System applications??Indigenously developed RFmodules like Up Converter Down Converter High Power Amplifier Power Monitor andSwitched Filter Bank Modules ??Developed a complete rugged field deployable NetworkInterface Unit (NIU) along with its Technology Partner used for Ethernet to Fiber OpticMedia conversion??Developed man-portable communication gateway unit for Indian Navy calledInteroperable Communication System FAK which can be used for joint operations with foreignnavy and humanitarian aid disaster relief activities??Developed Capabilities inHigh-end Finite Element Analysis including advanced FEA Explicit Dynamic Simulation andNon-Linear Analysis??Developed capability for CFD simulation in areas such as two-phaseflow analysis for boiling applications??Development of Technology for Simulation ofManufacturing processes such as simulation of Welding process and it's application forvarious projects such as fabrication of ITER Cryostat vessel and fabrication of variousChemical Equipment??Development of improved High Temperature Heat Recovery (HTHR) forEthylene Production plants ??Development of improved design of Feed Water Heaters forSupercritical Power Plants??Development of Shell & Tube type LNG Vaporizers for landbased LNG Regasification terminals??Development of end to end Sales & Procurementcycles through Centralized ERP Server??Introduction of advanced features like Click toCall Click to Chat on Website Portal for Customer interaction
(ii) Benefits derived like product improvement cost reduction product development orimport substitution:
??Introduction of new products like New 1-phase Meter with IrDA 3-Phase Meter withIrDA 1-Phase Pre-Paid Meter (Taurus) 3-phase Pre-Paid Meter (Atria) 1-Phase Smart Meter(Aurora) 3-Phase Smart Meter (Regor) 3-Phase Digital Panel Meter (Nova) New TripSupervision Relay (TCS01-nX) & Motor Protection Relay (MPR200)??Introduction ofL&T's Outdoor Compact substation- N-Qube following Franchisee model ??Introduction ofa new variant to the GIS (Gas insulated switchgear) family??Continuous product developmentin the switchgear business at its various Department of Scientific & IndustrialResearch Ministry of Science & Technology accredited R&D facilities in India andfiling 101 Patent 3 Trademark 4 Design in India and 2 foreign patent applications and 18foreign trade mark applications ??Expansion of switchgear product range and offerings tothe infrastructure sector ??Strategic alignment with IOmniscient (Australian company) forits video analytics specialty??Use of Emulsion based cold mixes with Reclaimed AsphaltPavement materials as they are more environmental friendly over conventional bituminousmixes??Use of alternate curing techniques to reduce / eliminate the usage of water forconcrete curing.
??Use of Geo polymer concrete which ensures elimination of cement from constructionactivities
??Economical and cost effective piles in solar projects thus saving time
??The use of clean water for producing aggregates (fine and coarse) drops the price ofaggregates by 50% as compared to virgin aggregates use
??The recycling process can make the aggregate crushers self sufficient
??The high flexural strength PQC with alternate materials reduces the crust thicknessesof rigid pavements and inturn reduces the overall construction cost of rigid pavements
??The enhancement in NABL accredited testing facility with geotextile geosyntheticbitumen emulsion sealants ASR fineness by Blaines and NDT tests will improve theCompany's brand image and give competitive advantage over its peers
??Development of pre-packed dry concrete is a ready solution for quick concreting inremote project sites and it minimizes manual labour along with improvement in the speed ofconstruction
??The special fatigue and tensile tests on bronze alloy specimens were the majorcriteria for material qualification for prestigious SOU project
??The IoT based monitoring system developed for solar trackers cooling tower remoteunits special coastal structures will automate critical data collection and its analysis
??Positioning for Futuristic Programs for Indian MoD under Make' and IDDM'category
??10% reduction in welding in the Tilt beam of TCT-5 production order due to adoptingbend plates and extended length of plates pallet and lower costs due to in-house machiningof sub-assemblies
??QRSAM first prototype on-time delivery by taking constraints under control in-housepallet
??Increased self-reliance and savings in Foreign Exchange in process plant and powerplant equipment sector
??Improvement in manufacturing processes resulting in reduction in production cycletime cost and rework
(iii) Information regarding technology imported during the last 3 years:
|S. No. ||Technology Imported ||Year of Import ||Status of absorption & reasons for non- absorption if any |
|a) ||Flue Gas Desulphurization ||2016 ||Absorption has been initiated in FY 2016-17. Its completion is linked with the completion of the first project where L&T Power would install FGDs. |
|b) ||UV disinfection system ||2015 ||Absorbed successfully in the 2 MLD President estate STP. |
| || ||2016 ||Implementing for the India's largest gravity channel UV disinfection system in 120 MLD Varanasi STP. Implementation of Ultra Violet (UV) disinfection system for secondary treated wastewater. This is preferred over the conventional chlorination system which has harmful side effects due to the presence of carcinogens in residual chlorine. |
|c) ||Vortex Grit Removal in Sewage Treatment Plant ||2015 ||Absorbed successfully in the 2 MLD STP at President's Estate New Delhi. |
| || ||2016 ||Works for the 5 new pumping stations of Greater Colombo project is in progress. It is the first of its kind to be installed in India for sewage application. It operates on VORTEX Principle where the grit removal happens by tangential Centrifugal force. Grit removal efficiency is about 95 %. The major advantage of this system is that they occupy less area and thus leads to easy maintenance. This is preferred over the conventional grit removal system for its high grit removal efficiency and compactness. |
(iv) Expenditure incurred on Research & Development:
| ||2016-17 |
|Capital ||53.53 |
|Recurring ||145.98 |
|Total ||199.51 |
|Total R&D expenditure as a percentage of total turnover ||0.30% |
[C] FOREIGN EXCHANGE EARNINGS AND OUTGO:
| ||Rs crore |
| ||2016-17 |
|Foreign Exchange earned ||16133.05 |
|Foreign Exchange saved / deemed exports ||999.00 |
|Total ||17132.05 |
|Foreign Exchange used ||15588.43 |
Annexure D' to the Board Report
A) Ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year 2016-17 the percentage increase inremuneration of each Director & Company Secretary during the financial year 2016-17:
|Name of the Director/KMP || ||2016-17 || || |
| ||Designation ||Total Remuneration ||Ratio of remuneration of director to the median remuneration ||Percentage increase in Remuneration |
| || || ||$ || |
|A. M. Naik ||Group Executive Chairman ||78.91~ ||1101.12 ||19.29 |
|S. N. Subrahmanyan ||Deputy Managing Director & President ||23.71 ||330.85 ||7.17 |
|R. Shankar Raman ||Whole-time Director & Chief Financial Officer ||14.35 ||200.32 ||4.83 |
|Shailendra Roy ||Whole-time Director & Senior Executive Vice President (Power Heavy Engineering & Defence) ||12.04 ||168.00 ||19.80 |
|D. K. Sen ||Whole-time Director & Senior Executive Vice President (Infrastructure) ||7.77 ||108.36 ||@ |
|M. V. Satish ||Whole-time Director & Senior Executive Vice President (Buildings Minerals & Metals) ||7.40 ||103.23 ||@ |
|M. M. Chitale ||Independent Director ||0.46 ||6.43 ||(11.44) |
|Subodh Bhargava ||Independent Director ||0.56 ||7.84 ||(9.07) |
|M. Damodaran ||Independent Director ||0.41 ||5.65 ||(6.92) |
|Vikram Singh Mehta ||Independent Director ||0.38 ||5.32 ||(5.00) |
|Sushobhan Sarker ^ ||Nominee of Life Insurance Corporation of India ||0.29 ||4.04 ||1.83 |
|Adil Zainulbhai ||Independent Director ||0.40 ||5.63 ||(17.76) |
|Akhilesh Gupta ||Independent Director ||0.21 ||2.86 ||(15.74) |
|Narayanan Kumar ||Independent Director ||0.13 ||1.84 ||* |
|Bahram Vakil ||Independent Director ||0.21 ||2.86 ||# |
|Swapan Dasgupta ||Non-Executive Director ||0.06 ||0.84 ||## |
|Sanjeev Aga ||Independent Director ||0.24 ||3.41 ||** |
|Sunita Sharma^ ||Nominee of Life Insurance Corporation of India ||0.15 ||2.02 ||(13.02) |
|Thomas Mathew T. ||Independent Director ||0.38 ||5.32 ||@ |
|Ajay Shankar ||Independent Director ||0.29 ||3.98 ||@ |
|Subramanian Sarma ||Non-Executive Director ||NIL ||NIL ||NIL |
|Naina Lal Kidwai ||Independent Director ||0.21 ||2.86 ||@ |
|N. Hariharan ||Company Secretary ||1.11 ||15.56 ||14.23 |
$ Ratio of remuneration of director to the median remuneration is calculated onpro-rata basis for those directors who served for only part of the financial year 2016-17
^ Part of the remuneration has been paid to the financial institution he/she represents
@ Details not given as Mr. D. K. Sen Mr. M. V. Satish Mr. Thomas Mathew T. Mr. AjayShankar and Ms. Naina Lal Kidwai were Directors for only part of the financial year2015-16
# Details not given as Mr. Bahram Vakil was a Director for only a part of the financialyear 2016-17 i.e. upto August 1 2016
## Details not given as Mr. Swapan Dasgupta was a Director for only a part of thefinancial year 2016-17 i.e. upto May 15 2016
* Details not given as Mr. Narayanan Kumar was a director only from 27th May 2016
** Details not given as Mr. Sanjeev Aga was a director only from 25th May 2016
~ Includes encashment of accumulated past service leave Rs 32.21 crore and perquisitevalue related to employee stock options exercised during the year in respect of stockoptions granted over the past several years by a subsidiary company - Rs 19.01 crore.
B) Percentage increase in the median remuneration of all employees in the financialyear 2016-17:
The median remuneration of employees of the Company during the financial year was Rs7.17 lakh. In the financial year there was an increase of 8.85% in the medianremuneration of employees;
C) Number of permanent employees on the rolls of Company as on March 31 2017:
There were 41466 permanent employees on the rolls of Company as on March 31 2017;
D) Average percentile increase already made in the salaries of the employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in managerial remuneration:
Average percentage increase made in the salaries of employees other than the managerialpersonnel for the year 2016-17 was 4.54% whereas there is increase in the managerialremuneration by 11.6% because a substantial portion of managerial remuneration is linkedto Company performance during the financial year 2016-17. The Profit after Tax for theyear 2016-17 increased by 9% directly impacting the variable component of managerialremuneration. Further the managerial remuneration for this purpose also includesperquisite value of employee stock options exercised during the year and the encashment ofaccumulated past service leave but excludes gratuity and leave encashment benefits payableon retirement;
E) Affirmation that the remuneration is as per the remuneration policy of the Company:
It is hereby affirmed that the remuneration paid is as per the Remuneration Policy forDirectors Key Managerial Personnel and other Employees.
Annexure E' to the Board Report
Larsen & Toubro Limited CIN L99999MH1946PLC004768 L&T House Ballard EstateMumbai 400 001.
Our Secretarial Audit Report for the Financial Year ended 31st March 2017 of evendate is to be read along with this letter.
1. It is the responsibility of the management of the Company to maintain secretarialrecords devise proper systems to ensure compliance with the provisions of all applicablelaws and regulations and to ensure that the systems are adequate and operate effectively.
2. Our responsibility is to express an opinion on these secretarial records standardsand procedures followed by the Company with respect to secretarial compliances.
3. We believe that audit evidence and information obtained from the Company'smanagement is adequate and appropriate for us to provide a basis for our opinion.
4. Wherever required we have obtained the management's representation about thecompliance of laws rules and regulations and happening of events etc.
5. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
6. We have not verified the correctness and appropriateness of financial records andbooks of accounts of the Company.
For S. N. ANANTHASUBRAMANIAN & CO.
S. N. ANANTHASUBRAMANIAN
C.P No: 1774
Date: May 18 2017
Annexure G' to the Board Report
DIVIDEND DISTRIBUTION POLICY
As per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 prescribed Listed Companiesare required to frame a Dividend Distribution Policy.
The purpose of this Policy is to regulate the process of dividend declaration and itspay-out by the Company which would ensure a regular dividend income for the shareholdersand long term capital appreciation for all stakeholders of the Company.
This Policy has been adopted by the Board of Directors of Larsen & Toubro Limited(the Company') at its Meeting held on 22nd November 2016. The Policy shall also bedisplayed in the annual reports and also on the website of the Company.
FORMS OF DIVIDENDS
The Companies Act provides for two forms of Dividend:
The final dividend is paid once for the financial year after the annual accounts areprepared. The Board of Directors of the Company has the power to recommend the payment offinal dividend to the shareholders for their approval at the general meeting of theCompany. The declaration of final dividend shall be included in the ordinary businessitems that are required to be transacted at the Annual General Meeting.
This form of dividend can be declared by the Board of Directors one or more times in afinancial year as may be deemed fit by it. The Board of Directors shall have the absolutepower to declare interim dividend during the financial year in line with this policy. TheBoard should consider declaring an interim dividend after finalization of quarterly/ halfyearly financial results. This would be in order to supplement the annual dividend or toreward shareholders in exceptional circumstances.
QUANTUM OF DIVIDEND AND DISTRIBUTION
Dividend payout in a particular year shall be determined after considering theoperating and financial performance of the Company and the cash requirement for financingthe Company's future growth. In line with the past practice the payout ratio is expectedto grow in accordance with the profitable growth of the Company under normalcircumstances.
DECLARATION OF DIVIDEND
Dividend shall be declared or paid only out of-
1) Current financial year's profit:
a) after providing for depreciation in accordance with law;
b) after transferring to reserves such amount as may be prescribed or as may beotherwise considered appropriate by the Board at its discretion
2) The profits for any previous financial year(s) after providing for depreciation inaccordance with law and remaining undistributed; or
3) out of 1) & 2) both.
The circumstances under which shareholders may not expect dividend/or when the dividendcould not be declared by the Company shall include but are not limited to the following:
a. Due to operation of any other law in force;
b. Due to losses incurred by the Company and the Board considers it appropriate not todeclare dividend for any particular year;
c. Due to any restrictions and covenants contained in any agreement as may be enteredwith the Lenders and
d. Due to any default on part of the company.
FACTORS AFFECTING DIVIDEND DECLARATION:
The Dividend pay-out decision of any company depends upon certain external andinternal factors-
Legal/ Statutory Provisions and Regulatory concern: The Board should keep inmind the restrictions imposed by Companies Act any other applicable laws with regard todeclaration and distribution of dividend. Further any restrictions on payment ofdividends by virtue of any regulation as may be applicable to the Company may also impactthe declaration of dividend.
State of Economy: The Board will endeavor to retain larger part of profits tobuild up reserves to absorb future shocks in case of uncertain or recessionary economicconditions and in situation where the policy decisions of the Government have a bearing onor affect the business of the Company.
Nature of Industry: The nature of industry in which a company is operatinginfluences the dividend decision. Like the industries with stable demand throughout theyear are in a position to have stable earnings and thus declare stable dividends.
Taxation Policy: The tax policy of a country also influences the dividend policyof a company. The rate of tax directly influences the amount of profits available to thecompany for declaring dividends.
Capital Markets: In case of unfavorable market conditions Board may resort to aconservative dividend pay-out in order to conserve cash outflows and reduce the cost ofraising funds through alternate resources.
Apart from the various external factors the Board shall take into account variousinternal factors including the financial parameters while declaring dividend which interalia will include -
Magnitude and Stability of Earnings: The extent of stability and magnitude ofcompany's earnings will directly influence the dividend declaration. Thus the dividend isdirectly linked with the availability of the earnings (including accumulated earnings)with the company.
Liquidity Position: A company's liquidity position also determines the level ofdividend. If a company does not have sufficient cash resources to make dividend paymentthen it may reduce the amount of dividend pay-out.
Future Requirements: If a company foresees some profitable investmentopportunities in near future including but not limited to Brand/ Business AcquisitionsExpansion / Modernization of existing businesses Additional investments in subsidiaries/associates of the Company Fresh investments into external businesses then it may decidefor lower dividend payout and vice-versa.
Leverage profile and liabilities of the Company.
Any other factor as deemed fit by the Board.
The portion of profits not distributed among the shareholders but retained and used inbusiness are termed as retained earnings. It is also referred to as ploughing back ofprofit. The Company should ensure to strike the right balance between the quantum ofdividend paid and amount of profits retained in the business for various purposes. Theseearnings may be utilized for internal financing of its various projects and for fixed aswell as working capital. Thus the retained earnings shall be utilized for carrying out themain objectives of the company and maintaining adequate liquidity levels.
PARAMETERS THAT SHALL BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARE
The Company does not have different classes of shares and follows the one shareone vote' principle.
REVIEW & AMENDMENT
The Policy shall be reviewed as and when required to ensure that it meets theobjectives of the relevant legislation and remains effective. The Executive ManagementCommittee has the right to change/amend the policy as may be expedient taking into accountthe law for the time being in force.