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Larsen & Toubro Ltd.

BSE: 500510 Sector: Engineering
NSE: LT ISIN Code: INE018A01030
BSE 00:00 | 08 Aug 1829.45 41.90
(2.34%)
OPEN

1785.10

HIGH

1831.95

LOW

1785.10

NSE 00:00 | 08 Aug 1829.65
(%)
OPEN

1796.40

HIGH

1832.05

LOW

1790.25

OPEN 1785.10
PREVIOUS CLOSE 1787.55
VOLUME 178264
52-Week high 2078.20
52-Week low 1456.80
P/E 34.58
Mkt Cap.(Rs cr) 257,074
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1785.10
CLOSE 1787.55
VOLUME 178264
52-Week high 2078.20
52-Week low 1456.80
P/E 34.58
Mkt Cap.(Rs cr) 257,074
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Larsen & Toubro Ltd. (LT) - Chairman Speech

Company chairman speech

Dear Shareholders

Robust self-belief and resilience are the key to success in times ofuncertainty and challenge. This spirit has helped India contend with an unprecedentedpandemic and in rapid succession a war in Europe with its attendant disruptions. It isindeed creditable that amidst these macroeconomic and geopolitical upheavals India hasmanaged to stay the course in its quest for growth. Your Company has also performed wellwhile operating within the given constraints. At this juncture we wish to reiterate ourcommitment to advance the interests of our country and express our solidarity with thenation and its leadership.

Business Scenario

FY 2021-22 was an economic roller coaster with the impact of recurringbouts of COVID-19 and global disquiet counter-balanced to some extent by Country'seconomic resilience. Regular government spending throughout the year complemented byliquidity easing measures by the Reserve Bank of India prevented the risk of an economicmeltdown and helped bolster the confidence of households and private companies.

An improved borrowing programme for the Centre and State Governmentsalso meant that the spending proposals envisaged in the Budget continued unhindered. Mostof the high frequency mobility and service indicators gained momentum as the easing ofpandemic curbs saw demand regaining lost ground before geopolitical tensions erupted toset the clock back once again.

After years of stagnation India witnessed a pick-up in exports in FY2021-22. Consequently the economy expanded aRs 8.7% in real GDP terms vis-a-vis acontraction in the previous financial year.

India is expected to post top quartile growth among emerging nations inthe medium term. Challenges hovering on the horizon include runaway oil prices supplychain disruptions and the US rate hikes affecting capital flows into India. Despite theseroadblocks however our view is that the bold structural reforms carried out by theGovernment in the last couple of years will pave the way for improved quality of growth. Aslew of incentive schemes launched by the Government should stimulate manufacturing andexports in our run up to becoming a USD 5 trillion economy. Leveraging its expertise inhigh- tech manufacturing your Company is well-positioned to take advantage of theopportunities as they unfold.

Driving Growth

India's FY 2022-23 Budget focusses on consolidation with a capex-driveninfrastructure thrust where the Government will do the heavy lifting and the privatesector steps in to play its part. Most of the initiatives undertaken ranging from NIP toNMP creation of DFI the PLI scheme the public procurement initiatives as well as therenewed PPP models have an overarching infrastructure focus. Clearly they are directedto coax capex back into play. We hope that a reasonably stable domestic macro environmentand an equable socio-economic climate will enable the Government to realise the visionenvisaged in the NIP blueprint. Public and private investments working in tandem shouldalso resuscitate India's Investment / GDP ratio which has been stagnant.

Since infrastructure investments serve the dual purpose of drivingproductivity and generating employment we believe the underlying macro drivers for growthremain intact. Your Company is poised to capitalise on these opportunities as they emerge.

Internationally we expect the GCC economy to remain buoyant with astrong capex fuelled by prevailing oil prices. Infrastructure and hydrocarbonopportunities are likely to open up in the African sub-continent on the back of enhancedbi-lateral/multi-lateral funding support.

Group Performance Review

In a year marked by several disruptions your Company turned in acreditable performance and registered appreciable recovery across key performanceparameters. Our Order Inflow for the year at ^ 192997 crore was achieved on the back ofmajor domestic and international order wins in Hydrocarbon and Infrastructure. Althoughthe domestic ordering environment was a shade below expectations the internationalenvironment especially in the Middle East is a cause for cheer.

The L&T Group recorded revenues of ^1 56521 crore during FY2021-22 registering a growth of 15%. The growth was aided by improved project executionand manufacturing activity further complemented by a strong pick-up in the servicesbusinesses amidst a volatile macro backdrop.

As on March 31 2022 the Order Book at Rs 357595 crore is largegrowing and diversified. The Infrastructure segment has a 73% share of the consolidatedOrder Book. The Order Book registered a growth of 9% on the back of orders secured inprojects businesses.

A healthy Operational Profit After Tax at Rs 8572 crore representinga growth of 23% over the previous year. Thanks to robust operational cash flows ourcapital employed metrics have reported progress leading in turn to improved return ratiosfor the Group. The Group has repaid borrowings during the year resulting in improvedDebt-to-Equity ratios.

Your Company continues to focus on shareholder value creation bydivesting non-core assets capturing cost efficiencies and leveraging technology forproductivity gains. Our strategically diversified business portfolio geographicaldispersion robust balance sheet and strong Order Book are reliable signposts pointing toa brighter future. Further the Company's proven execution strengths and committedworkforce are helping it to seamlessly transition to a more digitally evolved workenvironment. This should enable the business to thrive once the immediate challenges posedby pandemic and the geopolitical uncertainties are behind us.

It gives me great pleasure to inform you that the Board of Directorshas recommended a final dividend of Rs 22 per share for FY 2021-22.

International Business

The Company's policy of aiming for wider geographic dispersal continuesto yield positive results while de-risking exposure. While the Middle East region remainsan area of focus your Company has expanded its outreach to several countries in Africa aswell as South East Asia. Currently the Middle East region constitutes 76% of theinternational Order Book of Rs 95227 crore.

Strategic Plan

Our Strategic Five-year Plan christened 'Lakshya 2026' continues tosteer your Company's growth. Simultaneously it also responds with agility to flux in thebusiness environment. This year we launched Lakshya 2026 built around the followingthemes:

• Value accretive growth in our current business portfolio

• Exit from non-core businesses

• Developing innovative business offerings to ride the energytransition wave

• Scaling up Digital and e-commerce businesses

• Business sustainability through sharper focus on ESG andshareholder value creation

We are targeting Group Revenues of Rs 2.7 lakh crore and ROE of 18%+ byFY 2025-26

Training and Talent Management

People are at the heart of our successes and our continuing endeavoursto do better. Our HR policies are crafted to ensure professional growth while contributingto the employee's sense of pride and well-being. We also leverage technologies as weanticipate and adapt to changing requirements. For instance our digitalisationinitiatives enabled us to provide learning experience to our employees even as theyworked remotely during multiple lockdowns.

Sustainable Development

I am very happy to inform you that this is the maiden issue of ourIntegrated Annual Report bringing together our financial and sustainability performanceacross multiple parameters. While the world seems to have suddenly woken up to the perilsof climate change for your Company sustainability is nothing new. We have been at theforefront of many sustainability initiatives long before they were mandated by law. Since2008 we have maintained an annual reporting cycle for our sustainability performance.These reports are accessible on the Company's website.

Your Company has set for itself a Water Neutrality and Carbon Net Zerotarget of 2035 and 2040 respectively. We are already present in EPC Solar and Water spaceand are now actively looking at expanding our footprint in Green Hydrogen and EnergyStorage. With more and more countries signing up for time-bound zero emission targetslucrative business opportunities should emerge for your company in green hydrogen storagesolutions renewables and the world of data infrastructure.

With regard to governance the Company's core values pivot around theprinciples of independence transparency accountability responsibility complianceethics and trust. We will continue to uphold the value systems which have been thetraditional hallmark of Larsen & Toubro for over eight decades.

As stated in the past I wish to reiterate that our defence businessdoes not manufacture explosives or ammunition of any kind including cluster munitions oranti-personnel landmines or nuclear weapons or components for such munitions. The businessalso does not customise any delivery systems for such munitions.

Outlook

We live in an age of unpredictability. Just when it appeared that theworld had come to terms with the pandemic and that the worst was behind us war broke outin Europe dashing hopes of achieving the stability essential for growth. In theinterdependent world we live in conflagrations are no longer confined to the boundariesof the combatant countries. This has disrupted the global supply chains and triggered analarming spike in prices. The consensus view is that prices of various commodities wouldremain elevated in the near term.

Amid all this there is good news on the technology front.Paradoxically it took a pandemic to open our eyes to the latent benefits of digitaltechnologies. These technologies are irrevocably changing the way we work and interactwith each other. Also the IT spends are possibly the only deflationary force in today'sinflationary world. Another positive result has been a heightened awareness ofsustainability and a more rigorous emphasis on Environment Protection SocialResponsibility and Governance frameworks.

Conclusion

I would like to thank our employees our customers supply chainpartners and the Government for their contribution directly and indirectly to ourgrowth. I also thank my fellow Board Members for their invaluable support in guiding theCompany through turbulent times.

My special thanks to all our shareholders for the trust you havereposed in us. You remain an invaluable pillar of strength and I look forward to yourcontinued support in our journey towards setting higher levels of excellence.

My heartfelt greetings to you all as India celebrates 'Aazadi ka AmritMahotsav'.

Jai Hind!

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