I am addressing you at a time when the nation is grappling with a global pandemicwhile simultaneously gearing itself for a phased reopening of the economy and preparingfor life beyond Covid-19. Further simmering tensions along our northern border haveprecipitated an anti-China sentiment within the country. The world too is witnessing agrowing groundswell of opinion against China and seeking viable alternative sources ofsupply. I believe this is the opportune moment for the Government of india and indianindustry to act in unison to minimise our external dependencies and enhance self-reliance.
Our Hon'ble prime minister's call for ^aatma nirbhar Bharat' has resonated across thecountry. To ensure that the pm's thrust on self-dependence achieves the desired outcomesswiftly it is essential for the Government to introduce much-needed reforms in severalareas including Land acquisition Competency & Skill Building. In tandem theadministration would do well to streamline processes and accelerate the pace of decisionmaking.
We are confident that if these measures are adopted and if the nation remains unitedour determination and resolve will enable us to overcome the challenges ahead. Yourcompany as always stands by the country and its leadership in this hour of need.
Right from the onset of the pandemic L&T adopted stringent safety measures toensure the safety and wellbeing of its people and stakeholders. As a good corporatecitizen with a social conscience we responded to the humanitarian crisis caused by thevirus with monetary and material assistance. L&T at the group level contributed RS150 crore for the pm CARES fund in FY 2019-20 and further donated medical equipmentincluding personnel protective Equipment worth R 40 crore to states across the country.
Amid widespread concerns about the plight of daily wage earners we took it uponourselves to ensure that the 160000 contract workmen at our project sites received goodcare. We continued to pay them their wages provide food shelter and medical assistancewhile maintaining prescribed Covid 19 preventive & containment protocols. This hasinvolved an outlay of approximately RS 500 crore per month.
As india's leading technology engineering and construction company we are alsoextending expert assistance for the cause. Our construction business has convertedhospitals to covid care centres at six locations around the country. Our array of smartsolutions helps civic administrators in different cities to monitor crowds and alert theauthorities. Your company's public spirited initiatives have been appreciated by variousstate governments.
The year witnessed faltering economic growth and underutilization of capacity due to acombination of contributory factors. Private sector investments already under stresswere further affected by fiscal slippages at the Centre and States and tight liquidityconditions. Consumption spends which hitherto had been a robust driver of economicgrowth lost momentum in FY 2019-20. Expectedly both export earnings and tax collectionswere weak. In its bid to revive the economy the Government initiated several monetary andfiscal measures. Amongst them were a reduction in corporate tax rates re-capitalisationof banks and consolidation within the banking sector initiatives to improve creditavailability faster resolution of stressed assets and the announcement of packages forsectors like real estate and exports.
These steps did lead to some encouraging results. The onset of the pandemic howevernegated these gains dragging real gdp growth down to 4.2% for FY 2019-20 as a whole. Thelockdown imposed towards the end of FY 2019-20 has dealt a severe blow to both demand andsupply. In response the Government has initiated a wide range of stimulus measures.Booster doses of fiscal and monetary resources aimed at improving liquidity have beenannounced providing relief to stressed sections of society and revitalizing economicactivity. While these measures are stemming the slide it is likely that economic growthwill still take a few more quarters to revive fully.
On the global front the world is bracing itself for growing insularity and economicuncertainty. We see a marked slowdown in manufacturing and trade and heightenedgeo-political tensions. The domino effect of the us-China trade dispute is being felt indifferent geographies as more countries begin to view international relations through abipolar lens. Increasingly countries are adopting a protectionist stance in an attempt tosafeguard their own economies. Meanwhile oil prices remained soft due to shiftingdemand-supply positions and rapidly changing geopolitical alignments. This has led tofiscal imbalances in oil producing countries.
It is this volatile situation which the onslaught of the pandemic has roiled further.Lockdowns in country after country have stalled the world's growth engine casting a longshadow of economic uncertainty for some time to come. A few countries are now on the roadto recovery and have sought to re-boot growth by injecting stimulus measures through acombination of monetary and fiscal resources. These accommodative fiscal and monetarypolicies are likely to continue through 2020.
National infrastructure Pipeline (nip)
The Government has formulated a National infrastructure project pipeline of RS 111 laccrore over a 6-year period. Although inadequate given the scale of india's infrastructuredeficit this is a step forward. This project pipeline consists of around 6500 projectsto be collectively funded by Central Government and State Governments to the extent of79%. The remaining 21% is envisaged to come from the private sector. A reading of the Nipindicates that the next few years are likely to see increased public spends in areas ofwater metro rail networks roads renewable energy power transmission and distributionas well as urban infrastructure. Projected investments by the private sector howeverappear a bit optimistic despite corporate tax cuts. Since infrastructure investmentsserve the twin benefits of improving productivity and generating employment we believethat the underlying macro drivers for investments in india remain intact and that theCompany is poised to capitalise on these opportunities in the future.
For most of the year L&T exhibited growth and strength on all key performanceparameters - even in the face of a stressed economic environment. Your Company'sstrategically diversified business portfolio geographical dispersion robust BalanceSheet strong Order Book position and execution strengths have stood L&T in goodstead.
Covid-19 impact: The period leading up to the lockdown and the subsequent stoppage ofall economic activity from 25th March 2020 has adversely affected yourCompany's operations in late FY 2019-20 as well as the better part of Q1 FY 2020-21. Thelockdown was progressively lifted from 14th April 2020 with the initialresumption of operations being conducted under restrictions imposed by local authorities.Currently most of these project sites are active and execution of jobs is progressingwith a reasonable level of labour workforce.
Sub-contracted labour force
The sections of society hardest hit by the prolonged lockdown are daily wage earnersand contract labour images of migrant workers returning to their homes some on footsome by hitch-hiking and a large number through special 'Shramik' trains and busesarranged by the Central Government in coordination with State Governments have beenimprinted on our minds through mainstream and social media. While L&T on its part hastaken measures to provide relief to workmen at our project sites we have not been immuneto the impact of labour disruption. From a sub-contracted labour force of around 225000working at project sites prior to the Covid-19 outbreak the workforce came down to160000 at the beginning of the lockdown and dropped further as project sites wereprogressively reopened. Normalcy is being gradually restored and is expected to stabiliseto near regular levels in the second quarter of FY 2020-21
Group performance overview
In a year overshadowed by uncertainty your Company turned in a creditable performanceand registered growth in key performance parameters. Order inflows which enable the coreEPC business to flourish and grow expanded by 9% over the previous year. Revenues whichdemonstrate the ability of the Company to execute and deliver on customer commitments grewby 8%. Shareholder value was delivered through healthy Profit after Tax which stood at RS9549 crores representing a growth of 7% over the previous year. The total Order Book ofRS 303857 crores as on 31st March 2020 grew by 4% over the previous year-endand provides multi-year revenue visibility to the Company. Revenue growth in the corebusiness was provided by infrastructure Hydrocarbon Heavy Engineering and DefenceEngineering Segments. Businesses in the it and Technology Services Segment which couldtransition with relative ease to a 'work from home' environment grew significantlyaided by inclusion of revenues from an acquisition made in FY 2019-20. The FinancialServices business also registered modest growth even while grappling with constraints oftight liquidity stoppage of disbursements in end-March 2020 and the dominant risk-aversesentiment of the lending community.
It gives me great pleasure to inform you that the Board of Directors has recommended aDividend of RS 18.00 per
Share including interim dividend of RS 10.00 paid before 31st March 2020.
The Company has over the years expanded its international footprint through ageographical diversification and de- risking strategy. While the middle East region hasobviously remained an area of focus the Company has turned its attention to North andEast Africa. We have also looked at Bhutan Sri Lanka Bangladesh and other South EastAsian countries to steadily augment our international business. As things stand themiddle East region constitutes 57% of the international order Book of RS 75038 crores.
Talent management and succession planning
People continue to be the fulcrum of your Company's operations and focused attention isgiven to retention and professional development of talent at all levels. L&T has awell-structured 7-step leadership development program designed to develop leadership atmultiple levels spanning junior through middle to top management. Several initiativesincluding monetary and non-monetary rewards are in place to incentivise performance andprovide our people the impetus to surpass themselves. The top management devotesconsiderable attention to ensuring that employees are given opportunities for professionaldevelopment and are able to grow along with the businesses they work for.
During the year your Company acquired a majority stake in mindtree Ltd. an it-enabledservices company.
This acquisition has helped the services segment of the L&T Group to expand andcontribute to higher revenues and profits. Going forward we are confident that thecontribution of the services businesses will exceed 40 per cent of Group turnover. Theprocess of integrating the staff of mindtree and aligning common interests was completedthrough the active engagement of top management. This is now paying off through improvedperformance and growth. L&T has been steadfastly following its 5-year Strategic planunder the overarching theme of improving the Consolidated Return on Equity (roe). Theimpact of the pandemic and additional provisions in Financial Services business hashowever depressed the roe for FY 2019-20. We are also incubating new age businesses whichare expected to provide growth in the coming years.
Your Company takes a 360-degree view of sustainable development that encompasses thesocial economic governance and financial aspects of an organisation. We have beendisclosing our sustainability performance through our annual Sustainability / integratedreports which are being published for the last 12 years. The reports which serve as ESGprogress score cards also adhere to the Global reporting initiative (Gn) Standards andSustainable Development Goals (sdgs) and are independently verified by a third-partyassurance agency.
Our approach covers a wide spectrum - ranging from progressive reduction of carbonemission intensity at our campuses and project sites water conservation at the locationswe operate in and the phased induction of alternative and recycled substitutes in ouroperations. The health safety and well-being of your Company's staff and all those whowork at our factories and project sites are accorded the highest priority.
Wherever we are and whatever we do we make sure that the communities around us see atangible and durable benefit from our presence. They see it in the shape of better accessto potable water an improved level of sanitation and facilities for health educationand skill building. We believe each of these steps contribute to building a happiercommunity which in turn will lead to a more harmonious society.
The Covid-19 pandemic and its fallout makes it difficult to forecast the future withany degree of certainty. While we are hopeful that the 2nd half of FY 2020-21 will heraldbetter economic and business activity in terms of tendering good liquidity and revival oflabour and supply chains it would be premature to predict the Company's business outcomesfor FY 2020-21. The company is putting in enormous efforts to mitigate the impact of thepandemic and register enhanced performance in FY 2021-22.
At this point in time we see prospects in the areas of Government buildings datacentres healthcare infra airports metro railways water projects including wastewatertreatment and irrigation hydel projects expressways as well as onshore and offshorehydrocarbon projects. We are uncertain however of the timelines when these projects willtake off.
We are all passing through a crisis of unprecedented magnitude and i would like tothank Team L&T as well as our customers vendors and other stakeholders for theconfidence and trust they have reposed in us. I also thank my fellow Board Members fortheir invaluable support in guiding the Company and enabling another year of growth.