Robust self-belief and resilience – the key to success in times of challenge.
Robust self-belief and resilience are the key to success in
times of uncertainty and challenge. This spirit has helped
India contend with an unprecedented pandemic and,
in rapid succession, a war in Europe with its attendant
disruptions. It is indeed creditable that amidst these macroeconomic and geopolitical upheavals, India has
managed to stay the course in its quest for growth. Your
Company has also performed well while operating within
the given constraints. At this juncture, we wish to reiterate
our commitment to advance the interests of our country
and express our solidarity with the nation and
FY 2021-22 was an economic roller coaster with the
impact of recurring bouts of COVID-19 and global disquiet
counter-balanced to some extent by Country’s economic
resilience. Regular government spending throughout
the year complemented by liquidity easing measures
by the Reserve Bank of India prevented the risk of an
economic meltdown and helped bolster the confidence of
households and private companies.
An improved borrowing programme for the Centre and
State Governments also meant that the spending proposals
envisaged in the Budget continued unhindered. Most of
the high frequency, mobility and service indicators gained
momentum as the easing of pandemic curbs saw demand
regaining lost ground before geopolitical tensions erupted
to set the clock back once again.
After years of stagnation, India witnessed a pick-up
in exports in FY 2021-22. Consequently, the economy
expanded at 8.7% in real GDP terms vis-à-vis a contraction
in the previous financial year.
India is expected to post top quartile growth among
emerging nations in the medium term. Challenges
hovering on the horizon include runaway oil prices, supply
chain disruptions and the US rate hikes affecting capital
flows into India. Despite these roadblocks, however, our
view is that the bold structural reforms carried out by
the Government in the last couple of years will pave the
way for improved quality of growth. A slew of incentive
schemes launched by the Government should stimulate
manufacturing and exports in our run up to becoming a
USD 5 trillion economy. Leveraging its expertise in high-tech manufacturing, your Company is well-positioned to
take advantage of the opportunities as they unfold.
India’s FY 2022-23 Budget focusses on consolidation with
a capex-driven infrastructure thrust where the Government
will do the heavy lifting and the private sector steps in to
play its part. Most of the initiatives undertaken, ranging
from NIP to NMP, creation of DFI, the PLI scheme, the
public procurement initiatives as well as the renewed PPP
models, have an overarching infrastructure focus. Clearly,
they are directed to coax capex back into play. We hope
that a reasonably stable domestic macro environment
and an equable socio-economic climate will enable the
Government to realise the vision envisaged in the NIP
blueprint. Public and private investments working in
tandem should also resuscitate India’s Investment / GDP
ratio which has been stagnant.
Since infrastructure investments serve the dual purpose of
driving productivity and generating employment, we believe
the underlying macro drivers for growth remain intact. Your
Company is poised to capitalise on these opportunities as
Internationally, we expect the GCC economy to remain
buoyant with a strong capex fuelled by prevailing oil prices.
Infrastructure and hydrocarbon opportunities are likely
to open up in the African sub-continent on the back of
enhanced bi-lateral/multi-lateral funding support.
Group Performance Review
In a year marked by several disruptions, your Company
turned in a creditable performance and registered
appreciable recovery across key performance parameters.
Our Order Inflow for the year at ₹192,997 crore was
achieved on the back of major domestic and international
order wins in Hydrocarbon and Infrastructure. Although
the domestic ordering environment was a shade below
expectations, the international environment, especially in
the Middle East, is a cause for cheer.
The L&T Group recorded revenues of ₹156,521 crore during
FY 2021-22, registering a growth of 15%. The growth was
aided by improved project execution and manufacturing
activity further complemented by a strong pick-up in the
services businesses amidst a volatile macro backdrop.
As on March 31, 2022, the Order Book at ₹ 357,595 crore
is large, growing and diversified. The Infrastructure segment
has a 73% share of the consolidated Order Book. The Order
Book registered a growth of 9%, on the back of orders
secured in projects businesses.
A healthy Operational Profit After Tax at ₹ 8,572 crore,
representing a growth of 23% over the previous year.
Thanks to robust operational cash flows, our capital employed metrics have reported progress, leading in turn to
improved return ratios for the Group. The Group has repaid
borrowings during the year resulting in improved
Your Company continues to focus on shareholder value
creation by divesting non-core assets, capturing cost
efficiencies and leveraging technology for productivity gains.
Our strategically diversified business portfolio, geographical
dispersion, robust balance sheet and strong Order Book
are reliable signposts pointing to a brighter future. Further,
the Company’s proven execution strengths and committed
workforce are helping it to seamlessly transition to a more
digitally evolved work environment. This should enable the
business to thrive once the immediate challenges posed by
pandemic and the geopolitical uncertainties are behind us.
It gives me great pleasure to inform you that the Board of
Directors has recommended a final dividend of ₹ 22 per
share for FY 2021-22.
The Company’s policy of aiming for wider geographic
dispersal continues to yield positive results while de-risking
exposure. While the Middle East region remains an area of
focus, your Company has expanded its outreach to several
countries in Africa as well as South East Asia. Currently, the
Middle East region constitutes 76% of the international
Order Book of ₹ 95,227 crore.
Our Strategic Five-year Plan christened ‘Lakshya 2026’,
continues to steer your Company’s growth. Simultaneously,
it also responds with agility to flux in the business
environment. This year we launched Lakshya 2026, built
around the following themes:
- Value accretive growth in our current business portfolio
- Exit from non-core businesses
- Developing innovative business offerings to ride the
energy transition wave
- Scaling up Digital and e-commerce businesses
- Business sustainability through sharper focus on ESG and
shareholder value creation
We are targeting Group Revenues of ₹ 2.7 lakh crore and
ROE of 18%+ by FY 2025-26
Training and Talent Management
People are at the heart of our successes and our continuing
endeavours to do better. Our HR policies are crafted to ensure
professional growth while contributing to the employee’s
sense of pride and well-being. We also leverage technologies
as we anticipate and adapt to changing requirements. For
instance, our digitalisation initiatives enabled us to provide
learning experience to our employees, even as they worked
remotely during multiple lockdowns.
I am very happy to inform you that this is the maiden issue of
our Integrated Annual Report, bringing together our financial
and sustainability performance across multiple parameters.
While the world seems to have suddenly woken up to the
perils of climate change, for your Company sustainability
is nothing new. We have been at the forefront of many
sustainability initiatives long before they were mandated by
law. Since 2008, 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 Zero target of 2035 and 2040 respectively. We
are already present in EPC Solar and Water space and are
now actively looking at expanding our footprint in Green
Hydrogen and Energy Storage. With more and more countries
signing up for time-bound zero emission targets, lucrative
business opportunities should emerge for your company in
green hydrogen, storage solutions, renewables and the world
of data infrastructure.
With regard to governance, the Company’s core values
pivot around the principles of independence, transparency,
accountability, responsibility, compliance, ethics and trust. We
will continue to uphold the value systems which have been the
traditional hallmark of Larsen & Toubro for over eight decades.
As stated in the past, I wish to reiterate that our defence
business does not manufacture explosives or ammunition
of any kind, including cluster munitions or anti-personnel
landmines or nuclear weapons or components for such
munitions. The business also does not customise any delivery
systems for such munitions.
We live in an age of unpredictability. Just when it appeared
that the world had come to terms with the pandemic and
that the worst was behind us, war broke out in Europe,
dashing hopes of achieving the stability essential for growth.
In the interdependent world we live in, conflagrations are
no longer confined to the boundaries of the combatant
countries. This has disrupted the global supply chains and
triggered an alarming spike in prices. The consensus view is
that prices of various commodities would remain 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 digital technologies. These technologies are
irrevocably changing the way we work and interact with each
other. Also, the IT spends are possibly the only deflationary
force in today’s inflationary world. Another positive result
has been a heightened awareness of sustainability and a
more rigorous emphasis on Environment Protection, Social
Responsibility and Governance frameworks.
I would like to thank our employees, our customers, supply
chain partners and the Government for their contribution,
directly and indirectly, to our growth. I also thank my fellow
Board Members for their invaluable support in guiding the
Company through turbulent times.
My special thanks to all our shareholders for the trust you
have reposed in us. You remain an invaluable pillar of
strength, and I look forward to your continued support in our
journey towards setting higher levels of excellence.
My heartfelt greetings to you all as India celebrates
‘Aazadi ka Amrit Mahotsav’.