80 YEARS OF LEADING THE CHANGE

80 YEARS OF LEADING THE CHANGE
2018 marks the 80th anniversary of Larsen & Toubro.
The tiny partnership firm set up on May 1, 1938 is now India’s front-ranking engineering & construction conglomerate, operating at the upper end of the technology spectrum. Over the last eight decades, your Company has kept pace with successive waves of technological changes, and evolved in tune with the needs of the nation.
Today, emerging technologies, disruptive business models and rising customer expectations are reshaping the way business is done, and we are responding to these developments by enhancing our processes, and expanding our offerings. Your Company is, in every sense, leading the change.
When your Company began its journey, the idea of India had not yet taken political shape. Nine years later, the flag of freedom was unfurled, and since then we have played our part while a fledgling nation found its feet, and grew into a vibrant, sometimes vociferous but robust democracy – the world’s largest.

 

Building the Nation, Creating Value

Your Company believes that its primary objective of creating value for its stakeholders goes hand in hand with the larger mission of nation building.

In the early days, when the building blocks of India’s economy were being put in place, we participated in virtually every major national endeavour in vital sectors – power (thermal and nuclear), chemical, fertilizer, oil & gas, mining, cement, steel, infrastructure, and so on.

Over the decades, as the economy shifted gears, we propelled ourselves higher up the value chain, augmenting our capabilities and adding engineering, design and project execution expertise to manufacturing capability.

While we built the projects that built the nation, we simultaneously ensured that our stakeholders stood to gain significantly from these prestigious engagements. In the last two decades, our focus on shareholder value has been even sharper. Market capitalization, which stood at Rs. 2,000 crore in 1999 has surged to over Rs. 1,89,000 crore at present.

 

Engineering a Paradigm Shift

Your Company is helping in altering global perceptions of the country. Years ago, it was thought that high-tech engineering equipment could be made available in India only from the West or the Far East. We rejigged the compass, and commenced manufacturing some of the world’s advanced equipment for refineries, petrochemical projects, aerospace industry and power plants, including nuclear. Many of these are now installed in plants around the world, including countries such as USA, Canada, UK, China and Australia. 

Currently, your Company’s engineers are working alongside their global counterparts on an experimental fusion device, named ITER, which is one of the most ambitious energy projects in the world today. When complete, the ITER cryostat, being manufactured at your Company’s facility in Hazira, will be the largest high-vacuum pressure vessel ever built. It will be crucial to advancing fusion science and paving the way for the fusion power plants of tomorrow.

Side by side with these forays, your Company’s construction teams are the country’s flag-bearers at prestigious projects overseas – including mass rapid transit systems in Saudi Arabia, the GCC countries, Mauritius and Bangladesh. We are also building further on our presence in Africa and South-East Asia.

EPS

Next Generation Infrastructure

NGI

The Honourable Prime Minister of India has called for ‘next generation infrastructure’ as part of his sweeping development push. As India’s largest infrastructure company, we have the expertise and experience to help launch the nation into a new orbit of growth. We believe India needs an infrastructure revolution, even more momentous and far-reaching than the Green and White revolutions which preceded it. High quality infrastructure can have a profoundly transformative effect. It can improve efficiencies, drive growth, and equally important, offer our country’s citizens homes, workspaces, transport systems and utilities they can be proud of.

‘Make in India’ Track Record

For your Company, ‘Make in India’ began decades ago. In the early 1970s, we turned a new page in the history of Indian industry by manufacturing India’s first indigenous nuclear reactor. Since then, almost all of India’s nuclear reactors have come out of your Company’s facilities. So too has an array of advanced equipment for critical sectors, including India’s first indigenous hydrocracker reactor and giant oil & gas process platforms. 

In the defence sector, ‘Make in India’ spells the difference between assurance and uncertainty, and the defence platforms and weapons systems which your Company offers carry an invaluable assurance – indigenous manufacture and life-cycle support.  

Capability building in defence cannot be achieved overnight. It entails long-term engagement, sustained levels of investment and periodic upgrading of technologies.

Your Company has stayed the course, and emerged as one of the largest private sector partners in the defence effort.

In addition to the dedicated defence facility at Talegaon near Pune, we have set up an Armoured Systems Complex in Hazira – the first of its kind in India’s private sector.

MTR

Digital Disruption

DD

The digital onset has changed our everyday lives, bringing in new levels of connectivity and convenience. We believe that even greater, more fundamental changes await us in a digital universe.

Your Company is cued in to new age technologies, such as Artificial Intelligence, robotics and machine learning. We are rapidly inducting digital technologies into our own operations, and have secured multiple benefits, including better asset utilisation, improved labour productivity and sourcing efficiencies though the use of the Internet of Things and other digital solutions.

Our digitalisation journey will extend deep into the organisation and progressively cover additional functions. Your Company’s subsidiaries – L&T Infotech and L&T Technology Services are our partners in this initiative, and we expect to continue harvesting the wide-ranging benefits of digitalisation in the coming years.

Smart World, Smarter Future

The Smart City stands at the convergence of the physical and the digital, and given your Company’s prowess in both domains, we are uniquely positioned to collaborate with the Government and play the role of a Master Systems Integrator.

A growing number of cities in India – Mumbai, Nagpur, Pune, Visakhapatnam and Raipur – have already adopted elements of smart city infrastructure. This includes intelligent traffic management and surveillance systems, smart electric grids and lighting, Wi-fi networks, fibre optic cabling and transport systems. When these individual elements are fit into a mosaic, our citizens will experience the connectivity, mobility and security of a smart future.

Reimagining & Reinventing Ourselves

The ability to anticipate the future and respond proactively is a strategic asset.

In 1999, your Company formulated its first, full-fledged Vision Statement, and subsequently drew-up a 5-year strategic plan which for the first time, mapped the direction of growth and laid down the agenda for change. These successive 5-year plans, christened LAKSHYA -1, 2 and 3 – were instrumental in enabling your Company to sustain its momentum of profitable growth despite the ups and downs of the economy. With each consecutive plan, the corporate structure of your Company also underwent changes in the light of changing markets, technologies and customer expectations. We divested businesses which were not aligned to our core, and sought out businesses where we could add greater value.

Periodically, the concept of ‘core’ itself is revisited to ensure that your Company remains future-ready.

Re-energising L&T’s Unique Character

Your Company’s success in leading the change rests on its ability to determine its own destiny – as an independent and professionally managed organisation. This unique character of your Company was endangered between the late 1980s and early 2000 by takeover threats.

However, astute leadership and strength of conviction turned conflict into a win-win solution which benefitted all concerned. There were other positive outcomes too: a newly- formed employees’ foundation ring-fenced your Company against future takeover threats; your Company became AAA rated; a reduction in equity enhanced the Company’s value and stock options boosted employee morale.

Performance at a Glance

Your Company has turned in a commendable performance on key financial parameters in 2017-18. Even though awarding of infrastructure projects continued to be unpredictable in terms of timelines, we registered significant growth. The unexecuted Order Book at the end of 2017-18 stands at Rs. 2, 63,107 crore which provides good revenue visibility for the future. Your Company registered a 9.5% growth in revenues at Rs. 1,19,862 crore and the Profit After Tax (PAT) recorded an all-time high of Rs. 7, 370 crore – representing a 22% increase over PAT of 2016-17.

PAG

Outcome-focused Social Responsibility

OSR

‘Unity in diversity’ enriches us as a nation but an underlying disparity diminishes us as a society.

At L&T, we have a history of doing our bit to promote inclusive growth. Over 50 years ago, we had set up a Welfare Centre in Mumbai for the poor and disadvantaged. Since then, in tandem with the growth of your Company, we have extended our social outreach and augmented the services we offer.

In addition to health clinics, we have also set up skill training centres to train youth from the disadvantaged sections of society, and pave the way for gainful employment.

Last year, your Company’s total spends on CSR initiatives exceeded the recommendations set out in the Company’s Act 2013. We believe that meaningful CSR must go far beyond ‘feel-good philanthropy’. Your Company’s CSR teams are out on the field, engaging with communities around the country. Our outcome-focused approach ensures that CSR outlays are rigorously monitored and the results measured against set targets – so that the next round of investment yields even better results.

 

I would like to conclude by thanking our shareholders who have joined us in our 80-year journey. I thank Team L&T, our customers and other stakeholders who have made it possible for your Company to maintain its trajectory of growth during a challenging phase of the Indian economy. I also wish to thank my fellow Board members for their invaluable support.

On our 80th anniversary, we reaffirm our commitment to the cause we have championed all these years – of building a new India.

Twenty years from now, your Company will mark its centenary, and nine years later, India will celebrate hundred years of freedom. As we look forward to these milestones, the words of your Company’s anthem resonate with us at this juncture:

‘Jiski mitti se paida hue hum
Karz hum us zameen ka chukayen
Haath mein haath dekar badhe hum
Jab talak manzilen mil na jaye’

(We will redeem the debt we owe to the land we were born in. 
We will walk hand in hand until we reach our goals.)

Jai Hind

This does not purport to be a record of the proceedings of the Annual General Meeting of Larsen & Toubro Limited held on August 23, 2018.

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