It gives me great pleasure to welcome you to the 72nd Annual General Meeting of your Company.
This meeting is indeed a special one for me – a milestone in my long career. Although I will continue to address you in the years ahead as Chairman, this is the last time I will be doing so in an Executive capacity.
I take this opportunity of journeying back along the road I have travelled for 53 years, with special focus on the last 18 when I have been privileged to lead the Company.
It was in 1965 that I walked through the gates of Larsen & Toubro's Powai complex, with an application in my hand and a dream in my heart.
All through college, my ideal career destination was L&T, for it was only here that my career aspirations as an engineer could converge with my passion to serve the nation. I consider it my good fortune that I could join the company I had dreamt about, and eventually attain a position where I could reshape that very dream.
Beginning in the 1960s, and over the next five decades, the L&T story has been woven into India's larger narrative of growth. The Company has provided the technological impetus and manufacturing muscle for virtually every venture in nuclear power, space research, defence, hydrocarbon…. Think of the names that strike a patriotic chord – Akash, Prithvi, Agni, BrahMos, Rohini, SLV-3, ASLV, PSLV, Chandrayaan, Mangalyaan, Mumbai High… the roll call of national triumphs is long, and your Company was part of them all.
The work was hard and not immediately rewarding. I used to put in long hours, often returning for the night shift after completing an earlier shift. My role model was my father. He was a teacher and freedom fighter who had dedicated his life in the service of the rural poor. As an engineer, I felt I could best continue that family tradition by building products and projects that would help my country stand tall.
In the 60s, India set its sights on tapping the energy of the atom. One of L&T's earliest nationally significant assignments was to build India's first indigenous nuclear reactor for the Rajasthan Atomic Power Plant. Over the years, we remain the dominant player in the industry, having supplied 18 nuclear reactors.
When India successfully propelled the Tricolour into space, it was a euphoric moment for your Company too. We have supplied mission-critical systems and components for India's space programme. In February this year, when ISRO launched 104 satellites on a single rocket, your Company was an integral partner in this world record.
The world respects strength. If India's voice is to be heard on the world stage, economic growth must be bolstered by military muscle. Since 1999, we have placed special emphasis on expanding your Company's capabilities in design and manufacturing of defence equipment. We are one of the largest private sector partners to India's defence forces. We contributed to India's first nuclear-powered submarine, built a range of missiles and weapon systems and recently won an order for 100 artillery guns of 155mm/52 calibre – all of which play a part in protecting our independence.
In the early 1990s, your Company became the first in India's private sector to build platforms for oil & gas at Mumbai High. Our track record since then includes offshore and onshore projects that set global benchmarks for scale and speed of execution. Recently, we ventured into the first deep water project on the east coast – another significant step on the long road to help India achieve energy security.
Our association with infrastructure goes back over seven decades. But its full potential was only realized when we raised the bar in terms of speed, scale and complexity. Our entrepreneurial inputs have made a significant difference: in just 11 years, the infrastructure business grew approximately 20 times and profits went up 45 times. Your Company's unmatched technological prowess and its unwavering commitment to national causes is why it's called the builder of 21st Century India. Highlights include: airports in Mumbai, Delhi, Bengaluru, Hyderabad and Kochi; metro systems in Delhi, Mumbai, Hyderabad, Bengaluru, Chennai, Lucknow and Kochi; rail corridors, bridges and modern residential and commercial complexes.
Your Company has also evolved into the industry leader in water treatment and distribution and waste water treatment, and participates in the National Mission for Clean Ganga.
The IT vision that we articulated for your Company envisaged transforming an internal wing of the parent company into a market-facing, customer-centric organisation – now known as LTI, and placing it on track to accelerated growth. It also meant carving a new business out of embedded engineering services and developing it into a stand-alone company – L&T Technology Services. Both companies are now publicly listed. Their expertise across advanced technology platforms enables your Company to contribute significantly to the Prime Minister's Digital India programme, and build the Smart Cities of the future.
Your Company has taken Brand India beyond our shores, and given it a high-tech dimension. Soon, if you were to take the metro in Doha or Riyadh or Mauritius, you will be using infrastructure built by your Company. We also export equipment and products to over 30 countries – including the US, UK, Canada and even China. Overseas revenues today account for over 30% of your Company's total turnover. All this is the outcome of the international thrust that we initiated two decades ago.
The hallmark of leadership is its response to challenge. In the latter part of 2001, the unique professional character of your Company was threatened as it faced the imminent prospect of being taken over by a business house. It took astute leadership to turn conflict into a win-win solution. The business group obtained what it was looking for – the cement business, and your Company divested a business it had all along intended to exit. This had other positive outcomes too: formation of the employees' foundation ring-fenced your Company against future challenges; your Company became AAA rated; reduction in equity enhanced value; and stock options boosted employee morale.
Soon after I took over the reins as CEO, we initiated a process to co-create a Vision Statement for the Company, premised on the belief that value-creation can go hand in hand with nation-building. We also drew up a strategic roadmap – LAKSHYA – which ensured that we continuously re-examine our portfolio through the lens of emerging market realities.
The results speak for themselves. Between 1999 and 2017, Group revenues grew from ₹5000 crores to nearly ₹1,20,000 crores on a like-to-like basis. This surge, achieved entirely through organic growth, has few parallels in corporate India. In the same period, market cap climbed from around ₹2000 crores to around ₹1,60,000 crores at a CAGR of nearly 28 % Last year, your Company performed well despite macro-economic headwinds, with Profit After Tax growing by 43% to reach ₹6,041 crores.
Side by side with value creation, your Company also helps in meeting a national need – job creation. The Group provides direct employment to around 90,000, and engages contract labour of close to 3.5 lakh – cumulatively touching the lives of millions of families. Through structured training, your Company is also transforming raw talent into technocrats that are the envy of industry.
Our emphasis on shareholder value continues in sharp focus. In the last decade, we have declared four bonus issues: 1:1 in 2006, 1:1 in 2008, 1:2 in 2013 and 1:2 in 2017. While all our shareholders have good reason to smile, our ESOPs have also helped your Company contain attrition at senior levels.
Inclusive growth alone is sustainable growth. I grew up in a village in south Gujarat and although I have spent all my working life in a metropolis, my heart still beats for the India beyond urban boundaries. Community development has always been high on my agenda.
Your Company's CSR expenditure exceeds the government mandate – which is 2% of PAT. Our focus is on Water and Sanitation, Healthcare, Education and the need of the hour – Skill-building. In addition, we have fostered a culture of 'giving' within the organisation. The L&T Public Charitable Trust is one of the few in the country to be funded by employees, with matching grants from your Company.
I have always believed that succession planning is vital for an organisation's sustainability. In 2014, I had indicated that Mr. S. N. Subrahmanyan would be my likely successor. A Board decision to this effect was publicly announced in April this year, and accordingly on July 1, 2017, he was elevated to CEO & Managing Director in a transparent, well-calibrated demonstration of leadership transition – one of the smoothest in the industry.
Your Company's seven-stage Leadership Development Programme culminates in personal mentoring by the Chairman. In addition to Mr. Subrahmanyan, I have mentored most of the members of the current leadership team, and am engaged in mentoring 25 more top executives. Rest assured, your Company
is in very good hands.
In conclusion, I would like to thank my fellow Board Members, L&T-ites and all other stakeholders who have collectively enabled profitable growth of your Company.
I pray to God almighty that your Company forever remains able, willing, value-driven and committed to building the glorious India of our dreams.