A. M. Naik
Chairman & Managing Director
Dear Shareholders A multiplicity of business, economic and political factors made the year gone by among the most challenging in recent times. The global economy is seeking to recover from uncertainties centred on the European Union. Domestically, a deterioration in macroeconomic indicators and a marked deceleration in the investment momentum aggravated bearish sentiments in the capital markets. Infrastructure sectors have been hampered by resource constraints and other issues. Investment decisions, as a result, have seen prolonged deferment, with only a few projects being awarded. It is heartening, however, that the intrinsic strengths and embedded characteristics of the Indian economy still remain positive. GDP growth, at 6.5%, though sharply down from the levels that prevailed a couple of years back, still has the potential to revive.
Performance Overview Against this backdrop, your Company has successfully steered a steady course and consolidated its position as India’s leading E&C player. Fresh Order Inflows at ` 70,574 Cr enabled the year-end unexecuted Order Book position to increase by 11% to ` 145,723 Cr, an all-time high for the Company. The slowdown in orders from the domestic market was partially compensated by growth in international orders, mainly from the Middle East region. International orders accounted for 18% of the full year’s Order Inflow. L&T ensured on-track execution of projects that have been committed for delivery. This is reflected in the robust revenue of ` 53,171 Cr, an increase of 21% over FY11. Profit after tax, excluding exceptional and extraordinary items at ` 4,413 Cr, translates to an increase of 20% over the previous year. At the group level, your Company recorded net revenues of ` 64,313 Cr, an increase of 24% over FY11. Consolidated
PAT, excluding exceptional and extraordinary items rose by 10% to ` 4,649 Cr during FY12. It gives me pleasure to announce that your Company has recommended a dividend of ` 16.50 per equity share on a face value of ` 2 per share for the year. The corresponding dividend during the previous fiscal stood at ` 14.50 per equity share. Internationalisation Your Company is augmenting its presence in existing international markets such as Middle East and South East Asia Regions and expanding its footprints in new geographies like Australia, CIS and select African countries. New offices have been set up at key locations such as Perth and Istanbul. A multi-cultural leadership team is being built through induction of expatriates with local knowledge, customer intimacy and domain expertise. Capacity Augmentation Over the last few years, your Company has built manufacturing capacities in areas of strategic significance and in low cost regions. Production at the state of the art manufacturing facilities for supercritical boilers and turbines, which were commissioned over a year ago, has been streamlined - thus enhancing productivity. This has been achieved through increased indigenisation of manufacturing processes. Facilities for manufacture of critical piping and Electrostatic Precipitators have recently been commissioned. A new switchgear manufacturing unit has been set up in Vadodara which is expected to lower cost of production. Greenfield and brownfield expansion of the manufacturing units for Low and Medium voltage electrical control panel are nearing completion in Ahmednagar (Maharashtra) and Coimbatore (Tamil Nadu). A shipyard capable of manufacturing a variety of specialised defence and commercial vessels is under commissioning. While some of the investments are capital intensive, the Company sees long term prospects for sustainable growth in these areas. Talent Management People are critical to L&T’s growth and enduring success. Your Company has institutionalized a 5 Step Leadership Development initiative in association with a global consultancy firm to ensure a robust leadership pipeline. An expanded...
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