The Directors have pleasure in presenting their 71st Annual Report and
Audited Financial Statements for the year ended March 31, 2016.
Particulars 2015-16 2014-15
Rs. crore Rs. crore
Profit before depreciation, exceptional
and extra ordinary items & tax 7127.71 7352.21
Less: Depreciation, amortisation, impairment
and obsolescence 998.88 1009.74
Add: Transfer from Revaluation Reserve - 1.59
Profit before exceptional and
extraordinary items and tax 6128.83 6344.06
Add: Exceptional Items 560.28 357.16
Profit before tax 6689.11 6701.22
Less: Provision for tax 1377.65 1645.04
Profit for the period carried to Balance
Sheet 5311.46 5056.18
Add: Balance brought forward from
previous year 3429.11 333.45
Less: Dividend paid for the previous
year (Including dividend distribution tax) 2.15 2.20
Less: Depreciation charged against
retained earnings 6.14 86.28
Add: Reversal of deferred tax on
depreciation charged against
retained earnings 2.13 29.33
Balance available for disposal 8734.41 5330.48
(which the directors appropriate
Debenture Redemption Reserve 156.50 256.50
Proposed dividend 1699.95 1510.54
Dividend Tax 140.88 134.33
Balance to be carried forward 6737.08 3429.11
Dividend 1699.95 1510.54
The Directors recommend payment of
final dividend of Rs. 18.25 per
share of Rs. 2/- each on 93,14,78,845
CAPITAL & FINANCE
During the year under review, the Company allotted 19,16,784 equity
shares of Rs. 2/- each upon exercise of stock options by the eligible
employees under the Employee Stock Option Schemes.
The Company issued Non-Convertible Debentures (NCDs) worth Rs. 1,000
crore. At maturity, repayment of NCDs worth Rs. 600 crore was also
made. The Company tied up a long-term foreign currency loan of USD 25
million, and also completed part repayment of a foreign currency long
term debt of USD 5.83 million as per schedule. In addition, the Company
prepaid foreign currency loans worth USD 50 million.
As at March 31, 2016 the gross tangible and intangible assets including
leased Assets, stood at Rs. 13,297.13 crore and the net tangible and
intangible assets, including leased assets, at Rs.7,668.59 crore.
Capital Expenditure during the year amounted to Rs. 776 crore.
The Company does not have any unclaimed deposits as of date. All
unclaimed deposits have been transferred to Investor Education &
As the members are aware, the Company''s shares are compulsorily
tradable in electronic form. As on March 31, 2016, 97.90% of the
Company''s total paid up capital representing 91,18,73,781 shares are in
dematerialized form. In view of the numerous advantages offered by the
Depository system as well as to avoid frauds, members holding shares in
physical mode are advised to avail of the facility of dematerialization
from either of the depositories.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
The Company sends letters to all shareholders, whose dividends are
unclaimed so as to ensure that they receive their rightful dues.
During the year, the Company has transferred a sum of Rs.1,51,31,245 to
Investor Education & Protection Fund, the amount which was due &
payable and remained unclaimed and unpaid for a period of seven years
as provided in Section 205C(2) of the Companies Act, 1956. Despite the
reminder letters sent to each shareholder, this amount remained
unclaimed and hence was transferred. Cumulatively, the amount
transferred to the said fund was Rs. 14,56,60,404 as on March 31, 2016.
SUBSIDIARY/ASSOCIATE/JOINT VENTURE COMPANIES
During the year under review, the Company subscribed to/acquired
equity/preference shares in various subsidiary/ associate/joint venture
companies. These subsidiaries include companies in general insurance,
power, real estate, infrastructure and manufacturing sectors. The
details of investments in subsidiary companies during the year are as
A) Shares subscribed/acquired during the year:
Name of the company Type of Shares No. of shares
L&T General Insurance Company Equity 8,50,00,000
L&T Global Holdings Limited, Equity 1,000
United Arab Emirates
L&T Hydrocarbon Engineering Preference 26,00,00,000
L&T Metro Rail (Hyderabad) Equity 4,92,643
L&T Power Development Limited Equity 38,34,00,000
L&T Realty Limited Preference 64,83,00,000
L&T Seawoods Limited Preference 13,22,50,000
L&T Shipbuilding Limited Preference 133,18,60,000
L&T Uttaranchal Hydropower Preference 60,47,50,000
LTH Milcom Limited Equity 1,13,340
Larsen & Toubro Saudi Arabia Equity 625
LLC, Saudi Arabia
Marine Infrastructure Developer Equity 9,990
B) Equity shares sold/transferred during the year:
Name of the Company Number of shares
L&T Finance Holdings Limited 8,52,26,706
L&T Infocity Limited 2,40,30,000
L&T Natural Resources Limited 50,000
L&T Powergen Limited 50,000
L&T Sapura Offshore Private Limited 6,000
L&T Sapura Shipping Private Limited 9,53,11,850
L&T Solar Limited 50,000
L&T-Gulf Private Limited 40,00,016
L&T-Valdel Engineering Limited 11,79,000
Larsen & Toubro International FZE, United Arab 1,829
PNG Tollway Limited 2,15,43,340
JSK Electricals Limited 21,20,040
L&T-Chiyoda Limited 45,00,000
Rishi Consfab Private Limited 27,04,000
Salzer Electronics Limited 26,79,808
The Company has formulated a policy on the identification of material
subsidiaries and the same is placed on the website at
http://investors.larsentoubro.com/Listing- Compliance.aspx. The Company
does not have any material subsidiaries.
C) Performance and Financial Position of each subsidiary/associate and
joint venture companies:
A statement containing the salient features of the financial statement
of subsidiary/associate/joint venture companies is provided on pages
390 to 399 of this Annual Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR
SECURITY PROVIDED BY THE COMPANY
The Company has disclosed the full particulars of the loans given,
investments made or guarantees given or security provided on pages 263
to 265 of this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Audit Committee and the Board of Directors have approved the
Related Party Transactions Policy and the same has been uploaded on the
Company''s website http://
The Company has a process in place to periodically review and monitor
Related Party Transactions.
All the related party transactions were in the ordinary course of
business and at arm''s length. The Audit Committee has approved all
related party transactions for the FY 2015-16 and estimated
transactions for FY 2016-17.
There were no material transactions with related parties during the
STATE OF COMPANY AFFAIRS
The gross sales and other income for the financial year under review
were Rs. 62,821 crore as against Rs. 59,841 crore for the previous
financial year registering an increase of 5%. The profit before tax
from continuing operations including extraordinary and exceptional
items was Rs. 6,689 crore for the financial year under review as
against Rs. 6,701 crore for the previous financial year, registering a
decrease of 0.18%. The profit after tax from continuing operations
including extraordinary and exceptional items of Rs. 5,311 crore for
the financial year under review as against Rs. 5,056 crore for the
previous financial year, registering an increase of 5%.
AMOUNT TO BE CARRIED TO RESERVE
The Company has not transferred any amount to the reserves during the
current financial year.
The Directors recommend payment of dividend of Rs. 18.25 (912.50%) per
equity share of Rs. 2/- each on the share capital.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE
There are no material changes and commitments affecting the financial
position of the Company between the end of the financial year and the
date of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information as required to be given under Section 134(3) (m) read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in
Annexure ''A forming part of this Board Report.
RISK MANAGEMENT POLICY
The Risk Management Committee comprises of Mr. A. M. Naik, Mr. S. N.
Subrahmanyan and Mr. R. Shankar Raman. Mr. A. M. Naik is the Chairman
of the Committee.
The Company has formulated a risk management policy and has in place a
mechanism to inform the Board Members about risk assessment and
minimization procedures and periodical review to ensure that executive
management controls risk by means of a properly designed framework.
A detailed note on risk management is given under financial review
section of the Management Discussion and Analysis on pages 217 to 219
of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee comprises of Mr. Vikram
Singh Mehta, Mr. D. K. Sen and Mr. R. Shankar Raman as the Members.
Mr. Vikram Singh Mehta is the Chairman of the Committee.
The details of the various projects and programs which can be
undertaken by the Company as a part of its CSR policy framework is
available on its website
The disclosures required to be given under Section 135 of the Companies
Act, 2013 read with Rule 8(1) of the Companies (Corporate Social
Responsibility Policy) Rules, 2014 are given in Annexure ''C'' forming
part of this Board Report.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/RESIGNED
DURING THE YEAR
Mr. K. Venkataramanan retired as the Chief Executive Officer and
Managing Director of the Company on September 30, 2015 pursuant to his
superannuation from the services of the Company. The Board places on
record its appreciation of the immense contribution by Mr. K.
Venkataramanan as the Chief Executive Officer and Managing Director of
Mr. M. V. Kotwal retired as the Whole-time Director of the Company on
August 26, 2015 pursuant to his superannuation from the services of the
Company. The Board places on record its appreciation of the immense
contribution by Mr. M. V. Kotwal as a Whole-time Director of the
Mr. Swapan Dasgupta resigned as Nominee Director of the Company on May
15, 2016. The Board places on record its appreciation of the immense
contribution by Mr. Swapan Dasgupta as Director of the Company.
The Board has appointed Mr. Subramanian Sarma as a Non-Executive
Director of the Company w.e.f. August 19, 2015.
During the year the Board has appointed Mr. S. N. Subrahmanyan as
Deputy Managing Director and President of the Company w.e.f October 1,
2015 for a period of 5 years, subject to approval of the shareholders.
The Board has appointed Mr. D. K. Sen as a Whole-time Director w.e.f.
October 1, 2015 for a period of 5 years, subject to approval of the
The Board has appointed Mr. M. V. Satish as a Whole- time Director of
the Company w.e.f. January 29, 2016 for a period of five years, subject
to approval of the shareholders.
The Board has appointed Ms. Naina Lal Kidwai as an Independent Director
of the Company from March 1, 2016 to February 28, 2021, subject to the
approval of the shareholders. Ms. Naina Lal Kidwai, appointed as an
Additional Director, will hold office till the ensuing AGM and is
eligible for appointment.
The Board has appointed Mr. Sanjeev Aga as an Independent Director of
the Company from May 25, 2016 to May 24, 2021, subject to the approval
of shareholders. Mr. Sanjeev Aga, appointed as Additional Director,
will hold office till the ensuing AGM and is eligible for appointment.
The Board has appointed Mr. Narayanan Kumar as an Independent Director
of the Company at its Meeting dated May 25, 2016 with effect from May
27, 2016 to May 26, 2021, subject to the approval of shareholders. Mr.
Narayanan Kumar, appointed as Additional Director, will hold office
till the ensuing AGM and is eligible for appointment.
Mr. S. N. Subrahmanyan and Mr. A.M Naik retire by rotation at the
ensuing AGM and being eligible offers themselves for re-appointment.
Mrs. Sunita Sharma who was appointed as a Director in casual vacancy
caused due to the resignation of Mr. N. Mohanraj holds office till the
conclusion of the ensuing AGM and being eligible offers herself for
It is proposed to re-appoint Mr. R. Shankar Raman as a Whole-time
Director of the Company for a period of 5 years from October 1, 2016 to
September 30, 2021, subject to the approval of the shareholders.
It is proposed to re-appoint Mr. Shailendra Roy as a Whole-time
Director of the Company for the period March 9, 2017 to July 7, 2020,
subject to the approval of the shareholders.
The notice convening the AGM includes the proposal for
appointment/re-appointment of Directors.
The terms and conditions of appointment of the Independent Directors
are placed on the website of the Company
The Company has also disclosed on its website
http://investors.larsentoubro.com/Listing-Compliance.aspx details of
the familiarization programs formulated to educate the Directors
regarding their roles, rights and responsibilities in the Company and
the nature of the industry in which the Company operates, the business
model of the Company, etc.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
This information is given in Annexure ''B'' - Report on Corporate
Governance forming part of this Board Report. Members are requested to
refer to page 79 of this Annual Report.
The Company has in place an Audit Committee in terms of the
requirements of the Companies Act, 2013 read with the rules made
thereunder and Regulation 18 of the SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015. The details relating to the
same are given in Annexure ''B'' - Report on Corporate Governance forming
part of this Board Report. Members are requested to refer to pages 81
to 83 of this Annual Report.
COMPANY POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Company has in place a Nomination & Remuneration Committee in
accordance with the requirements of the Companies Act, 2013 read with
the rules made thereunder and Regulation 19 of the SEBI (Listing
Obligations & Disclosure Requirements) Regulations, 2015. The details
relating to the same are given in Annexure ''B'' - Report on Corporate
Governance forming part of this Board Report. Members are requested to
refer to pages 83 to 85 of this Annual Report.
The Committee has formulated a policy on Director''s appointment and
remuneration including recommendation of remuneration of the key
managerial personnel and other employees, composition and the criteria
for determining qualifications, positive attributes and independence of
a Director. The Committee has formulated a policy on board diversity.
DECLARATION OF INDEPENDENCE
The Company has received Declarations of Independence as stipulated
under Section 149(7) of the Companies Act, 2013 from Independent
Directors confirming that he/she is not disqualified from
appointing/continuing as Independent Director. The same are also
displayed on the website of the Company www.larsentoubro.com
EXTRACT OF ANNUAL RETURN
As per the provisions of Section 92(3) of the Companies Act, 2013, an
extract of the Annual Return in Form MGT-9 is attached as Annexure ''F''
to this Board Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
b) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit of
the Company for that period;
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
d) The Directors have prepared the Annual Accounts on a going concern
e) The Directors have laid down an adequate system of internal
financial controls to be followed by the Company and such internal
financial controls are adequate and operating efficiently;
f) The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and were operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has designed and implemented a process driven framework for
Internal Financial Controls (IFC) within the meaning of the
explanation to Section 134(5) (e) of the Companies Act, 2013. For the
year ended March 31, 2016, the Board is of the opinion that the Company
has sound IFC commensurate with the nature and size of its business
operations and operating effectively and no material weakness exists.
The Company has a process in place to continuously monitor the same and
identify gaps, if any, and implement new and/or improved controls
wherever the effect of such gaps would have a material effect on the
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS
The Nomination & Remuneration Committee and the Board have laid down
the manner in which formal annual evaluation of the performance of the
Board, Committees, Chairman and individual directors has to be made.
It includes circulation of questionnaires to all Directors for
evaluation of the Board and its Committees, Board composition and its
structure, its culture, its effectiveness, its functioning, information
availability, etc. These questionnaires also cover specific criteria
and the grounds on which all Directors in their individual capacity
will be evaluated.
The Individual Directors'' responses on the questionnaire on the
performance of the Board, Committee(s), Directors and Chairman were
analyzed by an independent consultant, to arrive at unbiased
The inputs given by all the Directors were discussed in the meeting of
the Independent Directors held on April 11, 2016, as per Schedule IV of
the Companies Act, 2013. The performance evaluation of the Board,
Committees, Chairman and Directors was also reviewed by the Nomination
& Remuneration Committee and the Board.
DISCLOSURE OF REMUNERATION
The details of remuneration as required to be disclosed under the
Companies Act, 2013 and the rules made thereunder, are given in
Annexure ''D'' forming part of this Board report.
The details of employees receiving remuneration exceeding Rs. 5 lakh
per month or Rs. 60 lakh per annum is provided in Annexure ''G'' forming
part of this report. In terms of Section 136(1) of the Act and the
rules made thereunder, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any Shareholder
interested in obtaining a copy of the same may write to the Company
Secretary. None of the employees listed in the said Annexure is related
to any Director of the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL
The Company has complied with Secretarial Standards issued by the
Institute of Company Secretaries of India on Board Meetings and Annual
PROTECTION OF WOMEN AT WORKPLACE
The Company has formulated a policy on ''Protection of Women''s Rights at
Workplace'' as per the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition & Redressal) Act, 2013. This has
been widely disseminated. There were no cases of sexual harassment
received by the Company in 2015-16.
There has been no material change in the Employee Stock Option Schemes
(ESOP Schemes) during the current financial year. The ESOP Schemes are
in compliance with SEBI (Share Based Employee Benefits) Regulations,
The disclosures relating to ESOPs required to be made under the
provisions of the Companies Act, 2013 and the rules made thereunder and
the SEBI (Share Based Employee Benefits) Regulations, 2014 are provided
on the website of the Company www.larsentoubro.com.
A certificate obtained from the Statutory Auditors, confirming
compliance with the Companies Act, 2013 and the above Regulations is
reproduced below :
Pursuant to the SEBI (Listing Obligations & Disclosure Requirements)
Regulations, 2015, a Report on Corporate Governance and a certificate
obtained from the Statutory Auditors confirming compliance, is provided
in Annexure ''B'' forming part of this Board Report.
As per the provisions of Section 177(9) of the Companies Act, 2013
(''Act''), the Company is required to establish an effective Vigil
Mechanism for directors and employees to report genuine concerns.
The Company has a Whistle-blower Policy in place since 2004 to
encourage and facilitate employees to report concerns about unethical
behaviour, actual/suspected frauds and violation of Company''s Code of
Conduct or Ethics Policy. The Policy has been suitably modified to meet
the requirements of Vigil Mechanism under the Act. The policy provides
for adequate safeguards against victimisation of persons who avail the
same and provides for direct access to the chairperson of the Audit
Committee. The Audit Committee of the Company oversees the
implementation of the Whistle-Blower Policy.
The Company has disclosed information about the establishment of the
Whistle Blower Policy on its website
http://investors.larsentoubro.com/corporategovernance.aspx. During the
year, no personnel has been declined access to the Audit Committee,
BUSINESS RESPONSIBILITY REPORTING
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
As per Regulation 34 of the SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015, a separate section on Business
Responsibility Report forms a part of this Annual Report (refer pages
18 to 35).
The detailed Corporate Sustainability Report is also available on the
Company''s website http://www.larsentoubro.com/corporate/sustainability.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS
During the year under review, there were no material and significant
orders passed by the regulators or courts or tribunals impacting the
going concern status and the Company''s operations in future.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Section 129(3) of the Companies Act, 2013 and
Regulation 34 of the SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015 and prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India (ICAI), in this regard.
The Auditors report to the shareholders does not contain any
qualification, observation or adverse comment.
SECRETARIAL AUDIT REPORT
The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian &
Co., Practicing Company Secretaries is attached as Annexure ''E'' to this
The Secretarial Auditor''s report to the shareholders does not contain
The Company''s auditors M/s. Sharp & Tannan, (firm registration number
109982W) have already completed more than ten years as Statutory
Auditors of the Company.
In accordance with provisions of Section 139 of the Companies Act, 2013
and the Companies (Audit and Auditors) Rules, 2014, the Company had
appointed them for a period of two years from conclusion of 70th Annual
General Meeting till the conclusion of 72nd Annual General Meeting. A
proposal for ratifying their appointment from the conclusion of the
71st AGM till the conclusion of the 72nd AGM has been included in the
Notice of the ensuing AGM.
In view of the mandatory rotation of auditor requirement and to ensure
smooth transition during this period, M/s. Deloitte Haskins & Sells LLP
[ICAI Registration No. 117366W/W-100018] was appointed as Statutory
Auditors for a period of 5 continuous years from the conclusion of 70th
Annual General Meeting till the conclusion of 75th Annual General
Meeting of the Company. A proposal for ratifying their appointment from
the conclusion of the 71st AGM till the conclusion of the 72nd AGM has
been included in the Notice of the ensuing AGM.
Both the Auditors will be jointly and severally responsible during the
financial year 2016-17.
Sharp & Tannan and Deloitte Haskins & Sells LLP, have informed the
Company that their appointment if made would be within the limits
prescribed under Section 141 of the Companies Act, 2013.
The Auditors have confirmed that they have subjected themselves to the
peer review process of ICAI and hold valid certificate issued by the
Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their
independence as well as their arm''s length relationship with the
Company as well as declaring that they have not taken up any prohibited
non-audit assignments for the Company.
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified
under Section 143(12) of the Companies Act, 2013.
Pursuant to the provisions of Section 148 of the Companies Act, 2013
and as per the Companies (Cost Records and Audit) Rules, 2014 and
amendments thereof, the Board, on the recommendation of the Audit
Committee, at its meeting held on May 25, 2016, has approved the
appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost
Auditors for the Company for the financial year ending March 31, 2017
at a remuneration of Rs. 11 lakhs.
The Report of the Cost Auditors for the financial year ended March 31,
2016 is under finalization and will be filed with the MCA within the
A proposal for ratification of remuneration of the Cost Auditor for
financial year 2016-17 is placed before the shareholders.
Your Directors take this opportunity to thank the customers, supply
chain partners, employees, Financial Institutions, Banks, Central and
State Government authorities, Regulatory authorities, Stock Exchanges
and all the various stakeholders for their continued co-operation and
support to the Company. Your Directors also wish to record their
appreciation for the continued co-operation and support received from
the Joint Venture partners/ Associates.
For and on behalf of the Board
A. M. Naik
Group Executive Chairman
Mumbai, May 25, 2016