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Director's Report
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Larsen & Toubro LtdIndustry : Engineering - Turnkey Services
BSE Code:500510
ISIN Demat:INE018A01030
Book Value(Rs):416.49
NSE Symbol:LT
Div & Yield %:1.3
Market Cap (Rs Cr.):194061.25
P/E(TTM):14.78
EPS(TTM):93.53
Face Value(Rs):2
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Dear Members,

The Directors have pleasure in presenting their 75th Annual Report and Audited Financial Statements for the year ended 31st March 2020.

FINANCIAL RESULTS:

Particulars 2019-20

2018-19

Rs crore

Rs crore

Profit Before Depreciation, exceptional items & tax 7379.43 8576.66
Less: Depreciation, amortization, impairment and obsolescence 1020.51 999.55
Profit before exceptional items and tax 6358.92 7577.11
Add: Exceptional Items 626.99 1642.35
Profit before tax 6985.91 9219.46
Less: Provision for tax 961.15 2271.13
Profit for the year from continuing operations 6024.76 6948.33
Profit before tax from discontinued operations 865.38 812.40
Less: tax expense of discontinued operations 210.93 269.34
Net profit after tax from discontinued operations 654.45 543.06
Net profit after tax from continuing operations and discontinued operations 6679.21 7491.39
Add: Balance brought forward from the previous year 15046.99 14250.01
Less: Business combination impact

-

3291.90
Less: Ind AS 115 transition adjustment

-

704.04
Less: Ind AS 116 transition adjustment 3.97

-

Less: Dividend paid for the previous year (Including dividend distribution tax) 2754.94 2596.78
Less: Interim dividend paid during the year 1403.89
Less: Loss on remeasurement of the net defined benefits plans / Equity instruments through Other Comprehensive Income 512.96 20.37
Balance available for disposal (which the Directors appropriate as follows) 17050.44 15128.31
Less: Debenture Redemption Reserve 93.27 81.32
Balance to be carried forward 16957.17 15046.99

STATE OF COMPANY AFFAIRS:

The total income for the financial year under review was Rs 85,192 crore as against RS 84,999 crore for the previous financial year, registering an increase of 0.23%. The profit before tax from continuing operations including exceptional items was RS 6,986 crore for the financial year under review as against RS 9,219 crore for the previous financial year, registering a decrease of 24%. The profit after tax from continuing operations including exceptional items was RS 6,025 crore for the financial year under review as against RS 6,948 crore for the previous financial year, registering a decrease of 13%.

Amount to be carried to reserve:

The Company has not transferred any amount to the reserves during the current financial year.

DIVIDEND:

During the Financial Year ended March 31, 2020, the Company paid an interim dividend of RS 10/- (500%) per equity share amounting to RS 1,403.89 crore

The Directors recommend payment of dividend of RS 8/- (400%) per equity share of RS 2/- each on the share capital amounting to RS 1,123.11 crore for FY 2020.

The total dividend for FY 2020, including the final dividend, if approved by shareholders, would amount to RS 18/- (900%) per equity share.

The Dividend payment is based upon the parameters mentioned in the Dividend Distribution policy approved by the Board of Directors of the Company which is in line with regulation 43A of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 ('SEBI lodr Regulations'). The Policy is provided as Annexure 'G' forming a part of this Board Report and also uploaded on the Company's website at http://investors.larsentoubro. Com/Listing-Compliance.aspx.

CAPITAL & FINANCE:

During the year under review, the Company allotted 7,83,249 equity shares of RS 2/- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

On exercise of the conversion option of US$200 million

0.675% convertible bonds due in 2019, the Company has allotted 3,79,388 equity shares of RS 2/- each against conversion of 7,970 fccbs of the face value of US$ 1000 each. Remaining 1,92,030 Bonds of the face value of US$1000 each were redeemed/repaid.

The Company repaid long-term borrowings of USD 492.03 million (approx. RS 3,500 crore) during the year under review on scheduled due dates. On the other hand, the Company raised USD 425 million of foreign currency borrowings for meeting business requirements and certain capital expenditure.

The Company has issued and allotted on private placement basis, Unsecured, Rated, Listed, Redeemable Non-convertible Debentures (ncds) aggregating to RS 5900 crore during the financial yea Rs 2019-20. The funds raised through issuance of ncds had been utilised for capital expenditures, long-term working capital, business expenses, treasury investments and bonafide purposes in the normal course of business. These ncds are listed on the Wholesale Debt Market Segment of National Stock Exchange of India Limited and BSE Limited.

Listing of cps

The Company has issued Commercial papers amounting to R 4,845 Crore during the FY 2019-20.

Pursuant to the SEBI Circular dated octobe Rs 2019, the Company has listed the Commercial papers on BSE Limited.

The Company has not defaulted on any of its dues to the financial lenders.

The Company's borrowings are rated by CRISIL and ICRA. The details of the same are given on page 115 in Annexure 'B' - Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.

DIVESTMENT OF ELECTRICAL & AUTOMATION BUSINESS:

As disclosed in our previous Report, the Company had on 1st May 2018 signed, subject to regulatory approvals, definitive agreements with Schneider Electric, a global player in energy management and automation for strategic divestment of its Electrical and Automation (E&A) business for an all-cash consideration of RS 14,000 crore. As reported last time, Schneider Electric had received approval from Competition Commission of India for the proposed combination, vide letter dated 18th April 2019. The process of divestment was progressing well. However, due to the Covid-19 Pandemic and subsequent lock-down, the process has been delayed and the Company expects the transaction to close after normalcy is restored.

Capital expenditure:

As at 31st March 2020, the gross property, plant and equipment, investment property and other intangible assets including leased assets, stood at RS 13,559.73 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at RS 8,637.58 crore. Capital Expenditure during the year amounted to RS 1,370.51 crore.

DEPOSITS:

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013. The Company does not have any unclaimed deposits as of date. All unclaimed deposits have been transferred to Investor Education & Protection Fund.

Pursuant to the Ministry of Corporate Affairs (MCA) notification amending the Companies (Acceptance of Deposits) Rules, 2014, the Company has filed with the Registrar of Companies (roc) the requisite returns for outstanding receipt of money/loan by the Company, which is not considered as deposits.

Depository SYSTEM:

As the members are aware, the Company's shares are compulsorily tradable in electronic form. As on 31st March 2020, 98.68% of the Company's total paid up capital representing 1,38,52,96,740 shares are in dematerialized form.

SEBI LODR Regulations mandate that the transfer, except transmission and transposition, of securities are to be carried out in dematerialized form only with effect from 1st April 2019. 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. Accordingly, any investor desirous of transferring shares (which are held in physical form) can transfer only after their shares are dematerialized.

Further in adherence to SEBI's circular to enhance the due-diligence for dematerialization of the physical shares, the Company has provided the static database of the shareholders holding shares in physical form to the depositories to augment the integrity of its existing systems and enable the depositories to validate any dematerialization request.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

The Company has been regularly sending communications to members whose dividends are unclaimed, requesting them to provide/update bank details with RTA/Company, so that dividends paid by the Company are credited to the investor's account on time. Efforts are also made by the Company in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

Despite these efforts, an amount of RS 5,27,14,490 which was due & payable and remained unclaimed and unpaid for a period of seven years, was transferred to Investor education & protection Fund (iepf) as provided in section 125 of the Companies Act, 2013 and the rules made thereunder. Cumulatively, the amount transferred to the said fund was RS 29,61,28,286 as on 31st March 2020.

In accordance with the provisions of the Section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor education and protection Fund Authority (Accounting, Audit, transfer and Refund) Rules, 2016 ('iepf Rules'), the Company has transferred 2,47,300 equity shares of RS 2 each (0.02% of total number of shares) held by 2,709 shareholders (0.24% of total shareholders) to IEPF. The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial yea Rs 2011-12. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.

The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers providing the details of the shares due for transfer so as to enable them to take appropriate action. All corporate benefits accruing on such shares viz. Bonus shares, etc. Including dividend except right shares shall be credited to IEPF.

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. The details of

Investments / divestments in subsidiary companies during the year are as under:

A) Shares acquired during the year:

Name of the Company Type of Shares No. Of shares
L&T Shipbuilding Limited (Note 1) Equity 1,33,20,000
Mindtree Limited (Note 2) Equity 10,05,27,734
L&T Construction Machinery Limited (Note 3) Equity 19,91,32,091
L&T Construction Equipment Limited (Note 3) Equity 4,71,600
L&T Construction Equipment Limited (Note 3) Preference 64,83,00,000

Note:

1. The Company had acquired the entire stake held by Tamil Nadu Industrial Development Corporation (TIDCO) in L&T Shipbuilding Limited thereby making it a wholly owned subsidiary of the Company. Subsequently, pursuant to the National Company Law Tribunal (Mumbai & Chennai bench) approval for the Scheme of Amalgamation, L&T Shipbuilding Limited has merged with the Company (appointed date 1st April 2019 and effective date 18th May 2020).

2. The Company acquired 3,27,60,229 equity shares of Mindtree Limited, pursuant to the Share Purchase Agreement. Further, 164,42,134 equity shares of Mindtree Limited have been acquired in the open market and 5,13,25,371 equity shares have been acquired through open offer.

3. Pursuant to the approval of the Composite Scheme of Amalgamation & Arrangement between L&T Realty Limited (LTR), L&T Construction Equipment Limited (LTCEL) and L&T Construction Machinery Limited (LTCML) by National Company Law Tribunal, Mumbai bench (appointed date 1st April 2018 and effective date 17th May 2020), LTR has been amalgamated into LTCEL and the manufacturing business of LTCEL has been demerged into LTCML. As consideration towards this amalgamation and demerger, the Company has been allotted 19,91,32,091 equity shares of RS 10 each by L&T Construction Machinery Limited and 4,71,600 equity shares of RS 10 each and 64,83,00,000 12% non-convertible preference shares of RS 10 each by L&T Construction Equipment Limited.

B) Equity shares sold / transferred / reduced during the year:

Name of the Company Number of shares
L&T Technology Services Limited (Note 1) 40,63,632
L&T Kobelco Machinery private Limited (LTKM) (Note 2) 2,55,00,000

Pursuant to the amendment agreement entered by the Company with Canadian Pension Plan Investment Board (CCPIB), L&T Infrastructure Development projects Limited, (L&T idpl), a wholly owned subsidiary of the Company, has allotted 30,84,62,468 equity shares to ccpib India private Holdings Inc. Accordingly, the Company presently holds 51% in L&T idpl.

Note:

1. The Company had sold shares of L&T Technology Services Limited in the open market and through offer for Sale towards achieving the minimum public shareholding norm. Pursuant to this sale, the present public shareholding in L&T technology Services Limited is more than 25% and is in compliance of SEBI requirements.

2. Sale of 51% stake of L&T in crkm to the JV partner is in line with L&T's strategy to move away from the non-core businesses.

C) Companies Struck off:

L&T Cassadian Limited has applied to the Ministry of Corporate Affairs for strike off under the provisions of Companies Act, 2013 and is awaiting approval for the same.

D) Performance and Financial Position of subsidiary / associate and joint venture companies:

A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 594 to 607 of this Annual Report.

The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI lodr Regulations and the same is placed on the website at http://investors.larsentoubro.com/ Listing-Compliance.aspx. The Company does not have any material subsidiaries.

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 as required under section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI lodr Regulations in Note 58 forming part of the financial statement.

PARTICULARS of contracts or ARRANGEMENTS WITH RELATED PARTIES:

The Audit Committee and the Board of Directors have approved the Related party Transactions policy, signifying the individual threshold limits for each transaction and the same has been uploaded on the Company's website http://investors.larsentoubro.com/Listing-Compliance. Aspx.

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 the related party transactions for the FY 2019-20 and estimated related party transactions for FY 2020-21.

There were no materially significant related party transactions that may have conflict with the interest of the Company.

MATERIAL CHANGES AND commitments AFFECTING THE FINANCIAL position of THE company, between the end of THE FINANCIAL YEAR AND THE DATE of THE report:

The Company had filed a petition for merger of L&T Shipbuilding Limited with the Company. The amalgamation was approved by National Company Law Tribunals at Mumbai & Chennai. L&T Shipbuilding Limited has thus merged with the Company (appointed date 1st April 2019 and effective date 18th May 2020).

There are no other material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

Company response to covid-19

During March 2020, the covid pandemic increased rapidly forcing Governments of most countries to enforce a lockdown of all activities. Heeding to the various guidelines issued in India by the Central and State Governments and abroad by various agencies on the Covid-19 pandemic, all establishments, offices & factories of the Company had shut down operations from March 25, 2020. Your Company immediately took several measures to ensure health and safety of its workers and other employees and thereafter, steps were taken to ensure business continuity of essential services including Security and IT lights-on operations. Special permissions were also taken for ensuring that very critical operations such as defence business, dewatering in Metro projects, etc. Continued with all the precautionary measures.

A Decision Response team was formed which consisted of members from the Executive Committee to assess the situation and take appropriate decisions. Smaller teams/ task forces were set up at each location / site / factory / manufacturing units etc to regularly monitor the situation.

Your Company employs more than 250,000 contract labourers around various sites in India and abroad. Your Company set up labour camps at their sites to house these labourers including migrant labourers. During the lockdown period, your Company ensured food, shelter and medical facilities in these labour camps and timely remittance of wages to workmen and payments to subcontractors, directly to their bank accounts.

Your Company along with its subsidiary companies and employees who donated two days salary, contributed RS 150 Crore to the PM-CARES Fund, responding to the call given by Hon'ble Prime Minister of India. Additionally, your Directors, Executive Committee members, with equivalent contribution from the Company, contributed RS 5.58 crore to the PM CARES fund. Your Company also provided a wide range of material assistance viz., donated medical equipment to various hospitals and other institutions, distributed grocery kits and cooked food to doctors, sanitation workers, stranded families and migrant workers. Your Company has also extended its technological expertise to partner with civic authorities and the police to set up monitoring systems and manage Command & Control Centers. Such centers are in operation in ove Rs 20 cities including Mumbai, Pune, Nagpur, Prayagraj, Ahmedabad, Visakhapatnam and Hyderabad. As of date, your Company has re-purposed sections of hospitals in Delhi, Dwarka, Bettiah, Puducherry, Kolkata and Gorakhpur to meet the needs of COVID patients.

For the quarter ended 31 March 2020, the impact due to COVID 19 on your Company's revenues and net profits was approximately RS 1800 crore and R 400 crore respectively. This was due to stoppage of work in almost all the sites for the last part of March 2020 as well as the disruption to the last mile work, like physical inspection, customer clearance etc., that could not be completed due to lockdown restrictions.

Your Company resumed partial service of operations from April 14, 2020, after implementation of standard protocols in line with the guidelines prescribed. As on the date of this report, your Company has resumed work in all offices/manufacturing units, barring some establishments in Maharashtra where the employees continue to Work from Home. 90% of the domestic project sites of the Company are working with restricted labour capacity. The Company is remobilizing the workmen as a significant percentage of the migrant workmen have gone back to their villages.

All international sites have also resumed work after some interruptions. Employees are working in a staggered manner with mandatory rotation on a periodic basis and in adherence to all the safety protocols.

In fact, all the plants and office establishments that have started functioning have implemented safety and hygiene protocols like wearing of face masks, social distancing norms, workplace sanitation and employee awareness programmes. The protocols are regularly reviewed and updated based on revisions in guidelines received from authorities concerned from time to time.

With the graded opening of sites and factories, the Company is making every effort possible to make up for the lost time, due to the pandemic, during the year. The impact of the lockdown disruption is being assessed from time to time. A lot depends on the success of the various pandemic containment efforts being undertaken by the State and Central Government and Health authorities.

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:

The Risk Management Committee was reconstituted during the year and comprises of Mr. Adil Zainulbhai, Mr. Sanjeev Aga and Mr. Subramanian Sarma, Directors of the Company. Mr. Adil Zainulbhai 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. The risk assessment includes review of strategic risks of the group at the domestic and international level, including Sectoral developments, risk related to market, financial, geographical, political and reputational issues, Environment, Social and Governance (ESG) risks, cyber security and risk minimization initiatives. The Committee periodically reviews the risk 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 331 to 334 of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY:

The Corporate Social Responsibility Committee comprises of Mr. M. M. Chitale, Mr. R. Shankar Raman and Mr. D. K. Sen as the Members. Mr. Chitale is the Chairman of the Committee.

The CSR policy framework is available on its website Http://investors.larsentoubro.com/Listing-Compliance.

Aspx.

A brief note regarding the Company's initiatives with respect to CSR is given in Annexure 'B' - Report on Corporate Governance forming part of this Board Report. Please refer to pages 105 to 107 of this Annual Report.

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:

Mr. Akhilesh Gupta ceased to be an Independent Director of the Company w.e.f. 8th Septembe Rs 2019 on account of completion of his term as Independent Director.

Mr. Arvind Gupta, Nominee Director representing equity interest of the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) on the Board of the Company, has demitted the office as a Nominee Director of the Company with effect from 26th March 2020 on account of withdrawal of his nomination by SUUTI, pursuant to divestment of their stake held in the Company.

Mr. Thomas Mathew T. Ceased to be an Independent Director of the Company w.e.f. 2nd April 2020 on account of completion of his term as Independent Director.

Mr. Ajay Shankar ceased to be an Independent Director of the Company w.e.f. 29th May 2020 on account of completion of his term as Independent Director.

Mr. N. Hariharan, Executive Vice-President & Company Secretary superannuated from the services of the Company with effect from 1st January, 2020.

The Board places on record its appreciation towards valuable contribution made by them during their tenure as Directors and Key Managerial Personnel of the Company.

Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on 23rd Octobe Rs 2019, approved the appointment of Mr. Sivaram Nair A as the Company Secretary and Compliance Officer with effect from 2nd January 2020.

The Board has re-appointed Mr. D. K. Sen as a Wholetime Director of the Company from 1st Octobe Rs 2020 to 7th April 2023, subject to the approval of the shareholders.

The Board has re-appointed Mr. A M Naik as nonexecutive Chairman of the Company for a period of 3 years from 1st Octobe Rs 2020, subject to the approval of the shareholders.

Mr. Subramanian Sarma, Ms. Sunita Sharma and Mr. A M Naik, retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment.

The notice convening the AGM includes the proposal for re-appointment of Directors.

The terms and conditions of appointment of the Independent Directors are in compliance with the provisions of the Companies Act, 2013 and are placed on the website of the Company http://investors.larsentoubro. Com/Listing-Compliance.aspx.

The Company has also disclosed on its website http://investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs 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 Report. Members are requested to refer to pages 92 and 93 of this Annual Report.

AUDIT COMMITTEE:

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 LODR Regulations. 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 98 to 100 of this Annual Report.

COMPANY POLICY ON DIRECTORS' APPOINTMENT AND Remuneration:

The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI LODR Regulations. 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 100 to 104 of this Annual Report.

The Committee has formulated a policy on Directors' appointment and remuneration including recommendation of remuneration of the key managerial personnel and senior management personnel, composition and the criteria for determining qualifications, positive attributes and independence of a Director. The Nomination and Remuneration Policy is provided as Annexure 'H' forming part of this Board Report and is also disclosed on the Company's website at http://investors.larsentoubro.com/Listing-Compliance.aspx.

The Committee has also formulated a separate 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 as laid down in section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI LODR Regulations. The same are also displayed on the website of the Company http://investors.larsentoubro. Com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

The Independent Directors of the Company have registered / in the process of registering themselves with the data bank maintained by Indian Institute of Corporate Affairs (IICA). In terms of Section 150 of the Act read with Rule 6(4) of the Companies (Appointment & Qualification of Directors) Rules, 2014, the Independent Directors are required to undertake online proficiency self-assessment test conducted by the IICA within a period of one (1) year from the date of inclusion of their names in the data bank. The said online proficiency self-assessment test will be undertaken by the Independent Directors of the Company, as applicable, within the prescribed timelines.

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 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 material departures;

B) The Directors have selected such accounting policies and applied them consistently and made judgements 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 irregularities;

D) The Directors have prepared the Annual Accounts on a going concern basis;

E) the Directors have laid down an adequate system of internal financial control 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 31st March 2020, 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 Company's operations.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, Directors And CHAIRMAN:

The Nomination & Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, committees, individual directors and the Chairman has to be made. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual directors and the Chairman.

For the year under review, the questionnaire was modified suitably to include qualitative criteria, based on the comments and suggestions received from Independent Directors. As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The same external consultant's IT platform was used from initiation till conclusion of the entire board evaluation process.

This ensured that the process was transparent and Independent of involvement of the Management or the Company. This has enabled unbiased feedback.

The Board Performance Evaluation inputs, including areas of improvement, for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meeting of the Independent Directors held on 18th May, 2020 and in the subsequent meeting of Nomination and Remuneration Committee and the Board.

Most of the suggestions from the Board Evaluation exercise of FY 2019-20 have been suitably implemented such as considering qualitative criteria for performance evaluation exercise.

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 information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure 'I' 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 at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

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. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees as per the above Act.

No complaint was received in the Company during the F.Y. 2019-20.

In addition to the continuous online awareness programs, more than 100 awareness workshops and training programs were conducted during the year across the Company to sensitize employees to uphold the dignity of their colleagues at workplace specially with respect to prevention of sexual harassment.

OTHER DISCLOSURES:

• Esop Disclosures: 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 Securities and exchange Board of India (Share Based employee Benefit) Regulations, 2014 ("SBEB 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 SBEB Regulations is provided on the website of the Company http:// investors.larsentoubro.com/Listing-Compliance.aspx.

The certificate obtained from the Statutory Auditors, confirming compliance with the Companies Act, 2013 and the SBEB Regulations is also provided in Annexure 'B' forming part of this Report.

• Corporate Governance: Pursuant to Regulation 34 of the SEBI lodr Regulations, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, are provided in Annexure 'B' forming part of this Report.

• Integrated Reporting: Pursuant to SEBI Circular on Integrated Reporting, the Company is complying with the applicable requirements of the Integrated Reporting Framework. The Sustainability Report has been replaced by an Integrated Report which tracks the sustainability performance of the organization and its interconnectedness with the financial performance, showcasing how the Company is adding value to its stakeholders.

The Integrated Report encompasses areas such as Corporate Governance, the IR & Sustainability Structure, Sustainability Roadmap 2021, Risks & opportunities, enhancement of Financial Capital, Manufactured Capital, Intellectual Capital, Human Capital, Natural Capital and Social & Relationship Capital and alignment to sustainable development goals. It also covers strategy, business model and resource allocation.

The integrated Report for the yea Rs 2018-19 is available on the Company's website http://www. Larsentoubro.com/corporate/sustainability/integrated- report/ and the report for the yea Rs 2019-20 shall be published shortly.

• Statutory Compliance: The Company complies with all applicable laws and regulations, pays applicable taxes on time, takes care of all its stakeholders, ensures statutory CSR spend and initiates sustainable activities.

• MSME: The Ministry of Micro, Small and Medium Enterprises vide their Notification dated 2nd Novembe Rs 2018 has instructed all the Companies registered under the Companies Act, 2013, with a turnover of more than Rupees Five Hundred crore to get themselves onboarded on the Trade Receivables Discounting system platform (treds), set up by

The Reserve Bank of India. In compliance with this requirement, the Company has registered itself on treds through the service providers Receivables Exchange of India Limited (RXIL).

The Company complies with the requirement of submitting a half yearly return to the Ministry of Corporate Affairs within the prescribed timelines.

• IBC: There is no Corporate Insolvency Resolution process initiated under the Insolvency and Bankruptcy Code, 2016 (IBC).

VIGIL MECHANISM:

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 Companies Act, 2013. 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 policy also establishes adequate mechanism to enable employees report instances of leak of unpublished price sensitive information. 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/corporateaovernance. Aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.

Also see page 108 forming part of Annexure 'B' of this Board Report.

BUSINESS RESPONSIBILITY REPORTING:

As per Regulation 34 of the SEBI LODR Regulations, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 22 to 43).

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 LODR Regulations and prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)

Rules, 2015 and amendments thereof issued by the Ministry of Corporate Affairs in exercise of the powers conferred by section 133 of the Companies Act, 2013.

AUDIT REPORT:

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., Company Secretaries is attached as Annexure 'E' forming part of this Board Report.

AUDITORS:

In view of the mandatory rotation of auditors' requirement and in accordance with the provisions of Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP were 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.

Accordingly, in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the present Statutory Auditors of the Company, M/s Deloitte Haskins & Sells LLP would hold office until the conclusion of the ensuing Annual General Meeting. They have expressed their willingness to be reappointed for a further term.

The Board of Directors of the Company, after considering the recommendation of the Audit Committee, recommends the re-appointment of M/s Deloitte Haskins & Sells LLP for the 2nd and final term of five consecutive years from the conclusion of this ensuing 75th Annual General Meeting till the conclusion of 80th Annual General Meeting of the Company.

M/s Deloitte Haskins & Sells LLP has submitted their confirmation to the effect that they continue to satisfy the criteria provided in Section 141 of the Companies Act, 2013 and that their appointment is within the limits prescribed under Section 141(3)(g) of the Act.

The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (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.

The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.

The Auditors attend the Annual General Meeting of the Company.

The Notice convening the AGM includes a resolution for their re-appointment. The terms and conditions of their appointment including remuneration are specified in the explanatory statement which is a part of the notice convening the AGM.

Also see pages 108 and 109 forming part of Annexure 'B' of this Board Report.

REPORTING OF FRAUD:

The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

COST AUDITORS:

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 5th June 2020, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost Auditors for the Company for the financial year ending 31st March 2021 at a remuneration of RS 13 lakhs.

A proposal for ratification of remuneration of the Cost Auditor for the financial yea Rs 2020-21 is placed before the shareholders.

The Report of the Cost Auditors for the financial year ended 31st March 2020 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.

The provisions of Section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31st March 2020.

ACKNOWLEDGEMENT

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 Chairman

(DIN: 00001514)
Date : 5th June 2020
Place : Mumbai

   

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