LARSEN AND TOUBRO LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
The Directors have pleasure in presenting their Annual Report and Accounts
for the year ended March 31, 2012.
FINANCIAL RESULTS:
2011-2012 2010-2011
Rs. crore Rs. crore
Profit before depreciation, exceptional
and extraordinary items and tax 6,954.79 6,167.78
Less: Depreciation, amortization and
obsolescence 700.45 600.28
6,254.34 5,567.50
Add: Transfer from revaluation reserve 0.99 1.06
Profit before exceptional and
extraordinary items and tax 6,255.33 5,568.56
Add: Exceptional items 55.00 262.07
Profit before extraordinary items and tax 6,310.33 5,830.63
Extraordinary items - 70.84
Profit before tax 6,310.33 5,901.47
Less: Tax expenses 1,853.83 1,943.58
Profit after tax 4,456.50 3,957.89
Add: Balance brought forward
from previous year 105.68 107.29
Less: Dividend paid for the previous year
(including additional tax on dividend) 3.89 4.01
Balance available for disposal which the
directors appropriate as follows: 4,558.29 4,061.17
Debenture redemption reserve 44.00 49.83
Proposed Dividend 1,010.46 882.84
Additional tax on dividend 101.44 112.82
General reserve 3,250.00 2,910.00
4,405.90 3,955.49
Balance to be carried forward 152.39 105.68
Dividend
The Directors recommend payment of final
dividend of Rs. 16.50 per equity share of
Rs. 2/- each on 61,23,98,899 shares 1010.46 882 84
YEAR IN RETROSPECT:
The gross sales and other income for the financial year under review were
Rs. 55,076 crore as against Rs. 45,444 crore for the previous financial
year registering an increase of 21%. The Profit before tax excluding
extraordinary and exceptional items was Rs. 6,255 crore and the Profit
after tax excluding extraordinary and exceptional items of Rs. 4,413 crore
for the financial year under review as against Rs. 5,569 crore and Rs.3,676
crore respectively for the previous financial year, registering an increase
of 12% and 20% respectively
DIVIDEND:
The Directors recommend payment of dividend of Rs. 16.50 per equity share
of Rs. 2/- each.
DEPOSITORY SYSTEM:
As the members are aware, the Company`s shares are compulsorily tradable in
electronic form. As on March 31, 2012, 97.19% of the Company`s total paid-
up Capital representing 59,52,14,789 shares is in dematerialized form. In
view of the numerous advantages offered by the Depository system, members
holding shares in physical mode are advised to avail of the facility of
dematerialization from either of the Depositories.
CAPITAL & FINANCE:
During the year under review, the Company allotted 35,46,773 equity shares
upon exercise of stock options by the eligible employees under the Employee
Stock Option Schemes.
During the year under review, Rs. 540 crore were drawn by the Company under
the partly-paid Non-Convertible Debentures issued in 2010-201 1. Further
the Company tied up long term foreign currency loans equivalent to
approximately USD 145 million, half of which was drawn during the year, the
balance to be drawn in 2012-2013.
During the year, the Company repaid a part of the long term foreign
currency loans, equivalent to about Rs. 615 crore and redeemed Non-
Convertible Debentures of Rs. 250 crore.
CAPITAL EXPENDITURE:
As at March 31, 2012, the gross fixed and intangible assets, including
leased assets, stood at Rs. 11,295 crore and the net fixed and intangible
assets, including leased assets, at Rs. 8,364 crore. Additions during the
year amounted to Rs. 1,725 crore.
DEPOSITS:
7 Deposits totaling Rs. 71,000 which were due for repayment on or before
March 31, 2012 were not claimed by the depositors on that date. As on the
date of this report, none of these deposits have been claimed and paid.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND:
The Company sends letters to all shareholders whose dividends are unclaimed
so as to ensure that they receive their rightful dues. Efforts are also
made in co-ordination with the Registrar to locate the shareholders who
have not claimed their dues.
As provided in Section 205C(2) of the Companies Act, 1956, dividend amount
which was due and payable and remained unclaimed and unpaid for a period of
seven years has to be transferred to Investor Education & Protection Fund.
Despite the reminder letters sent to each shareholder, an amount of
Rs.1,10,97,033/- remained unclaimed and was transferred to Investor
Education & Protection Fund by the Company during the year. Cumulatively,
the amount transferred to the said fund was Rs. 9,90,45,963/- as on March
31, 2012.
SUBSIDIARY COMPANIES:
During the year under review, the Company subscribed to/sold/acquired
equity shares in various subsidiary companies. These subsidiaries are
either SPVs executing projects secured through Build Operate Transfer (BOT)
route, or holding companies making investments in companies such as those
engaged in power and financial services business. The details of
investments in subsidiary companies during the year are as under:
A) Shares acquired during the year:
Name of the company No. of shares
L&T Cassidian Limited 50,000
L&T Howden Private Limited 1,00,20,000
Larsen & Toubro Consultoria E Projecto Ltda 96,819
L&T General Insurance Company Limited 12,50,00,000
L&T Power Development Limited 3,20,00,000
L&T Infrastructure Development Projects Limited 6,94,08,226
PNG Tollway Limited 2,19,83,000
L&T Special Steels and Heavy Forgings Pvt. Limited 11,10,00,000
L&T Kobelco Machinery Private Limited 1,02,00,000
L&T Metro Rail (Hyderabad) Limited 9,30,000
L&T Sapura Shipping Private Limited 1,72,911
L&T Infocity Limited 2,40,30,000
B) Shares sold/transferred during the year:
Name of the company No. of shares
L&T Cassidian Limited 13,000
L&T-Sargent & Lundy Limited (under buy-back) 4,36,366
L&T Rajkot Vadinar Tollway Limited 5,50,15,000
L&T Western India Tollbridge Limited 1,39,50,007
Raykal Aluminium Company Private Limited 2,250
L&T Power Limited* 7
*During the year the share capital of the Company was consolidated from
15,34,92,000 equity shares of Rs. 10 each into 51,164 equity shares of
Rs.30,000 each.
The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011 dated
February 8, 2011, has granted general exemption under Section 212(8) of the
Companies Act, 1956, subject to certain conditions being fulfilled by the
Company. As required under the circular, the Board of Directors has, at its
meeting held on January 23, 2012, passed a resolution giving consent for
not attaching the Balance Sheet of the subsidiary companies. We have also
given the required information on subsidiary companies in this Annual
Report. Shareholders who wish to have a copy of the full report and
accounts of the subsidiaries will be provided the same on receipt of a
written request from them. These documents will be uploaded on the
Company`s Website viz. www.larsentoubro.com and will also be available for
inspection by any shareholder at the Registered Office of the Company, on
any working day during business hours.
AUDITORS` REPORT:
The Auditors` Report to the Shareholders does not contain any
qualification.
DISCLOSURE OF PARTICULARS:
Information as per the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, relating to Conservation of Energy,
Technology Absorption, Foreign Exchange Earnings and Outgo is provided in
Annexure `A` forming part of this Report.
OTHER DISCLOSURES:
The disclosures required to be made under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, together with a certificate obtained from the Statutory
Auditors, confirming compliance, is provided in Annexure `B` forming part
of this Report.
Pursuant to Clause 49 of the Listing Agreement entered into with the Stock
Exchanges, a Report on Corporate Governance and a certificate obtained from
the Statutory Auditors confirming compliance, is provided in Annexure `C`
forming part of this Report.
PERSONNEL:
The Board of Directors wishes to express its appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. The information required under Section 217(2A) of
the Companies Act, 1956 and the Rules made thereunder, is provided in
Annexure forming part of the Report. In terms of Section 219(1)(b) (iv) of
the Act, the Report and Accounts are being sent to the Shareholders
excluding the aforesaid Annexure. Any Shareholder interested in obtaining
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.
CORPORATE GOVERNANCE VOLUNTARY GUIDELINES:
By complying with the provisions of the Companies Act, 1956 and Clause 49
of the Listing Agreement, the Company is complying with all the major
clauses of the Corporate Governance Voluntary Guidelines, 2009.
We have reported in Annexure `C` to the Directors` Report-Corporate
Governance, the extent of our compliance of the Corporate Governance
Voluntary Guidelines, 2009 under the following heads:
1. Nomination & Remuneration Committee
2. Other Information
3. Audit Committee
4. General Shareholders` Information
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES:
MCA had released a set of guidelines on Corporate Social Responsibility
(CSR) in December 2009. The Company is substantially complying with the
guidelines laid down.
The Company has been one of the first engineering and construction
companies in India to publish its report on Corporate Sustainability.
The activities carried out by the Company as a part of its CSR initiatives
are briefly described on pages 14 to 19 and 106 of the Annual Report. The
detailed Corporate Sustainability Report is also available on the Company`s
website www.larsentoubro.com.
DIRECTORS` RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:-
i. That in the preparation of the annual accounts, the applicable
Accounting Standards have been followed and there has been no material
departure;
ii. That the selected accounting policies were applied consistently and the
Directors 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 as
at March 31, 2012 and of the profits of the Company for the year ended on
that date;
iii. That proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. That the annual accounts have been prepared on a going concern basis;
and
v. That the Company has adequate internal systems and controls in place to
ensure compliance of laws applicable to the Company.
DIRECTORS:
During the year under review, Mr. K. V. Rangaswami Whole-time Director of
the Company retired as Director of the Company on June 30, 2011.
Mr. S. N. Subrahmanyan was inducted as Whole-time Director of the Company
w.e.f. July 1, 2011.
Mr. Y. M. Deosthalee, Chief Financial Officer and Whole-time Director of
the Company retired on September 5, 2011.
The Board has appointed Mr. R. Shankar Raman as Chief Financial Officer
w.e.f. September 6, 2011 and as a Whole-time Director of the Company w.e.f.
October 1, 2011.
Pursuant to the Articles of Association of the Company, Mr. A. M. Naik is
proposed to be appointed as a Director liable to retire by rotation, with
effect from October 1, 2012, in the forthcoming Annual General Meeting, in
view of his appointment as Executive Chairman from October 1, 2012 upto
September 30, 2017.
Mr. K. Venkataramanan is appointed as Chief Executive Officer and Managing
Director of the Company w.e.f. April 1, 2012 upto September 30, 2015.
Pursuant to the Articles of Association of the Company he will not be
liable to retire by rotation.
Mr. Shailendra Roy was inducted as a Whole-time Director of the Company
w.e.f. March 9, 2012.
Consequent to her retirement from General Insurance Company Limited (GIC),
Mrs. Bhagyam Ramani resigned as a Director w.e.f. May 8, 2012.
Mr. Thomas Matthew T., Mr. M.V. Kotwal, Mr. V. K. Magapu and Mr. Ravi Uppal
retire from the Board by rotation and are eligible for re-appointment at
the forthcoming Annual General Meeting.
Mr. J. S. Bindra retires from the Board of Directors but has not sought re-
appointment at the forthcoming Annual General Meeting. Accordingly, a
suitable resolution will be placed before the shareholders for their
approval.
The notice convening the Annual General Meeting includes the proposal for
appointment/re-appointment of Directors.
CONSOLIDATED FINANCIAL STATEMENTS:
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into with
the Stock Exchanges and prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of India, in
this regard.
The Auditors` Report to the Shareholders does not contain any
qualification.
AUDITORS:
The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion
of the ensuing Annual General Meeting and are recommended for re-
appointment. Certificate from the Auditors has been received to the effect
that their re-appointment, if made, would be within the limits prescribed
under Section 224(1B) of the Companies Act, 1956.
S&T has submitted the Peer Review Certificate dated September 21, 2010
issued to them by Institute of Chartered Accountants of India (ICAI).
COST AUDITORS:
The Ministry of Corporate Affairs (MCA) has introduced The Companies (Cost
Audit Report) Rules, 2011 vide its notification no. GSR 430(E) dated June
3, 2011. These rules make it mandatory for industries to appoint a Cost
Auditor within 90 days of the commencement of the financial year. The Cost
Audit Order No. 52/26/CAB/2010 dated January 24, 2012 covers engineering
machinery (including electrical and electronic products) due to which some
of the Company`s manufacturing operations will get covered w.e.f. April 1,
2012.
Based on the Audit Committee recommendations at its meeting held on May 2,
2012, the Board has approved the appointment of M/s R. Nanabhoy & Co. as
the Cost Auditors of the Company for the financial year 2012-2013, subject
to approval of the Central Government.
ACKNOWLEDGMENT:
Your Directors take this opportunity to thank the 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
Chairman & Managing Director
Place: Mumbai,
Date : May 14, 2012
Annexure `A` to the Directors` Report:
(Additional information given in terms of notification issued by the
Ministry of Corporate Affairs)
[A] CONSERVATION OF ENERGY:
(a) Energy Conservation measures taken:
1. Improving energy effectiveness/efficiency of Equipment and Systems:-
* Effective load monitoring and rationalization of operational timings of
air conditioning chillers, air handling units and elevators.
* Inverter based conversion of all contractor welding rectifiers.
* Replacement of Crawler cranes by Goliath bays in MFF-3 improving working
efficiency and reducing fuel consumption.
* Installation of Smart Lighting Energy Savings Device to regulate feeding
voltage to illumination system.
* Conducting independent Energy Audit at MFF, Hazira.
* Modification of HVAC in electrical lab and training centre by connecting
12TR air handling units and installing 15TR air handling units to secondary
chilled water lines of CRR.
* Replacement of MH/HPSV with CFL.
* Harvesting of rainwater targeting anti-pollution drives against ground
and surface water pollution.
* Management of water supply through electro*magnetic water flow meters at
Kansbahal.
* Installation of solar water heaters in Guest Houses & Hostels.
* Installation of bio-gas plant for solid waste management.
* Installation of energy savers in lighting distribution in TC-3 towers.
* Use of Electronic drive for Blower motors to improve the motor efficiency
and enhance energy saving.
* Use of energy saving devices like Occupancy sensors, Timers and
contactors in shop offices, buildings, wash rooms, unused space etc.
* Changing of connections of Blower motor from Delta to star to reduce
power consumption of motor.
* Replacement of Tube lights & Metal Halide lamp (MHL) with Compact
Fluorescent Lamp (CFL) in offices, shop floor etc.
* Use of Solar power for office lighting, heat water for canteen use, etc.
* Use of Variable frequency drive for various applications such as Welding
Positioners, induction motors, EOT cranes, Machine tools to improve the
motor efficiency and enhance energy saving.
* Installation of transparent roofing.
* Installation of 3 AC Drives for Turn Tables.
* Automation of Coolant supply system in drilling machines to give feed
only during drilling cycle.
* Installation of Standby mode for the cranes.
* Effective utilization of clean green energy.
* Installations of turbo ventilators for shop floor roofs.
* Installations of sky light panels on shop roof & sides.
* Use of Grid Power in place of DG set power.
* Switching off idle transformer.
* Installation of solar street light system in ECC campus.
* Installation of 125 KW rooftop solar PV system in ECC campus resulting in
annual power generation of around 197,000 Kwhr.
* Energy saving by change from Star/delta connection to star connection of
table motor in 1600 mm table diameter Vertical Turret Lathes at Valves Mfg.
Unit (VMU) at Coimbatore.
* Optimization of fan speeds in dust collectors at Foundry Unit,
Coimbatore.
* Installation of PLC based air monitoring system in Compressor operations
at Foundry Unit, Coimbatore.
* Installation of no-loss drain valve near compressed air pressure vessel
at Foundry Unit, Kansbahal.
* Reduction in use of Material handling equipment & saving of fuel by
improving overall plant layout in MFF.
* Installation of 1000 KVAr of Automatic Power Factor Correction Panels for
MFF-1, 2 & 3.
* Introduction of double circuit in High mast light towers to reduce
illumination and power consumption during non-working hours.
* Installation of Auto temperature controller with the use of VFD and PID
controller in HVAC of MFF EPC Block.
* Retrofitting on 3 MT EOT crane with installation of VFD.
* Incorporation of transparent poly carbonate sheets at the time of design
for new shops to make use of day-light for illumination.
* Retrofitting of CNC control on VDF Table Borer in Machine shop (Machine
No. 122) at Kansbahal for increased productivity & reduction in power
consumption.
* Replacement of energy efficient HPSV SON-T lamp for open Yards in MFF-1 &
2.
* Procurement of 700 MT EOT and Goliath cranes having all motors driven
through high efficient VFD controlling.
* Conducting 70% of MFF Blasting operation in controlled shop environment
to realize more efficient blasting process and reduction of diesel
consumption & compressor requirements.
2. Improving energy effectiveness/efficiency of Manufacturing Processes:-
* Design new Low voltage heating pads for coke drum to reduce power
consumption.
* Modified PLC program of Toshiba 1 & 2, KOLB & Homma machines to avoid
idle running of coolant motors.
* Installation of servo drive in SKODA.
* Installation of AC Spindle motors & Drives 2 nos. for Kolb machines.
* Installation of modified Deep Hole Drilling Tool Holder resulting in 20%
Cycle time reduction & energy saving at Coimbatore.
* Implementation of new cutting plan for raw material have resulted in 25%
saving of raw material and Energy at Coimbatore.
(b) Additional investments and pr oposals, if any, being implemented for
reduction of consumption of energy:
* Solar Street Lights at the remote places for security purpose.
* Biogas plant at the Canteen to reduce the waste disposal.
* Astronomical Timers for better control on Outdoor Lighting System.
* Solar pipe light in shop floor & offices.
* Installation of magnetic resonators for improving the efficiency in fuel
consumption (both liquid & gas) in furnaces, pre-heating, post heating
etc..
* Installation of energy management system (EMS) at main substation at
Kansbahal for monitoring of area wise energy consumption.
* Retrofitting of Variable Frequency Drives for crane hoists at LTM`s
Kancheepuram Plant.
* Installation of Electronic Drive in 37KW Blower Motor in SR Furnace (HFS-
1).
* Changing of control of Brick Furnace from Cycle control to Firing Angle
control.
* Changing Heat treatment control panel from convention contactor to Solid
State Relay (SSR) based panel.
(c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods:
* The measures taken have resulted in savings in cost of production, power
consumption, reduction in carbon dioxide emissions & processing time.
(d) Total Energy Consumption and Energy Consumption per unit of pr oduction
as per Form A in respect of industries specified in the Schedule:
FORM - A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
[A] POWER & FUEL CONSUMPTION:
FOUNDRY FOUNDRY
Reporting Previous Year
Year 2010-2011
2011-2012
1. Electricity
(a) Purchased Unit 261.247 KWhr 306.08 L KWhr
Total amount Rs. 1,519.72 L Rs. 1,552.24 L
Rate/Unit Rs. 5.82 Rs. 5.07
(Average) (Average)
(b) Own generation
(i) Through diesel generator
Unit 2.35 L KWHr 2.859 L KWhr
Unit per ltr. of diesel oil 3.10 Units 3.15 Units
Cost/unit Rs. 12.75 Rs. 12.50
(ii) Through steam turbine/generator
Unit NIL NIL
Unit per ltr. of fuel oil/gas NIL NIL
Cost/unit NIL NIL
2. Coal (specify quality
and where used)
Quantity (tones) NIL NIL
Total cost NIL NIL
Average rate NIL NIL
3. H S D
Quantity (k.ltrs.) 643.22 721.50
Total amount Rs. 265.14 L Rs. 55.09 L
Average rate Rs. 41.22/Ltr Rs. 35.00/Ltr
4. Others/internal generation
Quantity (k. ltrs.) NIL NIL
Total cost NIL NIL
Rate/unit NIL NIL
A. Consumption per unit of
production Stands (if any)
Products (with details) unit
Casting 14,694 Tons 19,434 Tons
Ferro Alloy** - -
Electricity KWH/Ton KWh/Ton
Casting 1,735 1546.63
Ferro Alloy** - -
H S D
Casting 43.80 Ltr/Ton 37.12 Ltr/Ton
Ferro Alloy** - -
Coal (specify quality) NIL NIL
Others (specify) NIL NIL
[B] TECHNOLOGY ABSORPTION:
Efforts made in technology absorption as per Form B.
FORM - B
(Disclosure of particulars with respect to Technology Absorption)
RESEARCH AND DEVELOPMENT (R&D)
1. Specific areas in which R&D carried out by the Company:
* Chemical Engineering:-
Design, analysis and simulation of chemical processes and equipment, with
special emphasis on Gas Processing applications (Gas/Liquid Separation, Gas
Dehydration and Gas Sweetening Units); Capability development in process
simulation for Ammonia and Urea Plants; Process Engineering for Gas
Compressor Modules; Technology Evaluation of Air Separation Units; Flow
simulation studies for Oil & Gas Projects; Refractory engineering for
Fertilizer and Refinery Plant equipment; Modeling and process simulation of
fixed bed and entrained bed Coal Gasifiers; Failure analysis and
troubleshooting of various process units; Solid handling processes in
Petrochemical applications.
* Material Science & Corrosion Engineering:-
Material selection/material characterization for equipment and systems in
various Oil & Gas Projects; Failure Analysis studies for components such as
waste heat recovery coils, furnace tubes, pulverizer roller liners, pumps,
fasteners, fittings, coatings etc.; Reverse engineering and material
development support for Defence equipment; Preservation techniques for
critical systems; Cathodic protection system for marine vessels; Eco-
friendly corrosion inhibitors; Surface engineering of metals and non-
metals; Development of Composites with functional properties; Nano-
materials for strategic applications.
* Thermal Engineering:-
Application of CFD technique in design optimization and troubleshooting of
equipment and systems (such as flare and exhaust stack, chimney risers,
multi-phase separator and water jet propulsion system); Check-rating and
design optimization of waste heat recovery coils and heat exchangers;
Analysis of heat loss from subsea pipeline and insulation requirements;
String Testing of Process Gas Compressor modules for Offshore Platform;
Modeling of heat transfer mechanism in Orifice Chamber; Failure analysis
and troubleshooting involving heat exchangers, boilers, heaters and
furnaces; Transient analysis of flue gas exhaust system in Refinery; Low-
temperature thermal desalination processes; Furnace waste heat recovery
using molten salt system.
* Rotating Machinery:-
Advanced engineering studies in Vibration and Acoustics for machinery and
piping; Stress analysis and design optimization of rotary absorber unit;
Dynamic stress analysis of piping network in Refinery Complex considering
flow-induced and acoustic vibration; Design of acoustic insulation for
critical piping system; Troubleshooting of machinery vibration problems in
high-speed pumps, drive gearboxes and compressors; Plant noise assessment
for Refinery Complex; Product development/design optimization studies for
Coal Pulverizes units for Supercritical Boilers; String test of PGC
Modules; Technical support during Acceptance Test and Commissioning for
critical machinery.
* Mechanical Engineering:-
Design solutions for critical equipment through advanced Finite Element
Analysis; Thermal-Structural composite analysis for equipment, piping and
support systems; Design and fatigue analysis of high-pressure vessels as
per ASME Sec. VIII Div.3; Advanced stress analysis of critical structures
such as offshore jacket, crane pedestal of drilling rig, winch system
foundation, pipeline reeling system and flare stack; Boat Impact Analysis
for offshore jackets; Buckling analysis of sub-sea piping; Stress analysis
and design optimization of piping system for high-pressure/high-temperature
well-head platform; Analysis of pipe reeling system; Experimental stress
analysis of critical equipment such as deck crane during load testing.
* Water Technologies:-
Technology evaluation for water, sludge and effluent treatment processes;
Design and detailing of water/wastewater facilities, sludge and effluent
treatment plants in Oil & Gas, Fertilizer and Power Projects; Application
of advanced treatment technologies such as sea water/brackish water thermal
desalination, membrane bioreactor, sequential batch reactor, upflow
anaerobic sludge blanket reactor etc.; Oil-water separation processes;
Waste minimization/recycling techniques; Methodologies for achieving Zero
Discharge from plants; Lab scale pilot plant studies for determining
characteristics and treatability aspects of water and wastewater.
* Development of software for the automated design of storm water drains
for substation yards.
* Experimental study on the horizontal and vertical connections of precast
shear walls.
* Continued Research on the development of software on the design of piled
raft foundations suitable for high rise buildings.
* Development of alternate Solution to reduce bitumen content by means of
Sulphur Pellets.
* Development of cold mix design for pot hole repair in pavements.
* Development of high enduring fatigue resistant bituminous mixes.
* Development of India`s First Composite pavement and evaluation using a
Falling weight deflectometer.
* Development of Soil Piles by Deep Soil Mixing Technique.
* Development of Plastic concrete for diaphragm walls
* Development of Low cost sub base layers in highway express corridors.
* Development of Alternate Filling System.
* Development of Roller compacted concrete with margin aggregates for
hydroelectric dam projects.
* Development of low permeability concrete mixes using plastic concrete.
* Designed and evaluated high early strength concrete for application in
Port structures.
* Development of low cost indigenous cementitious grout for precast housing
project.
* Completion of Design validation tests on the Class 3100 20 inch and the 6
inch Class 3100 valves at Valves Manufacturing Unit (VMU) to meet the
requirements of customers.
* Design, development and supply of Straight pattern globe valves in Class
4500 which are used in super critical power plants at VMU.
* Validation of designs on metal seated ball valves at VMU.
* Development of a bigger coal crusher (Ring Granulator model 1219 U) at
Kansbahal.
* Development of new products by LTM such as 46", 51" and 68.5" Hydraulic
Tyre Curing Presses; 95" and 118" Mechanical Tyre Curing Presses and 68.5"
Hybrid Tyre Curing Press.
* Development of an All-Electric Injection Molding Machine eTech 160 and
also integration of a new injection unit with high power motor for eTech
105 by Product Development Center, Coimbatore.
* Development of mobile screeners and crushers are in progress.
* Developed low cost hydraulic bound layer for metro depot foundation
system.
* Developed innovative creep test equipment for concrete.
* Development of iPAD.
* Development of welding Simulation Technology.
* Development of Steam Generator & Moisture Separator for Nuclear Power
Plant.
* Development of LNG vaporizer.
* Development of cyclone separator for FCC regenerator in refinery.
* Development of Futuristic Infantry Combat Vehicle.
* Development of mechanical systems & fire control algorithms for mobile
artillery systems such as the Towed and Tracked Self Propelled 155 mm Guns.
* Development of Dual band Antenna & High frequency RF receiver along with
its stabilized platform for high speed & ultra-reliable tracking system.
* Development of optronics & drive packages for Air Defense Gun upgrades.
* In-house development of software application packages for Solar PV Power
Plant, Ship Lift controls, resource management for environment
sustainability and material handling.
* Development of low voltage high power BLDC drives.
* Development of Torpedo Weapon Complex for submarines.
* Development of Autonomous Underwater Vehicle for surveillance & target
simulation.
* Development of integrated power pack solutions for remotely operated
tracked vehicles.
* Development of water jet propulsion system for high speed crafts.
* Development of military communication hardware & solutions and ion-mobile
spectroscopy based chemical agent monitors.
* Development of capabilities & technologies related to Frequency Modulated
Continuous Wave Radars; Multi-sensor data fusion for automated target
recognition; Video analytics for enhanced situation awareness and composite
material based radomes & sonar domes.
* Design and development of new products and product ranges of Air Circuit
Breakers (ACB), Moulded Case Circuit Breakers (MCCB), Contactors, Relays,
Switch Disconnector-Fuse and Change over devices.
* Design and development of new product ranges of Low Voltage Power Control
Centre (PCC) and Motor Control Centre (MCC) Switchboards.
* Development of Tele-tector, Gamma Logger and Mobile Radiation Survey
system.
* Development of Resin transfer moulding machine, for manufacture of
composites with very high Fiber Volume Fraction (FVF).
* Development of special purpose machine for machining of composites for
Universal Vertical Missile launchers.
2. Benefits derived as a result of above R&D:
* Complete process simulation, design solutions and optimization for
Hydrocarbon projects in Fertilizer sector, involving Reformers, Ammonia
Plant and Urea Plant.
* Establishment of in-house capability in Process Simulation and FEED
Verification of on-shore/off-shore Gas Processing Plants and design
optimization of associated equipment.
* In-house expertise for complete Refractory solutions (e.g., material
selection, engineering, commissioning and troubleshooting) in high-
temperature equipment for process plants.
* Development of in-house capability in multi-phase flow simulation studies
for Oil & Gas Projects.
* Successful testing/commissioning of plants and equipment in various
Hydrocarbon projects, through multi-disciplinary technology support.
* Effective support to business units for all Materials related assignments
(such as material evaluation/characterization; selection of alternative
materials; failure analysis; preservation and corrosion protection of
critical equipment; development of new materials for strategic
applications).
* Development of in-house expertise related to manufacturing processes,
welding, heat treatment, failure mechanisms and corrosion
protection/preservation issues of equipment having special metallurgy for
critical Oil & Gas applications.
* Successful troubleshooting/design optimization of Oil & Gas Processing
equipment, heat exchangers, flares and exhaust stack etc., using advanced
CFD technique; design and check-rating of critical thermal equipment for
heat exchange/heat recovery applications; Estimation of heat loss and
insulation requirements for sub-sea pipeline; Transient heat transfer
analysis for flue gas exhaust system Capability development in newer
applications such as low-temperature thermal desalination and energy
storage through molten salt system.
* Establishment of in-house capabilities in analysis of piping system for
flow-induced and acoustic-induced vibrations; Completion of Plant Noise
studies utilizing in-house expertise; Development of in-house capabilities
in special acoustic studies such as piping insulation design and valve
noise/vent noise assessment.
* Development of in-house expertise in advanced FEA and fatigue analysis
techniques for specialized systems (Orifice Chamber/associated piping);
Design upgrade and optimization of coal pulverizers.
* Successful completion of failure analysis/troubleshooting assignments for
critical machinery; Technical support to business units for machinery
acceptance testing and commissioning.
* Development of FEA-based design/analysis methodology for critical
components such as nozzles, expansion joints, winches/sheaves, flare hook
and crane pedestal.
* Establishment of in-house capability in composite analysis of complex
systems involving equipment, piping and structures; Design methodology for
advanced FE analysis involving non-linear effects, shock/impact, thermal
fatigue and high-pressure/high-temperature processes.
* Development of in-house expertise in specialized applications such as
low-temperature creep phenomenon and buckling of sub-sea piping system.
* Competing with international competitors due to development of new
products by LTM.
* Participation in offshore segment due to development of metal seated ball
valves.
* Development of eco-friendly products, augmentation of existing range of
products and introduction of new features.
* Technical support to Oil & Gas, Fertilizer and Power Projects for
complete water and waste water management solution; Design of sludge and
effluent treatment systems; Development of water recycling, reuse and zero-
discharge schemes; Appropriate technical solutions for water treatment,
filtration and desalination applications.
* Savings in time to the tune 75% compared to earlier practice in the
design of layout of storm water drains for substation yards.
* Know how on the cost effective precast connection systems for buildings.
* In-house testing facility created for the testing of structural elements.
* Cost savings of bituminous mixes with sulphur pellets is 10%.
* Cold mix for pothole repair is 50% economical compared to proprietary
products. Conventional mixes have become obsolete due to continuous damage
and repair methodology issues.
* Substituted the imported equipment for creep studies which costs 30 lakhs
by indigenous development of test set up.
* The crust thickness of composite pavement is half that of conventional
pavement with this new technology and performance evaluation by falling
weight deflectometer is excellent for composite pavement when compared to
conventional pavement.
* Cost Saving of 25-30% as compared to other conventional Methods using
deep soil mixing technique.
* Cost Savings of 25% compared to conventional base material using low cost
hydraulic bound layer.
* The alternate engineered soil materials have provided cost and time
effective technology in metro sites.
* Development of EOM for C-Line changeover switch and MO range capacitor
switching contactors.
* Offering internationally benchmarked product range with contemporary
technologies.
* In-house testing facility has yielded reliable and timely delivery of
about 125 various construction materials for faster construction and
knowledge upgradation.
* Know how in construction materials for forth coming high rise towers,
metro and port infrastructure projects.
* Remote monitoring and civil engineers AutoCad viewer.
* Indigenisation & development of products for Indian Defence sector.
* Indigenisation & development of products for Indian Space sector.
* Indigenisation & development of products for Indian Nuclear sector.
* Savings in Foreign Exchange.
3. Future Plan of Action:
The R&D Centre is committed to providing appropriate technology support to
all Hydrocarbon Projects, as required by various business units. Future
development activities are identified based on the expected needs of
upcoming Projects as well as requirements for in-house capability
development. The following key areas have been identified under R&D Action
Plan:
* In-house design/simulation capability of Ammonia and Urea Processes.
* Rate-based model development and simulation for Pre-Reformer, HTER and
Auto-thermal Reformer.
* Capability development in multi-phase flow assurance studies using OLGA
software.
* Use of Refinery Residue for gasification application.
* Process design capabilities in Petrochemical/Polymer Plants.
* Process technology for coal gasification (technology evaluation, coal
characterization, performance simulation, design optimization and system
integration for EPC Projects).
* Modularization of Process Plants.
* Carbon Capture and Sequestration (CCS) techniques for Oil & Gas Projects.
* Development of special engineered products for the power industry like Re
heat isolation device and the quick closing NRV at VMU.
* Development of semi-mobile crushing plant for coal at Kansbahal.
* Development of Hydraulic presses for passenger car and truck- bus tyres
and development of all electric presses for the same segment at LTM.
* Cryogenic Air Separation Processes (technology evaluation, process
simulation, heat integration and system engineering).
* Use of CFD techniques for performance assessment of coal gasifiers.
* Emerging (Non-traditional) energy solutions such as CBM, Shale Gas and
Tar Sands.
* Design of Cryogenic Vaporizers and Cold Boxes for Air Separation plants.
* Design of Combustion Air Pre-heaters for Reformers in Ammonia Plants.
* Design analysis of Bulk Flow coolers in Urea Plants.
* Application of Low Temperature Thermal Desalination process for
commercial use.
* Design/engineering of molten salt based thermal energy storage system for
electric arc furnace with intermittent operation.
* Power generation solutions for offshore process platforms using wind
power.
* Development of software application packages for substation automation
with IEC interface, Integrated Building Management System and Meter Data
Acquisition System for Smart Grid.
* Development of in-house design/analysis capability involving Recycle,
Reuse and Zero-discharge Technologies.
* Solar energy based desalination plants for "Clean Energy" initiative.
* Advanced Finite Element Analysis (FEA) techniques for process equipment
subjected to thermal shock.
* Techniques for Reliability, Availability & Maintainability (RAM) studies
as part of specialized engineering support for Process Plants.
* Development of design/analysis methodology for Floating Structures using
FEA.
* Study on state-of-the art analysis technique for Cold Creep phenomenon.
* Design methodology for buckling analysis of sub-sea pipelines.
* Study on degradation mechanisms in material of construction for Ammonia
Convertor.
* Chemical synthesis of Platinum nano-particles for development of
electrodes for Electro-chemical applications.
* Study on degradation/failure mechanisms for High-Strength Steel and
Duplex Stainless Steels.
* Development of environmentally-friendly chemical formulations for
chemical cleaning and pickling of steels.
* Analytical and experimental study on the different types of precast
connections suitable for high rise buildings.
* Software for the design of the large capacity transmission towers.
* Production of mixes with lower bitumen content and higher fatigue life.
* Usage of the proven technology in various other sites and derive long
term economical and performance benefits.
* Effective utilization of the deep soil mixing technology at various
sites.
* Develop platform product ranges on new technology platform, thereby
creating a technology differentiation in the product.
* Incorporate technologically cutting edge to the product portfolio.
* Addressing new applications through the new product ranges.
* Creation of new markets and geographies for newer business opportunities.
* Participation in the various national and international Standard
Organizations will ensure that the product designs are always contemporary
and meet latest regulatory requirements.
* Development of new concrete.
* Development of new/upgraded products in defense equipments.
* Development of new/upgraded products in space equipments.
* Development of product as well as technological development in the areas
of Refineries, Fertilizer, Petrochemical & Energy.
* Development of technologies to automate composite production &
integration.
* CEFD - Centre for Excellence and Future Development
CEFD was started a couple of years ago and is responsible for developing
sustainable and carbon neutral built spaces. As a step forward in this
process, CEFD is focusing on enhancing energy efficiency, indoor
environmental quality, occupant comfort and climate responsiveness in the
upcoming projects. The thrust areas of CEFD are as follows:
Performance Enhancement in Built : Assisting energy efficiency during
spaces design
Comfort and energy analysis of
existing and upcoming projects
Experimental testing and thermal
performance evaluation of building
envelope systems for existing
buildings
Developing new technology systems:
Energy efficiency and indoor environmental quality in buildings:-
Developing design guidelines for office spaces which involves spatial
design optimization, envelope optimization and material selection for
various climatic zones.
Developing energy performance database for various glazing systems which
will further be used to create a tool for glazing and frame selection.
Life cycle costing:-
LCC analysis to support selection of building systems.
Tools/Interface development:-
HTML interface to assist shading design for major Indian cities.
Sustainability Initiatives:
Facilitation and coordination for green rating.
Capacity Building:
Collaborative research initiatives with organizations like IITs, IISc, TERI
and research laboratories in US, Canada and Europe.
Knowledge enhancement programs for various divisions of B&F (IC).
4. Expenditure on R&D: Rs. crore
2011-2012 2010-2011
(a) Capital 56.86 40.72
(b) Recurring 78.14 68.26
(c) Total 135.00 108.98
(d) Total R&D expenditure as
a percentage of total turnover 0.25% 0.25%
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. Efforts in brief made towards technology absorption, adaptation and
innovation:
* Interaction with external agencies/technology partners for exposure to
the latest products/designs, manufacturing technologies, processes,
analytical techniques and engineering protocols.
* Active involvement with International/National Professional Societies
(such as IChemE, AIChE/CCPS, IIChE, ICC, FRI, ASME, NACE, ASM, ASTM, AISC,
ACS, TERI, HTFS, HTRI, STLE, TSI, NAFEMS, TSI, etc.).
* Knowledge sharing through national/international conferences, seminars
and exhibitions.
* Institutionalization of in-house schemes (such as ICONs and KnowNet) for
identifying, nurturing and implementing innovative ideas and technology
solutions.
* Valuation, adaptation and/or modification of imported designs/
technologies to suit indigenous requirements, alternative materials/
components.
* Parametric studies involving theoretical models duly validated by
experimental studies at in-house laboratories and pilot plants as well as
feedback and operating data during commissioning of various plants and
machinery.
* Review of patents in relevant technology areas.
* Nomination of R&D engineers to external training programs, expert groups
and technical committees.
* Collaborative efforts with educational/research institutions for research
projects.
* Use of state-of-the-art equipment, instrument and software.
* Analyzing feedback from users to improve processes and services.
* Development of Torpedo Launching mechanism.
* Development of Armoured Fighting Vehicle.
* Development of remote welding technique for repair on live nuclear
reactor vault.
* Translation of technologies and product concepts into product designs
through state-of-the-art CAD/CAE facilities and well equipped test
laboratories.
* Adaptation of crushing technology for various applications at Kansbahal.
* Indigenization of various components for Rubber Processing Machines by
designing, developing specifications and adapting to Indian conditions at
LTM.
* Increasing filtration capacity at Foundry Unit, Coimbatore through change
of filters used in Casting process from Foam Filters to Hyper-cast filters.
* Development of Sulphur block coatings for moulds & cores in place of
Zircon based coatings at Foundry Unit, Coimbatore.
* Development of newer grades - SG 700/2 for Gear Box castings and Heat
Resistant Steel (High Nickel-High Chrome Steel) for steel rolling mills at
Foundry Unit, Coimbatore.
* Optimization of melt mix and improvement in overall Yield through new
spread of casting grades (SG, Grey Iron & Steel) at Foundry Unit,
Coimbatore.
* Localization of machining vendors at Foundry Unit, Coimbatore.
* Development and tracking of future technologies for integration with
products.
* Development of multi-generation platform products.
* Development of mechanization/welding automation on shop floor for
specific application.
* In discussions with Shell Projects for detailed engineering of Gasifier.
* Creation of intellectual property for the businesses.
2. Benefits derived as a result of the above efforts, e.g., product
improvement, cost reduction, product development, import substitution,
etc.:
* Successful performance simulation/optimization of process design and
engineering for various Hydrocarbon projects (Refinery, Oil & Gas,
Fertilizer and Chemical plants).
* Complete in-house support to business units in providing Refractory
solutions (selection, design, engineering, commissioning) for high-
temperature applications.
* Energy conservation through optimal design, analysis and engineering of
heat exchange equipment and waste heat recovery systems for Process Plants.
* Successful selection and characterization of materials for critical
applications and implementation of suitable preservation/corrosion
protection techniques to achieve longer life.
* Development of optimized design for Coal Pulverizers through appropriate
sizing, material selection and modification of indigenization of
manufacturing processes.
* Establishment of in-house capability for specialized engineering analyses
(e.g., Modeling & Process Simulation, Computational Fluid Dynamics,
Transient Thermal Analysis, advanced Stress Analysis, Vibration &
Acoustics, Rotor Dynamics, Tribology etc.) in order to achieve self-
sufficiency and minimize dependence on external agencies.
* Multi-disciplinary technology support to Projects towards
troubleshooting, failure analysis and plant commissioning, in order to
achieve successful Project completion with respect to cost, time, quality
and HSE targets.
* Widening of product range at Kansbahal to meet specific application
requirement for crushing.
* Manufacture of more safer and reliable products due to efforts of Product
Development Centre, Coimbatore.
* Acquisition of in-house expertise in areas such as material
characterization, advanced corrosion control methods, coating and wear
protection techniques to assess and mitigate material-related risks in
Projects.
* Contribution towards new materials development (composites/nano-
materials) to effective support Projects of strategic importance in
Defense, Nuclear and Aerospace applications.
* Establishment/upgrade of state-of-the art laboratory facilities for
material characterization, chemical analysis, corrosion control, vibration
and acoustics studies, experimental stress analysis etc., in order to
provide comprehensive technology support to business units. This has
reduced the dependence on external agencies and enabled effective execution
of projects.
* Indigenisation (import substitution) & development of products for Indian
Defence and Space sector.
* Technology differentiation in products and offering of superior features
to customers.
* Improvement in turnaround time and reduction in logistics costs.
* Expansion of product range and export opportunities.
* Product improvement.
* Increase in know-how within the country.
3. Information regarding technology imported during the last 5 years:
S.
No. Technology Imported Year of Import Status
a) Manufacturing know-how of 2007 Absorbed
Cementing Unit
b) Manufacture of control valves 2011-12 Under absorption
c) Crushing Technology On continuous basis at Kansbahal
[C] FOREIGN EXCHANGE EARNINGS AND OUTGO:
Activities relating to exports, initiatives taken to increase exports;
development of new export markets for products and services; and export
plans.
Overview:
The Company has a diversified range of products. Each division of the
Company has dedicated cells for giving impetus to exports. The Company has
offices abroad and agents in various countries to boost exports. The
Company is intensifying efforts in selected countries and exploring new
markets. The Company regularly participates in prestigious international
exhibitions and conducts market surveys and direct mail campaigns. The
Company has an international presence, with a global spread of offices and
joint ventures with world leaders. Its large technology base and pool of
experienced personnel enable it to offer integrated services in world
markets.
Hydrocarbon IC:
Hydrocarbon IC has a two decades successful track record of executing a
number of international turnkey large size & complex projects including in
GCC region where it has established a good presence.
During financial year 2012, few major projects have been received from
reputed international clients which reinforces the strong presence
Hydrocarbon IC has and future potential in these regions. Order received
from PDO for Gas processing facility, SADARA Chemical (a 50:50 JV of Saudi
Aramco & Dow Chemical Company) for process plant construction, ADMA OPCO &
PTTEP for well head platforms, GASCO for pipeline project. Moreover
prequalification obtained for upcoming large size projects from important
customers including ADCO, GASCO, ADMA OPCO, PDO, ORPIC, SAUDI ARAMCO, KOC,
KNPC.
As a part of Internationalisation initiatives key business development and
regional heads have been appointed in select important geographies such as
Australia, Houston, London, Malaysia, Perth, Saudi Arabia and Singapore.
Further IC has entered into few alliances and collaborations with reputed
international players in the area of Subsea systems, FPSO/MOPU, Refineries
& Fertilisers, etc.
Going forward we see substantial contribution and growth coming from
international region in all the business segments of Hydrocarbon IC.
Heavy Engineering IC:
* In process of approval with Alstom, Toshiba, ENEL, Skoda as worldwide
supplier for Power Plant Equipment.
* Pursuing with Saudi Electric Company (SEC) for approval as supplier of
Power Plant Equipment.
* Pursuing with Aker Solutions for Medicine Bow project in USA.
* In close interaction with Sasol for CTL Projects worldwide.
* Exploit the good performance of supplying Shell gasifiers in China to
expand and acquire business of Shell gasification worldwide.
* Fertilizer projects are expected in gas rich region like Africa, Brazil,
Middle East, Azerbaizan, Argentina and China.
* New market opportunities are expected in KSA, Kazakasthan, US & China for
our products.
* China emerges as the potential market for EO/EG & Methanol plant
equipment.
* Leverage L&T Forged shell for Ammonia Convertors, Reactors etc.
* Toyo qualification of OMAN works for Urea equipment.
* Improving reliability through the Competency Centres for Technology,
Design & Planning and Material & Logistics and implementation of Theory of
Constraint.
* Penetration in US market in Nuclear business for the BWR technology for
Canister, and also awarded order for supply of Canister in PWR technology.
* Expecting Nuclear business from Europe for CUSK and also ITER project -
France.
L&T Heavy Engineering has been exploring opportunities for export of
Defense, Nuclear Power & Aerospace equipment as well. Orders received from
Israeli Aerospace Industries as key Offset Partner in the areas of Weapon
Systems, Radars and Aerospace. The Defense Business is also interacting
with major international players in the defense industry for technology tie
ups and indigenous manufacturing.
Construction IC:
The focus on GCC Countries occupies a predominant position for PT&D for its
International Business. The year 2011-12 was an extremely challenging year.
Inordinate delay/deferment of projects by clients affected the Sales.
However, L&T`s Global Footprint coupled with project execution capabilities
helped the IC in securing certain prestigious orders in Qatar, UAE and
Kuwait in the Power Transmission and Distribution Sector. The IC has
substantially improved its market share in Qatar.
Business Environment:
The construction industry continues to witness slowdown and was very
sluggish during the last financial year. In UAE, the Abu Dhabi Government,
despite being highly liquid and cash rich, is very cautious in it`s
approach and the same is evident from the delay in placement of
Tender/Award of Contracts.
Business Performance:
The IC has secured one of the largest value tender in PT&D business at
Qatar during the year 2011-12. Expansion of Business into the new areas
viz. Bahrain, Kuwait has helped the Company to reach significantly higher
order inflow position.
Volatility in Commodity Prices:
Though oil price was not seen with much oscillation, the commodity price
had lot of volatility, however the Operating Company protected its margin
by mitigating the risk through proper hedging.
Outlook:
The 2012-13 outlook for GCC countries remains positive despite the Eurozone
crisis. With oil prices expected to be around $100/barrel range in 2012,
GCC public finances will remain reassuringly strong. Due to Arab spring in
2011, Government will remain focused on their medium term development goals
& propel the growth rate which will pave way for enhanced business
opportunities.
On the cost side, the various welfare measures announced by GCC Governments
for their nationals, including a steep hike in their salaries pose a
challenge to the Company in terms of inflation & pressures on margin. In
addition, recruitment & management of multinational staffs & workmen will
add to the challenges to the Company`s project team.
With the IC having firmly established in all GCC countries now, it has set
its sight to expand to African Countries & corner a significant market
share in GCC Market.
Electrical & Automation IC:
The overall economic activities, affected by factors such as increasing oil
prices, inflation, higher interest rates and rise in input costs, remained
quite slow. The dull Middle East markets in the middle-east added to the
pressure on this business.
Tamco Malaysia (one of the subsidiaries of the Company) qualified for
Achilles (UK) certification, made an entry into Philippines and Vietnam
markets, qualified in Kuwait and Iraq, received Petronas approval for its
MV products and executed its first order for 31.5kA AIS at Lusail City in
Qatar.
The switchboards and automation teams bagged an order of US $ 22 million
for supply of switchboards and telecommunications package including
transmission network and CCTV monitoring for an inter refinery pipelines
project in Abu Dhabi.
Future Outlook:
Some of our focused International markets have started showing signs of
recovery. The outlook for TAMCO holds good promise. Besides Malaysia, there
is an anticipation of boom in mining and offshore industries as well as
capacity addition in windmills in Western Australia, opportunities in the
infrastructure sector in Qatar, UAE and Malaysia. The Maaden frame
agreement has facilitated recognition of the IC`s subsidiary with global
EPC majors in KSA where higher government spending in infrastructure
segment is expected to yield significant business. For the IC`s subsidiary
in UAE, the Oil & Gas, Utility and Infrastructure segments are showing
signs of revival across Middle East, Africa and CIS countries with
significant investments announced over next 3-5 years. Having strengthened
its position in Telecom System Integration, it expects to grow
significantly in this area in addition to the areas in control, electrical
and instrumentation.
Electrical & Automation (E&A) business is confident of higher growth with
the Utility segment indicating increased activities alongwith revival in
the Building segment in GCC region. Africa has become a destination of new
opportunities. Prospects of turnkey automation projects are improving and
opportunities in the energy management segment should contribute to better
growth for automation products and solutions.
For FY 2011-12, E&A filed 162 patents applications, 16 trademark
applications, 10 design registrations and 9 Copyrights as well as 10
international patent applications through PCT (Patent Cooperation Treaty)
making it the 5th consecutive year of filing more than 100 patent
applications.
Power IC:
Power IC has identified export markets as key to growth for its Gas-based
Power Plants SBU. This is driven by lack of opportunities in domestic
market owing to sharp fall in Gas availability, which led the Ministry of
Power to advise Indian Power Producers not to plan any new Gas-based Power
project until 2015-16.
Power IC has identified GCC and South East Asia as the potential markets. A
good beginning is made in Bangladesh where the pre-qualification has been
achieved successfully. Orders totaling approximately 1600 MW are expected
to be ordered out in 2012-13.
Negotiations are also in progress with Mitsubishi Heavy Industries Limited
to order components on the manufacturing Joint Ventures, namely L&T-MHI
Boilers Private Limited and L&T-MHI Turbine Generators Private Limited.
Manufacturing & Industrial Products IC (MIP IC): LTM BU has successfully
supplied the proto type press to a major European Tyre Manufacturer and the
press is under observation. On successful performance LTM will be in a
position to get orders for presses to their plants worldwide. LTM also
succeeded in obtaining an order for Automatic Truck Tyre Building Machines
from another Major European Tyre Major, which opens a new market segment
for the unit. The Rubber Machinery business secured orders in Greenfield
domestic projects and emerging economies like Brazil and Russia this year.
LTM BU also stands to benefit from the new business prospects likely to
emerge in the area of Internal Mixers and Twin Screw Extruders in the
coming year.
Valves unit did good business on the back of sustained Oil & Gas project
activity in the Middle East, North Africa and Australia. The targeted
projects in international Oil & Gas were on schedule and enabled Valves to
end the year with a healthy order booking. Extension of approval for new
range of products including TMBV/TOBV were taken up with end users like
Aramco, KOC, Adnoc etc. for their product requirements. Service support at
site was strengthened with agreements signed with local modification shop
in Qatar, Saudi Arabia & Abu Dhabi. Detailed plans to address replacement
market business are being worked out with key distributors. All these
measures are expected to bring in international business of significant
scale.
Exports opportunities of Crushing and Surface Mining equipment at Kansbahal
were limited in 2011-12 due to subdued activities in cement industry in GCC
region. The future potential for export growth of products from Kansbahal
is envisaged in African countries. The efforts are being made in
identifying and aligning with local partners for further promotion and
sales activities. Increased mining activity in neighbouring countries like
Nepal, Bhutan and Myanmar will also throw opportunities of sale for our
equipment in coming year.
A few initiatives detailed:
The following initiatives are being followed on a continuous basis by the
Company:
* Widening new geographical areas for augmenting its exports.
* Exploring inorganic growth opportunities for the acquisition of
specialized engineering outfits abroad.
* Membership of global forums like Engineering & Construction Risk
Institute (ECRI) and participating in international seminars.
* Implementation of internal processes towards operational excellence and
creating a lean high performance organization.
* Knowledge dissemination through various platforms within the
organization.
* Bringing in high caliber resources in the areas of front-end marketing,
engineering, project management, risk management, contract administration,
etc., to strengthen the overseas operations.
* Customized Talent Management programs for catering to the training and
development needs of employees.
Total foreign exchange used and earned:
Rs. crore
2011-2012 2010-2011
Foreign Exchange earned 8,057.36 5,878.81
Exchange saved/deemed exports 2,363.25 1,941.85
Total 10,420.61 7,820.66
Foreign Exchange used 10,572.57 9,767.54
ANNEXURE `B` TO THE DIRECTORS` REPORT
Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines,
1999 (I) Employee Stock Ownership Scheme-1999-2003:
A. PRE RESTRUCTURE:
ESOP SERIES
Particulars SAR-1999 2000 2002-A
(1) (2) (3) (4)
(a) Options granted 10,66,000 39,48,800 37,81,100
Stock Equity shares Equity shares
Appreciation
Rights
(SARs)
(b) The pricing Grant price for The average The average
formula the purpose of market price market price
ascertaining on the Stock on the Stock
the Exchange, Exchange,
appreciation: Mumbai, on Mumbai, on
Average of the date of the date of
daily High Low grant i.e., grant i.e.,
Avarages of June 1, 2000 April 19, 2002
the Company`s- Rs.184/- per -Rs.172/- per
share price share. share.
on the Stock
Exchange,
Mumbai,
during the
year April
1998-March
1999.
This worked
out to Rs.199/-
per share.
(c) Options vested 10,60,750 38,64,050 20,67,250
(d) Options exercised 2,66,500 52,415 12,750
(e) Total number 1,04,318 52,415 12,750
of shares arising
as a result of
exercise of
Options (Equity
shares of Rs.10/-
each)
(f) Options lapsed 5,250 1,46,025 1,25,300
(g) Variation of Nil Nil Nil
terms of Options
(h) Money realised
by exercise of Rs.10,43,180/- Rs.96,44,360/- Rs.21,93,000/-
Options
(i) Total Number 7,94,250 37,50,360 36,43,050
in force SARs
(j) Employee-wise
details of Options
granted to:-
i) Senior Managerial
Personnel:
Mr. A.M. Naik 1,25,000 2,00,000 2,00,000
Mr. K. Venkataramanan 60,000 1,00,000 1,00,000
Mr. V.K. Magapu 20,000 35,000 35,000
Mr. M.V. Kotwal 16,500 27,000 27,000
Mr. S.N. Subrahmanyan - 5,400 4,800
Mr. R. Shankar Raman - 5,000 13,000
Mr. Y.M. Deosthalee 60,000 1,00,000 1,00,000
Mr. K.V. Rangaswami 16,000 25,000 25,000
Mr. J.P. Nayak 60,000 1,00,000 1,00,000
Mr. R.N. Mukhija 30,000 60,000 85,000
Mr. A. Ramakrishna 80,000 1,25,000 1,25,000
Mr. P.M. Mehta 30,000 60,000 85,000
Mr. M. Karnani 40,000 42,000 -
5,37,500 8,84,400 8,99,800
ii) Any other None None None
employee
who receives
a grant, in any
one year, of
Options amounting
to 5% or more of
Options granted
during that year
iii) Identified None None None
employees who
were granted
Options, during
any one year,
equal to or
exceeding 1% of
the issued capital
(excluding
outstanding
warrants and
conversions) of
the Company at
the time of
grant.
ESOP SERIES
Particulars 2002-B 2003-A 2003-B
(1) (5) (6) (7)
(a) Options granted 37,81,660 67,51,000 57,42,500
Equity shares Equity shares Equity shares
Appreciation
Rights
(SARs)
(b) The pricing The average The average The average
formula market price of the two of the two
on the Stock weeks high weeks high
Exchange, and low prices and low prices
Mumbai, on of the shares of the shares
the date of on the Stock on the Stock
grant i.e., April Exchange, Exchange,
April 19, 2002 Mumbai, Mumbai,
-Rs.172/- per preceding the preceding the
share. date of grant date of grant
i.e., May 23, i.e., May 23,
2003-Rs.206/- 2003-Rs.206/-
per share. per share.
(c) Options vested 20,19,830 Nil Nil
(d) Options exercised 6,250 Nil Nil
(e) Total number 6,250 Nil Nil
of shares arising
as a result of
exercise of
Options (Equity
shares of Rs.10/-
each)
(f) Options lapsed 1,07,375 Nil Nil
(g) Variation of Nil Nil Nil
terms of Options
(h) Money realised
by exercise of Rs.10,75,000/- Nil Nil
Options
(i) Total Number 36,68,035 67,51,000 57,42,500
in force
(j) Employee-wise
details of Options
granted to:-
i) Senior Managerial
Personnel:
Mr. A.M. Naik 2,00,000 2,00,000 2,00,000
Mr. K. Venkataramanan 1,20,000 1,20,000 1,20,000
Mr. V.K. Magapu 40,000 22,500 22,500
Mr. M.V. Kotwal 30,000 17,500 17,500
Mr. S.N. Subrahmanyan 3,400 3,250 3,250
Mr. R. Shankar Raman 14,000 12,500 12,500
Mr. Y.M. Deosthalee 1,20,000 1,20,000 1,20,000
Mr. K.V. Rangaswami 27,000 17,500 17,500
Mr. J.P. Nayak 1,20,000 1,20,000 1,20,000
Mr. R.N. Mukhija 80,000 85,000 85,000
Mr. A. Ramakrishna 90,000 60,000 -
Mr. P.M. Mehta 40,000 - -
Mr. M. Karnani - - -
8,84,400 7,78,250 7,18,250
ii) Any other None None None
employee
who receives
a grant, in any
one year, of
Options amounting
to 5% or more of
Options granted
during that year
iii) Identified None None None
employees who
were granted
Options, during
any one year,
equal to or
exceeding 1% of
the issued capital
(excluding
outstanding
warrants and
conversions) of
the Company at
the time of
grant.
Consequent to the demerger (sanctioned by the High Court of Judicature at
Bombay on April 22, 2004) of Cement Business of the Company and
restructuring of the share capital the outstanding SARs were converted into
equivalent number of Options and the total number of Options in force as
above were readjusted in proportion to the restructured equity capital
i.e., one Option for an equity share of the face value of Rs.2/- for every
two Options and repriced at Rs.14/- per Option in respect of ESOP Series
1999, 2000, 2002-A & 2002-B and Rs.70/- per Option in respect of ESOP
Series 2003-A & 2003-B.
B. POST RESTRUCTURE (PRE BONUS ISSUE-2006):
ESOP SERIES
Particulars 1999 2000 2002-A
(1) (2) (3) (4)
(a) (1) Options granted 3,97,125 18,75,180 18,21,525
(outstanding and adjusted
consequent to
restructuring of
share capital)
(2) Options granted
during:
(a) 2005-2006 6,02,670
(b) 1.4.2006 to
29.9.2006 56,460
(Equity shares of
Rs. 2/- each) 35,30,380
(b) The pricing formula
(Adjusted grant price Rs. 14/-
per share)
(c) Options vested 3,97,125 18,75,180 10,22,050
(adjusted on
restructure)
Add: vested post
restructure - - 7,90,312
(d) Options
exercised 3,97,121 18,65,367 18,03,824
(e) Total number
of shares 3,97,121 18,65,367 18,03,824
arising as a
result of exercise
of Options
(Equity shares
of Rs.2/- each)
(f) Options lapsed 4 5,613 12,326
and/or withdrawn
(g) Variation of
terms of Options Nil Nil Nil
(h) Money realised
by exercise Rs.55,59,694/- Rs.2,61,15,138/- Rs.2,52,53,536/-
of Options
(i) Total Number
of Options in
force-
Vested Nil 4,200 5,375 14,925
Unvested Nil Nil Nil
Total Nil 4200 5375
Employee-Wise
datails of Please refer to part A(j)
Options granted
Options granted
to Senior
Managerial
Personnel post
Restructure Pre
Bonus Issue
2006:
Mr. Shailendra - - -
Roy
ESOP SERIES
Particulars 2002-B 2003-A 2003-B
(1) (5) (6) (7)
(a) (1) Options granted 18,34,018 33,75,500 28,71,250
(outstanding and adjusted
consequent to
restructuring of
share capital)
(2) Options granted
during:
(a) 2005-2006
(b) 1.4.2006 to
29.9.2006
(Equity shares of
Rs. 2/- each)
(b) The pricing formula
(Adjusted grant price Rs. 70/-
per share)
(c) Options vested 10,02,003 Nil Nil
(adjusted on
restructure)
Add: vested post
restructure 8,20,708 20,51,220 19,32,585
(d) Options
exercised 18,04,510 20,33,343 19,14,964
(e) Total number
of shares 18,04,510 20,33,343 19,14,964
arising as a
result of exercise
of Options
(Equity shares
of Rs.2/- each)
(f) Options lapsed 14,583 6,94,997 3,23,009
and/or withdrawn
(g) Variation of
terms of Options Nil Nil Nil
(h) Money realised
by exercise Rs.2,52,63,140 Rs.14,23,34,010 Rs.13,40,47,480
of Options
(i) Total Number
of Options in
force-
Vested 14,925 17,389 17,135
Unvested Nil 6,29,771 12,75,272
Total 14,925 6,47,160 12,92,407
Employee-Wise
datails of Please refer to part A(j)
Options granted
Options granted
to Senior
Managerial
Personnel post
Restructure Pre
Bonus Issue
2006:
Mr. Shailendra - - 10,000
Roy
Consequent to the issue of Bonus Shares the total number of Options in
force as above as at the record date for Bonus Issue i.e., September 29,
2006 was readjusted in number in the ratio of Bonus Issue (1:1) and the
above exercise price of Rs.14/- and Rs.70/- was readjusted to Rs.7/- and
Rs.35/- respectively.
C. POST RESTRUCTURE (POST BONUS ISSUE 2006 - PRE BONUS ISSUE 2008):
ESOP SERIES
Particulars 1999 2000 2002-A
(1) (2) (3) (4)
(a) (1) Options granted Nil 8,400 10,750
(outstanding and adjusted
consequent to Bonus Issue)
(2) Options granted post
Bonus Issue
(Equity shares of
Rs. 2/- each)
(b) The pricing formula Rs. 7/-
(Adjusted grant price per
share)
(c) Options vested Nil 8,400 10,750
(adjusted on Bonus Issue)
Add: vested post Bonus - - -
Issue
Total Nil 8,400 10,750
(d) Options exercised Nil Nil Nil
(e) Total number of shares
arising as a Nil Nil Nil
result of exercise of
Options* (Equity shares
of Rs. 2/- each)
(f) Options lapsed Nil Nil Nil
(g) Variation of terms Nil Nil Nil
of Options
(h) Money realised by exercise
of Options (Rs.) Nil Nil Nil
(i) Total Number of
Options in force -
Vested Nil 8,400 10,750
Unvested Nil Nil Nil
Total Nil 8,400 10,750
(j) Employee-wise details
of Options granted Please refer to Part A (j) and Part B (j)
Options granted to Senior
Managerial Personnel post
Bonus Issue 2006
(Pre Bonus Issue 2008):
Mr. S.N. Subrahmanyan - - -
Mr. R. Shankar Raman - - -
Mr. Shailendra Roy - - -
22,500
* During the year 2007-08 50,000 shares were allocated to employees who
exercised 7,000 Options under 2003-A Series and 43,000 Options under 2003-B
Series from the shares returned by former Directors in accordance with the
consent terms approved by the Hon`ble High Court of Bombay on June 14,
2007.
Consequent to the issue of Bonus Shares 2008 the total number of Options in
force as above as at the record date for Bonus Issue i.e., October 3, 2008
was readjusted in number in the ratio of Bonus Issue (1:1) and the above
exercise price of Rs. 7/- and Rs. 35/- was readjusted to Rs. 3.50 and
Rs.17.50 respectively.
ESOP SERIES
Particulars 2002-B 2003-A 2003-B
(1) (5) (6) (7)
(a) (1) Options granted 29,850 12,94320 25,84,814
(outstanding and adjusted
consequent to Bonus Issue)
(2) Options granted post
Bonus Issue 7,18,430
(Equity shares of
Rs. 2/- each)
33,03,244
(b) The pricing formula Rs. 7/- Rs. 35/-
(Adjusted grant price per
share)
(c) Options vested 29,850 34,778 34,270
(adjusted on Bonus Issue)
Add: vested post Bonus - 12,35,430 19,90,863
Issue
Total 29,850 12,70,208 20,25,133
(d) Options exercised Nil 12,52,754 19,38,270
(e) Total number of shares
arising as a 10,000 12,45,754 18,95,270
result of exercise of
Options* (Equity shares
of Rs. 2/- each)
(f) Options lapsed Nil 25,840 2,12,861
(g) Variation of terms
of Options Nil Nil Nil
(h) Money realised by exercise
of Options (Rs.) 70,000/- 4,36,01,390/- 6,63,34,450/-
(i) Total Number of
Options in force -
Vested 19,850 15,726 81,963
Unvested Nil Nil 10,70,150
Total 19,850 15,726 11,52,113
(j) Employee-wise details
of Options granted Please refer to Part A (j) and Part B (j)
Options granted to Senior
Managerial Personnel post
Bonus Issue 2006
(Pre Bonus Issue 2008):
Mr. S.N. Subrahmanyan - - 7,000
Mr. R. Shankar Raman - - 9,000
Mr. Shailendra Roy - - 6,500
22,500
* During the year 2007-08 50,000 shares were allocated to employees who
exercised 7,000 Options under 2003-A Series and 43,000 Options under 2003-B
Series from the shares returned by former Directors in accordance with the
consent terms approved by the Hon`ble High Court of Bombay on June 14,
2007.
Consequent to the issue of Bonus Shares 2008 the total number of Options in
force as above as at the record date for Bonus Issue i.e., October 3, 2008
was readjusted in number in the ratio of Bonus Issue (1:1) and the above
exercise price of Rs. 7/- and Rs. 35/- was readjusted to Rs. 3.50 and
Rs.17.50 respectively.
D. POST RESTRUCTURE (POST BONUS ISSUE 2008):
ESOP SERIES
Particulars 1999 2000 2002-A
(1) (2) (3) (4)
(a) (1) Options granted
(outstanding and Nil 16,800 21,500
adjusted consequent to Bonus
Issue)
(2) Options granted
post Bonus Issue
(Equity shares of
Rs. 2/- each)
(b) The pricing formula Rs. 3.50
(Adjusted grant price per
share)
(c) Options vested Nil 16,800 21,500
(adjusted on Bonus Issue)
Add: vested post Bonus Issue - - -
Total Nil 16,800 21,500
(d) Options exercised Nil Nil Nil
(e) Total number of
shares arising as a Nil Nil Nil
result of exercise
of Options (Equity
shares of Rs. 2/- each)
(f) Options lapsed Nil Nil Nil
(g) Variation of terms
of Options Nil Nil Nil
(h) Money realised by
exercise of Options (Rs.) Nil Nil Nil
(i) Total Number of
Options in force -
Vested Nil 16,800 21,500
Unvested Nil Nil Nil
Total Nil 16,800 21,500
(j) Employee-wise details
of Options Please refer to Part A (j), Part B (j)
and Part C (j)
Options granted to Senior
Managerial Personnel post
Bonus Issue 2008:
Mr. Ravi Uppal - - -
ESOP SERIES
Particulars 2002-B 2003-A 2003-B
(1) (5) (6) (7)
(a) (1) Options granted
(outstanding and 39,700 31,452 23,04,226
adjusted consequent to Bonus
Issue)
(2) Options granted
post Bonus Issue 7,13,200
(Equity shares of
Rs. 2/- each)
30,17,426
(b) The pricing formula Rs. 3.50 Rs. 17.50
(Adjusted grant price per
share)
(c) Options vested 39,700 31,452 1,63,926
(adjusted on Bonus Issue)
Add: vested post Bonus Issue - - 21,35,207
Total 39,700 31,452 22,99,133
(d) Options exercised Nil Nil 21,77,629
(e) Total number of
shares arising as a Nil Nil 21,77,629
result of exercise
of Options (Equity
shares of Rs. 2/- each)
(f) Options lapsed Nil Nil 1,92,495
(g) Variation of terms
of Options Nil Nil Nil
(h) Money realised by
exercise of Options (Rs.) Nil Nil 3,81,08,507.50
(i) Total Number of
Options in force -
Vested 39,700 31,452 1,04,202
Unvested Nil Nil 5,43,100
Total 39,700 31,452 6,47,302
(j) Employee-wise details
of Options Please refer to Part A (j), Part B (j)
and Part C (j)
Options granted to Senior
Managerial Personnel post
Bonus Issue 2008:
Mr. Ravi Uppal - - 20,000
Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines,
1999
(II) Employee Stock Option Scheme - 2006
A. PRE BONUS ISSUE 2008
ESOP SERIES
Particulars 2006 2006-A
(1) (2) (3)
(a) (1) Options granted 53,35,750 -
(Pre Bonus Issue)
Options Outstanding and
adjusted consequent 1,06,71,500 -
to Bonus Issue#
(2) Options granted Post
Bonus Issue 6,94,270 29,06,240
(Equity shares of
Rs.2/- each)
(b) The pricing formula The latest available The latest available
closing price on closing price on
National Stock National Stock
Exchange of India Exchange of India
Limited on August Limited on June 29,
31, 2006, preceding 2007, preceding the
the date of initial date of grant i.e.,
grant i.e., September July 1, 2007 -
1, 2006 - Rs.2,404/- Rs. 2,198/- per
per share. share (Discounted
grant price per
share - Rs.1,202/-).
# Consequent to the issue of Bonus Shares the total number of Options in
force as at the record date for Bonus Issue i.e., September 29, 2006 was
readjusted in number in the ratio of Bonus Issue (1:1) i.e., 1,06,71,500
Equity Shares and the above exercise price of Rs. 2,404/- was readjusted to
Rs. 1,202/-.
(c) Options vested 20,13,200 40,524
(d) Options exercised 12,80,677 25,034
(e) Total number of 12,80,677 25,034
shares arising as a
result of exercise of
Options (Equity shares
of Rs. 2/- each)
(f) Options lapsed
and/or withdrawn 32,72,955 1,80,428
(g) Variation of terms
of Options Nil Nil
(h) Money realised by
exercise of Options Rs. 153,93,73,754 Rs. 3,00,90,868
(i) Total Number of
Options in force -
Vested 6,97,138 14,844
Unvested 61,15,000 26,85,934
Total 68,12,138 27,00,778
(j) Employee-wise details
of Options granted to -
i) Senior Managerial
Personnel None
ii) Any other employee who
receives a grant, in any
one year, of Options
amounting to 5% or more
of Options granted during
that year None
iii) Identified employees
who were granted Options,
during any one year, equal
to or exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the Company
at the time of grant None
Consequent to the issue of Bonus Shares 2008 the total number of Options in
force as above as at the record date for Bonus Issue i.e., October 3, 2008
was readjusted in number in the ratio of Bonus Issue (1:1) and the above
exercise price of Rs. 1202/- was readjusted to Rs. 601/-.
B. POST BONUS ISSUE 2008:
ESOP SERIES
Particulars 2006 2006-A
(1) (2) (3)
(a) (1) Options granted
(outstanding and adjusted 1,36,24,276 54,01,556
consequent to Bonus Issue)
(2) Options granted Post
Bonus Issue Nil 85,82,980
(Equity shares of
Rs. 2/- each) 1,36,24,276 1,39,84,536
(b) The pricing formula Rs. 601/-
(Adjusted grant price
per share)
(c) Options vested 13,94,276 29,688
(Adjusted on Bonus Issue)
Add: Vested post Bonus
Issue 1,17,81,255 50,31,790
Total 1,31,75,531 50,61,478
(d) Options exercised 1,06,81,677 30,68,800
(e) Total number of
shares arising as a
result of exercise 1,06,81,677 30,68,800
of Options (Equity
shares of Rs. 2/-
each)
(f) Options lapsed
and/or withdrawn 9,15,848 22,70,387
(g) Variation of terms
of Options Nil Nil
(h) Money realised by
exercise of Options Rs. 641,96,87,877 Rs. 184,43,48,800
(i) Total Number of
Options in force -
Vested 20,11,951 17,51,546
Unvested 14,800 68,93,803
Total 20,26,751 86,45,349
(j) Employee-wise details
of Options granted to -
i) Senior Managerial
Personnel None
ii) Any other employee
who receives a grant, in
any one year, of Options
amounting to 5% or more
of Options granted
during that year None
iii) Identified employees
who were granted Options,
during any one year, equal
to or exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the
Company at the time of
grant None
Employee Stock Ownership Scheme -1999-2003 and Employee Stock Option Scheme
2006
(k) Diluted Earning per Share a. Diluted EPS before extraordinary
(EPS) pursuant to issue of items Rs. 72.23
shares on exercise of Options
calculated in accordance with b. Diluted EPS after extraordinary
Accounting items Rs. 72 23
Standards (AS) 20
(l) The difference between Had fair value method been adopted for
employee compensation cost expensing the compensation arising from
using intrinsic value method employee share-based payment plans:
and the fair value of the
Options and impact of this a. The employee compensation charge
difference on profits and debited to the Statement of Profit and
on EPS. Loss for the year 2011-2012 would have
been higher by Rs. 25.99 crore
(previous year: Rs. 43.85 crore)
[excluding Rs. 4.79 crore (previous
year: Rs. 3.31 crore) on account of
grants to employees of subsidiary
companies]
b. Basic EPS before extraordinary items
would have decreased from Rs. 72.92 per
share to Rs. 72.50 per share
c. Basic EPS after extraordinary items
would have decreased from Rs. 72.92 per
share to Rs. 72.50 per share
d. Diluted EPS before extraordinary
items would have decreased from
Rs. 72.23 per share to Rs. 71.81 per
share
e. Diluted EPS after extraordinary items
would have decreased from Rs. 72.23 per
share to Rs. 71.81 per share
(m)(i) (a) Weighted average Rs. 566.22 per share
exercise prices of Options
granted during the year where
exercise price is less than
market price.
(b) Weighted average exercise No such grants during the year
prices of Options granted
during the year where exercise
price equals market price.
m(ii) (a) Weighted average
fair values of Options granted
during option the year where
exercise price is less than
market price. Rs. 745.94 per
(b) Weighted average fair
values of Options granted
during the year where
exercise price equals
market price. No such grants during the year
(n) Method and significant
assumptions used to estimate
the fair value of Options
granted during the year.
(a) Method Black-Scholes Option Pricing Model
(b) Significant Assumptions
(i) Weighted average risk-free
interest rate 8.28%
(ii) Weighted average expected
life of Options 4.33 years
(iii) Weighted average
expected volatility 41.09%
(iv) Weighted average expected
dividends Rs. 62.84 per option
(v) Weighted average market
price Rs. 1146.53 per share
AUDITORS` CERTIFICATE ON EMPLOYEE STOCK OPTION SCHEMES
We have examined the books of account and other relevant records and based
on the information and explanations given to us, certify that in our
opinion, the Company has implemented the Employees Stock Option Schemes in
accordance with SEBI (Employee Stock Option Schemes and Employee Stock
option Purchase Scheme) Guidelines, 1999 and the resolutions of the Company
in general meetings held on 26 August, 1999, 22 August, 2003 and 25 August,
2006.
SHARP & TANNAN
Chartered Accountants
ICAI registration no. 109982W
by the hand of
R.D. KARE
Partner
Membership No. 8820
Place: Mumbai
Date : 14 May, 2012.
MANAGEMENT DISCUSSION AND ANALYSIS
Global Economic Condition:
The world economy continues to face challenges on the road to sustained
recovery. Advanced Economies that seemed to be shaping well at the start of
2011 lost steam towards the fag-end of the year and this uncertainty is
clouding the prospects for global growth during 2012. The growth momentum
was impacted as the protracted debt crisis in the euro area and fiscal
fragilities dampened business and consumer confidence.
The economic crisis and its ramifications have accelerated the shift of
economic power from the developed to the emerging nations and exposed a
fragile world with limited capacity to respond to systemic risks. The
consequence has been volatile and low growth which is likely to stay for
sometime to come.
Near term, the growth prospects for 2012-2013 remain uncertain, with growth
petering out in the euro area and moderating in the emerging markets, while
a better-than-expected recovery is shaping up in the US. The baseline
scenario suggests that global growth may continue to be low in 2012, with a
recession in the euro area as the region makes the much needed fiscal
adjustment. Meanwhile, the resource rich Middle East and North Africa
(MENA) region has been facing significant internal challenges and
geopolitical risks. In addition, there is the risk of large potential
spillovers to the region from Europe.
The year 2011-201 2 was abetted by the continuing global volatility and
challenges. These uncertainties led to widespread risk aversion and
adversely affected capital flows to new projects. The competition for
limited opportunities, led to socio-political tensions, increasing
protectionism, reassessment of regulation and more importantly, heightened
competition for scarce natural resources.
Overview of Indian Economy:
After a rebound in growth in 2010-2011, the Indian economy slowed down to
6.5% in fiscal 2011-2012. This was the lowest annual growth in the last 9
years and was sub-par in comparison to not just the pre-crisis years up to
2008 but also compared to immediate post crisis period.
With increasing global integration, the Indian economy was impacted by
global uncertainties, while at the same time faced significant domestic
challenges of persistent and high inflation, tight monetary conditions, low
investment and delays in policy making.
The slowdown in 2011-12 was seen in all the major sectors of the economy as
compared with the previous year. The Services sector grew by 8.9%, Industry
by 3.4% and Agriculture by 2.8% as compared with 9.3%, 7.2% and 7%
respectively in 2010-2011. Industrial growth remained subdued due to
supply-side bottlenecks, particularly in the mining sector, and moderation
in investment demand. The most dismal picture has been presented by capital
goods segment which has been in a negative territory during the fiscal.
Significantly, slowdown was witnessed in capacity addition as defined by
capital formation which decelerated to 5.5% in 2011-2012 as against 7.5%
achieved in 2010-2011.
Business scenario:
Core sectors in the country which are of key importance to the businesses
of the Company, in particular, Power, Transportation Infrastructure,
Hydrocarbon, Fertiliser, Defence, faced multiple challenges due to policy
delays. Consequently the commitments on capital expenditure and fresh
investments were deferred, impacting the growth in the order inflow of the
Company during 2011-2012.
Delays in obtaining various clearances and approvals staggered progress on
a few ongoing projects in power, power transmission, roads and railways
segment. Product businesses of the Company witnessed sluggish industrial
demand and recorded moderate sales during 2011-2012.
Despite the prevailing economic uncertainties, the year 2012-2013 holds
prospects of gradual build-up in the growth momentum of the Indian economy.
Infrastructure development assumes prominence in the Government`s budget
proposals for the year 2012-2013. Apart from Power and Transportation
Infrastructure, the emphasis will be on strengthening certain other sectors
such as Fertiliser, Oil & Gas Pipelines, Irrigation, and Rural Market
Network with increase in the budgeted allocation of resources for funding
growth in these sectors.
In the long-term, India continues to offer considerable opportunities aided
by its favourable demographic profile. Its large consumer market has
attracted global companies, many of whom have made India their
manufacturing hub. However, in order to harness this potential and achieve
sustainable growth, the country needs to push forward critical reforms and
build innovative public-private partnerships to deliver rapid and inclusive
growth as also provide an enabling environment for upgrading
infrastructure.
Besides policy reforms, better governance, delivery systems and stronger
implementation, the leaders from the government, industry and society need
to collaborate to improve the education system, invest in much needed
infrastructure, increase the agricultural productivity and ensure an
equitable distribution of opportunities for achieving an inclusive and
sustainable growth.
With some signs of stability returning in the MENA region and crude prices
sustaining at remunerative levels, infrastructure development and capacity
expansion in Oil & Gas sector is expected to attract fresh investments in
the Middle East which augur well for the businesses of the Company.
Business Challenges:
Order prospects of the Company especially from Power, Infrastructure,
Defence, Fertiliser, Water and Railways in India largely depend upon the
policy direction and availability of resources to finance large projects.In
spite of large demand for power, projects for setting up of new power
plants are not gaining momentum due to fuel shortage, delays in obtaining
environmental clearances, issues associated with land acquisition and
competition from Chinese equipment manufacturers. Political stability, good
governance and speedy decision making hold the key for achieving growth in
the order inflow.
The businesses of the Company are also focusing on harnessing international
prospects, mainly from the Middle East region in 2012-2013. The forays into
international markets would mean dealing with many challenges such as stiff
competition from multinational players, regulatory requirements of local
sourcing etc.
Margins would remain under pressure during 2012-2013 with inflationary
conditions and continuing competition from domestic and international
players. The volatility in commodity prices and foreign currency exchange
rates are expected to pose challenges to the operating margins. Conditions
of tight liquidity and elevated interest rates are expected to prevail in
2012-2013. The working capital levels unless managed well are likely to
trend higher.
Growth Strategies and Thrust Areas:
Improved execution efficiencies, cost competitiveness, better supply chain
management, control over working capital, efficient utilization of
resources, smart bidding strategies, better product and service offerings
will enable the businesses to achieve the desired targets in the medium
term. The major growth strategies of the Company include:
* Thrust to International Business:
While strengthening its domestic presence, the Company is accelerating
forays into the international markets, particularly in the Middle East. The
prospects in the new geographies such as Australia, parts of Africa and CIS
countries are also being explored. Building an international organisation
for business development and execution is a major thrust area. The
businesses are focusing on tie-ups/pre-qualification alliances for securing
large value international orders.
* Strengthening Execution and Operational efficiency:
The businesses have taken steps for focused cost reduction and productivity
improvement to enhance their competitive positioning. These steps will also
enable deployment of innovative pricing strategies for achievement of
targeted business inflow for both projects as well as product businesses of
the Company.
Efficient project monitoring and improved contract management remain the
key thrust areas for management of large sized, long cycle EPC jobs under
execution. The businesses are concentrating on superior execution and
enhanced delivery capability for achieving targeted sales and profitability
in 2012-2013.
* Capacity augmentation and productivity gains:
With an eye on capacity augmentation, the Company has undertaken in 2011-
2012 capital expenditure mainly to acquire various plant and equipment for
the businesses in Engineering and Construction segment and for expansion of
the Modular Fabrication Yard at Kattupalli, Tamilnadu. The manufacturing
facilities at Vadodara and Ahmednagar for the Electrical and Electronics
business segment are being augmented to reap benefits of low cost
locations.
The Company has made significant investments in the past few years in
expanding the fabrication & manufacturing facilities for its various
businesses. While these new capacities will enhance the competitive edge of
the Company, the returns on these investments are expected only over a
longer term. The businesses are focusing on increasing capacity utilization
and enhancing productivity in order to improve returns on these
investments.
* New Business Structure and Strategic Plan:
The Independent Companies (ICs) structure has been institutionalized in L&T
Group for empowering businesses for scaling up performance. A mid-term
review of the Strategic Plan 2015 was carried out and requisite course
corrections have been incorporated in the newly adopted Lakshya 2016 plan.
With improved organizational structure and strategic direction, the
businesses are enabled to harness opportunities and tackle challenges. The
Strategic Plan will aid the Company to take initiatives for growing
remunerative businesses.The Strategic Plan is also expected to facilitate
organizational and business portfolio restructuring for increased value
creation in the medium term.
* Human Resource Development:
Talent management, leadership development and succession planning are the
major focus areas for the Company. The individual business units have been
focusing on acquiring and retaining the talent with requisite competencies.
Specific high impact programmes are being conducted for leadership
development. The Company has invested in setting up various in-house
training and development centers. L&T-Project Management Institute in
Baroda is accredited by PMI of USA. The Company runs Construction Skill
Training Institutes (CSTI) in association with the Ministry of Rural
Development, GOI and some of the State Governments at 7 locations across
India for imparting vocational training to rural youth on skills such as
masonry, carpentry, plumbing etc.
With identified key strategic initiatives, large order book and the proven
track record, the Company is well positioned to chart out its course on the
growth trajectory and create value for all its stakeholders in the medium
term. It is in this background that the Company`s ICs, Subsidiary &
Associate Companies present their operations review for the year 2011-2012
as under:
Hydrocarbon IC Delivers:
Overview:
Hydrocarbon IC delivers design-to-build world class solutions in the
Engineering & Construction space for Oil & Gas sector. In-house expertise
and experience, synergized with strategic partnerships enable it to deliver
a singlepoint solution for every phase of project - from front end design
through engineering, fabrication, project management, procurement,
construction and installation right up to commissioning.
The key aspects of business philosophy are on-time delivery, cost
competitiveness, high quality standards with focus on best in class Healthy
Safety Environment and IT security practices. Integrated strengths coupled
with experienced and highly skilled work force, are the key enablers in
delivering critical and complex projects in India and in select overseas
countries.
Major capabilities of the IC include in-house engineering, R & D centers,
engineering joint ventures with reputed international companies, offshore
installation capabilities, world class modular fabrication
facilities,experienced & competent project execution team and safety
oriented work culture. Hydrocarbon IC constantly strives to enhance health
safety and environment parameters during project execution through safety
cultural transformation across various disciplines. It has major work
centres in India at Powai [Mumbai], Vadodara, Chennai, Bengaluru,
Faridabad, Hazira and Kattupalli. The IC is a significant player in the
Middle East and South East Asia. Internationally it has a manufacturing
facility in Sohar [Oman], project execution capabilities in UAE [Abu Dhabi
and Sharjah], Qatar [Doha] and Al-Khobar [Saudi Arabia] and business
development offices in Houston, London, Singapore, Malaysia & Brazil.
Hydrocarbon IC is structured into the following three Strategic Business
Groups (SBGs):
* Hydrocarbon Upstream
* Hydrocarbon Mid & Downstream (HMD)
* Hydrocarbon Construction & Pipelines (HCP)
Hydrocarbon Upstream
Hydrocarbon Upstream SBG provides a wide range of EPIC solutions covering
entire value chain of offshore Oil & Gas encompassing drilling rigs,
offshore platforms and subsea pipelines. Its wide business portfolio
includes well-head platforms, process platforms & modules, subsea
pipelines, brownfield developments, floating systems and deep water sub-
sea.
The SBG has successfully executed large size projects in East & West Coast
of India, the Gulf and Africa and has an elite clientele comprising global
companies such as ONGC, GSPC, Songas, Qatar Petroleum, Maersk Oil Qatar,
Bunduq, PTTEPI, ADMA OPCO and also executed break through orders for major
jack up rig refurbishment.
Upstream SBG has three state-of-art fabrication facilities offering round
the year delivery, accessing strategically important regions - Hazira near
Surat on the west coast of India, Kattupalli near Chennai on the east coast
of India, and at Sohar on the Gulf of Oman, with a capacity of about 1
50,000 MT per year catering to fabrication of large oil & gas modules and
heavy offshore and onshore structures. In addition, the deepwater yards at
Sohar and Kattupalli can execute construction / refurbishment of Jack-up
Rigs & Semis, FPSO`s and Integrated Decks. The SBG`s capabilities are
further augmented with the new Heavy Lift-cum-Pipelay installation Vessel,
LTS3000.
The SBG recently completed installation of the country`s largest project
order bagged in 2009-the US $ 1.2 Billion Mumbai High North complex, where
it achieved several firsts for Indian offshore such as largest jacket,
heaviest loadout, heaviest lift at offshore, largest offshore living
quarter module and largest process platform. The entire Engineering and
Fabrication for this project was done in-house, achieving an end-to-end
delivery capability for such mega projects. Installation vessel LTS 3000
owned by L&T`s JV LTSSPL was used for installation of Jackets including
heaviest MNP Jacket weighting 13,500 MT for first time in India. A total of
80,000 MT of fabrication was involved in this project.
During the year, Upstream SBG was successful in bagging major well head
platform orders from international clients like PTTEPI and ADMA OPCO.
As a part of strategic initiatives, newer geographies are being explored to
maintain the growth momentum.
Hydrocarbon Mid & Downstream (HMD):
Hydrocarbon Mid & Down Stream SBG offers turnkey solutions encompassing
engineering, procurement, construction and commissioning (EPCC) to
petroleum refining, petrochemicals, fertiliser and onshore gas processing
sectors.
The SBG has rich experience of project execution with diverse technologies
form process licensors like UOP, Axens, HaldorTopsoe, CB&I Lummus, Black &
Veatch, Ortloff, ExxonMobil, BOC Parsons, Du-Pont (Invista) & Davy Process
Technologies.
HMD has built the capabilities and has the resources to simultaneously
execute multiple large value complex projects meeting stringent delivery
schedules and safety norms. The multi-locational centres of engineering
excellence comprising L&T-Chiyoda and in-house design and engineering
centres, have over 1500 experienced engineers, equipped to address the
complete spectrum of process and detailed engineering. In India, the SBG
mainly operates from Mumbai and Vadodara. As a part of internationalization
initiative, business development and execution capabilities have been
established in Sharjah and Al-Khobar.
HMD has also been prequalified with major state owned oil & gas producers
in MENA and SEA such as ORPIC, ADCO, ADMA OPCO, KOC, KJO, Saudi ARAMCO for
large value upcoming projects.
During the year, SBG has bagged a green field gas processing project from
PDO Oman. HMD has actively participated in almost all the fertilizer
projects in India. Through strategic alliances with internationally
renowned companies, HMD has access to world-class technologies offering
process for manufacture of ammonia and urea.It has three Ammonia Plant
modernisation projects under execution at Bharuch for GNFC and at Panipat &
Bhatinda for NFL which are progressing as per schedule.
The SBG has excellent track record in executing hydrogen generation and
synthesis gas generation projects and has also executed several fast track
refinery projects including diesel hydrodesulphurisation and diesel hydro-
treating units. In the domestic Gas processing segment, two projects are
under execution for additional gas processing facilities from ONGC at
Hazira & Uran.
Major jobs completed during the year include commissioning of hydrogen
generation unit of GGSR at Bhatinda and mechanical completion of diesel
hydrotreating unit and hydrogen generation unit of MRPL at Mangalore.
Reactor regenerator package for IOCL-Paradip is also under advanced stage
of execution.
Hydrocarbon Construction & Pipelines (HCP):
Hydrocarbon Construction & Pipelines SBG undertakes turnkey construction of
refinery, petrochemicals, chemical plants, fertilizers, gas gathering
stations, crude oil & gas terminals, underground cavern storage system for
LPG covering civil, structural, piping, equipment and heavy lift works. It
also undertakes cross-country pipelines on lump-sum turnkey (LSTK) basis.
Major capabilities include engineering design centers, heavy lift
competency and quality adherence. SBG has put in focused efforts to set
higher benchmarks in Health Safety Environment Culture. The SBG has a joint
venture with Gulf Interstate Engineering of USA to provide world class
engineering for cross-country pipelines. L&T`s capability to meet the
global standards in pipeline construction on EPC mode has been proven in
Cairn`s Barmer Salaya pipeline project which is the world`s longest heated
and PUF insulated waxy crude pipeline.
To cater to GCC opportunities, the SBG has well established at Sharjah & Al
Khobar supported by plant and machinery a fleet of key construction
equipment, including all-terrain cranes, entire range of pipeline spreads &
earthmoving equipment. In order to service the clients in the MENA region
more effectively, the SBG has entered into joint venture with reputed local
partners in Oman, Kuwait and Saudi Arabia. Hydrocarbon IC is targeting
select opportunities in other international geographies such as-South East
Asia, Australia, Africa & CIS countries and key regional business
development personnel have been appointed in those regions.
The SBG has executed various projects for key clients such as SABIC (Saudi
Arabia), KOC (Kuwait), KAFCO (Kuwait) ADNOC, ENOC, Qatar Petroleum,
Oiltanking Odfjell Terminals & Co. (Oman) and Saudi Aramco directly as well
as through other EPC contractors.
During the year, SBG achieved major milestone by bagging a 52" X 123 km
pipeline contract on EPC basis from GASCO in UAE and breakthrough order in
Saudi Arabia for CMIE construction work of poly ethylene plant from Sadara
Chemicals (a 50:50 JV of Saudi Aramco & Dow Chemical Company).
Business Environment:
Domestic Market is becoming increasingly competitive with new players
trying to establish themselves through aggressive bidding as also
established international players quoting on marginal cost basis to utilize
their idle capacities.
In order to achieve sustainable growth going forward, IC has embarked on
cost reduction & value engineering initiatives and diversification into new
geographies. Hydrocarbon IC is also focusing on modular process plant
opportunities including onshore LNG modules for international markets.
During the year, a few orders, mainly domestic, got deferred due to lack of
clear policies on fertilisers, fuel pricing and weaker financial condition
of oil marketing PSUs.Internationally, select GCC countries saw some
sluggishness namely Qatar due to gas moratorium and Kuwait due to political
reasons. On the contrary, UAE and Saudi are seen to be active on new
project announcements. Successful execution of jobs bagged during the year
from some prestigious international client like ADMA OPCO, PDO, PTTEP,
GASCO and SADARA Chemical, would lead to potential of repetitive orders.
Significant Initiatives:
During the year, the IC achieved prequalification for major upcoming
projects in Saudi, UAE, Australia, South East Asia and Kuwait. For
venturing into newer product lines like Subsea systems, FPSO/MOPU and to
strengthen position in areas like fertilizer, it has formed strategic
alliances/ collaborations with world-class technology providers. The IC
will target large value projects in GCC, through consortium model with big
EPC players.
In order to realign to the changing market scenario, a mid term review of
Strategic plan-"Lakshya 2016" was taken up during the year wherein a number
of new initiatives have been identified to ensure sustainable business
growth as well as operational excellence.
As a part of internationalization initiatives, key business development
personnel and international business heads have been appointed across
geographies such as Houston, London, Kaula Lumpur, Perth, Al-Khobar (Saudi
Arabia) and Singapore. Moreover, to strengthen international organization,
proven performers in the domestic operations have been identified and are
being assigned key roles in the international arena.
In order to tap upcoming opportunities reserved for local companies, an IK
EPC Joint Venture is being formed in Saudi Arabia. IC continues to explore
new avenues of cost savings and cost reduction. Target pricing, alternate
sourcing, value engineering and effective contract management are the key
initiatives which will help in sustained growth.
During the year Kattupalli yard witnessed dispatch of GSPCL Deck for
Kakinada Oil fields. In view of increased international opportunities in
modularisation the yard is being developed further, which is expected to be
completed in 2012-2013.
The IC has undertaken various efforts to strengthen the safety culture
within the organization by engaging DuPont to lead the initiative. A safety
governance structure with an apex committee comprising senior management
personnel is formed. Eight standards on high risk activities have been
formulated and approved by Apex safety committee for implementation across
the facilities. Safety Innovation school has been established in Hazira
providing trainings on various safety competencies including facilities for
experiential learnings.
Hydrocarbon IC has a strong resource base of skilled and experienced people
working in various disciplines. HR efforts are targeted to ensure that the
right talent is sourced, selected, trained and deployed across the
organization. Special efforts are being put to identify potential leaders
and groom them to take on higher responsibilities in the future.
The IC has entered into Memorandum of Understanding [MoU] with prestigious
Universities to offer specialized courses in niche areas relevant to the IC
for grooming select young engineers to be a part of the workforce. L&T
Institute of Project Management, at Vadodara, plays a pivotal role in
equipping the employees with the tools and techniques that can be deployed
in effective project execution. The HR Excellence Model patterned around
the Malcolm Balridge Quality Model & People Capability Maturity Model
(PCMM), takes a holistic view of the existing HR processes and provides a
structured approach for continuously improving the HR processes and its
effectiveness.
The IC has institutionalised matured Risk Management Process with clear
policies and guidelines to enhance/protect operating margins. The process
is aimed at identification, assessment, mitigation and monitoring risks
from pre-bid to completion of the project.
The challenges in the form of increasing competition, newer geographies,
forex and commodity price fluctuation and manpower attrition are
effectively mitigated through specific actions like appointing local
representatives in target countries, proactive hedge management,
operational excellence initiatives and employee engagement programmes.
Project Managers of the IC are undergoing Risk Induction Programme
conducted by ECRI (Engineering & Construction Risk Institute) on a
continuous basis to get acquainted with Global Best Practices in
Engineering & Construction Risk Management.
Outlook:
Oil prices are steady at elevated level and have upward bias in near term
given the political tensions between USA and Iran. The IC foresees business
momentum building up particularly in Saudi Arabia and UAE markets in 2012-
2013.
Major triggers in domestic markets would be clarity on gas pricing and
availability which will facilitate award of fertilizer projects and
expected impetus to cross country pipeline projects. Good business
opportunities are also seen in upcoming onshore gas processing projects.
On the international front, the IC is confident of securing a few large
size orders from Saudi Arabia, UAE, Oman, South East Asia region aided by
business development initiatives undertaken by the IC and good business
prospects in these select markets.
Buildings & Factories IC:
Overview:
Buildings & Factories (B&F) IC undertakes engineering design and
construction of Airports, IT office spaces & institutional buildings,
hospitals, hotels, residential buildings, factories and cement plants. Our
thrust is on diversifying in various building segments and expanding
customer base by providing "Concept to Commissioning" solutions thus
maintaining its leadership position, retaining key customers and bagging
major orders.
B&F IC, as a part of L&T`s Construction business has completed many
landmark projects in India as well as abroad. In a global setting, L&T
construction ranked 29th amongst the top 225 Global Contractors [source:
Engineering News Record (ENR) August 29, 2011] consistently improving its
ranking over last five years from 54th rank in ENR 2006.
Business Environment:
Despite a decline in overall GDP growth, the B&F IC maintained its
leadership in the market during 2011-2012.
Elite & luxury housing segment in the metro cities, commercial complexes
for Retail and IT industry provided good opportunities to B&F IC during
2011-2012.
The Order book of B&F IC recorded significant growth with major orders
bagged during 2011-2012. In Airports, B&F bagged the prestigious project of
Bangalore International Airport Limited Terminal 1 expansion at Bengaluru
on a design and build model. In IT Parks and offices, the IC received
orders from IT Giants like TCS, Cognizant and HCL at Kochi and Chennai
locations. B&F IC also received mixed use development orders from DLF and
RMZ at Noida and Bangalore respectively. The IC has put a strong foot into
the Hyper-mart construction by getting orders on Pan-India basis from
Reliance Industries Limited. The IC has strengthened its presence in
residential segment in Mumbai by bagging orders from Omkar, Oberoi Realty
and Lodha Crown Buildmart. In addition to the above, the IC has received
residential projects at Chennai, Mumbai, Bangalore and Mangalore from DLF,
Prestige Estates Projects, Essar and SKS Netgate to name a few. Factories
segment has bagged orders from Renault Nissan, Birla Suriya and Arshiya.
Repeat orders from Cognizant, TCS, Omkar and DLF, to name a few, indicates
the capability of the IC in project deliveries to the satisfaction of our
customers.
B&F IC has reported significant growth in the revenues during the year
2011-2012. Some of the key notable projects completed by B&F IC include the
Punjab War Memorial and Mumbai International Airport Limited (MIAL)
Airside. The completion of these prestigious projects within stringent
timeline, demonstrates B&F IC`s superior project management/project
execution capabilities in handling large design build / turnkey projects.
Significant Initiatives:
B&F IC is fully geared up on the technology front for undertaking the new
trends in civil engineering and construction technology like high rise
towers, green buildings, Maintenance, repair and operations (MRO)
facilities and precast housing. Various initiatives including technology
tie-ups have been implemented to improve upon the execution and delivery
capabilities for complex and large value orders.
Outlook:
The opportunities in airports in domestic expansions and international
projects, IT campus development, government thrust on healthcare, retail,
demand for housing, factories and cement plant expansion plans by major
players will be the key drivers for B&F IC`s growth. Construction market is
also expected to remain attractive in MENA countries. Given the fact that
the global construction majors have been witnessing slowdown in their home
markets, the growth hubs of India & MENA countries will attract a number of
players.
Nevertheless, B&F IC is poised to register a satisfactory growth in the
revenues during the year 2012-2013 on the back drop of a healthy order book
and proven track record.
Infrastructure IC:
Overview:
Infrastructure (Infra) IC undertakes design, engineering and construction
of projects in Roads and Runways, Elevated Corridors, Metros, Tunnels,
Ports, Special Bridges, Hydro Power, Nuclear Power, Defence and Railway
infrastructure sectors.
Business Environment:
The slowdown in economic growth adversely affected the investment in
various infrastructure projects in 2011-2012. Apart from deferment of
ordering, the IC also witnessed stiff competition on the available business
prospects during the year 2011-2012. Tight liquidity position, issues
relating to land acquisition slowed down the pace of execution of certain
large scale projects. The prices of key inputs remained volatile during
2011-2012.
Some of the major orders secured in during the year 2011-2012 include
Hosur-Krishnagiri, Bewar-Pindwara, Kishangarh-Ahmedabad and Shivpuri-Dewas
projects in road sector, various underground and elevated metro packages of
Delhi, Chennai & Kolkata, common service package for Kakrapar & Rajasthan
Atomic Power Projects. The IC has also secured two orders for construction
of roads in the Sultanate of Oman.
Some of the key projects completed by Infra IC include Halol-Godhra-
Shamlaji, Rajkot-Jamnagar-Vadinar, Kattupalli port, railway electrification
of Moradabad-Roza and Barauni-Chappra sections, gauge conversion for
Nagore-Karaikal section and port connectivity for Bharuch-Dahej section.
Significant Initiatives:
Infra IC has undertaken several new initiatives with clear focus on areas
of supply chain management, cost competitiveness, operational excellence,
value engineering and improved capacity utilisation. Attracting and
retaining talent with requisite competencies and focus on training and
development to enhance productivity are also being done continuously to
support the business needs.
Outlook:
Given the huge gap between infrastructure demand and supply in a growing
economy like India, all business relating to urban infrastructure, power,
roads and water would witness attractive growth over a sustained period.
The Union Budget 2012-2013 also lays greater emphasis on infrastructure
development. The realisation of order prospects in infrastructure, power,
defence and railways sectors, however, largely depend upon the government`s
ability to implement the policy decision and finance large scale projects.
Infra IC is clearly focussing in capitalising the current market trend.
With the specific and continuous thrust on business development, the IC is
looking at new opportunities across various business segments in India as
well as in the International fronts. The healthy Order book position of
Infra IC gives the confidence of registering good growth in revenues during
the year 2012-2013.
Metallurgical & Material Handling IC:
Overview:
Metallurgical & Material Handling (MMH) IC undertakes EPC (Engineering,
Procurement & Construction) projects for ferrous (iron & steel making) and
non-ferrous (Aluminium, copper, lead & zinc) metal industries, bulk
material & ash handling systems in power, port, steel & mining sectors. It
has a well-established fabrication unit at Kanchipuram, Tamil Nadu to meet
the specific needs of its customers.
Business Environment:
MMH IC retained its market leadership in its areas of operation during the
year 2011-2012. Greenfield project of Tata Steel at Kalinganagar picked up
momentum for which the IC is executing major packages.
MMH IC had won orders from Tata Steel for Blast Furnace, Coke Oven, Raw
Material Handling System, Civil & Structural works for SMS, HSM and PDS at
Kalinganagar and rebuild of Blast Furnace F&G at Jamshedpur. Other orders
won include Civil and Structural works for CDQ and DRI at Bellary from JSW,
Civil and Structural works for Alumina Refinery at Raigarh from Utkal
Alumina, Civil and Structural works for BOF and Slab Caster for Phase III
at Angul from Bhushan Steel, Civil and Structural works for Phase II at
Amravati, Nashik from India Bulls, Raw Material Handling System at
Tuticorin from Sterlite, Coal Handling Plant at Bara from Jaypee and supply
and Erection of CHP at Parsa Kente Mines for Adani Group.
MMH IC had successfully completed India`s largest pellet plant (6 MTPA),
LD-3 & Thin Slab Caster Rolling Mill at Jamshedpur, Bedding & Blending
System for Iron Ore Fines at Noamundi, Yard Machines at Joda Mines for Tata
Steel, Blast Furnace-4 at Bellary for JSW, Coal handling plant for stage II
at Simhadri for NTPC, coal handling plant at Kodermafor DVC and at Tiroda
for Powergen Infrastructure.
MMH IC is currently executing projects involving various facilities at
steel plant at Kalinganagar for Tata steel, at Bhila for SAIL, at Angul for
Bhushan Steel, at Bellary for Jindal Steel, Alumina refinery at Raigarh for
Utkal Alumina and 13 Coal Handling Plants concurrently for various
customers, which is a landmark achievement.
MMH IC is also involved in fabrication of Coke Oven Battery equipment
including primary gas cooler for Tata steel and Bhushan steel, Blast
furnace shell, lower tower structures and hot stove shell including dome
for SAIL- Bhilai Plant, surface condensers for power plants, N2 vessel for
Bhushan steel plant, wagon shifter for India Bulls and Pot shells for
Hindalco.
Key success factor for the IC is high customer retention, operational
efficiency and consistent performance.
The deployment of Business development Head dedicatedly focusing on
International market has resulted in securing first order in Oman for MMH
IC. The IC intends to carry forward this initiative to tap the potential in
the Middle East market in ferrous & non-ferrous segment.
Significant Initiatives:
MMH IC has made strategic alliance with leading global technologist as a
part of business line diversification in ferrous segment which include:
* Paul Worth-for blast furnace, coke oven and by-product plant
* SMS Siemag - for steel melt shop and thin slab caster
* Outotec-for sinter plant and pellet plant
* Nippon Steel-for coke-dry-quenching and continuous annealing & processing
line
* METSO-for iron ore beneficiation
To avail new concept & technology for increased capacity in material
handling sector, MMH IC has technology tie ups with global technologist
which include:
* Ashton Bulk, U.K - for crescent type wagon tipplers, high capacity side-
arm-chargers and ducking tripper type stacker reclaimer;
* Norwest, U.S - for coal washeries;
* FLCE, France - for long belt conveyors;
* UCC. U.S - for ash handling system.
Outlook:
Growth in the field of Ferrous & Non-Ferrous, Power sector and Government
commitment towards infrastructure spending are going to be the key drivers
for the Metals & Minerals business. Healthy order book gives MMH IC
confidence of achieving the revenue growth in 2012-2013.
Power Transmission & Distribution IC:
Overview:
Power Transmission & distribution (PT&D) IC with its foot prints in India
and GCC Countries, is one of the major players in EPC space for High
Voltage Substations, Industrial Electrification and Power Transmission
Lines.
The Industrial Electrification Business provides turnkey Electrical and
Instrumentation & Communication solutions for major Power plants including
Thermal & Nuclear plants, Process plants & Infrastructure projects.The
Substation & Transmission Line Businesses cater to the needs of Power
Transmission & Distribution in Domestic & International Market, boosted by
its state of the art tower testing facility at Kanchipuram and tower
manufacturing units at Pondicherry and Pithampur, with an installed
capacity of 50,000 TPA in each location.
Over the last few years, IC has established strong presence in GCC
countries and is now set to expand to African countries.
Business Environment:
The business environment for PT&D business was challenging during 2011-
2012. Increased Competition from local and small players, volatility in
currency and commodity prices, entry of new players, delays in Power
capacity additions and Power density improvement projects imposed
constraints for growth in PT&D business.
Some of the major orders bagged by PT&D IC include transmission lines
projects from PGCIL for Varanasi to Kanpur, Raipur to Wardha, Wardha to
Aurangabad, Substation projects of Phagi from RVPN, E-BOP for 2X660 MW
Thermal power plant for Abhijeeth Power in Bihar.
International orders include EHV Substations and Cabling projects from
Qatar General Electricity & Water Authority, Abu Dhabi Transmission &
dispatch Company, Substation for Abu Dhabi Port Company and EHV substation
from Ministry of Electricity & Water, Kuwait.
PT&D IC had commissioned India`s First 765 kV Substation for Uttar Pradesh
Power Transmission Corporation Limited at Unnao, charged 1200 kV
transformer for PGCIL`s Bina test station which is a first of its kind.
Other completed projects include 400 KV GIS substation for PGCIL at
Gurgaon, 15 EHV Substations at various locations, synchronization of Unit-1
of 2 x 500MW Thermal Power Plant for NTECL at Vellore, Electrical works of
a 330MW power project for Adani Power Limited, Mundra-Shandong electric
power Construction Corporation.
PT&D IC also commissioned 400kV D/C Karcham Wangtoo-Abdullapur Transmission
line in the toughest terrain of Himachal Pradesh and 34 No`s of
Substations/Package Units and 89 KM of Overhead Transmission Line in
overall Gulf region.
Despite several challenges, IC has demonstrated an impressive growth of
about 60% in Order Intake this financial year, and is well positioned to
continue the momentum next year owing to the increased private player
participation, domestic demand for Power transmission and opportunities in
overseas. The IC is also ambitious about its GCC operations where T&D
investments in strengthening of Transmission Grids provide significant
business opportunities.
Significant Initiatives:
PT&D IC took several initiatives for improving the operational excellence,
retain competitiveness and thereby improve upon the market share.
* Dedicated Business Initiative cells have been established at Strategic
locations and improve proximity to customers with cluster operations.
* The Right of Way (ROW) team at cluster level especially for TL business
has been strengthened for speedy project execution.
* The IC has targeted portfolio expansion in GCC countries and forays into
new geographies, new lines of business in Security solution.
Outlook:
Power shortage scenario in India is expected to intensify the focus by the
Government for improving power transmission & distribution. Utilities like
PGCIL, NTPC, etc and State Electricity Boards are likely to go-ahead with
their investments in the coming years in power transmission and
distribution. With high crude oil prices, GCC public finances will remain
reassuringly strong. The focus on infrastructure development and boost to
tourism in most of the countries in the Middle East region augur well for
the business expansion of PT&D IC.
Water and Solar SBG:
Overview:
Water & Solar SBG brings under one umbrella the water & effluent treatment
(WET) business, the water technology business and Solar EPC business to
cater to the entire value chain of Water business and Solar EPC business.
The water and effluent treatment business caters waterintake, transmission,
treatment and distribution including industrial waste water treatment &
disposal and ordinary waste water treatment & reuse segments. Water
technology business by deploying advanced and complex water treatment
technologies caters to advance water and waste water treatment for very
complex treatment plants, concentrating mostly on the Middle East market.
Solar EPC business comprises Solar photovoltaic (PV), Concentrated solar
power (CSP) and Solar thermal which are the three emerging segments of the
solar business.
Business Environment:
Investments in water management systems are on the rise throughout the
world. The huge outlay envisaged in water supply, water treatment, waste
water management and desalination plants in India and International markets
like Middle East, opens up opportunities for SBG to leverage and expand the
core competencies in this area.
Some of the orders bagged in water business are Combined Water Supply
Scheme to Attur, Melur & Vellore Package I, II & III for Tamil Nadu Water
Supply & Sewerage Board, 60 Km MS Pipeline from Dhanki to Navada-NC-34
Water Supply Project for Gujarat Water Infrastructure Limited, Development
Works of Kamal Vihar for Raipur Development Authority, Chhattisgarh and
development Works of Aerocity for Greater Mohali Area Development
Authority, Punjab.
The water business completed the projects of Water Supply Scheme to 392
villages for Ananthapur Phase III Water Supply Project, Andhra Pradesh, 50
MGD Water Supply Scheme covering 172 KM of MS Pipeline from Narayanapura
Dam to Jindal Steel Plant at Bellary, Karnataka, Pumped Water Supply Scheme
with 65 km of MS Pipeline from Kadiyali to Kesaria for NC - 24 Water Supply
Project, Gujarat.
Solar Business Unit has set track record of putting up largest & fastest
solar power plants in India and emerged as no. 1 EPC player, providing
solutions for various solar technologies. The BU has highest rating-`SP1 A`
and has been certified as a highly rated RESCO (Renewable Energy Service
Company) and system integrator, enabling it to become one of the most
reputed channel partners of MNRE to execute off-grid solar power projects.
Some of the major orders executed in Solar business are are 40 MW solar PV
power plant for Reliance Power at Pokhran, Rajasthan, 10 MW solar PV
tracker based power plant for Millennium Synergy at Dhama, Surendranagar,
Gujarat, 25 MW solar PV power plant for SunEdison at Charankha, Gujarat, 20
MW solar PV power plant for Kiran Energy at Charankha, Gujarat.
Significant Initiatives:
The initiatives such as building a strong in-house design team, Strategic
Alliances for advanced technology know-how, readiness & clear focus on
growth segments, entering Middle East market by putting up a strong
organization structure have helped water and solar business to chart a good
growth in 2011-2012.
Outlook:
Indian Government`s consistent support to bridge the demand supply gap in
water segment coupled with the interest shown by water bodies towards water
management contracts, offer promising growth prospects for the water
segment in India. With increased pollution monitoring by regulators and
almost 79% of waste water generated not been collected, the highly
inadequate waste water segment will see large investments in the coming
years.
Water Technology BU which will concentrate on the Middle East markets
predominantly has seen very favourable prospects in Desalination and Reuse
in Oman and KSA. Industries in these countries are going for Reuse projects
to meet water demand. The BU is building up on its technology tie-ups,
which is seen to be the main differentiator among the competitors.
With further ease in external sources of financing, prices of solar panels
stabilizing, grid parity to be achieved by 2014-2015, the solar segment
appears promising. With the Indian government already having unveiled the
National Solar Mission to target of 20,000 MW of solar generating capacity
by the end of the 13th Five Year Plan, there are many favourable growth
prospects for solar EPC for 2012-2013.
Power IC:
Overview:
Power IC specializes in setting up of power generation projects for
utilities like electricity boards and independent power producers on a lump
sum turnkey basis.
Power IC undertakes coal based & gas-based projects & specialises in the
super critical technology equipments. Its in house manufacturing facilities
in the form of Boiler & Steam Turbine , pressure piping fabrication, Axial
fans & air-preheaters & Electrostatic Precipitators together with its
decades strength in the areas of project management, engineering &
construction management has made Power IC as end to end solution provider
under one cloud in setting up the thermal based power plants, particularly
of the super critical type.
During the year 2011-2012, the Power IC focused on timely execution of its
existing projects amid multiple challenges on the business prospects front.
The facility for manufacture of Electrostatic Precipitators was
commissioned during 20112012. The facilities of the joint venture with
Howden UK for manufacture of axial fans and air-preheaters were also
commissioned during the year. Major dispatches of machines and materials to
the various project sites of customers were made from the manufacturing
facilities for Boiler and Steam Turbine, High Pressure piping which were
commissioned during 2010-2011. With this, the Power IC is geared up to
provide nearly 85% (by value) of equipment and services in house.
During the year, most projects entered into the critical phase. The Phase 2
of GMR Vemagiri gas based combined cycle power plant progressed
substantially during the year, with Unit 2 being commissioned in record
time of 24 months and the mechanical completion of Unit 3 was also
completed. A significant milestone in power projects, `Ceiling Girder Final
Jackup` was completed for 2 units of the JPVL Nigrie project (Madhya
Pradesh) and 1 unit of the Nabha Power project (Rajpura, Punjab).
The year 2011-2012 also saw dispatch of ODC consignments and critical
supplies for Boiler for the Koradi and Nigrie projects, notably the
Generator Stator and related assemblies. In case of APPDCL project, the
392MT Generator Stator was successfully erected.
Currently, 3 BOP projects are under execution and will enter the critical
phase of completion in the year 2012-2013.
The Dhuvaran gas based project being constructed for Gujarat State
Electricity Corp. Ltd. saw the HRSG primary structures executed in a record
14 days.
The challenging economic environment reflected on lower order inflow during
2011-2012. The IC has, however, registered substantial growth in sales and
profitability.
Business Environment:
Recently, India`s installed power generation capacity exceeded the
milestone of 200,000 MW, still much lower than the installed capacity of
950,000 MW of China.India faces acute power shortages, slowing its economic
engine.
The planned capacity addition target of 76000 MW in the XII plan also look
increasingly difficult to achieve, considering the myriad problems plaguing
the power sector. Over the last 12 to 18 months, business opportunities for
players in thermal power space have shrunk dramatically, despite high
demand for power. The Power industry faced unexpected headwinds on many
fronts such as fuel shortages, difficulties in financial closure of new
projects, delayed environmental clearance, land acquisition issues and the
financial troubles of SEBs. The domestic coal and gas supply did not reach
the expected levels. The domestic market for gas-based projects has,
therefore, pretty much evaporated. The IC also faced intense competition
from BHEL, Chinese equipment suppliers as also from Korean and European
players, battling for shrinking opportunities with aggressive bidding
strategies.
The Union Budget 2012 also left the domestic power equipment industry
largely disappointed. The much sought after demand for levy of duties on
import of power equipment from China, was ignored, and the market continues
to be dominated by Chinese imports, further supported by financing from
Chinese banks.
Significant Initiatives:
The challenging business environment necessitated the introduction of a
slew of initiatives to ensure that the growth plans remain on track and the
IC continue to build on its body of knowledge in the areas of super
critical technology.
Considering the limited opportunity in the domestic market for gas based
projects, the IC has taken steps to expand its horizons beyond India for
gas based projects. The IC is exploring opportunities in Asia (Bangladesh,
Sri Lanka, Malaysia, Indonesia & Thailand), Middle East (Saudi Arabia,
Oman, Qatar) and Africa (presently only Gabon) as many of these countries
have proven gas reserves, and fairly good gas transportation networks. The
move to explore new frontiers will enable the IC to diversify its project
profile and ride on the growth expected in these markets.
A Technical Services Support Agreement was entered into with MHI pursuant
to which the IC has formed Engineering & Technology Group which is
entrusted with the responsibility to assimilate the best practices of MHI
in Interface Engineering of Boiler, Turbine Generator, Balance of Plant and
also for commissioning the projects.
To increase operational efficiencies, the IC also came up with various
improvements in execution methodologies. The IC is first in India to use
the Strand Jack method for Generator Stator erection in the Krishnapatnam
project and Boiler erection in the Rajpura project. With a view to develop
a pool of talented professionals with sound knowledge of the power
industry, technologies and capabilities, the IC has set up the Power
Training Institute at Vadodara in 2011-2012. With the objective of
developing and sustaining a strong and reliable vendor base, the IC
convened its first ever vendor meet to identify, discuss and understand the
needs and solutions of vendors.
The IC is also in the process of setting up a Central Project Monitoring
system. With this, it will be possible to remotely monitor from a central
location the progress at various project sites across the country.
Outlook:
The Government has recently taken certain measures, which indicate its
seriousness about the problems plaguing the power sector. The recent
directive to Coal India to enter into long term Fuel Supply Agreements with
power developers provides assurance of coal supply to all plants expected
to be commissioned by March 2015. A few state electricity distribution
companies have raised their tariffs which is a big positive for their
finances, and provides the necessary impetus to both state power generation
companies and IPP`s to plan for new projects.
IC expects the first half of 2012-2013 to be challenging; the second half,
however, seems promising with some awards materializing especially from
state owned companies.
The focused initiatives taken by ICs in the overseas market will help
getting awards in Asia for gas based projects. The IC also expects orders
for civil packages in power plants from both private and public sector.
With existing order backlog and expected timely execution of all projects,
the IC is confident to sustain the growth in sales and profitability in
2012-2013.
The IC with all its factories commissioned, offering of energy efficient
solutions, a robust technology and manpower base with relevant
capabilities, is poised to capitalize on the opportunities of the future.
Heavy Engineering IC:
Overview:
Heavy Engineering (HE) IC manufactures and supplies custom-designed,
engineered critical equipment & systems to the core sector industries like
Fertiliser, Refinery, Petrochemical, Chemical, Oil & Gas, Thermal & Nuclear
Power, Aerospace and Equipment & Systems for Defence applications.
HE IC has manufacturing & fabrication facilities at Mumbai in Maharashtra,
at Baroda & Hazira in Gujarat and at Visakhapatnam in Andhra Pradesh. At
Talegaon in Maharashtra; it has a Strategic Systems Complex for integration
and testing of Weapons Systems, Sensors & Engineering Systems. A Precision
Manufacturing Facility at Coimbatore in Tamilnadu caters to the needs of
precision-machined/manufactured components & assemblies.
Dedicated production engineering and manufacturing process development
centres support manufacturing at each location. Detailed design and
engineering centers support Project Management teams at all locations. The
IC has three "Technology Development Centres" that operate from Powai - for
new product development in process plant equipment and for strategic
equipment & systems, as well as one focused on electronic systems/sub-
systems. Defence Electronics Systems` design & engineering is supported
through a dedicated Strategic Electronics Centre including a new product
development centre at Bengaluru in Karnataka.
IC has warship Design Centre, which is well-equipped with latest software
tools & know-how and has developed in-house designs for surface ships such
as Fast Speed Boats, Attack Crafts, Offshore Patrol Vessels and Corvettes.
A heavy fabrication facility, set up as a Joint Venture in Oman,
manufactures a range of equipment for the hydrocarbon & power sectors. The
IC has set up a Joint Venture Company for manufacture of heavy forgings for
the hydrocarbon & nuclear power sectors.
Business Environment:
The sluggish global economic scenario, the Fukushima nuclear incident in
Japan and lack of policy decisions on the domestic front have adversely
impacted the Order Inflow & Sales during Financial Year 2011-2012 in most
of the business segments of the IC. Deferment/cancellation of planned
projects across geographies has led to a sharp drop in Export Orders.
Despite large scale induction programmes of the Armed Forces and the Indian
Coast Guard, not many orders were awarded to private players during the
year 2011-2012. For the Defence Marine business, competition from other
Indian Private Shipyards has intensified. The IC, however, managed to
secure a breakthrough order for the Strategic Communications Programme,
which would open up fresh avenues in this segment.
In the process plant equipment businesses, the margins are under pressure
due to aggressive pricing from competitors having idle capacities. The
localization policies of some of the countries and preference to local
suppliers by some of the EPC Companies due to socio-political compulsions,
is putting the IC at a disadvantage. International sanctions on Iran
deprive us from some good business opportunities.
Significant Initiatives:
In the pursuit for excellence in productivity and working efficiency, a
number of initiatives have been undertaken by the IC in a campaign titled
`UDAAN` which signifies flight or breaking free from existing mindsets to
scale new heights. This campaign has been initiated with the objective to
achieve an exclusive position in the global process plant equipment and to
fortify our lead position as supplier of defence equipment & systems from
private sector.
Some of the major initiatives under "UDAAN" are:
* Implementation of Theory of Constraints
* Lakshya
* Enterprise-wide Collaboration for Alignment with Strategy (ECAS)
* Employee Engagement
* Innovation
* Sustainability
With an aim of improving execution & delivery performance, HE IC has been
using `Critical Chain Project Management` methodology of `Theory of
Constraints`. HE IC has also undertaken the implementation of the Strategy
and Tactic (S&T) Tree in order to achieve operational excellence.
Lakshya is the 5-year strategic plan for identifying strategies and action
plans for their implementation to drive growth during the plan period.
`Enterprise-wide Collaboration for Alignment with Strategy (ECAS)` aims at
enhancing Organisational Excellence for improved performance and alignment
of operations to the strategy of Customer Intimacy through a collaborative
culture.
Employee Engagement initiative by HE IC helps in seeking an unbiased
employee perception on numerous dimensions creating healthy, customer
focused and productive work environment.
A Culture of Innovation through collaboration and creative thinking helps
in seeking newer and better ways of designing, manufacturing and execution.
The IC maintains its leadership position through its multiple Technology &
Product Development Centers which are focused on process technologies,
manufacturing technologies, mechanical systems technologies and ship &
submarine designs.
These centers provide specific emphasis on welding & metallurgy, composite
materials, heat transfer, computational fluid dynamics, stress analysis,
microwave & RF technologies, embedded systems and drives technologies.
A large part of the current revenues in the Defense & Aerospace businesses
are the fruits of sustained development of products in-house in these
centers over the years. The current efforts of these centers would lead to
a quantum jump in business volumes in the future.
Outlook:
In the hydrocarbon sector, business is expected to look up in the medium
term with expected investments in refinery upgrade and revamp/ modification
projects, new value-added petrochemical products, grass root Refinery
projects in Middle-East, Turkey, Vietnam, Taiwan, Latin America, Russia &
CIS countries likely to come up in 2012-2013. Major Oil & Gas investments
including LNG are also slated in Australia, Qatar & Russia.
The Urea Investment policy cleared recently by the Government of India and
widely welcomed by Fertiliser sector is expected to provide major impetus
for investment in domestic market and some brown-field projects are likely
to be finalized in the near future. Fertiliser projects are expected in
gas-rich regions like Africa, Brazil, Middle East, Azerbaijan, Argentina
and China. Indian Fertilizer companies are also exploring possibilities of
setting up projects in some of these regions. The IC sees good potential
for EO/EG & Methanol plant equipment in China. In the backdrop of rising
coal prices vis-a-vis lower price of gas, the IC sees prospects in the GTL
market.
In the Nuclear Equipment business, post Fukushima, there is likely to be a
demand spurt for Spent Fuel storage equipment and increased opportunities
for decommissioning of Generation II plants.
The enhanced budget allocation for defence and the first wave of "Make"
programmes and "Buy & Make Indian" programmes in Defence, the IC sees major
opportunities in co-development to be followed by co-production over medium
to long term. The recent Government guidelines for establishing joint
ventures by Defence Public Sector undertakings in the Public-Private
Partnership mode usher in a range of opportunities to the IC.
With superior technology, state of the art manufacturing facilities, HE IC
is well-poised to tap upcoming business opportunities.
Electrical & Automation IC:
Overview:
Electrical & Automation (EA) IC includes low and medium voltage switchgear
products, electrical systems, energy meters, automation solutions and a
stand-alone strategic business unit - Medical Equipment & Systems.
A major strength of EAIC is its in-house design and development center for
switchgear as well as tooling facility that designs and manufactures a wide
range of high precision tools, a pre-requisite for high quality products.
The manufacturing operations of EAIC are located at Mumbai (Powai), Navi
Mumbai, Ahmednagar, Coimbatore, Vadodara and Mysore in India and its
subsidiary companies have facilities in Saudi Arabia, UAE (Jabel Ali,
Dubai), Malaysia, Indonesia and Australia outside India.
EA IC comprises of two Strategic Business Groups (SBGs)-Products SBG and
Projects SBG. Product SBG has two Business Units (BUs) -namely, Electrical
Standard Products (ESP) and Metering & Protection System (MPS) while
Projects SBG has Electrical Systems & Equipment (ESE) and Control &
Automation (C&A).
Business Environment:
The businesses of the IC witnessed subdued industrial demand in domestic
and international markets, volatile commodity prices, tight liquidity
conditions and stiff competition.
While certain stronghold sectors of ESP business such as textile, telecom
and sugar industries slowed down, agricultural, agro-based industry and
electrical sectors witnessed good growth. The demand from Tier 2-3 cities
and retail segment also showed improvements. The market for energy meters
grew with good demand for single phase and 3-phase meters.
In spite of these odds, EAIC managed to earn double-digit growth, and
worked around achieving excellence in many operational areas in order to
maintain its competitive capabilities.
Significant Initiatives:
Meters` manufacturing reached a new high as the single phase meters
production touched 3.1 million as against 2.45 million in the previous
year. During the year, development of pre-paid meters and smart meters as
well as integration of radio modules for facilitating collection of data
over mesh network was also initiated.
In the Medium Voltage category, the domestic sales more than doubled during
the period 2011-2012. Tamco Malaysia qualified for Achilles (UK)
certification, made an entry into Philippines and Vietnam markets,
qualified in Kuwait and Iraq, received Petronas approval for its MV
products and executed its first order for 31.5kA AIS at Lusail City in
Qatar.
The switchboards and automation teams bagged an order of US $ 22 million
for supply of switchboards and telecommunications package including
transmission network and CCTV monitoring for an inter refinery pipelines
project in Abu Dhabi.
The IC participated in technology and automation conclaves and exhibitions
such as ELECRAMA and ACETECH for improving visibility of its numerous
products and solutions. A major initiative was taken towards expanding the
manufacturing operation and a new manufacturing facility was commissioned
at Vadodara for the commercial production of Moulded Case Circuit Breakers
(MCCBs).
The Medical BU launched Sky view, a web-based system for remote monitoring
and a compact rugged pulse oximetry to complement its position in the
oximetry market. On the Electro-surgery front the addition of advanced
vessel sealing feature completes the offering.
Initiatives on spreading a culture of operational excellence through
continual improvements continued under the banner of `ELITE`, an acronym
for IC`s Lean Initiative towards Excellence. These were Lean-5S, VSM, Value
Engineering, Six Sigma, PFMEA and TPM-JH.
The IC undertook Value Stream Mapping (VSM) to improve the flow of all
operating processes. As many as 71 VSM projects were implemented. Like in
the previous years, the IC was successful in achieving significant savings
on account of Value Engineering (VE) and majority of the projects were
focused on reduction in material consumption. In an effort to reduce
customer complaints and defects at source, Six Sigma was used. The IC
started two more initiatives in 2011-2012 namely Total Productive
Maintenance (TPM) for machines and Process Failure Mode Effect Analysis
(PFMEA) for identifying potential defects during the course and addressing
them well before they surface.
The IC currently has 173 Green Belts, 62 Black Belts and 14 Master Black
Belts in Six Sigma category, 125 VSM trained resources in Lean initiative
and 27 AVS (Associate Value Specialists) in VE.
ESP has covered its key suppliers under CRISIL rating to judge their
performance capability and financial strength. After winning the
prestigious Ram Krishna Bajaj National Quality Award (RBNQA), the BU has
now started its journey on challenging the Deming award.
C&A received prestigious Indian Merchant Chambers Ramakrishna Bajaj
National Quality Award "Performance Excellence Trophy 2011" in Service
Category. Similarly, its Unnati facility was awarded BEE 4 Star rating for
energy conservation.
Engineered Tooling Solutions (ETS), won the India Manufacturing Excellence
Award (IMEA) Platinum award instituted by Frost & Sullivan.
Design and development of new products has always been the focus of the IC.
It launched a number of products and variants in Controlgear, Powergear,
Industrial automation and Building automation categories to meet the needs
of discerning customers. In the space of electrical systems control and
automation, the IC launched a number of products and solutions that
addressed the aspects of safety, environment and innovation.
In 2011-2012, ESP launched Moulded Case Circuit Breakers (MCCBs) with
Matrix release which offers wide range of flexibility in protection and
current metering with add-on modules for display. Compact & cost effective
versions of MCCBs viz. DN0, DN1 & DU250 were also added to ESP basket
during the year. ESP has started offering standard solution for reactive
power compensation. In Medium Voltage segment, 11kv & 33 kv panels were
introduced through ESP channel. In the industrial automation category, ESP
launched A1000 AC drive with embedded crane control software for EOT crane
hoist application and L1000 drive for elevator industry.
In residential and commercial segments, ORIS offers a complete range of
modular switches designed using high quality fire retardant polycarbonate
and high performance electrical components that ensure a very long life.
Environmental care is embedded into the design by way of low energy
consuming SMD LED for all indications / footlights, ROHS compliance of GI
wall box.
The IC introduced T-ERA range of switchboards that highlighted safety and
reliability through its compact design and saving of space, total closed
door operation, racking of the breaker without door opening, an arc
resistant design and clearances higher than those required by standards. It
is also built to simplify communications solutions and provide user
customization through fully interchangeable modules. A new, indigenously
developed motor protection relay, MCOMP, with capability of protecting all
motors from lower to the highest ratings was launched. It is the first
relay to be certified by Profibus International and will help IC to
consolidate its leadership in the Indian technology race.
To highlight its capability in the automation space, the IC brought out a
software based Resource Management Solution. i-Visionmax Resourze-that
would help facilities to monitor, report and take conversation measures for
energy, water, electricity and gas. In the field of renewable energy, it
developed new products solutions for solar thermal and photo voltaic
systems. Other software based solutions such as i-Visionmax PMS for Power
Management and i-Visionmax I-TAS for Terminal Automation were successfully
implemented at various sites.
Ship Lift Control System was designed for the first time in India and
deployed successfully at LTSB shipyard at Kattupalli. The system is
designed for 68 numbers of closed loop vector controlled hoist Drives
controlled in a synchronous manner with high position accuracy using state-
of-the-art redundant Automation System. The control system takes care of
all possible failure modes to ensure platform stability at all times.
In the medium voltage category, Tamco developed as many as 33 new products,
completed the type test for 40kA AIS family (lowest width), successfully
tested the most compact 12/24kV GIS and the cost competitiveness design of
36kV AIS.
In 2011-2012, the IC filed 162 patents applications, 16 trademark
applications, 10 design registrations and 9 Copyrights as well as 10
international patent applications through PCT (Patent Cooperation Treaty).
This was the 5th consecutive year that the IC has filed more than 100
patent applications.
Continuous efforts on IP creation and its management earned the IC the
highest awards in patents filing and design registration, instituted by the
Indian Patents Office.
Outlook:
With Government`s focus on Agricultural sector, the growth momentum in Agri
segment is expected to continue. Some of the industry segments like Steel,
Cement, Sugar & other agro-based industries are likely to see enhanced
growth which will benefit ESP business. Some of our focused International
markets have also started showing signs of recovery. Retail segment is also
expected to continue the growth momentum. It is also expected that the
energy consumption for commercial and residential applications will grow
that will trigger a positive growth for ESP business. Most electrical
systems are expected to use automation-in industries, buildings & homes for
greater control, comfort and convenience. ESP is well-positioned to capture
these opportunities.
Meter market is expected to grow albeit at a lower rate than 2011-2012. The
market will witness a technology change with utilities more open to
obtaining data from remote. This will increase the requirement for meters
with built-in radio.
Machinery & Industrial Products IC:
Overview:
Machinery & Industrial Products (MIP) IC comprises three Strategic Business
Groups (SBGs)-Construction & Mining Machinery, Industrial Machinery and
Industrial Products.
Construction & Mining Machinery SBG:
Construction & Mining Machinery SBG markets and renders support for
Construction & Mining Equipment. The SBG comprises Construction & Mining
Business Unit (CMB) which markets Equipment manufactured by L&T-Komatsu
Limited, India and the entire range of Equipment available from Komatsu
worldwide. CMB also represents Scania, Sweden for their Mining Tipper
Trucks. L&T-Komatsu Limited (LTK) is a 50:50 joint venture between the
Company and Komatsu that manufactures Hydraulic Excavators and Hydraulic
Components, all of which are distributed in India by CMB.
Industrial Machinery SBG:
Industrial Machinery SBG consists of Machinery for Paper and Pulp,
Crushing, Mining and Mineral processing industries, Steel, Rubber & Plastic
Processing Industries and also castings for Wind power and other
engineering sectors. Industrial Machinery SBG comprises of Rourkela Campus
Kansbahal plant, Foundry business unit, Rubber Processing Machinery Unit.
Rourkela Campus, which includes Kansbahal Plant, undertakes Design,
Manufacturing & Marketing of Mineral Crushing Solutions (Limestone, Coal
and other minerals), Surface Miners, Specialised Equipment for Steel Plants
(such as Torpedo Ladle Cars) and Machinery for Paper & Pulp. Foundry
Business Unit comprises two foundries, one at Coimbatore and the other at
Kansbahal in Rourkela Campus.
The state-of-the-art Casting Manufacturing Unit at Coimbatore has an annual
capacity of 30,000 T to manufacture large sized SG Iron and special Iron
castings for Wind power and other Engineering sectors. The Foundry can
produce castings in the weight range of 3T to 28T each.
The other Foundry operates at Kansbahal Works, Orissa (Rourkela Campus)
manufacturing Steel, Alloy Iron, SG Iron & Grey Iron castings and also
addresses requirement of large Wear and Abrasion resistant castings for
Power and Cement sectors.
Industrial Machinery SBG also includes LTM Business Unit (LTMBU) which
manufactures and markets Rubber Processing Machinery for the tyre industry
across the globe. Currently, the Unit has manufacturing facilities at
Manapakkam, Chennai and Kancheepuram near Chennai.
The IC has set up through the subsidiary companies manufacturing facilities
for various businesses such as Rubber Processing Machinery, Internal Mixes
and Twin Screw Roller Head Extruders for Tyre Industry and Plastic
Injection Moulding Machines.
Industrial Products SBG:
Industrial Products (IP) SBG consists of businesses related to Industrial
Valves, Welding Equipment & Products and Cutting tools. The IP SBG
comprises Valves business and Industrial Cutting Tool business.
Valves Business Unit (VBU) markets valves and allied products manufactured
by Audco India Limited (AIL), a JV Company and Larsen & Toubro (Jiangsu)
Valve Company Limited (LTJVCL), China, a Subsidiary Company and a few
Indian & Overseas manufacturers. VBU is one of the few select suppliers of
valves for global oil majors.
The IC has also set up Valves Manufacturing Unit (VMU) in Coimbatore is
responsible for manufacturing of Valves for Power Sector through its
Manufacturing Plant at Coimbatore as well as Contract Manufacturing of
Valves in ranges not fully supported by AIL; besides providing the
technology support for new product development of Valves.
MIP IC has under its fold the business of welding products housed in EWAC
Alloys Limited (EWAC), a wholly owned subsidiary of L&T. It has
manufacturing facilities at Powai and Ankleshwar. The principal products
and services comprise Maintenance & Repair (M&R) consumables, specification
grade electrodes, flux-cored welding wires, wear plates/parts, welding and
cutting equipment, Terro Cote Lab services etc.
Industrial Cutting Tools (INP) Business of MIP IC provides metal cutting
solutions to the Indian manufacturing industry covering automobile,
engineering and machine tool segments through marketing of Industrial
Cutting tools manufactured by ISCAR Limited, Israel.
Product Development Center (PDC) of MIP IC based at Coimbatore renders
Engineering and Product Development support across all the businesses of
the IC.
Business Environment:
The Construction Equipment Industry has sustained the performance largely
on account of the road sector and general construction activities. IC`s
foray into large size Mining Equipment has been successfully received by
the market and the business is strengthening its position in this market.
Capacity additions in Indian Cement and Power Sector during 2011-2012
helped realise revenue growth for Kansbahal`s Industrial Machinery business
through supply of Limestone and Coal Crushing Plants. Adoption of more
energy-efficient processes in Indian Steel industry also saw continued
demand for Torpedo Ladle Cars. Renewed focus by the State Governments on
non-conventional energy has favoured investment in wind turbines.
Automotive and Engineering Sectors fared better and showed good growth
during 2011-2012 resulting in better performance in both our EWAC and
Cutting tools business.
The year 2011-2012 saw slowing down of the domestic market due to over-
capacity in the conventional Car & Truck tyre market. However, the domestic
market experienced green field investment in Off-the Road tyre. Rubber
Machinery Business secured a large order for OTR tyre curing presses
against tough Chinese competition for this project. Rubber Machinery
Business has been successful in getting project orders from some of the
Japanese and European tyre companies for supplies to their sites in Brazil
and Russia. LTM BU moved to 8th Rank in the Global Rubber Machinery
business in 2011-2012 from 13th Rank a year ago. LTM BU continues to enjoy
a majority market share in the domestic market and over 10% share in the
Global market for the Tyre Curing Presses.
Sustained oil & gas project activity in the Middle East, North Africa and
Australia provided good opportunity for Valves Business. Long-term
relationships with key end-users and EPCs in the Middle East and Far East
were leveraged to enhance our market presence. However project investments
in North America and Europe continued to be sluggish. Though activity in
domestic mid & downstream oil & gas segments were low, fertilizer and power
sectors offered potential for the valves business. The renewed thrust in
the projects has helped the IC achieve the projected order booking by
closely working with EPCs. With rationalized product portfolio, IC has been
able to address the Power segment requirements in India and get
breakthrough order for Ultra High Pressure valves (above #2500 rating) for
the supercritical power plant in India. Valves business also expanded into
new segment of defence.
Despite the slow down in the mining activity in India during the year 2011-
2012, CMB managed to maintain its leadership position in the Construction
and Mining Equipment Market. During the year 2011-2012, CMB increased its
presence in large size mining machinery arena by supplying more than 100
dump trucks of various sizes.
Significant Initiatives:
During the year 2011-2012, the businesses of MIP IC have taken various
initiatives to enhance the product range and increase the market share.
CMB has been able to expand its after-sales support capability through long
term full maintenance contracts and site support agreements for its
products to help improve machine uptime and capping operating costs thus
helping customers in improving their competitive position.
A new assembly line for Wheel Loader manufacture within the existing shop
at KBL was put up. The first set of Wheel Loaders have been tested and
proven under rigorous application areas.
As an initiative to widen the product range and to strengthen the position
of L&T Tyre machinery globally, a Joint venture has been formed for
providing world class Internal Mixers and Twin Screw Extruders. The IC also
introduced new range of Tyre Building machines to cater to Truck and Off-
the-road tyre markets.
L&T`s Valves expanded approvals from key oil companies in the international
market. This year, international valves sales network has been strengthened
with personnel posted in key growing markets such as Middle East and South
Africa. Market coverage of domestic channel business has been strengthened
with appointment of new distributors as well as field force. Key products
were evaluated and certified for Safety Integrity Level as per
international standards.
With new generation ball and butterfly valves replacing conventional
products, IC has built design and manufacturing capabilities to address
this challenge. Prototype trials have been successfully completed and
initial orders secured.
Efforts towards developing new products, such as mobile crushers & screens,
all-electric injection moulding machine and tyre curing presses, continue
at Product Development Center at Coimbatore.
Over the last year, many new products in drilling, milling and turning have
been launched successfully in the market. These new introductions are
expected to enhance the competitive position and build market share for the
business.
Outlook:
With renewed focus on infrastructure development in India, the demand for
Hydraulic Excavators is expected to improve.
The Mining Equipment business will continue to see a growth on account of
investments being made both in the public and private sectors to augment
coal production. The demand for metals like iron ore, zinc etc. is also
expected to help growth of this business segment. Resolution of
environmental concerns and land acquisition issues by the government hold
the key for business prospects from the mining sector. CMB is well placed
to take advantage of the available opportunities through supply of large
size Mining Equipment both to the public and private coal producing
companies.
Demand for Industrial Machinery from Mineral Processing and Infrastructure
segments continue to show an upward trend. This should give us good
business opportunities for KBL in our Crushing & Screening segment as well
as Wheel Loaders.
In the year 2012-2013, it is expected that the Domestic Tyre Companies
would reach full utilization of installed capacity and may look for further
expansion opportunities.
Augmentation in power generation and distribution capacity in India is
expected to provide promising prospects to the Valves business.
Overall, moderate improvement in the Industrial growth indices in the
coming year are expected to enable our businesses to register better growth
trends.
Integrated Engineering Services:
Overview:
Integrated Engineering Services (IES) has registered a three year CAGR of
51% and is today acknowledged as one of the emerging leaders in the Indian
Engineering Research and Development (ER&D) service segment. Recent analyst
studies on Global Service Provider Ranking for 2011 have positioned IES as
highest amongst the pure play Engineering Services companies. For
Industrial Products Domain, IES has been ranked in the Leadership Zone.
This is a true reflection of our commitment to be on the fast track of
being the "BEST" in engineering outsourcing service industry.
IES head office is at Vadodara, India with design centers located in cities
of Vadodara, Bengaluru, Chennai, Mysore and Mumbai. IES has a global
footprint with offices in the US, Europe, Middle East and Asia Pacific.
IES`s service offerings include product design, analysis, prototyping,
testing, embedded system design, manufacturing engineering, plant
engineering & construction management and asset information management
using cutting-edge Computer Aided Design / Computer Aided Manufacturing /
Computer Aided Engineering technology in various domains. IES has supported
innovation through co-authoring of over 70 patents.
IES has alliances and partnerships with AUTOSAR (Automotive Open System
Architecture), National Instruments, Intel, GENIVI. IES maintains high
quality and data security standards. IES was the first in the world which
received ISO/IEC 27001:2005 certification for IT Security Management
Systems. IES is an ISO 9001:2008 and a CMMI level 5 certified organization.
IES has marquee clientele in automotive, aerospace, industrial products,
medical devices, consumer electronics, consumer packed goods, oil & gas,
etc. and over 30 of its clients are Fortune 500 companies.
Business Environment:
Analysts are highly optimistic on the prospects of outsourcing business to
India. With the economic slowdown, there is a pressure on American and
European companies to leverage outsourcing for getting the benefits of
value added services and cost arbitrage.
Engineering Research & Development (ER&D) outsourcing to India has shown
remarkable growth from $8.3 Bn in 2009 to $11.3 Bn in 2011. The Engineering
Outsourcing market to India is expected to grow to $ 40-$ 45 billion by the
year 2020 with a CAGR of 16%. (Source: Nasscom)
Engineering Service Industry is on the cusp of a significant change,
shifting to knowledge-intensive and value-added services that call for a
new way of functioning. Besides cost arbitrage, the need to scale rapidly,
greater focus on core competencies, enhanced productivity, competition and
reduced time to market are driving the business.
Revenue from North America contributes 70% of the total revenues, the visa
policies of North America especially USA, therefore, have maximum impact on
IES`s business. To minimize this effect and to meet the business
requirements, IES is also recruiting local talent.
IES being in an export oriented service business, any fluctuation in the
foreign currency exchange rate has a considerable impact on its
performance. IES has undertaken a range of measures like hedging to
minimize these exchange fluctuation impact.
ER&D outsourcing sector is predominantly a project based business. IES is
actively working to increase its annuity business portfolio and some of the
significant long term contracts won during the year are a testimony to
that.
A significant growth in ER&D market will be in the industry sectors of
Transportation, Industrial Products and Plant Engineering. These sectors
together will account for more than 70% of ER&D market. IES is uniquely
positioned to have strong presence in each of these industry sectors as
compared to our domestic and international competitors.
Significant Initiatives:
IES has taken significant initiatives towards propelling its growth so as
to grab the opportunity with a focus on Transportation, Industrial Products
and Plant Engineering verticals.
* IES is strategically focused on Solutioneering and Menu Card approach in
delivering to customers
* Efforts have been taken to develop analytical engineering capabilities
among the resources in IES
* Significant investments have been made in Tools, Test labs, Licenses and
in Tear down studios
* Focused HR team to nurture & acquire talent in IES and to bring personal
& professional development in the organization resources.
* IES has identified high growth potential clients and the action plan to
nurture and grow the relationship with them for long term benefits
* IES is seeing significant potential in new geographies like Russia,
Eastern Europe, Australia, Africa, Mexico and Brazil. Sales force is being
setup for these regions for building momentum in the revenue from these
regions.
* Actively working on acquiring a suitable prospect for increasing its
services portfolio base in key industry segments.
Outlook:
Global trends in the economy today motivate the people in general to invest
in businesses which have been growing significantly over the years.
Engineering Services is one such industry. During the current fiscal year,
IES has been able to achieve a revenue growth of 60%. To cater to this
growth, IES has added more than 1200 employees in the year and more than 50
clients including 15 fortune 500 companies.
With the initiatives taken in 2011-2012, actions planned in the next year
and addition of new geographies, IES is confident of achieving impressive
growth in the 2012-2013.
Financial Review 2011-2012 L&T Standalone:
I. SUPERIOR PERFORMANCE IN A CHALLENGING ENVIRONMENT:
Good revenue growth, healthy order book, enhanced profit and strong balance
sheet are the highlights of the Company`s performance during 2011-2012.
The Company garnered fresh orders amounting to Rs. 70574 crore, despite
decelerating growth momentum across the sectors in India during the year
2011-2012. Order Inflow includes proportionate share in Integrated Joint
Ventures. Lower GDP growth, policy uncertainties and rising borrowing costs
led to deferment of various order prospects during the year 2011-2012.
Moreover, stiff competition from international and domestic players posed
considerable challenges in converting available prospects into orders.
Still Buildings & Factories, Infrastructure, Power Transmission &
Distribution and Metallurgical & Material Handling businesses contributed
significantly to the order inflows during the year. International order
inflow at Rs. 12909 crore during the year 2011-2012 recorded an increase of
62% aided by concerted business development initiatives undertaken in
select geographies.
The Order Book including share in Integrated Joint Ventures at the close of
the year was healthy at Rs. 145723 crore. Proven track record in the
various business segments, enhanced capacities and sector specific focus
enabled the Company to achieve CAGR of 20% in its order book over the last
3 years.
Revenue from Operations:
Gross Revenue from Operations for the year at Rs. 53738 crore registered a
growth of 21% over 2010-2011 on the back of healthy Order Book at the start
of the year. Most of the projects progressed well as scheduled, in
particular, EPC Power, Buildings & Factories and Hydrocarbon businesses
contributed significantly to the Company`s Revenue growth. The product
businesses, however, recorded a modest revenue increase with sluggish
industrial off-take during the year 2011-2012. International Revenue grew
by 38%, constituting 12% of the total Revenue, mostly contributed by
various projects under execution in Power Transmission & Distribution,
Infrastructure and Oil & Gas sectors in GCC countries and sales by
Integrated Engineering Services business.
A compounded annual growth in Revenue of 20% over the last 3 years,
reflects consistent good performance delivered over the years.
Operating Cost:
Manufacturing, Construction and Operating expenses for the year 2011-2012
amounted to Rs. 41020 crore, translating into 77.1% of the Net Revenue. As
compared to the previous year, these costs increased by 90 basis points as
the prices of key inputs were higher in the year 2011-2012.
The Staff Expenses for the year 2011-2012 at Rs. 3663 crore increased by
29.4% as compared to the previous year, representing 6.9% of the Net
Revenue. There was a net addition of 3637 employees during the year mainly
to support higher level of activities in Engineering & Construction
businesses and Integrated Engineering Services business. The Company`s
manpower strength stood at 48754 as at March 31, 2012.
Sales, Administration & Other expenses for 2011-2012 at Rs. 2204 crore were
contained at 4.1% of Net Revenue as against 4.5% for 2010-2011, reflecting
a saving of 40 basis points, largely arising out of lower warranty
provisions, reduction in packing & forwarding expenses and decrease in
losses of Integrated Joint Ventures. The Sales, Administration & Other
expenses for the year 2011-2012 comprised higher net exchange loss of Rs.
459 crore largely arising from MTM valuation of exposures vis-a-vis Rs. 193
crore for the previous year, as INR weakened significantly against USD
during the year.
Depreciation & Amortization charge:
Depreciation and amortisation charge for the year 2011-2012 at Rs. 699
crore increased by 37% over the previous year reflecting the full impact of
the additions to the fixed assets carried out in the previous year and part
impact of the additions made during 2011-2012.
Other Income:
Other Income for 2011-2012 amounted to Rs. 1338 crore as against Rs. 1147
crore for the previous year. Dividends from Group companies during the year
amounted to Rs. 408 crore as against Rs. 229 crore earned in 2010-2011.
Temporary surplus funds invested in low risk, largely interest-bearing
short term investments, earned an income of Rs. 723 crore in 2011-2012 vis-
a-vis Rs. 516 crore in the previous year. The yield on these short-term
investments was 8.90%.
During the year, the Company divested its part stake in Raykal Aluminium
Company Private Limited, a subsidiary company at an exceptional gain of Rs.
55 crore (net of tax Rs. 43 crore). The previous year included an
exceptional gain of Rs. 262 crore (net of tax Rs. 211 crore).
Finance cost:
Interest expense for 2011-2012 amounted to Rs. 666 crore with an average
borrowing cost of 7.8% p.a. as against 8.0% p.a. for the previous year. The
Company`s loan portfolio is carefully balanced with a combination of
suitably hedged foreign currency loans and domestic loans, tied-up at
appropriate times. This has enabled the Company to reduce its average
borrowing cost, despite weak INR, tight liquidity conditions and high
interest rates regime that prevailed throughout the year.
Profit after tax and EPS:
Profit after Tax (PAT) for the year 2011-2012 from normal operations
excluding exceptional and extraordinary items stood at Rs. 4413 crore
recording an increase of 20% over the PAT of Rs. 3676 crore for the
previous year.
Overall PAT including extraordinary and exceptional items, for the year
2011-2012 was Rs. 4457 crore vis-a-vis Rs. 3958 crore for the year 2010-
2011.
The Earnings per Share (EPS) excluding exceptional and extraordinary items
for 2011-2012 at Rs. 72.22 improved by 19% over the previous year.
Over a period of last 3 years, PAT registered a compound growth of 18%.
Funds Employed and Returns:
With continued thrust on capacity augmentation, the Company invested
Rs.1730 crore in 2011-2012 mainly to acquire various plant and equipment
for the businesses in Engineering and Construction segment and for
expansion of the Modular Fabrication Yard at Kattupalli, Tamilnadu. The
manufacturing facilities at Vadodara and Ahmednagar for the Electrical and
Electronics business segment are being ramped up to improve the
competitiveness of the business.
Gross Working capital as at March 31, 2012 was Rs.39287 crore, representing
73.1% of sales vis-a-vis 71.5% as at the end of the previous year. The
increase was mainly due to increase in customer receivables. Net Customer
Receivables as at the end of the year stood at Rs. 18730 crore, reflecting
127 Days of Sales, higher by 25 Days sales over the previous year. The
customer receivables as on March 31, 2012 included Rs.12393 crore
contractually not due. The balance customer receivables which were
contractually due as on March 31, 2012 have increased by 7 days sales over
the previous year.
Net Working capital as at March 31, 2012 also increased over the previous
year due to lower advances from customers, as anticipated orders were not
received.
During the year, fresh investments of Rs. 1684 crore were made in the
equity shares of subsidiary, joint venture & associate companies.
Investments in terms of loans, intercorporate deposits and advances against
equity to the subsidiary & associate companies stood at Rs. 3541 crore as
on March 31, 2012 vis-a-vis Rs. 2440 crore as on March 31, 2011. Major
investments have been made in Developmental Projects business, Realty
business and in the Ship Building subsidiary company.
Accordingly, the overall Funds Employed by the Company at Rs. 35252 crore
as at March 31, 2012 increased by Rs. 5981 crore as compared to the
previous year end position.
Return on Net Worth (RONW) for the year 2011-2012 is at 18.8% as against
18.3% for the previous year. Return on Capital Employed (ROCE) for the year
2011-2012 is at 15.1% quite close to the ROCE of 15.0% for the previous
year. The new facilities created in the recent past for the various
businesses of the Company, are yet to reach their optimum utilization
levels. Moreover, the investments in emerging businesses housed in
subsidiary companies such as shipbuilding, power development and heavy
forgings are in the construction stage. Many of the BOT projects are either
in the construction stage or in their early phase of commercial operations.
As a result, the increase in net earnings is moderate as compared to the
addition to net funds employed, leading to muted return profile.
Economic Value Added from normal operations stands positive at Rs. 430
crore for 2011-2012. The trend during the past three years reflects the
investment phase for the company.
Liquidity & Gearing:
During the year 2011-2012 the cash accruals from operations were lower at
Rs. 1082 crore as compared to the previous year, mainly due to increase in
net working capital, despite higher net earnings. The Company incurred
capital expenditure of Rs.1730 crore and made investment in group companies
of Rs. 2139 crore. Fresh borrowings and proceeds from sale of short term
investments supplemented the accruals from operations to fund these
investments.
During the year 2011-2012, some of the expensive loans were repaid and
fresh loans were raised at relatively lower interest rates.
Liquidity & capital resources:
Rs. crore
2011-20121 2010-2011
Cash & bank balance at the start of year 1730 1432
Add: Net cash provided/(used) by :
Operating activities 1082 3833
Capital expenditure (1730) (1645)
Investments in group companies (2139) (3077)
Other investing activities (Mainly dividend
and interest income) 1191 1119
Divestment proceeds 126 476
Proceeds from sale of short term investments 629 717
Financing Activities 1016 (1125)
Cash & bank balance at the end of year 1905 1730
Net additional cashflow of Rs. 175 crore was generated during the year
2011-2012.
The gross Debt Equity ratio as at March 31, 2012 was 0.39:1 vis-a-vis
0.33:1 as at March 31, 2011. After adjusting investment in liquid funds,
the Company virtually enjoys a debt-free status.
SEGMENT WISE PERFORMANCE:
Engineering & Construction Segment (E & C):
E&C segment achieved Gross Segment Revenue of Rs 46979 crore during 2011-
2012 registering a growth of 23% over the previous year, driven by
satisfactory progress on the jobs by Power, Buildings & Factories and
Hydrocarbon businesses. This revenue growth was achieved despite deferment
of some of the anticipated orders and delays in obtaining clearances in a
few projects under execution.
During the year, the Segment secured orders totaling to Rs 63573 crore vis-
a-vis order inflow of Rs. 73602 crore during the previous year.
International orders constituting 18% of the total order inflow grew by 70%
over the previous year. The business environment was highly challenging
during the year as investment momentum paused in Power sector, intense
competition witnessed in the Oil & Gas sector and policy delays led to
deferment of bidding process in Fertilizer and Defence sectors.
The Order Book of the Segment stood at a healthy Rs. 143448 crore as at
March 31, 2012 with international orders constituting 12% of the total
order book.
The composition of jobs under execution during 2011-2012 was dominated by
material intensive EPC Power jobs with relatively lower, albeit steady
margins. The job composition of other businesses of E&C Segment was skewed
towards contracts in early stages of execution. Despite unfavourable job
mix, the Segment recorded Operating Margin of 12.6% in 2011-2012 with
efficient management of costs and superior execution capabilities.
Electrical & Electronics Segment:
Gross Segment Revenue of Electrical & Electronics business stood at Rs.3579
crore for 2011-2012 recording a moderate growth of 11.5% due to subdued
industrial demand and intense competition. International sales at Rs. 343
crore registered 69% growth, driven by Electrical Systems & Equipment (ESE)
business. International Sales revenue constituted 10% of the total revenue
as against 6% during the corresponding previous year.
The businesses of the Segment reeled under the pressure of higher input
costs and intense competition. During the year 2011-2012, the EBITDA Margin
of the Segment was 12.0% vis-a-vis 15.6% for the year 2010-2011.
Machinery & Industrial Products Segment (MIP):
The MIP Segment recorded Gross Revenue of Rs. 2854 crore during 2011-2012
vis-a-vis Revenue of Rs. 2793 crore for the previous year. The sales growth
was moderate due to transfer of Welding Products Business (WPB) to a wholly
owned subsidiary in July 2011. On like-to-like basis, excluding the revenue
from WPB which formed part of the total revenue in 2010-2011, the Segment
achieved growth of 10% in 2011-2012 over the previous year.
International sales revenue during 2011-2012 at Rs. 448 crore doubled as
compared to Rs. 202 crore for 2010-2011 propelled by Valves business and
Rubber Processing Machinery business of the Segment.
The EBITDA Margin of the Segment at 18.4% declined during 2011-2012. The
Margin was adversely affected by higher input costs and unfavourable sales
mix.
"Others" Segment:
"Others" Segment includes Integrated Engineering Services (IES) and
Property Development businesses. The IES business dominates the Segment
contributing 93% of the gross revenue.
IES revenue at Rs. 891 crore in 2011-2012 recorded impressive revenue
growth of 68% over the previous year. New customers and enhanced billing to
existing flagship clients enabled IES business to record robust performance
during the year.
IES recorded EBITDA margin of 18.7% in 2011-2012, marginally lower as
compared to 19.4% for 2010-2011. Despite favourable foreign currency rates,
the EBITDA margin was lower, due to large capacity addition undertaken
during the year to support future growth aspirations.
II. RISK MANAGEMENT:
The company is predominantly engaged in the engineering and construction
business with a high dependence on the core sectors of the economy. With
increasing focus on international operations and extensive assortment of
risks associated with turnkey projects, our long-term success largely
depends on how effectively we identify and analyze the risks involved in a
project and manage them to our competitive advantage.
The Company strongly believes that its Risk Management culture should
pervade the whole enterprise instead of being restricted to a few silos and
has, therefore, actively pursued a uniform risk framework and understanding
across the organization. Continuing on this belief, besides employing an
efficient risk management structure in its main businesses of engineering
and construction, the company has also succeeded in establishing a similar
risk management structure in its product businesses, as well as in all its
major subsidiary companies.
The current slowdown in investment momentum witnessed in almost all sectors
of the economy, coupled with high inflation and interest rates, volatile
financial markets and delayed policy intervention are posing considerable
challenge to the growth of the core sector with fewer projects coming up
for capacity augmentation. The sluggish economy of the developed countries
has further intensified the competition with more number of foreign players
vying for a share of the limited pie. Despite all these challenges, the
company, by leveraging on its Enterprise Risk Management (ERM) culture and
past record of excellence in project execution, has been able to secure
orders against stiff domestic and international competition. On strategic
front, opportunities in international geographies and markets are being
exploited to its fullest potential in order to counter the risk of business
momentum slowdown in domestic markets of the company.
The key to successful project execution lies in timely completion and cost
management. The well-established process of detailed pre-bid risk review
not only helps in realistic estimation of project cost, but also
facilitates early identification of the key risks in the project and
devising informed mitigation strategy. Once a project order is won, the
process of risk review continues throughout the project lifecycle. The
project team and business heads, facilitated by the risk management
committee, continuously monitor the impact of new risks emerging during the
execution phase and take appropriate mitigation steps.
Information technology plays a very important role in achieving business
goals and hence it becomes essential for the company to have sound risk
management in this area. The company has integrated its Information
Security initiatives with its overall risk management framework and
enhanced such security by deploying latest technology and improving the
monitoring processes. Business Continuity and Disaster Recovery systems are
constantly upgraded with state-of-the-art tools for replication, and
performing drills to ensure unhindered availability of data and systems at
all times.
Each business group follows a well-documented risk management policy and
procedures framed around the uniqueness of the businesses. Risk Management
offices in each business along with the Corporate Risk Management
representatives actively participate in the risk review process and also
continuously assess the ERM structure for improvements.
The year saw a sharp volatility of Indian Rupee against US Dollar. The
company has a well-defined hedging policy wherein a joint committee of the
respective Business Heads and the Treasury department decides on the
hedging strategy for all projects. This helps in effectively insulating the
company against the risk of foreign exchange fluctuations.
A significantly large part of the company`s business portfolio being made
up of project business, is exposed to a variety of risks. The large volume
of procurement and sub-contracting across various countries poses the
challenge of appropriate cost estimation for long duration LSTK contracts.
Successful implementation of international projects requires knowledge of
the regulatory and taxation laws of respective countries. Talent
acquisition in remote project sites becomes difficult in many cases. The
risk management process gives a platform to discuss all such critical risks
and their mitigation plans which in turn brings in transparency and
predictability in the project management process.
The company is a member of the Engineering & Construction Risk Institute
(ECRI), USA and actively participates in training and knowledge sharing
sessions with its peers. As a part of risk assurance, the company`s risk
management policy and procedures are periodically reviewed and revised to
align with changing business needs and the demands of the new organisation
structure. Corporate Audit Service also conducts independent reviews of
risk management processes to check their effectiveness. The Audit Committee
of the Board is periodically informed about the significant risks,
functioning of the risk management process and various initiatives taken
for improvement in the risk management framework of the company.
Internal Controls:
The growing business activities and restructuring of business processes
call for a constant review of the efficacy of the company`s internal
control mechanism. The company has an internal process for such a review to
facilitate formulation and revision of policies and guidelines to align
with the changing needs.
A corporate policy on internal control is in place which provides
structured framework for identification, rectification, monitoring and
reporting of internal control weaknesses in the company. Various business
segments of the company have also created well documented policies,
authorization guidelines and standard operating procedures as per their
business requirements. There is a separate process in the company which
oversees the guidelines and implementation of internal controls in business
processes.
Apart from having all policies, procedures and internal audit mechanism in
place, the company also periodically engages an expert consulting firm to
carry out an independent review of the effectiveness of various business
processes. The observations and good practices suggested are reviewed by
the Management and Audit Committee and appropriately implemented for
strengthening the controls of various business processes.
The effectiveness of internal control mechanism is also continuously
reviewed by Corporate Audit Services. The statutory auditor, during the
process of financial audit, checks the internal control efficacy. All
significant observations and corrective actions taken are reviewed by the
Management and Audit Committee of the Board.
III. FINANCIAL RISKS:
a) Capital Structure, Liquidity and Interest rate risks:
Over the years, the Company`s strategy of keeping a conservative capital
structure has positioned it well in managing the economic volatility and at
the same time, also providing the flexibility for funding growth. With an
objective of maintaining a healthy credit profile, the Company has
consciously followed a policy of restricting its financial leverage. This
policy, apart from contributing to a strong balance sheet, provides
flexibility for future fund raising options, which is of significance given
the recent volatility in global markets.
The Company holds necessary levels of liquidity, judiciously deployed into
short term investments in line with the corporate treasury policy. In
addition, the company regularly assesses and maintains other means of
sourcing liquidity, such as ready lines with the banking system and quick
access to capital markets. The company regularly evaluates the right levels
of liquidity in line with business needs and economic factors.
To manage interest rate risks, the Company uses a mix of fund-raising and
investment products across maturity profiles, and adopts various tools
approved under a robust risk management framework.
b) Foreign Exchange and Commodity Price Risks:
The company is exposed to changes in foreign exchange rates and commodity
prices across its various business segments. It also has exposures to
foreign currency denominated financial assets and liabilities. The business
related financial risks are to a reasonable extent, especially in case of
commodities, managed contractually by inclusion of price pass through or
variations clauses. The Company`s loan portfolio is managed both by choice
of loan currency and by contracting appropriate treasury products, with a
view to balancing risks while optimizing borrowing costs. Appropriate
hedging tools are used under the framework of a Board approved Risk
Management Policy. Financial risks in each business portfolio are measured
and managed centrally. These risks are reviewed periodically and managed in
line with the objective laid out in the Risk Management Policy of the
Company. The process is also subject to an annual review by the Audit
Committee.
IV. GETTING THE BEST OUT OF INFORMATION TECHNOLOGY FOR BUSINESS BENEFITS:
The company is of the firm belief that Information Technology is a key
enabler for employee productivity and business efficiency. Every business
of the company is well supported by an Enterprise Resource Planning (ERP)
system to carry out its business processes and to take care of all
transaction processing needs. Most businesses have niche application
systems to complement the ERP and perform special functions to provide a
competitive advantage. During the year the company has also deployed CRM
systems for marketing specific to the project business, PLM systems for
better connect with bidding, engineering , execution and BI systems for
providing better information for decision making. The company has re
architected and upgraded its systems periodically to prevent obsolescence
and to ensure better business IT alignment.
The use of advanced networking and communications has facilitated team
collaboration, with savings in travel costs. IT infrastructure has been
enhanced and expanded to provide reliability, security and availability. A
new state-of-the-art Data center at Powai has been one such initiative that
was successfully completed during the year.
Modern technology initiatives are pursued after due scrutiny and
evaluation; a pilot deployment of mobile applications has been done as a
prelude to more applications that are on the anvil. We see Cloud computing
emerging as a major change in IT delivery model and in sync with this
trend, the foundations for a Private Cloud are being built that will
leverage all the cloud computing models and technologies to reduce costs,
provide better performance and elastic capacity on demand.
The IT function in the company continues to focus on value delivery,
security, superior customer service and complete alignment with business as
its cornerstones of performance.
V. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
A sense of responsibility towards society and environment is demonstrated
through our culture of trust and caring. L&T has adopted sound business
practices, be it in natural resources management, social harmony or
corporate governance, the practices are in sync with our value system.
The company is disclosing the economic, environmental and social
performance through Corporate Sustainability Reports since 2008 as per GRI
(Global Reporting Initiatives) guideline in public domain.
As part of sustainability journey, L&T`s various businesses have adopted
sustainability approach encompassing initiatives covering natural & energy
resource conservation, water efficiency, waste reduction and product
innovation. This is strengthened through commitment of top management,
robust processes and policy formulation.
The company actively works towards development of underprivileged
communities especially around our area of operations. Mother & child
health, primary education and skill building are the key thrust areas for
community welfare.
Mechanisms to monitor and facilitate these developmental activities on the
social front are systemic. L&T units and project sites are encouraged to
undertake programmes that benefit the community. Employee volunteers and
spouses of employees are important drivers of our community development
initiatives. Through a network of L&T units, offices and project sites
spread across the country we are able to reach a significant number of
beneficiaries of our social interventions.
The company has put in place an Environmental and social risk management
framework to proactively address environmental and social issues in the
planning stage of products & services. This ensures that negative impacts
on environment are mitigated or controlled effectively.
Since 2008, L&T has been conducting carbon footprint mapping of its
operations that enables to determine the annual GHG emissions. This level
of comprehensive quantification is helping to strategically plan and
monitor our emission intensity.
At L&T our objective is to progressively drive design expertise,
operational efficiency and maintenance efforts towards cleaner and greener
technologies. We have implemented many eco-friendly initiatives such as,
`Zero wastewater Discharge Approach` and presently 15 of L&T locations have
achieved zero discharge status. All wastewater generated is treated, and
reused within the units.
L&T`s energy conservation practices not only result in environment
protection but also result in cost optimization. The company focuses on
state of the art technology, cleaner processes and propagating energy
optimization culture. Biodiversity conservation is consciously implemented
across the company and we have done GIS based biodiversity assessment of
key campuses.
The Corporate Social Initiatives (CSI) cell of the company engages with
local stakeholders, community leaders and NGOs to identify and assess
community needs, in order to plan and develop social interventions. The CSI
apex set-up based in Mumbai works closely with respective L&T offices to
bring in uniform approach, consistency, monitoring mechanism and to scale
up community initiatives across various locations.
The Company`s Working on Wellness (WoW) initiative caters to overall
employee wellbeing while ensuring that a preventive and curative approach
is adopted for occupational health care.
SUBSIDIARIES & ASSOCIATES (S&A) PORTFOLIO:
Progressive Performance amidst Challenges:
Larsen & Toubro continues to expand its Subsidiary & Associate companies
portfolio (hereafter referred to as S&A companies) to accelerate growth
momentum. L&T group had 128 subsidiaries, 18 associates and 14 Joint
venture companies under its umbrella as on March 31, 2012.
L&T`s S&A portfolio is further classified under the IC Business structure
based on its business risk-reward profile and the business segment to which
it caters.
The following are the IC Groups under which the S&A companies function:
I. Hydrocarbon IC Group:
II. Power Transmission & Distribution IC Group.
III. EPC Power & Power Equipment IC Group
IV. Heavy Equipment IC Group
V. Ship Building IC Group
VI. Electrical & Automation IC Group
VII. MIP (Machinery & Industrial Products) IC Group
VIII. Financial Services Group
IX. Technology & Services Group
X. Development Projects Group
XI. Power Development Group
XII. Urban Infrastructure Group
XIII. Holding company for overseas investments
Some of the ventures initiated in the emerging business sectors during last
couple of years are still under construction stage/in initial phase of
operation. These ventures are yet to contribute to the Group`s revenues.
For the year ended March 31, 2012, consolidated revenue at Rs. 64313 crore
grew by 24% and the consolidated Profit after tax excluding exceptional and
extraordinary items at Rs. 4238 crore increased by 10% over the previous
year.
A review of the major operating S&A companies under respective IC Group is
presented below:
I. HYDROCARBON:
Domestic Companies:
A. L&T SAPURA OFFSHORE PRIVATE LIMITED (LTSOPL) AND L&T SAPURA SHIPPING
PRIVATE LIMITED (LTSSPL):
Subsidiary Companies:
LTSOPL and LTSSPL are Joint Ventures between L&T and Nautical Power Pte
Limited, Singapore, a wholly owned subsidiary of Sapura Crest Petroleum
Bhd, Malaysia for operation of a Heavy Lift cum Pipe Lay Vessel (HLPv) and
installation of offshore platforms and laying of subsea pipes and cables
under the sea for the Hydrocarbon Upstream Industry. The Joint Venture (JV)
companies were formed in September 2010 with L&T holding majority of 60%
equity stake in both the companies. Heavy Lift cum Pipe Lay Vessel was
commissioned during the year 2010-2011.
JV companies recorded revenue from operations of Rs. 164 crore and profit
after tax of Rs. (72) crore for the period ended March 31, 2012. LTSSPL
closed the year with order book of Rs. 164 crore.
B. L&T-VALDEL ENGINEERING LIMITED (LTV):
Subsidiary Company:
LTV, wholly owned by L&T, provides complete engineering solutions for
upstream oil & gas sector and offers design engineering services as well as
project management services globally.
The Company recorded order inflows of Rs. 100 crore during 2011-2012 as
against Rs. 61 crore during 2010-2011. The order book as at March 31, 2012
stood at Rs. 63 crore recording a growth of 50% over the previous year.
Revenue from operations at Rs. 81 crore registered a growth of 16% over the
previous year. Profit after tax for 2011-2012 was marginally higher at
Rs.6.42 crore as compared to Rs. 6 crore in 2010-2011.
C. L&T-CHIYODA LIMITED (LTC): Associate Company:
LTC, a company where L&T has 50% stake, is a globally recognised design &
engineering consultancy company for hydrocarbon processing industry. LTC
was set up in the year 1994 as a JV between Chiyoda Corporation of Japan
and L&T with an equal stake. LTC offers total engineering solutions to
hydrocarbon sector and related industries including petroleum refineries,
petrochemical units, oil and gas onshore processing facilities, LNG/LPG
plants, fertilizer plants and chemical plants.
Revenue from operations for 2011-2012 at Rs. 111 crore registered a growth
of 14% over 2010-2011. Profit after tax for the year was lower at Rs. 6
crore as compared to Rs. 9 crore during the previous year.
International Companies:
D. LARSEN & TOUBRO ELECTROMECH LLC (L&T Electromech):
Subsidiary Company:
L&T Electromech is a JV between L&T and The Zubair Corporation, Oman (TZC).
L&T, through its wholly owned subsidiary L&T International FZE holds 65%
and TZC holds 35% in the Company.
The Company is a leading Civil, Mechanical and Electrical & Instrumentation
Construction Company in Oman undertaking projects in Oil and Gas,
Refineries, Petrochemicals, Power and Water Treatment sectors.
During the year under review, the Company bagged orders worth Rs. 635 crore
as against Rs. 514 crore in 2010, thus registering a growth of 24%. Sales
for the year at Rs.478 crore registered a growth of 4% over 2010. Profit
after tax stood at Rs. 48 crore as against Rs. 36 crore in 2010. The Order
Book as at December 31, 2011 stood at Rs. 655 crore.
Investments to the tune of Rs. 7200 crore for refinery expansion in Sohar
is on the anvil. Investment in Oil & gas sector has been planned for Rs.
15000 crore. In the backdrop of depleting oil and gas reserves, the
government continues to focus on implementing the economic diversification
strategy to enhance the non-oil production base of the economy. Targeted
economic growth for Oman for 2012 is 5%. On an overall basis, the business
outlook in Oman for 2012 is buoyant.
E. L&T MODULAR FABRICATION YARD LLC, OMAN (LTMFYL):
Subsidiary Company:
LTMFYL is a JV company between Zubair Corporation & L&T established in
Sultanate of Oman. L&T, through its wholly owned subsidiary L&T
International FZE holds 65% in the Company. The Company has developed core
competencies in manufacture of high end equipment like Jack up Drill Rigs,
Floating Production Storage & Offloading (FPSO) Vessels, Integrated Decks,
Skid mounted equipment, Onshore Process Modules in addition to fabrication
of large size offshore platforms.
During the year 2011, LTMFYL`s revenues were at Rs. 149 crore vis-a-vis
Rs.252 crore in 2010. The Profit after tax for the year 2011 was Rs. 9
crore. LTMFYL has secured major order for Fabrication of 5 Offshore
Platforms (Jackets, Topsides, Piles and Bridges) for ADMA OPCO, Abu-Dhabi
during the year 2011.
F. LARSEN & TOUBRO ATCO SAUDIA COMPANY LLC:
(L&T ATCO): Subsidiary Company
L&T ATCO is a strategic JV between L&T and Abdulrahman Ali Al-Turki Group
of Companies (ATCO) Dammam, a renowned Saudi conglomerate. L&T ATCO was
incorporated as an In-Kingdom Company in 2007 to take advantage of the
electro-mechanical construction opportunities arising in the areas of Oil &
Gas, Petrochemicals, Power and Water related projects in Saudi Arabia. L&T,
through its wholly owned subsidiary L&T International FZE holds 49% in the
Company.
During 2011 the Company`s total income was at Rs. 67 crore against Rs. 25
crore in 2010. The Company registered a Profit after tax of Rs. 3 crore as
against Rs. 0.09 crore in 2010.
The company has made a major breakthrough in Saudi Arabia by bagging a
large order for constructing state of the art solution polyethylene plant
from `SADARA Petrochemicals`, an Aramco Dow JV.
The Company will leverage the benefit of specific tie-ups with prominent
EPC players in the Refinery & Petrochemical sector. The recent
prequalification with large and most prestigious customer in the Kingdom
and pre-bid alliance with some of the leading EPC players will benefit the
Company to gain competitive strength and obtain new project orders.
G. LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL
(LTKC):
Subsidiary Company:
LTKC is a strategic JV between M/s Bader Almulla and Brothers Company WLL,
a Kuwaiti company and L&T. L&T, through its wholly owned subsidiary L&T
International FZE, holds 49% in the Company. LTKC executes construction
projects in Oil & Gas and Power sectors in the State of Kuwait.
The Company reported revenues of Rs. 30 crore during 2011 with Profit after
tax of Rs. (0.90) crore.
II. POWER TRANSMISSION & DISTRIBUTION:
Domestic company:
A. L&T-RAMB0LL CONSULTING ENGINEERS LIMITED (LTRCE):
Associate Company:
LTRCE, a consultancy firm where L&T has 50% stake, was established in 1998
as a JV with RAMB0LL A/S of Denmark. The Company provides engineering and
project consultancy services for transportation infrastructure projects
relating to Ports & Marine, Roads & Airports and Bridges & Metros sector.
LTRCE also offers consultancy services in SEZ Planning & Environmental
Engineering.
The Company has consolidated its position in the domestic market as
advisors and consultants to developers of projects. LTRCE registered total
income of Rs. 46 crore and Profit after tax of Rs. 10 crore during 2011-
2012.
International companies:
B. LARSEN & TOUBRO (OMAN) LLC (LTO):
Subsidiary Company:
LTO, a JV with Zubair Corporation LLC, provides engineering, construction
and contracting services for the last 15 years in Sultanate of Oman. The
Company has an excellent track record in civil projects and continues to
enjoy customer preference in the country. L&T, through its wholly owned
subsidiary L&T International FZE holds 65% in the Company.
The Company procured order valued OMR 113 Million (V 1493 crore) during
2011. Order Book as at December 31, 2011 stood at OMR 203 Million (V 2682
crore). The revenue at Rs. 2017 crore for the year grew by 21% over 2010.
The Profit after tax for the year 2011 stood at Rs. 96 crore.
Based on the country`s budgets, the company is confident of securing orders
in the areas of roads, bridges, water network & other government projects.
C. LARSEN & TOUBRO READYMIX CONCRETE:
INDUSTRIES LLC (RMC LLC):
Subsidiary Company
RMC LLC is a JV between Mr. Majed Al Muhari (51%), UAE and Larsen & Toubro
International FZE (49%), a wholly owned subsidiary of L&T.
The construction and real estate activity remained stable during 2011.
Accordingly, the gross revenue from operations was at Rs. 58 crore in 2011
as compared to Rs. 57 crore in 2010.
III. EPC POWER & POWER EQUIPMENT:
Domestic companies:
A. L&T-MHI TURBINE GENERATORS PRIVATE LIMITED:
Subsidiary Company:
L&T has entered into JV with Mitsubishi Heavy Industries, Japan (MHI) to
manufacture super critical steam turbines & generators (STG package) to
leverage on its EPC capabilities in the emerging mega power sector. L&T-MHI
Turbine Generators Private Limited has been formed with L&T holding 51% of
the equity. The Company has a manufacturing facility at Hazira, Gujarat to
produce STG equipment of capacity ranging from 500 MW to 1000 MW.
Considering the market scenario of power sector, the Company has not
secured any fresh orders during 2011-2012. The order book position stood at
Rs. 1533 crore as on March 31, 2012. The Gross sales at Rs 1300 crore
registered a significant growth over the previous year with 4 projects
under execution.
Besides high capital costs the power industry is facing lot of challenges
over the availability of critical resources viz. land, water and coal
linkages. Many power producers are holding back their expansion plan which
has sharply reduced the business opportunities of the power equipment
manufacturers. Considering that the energy security is paramount to achieve
the desired GDP growth of the economy, recently the Government has taken
several measures to give impetus for power infrastructure to meet the
growing energy demand.
The competition has intensified with many international players having
presence in Indian market and able to get their share of business during
last couple of years. The aggressive pricing and delivery terms from the
Chinese power equipment manufacturers has also added to severe pressure on
the pricing.
The Company is focusing on internal processes & capabilities with the
objective of cutting wastage, enhancing efficiency and maximizing
productivity to build a strong foundation to meet the challenges of
tomorrow. The Company is confident of meeting the market requirements to
manufacture & deliver the cost competitive products in the coming years.
B. L&T-MHI BOILERS PRIVATE LIMITED:
Subsidiary Company:
L&T and MHI have entered into a JV to manufacture and supply Supercritical
Boilers for large coal based power utilities. L&T-MHI Boilers Private
Limited has been formed with L&T holding 51% equity stake. The Company has
completed its first phase of setting up the manufacturing facilities at
Hazira, Gujarat. The total capacity being installed is 4000 MW.
The Company has recorded healthy growth in gross revenue from operations at
Rs. 2457 crore as against Rs. 1029 crore in the previous year.
The thermal power sector of the country is facing issues like fuel
availability, land acquisition and environmental clearances. With enhancing
capacity of domestic players and entry of international players by forming
joint ventures with local companies, the competition has intensified.
With the impetus to the power sector and the benefits of super critical
technology, the Company is confident of meeting the market requirements
with focused efforts to manufacture/deliver the products and to become more
cost competitive in the coming years. The Company has made inroads in
introducing advance ultra-supercritical Steam Generators for the Indian
market to remain ahead of competition by providing energy efficient and
environment friendly products. The initiatives undertaken by the company
are expected to add significantly to execution capability with improved in
efficiency and productivity.
C. L&T-SARGENT & LUNDY LIMITED (LTSL):
Subsidiary Company:
LTSL, a 50% each joint venture between L&T and Sargent & Lundy, USA is ISO
9001:2008 quality certified engineering consultancy organisation. LTSL
offers a complete range of Power Plant Engineering & Consultancy services,
from concept to commissioning to its customer base in India and abroad.
LTSL has extensive expertise in gas based and coal based power projects and
forms the engineering base for L&T`s thrust into turnkey execution of
super-critical technology. LTSL is also expanding its capabilities in the
renewable (Solar/Wind/Biomass) energy. LTSL is located at Vadodara, Gujarat
and has set up a full-fledged Design & Engineering centres at Faridabad &
Kolkata to expand its horizons.
LTSL received new orders aggregating to Rs. 110 crore during 2011-2012 of
which export orders amount to Rs. 66 crore.
Revenue from operations for 2011-2012 at Rs. 114 crore registered a growth
of 32% over the previous year. Exports constitute 31% of revenue from
operations. Profit after tax registered a 38% growth at Rs. 20 crore during
2011-2012.
LTSL will capture opportunities for large super-critical and ultra-super
critical power projects in domestic market and gas based and oil fired
power projects in International market. With increased focus on business
development in international market, LTSL seeks to achieve sustainable
growth momentum in medium to long term.
IV. HEAVY EQUIPMENT:
Domestic Companies:
A. SPECTRUM INFOTECH PRIVATE LIMITED (SIPL):
Subsidiary Company:
SIPL, a wholly owned subsidiary of L&T, possesses capabilities in defence
electronics and systems. SIPL concentrates largely on product development
in embedded solutions, control and signal processing for defence sector. It
has grown from designing and development of sub-systems to a full-fledged
production organisation delivering sub-systems.
Revenue from operations were at Rs. 13 crore during 2011-2012 with Profit
after tax at Rs. 2 crore.
B. L&T SPECIAL STEEL AND HEAVY FORGINGS PRIVATE LIMITED (LTSHF):
Subsidiary Company:
LTSHF is a JV between L&T and Nuclear Power Corporation of India Limited
(NPCIL) with L&T holding majority equity stake of 74%. The JV, formed in
July 2009 is in the process of setting up a fully integrated special steel
and heavy forgings manufacturing facility at Hazira, Gujarat. This facility
will produce heavy forgings required for both the Hydrocarbon sector and
the Nuclear power sector. The company is expected to commence production by
September 2012.
V. SHIP BUILDING
Domestic Companies:
L&T SHIPBUILDING LIMITED (LTSB):
Subsidiary Company:
L&T has identified shipbuilding as a major thrust area in the heavy
engineering sector. LTSB, a 97% owned subsidiary of L&T, has been formed
for development and operation of a Shipyard cum Minor Port Complex at
Kattupalli, near Chennai, Tamil Nadu. The project involves development of
Shipyard for manufacturing and repair of defence as well as commercial
vessels and operation of Port complex on a commercial basis with a capacity
of 1.2 million TEUs per annum.
LTSB entered into a JV agreement with TIDCO to set up the project. LTSB has
successfully acquired 1148 acres of patta land at Kattupalli on long-term
lease and has also received the formal SEZ approval from the Ministry of
Commerce and Industry.
The construction activity at the project site is advancing well as per
schedule. The Company has entered into license and collaboration agreement
with Mitsubishi Heavy Industries Ltd., Japan to enable itself for seizing
new business opportunities.
VI. ELECTRICAL & AUTOMATION:
International Companies:
A. TAMCO GROUP OF COMPANIES:
Subsidiary Companies:
TAMCO Group of companies operating from Malaysia, Indonesia and Australia
are the wholly owned subsidiaries of L&T International FZE.
TAMCO has strengthened its brand equity for Low and Medium Voltage
switchgear both in domestic and overseas market. Its products are widely
used in power, oil & gas, construction and manufacturing industries.
Through extensive R&D and advanced manufacturing technology, the TAMCO
group is able to deliver high quality and cost effective products. It has a
wide market share in Dubai, Qatar, Oman and other GCC countries.
During the financial year ended December 2011, TAMCO Group has secured
orders amounting to Rs. 479 crore. Gross revenue from operations for 2011
stood at Rs. 599 crore. The operations have been impacted by the slow off-
take in the Middle East and Gulf markets. Sales in Australia increased to
Rs. 91 crore in 2011 while the revenue in Indonesia increased to Rs. 32
crore in 2011. Profit after tax was at Rs. 55 crore for the year ended
December 2011.
GDP growth in Malaysia is expected to be at 6%. Accordingly, Tamco Malaysia
sees opportunities in upcoming tenders for 2500 AIS tenders, RMU tender for
12kV and PPU tender for sub-stations. The company also boasts of
containerized and rehab sub-stations.
Tamco Australia holds good prospects due to the boom in Mining & Offshore
industries in Western Australia. The company can leverage good reference of
NSW utilities in Western Australia and achieve capacity addition in
Windmills of 2000MW by the year 2020.
The market shows good prospects for business in UAE. FEWA approval is
expected by May 2012 along with a new tender for 33kV GIS substation from
SEWA. The approval from ADWEA is in advance stage.
The market also holds good prospects for business in Qatar in the
infrastructure segment on account of FIFA 2022. Further, 8500 panels for
AIS are to be finalized in 2012-2013.
Tamco group aims to make new product developments in line with "Lakshya
2016" Strategic plan. Initiative is on to make in-roads in Western
Australia in mining and petrochemical business, to develop OEMs in select
markets and to synergize with PT&D in the ME market particularly in Kuwait
and Iraq. Attempts would also be made to increase localization in Indonesia
and make in-roads in the KSA market.
B. L&T ELECTRICALS SAUDI ARABIA COMPANY LIMITED, LLC (LTESA):
Subsidiary Company:
L&T Electricals Saudi Arabia Company Limited (LTESA) is a JV between Larsen
& Toubro Limited, India and Yusuf Bin Ahmed Kanoo Group, KSA with a state-
of-the-art integrated manufacturing facility in Dammam to cater to the
customers in and around Saudi Arabia. The company offers complete range of
electrical systems and switchgear components in the Gulf market in Low and
Medium Voltage categories, Pre-Fabricated / Packaged Substations, Variable
Frequency Drive panels and Automation systems etc.
The order inflow for the year ended December 2011 was at Rs. 47 crore.The
performance of the company was impacted by the slowdown in the market where
many projects were stalled and decisions on order finalization were
deferred. Revenue from operations for the year ended December 2011 was
Rs.56 crore.
The company sees good prospects in 2012-2013 as the Maaden frame agreement
has facilitated recognition with global EPC majors in KSA. Also, product
certification as per KSA standards is under progress. SEC potential of USD
70-80 Million annually from T&D segments will become addressable after
approval. Business from E&C & PTD in KSA is also expected to contribute
from 2012-2013. Higher government spending in Infrastructure segment is
expected to yield significant business.
C. L&T ELECTRICAL & AUTOMATION FZE, (LTEAFZE):
Subsidiary Company:
L&T Electrical & Automation FZE, established in 2008 and operating from its
own Integration Centre, at Jebel Ali Free Zone in United Arab Emirates
(UAE), is a wholly owned subsidiary of L&T International FZE.
The company provides Integrated Control Solutions to Industry verticals
like Oil & Gas, Water & Waste Water, Power and Infrastructure in the Middle
East, Africa and CIS markets with expertise in Automation,
Telecommunication, Electrical & Instrumentation segments.
The order inflow for the year ended December 2011 was Rs. 242 crore as
against Rs. 118 crore in 2010. Revenue from operations for the year were
Rs. 111 crore. The performance of the company was affected by slowdown in
the Middle East market and very low opening order book. The Profit after
tax for the year ended December 2011 was Rs. 17 crore. The company has a
healthy order book of Rs. 186 crore as on January 1, 2012. During 2011, the
company declared a 10% maiden dividend to its holding company L&T
International FZE.
The Oil & Gas, Utility and Infrastructure segments are showing signs of
revival across Middle East, Africa & CIS countries with significant
investments announced over next 3-5 years. The company has strengthened its
position in Telecom System Integration and expects to grow significantly in
this area in addition to Control, Electrical & Instrumentation areas.
With major customer approvals in place, the company is focusing to provide
solutions and services to Engineering Procurement & Construction (EPC)
companies and to end users for both new and brown field projects.
D. LARSEN & TOUBRO (WUXI) ELECTRIC COMPANY LIMITED (LTW):
Subsidiary Company:
Larsen & Toubro (Wuxi) Electric Company Ltd. (LTW) is a 100% subsidiary of
L&T International FZE, Sharjah. It is located at Wuxi in the Jiangsu
province of People`s Republic of China. The factory was established in 2006
to manufacture Air circuit breakers (ACB) and Moulded Case Circuit Breakers
(MCCB) for Chinese market.
Sales and other income for the year ended December 2011 was at Rs. 33 crore
and Profit after tax at Rs. (0.30) crore.
As the growth and profitability of the business has been low as compared to
the plan, it has been decided to close the business. Accordingly, the plans
to exit the business is awaiting Chinese Government clearance.
VII. MACHINERY & INDUSTRIAL PRODUCTS:
Domestic Companies:
A. L&T PLASTICS MACHINERY LIMITED (LTPML):
Subsidiary Company:
LTPML is a wholly owned subsidiary of L&T. The Company is in the business
of manufacture of Injection Moulding Machines (IMMs) for the plastics
industry. The Company`s products find applications in diverse industries
like automobiles, electrical goods, packaging, personal care products,
writing instruments and white goods.
The company reported revenue of Rs. 206 crore during 2011-2012 from its
operations and Profit after tax of Rs. 11 crore.
The business for the company`s products is expected to continue the growth
during the year 2012-2013. Due to good energy saving feature, we foresee
increase demand for DTS and 2-tech series. We also expect to see good
growth of the export business consequent to the appointment of a few agents
in Dubai and Nigeria.
B. EWAC ALLOYS LIMITED (EWAC):
Subsidiary Company:
EWAC is a wholly owned subsidiary of L&T.
EWAC is a market leader in the business of Maintenance & Repairs, Welding &
Welding solutions for conservation of global metal resources. The principal
products and services comprise Maintenance & Repair (M&R) consumables,
specification grade electrodes, flux-cored welding wires, wear
plates/parts, welding and cutting equipment, Tero Cote Lab services etc.
EWAC had a Selling Agency Agreement (SAA) with the Welding Products
Business Unit (WPBU) of L&T till June 30, 2011. EWAC, with effect from July
1, 2011 acquired the WPBU from L&T in line with the strategic restructuring
of Company`s business and is aimed at consolidating the welding products
business.
EWAC reported Revenue of Rs. 368 crore from its operations during 2011-2012
and Profit after tax of Rs 55 crore.
The Company has undertaken expansion of its facilities at Ankleshwar with
the objective of consolidating all its manufacturing operations at one
place and accordingly has decided to close its manufacturing operations at
Powai, Mumbai. The Company expects to complete the expansion and shifting
of operations by June 2012.
EWAC expects to continue with its good performance in the year 2012-2013
and has planned major initiatives for addressing export markets and
providing integrated solutions to its customers.
C. L&T KOBELCO MACHINERY PRIVATE LIMITED:
Subsidiary Company:
L&T Kobelco Machinery Private Limited (LTKM), a JV of Larsen & Toubro
Limited, India and Kobe Steel Ltd., Japan to manufacture Internal Mixers
and Twin Screw Roller head Extruders for the tyre industry.
LTKM commissioned the plant during the year and also delivered three
internal mixers to Indian and Indonesian Customers. The technology from
Kobe Steel, Japan was transferred during the year. During year 2011-2012
LTKM recorded revenue from operations of Rs. 14 crore.
It is expected that the Rubber Processing Machinery business will continue
to see a growth on account of investments being made both Indian and
International tyre manufacturers.
Overall the Company envisages a good improvement in the industrial growth
indices, in the coming year and its business are better equipped to harness
the market potential.
D. L&T-KOMATSU LIMITED (LTK):
Associate Company:
LTK is a 50:50 Joint Venture between L&T and Komatsu Asia Pacific Pte.
Ltd., Singapore, a wholly owned subsidiary of Komatsu Limited, Japan.
Komatsu is the world`s largest manufacturer of Hydraulic Excavators and has
manufacturing and marketing facilities worldwide. LTK is engaged in the
manufacture of Hydraulic Excavators and other associated hydraulic
components. L&T markets and provides after sales support for Hydraulic
Excavators manufactured by LTK.
During the year 2011-2012, LTK posted gross sales of Rs. 1615 crore
registering 8% growth from previous year. Profit after tax at Rs. 5 crore
however, declined due to significant increase in component costs, arising
out of steep appreciation in Japanese Yen and steel price hikes during the
year. The Company was able to maintain market share in spite of intense
competition from existing players and new entrants.
With the Indian economy on growth path, the outlook for Hydraulic Excavator
market is very positive. Based on current economic activity, the market is
expected to grow significantly with further scope to improve on the back of
infrastructure projects taking off in 2012-2013.
E. AUDCO INDIA LIMITED (AIL):
Associate Company:
AIL is a JV with 50% equity holding each by L&T and Flowserve Corporation,
USA. AIL is a leading manufacturer of Industrial Valves.
AIL caters to all major industries viz Refineries & Pipelines, Power,
Offshore Platforms, Petro Chemicals, Chemicals, Fertilizers, Food & Pharma,
etc.
AIL Valves are approved by international Oil majors such as Shell, Chevron,
EXXON, Aramco, PDO, ADCO, which helps in participating in their worldwide
projects. Apart from Indian Oil majors and various other industrial segment
approvals, AIL also has a unique advantage of Indian Nuclear Industry
approval.
AIL witnessed growth in gross revenue from operations by 22% and growth in
profits during 2011-2012. AIL posted gross revenue from operations of
Rs.586 crore in 2011-2012 and Profit after tax stood at Rs. 61 crore.
With a healthy Order Book position as on March 31, 2012, AIL expects a
satisfactory performance in the year ahead.
International Companies:
F. LARSEN & TOUBRO (QINGDAO) RUBBER MACHINERY COMPANY LIMITED (LT QINGDAO)
-Subsidiary Company
L&T Qingdao, a subsidiary of L&T, set up in Jiaonan, Qingdao, People`s
Republic of China to develop and supply Tyre Curing Presses and other
Rubber Processing Machinery on par with the quality of products being
supplied by L&T to its global clients.
During the year 2011, L&T Qingdao posted revenues of Rs. 93 crore (previous
year Rs. 70 crore) and a Proft after tax of Rs. (1.8) crore (previous year
Rs. 0.53 crore). During the year 2011, the Company successfully executed
orders from Tyre majors in China as well as from Pirelli for delivery to
its plants in South America. LT Qingdao also has secured orders from new
customers in Vietnam during the year that will be executed in 2012.
The sustained growth of the automobile industry in China as well as
globally, provides opportunity for the Company to grow in the future. The
Company plans to enhance its product offerings for the domestic market from
2012-2013 onwards so as to strengthen its presence in China.
G. LARSEN & TOUBRO (JIANGSU) VALVE COMPANY LIMITED (LTJVCL):
Subsidiary Company:
LTJVCL a subsidiary was set up in Yancheng City, People`s Republic of
China, for manufacture of certain range of Valves for global markets. The
plant has state-of-the-art manufacturing facilities and has secured
important approvals of oil majors such as SHELL, BP, Chevron, Saudi Aramco,
Alstom, SASOL, Dow Chemicals etc.
The revenue for the year 2011 was Rs. 62 crore. The improved performance
was attributable to higher order inflows during the latter half of previous
year.
The appreciation of RMB vs USD and rising costs in China are a matter of
concern as these impact the competitiveness of the Company. However, with
the customer approvals in place and plans to widen the offerings to large
size and special valves, together with firm oil prices, the Company expects
to overcome these challenges and looks ahead with optimism.
H. LARSEN & TOUBRO LLC, HOUSTON, USA (L&T LLC):
Subsidiary Company:
L&T LLC, a wholly owned subsidiary of L&T, is based in Houston, USA and
represents L&T for sale of industrial valves in the North American market.
During the year 2011, the sales revenue was Rs. 5 crore. The Company has
decided to gradually scale down the operations in view of the lower volumes
& high cost of operations.
VIII. FINANCIAL SERVICES:
Financial Services spectrum:
Domestic Companies:
A. L&T FINANCE HOLDINGS LIMITED (L&T FH):
Subsidiary Company:
L&T FH, a subsidiary of L&T, was incorporated in 2008, with a view to
consolidate L&T`s investments in the financial services business and give a
distinct identity to the business segment.The Company came out with an IPO
in August 2011 and became the first listed subsidiary company of the group.
It is registered with the Reserve Bank of India as a non-banking financial
company. L&T FH is the holding company for L&T`s investments in the non-
banking financial companies and mutual fund business and also a few other
strategic investments in the sector.
The Company`s investments in its subsidiaries and strategic investments
amounted to Rs. 3047 crore as at March 31, 2012.
B. L&T FINANCE LIMITED (LTF):
Subsidiary Company:
LTF, a wholly owned subsidiary of L&T Finance Holdings Limited was
incorporated as a public limited company on November 22, 1994 to provide a
comprehensive range of financial products and services. It is registered
with RBI as a non-deposit taking non-banking financial company.
During 2011-2012, LTF recorded an improvement in major performance
parameters. This was facilitated by the growth in its business segments,
increased investment in infrastructure and higher rural incomes. The
positive environment for raising resources was also a contributor to the
improved performance. The highlights of the Company`s financial performance
are as below:
As on March 31, 2012, total assets grew by 24% to Rs. 13823 crore. Total
income at Rs. 1789 crore recorded a growth of 28% and Profit after tax
during 2011-2012 was Rs. 199 crore.
The favourable changes in rural landscape are expected to offer multiple
opportunities for launching new offerings in 2012-2013 coupled with intense
competition from banks and peer companies. In the absence of clear trend on
interest rate movements, the ability to maintain net interest margin and
good asset quality would be value drivers.
C. L&T MUTUAL FUND TRUSTEE LIMITED (LTMFTL) & L&T INVESTMENT MANAGEMENT
LIMITED (LTIML):
LTIML managed an Average Asset of Rs. 4469 crore for the year ended March
31, 2012 across L&T Mutual Fund Schemes as against Rs. 3782 crore for the
year ended March 31, 2011. The average assets under management (AAUM) of
LTMFTL grew by 18% compared to previous period. The market share of LTMFTL
grew to 0.7% from previous year.
The number of Investor Folios increased to 1,45,712 as of March 31, 2012.
The Industry`s AAUM for the year ended March 31, 2012, however, stood at
Rs.700740 crore registering a decline of 0.4% over the previous year
(Source: Association of mutual fund of India website).
Investment Management Fees as a percentage of Asset Under Management
improved to 0.2% in 2011-2012. LTIML`s loss from operations for the year
ended March 31, 2012 was at Rs. 25 crore.
LTMFTL launched two Open Ended Schemes during the financial year 2011-2012;
L&T Wealth Builder Fund and L&T Short Term Debt Fund. The total amounts
mobilized in L&T Wealth Builder Fund and L&T Short Term Debt Fund were
Rs.73 crore and Rs. 62 crore respectively.
D. L&T INFRASTRUCTURE FINANCE COMPANY LIMITED (LTIFCL):
Subsidiary Company:
LTIFCL, a subsidiary of L&T Finance Holdings Limited, is a non-banking
financial company focused on financing of infrastructure projects, across
various sectors. LTIFCL has developed a comprehensive service platform
across various lines of businesses to create and offer appropriate
financing solutions to its diverse set of customers. Being a specialist in
infrastructure financing and advisory services, it has expanded its service
offerings from pure lending in project finance towards enhanced value
addition to clients in terms of equity & debt syndication, investment
banking, private equity and inputs to various governments/regulatory
bodies/Chambers of Commerce on infrastructure-related issues.
LTIFCL recorded improved performance during 2011- 2012, on the strength
of the investment flow into infrastructure projects, supported by a
positive environment for fund raising. The highlights of its financial
performance are as below:
As on March 31, 2012, total assets grew by 44% to Rs. 11070 crore. Total
income at Rs. 1183 crore recorded growth of 68% in 2011-2012. Profit after
tax during 2011-2012 grew by 31% to Rs. 264 crore.
As LTIFCL steps into its next phase of growth from 2012- 2013 onwards, it
would be reviewing a wide range of strategic options for continuing the
momentum of growth together with measures to persist with excellence in
processes and governance, diversify sources of funding and infuse capital
to support asset growth while maintaining healthy capital adequacy ratios.
LTIFCL would continue to make asset quality its top priority. LTIFCL would
consider a broad spectrum of strategic initiatives and engagement with
multilaterals to expand beyond its current horizons.
E. L&T GENERAL INSURANCE COMPANY LIMITED (LTGI):
Subsidiary Company:
LTGI, a wholly owned subsidiary of Larsen & Toubro Ltd., is into general
insurance business offering a wide range of insurance solutions to various
segments of corporate and retail customers through multiple product
offerings.
LTGI, with its advanced technological platform, is well equipped to expand
its distribution reach in the fast growing Indian General Insurance sector.
LTGI in its second year of operations and first full financial year,
achieved Gross Written Premium of Rs. 143 crore by selling nearly hundred
thousand policies (97,766) and was the fastest growing Insurance Company in
India in 2011-2012. LTGI already has a pan India presence with 10 branch
offices as hub locations.
The delay in approval of health products resulted in lower achievement of
health business. The company`s prudent underwriting practices resulted in
lower levels of engineering business where the market did not support by
adequate increase in price realisation. The existing resources being
properly re-deployed and utilized resulted in motor line showing a
significant growth. However, lower price realization in this line has
resulted in higher loss ratio. The loss in the current year stands at
Rs.106 crore.
Indian general insurance industry continues to show an impressive growth in
top line and has reported a growth of 23% to Rs. 58344 crore in 2011-2012.
Health and Motor have been the fastest growing lines of business. Going
forward, the growth momentum in the General Insurance industry is expected
to continue. The Company is well positioned to exploit the growth
opportunities.
F. L&T CAPITAL COMPANY LIMITED (LTCCL):
Subsidiary Company:
LTCCL, a wholy owned subsidiary of L&T, is a Portfolio Manager registered
with the Securities And Exchange Board of India, with over Rs. 2050 crore
under its fund management. It is also a significant Mutual Fund
Distributor/Advisor with outstanding mutual fund assets under advice of
around Rs. 2000 crore. LTCCL holds and monitors a significant portion of
L&T Group`s strategic investments.
During the year, the company`s overall income was at Rs. 10 crore with
Profit after tax of Rs. 7 crore.
The Company has expanded its private wealth advisory team and is poised to
offer investment advisory services to a larger number of investors,
including offshore investors. The Company has already established a branch
office at Bengaluru and is in the process of setting up a wider network of
branches in identified centres across India.
IX. TECHNOLOGY & SERVICES:
Domestic Companies:
A. LARSEN & TOUBRO INFOTECH LIMITED (L&T Infotech):
Subsidiary Company:
L&T Infotech, a wholly owned subsidiary of L&T, is a global IT Services and
solutions provider. A full-services IT firmwith a blue-chip client roster,
the Company offers comprehensive, end-to-end software solutions and
services in the industry verticals such as Manufacturing (Auto, Industrial
Products, CPG, Chemical, Hi-tech, Aero, Construction Equipment and
Engineering & Construction), Energy & Petrochemicals, Banking, Financial
Servicesand & Insurance.
The Company`s key service areas are Application Maintenance & Development,
Application Outsourcing, Legacy Modernization, Package implementations in
SAP/ Oracle, Infrastructure Management Services, Testing Services and
specialized services like Data Warehousing, Business Intelligence and
System Integration. These have been complimented by providing Consulting
Services to clients building on the `Thought Leadership` in respective
domains.
L&T Infotech has its presence globally in USA, Canada, Europe, Asia, South
Africa, Middle East, Australia and New Zealand.
Business Environment:
The Indian IT BPO industry achieved a significant landmark of crossing
aggregate revenue of USD 100 Billion (including USD 88 Billion comprised of
IT Software and Services Revenue) during the year 2011-2012. This resulted
into 14% growth over last year, and as per NASSCOM estimates, the growth
rate for 2012-2013 is projected at 11%-14%.
The year witnessed volatile operating environment with fluctuations in
customer demand and the industry adapted to stay ahead of the curve to
continue to be relevant. The industry has embarked on a focused path of
change, which includes redesigning internal operations, flexibility in
product solutions portfolio, and compelling vertical market strategies. New
technologies especially the cloud, mobility, social and bid data analytics
are impacting service providers, who are reviewing how industry verticals
and customer segments will adjust themselves to the changing technology
landscape.
For the year ended 2011-2012, L&T Infotech recorded total revenue of
Rs.2969 crore, registering an increase of 26%. Export revenue constituted
94% of the total revenue of Rs. 2794 crore in 2011-2012.Operating profit
(PBDIT) is higher by 44% at Rs. 629 crore. Profit after tax at Rs. 405
crore grew by 29%. Also on consolidated basis, Profit after tax at Rs. 419
crore grew by 35%.
L&T Infotech operates through its subsidiaries in Canada, Germany and USA.
During the year, the Company commenced operations from its new SEZ
facilities at various locations across Navi Mumbai, Pune, Bengaluru, Mysore
and Chennai, which added total seat capacity by 3,166 seats.
For the year 2011-2012, North America continued to be the significant
region contributing to 67% of revenue with Europe region contributing 16%.
Contribution from APAC and Africa/MEA stand at 6% and 5% in 2011-2012
respectively. Onsite proportion of export revenue has increased from 53% in
2010-2011 to 55% in 2011-2012.
The industry is moving towards non-linear (IP Driven) business model. Major
opportunities are visible in current scenario in large deals including
renewals and SI deals in India, alliance and partnerships around niche
products, emergence of new technologies like Cloud, Mobility, Business
Process Consulting, Risk management, Digital publishing, Security and IP
protection, new geographies like Australia and South Africa, growing
interest in independent Testing Services, and increasing Regulatory
changes.
With increasing customer spend in IT sector, L&T infotech is confident to
capitalise these opportunities with several strategic initiatives.
International companies:
B. LARSEN & TOUBRO INFOTECH GMBH (L&T Infotech GmbH):
Subsidiary Company:
L&T Infotech GmbH, a wholly owned subsidiary of L&T Infotech, provides
software services in Banking, Financial Services & Insurance, Manufacturing
and Product Engineering Services in Germany. The total income of the
company remained stable at Rs. 57 crore with Profit after tax at Rs. 2
crore.
C. LARSEN & TOUBRO INFOTECH CANADA LIMITED:
(L&T Infotech Canada): Subsidiary Company
L&T Infotech Canada, a wholly owned subsidiary of L&T Infotech, provides
software services in Financial, Insurance and Oil & Gas Sectors in Canada.
The total income of the Company for 2011-2012 amounted to Rs. 36 crore,
with Profit after tax at Rs. 2 crore.
D. GDA TECHNOLOGIES INC. (GDA TECH):
Subsidiary Company:
GDA Tech, a wholly owned subsidiary of L&T Infotech, was acquired in 2007
to strengthen IT outsourcing business in USA. GDA Tech is engaged in two
business segments: Intellectual property (IP) and custom design &
manufacturing services.
The total income of GDA Tech for 2011-2012, amounted to Rs. 26 crore with
Profit after tax at Rs. 0.4 crore.
E. LARSEN & TOUBRO INFOTECH LLC (L&T Infotech LLC):
Subsidiary Company:
L&T Infotech LLC, a wholly owned subsidiary of L&T Infotech, operates in
the United States. During 2011-2012, the total revenue of the Company
amounted to Rs. 35 crore with Profit after tax at Rs. 2.1 crore.
F. L&T INFOTECH FINANCIAL SERVICES TECHNOLOGIES INC., (L&T Infotech FS):
Subsidiary Company:
L&T Infotech FS was formed during 2010-2011 as a wholly owned subsidiary of
L&T Infotech, for acquisition of transfer agency business unit from
Citigroup Fund Services in Canada. For the year 2011-2012, the Company
recorded total revenue of Rs. 197 crore with Profit after tax at Rs. 22
crore.
X. DEVELOPMENT PROJECTS:
A. L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (L&TIDPL):
Subsidiary Company:
L&TIDPL has been set up as an infrastructure development arm of the Group,
where L&T currently has 97.45% stake. L&TIDPL has over a period of time,
built up capabilities in identifying and developing infrastructure
projects, operation & maintenance of these projects and providing advisory
services relating to financing & engineering of the projects.
L&TIDPL portfolio is well diversified with a mix of projects under
development across various sectors such as roads & bridges, ports and
metro.
During the year under review in roads and bridges space, the Company
commenced tolling operations for L&T Krishnagiri Walajahpet Tollway Ltd.
(Tamil Nadu) and L&T Rajkot Vadinar Tollway Ltd. (Gujarat) from June 7,
2011 and February 1, 2012 respectively.
Further, during the year under review, two SPVs of the Company signed
concession agreements with NHAI - (i) L&T BPP Tollway Ltd. on June 22, 2011
for four-laning of Beawar-Pali-Pindwara section of NH-14 (from KM 0.00 to
KM 244+120) in the state of Rajasthan under NHDP Phase III on design,
build, operate and transfer basis (ii) L&T Deccan Tollway Ltd. on February
2, 2012 for 4-laning of Sangareddy in Andhra Pradesh to Maharashtra-
Karnataka border, part of NH-9 in the states of Andhra Pradesh & Karnataka.
The Company has received from NHAI Letters of Award dated March 31, 2012
for four-laning of Amravati-Jalgaon section of NH-6 in Maharashtra and
four-laning of Jalgaon to Maharashtra-Gujarat border section of NH-6 in
Maharashtra. The Company is expected to incorporate two SPVs for
development of these projects under concession agreements to be entered
into with NHAI.
The Company has now reached position of leadership in developing
transportation infrastructure in india.
For the year ended 31st March 2012, L&TIDPL has reported a total income of
Rs. 103 crore and a Profit after tax of Rs. 7 crore.
As of March 31, 2012, L&TIDPL`s portfolio of transportation and infra
projects includes following projects:
Major SPVs Project Status Stage
Cost*
(Rs.
crore)
Roads and Bridges:
1 L&T Panipat Elevated Corridor Limited 422 Subsidiary Operational
2 Narmada Infrastructure Construction
Enterprise Limited 142 Subsidiary Operational
3 L&T Krishnagiri Thopur Toll
Road Limited 525 Subsidiary Operational
4 L&T Western Andhra Tollways Limited 328 Subsidiary Operational
5 L&T Transportation
Infrastructure Limited 104 Subsidiary Operational
6 L&T Interstate Road Corridor Limited 555 Subsidiary Operational
7 L&T Vadodara Bharuch Tollway Limited 1450 Subsidiary Operational
8 L&T Rajkot VadinarTollway Limited 1096 Subsidiary Operational
Sub Total 4622
9 L&T Samakhiali Gandhidham
Tollway Limited 1300 Subsidiary Under
Implementation
10 L&T Ahmedabad-Maliya Tollway Limited 1497 Subsidiary Under
Implementation
11 L&T Halol-Shamlaji Tollway Limited 1305 Subsidiary Under
Implementation
12 L&T Krishnagiri Walajahpet
Tollway Limited 1370 Subsidiary Under
Implementation
13 L&T Devihalli Hassan Tollway Limited 314 Subsidiary Under
Implementation
14 L&T Chennai Tada Tollway Limited 848 Subsidiary Under
Implementation
15 L&T Decaan Tollways Limited 1273 Subsidiary Under
Implementation
16 L&T BPP Tollway Limited 2472 Subsidiary Under
Implementation
Sub Total 10379
Roads and Bridges Total 15001
Ports:
17 The Dhamra Port Company Limited 3639 Joint Operational
Venture
18 International Seaport (Haldia)
Private Limited 125 Associate Operational
Ports Total 3764
Metro:
19 L&T Metro Rail (Hyderabad) Limited 14917 Subsidiary Under
Implementation
Metro Total 14917
* Excludes amount payable/receivable by way of grant.
Financial performance summary of key operational SPVs:
A. Roads and bridges:
Name of Project Details A B C D
Subsidiary
1 L&T Panipat Widening of the existing Road on 42 39 (42) (46)
Elevated Corridor National Highway No.1 (NH-1) on
Limited BOT basis.
2 Narmada Construction, development, 56 52 30 26
Infrastructure operation and maintenance of
Construction Second Two-Lane Bridge at
Enterprise Zadeshwar across the Narmada
Limited River in Gujarat on National
Highway 8 (NH-8).
3 L&T Krishnagiri Widening of the existing Road 95 81 (12) (25)
Thopur Toll Road from the end of proposed
Limited Krishnagiri flyover to
Thumpipadi on BOT basis.
4 L&T Western Construction, development,
Andhra Tollways operation and maintenance 44 38 (14) (20)
Limited of the road from Jadcherla
to proposed Kotakatta bypass
on NH-7 in the State of
Andhra Pradesh.
5 L&T Building a bypass at Coimbatore 34 36 9 11
Transportation Section of National Highway
Infrastructure (NH-47) and construction of
Limited additional bridge at Athupalam
on River Noyyal on BOT basis.
6 L&T Interstate Construction, operation and 90 88 10 5
Road Corridor maintenance of the road on
Limited Palanpur Swaroopgunj section
of NH-14 in the state of Gujarat
and Rajasthan on BOT basis.
7 L&T Vadodara Widening the existing road of 215 192 (60) (79)
Bharuch Tollway Vadodara to Bharuch section on
Limited NH-8 in the State of Gujarat
on BOT basis.
8 L&T Rajkot Widening of existing Two-Lane- 9 - (15) -
Vadinar Tollway Road, covering Rajkot Jamnagar-
Limited Vadinar section in Gujarat, to
Four-Lane Road along with the
divided Carriageway facility.
A = Total Income (Rs. crore) - 2011-2012
B = Total Income (Rs. crore) - 2010-2011
C = PAT/(Loss) (Rs. crore) - 2011-2012
D = PAT/(Loss) (Rs. crore) - 2010-2011
Most of the projects listed above are in the initial phase of operations
with a much higher amortisation and interest cost, resulting in losses for
the year.
B. Ports:
THE DHAMRA PORT COMPANY LIMITED (DPCL):
JOINT VENTURE:
DPCL, a 50:50 joint venture between L&T IDPL and TATA Steel has been set up
to build a deep water all weather port at Dhamra, under Build-Own-Operate-
Share-Transfer (BOOST) model with a concession awarded by the Government of
Odisha for a period of 34 years (including period of construction).
With a draft of 18.5 meters, the port can accommodate cape size vessels of
up to 1,80,000 DWT. This is an advantage to the mineral hinterland of north
Odisha, Jharkand, West Bengal and Chattisgarh where a large number of steel
plants and mineral based industries are located. The project includes
62.5km rail connectivity to the main Howrah-Chennai lines at Bhadrak.
The port is expected to become an infrastructural hub of eastern coast of
India by providing the efficient port facilities for the industrial and
economic development of the region and the country. The Port commenced
commercial operations on May 6, 2011 and during the year handled a total
cargo of 5.1 Million tonnes.
DPCL reported a total income of Rs. 198 crore for 2011-2012 with a net loss
of Rs. 458 crore. As this was the first year of operations for the port, it
had high amortisation and interest costs along with initial ramp-up in
traffic.
C. Metros:
L&T METRO RAIL (HYDERABAD) LIMITED:
L&T Metro Rail (Hyderabad) Limited was incorporated on August 24, 2010 as a
special purpose vehicle to undertake the business to construct, operate and
maintain the Metro Rail System including the Transit Oriented Development
in Hyderabad under Public Private Partnership model on Design, Build,
Finance, Operate and Transfer (DBFOT) basis. During the year under review,
conceptual engineering and design basis report for the Project has been
completed. Further, detailed design for Viaduct, Stations, Depot, Power
Supply systems and Track system is in Progress.
XI. POWER DEVELOPMENT L&T POWER DEVELOPMENT LIMITED (L&T PDL):
SUBSIDIARY COMPANY:
L&T PDL, a wholly owned subsidiary of L&T, has been incorporated as the
power development arm with the objective of developing, investing,
operating and maintaining power generation projects of all types namely
thermal, hydel, nuclear and other renewable form of energy including
captive and co-generation power plants.
During the year 2011-2012, L&T PDL has reported a total income of Rs. 17
crore by way of Project facilitation and advisory service fees & other
income. Profit after tax was Rs. 1.3 crore for the year 2011-2012.
As of March 31, 2012, L&T PDL is developing the following projects through
its wholly owned subsidiaries:
Name of Project Capa- State Name of Current Status
city Subsidiary
(MW)
Rajpura Thermal 1400 Punjab Nabha Power Construction work
Power Plant-Phase I Limited is in progress.
Rajpura Thermal 700 Punjab Nabha Power In the initial
Power Plant-Phase II Limited stages of
Development
Singoli-Bhatwari 99 Uttarakhand L&T Construction work
Hydro Electric Limited Uttaranchal is in progress.
Project Hydropower
Tagurshit Hydro 60 Arunachal L&T Arunachal Detailed Project
Electric Pradesh Hydropower Report (DPR) is
Project Limited being revised for
a possible
upsizing of
capacity.
Sach-Khas Hydro 149 Himachal L&T Himachal DPR is under
Electric Project Pradesh Hydropower preparation and
Limited Survey &
Investigations
work is being
carried out.
Reoli-Dugli Hydro 420 Himachal L&T Himachal DPR is under
Electric Pradesh Hydropower preparation and
Project Limited Survey &
Investigations
work is being
carried out.
TOTAL 28281
Government`s policy to encourage significant capacity addition provides
various growth opportunities for private power developers. Several large
projects (including Ultra Mega Power Projects and Case-2 Bids) are in the
pipeline and shall soon come up for development by private players. Apart
from this, private players are also developing merchant power plants
considering the continuing peak deficit scenario in the Indian Power
Sector. This throws up many opportunities for the Company to consider
opportunities on its merit.
XII. URBAN INFRASTRUCTURE:
L&T URBAN INFRASTRUCTURE LIMITED (L&T UIL):
SUBSIDIARY COMPANY:
L&T UIL, a wholly owned subsidiary of L&T Realty Ltd., has built a balanced
portfolio of Urban Infrastructure related projects in IT/ITES, commercial,
hospitality and residential sectors over the past 6 years. It has
operational/under construction projects in Chennai, Hyderabad, Bengaluru,
Vijayawada, Chandigarh and Kochi.
L&T UIL has its portfolio investment of over Rs. 562 crore as at March 31,
2012, bulk of which is in the residential, commercial & IT and ITES sector.
The Company earned total income of Rs. 27 crore which includes project
facilitation and advisory service fees of Rs. 8 crore. Profit after tax was
at Rs. 13 crore for the year 2011-2012.
Financial Performance Summary of key operational SPVs: (Urban
Infrastructure).
A. Projects completed:
Name of Project Details A B C D
Subsidiary
L&T Tech Park The Company has to set up an IT 21 20 1 5
Limited SEZ within the Infopark at
Kochi, Kerala, as a
co-developer.
Phase I of the project, with a
built up area of 3.86 lakh sq.ft.
is fully occupied.
L&T Infocity The Company focuses on (i) 145 331 40 140
Limited Operating and maintaining the
multi-tenanted IT Parks (ii)
Operating the Built to Suit IT
facilities (iii) Facility
Management and (iv) Development
and Sale of Residential Units
in Mega Residential Project
`Serene County`.
The Company is in the process of
identifying certain land parcels
for development of commercial
and residential space.
L&T South City The Company is developing a 242 132 31 13
Projects Limited township consisting of
residential complex, school,
shopping complex etc., over
90 acres of land situated at
Siruseri Village, Kancheepuram
District. As of March 2012,
626 apartments have been sold.
The next phase of 4.5 Million
sq. ft of development is planned
to be launched by September
2012. The overall development
is expected to be executed
by 2017.
Hyderabad The Company has developed a 18 16 3 3
International modern trade exposition centre
Trade on a 52 acre plot at Cyberabad,
Expositions Hyderabad.
Limited
L&T Hitech City The Company floated by L & T 0.67 0.69 (5) (8)
Limited Infocity Limited,in partnership
with APIIC, to set up an IT SEZ
at Vijayawada and has already
constructed 2.1 lakh sq.ft of
built up space. During 2011-2012,
the total occupancy increased by
10,917 sq.ft. The Board has
decided to de-notify the SEZ for
attracting more companies.
A = Total Income (Rs. crore) - 2011-2012
B = Total Income (Rs. crore) - 2010-2011
C = PAT/(Loss) (Rs. crore) - 2011-2012
D = PAT/(Loss) (Rs. crore) - 2010-2011
B. Major Projects under implementation (Urban Infrastructure)
Name of Subsidiary Project Details
1. CSJ Infrastructure The Company is developing Mixed use
Private Limited Commercial Project of 1.85 million sq. ft.,
consisting of Mall, Hotel and Office space
in Chandigarh.
2. L&T Bangalore Airport The Company is formed to undertake
Hotel Limited construction & operation of business class
hotel with a total of 154 rooms.
3. L & T Vision Ventures The Company is formed to undertake
Limited development of a residential township at
Vishakhapatanam.
4. L & T Seawoods Private The Company was formed to execute a Transit
Limited Oriented Development at Seawoods,Navi Mumbai.
XIII. HOLDING COMPANY FOR OVERSEAS INVESTMENTS:
LARSEN & TOUBRO INTERNATIONAL FZE (LTIFZE):
SUBSIDIARY COMPANY:
LTIFZE, a wholly owned subsidiary of L&T, is incorporated in the Hamriyah
Free Zone, Sharjah as a Free Zone Establishment (FZE). LTIFZE is a holding
company of most of L&T`s investments in overseas companies. The Company is
also providing support to L&T and its group companies in the Middle and Far
East by acquiring and hiring plant, machinery & other equipment for project
business.
The value of investments made in various S&A Companies through LTIFZE is
Rs.697 crore. Total revenue earned during the year was Rs. 40 crore. The
income mainly comprised of revenue from hire of plant & equipment and
dividend income from investments in subsidiary companies. Profit after tax
was Rs. 33 crore for the year ended December 2011. |