Engineering Success

Larsen & Toubro, or L&T, is a home-grown multinational technology, engineering, construction, manufacturing and financial services conglomerate with business interests in basic and heavy engineering, construction, realty, capital goods, information technology, and financial services. As of 2020, L&T group comprises 118 subsidiaries, 6 associates, 25 joint-venture and 35 joint-operation companies.

For FY20, L&T saw a 4 per cent growth in its total order book over the previous year. The size of the order book as on March 31, 2020 stood at Rs 303,857 crore. Order inflows, which enable the core EPC business to flourish and grow, expanded by 9 per cent over the previous year (Rs 186,356 crore at the group level) while revenues which demonstrate the ability of the company to execute and deliver on customer commitments grew 8 per cent in FY20.

The shareholder value was delivered through healthy profit after tax (PAT) which stood at Rs 9,549 crore representing a growth of 7 per cent over the previous year. International orders during the year stood at Rs 60,094 crore, an increase to 32 per cent of the total order inflow, on large value order wins in diverse sectors such as power transmission & distribution, hydrocarbon, water effluent treatment and metallurgical and material handling business. At the time of announcing the financials for FY20 (June 20), SN Subrahmanyan, CEO and MD, L&T had said: “L&T is expecting it will take a while for the demand to pick up. At the moment, the scenario is a little muted.”

The revenue growth in the core business was provided by infrastructure, hydrocarbon, heavy engineering and defence engineering segments. Businesses in the IT and technology services segment, which could transition, with relative ease, to a ‘work from home’ environment, grew significantly, aided by inclusion of revenues from an acquisition made in FY20, the company said.

INTERNATIONAL FOOTPRINT: While L&T has, over the years, expanded its international footprint through a geographical diversification and derisking strategy and while the Middle East region has obviously remained an area of focus, the conglomerate turned its attention to North and East Africa in FY20. However, the Middle East region constitutes 57 per cent of the international order book of Rs 75,038 crore as on March 31, 2020.

The infrastructure segment secured orders worth Rs 102,678 crore, during the year ended March 31, 2020, registering growth of 7 per cent compared to the previous year. International orders at Rs 29,509 crore constituted 29 per cent of the total order inflow of the segment during the year, with noteworthy order wins in Africa and the Middle East, the company said.

During the year, L&T acquired a majority stake in Mindtree, an ITenabled services company. This acquisition has helped the L&T Group’s services segment to expand and contribute to higher revenues and profits. “Going forward, we are confident that the contribution of the services businesses will exceed 40 per cent of group turnover,” A.M. Naik, Group Chairman, L&T informed the shareholders in the company’s latest annual report.

Revenue from the hydrocarbon business, which contributed 11 per cent to total revenue, grew 15.1 per cent year-on-year to Rs 4,979.2 crore and EBIT jumped 30 per cent to Rs 502.3 crore. During FY20, the company paid an interim dividend of Rs 10 per equity share amounting to Rs 1,403.89 crore.

The directors recommend payment of dividend of Rs 8 per equity share of Rs 2 each on the share capital amounting to Rs 1,123.11 crore taking the total dividend payout for FY20 (subject to shareholder’s approval) to Rs 18 per equity share