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DIRECTOR'S REPORT

Larsen & Toubro Ltd.

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Market Cap. (₹) 198070.94 Cr. P/BV 3.18 Book Value (₹) 443.41
52 Week High/Low (₹) 1607/1183 FV/ML 2/1 P/E(X) 22.24
Bookclosure 01/08/2019 EPS (₹) 63.46 Div Yield (%) 0.99
Year End :2019-03 

Dear Members,

The Directors have pleasure in presenting their 74th Annual Report and Audited Financial Statements for the year ended 31st March 2019.

FINANCIAL RESULTS:

particulars

2018-19

2017-18

Rs. crore

Rs. crore

profit Before Depreciation, exceptional items & tax

9811.19

7881.31

Less: Depreciation, amortization, impairment and obsolescence

1067.95

1049.46

profit before exceptional items and tax

8743.24

6831.85

Add: Exceptional Items

474.93

430.53

profit before tax

9218.17

7262.38

Less: Provision for tax

2540.47

1875.08

profit for the period carried to Balance Sheet

6677.70

5387.30

Add: Balance brought forward from previous year

14250.01

1 1225.53

Less: Ind AS 115 transition adjustment

701.58

-

Less: Dividend paid during the previous year (Including dividend distribution tax)

2596.78

2278.69

Add: Gain/(Loss) on remeasurement of the net defined benefit plans

(20.36)

2.50

Add: transfer under scheme of arrangement

15.55

Balance available for disposal (which the Directors appropriate as follows)

17608.99

14352.19

Less: Debenture Redemption Reserve

81.32

102.18

Balance to be carried forward

17527.67

14250.01

STATE OF COMPANY AFFAIRS:

the total income for the financial year under review was RS. 89,757 crore as against RS. 76,224 crore for the previous financial year registering an increase of 18%. The profit before tax from continuing operations including exceptional items was RS. 9,218 crore for the financial year under review as against RS. 7,262 crore for the previous financial year, registering an increase of 27%. the profit after tax from continuing operations including exceptional items was RS. 6,678 crore for the financial year under review as against RS. 5,387 crore for the previous financial year, registering an increase of 24%.

AMOUNT TO BE CARRIED TO GENERAL RESERVE:

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

DIVIDEND:

The Directors recommend payment of dividend of RS. 18 (900%) per equity share of RS. 2/- each on the share capital amounting to RS. 2,759 crore (including DDT amounting to RS. 234 crore).

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

CAPITAL & FINANCE:

During the year under review, the Company allotted 13,59,929 equity shares of RS. 2/- each upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

The Company repaid long-term borrowings of USD 233 million (approx. RS. 1610 crore including secured debentures of RS. 400 crore) during the year under review on scheduled due dates. on the other hand, the Company raised USD 100 million of foreign currency borrowings and RS. 90 Crore of Rupee term Loan as fresh unsecured long-term borrowings for meeting business requirements and certain capital expenditure.

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

The Company’s borrowings are rated by CRISIL and ICRA. the details of the same are given on page 105 in Annexure ‘B’ - Report on Corporate Governance forming part of this Board Report and is also available on the website of the Company.

DIVESTMENT OF ELECTRICAL & AUTOMATION BUSINESS:

As disclosed in our previous Report, on 1st May 2018, the Company had signed, subject to regulatory approvals, definitive agreements with Schneider Electric, a global player in energy management and automation for strategic divestment of its electrical and Automation (E&A) business for an all-cash consideration of RS. 14,000 crore. The Company has been informed by Schneider electric that it has received a communication dated 18th April 2019 from the Hon’ble Competition Commission of India (CCI) approving the proposed combination subject to the amendment filed by Schneider electric. the Company is awaiting the detailed order of the CCI and the timelines for divestment cannot be ascertained as of now and are expected to be prolonged. In view of the above, the E&A business is disclosed as a continuing operation and has not been classified as discontinued operation as on March 31, 2019.

BUYBACK OF EQUITY SHARES:

the Company had proposed a buyback of up to 6,10,16,949 equity shares from its equity shareholders as on the record date, being october 15, 2018, on a proportionate basis by way of the tender offer route through the stock exchange mechanism at a price of RS. 1,475 per equity share, aggregating up to RS. 9,000 crore, in accordance with the applicable provisions of the Companies Act, 2013 and the Securities and exchange Board of India (Buy-Back of Securities) Regulations, 2018 (‘Buyback Regulations’ and such buy back herein after referred to as ‘Buyback’), inter alia, considering the debt-equity ratio requirement on the basis of standalone financial statements, post buyback.

Pursuant to the approval of the Buyback by the shareholders of the Company, a draft letter of offer (‘DLOF’) was submitted to the Securities and exchange Board of India (‘SEBI’) in terms of Regulation 8(i)(a) of the Buyback Regulations, for their comments.

By way of a letter dated 18th January 2019, SEBI advised the Company not to proceed with the buyback offer since the ratio of the aggregate of secured and unsecured debts owed by the Company and its subsidiaries after buyback (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the Company based on consolidated financial statements of the Company.

Accordingly, the Company decided not to proceed with the buyback.

CAPITAL expenditure:

As at 31st March 2019 the gross property, plant and equipment, investment property and other intangible assets including leased assets, stood at RS. 12,174.29 crore and the net property, plant and equipment, investment property and other intangible assets, including leased assets, at RS. 7,934.32 crore. Capital Expenditure during the year amounted to RS. 1,571.41 crore.

DEPOSITS:

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

Pursuant to the Ministry of Corporate Affairs (MCA) notification dated 22nd January 2019 amending the Companies (Acceptance of Deposits) Rules, 2014, the Company is required to file with the Registrar of Companies (ROC) requisite returns in Form DPT-3 for outstanding receipt of money/loan by the Company, which is not considered as deposits.

The Company would be complying with this requirement within the prescribed timelines.

DEPOSITORY SYSTEM:

As the members are aware, the Company’s shares are compulsorily tradable in electronic form. As on 31st March 2019, 98.47% of the Company’s total paid up capital representing 138,13,25,258 shares are in dematerialized form.

SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 mandate that the transfer, except transmission and transposition, of securities shall be carried out in dematerialized form only with effect from 1st April 2019. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories. The Company has, directly as well as through its RTA, sent intimation to shareholders who are holding shares in physical form, advising them to get the shares dematerialized.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

The Company sends reminder letters to all shareholders, whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made by the Company in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of RS. 3,93,12,966 to Investor education & protection Fund (IEpF), the amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided in section 125 of the Companies Act, 2013 and the rules made thereunder. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund was RS. 24,34,13,796 as on 31st March 2019.

The Company has also sent communications to members whose dividends are unclaimed requesting them to provide/update bank details with RTA/Company, so that dividends paid by the Company are credited to the investor’s account on time.

In accordance with the provisions of the Section 124(6) of the Companies Act, 2013 and Rule 6(3)(a) of the Investor education and protection Fund Authority (Accounting, Audit, transfer and Refund) Rules, 2016 (‘IEpF Rules’), the Company has transferred 3,634 equity shares of RS. 2 each (0.0003% of total number of shares) held by 257 shareholders (0.024 % of total shareholders) to IEPF.

The said shares correspond to the dividend which had remained unclaimed for a period of seven consecutive years from the financial Year 2010-11. Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.

The Company sends specific advance communication to the concerned shareholders at their address registered with the Company and also publishes notice in newspapers providing the details of the shares due for transfer so as to enable them to take appropriate action. The shareholder/ claimant can file only one consolidated claim in a financial year as per the IEPF rules. All corporate benefits accruing on such shares viz. bonus shares, etc. including dividend shall be credited to IEPF.

Subsidiary / associate / JOINT venture

COMPANIES:

During the year under review, the Company subscribed to / acquired equity / preference shares in various subsidiary / associate / joint venture companies. These subsidiaries include companies in power, defence and infrastructure sectors. The details of investments/divestments in subsidiary companies during the year are as under:

A) Shares acquired during the year:

Name of the Company

Type of Shares

No. of shares

L&T Construction Machinery Limited

Equity

10,000

L&T Metro Rail (Hyderabad) Limited

Equity

22,01,98,631

L&T MBDA Missile Systems Limited

Equity

4,84,500

L&T Uttaranchal Hydropower Limited

Preference

24,94,00,000

The Company has entered into a share purchase agreement dated 18th March 2019 with Mr. V. G. Siddhartha, Coffee Day Trading Limited and Coffee Day Enterprises Limited (‘Sellers’) for acquisition of 3,33,60,229 equity shares of Mindtree Limited aggregating to 20.32% of the paid-up equity share capital of Mindtree Limited.

The Company proposed to acquire, subject to the regulatory approvals, additional equity shares upto 15% of the voting share capital from the stock exchanges and make an open offer aggregating to 31% of the voting share capital of Mindtree Limited, in accordance with the requirements of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011. The Company has since received the approval from Competition Commission of India and Anti-trust authorities of US and Germany. Pursuant to the above, the Company has acquired 3,27,60,229 equity shares of Mindtree Limited from the Sellers on 30th April 2019. Further, 98,29,859 equity shares of Mindtree Limited have been acquired in the open market upto 9th May 2019.

Subsequent to the year under review, the Company has acquired entire stake held by Tamil Nadu Industrial Development Corporation (TIDCO) in L&T Shipbuilding Limited on 10th April 2019. With this acquisition, L&T Shipbuilding Limited is now a wholly owned subsidiary of the Company.

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

Name of the Company

Number of shares

Marine Infrastructure Developer Private Limited (Note 1)

38,80,00,000

L&T Technology Services Limited (Note 2)

87,71,569

Larsen & Toubro Infotech Limited (Note 2)

1,29,09,603

L&T Seawoods Limited (Note 3)

34,50,00,000

Note:

1. The Company has sold its entire stake in Marine Infrastructure Developer Private Limited, a subsidiary, to Adani Ports and Special Economic Zone Ltd.

2. The Company has sold shares of L&T Technology Services Limited and Larsen & Toubro Infotech Limited in the open market towards meeting its mandatory obligation to reduce promoter shareholding in these companies. With the above sale, the minimum public shareholding obligation in Larsen & Toubro Infotech Limited has been complied.

3. Pursuant to an order dated 13th December 2018 passed by the National Company Law Tribunal, Mumbai bench, the equity share capital of L&T Seawoods Limited, a wholly owned subsidiary, was reduced to the extent of 34.50 crore shares aggregating to RS. 345 crore.

Subsequent to the year under review, the Company has divested its entire stake in L&T Kobelco Machinery Private Limited, a subsidiary, to Kobe Steel, Ltd. on 17th April 2019.

C) Companies Struck off:

Pursuant to the application made in the previous year, the following companies were struck off by Ministry of Corporate Affairs under the provisions of Companies Act, 2013 during the year under review:

Name of the Company

Date of Strike off

Seawoods Retail Private Limited

26th June 2018

Seawoods Realty Private Limited

26th June 2018

L&T Trustee Company Private Limited

8th August 2018

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

A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies and their contribution to the overall performance of the Company is provided on pages 546 to 555 of this Annual Report.

The Company has formulated a policy on identification of material subsidiaries in line with Regulation 16(c) of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 and the same is placed on the website at http://investors.larsentoubro.com/Listing-Compliance. aspx. The Company does not have any material subsidiaries.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:

The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under section 186 of the Companies Act, 2013, Regulation 34(3) and Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 in Note 37 and Note 38 forming part of the financial statement.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy, signifying the threshold limits and the same has been uploaded on the Company’s website http://investors.larsentoubro.com/ Listing-Compliance.aspx.

The Company has a process in place to periodically review and monitor Related Party Transactions.

All the related party transactions were in the ordinary course of business and at arm’s length. The Audit Committee has approved all related party transactions for the FY 2018-19 and estimated transactions for FY 2019-20.

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:

Other than stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information as required to be given under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure ‘A’ forming part of this Board Report.

RISK MANAGEMENT:

The Risk Management Committee comprises of Mr. S. N. Subrahmanyan, Mr. R. Shankar Raman and Mr. Subramanian Sarma, Directors of the Company.

Mr. S. N. Subrahmanyan is the Chairman of the Committee.

The Company has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment. The risk assessment includes review of geo-political developments, business environment, growth opportunities, geographical expansion, capability development, talent management, brand and reputation protection and enhancement, cyber security and risk minimization initiatives. The Committee periodically reviews the risk to ensure that executive management controls risk by means of a properly designed framework.

A detailed note on risk management is given under financial review section of the Management Discussion and Analysis on pages 296 to 298 of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY:

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

The CSR policy framework is available on the website http://investors.larsentoubro.com/Listing-Compliance. aspx.

A brief note regarding the Company’s initiatives with respect to CSR is given in Annexure ‘B’ - Report on Corporate Governance forming part of this Board Report. Please refer to pages 96 and 97 of this Annual Report.

The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ‘C’ forming part of this Board Report.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/ RESIGNED DURING THE YEAR:

Mr. M.M Chitale, Mr. M. Damodaran and Mr. Vikram Singh Mehta were appointed as Independent Directors of the Company with effect from April 1, 2014 to March 31, 2019. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on March 5, 2019 has approved the re-appointment of Mr. M.M Chitale, Mr. M. Damodaran and Mr. Vikram Singh Mehta for a further term of five years from April 1, 2019 to March 31, 2024, subject to the approval of shareholders through special resolution.

Special resolution for continuation of Mr. M. Damodaran as an Independent Director, who would attain the age of 75 years during his current tenure forms part of the Notice being sent to the shareholders.

Mr. Adil Zainulbhai was appointed as Independent Director of the Company with effect from May 30, 2014 to May 29, 2019. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on March 5, 2019 has approved the re-appointment of Mr. Adil Zainulbhai for a further term of five years from May 29, 2019 to May 28, 2024, subject to the approval of shareholders through special resolution.

Based on their skills, experience, knowledge and report of their performance evaluation, the Board was of the opinion that their association would be of immense benefit to the Company and it would be desirable to avail their services as Independent Directors.

Mr. Subhodh Bhargava was re-appointed as Independent Director with effect from March 30, 2017 for a second term of five years which was approved by the shareholders through a special resolution. At the time of his re-appointment, he had attained the age of 75 years and accordingly he shall continue in his present term until March 29, 2022. His re-appointment is in compliance with regulation 17(1A) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 which was effective from 9th May 2018.

Mr. R. Shankar Raman, Mr. Shailendra Roy, Mr. M.V Satish and Mr. J. D. Patil retire by rotation at the ensuing AGM and being eligible offer themselves for re-appointment.

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

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

The Company has also disclosed on its website http:// investors.larsentoubro.com/Listing-Compliance.aspx details of the familiarization programs to educate the Directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company, etc.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

This information is given in Annexure ‘B’ - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 82 and 83 of this Annual Report.

AUDIT COMMITTEE:

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ‘B’ - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 88 to 90 of this Annual Report.

COMPANY POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION:

The Company has in place a Nomination and Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 19 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure ‘B’ - Report on Corporate Governance forming part of this Board Report. Members are requested to refer to pages 90 to 94 of this Annual Report.

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

DECLARATION OF INDEPENDENCE:

The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 from Independent Directors confirming that he/she is not disqualified from appointing/continuing as Independent Director. The same are also displayed on the website of the Company http://investors.larsentoubro. com/Listing-Compliance.aspx. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

EXTRACT OF ANNUAL RETURN:

As per the provisions of Section 92(3) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as Annexure ‘F’ to this Report.

The Annual Return of the Company will be available on its website www.larsentoubro.com.

DIRECTORS’ RESPONSIBILITY STATEMENT:

The Board of Directors of the Company confirms:

a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) The Directors have laid down an adequate system of internal financial controls to be followed by the Company and such internal financial controls are adequate and operating efficiently;

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

The Company has designed and implemented a process driven framework for Internal Financial Controls (“IFC”) within the meaning of the explanation to Section 134(5) (e) of the Companies Act, 2013. For the year ended 31st March 2019, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Company’s operations.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, DIRECTORS AND CHAIRMAN:

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

For the year under review, the questionnaire was modified suitably, based on the comments and suggestions received from Independent Directors. As in the previous years, an external consultant was engaged to receive the responses of the Directors and consolidate/ analyze the responses. The same external consultant’s IT platform was used from initiation and till conclusion of the entire board evaluation process. This ensured that the process was transparent and independent of involvement of the Management or the Company’s IT system. This has enabled unbiased feedback.

The Board Performance Evaluation inputs, including areas of improvement, for the Directors, Board processes and related issues for enhanced Board effectiveness were discussed in the meeting of the Independent Directors held on 30th November 2018 and in the subsequent Meetings of Nomination and Remuneration Committee and the Board. The Group Chairman had a discussion with all the Independent Directors individually and the Chairman of Nomination and Remuneration Committee had a discussion with all the Executive Directors individually.

Most of the suggestions from the Board Evaluation exercise of FY 2017-18 have been suitably implemented such as meetings of Chairman of NRC with individual directors and Action Taken Report of Board decisions.

DISCLOSURE OF REMUNERATION:

The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder, are given in Annexure ‘D’ forming part of this Board report.

The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is provided in Annexure ‘I’ forming part of this report. In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:

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

PROTECTION OF WOMEN AT WORKPLACE:

The Company has formulated a policy on ‘Protection of Women’s Rights at Workplace’ as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The policy has been widely disseminated. The Company has constituted Internal Complaints Committees as per the above Act.

There were 4 complaints received during the F.Y. 2018-19. All the 4 complaints were investigated and appropriate action was taken.

Awareness workshops and training programs are conducted across the Company to sensitize employees to uphold the dignity of their colleagues at workplace specially with respect to prevention of sexual harassment.

OTHER DISCLOSURES:

- ESoP Disclosures: There has been no material change in the Employee Stock Option Schemes (ESOP schemes) during the current financial year.

The ESOP Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefit) Regulations, 2014 (“SBEB Regulations”).

The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SBEB

Regulations together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided on the website of the Company http:// investors.larsentoubro.com/Listing-Compliance.aspx.

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

- Corporate Governance: Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, are provided in Annexure ‘B’ forming part of this Report.

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

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

The integrated Report for the Year 201718 is available on the Company’s website http://www.larsentoubro.com/corporate/ sustainability/integrated-report/ and the report for the Year 2018-19 shall be published shortly.

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

- MSME: The Ministry of Micro, Small and Medium Enterprises vide their Notification dated 2nd November 2018 has instructed all the Companies registered under the Companies Act, 2013, with a turnover of more than Rupees Five Hundred crore to get themselves onboarded on the Trade Receivables Discounting system platform (TReDS), set up by the Reserve Bank of India. In compliance with this requirement, the Company is in the process of registering itself on TReDS through one of the service providers.

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

VIGIL MECHANISM:

As per the provisions of Section 177(9) of the Companies Act, 2013 (‘Act’), the Company is required to establish an effective Vigil Mechanism for directors and employees to report genuine concerns.

The Company has a Whistle-blower Policy in place since 2004 to encourage and facilitate employees to report concerns about unethical behaviour, actual/ suspected frauds and violation of Company’s Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Companies Act, 2017. The policy provides for adequate safeguards against victimisation of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The policy also establishes adequate mechanism to enable employees report instances of leak of unpublished price sensitive information. The Audit Committee of the Company oversees the implementation of the Whistle-Blower Policy.

The Company has disclosed information about the establishment of the Whistle Blower Policy on its website http://investors.larsentoubro.com/corporategovernance.aspx. During the year, no person has been declined access to the Audit Committee, wherever desired.

Also see page 98 forming part of Annexure ‘B’ of this Board Report.

BUSINESS RESPONSIBILITY REPORTING:

As per Regulation 34 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 20 to 41).

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations in future.

CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 and prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereof issued by the Ministry of Corporate Affairs in exercise of the powers conferred by Section 133 of the Companies Act, 2013.

AUDIT REPORT:

The Auditors’ report to the shareholders does not contain any qualification, observation or adverse comment.

SECRETARIAL AUDIT REPORT:

The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Company Secretaries is attached as Annexure ‘E’ forming part of this Board Report.

The observation of the Secretarial Auditor is self-explanatory.

AUDITORS:

In view of the mandatory rotation of auditors’ requirement and in accordance with the provisions of Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP were appointed as Statutory Auditors for a period of 5 continuous years from the conclusion of 70th Annual General Meeting till the conclusion of 75th Annual General Meeting of the Company.

The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.

The Auditors have also furnished a declaration confirming their independence as well as their arm’s length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company.

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

The Auditors attend the Annual General Meeting of the Company.

Also see pages 98 and 99 forming part of Annexure ‘B’ of this Board Report.

REPORTING OF FRAUD:

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

COST AUDITORS:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, at its meeting held on 10th May, 2019, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost Auditors for the Company for the financial year ending 31st March 2020 at a remuneration of RS. 13 lakhs.

A proposal for ratification of remuneration of the Cost Auditor for the financial Year 2019-20 is placed before the shareholders.

The Report of the Cost Auditors for the financial year ended 31st March 2019 is under finalization and shall be filed with the Ministry of Corporate Affairs within the prescribed period.

The provisions of Section 148(1) of the Companies Act, 2013 are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31st March 2019.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board

A.M. Naik

Group Chairman

(DIN: 00001514)

Date : 10th May 2019

Place : Mumbai

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