Larsen & Toubro Ltd Management Discussions.

The Indian economy has been exhibiting lacklustre growth in the face of global volatility amidst weak manufacturing, muted domestic demand and volatility in oil prices.

Real GDP growth has slowed down from 6.1 per cent in fiscal 2018-19 to 4.2 per cent in the backdrop of the slowdown in private consumption, lower tax collections, fund allocation challenges at the State and Central Government levels, and a sharp slowdown in credit growth. To overcome the slowdown, various reforms were announced by the Government in FY 2019-20, viz. Reduction in corporate tax rates, a scheme to provide a one-time partial credit guarantee to public sector banks (psbs) for purchase of pooled assets of financially sound non-banking financial companies (nbfcs), recapitalization of public sector banks, relaxation of external commercial borrowing guidelines for affordable housing, setting up of a Realty Fund for stalled housing projects, merger of 10 public sector banks into four entities and revised Priority Sector Lending (PSL) norms for exports.

Private sector investments continued to be muted in the areas of industrial capex and building infrastructure. Public sector spending, however, remained firm and was robust in the areas of core infrastructure, driven by the Governments commitment to boost investment across multiple infrastructure sectors. The Government also announced the National Infrastructure Pipeline (NIP) of projects worth RS 100+ lakh crore up to FY25, with a focus on energy, roads, railways, urban infrastructure and irrigation projects to provide a much-needed productivity boost to the Indian economy and fulfil Indias aspiration to become a USD 5 trillion economy by 2025. The NIP, coupled with other pro-business policy initiatives, is expected to lead to a rebound in domestic demand in the medium and long term.

Global Economy

The global economy had its share of upheavals in the yea Rs 2019-20. Amid prolonged trade disputes and wide- ranging policy uncertainties, growth suffered broad-based deterioration. Global trade has declined and there has been a marked slowing-down in manufacturing activities, even though the service-sector activity has held up to some extent.

The escalation of tension between the US and China is expected to further dampen global growth. The fall in crude oil prices, occasioned by changes in the demand- supply position and geopolitical events across OPEC+ countries, has also had an impact on commodity prices, which have been largely depressed globally. The pandemic has led to a sharp contraction in the demand for oil and commodities, and recovery is likely to happen only after global economies tide over the covid-19 crisis. Fragilities in the financial sector in a number of economies continue to remain a concern, though this has been partly addressed through increased liquidity, which has been boosted by a series of stimulus measures undertaken by all large economies.

COVID-19 Outbreak

The pandemic and the nationwide lockdown that it triggered has dealt both demand and supply shocks to the economy, with wide ramifications on revenue collections and economic growth. It is likely to take quite some time for the consequent stress in the economy to be relieved and for growth to revive.

The crisis has prompted the Government to announce a series of monetary and fiscal relief packages designed to inject liquidity into the system and provide relief to stressed sectors. While these stimulus measures will provide relief to the affected people and some industries, the slowdown in economic activity is expected to significantly lower Indias GDP growth in FY 2020-21.

Global supply chains have also been threatened by the pandemic. Governments around the world have been quick to respond to the crisis by implementing meaningful stimulus measures through a combination of fiscal and monetary easing, increased health spending and direct support to cover losses in incomes and revenues. Sustained efforts from Governments, focused on these measures could soften the economic impact of the Coronavirus.

Against this backdrop, the Company has undertaken a series of measures to mitigate the crisis, which includes securing the safety and livelihood of its staff and subcontracted labour working at project sites, curtailing and reducing overheads at all operating levels, enhancing liquidity on its Balance Sheet through increased market borrowings and controlling working capital requirements through a mix of judicious cashflow planning and measured project execution.

Digital @ L&T

At L&T, digital technologies have made a significant impact in data-driven decision making. Plant & Machinery remote monitoring cells are a case in point; powered by Industrial iot and Artificial intelligence, these cells enable remote monitoring, provide advanced analysis and insights, and facilitate decision making for plant and machinery operations. For instance, in one such remote monitoring cell, a plant & machinery head is analysing equipment productivity vs. Internal hiring charges to take decisions on hiring of concrete batching plants. An engineer zooms into the dashboard of a tower crane operating thousands of kilometres away to analyse and understand utilization and lifting patterns. Factory heads are able to centrally monitor and benchmark OEE of manufacturing plants located across the country.

Today, more than 50 digital solutions have been deployed across the organization - spanning bidding, engineering, procurement, construction, manufacturing, supply chain, safety, quality, customer experience and finance. These digital solutions are designed and developed leveraging Artificial Intelligence (Machine learning, Computer vision, Natural Language Processing, Natural Language Understanding, Conversational AI), Industrial lot, Cloud computing, virtual reality, Augmented reality, and Geospatial technologies. All these solutions are deployed at scale enabling significant improvement on operational efficiency, accelerating project completion, enhancing workplace safety and improving quality.

Digital for construction & project businesses

Asset Insight, L&Ts connected equipment platform, acquires a variety of operational, performance and health data from construction equipment, analyses this data by leveraging advanced analytics, AI and machine learning, and provides necessary insights to project and operations personnel. Today, more than 11,000 equipment across various project sites are connected to the Asset Insight, streaming real-time equipment data. Insights derived from the Asset Insight platform have enabled L&T to increase equipment productivity, enhance capacity utilization, right-size assets, improve fuel efficiency, reduce capital expenditure and much more.

WISA - Worker Induction and Skills Application is an

End-to-end digital solution for smooth on-boarding of blue- collar workers into construction sites. This solution spans mobilization, screening of records, KYC, health screening, skill grading, attendance management, performance records and observations, appreciations, violations, and training management. Today more than 300,000 workers are on-boarded in WISA. This solution extensively leverages mobile technologies, statistical analysis, and artificial intelligence to provide insights that have enabled faster mobilization of workers, reduction in on-boarding lead time and better understanding of the demographics and performance of our workforce.

Integrated safety platform provides holistic visibility, analysis and insights to improve workplace safety across all construction sites. More than 10,000 forms are submitted digitally every day giving visibility into prestart checklists, work permits, near misses, incidents, safety observations, inspections, audit findings, safe and unsafe conditions.

This data is analysed to arrive at an integrated safety performance score-card. Natural language processing helps in analysing the free text entered in the forms to categorize the safety incidents and provide targeted safety training. Computer vision helps detect safe and unsafe conditions and acts based on the photographs captured during the form submissions and using the cctv footage. More than 50 virtual Reality (vr) based safety modules have been created, covering different scenarios such as working at height, excavation, tower construction and so on. These vr modules are pre-installed in portable vr Devices and distributed across various construction sites. Safety awareness sessions for workers using these vr modules create a vivid immersive experience about safe work practices.

At the place, by the person, at the time of work: This is the guiding principle of Procube, a progress-monitoring solution. This mobile-enabled solution helps capture project progress information in near-real-time. This data is further analysed using statistical analysis and machinelearning techniques to provide insights to different project management stakeholders with role-based visualization. These insights enable project managers and operations personnel to take informed decisions for removing constraints and adding resources that enable timely completion of projects.

Geospatial solutions use a range of sensors (Lidar, Radar, Sonar, Thermal, Optical) mounted on multiple platforms (Terrestrial, Mobile, Aerial) for capturing geographical information. A variety of analyses - such as temporal analysis, flood flow analysis, cut-fill analysis and quantity estimations - are performed on this data to provide location-based intelligence and insights. This is further integrated with data from other digital solutions to provide map-based integrated dashboards and visualizations to different stakeholders. These solutions enable multi-fold improvements in accuracy and time taken to acquire and analyze geographical information. This results in better design and estimation as well as faster start of procurement and execution.

These digital solutions provide high-velocity data with a significant volume and huge variety. Alchemy, an advanced analytics and artificial intelligence initiative, helps in understanding, analysing and deriving insights from this data. For instance, statistical analysis is used extensively on weighbridge data to detect weighment anomalies and provide real-time alerts. Natural language processing helps in automatically comprehending large complex contract documents and flag risky clauses. Machine learning techniques are used for analysing equipment condition and predicting failure to improve equipment availability. Conversational AI is used to provide seamless interaction between humans and systems through FAQ bots, information bots, transaction bots, and knowledge bots.

Digital for manufacturing businesses

Embracing Industry 4.0: The Internet of Things for manufacturing has been applied to connect machines, cranes, welding machines and other equipment across various manufacturing plants for remote monitoring and maintenance. Installing multiple sensors and intelligent gateways on the machines and equipment enables the business to obtain real-time operational, production and condition-based data without human intervention. Some of these data points are location, movement, arcing time, switch on and switch off time, idling time, work done, number of hours worked, pressure, temperature and welding consumables consumption and many other variables, depending on the type of equipment.

Laser & Radiography: These technologies have helped reduce the job set-up times from days to hours, automate non-destructive quality testing methods and integrate manufacturing processes for real-time information visibility.

Mobile Applications: All digital applications are made mobile first to ensure real-time, anytime and anywhere information visibility across the enterprise.

Smart Glass: These wearables allow our customers to undertake remote inspection of their work-in-process orders in a collaborative manner. This has helped the Company to save the time and energy spent on third party or customer inspections, thereby facilitating faster time-to- market of products and faster delivery of customer orders.

RFID / Near-field communications (NFC) / Beacons:

These technologies have been widely used for real-time monitoring of workers entering hazardous areas, monitoring and tracking of materials across the supply chain, monitoring of materials at open-storage locations and tracking of moving assets across project sites.

Virtual Reality and Augmented Reality are used to create captivating experiences such as augmented technical training of products, enabling the sales team to gain a higher order conversion ratio and an immersive 360-degree view of products. This technology has also been applied to increase the work safety at project sites. The application of this technology in scenarios such as working at heights, material handling, working in confined spaces, heavy vehicle management, high temperature welding and working in marine environments has helped create a vivid immersive experience and imprint the rules of safety firmly on the minds of the workers.

Artificial Intelligence is used across the value chain in applications such as cognitive comprehension of bid documents, price prediction, image analytics to automate quality testing, contractual risk analysis and auto-validation of in-bound material quality.

Implementation, Change Management & Benefit Realization

Over the last four years, digital solutions have been rolled out pervasively across the business with speed and scale at every project site and every manufacturing plant.

Employees on the field actively use these digital solutions. This has been made possible by continuous engagement, training, active change management and governance.

L&T is a diversified organization with a variety of businesses. Its Digital Council is a confluence of digital leaders from all L&T businesses under the aegis of the Chief Digital Officer of L&T. The Council provides a platform to discuss ideas, understand challenges, adopt best practices, leverage technologies and solutions implemented across different businesses. It provides the necessary direction, governance and oversight for driving digital initiatives within L&T.

With digital solutions deployed at scale, cyber security assumes paramount importance. All the digital solutions are designed and developed with in-built security principles under the guidance of the Companys Chief Information Security Officer. All the solutions are subjected to frequent security reviews, testing and monitoring. Regular governance meetings involving the CISO team and the Digital Council enable key digital stakeholders to take stock of the current status, understand the cyber risks, and adopt relevant mitigations and counter-measures towards enhancing cyber security.

SPEED, a structured programme for benefit realization from digital solutions, has been in operation for the past 2 years. This programme has different tracks for driving adoption of digital solutions, programme management and governance, kpis and benchmarking, and driving actions based on insights derived from digital solutions. The SPEED programme has helped create significant business impact from digital solutions.


Digital transformation can be broadly categorized into four areas; transforming operations, building connected products and services, transforming customer experience, and creating new business models enabled by digital. So far in L&T, the digital solutions were focussed on transforming operations. The Company is now in the process of developing digital solutions in the areas of connected products and services and customer experience.

Digital solutions have assumed greater importance in the current environment. The progress made in digitalisation will put the group in an advantageous position to leverage technology to devise newer ways of working safely and efficiently under ever-changing circumstances.

Further, with in-house success, the digital solutions are ready to be marketed, creating a new business portfolio for the organisation.

Information Technology

The business environment today is rapidly evolving with the emergence of new technologies, and a high-stakes global game of digital disruption is currently under way.

It is fuelled by the latest wave of technology: advances in Artificial Intelligence, data analytics, robotics, the Internet of Things, and new software-enabled industrial platforms that incorporate all these technologies and more. Every enterprise leader recognizes that, as a result, the prevailing business models and the way of working in his or her industry could drastically and fundamentally change. Add to this, the interconnections between corporate networks and other networks to conduct business online. The technology innovations being rapidly adopted online have created access across people, information, systems and assets worldwide. We are today, in the true sense of the word, a network-delivered society.

At L&T, we are constantly enabling business with such innovative technologies to enable collaboration between individuals, and between people and machines. This reduces friction and deepens insights to facilitate quick decision making. It is not enough to just bring in technology; its adoption is far more important. A special IT group is formed to handhold the users. Technology always has a flip side - and that is cybersecurity. A special taskforce has been formed under Chief Information Security Officer (CISO) to keep a tab on all such developments, guide the organization and create a cybersafe environment to conduct business.

The proof of virtual presence through IT was put to test when, due to the sudden disruption caused by COVID-19, the staff had to shift to Work From Home (WFH) mode for the first time. The IT systems built over the period ensured a smooth transition. In addition, the Companys IT infrastructure was upgraded / modified on a war-footing to enable WFH for almost all the employees and also enable them to connect across locations without worrying about productivity dips. Adequate training was provided to employees to enable them to handle such situations. Additional cybersecurity controls and 24x7 monitoring mechanisms were implemented. This enabled the Company to execute business as usual in unusual times.

Human Resources

Manpower - the key resource in business and more so in project and services businesses - is the pillar of business growth. A strong organisation supported by an evolving leadership continues to play a key role in the success of a business. L&T can confidently affirm having a robust leadership pipeline to support current and future business requirements. The Companys signature leadership development practices continue to be designed and deployed so that leaders are identified, developed and groomed to take up larger responsibilities, faster. The Development Centres, pivotal to the Companys core philosophy of grooming internal talent, ensure that the right leadership talent is identified through a rigorous process. To reflect the changing business context and the required leadership capabilities, the Development Centres have been revamped across different levels. Additionally, they have been digitised and training can be imparted virtually. The outcomes of Development Centres are used for talent management, succession planning, training and leadership development.

The Development Centres efforts are augmented by the Seven-Step Leadership Programme, developed in-house. The programme provides access to world-class management gurus from the most reputed institutions from across the globe and curates learning experiences which are not only transformational for the participants but result in breakthrough outcomes for the organization. The Action Learning Projects that participants undertake not only help them to assimilate and apply the learnings but also to work on live business improvement projects under the guidance of high-calibre business leaders. The mentoring programme, in which senior executives including the Group Chairman, CEO & MD and other Directors and Business Heads mentor emerging leaders, serves as the ultimate leadership experience that few organizations can provide. These initiatives have ensured a steady talent pool of leaders.

The Company has been developing project management capabilities which are key for the success of its core businesses through its Project Leadership Programme.

This will augment the project execution capability building efforts spearheaded by the in-house Institute of Project Management.

L&Ts Leadership Development Academy at Lonavala, its captive Technical Training Institutes along with the Corporate Learning and Development Centre, continue to provide a world-class learning eco-system with high quality and business-relevant capability-building programmes that augment the skills and abilities of the human resources of the Company.

To sustain a culture of safety, which is of paramount importance for the Company, the Corporate Learning & Development team offers specialized programmes to train employees and integrate safety in every aspect of work. To develop internal training capabilities in EHS, the Company has partnered with the National Examination Board in Occupational Safety & Health (NEBOSH) and The Institution of Occupational Safety & Health (IOSH) to become an accredited course provider for its employees.

L&Ts Corporate Technology & Engineering Academy (CTEA), with centres at Madh and Mysuru, plays a critical role in bridging the skill gap of young engineers, making them job-ready and focussing on developing their technical competence by providing hands-on training in contemporary technologies.

L&T has been at the forefront of digital learning. Its state-of-the-art Artificial Intelligence and Machine Learning-driven learning experience platform atlnext won the prestigious People Matters - Learning & Development Award 2019 in the Best in L&D Technology and Analytics category.

The digitalisation of HR processes received further impetus during 2019-20. The digital roadmap put in place an integrated cloud-based platform to anchor all talent processes. This platform harbours a contemporary and transparent interface for the employees and includes HR processes as diverse as employee life cycle operations, performance management, leadership development, efficient query management and robust data for HR Analytics. In addition, digital platforms are being planned for talent acquisition and learning management; these digital platforms will be seamlessly integrated with existing platforms so as to provide a superior employee experience and to be leveraged for organization-level talent interventions, reviews and data-driven decision making.

These investments in digitalisation of HR processes ensured minimal disruption to work during the COVID-19 crisis, ensuring that employees are productive and engaged while working remotely during the lockdown.

L&T continued to be recognised externally for its Human Resources practices. Forbes magazine again named L&T amongst the global best employers. The 2019 Randstad Most Attractive Employer Brand Research ranked L&T #6. Business Standard named L&T The Company of The Year. Apart from these accolades, L&T received other rankings, such as the Business World ranking of #12 in the Most Respected Companies list, Business Today, People Strong ranking at #13 in the Best Companies to Work fo Rs 2020, Universum ranking at #7 as Most Attractive Employers in India amongst engineering students - affirming its stature as a strong employer brand. The signature Technology Leadership Programme for the Defence business received the SHRM HR Excellence Award 2019 - recognition as a best practice in developing leaders for tomorrow.

COVID-19 Response

The HR response to COVID-19 was timely, caring and effective, ensuring the safety of ove Rs 250000 personnel operating across 200+ sites and offices in India and overseas.

As soon as the first signs of the pandemic emerged, a robust structure and comprehensive process was put in place to collate information and take quick decisions.

Under the aegis of the Executive Committee, a Direct Response Team comprising senior executives was set up. This was followed by local leadership teams being set up for the respective businesses, regions, projects, clusters, manufacturing sites and offices. The HR Council, comprising HR Heads of the businesses, swung into action to integrate the efforts at the enterprise and local levels.

A system of daily monitoring and reporting of COVID-19 suspected and positive cases was put in place.

Periodic health advisories and sops were issued on what steps should be taken towards the safety of employees, contractual personnel and their families, apart from the security of business assets. These ensured timely, clear and consistent communication. Government orders were suitably communicated to ensure strict compliance. In the wake of the lockdown, adequate measures were taken with speed and agility - including setting up a medical helpline, a counselling helpline and the necessary IT infrastructure to facilitate Work From Home.

Work From Home guidelines were issued, and detailed plans and infrastructure was put in place to ensure that employees not only complied with the Government guidelines to stay safe but also remain engaged and productive while working from home. Additional e-learning and virtual training infrastructure was immediately set up to facilitate capability-building. A host of webinars curated in-house, by academic institutions and training partners were offered to employees on a wide range of themes relevant to business as well as mental well-being. Taskforces were set up to take up projects for process improvements and various other initiatives.

The CEO & MD and the Business Heads have undertaken a massive communication exercise through different media to reach out to all employees and apprise them of the current situation, what actions were to be taken and how the future was likely to unfold. This served as a very effective platform for top-down and bottom-up communication.


Sector Performance in FY 2019-2020

The Infrastructure sector is a key driver for the Indian economy, and contributes to Indias overall development. The sector, accordingly, receives focused attention and resource allocation from both Central and State Governments.

FY 2019-20 was a challenging year both for the Indian economy, which performed below its true potential, as well as the construction sector, which recorded a six-year low growth of 1.3%.

Cement production saw a marginal decrease of 0.8% in FY 2019-20 as compared to 13.3% increase in FY 2018-19. Indias crude steel production was down by 1.5 percent and finished steel production was flat at 109.2 MT in FY 2019-20 against 110.9 MT in FY 2018-19.

Despite the challenges, the Governments thrust areas continued to provide a business opportunity basket for the Company, which was in the pole position to capitalize on the business prospects that came to fruition during the year. The continuing weakness in the Realty sector was countered with a Government focused boost to the affordable mass housing and health segments. With the Governments focus on improving air-connectivity, opportunities in the airport segment continue to arise at periodic intervals.

The construction of highways slowed to 28 km a day during FY 2019-20, from 29.7 km a day achieved in FY 2018-19. The Ministry of Road Transport & Highways is hopeful of increasing it to 32 km a day in FY 2020-21.

Competition in this sector has increased with a higher frequency of smaller-sized bids attracting interest from smaller players. This sector is also beset with challenging payment terms in Government tenders coupled with slow progress in land acquisition.

With a discernable thrust on renewable energy, the award of some contracts in this area has been gaining momentum, which has offset the tapering of prospects on centrally sponsored intensive electrification projects under the Saubhagya initiatives. As on March 31, 2020, ove Rs 26 million households have been provided with electricity connections under the Scheme.

As the implementation of Mass Rapid Transit System (MRTS) at various metros progressed well, the Governments focus has turned to Tier II cities, and opportunities are being sighted there.

The Governments emphasis on augmenting local water resources launched under the Jal Jeevan Mission is also giving rise to good prospects.

Under the National Infrastructure Pipeline (NIP), roads, urban and housing, railways, power (renewable and conventional) and irrigation comprise ~80% of the total plan. This investment and initiative from the Government will create a good opportunity for the infrastructure sector in the coming years.

Public sector spending on the Infrastructure sector, as a whole, continues to witness focused attention through a combination of Central, State Government and PSU capex. The combined Budgetary Capex spends (including PSU Capex) amount to over RS 16 lakh crore for FY 2020-21, which translates to ove Rs 7% of expected nominal GDP.

The covid-19 crisis is likely to adversely affect revenue collections and GDP growth in FY 2020-21, which in turn could lead to contraction of spends on Infrastructure. The Central and State Governments are attempting to mitigate the impact of lower tax collections through significantly higher market borrowings than originally budgeted for the year FY 2020-21, and the increase could be in the region of RS 9 lakh crore. Multi-lateral funding of projects, which has increased in recent years, is providing additional resources for building infrastructure within the country.

On the international front, amid geo-political upheavals, the Middle East countries have been investing in non-oil capex as well, which has offered some business opportunities to the Company, especially in Saudi Arabia and the UAE. Geographical diversification has been yielding results in the last few years, and the segment saw some big-value successes in countries other than the Middle East region.

The Infrastructure business, which faces normal execution challenges in terms of Right of Way and delayed client clearances, encountered some unprecedented issues in FY 2019-20. Change in some State Governments, led to reassessment of awarded contracts, while some environmental-related work stoppages adversely affected work progress in some projects. The impact of these challenges was accentuated with the onset of the pandemic in the last fortnight of the financial year, which slowed down the economy, with the lockdown being implemented by various Governments. The pandemic has affected execution in the last quarter of the year, which otherwise is the busiest quarter for the segment in terms of progress and collections. This has had an impact on both revenues and profits, since the sites had to be shut temporarily.

With the changing environment, the project sites are also required to adapt to a new set of norms for continuation of work, which will hamper progress for some time. The impact of the pandemic is expected to continue into the next financial year, and may taper off as normalcy gradually returns.



L&Ts Buildings & Factories (B&F) business is the leader in Engineering, Procurement and Construction (EPC) of airports, hospitals, stadiums, retail spaces, educational institutions, IT parks, office buildings, datacentres, residential buildings, high- rise structures, mass housing complexes, cement plants, industrial warehouses, and other factory structures in India and overseas. The business is well-known for its capabilities in constructing engineering marvels and landmark structures.

The business comprises six business units (bus) - Airports, Health, Public Spaces, IT & Office Space (ITOS), Residential Buildings and Factories.

Airports: B&F offers design-and-build solutions for passenger terminal buildings and allied service buildings, and cargo terminal buildings, with integrated airport system solutions like baggagehandling systems, passenger-flow monitoring system, passenger boarding bridges, visual docking guidance systems and other facilities.

Health: This business unit handles hospitals, medical and nursing colleges. Healthcare

Infrastructure is delivered with end-to-end healthcare facilities, including medical equipment, right from concept to commissioning.

Public Spaces: Design and execution of special structures like tall statues, metro stations, convention centres, secretariat buildings, hotels, malls, integrated development and educational institutions are handled by this business unit.

IT & Office Spaces: This business unit focuses on providing turnkey solutions for IT and office spaces. Leveraging the strong mechanical, electrical and plumbing (MEP) competencies of B&F, it also offers concept-to-commissioning services for building Data Centres.

Residential Buildings: This business unit is a prime EPC solutions provider of elite, affordable and mass housing projects.

Factories: This business unit is a one-stop solution for the EPC requirements of factories like cement plants, automobile plants, glass manufacturing and food processing plants.

In line with L&Ts Perspective Plan 2026, the business is venturing into a new segment - B&F Fast - to explore and create value from advanced construction technologies such as Prefabricated

Prefinished Volumetric Construction, Offsite Manufacturing, Structural Steel Construction and 3D printing.

A state-of-the-art design facility, competency cells, advanced formwork systems, highly mechanized project execution, digitalized project control and a talented pool of employees helps sustain the leadership position of the business, retain key customers and secure major orders. An efficient supply chain and extraordinary project management expertise, acquired over decades, adds to the competitive edge.

Business Environment

The Indian economy started the year FY20 on a high note with higher GDP growth projections of up to 8% year on year. Government of Indias intention to drive more investments into developing infrastructure and thereby improving the growth, was evident in the Union Budget 2020. The tax sops for sovereign wealth funds investing in infrastructure sector, proposal of an Investment Clearance Cell, viability gap funding for projects in healthcare and logistics were some of the initiatives proposed. The allocation of funds towards the National Infrastructure Pipeline, announced earlier by the Finance Minister, has also offered promise to the Infrastructure industry, specifically the health care segment, in which B&F has a proven expertise of handling design, turnkey execution including the supply and commissioning of medical equipment.

The data localization policy has also paved the way for more Datacenters in India, a segment in which B&F has concept to commissioning capabilities.

The real estate industry was the focal point of the Indian economy in FY 2019-20, but not for the ideal reasons.

The Government of India had announced substantial relief packages to support the real estate industry by improving liquidity and enabling developers to come out of stuck realty projects. However, sizeable orders emerged from the affordable and mass housing industry and major developers from elite housing business were making a move to capture the market in this segment.

Assembly elections and the political instability that followed had created problems viz. Delayed tender results and lack of clarity in governmental policies and decisions in this fiscal.

Additionally, the spread of the covid-19 pandemic towards the end of the financial year and the consequential lockdown has posed severe concerns for the economy. Construction activities across the country have been impacted due to the lockdown.

Major Orders secured

• CIDCO Housing Project at Navi Mumbai

• One of the largest greenfield airports in India at Navi Mumbai

• Mandarin Oriental Hotel, Muscat in Oman

Key projects completed

Key projects commissioned during the year include:

• Government Hospital & Medical College, Madhepura, Bihar

• Ford Global Technology & Business Centre, Chennai

• ITC Royal Bengal, Kolkata

• Police Bhawan - Signature Building, Lucknow

• Prestige Song of the South, Bengaluru

• Asian Paints Factory, Visakhapatnam

The business has also achieved important milestones in the

Execution of major landmark projects, as given below:

• The pitch-laying process was completed at the Al Rayyan - FIFA Stadium, Qatar in unde Rs 12 hours

• South Asias largest skybridge weighing a massive 2000 MT was erected in 8 hours at ITC Colombo by the in-house team

• The largest cricket stadium in the world at Motera, Gujarat was substantially completed and was the venue for the meeting between the Prime Minister of India and the President of the US

• AIIMS Gorakhpurs OPD block was completed and handed over


The business has received numerous accolades from Renowned international and national agencies for its Superior standards in EHS and quality.

• Bengaluru International Airport Project bagged three coveted awards from the Confederation of Indian Industries - Southern Region

• Multiple International agencies - such as Project Management Associates (PMA), American Concrete Institute (ACI) and Engineering News Record - have showered praises on the construction of the iconic Statue of Unity project in Gujarat

• The Prestige Lakeside Habitat secured the ACCE(I) Billimoria Award for Excellence in Construction of High-rise Buildings

• WIPRO Kodathi was conferred the ICI (BC) Birla Super Endowment Award for the Outstanding Concrete Structure of Karnataka 2019 in the Building Category

• Police Bhawan, Lucknow was conferred an award by ICI Ultratech - Lucknow Centre, for the Outstanding Concrete Structure of 2019 in the Institutional Building Category

Significant Initiatives

The business has been the frontrunner in developing digital applications customized to serve its project sites in streamlining various activities and statutory processes. Apart from the consistent success in employing advanced Building Information Modelling (BIM) in construction, the business was able to leverage the latest technologies like Geospatial Information System, Image Recognition, Artificial Intelligence and Robotic Process Automation through various applications developed in-house.

Geospatial technology using lidar (Light Detection and Ranging) was utilized to map existing structures and create 3D models. The Workforce Induction and Screening Application (WISA) is extensively used to digitize the workmen induction process and build a database of ove Rs 2 lakh workmen including their skill details and images captured using face recognition technology. Robotic Process automation helps in replacing human effort in mundane activities like indent creation and other accounting functions.

The Digital Stores initiative has digitized the processes of indent generation, approval, material issue and indent creation in an ERP system. The data generated through this application has helped in better inventory management.

Using 3D-printing technology, the team successfully printed a 2.8 m-high residential building at Kancheepuram, the first full-scale 3D-printed building in India. The mix design developed by the team enabled the use of crusher sand in 3D printing of concrete for the first time in the world. Further research is in progress.

Environment, Health and Safety

The business has rolled out its EHS Professional Development Programme (EHSPDP) and comprehensive Risk Management training for front-line engineers to ensure better EHS practices.

In an effort to develop a positive safety culture based on the principles of BBS (Behaviour Based Safety), SIM (Safety Improvements made by Me) has been introduced. To date, more than 4000 interventions (SIM cards) were made at all levels of employees at the project sites.

As a testimony of superior EHS standards, the business was certified for ISO 45001:2018 Occupational Health & Safety on June 13, 2019 by M/s dnvgl.

Significant statistics for the year include:

• 93% of projects achieved Zero Accidents status

• 65 projects achieved more than 3 million safe man-hours

• 20 projects achieved more than 10 million safe man-hours

The business was conferred several prestigious awards during the year, including:

• British Safety Councils Sword of Honour, for the fourth consecutive year, with ten of its projects securing the award

• The Royal Society for the Prevention of Accidents (UK) Gold Awards for Occupational Health & Safety for eleven projects

• 18 National Safety Council awards in various categories

The business has also taken up several initiatives to safeguard employees and workmen within the country and abroad at the onset of the pandemic. The various project sites across India are housing workmen in labour camps equipped with all essential facilities, medical care and competent supervision. Covid-19 Emergency Response Teams (ERT) constituted at the cluster-level pan-India are tasked with reaching out to staff, especially those at project sites, to check on their well-being.

The business has also banned the use of single use plastic in all forms across all offices, sites and establishments.

Human Resources

With people as the prime assets, the business ensures that it nurtures talent through new initiatives and value-adding training programmes. The business has introduced a Testing & Commissioning Management Development Programme to develop a specialist group of individuals to deliver Testing & Commissioning of Airports, Data Centres and Smart Buildings. To further develop a specialist group of Finishes professionals, a customized programme covering Masonry & Plaster, Dry Finishes, Wet Finishes, Interiors and Fagades was launched in Decembe Rs 2019.

Risks and Concerns

The housing and real estate business is increasingly witnessing the political risks of Government decisions being reversed and projects halted due to changes in regime in the States. A robust political risk index is conceived and being developed to effectively identify and mitigate the same at the bidding stage.

In the case of a few projects, specifically Government projects, hand-over of encumbrance-free sites on time, remains a key issue that halts the projects momentum.

In jobs executed on a design-and-build contract basis, frequent changes in design by the client and

Client-appointed consultants are a huge concern. Though in-house Engineering, Design & Research Centre (EDRC) is proactive and is improving continuously by documenting and implementing the learning from previous experiences in new jobs, unexpected changes suggested by clients hinder timely completion of jobs. Such changes are thoroughly documented and communicated to clients by the Contracts Administration team to pursue claims.

The strategy of the business to develop a specialized vertical - B&F Fast - to modularize, standardize and focus on prefab plus assembly building solutions for different types of buildings is a step towards mitigating the growing risk of the non-availability of skilled manpower in the industry. The solution will also cater to the increasing need of customers for quicker construction.

Presently, the world economy is facing a downturn triggered by the COVID-19 pandemic, which has spread to almost all the countries across the globe. The Infrastructure industry is among one of the badly affected industries due to the contagion-led lockdown and eventual new norms of working. It has also impacted the supply chain and the availability of the workforce.

The business is working on identifying different scenarios and preparing contingency plans for each scenario. All necessary measures are being taken to ensure the collection of payments due and to have a hard look at fixed costs and optimize overheads during the lockdown period.


Currently the economy is opening up with restrictions on construction activities completely lifted.

The lockdown has led to a reduction in consumption demand in the country, leaving government spending in social sectors as the key driver of economic growth.

The opportunities for the business in the upcoming year will be majorly from Healthcare industry, as increased government spending is expected in this segment. Also, there is a negative sentiment about China and many countries currently are looking to move out of China which was their manufacturing base. This is expected to trigger opportunities for the factories segment in B&F as most companies are likely to set up their manufacturing establishments in India. However, the commercial and residential real estate business in the country will witness a prolonged impact of the pandemic. The investments into the development of Airport construction may slow down and are expected to rebound only during the latter part of FY 21.

The major challenge for the construction industry will be supply chain disruptions including limited availability of labourers as the migrant workers constituted a very large share of the workforce. The business has already initiated the implementation of long-term solutions to face such challenges like reducing the dependency on human resources by leveraging advanced construction technology.

Also, the business is considering implementation of techniques like Zero Based Budgeting for cutting down unnecessary expenses and optimizing resource utilization.

On the international front, B&F will employ a cautious approach in the Middle East and also while exploring opportunities to enter new geographies like Bangladesh and Africa.

The business is confident of its ability to tide over the challenges arising from subdued demand and executional challenges through its customer- centric approach, construction expertise and technology leadership in the industry.



L&Ts Transportation Infrastructure business (TI) is one of the oldest, largest and most reputed EPC contractors in India in the Road, Railway and Airport sectors and has two Strategic Business Groups (sbgs), namely, Roads, Runways & Elevated Corridors (RREC) and Railways Business Group (RBG).

The RRECs major business unit, the Roads & Runways BU (R&R), provides EPC Design & Build Construction services for all types of roads (asphalt and concrete) including all associated structures, cross drainage, toll booths, wayside amenities, etc., to NHAI, morth, State Governments and certain private clients. In the Airport sector, the R&R BU undertakes EPC construction of complete airside infrastructure, namely, runways, taxiways, aprons, airfield ground lighting, fuel hydrant systems, etc., both greenfield and brownfield. The R&R BU is also a pioneer in providing complete civil infrastructure for greenfield city infrastructure projects, e.g. Smart Cities. The Elevated Corridor Segment (EC) is engaged in EPC construction of all types of urban flyover projects for City Traffic Decongestion, and the Dedicated Freight Corridor Corporation of India (DFCC) - civil works projects in both the Eastern and Western Dedicated Freight Corridors.

The Railways SBG (RBG) consists of the Mainline Business Unit (MLBU) and the Metro Business Unit (MTBU). The MLBU provides EPC construction services for all Mainline Railway Projects, Western & Eastern Dedicated Freight Corridors including Track Laying, Overhead Electrification, Dedicated Railway Linking for Port & Mining facilities, etc.

The MTBU executes EPC projects for all Signalling & Telecommunication Systems Works, Mass Rapid System Projects for metro projects in India, Riyadh Metro, Dhaka Metro and end-to-end Integrated Transit System complete with Civil and Systems Works (Mauritius Light Rail Transit - LRT).

On the international front, the business recently completed several large and complex road projects in the UAE, Oman and Qatar. The RBG is currently executing major projects in Mauritius and Bangladesh.

The business leverages its vast experience in project management, engineering design and construction management to achieve international standards of safety, quality and operational efficiency. It has engineering design centres in Mumbai, Faridabad and Chennai. In addition, it has a Competency Development Centre at Kancheepuram for the RBG and a Workmen Training Centre at Ahmedabad for the RREC. In FY 2019-20, the transportation infrastructure business has executed approximately 1 million sq. Mtr. Of airside construction, 1347 lane km of roads, 389 km of track linking and 981 km of Railway Electrification (OHE).

Business Environment

A) Roads, Runways & Elevated Corridors

Over the last 5 years, the budgetary support for road construction has seen a steady increase. However, the award of contracts has shrunk significantly in FY 2019-20 owing to land- acquisition issues. The delay in the financial closure of Hybrid Annuity Model (HAM) projects has impacted the Governments ambition to infuse private investment into the sector. Any shift towards a higher proportion of EPC projects will impact NHAIs awarding capability due to higher funding requirement for civil works related to EPC projects. Due to difficult contractual terms, the working capital requirement for road projects is becoming very high. The delays in settling contractual issues like extension of time, arbitration award, etc., are compounding problems. In FY 2019-20, approximately 5,100 km of road were awarded and 9,855 km of road were constructed. Construction of highways at 28 km/day in 2019-20, has been steady from FY 2017-18 onwards, with an increased focus on delivery of projects. The market continues to have many small EPC contractors, consequently intensifying the competition.

In the yea Rs 2019-20, a few major airports have been initiated, such as the Delhi International Airport and Navi Mumbai International Airport, providing opportunities for the business.

City Infrastructure Development has seen a lull in orders in FY 2019-20, with no significant awards. The Delhi-Mumbai industrial corridor is at an advanced stage, with multiple projects substantially completed in Dholera and Bidkin industrial township.

The Government announced a National Infrastructure Pipeline with a total outlay of RS 100+ lakh crore for FY20-FY25. Out of this, 19% of the capital expenditure is earmarked for Roads, which is expected to give a considerable boost to the sector.

B) Railways:

The Indian Railways (IR) has significantly improved its EPC tendering model. The new EPC tender document (Single Stage 2 packet) has been finalized, with industry suggestions suitably incorporated. However, the IR needs successful and faster implementation of EPC tendering. No major project was awarded in FY 2019-20.

High Speed Rail, the tendering for which was expected to gather momentum, has been deferred, with the major bids being extended multiple times. Steady projects in metro rails in various States are expected to help increase business. The Public-Private Partnership (PPP) component has been made mandatory for availing Central assistance for new metro projects.

Major Orders

• Navi Mumbai International Airport - design, engineering, procurement and construction of Passenger Terminal Building, runway, taxiways and aprons, landside roads, utility infrastructure and drainage

• Delhi International Airport Limited - Fuel Hydrant System

• Three Systems packages on EPC basis for the Eastern Dedicated Freight Corridor

• EPC Overhead Electrification job from CORE

• Track works for two packages of Mumbai Metro Line 3

Projects Completed

The business has completed the following projects:

• Rewa-Katni-Jabalpur-Lakhnadon Road Project - 4 Packages, 288 km, 4-lane, Madhya Pradesh

• Bijapur-Humnabad Road Project, 220 km, 2-lane, Karnataka

• Raipur-Bilaspur Road Project, 42 km, 4-lane, Chhattisgarh

• Hospet-Chitradurga Road Project, 108 km, 4-lane, Karnataka

• North-South Parallel Runway commissioned for Bangalore International Airport, Phases 1 & 2

• Kanakura-Madar section (OHE - 294 TKM) and the Alwar-Bandikui section (OHE - 68 TKM)

• Khaliapali-Loisinga (11.15 TKM) track section of the Sambalpur-Tilagarh Doubling Project

• GMRCL - Meg Track Project - Priority Stretch (13 TKM)

• Hyderabad Metro OHE and Track Package (25 TKM)

• Track-linking for the Rewari-Iqbalgarh section of CTP 1&2 (1400 TKM)

• Commercial Trial runs are in progress in the Rewari- Madar section

• Mauritius Light Rail Transit system (Phase I, 25 TKM)

• Roads and Transport Authority (RTA) 1028 (Extension of Tripoli Street)

• RTA 1048 Improvement of Expo 2020 Roads Network contract No RS 1048/1 & 5

During the year some other notable achievements were:

• DFCC - (Civil track package) CTP3R project had the highest single-day production of 1.16 L cu.m/Day Earthwork in filling and record of executing 20.30 lakhs cu.m in May 2019

• Mumbai-Nagpur Expressway Project, Mumbai-Vadodara Road Project - 80% design completed in 6 months time

Under the Design Acceleration Initiative of the RREC business

• Aurangabad-Karodi Road project milestone II achieved 6 months ahead of time

Significant Initiatives

The major fixed cost for the RREC business includes hiring charges for asset operation & maintenance, fuel, etc.

Special initiatives of P&M as a profit centre with a focus on productivity-driven decision-making have resulted in cost-reduction on all these fronts.

The business continues to leverage the benefits of the extensive use of Linear Project Management tools, such as TILOS, to effectively visualize and plan mega linear projects across domains. Driven by a dedicated Track Planning Cell, this strategic initiative facilitates centralized planning of not only civil and track projects but also mega OHE (Overhead Electrification) projects.

An Internal Project Management Consultant (IPMC) team was formed to conduct a quality audit of ongoing projects. The team will ensure that construction complies with design specifications, specified materials are used during construction, codal specifications meet with the requirements, as well as review the status of nonconformance reports and aid closure.

Engineering Project Monitoring & Control Cell was

Formed under the project controls team and tasked with development of a design and drawing tracker to monitor the delivery with respect to agreed time lines, optimization of quantities with respect to initial design, coordination and monitoring of the actual quantity reported by the design department progressively and development of a model for indices for quantities of projects of a similar nature to support ongoing projects and the tendering department.

The thrust on mechanization in the railway business for faster execution has been a remarkable success, involving simultaneous stringing of Contact and Catenary, which reduces operational costs and execution time. Having been well-established in DFCC, such mechanization is also being used in other EPC projects, such as the Konkan Railway in the Western Ghats - a project requiring OHE installations amidst highly restrictive block sections involving significant material handling and extraordinary erection methodologies.


Connected assets and geospatial solutions are two high-impact solutions for the business. Digital data now backs the majority of equipment mobilization and hiring decisions, as well as fuel distribution. On the geospatial front, drone-based photogrammetry or lidar-based surveys are conducted wherever possible for every new project.

Work has commenced on an Artificial Intelligence (AI) based Contracts Administration Platform to introduce smarter ways to manage contracts.

Environment, Health and Safety

Transportation Infrastructure projects are typically spread across hundreds of kilometres, with a multitude of discrete safety risks that are both location and task specific. Rtr (Reverse the Risk) and PREP are digital applications which have been developed to identify the risk level. Continuous monitoring of the risk level using digital applications and implementation of effective control measures helps mitigate risk.

Well-planned implementation of traffic diversions as per IRC SP55 to prevent work zone incidents is undertaken. To monitor live road activities and prevent traffic accidents, the business has introduced the Verify and Ensure Controlling Traffic (VECT) initiative.

Across all the projects, digitally enabled training modules - such as virtual reality safety modules and augmented reality EHS Golden Rule modules - have been developed to increase the EHS awareness in the workforce. A Zero Fatal Award has been introduced for projects having zero fatality for the entire duration of the project cycle.

A structured Environment Management System (EMS) has been implemented. Every project has a specific

Environment Plan which conforms to ISO 14001 2015, individual contractual needs and the business Integrated Management System (IMS) manual. Micro-level preparation takes place at each project to define a set of processes, followed by Impact Aspect Assessment. The defined control measures are implemented during job execution, and that facilitates the reduction of the negative environmental impact and the mitigation of all potential environmental aspects. Detailed Environment Impact Assessments (EIA) are conducted in the pre-execution construction planning stage. Various control measures are identified and implemented. Along with dedicated methodology / SOP and engineering control, many new initiatives are taken.

During FY 2019-20, the business won 19 international awards (five Gold Awards, two Silver Awards from the Royal Society for the Prevention of Accidents, a Sword of Honour and a BSC OHS Audit Five Star Rating from the British Safety Council, one distinction, 4 merit and 5 pass certificate from British Safety Council). Other than international, the business has received seven prestigious safety awards by the National Safety Council, a prestigious award by the Institution of Engineers India and two awards by India HSE Summit.

Human Resources

The focus of the business has been on developing a culture of recognition, innovation and process improvement.

The business conceptualized the DELTA Awards - Digital Breakthrough, Energy Optimization, Large scale reuse of Scrap/ Waste, Time reduction (Reduction in Cycle Time), Advances (Innovation). To strengthen its safety culture using positive motivation, the LIFE (Loss & Injury Free Environment) Award was conceptualized.

Risks and Concerns

Land acquisition is a critical factor. Very often, there are delays in handing over encumbrance-free land and Right of Way, impacting progress of work and idling of resources. Commercial terms in the business are getting tougher, resulting in working capital pressures. The sector is also exposed to delays in various approvals, leading to a domino effect. Extreme environmental events (such as unprecedented rainfall), National Green Tribunal bans and construction bans due to pollution pose an adverse risk to the business.


A) RREC business

Over the next 5 years, the Government has planned to expand the National Highway network by ~60,000 km, with about 20,000 km in major economic corridors, strategic areas and major tourist destinations.

The Department of Civil Aviation envisages 100 new airports will be built in the country over the next 10 to 15 years. It is also working on the cargo policy, which will provide a boost to the nations logistics capacity.

The Government has envisaged an investment of more than RS 1.43 lakh crore for airports under the National Infrastructure plan over a period of 5 years.

The Governments focus on developing a strong express highway network, along with changes in contractual terms, is expected.

B) Railway business

The Indian Railways is planning its highest outlay of RS 1.61 lakh crore for FY 2020-21, an increase of over ~3% on last years outlay of RS 1.58 lakh crore.

The conventional projects of the Indian Railways continue to get a big thrust, backed by strong institutional funding like LIC, IRFC, etc. The Indian Railways is planning to tackle Mainline Capacity constraints through a New Line of ~5,000 km, Capacity Augmentation (Doubling & Tripling) of ~12,000 km and Gauge Conversion of ~2,500 km in the next five years. About 10,000 km of electrification is also expected to be awarded under the banner of Mission Electrification over the next four years.

There is a major thrust on electrification of the entire railway network by 2024. New projects including port connectivity dedicated rail links, etc., are planned to be implemented through spvs owned by State-Centre jvs.

Tendering for three New Dedicated Freight Corridors is to be initiated in the next 2-3 years.

India is well on its way to creating a world-class MRT system as an integral part of community infrastructure development across all metros and major cities, including Tie Rs 1 and Tie Rs 2 cities in the country. System works in MRTS provide good business opportunities; nevertheless such opportunities are increasingly becoming multiple smaller packages, especially in Tie Rs 2 cities, and hence may not be attractive enough for the business to participate in.

The Indian Railways has floated tenders for a Detailed Project Report (DPR) on each new Dedicated Freight Corridor. The Government has not yet secured funding for these projects. Certain packages are being contemplated on the PPP mode. Packages worth ~ RS 68,000 crore are expected to be finalized in the next five years.

On the international front, the focus is on the neighbouring geographies and in geographies where the business already exists. The funding needs to be through secured sources, such as the Indian Government or from any bi-lateral / multilateral agencies like JICA.

C) International

Since all the major infra projects related to EXPO 2020 in Dubai and FIFA 2022 in Qatar are already awarded and are At an advanced stage and oil prices have dropped, no more major prospects are visible in the near horizon in the Middle East. Africa posted very few opportunities during 2019-20 and stiff competition persisted from Chinese contractors. The key hubs for investment in 2020 are expected to be Morocco, Egypt, Ghana, Cote DIvoire, Namibia, Botswana, Rwanda, Ethiopia and Kenya.

In general, with the disruptions due to the covid-19 lockdown, funding for new projects is likely to get affected. The lockdown may trigger shortage of raw material and workmen, disruption in the supply chain, a significant increase in costs related to operating at site, coupled with reduced productivity due to controlled working environment, need for hygiene infrastructure and various safety measures requirements. There may be a decline in project awarding by various other authorities owing to rising debts, limited capital and reduced private investment.



L&T s Heavy Civil Infrastructure business is a market leader in Engineering, Procurement, and Construction (EPC) projects in core civil infrastructure segments that are crucial to the economy, viz. Metros, Nuclear, Special Bridges,

Hydel and Tunnels, Ports and Harbours and Defence.

As an industry leader in augmenting capabilities for urban mass rail transit systems, the business is involved in the construction of metro rail systems in almost all the major Indian cities. It provides extensive end-to-end engineering and construction services for both elevated and underground metro systems. During the year, the construction of the Hyderabad Metro was completed.

In the Nuclear segment, the business provides EPC solutions in civil, mechanical, electrical and instrumentation, including seismic qualification and modular construction technology. Its expertise extends to both pressurized heavy water reactor (PHWR) and light water reactor (LWR) technologies.

The Special Bridges segment has extensive experience in executing a wide range of bridges, such as cable-stayed, precast, pre-stressed concrete, steel and concrete composite construction using ingenious cutting-edge construction techniques, viz. Incremental launching, segmental construction, balance cantilever construction and span-by-span construction.

The Hydel and Tunnel segment offers EPC solutions for complete Hydroelectric Power Projects, Large-diameter Transport / Water Tunnels and complex Irrigation projects. The business also provides expertise for road and railway tunnelling projects, which cater to nation-building.

The Ports & Harbours vertical has extensive experience in greenfield ports, shipyard structures and seawater intake systems in all coastal states of India. It provides EPC solutions for breakwaters, berths, jetties and wharfs, dry docks and shore protection structures. It has unique expertise in providing design and construction solutions for state-of-the-art Shiplift structures.

Backed by the expertise and experience gained from managing mega projects, L&T has established a position of pre-eminence in shoring up the countrys defences. L&T offers single-point EPC solutions in the form of infrastructure facilities for defence bases, underground facilities and surveillance.

The business has a strong presence in India, the Middle East, Bhutan, and Bangladesh. The ability to provide tailor-made design-&-build and EPC solutions to suit the specific requirements of customers for complex infrastructure projects has made the business a market leader in India. Dedicated design and technical centres, competency cells, specialized training centres, digital project management, and a talented pool of employees help the business sustain a leading role, attract key clients, penetrate new geographies and secure major orders.

L&T Geostructure is a unique entity which focuses on foundation and ground improvement related projects. It has a strong and professional foundation specialist team with the knowledge of design, equipment and methods to execute and supervise sophisticated foundation works. It has expertise in deep piling and diaphragm walls, multi-cellular intake wells for river-linking, marine terminals with berths and jetties and deep cut-off walls.

Business Environment

Infrastructure is a major sector that propels the overall development of the Indian economy. The Government maintains Indias upward growth trajectory and continues to target gradual and sustained growth. Infrastructure was one of the countrys budget priorities this year.

With major metropolitan areas on the metro map, both the Central and the State Governments have now turned their attention towards Tier-II cities such as Kanpur, Agra, Surat, Patna, Meerut, Ahmedabad, Nagpur, etc. Due to their increasing population density. The business has been awarded two packages of the 82-km Delhi-Ghaziabad-Meerut Regional Rapid Transit System (RRTS) line in Uttar Pradesh.

The Ministry of Defence has identified an urgent need to upgrade the countrys defence infrastructure, and major projects are currently in the planning stage.

Bridge construction in India is witnessing significant interest from international funding agencies like JICA, the World Bank, ADB, etc.

Indias ports and trade-related infrastructure accelerate growth in the manufacturing industry and assist the Make in India initiative. India has 12 major ports and approximately 200 non-major ports administered by Central and State Governments respectively. With a view to promoting the expansion of port infrastructure and facilitating trade and commerce, the Ministry of Shippings proposal to replace the Major Port Trusts Act, 1963 by the Major Port Authorities Bill, 2020, was approved. The Major Port Authorities Bill, 2020 will empower the major ports to perform with greater efficiency on account of full autonomy in decision-making and by modernizing the institutional framework of the major ports. The business has secured the Dabhol Breakwater Project (offshore structures) located at Ratnagiri.

FY 2019-20 saw a steady increase in projects tendered out by the Government in the Hydel, Tunnel and Irrigation segments, as the Government introduced a few structural policy changes to promote the Hydropower sector based recommendations of the Standing Committee on Energy (2019).

Indias total nuclear power generation capacity is 6,780 mwe, which comprises 2 percent of the countrys overall power generation. The Energy policy of the country calls fo Rs 25 percent of electricity to be generated from nuclear power by 2050. The business is expecting the Government to move forward with a proposal fo Rs 10 pressurized heavy- water reactor (PHWR) fleet. Major tenders in the Nuclear industry were delayed and were pushed to FY 2020-21 due to lack of clarity about The Civil Liability for Nuclear Damage Act, 2010 amongst civil contractors.

However, the momentum of project awards suffered due to delays in bid evaluations, board approvals, etc., towards the end of the FY, and was further aggravated due to the impact of COVID-19 in March 2020. These delays have affected the much-anticipated order inflow for the business.

Major Achievements

Orders Won

• Rishikesh - Karnaprayag Rail Link Project (Package# 2), Uttarakhand

• Dabhol Breakwater Project (offshore structures) located near Ratnagiri, Maharashtra

• Delhi-Meerut Regional Rapid Transit System (RRTS) - two packages, Delhi and Uttar Pradesh

• Strategic Defence Facility project

Projects Completed

• Medigadda Barrage, Kaleshwaram Irrigation Project, Telangana

• Singoli Bhatwari HEP, Uttarakhand

• Hyderabad Metro Rail Project (HMRP) Raidurgam Stretch, Telangana

• Doha Metro Gold Line, Qatar

• Durgam Cheruvu cable-stayed bridge, Telangana

• Kakrapar Atomic Power Plant (KAPP MPCW), Gujarat

Other Key Achievements

• The business won a slew of awards during the financial year from august bodies, including the Indian Chapter of ACI Excellence in Concrete Construction Awards in the Infrastructure category for the Kakrapar Atomic Power Project 3 & 4, and the Indian Concrete Institute for Outstanding Concrete Structure of Telangana-2019 for the Medigadda Barrage Project.

• A 16 m-high wall was cast in a single pour at the Kudankulam Nuclear Power Plant Project, setting a benchmark in the industry.

• The first-of-its-kind superstructure erection was undertaken using heavy cranes across the congested Delhi-Mumbai live railway line in a block period of 4 hours at DFCC 15C project.

• The first span for Mumbai Trans Harbour Link (MTHL Package 1) was erected in January 2020.

Significant Initiatives

With high potential business opportunities anticipated in tunnelling projects, an in-house Tunnelling Excellence Academy (TEA), the first-of-its-kind in India, was built at Kancheepuram, Chennai, India. It has been set up with international expertise to build strong technical capability in the design and execution of complex tunnelling projects conforming to world-class standards, with high quality and safety compliance. The academy has in-house subject- matter experts who are capable of training the staff on various technical aspects to upskill them in alignment with the needs of the business. The objective of this institute is to create a pool of certified tunnelling professionals for the business in order to meet international industry standards in safety, quality and productivity.


Digitalisation has become an integral part of business processes. It has opened up new-age capabilities to measure, analyse and improve business performance. The business digitally monitors all productivity factors - Men, Material and Machinery - in real-time. For effective project delivery, the business is committed to digitalisation and innovation through the use of digital platforms such as VR for workmen training in EHS (Environment Health and Safety), BIM (building information modelling), Drones and 3D laser scanners.

Environment, Health and Safety

Committed to the mission of Zero Harm, the business clocked 330 million safe man-hours in the year, and 76 thousand man-hours were invested in EHS awareness and training. Key EHS training initiatives were implemented, including P&M operations, tunnelling, incident investigation, marine construction, scaffolding, sustainable skills, auditing, EHS leadership, behaviour-based safety and certifications in NEBOSH IGC and IOSH Managing safety. The business has successfully fulfilled the corporate EHS strategic plan 2019-20 with key EHS deliverables that have been implemented across all its operations.

Digital applications have been launched to regulate safe working conditions, such as inspections, work permits, P&M inspections before use, and monthly reporting status.

Various projects across the business have received safety awards:

1. Six projects received International Safety Awards and one project received a Gold medal (for the 9th consecutive time) from The Royal Society for the Prevention of Accidents (rospa) - UK, for the yea Rs 2019.

2. International Safety Awards were conferred for various projects from the British Safety Council - UK for the yea Rs 2019.

3. Various projects received awards and appreciation certificates from the National Safety Council - India (NSCI) under the Construction Award Scheme 2019.

Human Resources

The prime focus is on talent development and talent engagement. Policies and programmes for employee growth and development, employee appreciation and employee satisfaction are put in place to pave the way for future leaders. Programmes - such as those conducted at the Trainees Engagement & Development Centre (TEDC), an initiative of HRs Talent Development cell - focus on the engagement and development potential of the recruits. Other training programmes deliver customized training,

Partnering with subject-matter experts to enhance relevant skillsets.

In collaboration with IIM-Trichy and Great Lakes Institute of Management, long-term capability-development programmes have been initiated in order to develop future leaders. Different methodologies, mentoring and coaching forums and L&T-specific case studies have been created to make the Competency Development model more relevant to the business context.

Risks and Concerns

Each construction project is unique and comes with its own set of challenges and opportunities. Major risks for the business are delay in obtaining Right of Way (row), work front, third-party liability, epidemic risks, schedules, approvals/clearances, design approvals, and change in design.

We have a strong risk management system and process in place. The risks identified in the pre-bid and post-bid stages are continuously monitored through regular reviews throughout the project cycle for mitigation/resolution.


A National Infrastructure Pipeline (NIP) has been prepared for capital investment worth RS 100+ lakh crore in Infrastructure through FY25, pledging about RS 65 lakh crore for ports, urban development, irrigation, railways and roads and power.

Out of the total NIP, RS 34 lakh crore (30%) worth of projects are at the conceptualization stage, and RS 22 lakh crore (20%) worth of projects are under development. Several big-ticket and first-of-its-kind projects are proposed by the Government - such as High-speed Rail, Dedicated Freight Corridors, Urban Transport / MRTS projects - which are expected to provide an impetus to the business in the coming years. Strategic investments in the North East and the J&K region in Hydel projects are expected to enter the implementation phase in the next 2-3 years.

The Government has also identified an urgent need to upgrade the countrys defence infrastructure. Plans for the upgrade of Naval and Air force bases as well as the creation of underground infrastructure for strategic assets by the Government are in progress.

However, the COVID-19 situation may lead to a shift in priorities and a slowdown in decision-making by customers for the award of projects. Elevated investments in infrastructure will be the key to ensuring that India recovers from the COVID-19 crisis at the earliest. The Government has already identified infrastructure as one of the 5 pillars to make India a self-reliant economy, and various stimulus

Packages proposed by the Government to revive the economy will be a big boost for the infrastructure sector.



L&Ts Power Transmission and Distribution (PT&D) business vertical is a leading EPC player in the field of power transmission & distribution and solar energy. It offers integrated solutions and end-to- end services - ranging from design, manufacture, supply, installation and commissioning of transmission lines, substations, underground cable networks, distribution networks, power quality improvement projects, infrastructure electrification and fibre optic backbone infrastructure, to solar PV plants including floating solar, battery energy storage systems and mini / micro grid projects. Besides being a dominant player in the Indian subcontinent, the business enjoys a significant share and a strong reputation in the Middle East, Africa and ASEAN markets.

The business comprises several business segments:

The Substation business unit provides turnkey solutions for Extra High Voltage (EHV) air insulated / gas insulated substations, Flexible AC Transmission Systems (FACTS) and substation automation and digital substation solutions for utilities and power plants, EHV cable systems and complete electrical and instrumentation solutions for various infrastructure projects, such as metros and airports.

The Power Distribution business unit provides a range of EPC services related to urban/ rural electrification, including last-mile connectivity, augmenting, reforming and strengthening of high voltage and low voltage distribution networks, distribution automation solutions and power quality improvement works.

The Transmission Line business offers turnkey EPC solutions for overhead lines for power evacuation and transmission, bolstered by its state-of-the- art tower manufacturing units at Puducherry, Pithampur and Kancheepuram, which have supplied over seventeen lakh tonnes of tower components over the years. The Testing and Research station at Kancheepuram is accredited by NABL (National Accreditation Board for Testing and Calibration Laboratories), and is one of the largest in Asia, apart from being amongst the most renowned testing centres in the world. The clientele of this testing facility includes utilities from 30 different countries.

The Optic Fibre Cabling (OFC) segment provides turnkey solutions for deploying a gigabit-scale optical fibre backbone for both government agencies and private telecommunication companies by establishing a state-of-the-art network infrastructure, typically involving a vast geographic spread. The business also provides operation & maintenance support to ensure the health of the Optic Fibre Cable by maintaining Mean Time Between Failure (MTBF) and Mean Time To Repair (MTTR) figures as per the agreed Service Level Agreements (slas).

The Renewables business provides single-point EPC turnkey solutions for solar Photo voltaic (Pv) related projects, including energy storage solutions and microgrids. Its experience ranges from flat to highly undulating as well as to landfill topologies, with specialized technologies, including designing and executing contour-following solar Pv power plants. The solar business has in-house capabilities to produce different module-mounting structure types - such as Fixed Tilt, Seasonal Tilt and HSAT - offering the customer a range of solutions. As grid stability and power conditioning requirements gain significance in the wake of large-scale renewable integration, standalone and PV integrated storage solutions are being offered, ranging from rooftop systems to floating solar systems.

The International units of the business in the Middle East, Africa and the ASEAN region offer complete solutions in the field of power transmission and distribution up to 500 kv These include substations, power transmission lines, EHV cabling, distribution networks, solar plants and Electrical, Instrumentation and Controls (EI&C) works for infrastructure projects such as airports, oil & gas industries, etc.

The Middle East business unit that caters to the UAE, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain, has garnered a coveted place in the GCC region. With a presence spanning ove Rs 25 years and numerous milestones, it enjoys an enviable track record in the region.

The once-fledgling Africa business unit has established itself as a force to reckon with, in 10 countries across the North, East and South of the continent. With a sizeable market share in the addressable segment, and projects from all the business lines within the PT&D spectrum, the business unit is now poised to make inroads into the western parts of Africa.

In the ASEAN region, a proven track record of successful project execution in Malaysia and Thailand has helped the business foray into Myanmar and the Philippines.

Larsen & Toubro Saudi Arabia LLC (LTSA) is a wholly owned subsidiary providing engineering, construction and contracting services in the sphere of Transmission & Distribution in the Kingdom of Saudi Arabia.

Business Environment

On the power distribution front in India, the achievement of electrical connectivity to all villages and the near closure of centrally sponsored schemes such as Saubhagya and R-APDRP redirected the focus to strengthening of urban distribution networks and intensification of electrification in select States. As the State DISCOMS depended mainly on multilateral funding, finalization delays were witnessed. However, the business was able to maintain its market share and garner significant orders from Karnataka, Tamil Nadu and Uttar Pradesh.

In the transmission system space, investments were driven by the packages finalized based on tariff-based competitive bidding and through the State utilities that could secure multilateral funding. With the continuing general lack of investment in the conventional power generation and industry segments, centrally-driven transmission schemes were not aplenty. States such as West Bengal and Tamil Nadu finalized packages for strengthening their intra-state transmission line networks and associated substations.

The neighbouring countries of Nepal and Bangladesh too offered potential across the T&D spectrum, viz. Substations, transmission lines and distribution.

Despite the fact that the solar industry faced a lower capacity addition in FY 2019-20 as compared to the previous year, in the face of political changes in some States and the dependence on China for modules, the solar business portfolio surpassed a cumulative capacity of 2.3 GW. Measures such as the removal of the ceiling on tariff, acceptance of corporate guarantees in lieu of bank guarantees, etc., boosted the confidence of the developers. Central PSU tenders with a domestic content requirement gave a fillip to prospects.

In the Middle East, though the macro-economic scenario was mixed in FY 2019-20, the business garnered a major portion of the opportunities that arose. The continued trend of non-oil based economic diversification has opened up infrastructure project development in these countries.

In Africa, certain countries in need of facilitation in terms of funding and expertise to build transmission lines and substations at ehv levels resorted to the MOU route with reliable partners.

With the on-schedule completion of projects in Malaysia and Thailand and the strengthening of its presence in the Philippines and Myanmar, the business has demonstrated its capabilities and has won recognition in the ASEAN market.

Major Achievements Orders Won

• Modernizing the power distribution network in Bengaluru Metropolitan Area Zone, Gurugram Smart City and Chennai. The package for Chennai also includes fully automated, unmanned 33 kv Gas Insulated Substations at select locations

• Underground cabling packages and supply and installation of Medium voltage capacitor banks with related accessories in Uttar Pradesh

• Construction of 765 kv and 400 kv Transmission lines for integration and evacuation of power from wind energy in Kutch, using high capacity Transmission systems

• Design, supply and construction of a 400 kv Substation at Ottapidaram, Tamil Nadu and the associated 400

Kv Double Circuit Ottapidaram - Udangudi - Kamudhi Transmission Line on a total turnkey basis

• Establishing a 220 kv Gas Insulated Substation including laying of associated 220 kv and 66 kv cable networks in Karnataka

• Substation and Transmission Line packages associated with Meerut and Simbhavali Project under tariff-based competitive bidding

• Power Transmission Infrastructure fo Rs 800 MW Rupsha power plant, Bangladesh; 220 kv Substations in Nepal and a distribution package for establishing an underground cable network in Kathmandu

• Developing a 230 MW Grid Connected Solar Photovoltaic plant, which is one of the largest such orders under the CPSU Scheme Phase II (Tranche II)

• Anothe Rs 150 MW Solar Photovoltaic Plant in Tamil Nadu and Uttar Pradesh including a large floater solar power project at a reservoir of Auraiya Gas Power Plant

• Providing off-grid DC solar photovoltaic water pumping systems with standalone lighting systems for farmers, with provisions for mobile charging and transfer of automated meter reading and water discharge reading data in Maharashtra

• Orders across the Middle East for establishing 380 kv and 230 kv Transmission Line corridors in the Kingdom of Saudi Arabia, upgrading substations and related power facilities in Kuwait and UAE, constructing 400 kv Overhead Lines in Qatar and setting up a 400 kv Grid Station in Oman

• Engineering, Procurement and Construction of the 400 kv Overhead Transmission Line between the towns of Chimuara and Alto Molocue in Zambezia Province in Mozambique, Africa. In Ethiopia and Uganda, orders have been received for establishing distribution networks involving medium / low voltage distribution lines and last-mile consumer connections

• 500 kv Substation order in the Philippines

Projects completed and commissioned

• Three STATCOM projects in Hyderabad, Udumalpet and Trichy

• Commissioned one of the highest-altitude 400 kv GIS at Wangtoo, Himachal Pradesh, at an altitude of 1727 m above MSL, overcoming cold weather conditions

• More than 1900 CKM-long transmission corridors were completed in 2019-20

• Communication backbone networks involving aerial / underground optic fibre cable links of more than 11000 km have been established

• The first biggest utility-scale solar-cum-mwh-scale energy storage project in India was substantially completed.

Also, the first MW scale floating solar project in India (4 mwp) was rendered ready for commissioning

• Across the Middle East, 26 substations were commissioned, including major 400 kv substations in Qatar and Oman. More than 200 km of overhead transmission lines and 325 km of underground cable networks capable of high capacity energy transfer were built

• Building upon the successful commissioning of ehv substation projects in Africa, the business has now completed a 220 kv Transmission Line in Egypt and a 500 kv hvdc Transmission Line in Kenya

• In Malaysia, a 500 kv Transmission Line from Yong to Peng to Segamat has been successfully commissioned on schedule

Awards and Recognitions

The business won laurels for its technological and execution


• For its innovativeness amongst the emerging technologies, the Energy Management System for BESS used in hybrid and microgrid systems won several awards, including World Innovation Congress 2020 Awards, ET Now Solar Leadership Award 2020 and the ISGF Innovation Award 2020

• The smart portable mobile solution L&T Mobisol won the World Innovation Congress 2020 and ET Now Solar Leadership Awards 2020

• The Bihar rural electrification project was adjudged as the best use of solar for societal benefits, and the Andaman Energy Storage project was hailed as the energy storage project of the year by ET NOW

• The automatic module dry cleaning system won the award for the best smart technology of the year from India Smart Grid Foundation (ISGF)

• The 132 kv Ghala Heights Substation earned L&T Oman the Dossier Award for the Best Contractor for Infrastructure Projects

• The power transmission & distribution projects in KSA and UAE bagged five Middle East Economic Digest (MEED) awards in different categories

• The Union Territory of Puducherry conferred the Swachhata hi Sewa award for a water management related CSR project of the Puducherry factory

Significant Initiatives

The containerized integration facility for battery energy storage systems set up at Kancheepuram was commissioned successfully and started despatch. The ready-for -commissioning cell that was created to quicken the handing-over of completed transmission line stretches has started to have a beneficial impact on customer delight. Improvised modularization initiatives such as kitting of tower components and remote electrification items continue.

In the vast expanses of Africa, mechanized bush-clearing activities and the adoption of advanced techniques, such as the Aerial lidar survey, have led to timely project completion with desired productivity levels. With mechanized trenching and in-house GIS surveys with 360 cameras, increased productivity was witnessed in the domestic optic fibre cabling projects too. The TL9000 certification meant for the supply chain of telecommunications industry has been obtained.

The momra (Ministry of Municipal and Rural Affairs) certification for L&T Saudi Arabia has opened up opportunities with Royal Commission tenders.


Taking a step towards the next level of digitalisation, a specific Opex initiative has been launched to orchestrate the data captured by digital means and to articulate the organizational wisdom in a replicable manner. This initiative is expected to enhance the predictive abilities and make the plans robust, so as to better manage risks and achieve the desired speed and scale. The Industry 4.0 journey has gained momentum in the manufacturing facilities, resulting in a marked improvement in the overall equipment efficiency (OEE). At the core of such initiatives is the centralized facilitator set-up named PRAPTI - Planning, Reviewing and Assisting Projects to Improve - that equips the site team with the requisite tools and analytics to improve productivity.

Digital initiatives such as 3D/4D BIM, deployment of drones and mobility devices for project progress monitoring, connected plant and machinery, geospatial technology- based surveying, integrated material management, quality / EHS incident reporting, etc., have yielded tangible benefits. Novel solutions have been deployed, and a fibre track application that facilitates patrol management for Operation & Maintenance of cross-country cables laid is just one such example.

Also, to measure the depth profile of trenches in real time accurately, a sophisticated digital method has been used.

Environment, Health and Safety

EHS practices implemented by the business are aligned with a corporate EHS policy that is strictly followed, along with clear policies laid out at the business level. The EHS policy is supported by standard operating procedures (sops) at the business-unit level, and the aim of Zero Harm is cascaded down to the project level through various digital and technical initiatives.

The start-and-stop OTP (One Time Password) based process with a 3-level approval mechanism for shut-down works is an example of an improvised fail-safe EHS practice meant for the geographically distributed electrification work involving workmen of different skill levels. Virtual reality-based training modules, gamified mobile training modules, etc., are utilized to inculcate a safety culture. A nimble communication platform named Prakasha Vani was launched for dial-out conferencing with large teams of field staff. WISA (Workmen Induction & Skills Application) Card implementation is used for workmen screening and allocation of tasks according to skill levels and proficiency.

In the Middle East, the Occupational Health and Safety System was migrated from OHSAS 18001:2007 to ISO 45001:2018.

The business bagged 21 British Safety Council (BSC) Awards, 8 awards from NSCI under various categories and 15 rospa Awards. Also, ASSE awards and appreciation certificates from several domestic and overseas customers such as PGCIL, Aramco, SEC and OETC have been received.

Human Resources

The business has been constantly engaged in developing employees for greater roles and responsibilities, ensuring that there is a talent pipeline of managers prepared to take up challenging roles.

A blend of robust processes like the Performance Management System, the Individual Development Plans, Job rotation Plan, cross-learning and cross-training opportunities help to develop young managers. They are assigned new situations and challenges which expand their skill sets and encourage them to think on their feet. Many of the new projects sites in Africa have been staffed by young managers and engineers transferred from India in accordance with the employee development plan.

A wide array of digital platforms has been implemented to connect and engage with employees as well as encourage them to undertake new learning opportunities. A year-long Employee Engagement Calendar has been launched, with specific focus on a range of activities built around the core values of the organisation. The initiatives to recruit and induct young engineers of diverse nationalities continue.

Risks and Concerns

Towards the end of the financial year, the outbreak of the covid-19 pandemic and the resultant lockdown caused uncertainties in timely delivery of a few supply items planned. Adequate contractual safeguards have been put in place and extensive scenario planning exercises have been carried out.

Recovery is expected to be prolonged and necessitates a multi-pronged approach towards prudent financial management, workmen management, etc., as it provides an opportunity for new methods of working and revised cost estimates.

The business has implemented a bespoke digital platform for Enterprise Risk Management that supports the pre-bid and execution risk reviews with robust stage gates.


The proposed amendment to the Electricity Act envisages stricter enforcement of obligations that are to be fulfilled by State utilities, thereby improving their financial health.

It may also open up new models of participation in the distribution sector.

The Union Budget 2020-21 hinted on a centrally sponsored scheme, focussed on smart metering, feeder segregation and AT&C loss reduction. Early formulation and implementation, along with project packaging and models of participation, are crucial.

Though the investment levels delineated in the National Infrastructure Pipeline are not markedly higher than historical trends, the report contains a KPI-based framework with specific targets on AT&C loss reduction, etc., by 2023.

In urban areas and cyclone-prone zones, HT and LT overhead lines are being replaced with underground cables. New 11 kv feeders are created for load bifurcation. Such projects improve the overall reliability of the power distribution network and, in particular, help in avoiding unscheduled power cuts during rains and gusty winds.

The transmission lines and substations related to the second phase of Green Energy Corridors for evacuation of renewable energy are expected to get finalized. These are under various stages of bidding through the Tariff-based Competitive Bidding mode. In addition, intra-state system strengthening-related opportunities are expected to come up in select States. Also, certain mass transit projects which involve receiving substations and power supply networks are envisaged in key cities.

Grid integration of intermittent renewable energy and the emerging prospects of distributed generation require investments in power quality devices such as STATCOM, thyristor-controlled reactor (TCR) and svc to ensure voltage stability, reactive power compensation and reduction of harmonics.

System Strengthening and Generation Linked Schemes, especially those funded by Indian Lines of Credit and multilateral aids, offer potential in Bangladesh and Nepal.

Despite the slow pace of solar EPC tenders from private developers being incommensurate with ambitious targets, there are ample opportunities, especially from psus.

Preference for Hybrid renewable projects and floating solar projects are also on the rise. There is a perceivable shift towards solar-cum-storage projects. The expanding support to the International Solar Alliance is a positive factor in attracting investments into the renewable energy sector in India.

The Indian market for Optical Fibre Cable has been projected to grow at a CAGR of 17 percent through 2023. Growth in the market is majorly expected to be backed by the rising investments in OFC network infrastructure by the Indian Government to increase internet penetration across the country, in line with the Governments initiatives such as Smart Cities vision and Digital India. Also, the success of 5G technology will ultimately depend on the strength of Optical Fibre Cable connectivity.

In the Middle East, the business is cautiously optimistic in its outlook as oil prices are hovering in the lower ranges; commodity prices are volatile, and the geopolitical stalemates continue. The investment in infrastructure will depend on the fiscal surplus and financial buffers available with the countries. However, the diversification of the economy to non-oil sectors will continue to provide opportunities in terms of upgradation to higher voltage levels, integration of renewable energy sources to the existing power grid and interconnections of transmission networks.

The business continues to concentrate on key African economies that have a clear road map to build transmission and distribution networks to meet increasing demand. Ambitious plans - such as the Kenya Vision 2030, Growth and Transformation Plan II of Ethiopia and the National Development Plan of Botswana - point to significant opportunities to scale up faster. Grid strengthening, regional interconnection and rural electrification opportunities are being pursued in select countries. Renewable generation is another area that holds potential. Consolidating the breakthroughs achieved in countries forayed into, exploring renewable energy opportunities and the opening-up of select West African countries will hold the key to success in the coming year.

The rising power demand in ASEAN countries continues to pave the way for significant investments in grid interconnections, grid development and strengthening.

The entry into the Philippines, Myanmar and Cambodia is expected to provide a fillip in the region. Plans are afoot for an expanded presence in Malaysia and Thailand.

Given the visibility of prospects in traditional strongholds and the thriving expansion in renewables and new geographies, the growth momentum of the PT&D business is intact, backed by a strong order book and ably supported by cost leadership, technology leverage, delivery excellence and employee engagement initiatives.



The Water & Effluent Treatment business undertakes the construction of water infrastructure for the efficient usage, conservation and treatment of water. The business has proven to be a lead player in the domestic market and has also had successes in international markets. The business comprises the following verticals:

• Water supply & distribution business, which caters to the supply of potable water.

• Wastewater business, which provides infrastructure by building sewer networks and sewage treatment plants to collect and treat municipal wastewater for safe disposal of the treated effluent.

• Large Water business, which irrigates lakhs of hectares of land in order to enhance the livelihood of millions, pumps and lifts water from rivers to delivery chambers and distributes it using automated outlet management systems. The business also constructs combined effluent treatment plants for industries and desalination plants.

• Smart Water Infrastructure business, which develops utility infrastructure in the cities as well as the shortlisted brownfield cities under the Smart City Mission.

• The International arm, which focuses on building water infrastructure, viz. Sewage treatment plants, water treatment plants and water transmission and distribution projects. The business has a presence in the UAE, Qatar, Oman, Tanzania and Sri Lanka.

Business Environment

Aiming to provide piped water supply to all households, the Government has announced the Jal Jeevan Mission. The scheme places emphasis on augmenting local water sources and recharging existing sources, and will promote water harvesting and de-salination. The Har Ghar Jal scheme to provide a functional tap connection to all households by 2024 is part of the Jal Jeevan Mission.

The business accounts for an average of more than 35% share of the domestic market. Over the years, it has emerged as a strong contender in the water segment, meeting the requirements of the public at large. Each business unit is independent, and faces stiff competition in the market including international competition from Chinese and European players.

FY 2019-20 has been volatile, with the General Elections and the change in Governments of key states. This has resulted in some delays in new prospects fructifying, and the execution of projects being stalled or reviewed by a few states. The COVID-19 pandemic also continues to have a profound impact on the Indian construction industry.

Major Achievements

The business continued its momentum in securing repeat orders from existing customers as well as attracting new customers. These orders were secured across the various business portfolios.

Major Orders Secured In India

• Parwati Mega Lift Irrigation Schemes Phase III & IV, Madhya Pradesh

• 100 MLD Sea Water Reverse Osmosis Desalination (SWRO) Plant in Dahej district

• 477 MLD Water Treatment Plant at Chandrawal

• Area Based Development for Rajkot, Gujarat

• Gunjawani Lift Irrigation Scheme

• Bhubaneshwar Sewerage Scheme

• Rural Water Supply Scheme to Keonjhar District in Odisha

• 30 MLD Combined Effluent Treatment Plant (CETP) at Ahmedabad, Gujarat

• Water Supply Schemes to 4 blocks in Medinipur, West Bengal

• Water Management projects in Hubballi-Dharwad, Belagavi and Kalaburgi districts of Karnataka


• Al Dhakhliya Water Transmission System, Phase-II project in the Sultanate of Oman

• Kundasale Haragama Water Supply Project, Sri Lanka

• Supply of Recycled Water along Abu Dhabi Al Ain Road - Package B, UAE


During the year, the business won a slew of prestigious


• 7 awards from Zee Business as part of the National CSR Leadership Congress including Best Water Company and Best Rural Drinking Water Solutions Provider

• Overall Infrastructure Development award from Dun & Bradstreet

• Water Optimization Awards Technology Excellence in Design & Engineering and Best Water Management in Ash Handling from Mission Energy Foundation

• The prestigious Golden Peacock Award for HR Excellence fo Rs 2019

The business is proud of commissioning its largest 375 MLD Sewage Treatment Plant in Jebel Ali, UAE and successfully undertaking its operation and maintenance.

The desalination project bagged by the L&T-Tecton JV this year uses the Split Partial Method for the Reverse Osmosis (RO) process, the first of its kind to be implemented in India. This is an in-house design innovation and will reap benefits during the progress of the project.

Significant Initiatives

The business keeps continuously honing its operations and process knowhow capabilities by implementing strategic initiatives for the effective working of its project sites.

With significant focus on digitalisation, the business has

Developed many web and mobile applications such as:

• Project monitoring tool epragati, from which data is captured for visualization of project progress using 3D GIS platform for pipeline and civil structures

• The customized pipe fabrication (P-Fab) application to track the status of pipes - from manufacturing to installation

• The Material Schedule Tracker (MST) to ensure timely supply of items by effective monitoring and tracking

• The WISA application for elaborate and faster on-boarding, monitoring and screening of the workforce

• Using artificial intelligence in contracts for classifying, extracting and assessing the risk in the tenders clauses

The continuous emphasis on strengthening the in-house

Design team has resulted in shortening the design duration

By leveraging technological solutions, such as:

• Use of lidar surveys to capture accurate, speedy and voluminous data

• Automated design-to-drawing preparation of esrs using in-house developed tools

• Extensive utilization of BIM for project monitoring and progress review

• Creation of value engineering centres and process improvement techniques to aid in innovation and design optimization

Apart from digitalisation, the business has also developed strong process teams and tie-ups with educational institutions like I IT Madras, Anna University and BITS,

Goa for research in the field of wastewater and sludge management.

Environment, Health and Safety

The business:

• Achieved 112 million safe man-hours and clocked 5.9 lakh man-hours for training the workmen and staff

• Developed training videos for MS pipe manufacturing process (conventional and spiral), pipe-handling methodology, safe erection of transmission towers, micro tunnelling safety and pipe-bursting methodology

• Developed Project Risk Index Map for real-time hazards and risk-monitoring of sites

• Developed a comprehensive Safety Mobile application, viewehs, capturing safe execution cards (SEC), observation and audit reviews

• Planted more than 14 lakh tree saplings, with 7 lakh+ saplings in a single day on World Environment Day 2019, and donated 4300 units of blood

• Received several awards from rospa (Royal Society of Prevention of Accidents), British Safety Council, Confederation of Indian Industry and National Safety Council

Human Resources

Continuous learning, improvement and excellence are the focus of the business, which has 5700+ staff across India and abroad. Various programmes are conducted to appreciate employees, such as rave (Recognition Awards for value Engineering Excellence) which aims to recognize individuals and teams in L&Ts Engineering,

Design & Research Centre (EDRC) for their outstanding contribution to fulfilling business objectives; and PRAISE, which recognized 124 staff members for the innovations or improvements implemented by them at work.

To engage employees beyond work, various events were organized to commemorate World Water Day, World Environment Day as well as various national and regional festivals. The business also organized sporting events across all projects, which helped employees de-stress and develop a sense of togetherness and camaraderie.

Succession planning is the key to ensuring the seamless continuity of a business. A leadership programme,

ASCEND, was initiated to build leadership capabilities in women managers. EMEX (Engineering Management Excellence Programme) was organized to build the project engineering management capabilities of the EDRCs managers.

Risks and Concerns

Operational risks include delays in land acquisition, ROW/ ROU issues and volatile steel prices. With the majority of the business clients being state government authorities, there isnt much risk related to projects getting shelved or concerns pertaining to creditworthiness. However, the year evidenced the cashflow rationalisation in the case of change in state governments.

The assessment of risks associated with the projects is carried out frequently to track and review the project cost, cash flows, margins as well as physical progress, and thus determine the overall health of the portfolio. Also, state- wise exposure is dynamically monitored to track any early signals of cashflow constraints.

The business proactively ensures that it has a healthy mixture of projects funded by various credit-worthy clients and bodies like the Central Government, State Governments, Municipal Corporations, Urban Local Bodies,

Multilateral Funding Agencies, etc. Wherever feasible, the payment terms with supplier and vendor partners are aligned to customer terms to avoid cash gaps.

Foreign currency exposure in the case of international projects, is minimised by ensuring a natural hedge at the bid stage. Further, hedging policies are also in place for exposures, if any.


The business is anticipating an increase of multilateral funded projects in the next year from the domestic market. The Jal Jeevan Mission is envisioned to provide piped water supply to every rural household under the Har Ghar Jal Yojana scheme by 2024, which will bring greater coherence to policy objectives and the decision-making process.

However, the business foresees challenges in terms of payment slowdown, mobilization of the workforce and loss of the productive months of the year due to the ongoing pandemic.

A revision of the National Water Policy 2012 with key changes in the water governance structure and regulatory framework is anticipated in FY 2020-21, with more emphasis on water management and river interlinking. This is expected to give impetus to the business.

The Union budget proposed an allocation of RS 11,500 crore during the yea Rs 2020-21 towards the Jal Jeevan Mission. The Jal Shakti Ministry has been formed by merging the Ministry of Drinking Water and Sanitation (MDWS) and the Ministry of Water Resources and Ganga Rejuvenation (mowr).



L&Ts Smart World & Communication (SWC) vertical was created in 2016 to address the emerging need for a safe, smart and digital India. As a Master Systems Integrator, SWC operates and retains market leadership in the following segments:

• Smart Cities & Smart Infrastructure: Smart Cities, e-gov, Smart Energy, Smart Education, etc.

• Safe Cities: Public Safety, Critical Infra Security, Intelligent Traffic Management, etc.

• Communication & Telecom Infrastructure:

Wired & Wireless i.e. IP/MPLS backbones, Dense Wavelength Division Multiplexing, Global System for Mobile Wi-Fi, Satellite, Microwave, Emergency Communications like APCO, Tetra, Early Warning Dissemination, 5G, etc.

The business has gained experience across 26+ cities and 44 agencies in the country. It has built a technology and project management team with ove Rs 800 personnel, to cater to the needs of both projects and Operations & Maintenance. The business is currently in the process of rolling out various initiatives to transform itself as a thought partner to its clients; a value-adding Master System Integrator (MSI) with futuristic solutions, strategic partnerships, as well as Integration & Analytics and domain-specific centres of excellence.

Business Environment

A growing number of cities is adopting elements of smart city infrastructure, such as intelligent traffic management and surveillance systems, smart electric grids and lighting, fibre optic cabling and transport and logistics systems. Out of the 100 Smart Cities planned in the Smart Cities Mission, an integrated command and control centre along with various Smart City solutions is operational in 47 cities, with 17 more cities being in the process of implementation.

To provide 100% population coverage for telecom and high-quality broadband services for the socio-economic empowerment of every citizen and end-to-end online delivery of government services, the Government will continue its investment in the Bharat Net Programme.

During the COVID-19 pandemic lockdown, the authorities leveraged Smart City or Safe City Command and Control Centres set up by the business, with cutting-edge technologies like AI, iot, etc. The business has rolled out smart technology solutions to combat COVID-19 in 20 major cities across India. These technologies are helping the administration in cities such as Mumbai, Pune, Nagpur, Prayagraj, Raipur, Ahmedabad, Visakhapatnam and Hyderabad in fighting the pandemic through Command Centres or City Operations Centres.

Major Achievements

The business received several major orders, as follows:

A. The business won a large order to establish the first-of- its-kind, state-of-the-art Unified Network Management System to Manage, Support and Operate a countrywide Armed Forces Network under the Network for Spectrum (NFS)

B. Jhansi Smart City involving deployment of an Integrated Command and Control Centre, Intelligent Traffic Management System, City Surveillance, City Wi-Fi, technology-enabled Solid Waste Management, GIS, Citizen Portal and e-Office Applications

C. SUMITRA Project, which is a pilot project for Surveillance using Multilayer Intelligent Tracking, Response and Analysis system on a turnkey basis

D. Army IP MPLS - an order to create an IP MPLS Network Backbone for the Armed Forces

E. Hyderabad ITMS Expansion an order for expansion of the Intelligent Traffic Management System for Rachakonda and Cyberabad

Other Achievements

The Early Warning Dissemination System (EWDS) for Odisha was effectively utilized in disaster management by the Government during Cyclone Fani enabling the Government of Odisha to save millions of lives through dissemination of warnings through text messages (26 million messages), Sirens and Radio communication.

The business successfully rolled out 1 million+ Smart Meters, with Meter Data Management System and Head End System hosted on the cloud, in the states of Uttar Pradesh and Haryana as part of the ongoing project to deploy 5 million Smart Meters.

The business commissioned the E-shiksha (Hi-Tech Lab) project for the state of Tamil Nadu, involving the largest roll-out of ICT for more than 6000 schools in Tamil Nadu.

The largest City Surveillance and Intelligent Traffic Management System for Hyderabad was declared Go-Live.

The Early Warning Dissemination System (EWDS) for Andhra Pradesh was successfully commissioned and covers 10 coastal districts.

Raipur Smart City was successfully commissioned and declared Go-Live.

Awards and Recognition

In the year under review, the business won ove Rs 10 prestigious awards, including: -

• Best Smart City Award at the Dun & Bradstreet Infra Awards 2019, for Nagpur Smart City

• Best Safe & Secure Initiative Award at the 5th BW Digital India Awards, for Prayagraj Smart City

• Unique Artificial Intelligence-based Solutions at the Data Science Excellence Awards, CYPHER, for Prayagraj Smart City

Significant Initiatives

The business has taken the following initiatives in the areas of tendering, technology, supply chain management and operational efficiency improvement:

• In order to solve problems utilising the huge amount of data being collected in 25+ Smart and Safe cities, the business has set up an Analytics & Integration coe using Big Data, lot and Artificial Intelligence technologies. The business has also undertaken the development of a world-class Integrated platform, which allows the creation of one Operating System to solve business problems as against point solutions. This value-based approach helps in retaining clients. Under this initiative, a pilot use case of in-house AI-based crowd management solutions was successfully deployed in Telangana State to manage Samakka Saralamma Jatara, Asias largest tribal fair

• The business is continuously working with global partners, reputed academic institutions and start-up ecosystems to co-develop customised solutions, blending the partners technology and its domain expertise. This approach will position the business as Value-adding MSI and help transform it into a thought partner to clients

• The business launched a multitude of digital solutions to support the business functionalities, viz.

• SWIFT: Supply and Work Integrated Finishing on Time to enable procurement

• Centralized O&M: A GIS-based tool to track O&M activities and incident management

• VR Training Module: A virtual reality training module for site staff/workmen

• QMS Tool: QMS Manual and Risk / Opportunity / Objective Tracking

Environment, Health and Safety

• The business completed 4.93 million safe manhours during this financial year

• The business planted 35,974 saplings and donated 403 units of blood

• The business won 4 rospa Gold Awards from The Royal Society for the Prevention of Accidents, UK, for Lucknow Metro Rail Project, Raipur Smart City, MEGA Telecommunication Project and Prayagraj Smart City

• The business launched its second digital application, VIEW EHS, this year and received copyrights over the application

• After successful completion of transition audits by DNV-GL, the business has been recommended for ISO 45001:2018 certification

Human Resources

The team comprises multi-domain technical talent with Specialists in the areas of communication, iot, server And storage, Cloud in Smart Cities, Safe Cities and Communication technology areas. The focus over the last year has been on building capabilities in cutting- edge technologies like AI, iot, Computer vision, Cyber Security, Blockchain technologies for Smart Cities. Project Management, and Domain Expertise, blended with technology expertise - all of which have differentiated the business, enabling it to retain its position as market leader for the last few years.

Technical certifications are a focus area, with ove Rs 150 employees obtaining certification in courses from CISCO, Microsoft, Huawei, Juniper and Cloud.

Technology-enabled learning has been extensively deployed, using elearning and webinars as well as microlearning using the ATL Next and rapl platforms. The business recognizes high performers through its Quarterly PRAISE awards programme.

Risks and Concerns

Though the projects secured are funded through Union and State budgetary allocations, payment terms continue to pose working capital challenges. Projects with certain State authorities need close monitoring due to delay in handing over of sites, delay in certifications due to involvement of multiple agencies and the challenges faced in timely budgetary allocations.

Operational risks - such as timely mobilisation, procedural delays in ROW and sign-offs are mitigated through digital interventions at every stage of project implementation - from planning to monitoring operations - helping the management to take appropriate action to pre-empt and overcome challenges.

The business is well supported by a centralised support team in the maintenance of SLA requirements.

The business also faces unstructured competition through aggressive bidding of new entrants in certain segments. However, with its experienced team and previous experience in executing complex technological projects, L&T has an advantage in the market.


The Infrastructure Vision 2025 includes the goal of Digital Services: Access for all, amongst others. The current pandemic has opened new opportunities to leverage digital services owing to the necessity of social distancing, which is going to be the new normal.

Under the Bharat Net Programme, investment in digital connectivity backbone will be more prominent.

The Government has also announced the possible launch of Smart Cities Mission 2.0 soon, covering 4000+ cities/towns.

Under the Smart Meter National Programme, the Government aims to replace 250 million conventional meters with Smart Meters in the next 5 years. With the Governments focus on reducing commercial losses and providing a choice of suppliers to consumers through Smart Meters, this programme is likely to be implemented at an accelerated mode with a target of completion of 3 years.

The Ministry of Home Affairs continues its focus on Safe Cities and the modernization of the Police force. It is expected to launch multiple City Surveillance projects and augment the scope of the existing Safe City projects.

With the continued need for perimeter security for all critical installations - including defence establishments, air/ army bases, armament factories, nuclear power plants, etc. - investments are expected to flow into projects designed to meet these security needs.

Another focus area in the National Infrastructure Pipeline is the creation of technology-driven learning. This focus on creating ICT infrastructure for primary and secondary schools through Samagra Shiksha Abhiyan is expected to create many new opportunities in e-Education.

The Union Budget 2020-21 also announced the National Mission on Quantum Technologies & Applications with an outlay of RS 8,000 crore over the next 5 years to focus on a quantum computing domain and its impact on new frontiers in computing, communications and cyber security, with widespread applications including smart cities.

The business has the unique advantage of in-house domain expertise, enabling it to provide end-to-end offerings to its customers. This enables it to play the role of a Master System Integrator for the Smart Cities of the future.



L&Ts Metallurgical and Material Handling (MMH) business offers complete EPC solutions for the metal (ferrous and non-ferrous) sectors across the globe. The business undertakes end-to-end engineering, procurement, manufacture, supply, construction, erection and commissioning, covering the complete spectrum from mineral processing to finished metal products with state of the art Process Plants.

The business also offers comprehensive product solutions such as Mineral Crushing Equipment and Plants, Surface Miners, Premium Sand Plants, Material Handling Equipment (Stackers, Reclaimers, Wagon Tipplers, Ship Unloaders, Multipurpose

Cranes and other Mining Equipment), as well as Steel Plant Machinery catering to core industrial sectors, including Cement, Mining, Power, Construction, Steel, Fertilizers and Chemical Plants. The complete range of product solutions is backed by 5 decades of experience and knowledge, in- house design resources and state-of-the-art manufacturing capabilities. The manufacturing centres of its product lines are in Kansbahal, Odisha and Kancheepuram, Tamil Nadu with facilities for fabrication, machining and assembly of custom-made equipment and critical structures. the business commands a leadership position in the sectors it serves.

Business Environment

The metal sector, as a whole and specifically the base metal sector, witnessed a subdued price level globally on account of less-than-anticipated growth in demand.

The demand for Manufactured Sand witnessed a rise with the increasing restrictions / bans on river-sand mining. The replacement of river sand with quality manufactured sand continues to gain momentum, improving prospects for the business.

The successful completion of the steel industry consolidation and allocation of iron ore mines in Q4 FY20 Has brought all the majors on par as vertically integrated producers. Despite the liquidity crunch during the consolidation cycle and new expansions not immediately on the anvil, the refurbishment and de-bottlenecking of newly acquired assets to synergise with their existing products will be something very much on the cards.

The business faces reduced competition in EPC contracts and technology-oriented projects due to the scarcity of players matching qualification requirements.

In the wake of the covid-19 pandemic, the global demand has plummeted and business cycles have been disrupted, resulting in a major production cut by the industry. The industry is expected to take time to attain full capacity again.

Major Achievements

The continued focus on the Middle East and North Africa (MENA) has yielded good results in FY 2019-20, with the award of major orders from the Maaden-Gold Plant Project in Saudi Arabia and the Etihad Rail - Freighthandling package in UAE. Despite the limited opportunities available during the current year in India, the business has managed to stay ahead of its competitors in terms of order booking.

Marquee projects commissioned / at an advanced stage of completion in the yea Rs 2019-20 are:

• Hot Strip Mill at Rourkela Steel Plant

• Basic Oxygen Furnace plant at Bokaro Steel Plant - Commissioned

• Tandem Tippler at JSW Paradip - Commissioned (hydraulically driven largest tippler in India)

• CHP & AHP at Tanda, Khargone

• CHP Lingaraj, Chhabra (Phase 1)

• 10 Large-capacity state-of-the-art sand plants commissioned for various customers

• 3 Newly-developed Track-Mounted Mobile Roll Crushers commissioned for coal-crushing applications

• 5 Surface Miners commissioned in Coal India subsidiaries

• 1100 MT Sky bridge in Colombo, fabricated in a factory at EWL works Kancheepuram.

Significant Initiatives

The business has strategic alliances with leading global technologists to offer comprehensive EPC solutions across the various sectors of mineral beneficiation, steel processing units and mega-sized by-product plants. The technical

Collaboration with Kemco of Japan was strengthened to enable the addition of many new products for the construction industry.


There is an increased thrust on digitalisation of processes / activities to enhance operational efficiency through faster decision-making with ready availability of data. The large international projects are being executed through Building Information Modelling (BIM) connected philosophy where in-house 3D engineering capability is being extended to 4D for scheduling with Work Breakdown Structure (WBS). Comprehensive solutions for EPC Planning and Monitoring, as well as Communication and Document Management solutions are implemented for projects under execution. Many of the sites have digitalised the workmen induction and tracking processes, while the initiative on connected equipment began giving results in terms of increased utilization.

The business has further strengthened real-time monitoring systems for Stockyard Machines, Sand Plant and Surface Miners through IOT and linked customized dashboards for optimum utility of the system for customers.

Environment, Health and Safety

Leadership and management commitment are demonstrated at all locations and levels, by continual improvement in the EHS processes and their implementation. Various digital tools, including Virtual Reality (vr) based training modules for Safe Rigging Practices, have been deployed at all project sites.

Concerted efforts are made to involve and engage every employee, including workmen, in the safety cultural transformation, with a training coverage of 0.52 million manhours. Similarly, IB4U (Inspection Before Use) has been launched to track the inspection details of various materials and equipment including P&M, tools and tackle, PPE, etc.

All operations have been certified for ISO 45001: Occupational Health & Safety.

Various national and international awards and accolades have been received for projects and factories in recognition of EHS excellence from the Ministry of Labour and Employment, rospa, ICC and customers.

Human Resources

Focussed interventions for employee learning and growth were implemented through various virtual platforms like RAPL and webinars after mapping the needs across various levels and functions. To reinforce the latest developments in technology and automation in processes, the business has developed a pool of internal trainers. They share knowledge and enhance implementation of these initiatives at all locations for the development of our personnel and to improve productivity. To increase employee satisfaction, the business uses open communication channels like Connect HR, Townhalls, 2-way feedback and an internal newsletter - Sampark, while continuing with appreciation schemes, such as Hi5, NMR and PRAISE.

For building future leaders, a focused way of talent building across positions and levels, employees are provided with challenging opportunities across various functions, including job rotation with active handholding and mentoring by senior leaders. Leaders have been identified for senior key positions as part of the succession planning process.

Risks and Concerns

The impact of the pandemic on the global and national economy and the time the situation takes to return to normalcy will determine the confidence of industry, especially the private sector, towards fresh capital expenditure.

COVID-19 will impact business operations, with restrictions on the mobilization of the workforce to MENA and disruptions in the supply chain, which may have adverse effects on the projects under execution. However, strategies to overcome these difficulties are being put in place to minimize impact, and customers are taken into confidence.


While sentiments looked positive for FY 2020-21, the COVID-19 pandemic has put the industry across the globe on the back foot. Global investments may be impacted in developing nations.

While the base and light metal prices continued to be subdued, the demand for these metals in the medium-to- long term looks robust enough to meet the growing needs of domestic consumption.

While oil prices are recovering after hitting new lows due to weak demand, impact on earnings of the GCC countries may slow down the capex plans of governments. Even though there is a slump in prices of base metals due to weak demand, GCC nations (e.g. KSA) with their own mines are expected to move ahead with capex plans to compensate for the loss of revenues from the oil sector.

With expected growth pick-up in the coal and cement sectors, core products like Crushing Plants, Surface Miners and Material Handling equipment are expected to grow at a good pace, especially in the second half of FY 2020-21.



L&T has established itself as one of the leading EPC players in the Power Plant business in India and is known to deliver complete turnkey business solutions from concept to commissioning for the thermal power industry.

The business has built on its core competencies and capabilities and has emerged as a major player in new technologies such as Flue Gas Desulphurization (FGD) in the thermal power plant industry. It now has a sizeable presence in the FGD business.

The business has developed its own capabilities for executing large and complex power projects, which include in-house engineering, state-of-the-art manufacturing facilities, competent manpower and decades of experience earned in executing large and complex projects within and outside India. The business has a proven track record of delivering complete power plant solutions with scale and sophistication to meet Indias growing energy needs.

L&Ts integrated power equipment manufacturing facility at Hazira, Gujarat, is one of the most advanced in the world. The facility manufactures ultra-supercritical / supercritical boilers, turbines and generators, pulverisers, axial fans and air preheaters, components of FGD and electrostatic precipitators.

The business has project management offices at vadodara and Faridabad.

The business is now gearing up to make its mark to provide EPC solutions for Turbine Island of nuclear power plants and has taken the necessary steps to participate in tenders for upcoming nuclear power projects.

The business has the following Jvs within its fold: L&T-MHPS Boilers Private Limited, a joint venture with Mitsubishi Hitachi Power Systems Limited (MHPS) Japan, for the engineering, design, manufacture, erection and commissioning of ultra-supercritical / supercritical boilers in India up to a single unit of 1000 MW.

L&T-MHPS Turbine Generators Private Limited,

A joint venture with Mitsubishi Hitachi Power Systems Limited (MHPS), Japan and Mitsubishi Electric Corp. (MELCO), for manufacture of Steam Turbine Generator (STG) equipment of capacity ranging from 500 MW to 1,000 MW. It is engaged in engineering, design, manufacture, erection and commissioning of ultra-supercritical / supercritical turbines and generators in India.

L&T Howden Private Limited, a joint venture with Howden Holdings B.v L&T Howden, is in the business of regenerative air-preheaters and variable

Pitch axial fans (equipment, after-market spares and services) for power plants.

L&T Sargent & Lundy, a joint venture with Sargent & Lundy LLC, USA, which is engaged in the business of providing design, engineering and project management services for the power sector.

Business Environment

In the wake of the Governments increasing emphasis on renewable energy, the thermal power sector is growing at a slow pace. However, compared to the previous year, this year witnessed improved ordering in coal-based power projects with the advent of major hydel players like sjvn Limited and THDC India Limited in the coal sector.

L&Ts FGD segment continued its order-winning streak with a total of 13.4 GW out of 65 GW of orders from the Central, State and Private sector companies chasing the deadline of installing fgds to meet revised emission norms by 2022.

Going forward, the power sector will continue to face challenges like availability of funds, lowering plant load factor, financial stress, load balancing, coal and water availability issues, payment assurances, etc. Further, muted demand from the private sector and excess manufacturing capacity of suppliers continues to put pressure on prices.

Major Achievements

Some of the major achievements by the business during the year include:

• Achieved Commercial Operation of Indias First Ultra Supercritical power project for Central Utility in Madhya Pradesh. Also achieved completion of Performance Guarantee Test of 1st unit and completion of Trial Operation of 2nd unit of this project

• Forayed into Turbines for Nuclear sector in collaboration with MHPS, Japan and participated in NPCILs ambitious tender fo Rs 6x700 MW Turbine Island package for Gorakhpur and Kaiga projects, which are expected to be ordered in financial yea Rs 2020-21

• Received Certification for completion of Phased Manufacturing Program (PMP) for Supercritical Steam Generators and Steam Turbine Generators as required under CEAs regulation for setting-up of Indigenous manufacturing facilities

Significant Initiatives

As a part of continuous improvement in operating efficiency, the workshop at Hazira (near Surat) for manufacturing of ESP Collecting Electrodes was upgraded to undertake manufacturing of casings made of exotic material (nickel-based high alloy) for absorbers required in fgds.

The business has embarked upon several initiatives to reduce cost in areas like procurement, manufacturing, logistics, value engineering, overheads, etc., and has utilized the services of leading consultants/subject matter experts. The business has been able to improve its competitiveness due to these initiatives and intends to continue its cost-saving journey in the coming years.

The business also enhanced its focus on initiatives to achieve quality and EHS excellence and expand its global footprint.


The business is working on various digital technologies at its project sites and offices. Its key initiatives include deployment of the Internet of Things (iot) in various plants and on machinery at sites to benchmark and improve its machine utilization, health of machines and their duty cycles; use of Artificial Intelligence (AI) & Machine Learning (ML) for video analytics like weighbridge and store surveillance; Robotic Process Automation (RPA) to automate repetitive processes to improve people productivity; virtual Reality (vr) using immersive videos for imparting safety training more effectively and Augmented Reality (AR) for initiatives like smart-glass for remote project monitoring to reduce travel time and cost. Efforts are also being made to leverage the available data to get insights such as price discovery for SCM and sentiment analysis for HR using various analytics methodologies.

Environment, Health and Safety

Safety is one of the core elements of the business. Besides ensuring implementation of robust engineering solutions to enhance safety, various initiatives are being undertaken to sensitize the workforce. The theme-based safety skit is one such innovative platform. Online hazard and near-miss reporting and compliance is an example of embracing digitalisation in safety processes. The business commitment towards safety is reaffirmed by various means, including monthly theme-based safety campaigns, audits and inspections.

Risks and Concerns

With the increased emphasis on renewable energy, the business may face some headwinds on the opportunities available. However, the business anticipates that coal will continue to be a dominant source of power generation in India and that may continue to offer market opportunities. Excess manufacturing capacity, however, will continue to drive the prices downwards and would reflect in the financials of EPC players. The onslaught of the pandemic has set in some uncertainty on project execution timelines, for which the business has initiated the required steps considering force majeure conditions.


The projection of 292 GW thermal power capacity by FY25 in the National Infrastructure Pipeline (NIP) report published by the Department of Economic Affairs (Ministry of Finance) and retirals of old, inefficient and polluting power plants indicate that thermal power is still going to be the mainstay in the countrys power generation mix. Considering the huge number of old and inefficient power plants which are nearing retirement, the business is confident of growth in capacity addition in the thermal power sector to match projected rise in demand for power. Coal-fired stations will continue to be in demand as it would ensure stable power and provide peaking power requirements and ensure a balanced grid.

It is estimated that the total installed capacity of power plants in which fgds are to be installed is around 167 GW, involving 440 FGD units. Of this, 65 GW of orders have already been placed, while additional 100 GW of orders are expected to gain momentum in time to come.

The Government has an ambitious plan to increase the nuclear power production to 23 GW by 2031 from the current level of 7GW. The business sees large value opportunities in this segment and has tied up with world- class oems.

Gas-based plants are expected to be slowly revived in India. Since the revival of the domestic gas sector is going to take some time, the business continues to focus on markets outside India for gas-based power plants. The target countries are Bangladesh, Sri Lanka, Myanmar and GCC countries. The business has taken steps to strengthen its presence in the Middle East to capitalise on the available opportunities in this sector.

The L&T-MHPS Boiler Jv and L&T-MHPS Turbine Generator Jv are looking forward to leveraging upcoming spares and service opportunities in the domestic market and will continue to explore business opportunities in the international market for export orders.



L&T Heavy Engineering (HE) is amongst the top 3 global fabricators to supply engineered-to-order critical equipment, piping and systems for core sector industries - Refinery, Petrochemical, Oil & Gas, Gasification, Fertilizer, Thermal & Nuclear Power including critical revamp and up-gradation projects.

The business is organized into Business Units (bus) based on the industries served. The Refinery, Cracker, Oil & Gas and Gasification BU (RCOG) focuses on hydro-processing reactors, high-pressure heat exchangers, gasifiers, pressure vessels, waste heat boiler packages, process plant internals and such critical equipment for process plants. The Fertilizer and Petrochemical BU focuses on products like ammonia converters, urea reactors, urea strippers, methanol converters and critical reactors for the fertilizer and petrochemical sector. The Nuclear BU supplies highly critical equipment like steam generators, reactor components (end shield assembly, end fittings) and pressurizers for the nuclear power sector. The Modification, Revamp & Upgrade (MRU) unit offers complete solutions for Process Plants through dedicated engineering, procurement, project management and construction services. The Piping Center (LTPC) fabricates critical piping spools for power and other process industries.

The business has a JV with Nuclear Power Corporation of India (NPCIL) i.e., L&T Special Steels and Heavy Forgings Private Limited (LTSSHF), to cater to the demand for critical forgings required for the Indian Nuclear Power programme and for other critical sectors like Defence, Hydrocarbon and Oil & Gas. The JV has set up a fully-integrated forging facility (from steel scrap to finished forgings of alloy steels, carbon steel & stainless steels) with capacity to produce a single-piece ingot up to 200 MT and forgings up to 120 MT in the first phase. These have applications in critical equipment in Nuclear power plants, Defence, the Hydrocarbon industry and the Power sector. Other applications include separator blocks for the Oil & Gas segment and other heavy forgings for engineering applications.

The business has achieved international recognition through an impeccable track record of executing large, complex projects and constantly creating international benchmarks. Capabilities include state- of-the-art fully integrated, globally benchmarked manufacturing facilities, an experienced talent pool and impressive global references for the supply of high-end reactors and high-pressure heat exchangers. The sustainability and safety standards at its manufacturing facilities located in Mumbai, Hazira and Vadodara are at par with international standards.

Business Environment

The business faced fierce competition from European, Korean and domestic fabricators, while Korean, Chinese and European companies continued to get preference due to ECA (Export Credit Agency) financing requirements. Excess global capacities and limited demand put pressure on pricing and deliveries.

Amidst stiff competition, the business continued to bag significant orders from global and domestic clients for hydrocracker reactors, ethylene oxide reactors, coke drums, HP heat exchanger and heavy columns, mainly for projects in Middle East, South East Asia, North America and Mexico. In the domestic market, the business bagged orders for high pressure & exotic material heat exchangers for HPCLs RUF Project and an ethylene oxide reactor for IOCLs Paradip Project.

The domestic Nuclear sector continued to remain sluggish due to delay in fleet procurement orders.

Major Achievements

In the domestic market, the business has secured the order for the first Coal Gasifier using Air Product Technology solutions for the Talcher Gasification Project. During the year, the countrys heaviest hydrocracker reactor weighing 1858 MT was dispatched to HPCLs vizag Refinery.

On the international front, the business dispatched 16 critical Chrome-Moly-vanadium reactors for ADNOC- Takreer refinery, Abu Dhabi - all delivered before time.

The MRU business vertical executed a benchmark project - revamp of an FCCU reactor for the ORPIC Refinery in Oman.

On the Nuclear front, the base section and upper cylinder of the Cryostat, a key component of the worlds largest fusion reactor, was delivered to ITER at Cadarache, France. Cycle time for NPCILs 700 mwe Steam Generator, currently under manufacturing, was reduced from contractual 48 months to a record 30 months, setting an industrial benchmark.

In the Defence sector, LTSSHF has been qualified as the only indigenous producer of large and heavy forgings and thick plates for the prestigious Submarine Programme.

Significant Initiatives

L&T Heavy Engineering embarked on a journey to be the best manufacturer of critical fabricated equipment in the world, determined to Transform for Future NOW! to improve competitiveness and deal with the challenging market scenario. In 2019-20, the business focused on cultural transformation, specifically streamlining initiatives across the units and aligning with the Mission Statement. The Root Cause Analysis (RCA) system was strengthened to

Expand beyond quality and safety to cover project cost and other overruns.

Environment, Health and Safety

The business conducted awareness sessions through the celebration of National Safety Day, Road Safety Week and World Environment Day at the workplace as well as in Surat City. During the year, 48 batches of safety training programmes were conducted at the Safety Innovation School, Hazira for neighbouring industries. As a part of the safe workplace initiative, oxygen sensors were installed at confined locations and various initiatives were undertaken for treatment of emissions, effluents, industrial gases/wastes. The business has adopted ISO 45001:2018 standard from the earlier OHSAS 18001. The business won the Platinum category Energy & Environment Global Safety Award 2020 at the 10th World Petro Coal Congress 2020.

Human Resources

The business continued to improve its Performance Management System from SMART (Specific, Measurable, Attainable, Relevant and Time-based) goal-setting to meaningful performance dialogue and subsequent fair performance evaluation. Special programmes were designed with help from internal and external faculty for staff and workmen. These programmes focus on driving the culture of Safety, Quality and Productivity and

Emphasize upon Transparency, Trust, Action-orientation and Teamwork.

Employee Engagement was a thrust area for FY20 with the introduction of the Josh Brigade - teams of Employee Engagement Champions who drive initiatives at the department level. The Mentorship initiative was extended to promising young managers. Critical role-holders were identified, and succession planning is in progress for a sustainable leadership pipeline.

Risks and Concerns

The business faces the risk of reduced investments in the refinery sector due to falling crude prices. To mitigate the same, it has expanded its MRU offering, which continues to grow due to focus on upgrades, modernization and revamps of existing plants.

Shrinking markets and increasing competition, on both the International and domestic fronts, continues to be a challenge. To sharpen the competitive advantage of engineering strength, the business has identified the role of CTO (Chief Technology Officer) as being exclusively responsible to build and develop engineering and technological capabilities and knowledge management within the Company.

Capabilities have been developed for niche equipment for specialty chemicals and petrochemicals like Purified Terephthalic Acid (PTA) and Acrylic acid. The business is also expanding into new geographies like North Africa, Egypt, Mexico and MRU offerings for the Middle East and Asia Pacific region. To mitigate the risk of doing business in new geographies, the business avails of export credit insurance to secure credit risk.

The business faces foreign competition in domestic projects. To have a level playing field, it is proactively suggesting policy changes to the ministries through industry associates. Anomalies in implementation of Make- in-India and GST by Public Sector Units (psus) procurement are being addressed.

On the supply chain front, competitive sourcing remains a focus area. With increasing price pressure, the business has identified and developed new vendors in China, Eastern Europe and India. The direct impact of covid-19 on orders under execution is covered under the force majeure clause of the contract on account of expected delay.


The global pandemic of covid-19, combined with global recession and a tough business environment, may lead to reduced demand for heavy engineering equipment in the short term. However, with a global recovery expected towards the end of FY 2020-21, we expect the crude prices to improve, which may lead to revival of the capital expenditure cycle.

Nuclear customers are increasingly adopting strategies like reverse auction and qualifying new suppliers. This is resulting in a huge supply-demand gap with less demand and excess global capacity, and thus causing increased pressure on price and margin.

For the ongoing domestic bids, we expect slow progress in project finalization on account of the covid-19 pandemic. In the domestic market, we expect new projects in the sectors of Coal to Chemicals, Petrochemical and the Specialty Chemicals industry, and increased demand for MRU services. Nuclear fleet procurement opportunities (700 mwe PHWR projects) are expected to be tendered in FY 2021.

For the LTSSHF business, the domestic sectors in the fields of nuclear and defence are expected to grow in the coming years. The Government has cleared the proposal of investment in 10 domestic nuclear power plant (700 mwe each) through bulk ordering. This has opened up opportunities for the Jv with the placement of orders for supply of Steam Generator forgings fo Rs 6 units, End Shield Plates for 4 units and forgings for Pressurizer and Bleed Cooler for 4 units.



L&T has been active in the Defence and strategic sector since the mid-80s, well ahead of the opening up of the sector for private industry participation, by associating with the Defence Research & Development Organisation (DRDO) and Naval indigenisation programmes. Having built a portfolio of technologies, products, systems, platforms and solutions, today L&T Defence provides design-to- delivery solutions across chosen defence segments with a focus on indigenous design, development and production of Naval (Submarines and Warships) and Land Platforms (Armoured Systems, Howitzers), Weapon Systems, Engineering Systems, Missile & Space Launch vehicle subsystems, Sensors, Radar Systems and Avionics. These are complemented by R&D and Design & Engineering Centres for targeted Platforms, Systems & Solutions development.

The operations span across two R&D centres, three Design & Engineering Centres and Production centres at multiple locations spread across India to serve the Defence & Aerospace sectors. These include the following facilities:

• Submarine hull-building facility and an Armoured Systems manufacturing, integration & testing facility at L&Ts Hazira Complex (near Surat)

• Modern shipyard at Kattupalli (near Chennai)

• Aerospace manufacturing shops for rocket motors for Indias Space Launch vehicles at Powai and Coimbatore

• Precision Manufacturing & Systems Complex for Aerospace & Missiles manufacturing at Coimbatore

• Advanced Composites facilities at vadodara and Coimbatore

• Strategic Systems Complex for Weapon & Engineering Systems and Sensors at Talegaon near Pune

• Strategic Electronics Centre at Bengaluru

Besides these dedicated facilities, L&T also operates a facility at visakhapatnam under the Government Owned Contractor Operated (GOCO) model for a Strategic Programme. These Work Centres are complemented by R&D Centres at Powai (Mumbai) and Bengaluru, and Design and Engineering Centres for Warship, Submarine and Weapon & Engineering Equipment at Powai and Chennai.

The Defence Business is structured into two business groups:

1. Defence & Aerospace

2. Defence Shipbuilding

1. Defence & Aerospace

Over the years, the Defence and Aerospace (D&A) business has built a bouquet of a wide range of indigenous products, systems, solutions, platforms and technologies through in-house efforts as well as by teaming up with the DRDO, and participation in the Indian Navys indigenisation programme for the development of a range of Engineering Systems and Weapon Systems and the realisation of Systems within the country. To date, the D&A strategic business group has indigenously developed more than 250 defence products, and more than 50 of them have been industrialised and delivered in serial production mode. The business model uniquely differentiates with focus on in-house technology and product development, innovation at the core of offerings, mature and equated partnerships with global majors, all of which enable it to maintain market leadership position in an environment where the Government is aggressively pursuing the indigenisation agenda for the long run, and where most indigenous players are dependent on the Transfer of Technology (tot) model to pursue defence production. The D&A SBG also has a Joint venture (Jv) with MBDA, a global leader in missiles and missile systems. The Jv is well positioned to indigenously offer advanced missile systems to the Indian Armed Forces.

2. Defence Shipbuilding

L&Ts Shipbuilding business offers end-to-end solutions for design, construction and through-life support of defence ships. L&T operates two defence shipyards - one at Hazira Manufacturing Complex, and another greenfield mega defence shipyard at Kattupalli, near Chennai. Located across a sprawling 900-acre complex, the Kattupalli Shipyard is Indias largest yard. The design and construction of the yard ensures adaptation of global best practices like modular construction, construction under covered shops, use of a shiplift with dry and wet berths, etc., to enable simultaneous construction of different classes of vessels until near-completion on land and then launching them through the shiplift. A large number of Industry 4.0 practices have been instituted, enhancing the efficiency of construction.

A dedicated Warship Design Centre at Chennai is equipped with the latest integrated 3D design, analysis and Product Lifecycle Management tools, and interfaced with project management and ERP systems, in line with global best practices.

The Kattupalli Shipyard has been largely engaged in new build and refits / repairs of defence ships of the Indian Navy and Indian Coast Guard. Since 2010, the Shipbuilding business of L&T has designed, constructed and delivered 57 Defence Vessels, which include a Floating Dock (Navy), Interceptor Boats and Offshore Patrol Vessels (for the Coast Guard) in record time. The unique capability of the business to achieve on-time or ahead of contractual delivery performance in all the contracts for Defence Vessels is a benchmark in itself in the Indian Shipbuilding Industry. The shipyard has a track record of delivering first-of-class vessels on / ahead of schedule with design and construction maturity and in-built quality.

L&T purchased the 3% stake held by the Tamil Nadu Industrial Development Corporation Ltd (TIDCO) in L&T Shipbuilding Ltd (LTSB) in April 2019, making it a wholly owned subsidiary. In July 2019, the L&T Board approved the Scheme of Amalgamation of LTSB with L&T wef 1st April, 2019 as record date. The NCLT permissions have since been obtained and LTSB has now been merged with parent Larsen & Toubro Limited.

Business Environment

The macro picture has been a mixed bag over the recent years. On the one hand, the Government of India (goi) is taking substantive steps to promote defence exports, boost the acquisition pipeline by preferential categorization in favour of indigenous procurement of Defence systems and accelerating the process of aons and rfps, while, on the other hand, budget constraints have seen orders slip by. There has been a gradual increase in the Defence Modernisation budget. However, the inclusion of the GST (since July 2017) and Customs Duties (since April 2016) as additional outflows from funds allocated to the Ministry of Defence (mod) had, in effect, cut the capital allocations to

Defence in real terms. The consequent decrease in funds available for Defence Modernisation is visible from the drop in the volume of orders placed on Indian companies in preference to imports to address urgent gaps in capability.

A few steps have been taken during the FY 2019-20 to defray the Customs duties and IGST on the mods imports (Government-to-Government deals) and specific programmes ordered on system integrators (dpsus), necessitating import inputs not produced in India and, in the process, freeing some capital for indigenous acquisition from within the budget allocation.

As per the Rajya Sabha Q&A data, the mod has cleared aons totalling more than R 409,000 crore worth of programmes for Indian industries to participate in over the last five years.

The intent of the Government to achieve a higher degree of indigenisation and self-reliance is visible in the latest policy measures, such as Strategic Partnerships. The Defence procurement policy and procedures continue to evolve with earnest and positive impetus towards Make in India and industry friendliness, as can be seen from the draft DPP-2020. While the goi has taken steps to ensure ease of doing business, concern regarding a level playing field for the private sector continues in the form of retention of provisions to nominate large Defence programmes to state-owned companies.

Major Achievements

During the year, the business has had multiple successes

And proud moments, uniquely reaffirming L&Ts positioning

As a Nation Builder. These include:

• L&T has been shortlisted as one of the two final contenders as Strategic Partners for P75 (I) submarine programme, and await issuance of the RFP

• Successfully delivered multiple Weapon Launch Systems (Land & Naval), Engineering Systems and Missile Systems to the Indian Armed forces

• The Work-Centres have set new benchmarks in terms of deliveries (opvs, K9 Vajra-T, PINAKA, Satcom systems to name few), safety and digitalisation

• Delivered 44 K9 Vajra-T Self-propelled Howitzers ahead of schedule during the year, having reached a peak of 10 deliveries a month, with the team at ASC Hazira ramping up operations

• The R&D and Design & Engineering teams have developed a range of new technologies, products and solutions with a focus on emerging technologies such as Unmanned Systems, AR/VR, Image Processing and Predictive Maintenance that were on display at Defexpo 2020, emphasizing uniqueness of offerings, innovation and presence across the value chain

• The Kattupalli Shipyard attained the globally unique distinction of complete sea acceptance trials of OPV5 on its maiden sea sortie and cut the build time to below 20 months from the keel-laying

• Delivered 2 Offshore Patrol Vessels and 5 Interceptor Boats to the Indian Coast Guard, all ahead of contracted schedule

• L&T Shipbuilding achieved a breakthrough by initiating execution of a large export order fo Rs 12 High Speed Guard Boats from South East Asia and achieved a significant milestone in public-private-partnership by securing workshare from a DPSU Yard for construction of three Defence Vessels

Significant Initiatives

In addition to the focus on Defence Manufacturing to serve the Indian Armed Forces, Direct Exports of our matured weapon systems offerings, either solo or by partnering with DPSU / OFB for weapons, and entering into PPP relationships for and workshare with dpsus are being pursued as two additional engines for growth.

L&T has been working closely with dpsus over the years and this relationship is being leveraged to target specific programmes and explore new opportunities in both domestic and international markets.

The teams embarked on consolidation of work centres and merged its Rabale operations into its Strategic Systems Complex (SSC) Talegaon. R&D has been the backbone of the Defence business since its inception and the business will continue investing in R&D to develop new-age technologies and products such as Unmanned Systems (all four segments), Robotics, Additive Manufacturing and Artificial Intelligence.

The L&T-MBDA Jv achieved an important landmark, with readiness to operationalize the new inert integration facility at Coimbatore.

L&T has been building a strong position in digital design since the mid-90s, and has attained proficiency in elements of Industry 4.0 in its multiple R&D, Design & Engineering Centres and Production work centres that extend to the building of platforms such as warships and submarines.

The in-house Warship Design Centre employs highly skilled designers to build platforms in 3D / virtual Domains and extensively use vr/AR tools for walk-through analysis for highly engineered designs which suit the modern production facilities on the shop-floor.

L&Ts lead in submarine construction and outfitting and system integration with indigenously developed homegrown technologies draws from its early initiative in the digital domain nearly two decades ago. L&T has been gradually adopting an Industry 4.0 environment using model digital data, tracking and scanning tools and data analytics for planning, quality control and sequencing.

The Armoured Systems Complex (factory) built recently at L&Ts Hazira Complex is a modern Industry 4.0-ready set-up. It has created a sizeable opportunity for shop-floor engineers and technicians to acquire skill in automation, robotization and multi-disciplinary system integration in order to attain >90% automated welding of armoured vehicle hulls and turrets using a series of robots, as well as to build complex components under the same roof using 3D printing wire-deposition processes for volume deposition.

Environment, Health and Safety

The safety track record across work centres, customer locations, and Business Partners premises has been exemplary. L&T Shipbuildings Kattupalli Yard has won the prestigious Sword of Honour from the British Safety Council during FY20, making it the first shipyard in India and the fourth globally to achieve such a feat. The business has also implemented digital workmen safety systems such as RFID-based tracking especially in confined spaces, like submarines and warships, as well as tagging of assets for online tracking. The business continues to focus on the triple bottom line and green initiatives. It has achieved significant y-o-y reduction in water and energy consumption, in line with L&Ts sustainability focus.

Human Resources

HR initiatives have been aligned to the overall business strategy by focussing on identifying and grooming high- potential talent, critical for having a competitive advantage, through various management and leadership programmes. L&T Defence has implemented a Technology Leadership Programme to maintain a market leadership position and continue to focus on development of niche technologies. Attention to leadership and talent development continues as a business imperative. Further, with renewed emphasis, the business has embarked upon employee engagement initiatives to retain and grow talent and continue to be an employer of choice.

Risks and Concerns

While the cyclical nature of the business affects the entire Defence sector, for L&T, which has developed a bouquet of products across the segment through in-house efforts, the risk is primarily that of delays and deferment of orders, given the vagaries of Capital budget allocation. It can be seen from parliamentary standing committee reports that the defence modernisation budget allocation was not sufficient even to cover the committed liabilities over the last two years, leading to acquisition programmes getting deferred, cancelled or even reduced in quantities after issuance of rfps. The lack of funds for new acquisitions has resulted in very low order placement of about RS 77,000 crore on Indian industries over the past three years, with large portions being nominated to dpsus. The rest of the orders are placed on foreign suppliers to address urgent capability gaps.


The impact of social spending as a consequence of the covid-19 pandemic may further affect the already- inadequate Capex budget available for Armed Forces Modernisation and Indian Space Programmes. Also, the decision-making window in FY 2020-21 is expected to shrink due to the pandemic, leading to the spill-over of a few significant contracts from Defence as well as Space sectors into the next FY. The current slowdown in the economy of the country is expected to marginally affect the release of funds against the Navys Capital budget, while the Revenue budget is likely to be significantly impacted, in turn impacting ship refits in the short term.

In order to offset the risk of order inflow, the business is pursuing a portion of business from major orders with dpsus and is exploring increased export opportunities in the short term. To compensate for the effect of productivity loss due to the pandemic, various measures have been initiated for cost reduction in project procurement and revenue expenses, accelerated cash conversion cycle, targeted digitalisation, and reduced outsourcing to gainfully use idling manhours.

The outlook for Defence business remains cautious in the short run but positive in medium- long-term, as indigenous production picks up in a big way with the Government making concerted efforts to implement some of its major policy initiatives, such as Strategic Partnership and Indigenously Designed and Manufactured category programmes. By 2027, the Indian Navy intends to operate 175 warships and submarines. Such an aggressive fleet expansion plan, combined with the Make in India initiative of the Government, provides wider opportunities to Indian shipyards for construction of warships and submarines for defence forces. Further, L&Ts decades-long partnership with the DRDO in indigenous design and development programmes, including Strategic Programmes, augurs well, with unprecedented opportunities in the pipeline.

In the short run, Shipbuilding sees some significant opportunities, given the number of shipbuilding rfps issued by the mod during the last FY. Weapons Systems & Engineering Systems programmes have served to offer a strong foundation to consolidate and build upon. The Indian Space Research Organization (ISRO) has initiated action to involve private sector firms in launch vehicle integration, which is likely to create sizeable opportunities in the aerospace segment in the coming years.



L&Ts Electrical & Automation (E&A) business, is a leading supplier of electrical equipment in India. It is engaged in manufacturing low and medium voltage electrical switchgear products (both standard & customized) and energy meters, and executes projects in the control & automation space.

In the low voltage (LV) segment, E&A has two categories of products - standard switchgear products and customised switchboards / electrical panels - and commands the highest market share in India. These products are widely accepted in international markets, particularly in South East Asia, the GCC and select African geographies.

E&As electrical Agri products have occupied the agricultural market for more than 40 years. Its innovative control-gear products as well as new generation solar energy-supported products give a technological push to the Indian agricultural ecosystem.

L&Ts LV products are manufactured at three locations in India. Customised LV switchboards are manufactured at two locations in India and one location each in the Kingdom of Saudi Arabia (KSA) and Indonesia.

The medium voltage (MV) range of switchgear products is manufactured in India and Malaysia. E&As group Company Tamco Switchgear enjoys a market-leading share in Malaysia and has a strong foothold in the MENA region, the SEA region, and select geographies in Europe and Australia.

E&A has the distinction of being the single largest manufacturer of single-phase energy meters with a leading market position in India. The business has significant capacity to manufacture three-phase / tri-vector meters, and is a pioneer in developing new products. It is one of the first to deploy smart prepaid meters in the country on a large scale.

E&As System Integration business possesses project management experience of more than 25 years. The business is supported by an in-house manufacturing facility for control panels, combined with its own copyrighted software solution- i-Visionmax. The business provides a one-stop engineered solution coupled with project management skills. The domestic business serves the Indian market and neighbouring countries like Bangladesh, Nepal and Indonesia, while its international arm addresses the GCC market.

Clients of the business span a wide range of sectors including Metro Rail, Airports, Renewable Energy/ Solar, Defence, Hospitals, Educational Institutions, Data Centres, Realty, Auto, Food & Beverages, Chemical, Pharma, Textile, Sugar, Automobile and Steel.

The business LV standard switchgear and agricultural products are marketed through a network of ove Rs 650 stockists. Automation products, such as drives and plcs, are sold through around 75 Integrated solution providers. In addition, the retail market is serviced through a network of 165 Retail Distributors and around 350 Distribution Select Partners. Customers of E&A include both private and publicly-owned undertakings and select corporates.

E&A is a full-suite business with strong in-house design and development teams. It has five DSIR- approved R&D facilities and two NABL-accredited testing laboratories for testing products across diverse testing parameters. The design and development team collaborates with international laboratories, testing centres and academic institutions. The business is supported by state-of- the-art tooling facilities which produce a range of high precision tools to service the in-house business needs as well as external customers.

To promote good electrical practices in the industry, the business conducts a wide range of training programmes for technicians, customers, engineers, professionals and even students through its Switchgear Training Centres at Pune, Lucknow, Coonoor, Delhi, Kolkata and vadodara.

The business has an international presence through the following entities within the group:

TAMCO Switchgear is an established manufacturer of low and medium voltage switchgear. Together with its direct subsidiary in Indonesia, Tamcos international market spans MENA regions, select geographies in Europe, ASEAN countries and Australia.

L&T Electrical & Automation FZE (LTEAFZE), located at Jebel Ali Free Zone (Dubai, UAE) provides turnkey engineering, assembly, integration of electrical, instrumentation and telecommunication solutions.

It taps into a customer base in the Middle East and Africa. It has a state-of-the-art integration facility in Jebel Ali Free Zone.

L&T Electrical & Automation Saudi Arabia Company Limited, located at Dammam in the Kingdom of Saudi Arabia, offers the Gulf market a spectrum of products and services comprising Air Insulated Switchgear (AIS), Gas Insulated Switchgear (GIS), Ring Main Units, Lv Switchgear, Motor Control Centre (MCC) - Fixed / Drawout, Pre-Fabricated / Packaged Sub-stations. Offerings include Variable Frequency Drive panels and automation systems, Security Systems and allied equipment such as Transformers, Busducts, DC/UPS, Power Quality Management Systems, as well as erection, testing, commissioning and retrofitting services and maintenance contracts.

Henikwon Corporation is a leading Malaysia-based LV and MV busduct systems manufacturer, with offerings for the building and infra segments.

The UK-based Servowatch Systems Limited, offers technology in the control & automation space for marine applications as well as other emerging segments. Servowatch is recognized as a world-leading system integrator for modern naval platforms, Super Yacht installations and commercial marine operators. The unique software design allows integration of third-party software into a common operator platform environment.

Kana Controls, Kuwait, is a local company that helps L&T penetrate the Kuwait market and enhance its domain expertise in design, engineering, supply and commissioning, as well as render after-sales support of Integrated Automation and Telecommunication Systems based on various global OEM products and technologies.

Business Environment

The various Government reforms initiated - such as focus on improving 41 different areas, primarily the Energy, Infrastructure and Irrigation sectors in India and making India a USD 5.0 trillion economy by 2024-25 - led the business to begin FY 2019-20 with a healthy order backlog.

As the General Elections in India were held at the beginning of the financial year, it was expected that Economic performance would remain benign in view of the model code of conduct and slowing down of the decisionmaking process by the Government in the first quarter of FY 2019-20. The pro-incumbency mandate received by the Government reassured the sustenance of the reform agenda.

NITI Aayogs focus on the North Eastern region by proposing to set up industrial estates/parks in such areas set up a platform for growth for the standard products division of the business during FY 2019-20. The Governments continued emphasis on improving rural infrastructure translated into opportunities for the business. Various announcements made in the Finance Budget by the Government of India paved the way for creating new infrastructure, public transport systems and airports. The support for renewable energy provided significant opportunities for E&As standard switchgear products and switchboards divisions which are functional in the LV and MV space.

Other notable initiatives like UDAY, Smart Cities, Smart Grid, Pradhan Mantri Krishi Sinchayee Yojana, Pradhan Mantri Kisan Samman Nidhi Yojana and Digital Villages continued to remain highlights in FY 2019-20. The Metering division of the business found major opportunities owing to these initiatives and was able to successfully roll out one of the largest Smart Meter projects in India based on the linear polarisation resistance technology. Continued emphasis on smart cities has helped the Control & Automation division of the business to provide technologically superior solutions to the domestic market.

The business also has a significant presence in Malaysia and South East Asian countries through TAMCO. With the drop in growth rates in Malaysia, business opportunities for TAMCO were scaled down.

Supported by market demand, enhancement in public- private partnership projects and Government reforms, the business performed on expected lines until January 2020 by achieving profitable growth. However the covid-19 pandemic began to impact business from February 2020 onwards.


• The businesss New Product Development function bagged the Deming Prize, the highest award in Quality. L&T is the first switchgear manufacturing company outside Japan to receive this prestigious award

• E&As Metering & Protection Systems business unit won the coveted IMC Ramkrishna Bajaj National Quality Award (RBNQA) Performance Excellence Trophy 2019

Significant Initiatives

• The switchboard business initiated the manufacture of its Compact Substation switchboard at Ahmednagar to enhance manufacturing excellence. A web-based portal

For asset management has been developed to monitor LV switchgear and other electrical system equipment

• The business received grants for as many as 81 patents, 9 trademarks and 9 design applications in India

Product Launches

• New mccbs, new variants of acbs, contactors, isolators and panel solutions for emerging market segments such as Solar and Railways, new state-of-the-art motor protection relays, controllers for Power Quality Solutions, intelligent products for the Agricultural segment, etc. Were launched

• The Electrical Systems & Equipment business introduced feeder pillars, compact sub-stations and front RMU with FRTU for the Utilities segment. For the international market, sub-main distribution boards (smdbs) and GIS for the wind segment were introduced to cater to the Infrastructure sector, including Metros, Airports, Smart Cities and high-end residential complexes. The business also introduced a pre-fabricated electrical substation building, known as E-House, customized to house all electrical equipment as per project requirements

• The MV portfolio was enhanced by an improved range of GIS for Wind Energy applications and Metro projects

• SMART Ring Main Units were in high demand in Smart Cities. The domestic LV Switchboards with the closed-door operation feature were offered to key customers in the refinery and power plant segments

• The Metering division worked on the integration of new communication technologies such as 4G, nbiot and lora in the Smart Meter segment

• The business successfully rolled out one of Indias largest Smart Meter projects based on the Linear Polarisation Resistance (LPR) technology


Key digital initiatives which comprised both new as well As scope enhancement in projects under implementation Included:

1. Asset Lifecycle Management, using Radio Frequency Identification (RFID)

2. Robotic Process Automation (RPA) & AI

3. Augmented reality (AR)

4. Virtual Reality (vr) - virtual factory visit and Safety Training

5. Sales Force Dot Com (SFDC): The business recently implemented SFDC as a single platform for structured planning, database management and analytics to improve decision-making for its Electrical Standard Product (ESP) sales, business development, product management and service functions.

The business also developed a retail management system for the Retail and Agricultural business of its ESP division.

Environment, Health and Safety

Energy conservation remained a major focus area in FY20 across all manufacturing locations. Various initiatives undertaken have saved total energy of 962580 kwh. Notable initiatives include use of LED lights, optimum temperature setting for acs, installation of solar panels to reduce conventional energy consumption and the use of the energy-saving option on CNC machines.

The Bureau veritas Surveillance audit of the ISO50001 Energy Management. System of the ESP manufacturing campus at Ahmednagar was successfully completed.

There have been no accidents reported at the Mahape, Coimbatore and Mysore facilities in the last 2 years. The business conducted a Human Safety Audit at manufacturing locations through M/s TCE in August 2019. One of the outcomes of this audit was the conducting of Safety Leadership Training of line managers and supervisors who are directly responsible for safety at the workplace. This has resulted in safety awareness among employees, and manufacturing facilities have started reporting near miss incidents.

Human Resources

The business has rolled out several digital initiatives to manage the indirect workforce, leading to enhanced productivity and process efficiency. There has been consistent encouragement to adopt on-line learning through Anytime Learning (ATL) and ATL Next across the organization. Various leadership development programmes linked to competency requirements at different career stages help build a robust internal pipeline of leadership to take charge of the current and future requirements of the organization. Despite the overhang of divestment, the business has been able to successfully recruit the right talent to meet its manpower requirements. Focus on employee health and wellness, succession and career planning and need-based developmental opportunities have helped retain top talent.

The HR practices of the business are well-aligned to the business strategy, and the outreach for development encompasses not just employees but also channel partners and customers, through a variety of training interventions.

Risks and Concerns

The key concern for the business is keeping pace with fast-evolving technologies to stay relevant to the market. For this, investments in Research and Development are essential.

By aligning its business strategy and product portfolio, the business strives to make a winning proposition amidst changing business environments and Government policies.

With the progress in the process of divesting the business to Schneider Electric, an impact was felt due to customers apprehensions about continuity of service quality. Also, with the pandemic, market sentiments have been affected overall, and the new norms mandated may impact operations.


With the outbreak of the covid-19 pandemic, economies are expected to contract in the near term, leading to reduced capex by the private sector. The Middle East economies continue to reel under the oil-price meltdown, impacting opportunities in that region. With limited opportunities, the competition is expected to intensify.

However, the Governments emphasis on vocal for Local and the push in the rural economy in view of the large migration of workforce from cities to rural areas may work in favour of the business. With the Governments focus on the large-scale roll-out of Smart Prepaid Meters in order to improve the fiscal health of the discoms, the Metering division stands to gain majorly due to its in-house design and customization capabilities and its large manufacturing capacity. Better prospects are visible in Malaysia for large MV orders through TAMCO.

The growing trade-tensions between the US and China and the worlds changing perception towards China may result in the shifting of manufacturing bases for some of industries to India, Indonesia, etc. The business is likely to benefit from this.

The divestment process of the business to Schneider Electric is on course. The approval of the Competition Commission of India, subject to fulfilment of certain conditions, has been received and the business has been classified as a discontinued operation from June 2019.



L&T Hydrocarbon Engineering Limited (LTHE), a wholly-owned subsidiary of L&T, provides integrated design-to-build turnkey solutions for the hydrocarbon industry globally. The business executes projects for oil and gas extraction and processing, petroleum refining, chemicals and petrochemicals, fertilizers, cross-country pipelines and terminals. In-house capabilities range from front-end design through detailed engineering, procurement, fabrication, project management, construction and installation up to commissioning services.

LTHE has a fully integrated capability chain, including in-house engineering and R&D centres, world-class modular fabrication facilities, as well as onshore construction and offshore installation capabilities. Major facilities in India include Engineering & Project Management Centres at Mumbai, Vadodara, and Chennai, as well as Fabrication Yards at Hazira (near Surat) and Kattupalli (near Chennai). The business has an overseas presence in the Middle East, i.e. In the UAE (Sharjah), Saudi Arabia (Al-Khobar), Kuwait and Oman (Muscat), as well as in Algeria. The business also has a major Modular Fabrication and Heavy Engineering Facility at Sohar in Oman.

LTHE caters to clients across the hydrocarbon value- chain through five key business verticals:


Lumpsum turnkey EPCIC solutions are offered to the global offshore oil & gas industry encompassing wellhead platforms, process platforms and modules, subsea pipelines, brownfield developments, offshore drilling rigs (upgrade and new-builds), FPSO modules, deep-water subsea manifold & structures, living quarters, transportation & installation services, offshore wind-farm projects and decommissioning projects.

As a full-fledged EPCI player, it also has in-house offshore installation capability comprising a self-propelled heavy-lift-cum-pipe-lay vessel - LTS 3000 - held in a joint venture, and a wholly-owned pipe-lay barge - LTB 300.


The business vertical provides EPCC solutions for a wide range of onshore hydrocarbon projects covering upstream oil & gas processing, refining, petrochemicals, fertilizers (ammonia & urea complexes), cryogenic storage tanks and LNG regasification terminals and cross-country pipelines. The business has a track record of concurrent execution of multiple mega projects successfully, with diverse technology process licensors. The vertical is complemented by the Design Engineering capabilities of L&T-Chiyoda for onshore engineering and L&T Gulf for pipeline engineering.

Construction Services

This business vertical renders turnkey construction services for refineries, petrochemicals, chemical plants, fertilizers, gas-gathering stations, crude oil & gas terminals and underground cavern storage systems for LPG and crosscountry oil & gas pipelines.

Its major capabilities include heavy-lift competency, application of advanced welding technologies, high levels of automation, management of manpower and material in large volumes at construction sites and Quality / HSE systems conforming to international practices. The business has also invested in strategic construction equipment, a range of pipeline-spread equipment, automatic welding machines and other plant and machinery for electromechanical construction works.

Modular Fabrication Services

The vertical specialises in fabrication and supply of modules and static equipment for offshore oil & gas fields, refineries, petrochemical plants and fertilizer complexes. It has world-class modular fabrication facilities strategically located at Hazira (Indias west coast), Kattupalli (Indias east coast) and Sohar (Oman), with a combined annual capacity in excess of 200,000 MT (depending on the product mix). The business is also equipped to supply foundations and other modules for offshore wind-farm projects and modular e-houses. The all-weather waterfront facilities provide easy access to clients across the globe and have load-out jetties suitable for the dispatch of large and heavy modules via ocean-going vessels and barges.

A new Integrated Manufacturing Facility has been recently opened at Jubail in Saudi Arabia to cater to the local market.

Advanced Value Engineering & Technology Services (advent)

Advent (the erstwhile Engineering Services vertical) offers customer-centric solutions for the Hydrocarbon sector and emerging industries, while addressing the specific needs of the changing energy sector. Leveraging its domain expertise in high-end engineering and the experience gained from the execution of large-scale, technologically complex EPC projects, advent delivers comprehensive solutions encompassing Design & Engineering, Project Management, Strategic Project Delivery, Modularization, Smart Asset Management and Green Energy to global clients.

Business Environment

During FY 2019-20, two key drivers impacting a structural shift were the increase in oil supply by OPEC and the Collapse in oil demand by the shuttering of the global economy due to the coronavirus pandemic. The price of oil fell 30% due to oversupply in the first week in March, even before the impact of covid-19 was factored in.

The domestic market also witnessed deferment of projects by a few quarters due to overcapacity in the domestic refining sector. The domestic segment also witnessed stiff competition from new entrants.

In the Middle East, the other major focus region for LTHE - the business was impacted by the oil prices coming under pressure due to over-supply and the price war between Saudi Arabia and Russia. Saudi Arabia - where LTHE has a decent market share of the Offshore business, given its position of being the select contractor under the Long Term Agreement (LTA) - saw new contractors being pre-qualified. This impacted LTHEs share in the contracts being awarded under LTA. Concerted localization efforts in the Kingdom of Saudi Arabia are in progress to position LTHE as a compliant contractor to achieve iktva (In-Kingdom Total value Add).

In other geographies, such as the UAE and Qatar, the business is addressing the increasing icv (In-country value) requirements.

With a focus on Execution Par Excellence, LTHE achieved robust financial performance, as compared to its global peers.

Major Achievements

Major orders won during the year:

• EPCIC contract for the development of the Heera Panna Block of the Western Offshore basin involving wellhead platforms, subsea rigid pipelines, riser installation and modification work at existing platforms

• EPCIC contract for the development of the Mumbai High South field of the Western Offshore basin involving a Water Injection Platform Bridge connected to the existing WIS platform, Living Quarters, modification and interconnection of all the utilities with the existing platforms

• Marjan Incremental Development Project by Saudi Aramco, a mega project in consortium with EMAS AMC PTE Ltd. (a Subsea 7 Company) involving tie-in platforms, tie platform module, production deck modules, 217 km of subsea pipelines and 145 km of subsea cables

• EPCI contract from Saudi Aramco, involving 28 offshore jackets in Saudi Arabias Zuluf, Marjan, Safaniya and Ribyan offshore fields in consortium with EMAS AMC PTE Ltd.

• EPCC contract for setting up a 3.55 MMTPA Residue Upgradation Facility (RUF) for Visakh Refinery Modernisation Project (VRMP) at HPCLs Vizag Refinery to convert the heaviest oils into high-quality Euro 6 diesel

• EPCC contract for setting up a new 9 MMTPA Atmospheric & vacuum Distillation Unit (avu) and allied facilities for Barauni Refinery Capacity Expansion Project of Indian Oil Corporation

• Process and Piperack Modules (28,000 MT) for a Refinery Project in South East Asia from EPC Contractors Consortium, as a repeat order

• Supply of critical modules for Air Separation Process Modules for a leading International Technology Company for their projects in USA and Algeria, as a repeat order

• Three Instrumentation Houses for an international client for a project in Algeria

Projects Completed

• During the year, the Offshore vertical achieved partial mechanical completion for Hasbah II project of Saudi Aramco and completed ONGCs Bassein Development 3 Well Platform & Pipeline Project and Neelam Re-development & B173AC Project

• The Onshore vertical achieved mechanical completion of the indmax FCC Unit for IOCL Bongaigaon

And completed the major milestone of Ready for Commissioning - Multiphase Pump for Haliba Field Development project of Al Dhafra Petroleum Operations Company Ltd., UAE.

• The Construction business achieved the Commissioning of Phase-2 of the Coal Bed Methane Development Project at Shahdol in Madhya Pradesh for Reliance Industries, Commissioning of Syngas Phase 2 Project at Kochi for Air Products involving expansion of gas separation facility based on cold-box technology and laying & commissioning of pipeline for Barmer-Pali and Palanpur-Pali projects

Significant Initiatives

The mission of Execution Par Excellence is reflected in LTHEs continued emphasis on sharper bidding to enhance its market share and execute projects within time and cost to protect bid margins. The business continued its journey with its Operational Excellence initiative, which has yielded results by way of enhanced cost-competitiveness in its bids and further improvement in its bottom-line for projects under execution.

The business is resorting to newer manufacturing techniques such as the Assembly Line Concept and Serial Production technique for fabricating multiple jackets concurrently. Additionally, cutting-edge technologies in the pipe-welding process through automation and process upgradation are implemented at its fabrication facilities and construction sites for increased productivity and better quality. Additionally, Construction Competency Centres and Skill Development Centres have been augmented.

LTHE has proactively embarked on an organisation-wide Digital Transformation Programme for integrating Business Processes, Enterprise Software and robust In-house IT applications to enhance execution efficiency. This will result in shorter project cycles, project progress visualisation through Digital Walls, assured delivery schedules, cost- competitiveness and enhanced risk mitigation; thereby providing business differentiators for delivering projects. Additionally, connected-construction machinery and connected-workmen are being tracked through iot to improve productivity.

To create a strong foundation for business intelligence, analytics and knowledge management, LTHE has implemented an Enterprise-wide Project Lifecycle Management programme (EPSILON). This provides a collaborative space for all project stakeholders to interact around a 3D-model-based integrated workspace wherein project teams can plan together, conduct what-if analysis, share and view project updates and manage changes.

In order to create new opportunities with a sustained revenue stream, the advent vertical is pursuing several initiatives such as Smart Asset Management, Operation & Maintenance (O&M) services and development of Green Energy projects. The advent business is actively engaged with various R&D Centres and startups to harness emerging technologies and create differentiated solutions for its customers.

Environment, Health and Safety

The business remains committed to achieving HSE excellence at the workplace and beyond by continuously striving to improve, protect and develop the health, safety, and environmental assets of its employees and stakeholders. LTHE strongly believes that every incident is preventable, and is committed, through its Zero Incident Credo, to providing a safe and healthy workplace. During the year, the business clocked ove Rs 102 million safe man hours at a stretch across a dozen successful projects in both the domestic as well as international markets, including the three modular fabrication yards.

The business drives HSE excellence across the EPC value chain, from engineering to commissioning of projects, applied to all stakeholders by reinforcing a safe working culture through various initiatives. HSE Assurance Audits were initiated and carried out for all the verticals to ensure the effective implementation of the HSE management system across the business. Besides introducing new HSE Training and HSE Design Policies, it redefined a set of Golden Safety Rules to strengthen and transform the safety culture.

Considering HSE performance an important factor for business, many new HSE leading and lagging parameters were added in the monthly online reporting system.

Further, various HSE Digitalisation Initiatives were undertaken, such as VR (Virtual Reality) based HSE Training, Electronic Permit to Work (e-PTW), Online Incident Reporting & Investigation, Behaviour-based Safety and Digital Health Monitoring.

During the year, the business bagged 22 national and 10 international level awards for best HSE performance. These include:

• The British Safety Councils International Safety Award for demonstrating a strong commitment to good Health & Safety Management

• Middle East Energy Award 2019 under the category of HSE Innovation of the Year for Workmen Safety Observation Programme

• Indian Chamber of Commerces National Occupational Safety & Health Award 2019

• Confederation of Indian Industrys Safety Best Practices Award in recognition of the various HSE initiatives

• The Royal Society for the Prevention of Accident Gold Award for Health & Safety performance during the yea Rs 2019

The business also received HSE recognition from several clients, a few of which are listed below:

• Certificate of appreciation for achieving 32 million safe man-hours from Saudi Aramco for HASBAH Offshore Gas Facilities Increment II

• EHSS excellence award for achieving 25 million safe man-hours from Farabi Petrochemical for N-Paraffin and Derivative complex

• Certificate of appreciation for achieving 8 million safe man-hours and for Best HSE performance from IOCL for the Indmax FCC project

• Certificate of appreciation for achieving 5 million safe man-hours from EIL for the HPCL CDU VDU project

As a responsible corporate citizen, LTHE is determined to continue operating in an environmentally sustainable manner by fostering the HSE culture in all its activities.

Human Resources

The business focuses on recruiting and retaining a unique and diverse set of talented and passionate individuals.

The organization utilizes various state-of-the-art training infrastructure and resources like the L&T Leadership Development Academy (LDA), the Institute of Project Management (IPM) and technical training centres to develop the employees Project Management skills, Functional and Leadership competencies, as well as nurture and groom talent.

In order to inculcate a culture of driving continuous career advancement of internal talent, the business has initiated a DREAM Career Planning architecture for sustainable growth of employees, and is strengthening its position in

Social Media through professional networking sites. The design and deployment of the GENIE: Engagement survey with the subsequent business-specific and managerial-level interventions undertaken and communicated through the multiple forums of IGNITE, such as town halls, webcasts and video conferencing, bears testimony to LTHEs commitment in creating a highly engaged workforce. A culture of appreciation is inculcated by various reward and recognition interventions. The I-TOO recognition framework, initiatives like ICONS, Long Service Awards, Talent Champions, Team Building Workshops, non-monetary recognition events, etc. Are periodically undertaken to enhance employee motivation.

Innovation is recognized based on merit. LTHE appreciates the convergence of divergent thought processes and ideas. The business stands united in its mantra of Together We Succeed by practising Execution Par Excellence.

Risks and Concerns

The fortunes of the business are heavily linked to the global oil prices and green environment pressures. Further, with nearly 50% of the business originating from international markets, geo-political situations have a major impact on new orders and the execution momentum. With some key competitors rendered with surplus capacity, cost competition is becoming challenging, and is further accentuated by the increasing requirement for localisation in some of the regions where the business has a presence.

The business addresses the risks by continuous evaluation of its portfolio, examining the emerging scenario, exploring newer regions and addressing cost-competitiveness on an on-going basis, while undertaking operational excellence.

Besides, the business may also face risks such as difficult contract terms set by clients, tight schedules, counterparty risks, currency and commodity exposures, vendor defaults, delay in material delivery, QHSE, productivity, etc. These risks are mitigated through specific actions, such as operational excellence initiatives, alliances, compliance with stringent QHSE standards, timely forex and commodity price hedging, strong contract and claims management and identification of key personnel and talent at the pre-bid stage.

The risk management policy and guidelines have facilitated the creation of a consistent set of standard tools and templates incorporating global best practices and procedures. Proactive risk management enables building the ability to anticipate challenges, as well as mitigate and identify opportunities which may help achieve strategic objectives. The business promotes a culture of transparency in flagging problems as early warning signals for the Managements timely attention.


The downward oil price spiral started with the warring between OPEC and Russia and was further fuelled by the onset of the global pandemic, due to which the oil demand depleted to a record low. To stabilise the plummeting oil prices, OPEC and Russia have reached an agreement to cut oil production. Further, the U.S. also cut its 2020 oil production forecast by more than 1 million barrels a day due to the plummeting demand and collapsing crude prices. Oil prices are expected to predominantly remain under stress during 2020. Volatility and uncertainty in oil prices is expected to delay project awards in the hydrocarbon segment. Further, most of the Middle Eastern GCC economies plan to diversify into several other sectors other than hydrocarbon.

With international oil companies evincing interest in the market, investments in West and North Africa may fructify in case crude oil prices show upward movement.

On the domestic front, the Ministry of Petroleum and Natural Gas is working in collaboration with various Central Government Ministries, State Governments, and stakeholders to make efforts to achieve reduction in import dependency for oil in the long run through use of alternative fuels like ethanol and biodiesel through the Ethanol Blending in Petrol (EBP) Programme and Biodiesel blending in diesel. The Government has formulated a

National Biofuel Policy 2018 to boost the availability of biofuels in country. It has launched a Sustainable Alternative Towards Affordable Transportation (SATAT) initiative for producing Bio CNG by setting up 5000 Bio-CNG plants in next five years.

The Union Budget has proposed a capital outlay of RS 98,522 crore for oil and gas companies for FY 2020-21, comprising RS 52,019 crore for the Exploration and Production segment, R 41,654 crore for the Refining & Market segment R 4,754 crore for the Petrochemical sector. Major domestic pipeline projects which were deferred in FY 2019-20 are expected to pick up during FY 2020-21.

The Company will expand its bid pipeline and explore new clients and new markets in the adjacency of its existing capabilities.

With the onslaught of the pandemic, numerous challenges are also expected in project execution. The aim of the business will be to remain cash-positive and adopt the PIO approach, viz. Protect the business, be Innovative in approach for solving unanticipated problems and look for Opportunities in the marketplace that could give strategic advantages in the medium and long term.



L&T Infotech (LTI) is a global technology consulting and digital solutions company helping more than 420 clients succeed in a converging world. With operations in 32 countries, the business goes that extra mile for its clients and accelerates their digital transformation with its Mosaic platform - enabling their mobile, social, analytics, lot and cloud journeys. Founded in 1997 as a subsidiary of Larsen & Toubro Limited, its unique heritage gives it an unrivalled real-world expertise to solve the most complex challenges of enterprises across all industries. Each day, the team of more than 30,000 ltites enables clients to improve the effectiveness of their business and technology operations and deliver value to their customers, employees and shareholders.

The business has a strong presence in each of the following verticals:

• Banking and Financial Services

• Insurance

• Manufacturing

• Energy and Utilities

• Consumer packaged goods (CPG), Retail and Pharma

• Hi-Tech, Media and Entertainment

To further augment its digital capabilities, LTI announced two acquisitions in FY 2019-20. In July 2019, it acquired Lymbyc, a specialist in AI, machine learning and advanced analytics. The Lymbyc acquisition adds to LTIs Mosaic platform offering. In Octobe Rs 2019, it acquired Powerup, a born-in-cloud company, with cloud consulting capabilities across all three leading cloud platforms - AWS, Microsoft Azure and Google cloud. In addition to cloud-consulting capabilities, Powerup also adds 2 AI products to LTIs powerful suite of offerings.

Business Environment

The global Information Technology-Business Process Management (IT-BPM) market, excluding hardware and Engineering, Research & Development (ER&D), grew 5.6% over the last year and stood at USD 1.5 trillion in 2019. Indian IT-BPM industry revenues including hardware and ER&D spend stood at USD 191 billion in FY20. The industry added ~USD 14 billion in incremental revenues last year, representing year-on-year growth of ~ 7.7% in USD terms. IT-BPM export revenues for the industry for FY 2019-20 are expected to reach USD 147 billion, a growth of 8.1% over the past year.

The share of digital in industry revenues has jumped from ~20% last year to a range of 26%-28%. Nine digital technology areas will emerge as the fastest-growing and highest-impacting, with the combined potential to deliver one-third of the USD 100 trillion. The nine areas include three foundational technologies - Big Data and Analytics, Cloud Computing, and Cybersecurity - and six advanced technologies - Artificial Intelligence, Internet of Things, 3D Printing, Robotics, Blockchain, and Immersive Media.

The strong digital foundation that Indian technology has built over the last decade underpinned the remarkable agility and resilience in responding to the COVID-19 crisis; ensuring business continuity for all global clients while prioritizing the safety of its professionals.

The vertical specific key trends observed are as follows:

A) Banking and Financial Services: With the Banking industry being a fast adopter of advanced data analytics and AI-based strategies, as customer data segmentation and enhanced decision support become key priorities, this sector saw an increase in spend on digital technologies. COVID-19 has the potential to change the way people bank, forever marking a clear shift towards digital and cloud. It is expected that most routine operations would move to the cloud as cloud-native technologies can enhance customer experience while reducing costs at the same time.

B) Insurance: Cost optimization and legacy systems modernization are the key drivers of growth, and many insurers are shifting from the product-centric to a customer-centric business model, so insurance companies are open to form partnerships with insurtechs which will help them cut costs and improve business process efficiencies, as well as provide a better customer experience.

C) Manufacturing: This sector includes Industrial Manufacturing, Automotive & Aerospace. The automotive industry has been facing an unprecedented technology and business model transformation, driven mainly by Connected, Autonomous, Shared and Electric mobility (CASE). These trends will continue to drive the industry evolution going forward. The industrial manufacturing sector is witnessing the importance of the Digital Twin in maintaining operations within the manufacturing ecosystem, and the emerging and expanding role of collaborative robots, remote work and the virtual shift in the manufacturing sectors.

D) Energy and Utilities: Cloud migration has helped companies leverage solutions for automated adaptive planning and scheduling of production, logistics and service processes, which in turn will enhance operational efficiency by reducing human interventions.

E) CPG, Retail and Pharma: Competition from Direct-to-consumer companies is changing business models for CPG players. Companies are investing in customer-centric digital technologies, such as Virtual Shelves, Digital Kiosks, Self-Checkout, Digital Reality, etc. As pharma companies generate a huge amount of health data, linking them to new technologies to build digital platforms is the way forward to transform their businesses. Emerging technologies, such as mhealth, Robotic Surgeries and 3D Printing, are paving their way in the Life Sciences industry.

F) Hi-Tech, Media and Entertainment: Direct-to- Consumer is a strong theme emerging from the necessity to understand customer preferences and behaviour. In the Media and Entertainment sector, content creation and prediction, along with personalization, are the keys to providing a seamless user experience. In Hi-Tech, 5G technology is slated to drive the market for the next several years and open opportunities in Over-the-top (OTT) and E-commerce.

FY 2019-20 marks the fourth consecutive year of industry-leading double-digit growth from LTI in constant currency terms.

Major Achievements

In FY 2019-20, LTI further strengthened its partnership and alliances ecosystem. LTI received the AWS SAP Competency partner certification, positioning it on an exclusive list of AWS global partners. Elevation of LTI to Gold partnershipwith Pega and Premier partnership with mulesoft reaffirms the resolve of the business to remain relevant to clients.

During the year, LTIs long-term rating has been upgraded by CRISIL to AAA/Stable from AA+/Positive. The National Stock Exchange of India Ltd. (NSE) has included LTI in its Nifty Next 50 Index.

Large Deal Wins

A) A US based insurance company, a new logo has selected LTI for a multi-year, multi-million-dollar managed services deal for its IT infrastructure and IT security operations

B) A US based utility company, a new logo has selected LTI for multi-year, multi-million-dollar deal to provide Cloud and Infrastructure Managed services

C) Won a multi-year, multi-million-dollar managed services engagement with a European financial institution, a new logo

D) A leading power generation company chose LTI as its partner for a greenfield and organization-wide implementation of SAP S/4 HANA

E) A multi-year, multi-million-dollar deal for transforming the global application operations of a global auto ancillary manufacturer

F) An apex government body selected LTI to create a conceptual framework on Data Management, integrating and harmonizing the available data sets in various key sectors through a single-window system for better governance

G) A multi-year, multi-million-dollar deal for complete digital transformation, enhancing productivity and quality of service of a key government ministry by implementing new microservices-based applications and building a data and analytics platform

H) A large energy retail company selected LTI for an end-to-end managed services deal for its IT applications and infrastructure operations

Awards and Recognition

A) LTI ranked as a Leader in AI-based Automation Capability in Software Testing Services: AI and Digital Next-Gen Testing nelsonhall NEAT report 2019

B) LTIs Digital Transformative Agribusiness case study recognized in ISGs Global Digital Excellence: 25 Winning Partnerships Book

C) LTI ranked as HFS Top 10 iot Service Providers 2019

D) LTI featured as a Major Contender in Everest Group Talent Readiness for Next-generation IT Services PEAK Matrix™ Assessment 2020

E) LTI positioned as a Major Contender and Star Performer in Everest Group Application and Digital Services in Banking - Services PEAK Matrix™ Assessment 2020

F) Won the SAP Pinnacle Award for Industry Innovation Partner of the Yea Rs 2020

G) LTI is now a constituent of the FTSE4Good Index Series following the June 2019 index review

H) LTI has been felicitated with the ZEE Business National CSR Leadership Award 2019 for Innovation in CSR practices

Significant Initiatives

The advent of newer and efficient technologies is driving extraordinary changes across different industry verticals all over the world. During these tumultuous shifts, there are early signs of winners who would outgrow their competitors and establish themselves as Breakaway Enterprises. The common thread across these companies is they are fast adopters of technology and are reshaping their organisation at a pace and agility that has not been witnessed in the past.

At LTI, we believe enterprises need to master four essential plays to be a breakaway leader:

• Operate to transform - leveraging automation in everyday operations and solving for the unstated needs

• Data driven Organization - harnessing the power of analytics

• Experience Transformation for their customers and employees

• Digitize the Core by leveraging real-world know-how of the clients industry domain

LTIs go-to-market strategy that is believed to help enterprises to be breakaway leaders continues to be the same as last year. It is continuously working towards strengthening to solve along these four plays by investing in people and sharpening capabilities. LTIs programmatic capability building focuses on hiring and re-skilling employees in digital technologies, developing vertical-centric platforms, augmenting key partnerships and acquiring unique capabilities.

Xfh - LTI Design for Thriving in the WFH Future

For the foreseeable future, WFH is the new global norm.

As with any competitive landscape, some organizations will find ways to adapt and thrive under a fully distributed model, while others will, unfortunately, flounder.

Thats what the xfh model is all about: helping organizations make sense of their own WFH model, understand the layers that comprise it, then drive meaningful and impactful interventions at each of those layers - and across all layers - to ensure optimal business outcomes.

At LTI, the WFH is broken down into five layers, each with a specific set of interventions, tools, governance and outcomes - these layers traverse foundational needs to include both team and individual requirements.

LTI has demonstrated agility and nimbleness to adapt to the challenges posed by covid-19. This, combined with its strategy to help customers become Breakaway Enterprises, is enabling LTI stand out in the marketplace.

Human Resources

LTI crossed the 30,000-employee mark in FY 2019-20. The LTI culture is one of inclusivity and transparency. A gender- inclusive workforce is a natural result of this outlook, which is deeply woven into its ways of working. As of March 31, 2020, 31% of its workforce comprises women. LTIs unique recruitment programme Revive with LTI provides return- to-work opportunities to experienced women professionals, who are currently on sabbatical, under which they receive on-the-job training, mentorship from senior leaders and the opportunity to work on trending technologies in LTI.

In the area of talent management and digital skilling, the business has launched an AI-based solution that will help contextualize and speed up hiring, skilling - specifically focused on digital - and deployment. It provides accurate ways of matching the right talent with the relevant job at speeds that significantly cut down on sourcing and hiring times. Besides providing a business-context based skill map-gap analysis, it also ensures an improved employee as well as candidate experience.

A key goal for the business in FY 2019-20 has been to focus on continuous reduction in attrition. Towards this,

LTI launched the ilead series to help first-time managers develop their leadership skills and help in talent retention.

To tap the vast talent pool in colleges, LTI flagged off the Brand Icon initiative - a strategic programme designed to engage with selected colleges, not just for branding but from a 360-degree-development perspective between academia and corporates. Student development programmes like webinars and workshops were conducted by the LTI industry experts.

The global sales leadership incubation programme - irise

- has won recognition at the 2019 Stevie Awards for Great Employers. Currently in its 3rd batch, irise is a 12-month onboarding programme aimed at building the global sales leaders of tomorrow. In its recent report "Talent Readiness for Next-generation IT Services PEAK Matrix™ Assessment 2020: Closing the Demand-Supply Gap", the Everest Group has ranked LTI as the leading service provider for talent readiness for next-generation data services skills. This

Ranking is on account of LTIs focused talent development efforts across the entire data value chain of data storage and management, data gathering, and data analytics.

In response to the COVID-19 outbreak, LTI has swiftly enabled the work-from-home option for almost all of its employees, ensuring the safety and well-being of its employees, while maintaining continuity of operations.

A global helpline and email address have been set up to answer questions about COVID-19. Regular updates and information to employees through emails, Intranet and other communication channels have been ensured. An internal portal has been set up which acts as a one-stop destination for accurate information and guidelines about COVID-19.

For India-based employees, LTI saferadius - a GDPR- compliant return-to-work app-based solution was launched to track and monitor an employees health and safety, and for issuing regional alerts from the HR and Admin teams.

Risks and Concerns

Client relationships are at the core of the business. LTI enjoys a history of high client retention and continues to derive a significant proportion of revenue from repeat business built on the successful execution of prior engagements. Also, efforts are on to expand the client base and geographies, as well as increase the value-add of deliverables.

The major risks faced by the business include failure to align the services portfolio with newer and in-demand technologies, leading to lower operating revenue. A technology architecture group has been created to ensure continuous skill alignment with market needs. Evolving geo- political and economic conditions may affect the clients business and LTIs delivery, which is mitigated by regular monitoring. Changes in immigration policies of countries where LTI has significant business may affect its ability to position consultants at client locations.

With a majority of the revenue being foreign currency denominated, the business carries translation and transaction foreign exchange risks. However, expenses in respective currencies provide a natural hedge.

Employees are the real assets for the IT industry. In order to compete effectively, the ability of the business to attract and retain qualified employees is critical. Attrition of experienced and talented employees impacts organizational knowledge and relationships. LTI has launched programmes for employee engagement and has a framework in place to reward high-potential employees.


The risks emanating from the global pandemic continue to evolve. With sustained investments in capabilities and clients concurring with a xfh approach in response to covid-19, the business is confident of a robust, resilient and sustainable business model.



During the year, subsequent to acquisition of control, Mindtree was consolidated as a subsidiary in the L&T Group, from the second quarter of the financial year.

Mindtree is a global technology consulting and services company, helping Global 2000 corporations marry scale with agility to achieve a competitive advantage. Born digital in 1999, more than 340 enterprise clients rely on the entitys deep domain knowledge to break down silos, make sense of digital complexity and bring new initiatives to market faster. Mindtree enables IT to move at the speed of business, leveraging emerging technologies and the efficiencies of continuous delivery to spur business innovation.

Mindtree offers an extensive range of technology- driven customized solutions. Mindtrees digital strategy is pivoted on multiple solutions, ips, and frameworks cutting across several service offerings, covering areas such as real-time recommendations, social media intelligence, workforce productivity, customer analytics, and sales enablement. The entitys expertise in digital solutions span across

Adobe, Salesforce, and Sitecore. It services clients in diverse industries such as Retail, CPG and Manufacturing, Travel & Hospitality, Banking, Financial Services & Insurance, High-Technology and Media.

Mindtree is a Digital Next company with the main emphasis on the digital transformation of its clients to make them a better suited for future disruptions. Mindtree has grown as a trusted service provider for its clients and has repeatedly proven its technological expertise and domain capabilities.

Digital Next Intelligent Enterprise for Future Possibilities

Mindtree plays the foremost role in its clients digital transformation and customer experience development. Mindtrees clients businesses are highly influenced by their customer experience and the ease of use of all provided services. Emerging technologies are defining businesses even more than before. Therefore, companies have to be more aggressive in their uptake of new offerings, before they disrupt their business models.

Mindtree develops innovative solutions and platforms around such unique customer and cross-sector requirements.


At Mindtree, automation strategy is platform and technology agonistic. Niche technologies like Machine Learning and RPA are used to automate repeatable and reusable tasks. At present, 764 bots are employed along with Mindtree Minds to provide top-notch client deliverables.

Application Managed Services

Mindtree has developed unique end-to-end workflow-driven Application Managed Services that take complete lifecycle ownership of client enterprise applications. Through the AMS practice, Mindtree has grown to become a strategic partner for clients business growth. The wide range of services provided to clients through this practice includes:

• Transition and planning management - Performing system audit and creating a tailored plan for IT transformation completely aligned to business objectives and relevant kpis

• devops - Automation of all possible IT services and transforming existing business into an agile and lean IT system

• Test Automation capabilities - For complete software test automation of client application with reduced time to production

• End-to-end Managed Services - Providing omnichannel support and business aligned kpis

• Application Modernization - To identify and eliminate redundancies in client systems, thereby enhancing customer experience through increased speed of operation, new features and add-ons

Expert Thinking

Mindtree helps its clients re-imagine their business, providing unique solutions and digital transformation by leveraging next-generation and emerging technologies, including Blockchain, Machine Learning and Artificial Intelligence, Internet of Things and Cloud. Services ranging from ideation to customized solution building and implementation are carried out across the entire digital value chain.

Alliance and Partnerships

• Microsoft: Gold Cloud Partner, through which access to all Microsoft resources is available, delivering the best possible solutions to its customers

• Salesforce partner ecosystem: A Platinum partner, specialising in Salesforce implementation strategies to drive digital growth through client engagement

• SAP: Mindtree is the worlds only integrated service provider with expertise on the SAP HANA platform

• Amazon Web Services: Advanced Consulting Partner in the Amazon Partner Network (APN) for AWS

• Adobe: Business Partner within the Adobe Solution Partner Programme, which brings together a full suite of customer experience transformation services and Adobe Experience Cloud solutions to accelerate the digital transformation journey

Business Environment

The IT BPM sector in India grew at the rate of 6.1% year-on-year. The IT and ITES industry grew from USD 170 billion in FY19 to USD 181 billion in FY20. Indias IT industry contributed around 7.7% of the countrys GDP India has become the largest digital capabilities hub in the world with about 75% of the global digital talent being present here.

The covid-19 pandemic has had an unprecedented impact at different levels viz. Health and safety risks for Mindtree Minds, impact on clients which may lead to reduction in customer discretionary IT spends, delivery disruptions as well as increase in financial, compliance and operational risks. Mindtree set up a War Room consisting of senior leaders from different functions to co-ordinate response to covid-19.

Significant Initiatives

Customer satisfaction is one of the key performance indicators in Mindtree. Customer feedback is regularly gathered through quarterly Project Feedback Survey (PFS) and annual Customer Experience Survey (CES) which helps in monitoring account health and interest.


The entity has been recognized on multiple fronts for its capabilities in a wide range of offerings including Digital, Cloud, Automation and other next generation developments. A few highlights include:

• Mindtree has been placed on The Best of The Global Outsourcing 100 list by the International Association of Outsourcing Professionals (IAOP)

• Zinnov positions Mindtree in the Leadership Zone in Overall Digital Services and across Six Categories in the Zinnov Zones for Digital Services 2019 Report

• Mindtree named Overall Winner of the 2019 ISG Star of Excellence Awards™ for Core Technology Services

• Mindtree won at the 2019 Paragon Awards™ in the Excellence Category for Outstanding Service Delivery for a Global Airline

• Mindtree recognized as an Innovator in Avasants Intelligent Automation Services radarview™ Report 2019 - 2020

• Received several awards from The ISG Provider Lens™ Report viz. Leader for providing Professional Services for Salesforce Sales and Service Cloud in USA, Leader for Private/Hybrid Cloud - Data Center Services & Solutions, Rising Star in Service Operation and Delivery (US), Global Leader for Next-gen ADM services

• Conferred South Asian Federation of Accountants (SAFA) best-presented accounts award for its strong ethics, excellence in financial reporting and corporate governance

• Best Compliance Framework award by UBS Forums

Environment, Health and Safety

The entity is determined to reduce its carbon footprint through initiatives to conserve energy and water. It continuously strives to improve energy efficiency, increase the use of renewable energy, enhance water sustainability and reduce waste to landfills.

The entity has installed a turbo core chiller, resulting in an average annualized reduction of power consumption. Installation of LED fixtures across locations, UPS optimization, AC retrofit activity, shift rationalization through Routematic Application, a common bus system and so on led to reduced carbon emissions. In order to reduce freshwater consumption and to make its Pune facility a zero-discharge facility, its sewage treatment plant was upgraded to a newer technology. At Bengaluru, various water conservation programmes, such as installation of advanced aerators and reuse of RO reject water, resulted in saving of fresh water.

Gladius iot, a full-fledged building iot solution which integrates all aspects of building management systems with the IT systems, is operational at Mindtree Kalinga and Bengaluru West campus. The system monitors energy consumption in the building, across the floors and prevents avoidable energy losses.

The entity is committed to providing a safe and healthy workplace to employees. The aim is to make it a zero- incident campus. Post covid-19, the entity is closely following WHO guidelines for health and safety. It has set up a 24-hour medical hotline for all employees to report any covid-19 concerns, including diagnoses. Top priority has been given to safeguarding the health and safety of employees, while also ensuring the continuity of customer deliverables.

Human Resources

Mindtree creates a work environment where Mindtree Minds feel recognized for their efforts and contribution, thus creating an organization nurturing high performance, innovation and execution excellence. Through its focus on diversity and inclusion, women-centric leadership programmes cover more lady minds throughout the organization. The onboarding programme for new Mindtree Minds and Mindtree Kalinga - The Global Learning Center was designed to create Engineers of Tomorrow. The homegrown, cloud-based learning platform - Yorbit - has ove Rs 2400 courses that cove Rs 900+ skills. More than 87,000 courses have been completed on Yorbit in the current FY. The entity also has an Enterprise Leadership Programme for leaders identified from a combination of Talent Review and Leadership nominations to ensure a diverse group across functions (sales, delivery, enabling functions) and geographies. Spoton - Mindtrees Rewards and Recognition tool - has been built to strengthen the ways by which Mindtree Minds can recognize each other, and provides People Manager and Peer Awards that focus on instantaneous recognition.

Risks and Concerns

As a global enterprise, Mindtree is exposed to a range of external as well as internal risks that have a significant impact on its performance. In order to efficiently manage these, a strong risk management architecture has been built. The entity identifies, assesses, manages and reports on the principal risks that could affect its ability to implement strategies and deliver commitments. Its robust enterprise risk management programme propels a culture of informed and responsible risk handling to achieve the desired growth.

The business faces the risk of revenue concentration with top clients. Changes in immigration policies of countries like the US, which is tightening its visa norms, where Mindtree has significant business, may affect its ability to position consultants at client locations. It could face margin pressures due to competitive pricing, tactical movements by competitors to gain market share, or escalating costs. With a majority of the revenue being foreign currency denominated, the business carries translation and transaction foreign exchange risks. A formal Board- approved hedging strategy is reviewed periodically.

Cyber Risk has emerged as a top risk across industries as organizations are moving to newer areas of engagement such as social, mobile computing and cloud computing.

The entity has leveraged leading industry standards to develop cyber security frameworks. In the knowledge industry, attracting and retaining people with the right skills is imperative for long-term success. Employee-friendly policies, learning plans and career growth options have ensured that attrition remains at tolerable limits.


The covid-19 outbreak has been creating an unprecedented level of uncertainty with major economies virtually coming to a halt. The business is well equipped to handle the global crisis based on the business continuity plan that has been successfully implemented to ensure the health and safety of employees while fully supporting clients worldwide. Looking ahead in 2020-21, the business anticipates a drop in demand, curtailment of discretionary spends and cost-optimization pressure within clients business. At the same time, the business also expects demand from clients for digital and transformational services as they invest into data, cloud-enabled solutions, customer-centric and end user experience businesses.

Focus would be on signing multi-year annuity deals, rationalizing tail-accounts and going deeper into the limited set of strategic clients. The business will continue co-selling with long-standing strategic partners.

The business will continue to drive operational efficiencies for margin-expansion and continue the profitable growth journey.



L&T Technology Services Limited (LTTS) is a leading global pure-play Engineering Research & Development (ER&D) services company. It offers design and development solutions throughout the product development chain and provides services and solutions in the areas of mechanical and manufacturing engineering, embedded systems, engineering analytics and plant engineering. LTTS customer base includes 69 Fortune 500 companies

And 53 of the worlds top ER&D companies across industrial products, transportation, telecom & hi-tech, medical devices and plant engineering. The business also provides digital engineering advisory services to some of the worlds leading enterprises. The key differentiators for LTTS business are its customer-centric industry innovations, domain expertise, and multi-vertical presence spanning major industry segments.

Transportation: LTTS offers the complete gamut of engineering services and solutions for its global customers in the transportation industry, including oems and Tie Rs 1 suppliers in the Automotive, Trucks & Off-Highway vehicles and Aerospace sectors.

In the automotive sector, LTTS helps its customers through best-in-class platforms and solutions in areas such as Advanced Driver Assistance System (ADAS), Autonomous Drive (AD) and Electrical vehicles (Ev). In the Aerospace sector, LTTS offerings encompass a wide spectrum, including aero engine, aero structure & systems, avionics, air traffic management and new-age disruptive digital transformation solutions, which cater to all phases of the Aircraft Lifecycle - design, manufacturing, and aftermarket services. LTTS has over a decade of domain expertise in the Trucks and Off-highway segment, and offers services across industries like Construction & Mining, Cranes & Material Handlers, Commercial Vehicles, Agricultural & Gardening Equipment, Powersports and Polymer.

Industrial Products: LTTS helps its OEM customers across building automation, home and office products, energy, process control and machinery backed by its deep domain expertise across software, electronics, connectivity, mechanical engineering, industrial networking protocols, User Interface/User Experience (UI/UX), test frameworks and enterprise control solutions.

Telecom & Hi-tech: LTTS Telecom and Hi-tech vertical provides engineering services and solutions that cater to five key sectors: Telecom, Consumer Electronics, Semiconductor, ISV, and Media & Entertainment. For the Telecom sector, the services provided include product variant design & development, maintenance, testing, support, optimization, system integration and professional services (pre-deployment, deployment & post-deployment). For the Semiconductors industry, LTTS provides turnkey design services, IC design services, hardware system design, platform software, modem services, verification & validation, multimedia, connectivity, storage, mechanical engineering, and customer engineering support.

For the Consumer Electronics segment, it provides services in the areas of product conceptualization, design & development, platform software, testing & certification, manufacturing support, product maintenance, and product launch support. For the Media & Entertainment industry, it provides services in product engineering, product conceptualization, design & development, testing & certification, manufacturing support, product maintenance, and value engineering. And in ISV, LTTS undertakes application engineering, vlsi, cloud engineering, product uplift, platform development & migration, product support, testing and certification.

Plant Engineering: As an engineering, procurement, and construction management (EPCM) specialist, LTTS supports every phase of a plants lifecycle, from concept to commissioning. The business enables its customers to address all their engineering requirements to streamline their processes, resolve downtime issues, and adhere to statutory, human safety, machine safety, regulatory compliance as well as local and global standards. LTTS provides end-to-end solutions in the areas of plant design, process engineering, project management, construction management, MOC (management of change), and handover of operations to its customers in the Chemical, Consumer Packaged Goods (CPG), and Oil & Gas sectors.

Medical Devices: LTTS helps medical device oems address various industry challenges, including acceleration of the product development cycle, reduction of time-to-market, value engineering, and product launches in various geographies in compliance with the regional regulatory requirements. It focuses on delivering solutions In in-vitro diagnostics, patient mobility services, musculoskeletal services, surgical services, cardiovascular, home healthcare and general medical. LTTS also provides pre-compliance testing and validation support, including product/ compliance remediation, complaint management, and regulatory documentation support.

Business Environment

According to NASSCOM, Indias ER&D services sector (comprising embedded systems, ER&D and product engineering services) is the fastest growing sector within the Indian technology space - estimated to grow at 11 percent Y-o-Y to reach USD 32.7 billion in FY20. NASSCOM reports that, over the last 5-6 years, Indias ER&D services sector has been a story of consistent double-digit growth, even as the overall IT industry has grown in single digits.

The global ER&D spend remained strong at USD 1.5 trillion in the calendar yea Rs 2019 (growth of 5.3%

Y-o-Y), driven by increasingly software-led engineering and digital technologies (like iot and analytics). Digital Engineering is going to be the focus area for enterprises with growing requirements for a better user experience and personalization, greater adoption of platforms and cloud, and consolidation to build full-stack capabilities.

Zinnov reiterates this fact by observing that the global ER&D spend is resilient and has witnessed growth despite the slowdown and geo-political factors. Zinnov also forecasts that enterprises will continue to invest in Digital

Engineering initiatives to stay relevant. The global spend of Digital Engineering is expected to grow at a CAGR of 19 percent, from USD 403 billion in 2019 to reach USD 1153 billion by 2025.

LTTS service portfolios have well-defined offerings in the ER&D sector. Through its services and solutions in the areas of Core Engineering, Digital Engineering and Digital Advisory Practice combined with its Innovation Engine, the entity is well- positioned to provide customers with business value propositions throughout their value chain needs across domains and industries. This is further corroborated through its positioning as an established technology leader by industry experts such as Zinnov, ISG, ARC, IDC, nelsonhall, and Frost & Sullivan.

Major Achievements

LTTS had a healthy inflow of projects across all its verticals. Several multi-million-dollar deals were won across the globe.

Order Wins Transportation

• Airbus India selected LTTS to manage their Avionics Software Development, v&v (validation & verification) and Data Analytics

• A European components supplier for autonomous vehicles has selected LTTS as its engineering partner for key programmes in Advanced Driving Assistance Systems (ADAS) and Automated Driving (AD) domains

• A leading Swedish Automotive OEM has awarded LTTS a multi-year programme to set up a SCRUM team to develop and manage the software components in Brakes, Steering, Suspension and Climate Control Domains

• A leading auto parts maker has awarded LTTS a multiyear programme for design and development of their Engine Control Unit (ECU) for enhanced fuel efficiency for a new range of powertrains for their vehicles

• A global automotive manufacturer has chosen LTTS for the development of their AUTOSAR platform and integration of 5G telematics modules

• LTTS was selected as strategic partner by a European automotive manufacturer for its electric Powertrain (epowertrain) practice

Industrial Products

• For an industrial automation company, LTTS won an order to develop iot firmware for next-generation motor drives and controllers

• LTTS is setting up a development and design centre in India for a European manufacturer to provide engineering projects across Embedded, Mechanical and Connectivity domains

• A global manufacturer of Drinking Water Management solutions has chosen LTTS to be their sole engineering services partner to support various advanced digital programmes including NPD and sensorization

• A major industrial automation company has awarded LTTS a multi-year contract to develop an electrical power module using end-to-end engineering protocols

Telecom and Hi-Tech

• LTTS won a contract from a global technology conglomerate for vlsi engineering services spanning its product suite of AR and vr enabled solutions

• One of the worlds leading technology firms has awarded LTTS a multi-year deal involving an engineering analytics program for next-generation wireless laptops and processors

• The worlds leading datacentre solutions provider has awarded LTTS a programme to validate their family of high-speed platforms and to set up a Centre of Excellence (coe)

• LTTS will deploy its intelligent buildings framework i-BEMS to help a multinational technology company optimize energy conservation, implement analytics and enhance UX

• A European media and communications conglomerate awarded LTTS a contract to develop next-generation Hybrid Boxes that support 4K resolution

• LTTS has been awarded a programme by a global media firm to design and develop a next-generation chipset for broad-band and video security

Medical Devices

• For a leading medical device manufacturer, LTTS is executing a complete Design History File (DHF) and European Union (EU) Medical Device Regulation & Remediation project in the Newborn Care and Neurology markets

• LTTS has secured the next phase of development of a digital health programme for one of the top life sciences companies in the US

• A global medical devices OEM awarded LTTS a contract to develop a new iot platform to remotely monitor their life sciences products installed globally

• For a global healthcare company, LTTS was chosen to be their engineering partner to set up a coe that will provide support investigating and analysing reporting of complaints for regulatory filing in the Us and Europe

• LTTS secured an order from a medical equipment manufacturer for the design and development of a new bedside patient-monitoring device

Plant Engineering

• A leading German chemical company has awarded LTTS a programme to offer end-to-end services for a brownfield plant expansion

• LTTS won a large deal to implement ove Rs 600 engineering applications for a leading US-based EPC company

• One of the largest beverage companies in the world has selected LTTS for an Engineering, Procurement and Construction Management Programme (EPCM) to replace the age-old wastewater treatment system at one of its key manufacturing plants

• LTTS was awarded a project to set up an Engineering value Centre (evc) by a multinational brewery company for execution of site-based projects

Customer Recognition

• LTTS launched the Smartest Office Campus in the World in Israel for a leading technology conglomerate, which runs on its proprietary smart building platform i-BEMS

• Agappe Diagnostics, a diagnostics reagents and equipment manufacturer, launched the first indigenously developed blood cell counter in partnership with LTTS.

The blood cell counter provides accurate diagnostics for critical ailments such as dengue fever, rat fever, allergic conditions, leukaemia, typhoid, and anaemia

• LTTS was conferred with the Performance Excellence Award by a leading global OEM for exceeding performance standards including quality, cost and service

Awards and Recognition

• The Confederation of Indian Industry (CII) conferred LTTS with the CII Industrial Innovation Award, 2019 and recognized it as one of the most innovative Indian companies in the Services category in the Large Enterprises segment

• LTTS was awarded recognition for High Growth in Women Employment and Highest Exporter-IT (Mysuru Region) by the Software Technology Parks of India (STPI)

• LTTS was rated as an Expansive and Established Leader across 10 verticals by Zinnov

• LTTS was recognized as a Leader in Product Engineering and Manufacturing Services in the Automotive & Aerospace sectors by ISG

• nelsonhall rated LTTS as an overall leader in Digital Manufacturing Services

• LTTS was rated as Leader in Worldwide Business and Industrial iot Engineering and Managed Services 2020 by IDC

• Everest Group recognized L&T Technology Services as Leader in Automotive Engineering Services

Significant Initiatives

LTTS believes in incremental efforts to enhance its

Technology and service footprint across the industry Sectors that it caters to globally, and has launched various initiatives that enable it to realize its vision and demonstrate its commitment towards excellence.

• LTTS inaugurated an Aerospace and Defence Engineering Design Centre in Rockford, Illinois, to cater to the new- age digital requirements of the aerospace and defence markets

• LTTS developed the worlds first cost-effective Robotic Endo-training Kit in association with GITA and Department of Science and Technology (DST). This kit is a futuristic surgical training robot that gives a high- definition observation of the patients anatomy and the instruments. The research and development for the kit has been a joint effort between India and the Republic of Korea

• LTTS new framework unveiled a line-up of Digital Manufacturing Solutions that can unlock value-based digital transformation and help global manufacturers scale-up their digital initiatives

Environment, Health and Safety

LTTS has aligned its sustainability goals with that of its parent, L&T, with the objective of contributing to the creation of a sustainable world by minimizing environmental impact, maximizing social outreach and offering sustainable solutions. As part of this roadmap, LTTS

Is constantly undertaking various initiatives in the areas of water and energy conservation as well as efforts to reduce the carbon footprint.

From water-cooled chillers, occupancy sensors, LED lighting, and elevator operation optimization to pressmatic taps, wastewater treatment and usage of technology to reduce travel and logistics, LTTS ensures optimal measures to safeguard the environment. LTTS also follows and implements all the industry standards, protocols, and best practices to ensure the workplace health, safety, and well-being of its workforce of ove Rs 16,000+ employees.

Human Resources

LTTS HR policies have strongly focussed on creating a culture of excellence and achievement. Abiding by the People, Process, and Portals parameters, the entity is striving towards making employees at all levels an integral part of the decision-making system. LTTS launched multiple new employee support and welfare initiatives this year.

A few of these are:

Global Engineering Academy (GEA): The GEA provides an invaluable opportunity for LTTS employees to reskill and reboot their domain knowledge. There are 15 technology tracks that employees can select from to advance their digital skillsets and be eligible for new opportunities across technology domains.

DIGICIANDOS: This programme helps employees gain proficiency in the latest technologies. With over 400 attendees, 3 sessions have successfully trained participants on AI and Mobility. An additional USP, byte-sized learning modules that can be accessed through handheld devices will be launched soon, enabling employees to learn on-the-go.

Risks and Concerns

The economic slowdown in key geographies or cyclical downturns in key segments could materially affect revenue growth and profitability. The inability to innovate and develop new services and solutions to keep up with customer expectations and evolving technologies could result in lower growth traction. Changing immigration laws and policies can impact the entitys ability to provide services to customers. Exchange rate fluctuations could materially impact the results of operations.


According to NASSCOM, the Indian ER&D landscape has been growing at a healthy rate of 11 percent y-o-y. As an ER&D leader in the industry, this bodes well for LTTS. The entitys strategic approach is to assess the changing business needs of customers and build innovation Infrastructure to meet those needs, thereby enabling customers to gain a market share and the technology edge.

Current circumstances have presented a unique opportunity for providing unwavering support to the customers at a difficult time. LTTS has identified areas where it can support customers to see through the current challenges as well as help them come out stronger. It has launched services for the manufacturing industry to address the shift in demand with its Manufacturing Line Expansion/Re-Design/Transfer services, achieve business continuity with its AGILE Sourcing and Supply Chain services and plan healthcare for their machines with the Remote Asset Care services.

Furthermore, based on conversations with the customers and industry experts, to address the roi disparity in the implementation of the digital initiatives, the business has carved out a Digital Advisory Practice (DAP). The practice goes beyond selling solutions and services and helps companies to architect and execute their digital roadmap with LTTS as a consulting partner.

The industry outlook points to a steady demand for ER&D- led innovation in the form of cutting-edge technology solutions that will help transform customer experiences.

LTTS aspires to be the transformation agent that customers can bank upon to realize their vision and aspirations.



L&T Finance Holdings (LTFH) is the holding company for the financial services businesses of the Larsen & Toubro Group. It is one of Indias most valued and diversified nbfcs, having a strong presence across the Lending & Investment management businesses. LTFH is a financial solutions provider catering to the diverse needs of its customers across various sectors, including:

• Rural Finance, comprising Farm Equipment Finance, Two-Wheeler Finance, Micro Loans and Consumer Loans

• Housing Finance, comprising Home Loans, Loan against Property and Real Estate Finance

• Infrastructure Finance

• Mutual Funds

The Wealth management business is being divested to IIFL wealth, the approval for which was received in April 20. With the aim of creating a single, unified lending entity with a wider and stronger capital and asset base, the process of amalgamating three lending entities - L&T Finance Ltd., L&T Infrastructure Finance Company Ltd. And L&T Housing Finance Ltd. - has been initiated.

Business Environment

The Indian economy in FY 2019-20 began on a downward trajectory, and continued to slow down further, weighed by structural stresses, such as sluggish private investment, a significant decline in savings rate and the highest unemployment rate ever recorded.

A broad-based breakdown in consumption further accentuated the slowdown.

On the sectoral front, a bountiful monsoon supported the growth in agriculture and allied activities. The healthy water reservoirs augured well for rabi crops. Industrial growth, however, slowed down on the back of sluggish manufacturing activity. Growth in the services sector too was moderate due to subdued activity in the trade, hotel, transport and communication sectors.

Indias fiscal deficit stood at 4.6% of GDP in 2019-20 as per the official report of the Department of Expenditure, Government of India. The financial markets remained jittery in FY20 due to the domestic economic slowdown, concerns on fiscal slippage and geo-political tensions. Weaknesses in overall economic activity also put pressure on the business growth of lenders, including nbfcs.

Government revenues have taken a significant hit due to the COVID-19 impact and the lockdown. On the other hand, expenditures have risen due to the various costs arising from the many virus containment efforts and the enforcement of the lockdown.

However, AAA rated, large-sized nbfcs were relatively better placed with liquidity, comprising liquid assets, undrawn lines from banks, and, in some cases, funding lines from group companies.

Overall, FY 2019-20 was a very challenging year, with funding markets seeing multiple periods of disruption and risk aversion from Mutual Funds and Banks especially towards nbfcs. However, in these difficult times, LTFH has been able to time the markets and has successfully raised highest annual long-term incremental borrowing (across various instruments) since FY 2016.

The business is comfortably placed with respect to both liquidity and interest rate risks, due to its robust Asset Liability Management (ALM) and strong risk management framework.

The average assets under Management for the Mutual Fund business had marginal Y-o-Y increase in FY20, the key focus areas being:

• Continued focus on retailisation of assets with diversified mix of distributors and customers

• Increase in market share through new customers

• Enhancing market share in high-quality fixed-income assets

Significant Initiatives

During FY 2019-20, the business continued to focus on sustainability of performance with steady margins, stable asset quality, focused growth and building a strong liability franchise. The specific focus for the year was on the following areas:

A) Diversification of sources of funds leading to stronger liability franchise

The business has a well-diversified borrowing mix in the form of Bank borrowings (including PSL), ncds (retail and wholesale), Preference shares and ecbs. It has strengthened its liability profile with higher proportion of long-term borrowings through diversified sources of funding during the year.

B) Business realignment with focus on the Right to Win

Some of the key business changes undertaken include:

• The business launched a pilot run of consumer loans in Q3 FY2019-20 and has disbursed the product to ~12,000 active customers with an excellent track record of repayment with the aid of data analytic tools

• In the Infrastructure Finance segment, the business is also evaluating diversification into new sectors including funding to City Gas Distribution (CGD) companies, ports and airports. In line with the strategy of investing in products with a Right to Win, the Structured Finance Group (SFG) and Debt Capital Markets (DCM) were classified as defocused business during the year and have been run down significantly over the last year (50% yoy reduction)

C) Maintained market share by leveraging on business strengths

LTFH increased its market share in the Farm and Twowheeler sectors, while maintaining business strengths across the businesses, through investing in footprint expansion, team quality enhancement, technology infrastructure and data analytics framework.

Major Achievements

LTFH, through rigorous execution of digital proposition and domain expertise, has been able to capture a 9.3% market share in the Two-Wheeler Finance segment in FY 2019-20. A new scheme, Sabse Khaas Loan was introduced to target the unfinanced sector with no hypothecation and a lower rate of interest as compared with credit cards.

LTFH focussed on touch-free collections, which accounted fo Rs 32% of the total collection in FY20. LTFH has been

Able to maintain its market share of 14% in Farm Loans and strengthen its position as the #2 player in the Farm Equipment Finance industry. The rich customer base in Tractor Financing services, built over the years, is further strengthened by extending the refinancing facility to its prime customers with a good credit and payment history.

LTFH has strengthened its Right to Win in business by moving to a desired OEM and Asset mix and by de-risking over-dependencies. Disbursement from preferred oems now contributes 73% of the total disbursements in FY 2019-20.

LTFH disbursed RS 9,884 crore of micro loans in FY 2019-20, benefiting ove Rs 28 lakh women in rural and semi-urban areas who depend on dairy, grocery shops and similar allied activities for earning their daily livelihood.

LTFH introduced the Mid Term Renewal Product (MTRP) scheme which aims to provide pre-approved early repeat loans for existing customers with an excellent repayment history, resulting in repeat business contributing 40% of the total business.

Despite the challenging environment witnessed in the housing market, direct sourcing initiatives have helped scale up home loans from 69% in FY 2018-19 to 72% in FY 2019-20.

With the strategy to optimise its sectoral mix, the business scouted for disbursement opportunities in newer infrarelated sectors and, during the year, has funded 2 projects of City Gas distribution (CGD) which are being executed by the AG&P group.

Asset origination with a clear perspective of Churn, the business achieved a key milestone of RS 25,000 crore of cumulative sell-down since FY17. Further, while there was a reduction in overall sell-down volumes during the year due to the liquidity challenges being faced by nbfcs and the consolidation of PSU banks, it managed to sell down RS 780 crore of Hybrid Annuity Model (HAM) road projects to public sector banks.

FY 2019-20 was a year which also saw more rating downgrades than upgrades. In such a difficult operating environment, LTFH was successful in being assigned a AAA rating by CRISIL for the first time (Octobe Rs 2019). With this, all 4 rating agencies (viz., CRISIL, India Ratings, CARE and ICRA) have reaffirmed / rated LTFH as AAA during FY 2019-20.

Environment, Health and Safety

LTFH recognises that the physical risks of climate change are very high, and thereby ensures that its operations and investments have a positive environmental impact in line

With its Sustainability Policy. The policy has environmental objectives including:

• Products and services that contribute to the sustainable development of the Indian economy while ensuring application of environmentally friendly practices

• To reduce the adverse impact of climate change, and promote energy efficiency and environmentally friendly operations

The business is working towards lowering Greenhouse Gas (GHG) emissions through its operations. It believes that its operational efficiency can be enhanced by measuring, managing and mitigating GHG emissions. The business is also in the process of phasing out ozone-depleting substances (ODS) by reducing their usage and has installed inverters in place of dgs to reduce carbon emissions.

Investments in technology are a part of LTFHs commitment towards sustainability. The digital transformation efforts - e-communications and mobile apps across its business segments - have led to an impressive reduction in paper usage and, in turn, emission reduction. 100% E-waste is re-cycled through registered recyclers in accordance with the E-Waste Management and Handling Rules.

Human Resources

The business believes that its people are its most important asset, and works with a clear plan for capitalizing and building upon their capabilities.

LTFH competes on the strength of its people; employees who are united by the core values of pride, integrity, discipline and ambition, and thrive in the climate of the Right People for the Right Culture. A culture of entrepreneurship and empowerment has been built, with Results, Not Reasons being at its core. Believing that knowledge is the differentiator, the business has modelled itself as a learning organisation by focusing on Stretch, Learn and Grow.

The business talent strategy, aligned with its goals, is performance oriented. The business believes that building individual capabilities with focus and direction and leveraging them in a structured manner through job rotation builds up organisational capability. It encourages employees who have demonstrated the right capability, the right attitude and the desire to Step Up. As part of its strategy to groom talent who are future-ready, cross-functional movements are encouraged and they are up-skilled through Education, Exposure and Experience.

LTFH is an equal-opportunity employer, where meritocracy is the norm, and helps build a forward-looking organisation that can deal with the ever-changing business landscape.

Risks and Concerns

At this juncture, there are several uncertainties that cloud Indias growth outlook and macroeconomic stability during FY 2020-21. The critical GDP contributors for India, comprising private consumption, investment and external trade, may get significantly impacted on the plausible scenario of a prolonged lockdown to contain the COVID-19 outbreak. The pandemic may have credit risk and liquidity implications for the NBFC sector. Despite steep monetary easing by the RBI, the cost of borrowing for nbfcs has witnessed an increase owing to fiscal slippage expectations and elevated risk premia for nbfcs. Furthermore, asymmetry in loan moratorium relief announced during the lockdown period (concessions from the asset side but not from the liability side) is likely to create liquidity stresses and ALM challenges for nbfcs.

The business of nbfcs is expected to experience a pressure on the nims owing to surplus liquidity in the banking system, coupled with a significant drop in new disbursements and fee income. Lower collections due to restrictive measures to counter the COVID-19 outbreak and the adverse impact on the earnings of the borrowers are likely to put additional pressures on asset quality and credit costs, which could be more pronounced in certain relatively more vulnerable segments, such as micro loans, loans against property (LAP), affordable housing and real estate segments.

With the onset of the pandemic in March 2020, the RBI has undertaken a series of radical policy measures to infuse liquidity into the banking system via Targeted Long Term Repo Operation (TLTRO), reduction in policy rate, widening the Liquidity Adjustment Facility (LAF) corridor, availability of funding for NBFC/HFC sector (TLTRO 2.0), etc. This has helped restore a degree of normalcy in short-term market rates. However, there has not been much effect on medium-long term rates which, at best, saw a marginal decline.

In April, following the Governments decision to hike its gross market borrowings for FY21 in the light of the economic package to mitigate the impact of the economic slowdown, there has been a rise in G-Sec yields reflecting market nervousness on account of anticipated higher fiscal deficit. Credit spreads have remained wide on account of heightened risk aversion from market participants, who see repayment stress affecting in particular, the NBFC sector, due to which interest rates for FY 2020-21 are anticipated to be elevated. This is despite the fact that the inflation rate is expected to remain benign due to the demand crunch both in the rural as well as the urban sectors and also due to likely low crude oil prices in the world market.

The business is confident of managing the hazards of adverse business conditions with the help of in-depth business knowledge, strong managerial capabilities, an agile execution engine, deep market penetration, risk mitigation through various market and credit checks, robust early warning systems and the extensive use of analytics.


The global macroeconomic outlook is overcast with the adverse impact of the covid-19 pandemic which has caused dislocations in global supply chains, among others. Several multilateral agencies have projected a recession for the global economy in 2020, with the International Monetary Fund (IMF) warning of the worst global recession in almost a century. Major nations, including India, have responded by expansionary monetary and fiscal policies to ensure liquidity and credit flow to their economies. Nevertheless, the pace of the containment of the pandemic will determine the depth of the recession while the policy responses announced in the meanwhile will support the pace of recovery in 2021.

Rating agencies and economic think-tanks have lowered Indias growth projections for the year FY 2020-21 to a lowly positive growth print on the back of factory shutdowns, supply chain disruptions, travel restrictions, reduced discretionary spending and a recessionary outlook for the global economy. Many believe this decline as a cyclical event and that Indias structural story is intact. However, a prolonged economic slowdown could adversely affect all credit intermediaries and financial markets. The asset quality of banks and nbfcs could further deteriorate amid the broad-based economic slowdown.

The outlook on inflation remains subdued during FY 202021 due to adequate buffer stocks in cereals, a good rabi harvest, record decline in global crude prices, low pricing power of firms and expectations of a normal monsoon in FY 2020-21.

LTFH expects that disbursements in retail will start gradually as the economy opens up, and in Infrastructure and Real Estate will be largely limited to tranche disbursements, while fresh disbursements are subject to higher risk controls.

LTFH remains resilient by continuing to focus on the strengths built over the past few years, viz. A strong ALM and enhanced liquidity on the back of well-established liability franchise, a strong balance sheet demonstrated through reduction in GS3 and comfortable capital adequacy.


The Development Projects business segment comprises:

A) Infrastructure projects executed through its joint venture company, L&T Infrastructure Development Projects Limited and its subsidiaries and associates (the L&T IDPL Group)

B) The Hyderabad Metro Rail project, executed through its subsidiary, L&T Metro Rail Hyderabad Limited

C) Power development projects executed through its subsidiary L&T Power Development Limited and its subsidiaries (the L&T PDL Group)

The operations of the Development Projects business segment primarily involve the development, operation and maintenance of basic infrastructure projects in the Public- Private Partnership (PPP) format, toll collection including annuity-based road projects, power development, power transmission and providing related advisory services.



L&T Infrastructure Development Projects Limited (L&T IDPL) is a pioneer of the Public-Private Partnership (PPP) model of development in India, which involves the development of infrastructure projects by private-sector players in partnership with the Central and State Governments. Since its inception in 2001, the entity has completed landmark infrastructure projects across key sectors like roads, bridges, transmission lines, ports, airports, water supply, renewable energy and urban infrastructure. It is one of Indias largest road developers, as measured by lane kilometres under concession agreements signed with Union and State Government authorities. Currently, L&T IDPL has 10 operational road assets and the Kudgi Transmission Project in its portfolio. It also manages 5 operational road assets transferred to Indinfravit Trust, an invit that the entity sponsored and launched in May 2018 as the first privately placed invit in India, with 77% holding from an international pension fund and insurance investors.

Two decades of extensive experience of working with governments, multi-lateral agencies, international and domestic financial institutions and corporate entities has helped the business to develop proven competencies in viability Assessment, Financial Closure, Project Management, Operations & Maintenance and Portfolio Management of Infrastructure Assets across various sectors.

The Canada Pension Plan Investment Board (CPPIB) made substantial financial investments in L&T IDPL in two investment tranches, in Decembe Rs 2014 and Decembe Rs 2015 respectively. This is the first direct private investment by the largest Canadian pension fund into an Indian Infrastructure Development company. During the year, on conversion of Compulsorily Convertible Preference Shares, the CPPIB became a 49% equity holder and L&Ts stake in L&T Infrastructure Development Projects Ltd (L&T IDPL) has been diluted to 51%.

Business Environment Transportation sector

Considering that the private sector has moved away from Build Operate Transfer and the response to Hybrid Annuity Model projects has also been dwindling, NHAI has focussed on the Toll Operate Transfer (TOT) model. During the year, the entity associated itself with the National Infrastructure & Investment Fund (NIIF) and the CPPIB for their consortium bid for TOT Bundle 3.

In order to drive the Digital India vision of Electronic Toll Collection (ETC), the Ministry of Road Transport & Highways (morth), with effect from Decembe Rs 2019, made the Fastag mandatory for all commercial and private vehicles plying on NHAI roads. The entity successfully led the Fastag implementation on some of the busiest stretches in the country. ETC collections, as a proportion of total toll collections, went up from 27% in March 2019 to 72% in March 2020. This has increased user convenience and reduced cash-handling issues.

Transmission Lines

During the year, the entity resumed bidding activities and participated in five bids under the TBCB (Tariff-Based Competitive Bid) framework.

The Ministry of Power, goi, Central Electricity Authority (CEA) and Solar Energy Corporation of India have Collectively decided to construct a Green Energy Corridor across the country to make India grid-ready for upcoming power generation through renewable energy sources.

CEA has approved 24 projects worth RS 32,000 crore for bidding under TBCB. However, the timelines for bidding are uncertain due to covid-19.

Major Achievements

Morth has instituted the National Highways Excellence Awards to recognize the countrys best-performing road assets and toll plazas, both concessionaire-managed and NHAI-managed. For the yea Rs 2019-20, Krishnagiri Thoppur Tollways Ltd (KTTL) managed by IDPL won the Silver award, while several others owned/managed by IDPL figured in various categories as Champions. These road assets are highlighted in the annual calendar and dossier of morth, which are widely distributed across the country.

In a road subsidiary for a project terminated in 2015, there was a favourable arbitration award for termination payments. Another road subsidiary received a favourable arbitration award for a construction claim.

The entity actively supported Indian Highways Management Company Limited (IHMCL), the agency responsible to carry out Electronic Tolling, at various policy level discussions, sops and operational experiences to enhance the applicability and efficacy of Fastag across the nation. In

The Transmission Service Agreement of the project, the key aspect is its availability. In FY 2019-20, Kudgi Transmission Line (KTL) achieved an availability of 99.99% and thereby earned incentives. The maintenance cost of KTL was also reduced substantially as compared to the previous year.

Significant Initiatives

During FY 2019-20, remarkable advancements were made towards digitalisation. Ahead of Fastag being called in mandatorily, the business proactively envisaged the strong need to push IT infrastructure to facilitate an enhanced user experience and efficient operations. This resulted in the development of the completely automated and centrally monitored Fastag control system. This system enables the automatic generation of all related transactional reports and expeditious notification of class discrepancy evidence to the acquiring bank, arresting revenue leakages.

The various other Digital Initiatives across the functions include:

• End-to-End Integrated new age SAP S4 Hana replacing existing ERP

During the year, the project for implementing SAP S4 Hana 1909 along with various other bolt-on products/ applications, such as SAP Ariba, Vendor Portal, Business on Maps, Mobile Application for route operations and O&M teams, etc., were initiated. All these applications, Once implemented, will be integrated with SAP, and will enhance the speed of reporting and response.

This initiative also includes the implementation of 17+ SAP modules, some of which are first of their kind in India to be implemented in an integrated way. Go-Live is planned by August 2020.

• Human Resources

In the current financial year, the entire spectrum of HR operations has moved to a sophisticated application called employwise, which covers the entire employee life cycle from Hire to Retire. It is on the cloud (SAAS - Software as a service).

• Security-related Implementation

Numerous measures have been taken to tighten security, and various tools and components have been introduced and implemented. Network segregation has been done at all toll plazas as well. People were enabled to work from home in a secure way via secured VPN, end-point security, etc.

• Kudgi Transmission Ltd (KTL) has gone completely digital in its Operations and Maintenance

Environment, Health and Safety

The business is committed to providing a safe and healthy workplace for their employees and stakeholders and to conserving the environment. EHS is one of the essential pillars of a good and robust corporate governance structure.

To facilitate the implementation of the EHS policy, various Standard Operating Procedures (sops) have been formulated defining individual responsibilities and procedures relating to Environmental, Health and Safety matters.

A system called Route Operations Management System (ROMS) has been implemented, which enables immediate reporting of any incident to the project head and functional head concerned in the form of a Preliminary Accident Information Report (PAIR) and Final Accident Information Report (FAIR).

Kudgi Transmission Line (KTL) has successfully achieved a full safe year for all its manpower.

With the onset of the COVID-19 pandemic, the entity enhanced its preparedness early on. A range of preventive measures were undertaken in line with the guidelines under Government advisories/regulations. The entity has also been an early mover in rolling-out a detailed Operations sops for not only dealing with the contagion but also ensuring business continuity, including establishing a concrete Disaster Recovery Plan.

Human Resources

The business has well-laid practices in terms of recruitment of talent and retention. Employees are kept engaged by providing access to learning opportunities, Development Centres, challenging business assignments, and individual need-based specific development interventions. The Development Centre is a systematic and objective method to measure competence to provide insights into the strengths and development areas of individuals.

The business has in place a Rewards & Recognition (R&R) programme to drive performance and boost the morale of the employees spanning across the categories. An engaged workforce will be a very productive workforce is the principle based on which the R&R programme has been devised.

With the aim of building future leaders, the business has devised a 9-month long learning programme, called Capability Capitalization, for a select few potential future leaders. This journey aims to mould an employee into a well-rounded leader. The sessions comprise psychometric tools to enhance self-awareness, awareness of the ecosystem, etc. Tools are administered to further enhance the Emotional Intelligence quotient. Change orientation, mastering the change curve, team behaviour using tools such as Belbin and Business Simulations are also covered.

Getting these potential future leaders to understand the importance of communication for influence, business thinking and developing managerial acumen are integral parts of this learning journey.

Risks and Concerns

Traffic & Tariff are key factors in the Toll business. In the aftermath of COVID-19, the nature of recovery across various sectors, such as automobiles, mining, construction, exports, etc., will play a pivotal role in determining the traffic growth characteristics across the portfolio. Further, in some of the projects, the annual toll tariff revisions are based on the wholesale price index (WPI). Lower WPI coupled with lower traffic could lead to lower toll collections. The impact of the pandemic on toll collections is being addressed by the business by resorting to provisions under the Concession Agreements under force majeure.

The mandatory implementation of Fastag has led to various challenges, such as plaza-level cyber security, data management and timely discrepancy reporting to acquiring banks. However, the entity proactively recognised the associated risks and reinforced the IT infrastructure requirements and sops. This resulted in the seamless shift towards Fastag implementation across the spvs. Currently, the entity hosts a completely digitalised and centrally monitored in-house data management and monitoring Framework for Fastag transactions, which is thoroughly secured.


The Government of India intends to provide a strong thrust to the Infrastructure sector via the National Infrastructure Pipeline (NIP). Out of the total project capital expenditure of NIP, 19% ~ RS 20 lakh crore would be spent on the Transportation sector.

Prior to covid-19, toll revenue was expected to increase to the tune of 6%. However, in the near term, the toll revenues are expected to contract as compared to the previous year due to lower traffic growth and lower WPI. Covid-19 has presented an unprecedented challenge, resulting in a nationwide lockdown and hence a sharp decline in traffic across the country. This event has been categorised as a force majeure event under the concession agreement, the cashflow for the year will be stressed, and hence cash conservation will be the key.

The morth has issued a memorandum providing relief to contractors / developers of the road sector under the Atmanirbhar Bharat Scheme and directing NHAI to provide force majeure relief to concessionaires impacted by COVID-19. A separate committee is being set up under the chairmanship of Director General (RD) &

Special Secretary to suggest further steps in this regard.

The Ministry of Finance (Department of Expenditure), Government of India has also issued a circular to provide extension of concession period between 3 to 6 months. Expeditious approval in the Change of Scope in contracts, extension of Concession Period, and provision of Revenue Shortfall Loans are some of the immediate relief measures mentioned in the memorandum published by morth. In addition, certain spvs of the entity have availed of the debt repayment moratorium announced by the RBI to take care of immediate cashflow requirements.

The business has initiated necessary action and believes that the impact will be substantially mitigated.



L&T Metro Rail (Hyderabad) Limited (L&TMRHL) is a Special Purpose Vehicle (SPV) incorporated on 24th August, 2010 to undertake the business to construct, operate and maintain the Metro Rail System including the Transit Oriented Development (TOD), in Hyderabad under the Public Private Partnership model on Design, Build, Finance, Operate and Transfer (DBFOT) basis. L&TMRHL entered into a Concession Agreement with the erstwhile Government of Andhra Pradesh on 4th September, 2010.

The Concession Agreement includes construction of 71.16 km of elevated metro rail corridor and rights for real estate development of 18.5 million sq. Ft., with strategically located land parcels interspersed in prime city locations adjoining metro stations and metro corridors. The concession period of the project is 35 years, from the appointed date of 5th July, 2012 including the initial construction period of 5 years. This is extendable for a further period of 25 years, subject to fulfilment of certain conditions by the spv as set out in the Concession Agreement.

As per the Concession Agreement (CA), the scheduled Commercial Operation date (COD) for the project was 5th July, 2017. However, due to delays in providing required row and confirming alignment changes by the Government, extension of the COD to 30th June, 2020 was approved. L&TMRHL completed execution of the project well ahead of the extended time granted.

L&TMRHL completed commissioning of the entire stretch progressively, with the last stage getting commissioned in February 2020. The entire project is now operational.

During the year, the construction of 1.28 million sq. Ft. Of Transit Oriented Development (TOD) consisting of 4 malls and an office block has been completed and has commenced commercial operations. Construction work of 0.5 million sq. Ft. Of office space at Raidurg site is currently under way. The entity is chalking out plans for phased development of the balance TOD.

Business Environment

The Hyderabad Metro Rail is the worlds largest metro project in public-private partnership mode. It brings together best in class resources and technology in every aspect of the project - stations, rolling stock, track work, depots, AFC, power supply, traction and SCADA system, signalling and train control systems and telecom systems.

Metros are an environment-friendly, safe and punctual mode of transport. They ease commuting in densely populated cities and towns. Given the population density of Hyderabad, L&TMRHL has been working on various value- added initiatives to minimize the commuters pain points, such as last-mile connectivity, digital ticketing, mobile apps, etc., which ensure higher ridership of the metro system. Establishing successful last-mile connectivity is a challenge, and discussions with the Government are in progress to intensify steps to this end.

However, with the onset of the COVID-19 pandemic, the environment has been impacted in the short term. The entity is looking at various innovative business models to overcome this challenge.

Significant Initiatives

• Robust and affordable last mile connectivity initiatives to enhance the ridership

• Launched corporate shuttle services from metro stations to corporate offices

• All metro stations have a bike-rental facility

• Exploring non-fare revenue generating options, viz. Royalty amount from QR ticketing partners, consultancy services for other metros, cross-selling of products to commuters

• Tied up with ticketing partners like Goibibo, makemytrip, Phonepe, Paytm, etc. And launched Mobile Ticketing (QR Code generation) solution for the convenience of metro commuters

• Provision of skywalks from the Metro stations to the adjoining TOD malls to enhance convenience and business potential


Easing the pressure of reconciling huge, heterogeneous data on fare collection, L&TMRHL has automated Fare

Revenue Reconciliation between Automatic Fare Collection System Reports vs Payment Channel Reports vs Bank Reports. To make the metro travel easy and trouble-free, it is coming up with the emv-based Open Loop Ticketing (Euro Master visa (emv) card) solution for metro commuters.

L&TMRHL has started using Business Intelligence IT tools like Alteryx and Tableau for both business and passenger data analysis/interpretation, which will improve Management decisions.

L&TMRHL has put in place a process for automation of refunds to customers by developing an auto verification process of the refund data using software tools. This software tool verifies items of refund reported by the Automatic Fare Collection System (AFC) with the smart card history data base. The tool helps minimising the process time and facilitates timely refunds to customers.

Awards and Recognition

Prestigious awards received by L&TMRHL during FY 2019-20 include:

1. DCD National Awards 2019 - Hybrid IT Project of the Year Award

2. Institute of Economic Studies - Enhancing the Image of Metro Rails in India - Globally

3. DCD Global Awards 2019 - Hybrid IT Project of the Year Award

4. CSO 100 Awards 2019 - the Information Security Project has added significant benefit to the organization, its employees, associates and vendors

Environment, Health and Safety

A mass transit system helps move large numbers of commuters away from private vehicles, helping reduce the carbon footprint of the city. It helps reduce the air pollution, since it operates on electricity and hence there is no emission of greenhouse gases. It also helps reduce sound pollution due to the efficiency of the coaches and the advanced engineering that has been used for building the track, viaduct as well as metro coaches. Further, the smart-card option reduces paper consumption.

The Automatic Train Protection (ATP) System implemented continuously monitors safe train operations. Automatic Train Supervision (ATS) pre-empts unscheduled interruptions of train services. Station equipment such as Computer- based Interlocking (CBI), wayside ATP, etc., are vital signalling equipment and ensure safe and uninterrupted train operations. Passenger Emergency Stop Plungers are provided on each platform and in the Station Control Room (SCR) to stop a train immediately in case of an emergency.

Risks and Concerns

With the Metro fully commissioned, the risks related to construction phase are averted, except for the financial risks of close out of pending claims. While the operational risks now kick in viz. Safety of passengers and assets, bus mode of transport being preferred, considering the connectivity and a drop in commuters in the feeder industry, especially IT.

The business has a robust risk mitigation process and several initiatives have been taken to avert / minimise the impact of various risks, including:

• The appointment of Keolis, a reputed O&M operator from France, with experience of providing safety solutions

• Discussions with local bus transport authorities, impressing upon them the need to work complementarily

• Thrust on developing additional revenue sources

However, the COVID-19 pandemic in the end of the financial year is expected to have an impact on the commuters, additional costs and real estate monetisation. The business is working on ways to facilitate contactless travel, increase focus on sanitisation of the metro system, etc.


With the entity getting into first full year of operation of the metro, things had started looking up, aided by the planned partial monetisation of the real estate. However, the pandemic has brought in the challenges of:

• Commuters preference for avoidance of mass transit

• ITES commuters preference to continue to Work from Home

• Drop in advertisement income due to curtailment of expenses by various corporates

• Drop in oil prices, making alternative modes of transport more attractive

• TOD revenues impacted by overall business sluggishness

• Major investments in realty sector may be on hold in the short to medium term

All efforts are being taken to make Hyderabad Metro the safest and cleanest transportation mode keeping in mind the current pandemic situation. This gives L&TMRHL the opportunity to shift the new customer segment to Metro rail from other transportation modes like bus, auto, etc. Also, contactless travel system integrated with other transport modes focus on making travel safe.

Strategy alignment through innovative business models to retain the competitive advantage in TOD and station retail developments is a focus area.



L&T Power Development Limited, a wholly-owned subsidiary of L&T, is engaged in developing, operating and maintaining power generation assets. The portfolio comprises projects in thermal and hydel power generation projects aggregating to 1499 MW. In the hydel sector, L&T Uttaranchal Hydropower Limited is executing a hydel power project of capacity 99 MW in the state of Uttarakhand, which is at an advanced stage of construction and is expected to be commissioned in FY 2020-21. The hydel projects in L&T Himachal Hydropower and L&T Arunachal Hydropower have been shelved. In the thermal sector, Nabha Power Limited owns and operates a 2 X 700 MW supercritical thermal power plant at Rajpura, Punjab.

Nabha Power Limited (NPL)

Business Profile

NPL is operating a 2 X 700 MW supercritical thermal power plant at Rajpura, Punjab. 100% of the power generated from this plant is tied-up to Punjab State Power Corporation Limited (PSPCL) for a period of twenty-five years upto 2039 under a Power Purchase Agreement (PPA). The plant is the first indigenously manufactured supercritical power plant, built using technology sourced from Mitsubishi, Japan.

The plant sources its fuel from South Eastern Coalfields Ltd. (SECL), a subsidiary of Coal India Limited, under a 20-year Fuel Supply Agreement (FSA). NPL has also secured approvals to arrange coal from alternative sources to make up for any shortage in supply of coal under the FSA. The Bhakra-Nangal distributary is the perennial source of water for the plant under an allocation by the State Government. The plant is operated by an in-house team of experienced operations and maintenance professionals.

The power plant has been running successfully for over six years with an availability of ove Rs 85 % during FY20.

NPL has been the most reliable source of power for the state of Punjab and has supported its requirements with uninterrupted supply during the peak season also.

NPL is the lowest cost thermal power producer within Punjab, with benchmark-setting operational efficiency.

Business Environment

Indias Installed Capacity rose to 3,70,106 MW in FY 201920, a marginal increase of 1.41% over the previous year, of which the Installed Capacity of thermal power plants is 55%. Dependence on the thermal generation is clearly reflective, as it fulfils 71% of the total power requirement in the country.

The Average Power Demand in Punjab was 6486 MW in FY 2019-20 and NPL contributed to 14% of the demand. The Average Power Purchase rate was RS 3.60 per kwh in FY20 vs RS 3.48 per kwh in FY19.

Third Party Sampling and testing through CIMFR (Central Institute of Mining and Fuel Research) has been operating quite well to mitigate the grade variation issues in linkage coal.

Unit 1 was under a planned shutdown since Feb. 1,

2020 fo Rs 77 days for the first major capital overhaul in which 1004 personnel were involved. The task involved rectification and replacement of various equipment under turbine, boiler, electrostatic precipitator.

During the year, in order to comply with the emission compliance norms the construction work of Flue Gas Desulphurisation has been awarded to L&T Power, who emerged as a successful bidder in the competitive bidding process.

During the covid-19 lockdown, NPL, being classified as delivering an essential service, maintained business continuity, while ensuring the health and safety of all its employees and contract staff. Various steps were undertaken, including social distancing and following best safety practices with robust Standard Operating Procedure (SOP).

Major Achievements

• Best Operational Performance: - Annual Plant Load Factor (PLF): 71%, (All India Thermal Average: 56%)

• Received a Favourable Order from Supreme Court on the washing charges petition and received partial payment from PSPCL

• Partial Favourable Order received from PSERC in imported coal matter, clearing partial dues

• Ensured Fuel Adequacy, as no lapsing despite flooding of mines in Korba Coalfields of South Eastern Coalfields Limited (SECL) and approval for imported coal

• During the year, NPL was awarded the following awards:

• National Energy Leader Award, CII

• Excellent Energy Efficient Unit Award, CII

• Winner - Water Management and Ash Handling, Mission Energy Foundation

• Finalist, Global Platts Energy Excellence Award S&P USA

• Gold Award, Grow Care India CSR Award 2019

• Best Operating Thermal Power Generator, IPPAI Third Consecutive Year

• National Best Employer Brands 2019

Significant Initiatives

• Reduction in costs through alternate sourcing, reverse engineering

• Digital Initiatives

• Implementation of Energy Management System

• Management Dashboard upgradation

Environment, Health and Safety

NPL is committed to generating reliable and environment- friendly power under safe working conditions. A policy on Quality, Environment, Health and Safety has been put in place. Emphasis is laid on continual improvement of processes and practices to achieve improved environmental, health and safety performance. Training on HSE for employees and stakeholders is undertaken on a regular basis to foster a culture of health and safety.

Human Resources

NPL has a team of 296 personnel including professionals experienced in the field of operations and maintenance of power plants and other support staff. NPL focusses on leadership development and communication skills. Emphasis is laid on participation in various training and development programmes organized internally and externally.

Risks and Concerns

As a private developer, NPL faces the following major risks:

• Delay in plant scheduling - increase in yard loss

• Delay in receipt of payment from DISCOM for monthly bills

• Dispute for force majeure with DISCOM

• Coal quality from different mines

• Flue Gas Desulphurisation environmental compliances

The risk management policy of NPL provides for a robust risk management framework which involves risk identification, assessment & evaluation, strategy & mitigation, and monitoring and review mechanisms. NPL has implemented multiple measures in each of the risk areas to ensure a proactive approach and timely mitigation.


Due to the lockdown to contain spread of COVID-19, power demand by industrial units and farmers in Punjab has dropped substantially since March 2020. PSPCL may prefer to optimize its power purchase costs by purchasing power from the cheaper sources as the power exchange prices have dropped substantially.

NPL is likely to remain the lowest cost thermal power producer amongst the Independent Power Producers (ipps) in the state with an expected plant load factor of 73% in FY21.

On the fuel side, coal supply continues to be challenging. The goi and gop are pushing for reduction in coal imports to reduce the cost of power. Non-approval of imported coal may have adverse implications. Higher usage of rom coal may lead to higher maintenance and auxiliary consumption and lower boiler efficiency.

NPL is geared to address the challenging times and has been taking proactive steps like deferring capex/ modifications/non-routine purchases, negotiating better credit from suppliers of coal, etc.


Others business comprises:

A. Realty Business

B. L&T valves Limited

C. Construction Equipment & others



L&T Realty is positioned amongst the top real estate developers in India, with a total portfolio of ove Rs 70 Mn sq. Ft. Across segments like residential, commercial and retail in key metro cities, viz. Mumbai, Bengaluru and Chennai. L&T Realty is focused on delivering higher value to its customers through efficient designs, cutting-edge technologies and superior project management skills. The business model involves development of large land banks in metro cities, partnership with co-developers and sale/lease of commercial spaces.

Residential Segment

1. Emerald Isle (Mumbai)

This flagship residential project, the finest gated community at a premium location, is part of a prime real estate development in Powai, spanning ove Rs 90 acres. Phase I has been completed and is now occupied by ove Rs 780 residents. Development of further phases of the project is in full swing.

2. Crescent Bay (Mumbai)

Situated at the most desirable location - Parel, with the Arabian Sea as the backdrop - Crescent Bay is a residential complex with the perfect setting for an extraordinary life. Crescent Bay raises urban living to top-notch quality, with a sky deck and associated amenities on level 21. It is currently occupied by 1000+ residents and the last tower is being built.

3. Raintree Boulevard (Bengaluru)

Conceptualized on the live-work-play idea, Raintree Boulevard is a 65-acre mixed-use project located in the premium, high-growth micro-market of Bengaluru. The project offers premium flats with elegant and majestic layouts, along with the leisure of fine-living and best-inclass amenities. The project also includes fully furnished studio units, which were launched in March 2020.

4. Seawoods Residences (Navi Mumbai)

Part of Indias first Transit-Oriented Development, Seawoods Residences is part of a large development spread across over 40 acres. The project offers unmatched connectivity and is surrounded by breathtaking views. Launched in June 2019, the project received an excellent response and was sold out within a month.

5. Rejuve 360 (Mumbai)

This residential complex is designed around wellness, and is focused on the rejuvenation of mind, body and soul. Conveniently located in the bustling neighbourhood of Mulund West, Mumbai, it is planned to stand 57 storeys tall. Phase I was launched recently and gained traction quickly.

Commercial Segment

1. L&T Business Towers (Mumbai)

L&T Business Towers offers commercial office space that taps into the excesses of nature, gives an uninterrupted view of Powai lake, and has cutting-edge technological features. It is a part of a mixed-use development, designed on the live-work-play concept.

2. Seawoods Grand Central (Navi Mumbai)

Indias first Transit-Oriented Development (TOD) is spread across 40 acres and offers 2.6 Mn sq. Ft of Grade A development with a unique combination of commercial and retail business spaces coupled with the captive local train station. It offers spacious, well- planned and completely customizable office spaces.

3. L&T Business Park (Mumbai)

Designed to provide superior workspaces, L&T Business Park is one of the most coveted corporate addresses in Powai, Mumbai. It offers about 1 Mn. Sq. Ft. Of high-quality, Grade A office spaces, which are occupied by marquee MNC clients.

4. Technology Park, Bengaluru

Located in the premium and rapidly growing micro market, the project has the potential for development of commercial office spaces of 3.3 Mn. Sq. Ft., which is being taken up in phases. With unmatched connectivity and well-designed spaces, it is set to become the most favoured address for many technology companies.

Business Environment

Over the last few years, though reforms and changes like demonetization, RERA, GST, IBC, and the ban on Subvention schemes have caused disruption; these measures also have helped the sector by bringing about much-needed transparency, accountability and fiscal discipline. The resultant stress on over-stretched balance sheets has witnessed a higher rate of collaborations. The ensuing consolidation has further strengthened the position of L&T Realty in the market.

In FY 2019-20, the residential segment witnessed an increase of 21% in new launches in key metro cities, with affordable housing contributing significantly to this supply. Residential sales also gained momentum, recording a y-o-y rise of 5%. Nearly 52 Mn. Sq. Ft. Of Grade A office space was completed, of which 46 Mn. Sq. Ft. Was absorbed in the top 7 cities in the yea Rs 2019. The office space market grew at a robust 40% y-o-y with net absorption across the top seven cities - creating a new record. This growth in demand was led mainly by the expansion of IT/ites (42% of overall leasing) and co-working operators (14% of overall leasing) in cities with robust fundamentals and planned infrastructure improvements. However, retail sector leasing was hit as consumer spending went down, resulting in 35% reduction in retail leasing activity in the top 7 cities.

The maiden Real Estate Investment Trust (REIT), which aimed to attract private investments and relieve the burden on formal banking institutions, was listed in 2019. This has set the stage for other real estate developers to consider the REIT as a vehicle to raise funds. The Government of India (goi), on its part, has introduced various fiscal measures and policy reforms like the special window for funding of stalled affordable and middle-income projects, the Insolvency & Bankruptcy Code (Amendment) Bill 2019, digitization of land records and reduction in corporate tax rates. Indian real estate attracted USD 6.2 Bn of private equity investments in the year.

The last quarter of FY 2019-20 threw up a unique challenge in the form of the COVID-19 pandemic, first threatening the health and safety of individuals and then in the form of uncertainties in business continuity. While the situation continues to remain fluid, the long-term impact of this can perhaps only be assessed in the time to come.

Major Achievements

• Successful launch of two new premium residential projects in Mumbai. Project Seawoods Residences was sold out within a month of the launch and project Rejuve 360, Mulund, gained robust traction in the toughest micro market of Mumbai

• Phase I of project Raintree Boulevard was completed on time and hand-over started

• Blackstone Group made investments in Seawoods Grand Central project

Awards and Recognition

L&T Realty has been conferred many national and international awards for the brand as well as individual projects during the year. A few of them are listed below:

• Business Excellence in Real Estate - CNN News 18 Real Estate Award

• Best Corporate Social Responsibility Practices and Institution Building - World HRD Congress

• Most Customer Centric Company & Best Use of Voice of Customer - Customer FEST Leadership Award

• Smart Real Estate Project of the Year, Luxury Project of the Year, Best Residential Luxury Project of the Year - ET Now - Real Estate Awards 2020

• Iconic Excellence in Residential Development - 4th Times Realty Icons 2019 Awards

• Commercial Project of the year (L&T Business Towers) - Abu Dhabi Real Estate Leadership Awards

• Received Sword of Honour from British Safety Council,UK

Significant Initiatives Digitalisation

L&T Realty is working on multiple digital initiatives covering all aspects of the business. A state-of-the-art smart office complex is being built in Powai aiming at the manifold Improvement of employee safety, health and efficiency.

The I-BEMS IOT solution, an employee mobile app and - to improve quality further - a mobile-based inspection app called SQAD have been implemented. The BIM solution has been adopted for an advanced design process, and soon 4D BIM initiatives will be started to track progress visually. To provide a better customer experience at each touchpoint, the Salesforce ecosystem for digital marketing, sales and CRM has been implemented, complemented by deploying augmented reality solutions and digital flipbooks.


Besides excellence in design and development, L&T Realty strives for innovation in every project. Emerald Isle (Phase 2) features the first residential building in Mumbai constructed with pre-finished bathroom pods (Prefabricated on Demand), leading to reduction in finishing time and delivery of an enhanced quality product.

Human Resources

L&T Realty makes every effort to generate a never-ending desire to collaborate, learn and build a talent pool to stay relevant to customers needs at all times. The business is focused on creating a young vibrant organization; currently the average age in the organization is 37 years. With emphasis on gender diversity, L&T Realty has one of the highest number of women employees in the Indian real estate sector.

Focusing on the employees physical and mental well-being, a one-of-its-kind programme Couch to 5K / 10K was initiated this year, in which employees were professionally trained and motivated towards their own well-being through specially organized city marathons. The business has been providing avenues for capability building and continuous learning and this year clocked 1,920 man-days of dedicated personnel training.

Risks and Concerns

As the after-effects of COVID-19 evolve, the real estate sector is expected to be considerably impacted. Markets have shown a negative sentiment towards real estate sector. Further, the lockdown and stalling of construction activity will lead to delayed construction schedules, which will be further impacted by the unavailability of labour.

On the demand side, the lockdown has affected customer walk-ins; and buying decisions have been deferred due to the uncertainty regarding the return of normalcy. For the next few quarters, office space demand is also expected to remain subdued as the expansion plans and capital expenditures of major corporates has been put on hold.


Before COVID-19, the Indian real estate sector was slowly coming out of the difficult phase. The residential segment was in distress and the commercial segment was doing well. Post the advent of the pandemic, the distress spread across the industry chain. The commercial segment has been largely dependent on US companies for a large part of the annual offtake. As the impact of COVID-19 is maximum in the US, companies may defer their expansion or office consolidation plans. The segment is expected to contract 20 - 30% in the short term before it starts to gain traction again.

Near-term troubles are certain for the sector. However, with Government support, the medium-to-long-term outlook is positive. Other asset classes becoming riskier in the current situation, smart investors, especially hnis, are expected to take advantage of the investment opportunities. Big real estate funds are facing their own challenges; however, many believe in the long-term story of the country and are expected to continue with their investments to capture attractive valuations.

The softening of interest rates would encourage buyers who are re-looking at investment options, as hard assets will be more lucrative than stock markets. Nris may want to own a house back in India, considering the uncertain economic environment in their host countries.

Developers will focus on conserving cash and optimizing resources. New launches will be paused for next few quarters and, as a measure to pool in liquidity, the focus would be on selling the inventory in hand. The marketing approach to reach customers is already undergoing a change, with enhanced digital outreach to sell directly.

In the changed business scenario, the industry is looking at a big wave of consolidation. L&T Realty is set to take advantage of the situation and is confident of its growth and expansion, given its strong business framework and the brand connect with its customers.



L&T valves (ltvl) is a leading manufacturer of industrial valves with a global manufacturing presence. The business leverages six decades of manufacturing excellence to serve key sectors of the economy - such as oil and gas, defence, nuclear & aerospace, power, petrochemicals, chemicals, water and pharmaceuticals - in India and overseas. L&T valves manufactures a wide range of products, such as Gate, Globe, Check, Ball, Butterfly, Plug and Control valves, as well as automation solutions. The business also runs a global after-market business to support its installed base with service and spares needs.

The business has three state-of-the-art facilities in Tamil Nadu and Gujarat in India, and has established two new facilities in the USA and Saudi Arabia respectively. LTVLs products enhance safety, reliability and performance in industries across the world.

Business Environment

Market indicators such as prices of crude oil and natural gas, environmental norms for fugitive emissions as well as economic parameters of GDP growth, pace of urbanization and capital investment in projects remain the key drivers of demand for LTVL. The business environment in most of these parameters remained stable through the first three quarters in FY 2019-20. The investment climate across sectors was lukewarm with an increased thrust on cost reduction and faster implementation. LTVL has maintained its portfolio spread in terms of domestic v/s international business. In FY 2019-20, approximately 40% of its order inflows were secured from overseas markets.

With structural challenges ailing the power sector, there were no significant capacity additions in the thermal power space. However, the new fugitive emission norms introduced by the goi opened up some opportunities in the form of Flue Gas Desulfurization (FGD) projects.

Major Achievements

Major Orders Received

The business focussed on diligent build-up of its order book during FY 2019-20 with a focus on improvement in margins and on-time delivery performance. Some of the order highlights include:

• Critical valves for naval applications from the mod

• LNG Canada project from JGC and Fluor JV

• Duqm Refinery project from UTE-TR

• Supply of Remotely Operated Shut-off valves to IOCL

• BAPCO Modernization Programme for Technip, TR and Samsung Jv

Moreover, ltvl progressed well on its journey to improve the product mix by increasing the share of pre-configured and after-market orders by 10% during the year.

Major product achievements:

Manufacture and supply of complex engineering products viz:

• 76" Class 150 Triple Offset Butterfly valve

• 6" Class 150 Titanium Trunnion Mounted Ball Valve

• Top Entry Cryo Triple Offset Butterfly Valve (16" & 20")


• Green Channel status awarded by DGQA, Ministry of Defence, Gol. L&T Valves Limited is the first private enterprise to secure this status

• EEPC award for export performance

• Health & Safety award from National Safety Council, Tamil Nadu chapter

Significant Initiatives

LTVL continued its emphasis on strategic initiatives in three

Key areas of business viz.: Front-end Sales; Operations and

Supply chain. Some of the key initiatives under each of

These areas is listed below:

Front-end Sales

• Improvement in customer experience and engagement through the customer connect programme

• Branding agreement with leading valve manufacturers

• Securing key customer approvals

• Frame agreements with key EPC companies and distribution tie-ups in US and Europe


• Operational excellence initiatives for faster conversion cycles

• Sales and operations planning, to accelerate shipments

• Operationalising manufacturing facilities in USA and KSA including quality and ISO certifications

• Expanding contract manufacturing capacity

• Use of Augmented Reality tools to give real-time plant tours and conduct product inspections

Supply chain

• Capacity enhancement for raw material inputs to provide supply chain sustainability

• Geographical diversification of supply chain with focus on cost and quality

• Consolidation of its input sources in India

Cost reduction

• Fixed and variable cost reduction initiatives across the business spectrum

• Design optimization

• Cost reduction strategies in sourcing and logistics

The businesss focus to pursue opportunities in the global distribution space gained momentum during the year mainly in the Americas and Europe. It also entered into branding agreements with some global majors during the year.


Digitalisation initiatives at LTVL largely were focussed on process automation through ERP and material management during the year. Key initiatives included:

• Bar coding of key input components such as castings and forgings

• Automated full kit availability and management module

• Management of pattern allocation to foundries

• Automated supplier evaluation and allocation

• AR-based real-time plant tour and product inspections

• Fully automated product costing system

Environment, Health and Safety

Environment, Health and Safety are at the core of LTVLs operations and the business remains committed to achieving EHS excellence in its workplaces. Various initiatives in the area of health, safety and environment helped the business achieve a zero man-days lost record during the year.

• Emissions maintained well below statutory requirement

• Maintaining water consumption at the same level despite increase in production by 40%

• Single use, throw-away plastic items restricted across manufacturing locations

• Daylight harvesting through solar dome installation on building tops

• Tree-plantation drive undertaken at Coimbatore campus

• Reduction in diesel consumption through reduced DG set operation

• Common air-line testing to reduce energy consumption by 1.2L units using VFD compressor

• Increase in usage of LED light panels and LED flood lamps

Human Resources

The business has built a committed and experienced team of professionals over the decades. Special emphasis is laid on training and development of the workforce. In addition to competency building programmes, focus is also laid on soft skills and leadership development. Various engagement initiatives are undertaken to motivate employees and maintain a harmonious workplace.

During the year, the business launched a focussed initiative, committed to drive change management and talent development under the flagship programme DISHA. At the heart of this programme is the improvement of the effectiveness of ltvls workforce in the marketplace. Developmental initiatives, including training, mentoring and coaching programmes, were organized for upskilling high-potential employees. Cross-functional collaboration workshops were identified as another key focus area and a programme series was launched during the year to achieve the team goals.

Risks and Concerns

The industrial valves market is a highly fragmented space. With an increased focus by customers on faster deliveries and lower costs, the market environment is highly competitive. However, given the geographical spread of the demand base, the business has a high market share gain potential through its geographical, channel and product expansion strategies.

The post-covid-19 market scenario remains fraught with uncertainty. Further, the business has major linkage to the fortunes of the oil & gas segment, which is currently facing major turmoil. Some of the major risks identified are weakening demand, supply chain disruption, liquidity crunch, delays in project awards, availability of labour workforce and working capital management.

Ltvl has a robust risk management framework in place and has taken several initiatives to mitigate the risks, viz.

• Market share gain strategies through geographical, product and channel expansions

• Building alternative revenue streams through brand labelling

• Consolidating Aftermarket business presence

• Refining its product mix with focus on standard products

• Global manufacturing presence

• Global supply chain

• Enhanced Contract Manufacturing capacity

• Improving cost competitiveness through cost reduction measures

• Operational excellence initiatives to improve delivery performance


The business is closely monitoring key demand indicators such as crude oil prices, capacity additions, liquidity, project capex spending and GDP trends in the relevant geographies. It does expect a slowdown in the market in the coming year if the lockdown across the world continues for a longer than expected duration thereby affecting its demand indicators and prospects. The dip in oil prices normally affects the valve industries by one-year time lag. Capital spending is expected to stay tepid for a few quarters in the new financial year. Liquidity may also pose a challenge due to the covid-19 pandemic for the first two quarters of next year.

The initiatives on geographical expansion of markets and operations, product mix, focus on aftermarket business, brand labelling, etc., provide immense opportunities and will act as mitigation measures. The business is taking adequate steps to maintain liquidity and preserve cash.

Once the situation normalises, the entity is geared to expand its market share gain strategies and to develop an alternative supply chain to enhance its cost and delivery efficiency. With a strong order book, it continues to position itself as a brand that maintains high customer focus and high standards of quality and design. It also expects the covid-19 pandemic to provide opportunities for its maintenance, repair and operations segment. With the oil prices expected to redeem in Q4 of FY 21, and the fragmented nature of the global valve market together with the strategies deployed by L.WL, the outlook remains positive.



The Construction Equipment & Others (CE&O) business manufactures, distributes and provides after-sales support for construction and mining equipment for diverse industries and applications. The business also manufactures and markets Tyre Curing Presses and Tyre Building Machines and provides solutions for the tyre manufacturing industry globally.

The CE&O business consists of two broad business segments, namely, Construction & Mining Machinery (CMM) and Rubber Processing Machinery (RPM). Cmm further comprises Construction & Mining Machinery business unit (CMB) and L&T Construction Equipment Limited (LTCEL), a wholly owned subsidiary of L&T. Under a scheme of arrangement the business under LTCEL has been transferred on going concern basis to a new entity L&T Construction Machinery Limited (LTCML) on receipt of approval from NCLT. In April 2019, L&T fully exited its investment in L&T Kobelco Machinery

Private Limited (LTKMPL) with Kobe buying the 51% stake held by L&T, while L&T continued to represent LTKMPL for marketing its products.

The CMB division focuses on distribution and after-sales service for hydraulic excavators and dump trucks manufactured by Komatsu India Private Limited (KIPL) and other mining and construction equipment manufactured by Komatsu worldwide. It also handles the distribution and providing of aftersales support for a range of construction equipment including wheel loaders, compactors and hydraulic excavators manufactured by LTCML and Mining Tipper Trucks manufactured by Scania India. CMBs offerings include products such as surface miners, sand plants, crushing solutions and apron feeders, manufactured by L&T at Kansbahal Works.

LTCML, located in Doddaballapura near Bengaluru, manufactures vibratory compactors, wheel loaders, hydraulic excavators, asphalt paver finishers, pneumatic tyred rollers, skid steer loaders, hydraulic power packs, cylinders, pumps and other components.

LTRPM, located in Kancheepuram near Chennai, manufactures and markets rubber processing machinery, i.e. Mechanical and hydraulic tyre curing presses, tyre building machines, conveyor systems and tyre automation systems for the global tyre industry, including India.

The Product Development Centre (PDC), based at Coimbatore, renders engineering and product development support for all the businesses.

Business Environment

Construction & Mining Machinery Business


The construction and mining sectors are the key demand drivers of the CMM business.

During the year, highway construction activity decreased as compared to the previous year as the overall contract awarding activity fell. Further prolonged slowdown in real estate projects continue to weigh on the business.

The Union budget FY 2020-21 proposes to invest about RS 82,000 crore on road construction and RS 70,000 crore on Railways. With the above budget proposals, construction activity is expected to pick up pace during the coming year.

In the mining sector, coal production registered a growth of ~3.8% over the previous year. The Indian Government has approved an ordinance that opens up the coal sector by allowing commercial coal mining as well as removing end-use restrictions. The move is likely to increase the coal mining activity in the coming years. Iron ore production too registered a growth of ~6.7% over the previous year.

The installed capacity in the cement sector has increased from 480 MT to 499 MT in FY 2019-20, with an increase in overall production from 334 MT to 344 MT in FY 2019-20.

The above positives are likely to boost the demand for mining equipment.

However, the NBFC crisis continuing to impact liquidity in the economy, coupled with stiff competition from domestic and Chinese mining equipment manufacturers, has impacted growth.

Rubber Processing Machinery Business (RPM)

The demand for the machinery manufactured by the LTRPM unit is dependent on tyre demand and is indirectly linked to the automobile industry.

FY 2019-20 was not a good year for automotive market globally. Currently, the automobile industry is at crossroads due to an increased preference for shared mobility.

Coupled with a fall in demand is the technology shift towards greener electric cars. The protracted slowdown has taken a toll on the automotive industry, with 2-4% de-growth in automobile sales across the world.

The automobile industry witnessed one of its sharpest declines in domestic sales due to subdued demand and consumer sentiments, besides lower production in view of the transition to BS vi emission norms, affecting wholesale despatches. Due to the severe challenges, the industry witnessed a decline in production of 14.73% compared to FY 2018-19. Despite the current situation, the Indian automobile sector still has enormous potential and is anticipating demand growth.

The global tyre market reached a volume of 3.2 billion units in 2019-20, growing at a CAGR of around 4% during 2014-2019. However, the sales growth tapered in 2019, with growth seen in select geographies only.

In line with automobile sales, the OEM tyre market has come down approximately by 2-4%. The replacement tyre demand continues to be mostly flat and stable due to higher passenger vehicles on road. Along with this, the growing infrastructure activities in both the developed and developing countries, combined with agricultural activities is giving a boost to tyre sales in select segments.

The Indian tyre market has reached a consumption volume of 185 million units in 2019-20. The market is currently being driven by the increasing use of radial tyres, especially for buses and trucks. There has been the constant threat of cheaper imports from China, etc. Tyre industry investments have been slow due to uncertain demand growth. There has been a marked slowdown in industry investment starting almost from Q2 FY20. Tyre majors across the globe are concentrating on realising the money out of their earlier investments and are choosing to either cancel or defer their orders.

Significant Initiatives

Construction & Mining Machinery Business


CMB introduced a number of business expansion activities during FY 2019-20. It introduced new equipment models of construction and mining equipment such as Komatsu PC 210-10M0 excavator and SCANIA G440 Mining Tipper truck with better machine capabilities and attachments for piling equipment from movax, which helped in partially mitigating the depressed market. With the availability of spares being brought closer to customer sites, the availability guarantee of the machines has been maintained at the present levels of ~90% to achieve customer confidence, thereby increasing sales of spares for the business.

With a continued focus on capturing the hiring segment, CMB promoted lease financing programmes with low investment and low EMI. In order to retain customers and overcome the competition, CMB has been educating customers on evaluating the equipment on the basis of lower life-cycle costs, quick serviceability, etc.

To ensure faster servicing of equipment, CMB increased the dealer workshop network from 3 locations in FY 2017-18 to 9 in FY 2019-20.

Rubber Processing Machinery Business (RPM)

LTRPM has successfully launched various new products in the market:

• Floor-mounted passenger car Hydraulic Tyre Curing press in India and Germany

• Compact v-orientation passenger car Hydraulic Curing press

• Zeus single stage two-wheeler Tyre Building Machine (TBM) to Thailand

• OTR Tyre Building Machine successfully commissioned in USA

• Custom-built products like Batch-off Units and Lube- spray machine

LTRPM developed an In-house Panel shop to assemble the control panels required in its products. This special focus gives significant cost benefits and an opportunity to supply the panels to other customers as well. The formation of a Technology Centre is helping it to adapt advanced technologies for the tyre industry and add futuristic products to its portfolio.

LTRPM also strengthened its portfolio of Tyre Handling Automation Solutions and increased its focus on product support and services. Apart from these, the unit continues to focus on process initiatives including design process modernisation, long-term vendor contracts, product reliability enhancements, digitalisation, automated submerged arc welding, etc.

It is working on service offerings to the tyre industry like maintenance contracts and value-added programming services. The unit is also working on upgradation kits to help its customers to improve the productivity of existing machines with minimal investment.

LTRPM won the Prestigious Gold plus Award for Business Excellence from CII. It has also won a Gold Award in the Indian Green Manufacturing challenge and in 5S won a Platinum Award and a Sustenance award from ABK- AOTS Dosokai.


Digitalisation in CMB has been one of the focus areas in the past year. During the year, a new initiative, EQUIPCARE, was implemented to serve the customers post-sales service requirements. An App - Customer Connect - is being developed to help customers access complete service information pertaining to their machines on their mobile phones. Migration to SAP S4 HANA was completed during the year, helping the users to process data faster.

On the digital front, the LTRPM business has established a system for the Total Productivity Management (TPM) track, monitoring adaptive feed and collision monitoring in the manufacturing process. The unit also has initiated digitalisation of customer connectivity through the proposed E-CRM portal.

Environment, Health and Safety

Safety Officers are appointed at all the units and report to management personnel. They are responsible for ensuring that the safety practices are strictly adhered to. Safety audits are conducted regularly to ensure that the safety practices are in place and are being followed.

The manufacturing unit of RPM is certified in OHSAS under Integrated Management Systems. LTCML has been certified for its Integrated Management System (Environmental Management systems as per ISO 14001:2004 and OHSAS 18001:2007 for Occupational Health and Safety Management systems).

Human Resources

The business has progressively built a team of committed professionals across its manufacturing plants and corporate offices. Emphasis on training and development of the workforce has been the focus area. Additionally, competency building programmes for leadership

Development and various engagement initiatives have been undertaken to sustain the employees motivation and maintain a harmonious workplace.

The Industrial Relations scenario has remained cordial in the manufacturing units of the business. There were no cases of violations during the year under the whistle-blower policy and the policy on Protection of Womens Rights at Workplace.

Risks and Concerns

Increased market competition and macro-economic volatility are continuing concerns for the business.

Due to the lockdown because of COVID-19 and its economic impact, it is anticipated that the customers may request for deferment of orders or extension of credit.

In the CMB business, immediate availability of contract workmen at the customer sites post lifting of the lockdown will pose a challenge.


CMB plans to strengthen its position in the premium segment and increase its focus on large contractors, large irrigation projects and coal OB (over burden) removal contractors. With a targeted spend plan of over RS 100 lakh crore by the government in the next 5 years in infrastructure, there is a large scope for CMB to achieve higher business volumes.

Government initiatives in infrastructure development in roads, railways, irrigation, ports, urban & rural infra, affordable housing, etc., are expected to drive demand in the cement and metal sectors, which in turn will boost demand for excavators, dump trucks, dozers and other road construction and mining equipment. With ~60% of demand for mining equipment coming from coal psus,

CMB is planning to target selective tenders along with Komatsu.

The dozer segment is expected to grow by ~18%. Demand for Komatsu excavators is expected to increase by ~10% for FY 2020-21. The motor graders segment is expected to increase by ~10%. CMB also expects the spares and auxiliaries business to grow by ~4%.

In the parts and services segment, CMB plans to introduce newer and more innovative, user-friendly spares. It is also in discussion with the dealers to develop component repair service for construction equipment. However, as an aftermath of COVID-19, major capex or investments are likely to be deferred by the customers, thus impacting the order inflow.

Post COVID-19, people may continue to observe social distancing norms even after the crisis has subsided and that will change the way people commute. Daily commuters may prefer avoiding public transport and shared mobility might take a short-term hit. As a result, the demand for entry-level cars and two-wheelers might increase. But this again depends on economic/ market sentiments and consumer purchasing power. With the shutdown of all non-essential services, the demand for commercial vehicles is expected to further plummet. Tyre demand is likely to remain low and tyre companies may not make any immediate major fresh investments. However, companies which have already committed the money may wish to expedite their activity.

Further to the COVID-19 outbreak, it is anticipated that there will be limitations to global travel, at least in the immediate future. Also, some tyre companies may prefer to source locally. While this augurs well for LTRPM in the domestic market, it may be a disadvantage in European projects with stiff competition from suppliers in Europe.

LTRPM plans to be selective in its order intake by executing orders which require a shorter production time to minimise the inventory holding. It will also focus on spare parts and retrofit kits which will increase productivity to the customer at minimal cost. Further, joint development of machines with the client, along with service opportunities, are being explored.

Financial Review 2019-20


The Indian economy faced a challenging year in FY 2019-20. Post the general elections, the Indian economy witnessed sluggish investment momentum on the back of weak consumer sentiment, lower tax collections and fiscal slippages. The stress in the financial system due to non-performing loans led to risk aversion and low credit growth. The demand destruction in vital sectors such as real estate, automobiles, etc., led to the slowing economic growth and absence of broad-based private investment in industrial capex and infrastructure development. The onset of the global pandemic at the very end of the financial year led to the lockdown of the countrys social and economic activity, adding further impetus to the economic slowdown.

To counter these challenges, the Government along with the RBI initiated several measures both monetary and fiscal at various times during the year, viz. Reduction in corporate tax rates, capital infusion into Public Sector banks, relaxation of External Commercial Borrowing guidelines for affordable housing, Realty Fund for stalled housing projects and periodic lowering of interest rates in line with an overall moderated inflation trajectory.

The Governments firm commitment to substantially boost investment in infrastructure development, rural electrification, airports, railroads, water supply & irrigation, social sector, education and health is expected to provide opportunities to the Companys various business segments; although in the near term, the Company would be required to deal with the economic fallout of the Covid-19 pandemic. Further, with the Governments focus on structural reforms and the launch of the National Infrastructure Pipeline (NIP) of RS 100+ lakh crore, the Company expects the measures to improve Indias long-term growth potential.

The global economy witnessed significant volatility in 2019-20. The continued slump in manufacturing coupled with challenges relating to growth, inflation and employment, weakened the global GDP. Driven by protectionist policies in developed economies, trade wars intensified in various pockets across the world. The yea Rs 2019-20 also witnessed delayed Brexit, an oil price war between Saudi Arabia and Russia, rising geo-political tensions in the Middle East and the onslaught of the global pandemic, leading to major lockdown measures across countries. All these effectively created recessionary conditions in the world economy towards the end of the fiscal year.

Against the backdrop of such an environment, the Group recorded satisfactory growth in order inflows and revenues during FY 2019-20, though the impact of the pandemic will inevitably be felt in the FY 2020-21. Slowdown of infrastructure projects in multiple states due to change in State Governments, macroeconomic concerns and the systemic liquidity challenges slowed down the growth plans of the Company for FY 2019-20. The diversified portfolio of the Company coupled with the acquisition and the quick integration of Mindtree Limited, has however helped register reasonable growth at the Group level.

Post the acquisition of Mindtree Limited during the year, the entity has been consolidated as a subsidiary from the second quarter of FY 2019-20. The acquisition will help consolidate the Companys position in the IT-enabled services sector. In compliance with regulatory requirements, the Company further diluted its stake in L&T Technology Services (LTTS) to achieve 25% minimum public shareholding during the year.

Shareholding in L&T Infrastructure Development Projects Ltd (L&T IDPL) was also diluted to 51% on the partner Canadian Pension Plan Investment Board obtaining statutory approvals for conversion of Compulsorily Convertible Preference Shares (CCPS) into a 49% equity stake in L&T IDPL under a negotiated agreement. L&T Shipbuilding Limited which was a 100% subsidiary company has now been merged with L&T standalone entity as an adjusting event after obtaining NCLT approval to the scheme of amalgamation. Also, during the year FY 2019-20 the Company exited its shareholding in L&T Kobelco Machinery Private Limited by selling its stake to its JV partner Kobe Steel Ltd.

The Company is on course to complete divestment of its Electrical & Automation (EA) business to Schneider Electric. The approval of Competition Commission of India subject to fulfilment of certain conditions has been received and the business has been classified as discontinued operation from June 2019, pursuant to which the previous year figures have been regrouped wherever necessary. Progress is being made on fulfilling the conditions precedent to the divestment.

L&T Metro Rail (Hyderabad) Limited, a subsidiary company, successfully operationalized and commissioned the last stretch of the metro rail during FY 2019-20, thereby completing the full network of close to 70 km in the city of Hyderabad. Another subsidiary company, viz. Nabha Power Limited, which houses two units of a thermal power plant at Rajpura in Punjab, received a favourable Supreme Court judgement on its income related disputes with Punjab State Power Corporation Ltd. Also, in compliance with environment norms, this subsidiary has placed an order for construction of Flue Gas Desulphurisation system and work on this is in progress.

As at March 31, 2020, L&T Group comprises 117 subsidiaries, 6 associates, 25 joint venture companies and 35 joint operations. Most of the group companies are strategic extensions of the project and product businesses of L&T, while the Hydrocarbon business is housed in a separate set of group companies to provide the desired focus and independent functioning. The majority of the subsidiaries support L&Ts core businesses and enable access to new geographies, products and business segments. Certain distinct service businesses such as Information Technology, Technology Services, and Financial Services are housed in separate listed subsidiaries. The development projects business resides in separate subsidiaries and joint venture companies.

The Company continued on its journey of shareholder value creation by focusing on cost efficiencies, leveraging technology for productivity gains, efficient fund management and targeting select international opportunities beyond the Middle East. The Companys strong Balance Sheet, coupled with sound policies and procedures and committed work force is helping it tide over the current volatile economic environment and will enable business to thrive and grow, once the environment improves.

L&T Group achieved order inflows of RS 186356 crore during the yea Rs 2019-20, registering a growth of 9.1% over the previous year, growth largely being driven by international business. The year witnessed some noteworthy order wins in thermal power, affordable mass housing, a substation & transmission line project in Africa, gold beneficiation order in Saudi Arabia, residue upgradation in refinery modernisation and an order for offshore oil facilities in Saudi Arabia. Despite deferral of various prospects, Infrastructure contributed 55% of the total order inflow, while the share of Power increased from 2% in previous year to 6% in the current year on receipt of a large value thermal order and increased ordering by thermal power plants for emission control equipment to meet environmental norms.

The Group crossed the RS 3 lakh crore mark as at March 31, 2020 with the Order Book standing at RS 303857 crore. Infrastructure segment constitutes the highest proportion of the consolidated Order Book at 74% share, though reduced from 76% as at March 2019, with increase in the share of the Power segment from 2% to 5% on higher order inflows during the year.

The Order Book growth at 4.5% was constrained on deletion of some non-moving orders from the portfolio, mainly impacted by review decisions in the post-Covid scenario and change of Government in Andhra Pradesh during the Financial Year. The Order Book comprises of 27% from various State Governments, including local authorities. With major orders received from Public Sector Undertakings during the year FY 2019-20, the composition of the Order Book from that customer segment increased from 35% to 44%.

FY 2019-20 order inflow growth being driven by international business, the share of the international Order Book grew from 21% to 25%, with Saudi Arabia and Africa contributing the majority of the growth - resulting in their increased share in the overall international Order Book to 28% and 24% respectively.

Consolidated Revenue from Operations

L&T Group recorded revenue of RS 145452 crore during the year, registering a growth of 7.6%. The growth however, was below expected levels with execution impediments of Covid-19 in the last few weeks of the year, coupled with delayed clearances, right of way constraints and the review of awarded tenders by some state governments leading to stoppage of work in the Infrastructure segment for a prolonged period of time during the year. With the consolidation of Mindtree Limited acquired in early July 2019, the composition of international revenue at the Group level increased to 33% in year FY 2019-20.

Despite the challenges faced in the Infrastructure segment and sharp deceleration of business activity in the last few weeks of the year due to Covid-19, satisfactory growth in the Segment Revenue for the year was achieved with pick up of execution momentum mainly in Hydrocarbon and Heavy Engineering segments. The composition of IT&TS segment in the overall portfolio registered a growth of 400 bps achieved with consolidation of Mindtree on acquisition of control from Q2 FY 2019-20 onwards.

Operating Expenses and PBDIT

Manufacturing, Construction and Operating (MCO) expenses for FY 2019-20 at RS 97363 crore increased by 1.8% over the previous year. These expenses mainly comprise cost of construction material, raw materials and components, subcontracting expenses and interest costs in Financial Services business. This represent 66.9% of revenue, a decrease by 380 bps, mainly on account of increased share of IT&TS segment as well as cost control initiatives at the Group level.

Staff expenses for the yea Rs 2019-20 at RS 23114 crore increased by 32.3% over the previous year mainly on consolidation of Mindtree - adjusted for the same, the increase is 10.5% on a like-to-like basis. Adjusted for IT&TS segment (where manpower augmentation for revenue growth has led to an increase in the total headcount), the staff cost as a percentage to revenue increased by 30 bps, representing normal escalation. The Group has sharpened its focus on productivity improvement, digitalization and manpower rationalization.

Sales and administration expenses increased by 27.3% y-o-y to RS 8647 crore - when adjusted for Mindtree consolidation, the increase stands at 17.7% on a like-to- like basis. The increase is mainly in Financial Services due to higher credit cost and provisions in conformity with RBI guidelines (issued consequent on moratorium relief given to borrowers in the Covid-19 scenario). Other increases that contributed to the rise include Expected Credit Loss provisions for financial and contract assets, donations to PM Cares fund and provision for write down of Yes Bank AT1 bonds under regulatory mandate.

The Group operating profit at RS 16329 crore for the yea Rs 2019-20 registered growth of 6.5% y-o-y. The EBITDA margins for the year was lower by 10 basis points at

11.2%. Cost overruns encountered in some projects coupled with slow progress in some jobs mainly in Infrastructure segment impacted the operating margin. The drop was partially offset by a favourable job mix, coupled with execution efficiencies in Defence and Hydrocarbon segments, and the reversal of provision on a favourable arbitration award in the Power business.

Depreciation and Amortization charge

Depreciation and amortization charge for the yea Rs 2019-20 increased by 28% to RS 2462 crore, compared to RS 1923 crore in previous year. The increase was largely due to consolidation of Mindtree, full operationalization of the Hyderabad Metro Rail concession and amortization of Right of Use asset on adoption of the newly introduced Ind AS 116 accounting standard in 2019-20.

Profit Before Interest and Tax

Segment-wise composition of PBIT for FY 2019-20 is represented below:

Other Income

Aided by profit on sale of liquid investments, interest earnings and dividend income from treasury investment, Other income at RS 2361 crore, increased by 28.6% over RS 1837 crore in the previous year.

Finance cost

The interest expenses for the yea Rs 2019-20 at RS 2797 crore was higher by 55.2% over RS 1803 crore for the previous year. The increase was mainly attributable to the higher interest cost in L&T Hyderabad Metro Rail upon commencement of full operations, interest on lease liability on application of Ind AS 116 and higher level of borrowings in the standalone entity to fund the higher level of working capital caused by the tight liquidity conditions. Average borrowing cost for the year FY 2019-20 increased to 8.1% from 7.9% in the previous year.

Exceptional Items

There are no exceptional items during the year under review. Previous year exceptional item of RS 192 crore (post-tax) represents write back of certain customer dues upon realization based on favourable NCLAT order.

Tax Expense

Income Tax charge for FY 2019-20 (excluding tax charge on discontinued operations) decreased to RS 3263 crore compared to R 4067 crore in FY 2018-19 on adoption of tax ordinance resulting in lower effective tax rate, partially offset by write-down of opening DTA for the rate differential and write-off of opening MAT credit, due to its unavailability under the new tax regime. Creation of DTA in 2019-20 for set-off of capital losses has also contributed to the lower tax charge.

Consolidated Profit after Tax and EPS

Consolidated Profit after Tax (PAT) at RS 9549 crore for the yea Rs 2019-20 rose by 7.2% over the previous year at RS 8905 crore.

Consolidated Basic Earnings per Share (EPS) from continuing operations and discontinued operations for the yea Rs 2019-20 at RS 68.04 registered growth over previous year at RS 63.51.

Return on Consolidated Net Worth

The Net Worth, as on March 31, 2020, at RS 66723 crore, reflects net increase of R 4348 crore, as compared to the position as on March 31, 2019. Return on Net Worth (RONW) for the yea Rs 2019-20 was lower at 14.8%, compared to 15.3% in the previous year. RONW for the current year has been adversely affected by Covid impact and provisions in financial services business.

Liquidity & Gearing

Cash flow from operations (excluding change in loans and advances towards financing activities) decreased to RS 6687 crore as compared to RS 9100 crore in the previous year due to delay in customer collections, impacted by fund constraints with Government and Public Sector clients. Borrowings increased by RS 13874 crore to sustain higher level of operations and increased working capital requirements in a liquidity-constrained environment. During the year, borrowing was supplemented by additional funds generated from divestment of stake in subsidiary companies, profit on sale of investment and treasury income.

Funds were used mainly for purchase of stake in Mindtree Limited. Further, the Group incurred capital expenditure of RS 3299 crore (including capex for full operationalisation of Hyderabad Metro Rail concession). Funds were also utilized for payment of final dividend for FY 2018-19 RS 2526 crore, towards interim dividend of RS 1404 crore for FY 2019-20 and DDT RS 621 crore. The cash outflow also included net interest expense of RS 2903 crore during the year FY 2019-20.

Consequently, there was a net increase of R 4809 crore in the cash balances as at March 31, 2020 as compared to the beginning of the year.

Consolidated Fund Flow Statement

Rs crore

Particulars 2019-20


Operating activities 6687


Borrowings/(Repayment) of Borrowings 13874


Treasury and dividend income 952


Sale/(Purchase) of other investments 3983


ESOP Proceeds (net) 18


Sources of Funds 25424


Capital expenditure (net) 3299


Net investment/(divestment) 9802


Dividend paid 4551


Interest paid 2903


Increase/(Decrease) in cash balance 4809


Payment (to)/from minority interest (net) 60


Utilisation of Funds 25424


The total borrowings as at March 31, 2020 stood at RS 141007 crore as compared to RS 125555 crore as at March 31, 2019. The major increase is in the standalone entity to support the increasing business volumes, increase in borrowings of Financial Services and higher debt availed to complete operationalization of the Hyderabad Metro Rail concession. The gross debt:equity ratio increased to 1.85:1 as at March 31, 2020 from 1.81:1 as at March 31, 2019. The net debt:equity ratio stood at 1.53:1, as at March 31, 2020 from 1.52:1 as at March 31, 2019.

Details of significant changes in key financial ratios along with explanation:

In compliance with the requirement of listing regulations, the key financial ratios of the Group were examined and the ratios with significant changes i.e. Change of 25% or more as compared to the immediately previous financial year have been provided hereunder along with the explanation for the changes:



2019-20 ?
(i) Interest Coverage ratio* (Interest cost excludes Financial Services and Finance Lease Activity)


6.12 -31.5%
(ii) Net Working Capital % of Sales** (Excluding Financial Services & Corporate)


23.7% 30.9%

* The significant change in the Interest Coverage Ratio for FY 2019-20 has been due to implementation of Ind AS 116 resulting in accounting for interest on lease liability, as well as full commissioning of L&T Hyderabad Metro Rail leading to cessation of capitalization of interest on borrowing done hitherto.

** The significant changes in Net Working Capital % of sales is due to delay in customer collections, impacted by fund constraints with Government and Public Sector clients as well as support extended to vendors and sub-contractors in a tight liquidity environment.

B. SEGMENT-WISE PERFORMANCE (GROUP) 1. Infrastructure Segment

The Infrastructure segment won orders worth RS 102678 crore, higher by 7.2% over the previous year, mainly from Public Sector Undertakings. Large value orders were bagged by Building & Factories, Power Transmission & Distribution, Water Effluent Treatment and Metallurgical and Material Handling businesses. Investment by the Maharashtra State Government in the affordable housing segment and by private sector players in the airport and health segments boosted the order inflow momentum of the Buildings & Factories business vertical. Heavy Civil Infrastructure registered growth with receipt of orders in Hydel and Tunnel business, the Power Transmission & Distribution business recorded growth on receipt of key international orders, while the Metallurgical and Material Handling business registered significant growth with the receipt of a large value Gold beneficiation plant order and railway freight facility package in the MENA region.

The order inflow momentum was maintained in the Smart World & Communication business with the receipt of an order for an army network management system from the Indian Army and in the Water Effluent & Treatment business with order wins in the water supply and distribution segment.

De-growth was registered in the Transportation Infrastructure business due to deferral of some large value award decisions.

The share of international order inflow for the Infrastructure segment increased to 29%, from 16% in previous year. The Middle East region contributed 65% of the international order inflow. Lower contribution from South East Asian countries was compensated by a higher proportion of orders from African countries, reflecting the result of past efforts to expand presence in those countries. International order wins were predominantly in Power Transmission & Distribution and Metallurgical and Material Handling business.

Infrastructure segment clocked gross revenue of RS 73777 crore for the yea Rs 2019-20 registering a nominal growth of around 1% over the previous year. Revenue was impacted due to lack of progress in jobs in Andhra Pradesh with the stand taken by new state government to reassess new awards, execution challenges in some projects viz. Obtaining approvals, securing Right of Way, rationalisation of fund allocation in certain states, and stay on execution due to litigations concerning environmental clearances. The sharp deceleration in execution in the last few weeks of the year on account of the pandemic and consequent regulatory clampdown on business activities also impacted revenue growth for the year as a whole.

Revenue from international operations constituted 24% of the total revenues of the segment during the year as compared to 26% in the previous year with some large value orders in the opening Order Book nearing completion, especially in Heavy Civil Infrastructure.

Infrastructure Segment earned operating profit of RS 5912 crore. There was a decline in margins from 8.5% to 8.1% due to cost and time overruns in certain projects in Transportation Infrastructure and Buildings & Factories business. The decline was also due to the margin impact caused by Covid-19 led slowdown / lockdown in March 2020 and lower margin earned during the year in Heavy Civil Infrastructure business partially offset by realization of claims in Transportation Infrastructure and Water & Effluent Treatment business.

The Funds employed by the segment at RS 28279 crore as at March 31, 2020 registered a sharp increase of 18.1% vis-a-vis March 31, 2019, mainly due to stalled projects and fund allocation issues in certain State Government contracts. The funds employed were also impacted by the mandated stoppage of business activity / lockdown in the last 2 weeks of the financial year, a period that is usually characterized by a high level of customer collections.

2. Power Segment

The Power segment order inflow registered a substantial growth by bagging orders worth RS 12048 crore as compared to RS 2919 crore in the previous year. The segment received a large domestic order for an ultrasupercritical thermal power project, an order for a comprehensive Boiler Island package by L&T-MHPS Boiler JV, consolidated for L&T share, and several Flue Gas Desulphurisation projects following the mandate from Ministry of Environment, Forest and Climate Change to install emission control equipment in a timebound manner.

Despite the surge in order inflow, the Power segments revenue declined y-o-y by 41.8% to RS 2318 crore, since the new orders are yet to pick up execution momentum, as well as tapering of execution in coal-based projects nearing completion. Composition of revenue from international projects decreased to 17% of total revenue for the segment, from 35% in previous year due to diminishing revenue contribution from a Bangladesh gas-fired power project nearing completion in 2019-20.

Segment operating profit has improved from RS 177 crore in previous year to RS 275 crore in FY 2019-20, with the margin improving to 12% mainly due to reversal of provision on receipt of favourable arbitration award.

The Funds employed by the segment stood at RS 1745 crore as at March 31, 2020 registering a growth of 46.3% over the previous year due to delay in collection of retention amount in jobs nearing completion and higher carrying value of Investment in Joint Ventures under Power Group, consolidated through equity method under Ind AS.

3. Heavy Engineering Segment

The Heavy Engineering segment recorded an order inflow of RS 2361 crore for the year ending March 31, 2020, lower by 41.7% as compared to the previous year due to deferment of orders, coupled with the loss of international orders on aggressive pricing from global fabricators in a low-demand-cum-surplus-capacity scenario. Share of orders from international business decreased from 67% in the previous year to 57% in FY 2019-20, largely attributable to reduced prospects of Marine Pollution Control equipment.

The segments gross revenue of RS 3205 crore registered a growth of 27.5% compared to the previous year on the back of good progress in executing the Opening Order Book of the refinery, oil and gas equipment business. Revenue from international operations constituted 45% of the total revenue for the segment.

The segment recorded an increase in the operating profit for the year at RS 612 crore. The margin, however registered a decline from 24.5% to 21.5% due to prudential provisions made in an international project, partially offset by cost saving initiatives and a favourable claim settlement.

Funds employed by the segment as on March 31, 2020 at RS 2906 crore, registered an increase of 16.1% over the previous year on higher working capital due to pending milestone completion in some refinery projects.

4. Defence Engineering Segment

The Defence Engineering segment recorded an order inflow of RS 2233 crore for the year ending March 31, 2020, lower by 25.9% over the previous year with deferment of orders from the Ministry of Defence. The share of international orders for FY 2019-20 was higher at 21% as compared to the previous year.

The segments gross revenue of RS 3979 crore improved by 3.4% compared to the previous year. Growth was mainly contributed by the brisk execution of a tracked artillery gun order and partially offset by decline in the Shipbuilding business. Revenue from international operations was steady at 9% of the total revenue for the segment.

The operating margin improved from 16.2% in the previous year to 18.2% in FY 2019-20 due to cost savings across multiple projects in the Defence & Aerospace business and a favourable claim settlement in Shipbuilding business.

Funds employed by the segment as on March 31, 2020 at RS 3014 crore increased by 5.3% y-o-y, due to delay in collections from a fund constrained mod.

5. Hydrocarbon Segment

The Hydrocarbon segment achieved order inflows of RS 20964 crore, registering a decline of 24.8% due to deferment of orders mainly in the Onshore vertical.

The share of international orders decreased to 36% in FY 2019-20 from 45% in the previous year, which included one mega order received in Algeria. The Order Book, at R 44,130 crore, however, still provides multi-year revenue visibility even in the current uncertain environment of low oil prices.

Segment revenue at RS 17445 crore for the year grew by 15% y-o-y, enabled by peaking of execution activities in key projects. The share of International revenue in FY 2019-20 was lower at 43% of the total revenue of the segment as compared to 53% in the previous year, with closing stage progress of some large value international orders in the opening Order Book.

The segments operating profit for the year improved to RS 1898 crore, with the margin increasing by 210 basis points from 8.8% to 10.9%, reflecting operational / execution efficiencies and claim settlements in a few projects.

Funds employed by the segment as on March 31, 2020 at RS 2880 crore increased by 35.3% as compared to March 31, 2019, mainly due to the increase in current outstanding from customers in a tight liquidity environment.

6. IT & Technology Services (IT & TS) Segment

The Company acquired a controlling stake of 60.59% in Mindtree Limited as of 2nd July, 2019. Subsequent to the acquisition of control, the financials have been consolidated from the second quarter of FY 2019-20 and reported under the IT & TS segment. The resultant figures for the current periods are not comparable with the previous periods to that extent. An additional 0.49% stake was acquired in March 2020, taking the total shareholding as on March 31, 2020 to 61.08%.

The IT & TS segment comprises publicly listed companies L&T Infotech Limited and its group of companies, L&T Technology Services Limited and its group of companies, and Mindtree Limited and its subsidiaries. The segment recorded a gross revenue of RS 22335 crore for the year ended March 31, 2020, registering a growth of 53.5% over the previous year, including RS 5915 crore on account of the Mindtree acquisition in FY 2019-20. Excluding Mindtree, the growth would have been 13% on a like-to- like basis. International revenue constitutes a steady 91% of the total revenue of the segment. Like other businesses within the Group, the IT&TS Segment was also initially affected by the transition challenges of work-from-home / lockdown situation that prevailed towards the end of the year. The businesses have, however, quickly ramped up the work-from-home business model on various projects under execution during the lockdown period in line with approvals obtained from customers. The end-customer geographical segments in the US and Europe continue to witness stress due the pandemic that has severely impacted these geographies.

The Segments Operating Profit was at R 4635 crore for the yea Rs 2019-20 as compared to RS 3336 crore in the previous year including a contribution of RS 951 crore from Mindtree. The Operating Margin declined by 230 basis points, mainly on account of an increase in manpower cost, coupled with a drop in utilization and donations to the PM Cares fund set up for Covid-19 relief purposes.

The Funds employed by the segment as on March 31, 2020 at RS 19638 crore increased by 178% compared to March 31, 2019 mainly due to investment in goodwill and intangible assets of customer contracts on acquisition of Mindtree Limited.

During the year, the Company divested 4.26% stake in L&T Technology Services, towards meeting the regulatory requirement of minimum public shareholding of 25% within three years from listing of its shares. L&T s shareholding in LTI and LTTS as on March 31, 2020 is 74.53% and 74.62% respectively.

7. Financial Services (FS) Segment

The Financial Services segment comprises Rural, Infrastructure and Housing Finance and Asset Management. The segments revenue grew by 9.4% y-o-y at RS 13822 crore for the year FY 2019-20 aided by growth in the loan assets of focused business lines.

Disbursal of fresh Loans and Advances in Infrastructure, Real Estate, Micro Loans and Farm portfolio amounted to RS 37160 crore during the year ended March 31, 2020 - a decline of 36% y-o-y in a year characterized by multiple macroeconomic concerns that beset the financial services sector at periodic intervals. The Loan Book stood at RS 98384 crore as at March 31, 2020, marginally lower than the previous year. The Net Interest Margins (including fee income) at 7.2% improved ove Rs 6.8% in the previous year on the back of continued efforts to improve asset quality and profitability of operations, aided by the focus on increasing share of retail component in the Loan Book.

This Segment was also adversely affected by the Covid-19 pandemic by way of abrupt stoppage of disbursements at the year-end, extension of moratorium to customers through RBI directives and introduction of additional statutory provisioning requirements on account of such moratorium.

The Gross Non-Performing Assets (GNPA) ratio improved to 5.4% as at March 31, 2020 from 5.9% as at March 31, 2019. Net NPA ratio has also reduced to 2.3% as at March 31, 2020 against 2.4% as on March 31, 2019.

Average Assets Under Management (AAUM) in the Investment Management business has remained steady at RS 71056 crore during the year ended March 31, 2020 despite volatile markets and stress in the debt market funds.

The Financial services business is in the process of divesting its Wealth Management business to IIFL Wealth, and is awaiting regulatory approvals as of March 31, 2020.

8. Developmental Projects (DP) Segment

The Developmental Projects Segment comprises concessions acquired through a competitive bidding process for the development of Power projects, Roads, Bridges, Hyderabad Metro Rail and a Power Transmission Line project. The total portfolio of the Developmental Projects Group consists of 2 power projects (1 thermal and 1 hydel), 10 roads and bridges projects, 1 transmission line project and 1 metro rail project. The metro rail project has been executed under L&T Metro Rail (Hyderabad) Limited (L&T MRHL) which is a 100% subsidiary of L&T. Power projects are developed in spvs held by L&T Power Development Limited, a 100% subsidiary, and other projects are developed through spvs held by L&T Infrastructure Development Projects Limited, a Joint Venture in which the Company owns 51%. All the projects which were under construction have been commissioned by March 31, 2020, except 1 hydel power plant, which is expected to be commissioned in early part of FY 2020-21 on lifting of the lockdown.

The segment recorded a revenue of R 4850 crore for the year ended March 31, 2020, lower by 4.3% over the previous year, which included gains from divestment of a container port business. The drop in revenue was also contributed to by a lower Plant Load Factor (PLF) in Nabha Power Ltd. On account of planned shutdown for plant overhaul in Q4 FY 2019-20.

The segment clocked an operating profit of RS 539 crore for the yea Rs 2019-20, largely in line with the RS 522 crore earned in FY 2018-19, mainly on account of higher contribution from Nabha Power and Hyderabad Metro, partially offset by a non-recurring divestment gain from sale of a Container Port business in the previous year.

9. Others Segment

The Others segment covers Realty, Construction and Mining Machinery, Rubber Processing Machinery and Valves businesses. Revenue for the segment registered a decline of 10.5% from RS 5935 crore in 2018-19 to RS 5309 crore in 2019-20. The decline was mainly in the Realty business, which in the previous year included a large value sale of commercial property and higher hand over of residential properties. Construction Equipment and other allied businesses have recorded a decline with lower demand for wheel loaders and excavators. The Valves business, registered growth with focus on its distribution business and higher order intake in the previous year. The Operating Margin declined over the previous year, which included a lumpy gain on sale of commercial property in the Realty business.


L&Ts standalone financials reflects the performance of Infrastructure segment, Power, Heavy Engineering, Defence Engineering, and Others. The Others segment comprises of a part of Hydrocarbon business, Realty, Construction & Mining Machinery and Rubber Processing Machinery.

L&T Shipbuilding which was earlier a subsidiary has been merged with the Company with effect from April 1, 2019 pursuant to an NCLT Order. Accordingly, the previous years financials are restated for comparison purpose.

L&T standalone continues to be the major contributor to revenue and profits of the Groups performance.

Order Inflow and Order Book

The order inflow during FY 2019-20 grew by 6.7% at RS 114825 crore as compared to RS 107627 crore in the previous year. The Infrastructure segment contributed 86% of the total order inflow during the year on receipt of orders from the airport sector, affordable housing sector, and a few international orders. The Power business registered growth with the receipt of orders for an ultra-supercritical thermal power project and several Flue Gas Desulphurisation projects.

The international order inflow increased to 24% of the total order inflow for FY 2019-20 as compared to 16% in the previous year.

The Order Book as at March 31, 2020 stood at RS 2501 51 crore, 87% of which is contributed by Infrastructure segment. International orders constituted 20% of the current Order Book. The Order Book growth was restricted to 1.8% on deletion of some non-moving projects, especially in the Infrastructure segment.

Revenue from Operations

L&T achieved a revenue of RS 82384 crore during FY 2019-20 reflecting a flat growth over the previous year, with several execution impediments and delayed payment challenges from customers in various Infrastructure projects.

The growth was further impacted due to a decline in the Power segments revenue, since new orders are yet to gain execution momentum, whilst existing coal-fired power plant projects are nearing completion. The Realty business revenues also declined, since the previous years revenue included the sale of a major commercial property and higher hand-over of residential flats. The Defence Engineering segment registered growth, on better progress achieved on execution of the artillery gun project.

Manufacturing, Construction and Operating (MCO) expenses, comprising cost of construction material, raw materials, components and subcontracting expenses, amounted to RS 66882 crore, which is 81.2% of revenue, similar to the previous year.

Staff expenses for the year at RS 5956 crore increased by 3.9% y-o-y mainly due to increase in manpower count. Staff Cost as a percentage of revenue increased marginally from 7% to 7.2%.

Sales and administration expenses for the year at RS 2707 crore increased by 32.2% y-o-y, mainly due to higher Expected Credit Loss provisions on financial and contract assets, impairment of investment and Donation towards PM Cares Fund in Q4 FY 2019-20.

Profit before depreciation, interest and tax excluding other income (PBDIT) was RS 6838 crore for the year, lower by 10.6% over the previous year. The 100 bps drop in PBDIT at 8.3% of sales is mainly due to higher ECL provisions and cost overruns in some projects in the Infrastructure segment.

Depreciation and Amortization charge

Depreciation and amortization charge for the yea Rs 2019-20 marginally increased by 2.1% and was at RS 1021 crore, as compared to RS 1000 crore in the previous year, with additional depreciation of RS 75 crore accounted on implementation of new accounting standard on Leases (Ind AS 116).

Other Income

Other income mainly comprises income from the Companys treasury operations, dividend and income earning from Group companies. Other income for the yea Rs 2019-20 at RS 2808 crore, increased as compared to RS 2711 crore for the previous year mainly due to higher earnings on larger treasury investments and dividend from subsidiaries.

Finance cost

The interest expenses for the year FY 2019-20 at RS 2267 crore were higher by 26.8% vis-a-vis RS 1788 crore for the previous year. The increase is mainly attributable to an increase of RS 13,795 crore in borrowings as at March 31, 2020 compared to borrowings as at March 31, 2019, as well as a higher quantum of interestbearing customer advances. The average borrowing cost for the yea Rs 2019-20 was at 7.4% p.a., lower from the 7.6% p.a. In the previous year.

Exceptional Items

Exceptional Items of RS 610 crore (net of tax) for the yea Rs 2019-20 represents gain on dilution of stake in L&T Technology Services, while the previous year included gains on dilution of stake in L&T Infotech and L&T Technology Services, as well as recovery of a receivable amount under Insolvency & Bankruptcy Code, partly offset by impairment of some investments in jvs.

Profit after Tax and EPS

Profit after Tax (PAT), including exceptional items, for the yea Rs 2019-20 at RS 6679 crore, registered a decline of 11% as compared to RS 7491 crore in the previous year mainly due to lower operating margin, higher interest expenses and lower exceptional income.

The Company has opted for the lower tax rate under the tax ordinance introduced during the year under review. This has resulted in saving in current tax. The said saving is partially offset by write down of opening Deferred Tax Asset for revised rate and surrender of Minimum Alternate Tax credit not being available under the new tax ordinance.

The Basic Earnings per Share (EPS) from continuing operations & discontinued operations for the yea Rs 2019-20 at R 47.59 has declined compared to RS 53.43 in the previous year.

Other Comprehensive Income (OCI)

Other Comprehensive income during the year reflected a loss of RS 519 crore, vis-a-vis loss of RS 118 crore in the previous year, mainly due to impact of fair valuation of investments in Mindtree prior to acquiring controlling stake.

Return on Net Worth

The Net Worth of the Company as on March 31, 2020 at RS 52175 crore increased by RS 2127 crore as compared to March 31, 2019, reflecting mainly profit for the year, reduced by the payment of interim dividend of RS 10 per paid up equity share in March 20.

Return on Net worth (RONW) including Exceptional Items for the yea Rs 2019-20 at 13.1% is lower as compared to 15.7% in the previous year. The decline is largely due to higher exceptional income in 2018-19, which mainly included gains on dilution of stakes in LTI & LTTS.

Liquidity & Gearing

Borrowings increased during FY 2019-20 by RS 13452 crore to sustain a higher level of operations, increase in the working capital and for the acquisition of Mindtree Limited. During the year, additional funds were generated from liquidation of other investments, dividend income RS 1384 crore and Treasury income RS 518 crore.

Besides the Mindtree acquisition and operations, the funds were deployed for capex of RS 1309 crore, payment of dividend R 4159 crore comprising of final dividend of RS 2526 crore for FY 2018-19, Dividend Distribution Tax of RS 229 crore and interim dividend of RS 1404 crore for FY 2019-20 and net interest expense of RS 1893 crore during the year. There was a net increase of R 464 crore in the cash balances as at March 31, 2020 as compared to the beginning of the year.

Fund flow statement

Rs crore

Particulars 2019-20


Borrowings (net of repayment) 13452


Sale/(Purchase) of Other investments 3463


Treasury and dividend income 1902


ESOP Proceeds (net of buyback expenses) 18


Sources of Funds 18835


Operating activities 121


Capital expenditure (net) 1309


Net investment/(divestment) 10889


Dividend paid 4159


Interest paid 1893


Increase/(decrease) in cash balance 464


Utilisation of Funds 18835


Total borrowings as at March 31, 2020 stood at RS 25785 crore as compared to RS 1 1990 crore in the previous year. The loan portfolio of the Company comprises a mix of domestic and suitably hedged foreign currency loans. The gross debt:equity ratio increased to 0.49:1 as at March 31, 2020 from 0.24:1 as at March 31, 2019. The net debt:equity ratio has increased to 0.31:1 as at March 31, 2020 from 0.08:1 as at March 31, 2019 - the increase has primarily been driven by increased working capital requirements and the acquisition of Mindtree Limited.


Business strategy formulation seeks to set long-term goals and strategies that help the Company in exploiting its strengths, identifying and realizing new opportunities and building new capabilities. This is enabled through three plans with time horizons ranging from long-term (7-10 years) to medium-term (5 years) to short-term (annual). Each plan dovetails into the next.

Last year, the Company had embarked on the development of a Perspective Plan, with a long-term view of 7-10 years. The process started with the identification of emerging megatrends and potential disruptions in current businesses. This was followed by a call for ideas for new businesses as well as adjacencies and growth areas, conducted through groupwide exercises, large-scale interactive processes, brainstorming sessions and interactions with experts. Ideas were filtered based on certain criteria. Some ideas went through a stage-gated assessment and a few were selected for pursuing further. The exercise culminated in a future outlook for the Group along with seeding of potential new businesses in Digital Platforms such as the B2B marketplace, skilling platform, etc. The insights garnered from the Perspective Plan exercise, tweaked for the changed circumstances of the pandemic, would be used for creating the next 5-year strategic plan.

The strategic plan, which runs for a period of 5 years, is developed through a collaborative and consultative process across the organization. Formulating the plan involves a lookback analysis of performance against the previous plan, scanning market opportunities, outlook on investment and identification of critical areas to be addressed. The outcomes of the exercise are priorities for growth, key initiatives at business unit and corporate level, talent and leadership pipeline plan, financial resources plan, and broad financial targets for each business. The ensuing year (2020-21) is the terminal year of the current 5-year strategic plan, Lakshya 21. The Company would be undertaking the development of next 5-year strategic plan Lakshya 26, which would lay down the strategic guideposts for the Company from FY 22 to FY 26. Changes in various industry segments as well as new areas of business, after considering the impact of the recent Covid-19 pandemic, would get factored into Lakshya 26. The Strategic Plan usually gets to be reviewed after, say, three years for mid-course correction, if any.

While the 5-year business outlook and broad financial goals are embedded as an overarching strategic plan, the annual operating plan is formulated before the commencement of every financial year. This helps provide flexibility in tailoring annual operating and financial budgets to changing circumstances while keeping the 5-year strategic plan in view.

Business Model •

Value creation by the Group is enabled through leveraging its four business models:

• EPC: The company focuses on its proven core competencies of conceptualizing, executing and commissioning large, complex infrastructure projects in the areas of Roads and Bridges, Power Transmission & Distribution, Thermal /

Hydel / Solar / Nuclear Power Plants, Water and Irrigation Infrastructure, Residential, Commercial, Institutional and Factory Buildings, Airports, Metro and Conventional Railways, Onshore and Offshore Hydrocarbon facilities and Metallurgical projects.

• Manufacturing: Manufacturing is mainly concentrated around Defence and Shipbuilding, heavy custom-built equipment catering to process industries, Electrical Products and Systems (made-to-stock and made-to-order),

Material Handling Equipment and Industrial Products & Machinery. The company has extensive manufacturing facilities at Hazira, Vadodara, Ahmednagar, Talegaon, Chennai, Coimbatore, Kattupalli in India and Oman, UAE,

Saudi Arabia, Malaysia in international geographies.

• Services: The services businesses cater to sectors of Information Technology (through LTI and Mindtree), Technology Services (through LTTS), Smart World & Communication, Real Estate and Financial Services (through LTFHL).

• Development: The Company has also undertaken development projects such as the Hyderabad Metro, road operations and tolling (through IDPL), Nabha Power and Uttaranchal Hydel Power, among others.

Business Portfolio Schematic

The Group is present in various business segments, which are shown below:

Portfolio Strategy

The portfolio strategy aims to de-risk the revenue while improving profitability in the pursuit of growth. This strategy

Focuses on:

• Complementing the mature businesses with growth-stage businesses, with a focus on asset-light, capex-light and high-margin businesses. The Group is also trying to reduce exposure to asset-heavy businesses. Businesses requiring periodic capital infusion such as Financial Services will be reassessed from time to time in the context of emerging strategic significance.

• Well-balanced and geographically diversified businesses across domestic and international markets. Ove Rs 35% of the business comes from international markets (primarily the Americas, Middle East & Africa and Europe). To further de-risk the geographical concentration and pursue new growth opportunities, the focus on few more high-potential countries in Africa and ASEAN region will be enhanced.

• Balancing the cyclical nature of the EPC business through a portfolio of manufacturing and services businesses. The Services businesses contribute ove Rs 25% of the Groups revenues. With the aim of better profitability and a stable revenue profile, the Group intends to step up the proportion of services business while factoring the growth in the traditional EPC and manufacturing businesses. The acquisition of Mindtree Limited was a step in this direction.

• Supplementing the standalone offerings with partnerships: For the EPC and manufacturing businesses, the Company has partnered with several large global process and technology licensors, and for the IT and Technology Services businesses, the group has extensive partnerships with established global software product and technology companies. These engagements enable the group to offer a bouquet of value-added services to customers in different businesses.

Businesses and offerings are closely linked to global megatrends and the Company continues to build on these to

Address future challenges.

Strategic Thrust and Direction

The focus of the Groups strategy is to create economic value for its shareholders, investors and clients while generating

Social and environmental value for its employees and other societal stakeholders. This is enabled by:

• Ensuring efficient conversion of the Order Book into healthy margins through execution, operational excellence and digitalization initiatives

• Driving growth of the services businesses which have a higher roe profile

• Maintaining an optimum mix between domestic and international business

• Managing financial resources for the growth of the businesses and strong financial health to facilitate access to capital markets, as and when required

• Incubating new businesses to tap future growth opportunities

• Engaging with start-ups to access innovations to enhance capabilities and develop new offerings

• Unlocking capital from non-core businesses and assets earning sub-par returns

• Leveraging digital solutions and analytics across various parts of its businesses, spanning areas such as remote asset management, material tracking, employee productivity enhancement, safety and procurement, among others

• Focus on businesses contributing to environment sustainability such as solar, energy storage, water reuse and recycling

• Thrust on opportunities linked to achieving the Sustainable Development Goals, like access to clean water for everyone, reduction in consumption of virgin material in construction, energy efficiency solutions, etc.

The Group retains its thrust on improving ROE.

Resource Allocation:

The Company has a well laid-out plan of resource allocation to meet its strategic goals which includes:

• Maintaining adequate liquidity on the Balance Sheet to exploit growth opportunities and fund emerging and high growth businesses

• Prudent allocation of resources (Capex and Working Capital) to fund growth in different businesses. Financial resources are monitored and directed at a central level with mandates for control at a local level

• Attracting and retaining a robust and thriving talent pool through employee engagement programmes, monetary and non-monetary incentives, leadership development initiatives, offering professional development opportunities and fostering a conducive organisation climate. The Company has evolved a series of structured HR policies to enable this resource allocation

• Long-term lasting engagements with labour sub-contractors to ensure a steady augmentation of resources at project sites

• Long-term engagement with vendors of services, materials and equipment to provide adequate resources for business growth in various business verticals

• Maintaining strong financial health to facilitate raising of resources from Capital Markets as and when required

• Ensuring judicious allocation of manpower and monetary resources to company-wide sustainability and growth initiatives such as CSR, Digitalisation and operational excellence programs


The Company has an institutionalised Enterprise Risk Management framework, which is continuously reviewed and benchmarked with industry best practices. The Audit Committee and the Risk Management Committee are two Board committees that oversee the adequacy and effectiveness of the risk management framework and processes. Each business vertical has in place policies, structures and procedures to cater to the unique nature of its business aligned within the overall Enterprise Risk Management framework.

During the year, an Enterprise Risk Management (ERM) system for digitalizing the risk management processes for business operations was developed and implemented. This system enables monitoring risks across projects in various geographies of operation, provides aggregate risk-weighted portfolio views of businesses and shares learnings across the organization, etc. An integrated Knowledge Centre portal has also been developed and provides access to information on risks emerging from economic factors, geo-political happenings, financial markets, etc. It also provides a platform for assessment of counter-party risks and feeds useful updates to enable informed, fact-based decision-making.

The Companys emphasis on continuous learning has led to the creation of several programmes for improving the risk awareness across the organization. These include workshops, knowledge sessions, embedded risk management modules in project management / leadership development programmes and training content deployed on online learning platforms.

Once again in FY 2019-20 the Company has won CNBC TV18s prestigious Firm of the Year Trophy - 2019 for best Risk Management practices for Frameworks and Systems in two categories - Conglomerate and Technology.

The top enterprise-wide risks for the Company and their mitigation measures are summarized below:

Risk Description Mitigation
1 Pandemic
Covid-19, declared a pandemic by the World Health Organization in March 2020, posed a risk to health and safety. It also has had various implications on businesses in terms of slowdown of new orders, delays in execution of existing orders and supply disruptions. A task force comprising members from leadership and Risk Management was formed to assess and develop suitable mitigation strategies to address the impact of the pandemic. The Company is following all the lockdown restrictions imposed by the Government of India. Construction sites were closed and Work From Home for employees was enabled with appropriate data security controls. Standard Operating Procedures including safety precautions and social distancing norms were prepared in order to resume operations once the lockdown restrictions are progressively lifted. To mitigate the risk of supply disruptions, alternative procurement strategies have been considered. The Company is also exploring various contractual remedies to deal with the situation. The above steps taken along with other measures, will help the organization to be resilient and help weather any major shocks.
Geopolitical Risks
Over the last few years, risk on account of sanctions, trade barriers, protectionist policies and geopolitical conflicts have increased. Appropriate mitigation strategies are in place for addressing geographical concentration, strategic sourcing options, regular monitoring of international sanctions and realignment with international partners based on the geopolitical situation.
Risk Description Mitigation
Slowdown in economy
There has been a slowdown in various sectors like infrastructure, hydrocarbon, power, defence, metals & minerals, realty, etc., on account of several factors, such as budgetary allocation, funding issues, decline in oil prices, slow pace of decision-making, lack of investment demand, green initiatives and delays in environmental clearances. Due to Covid-19 there will be further stress on the resources available with central and state governments. Being a diversified conglomerate has helped mitigate the risk of such a slowdown in some specific sectors, which is compensated by growth in certain other sectors like water, airport construction, renewable energy, metro network, health infrastructure etc. The Company will continue to seek opportunities and take appropriate measures to offset the impact of the slowdown and the pandemic. The Company is also analysing various sectors to identify areas of growth and reallocate resources accordingly.
Terms of Trade
Over the years, terms of trade have become more restrictive and stringent both in terms of aggressive timelines as well as contract clauses such as payment terms, etc. Various mitigation strategies are undertaken by the Company, such as negotiating with the customer for equitable terms with better value offerings. The Company also enters into back-to-back arrangements with vendors and sub-contractors.
Due to the overall slowdown and limited opportunities, there has been aggressive bidding from various foreign and domestic players in the past few years. The Companys competitive strength is derived from its engineering expertise, excellence in executing projects, particularly the large and complex ones, reputation for quality, usage of technology, project management expertise and strong resource base, including the Balance Sheet strength. The Company has also taken various initiatives, such as digitalisation and cost-optimisation via value engineering, and this has helped to win new orders.
Reputation and Brand
The Company has a presence across sectors in various geographies, and the size and scale of projects being prospected / executed is of increasing magnitude and high visibility, hence maintaining its reputation / brand is paramount. The Company addresses the potential risk of erosion of reputation and brand value through a strong corporate governance framework and delivering projects on time and in conformity with contracted quality of deliverables. It has a Compliance Policy in place, mandating adherence to a Code of Conduct and Internal Controls, complemented by regular knowledge-sharing of best practices across the organisation and mechanisms to track various social media platforms. The Companys Corporate Brand Management & Communications department also protects and bolsters the brand in Indian and international markets through a wide range of online and offline media.
Cyber Security
As IT systems get increasingly interconnected and with implementation of various digitalisation initiatives, cyber security has become a key concern for Governments and businesses. The Company has taken several steps to mitigate the cyber risks. These include roll-out of an enterprise-wide cyber security framework that provides for technology solutions to enforce detective and preventive controls and employee education to create awareness of cyber risks.
Risk Description Mitigation
Execution Challenges
The Company faces execution challenges like unanticipated geological conditions, availability of work front, land acquisition and Right-of-Way (ROW), delay in approvals and clearances from Government agencies, working in difficult/harsh weather conditions, manpower issues, etc. The Company closely tracks the key risks for each project to ensure timely mitigation with proper escalation and resolution mechanism as required.
Counter Party Risks
The Company partners with different contractors (joint venture / consortium projects) across businesses based on technical requirements / local market conditions. The partners performance and financial strength is crucial for project success. Learnings from past projects are incorporated in the inter-se agreements with the partners and clauses on liability of each partner is carefully drafted after legal due diligence. On a periodic basis the Company carries out a financial assessment of its key counter parties and appropriate measures are adopted based on the outcome of the analysis.
Working capital challenges
Project delays and adverse contractual payment terms lead to increased working capital requirements. Guidelines have been issued to monitor and manage working capital, both at the project level as well as the business level. The Company also deploys specific cashflow management strategies at both client and vendor level, to mitigate working capital challenges on a case-to-case basis.
Claims Management
The EPC business has an inherent risk of timely and acceptable settlement of claims due to dependency on various stakeholders for approval and clearances. The Company maintains a strong documentation and follow-up protocol with various stakeholders for any claim management and to ensure timely and equitable settlement of such claims. Documentation in relation to Covid-19 / force majeure is being reviewed on a project- to-project basis and is being suitably taken up with all stakeholders.


Inflation in India remained benign in the first half of FY 2019-20 but picked up sharply in the second half mainly due to the rise in food prices driven by supply concerns. Further economic growth remained a challenge amidst follow-on concerns on domestic credit growth, corporate deleveraging cycle and lack of pick-up in private consumption. The US Dollar remained strong in FY 2019-20, primarily on the back of strong growth divergence between the US and rest of the world including emerging market countries. Slowdown in manufacturing gripped countries from Europe to China and various emerging markets in the first half of the yea Rs 19-20. During the second half of the year, risks pertaining to Trade War and Brexit temporarily abated. Liquidity infusion by Central banks and Corporate Tax cuts provided thrust to various asset classes. The Indian currency depreciated accordingly but less so due to better fundamentals compared to other emerging market economies.

The last quarter of FY 2019-20 witnessed elevated financial market volatility, primarily due to the emergence of the Covid-19 pandemic, thereby halting economic activity across the globe. Lockdown and closure of customer offices, non-completion of certification inspections and the Companys inability to generate invoicing resulted in significant amount of collections not being realized within the financial year. This has led to a sharp increase in working capital levels in the current year, which, for the last 3 years had been on a targeted improvement path. The Company believes that this is a temporary setback and hopes to pull back working capital levels in the next year or two.

Capital structure, liquidity and interest rate risks

The Company maintains a conservative capital structure. Low gearing levels equip the Company to balance business stresses on one hand and raise growth capital on the other. This policy provided the Company the required flexibility for fundraising at short notice to deal with the sudden worsening of the working capital due to the lockdown and also build up a liquidity buffer as the year FY 2019-20 ended.

The Company has been investing capital into subsidiaries as scheduled and also to optimise overall Group interest costs. The Company also completed the acquisition of shares of Mindtree Limited from a few of the existing shareholders of Mindtree and the Open Offer, which evidenced an overwhelming subscription resulting in acquisition of ove Rs 60% stake in Mindtree Limited.

Despite the lower liquidity environment in FY 2019-20 on the back of risk aversion (post defaults by some large AAA-rated entities in the NBFC sector) by both retail and institutional investors, slower consumer demand and the sluggishness around investments in the private sector as well as disruption caused due to the Covid-19 outbreak, the Company managed to meet its fund requirements and also managed to add to the cash and cash equivalents of the Company from RS 7588 crore at the end of Decembe Rs 31, 2019 to RS 9998 crore at March 31, 2020.

The Company plans to maintain adequate liquidity on the Balance Sheet to deal with the ongoing Covid-19 crisis and downturn in economic conditions. With the implementation of the Large Exposure Framework guidelines of RBI from April 1, 2019, the banking limits sanctioned by domestic banks to any of the Group companies will need to fit within 25% of Tie Rs 1 capital of banks versus 40% of Tie Rs 1 and Tie Rs 2 capital prevalent till now. This is likely to constrain the availability of bank limits (both fund-based and non-fund-based) and also impact the pricing of the same for the Group unless some regulatory relaxation is granted and may have some adverse impact on the growth plans of the Group.

The Company judiciously deploys its surplus funds in short-term investments in line with the Corporate Treasury policy. It constantly monitors the liquidity levels, economic and capital market conditions and maintains access to the lowest cost means of sourcing liquidity through banking lines, trade finance and capital markets. Given the extra liquidity buffer planned to be kept on the balance sheet due to the Covid-19 situation, both the debt and investments on the balance sheet are likely to remain elevated in FY 2020-21. The Company dynamically manages interest rate risks through a mix of fund-raising products, investment products and derivative products across maturity profiles and currencies within a robust risk management framework.

Foreign Exchange and Commodity Price Risks

The businesses of the Company are exposed to fluctuations in foreign exchange rates and commodity prices. Additionally, it has exposures to foreign currency denominated financial assets and liabilities. The business- related financial risks, especially involving commodity prices, by and large, are managed contractually through price variation clauses, while the foreign exchange risks and residual commodity price risks are managed by treasury products.

The disclosure of commodity exposures as required under clause 9(n) of Part C of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the format specified vide SEBI Circular dated 15th November, 2018 is given separately on page 335 of this Annual Report.

Financial risk management is governed by the Risk Management framework and policy approved by the Audit Committee and authorised by the Board. Financial risks in each business portfolio are measured and managed by Corporate Treasury.

Despite currency weakness and elevated financial market volatility, the Companys robust financial risk management processes ensured that financial costs remain under control.


The Company maintains a robust framework of internal controls sized appropriately with the nature of business, size of operations, geographical spread and changing risk complexity, which are impacted by varying internal and external factors. This framework forms the building blocks of a strong corporate culture of good governance.

The Company has aligned its internal financial controls with the requirements of Companies Act, 2013 and the globally accepted framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission that operates at both entity and process levels. The internal controls systems and activities at L&T cover the operational controls in the business processes besides the requirement of Internal Controls over Financial Reporting (icofr).

The internal controls are designed to provide reasonable assurance on recording of transactions and providing reliable financial and operational information. The Company has well documented policies, procedures and authorization guidelines commensurate with the level of responsibility, besides standard operating procedures specific to respective businesses. This ensures the propriety of transactions and authorisations at an appropriate level of management.

The Corporate Policy on internal controls sets the tone at the top and serves as the foundation for sound internal controls. The internal control teams at corporate and business levels assist the executive management, who are responsible for establishing, operating and upgrading the internal controls system. The Corporate team reviews and assesses the processes, formulates the policies, guidance notes and advisories. It also shares best practices across the organisation.

The effectiveness of internal controls is tested by Statutory Auditors as well as by the Corporate Audit Services team. The Corporate Audit Services department develops an audit plan for the Company, which covers core business operations, corporate departments as well as support functions. The Audit Committee of the Board reviews the annual internal audit plan. Significant audit observations from the independent internal audits conducted by Corporate Audit Services are presented quarterly to the Audit Committee along with the status of the management actions and the progress of the implementation of recommended remedial measures.

The Corporate Governance is strengthened by a Code of Conduct applicable to the employees and implementation of a separate Code of Conduct for Business Partners, which reinforces ethical behaviour by aligning them to the unique corporate culture and values of the Company. The whistle-blower mechanism forms another integral component of the internal control system, which is overseen by the Audit Committee. It is available to both employees and business partners, to enable them to raise genuine concerns about any actual or suspected ethical / legal violations or misconduct or fraud, with adequate safeguards against victimisation, fear of punishment or unfair treatment. The Company also has an institutionalised mechanism of dealing with complaints of sexual harassment through a formal committee constituted in line with the Companys Policy on Protection of Womens Rights at Workplace under relevant statutory guidelines. This policy has been widely disseminated across the Company and all complaints are addressed in a time bound manner.

Disclosure of commodity exposures as required under clause 9(n) of Part C of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Commodity Name

Exposure in INR towards the particular commodity (R crore)

Exposure in Quantity terms towards the particular commodity (Tn)

% of such exposure hedged through commodity derivatives

Domestic market

International market


OTC Exchange OTC Exchange
1 Silver (Buy) 353 60 - - - - -
2 Copper (Buy) 873 18,788 - - 76.90 - 76.90
3 Copper (Sell) (502) (12,221) - - 68.26 - 68.26
4 Steel (Buy) 11735 3,128,865 - - - - -
5 Aluminium (Buy) 546 40,353 - - 86.07 - 86.07
6 Aluminium (Sell) (141) (12,629) - - 34.52 - 34.52
7 Iron Ore (Buy) 44 108,129 - - 42.13 - 42.13
8 Coking Coal (Buy) 55 44,524 - - 42.13 - 42.13
9 Zinc (Buy) 90 5,388 - - 100.00 - 100.00
10 Lead (Buy) 63 4,149 - - 100.00 - 100.00
11 Cement (Buy) 2941 5,911,690 - - - - -
12 Nickel (Buy) 66 660 - - 37.88 - 37.88