BRACTs

Vishwakarma Institute of Management

(An ISO 9001-2008 Certified Institute)
(Approved by AICTE-New Delhi, Recognized by Government of Maharashtra and Permanently Affiliated to University of Pune)

MBA Programme Rated as MH-A by CRISIL Recipient of the 19th Dewang Mehta B School Award for the Best B School with Academic Inputs in Marketing Rewarded as Second Best Professional Institute in Urban Area Category by the University of Pune

1 2 3 4 5 6 7 8 9

Executive Summary Project Objective Introduction Markets Project Report Financial Information Corporate Governance On CSR Activities Conclusion Larsen & Toubro Limited References

(L&T)

For the subject, Enterprise Analysis Desk Research (Course Code: 115) Submitted by, Ankita Sunil Kirad MBA I, Div. A Roll No 13011064

INDEX

Sr. No. 1 2 3 4 5 6 7 8 9

Topic Executive Summary Project Objective Introduction Markets Financial Information Corporate Governance CSR Activities Conclusion References

Page No. 2 6 7 10 20 26 30 33 39

1. Executive Summary
1.1 Introduction Larsen & Toubro Limited, also known as L&T, is an Indian multinational conglomerate headquartered in Mumbai, India. The company has business interests in engineering, construction, manufacturing goods, information technology and financial services. L&T is India's largest engineering and construction company, Considered to be the "bellwether of India's engineering sector", L&T was recognized as the Company of the Year in 2010.

1.2

History A company was founded in Mumbai in 1938 by two Danish engineers, Henning Holck-

Larsenand Soren Kristian Toubro. The company began as a representative of Danish manufacturers of dairy equipment. However, with the start of the Second World War in 1939 and the resulting restriction on imports, the partners started a small workshop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. The wartime need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started to repair and fabrication shops signalling the expansion of the company. The sudden internment of German engineers in India (due to suspicions caused by the War), who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation. In 1944, ECC was incorporated by the partners; the company at this time was focused on construction projects (Presently, ECC is the construction division of L&T). L&T decided to build a portfolio of foreign collaborations. By 1945, the company represented British manufacturers of equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass.

In 1945, the company signed an agreement with Caterpillar Tractor Company, USA, for marketing earth moving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7 February 1946, Larsen & Toubro Private Limited was born.

POST INDEPENDENCE
Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai Mumbai. That uninhabitable swamp subsequently became the site of its main manufacturing hub. In December 1950, L&T became a public company with a paid-up capital of Rs. 20 lakhs (2 million rupees) (20, 00,000.00). The sales turnover in that year was Rs. 1.09 crore (10.9 million rupees). In 1956, a major part of the company's Mumbai office moved to ICI House in Ballard Estate, Mumbai; which would later be purchased by the company and renamed as L&T House, its present corporate office. The sixties witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963). 1.3 Operating Divisions L&T has delivered Engineering, procurement and Construction (EPC) services for many projects in the upstream hydrocarbon sector over the last two decades, in India, Middle East, Africa, South-East Asia and Australia. L&T has formed a joint venture with Sapura Crest Petroleum Berhad, Malaysia for providing services to offshore construction industry worldwide. The joint venture will own and operate the LTS 3000, a Heavy Lift cum Pipelay Vessel. L&T has more than 38000 employees in India. L&T Power has set up an organization focused on coal-based, gas-based and nuclear power projects. L&T has formed two joint ventures with Mitsubishi Heavy Industries, Japan to manufacture super critical boilers and steam turbine generators. L&T is among the top five fabrication companies in the world. L&T has a shipyard capable of constructing vessels of up to 150 meters long and displacement of 20,000 tons at its
3

heavy engineering complex at Hazira. The shipyard is geared up to take up construction of niche vessels such as specialized Heavy lift Cargo Vessels, CNG carriers, Chemical tankers, defence & para military vessels, submarines and other role specific vessels. The design wing of L&T ECC is called EDRC (Engineering Design and Research Centre). EDRC provides consultancy, design and total engineering solutions to customers. It carries out basic and detailed design for both residential and commercial projects.

L&T Solar
L&T Construction a subsidiary of the Larsen & Toubro conglomerate also undertakes solar projects. In April 12, L&T commissioned India's largest solar photo voltaic-based power plant (40 MWp) owned by Reliance Power at Jaisalmer, Rajasthan from concept to commissioning in 129 days. In 2011, L&T entered into a partnership with Sharp for EPC (engineering, procurement and construction) in megawatt solar project and plan to construct about 100 MW in the next 12 months in most of the metros L&T Infra Finance, promoted by the parent L&T Ltd, is also active in the funding of solar projects in India.

Electrical and electronics

L&T is an international manufacturer of a wide range of electrical and electronic products and systems. L&T also manufactures custom-engineered switchboards for industrial sectors like power, refineries, petrochemicals and cement. In the electronic segment, L&T offers a range of meters and provides control and automation systems for industries.

Information technology
L&T InfoTech focuses on information technology and software services. Larsen & Toubro InfoTech Limited, a 100 per cent subsidiary of the L&T, offers software and services with a focus on Manufacturing, BFSI and Communications and Embedded Systems. It also provides services in the embedded intelligence and engineering space.

L&T Machinery & Industrial Products

L&T manufactures markets and provides service support for construction and mining machinery, surface miners, hydraulic excavators, aggregate crushers, loader backhoes and vibratory compactors; supplies a wide range of rubber processing machinery; and manufactures

and markets industrial valves and allied products and a range of application-engineered welding alloys.

L&T EWAC
EWAC Alloys Limited, started as a joint venture of Larsen & Toubro Limited, India & Messer Eutectic Castolin Group, Germany. Prof. Wasserman, Founder of Eutectic Castolin, and Mr.Henning Hock Larsen, Founder of Larsen & Toubro, laid the foundation of Eutectic Division in India in the year 1962. More than 100 years, the Eutectic has been offering state-of-the-art solutions to conserve metallic resources. In the year 2011, EWAC Alloys Limited became a wholly owned subsidiary of Larsen & Toubro Limited.

1.4

Vision The L&T vision reflects the collective goal of the company. It was drafted through a

large scale interactive process which engaged employees at every level, worldwide.

2. Project Objective
i) The primary objective to study the company Larsen & Toubro Limited (L&T) is to understand in detail about the ii) To understand various segments / markets / customers catered by company from perspective of companys stakeholders / shareholders / or future employee of company. iii) Understand the companys market scenario and financial stand. To understand about companys various governance and CSR activities.

iv)

3.

Introduction

3.1 Larsen & Toubro Limited (L&T) Larsen & Toubro (L&T) is India's largest engineering and construction company. L&T, along with its group companies, provides integrated design, engineering, procurement, construction and project management services in various sectors. L&T has a global presence, with operations across over 30 countries. The company operates in multiple segments Engineering and Construction (E&C), Electrical and Automation (E&A), Machinery and Industrial Products (MIP) and others.

Engineering and Construction (E&C) includes: i) ii) iii) Construction- Buildings, infrastructure etc. E&C Projects- Turn key projects, turbines, boilers, refineries Heavy industry- Heavy engineering & ship building.

Electrical and Automation (E&A) includes: i) Electrical & automation products, metering systems, medical equipment, petrol dispensing &pumps systems.

Machinery and Industrial Products (MIP) includes: i) ii) Construction & mining equipment Industrial products & machinery like valves, welding & cutting tools, etc.

Others: Engineering Services

3.2 Major subsidiaries:

L&T InfoTech: i) Provides IT/ITes and consultancy solutions to sectors such as Banking, Financial Services and Insurance (BFSI), Technology, Energy, Petrochemicals etc. ii) Has a global presence as majority of its clients are MNCs.

L&T Finance Holdings: i) Provides financing solutions to Infrastructure players, retail players, corporates etc. through three subsidiaries. ii) Offers additional services for asset management and investment management.

L&T Infrastructure Development Projects Ltd: i) Handles all development projects, across sectors like Roads & Highways, Ports and Metro Rail. ii) Executes projects in railways, power transmission and public utilities, which are executed via SPVs.

L&T FZE: i) International arm of L&T, which handles electrical automation, telecommunication and instrumentation projects. ii) Provides power management, telecommunication and other industrial control systems to several industries.

4. Markets
Major customers:

Major customers

10

Product Name Civil/Infrastructure/Mechanical/Electrical Construction (Construction and Project Related) Thermal/Hydro/Gas Power Plants (Construction and Project Related) Plant and Equipment and Module For Nuclear Power Projects, Heavy Water Projects (Construction and Project Related) Chemicals Plants and Machinery (Construction and Project Related)

Year Month

Sales

Sales

% of

Quantity Value(Rs.Million) STO

2013

03

0.00

326999.50 53.20

2013

03

0.00

80237.40 13.05

2013

03

0.00

51434.10

8.37

2013

03 03 03 03 03 03 03

0.00 0.00 0.00 0.00 0.00 0.00 0.00

35920.30 26419.60 19870.20 13803.60 12150.30 8521.90 6569.60

5.84 4.30 3.23 2.25 1.98 1.39 1.07

11

Others (Construction and Project Related) 2013 Switchgear Others Traded Engineering and Service Fee Valves and Accessories Traded Earthmoving and Agricultural Machinery and Spares Traded 2013 2013 2013 2013 2013

Industrial Machinery Defense Equipments (Construction and Project Related) Servicing Electricity Meters Rubber Processing Machinery Other Operating Income - Premium earned on Related forward Contract Commission Other Operating Income - Miscellaneous Income Plant and Equipment and Module For Nuclear Power Projects, Heavy Water Projects Nuclear Purpose Equipment, De-aerators,

2013 2013 2013 2013 2013 2013 2013 2013

03 03 03 03 03 03 03 03

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4736.90 4457.70 4060.80 3111.40 2930.50 2459.10 1587.70 1580.70

0.77 0.73 0.66 0.51 0.48 0.40 0.26 0.26

2013

03

0.00

1405.00

0.23

Ultra High Pressure Vessels (Construction 2013 and Project Related) Other Operating Income - Income from Services to the Group Companies Industrial Electronic Control Panels Income from Property Development Activity 2013 2013 2013

03

0.00

1179.10

0.19

03 03 03 03 03 03 03 03 03 03 03

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

956.20 913.00 737.90 538.00 497.30 451.20 390.60 384.20 359.90 257.20 141.30

0.16 0.15 0.12 0.09 0.08 0.07 0.06 0.06 0.06 0.04 0.02
12

Other Operating Income - Technical Fees 2013 Other Operating Income - Lease Rentals Chemicals Plants and Machinery Transmission Line Tower Patient Monitoring System and Accessories Defense Equipments Steel Structural Fabrication 2013 2013 2013 2013 2013 2013

Design, Development and Manufacturing 2013

of Airborne Assemblies, System and Equipment for Aircrafts, Helicopters & Uninhabited Aerial Vehicles and Equipments for The Aviation Sector (Construction and Project Related) Other Operating Income - Companys Share in Profit of Integrated Joint Ventures Other Operating Income - Income from Hire of Plant & Equipment Parts & Accessories for Prime Movers , Boilers, Steam Generating Plants and Nuclear Reactor (Construction and Project Related) Electro Surgical Unit and Accessories Design, Development and Manufacturing of Airborne Assemblies, System and Equipment for Aircrafts, Helicopters & Uninhabited Aerial Vehicles and Equipments for The Aviation Sector Ship Auxiliaries and Components of Mechanized Sailing Vessels (Construction 2013 and Project Related) Ship Auxiliaries and Components of Mechanized Sailing Vessels Parts & Accessories for Prime Movers , Boilers, Steam Generating Plants and Nuclear Reactor Ultrasound Equipments and Accessories Nuclear Purpose Equipment, De-aerators, Ultra High Pressure Vessels 2013 2013 03 03 0.00 0.00 0.00 0.00 0.00 0.00 2013 03 0.00 1.90 0.00 2013 03 0.00 7.10 0.00 03 0.00 16.50 0.00 2013 03 0.00 16.70 0.00 2013 03 0.00 26.10 0.00 2013 03 0.00 93.40 0.02 2013 03 0.00 96.30 0.02 2013 03 0.00 101.00 0.02

13

Commercial Ships

2013

03 03 03 03

0.00 0.00 0.00 0.00

-712.60 -0.12 0.00 0.00 0.00 0.00 0.00 0.00

Welding Alloys and Accessories - Traded 2013 Electronic, Medical and other instruments, accessories and spares - Traded Industrial Machinery Traded Civil/Infrastructure/Mechanical/Electrical Construction (Construction and Project Related) Thermal/Hydro/Gas Power Plants (Construction and Project Related) Chemicals Plants and Machinery (Construction and Project Related) Plant and Equipment and Module For Nuclear Power Projects, Heavy Water Projects (Construction and Project Related) Others Traded Switchgear 2012 2012 2012 2012 2012 2013 2013

03

0.00

266335.60 49.56

03

0.00

72397.30 13.47

2012

03

0.00

48713.10

9.06

03

0.00

46731.20

8.70

03 03 03 03 03 03 03 03 03 03 03 03

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

17063.90 15311.70 14856.70 8757.40 7773.60 6169.10 5602.40 3713.70 3712.70 3249.20 2856.30 2547.20

3.18 2.85 2.76 1.63 1.45 1.15 1.04 0.69 0.69 0.60 0.53 0.47
14

Others (Construction and Project Related) 2012 Engineering and Service Fee Valves and Accessories Traded Earthmoving and Agricultural Machinery and Spares Traded Industrial Machinery Electricity Meters Defense Equipments (Construction and Project Related) Rubber Processing Machinery Servicing Other Operating Income - Premium earned on Related forward Contract 2012 2012 2012 2012 2012 2012 2012 2012 2012

Commission Other Operating Income - Miscellaneous Income Parts & Accessories for Prime Movers , Boilers, Steam Generating Plants and Nuclear Reactor

2012 2012

03 03

0.00 0.00

2050.10 1848.60

0.38 0.34

2012

03

0.00

889.00

0.17

Welding Alloys and Accessories - Traded 2012 Industrial Electronic Control Panels Other Operating Income - Income from Services to the Group Companies 2012 2012

03 03 03 03 03 03 03 03 03

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

714.60 680.80 674.40 625.80 620.20 566.00 533.40 407.20 388.20

0.13 0.13 0.13 0.12 0.12 0.11 0.10 0.08 0.07

Other Operating Income - Technical Fees 2012 Patient Monitoring System and Accessories DefenseEquipments Chemicals Plants and Machinery Other Operating Income - Lease Rentals Transmission Line Tower Nuclear Purpose Equipment, De-aerators, Ultra High Pressure Vessels (Construction 2012 and Project Related) Ship Auxiliaries and Components of Mechanized Sailing Vessels (Construction 2012 and Project Related) Income from Property Development Activity Steel Structural Fabrication Parts & Accessories for Prime Movers , Boilers, Steam Generating Plants and Nuclear Reactor (Construction and Project Related) Plant and Equipment and Module For 2012 2012 2012 2012 2012 2012 2012 2012 2012

03

0.00

307.30

0.06

03

0.00

222.40

0.04

03 03

0.00 0.00

217.00 144.80

0.04 0.03

03

0.00

142.40

0.03

03

0.00

124.60

0.02
15

Nuclear Power Projects, Heavy Water Projects Other Operating Income - Income from Hire of Plant & Equipment Design, Development and Manufacturing of Airborne Assemblies, System and Equipment for Aircrafts, Helicopters & Uninhabited Aerial Vehicles and Equipments for The Aviation Sector (Construction and Project Related) Commercial Ships Electro Surgical Unit and Accessories Other Operating Income - Companys Share in Profit of Integrated Joint Ventures Nuclear Purpose Equipment, De-aerators, Ultra High Pressure Vessels Design, Development and Manufacturing of Airborne Assemblies, System and Equipment for Aircrafts, Helicopters & Uninhabited Aerial Vehicles and Equipments for The Aviation Sector Ultrasound Equipments and Accessories Ship Auxiliaries and Components of Mechanized Sailing Vessels Electronic, Medical and other instruments, accessories and spares - Traded Industrial Machinery Traded 2012 2012 03 03 0.00 0.00 9.20 6.20 0.00 0.00 2012 03 0.00 14.80 0.00 2012 03 0.00 46.90 0.01 2012 03 0.00 51.30 0.01 2012 2012 03 03 0.00 0.00 64.10 53.60 0.01 0.01 2012 03 0.00 84.30 0.02 2012 03 0.00 99.50 0.02

2012 2012

03 03

0.00 0.00

0.00 0.00

0.00 0.00

16

Key projects during 2013-14: I) Domestic: i) Design. Engineering, Manufacture, supply, election and commissioning of two co a I-fired thermal units of 660 MW each with supercritical parameters at Chhabra in Baran District in Rajasthan. (Project cost in Rs. Million: 56,890).

ii)

A)

Construction of residential towers and commercial development

across India. B) Execution of-APDRF (part B) project on Tmkey basis at.Amritsar,

Jalandhar and Ludhian city. C) Nadu. D) Infrastructure and Metallurgical and Material Handiling Business Construction of Solar PV plants in Rajasthan and Tuticorin. Tamil

(Project cost in Rs. Million: 37,000).

iii)

A)

Construction of residential apartments in southern part of the

country B) Construction of 400 kV and 200 kV transmission lines at various

location across India. C) Construction of water supplywaste water and sewerage scheme

across the country. D) Various ongoing projects across various other Business Units.

(Project cost in Rs. Million: 20,040).

iv)

EPC order- construction of double track corridor from Rewari in Haryana to Iqbalgarh in Gujarat via Rajasthan, spanning three states. (Project cost in Rs. Million: 66,995).

v)

A)

Construction of office buildings at Bangalore and Ahmedabad

from esteemed customers.

17

B) C)

Turnkey EPC of a solar photovoltaic power plant in Tamil Nadu. Design, detail engineering, testing and commissioning of 25 kV

AC traction. 33 kV auxiliary sub stations, associated cabling and SCADA systems for underground corridor of line-S of the Delhi MRTS projectphase 3for Delhi Metro Rail Corporation Ltd. D) Supply, installation. Testing and commissioning of E&M fire

detection and fire suppression system of elevated stations of Delhi MRTS Projects- Phase 3. (Project cost in Rs. Million: 20,020).

vi)

A)

Construction of residential tower, a cement plant and a factory at

various locations across India, including additional orders from operating projects. B) Construction of an elevated viaduct, elevated stations including

architectural finishing work of stations and connecting the viaduct and ramp to the depot on Alwaye-Petta line of the project for Kochi MRP. C) Designing and construction of2X25 kV electrification, signaling,

telecommunication and associated works for a double tract railway line between New Karwandiya to Durgauti section of the eastern corridor. D) EPC order-Water supply distribution system for 97 villages at

Tehsil Nadnu in Rajasthan. E) Operating projects under Power Transmission and Distribution

Business (Project cost in Rs. Million: 25,420).

18

II)

International: i) Development of the prestigious Midfield Terminal complex for Abu Dhabi Airports Company PJSC, UAE ii) Manufacture and supply 11 kV Vacuum Circuit Breakers fVCBs over a two-year period to distribution stations across Qatar.

19

5. Financial Information
5.1 Weak execution impacts revenue growth: During Q1 2013-14, the company's order

inflows grew by 29 per cent y-o-y, led by orders from the real estate and railways segment. However, the company's revenues grew by a tepid 5 per cent y-o-y on account of weak execution. Healthy order inflows coupled with weak execution led to an 8 per cent growth in the company's order book. Order Inflows (Rs. billion) :

Order book to turnover:

20

5.2

Order book driven by infrastructure projects:

The Companys order book remains

well-diversified among sectors, such as power, gas, infrastructure and process engineering. Within infrastructure, orders are further diversified into sectors like ports, roads, bridges, power, hospitals, real estate etc. In Q1 2013-14, infrastructure sector accounted for 67 per cent of the order book. Additionally, the company has a fair mix of government projects (35%), private sector projects (53%) and in-house development projects (12%). The share of the power segment has declined significantly from 30 per cent in 2009-10 to 10 per cent in Q1 2013-14. Also, the share of the oil and gas segment has dropped significantly by 9 per cent to 6 per cent in the same period. L & T's order book consists of domestic orders to the tune of 88 per cent. This diversification in orders protects the company from any adverse impact on its overall performance owing to a slowdown in any geography/ segment. Trends in order book mix:

21

5.3

Financial performance

Larsen & Toubro Ltd.

Financial parameters

Unit

Standalone

Consolidated

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 Operating Income Net worth Net profit Operating margin Net Margin Rs. Million 438,259 533,604 611,667 519,947 644286 746,585 Rs. Million 217,201 250,590 283,757 143,043 186,925 263,855 Rs. Million 39,572 44 562 49,074 45405 47,368 52,375 Per cent Per cent 12.7 9.0 24.2 0.3 0.5 9.1 5.5 1.2 232 104 12.1 34 22.0 04 04 10.0 5.7 1.3 216 129 10.6 3.0 21.4 0.3 0.5 7.4 5.6 1.4 209 136 16.6 3.7 18.9 2.6 0.1 5.2 4.4 1.6 266 104 16.4 7.4 16.2 2.3 0.1 4.0 4.1 1.6 216 116 16.4 7.1 15.1 2.5 0.1 2.9 2.9 1.7 227 113

Return on capital employed Per cent Debt equity ratio Net cash accruals to debt Interest coverage Assets turnover ratio Current Ratio Creditors Debtors Source: CRISIL Research Times Times Times Times Times Days Days

Analysis: The net profit over the years has been increased consistently.

22

5.4

Q1 2012-13 Analysis: Muted revenue growth, operating margins decline

Larsen & Toubro Ltd. Financial Parameters Net sales Operating profit Net profit Operating margin Net Margin Source:CRISIL Research Standalone Apr Apr Jun Jun FY13 y-o-y Growth 119,554 10,870 8,637 9.1 7.2 5% -1% -12% -

Unit FY14 Rs. Million Rs. Million Rs. Million Per cent Per cent 125,551 10,715 7,560 8.5 6.0

5.5

Stock Index:

Stock Index Exchange (NSE) Date Open (Rs.) High (Rs.) Low (Rs.) Traded Qty. Current %Change Market Cap.(Rs. Billion) : 24/10/13 : 945.75 : 973.50 : 943.25 : 3,648,616 : 965.65 : 1.72

: 893.90

23

Stock Index Exchange (BSE) Date Open (Rs.) High (Rs.) Low (Rs.) Traded Qty. Current %Change Market Cap.(Rs. Billion) : 24/10/13 : 947.00 : 972.25 : 944.00 : 466,305 : 964.60 : 1.83

: 892.93

Larsen & Toubro Limited As of Oct 24, 2013 Exchange Current BSE1 NSE2 964.60 965.65 Prev Close 947.30 949.35 Today's High 972.25 973.50 Today's Low 944.00 943.25 52 Week High 1152.07 1152.40 52 Week Low 678.10 677.15 Volume 466305 3648616

24

 Nifty 5years range:

INR

Sensex 5years range :

INR

25

6. Corporate Governance
6.1 BOARD OF DIRECTORS:

A.M. NAIK

Group Executive Chairman K. VENKATARAMANAN

Chief Executive Officer & Managing Director M. V. KOTWAL

Whole-time Director &President (Heavy Engineering)

S. N. SUBRAHMANYAN

Whole-time Director & Sr. EVP (Infrastructure & Construction)

26

R. SHANKAR RAMAN

Whole-time Director & Chief Financial Officer SHAILENDRA ROY

Whole-time Director & Sr. EVP (Corporate Affairs & Power)

6.2 NON-EXECUTIVE DIRECTORS S. Rajgopal S.N. Talwar M.M. Chitale N. Mohan Raj Subodh Bhargava A.K. Jain M.Damodaran Vikram Singh Mehta Sushobhan Sarker

6.3 AUDIT COMMITTEE Terms of reference: i) The Audit Committee oversees the Company's financial reporting process and disclosure of its financial information, to recommend the appointment of Statutory Auditors and fixation of their remuneration, to review and discuss with the Auditors about internal control systems, the scope of audit including the observations of the
27

Auditors, adequacy of the internal audit system, major accounting policies, practices and entries, compliance with accounting standards and Listing Agreements entered into with the Stock Exchanges and other legal requirements concerning financial statements and related party transactions, if any, to review the Company's financial and risk management policies and discuss with the Internal Auditors any significant findings for follow-up thereon, to review the Quarterly, Half-yearly and Annual financial statements before they are submitted to the Board of Directors. ii) The Committee also meets the operating management personnel and reviews the operations, new initiatives and performance of the business units. Minutes of the Audit Committee Meetings are circulated to the Members of the Board, discussed and taken note of. The Audit Committee of the Board of Directors was formed in 1986 and comprises four Non-Executive Directors. iii) The Chief Financial Officer and Chief Internal Auditor are permanent invitees. The Company Secretary is the Secretary of the Committee. 6.4 NOMINATION & COMPENSATION COMMITTEE Terms of reference: To review, assess and recommend the appointment of Executive and Non-Executive Directors and, to review their remuneration package, to recommend compensation to the NonExecutive Directors in accordance with the provisions of the Companies Act, 1956, to consider and recommend Employee Stock Option Schemes and to administer and superintend the same. Composition: The committee comprises 3 Non-Executive Directors and Chairman & Managing Director.

6.5 SHAREHOLDERS' GRIEVANCE COMMITTEE Terms of reference: To look into the investors complaints, if any, and to redress the same expeditiously. Besides, the committee approves allotment, transfer and transmission of
28

Shares, Debentures and any other securities and issue of duplicate certificates and new certificates on split/consolidation/renewal etc. as may be referred to it by the Share Transfer Committee. Composition: The Shareholders' Grievance Committee presently comprises 2 Executive Directors and a Non-Executive Director.

6.6 MEANS OF COMMUNICATION i) Quarterly and Annual Results are published in prominent daily newspapers viz., The Financial Express, The Hindu Business Line & Loksatta. The said results are made available on the Company's website, www.larsentoubro.com ii) Official news releases, presentations, etc. made to institutional investors and the shareholding pattern of the Company, on a quarterly basis are displayed on the Company's website, www.larsentoubro.com iii) Management's Discussion & Analysis forms part of the Annual Report, which is mailed to the shareholders of the Company.

29

7. CSR Activities
L&T believes that the true and full measure of growth, success and progress lies beyond balance sheets or conventional economic indices. It is best reflected in the difference that business and industry make to the lives of people. Through its social investments, L&T addresses the needs of communities residing in the vicinity of its facilities, taking sustainable initiatives in the areas of health, education, environment conservation, infrastructure and community development. The company proactively provides assistance in situations such as natural calamities and assists victims of nature's fury or social neglect. Many social initiatives are undertaken in partnership with government agencies and NGOs. HEALTH L&T's participates in building a healthy community through continuing initiatives in several areas of healthcare, with a focus on mother & child care and HIV/AIDS awareness. All L&T locations, including construction sites, have in-house AIDS awareness programs. Five additional mother & child care centers were set up in 2006-07. In partnership with local NGOs, these centers benefit children of commercial sex workers, street children and tribal communities. Through health care centers and regular family camps L&T organizes health checkups, provides gynecology and laboratory facilities, carries out free cataract surgeries and intra ocular lens implants, and helps maintain health data for children. Supply of equipment and aid for orphanages and physically challenged children, periodic counseling to combat rampant alcoholism, awareness camps on childcare, reproductive health, sanitation, dental check-up, provision for safe drinking water, cancer awareness etc. are other healthcare activities that L&T supports. EDUCATION L&T's diverse and sustained programs in education provide underprivileged children with learning opportunities through supply of educational materials, teaching aids, recreational tools and up scaling school infrastructure. L&T also enriches children's

30

lives through programs like summer camps, math coaching, providing facilities like science laboratories, scholarship to deserving students, etc. The vocational training institutes of the Larsen and Toubro Public Charitable Trust provide local communities with skill-based training in Formwork, Masonry, Agro Mechanics, Electricals, Fabrication, Welding and Housekeeping. Various diploma courses are also conducted by L&T Institute of Technology for the children of employees. L&T has developed training modules in local languages in six centers across India for imparting skills sets in construction. L&T Training Centers provide courses for improving the standards of electrical engineering practices and for upgrading knowledge of maintenance, repair and welding. ENVIRONMENT Global warming: at L&T, we have always been conscious of the need to maintain harmony with the environment. We continuously seek newer environment-friendly approaches in all our operations energy conservation, exploring alternative sources like wind and solar energy, waste water reduction, etc. The Zero Discharge approach of the Powai Campus saves over 350,000 liters water every day through water treatment and recycling. More than 13,500 trees have been planted in different L&T campuses in the last year, and an additional 4,000 saplings were distributed among local communities. RESPONSE TO NATURAL CALAMITIES L&T and its employees have provided relief measures during natural calamities like earthquake and floods. L&T has assisted in disaster relief through employee and corporate donations, employee volunteering, supply of construction material, medical and food supplies. After the floods in Surat (Gujarat-India), L&T played a major role in roadclearing operations, organizing medical camps, and supply of food, water, clothes and other relief materials. EMPLOYEE VOLUNTEERING L&T encourages employees to volunteer for CSR activities, resulting in a selfdriven approach while retaining consistency. L&T employees and the ladies clubs formed
31

by their families at different locations, serve their communities by investing personal resources and time. From taking initiatives in building the next generation of productive citizens, empowering women, paying regular visits to old age homes and orphanages, to organizing blood donation camps, our employees have always believed in truly making a difference to the world in which they live.

32

8. Conclusion
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector. More than seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business. L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its global footprint, with offices and manufacturing facilities in multiple countries. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. In response to changing market dynamics, L&T has gone through a phased process of redefining its organisation model to facilitate growth through greater levels of empowerment. The new structure is built around multiple businesses that serve the needs of different industries.

33

AWARDS & RECOGNITION The NDTV Profit Business Leadership Award Affirming L&T's stature in building infrastructure, the Company was honoured with NDTV Profits Business Leadership Award.

Ranked 3rd in the Greenex :

L&T was ranked third in Greenex - a first-of-its-kind Green

Index constituted by Bombay Stock Exchange that assesses the carbon performance of companies drawn from the top 100 companies listed by BSE. Among the top 5 thought Leader Brands in India: Among the top 10 in SL&P ESG India : L&T stood among the top 5 in a

Thought Leaders in India index published by a London based communications agency. L&T was the only company from the engineering segment to be ranked among the top 10 in Standard L&Poors (SL&P) ESG India index of companies in terms of Environment, Social and Governance performance. Among the top 5 in RepuTex ESG ratings: L&Ts sustainability practices and

disclosures are ranked amongst the top in Asia in the Environment, Social L& Governance (ESG) 2011 ratings by RepuTex, Hong Kong - a leading ESG,carbon advisory and independent research organisation. L&T is also the only Indian company listed among the top 5 in Asia in the Industrial segment rating. Laurels for excellence in quality systems from FICCI: Platinum Awards for

Excellence in Quality Systems from FICCI were won by L&T Heavy Engineering, Powai campus - Mumbai and by L&T Komatsu, Bangalore Works. The international 'Be Inspired Award' for L&T-SL&L: L&T-Sargent L& Lundy

(L&T-SL&L) honored with the prestigious 'Be Inspired Award' from Bentley Systems Inc. in Amsterdam. CII-EXIM Bank Business Excellence Award conferred on L&T AIL for the third year in a row: L&T - Audco India Ltd. (AIL) won this award in recognition of business excellence initiatives under the MIP IC operational excellence programme to enhance the competitive edge and the quality of AIL's products and services. Institutional Investor magazine honors team L&T with high rankings: L&T ranked

'Second' in India and Fifth' in Asia in the All Asia (excluding Japan) Investor Relations (IR) Perception Study conducted by the prestigious Institutional Investor magazine. The Company, its leadership team and senior executives also scored high in other rankings.

34

 11 ABCI awards for L&T:

L&Ts communications bagged a total of 11 awards at

Association of Business Communicators of India (ABCI) Awards. The tally includes awards secured across the spectrum of In-house Magazines, Brochures, Calendars, Photographs and Sustainability Report. The number of awards received was among the highest secured by any company, qualifying L&T for the coveted 'Champion of Champions Award' Among the top 10 Best Companies to Work For, India: L&T ranked among the top

10 in a Best Companies to Work For listing published by Business Today, India. The ICC Corporate Governance and Sustainability Vision Award 2012: The Indian

Chamber of Commerce (ICC) awarded L&T with the Corporate Governance and Sustainability Vision Award 2012 in the Sustainability Reporting category. ICSI The Golden Peacock Global Award: L&T bagged the Golden Peacock Global

Award for Excellence in Corporate Governance - 2011, constituted by the Institute of Directors (IoD) and the World Council for Corporate Governance. Heavy Engineering wins the National Award for export excellence: Heavy

Engineering business won the National Award for export excellence, presented by the Engineering Export Promotion Council of India (EEPC).

35

IN THE NEWS 19 Oct 2013: 26 Sep 2013: 25 Sep 2013: 20 Sep 2013: L&T in Top 10 - Business worlds Real 500 Rankings L&T: Corporate Citizen of 2013 - The Economic Times L&T Scores High in Global 500 Climate Change Report 2013 L&T Technology Services - Leader In Engineering Services: Zinnov Study 22 Aug 2013: 10 Aug 2013: 31 Jul 2013: L&T among Indias Top 5 Most Respected Companies - Businessworld Capital Goods Skill Council Launched L&T in Top 10 Best Indian Brands - Interbrand& The Economic Times Survey 18 Jul 2013: 12 Jul 2013: L&T in Top 5 Best Companies to Work For - Business Today Survey L&T is Indias Most Admired Company in E&C Sector - Fortune India Survey 05 Jul 2013: 05 Jul 2013: National Good Design Award for L&Ts Solar Lantern L&T Integrates Valves Operations Under Single Entity - L&T Valves Limited 15 May 2013: 04 May 2013: 22 Apr 2013: 19 Apr 2013: 09 Apr 2013: 16 Mar 2013: 23 Feb 2013: 22 Feb 2013: 13 Feb 2013: 23 Jan 2013: 19 Jan 2013: L&T Ranks High In International Emission Disclosure Rankings Mr. A.M. NaikHonouredBy Gujarat CM on States Formation Day L&T - One of Indias Most Attractive Employers - Randstad Survey ONGCs Jack-Up Rig SagarUday Flagged Off From L&T Yard In Oman L&T bags NDTV Profit Business Leadership Award Mr. R. Shankar Raman is CFO of the Year - CNBC TV 18 L&T Wins ICC Corporate Governance & Sustainability Vision Award L&T Conferred Caring Company Award By World CSR Congress L&T Power Wins Golden Peacock National Quality Award L&T Ranks Among Top 10 In Carbon Disclosure Leadership Index Mr. A.M. Naik Awarded Doctorate from Gujarat Technological University 16 Jan 2013: L&T Heavy Engineering Bags CIIITC Sustainability Award

36

CORPORATE ADS

37

38

9. References www.crisilresearch.com www.wikipedia.com www.larsentourbro.com

39