In the sunset of his corporate career, A. M. Naik leaves behind a powerful legacy at Larson & Toubro (L&T). Riding on a strong 17.13 per cent growth in its total asset value coupled with healthy double digit growth in its order book, L&T, India’s biggest engineering and construction company, climbed three spots in the top 10 in the BW Real 500 rankings. Last year, L&T had re-entered the list of BW top 10 after 2013. The international revenue during FY16 stood at Rs 33,302 crore, which constituted 32 per cent of the total revenue.
For 2015-16, the consolidated order book of the group stood at Rs 2,49,949 crore as on 31 March, 2016, up by 7 per cent on a year-on-year basis. Its international order book constituted 28 per cent of the total order book.
The secret of the company’s successful performance in FY16 lies in garnering fresh orders worth Rs 1,36,858 crore at consolidated level. The international orders during the year also swelled at Rs 43,956 crore constituting 32 per cent of the order inflow, better than the previous fiscal. L&T saw 62 per cent of the total order inflow during the year come from the infrastructure segment.
Speaking at the 71st annual general meeting (AGM) in Mumbai on 26 August, 2016, L&T’s group executive chairman Naik said: “Our goal is to achieve a revenue of Rs 2 lakh crore by 2021 — without compromising on our margins and achieving an order inflow in excess of Rs 2.5 lakh crore per annum.”
Talking about potential future business opportunities, Naik said the opening up of the defence sector will lead to business opportunities worth Rs 13 lakh crore over the next 10 years. “With the resolution of issues relating to fuel supply and a clearer understanding on nuclear liability issues, the nuclear power sector is expected to grow significantly in the years ahead. The estimated opportunity from this sector over the next 10 years is up to Rs 50,000 crore,” said Naik.
Consolidated profit after tax (PAT) for the year ended 31 March, 2016 at Rs 5,091 crore was higher by 7 per cent vis-à-vis PAT of Rs 4,765 crore for the previous year. That is why the board of directors recommended a dividend of Rs 18.25 per equity share. This was much better than the corresponding dividends during the previous financial years. Last year, the company offered a dividend of Rs 16.25 per equity share on a face value of Rs 2 per share for the year.
Speaking about the outlook for the new year, Naik said the growth momentum in the infrastructure segment would rest mainly on government initiatives in the core infrastructure such as transportation, power transmission and distribution, defence, smart cities and water projects.
Naik has already announced that S. N. Subrahmanyan, who is currently deputy managing director and president, will take over as his successor from 1 October, 2017. Speculations about Naik’s successor have been doing the rounds since 2012, when Naik was first scheduled to step down. Naik was then given an extension. But in early 2016, he hinted that Subrahmanyan could take the top job; he also officially stated that at the company’s AGM in August. Expanding on what can be considered as a ‘core’ business area for L&T in the future, Naik maintains that the definition of ‘core’ changes every third or fourth year. L&T is divided into three broad verticals — hi-tech manufacturing, project business and services that include finance.
BW Reporters
Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
