L TAnnalReview 2008 09

5/27/2018 L TAnnalReview 2008 09

1/38

Produced by L&Ts Corporate Communications Dept.


2/38

A. M. Naik Chairman & Managing Director

J. P. Nayak President

(Machinery & Industrial Products)

Y. M. Deosthalee Chief Financial Offi cer

K. Venkataramanan President

(Engineering & Construction Projects)

R. N. Mukhija President

(Electrical & Electronics)

K. V. Rangaswami President

(Construction)

V. K. Magapu Senior Executive Vice President

(IT & Technology Services)

M. V. Kotwal Senior Executive Vice President

(Heavy Engineering)

Company Profile 2

Balance Sheet and Profit & Loss Account 3

L&Ts Domestic and International network 4

Engineering & Construction 7

Heavy Engineering 19

Construction 31

Electrical & Electronics 49

Machinery & Industrial Products 55

L&T Infotech & Technology Services 63

Financial Services 67

Whole-Time Directors

Contents

Mr. A. M. Naik, L&Ts Chairman & Managing Director, receives the Padma Bhushan from the President of India, Mrs. Pratibha Patil, on March 31, 2009.

The Padma Bhushan

- one of Indias highest civilian honours


3/38

Strategic Electronics

Spcu Ifc --Avionics

E&C PROJECTS

RAVI UPPAL

A.K. CHHATWANI

HEAVY INDUSTRYCONSTRUCTION

ENGINEERING & CONSTRUCTION

J. P. NAYAKR. N. MUKHIJAM. V. KOTWALK. VENKATARAMANAN

MACHINERY &

INDUSTRIAL

PRODUCTS

ELECTRICAL

&

ELECTRONICS

K. V. RANGASWAMI V. K. MAGAPU

IT &

ENGINEERING

SERVICES

Y. M. DEOSTHALEE

FINANCE

&

HR

DEVELOPMENT

PROJECTS &

FINANCIAL

SERVICES

A. M. NAIKChaIrman & managIng DIreCtor

OPERATING Cos. OPERATING Cos. OPERATING Cos. OPERATING Co. OPERATING Co.OPERATING Cos.

Buildings & Factories

Isiuil & Ccil

Buildings

twsips & SeZ

hls & hspils

Sys husi

Idusil Pls

Fwk & Building Products

Infrastructure

Ps & hbus

Bids

rds & ruwys

m tspi

hydlcic

nucl Pw

L&t rbll eii

Services

Metallurgical, Material

Handling & Water

mils & mls

Bulk mil hdli

W t &

Distribution Projects

Electrical Projects tsissi Lis

Subsis

Idusil elcici

& Isui

rilwy elcici

Upstream

oil & gs ePC

Projects

mdul Fbici

& Dilli ris

Fli Pduci

Systems

Islli Svics

Subs Piplis

L&t Vldl -

Engineering

Services

Mid & Downstream

ris

Pcicl &

Filizs

L&t Ciyd -

Engineering

Services

Process Plant

Construction

Pipelines

ePC - Csscuy

Projects &

Construction

L&t-gulf Pipli

Engineering

Heavy Engineering

Cl gsis

& tl Pl

Equipment

Filiz &

Pcicl

Equipment

ry, Cck

Pl d oil & gs

Equipment

Wp Syss

nucl Pw

Equipment

aspc

& Aviation

Shipbuilding &

Marine Systems

nvl

mc

rpi & r

Heavy Forging

Facilities

Electrical &

Automation

elcicl Sdd

Products

tamCo mdiu

Vl Pducs

elcicl Syss &

Equipment

Cl & aui

mi &

Protection Systems

SBUs

mdicl equip &

Systems

Pl Dispsi

Pumps & Systems

Industrial Machinery

& Products

Idusil mciy

f Pp, Sl,

Bulk mil

Handling

rubb Pcssi

mciy

Plsics Pcssi

mciy

Idusil Vlvs

Wldi Pducs &

Cutting Tools

Fudy Pducs

hvy Sucu

Fbici

elcsic

Precipitators

Construction

Machinery

Csuci & mii

mciy

hydulic equip

Udci d

mil hdli

Systems

Sps & Svic

L&T Infotech

IT Services

Verticals

mufcui

ey, oil & gs

& Pcss Idusis

Pduc

Engineering

Services

Isuc

Bki & Ficil

Services

Horizontals

erP SaP, ocl

Ifsucu m-

agement Services

SBUs

Integrated Engineer-

ing Services

mcicl &

mcics

Services

ebddd Syss

& Sfw

Financial

Services

Ifsucu

Fic

equip Fic

td Fic

Infrastructure

Development

Projects

rds & Bids

Ps & hbus

rilwys

aips

hyd Pw

Projects

tsissi

& Distribution

Projects

W Pjcs

Urban Infrastructure

Development

OPERATING Co.

Power Development

& Construction

Pw Dvlp

Ful Suc

m

o&m

Dvlp & ePC

f alui Pjc

ePC-nucl

tl Pw Pl

Construction

W Pcss

tcly

OPERATING Co.

L&T Power Limited

Cl Bsd Pjcs

gs Bsd Pjcs

Bil Isld

Stg Isld

Bil

mufcui

Fciliis

tubi

mufcui

Fciliis

hP Pipi

mufcui

Fciliis

Pulvizi mills

(Vrm)

hvy Fudy

L&t S

& Ludy -

Engineering

Services

Railway Projects

tuky Sluis

mss tsp Syss

rlli Sck - eii & mufcui

INTERNATIONAL BUSINESS: L&T is consolidating its presence in the Middle East, Africa and South East Asia by ramping up capabilities in EPC, Construction and Manufacturing.

CIO


4/38

A. M. NaikChairman &

Managing Director

J. P. NayakPresident

(Machinery & IndustrialProducts)

Y. M. DeosthaleeChief Financial Ofcer

K. VenkataramananPresident

(Engineering & ConstructionProjects)

R. N. MukhijaPresident

(Electrical & Electronics)

K. V. RangaswamiPresident

(Construction)

V. K. MagapuSenior Executive

Vice President

(IT & Technology Services)

M. V. KotwalSenior Executive

Vice President

(Heavy Engineering)

Leadership Team


5/38

Year 2008-09 at a Glance

L&T

l New Order inflow at Rs. 516215.20 million in CY as againstRs. 420190.10 million in PY 23% growth y-on-y

l Order Book as at March 31, 2009: Rs. 703191.40 million asagainst Rs. 526821.40 million as at March 31, 2008 33%growth y-on-y

l Gross Sales at Rs. 340450.41 million in CY as againstRs. 251874.80 million in PY 35% growth over 07-08

l Segment wise composition of gross revenues:

Engineering & Construction Segment 81.9% in CY as against75.3% inPY

Electrical & Electronics Segment 7.9% in CY as against10.3% in PY

Machinery & Industrial Products Segment 7.1% in CY asagainst 9.3% in PY

Others 3.1% in CY as against 5.1% in PY

l PBDIT before exceptional and extraordinary items at

Rs. 44247.86 million in CY as against Rs. 33180.22 million inPY up by 33%

l PAT at Rs. 34816.57 million in CY as againstRs. 21734.24 million in PY up by 60%

l Gross Debt Equity ratio of 0.53 :1 (previous year 0.38 : 1)

L&T Group

l Gross Sales at Rs. 406078.71 million in CY as againstRs. 295611.24 million in PY 37% growth over 07-08

l PAT at Rs. 37891.30 million in CY as againstRs. 23245.90 million in PY up by 63%

Larsen & Toubro is a technology, engineering, constructionand manufacturing company. It is acknowledged as one of theleading companies in the region, reputed for its engagementin key growth sectors, its ability to respond positively tochallenging requirements, and its excellent value system.

A strong, customer-focussed approach and the constantquest for top-class quality have enabled L&T to attain andsustain leadership in its major lines of business across sevendecades.

L&T has an international presence, with a manufacturingfootprint in eight countries, a wide network of offices, andcollaboratio n agreeme nts with global majors. Withi n India,L&T has a presence in virtually every district with a numberof offices, factories and distribution outlets.

History

The evolution of L&T into the country s largest engineering andconstruction organisation is among the more remarkable successstories in Indian industry. The company was founded in Bombay(now Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro -- both of whom were stronglycommitted to developing Indias engineering talent and enablingit to meet the demands of industry. Beginning with the importof machinery from Europe, L&T rapidly took on engineering andconstruction assignments of increasing sophistication. Today,the company sets engineering benchmarks in terms of scale andcomplexity.

Record of Achievements

L&Ts signature of excellence is evident on:

Hydrocarbon projects executed in India, the Middle East andSouth East Asia

Power projects executed in India, the Gulf and Sri Lanka.

The worlds largest coal gasifier made in India and exportedto China

The worlds biggest EO reactor for a petrochemical complex

in the Gulf The worlds largest FCC regenerator for a refinery Asias highest viaduct Infrastructure projects in Jordan, U.A.E. and South East Asia The worlds longest coal conveyor Indias widest range of switchgear A wide range of construction and mining equipment

This publication presents an overview of the Companyscapabilities in different business sectors, and an account of itsperformance over the last financial year. The contents havebeen structured in keeping with the Operating Divisions of theCompany:

Engineering & Construction Heavy Engineering Construction Electrical & Electronics Machinery & Industrial Products

Technology Services

Balance Sheet as at March 31, 2009

Rs. million

As at 31.3.2009 As at 31.3.2008

SOURCES OF FUNDS:Shareholdersfunds 124597 95551Loan funds 65560 35840Deferred tax liabilities 4352 2443

194509 133834APPLICATION OF FUNDS:Fixed assets:Tangible assets 50538 35534Intangible assets 1408 920

Investments 82637 69223

Deferred tax assets 3867 1830Net current assets 56056 26297Miscellaneous expenditure 3 30

194509 133834Note: Figures in the previous year have b een regrouped / reclassified

wherever necessary.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009 Rs. million

2008-2009 2007-2008

Sales & service (net) 336466 248547Operational / other income 10196 6751

346662 255298Less: Expenditure:

Manufacturing, construction and operatingexpenses 262320 191540Staff expenses 19980 15355Sales, administration and other expenses 18395 13506Interest expenses and brokerage 3503 1226

Depreciation, obsolescence and impairment 3060 2116

Profit before taxes before extraordinary items 39404 31555Less: Provision for taxes 12312 9821Profit after tax before extraordinary items 27092 21734Gain on extraordinary items (net of tax) 7725 -Profit after taxes after extraordinary items 34817 21734Basic earnings per equity share beforeextraordinary items (Rupees) 46.30 37.80Diluted earnings per equity share beforeextraordinary items (Rupees) 45.68 36.38

Basic earnings per equity share afterextraordinary items (Rupees) 59.50 37.80Diluted earnings per equity share afterextraordinary items (Rupees) 58.70 36.38

Note: Figures in the previous year have b een regrouped / reclassified wherever necessary.

2 3


6/38

Nationwide Network A Global Presence

Product&EquipmentSupply

Fabrication

Note:

Map

isbroa

dlyrepresentativeo

fL&Tspresence

inmarketsworl

dw

ide

.

Thisp

ictoria

lrepresentation

doesnotpurportto

bethepo

litica

lmapo

fIndia

.

4 5


7/38

Engineering & Construction Division

Hydrocarbon - Upstream

Process platform complex at Bombay High executed by L&T on an EPC basis for Oil & Natural Gas Corporation. L&T provides turnkey solutions to theupstream hydrocarbon sector encompassing oil & gas production, processing and transportation.

Computer-generated image of the heavy-lift-cum-pipelay vessel thatwill add the installation dimension to L&Ts EPC capabilities in theupstream hydrocarbon sector.

Overview

E&C (Projects) Division delivers Engineering, Procurement, &

Construction (EPC) solutions in the oil & gas, petrochemicals,

power and water sectors. It offers single-source responsibility forexecution of lumpsum turnkey projects in multiple geographies.

The expertise and experience of E&C arising out of a successful

track record in executing projects worldwide encompasses front-end design, engineering, fabrication, project management,

procurement, construction, installation and commissioning. These

integrated strengths are backed by flexibility of operation and agilityin response. A well-institutionalised Risk Management structure and

high safety standards are other key strengths of the Division.

E&C has consolidated its presence in international markets as part of

its mission to establish itself as a major EPC player in the Middle Eastand South East Asia. It has set up offices and built manufacturing

capabilities in select geographies. Joint ventures are set up with

renowned local partners in Saudi Arabia, Kuwait, Oman, Qatar andUnited Arab Emirates. The offices in Middle East are backed by a large

engineering resource base in India.

Key inherent strengths that enable the Division to offer world-classsolutions to its clients are:

Over 7500 qualied and experienced personnel from variousdisciplines

Strong basic engineering capabilities

Large Technology & Innovation Centers State-of-the-art CAD facilities with sophisticated plant design

systems

Conformance to globally recognised Management SystemsStandards

Open-yard facilities for modular fabrication with waterfront inIndia and Oman.

Business Environment

The global economic meltdown in 2008-09 led to a liquidity cr isis,

impacting business conditions. Decline in the industrial growth rate

has resulted in a sharp contraction in hydrocarbon, chemical andconstruction industries.

7


8/38

Oil & Gas Projects

Gas compressor module (Size: 31m x 16m x 16m) being despatched from L&Ts Modular Fabrication Facility at Hazira on Indias west coast. Load-out of flare deck and jacket for Maersk Oil Qatar at L&Ts ModularFabrication Yard at Sohar, Oman. The 300m jetty has a 12m draught anda bearing strength of 50 MT per sq.m.

The downturn caused a weak demand situation resulting in fallingcommodity prices and cut down in production. However, the

decline in commodity prices showed disparate trends. Prices of steel

fell sharply yet the cost of machinery and other equipments remainedfirm. Crude oil prices saw a sharp decline from a peak of $140 down

to $50+ per barrel. This coupled with the credit squeeze forced re-

examination of the project viability or deferment / cancellationof investment decisions, resulting in slower Order Inflows during

2008-09. Bidding for jobs in an uncertain economic scenario was

a challenge by itself. Sharp swings in the commodity prices anddepreciation of the rupee further added to the uncertainties. Some

prospective clients sought to reduce project costs through re-

bids and protracted pre-award negotiations on price. Moreover,the contracting basis is tending to change from LSTK to cost

reimbursable model due to volatility in the material and execution

costs. With the size of the contracts increasing, the pre-qualificationcriteria have become more stringent, thereby delaying the take-off

phase of projects.

During the year, the Division created three Operating Companies

under its umbrella - for Hydrocarbon Upstream, Hydrocarbon

Mid & Downstream and Power businesses - to lay closer focus andaccelerate growth in the areas. An account of these Operating

Companiesbusinesses is given below.

Hydrocarbon Upstream Operating Company

This Operating Company (OC) provides turnkey solutions in the

upstream hydrocarbon sector encompassing oil & gas production,

processing and transportation. It has been successfully executingprojects for the last two decades in India, the Gulf, Africa and South

East Asia for reputed clients. The solutions offered are in a widerange of products such as process platforms, wellhead platforms,

submarine pipelines, platform and pipeline replacement, modules,

marine terminals and floating system projects.

Decline in crude oil prices has hit the viability of expansion plans of

the oil producing companies, leading to deceleration in explorationactivities. Domestic capex on development of new fields continues

to be low as compared to global trends. However, there is a renewed

thrust in deep-water exploration activities. The current globaltrend in energy supply and consumption is economically and

9


9/38

Hydrocarbon - Mid & Downstream

Group-3 Lube-based oil project executed by L&T on an EPC basis for Petronas Melaka Refinery in Malaysia. L&T offers comprehensive services to theRefinery sector by undertaking EPC projects on Lumpsum Turnkey basis in India and abroad.

Naphtha Hydrotreater Reformer Unit constructed by L&T at E NOCProcessing Company LLC at Jebel Ali Free Zone, Dubai , UAE.

environmentally unsustainable and is expected to improve in the

near future.

The OC has established a new state-of-the -art fabrication facility for

modular structures, heavy jackets and oil rigs at Sohar in Oman, inpartnership with The Zubair Corporation, Oman. The Yard, spread

over 400,000 sq. m, has facilities for heavy structural fabrication,

sophisticated equipment, systems integration and testing and load-out of ultra-large modules. Significant progress has been achieved

on the capacity expansion plans at its existing modular fabrication

facility at Hazira in Gujarat.

L&T Valdel, the engineering arm of Upstream OC which provides

complete engineering solutions, is gearing up to cater to growthneeds through its centers located at Bangalore, Faridabad and

Chennai and is also currently positioning itself in the UAE. The OC has

set up a joint venture with SapuraCrest Petroleum Berhad of Malaysiato add the installation dimensions to its offshore capabilities through

owning and operating a heavy-lift-cum-pipelay vessel, LTS 3000.

To focus better on marketing and business development activities at

the international level, the OC has set up Development Centers at:1. Middle East Oil & Gas Projects at Abu Dhabi, primarily catering

to opportunities in GCC countries, Iran and North Africa

2. International Oil & Gas projects at Mumbai to addressopportunities in South East Asia, Australia and West Africa.

Hydrocarbon Mid & Downstream Operating Company

The Mid & Downstream OC offers single-point EPC solutions in the

field of hydrocarbon refining, petrochemical, fertiliser and chemicalsectors. The business has to its credit several complex projects

executed successfully in domestic and international markets. The OC

addresses the entire spectrum of opportunities in this sector whichinclude green-fuel projects, fuel upgradation, olefins, polyolefins,

aromatics, hydrogen, fertiliser, gas processing, reformers, cracking

furnaces, cross-country pipelines, gas-gathering stations, crude oilterminals, etc.

11


10/38

Petrochemical Projects

700 TPD methanol and 100 TPD CO plant for Methanol Chemicals Company (Chemanol) at Al Jubail in Saudi Arabia. Process Licensor: Haldor TopseA/S Denmark. L&T is also executing a 50,000 TPA methylamine plant and a 60,000 TPA dimethyl formamide plant for Chemanol at the same location.

An isomerisation project executed on EPCC basis by L&T for MangaloreRefinery & Petrochemicals Limited (MRPL). L&T is executing HydrogenGeneration Unit (Capacity 70,000 TPA), Process Licensor : Haldor TopseA/S, Denmark and Diesel Hydrotreater (Capacity: 3.7 MMTPA), ProcessLicensor: Axens, France, at the same location.

In 2008-09, the Mid & Downsteam business took a slew of initiatives to

cash in on emerging opportunities when the economic environmentsets on a recovery path. While the capabilities in the upcoming area

of pipeline engineering were strengthened through the formation of

a joint venture with Gulf Interstate Engineering USA, the engineeringcapacities at Mumbai, Vadodara and Faridabad centers were also

strengthened. This is in addition to the capabilities of L&Ts on-going

joint venture - L&T Chiyoda. Construction capacities were augmentedby adding strategic plant & machinery resources. In the international

arena, the OC has set up a full-fledged business unit at Sharjah to

cater to opportunities in the Middle East. Other country-specificJVs have been formed to focus on specialised electro-mechanical

construction capabilities in the Gulf.

Power Operating Company

L&T has taken initiatives in synergising its internal strengths

developed over decades in the areas of project management,engineering, manufacturing and construction by setting up anorganisation focused on opportunities in coal-based, gas-based and

nuclear power projects. This business provides turnkey solutions for

setting up utility power plants, co-generation and captive powerplants on EPC basis. It also provides power plant engineering services

through L&T Sargent & Lundy a joint venture of L&T and Sargent &

Lundy, U.S.A. L&T has formed two joint ventures with MitsubishiHeavy Industries, Japan to manufacture supercritical boilers and

steam turbine generators. In 2008-09, significant progress was made

in setting up manufacturing facilities for supercritical boilers andturbines at Hazira. Setting up facilities to manufacture various power

auxiliaries such as boiler tubings, pressure pipes, pulverising mills,

etc. is also underway to put together a comprehensive offering ofpower equipment to customers. Coal-sourcing initiatives are being

pursued actively through L&T Natural Resources.

Power Business is a major thrust area for L&T from the long-term

perspective. The company is undertaking significant efforts and

investments in this sector to take a leadership position. Technologytie ups, setting up of manufacturing facilities and front-end

marketing structure, scaling up manpower resources are the majorinitiatives already underway.

13


11/38

Risk Management

The Division has a robust risk management framework. This hasbeen identified as one of the key enablers to achieve t he Companys

strategic objectives. The E&C Risk Management team has been set

up to effectively manage risk that is inherent in the Engineering andConstruction business, be it costing, scheduling, safety, financing,

human capital and contracting risk. It is an active member of the

Engineering & Construction Risk Institute (ECRI) USA, an initiative ofWorld Economic Forum. Today we see a shift away from traditional

compliance and insurance motivated risk management to one

that is closely linked to business performance. The objective is tostrengthen E&Cs competitive edge and evolve a risk-embracing

culture.

Increased competition, pressures on cost and deliveries, forex and

commodity price variations, impact of recessionary trends on the

award of jobs and manpower attrition are some of the major risks facedby the Division. The Division has, however, adopted risk-mitigation

steps right from pre-bid stage covering technical, procurement and

financial risks. Measures such as advanced quantitative tools, globalsourcing, standard operating procedures, and operational excellence

initiatives have been implemented to enhance the profitability of the

businesses.

HR for Professional Excellence

Talent Management has been a prime mover in the companys

ambitious business plans. E&Cs HR strategy dovetails personalgrowth aspirations of employees with business needs. A variety of

HR interventions give E&C a strong competitive edge. A menu of

career growth options and training are offered to young aspiringprofessionals for achieving excellence in engineering and project

management skills. Important initiatives undertaken during the year

include setting up an L&T Project Management Institute at Vadodaracomplemented by the GLOPAT (global expatriates) programme,

mentoring of new joinees, recognition of excellence, strategy

workshops and team-building programs.

Asias largest and the worlds deepest cavern for storing LPG(190m below ground, capacity: 60,000MT) at Visakhapatnam in SouthIndia.

Pipelines & Storage Facilities

Laying of 592-km , 24 PUF-insulated crude oil pipeline along with 8 gas pipeline from Barmer to S alaya for Cairn Energy India Limited on an EPCbasis. L&T offers EPC and commissioning services for cross-country pipelines, terminals, offsite facilities, tankages, fire-protection systems, etc.

15


12/38

Outlook

India ranks sixth in the world, with a refining capacity of 3.4%. Justover 60% of the potential in the oil sector has been explored so far.

In order to enhance energy security of the country, the Government

has increased thrust on exploration, which is expected to lead toto substantial investments resulting in an increased activity in the

upstream sector. Improving oil prices will encourage investments

in new refineries creating opportunities particularly for the Mid& Downstream sector in GCC countries. A new fertiliser policy for

feedstock conversion projects announced during 2008-09, should

open up major opportunities in the next couple of years.

The reform process as envisaged in the Electricity Act in 2007

progressed during 2008-09. The sharp increase in demand for powerhas led to new-generation capacities, a significant portion of which

is planned through setting up of ultra-mega power projects based

on super-critical technology. India has adopted a blend of thermal,hydel and nuclear sources with a view to increasing the availability of

electricity. India needs to double its generation capacity in the next

7-10 years to meet potential demand for power.

E&C Division is geared to harness upcoming business opportunities.

Clearly drawn-out pre-bid strategies, intense marketing effortsand enhanced execution capabilities will drive performance. E&C

has also been quick to roll out measures to mitigate the adverse

economic slowdown by taking concrete steps in the areas of costreduction, improving productivity of resources and operational

excellence. These initiatives are expected to be the underpinnings

of performance in the coming years. In the backdrop of this outlook,E&C Division is optimistic of a good performance in the year

2009-10.

388.5 MW natural-gas-fired combined-cycle power plant built by L&T at Vemagiri in Andhra Pradesh. L&T has added another dimension to itscapabilities in the power sector by forming joint ventures with Mitsubishi Heavy Industries, Japan, to manufacture supercritical boilers and turbines.

445 MW combined-cycle power plant at Konaseema in AndhraPradesh, South India.

Power - Supercritical, Coal & Gas Fired

17


13/38

Heavy Engineering Division

Reactors & High Pressure Exchangers

Heavy Engineering Divisions operations are managed through two

Operating Companies viz.:

Heavy Equipment & Systems Operating Company

Shipbuilding Operating Company

HEAVY EQUIPMENT & SYSTEMS OPERATINGCOMPANY (HES OC)

Overview

Heavy Engineering & Systems Operating Company manufactures and

supplies custom designed and engineered critical equipment and

systems to core sector industries: fertiliser, refinery, petrochemical,

chemical, oil & gas, thermal & nuclear power, aerospace and defence.

HES OC has manufacturing and fabrication facilities at Mumbai

in Maharashtra, and at Hazira and Baroda in Gujarat. A Strategic

Systems Complex was commissioned during the year at Talegaon

in Maharashtra. A Precision Manufacturing Facility at Coimbatore in

Tamilnadu has been recently commissioned.

A Strategic Electronics Center for Defence Elect ronics Systems design

& engineering operates from Bangalore in Karnataka. Dedicated

engineering centers support manufacturing at all locations. The

Operating Company has set up three Technology Development

Centers at Powai - for new product development in process plant

equipment and for defence / nuclear equipment as well as one

focused on electronics systems / sub-systems.


The economic slowdown is mainly impacting potential exports.

Internationally the refining business has been hit by the fall in crude

oil prices and the general economic slowdown. Many planned

greenfield refineries and expansion projects have been deferred or

cancelled in the US, Canada as well as in the Middle East. With fewer

Methylamine converter for Chemanol-MA/DF plant is ready for despatch to Al-Jubail, Saudi Arabia. L&T offers a comprehensive range ofcritical equipment and systems including Cr-Mo-V reactors / converters and high pressure exchangers for the hydrocarbon sector.

High pressure screw plug exchanger being despatched to a refinery inKuwait. L&T has manufactured over 200 such exchangers.

19


14/38

Refinery Equipment

projects on the anvil, the competition is intense. However, Indian

domestic refinery projects are going ahead based on mandates

given by the Supreme Court. No new petrochemical projects are

being planned, due to fall in demand for petrochemicals.

HES OC continues to see growth opportunities, despite the current

economic crisis. The recently announced fertiliser policy by the

Government is favourable for investment. The fertiliser sector

offers good opportunities both in the domestic market as well as

in international markets like the Middle East and Africa. The coal

gasification business continues to show promise in countries like

China and Vietnam in the short to medium term. A recent order

received for coal gasifiers in India could lead the way for more such

projects within the country. The Operating Company has achieved

a breakthrough by entering into the elite league of manufacturers

of surface condensers & feed water heaters for super-critical powerplants.

There was no positive change in the Defence Business environment

during the past year, apart from the announcement of the Defence

Procurement Procedure (DPP), 2008. The environment is still not very

supportive of private sector participation in defence production.

The plan to award Raksha Udyog Ratna (RUR) status to select private

sector system integrators and create a level playing field continues to

remain in abeyance. Offsets offer a potential growth area.

HES OC is proud to have been associated with the Chandrayaan

mission for supply of critical equipment and systems both for the

launch segment as well as ground / command control segment.

The inking of agreements and MoUs by DAE/NPCIL with US, France,

Russia & Kazakhstan for nuclear plants and fuel opens up new

opportunities for supply of critical nuclear power plant equipment.

This is over and above the opportunities offered by Indias domestic

programme. The OC has signed MoUs with leading foreign players

such as Westinghouse and GE of USA, Atomstroyexport from Russia

and AECL of Canada which will enable participation in nuclear

projects coming up not only in India but also, in some cases, outside

the country.

High pressure reactors set sail for a refinery in South-East Asia. L&T designs and manufactures sophisticated equipment of large dimensions at itsstate-of-the-art manufacturing facilities in Hazira near the Arabian Sea. L&T is setting up additional manufacturing facilities at Sohar in Oman.

Vacuum column for a refinery on Indias west coast. L&T offers criticalequipment and systems for refineries and gas cracker plants.

21


15/38

Nuclear Power Plant Equipment

Significant Initiatives

The Operating Company has launched a number of key initiatives

aimed at establishing a leadership position in the global market.

Capacity Augmentation

HES OC has planned substantial capital expenditure in line with

its growth plans. The Strategic Systems Complex for assembly,

integration and testing of weapon systems, sensors and engineering

systems has started production at Talegaon. The advanced composite

facility for Defence, Aerospace and Aviation products has become

fully operational during the year at Ranoli complex, Baroda.

A dedicated facility for precision-engineered products was

commissioned at Coimbatore during the year under review. The

heavy fabrication facilities at Hazira are being upgraded and

expanded. Dedicated sub-contractors are being developed for

further capacity augmentation.

HES OC is setting up a heavy fabrication facility through a joint

venture in Oman to cater mainly to the Middle East market.

Capability Building

An integrated Special Steel Melting Shop with a Heavy Forging Facility

is proposed to be set up at Hazira for catering to the requirement of

heavy forgings for nuclear power plants as well as reactors for the

hydrocarbon market.

The Operating Company lays special emphasis on continuous

development / adaptation of manufacturing technology, modification

of existing products and development of new products through its

Technology Development Centers. The Technology Development

Centers have entered into partnerships with DRDO as well as other

national laboratories and academia for joint development work.

Steam generators for pressurized heavy water reactors under despatch. L&T has been accredited by ASME to use N and NPT stamps for manufactureof equipment and systems including reactor vessels, reactor heads, steam generators, heat exchangers, control rod drive mechanism and fuel handlingmachinery for nuclear power plants.

Reactor vessel for Fast Breeder Reactor (FBR) being lowered into a vaulthaving a mirror-polished thermal insulation panel mounted on itsoutside surface. L&T is at the forefront of Indias FBR programme.

23


16/38

Aerospace & Defence

A Warship & Submarine Design Center set up last year is being

strengthened for in-house design and construction of naval vessels.

A virtual reality facility was commissioned during the year.

Improvement Initiatives

As a further step in the thrust towards improving Employee

Engagement, a new initiative has been launched, titled Enterprise-

wide Collaboration for Alignment with Strategy(ECAS), which aims to

significantly boost the preparedness of the organisation to meet new

challenges. A new Customer Intimacy Strategy along with promotion

of Collaborative Cultureacross functions has been adopted with the

primary aim of providing best service to the customer.

The Product Lifecycle Management (PLM) project went live across

the Operating Companys various locations during the year. The PLMproject will help improve knowledge management, reduce cycle time

and improve collaborative working across functions. Automation of

design and drafting work using knowledge-based engineering tools

is of great assistance in knowledge management and cycle-time

reduction in engineering.

A number of teams are working on various improvement projects

under the umbrella of the Operational Excellence theme. The

Operating Company relies on the Critical Chain Project Management

methodology based on the Theory of Constraints for managing,

planning and execution of projects and for improving its delivery

performance.

The Operating Company follows a structured process for protection

of its Intellectual Property Rights. During 2009-10, the Operating

Company received four patents.

SHIPBUILDING OPERATING COMPANY (SHBD OC)

Ship Building Operating Company is in the business of construction/

repair of both commercial and defence vessels. The Operating

Lift-off of Indias prestigious space vehicle, Chandrayaan I. L&T provided specialised launch and tracking systems for this moon mission.L&Ts precision manufacturing facilities are geared to meet the exacting demands of supplying aerospace equipment and systems.

State-of-the-art stabilised naval rocket launch systems, designed anddeveloped by L&T, have been weaponised and inducted by the IndianNavy on multiple platforms. Other naval weapon systems developedby L&T include launch systems for anti-ship and surface-to-surfacemissiles, ASW torpedoes and ASW rockets.

Picture courtesy: Indian Space Research Organisation

25


17/38

Reactors & Coal Gasifiers

Company has design, fabrication and shipbuilding facilities at Hazira

in Gujarat, which handles the construction of specialised vessels

subject to a draught limitation of up to 4 metres. Construction of a

new mega shipyard has been launched at Kattupalli in Tamilnadu.

The new shipyard will primarily focus on construction of naval ships

and submarines and hi-tech commercial vessels, in addition to

repairs and refits for military and commercial vessels.


The international commercial shipbuilding market is presently

going through a difficult phase marked by low freight rates. The

global financial crisis has led to a global slowdown in commercial

shipbuilding. Fleet owners have deferred their plans for acquisition

of new vessels. Though the major shipbuilding yards in China and

Korea are still booked with orders till 2011, they have slots freed updue to cancellations in the bulkers segment.

The Government of India has agreed to grant shipbuilding subsidy

to all eligible vessel orders booked prior to 14th August 2007.

The Shipbuilders Association of India is working closely with the

Government for continuation of the subsidy scheme, to enable them

compete with Chinese and Korean yards.


Augmentation of facilities and resources at Hazira is underway to

meet present and future growth needs. The Operating Company

is focusing on streamlining its internal systems and processes for

strengthening operations.

Services of internationally acclaimed consultants are being availed of

for the construction of state-of-the-art facilities at the new shipyard

at Kattupalli.

Outlook

There are early signs of a turnaround. The economic situation world

over is likely to improve in the next six months. The fertiliser sector

Sinopec TPCC Ethylene Oxide (EO) reactor, heat exchangers and EO strippers bound for China Petroleum International Company. L&T exports high-tech plant, equipment and systems to over 45 countries including the US, UK and France.

The worlds largest coal-gasifier - manufactured by L&T for China. Keycoal gasification equipment is manufactured by L&T under a technicaltie-up with Shell Global Solutions.

27


18/38

Shipbuilding - Merchant & Naval

is expected to offer good opportunities with a few greenfield and

brownfield investments both in the domestic market as well as in

the international market. The Operating Company expects good

prospects from domestic refinery projects. Deferred projects in the

Middle East are likely to be revived in the third quarter of the current

year. New territories like Iran hold good potential.

With the signing of the Indo-US nuclear deal and India signing the

IAEA safeguard agreement, there are good opportunities for supply

of nuclear power plant equipment in the medium to long term. The

new government is expected to hasten the decision-making process

for new defence contracts and take measures to liberalise the sector.

With the international commercial shipbuilding industry being

severely affected by the financial meltdown, the order pipeline has

been thinning. The Operating Company has, therefore, been workingon enquiries for supply of specialised heavy cargo vessels, RoRo

vessels, Coast Guard Patrol vessels, etc. The Indian Navy is committed

to developing indigenous design and globally competitive

construction capabilities for naval vessels. The Operating Company

is well-poised to harness this potential demand through the new

shipyard under construction at Kattupalli.

Overall, both the Operating Companies envisage good market

opportunities in the medium term.

Specialised heavy-lift vessel launched from L&Ts ship-building yard at Hazira, on Indias west coast. Computer-generated image of 100-metre-long warship beingdeveloped by L&T for Indias Coast Guard.

29


19/38

Engineering, Construction &

Contracts Division

Buildings & Factories

Multi-storeyed commercial complex in Dubais prestigious Silicon Oasis. L&T has executed several major projects in the GCC countries, includingresidential and commercial complexes, bridges, switchyards and transmission lines.

Factory of automobile major near Chennai.

Overview

ECC L&Ts Engineering, Construction and Contracts Division (ECCD)undertakes engineering design and construction of infrastructure,buildings, factories, industrial projects incl uding power transmissionand distribution works covering civil, mechanical, electrical andinstrumentation engineering disciplines. ECC is equipped withthe requisite expertise and wide-ranging experience to undertakeEngineering Procurement and Construction (EPC) projects withsingle source responsibility.

Many of Indias prized landmarks - its modern airports, most exquisitebuildings, its tallest structures, largest industrial projects, longestflyovers and highest viaducts carry the distinctive signature of L&TsConstruction Division.

ECCs operations have been organized into four different OperatingCompanies to allow for more in-depth technology and businessdevelopment as well as to focus attention on domestic andinternational project execution.

BUILDINGS & FACTORIES Institutional and Commercial Buildings Residential Buildings Industrial Structures Mechanical, Electrical & Plumbing Construction Engineering Services (Formwork)

TRANSPORTATION INFRASTRUCTURE Roads & Runways Bridges, Metros & Ports Hydel Power Nuclear & Defence International Infrastructure

31


20/38

Roads & Bridges

83-km highway between Vadodara and Bharuch one of the many road projects that provide a critical link to the Golden Quadrilateral thatconnects Indias major metropolitan centres. Infrastructure projects executed by L&T also include bridges, ports, airports and metro rail systems.

Panipat Elevated Expressway Indias longest six-lane flyover on thecountrys strategic National Highway-1.

METALLURGICAL, MATERIAL HANDLING & WATER Minerals & Metals Bulk Material Handling Water & Utilities

ELECTRICAL & GULF PROJECTS Electrical, Instrumentation & Communication Transmission Lines & Railway Construction Gulf - Urban Infrastructure and Transmission & Distribution

Projects

ECC has built a reputation for innovative design and construction overthe last 65 years. It deploys state-of-the-art design tools and projectmanagement techniques. It executes a wide variety of projectsin every facet of construction and undertakes lumpsum turnkeyconstruction with single-source responsibility. The Division ranks40th among top global contractors and 67th among internationalcontractors as per the survey conducted by Engineering News Recordmagazine, USA (August 2008). The current years performancereaffirms the Companys global stature.


Due to the liquidity crunch and real interest remaining relatively high,private capital investments are showing signs of moderation. Variousmeasures taken by the Government / RBI are, however, expectedto offset the effect. On the positive side, inflation is under controland commodity prices have dropped. This could help the industryin general to improve margins. For the construction industry, theprimary drivers of growth remain robust in many areas. Businesswould grow steadily over time, albeit at a slower pace. The threeimportant drivers are: (a) infrastructure development; (b) capacityenhancement; and (c) urbanisation.

These growth drivers are irreversible and are underpinned by Indiasdomestic demand & the social & physical infrastructure deficit. Theconstruction industry is cyclical by nature. The Indian constructionsector has been growing at nearly 1.5 times Indias overall growth.Considering the current downturn in India, the construction sectoris expected to grow 9% - 11% in 2009-10 as against 17.5% in 2007-

33


21/38

Ports & Harbours

1300-metre jetty built by L&T at Karaikal, Puducherry, on Indias east coast. L&T undertakes design and construction of ports, harbours and waterfrontstructures like deepwater berths, open-sea jetties, container terminals and breakwaters.

Section of the Gangavaram Port at Visakhapatnam.

08, and 16.3% in 2008-09, resulting in slowdown in the overall orderinflow and sales growth.

Opportunities & Challenges

The construction market shows a mixture of optimism andapprehension. Owing to lowering demand, some sectors like realty,especially in premium housing and capacity augmentation inmanufacturing sectors, are expected to move a bit slower than inthe recent past. However with more and more migration of people into urban areas, the housing sector will continue to generate a lot ofopportunities. Mass-scale affordable housing is one such emergingopportunity to be harnessed.

Infrastructure projects will continue to be the focus of bothGovernment and private sectors, supported by policy initiatives to

drive infrastructure growth. This is corroborated by the PlanningCommissions ambitious investment plan on infrastructure over thenext 5 years in various sectors like power, irrigation, roads, railways,ports and airports. The construction sector, which accounts foralmost 60-65% of the capital spend, would be t he biggest beneficiaryof these investments. Transportation infrastructure (roads, bridges,elevated corridors, etc.) is expected to gain enough focus fromprivate investors driven by favourable measures taken by NHAI liketransparent MCA (Model Concession Agreements), increased VGF(Viability Gap Funding), etc. In addition, the state and district roadsare also in the limelight now.

Metros and MRTS (Mass Rapid Transport System) are emergingas a major area of infrastructure development in metros and statecapitals. Urban infrastructure like water supply, sanitation, healthcare, waste management, city roads, and flyovers are expected toprovide extensive opportunity in the year 2009-10. Tier II & Tier IIIcities are expected to be the new centers for large-scale investments.Increased budgetary allocation by the government for APDRP, NHDP,Accelerated Irrigation benefit programme, Jawaharlal Nehru UrbanRenewal Mission, Bharat Nirman Programme etc., are good potentialfor business opportunities in related segments. The increasingdemandsupply gap in the power sector and Governmentscontinued focus will drive growth in the sector which will give boostto order inflows for L&Ts Power Transmission & Distribution, BulkMaterial Handling, Hydel and Nuclear Business Units.

35


22/38

Airports

Bengaluru International Airport. L &T is driving the airpor ts revolution in India, building virtually every major new international airport in the country. Passenger terminal building of the new Rajiv Gandhi InternationalAirport at Hyderabad.

On the international front, the GCC countries have seen significantinvestment drop in the realty sector. The investment in the oil sectoris also likely to be moderate due to reduction in prices of oil andexpectations of a drop in demand for oil. However, the other sectorslike power distribution and infrastructure development in the Gulfregion is expected to continue to be robust. The Division is optimisticabout exploiting the potential available in these businesses.

Buildings & Factories Operating Company (B&F OC)

This Operating Company is equipped with the domain k nowledge,requisite expertise and wide-ranging experience to undertakeEngineering, Procurement and Construction (EPC) of all types ofbuilding and factory structures.The range covers the Service Sector (IT parks, office complexes), theUrban Infrastructure Sector (commercial centres like shopping malls,modern airport buildings and metro rail stations), the Leisure Sector(international class hotels, entertainment centers), the Educational& Health Sector (knowledge centers, super-speciality hospitals andmedical colleges), the Social Sector (public buildings, religious/convention centers and monumental structures) and the SportsSector (large stadiums, sports complexes).

In addition to design and construction of structural framework,the OC offers finishing and interior works and electro-mechanicalservices and latest project management techniques. MEP servicesoffered include: Heating, Ventilation and Air Conditioning (HVAC), FireProtection, Building Automation, Vertical Transportation, Plumbingand Sanitary, Surveillance and Security Systems, Telecommunicationnetworks, Electrification, Kitchen, Laundry, Water and Effluentmanagement, Medical equipment, Landscaping and Horticulture.This OC also provides customised solutions to business office spacesand corporate townships.

The B&F OC has continued its growth trend during 2008-09 bybagging large value turnkey, design-and-build orders in airports, ITparks, commercial space, health and leisure segments and residentialand factory building sectors. The progress made by the B&F OCduring the year 2008-09 towards providing total turnkey solutionswas significant. Concept-to-Commissioning is the buzzword drivinggrowth. This unique capability along with focus on Key Account

37


23/38

Railways & Mass Rapid Transport

Artists impression of Indias first monorail system being built by L&T in Mumbai. L&Ts Railway Business Unit integrates the Companys capabilities andprovides comprehensive solutions in the rail sector. The focus is on urban mass transportation systems like monorails, metros and Light Rail Transport.

Underground metro rail corridor for the Delhi Metro Rail Corporation,New Delhi.

Management has helped the OC to strengthen its relationship withcustomers. The composition of design-and-build has increased to65% of total revenue. Our involvement from the conceptual stageof the project helps clients in optimisation of time and cost. Theexecution of Delhi International Airport is progressing on schedule.Sensing the realty slowdown ahead of time, the B&F OC has quicklydiversified into government projects, affordable housing and newairports outside India / airport modernisation projects in Tier II cities.A healthy order book stands testimony to the relentless businessdevelopment initiatives, giving the OC an assurance on revenuegrowth for the year 2009-10.

Infrastructure Operating Company (Infra OC)

The Infrastructure Operating Company provides comprehensivedesign and construction services for meeting ever increasing demandfor infrastructural facilities like highways, bridges, airport runways,ports, harbours, railways and power. Recently, L&T was declaredInfrastructure Company of the Yearby Essar Steel and CNBC-TV 18.

The Infra OC has the resources, expertise and experience to handle alltypes of infrastructure projects, as well as well-equipped engineeringand design facilities Engineering Design and Research Centre (EDRC) at Chennai and Faridabad that offer comprehensive engineeringand consultancy services for infrastructure projects. Engineeringsolutions are also offered for the entire gamut of geotechnical andfoundation engineering designs through Foundation EngineeringDepartment. A dedicated team of engineers in the InfrastructureEngineering & Technical Services Cell focuses on developingconstruction methods and design of enabling works for all types ofhydel and nuclear power projects.

Bridges of all types in various span ranges have been built by L&Tusing innovative and sophisticated construction techniques likeincremental launching, segmental construction, cables stay, precast,prestressed concrete and steel-concrete composite construction.

L&T has extensive experience and expertise in the execution of manychallenging projects involving large maritime structures such asdocks, container terminals, ports, harbours, jetties, berths, shipyards,breakwaters including design, supply and installation of lock gates.

39


24/38

Nuclear & Hydel Power

The atomic power plant at Tarapur, Unit 4. L&T is working closely with leading national agencies in helping the country meet its stated target ofgenerating 20,000 MW of nuclear power by 2020 AD.

Earthen dam spanning river Kurket built by L&T at Chattisgarh.L&T undertakes hydropower and irrigation projects such as weirs,underground tunnels and powerhouses, penstocks including hydro-mechanical works.

Quarrying and placement of armoured stones and armouredconcrete blocks, preparation of beds for breakwaters and shoreprojection works, seating of floating caissons including supply andinstallation of shiplift platforms and transfer systems are a speciality.

Specialisation also covers design and construction of railway bridgesand other railway structures for metro, underground corridorsand elevated corridor, monorails, cut and cover and undergroundstructures. Sophisticated techniques of TBM and the EarthPressure Balancing Method (EPBM) are used for the construction ofunderground railway tunnels.

L&T has the capability to construct critical and complex structuresfor nuclear power with high level of quality standards. It has thedistinction of having participated in the construct ion of the majorityof nuclear power plants and heavy water plants in the country.

L&T caters to a large base of international clientele for infrastructureprojects. It has established its reputation as a constructionorganisation, truly world-class in reach, resource, scale and speed thathelps turn resources into results in critical sec tors of infrastructure.

The Infra OC continues to maintain its leadership position inconstruction of roads, runways, bridges, metros, tunnels, hydel andnuclear power plants. This OC has shown a significant growth inrevenues during 2008-09 driven primarily by BOT projects. Duringthe year, the Infra OC has successfully completed several projects,viz. runway in Delhi Airport, the Kattumavadi-Ramanathapuramand KrishnagiriThopurghat road packages, Panipat ElevatedCorridor and Veligonda Dam. Order Inflow and Order Book havebeen impressive, thanks to the governments renewed focus oninfrastructure as a tool to spur the economic growth. Major projectsbagged by the Infra OC include three prestigious Gujarat State roadpackages, the Mumbai Monorail, a dam project in Bhutan and anirrigation project in Andhra Pradesh.

Metallurgical, Material Handling and Water Operating

Company (MMHW OC)

This operating company is an established leader in all its areas ofoperations, viz. minerals & metals, bulk material handling and waterand utilities.

41


25/38

Metals & Minerals

Indias largest blast furnace (2.5 mtpa) built by L&T and Paul Wurth on EPC basis at Jamshedpur. L&T has constructed the largest number of blastfurnaces in the country. L&T carries out engineering, procurement, manufacture, supply, construction and commissioning of projects in ferrous andnon-ferrous metals, mineral beneficiation, coal washeries and paper plants.

Zinc Smelter Plant at Chanderiya, Rajasthan.

It has played a significant role in the development of the steelsector in India and undertakes turnkey construction contractsin the Minerals & Metals sector involving detailed design andengineering; manufacture, procurement and supply; civil andstructural construction; electrical & instrumentation works; utilities;site fabrication and erection including testing, commissioning andperformance test. Focus area covers ferrous metals, non-ferrousmetals, mineral beneficiation and paper plants. L&T has executedthe maximum number of blast furnaces in the country.

L&T has been executing some of the major and critical watertransmission/ distribution and water treatment projects in India andabroad for various metros, urban, municipal and rural customersincluding public sector undertakings and reputed private clients.

The OC offers turnkey project services involving civil, mechanical,electrical and instrumentation works with single point responsibility,including engineering, design, procurement commissioning,operation & maintenance (O&M) works for these projects. It alsoundertakes water treatment plants; industrial effluent treatmentplants; waste water treatment and disposal; and rehabilitation ofpipelines.

In addition it has a well established structural steel fabrication unit -L&T-ECC Workshops Limited at Kancheepuram near Chennai to meetthe customized needs of its customers.

The MMHW OC continues its record of successes during t he year.The Order Book increased significantly with projects from Tatas(blast furnace and sinter plant), SAIL (sinter plant, Rourkela), Vedanta(alumina plant, Hindustan Zinc Limited, Debari, Utkal Alumina),etc. MMHW OC has repeatedly proven its execution capabilities bycompleting projects well ahead of time. MMHW OC is concurrentlyexecuting six blast furnaces in the country a milestone event inIndian steel plant construction.

Electrical & Gulf Projects Operating Company (E&GP OC)

The E&GP OC extends its services mainly for all types of industrialand project electrification works in the domestic markets as well asfor power transmission and distribution projects including buildingsand urban infrastructure projects in the Gulf markets.

43


26/38

Transmission & Distribution

400kV double-circuit transmission line between Gorakhpur (Uttar Pradesh) and Muzaffarpur (Bihar). L&T undertakes design, survey, manufacture,supply, erection, testing and commissioning of transmission lines up to 765kV for several sectors power grids and state electricity boards.

132kV switchyard in Bhutan. L&T has set up several power evacuationsystems extra high voltage substations ranging up to 400kV for airand gas insulated switchgear in India and abroad.

Electrical Instrumentation & Communication (EI&C) Sector of theOC provides turnkey & individual package based solutions in theelectrical infrastructure space. EI&C also provides comprehensiveservices for the construction of EHV substations (up to 765kV), plantelectrification & instrumentation.

Turnkey construction of EHV transmission lines is a major areaof operation for the OC. With ISO and OHSAS certified tower-manufacturing facilities in Puducherry and Pithampur, thetransmission line construction business have been taken beyondIndian shores. Today, the OC has established niche markets in MiddleEast, South East Asia and SAARC countries with high quality productsand services. Capabilities include design, survey, supply, erection,testing and commissioning of transmission lines up to 765kV.

Railway Construction is yet another offering by this Company.This covers design, supply, erection, te sting and commissioning ofsignalling & telecommunication, overhead equipment and tractionsub-station, supply & installation of permanent way includingassociated embankment formation, construction of minor bridges /culvers, supply of permanent way materials, track laying, etc.

As a part of its Gulf Operations, Power Transmission and DistributionSector (PT&D) is actively involved in power evacuation, powertransmission and power distribution projects. L&T being one ofthe earliest Indian companies to operate in Gulf, it has gainedsignificant market presence in the PT&D Sector. The Buildings &Urban Infrastructure Sector of Gulf Operations caters to the urbaninfrastructure development of the individual GCC countries.

The E&GP OC has bagged a number of breakthrough orders likeBalance of Power Plants (BoP), 765 kV substation, power distributionpackage for 2.0 MTPA steel plant, etc. With the commissioning ofexpansion projects, installed capacity of our factories manufacturingtransmission line towers, has reached 1,00,000 MT per annum. TheGulf operations have registered significant growth in revenues. L&TOman, one of the subsidiaries, has shown significant growth in theBuildings and Electrical businesses. The key success factor for this OCcontinues to be managing working capital efficiently owing to thenature of job and clientele.

45


27/38

Material Handling & Water Systems

2730 cu.m per hour capacity bucket-wheel excavator manufactured and supplied by L&T for the Mines II Expansion Project of Neyveli LigniteCorporation. L&Ts product profile includes wagon loading systems, stockyard equipment and port-handling equipment and conveyor systems.

91-mld water treatment plant for Narmada Canal Distribution Projectin Gujarat. L&T offers engineering, procurement and constructionservices for water sourcing, treatment, transmission and distributionincluding industrial effluent/sewage treatment and disposal.


Operating companies (OCs) have been made fully functional sinceJuly08. OCs work virtually like independent companies to fosterrapid scaling up of the business and bring down the response timeto customers / projects. To tide over the suboptimal utilisation ofresources triggered by the current economic scenario, measureshave been taken to focus on better accountability at every level andensure good governance. A common forum to exchange knowledgeacross OCs is under implementation. ECC envisages that the volatilityin the economy may result in under-utilisation of human resources inpockets; consequently focus on multi-skilling / job rotation will getrenewed attention. ECCs initiative to train and retain workmen acrossIndia has been strengthened by additional budgetary allocation forbuilding centers in all the regions.

Outlook

The overall outlook for the Division remains good, owing to its robustorder book and diversified business portfolio. The governmentscommitment to revitalize the economy through renewed investmentin infrastructure provides immense scope and opportunities toECC. Increasing demand for power offers substantial businessopportunities for Bulk Material Handling business. The governmentsconsistent support to augment water supply and develop a waternetwork across India provides sizeable opportunities for Water &Effluent Treatment SBU. Similarly, the Gulf region offers many water-related projects.

The outlook of the Minerals and Metals business seems challengingfor the year 2009-10. Special initiatives are being taken to extend ourcapabilities beyond construction of blast furnaces / sinter plants, i.e.towards pellet plant / compact strip production in the ferrous sectorand copper smelting / alumina refinery in the non-ferrous sector. TheDivision is, therefore, hopeful of capitalising on these opportunitiesto sustain the growth momentum established in recent years.

47


28/38

Electrical & Electronics Division

Switchgear - Low Voltage

Overview

The Electrical & Electronics Division (EBG) comprises Electrical andAutomation Operating Company (EAOC) and two stand-alone

business units of Medical Equipment & Systems (MED) and Petroleum

Dispensing Pumps & Systems (PDP).

Four Strategic Business Units (SBUs) - Electrical Standard Products

(ESP), Electrical Systems & Equipment (ESE), Metering & ProtectionSystems (MPS) and Control & Automation (C&A) are under the

umbrella of EAOC. ESP and ESE have their production base in Powai,

Mumbai and at Ahmednagar in Maharashtra, with additional facilitiesfor ESE and a Precision Manufacturing Center for tooling solutions

at Coimbatore in Tamilnadu. Control & Automation business unitoperates from its Automation Campus in Navi-Mumbai, whileMetering & Protection Systems is based at Mysore in Karnataka.

EAOC has a significant international presence through manufacturingfacilities in Wuxi (China) for switchgear standard products, at Dammam

in Saudi Arabia for switchboards and for Control & Automation in

Jebel Ali, UAE. It has increased its international presence with theacquisition of switchgear business of TAMCO Corporate Holding of

Malaysia last year, winning access to its manufacturing facilities and

markets in Malaysia, Indonesia, Australia and China.


A Customer Interaction Center (CIC) went live in 2009. This new

initiative helped businesses to respond faster. EBG has initiated a

Division-wide awareness to focus on the 3 Cs: cost, cash and customer.The highlights of this initiative are working capital measures such

as aligning deliveries with the end-users cash flow, insistence on

milestone-based payments in large-value orders and emphasis onoutstanding collections. There is continuous monitoring of targets

assigned to every sales person. Initiatives for operational excellence

such as 5S, Six Sigma and Value Engineering continue with up to 75%increase in these projects.

Representative section of L&Ts wide range of switchgear. In addition to low-tension switchgear (featured here), L&T offers medium-voltage switchgear,building electricals and energy meters. The range encompasses integrated automation and complete electrical solutions.

Electricals for buildings a wide range, specially designed for malls,commercial complexes and residential apartments.

49


29/38

Switchgear - Medium Voltage

For switchgear products, a new initiative to tap the retail market

for electrical products was started. The focus is to enlarge reach,presence and visibility in the retail market through appointment of a

large number of dealers as channel partners under this programme.

A new partnership programme was initiated to provide automationsolutions to industrial and building segment customers.

After the acquisition of TAMCO there is a focus on growth in the MVsegment. EAOC is planning to set up a franchisee network for MV

products in India. Also there are plans for a franchisee network for

new design LV flat pack products for the Gulf market.

The Control & Automation business has set up a Technology Center to

nurture ongoing technologies, and looks forward to new upcomingcutting-edge technologies to be used for Automation EPC projects.

Competency development and skill-building are under focus to

reduce technology gaps. New design meters have been introducedand efforts are underway for providing automatic meter reading

(AMR) solutions.

New Product Development

Development of new products and technologies continues to be thetop priority for the Division. It plans to meet market expectations

and keep pace with competition by introducing new products, with

specific focus on cost effective offerings. In FY 10, ESP will be launchingright price product variants in Moulded Case Circuit Breakers and

Contactors. The U-Power range of ACBs will be upgraded. There will

be a focus on development of automation solutions for buildingsand energy management systems.

Post the acquisition of Tamco Switchgear, further development of theMV switchgear product range was undertaken in the Ahmednagar

factory. The product range is now being increased for the Indian

market. ESE is the also coming up with a new state-of-the-art LVswitchboard product range which will meet Indian and international

standards.

Control and Automation BU is developing a toll management

system, which will be a state-of-the-art system including electronic

toll collection for national and state highways. A terminal

Medium voltage switchgear, made at L&Ts Tamco facility, has been widely installed in industries around the world. L&T offers custom-engineeredswitchboards equipped with both conventional and intelligent protection, control and communication systems to meet the power control anddistribution needs of industry.

Tamco a wholly-owned subsidiary of L&T manufactures medium-voltage switchgear. Picture shows factory at Kuala Lumpur, Malaysia.L&Ts manufacturing footprint extends to the Middle East, China,Indonesia and Australia.

51


30/38

Automation Systems

automation system for integrated terminal automation and a tank

farm management system for petroleum products are also beingdeveloped.

MPS is planning to replace the existing designs of tri-vector meterwith new cost effective designs. Development initiatives are

underway for meters for select international markets, GPRS modems

for data communication, meters with radio communication facility.The R-APDRP initiative may require installation of open protocol in

meters and will also require all meters to be communicable over

various wired and wireless media.

MED had launched a new product range in Patient Monitoring under

55 series, which has been well accepted in the domestic marketand in the USA. A new set of multi-parameter monitors are being

developed to cater to the cost-conscious lower-end segments. A

partially modular monitor, Cosmic 55 will be released later this year. Aspot check monitor meant for physicians offices is being developed

and will be released in the US. PDP has developed a new electronicsplatform (4GDE) for its dispensing pumps.

Intellectual Property Rights

The Division has put in intensive efforts to generate innovative ideas

and create value for the organisation by protecting them through

intellectual property rights. In 2008-09, EBG has filed 108 patentapplications, 33 design registrations, 5 trademarks filings and 6

copyrights filings. The Division has been focused on directing its

innovation energy towards improved manufacturing processes andcost control. I t is ensuring continuous alignment of business interests

& IP creation by way of Gate Processes of approvals according to

EBGs Product Development System.

Multiple Geographies

The Division has increased its international presence with bases in 6

countries - Saudi Arabia, Jebel Ali (UAE), Malaysia, Indonesia, China

and Australia - in addition to India. Over 30% of the Divisions businessis from international markets. The Division has a multinational

workforce, over 15% of which belong to countries other than India.

L&Ts range of electronic energy meters and numerical relays.Supervisory Control And Data Acquisition system designed, supplied and commissioned by L&T for Onshore Control Centers (OCCs) for offshoreoperations of Oil & Natural Gas Corporation. The system connects 133 wellhead platforms, 13 process complexes and nine drilling rigs to OCC.

53


31/38

Machinery & Industrial Products

Division

Overview

Machinery and Industrial Products Division (MIPD) comprises two

business sectors; Industrial Products & Machinery Sector (IPM) and

Construction Equipment Business Sector (CEBS).

I. Industrial Products & Machinery Sector (IPM)

In order to address the comprehensive needs of the commoncustomers in the industrial sector, the Division has aggregated

its industrial products and machinery businesses under the IPM

Operating Company (IPM OC). IPM OC has two distinct businessstreams - Industrial Products and Industrial Machinery. Industrial

Products comprise Industrial Valves, Welding Products and Cuttingtools while Industrial Machinery consists of machinery for Paperand Pulp, Mining, Mineral processing, Steel and Rubber & Plastic

Processing Industries. IPM OC consists of the following Strategic

Business Units and Joint Venture Units:

A. Industrial Products

Valves Business Unit (VBU)

This Unit markets valves and allied products manufactured by L&TsJVs; namely, Audco India Limited (AIL), Larsen & Toubro (Jiangsu)

Valve Company Limited, China, and a few Indian and overseasmanufacturers. L&T is one of the few select suppliers of valves for

global oil majors.

AIL is a 50:50 JV with Flowserve Corporation USA and manufactures a

wide range of industrial valves at its four factories in southern India.

Larsen & Toubro (Jiangsu) Valve Company Limited is a 70:30 JV withYancheng Sunt Valve Company Limited, China, set up in Yancheng

in Jiangsu province, China, for manufacture of certain ranges of

Industrial Valves for global markets. Besides, the JV manufacturingfacilities, VBU also has set up its own facility - Fluid Control Products

Wide range of industrial valves marketed by L&T, addressing applications in oil & gas, petrochemical and power sectors. Innovative solutions for welding, cutting and wear protection of metalcomponents.

Industrial Valves & Welding Products

55


32/38

Rubber & Plastic Processing Machinery

Center (FCPC) at Coimbatore - which provides technology support

for new product development as well as contract manufacturing ofvalves in ranges not fully supported by AIL. The FCPC is also setting

up a new plant for manufacture of valves to support L&Ts foray in

the power sector.

Welding Products Business (WPB)

WPB markets products manufactured by EWAC Alloys Limited,along with imported Inverter based welding machines from Fronius,

Austria, and Oxy-Fuel Equipment from Messer, Germany. Locally,WPB also sells indigenously developed MIG welding machines and

inverter welding machines. To provide comprehensive solutions

to major clients in welding technology, WPB provides repair &maintenance of critical industrial components.

EWAC Alloys Limited (EWAC) is a 50:50 JV of L&T and Messer Eutectic+ Castolin Group of Germany. EWAC is a market leader in the business

of maintenance and repairs welding, and welding solutions.

Industrial Cutting Tools (INP) Business

This business provides metal cutting solutions to the Indian

manufacturing industry, covering automobile and machinetool segments through marketing of industrial cutting tools

manufactured by ISCAR Limited, Israel.

B. Industrial Machinery

Kansbahal Works (KBL)

Machinery for Pulp & Paper, Mining, Mineral Processing and Steelindustries, as well as components for wind turbines are manufactured

and marketed by Kansbahal Works. Its foundry also manufactures

large wear and abrasion resistant castings for t he power and cementsectors. Voith Paper Technology (India) Limited is a 50:50 JV with

Voith Paper Holding GmbH & Co. KG, Heidenheim which provides

technological solutions and products catering to these industries.

LTM Business Unit (LTMBU)

LTMBU manufactures and markets Rubber Processing Machineryfor the tyre industry. Currently, the unit has manufacturing facilities

at Manapakkam and Kancheepuram in Tamilnadu. LTM has been

ranked No.11 amongst the top suppliers of tyre and rubbermachinery around the world by European Rubber Journal for the

Tyre-building machine equipped with state-of-the-art features for building car / light truck radial tyres, for a leading tyre company in India.The machine is part of the wide range of rubber-processing machines manufactured by L&T.

L&Ts popular S-Tech Injection Moulding Machine for the plasticsindustry.

57


33/38

Construction & Mining Equipment

year 2009. LTMBU also markets plastic injection moulding machines

manufactured by L&T-Plastics Machinery Limited. L&T-PlasticsMachinerys products find applications in diverse industries like

automobiles, electrical goods, packaging, personal care products,

writing instruments and white goods.

II. Construction Equipment Business Sector (CEBS)

Construction Equipment Business Sector (CEBS) markets and renders

support for Construction & Mining Equipment. The sector comprises

the following business units:

Construction & Mining Business Unit (CMB) which marketsequipment manufactured by L&T-Komatsu Limited, India and the

entire range of equipment available from Komatsu worldwide. Italso markets Scanias mining tipper trucks;

L&T-Komatsu Limited (LTK) the 50:50 JV with Komatsu that

manufactures hydraulic excavators and hydraulic components, allof which are distributed in I ndia by L&T;

L&T-Case Equipment Private Limited (LTCEPL), a 50:50 JV withCNH Global N.V., which manufactures and markets loader

backhoes and vibratory compactors;

Tractor Engineers Limited (TENGL), a 100% wholly-ownedsubsidiary, which manufactures and markets undercarriage

systems for excavators and material handling systems like apron

conveyors and allied items.

Product Development Center

Product Development Center (PDC) based at Coimbatore renders

engineering and product development support to all the businessesacross MIPD.


Specific initiatives being undertaken by the respective sectors

include:

I. IPM OC

Setting up a 25000 TPA greenfield foundry in Coimbatore tomanufacture cast components for wind turbines which is expected

to go into commercial production in the 4th quarter of 2009-10.

L&T-Komatsu PC130-7 Hydraulic Excavator engaged in excavating a canal at an irrigation project. L&T markets within India, construction and miningequipment manufactured by L&T-Komatsu Limited as well as equipment supplied by Komatsu Limited worldwide.

Fleet of Scania tipper trucks at a coal mine. L&T distributes in India, themulti-axle trucks of Scania, the Swedish heavy-vehicle major.

59


34/38

Earthmoving & Road-building

Securing additional approvals from major end-users for LTJVCL

valves in China.

Introduction of duplex stainless steel electrodes and special hard-

faced excavator buckets for replacement market by the Welding

Products business.

Introduction of new products in the cutting tools segmentwhich will help build competitive advantage and market share.

Initiating of signicant steps by most business units in IPM OCfor close monitoring to ensure reduction in working capital and

in particular, receivables management.

Making eorts to bridge the gap in special products with metalseating by engaging the services of specialists from overseas

markets

II. CMB

Introduction of new imported models of hydraulicexcavators, viz. PC800, PC210-8, sourced from Komatsu, in theIndian market.

Expansion of after-sales support capability through long-term fullmaintenance contracts and site support agreements for theproducts to improve machine uptime and cap operating

costs, consequently giving the customers a competitive

advantage.

Appointing a dealer for hydraulic excavators in Nepal totake advantage of the expected development of road and hydro-

electric generation projects.

Providing dealers and customers with attractive nanceoptions through tie-ups with major financiers such as L&T Finance

and SREI.

L&T-CASE 770 loader-backhoe engaged in a land-development project. L&T-CASE is a JV of Larsen & Toubro Limited and CNH, a global leader inmanufacture of loader-backhoes.

L&T 752 Tandem Vibratory Compactors are involved with Indias infra-structure development. Machines seen here in action on a road construc-tion project.

61


35/38

INFORMATION TECHNOLOGY SERVICES

Information Technology

IT Center, Mahape, New Mumbai.

Technology Center II, Chennai.

Headquarters of L&T Infotech, Powai, Mumbai.

L&T Infotech Center, Bangalore.

Software Development Center, Mahape.

LARSEN & TOUBRO INFOTECH LIMITED (LTIL)

LTIL is a wholly owned subsidiary of L&T engaged in providingIT solutions and software consultancy globally. The Company

offers both onsite and offsite services in the areas of Application

Maintenance & Development, Enterprise Resource Planning, DataWarehousing, Business Intelligence, Testing and IT Infrastructure

management. It has established a global footprint, with a presence

in the USA, Canada, Denmark, France, Germany, Japan, UK andthe Middle East. Around 26% of the Companys clients are on the

Global / Fortune 500 list. The Company continues to focus on its

chosen verticals, viz. Manufacturing, Banking Financial Services andInsurance, Energy and Petrochemicals, Product Engineering Services

(comprising of Communications and Embedded Software).

In the backdrop of global economic downturn, L&T Infotechs

growth in 2008-2009 was modest, with increase in revenues : 9% in

dollar terms over the previous years.

As technology firms have been among the first to be hit by the near-

collapse of the financial markets in the US and Europe, they are a stepahead of the pack when it comes to restructuring their operations

to deal with the new situation of growth dipping and companies

adopting a wait-&-watch strategy. Since then, the industry in Indiahad started focusing on internal efficiencies and cost reduction. Given

the industrys resilience to withstand various challenges in recent

years, the Company is confident to sustain the growth momentumin the medium term.

ENGINEERING SERVICES

Carrying the brand and the legacy of Larsen and Toubro group

of companies, L&T Technology Services has been rated the No.1

engineering services provider in the World 2008 Black Book ofOutsourcing. The Division comprises Integrated Engineering

Services and Embedded Systems (EmSyS) business units which offer

a range of IT enabled engineering services and systems requiredin the design and execution of turnkey projects and equipment /

product development.

L&T Infotech a subsidiary of Larsen & Toubro Limited leverages the domain expertise of the parent company to offer end-to-end software solutionsand services to clients across the globe.

Talent drawn from premier academic institutions plays a pivotal rolein L&T Infotechs successful implementation of the key business andtechnology needs of its client base.

63


36/38

Engineering Services

Integrated Engineering Services (IES)

IES, headquartered at Vadodara, Gujarat, has established itsdesign centers in Bangalore, Chennai, Mysore, and Mumbai. It

has about 3000 employees delivering high-quality engineering

and design solutions. The end-to-end services basketcomprises product design, analysis, proto-typing and testing,

embedded system design, production engineering, plantengineering, buildings & factories design, asset information

management & sourcing support using cutting-edge CAD/CAM/

CAE technology. I ES predominately renders its cutting-edge servicesto high-end verticals such as automotive, aerospace, marine, off-

highway machinery, industrial products, consumer packaged goods,

pharmaceuticals, minerals & metals, oil & gas and utilities sectors.

Embedded Systems (EmSyS)

EmSyS provides embedded systems for electronics product designand development. The solutions comprise supply of hardware,

application software and enclosure design for the systems largely

required in the automotive, medical, semi-conductor and industrialproducts segments. The business unit has a dedic ated team of more

than 1000 professionals operating from Mysore, Bangalore and

Mumbai. Additional capacity is being created at these locations tocater to the growth in t he business.

India is poised for a big leap in the product development market.EmSyS, with expertise in product development, combined with its

experience in electronic product manufacturing is well-poised to

take a big share of this. It offers complete product development,consultancy as well as various components of the lifecycle such as

re-engineering, sustenance-engineering, VAVE and obsolescencemanagement.

The business unit has also achieved CMMI Level 5 cer tification tooffer quality deliverables to the customers.

L&T Knowledge City the new, state-of-the-art technology campus at Vadodara, Gujarat, provides integrat

L TAnnalReview 2008 09

Documents

Transcript of L TAnnalReview 2008 09