Larsen & Toubro’s (L&T) chairman A M Naik is hopeful the second half of the current financial year will see better economic activity, the top executive noted in a letter to shareholders. With business hit due to the pandemic, Naik also saw remuneration hit by 24 per cent.
At its AGM on August 13, however, the company will also discuss and approve a fundraising resolution for up to Rs 4,500 crore through various sources including by way of Qualified Institutions Placement (QIP) to Qualified Institutional Buyers.
On the pandemic impact, Naik said, “The Covid-19 pandemic and its fallout makes it difficult to forecast the future with any degree of certainty.” However, he added it was premature to predict any business outcomes.
“While we are hopeful that the second half of 2020-21 will herald better economic and business activity in terms of tendering, good liquidity and revival of labour and supply chains, it would be premature to predict the company’s business outcomes,” he said in his letter, released as part of L&T’s FY20 annual report.
Naik added the company, at present, sees opportunities in the areas of government buildings, data centres, healthcare infra, airports, metro railways, water projects including wastewater treatment and irrigation, hydel projects, expressways as well as onshore and offshore hydrocarbon projects. “We are uncertain, however, of the timelines when these projects will take off,” he added.
The report pegged the Covid-19 impact on L&T’s revenues at Rs 1,800 crore and on net profit at Rs 400 crore. The company’s board of directors, as a result, have also taken a pay cut, in some cases up to 53 per cent.
For the year FY20, Naik took a remuneration cut of 24.19 per cent, while SN Subrahmanyam, managing director and chief executive officer (CEO) for the company saw a pay cut of 43.91 per cent and R Shankar Raman, chief financial officer for L&T saw remuneration decrease by 47.33 per cent.
The annual report said reduction in managerial remuneration is mainly due to cost reduction measures voluntarily adopted by executive directors in the current pandemic scenario and reduced perquisite value. The report pegged average percentage increase seen for salaries of employees other than the managerial personnel at 4.70 per cent for FY20. Managerial remuneration, the report said, saw a decline of 42.21 per cent.
In his letter, Naik also noted tensions at the India-China border and the need for self-reliance. “Simmering tensions along our northern border have precipitated an anti-China sentiment within the country. The world too is witnessing a growing groundswell of opinion against China, and seeking viable alternative sources of supply,” he said.
At its AGM on August 13, the company will also discuss and approve a fundraising resolution for upto Rs 4,500 crore from various means including by way of Qualified Institutions Placement (QIP) to Qualified Institutional Buyers.