L&T Plans Rs 12,000 Crore Debt Fundraising Alongside Key Leadership Changes
Larsen & Toubro (L&T), the engineering and construction conglomerate valued at $27 billion, has announced plans to raise Rs 12,000 crore through various debt instruments to meet its financial requirements. This significant fundraising initiative comes alongside important organizational changes at the top management level.
Comprehensive Debt Fundraising Strategy
The company intends to explore multiple avenues for its debt fundraising, including:
- Non-convertible debentures
- External commercial borrowings
- Term loans
L&T has indicated that specific terms of these debt instruments will be disclosed upon finalization of the arrangements. This approach aligns with the company's historical preference for debt-based fundraising mechanisms.
During the previous fiscal year (FY 2024), L&T had issued non-convertible debentures worth Rs 7,000 crore and commercial papers totaling Rs 46,975 crore. The newly announced fundraising is expected to serve dual purposes of refinancing matured debt and meeting capital expenditure requirements for ongoing and future projects.
Strategic Leadership Changes
In a parallel development, L&T announced that Subramanian Sarma, who currently heads the energy unit, has been promoted to the position of Deputy Managing Director. Sarma, 67, will officially assume his new role on April 2, 2025.
Sarma's career trajectory at L&T has been notable - he joined the company's board directly in 2015, coinciding with S N Subrahmanyan's appointment as Deputy MD at that time. This direct board entry highlighted his strategic importance to the organization.
Leadership Succession Planning
Sarma's elevation is viewed as part of L&T's ongoing initiative to nurture internal talent for leadership positions. Under his guidance, the energy division has grown to become a significant contributor to L&T's overall business performance, accounting for approximately:
- 14% of L&T's revenue
- 25% of the company's order book
In his new capacity, Sarma will maintain direct reporting to S N Subrahmanyan (often referred to as SNS), who currently serves as the Chairman and Managing Director of L&T. Sarma will effectively be second-in-command in the organization's hierarchy.
The company has specified that Sarma's appointment as Deputy MD will be for a three-year term, valid until February 3, 2028, by which time he will turn 70 - aligning with the company's HR policy that stipulates retirement at 70 for executive directors.
Board Composition and Additional Updates
L&T currently has six executives serving on its board. In addition to SNS and Sarma, the executive directors include:
- R Shankar Raman (handles finance)
- S V Desai (oversees civil infrastructure)
- T Madhava Das (utilities)
- Anil Parab (heavy engineering)
The company also announced the reappointment of Desai and Das for five additional years from July 11, 2025, demonstrating stability in its leadership team.
In a separate development, L&T disclosed that it will allot 17,150 equity shares to "those grantees who had exercised their options under the company's employee stock option schemes."
Unique Ownership Structure
A distinctive feature of L&T is its operation without an identifiable promoter. The company's employees, through a trust, own approximately 14% of the organization. This structure contributes to L&T's reputation as a proxy for the investment cycle in India, with its performance often seen as reflective of broader economic trends in the country's infrastructure sector.
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