`setenv LM_DIR /opt/corp/projects/board_simulation/tools/hw_model-3.4/
+sms/lm_dir`;
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This won't work. By using the back-ticks (or any system-ish command), you are spawning a sub-process and telling it to execute that command. Environment changes only persist at or below the level of the process making them, so after each of these statements, the environment change is lost.

See How can I change the environment from within my Perl script? in the Q&A section. Modify the contents of %ENV instead to set up your environment, and then execute your programs that rely on that environment.