larsen and toubro

Larsen & Toubro Limited

Project Report

On

Larsen and Toubro

Submitted To: Submitted By:

Dr. Arvind Mohan Rajnee Dhami

(Faculty of Management) Rajat Arora

Ravit Chaudhary

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http://en.wikipedia.org/wiki/File:L&T-logo.svg


ACKNOWLEDGMENT

We are highly thankful to the management faculty Mr. Arvind Mohan for giving us opportunity to do this project work on financial statement assessment for “Larsen and Toubro” and for proving timely guidance to complete this project. In addition, we enjoyed to work in the group.

We expect to get such support and guidance from Mr. Arvind Mohan.

Signature

Name:

Date:

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INDEX

TOPICS PAGE. NO

1. COMPANY PROFILE 04

2. INDUSTRY PROFILE 05

3. FINANCIAL STATEMENT 09

4. INTERPRETATIONOF THE FINANCIAL 20 STATEMENT

5. FINDING 21

6. CONCLUSION 22

7. REFERENCES 23

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COMPANY PROFILE

INDUSTRY PROFILE

Operating Divisions

Engineering and Construction Projects

L&T’s engineering and construction track record consists of implementation of turnkey projects in major core and infrastructure sectors of the Indian industry.]L&T has formed a joint venture with SapuraCrest Petroleum Berhad, Malaysia for providing services to offshore construction

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Date of Establishment 1946

Revenue 9933.88 ( USD in Millions )

Market Cap 785064.76857305 (Rs. in Millions)

Corporate Address L & T House,Ballard Estate,Mumbai-400001, Maharashtrawww.larsentoubro.com

Management Details Chairperson –A.M.Naik MD –A.M.NaikDirectors – A.K.Jain, A.M.Naik, A.K.Jain, AM Naik, Bhagyam Ramani, J P Nayak, J S Bindra, K V Rangaswami, K Vekataramanan, K Venkataramanan, M M Chitale, M V Kotwal, MM Chitale, N Hariharan, N Mohan Raj, R N Mukhija, R Shankar Raman, Ravi Uppal, S N Subrahmanyan, S N Talwar, S Rajgopal, Subodh Bhargava, Thomas Mathew T, V K Magapu, Y M Deosthalee

Business Operation Engineering – Construction

Background Larsen & Toubro (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector.

Larsen & Toubro Limited is the biggest legacy of two Danish Engineers, who built a world-class organization that is professionally managed and a leader in India's engineering and construction industry. It was the business.

Financials Total Income - Rs. 454455.4 Million ( year ending Mar 2011) Net Profit - Rs. 38870.5 Million ( year ending Mar 2011)


industry worldwide. The joint venture will own and operate the LTS 3000, a Heavy Lift cum Pipelay Vessel. L&T has more than 38000 employees in India

L&T Power

L&T has set up an organization focused on opportunities in coal-based, gas-based and nuclear power projects. This business provides turnkey solutions for setting up utility power plants as well as co-generation and captive power plants on an EPC basis. It also provides power plant engineering services through L&T Sargent & Lundy, a joint venture of L&T and Sargent & Lundy, USA. L&T has formed two joint ventures with Mitsubishi Heavy Industries, Japan to manufacture super critical boilers and steam turbine generators. In 2008-09, significant progress was made in setting up manufacturing facilities for super critical boilers and turbines at Hazira, on India's west coast. L&T has also signed a technical collaboration with Clyde Bergemann for electrostatic precipitators, a crucial BOP item in coal based thermal power plants.

Heavy engineering

L&T is claimed to be among the top five fabrication companies in the world. The Heavy engineering division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defence sector. It is the preferred supplier of equipment for a select range of products, globally.

L&T has a shipyard capable of constructing vessels of up to 150 metres long and displacement of 20000 tonnes at its heavy engineering complex at Hazira. The shipyard is geared up to take up construction of niche vessels such as specialized Heavy lift Cargo Vessels, CNG carriers, Chemical tankers, defense & para military vessels and other role specific vessels.

Construction

ECC – Engineering, Construction & Contracts Division of L&T – is the major contributor of L&T's share market. Currently, it is also listed as India’s largest construction organization.L&T covers varied disciplines of construction – civil, mechanical, electrical and instrumentation.

The design wing of L&T ECC is called EDRC (Engineering Design and Research Centre). EDRC provides consultancy, design and total engineering solutions to customers. It carries out basic and detailed design for both residential and commercial projects.

Electrical and electronics

L&T is an international manufacturer of a wide range of electrical and electronic products and systems. L&T also manufactures custom-engineered switchboards for industrial sectors like

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power, refineries, petrochemicals and cement. In the electronic segment, L&T offers a range of meters and provides control and automation systems for industries. Medical Equipment and Systems manufactured by L&T include Patient Monitoring Systems, ESU, Syringe Pumps, Defibrillators, Ventilators, Anesthesia machines, Telemedicine Equipment

Information technology

L&T Infotech focuses on information technology and software services. Its clients include industry leaders like Marsh & McLennan, Standard Life, Travelers, Chevron, Freescale, Hitachi, Ingram Micro, Infineon, Sanyo, Lafarge, ABSA], P&G, Johnson and Johnson, CitiGroup, Barclays, eCORPUS, Marathon, Texas Instruments, Qualcomm, LG and Samsung among others.It offers services and solutions for the following industries: banking and financial services, insurance, energy and petrochemicals, manufacturing.

L&T Machinery & Industrial Products

L&T manufactures, markets and provides service support for critical construction and mining machinery – surface miners, hydraulic excavators, aggregate crushers, loader backhoes and vibratory compactors; supplies a wide range of rubber processing machinery and injection moulding machines; and manufactures and markets industrial valves and allied products and a range of sophisticated application-engineered welding alloys.

This division provides solutions to:

1. Construction & Mining Equipment2. Material Handling3. Crushing Systems & Equipment4. Hydraulic Equipment5. Valves6. Rubber Processing Machinery7. Plastics Processing Machinery8. Paper Machinery

SUBSIDARIES & JOINT VENTURES

L&T - Komatsu Limited

Having its registered office at Mumbai, India and focusing on construction equipment and mining equipment, L&T-Komatsu Limited[25] is a joint venture of Larsen and Toubro, India’s leading engineering, construction and technology major and Komatsu Asia Pacific Pte Limited,

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Singapore, a wholly owned subsidiary of Komatsu Limited, Japan. Komatsu is the world’s second largest manufacturer of hydraulic excavators and has manufacturing and marketing facilities worldwide.

The plant was started in the year 1975 by L&T to manufacture Hydraulic Excavators for the first time in India. In 1998, it became a joint venture. L&T-Komatsu Limited’s manufacturing facility – The Bangalore Works – comprises Machinery Works and Hydraulics Works. Machinery Works has a modern manufacturing facility with ISO 9001:2008 accreditation for design, manufacture and servicing of earthmoving equipment. Hydraulics Works, with a precision machine shop, manufactures the complete range of high pressure hydraulic components and systems, and is ISO 9001:2000 certified for design, development, manufacturing and servicing of hydraulic pumps, motors, cylinders, turning joints, hose assemblies, valve blocks, hydraulic systems and power drives as well as allied gear boxes.

L&T Finance

Larsen & Toubro financial services Financial Services is a subsidiary which was incorporated as a Non Banking Finance company in November 1994. The subsidiary has a spectrum of financial products and services for corporate, construction equipments etc. L&T Finance was able to withstand the market dynamics and adapt as per that. This is a new division after the company declared its restructuring. L & T Mutual Fund is the mutual fund company of the L & T group. This company provides Mutual Fund schemes for investors in India.

Larsen & Toubro Infrastructure Finance

Larsen and Toubro Infrastructure Finance Company Limited was set up as a 100% subsidiary of L&T. It commenced its business in January 2007 upon obtaining Non-Banking Financial Company (NBFC) license from the Reserve Bank of India (RBI). As of 31 March 2008, L&T Infrastructure Finance has approved financing of more than a billion USD to select projects in the infrastructure sector. L&T Infrastructure Finance has received the status of "Infrastructure Finance Company" from the Reserve Bank of India within the overall classification of "Non-Banking Financial Company".

L&T – Integrated Engineering Services (IES)

L&T Integrated Engineering Services (L&T IES), a business unit of L&T, offers a combination of mechanical, electrical and electronic design (mechatronics/embedded systems), civil and architectural services. L&T IES has its design and delivery locations in Vadodara, Chennai, Bangalore, Mysore and Mumbai in India.

L&T IES services also encompass architectural, civil, structural design and building utility systems design. Practices include both product and plant engineering services in the automotive, trucks and off-highway vehicles, industrial products, off-shore and marine, oil and gas and

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consumer goods sectors. Emerging areas include aerospace, railways and power and consumer electronics.

L&T Valves

L&T’s Valves Business Group markets valves manufactured by L&T's Valve Manufacturing Unit and L&T's joint ventures, Audco India Limited, India and Larsen & Toubro (Jiangsu) Valve Company Limited, China, as well as allied products from major international manufacturers.

L&T Institute of Technology

L&T Institute of Technology (LTIT) is a diploma polytechnic college in India. It is located in Powai, a suburb of Mumbai. It is run & managed by Larsen & Toubro, Affiliated to MSBTE and Approved by AICTE and offer courses leading to undergraduate (Bachelor) degrees in Engineering.

The Institute has its own building with over 5000 sq. mts. built up area. It accommodates a complete mechanical workshop, drawing hall, audio-visual room, library, administrative wing, laboratories, classrooms and also a playground...

FINANCIAL STATEMENT OF THE COMPANY

Balance sheet Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Sources of funds

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Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Owner's fund

Equity share capital 121.77 120.44 117.14 58.47 56.65

Share application money 368.31 25.09 - - -

Preference share capital - - - - -

Reserves & surplus 21,334.05 18,142.82 12,317.96 9,470.71 5,683.85

Loan funds

Secured loans 1,063.04 955.73 1,102.38 308.53 245.40

Unsecured loans 6,098.07 5,845.10 5,453.65 3,275.46 1,832.35

Total 28,985.24 25,089.18 18,991.13 13,113.17 7,818.25

Uses of funds

Fixed assets

Gross block 8,897.02 7,235.78 5,575.00 4,188.91 2,876.30

Less : revaluation reserve 22.13 23.29 24.59 25.90 27.93

Less : accumulated depreciation 2,220.82 1,727.68 1,421.39 1,242.47 1,122.83

Net block 6,654.07 5,484.81 4,129.02 2,920.54 1,725.54

Capital work-in-progress 785.00 857.66 1,040.99 699.00 471.22

Investments 14,684.82 13,705.35 8,263.72 6,922.26 3,104.44

Net current assets

Current assets, loans & advances 35,234.34 26,673.49 23,834.71 16,496.48 12,049.35

Less : current liabilities & provisions 28,372.99 21,632.13 18,277.57 13,928.17 9,542.14

Total net current assets 6,861.35 5,041.36 5,557.14 2,568.31 2,507.21

Miscellaneous expenses not written - - 0.26 3.06 9.84

Total 28,985.24 25,089.18 18,991.13 13,113.17 7,818.25

Notes:

Book value of unquoted investments 13,230.80 11,771.54 7,793.04 6,642.82 2,917.11

Market value of quoted investments 1,422.26 2,033.61 1,258.81 1,403.92 1,289.46

Contingent liabilities 1,647.66 1,719.39 1,371.86 1,013.51 270.22

Number of equity sharesoutstanding (Lacs) 6088.52 6021.95 5856.88 2923.27 2832.71

Profit loss account

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Income

Operating income 43,656.71 36,870.19 33,856.54 24,946.11 17,645.29

Expenses

Material consumed 11,812.83 10,016.52 9,211.27 7,510.29 5,199.22

Manufacturing expenses 20,241.57 17,247.39 16,115.56 10,998.08 7,759.20

Personnel expenses 2,884.53 2,379.14 1,998.02 1,535.44 1,258.21

Selling expenses 350.43 306.22 312.10 320.12 200.84

Adminstrative expenses 2,526.65 1,873.59 2,102.05 1,354.37 1,197.99

Expenses capitalized -37.87 -36.25 -24.48 -11.42 -3.30

Cost of sales 37,778.14 31,786.61 29,714.52 21,706.88 15,612.16

Operating profit 5,878.57 5,083.58 4,142.02 3,239.23 2,033.13

Other recurring income 1,199.05 974.59 748.80 477.10 458.56

Adjusted PBDIT 7,077.62 6,058.17 4,890.82 3,716.33 2,491.69

Financial expenses 1,199.23 995.37 770.00 501.83 331.46

Depreciation 575.81 383.65 284.83 195.94 160.13

Other write offs 23.41 30.95 21.16 15.66 -

Adjusted PBT 5,279.17 4,648.20 3,814.83 3,002.90 2,000.10

Tax charges 1,858.47 1,577.02 1,176.19 982.05 601.87

Adjusted PAT 3,420.70 3,071.18 2,638.64 2,020.85 1,398.23

Non recurring items 582.23 1,347.08 863.78 139.59 1.24

Other non cash adjustments -49.05 -45.13 -21.09 12.21 -5.34

Reported net profit 3,953.88 4,373.13 3,481.33 2,172.65 1,394.13

Earnigs before appropriation 4,061.17 4,473.63 3,585.64 2,250.89 1,449.83

Equity dividend 882.84 752.75 614.97 495.32 368.25

Preference dividend - - - - -

Dividend tax 112.82 110.25 101.83 76.26 53.34

Retained earnings 3,065.51 3,610.63 2,868.84 1,679.31 1,028.24

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Cash flow Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Profit before tax 5,832.91 5,880.67 3,940.41 3,155.47 2,004.89

Net cashflow-operating activity 3,861.30 5,482.75 1,478.57 1,945.24 2,130.45

Net cash used in investing activity -2,437.98 -6,071.73 -3,308.53 -5,241.89 -1,588.17

Netcash used in fin. Activity -1,124.84 1,245.56 1,640.79 3,166.68 -31.05

Net inc/dec in cash and equivlnt 298.48 656.58 -189.17 -129.97 511.23

Cash and equivalnt begin of year 1,431.87 775.29 964.46 1,094.43 583.20

Cash and equivalnt end of year 1,730.35 1,431.87 775.29 964.46 1,094.43

Ratios Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Per share ratios

Adjusted EPS (Rs) 56.18 51.00 45.05 69.13 49.36

Adjusted cash EPS (Rs) 66.02 57.88 50.28 76.37 55.01

Reported EPS (Rs) 65.01 72.66 59.45 74.35 49.53

Reported cash EPS (Rs) 74.85 79.54 64.67 81.59 55.18

Dividend per share 14.50 12.50 10.50 17.00 13.00

Operating profit per share (Rs) 96.55 84.42 70.72 110.81 71.77

Book value (excl rev res) per share (Rs) 352.40 303.28 212.31 325.87 202.30

Book value (incl rev res) per share (Rs.) 352.76 303.66 212.73 326.76 203.29

Net operating income per share (Rs) 717.03 612.26 578.06 853.36 622.91

Free reserves per share (Rs) 347.12 294.74 205.21 319.09 197.15

Profitability ratios

Operating margin (%) 13.46 13.78 12.23 12.98 11.52

Gross profit margin (%) 12.14 12.74 11.39 12.19 10.61

Net profit margin (%) 8.82 11.56 10.06 8.54 7.74

Adjusted cash margin (%) 8.96 9.21 8.50 8.78 8.60

Adjusted return on net worth (%) 15.94 16.81 21.21 21.21 24.39

Reported return on net worth (%) 18.44 23.95 27.99 22.81 24.48

Return on long term funds (%) 23.23 23.19 25.62 28.73 32.59

Leverage ratios

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Long term debt / Equity 0.29 0.33 0.43 0.27 0.24

Total debt/equity 0.33 0.37 0.52 0.37 0.36

Owners fund as % of total source 74.97 72.86 65.47 72.66 73.42

Fixed assets turnover ratio 5.03 5.20 6.23 6.09 6.21

Liquidity ratios

Current ratio 1.24 1.23 1.30 1.18 1.26

Current ratio (inc. st loans) 1.20 1.19 1.22 1.09 1.16

Quick ratio 1.18 1.15 0.96 0.86 0.93

Inventory turnover ratio 29.73 28.73 6.01 6.00 6.11

Payout ratios

Dividend payout ratio (net profit) 25.15 19.72 20.58 26.29 30.04

Dividend payout ratio (cash profit) 21.84 18.01 18.92 23.96 26.97

Earning retention ratio 70.90 71.91 72.84 71.72 69.85

Cash earnings retention ratio 75.24 75.25 75.66 74.40 72.95

Coverage ratios

Adjusted cash flow time total debt 1.78 1.95 2.23 1.61 1.33

Financial charges coverage ratio 5.90 6.09 6.35 7.41 7.52

Fin. charges cov.ratio (post tax) 4.80 5.81 5.92 5.75 5.72

Component ratios

Material cost component (% earnings) 28.34 26.01 27.51 33.09 30.15

Selling cost Component 0.80 0.83 0.92 1.28 1.13

Exports as percent of total sales 14.58 18.62 21.70 22.67 21.36

Import comp. in raw mat. consumed 36.78 54.43 44.34 39.78 49.28

Long term assets / total Assets 0.38 0.42 0.35 0.38 0.30

Bonus component in equity capital (%) 73.86 74.67 76.77 53.71 55.44

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FINANCIAL ANALYSIS

EARNIG PER SHARE

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7-Mar 8-Mar 9-Mar 10-Mar 11-Mar0

10

20

30

40

50

60

70

80

49.36

69.13

45.0551

56.18

EPS

EPS

Data interpretation:- EPS of a company shows the earning capacity of a company.

The EPS is about 56, which is slightly higher than the average EPS of the firm. So we can assume that company is having greater earning capacity in the future.

OPERATING INCOME

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Data Interpretation:-

The operating income of the year 2008 is reported to be highest. It drops down severely but a rise is noticed in the next year as well as in the year 0f 2011

NET PROFIT

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2

4

6

8

10

12

14

7.748.54

10.05

11.56

8.82

Net Profit

Net Profit


The Net profit has registered a down in the year of 2011 . It is below the average net profit

LONGTERM DEPT AND EQUITY

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0.050.1

0.150.2

0.250.3

0.350.4

0.450.5

0.240.27

0.43

0.330000000000001

0.29

Lond term dept and Equity

Lond term dept and Equity

Data interpretation:-

The long term debt/ equity is showing a decline which is the positive sign for the firm .

FIXED ASSET

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1

2

3

4

5

6

7

6.21 6.09 6.23

5.2 5.03

Fixed Asset

Fixed Asset

Data interpretation:-

The fixed asset of the firm is decreasing continuously which is alarming sign for the firm.

CURRENT RATIO

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7-Mar 8-Mar 9-Mar 10-Mar 11-Mar1.1

1.15

1.2

1.25

1.3

1.35

1.26

1.18

1.3

1.23 1.24

Current Ratio

Current Ratio


The Current ratio is showing a zig zag status which is not good for the firm .

TOTAL EXPORT SALES

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5

10

15

20

25

21.3622.67 21.7

18.62

14.58

Total export sales

Total export sales


The firm export sales have fallen down considerably. This is very alarming for any firm, or for investors.

FINDINGS:-

L & T is diversified company, which operates in national as well as international level.

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Company is going for new ventures in the market so , we can assume that it has greater

scope in future.

Earnings per share of the company Rs 56, which shoes the positive trend.

Operating income of the company is showing positive trend in the 2011,which shows the

positive trend.

Net profit of the company is showing the negative slope, which is risky for the company.

Long term debt and equity of the company is showing the negative slop ,which is good

for the company.

Fixed assets of the company are showing the decline slop which is alarming situation for

the company.

Current ratio of the company is showing the giz-gaz trend which is not suitable for the

company.

Total exports of the company is declining at high rate which is alarming for the company.

CONCLUSION

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From the above information, we can conclude that company is having sound financial position, with reference to debt equity ratio, earning per share, and operating income .

But net profit , net export, fixed assets and current ratio is showing negative trend . L&T need to pay attention towards the cost reduction so that profitability of the company can be maintained , and control the liabilities .

REFERENCE

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The information is obtained from the listed sources

www.moneycontrol.com www.wikipedia.com www.timesofindia.com Financial Management- Khan and Jain

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http://www.wikipedia.com/

http://www.moneycontrol.com/

larsen and toubro

Documents

integrated

positive trend

net profit

operating

infrastructure

hydraulic

current ratio

net worth