Amity Business SchoolPERFORMANCE ANALYSIS OF LARSEN&TOUBRO

Presented by: Abhilash Mishra

MBA GENA0101909425

Amity Business School

Objectives

• Primary Objective is to do a performance analysis of Larsen &

Toubro with the help of primary and secondary data analysis

• Secondary Objectives

•To analyze the investor’s confidence in the company.

•To analyze the employee confidence in the performance of the company.

•Determine the consumer confidence in the company’s quality of service

as against the competitors.

To do comparative ratio analysis of top 5 companies in construction sector

including L&T and analyze the results. And to see whether the secondary analysis

results strengthen my primary analysis results.

Amity Business SchoolLARSEN & TOUBRO

India’s Largest Engineering firm

Founded in 1938 by Henning Holck-Larsen & Soren Kristian

Toubro.

Employs over 40,000 people in various states across the

country.

Has presence in various sectors such as

Headquartered in Mumbai.

NSE & BSE listed company

Chairman & Managing Director – Mr. AM Naik

Amity Business SchoolSWOT Analysis

StrengthsStrong Economic growth of countryL&T’s experience in IndiaOrder book of over 100,000 croresBrand name of Larsen & ToubroAn experienced employee baseDiversified business groupStrong financial results

WeaknessSlowdown in middle eastAverage experience employee age nearing retirementHuge attrition rateLow employee satisfactionWeek Global ReachLack of Innovation

OpportunitiesMajor Infrastructure projects coming up (govt.)India’s growth rate above 10%Opportunities from Other south Asian Countries (less dev)Global economic recoveryInvestment in Defense sector

ThreatsInflationary and cost pressuresThreat of a second Global Financial TurmoilVendor issuesGovernment policiesCompetitorsTaxation policies

Amity Business SchoolPerformance – FY’10(Crs)

• Net Sales – 43513 v/s 40187 / 8% up

• Net Profit – 5450 v/s 3789 / 31% up

• Order Book – Over 100,000 crores / 43%

up

• Dividend – 12.50/ share

• Major growth in E&C segment

Amity Business SchoolResearch Methodology

• Data was calculated through question method.

• SAMPLE SIZE: 80

• TYPE OF SAMPLING:• STRATIFIED RANDOM SAMPLING

• STRATA DISTRIBUTION:• STRATA 1 - Investors (20 people)• STRATA 2 - Management (Larsen& Toubro) (20 people)• STRATA 3 - Employees (20 people)• STRATA 4 - Other Stakeholders’ (20 people)

Amity Business SchoolAnalysis of performance

• Management’s Feedback

• Employee’s Feedback

• Investor’s Feedback

• Client’s Feedback

Amity Business SchoolManagement Feedback

• Results are in line with expectations.

• Results have met shareholder’s expectations.

• Somewhat compromised on employee salary to

maintain good profitability.

• Management is Positive & Bullish about the

future growth of the company.

Amity Business SchoolEmployee Feedback

• Employee’s have rated the company’s results as good and

somewhat in line with expectations.

• They have rated management performance as average.

• ESOP scheme was praised as it has yielded good returns

for employees

• Employee’s feel that management is cutting down on

salaries to maintain profitability

Amity Business SchoolInvestor’s perspective

• Company’s year end results are in line with Investor’s

expectation

• Investor’s see a similar growth pattern for L&T in coming

years.

• Investor’s are impressed by management performance

during the year.

• Investor’s have rated L&T a better option to invest when

compared to competitors.

Amity Business SchoolClient’s Feedback

• L&T is running high on customer satisfaction and the

client’s are happy with the quality of service

• When compared to competitors, the quality is as per the

standard.

• L&T ranks well in terms of time deadlines.

• Client’s feel that L&T is quite innovative while performing

projects.

Amity Business SchoolProfit – Last 5 years

Profit After Tax for last 5 yeats

0

1000

2000

3000

4000

5000

6000

2006' 2007' 2008' 2009' 2010'

Years

Rs (c

rore

s)

Series1

Amity Business SchoolNet Sales – Last 5 years

Net Sales for the past 5 years

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2006' 2007' 2008' 2009' 2010'

Years

Rs (

Cror

es)

Series1

Amity Business SchoolData Collection Methods

• Financial Websites – Bloomberg/Factiva

• Questionnaires

• Personal Interaction

• Annual Financial report – 2009 – 10

• Analyst’s views on – Moneycontrol.com/ rediff.com

• All five companies website.

Amity Business SchoolRecommendations

• Needs to work on Employee Satisfaction.

• Attrition rate is huge – Some mechanism is required

• Needs to work further on Client Satisfaction.

• Try to build an international image.

• Salary structure needs a revision .

• Subsidiaries require more attention – Infotech & L&T Finance.

• Plan for future as top management is nearing retiring age.

Amity Business School