2009

L & T- Business Marketing Project

Submitted by: Group 1

Kapil Raina 08PG 231
Nandita Sinha Roy 08PG 099
Narendra Sharma 08PG100
Saravanan V R 08 PG 123
Vipul Kotadia 08 PG284
Nischinth Bhardwaj 08 PG037
11/10/2009
Introduction

Larsen & Toubro Limited (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. Seven decades of a strong, customer-focused approach and the continuous
quest for world-class quality have enabled it to attain and sustain leadership in all its major
lines of business. L&T has an international presence, with a global spread of offices. A thrust
on international business has seen overseas earnings grow significantly. It continues to grow
its overseas manufacturing footprint, with facilities in China and the Gulf region. The
company's businesses are supported by a wide marketing and distribution network, and have
established a reputation for strong customer support. L&T believes that progress must be
achieved in harmony with the environment. A commitment to community welfare and
environmental protection are an integral part of the corporate vision.

The evolution of L&T into the country's largest engineering and construction
organization is among the most remarkable success stories in Indian industry. L&T was
founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and
Soren Kristian Toubro. Both of them were strongly committed to developing India's
engineering capabilities to meet the demands of industry. Beginning with the import of
machinery from Europe, L&T rapidly took on engineering and construction assignments of
increasing sophistication. Today, the company sets global engineering benchmarks in terms
of scale and complexity.

In 1938, the two friends decided to forgo the comforts of working in Europe, and
started their own operation in India. All they had was a dream and the courage to dare. Their
first office in Mumbai (Bombay) was so small that only one of the partners could use the
office at a time! In the early years, they represented Danish manufacturers of dairy equipment
for a modest retainer. But with the start of the Second World War in 1939, imports were
restricted, compelling them to start a small work-shop to undertake jobs and provide service
facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This
crisis forced the partners to stand on their own feet and innovate. They started manufacturing
dairy equipment indigenously. These products proved to be a success, and L&T came to be
recognised as a reliable fabricator with high standards. The war-time need to repair and refit
ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to

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handle these operations. L&T also started two repair and fabrication shops - the Company
had begun to expand. Again, the sudden internment of German engineers (because of the
War) who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field
of installation - an area where their capability became well respected.

In 1944, ECC was incorporated. Around then, L&T decided to build a portfolio of
foreign collaborations. By 1945, the Company represented British manufacturers of
equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass.
By 1964, L&T had widened its capabilities to include some of the best technologies in the
world. In the decade that followed, the company grew rapidly, and by 1973 had become one
of the Top-25 Indian companies. Today, L&T is one of India's biggest and best known
industrial organisations with a reputation for technological excellence, high quality of
products and services, and strong customer orientation. It is also taking steps to grow its
international presence.

The L&T vision reflects the collective goal of the company. It was drafted through a
large scale interactive process which engaged employees at every level, worldwide. L&T has
a global presence. A thrust on international business over the years has seen overseas
revenues growing steadily. The company has manufacturing facilities in India, China, Oman
and Saudi Arabia. It has a global supply network with offices in 10 locations worldwide,
including Houston, London, Milan, Shanghai, and Seoul. Customers include global majors in
over 30 countries.

Achievements of L&T

 Built India's first indigenous hydrocracker reactor.

 Built the world's largest continuous catalyst regeneration reactor.
 Built the world's biggest fluid catalytic cracking regenerator.
 Built the world's longest product splitter.
 Built Asia's highest viaduct - Panvalnadi for the Konkan Railway.
 Built the world's longest LPG pipeline.
 Built the world‟s longest cross country conveyor.

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Products and Service Divisions

Engineering & Construction

In engineering and construction, L&T's technology capabilities include a strategic mix

of in-house strengths and the expertise of its joint venture partners. Engineering Centres at
Mumbai, Vadodara and Delhi carry out process design and simulation, analysis of
computational fluid dynamics, mechanical design, failure analysis and trouble shooting. L&T
has set up an engineering and project management centre in Abu Dhabi, to undertake oil and
gas related projects as well as engineering and consultancy services. An engineering centre in
Sharjah is an extended arm in the Gulf.

This is supplemented through collaborations with key partners: L&T-Valdel for

engineering services in the upstream hydrocarbon sector, L&T-Chiyoda for the mid and
downstream sectors, and L&T Sargent & Lundy for the power sector. The engineering
services provided by L&T's Engineering Design Research Centres at Chennai and Kolkata
include feasibility studies, project reports, system engineering, architectural, structural and
civil design for infrastructure development projects. L&T-Ramboll Consulting Engineers
provides civil engineering and consultancy services for a wide range of projects in the
transportation sector - ports, airports, highways and bridges.

Manufacturing

L&T's design & engineering capabilities in manufacturing enable it to set new

benchmarks in terms of scale, sophistication and speed. The Company has dedicated
engineering centres at the manufacturing locations. Two 'Technology Development Centres'
have been set up to develop new products and manufacturing technologies. L&T also
collaborates with the organisations like ISRO to bolster its capabilities in the strategic sectors
of aerospace, defence and nuclear power. L&T's Electrical & Electronics Division, is a
pioneer in the design of switchgear and switchboards that are engineered for tropical
conditions. It has built further on this experience, and has leveraged its R&D strengths to
develop a host of new products and features. In 2008-09, the division filed applications for
over 100 patents, improving its previous year‟s score of 101 patents. Cumulatively, L&T's
Electrical & Electronics Division has applied for and secured 409 patents - a landmark for an
Indian company. Patent applications cover innovations made on a variety of low voltage

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indigenously developed switchgear products like the air circuit breakers (ACBs) and moulded
case circuit breakers (MCCBs), medical products, petroleum dispensing pumps, tooling
solutions and switchboards.

Technology Services

L&T provides its global clients with the winning edge through the development of optimal
solutions. L&T's e-engineering services leverage the Company's own engineering heritage
and experience. The Embedded Systems unit provides technological assistance across a broad
spectrum - design, maintenance, re-engineering, testing, prototyping and industrial design. In
every sphere of L&T's operations, technology is the key enabler, reinforcing its leadership
position, and sustaining its competitive strengths. While for some, technology is a means to
an end, for L&T, technology represents endless possibilities.

Business Groups
Engineering & Construction - Projects: L&T has an enviable track record of successful
implementation of turnkey projects in major core and infrastructure sectors. L&T's core
competencies in engineering include highly qualified and experienced personnel from various
disciplines, state-of-the-art 2-D and 3-D CAD facilities with sophisticated plant design
systems and basic engineering capabilities. L&T is the only Indian EPC company pre-
qualified for executing large, process-intensive projects for oil & gas, refinery, petrochemical
and fertiliser sectors.

Heavy Engineering: L&T has been among Indian corporate sector in introducing new
processes, products and materials in manufacturing. It is acknowledged as one of the top five
fabrication companies in the world and has globally-benchmarked workshops are located in
Mumbai, Hazira, Baroda and Kansbahal.

Construction: ECC, the Engineering Construction & Contracts Division of L&T, is India's
largest construction organization. It is credited with building some of India's famous
landmarks such as exquisite buildings, tallest structures, largest industrial projects, longest
flyovers, highest viaducts, longest pipelines etc.

Electrical & Electronics: L&T is a major international manufacturer of a wide range of

electrical and electronic products and systems. In the electrical segment, L&T is India's

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largest manufacturer of low tension switchgear. In the electronic segment, L&T offers a wide
range of meters and provides complete control and automation systems for diverse industries.

Information Technology: L&T InfoTech Limited, a 100 per cent subsidiary of L&T,
caters to leading international companies across the globe and offers comprehensive, end to
end software solutions and services with a focus on Manufacturing, BFSI and
Communications & Embedded Systems.

Machinery & Industrial Products: L&T manufactures markets and provides service
support for critical construction and mining machinery such as surface miners, hydraulic
excavators, aggregate crushers, loader backhoes and vibratory compactors.

Key Products of L&T:

Turnkey projects

1. Hydrocarbon
2. Power
3. Cement and allied machineries
4. Water
5. Engineering services
6. Railway projects

Construction

1. Construction services
2. Building products
3. Infrastructure concessions
4. Engineering services
5. International products

Engineered products and systems

1. Refinery
2. Oil and gas
3. Petrochemicals
4. Fertiliser
5. Coal gasification

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 6. Aerospace
7. Thermal power plant
8. Nuclear power plant
9. Defence
10. Cement

Electrical and electronic product and systems

1. Switchgears
2. Electrical solutions
3. Metering systems and relays
4. Medical equipment
5. Control and automation
6. Petroleum dispensers and systems
7. Tooling solutions

IT and engineering services

1. IT services
2. Engineering services
3. Embedded systems

Machinery valves and industry consumables

Financial services

1. Infrastructure finance
2. Equipment finance

Shipbuilding

Distribution Channel of L&T InfoTech

In spite with increased competition from alternate distribution channels, the company
believes independent agents continue to represent a major chunk of carriers' business. Hence
it is imperative for carriers to focus on enriching their relationship with Agents. The suite of
services enables insurance companies to achieve a 'Carrier of choice' status amongst agents.

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Agency Relationship Management Solution, Agency Point includes:

 Agency Portal
 Mobile Based Agency Management Solution
 Agency - Carrier Interface Solution

These services enable insurance carriers to retain its top agents, while developing an
attractive proposition to attract new agents.

Agency Portal - Enabling Ease of Doing Business

Agency Portal is a state-of-the-art, web-based solution that enables ease-of-doing-

business across the Agency-Carrier relationship touch-points. It provides a single, consistent
interface with self service abilities for Agents to execute key business transactions efficiently
that leads to improved Agency retention, growth in direct written premium, customer service
and brand recall besides reducing operational costs. Built using ACORD standards, Agency
Portal has ready to use pre-built components which can accelerate development of this
collaboration platform for your agencies.

Agency Portal converses seamlessly with the Agency management systems and core
Carrier systems such as policy administration and claims. Agency Portal facilitates self
service for customer and policy information reducing dependency on Carrier personnel. It has
an extensive library of online forms, manuals and informative marketing resources. Agency
Portal provides functionality including performance dashboard covering KPIs, upcoming
renewal alerts, personalized training, satisfaction survey and task management.

Agency Agency On- Lead Customer

Appointment Boarding Generation Acquisition

Performance Commision Customer

Management Management Servicing

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Mobile Based Agency Management Solution

L&T InfoTech‟s solution accelerator is a state-of-the-art mobile solution to be used by

Agency interfacing personnel of an insurance company, such as Agency Relationship
managers, Territory managers and Sales managers. The solution presents a variety of vital
analytical Agency information fetched from the Carrier's core systems. The solution can be
deployed on any handheld device (PDA, BlackBerry), having Windows Mobile or Windows
Pocket PC operating system. This .NET based application, uses web service for real time
communication with the remote office server which is done via GPRS.

Following are the information segments of the Mobile based Agency Management Solution

 Agency Demographics
 New Agency Prospecting
 Agency Business Plan
 Policy and Claims Tracking
 Agency Business KPI
 Agency Relationship
 Lead Generation

Agency - Carrier Interface Solution (ACORD compliant Document and Business

Message exchange facilitator between Agency and Carrier systems )

This solution accelerator for Agency-Carrier interface is compliant with ACORD

messaging standard, which allows the Carrier and Agencies to exchange documents and data
electronically between their systems. It also gives Carriers an easy, effective way to
download information to Agents and in turn lets Agents easily upload data to Carriers. The
solution accelerator enables straight through processing which helps Carriers as well as
Agents overcome delays in writing business and hence results in a better business ecosystem.

ECC Supply Chain

Plant & Machinery

ECC‟s Plant & Machinery Business Unit, which is part of Resources Support &
Supply Chain Management function, has India‟s largest fleet of Construction Equipment
worth around Rs.830 Crore and numbering more than 12,000 pieces of equipment. The fleet

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comprises of a wide range of sophisticated and specialized equipment for achieving speed,
quality and cost-effective construction. The asset base includes Heavy Duty Cranes, Heavy
Earthmovers, Asphalt, Batching & Crushing Plants, Asphalt & Concrete Pavers, Vibratory
Compactors, Concrete Pumps, Boom Placers, Drilling Jumbos, Rock bolting / Shotcreting
machines, On / Offshore Hydraulic Drilling Rigs, Core Drilling Machines, Winders,
Compressors, D.G. Sets and Mobile Crushing units. P&M Business Unit offers „Total
Equipment Management Services‟ which include identification, evaluation, selection,
mobilization, commissioning, operation & maintenance of plant and machinery at sites in
India and abroad.

It focuses on optimum and effective utilization of equipment, high equipment

availability, technical support and offers alternative solutions to control operating &
maintenance costs through data driven practices and Quality policies for ensuring customer
(operating Business Unit) satisfaction. In recognition of its performance, this Business Unit
has been accredited with ISO9001 certification by BVQI. ECC‟s resources in terms of
Equipment, People and Facilities enable it to undertake construction of complex structures of
large magnitude with quality and within stringent time schedule. The equipment management
activities at jobsites like mobilization, commissioning, operation, periodic maintenance and
repairs are undertaken through well defined operating procedures. These activities are
handled by P&M in-charges located at sites duly supported in terms of men, material and
technical advice by Regional Plant Managers (RPLMs) located in the seven regional offices
and senior executives at HQ. ECC has repair workshops at strategic locations to carry out
major repairs and overhauls to the equipment. Technical Training Centers at Mumbai and
Chennai impart high level of training to our staff for honing and enhancing their skills. Apart
from this, periodical „On-the-job‟ training programmes are conducted at various project sites
by both internal and external (OEM representatives) faculties.

Materials Management

Materials Management, the most important link in Supply Chain Management,

supports the global operations of ECC by catering to the needs of all the offices, factories and
projects spread across all parts of India and abroad by constantly enhancing value creation.
The Materials Management function includes procurement from indigenous and overseas
sources, logistics management, inventory management at regional stores, disposal of obsolete
/ unserviceable items etc. The overall operations of Materials Management function are
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monitored from ECC‟s Headquarters in Chennai. The Department has received ISO
9001:2000 certification through BVQI. Materials Department at HQ handles all issues
connected with imports, exports, procurement of capital items and procurement for all
projects and factories. It also handles high value purchases, Rate Contracts, system
development & implementation and lays down procurement policies and systems to ensure
compliance. The Department also identifies alternative sources of supply and assists the
Business Units in pre-tender tie-ups. It takes care of the Training and Developmental needs of
its entire staff. Materials Department in the Regions takes care of material requirement of all
the projects in their respective geographical areas including finalisation of Rate Contracts,
management of logistics, Regional stores and disposal of scrap / obsolete items. To manage
the growing business volume and to support the Division‟s aspiration to become global,
procurement offices have been established in China and UAE, with a clear focus to identify
low cost sources for procurement and support the operations in optimising the costs. A
separate Cell located in HQ caters to the ever-growing requirements of imports and exports.
Export formalities and clearance of import consignments are also done through Regional
Materials Departments located in Mumbai and Kolkata. Imports/Exports Cell in Materials
Department at HQ oversees the activities of these Regional set-ups. HQ, all the Regional
offices and sites are linked with a state-of-the-art EIP system, developed in-house. The entire
Materials management functions right from indents for materials required till disposals,
including e-auctions, executive reports etc. are organised through EIP.

Resources Support

Resources Support Department fulfils the resource requirement of manpower and

Plant & Machinery for various projects in India and abroad. It helps in identifying and
mobilizing the right resources for the right job to facilitate timely completion of the projects.
It also acts as a resource center to support project sites with data on subcontractors available
for various types of works. The resource identification, allocation and distribution is taken
care at two levels, i.e. at the HQ for the inter-regional requirements and in Regional Offices
for intra-regional requirements. The Department is a “focal point” that helps the Operational
Units to optimize productivity by maintaining a balance between the availability, requirement
and utilization of resources (Staff and Plant & Machinery). It also facilitates the process of
decision making to maintain the in-house asset base at an acceptable level and monitors
hiring of equipment from external agencies. This department plays a vital role in effective

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distribution and deployment of resources in co-ordination with all Sectors/ BUs, Service
Units & Regions.

Subcontract Management

Subcontracting is one of the major inputs in the execution of projects. The main areas
of focus are streamlining / standardizing of systems and procedures, contractor registration,
data bank on the track record and rating of subcontractors based on their performance through
a suitable on-line system. Importance is given for imparting training to subcontract labour to
suit ECC‟s requirements. On-line management of data on subcontractors across the company
is an important function of this department. This includes regular coordination and
monitoring of Subcontractors‟ registration, reporting of their performance at periodical
intervals, identification of skilled personnel available with subcontractors and data on
operating rates for major items of work across the division.

Quarry & Crushing

Fully mechanised stone and metal quarries and crushing plants throughout India
strengthen ECC‟s resource base. They are operated on environment-friendly lines. Project
efficiency is sustained through a dependable channel for high-quality aggregates. ECC‟s
specialised Quarry and Crushing Department was set up to meet this need. The department
has extended its services to include: Controlled drilling and blasting for heavy civil
foundations/ excavations, controlled blasting close to existing structures and pipelines,
demolition of old bridges/culverts by blasting, tunnelling, large scale mechanised rock
excavation and producing graded stones for breakwater/marine work. ECC operates 24 stone
metal quarries, and crushing plants in different parts of the country, which are fully
mechanised and run on modern lines. Two state-of-the-art mobile crushing plants add to its
strength. These handle over one million tons of aggregates every year, providing efficient
support to all construction operations.

Pricing policy
L&T showcases aggressive pricing strategy to penetrate the space in all its segments
especially the energy segment. This strategy may be essential for L&T to not only outbid its
key competitors like BHEL but more importantly to compete against overseas players such as
the Chinese and Koreans, known for their low pricing strategies. However, as L&T is yet to

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fully put up a plant for power equipment, components for the current set of orders it receives
may have to be sourced from the Japanese partner. This could mean that the joint venture
may incur relatively higher costs until L&T‟s domestic plant starts manufacture.

With an aggressive pricing strategy and high costs, the profit margins in this segment
may be muted for now. Given the long gestation periods for power projects, revenues from
the business are also not likely to show up significantly before FY 2011. At a time when a
number of power projects are fraught with delays in execution, the key challenge for L&T
would be to deliver this order on time as it may serve as a reference point for bagging future
orders.

Core Competencies of L&T

The key core competencies of L&T are as follows

1. The research and design facility available in Chennai is a state-of-the-art centre

through which the company designs the various innovative and efficient steps for the
engineering and construction division.
2. With the largest fleet of earth moving equipments and human resource, L&T can be
time efficient in its projects.
3. The seamless integration of all the systems online helps the company to manage the
supply chain more effectively.
4. After localising the production for energy equipments the company can take a major
leap in the market through its low pricing.

Growth Strategies

In a challenging market environment, an environment characterised by prolonged downturn

in the domestic industrial sector and a recession in the global market, an engineering
company like L&T had to follow some crucial strategies for growth. General practices would
be to reduce costs, go into hibernation and wait till the climate becomes more conducive.
Move in aggressively thereafter. There is certainly no single sure-fire recipe guaranteeing
both survival and growth in a challenging market. According to Mr P.M. Mehta, Senior Vice-
President (Operations), L&T is concentrating on hi-tech areas, vacating non-remunerative

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product lines and focusing on the exports market. The company is currently following a
multi-pronged strategy for beating recession without compromising growth.
Three years ago the company had visualised opportunities shrinking in the traditional sectors,
process plants, power and refineries. It was then that the management really took a decision
to move into the hi-tech sector.

The company, which had a small presence in the defence sector earlier, started
moving in aggressively after the sector was opened up to the private sector. L&T developed
technology for manufacturing critical equipment for process, nuclear and defence sectors. It
is currently looking at entering into joint collaboration with defence companies in various
parts of the world. It is also in talks with leading aircraft manufacturers in India and abroad
for supplying components. Defence orders are generally spread across four to six years. A
submarine, for instance, would take 12 years for completion. The defence division could
contribute Rs 1,500 to 2,000 crore five years down the line which would be almost five times
the current contribution. Recently the company signed a joint venture with EADS Defence
and Security, for defence electronics in India. The €5.7 billion (Rs37, 791 crore) EADS
Defence and Security is a systems solutions provider for armed forces and civil security.

Future Plans

A blueprint for the next phase of growth till 2015, named Vision 2015, at Larsen and
Toubro Ltd is being drafted and will be ready by March 2010. The company is planning to
focus on segments traditionally dominated by foreign defence equipment makers and state-
owned companies. Since 2000, L&T has charted two five-year plans to reposition the
company which was heavily into engineering, procurement and construction segments with a
large exposure to commodity businesses, such as cement and ready-mix concrete, to a more
focused value-added engineering company.

The first plan was devised by Boston Consulting Group, a leading global management
consulting firm. It saw L&T divesting its cement business in favour of the Aditya Birla
Group. This was done through a unique arrangement with L&T employees getting shares of
their own company following the divestment. More recently, L&T divested its ready-mix
concrete business in favour of Lafarge SA. The two five-year plans paid huge dividends to

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the shareholders of the company including its employees who hold a 12.7% stake in it
through a trust. The market capitalization of L&T was Rs15, 507 crore in January 2000. It
soared to Rs1.31 trillion at the height of the bull rally in January 2008. Recently, L&T shares
rose 2.77% to close at Rs978.75 a piece on the Bombay Stock Exchange, even as sensex, the
exchange‟s benchmark index, dropped 0.03% to close at 12,131.08. At this price, L&T‟s
market value is Rs57, 313 crore.

L&T‟s recent moves such as signing a slew of pacts with nuclear engineering firms
such as Westinghouse of USA, Atomic Energy Commission of Canada and Russia‟s Atoms
troy export for nuclear plants, an entry into nuclear equipment forging, defence shipbuilding
and the latest joint venture make it clear that L&T is focusing more on its core competencies.
Its power business is also taking shape with 11 new factories making various parts of power
equipment. The highly skilled areas of engineering that L&T is entering are currently largely
serviced by imports. The operating margins are currently at 8-9% and the new areas it is
entering could fetch margins of about 11-12%.

The company also hopes that the nuclear program will be in place once the new
government assumes power. By signing pacts with three companies in the nuclear energy
space, L&T has hedged its risks as a nuclear equipment maker. It has put in place a nuclear
equipment forging shop in Hazira in Gujarat at an investment of Rs1, 500 crore. This is in
addition to a defence shipbuilding yard near Chennai at a cost of Rs1, 500 crore. As per plan,
the company will create three operating companies to look after defence, aerospace and
nuclear power sectors for effective operations. The three operating companies could happen
in 2012-13, provided they had the requisite volumes.

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