ECONOMICS PROJECT
SUBMITTED BY:
Animesh Tripathi Roll: 09 Sec: A.
Praveen Kumar Gupta Roll: 75 Sec: B
Rohit Roy Roll: 88 Sec: B
SECTOR: Construction sector.
INDUSTRY: Larsen & Toubro, ECC Construction Division.
CONTENTS:
Introduction
Leading construction companies in India
Top construction companies of the world
Introduction to Larsen & Toubro
Balance sheet of Larsen & Toubro
Profit & Loss account of Larsen & Toubro
Break even analysis
Break even point
INTRODUCTION
CONSTRUCTION INDUSTRY
The industry began as a government-regulated industry, and even after the establishment of
private consultancy firms, the government continued to play a key role in encouraging and
promoting the development of India’s construction industry. Following agriculture, the
construction industry in India is the leading contributor to the country’s GDP, contributing over
10% annually.
As an industry, the growth of the construction sector exceeds that of India’s national projected
GDP growth, creating a myriad of possibilities for development in the near future. The industry
employs approximately 31 million people throughout India, and is segmented into three areas:
real estate construction, which encompasses residential and commercial construction needs;
infrastructure building, which includes the construction of ground transportation lines (roads and
railways), power plants, etc.; and industrial construction, into which category fall projects related
to oil and gas refineries, pipelines, and textiles, among others.
Involvement from foreign investors has helped to cultivate the industry to what it is today, and
the construction industry is only expected to grow. In fact, the industry is estimated to be worth
$120 billion U.S. dollars by the year 2010. The key factors behind this growth are continuing
government investment in infrastructure creation, as well as real estate construction to meet the
demands for residential and commercial real estate.
The Construction industry Development Council, established by the Planning Commission,
Indian government, and the Indian construction industry, seeks to further the professional,
environmental, and technological goals of the Indian construction industry by improving quality
levels and providing the impetus for positive change through self-reform, thereby securing the
future of the construction industry in India.
The Market in construction industry is OLIGOPOLY.
Leading construction companies in India:
Aprotech Engineers
Artson Engineering Ltd
Bhagheeratha Engineering Ltd.
Gammon India Ltd.
Larsen & Toubro Ltd.
Leighton Contractors India Pvt. Ltd.
Mesuka Engineering Co. Pvt. Ltd.
MRK Industries
National Academy of Construction (NAC)
National Higways Authority of India (NHAI)
Nelco
Patel Engineering Ltd.
Schwing Stetter India Pvt. Ltd.
SVEC Constructions Ltd.
The Hindustan Construction Co. Ltd.
TOP CONSTRUCTION COMPANIES OF THE WORLD
VINCI is No.1 Construction Company of FRANCE and the WORLD
BECHTEL is No.1 Construction Company of the U.S.
HOCHTIEF is No.1 Construction Company of GERMANY
CCCC Ltd is No.1 Construction Company of PRC
ACS is No.1 Construction Group of SPAIN
SKANSKA is No.1 Construction Company of SWEDEN
TAISEI is No.1 Construction Company of JAPAN
SAIPEM is No.1 Construction Company of ITALY
STRABAG is No.1 Construction Group of AUSTRIA
BALFOUR BEATTY is No.1 Construction Company in the U.K.
ROYAL BAM GROUP is No.1 Construction Group of NETHERLANDS
LEIGHTON is No.1 Construction Group in AUSTRALIA
AKER SOLUTIONS is No.1 Construction Company in NORWAY
ENKA is No.1 Construction Company of TURKEY
SNC-LAVALIN is No.1 Construction Company of CANADA
HYUNDAI E&C is No.1 Construction Group in S.KOREA
YIT is No.1 Construction Company of FINLAND
ODEBRECHT is No.1 Construction Company of BRAZIL
CCC is No.1 Construction Company of the MIDDLE-EAST
ORASCOM is No.1 Construction Group in EGYPT
MURRAY&ROBERTS is No.1 of S.AFRICA
ELLAKTOR is No.1 Construction Group of GREECE
MTHOJGAARD is No.1 Construction Company of DENMARK
SHIKUN & BINUI ARISON Group is No.1 in ISRAEL
BUDIMEX is No.1 Construction Group in POLAND
LARSEN&TOUBRO is No.1 Construction Group of INDIA
INTRODUCTION TO LARSEN & TOUBRO
Larsen & Toubro
- ECC Construction Division
ECC, the Engineering, Construction and Contracts Division of Larsen & Toubro Ltd, is India's
largest construction organisation. Backed by the capabilities of allied divisions, ECC offers EPC
solutions with single-source responsibility for executing large industrial and infrastructure
projects from concept to commissioning. ECC can execute large projects on a turnkey basis
involving innovative design and comprehensive construction services, including procurement,
supply, installation, testing and commissioning. "L&T's reputation is built on quality and timely
delivery," says KV Rangaswami, Member of the Board & President (Construction), L&T. "We
make money not just for the organisation but also for shareholders." As India's largest
infrastructure company, L&T believes progress is best powered by partnership and it is already
engaged in over 30 BOT projects across the country. ECC's construction capabilities have
secured wide recognition, including ISO 9001 certification for all operations and the highest CR1
rating from Investment Information and Credit Rating Agency (ICRA) and Construction Industry
and Development Council (CIDC) for very strong contract execution capacity. ECC's state-of-
the-art design capabilities and mechanised construction methods coupled with strategic alliances
with leading international organisations have helped the company set new standards - national
and international. As the company claims proudly, "Whatever the industry, however complex the
project, L&T can do it all!" And the company's ambition? To sustain its leadership position with
initiatives on operational efficiency and optimal project strike rates; focus on large and mega
projects on EPC and turnkey basis; sustain a dominant role in nation-building with large-scale
infrastructure development; and position the company among the top 25 global E&C companies
in the next five years.
No. of employees:
12,000 (comprising a large number of engineers and highly qualified professionals,
specialistsand front-line supervisors from engineering)
Current year order book position: Rs 25,000 crore
Biggest projects undertaken: o Delhi International Airport Ltd o Dhamra port project o
Hyderabad International Airport Ltd o Bangalore International Airport Ltd o Victory Heights
sports project, Dubai o Tata Steel Sinter plant, Kalinganagar, etc.
BREAK EVEN ANALYSIS
Fixed Cost: Rs. (in crore)
Manufacturing, construction and operating expenses 26232.01
Interest expenses and Brokerage 350.22
Depreciation, Obsolescence of tangible assets 286.14
Amortisation of intangible assets 21.16
Total fixed cost 28887.55
Variable Cost:
Sales, administration and other expenses 1863.98
Total variable cost 1863.98
Total sale cost 3346.57
Total unit (assume) 1000
Break Even Point
Break even point= Total fixed cost / sales per unit-variable cost per unit
= 28887.55 / 3.346-1.869
=28887.55 / 1.477
=19558.25 ( Rs in crore)
