EC1 Experiential Learning Report For MBAZC415 Financial and Management Accounting

MBA ZC 415 Financial and Management Accounting
EC1 Experiential Learning
Executive Summary
Larsen & Toubro Limited (L&T) - a synonym for Engineering & Infrastructure excellence, is technology,
engineering, construction, and manufacturing company. It is renowned as one of the largest and most
respected companies in India's private sector. More than eight decades of a dedicated, customer-oriented
approach and the relentless quest for premium quality have enabled L&T to accomplish and maintain
leadership in all involved business sectors.
Over the years, L&T's international business activities have seen overseas earnings grow significantly.
It strives to expand its global footprint, with offices and manufacturing facilities in multiple countries.
The company's businesses supported by a comprehensive marketing and distribution network and have
established a reputation for strong customer support. The company also in the business sector of Power,
Infrastructure, Electrical & Electronics, Engineering Construction, Metallurgical & Material Handling.
Here we have focused our efforts on analysing the Construction division of Larsen & Toubro Limited
and evaluate the critical components that assisted and accelerated divisional growth over the decades, its
operational strategies, financial performance, Competition Analysis and SWOT analysis.
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Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Table of Contents
Sr. No Description Page
1 Introduction to Larsen & Toubro Ltd 4 – 12
a History of Company Milestones 4
b Vision, Mission and Objectives of L&T 5
c Organisation Structure 6
d Products & Services offered 7
e Operating Model 8-10
f Major Competitors 11-12
2 Research Methodology 13 -16
a The financial ratios used to analyse a company performance 13-14

from an Investor perspective
b Competitor Selection Criteria 15
c Source of Data 16
3 Financial performance 17 -32
a Trend Analysis 17-21
b Comparative Analysis with Two Competitors 22-23
c Ratio Analysis of Financial Statements 24
d Comparative Ratio Analysis of with competitors 25-32
4 SWOT Analysis 33-36
5 Conclusion 37-38
6 Annexures 39-51
7 Legend 52
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1) Introduction to Larsen & Toubro Ltd
a) History of Company Milestones

Larsen & Toubro is an Indian multinational company having its operational hub based in Mumbai
founded by Danish engineers Henning Holck-Larsen and Soren Kristian Toubro. The company is
involved in technology, engineering, construction, manufacturing, and financial services, with USD 20
billion in revenue. Its robust, customer-focused approach and the relentless quest for premium-class
quality have enabled them to achieve and spearhead the leadership in its major lines of business for
over eight decades. L&T operates in over 47 countries and ranks among the largest five fabrication
companies in the world. As per the most recent information, there are over 136 subsidiaries and nine
associate companies under L&T flagship.
On this Experiential Learning Exercise, our focus is on L&T's Construction Sector as L&T Construction
division is among the world's top 15 contractors. The core business activities involve the construction
of High rise Buildings and Manufacturing Plants, Heavy Civil Infrastructure Developments,
Transportation Infrastructure, Power Transmission & Distribution Infrastructure, Water & Effluent
Treatment plants, Metallurgical & Material Handling Infrastructure and Smart World &
Communication Infrastructure. The noteworthy construction projects undertaken by L&T include Lotus
Temple, New Delhi Airport, Cyber Towers-Hyderabad, Wankhede Stadium-Mumbai and many more.
The equity shares of Larsen & Toubro is listed on the BSE and NSE, and financial institutions held a
significant part of the shareholdings. As of 31st March 2019, the company had a count of 45467
permanent employees, out of which 2,756 were women (6.06%) L&T had provided direct employment
to 83 Persons With Disabilities (PWDs), and the supply chain has employed 43 Persons With
Disabilities. At the same period company had over 250,000 labourers around various sites in India and
abroad.
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b) Vision, Mission and Objectives of L&T

Vision
 Larsen and Toubro shall be a professionally-managed Indian multinational, committed to total

customer satisfaction and enhancing shareholder value.
 Larsen and Toubro shall be an innovative, entrepreneurial, and empowered team constantly
creating value and attaining global benchmarks.
 Larsen and Toubro shall foster a culture of caring, trust and continuous learning while meeting
expectations of employees, stakeholders, and society.
Mission
 Larsen and Toubro shall be responsive to customer needs, delivering optimal solutions and value-
added services
 Larsen and Toubro shall ensure sustainable growth and professional excellence using state-of-
the-art technology, process-driven approaches, eco-friendly solutions, and IT-enabled tools
 Larsen and Toubro shall foster a culture of mutual trust, respect, team-work, continuous-learning,
innovation, challenge, and employee-empowerment to provide a growth-oriented workplace.
 Larsen and Toubro shall adhere to fair, transparent, and ethical practices in interactions with all
stakeholders, in keeping the tenets of good-corporate-citizenship
 Larsen and Toubro shall remain flexible and agile, continually adapting to the changing business
environment.
Objectives
 L&T Objectives are focused on targeting the Strategic plan (timeline five years), Business plan
(Two to Three) and Operating plan (Annual). The Strategic plan objectives are focusing on
Business outlook, View on the domestic economy, global macro environment and critical
strategic initiatives. The Business plan objectives are a systemic plan to adjust to changes in the
environment and course corrections. The Operation plan objectives are Annual plan, Key
performance indicators such as Order acquisitions, revenues, EBITDA, PAT, Working Capital,
Financial leverage, Capex and ROE targets, Productivity targets.
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c) Organisation Structure
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d) Products & Services offered

L&T spearheads in nearly every sphere of business it operates in. Its Product and Services is spread
over a broad spectrum as below.
Segment Product & Services Offered
Construction Building Transportation Heavy Civil Water Power T &D

and Infra Infrastructure. effluent
factories Treatment
Power EPC Coal Thermal Electrostatic Preciptator Power

&Gas Power Plant Equipment
Manufacturing
Heavy Process Nuclear Equipment Piping

Engineering Plant Power Plant Centre &
Equipment Forgings
Defence Defence Aerospace Shipbuilding

Engineering
Hydrocarbon Onshore Offshore
IT & TS Info Technology

Technology services
Financial Rural Housing Wholesale Asset

services Lending Finance finance Management
Development-al Roads/Trans Metros Power

Projects Line
Electrical Electric Products Electric system Metering and Control and

Automation Standard and Equipment Protection Automation
Others Realty Industrial Smart World Metallurgical

Products and and & Material
Machinery Communication Handling
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e) Operating Model of L&T

Value creation concept by the Group is enabled through leveraging its four business models as mentioned
below;
 EPC - The Company focuses on its proven core competencies of conceptualising, implementing
and commissioning large and complex infrastructure projects primarily in the areas of Roads and
Bridges, Power Transmission and Distribution, Thermal / Solar / Hydel / Nuclear PowerPlants,
etc.
 Manufacturing Model: - Manufacturing is mainly focused around Defence and Shipbuilding,

heavily customised equipment serving to process industries, Electrical Products and Systems
Material Handling Equipment and Industrial Products and Machinery. Most of these are made-
to-stock and made-to-order.
 Services - The services businesses cater to sectors of Information Technology (through LTI and
Mindtree), Technology Services, Smart World & Communication, Real Estate and Financial
Services.
 The company also undertakes developmental projects such as Metro rail projects, tollings, hydel
power projects etc. which are few among the list.
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L&T Strategy Formulation and Analysis

Business strategy formulation and analysis seeks to set long-term goals and strategies that help the
company in exploiting its strengths, identifying and realising new prospects and building new
competencies. This is facilitated through three plans with time horizons ranging from long-term (7-10
years) to medium-term (5 years) to short-term (annual). Each program sets course for the next.
In the previous year, the company had embarked on the development of a 'Perspective Plan', with a
prolonged-term view of 7-10 years. The process commenced with the identification of emerging
megatrends and potential disruptions in current businesses. The perceptions accumulated from the
Perspective Plan exercise, adjusted for the changed circumstances of the pandemic, would be used for
establishing the next 5-year strategic plan.
The strategic plan, which runs for five years, is developed through a collaborative and consultative
process across the organisation. Formulating the program includes a lookback analysis of performance
against the previous plan, scanning market prospects, position on investment and recognition of vital
areas to be focused and addressed. The results of the exercise are priorities for growth, critical initiatives
at the corporate unit and corporate level, aptitude and leadership pipeline plan, financial resources plan,
and comprehensive financial targets intended for each business entity.
The following year (2020-21) is the terminal year of the current 5-year strategic plan, 'Lakshya 21'. The
company would be commencing the development of the next 5-year strategic plan 'Lakshya 26', which
would lay down the strategic guidelines for the Company from FY 22 to FY 26.
After contemplating the impact of the recent Covid-19 pandemic, changes in various industry segments,
as well as new areas of business, would get factored into 'Lakshya 26'. The Strategic Plan usually gets to
be evaluated after, three years for mid-course adjustment as required.
While the 5-year business stance and broad financial goals are implanted as a preliminary strategic plan,
the annual operating plan is devised before the commencement of every financial year.
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Portfolio Strategy: The portfolio strategy seeks to de-risk revenue while enhancing profitability in the
quest of growth. This strategy primarily aims at the following;
 Complementing the matured businesses with growth-stage businesses, with a dedicated focus on
asset-light, Capex-light and high-margin companies. The Group is also attempting to reduce
exposure to asset-heavy businesses. Businesses demanding periodic capital infusion such as
Financial Services will be reassessed from time to time in the context of emerging strategic
significance.
 Well-composed and geographically diversified companies across domestic and international
markets. Over 35% of the work orders come from global markets (primarily the Americas, Middle
East & Africa and Europe). The focus on a few more high-potential countries in Africa and the
ASEAN region will be enhanced to further de-risk the geographical concentration and pursue
new growth opportunities,
 Balancing the recurrent nature of the EPC business through a portfolio of manufacturing and
services businesses. The 'Services' enterprises contribute over 25% of the Group's revenues. With
the objective of better viability and a stable revenue profile, the Group anticipates to step up the
percentage of services business while factoring the growth in the traditional EPC and
manufacturing businesses. The acquirement of Mindtree Limited was a move in that route.
 Complementing the standalone offerings with partnerships: For the EPC and manufacturing
businesses, the company has partnered with several extensive international processes and
technology-oriented licensors, and for the IT and Technology Services businesses, the Group has
strategic alliances and partnerships with established global software product and technology
establishments. All these arrangements empower the Group to offer a bouquet of value-added
services to customers in different businesses.
Customer
Segments-
Specialized
customer
segments
Key Resources -
Human and Value
Physical Proposition
resources such (Accessibility
as production and
facilities and Brand/Status
technology hubs
L&T
Business
Model
Channels -Main
Key partners- Channel is
Technology business
alliances development
team
Key Activities -
Designing,
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developing,
manufacturing
and Services
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f) Major Competitors in the Infrastructure Sector
 IRB Infrastructure Developers Limited

Formerly known as IRB Infrastructure Developers Private Limited is an Indian highway construction
company headed by Virendra Dattatraya Mhaiskar. It was incorporated in 1998, with its head office
based in Mumbai, Maharashtra, India.
It is part of the IRB Group. IRB Infrastructure executed the country's first build-operate-transfer (BOT)
road project which was one of the largest operators of such ventures. Notable projects are the Expressway
and Acquired BOT Roadbuilders.
 IRCON International Limited

Formerly known as Indian Railway Construction Limited (IRCON), is an engineering and construction
organisation, specialised in the transport infrastructure industry. This Public Sector Undertaking was
instituted in 1976, by the Government of India under the provisions of Companies Act of 1956
IRCON was initially enrolled as the Indian Railway Construction International Ltd., a wholly (100%)
owned entity of the Ministry of Railways. Its principal charter was the construction of railway projects
in India and abroad. Ircon has since expanded into other transport and infrastructure segments. With its
developed extent of operations around the world, the name was changed to Indian Railway International
Ltd. in October 1995. Company is renowned for undertaking challenging infrastructure projects,
especially in challenging territories in India and abroad. Ircon has completed over 1650 major
infrastructure projects in India and over 900 major projects across the globe in more than 31 countries.
 Tata Projects
It is one of the fastest-developing and most revered industrial and infrastructure sector companies in
India. It has extensive expertise in executing large and complex urban and industrial
infrastructure projects.TATA projects ltd is part of TATA group. It was founded in Feb 1979. The
company provides turnkey projects and solutions designed towards the construction of civil infrastructure
including roads, bridges, fully integrated rail & metro systems, commercial building & airports and
setting up power generation plants, power transmission & distribution systems, chemical process plants,
water and waste management and complete mining and metal purification systems.
The company is motivated to deliver projects on time using superlative management techniques and has
uncompromising standards of safety and sustainability.
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The leading projects under their portfolio include

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- BDD Chawl.
- Mumbai Trans Harbor Link Bridge.
- Mechanized Track Laying Machine at Dedicated Freight Corridor.
- Lucknow Metro Tunnel.
 JMC Projects
It was established in 1982 under the give-name 'Civen Construction', and later the name got changed to
'Joshi & Modi Construction' and then ultimately to its present-day name of JMC Projects
JMC is among the few construction companies that are certified under ISO 9001:2000 quality
management system by TUV Management Services of Germany. The company is primarily involved in
the construction of industrial and residential infrastructure as well as on power industry and related
infrastructure development ventures.
JMC has to its credit many esteemed experiences in the power, industrial, infrastructure and
institutional sectors projects and is recognised as a reliable and qualified construction company by the
discerning and quality conscious market. Some of the clients for which JMC has worked on industrial
projects include Bajaj Auto, Arvind Mills, Cadila Healthcare and Carrier Refrigeration.
 Reliance Infrastructure Limited (R-Infra)

Formerly known as Reliance Energy Limited (REL) and Bombay Suburban Electric Supply (BSES), is
an Indian private sector enterprise engaged in power generation, infrastructure, construction, and
defence. It is part of the RELIANCE ANIL AMBANI GROUP who had its ups and downs. The company
is controlled by its Chairman, ANIL AMBANI, and Chief Executive Officer, Punit Narendra Garg (since
06th April 2019). The corporate headquarters is in Navi, Mumbai. The primary focus of Reliance
Infrastructure's interests is in the fields of power plants, metro rail, airports, bridges, toll roads, and
defence. It is a significant shareholder in the other group company, Reliance Power project and Reliance
Naval and Engineering Limited.
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2) Research Methodology
a) A ratio can be defined as the quotient of two numbers and the relation expressed between two
accounting figures are known as "financial ratio" the ratio analysis concentrates on the
interrelationship among the figures appearing in the financial statements. Ratios depict the areas
in which the company or an enterprise is advantaged or disadvantaged in comparison to those of
other companies of the same size within the same industry. It is particularly important to
remember when analysing these ratios; no one ratio would tell the whole story. The financial
health of a company is dependent on a combination of profitability, short-term liquidity,
and long-term liquidity. Companies, which are profitable, but have inadequate short term or
long-term liquidity measures, do not survive the troughs of the trade cycle. Hence, we have
chosen the following financial ratio for the analysis of the company.
Financial Ratio Formula Significance
Profitability Ratio
PBDIT% as of net (Net Income + Important for Management to pay for the
revenue from Depreciation + Interest / various expenses such as interest and taxes
Operation Net Revenue) *100 incurred because of running the business
Profit After Tax Net Profit / Net Sales Indicates how much the company can earn after
(PAT) Margin (%) Revenue *100 all direct and indirect expenses to sales revenue.
It gives the overall performance of the company.
Higher the better
Return on Net Worth (Net Income / The calculation reveals how much Profit
(RONW) % Shareholder's equity) *100 company generate to their shareholders from the
Share Equity.
Return on Total Net Income + Interest * How effectively the company's assets are being
Assets (ROTA) % (1-Tax Rate) / Total used to generate profit. A comparison of the
Assets *100 ratio - the higher the ratio, the more efficient use
Higher the better
of the capital employed.
Solvency Ratio
Debt to Equity ratio Debt / Equity Measures the portion of company resources
(about assets) that is funded by debt
(x times)
(about liabilities).
Standard ratio 2:1
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Valuations Ratio
Earnings per Share To get EPS, we have to It indicates how much money an establishment
(Rs) - Higher the divide Net Income by the makes for each share of its stock. It is a widely
better number of shares of used metric to estimate corporate value.
outstanding common
stock.
Book Value per Total Equity-Preferred Measures the company's net asset value on a per-
equity share (Rs) Equity / Total Shares share basis
outstanding
Dividend/Share (Rs) Total Dividends Paid / It allows an investor to determine how much
Shares outstanding Income from the Company an Investor will
receive on a per-share basis.
Liquidity ratio
Current Ratio Existing Assets divided by It measures a company's ability to pay off short-
(Working capital Current Liabilities gives term liabilities with current assets.
Ratio) (x times) Current Ratio
Operating Efficiency
Inventory Turnover COGS/Average Inventory Its is an essential ratio in deciding Inventory

levels within the organisations as it provides us
with an indication on the number of times a
company's inventory is sold and replaced over a
given period.
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b) Competitor Selection Criteria

L&T's Infrastructure segment contributed 86% of the total order inflow for the entire company in 2019-
20. Also, the Infrastructure segment contributed more than 50% of the total company's revenue.
From these factors, we can verify that the Infrastructure Segment is the most vital and significant vertical
arm within Larsen & Toubro. So, for having a more meaningful analysis, we have selected other notable
companies within the Infrastructure Industry for comparing the performance and financials with that of
L&T
In the later parts of this report, we are going to focus on how the tool ratio analysis can be used for
analysing the financial performance of selected Infrastructure establishments by defining several
financial-ratios. The calculated ratios will be then used to evaluate the performance of each company
focusing primary on L&T. The trend of performance of these companies for four years will be evaluated.
These competitors were selected on the basis of the relative market size that each company occupies in
the infrastructure industry as well as due to the similarity in the type of projects undertaken by all these
companies.
We could not find the competitor of equivalent size to LT.

TATA projects the entire financial figures were not available in the websites; hence we could not select
for comparison.
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c) Source of Data
 A significant source of data we used for collecting company financials was L&T official
website and its respective investor pages.
 Weblinks used for data collection are given below for reference
o https://investors.larsentoubro.com/
o https://www.larsentoubro.com/
o https://www.lntecc.com/
o https://www.tataprojects.com/
o https://www.irb.co.in/home/
o http://www.ircon.org/
o https://www.jmcprojects.com/
o https://www.rinfra.com/
 Besides, we used various other websites only for reference purpose as mentioned below
o https://simplywall.st/
o https://www.moneycontrol.com/
o https://www.financialexpress.com/
o https://economictimes.indiatimes.com/
o https://www1.nseindia.com/
o Screener.in
o www.myaccountingcourse.com
o www.ijmbs.com
o https://corporatefinanceinstitute.com
o https://www.business-case-analysis.com
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3) Financial Performance
a) Trend Analysis
Reference: Annual Report 2019-20

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Reference: Annual Report 2019-20

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 L&T Group achieved order inflows of INR 1,86,356 crore during the recently concluded financial
year, recording a growth of 9.10% over the previous year, and this growth is mainly being driven
by international business.
 Infrastructure division contributed over 55% of the total order inflow, while the share of power
increased from 2% in the concluded year to 6% in the current year on receipt of a large valued
thermal order and increased orders by thermal power plants for emission control equipment to
meet environmental norms.
 L&T Group recorded revenue of INR 1,45,452 crore during the year, registering a growth of
7.6%. The increase was below the expected levels with execution obstacles due to Covid-19 in
the last few weeks of the year, coupled with various other factors like deferred permissions during
the year.
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 The Group crossed the INR 3 lakh crore mark as at 31st March 2020 with the Order Book standing
at INR 3,03,857 crores.
 Infrastructure segment constituted the highest proportion of the consolidated Order Book at 74%
share, though reduced from 76% as at March 2019, with an increase in the share of the Power
segment from 2% to 5% on higher-order inflows during the year.
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 Consolidated Profit after Tax (PAT) at INR 9549 crore for the year 2019-20 rose by 7.2% over
the previous year at INR 8,905 crores.
 Consolidated EPS from continuing operations and discontinued operations for the year 19-20 at
INR 78.04 registered growth from a year earlier at INR 63.51.
 The Net Worth, at INR 66,723 crore on 31st March 2020, reflects a net increase of INR 4,348
crore, as compared to the previous year.
 RONW for the year 2019-20 was lower at 14.8%, compared to 15.3% in the previous year.
RONW for the current year has been badly affected by Covid impact and provisions in the
financial services business.
 Infrastructure segment clocked gross revenue of INR 73,777 crore for the year 2019-20
registering a minimal growth of around 1% over the previous year.
 Infrastructure Segment earned an operating profit of INR 5,912 crores. There was a noticeable
decline in margins from 8.5% to 8.1% owing to the cost and time overruns in specific projects in
Transportation Infrastructure and Buildings & Factories business.
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b) Comparative Analysis with Two Competitors
Following Performance-Indicators have been compared between L&T, IRB and Reliance infra.
Performance Indicator Company 2016 2017 2018 2019 2020
Price to Earning L&T 26.7 24 23 22.8 11.1
IRB 13 12.5 11.2 5.8 3
Reliance Infra 19 11.1 12.9 0.6 0
Sales Revenue (Rs Crores) L&T 1,01,122 1,09,312 1,19,683 1,35,220 1,45,452
IRB 5,128 5,846 5,694 6,707 6,852
Reliance Infra 26,952 25,229 18,728 19,731 19,457
Sales growth L&T 10.00% 8.10% 9.49% 12.98% 7.57%
IRB 33.23% 14.00% -2.60% 17.79% 2.16%
Reliance Infra 66.53% -6.39% -25.77% 5.35% -1.39%
Net Profit (Rs Crores) L&T 4,281 6,041 7,370 8,905 9,549
IRB 639 715 920 850 721
Reliance Infra 760 1,425 1,256 -2,427 771
Operating Profit Margin L&T 16% 15% 18% 17% 17%
IRB 52% 52% 47% 44% 43%
Reliance Infra 17% 16% 18% -23% 6%
Interpretation
Price to Earning - It measures the amount of money an investor is willing to invest in a single share of
a company for Re. 1 of its earnings. It is highest for L&T however, as shown in the above table, Price to
Earning for L&T is decreasing since 2016, between2019 to 2020 48.6% reduction in Price/Earning. The
low Price to earning indicates the undervaluation of stocks, owing to the systematic and unsystematic
risks of the market. When compare to IRB Reliance has the lowest Price to earnings in 2020 and
decreased rapidly since 2016.
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Sales growth – L&T's sales growth is highest when compared to IRB & Reliance Infra. Average growth
of L&T is 9.3 % since 2016. There is high variation in IRB & Reliance Infra. Reliance Infra Sales growth
has come down to negative in 2020, which is not a satisfactory condition. IRB sales growth has declined
to 2.16 % in 2020 from 17.79 % in 2019, which indicates the inconsistent performance of the company.
Net Profit – L&T's net profit is in increasing trend since 2016, last four years average rise in net profit
of the company is 17 %, whereas in IRB previous two years there is a decline in net profit about 11.2 %.
In the case of Reliance, there was the loss of INR 2,427 cr in 2019.
Operating margin
Operating margin of IRB is highest when compared to L&T and Reliance Infra. Average Operating of
IRB is 47.6 % from the last five years, whereas it is 16.6 % for L&T and 6.8 % for Reliance Infra. Higher
Operating margin indicates the company has generated enough cash from operating activities to pay for
its various variable as well as fixed costs. This means L&T has done over investments and or inefficient
utilisation of plant /machinery and higher overhead expenses resulting in higher production costs which
are a severe concern.
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c) Ratio Analysis of Financial Statements
Financial Ratios which we are available on L&T Annual report

As per Indian AS
Description 2019-20 2018-19 2017-18 2016-17 2015-16
PBDIT as % of net revenue from operations 11.23 11.34 11.40 10.18 10.35
PAT as % of net revenue from operations 6.12 6.16 6.16 5.53 4.19
RONW % (Return on Net Worth%) 14.80 15.35 14.12 12.80 9.91
Gross debt: Equity ratio 1.85:1 1.81:1 1.79:1 1.75:1 1.87:1
Basic earnings per equity share (Rs) 68.04 63.51 52.62 43.20 30.32
Book value per equity share (Rs) 475.27 444.67 391.78 358.83 316.20
Dividend per equity share (Rs) 18.00 18.00 16.00 14.00 12.17
LARSEN AND TOUBRO RATIO ANALYSIS OF FINANCIAL STATEMENTS

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
PBDIT % Margin PAT % RONW % ROA %
14.34 9.10 14.96 6.00
15.0 6.0
9 8.88
14
8.29
8.10 13.513.04 5.5 5.47 5.33
12.80
13 12.77 8
12.50 12.58
11.89 5.0
12.0
12 7.23 4.71
11.70 10.99 4.65
7
Debt to Equity Ratio EPS (Rs) Current Ratio BV Per ES (Rs)
0.49 57.07 1.44 491.50
56 53.43 1.40 480
0.45 1.4
436.90
1.32
47.59 1.30
0.35 48 1.3 420
0.30
0.24 371.65
0.25
0.21 0.20 40 39.00 38.46 1.2 1.18 360 349.79 356.79
Dividend
21.00 Per Share (Rs) 37.28 ITR 2016 2017 2018 2019 2020
20 35
31.66
18.25 29.78 29.74
18.00 18.00
18 30
16.00 24.57
16 25
2016 2017 2018 2019 2020
Year
(Note-Minitab is used for Trend analysis)

Note- Interpretation is provided under Section 3d long with competitor analysis.
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d) Comparative Ratio Analysis of with competitors

The calculated ratios from Financial statements of L&T, IRB, and Reliance Infra are displayed in
below table
Sr.No Ratios Company 2020 2019 2018 2017 2016
1 PBDIT% as of L&T 11.7 12.59 12.5 12.77 14.34

net revenue
IRB 17.26 20.32 25.56 17.45 22.64
from Operation
Reliance Infra 168.05 301.83 53.44 46.95 42.21
2 PAT % as of L&T 8.1 9.1 7.23 8.29 8.88

net revenue
IRB 6.99 9.71 15.31 5.95 11.74
from operation
Reliance Infra 87.56 -115.05 18.55 14.75 19.93
3 Return on Net L&T 12.8 14.96 10.99 11.89 13.04

Worth %
IRB 10.88 12.48 17.69 8.11 13.92
Reliance Infra 9.87 -6.39 7.57 6.13 9.32
4 Return on L&T 4.71 6 4.65 5.33 5.47

Total Assets %
IRB 2.17 3.36 4.27 2.25 4.13
Reliance Infra 4.44 -3.23 2.83 2.24 3.88
5 Debt-Equity L&T 0.49 0.24 0.2 0.21 0.3

ratio
IRB 2.92 1.46 1.89 1.23 1.07
(x times)
Reliance Infra 0.4 0.35 0.36 0.57 0.68
6 Earnings per L&T 47.59 53.43 38.46 39 57.07

share (Rs)
IRB 7.94 9.35 12.64 5.78 9.24
Reliance Infra 39.21 -34.73 63.29 48.99 75.51
7 Book Value L&T 371.65 356.79 349.79 491.55 436.96

per equity
IRB 73.01 74.91 71.4 71.29 66.41
share (Rs)
Reliance Infra 397.18 543.32 835.82 798.2 809.37
8 Dividend/Share L&T 18 18 16 21 18.25

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(Rs)
IRB 5 2.5 5 5 4
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Reliance Infra 0 0 9.5 9 8.5
9 Current Ratio L&T 1.18 1.3 1.32 1.44 1.4
IRB 0.44 0.54 0.66 0.74 0.69
Reliance Infra 1.85 1.6 1.09 1.18 1.35
10 Inventory L&T 29.74 24.57 29.78 37.28 31.66

Turnover Ratio
IRB 20.68 15.16 11.69 16.57 16.6
(x times)
Reliance Infra 320.02 105.85 26.72 28.42 23.44
One Way ANOVA tool is used to compare the mean difference between L&T, IRB and Reliance
Infrastructure Financial Ratio.
1. PBDIT % of net revenue from Operations
Ratios Company 2020 2019 2018 2017 2016 Average

PBDIT% as L&T 11.7 12.59 12.5 12.77 14.34 12.78
of net
IRB 17.26 20.32 25.56 17.45 22.64 20.646
revenue from
Operation Reliance Infra 168.05 301.83 53.44 46.95 42.21 122.496
Interpretations - As shown in table Reliance Infra PBDIT % margin has suddenly increased in 2019
and 2020. However, its P&L statement indicates that Reliance Infra revenue from Operation is decreased
from 2019 and 2020 the higher margin due to other Income in 2019 & 2020. L&T has lowest PBDIT %
margin 12.78 when compare to IRB and Reliance Infra and decreases year on year since it is not a
satisfactory condition for L&T. This indicates L&T has done over investments and or inefficient
utilisation of plant /machinery and higher overhead expenses resulting in higher production costs which
are a severe concern.
Hypothesis Testing
H0- PBDIT % margin Position of L&T, IRB and Reliance does not differ significantly
H1- PBDIT % margin Position of L&T, IRB and Reliance does differ significantly
One-way ANOVA: PBDIT % L&T, PBDIT % IRB, PBDIT % Reliance

26
Level of signification 95 %, α=0.05

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Conclusion -As P-value is less than the level of significance (α=0.05), the null hypothesis is rejected.
Hence it is concluded that PBDIT % margin of L&T, IRB, Reliance Infra differs significantly with a
Confidence level of 95 %.
2. PBT % Margin

PAT % as of L&T 8.1 9.1 7.23 8.29 8.88 8.32
net revenue
IRB 6.99 9.71 15.31 5.95 11.74 9.94
from
Reliance Infra 87.56 -115.05 18.55 14.75 19.93 5.148
operation
Interpretation - As shown in the above table. L&T's Average PAT % margin is 8.32 and is decline
marginally from 2016. For L&T PAT % margin change year on year is less when compare to IRB &
Reliance Infra. There is high variation in Reliance Infra PAT % margin year on year, in 2019 incurred
negative margin, which indicates higher operating expenses.
Hypothesis Testing
H0- PAT % margin Position of L&T, IRB and Reliance does not differ significantly
H1- PAT % margin Position of L&T, IRB and Reliance does differ significantly
One Way ANOVA PAT % LT, IRB and Reliance Infra.
Conclusion- As P-value is greater than the level of significance (α=0.05), the null hypothesis cannot be
rejected. Hence PAT % margin of LT, IRB and Reliance Infra does not differ significantly.
3. Return on Net worth %

Return on L&T 12.8 14.96 10.99 11.89 13.04 12.736
Net IRB 10.88 12.48 17.69 8.11 13.92 12.616
Worth % Reliance Infra 9.87 -6.39 7.57 6.13 9.32 5.3
Interpretation - As shown in the above table, the Average of RONW % of L&T is higher than IRB &
Reliance Infra. There is high variation in Reliance Infra RONW %, which is lowest among the three
companies. L&T is a more efficient company in generating a return on net worth.
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Hypothesis testing
H0- RONW % Position of L&T, IRB and Reliance does not differ significantly
H1- RONW % Position of L&T, IRB and Reliance does differ significantly
One Way ANOVA RONW % Position of L&T, IRB and Reliance Infra
Conclusion- As P-value is less than the level of significance (α=0.05), the null hypothesis is rejected.
Hence it is concluded that RONW % Position of L&T, IRB and Reliance Infra does differ significantly
with confidence level 95 %.
4. Return on Total Assets (ROA)%

Return on L&T 4.71 6 4.65 5.33 5.47 5.232
Total IRB 2.17 3.36 4.27 2.25 4.13 3.236
Assets % Reliance Infra 4.44 -3.23 2.83 2.24 3.88 2.032
Interpretation - As shown in the above table, the Average of ROA % of L&T is higher than IRB and
Reliance Infra. L&T has maintained an agreeable level of ratio, indicating that it utilises its assets in an
appropriate and scheduled manner for revenue generation.
Hypothesis testing
H0- ROA % Position of L&T, IRB and Reliance does not differ significantly
H1- ROA % Position of L&T, IRB and Reliance does differ significantly
One Way ANOVA ROA % Position of L&T, IRB and Reliance Infra
rejected. Hence PAT % margin of LT, IRB and Reliance Infra does not differ significantly
28
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5. Debt-Equity Ratio (x times)

Debt-Equity L&T 0.49 0.24 0.2 0.21 0.3 0.288
ratio IRB 2.92 1.46 1.89 1.23 1.07 1.714
(x times) Reliance Infra 0.4 0.35 0.36 0.57 0.68 0.472
Interpretation- As shown in the above table Debt to Equity ratio of L&T is lower than IRB and Reliance
Infra. It is a sign that the company is lying on Equity to finance the business which could be costly and
inefficient. The standard ratio is 2:1
Hypothesis testing
H0- Debt to Equity Ratio Position of L&T, IRB and Reliance does not differ significantly
H1- Debt to Equity Ratio Position of L&T, IRB and Reliance does differ significantly
One Way ANOVA ROA Position of L&T, IRB and Reliance Infra
Conclusion – As P-value is less than the level of significance (α=0.05), the null hypothesis can be
rejected. Hence it is concluded that the ROA position of L&T, IRB and Reliance Infra does differ
significantly with 95 % Confidence level
6. Earnings per Share

Earnings L&T 47.59 53.43 38.46 39 57.07 47.11
per share IRB 7.94 9.35 12.64 5.78 9.24 8.99
(Rs) Reliance Infra 39.21 -34.73 63.29 48.99 75.51 38.454
Interpretation - As shown in the above table, that EPS of L&T is highest when compared to IRB and
Reliance Infra. IRB is lowest among all three companies. There is a high variation in Reliance Infra EPS
when compare to IRB and L&T. This reveals that L&T is the most efficient company in generating
Earning per Share when compare to IRB and Reliance Infra.
Hypothesis Testing
H0- EPS Position of L&T, IRB and Reliance does not differ significantly
H1- EPS Position of L&T, IRB and Reliance does differ significantly
29

Page

One Way ANOVA – EPS position of LT, IRB and Reliance Infra
rejected. Hence PAT % margin of LT, IRB and Reliance Infra does not differ significantly with
confidence level 95 %
7. Book value per Equity Share

Book Value L&T 371.65 356.79 349.79 491.55 436.96 401.348
per equity IRB 73.01 74.91 71.4 71.29 66.41 71.404
share (Rs) Reliance Infra 397.18 543.32 835.82 798.2 809.37 676.778
Interpretation - As shown in the above table Book value per Equity Share of Reliance Infra is higher
than L&T and IRB. IRB has lowest Book Value per Equity Share. It reveals L&T net asset value on a
per-share basis is melancholier than Reliance Infra.
Hypothesis testing
H0- Book Value/Equity Share Position of L&T, IRB and Reliance does not differ significantly
H1- Book Value/Equity Share Position of L&T, IRB and Reliance does differ significantly
One-way ANOVA- Book Value/Equity Share of L&T, IRB and Reliance Infra.
rejected. Hence it is concluded that the Book Value /Equity Share position of L&T, IRB and Reliance
Infra does differ significantly with 95 % Confidence level
30
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8. Dividend per Share

Dividend/Share (Rs) L&T 18 18 16 21 18.25 18.25
IRB 5 2.5 5 5 4 4.3
Reliance Infra 0 0 9.5 9 8.5 5.4
Interpretation
As shown in above Dividend Per Share of L&T is higher than IRB and Reliance Infra. L&T is the most
efficient company generating Dividend per share.
Hypothesis testing
H0- Dividend/Share Position of L&T, IRB and Reliance does not differ significantly
H1- Dividend/Share Position of L&T, IRB and Reliance does differ significantly
One-way ANOVA Dividend/Share position of L&T, IRB and Reliance Infra
rejected. Hence it is concluded that the Dividend / Share position of L&T, IRB and Reliance Infra does
differ significantly with 95 % Confidence level
9. Current Ratio

Current L&T 1.18 1.3 1.32 1.44 1.4 1.328
Ratio IRB 0.44 0.54 0.66 0.74 0.69 0.614
Reliance Infra 1.85 1.6 1.09 1.18 1.35 1.414
Interpretation- As shown in the above table that Reliance Infra Current ratio is higher than L&T and
IRB. L&T current ratio is decreasing since 2016, which is not a satisfactory condition. IRB has the lowest
ratio among the three companies.
Hypothesis testing
31
H0- Current Ratio Position of L&T, IRB and Reliance does not differ significantly
Page

H1- Current Position of L&T, IRB and Reliance does differ significantly
One-way ANOVA – Current Ratio Position of L&T, IRB and Reliance
Conclusion - As P-value is less than the level of significance (α=0.05), the null hypothesis can be
rejected. Accordingly, it can be concluded that the Current ratio position of L&T, IRB and Reliance Infra
does differ significantly with 95 % Confidence level.
10. Inventory Turnover Ratio

Inventory L&T 29.74 24.57 29.78 37.28 31.66 30.606
Turnover Ratio IRB 20.68 15.16 11.69 16.57 16.6 16.14
(x times) Reliance Infra 320.02 105.85 26.72 28.42 23.44 100.89
Interpretation - As shown in the above table, L&T has retained a good level of this ratio at a constant
level which facilitates its growth. There is a sudden rise in Reliance infra from 2019 onwards showing
an indication of over-trading.
Hypothesis Testing
H0- Inventory Turnover Position of L&T, IRB and Reliance does not differ significantly
H1- Inventory Turnover Position of L&T, IRB and Reliance does differ significantly
One Way ANOVA – Inventory Turnover Ratio of L& T, IRB and Reliance Infra
Conclusion - As P-value is greater than the level of significance (α=0.05), the null hypothesis cannot be
rejected. Hence Inventory Turnover position of LT, IRB and Reliance Infra does not differ significantly
with confidence level 95 %
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4) SWOT Analysis – To be reviewed and corrected based on the Financial perspective
The primary purpose of the SWOT matrix is to identify the strategies that an organisation which can be
used to exploit external opportunities, counter threats, and build on & protect Larsen & Toubro strengths,
and eradicate its weaknesses
Strengths of Larsen & Toubro including Internal-Strategic Factors

Being one of the prominent firms in its Industry, Larsen & Toubro has numerous strengths that enabled
them to flourish in the marketplace. These strengths not only help it to safeguard the market share in
existing markets but also help in penetrating new markets.
 Extremely useful at Go to Market approaches for the products.

 Reliable Free Cash Flow – Larsen & Toubro has strong free cash flows that deliver supplies in
the hand of the company to develop into new ventures.
 Good Returns on Capital Expenditure – L&T is reasonably practical at the implementation of
new experiences and created excellent returns on capital-expenditure by creating brand-new
revenue generation enterprise profiles.
 Established distribution network – Over the years, Larsen & Toubro has built a reliable
distribution network that can reach the mainstream of its prospective marketplace.
 Successful track record of incorporating complimentary firms through mergers & acquisition. It
has successfully integrated several technology companies in the past few years to restructure its
operations and to build a reliable supply chain.
 Automation of activities brought reliability and stability in quality to Larsen & Toubro products
and has enabled the company to scale-up and scale-down established based on the demand
requirements in the marketplace.
 Splendid Performance in New Markets – Larsen & Toubro has built expertise at entering new
markets and making a success of them. The expansion has helped the organisation to create a
brand new revenue stream ventures and thereby diversifying the economic cycle risks in the
markets that it operates.
 Dependable and reliable suppliers – L&T has a strong and loyal stable supplier base for raw
materials which enables them to avoid any supply related issues and bottlenecks.
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Weaknesses
Weakness is the areas where Larsen & Toubro can improve upon. The strategy is about making the right
choices, and weakness is the areas where a firm can develop and improve using SWOT analysis and
build on its competitive advantage and strategic positioning.
 The high attrition rate in work force – compare to other organisations in the Industry Larsen &
Toubro has a higher attrition rate and must spend a lot more compare to its competitors on training
and development of its employees.
 The company has not been able to cop-up with the challenges offered by the new competitors in
the sector and has lost a small market share in the niche categories. Larsen & Toubro must build
internal feedback mechanism directly from the sales team on the ground to counter these
challenges.
 The organisation structure is only compatible with the present business model, thus limiting
expansion in adjacent product segments.
 Not highly successful at integrating firms with distinct work-culture. Even though Larsen &
Toubro is useful at assimilating small companies, it has its share of failure while merging firms
that have different work culture.
 Restricted success outside core business – Even though Larsen & Toubro is one of the prominent
organisations in its industry segment, it has faced challenges while moving to other product
segments with its present culture.
 Require additional investment in cutting-edge technologies and skills development of employees.
Considering the scale of expansion and different geographies the company is intending to expand
into, Larsen & Toubro requires to invest more capital in technological advancements to assimilate
the processes throughout the board. The present investment in technologies is not at par with the
vision of the company.
 The profitability ratio and Net Contribution % of L&T are lower than the industry norm.
Opportunities in front Larsen & Toubro which related to External-Strategic-Factors
 The new taxation policy can substantially impact the way of doing business and can open unique
opportunity for recognised players such as Larsen & Toubro to increase its profitability.
 New environmental policies – The new options will create a level playing field for all the players
in the industry. It represents an excellent opportunity for Larsen & Toubro to drive home its
benefit in new expertise and gather market share in the new product lines.
 New clients from online channel – Over the past few years, the company has invested a substantial
sum of money into the online platform. This investment has opened a new-sales-channel for
Larsen & Toubro which has futuristic potential. In the years to come, L&T company can make
use of this opportunity by knowing its customer needs better than the competition and serving
34
their needs using big data analytics.

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 The declining cost of transportation because of lower shipping prices can also bring down the
value of Larsen & Toubro's products thus delivering an opportunity to the company - either to
boost its productivity and profitability or pass on the benefits to the customers to gain market
share.
 Introduction to new markets because of government agreement – the implementation of cutting
edge technology and government-backed free trade agreements have paved the way for L&T to
enter new markets and region and thereby capitalise of the opportunities in the emerging markets.
 Steady and balanced free cash flow provides the opportunity to invest in adjacent product
segments. With more cash in hand, the company will have the liberty to capitalise in innovative
technological innovations and product segments.
 As a result of an economic uptick and increased customer spending will provide L&T with
opportunities to gain new customers and thereby drastically increase this market presence and
share.
 Organisation's core competencies can be a success in similar or related products field.
Threats that Larsen & Toubro Facing mainly from External-Strategic-Factors
 Presence of products Impersonation, counterfeit and low-quality product are a real threat to
Larsen & Toubro's development, especially in the emerging markets and low-income markets.
 Shortage of skilled workforce in the global market represents a threat to the constant increase in
profits for Larsen & Toubro since it prevents them from undertaking larger products and ventures.
 Fierce competition – With the emergence of new local and international players over the recent
years, overall sales and profits are under constant pressure to outcome the rest and maintain the
top spot.
 Adoption of cutting-edge technologies by competitors will be a threat in the long term. It will
necessitate the same or more investment from L&T into acquiring and developing similar better
technological advancements, production facilities and keeping the workforce trained on all these.
 Liability regulations and laws in different countries are different, and hence L&T may be
subjected to various liability claims from other political operating regions and markets.
 Increasing overheads especially on raw material and labour will adversely affect the profitability
of the L&T
Limitations of SWOT-Analysis for Larsen & Toubro

Irrespective of its broad-spectrum usage, SWOT Analysis has its weakness and limitations.
 Specific capabilities or factors of an organisation can be both a strength and weakness at the same
time. This is one of the significant restrictions in SWOT Analysis as it cannot distinguish the
35
factors which can serve dual purpose at times.

Page

 Further, it cannot give an idea on how to capitalise or accomplish strategic and competitive
advantage over others. Hence, it cannot be treated as a final say in terms of a company evaluation.
 This method can only be considered as a beginning point for any detailed analysis which may
follow. Since it provides only an assessment window rather than an execution plan, which is
necessary for getting desired results.
 This is a static assessment /analysis of the status quo with few prospective changes. And hence
changes in variable factors including circumstances, capabilities, opportunities, threats, market
pulse etc. may not be revealed in a single matrix which is a disadvantage.
 It can lead to specific overemphasising parameters which can be either internal or external, which
may differ from actual ground reality when analysed with specific other parameters.
Weighted-SWOT: Perusing the limitations mentioned above on the SWOT analysis, corporate
managers stated using preferential weightage and preference-allocation to each internal strength and
weakness of the firm. Organisations also assess the likelihood of events taking place in the coming future
and how strong their impact could be on the company's performance. This method, called 'Weighted-
SWOT' is better than doing simplistic-SWOT analysis. With Weighted-SWOT Analysis managers can
concentrate on the most crucial factors and ignore the least priority ones. It involves the preferential
selection of elements which the Management or managers conducting the analysis decides. It also
resolves the problem where organisations end up making a long list, but none of the factors deemed too
critical.
36
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5) Conclusion
Based on data from Larsen & Toubro Financial Statements, we can arrive at the following conclusions.
 L&T has high-quality earnings with 15.1% annual earnings growth, which implies that the
reported Net Profit results are a fair reflection of the company's performance for that period.
 But, in terms of Growing Profit Margin, L&T's current Net Profit margin is 5.6% which is
lower than last year 6.3%
 During the past five years, L&T Annual Earnings Growth has been 15.1% compared to 9.3%
within the peers from the same industry and 13.7% with the general market
 During the past year, L&T's has had negative earnings growth, so it can't be compared to its
5-year average
 L&T had negative earnings growth (-14.3%) over the past year, making it difficult to compare
to the Construction Industry average (-14.7%)
 L&T's Return on Equity (Profitability measure which shows how efficiently a company's
management team has used its shareholders' money to generate profits) is considered Low
since it is only 11.9%, as any value, less than 20% is regarded as Low return on Equity
 Short Term Assets (INR 1826.9B) exceed its Short-Term Liabilities (INR 1447.3B) which is
a positive aspect
 Short Terms Assets (INR 1826.9B) exceeds its Long Terms Liabilities (INR 871.7B) which
is a positive aspect
 L&T's Debt to Equity ratio (184.9%) is considered high, which is an unfavourable aspect.
 L&T's Debt to Equity ratio has reduced from 197.4% to 184.9% over the past five years,
which is a positive aspect.
 L&T's debt is not well covered by Operating Cash Flow (4.6%) which is an unfavourable
aspect which needs attention.
 L&T's interest payments on its debt are well protected by EBIT (4.6 times coverage). Interest
Payments includes the repayments L&T has to make to banks and financial institutions for
money it has borrowed. EBIT (Earnings Before Interest and Taxes) shall be at least three
times. Here L&T has 4.6 times coverage. So, it's a positive aspect.
 L&T's Dividend (1.7%) is higher than the Bottom 25% of dividend payers in the Indian
Market, which pays only 0.56% as a dividend. It is a positive sign for investors.
 L&T's Dividend (1.7%) is low compared to the Top 25% of dividend payers in the Indian
Market, which pays 2.28% as a dividend.
 L&T's Dividend payments have been Volatile in the past ten years, because of more than 20%
fluctuations in the Dividend paid. This instability is a matter of concern.
 L&T's Dividend payments have increased over the past ten years, which is a positive aspect.
 Current Pay-out to Shareholders – With its reasonable low pay-out ratio of 32.3%, L&T's
dividend payments are well covered by earnings, which is a positive aspect. Pay-out ratio
37
implies the proportion of L&T's earning's, which get paid out as dividends to shareholders.
Page

The higher the pay-out ratio, the more unsustainable a company's Dividend is. L&T's pay-out
ratio is reasonably Low.
 L&T's Average management tenure is four years which is positive as an experienced
management team is considered as a positive aspect
 L&T's board of directors are considered experienced having an average of 5.2 years average
tenure, which is a positive aspect from a company operational as well as an Investors
viewpoint.
38
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6) Annexures
Name Description
Annexure A Balance Sheet
Annexure B Statement of Profit and Loss
Annexure C Cash Flow Statement
Annexure D Consolidated Balance Sheet
Annexure E Consolidated Statement of Profit and Loss
Annexure F Consolidated Cash Flow Statement
39
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 Annexure A – Page 1/2
40
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 Annexure A – Page 2/2
41
Page

 Annexure B – Page 1/2
42
Page

 Annexure B – Page 2/2
43
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 Annexure C – Page 1/2
44
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 Annexure C – Page 2/2
45
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 Annexure D – Page 1/2
46
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 Annexure D – Page 2/2
47
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 Annexure E – Page 1/2
48
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 Annexure E – Page 2/2
49
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 Annexure F – Page 1/2
50
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 Annexure F – Page 2/2
51
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7) LEGEND
 PDBIT – Profit before Deduction of Income Tax

 PAT – Profit After Tax
 RONW – Return on Net Worth
 EPS – Earnings Per Share
 EDBIT – Earnings Before Interest, Taxes, Depreciation, and Amortisation
 SWOT – Strength, Weakness, Opportunity and Threats
 NSE – National Stock Exchange of India
 BSE –BSE Limited, formerly known as Bombay Stock Exchange Ltd.
 PWD – Person With Disability
 ROE – Return of Equity
 EPC – Engineering, Procurement and Construction
 ASEAN – Association of South-East Asian Nations
 BOT – Build Operate Transfer
 ROTA – Return On Total Assets
 COGS – Cost of Good Sold
**************
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MBA ZC 415 Financial and Management Accounting

EC1 Experiential Learning

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Sr. No Description Page

1 Introduction to Larsen & Toubro Ltd 4 – 12

a History of Company Milestones 4

b Vision, Mission and Objectives of L&T 5

d Products & Services offered 7

e Operating Model 8-10

f Major Competitors 11-12

2 Research Methodology 13 -16

a The financial ratios used to analyse a company performance 13-14

b Competitor Selection Criteria 15

3 Financial performance 17 -32

a Trend Analysis 17-21

b Comparative Analysis with Two Competitors 22-23

c Ratio Analysis of Financial Statements 24

d Comparative Ratio Analysis of with competitors 25-32

4 SWOT Analysis 33-36

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

1) Introduction to Larsen & Toubro Ltd

a) History of Company Milestones

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

b) Vision, Mission and Objectives of L&T

 Larsen and Toubro shall be a professionally-managed Indian multinational, committed to total

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

d) Products & Services offered

Segment Product & Services Offered

Construction Building Transportation Heavy Civil Water Power T &D

Power EPC Coal Thermal Electrostatic Preciptator Power

Heavy Process Nuclear Equipment Piping

Defence Defence Aerospace Shipbuilding

Hydrocarbon Onshore Offshore

IT & TS Info Technology

Financial Rural Housing Wholesale Asset

Development-al Roads/Trans Metros Power

Electrical Electric Products Electric system Metering and Control and

Others Realty Industrial Smart World Metallurgical

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

e) Operating Model of L&T

 Manufacturing Model: - Manufacturing is mainly focused around Defence and Shipbuilding,

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

L&T Strategy Formulation and Analysis

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

f) Major Competitors in the Infrastructure Sector

 IRB Infrastructure Developers Limited

 IRCON International Limited

The leading projects under their portfolio include

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

 Reliance Infrastructure Limited (R-Infra)

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Financial Ratio Formula Significance

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Inventory Turnover COGS/Average Inventory Its is an essential ratio in deciding Inventory

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

b) Competitor Selection Criteria

We could not find the competitor of equivalent size to LT.

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd

Reference: Annual Report 2019-20

Group 46 Financial Statement Analysis of Larsen & Toubro Ltd