L&T FINANCE 2012

ASSIGNMENT-2

Accounting for manager

ANALYSIS MADE ON L&T FINANCE IPO USING RATIO ANALYSIS , PROFIT AND LOSS A/C AND BALANCESHEET

INTRODUCTION: Larsen and Tourbo which is having a Head quarter in Mumbai. It is a engineering & construction based company and one of the largest companies in India. It is a Multi National company having a office located all around the country & having wide marketing and distribution channel. L&T has a market share in all the fields like oil , gas , bridges. They are also in ship building & nuclear tie up to achieve profit in the future period. L&T finance is incorporated in 2008 . It is Finance Holding company offers a diverse range of financial products and services in the field of corporate, retail and infrastructure finance sector.

What is IPO and Reasons for raising it?

Initial Public Offer means offering is made by company/promoter in term of selling there equity to the public.

To procure funds & capital for the expansion of the project/plans. The existing promoters starts taking out of the money from the company so

for maintaining the required amount of money. Company raises ipo. To build an image among society & for advertisement of the company.

ANALYSIS BASED ON BALANCESHEET,PROFIT AND LOSS A/C AND RATIOS OF COMPANY

Company is having 56.65 crores in 2007 as total share capital as compares to 121.77 crores in 2011 showing that company is increasing 2 times growth.

Company is not issuing a preference share for raising a capital they always believe in issuing equity shares.

Reserves of the company is increases by 568.35 in 2001 to 21334.15 in 2011 showing that company is in position to take risk and having a good amount of money as surplus to them. And requirement can be fulfilled as need arises.

L&T FINANCE 2012

The company work in progress in 2009 is 1040.99 which showing company is investing in business/ projects as of there commencement of new projects and expansion of the new factory.

The inventory of the company in 2009 is 5805.05 crore as compares to 2011 is 1577.15 crore. It showing that company is having a ample amount of raw material, labor, and then can fulfill the demand as they arises. But in 2011 the company inventory decreases to 1577.15 showing that company are making the inventory adequately . by using various methods like EOQ and just in time.

Cash and bank balance of company in 2011 is 1518.98 crore as compare to 6937.13 in 2009 because company is investing more money in 2009 for setting up there new project & they are not believing to keeping the money or amount of money idle with them.

Book value of share is showing fluctuation continuously. If we talk about the growth l&T is achieving 20% of year on year earning before interest & tax is dipping by 130 base points to13.9%.

The company total income is increases 45997.9 in 2011 as compare to 18226.8 in 2007 showing a drastic change as company is getting a good amount of money by using the resources efficiently such as men, labor, material & strategy.

If company has to earn more profit they have to invest more and increases there expenditure. As company total expenditure in 2011 is 38337.63 crore. As to increase the production more amount of employee cost, power & fuel cost & various selling expenses bear up by the company.

Company is having a maximum earning per share in 2008 of 74.55 rs as no. of share is also low compare to 2011 where eps is only 49.53 showing how the no. of share is increases in 2011 to get more amount of money from the public.

While seeing the liquidity rate of the company it is showing that company is not having ample amount of current assets with them and current ratio of company is doing better year on year and total debt of firm is decreasing which helping the company to make there position strong.

L&T FINANCE 2012

Profitability ratio of company in 2007 to 2011 is showing that profit percentage is deceased earlier & than gradually increased .

Solvency ratio of the company shows some improved performance as company debt were decreasing in comparison of the total capital. A performance of the company is improving day by day showing that investors can invest money in this company with more reliable and assurance.

Company turnover ratio is 28.93 in 2011 as compare to 27.09 in 2010 showing how the how faster the inventory are coveting into sales showing a positive sign that firm is doing well.

Exports as percent of total sales ratio is 14.50 in 2011 as compare in 18 in 2010 showing that company exports volume of trade ha been affected due to international market fluctuation slowdown the economy growth.

Import component as raw material consumed showing that company in 2010 it is 54% as compared to 2011 is only 37% showing how the demand for production is suffer due to slowdown of the world economy .

Conclusion we can say that L & T finance is growing tremendously in five years company has created a good name in the investors minds. It is good to invest in the company as company fundamentals are really strong in the point of view of equity investors. The liquidity and solvency position of the company is equally good so there is no harm to lend money to this L & T finance company. The company is growing there market internationally also they are coming with new offers for the public. It helping them to image building. Constantly growing there profits and revenues interprets that how financial sound company is it.

L&T FINANCE 2012