history of larsen and tubro

7/29/2019 History of Larsen and Tubro

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DEFINITION OF 'INITIAL PUBLIC

OFFERING - IPO'

The first sale of stock by a private

company to the public. IPOs are

often issued by smaller, younger

companies seeking the capital to expand,

but can also be done by large privately

owned companies looking to become

publicly traded.

In an IPO, the issuer obtains the

assistance of an underwriting firm, which

helps it determine what type of securityto issue (common or preferred), the best

offering price and the time to bring it to


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market.

Also referred to as a "public offering".

IPOs can be a risky investment. For the

individual investor, it is tough to predict

what the stock will do on its initial day of

trading and in the near future because

there is often little historical data with

which to analyze the company. Also, most

IPOs are of companies going through a

transitory growth period, which are

subject to additional uncertainty

regarding their future values.


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HISTORY OF LARSEN AND TOUBRO

The company was founded

inMumbai in 1938 by two Danish

engineers, Henning Holck-

Larsen and Sren Kristian Toubro. The

company began as a representative of

Danish manufacturers of dairy equipment.

However, with the start of the Second

World War in 1939 and the resulting

restriction on imports, the partners started

a small workshop to undertake jobs and

provide service facilities.
http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Mumbai


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(HENNING HOLCK-LARSEN)

(SOREN KRISTIAN TOUBRO)

4.7.1907 - 27.7.2003

27.02.1906 4.3.1982

Germany's invasion of Denmark in 1940

stopped supplies of Danish products. Thewar-time need to repair and refit ships

offered L&T an opportunity, and led to

the formation of a new company, Hilda

Ltd., to handle these operations. L&T also

started two repair and fabrication shops

signalling the expansion of the company.


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The sudden internment of German

engineers in India (due to suspicions

caused by 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.

In 1944, ECC was incorporated by the

partners; the company at this time was

focused on construction projects

(Presently, ECC is the construction division

of L&T). L&T decided to build a portfolio

of foreign collaborations. By 1945, the

company represented British

manufacturers of equipment used tomanufacture products such as


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hydrogenated oils, biscuits, soaps and

glass.

In 1945, the company signed an

agreement with Caterpillar Tractor

Company, USA, for marketing earth

moving equipment. At the end of the war,

large numbers of war-surplus Caterpillar

equipment were available at attractive

prices, but the finances required were

beyond the capacity of the partners. This

prompted them to raise additional equity

capital, and on 7 February 1946, Larsen &

Toubro Private Limited was born.


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Post Independence

Independence and the subsequent

demand for technology and expertise

offered L&T the opportunity to

consolidate and expand. Offices were set

up in Kolkata (Calcutta), Chennai (Madras)

and New Delhi. In 1948, fifty-five acres of

undeveloped marsh and jungle was

acquired in Powai, Mumbai. That

uninhabitable swamp is presently a

manufacturing landmark.

In December 1950, L&T became a

public company with a paid-up capital of


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Rs.2 million. The sales turnover in that

year was Rs.10.9 million. Notable orders

executed by the Company during this

period included the Amul Dairy at Anand

and Blast Furnaces at Rourkela Steel Plant.

With the successful completion of thesejobs, L&T emerged as the largest erection

contractor in the country.

In 1956, a major part of the company's

Mumbai office moved to ICI House in

Ballard Estate, Mumbai; which would later

be purchased by the company and

renamed as L&T House, its presentCorporate Office. The sixties were also a

decade of rapid growth for the company,
http://en.wikipedia.org/wiki/Rourkela_Steel_Planthttp://en.wikipedia.org/wiki/Rourkela_Steel_Plant


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and witnessed the formation of many new

ventures: UTMAL (set up in 1960), Audco

India Limited ( 1961), Eutectic Welding

Alloys (1962) and TENGL (1963).

In 1976, Holck-Larsen was awarded the

Magsaysay Award for International

Understanding in recognition of his

contribution to India's industrial

development. He retired as Chairman in

1978.


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Operating Divisions

Engineering and ConstructionProjects.

L&T Power.


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Heavy engineering.Construction.Electrical and electronics.Information technology.L&T machinery & industrialproducts.


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Subsidiaries & Joint

Ventures

L&T - Komatsu Limited.L&T Finance.Larsen and toubro infrastructurefinance.

L&T Integrated EngineeringServices (IES).

L&T Valves.


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L&T finance holdings limited a

subsidiary of Larson & tourbo issues initialpublic offering of equity shares with a

face value of rs.10 with price of band of

rs.51 to rs.59 per share. L&T finance

holdings limited incorporated in 2008,

which offers a wide range of financial

products and services. The company is

promoted by Larson & toubro limited,

one of the leading companies in India.

The L&T finance holdings limited

issues IPO of around 2.11 crore to 2.44

crore equity shares to raise around


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rs.1245 crore. The IPO is 100% book built

issue and one can bid for a minimum of100 equity shares and the multiple of 100

equity shares thereafter.

The issue already opened today, 27th

July, 2011 and will be closed on 29th

july,2011. This is a grade 5 IPO which

indicates strong fundamentals. The shares

will be listed will be listed in both BSE and


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NSE , the book running lead managers

(BRLMs) are Citigroup global marketsIndia private limited, HSBC securities &

capital markets Pvt. ltd and JM financial

consultants Pvt. ltd and the registrar is

sharepro services Pvt. ltd.

The bankers for issuing IPO are axis

bank ltd, OBS bank ltd, city union bank

ltd, Dhanlaxmi bank ltd. The federal bank

ltd, Citibank N.A, the hongkong &

shanghai banking corporation ltd., ICICI

bank ltd, IDBI bank ltd, state bank of India

and HDFC bank ltd.


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L&T Finance Holding IPOIssue Detail:

Issue Open: Jul 27, 2011 - Jul 29,

2011

Issue Type: 100% Book Built Issue

IPO

Issue Size: Equity Shares of Rs. 10

Issue Size: Rs. 1,245.00 Crore

Face Value: Rs. 10 Per Equity Share

Issue Price: Rs. 51 - Rs. 59 Per


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Equity Share

Market Lot: 100 Shares

Minimum Order Quantity: 100

Shares

Listing At: BSE, NSE

Till 29 July 2011, Final Subscription

Qualified Institutional Buyers (QIBs): 1.93times

Non Institutional Investors: 6.18 times

Retail Individual Investors (RIIs): 9.61

times

Employee Reservations: 1.53 times

Others: 3.35 times


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Total Subscription: 5.34 times (L&T

Finance IPO Subscribed)

Capital Structure

Pre Issue Equity: Rs. 1477.02crs

Post issue Equity: Rs. 1748.04crs

Listing: BSE & NSE

Lead Managers: JM Financial Consultants

Pvt. Ltd, Citigroup Global Markets IndiaPvt. Ltd, HSBC Securities & Capital

Markets (India) Pvt. Ltd, Barclays

Securities (India) Pvt. Ltd, Credit Suisse

Securities (India) Pvt. Ltd

Co- Book Lead Manager: Equirus Capital

Pvt. Ltd.


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Registrar to issue: SharePro Services

(India) Pvt. Ltd

L&T Finance Holdings, a subsidiary of

engineering conglomerate L&T opens its

IPO for subscription today for Jul 27, 2011aggregating to Rs 1,245crores. The IPO

was subscribed 0.46 times on Day 1.

The IPO received bids for 9.82crore

shares, compared with 21.45crore shares

on offer. The company has fixed a price

band of Rs 51-59 per share. The company

is aiming for a 17% stake dilution.The issue closed on Friday, 29 July

2011.


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L&T Finance Holdings on Tuesday said

the company has raised around Rs.

153crore from anchor investors for its

initial public offer, which opened for

subscription yesterday.

The company is allocating equity

shares to anchor investors at a price of Rs.

56 apiece, aggregating to Rs. 153crore.

"The Reserve Bank of India's higher-than-expected hike on Tuesday weighed

on the anchor investment in L&T Finance

Holdings at the company has raised Rs

153crore by placing shares of threeinstitutional investors at Rs 56 per share",

says a report by Nirmal Bang Securities.


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Earlier, the company had raised around

Rs 330crore through private equity from

Capital International PE Fund through a

pre-IPO placement.

The proceeds from the issue will be

used to augment the capital base of L&T

Finance and L&T Infra and to meet the

capital requirements arising out of

expected growth in their assets, primarily

the loan portfolio.

Currently the parent firm Larsen &

Toubro (L&T) holds 95.94 per cent in the

company and the remaining 4.06 per cent


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is held by private equity fund Capital

International. Post listing, parent L&T's

stake in the company would come down

to 83 per cent.

L&T Finance Holdings offers diverse

range of financial products and services

across corporate, retail and infrastructure

finance sectors through its wholly owned

subsidiaries.

Lots of brokerages are bullish on L&T

Finance Holding IPO and suggested to

subscribe keeping longterm perspective

in mind.


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Nirmal Bang

Securities

"L&TFH shares is offered at 2.04x P/BV

and 16.9x P/E calculated at higher band of

price for FY12E as compared to its peersthe offer looks fairly priced for near term

and does not offer a potential upside on

listing. However, we believe with

diversified credit portfolio, L&T Finance

can weather these issues better than its

peers.

Eastern Financers


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Eastern Financers has advised investors

to 'Subscribe' to the initial public offering

of L&T Finance Holding. The issue is

attractively priced as compared to peers.

Although the company currently has a

relatively smaller book size compared to

its peers but the business model is

scalable and the growth opportunities in

these segments continue to remain high.

Aditya Birla

Money

Aditya Birla Money has recommendedlong term investors to 'Subscribe' to the


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initial public offering of L&T Finance

Holdings.

Given the pedigree and trust, it is an

excellent long term bet; however listing

gains would largely be a function of

market conditions and going by the

current market parity, we believe the short

term gains would be at best marginal.

Therefore recommend long term investors

to subscribe to this issue," the report said

Sharekhan Ltd

Sharekhan is of the view that the initialpublic offering of L&T Finance Holdings is


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available at a marginal premium to

players like IDFC and PFC.

"The issue is priced at 2.3x FY2011

book value (BV; based on post issue

equity) which is at a marginal premium to

players like IDFC, PFC etc though the

business model is not strictly comparable.

SMC

SMC has advised investors with longterm perspective to consider the initial

public offering of L&T Finance.

Considering the P/E valuation on the

upper end of the price band of Rs 59, thestock is priced at pre issue P/E of 22.20x

on its annualised FY11 EPS of Rs 2.66.


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L&T Finance Holdings has opened its

IPO on 27th July 2011 in the price band

of Rs 51-59.

This is the biggest IPO issue of this

financial year and the company expects to

Rs 1,092 crore out of the total issue size

of Rs 1,245 crore. It is expected to be

listed at a price of Rs 64, 65. Brokerage

Nirmal Bang has advised investors withlong term perspective to subscribe to the

initial public offering of L&T Finance

Holdings. The issue looks fairly priced for

the near term, the brokerage said, but

warned that it does not offer a potential

upside on listing.


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L&T Finance Holdings Ltd (LFHL) is

financial holding company offering a

diverse range of financial products and

services across the corporate, retail and

infrastructure finance sectors, as well as

mutual fund products and investmentmanagement services, through its direct

and indirect wholly owned subsidiaries.

LFHL is registered with the RBI as an

NBFC-ND-SI. It is promoted by Larsen &

Toubro Limited (L&T), one of the

leading companies in India, with interests

in engineering, construction, electrical and

electronics manufacturing and services,


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information technology and financial

services.

L&T Finance IPO hits its 1st Day in

Market

L&T Finance Holdings hit the primary

market on July 27, 2011. The IPO was

subscribed 46%on the first day of the

issue. The price band decided for the IPO

is Rs. 51 to Rs. 59 per share. The issue
http://www.goodreturns.in/news/2011/07/28/finance-ipo.htmlhttp://www.goodreturns.in/news/2011/07/28/finance-ipo.html


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closes on July 29, 2011. The IPO received

bids for 9.82crore shares, compared with

21.45crore shares on offer.

The company has intended to raise Rs

12.45 billion from this initial public

offering. The company has raised aroundRs 1.6 billion by selling shares to its

anchor investors those are DSPBlackRock,

and investment arms of Malaysia's

Khazanah and U.S. private-equity fund

Capital

International. The company has raised

almost Rs. 153.04crore by selling 2.73

shares at Rs. 56each.
http://www.goodreturns.in/news/2011/07/28/finance-ipo.htmlhttp://www.goodreturns.in/news/2011/07/28/finance-ipo.html


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two of its subsidiaries - L&T Finance and

L&T Infrastructure Finance.


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Indian shares end down 2nd Day; banks,

L&T fall

Indian shares declined for the second

day, closing nearly 1 percent lower on

Wednesday, with financials leading the fallon concerns their margins could shrink in

the near term. Weak world markets also

kept the sentiment subdued. Banks have

been raising their deposit rates to fend

off tight cash conditions, while building

inflation pressure is expected to trigger a

hawkish monetary stance by the central


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bank, a move that could douse demand

for loans

Deposit rates are shooting up and it

doesnt look like lending rates will keep

pace with them. This will impact banksnet interest margins, Ambareesh Baliga,

vice-president of Karvy Stock Broking,

said.

Also, asset quality is a big concern.

And the RBI (Reserve Bank of India) may

also hike rates to contain inflation.

The Reserve Bank of India, which had

raised rates six times in 2010 before


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pausing in December, is widely expected

to hike key rates at its policy reviewscheduled for Jan. 25.[ID:nBMA009267]

The 30-Share BSE index .BSESN closed

0.96 percent, or 197.62 points, lower at20,301.10 points, with 24 of its

components closing in the red.

Volume was low with only 308 millionshares changing hands on BSE, where

declining shares were nearly double the

advancing ones.

The benchmark index climbed 17.4

percent in 2010, backed byrecord foreign


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fund investment of $29.3 billion. Leading

lenders State Bank of India (SBI.BO), ICICIBank (ICBK.BO) and HDFC Bank (HDBK.BO)

shed between 1.3 percent and 3.1

percent. Larsen & turbo (LART.BO)

L&T Finance Holdings IPO slips below

issue price


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Shares ofL&T Finance Holdings , a

subsidiary of engineering and

construction company Larsen and

Toubro , debuted below the issue price of

Rs 52 a share on August 12.

At 9:48 hours IST, the stock was trading atRs 51.35, down 1.25%. It has touched a

high of Rs 53.85, which was the opening

price and low of Rs 49.30 a share.

Traded volume on the National Stock

Exchange was more than three crores

equity shares.

CMD of L&T, AM Naik said L&T

Finance's contribution in the entire group

would go up to 30% from 10% in future.
http://www.moneycontrol.com/india/stockpricequote/finance-investments/lt-finance-holdings/LFHhttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/finance-investments/lt-finance-holdings/LFH


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L&T Finance received Rs 1,245crore

through the issue. Parent company L&T's

stake in the company reduced to 83%

post issue.

Company intends to use issue proceeds

for augmenting the capital base of L&TFinance and L&T Infra to meet the capital

requirements arising out of expected

growth in their assets, primarily the loan

portfolio.

Issue Subscription Detail / CurrentBidding Status

Number of Times Issue is Subscribed (BSE + NSE)


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As on

Date &

Time

Qualified

Institution

al Buyers

(QIBs)

Non

Institutional

Investors

(NIIs)

Retail

Individual

Investors

(RIIs)

Employ

ee

Reserva

tions

Others Total

Shares

Offered

/

Reserve

d

75,382,41

631,617,647

73,774,510

10,204

,082

23,529

,412

214,50

8,067

Day 1 -

Jul 27,

2011

17:00

IST

0.6400 0.3900 0.4600 0.0300 0.1700 0.4600

Day 2 -Jul 28,

2011

17:00

IST

0.7200 0.5000 2.2100 0.5100 0.9600 1.2200

Day 3 -

Jul 29,

2011

19:45

IST

1.9300 6.1800 9.6100 1.5300 3.3500 5.3400


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L&T Finance IPO ListingDate

Listing Date: Friday, August 12, 2011

BSE Scrip Code:533519

NSE Symbol: L&TFH


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Listing In: B Group of Securities

Sector:

ISIN: INE498L01015

Issue Price: Rs. 52.00 Per Equity Share

Face Value: Rs. 10.00 Per Equity Share


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Listing day Trading

Information

Particulars NSC BSC

Issue Price Rs.52.00 Rs.52.00

Open Rs.53.85 Rs.51.00

Low Rs.49.30 Rs.49.50

High Rs.53.85 Rs.52.50

Last Trade Rs.50.05 Rs.49.95

Volume 98,188,155 44,321,154


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Balancesheet - Larsen & Toubro Ltd.

Particulars Mar'11 Mar'10 Mar'09 Mar'08 Mar'07

Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months

Share Capital 490.08 145.53 117.14 58.47 56.65

Reserves & Surplus 21,334.05 18,142.82 12,317.96 9,470.71 5,683.85

Net Worth 21,846.26 18,311.64 12,459.69 9,555.08 5,768.43

Secured Loans 1,063.04 955.73 1,102.38 308.53 245.40

Unsecured Loans 6,098.07 5,845.10 5,453.65 3,275.46 1,832.35

TOTAL LIABILITIES 29,007.37 25,112.47 19,015.72 13,139.07 7,846.18

Assets

Gross Block 8,897.02 7,235.78 5,575.00 4,188.91 2,876.30

(-) Acc. Depreciation 2,220.82 1,727.68 1,421.39 1,242.47 1,122.83

Net Block 6,654.07 5,484.81 4,129.02 2,920.54 1,725.54

Capital Work in Progress. 785.00 857.66 1,040.99 699.00 471.22

Investments. 14,684.82 13,705.35 8,263.72 6,922.26 3,104.44

Inventories 1,577.15 1,415.37 5,805.05 4,305.91 3,001.14


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Sundry Debtors 12,427.61 11,163.70 10,055.52 7,365.01 5,504.64

Cash And Bank 1,730.35 1,431.87 775.29 964.46 1,094.43

Loans And Advances 19,499.23 12,662.55 7,198.85 3,861.10 2,449.14

Total Current Assets 35,234.34 26,673.49 23,834.71 16,496.48 12,049.35

Current Liabilities 26,139.56 19,443.77 15,211.04 11,892.75 8,362.01

Provisions 2,233.43 2,188.36 3,066.53 2,035.42 1,180.13

Total Current Liabilities 28,372.99 21,632.13 18,277.57 13,928.17 9,542.14

NET CURRENT ASSETS 6,861.35 5,041.36 5,557.14 2,568.31 2,507.21

Misc. Expenses 0.00 0.00 0.26 3.06 9.84

TOTAL ASSETS (A+B+C+D+E) 29,007.37 25,112.47 19,015.72 13,139.07 7,846.18

CURRENT SHARE PRICE

Open price - 1352.50 High price - 1381.75 Low price -1341.00 Prev. close - 1364.45 Average price - 1362.78 No. of contracts traded - 12,797


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Turnover (Rs. In lakhs) - 43,598.74 Market lot - 250 Open interest - 5,136,750 Open interest change - 62,250 Open interest change % - 1.23

SHARE PRICES FROM 2011TO 2012


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Year Open High Low Close Volume

Feb-11 1484.70 1514.95 1463.05 1496.70 287451

Apr-11 1666.50 1675.00 1643.45 1650.95 252960

Jun-11 1642.70 1685.00 1642.00 1682.35 292438

Aug-11 1736.30 1768.00 1736.60 1762.90 97880

Oct-11 1347.00 1347.00 1303.35 1318.25 536399

Dec-11 1305.00 1325.00 1286.60 1296.70 454011

Feb-12 1319.00 1321.00 1278.00 1310.60 703549


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CONCLUSION

Current financials till 26th Aug 2011


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L & T has performed robustly in all itsparameters over the last 10 years. Its

impressive fundamentals in the past form

a strong base for its future.

L&T has clocked an impressive CAGR of

67% in its EPS which has been possible

due to the strong investment back into

the business which is evident from itshigh BVPS CAGR of almost 50%. Also, it

has improved its margins over the years

from a stagnant average of 10-11% from

FY 03 to FY 06 to 15% in the last 4 years.

In fact in 2010 the companys operating

margin has increased to 19%.


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Its Sales have registered a CAGR of 19.6%

over the last 10 years, indicating a good

order inflow over the years. Over the past

5 years the CAGR of order inflows has

been 33%. This has helped the company

register an impressive 67.2% CAGR overthe last 10 years.

Share prices went up till August 2011

but it dipped drastically after that and

there was a slight growth in February

2012. Now it is expected to grow further.

history of larsen and tubro

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