BRACT’s

Vishwakarma Institute of Management (An ISO 9001-2008 Certified Institute)

(Approved by AICTE-New Delhi, Recognized by Government of Maharashtra and Permanently Affiliated to University of Pune) MBA – Programme – Rated as “MH-A” by CRISIL

Recipient of the 19th Dewang Mehta B School Award for the Best B School with Academic Inputs in Marketing Rewarded as “Second Best Professional Institute in Urban Area Category” by the University of Pune

1 Executive Summary2 Project Objective3 Introduction4 Markets5 Financial Information6 Corporate Governance7 CSR Activities8 Conclusion9 References

I

Project Report

On

Larsen & Toubro Limited (L&T)

For the subject,

Enterprise Analysis – Desk Research (Course Code: 115)

Submitted by,

ABC,

MBA – I, Div. – A

Roll No –

ACKNOWLEDGEMENT

I have great pleasure in submitting this project report on “Larsen & Toubro Limited (L&T)”. Before I get into the detail of this project I would like to add a few Heart full words of thanks for the persons who have helped me directly or indirectly to achieve my goal.

II

INDEX

Sr. No. Topic Page No.

1 Executive Summary 2

2 Project Objective

3 Introduction

4 Markets

5 Financial Information

6 Corporate Governance

7 CSR Activities

8 Conclusion

9 References

1

1. Executive Summary

2

2. Project Objective

3

3. Introduction

3.1 Larsen & Toubro Limited (L&T)

Larsen & Toubro (L&T) is India's largest engineering and construction company. L&T,

along with its group companies, provides integrated design, engineering, procurement,

construction and project management services in various sectors. L&T has a global presence,

with operations across over 30 countries. The company operates in multiple segments -

Engineering and Construction (E&C), Electrical and Automation (E&A), Machinery and

Industrial Products (MIP) and others.

Engineering and Construction (E&C) includes:

i) Construction- Buildings, infrastructure etc.

ii) E&C Projects- Turn key projects, turbines, boilers, refineries

iii) Heavy industry- Heavy engineering & ship building.

Electrical and Automation (E&A) includes:

i) Electrical & automation products, metering systems, medical equipment, petrol

dispensing &pumps systems.

Machinery and Industrial Products (MIP) includes:

i) Construction & mining equipment

ii) Industrial products & machinery like valves, welding & cutting tools, etc.

Others: Engineering Services

4

3.2 Major subsidiaries:

L&T InfoTech:

i) Provides IT/ITes and consultancy solutions to sectors such as Banking, Financial

Services and Insurance (BFSI), Technology, Energy, Petrochemicals etc.

ii) Has a global presence as majority of its clients are MNCs.

L&T Finance Holdings:

i) Provides financing solutions to Infrastructure players, retail players, corporates

etc. through three subsidiaries.

ii) Offers additional services for asset management and investment management.

L&T Infrastructure Development Projects Ltd:

i) Handles all development projects, across sectors like Roads & Highways, Ports and

Metro Rail.

ii) Executes projects in railways, power transmission and public utilities, which are

executed via SPVs.

5

L&T FZE:

i) International arm of L&T, which handles electrical automation, telecommunication

and instrumentation projects.

ii) Provides power management, telecommunication and other industrial control systems

to several industries.

6

4. Markets

Key projects during 2013-14:

I) Domestic:

i) Design. Engineering, Manufacture, supply, election and commissioning of

two co a I-fired thermal units of 660 MW each with supercritical

parameters at Chhabra in Baran District in Rajasthan.

( Project cost in Rs. Million: 56,890).

ii) A) Construction of residential towers and commercial development

across India.

B) Execution of-APDRF (part B) project on Tmkey basis at.Amritsar,

Jalandhar and Ludhian city.

C) Construction of Solar PV plants in Rajasthan and Tuticorin. Tamil

Nadu.

D) Infrastructure and Metallurgical and Material Handiling Business

( Project cost in Rs. Million: 37,000).

iii) A) Construction of residential apartments in southern part of the

country

B) Construction of 400 kV and 200 kV transmission lines at various

location across India.

C) Construction of water supply waste water and sewerage scheme

across the country.

D) Various ongoing projects across various other Business Units.

( Project cost in Rs. Million: 20,040).

iv) EPC order- construction of double track corridor from Rewari in Haryana

to Iqbalgarh in Gujarat via Rajasthan, spanning three states.

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( Project cost in Rs. Million: 66,995).

v) A) Construction of office buildings at Bangalore and Ahmedabad

from esteemed customers.

B) Turnkey EPC of a solar photovoltaic power plant in Tamil Nadu.

C) Design, detail engineering, testing and commissioning of 25 kV

AC traction. 33 kV auxiliary sub stations, associated cabling and SCADA

systems for underground corridor of line-S of the Delhi MRTS project-

phase 3for Delhi Metro Rail Corporation Ltd.

D) Supply, installation. Testing and commissioning of E&M fire

detection and fire suppression system of elevated stations of Delhi MRTS

Projects- Phase 3.

(Project cost in Rs. Million: 20,020).

vi) A) Construction of residential tower, a cement plant and a factory at

various locations across India, including additional orders from operating

projects.

B) Construction of an elevated viaduct, elevated stations including

architectural finishing work of stations and connecting the viaduct and

ramp to the depot on Alwaye-Petta line of the project for Kochi MRP.

C) Designing and construction of2X25 kV electrification, signaling,

telecommunication and associated works for a double tract railway line

between New Karwandiya to Durgauti section of the eastern corridor.

D) EPC order-Water supply distribution system for 97 villages at

Tehsil Nadnu in Rajasthan.

E) Operating projects under Power Transmission and Distribution

Business

(Project cost in Rs. Million: 25,420).

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II) International:

i) Development of the prestigious Midfield Terminal complex for Abu

Dhabi Airports Company PJSC, UAE

ii) Manufacture and supply 11 kV Vacuum Circuit Breakers fVCBs over a

two-year period to distribution stations across Qatar.

9

5. Financial Information

5.1 Weak execution impacts revenue growth: During Q1 2013-14, the company's order

inflows grew by 29 per cent y-o-y, led by orders from the real estate and railways segment.

However, the company's revenues grew by a tepid 5 per cent y-o-y on account of weak

execution. Healthy order inflows coupled with weak execution led to an 8 per cent growth in the

company's order book.

Order Inflows (Rs. billion) :

Order book to turnover:

10

5.2 Order book driven by infrastructure projects: The Company’s order book remains

well-diversified among sectors, such as power, gas, infrastructure and process engineering.

Within infrastructure, orders are further diversified into sectors like ports, roads, bridges, power,

hospitals, real estate etc. In Q1 2013-14, infrastructure sector accounted for 67 per cent of the

order book. Additionally, the company has a fair mix of government projects (35%), private

sector projects (53%) and in-house development projects (12%). The share of the power segment

has declined significantly from 30 per cent in 2009-10 to 10 per cent in Q1 2013-14. Also, the

share of the oil and gas segment has dropped significantly by 9 per cent to 6 per cent in the same

period. L & T's order book consists of domestic orders to the tune of 88 per cent. This

diversification in orders protects the company from any adverse impact on its overall

performance owing to a slowdown in any geography/ segment.

Trends in order book mix:

11

5.3 Financial performance

Larsen & Toubro Ltd.

Financial parameters Unit Standalone Consolidated

2010-11 2011-12

2012-132010-112011-122012-13

Operating Income Rs. Million438,259 533,604 611,667 519,947 644286 746,585

Net worth Rs. Million217,201 250,590 283,757 143,043 186,925 263,855

Net profit Rs. Million39,572 44 562 49,074 45405 47,368 52,375

Operating margin Per cent 12.7 12.1 10.6 16.6 16.4 16.4

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Net Margin Per cent 9.0 34 3.0 3.7 7.4 7.1

Return on capital employedPer cent 24.2 22.0 21.4 18.9 16.2 15.1

Debt equity ratio Times 0.3 04 0.3 2.6 2.3 2.5

Net cash accruals to debt Times 0.5 04 0.5 0.1 0.1 0.1

Interest coverage Times 9.1 10.0 7.4 5.2 4.0 2.9

Assets turnover ratio Times 5.5 5.7 5.6 4.4 4.1 2.9

Current Ratio Times 1.2 1.3 1.4 1.6 1.6 1.7

Creditors Days 232 216 209 266 216 227

Debtors Days 104 129 136 104 116 113

Source: CRISIL Research

5.4 Q1 2012-13: Muted revenue growth, operating margins decline

Larsen & Toubro Ltd.

Financial StandaloneApr Junparameters Unit Apr Jun

FY14 FY13 y-o-y Growth

Net sales Rs. Million 125,551 119,554 5%Operating profit Rs. Million 10,715 10,870 -1%Net profit Rs. Million 7,560 8,637 -12%Operating margin Per cent 8.5 9.1 -Net Margin Per cent 6.0 7.2 -Source:CRISIL Research

13

5.5 Stock Index:

Stock Index

Exchange (NSE)

Date : 24/10/13

Open (Rs.) : 945.75

High (Rs.) : 973.50

Low (Rs.) : 943.25

Traded Qty. : 3,648,616

Current : 965.65

%Change :  1.72

Market Cap.(Rs. Billion) : 893.90

Stock Index

Exchange (BSE)

Date : 24/10/13

Open (Rs.) : 947.00

High (Rs.) : 972.25

Low (Rs.) : 944.00

Traded Qty. : 466,305

Current : 964.60

%Change :  1.83

Market Cap.(Rs. Billion) : 892.9314

Larsen & Toubro LimitedAs of Oct 24, 2013

Exchange

Current

Prev Close

Today's High

Today's Low

52 Week High

52 Week Low Volume

BSE1 964.60 947.30 972.25 944.00 1152.07 678.10 466305

NSE2 965.65 949.35 973.50 943.25 1152.40 677.15 3648616

Nifty 5years range:

 INR

15

Sensex 5years range :

  INR

6. Corporate Governance

6.1 BOARD OF DIRECTORS:

A.M. NAIK

Group Executive Chairman

K. VENKATARAMANAN

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Chief Executive Officer & Managing Director

M. V. KOTWAL

Whole-time Director & President(Heavy Engineering)

S. N. SUBRAHMANYAN

Whole-time Director & Sr. EVP (Infrastructure & Construction)

17

R. SHANKAR RAMAN

Whole-time Director & Chief Financial Officer

SHAILENDRA ROY

Whole-time Director & Sr. EVP (Corporate Affairs & Power)

6.2 NON-EXECUTIVE DIRECTORS

• S. Rajgopal

• S.N. Talwar

• M.M. Chitale

• N. Mohan Raj

• Subodh Bhargava

• A.K. Jain

• M.Damodaran

• Vikram Singh Mehta

• Sushobhan Sarker

6.3 AUDIT COMMITTEE

Terms of reference:

i) The Audit Committee oversees the Company's financial reporting process and

disclosure of its financial information, to recommend the appointment of Statutory

Auditors and fixation of their remuneration, to review and discuss with the Auditors

about internal control systems, the scope of audit including the observations of the

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Auditors, adequacy of the internal audit system, major accounting policies, practices

and entries, compliance with accounting standards and Listing Agreements entered

into with the Stock Exchanges and other legal requirements concerning financial

statements and related party transactions, if any, to review the Company's financial

and risk management policies and discuss with the Internal Auditors any significant

findings for follow-up thereon, to review the Quarterly, Half-yearly and Annual

financial statements before they are submitted to the Board of Directors.

ii) The Committee also meets the operating management personnel and reviews the

operations, new initiatives and performance of the business units. Minutes of the

Audit Committee Meetings are circulated to the Members of the Board, discussed and

taken note of. The Audit Committee of the Board of Directors was formed in 1986

and comprises four Non-Executive Directors.

iii) The Chief Financial Officer and Chief Internal Auditor are permanent invitees. The

Company Secretary is the Secretary of the Committee.

6.4 NOMINATION & COMPENSATION COMMITTEE

Terms of reference:

To review, assess and recommend the appointment of Executive and Non-Executive

Directors and, to review their remuneration package, to recommend compensation to the Non-

Executive Directors in accordance with the provisions of the Companies Act, 1956, to consider

and recommend Employee Stock Option Schemes and to administer and superintend the same.

Composition:

The committee comprises 3 Non-Executive Directors and Chairman & Managing

Director.

6.5 SHAREHOLDERS' GRIEVANCE COMMITTEE

Terms of reference:

To look into the investors complaints, if any, and to redress the same

expeditiously. Besides, the committee approves allotment, transfer and transmission of

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Shares, Debentures and any other securities and issue of duplicate certificates and new

certificates on split/consolidation/renewal etc. as may be referred to it by the Share

Transfer Committee.

Composition:

The Shareholders' Grievance Committee presently comprises 2 Executive Directors and a

Non-Executive Director.

6.6 MEANS OF COMMUNICATION

i) Quarterly and Annual Results are published in prominent daily newspapers viz.,

The Financial Express, The Hindu Business Line & Loksatta. The said results are

made available on the Company's website, www.larsentoubro.com

ii) Official news releases, presentations, etc. made to institutional investors and the

shareholding pattern of the Company, on a quarterly basis are displayed on the

Company's website, www.larsentoubro.com

iii) Management's Discussion & Analysis forms part of the Annual Report, which is

mailed to the shareholders of the Company.

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7. CSR Activities

L&T believes that the true and full measure of growth, success and progress lies beyond

balance sheets or conventional economic indices. It is best reflected in the difference that

business and industry make to the lives of people. Through its social investments, L&T addresses

the needs of communities residing in the vicinity of its facilities, taking sustainable initiatives in

the areas of health, education, environment conservation, infrastructure and community

development.

The company proactively provides assistance in situations such as natural calamities and

assists victims of nature's fury or social neglect. Many social initiatives are undertaken in

partnership with government agencies and NGOs.

HEALTH

L&T's participates in building a healthy community through continuing initiatives

in several areas of healthcare, with a focus on mother & child care and HIV/AIDS

awareness. All L&T locations, including construction sites, have in-house AIDS

awareness programs. Five additional mother & child care centers were set up in 2006-07.

In partnership with local NGOs, these centers benefit children of commercial sex

workers, street children and tribal communities.

Through health care centers and regular family camps L&T organizes health

checkups, provides gynecology and laboratory facilities, carries out free cataract

surgeries and intra ocular lens implants, and helps maintain health data for children.

Supply of equipment and aid for orphanages and physically challenged children, periodic

counseling to combat rampant alcoholism, awareness camps on childcare, reproductive

health, sanitation, dental check-up, provision for safe drinking water, cancer awareness

etc. are other healthcare activities that L&T supports.

EDUCATION

L&T's diverse and sustained programs in education provide underprivileged

children with learning opportunities through supply of educational materials, teaching

aids, recreational tools and up scaling school infrastructure. L&T also enriches children's

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lives through programs like summer camps, math coaching, providing facilities like

science laboratories, scholarship to deserving students, etc.

The vocational training institutes of the Larsen and Toubro Public Charitable

Trust provide local communities with skill-based training in Formwork, Masonry, Agro

Mechanics, Electricals, Fabrication, Welding and Housekeeping. Various diploma

courses are also conducted by L&T Institute of Technology for the children of

employees. L&T has developed training modules in local languages in six centers across

India for imparting skills sets in construction. L&T Training Centers provide courses for

improving the standards of electrical engineering practices and for upgrading knowledge

of maintenance, repair and welding.

ENVIRONMENT

Global warming: at L&T, we have always been conscious of the need to maintain

harmony with the environment. We continuously seek newer environment-friendly

approaches in all our operations – energy conservation, exploring alternative sources like

wind and solar energy, waste water reduction, etc.

The Zero Discharge approach of the Powai Campus saves over 350,000 liters

water every day through water treatment and recycling. More than 13,500 trees have been

planted in different L&T campuses in the last year, and an additional 4,000 saplings were

distributed among local communities.

RESPONSE TO NATURAL CALAMITIES

L&T and its employees have provided relief measures during natural calamities

like earthquake and floods. L&T has assisted in disaster relief through employee and

corporate donations, employee volunteering, supply of construction material, medical and

food supplies. After the floods in Surat (Gujarat-India), L&T played a major role in road-

clearing operations, organizing medical camps, and supply of food, water, clothes and

other relief materials.

EMPLOYEE VOLUNTEERING

L&T encourages employees to volunteer for CSR activities, resulting in a self-

driven approach while retaining consistency. L&T employees and the ladies clubs formed

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by their families at different locations, serve their communities by investing personal

resources and time.

From taking initiatives in building the next generation of productive citizens,

empowering women, paying regular visits to old age homes and orphanages, to

organizing blood donation camps, our employees have always believed in truly making a

difference to the world in which they live.

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8. Conclusion

Larsen & Toubro Limited (L&T) is a technology, engineering, construction and

manufacturing company. It is one of the largest and most respected companies in India's

private sector.

More than seven decades of a strong, customer-focused approach and the continuous quest

for world-class quality have enabled it to attain and sustain leadership in all its major lines

of business.

L&T has an international presence, with a global spread of offices. A thrust on international

business has seen overseas earnings grow significantly. It continues to grow its global

footprint, with offices and manufacturing facilities in multiple countries.

The company's businesses are supported by a wide marketing and distribution network, and

have established a reputation for strong customer support.

L&T believes that progress must be achieved in harmony with the environment. A

commitment to community welfare and environmental protection are an integral part of the

corporate vision.

In response to changing market dynamics, L&T has gone through a phased process of

redefining its organisation model to facilitate growth through greater levels of

empowerment. The new structure is built around multiple businesses that serve the needs of

different industries.

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AWARDS & RECOGNITION

The NDTV Profit Business Leadership Award Affirming L&T's stature in

building infrastructure, the Company was honoured with NDTV Profits Business

Leadership Award.

Ranked 3rd in the Greenex : L&T was ranked third in Greenex - a first-of-its-kind Green

Index constituted by Bombay Stock Exchange that assesses the carbon performance of

companies drawn from the top 100 companies listed by BSE.

Among the top 5 thought Leader Brands in India: L&T stood among the top 5 in a

Thought Leaders in India index published by a London based communications agency.

Among the top 10 in SL&P ESG India : L&T was the only company from the

engineering segment to be ranked among the top 10 in Standard L& Poor’s (SL&P) ESG

India index of companies in terms of Environment, Social and Governance performance.

Among the top 5 in RepuTex ESG ratings: L&Ts sustainability practices and

disclosures are ranked amongst the top in Asia in the Environment, Social L& Governance

(ESG) 2011 ratings by RepuTex, Hong Kong - a leading ESG,carbon advisory and

independent research organisation. L&T is also the only Indian company listed among the

top 5 in Asia in the Industrial segment rating.

Laurels for excellence in quality systems from FICCI: Platinum Awards for

Excellence in Quality Systems from FICCI were won by L&T Heavy Engineering, Powai

campus - Mumbai and by L&T Komatsu, Bangalore Works.

The international 'Be Inspired Award' for L&T-SL&L: L&T-Sargent L& Lundy

(L&T-SL&L) honored with the prestigious 'Be Inspired Award' from Bentley Systems Inc. in

Amsterdam.

CII-EXIM Bank Business Excellence Award conferred on L&T AIL for the third year

in a row: L&T - Audco India Ltd. (AIL) won this award in recognition of business

excellence initiatives under the MIP IC operational excellence programme to enhance the

competitive edge and the quality of AIL's products and services.

Institutional Investor magazine honors team L&T with high rankings: L&T ranked

'Second' in India and Fifth' in Asia in the All Asia (excluding Japan) Investor Relations (IR)

Perception Study conducted by the prestigious Institutional Investor magazine. The

Company, its leadership team and senior executives also scored high in other rankings.

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11 ABCI awards for L&T: L&Ts communications bagged a total of 11 awards at

Association of Business Communicators of India (ABCI) Awards. The tally includes awards

secured across the spectrum of In-house Magazines, Brochures, Calendars, Photographs and

Sustainability Report. The number of awards received was among the highest secured by any

company, qualifying L&T for the coveted 'Champion of Champions Award'

Among the top 10 Best Companies to Work For, India: L&T ranked among the top

10 in a Best Companies to Work For listing published by Business Today, India.

The ICC Corporate Governance and Sustainability Vision Award 2012: The Indian

Chamber of Commerce (ICC) awarded L&T with the Corporate Governance and

Sustainability Vision Award 2012 in the Sustainability Reporting category.

ICSI The Golden Peacock Global Award: L&T bagged the Golden Peacock Global

Award for Excellence in Corporate Governance - 2011, constituted by the Institute of

Directors (IoD) and the World Council for Corporate Governance.

Heavy Engineering wins the National Award for export excellence: Heavy

Engineering business won the National Award for export excellence, presented by the

Engineering Export Promotion Council of India (EEPC).

26

IN THE NEWS

19 Oct 2013: L&T in Top 10 - Business world’s Real 500 Rankings

26 Sep 2013: L&T: Corporate Citizen of 2013 - The Economic Times

25 Sep 2013: L&T Scores High in Global 500 Climate Change Report 2013

20 Sep 2013: L&T Technology Services - Leader In Engineering Services: Zinnov

Study

22 Aug 2013: L&T among India’s Top 5 Most Respected Companies - Businessworld

10 Aug 2013: Capital Goods Skill Council Launched

31 Jul 2013: L&T in Top 10 ‘Best Indian Brands’ - Interbrand & The Economic Times

Survey

18 Jul 2013: L&T in Top 5 ‘Best Companies to Work For’ - Business Today Survey

12 Jul 2013: L&T is India’s Most Admired Company in E&C Sector - Fortune India

Survey

05 Jul 2013: National ‘Good Design’ Award for L&T’s Solar Lantern

05 Jul 2013: L&T Integrates Valves Operations Under Single Entity - ‘L&T Valves

Limited’

15 May 2013: L&T Ranks High In International Emission Disclosure Rankings

04 May 2013: Mr. A.M. Naik Honoured By Gujarat CM on State’s Formation Day

22 Apr 2013: L&T - One of India’s Most Attractive Employers - Randstad Survey

19 Apr 2013: ONGC’s Jack-Up Rig Sagar Uday Flagged Off From L&T Yard In Oman

09 Apr 2013: L&T bags NDTV Profit Business Leadership Award

16 Mar 2013: Mr. R. Shankar Raman is CFO of the Year - CNBC TV 18

23 Feb 2013: L&T Wins ICC Corporate Governance & Sustainability Vision Award

22 Feb 2013: L&T Conferred ‘Caring Company Award’ By World CSR Congress

13 Feb 2013: L&T Power Wins ‘Golden Peacock National Quality Award’

23 Jan 2013: L&T Ranks Among Top 10 In Carbon Disclosure Leadership Index

19 Jan 2013: Mr. A.M. Naik Awarded Doctorate from Gujarat Technological

University

16 Jan 2013: L&T Heavy Engineering Bags CII–ITC Sustainability Award

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CORPORATE ADS

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9. References

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