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Amity Business SchoolPERFORMANCE ANALYSIS OF LARSEN&TOUBRO
Presented by: Abhilash Mishra
MBA GENA0101909425
Amity Business SchoolObjectives
• Primary Objective is to do a performance analysis of Larsen &
Toubro with the help of primary and secondary data analysis
• Secondary Objectives
•To analyze the investor’s confidence in the company.
•To analyze the employee confidence in the performance of the company.
•Determine the consumer confidence in the company’s quality of service
as against the competitors.
To do comparative ratio analysis of top 5 companies in construction sector
including L&T and analyze the results. And to see whether the secondary analysis
results strengthen my primary analysis results.
Amity Business SchoolLARSEN & TOUBRO
India’s Largest Engineering firm
Founded in 1938 by Henning Holck-Larsen & Soren Kristian
Toubro.
Employs over 40,000 people in various states across the
country.
Has presence in various sectors such as
Headquartered in Mumbai.
NSE & BSE listed company
Chairman & Managing Director – Mr. AM Naik
Amity Business SchoolSWOT Analysis
StrengthsStrong Economic growth of countryL&T’s experience in IndiaOrder book of over 100,000 croresBrand name of Larsen & ToubroAn experienced employee baseDiversified business groupStrong financial results
WeaknessSlowdown in middle eastAverage experience employee age nearing retirementHuge attrition rateLow employee satisfactionWeek Global ReachLack of Innovation
OpportunitiesMajor Infrastructure projects coming up (govt.)India’s growth rate above 10%Opportunities from Other south Asian Countries (less dev)Global economic recoveryInvestment in Defense sector
ThreatsInflationary and cost pressuresThreat of a second Global Financial TurmoilVendor issuesGovernment policiesCompetitorsTaxation policies
Amity Business SchoolPerformance – FY’10(Crs)
• Net Sales – 43513 v/s 40187 / 8% up
• Net Profit – 5450 v/s 3789 / 31% up
• Order Book – Over 100,000 crores / 43%
up
• Dividend – 12.50/ share
• Major growth in E&C segment
Amity Business SchoolResearch Methodology
• Data was calculated through question method.• SAMPLE SIZE: 80
• TYPE OF SAMPLING:• STRATIFIED RANDOM SAMPLING
• STRATA DISTRIBUTION:• STRATA 1 - Investors (20 people)• STRATA 2 - Management (Larsen& Toubro) (20 people)• STRATA 3 - Employees (20 people)• STRATA 4 - Other Stakeholders’ (20 people)
Amity Business SchoolAnalysis of performance
• Management’s Feedback
• Employee’s Feedback
• Investor’s Feedback
• Client’s Feedback
Amity Business SchoolManagement Feedback
• Results are in line with expectations.
• Results have met shareholder’s expectations.
• Somewhat compromised on employee salary to
maintain good profitability.
• Management is Positive & Bullish about the
future growth of the company.
Amity Business SchoolEmployee Feedback
• Employee’s have rated the company’s results as good and
somewhat in line with expectations.
• They have rated management performance as average.
• ESOP scheme was praised as it has yielded good returns
for employees
• Employee’s feel that management is cutting down on
salaries to maintain profitability
Amity Business SchoolInvestor’s perspective
• Company’s year end results are in line with Investor’s
expectation
• Investor’s see a similar growth pattern for L&T in coming
years.
• Investor’s are impressed by management performance
during the year.
• Investor’s have rated L&T a better option to invest when
compared to competitors.
Amity Business SchoolClient’s Feedback
• L&T is running high on customer satisfaction and the
client’s are happy with the quality of service
• When compared to competitors, the quality is as per the
standard.
• L&T ranks well in terms of time deadlines.
• Client’s feel that L&T is quite innovative while performing
projects.
Amity Business SchoolProfit – Last 5 years
Profit After Tax for last 5 yeats
0
1000
2000
3000
4000
5000
6000
2006' 2007' 2008' 2009' 2010'
Years
Rs
(cro
res)
Series1
Amity Business SchoolNet Sales – Last 5 years
Net Sales for the past 5 years
05000
100001500020000250003000035000400004500050000
2006' 2007' 2008' 2009' 2010'
Years
Rs
( Cro
res)
Series1
Amity Business SchoolData Collection Methods
• Financial Websites – Bloomberg/Factiva
• Questionnaires
• Personal Interaction
• Annual Financial report – 2009 – 10
• Analyst’s views on – Moneycontrol.com/ rediff.com
• All five companies website.
Amity Business SchoolRecommendations
• Needs to work on Employee Satisfaction.
• Attrition rate is huge – Some mechanism is required
• Needs to work further on Client Satisfaction.
• Try to build an international image.
• Salary structure needs a revision .
• Subsidiaries require more attention – Infotech & L&T Finance.
• Plan for future as top management is nearing retiring age.
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