L&T Final Report

7/22/2019 L&T Final Report

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2013

9/5/2013

Larsen & Toubro LimitedIts all about Imagineering

By-

Anurag Pathak-12BSP2012

Sakshi Kapila

Ankush Gupta-12BSP0188

Shivani Jain-12BSP1615

Lokesh Kamra-12BSP0615


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COMPANY OVERVIEW

Larsen & Toubro (L&T or "the company") is a technology, engineering, construction, and

manufacturing company. Its other key activities include manufacturing of electrical and

electronic equipment, services, and information technology. The company operates primarily in

India. L&T is headquartered in Mumbai, India and employed about 48,754 people as on 31st

March 2012. The company recorded revenues of INR651,420.8 million ($13,588.6 million) during

the financial

year ended March 2012 (FY2012), an increase of 22.9% over FY2011. The operating profit of

the.company was INR69,167.4 million ($1,442.8 million) in FY2012, an increase of 6% over

FY2011.The net profit was INR46,936.9 million ($979.1 million) in FY2012, an increase of 5.3%

over FY2011.

KEY FACTS


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Mission and Vision of L&T Ltd.

VISION


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MISSION:

L&T Ltd shall provide products based on efficient and environment-friendly technology,

consistently surpassing cutomer expectation of quality and on time delivery.

L&T Ltd shall follow fair and transparent practices with all stakeholders and

performances excellence by innovation and continuous improvement in people, products

and services

L&T Ltd power shall foster a culture of care, challenge and empowerment among it

employees.


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BUSINESS DESCRIPTION

Larsen & Toubro (L&T or "the company") is a technology, engineering, construction, and

manufacturing company in India. It is also engaged in manufacturing of electrical andelectronic equipment, financial services, and information technology. L&T primarily operates in

India and also has international presence in various markets, including China and the Middle

East.

L&T operates through six business segments: engineering and construction, electrical and

electronics, machinery and industrial products, others, financial services, and developmental

projects. L&T's engineering and construction segment comprises execution of engineering and

construction projects to provide solutions in civil, mechanical, electrical, and instrumentationengineering (on turnkey basis or otherwise) to core sectors including railways, shipbuilding,

and supply of complex plant and equipment to core sectors. The segment capabilities include

basic/detailed engineering, equipment fabrication/supply, erection and commissioning,

procurement/construction, and project management.

The segment is sub divided into heavy engineering division (HED) and engineering,

construction and contracts division (ECCD). The HED manufactures and supplies custom

designed and engineered critical equipment and systems to core-sector industries includingfertilizers, refinery, petrochemical, chemical, oil and gas, thermal and nuclear power, aerospace,

and equipment and systems for defense applications. It is the preferred supplier of equipment

for a select range of products globally.

The ECCD undertakes engineering design and construction of infrastructure, buildings,

factories, water supply, and metallurgical and material handling projects covering civil,

mechanical, electrical and instrumentation engineering disciplines. The electrical and

electronics segment comprises manufacture and sale of low and medium voltage switchgearand control gear, custom-built switchboards, electronic energy meters/protection (relays)

systems, control and automation products, and medical equipment. The manufacturing

operations of this segment are located at Powai, Ahmednagar, Navi Mumbai, Coimbatore, and

Mysore in India.

Its international manufacturing facilities are located in China (Wuxi), Saudi Arabia, UAE (Jabel

Ali, Dubai), Malaysia, Indonesia, and Australia. The machinery and industrial products

segment comprises of two distinct business streams: industrial machinery and industrial

products. Industrial machinery manufactures and sells machinery to paper and pulp, crushing,mining, mineral processing, steel, and rubber and plastic processing industries. Industrial


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products comprise industrial valves, welding products and cutting tools L&T's others segment

includes ready mix concrete, e-engineering services and embedded systems,information

technology services and mining.

The financial services segment comprises corporate finance, equipment finance, infrastructure

financing, mutual fund services and related advisory services. The developmental projects

segment comprises development, operation, and maintenance of basic infrastructure projects,

toll collection, power development, development of urban infrastructure, and providing related

advisory services

MAJOR PRODUCTS AND SERVICESLarsen & Toubro is a technology, engineering, construction, and manufacturing company. The

company is also involved in the manufacturing of electronic and electrical equipment and

information technology.

Its major products and services include:

Turnkey projects:

Cement and allied machinery

Engineering servicesHydrocarbon

Power

Railway project

Water

Construction:

Building products

Engineering servicesInfrastructure concessions

International projects

Specialized services

Engineered products and systems:

Aerospace

Cement

Coal gasification


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Defense

Fertilizers

Nuclear power plant

Oil and gas

Petrochemicals

Refinery

Thermal power plant

Electrical and electronic products and systems:

Control and automation

Electrical systems

Medical equipmentMetering solutions and relays

-

Board of Directors


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Key Employees


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SWOT ANALYSIS

Larsen & Toubro (L&T or 'the company') is a technology, engineering, construction, and

manufacturing company. Its other key activities include manufacturing of electrical and

electronic equipment, services, and information technology.The company leverages its

resources, capabilities, and strong brand name to strengthen its market position. However,

increasing steel prices can increase the raw material costs and hamper the profitability of L&T.

Strengths

Market leadership providing competitive edge L&T is a technology, engineering, construction,

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

engineering, manufacture and integration of custom made technology-intensive equipment and

systems. The company has manufacturing facilities in India, China, Oman and Saudi Arabia;

and has its customers in more than 30 countries. L&T has a strong brand name, having built

world's largest coal gasifier made in India and exported to China, the world's biggest ethylene

oxide reactor for a petrochemical complex in the Gulf, the world's largest Fluid CatalyticCracker regenerator for a refinery, and the world's longest limestone conveyor. L&T


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also played a critical role in building India's first nuclear powered submarine. The company can

leverage its strong brand name and market leadership position to gain competitive advantage

and also expand into international markets.

Strong technical expertise reinforce leadership position

Technology plays a very important role in all of L&T's operations. In engineering and

construction, L&T's technology capabilities include a strategic mix of in-house strengths and the

expertise of its joint venture partners. Engineering centers carry out process design and

simulation, analysis of computational fluid dynamics, mechanical design, failure analysis, and

trouble shooting. L&T has set up an engineering and project management centre in Abu Dhabi

to undertake oil and gas related projects as well as engineering and consultancy services. In

manufacturing, L&T's design and engineering capabilities enable it to set new benchmarks in

terms of scale, sophistication, and speed.The company has engineering centers at the

manufacturing locations.

L&T's electrical and electronics division is a pioneer in the design of switchgear and

switchboards that are engineered for tropical conditions. It has built further on this experience,

and has leveraged its research and development strengths to develop a host of new products

and features.In technology services, L&T develops optimal solutions for its global clients.The

embedded systems unit provides technological assistance across a broad spectrum of

operations including design, maintenance, re-engineering, testing, prototyping, and industrial

design. A strong technical expertise helps the company to reinforce its leadership position,

sustain its competitive strengths, and provides with an edge over its competitors.

Diversified revenues providing resilience

L&T has an array of businesses in diverse areas. The company is mainly engaged in technology,

engineering, construction, and manufacturing. For instance, in FY2011, the companys revenues

were distributed among business divisions as follows: engineering and construction (75.3% of

the total revenues during FY2011), electrical and electronics (7.3%), machinery and industrial

products (6%), financial services (3.9%), developmental projects (2.1%), and others (5.5%).

Diversified product

and service offerings enable L&T to alleviate its business risk as fluctuations in a single offering

have less impact on diversified offerings and provide resilience to its revenues.

Weaknesses


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Dependence on domestic operations for revenue generation

L&T is largely dependent on its domestic operations for generating its revenues. In FY2011, the

company's domestic (India) operations contributed more than 80% of the total revenues. The

company's revenues can be affected with any adverse events occurring in the domestic market

such as adverse economic conditions and foreign currency fluctuations, among others. Higher

dependence on domestic operations to generate revenues could drastically affect L&T's

revenues and profitability. Increasing debt impacting financial flexibility Larsen & Toubro

Limited

L&Ts debts are increasing steadily. The companys debts in the form of loans increased to

INR328,285.3 million ($7,156.6 million) in FY2011 from INR12,119.9 million ($2,642.1 million) in

FY2008. Increase in loans registered a Compound Annual Rate of Changed (CARC) of 39.4%

over the 200811 period. As a result, L&Ts interest and brokerage expenditure over the period

200811 increased to INR8,308.6 million ($181.1 million) from INR203.1 million ($44.3 million)

in FY2008.

L&Ts increasing debts is impacting the companys financial flexibility.

Opportunities

Strategic joint ventures strengthening business

L&T has entered into several joint ventures in the recent past. In February 2012, L&T has

formed a

strategic partnership with Cyan Holdings plc, a UK-based integrated system design company

to

collaborate in the development, supply and delivery of advanced metering solutions

comprising utilitymeters equipped with Cyan's wireless communication capability for AMI, smart metering and

smart

grid pilot projects.

L&T and Cassidian entered into a partnership in February 2011, to become an electronics house

for defense and security. Subsequently, the Defence and Security Division of Europe's leading

Aerospace and Defence Group (EADS) was renamed as Cassidian. The joint venture will help

L&T

to serve the Indian armed forces as well as the global market with high-technology defenseequipments.


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L&Ts joint ventures in diversified areas such as defense, transmission and distribution and

power

plant equipment market could strengthen its presence in these business lines and add to its

expertise.

Strong project pipeline ensures revenue growth

L&T has a very strong pipeline of projects which would be completed in the next few years.

Order

book as at March 31, 2011 was worth INR1,302,170 million (approximately $28,387.3 million) as

against INR1,002,390 million (approximately $21,852.1 million) as at March 31, 2009, recording a

29.9% year-on-year growth. Further, the companys order book inflow increased at a

compounded

growth of 27.1% since FY2007. It was primarily due to bulk orders received by the company

from

engineering & construction.This division received new orders worth INR730,130 million

(approximately

$15,916.8 million) in FY2011 for projects such as Hyderabad Metro, Seawoods Phase I

complexes,

IT park for TCS, MRO (Maintenance, Repair and Overhaul) facility at Nagpur, AIIMS hospitals

at

Jodhpur & Bhubaneswar; factories (for Maruti, P&G, and COD Jabalpur); cement plants; and

others.

Large number of projects in L&Ts pipeline is ensures a steady revenue growth.

Growing Indian construction & engineering industry

Construction & engineering industry in India is growing rapidly. The industry grew by 11.5%

in 2010

to reach a value of $47.8 billion in FY2011. In 2015, the Indian construction & engineering

industry

is forecast to have a value of $71.5 billion, an increase of 49.6% since 2010. This industry is

expected

to register a Compound Annual Growth Rate of (CAGR) of 8.4% over the period 2010 15. In

addition,


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government of India plans major capacity increase in the thermal power segment during its

12th

Five-year Plan (201318). In 2011, Union government conferred infrastructure status to fertilizer

industry which has created conducive environment for revamping and modification of fertilizer

plants.

L&T is one of the largest players in the Indian construction & engineering industry. The

company

and is well placed to leverage from the growing Indian construction & engineering industry

and further

enhance its business in the coming years.

High global oil & gas capital expenditure plans likely to enhance business

The global oil & gas capital expenditure (Capex) plans are forecasted to remain high over the

coming

years. This is likely to provide more business opportunities for the companys Engineering &

Construction (Projects) division in FY2012. Key drivers of growth in this sector in near future

include

increasing brownfield prospects particularly in Middle East and Africa; the trend within Indian

refining

units going for downstream petrochemical units for value added products; and growing

prospects

in new business lines (gas processing, poly propylene and coal gasification). In addition, the

growing

thrust on gas production and transportation is expected to increase investments in cross

country

gas pipeline projects is expected to bring in more business. L&T is well placed to tap the

growing

global oil & gas capex plans and enhance its business in coming years.

Threats

Rise in cost of construction may affect margins

L&T could be adversely affected by the rise in costs of construction. Costs of construction are on

the rise globally as commodity prices are increasing. Rising costs are attributed to high oil andsteel


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prices in international markets. The rise in crude prices, which averaged $89 per barrel in

February

2011 and $103 per barrel in March 2011, will increase the cost of transportation. WTI prices are

estimated to average $114 per barrel in 2012.

In the beginning of 2012, the price of iron ore quoted more than $140.4 per ton, a 40% increase

over the 2010 level and a figure that approaches an all-time high. Further, owing to increased

demand

from China and appreciation in the 'coal currencies' (currencies of coal dominating countries),

such

Larsen & Toubro Limited.


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Business Analysis

PESTEL analysis (External analysis):

The PESTEL analysis must be used as list of control. Each time a factor of the companys

environment changes, it modifies the PESTEL as therefore the strategy to follow. The PESTEL is

used in strategic planning in order to try and understand what is coming up in the future and how it

can be managed.

A PESTEL analysis means a Political, Economic, Social, Technological, Environmental and Law

analysis. This could be defined as a study of macro-environmental factors in order to get

information about the changing external environment that a company must take into consideration.

Usually this is the external analysis of a market survey, helping to plan strategies, objective andpolicies, according to the changing environment.

We are going to study in detail the current external environment of Larsen and Toubro E-

Engineering Solutions in India

1.Political Factors :

The political conditions in India are not much stable. The government changes after every five

years and the new government brings its own policies and rules.

Employment law:

Traditionally Indian governments at federal and state level have sought to ensure a high degree of

protection for workers (allegedly). So for instance, a permanent worker can be terminated only for

proven misconduct or for habitual absence. So the company need to be vey careful before keeping

any employee.

_ Consequences of the new elections:

In few months new Prime Minister will be elected and this might impact the working of L&T as

new policies might be taken up. The government is also taking steps to increase foreign direct

investment (FDI) in India which might create competition for L&T.

_ Environmental policies:

Environmental regulations are important as we all know its effects are society and people are

becoming aware day by day.


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Concerning the company Larsen & Toubro EES, there is no worry to have about Environmental

regulations because that concerns companies working with toxic products and other risky domains.

The company produces services so there is no pollution.

2.Economical factors

Economic environment

In India, the economic situation is not really good because of the depreciation of the rupee. The

buying power of foreign companies is therefore not really high which could be a weakness for

Larsen & Toubro EES which sells on B to B market but good Indian companies who have high

exports can be a benefit for the L&T.

3.Social Factors

Culturally speaking, India has lots of social laws protecting people such as wages given every

month to people or children below the age of 14 who cannot work. But concerning Indias

populations growth rate, it follows a regular increase. Therefore it becomes difficult to provide

employment to each. So it leads to such factors that the people end up working for low wages toearn their living.

Also there are so many educated unemployed in India who do not get jobs. They have to work for

less salary as well.

4.Technological factors

For a company like Larsen & Toubro EES, it is very important to take care of technological factors

because it is an engineering company.

One of the most important factors to take into consideration is the technology used for the

production of engineering services. Indeed, the technology employed must be the latest in order to

compete against other engineering companies. It is also important for the companies to be using

the same software for example Catia V5, if not the companies cannot share information and

therefore no services can be provided.


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The technological factors are permanently changing, the softwares are also updated regularly, new

versions come on the market. The company need to purchase these new licences and train the

employees in order to fulfil the customers needs.

5.Ecological factors

As we said before, there are regulations about ecology but Larsen & Toubro EES does not have to

worry about it because that concerns companies working with dangerous product or collaborating

to environmental changes.

Larsen & Toubro EES definitely uses a trend by explaining to their customers that using their

services saves money and time but also saves energy. When a product is designed by computer

everything is tested for the assembly; for example with human simulation explained bellow, a

prototype is produced the mistakes are inexistent and there is no need to produce a new one, you

know that the employee will be able to accomplish the work as the assembling process has been

checked.

6.Law factor:

There is no special legislation for the trade of engineering services in India. However there

are many acts formed like The Apprentices Act, 1961, The Trade Unions Act, 1926, etc and

non-profit organisation is formed i.e. NASSCOM which is known worldwide.

The National Association of Software and Services Companies (NASSCOM) is a trade

association of Indian Information Technology (IT) and Business Process

Outsourcing (BPO) industry. Established in 1988, NASSCOM is a non-profit organisation.

NASSCOM is a global trade body with over 1200 members, of which over 250 are global

companies from the US, UK, EU, Japan and China. NASSCOM's member companies are inthe business of software development, software services, software products, IT-

enabled/BPO services and e-commerce. NASSCOM has been a proponent of global free

trade in India.

NASSCOM was set up in 1988 to facilitate business and trade in software and services and

to encourage advancement of research in software technology. It is a not-for-profit

organisation, registered under the Indian Societies Act, 1860.

Currently, NASSCOM is headquartered in New Delhi, India with regional offices in the

cities of Mumbai, Chennai, Hyderabad, Bangalore, Pune and Kolkata.


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Porter Five Forces Analysis

Information Technology Services

Description:

1) Threat of Substitute:Since all company are based on information technology for

robustness of their work, there is hardly any alternative for IT and there is low threat .

Threat of

Substitute

Rivalary

(Hi h)

Bargaining Power

of Supplier

Bargaining Power

of Buyers

(Hi h)

Threat of new

entrant


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2) Rivalry:with many MNC company and few Indian global companies already in this

business , the business rivalry is already very high.

3) Bargaining power of suppliers: Although companies like Intel and AMD are a part of the IT

industry, for the purpose of this project I will be classifying those companies as suppliers to

the IT industry's firms. But suppliers are good in numbers and carry good relation with

companies and technologies and IT infrastructure cost are already low the bargaining power

of suppliers are moderate.

4) Bargaining power of Buyers: In an industry as massive as Information Technology, the

term "buyers" refers to almost everyone in the world. While there are countries that are

behind technologically, a majority of locations in the world have access to computers and

the internet etc. Given the large number of buyers, it is safe to say that the customers control

the IT industry. So the bargaining power of buyers is very high

5) Threat of New Entrants: The IT industry is relatively attractive to newcomers because of its

rapid growth and appealing customer base. The entry is also easy for new comers. So the

threat of new entrant is high.


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Engineering and Construction Services

Description:

1) Threat of Substitute:

New and emerging innovative methods and processes within construction industry. New

innovative methods are at a lower cost than traditional method, Low switching costs once a

project is complete, new consultants may be appointed. Thus the threat of substitute is high.

2) Rivalry:

Threat of

Substitute

Rivalary

(Hi h) Bargaining Power

of Supplier

Bargaining Power

of Buyers.

(High)

Threat of new

entrants


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with many MNC company and few Indian global companies already in this business , the

business rivalry is already very high.

3) Bargaining power of suppliers:Industry members such as the principal contractors Construction materials are readily

available from many suppliers. Switching costs of contractors Q.S firms are low.

Contractors, sub-contractors and manufacturers have to work together for successful

delivery of the project. Thus bargaining power of suppliers are low.

4) Bargaining power of Buyers:

With so many engineering and construction companies, customers have many option to

choose from. So bargaining power is high.

5) Threat of New Entrants:Customers want brand to be associated while buying. Since majority of business has

already in the hand of big player, entry to new player is not easy.


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L&T Financial Services

Description:

1) Threat of Substitute:

Customers have many option to investment like mutual funds, insuranceetc, so there are

many substitutes for financial services and substitutes threat are very high.

2) Rivalry:

Not only there major company in financial services but there many consultant to guide customers for

investment. Therefore rivalry is very high.

Threat of

Substitute

Rivalary

(Hi h)

Bargaining Power

of Supplier

Bargaining Power

of BuyersThreat of new

entrant


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3) Bargaining power of suppliers:

Mutual fund companies, hedge funds, other broker dealers in structured deals, separate account managers, but due to

high competition in market there power to bargain is moderate.Bargaining power of suppliers are moderate.

4) Bargaining power of Buyers: Shifted dramatically toward the favour of the buyers. Because properfull information, faster access, Bargaining power of buyers is very high.

5) Threat of New Entrants:There will not be any new large mass-market players or niche players bursting on the scene, but

there will be new independent broker dealer players as well as discounters, banks, insurance

companies and credit unions. Count as well the independent shops where a broker can set up shop

literally overnight


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L&T Insurance Services

Description:

1) Threat of Substitute:As said customers have many option to invest, So threat of substitutes are

high

2) Rivalry: Not many company are in these industry but one big major player LIC covers the

70% of the market. So rivalries are high in these industry.

3) Bargaining power of suppliers: Since Customers have many option, people incest in insurance and

thus it is not widely accepted in India. So supplier power are low.

Threat of

Substitute

Rivalary

(Hi h)

Bargaining Power

of Supplier

Bargaining Power

of BuyersThreat of new

entrant


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4) Bargaining power of Buyers: Customers have many option as earlier mentioned thus there power

is very high.

5) Threat of New Entrants: Due to existing big player and customer negligence for insurance, there is

barrier to entry for new entrant.


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Strategic Formulation (Grand)

Audacity in vision. Focus on what know best. Trim flab to achieve operational excellence.

Good governance made the business sense. Develop leaders from within. Forge strongerpartnerships with supplier base. Pursue quality with zeal. Innovate to create value for

customers. Give back to the society The Indian edge

1. Vision

Excellence and professionalism. Customer delight through service. Entrepreneurial

leadership and creation of an organization that is on the path of continuously learning by

fostering teamwork, trust, and care. Community service and environmental protection.

Company strongly drove by its global vision to become an Indian Multinational ProgramLAKSHYAwhich outlines a strategic plan for 2005-10 will assist in this.

2. Core CompetenciesToday the core competence of L&T lies in its ability to

ynthesize,integrate and harmonize its diverse world-

class engineering,manufacturing, procurement, construction and fabrication skillsaround

turnkey projects (in core economic sectors) and people.

3. Business Leadership

With the Project and Construction business in the country growing at a fast pace and

expected to continue to do so with the countrysemphasis on infrastructure, both L&T ECC

(Construction group)and L&T's Projects (EPC) businesses are being treated as

thrustareas. The ECC construction group has been responsible forconstruction landmarks

both in India and abroad. L&T holds a leadership position in India in most of the areas in

which it operates.

The first company to introduce hydraulic excavators in the country, it still maintains itsleadership status in this and in the vibratory compactor segments. It continues to be a leader

in the manufacture of Z-Line petrol pumps and its cement is considered to be of high quality.

L&T has pioneered the manufacture and supply of critical nuclear reactors and space

vehicles hardware in the country and so on.

4. Decision-makingOver the years, the company has implemented its vision through various approaches.

Foremost is the emphasis on empowerment. Team-work and continuous training of

employees. The company is decentralized for all practical purposes.Budgetsand allocations are made at the beginning of the year forachieving the targets. Only


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through empowerment and decentralized decision making can a highly diversified company

like L&T be managed. Only

inmajor decisions involving capacity augmentation, businessdivestment, diversification, and

so on does the CEO personally involve himself

5. The Culture of TQMEmployees have realized that everybody in every department is supplier to somebody in

the organization if not directly to an outside customer. Employees are being trained in multi-

skills, including quality transactions and market engineering, besides product engineering.

6. Human Resource Management

With people being regarded as the 'prime movers', a strong HRD culture pervades theorganizations personnel policies, and HRD systems are designed to sustain motivation,

encourage learning, and achieve higher levels of quality and productivity through job

involvement. Quality Training and Development of Human Resources is realized through:

Identifying training needs within the Organization anddesigning and implementing those n

eed based trainingprogrammes

To bring about continuous up gradation of knowledge, skills and employee attitudes. The

following brief highlights ECC's training methodology for the comprehensive development

of its 7000-odd employees. Inclusion of stakeholders and delegates

7. Contribution to Academics

L&T set up L&T Institute of Technology, a polytechnic in Mumbai. IN a short period, it has

come to be widely regarded as one of the best training institutions of its kind in the country,

particularly for the full-fledged workshops and laboratories that provide a strong practical

orientation to theoretical inputs. There is a good demand n engineering companies for the

students passing out from this Institute.

8. Environment Up gradation

L&T has been showing its commitment towards corporatecitizenship.As one goes around the

works and offices of L&T, one experiences soothing and refreshing ambience because of the

rich foliage and delightful floral blooms around these structures.L&T has undertaken

extensive tree plantation programme toenhance green concepts. Over three lakh trees were

planted in and around the factory in1993-94 under the programme 'Trees for Life'. The

villagers have been given grafted saplings of fruit-bearing trees and encouraged to plant

them. The success of this on-going effort led to L&T being selected by the Government of

Maharashtra for the prestigious Vanashree award in 1990


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BCG Growth Share Matrix:

Dogs- Dogs have low market share and a low growth rate and thus neither generate nor

consume a large amount of cash. However, dogs are cash traps because of the money tied up

in a business that has little potential. Such businesses are candidates for divestiture.L&T todivest medical equipment business, plastics business and switchgear unit

Question marks- Question marks are growing rapidly and thus consume large amounts of

cash, but because they have low market shares they do not generate much cash. The result is

a large net cash comsumption. A question mark (also known as a "problem child") has the

potential to gain market share and become a star, and eventually a cash cow when the

market growth slows. If the question mark does not succeed in becoming the market leader,

then after perhaps years of cash consumption it will degenerate into a dog when the market

L&T Construction

L&T medical

equip,plastic,switch gearMarket Share

Growth Rate

Low

High

Low

High


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growth declines. Question marks must be analyzed carefully in order to determine whether

they are worth the investment required to grow market share.example L&T solar power.

Stars- Stars generate large amounts of cash because of their strong relative market share, but

also consume large amounts of cash because of their high growth rate; therefore the cash ineach direction approximately nets out. If a star can maintain its large market share, it will

become a cash cow when the market growth rate declines. The portfolio of a diversified

company always should have stars that will become the next cash cows and ensure future

cash generation. Example L&T IT(information technology) segment

Cash cows- As leaders in a mature market, cash cows exhibit a return on assets that is

greater than the market growth rate, and thus generate more cash than they consume. Such

business units should be "milked", extracting the profits and investing as little cash as

possible. Cash cows provide the cash required to turn question marks into market leaders, tocover the administrative costs of the company, to fund research and development, to service

the corporate debt, and to pay dividends to shareholders. Because the cash cow generates a

relatively stable cash flow, its value can be determined with reasonable accuracy by

calculating the present value of its cash stream using a discounted cash flow analysis.

Example L&T construction.

Ansoff Growth Matrix for L & T

Existing Products New Products

Existing Market

New Market

Market penetration Product Development

Market Development Diversification


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1. Market Penetration

L & T have talented professionals , in every sphere of its operations , technology is thekey enabler, reinforcing its leadership position , and sustain its competitive strengths in

existing market.

For L & T technology represent endless technologies.

Also its Market penetration segment is Engineering and Construction and Manufacturing.

It has good financial and capital position , as well access to multiple sources of capital.

products :

Low tension switchgear and accessories

Power gear

Building ElectricalsIndustrial Automation

2. Product Development

L & T has introduced new products in existing market. It has introduced Analog panel

meters and current transformers, MHO single phase starter , ML series contractor.

This were the efforts for the product development.

Focused on growth of their retail loan portfolio.

3.Market Development

It is the growth strategy where the Business seeks to sell its existing products into new

market.

Besides having offices and employing a direct sale force, L&T has developed a strong

network of agents across the globe to effectively carry out the business development

related activities. The company regularly participates in various international seminars ,

and industry conventions , which enable L & T showcase its technical capabilities and core

strengths with leveraging client references.

It has continued to expand the business to include new products and services , as well as

entirely new line of Business.

4.Diversification

Larsen and Toubro(L&T) has diversified over the past three decades around its core competence in

construction engineering. Originally the firm only made parts and machinery for construction.

Later the firm diversified into excavating and Earth moving equipment and still later into the

cement industry thus taking a stake in one of

the vital inputs to its Industry. Each of these diversifications addressed the scope opportunityfor a firm which had a clear definition and understanding of its Competitive Space.


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GE Matrix

INDUSTRY ATTRACTIVENESS

The IT industry in India has today become a growth engine for the economy, contributing

substantially to increases in the GDP, urban employment and exports, to achieve the vision

of a powerful and resilient India.

Indian firms, across all other sectors, largely depend on the IT & ITeS service providers to

make their business processes efficient and streamlined. Indian manufacturing sector has

the highest IT spending followed by automotive, chemicals and consumer products

industries.

Nasscom expects the IT services sector in India to grow by 13-14 per cent in 2013-14 and to

touch US$ 225 billion by 2020.

BUSINESS STRENGTH

It is the 8thlargest company in india.

Clients include industry leaders like Chevron, Freescale, Hitachi, Sanyo and

Lafarge, among others. They have found in us a right-size partner who combines

scale, stability and customer-centricity.

STRONG DOMAIN CONNECT

Solutions have a strong domain focus that helps clients in different industriesmaximize the value of their IT spend.

PROACTIVE INVESTMENT IN PEOPLE AND INFRASTRUCTURE

Revenue has increased four times in four years (between 2003 and 2007) and so has

associate strength and they expect to continue with this high level of growth. Key

strength is people and they have created systems that allow them to attract, train

and retain the best talent. They are also investing ahead of the curve by establishing

state-of-the-art delivery centres. Their robust IT infrastructure delivers assured

business continuity.

Therefore,

Industry attractiveness is HIGH.

Business strength is MEDIUM.


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CONCLUSION

L&T should Invest selectively for growth.


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VALUE PROPOSITION

A value proposition is generally a clear statement that outlines to potential clients

and stakeholders a company's (or individual's or group's) unique value-creatingfeatures.

A value proposition is a clear statement of the tangible results a customer gets from

using your products or services.

A value proposition is an offer to some entity or target in which they (the

possessor) get more than they give up (merit or utility), as perceived by them.

A value proposition is the basic reasoning for why people should consider your

product or service.

Describes what you do in terms of tangible business results. It draws interest andshares a success story within a few words.

NEED

A strong VP will help you break through the clutter and get the prospects attention

Many are trying to use heavy force of marketing to overcome the weak force of

their VP

A VALUE PROP STATEMENT MUST CONTAIN:

1. Describe "What" we provide

2. Answer "So what?"

3. Quantify "How much"

4. Provide Proof

System Integration with comprehensive domain expertise and ability to deliver

engineered solutions for all layers of the automation hierarchy.

Leveraging on the vast manufacturing expertise and worldwide presence of Larsen

& Toubro group of Companies.


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Backed by 75 years of engineering excellence, L&T Technology Services delivers

strong engineering pedigree that helps us engage very closely with our customers

to provide end to end solutions spanning all stages of a product lifecycle providing:

Global footprint in US, Europe and Asia, including designated consultant in each of

these geographies.

Flexible Operating Models.

Ability to engage with customers in large and critical engineering programs


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Bibliography:

www.larsentoubro.com

www.studymode.com

consultingwithresults.wordpress.com

http://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-

forces-model.html#axzz2du0lAJea

http://en.wikipedia.org/wiki/Larsen_%26_Toubro

www.businesswire.com
http://www.larsentoubro.com/http://www.larsentoubro.com/http://www.studymode.com/http://www.studymode.com/http://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-forces-model.html#axzz2du0lAJeahttp://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-forces-model.html#axzz2du0lAJeahttp://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-forces-model.html#axzz2du0lAJeahttp://en.wikipedia.org/wiki/Larsen_%26_Toubrohttp://en.wikipedia.org/wiki/Larsen_%26_Toubrohttp://www.businesswire.com/http://www.businesswire.com/http://www.businesswire.com/http://en.wikipedia.org/wiki/Larsen_%26_Toubrohttp://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-forces-model.html#axzz2du0lAJeahttp://businesscasestudies.co.uk/rolls-royce/competing-within-a-changing-world/porters-five-forces-model.html#axzz2du0lAJeahttp://www.studymode.com/http://www.larsentoubro.com/

Documents

L&T Final Report