What are the SWOT analysis of larsen and toubro? v Strengths:

L&T-Ites have strong mainframe capabilities. A broad portfolio of infrastructure related offerings. L&T-Ites is capable in performing infrastructure management work that is commonly bundled with application management like production systems support, database management, and server monitoring. L&T-Ites has 5 offshore infrastructure delivery centers located in Baroda, Bangalore, Mysore, Chennai, and Powai.

v Weaknesses:

Weak presence in Global delivery management. Weak help desk threatens to invite new clients.

v Opportunities:

Telecom infrastructure management. Mainframe management capabilities will give opportunity to L&T-Ites to go for large infrastructure deals and hosting biz.

v Threats:

Paucity of certified staff to support and disaster recovery offerings may become threat in long term for its expansion program in Europe to support mission-critical work.

Larsen & Toubro

Parent CompanyLarsen & Toubro

CategoryConstruction Services

SectorConglomerates

Tagline/ SloganIts all about Imagineering

USPOne of the largest and most respected companies in India for engineering, manufacturing and integration of custom made technology-intensive equipment and systems

STP

SegmentBased on business type; Based on geography India, Rest of Asia, the Americas, Africa, Europe, Australia

Target GroupTechnology, engineering, construction and manufacturing projectsPredominantly targets Indian projects

PositioningA company that focuses on technology leadership

SWOT Analysis

Strength 1. Market leadership providing competitive edge - The company can leverage its strong brand name and market leadership position to gain competitive advantage and also expand into international markets2. Strong technical expertise reinforce leadership position - 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 services3. Diversified revenues providing resilience - In FY2011, the companys revenues were distributed among business divisions as follows: engineering and construction, electrical and electronics, machinery and industrial products, financial services, developmental projects and others. This enables L&T to alleviate its business risk as fluctuations in a single offering have lesser impact on diversified offerings and provide resilience to its revenues4. Over 45,000 employees form a part of its workforce5. It has offerings like Construction, Heavy equipment, Electrical equipment, Power, Shipbuilding, Financial services and IT Services

Weakness1. Dependence on domestic operations for revenue generation - In FY2011, the company's domestic (India) operations contributed more than 80% of the total revenues.2. Increasing debt impacting financial flexibility - L&Ts interest and brokerage expenditure over the period increased

Opportunity1. Strategic joint ventures strengthening business - L&T has formed a strategic partnership with Cyan Holdings plc, a UK-based integrated system design company. L&T and Cassidian entered into a partnership in February 2011, to become an electronics housefor defense and security2. Strong project pipeline ensures revenue growth3. Growing Indian construction & engineering industry - In 2015, the Indian construction & engineering industry is forecast to grow

Threats1. Rise in cost of construction may affect margins - The rise in crude prices, will increase the cost of transportation.2. Challenges in land acquisition likely to affect business - in 2011, Indian government introduced The Land Acquisition, Rehabilitation and Resettlement Bill, 2011. As per the bill, compensation for the owners of the acquired land shall be four times the market value in rural areas and twice in urban areas3. Intense competition may reduce profitability few competitors have substantially greater resources and superior capabilities than L&T

Competition

Competitors1. ABB2. Bechtel3. Hindalco4. Sundaram Fasteners5. Gammon India6. Lanco Infratech

SWOT Analysis of Larsen and Toubro, L&T Company Case Study Dissertation Writing HelpStrengths

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 the 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 Catalytic Cracker regenerator for a refinery, and the world's longest limestone conveyor. L&T also played a critical role in building India's first nuclear powered submarine. In FY2013, the largest ten players in the Indian engineering sector reported $47 billion of revenues with L&Ts market share of over 60% ($28.3 billion). In August 2013, Engineering News Record, the international contractors magazine, ranked L&T Construction 48th among the worlds top international contractors and 28th among the worlds top global contractors, based on 2012 revenues. 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 reinforces 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.

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, 2013 was worth INR1,536,040 million (approximately $28,293.9 million) as against 708,200 million (approximately $13,045 million) as at March 31, 2009. Further, the companys order book inflow increased at a compounded growth of 14.2% since FY2009. It was primarily due to bulk orders received by the company from engineering and construction. The company received 49% of the orders received from the infrastructure sector. The engineering and construction division received new orders worth INR797,660 million (approximately $14,692.9 million) in FY2013 for projects such as 220/33 kV Grid Station at Zakher & Ayn Al Faydha in the UAE, 11 kV Power Distribution Network for Emirates Palace, Concourse 4 of Dubai International Airport, a tunnel between Shankar Vihar and Hauz Khas awarded by Delhi Metro Rail Corporation, Rajasthan Atomic Power Plant, Riyadh Metro Project, Al -Batinah Expressway Project, and others. Large number of projects in L&Ts pipeline ensures a steady revenue growth.

Weaknesses

Major dependence on domestic operations for revenue generation

L&T is largely dependent on its domestic operations for generating its revenues. In FY2013, the company's domestic (India) operations contributed more than 70% 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 L&Ts debts are increasing steadily. The companys debts in the form of loans increased to INR619,940 million ($11,419.3 million) in FY2013 from INR327,980 million ($6,041.4 million) in FY2011. Increase in loans registered a compound annual rate of change (CARC) of 35.5% over the FY2011-13 period. As a result, L&Ts interest expense over the period FY2011-13 increased to INR20,950.2 million ($385.9 million) from INR8,027.5 million ($147.9 million) in FY2011. 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. During March 2013, the company completed the ownership transactions related to its India based group company Audco India Limited (AIL), a manufacturer of industrial valves. In December 2012, L&T signed a contract with PETRONAS Carigali Myanmar (Hong Kong) Limited for executing an offshore engineering, procurement, construction, installation and commissioning project valued at over $100 million. Also during 2012, L&T acquired Indo Pacific Housing Finance, Ltd., a housing finance company and the UK based Thalest Limited, a holding company engaged in offering integrated platform management system and integrated bridge system solutions for naval warships and mercantile marine ships, vessels and floating systems. In the same year, L&T formed a strategic partnership with the UK based Cyan Holdings plc, an integrated system design company to collaborate in the development, supply and delivery of advanced metering solutions comprising utility meters equipped with Cyan's wireless communication capability for AMI, smart metering and smart grid pilot projects.

L&Ts joint ventures in diversified areas such as finance, defense, transmission and distribution and power plant equipment market could strengthen its presence in these business lines and add to its expertise.

Growing Indian construction and engineering industry

Construction and engineering industry in India is growing rapidly. The industry grew by 4.4% in 2012 to reach a value of $117.4 billion. In 2017, the Indian construction and engineering industry is forecast to have a value of $162 billion, an increase of 38% since 2012. This industry is expected to register a Compound Annual Growth Rate of (CAGR) of 6.6% over the period 201217. The Planning Commission of India has proposed an investment of around $1 trillion in construction sector in the 12th five-year plan (2012-2017). 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 and engineering industry. The company is well placed to leverage from the growing Indian construction and engineering industry and further enhance its business in the coming years.

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

The global oil and 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 and construction projects division in 2014. 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 and to bring in more business. L&T is well placed to tap the growing global oil and gas capex plans and enhance its business in the coming years.

Threats

Economic challenges in India could adversely impact the companys business

The Indian economy witnessed a decadal low growth in FY2013 with GDP of 5%. The country has seen economic expansion drop since the start of the FY2011 to levels even below the crisis years of FY2009. The slowdown which started in the industrial sector also extended to services sector. While the moderation in growth in agriculture was largely on account of the rainfall deficiency, the deceleration of industrial production growth to 1.2% in FY2013 from 2.7% in FY2012 was mainly due to domestic supply bottlenecks, contraction in mining and slowing growth in manufacturing and electricity sectors. Also, the country continued to face persistent challenges due to high inflation, tight monetary policy, deteriorating external balance and the global uncertainties. In addition, government expenditure growth decelerated from 8.6% in FY2012 to 3.9% in FY2013 due to the fiscal consolidation by the government to reduce the deficit. Continued economic challenges in India, the companys largest geographic market could lead to further slow-down in industrial production and impact L&Ts business prospects.

Challenges in land acquisition likely to affect business

Challenges in land acquisition are affecting L&Ts projects. Land acquisition issues are causing delays and concerns to projects under various segments within the group. Difficulties in land acquisition are slowing down the pace of project award decisions. Environmental and land acquisition issues are current barriers in the near term for expansion of mining equipment demand. Power projects and new projects in minerals and metals sector face hurdles due to land acquisition issues, environmental clearances, and coal linkages. Moreover, in 2013, Indian government passed The Land Acquisition, Rehabilitation and Resettlement Bill, 2011. As per the bill, compensation for the owners of the acquired land should be four times the market value in rural areas and twice in urban areas. Projects involving land acquisition that are undertaken by private companies and public private partnerships must have consent of 80% of the people affected. L&T presently has many ongoing projects under public private partnership. For instance, the land acquisition bill is expected to raise Navi Mumbai airport's project cost by INR50,000 million ($921 million). Challenges in land acquisition are likely to affect L&Ts business.

Intense competition may reduce profitability

The company faces stiff competition in the international market. The engineering and construction segment faces intense competition from construction majors in the Middle East including ABB of Sweden and Bechtel of the US.These companies have substantially greater resources and superior capabilities than L&T. In the domestic market, the company primarily competes with players like Hindalco, Sundaram Fasteners, Gammon India, and Lanco Infratech among others. Stiff competition in the marketplace could erode the company's market share and reduce its profitability.