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Documente Cultură
Project Report On
Submitted To:
Dr. Arvind Mohan (Faculty of Management)
Submitted By:
Rajnee Dhami Rajat Arora Ravit Chaudhary
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ACKNOWLEDGMENT
We are highly thankful to the management faculty Mr. Arvind Mohan for giving us opportunity to do this project work on financial statement assessment for Larsen and Toubro and for proving timely guidance to complete this project. In addition, we enjoyed to work in the group. We expect to get such support and guidance from Mr. Arvind Mohan.
INDEX
TOPICS 1. COMPANY PROFILE 2. INDUSTRY PROFILE 3. FINANCIAL STATEMENT 4. INTERPRETATIONOF THE FINANCIAL STATEMENT 5. FINDING 6. CONCLUSION 7. REFERENCES PAGE. NO 04 05 09 20
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COMPANY PROFILE
Date of Establishment Revenue Market Cap Corporate Address 1946 9933.88 ( USD in Millions ) 785064.76857305 (Rs. in Millions) L & T House, Ballard Estate, Mumbai-400001, Maharashtra www.larsentoubro.com Chairperson A.M.Naik MD A.M.Naik Directors A.K.Jain, A.M.Naik, A.K.Jain, AM Naik, Bhagyam Ramani, J P Nayak, J S Bindra, K V Rangaswami, K Vekataramanan, K Venkataramanan, M M Chitale, M V Kotwal, MM Chitale, N Hariharan, N Mohan Raj, R N Mukhija, R Shankar Raman, Ravi Uppal, S N Subrahmanyan, S N Talwar, S Rajgopal, Subodh Bhargava, Thomas Mathew T, V K Magapu, Y M Deosthalee Engineering Construction Larsen & Toubro (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. Larsen & Toubro Limited is the biggest legacy of two Danish Engineers, who built a world-class organization that is professionally managed and a leader in India's engineering and construction industry. It was the business. Total Income - Rs. 454455.4 Million ( year ending Mar 2011) Net Profit - Rs. 38870.5 Million ( year ending Mar 2011)
Management Details
Financials
INDUSTRY PROFILE
Operating Divisions
Engineering and Construction Projects
L&Ts engineering and construction track record consists of implementation of turnkey projects in major core and infrastructure sectors of the Indian industry.]L&T has formed a joint venture with SapuraCrest Petroleum Berhad, Malaysia for providing services to offshore construction industry worldwide. The joint venture will own and operate the LTS 3000, a Heavy Lift cum Pipelay Vessel. L&T has more than 38000 employees in India
L&T Power
L&T has set up an organization focused on opportunities in coal-based, gas-based and nuclear power projects. This business provides turnkey solutions for setting up utility power plants as well as co-generation and captive power plants on an EPC basis. It also provides power plant engineering services through L&T Sargent & Lundy, a joint venture of L&T and Sargent & Lundy, USA. L&T has formed two joint ventures with Mitsubishi Heavy Industries, Japan to manufacture super critical boilers and steam turbine generators. In 2008-09, significant progress was made in setting up manufacturing facilities for super critical boilers and turbines at Hazira, on India's west coast. L&T has also signed a technical collaboration with Clyde Bergemann for electrostatic precipitators, a crucial BOP item in coal based thermal power plants.
Heavy engineering
L&T is claimed to be among the top five fabrication companies in the world. The Heavy engineering division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defence sector. It is the preferred supplier of equipment for a select range of products, globally. L&T has a shipyard capable of constructing vessels of up to 150 metres long and displacement of 20000 tonnes at its heavy engineering complex at Hazira. The shipyard is geared up to take up construction of niche vessels such as specialized Heavy lift Cargo Vessels, CNG carriers, Chemical tankers, defense & para military vessels and other role specific vessels.
Construction
ECC Engineering, Construction & Contracts Division of L&T is the major contributor of L&T's share market. Currently, it is also listed as Indias largest construction organization.L&T covers varied disciplines of construction civil, mechanical, electrical and instrumentation. The design wing of L&T ECC is called EDRC (Engineering Design and Research Centre). EDRC provides consultancy, design and total engineering solutions to customers. It carries out basic and detailed design for both residential and commercial projects.
Information technology
L&T Infotech focuses on information technology and software services. Its clients include industry leaders like Marsh & McLennan, Standard Life, Travelers, Chevron, Freescale, Hitachi, Ingram Micro, Infineon, Sanyo, Lafarge, ABSA], P&G, Johnson and Johnson, CitiGroup, Barclays, eCORPUS, Marathon, Texas Instruments, Qualcomm, LG and Samsung among others.It offers services and solutions for the following industries: banking and financial services, insurance, energy and petrochemicals, manufacturing.
L&T Finance
Larsen & Toubro financial services Financial Services is a subsidiary which was incorporated as a Non Banking Finance company in November 1994. The subsidiary has a spectrum of financial products and services for corporate, construction equipments etc. L&T Finance was able to withstand the market dynamics and adapt as per that. This is a new division after the company declared its restructuring. L & T Mutual Fund is the mutual fund company of the L & T group. This company provides Mutual Fund schemes for investors in India.
L&T Valves
L&Ts Valves Business Group markets valves manufactured by L&T's Valve Manufacturing Unit and L&T's joint ventures, Audco India Limited, India and Larsen & Toubro (Jiangsu) Valve Company Limited, China, as well as allied products from major international manufacturers.
Sources of funds
Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus 121.77 368.31 21,334.05 120.44 25.09 18,142.82 117.14 12,317.96 58.47 9,470.71 56.65 5,683.85
Loan funds
Secured loans Unsecured loans Total 1,063.04 6,098.07 28,985.24 955.73 5,845.10 25,089.18 1,102.38 5,453.65 18,991.13 308.53 3,275.46 13,113.17 245.40 1,832.35 7,818.25
Uses of funds
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments 8,897.02 22.13 2,220.82 6,654.07 785.00 14,684.82 7,235.78 23.29 1,727.68 5,484.81 857.66 13,705.35 5,575.00 24.59 1,421.39 4,129.02 1,040.99 8,263.72 4,188.91 25.90 1,242.47 2,920.54 699.00 6,922.26 2,876.30 27.93 1,122.83 1,725.54 471.22 3,104.44
Notes:
Mar ' 11 Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) 13,230.80 1,422.26 1,647.66 6088.52
Income
Operating income 43,656.71 36,870.19 33,856.54 24,946.11 17,645.29
Expenses
Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend 11,812.83 20,241.57 2,884.53 350.43 2,526.65 -37.87 37,778.14 5,878.57 1,199.05 7,077.62 1,199.23 575.81 23.41 5,279.17 1,858.47 3,420.70 582.23 -49.05 3,953.88 4,061.17 882.84 10,016.52 17,247.39 2,379.14 306.22 1,873.59 -36.25 31,786.61 5,083.58 974.59 6,058.17 995.37 383.65 30.95 4,648.20 1,577.02 3,071.18 1,347.08 -45.13 4,373.13 4,473.63 752.75 9,211.27 16,115.56 1,998.02 312.10 2,102.05 -24.48 29,714.52 4,142.02 748.80 4,890.82 770.00 284.83 21.16 3,814.83 1,176.19 2,638.64 863.78 -21.09 3,481.33 3,585.64 614.97 7,510.29 10,998.08 1,535.44 320.12 1,354.37 -11.42 21,706.88 3,239.23 477.10 3,716.33 501.83 195.94 15.66 3,002.90 982.05 2,020.85 139.59 12.21 2,172.65 2,250.89 495.32 5,199.22 7,759.20 1,258.21 200.84 1,197.99 -3.30 15,612.16 2,033.13 458.56 2,491.69 331.46 160.13 2,000.10 601.87 1,398.23 1.24 -5.34 1,394.13 1,449.83 368.25 -
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Cash flow
Mar ' 11 Profit before tax Net cashflow-operating activity Net cash used in investing activity Netcash used in fin. Activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of year Cash and equivalnt end of year 5,832.91 3,861.30 -2,437.98 -1,124.84 298.48 1,431.87 1,730.35 Mar ' 10 5,880.67 5,482.75 -6,071.73 1,245.56 656.58 775.29 1,431.87 Mar ' 09 3,940.41 1,478.57 -3,308.53 1,640.79 -189.17 964.46 775.29 Mar ' 08 3,155.47 1,945.24 -5,241.89 3,166.68 -129.97 1,094.43 964.46 Mar ' 07 2,004.89 2,130.45 -1,588.17 -31.05 511.23 583.20 1,094.43
Ratios
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Profitability ratios
Operating margin (%) 13.46 13.78 12.23 12.98 11.52
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Mar ' 11 Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) 12.14 8.82 8.96 15.94 18.44 23.23
Leverage ratios
Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio 0.29 0.33 74.97 5.03 0.33 0.37 72.86 5.20 0.43 0.52 65.47 6.23 0.27 0.37 72.66 6.09 0.24 0.36 73.42 6.21
Liquidity ratios
Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio 1.24 1.20 1.18 29.73 1.23 1.19 1.15 28.73 1.30 1.22 0.96 6.01 1.18 1.09 0.86 6.00 1.26 1.16 0.93 6.11
Payout ratios
Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio 25.15 21.84 70.90 75.24 19.72 18.01 71.91 75.25 20.58 18.92 72.84 75.66 26.29 23.96 71.72 74.40 30.04 26.97 69.85 72.95
Coverage ratios
Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 1.78 5.90 4.80 1.95 6.09 5.81 2.23 6.35 5.92 1.61 7.41 5.75 1.33 7.52 5.72
Component ratios
Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets 28.34 0.80 14.58 36.78 0.38 26.01 0.83 18.62 54.43 0.42 27.51 0.92 21.70 44.34 0.35 33.09 1.28 22.67 39.78 0.38 30.15 1.13 21.36 49.28 0.30
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FINANCIAL ANALYSIS
EARNIG PER SHARE
EPS
80 70 60 50 40 30 20 10 0 7-Mar 8-Mar 9-Mar 10-Mar 11-Mar 49.36 51 45.05 EPS 69.13 56.18
Data interpretation:EPS of a company shows the earning capacity of a company. The EPS is about 56, which is slightly higher than the average EPS of the firm. So we can assume that company is having greater earning capacity in the future.
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OPERATING INCOME
Data Interpretation:The operating income of the year 2008 is reported to be highest. It drops down severely but a rise is noticed in the next year as well as in the year 0f 2011
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NET PROFIT
Net Profit
14 12 10 8 6 4 2 0 7-Mar 8-Mar 9-Mar 10-Mar 11-Mar 7.74 8.54 10.05 8.82 Net Profit 11.56
Data Interpretation:The Net profit has registered a down in the year of 2011 . It is below the average net profit
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7-Mar
8-Mar
9-Mar
10-Mar 11-Mar
Data interpretation:The long term debt/ equity is showing a decline which is the positive sign for the firm .
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FIXED ASSET
Fixed Asset
7 6 5 4 3 2 1 0 7-Mar 8-Mar 9-Mar 10-Mar 11-Mar Fixed Asset 6.21 6.09 6.23 5.2 5.03
Data interpretation:The fixed asset of the firm is decreasing continuously which is alarming sign for the firm.
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CURRENT RATIO
Current Ratio
1.32 1.3 1.28 1.26 1.24 1.22 1.2 1.18 1.16 1.14 1.12 1.3 1.26 1.23 1.24 Current Ratio 1.18
7-Mar
8-Mar
9-Mar
10-Mar
11-Mar
Data Interpretation:The Current ratio is showing a zig zag status which is not good for the firm .
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Data Interpretation:The firm export sales have fallen down considerably. This is very alarming for any firm, or for investors.
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FINDINGS:
L & T is diversified company, which operates in national as well as international level. Company is going for new ventures in the market so , we can assume that it has greater scope in future. Earnings per share of the company Rs 56, which shoes the positive trend. Operating income of the company is showing positive trend in the 2011,which shows the positive trend. Net profit of the company is showing the negative slope, which is risky for the company. Long term debt and equity of the company is showing the negative slop ,which is good for the company. Fixed assets of the company are showing the decline slop which is alarming situation for the company. Current ratio of the company is showing the giz-gaz trend which is not suitable for the company. Total exports of the company is declining at high rate which is alarming for the company.
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CONCLUSION
From the above information, we can conclude that company is having sound financial position, with reference to debt equity ratio, earning per share, and operating income . But net profit , net export, fixed assets and current ratio is showing negative trend . L&T need to pay attention towards the cost reduction so that profitability of the company can be maintained , and control the liabilities .
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REFERENCE
The information is obtained from the listed sources www.moneycontrol.com www.wikipedia.com www.timesofindia.com Financial Management- Khan and Jain
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