Description
Documentation about the organizational analysis of larsen tubro.
OTPR
L&T-HED
Group: C2
Organizational Analysis: A case study of Larsen & Toubro Ltd, Heavy Engineering Division
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Table of Contents
Sl. No. 1 2 3 4 5 6 7 8 9
Description An Introduction to the Organization Conducive factors identified The growth of the Organization Identified factors that have led to its expansion and growth Further expansion of the organization The factors that led to its further expansion Conclusion Learning from the project Reference sources
Page No. 3 6 10 15 23 25 27 28 29
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Chapter 1
An Introduction to the Organization
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning HolckLarsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry. Beginning with the import of machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication. Today, the company sets global engineering benchmarks in terms of scale and complexity.
Henning Holck-Larsen (4.7.1907 - 27.7.2003) The Founders of L&T
Soren Kristian Toubro (27.02.1906 - 4.3.1982)
Early Days: In the early years, they represented Danish manufacturers of dairy equipment for a modest retainer. But with the start of the Second World War in 1939, imports were restricted, compelling them to start a small work-shop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis forced the partners to stand on their own feet and innovate. They started manufacturing dairy equipment
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indigenously. These products proved to be a success, and L&T came to be recognized as a reliable fabricator with high standards.
The Vision Statement of L&T
The Journey: In 1944, ECC was incorporated. Around then, L&T decided to build a portfolio of foreign collaborations. By 1945, the Company represented British manufacturers of equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass. In 1945, L&T signed an agreement with Caterpillar Tractor Company, USA, for marketing earthmoving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7th February 1946, Larsen & Toubro Private Limited was born.
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Independence and the subsequent demand for technology and expertise offered L&T the opportunity to consolidate and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai. Today, Powai stands as a tribute to the vision of the men who transformed this uninhabitable swamp into a manufacturing landmark. Public Limited Company: In December 1950, L&T became a Public Company with a paid-up capital of Rs.2 million. The sales turnover in that year was Rs.10.9 million. In 1956, a major part of the company's Bombay office moved to ICI House in Ballard Estate. A decade later this imposing grey-stone building was purchased by L&T, and renamed as L&T House - it?s Corporate Office. The sixties were also a decade of rapid growth for the company, and witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963). Operating Divisions: ? ? ? ? ?
?
Engineering and Construction project (E&C) Heavy Engineering (HED) Engineering Construction & Contracts (ECC) Electrical & Electronics (EBG) Machinery & Industrial Products (MIPD) Information Technology & Engineering Services (Infotech)
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Board of Directors (L&T):
A. M. Naik
Chairman & Managing Director (CMD)
J. P. Nayak
Whole-time Director & President (Machinery & Industrial Products)
Y. M. Deosthalee
Whole-time Director & Chief Financial Officer (CFO)
K. Venkataramanan
Whole-time Director & President (Engineering & Construction Projects)
R. N. Mukhija
Whole-time Director & President (Electrical & Electronics)
K. V. Rangaswami
Whole-time Director & President (Construction)
V. K. Magapu
Whole-time Director & Senior Executive Vice President (IT & Technology Services)
M. V. Kotwal
Whole-time Director & Senior Executive Vice President (Heavy Engineering)
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L&T Heavy Engineering Division:
L&T's Heavy Engineering Division has established a reputation in global markets for quality products. The Division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defense sector. It is the preferred supplier of equipment for a select range of products, globally.
L&T has state-of-the art manufacturing facilities, which are capable of meeting the challenges of technology, quality conformance and delivery, while ensuring cost competitiveness.
The manufacturing plants are among the top fabrication facilities in the world with processes streamlined to achieve high efficiency and benchmarked to the latest technologies.
The Division has entered into Shipbuilding business and is engaged in construction of specialty commercial vessels and warships for the navy as well as the coast guard.
The various manufacturing, design and engineering locations of L&T HED are at the following locations:
1. Powai Works, Mumbai 2. Coimbatore Works, Tamil Nadu 3. Ranoli Works, Gujarat 4. Hazira Works, Gujarat
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The various Sub-Units of L&T HED are as follows:
Refinery: L&T offers all critical equipment and systems for refineries and gas cracker plants. The range includes high pressure, high temperature reactors like hydrocrackers, DHDT & DHDS reactors for „clean fuel? projects, and other critical equipment. These are manufactured in various grades of low alloy steels (including Cr– Mo-Vanadium) of clad or overlaid construction. L&T has the qualifications and vast experience in carrying out single-layer and double-layer overlay of equipment using ESSC (ESW) and SAW processes. Reactor internals are generally fabricated in-house and also assembled in reactors as per customer requirements.
Oil & Gas: L&T offers all critical equipment and systems for oil & gas projects. Having successfully executed orders for large tubular reactors (1500 MT), L&T is geared and qualified to take up the challenge of manufacturing the futuristic gas-to-liquid reactors for the oil & gas sector, in addition to traditional products such as test and production separators (separate or skid-mounted).
Petrochemicals: The product range comprises reactors, vessels, heat exchangers and
equipment for various services including high-
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pressure, high-temperature, hydrogen service, cryogenic application, etc.
Fertilizer: Heavy Engineering Division has contributed significantly to the growth of the Fertilizer industry in India and abroad. The division has supplied critical Equipment for over 50 Ammonia and Urea projects.
Fabrication is carried out at ASME-approved workshops in Mumbai, Hazira & Ranoli. These workshops have also secured ISO 9001:2000 Certification. Hazira Works near Surat has a waterfront load-out facility, capable of handling equipment and modules more than 2000 tones.
Coal Gasification: With rising cost of oil and natural gas, Syn-gas from coal gasification is becoming a cost-effective alternative
feedstock for fertilizers, chemicals (methanol, etc.), and power and coal liquefaction plants.
L&T manufactures and supplies key Coal Gasification Equipment -- coal gasifies and syngas coolers -- under a technical tie-up with Shell Global Solutions, The Netherlands. These find application in power plants and a wide variety of process plants such as ammonia, methanol and wherever synthesis gas is required.
Aerospace:
L&T offers design, manufacture and supply of
components, subsystems and systems for aerospace applications. L&T?s precision manufacturing facilities are geared to meet the
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exacting demands of aerospace manufacture. State-of-the-art facilities give L&T the capability to achieve high accuracy levels in the manufacture of systems and subsystems of satellites and launch vehicles in metals and in advanced composites.
L&T carries out in-house development of welding procedures for exotic materials and special machining processes for space application. Ship Building: L&T?s Shipbuilding facility has been created at Hazira Works to cater to the needs of growing global demand for construction of specialized oceangoing vessels.
The Shipbuilding facility recently set up for construction of high tech vessels and the facilities at the shipyard include prefabrication facilities such as shot blasting and priming , CNC cutting machine, semi panel line fabrication, unit assembly bay, block assembly and a slipway to launch the vessels along with a jetty for outfitting jobs for the ships under construction. 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 of specialized mid size vessels is being undertaken and capacity is being augmented by additional infrastructure such as ship lift system and additional outfitting workshops to extend the activities to ship repairs.
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Thermal Power Plant: L&T offers complete condensing and feed heating systems. It supplies balance of plant in the turbine island (other than turbine generator) which includes equipment like:
? ? ? ? ?
Circular Surface Condensers Rectangular Surface Condensers HP Feed Water Heaters LP Feed Water Heaters Deaerators
The equipment is interconnected with high pressure piping, valves, instruments, controls & auxiliary sub-system. Heavy Engineering Division also manufactures turbo generator
components like LP Hoods & Casing and Stator Frames for large steam turbines & turbo generator components for hydro turbines
Nuclear Power Plant: A pioneer in the field of manufacturing technology development, equipment manufacture and site / plant services for the Indian nuclear power plant program, L&T is a recipient of the prestigious „INS Industrial Excellence Award? for outstanding contribution in the nuclear power plant sector. L&T manufactures reactor vessels for Pressurized Heavy Water Reactors (PHWRs) and Fast Breeder Reactors (FBRs) designed technology and critical equipment & systems for heavy water plants, fuel re-processing plants and plasma reactors.
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Defense: We have been issued industrial licenses for a wide range of products, after Government of India?s decision to open up Defense production to the private sector. The licenses issued cover design, development, construction/ manufacturing and assembly of:
?
Warships, Submarines, Weapon platforms (off-shore, floating and submerged), Highspeed boats and crafts etc.
?
Radars, Sonar systems, associated subsystems, Electronic Warfare equipment and System Sensors.
? ?
Arms and Armament including Weapon Launchers. Armored and Combat vehicles, including associated systems, sub-systems such as Turrets, Turret mounts, Bridge laying systems on tanks, etc.
?
Airborne assembly systems & equipment for Aircrafts, Helicopters and Unmanned Aerial Vehicles (UAV) and equipment for aviation sector
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About the Leadership of L&T HED
L&T-HED is a team of more than 2900 L&T-ites spread across multiple locations across the globe. It is headed by Mr. M.V Kotwal.
Mr. M. V. Kotwal Whole-time Director & Senior Executive Vice President (Heavy Engineering)
Mr. M.V. Kotwal joined L&T in 1968 as a Junior Engineer and rose rapidly to assume positions of increasing responsibility in the Company's specialized manufacturing facilities. Under his leadership, the Heavy Engineering Division, with its strong engineering capabilities and technological strengths, had taken a number of successful initiatives to emerge as a significant global player in the process plant equipment market, and for gaining a competitive advantage in the production of equipment for the strategic sectors of nuclear, defense and aerospace.
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Chapter 2
Conducive factors identified 1) Environment:
L&T's Heavy Engineering Division has established a reputation in global markets for quality products. The Division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defense sector. It is the preferred supplier of equipment for a select range of products, globally. The economic slowdown is mainly impacting potential exports. Internationally, the refining business has been hit by the fall in the crude oil prices and the general economic slowdown. However, in India no such adverse problems are being felt due to good and stringent government policies thus no fall in oil demand is seen in India. However, the successful Chandrayan mission also introduced L&T?s success in Aerospace sector and with inking of collaboration of IndoFrench and Indo-Russian nuclear deals have given a new lease of life to L&T, HED in particular. Sources of uncertainty in the organization environment: The forces that cause all the problem can be viewed in another way: in terms of how they cause uncertainty because they affect the complexity, dynamism, and richness of the environment.
2)
Organization Design:
L&T HED has a Sub-unit differentiation. Since HED itself is a Division of L&T, its lower hierarchy is differentiated as Functional units. ? Differentiation vs. Integration
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Since HED has a more Sub-unit orientation, hence employees tend to see one?s role in the organization strictly from the perspective of the time frame. Integration at times tends to be a problematic issue. Generally, Direct Contact or Liaison roles are common touchpoints between various sub-units. But often it is seen that Teams and Tasks Force are created for critical and important manufacturing orders. ? Centralization vs. Decentralization At L&T HED, since the hierarchy is that of a short organization, the authority to make important decisions rests with the managers. Hence it is seen that decision making is decentralized. The advantage of decentralization is that it promotes flexibility and responsiveness by allowing lower level managers to make on-the-spot decisions. ? Standardization vs. Mutual Adjustment Even though, HED observes a decentralized decision making body, rules and norms are a mix of Standardization and mutual adjustment. ? Mechanistic Structure vs. Organic Structure HED follows an Organic Structure. Since often high degree of specialized work is required for manufacturing works, employees are given freedom to work together and coordinate their tasks. Authority to control tasks is delegated to people at all levels in the organization
3)
Organization Structure: Authority and Control
Since L&T is a multinational company, it is difficult to decide how much authority is to be centralized at the top of the organizational hierarchy and how much authority to be decentralized to the middle and the lower levels. HED follows a Flat organization. Under each functional sub-
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unit, the numbers of managers are more in lateral level and hence authority and communication problems do not exist. Since the organization is that of a flat structure, the principle of minimum chain of command is easily followed. The span of control of each manager is well defined and hence does not have to maintain complex relationships with the subordinates. Even though HED has a flat structure, the sub-units are further differentiated into small subhierarchical levels since most of the activities of HED are related to manufacturing products. Hence each sub-unit of HED is actually a mix of tall + flat structure. Hence manufacturing function sees a tall structure while sales and R&D functions sees more of a flat structure. This also follows that the authority and communication in manufacturing is more as compared to sales or R&D. Manufacturing jobs are generally costly jobs worth orders of crores hence accountability is better maintained in a tall structure. In case of Sales or R&D, the decision making and communication for faster input-to-output is required and hence flat structure suits these departments.
4)
Organization Structure: Specialization and Coordination
HED follows a functional structure, wherein group of people form teams to utilize their skills and expertise in using common resources. HED follows a Product Team structure. Since each sub-unit of HED is a sub-division, hence each division has their own functional units. For each of the Functional Units, Teams are form based on the Product Team Structure. Specialists from the support functions are combined into product development teams.
5)
Organization Culture: Creating and Managing
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The shared values and norms that control the employee interactions with each other and with people outside the organization are well defined through both formal and informal means. The mission statement and the company?s goal are well communicated so that the employee is aware of the terminal and instrumental values of the organization. Socialization is highly promoted and hence employees themselves learn and internalize the values and norms of the organization. Property rights are given to employees to receive and use the organization?s resources. Managers are provided with stock options, large salaries and hence better control over organizational resources and decision making. Similarly, for Workforce, long term employments, pensions and benefits maximizes participation in decision making. Mission: “To become an Indian Multinational.”
Tag Line: L&T's new tag line: “It?s all about Imagineering” It reflects the company's sharpening focus on knowledge-intensive businesses.
Its old tag line – “We make the things that makes India proud” is quite popular with media and public. In order to project L&T in International market, L&T can up with the new Tag Line.
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6)
Competencies
L&T's Heavy Engineering Division operates at the upper end of the technology spectrum and has been at the forefront of introducing new processes, products and materials into manufacturing sector, for over six decades. 1. Design & Engineering: L&T's engineering capabilities are geared to design equipment as per specific customer requirements.
2. Fabrication : L&T's world-class fabrication capabilities have been achieved through perfect integration of efficient material handling & preparation, precision machining and welding processes for a range of material in varying thicknesses, backed by technological excellence in design & engineering and responsive quality systems. 3. Welding: L&T has developed over 4000 welding procedures qualified as per international codes and standards - ASME, BS, AWS, AD Merkblatter, etc. for a variety
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of materials and thickness. Specialized welding is carried out in 100,000 class dust-free enclosures. 4. Machining: The capabilities of 'CNC' and special purpose machines are supported by a battery of general purpose machines all geared to the precision machining needs. 5. QA & Inspection: The Quality Assurance Programmed of L&T's Heavy Engineering Division has been accredited with ISO 9001: 2000 certification from DNV, UK. Workshops are also accredited to ISO 14001:1996 - Environmental Management System and OHSAS 18001:1999 - Occupational Health and Safety Assessment series. 6. Project Management : a. BaaN ERP: L&T is one of the first companies to implement BaaN ERP system in its heavy engineering manufacturing facilities. b. Multi-project scheduling of activities: Pioneer in implementing "Critical Chain Project Management" 'Concerto' for multi-project scheduling of activities across all locations. c. Product Lifecycle Management : Product Lifecycle Management (PLM) is being implemented for managing and controlling in an integrated environment, all product and process-related information, throughout the product?s life-cycle and thereafter. d. eProcurement & reverse auctions: eProcurement & reverse auctions used to encourage transparent competitive bidding.
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e. Customer Relationship Management: Customer Relationship Management (CRM) module allows the customer to track project progress via computer from anywhere in the world. f. Global sourcing: Strategically located global sourcing offices are staffed by technical personnel in USA, China, Japan, Italy, and Russia for ensuring timely delivery of materials and components at competitive rates meeting all technical requirements. 7. Single Point Sourcing: With almost all major EPC players and process licensors qualifying L&T for critical equipment to the hydrocarbon industry, L&T has become a single point source for hi-tech products. Its Heavy Engineering Division is a preferred supplier of equipment, globally. Operating at the upper end of the technology spectrum, Heavy Engineering Division has, for over six decades, been at the forefront of introducing new processes, products and materials into the manufacturing sector. Its state-of-the art manufacturing facilities are capable of meeting the challenges of technology, quality conformance and delivery, while ensuring cost competitiveness. 8. Manufacturing Facilities: L&T's Heavy Engineering manufacturing plants are among the world's top fabrication facilities with processes streamlined to achieve high efficiency and benchmarked to the latest technologies. 9. Global Recognition: Excellent performance leads to repeat export orders and orders on nomination basis.
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Chapter 3
The growth of the Organization & Annual Report 2008-2009 Growth of L&T
L&T HED has not only grown in India but also in the Global Market.
L&T continues to surge ahead in its quest for becoming a global player. It has set itself a target of earning 25 per cent of its revenues from its international operations by 2009-10. It is also actively pursuing business opportunities in China, Middle East and Africa as it sees immense potential in these regions. It seeks to utilize China as a hub for the sourcing of cost-effective components and materials. HED is expanding both in the domestic and international markets.
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ANNUAL REPORT 2008-2009 (comparison with previous 5 years)
BALANCE SHEET (in Crores)
Sources Of Funds Mar '05 12 mths Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 0 3312.25 30.9 3369.13 793.72 1065.34 1859.06 5228.19 0 4583.32 29.37 4640.17 465.79 987.78 1453.57 6093.74 0 5683.85 27.93 5768.43 245.4 1832.35 2077.75 7846.18 0 9470.71 25.9 9555.08 308.53 3275.46 3583.99 13139.07 0 12317.96 24.59 12459.69 1102.38 5453.65 6556.03 19015.72 0 0 0 0 0 25.98 25.98 Mar '06 12 mths 27.48 27.48 Mar '07 12 mths 56.65 56.65 Mar '08 12 mths 58.47 58.47 Mar '09 12 mths 117.14 117.14
Application Of Funds Gross Block Less: Accum. Depreciation 1089.54 982.22 1122.83 1242.47 1421.39 2106.55 2300.68 2876.3 4188.91 5575
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Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
1017.01 65.82 960.7 2310.84 3963.6 354.67 6629.11 1860.18 473.35
1318.46 286.06 1919.52 2210.27 4814.16 398.71 7423.14 2061.5 184.49
1753.47 471.22 3104.44 3001.14 5504.64 993.68 9499.46 2449.14 100.75
2946.44 699 6922.26 4305.91 7365.01 779.86 12450.78 3861.1 184.6
4153.61 1040.99 8263.72 5805.05 10055.52 693.13 16553.7 7198.85 82.16
8962.64 0 5023.23 794.64 5817.87 3144.77 39.89 5228.19 625.1 256.94
9669.13 0 6106.04 1015.37 7121.41 2547.72 21.98 6093.74 305.59 335.61
12049.35 0 8362.01 1180.13 9542.14 2507.21 9.84 7846.18 270.22 202.65
16496.48 0 11892.75 2035.42 13928.17 2568.31 3.06 13139.07 1013.51 325.98
23834.71 0 15211.04 3066.53 18277.57 5557.14 0.26 19015.72 1371.86 212.32
PROFIT & LOSS STATEMENT (in Crores)
Profit & Loss account in Rs. Cr. Mar '05 12 mths Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths
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Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses -3.15 12258.69 -1.89 13389.71 -3.3 15724.04 -11.42 22453.05 -24.48 29819.63 5170.22 877.6 147.2 6647.7 996.59 125 7451.07 1222.8 166.15 10632.83 1393.8 280.69 15659.17 1844.83 569.32 5211.98 90.33 764.51 4510.78 221.5 890.03 5320.98 308.13 1258.21 8256.46 365.25 1535.44 9316.38 456.39 1998.02 13404.27 214.56 13189.71 634.94 86.84 13911.49 15030.81 253.86 14776.95 527.52 -103.24 15201.23 17983.37 338.08 17645.29 459.8 121.76 18226.85 25280.49 334.38 24946.11 616.69 746.17 26308.97 34249.85 393.31 33856.54 1612.58 105.11 35574.23
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off
1017.86 1652.8 280.51 1372.29 87.52 0
1284 1811.52 321.34 1490.18 107.12 0
2043.01 2502.81 331.46 2171.35 160.13 0
3239.23 3855.92 501.83 3354.09 195.94 15.66
4142.02 5754.6 770 4984.6 284.83 21.16
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Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earnings Per Share (Rs) Equity Dividend (%) Book Value (Rs)
1284.77 8.02 1292.79 302.29 983.85 7046.71 0 357.21 49.41
1383.06 -1.85 1381.21 366.12 1012.14 8878.93 0 302.25 42.39
2011.22 -5.34 2005.88 601.87 1403.02 10403.06 0 368.25 53.34
3142.49 12.21 3154.7 982.05 2173.42 14196.59 0 495.32 76.26
4678.61 -21.09 4657.52 1176.19 3481.66 20503.25 0 614.97 101.83
1299.24 75.72 1375 256.94
1373.86 73.67 1100 335.61
2832.71 49.53 650 202.65
2923.27 74.35 850 325.98
5856.88 59.45 525 212.32
CASH FLOW STATEMENT
Cash Flow ------------------- in Rs. Cr. ------------------Mar '05 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities 1286.14 112.01 236.28 Mar '06 12 mths 1383.4 1369.25 -1326.3 Mar '07 12 mths 2004.89 2130.45 -1588.17 Mar '08 12 mths 3155.47 1945.24 -5241.89 Mar '09 12 mths 3940.41 1478.57 -3308.53
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Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
104.46
-287.77
-31.05
3166.68
1640.79
452.72 375.27 828.02
-244.82 828.02 583.2
511.23 583.2 1094.43
-129.97 1094.43 964.46
-189.17 964.46 775.29
Analysis: It is clearly seen from the various Ledger statements that the profit for L&T as a whole is always increasing for the past 5 years.
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Latest Orders bagged by L&T HED and its major contributions in the year 2009: ? 12 Aug 2009: Jaypee Group and L&T sign agreement for the supply of super critical equipment ? ? ? ? 05 Aug 2009: L&T wins orders worth Rs. 8,530 million for Coal Handling Plants 26 Jul 2009: L&T makes key contribution to India?s First Nuclear Powered Submarine 01 Jul 2009: L&T bags Rs. 6510 million orders for projects in Hydrocarbon Sector 19 May 2009: L&T signs MoU with GE Hitachi for ABWR & BWR Nuclear Power Plants in India ? 05 May 2009: EADS Defense & Security and Larsen & Toubro join forces in India to forge a long term partnership ? ? 15 Apr 2009: L&T signs MoU with Atomstroyexport for Nuclear Power Reactors 30 Mar 2009: L&T receives Rs. 3450 million order for Critical Equipment for Nuclear Project
?
16 Jan 2009: L&T signs MoU with Westinghouse for Modular Nuclear Power Reactors
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L&T Share Market
L&T Share Value as on Sep 07, 2009
L&T’s Competitors
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Chapter 4
Identified factors that have led to its expansion and growth
1. Supplies to the defense services including system integration done under offsets in India continue to attract various local taxes and levies which discourages the foreign defense contractors from awarding more work as well as value added work in India 2. A strategic Electronics Centre for Defense Electronics Systems design and engineering operates from Bangalore. Dedicated engineering centers support manufaturing at all locations. 3. HED has setup three “Technology Development Centers” at Powai, Mumbai for new product development in process plant equipment and for defence/ nuclear equipment as well as one focussed on electronics systems / sub-systems. 4. The inking of the Indo-US, Indo-French, Indo-Russian & Indo-Kazak nuclear deals opens up new opportunities for supply of critical nuclear power plant equipment.
SWOT ANALYSIS Strengths: ? L&T has strong international linkages through technology partnerships and ongoing relationships with global suppliers, consultants and customers. ? ? Core Competencies Good financial performance, which is improving by every year
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?
Its International strategy a thrust is its global sourcing policy, With a steady rise in material costs, the company has placed sourcing teams in China, Europe and Russia
?
It has been able to integrate its strengths across several areas like engineering, construction, procurement and process technology to be able to provide a „single point responsibility under stringent delivery schedules?.
Weaknesses: ? ? ? Structure problems like coordinating and collaborating. Difficult to manage the plants, as lot of the factors should be taken care of like safety etc, Unpredictive environment
Opportunities: ? ? Scope of global expansion Good operating margins
Threats: ? ? ? ? ? ? Tough competition from internationally established players Regulation & Compliance Currency Fluctuations Talent of best calibre to compete internationally and their mobility Severe Safety, Health & Environment (SHE) norms in certain Countries Logistic Risk-Coordinating the movement of goods through supply chains that span the globe ? Geopolitical uncertainty
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Chapter 5
Further expansion of the organization
L&T HED is expanding its business to Shipbuilding construction. Ship Building Operating Company is in the business of construction/repair of both commercial and defense vessels. The operating company presently has fabrication and shipbuilding facilities at Hazira, Gujarat, which handles the construction of commercial vessels. Construction of a new shipyard has been launched at Kattupalli in Tamil Nadu. The new shipyard will primarily focus on construction / refits of naval ships and submarines and repair of commercial vessels. The economic situation world over is likely to improve by end 2009 or early 2010. Fertilizer sector is expected to offer good opportunities with a few green and brown field investments both in domestic and international markets. HED also expects good prospects from domestic refinery projects.
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Chapter 6
The factors that led to its further expansion
1. HED is setting up a heavy fabrication facility through a joint venture in Oman to cater to the Middle East market. 2. There has been a requirement in the domestic sector for heavy forgings for nuclear plants as well as reactors for the hydrocarbon market. 3. Strategic Alliances and Joint ventures with DRDO and other national laboratories have lead to improve the R&D capabilities of L&T HED. 4. The inking of the Indo-US, Indo-French, Indo-Russian & Indo-Kazak nuclear deals opens up new opportunities for supply of critical nuclear power plant equipment. 5. Chandrayan success and India?s first nuclear operated submarine INS Arihant success has increased the R&D capabilities of L&T HED and will be definitely a success story in coming times.
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Chapter 7
Conclusion
The Company can be optimistic about the business prospects and about its capabilities to leverage them for its benefit. The recession and high oil prices and decrease in global demand have decreased the investment plans across sectors, particularly in the areas of hydrocarbon and other core sector industries. Company expects to improve on its revenue growth and profitability in future. HED can leverage on the impeccable pedigree of Larsen & Toubro Limited. Of all the assets that L&T possesses there is no doubt about what it would regard as its most precious – its values. L&T's brand values are those which characterize it as a corporate entity – professionalism, integrity and transparency. L&T believes that the true 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. Brand L&T also strikes a distinct nationalistic chord.
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Chapter 8
Learning from the project
? L&T (HED) is very vast and diversified organization which follows the organic structure having centralized decision making structure in top and very decentralized at the bottom which make the process of decision making very easy since important decisions are taken by top management and some decision are still left for others so they feel part of the decision making process which is very important for growth of organization. ? They have functional structure in the HED but they coordinate among themselves and team so they put their primary focus on product rather than functions. ? L&T is considered to be very ethical organization who not only takes from society but also give back to the society. ? L&T is very big organization consisting of people from different background and different geographical area which brings different mindset and culture in the organization. ? Flat structure helps to bring down bureaucratic cost as well as help them to pass information from top level to bottom level very easily which again helps in decision implementation. ? They have created a very good reputation in market for themselves so L&T is a very good brand which helps them to bring down dependency in resources outside the organization.
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?
L&T has a huge infrastructure of IT; it has its own software technology. This helps them to bring down further cost and time to develop products.
?
Authority and control is very clear and defined so there is no role of conflict or ambiguity among employee on what their role and responsibility in the organization which helps in no conflict among employees and peaceful working environment.
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Chapter 9
Reference sources
? ? L&T Website : http://www.larsentoubro.com L&T HED Website: http://www.larsentoubro.com/lntcorporate/common/ui_templates/homepage_news.aspx?r es=P_HED ? ? ? ? CNN IBN MoneyControl : http://www.moneycontrol.com/ Share Market Research Site MyIris: http://www.myiris.com/ L&T Annual Report 2008-2009 http://en.wikipedia.org/wiki/Larsen_%26_Toubro
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doc_526981438.docx
Documentation about the organizational analysis of larsen tubro.
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Organizational Analysis: A case study of Larsen & Toubro Ltd, Heavy Engineering Division
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Table of Contents
Sl. No. 1 2 3 4 5 6 7 8 9
Description An Introduction to the Organization Conducive factors identified The growth of the Organization Identified factors that have led to its expansion and growth Further expansion of the organization The factors that led to its further expansion Conclusion Learning from the project Reference sources
Page No. 3 6 10 15 23 25 27 28 29
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Chapter 1
An Introduction to the Organization
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning HolckLarsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry. Beginning with the import of machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication. Today, the company sets global engineering benchmarks in terms of scale and complexity.
Henning Holck-Larsen (4.7.1907 - 27.7.2003) The Founders of L&T
Soren Kristian Toubro (27.02.1906 - 4.3.1982)
Early Days: In the early years, they represented Danish manufacturers of dairy equipment for a modest retainer. But with the start of the Second World War in 1939, imports were restricted, compelling them to start a small work-shop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis forced the partners to stand on their own feet and innovate. They started manufacturing dairy equipment
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indigenously. These products proved to be a success, and L&T came to be recognized as a reliable fabricator with high standards.
The Vision Statement of L&T
The Journey: In 1944, ECC was incorporated. Around then, L&T decided to build a portfolio of foreign collaborations. By 1945, the Company represented British manufacturers of equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass. In 1945, L&T signed an agreement with Caterpillar Tractor Company, USA, for marketing earthmoving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7th February 1946, Larsen & Toubro Private Limited was born.
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Independence and the subsequent demand for technology and expertise offered L&T the opportunity to consolidate and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai. Today, Powai stands as a tribute to the vision of the men who transformed this uninhabitable swamp into a manufacturing landmark. Public Limited Company: In December 1950, L&T became a Public Company with a paid-up capital of Rs.2 million. The sales turnover in that year was Rs.10.9 million. In 1956, a major part of the company's Bombay office moved to ICI House in Ballard Estate. A decade later this imposing grey-stone building was purchased by L&T, and renamed as L&T House - it?s Corporate Office. The sixties were also a decade of rapid growth for the company, and witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963). Operating Divisions: ? ? ? ? ?
?
Engineering and Construction project (E&C) Heavy Engineering (HED) Engineering Construction & Contracts (ECC) Electrical & Electronics (EBG) Machinery & Industrial Products (MIPD) Information Technology & Engineering Services (Infotech)
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Board of Directors (L&T):
A. M. Naik
Chairman & Managing Director (CMD)
J. P. Nayak
Whole-time Director & President (Machinery & Industrial Products)
Y. M. Deosthalee
Whole-time Director & Chief Financial Officer (CFO)
K. Venkataramanan
Whole-time Director & President (Engineering & Construction Projects)
R. N. Mukhija
Whole-time Director & President (Electrical & Electronics)
K. V. Rangaswami
Whole-time Director & President (Construction)
V. K. Magapu
Whole-time Director & Senior Executive Vice President (IT & Technology Services)
M. V. Kotwal
Whole-time Director & Senior Executive Vice President (Heavy Engineering)
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L&T Heavy Engineering Division:
L&T's Heavy Engineering Division has established a reputation in global markets for quality products. The Division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defense sector. It is the preferred supplier of equipment for a select range of products, globally.
L&T has state-of-the art manufacturing facilities, which are capable of meeting the challenges of technology, quality conformance and delivery, while ensuring cost competitiveness.
The manufacturing plants are among the top fabrication facilities in the world with processes streamlined to achieve high efficiency and benchmarked to the latest technologies.
The Division has entered into Shipbuilding business and is engaged in construction of specialty commercial vessels and warships for the navy as well as the coast guard.
The various manufacturing, design and engineering locations of L&T HED are at the following locations:
1. Powai Works, Mumbai 2. Coimbatore Works, Tamil Nadu 3. Ranoli Works, Gujarat 4. Hazira Works, Gujarat
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The various Sub-Units of L&T HED are as follows:
Refinery: L&T offers all critical equipment and systems for refineries and gas cracker plants. The range includes high pressure, high temperature reactors like hydrocrackers, DHDT & DHDS reactors for „clean fuel? projects, and other critical equipment. These are manufactured in various grades of low alloy steels (including Cr– Mo-Vanadium) of clad or overlaid construction. L&T has the qualifications and vast experience in carrying out single-layer and double-layer overlay of equipment using ESSC (ESW) and SAW processes. Reactor internals are generally fabricated in-house and also assembled in reactors as per customer requirements.
Oil & Gas: L&T offers all critical equipment and systems for oil & gas projects. Having successfully executed orders for large tubular reactors (1500 MT), L&T is geared and qualified to take up the challenge of manufacturing the futuristic gas-to-liquid reactors for the oil & gas sector, in addition to traditional products such as test and production separators (separate or skid-mounted).
Petrochemicals: The product range comprises reactors, vessels, heat exchangers and
equipment for various services including high-
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pressure, high-temperature, hydrogen service, cryogenic application, etc.
Fertilizer: Heavy Engineering Division has contributed significantly to the growth of the Fertilizer industry in India and abroad. The division has supplied critical Equipment for over 50 Ammonia and Urea projects.
Fabrication is carried out at ASME-approved workshops in Mumbai, Hazira & Ranoli. These workshops have also secured ISO 9001:2000 Certification. Hazira Works near Surat has a waterfront load-out facility, capable of handling equipment and modules more than 2000 tones.
Coal Gasification: With rising cost of oil and natural gas, Syn-gas from coal gasification is becoming a cost-effective alternative
feedstock for fertilizers, chemicals (methanol, etc.), and power and coal liquefaction plants.
L&T manufactures and supplies key Coal Gasification Equipment -- coal gasifies and syngas coolers -- under a technical tie-up with Shell Global Solutions, The Netherlands. These find application in power plants and a wide variety of process plants such as ammonia, methanol and wherever synthesis gas is required.
Aerospace:
L&T offers design, manufacture and supply of
components, subsystems and systems for aerospace applications. L&T?s precision manufacturing facilities are geared to meet the
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exacting demands of aerospace manufacture. State-of-the-art facilities give L&T the capability to achieve high accuracy levels in the manufacture of systems and subsystems of satellites and launch vehicles in metals and in advanced composites.
L&T carries out in-house development of welding procedures for exotic materials and special machining processes for space application. Ship Building: L&T?s Shipbuilding facility has been created at Hazira Works to cater to the needs of growing global demand for construction of specialized oceangoing vessels.
The Shipbuilding facility recently set up for construction of high tech vessels and the facilities at the shipyard include prefabrication facilities such as shot blasting and priming , CNC cutting machine, semi panel line fabrication, unit assembly bay, block assembly and a slipway to launch the vessels along with a jetty for outfitting jobs for the ships under construction. 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 of specialized mid size vessels is being undertaken and capacity is being augmented by additional infrastructure such as ship lift system and additional outfitting workshops to extend the activities to ship repairs.
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Thermal Power Plant: L&T offers complete condensing and feed heating systems. It supplies balance of plant in the turbine island (other than turbine generator) which includes equipment like:
? ? ? ? ?
Circular Surface Condensers Rectangular Surface Condensers HP Feed Water Heaters LP Feed Water Heaters Deaerators
The equipment is interconnected with high pressure piping, valves, instruments, controls & auxiliary sub-system. Heavy Engineering Division also manufactures turbo generator
components like LP Hoods & Casing and Stator Frames for large steam turbines & turbo generator components for hydro turbines
Nuclear Power Plant: A pioneer in the field of manufacturing technology development, equipment manufacture and site / plant services for the Indian nuclear power plant program, L&T is a recipient of the prestigious „INS Industrial Excellence Award? for outstanding contribution in the nuclear power plant sector. L&T manufactures reactor vessels for Pressurized Heavy Water Reactors (PHWRs) and Fast Breeder Reactors (FBRs) designed technology and critical equipment & systems for heavy water plants, fuel re-processing plants and plasma reactors.
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Defense: We have been issued industrial licenses for a wide range of products, after Government of India?s decision to open up Defense production to the private sector. The licenses issued cover design, development, construction/ manufacturing and assembly of:
?
Warships, Submarines, Weapon platforms (off-shore, floating and submerged), Highspeed boats and crafts etc.
?
Radars, Sonar systems, associated subsystems, Electronic Warfare equipment and System Sensors.
? ?
Arms and Armament including Weapon Launchers. Armored and Combat vehicles, including associated systems, sub-systems such as Turrets, Turret mounts, Bridge laying systems on tanks, etc.
?
Airborne assembly systems & equipment for Aircrafts, Helicopters and Unmanned Aerial Vehicles (UAV) and equipment for aviation sector
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About the Leadership of L&T HED
L&T-HED is a team of more than 2900 L&T-ites spread across multiple locations across the globe. It is headed by Mr. M.V Kotwal.
Mr. M. V. Kotwal Whole-time Director & Senior Executive Vice President (Heavy Engineering)
Mr. M.V. Kotwal joined L&T in 1968 as a Junior Engineer and rose rapidly to assume positions of increasing responsibility in the Company's specialized manufacturing facilities. Under his leadership, the Heavy Engineering Division, with its strong engineering capabilities and technological strengths, had taken a number of successful initiatives to emerge as a significant global player in the process plant equipment market, and for gaining a competitive advantage in the production of equipment for the strategic sectors of nuclear, defense and aerospace.
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Chapter 2
Conducive factors identified 1) Environment:
L&T's Heavy Engineering Division has established a reputation in global markets for quality products. The Division manufactures and supplies custom designed and engineered critical equipment and systems to the needs of core-sector industries and the defense sector. It is the preferred supplier of equipment for a select range of products, globally. The economic slowdown is mainly impacting potential exports. Internationally, the refining business has been hit by the fall in the crude oil prices and the general economic slowdown. However, in India no such adverse problems are being felt due to good and stringent government policies thus no fall in oil demand is seen in India. However, the successful Chandrayan mission also introduced L&T?s success in Aerospace sector and with inking of collaboration of IndoFrench and Indo-Russian nuclear deals have given a new lease of life to L&T, HED in particular. Sources of uncertainty in the organization environment: The forces that cause all the problem can be viewed in another way: in terms of how they cause uncertainty because they affect the complexity, dynamism, and richness of the environment.
2)
Organization Design:
L&T HED has a Sub-unit differentiation. Since HED itself is a Division of L&T, its lower hierarchy is differentiated as Functional units. ? Differentiation vs. Integration
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Since HED has a more Sub-unit orientation, hence employees tend to see one?s role in the organization strictly from the perspective of the time frame. Integration at times tends to be a problematic issue. Generally, Direct Contact or Liaison roles are common touchpoints between various sub-units. But often it is seen that Teams and Tasks Force are created for critical and important manufacturing orders. ? Centralization vs. Decentralization At L&T HED, since the hierarchy is that of a short organization, the authority to make important decisions rests with the managers. Hence it is seen that decision making is decentralized. The advantage of decentralization is that it promotes flexibility and responsiveness by allowing lower level managers to make on-the-spot decisions. ? Standardization vs. Mutual Adjustment Even though, HED observes a decentralized decision making body, rules and norms are a mix of Standardization and mutual adjustment. ? Mechanistic Structure vs. Organic Structure HED follows an Organic Structure. Since often high degree of specialized work is required for manufacturing works, employees are given freedom to work together and coordinate their tasks. Authority to control tasks is delegated to people at all levels in the organization
3)
Organization Structure: Authority and Control
Since L&T is a multinational company, it is difficult to decide how much authority is to be centralized at the top of the organizational hierarchy and how much authority to be decentralized to the middle and the lower levels. HED follows a Flat organization. Under each functional sub-
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unit, the numbers of managers are more in lateral level and hence authority and communication problems do not exist. Since the organization is that of a flat structure, the principle of minimum chain of command is easily followed. The span of control of each manager is well defined and hence does not have to maintain complex relationships with the subordinates. Even though HED has a flat structure, the sub-units are further differentiated into small subhierarchical levels since most of the activities of HED are related to manufacturing products. Hence each sub-unit of HED is actually a mix of tall + flat structure. Hence manufacturing function sees a tall structure while sales and R&D functions sees more of a flat structure. This also follows that the authority and communication in manufacturing is more as compared to sales or R&D. Manufacturing jobs are generally costly jobs worth orders of crores hence accountability is better maintained in a tall structure. In case of Sales or R&D, the decision making and communication for faster input-to-output is required and hence flat structure suits these departments.
4)
Organization Structure: Specialization and Coordination
HED follows a functional structure, wherein group of people form teams to utilize their skills and expertise in using common resources. HED follows a Product Team structure. Since each sub-unit of HED is a sub-division, hence each division has their own functional units. For each of the Functional Units, Teams are form based on the Product Team Structure. Specialists from the support functions are combined into product development teams.
5)
Organization Culture: Creating and Managing
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The shared values and norms that control the employee interactions with each other and with people outside the organization are well defined through both formal and informal means. The mission statement and the company?s goal are well communicated so that the employee is aware of the terminal and instrumental values of the organization. Socialization is highly promoted and hence employees themselves learn and internalize the values and norms of the organization. Property rights are given to employees to receive and use the organization?s resources. Managers are provided with stock options, large salaries and hence better control over organizational resources and decision making. Similarly, for Workforce, long term employments, pensions and benefits maximizes participation in decision making. Mission: “To become an Indian Multinational.”
Tag Line: L&T's new tag line: “It?s all about Imagineering” It reflects the company's sharpening focus on knowledge-intensive businesses.
Its old tag line – “We make the things that makes India proud” is quite popular with media and public. In order to project L&T in International market, L&T can up with the new Tag Line.
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6)
Competencies
L&T's Heavy Engineering Division operates at the upper end of the technology spectrum and has been at the forefront of introducing new processes, products and materials into manufacturing sector, for over six decades. 1. Design & Engineering: L&T's engineering capabilities are geared to design equipment as per specific customer requirements.
2. Fabrication : L&T's world-class fabrication capabilities have been achieved through perfect integration of efficient material handling & preparation, precision machining and welding processes for a range of material in varying thicknesses, backed by technological excellence in design & engineering and responsive quality systems. 3. Welding: L&T has developed over 4000 welding procedures qualified as per international codes and standards - ASME, BS, AWS, AD Merkblatter, etc. for a variety
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of materials and thickness. Specialized welding is carried out in 100,000 class dust-free enclosures. 4. Machining: The capabilities of 'CNC' and special purpose machines are supported by a battery of general purpose machines all geared to the precision machining needs. 5. QA & Inspection: The Quality Assurance Programmed of L&T's Heavy Engineering Division has been accredited with ISO 9001: 2000 certification from DNV, UK. Workshops are also accredited to ISO 14001:1996 - Environmental Management System and OHSAS 18001:1999 - Occupational Health and Safety Assessment series. 6. Project Management : a. BaaN ERP: L&T is one of the first companies to implement BaaN ERP system in its heavy engineering manufacturing facilities. b. Multi-project scheduling of activities: Pioneer in implementing "Critical Chain Project Management" 'Concerto' for multi-project scheduling of activities across all locations. c. Product Lifecycle Management : Product Lifecycle Management (PLM) is being implemented for managing and controlling in an integrated environment, all product and process-related information, throughout the product?s life-cycle and thereafter. d. eProcurement & reverse auctions: eProcurement & reverse auctions used to encourage transparent competitive bidding.
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e. Customer Relationship Management: Customer Relationship Management (CRM) module allows the customer to track project progress via computer from anywhere in the world. f. Global sourcing: Strategically located global sourcing offices are staffed by technical personnel in USA, China, Japan, Italy, and Russia for ensuring timely delivery of materials and components at competitive rates meeting all technical requirements. 7. Single Point Sourcing: With almost all major EPC players and process licensors qualifying L&T for critical equipment to the hydrocarbon industry, L&T has become a single point source for hi-tech products. Its Heavy Engineering Division is a preferred supplier of equipment, globally. Operating at the upper end of the technology spectrum, Heavy Engineering Division has, for over six decades, been at the forefront of introducing new processes, products and materials into the manufacturing sector. Its state-of-the art manufacturing facilities are capable of meeting the challenges of technology, quality conformance and delivery, while ensuring cost competitiveness. 8. Manufacturing Facilities: L&T's Heavy Engineering manufacturing plants are among the world's top fabrication facilities with processes streamlined to achieve high efficiency and benchmarked to the latest technologies. 9. Global Recognition: Excellent performance leads to repeat export orders and orders on nomination basis.
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Chapter 3
The growth of the Organization & Annual Report 2008-2009 Growth of L&T
L&T HED has not only grown in India but also in the Global Market.
L&T continues to surge ahead in its quest for becoming a global player. It has set itself a target of earning 25 per cent of its revenues from its international operations by 2009-10. It is also actively pursuing business opportunities in China, Middle East and Africa as it sees immense potential in these regions. It seeks to utilize China as a hub for the sourcing of cost-effective components and materials. HED is expanding both in the domestic and international markets.
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ANNUAL REPORT 2008-2009 (comparison with previous 5 years)
BALANCE SHEET (in Crores)
Sources Of Funds Mar '05 12 mths Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 0 3312.25 30.9 3369.13 793.72 1065.34 1859.06 5228.19 0 4583.32 29.37 4640.17 465.79 987.78 1453.57 6093.74 0 5683.85 27.93 5768.43 245.4 1832.35 2077.75 7846.18 0 9470.71 25.9 9555.08 308.53 3275.46 3583.99 13139.07 0 12317.96 24.59 12459.69 1102.38 5453.65 6556.03 19015.72 0 0 0 0 0 25.98 25.98 Mar '06 12 mths 27.48 27.48 Mar '07 12 mths 56.65 56.65 Mar '08 12 mths 58.47 58.47 Mar '09 12 mths 117.14 117.14
Application Of Funds Gross Block Less: Accum. Depreciation 1089.54 982.22 1122.83 1242.47 1421.39 2106.55 2300.68 2876.3 4188.91 5575
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Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
1017.01 65.82 960.7 2310.84 3963.6 354.67 6629.11 1860.18 473.35
1318.46 286.06 1919.52 2210.27 4814.16 398.71 7423.14 2061.5 184.49
1753.47 471.22 3104.44 3001.14 5504.64 993.68 9499.46 2449.14 100.75
2946.44 699 6922.26 4305.91 7365.01 779.86 12450.78 3861.1 184.6
4153.61 1040.99 8263.72 5805.05 10055.52 693.13 16553.7 7198.85 82.16
8962.64 0 5023.23 794.64 5817.87 3144.77 39.89 5228.19 625.1 256.94
9669.13 0 6106.04 1015.37 7121.41 2547.72 21.98 6093.74 305.59 335.61
12049.35 0 8362.01 1180.13 9542.14 2507.21 9.84 7846.18 270.22 202.65
16496.48 0 11892.75 2035.42 13928.17 2568.31 3.06 13139.07 1013.51 325.98
23834.71 0 15211.04 3066.53 18277.57 5557.14 0.26 19015.72 1371.86 212.32
PROFIT & LOSS STATEMENT (in Crores)
Profit & Loss account in Rs. Cr. Mar '05 12 mths Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths
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Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses -3.15 12258.69 -1.89 13389.71 -3.3 15724.04 -11.42 22453.05 -24.48 29819.63 5170.22 877.6 147.2 6647.7 996.59 125 7451.07 1222.8 166.15 10632.83 1393.8 280.69 15659.17 1844.83 569.32 5211.98 90.33 764.51 4510.78 221.5 890.03 5320.98 308.13 1258.21 8256.46 365.25 1535.44 9316.38 456.39 1998.02 13404.27 214.56 13189.71 634.94 86.84 13911.49 15030.81 253.86 14776.95 527.52 -103.24 15201.23 17983.37 338.08 17645.29 459.8 121.76 18226.85 25280.49 334.38 24946.11 616.69 746.17 26308.97 34249.85 393.31 33856.54 1612.58 105.11 35574.23
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off
1017.86 1652.8 280.51 1372.29 87.52 0
1284 1811.52 321.34 1490.18 107.12 0
2043.01 2502.81 331.46 2171.35 160.13 0
3239.23 3855.92 501.83 3354.09 195.94 15.66
4142.02 5754.6 770 4984.6 284.83 21.16
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Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earnings Per Share (Rs) Equity Dividend (%) Book Value (Rs)
1284.77 8.02 1292.79 302.29 983.85 7046.71 0 357.21 49.41
1383.06 -1.85 1381.21 366.12 1012.14 8878.93 0 302.25 42.39
2011.22 -5.34 2005.88 601.87 1403.02 10403.06 0 368.25 53.34
3142.49 12.21 3154.7 982.05 2173.42 14196.59 0 495.32 76.26
4678.61 -21.09 4657.52 1176.19 3481.66 20503.25 0 614.97 101.83
1299.24 75.72 1375 256.94
1373.86 73.67 1100 335.61
2832.71 49.53 650 202.65
2923.27 74.35 850 325.98
5856.88 59.45 525 212.32
CASH FLOW STATEMENT
Cash Flow ------------------- in Rs. Cr. ------------------Mar '05 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities 1286.14 112.01 236.28 Mar '06 12 mths 1383.4 1369.25 -1326.3 Mar '07 12 mths 2004.89 2130.45 -1588.17 Mar '08 12 mths 3155.47 1945.24 -5241.89 Mar '09 12 mths 3940.41 1478.57 -3308.53
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Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
104.46
-287.77
-31.05
3166.68
1640.79
452.72 375.27 828.02
-244.82 828.02 583.2
511.23 583.2 1094.43
-129.97 1094.43 964.46
-189.17 964.46 775.29
Analysis: It is clearly seen from the various Ledger statements that the profit for L&T as a whole is always increasing for the past 5 years.
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L&T-HED
Group: C2
Latest Orders bagged by L&T HED and its major contributions in the year 2009: ? 12 Aug 2009: Jaypee Group and L&T sign agreement for the supply of super critical equipment ? ? ? ? 05 Aug 2009: L&T wins orders worth Rs. 8,530 million for Coal Handling Plants 26 Jul 2009: L&T makes key contribution to India?s First Nuclear Powered Submarine 01 Jul 2009: L&T bags Rs. 6510 million orders for projects in Hydrocarbon Sector 19 May 2009: L&T signs MoU with GE Hitachi for ABWR & BWR Nuclear Power Plants in India ? 05 May 2009: EADS Defense & Security and Larsen & Toubro join forces in India to forge a long term partnership ? ? 15 Apr 2009: L&T signs MoU with Atomstroyexport for Nuclear Power Reactors 30 Mar 2009: L&T receives Rs. 3450 million order for Critical Equipment for Nuclear Project
?
16 Jan 2009: L&T signs MoU with Westinghouse for Modular Nuclear Power Reactors
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L&T-HED
Group: C2
L&T Share Market
L&T Share Value as on Sep 07, 2009
L&T’s Competitors
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L&T-HED
Group: C2
Chapter 4
Identified factors that have led to its expansion and growth
1. Supplies to the defense services including system integration done under offsets in India continue to attract various local taxes and levies which discourages the foreign defense contractors from awarding more work as well as value added work in India 2. A strategic Electronics Centre for Defense Electronics Systems design and engineering operates from Bangalore. Dedicated engineering centers support manufaturing at all locations. 3. HED has setup three “Technology Development Centers” at Powai, Mumbai for new product development in process plant equipment and for defence/ nuclear equipment as well as one focussed on electronics systems / sub-systems. 4. The inking of the Indo-US, Indo-French, Indo-Russian & Indo-Kazak nuclear deals opens up new opportunities for supply of critical nuclear power plant equipment.
SWOT ANALYSIS Strengths: ? L&T has strong international linkages through technology partnerships and ongoing relationships with global suppliers, consultants and customers. ? ? Core Competencies Good financial performance, which is improving by every year
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L&T-HED
Group: C2
?
Its International strategy a thrust is its global sourcing policy, With a steady rise in material costs, the company has placed sourcing teams in China, Europe and Russia
?
It has been able to integrate its strengths across several areas like engineering, construction, procurement and process technology to be able to provide a „single point responsibility under stringent delivery schedules?.
Weaknesses: ? ? ? Structure problems like coordinating and collaborating. Difficult to manage the plants, as lot of the factors should be taken care of like safety etc, Unpredictive environment
Opportunities: ? ? Scope of global expansion Good operating margins
Threats: ? ? ? ? ? ? Tough competition from internationally established players Regulation & Compliance Currency Fluctuations Talent of best calibre to compete internationally and their mobility Severe Safety, Health & Environment (SHE) norms in certain Countries Logistic Risk-Coordinating the movement of goods through supply chains that span the globe ? Geopolitical uncertainty
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L&T-HED
Group: C2
Chapter 5
Further expansion of the organization
L&T HED is expanding its business to Shipbuilding construction. Ship Building Operating Company is in the business of construction/repair of both commercial and defense vessels. The operating company presently has fabrication and shipbuilding facilities at Hazira, Gujarat, which handles the construction of commercial vessels. Construction of a new shipyard has been launched at Kattupalli in Tamil Nadu. The new shipyard will primarily focus on construction / refits of naval ships and submarines and repair of commercial vessels. The economic situation world over is likely to improve by end 2009 or early 2010. Fertilizer sector is expected to offer good opportunities with a few green and brown field investments both in domestic and international markets. HED also expects good prospects from domestic refinery projects.
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L&T-HED
Group: C2
Chapter 6
The factors that led to its further expansion
1. HED is setting up a heavy fabrication facility through a joint venture in Oman to cater to the Middle East market. 2. There has been a requirement in the domestic sector for heavy forgings for nuclear plants as well as reactors for the hydrocarbon market. 3. Strategic Alliances and Joint ventures with DRDO and other national laboratories have lead to improve the R&D capabilities of L&T HED. 4. The inking of the Indo-US, Indo-French, Indo-Russian & Indo-Kazak nuclear deals opens up new opportunities for supply of critical nuclear power plant equipment. 5. Chandrayan success and India?s first nuclear operated submarine INS Arihant success has increased the R&D capabilities of L&T HED and will be definitely a success story in coming times.
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L&T-HED
Group: C2
Chapter 7
Conclusion
The Company can be optimistic about the business prospects and about its capabilities to leverage them for its benefit. The recession and high oil prices and decrease in global demand have decreased the investment plans across sectors, particularly in the areas of hydrocarbon and other core sector industries. Company expects to improve on its revenue growth and profitability in future. HED can leverage on the impeccable pedigree of Larsen & Toubro Limited. Of all the assets that L&T possesses there is no doubt about what it would regard as its most precious – its values. L&T's brand values are those which characterize it as a corporate entity – professionalism, integrity and transparency. L&T believes that the true 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. Brand L&T also strikes a distinct nationalistic chord.
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L&T-HED
Group: C2
Chapter 8
Learning from the project
? L&T (HED) is very vast and diversified organization which follows the organic structure having centralized decision making structure in top and very decentralized at the bottom which make the process of decision making very easy since important decisions are taken by top management and some decision are still left for others so they feel part of the decision making process which is very important for growth of organization. ? They have functional structure in the HED but they coordinate among themselves and team so they put their primary focus on product rather than functions. ? L&T is considered to be very ethical organization who not only takes from society but also give back to the society. ? L&T is very big organization consisting of people from different background and different geographical area which brings different mindset and culture in the organization. ? Flat structure helps to bring down bureaucratic cost as well as help them to pass information from top level to bottom level very easily which again helps in decision implementation. ? They have created a very good reputation in market for themselves so L&T is a very good brand which helps them to bring down dependency in resources outside the organization.
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Group: C2
?
L&T has a huge infrastructure of IT; it has its own software technology. This helps them to bring down further cost and time to develop products.
?
Authority and control is very clear and defined so there is no role of conflict or ambiguity among employee on what their role and responsibility in the organization which helps in no conflict among employees and peaceful working environment.
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L&T-HED
Group: C2
Chapter 9
Reference sources
? ? L&T Website : http://www.larsentoubro.com L&T HED Website: http://www.larsentoubro.com/lntcorporate/common/ui_templates/homepage_news.aspx?r es=P_HED ? ? ? ? CNN IBN MoneyControl : http://www.moneycontrol.com/ Share Market Research Site MyIris: http://www.myiris.com/ L&T Annual Report 2008-2009 http://en.wikipedia.org/wiki/Larsen_%26_Toubro
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