COMPANY PROFILELarsen & Toubro LimitedREFERENCE CODE:
BC12843B-5BD8-4976-90C4-A3B2589006ACPUBLICATION DATE: 18 Feb
2015www.marketline.comCOPYRIGHT MARKETLINE. THIS CONTENT IS A
LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED.TABLE
OF
CONTENTSCompanyOverview..............................................................................................3KeyFacts...............................................................................................................3BusinessDescription...........................................................................................4History...................................................................................................................6KeyEmployees...................................................................................................12Key
Employee
Biographies................................................................................13Major
Products and
Services............................................................................15RevenueAnalysis...............................................................................................17SWOTAnalysis...................................................................................................19TopCompetitors.................................................................................................24Company
View.....................................................................................................25Locations
and
Subsidiaries...............................................................................32Larsen
& Toubro Limited Page 2 MarketLineLarsen & Toubro
LimitedTABLE OF CONTENTSCOMPANY OVERVIEWLarsen & Toubro Limited
(L&T or the company") is a technology, engineering,
construction, andmanufacturing company. Its other key activities
include manufacturing of electrical and electronicequipment,
services, and information technology. The company operates
primarily in India. L&T isheadquartered in Mumbai, India and
employed 54,579 people as on March 31, 2014.The company recorded
revenues* of INR861,103.1 million ($14,294.3 million) during the
financialyear ended March 2014 (FY2014), an increase of 14% over
FY2013. The operating profit** of thecompany was INR71,489.9
million ($1,186.7 million) in FY2014, a decrease of 1% compared
toFY2013. The net profit of the company was INR52,056.7 million
($864.1 million) in FY2014, anincrease of 6.2% over FY2013.KEY
FACTSLarsen & Toubro Limited Head OfficeL&T HouseBallard
EstateP. O. Box: 278Mumbai 400 001MaharashtraIND91 22 6752 5656
Phone91 22 6752 5893 Faxhttp://www.larsentoubro.com Web
Address861,103.1 Revenue / turnover(INR Mn)March Financial Year
End54,579 Employees500510 Bombay TickerLT National StockExchange of
IndiaTickerLarsen & Toubro Limited Page 3 MarketLineLarsen
& Toubro LimitedCompany OverviewBUSINESS DESCRIPTIONLarsen
& Toubro Limited (L&T or "the company") is a technology,
engineering, construction, andmanufacturing company in India. It is
also engaged in manufacturing of electrical and
electronicequipment, financial services, and information
technology. L&T primarily operates in India and alsohas
international presence in various markets, including China, the
Middle East, South East Asia,and Australia.L&T operates through
seven business segments: infrastructure, metallurgical &
material handling,power, heavy engineering, electrical &
automation, machinery & industrial products, and others.The
infrastructure segment comprises engineering and construction of
building and factories,transportation infrastructure, heavy civil
infrastructure, power transmission & distribution and
water& renewable energy projects. This segment has presence in
South Asia, South East Asia, the MiddleEast, Russia, Commonwealth
of Independent States (CIS) countries including African
countries.Metallurgical & Material handling (MMH) segment
undertakes EPC (Engineering, Procurement &Construction)
projects for Ferrous (iron & steel making) and Non-Ferrous
(aluminium, copper, lead& zinc) metal industries, Bulk Material
& Ash handling systems in Power, Ports, Steel and Miningsector.
It has Industrial Machinery & Foundry work shop at Kansbahal,
Odisha and fabrication shopat Kancheepuram, Tamil Nadu to cater
specific requirements of the customer. MMH businesssegment also has
an International presence in Gulf region.The power business segment
provides engineering; procurement and construction (EPC)
solutionsfor setting up coal-based and gas-based thermal power
plants including power generation equipmentwith associated systems
and/or balance-of-plant packages. This business has a pan India
presencewith multiple project sites, project management centres at
Vadodara, Faridabad and Chennai andmanufacturing facilities at
Hazira.The heavy engineering business segment manufactures and
supplies custom designed, engineeredcritical equipment &
systems to core sector industries like Fertilizer, Refinery,
Petrochemical,Chemical, Oil & Gas, Thermal & Nuclear Power,
Aerospace and Defence applications.The electrical & automation
segment comprises of products and solutions for electricity
distributionand control in industries, utilities, infrastructure,
buildings and agriculture sectors. This includesmanufacture and
sale of low and medium voltage switchgear components, custom built
low andmedium voltage switchboards, electronic energy
meters/protection (relays) systems and control &automation
products. The manufacturing operations of this segment are located
at Mumbai (Powai),Navi Mumbai (Mahape & Rabale), Ahmednagar,
Vadodara, Coimbatore and Mysore in India. Itsinternational
manufacturing facilities are located at in Saudi Arabia, Jebel Ali
(Dubai), Kuwait, Malaysia,Indonesia, Australia and the UK.Larsen
& Toubro Limited Page 4 MarketLineLarsen & Toubro
LimitedBusiness DescriptionThe machinery & industrial products
segment comprises of manufacturing and sale of rubberprocessing
machinery & castings, manufacturing and marketing of industrial
valves, constructionequipment and industrial products and
manufacture and sale of welding and cutting equipment. Italso
includes manufacturing and sale of plastic processing machinery and
manufacturing and saleof undercarriage assemblies in the previous
year.L&Ts others segment includes realty, shipbuilding and
integrated engineering services.Larsen & Toubro Limited Page 5
MarketLineLarsen & Toubro LimitedBusiness
DescriptionHISTORYLarsen & Toubro Limited (L&T or "the
company") was founded in Bombay (Mumbai) in 1938 by twoDanish
engineers, Henning Holck-Larsen and Soren Kristian Toubro. The
company began with theimport of machinery from Europe, later took
on engineering and construction assignments. In 1944,the ECC
division was incorporated.During 1945, L&T signed an agreement
with Caterpillar Tractor Company, the US, for marketingearthmoving
equipment. In the following year, the company raised additional
equity capital andLarsen & Toubro Private Limited was
established. L&T acquired fifty-five acres of undevelopedmarsh
and jungle in Powai in 1948.L&T became a public company with a
paid-up capital of INR2 million (approximately $36,840) in1950.
During that decade, the company executed some orders including the
Amul Dairy at Anandand Blast Furnaces at Rourkela Steel Plant and
became the largest erection contractor in India.The company grew
rapidly during 1960s and formed many new ventures: UTMAL (1960),
AudcoIndia Limited (1961), Eutectic Welding Alloys (1962) and TENGL
(1963). During 1979, WilcoxBuckwell India merged with the company.A
number of agreements were signed with a range of companies
throughout the 1980s and 1990sas the company expanded its
operations. During this period, the company formed alliances with
anumber of players, which included Y E Data of Japan and Jeumont
Schneider of France for electronicPABX, as well as Honeywell
Information for printers.L&T diversified its operations into
medical electronics products in 1989, while receiving
industriallicenses to manufacture ship auxiliaries and certain
components of mechanized sailing vessels andrail track.The 1990s
saw the company take over the tractor unit of Kirloskar Pneumatic,
a merger with Gould,and a joint venture with Japanese company
Komatsu.In 2004, the company and Grasim Industries (Grasim) entered
into a scheme of demerger for thecement division, which was
completed in the same year. As a result, Grasim acquired majority
stakein UltraTech CemCo (UltraTech), the demerged cement business
of L&T.L&T entered into an agreement with Datar Switchgear
(DSL) of Nashik, India and merged DSL withL&T in 2005. In the
same year, the company, as part of its strategy to exit from
non-core businesses,divested its stake in L&T-John Deere (LTJD)
to its joint venture partner and sold its glass packagingbusiness
along with the manufacturing plant at Nashik to Ace Glass
Containers.Further in 2005, the company, in a joint venture
agreement with Dubai Aluminum Company (Dubal),established an
integrated bauxite mining-cum-alumina refinery project in Orissa.
In the same year,Larsen & Toubro Limited Page 6
MarketLineLarsen & Toubro LimitedHistoryOil & Natural Gas
Corporation (ONGC) awarded a INR10,000 million ($184.2 million)
turnkey projectorder to L&T for four well platforms and
inter-connecting pipelines for Mumbai High North and
Basseinfields.In 2006, the company partnered with Provenco, the New
Zealand based technology company, forsupply of petrol station
forecourt technology to Bharat Petroleum Corporation. Subsequently,
L&Tentered the dredging business by acquiring a majority stake
in the Indian entity, International SeaportDredging, promoted by
Belgian dredging multinational, Dredging International.During the
same year, the company entered into joint venture agreements with
SapuraCrest PetroleumBerhad to build, own, and operate a derrick
cum pipe laying barge and Kuwait-based Bader Al Mullaand Brothers
Company to focus on construction projects in oil and gas, power,
and infrastructure.Also in 2006, L&T agreed to distribute
Scania's range of multi-axle trucks in India.In 2007, L&T
Infotech, the IT consulting and services subsidiary of L&T,
acquired GDA Technologiesand its design centers in the US and
India. In the same year, L&T signed a joint venture with
AATurki Contracting and Trading Corporation of Saudi Arabia to
focus on electromechanical constructionfor the hydrocarbon and
power sector. The company built one of the world's largest FCC
regeneratorsand combustors for Reliance Petroleum's export oriented
refinery at Jamnagar, Gujarat in 2007. Inthe same year, the company
acquired Tamco Switchgear Malaysia in a share sale agreement
withTamco Corporate Holdings.Subsequently in 2007, the company
formed a joint venture with the US-based Gulf InterstateEngineering
Company for cross-country pipeline construction. In the same year,
Raytheon Company,a defense major, signed a memorandum of
understanding (MOU) with L&T for the MMRCA (MediumMulti Role
Combat Aircraft) program. Furthermore, L&T signed a SUA
(sub-usufruct agreement)with Sohar Industrial Port Company and
established a green-field plant in Sohar, Oman for themanufacture
of high-tech equipment for the process industry.In 2008, the
company, in a joint venture agreement with Tamil Nadu Industrial
DevelopmentCorporation, established a shipyard complex with a port
facility in the Kattupalli village, near Ennorein Tiruvallur
District of Tamil Nadu. In the same year, L&T Electricals Saudi
Arabia Company, thecompanys joint venture with Yusuf Bin Ahmed
Kanoo Group, inaugurated its switchboardsmanufacturing facility in
Saudi Arabia. In the same year, L&T sold its ready mix concrete
(RMC)business to Lafarge India and signed a strategic partnership
agreement with GE Energy to focus onthe Indian power generation
market.Further in 2008, a consortium led by L&T with Scomi
Engineering of Malaysia won an order fromthe Mumbai Metropolitan
Region Development Authority (MMRDA) to implement the country's
firstmonorail system in Mumbai. In the same year, L&T secured a
major order from HPCL Mittal Energy,a joint venture of Hindustan
Petroleum Corporation and Mittal Energy Investments. The project
orderinvolved setting up two 44,000 TPA capacity hydrogen
generation units (HGU) for HMEL's grassrootsrefinery in Bathinda,
Punjab.Larsen & Toubro Limited Page 7 MarketLineLarsen &
Toubro LimitedHistoryDuring 2009, L&T signed MoUs with the
following companies: the US based Westinghouse ElectricCompany for
co-operation on pressurized water nuclear reactors with modular
construction technologyin India; Canada based Atomic Energy of
Canada for co-operation on Advanced CANDU ReactorACR1000;
Atomstroyexport of Russia for co-operation on design reactors VVER
1000; and the USbased GE Hitachi Nuclear Energy for co-operation on
boiling water reactor and advanced boilingwater reactor nuclear
power plants. In the same year, EADS Defense and Security (DS) and
L&Tformed a joint venture company for defense electronics in
India, based in Talegaon near Pune.In 2009, L&T and Jaiprakash
Power Ventures, the power generation subsidiary of Jaypee
Group,signed an agreement, for the supply and erection of the
boiler and steam turbine and generator(STG) islands for the two 660
megawatts (MW) Jaypee Nigrie Super Thermal Power Project locatedin
Singrauli district in Madhya Pradesh. Later in 2009, L&T sold
its shares in Voith Paper TechnologyIndia to its joint venture
partner, Voith of Heidenheim, Germany.In early 2010, L&T and
Nuclear Power Corporation of India Ltd. (NPCIL) formed a joint
venturecompany to produce special steels and ultra heavy forgings.
In 2010, L&T launched its assetmanagement operations with the
acquisition of DBS Chola Mandalam Asset Management Companyby
L&T Finance. The asset management company was renamed L&T
Investment Management andthe fund house was renamed L&T Mutual
Fund.During 2010, L&T was awarded a contract by the Indian
Ministry of Defense for the design andconstruction of 36 high speed
interceptor boats for the Indian Coast Guard. In the same year,
L&Tsold its petroleum dispensing pump and systems (PDP)
business to Gilbarco, a subsidiary of DanaherCorporation. Also in
2010, L&T and Rolls-Royce, the global power systems company,
signed anMoU to address the need for light water reactors in India
and internationally. In the same year, L&Tformed a joint
venture with Howden to design, engineer, manufacture, and supply
axial fans and airpre-heaters to Indian thermal power plants.In
2010, L&T General Insurance Company, a subsidiary of the
company, received R3 approval fromInsurance Regulatory and
Development Authority to commence its business operations in
India.Also in 2010, L&T and Befula Investments, an engineering
and investment company in Durbanincorporated a joint venture
company 'Larsen & Toubro T&D SA (PTY) Ltd.' in South Africa
tocapitalize on the power transmission and distribution
opportunities in the country.During early 2011, L&T and Kobe
Steel of Japan formed a joint venture to manufacture internalmixers
and twin screw rollerhead extruders for the tyre and rubber
industry. During the same time,the joint venture of L&T and
Mitsubishi Heavy Industries opened a facility for
manufacturingsupercritical boilers and turbine generators at
Hazira, Surat.L&T and Cassidian entered into a partnership in
the first quarter of 2011, to become an electronicshouse for
defense and security. Subsequently, the Defence and Security
Division of Europe's leadingAerospace and Defence Group (EADS) was
renamed Cassidian. In the same quarter, the companysold its entire
stake in L&T-CASE Equipment Private Limited to its joint
venture partner CNH GlobalNV engaged in the agricultural and
construction equipment business.Larsen & Toubro Limited Page 8
MarketLineLarsen & Toubro LimitedHistoryIn mid-2011, L&Ts
subsidiary L&T Finance completed an initial public offering
(IPO) of 214.5 millionshares at a price of INR52 ($0.9) per share
for total gross proceeds of INR11,154.5 million
($205.5million).L&T formed a strategic partnership in early
2012 with the UK based Cyan Holdings plc, an integratedsystem
design company to collaborate in the development, supply and
delivery of advanced meteringsolutions comprising utility meters
equipped with Cyan's wireless communication capability for
AMI,smart metering and smart grid pilot projects.Later in 2012, the
electrical and automation business of L&T acquired the UK based
Thalest Limited,a holding company engaged in offering integrated
platform management system and integratedbridge system solutions
for naval warships and mercantile marine ships, vessels and
floating systems.At the same time, L&T Construction, a division
of L&T, commissioned Indias largest solar photovoltaic based
power plant (40 MWp), which is owned by Reliance Power Limited at
Dhursar Village,Jaisalmer district of Rajasthan.The company, as
part of its capacity expansion initiative for electrical and
automation business,inaugurated its manufacturing facility for
switchgear products at Vadodara, on an 18-acre plot adjacentto
L&T Knowledge City in mid-2012. During the same period, L&T
signed a share sale and purchaseagreement with Toshiba Machine Co.,
Ltd., Japan, and sold its entire stake in L&T Plastics
MachineryLimited in order to exit non-core businesses and
rationalize its portfolio.Towards the end of 2012, L&T won the
order for manufacture and installation of ITERs Cryostat forthe
experimental thermo nuclear fusion reactor in the South of France.
At the same time, L&T Financeacquired Indo Pacific Housing
Finance, Ltd., a housing finance company that provides home
loansand loans against property, for INR1,100 million ($20.3
million). Also at the same time, Delhi MetroRail Corporation
awarded L&T Construction an order worth INR12,520 million
($230.6 million), tobe executed as a joint venture with Shanghai
Urban Construction Group. With a share of INR8,520million ($156.9
million) in the joint venture, L&T is required to design and
construct a tunnel betweenShankar Vihar and Hauz Khas as well as
underground stations at Vasant Vihar, Munirka, R.K. Puram,IIT and
Hauz Khas.The company secured an order valued at over INR7,320
million ($134.8 million) from NPCIL for theRajasthan Atomic Power
Plant at the end of 2012. At the same time, L&T signed a
contract withPETRONAS Carigali Myanmar (Hong Kong) Limited in
Yangon, Myanmar for executing an offshoreengineering, procurement,
construction, installation and commissioning project valued at over
$100million.The company signed an agreement with CMI Energy,
Belgium in first quarter of 2013 for extensionof L&Ts licence
territory to manufacture and supply small heat recovery steam
generators installedbehind gas turbines below 80 MW to South East
Asia and the Middle East. In the same month, L&Tinaugurated its
offshore development centre for Calsonic Kansei (CK) at Chennai. In
the sameperiod, the company completed the ownership transactions
related to its India based group companyAudco India Limited (AIL),
a manufacturer of industrial valves. Also in the same period,
L&TLarsen & Toubro Limited Page 9 MarketLineLarsen &
Toubro LimitedHistoryannounced that it would acquire 50% stake in
L&T-Komatsu Limited held by Komatsu Asia & PacificPte.
Ltd.In second quarter of 2013, Larsen Toubro Arabia LLC, a joint
venture company of L&T secured anEPC contract from the Saudi
Arabian Oil Company (Saudi Aramco), for setting up gas
processingfacilities for the Midyan Gas Fields, The project was
scheduled to be completed in three years. Inthe following quarter,
L&T Construction won INR 82,500 million ($1,519.7 million)
worth RiyadhMetro Project and INR20,850 million ($384.1 milion) Al
-Batinah Expressway Project.In third quarter of 2013, the
Sojitz-L&T Consortium signed an EPC rail contract with the
DedicatedFreight Corridor Corporation of India for the construction
of 626 kilometer of a double track corridorfrom Rewari in Haryana
to Iqbalgarh in Gujarat, via Rajasthan. In the same quarter, the
water andrenewable energy business of L&T Construction secured
new orders worth INR11,410 million ($210.2million) in various
business segments.L&T won two EPC projects of about INR11,000
million ($202.6 million) value in hydrocarbon segmentin the UAE and
Qatar in towards the end of 2013. During the same period, L&T
Construction securedINR29,350 million ($540.6 million) worth EPS
contract from Qatar General Electricity and WaterCorporation for
the supply, construction and commissioning of 18EHV (Extra High
Voltage) substationsand 151 kilometer of EHV cabling in Qatar.In
January 2014, L&T Saudi Arabia acquired a contract to construct
55 km of 230kV Double CircuitOverhead Transmission line and
Underground Cabling in the Kingdom of Saudi Arabia from theSaudi
Arabian Oil Company (Saudi Aramco). In the following month, the
company declared that ithas secured new orders worth INR52,200
million ($866.5 million) across its various business segmentsin
January & February 2014.The company bagged order for INR15500
million ($257.3 million) in March 2014 from the Ministryof
Transport and Communications, Sultanate of Oman, for the
construction of a road betweenBidbid-Sur Section. Further, L&T
construction won new orders worth INR29,350 million ($487.2million)
across various business segments in February and March 2014.
Further in the same month,L&T Construction secured an
international contract for INR36,550 million ($606.7 million)
fromASHGHAL (Public Works Authority), State of Qatar to design and
construction of Al Wakrah BypassRoad (P015). Also L&T
construction acquired another contract for INR19,810 million at the
sametime for the construction of residential towers and villas in
Bangalore.In April 2014, L&T construction acquired contract for
$740 million from Qatar Railways Companyfor the design and
construction of the Gold Line of the Doha Metro project in
Qatar.L&T Infrastructure Development Projects (L&T IDPL)
and Tata Steel entered into an agreement withAdani Ports in May
2014 to sell 100% stake in the Dhamra Port Company Limited (DPCL)
forapproximately INR55,000 million ($913 million). Also in the same
month, L&T Special Steels andHeavy Forgings (LTSSHF) entered
into a five year agreement with The Japan Steel Works, Ltd.
Theagreement covered the transfer of critical technology for steel
melting & heavy forgings made fromingots for hydrocarbon,
thermal power, steel & cement sectors. Also in the same month,
the companyLarsen & Toubro Limited Page 10 MarketLineLarsen
& Toubro LimitedHistoryacquired two engineering, procurement
and construction orders for $480 million for setting up
dualfuel-fired gas based combined cycle power plants in
Bangladesh.L&T Technology Services purchased 74% of the equity
capital of Thales Software India Pvt. Ltd. inJune 2014 to
strengthen its Avionics Business. In the following month, L&T
Hydrocarbon acquiredcontract for INR50,760 million ($842.6 million)
in the Middle-East from the Kuwait Oil Company(KOC) to execute a
complete Engineer Procure-Construct contract for a Gathering Centre
for KOC.The company secured contract in September 2015 from the
state utility MP Power GeneratingCompany Limited for setting up a
Supercritical Thermal Power Project at Shree Singaji TPP
forINR51,000 million ($846.6 million). Also in the same month, the
company acquired 50% of the stakein L&T-Ramboll Consulting
Engineers Limited (LTR) held by Ramboll Denmark AS, to
strengthenits design base in the Infrastructure space.In December
2014, L&T Construction acquired contracts for INR40,060 million
($665 million) invarious business segments in both domestic and
international markets.Larsen & Toubro Limited Page 11
MarketLineLarsen & Toubro LimitedHistoryKEY
EMPLOYEESCompensation Board Job Title Name224285000 INR Executive
Board Group Executive Chairman A. M. Naik106709000 INR Executive
Board Chief Executive Officer &
ManagingDirectorKrishnamurthiVenkataramanan77227000 INR Executive
Board Whole-time Director and President,Heavy EngineeringMadhukar
Vinayak Kotwal104840000 INR Executive Board Whole-time Director and
Sr.Executive Vice President,Construction and InfrastructureS. N.
Subrahmanyan85340000 INR Executive Board Whole-time Director and
ChiefFinancial OfficerR. Shankar Raman64936000 INR Executive Board
Whole-time Director and Sr.Executive Vice President, Power,Minerals
and MetalsShailendra Roy4205000 INR Non Executive Board Director
M.M. Chitale4540000 INR Non Executive Board Director Subodh
Bhargava3985000 INR Non Executive Board Director M.Damodaran2765000
INR Non Executive Board Director Vikram Singh Mehta2849000 INR Non
Executive Board Director Sushobhan SarkerNon Executive Board
Director Adil ZainulbhaiNon Executive Board Director Akhilesh
Krishna GuptaLarsen & Toubro Limited Page 12 MarketLineLarsen
& Toubro LimitedKey EmployeesKEY EMPLOYEE BIOGRAPHIESA. M.
NaikBoard: Executive BoardJob Title: Group Executive ChairmanSince:
2003Mr. Naik has been the Group Executive Chairman of Larsen &
Toubro Limited (L&T or the company")since 2003. He joined the
company as a Junior Engineer in 1965 and held various key
positionsincluding General Manager, Managing Director, Vice
President and Chief Executive Officer duringhis career. Mr. Naik is
also associated with several educational and charitable trusts. He
is a Memberof the Board of Trustees at the Indian Business Trust
for HIV/AIDS (IBT), Confederation of IndianIndustry (CII), National
Council, Board of Trade, Ministry of Commerce, Government of India,
Fellowof the Indian National Academy of Engineers (INAE), and a
Member of the Board of Governors atthe Indian Institute of
Management, Ahmedabad.Krishnamurthi VenkataramananBoard: Executive
BoardJob Title: Chief Executive Officer & Managing
DirectorSince: 2012Mr. Venkataramanan has been the Chief Executive
Officer and Managing Director of L&T since2012. He joined the
company in 1969 and was appointed a whole-time Director at the
company in1999. Mr. Venkataramanan established the foundations for
Project Engineering and Execution inL&T. In 1983, he served as
Head of Special Fabrication Shops, Production Engineering and
PlantEngineering. Mr. Venkataramanan is associated with many
industry bodies which include The IndianInstitute of Chemical
Engineers, Bombay Chamber of Commerce & Industry, Chemtech
Foundation,and the National Executive Council for 'Petroleum &
Power' sector.Madhukar Vinayak KotwalBoard: Executive BoardJob
Title: Whole-time Director and President, Heavy EngineeringMr.
Kotwal currently serves as a Whole-time Director and the President
of Heavy Engineeringsegment of L&T. He was associated in
various capacities with the manufacture of India's first
NuclearPower Reactor (235 MW) as well as all the critical reactor
equipment. Mr. Kotwal was later responsiblefor the entire
manufacturing operations of nuclear power equipment at the company.
He was involvedin the planning and manufacture of an Ultra-high
Vacuum Tokamak Vessel for Plasma ResearchLaboratory and for
Analyzing Magnets for Variable Energy Cyclotron Project set up by
BhabhaLarsen & Toubro Limited Page 13 MarketLineLarsen &
Toubro LimitedKey Employee BiographiesAtomic Research Centre at
Kolkata. Mr. Kotwal was also in charge of the manufacture of
RocketMotor Casings for India's Space Research Program including
Satellite Launch Vehicles SLV, ASLV,PSLV and GSLV.S. N.
SubrahmanyanBoard: Executive BoardJob Title: Whole-time Director
and Sr. Executive Vice President, Construction and
InfrastructureAge: 54Mr. Subrahmanyan currently serves as a
Whole-time Director and Sr. Executive Vice President ofthe
Construction and Infrastructure segment of L&T. He joined the
company in 1984 as a ProjectPlanning Engineer. Mr. Subrahmanyan
completed the Executive Management Programme fromLondon Business
School. He is a Civil Engineer with post-graduation in Management.
Mr.Subrahmanyan also serves on the boards of L&T Buildings and
Factories Independent Company,L&T Infrastructure Independent
Company and L&T Oman LLC.R. Shankar RamanBoard: Executive
BoardJob Title: Whole-time Director and Chief Financial
OfficerSince: 2011Age: 56Mr. Raman has been a Whole-time Director
and Chief Financial Officer of L&T since 2011. He joinedL&T
Group in 1994 and set up L&T Finance Limited, a wholly owned
Subsidiary and served as itsfirst Chief Executive Officer. Mr.
Raman was transferred to Larsen & Toubro Limited in 2000
tooversee its finance, accounts and taxation functions. He is also
on the Board of Management ofseveral companies within the L&T
Group.Shailendra RoyBoard: Executive BoardJob Title: Whole-time
Director and Sr. Executive Vice President, Power, Minerals and
MetalsMr. Roy currently serves as a Whole-time Director and Sr.
Executive Vice President of Power,Minerals and Metals segment of
L&T. He joined L&T in 2000 and held various key
managementroles in the company. During 2002-04, Mr. Roy served as
the Managing Director and Chief ExecutiveOfficer of Bharat Heavy
Plates and Vessels Ltd., a government of India undertaking. He
rejoinedL&T in 2004. Mr. Roy holds a Bachelor of Technology
degree, and is a graduate of the WhartonAdvanced Management
Program.Larsen & Toubro Limited Page 14 MarketLineLarsen &
Toubro LimitedKey Employee BiographiesMAJOR PRODUCTS AND
SERVICESLarsen & Toubro Limited is a technology, engineering,
construction, and manufacturing company.The company is also
involved in the manufacturing of electronic and electrical
equipment and information technology.Its major products and
services include:Turnkey
Projects:HydrocarbonPowerConstruction:Building and
factoriesTransportationHeavy civil infrastructurePower transmission
& distributionWater & renewable energy projectsEngineering
products & systems:RefineryOil &
gasPetrochemicalsFertilizersCoal gasificationAerospaceThermal power
plantNuclear power plantDefencePower
Projects:ThermalHydropowerNuclearPlant automationPower transmission
and distributionPower developmentElectrical and electronic products
and systems:Larsen & Toubro Limited Page 15 MarketLineLarsen
& Toubro LimitedMajor Products and ServicesControl and
automationElectrical systemsMetering solutionsSwitchgear productsIT
and engineering services:IT servicesIntegrated engineering
servicesMachinery and industrial productsRailway
projectsShipbuildingInfrastructure development projectsL&T
realtyFinancial services:Retail financeInfrastructure
financeGeneral insuranceMutual fundWealth managementLarsen &
Toubro Limited Page 16 MarketLineLarsen & Toubro LimitedMajor
Products and ServicesREVENUE ANALYSISOverviewThe company recorded
revenues of INR861,103.1 million ($14,294.3 million) during the
financialyear ended March 2014 (FY2014), an increase of 14% over
FY2013. In FY2014, domestic, thecompany's largest geographic
market, accounted for 84% of the total revenues.L&T generates
revenues through seven business segments: infrastructure (60.2% of
the totalrevenues in FY2013), metallurgical & material handling
(9.5%), power (8.8%), heavy engineering(7.4%), electrical &
automation (6.7%), others (4%), and machinery & industrial
products (3.3%).Revenues by SegmentIn FY2014, the infrastructure
segment recorded revenues of INR351,153.1 million ($5,829.1
million),an increase of 21.8% over FY2013.The metallurgical &
material handling segment recorded revenues of INR55,460.8 million
($920.6million) in FY2014, a decrease of 13.8% compared to
FY2013.The power segment recorded revenues of INR51,400.6 million
($853.2 million) in FY2014, a decreaseof 36.3% compared to
FY2013.The heavy engineering segment recorded revenues of
INR43,217.7 million ($717.4 million) in FY2014,an increase of 43.9%
over FY2013.The electrical & automation segment recorded
revenues of INR39,073.4 million ($648.6 million) inFY2014, an
increase of 7.2% over FY2013.The others segment recorded revenues
of INR23,469.6 million ($389.6 million) in FY2014, an increaseof
53.8% over FY2013.The machinery & industrial products segment
recorded revenues of INR19,428.7 million ($322.5million) in FY2014,
a decrease of 18.9% compared to FY2013.Revenues by
GeographyDomestic, L&T's largest geographical market, accounted
for 84% of the total revenues in FY2014.Revenues from domestic
reached INR480,352.9 million ($7,973.9 million) in FY2014, an
increaseof 7.5% over FY2013.Larsen & Toubro Limited Page 17
MarketLineLarsen & Toubro LimitedRevenue AnalysisOverseas
accounted for 16% of the total revenues in FY2014. Revenues from
overseas reachedINR91,285.6 million ($1,515.3 million) in FY2014,
an increase of 21.5% over FY2013.Larsen & Toubro Limited Page
18 MarketLineLarsen & Toubro LimitedRevenue AnalysisSWOT
ANALYSISLarsen & Toubro Limited (L&T or the company) is a
technology, engineering, construction, andmanufacturing company.
Its other key activities include manufacturing of electrical and
electronicequipment, services, and information technology. The
company leverages its resources, capabilities,and strong brand name
to strengthen its market position. However, intense competition and
economicchallenges in India could adversely impact the companys
profitability.Weaknesses StrengthsMajor dependence on domestic
operationsfor revenue generationMarket leadership providing
competitiveedgeIncreasing debt impacting financial flexibility
Strong technical expertise reinforcesleadership positionStrong
project pipeline ensures revenuegrowthThreats OpportunitiesEconomic
challenges in India couldadversely impact the companys
businessStrategic joint ventures strengtheningbusinessChallenges in
land acquisition likely to affectbusinessGrowing Indian
construction andengineering industryIntense competition may reduce
profitability High global oil and gas capital expenditureplans
likely to enhance businessStrengthsMarket leadership providing
competitive edgeL&T is a technology, engineering, construction,
and manufacturing company. It is one of the largestand most
respected companies in India for engineering, manufacture and
integration of custommade technology-intensive equipment and
systems. The company has manufacturing facilities inIndia, China,
Oman and Saudi Arabia; and has its customers in more than 35
countries. L&T has astrong 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 largestFluid Catalytic Cracker regenerator
for a refinery, and the world's longest limestone conveyor.
L&Talso played a critical role in building India's first
nuclear powered submarine. The companys marketcapitalization as on
9th February 2015 was $24 billion with AAA credit rating from both
Crisil andICRA with a stable outlook.Larsen & Toubro Limited
Page 19 MarketLineLarsen & Toubro LimitedSWOT AnalysisIn 2014,
L&TMHI Boilers Private Ltd won the National Energy Conservation
Award for the year2013 by the Ministry of Power. Earlier in 2013,
Engineering News Record, the international contractorsmagazine,
ranked L&T Construction 48th among the worlds top international
contractors and 28thamong the worlds top global contractors, based
on 2012 revenues. The company can leverage itsstrong brand name and
market leadership position to gain competitive advantage and also
expandinto international markets.Strong technical expertise
reinforces leadership positionTechnology 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 itsjoint venture
partners. Engineering centers carry out process design and
simulation, analysis ofcomputational fluid dynamics, mechanical
design, failure analysis, and trouble shooting. L&T hasset up
an engineering and project management centre in Abu Dhabi to
undertake oil and gas relatedprojects as well as engineering and
consultancy services.In manufacturing, L&T's design and
engineering capabilities enable it to set new benchmarks interms of
scale, sophistication, and speed. The company has engineering
centers at the manufacturinglocations. L&T's electrical and
electronics division is a pioneer in the design of switchgear
andswitchboards that are engineered for tropical conditions. It has
built further on this experience, andhas leveraged its research and
development strengths to develop a host of new products
andfeatures.In technology services, L&T develops optimal
solutions for its global clients. The embedded systemsunit provides
technological assistance across a broad spectrum of operations
including design,maintenance, re-engineering, testing, prototyping,
and industrial design. A strong technical expertisehelps the
company to reinforce its leadership position, sustain its
competitive strengths, and provideswith an edge over its
competitors.Strong project pipeline ensures revenue growthL&T
has a very strong pipeline of projects which would be completed in
the next few years. Orderbook as at March 31, 2014 was worth
INR1,629,520 million (approximately $27,050 million as
againstINR708,200 million (approximately $13,045 million) as at
March 31, 2009. Further, the companysorder book inflow increased at
a compounded growth of 18.1% since FY2009. It was primarily dueto
bulk orders received by the company from engineering and
construction. The company received78% of the orders received from
the infrastructure sector. The engineering and construction
segmentreceived new orders worth INR1,270,680 million
(approximately $21,093.3 million) in FY2014 forprojects such as
Riyadh Metro in KSA, the Doha metro in Qatar, the EPC works for
substations forKahramaa in Qatar and the Western Dedicated Freight
Corridor (WDFC) for Dedicated FreightCorridor Corporation of India
Ltd. (DFCCIL) in India. Large number of projects in L&Ts
pipelineensures a steady revenue growth.WeaknessesLarsen &
Toubro Limited Page 20 MarketLineLarsen & Toubro LimitedSWOT
AnalysisMajor dependence on domestic operations for revenue
generationL&T is largely dependent on its domestic operations
for generating its revenues. In FY2014, thecompany's domestic
(India) operations contributed approximately 84% of the total
revenues. Thecompany's revenues can be affected with any adverse
events occurring in the domestic market suchas adverse economic
conditions and foreign currency fluctuations, among others. Higher
dependenceon domestic operations to generate revenues could
drastically affect L&T's revenues and profitability.Increasing
debt impacting financial flexibilityL&Ts debts are increasing
steadily. The companys debts in the form of loans increased
toINR801,530 million ($13,305.4 million) in FY2014 from INR327,980
million ($5,444.5 million) inFY2011. Increase in loans registered a
compound annual rate of change (CARC) of 34.7% over theFY2011-14
period. As a result, L&Ts interest expense over the period
FY2011-14 increased toINR10,760.8 million ($178.6 million) from
from INR8,027.5 million ($147.9 million) in FY2011.
L&Tsincreasing debts is impacting the companys financial
flexibility.OpportunitiesStrategic joint ventures strengthening
businessL&T has entered into several joint ventures in the
recent past. During March 2013, the companycompleted the ownership
transactions related to its India based group company Audco India
Limited(AIL), a manufacturer of industrial valves. In the following
month, L&T announced that it would acquire50% stake in
L&T-Komatsu Limited held by Komatsu Asia & Pacific Pte.
Ltd. In December 2012,L&T signed a contract with PETRONAS
Carigali Myanmar (Hong Kong) Limited for executing anoffshore
engineering, procurement, construction, installation and
commissioning project valued atover $100 million. Also during 2012,
L&T acquired Indo Pacific Housing Finance, Ltd., a
housingfinance company and the UK based Thalest Limited, a holding
company engaged in offering integratedplatform management system
and integrated bridge system solutions for naval warships
andmercantile marine ships, vessels and floating systems. In the
same year, L&T formed a strategicpartnership with the UK based
Cyan Holdings plc, an integrated system design company to
collaboratein the development, supply and delivery of advanced
metering solutions comprising utility metersequipped with Cyan's
wireless communication capability for AMI, smart metering and smart
grid pilotprojects.L&Ts joint ventures in diversified areas
such as finance, defense, transmission and distribution andpower
plant equipment market could strengthen its presence in these
business lines and add to itsexpertise.Growing Indian construction
and engineering industryLarsen & Toubro Limited Page 21
MarketLineLarsen & Toubro LimitedSWOT AnalysisConstruction and
engineering industry in India is growing rapidly. The industry grew
by 4.4% in 2012to reach a value of $117.4 billion. In 2017, the
Indian construction and engineering industry is forecastto have a
value of $162 billion, an increase of 38% since 2012. This industry
is expected to registera Compound Annual Growth Rate of (CAGR) of
6.6% over the period 201217. The PlanningCommission of India has
proposed an investment of around $1 trillion in construction sector
in the12th five-year plan (2012-2017). In 2011, Union government
conferred infrastructure status to fertilizerindustry 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 companyis well
placed to leverage from the growing Indian construction and
engineering industry and furtherenhance its business in the coming
years.High global oil and gas capital expenditure plans likely to
enhance businessThe global oil and gas capital expenditure (Capex)
plans are forecasted to remain high over thecoming years. This is
likely to provide more business opportunities for the companys
engineeringand construction projects division in 2015. Key drivers
of growth in this sector in near future includeincreasing
brownfield prospects particularly in Middle East and Africa; the
trend within Indian refiningunits going for downstream
petrochemical units for value added products; and growing
prospectsin new business lines (gas processing, poly propylene and
coal gasification). In addition, the growingthrust on gas
production and transportation is expected to increase investments
in cross countrygas pipeline projects and to bring in more
business. L&T is well placed to tap the growing global oiland
gas capex plans and enhance its business in the coming
years.ThreatsEconomic challenges in India could adversely impact
the companys businessThe Indian economy witnessed a decadal low
growth in FY2014 with GDP of 5.8%. The country hasseen economic
expansion drop since the start of the FY2011 to levels even below
the crisis yearsof 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, thedeceleration of industrial production
growth to 1.7% in FY2014 from 2.7% in FY2012 was mainlydue to
contraction in the mining and quarrying sector, and slowing growth
in manufacturing andelectricity 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 thefiscal
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 productionand impact
L&Ts business prospects.Challenges in land acquisition likely
to affect businessLarsen & Toubro Limited Page 22
MarketLineLarsen & Toubro LimitedSWOT AnalysisChallenges in
land acquisition are affecting L&Ts projects. Land acquisition
issues are causingdelays and concerns to projects under various
segments within the group. Difficulties in landacquisition are
slowing down the pace of project award decisions. Environmental and
land acquisitionissues are current barriers in the near term for
expansion of mining equipment demand. Powerprojects 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 TheLand Acquisition,
Rehabilitation and Resettlement Bill, 2011. As per the bill,
compensation for theowners of the acquired land should be four
times the market value in rural areas and twice in urbanareas.
Projects involving land acquisition that are undertaken by private
companies and public privatepartnerships must have consent of 80%
of the people affected. L&T presently has many ongoingprojects
under public private partnership. For instance, the land
acquisition bill is expected to raiseNavi Mumbai airport's project
cost by INR50,000 million ($921 million). Challenges in land
acquisitionare likely to affect L&Ts business.Intense
competition may reduce profitabilityThe company faces stiff
competition in the international market. The engineering and
constructionsegment faces intense competition from construction
majors in the Middle East including ABB ofSweden and Bechtel of the
US. These companies have substantially greater resources and
superiorcapabilities than L&T. In the domestic market, the
company primarily competes with players likeHindalco, Sundaram
Fasteners, Gammon India, and Lanco Infratech among others. Stiff
competitionin the marketplace could erode the company's market
share and reduce its profitability.Larsen & Toubro Limited Page
23 MarketLineLarsen & Toubro LimitedSWOT AnalysisTOP
COMPETITORSThe following companies are the major competitors of
Larsen & Toubro LimitedHindalco Industries LimitedSundram
Fasteners LimitedFluor CorporationThyssenKrupp AGABB Ltd.Bechtel
Group, Inc.Gammon India LimitedLanco Infratech LimitedTata Group of
CompniesBharat Heavy Electricals Limited (BHEL)Siemens India
Ltd.Crompton Greaves LimitedLarsen & Toubro Limited Page 24
MarketLineLarsen & Toubro LimitedTop CompetitorsCOMPANY VIEWA
statement by A. M. Naik, the Group Executive Chairman of Larsen
& Toubro Limited is givenbelow. The statement has been taken
from the companys annual report for FY2014.Dear Shareholders,In May
2014, the country rang in a decisive mandate for change. It is now
up to the new politicaldispensation to deliver on its agenda and
accelerate the process of renewed growth. It would needto act
decisively on a number of reform measures that will drive
development, including reducingsubsidies, streamlining approval
processes, professionalizing the public sector and privatizing
naturalresources under a transparent and stable policy
regime.Looking back, fiscal 2013-14 continued to witness the
constraints that have hampered the economyin the last couple of
years. GDP growth last year was lacklustre at 4.7% and Fiscal
Deficit continuedto be high. Feeble industrial production for the
third straight year, meant that FY14 ended in negativegrowth. New
investments, particularly in the private sector were muted as many
projects remainedmired in uncertainty. While the Government managed
to contain Fiscal Deficit within budgetednumbers by cutting back on
expenditure, the burden from the triad of subsidies continued
unabated.On the positive side, the Current Account Deficit was
narrowed down through a restriction on goldimports, aided by
stagnant imports of petroleum products as well as capital goods
thanks to theindustrial slowdown. Wholesale inflation also
contracted, leading to a benign commodity pricingenvironment. There
was intermittent progress in key reforms such as expediting and
streamliningapproval processes, SEB regulations, diesel/LPG price
hikes, and establishing policy certainty inareas such as power
purchase tariffs and toll-based highway concessions.In the
international arena, FY14 was marked by encouraging developments
such as a boominginfrastructure sector in the Middle East, with a
number of landmark projects in transportation andpower transmission
& distribution being ordered, and other multi-year
opportunities in the pipeline.The Hydrocarbon sector in the region
also continues to be vibrant, and attracts a large number ofglobal
E&C companies, giving rise to stiff competition.Performance
OverviewAgainst the backdrop of this challenging environment, your
Company has turned in a commendableperformance on most key
performance parameters.Order Inflows, which are the mainstay of any
company engaged predominantly in Engineering &Construction
business, clocked in at INR94,108 Cr., representing a robust 15%
growth over theprevious year. The unexecuted Order Book at the
year-end stands at INR162,952 Cr., thus providinga healthy revenue
and margin visibility over the next few years. Despite severe
execution challengesin the domestic market, your Company managed to
keep project execution largely on track, andLarsen & Toubro
Limited Page 25 MarketLineLarsen & Toubro LimitedCompany
Viewhelped by robust growth in overseas revenues, registered a 10%
growth in Gross Revenues atINR57,164 Cr. Profit after Tax
registered INR5,493 Cr which translates to a growth of 25% over
theprevious year on a like-to-like basis.At the Group level, Gross
Revenues displayed a growth of 14% and stood at INR85,889 Cr for
theyear under review. PAT, at INR4,902 Cr represents a decline of
6% over the previous year, causedby capacity underutilization in
two new subsidiaries, viz. L&T Shipbuilding Ltd. and L&T
SpecialSteels & Heavy Forgings Pvt. Ltd, as well as execution
challenges faced in the Hydrocarbon business.It gives me pleasure
to announce that your Company has recommended dividend of INR14.25
perequity share on a face value of INR2 per share for the year. The
corresponding dividend during theprevious fiscal was at INR12.33
per equity share.InternationalizationYour Company is moving
decisively towards consolidating its international operations
through areplication in the Middle East of its domestic structure
and systems. While the prime focus is theGulf Cooperation Council
countries, the international outreach also extends to South East
Asia, CIS,and select African nations. International talent and
experience is essential to achieve our goals, andwe are
strengthening our multi-cultural leadership base, with the
induction of professionals possessingrich domain experience and
local customer insight.The thrust on international markets is
yielding gratifying results. International Order Inflows
represent33% of the total inflows during the year under review, and
showcase remarkable success in winningmajor new orders in the
infrastructure sector.Talent ManagementIn an age of increasing
technological parity, high caliber talent, with the requisite
training and exposurecreates a key differentiator between companies
and represents a competitive edge. Your companytherefore places
continuing emphasis on identification and induction of talent at
various levels andacross multiple functions. Systems are in place
to ensure that a multicultural leadership team israpidly integrated
into the mainstream and embedded with the values, ethos and
philosophy of L&T.We recognize that the career preferences of
the youth today are biased towards jobs in the neweconomy, making
the task of attracting and retaining young talent more difficult.
As a counterweight,your company promotes and projects the
opportunity of working on critical projects that would makea
tangible difference to nation, society and community.Sustainable
DevelopmentInclusive growth that takes into account the interests
of all stakeholders is at the heart of yourCompanys value system.
These values have helped us empower communities and accelerate
theirdevelopment. Right from inception, we have been involved in
community engagement programmesLarsen & Toubro Limited Page 26
MarketLineLarsen & Toubro LimitedCompany Viewranging from
health, education to skill building. The Companys contribution to
CSR has been widelyrecognized. Early in 2014, L&T received the
prestigious The Economic Times Corporate Citizen ofthe Year 2013
award.The mandatory spending of 2% of profits on CSR initiatives
under the newly introduced provisionsof the Companies Act, 2013, is
in line with L&Ts policy on CSR. We are also using this window
ofopportunity to extend our social and environmental outreach. A
CSR committee with Board-levelrepresentation has been constituted
to drive projects across the organization in a more robustmanner.
We have also expanded the sustainability organizational structure
and formulated aSustainability & Corporate Social
Responsibility (SCSR) team.Thrust areas on the sustainability front
include augmenting efforts at energy conservation, climatechange,
water conservation and material management.OutlookDespite the
continuing slowdown, the macro environment has shown early signs of
recovery, andwith the dawn of a stable government, promises to
improve gradually during FY15. Your Companyhas identified specific
opportunities for growth within India and internationally, which it
is targetingeffectively. Segments that hold promise in FY15 include
1. Infrastructure a. Roads This segment is expected to pick up in
FY15 through ordering of more than 2,300 km ofnew projects on
Engineering, Procurement & Construction (EPC) mode, and 3,000
km in PPP mode.Apart from this, there are several upcoming
opportunities in building Expressways and ElevatedCorridors. Being
the distinct leader in the segment, we will selectively participate
in these EPC bidswhere the prospects meet our internal viability
benchmarks. We will also continue to target upcomingroad projects
in the Gulf countries, where we have had significant order wins
during FY14.b. Metro and Mono Rails The Company has been involved
in the execution of metro rail projectsin cities across the country
and in Indias first monorail in Mumbai (Phase I commissioned in
FY14).This enables the Company to exploit opportunities to secure
contracts in India, where multiple citiesare initiating metro rail
projects. We have also won two major, prestigious contracts in the
MiddleEast, for Riyadh and Doha Metro projects during FY14,
contributing significantly to the order inflowgrowth during the
year. We are participating in bidding for further such prospects in
the region.c. Railways Business The thrust on strengthening the
rail network across the country holds goodprospects for our
Railways business. We have already secured an initial order in
consortium with aJapanese company for a major section of the
Dedicated Freight Corridor, and are bidding for morepackages. We
are also exploring international markets, especially the Gulf
countries where severalprojects are coming up.d. Water &
Renewable Energy The sector has seen a strong growth in investments
over the lasttwo years, with growing focus from the Government
sector in improving access to water and preventingLarsen &
Toubro Limited Page 27 MarketLineLarsen & Toubro LimitedCompany
Viewpollution of its sources. In FY14, your Company has been able
to achieve significant order inflowgrowth in this segment, backed
by strong project execution capabilities and operational
excellence.With a healthy Order Backlog and growing order
prospects, the business from these sectors isexpected to see an
upswing in FY15.e. Urban Infrastructure Opportunities in
residential buildings, office space, hospitals, hotels,educational
institutions, shopping complexes and factories continue to provide
a large canvas ofbusiness potential. Your Company has become the
EPC contractor of choice for major developersand this is driving
profitable growth. Projects in Mass and Affordable Housing,
Healthcare andEducational Institutions hold additional promise in
FY15.f. Airports Increasing passenger and cargo traffic over the
last decade has sustained growth inaviation industry. The
Government plans to modernize a number of Tier II City airports and
build afew Greenfield airports as well. Similarly, a number of
nations in the Asian region are modernizingand expanding their
airport infrastructure. On the back of our excellent track record
in this sector,we are well-positioned for airport projects within
and outside India.2. Heavy Engineering & Shipbuilding We have
the capability to meet the requirements for hightechnology critical
equipment and systems. In the process plant equipment segment, the
internationalmarket looks promising in the medium term. The
domestic nuclear segment is expected to seeordering activity in
FY15. However, the setback that the international nuclear power
sector experiencedwith the natural disaster at Fukushima, Japan,
will continue to affect demand in this segment, andimpinge on
volumes in our new forging unit.During the last few years, the
defence sector had been adversely impacted by a slow pace of
decisionmaking resulting in deferral of contract awards. However,
recent initiatives to involve the privatesector in defence
equipment manufacturing and the stated intentions of the present
stable politicalestablishment augur well for your Company.The
shipyard at Kattupalli, which was commissioned in FY13, is capable
of building warships,submarines and specialized commercial ships.
It is equipped with a state-of-the-art ship-lift thatenables it to
undertake simultaneous new build, repair & refits. While the
global commercialshipbuilding trend remains subdued, we envisage
that the Indian defence sector is likely to open upand provide
opportunities for building defence ships.Apart from this, we are
looking at addressing the growing demand for specialized ships such
asLNG and Ethane carriers, and Chemical tankers through technical
collaborations. We are also lookingto leverage our position in the
hydrocarbon sector by developing semi-submersible rigs and
floatingLNG platforms, opportunities emerging from oil & gas
exploration and production in deep offshorefields.3. Hydrocarbon On
the domestic front, Exploration & Production (E&P) spends
in upstreamhydrocarbon segment are expected to sustain during FY15.
The decision to move towards marketdriven pricing in both Diesel
and Natural Gas is expected to spur upstream capex. Opportunities
inLNG regasification terminals and integrated refinery and
petrochemical projects should open up inLarsen & Toubro Limited
Page 28 MarketLineLarsen & Toubro LimitedCompany Viewthe year
ahead. Implementation of re-development projects should provide a
fillip to the onshoregas processing segment. Investments are also
expected in cross-country pipeline projects.In the upstream sector,
the Companys capabilities extend to the repair, rebuild and
construction ofnew Jack-up Rigs and FPSO topsides. The business is
well placed to leverage its multi-locationalModular Fabrication
Facilities to respond to global trends towards modularization of
onshore gasprocessing plants.Several large and prestigious
international orders have bolstered our presence in select
geographies.We are increasingly pursuing opportunities overseas
through alliances with the leading global EPCcompanies. This has
necessitated putting in place a multinational organization, with a
cross-culturalteam possessing local knowledge and domain
expertise.The Company has transferred its Hydrocarbon Business to a
wholly owned subsidiary in FY14, toenable greater autonomy and
formulation of HR policies in line with industry practices so as to
attractthe best talent.4. Thermal Power - Policy paralysis,
negative market sentiments and procedural bottlenecks haveadversely
affected the domestic Power sector in the last couple of years.
Pressing concerns withrespect to land, fuel, financing and
statutory approvals have shrunk the order pipeline, puttingpressure
on the Companys capacity utilization.Some welcome steps such as
raising distribution tariffs, imposing anti-dumping duties on
importedequipment, and fast tracking of Fuel Supply Agreements and
other clearances have been taken.However, in view of the large
backlog of projects which are stuck due to various constraints,
revivalin the sector is still some time away.Under the
circumstances, we are doing our best to be competitive through cost
reduction, designoptimization and smart sourcing.We are also
placing emphasis on expanding our spectrum of services to select
Gulf countries andthe Southeast Asia for gas based power plants,
and have recently achieved breakthrough orders inBangladesh.5.
Power Transmission & Distribution - Government policies lay
stress on investments in strengtheningthe power grid and the power
distribution system through central and multilateral funding
agencies.We have demonstrated a steady growth in order book
position in domestic and international markets.The emphasis on
strengthening of transmission grids in Gulf countries will continue
to providesignificant business opportunities for power transmission
and distribution business in the comingyears.6. Metallurgical and
Material Handling - The outlook in this area continues to be
challenging, due toa myriad factors including sector slowdown,
mining bans imposed by the judiciary, prevailingLarsen & Toubro
Limited Page 29 MarketLineLarsen & Toubro LimitedCompany
Viewcomplexities of policies governing mining, land acquisition as
well as the dearth of new investments.Efforts are underway to
resolve these issues through various government proposals,
legislationsand policies. As the economy grows, demand for metals
particularly steel, aluminium and copperwill necessitate expansion
of capacity. We are well positioned to benefit from the confidence
weenjoy because of our track record and timely completion of
projects. Material Handling prospects inareas of steel, mines,
power, ports and long distance conveyors for bulk ores are likely
to grow inline with economic growth.7. Electrical & Automation
- The Electrical & Automation business continues to maintain
its leadershipposition in LV Switchgear. It has also made a mark in
the MV segment through an acquisition of aninternational company a
few years ago. Product development in both LV and MV Switchgear
continuesto forge ahead. The project business has enhanced its
focus on international markets. The comingyear should see an upward
momentum. The Company has also acquired three companies whichwill
bridge technology gaps in one case, enhance product range in the
second and augment marketreach through the third.8. Machinery &
Industrial Products - The Construction Machinery business was able
to registerflattish growth despite shrinkage in construction
equipment market and entry of new competitors.Your Company acquired
the stake of the JV partner Komatsu in Construction Machinery
business.The Company also acquired the stake of JV partner
Flowserve in the Valves business. The reportedrevenues in Valves
and Cutting Tools businesses were lower for the Standalone entity,
as thebusinesses were transferred to subsidiaries during FY14.
However, the Valves business as a wholecontinued to grow due to Oil
& Gas and Power sector investments in India and overseas.
Freshinfusion of investment in these sectors in the US, the Middle
East and other countries is expandingthe potential for our
international operations.9. Realty L&T has recently started
realty business by using its own land parcels and in joint
ventureswith other developers and this has already started yielding
good results. Market has received ourentry in this business with
enthusiasm. With the help of L&Ts brand, its construction
capability andmarketing reach, this business is poised to deliver
profitable growth in the coming years.10. Information Technology
& Integrated Engineering Services Business - In USD terms,
L&T Infotech,a wholly owned subsidiary, grew at 18% Y-o-Y on a
consolidated, like-to-like basis. Profit after Taxgrew by 4%, due
to the impact of prior period adjustment. L&T Infotech has
embarked on buildinga strong sales and marketing team globally with
emphasis on the Americas, Europe, Gulf countriesand the Far East.
The Company has also undertaken certain major initiatives intended
to enhancethe visibility, profile and sharpen its distinction
through the differentiated solutions it offers in
multipledomains.Technology Services, a Strategic Business Unit of
L&T, is being formed into a subsidiary. This willresult in
consolidation of all engineering services business of L&T and
L&T Infotech. This subsidiarywill provide autonomous
functioning in line with industry practices.Larsen & Toubro
Limited Page 30 MarketLineLarsen & Toubro LimitedCompany
View11. Financial Services - This business, which was listed in
2011, continues to grow profitably witha loan book in excess of Rs
40,000 Cr at the end of FY14. Net Interest Margins at 5.5% reflect
thehealthy interest spreads that the business earns. The business
has successfully concludedacquisitions in mutual funds business and
housing finance.12. Developmental Projects - Development projects
undertaken by the Company in roads, ports,metro rail and power
continue to progress satisfactorily, with some of these projects
currentlyoperational. The Company has opened up alternate funding
lines to enable commissioning of theupcoming projects and reduce
dependencies on your Companys balance sheet, and advanced
onmonetizing the value of matured assets.Before I conclude, I would
like to extend my thanks to Team L&T, Government, customers,
vendorsand other stakeholders, without whom our continued growth
momentum would not have beenpossible. I would also like to thank my
fellow Board Members for their unstinted support
andencouragement.Larsen & Toubro Limited Page 31
MarketLineLarsen & Toubro LimitedCompany ViewLOCATIONS AND
SUBSIDIARIESHead OfficeLarsen & Toubro LimitedL&T
HouseBallard EstateP. O. Box: 278Mumbai 400 001MaharashtraINDP:91
22 6752 5656F:91 22 6752 5893http://www.larsentoubro.comOther
Locations and SubsidiariesL&T Australia L&T Europe31
Kitchen Road Suite 11.01Dandenong 3175 11th FloorExchange
TowerMelbourne 1 Harbour Exchange SquareVictoria
LimeharbourMelbourne London E14 9GEAUS GBRL&T South America
L&T North America150 Rua Bauhineas Da Peninsula 1610 3000
TowncenterBarra Da Tijuca Suite 610Rio De Janeiro 22776 090
SouthfieldBRA Michigan 48075USALarsen and Toubro Kuwait
Construction CoWLL.Larsen & Toubro T&D SA (Pty) Ltd.First
Floor Building 5Eastern Plaza Building Parc NicolBlock 8 3001
William Nicol DriveEast Ahamadi Bryanston 2021Fahaheel
JohannesburgKWT ZAFLarsen & Toubro Limited Larsen & Toubro
Limited32 Shivaji Marg 38 Cubbon RoadNew Delhi 110 015 Bangalore
560 001IND KarnatakaINDLarsen & Toubro Limited Page 32
MarketLineLarsen & Toubro LimitedLocations and
SubsidiariesLarsen & Toubro Limited Larsen & Toubro
Limited191/1 Dhole Patil Road 5-10-173 Fateh Maidan RoadPune 411
001 Hyderabad 500 004Maharashtra Andhra PradeshIND INDLarsen &
Toubro Limited Page 33 MarketLineLarsen & Toubro
LimitedLocations and SubsidiariesMARKETLINE | 119 FARRINGDON ROAD |
LONDON, UNITED KINGDOM, EC1R 3DAT: +44 161 238 4040 | F: +44 870
134 4371 | E: [email protected] | W: www.marketline.com
