COMPANY HISTORY

 Larsen and Toubro (L&T), one of the India’s largest engineering conglomerates, was founded in the year 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro at Mumbai. The company first carried on the business of importing machineries from Europe, and then rapidly took on engineering and construction assignments of increasing sophistication. L&T is now make its mark in the areas of Construction, hydraulic equipment, electric and electronic power services, fertilizer projects, medical electronics and information technology. It generates almost 85% of its revenue from the construction business.  L&T’s engineering and construction, implements turnkey projects in major core and infrastructure sectors of Indian industry. The company is executing large scale Turnkey projects by accessing technical know-how from many global companies.

The company has integrated its strengths in process technology, basic and detailed engineering, equipment fabrication, procurement, project management, erection, construction and commissioning, to offer single-point responsibility against stringent delivery schedules.  

• L&T’s  Electrical and Electronics segment comprises manufacture and sale of low-voltage switchgear and control gear, custom-built switchboards, petroleum dispensing pumps and systems, electronic energy meters/protection systems, control and automation products and medical equipments. Medical equipments and systems manufactured by L&T include advanced ultra sound scanners and patient monitoring systems.
• The company also made its mark in the IT sector, with instituting L&T InfoTech ltd., a 100% subsidiary of L&T. The company offers comprehensive, end- end software solutions and services with a focus on manufacturing, BFSI and communication and embedded systems.
• The Machinery and Industrial products segment comprises manufacture and sale of industrial equipment and machinery, marketing of industrial valves, construction equipment and welding/industrial products. It also markets hydraulic excavators, aggregate crushers, vibratory compactors etc. 

FINANCIALS 

The company announced its first quarter results recently. They are compared with the past quarterly results in the table below 

 The company for the quarter ended June 30 2008 reported a growth of 33.33% in net profit to touch Rs.5024.4 Million as against Rs.3768.5 Million reported in the corresponding quarter last year. But when compared to the last quarter results, profit declined by 48%. Sales grew up by 53% to Rs.699 Billion from Rs. 457 Billion posted in the same quarter last year. The company provided Rs.658.7 Million for depreciation an increase of 55% as against the provision made in the same quarter last year. The rise in the sales revenue, foreign exchange gain, soaring fresh orders from all the sectors and efficient project management aided the company to book 33% growth in the profit level. OPM declined by 27% on QoQ basis and remained flat on YoY basis.  

The company reported a strong order book with total order worth Rs.5,819 Billion, an increase of 40% over the same period last fiscal. The company received orders from all the major sectors especially received bulk orders from Railways to build a cast wheel manufacturing plant at Bihar and also a power plant order. Order inflows in the Engineering and Construction (E&C) segment witnessed a growth of 28% over the same quarter last year. E&C segment sales grew by 59% to Rs.554 Billion on YoY basis. International orders accounted for 16% of the total E&C segment’s order book. The Machinery and industrial product segment of the company registered a growth of 50% over the same period last fiscal. The growth in the welding systems businesses, valves and industrial machinery businesses aided the company to deliver higher operating margins.  

Electrical and electronics segment of the company reported a growth of 7% in the sales revenue. Exports contributed 12% of the total sales revenue. As compared to the previous quarters the growth in this segment is low due to the increasing input costs and sluggish demand prevailed in the market. All other segments like technology services and property development etc also performed well and reported a growth of 3% in the margins. The construction and mining equipment businesses of the company also performed well in the last quarter.  

COMPANY OUTLOOK 

The company is planning to pump nearly Rs.250 Billion for capital expenditure plans in this fiscal. It got assent from the shareholders to raise Rs.240 Billion through placement with Qualified Institutional Buyers. The company reported that these funds will be utilized to meet the needs of the growing business. It recently bagged orders totaling worth Rs.254 Billion from Tata Steel to set up a 6 Million TPA pellet plant and a blast furnace at Jamshedpur. It also received orders worth Rs.75 Billion and Rs.52 Billion worth orders from SAIL and Hindustan Zinc respectively.  

The company expects to bag Major contracts from the defense sector in the forthcoming quarters. It is also looking forward for more business opportunities from the Aero Space business. The company expects to receive more orders in the Persian Gulf and set up five offices to tap demand in that market. The company is focusing on strategies to offset inflation pressures and other Macroeconomic challenges. As the demand in the infrastructure power and steel companies are heading upwards the company’s order inflow and sales growth is expected to increase steeply in the upcoming quarters.  

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