CHAPTER I

About the Company

Name of the Company Larsen & Toubro Limited

Type of the company Public Company

Industry Conglomerate

Founded 7th February 1946; 76 years ago

Founders Henning Holck-Larsen

Soren Kristian Toubro
Headquarters L&T House, Ballard Estate, Mumbai,
Maharashtra, India
Products Heavy equipment, Electrical
equipment
Number of Employees 337,994 (2022)

Divisions Real Estate, Technology, Engineering,

Construction, Manufacturing

Company’s Profile
Larsen & Toubro Limited ('Larsen & Toubro' or 'L&T') is a multinational
technology, engineering, construction, projects, manufacturing, and financial
services corporation with a market capitalization of USD 17 billion.
Infrastructure, construction, defense, hydrocarbon, heavy engineering, power,
shipbuilding, aircraft, electrical & automation, mining, and metallurgy are the
primary industries addressed.
L&T’s integrated capabilities span the spectrum of ‘design to deliver’
solutions. Over seven decades of a strong, customer-focused approach and a
sharp focus on world-class quality have enabled it to maintain a leadership
position in its major lines of business.

1
 The Company has manufacturing facilities and offices in several
countries and a global supply chain. It delivers landmark projects and products,
helping clients in 30 countries to create long term progress and economic
growth continues to expand their global footprint with a focus on high-potential
markets. Their strategy to diversify the presence across geographics and sectors
helps them to leverage opportunities and optimise their risk exposure in an ever-
evolving operating environment.

Major players

 LARSEN & TOUBRO

 Megha engineering & Infrastructure Limited
 Tata Projects
 KEC International limited
 Shapoorji Pallonji Co. Pvt. Ltd

L&T Group at a Glance

Source: Annual Review Report 2020-21, Larsen & Toubro Limited

2
L&T Group Highlights

L&T Group Highlights

'Design to build' engineering L&T Hydrocarbon Engineering delivers and construction

solutions on a turnkey basis in the oil & gas, petroleum refining, chemicals & petrochemicals
and fertilizer sectors. In-house expertise, experience, and strategic partnerships enable it to
deliver a single point solution for all projects – from front-end design through engineering,
fabrication, project management, construction and installation and commissioning. Modular
fabrication facilities at Hazira (India, west coast), Kattupalli (India, east coast) and Sohar
(Oman) give L&T all-weather delivery capability.

3
The Company’s operations are characterized by an overriding emphasis on safety, on time
delivery, cost competitiveness, high quality standards with focus on best-in-class IT security

practices. Integrated strengths coupled with an experienced and highly skilled work force, are
key enablers in delivering critical and complex projects.

Transportation Infrastructure

L&T is engaged in the turnkey construction of major infrastructure projects - expressways,

runways and railway bridges projects. The Company has been a leading player in rail
infrastructure development for more than three decades, and has brought in new technologies
and mechanised construction. L&T is the only private organisation in India qualified to
undertake integrated rail construction projects of the Indian Railways.

Heavy Civil Infrastructure

The Company undertakes heavy civil construction - underground metro rail corridors docks,
container terminals, wharves and berths, jetties, breakwater and shore protection, and
caissons. It has the expertise to design special launching and erection techniques, including
special systems formwork for concrete deck on top of steel and concrete structures.

Comprehensive engineering, procurement and construction services are offered for

hydropower projects. L&T has also played a critical role in the development of technology
for India’s nuclear power sector

Building & Factories

L&T occupies leadership position in the construction of major airports, IT parks, turnkey
hospitals and residential buildings. Building & Factories Business undertakes projects on a
‘Concept to commissioning’ basis. Its technological capabilities encompass tall towers and
eco- friendly ‘green’ buildings. Its track record includes landmark structures such as the
Baha’i temple in New Delhi.

Power Transmission & Distribution

The focus is on sub-stations, industrial electrification, transmission line projects and railway
construction on the domestic front, and power transmission and distribution projects. L&T

4
has an extensive track record in the Middle East, and is recognised as a major player in the
region.

Water Projects & Solar Energy

distribution including industrial waste water treatment & disposal and ordinary waste water
treatment & reuse water and effluent treatment business covers water intake, transmission,
treatment and segments. The water technology business uses advanced water treatment
technologies for complex treatment projects – largely in the Middle East. L&T’s Solar EPC
business comprises solar photovoltaic (PV), concentrated solar power (CSP).

Metallurgical & Material Handling L&T’s Water & Solar business caters to the entire
value chain of water and solar EPC. The

This Company undertakes turnkey construction contracts for projects in minerals & metals
sector, and bulk material handling projects. It is a leader in all its areas of operations. It has a
structural steel fabrication unit at Kanchipuram to meet the customised needs of its wide
client base.

Metallurgical & Material Handling L&T’s Water & Solar business caters to the entire
value chain of water and solar EPC. The

This Company undertakes turnkey construction contracts for projects in minerals & metals
sector, and bulk material handling projects. It is a leader in all its areas of operations. It has a
structural steel fabrication unit at Kanchipuram to meet the customised needs of its wide
client base.

Power

L&T offers turnkey solutions for the power sector with a wide capability spectrum covering
supercritical coal and gas-based projects. The supercritical technology that L&T propagates is
‘greener’ than conventional techniques and represents a major advantage for industry. L&T’s
integrated capabilities and in-house expertise encompass virtually every aspect of design,
engineering, manufacture, construction and project management. The Company’s integrated
manufacturing facility at Hazira near Surat is among the most advanced in the world for
manufacturing state-of-the-art equipment for power plants - boilers, steam turbines,
pulverisers, pressure piping, coaxial fans, air-pre-heaters and electrostatic precipitators. The
complex also includes a modern casting and foundry shop.

5
Heavy Engineering

L&T is acknowledged as one of the top five manufacturing companies in the world in the
heavy engineering space. Operating at the higher end of the technological spectrum, L&T’s
offerings straddle the segments of process plants and the strategic sectors of defence, nuclear
and aerospace. New processes, products and materials have been introduced in
manufacturing. The Company also has the logistics capabilities of fabricating and supplying
over-dimensional equipment to tight delivery schedules. Globally-benchmarked workshops
are located at Powai in Mumbai, Hazira and Baroda in Gujarat, Talegaon in Maharashtra, and
Sohar in Oman.

Shipbuilding

Two modern shipyards - one on the west coast of India at Hazira, and the other on the east
coast at Kattupalli near Chennai establish L&T as a major shipbuilder. A state-of- the-art
Marine Design Centre is located at Chennai. L&T Shipbuilding focuses on four major
business segments: Building warships, submarines and auxiliary vessels; Building specialized
commercial ships; Repairs and re-fits of submarines as well as naval and commercial ships;
Ship conversions. The Hazira Shipyard has the capability to build sophisticated mid-sized
ships up to 20,000 t deadweight capacity, of 10 metres in length. The mega shipyard at
Kattupalli also includes a container port and an offshore modular fabrication yard. It has a
waterfront of 2.2 km, depth of 10m at berths and channel depths of 16 m.

Electrical & Automation

L&T is a major international manufacturer of a wide range of electrical and electronic

products and systems. In the electrical segment, the Company holds leadership position in
low tension switchgear in India, and is rapidly establishing itself in international markets. The
product range also includes custom-engineered LV and MV switchboards for industrial
sectors like power, refineries, petrochemical, cement. In the electronic segment are a wide
range of meters and complete control and automation systems for industries.

Information Technology

6
Larsen & Toubro Infotech, a 100% subsidiary of L&T, offers comprehensive, end-to-end
software solutions and services with a focus on Manufacturing, BFSI and Communications &
Embedded Systems. It provides a cost cutting partnership in the realm of offshore
outsourcing, application integration and package implementation. Leveraging the heritage
and domain expertise of the parent company, its services encompass a broad technology
spectrum, catering to leading international companies across the globe.

Technology Services

L&T Technology Services provides leading-edge engineering solutions to multiple industry

sectors like automotive, aerospace, consumer electronics, consumer packaged goods, marine,
medical devices, off-highway equipment, railways, pharmaceuticals, oil & gas, utilities,
infrastructure and industrial products. With its global headquarters at Vadodara, the Company
operates through dedicated engineering centres in tandem with onsite teams worldwide. Its
client base includes several Fortune 500 companies.

Machinery & Industrial Products

The Company manufactures, markets and provides service support for industrial products,
industrial machinery as well as construction and mining machinery. This includes a wide
range of industrial valves for critical applications, rubber processing machinery, surface
miners, hydraulic excavators, aggregate crushers and applicationengineered welding alloys
and cutting tools.

Infrastructure Development

L&T Infrastructure Development Projects Limited, a subsidiary, leverages domain expertise

in construction and financial services, and is a major player in Public-Private Projects in
India. L&T IDPL develops projects in various models - Build Own Transfer, Build Own
Operate Transfer, Build Own Operate Share Transfer, and other variants including the
annuity model. Major projects being executed by the Company include Hyderabad Metro
Rail - the largest public-private rail project in the world, and ports at Dhamra and Kattupalli.
Multiple highway projects around the country have established L&T IDPL as the leader in
the space

Financial Services

7
L&T Financial Services - a publicly listed subsidiary - is a key player in India’s financial
services sector. Its subsidiaries include L&T Finance Limited, L&T Infrastructure Finance
Company Limited and L&T Asset Management Company Limited. The Company also
provides Insurance related services through L&T General Insurance Company Limited.

VISION & MISSION

VISION

1. L&T shall be professionally managed Indian multinational committed to total

customer satisfaction and enhancing shareholder value. L&T shall be an innovative
entrepreneurial and empowered team constantly creating value and attaining global
benchmarks. L&T shall foster a culture of caring trust and continuous learning while
meeting expectations of employees, stakeholders and society.

8
MISSION

To achieve excellence in the field of Engineering, Procurement and Construction through

world class practice and standards in quality, Safety and Project Management.

L&T Construction – Buildings and Factories (B&F)

Overview of B&F

In India and abroad, L&T Buildings &Factories (B&F) is the market leader in EPC of
airports, hospitals, stadium retail spaces, educational institutional institutions, IT parks, office
buildings, data centers, residential buildings, high-rise structures, mass housing complexes,
cement plants, industrial warehouses, and other factory structures. The company provides
end-to-end
solutions, such as in-house design knowledge utilizing modern technologies like BIM 4D,
5D, and BIM 360, efficient supply chain management, and exceptional project management
experience

9
 CHAPTER II

HR Policy

In its HR, L&T complies with national legislation and collective bargaining agreements, the
international agreements of ILO, occupational safety regulations and other obligations. Our
working community upholds equality. We do not tolerate discrimination in any form. Our HR
management is fair and equitable.

Our employees have freedom to organise. We respect and deal openly with trade union
activities and personnel representatives.

The goals of our HR policy are:

 to ensure that employees have the competences required to implement our strategy

 to ensure that personnel headcount, quality and retention are high enough for
productive operations

 maintain the work ability of employees during their entire working lives until the age
of retirement

 spur employees to perform well on the job and motivate them to help us achieve the
company’s objectives

Competence development

 We take a systematic and long-term approach to developing competence on the basis

of our strategy.
 We continuously invest in deepening and maintaining the professional skills of our
employees so that we can provide good service experiences to our customers. We
encourage individuals to develop their professional expertise by learning on the job.
We also organise sufficient orientation for new employees and those changing
positions at L&T.

10
  During annual target and performance appraisals, we ensure that our employees have
the competence they require to perform well on the job as well as clear objectives and
areas of responsibility. To support competence development, we draft annual personal
or group objectives with every employee. With salaried employees, we also draft
personal development plans.
 We focus on the quality of supervisory work and the development of supervisory
expertise, because we recognise that our supervisors play a key role in the
implementation of our HR policy and the development of the competence of all our
employees. It is the task of our supervisors to ensure that their subordinates know not
only their personal goals, but also the objectives of the company and divisions.

Recruitment and resource planning

In our personnel choices, we focus on competence, service-mindedness, sense of

responsibility and ability to work well with others. We encourage our employees to apply for
job vacancies within our company. When filling vacancies, we give precedence to suitable
applicants who are already in L&T’s employ and fulfil the requirements set for the position.

With resource planning, we ensure that our company has the resources and
competence required to achieve our objectives and perform the tasks required to implement
our strategy

Remuneration

We reward our personnel for good job performance. Remuneration is appropriate and as
transparent as possible. Remuneration aims to encourage good performance and motivate
employees to engage in long-term work to help us achieve our strategic objectives.

In Finland, our salary system is based on job requirements and personal performance, which
are affected by the information and skills required in the position and compliance with our
operating principles. Employees have the right to receive constant feedback. Feedback is
encouraged at all levels of the organisation.

Personnel health and wellbeing

All of our employees are entitled to statutory occupational healthcare from the start of their
employment relationship, regardless of its type and duration. In addition to statutory

11
occupational healthcare, we have arranged general practitioner-level medical care for our
personnel in Finland as an employee benefit.

We support our employees’ work ability and stamina with activities that maintain their
occupational fitness. We apply the following principles to maintain the work ability of
employees during their entire working lives until the age of retirement:

 taking people of different ages into account as an element of maintaining and

managing work ability

 noticing any problems with work ability at an early stage

 discussions about problems between supervisors and their subordinates

 effective, properly targeted rehabilitation and treatment measures in occupational

healthcare

 cooperation to facilitate returning to work sooner.

The L&T sickness fund is a workplace fund that L&T established with its employees in
Finland. The sickness fund supports L&T’s work ability management and supplements
occupational healthcare. The members of the sickness fund are all those salaried and non-
salaried employees of L&T companies in Finland whose primary employer is L&T and
whose employment relationship is neither short-term nor temporary.

We support exercise and leisure-time pursuits through personnel clubs and by offering
employee benefits for fitness centres.

Occupational safety

Our occupational safety activities aim to ensure a safe workplace for all employees. The
means whereby we achieve our occupational safety objectives are described in our
occupational safety management principles

Work community and atmosphere

Each and every L&T employee must do his or her part to ensure that we have a good work
community and atmosphere. We follow shared operating methods with our own employees
and Supervisors are responsible for the practical implementation of the HR policy. All
employees are responsible for acting in accordance with the HR policy. customers. We
regularly measure and monitor our workplace atmosphere in order to develop it continuously

12
Implementation of the HR policy

The personnel department produces, maintains and develops personnel administration

processes and services as well as supports the organisation in the implementation of the HR
policy

L&T’s HR Director is responsible for the HR policy. The contents are approved by the
Group Executive Board. This policy applies to the entire L&T Group.

L&T’s Group Executive Board approved and ratified this policy on 14 December 2012.

Quality policy

Our quality policy describes the key principles governing our operations. In accordance with
our principles, we operate responsibly and in line with L&T’s values in all of our business
functions. We are com-mitted to the continuous development of our operations and ensuring
responsibility and sustainability in everything we do.

In our operations, we comply with applicable legislation and orders issued by the authorities.
We also observe the ISO 9001 standard and L&T’s Code of Conduct in our operations.

The satisfaction, well-being and professional development of our employees are important to
us. We want to provide an equal, non-discriminatory and safe work environment for our
employees. We take customer needs and expectations into account in our operations. We bear
social responsibility and also require our contractual partners and suppliers to operate
responsibly.

We always aim to ensure sufficient resources in order to keep the quality of our services as
high as possible. In our management, we apply a risk-based approach to serve our customers
as efficiently, reliably, innovatively and safely as possible.

Our management is committed to the continuous development of our operations. To ensure

development, we regularly measure customer and employee satisfaction as well as the
effectiveness of our management system. Based on the results of these measurements, we
create corrective measures and monitor their implementation.

This quality policy applies to the entire L&T Group and it is approved by Lassila & Tikanoja
plc’s President and CEO and the Group Executive Board.

13
 CHAPTER III

FINANCIAL PORTFOLIO

A financial portfolio is a collection of financial assets held by an individual investor or

business. The portfolio can be thought of like a pie with different slices in different sizes
representing various asset types and classes. The slices work together to achieve the
investor's financial goals.

Investors may manage their own portfolios or entrust them to financial professionals.
Investors may have a single financial portfolio or a variety of them with different purposes
depending on their investment aims.

Responsibilities

 Keep accurate records for all daily transactions.

 Prepare balance sheets.
 Process invoices.
 Record accounts payable and accounts receivable.
 Update internal systems with financial data.
 Prepare monthly, quarterly and annual financial reports.
 Reconcile bank statements.
 Participate in financial audits.

14
 Consolidated Balance Sheet as of March 31, 2022,2021,2020 (Rs. In crore)

ASSETS Note As at 31-3-2022 As at 31-3-2021 As at 31-3-2020

Non-current
assets
Property, plant 2 10578.87 11386.29 10103.79
and equipment
Capital work-in- 2 1170.32 388.37 3224.91
progress
Investment 3 3962.98 3646.78 3714.72
property
Goodwill 4 7476.98 8066.96 8011.4
Other intangible 5 18729.37 19197.76 19596.98
assets
Intangible assets 5 79.23 112.02 86.18
under
development
Right-of-use 61(b) 1988.62 2021.53 2226.49
assets (iii)
Financial assets
Investments in joint 43(e) 2729.35 2670.26 2851.01
ventures and associates
Other investments 6 7081.51 5945.14 4496.72
Loans towards financing 7 46736.84 52631.67 58589.36
activities
Other loans 8 252.99 482.66 1522.33
Other financial assets 9 2162.97 1110.77 638.15
58963.66 62840.5 68097.57
Deferred tax 51(d) 2840.1 2697 3846.58
assets (net)
Other non- 10 6077.62 5949.67 6541.62
current assets
Sub-total - 111867.75 116306.88 125450.24
non-current
assets
Current assets
Inventories 11 5943.32 5820.54 5746.65
Financial assets
Investments 12 29792.51 31011.23 12699.75
Trade receivables 13 46138.92 42229.78 40731.52
Cash and cash equivalents 14 13770.24 13373.52 11324.57
Other bank balances 15 5182.93 2867.98 3793.21
Loans towards financing 16 42269.2 41379.03 41723.42
activities
Other loans 17 280.34 235.35 716
Other financial assets 18 3840.04 3251.68 2927.87
141274.18 134348.57 113916.34

15
Other current 19 60132.89 54791.48 58659.69
assets
Sub-total - 207350.39 194960.59 178322.68
Current assets
Group(s) of 45(e) 830.78 6.24 4367.21
assets classified
as held for sale
TOTAL 320048.92 311273.71 308140.13
ASSETS

EQUITY AND LIABILITIES

Note As at 31-3-2022 As at 31-3-2021 As at 31-3-2020

Equity

Equity share capital 20 281.01 280.91 280.78

Other equity 21 82126.65 75587.62 66442.44

Equity attributable to 82407.66 75868.53 66723.22

owners of the
Company
Non-controlling 12966.07 12051.53 9520.83
interests
TOTAL EQUITY 95373.73 87920.06 76244.05

Liabilities

Non-current liabilities

Financial liabilities

Borrowings 22 61618.31 82120.04 82331.33

Lease 1633.31 1617.72 1741.6

liability
Other 23 111.67 186.74 901.14
financial
liabilities
63363.29 83924.5 84974.07

Provisions 24 817.77 773.78 708.67

Deferred tax liabilities 51(d) 1039.33 1178.66 1453.04

(net)
Other non-current 25 21.27 68.7 31.09
liabilities
Sub-total - non- 65241.66 85945.64 87166.87
current liabilities
Current liabilities

Financial liabilities

Borrowings 26 30476.96 27765.83 35021.02

16
Current maturities of 27 31372.96 22719.39 23654.77
long-term borrowings
Lease liability 406.54 406.1 424.95

Trade payables:

Due to 575.91 488.99 479.51

micro
enterprises
and small
enterprises
Due to 28 50568.33 45256.24 43164.42
others
Other financial 29 6643.32 5328.93 4923.23
liabilities
120044.02 101965.48 107667.9

Other current 30 34644.1 31269.63 30816.67

liabilities
Provisions 31 3355.86 2998.68 2750.85

Current tax liabilities 1309.82 1171.02 1509.62

(net)
Sub-total - Current 159353.8 137404.81 142745.04
liabilities
Liabilities associated 45(e) 79.73 3.2 1984.17
with group(s) of assets
classified as held for
sale
TOTAL 224675.19 223353.65
LIABILITIES
TOTAL EQUITY 320048.92 311273.71 308140.13
AND LIABILITIES
CONTINGENT 32
LIABILITIES
COMMITMENTS 33
(capital and others)

17
 CHAPTER IV
SWOT Analysis of Larsen & Toubro
Strengths of Larsen & Toubro
Your organisation’s strength is something that makes it stand out from the rest. It can be a
competitive advantage that sets it apart from its competitors. Some of the strengths of Larsen
& Toubro are as follows –
Subsidiaries & Joint Ventures: According to 2020 reports, Larsen & Toubro incorporates
118 subsidiaries, 6 associates, 25 joint-venture and 35 joint operations companies,
functioning across basic and heavy engineering, construction, realty, manufacturing of capital
goods, information technology, and financial services.
Technology Cluster: L&T provides services using emerging technologies, embedded
intelligence and engineering through its L&T technology services, L&T Infotech, L&T Smart
World Communication spread across smart cities in India to provide smart engineering
solutions.
International Markets: L&T honed its focus on global markets from 2010 onwards,
especially ensuring a full range of operations in the Middle East catering to the Gulf and
North Africa holding around one-third to both order inflow and revenue. 
Sustainable Approach: As said in the introduction above, L&T sustains a greener portfolio
while working towards heavy engineering. The company always try to ensure a holistic
approach towards environmental impacts by reducing its carbon emission and use of water.
The company also runs several CSR initiatives to present a positive side of the company.
Good Returns on Capital Expenditure: Larsen & Toubro is moderately successful at the
performance of new projects and has developed good returns on capital expenditure by
creating new revenue streams.
Genuine Material Suppliers: It has a powerful base of reliable suppliers of raw material,
thus facilitating the company to survive any supply chain bottlenecks. 

18
Highly Skilled Workforce: Larsen & Toubro is empowering large resources in the training
and development of its employees, resulting in a workforce that is not only highly competent
but also motivated to achieve a surplus.
Government Projects: As the conglomerate is a public limited company and it gets most of
the projects and support from the government of India which ensures that the organisation’s
profitability is never going to be affected

Weaknesses of Larsen & Toubro

Weaknesses are negative factors that can prevent an organisation from achieving its goals and
objectives. Some of these include a poor brand, high levels of debt, inadequate supply chains,
and lack of capital. So here are some of the weaknesses of Larsen & Toubro –
Depends on Domestic Operations: Larsen & Toubro always depends on domestic
operations for the revenue, as it only operates in India so its main dependence on revenue is
domestic operations only. During FY2011 a total of 80% of revenue was from India. The
conglomerate should explore international markets too.
Increasing Debt: L&T debts are increasing rapidly which affects the financial flexibility of
the company. It is reported that L&T is in debt of $11,419.3 million in FY 2013.
Less Investment in New Technologies: As the company embarks on its next phase of
expansion, it needs to invest in new technologies that can help it achieve its goals. Currently,
investment in technology does not meet the ideas that a company has.
Investment in Research & Development: Investment in research and development is below
the rapidly growing players in the industry. Even though Larsen & Toubro is consuming
above the industry average on research and development, it has not been able to compete with
the leading players in the industry regarding innovation.
Labour Safety: The company’s labour works in an unsafe environment i.e. construction
sites, real estate projects, road construction where the risk to their life is more. This is the
place where the responsibility of L&T increases in terms of ensuring its labour safety and
sometimes it fails when some unseen events happen with its labour.  

Opportunities for Larsen & Toubro

Opportunity is a type of competitive advantage that can be gained from various external
factors. For instance, if a country lowers its tariffs, a car manufacturer can benefit by
exporting its products to a new market. Opportunities for Larsen & Toubro are as follows –

19
  New Technology: Larsen & Toubro may now use differential pricing in the new
market thanks to the new technology. It will motivate the company to reinforce its
existing clients via excellent service while also attracting new clients through various
value-oriented offers.
 New Markets: The adoption of new technology criteria and government free trade
agreements has provided Larsen & Toubro with an opportunity to enter a newly
developing market.
 Stable Free Cash Flow: Stable free cash flow gives opportunities to empower
contiguous product segments. With extra cash in the bank, the company can empower
new technologies as well as in new product segments.
 Mergers & Acquisitions: The company sustains a strong financial position and it
should leverage this benefit to increase its mergers and acquisitions both domestically
and internationally. This approach will open new revenue streams for the company.

Threats to Larsen & Toubro

Many factors can affect your business outside its immediate environment. Some of these
include factors such as a shortage of skilled workers or a supply chain issue. The threats
Larsen & Toubro is facing are as follows –
The Land Acquisition: As the Government introduced “the land acquisition bill” the value
of the land would be four times the market value in rural areas & two times in urban areas.
High Competition: Larsen & Toubro’s stable profitability has increased many competitors
in the industry over the last two years which has put downward pressure on not only
profitability but also on overall sales, so this is one of the biggest threats for Larsen &
Toubro. 
Increasing Level of Payment: Rising labour pay levels, especially movements such as $15
an hour and increasing prices in China, can lead to serious pressure on the profitability of
Larsen & Toubro.
Competitors Advance Technologies: New technologies developed by competitors or market
disruptors could be a serious threat to the industry in the medium to long term future. This is
because due to the new technologies developed by the competitors, they would be able to do
more production, and because of more production, they would be able to supply more as per
the demand. New technologies also help in reducing the cost of production.

20
The Pressure of Environment Bodies: The company follows heavy construction and
equipment rolling on lands which led to increasing pressure from environmental activists and
several lawsuits on L&T for exploiting the environment.   

CHAPTER V

PESTEL ANALYSIS

A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the
macro-environmental (external marketing environment) factors that have an impact on an
organization, company, or industry. It examines the Political, Economic, Social,
Technological, Environmental, and Legal factors in the external environment. A PESTEL
analysis is used to identify threats and weaknesses which are used in a SWOT analysis.

POLITICAL

STABLITY

Currently, the geographic area in which Larsen Toubro is actively present is experiencing
some political instability due to internal and external conflicts. Inability to understand and
handle the prevailing political chaos can inhibit the company from achieving its growth
objectives, and management will be reluctant to invest in new capital.

UNCERTAINITY

Larsen Toubro should actively scan the political environment to ensure quick adaptation with
changing policies and reset the strategic priorities accordingly.

GOVERNENCE SYSTEM

The current governance system is based on democracy, which makes the business
environment friendly for Larsen Toubro. Larsen Toubro can benefit from the economic

21
freedom offered by the democratic governance system, which promotes entrepreneurship and
free trade.

PRESURE GROUPS IN GOVERNMENT

Pressure groups can affect the business environment by finding strong allies in the media.
These groups pressurize the organizations by arranging protests and running marketing
campaigns. Larsen Toubro needs to keep an eye on the activities of these pressure groups as
they can influence the government’s policies, which may ultimately affect the overall
business environment. Larsen Toubro should closely collaborate with these groups to win
their trust and should invest in ethical and social activities to develop closer ties with society.

TRANSPARENCY

A transparent governance structure is crucial for promoting a friendly business environment.

Larsen Toubro is currently facing several issues due to corruption and lack of transparency.
This lack of transparency is mainly linked with the prevailing political uncertainty and
instability. 

FISCAL POLICY (TAXATION)

While making the expansion decisions, Larsen Toubro should carefully review the industry-
specific taxation policies. governments in many developing countries are interested in
reducing corporate taxes in an attempt to attract foreign direct investment. Larsen Toubro
should consider these countries, as it will be easier to make profits and invest in the
innovation, new product and research and development activities due to low tax rate.

TRADE POLICIES

The business expansion decision of Larsen Toubro should also consider the prevailing trade
regulations, and management should prefer the regions with free or flexible trade agreements.
The region under consideration is currently reducing the trade restrictions to ease the
environment for foreign business players, which increases the attractiveness of this region for
Larsen Toubro, which is seeking international business growth opportunities.

ECONOMIC FACTORS

22
THE EFFICIENCY OF FINANCIAL MARKETS

High financial market efficiency shares a strong positive relationship with overall economic
growth, making capital accumulation and goods/service production easier. Therefore, Larsen
Toubro needs to choose the countries with highly efficient financial markets so that it could
easily accumulate financial and human capital. By keeping an eye on the financial market
efficiency, Larsen Toubro can successfully stay ahead of the competition.

ECONOMIC GROWTH RATE

Larsen Toubro should review the economic growth rate of the countries while making
international expansion decisions. Countries with high economic growth rates provide more
opportunities to pursue long-term growth objectives. A slow economic growth rate leads
towards more cautious spending by consumers, which can directly affect Larsen Toubro’s
revenue growth.

INFLATION

The rising inflation rate can have a negative impact on the revenue growth of Larsen Toubro
as its decreases the purchasing power of money and discourages consumer spending on goods
and services.

EXCHANGE AND INTEREST RATE

Fluctuations in the exchange rate can affect business profitability. Larsen Toubro should
study the exchange rate fluctuations to make accurate anticipations so that the undesired trade
and business performance consequences could be avoided. High-interest rate means Larsen
Toubro will make high-interest payments, and taken loans will cost more in the long run.

DEMAND AND SUPPLY OF LABOUR

The performance of Larsen Toubro heavily depends on the skills and competencies of its
workforce. The timely availability of skilled workers is crucial for Larsen Toubro to stay
ahead of the competition. Larsen Toubro should analyse the labour demand and supply trends
to understand how workers with the required skills set could be successfully recruited. A
rigid labour market with powerful worker unions can cause various problems for Larsen
Toubro. Like, it may pressure the Larsen Toubro to give an unfair wage raise, or may halt the
production process by giving a strike call. Hence, it is important to analyse the labour market
dynamics, anticipate the key trends and adapt the talent management strategies accordingly.

23
SOCIAL FACTORS

CONSUMER BEHAVIOUR

It is important for Larsen Toubro to carefully analyze their consumption/spending patterns

preferences so that the marketing mix strategies could be adapted accordingly. It is also
important for Larsen Toubro to understand whether the consumption is driven by utilitarian
or hedonic motivations. Another important consumer behaviour variable that can affect the
Larsen Toubro’s performance is the degree of ethnocentrism. Higher ethnocentrism can make
the business environment more challenging for Larsen Toubro while operating in the
international markets.

DEMOGRAPICS

 Larsen Toubro should adapt its marketing strategies to ensure diversity and inclusion. A
positive attitude towards migration also reflects that Larsen Toubro can easily recruit staff
from diversified cultural backgrounds. High workplace diversity is often linked with higher
productivity, better innovation, and improved overall firm performance.

SOCIAL EQUALITY

A hierarchal structure with formal work culture suits Larsen Toubro when entering countries
with high power distance. 

CULTURAL AND SOCIETIAL NORMS

Larsen Toubro must conduct extensive research to gain local consumer knowledge. Being an
international firm from a culturally distant home market, it could be difficult for Larsen
Toubro management to understand the delicate cultural nuances. For this purpose, Larsen
Toubro can develop a business partnership with local market players that could offer in-depth
information about cultural norms and values that influence consumers’ perceptions and
attitudes towards the brand.

GENDER

The gender roles in that particular society could also affect the human resource management
strategies of Larsen Toubro, as the company will find it difficult to ensure gender diversity
across all management levels in countries where women are considered primarily responsible
for managing domestic responsibilities.

24
TECHNOLOGICAL FACTORS

TECHNOLOGICAL INFRASTRUCTURE

Larsen Toubro should prefer countries with well-developed technological infrastructure, as

supportive technological infrastructure makes it easier for a firm to achieve its cost reduction,
innovation, and value creation objectives.

TECHNOLOGICAL INNOVATIONS

Larsen Toubro will be able to understand the new product development rate, product life
cycle length, and innovative features being mostly liked by consumers. 

By investing in the right technological innovations, Larsen Toubro can optimize the user
experience, achieve operational efficiencies, and position itself as an innovative organization.

RESEARCH AND DEVELOPMENT

Larsen Toubro to adopt a long-term horizon, and do not expect a short-term return from its
research and development efforts. They understand how the technology will emerge for the
future period.

ENVIRONMENTAL REGULATIONS

Larsen Toubro should adopt responsible production practices, encourage responsible

consumption practices among its targeted consumers, try to improve its brand image on
sustainability grounds, and ensure full compliance with the international and local
environmental regulations, as inability to do so can draw the serious, reputation damaging
criticism from relevant stakeholders.

THE GROWING USE OF RENEWABLE ENERGY

In some world regions, governments offer attractive subsidies on the use of renewable energy
sources. By taking the advantage, Larsen Toubro can incur investment in renewable energy
sources to achieve sustainable business development objectives.

INDUSTRY NORMS OF RECYCLEING, WASTE MANAGEMENT AND

RESOURSE UTILIZATION

25
In some countries, customers take an active part in the recycling process. Larsen Toubro can
benefit from these sustainability trends and use them as a tool to not only reduce the
environmental costs but also achieve economic objectives in form of reduced production
costs.

WEATER

Weather conditions also shape consumer behaviour, and require Larsen Toubro to integrate
flexibility into its supply chain operations.

LEGAL FACTORS

EMPLOYMENT LAWS

Some countries the penalty will be strict in case of violation of employment laws as entering
in those countries L&T should ensure environment and work safety.

INTELLECTUAL PROPERTY LAWS

Strict compliance with the intellectual property laws makes the business environment safer
for firms like Larsen Toubro, as their patents are protected from imitation, leading towards
sustainable competitive advantage.

CONSUMER PROTECTION LAWS

In the case of online transactions, Larsen Toubro must strictly comply with the data
protection regulations to avoid lawsuits. While entering different countries, Larsen Toubro
management needs to study the laws related to refund, discount, credit terms, quality,
misleading advertisement, and maximum pricing (particularly in the case of basic essential
goods) to ensure consumer privacy.

26
 CHAPTER VI

AREA OF LEARNING

This Finance internship made me to gain more experience and also, I implement my
classroom learning to work in a real-world setting

It helps me to develop my professional skills

1st week

On the First week I completed my joining procedure, submitted my required documents with
my HR Manager and I applied for my ID card and completed my join.

I learned about the company vision mission, as well as the process how the firm maintain the
finance of its investments and associated transaction using precious financial years Annual
Report.

2nd week

Mr. Sekhar sir assigned me tax audit work for the year 2021 for the consolidate months. We
carried out this work for the entire week.

27
3rd week

With the help of Mr. Sekhar sir I learnt advance EXCEL

 Basic keys/shortcut keys

 Formula Functions
 Pivot table
 Working with custom analysis
 Learnt how to make statistical analysis in excel

Ms. Power point (How to work with custom slides and templates)

During the work I learnt time management and Data merging

4th week

Our mentor (Sekhar sir) discussed current activities of the B&F (Budlings & Factories) and
the current year investment and resource allocation

CHAPTER VII

CONCLUSION

L&T construction has a strong workflow in processing the bills & generating the reports.
They have excellent co-ordination between the headquarters and the construction sites which
result in avoiding wrong payments and helps to save their employees precious time the ERP
software of L&T provides the best real time data monitoring and data analysis experience and
helps to avoid data error.

It was a good experience and I hope the experience gained from this internship will help me
to become familiar with the ever-evolving working culture.

This gives me a practical exposure in the field of finance.

28