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Introduction:
❖ Larsen and Toubro Infotech Ltd. is a technology consulting and digital
solution company that provides information technology services and
solutions in India, North America, Europe, the Asia Pacific, and
internationally.
❖ The company operates through Banking, Financial Services &
Insurances; Manufacturing; Energy & utilities; High tech media&
Entertainment; CPG, Retail, Pharma and other segments. It offers
maintenance and outsourcing, enterprise solution, infrastructure
management, testing, digital solution, and platform-based solution
services.
❖ The company was formerly known as L & T Information Technology
Limited and changed its name to Larsen & Toubro Infotech Limited in
June 2001. The company was incorporated in 1996 and is based in
Mumbai, India.
❖ Larsen and Toubro Infotech are a subsidiary of Larsen and Toubro Ltd.
which was founded in 1938 by two Danish Engineers named Holck
Larsen and Soren Kristian Toubro.
ANALYSIS OF FINANCIAL STATEMENTS:
Analysis may be generally defined as breaking some complex thing
into smaller components so as to get better understanding from
them.
Financial Statement Analysis is the process of understanding the risk
and profitability of a firm through analysis of reported financial
information by using different accounting tools and techniques,
Generally, there are 4 methods of analyzing a financial statement as:
1. Horizontal Analysis: Using comparative financial statements to
calculate percentage change in a financial statement item from
one period to the next.
2. Vertical Analysis: For a single financial statement, each item is
expressed as a percentage of a significant total.
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3. Trend Percentage: It shows changes over time in given
financial statement items. It helps in evaluating financial
information of several years.
4. Ratio Analysis: it is the expression of logical relationship
between items in a financial statement of a single period.
BALANCE SHEET OF L&t INFOTECH LTD.:
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As we all know that balance sheet of a compony is known as a
statement of financial position. It reveals the firm’s assets, liabilities
and the equity of the owner. The balance sheet is divided into two
parts that are based on the basic equation that should be balanced
out by each other.
𝐴𝑠𝑠𝑒𝑡𝑠 = 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 + 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 ′ 𝑠 𝐸𝑞𝑢𝑖𝑡𝑦.
Let’s now begin analysing the financial position of the L & T Infotech Ltd.
▪ We will start this by analysing the Equity of the company.
▪ Equity appears at the first section of the balance sheet. It normally
tells us about the net worth of the owner. It is generally used for
representing the amount of money that would be returned to a
company’s shareholders if all of the assets get liquidated. From the
balance sheet cited above, the EQUITY SHARE CAPITAL of the L & T
Infotech Ltd. in the previous five years can be described as we are
clearly seeing that in the year 2016, it was Rs. 16.98 Crores which
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increased in March 2017 and became Rs. 17.10 Crores and kept on
increasing in March 2018 (17.20 Crores), March 2019 (Rs. 17.40 Crores)
and remained constant in March 2020 with that of March 2019 that is
Rs. 17.40 Crores. Since, it represents the shareholder’s stake in the
company identified on a L&T Infotech’s balance sheet therefore it
clearly indicates that the trend of equity is increasing in previous
years. Since, it is a sort of liability so either it should decrease or
remain constant in order to survive in the market with good profits.
But from the balance sheet we come to know that the trend has
increased in the previous years from 2016 to 2019 but remained
constant in 2020. Therefore, we may say that in the fiscal year 2020, it
showed some sort of improvement which is actually a good sign or
healthy business.
▪ Now coming to the RESERVES AND SURPLUS portion of the balance
sheet. Reserves & Surplus are generally the total profits that a
company has earned and retained that is profits left after paying the
dividends to the shareholders. When a company reinvests money back
into itself, its complementary effect can be seen in the assets side.
While taking this data into the account, we are in position to say that
the reserves and surplus of L & T Infotech has increased over period of
years with a good value that is it went from Rs. 1,846.29 Crores (2016)
to Rs. 5,211.40 Crores (2020). The data shows that company has a
good reserves and surplus which in turn means it has a healthy
business survival in market.
▪ Considering the NON-CURRENT LIABILITIES, which are the debts and
other non-debt financial obligations that are due after a period of one
year from the date of balance sheet. It includes: - DEFERRED TAX
LIABILITY (Provision for future tax payments.), LONG TERM
BORROWING (Amount that has been borrowed from various sources)
and LONG-TERM PROVISIONS (Money set aside for employees benefit
programmes.) The trend in non-current liabilities show some irregular
fashion like in March 2017, it tremendously decreased from Rs.233.33
Crores to Rs. 28.50 Crores and then in March 2018, it increased to Rs.
48.40 Crores and then in March 2019, it again went down to Rs. 32,30
Crores. But in March 2020, it vigorously increased to Rs. 1,003.30
Crores. This means during the initial 4 years during the previous 5
years, the company was showing somewhat zig-zag movement that
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tremendously increased in March 2020, that is not a good sign for the
business at all.
▪ Now taking the CURRENT LIABILITIES into the account. These are the
liabilities of a company that are sought to be settled before one year.
These include: - SHORT TERM BORROWINGS (Undertaken by the
company to meet day to day cash requirements), TRADE PAYABLES
(Obligations payable to vendors who supply to the company), OTHER
CURRENT LIABILITIES (Obligations that are not directly related to
company’s operations) and SHORT-TERM PROVISIONS (Associated
with Employee Benefits). From the balance sheet cited above, we
come to know that from 2016 to 2019 the current liabilities are being
increased gradually, there is no any sudden change but taking March
2020 into the account, the current liabilities there is a huge rise in
March 2020 as compared to March 2019. This sort of increase in
liability is not a good sign for the growth of company.
10000
9000
8000
LIABILITIES (in Crores)
7000
6000
5000
4000
3000
2000
1000
0
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
YEARS
TOTAL LIABILITIES
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▪ Taking NON-CURRENT ASSETS into the account, we come to know
that it is broken into: - TANGIBLE ASSETS (These have physical form.),
INTANGIBLE ASSETS (have an economic value but not physical form),
CAPITAL WORK IN PROGRESS (Buildings and Machinery under
progress) & INTANGIBLE ASSETS UNDER DEVELOPMENT (patent,
copyright etc. under progress) and Fixed Assets are of Non-Current
investments, deferred tax investments, long term loan and advances
and other noncurrent assets. The trend in Non-Current Assets shows
zig-zag movement in initial 3 years during 5 years. But in March-2019
and in March 2020, these have been increasing which is actually a
great sign for the growth as well as survival of business in long term.
▪ If we talk about CURRENT ASSETS, it is being broken into CURRENT
INVESTMENTS, TRADE RECEIVABLES, CASH & CASH EQUI. and OTHER
CURRENT ASSETS. The trend shows an appreciable increase in the
assets of L&T Infotech Ltd.
Assets
Assets
9,000.00
8,000.00
7,000.00
ASSETS (IN CRORES)
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
YEARS
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income statement of l & t
infotech ltd.:
The Profit and Loss statement is also popularly referred to as the P&L
statement, Income Statement, Statement of Operations, and Statement of
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Earnings. The Profit and Loss statement shows what has transpired during a
time period.
▪ Let’s begin the interpretation of P & L Statement of L & T Infotech
Ltd. by considering the top line element i.e., TOTAL OPERATING
REVENUE (Generated by the primary activities of a business). The
revenue of the company has started rising appreciably from March
2016 to March 2020 which in turn assigns a healthy position to the
business in the market.
▪ Now taking EXPENSES into the account. Expenses can be incurred I
am company by Operating Activities, Direct Activities, Employee
benefit Expenses, Finance Costs, depreciation and Amortization
Expense. Generally, the increase in expenses show that the business is
expanding which in turn assigns a good sign of the growth. From the
balance sheet sighted above, we are able to see that the expenses of
L & T Infotech are continuously increasing over the five years (rose
from Rs. 8,598.90 Crores in March 16 to Rs. 4754.95 Crores March 20.)
▪ And PBET (Profit Before Exceptional, Extraordinary Tax) has shown a
gradual increase over the period over five years.
▪ The profit after tax of the company has also increased gradually
marking a good market position.
▪ EARNING PER SHARE tells us about how much company is earning per
face value of the ordinary share. The EPS has also increased
reasonably since past five years indicating a greater earning of Co.
1800
1600
1400
PROFIT (in Crores)
1200
1000
800
600
400
200
0
profit
Jan-16 Jan-17 Jan-18
YEARS Jan-19 Jan-20
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Conclusion from the study:
o Since the profit of company has been increased with a certain
and specific rate as seen from the P & L Statement and graph
drawn above. The only reduction in the amount of profit was
seen only during March 2017 of about Rs. 0.53 Crores to March
2016. And after then the profit of the company has been
increased with a constant rate giving us the steeper slope.
o Liabilities of the company has almost got tripled in 2020 from
2016, but along with this; total non-current assets of the
company have been also doubled and total current assets of the
company also got tripled thereafter masking the increase in
liabilities of the company.
o The profit of L&T Infotech has become 1.65 times of the initial
value.
o Also, the reserves and surplus of the company has became 5
times in 2020.
References:
(MY Khan, 2013) (Zerodha, 2021) (moneycontrol, 2021)
Thank-you!!!
