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  • June 19th, 2024

A Case Study of the Largest Engineering and Construction Company : Larsen & Toubro

We all know that Larsen & Toubro Limited is an Indian company that is popular all over the world due to its engineering, technology, manufacturing, construction, and financial services. It is generally called L&T. The headquarters of the company is located in Mumbai, Maharashtra, India. The commercial activities of the company are basic and heavy engineering, real estate, construction, information technology, capital goods manufacture, and financial services. The CEO of L&T EduTech is Sabyasachi Das. You may pursue different types of engineering and technology-based courses from L&T EduTech. First of all, we have to learn what is the secret behind the success of this outstanding company. 

Have a Quick Look at the Basic Details of Larsen & Toubro Company: 

  • Original name: Larsen & Toubro Limited
  • Year of establishment: 7th February 1938.
  • Inventors of the company: Henning Holck-Larsen, Soren Kristian Toubro
  • CEO of the company: S. N. Subrahmanyan
  • Headquarters of the company: Mumbai, India
  • Enterprise: Conglomerate

A Short History and Overview of Larsen & Toubro 

Two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro set up the company Larsen & Toubro on 7th February 1938 in the lanes of Bombay. At first, the company started to produce dairy supplies but as soon as the Second World War started in 1939, the organization began to manufacture and repair industrial as well as defense instruments. After that, the company became a public corporation in 1950 with a primary capital of Rs. 20 lakhs which is equal to more than 20 crores or $2.42 million in 2023. 

L&T did not take much time to become a reliable company for government tasks and agreements along with the first-ever alliance of the company with ISRO in 1970 and after that with DRDO in 1985. From then on, that organization has spread its business to different parts like manufacturing, construction, defense, heavy engineering, power and energy, supply chains and transportation, minerals and metals, aerospace, mining and metallurgy, IT services, agriculture, and finance. 

There are more than 93 subsidiaries, 27 joint ventures, and 5 associate organizations of L&T company. As of March 2023, the company has managed to gain nearly 23 billion USD in revenue. 

The Best Conglomerate in India: Larsen & Toubro 

We all know that Larsen & Toubro Limited is a global engineering, technology, construction, manufacturing, projects, and financial services company. The market capitalization of the company is nearly 17 billion USD. 

The most important areas that resolve important demands are hydrocarbons, infrastructure, power, construction, defense, shipbuilding, heavy engineering, electrical & automation, aircraft, metallurgy, and mining. 

Who is the Founder of Larsen & Toubro? 

Two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro set up Larsen & Toubro in Mumbai in 1938. L&T has chosen S. N. Subrahmanyan as the Chief Executive Officer and Managing Director Of Larsen & Toubro. He took the position of Mr. Anil Manibhai Naik in the CEO position on 1st July 2017. 

The Business Model of Larsen & Toubro 

The business model of L&T is supposed to be the most effective business model available now. Have a glance at the most important elements of the business model of L&T given below: 

  • Consumer segments: 

Larsen & Toubro has made a proper business model for various consumers. The company offers multi-element products and services for the customers like manufacturing machinery and heavy plants, infrastructure and construction, banking and finance services, and IT services. The company provides services aimed at businesses in the industrial sector. 

  • Value Proposition: 

The value proposition of the company says that the organization concentrates on giving the best quality and vigorous solutions and services to its consumers as well as clients. The organization only offers services that can fulfill the particular purposes of the consumers. The company is polar for its business model creation and analysis and expansion. They keep improving their products and always stand out from the crowd. 

  • Subsidiaries and Partnerships :

The company has been able to make a powerful brand with over 130 subsidiaries and 15 partner organizations due to its success. The name of the company is listed among the top five fabrication companies all over the globe. Moreover, the company claims to be the largest engineering and construction organization in India and one of the most important global companies in the nation.

  • Advertisements:

The primary route of L&T is the business development team of the company. The company promotes the services it provides on its website, promotions, social media pages, and conferences. 

  •  Consumer Relationships: 

The company thinks to make strong and friendly relations with its consumers by using on-demand training and vigorous consumer aid. Most of the consumer relationships of L&T depend on human support. The company gives the consumers full training and prolonged phone and email support. 

  •  Designing, developing, manufacturing, and providing services: 

These are all very important parts of the business model of L&T. 

  • Key Partners:

The company maintains technical associations like Joint ventures with different organizations for providing the best possible services to the clients of the company. The organizations are from various industries like hydrocarbons, construction, and power. For instance, a few particular partners of the company are Chiyoda Corporation of Japan, GULF Interstate Engineering, Valdez, and Sargent & Lundy. 

  • Sources of Income: 

The income sources of Larsen & Toubro are product sales revenue, project-based revenue, financial services, and IT and software services. 

The Acquisitions of Larsen & Toubro 

The company has bought two organizations named MindTree and Spectrum. The most recent purchase of the company was MindTree. They bought the company on 3rd June 2019.

It is very important to note that the company was funded by City Union Bank on 1st December 2006. The Post-IPO Equity- the valuation of the investment of City Union Bank was nearly $450 million.

Who are The Adversaries of Larsen & Toubro? 

The most popular adversaries of Larsen & Toubro are as follows: 

  • Aditya Birla Group
  • Reliance
  • Tata Projects
  • LANCO Group
  • GMR Group
  • PEL
  • SPCL
  • Afcons

What Challenges did Larsen & Toubro Encounter?

The company has to face a lot of challenges in their way. A few most important challenges faced by the company are given below: 

  • Fewer Employees: 

When the lockdown was lifted, Larsen & Toubro, the largest engineering and construction corporation in India, was trying to restart their work at the construction sites of the company. At the time of the lockdown, more than one lakh employees of the company which is almost half of the workforce of the organization went back to their homes in Bihar, Uttar Pradesh, West Bengal, Jharkhand, and Orissa. 

  • Enactment: 

The company has reopened most of its works and more than half of the 1000-plus project sites but they faced issues implementing them. 

  • Adversaries: 

The company has a lot of opponents in the market and a major portion of them are noteworthy performers. This is supposed to be one of the most important challenges faced by the company. The company had to strive a lot to surpass its adversaries. 

What is the Share Price of Larsen & Toubro Limited? 

The share price of Larsen & Toubro was supposed to be Rs. 1,876.15 as of 13th October 2022. The previous share price of the company was Rs. 1878.95 which means that the share price of the company has been reduced by 1.84%. 

Who are the Subsidiaries of Larsen & Toubro?

The company becomes popular as it provides a lot of services. This is a multinational company that has different functions in various industries like construction, technology, engineering, financial services, and manufacturing. The company has purchased two organizations. They purchased MinTree on 3rd June 2019. They purchased Spectrum Infotech on 3rd February 2006.

The company has been able to establish a strong brand because of its success. The company has over 130 subsidiaries and 15 associate organizations which led it to become the top five fabrication organizations all over the globe. The company claims to be one of the most important global companies and the largest engineering and construction company in India. 

What Type of Products and Services Are Offered by Larsen & Toubro?

The company is supposed to be the senior construction corporation in India. Larsen & Toubro offers the following products and services: 

  • Electrical Equipment
  • Heavy Equipment
  • Power Generation
  • Construction
  • Infrastructure
  • Heavy Industry
  • Rapid Transit
  • IT Services
  • Financial Services
  • Real estate
  • Ship Building
  • Defense 

The SWOT Analysis of Larsen & Toubro

With the help of a SWOT analysis, we may identify the strengths, weaknesses, opportunities, and threats of a company. We are going to make a SWOT analysis of Larsen & Toubro here. So let’s start without wasting any more time. 

What are the Strengths of Larsen & Toubro?

The strength of a company is something that helps the company to stand out from the crowd. It may be a competitive edge that sets it completely different from its adversaries. A few strengths of Larsen & Toubro are given below: 

  • Subsidiaries & Joint Ventures:

As per the reports of 2020, Larsen & Toubro Limited includes 118 subsidiaries, 6 associates, 25 joint-venture, and 35 joint operations organizations and basic and heavy engineering construction, realty, heavy engineering, manufacturing of capital goods, financial services, and information technology. 

  • Technology Cluster: 

Larsen & Toubro offers its services with the help of the latest technologies, ingrain intellect, and engineering through its L&T technology services 

L&T Infotech, L&T Smart World Communication circulate all across the smart cities in India to deliver smart engineering solutions. 

  • Global Markets:

The company sharpened its concentration on international markets in 2010 particularly assuring a wide range of operations in the Middle East spreading to the Gulf and North Africa keeping about one-third to order inflow as well as earning. 

  • Sustainable Approach: 

L&T maintains a greener portfolio at the time of working toward heavy engineering. The company strives its best always to assure a holistic strategy towards environmental effects by cutting down the emission of carbon and the use of water. The organization also drives various CSR initiatives to display a favorable side of the corporation. 

  • Good Returns on Capital Expenditure: 

Larsen & Toubro is relatively triumphant at the enactment of new projects and has evolved decent returns on capital expense by developing new income sources. 

  • Real Material Suppliers: 

The company has reliable raw material suppliers who help the company to survive any kind of supply chain bottlenecks. 

  • Highly Efficient Workforce: 

The company is expanding a lot to train and develop its workers which in turn creates a workforce that is highly skillful and devoted to gaining the best. 

  • Government Projects:

The conglomerate is a public limited company and receives a major portion of the projects and aid from the government of India which makes sure that the profitability of the company will be never impacted. 

What are the Weaknesses of Larsen & Toubro? 

Weaknesses are the adverse aspects that may restrict a corporation to meet its goals and purposes. A few weaknesses add a high amount of debt, poor brand, insufficient supply chains, and shortage of capital. 

A few weaknesses of Larsen & Toubro are as follows: 

  • Relies on Domestic Functions: 

The company always relies on domestic functions for income because it only functions in India. That is why it depends primarily on the revenue of domestic functions only. At the time of FY2011, about 80% of the income of the company came from India. The company must explore global markets too. 

  • Growing Debt: 

The debts of L&T are growing rapidly day by day which impacts the economic flexibility of the organization. According to the report, the company is in debt of $11,419.3 million in FY 2013. 

  • Nominal Investment in New Technologies:

As soon as the company wants to expand, it has to invest in the latest technologies that may help it meet its goals. 

  •  Investment in Research & Development: 

Investment in research and development is below the quickly rising players in the industry. Though the company is taking more than the industry average on research and development it has not been able to play against the leading players in the industry related to innovation. 

  • Labour Safety: 

The labor works of the company are not in a safe place such as real estate projects, construction sites, or toad construction whether there are heavy risks to their life. At this point, the responsibility of L&t grows for assuring labor safety and occasionally it fails when a few unknown events take place with its labor. 

What are the Opportunities for Larsen & Toubro?

Opportunity is nothing but a kind of competitive edge that a company may gain from different external aspects. For example, in case a nation reduces its tariffs a car manufacturer may gain profit by exporting its products to a new market. A few opportunities for Larsen & Toubro are as follows: 

  • New Technology: 

The company now utilizes various proving in the new market for the new technology. It will encourage the corporation to strengthen its prevailing clients through outstanding service as well as grab the attention of new clients through different value-based offers at the same time. 

  • New Markets:

The new technology adoption rules and government-free business agreements gave given the company an opportunity of entering a newly rising market. 

  • Stable Free Cash Flow: 

With the help of stable free cash flow, the company may certify adjacent product parts. With additional cash in the bank, the company can authorize new technologies and new product parts. 

  • Unions & Acquisitions: 

The company has a very powerful financial position and it promotes this advantage to improve its unions and assets domestically as well as internationally. With this approach, the company will be able to open new income sources. 

What are the Threats to Larsen & Toubro?

There might be a lot of reasons that may affect a company outside the environment. A few threats to a company are a lack of efficient employees or a supply chain problem. The threats connected to Larsen & Toubro are given below: 

  • The Land Acquisition: 

The administration has launched the land acquisition bill which says that the land would be four times the market value in rural areas and two times the market value in urban areas. 

  • High Competition:

Due to the consistent profitability of Larsen & Toubro, there are a lot of adversaries in the industry who are trying to reduce the profitability of the company as well as the all-around sales. That is why this is supposed to be one of the most important threats for Larsen & Toubro. 

  • Improving Level of Payment: 

The labor pay levels are increasing. Particularly the campaigns like $15 per hour and growing prices in China may create significant pressure on the profitability of Larsen & Toubro. 

  • Opponents Advanced Technologies:

The opponents or market disruptors are developing new technologies. This might be a significant threat for a company shortly as with the help of new technologies the competitors will be able to increase their production and due to the increased production level, they will be able to supply more according to the requirement. With the help of new technologies, they will also be able to cut down their production cost. 

  • The Pressure of Environment Bodies: 

The business abides by heavy construction and equipment rolling on lands which increases stress from environmental activists and various cases on L&T for taking advantage of the environment. 

What are the Plans of Larsen & Toubro for the Future?

The company has made the following plans for the future: 

  • Larsen & Toubro is going to launch its Lakshya 2021 business plan within a few months. This business plan has set a target revenue of INR 2 trillion.
  • The corporation has created an in-house digital platform that offers unlimited and uninterrupted connectivity to its various procedures, boosting productivity, and reducing decision-making time. 
  • Larsen & Toubro is taking this responsibility to the following level with a unique strategic endeavor which is termed as L&T-Nxt. This initiative will apply the latest technologies, analytics, and digitization to offer industrial solutions commercially by capitalizing on possibilities as companies improve toward Industry 4.0. 

Final Verdict

Larsen & Toubro Limited works in highly effective segments of the economy. The company has shown its expertise in engineering, technology, construction, manufacturing, and infrastructure projects. The company retains its position as a leader in every important business line. It has never compromised the quality of its products. If you are finding it difficult to write a case study on this topic you may take help from My Assignment Writing Help without any hesitation.

FREQUENTLY ASKED QUESTIONS

  1. Why is Larsen & Toubro so Famous?

Larsen & Toubro is providing the best quality products to consumers fit more than 80 years. The company is highly efficient in various sectors like engineering, technology, construction, and manufacturing. The company has successfully retained its position as a leader among the most important business lines. That is why Larsen & Toubro is so famous. 

  1. What is the Plan of Larsen & Toubro for the Future?

The company is planning to gain water neutrality by 2035 and car neutrality by 2040. The company has managed to save 150 million kWh of energy cumulatively with which about 70,000 homes can be powered in a year. The company has evaded emissions of 47,000 tCO2e in 2022 which is equal to sowing 5 lakh trees.

  1. What is the Mission and Vision of Larsen & Toubro?

Larsen & Toubro wants to become the engineering partner of choice with the help of innovation, best-in-class processes, technologies, and people. Not only that, it wants to deliver outstanding improvement for every stakeholder. Larsen & Toubro wants to create a sustainable and better world for the future of their consumers, neighborhoods, and people. 

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