Beruflich Dokumente
Kultur Dokumente
of
Larsen & Toubro
TABLE OF CONTENTS
LARSEN & TOUBRO ..................................................................................................... 1
Introduction ............................................................................................................................. 1
Organisational Change ................................................................................................................ 1
Organisational Structure of L&T .......................................................................................... 2
Background ................................................................................................................................... 2
Restructuring the Organisation ............................................................................................ 3
Need for Restructure .................................................................................................................... 3
Restructuring Plan ........................................................................................................................ 4
Current Scenario Post Restructuring ......................................................................................... 7
company. L& T had 152 businesses in 63 subsidiaries and more than 1450 JVs when
it was decided to restructure the business. Moreover, the Company was failing in
capturing the valuations of individual divisions and therefore aimed at creating and
capturing individual valuations. It was felt that restructuring would unlock shareholders
value by re-organising the businesses into 09 independent companies under a
separate CEO and Board with central control by Headquarters.
10.
Simplicity and Clarity of Operations. It was believed that the planned
structural change will bring about the necessary improvement in performance of the
various companies with greater focus, empowerment, transparency, stronger
leadership and increased competitiveness. It was purely an organisational
restructuring and not aimed at cultural changes. It was felt that only restructuring can
help L & T to face the intense competition and business challenges of those times
while doing away with the inherent complexities of the existing structure and bring
about simplicity, clarity and greater coordination in operations.
11.
Changing Business Models. L&T was a highly diversified company and it
was difficult to maintain domain expertise and reorganisation had become inevitable
due to intense competition. Further, L & T saw major growth opportunities in all the
sectors they were present in. Therefore, they followed the path charted by other
conglomerates such as the Tata and the Birla groups who were also forced to
restructure themselves for carving independent companies, with holding firms (Tata
Sons Ltd and Aditya Birla Nuvo Ltd) to retain their competitive edge. During that time,
the struggling airlines, Air India Ltd, too, restructured themselves, by creation of five
strategic business units for the passenger airline, cargo and engineering, among
others to survive in the ever changing business environment.
RESTRUCTURING PLAN
12.
Strategic Business Units.
India's top engineering and construction
company Larsen & Toubro was to be reorganized into following nine business verticals
as depicted in Figure 2. The conglomerate sought to simplify its structure so as to
manage growth efficiently.
Infrastructure
Hydrocarbon
Power
Process
Others
Construction &
Mining Equipment
EPC - Coal
Minerals & Metals
Midstream
(Refineries)
Airports
EPC - Gas
Shipbuilding
Hydro Power
Defence & Aerospace
Railways
Nuclear Power
Bulk Material
Handling
Industrial Macheniery
Production
Technology Services
Balance Plant
Fertilizers
Water
Transmission &
Distribution
Electrical Products
15.
A corporate centre was established to nurture the L&T brand, value, culture,
and optimize synergies through key account management and shared services. The
focus shifted to develop a deeper leadership pipeline and attract lateral talent.
CURRENT SCENARIO POST RESTRUCTURING
16.
The company has successfully met the challenges of competition in the ever
changing business environment. The restructuring of organisation coupled with five
decades of experience in designing, manufacturing, installing plant and equipment for
major projects and absorbing/adapting technology to sharpen skills helped L& T to
make its foundation and operations stronger in developing India and abroad. L & T
expertises has grown out of its mastery over indigenous know-how, its versatility
diversifying into various fields. Behind it all is the spirit of enterprise and an obsession
for quality and customer service. The new organisation structure of L& T is depicted
in Figure 3.
17.
The creation of nine independent companies made L& T more aggressive,
facilitated nourishing talent by fast-tracking senior managers to independent positions
and unlocked value by allowing investors to choose particular businesses. It is a
common practice in the West among diversified conglomerates to incubate a business
and later unlock value, allowing investors and senior managers to cash out. But, L&T
proved that the same can also be successfully implemented in the Indian business
environment with a growing economy. The hybrid company now houses the nine
operating companies with separate profit and loss accounts. There are five
subsidiaries, including L&T Infotech Ltd and L&T Finance Ltd. The reorganisation is
expected to yield a fourfold increase in revenue by 2017 from Rs 46,900 crore in FY10.
18.
The Company has been able to leave a mark in professional management. It
has produced legendary professionals and leaders like Mr. NM Desai, Mr. UV Rao,
Mr. SD Kulkarni and Mr. AM Naik. Today, L&T is one of India's biggest and best known
industrial organisations with a reputation for technological excellence, high quality of
products and services, and strong customer orientation. The company has
manufacturing facilities in India, China, Oman and Saudi Arabia. It has a global supply
network with offices in 10 locations worldwide, including Houston, London, Milan,
Shanghai, and Seoul. It is also taking steps to further grow its international presence.
The presence of L&T in India and abroad is depicted in Figure 4.
Associate Companies
Subsidaries
L&T Infotech
Power T&D
Infrastructure SPVs
Hydrocarbon
MHI JVs
Power
Heavy Engineering
Shipbuilding
AUDCO
Infrastructure
L&T KOMATSU
Others
Figure 4 L&Ts Footprint at National & Global Level