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ACKNOWLEDGEMENT
I would like to express my gratitude and appreciation to all those who gave me the
possibility to complete this report. A special thanks to Mr.Senthil (Cluster
Accounts Manager) and Mr.V.Nagarajan (Deputy Manager Accounts-Water,
smart world and Communication IC) in Larsen & Toubro whose help,
stimulating suggestions and encouragement, helped me to coordinate my project
especially in writing this report.
I would also like to acknowledge with much appreciation the crucial role of the
staff of Larsen & Toubro Limited who helped me in collecting all required
information to complete the project report.
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TABLE OF CONTENTS
2
CHAPTER-1
INTRODUCTION TO THE
COMPANY
3
1.1 INDUSTRY PROFILE
L&T Construction is the construction arm of Larsen & Toubro. Ranked 28th
among the top 225 global contractors by Engineering News Record in 2013, L&T
Construction offers EPC solutions with single-source responsibility for executing
large industrial and infrastructure projects from concept to commissioning.
With a track record of over 70 years, L&T Construction has proven its capability
for executing all types of mega projects on a turnkey basis involving innovative
designs, comprehensive construction services that include procurement, supply,
installation, testing and commissioning.
L&T Construction has over the past seven decades been transforming cityscapes
and landscapes with structures of immense size and grandeur. India's largest
construction organization and ranked among the world's top 30 contractors, the
company's capabilities span the entire gamut of construction - civil, mechanical,
electrical and instrumentation engineering and its services extend to all core sector
industries and infrastructure projects.
Transportation Infrastructure
Geo Structure
5
L&T Construction offers a broad spectrum of Engineering, Design, Research and
Consultancy services, ranging from concept to commissioning for all types of
projects at its AR Centre located at Chennai.
Feasibility Studies
Geo-technical Engineering
Building Services
Hydraulic Engineering
Over the last seven decades, the AR Centre has designed critical structures for
many of India's most challenging projects and has gained a reputation for
innovation and quality through application of modern construction methods and
techniques, which are constantly updated. A team of dedicated engineers are
ceaselessly engaged in developing and acquiring new concepts and structural
systems for unique project developmental works in line with the latest
developments in the field. With the aid of state-of-the-art technology and
6
customized software developed in house, this team works towards reducing
construction time and adding value to the clients.
L&T was rated 58th Most Innovative Company by Forbes International, and 4th in
the global list of „green companies‟ in the industrial sector by Newsweek. It was
voted among the most admired companies in the country by Fortune India, and
rated 8th Most Powerful Brand in India by Brand Finance. It won The Economic
Times Corporate Citizen of the Year Award - 2013, instituted by one of the
world‟s most widely sold business newspapers - The Economic Times. A survey
by a leading HR consultancy affirmed its reputation as a people-focused company,
leading to the award for the „Most Attractive Employer‟ in the industrial sector.
1.2.1 HISTORY
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sophistication. Today, the company sets engineering benchmarks in terms of scale
and complexity.
L&T was the first company in India in the engineering & construction space to
publicly disclose its sustainability performance. The Company‟s annual
Sustainability Reports highlight achievements and objectives across the traditional
three „Ps‟ of Planet, People and Profits. All our Reports are rated A+ by Global
Reporting Initiatives, indicating the highest level of disclosure. The recognition
that the Company has secured from forums around the world affirm public
perception of L&T as an organization that contributes significantly to the
wellbeing of people.
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highly skilled work force, are key enablers in delivering critical and complex
projects.
9
capabilities encompass tall towers and eco-friendly „green‟ buildings. Its track
record includes landmark structures such as the Baha‟i temple in New Delhi.
L&T‟s Water & Solar business caters to the entire value chain of water and solar
EPC. The water and effluent treatment business covers water intake, transmission,
treatment and distribution including industrial waste water treatment & disposal
and ordinary waste water treatment & reuse 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).
1.2.10 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
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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, pulverizes,
pressure piping, coaxial fans, air-pre-heaters and electrostatic precipitators. The
complex also includes a modern casting and foundry shop.
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 defense, 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 Poway in
Mumbai, Hazira and Baroda in Gujarat, Talegaon in Maharashtra, and Zohar in
Oman.
1.2.12 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
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Shipyard has the capability to build sophisticated mid-sized ships up to 20,000 t
deadweight capacity, of 10 meters 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.
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1.2.15 TECHNOLOGY SERVICES
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 application engineered welding alloys and cutting tools.
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1.2.18 FINANCIAL SERVICES
2015:
2014:
2012:
15
CHAPTER 2
LITERATURE ANALYSIS
16
Noel Capon, John U. Farley, Scott Hoenig, Determinants of Financial
Performance: A Meta-Analysis
This study compares the pre- and post-privatization financial and operating
performance of 61 companies from 18 countries and 32 industries that experience
full or partial privatization through public share offerings during the period 1961
to 1990
Amalendu Bhunia, Sri Somnath Mukhuti and Sri Gautam Roy, Financial
Performance analysis – A case study
The Pressent study aims to identify the financial strength of the public sector
pharmaceutical enterprises by properly establishing relationships between the
items of the balance sheet and the profit and loss account. The study two public
sector drug and pharmaceutical enterprises listed on BSE. The study has been
undertaken for a period of twelve years from 1997-98 to 2010-09 and the necessary
data have been obtained from CMIE database.
17
Brian K. Boyd, Strategic planning and financial performance: A meta-analysis
Review
This study compares the pre and the post-privatization financial and operating
performance of 85 companies from 28 industrialized countries that are privatized
through public share offerings between 1990 and 1996. We document significant
increases in profitability, output, operating efficiency and dividend payments and
there is a significant decrease in leverage ratios for our full sample of firms after
privatization and for most subsamples examined.
According to Rajiv and Mishra, Balance Sheet, P&L a/c and cash flow statement
contain a lot of numbers that can be used to draw some meaningful inferences,
these inferences can further be used as the inputs for planning, decision making.
The numbers contained in the financial statements carry a host of information that
can be put to use in making judgments‟ regarding financial strength and weakness
of the firm, efficiency and past policies and remedial measures or corrective action
to be taken. Financial management, Rajiv Srivastava, Anil Mishra, Oxford
university press, Pg No: 25Accounting for Management T.Vijaya Kumar McGraw
Hill Publications Pg No: 23.1
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According to Slhler, A comprehensive analysis, presenting data in meaningful
terms is a significant aid to understanding the profitability and financial strength of
a company. When properly prepared, financial evaluations can be used in
performance appraisal and to highlight
Amir (1993) was the first to use the term “value relevance” in the context of
information content of accounting figures. An accounting figure/ratio value
relevant is it has the significantly strong predicted association with the stock prices
and stock market indicators such, price-earnings (P/E) or price to book (P/B)
ratios. Misund et al. in their study on the value of relevance of accounting figures
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in the international oil and gas industry concluded that all accounting figures are
value relevant, be it cash or accrual based.
According to Ohlson(1995) depicted in his work that the value of a firm can be
expressed as a linear function of book value, earnings and other value relevant
information. Financial management theory and practice Prasanna Chandra 7th
edition 2010 TATA McGraw Hill Pg No: 69
Amir, E.Harris, T.S & Venuti, E.K (1993) “A comparison of the value
relevance of U.S.P-632 Ohlson (1995) depicted in his work that the value of the
firm can be expressed. Pg No-454
Mingyi Hung (2000) in his paper on “accounting standards and the value
relevance of financial statements: An international Analysis” concluded that the
use of accrual accounting (versus the cash accounting) negatively affects the value
relevance of financial statements in countries with weak shareholder protection.
According to Liu, Nissim and Thomas (2004), we found that multiples based on
reported earnings outperform multiples based on a variety of reported operating
cash flow measures. EPS forecasts represented substantially better summary
measures of value than did operating cash forecasts in all five countries examined,
and this relative superiority was absorbed in most of the industries. Hardly any
studies have been done in the area of investing value relevance of financial
statements based on Indian Accounting Standards. This may be probably because
it‟s just ten years that due to a number of reforms, Indian economy has divulged
into a market-oriented economy. Further, most of the accounting standards have
been developed during last six years by the ICAI. Prior to this, due concerns were
not involved in improving the quality and integrity of financial reporting
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CHAPTER: 3
THEORETICAL FRAMEWORK
21
2.1 FINANCIAL PERFORMANCE ANALYSIS
The word „Performance is derived from the word „parfourmen‟, which means „to
do‟, „to carry out‟ or „to render‟. It refers the act of performing; execution,
accomplishment, fulfillment, etc. In border sense, performance refers to the
accomplishment of a given task measured against preset standards of accuracy,
completeness, cost, and speed. In other words, it refers to the degree to which an
achievement is being or has been accomplished. In the words of Frich Kohlar “The
performance is a general term applied to a part or to all the conducts of activities of
an organization over a period of time often with reference to past or projected cost
efficiency, management responsibility or accountability or the like. Thus, not just
the presentation, but the quality of results achieved refers to the performance.
Performance is used to indicate firm‟s success, conditions, and compliance.
In short, the firm itself as well as various interested groups such as managers,
shareholders, creditors, tax authorities, and others seeks answers to the following
important questions:
2. How is the Financial Performance of the firm over a given period of time?
These questions can be answered with the help of financial analysis of a firm.
1. Material used
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2. Modus operandi
Liquidity ratios
Activity ratios
Profitability ratios
Earnings ratios
2.1.4.2 Comparative balance sheet:
The comparative balance sheet is helpful in analyzing and evaluating the financial
position of the firm over a period of years. The comparative balance sheet analysis
is the study of the trend of the same items, group of items, and computed items in
two or more balance sheet of the same business enterprise on different dates.
The changes in periodic balance sheet items reflect the conduct of a business. The
changes can be observed by comparison of the balance sheet at the beginning and
at the end of the period and these changes can help in forming an opinion about the
progress of an enterprise
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2.1.4.4 Common size balance sheet:
Financial statements when read in absolute figure are not easily understandable.
They are even misleading. Each items of asset is converted in to percentage to total
asset and each item of capital and liabilities is expressed to total liability and
capital fund. Thus the whole balance sheet is converted in to percentage form i.e.,
every individual item stated as a percentage of total 100.such converted balance
sheet is known as common size balance sheet. The percentage so calculated can be
easily compared with the corresponding percentages in some other period.
The „trend‟ signifies a tendency and as such the review and appraisal of tendency
in accounting variables are nothing but the trend analysis. Trend analysis is carried
out by calculating trend ratio. Trend analysis is significant for forecasting and
budgeting. Trend analysis discloses the change in financial and the operating data
between specific periods.
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Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals
with cash flow statements.
There are three main components associated with working capital management:
accounts receivable, accounts payable and inventory.
The efficient management of working capital is essential for the profitability and
overall financial health of any company. Working capital is the cash that
companies use to operate and conduct their businesses. The components, or
aspects, of working capital that investors and analysts assess to evaluate a company
are the key elements for a company's cash flow – money coming in, money going
out and management of inventory.
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ACCOUNTS RECEIVABLE
ACCOUNTS PAYABLE:
Accounts payable, the money that a company is obligated to pay out over
the short term, is also a key component of working capital management.
Companies seek to strike a balance between maintaining maximum cash flow by
delaying payments as long as is reasonably possible and the need to maintain
positive credit ratings and good relationships with suppliers and creditors. Ideally,
a company's average time to collect receivables is significantly shorter than its
average time to settle payables.
INVENTORY
30
How does working capital management affect corporate earnings?
A company that does not manage working capital effectively is less
profitable and could potentially face financial insolvency. Working capital is
the money used by a business to fund its daily operations. It can be looked at
as essentially the financing for the transformation of basic materials into
finishedgoods.
Companies do not all face the same situations in terms of operational cash
flow. For example, hospitals receive co-pays from patients at the time of
delivery of services and then receive the remainder some time later from
insurance companies. Timely collection of accounts receivables is of
paramount importance. Large retail companies do not face such accounts
receivable issues since customers pay for goods immediately. The issue for
these kinds of businesses is more in the area of inventory management.
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how likely it is to be profitable and how much potential it has for growth.
Adequately managing working capital is critical for the basic financial
survival of a company.
Primary Objectives
Secondary Objectives
To study all the financial statements for the past five years to identify the changes
in various items present in them.
To examine the impact of the changes in the financial statement on the financial
position and the profitability of the organisation
32
To find future trend of selected items for next 5 years
To examine the relationship that exists between sales and inventories by using Karl
Pearson‟s Correlation co-efficient.
The study, which is done at the L&T construction, aims at forecasting profitability.
Profitability analysis is a process of understanding the financial strength and
weakness between the various items of balance sheet and profit and loss account,
profitability analysis is therefore very important and crucial aspect of every
company has to undertake as it is starting for making plans and has to be done
using any sophisticated forecasting and procedures. The above study will help the
organization to identify the adverse condition and would help in taking necessary
steps.
Forecasting profitability is one of the tools for controlling costs and maximizing
profits. It is useful management tool for comparing the performance with pre
planned performance with a view to attain equilibrium between ends and meanings
outputs and efforts. It corrects the deviation from pre-planned path through the
media observation, research planning, control and decision making and thus helps
in performance of future activities in an orderly way. It uncovers uneconomic in
operations, weaknesses in organization structure and minimizes wasteful spending.
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Prediction helps the firm to control expenses and attains its objective in a profitable
manner
METHODOLOGY
The research method used is analytical research. In this type of research the
researcher uses the facts and information already available and analyses them to
make a critical of the material.
Research Design
For the purpose of this study only secondary data have been used to a large extent.
Source of Data
The main source of data of the study was the annual reports of L&T constructions,
internet sources, books and articles.
Tools
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CHAPTER: 4
INTERPRETATION
35
COMPARTIVE STATEMENT ANALYSIS OF L& T FOR THE YR 2011-12
36
COMPARTIVE B/S STATEMENT OF L&T FOR YR 2012-13
CY 2013 BY2012 ( INC./ INC./ DEC
PARTICULAR
(in crore ) in crore) DEC. ( RS ( %)
NON CURRENT ASSETS
FIXED ASSET
tangible assets 20816.2 14113.7 6702.4 47.5
intangible assets 7453.3 5287.0 2166.3 41.0
captial wip 4061.1 7878.8 -3817.7 -48.5
goodwill on consolidation 2119.8 0.0 2119.8 0.0
intangible assets under development 7289.4 7033.9 255.5 3.6
NON CURRENT INVESTMENTS 1224.2 1564.9 -340.7 -21.8
LONG TERM LOANS AND ADVANCES 2258.6 1900.8 357.9 18.8
CASH AND BANK BALANCES 65.1 143.6 -78.5 -54.7
OTHER NON CURRENT ASSETS 148.2 201.7 -53.5 -26.5
DEFERRED TAX ASSET ( NET) 194.2 129.0 65.2 50.5
LONG TERM LOANS AND ADVANCES TOWARDS FA 21840.7 16605.9 5234.8 31.5
CURRENT ASSETS
CURRENT INVESTMENT 7543.3 7224.6 318.7 4.4
INVENTORIES 5169.5 4229.9 939.6 22.2
TRADE RECEIVABLES 23011.3 20405.4 2606.0 12.8
CASH AND BANK BALANCES 3566.1 3378.6 187.6 5.6
SHORT TERM LOANS AND ADV 6171.5 5591.5 580.1 10.4
SHORT TERM LOANS AND ADV TOWARDS FA 10160.1 8167.3 1992.8 24.4
OTHER CURRENT ASSETS 20029.7 15137.9 4891.8 32.3
TOTAL 143122.2 118994.3 24127.9 20.3
EQUITY AND LIABILITES
NON - CURRENT LIABILITES
LONG TERM BORROWINGS 47392.1 36155.6 11236.5 31.1
DEFERRED TAX LIABLITES( NET) 377.9 210.9 167.0 79.2
OTHER LONG TREM LIAB 1160.9 1059.6 101.3 9.6
DEFFERED PAYMENT LIAB FOR ACQUISTION OF F.A 3481.5 3953.6 -472.1 -11.9
LONG TERM PROVISIONS 346.7 312.2 34.5 11.0
CURRENT LIABILITES
SHORT TERM BORROWINGS 7965.8 5778.1 2187.7 37.9
CURRENT MATURITIES OF LTB 7313.7 5216.4 2097.4 40.2
TRADE PAYABLES 18053.7 16716.5 1337.1 8.0
SHORT TERM PROVISONS 2539.4 2343.1 196.4 8.4
CURRENT MATURITIES OF DEFERRED PAY LIAB FOR ACQUIS OF F.A 472.5 464.1 8.4 1.8
OTHER CURRENT LIABILITES 17505.6 15644.2 1861.5 11.9
SHARE HOLDERS FUNDS
SHARE CAPTIAL 123.1 122.5 0.6 0.5
RESERVE AND CAPITAL 33736.6 29264.3 4472.3 15.3
MINORITY INTEREST 2652.9 1753.5 899.4 51.3
TOTAL EQUITY AND LIABILITES 143122.2 118994.3 24127.9 20.3
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COMPARTIVE B/S ANALYSIS OF L & T FOR THE YEAR 2013 - 2014
CY 2014 ( rs BY 2013 (
INC/DEC (RS) INC/DEC (%)
PARTICULAR in crore ) rs in crore)
NON CURRENT ASSETS
FIXED ASSET
intangible assets 9391.4 7453.3 1938.1 26.0
captial wip 4262.6 4061.1 201.5 5.0
goodwill on consolidation 2136.2 2119.8 16.4 0.8
intangible assets under development 10018.4 7289.4 2729.0 37.4
NON CURRENT INVESTMENTS 1432.8 1224.2 208.6 17.0
LONG TERM LOANS AND ADVANCES 2793.8 2258.6 535.2 23.7
CASH AND BANK BALANCES 38.7 65.1 -26.4 -40.5
OTHER NON CURRENT ASSETS 184.9 148.2 36.8 24.8
DEFERRED TAX ASSET ( NET) 280.4 194.2 86.2 44.4
LONG TERM LOANS AND ADVANCES TOWARDS FA 32598.9 21840.7 10758.1 49.3
CURRENT ASSETS
CURRENT INVESTMENT 6676.2 7543.3 -867.1 -11.5
INVENTORIES 5527.5 5169.5 358.0 6.9
CASH AND BANK BALANCES 4096.6 3566.1 530.4 14.9
SHORT TERM LOANS AND ADV 7327.2 6171.5 1155.7 18.7
SHORT TERM LOANS AND ADV TOWARDS FA 10835.6 10160.1 675.5 6.6
OTHER CURRENT ASSETS 25269.7 20029.7 5240.0 26.2
TOTAL 170022.7 143122.2 26900.5 18.8
EQUITY AND LIABILITES
NON - CURRENT LIABILITES
LONG TERM BORROWINGS 55447.3 47392.1 8055.1 17.0
38
Analysis of changes in comparative balance sheet of Larsen &Toubro from
2011-12 to 2013-14 (in %)
Figure 1
35
30.14
30 27.67
26.54
Percetage
24.35
25 22.98 21.97
19.77
20 17.3 17.95
16.65
15.22 14.44
15 13.83
11.37
10
0
Total share holder's Total non current Total current Total non current Total current assets
fund liabilities liabilities assets
INTERPRETATION :
By analyzing the comparative balance sheet from the FY 2011-12 to 2013-14, we can see the
following results: The shareholders fund is increasing in at a decreasing rate of 5.93% which is
due to the issue of bonus shares. The total non-current liabilities have been increasing at a
decreasing rate of 23.99%.The current liabilities increased by 7.9%. The non-current assets
increased at a decreasing rate of 5.78%. The total current asset increased at a decreasing rate of
8.14%. This shows there is a considerable increase in the current assets with respect to current
liabilities. In this situation the organization can easily manage the requirement for working
capital to meet its day to day expenses.
39
COMMON SIZE BALANCE SHEET OF LARSEN AND TOUBRO
Common Sized Balance Sheet Of L & T (2012-13 To 2013-14)
Table 1
Interpretation
The above table reveals the common size balance sheet of Larsen and Toubro Constructions for
the year 2013-2014. The company net current assets decreased from 52.86% to 50.65% followed
by 2013-2014. The Company‟s Fixed Asset shows a slight amount of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it can be concluded that
the company‟s financial position is satisfied.
40
COMMON SIZED BALANCE SHEET OF L & T (2011-12 to 2012-13)
Table 2
Interpretation
The above table reveals the common size balance sheet of Larsen and Toubro Constructions for
the year 2012-2013. The company net current assets decreased from 53.90% to 52.86% followed
by 2012-2013. The Company‟s Fixed Asset did not show much of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it can be concluded that
the company‟s financial position is satisfied.
41
COMMON SIZED BALANCE SHEET OF L & T (2010-11 to 2011-12)
Table 3
Interpretation
The above table reveals the common size balance sheet of Larsen and Toubro Constructions for
the year 2011-2012. The company net current assets decreased from 55.50% to 53.90% followed
by 2011-2012. The Company‟s Fixed Asset shows a slight amount of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it can be concluded that
the company‟s financial position is satisfied.
42
Analysis of Equities &Liabilities in the Common Size Balance Sheet of L&T during the FY
2011-12 to 2013-14
Figure 1
40.68
40.44
38.79
37.63
36.86
35.51
35.04
31.79
26.44
PERCENTAGE
23.66
24.7
22.18
1.87
1.85
1.47
1.08
Total share holder's minority intrest Total non current Total current
fund liabilities liabilities
Equities & Liabilities
43
Figure 2
40.00
30.00
20.00
10.00
0.00
Total non current assets Total current assets
ASSETS
Changes in 2011 (in %) Changes in 2012 (in %)
Changes in 2013 (in %) Changes in 2014 (in %)
44
STATEMENT OF WORKING CAPITAL (2013-14)
Particulars 2013-14 2012-13 Increase Decrease
in crores in crores in crores in crores
Current assets
current investments 6676.17 7543.31 867.14
inventories 5527.46 5169.46 358
trade receivables 26384.55 23011.32 3373.23
cash and bank balances 4096.57 3566.14 530.43
short term loans and advances 7327.16 6171.5 1155.66
short term loans and advances 10835.6 10160.06 675.54
towards financing activities
other current assets 25269.73 20029.7 5240.03
Total current assets 86117.24 75651.49
Current liabilities
short term borrowings 13678.67 7965.76 5712.91
current maturities of deferred 515.13 472.53 42.6
payment liabilities for acquisition
of fixed asset
current maturities of long term 11026.97 7313.73 3713.24
borrowings
trade payables 20870.58 18053.65 2816.93
other current liabilities 19731.84 17505.6 2226.24
short term provisions 2930.78 2539.42 391.36
Total current liabilities 68753.97 53850.69
Working Capital ( CA-CL) 17363.27 21800.8
Decrease in WC 4437.53 4437.53
Net WC 21800.8 21800.8 15770.42 15770.42
45
Figure 1
100000
86117.24 2012-13 2013-14
90000
80000 75651.49
68753.97
70000
Amounts in crores
60000 53850.69
50000
40000
30000
21800.8
17363.27
20000
10000
0
Total Current Asset Total Current liability Total Working capital
INTERPRETATION:
The current asset and the current liability shows an increasing trend during the FY
2012-13 to 2013-14. The total current asset increased by 13.83%. The total current
liabilities increased by 27.67%. It shows a decrease in the working capital by
20.35% in this FY.
46
Table 1
47
Figure 2
70000
64135.03 2011--12 2012-13
60000
53850.69
Amounts in crores
50000 46162.28
40000
30000
21800.8
20000 17972.75
10000
0
Total Current Asset Total Current liability Total Working capital
INTERPRETATION:
The current asset and the current liability shows an increasing trend during the FY 2012-13 to
2013-14. The total current asset increased by 17.95 %. The total current liabilities increased by
16.65 %. It shows an increase in the working capital by 21.29% in this FY.
48
Table 3
49
Figure 3
70000 64135.03
2010--11 2011-12
60000
52580.73
46162.28
Amounts in crores
50000
38540.77
40000
30000
20000 17972.75
14039.96
10000
0
Total Current Asset Total Current liability Total Working capital
INTERPRETATION:
The current asset and the current liability shows an increasing trend during the FY 2012-13 to
2013-14. The total current asset increased by 21.97 %. The total current liabilities increased by
19.77 %. It shows an increase in the working capital by 28.01% in this FY.
50
LIQUIDITY RATIO
CURRENT RATIO
1.45
1.41
1.4 1.38
1.36
1.35
RATIO
1.3
1.25
1.25
1.2
1.15
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 1.36 to 1.38. It again
increased to 1.41 in the year 2013. In the year 2014 it decreased to 1.25. The
management should take remedial measures to improve the present position.
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2. QUICK RATIO in Crores
QUICK RATIO
1.35
1.31
1.28 1.29
1.3
1.25
RATIO
1.2 1.17
1.15
1.1
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 1.28 to 1.30. It again
increased to 1.31 in the year 2013. In the year 2014 it decreased to 1.17. The
management should take remedial measures to improve the present position
52
3. ABOSULTE LIQUID RATIO in Crores
Absolute Liquid
Year Assets Current Liabilities Absolute Liquid Ratio
LIQUID RATIO
0.3 0.27
0.24
0.25
0.2
0.2
0.15
RATIO
0.15
0.1
0.05
0
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 0.15 to 0.24. It again
decreased to 0.21 in the year 2013. In the year 2014 it further decreased to 0.15.
The management should take remedial measures to improve the present position
53
LEVERAGE RATIOS
Total Tangible
Year Shareholders' Funds Assets Proprietary Ratio
PROPRIETORY RATIO
0.66 0.65
0.64
0.62
0.6 0.59
RATIO
0.58
0.58 0.57
0.56
0.54
0.52
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it decreased from 0.65 to 0.59. It again
decreased to 0.57 in the year 2013. In the year 2014 it increased to 0.58. The
management should take remedial measures to improve the present position.
54
ACTIVITY RATIOS
1.5
0.5
0
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it decreased from 2.22 to 2.15. It again
decreased to 1.96 in the year 2013. In the year 2014 it increased to 2.8.The
management should take remedial measures to improve the present position.
55
6. FIXED ASSETS TURNOVER RATIO in Crores
1.06 1.05
1.04
1.04
1.02
1
0.98
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 1.11 to 1.13. It again
decreased to 1.04 in the year 2013. In the year 2014 it increased to 1.05. The
management should take remedial measures to improve the present position.
56
7. CAPITAL TURNOVER RATIO in Crores
1.26
1.24
1.24
1.22
1.2
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 1.25 to 1.32. It again
decreased to 1.28 in the year 2013. In the year 2014 it increased to 1.29. The
management should take remedial measures to improve the present position.
57
8. CURRENT ASSETS TO FIXED ASSETS RATIO in Crores
1.83
1.82 1.81
1.81
1.8
1.79
1.78
2011 2012 2013 2014
YEARS
Interpretation
Current Assets are increased due to a increase in debtors and the next fixed assets
of the company are raised due to a rise in investment. It resulted in the rise in ratio
compared to the previous year.
58
PROFITABILITY RATIOS
Year Net Profit After Tax Net Sales Net Profit Ratio
5
4
3
2
1
0
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is decreasing trend during the
study period. In the year 2011-2012 it decreased from 8.36 to 7.29. It again
decreased to 7.05 in the year 2013. In the year 2014 it further decreased to 5.73.
The management should take immediate remedial measures to improve the present
position which is alarming.
59
10. OPERATING PROFIT in Crores
0.335
0.33
0.33
RATIO
0.325
0.32 0.32
0.32
0.315
0.31
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is constant trend during the
study period. In the year 2011-2012 it decreased from 0.33 to 0.321. It again
increased to 0.324 in the year 2013. In the year 2014 it increased to 0.34. The
management should take remedial measures to improve the present position.
60
11. RETURN ON TOTAL ASSETS RATIO in Crores
2.5
2
1.5
1
0.5
0
2011 2012 2013 2014
YEARS
Interpretation
From the above graph it can be observed that there is decreasing trend during the
study period. In the year 2011-2012 it decreased from4.7 to 3.94. It again
decreased to 3.67 in the year 2013. In the year 2014 it increased to 2.87. The
management should take remedial measures to improve the present position.
61
12. RESERVES & SURPLUS TO CAPITAL RATIO in Crores
0.9954
0.9952
0.995 0.995 0.995
0.995
0.9948
0.9946
0.9944
2011 2012 2013 2014
YEAR
Interpretation
From the above graph it can be observed that there is constant trend during the
study period. In the year 2011-2012 it remained constant in 0995. It again
increased to 0.996 in the year 2013. In the year 2014 it was 0.995 The present
position is satisfying.
62
OVERALL PROFITABILITY RATIOS
Number of Equity
Year Net Profit Shares Earnings Per Share
Interpretation
From the above graph it can be observed that there is fluctuating trend during the
study period. In the year 2011-2012 it increased from 73.54 to 76.76. It again
decreased to 57.03 in the year 2013. In the year 2014 it further decreased to 52.59.
The management should take remedial measures to improve the present position.
63
14. PRICE EARNINGS (P/E) RATIO in Crores
0.5
0.4
0.3
0.2
0.1
0
2011 2012 2013 2014
YEAR
Interpretation
From the above graph it can be observed that there is increasing trend during the
study period. In the year 2011-2012 it increased from 0.56 to 0.63. It again
increased to 0.64 in the year 2013. In the year 2014 it further increased to 0.77.
This shows a greater amount of satisfaction in the market.
64
15. RETURN ON INVESTMENT in Crores
Yea
r Net Profit Shareholders' Funds Return on Investment
RETURN ON INVESTMENT
20
17.78
18
15.9 15.51
16
14 12.93
12
Ratio
10
8
6
4
2
0
2011 2012 2013 2014
YEAR
Interpretation
From the above graph it can be observed that there is decreasing trend during the
study period. In the year 2011-2012 it decreased from 17.78 to 15.96. It again
decreased to 15.51 in the year 2013. In the year 2014 it further decreased to12.93.
The management should take remedial measures to improve the present position.
65
TREND ANALYSIS-1
Yc =A+Bx
Where A=∑y/n
B=∑xy /∑x2
A= ∑y/n
= 320540.93
A = 64108.19
B= ∑xy/∑x2
= 111192.36
10
B= 11119.24
66
Yc = A+Bx
= 64108.19+ 11119.24(-2)
= 41869.706
Yc =A+Bx
= 64108.19+ 11119.24(-1)
= 52988.95
Yc =A+Bx
= 64108.19+0
= 64108.19
Yc =A+Bx
= 64108.19+11119.24 (1)
= 75227.43
Yc =A+Bx
= 64108.19+11119.24 (2)
= 86346.67
67
Trend Analysis of Current Assets from 2010-2014
70000
60000
Trend Values
50000
40000
Trend
30000
Deviation
20000
10000
0
2010 2011 2012 2013
Years
Projected Trend Value of current assets for the forthcoming years (2015-2019)
Interpretation
The trend analysis for the above years shows a very good amount increase. This is mainly due to the
reason that these data‟s have been arrived in comparison with the last 5 years current assets value. There
was a phenomenal increase in growth in term of assets during 2014 and this is one of the major reasons
that the projections are showing a good increase. In reality if we assume that the same increase in trend
continues compared to 2014, the ratio for the above five years will be still higher.
68
Chart Showing Trend Analysis of Current Assets
In Crores
2018 130823.63
2017 119704.39
Years
2015 97465.91
2014 86346.67
69
TREND ANALYSIS-2
Yc =A+Bx
Where A=∑y/n
B=∑xy /∑x2
A= ∑y/n
= 225696.14
A = 45139.23
B= ∑xy/∑x2
= 93755.36
10
B= 9375.54
70
Yc = A+Bx
= 45139.23+9375.54(-2)
= 26388.15
Yc =A+Bx
= 45139.23+ 9375.54(-1)
= 35763.69
Yc =A+Bx
= 45139.23+ 0
= 45139.23
Yc =A+Bx
=45139.23+9375.54 (1)
= 54514.77
Yc =A+Bx
= 45139.23+ 9375.54(2)
= 63889.23
71
Trend Analysis of Current Liabilities from 2010-2014 in Crores
70000 64135.03
63889.23
60000 52580.73
46162.28 54514.77
50000
45139.23
38540.77
40000
Values
35763.69
24277.33 Trend
30000
26388.15 Deviation
20000
10000
0
2010 2011 2012 2013 2014
Years
Interpretation:
The trend analysis for the above years shows a marginal increase. This is mainly due to the reason that
these data‟s have been arrived in comparison with the last 5 years current liabilities value. There was no
phenomenal increase in growth in term of liabilities during 2014 and this is one of the major reasons that
the projections are showing a marginal increase. In reality if we assume that the same increase in trend
continues compared to 2014, the ratio for the above five years will be still higher.
72
Chart Showing Trend Analysis of Current liabilities(2015-2019)
In Crores
2018 101391.39
2017 92015.85
Years
2016 82640.31
Future Trend
2015 73264.77
2014 63889.23
73
Consolidated Cash Flow Statement FY 2011-2014
In Crores
Net Inc/Dec In Cash And Cash Equivalent 336.97 -409.66 174.91 298.48
Cash And Cash Equivalent At The Beginning Of the Year 1457.15 1906.02 1730.35 1431.87
Cash And Cash Equivalent At The End Of the Year 1794.12 1496.36 1905.26 1730.35
74
In Crores
3833.3
1906.02
1905.26
1794.12
1730.35
1730.35
1496.36
1472.24
1457.15
1431.87
1081.58
1047.24
1015.61
656.73
336.97
504.5
298.48
174.91
Mar'14 Mar'13 Mar'12 Mar'11
-409.66
-1124.84
-1214.32
-1922.28
-2416.79
-3316.23
75
CHAPTER 5
FINDINGS, SUGGESTIONS &
CONCLUSION
76
FINDINGS OF THE STUDY
The above table reveals the common size balance sheet of Larsen and
Toubro Constructions for the year 2013-2014. The company net current
assets decreased from 52.86% to 50.65% followed by 2013-2014. The
Company‟s Fixed Asset shows a slight amount of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it
can be concluded that the company‟s financial position is satisfied.
The above table reveals the common size balance sheet of Larsen and
Toubro Constructions for the year 2012-2013. The company net current
assets decreased from 53.90% to 52.86% followed by 2012-2013. The
Company‟s Fixed Asset did not show much of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it
can be concluded that the company‟s financial position is satisfied.
The above table reveals the common size balance sheet of Larsen and
Toubro Constructions for the year 2011-2012. The company net current
77
assets decreased from 55.50% to 53.90% followed by 2011-2012. The
Company‟s Fixed Asset shows a slight amount of deviation. The company
capital, surplus and reserves also didn‟t show much of deviation. Finally it
can be concluded that the company‟s financial position is satisfied.
The current asset and the current liability show an increasing trend during
the FY 2012-13 to 2013-14. The total current asset increased by 13.83%.
The total current liabilities increased by 27.67%. It shows a decrease in the
working capital by 20.35% in this FY.
The current asset and the current liability shows an increasing trend during
the FY 2012-13 to 2013-14. The total current asset increased by 17.95 %.
The total current liabilities increased by 16.65 %. It shows a increase in the
working capital by 21.29% in this FY.
The current asset and the current liability shows an increasing trend during
the FY 2012-13 to 2013-14. The total current asset increased by 21.97 %.
The total current liabilities increased by 19.77 %. It shows a increase in the
working capital by 28.01% in this FY.
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 1.36 to
1.39. It again increased to 1.41 in the year 2013. In the year 2014 it
decreased to 1.25. The management should take remedial measures to
improve the present position.
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 1.28 to
1.30. It again increased to 1.31 in the year 2013. In the year 2014 it
78
decreased to 1.17. The management should take remedial measures to
improve the present position
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 0.15 to
0.24. It again decreased to 0.21 in the year 2013. In the year 2014 it further
decreased to 0.15. The management should take remedial measures to
improve the present position
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 1.11 to
1.13. It again decreased to 1.04 in the year 2013. In the year 2014 it
increased to 1.05. The management should take remedial measures to
improve the present position.
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it decreased from 2.22 to
2.16. It again decreased to 1.97 in the year 2013. In the year 2014 it
increased to 2.81.The management should take remedial measures to
improve the present position.
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 1.11 to
1.13. It again decreased to 1.04 in the year 2013. In the year 2014 it
increased to 1.05. The management should take remedial measures to
improve the present position.
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 1.25 to
1.32. It again decreased to 1.28 in the year 2013. In the year 2014 it
79
increased to 1.29. The management should take remedial measures to
improve the present position
Current Assets are increased due to a increase in debtors and the next fixed
assets of the company are raised due to a rise in investment. It resulted in the
rise in ratio compared to the previous year
From the above graph it can be observed that there is decreasing trend
during the study period. In the year 2011-2012 it decreased from 8.36 to
7.29 . It again decreased to 7.05 in the year 2013. In the year 2014 it further
decreased to 5.73. The management should take immediate remedial
measures to improve the present position which is alarming.
From the above graph it can be observed that there is constant trend during
the study period. In the year 2011-2012 it decreased from 0.33 to 0.321. It
again increased to 0.324 in the year 2013. In the year 2014 it increased to
0.34. The management should take remedial measures to improve the
present position.
From the above graph it can be observed that there is decreasing trend
during the study period. In the year 2011-2012 it decreased from4.7 to 3.94.
It again decreased to 3.67 in the year 2013. In the year 2014 it increased to
2.87. The management should take remedial measures to improve the
present position.
From the above graph it can be observed that there is constant trend during
the study period. In the year 2011-2012 it remained constant in 0995. It
again increased to 0.996 in the year 2013. In the year 2014 it was 0.995 The
present position is satisfying.
80
From the above graph it can be observed that there is fluctuating trend
during the study period. In the year 2011-2012 it increased from 73.54 to
76.76. It again decreased to 57.03 in the year 2013. In the year 2014 it
further decreased to 52.59. The management should take remedial measures
to improve the present position.
From the above graph it can be observed that there is increasing trend during
the study period. In the year 2011-2012 it increased from 0.56 to 0.63. It
again increased to 0.64 in the year 2013. In the year 2014 it further increased
to 0.77. This shows a greater amount of satisfaction in the market.
From the above graph it can be observed that there is decreasing trend
during the study period. In the year 2011-2012 it decreased from 17.78 to
15.96. It again decreased to 15.51 in the year 2013. In the year 2014 it
further decreased to12.93. The management should take remedial measures
to improve the present position.
The trend analysis for the above years shows a very good amount increase.
This is mainly due to the reason that these data‟s have been arrived in
comparison with the last 5 years current assets value. There was a
phenomenal increase in growth in term of assets during 2014 and this is one
of the major reasons that the projections are showing a good increase. In
reality if we assume that the same increase in trend continues compared to
2014, the ratio for the above five years will be still higher.
The trend analysis for the above years shows a marginal increase. This is
mainly due to the reason that these data‟s have been arrived in comparison
with the last 5 years current liabilities value. There was no phenomenal
increase in growth in term of liabilities during 2014 and this is one of the
81
major reasons that the projections are showing a marginal increase. In reality
if we assume that the same increase in trend continues compared to 2014,
the ratio for the above five years will be still higher.
82
Suggestions:
Company‟s Profits are huge in the current year, it‟s better to declare
dividend to shareholders.
The Company is utilizing its fixed assets, which majorly help in the growth
of the organization. The Company should maintain that perfectly.
The company‟s Investments are raised from the inception, it gives the other
income i.e., interest on investments.
Steps have to be taken to increase the current assets position of the firm so as
to improve the liquidity position of the company.
Steps can be taken to reduce the current liability of the firm so as to have a
stable financial position.
Steps can be taken to increase the net profit so as to increase the overall
financial performance.
83
Conclusion:
It‟s better for the organization to diversify the funds to different sectors in
the present market scenario.
The Assets were increased but the working capital is decreased which says
that the firm is not able to meet its current liabilities.
The calculation of Current and Liquid Ratio will enable the creditors to
access the current financial position of the concern in relation to their debts.
It is not only helpful to analyze the present financial position it also enables
to study the future prospects and the expansion plans of the concern.
84
Bibliography
www.larsentoubro.com
www.lntecc.com
http://www.larsentoubro.com/media/29758/fact-sheet-sep2014.pdf
https://ebstudies.wordpress.com/2012/11/06/financial-performance-analysis/
http://shodhganga.inflibnet.ac.in/bitstream/10603/705/11/12_chapter3.pdf
https://ebstudies.wordpress.com/2012/11/06/financial-performance-analysis/
85