Larsen & Toubro Limited: history, ownership, mission, how it works & makes money

A Brief History of Larsen & Toubro Limited

Larsen & Toubro Limited (L&T) was established in 1938 by two Danish engineers, Henning Holck-Larsen and Søren Kristian Toubro, in Mumbai, India. Initially, the company focused on the manufacturing of equipment for the defense and process industries.

By the 1940s, L&T expanded its scope to construction, marking its entry into infrastructure development. In 1950, the company constructed the first cement plant in India, paving the way for further growth in the sector.

In the early 1960s, L&T ventured into various sectors including hydrocarbon, power, and heavy engineering. Notably, in 1961, the company won a contract for the construction of India's first nuclear power plant at Tarapur, showcasing its engineering capability.

The 1970s marked significant growth for L&T as it diversified into design and manufacturing of various industrial products, including machine tools and fabrication of structures. By the late 1980s, it had established itself as a major player in engineering and construction.

In 2001, L&T established a joint venture with the multinational corporation, KBR, to enter the oil and gas sector, further solidifying its market presence. The company then went public in 2004, with an initial public offering (IPO) raising approximately ₹1,500 crores.

Fast forward to the 2010s, L&T continued to expand its operations, acquiring several companies to enhance its portfolio. In 2010, it acquired the entire stake in the arm of the company focused on software solutions for the engineering sector.

By March 2023, L&T's order book was reported at approximately ₹3.5 trillion, with significant contributions from the infrastructure segment, which encompasses transportation, power, and water projects.

For the fiscal year ended March 2023, L&T reported consolidated revenues of approximately ₹1.60 trillion, representing a year-on-year growth of about 15%. The net profit for the same period reached approximately ₹12,500 crores, which is an increase of around 18% compared to the previous year.

The company has also made strides in sustainability, setting a target to achieve net zero emissions by 2035, aligning with global sustainability initiatives.

L&T continues to be one of India's most respected and diversified engineering and construction conglomerates, committed to delivering high-quality infrastructure and innovative solutions across various sectors.

A Who Owns Larsen & Toubro Limited

Larsen & Toubro Limited (L&T) is one of India's leading multinational conglomerates, primarily focusing on engineering, construction, manufacturing, and technology. As of the latest available data, ownership of L&T is divided among various institutional and individual shareholders.

The promoter group includes several entities, such as the L&T Family Trust. This influential group holds the majority stake, reinforcing their control over strategic decisions within the company.

FIIs have shown a consistent interest in L&T, largely due to its robust growth trajectory and significant presence in infrastructure and technology sectors. Recent reports indicated that L&T received investments from notable FIIs, including T. Rowe Price and Vanguard Group.

As of September 2023, L&T's total market capitalization stood at approximately ₹2.81 trillion (around $34 billion), reflecting its strong position in the market and the confidence of its shareholders.

The company's stock performance has also been noteworthy, with a closing price of approximately ₹1,691 per share, representing a year-to-date increase of about 25%. This rise can be attributed to several successful project completions and a favorable economic outlook in India.

With a diverse portfolio including major projects in sectors like transportation, water and waste management, and energy, L&T's strong ownership structure provides a solid foundation for its ongoing operations and future expansions.

Larsen & Toubro Limited Mission Statement

Larsen & Toubro Limited (L&T), established in 1938, focuses on technology-driven engineering and construction projects, manufacturing, and financial services. The company's mission statement emphasizes its commitment to delivering high-quality products and services, fostering innovation, and ensuring customer satisfaction while adhering to sustainable practices.

The mission statement can be summarized as follows:

• Provide world-class engineering and technology solutions.
• Deliver superior value to customers through innovative and reliable services.
• Contribute to the economic development of the communities in which it operates.
• Maintain a culture of performance and accountability.
• Ensure sustainable practices across all business operations.

In 2023, L&T reported a consolidated revenue of ₹2.02 trillion, reflecting a year-on-year growth of 15%.

Below is a table detailing L&T's mission-driven priorities and results based on their recent financial performance:

The company's investment in research and development has significantly driven innovation. In fiscal 2023, L&T allocated approximately ₹10 billion to R&D efforts, focusing on sustainable technologies and advanced engineering practices. This aligns with their mission to deliver high-quality and innovative solutions.

Moreover, L&T's commitment to sustainability is evident in its various initiatives aimed at minimizing environmental impact. The company has set ambitious targets to reduce greenhouse gas emissions by 50% by 2030 compared to its 2020 levels.

In summary, L&T's mission statement drives its operations, reflected in robust financial performance and strategic growth initiatives. The company continues to be a prominent player in various sectors, including infrastructure, defense, and renewable energy, showcasing its adaptability and forward-thinking approach.

How Larsen & Toubro Limited Works

Larsen & Toubro Limited (L&T) is an Indian multinational conglomerate engaged in technology, engineering, construction, manufacturing, and financial services. The company operates across various sectors, including infrastructure, hydrocarbon, defense, and power. As of March 2023, L&T reported consolidated revenues of approximately ₹1,84,000 crore (around $24.6 billion), showcasing significant growth from previous fiscal years.

The company is structured into several business segments:

• Infrastructure
• Hydrocarbon
• Power
• Heavy Engineering
• Defense Engineering
• Information Technology

In the infrastructure segment, L&T has played a substantial role in India's development, with projects across roads, railways, and urban infrastructure. For FY 2023, the infrastructure segment alone contributed about 55% of the company's total revenue, amounting to approximately ₹1,01,200 crore.

The hydrocarbon division focuses on providing integrated solutions in the oil and gas sector. In FY 2023, this segment recorded revenues of approximately ₹40,000 crore, driven by ongoing projects and increased crude oil prices.

The power segment is another critical area, primarily dealing with power generation and transmission. L&T's power business has seen a revenue of around ₹20,000 crore in FY 2023, supported by significant investments in renewable energy projects.

L&T's operational strategy focuses on sustainable growth through innovation and digital transformation. The company has invested significantly in technology to optimize project delivery and enhance operational efficiency. In FY 2023, L&T allocated about ₹1,500 crore for research and development, particularly in areas like smart construction and IoT applications in infrastructure.

Additionally, L&T's financial health is reflected in its balance sheet, with a total debt of approximately ₹97,000 crore and a debt-to-equity ratio of 1.1 as of the fiscal year-end. This indicates a managed leverage approach, allowing the company to undertake large-scale projects while maintaining financial stability.

The company's stock performance has shown resilience, with a market capitalization exceeding ₹2,44,000 crore as of September 2023. Over the past year, L&T’s shares have gained approximately 30%, outperforming several benchmark indices.

L&T also emphasizes corporate social responsibility (CSR), investing around ₹500 crore annually in community development, education, and healthcare initiatives, reinforcing its commitment to sustainable development.

Through a combination of diversification, innovation, and financial prudence, Larsen & Toubro Limited positions itself as a leading player in both domestic and global markets, catering to the growing demands across multiple sectors. The company's focus on delivering large-scale projects while maintaining profitability continues to foster its growth trajectory.

How Larsen & Toubro Limited Makes Money

Larsen & Toubro Limited (L&T) generates revenue through a diversified range of segments, primarily including Engineering & Construction, Manufacturing, and Services. Each segment contributes significantly to the overall financial performance of the company.

Engineering & Construction

The Engineering & Construction (E&C) segment is the backbone of L&T's business model, accounting for approximately 70% of the company's total revenue. For the financial year 2022-2023, this segment reported revenue of around ₹1.22 trillion, supported by several large infrastructure projects across sectors such as hydrocarbons, power, and urban development.

Manufacturing

L&T's manufacturing operations encompass various products, including heavy machinery, electrical equipment, and components for defense and aerospace. The manufacturing segment contributed about 15% to the overall revenue, generating approximately ₹1.24 trillion in FY 2022-2023. Notably, the company has also seen growth in its renewable energy product line.

Services

Services such as information technology (IT), financial services, and project management also play a vital role in L&T's revenue generation. In FY 2022-2023, this segment accounted for about 15% of the total revenue, with earnings reaching approximately ₹400 billion.

Key Financial Metrics

Project Pipeline and Growth Potential

L&T's robust order book reflects a strong project pipeline, which is crucial for future revenue streams. As of March 31, 2023, the company recorded an order inflow of approximately ₹1.75 trillion. This demonstrates the company's capability to secure large contracts, which is essential for sustainable growth.

Geographic Diversification

L&T has strategically diversified its operations beyond India, with a presence in over 30 countries. The international business accounted for approximately 30% of its total revenue in FY 2022-2023, emphasizing the significance of global markets in L&T's financial strategy.

Innovation and Technology Adoption

Investment in technology plays a crucial role in enhancing operational efficiency and product offerings. L&T has allocated around ₹25 billion annually towards research and development, focusing on areas such as smart infrastructure, digital solutions, and automation.

Conclusion

The multifaceted approach of Larsen & Toubro Limited—including its substantial presence in the engineering and construction sectors, diversified manufacturing portfolio, and expansion into global markets—continues to drive its revenue growth. With a solid order book and ongoing investment in innovation, L&T is well-positioned to capitalize on future opportunities.