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Submitted by,

SHREEVISHNUKUMAR.M,
17382050,
Department of international business,
Pondicherry university.
INTRODUCTION -
 Larsen and Toubro (L&T) is a technology, engineering, power, construction and
manufacturing company.
 It is one of the largest and most respected companies in India’s private sector.
 As on 31st March 2013, the company (excluding subsidiaries) had 54,062
permanent employees, out of which 2,635 were women (4.87%) and 74 were
employees with disabilities (0.14%).
 Larsen and Toubro has a revenue of US$18 billion as of 2017.
 The subsidiaries of L&T are as follows,
 L&T Technology services,
 L&T Infotech,
 L&T Mutual fund,
 L&T Infrastructure Finance Company,
 L&T Finance Holdings and
 L&T MHPS.
PROBLEM STATEMENT-
This study is made to find is there will be any financial problem on selling up
L&T Electrical and Automation, which is one of the major L&T’s subsidiaries.

OBJECTIVES OF THE STUDY -


 To understand the performance of L&T Constructions using ratio analysis
 To access the sale of Electrical & Automation on L&T (Standalone)
 To offer suggestions from the study to L&T
METHODOLOGY-
 Type of data – Secondary data.
 Period of Internship – 47 days (08/05/2018 to 23/06/2018).
 Type of Test Performed – One Sample t-test, Independent Sample t-test.
 Data collected from L&T ECC annual report between 2010 and 2017.
 Software used – Excel, IBM SPSS Statistics 20.
 Tools used for analysis:
 Current Ratio,
 Quick Ratio,
 Cash Position Ratio,
 Proprietary Ratio,
 Long Term Debt to Equity Ratio and
 Fixed Asset Ratio.
Ratio’s of L&T Standalone-

YEAR CURRENT QUICK CASH PROPRIETA LONG FIXED


RATIO RATIO POSITION RY RATIO TERM DEBT ASSET
RATIO EQUITY RATIO
RATIO
2010-11 1.33 1.28 0.49 0.38 0.27 0.83
2011-12 1.27 1.22 0.39 0.37 0.24 0.86
2012-13 1.41 1.35 0.46 0.4 0.28 0.79
2013-14 1.33 1.28 0.41 0.39 0.19 0.85
2014-15 1.41 1.35 0.39 0.43 0.23 0.58
2015-16 1.38 1.34 0.34 0.42 0.2 0.58
2016-17 1.44 1.4 0.43 0.45 0.19 0.53
Ratio’s of L&T ELECTRICAL &AUTOMATION-

YEAR CURRENT QUICK CASH PROPRIETA LONG FIXED


RATIO RATIO POSITION RY RATIO TERM DEBT ASSET
RATIO EQUITY RATIO
RATIO
2010-11 1.2 1.06 0.54 0.5 0.07 0.51
2011-12 1.14 0.95 0.56 0.38 0.17 0.43
2012-13 1.14 0.86 0.3 0.45 0.12 0.44
2013-14 0.87 0.78 0.62 0.24 0.33 0.23
2014-15 1.2 1.09 0.79 0.86 0.39 0.68
2015-16 1.34 1.23 0.63 0.29 0.29 0.52
2016-17 1.15 1.02 0.76 0.44 0.37 0.59
ONE SAMPLE t-TEST -
1. CURRENT RATIO AND STANDARD VALUE –
VARIABLE df t SIGNIFICANCE

Current Ratio & Standard value 6 -28.074 -0.632

H0 - There is no significant difference between Current Ratio and it’s standard value.
HA - There is a significant difference between Current Ratio and it’s standard value.
Since the significant value is less than 0.05 (-0.632), null hypothesis is rejected. Therefore, there is a significant difference between Current
Ratio and it’s standard value.
2. QUICK RATIO AND STANDARD VALUE –

VARIABLE df t SIGNIFICANCE
Quick Ratio & Standard value 6 13.939 0.317
H0 - There is no significant difference between Quick Ratio and it’s standard value.
HA - There is a significant difference between Quick Ratio and it’s standard value.
Since the significant value is greater than 0.05 (0.317), null hypothesis is accepted. Therefore, there is no significant difference between
Quick Ratio and it’s standard value.
3. CASH POSITION RATIO AND STANDARD VALUE –
VARIABLE df t SIGNIFICANCE
Cash Position Ratio & Standard 6 -4.49 0.04
value

H0 - There is no significant difference between Cash Position Ratio and it’s standard value.
HA - There is a significant difference between Cash Position Ratio and it’s standard value.
Since the significant value is less than 0.05 (0.04), null hypothesis is rejected. Therefore, there is a significant difference between
Cash Position Ratio and it’s standard value.
4. PROPRIETARY RATIO AND STANDARD VALUE –

VARIABLE df t SIGNIFICANCE

Proprietary Ratio & Standard 6 -54.623 -0.594


value
H0 - There is no significant difference between Proprietary Ratio and it’s standard value.
HA - There is a significant difference between Proprietary Ratio and it’s standard value.
Since the significant value is less than 0.05 (-0.594), null hypothesis is rejected. Therefore, there is a significant difference between
Proprietary Ratio and it’s standard value.
5. LONG TERM DEBT TO EQUITY RATIO AND STANDARD VALUE –
VARIABLE df t SIGNIFICANCE
Debt Equity Ratio & Standard 6 -54.923 -0.771
value

H0 - There is no significant difference between Debt Equity Ratio and it’s standard value.
HA - There is a significant difference between Debt Equity Ratio and it’s standard value.
Since the significant value is less than 0.05 (-0.771), null hypothesis is rejected. Therefore, there is a significant difference between
Debt Equity Ratio and it’s standard value.
6. FIXED ASSET RATIO AND STANDARD VALUE –

VARIABLE df t SIGNIFICANCE
Fixed Asset Ratio & Standard 6 -5.11 -0.282
value
H0 - There is no significant difference between Fixed Asset Ratio and it’s standard value.
HA - There is a significant difference between Fixed Asset Ratio and it’s standard value.
Since the significant value is less than 0.05 (-0.282), null hypothesis is rejected. Therefore, there is a significant difference between
Fixed Asset Ratio Ratio and it’s standard value.
INDEPENDENT SAMPLE t-TEST -
1. CURRENT RATIO OF L&T STANDALONE AND L&T E&A –
GROUP N MEAN t df Sig (2-TAILED)

L&T SA 7 1.367 3.772 12 0.003


L&T E&A 7 1.14

H0 - There is no significant difference between Current Ratio of L&T Standalone and L&T E&A.
HA - There is a significant difference between Current Ratio of L&T Standalone and L&T E&A.
Since the significant value is less than 0.05 (0.003), null hypothesis is rejected. Therefore, there is a significant difference
between Current Ratio of L&T Standalone and L&T E&A.
2. QUICK RATIO OF L&T STANDALONE AND L&T E&A –
GROUP N MEAN t df Sig (2-TAILED)
L&T SA 7 1.317 5.207 12 0.000
L&T E&A 7 0.998
H0 - There is no significant difference between Quick Ratio of L&T Standalone and L&T E&A.
HA - There is a significant difference between Quick Ratio of L&T Standalone and L&T E&A.
Since the significant value is less than 0.05 (0.000), null hypothesis is rejected. Therefore, there is a significant difference
between Quick Ratio of L&T Standalone and L&T E&A.
3. CASH POSITION RATIO OF L&T STANDALONE AND L&T E&A –
GROUP N MEAN t df Sig (2-TAILED)

L&T SA 7 0.416 -2.87 12 0.014


L&T E&A 7 0.60
H0 - There is no significant difference between Cash Position Ratio of L&T Standalone and L&T E&A.
HA - There is a significant difference between Cash Position Ratio of L&T Standalone and L&T E&A.
Since the significant value is greater than 0.05 (0.014), null hypothesis is rejected. Therefore, there is a significant difference between Cash
Position Ratio of L&T Standalone and L&T E&A.
4. PROPRIETARY RATIO OF L&T STANDALONE AND L&T E&A –

GROUP
H0 - There N
is no significant difference MEANRatio of L&T Standalone
between Proprietary t and L&T E&A. df Sig (2-TAILED)
HA - There is a significant difference between Proprietary Ratio of L&T Standalone and L&T E&A.
L&T SA 7 0.406 -0.59 12 0.565
Since the significant value is greater than 0.05 (0.565), null hypothesis is accepted.. Therefore, there is no significant difference between
L&T E&A
Proprietary Ratio of L&T Standalone 7 and L&T E&A. 0.451
5. LONG TERM DEBT TO EQUITY RATIO OF L&T STANDALONE AND L&T E&A -
GROUP N MEAN t df Sig (2-TAILED)

L&T SA 7 0.23 -0.398 12 0.698


H0 -L&T
ThereE&A
is no significant difference
7 between Debt Equity
0.25 Ratio of L&T Standalone and L&T E&A.
HA - There is a significant difference between Debt Equity Ratio of L&T Standalone and L&T E&A.
Since the significant value is greater than 0.05 (0.699), null hypothesis is accepted.. Therefore, there is no significant difference between Debt
Equity Ratio of L&T Standalone and L&T E&A.
6. FIXED ASSET RATIO OF L&T STANDALONE AND L&T E&A –

GROUP
H0 - There N
is no significant difference MEAN
between Fixed Asset t
Ratio of L&T Standalone and L&T E&A. df Sig (2-TAILED)
HA - There
L&T SA is a significant difference
7 between Fixed Asset
0.717Ratio of L&T Standalone
3.00 and L&T E&A. 12 0.011
Since the significant value is greater than 0.05 (0.011), null hypothesis is accepted.. Therefore, there is a significant difference between Fixed
L&T E&A 7 0.486
Asset Ratio of L&T Standalone and L&T E&A.
FINDINGS -
 Average of Current ratio between the year 2010-2017 of L&T Standalone is 1.37 and L&T Electrical and Automation is
1.15.
 Average of Quick ratio between the year 2010-2017 of L&T Standalone is 1.32 and L&T Electrical and Automation is
0.99.
 Average of Cash Position ratio between the year 2010-2017 of L&T Standalone is 0.42 and L&T Electrical and
Automation is 0.6.
 Average of Proprietary ratio between the year 2010-2017 of L&T Standalone is 0.41 and L&T Electrical and Automation
is 0.45.
 Average of Long term Debt to Equity ratio between the year 2010-2017 of L&T Standalone is 0.23 and L&T Electrical
and Automation is 0.25.
 Average of Fixed Asset ratio between the year 2010-2017 of L&T Standalone is 0.72 and L&T Electrical and Automation
is 0.49.
 The significant value of Current ratio (-0.632), Cash position ratio (0.04). Proprietary ratio (-0.594), Debt equity ratio
(0.771), Fixed asset ratio (-0.282) which is less than 0.05. Therefore, H0 is rejected, which implies there is a significant
difference between the above ratio’s and standard value. ( ob.1)
 The significant value of Current ratio (0.003), Quick ratio (0.000), Fixed asset ratio (0.011), Cash position ratio (0.014)
which is less than 0.05. Therefore, H0 is rejected, which implies there is a significant difference between the above
ratio’s of L&T Standalone and L&T E&A.( ob.2)
SUGGESTIONS -

 Current ratio of L&T Consolidated is not in good condition and


company should try to reduce current liabilities.
 A high proprietary ratio will reduce the risk and it indicates less
danger. So the management can try to increase the proprietary
ratio in present and the future.
 There should be proper efforts should be made to invest the
money which they are going to rise from selling L&T Electrical
and Automation.
CONCLUSION -
The L&T Standalone overall position is good compared to L&T
Electrical and Automation. In this study we have used ratio analysis which helped us
to find the financial soundness of the company.
The project was very useful for the judgement of the financial status of
the company which compares and tells that whether L&T constructions financial
strength is weak or not. By seeing the liquidity position we can say that by selling
L&T Electrical & Automation to Schneider Electric consortium will not affect L&T
Standalone’s financial position.
LIMITATION -
 The study is restricted for the period of seven years.
 The project study is mainly based on the secondary data given in the annual
report of L&T Constructions.
 Lack of access of information due to discomfort in disclosure of financials as
they are highly confidential.
 The figures in the financial statement are likely to be the past data’s and
information which may not give a proper financial position of the company.
BIBLIOGRAPHY -
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aluminium producing industry. Indian Journal of Accounting, 32, 8-14.
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market, Submitted on 20.11.2010.
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& Data Systems, 110(2), 193-210.
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609.
Contd.,
 BOOK- Research Methodology: Methods and Techniques by C R Kothari.
 Annual Report of L&T Constructions subsidiary companies from 2010 to 2017.
 WEBSITES –
 www.lntecc.com
 www.moneycontrol.com
 m.economictimes.com
 www.thehindu.com
 m.economictimes.com
 wap.business-standard.com
 www.accountingcapital.com