1. L&T FINANCE 2012
ASSIGNMENT-2
Accounting for manager
ANALYSIS MADE ON L&T FINANCE IPO USING RATIO
ANALYSIS , PROFIT AND LOSS A/C AND BALANCESHEET
INTRODUCTION: Larsen and Tourbo which is having a Head quarter in
Mumbai. It is a engineering & construction based company and one of the largest
companies in India. It is a Multi National company having a office located all
around the country & having wide marketing and distribution channel. L&T has a
market share in all the fields like oil , gas , bridges. They are also in ship building
& nuclear tie up to achieve profit in the future period. L&T finance is incorporated
in 2008 . It is Finance Holding company offers a diverse range of financial
products and services in the field of corporate, retail and infrastructure finance
sector.
What is IPO and Reasons for raising it?
Initial Public Offer means offering is made by company/promoter in term of
selling there equity to the public.
To procure funds & capital for the expansion of the project/plans.
The existing promoters starts taking out of the money from the company so
for maintaining the required amount of money. Company raises ipo.
To build an image among society & for advertisement of the company.
ANALYSIS BASED ON BALANCESHEET,PROFIT AND LOSS A/C AND
RATIOS OF COMPANY
Company is having 56.65 crores in 2007 as total share capital as compares to
121.77 crores in 2011 showing that company is increasing 2 times growth.
Company is not issuing a preference share for raising a capital they always believe
in issuing equity shares.
Reserves of the company is increases by 568.35 in 2001 to 21334.15 in 2011
showing that company is in position to take risk and having a good amount of
money as surplus to them. And requirement can be fulfilled as need arises.
2. L&T FINANCE 2012
The company work in progress in 2009 is 1040.99 which showing company is
investing in business/ projects as of there commencement of new projects and
expansion of the new factory.
The inventory of the company in 2009 is 5805.05 crore as compares to 2011 is
1577.15 crore. It showing that company is having a ample amount of raw material,
labor, and then can fulfill the demand as they arises. But in 2011 the company
inventory decreases to 1577.15 showing that company are making the inventory
adequately . by using various methods like EOQ and just in time.
Cash and bank balance of company in 2011 is 1518.98 crore as compare to
6937.13 in 2009 because company is investing more money in 2009 for setting up
there new project & they are not believing to keeping the money or amount of
money idle with them.
Book value of share is showing fluctuation continuously. If we talk about the
growth l&T is achieving 20% of year on year earning before interest & tax is
dipping by 130 base points to13.9%.
The company total income is increases 45997.9 in 2011 as compare to 18226.8 in
2007 showing a drastic change as company is getting a good amount of money by
using the resources efficiently such as men, labor, material & strategy.
If company has to earn more profit they have to invest more and increases there
expenditure. As company total expenditure in 2011 is 38337.63 crore. As to
increase the production more amount of employee cost, power & fuel cost &
various selling expenses bear up by the company.
Company is having a maximum earning per share in 2008 of 74.55 rs as no. of
share is also low compare to 2011 where eps is only 49.53 showing how the no. of
share is increases in 2011 to get more amount of money from the public.
While seeing the liquidity rate of the company it is showing that company is not
having ample amount of current assets with them and current ratio of company is
doing better year on year and total debt of firm is decreasing which helping the
company to make there position strong.
3. L&T FINANCE 2012
Profitability ratio of company in 2007 to 2011 is showing that profit percentage is
deceased earlier & than gradually increased .
Solvency ratio of the company shows some improved performance as company
debt were decreasing in comparison of the total capital. A performance of the
company is improving day by day showing that investors can invest money in this
company with more reliable and assurance.
Company turnover ratio is 28.93 in 2011 as compare to 27.09 in 2010 showing
how the how faster the inventory are coveting into sales showing a positive sign
that firm is doing well.
Exports as percent of total sales ratio is 14.50 in 2011 as compare in 18 in 2010
showing that company exports volume of trade ha been affected due to
international market fluctuation slowdown the economy growth.
Import component as raw material consumed showing that company in 2010 it is
54% as compared to 2011 is only 37% showing how the demand for production is
suffer due to slowdown of the world economy .
Conclusion we can say that L & T finance is growing tremendously in five years
company has created a good name in the investors minds. It is good to invest in the
company as company fundamentals are really strong in the point of view of equity
investors. The liquidity and solvency position of the company is equally good so
there is no harm to lend money to this L & T finance company. The company is
growing there market internationally also they are coming with new offers for the
public. It helping them to image building. Constantly growing there profits and
revenues interprets that how financial sound company is it.
