2010

L&T Project

International
Academy Chandan Singh
of PGPM/0911/015
Management 2009-2011
&
Entrepreneurship
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NATURE OF BUSINESS:
The company was founded in Mumbai in 1938 by two Danish engineers, Henning Holck-
Larsen and Soren Kristian Toubro

Larsen & Toubro is a $8.5 billion, technology, engineering, construction and manufacturing
company.

L&T has an international presence, with a global spread of offices, factories and offices
located around the country, further supplemented by a comprehensive marketing and
distribution network.

Turnover of the company:

Larsen and Toubro (L&T) is a public company which founded in Mumbai in 1938 by Henning
Holck-Larsen and Soren Kristian Toubro. L&T ‘s headquarter is established in Mumbai, India.

This is a conglomerate industry which provides their services worldwide. L&T deal into
power generation, Refineries, Cement plant, Ships, Switchgear. The services which provides
are Engineering Services, Turnkey Projects, IT Services, Shipbuilding.

The number of employees were working in L&T was 35,000 (2007).

The total revenue was US$ 8.50 billion (2009), Operating income US$ 900 million (2009), the
net income was US$ 0.58 billion (2009) and total assets in US$ was 9.92 billion (2009).

HISTORY AND MILESTONE:

Larsen & Toubro has been involved in:

 Hydrocarbon projects executed in India, the Middle East and South East Asia
 Power projects executed in India, the Gulf and Sri Lanka
 The world's largest coal gasifier made in India and exported to China
 The world’s biggest EO reactor for a petrochemical complex in the Gulf
 The world’s largest FCC regenerator for a refinery
 Infrastructure projects in Jordan, U.A.E. and South East Asia
 The world’s longest coal conveyor
 India’s widest range of switchgear
 A wide range of construction and mining equipment
 L&T played a critical role in building India’s first nuclear powered submarine

Engineering & Construction – Projects:

L&T’s engineering & construction track record consists of implementation of turnkey
projects in major core and infrastructure sectors of the Indian industry.

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L&T Power:
L&T has set up an organisation focused on opportunities in coal-based, gas-based and
nuclear power projects. This business provides turnkey solutions for setting up utility power
plants, co-generation and captive power plants on EPC basis. It also provides power plant
engineering services through L&T Sargent & Lundy a joint venture of L&T and Sargent &
Lundy, U.S.A. L&T has formed two joint ventures with Mitsubishi Heavy Industries, Japan to
manufacture supercritical boilers and steam turbine generators. In 2008-09, significant
progress was made in setting up manufacturing facilities for supercritical boilers and
turbines at Hazira.

Heavy Engineering:
L&T is acknowledged as one of the top five fabrication companies in the world.

Shipbuilding: L&T has a shipyard capable of constructing vessels of up to 150 metres long
and displacement of 20000 tonnes at its heavy engineering complex at Hazira on India’s
west coast. The focus will be on construction of commercial vessels, warships for the navy
and the coast guard.

Construction:
ECC – the Engineering Construction & Contracts Division of L&T is the major contributor in
L&T's share market. Which is India’s largest construction organisation? L&T covers every
discipline of construction – civil, mechanical, and electrical and instrumentation. L&T has
also expanded its focus to the Middle East, South East Asia, Russia, CIS, Mauritius, African
and SAARC countries. L&T also has keen interest in the markets of Indian Ocean rim
countries, Africa and Latin America.

Electrical & Electronics:

L&T is an international manufacturer of a wide range of electrical and electronic products
and systems. L&T also manufactures custom-engineered switchboards for industrial sectors
like power, refineries, petrochemicals and cement. In the electronic segment, L&T offers a
range of meters and provides control and automation systems for industries. Medical
equipment and systems manufactured by L&T include advanced ultrasound scanners and
patient monitoring systems.

Information Technology:
Larsen & Toubro Infotech Limited, a 100 per cent subsidiary of the L&T, offers software
solutions and services with a focus on Manufacturing, BFSI and Communications &

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Embedded Systems. It also provides services in the embedded intelligence and e
Engineering space.

Machinery & Industrial Products:

L&T manufactures markets and provides service support for critical construction and mining
machinery – surface miners, hydraulic excavators, aggregate crushers, loader backhoes and
vibratory compactors; supplies a wide range of rubber processing machinery and injection
moulding machines; and manufactures & markets Industrial valves and allied products and a
range of sophisticated application-engineered welding alloys.

Corporate Social Responsibility:

L&T claims to be conscious of the larger social obligations that business carries.

L&T’s co-founder, the late Mr. Holck-Larsen had received several national and international
encomiums including the Padma Bhushan, the Magsaysay Award for International
Understanding, and the Sir Jahangir Ghandy Medal for Industrial Peace and the Chemical
Industry Stalwart Award.

Subsidiaries:
Larsen & Toubro Komatsu Limited:

Having Registered office at Mumbai, India, focusing on construction equipment and mining
equipment, L&T-Komatsu Limited is a joint venture of Larsen and Toubro and Komatsu Asia
Pacific Pte Limited, Singapore, a wholly owned subsidiary of Komatsu Limited, Japan which is
the world’s largest manufacturer of hydraulic excavators and has manufacturing and
marketing facilities worldwide. The plant was started in the year 1975 by L&T to
manufacture Hydraulic Excavators for the first time in India. Later it became a joint venture.
L&T-Komatsu Limited's manufacturing facility – the Bangalore Works – comprises the
Machinery Works and Hydraulics Works divisions. Machinery Works has a manufacturing
facility with ISO 9001:2000 accreditation for design, manufacture and servicing of
earthmoving equipment. Hydraulics Works, with a precision machine shop, manufactures
the complete range of high pressure hydraulic components and systems, as well as design,
development, manufacturing and servicing of hydraulic pumps, motors, cylinders, turning
joints, hose assemblies, valve blocks, hydraulic systems, power drives and allied gear boxes.

L&T Infotech:

L&T Infotech focuses on information technology and software services. Its clients include
industry leaders like Marsh & McLennan, Standard Life, Chevron, Freescale, Hitachi, Sanyo ,
Lafarge , ABSA , CitiGroup, Barclays , eCORPUS, Marathon and Qualcomm among others. It
offers services and solutions for the following industries: banking and financial services,
insurance, energy and petrochemicals, manufacturing, and engineering services.

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L&T EmSyS:

EmSyS works in the domains of embedded systems and software. It offers services related
to hardware and software / firmware development in diverse verticals. EmSyS Quality
Management System has benchmarked at CMMI - DEV + IPPD, ver. 1.2, Maturity Level 5

It offers the services in following industries : automotive electronics, consumer electronics,

control automation, industrial systems, medical electronics, avionics and railway signalling.

Larsen & Toubro Infrastructure Finance:

Larsen and Toubro Infrastructure Finance Company Limited was set up as a 100% subsidiary
of L&T. It commenced its business in January 2007 upon obtaining Non-banking financial
company (NBFC) license from the Reserve Bank of India (RBI).

As of March 31, 2008, L&T Infrastructure Finance has approved financing of more than a
billion USD to select projects in the infrastructure sector.

Larsen & Toubro e-Engineering Solutions:

A subsidiary focusing on providing engineering solutions using PLM technology. It provides

engineering services. Operates from off-shore engineering centres at Vadodara, Chennai
and Bangalore with onsite teams to cater to engineering requirements of global clients,
many of them Fortune 500 companies across the globe.

Larsen & Toubro Valves Business Group:

L&T’s Valves Business Group markets valves manufactured by joint ventures, Audco India
Limited, India and Larsen & Toubro (Jiangsu) Valve Company Limited, China, as well as allied
products from major international manufacturers.

L&T sells value-added flow control solutions to oil & gas, refining, petrochemical, chemical
and power industries.

L&T is a leading global supplier of industrial valves and customised solutions for major
Refinery, LNG, GTL, Petrochemical and Power projects.

L&T Valves Business Group has offices in the USA, India and China, and strategic alliances
with leading integrated valve distributors and agents in the major markets.

Awards and accolades:

 SGCCI Golden Jubilee Memorial Trust Award - for outstanding performance in Export
of Engineering Goods for 2004-05. This Award highlights L&T's export of high-tech,
custom-built equipment worldwide.

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  Greentech Safety Awards (2005) - by the New Delhi-based non-profit organisation,
Greentech Foundation, for the effort in industrial safety and environmental
management.
 Ethics is Good Business award - from the New Delhi based PHD Chamber of
Commerce & Industry (PHDCCI).
 India Manufacturing Excellence Award from Frost & Sullivan, 2004.
 Environment Excellence Award 2003-04, Greentech Foundation.
 Businessworld's survey on "India's Most Respected Companies", ranked L&T first in
infrastructure sector.
 L&T was ranked first in "India's Best Managed Companies" in a 2008 survey
published by Business Today, India's leading business periodical.

Forbes Global 2000 Ranking – 2008:

The Forbes Global 2000 list for the year 2008 ranked Larsen & Toubro at 961.Also in last
year Mr. A. M. Naik has got businessman of year award in Delhi. This year Mr. A. M. Naik
received Padma Bhushan from President of India.

Institutional &commercial Buildings:

ECC undertakes turnkey construction of institutional and commercial buildings. The range
covers IT/Theme Parks, international class hotels, super-speciality hospitals, office
complexes and public buildings including mass construction of primary education and health
centres in far-flung areas on a state-wide basis.
ECC's capability encompasses design and construction of structural framework including
finishing items of work and electro-mechanical services like: heating, ventilation and air-
conditioning (HVAC), electrification, laundry, kitchen, building automation, vertical
transportation, telecommunication networks, surveillance and security systems, plumbing
and sanitary, fire protection, medical equipment, water/effluent treatment, and landscaping
and horticulture.
ECC specialises in construction of houses of worship, sports complexes like indoor and
outdoor stadiums and preserving 'heritage' structures.

Corporate Overview
Larsen & Toubro Limited (L&T) is India's largest engineering and construction conglomerate
with additional interests in electrical, electronics and IT. A strong customer-focus approach
and constant quest for top-class quality have enabled L&T to attain and sustain leadership
over 6 decades. EPC project business constitutes a critical part of the L&T's engineering
core. L&T has integrated its strengths in basic and detailed engineering, process technology,
project management, procurement, fabrication and erection, construction and
commissioning, to offer single point responsibility under stringent delivery schedules.
Strategic alliances with world leaders enable L&T to access technical know-how and execute
process intensive, large scale turnkey projects to maintain its leadership position. L&T's
international presence is on the rise, with a global spread of over 30 offices and joint
ventures with world leaders. Its large technology base and pool of experienced personnel

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enable it to offer integrated services in world markets. L&T enjoys a brand image in India
and several countries offshore. With factories and offices located all over the country and
abroad, L&T operations are supplemented by a comprehensive distribution network and
nationwide ramifications for customer service and delight!

Ports &harbours and Special projects

ECC undertakes heavy construction works and provides infrastructure facilities such as
ports, harbours and waterfront structures including design. Ports, Harbours and Waterfront
structures. Complete design and execution of all types of maritime structures, like:
Docks.
Container Terminals.
Wharves.
Jetties (in open sea and inside harbours).
Breakwaters.
Land Reclamation.
Coal Berths.

Joint Venture Project ECC is part of a Project Joint Venture to undertake a special
infrastructure project: L&T Hochstein Seabird JV: This joint venture was formed to
construct India's largest breakwater 'Project Seabird' at Karwar. This consists of an
international consortium of three companies: Hochtief AG (Germany) and L&T (India) for
breakwater and quarrying; Ballast Nedam Dredging (The Netherlands) for dredging. Special
Project ECC has successfully entered into the field of underground metro construction with
the first major metro work for Delhi Metro Rail Corporation Limited. ECC in Joint Venture
with a group of International contractors is executing this prestigious project in New Delhi.
International Metro Civil Contractors JV: This JV of DYWIDAG International, (Germany), L&T
(India), IRCON International Ltd. (India), Samsung Engineering & Construction (South Korea)
and Shimizu Corporation (Japan) is executing the contract for construction of an
underground metro rail corridor in Delhi for the Delhi Metro Rail Corporation (DMRC).

Hydropower and Irrigation Projects

ECC offers a wide range of services in the construction of:

Underground tunnels of various diameters (both concrete lined and steel lined)
including inclined tunnels.
Construction of concrete and earthen dams including roller compacted concrete dams.
Construction of diversion weirs.
Construction of large under- ground caverns.
Construction of pressure shafts, surge chambers, underground and surface power
houses.
Fabrication and erection of gates, penstocks and other hydro-mechanical works and
erection of electro-mechanical equipment.
Refurbishment of old hydro power plants.
Construction of barrages, canals, aqueducts, lifts irrigation works and other irrigation

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 structures.
Engineering, Procurement and Construction of Hydro Power Projects on turnkey / BOT
basis.
Foundation Engineering & Geo-technical Investigations ECC's comprehensive services in
geo-technical engineering include soil investigation and recommendations for economical
and speedy construction of foundations. Area of specialization covers:
Design and construction of large-diameter bored piles.
Driven precast piles.
Well foundations / sheet pile structures / caissons.
Diaphragm walls.
Deep excavations / shoring systems.
Ground-improvement works.
Dewatering.
Special foundations.
Geo-technical and geo-physical exploration works.

ECC has in-house facilities to conduct integrity and dynamic load-testing of piles. Its
services are complemented by sophisticated soil and concrete laboratories and site testing
facilities.

Thermal & Non-Conventional Power:

ECC has extensive experience in construction of power plants - coal / lignite based thermal,
gas- based simple / combined cycle, diesel, co-generation, solar and other non-conventional
plants. ECC undertakes:
Turnkey construction of power plants including civil, mechanical, electrical,
instrumentation works.
Associated detailed engineering, procurement and other related services. Deals with
fossil fuel stations - coal, liquid, gas and non-conventional.
Construction and erection services include:
Survey and soil investigation.
Site development works - leveling and grading, compound wall and fencing, roads and
drains, railway sidings, ash ponds, greenbelt and landscaping.
Complete civil works for power plant including equipment foundations, powerhouse
building, plant and non-plant buildings, township and facilities.
River/seawater intake works, CW system, plant reservoirs and pump-houses.
Erection of SG, TG, GTG, HRSG and all other main equipment and BOP equipment.
Piping and ducting - fabrication and erection, including all protective coating and
refractory insulation.
Electrical & instrumentation works.
EHV switchyard & transmission lines.
Assistance in testing and commissioning.
Port clearances, inland transportation, store management and other related works.
ECC offers turnkey services for various packages of power plant viz. natural and induced
draft cooling towers, single / multi-flue brick / steel lined chimneys, coal and ash-handling
systems, water and effluent treatment plants, compressed air / fire protection system,

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HVAC systems, EHV switchyards, complete plant electrification, instrumentation and
transmission lines. ECC complements the strengths of L&T's E&C division and provides
Engineering Procurement and Construction services in the power sector.

Electrical, Instrumentation and communication

The EI&C BU handles some of the largest electrical and instrumentation contracts in India
and abroad. It has affected a paradigm shift from executing individual package-based
contracts to providing turnkey solutions for major project electrification works,
instrumentation, high voltage substations and telecommunication projects. Industrial
Electrification & Switchyards ECC offers electrification services to the whole gamut of
industries, such as power, steel, metallurgical, glass, fertilizers, paper, food, coal, mining,
automobile, chemical and fertilizer plants, refinery, petrochemical and cement industries.
Services include:
Complete system design for EHV switchyard and industrial projects.
Design and manufacture of switchyard structures.
Sourcing, selection, inspection, installation, testing and commissioning of electrical
equipment for Extra High Voltage switchyards & Plants.
Installation of gas insulated substations (GIS) for all industrial projects.
Improvement in power distribution system under Accelerated Power Development and
Reform Programs of Ministry of Power.
Process instrumentation system and SCADA system design, equipment sourcing,
installation calibration and commissioning.
Electrification and building management systems for IT Parks, Hospitals and
Commercial Buildings.
Telecommunication ECC offers optic fibre cabling solutions for back bone and access
network and turnkey solutions for construction of microwave towers. Services include:
Turnkey optical fibre communication system for Railways and oil companies.
Design, manufacture, civil works, supply and installation of microwave towers.
Supply and installation of shelters and optical fibre communication transmission
equipments.
Live line stringing of optic fibre ground wires and wrap-around optic fibre cable over
power transmission lines.
All dielectric self-support optic fibre cable installation over poles and transmission line
towers.
Supply and installation of underground optic fibre cabling for back bone and access
network.
OFC and copper cabling for Railways signaling and telecommunication usage.
Instrumentation ECC Offers Turnkey Solutions for Instrumentation & Control Systems for
a wide variety of industries such as Power, Metallurgical, Water Supply & Treatment,
Chemical & Fertilizers, Refinery & Petrochemical, Oil & Gas Pipelines, Cement industries and
Software Parks. Services include:
Design & detailed engineering of Instrumentation & Control Systems.
Procurement, inspection, installation & commissioning of Instrumentation & Control
Systems on turnkey basis.
Implementation of Turnkey solutions including PLC/DCS & SCADA System.

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 Design, Supply, Installation & Commissioning of Special Instruments like Vibration
Monitoring Systems, Online Gas Chromatograph, Steam & Water Analysis System for
Boilers, Waste Gas Analysers, Radiation Pyrometers & Nucleonic measurement System.
Design, Supply, Installation & Commissioning of Telemetry Systems for Water Supply,
Oil & Gas Pipeline projects consisting of VSAT, Radio & Fibre Optic communication
Systems.
Design & detailed engineering, procurement, inspection, installation & commissioning
of Building Automation Systems like Structured Cabling, Public Address Systems, CCTV,
Fire Alarm Systems etc.
Design & detailed engineering, procurement, inspection, installation & commissioning
of High Way Traffic & Toll Management systems.

International Projects:
L&T is globalising its operations with increasing focus on international business
opportunities. Today, the activities of construction division extend beyond the
subcontinent. ECC has a major presence in the Middle East, South East Asia, Russia, CIS
countries, Mauritius, Africa and SAARC countries. ECC is increasing its market share in the
developing countries of the Indian Ocean Rim, Africa and Latin America.

Materials Management:
Materials department supports global operations of ECC by catering to the needs of all the
projects, factories and offices by constantly enhancing input efficiency for our operations.
The function of Materials Department include procurement from both indigenous as well as
oversees markets, storage, logistics, inventory management at regional stores, disposal etc.
The overall operations of Materials Department are monitored from ECC's Headquarters in
Chennai. Materials department is among the first to get ISO 2000 certification through
BVQI. Materials department at HQ deals with all policy matters, imports, exports, capital
procurement, project procurement, high value purchases, rate contracts, system
development & implementation, etc. Regional Materials Department, which are attached to
every region, takes care of material requirement for the projects in their respective regions
including management of regional stores, transportation, disposal, regional rate-contracts
etc. In addition there is specialised cell in HQ catering to the ever-growing requirements for
imports and exports. Clearance of imported consignments and export formalities are also
done through regional Materials Department located in Mumbai and Kolkata. Import /
export department at HQ oversees the activities of these regional setups. All the regional
offices, HQ and sites are linked with state of the art EIP system. The entire procurement
process, stock monitoring, e-auctions, executive reports etc are carried out thorough EIP.

Resources Planning:

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Centralised Resources dept at HQ takes care of allocation, distribution and movement of
Staff and Plant & Machinery to meet the requirements for deployment in various regions
and overseas across the company. Resources dept in the Regional Offices takes care of this
function within the regions and also acts as a resource centre with data on subcontractors
available for various types of works. Resources department as a focal point helps the
Operational Units to optimize the productivity by maintaining a balance between the
availability and the requirement of resources (Staff and Plant & Machinery). It also
facilitates the process of decision and deployment of equipment from external agencies as
needed. This department plays the vital role in effective distribution and deployment of
resources in co-ordination with all Sectors, BUs, Zones, Regions etc.

Sub-Contracts Management:
Subcontracting is one of the major inputs in the execution of projects. The main areas of
focus are streamlining / standardizing of systems/procedures, registration, making available
the track record and rating of the subcontractors based on their performance through a
suitable on-line system. Importance is given for training of subcontractor labour to suit
requirements.

Strategic planning:
Market survey, analysis of customer needs and aligning business accordingly has always
given an edge to ECC over its competitors. Over the years the organization has perfected its
operations with inputs from market study and forecasted future business plans and targets.
Strategic plans have been developed to provide direction to business and accompanying
strategic initiatives help in focused action to achieve targets. Quality Management Good
quality products and customer satisfaction are two basic requirements of business. Well-
structured quality management systems ensure good quality, safety, reliability and
controlled cost at every stage of construction with a view to enhance customer satisfaction
and value addition to stake holders. ECCD's quality management program was initiated
since its inception. It was given a thrust by deciding to bring the organization under ISO
certification. As of date ECCD's Business Units / Facilities are certified for ISO 9001: 2000
quality standards.

Safety, health &Environment:

At ECC, safety is given the highest priority. The Occupational Safety, Health and
Environment Policy enunciated by the Corporate Management lays emphasis on Safety,
Health and Environment through a structured approach and a well defined organization.
Systems and procedures have been established for implementing the requisites of safety at
all stages of construction and in respect of plants, machinery and materials. The Head of
the Safety Engineering Department operates from the Headquarters. He is assisted by the

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Regional Safety Co-ordinators who in turn monitor implementation of Safety, Health &
Environment measures through Safety Co-ordinators located at job sites. Besides the
enforcement of engineering measures and management controls, Personal Protective
Equipment (PPE), as per needs of the operations, are provided to the employees free of
cost. PPE conforming to relevant Indian Standards / International Standards are procured to
ensure the quality of the appliances. Inspection and safety audits are conducted
periodically. Awareness among employees is sustained through regular training
programmes. Systems are rigorously implemented to ensure safe working at sites. The
Safety Practices in ECC are standardized and accredited by ISO 9001:2000 standard.

Corporate Centre &Legal:

Corporate Centre of ECC acts as an extended arm of L&T's Corporate Office and implements
various corporate initiatives. The Centre assists the Head of the Division and ensures
smoother functioning of the subsidiary and associated companies managed by the Division.
It coordinates with the Corporate Office for approvals and ensures compliance of the laid
down procedures. It actively assists the business units in evaluating joint venture proposals
and in the formation of Joint venture companies. Some of the other activities handled by
the Corporate Centre include budgeting, monitoring and reporting of capital expenditure;
follow up actions based on internal audit reports, tracking the performance of competitors
and exploring the opportunities for mergers and acquisitions. Legal Department extends
legal services to all the Operational Heads, Business Units and Regions including overseas
establishments on legal and commercial issues of contract management and in the drafting
of various agreements. Changes in legislation, statutory rules and regulations, judicial
precedence set by courts etc., are monitored and the management is advised on their
implications.

Corporate Communications:
ECC’s Corporate Communications Department disseminates vital information of the
Division, its products and services for internal and external customers. ECC’s in-house
magazine “ECC News” is a people-oriented magazine offering insight on spectrum of ECC’s
management philosophy and employee’s achievements including their family members.
“ECC Concord”, a customer-specific quarterly journal is meant for the external public. The
department produces corporate films and project capsules, handles media relations for the
company and provides marketing communication support through print publication and
other electronic media.

Personnel &Human Resources Development:

Just as ECC has been the story of shaping an institution that stands today for the highest
standards of quality, innovation and service to the consumers across the globe, its Personnel

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and Human Resources Department has been a chronicle of attracting, holding and moulding
the finest talent in India. A strategic business partner, P& HR Department, has been the
key to vital business advantage. The focus areas of Recruitment and Training ensure the
induction and grooming of talent and coupled with a robust performance management
system they assure that all one needs is merit in order to progress. The systems wing of
P&HR Department which has pioneered many indigenous IT solutions, has been the
backbone of all HR activities and has enabled smoother workflow. All this in conjunction
with humane employee care policies has bred people whose calibre has changed the quality
of infrastructure for millions of people across the globe. With good work in place,
recognition is never far behind. ECC has won several awards in the field of HR, including ISO
9001 accreditation from BVQI for its P&HR Department.

Finance, Accounts and Administration:

Finance, Accounts and Administration Department administers the Finance & accounts
related policies of the Company at all project sites through Regional Offices. Besides this,
the Department manages the working capital for the Division through effective funds
management, monitoring of receivables and vendor financing. It also ensures compliance of
statutory requirements and internal controls at Regional Offices and project sites. The
department also consolidates and presents the audited accounts of the Division as
applicable under the relevant Acts. Budgeting process and preparation of periodic MIS
reports for Corporate Management, issue of policy guidelines related to Finance and
Accounts, as and when applicable are the other key activities of the department. Specialist
functions include insurance and taxation management for the Division.

Information Systems:
Information Technology applications enhances internal efficiency of Business Process by
eliminating redundant process nodes, optimising productivity and reduce business costs.
This department develops tailor-made software for different systems and takes care of
company's IT requirements. Construction Enterprise Management (CeMa) / EIP - the
Enterprise Information Portal (EIP) of ECC is a web-enabled Project Management system,
developed, optimised internally on a 24 x 7 VPN network infrastructure. This EIP solution
covers all phases of construction cycle - Design Development, tendering/bidding, budgets,
planning, procurement and even construction scheduling. EIP integrates all stakeholders viz
- architects, designers, vendors, sub-contractors, clients and L&T on a single platform to
deliver the Business Value to the organisation.

Corporate Audit Services:

Corporate Audit Services (CAS) takes care of Internal Audit function for L&T Units including
Subsidiary and Associate (S&A) companies. CAS operates as two zones for operational

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convenience namely Central and South Zone. Central Zone operates from L&T - Mumbai
(Powai) and South Zone operates through ECC Headquarters, Chennai.

Balance sheet
Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Sources of funds
Owner's fund
Equity share capital 117.14 58.47 56.65 27.48 25.98
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 12,317.96 9,470.71 5,683.85 4,583.32 3,312.25
Loan funds
Secured loans 1,102.38 308.53 245.40 465.79 793.72
Unsecured loans 5,453.65 3,275.46 1,832.35 987.78 1,065.34
Total 18,991.13 13,113.17 7,818.25 6,064.37 5,197.29
Uses of funds
Fixed assets
Gross block 5,575.00 4,188.91 2,876.30 2,300.68 2,106.55
Less : revaluation reserve 24.59 25.90 27.93 29.37 30.90
Less : accumulated depreciation 1,421.39 1,242.47 1,122.83 982.22 1,089.54
Net block 4,129.02 2,920.54 1,725.54 1,289.09 986.11
Capital work-in-progress 1,040.99 699.00 471.22 286.06 65.82
Investments 8,263.72 6,922.26 3,104.44 1,919.52 960.70
Net current assets
Current assets, loans & advances 23,834.71 16,496.48 12,049.35 9,669.13 8,962.64
Less : current liabilities & 18,277.57 13,928.17 9,542.14 7,121.41 5,817.87
provisions
Total net current assets 5,557.14 2,568.31 2,507.21 2,547.72 3,144.77
Miscellaneous expenses not 0.26 3.06 9.84 21.98 39.89
written
Total 18,991.13 13,113.17 7,818.25 6,064.37 5,197.29
Notes:
Book value of unquoted 7,793.04 6,642.82 2,917.11 1,893.92 926.16
investments
Market value of quoted 1,258.81 1,403.92 1,289.46 999.29 537.94
investments
Contingent liabilities 1,371.86 1,013.51 270.22 305.59 625.10
Number of equity 5856.88 2923.27 2832.71 1373.86 1299.24
sharesoutstanding (Lacs)

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The Business Model
To extract value from an innovation, a start-up (or any firm for that matter) needs an
appropriate business model. Business models convert new technology to economic value.

For some start-ups, familiar business models cannot be applied, so a new model must be
devised. Not only is the business model important, in some cases the innovation rests not in
the product or service but in the business model itself.

In their paper, The Role of the Business Model in Capturing Value from Innovation, Henry
Chesbrough and Richard S. Rosenbloom present a basic framework describing the elements
of a business model.

Given the complexities of products, markets, and the environment in which the firm
operates, very few individuals, if any, fully understand the organization's tasks in their
entirety. The technical experts know their domain and the business experts know theirs. The
business model serves to connect these two domains as shown in the following diagram:

Role of the Business Model

Technical Business Economic

Inputs Model Outputs

A business model draws on a multitude of business subjects, including economics,

entrepreneurship, finance, marketing, operations, and strategy. The business model itself is
an important determinant of the profits to be made from an innovation. A mediocre
innovation with a great business model may be more profitable than a great innovation with
a mediocre business model.

In their research, Chesbrough and Rosenbloom searched literature from both the academic
and the business press and identified some common themes. They list the following six
components of the business model:

1. Value proposition - a description the customer problem, the product that addresses
the problem, and the value of the product from the customer's perspective.
2. Market segment - the group of customers to target, recognizing that different
market segments have different needs. Sometimes the potential of an innovation is
unlocked only when a different market segment is targeted.
3. Value chain structure - the firm's position and activities in the value chain and how
the firm will capture part of the value that it creates in the chain.

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 4. Revenue generation and margins - how revenue is generated (sales, leasing,
subscription, support, etc.), the cost structure, and target profit margins.
5. Position in value network - identification of competitors, complementors, and any
network effects that can be utilized to deliver more value to the customer.
6. Competitive strategy - how the company will attempt to develop a sustainable
competitive advantage, for example, by means of a cost, differentiation, or niche
strategy.

Business Model vs. Strategy

Chesbrough and Rosenbloom contrast the concept of the business model to that of strategy,
identifying the following three differences:

1. Creating value vs. capturing value - the business model focus is on value creation.
While the business model also addresses how that value will be captured by the firm,
strategy goes further by focusing on building a sustainable competitive advantage.
2. Business value vs. shareholder value - the business model is an architecture for
converting innovation to economic value for the business. However, the business
model does not focus on delivering that business value to the shareholder. For
example, financing methods are not considered by the business model but
nonetheless impact shareholder value.
3. Assumed knowledge levels - the business model assumes a limited environmental
knowledge, whereas strategy depends on a more complex analysis that requires
more certainty in the knowledge of the environment.

Business Model for the Xerox Copier

Chesbrough and Rosenbloom illustrate the importance of the business model with a case
study of Xerox Corporation's early days in the copy machine business with its Xerox Model
914 copier. (Before changing its name to Xerox Corporation, the company was known as the
Haloid Company and then Haloid Xerox Inc.)

The Model 914 used the relatively new electrophotography process, which is a dry process
that avoids the use of wet chemicals. In seeking potential marketing partners, Haloid
repeatedly was turned down by the likes of Kodak, GE, and IBM, who had concluded that
there was no future in the technology as seen through the lens of the then-prevalent
business model. While the technology was superior to earlier copy methods, the cost of the
machine was six to seven times more expensive than alternative technologies. The model of
selling the equipment below cost and making up the difference by large margins in the sale
of supplies was not viable because the cost of the supplies was about the same as that of
the alternatives, so there was little room to maneuver.

Xerox then decided to market the new product itself and developed a new business model
to do so. The new model leased the equipment to the customer at a relatively low cost and
then charged a per copy fee for copies in excess of 2000 copies per month. At that time, the
average business copier produced an average of only 15-20 copies per day. For this model to
be profitable to Xerox, the use of copies would have to increase substantially.

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Fortunately for Xerox, the quality and convenience of the new copy technology proved itself
and companies began to make thousands of copies per day. As a result, Xerox sustained a
compound annual growth rate of 41% over a 12 year period. Without this business model,
Xerox might not have been successful in commercializing the innovation.

The Entrepreneurial Advantage

Chesbrough and Rosenbloom observe that a successful business model such as that of Xerox
tends to build momentum and the company becomes confined to its successful model.
However, new technologies often require new business models.

Because start-up companies are free to choose or develop a new business model, in this
regard start-ups have an advantage over more established firms. In addition to the risk
incurred in the technological and the economic domains, an unproven business model adds
additional risk, and entrepreneurial ventures usually are more prepared to accept this risk
than would be a large, well-entrenched firm.

In fact, many venture capitalists see themselves as investing in a business model.

Consequently, it often is the VC that pushes for a change in the business model when it
becomes apparent that the original model is not working.

Supply Chain Management Strategy in L&T (ECCDivision):

ECC structured itself into seven regions in order to handle the complexity in terms of stage
of completion, size of project, and the geo-political situation. Each region catered to the
demand of specialized construction services in that region and had its own materials
department.

The materials department of ECC got itself ISO-9002 certified; indicating the level of
importance it gave to the management of its suppliers. ECC adopted a sound and efficient
Supply Chain Management Strategy in order to keep the supply chain costs to the minimum.
Its quality policies emphasized minimum landed costs, transparent practices, and optimum
inventory levels.

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