RESEARCH PROJECT ON

DEPLOPMENT OF MARKETING STRATEGY OF FINANCIAL PRODUCT (LARSEN & TOUBRO LIMITED) COMPANY

Submitted in the partial fulfillment of the M.Phil degree of commerce

SUBMITED TO:Dr. D.P. WARNE Associate Professor Department of commerce

SUBMITED BY:DEEPAK MATHIL Roll NO. 05 M.Phil. (Commerce)

CHAUDHARY DEVI LAL UNIVERSITY SIRSA, (HARYANA) SESSION-2012-13

ACKNOWLEDGEMENT
It is only when a person is working on a project, that he realizes the amount of difficulties he has to overcome. However, in spite of all the difficulties, he knows help is always near hand at hand trickling the problems. Theoretical knowledge without practical is incomplete. Therefore, the exposure to practical word gives a new dimension to whatever has been grasped till time and it also gives a chance to understand that where the learned knowledge can be applied. It is my great privilege and honor to express my heartiest gratitude to our lecturers who provide us the conceptual knowledge. I have deep and soulful gratitude towards our Assistance professor & Associate professor DR. D.P. WARNE for providing detailed and explanatory information regarding the preparation of the project report. Special thank to my colleagues who were always there when I needed them. (DEEPAK MATHIL)

PREFACE
M.PHIL is a stepping stone to the research carrier and to develop good Researcher. It is necessary that the theoretical must be supplement with exposure to the real environment. Theoretical Knowledge just provides the base and its not sufficient to produce to produce good researcher thats practical knowledge is needed therefore the research product is an essential requirement for the student of M.PHIL. this research project not only helps the student to utilize his skills properly learn felid realities but also provides a chance to the organization find out talent among the budding in the very begi8nning .in arrogance with the requirement of M.PHIL coerce I have reach project on the topic DEPLOPMENT OF MARKETING STRATEGY OF FINANCIAL PRODUCT (L&T) COMPANY. While preparing this project I got an opportunity to lean many valuable things.

CERTIFICATE
This is to certify that the research project entitled DEPLOPMENT OF MARKETING STRATEGYOF FINANCIAL PRODUCT (L&T) COMPANY has completed by Mr. Deepak Mathil, student of M.Phil. (COM.) 2nd semester under my supervision. He has shown conscientiously zeal and innovative attitude for the successful completion of this research project. I recommend it for the submission to the university and same may be sent for evaluation. I wish his all the best in his future endeavors. Dr. D.P. WARNE Associate Professor Department of Commerce Chaudhary Devi Lal University, Sirsa (Haryana)

DECLARATION
I, DEEPAK MATHIL, hereby declare that the research project of M.Phil entitled DEPLOPMENT OF MARKETING STRATEGY OF FINANCIAL

PRODUCT (L&T) COMPANY Successfully completed by me under the supervision of Associate professor Dr. D.P. WARNE, READER Department of Commerce Chaudhary Devi Lal University, Sirsa (Haryana) the material embodies in this report has not been submitted earlier for award of any degree or diploma to the best of my knowledge and belief.

(DEEPAK MATHIL)

TABLE OF CONTENTS
Chapter No. Ch.-1.0 Ch.-2.0 Ch.-3.0 Subject Introduction Review of Literature Research Methodology 3.1Objective of the study 3.2 Research Design 3.3 Nature of Data 3.4 Scope of the study Ch.-4.0 L&TF products and services 4.1 Types of Strategies 4.2 Swot Analysis Ch.-5.0 Ch.-6.0 Findings References 25 28 19 Page No 7 10 13

CHAPTER-1
INTRODUCTION
History The Company was founded in Mumbai in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. The company began as a representative of Danish manufacturers of dairy equipment. However, with the start of the Second World War in 1939 and the resulting restriction on imports, the partners started a small workshop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started to repair and fabrication shops signaling the expansion of the company. The sudden internment of German engineers in India (due to suspicions caused by the War), who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation. In 1944, ECC was incorporated by the partners; the company at this time was focused on construction projects (Presently, ECC is the construction division of L&T). L&T decided to build a portfolio of foreign collaborations. By 1945, the company represented British manufacturers of equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass. In 1945, the company signed an agreement with Caterpillar Tractor Company, USA, for marketing earth moving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7 February 1946, Larsen & Toubro Private Limited was born.

Company Profile L&T Finance Holdings Ltd is a financial holding company offering a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors. The company also offers mutual fund products and investment management services, through their direct and indirect wholly-owned subsidiaries. The company is promoted by Larsen & Toubro Ltd, one of the leading companies in India. The company has established their presence in 21 states in India. The company has 5 subsidiaries, namely L&T Finance Ltd, L&T Infrastructure Finance Company Ltd, L&T Investment Management Ltd, L&T Mutual Fund Trustee Ltd and India Infrastructure Developers Ltd. They have four business groups, namely Infrastructure Finance Group, the Retail Finance Group, the Corporate Finance Group and the Investment Management Group. The company's wholly owned subsidiary L&T Finance Ltd conducts the retail finance business and the corporate finance business. The Retail Finance Group provides financing to their retail customers for the acquisition of income-generating assets and income-generating activities generally, and comprises the segments of construction equipment finance, transportation equipment finance, rural products finance and microfinance. The Corporate Finance Group provides financial products and services to the corporate customers, and comprises the segments of corporate loans and leases, supply chain finance and capital markets products. The company's wholly owned subsidiary L&T Infrastructure Finance Company Ltd conducts their infrastructure finance business, which provides financial products and services to the customers engaged in infrastructure development and construction, with a focus on the power, roads, telecommunications, oil and gas and ports sectors in India. The company's wholly-owned indirect subsidiary, L&T Investment Management Ltd conducts the investment management business which comprises the mutual fund segment and the portfolio management services segment. L&T Finance Holdings Ltd was incorporated on May 1, 2008 as a public limited company with the name L&T Capital Holdings Ltd. The company was promoted by Larsen & Toubro Ltd as a holding company for their financial services business. In May 15, 2008, the company received the certificate of commencement of business. In March 31, 2009, Larsen & Toubro Ltd's investment in L&T Finance Ltd, L&T Infrastructure Finance Company Ltd and India Infrastructure Developers Ltd were transferred to the company and hence, L&T Finance Ltd, L&T Infrastructure Finance Company Ltd and India Infrastructure Developers Ltd became the wholly owned subsidiaries of the company. In January 20, 2010, the company's wholly owned subsidiary L&T Finance Ltd acquired L&T Investment Management Ltd

(formerly DBS Cholamandalam Asset Management Ltd) and L&T Mutual Fund Trustee Ltd (formerly DBS Cholamandalam Trustee Ltd), the trustee company for L&T Mutual Fund. As of August 31, 2010, the company had 715 points-of-presence across India, comprising 103 branch offices, 221 meeting centers, 27 KGSK centers and 364 customer care centers across all of their business groups and segments. In September 1, 2010, the company changed their name from L&T Capital Holding Ltd to L&T Finance Holdings Ltd. The company plans to raise funds through public issue to augment the capital base of L&T Finance and L&T Infra to meet the capital requirements arising out of expected growth in their assets. L&T Finance Holding Ltd was incorporated in 2008, is registered as an NBFC ND SI with RBI. It is a financial holding company offering diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, as well as mutual fund products and investment management services through its wholly owned subsidiaries. The company was promoted by Larsen and Toubro Ltd which holds 95.94% stake currently. It has pan India presence with 103 branch offices, 221 meeting centers, 27 KGSK (Kisan Gaurav Seva Kendra) centers and 364 customer care centers. Company operates through four business groups, the Infrastructure Finance Group, the Retail Finance Group, the Corporate Finance Group and Investment Management Group under its wholly owned subsidiaries. L&T Finance is one of the leading NBFCs in the country and offers a wide spectrum of financial products and services for trade, industry and agriculture. L&T Finance Limited (LTF) is a subsidiary of Larsen and Toubro. It was incorporated as a Nonbanking Finance Company in November 1994. Through LTF, L&T aims at making a strong foray in the ever-expanding financial services sector. As a business philosophy, we fund income generating assets/activities while maintaining a clear focus on returns.LTF offers a spectrum of financial products and services for trade, industry and agriculture. The companys focus segments are corporate products, construction equipment, CVs and tractors. Despite the turbulence in the financial services markets over the past few years, L&T Finance has adapted well to the changing market dynamics to remain consistently profitable. Like the rest of the companies in L&T group, LTF is also professionally managed. LTF shares the professional values and ethos of its parent company, and has acquired and maintained a reputation for reliability, transparency of operations and absolute integrity. A steady growth rate validates the trust that industry has reposed in the company.

CHAPTER-2
REVIEW OF LITERATURE

1. Company Profile (1938) Founded in 1938, Larsen & Toubro Limited (L&T) is one of Asia's largest vertically integrated Engineering &Construction conglomerate with additional interests in Information Technology and electrical business. Strong, customer-focused approach and the constant quest for top-class quality have enabled the company to attain and sustain leadership position for over seven decades. Serving the core sectors and infrastructure of the economy, L&T has pioneered spectacular achievements in Indian industry. Many of the engineering and construction projects executed by L&T have set new benchmarks in terms of scale Sophistication and speed. So do many buildings, ports, highways, bridges and civil structures around the country, which are widely regarded as landmarks 2. L & T An Indian multinational (2005) In line with its strategy of aligning capabilities to meet emerging trends, L&TF recently initiated a mega-transformation process, internally to ensure that it emerges, as a knowledge-based Indian multinational Over the years the company has proactively created the necessary infrastructure for its global initiative with office locations in USA, Europe, Middle East and Japan. The Engineering & Construction Division made significant progress during the year in increasing its presence in the overseas markets. The Division secured orders from international clients located at Malaysia, USA, UK, Brazil, Saudi Arabia, UAE, Qatar, Bangladesh, Sri Lanka, etc. The export earnings of the Division amounted to Rs. 24600 million during the year 2005-06 3. The Customer Profile (2006) the customer profile includes leading names such as Samsung, Chevron, Bechtel, Kvaerner, Pirelli, Siam Michelin, Goodyear, etc...The Electrical & Electronics Division too has increased its thrust on exports and the share of export revenues during the year ended March 31, 2006 increased to 11% as compared to 8% in the previous year. L&TF believes that progress must necessarily be achieved in harmony with the environment. Commitment to community welfare and environmental protection constitute an integral part of the Corporate Vision.

4. Mr. Y.M.Deosthalee, Chairman & Managing Director, L&T Finance Holdings (2008) said, The decision to acquire Fidelitys mutual fund business in India was made with an aim to become the best value provider of investment solutions across asset classes. With this acquisition, our fund suite spans the whole range of investment opportunities equity, fixed income, and hybrid, domestic and international funds and moves us closer to becoming one of the countrys leading and admired asset management companies. We now have a high quality business that combines bestinclass practices, a strong domestic brand, market knowledge and a proven performance track record. 5. Mr. N.Sivaraman, President & Wholetime Director, L&T Finance Holdings.(2009) Said L&T Mutual Fund has strengthened its investments team. The AMC has appointed S.N. Lahiri as Head Equities, Shriram Ramanathan as Head Fixed Income and has enhanced its research team in order to increase coverage. The new entity has five important pillars in place: people, processes, products, performance and presence. Over the last few months, we focused on a seamless transition and adding high quality talent to our investments team and other areas. 6.Ashu Suyash, CEO, L&T Mutual Fund.(2009) added, The comprehensive fund range, proven track record, geographical reach, our commitment to distributor training and investor education, and the support of our investors provides an opportunity to take the All New L&T Mutual Fund to the next level. We have significantly enhanced our capabilities in all areas including equity and debt fund management, operations and customer service. We aim to consistently deliver long term investment performance through a disciplined approach to investing, great customer experience through product innovation, technology and high service standards.

CHAPTER-3
RESEARCH METHODOLOGY
3.1 Objectives of the study:

1. To study the financial performance of L&TF company.

2. To identify the key areas to be considered for improvement of financial problem. 3. To suggest the Strategy of financial products. 3.2 Research Design: Research Design pertains to the great research approach or strategy adopted for a particular project. A research project has to be the conducted scientifically making sure that the data is collected adequately and economically. The study used a descriptive research design for the purpose of getting an insight over the issue. Descriptive research is used when the objective is to provide a systematic description that is as factual and accurate as possible. 3.3 Nature of Data: Secondary data: Secondary data that is already available and published .it could be internal and external source of data. Internal source: which originates from the specific field or area where research is carried out e.g. publish broachers, official reports etc. External source: This originates outside the field of study like books, periodicals, journals, newspapers and the Internet. 3.4 Scope of the study: The present study will provide the information about the L&TF Company financial products and which strategy are use to beat the other company.

Strategy Mission - LAKSHYA

To compete and grow in a globalised business environment, L&TF is implementing a Strategy plan (LAKSHYA) for 2005-10. The plan has been drawn up in consultation with a leading international strategy consultant. It has set ambitious growth targets for each business. Also included are opportunities for diversification of L&T's business portfolio.

Strength
Larsen and Toubro is a leading technology, engineering, construction and manufacturing company. The companys other key activities include manufacturing of electrical and electronic equipment, services and information technology. The company operates primarily in India. It is headquartered in Mumbai, India. The company recorded revenues of INR297, 129.9 million (approximately $7,380.7 million) during the financial year ended March 2008 (FY2008), an increase of 42.3% over 2007. The operating profit of the company was INR36, 237.6 million (approximately $900.1 million) during FY2008, an increase of 14.5% over 2007. The net profit was INR22, 312.5 million (approximately $554.2 million) in FY2008, a decrease of 4% over 2007. A Public Limited Company incorporated under the Companies Act, 1956.The Company, promoted by L&T, was incorporated in November 1994 as a public limited company under the Companies Act, 1956, to provide a range of financial products / services.] The Company was registered with RBI under Section 45-IA of the Reserve Bank of India Act, 1934, as a nonbanking financial institution without accepting public deposits vide Certificate of Registration No.B-13.00602 dated April 2, 1998. Based on the revised regulatory framework prescribed by RBI for NBFCs, we were reclassified under the category Asset Finance Company-Non Deposit Taking by RBI vides fresh Certificate of Registration bearing No.B13.00602 dated March 21, 2007. In 2004, L&T Equipment Leasing Company Limited, LTM Limited, L&T Netcom Limited and L&T Trade.Com Limited, were amalgamated with our Company, pursuant to a Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. As part of its corporate strategy to give a distinct identity to the financial services business, L&T promoted a holding

company for financial services business, namely L&T Capital Holdings Limited. L&Ts investment, inter alia, in our Company was transferred to L&T CHL on March 31, 2009. The Company continues to be a subsidiary of L&T - albeit through the latters subsidiary financial services sector holding company, L&T CHL, which itself is also duly registered as a non-banking financial institution without accepting public deposits with RBI. Our Company began by financing the small and medium enterprises and later synergized with the opportunities provided by L&T ecosystem consisting of its subsidiaries and associates along with its large network of dealers, vendors, suppliers, clients etc. We have now evolved into a multi-product asset backed finance company with a diversified corporate and retail portfolio. We are a wholly owned subsidiary of L&T CHL which is in turn a 99.99% subsidiary company of L&T. Our Company is headquartered in Mumbai and has a presence in major cities in India. L&T finance assets base has grown from around Rs 923 crore in 2005 to Rs 6274 crore in September 2009 with a clear retail focus and is projected to grow at a 30% annual clip over the next five years. LTF has relationships with over 500 corporate, 8,000 contractors, 1,500 vendors, 900 dealers 10,000 transporters, 40,000 farmers and over 5, 00,000 microfinance clients. LTFs revenues for the six month period ending September 30, 2009 stood at Rs. 421.8 cr. LTF has consistently made profits and generated return on assets of over 1.85% in the past 5 years. LTF enters the debt capital market on 09 February 2010 with a public issue of Non-Convertible Debentures (NCDs) aggregating up to Rs. 250 crore with an option to retain over-subscription of up to Rs. 250 crore for issuance of additional NCDs. aggregating to a total of up to Rs. 500 Crores. Combining the value of bond issued on August 2009 and February 2010 the company has successful in raising the amount equal to Rs 1500 crore.

Global Presence
L&TF has a global presence. A thrust on international business over the years has seen overseas revenues growing steadily. The company has manufacturing facilities in India, China, Oman and Saudi Arabia. It has a global supply network with offices in 10 locations worldwide, including Houston, London, Milan, Shanghai and Seoul. Customers include global majors in over 30 countries. Sustainability Reporting: L&T CMD releases the Company's First Corporate Sustainability Report. L&Ts first Corporate Sustainability Report for 2007-08 was released by Mr. A. M. Naik, Chairman & Managing Director, in Mumbai today. It communicates L&Ts sustainability performance to stakeholders and will help in benchmarking with that of its peers internationally. This is the first corporate sustainability report to be brought out by an engineering and construction company in India. Sustainability reports disclose performance along social, environmental, economic parameters. Reporting can go a long way in satisfying stakeholders' demands for transparency on corporate responsibility issues.

Corporate Social Responsibility

L&T believes that the true and full measure of growth, success and progress lies beyond balance sheets or conventional economic indices. It is best reflected in the difference that business and industry make to the lives of people. Through its social investments, L&T addresses the needs of communities residing in the vicinity of its facilities, taking sustainable initiatives in the areas of health, education, environment conservation, infrastructure and community development. The company proactively provides assistance in situations such as natural calamities and assists victims of nature's fury or social neglect. Many social initiatives are undertaken in partnership with government agencies and NGOs. Larsen & Toubro Limited, in its corporate policy, philosophy and deeds has shown a commitment to social responsibility, with a range of activities as vast as it is varied - from environmental preservation, a field in which it has won laurels, to rural and social development. It has taken giant strides in promoting safety, health and hygiene, both within the corporation and externally.

CHAPTER-4
Larsen & Toubro Financial Products and Services Limited

Corporate Finance Group accounts for 37% of total assets as on March 31, 2009 and Retail Finance Group accounted for the balance 63%. Retail Finance Groups focus on the under penetrated semi-urban/rural areas and knowledge of the construction equipment business has led to a CAGR of 63% over the past five years in retail finance. Our core business is that of asset backed finance, covering a wide range of commercial and farm assets. Asset backed loans constitute 90.82% of our total loan assets. We also provide loans for meeting the working capital needs of small and medium enterprise (primarily to vendors and dealers of large corporate) and loans against capital market assets for corporate. We have recently made a foray into Micro Finance business further strengthening our commitment towards financial inclusion in the rural economy. Our client base for asset backed loans includes large corporate, banks, multinational companies, small and medium enterprises, contractors, commercial vehicle operators and farmers.

Corporate Finance Group

The business of this group is to provide a wide range of financial products / services to corporate. This may extend from providing asset backed finance for acquisition of a range of equipments and also short-term working capital finance, as well as non-fund based arrangements for establishment of Letters of Credits, Guarantees, etc. The finance may be provided through diverse products including term loan, operating lease, finance lease, purchase of receivables, channel financing, tie-up for providing financing to employees of the corporate. Some of the major businesses that we undertake in this category are as follows:-

Finance Lease:
Finance Lease as a product is less attractive today as a result of higher costs arising out of certain tax issues. However, depending on the customers requirements, we offer this product for financing of cars, computers and plant & machinery. Our major customers include several large companies.

Channel Finance:
Vendor Finance: This product primarily caters to the requirements of vendors / suppliers of large corporate. Currently a substantial part under this product is for the vendors of L&T group. Under this product, we provide a short term working capital finance facility to the vendors of L&T and its subsidiaries and associates. This is mainly in the form of discounting of invoices raised by vendors / suppliers on L&Ts various operating divisions / subsidiaries/ associates. Recently, the product coverage has been expanded to include vendors of other large corporate. The tenor of such financing extends from 1 month to 6 months.

Dealer Finance:
This division focuses on dealers of various operating divisions of L&T and its subsidiaries and associate companies. It offers short term financing with automatic revolving credit to dealers who contribute substantially towards sale of L&Ts finished products. We are preferred by the dealers due to our transparency, faster turnaround time in sanctioning limits and disbursements

and also easier co-ordination with L&T. It is our plan to extend this facility to channel partners of other companies as well.

Receivable Discounting:
This refers to the discounting of receivables from large corporate. It is an asset-backed facility, where operating lease runs in the back-end and the periodic rentals are assigned to us. We have a tie-up with large IT equipment & service providers involved in leasing of IT equipments, furniture & fixtures to large corporate. We have the option of choosing the agreements to be financed through this product. Typically, in such cases, the lesser assigns the rentals arising from the operating lease in our favor and a suitable confirmation from the lessee is also obtained. Additionally, charge on the asset is also created in our favor.

Asset Backed Term Loan:

We provide the term loan for financing of plant & machinery, IT equipments, furniture & fixtures. The charge on the asset is created in our favour as security. Target customers for this product include large corporate as well as the SMEs having specific linkage to a large corporate. Presently, large corporate constitute a majority of the outstanding book of asset backed term loans. Our transparent functioning and quick processing, ensures that the customers preference for our company is maintained

Capital Market Products:

We continue to retain our small but Strategy portfolio of the Loan against Securities (LAS) business. Based on opportunities available, the business selectively provides finance to high net worth individuals and promoters against pledge of shares and other securities. As of March 31, 2009, the LAS business had a book-size of Rs.36, 417 lacs and the NPAs stand at less than 0.30%. In the current year, based on the market conditions, we shall continue to selectively provide finance against shares and securities and additionally shall also consider financing of subscription to IPOs, which is a high yielding product.

Retail Finance Group

The major businesses that we undertake in this category are as follows: Construction Equipment Finance We provide financing for a wide range of equipment like earthmoving equipment, heavy-duty cranes, road construction equipment, mining equipment, etc. We have, in this industry in particular, extensive knowledge and experience. This knowledge of the industry provides us with a competitive edge both in terms of sourcing as well as assessment of business. Further, our understanding of the industry and of the clients enables us to provide our services in a manner that meets the requirements of the client and hence helps us retain our client base. The construction equipment industry consists of a variety of products, such as, hydraulic excavators, wheel loaders, loader backhoes, vibratory compactors, cranes, stone crushing machine and others. These products are widely used in industries like power, national highway development, mining, transportation and earthworks for urban infrastructure. Keeping in view the growth potential for infrastructure in India and the parentage of L&T, which has been in this sector for the last 50 years, construction equipment finance would continue to be one of the major thrust areas of business. We have already made our presence felt in the equipment finance sector over last few years. Major foreign banks and private sector banks have entered this segment in the last few years. Despite severe competition from banks and other major NBFCs in this segment, we have expanded our asset base through our experience and knowledge base developed during the last few years. Further, our Company plans to expand its geographic presence to some of the major markets where we have limited presence thus helping us grow our book size and Expand market. It should be noted that total market of our country is Rs30000cr and for north region it is approximately Rs. 4000cr Rs. 5000cr. In Delhi the market is approx. about Rs. 1296 cr. (We have provided finance for Rs 234 crore comprising of 1175 no. of assets in year 2009-2010. For the year 2008-2009 we have provided finance for Rs. 214 crore comprising of 914 no. of assets taking north region as whole).

Talking Delhi NCR region the company has financed Rs. 99 crore in year 2009-2010 and target set for year 2010-2011 is Rs. 200crore. The portfolio mix strategy will be 70% finance new assets and rest 30% finance to used assets or refinance.

TYPES OF STRATEGIES
INTEGRATION STRATEGIES: - Backward integration INTENSIVE STRATEGIES: - Market development DIVERSIFICATION STRATEGIES: - Conglomerate diversification

Portfolio Mix Strategy:

TYPE OF ASSET New Asset Refinance/Used Asset % Contribution to sales 70% 30%

Category of asset Standard Asset

% Contribution to Sales Examples 60% Excavator, Backhoe Loader, Tipper, Cranes, Pilling Rigs, Paver , Compactors, Graders ,Boom Pumps,Dozers,Transit Mixer etc.

Non Standard Asset

40%

Compressor, HDD Machines, Batching Plants, Hot mix Plant, Stone Crushers,DG Sets, Jetting Machine, Heavy Duty/Vintage-Imported Cranes etc.

Transportation Equipment Finance In 1996, we made a foray in financing of commercial vehicles to the transporters of the erstwhile L&T Cement. However, this segment was not the main focus since there were already established players in the market. We had already built a network for its construction equipment and farm equipment segments. In order to leverage on their network and get into another important sector of the economy, CV Finance was launched in FY 2004-05. The slowdown in the economy in the second half of FY 2008-09 had resulted in lower disbursements, but with the relative recovery in the economy this business is growing again. The CV market in India comprises of four segments namely: Heavy commercial vehicles (Gross vehicles weight 25200 to 40000). Medium commercial vehicles (Gross vehicles weight 16200) Intermediary commercial vehicle (Gross vehicles weight 11700-11800) Light commercial vehicles (Gross vehicles weight 4000) Small commercial vehicles The Company is present in all the segments and is involved in financing commercial vehicles of all makes. We also undertake funding of the body of the CV on a selective basis. Major manufacturers with whom we have a tie-up include Tata Motors, Ashok Leyland, Volvo, Eicher Motors, Force Motors and M&M. As on March 31, 2009, 95% of our commercial vehicles portfolio comprised of new vehicles. However, we plan to finance more number of pre-owned vehicles in the near future in order to have a well balanced portfolio with right mix of first time users, retail customers, fleet owners and used vehicles. We are adding manpower and setting up infrastructure across the country, so that volumes are ramped up and the market is diversified. Our vision is to emerge as a leading player in this industry, while at the same time maintaining good portfolio quality

Rural Finance
The Government of India has classified farm mechanization amongst its priorities. To exploit this opportunity, the rural finance group was launched with its focus on rediscovering the rural potential. We started financing farm equipment from 2004, under the name of Kisan Gaurav retail finance scheme. The scheme was well received in the market by dealers and retail customers on account of competitive terms, tailors made schemes and quick processing. With more feeder roads being developed in rural areas under Prime Ministers Gram Sadak Yojna, new business opportunities have opened up in this segment. The KISAN GAURAV retail finance scheme does not operate in DELHI. We have identified this segment as a focus area and launched the Kisan Bandhu scheme in 2008 targeting customers who are rural entrepreneurs in need of finance for acquisition of small sized transport vehicles. Such as MAHINDRA MAXI PIC UPS, TATA ACE etc. These are 4 wheeler cars. These vehicles provide the last mile connectivity to the villages and are a backbone for rural transportation infrastructure. We have made a foray in financing the dealers of Farm Equipment as well as the small sized transport vehicles in accordance with our strategy of increasing rural penetration. The financing is being done under a scheme named TracFin. This market has a high potential with a large customer base, since their access to other means of finance is limited and if available, is at onerous cost and terms. We plan to explore this market with our USP of transparency in credit appraisal, pricing and documentation. Going forward, we want to identify ourselves as a game changer in the rural segment. This initiative shall also contribute towards achieving the Governments objective of financial inclusion.

Distribution We recently commenced our insurance distribution business for both life and non-life insurance products. In addition to the insurance distribution business, we are also in the business of distributing mutual fund products and plans to pursue this business further as a focus area for growth and profitability. Distribution of third party products presents a significant business opportunity, and is a logical extension to our current product range as it facilitates leveraging the existing retail customer base and widens the range of service offerings to customers. Micro Finance This segment is integral to our aim of achieving financial inclusion in a commercially viable manner. We commenced operations in this business in late 2008. This business is spread over four states, namely, Andhra Pradesh, Tamil Nadu, Maharashtra, West Bengal, Orissa, Gujarat and Karnataka. We follow the model of direct lending through joint liability groups. We currently have a client base of around 5 lakhs customers which we are looking to expand in this segment Micro Finance Products offered by our Company are categorized into Gram Bandhu Micro Loans to joint liability groups of 4-6 individuals ranging from Rs.5,000/- to Rs.50, 000/-; and Udyog Bandhu Small Loans to rural businesses ranging from Rs.50,000/- to Rs.2,00,000/-

SWOT ANALYSIS
Strengths
1. L&T-Ites have strong capabilities. 2. First to Market advantage 3. Cost Leadership

Weaknesses
mainframe 1. Capital goods have been an overvalued 2. Long Delivery period of certain financing products. 3. Weak presence in Global delivery

4. A broad portfolio of infrastructure related management. offerings. 4. Weak help desk threatens to invite new clients.

Opportunities

Threats

1. Diverse range of financial products and 1.Banking license: challenges and prospects 2. Loan growth strong, asset quality woes services 2. L&T Finance has a highly diversified business 3. Paucity of certified staff to support and 3. A strong credit check and asset valuation disaster recovery offerings may become threat in long term for its expansion program framework 4. Telecom infrastructure management. in Europe to support mission-critical work.

Strengths
A strong Brand name: L&T being in the financing product and services market for the last 40 years has a strong market name. Their financial products and services has the largest market share and used by almost all investor across the country. Even before other financing company came into India during the early 90s L&TF has established its name strongly. It had the added advantage of first to the Market. Cost Leadership: L&TF comparatively to competition its financial products and services which is a key strength to the price sensitive investor especially in the times of recession

Weakness:
Capital goods have been an overvalued: L&T will see as much strength as it has seen in the next six to twelve months. Capital goods have been an overvalued segment and there has been concern from management about the order book and order flows coming in. On L&T particularly after it was disqualified from the NTPC tender, that would have contributed significantly towards order flow, so that a big knock against the stock. So you are going to see some weakness in the next couple of months. The company's trailing 12-month (TTM) EPS was at Rs 72.54 per share. (Mar, 2010). The stock's price-to-earnings (P/E) ratio was 25.93. The latest book value of the company is Rs 278.76 per share. At current value, the price-to-book value of the company was 6.75. The dividend yield of the company was 0.56

Opportunities:
Diverse range of financial products and services: L&T Finance Holdings Ltd, which is coming out with an initial public offering (IPO), is a financial holding company offering a diverse range of financial products and services across sectors, as well as mutual fund products and investment management services through its direct and indirect wholly owned subsidiaries. The company is promoted by Larsen and Toubro Ltd (L&T).

L&T Finance has a highly diversified business: model covering a variety of high growth business segments across its core business groups, including infrastructure finance, construction

equipment finance, transportation equipment finance, rural products finance, microfinance, corporate loans and leases, supply chain finance, capital markets finance, the distribution of financial products and investment management products and services. A strong credit check and asset valuation framework: The workforce has increased more than three times in order to support this physical and geographic growth, up from a headcount of 1,214 in March 2008 to 4,395 as on 31 May. For each of its businesses, it has established a strong credit check and asset valuation framework to evaluate and monitor credit risk at the time of origination. The company does not typically buy loan portfolios, but rather focuses on originating and retaining its own loan portfolio with the objective of maintaining asset quality to the highest standards.

Threats:
Banking license challenges and prospects: L&T Finance Holdings strong brand name, large size and diversified loan portfolio make it a leading candidate for a banking licence. Peers such as Mahindra & Mahindra Financial Services and Shriram Transport Finance Company are also touted as the front-runners for the banking licence. Currently, the L&T Finance Holdings scrip is trading at 2.6 times FY14 estimated book value, closer to that of M&M Financial, but higher than Shrirams price/book value of 1.9 times. Loan growth strong, asset quality woes: While L&T Finance Holdings loan growth is expected to moderate from 43 per cent levels witnessed in FY12, it will still be in a healthy range of 23-25 per cent over FY12-15, say analysts. The company is expected to post earnings growth of 28 per cent over this period. The return on equity (RoE)s will be driven higher by retail business at 18 per cent, while that of its corporate business is likely to moderate to 15-16 per cent levels. L&T Finance Holdings recently acquired two companies - Indo Pacific Housing Finance (IPHF) and FamilyCredit in the housing and auto lending businesses, respectively. Going forward, both these acquisitions will drive growth of its retail business subsidiary L&T Finance.

CHAPTER-5
FINDINGS
Better financial product and services should be offered and useful strategy should be made by the management to keep pace with the changes in the corporate world. 1. The Microfinance business is expected to be a robust, predictable, profitable and scalable business in the long term, once the regulatory flux is resolved. 2. Retail Finance businesses are carried out through our Wholly-owned subsidiary, L&TF Ltd. 3. Corporate Finance business, in addition to the Retail Finance business, is carried out through 4. Wholly-owned subsidiary, L&T Finance Limited 5. The Infrastructure Finance business is carried out through our wholly-owned subsidiary, L&T Infrastructure Finance Company Limited 6. Investment Management business, comprising of the Mutual Fund segment and Portfolio Management Services, is conducted through L&T Investment Management Limited (L&T IM), a wholly-owned subsidiary of L&T Finance Limited 7. In Retail Finance, scorecards play a vital role in the lending decision. 8. A comprehensive score card is developed by the credit team, and takes into account all relevant parameters that assist in the evaluation of the creditworthiness of the borrower. 9. We have emerged as one of the leading financiers in world. 10. Concentration risk with respect to single borrower/ promoter groups are low, with the top 10 borrowers/ promoters constituting only 19% and 29% of our infrastructure finance exposure in FY 2012. 11. LTFH follows a policy of rewards and recognition based on merit, powered by focused action planning and activities structured towards building an employee friendly organization

CHAPTER-6 References:
1. Larsen and Tubro financing Companys Vision 2010 2. L&T corporate website- financials performance analysis etc. 3. Rajesh Jeyachandran, Assistant Manager L&TF Limited (2010) - Market share of the different financing Companies in India. Through email dated 17.03.2010. 4. Abbas GM, C&S L&TF Limited, 2010 L&T Performance over last three years including the present financial year 2010 Through email dated 14.03.2010. 5. Target financing Markets strategies for competitor financing companies in India- Abhishek Gokhale, Industry Analyst Frost and Sullivan 2009 6.http://www.larsentoubro.com/lntcorporate/LnT_DWS/Downloads.aspx?resP_CORP_CINV_A FNC_BQUT (Accessed 22.02.2010) 7. http://www.L&TF marketlineinfo.com/library/DisplayContent.aspx?N=4294669489 (Accessed via Metalib 21.02.2010) http://www.ibef.org/download/larsen_&_toubro 8."L&T Wins the Economic Times Company of the Year Award - 2010". L&T Corporate Communications Department. 10 January 2011. 9. L&T History, Larsen & Toubro Corporate website. Retrieved 2010-03-06 10."No.1 Construction Companies in World". No.1 Construction. Retrieved 10 August 2011. 11. AM Naik, Larsen & Toubro, Business Leader of the Year, Economic Times website. Retrieved 2010-07-27.