Introduction To The Lnt Finance Company Finance Essay

It is the company promoted by Larsen Toubro Ltd. It is an earlier known as the LT capital keeping company. It provides a broad scope of fiscal merchandises and services in corporate, retail, substructure finance company. It besides offers common fund merchandises and investing services.

The company operates through its subordinates i.e. L & A ; T infra, IIDL ( Indian Infrastructure Developers Limited ) , L & A ; T IM ( Investment Management ) , L & A ; T Mutual fund etc. it besides holds interest in Federal bank ( 5 % ) , metropolis brotherhood bank ( 5 % ) , invent ARC ( 8.9 % ) , NAC Infrastructure and Equipment Limited ( 30 % ) .

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It has its subdivisions in 23 provinces in India. The company came into market on 1 may 2008. Its retentions is registered with the RBI a non- sedimentation taking non- banking fiscal company and has applies as a nucleus investing company. Its chief headquarter is in Mumbai.

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The companies operates in many Fieldss such as- the substructure finance group, the retail finance group, the corporate finance group and the investing direction group. From the three lines of concern the corporate and retail section is the biggest, secondly the substructure support and at present the investing direction portion of the concern contributes less that 1 % in the concern.

As it is a keeping company, it has the 3 direct subsidiaries-

L & A ; T substructure finance company- it has an income of Rs.7.03 billion in financial 2011, and organize 33.29 % of the entire company. The entire gross loans of the company were Rs.71.8 billion.

The other one Idaho L & A ; T Finance which consist of retail and corporate finace of the company. The retail sector includes micro and macro finance concern lending about 4.5 % of unbarred loans. The entire income is Rs.13.9 billion in financial 2011 and formed 66.08 % of the entire gross. The entire gross loan were Rs.101 billion.

IIDL i.e India Infrastructure Developers Limited does n’t hold any concern right now but be aftering to come in in funding little and average corporate by financial 2012.

Further there are 2 indirect subsidiaries-

L & A ; T Investment Management Limited

L & A ; T Mutual fund legal guardian limited.

L & A ; T Holding Corporate Structure

L & A ; T Holding Corporate construction

The L & A ; T Finance has set up IPO between a scope of Rs.51-59, considered as good because of pre-placement with US Private equity Investor- MACE CIPEF Limited.

It is big company with grosss of Rs.21.14 billion and net net income of Rs. 3.925 billion in financial 2011. In 2010 the grosss and net net income were Rs. 21.14 billion, and Rs. 2.63 billion. Both the subordinates have a good capital and lend together about 16 % and therefore got 5 out of 5 by recognition evaluation bureaus.


In this the company lists its securities to public, i.e the money paid by public portions straight goes to company. An IPO made company to tap in the market of investors to supply itself with the money for their hereafter growing, refund of debt, or working capital. Therefore, it provides the chance for the investing of money by the investors. Those who buyed the portion can make two things with the shares- either they can sell portions one by one or otherwise they can sell those portions as a whole to the populace.

Once the company been listed in the IPO than they get the chance to publish extra portions and sell them which create more flow of money the company. The lone ground why the companies want to be public merely because of the ground that they want market money to be in their pockets.


Capital entree becomes cheaper

Addition in good will in market

Increasing the equity base

Crates many funding chance

Better direction and pay to the employees


The company ‘s fiscal and concern information usage to acquire disclosed.

Right clip to hit the occupation is required.

Legal selling and accounting cost.

Hazard that financess will non be increased.


Profitability ratio: – it is the ratio which analysis the company ‘s ability to gain capital other than disbursals in a specified clip. It farther categorized into two –

Gross net income ratio

Operating net income ratio

Net net income ratio

Operating ratio

The net income per centum of the company increased but the gross net income ratio is decreased. The per centum of net income was non so much high. It has been decreased from 12.74 in March 2010 to 11.52 in March 2011. Even the net net income border besides decreased from past twelvemonth i.e it was 11.56 in March 2010 and in 2011 it was 8.72. The reported return on net worth has been decreased from 23.95 in 2010 to 18.42 in 2011. The return on long term financess is besides decreased from 2007 as 32.59 to 22.62 in 2011, therefore its return on investing capital has been decreased do drastically.

Liquidity ratio- there was so such addition or lessening in the liquidness ratio of the company therefore it seem to be that the company do non hold a batch of current assets. Both the speedy ratio and current ratio are non upto the needed criterion which indicates that the liquidness in the company was non so strong.

Leverage ratio- in this besides there was no such addition in the company ‘s purchase, the long term debt is same as the old twelvemonth 0.33. The fixed assets turnover ratio has decreased by 0.14, while the proprietor ‘s fund was increased from old old ages it was 72.86 in 2010 and increased to 74.99 in 2011.

Payout ratio- the dividend payout ratio is been increased over past 2 old ages which was 21.84 in rear 2011. Both the earning keeping ratio and hard currency gaining keeping ratio has been increased over the the past 5 old ages which was 74.39 and 77.81 severally.


Harmonizing to the analysis the company should travel for the IPO which creates good will in the market, therefore making trade name in the heads of the people. It farther increases the hard currency flow in the market which can assist the company to set up at that place other works and heighten there substructure which finally creates the employment chances. Thus increases the capital in the state and liquidness flow will besides increase.

This will even assist the stockholders and interest holder ever happy as they will acquire at that place dividend on clip or may acquire some net income besides.

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