AN ORGANISATION STUDY REPORT

ON

LARSEN & TOUBRO INFOTECH LTD

Submitted in partial fulfillment of the requirements for the award of degree of

Master of business administration
Master of Business Administration

Submitted by

THARIGOPULA MADHAN KUMAR

Register No.:20MBAJ0083

Under the guidance of

Prof. Karpagam Aras

Professor

Jain (Deemed-to-be University)

Bangalore
2021
 AN ORGANISATION STUDY REPORT

ON

LARSEN & TOUBRO INFOTECH LTD

Submitted in partial fulfillment of the requirements for the award of degree of

Master of business administration
Master of Business Administration

Submitted by

THARIGOPULA MADHAN KUMAR

Register No.:20MBAJ0083

Under the guidance of

Prof. Karpagam Aras

Professor

Jain (Deemed-to-be University)

Bangalore
2021
 DECLARATION

I hereby declare that the Organization Study Report undertaken by me on

LARSEN & TOUBRO INFOTECH LTD under the guidance of Prof.
Karpagam Aras, Jain (Deemed-to-be-University), Bangalore is an
independent work. The report is towards the partial fulfillment of the
Master of Business Administration course of Jain (deemed-to-be-
University), Bangalore for the batch of 2020-22.

Bangalore Tharigopula Madhan Kumar

Date
Prof. Karpagam Aras

Professor

Jain (Deemed-to-be University)

CERTIFICATE

I certify that this Organization Study Report undertaken on LARSEN &

TOUBRO INFOTECH LTD submitted to Jain (Deemed-to-be University) in
partial fulfillment of the requirements for the award of Master of Business
Administration is a record of independent study carried out by Mr
THARIGOPULA MADHAN KUMAR Under my supervision and guidance.
This work has not been submitted previously to any other College/University

Bangalore Prof. Karpagam Aras

Date
 CONTENTS Page No.

Chapter Company History and Profile 1-7

I
1.1 Back Ground and History
1.2 Vision
1.3 Mission
1.4 Goals & Objectives
1.5 SWOT Analysis
1.6 Product profile
1.7 Market share
1.8 Present status
1.9 Future plans

Chapter Industry Analysis 8 –26

II
2.1 Origin of the L&T Infotech Limited
2.2 Growth and present status
2.3 Global scenario of L&T Infotech industry
2.4 Key players in the industry
2.5 Market analysis
2.6 PESTLE analysis of FMCG industry
2.7 Porter’s five forces

Chapter Marketing 27 – 32
III-A
3. A.1 Identify segments and target markets
3. A.2 Range of products
3. A.3 Promotion strategies
3. A.4 Market share and comparison to competition

Chapter Finance 33 – 37
III-B
3. B.1 Accounting standards followed by Emami limited
3. B.2 Internal control and audit
3.B.3 Interpretation
Chapter III-C HRM 38 – 41
3. C.1 Organisation culture

3. C.2 Industrial laws that influences

3. C.3 Job description and Job specification of any 2 vacancies

3. D.1 Impact of COVID on the emami limited operations

Chapter III-D Operations 42 – 46

3. D.2 Lessons learnt and change in strategy by industry in last one year

Chapter III-E Supply chain Management 47 – 49

3. E.1 Order process and resource management practices

3. E.2 Supply chain finance practices

3. E.3 Use of IT and other technologies in managing the supply chain

Chapter III-F Systems & Operations Management 50 –53

3. F.1 Understanding general operations practices
3. F.2 Impact of IT on operations management
3. F.3 TQM practices
3. F.4 Technological advancements in operations

Chapter III-G IT and Analytics 54 -55

3. G.1 Information system in organisation

3. G.2 Layout and utilities report

Chapter IV Corporate Social Responsibility 56-58

4.1 Social economics CSR activities during COVID-1

4.2 CSR activities by the firm in general

Chapter V News Article Triggers and Discussion (Case Study) 59-68

5.1 Collect recent news about the Emami limited

5.2 Background and history

 5.3 Product strategy of Emami limited Vs. Hindustan Unilever limited

5.4 The market for fairness cream in India

5.5 Emami limited Vs. Hindustan Unilever limited

5.6 Hindustan Unilever limited Rebranding

5.7 First-to-use Trademark owner in India

5.8 Emami limited question Hindustan unilever limited fairness over skin cream
rebranding

Chapter V References 69
1. COMPANY HISTORY AND PROFILE
1.1 BACKGROUND AND HISTORY

The Company was incorporated as L&T Information Technology Limited on

December 23, 1996 at Mumbai as a public limited company under the Companies
Act, 1956. The Company received the certificate of commencement of business on
March 25, 1997. Subsequently, the name of The Company was changed to Larsen &
Toubro Infotech Limited pursuant to a special resolution passed by The Shareholders
at the EGM held on June 11, 2001. The name of The Company was changed to
convey the vision for The global brand and to draw strength from The Promoter.
Pursuant to the change of name, a fresh certificate of incorporation was issued to The
Company by the RoC on June 25, 2001. As of the date of this Red Herring
Prospectus, The Company has 1,205 Shareholders (including 11 additional folios held
by certain Shareholders of The Company).

1
Year Major events and milestones of a company
1997 Incorporation of The Company
2002 The Company was assessed at the Optimizing Level 5 of the
Capability Maturity Model for Software, Version 1.1 by the
Software Engineering Institute, Carnegie Mellon University,
USA for the Mumbai, Navi Mumbai, Pune, Chennai,
Bengaluru and Mysore development centres.
2007 The Company acquired GDA USA, an electronic design
services company.
2008 The Company established business in South Africa.
2010 The Company was appraised at Maturity Level 5
(Optimizing) of CMMI for Development v1.2 for the units at
Mumbai, Navi Mumbai, Pune, Bengaluru, Mysuru and
Chennai.
2011 The Company acquired transfer agency business unit of
Citigroup Fund Services Canada Inc. and renamed it as
LTIFST
2013 The business verticals were re-cast into two clusters-
industrials and services.
2014 The Company transferred The PES Business unit to LTTSL.

2015 The Company acquired ISRC from Otis Elevator Company,

USA and Otis Elevator Company (India) Limited, units of
United Technologies Corporation.
2016 The Company was assessed at maturity Level 5 CMMI-SVC
v1.3 for the units at Mumbai, Navi Mumbai, Pune,
Bengaluru and Chennai.
The Company is positioning to cater to “Smart Cities”
opportunities that we have identified.

2017 The Company was assessed at Maturity Level 5 CMMI-

DEV v1.3 for the units at Mumbai, Navi Mumbai, Pune,
Bengaluru and Chennai.

2
Industry Name: IT Consulting & Software - Mid Cap Face Value: 1.0

House Name: L&T Group ISIN: INE214T01019

Incorporation Date: 23/12/1996 Market Lot: 1

1.2 VISION

L&T shall be a professionally-managed Indian multinational, committed to total

customer satisfaction and enhancing shareholder value.

L&T-ites shall be an innovative, entrepreneurial and empowered team constantly

creating value and attaining global benchmarks.

L&T shall foster a culture of caring trust and continuous learing while meeting
expectations of employees, stakeholders and society.

1.3MISSION

To develop and deliver high quality education and research in project management in
consonance with the vision of L&T by providing state-of-the-art infrastructure and
learner friendly atmosphere with innovative pedagogy thereby creating a pool of
world class and socially responsible project professionals.

1.4 GOALS AND OBJECTIVES

1. To ensure that the Company complies with the disclosure obligations to which it is
subject as a publicly-traded company as laid down by the Listing Regulations.
2. To ensure that the information disclosed by the Company is timely and transparent.

1.5 SWOT ANALYSIS

Strengths of L&T
Strong Brand Name in construction and manufacturing in India: L&T has a
strong brand name in India in the field of construction and manufacturing which
enhances its trust on its clients. L&T has handled various large scale projects in India

3
and has successfully created a trustworthy brand name which is very important
especially in the construction industry.
Competitive advantage: L&T is one of the most respected companies in India for
engineering for its custom made technology-intensive equipment and systems. With
the strong brand name and strong manufacturing facilities, L&T holds a competitive
advantage.

Technical expertise: L&T’s technological capabilities support its design and

manufacturing capabilities and provide an expertise in engineering and project
management. L&T’s Technical expertise provides a competitive advantage to the
company.

Strong financial position: L&T’s financial position has been improving from the past
few years with company’s total assets growing at a CAGR of 18% and its total capital
grew at a CAGR of 12% from FY2011-15. Improving financial conditions provides a
cushion at the time of adverse market conditions.

Weaknesses of L&T

Dependence on Indian market: Indian market contributes over 65% of its total

revenues and thus makes L&T largely dependent on the Indian market.
Overdependence on a particular market makes the company vulnerable to any
fluctuations in the Indian market.

Increasing debt: L&T’s debts have been increasing steadily for the past few years.
L&T’s debt has increased from INR 98960 million in FY2011 to INR 136090 in
FY2016. Increasing debts impact company’s financial flexibility.

Opportunities of L&T

Growth in Indian construction and engineering industry: The Indian construction and

engineering industry grew by 8% year on year. With expected high government and
private spending on infrastructure in the next 10 years on smart cities, metro projects
etc. L&T is well placed to leverage the opportunity created in the industry.

4
Strong order book position: L&T has won various contracts in the recent past and
secured new orders worth more than $20000 million in the year 2015-16 which
showed a growth of over 7% over the year.

Threats of L&T

Extensive environmental regulations: L&T is subject to follow extensive

environmental regulations relating to health, pollution, waste disposal etc. These
regulations increase compliance cost for the company.

Low Oil prices affect the industry: With oil prices decreasing, various drilling
projects have been stopped and expansion plans have been scaled back. This affects
growth opportunity for the company and the industry.

GST impact can be negative: The cost of under construction buildings are expected to
increase with GST and it will have an overall negative impact on the construction
industry.

1.6 PRODUCT PROFILE

About Product profile of L&T Infotech limited are Construction& Mining machinery,
Heavy Engineering, Hydraulics, Hydrocarbon, Metallurgical& Material Handling,
Power, Power Development limited, Rubber Processing Machinery, Shipbuilding,
Valves.
1.7 MARKET SHARE
L&T has allotted of shares of 1,20,154 (One Lakh Twenty Thousand One Hundred
Fifty Four) shares on March 24, 2021 to those grantees who had exercised their
options under the Company’s Employee Stock Ownership / Option Schemes. They
said shares will rank pari-passu with the existing shares of the Company in all
respects.

1.8 PRESENT STATUS

5
LTI Tops Everest group’s IT services challenger list named star performer of the year
for BFS services PEAK matrix assessments
LTI has topped the list of ‘IT Services Challenger 2021’ in Everest Group’s PEAK
Matrix Service Provider of the Year Awards. LTI also improved its ranking from 16
last year to 11 in the overall PEAK Matrix® rankings for IT services – the highest
leap registered by any player. LTI is also a Star Performer of the Year in Banking and
Financial Services PEAK Matrix Assessments.

LTI has been categorized amongst the best in ITS Challenger 2021 list based on
PEAK Matrix assessment 2021 undertaken across services such as – Advanced
Analytics & Insights, Artificial Intelligence, Cloud-native Application Development,
Internet of Things, Application and Digital Services in Life and Annuities and Capital
Markets, Next-generation Application Management, Insurance Business Model
Innovation Enablement, Cloud Hyper scalers etc.

The latest ranking acknowledges LTI’s above industry performance on parameters

such as – operational matrix, innovation, expansion in delivery footprint, scope of
services offered and Technology / domain specific investments during the year.

1.9 FUTURE STATUS

 The company reported revenue of INR 2,949 crore, an increase of 18.7% year
on year in the 1st Quarter of FY 2021. This was mainly driven by a new large
order win during the quarter. The major concerns are reduced growth
opportunities and the clients cutting down on discretionary spend.
 A UK based wealth management firm has selected the company for a multi-
million, multi-year deal. It has also received a large order from a US
Aerospace company and a leading debt management company in Europe.
Overall the deal pipeline remains stable for the coming years.
 The management has passed on some time-bound discounts and offshoring
solutions for clients who were facing challenges due to the pandemic. They
are also looking at new revenue structures where they can help optimise the
costs in exchange for better profit sharing from the clients. This may turn out
to be beneficial for the company in the Post Covid-19 era.

6
L&T Infotech and Mind tree together have the highest revenue CAGR in the industry
over FY 2019-22. The merged company could break into the top-5 club of the Indian
IT sector over the next two years. The merged company will then be a $ 3.5 billion IT
Services firm by FY 2024. It will also have a significantly superior profile to Tech
Mahindra with higher growth, margins and Return to Equity. Therefore this category
gets 5 stars in L&T Infotech fundamental analysis.

7
2. INDUSTRY ANALYSIS

8
2.1 ORIGIN OF INDUSTRY IN INDIA

Larsen & Toubro originated from a company founded in 1938 in Mumbai by two
Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. The company
began as a representative of Danish manufacturers of dairy and allied equipment.
However, with the start of the Second World War in 1939 and the resulting blockade
of trade lines, 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 and degauss 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 fabricate ships signalling the expansion of
the company. The sudden internment of German engineers in British India (due to
suspicions caused by the Second World War), who were to put up a soda ash plant for
the Tata's, gave L&T a chance to enter the field of installation.

Larsen & Toubro Limited, commonly known as L&T, is an Indian

multinational technology, engineering, construction, manufacturing and financial
services conglomerate headquartered in Mumbai, Maharashtra, India. It was founded
by two Danish engineers taking refuge in India. The company is also counted in the
list of world's top 5 construction companies. The company has business interests in
basic and heavy engineering, construction, realty, manufacturing of capital goods,
information technology, and financial services. As of 2020, L&T Group comprises
118 subsidiaries, 6 associates, 25 joint-venture and 35 joint operations companies.

In 1944, ECC (Engineering Construction & Contracts) 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 began several 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’s were available at attractive prices, but the finances
required were beyond the capacity of the partners. This prompted them to raise

9
additional equity capital, and on 7 February 1946, Larsen & Toubro Private Limited
was incorporated.[9]

After India's independence in 1947, L&T set up offices in Kolkata, Chennai and New
Delhi. In 1948, 55 acres of undeveloped marsh and jungle was acquired in Powai,
Mumbai. A previously uninhabitable swamp subsequently became the site of its main
manufacturing hub. In December 1950, L&T became a public company with a paid-
up capital of ₹20 lakh (US$28,000). The sales turnover in that year was ₹1.09
crore (US$150,000). In 1956, a major part of the company's Mumbai office moved to
ICI House in Ballard Estate, which would later be purchased by the company and
renamed as L&T House, its present headquarters.

During the 1960s, ventures included UTMAL (set up in 1960), Audco India

Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963)

In 1965, L&T had been chosen as a partner for building nuclear reactors. Dr. Homi
Bhabha, then chairman of the Atomic Energy Commission (AEC) had in fact first
approached L&T in the 1950s to fabricate critical components for atomic reactors. He
convinced Holck-Larsen, a friend with whom he shared an interest in the arts that the
company could do it, indeed must do it. L&T has since contributed significantly to the
Indian nuclear programme Holck-Larsen was once asked by a junior engineer why
L&T should get into building nuclear power plants when companies in the US and
Germany were losing money on nuclear jobs.  He replied: ‘Young man, India has to
build nuclear power plants. If not L&T, who will do it?’

During the 1970s, L&T was contracted to work with Indian Space Research
Organisation (ISRO). Its then chairman, Vikram Sarabhai, chose L&T as
manufacturing partner. In 1972, when India launched its space programme, L&T was
invited to participate.

In 1976, ECC bid for a large airport project in Abu Dhabi. ECC's balance sheet,
however, did not meet the bid's financial qualification requirement. So it was merged
into L&T. ECC was eventually rechristened L&T Construction and now accounts for
the largest slice of the group's annual revenue.

In 1985, L&T entered into a partnership with Defence Research and Development

Organisation (DRDO). L&T was not yet allowed by the government to manufacture

10
defence equipment but was permitted to participate in design and development
programmes with DRDO. After the design and development was done, L&T had to
hand over all the drawings to DRDO. The government would then assign the
production work to a public sector defence unit or ordnance factory for manufacture.
After a series of successes and positive policy initiatives, L&T today makes a range of
weapon and missile systems, command and control systems, engineering systems and
submarines through DRDO.

2.2 GROWTRH AND PRESENT STATUS

At the end of fiscal year 2020, the annual growth rate of Larsen & Toubro across
India was about 7.6 percent.. This was estimated to drop further in fiscal year 2021
due to the lockdown and the after effects of the COVID-19 pandemic. It was
estimated that the company would bounce back to the pre-COVID growth rate in
fiscal year 2022. The company sold its electrical and automation business to
Schneider Electric in 2020, with a view to focus on the EPC and service segment.
Larsen & Toubro Closure of trading window the closure is in connection with the
finalization of financial results of the Company for the year ending March 31, 2021.
The Trading Window will open 48 hours after the said financial results are declared to
the Stock Exchanges.
2.3 GLOBAL SCENARIO

The current geopolitical scenario and the global trade barriers are creating
opportunities for India and the government needs to encash this opportunity, a senior
Larsen & Toubro official said.

Acknowledging that the general slowdown in the economy has impacted the
construction sector in India, L&T's Whole Time Director and CFO R Shankar Raman
said that the government also needs to create an environment for multilaterals, with
huge development budgets, to invest in India.

"The trade barriers that are happening globally are creating opportunities for countries
like us provided we are willing to encash. This will be a window which could soon
disappear," Raman told reporters after announcing the company's quarterly
performance.

11
He said that multilaterals have a lot of developmental budgets available for spending
and we are seeing a lot of Japanese credit coming in and few others also investing.

"The FDI numbers have gone up. There are people who want to take call on India.
What the government has to do is to create an environment which will make them feel
comfortable for lending as well as investing. I think government can address some of
these issues and industry can respond by moving forward," Raman added.

He further noted that the economic agenda is coming to the front burner from the back
burner for the first time in the current year.

"There have been a lot of political distractions. There have also been extensive
industry consultations at various levels in the government and there is seriousness to
revival. What is ailing us is soft consumption as there are no jobs that are getting
created which has led to discretionary spends to be put on hold. If growth has to come
back, if investment has to happen, it's important that consumption has to happen,"
Raman added.

He also noted that it will take a year and year-and-half from now for things to fall in
place and the situation to improve.

Company's managing director and CEO SN Subrahmanyan said that government

should speed up the pace big ticket size projects and ensure they are not stuck.

"There are big ticket size projects announced like the river interlinking, road
expansions, the high speed corridor, among others which are moving slowly. We do
expect these to pick up as this situation cannot prevail long. There are various
disputes and arbitrations which are now getting sorted out," he said.

Subrahmanyan also said that stretched balance sheets among their competitors
sometimes has placed the company in the position of being the sole bidder for major
infrastructure projects.

"There are orders where L&T is the single bidder and hence, we have to bid in 2-3
rounds to win projects. In certain government projects, L&T's pricing is below the

12
government's budget. In such cases, the government has cut the scope of the projects
to meet their budget constraints," he added.

On expectations from the upcoming Union Budget, Raman said the government does
not have enough resources to meet its plans for public spending.

"The government is not scaling down its plan but is struggling to figure out a way to
meet the plans. So lead indicators from the budget may be some slippages in fiscal in
the larger interest of economic growth, the financial responsibility mandate that they
cast upon themselves can get more flexible in implementation. The other will be how
much money they will borrow.

2.4 KEY PLAYERS IN THE INDUSTRY

1. Simplus: Simplus has been critical to the necessary SFDC enhancements and
changes to support our fast growing company since we do not have the in house
expertise.

2. Accenture: Great resources available for PMP and project management. They also
have round the clock support for running projects at critical phases for go live.

3. G2 storefront

This is how G2 Storefront can help you:

Easily shop for curated – and trusted – software

Own your own software buying journey

Discover exclusive deals on software

4. Deloitte implementation services

They have pretty much any skill or type of consultant a company might need. They
are like a big time law firm in that they only hire high level candidates coming out of
school.

13
2.5 MARKET ANALYSIS

L&T has a strong brand name in India in the field of construction and manufacturing
which enhances its trust on its clients. L&T has handled various large scale projects in
India and has successfully created a trustworthy brand name which is very important
especially in the construction industry.

L&T is one of the most respected companies in India for engineering for its custom
made technology-intensive equipment and systems. With the strong brand name and
strong manufacturing facilities, L&T holds a competitive advantage.

L&T’s technological capabilities support its design and manufacturing capabilities

and provide an expertise in engineering and project management. L&T’s Technical
expertise provides a competitive advantage to the company.

Indian market contributes over 65% of its total revenues and thus makes L&T largely
dependent on the Indian market. Overdependence on a particular market makes the
company vulnerable to any fluctuations in the Indian market.

The Indian construction and engineering industry grew by 8% year on year. With
expected high government and private spending on infrastructure in the next 10 years
on smart cities, metro projects etc. L&T is well placed to leverage
the opportunity created in the industry.

L&T is subject to follow extensive environmental regulations relating to health,

pollution, waste disposal etc. These regulations increase compliance cost for the
company.

14
2.6 PESTEL ANALYSIS

The PESTEL analysis is a tool devised by Harvard professor Francis Aguilar to

conduct a thorough external analysis of the business environment of any industry for
which data is available. This is an important step for eventually devising a strategy
that can effectively manoeuvre the competition to maximize a firm's chances of
sustainability and profitability. PESTEL is an amalgam of initials of various factors
that not only affect but the entire industry as a whole- these factors are namely
Political, Economic, Social, Technological, Environmental and Legal.

POLITICAL FACTORS THAT IMPACT

The political factors that may impact the profitability or chances of survival of the
company are quite diverse. The political risks vary from sudden changes in existing
political regimes to civil unrest to major decisions taken by the government. In cases
of possible multinationals, one may also include political factors that take place/
affect not only the host country but also all countries that contain business operations,
or that may engage in trade with

To properly appraise the extent of the overall systematic political risk that may be
exposed to, the following factors should be considered before taking part in any
investments:

 The level of political stability that the country has in recent years.
 The integrity of the politicians and their likelihood to take part in acts of
corruption, as the resulting repercussions may lead to possible impeachments
or resignations of high level government employees.
 The laws that the country enforces, especially with regards to business, such as
contract law, as they dictate what is and is not allowed to do. Some countries,
for example, prohibit alcohol or have certain conditions that must be fulfilled,
while some government systems have inefficient amounts of red tape that
discourage business.
 Whether or not a company’s intellectual property (IP) is protected. For
example, a country that has no policies for IP protection would mean that
entrepreneurs may find it too risky to invest in

15
  The trade barriers that the host country has would protect; however, trade
barriers that countries with potential trade partners would harm companies by
preventing potential exports.
 A high level of taxation would demotivate companies like from maximizing
their profits.
 The risk of military invasion by hostile countries may cause divestment from
ventures.
 A low minimum wage would mean higher profits and, thus, higher chances of
survival for

ECONOMIC FACTORS THAT IMPACT

Economic factors are all those that pertain to the economy of the country that , such as
changes in the inflation rate, the foreign exchange rate, the interest rate, the gross
domestic product, and the current stage of the economic cycle. These factors, and
their resulting impact on aggregate demand, aggregate investment and the business
climate, in general, have the potential to make a company highly profitable, or
extremely likely to incur a loss. The economic factors in the PESTEL analysis are
macroeconomic.

The economic factors that may be sensitive to, and in turn should consider before
investing may include the following:

 The economic system that is currently operational in the sector in question-

whether it is a monopoly, an oligopoly, or something similar to a perfect
competition economic system.
 The rate of GDP growth in the country will affect how fast is expected to grow
in the near future.
 The interest rates in the country would affect how much individuals are
willing to borrow and invest. Higher rates would result in greater investments
that would mean more growth for
 However efficiently the financial markets operate also impact how well can
raise capital at a fair price, keeping in mind the demand and supply.

16
  The exchange rate of the country operates in would impact the profitability of ,
particularly if engages in international trade. The stability of the currency is
also important- an unstable currency discourages international investors.
 A high level of unemployment in the country would mean there is a greater
supply of jobs than demand, meaning people would be willing to work for a
lower wage, which would lower the costs of

SOCIAL FACTORS THAT IMPACT

The social factors that impact are a direct reflection of the society that operates in, and
encompasses culture, belief, attitudes and values that the majority of the population
may hold as a community. The impact of social factors is not only important for the
operational aspect of, but also on the marketing aspect of the organization. A
thorough understanding of the customers, their lifestyle, level of education and beliefs
in a society, or segment of society, would help design both the products and
marketing messages that would lead to a venture becoming a success.

The social factors that affect and should be included in the social aspect of the
PESTEL analysis include the following:

 The demographics of the population, meaning their respective ages and

genders, vastly impact whether or not a certain product may be marketed to
them. Makeup is mostly catered to women, so targeting a majority male
population would be less population than targeting a population that is mostly
female.
 The class distribution among the population is of paramount importance:
would be unable to promote a premium product to the general public if the
majority of the population was a lower class; rather, they would have to rely
on very niche marketing.
 To some extent, the differences in educational background between the
marketers and the target market may make it difficult to relate to and draw in
the target market effectively. Should be very careful not to lose the connection
to the target market's interests and priorities.
 Needs to be fully aware of what level of health standards, reactions to
harassment claims and importance of environmental protection prevail in the

17
 industry as a whole, and thus are expected from any company as they are seen
as the norm.

TECHNOLOGICAL FACTORS THAT IMPACT

Technology can rapidly dismantle the price structure and competitive landscape of an
industry in a very short amount of time. It thus becomes extremely important to
constantly and consistently innovate, not only for the sake of maximizing possible
profits and becoming a market leader, but also to prevent obsolescence in the near
future. There are multiple instances of innovative products completely redesigning the
norm for an entire industry: Uber and Lyft dominate the taxi cab industry;
smartphones have left other phones an unviable option for most et cetera.

The technological factors that may influence may include the following:

 The recent technological developments and breakthroughs made by

competitors, as mentioned above. If encounters a new technology that is
gaining popularity in the industry in question, it is important to monitor the
level of popularity and how quickly it is growing and disrupting its
competitors’ revenues. This would translate to the level of urgency required to
adequately respond to the innovation, either by matching the technology or
finding an innovative alternative.
 How easy, and thus quickly, will the technology be diffused to other firms in
the industry, leading to other firms copying the technological processes/
features of
 How much an improvement of technology would improve/ transform what the
product initially offers. If this improvement is drastic, then other firms in the
industry suffer more heavily.
 The impact of the technology on the costs that most companies in the industry
are subject to have the potential to increase or reduce the resulting profits
greatly. If these profits are great in number, they may be reinvested into the
research and development department, where future technological innovations
would further raise the level of profits, and so on, ensuring sustainable profits
over a long period of time.

18
 ENVIRONMENTAL FACTORS THAT IMPACT

Different industries hold different standards of environmental protection in their head

as the norm. This norm then dictates what every company should aim for, in the least,
to prevent becoming the target of pressure groups and boycotts due to a lack of
environmental conscientiousness. A company in the textile industry, for example, is
not expected to incur the same level of pollution and environmental degradation as an
oil company. The new consumer, armed with the interest and the knowledge it carries,
prefers to give its business to companies it views as more ethical, particularly about
the environment in the wake of global warming.

The environmental factors that may significantly impact include:

 The current weather conditions may significantly impact the ability of to

manage the transportation of both the resources and the finished product. This,
in turn, would affect the delivery dates of the final product in the case of, say,
an unexpected monsoon.
 Climate change would also render some products useless. For example, in the
case of textiles, in countries where the winter has become very mild due to
Global Warming, warm winter clothes have much less of a market.
 Those companies that produce extremely large amounts of waste may be
required by law to manage their environmental habits. This may include
pollution fines and quotas, which may place a financial strain on
 If should (knowingly or unknowingly) contribute to the further endangerment
of an already endangered species may face not only the consequences from the
law but also face a backlash from the general public who may then boycott in
retaliation.
 While relying, in any percentage, on renewable energy may be expensive, it
often receives support not only from the government but also from its
customer base, who may be willing to pay a premium price for the products
that may produce.

LEGAL FACTORS THAT IMPACT

19
The government institutions and frameworks in a country while technically also
political and thus subject to whichever political party holds the majority in a
government body, are also legal and thus should be considered in a PESTEL analysis.
Often policies on their own are not enough to efficiently protect and its workers,
making appear an undesirable place of employment that may repel skilled, talented
workers.

The legal factors that deserve consideration include the following:

 Intellectual property laws and other data protection laws are, as mentioned
earlier, in place to protect the ideas and patents of companies who are only
profiting because of that information. If there is likelihood that the data is
stolen, then will lose its competitive edge and have a high chance of failure.
 Discrimination laws are placed by the government to protect the employees
and ensure that everyone in is treated fairly and given the same opportunities,
regardless of gender, age, disability, ethnicity, religion or sexual orientation.
 Health and safety laws were created after witnessing the horrible conditions
that employees were forced to work in during and directly after the industrial
revolution. Implementing the proper regulations may be expensive, but has to
engage in it, not only due to the law but also out of’s personal feeling of
ethical and social responsibility to other human beings.
 Laws are also placed to ensure a certain level of quality or reasonable price for
certain products to keep the customer safe and prevent them for being
provided. The industries this applies to find often their costs elevated.

2.7 PORTERS’S FIVE FORCE ANALYSIS

A model was put forward by Michael. E. Porter in an article in the Harvard Business
Review in 1979. This model, known as Porter's Five Forces Model is a strategic
management tool that helps determine the competitive landscape of an industry. Each
of the five forces mentioned in the model and their strengths help strategic planners
understand the inherent profit potential within an industry. The strengths of these
forces vary across the industry to industry, which means that every industry is
different regarding the profitability and attractiveness. The structure of an industry,

20
even though it is stable, can change over time. These Porter’s five forces are as
follows:

 Threat of New Entrants

 Bargaining Power of Suppliers
 Bargaining Power of Buyers
 Threat of Substitute Products or Services
 Rivalry Among Existing Firms

The Porter’s Five Forces model can be used to analyse the industry in which Larsen
Toubro operates, in terms of attractiveness through inherent profit potential. The
information analysed using the model can be used by strategic planners for Larsen
Toubro to make strategic decisions.

THREAT OF NEW ENTRANTS

 The economies of scale are fairly difficult to achieve in the industry in which
Larsen Toubro operates. This makes it easier for those producing large
capacitates to have a cost advantage. It also makes production costlier for new
entrants. This makes the threats of new entrants a weaker force.
 The product differentiation is strong within the industry, where firms in the
industry sell differentiated products rather a standardised product. Customers
also look for differentiated products. There is a strong emphasis on advertising
and customer services as well. All of these factors make the threat of new
entrants a weak force within this industry.
 The capital requirements within the industry are high, therefore, making it
difficult for new entrants to set up businesses as high expenditures need to be
incurred. Capital expenditure is also high because of high Research and
Development costs. All of these factors make the threat of new entrants a
weaker force within this industry.
 The access to distribution networks is easy for new entrants, which can easily
set up their distribution channels and come into the business. With only a few
retail outlets selling the product type, it is easy for any new entrant to get its

21
 product on the shelves. All of these factors make the threat of new entrants a
strong force within this industry.
 The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it
difficult for new entrants to join the industry, therefore, making the threat of
new entrants a weak force.

How Larsen Toubro can tackle the Threat of New Entrants?

 Larsen Toubro can take advantage of the economies of scale it has within the
industry, fighting off new entrants through its cost advantage.
 Larsen Toubro can focus on innovation to differentiate its products from that
of new entrants. It can spend on marketing to build strong brand identification.
This will help it retain its customers rather than losing them to new entrants.

BARGAING POWER OF SUPPLIERS

 The number of suppliers in the industry in which Larsen Toubro operates is a

lot compared to the buyers. This means that the suppliers have less control
over prices and this makes the bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardised, less
differentiated and have low switching costs. This makes it easier for buyers
like Larsen Toubro to switch suppliers. This makes the bargaining power of
suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This
means that there are no other substitutes for the product other than the ones
that the suppliers provide. This makes the bargaining power of suppliers a
stronger force within the industry.
 The suppliers do not provide a credible threat for forward integration into the
industry in which Larsen Toubro operates. This makes the bargaining power
of suppliers a weaker force within the industry.
 The industry in which Larsen Toubro operates is an important customer for its
suppliers. This means that the industry’s profits are closely tied to that of the

22
 suppliers. These suppliers, therefore, have to provide reasonable pricing. This
makes the bargaining power of suppliers a weaker force within the industry.

How Larsen Toubro can tackle the Bargaining Power of Suppliers?

 Larsen Toubro can purchase raw materials from its suppliers at a low cost. If
the costs or products are not suitable for Larsen Toubro, it can then switch its
suppliers because switching costs are low.
 It can have multiple suppliers within its supply chain. For example, Larsen
Toubro can have different suppliers for its different geographic locations. This
way it can ensure efficiency within its supply chain.
 As the industry is an important customer for its suppliers, Larsen Toubro can
benefit from developing close relationships with its suppliers where both of
them benefit.

BARGAING POWER OF BUYERS

 The number of suppliers in the industry in which Larsen Toubro operates is a

lot more than the number of firms producing the products. This means that the
buyers have a few firms to choose from, and therefore, do not have much
control over prices. This makes the bargaining power of buyers a weaker force
within the industry.
 The product differentiation within the industry is high, which means that the
buyers are not able to find alternative firms producing a particular product.
This difficulty in switching makes the bargaining power of buyers a weaker
force within the industry.
 The income of the buyers within the industry is low. This means that there is
pressure to purchase at low prices, making the buyers more price sensitive.
This makes the buying power of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make
frequent purchases. This means that the buyers in the industry are less price
sensitive. This makes the bargaining power of buyers a weaker force within
the industry.

23
  There is no significant threat to the buyers to integrate backwards. This makes
the bargaining threat of buyers a weaker force within the industry.

How Larsen Toubro can tackle the Bargaining Power of Buyers?

 Larsen Toubro can focus on innovation and differentiation to attract more

buyers. Product differentiation and quality of products are important to buyers
within the industry, and Larsen Toubro can attract a large number of
customers by focusing on these.
 Larsen Toubro needs to build a large customer base, as the bargaining power
of buyers is weak. It can do this through marketing efforts aimed at building
brand loyalty.
 Larsen Toubro can take advantage of its economies of scale to develop a cost
advantage and sell at low prices to the low-income buyers of the industry. This
way it will be able to attract a large number of buyers.

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

 There are very few substitutes available for the products that are produced in
the industry in which Larsen Toubro operates. The very few substitutes that
are available are also produced by low profit earning industries. This means
that there is no ceiling on the maximum profit that firms can earn in the
industry in which Larsen Toubro operates. All of these factors make the threat
of substitute products a weaker force within the industry.
 The very few substitutes available are of high quality but are way more
expensive. Comparatively, firms producing within the industry in which
Larsen Toubro operates sell at a lower price than substitutes, with adequate
quality. This means that buyers are less likely to switch to substitute products.
This means that the threat of substitute products is weak within the industry.

How Larsen Toubro can tackle the Threat of Substitute Products?

 Larsen Toubro can focus on providing greater quality in its products. As a

result, buyers would choose its products, which provide greater quality at a

24
 lower price as compared to substitute products that provide greater quality but
at a higher price.
 Larsen Toubro can focus on differentiating its products. This will ensure that
buyers see its products as unique and do not shift easily to substitute products
that do not provide these unique benefits. It can provide such unique benefits
to its customers by better understanding their needs through market research,
and providing what the customer wants.

RIVALRY AMONG EXISTING FIRMS

 The number of competitors in the industry in which Larsen Toubro operates is

very few. Most of these are also large in size. This means that firms in the
industry will not make moves without being unnoticed. This makes the rivalry
among existing firms a weaker force within the industry.
 The very few competitors have a large market share. This means that these
will engage in competitive actions to gain position and become market leaders.
This makes the rivalry among existing firms a stronger force within the
industry.
 The industry in which Larsen Toubro is growing every year and is expected to
continue to do this for a few years ahead. A positive Industry growth means
that competitors are less likely to engage in completive actions because they
do not need to capture market share from each other. This makes the rivalry
among existing firms a weaker force within the industry.
 The fixed costs are high within the industry in which Larsen Toubro operates.
This makes the companies within the industry to push to full capacity. This
also means these companies to reduce their prices when demand slackens.
This makes the rivalry among existing firms a stronger force within the
industry.
 The products produced within the industry in which Larsen Toubro operates
are highly differentiated. As a result, it is difficult for competing firms to win
the customers of each other because of each of their products in unique. This
makes the rivalry among existing firms a weaker force within the industry.
 The production of products within the industry requires an increase in capacity
by large increments. This makes the industry prone to disruptions in the

25
 supply-demand balance, often leading to overproduction. Overproduction
means that companies have to cut down prices to ensure that its products sell.
This makes the rivalry among existing firms a stronger force within the
industry.
 The exit barriers within the industry are particularly high due to high
investment required in capital and assets to operate. The exit barriers are also
high due to government regulations and restrictions. This makes firms within
the industry reluctant to leave the business, and these continue to produce even
at low profits. This makes the rivalry among existing firms a stronger force
within the industry.
 The strategies of the firms within the industry are diverse, which means they
are unique to each other in terms of strategy. This results in them running
head-on into each other regarding strategy. This makes the rivalry among
existing firms a strong force within the industry.

How Larsen Toubro can tackle the Rivalry among Existing Firms?

 Larsen Toubro needs to focus on differentiating its products so that the actions
of competitors will have less effect on its customers that seek its unique
products.
 As the industry is growing, Larsen Toubro can focus on new customers rather
than winning the ones from existing companies.
 Larsen Toubro can conduct market research to understand the supply-demand
situation within the industry and prevent over production.

26
3.A MARKETING

27
3.A.1 Segments and Target Markets

Segmentation of Larsen Toubro

The development of Larsen Toubro Marketing Strategy requires identifying

segmentation basis to understand the specific buying behaviour of customers. The
needs, expectations and buying behaviour of customers are heterogeneous and depend
on multifaceted factors- like:

 Age
 Gender
 Income
 Lifestyle
 Values etc.

By using the segmentation technique, Larsen Toubro can narrow down the large,
diversified target audience into specific and narrowly defined groups. Market
segmentation surveys are common methods of obtaining the customer-specific
information that could be used to create groups sharing common characteristics.

After understanding the unique buying behaviour of customers and getting the
required information through surveys, Larsen Toubro can divide the market into small
homogeneous groups. It can be done by exploring the geographic, demographic,
behavioural and psychographic characteristics of customers.

The company can use one or more of these segmentation strategies to choose the right
market segments and develop an effective Marketing Strategy.

28
  The geographic segmentation divides the market according to geographic
areas, like- city, country and region.
 The demographic segmentation will require Larsen Toubro to divide market
according to demographic characteristics, like- gender, age, income and
ethnicity.
 If Larsen Toubro chooses behavioural segmentation, then customers will be
divided according to their buying pattern like usage frequency, benefits
sought, usage occasions and brand loyalty.
 Use of psychographic segmentation will result in customers' grouping
according to their lifestyles, interests, attitudes, values and traits.

Larsen Toubro can combine the different segmentation strategies for more specific
targeting as explained in the next section.

Targeting and Positioning of Larsen Toubro

After dividing the large diversified customer market into smaller groups with
homogeneous characteristics, Larsen Toubro should wisely choose the target
segment/segments whose needs and expectations match the company’s resources and
capabilities.

The targeting can be done by evaluating the commercial attractiveness and growth
potential of identified segments. Larsen Toubro can choose one or more segments
depending on the segments’ characteristics and the company's resources, capabilities
and growth objectives.

The commercial attractiveness and growth potential of each segment can be evaluated
by using the following indicators:

 Identified segments have the appropriate size

 Have concrete differences.
 The estimated profits should exceed the additional marketing costs.
 Segments are easily accessible.

29
After segmenting the customer market and choosing the right target market, Larsen
Toubro now requires to set a clear positioning statement that could create a positive
image of the offered product in the customers' mind. Larsen Toubro can follow the
following steps to develop an effective positioning strategy:

 Develop the positioning statement for Larsen Toubro Marketing Strategy by

answering the following questions:
o What your brand stands for?
o What are the needs and wants of your target market?
o How your brand serves those needs?
o How different is your offering from competitors?
 Answers to these questions will yield enough information to develop a
positioning statement.
 The comparison of their communication and messaging strategy with
competitors will reveal the potential areas that could be addressed with
targeted positioning message.
 Identify the strengths/weaknesses of business by comparing with competitors
to find that gaps that offered product can fill.
 Analyse positioning of competitors and evaluate own position in the market.
 By using the analytical data collected from a different market, customer and
competitor surveys, develop a positioning statement and periodically test its
effectiveness by collecting qualitative and quantitative data (like focus groups,
polls, interviews etc.).
 Use the test results to make necessary adjustments in the brand positioning.

3.A.2 Range of Products/Service of L&T Infotech

1. Construction

2. Construction & Mining Machinery

3. Heavy Engineering

4. Hydraulics

5. Hydrocarbon

30
6. Metallurgical & Material Handling

7. Power

8. Power Development Limited

9. Rubber Processing Machinery

10. Shipbuilding

11. Valves

These are the total services/products of L&T Infotech Limited

3.A.3 Promotion Strategies

This is one of the most important elements of Larsen Toubro Marketing Strategy.
Larsen Toubro can blend above and below the line promotional strategies to achieve
its marketing objectives. The above the line promotion options for Larsen Toubro are-
television, radio and print advertising. Below the line promotion options are-
catalogues, tradeshows and direct mail campaigns.

The promotional plan of Larsen Toubro Marketing Strategy requires the company to
consider the following factors:

 Start with clearly defining your unique selling propositions and understand
why customers need the product and how it is different from available
alternatives.
 Craft the message content and evaluate how the crafted message will help
customers in creating a clear image of the offered product. Consider the AIDA
(awareness, interest, desire, action) when developing the message.
 The promotional strategies like direct selling or high profile advertising will
suit if the company wants to push the product. However, the pull strategy will
require the development of a prestigious brand image that could attract the
customers towards the offered product.
 Collect the following target market information- who will buy the product?
(Age, gender, income and social status), what is price sensitivity level? And

31
  what are customers’ desired communication modes? Incorporate this
information into the promotional plan.
 Filter out the promotional options based on the above information and conduct
a cost-benefit analysis of selected promotional alternatives.

For example, the selection of TV advertising as a promotional strategy

will allow the company to target the mass market, increase brand
awareness and brand recall. However, it is an expensive promotional
strategy and suits if the company has adequate resources available for
the promotional efforts.

The popularity of social media marketing has raised significantly

during the last few years. Use of this promotional strategy will enable
Larsen Toubro to reach the mass market economically. It will also
offer an opportunity to actively interact with customers, develop a
personalised relationship and manage e-WOM to get better results.
However, the risk of uncontrollable negative e-WOM remains there.

 Lastly, consider the budget constraints and allocate budget to chosen

promotional strategies according to their nature, importance and frequency.

3.A.4 Market Share and Comparison to competition

Name Last Price Market Sales Turnover Net Profit Total Assets
Cap(Rs.cr.)
TCS 3,165.00 1,187,629.76 131,306.00 33,260.00 74,368.00
Infosys 1,385.20 590,186.74 79,047.00 15,543.00 62,234.00
HCL 1,002.60 272,072.06 32,606.00 8,969.00 37,456.00
Tech
Wipro 406.00 228,151.33 50,407.00 8,680.70 51,480.70
Tech 992.15 96,065.92 29,225.40 4,534.50 23,503.80
Mahindra
L&T 4,112.80 71,871.43 10,183.20 1,552.40 5,228.80
Infotech

32
3.B FINANCE

33
3.B.1 Accounting Standards Followed By L&T Infotech Limited

In the preparation of the annual accounts, the applicable accounting standards have
been followed and there has been no material departure.

The Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company as on March 31, 2020 and of the
profit of the Company for the year ended March 31, 2020.

The Directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

The Directors have laid down an adequate system of internal financial controls to be
followed by the Company and such internal financial controls are adequate and
operating efficiently.

The Directors have devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.

3.B.2 Internal Control & Audit

Accuracy of recognition, measurement, presentation and disclosures of revenue and

other related balances in view of the principles laid down under Ind AS 115 “Revenue
from Contracts with Customers”. The application of the revenue accounting standard

34
(Ind AS 115) involves significant judgements/material estimates relating to
identification of distinct performance obligations, determination of transaction price
of the identified performance obligations, the appropriateness of the basis used to
measure revenue recognized over a period. Additionally, the standard requires
disclosures, which involve collation of information in respect of disaggregated
revenue, and periods over which the remaining performance obligations will be
satisfied subsequent to the balance sheet date. The Company has also evaluated the
impact of COVID – 19 resulting from (i) the possibility of constraints to render
services which may require revision of estimations of costs to complete the contract
because of additional efforts, (ii) Onerous obligations, (iii) Penalties relating to
breaches of service level agreements (iv) Termination or deferment of contracts by
customers.

Profit and Loss Account of L&T Infotech Limited

Particular March March 2019 March 2018

2020
INCOME
Sales Turn over 10184.20 8907.20 6906.40
Excise Duty 0.00 0.00 0.00
NET SALES 10184.20 8907.20 6906.40
Other Income 421.7000 329.0000 525.4000
TOTAL INCOME 10605.90 9236.20 7431.80
EXPENDITURE
Manufacturing Expenses 2173.60 1931.60 1628.60
Material Consumed 0.00 0.00 0.00
Personal Expenses 5982.80 5128.70 4134.80
Selling Expenses 0.00 0.00 0.00
Administration Expenses 162.10 123.80 94.90
Expenses Capitalised 0.00 0.00 0.00
Provisions Made 0.00 0.00 0.00
TOTAL EXPENDITURE 8318.50 7184.10 5858.30
Operating Profit 1865.70 1723.10 1048.10
EBITDA 2287.40 2052.10 1573.50
Depreciation 208.40 88.10 91.30
Other Write-offs 0.00 0.00 0.00
EBIT 2079.00 1964.00 1482.20
Interest 72.00 4.30 13.80
EBT 2007.00 1959.70 1468.40
Taxes 454.60 484.60 308.30

35
Profit and loss for the Year 1552.40 1475.10 1160.10
Non-Recurring Items 0.00 0.00 0.00
Other Non-Cash Adjustments 0.00 0.00 0.00
Other Adjustments 0.00 0.00 0.00
REPORTED PAT 1552.40 1475.10 1160.10

Balance Sheet of L&T Infotech Limited

Particular March 2020 March 2019 March 2018

Liabilities
Share capital 17.40 17.40 17.20
Reserves & Surplus 5211.40 4696.10 3701.40
Net Worth 5228.80 4713.50 3718.60
Secured Loan 0.00 0.00 0.00
Unsecured Loan 0.00 0.00 0.00
TOTAL LIABILTIES 5228.80 4713.50 3718.50
Assets
Cross Block 1461.40 551.50 272.70
(-) Acc.Depreciation 309.90 236.80 0.00
Net Block 1151.50 314.70 272.70
Capital Work in Progress 40.00 8.20 6.80
Investments 2873.50 2260.00 1560.30
Inventors 0.00 0.00 0.00
Sundry Debtors 2176.70 1729.30 1327.50
Cash and Bank 371.40 215.40 249.80
Loans and Advances 1703.60 1699.00 1634.50
Total Current liabilities 4251.70 3643.50 3211.80
Current Liabilities 2807.90 1282.50 1128.90
Provisions 280.60 230.60 204.10
Total Current Assets 3087.90 1513.10 1333.00
NET CURRENT ASSETS 1163.80 2130.60 1878.80
Misc. Expenses 0.00 0.00 0.00
TOTAL ASSETS 5228.80 4713.50 3718.60

3.B.3 Interpretation of Profit and Loss and Balance sheet of L&T Infotech Limited

On standalone basis, revenue from operations and other income for the financial year
under review were Rs, 92,362 Million as against Rs, 74,318 Million for the previous
financial year registering an increase of 24.3%. The profit before tax was Rs, 19,597
Million and the profit after tax was Rs, 14,751 Million for the financial year under
review as against Rs, 14,684 Million and Rs, 11,601 Million respectively for the
previous financial year. The profit after tax increased to the tune of 27.2% in
comparison to the revenue increase of 24.3%.

36
On consolidated basis, revenue from operations and other income for the financial
year under review were Rs, 97,481 Million as against Rs, 77,326 Million for the
previous financial year registering an increase of 26.1%. The profit before tax was Rs,
20,278 Million and the profit after tax was Rs, 15,155 Million for the financial year
under review as against Rs, 14,415 Million and Rs, 11,124 Million respectively for
the previous financial year.

As per the fiscal year 2020 Profit after tax is Rs, 15,524 Million

37
 3.C HUMAN RESOURCE

3.3.1 Meaning of Organizational culture

Organizational culture is the collection of values, expectations, and practices that

guide and inform the actions of all team members. Think of it as the collection of

traits that make your company what it is. A great culture exemplifies positive

traits that lead to improved performance, while a dysfunctional company culture

brings out qualities that can hinder even the most successful organizations.

Don’t confuse culture with organizational goals or a mission statement, although both

can help define it. Culture is created through consistent and authentic behaviors, not

press releases or policy documents. You can watch company culture in action when

38
 you see how a CEO responds to a crisis, how a team adapts to new customer

demands, or how a manager corrects an employee who makes a mistake.

3.3.2 Organization culture in L&T Infotech Limited

Organizational culture is a set of shared values that guide the employees towards
acceptable and rewarding behavior. L&T has a strong heritage of professionalism that
places the highest value on merit and integrity.

L&T’s strong, customer-focused approach and the continuous quest for world-class
quality have enabled it to attain and sustain leadership in all its major lines of
business. A commitment to community welfare and environmental protection are an
integral part of the corporate vision.

L&T Infotech (LTI) Culture reviews. Good company to work for, management are

supportive and pay structure is also v competitive .Managers screw the
work culture by committing unrealistic deadlines with clients and expect to be
completed. Managers are scared to push back with the clients they just say ok for
everything.

With people being regarded as the prime movers a strong HRD culture pervades the
organization personnel policies, and HRD systems are designed to sustain motivation,
encourage learning, and achieve higher levels of quality and productivity through job
involvement. Quality Training and Development of Human Resources is realized
through:
Identifying training needs within the Organization anddesigning and implementing those 
need based trainingprogrammes 
To bring about continuous up gradation of knowledge, skills and employee attitudes. The
following brief highlights ECC's training methodology for the comprehensive
development of its 7000-odd employees. Inclusion of stakeholders and delegates.

39
3.3.3 Job Description and job specification of any 2 vacancies
For first job vacancy
Job description
 Job Title: Performance Testing
 Job Location: Can be Remote
Preferred Location: Hyderabad, Bangalore, Mumbai, Chennai and Pune
 Job Type: Full time
 Job Role: Performance Testing and Capital Market and vegun.
Job Specification
 Qualification: Should have good communication skills and interpersonal
skills.
 If candidate worked on any migration project.
 Should have good knowledge of performance centre
Experience: 4-12 years
For second job vacancy
 Job Title: IOS developer
 Job Location: : Can be Remote
Preferred Location: Hyderabad, Bangalore, Mumbai, Chennai and Pune
 Job Type: Full time
 Job Role: creating and architecting new mobile applications, maintaining and
improving existing features on existing applications, and working with our
sales team to develop innovative solutions that meet our clients' business
needs.
Job Specification
 Qualification: Have published one or more iOS apps in the app store,
Working experience in iOS development, Excellent Communicator
 Experience: 4-12 years, Experience with third-party libraries and APIs

40
3.D OPERATIONS

41
3. D.1 Impact of COVID-19 on the company operation

L&T Infotech (LTI) feels the COVID-19 pandemic will impact business in the first
half of the fiscal, but it will not resort to employee retrenchment even as it seeks to
protect profit margin, a top company official said.

Different tools, including reducing subcontracted staff and deferring capital

expenditure plans, will be deployed to protect margins, LTI Managing Director and
Chief Executive Officer Sanjay Jalona told PTI.

A lot of information technology (IT) companies have voiced concern about the

business impact of COVID-19 pandemic as economic activity slows down across the
world, leading companies to spend less or defer spending on IT front.

LTI posted a 12.9 per cent jump in its March quarter net profit at Rs 427.5 crore, on
the back of a 21 per cent rise in revenue to Rs 3,110 crore. In the March quarter, the
impact of COVID was only in the last two weeks. The full impact will be seen in Q1,
42
and we feel Q1 and Q2 business will surely be impacted, Jalona said, pointing out
specifically to difficulties which may come out of oil and gas and manufacturing
sectors.

3. D.2 Change in strategies in last one year

On Feb 6, 2020 LTI expands strategic partnership with OKQ8 Scandinavia.

Engagement to accelerate digital transformation at Sweden’s largest fuel company

Arun Sankaranarayanan, Chief Business Officer, LTI Nordics, said, “Since its
inception in 1999, OKQ8 has consistently set high standards for technology adoption
and excellence in customer service. We are excited to expand our partnership with
OKQ8 to design next-generation architecture and fulfil the company’s digital
transformation vision. LTI would leverage its capabilities in exponential technologies
and customer-centric approach to help OKQ8 accomplish its strategic goals.

LTI has a strong presence across the Nordic region and partners with leading
companies to help them compete effectively in a changing world.

On June 17, 2020 LTI Introduces safe Radius, a return to work app to ensure
employee safety Larsen & Toubro Infotech , a global technology consulting and
digital solutions company has introduced LTI SafeRadius, a GDPR-compliant return-
to-work app to ensure workforce well-being and enhance operational efficiency as
employees return to work in a phased manner across industries. The app provides rich
and intuitive operational risk analysis by recording, processing, integrating and
presenting data from various sources within and outside an organization.

On June 23, 2020 Larsen & Toubro Infotech a global technology consulting and
digital solutions company, today announced an Accelerated Migration Program for
customers of SAP with Amazon Web Services (AWS). As part of this program, LTI
will help customers move their SAP ERP, SAP S/4HANA, and other SAP workloads
from on-premise to AWS leveraging its intelligent, automated, migration acceleration
platform and services.

43
To enable faster migration to AWS, the program offers Discovery Module, Build and
Deployment Module, and Validation Module to enterprises across industry segments.
The Add-on components of the program include an SAP profiler, analyzer for SAP
S/4HANA, Auto-code remediation for SAP HANA® compliance, Security Module
and Smart Testing module with a vast repository of test scenarios and test cases.

“LTI has a successful track record of enabling AWS cloud transformations across
highly complex SAP customer landscapes,” said Siddharth

On July 8, 2020  Larsen & Toubro Infotech, a global technology consulting and
digital solutions company has launched LTI Canvas, a modern software engineering
platform that addresses critical need of enabling work from anywhere. LTI Canvas is
an integrated platform that brings together various processes, tools and methodologies
to drive technology and business outcomes in an environment where teams are
operating in a distributed environment.

A resilient digital platform, LTI Canvas can help organizations improve their
effectiveness and ability to innovate in a remote or hybrid environment. LTI Canvas is
a bundle of Microsoft technologies and LTI solutions to help IT professionals across
industries collaborate easily and stay productive. It is based on micro services
architecture and leverages Microsoft platforms like Azure and Microsoft 365
including Teams, among others along with LTI’s Ways of Working solution stack.
LTI Canvas streamlines processes like software development, support, transition,
knowledge management, infrastructure management, and information security. It
consolidates capabilities across Cloud, Agile, Devops and Design Thinking
leveraging AI/ML and analytics.

On October 1, 2020 Larsen & Toubro Infotech, a global technology consulting and
digital solutions company launched Canvas PolarSled, an automated cloud migration
and modernization framework to help enterprises accelerate their data journey
to Snowflake, the cloud data platform. LTI Canvas PolarSled enables enterprises with
rapid migration of their cloud data to Snowflake’s single, integrated platform in an
efficient and low-risk way.

With its innovative architecture, unique consumption model and near-unlimited

scalability, Snowflake adoption can help enterprises emerge as fully equipped digital

44
organizations. LTI Canvas PolarSled is a unique framework that provides a complete
playbook on automation strategy and governance to ensure swift migration to
Snowflake.

LTI Canvas PolarSled approaches migration to Snowflake in three layers, each with a
specific set of tools, governance and outcomes:

1. A consulting led and contextualized migration strategy and design

2. End-to-end migration across entire analytics value chain by leveraging LTI
tools & accelerators
3. Optimizing Snowflake data platform post-migration

On Dec 1, 2020 Larsen & Toubro Infotech (LTI), a global technology consulting and
digital solutions company, has partnered with Temenos, the banking software
company, to launch Digital Banking Platform, powered by Temenos technology. The
platform will modernize legacy core banking systems in the Nordic region, enabling
financial institutions to be more agile and scalable while reducing operating costs.
Banks will also be able to leverage the platform to launch new products and services
faster.

With its comprehensive capabilities, the Digital Banking Platform provides end-to-
end integration with Temenos Transact, Temenos Infinity, Temenos Payments, and
Temenos Financial Crime Mitigation as well as Fintech solutions like regulatory
reporting, authentication, KYC solutions, card services, and payment solutions
available on Temenos Marketplace. LTI and its fully-owned subsidiary, Syncordis
Consulting, a leading Temenos expert in the European region for more than 15 years,
will provide implementation and managed services.

The partnership heralds a new era for Nordic banks as it brings together LTI’s
expertise in the domain and its deep understanding of Temenos functionality and
advanced cloud-native, cloud-agnostic, AI and API-first technology solutions,
enjoyed by over 3,000 banks in over 150 countries.

On Jan 7, 2021 Larsen & Toubro Infotech (BSE code: 540005, NSE: LTI), a global
technology consulting and digital solutions company has become an Elite Services
Partner of Snowflake, the Data Cloud company. Elite Partner represents the highest
level of partnership in Snowflake Partner Network. This achievement recognizes

45
LTI’s commitment in delivering amplified outcomes at scale and speed on
Snowflake’s Data Cloud. The status differentiates LTI as a preferred services partner
for Snowflake with proven expertise and experience.
LTI has also become the maiden partner for Snowcase, a program that Snowflake is
launching to develop and market industry-specific solutions to accelerate cloud data
transformation journey of enterprises. The first Snowcase being launched with LTI is
‘Data-Driven Manufacturing Transformation’ highlighting best practices from LTI’s
marquee Snowflake implementation for a global manufacturer. The accelerated
migration and platform simplification of existing data platform to Snowflake data
cloud was done leveraging LTI Canvas PolarSled, LTI Mosaic & Qlik.

46
 3. E SUPLLY CHAIN MANEGEMNT

3. E.1 Order Process and Resource Management Practices in the company

Transforming Supply Chain from being just a functional necessity to becoming a

competitive advantage. LTI’s Oracle SCM solutions offer the most extensive range of
capabilities to modernize operations across Demand, Supply, Process Optimization
and Supply Chain Visibility.

L&T Infotech solutions are used by global companies with flexibility of centralized
control for logistics, near shore warehouses, vendor managed inventories and multiple
mobility-based solutions, including wearable technology.

3. E.2 Supply Chain Finance Practices in the company

The Hi-Tech industry is characterized by demand volatility, shorter product life

cycles, increasing pressure to innovate, reduced cost and increased customer value.

47
The increasing trend of going ‘fab-lite’ has introduced another dimension – managing
extended supply chains with limited control over inbound supply. To meet these
challenges, Hi-Tech manufacturers need to optimize their supply chain, enable
complete real-time visibility with customers, partners & suppliers; and reduce the
time-to-market.

L&T Infotech’s long term partnership with leading Hi-Tech customers has resulted in
gaining a first-hand experience of the semiconductor industry. We analysed
challenges and pain areas of the Hi-Tech industry, and the need for a collaborative,
responsive & agile supply chain in the current economic scenario. L&T InfoTech’s
SCM practice for Hi-Tech manufacturing has been a part of various innovation
programs, from new idea generation, conceptualization, actual development and
rollout support, to servicing the needs of customers & end users across the global
supply chain.

3. E.3 Use of IT and other technologies in managing the supply chain

L&T Infotech’s Supply Chain Management (SCM) implementation expertise in the

Hi-Tech sector encompasses Semiconductor Manufacturers, Original Equipment
Manufacturers (OEMs), Foundries, Distributors and Contract Manufacturers. Our
broad and deep domain expertise provides the foundation for architecting and
integrating client-specific solutions.

Key Supply Chain Management Services

Consulting/Business Solutions

 Package evaluation and selection

 Business process tuning
 Application Portfolio consulting

Implementation/Rollout

 Implementation and rollout services for a wide range of packages

 Version upgrades and enhancement services
 Integration of ERP and Legacy systems
 Business analytics for SCAM

48
Maintenance, Support and Development Services

 Sustenance service, enhancements, and development services for current

applications.

3. E.4 Purchasing function and policy

Most employees would agree that Procurement processes are incredibly time-
consuming and not at all user-friendly. With manual processes for supplier
collaboration and lack of effective control over contracts, procurement processes tend
to be quite sophisticated. This in turn means that there is very low visibility into
sourcing performance, and businesses are unable to accurately gauge savings potential
in their procurement processes.

Procurement Savings-as-a-Service ensures seamless implementation of Cloud-based

apps in the procurement and expense space. This ensures savings throughout the
Procure to pay cycle, while providing higher visibility & control for optimized costs
and also mitigating supply risk and enhancing user experience.

49
3. F SYSTEMS AND OPERATIONS
MANAGEMENT

3. F.1 understanding general operations practices of the company

LTI is a global technology consulting and digital solutions Company helping more
than 400 clients succeed in a converging world. With operations in 31 countries, we
go the extra mile for our clients and accelerate their digital transformation with LTI’s
Mosaic platform enabling their mobile, social, analytics, IoT and cloud journeys.
Founded in 1997 as a subsidiary of Larsen & Toubro Limited, our unique heritage
gives us unrivalled real-world expertise to solve the most complex challenges of
enterprises across all industries. Each day, our team of more than 33,000 LTItes
enable our clients to improve the effectiveness of their business and technology
operations and deliver value to their customers, employees and shareholders.

50
Known as a powerful practice that is transforming how the software is designed and
engineered at some of the large-scale operations in the world, Chaos Engineering is
likely to shake the status quo. LTI’s Archana Joshi, Head – Transformation Practice,
gets down to the roots of this concept.

3. F.2 Impact of IT on operations Management in the company

LTI’s EMS solution is an industry-leading, lightweight ITOM (IT operations

management) solution. The key modules of this offering consist of availability of
server management, network, storage, database, etc. It includes an intelligent
discovery module for automatic discovery of the client infrastructure. It discovers all
components within the client’s enterprise – standard and unique – across physical,
virtual and cloud setups. LTiOM collects and stores a variety of data in a clean data
lake. It has the ability to apply AI / ML for actionable insights – understanding
relationships between infrastructure, applications and business services, and using this
context to gain insights. LTiOM can integrate and share data across technologies and
IT ecosystem in real-time. It can apply multi-directional integrations to automate
actions at the cloud scale.

The Manager-of-Manager (MoM) layer of the LTiOM platform incorporates a

powerful correlation engine, which aggregates incoming alerts from various sources
and streamlines them, thus helping reduce noise from alerts.

Solution Description

 Integrated hybrid monitoring & management platform

 Complete visibility of hybrid environment
 Collection and storage of a variety of data in a clean data lake
 Integration with the clients IT ecosystem in real time

Value Proposition Offered

 Elimination of cost and complexity of multiple monitoring tools

 Reduction of administration burden for monitoring
 Application of multi-directional integrations to automate actions at cloud scale

51
  Different RBAC views for management, internal and external clients.

3. F.3 TQM Practices in the company

Media & Entertainment industry is undergoing massive changes both from business
and technology perspective in today’s Digital era. The growing competition and rising
consumers’ expectations have raised the bar for Quality Assurance (QA) needs of
media companies. This Webinar takes a closer look at the trends that are influencing
these needs and at how media companies are responding to them to achieve their
business goals. As companies increasingly use new digital technologies to connect
with their customers, QA is reinventing itself to align with new industry trends. The
questions that arise are – How these trends affect my business? How can QA help me
secure customer value and business performance? What are the best fit solutions
which can help me navigate the digital wave?

3. F.4 Technological advancements in operations management in the company

Smart Operations include applications such as wireless monitoring, infotainment

systems, or field service management for maintenance crew enablement, to deliver for
Integrated Assets, Operations and Business Systems. Smart Operations is a broad
concept of using technology-enabled and automated connectivity & intelligence, to
effectively deliver improved insights and predictability through advanced analytics,
moving towards autonomous operations.

52
3. G IT AND ANALYTICS

53
3. F.1 Information system in organization

Organizations, including government agencies and corporate organizations, are

increasingly recognizing the economic and strategic value of Geographical
Information Systems (GIS). This technology, which enables effective visualization,
analysis and enrichment of geographically referenced, spatial data, can provide
organizations a significant edge over competitors.

Mobile phones, ‘smart’ devices and infrastructure such as cell towers, beacons, RFID
and GPS, are enabling enterprises to effortlessly track customer and asset location
data today. With an effective GI system, comprising spatial mapping and analysis
software, businesses can garner real-time location information to identify patterns and
anomalies. These can be applied to bolster decision-making, achieve greater
operational efficiency, improve collaboration, and bring down costs.

LTI’s GIS services help clients systematically extract geospatial information to build
robust location intelligence. We provide a wide range of services, including

54
Consulting, Application Design & Development, and Operations & Maintenance
Support. Our GIS-integrated services, including fleet management, supply chain
management, field service management and distribution management, introduce
creative synergies into our clients’ operations, driving greater productivity and
efficiency.

55
4. CORPORATE SOCIAL RESPONSIBILITY

4.1 Socio-economic CSR activities by the firm during COVID 19

Our social initiatives help empower communities with focus on improving the quality
of education among children from marginalized communities and helping them stay
in school, enhancing skills of the marginalized youth and women, providing special
education & skills for physically and intellectually challenged people, and addressing
the critical issue of environment conservation. Our projects help promote sustainable
community development, with a commitment to promote the cause of creating a more
inclusive society

LTI contributed to PM CARES Fund (The Prime Minister’s Citizen Assistance and
Relief in Emergency Situations Fund) in India and United way world wide’s
COVID19 Relief Fund in the US.

4.2 Major CSR activities by the firm

56
Empowerment

At LTI, we believe that the divide in society, created due to opportunity and
awareness or the lack of these, can be bridged by an inclusive approach. By
empowering marginalized communities through vocational training, and focusing on
the development of women & people with disabilities, we wish to make a difference
to the society, both at a macro, as well as at the grassroots level.

CSR projects targeted toward empowering the society youth, women, specially-abled.

Environment

Conserving the environment and taking action to tackle climate change is one of the
key focus areas of our CSR strategy.

Some of the CSR activities done by LTI is Green cover, water harvesting\

Education

Education is key to the overall development of an individual, and it also enhances the
quality of life. With a high drop-out rate in Government schools, it’s a tough task to
attract the marginalized children to education, which is the means to help them live a
better & happier life.

At LTI, we work with a three-pronged approach to make a difference to the lives of

this segment, and enabling these children stay in school.

 Digital learning

 Experiential learning

 Mid-day meals

57
58
 CASE STUDY

Abstract

This article tries to understand and analyse the recent acquisition of Mindtree Ltd.
by the corporate conglomerate giant Larsen & Toubro (L&T). L&T Infotech (LTI),
which looks after the information technology (IT) business of the L&T group
made a hostile bid for Mindtree Ltd., one of India’s leading and fastest growing
infotech companies in March 2019. The case goes on to analyse the deal and

59
delves into the reasons for the deal turning hostile. The objective of the case study
is to understand the concept of hostile takeovers and the business environment that
augur acquisitions.

The second part of the article tries to focus on anti-takeover tactics, which the
company adopts to avoid the takeover attempt. Here, Mindtree’s decision of share
buyback, immediately after L&T’s bid, has been examined. Two perspectives have
been studied here—one from the point of view of the promoters of Mindtree, and
the other from the point of view of investors. There have been certain very
interesting and jocular exchanges of words between the promoters of Mindtree and
LTI1 during the whole phase of takeover, which put the focus on the human
element in acquisitions.

The business environment and industry analysis have been conducted to

understand the nature and circumstances of the deal. Legalities of the acquisition
and dominant player misuse have also been examined.

LTI’s take on the acquisition was very clear. For them, it was a pure business deal.
They were on the path for fast growth, which Mindtree would help them achieve.
Certain sectors such as Retail, Consumer Packaged goods, Media and Technology
are underachieved for LTI where Mindtree has a formidable presence. Mindtree
would help LTI explore geographies in Europe that so far were unexplored.

However, for the promoters of Mindtree, this bid for takeover became an
emotional issue. It all started when one of the non-executive directors of Mindtree
itself—V. G. Siddharth—came up to LTI and offered his shareholding of 21 per
cent in Mindtree. LTI grabbed this offer and went on to announce that it would
acquire a total of about 60 per cent in the company, which made the other
promoters very uncomfortable. There was a lot of resistance from some of the
Mindtree promoters, and certain hasty announcements and statements in the media
were also made. This interesting interlude between the two companies brought a
lot of attention to the acquisition and left the investors in a state of confusion.

60
The main objective of the case will be to analyse and teach the different corporate
actions which took place and the strategic decisions that were taken during the
entire interaction between the two companies.

This case would address teaching objectives for the topics such as hostile
takeovers; share buybacks as a new approach to anti-takeover defence; political,
legal and industrial analysis relevant to corporate restructuring decisions; and
Hubris and Managerialism. A separate teaching perspective on Corporate Business
Communication has also been explored.

It all started when the non-executive director of Mindtree and founder-promoter of

Coffee Day Enterprises V. G. Siddharth came out in the open to sell off his close
to 21 per cent stake in Mindtree. The total shareholding owned by V. G. Siddharth
individually, comprised of 5.469 million shares (3.3%), and the 17.4 million shares
(10.63%) were held by his company Coffee Day Enterprises. Another company
called Coffee Day Trading Corporation held 10.5 million shares (6.4%) of the
Information Technology (IT) Company Mindtree. V. G. Siddharth started
investing in Mindtree in 1999 while it was still a struggling IT2 Start-up.

Other promoters of Mindtree owned 13.32 per cent shares in the company.

Siddharth3 approached L&T in March 2019 and offered his shareholding in

Mindtree. L&T took to the offer and bought out his stake on 18 March 2019. In the
same month, L&T declared an open offer to the shareholders to buy a stake of
another 26 per cent in Mindtree and then further increasing it to 51 per cent. In that
event, the present management of Mindtree would lose control of the company.

The current management/promoters of Mindtree were extremely resistant to the

deal.

Mindtree was incorporated by ten IT professionals from different companies such

as Wipro, Cambridge Technology Partners and Lucent Technologies who all had a
common passion for technology and entrepreneurship. The brainchild of
Krishnakumar Natarajan (KK) and Subroto Baghchi was initially set up as a tech
company with Ecommerce in its centre. Later on, as the company started taking

61
shape, other like-minded people, namely N. S. Parthasarthy, Kalyan Banerjee,
Scott Staples, Kamran and Rostow Ravanan joined the bandwagon. Natarajan had
been associated with Wipro from 1982 to 1999 in various positions wherein he
started and grew the Ecommerce division. When Mindtree was set up in August
1999, he played a key role in building the organization and setting up the US
business. He, later on, drove the company’s expansion into Europe, Asia Pacific
and the Middle East. This international diversification made a big difference in
building a risk-resilient company and a diverse client profile. KK4 was the
executive chairman of Mindtree when Larsen & Toubro Infotech (LTI) made the
hostile bid. Baghchi had previously worked for Wipro and Lucent. Baghchi who
later took on the role of a non-executive director in the company had played a key
leadership role as the Chief Operating Officer during the tough years between
1999 and 2007, spanning the economic slowdown in the USA and into the crisis
after 9/11. At a time when most of the new IT companies had to shut shop,
Baghchi moved to the USA, in order to deal with the crisis, which helped the
leadership team stay together during the difficult phase. Baghchi was instrumental
in articulating Mindtree’s Vision, Mission and Values and led areas such as
leadership development, marketing and knowledge management initiatives, which
differentiated the company from other technology companies in the field.

In a desperate but bold attempt to stop the acquisition, on 20 March 2019, the
Mindtree board announced a share repurchase after L&T’s open market bid to buy
shares.

However, even if it were not successful in stalling the takeover, it would definitely
raise the offer price for the acquirer.

Mindtree had a cash reserve of ₹1.62 billion and investments of about ₹8.11
billion, which could be used for the buyback.

Mindtree

The acquisition of Mindtree would help LTI to significantly expand its presence,
with operations in key markets across the world. Mindtree had a strong presence in
the technology and media industries, which were all potentially new areas of

62
expansion for LTI. Mindtree catered to numerous industries and provided
customized IT solutions for industries such as Banking, Insurance, Retail,
Consumer Technologies, Education, Manufacturing, Transportation and Logistics,
Media and Entertainment, Travel and Hospitality and many more. The services of
Mindtree could be categorized into six parts, namely Digital Services, Operations,
IT Consulting Services, Engineering R&D, Enterprise Software and Products. In
the year 1999, when ten IT professionals came together to form this company, part
of the company was held through a company in Mauritius. It was initially funded
by Venture Capital as most IT firms are. In 2007, Mindtree came out with an
Initial Public Offering (IPO) and was publicly listed on the Bombay Stock
Exchange BSE and National Stock Exchange (NSE). Its IPO was oversubscribed
by 100 times. The company spread out in 17 countries had more than 40 offices.
At the time of the announcement of the bid, the company had more than 20,000
employees of which 31 per cent were women. The employees represented 65
nationalities and 93 per cent of the workforce comprised software professionals.
Mindtree had the reputation of a fast-growing company in the industry. Its
revenues increased by 28.53 per cent, and profit before tax increased by 32.93 per
cent in 2019 from the previous year. In the year 2018–2019, Mindtree posted an
annual revenue of US$1 billion.

Larson &Toubro Infotech

In 1997, LTI resumed operations as a subsidiary of L&T. Since then, its journey
had been eventful and fast with a slew of acquisitions for augmenting its growth
story. When it announced the bid for Mindtree, it had a presence in more than 30
countries and had about 28,000 employees. It functions across several service
verticals namely Cloud services, consulting, Cloud-based Infrastructure services,
Assurance, Cyber Defense Resiliency Services and Applications Management.
Digital has emerged as the universal change agent, trying to address new
challenges in the business world. LTI’s business philosophy was to improve
business outcomes with the use of Artificial Intelligence (AI), Automation and
Data Analytics. Their Digital services portfolio was one of the most advanced in
the industry with major focus on Internet of Things, AI, Digital Integration and
Intelligent Robotics Programme Automation.

63
Industry

The IT industry in India had revenues of US$181 billion as of March 2019 and was
expected to grow at 7–9 per cent in the next few years. Exports formed more than
80 per cent of revenues and aggregated at around US$137 billion. The industry is
expected to reach a forecasted US$350 billion by the year 2025. The domestic
industry, which generated revenues of US$28–29 billion, was expected to grow at
the rate of 10–12 per cent in the coming few years. Among all the segments of the
IT sector, the Digital technologies sector was growing at 30 per cent per annum.
The share of the Digital technologies segment is expected to become a staggering
38 per cent by the year 2025. Foreign direct investments to the tune of US$37
billion has come to the Indian IT sector between the years 2000 and 2019 as per
the data released by the Department for Promotion of Industry and International
Trade (DPIIT).

Some of the major initiatives taken by the government to promote IT and

information technology–enabled services (ITES) sector in India after the year
2014:

The government identified IT as one of the 12 champion service sectors for which
an action plan would be developed. Also, the government set up a ₹50 billion
(US$745.82 million) fund for realizing the potential of these champion service
sectors.

As a part of Union Budget 2018–2019, National Institute for Transforming India

(NITI) Aayog would set up a national-level programme that will enable efforts in
AI and would help in leveraging AI technology for development works in the
country.

In the Interim Budget 2019–2020, the Government of India announced plans to

launch a national programme on artificial intelligence (AI) and setting up of a
National AI portal.

National Policy on Software Products–2019 was passed by the Union Cabinet to

develop India as a software product nation.

64
Looking to the industry scenario, and the environment for doing business, it was
natural for any ambitious IT company like LTI to expand through acquisitions.

Reasons for the Acquisition

In the past couple of years, LTI had been on a fast growth spree. In the years 2016
and 2017, the company made some very focused and pure play acquisitions taking
on the inorganic growth path. In 2016, LTI acquired AugmentIQ Data Sciences
that specialized in Big Data. In 2017, it acquired Syncordis SA for core banking
implementation. In January 2019, LTI acquired a US-based company called
Ruletronics for making a big entry in the Pega Implementation space. Mindtree’s
portfolio has strong capabilities and clientele that is complementary to LTI.
Mindtree’s strong presence in the Media and Technology industries was the main
attraction for L&T where it had yet to make a mark. Mindtree’s presence in
industries such as consumer packaged goods, retail, travel and hospitality could
pave the way for a synergistic equation with the LTI portfolio.

LTI had a good presence in the USA but not in Europe. Acquisition of Mindtree
would give them an entry into the European markets.

Both companies were basically headquartered in India, and hence integration with
respect to ironing out cultural differences would also be less challenging.

The Big Coup

Finally, after a lot of hostility and war of words, Mindtree redacted its plan of
share buyback and took a sort of conciliatory route. However, the battle was far
from over.

KK said that he was not so much concerned about the takeover attempt; rather, he
was more concerned about the timing of LTI’s offer.

He said in an interview with a reputed newspaper that:

"Mindtree did all the early work, suffered low margins for years and now it’s
poised to clock top-shelf growth in the next couple of years. We tilled the land,

65
 fertilised it, put the right seeds, and now it may give us a great yield. Now if a
tornado spoils it, it’s not the right thing for shareholders.

The focus now is on safeguarding the interests of employees and customers."

This emotional outburst surprised many in the industry. He, however, underlined
the importance of remaining optimistic and practical; saying that crying over the
past is pointless.

LTI bought out Siddhartha’s shares for ₹980 per share, and it purchased another
13 per cent from the open market. Its original plan was to ultimately to own about
66 per cent of Mindtree.

On 2 July 2019, L&T had acquired 60 per cent stake in Mindtree and became the
promoter of the company.

The first ever hostile takeover attempt in India was made by a non-resident Indian
(NRI)—Swaraj Paul, somewhere in the 1980s for companies DCM Ltd. and
Escorts Ltd., wherein the promoters held 10 per cent and 5 per cent shares and
voting rights, respectively. Although Paul was not successful in acquiring the
companies, the Indian Law and regulatory authorities as well as the corporate
world realized that proper regulation for takeovers of companies was needed. After
the economic reforms of 1991, the need was further accentuated due to
privatization and globalization and the arrival of multinationals in the country. The
Securities and Exchange Board (SEBI) was formed in 1992, and thereafter a
proper guideline for takeovers was set out.

How the acquisition was executed:

 31 per cent was acquired in an open offer worth ₹50 billion.

 15 per cent was acquired through an open market purchase.

 20.32 per cent stake of V. G. Siddharth worth about ₹32 billion was acquired.

The total value of the deal was pegged at around ₹100.7 billion at ₹980 per share.
This deal has been tagged as the first hostile takeover in the Indian IT space. LTI

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 declared that it intended to have a total stake of 66.32 per cent in the company and,
on 6 June 2019, increased its stake to 28.90 per cent.

On 12 June 2019, amidst all the drama and hostility between both the companies, a
report of the independent directors of Mindtree came out. This report claimed that
the offer of ₹980 per share made by LTI was a fair offer. This again was a thumbs
up sign for LTI that had maintained that its offer was anything but hostile and Mr
A. M. Naik, Group Chairman of L&T, even said that the directors of Mindtree
were in fact perpetrating hostility and not the other way around.

Initially, LTI had offered a price of ₹1,150 per share with a caveat that the
management cooperated in the acquisition. But since the management did not take
kindly to the deal, LTI had had to take the market route.

Share price movement of Mindtree Ltd. and LTI Ltd. between the date of purchase
of V. G. Siddhartha’s shares, announcement of acquisition and the date of final

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research,
authorship and/or publication of this article.

Funding

The author received no financial support for the research, authorship and/or
publication of this article

Notes

1. L&T Infotech shall henceforth be referred to as LTI in the case.

2. The acronym for information technology.

3. V. G. Siddharth will henceforth be referred to as Siddharth or VG in the case.

4. Krishnakumar Natarajan will henceforth be referred to as KK in the article.

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REFERENCE

 www.lntinfotech.com
 www.economictimes.com
 www.moneycontrol.com
 www.scribd.com

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