Company selected for project – Lanco Infratech Limited

Subject- Management Accounting

Presented by – FORE SCHOOL OF MANAGEMENT, MBA- Part time

WMG-XIX

Name Roll no.

Deepak Kumar Sharma 09

Ankur Seth 05

Sumit Kumar 38
  Brief Introduction about the Company

Lanco’s journey began in 1986, with the entrepreneurial zeal and vision of L Rajagopal who
forayed into civil contracting as his chosen field of competence. In the early 90’s with the
economic liberalisation in India, Lanco diversified into – Pig Iron, Cement and Foundry. The
emergence of Lanco Ferro set the pace for Brand LANCO, the name itself being the acronym
for Lagadapati Amarappa Naidu Company, a tribute to the principles and values embodied by
their uncle, the late L Amarappa Naidu. From here on, the success sage of Lanco was well set
in motion. What followed was setting up of India’s first Independent Power Plant – the Lanco
Kondapalli Power Plant – through competitive bidding.

A few years later, L Madhusudhan Rao, took over the reins of the enterprise and under his
dynamic leadership, Lanco evolved into a holistic, diversified enterprise with a fast spreading
footprint in its defined competencies. Lanco was subsequently consolidated into a single holding
company Lanco Infratech Ltd, restructured into five verticals – Power, Construction, EPC,
Infrastructure and Realty.

Lanco’s growth curve in financial terms stands at an impressive market capitalisation of USD 3
billion. A name to reckon with in the power sector, Lanco is currently operating 1043 MW of
power plants and is augmenting an additional 8258 MW!

Lanco considers CSR as an extension of its core competencies which has evolved as a
business vertical in its own right. A reflection of this commitment is evident in Lanco Foundation
which has formulated coherent and integrated strategies and is actively present in Education,
Health, Livelihoods, Community Development, Environment, Relief & Rehabilitation and Sports
& Culture.

Today Lanco, in its Silver Jubilee Year with a Pan-India presence and a work force of over 5000
Lanconians, continues on its journey of excellence having defined its purpose in its Mission,
Vision and Values.
  Brief Business details

Lanco Infratech Ltd is one of India’s top business conglomerates and among the fastest
growing.

Lanco Infratech has subsidiaries and divisions across a synergistic span of verticals. These
include Construction, Power, EPC, Infrastructure, Property Development, and Renewables.

Lanco Infratech’s projects, operational and underway, are spread across India.

A member of the UN Global Compact, Lanco Infratech is recognized for its Good Corporate
Governance and Corporate Social Responsibility initiatives led by the Lanco Foundation.

A preferred employer, Lanco Infratech builds on a tradition and culture where trust comes first…
and the credo is inspiring growth.

 Future Plans

Lanco is one of the fastest growing Integrated Infrastructure Enterprises of India,

operating across a synergistic span of verticals comprising Power Generation, Power
Trading, Non-Power Infrastructure, Construction, EPC, Property Development and
Renewables (Solar and Wind).

Lanco Infratech Ltd's current market capitalisation is approximately Rs. 12,000 Crores
(USD 2.59 billion), of which about 68 % equity stake is held by its promoters. Its gross
revenue as on March 2009 was over Rs. 6,000 Crores (USD 1.3 billion). Lanco is fast
emerging as one of the leading private sector power developers in India with 2087 MW
under operation, 8468 MW under construction, and 1039 MW of projects under
development. Out of the total portfolio of 11594 MW, the company has achieved
financial closure for 4533 MW. Having over two and a half decades of experience in
Construction and Civil Engineering, Lanco has created a niche for itself besides building
powerful knowledge bank and systems which facilitate continuous adoption and
implementation of best practices and technologies. Lanco has strategic global
partnership with top-notch companies which include: OHL of Spain, Westports and
Genting of Malaysia, Harbin, GE, Dongfang, Doosan etc. Today, Lanco is one of
India's largest Power Traders in the private sector.

A people driven organization, Lanco operates from 20 States in India and has a human
resource base of 5500 people. Lanco is also a privileged member of the World
Economic Forum and it has been acknowledged as an elite member of the top two
hundred “Global Growth Companies”. As part of its business strategy, the company has
evolved Lanco's Vision for 2015: to build a High Performance Organisation with an
operating capacity of 15000 MW in Power. Lanco also envisages aggressive growth
plan for the Construction and EPC division to achieve an Annual Turnover of Rs 40,000
Crores(USD 8.64 billion) by 2015.
 Calculation of Ratio’s

Net profit Ratio = Net profit / Net sales

 Fy ‘2009 - 2010‘ = 5678.70 / 81075.56 x 100 =

 Fy ‘2008 - 2009‘ = 3839.72 / 60709.59 x 100 =

 Fy ‘2007 - 2008‘ = 4845.63 / 32412.57 x 100 =

Return on Investment = EBIT / total capital employed

 Fy ‘2009 - 2010‘ = 12875/ 99322 =

 Fy ‘2008 - 2009‘ = 7715 / 63073 =

 Fy ‘2007 - 2008‘ = 6217 / 36822 =

Turnover to Asset ratio = Net sales / Net assets x 100

 Fy ‘2009 - 2010‘ = 81075 / 85706 x 100 =

 Fy ‘2008 - 2009‘ = 60719 / 36420 x 10 =

 Fy ‘2007 - 2008‘ = 32412.57 / 24675 x100 =

Interest Coverage Ratio = EBIT / Interest on long term debts, loans

 Fy ‘2009 - 2010‘ = 12875 / 3554.11=

 Fy ‘2008 - 2009‘ = 7715 / 2184.90 =

 Fy ‘2007 - 2008‘ = 6217 / 921.35 =

Debtors Turnover Ratio=Credit sales / Avg of debtors and B.R

 Fy ‘2009 - 2010‘ = 81075 / 17106.72 = 4.73

 Fy ‘2008 - 2009‘ = 60709.59 / 9592.14 =

 Fy ‘2007 - 2008‘ = 32412. 57 / 4967.5 =

Debt Equity Ratio =Total long term debt / share holders fund

 Fy ‘2009 - 2010‘ = 75619.08 / 33447.73 =

 Fy ‘2008 - 2009‘ = 52472.70 / 20976.19 =

 Fy ‘2008 - 2007‘ = 28603.04 / 18317.09 =

Return on Equity / Return on net Worth = Earnings after tax – preference share dividend /

equity share funds x 100

 Fy ‘2009 - 2010‘ = 4585.49 / 2597.80 x 100 = 176%

 Fy ‘2008 - 2009‘ = 2803.57 / 2363.62 x 100 = 118.61%

 Fy ‘2008 - 2009‘ = 3541.70 / 2363.62 x 100 = 149.84 %

Current Ratio =Current Assets / Current Liability

 Fy ‘2009 - 2010‘ = 70039/ 35110 = 1.99

 Fy ‘2008 - 2009‘ = 51509 / 31331 = 1.64

 Fy ‘2007 - 2008‘ = 37790 / 27038 = 1.39

Return on Assets = EBIT / Total Assets

 Fy ‘2009 - 2010‘ = 12875 / 162083 x 100 = 7.94%

 Fy ‘2008 - 2009‘ = 7715 / 115485 x 100 = 6.680 %

 Fy ‘2007 - 2008‘ = 6217 / 82785 x 100 = 7.50 %

Following are the significant items reflected through the cash flow for the year 2009/10

Investing activities

 Purchase of Fixed Assets for Rs. 15383.18 million

 Sale of fixed assets for Rs. 30.41 million

 Purchase of Investments - for Rs. 6055.03 million

 Sale of investments for Rs. 6285.82 million

Financing Activities

 Proceeds from issue of equity shares for Rs. 7273.50 million

 Proceeds from long term borrowing for Rs. 28648.45 million

 Capital structure for the year 2009/ 10

 Equity share capital - Rs 2385 million

 Long term secured loan - Rs 75619

2385

equity share capital

long term secured loan

75619
This year long term secured loans do not include
debentures, but includes major part as term loans from
banks and financial institutions . We can also find
contributions in form of foreign currency loans and
hypothecation loans.

Significant items found under Directors Report Were

1. Gross Revenue increased by 36% from Rs 82159.68 million to Rs 60614.45 million

2. NPAT – went up from Rs 2803.57 million to Rs 4585.48 million showing a 64 % growth

3. Financial charges and interest grew up from Rs 2184.90 million to Rs 3554.11 million
due to new loans and working capital requirements

4. One subsidiary company ABAN power company LTD. Won the TERI corporate awards
for excellence in environment

5. Joint Managing Director Mr. D.V Rao resigned in august 2009.

6. Auditors Price water house conveyed their inability for re appointment next year

7. 18418 587 equity shares were allotted @Rs. 394.80 / share with face value of Rs. 10 /
share in august 2009