Anish|Karthik|Purvi|Nilesh|Ghanshyam| Animesh|Shantanu|Shiwangi|Abhishek|Urvashi| Group 2

 Founded in Mumbai by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. in 1938  Started with heavy machinery, dairy equipments, Construction and gradually moved into engineering and construction projects  Went Public into 1950 with paid up capital of Rs. 2 million  Recently entered into IT and Financial services

Current Position

Stock Price

A. M. Naik MD & Heavy EngineeringChairman

Machinery & Product

Machinery & Electrical & Industrial Electrical Businesses Electronics Projects

IT & Power Engineering Services

Financial Services

Building & Factories

Engineering and Construction

Switchgear Hydrocarbon

Infrastructure
Construction E&C Projects

Heavy Industry

Metals & Minerals

A.M. Naik, the current managing director and chairman, is retiring next year
Why thats an issue The growth of the company in last 20 is largely attributed to him He has been involved in setting up of every new venture for last 30 years

The company, Indias sixth largest non-PSU, is run by seven directors who are also due to retire in next few years
Whats the big deal In 1977 the company had nine directors and then the company was worth 1,500 crores (inflation adjusted) and now it is worth 111,061 crores L&T Directors Career Span 42 years (Median) & 40 years (Mean) BHEL Directors Career Span 33 years (Median) & 33 years (Mean) BHEL, the closest rival to L&T, is growing at a faster rate More than fifty percent of the companys current workforce is now aged between 20-30 who are led by people twice their age

The company operates in 152 lines of business in 63 strategic business units

Bigger is better, isnt it After CK Prahlad came up with the core competency theory in 1990, it has been proved worldwide that diversity after a certain size leads to internal mismanagement and loss of flexibility in competitive markets GE, Motorola and AT&T are some of the examples (Tata is not an exception as all companies under Tata Sons operate as independent units)

 New skills and capabilities are needed to meet current or expected operational requirements. Accountability for results are not clearly communicated and measurable resulting in subjective and biased performance appraisals. Parts of the organization are significantly over or under staffed. Organizational communications are inconsistent, fragmented, and inefficient. Technology and/or innovation are creating changes in workflow and production processes. Significant staffing increases or decreases are contemplated. Personnel retention and turnover is a significant problem. Workforce productivity is stagnant or deteriorating. Morale is deteriorating.

 reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs like

Changing nature of the markets The continuous innovations in technology, product, work processes, materials, organizational culture and structure Various actions of work force values, global competitors, demands and diversity Ethical constraints and regulations Individual transition and development of the business

According to A M Naik the restructuring is part of an exercise to `make the job easier for his successor' by streamlining L&T's sprawling and complex web of 64 businesses ranging from power to roads to aerospace to switchgear. "No other company in the world is as complex as L&T... not even General Electric," he said. "No one chairman can manage such a complex operation. I was able to do it because I have been with L&T for 46 years and have started 60% of these businesses."

 The companies will be vertically integrated, with their own internal boards The companies will work to maximize the earnings for its common shareholders for the entire conglomerate The board will have at least three independent Directors and representatives from the parent company Eliminate the problem of immediate succession, as most of the CEOs will be in the age bracket of 55-59 years 55 This will allow greater independence in functioning and will provide external and better business perspective Will increase the accountability of each of the SBU for its own performance

 Disparity regarding Salary structure among different Independent Companies Proper Appraisal System might be hindered Proper Training Module might not be available Training might also become expensive, increasing the costs Policy implementation can take a back seat with violations & relaxation of norms during the initial period Policies and procedures revision may face difficulties Grade or Designation Structure in the new company Issues regarding Seniority and Position Entitlements Low Level of awareness among new employees

You cannot run L&T as you did before: A.M. Naik Larsen and Toubro - Competition A.M. Naik: Why is this man splitting L&T? L&T Board of Directors BHEL Board of Directors CAPITALINE PLUS Database The Core Competencies of the Organization The annual sustainability report 2009-2010