Larsen and Toubro (L&T) had a practice of disclosing all its order details in order to maintain transparency amongst the stakeholders. All the details of the customer’s order except the confidential or sensitive ones were disclosed. However, in the recent times this practice has adversely affected them.

These details were closely analysed by the competitors as a result of which they were able to calculate the profits and earnings of L&T. In addition to this, they now had an upper hand in deciding their prices to face competition and survive in the market. As a result of this there was a fall in the domestic order rate of L&T in the Q3 of 2018-19. In order to face this situation and survive in the market, L&T came up with a new method. As per the new method they would no longer disclose the entire order details, but instead disclose only the price range. By disclosing only the price range, they were still in a position to guide their stakeholders and retain their confidence.

Announcements by L&T

Since 15th January, 2019 L&T has made 6 announcements in which the category of their price range has been stated. They have declared 4 categories

1st Category -> SIGNIFICANT

Price Range = ₹1,000cr – ₹2,500cr

2nd Category -> LARGE

Price Range = ₹2,500cr – ₹5,000cr

3rd Category -> MAJOR

Price Range = ₹5,000cr – ₹7,000cr

4th Category -> MEGA

Price Range = over 7,000cr

The lowest category being significant and highest being Mega. For e.g. if an order is of ₹4,500cr it will be called as a Large order as it lies between the price range of ₹2,500cr – ₹5,000cr. Similarly, an order of ₹1,200cr will be a significant order and ₹8,000cr will be a mega order In FY18 the company’s net profit was ₹2,042cr. The average share price ranges around ₹1,800.

The disclosure of only the price range by L&T is an attempt to increase its share and sustainability.

We will soon be updating more information of the effect of this new method.

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