I have received over a hundred emails from fund managers of every perceivable fund house seeking help to analyse the L&T nos. Here it is.
Mind you L&T has the potential to be a great company. It has been a great company in the past. But when cos grow, negative economies of scale kick in.
Wrong people make it to the boards. Strategic mistakes become the norm rather than the exception. Inner democracy goes for a six. And this is not cricket.
Quality suffers. Buildings constructed on the central vista at Rajpath delhi have cracks. This is because they tried to do a pre cast construction without ordering the right materials and using the right technologies.
Similarly managers in foreign geographies run amuck trying to meet revenue targets. Acquisitions are not for skills or technologies – but to buy revenue. The acquisition money goes into the balance sheet but the revenue and profits miraculously show up in the P&L.
It is like selling rs 100 notes for rs 80 and showing rs 80 revenue with 100% profit. The rs 100 goes to the balance sheet. The 80 comes to the P&L
