Key Insights into CA Interviews at L&T Construction

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Table of Contents

Introduction:

Have you ever wondered how construction companies operate differently from typical B2C businesses and how you, as a budding Chartered Accountant, can make a significant impact in this dynamic industry? We interviewed CA Umehani Merchant in 2023, an expert with years of experience at L&T, Tata Steel, and Aditya Birla, to share her experiences and insights into how construction companies operate and how the interview process is designed specifically at Larsen & Turbo.

From understanding L&T’s financials and work culture to mastering role-specific skills, this guide provides a roadmap for students to navigate the CA Interviews at L&T and secure their place in one of India’s top companies.

Understanding the Process of CA Interviews at L&T Construction

Larsen & Toubro (L&T) is a conglomerate known for its engineering, construction, and technology services. The organisation offers diverse roles across sectors and promotes career growth and adaptability through its supportive work culture and internal transfer policies. CA Umehani worked primarily in the company’s construction sector in a Financial Planning and Analysis role.

Written Test for Logical Reasoning

L&T has a written logical reasoning test for all candidates applying for the position. This logical reasoning test helps in selecting the candidates for the next round of the interview process. The written test for L&T Construction has 30 multiple-choice questions and candidates are allowed 30 minutes to complete the test. A few examples of questions may be figuring out the pattern of images or which number will follow in the sequence given.

Importance of IND AS and MDA

CA Umehani mentioned that L&T is a conglomerate of businesses spanning over 10 sectors, including IT, Realty, and Financial Services. 60 to 70% of the company’s revenue is generated by the Construction sector, which is divided into fields like Hydrocarbons, Heavy Civil Construction, Defence, and many more. Since construction companies operate differently from other businesses, the Indian Accounting Standards (IND AS) differ for them. As someone applying for L&T, you should be aware of the different IND AS that apply, along with depreciation policies. 

CA Umehani also mentioned that the best way to understand the company is by reading the company’s Annual Reports. In the Annual Report, you will find the MDA. The Management Discussion & Analysis (MDA) is a document that highlights what the company deals with, revenue streams, and factors generating profits.

What the interviewer may ask?

We have listed down topics you should be familiar with for your CA interview at L&T. These topics suggested by CA Umehani are as per her interview experience and give an overview of what information you should know.

  • Indian Accounting Standards (IND AS): The Indian Accounting Standards (IND AS) are a set of financial reporting standards that govern how companies in India record financial transactions and present their financial statements. The Accounting Standards applicable to construction companies vary quite a lot from manufacturing and retail companies. A few you should be knowledgeable about are IND AS 115: Revenue from Contracts with Customers and IND AS 16: Property, Plant & Equipment. 
  • Knowledge about the Sector & Company: In the Indian construction sector, Larsen & Turbo is one of the widely recognized businesses. Stepping into this sector, you should be aware of how the sector works, how construction companies are faring in general and current news about the company you are interviewing at.
  • Tip: Use Google Search to research the company, the news tab has a filter for the last month. It will show you all the recent updates regarding the company.
  • Ratio Analysis: This is a financial tool that uses ratios to evaluate a company’s financial performance. It helps identify strengths and weaknesses and compare performance with competitors. Questions like “What are the 5 types of ratios in ratio analysis?” or “How do you calculate liquidity ratio for a company?” may be asked during the interview.
  • Unbilled Revenue: It is the revenue a company has earned through its percentage completion of the project, but it is yet to be billed to the contractor.

5 Parameters L&T Construction Measures

The interviewer may ask questions like “What are the important factors L&T needs to monitor?” or “What special parameters should L&T as a company take into consideration?” These topics may seem a bit hard to grasp for a fresher, but knowledge of these topics will get you an added advantage over others. CA Umehani explained the following 5 parameters:

  • Order In-flows: Construction companies receive orders from the government or another company to work on. It may be building roads, stadiums, and residential areas. These orders don’t necessarily mean they will be worked on in the same year. They may be scheduled for the following year or stretched over 5-6 years. The sequence of these orders is called order in-flows.
  • Order books: Order in-flows are recorded in order books to keep track of ongoing and upcoming projects. This data is always recorded with “As on date” instead of the duration.
  • Revenue: Construction companies usually use the percentage completion method to recognise revenue, meaning they gradually record income as the project progresses based on the percentage of work completed compared to the total contract value.
  • Earnings before Interest, Taxes & Depreciation (EBITDA) Margin: This value is derived with earnings before interest and tax + depreciation divided by revenue. EBITDA shows the amount of cash profit a company has earned in a given year. The Profit after Tax (PAT) margin may also be considered.
  • Free Cash-Flow: It refers to the movement of money in and out of a construction project over a period of time. Effective cash flow management is crucial for the success of projects. Since construction projects are billed based on the percentage completion method, the revenue generated is not the same as for manufacturing businesses. Hence these records are monitored monthly or fortnightly.

Frequently Asked Questions

Can we apply for a job at L&T off-campus?

CA Umehani spoke in depth about the hiring process at L&T. Job roles for freshers are usually filled by campus recruitment only. These on-campus recruitments help the company pick 40-50 students and fill the vacancies as soon as possible. In case you wish to apply to the company directly, having a reference or connection within the company may help you apply for the vacancy.

Which domain should we prefer to work in?

CA Umehani’s opinion is that candidates who opt for a role at the corporate level or in L&T as a group have a better overview of the company and how the conglomerate works on the whole. There are specific job roles in the various business sectors like LTIMindtree, LTF, and Hydrocarbon Engineering that may be offered to you. The role offered to you is based on your experience, knowledge, and what the interviewer deems you capable of. If given the choice, go for a role that gives you entry to the L&T corporate group as a whole.

How to prepare for FP&A and MIS Reporting?

People in the FP&A and MIS roles work on making budgets for the company and use these budgeted numbers to forecast the numbers for the future. This role requires a lot of analytical skills and knowledge of Variance Analysis. To understand these further, you can study financial statements and come up with answers to situations like revenue increases or decreases. The interviewer may ask you to state a few reasons for the difference in revenue projected and revenue earned.

What are the different roles in Finance?

There are 2 main roles in finance – Finance Controller and Finance Planning & Analysis (FP&A). Finance Controllers are tasked with producing accurate books and records for a company. They prepare financial reports and may assist in budget forecasting as well. Once the role of the Finance Controller is over, the FP&As come in. Based on the reports made by the Finance Controller, FP&As analyze the performance of the company. There may also be a role in corporate finance which mainly deals with investments for the company, capital and capex requirements.

If the company has vacancies for multiple roles, should we prepare for all of them?

As per CA Umehani, the candidate should first research the company and domain they wish to enter. This will give them an understanding of the sector and business. She also mentioned since the candidates are freshers, the CA interviews at L&T will not expect experienced answers. They will ask the basics like “What do you know about accounts payable?” or “What is budget forecasting?” or questions about the foundation. For different roles, they will ask different questions. The best way to prepare is to research the company and know what roles are vacant and then what questions can be asked. 

What is the level of the Psychometric Test and how should we prepare?

The Psychometric Test is based on logical reasoning and requires practice to master it. For questions that currently may take you 2-3 min to solve, practising test questions similar to them will help you become faster in solving them.
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Can we switch to a different domain within the company?

Based on CA Umehani’s experience, L&T has an internal transfer policy. Companies may allow you to switch your work domain after a minimum of 2 to 3 years. Based on your grasping knowledge and working efficiency, the company may shift you to another sector to learn a new set of skills.

Having audited a construction company in my articleship, does that help in any way?

Having experience with a construction company during your articleship is an accomplishment you must highlight on your resume. Companies like L&T would prefer people with a bit more knowledge about their sector than those who don’t. The interviewers may deep dive into the articleship project to understand more about your knowledge. Make sure you are thorough with the details for them.

Final Thoughts

Here is a concise checklist of how you can prepare for your CA Interview at L&T:

  • Learn about IND AS for Construction Companies.
  • Keep yourself updated about the company and its business sector.
  • Follow current affairs on finance.
  • Be confident and portray your knowledge to the best of your ability.
  • Advertise yourself, but don’t boast about your skills.

CA Umehani Merchant’s experiences guide aspiring finance professionals aiming to make their mark in the construction sector and with a structured approach and a solid grasp of the fundamentals, you can confidently step into your L&T interview. 

Check out our online Interview-Ready Workshop to meet our mentors and experts to help prepare you on your journey to becoming a CA.

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