A REPORT ON THE INTERNSHIP PROGRAMME

Submitted to Loyola College (Autonomous), Chennai

BY

G. John Praveen

22-UAF-015

Under the guidance of

MR.M. NAGAMANI

Assistant Professor, Department of B.Com (Accounting & Finance)

JUNE 2024

Department of B.Com (Accounting & Finance)

Loyola College, Chennai – 600 034.

CONTENTS

Chapter Title Page No

I Introduction -Company Profile 1

II Financial Statements and Analysis 2-9

III Ratios and Analysis 10-18

IV Conclusion 19-20
COMPANY PROFILE

Larsen & Toubro Limited (L&T) is a titan among Indian multinational conglomerates.
Established in 1938, L&T has grown from its Mumbai headquarters into a global
entity with operations in over 50 countries.

L&T's reach extends across a vast array of industries. Their core expertise lies in
engineering and construction, encompassing projects, manufacturing, and financial
services. They're a one-stop shop for critical needs in sectors like infrastructure,
defense, energy (both hydrocarbon and power), heavy engineering, shipbuilding, and
even aerospace.

One of L&T's defining strengths is its integrated capabilities. They don't just design a
project; they see it through to completion, delivering a holistic solution. This
commitment to quality and customer focus has earned them a reputation for
excellence.

Looking beyond immediate projects, L&T is incorporating sustainability into its long-
term vision. They prioritize environmental responsibility, social impact, and ethical
governance, making them a well-rounded player in the global market.
Financial Statements

Income Statement

Revenue

 L&T's revenue has grown steadily over the past five years. In fiscal 2024, the
company's revenue was ₹131,576 crore, which is a 21% increase from
₹104,613 crore in fiscal 2022. This growth can be attributed to several factors,
including increased government spending on infrastructure projects, a revival
in the real estate sector, and L&T's focus on expanding its overseas operations.
Profits

 L&T's profits have also grown over the past five years. Net profit in fiscal
2024 was ₹9,304 crore, which is a 19% increase from ₹7,879 crore in fiscal
2022. This profit growth is slower than revenue growth, which has caused a
slight decline in L&T's profit margin (net profit as a percentage of revenue).
However, the company's profit margin is still healthy, and it has improved
slightly since fiscal 2020.

Expenses

 L&T's total expenditure has also grown over the past five years. In fiscal 2024,
the company's total expenditure was ₹117,854 crore, which is a 27% increase
from ₹92,850 crore in fiscal 2022. There are a number of reasons why L&T's
expenses have grown faster than its revenue. One reason is that the cost of raw
materials has increased in recent years. Additionally, L&T has been investing
in expanding its operations, which has led to higher costs.

EBIT (Earnings Before Interest and Taxes)

 L&T's EBIT has grown steadily over the past five years. In fiscal 2024, the
company's EBIT was ₹13,722 crore, which is a 15% increase from ₹11,762
crore in fiscal 2022. EBIT is a measure of a company's profitability from its
core operations. The fact that L&T's EBIT has grown faster than its total
expenditure suggests that the company is becoming more efficient at
managing its operating costs.

Other metrics

 It is also important to look at other metrics besides profit margin when

analyzing a company's income statement. For example, L&T's interest expense
has decreased as a percentage of revenue over the past five years. This
suggests that the company is becoming less reliant on debt financing, which is
a positive sign.
Overall, L&T's income statement shows that the company has been performing well
financially over the past five years. The company's revenue and profits have grown
steadily, and its profit margin has improved slightly. However, it is important to note
that L&T's expense growth has outpaced its revenue growth in recent years. This is
something that investors will need to monitor going forward.
BALANCE SHEET
ANALYSIS
  Equity (Share Capital + Reserves & Surplus) has grown from ₹74 million in
March 2020 to ₹135,282 million in March 2024. This significant increase indicates
that the company has retained a large portion of its earnings over the past four years.
This is a positive sign, as it suggests that L&T is generating healthy profits and is
financially stable.

 Liabilities (Current Liabilities + Other Liabilities) have also grown over the same
period, from ₹141,556 million to ₹175,282 million. However, the growth in equity
has outpaced the growth in liabilities. This trend suggests that L&T is becoming less
reliant on debt financing over time, which is a positive sign for the company's
financial health.

  Total Assets: L&T's total assets have grown steadily over the past five years,
from ₹141,556 crore in March 2020 to ₹175,282 crore in March 2024. This increase
of ₹33,726 crore suggests that the company has been expanding its operations and
investing in new assets.

 Fixed Assets: L&T's fixed assets, which include property, plant, and equipment,
have fluctuated somewhat over the past five years. They reached a high of ₹12,463
crore in March 2020 and a low of ₹8,637 crore in March 2023. The most recent data
point shows a rise to ₹9,695 crore in March 2024. It's possible that the decrease in
fixed assets reflects depreciation (the gradual decrease in the recorded value of an
asset) or the sale of assets that are no longer considered necessary.

 Current Assets: L&T's current assets, which include cash, inventories, and short-
term receivables, have grown steadily over the past five years. They have nearly
doubled from ₹95,635 crore in March 2020 to ₹124,669 crore in March 2024. The
significant growth in current assets suggests that L&T may be preparing for an
increase in business activity or it may be holding more cash due to uncertainty in the
economic environment.

 Other Assets: The table shows another category of assets called "Other Assets".
The value of these assets has also grown over the past five years, from ₹37,283 crore
in March 2020 to ₹38,150 crore in March 2024. However, the specific nature of these
assets is not clear from the image you provided. Intangible assets, such as patents,
trademarks, and copyrights, could be included in this category.
CASH FLOW STATEMENT

ANALYSIS

Operating Cash Flow (CFO)

 L&T's operating cash flow (CFO) has increased steadily over the past five
years, from ₹-121 crore in March 2020 to ₹227,770 crore in March 2024. This
significant increase suggests that L&T is not only covering its operating
expenses but also generating healthy profits from its core operations. A strong
CFO is a positive sign for a company's financial health, as it indicates that the
business is able to generate cash through its normal business activities. This
cash flow can then be used to fund investments in growth, pay dividends to
shareholders, or reduce debt.

Investing Cash Flow (CFI)

 L&T's investing cash flow (CFI) has fluctuated over the past five years. It has
been negative in all five years, indicating that the company has been spending
more cash on capital expenditures (capex) than it has been receiving from
selling off assets. However, there has been a significant improvement from ₹-
6,833 crore in March 2020 to ₹-83,117 crore in March 2024. A negative CFI
can be a sign that a company is investing in growth, which is generally a
 positive sign. L&T may be expanding its manufacturing capacity, building
new infrastructure, or developing new products. These investments could lead
to higher profits in the future. However, it is important for L&T to ensure that
its investments are well-timed and that they will generate a return on
investment (ROI) that exceeds the cost of capital.

Financing Cash Flow (CFF)

 L&T's financing cash flow (CFF) has also fluctuated over the past five years.
It has been negative in four out of the five years, indicating that the company
has used more cash to fund its operations than it has generated through issuing
stock or taking on debt. However, there has been a positive trend, with net
financing cash used decreasing from ₹-7,441 crore in March 2021 to ₹-
115,725 crore in March 2024. A negative CFF can be a sign that a company is
using debt to fund its operations. This is not necessarily a bad thing, but it is
important for the company to manage its debt levels carefully. A high debt
burden can make it difficult for a company to meet its interest payments and
can limit its financial flexibility.

Net Cash Flow

 L&T's net cash flow has turned positive in the last financial year (March
2024), reaching ₹136 crore, which is an improvement from a net cash outflow
of ₹-1,915 crore in March 2023. A positive net cash flow indicates that a
company is generating sufficient cash flow from its operations to cover its
investment and financing activities. This is a positive sign for L&T's financial
health, as it suggests that the company is less reliant on debt to fund its
operations.
RATIOS

1. Liquidity Ratios

The liquidity ratios for Larsen & Toubro (L&T) for the three years shown in the
image, which are March 2021, March 2022, and March 2023. The two liquidity ratios
listed are the current ratio and the quick ratio.

Current Ratio

 Meaning: The current ratio is a measure of a company's ability to pay its

short-term debts (obligations due within one year) with its current assets
(assets that can be converted into cash within one year). A higher current ratio
indicates a greater ability to meet short-term obligations.
 Formula: Current Ratio = Current Assets / Current Liabilities
 Pros: A high current ratio is generally considered favorable as it indicates a
company has sufficient resources to cover its short-term debts. This can
improve investor confidence and creditworthiness.
 Cons: A very high current ratio, however, may indicate that the company is
not efficiently using its current assets. The company may be holding too much
cash or inventory, which could be earning a higher return on investment
elsewhere.
  Standard Ratio: A generally accepted rule of thumb is that a current ratio of
2:1 or higher is considered strong, while a ratio below 1:1 indicates potential
difficulty meeting short-term obligations.
 Analysis of L&T's Current Ratio: L&T's current ratio has fluctuated
between 1.18 and 1.46 over the three years shown, which is within the
generally accepted range. In March 2024, the current ratio was 1.27.

Quick Ratio

 Meaning: The quick ratio, also known as the acid-test ratio, is a more
stringent measure of liquidity than the current ratio. It considers only the most
liquid current assets, which are those that can be quickly converted to cash
without a significant loss in value. These typically include cash, marketable
securities, and accounts receivable.
 Formula: Quick Ratio = Quick Assets / Current Liabilities
 Pros and Cons: The pros and cons of the quick ratio are similar to those of
the current ratio. A high quick ratio indicates a strong ability to meet short-
term obligations, while a very high ratio may suggest inefficient use of
resources.
 Standard Ratio: A quick ratio of 1:1 or higher is generally considered strong,
although some industries may have higher or lower standards.
 Analysis of L&T's Quick Ratio: L&T's quick ratio has ranged from 1.14 to
1.42 over the three years shown. In March 2024, the quick ratio was 1.24. Like
the current ratio, it has fluctuated but remained within a generally acceptable
range.

Overall, the liquidity ratios suggest that L&T has a good ability to meet its short-term
obligations. The current ratio and quick ratio have both been above 1:1 in all three
years. However, it is important to note that these are just two of many factors that
investors should consider when evaluating a company's financial health.
2. Margin Ratios:

Larsen & Toubro (L&T) for the fiscal years ending in March 2020, 2021, 2022, 2023,
and 2024:

 Gross Profit Margin

 Operating Profit Margin
 Net Profit Margin

Gross Profit Margin

 Meaning: The gross profit margin is a measure of a company's profitability

after accounting for the cost of goods sold (COGS). It represents the portion of
each rupee of revenue that remains after covering variable costs such as direct
labor and materials. A higher gross profit margin indicates a company is more
efficient at controlling its production costs.
 Formula: Gross Profit Margin = (Gross Profit / Net Sales) x 100
  Pros: A high gross profit margin can be a sign of a company's pricing power,
efficient production process, or both. It can also indicate a company's ability to
control its variable costs.
 Cons: A low gross profit margin may not necessarily be a bad sign, especially
if it is characteristic of the industry. However, a declining gross profit margin
for a company may indicate a need to investigate increasing costs or declining
selling prices.
 Standard Ratio: The standard gross profit margin ratio varies depending on
the industry. For example, manufacturing companies tend to have lower gross
profit margins than retail companies.
 Analysis of L&T's Gross Profit Margin: L&T's gross profit margin has
fluctuated between 11.70% and 14.59% over the five years shown. In March
2024, the gross profit margin was 11.90%.

Operating Profit Margin

 Meaning: The operating profit margin is a measure of a company's

profitability after accounting for all operating expenses. It represents the
portion of each rupee of revenue that remains after covering both variable and
fixed costs of production and administration. A higher operating profit margin
indicates a company is more efficient at managing its overall costs.
 Formula: Operating Profit Margin = (Operating Profit / Net Sales) x 100
 Pros and Cons: The pros and cons of the operating profit margin are similar
to those of the gross profit margin. A high operating profit margin indicates a
company's ability to control its costs and generate profits from its core
operations.
 Standard Ratio: The standard operating profit margin ratio also varies
depending on the industry.
 Analysis of L&T's Operating Profit Margin: L&T's operating profit margin
has ranged from 10.46% to 13.19% over the five years shown. In March 2024,
the operating profit margin was 10.51%.

Net Profit Margin

  Meaning: The net profit margin is a measure of a company's profitability after
accounting for all expenses, including operating expenses, interest, and taxes.
It represents the portion of each rupee of revenue that remains as net profit. A
higher net profit margin indicates a company is more efficient at generating
profits from its operations.
 Formula: Net Profit Margin = (Net Profit / Net Sales) x 100
 Pros and Cons: The pros and cons of the net profit margin are similar to those
of the other profitability margins. A high net profit margin indicates a
company's ability to control its costs and generate profits after all expenses are
paid.
 Standard Ratio: The standard net profit margin ratio also varies depending
on the industry.
 Analysis of L&T's Net Profit Margin: L&T's net profit margin has
fluctuated between 7.10% and 15.46% over the five years shown. In March
2024, the net profit margin was 7.37%. It is important to note that L&T's net
profit margin in 2021 was unusually high at 15.46%.

Overall, the profitability ratios for L&T show some variation over the five years
shown. Profitability ratios can be affected by many factors, including changes in sales
volume, cost of goods sold, operating expenses, interest rates, and taxes. Investors
should consider these ratios along with other financial metrics when evaluating a
company's financial health.

3. Per Share Ratios:

The following per-share ratios for Larsen & Toubro (L&T) for the fiscal years ending
in March 2021, 2022, and 2023:

 Basic EPS (Earnings per Share)

 Diluted EPS (Earnings per Share)
 Book Value per Share (Excl. Reval Reserve)
 Dividend per Share

Basic EPS (Earnings per Share)

 Meaning: Basic EPS is a measure of a company's profit per share of common

stock outstanding, calculated using only common shares. It is a key metric for
investors to understand a company's profitability on a per-share basis.
 Formula: Basic EPS = (Net Profit - Preferred Dividends) / Weighted Average
Number of Common Shares Outstanding
 Pros: A higher basic EPS indicates a company is more profitable and
generating more earnings for its common shareholders.
  Cons: Basic EPS does not take into account the potential dilution of earnings
from other securities that can be converted into common stock, such as stock
options or convertible bonds.
 Standard Ratio: There is no standard ratio for basic EPS, but a higher
number is generally considered better.
 Analysis of L&T's Basic EPS: L&T's basic EPS has fluctuated between
₹47.59 and ₹80.74 over the three years shown. In March 2024, the basic EPS
was ₹66.95.

Diluted EPS (Earnings per Share)

 Meaning: Diluted EPS is a measure of a company's profit per share of

common stock outstanding, considering all potential dilutive securities, such
as stock options or convertible bonds that can be converted into common
stock. It provides a more complete picture of a company's earnings per share.
 Formula: Diluted EPS = (Net Profit - Preferred Dividends) / Weighted
Average Number of Common Shares Outstanding + Diluted Shares
 Pros: Diluted EPS is a more comprehensive measure of earnings per share
than basic EPS because it takes into account all potential dilution.
 Cons: Diluted EPS can be more complex to calculate than basic EPS because
it requires consideration of the terms of all dilutive securities.
 Standard Ratio: There is no standard ratio for diluted EPS, but a higher
number is generally considered better.
 Analysis of L&T's Diluted EPS: L&T's diluted EPS has closely mirrored its
basic EPS over the three years shown. In March 2024, the diluted EPS was
₹66.89.

Book Value per Share (Excl. Reval Reserve)

 Meaning: Book value per share (excl. reval reserve) is a measure of a

company's net assets per share of common stock outstanding. It is calculated
by dividing the company's total stockholders' equity (excluding revaluation
reserves) by the number of common shares outstanding.
 Formula: Book Value per Share (Excl. Reval Reserve) = (Total Stockholders'
Equity - Revaluation Reserves) / Number of Common Shares Outstanding
  Pros: Book value per share can be used to assess a company's book value, or
net asset value, on a per-share basis.
 Cons: Book value per share may not reflect the fair market value of a
company's assets and liabilities.
 Standard Ratio: There is no standard ratio for book value per share.
 Analysis of L&T's Book Value per Share: L&T's book value per share
(excl. reval reserve) has increased from ₹430.13 in March 2021 to ₹468.60 in
March 2024.

Dividend per Share

 Meaning: Dividend per share is the amount of dividend a company pays out
to its common shareholders per share of stock outstanding. It is a way for
companies to share their profits with shareholders.
 Formula: Dividend per Share = Total Dividends Paid / Number of Common
Shares Outstanding
 Pros: Dividends can be a source of income for investors. A company that pays
a consistent dividend may be seen as more attractive to income-oriented
investors.
 Cons: Dividends represent a distribution of corporate profits that could be
reinvested in the company for future growth.
 Standard Ratio: There is no standard ratio for dividend per share.
 Analysis of L&T's Dividend per Share: L&T's dividend per share has
fluctuated between ₹18.00 and ₹36.00 over the three years shown. In March
2024, the dividend per share was ₹34.00.

Overall, the per-share ratios provide some insight

4. Turnover Ratios:
Asset turnover ratio and inventory turnover ratio, which are two different types of
efficiency ratios.

 Asset Turnover Ratio

 Meaning: The asset turnover ratio measures a company's ability to generate
sales from its assets. A higher asset turnover ratio indicates that a company is
using its assets more efficiently to generate sales.
 Formula: Asset Turnover Ratio = Net Sales / Average Total Assets
 Pros: A high asset turnover ratio can be a sign of efficient asset management.
It indicates that the company is able to generate a high level of sales without
having to invest heavily in assets.
 Cons: A very high asset turnover ratio may also indicate that a company is
under-investing in its assets, which could hurt its future growth potential.
 Standard Ratio: The standard asset turnover ratio varies depending on the
industry.
 Analysis of L&T's Asset Turnover Ratio: L&T's asset turnover ratio has
fluctuated between 0.64 and 0.73 over the three years shown. In March 2024,
the asset turnover ratio was 0.73.
 Inventory Turnover Ratio
 Meaning: The inventory turnover ratio measures how many times a company
sells and replaces its inventory over a period. A higher inventory turnover ratio
indicates that a company is selling its inventory efficiently and avoiding
holding excess inventory.
  Formula: Inventory Turnover Ratio = Cost of Goods Sold / Average
Inventory
 Pros: A high inventory turnover ratio can be a sign of efficient inventory
management. It indicates that the company is able to sell its inventory quickly
and avoid the costs associated with holding too much inventory, such as
storage costs and the risk of obsolescence.
 Cons: A very high inventory turnover ratio may also indicate that a company
is not holding enough inventory to meet customer demand, which could lead
to stockouts.
 Standard Ratio: The standard inventory turnover ratio also varies depending
on the industry.
 Analysis of L&T's Inventory Turnover Ratio: L&T's inventory turnover
ratio has ranged between 2.57 and 4.20 over the three years shown. In March
2024, the inventory turnover ratio was 3.34.

Overall, the efficiency ratios for L&T suggest that the company is using its assets and
managing its inventory fairly efficiently. However, it is important to note that these
ratios are just two of many factors that investors should consider when evaluating a
company's financial health. Benchmarking these ratios against industry averages can
provide more context for how L&T is performing compared to its peers.

CONCLUSION

Financial Performance:

 L&T's financial performance appears to be strong overall.

 Revenue and profits have grown steadily over the past five years, indicating
healthy core business activity.
 Profit margins have remained stable, suggesting efficient cost management.

Balance Sheet:
  The balance sheet shows a healthy increase in equity, suggesting strong profit
retention.
 Liabilities have also grown, but at a slower pace than equity, indicating a
potentially decreasing reliance on debt financing.
 A more detailed analysis, including debt-to-equity ratio and working capital,
would be beneficial for a complete picture.

Cash Flow:

 Operating cash flow has grown significantly, indicating the ability to generate
cash from core operations.
 Negative investing cash flow suggests investments in growth, but continued
monitoring is necessary.
 Financing cash flow has improved, with net cash flow turning positive in the
last year. This is a positive sign for L&T's financial health.

Limitations:

 The analysis is based on a limited data set (presumably a stock price chart and
potentially excerpts from financial statements).
 A full analysis would require access to L&T's complete annual report,
including income statement, cash flow statement, and detailed balance sheet.

Overall, Larsen & Toubro Ltd appears to be in a strong financial position. The
company is generating healthy profits, managing its debt levels, and investing in
growth. However, further analysis is recommended to gain a more comprehensive
understanding of L&T's financial health and future prospects.