Larsen & Toubro
Annual Report 2009

Plain-text annual report

Mr. A. M. Naik, L&T’s Chairman & Managing Director, receives the Padma Bhushan from the President of India, Mrs. Pratibha Patil, on March 31, 2009. The Padma Bhushan Leading a company that is helping to build the nation is a matter of pride in itself. To receive high national recognition for this service is indeed heartening. It will be my privilege to accept the Padma Bhushan on behalf of all the employees of the Company for whom the L&T story is always interwoven with the larger interests of India. - - Mr A.M. Naik on receiving the Padma Bhushan Dear Shareholders, The year gone by witnessed unprecedented global economic and business turbulence. While your Company has managed to maintain its growth trajectory during 2008- 2009, the last six months have been a challenging period as decisions on awarding projects were repeatedly deferred on account of the economic slowdown and due to the code of conduct applicable to public sector bodies prior to the elections in May 2009. With a stable Government now in place and priority being accorded to infrastructure, it is expected that capital expenditure in this sector will increase and new business prospects will fructify in the later part of this year. 2008-2009, giving us some revenue It gives me pleasure to mention that visibility going forward. In the year your Company has recommended a under review, Net Sales touched Rs. dividend of Rs. 10.50 per equity share 33,600 crore - which translates into a of a face value of Rs. 2 per share for the growth of 35% over 2007-2008. year on the expanded share capital Margins remained relatively stable, and post-bonus issue of 1:1 during the year. Profit after Tax (PAT) excluding The corresponding dividend during exceptional items of expense and the previous fiscal, adjusted for Bonus income grew by a healthy 29% year issue in 2008-2009 for comparison on year. Growth in PAT including purposes, stood at Rs. 8.50 per equity exceptional items stood at 63%. share. 1 A. M. Naik Chairman & Managing Director Performance Overview Your Company has performed well despite the adverse scenario in 2008- 2009. Order Inflows grew by 23% over 2007-2008, and in line with our efforts to diversify the geographical spread of our businesses, international orders constituted 15% of the total Order Inflows. The Middle East continues to be a focus area for us and we have enhanced our footprint in the GCC Region. The Order Book position stood at Rs. 70,300 crore at the end of Sustaining Profitable Growth: Last year we had put in a slew of measures to accelerate growth in a profitable manner and we hope to return to this growth path in the near term future. (cid:2) Organization Structure: An internal reorganization has now been completed where complementary business units have been organized under vertically integrated businesses termed ‘Operating Companies’ (OCs). These OCs have their own internal Boards and embedded shared service functions such as HR, Resource Support and Finance & Accounts to enable self- sufficiency. The new structure opens up opportunities for leadership development, provides a platform for nurturing internal resources and is expected to provide focus to businesses within each OC. The structure aims to shareholder value enhance creation. (cid:2) Talent Management: The adverse economic conditions have worked to our advantage in enabling us to position L&T as a stable career destination. We have bolstered our talent recruitment drives to meet our growing business needs. Steps have been taken to meet the challenges of retention, skill upgradation, remuneration and the career aspirations of talent on our rolls. structured These include 2 induction paths, capability building programs, differentiated reward career systems, progression plans and leadership development programs including succession planning. We are confident that the measures now being taken will enhance the talent effectiveness of our management initiatives. businesses to run efficiently and IT also build cutting edge solutions. IT activities in the Company are effectively governed within a structured framework IT–business with alignment, value delivery, risk management, service & support and total cost of ownership. focus on (cid:2) Capacity Expansion: (cid:2) Technology: Technology continues to be the cornerstone of our business model, and your Company prides itself on being able to leverage for technological offerings profitable business growth. Alliances with international technology partners enable us to fill capability gaps and access expertise wherever we do not possess the requisite in-house resources, either on long-term or on project-specific basis. Examples of such tie-ups are our recent JV with EADS to exploit opportunities in Defense, and the MOUs with Westinghouse Electric Company (USA), Atomic Energy Commission (Canada), Limited Atomstroyexport (Russia) and GE Hitachi Nuclear Energy (USA) in the area of Nuclear Power. (cid:2) IT in Business: Your Company believes in investing in IT as a business enabler. IT outlay over the years have been directed towards a balanced mix of hygiene spends and payoff spends that enable our our Your Company has taken proactive steps in setting up manufacturing capacities ahead of demand triggers. A new modular fabrication facility in Oman is fully functional, enabling us to bid for significantly large hydrocarbon projects in the international arena. A heavy engineering workshop adjoining this facility that will augment global manufacturing capabilities is due to become operational later this year. Plans to manufacture super- critical power plant equipment in collaboration with Mitsubishi Heavy Industries, Japan are well on track, and these plants would come on stream at Hazira in with Gujarat, commissioning of the boiler manufacturing unit this year. Manufacturing capacity in MV switchgear has been augmented in Ahmednagar, Maharashtra and is expected to drive growth impetus in our Electrical and Automation OC. Our heavy engineering workshop in Talegaon in Maharashtra has become operational and will beginning enhance our manufacturing capabilities for the defence sector. We have commenced setting up of a shipyard at Kattupalli near Ennore in South India which will enable us to manufacture defense ships and later undertake repairs of commercial ships. We also plan to set up a heavy forge shop that will cater to nuclear and process plants forgings, an area where we were hitherto dependent on international vendors. Outlook: While no country is insulated from the impact of the global meltdown, India’s economy provides relatively greater stability. The business environment however, continues to be challenging and we foresee a return to robust growth conditions after economic recovery takes root. Your Company has planted seeds of growth in sectors likely to receive focused attention. These include: (cid:2) Hydrocarbon business – both in the upstream oil and gas exploration / extraction and in midstream refineries. Increased capacity in the Middle East is likely to yield some growth in this sector in years to come. (cid:2) Availability of gas from the KG Basin along with high gas allocation to the fertilizer sector affords in feedstock naphtha-to-gas conversion prospects and opportunities (cid:2) brownfield expansion plans of fertilizer companies. Road projects have started receiving focused Government attention and are likely to witness increased awards on BOT basis. This is an area where we can leverage past record, scale, design strength and execution capability as and when tenders are floated as a first step towards final award of these projects. (cid:2) We intend to leverage our strong track record in the area of evacuation, storage, treatment and transmission of bulk water to exploit emerging opportunities in states that are water-deficit. (cid:2) (cid:2) Increased demand for power as a pre-requisite for economic development offers good potential for us in future. Our power equipment manufacturing venture is an integral part of our efforts to grow this business in years to come and we have started receiving large orders in this space. In the recent past, your Company has received orders of a diverse nature in the railway business, which include contracts from the Indian Railways for setting up facilities for manufacture of rolling stock, railway sidings for private players, sector electrification of rail corridors, intra-city metro and monorails. Coupled with significant spending likely to take place on Dedicated Freight Corridors for the Railways, this sector is perceived by us to hold good growth potential in years to come. (cid:2) Nuclear Power Generation, which is slated to grow by an order of magnitude over the next decade and more, can spell major growth opportunities for us in the long term. (cid:2) Defense Sector, when privatized, will offer large business potential and this is an area where your Company is well positioned. Before I conclude, I would like to thank all L&T-ites for the support and continued commitment which is helping us to navigate through these difficult times. I would also like to express my gratitude to my colleagues, our customers, business and associates, members of the Board for their valuable assistance. We will continue to work for enhancement of stakeholder value, and remain committed to justifying the faith and trust you have reposed in us. shareholders With best wishes, A. M. Naik Chairman & Managing Director Mumbai, May 28, 2009 3 Contents Company Information Organisation Structure Leadership Team People Technology Thrust International Operations Corporate Social Responsibilities Powering Growth Accelerating Development L&T’s Nationwide Network & Global Presence Standalone Financials - 10 Year Highlights Consolidated Financials - Highlights Graphs Director’s Report Management Discussion & Analysis Auditor’s Report Balance Sheet Profit and Loss Account Cashflow Statement Schedules forming part of Accounts Notes forming part of Accounts 5 6 7 8 9 10 11 12-13 14-15 16 17 18-19 21-47 48-100 101-103 104 105 106 107-135 136-171 Statement pursuant to Section 212 of the Companies Act, 1956 172-178 Information on Subsidiary Companies 179-191 Auditors’ Report on Consolidated Financial Statements Consolidated Balance Sheet Consolidated Profit and Loss Account Consolidated Cashflow Statement Schedules forming part of Consolidated Accounts Notes forming part of Consolidated Accounts 193 194 195 196 197-216 217-242 4 L&T’s Corporate Office in Mumbai ormationtiontiontiontion orma orma ompany Iy Iy Iy Iy Infnfnfnfnforma ompan ompan CCCCCompan orma ompan d of Dd of Diririririrececececectttttorsorsorsorsors d of Dd of D BBBBBoaroaroaroaroard of D A. M. Naik J. P. Nayak Y. M. Deosthalee K. Venkataramanan R. N. Mukhija K. V. Rangaswami V. K. Magapu M. V. Kotwal S. Rajgopal S. N. Talwar M. M. Chitale Thomas Mathew T. N. Mohan Raj Subodh Bhargava Bhagyam Ramani (Mrs) A. K. Jain J. S. Bindra Company Secretary N. Hariharan Chairman & Managing Director Whole-time Director & President (Machinery & Industrial Products) Whole-time Director & Chief Financial Officer Whole-time Director & President (Engineering & Construction Projects) Whole-time Director & President (Electricals & Electronics) Whole-time Director & President (Construction) Whole-time Director & Senior Executive Vice President (IT & Technology Services) Whole-time Director & Senior Executive Vice President (Heavy Engineering) Non-Executive Director Non-Executive Director Non-Executive Director Nominee - LIC Nominee - LIC Non-Executive Director Nominee - GIC Nominee - SUUTI Non-Executive Director Registered Office L&T House, Ballard Estate, Mumbai - 400 001 Auditors M/s. Sharp & Tannan Solicitors M/s Manilal Kher Ambalal & Co. Registrar & Share Transfer Agents Sharepro Services (India) Private Limited 64th ANNUAL GENERAL MEETING AT BIRLA MATUSHRI SABHAGAR 19, MARINE LINES, MUMBAI 400 020 ON FRIDAY, AUGUST 28, 2009 AT 3.00 P.M. 5 T N E M P O L E V E D E C N A N F I & T I & S T C E J O R P I L A C N A N F I I S E C V R E S & R H I G N R E E N G N E I I S E C V R E S O C I & Y R E N H C A M I I L A R T S U D N I S T C U D O R P I L A C R T C E L E & I S C N O R T C E L E I N O T C U R T S N O C & G N R E E N G N E I I I I R O T C E R D G N G A N A M & N A M R A H C I I K A N . M . A 6 E E L A H T S O E D . M . Y U P A G A M . K . V K A Y A N . P . J A J I H K U M . N . R L A W T O K . V . M N A N A M A R A T A K N E V . K I M A W S A G N A R . V . K L A P P U I V A R Y R T S U D N I Y V A E H S T C E J O R P C & E I N O T C U R T S N O C e c n a n F i t n e m p u q E (cid:129) i i e c n a n F e d a r T (cid:129) e r u t c u r t s a r f n I (cid:129) e c n a n F i l a i c n a n F i s e c i v r e S s e g d i r B & s d a o R (cid:129) s r u o b r a H & s t r o P (cid:129) e r u t c u r t s a r f n I t n e m p o l e v e D s t c e j o r P r e w o P o r d y H (cid:129) s t c e o r P j s y a w l i a R (cid:129) s t r o p r i A (cid:129) i i n o s s m s n a r T (cid:129) e r u t c u r t s a r f n I n a b r U t n e m p o l e v e D n o i t u b i r t s D & i s t c e o r P j s t c e o r P j r e t a W (cid:129) s e i r t s u d n I s s e c o r P & s a G & l i O , y g r e n E (cid:129) g n i r u t c a f u n a M (cid:129) h c e t o f n I T & L s e c i v r e S T I s l a c i t r e V g n i r e e n g n E i t c u d o r P (cid:129) i s e c v r e S e c n a r u s n I (cid:129) . 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I o C G N T A R E P O & l a c i r t c e l E n o i t a m o t u A i y r e n h c a M l a i r t s u d n I (cid:129) d r a d n a t S l a c i r t c e E (cid:129) l , l e e t S , r e p a P r o f l a i r e t a M k u B l g n i l d n a H s t c u d o r P e g a t l o V i m u d e M – O C M A T (cid:129) s t c u d o r P i g n s s e c o r P r e b b u R (cid:129) & s m e t s y S l a c i r t c e E (cid:129) l I . s o C G N T A R E P O i g n i r e e n g n E y v a e H s r e fi s a G i l a o C (cid:129) t n a P l l a m r e h T & l i a c m e h c o r t e P t n e m p u q E i t n e m p u q E i & r e z i l i t r e F (cid:129) i y r e n h c a M t n e m p u q E i r e k c a r C , y r e n fi e R (cid:129) i i g n n M & n o i t c u r t s n o C t n e m p u q E c i i l u a r d y H g n i l d n a H l a i r e t a M d n a e g a i r r a c r e d n U i y r e n h c a M (cid:129) (cid:129) (cid:129) i g n s s e c o r P s c i t s a P (cid:129) l & s t c u d o r P g n d e W l i s e v a V l l a i r t s u d n I i y r e n h c a M (cid:129) (cid:129) n o i t a m o t u A & l o r t n o C & g n i r e t e M (cid:129) (cid:129) s m e t s y S n o i t c e t o r P s t c u d o r P y r d n u o F (cid:129) & t n e m p u q E i l i a c d e M (cid:129) l s o o T g n i t t u C s U B S s m e t s y S e r u t c u r t S y v a e H (cid:129) s r o t a t i p c e r P i n o i t a c i r b a F c i t a t s o r t c e E (cid:129) l n o i t c u r t s n o C i y r e n h c a M s m e t s y S & s p m u P i g n s n e p s D i l o r t e P (cid:129) s a G & l i O d n a t n a P l s m e t s y S n o p a e W r e w o P l r a e c u N (cid:129) (cid:129) t n e m p u q E i t n e m p u q E i n o i t a v A & i e c a p s o r e A (cid:129) s m e t s y S e n i r a M t fi e R & r i a p e R t n a h c r e M l a v a N (cid:129) (cid:129) (cid:129) i g n g r o F y v a e H s e i t i l i c a F & g n d i l i u b p h S i j s t c e o r P d e s a B l a o C j s t c e o r P d e s a B s a G (cid:129) (cid:129) g n i r u t c a f u n a M d n a s I l r e l i o B (cid:129) d n a s I l G T S (cid:129) r e l i o B (cid:129) s e i t i l i c a F i e n b r u T (cid:129) g n i r u t c a f u n a M s e i t i l i c a F d e t i i m L r e w o P T & L g n i r u t c a f u n a M s e i t i l i c a F i i g n p P P H (cid:129) s l l i i M g n z i r e v u P (cid:129) l y r d n u o F y v a e H (cid:129) t n e g r a S T & L (cid:129) ) M R V ( g n i r e e n g n E i i s e c v r e S y d n u L & t n e m p o l e v e D r e w o P n o i t c u r t s n o C & t n e m p o e v e D l r e w o P (cid:129) t n e m e g a n a M e c r u o S l e u F (cid:129) C P E & t n e m p o e v e D l M & O (cid:129) (cid:129) . I o C G N T A R E P O j t c e o r P a n m u A l i r o f t n a P l r e w o P l a m r e h T (cid:129) n o i t c u r t s n o C s s e c o r P r e t a W (cid:129) l y g o o n h c e T l r a e c u N C P E (cid:129) - n o i t a c i r b a F r a u d o M l (cid:129) n o i t c u d o r P g n i t a o F (cid:129) l i s g R g n i l l i r D & s m e t s y S i s e c v r e S n o i t a l l a t s n I (cid:129) s e n i l i e p P a e s b u S (cid:129) C P E s a G & l i O • m a e r t s p U s t c e o r P j g n i r e e n g n E i i s e c v r e S - l l e d a V T & L (cid:129) m a e r t s n w o D & d M i & l i a c m e h c o r t e P (cid:129) s r e z i l i t r e F i - a d o y h C T & L (cid:129) s e i r e n fi e R (cid:129) g n i r e e n g n E i i s e c v r e S t n a l P s s e c o r P n o i t c u r t s n o C s e n i l e p P i i e c v r e S & s e r a p S (cid:129) s m e t s y S i s c n o v A i - - h c e t o f n I m u r t c e p S i l s c n o r t c e E c g e t a r t i S (cid:129) (cid:129) y r t n u o c s s o r C - C P E (cid:129) n o i t c u r t s n o C & s t c e o r P j e n i l e p P i f l u G - T & L (cid:129) g n i r e e n g n E i l i a c r e m m o C & l a n o i t u t i t s n I (cid:129) s e i r o t c a F & s g n d i l i u B Z E S & s p h s n w o T (cid:129) i s g n d i l i u B l s a t i p s o H & s e t o H l (cid:129) s t c u d o r P g n d i l i u B & k r o w m r o F (cid:129) i g n s u o H m e t s y S (cid:129) s t n a P l l a i r t s u d n I (cid:129) n o i t a t r o p s n a r T o r t e M s y a w n u R & s d a o R r e w o P l r a e c u N l c i r t c e e o r d y H (cid:129) (cid:129) (cid:129) (cid:129) s r u o b r a H & s t r o P (cid:129) e r u t c u r t s a r f n I s e g d i r B (cid:129) g n i r e e n g n E – i l l o b m a R T & L (cid:129) i s e c v r e S l a i r e t a M , l a c i g r u l l a t e M r e t a W & g n i l d n a H g n i l d n a H l a i r e t a M k u B (cid:129) l & t n e m t a e r T r e t a W (cid:129) j s t c e o r P n o i t u b i r t s D i s t c e j o r P l a c i r t c e l E l s a t e M & s a r e n M l i (cid:129) n o i t a c fi i r t c e E l l a i r t s u d n I (cid:129) n o i t a t n e m u r t s n I & n o i t a c fi i r t c e E y a w l l i a R (cid:129) s n o i t a t s b u S (cid:129) i i s e n L n o s s m s n a r T (cid:129) i . I o C G N T A R E P O I N A W T A H H C . K A . I . s o C G N T A R E P O I . s o C G N T A R E P O , C P E n i s e i t i l i i b a p a c p u g n p m a r y b a i s A . g n i r u t c a f u n a M d n a n o i t c u r t s n o C t s a E h t u o S d n a a c i r f A , t s a E e l d d M e h t n i i e c n e s e r p s t i g n i t a d i l o s n o c s i T & L : I S S E N S U B L A N O T A N R E T N I I g n i r u t c a f u n a M & g n i r e e n g n E i - k c o t S g n i l l o R s m e t s y S t r o p s n a r T s s a M (cid:129) (cid:129) l s n o i t u o S y e k n r u T (cid:129) s t c e j o r P y a w l i a R Leadership Team (Front row - from left to right) ; Mr. Y. M. Deosthalee, Mr. A. M. Naik and Mr. J. P Nayak (Rear - from left to right) : Mr. K. Venkataramanan, Mr. K. V. Rangaswami, Mr. M. V. Kotwal, Mr. R. N. Mukhija and Mr. V. K. Magapu 7 continuous. It is facilitated through training modules, an e-learning portal, leadership development strategies and soft-skills amplification programmes. Technology is changing the face and pace of the workplace, and L&T ensures that its people stay in step – and in tune – with the times. Succession planning plays an important part in ensuring that change does not disrupt continuity. Our leadership development programmes help to mould the leaders of tomorrow. Employee welfare initiatives provide the back-up support essential job performance. These include health care, child education, spouse engagement, etc. to As L&T marches forward into the future, its people will continue to be its driving force. People The driving force L&T is its people. They have shaped its destiny, expanded its horizons, and proved to be the one vital differential that distinguishes L&T from the rest. Talent Acquisition People are a precious asset – and also a scarce one. At L&T, we successfully tackle the twin challenges of talent acquisition and attrition. Stringent recruitment processes and procedures ensure that only the finest talent is selected. L&T’s academia-industry interface also helps in projecting the L&T brand in campuses. Post-recruitment, a number of phased initiatives ensure that the employee aligns his or her personal goals with the Company’s objectives. Talent retention Employee retention is woven into the company’s strategy for success. The transformation of an employee into someone special – an L&T-ite – is a process that cannot be calibrated but, like the change of seasons, happens inevitably. Corporate initiatives that act as catalysts in the process of change include induction programmes, mentoring and a buddy scheme. Skill-enhancement is also 8 L&T is widely regarded as a crucible of engineering talent in India. Trainiing programmes and a unique environment ensure a transformation from ‘employee’ to L&T-ite. Picture (top) shows the serene ambience of L&T’s Management Development Centre at Lonavla, near Mumbai. Stringent recruitment processes Academia-industry interface Continuous skill enhancement Succession planning FAIR - Framework for linking Appraisals with Incentives & Reward Technology Thrust Design gives shape to dreams A small step in a design engineer’s mind… a giant leap in the application of technology. The L&T Knowledge City at Vadodara crystalizes the importance that the Company attaches to knowledge-intensive businesses. This complex will deepen and widen L&T’s capabilities in an array of high- tech domains. Enhancing Capabilities L&T has advanced design engineering capabilities for project and product design. Facilities at Mumbai, Chennai, Bangalore, Faridabad, Vadodara, Sharjah and Oman are backed by laboratories for R&D, technology assimilation and absorption, and design analysis. Joint venture companies provide engineering services for different sectors: L&T-Valdel Engineering Limited for upstream hydrocarbon, L&T-Chiyoda Limited for mid- and downstream hydrocarbon, L&T-Rambøll Consulting Engineering Limited for transportation infrastructure and L&T-Sargent & Lundy Limited for power. A Rich Harvest In the sphere of Heavy Engineering, L&T has designed equipment that has set world records in terms of complexity and technological sophistication. In the field of electrical and electronics products and systems, L&T’s in-house R&D and design efforts have won significant recognition. The electrical and electronic business has a large number of patents to its credit. Its offerings include a large number of new products -- a measure of the vibrance of its R&D. In the construction, mining and earthmoving sectors, L&T collaborates with global majors like Komatsu and Case NH to bring to Indian industry the benefits of contemporary technology. Top: L&T Knowledge City at Vadodara. Above: 3-D model of a cracking furnace. Designing the Future Front-end Engineering & Design Technology is the key to the future. As the company stretches outwards and upwards to expand and grow, design and engineering will give it the impetus to soar. Engineering Centres Intensive R&D laboratories Joint ventures for several sectors 409 patent applications for switchgear filed from 2003-09 9 A mark in world markets Post the acquisition of Tamco, the manufacturing footprint of L&T covers new geographies. L&T now has manufacturing facilities in Dubai, Saudi Arabia, Oman, Malaysia, China, Indonesia and Australia. L&T’s project and product exports cover over 30 countries. These include countries traditionally considered engineering nerve-centers -- the U.S., U.K., Canada, France and China. With a long-term perspective of the global arena, L&T is slated to make further inroads into the international marketplace. International Operations The world is an integrated economy. Close to a fifth of L&T’s sales turnover comes from sales outside India. While remaining committed to building the nation, L&T is simultaneously enlarging its global footprint -- for sound business reasons. A wide international customer base enables de-risking of operations. Further, international exposure enables L&T to benchmark its operations against global standards. Multi-faceted presence There are many dimensions to L&T’s global presence. Collaborations with international majors enable us to introduce to Indian industry the benefits of the world’s latest technologies. Global sourcing enables us to give our clients the global advantage – the benefit of world-class quality at competitive prices and to stringent delivery schedules. Project and product exports have helped expand our global footprint, earning foreign exchange for the country while building both the Indian and the L&T brand abroad. 10 A methanol plant in Saudi Arabia -- one of several plants set up by L&T on an EPC basis in the Middle East and South East Asia. Manufacturing footprint in 8 countries Global network World-class quality International partnerships Global sourcing Corporate Social Responsibilities Today’s choices can lighten tomorrow’s compulsions L&T was one of the first engineering and construction companies in India to publish its Report on Corporate Sustainability. The Company and its people are committed to living and doing business in a manner that will ensure sustained well-being for all. A Key to the Future L&T has set up Construction Skills Training Institutes (CSTIs) at Ahmedabad, Bangalore, Chennai, Delhi and Panvel to turn dropouts into contributing members of their families and of society at large. The CSTIs ensure a steady supply of skilled labour to the construction industry, helping it sustain its momentum. In addition, the Larsen & Toubro Public Charitable Trust conducts skill training at Mumbai, Lonavala, Aurangabad, Latur and Kharel. Health its Around factories and offices countrywide, the company has initiated welfare activities in the areas of health, education and environment conservation, with local partners. L&T’s HIV/AIDS- prevention initiatives include awareness camps targeted at high-risk groups, voluntary testing and counseling. Health camps in rural areas bring the benefits of modern diagnostic and curative tools to the rural poor. Education L&T has adopted several municipal schools in the vicinity of its works, and enriches the learning experience in many ways. L&T’s own employees dedicate part of their spare time and talent to augmenting the learning process. Environment L&T has taken significant initiatives to reduce the consumption of energy and use ‘greener ’ forms of energy at its factories. Anti-pollution measures help minimise the impact of industrial processes on the environment. CSR programmes cover primary and municipal schools around L&T’s campuses. In addition, L&T- eers (employee volunteers), in their own time, teach underprivileged children. The wives of L&T-ites undertake a broad spectrum of social work under the aegis of numerous Ladies Clubs. Training Institutes Health Centres School adoption Energy optimisation Anti-pollution measures 11  Accelerating Development Commercial & Residental Complexes Roads & Bridges Ports & Harbours Airports Oil & Gas Projects Refineries 12  Powering Growth Power Projects Missile & Weapon System Process Plant Equipment Steel Plants Switchgear Construction & Mining Equipment 13 A Nationwide Network The pictorial representation does not purport to be the political map of India 14 A Global Presence Product & Equipment Supply Fabrication Note: Map is broadly representative of L&T’s global presence. 15 STANDALONE FINANCIALS - 10 YEAR HIGHLIGHTS Description 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000 Rs. crore 7424 242 7666 6956 995 369 329 13 - 342 180 248 3616 3864 - 3974 7838 4589 774 2439 Profit and Loss Account Gross sales & service Other income Gross revenues Net sales & service Profit before depreciation, interest and tax [PBDIT] (excluding extraordinary/exceptional items) Profit before tax (excluding 34045 1020 35065 33647 25187 676 25863 24855 17901 522 18423 17567 14966 519 15485 14735 13255 732 13987 13050 9807 461 10268 9561 9870 302 10172 9360 8167 277 8444 7726 7825 310 8135 7390 4425 3318 2186 1424 1081 extraordinary/exceptional items) 3940 3068 1982 1235 Profit after tax (excluding extraordinary/exceptional items) Extraordinary items (net of tax) Exceptional items (net of tax) Profit after tax (PAT) Dividend including dividend distribution tax 2709 773 - 3482 2099 - 74 2173 1385 - 18 1403 863 70 79 1012 720^ 572 428 349 Balance Sheet Share capital Reserves Net worth Deferred tax liability (net) Loan funds Capital employed Net fixed assets Investments Net working capital (NWC) Miscellaneous expenditure 117 12343 12460 48 6556 19064 5195 8264 5605 58 9497 9555 61 3584 13200 3645 6922 2630 (to the extent not written-off) – 3 57 5711 5768 40 2078 7886 2225 3104 2547 10 27 4613 4640 77 1454 6171 1605 1920 2625 21 933 631 - 353 984 407 26 3343 3369 95 1859 5323 1083 961 3238 41 890 769 533 - - 533 225 25 2750 2775 114 1324 4213 1015 966 2185 47 999 1042 1013 510 433 - - 433 211 249 3314 3563 841 3176 7580 4056 1160 2300 401 347 - - 347 174 249 3095 3344 853 3463 7660 4264 918 2413 339 315 - - 315 178 249 3751 4000 - 4263 8263 4671 813 2735 64 65 44 36 Ratios and statistics PBDIT as % of total income @ PAT before extraordinary/exceptional items as % of total income $ ROCE % * RONW % ** Gross Debt:Equity ratio NWC as % of gross sales & service Current ratio Basic earnings per equity share (Rs.) # Book value per equity share (Rs.) No. of equity shareholders No. of employees 12.83 13.08 12.14 9.45 8.08 8.94 10.39 13.12 13.33 13.94 7.81 17.55 24.67 0.53:1 16.47 1.31 8.25 20.58 28.21 0.38:1 10.44 1.19 7.67 20.15 26.84 0.36:1 14.23 1.27 5.69 16.05 21.88 0.32:1 17.54 1.38 4.70 14.17 21.05 0.56:1 24.43 1.58 5.32 13.52 20.66 0.49:1 22.28 1.47 4.48 7.27 12.91 0.92:1 23.30 1.58 4.34 6.84 9.69 1.07:1 30.42 1.81 4.09 6.74 8.18 1.09:1 34.95 2.11 4.57 7.38 8.85 1.05:1 32.85 2.07 59.50 37.80 25.11 19.02 19.41 10.71 8.71 6.98 6.34 6.87 212.31## 325.90 152.13 9,31,362 578,177 4,28,504 3,27,778 3,23,908 3,65,824 4,90,628 5,09,922 5,13,562 6,05,031 24,448 202.28## 334.01 37,357 27,191 31,941 18,996 19,848 21,873 23,148 23,988 22,922 157.31 130.25 253.91 139.15 216.74 Figures for the years 1999-2000 to 2002-2003 include demerged cement business ^ Includes dividend distribution tax of Rs.2.69 crore paid by a direct subsidiary company for which set off was availed by the parent company as permitted under the Income Tax Act. @ PBDIT as % of total income [(PBDIT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items and interest income)]. $ PAT before extraordinary/exceptional items as % of total income [(PAT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items)]. * ROCE [(PAT before extraordinary/exceptional items + interest - tax on interest)/(average capital employed excluding revaluation reserve and miscellaneous expenditure)]. ** RONW [(PAT before extraordinary/exceptional items)/(average net worth excluding revaluation reserve and miscellaneous expenditure)]. # Basic earnings per equity share has been calculated including extraordinary/exceptional items and adjusted for all the years for bonus issue in the ratio of 1:1 in the current year. ## After considering issue of bonus shares in the ratio of 1:1 during the respective years. 16 CONSOLIDATED FINANCIALS - HIGHLIGHTS Description 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 Rs.crore Profit and Loss Account Gross sales & service Other income Gross revenues Net sales & service Profit before depreciation, interest & tax [PBDIT] (excluding extraordinary/exceptional items) Profit before tax (excluding extraordinary/ exceptional items) Profit attributable to Group shareholders (excluding extraordinary/exceptional Items) Extraordinary items (net of tax) Exceptional items (net of tax & minority interest) Profit attributable to Group shareholders Dividend including dividend distribution tax Balance Sheet Share capital Reserves Net worth Minority interest Loan funds Deferred payment liabilities Deferred tax liability (net) Capital employed Net fixed assets Investments Loans & advances towards financing activities Net working capital (NWC) Miscellaneous expenditure 40608 885 41493 40187 29561 684 30245 29199 20700 1071 21771 20336 16747 577 17324 16500 14599 696 15295 14379 11107 488 11595 10849 10857 267 11124 10327 9195 239 9434 8714 5398 3984 2905 1846 1367 1215 1200 1287 4344 3384 2510 1472 1052 921 469 414 3007 773 9 3789 720 117 13871 13988 1058 18400 1970 131 35547 15589 6806 7110 6042 2304 – 21 2325 572 58 10773 10831 923 12120 196 122 24192 8523 5552 6161 3927 1810 – 430 2240 428 57 6865 6922 646 6200 232 107 14107 5440 2478 2410 3762 1051 70 196 1317 349 27 4937 4964 107 3499 - 127 8697 2973 1676 1012 3011 697 – 353 1050 407 26 3290 3316 105 3454 - 138 7013 2215 615 406 3736 600 – 147 747 225 25 2622 2647 54 2769 - 214 5684 2140 624 375 2498 380 – – 380 211 249 2968 3217 50 4701 - 913 8881 5539 528 323 2392 290 – – 290 174 249 2889 3138 44 4978 - 928 9088 5824 358 218 2613 (to the extent not written-off) – 29 17 25 41 47 99 75 Ratios and statistics PBDIT as % of total income @ PAT before extraordinary/exceptional items as % of total income $ ROCE % * RONW % ** Gross Debt:Equity ratio Net Debt:Equity ratio NWC as % to gross sales Current ratio Basic earnings per equity share (Rs.) # Book value per equity share (Rs.) 13.19 13.40 13.97 11.01 9.31 10.77 11.37 14.46 7.33 12.10 24.32 1.32:1 0.84:1 14.88 1.29 64.76 7.72 14.13 26.68 1.12:1 0.57:1 13.28 1.25 40.44 238.27## 368.62 8.66 17.78 30.71 0.90:1 0.44:1 18.17 1.36 40.10 3.24 3.59 6.70 7.13 12.45 9.24 1.52:1 1.65:1 1.27:1 1.53:1 28.41 22.03 1.79 1.55 5.83 7.65 242.77## 357.43 249.75 206.33 123.98 121.64 5.29 13.02 21.24 1.08:1 0.76:1 22.49 1.50 15.01 4.73 13.84 23.96 1.06:1 0.89:1 25.59 1.64 20.70 6.25 15.89 25.78 0.71:1 0.49:1 17.98 1.40 24.75 Figures for the years 2001-2002 & 2002-2003 include demerged cement business @ PBDIT as % of total income [(PBDIT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items and interest income)]. $ PAT before extraordinary/exceptional items as % of total income [(PAT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items)]. * ROCE [{profit available for appropriation before extraordinary/exceptional items + minority interest + interest (including interest forming part of operating expenses) - tax on interest}/(average capital employed excluding revaluation reserve and miscellaneous expenditure)]. ** RONW [(profit available for appropriation before extraordinary/exceptional items)/(average net worth excluding revaluation reserve and miscellaneous expenditure)]. # Basic earnings per equity share is calculated including extraordinary/exceptional items and adjusted for all the years for bonus issue in the ratio of 1:1 in the current year. ## After considering issue of bonus shares in the ratio of 1:1 during the respective years. 17 L&T-ORDER INFLOW L&T-SALES L&T-PBDIT AS % OF TOTAL INCOME L&T-INTEREST COVERAGE RATIO L&T-PAT & EPS L&T-FIXED ASSET TURNOVER RATIO 18 L&T-SEGMENT-WISE ORDER INFLOW 2008-2009 L&T-SEGMENT-WISE SALES 2008-2009 L&T-SEGMENT-WISE RESULT L&T-SEGMENT-WISE EBDITA MARGINS* L&T-SECTOR-WISE ORDER BOOK AS AT MARCH 31, 2009 L&T CONSOLIDATED SALES AND PAT 19 NOTES Directors’ Report The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2009. FINANCIAL RESULTS Profit before depreciation and tax 2008-2009 2007-2008 Rs. crore Rs. crore 4,246.40 3,367.07 Less: Depreciation and amortization 307.30 213.63 Add : Transfer from revaluation reserve 3,939.10 1.31 3,153.44 2.03 DIVIDEND The Directors recommend payment of dividend of Rs. 10.50 per equity share of Rs. 2/- each. Shares that may be allotted on exercise of options granted under the Employee Stock Option Schemes before the book closure for payment of dividend will rank pari passu with the existing shares and be entitled to receive the dividend. DEPOSITORY SYSTEM As the members are aware, the Company’s shares are compulsorily tradable in electronic form. As on March 31, 2009, almost 96% of the Company’s total paid-up capital representing 56,32,91,981 shares are in dematerialized form. In view of the numerous advantages offered by the depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization on either of the depositories. Profit before tax and extraordinary items 3,940.41 3,155.47 CAPITAL & FINANCE Less: Provision for tax Profit after tax (before extraordinary items) Profit on sale / transfer of business (net of tax) Profit after tax and extraordinary items Add : Balance brought forward from previous year Less: Dividend paid for the previous year (including dividend distribution tax) 1,231.21 982.05 2,709.20 2,173.42 772.46 - 3,481.66 2,173.42 104.31 0.33 78.24 0.77 Balance available for disposal which the Directors appropriate as follows: 3,585.64 2,250.89 Debenture redemption reserve 43.34 - Interim dividend - 56.83 During the year under review, the Company allotted 7,68,418 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes. The shareholders of the Company approved the issue of bonus shares in the ratio of 1:1 at the AGM held on August 29, 2008. The Company accordingly issued 29,25,92,054 bonus shares on October 3, 2008. During the year under review, the Company tied up foreign currency long term loans aggregating to USD 100 million to finance ongoing capital expenditure, investment in overseas subsidiaries and overseas acquisitions. The loans have tenors of 5, 7 and 10 years. The Company has also issued secured redeemable non-convertible debentures of Rs. 900 crores, with tenor of 10 years, and unsecured redeemable non-convertible debentures of Rs. 250 crores with tenor of 3 years. CAPITAL EXPENDITURE As at March 31, 2009, the gross fixed and intangible assets, including leased assets, stood at Rs. 6,670.78 crore and the net fixed and intangible assets, including leased assets, at Rs. 5,194.60 crore. Additions during the year amounted to Rs. 1,986.31 crore. Proposed final dividend 614.97 438.49 DEPOSITS Dividend tax General reserve 101.83 76.26 2,725.00 1,575.00 3,485.14 2,146.58 85 deposits totalling Rs. 0.08 crore which were due for repayment on or before March 31, 2009 were not claimed by the depositors on that date. As on the date of this report, deposits aggregating to Rs. 0.01 crore thereof have been claimed and paid. Balance to be carried forward 100.50 104.31 TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND Dividend The Directors recommend payment of dividend of Rs. 10.50 per equity share of Rs. 2/- each on 58,56,87,862 shares YEAR IN RETROSPECT 614.97 438.49 The gross sales and other income for the financial year under review were Rs. 35,065 crore as against Rs. 25,863 crore for the previous financial year registering an increase of 36%. The profit before tax and extraordinary items (after interest and depreciation charges) of Rs. 3,940 crore and the profit after tax (before extraordinary items) of Rs. 2,709 crore for the financial year under review as against Rs. 3,155 crore and Rs. 2,173 crore respectively for the previous financial year, improved by 25% in each case respectively. During the year, the Company has transferred a sum of Rs. 1,43,88,496 to Investor Education & Protection Fund, the amount which was due & payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund as on March 31, 2009 is Rs. 7,30,26,439. SUBSIDIARY COMPANIES During the year under review, the Company subscribed to / acquired equity shares in various subsidiary companies. These subsidiaries are either SPVs executing projects secured through BOT route, or holding companies making investments in companies such as power and financial services. The investment in L&T International FZE is mainly for onward investment in international ventures. The details 21 of investments are as under: 862 equity shares of Dhs. 550,500 each in Larsen & Toubro International FZE for Rs. 533 crore at par. 4,08,00,000 equity shares of Rs. 10 each in L&T Power Limited at par. 1,989 equity shares of Rs. 10,000 each in International Seaport Dredging Limited at par. 5,70,00,000 equity shares of 10 each in L&T Power Development Limited at par. 12,40,005 equity shares of Rs. 10 each in L&T-Gulf Private Limited at par. 10,000 equity shares of Rs. 10 each in L&T Seawoods Private Limited at par. 100 equity shares of Rs. 10 each in L&T Chennai – Tada Tollway Limited at par. 50,000 equity shares of Rs. 10 each in L&T Natural Resources Limited at par. 20,50,000 equity shares of Rs. 10 each in L&T Capital Holdings Limited at par. 1,70,00,000 equity shares of Rs. 10 each in L&T Capital Company Limited at par. 40,000 equity shares of Rs. 10 each in Raykal Aluminium Company Private Limited at par. 10,10,000 equity shares of Rs. 10 each in L&T Halol- Shamlaji Tollway Private Limited at par. 10,10,000 equity shares of Rs. 10 each in L&T Rajkot- Vadinar Tollway Private Limited at par. 10,10,000 equity shares of Rs. 10 each in L&T Ahmedabad- Maliya Tollway Private Limited at par. Further contribution of Re. 0.55 per share & premium of Rs. 71.39 per share on 22,50,000 partly paid-up equity shares in Larsen & Toubro Infotech Limited. Total paid-up Rs. 3.75 per share, premium Rs. 393.745 per share. The Company has acquired 50% stake in L&T-Demag Plastics Machinery Limited from the JV partner M/s Sumitomo (SHI) Demag Plastics Machinery GmbH on March 31, 2009. Accordingly 30,00,000 shares were acquired for a consideration of Euro 1. Thus L&T-Demag Plastics Machinery Limited became a wholly owned subsidiary of the Company w.e.f. March 31, 2009. An application has been made to the Registrar of Companies to change the name of the subsidiary to L&T Plastics Machinery Limited. The Company further subscribed to 1,00,00,000 shares of Rs. 10 each at par. The Company transferred its entire 100% stake as detailed below to L&T Capital Holdings Limited (LTCHL). 50,00,00,000 equity shares of Rs. 10 each in L&T Infrastructure Finance Company Limited at par. 18,66,91,500 equity shares of Rs. 10 each in L&T Finance Limited for a consideration of Rs. 490.98 crores. 5,60,60,000 equity shares of Rs. 10 each in India Infrastructure Developers Limited at par. LTCHL will be the umbrella holding company for investments in financial services business. The Company has also sold 205 equity shares of Rs. 10 each of L&T Capital Holdings Limited at par. The statement pursuant to Section 212 of the Companies Act, 1956, containing details of subsidiaries of the Company, forms part of this Annual Report. 22 In view of the exemption received from Central Government vide letter no. 47/378/2009-CL-III dated May 8, 2009, the Audited Statement of Accounts, the Reports of the Board of Directors and Auditors of the Subsidiary companies are not annexed as required under Section 212(8) of the Companies Act, 1956. Shareholders who wish to have a copy of the full report and accounts of the subsidiaries will be provided the same on receipt of a written request from them. These documents will be put up on the Company’s Website viz. www.larsentoubro.com and will also be available for inspection by any shareholder at the Registered Office of the Company on any working day during business hours. AUDITORS’ REPORT The Auditors’ Report to the Shareholders does not contain any qualification. DISCLOSURE OF PARTICULARS Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure ‘A’ forming part of this Report. OTHER DISCLOSURES The Company has disclosed in the notes forming part of accounts the quantitative details in respect of sales, raw materials and components consumed and inventories as required vide sub-paras 3(i)(a), 3(ii)(a)(1) and (2) and 3(ii)(b) of Part II of Schedule VI to the Companies Act, 1956. The Central Government, vide its order No. 46/44/2009-CL-III dated March 30, 2009, has granted exemption to the Company for the financial year ended on March 31, 2009 in respect of disclosure of the above mentioned quantitative details where the values of the individual items in each category are less than 10% of the total value of the category. The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure ‘B’ forming part of this Report. Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure ‘C’ forming part of this Report. PERSONNEL The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company. DIRECTORS’ RESPONSIBILITY STATEMENT The Board of Directors of the Company confirms: i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure; that the selected accounting policies were applied consistently ii. (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2009 and of the profits of the Company for the year ended on that date; iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv. that the annual accounts have been prepared on a going concern basis. DIRECTORS Mr. Jagjeet Singh Bindra who was appointed as an Additional Director w.e.f. January 30, 2009, holds office upto the date of the forthcoming Annual General Meeting and is eligible for re-appointment. Mr. Thomas Mathew T. who was appointed on November 20, 2006 in the casual vacancy caused by the resignation of Mr. A. K. Shukla, holds office upto the date of the forthcoming Annual General Meeting and is eligible for re-appointment. Mr. S. N. Talwar, Mr. K. V. Rangaswami, Mr. M. V. Kotwal, Mr. V. K. Magapu and Mr. R. N. Mukhija retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting. The Notice convening the Annual General Meeting includes the proposals for re-appointment of Directors. Annexure ‘A’ to the Directors’ Report (Additional information given in terms of notification issued by the Ministry of Corporate Affairs) [A] CONSERVATION OF ENERGY: (a) Energy Conservation measures taken: 1 Improving energy effectiveness / efficiency of Equipments and Systems Use of Variable frequency drive for various applications such as central ACs, FDVS, AC plant Air Handling Units, EOT crane motors, etc. to improve the motor efficiency and enhance energy saving. Use of solar powered street lights, installing timers, applying reduced voltage to street lights during night time, installation of dusk to dawn solar powered street lights, etc. saving energy. Use of Solar power for water heaters, installation of water heating system for canteen cooking / washing, use of Portable electrical ovens modified with digital temperature controller, green power generation through roof installed grid connect solar power plant. Use of energy saving devices like human body sensors, presence sensors, time switches, photo sensing devices, electromizer energy saving devices, TFT monitor, LCD screens in discussion rooms, zone controlled AC, Low emission films on glass doors and windows, etc to reduce energy consumption. Procurement of energy efficient Amada CNC Press Brake machine as a replacement of old machine. Procurement of new compressor for packing shop for usage in third shift to cater to month end urgent packing requirements thus reducing the need to switch on a higher rated common compressor. CONSOLIDATED FINANCIAL STATEMENTS Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Auditors’ Report to the Shareholders does not contain any qualification. AUDITORS The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. ACKNOWLEDGEMENT Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and the stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners/Associates. Mumbai, May 28, 2009 For and on behalf of the Board A. M. Naik Chairman & Managing Director Saving of diesel by efficient running of powder coating / pre-treatment plant, provision of AMF panels on generator sets, etc. Practising Rain Water harvesting, sewage water treatment plant to recycle the water for maintenance of the greenery, use of auto sprinkling system for watering of gardens, use of foam type taps, Water efficient / climate tolerant plantings, etc. Reduction in daily A.C. running time, switching off lights and air conditioning during lunch breaks. Re-sizing of conformal coating chamber and reducing the size of the chamber exhaust fan. Use of Turbo ventilators for non air-conditioned areas to extract heat of the building. Reducing the height of the ceiling, installation of fibre sheet to get more illumination and improve daylight. Replacement of florescent tube lights, incandescent lamps with CFL, & metal halide lamps in various offices and workshops. Stopping air leakages, installing new air solenoid valves in air line to control air combustion, etc. Modification of Coolant piping (reduction in joints, bends, friction) in Asquith deep hole drilling machine to save energy. Installation of Energy Saver in welding machines belonging to subcontractors, introduction of Fullwave welding machines and Inverter based welding machines. Replacement of Chuck drives with the latest energy efficient drives, procurement of new high efficiency welding inverters and welding machines. Installation of energy efficient AC windows units having screw compressor, replacement of V belts with flat belts in 23 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) AC unit compressors, installation of real time switches in package ACs, etc. Modularization of Chilled Water system to take care of different load centres, use of Zero CFC based refrigerants; double glazing; high performance CFC free chillers. Introduction of VVVF Drives in the place of conventional type starter panels for all the movements in Gantries, detachment of Cable realer motors from all gantry cranes & adopted the cable Festoon system. Taking various initiatives to reduce the fuel consumption including: Modification of Flue gas ducting system to retain more heat inside the galvanizing furnace chamber. Adding special additives with fuel in order to get complete combustion. Pre-heating of fuel to improve combustion. Frequent cleaning & monitoring of burner valves, nozzle & strainers. Use of Soft Starters: Soft Starters utilize a powerful micro - controller, which continuously monitors motor efficiency. Slight changes in demand will be recognized and Starter will respond immediately by matching the input power exactly as the load changes - thus saving energy. The heat generated while running of motor is minimized. This in turn improves the efficiency drastically. Usage of energy efficient motors: Energy efficient motors increase the power factor higher than those of standard motors. Energy efficient motors operate without loss in efficiency at loads between 75% and 100% of the rated capacity. Formation of a dedicated team to focus on ‘Climate Change Mitigation, Carbon Trading and Environmental Management’. 2 Improving energy effectiveness / efficiency of Manufacturing Processes Electrode implementation in vacuum sealed packing to eliminate breaking. Development of Portable boring cum milling machine for machining of nozzle cut out. Design & Development of 500 MT Tank Rotator with Anti drift Mechanism. Design and development of Portable Flame cutting machine for Nozzle Cutout. Implementation of Data Logger for Welding Equipment for capturing the actual welding parameters. Installation of Automatic Temperature Monitoring & Controlling System during welding. This development has been granted Patent - 1st Indian patent for L&T, HZMC. Design & Development of SAW Station (Plug & Play) with the following features: Heat insulated platform bottom and seat for operator’s comfort. Flexible arrangement for welding head mounting Modular design Indigenous development of hydro expansion tooling for expansion of large dia tubes. 24 Development of Button forming process on Hex sheath of DFSA, DBSA, SSSLSA. Clad Restoration of inaccessible areas of Elbow # Pipe joint by using camera along with FCAW process. Development of FCAW O/L process Station for 3.7m long pipe which was previously done in sections. Development of Clad stripping machine in LEMF replacing manual working. Development & installation of portable pipe bevelling machine to replace manual grinding resulted in reducing the cycle time from 120 minutes to 2 minutes. Development & commissioning of Spiral weld overlay reducing the cycle time by 95%. Implementation of Square Butt joint in Special project, converting manual weld to automatic weld, reducing cycle time for WEP preparation & welding and reduces rework & repair. Installation of Virtual Reality Simulator for training Welding Operators. Development of wider Stainless Steel ESSC strip to reduce cycle time. Implementation of 350 kg wire Pay-off pack for High thickness Circ Seam Welding in Station reducing change overtime by 90%. Use of Automatic CNC based machine for In-Situ squareness & WEP machining for Sections in axis horizontal condition. Implementation of GMAW-P welding in LEMF defence shops. Joining of Cupro Nickel Sleeve to AB grade forging by automatic GTAW Process. Introduction of laser based instruments like cross liners and EDM, which are more efficient than the conventional measurements with plumbs and tapes. Use of In-Situ Hydro of penetrations without welding blanks on penetration face, usage of man lift to minimize scaffolding requirement hence reduction in cost & cycle time. CNC Retrofitting of Bench lathe in Kansbahal enhancing productivity resulting in reduction of process time & power consumption. Replacement of 5T melting ARC furnace by 4T energy efficient medium frequency Induction furnace at Foundry in Kansbahal. Installation of Variable frequency drives for EOT crane hoists at LTMBU to improve the motor efficiency and enhance energy saving. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Use of energy saving type of lighting arrangements (LED based, metal halide etc.) in Shop floor and on roads inside factory, install lighting energy saver, replacement of HPSV (high pressure sodium vapour) lamps with metal halide. Procurement of additional Inverter based welding machines instead of rectifiers for shops, new machines with energy efficient motors, etc. Exploring use of Solar AC & wind power solutions. Usage of Energy Saver Ballast in more nos. of Flood Lights (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Optimizing excess air in plate heating furnace, Vapour absorption Machine (VAMs), etc. Installation of VFD (variable frequency drive) in secondary chilled water & condenser water pumps in office buildings. Study of Waste Heat Recovery of Natural Gas Power Generator for enhancing energy efficiency. Installation of Natural Gas based additional Generating set –III CNC Retrofitting of VDF Table borer for enhancing productivity and reducing machining time resulting in reduction of process time & power consumption. Replacement of conventional central A/C plant with new energy efficient plant. (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The measures taken have resulted in savings in cost of production, power consumption & processing time. (d) Total Energy Consumption and Energy Consumption per unit of production as per Form A in respect of industries specified in the Schedule: NOT APPLICABLE [B] TECHNOLOGY ABSORPTION: Efforts made in technology absorption as per Form B. FORM B (Disclosure of particulars with respect to Technology Absorption) RESEARCH AND DEVELOPMENT (R&D) 1. Specific areas in which R&D carried out by the Company: Cement & Mineral Process Process Design and related aspects of Cement / Mineral projects; Modelling of NOx emission; Use of alternative fuels; Comminution characteristics of blended cement; Modelling and simulation of entrained flow and fixed bed coal gasifiers. Chemical Engineering Design, analysis and simulation of chemical processes and equipment, with special emphasis on Oil & Gas applications (3-phase separators, fuel gas conditioning skids); Capability development for in-house process engineering of Process Gas Compressor modules; Fertilizer plant revamp, Ammonia and Methanol plants. Refractory engineering for chemical plant equipment. Material Science & Corrosion Engineering Construction Material for Oil & Gas, Refineries and Chemical plants process equipment; Root cause analysis of metallurgical and corrosion related failures; Surface treatment processes for defence and aerospace components; Composite materials for functional properties requirement. Nano Technology for strategic applications. Thermal Engineering Dynamic simulation of captive power plant; CFD analysis of industrial machinery and systems (such as air preheaters, kiln burners and wind tunnels); Design and analysis of thermal systems in refineries and process plants; Capability development in Super Critical Boiler technology. Rotating Machinery Advanced engineering studies for Oil & Gas and Power projects; Performance testing and commissioning of process gas compressors; Development and optimization of coal pulverizer system. Analysis of flow-induced and acoustic vibration in Oil & Gas pipelines; Advanced analytical techniques for machinery design. Mechanical Engineering Development of advanced design / analysis capabilities for equipment and structure in Heavy Lift & Pipe Lay Vessel; Seismic analysis of on-shore buried pipeline; Design solutions for various products through advanced Finite Element analysis; Piping analysis and engineering support in offshore Oil & Gas applications; Experimental stress analysis of critical products; Capability development in material non-linear analysis and fatigue analysis using FE techniques. Ocean Engineering Design, analysis and optimization of complex offshore structures; Transportation analysis for offshore jacket and compressor modules; Hydrostatic stability analysis of jack- up rigs and semi-submersibles; Studies on design/analysis of FPSO Topsides, Sub-sea Systems and Jack-up Rigs; Capability development for in-house engineering of PGC modules (structural design). Water Technologies Design and specifications for brackish water RO plant; Design and specifications for membrane bio-reactor for treated sewage recycling; Studies on RO-based desalination technology, Membrane Bio-reactors, Thermal Desalination systems and Zero-discharge technologies; Development of laboratory facilities for water / waste water analysis. Development of new products / product ranges of Air Circuit Breakers, Moulded Case Circuit Breakers, Miniature Circuit Breakers, Contactors, Relays Switch Disconnector Fuses, Change-Over devices, & Motor starters. IGBT based Slip Power recovery systems (benefits – energy saving without affecting Power Quality). 1 MW high quality power supply for sea port application (import substitution - saving Foreign Exchange). DCS for Power system Highway Traffic Management System Medium Voltage Inverters, designed & developed five types of electronic energy meters for various applications. Development of communication modules for remote meter data acquisition on GPRS, Low Power Radio, development of software for remote acquisition of meter data. Release of 5 new products in the monitoring range namely Comet-P, Galaxy 55, Star 55 with 12 L ECG, Skyline 55 a 16 bed Central Nurses Station, 3 channel ECG M/c ‘Orion’ and in Ultrasound ‘Scintilla’ colour Doppler. FDA approval for 11 products till date. More focus was placed on developing and aligning our products to drive our thrust towards exports largely USA. Development of indigenous NIBP module to achieve technology independence & cost effectiveness for our monitoring products. 25 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Filing of 14 patents by Medical Division in 2008-2009 and focusing on self reliance in core technologies in monitoring. The products have been developed with a focus on Enhanced safety and user convenience Environment friendly features Built-in intelligence & Communication capability Conformance to latest Indian & International standards Weapon Launch Systems (Structures, mechanisms, drives, controls), Air Defence Guns (Ballistics, mechanisms, drives, optronics), Robotics & remotely operated systems, Development of steam generator design for Nuclear power plant, Manufacturing Technology for thin walled Aero structures, Development of Plasma Arc Welding Technology for Space & Strategic applications, Development of Airborne Composite Components. Composites (Process & Design Technologies), Regenerative heat exchanger for strategic project. Development of welding Simulation Technology. Development of Feed-water Heater Design Package for supercritical power plants. Development of Core technologies for Hypersonic Wind Tunnel Systems. Development of Angular Motion Simulator Design provisions & development of Optical measurement technologies for achieving machine tool alignment accuracies within 1 arc second. Development of Road Miller, a new product for KBL, which is suitable for undertaking proper repair of city roads and highways with the possibility of recycling the old pavement material. The first prototype will be tested during the FY 2009-10. Design of Track-mounted and electrically-driven Primary Mobile Crushing Plant for crushing aggregate and iron ore. The first prototype will be tested during the FY 2009-10. Design of certain Construction equipment and Body for Tipper Trucks along with the development of prototypes is on the anvil. Besides this, developmental work is also being carried on an all-electric Plastic Injection Moulding Machine. R&D efforts in respect of development of 30% energy saving platen insulation system for tyre curing press, mould container, equipment for handling rubber ply and designs for internal mixer of 240L and 270L capacities and Web handling equipment for calendar and extruder lines. Development of No Cement Concrete, Development of light weight concrete panels for modular housing, Continued development in self compacting & high strength concrete above M80, Development of eco friendly, green products and conservation of natural sources – Reduction of soil brick in housing construction by Controlled Low strength Materials in the form of blocks and concrete. Development of alternate foundation system for Transmission line towers. Continued Development of soil stabilization techniques for airport sub grades & high speed corridors, Development of low cost kit for compaction control under vibratory roller, Continued development of performance grade Asphalt with polymer, Continued development of recycled asphalt pavement (RAP) for high speed corridors. Development of neural network algorithms for optimization of buildings design & construction. Development of RFID’s application in logistics handling and stores management. 2. Benefits derived as a result of above R&D: Process design and optimisation for cement plants Refractory solutions for high-temperature equipment in process plants Process simulation and optimization for E&C projects involving refinery, fertiliser and chemical plants, Successful testing / commissioning of plants and equipment in various E&C projects, through multi-disciplinary technology support, Successful simulation of combined cycle power plant dynamics; optimization of equipment and system design using CFD technique; design / optimization of various thermal systems, Development of optimized design for coal pulverizer / separator system for power plant application, Development of in-house capability for analyzing flow-induced vibration and acoustic vibration in oil & gas piping systems, Successful diagnosis of rotating machinery problems in various projects through vibration / acoustic analyses, Development of in-house capability for seismic analysis of buried pipeline, Design / analysis of complex structures and piping systems for offshore Oil & Gas applications, Development of design / analysis techniques and resources for Deepwater Oil & Gas applications. Material evaluation / characterization; selection of alternative materials; failure analysis support; preservation and corrosion protection of critical equipment. Design solutions for water treatment systems, Establishment of in-house water testing facilities. Development of capability for in-house engineering of Process Gas Compressor modules. Development of in-house expertise in high-end engineering analysis (e.g., advanced FEA, CFD, Dynamic Simulation, Acoustic Mapping, Rotor Dynamics, Non-Linear Analysis etc.) and technologies such as nano materials, advanced corrosion control methods and water treatment techniques. Expansion of product range and export opportunity, Product improvements, Cost effective products, Acceptance for International Markets, Technology up gradation, Developing safe, user and environmental friendly products. Providing a comprehensive solution for Automatic Meter Reading (AMR). Installation of High speed press ‘Bruderer’ and Precision grinding machine ‘Imatec’ for manufacture of magnets for contactors. Fully automated testing & packing set up for MCB manufacturing. Introduction of a system of E-waste disposal through MPCB approved source to ensure the environmental friendly disposal. Installation of automatic silver plating plant (and with strict process control, has resulted a reduced water consumption & chemical consumption in silver plating). 26 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Road Miller and track-mounted electrically-driven mobile crushing plant has increased our product range. Road Miller has good export potential. Creation and implementation of procedure for top-down design of Mobile Equipment using 3D Modelling using PLM / Windchill, design validation & analysis of complete Mobile Equipment using ANSYS and Hypermesh and process for deriving target specifications for a mobile construction / mining equipment. This initiative offers tremendous business opportunity as and when it is decided to launch new products. Offering a new product line in Rubber Processing Machinery to cater to high volume growth market and enable entry into new application area of rubber mixing technology, besides development of in-house knowledge of rubber web handling. Conservation of Natural resources on development of Controlled Low Strength Material and alternate Pavement blocks, Reduction in natural aggregate consumption in Pavement Construction by Mechanistic approach design and alternate pavement construction, Performance grade binder for critical conditions of traffic loading, Cost effective utilization of natural materials with substitution of Recycled Asphalt Pavement materials. Building up a strong intellectual property base, Winning national / international awards in recognition of good designs of products, Enhancing intelligence and communication capability, Ease of manufacturing & improvement in productivity, Indigenisation & development of products for Indian defence sector, Savings in Foreign Exchange. 3. Future Plan of Action: Process technology for coal gasification Alternative fuels for use in cement plants Low-NOx Burners for combustion of alternative fuels Simulation of Combustion Chamber Design / simulation of Hydrogen and Ammonia processes and Auto Thermal Reformers. Study on Gas Processing techniques Study of Synfuels Technology Applications of Nano Technology, development of nano- materials and coatings Application of electrochemical noise method for characterization of stress corrosion cracking (SCC) Carbon-fibre from polymeric fibres Dynamic Simulation and Performance Analysis of Combined Cycle Power Plants Technology Analysis of Super Critical Boilers Thermo-hydraulic design of Once-Through Steam Generator (OTSG) Capability development in machinery design and fault diagnosis involving advanced analytical techniques Study of water hammer / surge phenomena in large liquid- handling pipe networks Application of Statistical Energy Analysis (SEA) in machinery noise control Development of in-house expertise in performing advanced engineering studies for large EPC Projects FE analysis of Floating Structures Design / analysis of FPSO Topsides Design / Analysis of Jack-up Rigs and Semi-submersible Drilling Rigs Design and analysis of Jacket & Deck Installation Design and Analysis of Sub-sea pipeline installation Capability development for Pile Drivability analysis Capability development for motion response analysis of offshore vessels Design of Membrane Bio Reactors Thermal Desalination techniques Recycle, Reuse and Zero-discharge Technologies Nano coatings to improvise surface properties Nano-catalysts Development of new / upgraded products in defence equipments Toll Management system including Electronic Toll Collection for National & State Highways Integrated Terminal Automation & Tank Farm Management System for Petroleum Products Power Management System Launching new range of cost effective Multi-parameter monitors with rich features viz. Planet 50N, Star 50N and Planet 30 during Q2 of 2009-2010. A new trolley model premium Grey scale Ultrasound System and colour Doppler is under development and is expected to be launched during Q3 of 2009-2010. Continuing efforts on bringing out new intelligent meter designs. Developing communication modules communication over wired as well as wireless media. for meter Developing software for data acquistion and Advanced Metering Infrastructure (AMI) Developing another new model of Surface Miner with higher capacity of coal mining, thus extending the existing range of Surface Miners. Creating & implementing Test protocol and field testing for Mobile construction / mining Equipment to simulate functional requirement / field conditions. Developing new products and upgrade existing products in rubber mixing, besides capability development in automated material handling pertaining to tyre industry. Development of thermal efficient building products Development of high early strength concrete for faster construction Development of deep soil mixing technique Development of Laboratory information management system for Construction Development of Pavement Management System Development of faster construction methods and systems 27 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) 4. Expenditure on R&D: (a) Capital (b) Recurring (c) Total (d) Total R&D expenditure as a percentage of total turnover 2008-2009 Rs. crore 2007-2008 5.01 75.18 80.19 6.61 60.64 67.25 0.24% 0.27% TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: Efforts in brief made towards technology absorption, 1. adaptation and innovation: Interaction with external agencies / technology partners for exposure to the latest products / designs, manufacturing technologies, processes, analytical techniques and engineering protocols. Participating in national / international conferences, seminars and exhibitions. Valuation, adaptation and/or modification of imported designs / technologies to suit indigenous requirements, alternative materials / components. Parametric studies involving theoretical models duly validated by experimental studies at in-house laboratories and pilot plants as well as feedback and operating data during commissioning of various plants and machinery. Review of patents in relevant technology areas. Collaborative efforts with educational / research institutions for technology upgradation. Use of state-of-the-art equipment, instrument and software. Analyzing feedback from users to improve processes and services. Adaptation of previously developed technologies for delivering products such as Winch & Mooring System for Aerostats, Torpedo Launcher mounts, ASW Rocket launcher mounts & Anti-Tank Guided Missile launchers. Indigenisation of all the boiler components of Shell Coal Gasifiers. Development of hydraulic gap setting mechanism for Jaw Crusher, STJ108. Development of design of Vibrating Feeder, Grizzly Feeder and Conveyor for Mobile Crushing Plant. Introduction of new products with indigenous technology; also developing products which are user-friendly, eco- friendly and with enhanced safety features. Technology absorption in rubber mixing through hiring the services of a Consultant. Development of Blanking Tool For Climbing Bracket Head Plate – which avoids Gas cutting and grinding. Development of Compound Tool For Climbing Bracket Main Plate – which combines 3 different operations in a single tool. 2. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution, etc.: Successful simulation / optimization of process design and engineering for various E&C projects (cement, refinery, Oil & Gas, fertilizer and chemical plants). 28 Appropriate refractory design for high-temperature applications. Successful selection and characterization of materials for critical applications and implementation of suitable preservation / corrosion protection techniques. Establishment of in-house capability for dynamic simulation of complex thermal-fluid systems in Combined Cycle Power Plant. Development of upgraded cement kiln and ball mill designs, suitable for enhanced production capacity and higher operating speeds. Development of in-house expertise for seismic analysis of buried pipelines. Effective solutions to design / analysis problems involving complex structures and piping systems for offshore Oil & Gas applications. Development of in-house analysis capabilities and resources for Deepwater Oil & Gas applications. Capability development for design for water treatment systems for various applications. Successful testing / commissioning of plants and equipment in various E&C projects, through multi-disciplinary technology support. Acquisition of in-house expertise in high-end engineering analysis (e.g., advanced FEA, CFD, Dynamic Simulation, Acoustic Mapping, Rotor Dynamics, Non-Linear Analysis etc.) and technologies such as composite materials, advanced corrosion control methods and water treatment techniques. Establishment / upgradation of state-of-the art laboratory facilities for material characterization, chemical analysis, corrosion control, vibration and acoustics and experimental stress analysis, in order to provide comprehensive technology support to business units. This has reduced the dependence on external agencies and enabled effective execution of projects. Indigenisation (import substitution) & development of products for Indian defence sector Expansion of product range and export opportunities. Product improvement. Increasing knowhow within the country. Improving the effectiveness of the operation of the crusher by increading the Hydraulic gap setting. Development of Vibrating Feeder, Grizzly Feeder and Conveyor have resulted in product improvement and also cost reduction. 3. Information regarding technology imported during the last 5 years S. Technology Imported No. Year of Import Status a) Sour Water Stripping Process 2005 Absorbed b) Tail Glass Treatment Process 2005 Absorbed c) Manufacturing know-how of Cementing Unit 2007 Absorbed (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) [C] FOREIGN EXCHANGE EARNINGS AND OUTGO: Activities relating to exports, initiatives taken to increase exports; development of new export markets for products and services; and export plans. Overview: The Company has a diversified range of products. Each business division of the Company has dedicated cells for giving impetus to exports. The Company has offices abroad and agents in various countries to boost exports. The Company is intensifying efforts in selected countries and exploring new markets. The Company is expanding reach of new products through synergy with existing products and, International Engineering, Procurement and Construction (EPC) projects. Export of heavy engineering equipment has been identified as thrust area. The Company regularly participates in prestigious international exhibitions and conducts market surveys and direct mail campaigns. The Company has an international presence, with a global spread of offices and joint ventures with world leaders. Its large technology base and pool of experienced personnel enable it to offer integrated services in world markets. Engineering & Construction Division: E&C Division continues to focus on GCC countries for procuring EPC contracts. The division has set up overseas design and engineering centres in UAE to cater to engineering support on new projects, obtaining stand-alone engineering/consultancy business and co-ordination/support on EPC projects awarded in the region. The division is also focusing on electro-mechanical construction works in all GCC countries and towards achieving the same, JV companies have been formed in Kuwait, Oman, Saudi Arabia & Qatar. The division is widening its network of overseas marketing partners in the GCC as well as other countries in the Middle East & Far East. The division is looking forward to other opportunities in the MENA region (Middle East and North Africa) and CIS countries. The Company’s E&C Division has executed and is executing Engineering, Procurement (EP) and Engineering, Procurement and Construction (EPC) projects in countries like Oman, Qatar, Saudi Arabia, Kuwait, UAE, Malaysia, Tanzania, Sri Lanka, etc., and in the field of upstream hydrocarbon, mid & downstream hydrocarbon, hydrocarbon plant construction & pipelines and power. E&C Division has actively contributed towards clean environment through execution of Clean Fuel projects such as Motor Spirit Quality Upgradation, Diesel Hydro treating, Hydrogen and Sulphur Block projects. The global market for construction industry was at boom during the first half of 2008-09. The Gulf market due to phenomenal oil price hike created lots of opportunity for the Company during the first half. The inflationary trend had its own impact by way of unprecedented increase in commodity prices which has squeezed the margin since majority of the Company’s contracts were fixed price contracts. The business environment was very sluggish during the second half of 2008-09 for the Building & Urban Infrastructure business due to the macro-economic decline on a scale not seen for decades. The economic meltdown had a great impact on the property market in Dubai, which has forced the developers to defer lot of their ambitious plans resulting in a very depressed market. The Buildings & Urban Infrastructure business could not secure any order due to the adverse market trend. The Company had also adopted a cautious approach in selecting the bids to avoid liquidity risk seen during recession. However the Power Transmission & Distribution business and Ready Mix Concrete business strengthened its presence in select Gulf Market. The Gulf economy is mainly dependant on the movement of oil price. With the oil price oscillating up and down it is expected that the year ahead is going to be much more challenging than the previous year. The business prospects for the Gulf Projects in the Infrastructure, Power Transmission & Distribution business are expected to be promising. The thrust on geographical expansion through focus countries (Kuwait, Saudi, South Africa, Botswana & Libya) is expected to yield good result in the years to come. There are plans to strengthen our position in the ready- mix-concrete business. Expanding the business horizon and geography are some of the futuristic initiatives taken by the construction division. Heavy Engineering Division (HED): HED continues to take a number of initiatives to enhance export growth. In the last financial year, exports accounted for 50% of total sales in the Division. South America in general & Brazil in particular is emerging as a major market for process plant equipment. HED has booked orders worth Euro 113 million for the supply of Reactors & Coke Drums for North East Refinery project of Petroleo Brasileiro S.A. – Petrobras, Brazil. Middle East & North Africa (MENA) continues to be focus market for HED. Orders for supply of critical equipment to fertilizer projects were received from Oman, Algeria. Orders for supply of Ammonia converters for various projects in Iran were received. With these orders, Iran has been included in HED’s list of important markets for equipment supply. Coal gasification equipment is one of HED’s key products for export. Orders for this equipment have been received from Shuifu Coal Revamp Project, China and Ninh Binh Fine Coal Based Urea Project, Vietnam. China remains to be a major market for HED’s products. Apart from coal gasification equipment, HED has also received order for Methanol Converter for Sichuan Vinylon Works, Chongqing. HED has been exploring opportunities for export of Defence, Nuclear Power & Aerospace equipment as well. With authorization from ASME (American Society of Mechanical Engineers) for the use of ‘N’ & ‘NPT’ stamps, the Company is well placed to supply critical nuclear power equipment to the overseas market. HED’s initiative for boosting of exports includes the following: Offering valued added services like site work for Chinese projects Participation in international seminars Building on the success of Power Plant equipment with overseas customers Offering value added services like maintenance-friendly design features for High Pressure Heat Exchangers at customer’s plants. Establishment of Representative Offices in major overseas markets. Electrical & Electronics Business Division: International Sales of Electrical Standard Products (ESP) has continued to pursue the two pronged strategy of promoting sales to select overseas markets and to brand labelling partners. 29 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) With the introduction of type tested fixed type Switchboard in the UAE, ESP has made substantial inroads in the UAE market, securing prestigious building projects. New products such as Busbar trunking and Wires were introduced in selected markets. ESP has entered into new brand labelling arrangements for MCCBs and supplies to commence during 2009-2010. ESP has completed CCC (China Compulsory Certification) for MCCBs & Controlgear products as planned. Export sales during 2008-09 were 97.6 Cr (36% growth). Export as % of ESP sale has increased from 5.4% (in 07-08) to 7.3% (in 08-09). The Electrical Systems and Equipment, offering electrical systems up to Medium Voltage (MV) range, grew significantly in the GCC countries and North Africa. The Division’s JV in Saudi Arabia has executed many significant projects in the Gulf countries. MV product sales has also increased substantially over last year and enabled better positioning as complete electrical solution provider up to 36kV range. Control & Automation business has exports of engineered control and automation solutions to Middle East, African countries etc. It has export of engineering & software services. Also Deemed export of the supplies & services for the control & automation systems. Metering business booked an order for trivector meters worth US $ 0.5 million from Bangladesh. It will be executed in 2009-10. It has participated in tenders worth US $ 0.4 million which are under evaluation. Also development of meter as per specifications of utilities in certain select markets is in progress. Manufacturing & Industrial Products Division: Kansbahal (KBL) Unit has developed contact with potential customers, local service providers in the Middle-East and countries like Australia, Indonesia, where opportunity for exporting Surface Miners is good. Valves Business Unit already has a sizeable export business. Plans are afoot to scale up the exports through leveraging alliances and agreements with major end-users, and diversifying into additional markets such as South America, Iran etc., also increased focus into Power Sector. Rubber Machinery Business Unit (LTMBU) has been continuously working on development of export markets, as most global tyre companies are its major customers and revenues from exports have always been forming a significant portion of LTMBU sales. A few initiatives detailed: The following initiatives have been taken by the Company Expanding Modular Fabrication Facility at Hazira and making operational its Modular Fabrication Yard at Sohar, Oman to cater to deepwater opportunities. Joint venture with SapuraCrest Petroleum Berhad of Malaysia to form Offshore International FZC, for construction of own Heavy Lift & Pipelay Vessels (HLPV) to provide offshore installation services to the Oil & Gas industry. A 290-man HLPV (LTS 3000), is under construction for the JV at a shipyard in Batam, Indonesia and is scheduled to enter service in Q1 2010. Establishing two joint ventures with Mitsubishi Heavy Industries of Japan for environment-friendly coal-fired supercritical boilers and supercritical steam turbine generators. Joint Ventures with local companies for undertaking electro- mechanical construction activities for Hydrocarbon Construction & Pipelines, for the Middle East and South East Asian markets. Efforts for strategic alliances with Process Licensors / technology Providers and reputed international EPC players are underway to undertake high value projects in international markets. Widening new geographical areas for augmenting its exports. Exploring inorganic growth opportunities for the acquisition of specialized engineering outfits abroad. Membership of global forums like Engineering & Construction Risk Institute (ECRI) and participating in international seminars. Implementation of Project KIRAN to towards operational excellence and creating a lean high performance organization. Implementation of Knowledge Management System “KnowNet” for capturing tacit knowledge in the form of learnings & experiences and disseminating the same across the organization. Bringing in high caliber resources in the areas of front-end marketing, engineering, project management, risk management, contract administration, etc., to strengthen the overseas operations. Customized Talent Management programmes including flagship Capability & Leadership Development (CALD) programmes for catering to the training and development needs of employees. Setting up a premier world-class centre for excellence in project management - Project Management Institute (PMI) at L&T Knowledge City – Vadodara. Total foreign exchange used and earned: Foreign Exchange earned Foreign Exchange saved / deemed exports Total Rs. crore 2008-2009 2007-2008 7,348.23 5,656.59 92.31 124.04 7,440.54 5,780.63 Foreign Exchange used 7,899.42 4,534.37 30 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 Annexure ‘B’ to the Directors’ Report (I) A. Employee Stock Ownership Scheme-1999-2003 PRE RESTRUCTURE: ESOP SERIES Particulars SAR-1999 (1) (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A 2003-B (6) (7) (a) Options granted (b) The pricing formula 10,66,000 Stock Appreciation Rights (SARs) Grant price for the purpose of ascertaining the appreciation: Average of daily High Low Averages of the Company’s Share price on the Stock Exchange, Mumbai, during the year April 1998 – March 1999. This worked out to Rs. 199/- per share. 39,48,800 Equity shares 37,81,100 Equity shares 37,81,660 Equity shares 67,51,000 Equity shares 57,42,500 Equity shares The average market price on the Stock Exchange, Mumbai, on the date of grant i.e., June 1, 2000 – Rs. 184/- per share. The average market price on the Stock Exchange, Mumbai, on the date of grant i.e., April 19, 2002 – Rs. 172/- per share. The average of the two weeks high and low prices of the shares on the The average market price on the Stock Exchange, Mumbai, The average of the two weeks high and low prices of the shares on the on the date Stock Exchange, Stock Exchange, Mumbai, of grant i.e., Mumbai, preceding the preceding the April 19, date of grant date of grant 2002 – Rs. 172/- i.e., May 23, i.e., May 23, per share. 2003 – Rs. 206/- 2003 – Rs. 206/- per share. per share. (c) Options vested 10,60,750 38,64,050 20,67,250 20,19,830 (d) Options exercised 2,66,500 52,415 12,750 6,250 (e) Total number of shares arising as a result of exercise of Options (Equity shares of Rs. 10/- each) 1,04,318 52,415 12,750 6,250 (f) Options lapsed 5250 1,46,025 1,25,300 1,07,375 (g) Variation of terms of Options (h) Money realised by exercise of Options (i) Total Number of Options in force Nil Nil Nil Nil Rs. 10,43,180 Rs. 96,44,360 Rs. 21,93,000 Rs. 10,75,000 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 7,94,250 SARs 37,50,360 36,43,050 36,68,035 67,51,000 57,42,500 31 A. PRE RESTRUCTURE: (Contd.) ESOP SERIES Particulars SAR-1999 (1) (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A 2003-B (6) (7) (j) Employee-wise details of Options granted to – i) Senior Managerial Personnel: Mr. A.M. Naik Mr. J.P. Nayak Mr. Y.M. Deosthalee Mr. K. Venkataramanan Mr. R.N. Mukhija Mr. V. K. Magapu Mr. K.V. Rangaswami Mr. M.V. Kotwal Mr. A. Ramakrishna Mr. P.M. Mehta Mr. M. Karnani ii) Any other employee who receives a grant, in any one year, of Options amounting to 5% or more of Options granted during that year. iii) Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. 1,25,000 2,00,000 2,00,000 2,00,000 2,00,000 2,00,000 60,000 60,000 60,000 30,000 20,000 16,000 16,500 80,000 30,000 40,000 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 60,000 35,000 25,000 27,000 85,000 35,000 25,000 27,000 1,25,000 1,25,000 60,000 42,000 85,000 - 80,000 40,000 27,000 30,000 90,000 40,000 - 85,000 22,500 17,500 17,500 60,000 - - 85,000 22,500 17,500 17,500 - - - 5,37,500 8,74,000 8,82,000 8,67,000 7,62,500 7,02,500 None None None None None None None None None None None None Consequent to the demerger (sanctioned by the High Court of Judicature at Bombay on April 22, 2004) of Cement Business of the Company and restructuring of the share capital the outstanding SARs were converted into equivalent number of Options and the total number of Options in force as above were readjusted in proportion to the restructured equity capital i.e., one Option for an equity share of the face value of Rs. 2/- for every two Options and repriced at Rs. 14/- per Option in respect of ESOP Series 1999, 2000, 2002-A & 2002-B and Rs. 70/- per Option in respect of ESOP Series 2003-A & 2003-B. 32 B. POST RESTRUCTURE (PRE BONUS ISSUE -2006) ESOP SERIES Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B 2003-A 2003-B (5) (6) (7) (a) (1) Options granted (outstanding 3,97,125 18,75,180 18,21,525 18,34,018 33,75,500 28,71,250 and adjusted consequent to restructuring of share capital) (2) Options granted during: (a) 2005-2006 (b) 1.4.2006 to 29.9.2006 (Equity shares of Rs. 2/- each) (b) The pricing formula (Adjusted grant price per share ) (c) Options vested 6,02,670 56,460 35,30,380 Rs. 14/- Rs. 70/- (adjusted on restructure) 3,97,125 18,75,180 Add: vested post restructure - - 10,22,050 7,90,312 10,02,003 8,20,708 Nil Nil 20,51,220 19,32,585 Total 3,97,125 18,75,180 18,12,362 18,22,711 20,51,220 19,32,585 (d) Options exercised 3,97,121 18,65,367 18,03,824 18,04,510 20,33,343 19,14,964 (e) Total number of shares arising as a result of exercise of Options (Equity shares of Rs. 2/- each) 3,97,121 18,65,367 18,03,824 18,04,510 20,33,343 19,14,964 (f) Options lapsed and/or withdrawn (g) Variation of terms of Options (h) Money realised by exercise of 4 Nil 5,613 Nil 12,326 Nil 14,583 6,94,997 3,23,009 Nil Nil Nil Options Rs. 55,59,694 Rs. 2,61,15,138 Rs. 2,52,53,536 Rs. 2,52,63,140 Rs. 14,23,34,010 Rs. 13,40,47,480 (i) Total Number of Options in force - Vested Unvested Total (j) Employee-wise details of Options granted Nil Nil Nil 4,200 Nil 4,200 5,375 Nil 5,375 14,925 Nil 14,925 17,389 6,29,771 6,47,160 17,135 12,75,272 12,92,407 Please refer to Part A (j) Consequent to the issue of Bonus Shares the total number of Options in force as above as at the record date for Bonus Issue i.e., September 29, 2006 was readjusted in number in the ratio of Bonus Issue (1:1) and the above exercise price of Rs. 14/- and Rs. 70/- was readjusted to Rs. 7/- and Rs. 35/- respectively. 33 C. POST RESTRUCTURE (POST BONUS ISSUE 2006 – PRE BONUS ISSUE 2008): ESOP SERIES Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B 2003-A 2003-B (5) (6) (7) (a) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) (2) Options granted post Bonus Issue (b) (c) (d) (e) (f) (g) (h) (i) (Equity shares of Rs. 2/- each) The pricing formula (Adjusted grant price per share ) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue Total Options exercised Total number of shares arising as a result of exercise of Options* (Equity shares of Rs. 2/- each) Options lapsed Variation of terms of Options Money realised by exercise of Options Total Number of Options in force - Vested Unvested Total (j) Employee-wise details of Options granted Nil 8,400 10,750 29,850 12,94,320 25,84,814 7,18,430 33,03,244 Rs. 7/- Rs. 35/- 8,400 - 8,400 Nil Nil Nil Nil Nil 8,400 Nil 8,400 10,750 - 10,750 Nil Nil Nil Nil Nil 29,850 - 29,850 34,778 12,35,430 34,270 19,90,863 12,70,208 20,25,133 Nil 12,52,754 19,38,270 10,000 12,45,754 18,95,270 Nil Nil 25,840 2,12,861 Nil Nil Rs. 70,000 Rs. 4,36,01,390 Rs. 6,63,34,450 10,750 Nil 10,750 19,850 Nil 19,850 15,726 Nil 15,726 81,963 10,70,150 11,52,113 Please refer to Part A (j) Nil - Nil Nil Nil Nil Nil Nil Nil Nil Nil * During the year 2007-2008, 50,000 shares were allocated to employees who exercised 7,000 Options under 2003-A Series and 43,000 Options under 2003-B Series from the shares returned by two former Directors, pursuant to a Court order. Consequent to the issue of Bonus Shares 2008 the total number of Options in force as above as at the record date for Bonus Issue i.e. October 3, 2008 was readjusted in number in the ratio of Bonus Issue (1:1) and the above exercise price of Rs. 7/- and Rs. 35/- was readjusted to Rs. 3.50 and Rs. 17.50 respectively. 34 C. POST RESTRUCTURE (POST BONUS ISSUE 2008): ESOP SERIES Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B 2003-A 2003-B (5) (6) (7) Nil 16,800 21,500 39,700 31,452 23,04,226 (a) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) (2) Options granted post Bonus Issue (b) (c) (d) (e) (f) (g) (h) (i) (Equity shares of Rs. 2/- each) The pricing formula (Adjusted grant price per share ) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue Total Options exercised Total number of shares arising as a result of exercise of Options (Equity shares of Rs. 2/- each) Options lapsed Variation of terms of Options Money realised by exercise of Options Total Number of Options in force - Vested Unvested Total (j) Employee-wise details of Options granted Rs. 3.50 Rs. 17.50 Nil - Nil Nil Nil Nil Nil Nil Nil Nil Nil 16,800 - 16,800 Nil Nil Nil Nil Nil 21,500 - 21,500 Nil Nil Nil Nil Nil 16,800 Nil 16,800 21,500 Nil 21,500 39,700 - 39,700 Nil Nil Nil Nil Nil 39,700 Nil 39,700 Please refer to Part A (j) 1,53,800 24,58,026 1,63,926 5,19,650 6,83,576 4,47,226 4,47,226 50,912 Nil 31,452 - 31,452 Nil Nil Nil Nil Nil Rs. 78,26,455 31,452 Nil 31,452 2,26,326 17,33,562 19,59,888 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme - 2006 A. PRE BONUS ISSUE 2008 ESOP SERIES Particulars (1) (a) (1) Options granted (Pre Bonus Issue) Options Outstanding and adjusted consequent to Bonus Issue# (2) Options granted Post Bonus Issue (Equity shares of Rs. 2/- each) (b) The pricing formula 2006 (2) 53,35,750 1,06,71,500 6,94,270 2006-A (3) - - 29,06,240 The latest available closing price on National Stock Exchange of India Limited on August 31, 2006, preceding the date of initial grant i.e., September 1, 2006 – Rs. 2,404/ per share. The latest available closing price on National Stock Exchange of India Limited on June 29, 2007, preceding the date of grant i.e, July 1, 2007 – Rs. 2,198/- per share (Discounted grant price per share – Rs. 1,202/-) # Consequent to the issue of Bonus Shares the total number of Options in force as at the record date for Bonus Issue i.e., September 29, 2006 was readjusted in number in the ratio of Bonus Issue (1:1) i.e. 1,06,71,500 Equity Shares and the above exercise price of Rs. 2,404/- was readjusted to Rs. 1,202/-. 35 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme - 2006 A. PRE BONUS ISSUE 2008 (Contd.) ESOP SERIES (c) (d) (e) (f) (g) (h) (i) (j) Particulars (1) Options vested Options exercised Total number of shares arising as a result of exercise of Options (Equity shares of Rs. 2/- each) Options lapsed and/or withdrawn Variation of terms of Options 2006 (2) 20,13,200 12,80,677 12,80,677 32,72,955 Nil Money realised by exercise of Options 153,93,73,754 Total Number of Options in force – Vested Unvested Total Employee-wise details of Options granted to – i) ii) Any other employee who receives a grant, Senior Managerial Personnel iii) in any one year, of Options amounting to 5% or more of Options granted during that year Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant 6,97,138 61,15,000 68,12,138 None None None 2006-A (3) 40,524 25,034 25,034 1,80,428 Nil 3,00,90,868 14,844 26,85,934 27,00,778 Consequent to the issue of Bonus Shares 2008 the total number of Options in force as above as at the record date for Bonus issue i.e. October 3, 2008 was readjusted in number in the ratio of Bonus Issue (1:1) and the above exercise price of Rs. 1202/- was readjusted to Rs. 601/-. B. POST BONUS ISSUE 2008 Particulars (1) 2006 (2) (a) (1) Options granted (outstanding and adjusted 1,36,24,276 consequent to Bonus Issue (2) Options granted Post Bonus Issue (Equity shares of Rs. 2/- each) The pricing formula (Adjusted grant price per share) Options vested (Adjusted on Bonus Issue) Add: Vested post Bonus Issue Total Options exercised Total number of shares arising as a result of exercise of Options (Equity shares of Rs. 2/- each) Nil 1,36,24,276 13,94,276 40,48,750 54,43,026 37,516 37,516 (b) (c) (d) (e) 36 ESOP SERIES Rs. 601/- 2006-A (3) 54,01,556 6,46,295 60,47,851 29,688 2,75,608 3,05,296 19,012 19,012 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme - 2006 B. POST BONUS ISSUE 2008 (Contd.) ESOP SERIES (f) (g) (h) (i) (j) (k) (l) Particulars (1) Options lapsed and/or withdrawn Variation of terms of Options Money realised by exercise of Options Total Number of Options in force – Vested Unvested Total Employee-wise details of Options granted to – i) ii) Any other employee who receives a grant, Senior Managerial Personnel iii) in any one year, of Options amounting to 5% or more of Options granted during that year Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant 2006 (2) 2,61,900 Nil 2,25,47,116 53,21,810 80,03,050 1,33,24,860 2006-A (3) 1,33,664 Nil 1,14,26,212 2,79,136 56,16,039 58,95,175 None None None Employee Stock Ownership Scheme -1999-2003 and Employee Stock Option Scheme - 2006 Diluted Earning per Share (EPS) pursuant to issue (a) Diluted EPS before extraordinary items Rs. 45.68 of shares on exercise of Options calculated in accordance with Accounting Standards (AS) 20 (b) Diluted EPS after extraordinary items Rs. 58.70 The difference between employee compensation cost using intrinsic value method and the fair value of the Options and impact of this difference on profits and on EPS. Had fair value method been adopted for expensing the ESOP compensation: (a) the ESOP compensation charge debited to P&L A/c for the year 2008-2009 would have been higher by Rs. 93.74 crore (excluding Rs. 0.55 crore on account of grants to employees of subsidiary companies) (b) Basic EPS before extraordinary items would have decreased from Rs. 46.30 per share to Rs. 44.70 per share (c) Basic EPS after extraordinary items would have decreased from Rs. 59.50 per share to Rs. 57.90 per share. (d) Diluted EPS before extraordinary items would have decreased from Rs. 45.68 per share to Rs. 44.10 per share. (e) Diluted EPS after extraordinary items would have decreased from Rs. 58.70 per share to Rs. 57.12 per share. (m)(i) (a) Weighted average exercise prices of Options Rs. 508.69 per option granted during the year where exercise price is less than market price. (b) Weighted average exercise prices of Options No such grants during the year granted during the year where exercise price equals market price. (ii) (a) Weighted average fair values of Options Rs. 670.71 per option granted during the year where exercise price is less than market price. (b) Weighted average fair values of Options granted during the year where exercise price equals market price. No such grants during the year 37 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 Employee Stock Ownership Scheme - 1999-2003 and Employee Stock Option Scheme - 2006 Particulars ESOP SERIES (n) Method and significant assumptions used to estimate the fair value of Options granted during the year. (a) Method (b) Significant Assumptions Black-Scholes Method (i) Weighted average risk-free interest rate 8.60% (ii) Weighted average expected life of Options 3.75 years (iii) Weighted average expected volatility 44.40% (iv) Weighted average expected dividends Rs. 39.42 per option (v) Weighted average market price Rs. 1,018.59 per share Notes: 1. The weighted average exercise price and fair values of the options have been computed after considering bonus issue. Auditors’ certificate on employee stock option schemes We have examined the books of account and other relevant records and based on the information and explanations given to us, certify that in our opinion, the Company has implemented the Employee Stock Option Schemes in accordance with SEBI (Employee Stock Option Schemes and Employee Stock Purchase Scheme) Guidelines, 1999 and the resolutions of the Company in general meetings held on August 26, 1999, August 22, 2003 and August 25, 2006. Mumbai, May 28, 2009 SHARP & TANNAN Chartered Accountants by the hand of F. M. Kobla Partner Membership No. 15882 38 Annexure ‘C’ to the Directors’ Report A. CORPORATE GOVERNANCE Corporate Governance is the application of best management practices, compliance of law and adherence to ethical standards to achieve the Company’s objective of enhancing shareholder value and discharge of social responsibility. The Corporate Governance Structure in the Company assigns responsibilities and entrusts authority among different participants in the organization viz., the Board of Directors, the senior management, employees etc. The Company had infact adopted Corporate Governance and disclosure practices much before these were mandated by legislation. B. COMPANY’S CORPORATE GOVERNANCE PHILOSOPHY The Company’s essential character revolves around values based on transparency, integrity, professionalism and accountability. At the highest level the Company continuously endeavors to improve upon these aspects on an ongoing basis and adopts innovative approaches for leveraging resources, converting opportunities into achievements through proper empowerment and motivation, fostering a healthy growth and development of human resources to take the Company forward. C. Strategic Supervision – by the Board of Directors comprising the Executive and Non-Executive Directors THE GOVERNANCE STRUCTURE The Company has four tiers of Corporate Governance structure, viz.: (i) (ii) Executive Management – by the Corporate Management comprising the Executive Directors (iii) Strategy & Operational Management – by the operating Company Board of verticals in each Operating Division (iv) Operational Management – by the Strategic Business Unit (SBU) Heads The four-tier governance structure besides ensuring greater management accountability and credibility, facilitates increased autonomy of businesses, performance discipline and development of business leaders, leading to increased public confidence. D. ROLES OF VARIOUS CONSTITUENTS OF CORPORATE GOVERNANCE IN THE COMPANY a. Board of Directors (the Board): The Directors of the Company are in a fiduciary position, empowered to oversee the management functions with a view to ensure its effectiveness and enhancement of shareholder value. The Board reviews and approves management’s strategic plan & business objectives and monitors the Company’s strategic direction. b. Corporate Management (CM): The main function of the Corporate Management is strategic management of the Company’s businesses within Board approved direction and framework. This includes ensuring that effective systems are in place for appropriate reporting to the Board on important matters. c. Chairman & Managing Director (CMD): d. The CMD is the Chief Executive of the Company. He is the Chairman of the Board and the Corporate Management. His primary role is to provide leadership to the Board and the Corporate Management for realizing the approved strategic plan and business objectives. He presides over the meetings of the Board and the Shareholders. Executive Directors (ED): The Executive Directors, as members of the Board and the Corporate Management, contribute to the strategic management of the Company’s businesses within Board approved direction and framework. They assume overall responsibility for strategic management of business and corporate functions including its governance processes and top management effectiveness. As regards Subsidiaries, Associates and Joint Venture Companies, they act as the custodians of the Company’s interests and are responsible for their governance in accordance with the approved plans. e. Non-Executive Directors (NED): The Non-Executive Directors play a cruical role in enhancing balance to the Board processes with their independent judgment on issues of strategy, performance, resources, standards of conduct, etc., besides providing the Board with valuable inputs. E. BOARD OF DIRECTORS a. Composition of the Board: As on date the Board comprises Chairman & Managing Director, 7 Executive Directors and 9 Non-Executive Directors. The composition of the Board is in conformity with Clause 49 of the Listing Agreement. b. Meetings of the Board: The Meetings of the Board are generally held at the Registered Office of the Company at L&T House, Ballard Estate, Mumbai 400 001. However, during the year, a Board Meeting was held at L&T Knowledge City, Baroda on January 2, 2009. During the year under review, 10 Meetings were held on May 29, 2008, July 28, 2008, September 20, 2008, October 15, 2008, December 31, 2008, January 2, 2009, January 14, 2009, January 21, 2009, January 30, 2009 and March 25, 2009. The Company Secretary prepares the agenda and the explanatory notes, in consultation with the Chairman & Managing Director and circulates the same in advance to the Directors. Every Director is free to suggest inclusion of items on the agenda. The Board meets 39 at least once every quarter inter alia to review the quarterly results. Additional Meetings are held, when necessary. Presentations are made to the Board by atleast one Operating Division in a year for a complete review of its business. The Minutes of the proceedings of the Meetings of the Board of Directors are noted and the draft minutes are circulated amongst the Members of the Board for their perusal. Comments, if any, received from the Directors are also incorporated in the Minutes, in consultation with the Chairman & Managing Director. The minutes are approved by the Members of the Board at the next Meeting. Senior management personnel are invited to provide additional inputs for the items being discussed by the Board of Directors as and when necessary. The composition of the Board of Directors is as on May 28, 2009. Their attendance at the Meetings during the year and at the last Annual General Meeting as also number of other Directorships & Memberships of Committees as on March 31, 2009 are as follows: Name of Director Mr. A. M. Naik Mr. J. P. Nayak Mr. Y. M. Deosthalee Mr. K. Venkataramanan Mr. R. N. Mukhija Mr. K. V. Rangaswami Mr. V. K. Magapu Mr. M. V. Kotwal Mr. S. Rajgopal Mr. S. N. Talwar Mr. M. M. Chitale Mr. Thomas Mathew T. $ Mr. N. Mohan Raj $ Mr. Subodh Bhargava Mrs. Bhagyam Ramani @ Mr. A. K. Jain #~ Mr. J. S. Bindra * Nature of Directorship No of Board Meetings attended No of other Attendance at last AGM Directorships Committee No. of No. of Committee Membership Chairmanship CMD ED ED ED ED ED ED ED NED NED NED NED NED NED NED NED NED 10 9 10 10 9 9 10 10 9 10 10 5 8 10 6 9 1 YES YES YES YES YES YES YES YES YES YES YES NO NO YES YES YES N.A. 2 10 11 4 1 4 2 – 1 14 7 3 1 11 3 2 – – 1 1 – 2 2 1 – 1 8 3 1 2 5 1 3 – – 5 4 2 – – – – – 4 4 1 – 4 – – – None of the above Directors are related inter-se. $ Representing equity interest of LIC @ Representing equity interest of GIC # Representing equity interest of SUUTI ~ Appointed on May 29, 2008 * Appointed w.e.f January 30, 2009 c. CMD – Chairman & Managing Director ED – Executive Director NED – Non-Executive Director Information to the Board: The Board of Directors has complete access to the information within the Company, which inter alia includes - (cid:2) Annual revenue budgets and capital expenditure plans Quarterly results and results of operations of operating divisions and business segments Financing plans of the Company (cid:2) (cid:2) (cid:2) Minutes of meeting of Audit Committees and Nomination & Compensation Committees (cid:2) Details of any joint venture, acquisitions of companies or collaboration agreement (cid:2) Materially fatal or serious accidents or dangerous occurrences, any material effluent or pollution problems (cid:2) Any materially relevant default, if any, in financial obligations to and by the Company or substantial non-payment for goods sold or services rendered, if any Any issue, which involves possible public or product liability claims of substantial nature, including any Judgment or Order, if any, which may have strictures on the conduct of the Company Developments in respect of human resources Compliance or Non-compliance of any regulatory, statutory nature or listing requirements and investor service such as non- payment of dividend, delay in share transfer etc., if any (cid:2) (cid:2) (cid:2) 40 F. BOARD COMMITTEES The Board currently has 3 Committees: 1) Audit Committee, 2) Nomination and Compensation Committee and 3) Shareholders’/ Investors’ Grievance Committee. The Board is responsible for constituting, assigning and co-opting the members of the Committees. 1) Audit Committee The role of the Audit Committee includes the following: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Overseeing the Company’s financial reporting process and disclosure of its financial information Recommending the appointment of the Statutory Auditors and fixation of their remuneration Reviewing and discussing with the Statutory Auditors and the Internal Auditor about internal control systems Reviewing the adequacy and independence of the Internal Audit function, and observations of the Internal Auditor Reviewing major accounting policies and practices and adoption of applicable Accounting Standards Reviewing major accounting entries involving exercise of judgment by the management Disclosure of contingent liabilities Reviewing, if necessary, the findings of any internal investigations by the Internal Auditors and reporting the matter to the Board Reviewing the risk management mechanisms of the Company Reviewing of compliance with Listing Agreement and various other legal requirements concerning financial statements and related party transactions Reviewing the Quarterly and Half yearly financial results and the Annual financial statements before they are submitted to the Board of Directors Reviewing the operations, new initiatives and performance of the business divisions Looking into the reasons for substantial defaults in payments to depositors, debenture holders, shareholders(in case of non-payment of declared dividends) and creditors, if any Minutes of the Audit Committee Meetings are circulated to the Members of the Board of Directors and taken note of. The Audit Committee of the Board of Directors was formed in 1986 and as on March 31, 2009 comprises three Non-executive Directors, all of whom are independent. The Committee met 7 times during the year on April 26, 2008, May 16, 2008, May 28, 2008, July 28, 2008, October 15, 2008, January 21, 2009 and January 30, 2009. The attendance of Members at the Meetings was as follows- Name Status No. of Meetings Attended & Remarks Mr. M. M. Chitale Mr. N. Mohan Raj Mrs. Bhagyam Ramani Chairman Member Member 7 5 6 All the members of the Audit Committee are financially literate and have accounting or related financial management expertise. The Chief Financial Officer and the Chief Internal Auditor are permanent invitees to the Meetings of the Audit Committee. The Company Secretary is the Secretary to the Committee. The Company’s Internal Audit function is ISO 9001:2000 certified. 2) Nomination & Compensation Committee i) Terms of reference: To review, assess and recommend the appointment of Executive and Non-Executive Directors and, to review their remuneration package, to recommend compensation to the Non-Executive Directors in accordance with the provisions of the Companies Act, 1956, to consider and recommend Employee Stock Option Schemes and to administer and superintend the same. ii) Composition: The Committee has been in place since 1999. As at March 31, 2009, the Committee comprises 3 Non- Executive Directors and the Chairman & Managing Director. The Committee met 7 times during the year on May 28, 2008, July 28, 2008, September 20, 2008, October 15, 2008, December 31, 2008, January 30, 2009 and March 24, 2009. The attendance of Members at the Meetings was as follows- Name Status Mr. S. Rajgopal Mr. S. N. Talwar Mr. Subodh Bhargava Mr. A. M. Naik Chairman Member Member Member iii) Remuneration Policy No. of Meetings Attended & Remarks 6 7 7 7 The objectives of the remuneration policy are to motivate employees to excel in their performance, recognize their contribution, retain talent and reward merit. Remuneration of employees largely consists of base remuneration, perquisites and performance incentives. The components of the remuneration vary for different grades and are governed by industry pattern, qualifications, experience, responsibilities handled, individual performance, etc. iv) Details of remuneration paid / payable to Directors for the year ended March 31, 2009: (a) Executive Directors: The details of remuneration paid / payable to the Executive Directors is as follows- Names Salary (Rs. Lakh) Perquisites Retirement Commission Benefits Mr. A. M. Naik Mr. J. P. Nayak Mr. Y. M. Deosthalee Mr. K. Venkataramanan Mr. R. N. Mukhija Mr. K. V. Rangaswami Mr. V. K. Magapu Mr. M. V. Kotwal 132.00 69.00 72.00 69.00 66.00 63.00 63.00 60.00 15.00 15.00 87.89 87.38 86.73 12.24 12.60 69.99 263.66 132.64 133.45 132.64 131.82 108.22 108.22 107.40 844.50 422.25 422.25 422.25 422.25 337.80 337.80 337.80 41 (cid:2) (cid:2) (cid:2) Notice period for termination of appointment of Chairman & Managing Director and other Whole-time Directors is six months on either side. No severance pay is payable on termination of appointment. Details of Options granted under Employee Stock Option Schemes are given in Annexure ‘B’ to the Directors’ Report (b) Non-Executive Directors: The Non-Executive Directors are paid sitting fees @ Rs. 20,000/- per meeting of the Board or its Committees. The amount of commission paid to each Non-Executive Director is decided by the Board of Directors on the basis of the following criteria - i. Number of Board / Committee Meetings attended Chairmanship of Committees ii. As required by the provisions Clause 49 of the Listing Agreement, the criteria for payment to Non-Executive Directors is made available on the investor page of our corporate website www.larsentoubro.com The details of remuneration paid / payable to the Non-Executive Directors is as follows- Names Sitting Fees Commission (Rs. Lakh) Mr. S. Rajgopal Mr. S. N. Talwar Mr. M. M. Chitale Mr. Thomas Mathew T. Mr. N. Mohan Raj Mr. Subodh Bhargava Mrs. Bhagyam Ramani Mr. A. K. Jain Mr. J. S. Bindra 3.00 3.40 3.40 1.20* 2.60* 3.40 2.40* 2.40 0.20 7.50 6.50 7.50 7.50* 6.50* 6.50 6.50* 6.50* 1.50 * Payable to respective Institutions they represent. Details of shares and convertible instruments held by the Non-Executive Directors as on date are as follows – Names No. of Shares held Mr. S. Rajgopal # Mr. S.N.Talwar Mr. M.M. Chitale Mr. Thomas Mathew T * Mr. N. Mohan Raj * Mr. Subodh Bhargava Mrs. Bhagyam Ramani * Mr. A. K. Jain * Mr. J. S. Bindra 900 6,000 550 200 200 500 200 400 100 * held jointly with the Institution they represent # has been granted 60,000 stock options 3) Shareholders’ / Investors’ Grievance Committee: Terms of reference: The terms of reference of the Shareholders’ / Investors’ Grievance Committee are as follows: (cid:2) Redressal of Shareholders’ / Investors’ complaints 42 (cid:2) Allotment, transfer & transmission of Shares/ Debentures or any other securities and issue of duplicate certificates and new certificates on split/ consolidation/renewal etc. as may be referred to it by the Share Transfer Committee. Composition: As on March 31, 2009 the Shareholders’ / Investors’ Grievance Committee comprises of 2 Non-Executive Directors and 2 Executive Directors. During the year, the Committee held 4 meetings on May 29, 2008, July 28, 2008, October 15, 2008 and January 30, 2009. The attendance of Members at the Meetings was as follows- Name Status Mr. Thomas Mathew T. Mr. J. P. Nayak Mr. R. N. Mukhija Mr. A. K. Jain Chairman Member Member Member No. of Meetings Attended 1 4 3 3 * * Appointed on May 29, 2008. Mr. N. Hariharan, Company Secretary is the Compliance Officer. During the year, 113 letters were received, all of which were responded to / resolved. As on March 31, 2009, 69 requests involving transfer of 7,098 shares were under process. These requests were less than ten days old and have since been processed. Complaints from Investors are resolved expeditiously except matters which are sub-judice. The Board has delegated the powers to approve transfer of shares to a committee of three Senior Executives. This Committee held 48 meetings during the year and approved the transfer of shares lodged with the Company. G. OTHER INFORMATION a) Risk Management Framework: The Company has in place mechanisms to inform Board Members about the risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly defined framework. A detailed note on risk management is given in the Financial Review section of Management’s Discussion and Analysis report elsewhere in this Report. b) Code of Conduct: The Company has laid down a code of conduct for all Board members and senior management personnel. The code of conduct is available on the website of the Company www.larsentourbo.com. The declaration of Chairman & Managing Director is given below: To the Shareholders of Larsen & Toubro Limited Sub: Compliance with Code of Conduct I hereby declare that all the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct as adopted by the Board of Directors. A. M. Naik Chairman & Managing Director Date: May 26, 2009 Place: Mumbai c) General Body Meetings: Procedure for Postal Ballot The last three Annual General Meetings of the Company were held at Birla Matushri Sabhagar, Mumbai as under: Date Financial Year Time 2007-2008 2006-2007 2005-2006 August 29, 2008 August 24, 2007 August 25, 2006 3.00 p.m. 2.15 p.m. 3.00 p.m. The following Special Resolutions were passed by the members at the past 3 Annual General Meetings: Annual General Meeting held on August 29, 2008: (cid:2) Raising of capital through QIP’s by issue of shares / convertible debentures / securities upto an amount of USD 600 million or Rs. 2400 crores. Appointment of Statutory Auditors and remuneration payable to them. (cid:2) Annual General Meeting held on August 24, 2007: (cid:2) Raising of capital in Indian and/or International market by issue of shares/ securities. Appointment of Statutory Auditors and remuneration payable to them. (cid:2) Annual General Meeting held on August 25, 2006: (cid:2) Introduction and implementation of ESOP Scheme-2006 and to issue upto 5% of the equity capital to employees including Executive Directors and Non-Executive Directors of the Company. Offering the benefits of ESOP Scheme 2006 to the eligible employees of subsidiary companies as permitted by law to eligible employees of Associate Companies. Appointment of Statutory Auditors and remuneration payable to them. (cid:2) (cid:2) d) Approval by Members through Postal Ballot: The Company sought approval of the Members, for passing a Special Resolution under Section 293(1)(a) of the Companies Act, 1956, for restructuring the business of the Company including by transferring, selling and / or disposing of the Medical Equipment & System (“MED”) Business unit of the Company to its subsidiary company or to any other entity as a going concern as may be approved by the Board. Mr. S. N. Ananthasubramanian, Practising Company Secretary, was appointed as the Scrutinizer for conducting the Postal Ballot process. The details of the voting pattern are as under: Particulars In favour of the Resolution Against the Resolution Total No. of Votes cast % of total votes cast 15,57,24,533 99.42 9,09,463 15,66,33,996 0.58 100.00 Number of Invalid Ballots (unsigned/unticked) was 376. The Resolution was approved by an overwhelming majority of the Members. After receiving the approval of the Board of Directors, Notice of the Postal Ballot, text of the Resolution and Explanatory Statement, relevant documents, Postal Ballot Form and self-addressed postage pre-paid envelopes are sent to the shareholders to enable them to consider and vote for or against the proposal within a period of 30 days from the date of dispatch. The calendar of events containing the activity chart is filed with the Registrar of Companies within 7 days of the passing of the Resolution by the Board of Directors. After the last date for receipt of ballots, the Scrutinizer, after due verification, submits the results to the Chairman. Thereafter, the Chairman declares the result of the Postal Ballot. The same is published in the Newspapers and displayed on Website and Notice board. e) Disclosures: 1. During the year, there were no transactions of material nature with the Directors or the Management or the subsidiaries or relatives that had potential conflict with the interests of the Company. 2. There were no instances of non-compliance on any matter related to the capital markets, during the last three years. f) Means of communication: Company’s 1. corporate The website www.larsentoubro.com provides comprehensive information about its portfolio of businesses. Section on “Investors” serves to inform and service the Shareholders allowing them to access information at their convenience. The entire Report and Accounts are available in downloadable formats. 2. Quarterly & Annual Results are published in prominent daily newspapers viz. The Business Standard, The Financial Express, The Hindu Business Line & Loksatta. 3. Information to Stock Exchanges is now being filed through corp-filing. Investors can view this information by visiting the website www.corpfiling.co.in. 4. Official news releases, presentations etc. made to Institutional Investors and the shareholding pattern of the Company, on a quarterly basis are displayed on the Company’s website: www.larsentoubro.com. 5. Management’s Discussion & Analysis forms part of the Annual Report, which is mailed to the shareholders of the Company. GENERAL SHAREHOLDERS’ INFORMATION a) Annual General Meeting: The Annual General Meeting of the Company has been convened on Friday, August 28, 2009 at Birla Matushri Sabhagar, Marine Lines, Mumbai – 400 020 at 3.00 p.m. 43 b) Financial calendar: 1. Annual Results of 2008-09 May 28, 2009 2. Mailing of Annual Reports Second week of July, 2009 3. First Quarter Results Around third week of July, 2009 4. Annual General Meeting August 28, 2009 5. Payment of Dividend September 2, 2009 6. Second Quarter results End of October, 2009 7. Third Quarter results End of January, 2010 c) Book Closure: The dates of Book Closure are from Friday, August 21, 2009 to Friday, August 28, 2009 (both days inclusive) to determine the members entitled to the dividend for 2008-2009. (cid:2) Post Bonus d) Listing of equity shares / shares underlying GDRs on Stock Exchanges: The shares of the Company are listed on The Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). Shares underlying GDRs are listed on Luxembourg Stock Exchange and London Stock Exchange. e) Listing Fees to Stock Exchanges: The Company has paid the Listing Fees for the year 2009-2010 to both the above Stock Exchanges. f) Custodial Fees to Depositories: The Company has paid custodial fees for the year 2009-2010 to National Securities Depository Limited and Central Depository Services (India) Limited. g) Stock Code/Symbol: BSE : 500510 NSE : LT ISIN No. : INE018A01030 Reuters RIC: LART.BO The Company’s shares constitute a part of BSE 30 Index of the Bombay Stock Exchange Limited as well as NIFTY Index of the National Stock Exchange of India Limited. h) Stock market price data for the year 2008-2009: (cid:2) Pre-Bonus Month L&T BSE Price (Rs.) BSE SENSEX 2008 April May June July High Low Month Close High Low Month Close 3,085.00 2,545.00 3,003.35 17,480.74 15,297.96 17,287.31 3,262.00 2,666.00 2,981.35 17,735.70 16,196.02 16,415.57 3,038.00 2,165.00 2,183.20 16,632.72 13,405.54 13,461.60 2,814.90 2,100.00 2,602.70 15,130.09 12,514.02 14,355.75 August 2,930.00 2,480.15 2,589.85 15,579.78 14,002.43 14,564.53 September 2,825.00 2,256.00 2,442.85 15,107.10 12,153.55 12,860.43 44 Month 2008 L&T BSE Price (Rs.) BSE SENSEX High Low Month Close High Low Month Close October 1,250.00 680.00 805.45 13,203.86 7,697.39 9,788.06 November 960.00 December 843.70 700.00 670.00 726.95 10,945.41 8,316.39 9,092.72 774.40 10,188.54 8,467.43 9,647.31 2009 January February March 867.90 711.00 693.70 611.00 598.25 557.00 689.20 10,469.72 8,631.60 9,424.24 611.45 9,724.87 8,619.22 8,891.61 672.65 10,127.09 8,047.17 9,708.50 i) j) Registrar and Share Transfer Agents: Sharepro Services (India) Private Limited, Mumbai. Share Transfer System: The Company’s Shares are required to be compulsorily traded in the Stock Exchanges in dematerialized form. Shares in physical mode which are lodged for transfer are processed and returned within the stipulated time. The share related information is available online. Physical shares received for dematerialization are processed within a period of 21 days from the date of receipt. Bad deliveries are promptly returned to Depository Participants (DP’s) under advice to the shareholders. k) Distribution of Shareholding as on March 31, 2009: No. of Shares Shareholders Shareholding Number % Number % Up to 500 8,81,403 94.63 6,68,22,648 11.41 501 – 1000 1001 – 2000 2001 – 3000 3001 – 4000 4001 – 5000 5001 – 10000 27,735 11,978 3,441 1,900 1,028 2,033 10001 and above 1,845 2.98 1.29 0.37 0.20 0.11 0.22 0.20 2,03,20,177 1,71,58,595 85,13,817 67,13,214 46,60,729 1,42,19,637 3.47 2.93 1.45 1.15 0.80 2.43 44,72,79,045 76.36 TOTAL 9,31,363 100.00 58,56,87,862 100.00 l) Categories of Shareholders as on March 31, 2009 is as under: Category Shareholding No. of Shares % Financial Institutions 18,76,10,525 Foreign Institutional Investors Shares underlying GDRs Mutual Funds Bodies Corporate Directors & Relatives 6,97,05,591 1,71,92,103 3,43,36,111 3,37,60,770 66,67,993 L&T Employees Welfare Foundation 7,44,04,116 32.03 11.90 2.94 5.86 5.77 1.14 12.70 27.66 General Public TOTAL 16,20,10,653 58,56,87,862 100.00 m) Dematerialization of shares: As on March 31, 2009, 96.2% of the Company’s total paid-up capital representing 56,32,91,981 shares were held in dematerialized form and the balance 3.8% representing 2,23,95,881 shares were held in paper form. n) Outstanding GDRs / ADRs / Warrants or any Convertible Instruments, conversion date and likely impact on equity: The outstanding GDRs are backed up by underlying equity shares which are part of the existing paid up capital. o) Listing of Debt Securities: The redeemable Non-Convertible debentures issued by the Company are listed on the Wholesale Debt Market (WDM) of National Stock Exchange of India Limited (NSE). p) Debenture Trustees (for privately placed debentures) IDBI Trusteeship Services Limited Ground Floor, Asian Building 17, R. Kamani Marg Ballard Estate Mumbai – 400 001 q) Plant Locations: Manufacturing facilities of the Company and its Group are located (within India) at Ahmednagar, Bangalore, Chennai, Coimbatore, Faridabad, Hazira (Surat), Kansbahal (Rourkela), Mumbai, Mysore, Pithampur, Puducherry, Pune, Vadodara and Visakhapatnam; and in Australia, China, Indonesia, Malaysia, Oman, Saudi Arabia and U.A.E. r) Address for correspondence: Larsen & Toubro Limited, L&T House, Ballard Estate, Mumbai 400 001. Tel. No. (022) 67525 656, Fax No. (022) 67525 893 Shareholder correspondence may be directed to the Company’s Registrar and Share Transfer Agent, whose address is given below: 1. Sharepro Services (India) Private Limited-Unit:L&T Samhita Warehousing Complex, Bldg. No.13 A B, Gala No. 52 to 56 Near Sakinaka Telephone Exchange, Andheri – Kurla Road, Sakinaka, Mumbai – 400 072 Tel No. : (022) 6772 0300 / 6772 0400 Fax No. : (022) 2859 1568 / 2850 8927 E-Mail : lnt@shareproservices.com; sharepro@vsnl.com 45 2. Sharepro Services (India) Private Limited-Unit:L&T 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai 400 021. Tel : (022) 6613 4700 Fax : (022) 2282 5484 s) Investor Grievances: The Company has an exclusive e-mail id viz. igrc@lth.ltindia.com to enable investors to register their complaints, if any. The Company strives to reply to the complaints within a period of 3 working days. t) Non-mandatory requirements on Corporate Governance recommended under the Clause 49 of the Listing Agreement: The Company has adopted the following non-mandatory requirements on Corporate Governance recommended under Clause 49 of the Listing Agreement: 1. A Nomination & Compensation Committee is in place since 1999. The Committee comprises of three Non-Executive Directors and the Chairman & Managing Director of the Company. 2. Whistle Blower policy for L&T and its group companies is in place. Access to the Audit committee of the Board is also available. 3. u) Securities Dealing Code: Pursuant to the SEBI (Prohibition of Insider Trading) Regulations 1992, a Securities Dealing Code for prevention of insider trading is in place. The objective of the Code is to prevent purchase and/or sale of shares of the Company by an Insider on the basis of unpublished price sensitive information. Under this Code, Designated Persons (Directors, Advisors, Officers and other concerned employees/persons) are prevented from dealing in the Company’s shares during the closure of Trading Window. To deal in securities beyond specified limit, permission of Compliance Officer is also required. All the Designated Employees are also required to disclose related information periodically as defined in the Code. Mr. N. Hariharan, Company Secretary has been designated as the Compliance Officer. v) ISO 9001:2000 Certification: The Company’s Secretarial Department which provides secretarial services and investor services for the Company and its Subsidiary and Associate Companies is ISO 9001:2000 certified. w) Secretarial Audit for Capital Reconciliation: As stipulated by SEBI, a Qualified Practising Company Secretary carries out Secretarial Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. This audit is carried out every quarter and the report thereon is submitted to the Stock Exchanges. The Audit confirms that the total Listed and Paid-up capital is in agreement with the aggregate of the total number of shares in dematerialized form and in physical form. Chief Executive Officer (CEO) and Chief Financial Officer (CFO) certification To the Board of Directors of Larsen & Toubro Limited Dear Sirs, Sub: CEO / CFO certificate (Issued in accordance with provisions of clause 49 of the Listing Agreement) We have reviewed the financial statements, read with the cash flow statement of Larsen & Toubro Limited for the year ended March 31, 2009 and that to the best of our knowledge and belief, we state that; (a) (i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that may be misleading; (ii) These statements present a true and fair view of the Company’s affairs and are in compliance with current accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the Company’s code of conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of internal control systems of the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, and steps taken or proposed to be taken for rectifying these deficiencies. (d) We have indicated to the Auditors and the Audit Committee: (i) (ii) Significant changes in accounting policies made during the year and that the same have been disclosed suitably in the notes to the financial statements; and Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee. Y. M. Deosthalee Chief Financial Officer A. M. Naik Chairman & Managing Director Yours sincerely, Place: Mumbai Date: May 28, 2009 46 Auditors certificate on compliance of conditions of corporate governance To the members of Larsen & Toubro Limited We have examined the compliance of conditions of corporate governance by Larsen & Toubro Limited for the year ended March 31, 2009 as stipulated in clause 49 of the listing agreement entered into by the Company with the stock exchanges. The compliance of conditions of corporate governance is the responsibility of management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied in all material respects with the conditions of corporate governance as stipulated in the above mentioned listing agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which management has conducted the affairs of the Company. Mumbai, May 28, 2009 SHARP AND TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No. 15882 47 Management Discussion & Analysis 2008-2009 Review of the Economic Scenario was accentuated due to contraction in the The Indian economy began the year 2008- 2009 on a confident note. Sound economic fundamentals, encouraging performance by the country's infrastructure & core sectors and buoyant global economic conditions were conducive for maintaining the investment demand for petroleum products. This heightened the uncertainty for new capital investments in oil exploration and distribution in the Gulf countries. These developments posed significant challenges for the international business of the Engineering and momentum. However, the global financial Construction segment. turmoil emerging from sub-prime crisis in the US, extreme volatility in the prices of crude oil, steel, cement & other key raw materials and liquidity constraints led to a slowdown in the Business Performance Countering the adverse business conditions, the Company achieved satisfactory growth in complemented by a focused organisation structure. The Company’s profitability was protected from input cost volatility due to efficient contract structuring. The product businesses, however had to bear the burden of higher input costs without corresponding higher realisation from the market. At the Group level, the total income registered a significant increase over the previous year driven by a satisfactory performance of the parent company and its flagship subsidiaries. domestic economy . the order inflow during 2008-2009. The Strategic Initiatives Engineering and Construction segment was Consequently, the country's GDP growth for able to garner project orders not only in the year 2008-2009 dropped to 6.7% against traditional sectors such as Hydrocarbon and the growth of around 9% seen during the past Infrastructure, but were also successful in few years. Almost all the sectors of the bagging orders in the emerging sectors such economy witnessed considerable moderation as Railways and Power. The orders came in the growth trends. In particular, mainly from the domestic market. manufacturing and capital goods sectors were adversely impacted by the credit squeeze and low demand forcing the postponement of industrial expansion plans. The sales growth during the year 2008-2009 was impressive on the back of healthy performance of the Engineering & Construction segment. The product The Index of Industrial Production for 2008- businesses, however, saw severe curtailment 2009 showed a growth of around 2.3% as in the demand for industrial goods due to compared to the growth of 8.5% in the economic slowdown and therefore could previous year. Similarly, the construction register only a marginal growth in revenues sector showed a lower growth rate of around for the year as a whole. 7.2 % as compared to 10.1 % in the previous year. The adverse impact was also felt in many government sponsored infrastructure projects owing to credit crunch and tighter monetary policies adopted to combat inflation. The economies in the Gulf region, once holding promising business prospects, were also not spared from the brunt of global economic down-turn, especially after the crude oil prices decreased sharply during the last quarter of fiscal 2008-2009. The problem 48 The order book as on March 31, 2009 at Rs. 70,319 crore provides a strong visibility to the Company's sales revenue during 2009-2010 and 2010-2011 even in the face of a continuing economic downturn. The Company has recorded a healthy increase in the profitability driven by improved margins of Engineering & Construction segment demonstrating the Company's superior project execution capabilities and a The Company is well on its course to meet its strategic plan target as per "Project Lakshya 2010", despite the challenges being experienced currently due to economic slowdown. This has been largely due to the effective business strategies pursued by the various business divisions of the Company, encompassing capacity augmentation, building up of superior execution capabilities, technology tie-ups, risk analysis and mitigation. Moreover, the strategy of bidding for only large projects, and thereby economising on the critical resources, has yielded better financial results besides taking the L&T brand to the next higher league. The foray into high potential businesses such as Railways and Power equipment has been successful during the year and boosted the order inflow. The Company's proven EPC capabilities in turnkey power projects are being strengthened with major investments in the manufacturing facilities for super critical boilers & turbine generators at Hazira. New fabrication yard at Sohar, Oman has added to the EPC capability for large projects in upstream hydrocarbon sector. To augment heavy engineering capability to cater to the Middle East market, an advanced fabrication comprehensive risk mitigation framework, facility is being set up in Oman. Post signing of nuclear fuel treaty, new vistas The ship building facilities have been expected to provide customer focus & of opportunity in the field of civilian nuclear stabilised in Hazira with the first commercial specialised resources for effectively meeting power are expected to unfold during the ship slated for delivery in 2009-2010. A new the customer needs. The new structure is also coming years. The Company has been playing shipyard being set up in Kattupalli, Tamil Nadu, expected to provide better career growth a lead role in equipment supplies and will mainly cater to the anticipated business opportunities for aspiring managerial construction in the country's domestic prospects of construction of naval ships & personnel. nuclear power programmes. The Company submarines and repair of commercial vessels. has recently concluded several tie ups with leading international groups in the areas of advanced nuclear technology. A state-of-the- art heavy forging facility for nuclear equipment is being set up at Hazira in Gujarat. Evaluation of existing business portfolio is an During the year 2008-2009, a new business on-going initiative for the Company. During management structure was put in place by the year 2008-2009, the Company divested its establishing Operating Companies for the Ready Mix Concrete business augmenting its various businesses. The new structure is cash flows and profit. Year 2008-2009 at a Glance L&T (cid:2) New order inflow at Rs. 5,16,215 million in current year as against Rs. 4,20,190 million in previous year - 23% growth year-on-year (cid:2) Order book as at March 31, 2009 Rs. 7,03,191 million as against Rs. 5,26,821 million as at March 31, 2008 - 33% growth year-on-year (cid:2) Gross sales at Rs. 3,40,450 million in current year as against Rs. 2,51,875 million in previous year - 35% growth over 2007-2008 (cid:2) Segment wise composition of gross revenues: Engineering & Construction segment - 81.9% in current year as against 75.3% in previous year Electrical & Electronics segment - 7.9% in current year as against 10.3% in previous year Machinery & Industrial Products segment - 7.1% in current year as against 9.3% in previous year Others - 3.1% in current year as against 5.1% in previous year (cid:2) PBDIT at Rs. 44,248 million in current year as against Rs. 33,180 million in previous year - up by 33% (cid:2) PAT at Rs. 34,817 million in current year as against Rs. 21,734 million in previous year - up by 60% (cid:2) Gross debt equity ratio of 0.53:1 (previous year 0.38:1) L&T Group (cid:2) Gross sales at Rs. 4,06,079 million in current year as against Rs. 2,95,611 million in previous year - 37% growth over 2007-2008 (cid:2) PAT at Rs. 37,891 million in current year as against Rs. 23,246 million in previous year - up by 63% 49 K. V. Rangaswami Whole-time Director & President (Construction) 83-km highway between Vadodara and Bharuch – one of the many road projects that provides a critical link to the Golden Quadrilateral that connects India’s major metropolitan centres. Infrastructure projects executed by L&T also include bridges, ports, airports and metro rail systems. Engineering, Construction & Contracts Division Overview Engineering, Construction and Contracts Division (ECCD) undertakes engineering design and construction of infrastructure, buildings, factories and industrial projects covering civil, mechanical, electrical and instrumentation engineering disciplines. With many of the country's prized landmark constructions to its credit, ECCD, India's largest construction organisation, uses state-of-the-art design tools and project management techniques. Supported by a track record of over sixty-five years, the Division also undertakes lumpsum turnkey construction contracts with single-source responsibility. The Division is ranked 40th amongst all the construction companies world wide [source: Engineering News Record (ENR)]. Business Environment The busines conditions have been challenging. Liquidity crunch and high real interest rates have moderated the private capital investments. Various measures taken by the Government / RBI are, however, expected to mitigate the effect. On the positive side, inflation is under control and the commodity prices have softened. This could help the industry in general to 50 improve its performance. For the construction industry, the primary drivers of growth remain healthy in many areas. Business would grow steadily over time, albeit at a slower pace. The three important drivers are : (a) infrastructure development; (b) capacity enhancement; and (c) urbanisation. These growth drivers are influenced by India's domestic demand and the existing social and physical 'infrastructure deficit'. Construction industry is cyclical by nature. The Indian construction sector has been growing at nearly 1.5 times the country's overall growth. Considering the current conditions, construction sector is expected to grow at a slower rate of 9-11% in 2009-2010 as against 17.5% in 2007-2008 and 16.3% expected in 2008-2009. Opportunities & Challenges The construction market reflects a mixture of optimism and apprehension. Owing to lowering demand, some sectors like realty, especially in premium housing and capacity augmentation in manufacturing sectors are expected to progress slower than in the recent past. However with continuous migration of people in to urban areas, the housing sector will continue to generate a lot of opportunities. Mass scale affordable housing is one such opportunity to be harnessed. The infrastructure projects will continue to get the focus from both Government and private sectors, supported by policy initiatives aimed at infrastructure development. This is corroborated by the Planning Commission's ambitious investment plan on infrastructure over the next 5 years in various sectors like power, irrigation, roads, railways, ports and airports. The construction sector, which accounts for almost 60-65% of the capital spend, would be the biggest beneficiary of these investments.Transportation Infrastructure (roads, bridges, elevated corridors, etc) is expected to gain from favourable measures taken by NHAI like transparent MCA (Model Concession Agreements), increased VGF (Viability Gap Funding) etc. In addition, the state and district roads are also being taken up for development. Metros and MRTS (Mass Rapid Transport System) are emerging as a major area of infrastructure development in major urban centres. Urban infrastructure like water supply, sanitation, health care, waste management etc., are expected to provide opportunity in the year 2009-2010. Increased budgetary allocation by the Government for APDRP, NHDP, Accelerated irrigation benefit programme, Jawaharlal Nehru Urban Renewal Mission, Bharat Nirman Programme etc., augur well for business opportunities in related segments. The increasing 'demand - supply' gap in the Power sector and Government's continued focus will drive the growth of the sector which will boost order inflows for the Power Transmission & Distribution, Bulk Material Handling, Hydel and Nuclear business units. On the international front, the GCC countries have seen significant decline in investment in realty sector. The investment in the Oil sector is likely to be moderate due to expectations of a drop in demand for oil and the correction in its prices. Other sectors, however, like power distribution and infrastructure development in the Gulf region is expected to continue to be robust. Buildings & Factories Operating Company (B&F OC) B&F OC has continued its growth trend during 2008-2009 by bagging large value turnkey, design & build orders in airports, IT parks, commercial space, health & leisure structures & residential and factory building segments. The progress made by B&F OC during the year 2008-2009 towards 'Total Turnkey Solutions' was quite significant. 'Concept to Commissioning' is the theme driving the growth. This unique capability along with focus on key account management helps the B&F OC to retain its customers. Major contracts undertaken by B&F OC including Delhi International Airport is progressing on expected lines. Sensing the realty slowdown ahead of time, B&F OC has quickly diversified into Government projects, affordable housing and new airports outside / airport modernisation projects in Tier II cities. Healthy order book stands testimony to the relentless business development initiatives, giving the B&F OC visibility on the revenue growth for the year 2009-2010. India Infrastructure Operating Company (INFRA OC) INFRA OC continues to maintain its leadership position in construction of roads, runways, bridges, metros, tunnels, hydel and nuclear power plants. INFRA OC has reported significant growth in the revenues during 2008-2009 driven primarily by BOT projects. During the year INFRA OC has successfully completed several projects viz. Runway in Delhi Airport, Road Packages in Kattumavadi - Ramanathapuram and Krishnagiri - Thopurghat sectors, Panipat Elevated Corridor and Veligonda Dam. to largely due renewed Order inflow and order book have been satisfactory the Government's focus on infrastructure as a tool to revive the economic growth. Some of the major projects bagged by INFRA OC include three prestigious Gujarat State Road Packages, Mumbai Monorail, Dam Project in Bhutan, Irrigation project in Andhra Pradesh etc. The atomic power plant at Tarapur, Unit 4. L&T is working closely with leading national agencies in helping the country meet its stated target of generating 20,000 MW of nuclear power by 2020 AD. 51 Metallurgical Material Handling and Water Operating Company (MMHW OC) MMHW OC has sustained its success story during the year 2008-2009. Order book increased significantly with projects from TATA Steel (Blast furnace and Sinter plant), SAIL (Sinter plant, Rourkela), Vedanta (Alumina plant, Hindustan Zinc Limited, Debari, Utkal Alumina) etc. Time and again MMHW OC has proven its execution capabilities by completing the projects ahead of time. MMHW OC is concurrently executing six blast furnaces in the country - a milestone event in Indian Steel plant construction. The Sector witnessed sharp volatility in the commodity prices and thereby bringing uncertainty in the capacity built up plans in the near term. However, with the continued thrust being given for water and infrastructure development projects by the Central/State Governments, MMHW OC is expected to improve its performance. Electrical & Gulf Projects Operating Company (E&GP OC) Power demand and supply gap drives the business growth of E&GP OC. In addition, India’s largest blast furnace (2.5 mtpa) built by L&T and Paul Wurth on an EPC basis at Jamshedpur. L&T has constructed maximum number of blast furnace in the country. L&T carries out engineering, procurement, manufacture, supply, construction and commissioning of projects in ferrous and non- ferrous metals, mineral beneficiation, coal washeries and paper plants. technological developments help transmitting power over long distance with minimum transmission losses. This has given a fillip to HT Transmission Line projects in the country. This OC is focusing on substations, industrial electrification, transmission line projects and railway construction. E&GP OC has successfully completed projects like Power Distribution System - KAFCO, Kuwait, DIAL - AGL package - Asia's longest runway (4430mtr), 400 KV for Jindal at Raipur substation, 220 KV GIS at Kudankulam for NPCIL etc. Getting repeat orders from clients like Power Grid its project testifies management capabilities and timely delivery. E&GP OC has bagged a number of breakthrough orders like construction of Balance of Power Plants (BoP), 765 KV substation, Power distribution package for 2.0 MTPA steel plant etc. With the commissioning of expansion projects, installed capacity of the Company’s factories manufacturing Transmission Line Tower, has reached 1,00,000 MT per annum. Multi-storeyed commercial complex in Dubai’s prestigious Silicon Oasis. L&T has executed several major projects in the GCC countries, including residential & commercial complexes, bridges, switchyards and transmission lines. 52 The Gulf operations have shown significant growth in revenues. L&T Oman, one of the subsidiaries, has reported impressive growth in the Buildings and Electrical businesses. Key success factor for E&GP OC continues to be efficient management of working capital. Power generation and distribution sector continues to show promise within India and in the Gulf region as the industrial and domestic demand for power has been steadily growing. Significant Initiatives Operating companies (OC) have been made fully functional within the ECC Division since July 2008. OCs are working virtually like independent companies to foster rapid scaling up of the business and bring down the response time to customers / projects. To tide over the suboptimal utilisation of resources triggered by current economic scenario, measures have been taken to focus on better accountability at every level and ensure good governance. A common forum to exchange the knowledge across OCs is also under implementation. The Division envisages that the volatility in the economy may result in under utilisation of human in pockets; resources consequently focus on multi-skilling / job rotation will get a renewed attention to minimise the effect. The Division's initiative to train and retain workmen across India has been strengthened by additional budgetary allocation for building centres in all the regions. Outlook Overall outlook for ECCD remains good owing to its robust order book and diversified business portfolio. The Government's commitment to revitalise the economy through renewed investment in infrastructure, provides immense scope and opportunities to the Division. Increasing demand for power offers substantial business opportunities for Bulk Material Handling business. Government's consistent support to augment water supply and develop water network across India, provides sizeable opportunities for Water & Effluent Treatment SBU. Similarly, Gulf region offers many water related projects. The outlook of Minerals and Metals business seems challenging for the year 2009-2010. Special initiatives are being taken for spreading our wings beyond construction of blast furnaces / sinter plants i.e towards pellet plant / compact strip production (CSP) in ferrous sector and copper smelting / alumina refinery in non- ferrous sector. The Division is therefore hopeful of capitalising on these opportunities to sustain the growth momentum. Artist’s impression of India’s first monorail system – being built by L&T in Mumbai. L&T’s Railway Business Unit integrates the Company’s capabilities and provides comprehensive solutions in the rail sector. The focus is on urban mass transportation systems like monorails, metros and Light Rail Transport. 53 K. Venkataramanan Whole-time Director & President (Engineering & Construction Projects) Process platform complex at Bombay High executed by L&T on an EPC basis for Oil & Natural Gas Corporation. L&T provides turnkey solutions to the upstream hydrocarbon sector encompassing oil & gas production, processing and transportation. Engineering & Construction (Projects) Division Overview [E&C Engineering & Construction (Projects) Division (Projects)] delivers engineering, procurement & construction in the oil & gas, (EPC) solutions petrochemicals, power and water sectors. It provides single source responsibility for execution of lump-sum turnkey projects in multiple geographies. The expertise and experience of E&C (Projects) Division arising out of a successful track record in executing projects, encompasses front-end design, engineering, project management, procurement, construction, installation and commissioning. These integrated strengths are backed up by flexibility of operation and agility in response. A well institutionalised risk management structure and high safety standards are the other key strengths of the division. fabrication, E&C (Projects) Division has consolidated its presence in international markets. As part of its mission to establish itself as a major EPC player in the Middle East and South East Asia, it has set up offices and built manufacturing capabilities in select countries. Joint ventures are set up with 54 renowned local partners in Saudi Arabia, Kuwait, Oman, Qatar and United Arab Emirates. The offices in Middle East are backed up by a large engineering resource base in India. Some of the key inherent strengths that enable the division to offer world class solutions to its clients include: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Over 4500 qualified and experienced personnel from various disciplines Strong basic engineering capabilities Large technology & centers innovation State-of-the-art CAD facilities with sophisticated plant design systems Conformance to globally recognised management systems standards Open yard facilities for modular fabrication with water front in India and Oman Business Environment The global economic meltdown in 2008- 2009 led to the liquidity crisis, impacting business conditions. Decline in growth rate has resulted in a sharp contraction in hydrocarbon, chemical & construction industries. The downturn caused a weak demand situation and resulted in declining commodity prices and cut down in production. The decline in commodity prices, however, showed disparate trends. Fall in the price of steel did not result in proportionate decline in the cost of machinery and other equipment. Crude oil prices saw a sharp decline from a peak of $140 down to around $50+ per barrel. This coupled with the credit squeeze forced review of the project viability and deferment / cancellation of investment decisions, resulting in slower order inflows during 2008-2009. Bidding for jobs in an uncertain economic scenario was a challenge by itself. Sharp swings in the commodity prices and depreciation of rupee further added to the uncertainties. Some of the prospective clients sought to reduce project costs through re-bids and protracted pre-award negotiations on price. Moreover, the contracting basis is tending to change from LSTK to cost reimbursable model due to volatility in the material and execution costs. With size of the contracts increasing, the pre- qualification criteria have become more stringent and thereby delaying the take-off phase of the project. facing is also Tough competition from emerging EPC players both in domestic and international markets is a challenge to tackle in Hydrocarbon Upstream and Mid & Downstream businesses. The Power formidable busines competition from established domestic players and Chinese companies. The large size of the envisaged power projects has brought about additional challenges such as accurate cost estimates, adherence to demanding project schedules and financial closure calendar. Lack of fuel sufficiency and delays in implementation of reforms have contributed to delays in finalising the plans for power projects in the country. The Division created three Operating Companies under its umbrella during the year, each for Hydrocarbon Upstream, Hydrocarbon Mid & Downstream and Power businesses to lay closer focus and accelerate growth in the areas. Gas compressor module (Size: 31m x 16m x 16m) being despatched from L&T’s Modular Fabrication Facility at Hazira on India’s west coast. Hydrocarbon Upstream Operating Company hydrocarbon Hydrocarbon Upstream Operating Company provides turnkey solutions in sector upstream encompassing oil & gas production, processing & transportation. The Company has been successfully executing projects for the last two decades in India, Gulf, Africa and South East Asia for reputed clients. The solutions offered are in a wide range of products such as Process Platforms, Wellhead Platforms, Submarine Pipelines, Platform and Pipeline replacement, Modules, Marine terminals and Floating systems. Decline in crude oil prices has affected the viability of expansion plans and exploration activities of the oil producing companies. Domestic capex on development of new fields continues to be modest as compared to global trends. However, there is a 55 Naphtha Hydroteater Reformer Unit constructed by L&T at ENOC Processing Company LLC at Jabel Ali Free Zone, Dubai , UAE. Engineering USA, engineering were strengthened though formation of a joint venture with Gulf the Interstate engineering capacities at Mumbai, Vadodara and Faridabad centers were also strengthened. The construction capacities were augmented by adding strategic plant & machinery resources. In the international arena, the OC has set up a full-fledged business unit at Sharjah to cater to Middle East opportunities. Other country specific JVs have been formed to focus on specialised electro-mechanical construction capabilities in the Gulf countries. Power Operating Company L&T has taken initiatives in synergising its internal strengths developed over decades in the areas of project management, engineering, manufacturing and construction by setting up an organisation focused on opportunities in coal-based, gas-based and nuclear power projects. This business provides turnkey solutions for setting up utility power plants, co- generation & captive power plants on EPC basis. It also provides power plant engineering services through L&T-Sargent & Lundy a joint venture between L&T and Sargent & Lundy, USA. L&T has formed two joint ventures with Mitsubishi Heavy Industries, Japan for manufacturing Supercritical Boilers and Turbine Generators. During the year 2008-2009, significant progress has been made in setting up of these manufacturing facilities at Hazira. Creation of facilities to manufacture various power auxiliaries such as boiler tubings, pressure pipes, pulverising mills etc are also underway for comprehensive offering of power equipment to the customers. The coal sourcing initiatives are being pursued actively through L&T Natural Resources Limited, a subsidiary company. Power business is a major thrust area for L&T from the long term perspective. The Company is undertaking significant efforts Group-3 Lube-based oil project executed by L&T on an EPC basis for Petronas Melaka Refinery in Malaysia. L&T offers comprehensive services to the Refinery sector by undertaking EPC projects on Lumpsum Turnkey basis in India and abroad. renewed thrust in both redevelopment of existing fields and in deep water exploration activities. The Company has established a new state- of-the-art fabrication facility for modular structures, heavy jackets and oil rigs at Sohar in the Sultanate of Oman. The yard spread over 400,000 sq. m has facilities for heavy structural fabrication, sophisticated equipment, systems integration and testing and load-out of ultra-large modules. Significant progress has been achieved on the capacity expansion plans at its existing modular fabrication facility at Hazira in Gujarat. L&T-Valdel is the engineering arm of Hydrocarbon Upstream OC, which provides complete engineering solutions. It is gearing up to cater to the growth needs through its centers located at Faridabad, New Delhi & Chennai and is also currently positioning itself in UAE. The OC has set up a joint venture with SapuraCrest Petroleum Berhad of Malaysia to add to the installation dimensions to its offshore capabilities through owning & operating a Heavy Lift cum Pipelay vessel, the LTS 3000. In order to focus better on the marketing & business development activities at the 56 international level, the OC has set up development centers at: 1. Abu Dhabi, primarily catering to opportunities in GCC countries, Iran and North Africa 2. Mumbai, to address opportunities in South East Asia, Australia and West Africa. Hydrocarbon Mid & Downstream Operating Company Mid & Downstream business offers single point EPC solutions in the field of Hydrocarbon refining, Petrochemical, Fertiliser and Chemicals Sector. The business has to its credit several complex projects executed successfully in domestic and international markets. The OC addresses the entire spectrum of opportunities in this sector which include Green Fuel Projects, Fuel Upgradation, Olefins, Polyolefins, Aromatics, Hydrogen, Fertiliser, Gas processing, Reformers, Cracking Furnaces, Cross Country Pipelines, Gas gathering stations, Crude Oil terminals etc. During 2008-2009, Mid & Downsteam business has taken a slew of initiatives to improve its competitive positioning. While the capabilities in the area of pipeline and investments in this sector to leverage on the business potential. Technology tie ups, setting up of manufacturing facilities & front end marketing structure, scaling up manpower resources are the major initiatives already underway in this regard. Significant Initiatives a) Risk Management The Division has developed a robust risk management framework. It has been identified as one of the key enablers to achieve the company's strategic objectives. The E&C (Projects) Risk Management team has been set up to effectively manage risk that is inherent in the Engineering and Construction business, namely costing, scheduling, safety, financing, human capital and contracting risk. It is an active member of the Engineering & Construction Risk Institute (ECRI) USA, an initiative of World Economic Forum. The objective of this initiative is to strengthen the competitive edge and evolve a risk embracing culture. Increased competition, pressures on cost and deliveries, forex & commodity price variations, impact of recessionary trends on the award of jobs and manpower attrition are some of the major risks faced by the division. The Division has however adopted risk mitigation steps right from pre-bid stage covering technical, procurement and financial risks. The measures such as advanced quantitative tools, global sourcing, standard operating procedures, and operational excellence initiatives have been implemented so as to protect the profitability of the businesses. b) HR for Professional Excellence 'Talent Management' has been a prime mover in the company's ambitious business plans. The HR strategy dovetails personal growth aspirations of employees with business needs. A variety of HR interventions give the division a strong competitive edge. A menu of career growth options and training are offered to young aspiring professionals for achieving excellence in engineering and project management skills. Setting up of L&T Project Management Institute at Vadodara complemented by the GLOPAT programme, mentoring of new joinees, recognition of excellence, strategy workshops and team building programs are some important initiatives undertaken during the year. Outlook India ranks sixth in the world with refining capacity of 3.4 %. Just over 60% of the potential in the oil sector has been explored so far. In order to enhance energy security of the country, the Government has increased thrust on exploration which is expected to lead to substantial investments resulting in an increased activity in the upstream sector. Improving oil prices will encourage investments in new refineries creating opportunities particularly for Mid & Downstream sector in GCC countries. New fertiliser policy for feedstock conversion projects announced during 2008-2009, is seen to open up large opportunities in the next couple of years. The reform process as envisaged in Electricity Act in the year 2007 progressed during 2008-2009. The sharp increase in demand for power has led to new generation capacities, a significant portion of which is planned through setting up of Ultra Mega Power Projects based on super critical technology. India has adopted a blend of thermal, hydel and nuclear sources with a view to increasing the availability of electricity. Currently India needs to double its generation capacity in next 7-10 years to meet potential demand for power. E&C Division is well geared up to harness the upcoming business opportunities. Clearly drawn out pre-bid strategies, intense marketing efforts and enhanced execution capabilities will drive the performance. The division has also been quick to roll out measures to mitigate the adverse economic slowdown by taking concrete steps in the areas of cost reduction, improving productivity of resources and operational excellence. These initiatives are expected to be the underpinnings of performance in the coming years. In the backdrop of this outlook E&C Division is optimistic of a good performance in the year 2009-2010. 388.5 MW natural-gas-based combined cycle power plant at Vemagiri in Andhra Pradesh, South India. L&T’s EPC capabilities extend across all types of power projects. 57 M. V. Kotwal Whole-time Director & Senior Executive Vice President (Heavy Engineering) Steam generators for Pressurized Heavy Water Reactors. L&T’s product range for the nuclear power sector includes calandria, reactor roof slabs, Control Rod Drive Mechanisms and SS thermal insulation panels. Heavy Engineering Division Heavy Engineering Division's operations are managed through two Operating Companies viz.: (cid:2) (cid:2) Heavy Equipment & Systems Operating Company Shipbuilding Operating Company Heavy Equipment & Systems Operating Company (HES OC) Overview Heavy Engineering & Systems Operating Company manufactures and supplies custom designed and engineered critical equipment and systems to the core sector industries like Fertilizer, Refinery, Petrochemical, Chemical, Oil & Gas, Thermal & Nuclear Power, Aerospace and Defence. HES OC has manufacturing & fabrication facilities at Mumbai in Maharashtra, Hazira & Baroda in Gujarat and Visakhapatnam in Andhra Pradesh. A Strategic Systems Complex was commissioned during the year at Talegaon in Maharashtra. A Precision Manufacturing Facility at Coimbatore in Tamilnadu has also been recently commissioned. A Strategic Electronics Centre for Defence Electronics Systems design & engineering operates from Bangalore in Karnataka. Dedicated engineering centers support manufacturing at all locations. The Operating Company has set up three "Technology Development Centers" at Powai for new product development in process plant equipment and for defence / nuclear equipment as well as one focused on electronics systems / sub-systems. Business Environment is mainly The economic slowdown impacting potential exports. Internationally the refining business has been hit by the fall in the crude oil prices and the general economic slow down. Many planned green field refineries and expansion projects have been deferred or cancelled in USA, Canada as well as in the Middle East. With fewer projects on the anvil, the competition is intense. However, Indian domestic refinery projects are going ahead based on mandates given by the Supreme Court. No new petrochemical projects are being planned, due to fall in demand for petrochemicals. HES OC, however, continues to see growth opportunities, despite the current economic conditions. The recently announced fertiliser policy by the Government is favourable for investment. Fertiliser sector offers good opportunities both in the domestic market as well as in the international markets like Middle East & Africa. Coal Gasification business continues to show promise in countries like China & Vietnam in the short to medium term. The Operating Company has achieved a breakthrough by entering into the elite league of manufacturers of Super-Critical Power Plant Equipment. The single major change in the Defence Business environment during the past year, was the announcement of the Defence Procurement Procedure (DPP), 2008. The environment is still not very supportive of the private sector participation in defence production. The decision to award "Raksha Udyog Ratna" (RUR) status to select private 58 sector system integrators and allowing "level playing field" continues to remain pending for actions. Offsets offer a potential growth area. However, the Government needs to resolve certain taxation issues. Supplies to the defence services including system integration done under offsets in India continue to attract various local taxes and levies which discourage the foreign defence contractor from awarding more work as well as value added work in India. HES OC is proud to be associated with the Chandrayan mission for supply of critical equipment & systems both for the Launch segment as well as Ground / Command control segment. The inking of the Indo-US, Indo-French, Indo-Russian & Indo-Kazak nuclear deals opens up new opportunities for supply of critical nuclear power plant equipment. Significant Initiatives The Operating Company has launched a number of initiatives aimed at establishing a leadership position in the global market. The key initiatives are as follows: Capacity Augmentation HES OC has planned substantial capital expenditure in line with its growth plans. The Strategic Systems Complex for assembly, integration and testing of weapon systems, sensors and engineering systems has started production at Talegaon. The advanced composite facility for Defence, Aerospace & Aviation products has become fully operational during the year at Ranoli complex, Baroda. A dedicated facility for precision engineered products was commissioned at Coimbatore during the year under review. The Hazira heavy fabrication facilities are being upgraded and expanded. Dedicated sub-contractors are being developed for further capacity augmentation. HES OC is setting up a heavy fabrication facility through a joint venture in Oman to cater mainly to the Middle East market. An integrated Special Steel Melting Shop with a heavy forging facility is proposed to be set up at Hazira for catering to the requirement of heavy forgings for nuclear power plants as well as reactors for the hydrocarbon market. Capability Building The Operating Company lays special emphasis on continuous development / adaptation of manufacturing technology, modification of existing products and development of new products through its Technology Development Centers. The Technology Development Centers have built partnerships with DRDO / other national laboratories and academia for joint development work. A Warship & Submarine Design Centre set up last year is being strengthened for in-house design and construction of naval vessels. A Virtual Reality facility has also been commissioned during the year. to significantly boost A new initiative has been launched titled "Enterprise-wide Collaboration for Alignment with Strategy" (ECAS), which aims the preparedness of the organisation to meet new challenges. A new Customer Intimacy Strategy along with promotion of "Collaborative Culture" across functions has been adopted with the primary aim of providing best service to the customer. Improvement Initiatives The "Product Lifecycle Management" (PLM) project went live across the Operating Company's various locations during the year. The PLM project will help improve knowledge management, reduce cycle time and improve collaborative working across functions. Automation of design and drafting work using knowledge based engineering tools is helping in knowledge management and cycle time reduction in engineering in a big way. Lift-off of India’s prestigious space vehicle, Chandrayaan I. L&T provided specialised launch and tracking systems for this moon mission. L&T’s precision manufacturing facilities are geared to meet the exacting demands of aerospace manufacture. A number of teams are working on various improvement projects under the umbrella 59 Methylamine converter for Chemanol-MA/DF plant, Al-Jubail, Saudi Arabia. of the "Operational Excellence" theme. The Operating Company relies on the "Critical Chain Project Management" methodology of the "Theory of Constraints" for managing planning & execution of projects and for improving its delivery performance. The Operating Company follows a structured process for protection of its Intellectual Property Rights. During 2009-2010, the Operating Company received four patents. Shipbuilding Operating Company (SHBD OC) Ship Building Operating Company is in the business of construction/repair of both commercial & defence vessels. The Operating Company presently has design, fabrication & shipbuilding facilities at Hazira in Gujarat, which handles the construction of commercial vessels. Construction of a new shipyard has been launched at Kattupalli in Tamilnadu. The new shipyard will primarily focus on construction / refits of naval ships & submarines and repair of commercial vessels. Business Environment The international shipbuilding market is presently going through a difficult phase marked by low freight rates & the global financial crisis leading to a global slowdown in commercial ship building. Fleet owners have deferred their plans for acquisition of new vessels. Though the major shipbuilding yards in China & Korea are still booked with orders till 2011, they have slots freed up due to cancellations in the bulkers segment. The Government of India has agreed to grant shipbuilding subsidy to all eligible vessel orders booked prior to August 14, 2007. The Shipbuilders association of India is working closely with the Government for continuation of the subsidy scheme to enable them compete with Chinese & Korean yards. Significant Initiatives Augmentation of facilities & resources at Hazira is under way to meet the present and future growth needs. The Operating Company is focusing on streamlining its internal systems and processes for strengthening the operations. Services of internationally acclaimed consultants are being availed for construction of state-of-the-art facilities at the new ship yard planned at Kattupalli. Outlook There are early signs of a turnaround. The economic situation world over is likely to improve by end 2009, early 2010. Fertilizer sector is expected to offer good opportunities with a few green and brown field investments both in the domestic market as well as in the international market. The division expects good prospects from domestic refinery projects. Deferred projects in the Middle East are likely to revive in the third quarter of the current year. New territories like Iran hold good potential. With the signing of the Indo-US nuclear deal and India signing the IAEA safe guard agreement, there are good opportunities 60 for supply of nuclear power plant equipment in the medium to long term. The new Government is expected to hasten the decision making process for new defence contracts and take measures to liberalise the sector. Indian Navy With the international shipbuilding industry being severely affected by the financial meltdown, the order pipeline has is been thinning. The committed to develop indigenous design and globally competitive construction capabilities for naval vessels. The Operating Company is well poised to harness this potential demand through the new ship yard under construction at Kattupalli. Overall, both the Operating Companies envisage good market opportunities in the medium term. Reactor vessel for Fast Breeder Reactor (FBR) being lowered into a vault. The mirror-polished thermal insulation panel increases the effectiveness of the vessel. L&T is at the forefront of India’s FBR programme. Reactors set sail for Malaysia’s Maleka Refinery. L&T designs and manufactures sophisticated equipment of large dimensions at its state-of-the-art manufacturing facilities in Hazira near the Arabian Sea. L&T is setting up additional manufacturing facilities at Sohar in Oman. 61 R. N. Mukhija Whole-time Director & President (Electricals & Electronics) Representative section of L&T’s wide range of switchgear. In addition to low-tension switchgear (featured here), L&T offers medium-voltage switchgear, building electricals and energy meters. The range encompasses integrated automation and complete electrical solutions. Electrical Business Group (EBG) Overview The Electrical & Electronics Division (EBG) comprises Electrical and Automation Operating Company (EAOC) and two stand- alone business units of Medical Equipment & Systems (MED) and Petroleum Dispensing Pumps & Systems (PDP). Four Strategic Business Units (SBUs) - Electrical Standard Products (ESP), Electrical Systems & Equipment (ESE), Metering & Protection Systems (MPS) and Control & Automation (C&A) are under the umbrella of EAOC. ESP and ESE have the production base in Powai, Mumbai and at Ahmednagar in Maharashtra, with additional facilities for ESE and a Precision Manufacturing Centre for tooling solutions at Coimbatore in Tamil Nadu. Control & Automation business unit operates from its "Automation Campus" in Navi Mumbai, while Metering & Protection Systems is based at Mysore in Karnataka. EAOC has international presence through manufacturing facilities in Wuxi (China) for Switchgear Standard Products, at Dammam in Saudi Arabia for switchboard and for Control & Automation in Jebel Ali, UAE. It 62 has increased its international presence with the acquisition of switchgear business of TAMCO Corporate Holding of Malaysia last year, winning access its manufacturing facilities and markets in Malaysia, Indonesia, Australia and China. to Business Environment Owing to the global economic events of Sept-Oct 2008, performance was adversely impacted either with business slowing down or getting postponed in several industry sectors like cement, metal etc. The pressures to re-negotiate contracts were experienced, as most of the customers went through the phase of falling profits and surplus capacities. The commercial and residential building projects were the worst hit, as also the traditionally stronghold sectors like, cement and steel. However, business segments in power and infrastructure domains, viz. Balance of Plant (BoP), R- APDRP, Power Plant DCS and BMS/EMS continued to show good potential. Investments in infrastructure sector such as metro rail, monorail, ports, airports etc. hold promise. No major expansion is evident in oil & gas sector. The reduced level of enquiries led to more intense competition at the market place. Existing players increased their manufacturing capacities putting pressure to book more business causing price pressure. There is a slowdown in petroleum retail network investments which will reduce off-take of dispensers. With controlled price regime still in place, fuel retailing by private oil companies has become unattractive. For Medical Equipment Systems, the industry has grown and this growth is expected to continue in the Indian market. Entry of Chinese manufacturers through the distribution chanels at low prices for monitors and ultrasound equipment is the major challenge to Medical business. On the international front, oil & gas projects & power sector outlays sustain the prospects pipeline. Significant Initiatives The Customer Interaction Centre (CIC) went live in the year 2008-2009. This new initiative helped the businesses to respond The Control & Automation business has set up a Technology Centre to nurture the ongoing technologies & look forward to new upcoming cutting edge technologies to be used for Automation EPC projects. New design meters have been introduced and efforts are underway for providing automatic meter reading (AMR) solutions. New Product Development Development of new products and technologies continues to be top priority for the division. It plans to meet market expectations and keep pace with competition by introducing new products, with specific focus on cost effective offerings. In the year 2009-2010, ESP will be launching 'right price' product variants in Moulded Case Circuit Breakers and Contactors. The U-Power range of ACBs will be upgraded. There will be focus on development of Automation Solutions for buildings and Energy Management Systems. The Control and Automation business unit is developing Toll Management System, which will be a state-of-the-art Toll L&T’s custom-engineered switchboards, equipped with both conventional and ‘intelligent’ protection, control and communication systems meet the power control and distribution needs of industry. for MV products in India. Also there are plans for a franchisee network for new design LV flat pack products for Gulf market. faster and free the sales team from attending general queries. EBG has initiated a division-wide awareness to focus on the 3 Cs - cost, cash and customer. The highlights of this initiative are working capital measures taken such as aligning deliveries with the end users cash flow, and emphasis on outstanding collections. Initiatives for operational excellence such as 5S, Six Sigma and Value Engineering continue with upto 75% increase in these projects. For switchgear products, a new initiative to tap the retail market for the electrical products was started. The focus is to enlarge reach, presence and visibility in the retail market through appointment of a large number of dealers as channel partners under this programme. A new partnership programme was initiated to provide automation solutions to industrial and building segment customers. After the acquisition of TAMCO there is a focus on growth in MV segment. EAOC is looking for setting up franchisee network Medium voltage switchgear, made at L&T’s Tamco facility, has been widely installed in industries around the world. L&T offers custom-engineered switchboards – equipped with both conventional and intelligent protection, control and communication systems – to meet the power control and distribution needs of industry. 63 Management System including electronic toll collection for national & state highways. A Terminal Automation System for Integrated Terminal Automation & Tank Farm Management System for petroleum products are also under development. MPS is planning to replace the existing designs of tri-vector meter with new cost effective designs. Also development is on for meters for select international markets, GPRS modem for data communication, meters with radio communication facility. R-APDRP initiative may require installation of open protocol in meters and will also require all meters to be communicable over various wired and wireless media, which are on the anvil. Medical Equipment and Systems business unit had launched a new product range in Patient Monitoring under 55 series, which has been accepted well in the domestic and USA market. A new set of multi-parameter monitors are being developed to cater to the cost conscious lower end segments. PDP has developed a new electronics platform (4GDE) for its dispensing pumps. Intellectual Property Rights (IPR) The division has put conscious efforts to generate innovative ideas and create value for the organization by protecting them through intellectual property rights. In 2008-2009, EBG has filed 108 patent applications, 33 design registration, 5 trademarks filings and 6 copyrights filings. The IPR approach also ensures that no product infringes on any competitors' products unknowingly. The division has been focused on directing its innovation energy towards improved manufacturing processes & cost control. It is ensuring continuous alignment of business interests & IPR creation by way of Gate Processes of approvals according to EBG's Product Development System (EPDS). Outlook The Government's ambitious UMPP projects will be under implementation 64 Supervisory Control And Data Acquisition system designed, supplied and commissioned by L&T for Onshore Control Centres (OCCs) for offshore operations of Oil & Natural Gas Corporation. The system connects 133 wellhead platforms, 13 process complexes and nine drilling rigs to OCC. during the year 2009-2010. It has also sanctioned Rs. 1477 crore in the interim budget for R-APDRP initiative. The Government initiative on highway development programme will open good business opportunities. With the investments in ports, airports, metro & monorail projects, infrastructure sector is also expected to grow. Apart from power generation and infrastructure sector, all other sectors are showing marginal or negative growth. A positive outcome of the economic down- turn is that customers are moving from products sourcing to project sourcing thereby bundling the related products in one package . This trend will enhance the competitive position of the division, as it will leverage upon the Company's project management skills. The Division is hopeful of positive developments leading to improvement in the demand in the latter half of the financial year 2009-2010. L&T’s range of electronic energy meters and numerical relays. J. P. Nayak Whole-time Director & President (Machinery & Industrial Products) L&T-Komatsu PC130-7 Hydraulic Excavator being employed for canal excavation at an Irrigation project. L&T markets Construction and Mining equipment manufactured within India by L&T-Komatsu Limited as well as machines supplied by Komatsu Limited. Machinery & Industrial Products Division Overview Machinery and Industrial Products Division (MIPD) comprises Industrial Products & Machinery Operating Company (IPM OC) and Construction Equipment Business Sector (CEBS). Industrial Products & Machinery Operating Company (IPM OC): In order to address the comprehensive needs of the common customers in industrial sector, the Division has aggregated its industrial products and machinery businesses under the IPM Operating Company. IPM OC has two distinct business streams - Industrial Products and Industrial Machinery. Industrial Products: A. Valves Business Unit (VBU): VBU markets valves and allied products manufactured by the L&T's JVs; viz. Audco India Limited (AIL), Larsen & Toubro (Jiangsu) Valve Company Limited, China, and a few Indian & overseas manufacturers. VBU is one of the few select suppliers of valves for global oil majors. Besides, the JV manufacturing facilities, VBU also has set up its own facility "Fluid Control Products Centre" (FCPC) at Coimbatore, which provides the technology support for new product development as well as contract manufacturing of valves in ranges not fully supported by AIL. The FCPC is also setting up a new plant for manufacture of valves to support L&T's foray in the Power Sector. Welding Products Business (WPB): WPB markets products manufactured by EWAC Alloys Limited, along with imported inverter based welding machines from Fronius, Austria, and Oxy-Fuel equipment from Messer, Germany. WPB also sells locally indigenously developed MIG welding machine and inverter welding machines. To provide comprehensive solutions to its major clients in the welding technology, WPB also provides repair & maintenance of critical industrial components. Industrial Cutting Tools (INP) Business: INP business provides metal cutting solutions to the Indian manufacturing industry, covering automobile and machine tool segments through marketing of industrial cutting tools manufactured by ISCAR Limited, Israel. Industrial Machinery: B. Kansbahal Works (KBL): Machinery for Pulp & Paper, Mining, Mineral Processing and Steel industries, as well as components for Wind Turbines are manufactured and marketed by Kansbahal Works. Its Foundry also manufactures large wear and abrasion resistant castings for power and cement sectors. LTM Business Unit (LTMBU): LTMBU manufactures and markets rubber processing machinery for the tyre industry. Currently, the unit has manufacturing facilities at Manapakkam, Chennai and at Kancheepuram near to Chennai. LTMBU also markets plastic injection moulding machines manufactured by L&T-Demag Plastics Machinery Limited. LTM has been ranked No.11 amongst "top suppliers of tyre and rubber machinery around the world" by European Rubber Journal, for the year 2009. L&T-Demag Plastics Machinery's products find applications in diverse industries like automobiles, electrical goods, packaging, personal care products, writing instruments and white goods. 65 Construction Equipment Business Sector (CEBS) Construction Equipment Business Sector (CEBS) markets and renders support for Construction & Mining Equipment. The Sector comprises following business units: (cid:2) (cid:2) (cid:2) (cid:2) Construction & Mining Business Unit (CMB) which markets equipment manufactured by L&T-Komatsu Limited, India and the entire range of equipment available from Komatsu worldwide. It also markets Mining Tipper Tricks available from Scania. L&T-Komatsu Limited (LTK) - the 50:50 JV with Komatsu that manufactures Hydraulic Excavators and Hydraulic Components, all of which are distributed in India by CMB; L&T-Case Equipment Private Limited (LTCEPL), the 50:50 JV with CNH Global n.v., which manufactures and markets Backhoe Loaders and Vibratory Compactors; Tractor Engineers Limited (TENGL), the 100% wholly-owned subsidiary, which manufactures and markets Undercarriage Systems for excavators and Material Handling Systems like apron conveyors etc Business Environment rise The current economic downturn which started in last year has cast its influence on the industrial sector in general and on the business sectors that MIPD operates in particular. The first half of the financial year witnessed unprecedented in commodity prices adversely affecting input costs of most industries. On the other hand, the sharp fall in economic activity globally and the fall in price of crude oil, led to a postponement of investment by the major clients. With surplus capacity among manufacturers, the competitive intensity has increased particularly in the global market. 66 Many projects in cement, steel & paper sectors are on hold or have been dropped due to the global financial crisis. Also, minor revisions in Wind Energy Policy in some states like Tamil Nadu has brought down the growth rate in the sector from 25% last year to 15%. The last quarter of the year 2008-2009 saw a downturn of automobile industry which had a cascading effect on the performance of tyre industry and tyre machinery manufacturers. The performance of the construction equipment industry also reflected these pains. After a moderate slowdown in growth rates from the past three year highs of 45-60% to about 22%, the demand fell by 50-65% in the third quarter of the financial year. Significant Initiatives: The Division has set up War Rooms to combat effects of the severe downturn in the demand for products. Production and procurement plans have been quickly reviewed and adjusted to fit the volatile demand. Special focus groups have been constituted to expedite collections, reduce inventories and conserve cash. Tracking and monitoring measures have been put in place and reviews are carried out closely at various levels in the sector. Specific initiatives being undertaken by the respective sectors is given below: I. (cid:2) (cid:2) IPM OC The project for setting up 25000 TPA green field foundry in Coimbatore to manufacture cast components for wind turbine is progressing as per the plan and is expected to go into commercial production in the 3rd quarter of 2009-2010. strengthen Additional approvals from major end- users were secured for LTJVCL valves in China. To the international marketing network personnel have been posted in key growing markets such as China and Middle East. (cid:2) New products have been introduced which will help in building the L&T-CASE 770 loader-backhoe engaged in a land-development project. L&T-CASE is a JV of Larsen & Toubro Limited and CNH, a global leader in manufacture of loader-backhoes. including projects under execution. With the implementation of the UMPP projects in India, requirement for industrial valves is expected to boost the demand in the coming year. The nuclear power program also offers large scope for the valves business. L&T's strategic alliance with some of the key nuclear power majors will help in building this market segment. Due to the capacities built up in the last 2- 3 years, coupled with the liquidity constraints, demand for machinery for steel and other mineral process industries is expected to be lower than last year. The outlook for wind mill castings is however positive as there is a backlog of orders and the new foundry facility in Coimbatore would be operational in the coming year. As per the latest reports from tyre majors like Pirelli, the global demand for tyres is expected to be lower in the coming year. In view of the current downturn, the domestic tyre industry is focusing only on two and three wheeler tyres, truck radial & OTR tyres. The business for the Plastic Injection Moulding machines will also improve only by the end of the year 2009. The market demand for construction equipment is expected to remain sluggish Tyre Building machine equipped with state-of- the-art features for building car / light truck radial tyres, for a leading tyre company in India. The machine is part of the wide range of rubber- processing machines manufactured by L&T. competitive advantage and market share. (cid:2) Most business units in IPM OC have initiated significant steps for close monitoring to ensure reduction in working capital and in particular, customer receivables. II. CMB (cid:2) (cid:2) New imported models of Hydraulic Excavators, viz. PC800, PC210-8, sourced from Komatsu, have been introduced in the Indian market to improve product offerings to the customers. After-sales support capability is expanded through long term full maintenance contracts and site support agreements for the products to help improve machine uptime and capping operating costs thus helping their customers competitive position. improving in Outlook The oil prices over the last few months have stabilized and a number of projects in the upstream sector particularly in the Middle East are slated to proceed. However, in the Refining segment, there is a significant slowdown in international projects, Industrial valves manufactured by JVs, Audco India Limited and Larsen & Toubro (Jiangsu) Valve Company Limited. Innovative Solutions for Welding, Cutting & Wear Protection of Metal Components on account of the downturn in the urban infrastructure and general construction sectors and reduced spending by the Government on various infrastructure projects. Post parliamentary elections and monsoons, it is expected that there will be an improvement in infrastructure building activities by the Government as well as a in market general confidence. improvement Gap between coal demand and supply of around 40 million tones continues to provide a growing opportunity for mining equipment. CMB is well placed to take advantage of these opportunities. Backhoe Loader and Vibratory Compactor markets are witnessing slight recovery as compared to substantial decline in the year 2008-2009. Still it is expected that the market for Backhoe Loader may remain bearish, though Vibratory Compactor market may witness marginal growth in view of large planned investments in Road Sector. The domestic economic environment is largely dependent on the domestic policy framework as well as the stability in the financial market. Considering the good track record of the economy in the recent past, the Division is quite optimistic of positive developments emerging from the third quarter of the year 2009-2010. 67 V. K. Magapu Whole-time Director & Senior Executive Vice President (IT & Technology Services) Technology Services Overview Carrying the brand and the legacy of Larsen and Toubro group of companies, L&T Technology Services has been rated the no. 1 engineering services provider in the World 2008 Black Book of Outsourcing. The Division comprises Integrated Engineering Services (IES, earlier named as e-Engineering Services) and Embedded Systems (EmSyS) business units. The Division provides a range of IT enabled engineering services and systems required in the design and execution of turnkey projects and equipment / product development. Integrated Engineering Services (IES) The IES, headquartered at Vadodara, Gujarat, has established its design centers spanning the cities of Bangalore, Chennai, Mysore, and Mumbai. It has about 3000 employees delivering high-quality engineering and design solutions. The end- to-end services basket comprise product 68 Headquarters of L&T Infotech at Powai, Mumbai. design, analysis, proto-typing & testing, embedded system design, production engineering, plant engineering, buildings & factories design, asset information management & sourcing support using cutting-edge CAD/CAM/CAE technology. IES predominately renders its cutting-edge services to high end verticals such as Automotive, Aerospace, Marine, Off- highway Machinery, Industrial Products, Consumer Goods, Pharmaceuticals, Minerals & Metals, Oil & Gas and Utilities sectors. Packaged Embedded Systems (EmSyS) EmSyS provides embedded systems for electronics product design and development. The solutions comprise supply of hardware, application software and enclosure design for the system largely required in Automotive, Medical, Semiconductor and Industrial products segment. The business unit has a dedicated team of more than 1000 professionals operating from Mysore, Bangalore and Mumbai. India is poised for a very big leap in the in 'Product Development' market. EmSyS with expertise 'product development' combined with its experience in 'electronic product manufacturing' is in a very good position to take a big share of this. It is serving its customers in complete Product development, consultancy as well as various components of the Life Cycle such as Sustenance- engineering, VAVE and obsolescence management. Re-engineering, Business Environment The evolution of the Engineering Services market has been significant over the past few years. The current trend in outsourcing space shows a larger share of IT enabled engineering services ranging from complete product design, complex turnkey project design, value analysis/cost reduction projects, design of assembly lines, fixtures etc. In the next two or three years, the trend is expected to accelerate and accordingly engineering services industry would need to position itself for delivering the bench marked services for driving innovation and continuous cost reduction for its global clients. Significant initiatives IES has taken special measures to re- organize its sales reach by increased focus on India & Europe in addition to emerging regions like Middle East and Asia Pacific. The business unit has also achieved CMMI Level 5 certification to offer quality deliverables to the customers. IES has taken important steps to increase resource utilization & reduce operational cost so as to deliver value to the customers. EmSyS was the first business unit in the world to achieve SEI CMMI® Level 5 using all the four components. "Continuous improvement" programs and "Six-Sigma" initiatives in EmSyS are giving thrust to its "Quality Movement". It continues to generate and pass on many 'Patentable ideas' to its customers. EmSyS serves many small as well as Fortune 500 companies. Outlook The economic recession, along with the tightening of outsourcing norms, has dented the growth of all sectors in the current year. However, even in such a difficult environment, L&T Technology Services has fared better than most of its peers because of a healthy exposure to diverse sectors and a client portfolio of industry leaders. Moreover, with the economic slump expected to ease out by the end of this year, the demand for engineering services outsourcing would experience a significant upturn. Talent drawn from premier academic institutions plays a pivotal role in L&T Infotech’s successful implementation of the key business and technology needs of its client base. Design Centre for Embedded Systems at Mysore. L&T offers design solutions in the areas of hardware, software, product development…. 69 Y. M. Deosthalee Whole-time Director & Chief Financial Officer Financial Performance for 2008-2009: An analytical review L&T Standalone: I. GROWTH IN AN EXTREMELY CHALLENGING ENVIRONMENT The Company has reaffirmed its conviction in the sustained growth potential of its various businesses by reporting a healthy financial performance for the year 2008-2009, despite the perilous impact of a global slowdown. While the Company's product businesses had to bear some adverse impact of the downturn, its project businesses improved their performance over the previous year, even in the face of highly demanding circumstances. The Company secured fresh orders during the year totaling to Rs. 51,621 crore, recording a healthy growth of 23% over the previous year. The growth in order inflow would have been still higher, but for the deferment of a few major orders in the Hydrocarbon and Process industries. The share of order inflow from the Infrastructure & Power sectors increased during the year reflecting the Company's growing stature in the nation's infrastructure-building. The flow of orders witnessed during the year 2008-2009, as reflected in its sizeable order book, is expected to give a fair amount of confidence to the Company's revenue growth plans in the year that has just commenced. Gross sales & services at Rs. 34,045 crore grew by 35% over the previous year, with a share of 82% from 70 Engineering & Construction businesses. International revenues increased to 19% establishing the Company's growing presence in the overseas markets. Order book of the Company as at March 31, 2009 at Rs.70,319 crore grew by 33%. In the Engineering & Construction Segment, orders over Rs. 300 crore each under execution, account for 70% of the segment's order book, signifying a strategic shift in selection of orders towards relatively larger size projects, to ensure optimum utilisation of the available resources and the management bandwidth. Manufacturing, Construction & Operating Expenses The Company incurred Rs.26,232 crore under Manufacturing, construction & operating expense category. This translates into 78% of net sales reflecting a marginal increase by 1% point, as compared to the previous year. Major part of the financial year 2008-2009 witnessed increase in commodity and input prices. While this increase was covered under contractual escalations for E&C Orders to a large extent, competitive forces prevented the product businesses from passing on the higher input costs to the market through higher price realisation. Improved execution and manufacturing efficiencies helped the businesses partially mitigate the impact of higher input costs and lower growth in volumes. Keeping in mind the long term growth ambitions of its businesses, the Company during the year effected a net addition of 5,416 employees, taking its manpower strength to 37,357. Staff expenses at Rs.1,998 crore for the year were higher by 30% over the previous year due to this manpower addition as also the effect of increase in salaries & wages. However, staff expenses as a percentage of total income have reduced from 6% in the previous year to 5.8% in the year 2008-2009. Sales, administration and other expenses for the year at Rs.1,840 crore have increased by 36% as compared to the previous year. However, as a percentage of total income, the expenses have remained at 5.3%. Benefit of scale of operations, sharing of common resources and tighter control on elements of fixed costs have enabled the Company contain this category of expenses. Sustained Profitability of Core Businesses The Company's Engineering and Construction Segment has not only sustained their profitability but has also been able to show some marginal improvement in the operating margins during the year under review. This improved performance has, however, been offset by a drop in operating margins of its product businesses due to lower capacity utilisation and higher input costs, as compared to the previous year. Overall the Company's profit before 71 exceptional items registered a healthy growth of 29% to Rs. 2,709 crore, as compared to the previous year. The Company successfully concluded a deal disposing of its Ready-mix Concrete business during the year, which generated an extraordinary gain of Rs. 959 crore net of tax. Further, the Company made an investment in shares of Satyam Computers & Services Limited (SCSL) through its wholly-owned subsidiary, L&T Capital Company Limited, as well as on its own Balance Sheet. Though the Company believes in the long-term value proposition of this investment, it has made a provision of Rs.186 crore towards the extraordinary decline in the value of SCSL shares, based on the principle of "prudence". Including the effects of the said extraordinary items, the Company's PAT rose by 60% to Rs. 3,482 crore. The Earning per Share (EPS) for the year accordingly has increased by 57% to Rs. 59.50 per share, post-allotment of Bonus Shares in the ratio of 1:1. depreciation, interest & tax, excluding other income (operating PBDIT), at Rs. 3,857 crore has increased by 30% over the previous year. Operating PBDIT at 11.5% of net sales, however, stands marginally reduced by 40 basis points as compared to the previous year, due to reduced profitability of product segments and an exchange loss incurred on foreign currency loans before the same were hedged. Other Income The Company has astutely managed its portfolio of investments so as to maximise the returns from surplus funds in a highly volatile capital and money markets. The surplus cash available from the internal accruals, borrowings and the sale proceeds from divestment of Ready Mix Concrete (RMC) business, was timely deployed to earn an pre-tax yield of over 14%. Finance Cost The relatively higher interest expense for the year at Rs. 350 crore is attributable to additional average borrowing of Rs. 2,240 crore during the year to finance the growth needs of the Group, as also increased cost of borrowing. The Company has drawn up ambitious plans for its emerging businesses in Financial Services, Property Development, Port & Shipyard and Power Equipment manufacture through its subsidiary companies and JVs. Besides, its project & product businesses have also been growing rapidly at a compounded growth rate of over 30%, requiring higher funds for working capital and capital expenditure needs. Interest rates in the domestic financial market hardened due to the global financial crisis and constrained credit flow to the corporate sector. However, the average cost of borrowings could be contained at 6.9% for the year, through higher proportion of foreign currency borrowings. A major part of such foreign currency borrowings stands hedged against currency and interest rate risks. Overall Profitability Profit before tax excluding extraordinary and exceptional items for the year 2008-2009 at Rs. 3,940 crore registered a growth of 28% over the like amount of previous year. In line with the growth in profits, the income tax provision increased by 29% to Rs. 1,177 crore. However, the effective tax rate is still lower at 30% of the book profits. Fringe Benefit Tax has reduced by Rs. 16 crore due to lower market price of the options under the Employee Stock Options Scheme. Profit after tax (PAT) excluding extraordinary and 72 Funds Employed Working capital in the business segments increased during the year, mainly due to lower flow of customer advances in case of project orders, aggravated by poor availability of funds in the system. Gross & net working capital deployed by the segments marginally increased to 44% & 12% of sales respectively as at the year end. Net customer receivables at Rs.10,056 crore reflect 108 days of sales (DOS), almost at the previous year's level. The businesses were successful in settling some of the old disputes with their customers and collecting the overdue receivables, thereby bringing down the DOS. during the year. Higher net working capital and capital expenditure contributed to the increase in segment funds employed by Rs. 2,566 crore. At the Company level, investments in Subsidiary & Associate Companies increased by Rs. 2,170 crore to build capabilities for the emerging opportunities in the Financial Services, Power equipment, Property Development & Medium Voltage Electrical businesses. Considering increase in other corporate assets, loans, advances and investments of surplus funds, amounting to a total of Rs.1,128 crore, the net funds employed for the Company increased by Rs.5,864 crore over the previous year. Excluding the extraordinary and exceptional items, return on net worth & return on capital employed stood at 24.7% & 17.6% respectively. EVA for the year at the Company level continues to be positive at Rs. 733 crore. The relative reduction in RONW, ROCE and EVA as compared to the previous year, is attributable to the additional funds The capital expenditure of the business segments amounted around Rs. 1,900 crore during the year. The major expenditure was incurred as part of the on-going expansion plans at Hazira, Coimbatore, Ahmednagar & Talegaon, besides on beefing up the construction plant and machinery for execution of mega turnkey projects bagged 73 deployed in the emerging businesses and expansion plans of the Group that are yet to see full scale revenue and profit generation. Sound Financial Health Despite the tight liquidity condition prevailing in the market, the businesses could succeed in generating an operating cash-flow of Rs.1,479 crore through a close monitoring of working capital. The divestment of Ready Mix Concrete business boosted the Company's cash position by Rs.1,121 crore net of tax. Further, the Company resorted to additional borrowings to the tune of Rs.2,558 crore during the year, at competitive interest rates from both domestic and international markets. This helped the Company continue with its capacity build-up plan, investments on its new business initiatives and provide the much needed working capital to its growing businesses. Refineries sectors, many of which were exceeding Rs.1,000 crore in values. Due to crude oil prices bottoming out during the later part of the year, the pace of infrastructural development in Gulf slowed down to some extent and adversely impacted the flow of orders from that region. This led to the share of international orders reducing to 14.5% of the total segment order inflow during the year. Backed by a healthy opening order book and a good order inflow during the year, gross revenue increased by 47%. The segment's order book as on March 31, 2009 stood at Rs.68,753 crore, giving a good visibility for next year's revenue growth. Segment EBITDA margin on net revenue at 12.9% improved by 20 basis points, vindicating the segment's superior execution capability and cost control initiatives besides appropriate risk mitigation strategies adopted by its various businesses. Liquidity & capital resources Rs. crore Due to paucity of customer advances in some of the fresh orders, the segment net working capital at Rs.2,935 crore 2008-2009 2007-2008 964.46 1094.43 Cash & cash equivalents at the beginning of year Add: Net cash provided / (used) by : Operating activities 1478.57 1945.24 Investing activities (4429.67) (5241.89) Sale of RMC business 1121.14 - Financing activities 1640.79 3166.68 Cash & cash equivalents at end of the period 775.29 964.46 The gross Debt Equity ratio of the Company stood at a moderate level of 0.53:1, which helped it continue to enjoy its domestic and international credit rating at 'AAA' & 'Baa2' with stable outlook, respectively. With the vigilant treasury team driving the Group's funding plans, the Company is confident of sustaining its sound financial health in the near to medium term. BUSINESS SEGMENT WISE PERFORMANCE REVIEW Engineering & Construction Segment (E&C) The segment has performed exceedingly well during the year despite the challenges of global meltdown and uncertainty. Order inflow at Rs.45,418 crore increased by 28% as compared to the previous year. Prestigious orders were secured by the segment in the Urban Infrastructure, Power, Roads, Railways, Metals, Hydrocarbon and 74 has marginally increased by 1.8% of sales over the previous year. With an additional capital expenditure of Rs.1,700 crore incurred during the year, the segment's net funds employed as at the end of the year increased to Rs.6,617 crore from Rs.4,107 crore as of the previous year-end. As a percentage of segment revenue, this works out to 23%, higher by 2 percentage point as compared to previous year. Electrical & Electronics Segment (E&E) The segment was deeply impacted by the ill-effects of the downturn that severely subdued the demand for industrial goods, and could nevertheless achieve a growth of 4% in sales revenue at Rs.2,778 crore during the year. The Electrical Standard Products business suffered due to the sluggish demand in the realty & manufacturing sectors. The controlled petroleum prices regime sapped the fresh investment in the retail oil dispensation systems, resulting in negative growth in this business. The State Electricity Boards deferred the implementation of their plans under rural schemes, impacting the demand for metering systems. Thus, despite a healthy sales growth of 23% achieved by the Switchboard and Automation Systems businesses, overall segment revenue growth remained low as aforesaid. The drop in demand of its products also led to lower capacity utilisation of the segment's enhanced facilities. The under-absorption of overhead expenses, and higher input prices prevailing over a large part of the year, saw the segment margin dropping to 13.3% as compared to 16.9% of the previous year. The segment funds employed at the end of the year increased by Rs.233 crore to Rs.1,247 crore, due to increase in finished goods inventories and higher customer receivables. Machinery & Industrial Products Segment (MIP) This segment was also impacted by the slowdown in the core industrial and infrastructure sectors. The significant revenue growth observed in the last 3 years was absent during the year, as the liquidity crisis unfolded in the second half of the financial year. The negative sentiment led to a sharp fall in the demand for construction & mining machineries and industrial goods. Export of industrial valves and machineries too was adversely impacted as the sentiments in international trade reached an abysmal low. Owing to the relatively better performance in the first half of the year, the segment ended up with sales revenue of Rs.2,475 crore for the year as a whole, which was marginally higher than the previous year. Though the slump in demand led to a drop in product prices, the segment EBITDA margin on net revenue could be improved by 110 basis points to 20%, due to higher rupee realisation on the exports and improved cost management. The year-end funds employed in the segment at Rs.413 75 better rupee realisation, the EBITDA margins for the year rose to 24.5%. Funds employed as a percentage of gross revenues showed marked reduction to 46%, due to better management of customer receivables. II. RISK MANAGEMENT The Company has assiduously built, over the last few years, a risk management culture in the Company, which has since been ingrained in its various business processes. This has encompassed a disciplined process of pre-bid risk review of all major tenders for projects, review of the risk complexion of projects at various stages during the course of execution, and risk management assurance. An enterprise-wide risk awareness has been successfully created and integrated into the very process of business decision making. The global recession that started during the later part of the year 2008-2009 has deeply impacted the business sentiment world-over. Internationally, a number of companies have deferred or cancelled their investment plans. In the aforesaid backdrop, the Company has fared reasonably well during the year, not only in terms of a comfortable growth in sales revenue and profitability, achieved particularly by its largest business segment Engineering & Construction, but has also witnessed a reasonable growth in order inflow in the face of stiff competition. A solid foundation led by an all pervading risk management framework has helped the Company stand out even in these trying times. The presence of the Company in a host of diversified industry segments has, in itself, an element of risk mitigation against the vagaries of business downturn in one or the other sectors. The Company's foray into the manufacture of super critical boilers and turbines, heavy forgings, power and railway business, has helped it exploit new avenues of business, thereby greatly de-risking itself from the impact of the downturn. The Company's dependence on the international market for business, has been less than 20% of its total turnover. Therefore, the crippling depression seen in other parts of the world could not leave much of an impact on the Company's businesses during the year. The Company has, during the year, created twelve Operating Companies to lay larger focus on its various businesses, and to provide them with more autonomy in the conduct of their respective businesses. Besides crore reduced by Rs. 26 crore over the previous year-end, due to lower customer outstanding and higher initial advances secured on its customers' orders despite liquidity constraints in the market. Accordingly, the net working capital decreased to 8% of revenue, as compared to 12.7% for the previous year. "Others" Segment The performance of Ready Mix Concrete (RMC) and Technology Services businesses comprising e-engineering services and embedded systems is reported under "Others" segment. The RMC business was divested on October 23, 2008 and accordingly the financial performance of this business is not being separately elucidated. The Technology Services business performed very well during the year and was not adversely impacted by the global slowdown since the IT development-related outsourcing continued with their inherent cost advantages. The business continued to have a large share of its revenues coming from the US market. Rs. crore Technology services performance Gross revenues * EBITDA % on net revenues Funds employed as % of net revenues 2008-2009 2007-2008 367 24.5% 190 9.5% 46% 71% *Gross revenues include inter segment revenues Aided by rupee depreciation of over 15%, the gross revenues at Rs. 367 crore grew by 93% as compared to the previous year. Owing to higher capacity utilisation and 76 formation of an Operating Company Board for each of them, the risk management function has also been attached to each of the Operating Company, to be able to closely manage the risks of their businesses. The Company has become a sponsor of the Engineering & Construction Risk Institute (ECRI), USA, with an active involvement, being on the Board of this prestigious institute. It hosted the ECRI 2008 Risk Forum on "Global Risk Management Practices for India Infrastructure Projects" in Mumbai, where eminent risk practitioners from world class E&C Companies like Bechtel, KBR and Shaw Stone & Webster shared their best practices, covering various facets of effective project risk management. Financial Risks (a) Liquidity and interest rate risks Despite the prevailing tight credit conditions, the Company has managed to ensure that funds are available to meet its operational and strategic needs viz. capital expenditure, working capital and strategic investments. At current gearing levels and with its relatively comfortable liquidity position, the Company is confident of managing its liquidity over the short/ medium term. Further, the Company's short term and long term credit rating and unutilised bank lines, will enable raising funds at short notice to meet short term liquidity gaps, if any. The Company manages liquidity and interest rate risk by accessing funds across various products, investor classes and maturity profile. Besides this, the Company has in place, various approved risk management tools to mitigate interest rate risks. (b) Foreign exchange and commodity price risks The Company is exposed to foreign exchange rate risk across projects / contracts, product businesses, loan liabilities and its foreign currency denominated assets. The Company is also subject to risk arising out of change in commodity prices in respect of various inputs like steel, oil and other base metals. Some portion of the foreign exchange and commodity price risk is covered by way of pass-through clause in project contracts with customers. The balance is monitored through an elaborate risk management protocol, periodically reviewed by the Audit Committee / Board of Directors. The Company's Treasury Hedge Management desk closely works with the constituent business groups to price and hedge the aforesaid types of risk under the aegis of a Board approved hedge management policy. III. INTERNAL CONTROLS The Company believes that a robust internal control mechanism is a necessary concomitant for effective governance. The authority vested in the various levels of management is exercised within a framework of appropriate checks & balances. The company is committed to ensure an effective internal control environment that helps in preventing and detecting errors, irregularities & frauds, thus ensuring security of Company's assets and efficiency of operations. There is a separate cell in the Company which oversees implementation of internal control in the business processes and information technology systems. A Corporate Policy on Internal Control is in place which provides a structured framework for identification, rectification, monitoring and reporting of Internal Control weaknesses in the Company. It specifies the responsibilities and tasks enjoined upon employees in all positions. The various business segments of the company have also, over the years, created well documented policies, authorisation guidelines and standard operating procedures specific to their respective businesses. The effectiveness of internal control is reviewed during internal audits carried out by the Corporate Audit Services on a regular basis. An independent review of the Internal Control systems is also carried out by the Statutory Auditors. Any significant deficiency in internal control along with the progress in implementation of recommended remedial measures is regularly presented to and reviewed by the Audit Committee of the Board. IV. NURTURING HUMAN CAPITAL The Company has set its vision high to foster a culture of trust, caring and continuous learning for its growing human capital so as to ensure a continuous enhancement in shareholder value. Sustained well-being of its employees, both professional and personal, is the hallmark of its human resource policies. Being an engineering conglomerate, the Company needs a large pool of engineering talent. Every year in line with the growing business needs, the Company recruits a sizeable number of Graduate Engineer and Diploma Engineer Trainees from engineering colleges across the country. "Prayag", a month-long induction programme, helps these trainees to transition from the academic to the industrial world to understand how engineering knowledge is applied in practice. A wide menu of training programmes is offered to our employees for development. This year, a number of unique strategic programs like Corporate Entrepreneurship, Managing & Leading across Borders, Strategy and Leadership programmes were added with a view to nurture 77 the knowledge, skill & behaviour required in the global business scenario. The Company endeavours to build a leadership pipeline in a systematic and scientific way, using the most sophisticated human technologies so as to achieve the targets to be set out under Perspective Plan 2015. Towards this end, the Company has launched two streams of Leadership Development Program with the help of Mckinsey & Company, namely : (cid:2) Emerging Leadership Development Program (e-LDP) and (cid:2) Top Leadership Development Program (t-LDP) The eLearning initiative ATL - Any Time Learning launched a few years ago has been augmented to include 'Harvard Manage Mentor'- an engaging online resource consisting of 42 management topics for fostering management skills. This learning initiative enables learning anywhere, any time and at one's own pace. The Company's Management Development Centre at Lonavla is a symbol of the value and priority that talent growth and development is accorded in L&T. This prestigious facility is being augmented to triple its training capability matching the Company's growing size and stature. V. RAPID STRIDES IN INFORMATION TECHNOLOGY INITIATIVES The Company is an intense user of Information Technology in all aspects of its businesses. Having successfully automated most of the transaction processing requirements, the Company has also recently completed implementation of niche solutions in other areas to enable new capabilities. The year saw the implementation of ERP solutions for a few of the new businesses, to enable these new businesses to use the information technology platforms right from inception. The implementation of the enterprise-wide Human Resources System in the various businesses has made good progress. Significant improvements are also being made to the IT infrastructure by enhancing the capacity of networks, computing and storage. The Company's IT governance and risk management framework ensures that IT risk management and information security are continuously monitored and beefed to protect the confidentiality, integrity and availability of information systems. The company is also adapting itself to the new technologies 78 like virtualisation and power saving systems to support "Green IT" initiatives. A systematic measurement of the IT costs vis-a-vis the IT benefits derived ensures that the IT initiatives deliver value to the businesses. The Company believes that continued investments and value focus on IT will go a long way in improving every aspect of the Company's operations and thereby its profitability and growth. VI. SUSTAINABLE DEVELOPMENT THROUGH ENVIRONMENT MANAGEMENT The virtue of addressing the importance of "triple bottom- line" is being felt today like never before. The Company reckons its responsibility and is committed to playing an instrumental role in this period of economic and social change. The emphasis now is not just on increasing profits but at the same time on improving the efficiency of all business decisions and minimising the environmental and social costs of operating in communities. The first Sustainability Report published by the Company for the year 2007-2008 emphasised the strategy to integrate environmental, economic and social considerations in all aspects of business development. We understand that the social and environmental challenges are as dynamic as the financial ones and hence we have taken steps to put in place a robust organisational structure to address them effectively. The Sustainability Organisation Structure, headed by the Corporate Management Committee and functional at all the business divisions and operating locations, ensures that the commitment to conduct business responsibly trickles down to the grass-root level across the operations. The Company has been taking focused steps to enhance the quality of the community life in its immediate vicinity. It has been diligently working to build the capabilities and employability of the youth through its Construction Skills Training Institute and Vocational Training Centres in partnership with the various state governments and helping women being self-reliant through professional skills training. Apart from implementation of the OHSAS 18001:2007 and ISO 14001:2004 management systems, the Company has also started implementing the British Safety Council's Health & Safety Management System at some of its manufacturing locations for further strengthening its systems and improving the working condition of the employees. GROWING SUBSIDIARIES & ASSOCIATES PORTFOLIO L&T Group is actively pursuing its diversified business portfolio, particularly in the emerging businesses, through formation of wholly owned subsidiary companies and joint ventures with strategic partners. As on March 31, 2009, the Group has 97 subsidiaries, 22 associate companies & 15 joint ventures within its fold. These entities broadly operate in and focus on the following sectors: 1. Information Technology Services 2. Financial Services 3. Engineering, Construction & Project Management 4. Infrastructure and Property Development projects 5. Manufacture of electrical and industrial equipment, machinery and products 6. Shipyard and Port facilities Within the above classification, L&T has invested in companies incorporated both in India & abroad. Most of the investments in companies incorporated overseas are through L&T's wholly owned subsidiary company, L&T International FZE. Some of the ventures initiated in the emerging sectors during the last 1-2 years are still in the formative stage and are yet to contribute to the Group's revenues. During the year, acquisition of the medium voltage electrical business of TAMCO, Malaysia was consummated and accordingly the turnover of the acquired entities contributed to the growth in Group revenues. Consolidated total income at Rs.41072 crore grew by 37%, when compared to that of the previous year. Profit after tax (PAT) for the consolidated Group at Rs.3789 crore increased by 63% over the previous year, which is marginally higher than the growth achieved by the standalone Company at 60%. The consolidated gross Debt:Equity ratio as at the end of the year stood at 1.32:1 mainly due to higher borrowings by the major capital intensive subsidiaries in the financial services and developmental projects businesses. A review of each of the operating subsidiary & associate companies is presented below: INFORMATION TECHNOLOGY SERVICES I. A. LARSEN & TOUBRO INFOTECH LIMITED (LTIL): Subsidiary company LTIL is a wholly owned subsidiary of L&T engaged in providing IT solutions and software consultancy globally. The Company offers both onsite and offsite services in the areas of Application Maintenance & Development, Enterprise Resource Planning, Data Warehousing, Business Intelligence, Testing and IT Infrastructure management. It has established its global footprints in USA, Canada, Denmark, France, Germany, Japan, UK and the Middle East. Around 26% of the Company's total number of clients is in the Global / Fortune 500 list. The Company continues to focus on the chosen verticals viz Manufacturing, Banking Financial Services and Insurance, Energy and Petrochemicals, Product Engineering Services (comprising of Communications and Embedded Software). Operations & Performance In the backdrop of global economic downturn, the highlights of L&T Infotech's performance during the year 2008-2009 are as under: (cid:3) (cid:3) (cid:3) 19% growth in total revenues at Rs.1,975 crore during the year 2008-2009 compared to Rs.1,658 crore achieved during the previous year. On consolidated basis including subsidiaries in Canada, Germany and GDA Technologies Inc., the total revenue grew to Rs.2,081 crore in 2008- 2009 from Rs.1,757 crore in the previous year. 21% increase in operating profit (PBDIT) which was higher at Rs. 343 crore as against Rs. 283 crore in 2007-2008. 25% increase in profit after tax at Rs. 265 crore as against Rs. 211 crore in 2007-2008. Though USA continues to be the leading destination for Software exports, its contribution for the year 2008- 2009 dropped to 67% vis-à-vis 74% for the previous 79 Banking & Finance, Insurance, and Communication and Embedded technology businesses in Germany. During the year 2008-2009, L&T Infotech GmbH recorded total income of Rs. 52.12 crore, registering a growth of 22%. The investment in sales and marketing organization has contributed to the Company's revenue growth. It has been able to secure new clients with strong potential as also increase its presence with existing clients. This is expected to reflect in the further improved performance in the coming years. C. LARSEN & TOUBRO INFOTECH CANADA LIMITED (LTI Canada): Subsidiary company L&T Infotech Canada (LTI Canada) provides software services in financial, Insurance and Oil & Gas sectors in Canada. During the year 2008-2009, the total income of LTI Canada amounted to Rs. 26.23 crore. The Company has been able to improve its operating performance by targeting on certain niche areas, which has the potential to develop significantly in the years ahead. D. GDA TECHNOLOGIES INC. (GDA): Subsidiary company GDA Technologies was acquired in the year 2007 to strengthen IT outsourcing business in USA. Since then, GDA has been integrating its business development with L&T Infotech's foray into the outsourcing business. The Company has been scaling up its revenues largely through the Offshore Design Centres, besides its conventional segments of Property and Custom Design & Manufacturing services. GDA clocked total income of Rs. 60.46 crore for year ended March 31, 2009. The efforts put in by the team towards integration and leveraging of L&T Infotech relationship with high potential customers is expected to further improve the operational performance going forward. II. FINANCIAL SERVICES A. L&T CAPITAL HOLDINGS LIMITED (L&TCHL): Subsidiary company Considering the emerging opportunities in the fast growing financial sector of the country, the Company has expanded its financial services range covering commercial, retail & infrastructure finance and merchant banking services. In order to consolidate various business interests and create future value year. Europe and Asia Pacific contributed 16% and 9% respectively, while contribution of Africa/MEA increased to 4%. Onsite services accounted for 53% of L&T Infotech exports and the balance was delivered from the offshore development centers. Outlook The slowdown in global economic growth is expected to continue into 2009-2010. This will adversely affect the demand for IT services in the short term. In the long term, however, the Indian IT sector is well poised for growth, as its competitive advantage in outsourced services space is sustainable. Several global mega- trends viz. economic, demographic, business, social and environmental, will create new opportunities for the industry in: (cid:3) New verticals: public sector, healthcare, media and utilities (which have adopted global sourcing only to a limited extent) (cid:3) New customer segments: small and medium businesses (cid:3) New geographies: greater outsourcing in BRIC, GCC, Japan and rest of the world To take advantage of emerging opportunities L&T Infotech has started focusing on internal efficiencies and cost reduction. Given the industry's resilience to withstand various challenges in recent years, the Company is confident to sustain the growth momentum in the medium term. B. LARSEN & TOUBRO INFOTECH GmbH (L & T infotech GmbH): Subsidiary company L&T Infotech GmbH provides software services in 80 potentials in the sector, the Company has set up a wholly owned subsidiary for Financial Services; viz. L&T Capital Holdings Limited and has consolidated all its existing investments held in the Financial Services Companies under L&TCHL. B. L&T FINANCE LIMITED (LTF): Subsidiary company Overview L&T Finance Limited, a wholly owned subsidiary of L&T Capital Holdings Limited is one of the premier diversified non-banking finance companies in the country, with product offerings in Enterprise Finance catering to various segments, Commercial Vehicle Finance and Rural Finance. The Company is, from the current year, actively engaged in microfinance in the rural sector. It has a robust sourcing, underwriting, receivables, collection and operational model, commensurate with the size and risk of the respective underlying asset class. Operations & Performance The performance of the Company during 2008-2009 was adversely affected due to the economic slowdown, which resulted in lower business volumes across almost all the sectors catered to by the Company. Tight liquidity conditions witnessed during the financial year also led to increased interest costs. During the year, the Company added 24 branches to its network, taking the total to 85, spread across 23 states. The highlights of financial results for 2008-2009 are given below: (cid:3) (cid:3) (cid:3) Total assets grew from Rs.4,793 crore on March 31, 2008 to Rs.5,337 crore on March 31, 2009. Total income grew to Rs.830 crore in 2008-2009 from Rs.606 crore in 2007-2008. Profit after tax for the year was lower at Rs.99 crore as compared to Rs. 115 crore in 2007-2008. Outlook The business conditions for non-banking finance companies continue to be challenging due to lower economic/credit growth and high cost of funds. Notwithstanding increasing competition, LTF is in a strong position to deliver a resilient earnings profile, supported by its well-balanced business platform and strong asset quality. The Company's strategy, as in the past, would be to focus on strong risk management & processes, profitable growth and diversification of its product portfolio. C. L&T INFRASTRUCTURE FINANCE COMPANY LIMITED (LTIFC): Subsidiary company LTIFC, a wholly owned subsidiary of L&T Capital Holdings Limited, is focused on financing and developing of infrastructure projects, covering various sectors. The Company intends to leverage L&T's domain knowledge in the engineering and construction fields to provide infrastructure financing solutions through a mix of debt, sub-debt, quasi-equity and equity participation. It also provides active support to clients at project development stage. The key success factors for LTIFC are the sheer demand for infrastructure in the country, the Company's acknowledged expertise in all areas of infrastructure, its ability to tap financial resources, its strategy to be a 'one-stop-shop' for infrastructure and a strong synergy between the Company's professional management, its Board of Directors and key stakeholders that allows the Company to expeditiously pursue opportunities for yet more profitable growth. Operations & Performance Amidst global slowdown and recessionary concerns, the Company achieved significant growth during 2008- 2009, with gross approvals and disbursements of Rs.1,913 crore for 39 projects and Rs.1,412 crore for 34 projects, respectively. The highlights of financial results during 2008-2009 are: (cid:3) (cid:3) (cid:3) Total assets grew from Rs.1,916 crore as on March 31, 2008 to Rs.2,398 crore as on March 31, 2009. Total income for the year 2008-2009 was Rs.296 crore as compared to Rs.110 crore in the previous year Profit after tax increased to Rs.76 crore in 2008- 2009 from Rs. 45 crore in 2007-2008. Outlook The business sentiment for infrastructure finance companies continues to be challenging. With renewed focus by the Government on infrastructure development, announcement of the fiscal packages to provide economic stimulus, LTIFC is in a strong position to deliver improved performance on a sustainable basis. 81 D. L&T CAPITAL COMPANY LIMITED (LTCCL): Subsidiary company LTCCL, a wholly owned subsidiary of L&T, is a SEBI registered Portfolio Manager with close to Rs.1,450 crore under its fund management. It also provides service as a Mutual Fund Distributor / Advisor. LTCC holds and monitors a significant portion of the L&T Group's strategic investments. Operations & Performance Mutual fund markets were subdued in 2008-2009. The net asset values of most funds nose-dived. The adverse capital market conditions had its impact on LTCCL's income and profits. During the year, the Company's gross income recorded a decrease of 25% to Rs. 6.38 crore, as compared to Rs. 8.45 crore in the previous year. The Company is planning to expand its fund management by offering offshore advisory services. It is in the process of setting up wholly owned subsidiaries in Mauritius towards meeting this objective. The new services are likely to be offered in the second half of 2009-2010. Outlook With the domestic stock market looking up, new portfolio management avenues would be available. The initiative in offshore advisory services is expected to open up new vistas of regular income streams for the Company, so as to counter the fluctuations in the domestic market. III. ENGINEERING & CONSTRUCTION Domestic Companies A. L&T-SARGENT & LUNDY LIMITED (LTSL): Subsidiary company Overview L&T - Sargent & Lundy Limited (LTSL), a Joint Venture company between L&T & Sargent & Lundy LLC Chicago, USA, renders complete power plant engineering services to its customers in India and abroad. Besides being a major provider of Integrated Engineering Solutions through 3 D modeling, LTSL has established itself as a global consultant backed by a competent engineering talent pool and technology support. Operations & Performance Power sector got a boost during the year with many 82 UMPP's and other mega IPP projects declared for bidding. The economic environment was encouraging in the Middle East countries also facing a power deficit As a result, the Company secured healthy orders for engineering services, from domestic and international markets. The sales and other income for 2008-2009 at Rs.62.74 crore registered a growth of 50%. Exports accounted for 65% of the total income. Profit after Tax at Rs. 10.43 crore for 2008-2009 rose sharply as compared to the previous year level of Rs. 3.68 crore. Outlook According to Energy Information Administration (EIA), world energy consumption is projected to expand by 50 percent upto 2030. Within the country, the implementation of Rural Electrification Scheme and amendments in the Electricity Act, 2007, are expected to attract more investment in the power sector. Moreover due to implementation of the 11th plan capacity addition of 78.7 GW and the 12th plan capacity addition of 82.2 GW, the power sector promises enormous opportunities for the engineering services. Given the good opportunities both in India and abroad LTSL sees bright prospects in the medium to long term. B. L&T-CHIYODA LIMITED (LTC): Associate company Overview L&T-Chiyoda Limited (LTC) is an internationally reputed design & engineering Consultancy Company for Hydrocarbon Processing Industry. LTC was set up in the year 1994 as a joint venture (JV) between Chiyoda Corporation of Japan and Larsen & Toubro Limited of India with an equal stake. LTC offers total engineering solution to hydrocarbon sector and related industries including Petroleum Refineries, Petrochemical Units, Oil and Gas Onshore Processing Facilities, LNG/LPG Plants, Fertilizer Plants and Chemical Plants. Engineering and Consultancy services offered by the Company include Feasibility Studies, Basic Engineering, Front End Design & Engineering (FEED), Detailed Engineering, Procurement Assistance, Construction Supervision, Commissioning Assistance and Project Management Consultancy, to many global and Indian Oil Companies. Operations & Performance The Company has already established its experience in design and engineering of refinery units. Presently it is involved with L&T in its Diesel Hydro-treating Project of MRPL-Mangalore, two Hydrogen Generation Units and LOBS Quality Up-gradation Project of HPCL- Mahul Refinery. LTC, being the engineering partner for most of the LNG/GTL Projects of Chiyoda, is getting an excellent exposure to onshore oil/gas processing plants. The Company is also in the process of finalising Gas Treatment Project in Russia with an international EPC contractor. The Company reported a healthy growth in Order Inflow and Sales revenue at Rs. 126 crore and Rs.79 crore respectively. Considering the long term growth aspirations, Oil Companies continued with their capacity augmentation projects even as the global economy was grappling with the unprecedented financial crisis. In line with the revenue growth, the Profit after Tax for 2008-2009 at Rs. 10 crore grew by 34% as compared to the previous year. Outlook Indian energy sector is in the midst of a major capacity augmentation program, considering the expected surge in the demand for oil and gas products in the next decade. Refining capacity in the country has been growing at a rate of 4 to 5% every year. The growth rate is expected to increase to around 7% by the end of 11th Plan period 2007 to 2012, besides the plan for setting up 3 grass root refineries in the country. The Government is also promoting the sector through various initiatives like the proposed SEZ-type scheme to create Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR). Considering that the energy sector would be the backbone of the Indian growth strategy, the sector is expected to attract investment outlays which in turn would provide attractive opportunities to the Company. C. L&T-VALDEL ENGINEERING LIMITED (LTV) : Subsidiary company L&T-Valdel Engineering Limited (LTV), established in 2004, became a subsidiary of L&T in 2007-2008. LTV provides complete engineering solutions for Upstream Oil & Gas sector and offers design engineering services as well as project management services globally. Operations & Performance The hydrocarbon sector saw spurt in E&P activities following a sharp increase in crude oil prices during 2008-2009. The committed investments in the sector enabled the Company to bag fresh engineering orders and register a healthy revenue growth of 70% over the previous year. Expecting the ramp up in the sector, the Company had invested in expansion of facilities and beefed up the talent pool, which enabled it to report higher revenues at Rs. 72.46 crore. In tandem, the profit after tax for the year 2008-2009 improved significantly to Rs. 15.61 crore. Apart from the higher capacity utilisation, the rupee depreciation also aided the improvement in the operating margins during 2008- 2009. Outlook The crude oil prices declined significantly in the later part of the year 2008-2009. The scenario of continued depressed crude oil prices adversely impacted the investments in the hydrocarbon sector. Though major E&P players have not announced cuts in their plans as yet, the companies are re-tendering the projects to optimize the costs in the current recessionary scenario. The Company, however, is confident of tiding over the current economic slowdown with focused marketing efforts in the international market and capability building in the new lines of business such as Deep Water Pipeline Systems, Jack-up Rigs, and Semi- Submersibles. D. L&T-MHI TURBINE GENERATORS PRIVATE LIMITED and L&T-MHI BOILERS PRIVATE LIMITED Subsidiary companies Overview Leveraging on the strengths of EPC capabilities in the power sector, L&T has entered into Joint Venture with the leading power plant equipment manufacturer, Mitsubishi Heavy Industries, Japan (MHI) & Mitsubishi Electric Corporation, Japan (MELCO) to manufacture & supply Supercritical Boilers & Steam Turbines & Generators (STG) for large coal based utilities. L&T- MHI Turbine Generators Private Limited (LTMHI Turbine) and L&T-MHI Boilers Private Limited (LTMHI Boilers) have been formed with L&T holding the majority share of 51% each of the equity through its subsidiary L&T Power Limited. The principal business of the JVs will comprise design, manufacture, supply, erection & commissioning Supercritical Boilers, Turbines & Generators and subsequent warranty and service support for the Indian market. LTMHI Turbine & Boiler have envisaged manufacturing of equipment in the capacity range of 500 MW to 1000 MW for sale in India. Equipment will be manufactured 83 using advanced, fuel efficient & environment friendly "Supercritical Technology". The total capacity being installed is 4000 MW for each of the manufacturing unit. Project Activities The Turbine JV Company has already secured order for supply of 2800 MW STG from Andhra Pradesh Power Development Company Limited. Also it has undertaken bids for various projects and is expected to bag few more orders shortly. The JVs are poised to establish a state-of-the-art manufacturing facility at Hazira, Gujarat State with the Technological Support from MHI for a period of 20 years. The Turbine Company proposes to commence operations with the manufacture of 2 Turbines & Generators in the year 2010-2011, increasing the same to 4 from the year 2012-2013. The implementation of the Steam Turbine & Generator project has been conceptualised in phases. The phased implementation schedule has been drawn in consonance with the plan of acquiring of requisite skill for specialised manufacturing activity and focused indigenisation plan. All major machines & facilities have been ordered and are slated for commissioning in a phased manner aligning with the production plan. F. E. L&T- RAMBOLL CONSULTING ENGINEERS LIMITED (LTR): Associate company Overview LTR is a joint venture consultancy firm established in the year 1998 by L&T and RAMBØLL A/s of Denmark. LTR provides engineering and project consultancy services for Transportation Infrastructure projects relating to Ports & Harbour, Roads & Highways, Bridges & Flyovers, Airports and Environmental Engineering. Operations & Performance The Company has consolidated its position in the domestic market as advisors and consultants to developers of projects. This has enabled the Company to utilise its strengths in the Design & Build segment of Consultancy business. Backed by order inflow at Rs. 35.88 crore, LTR registered in 2008-2009 a growth of 23% in total income at Rs. 30.27 crore. In tandem, profit after tax at Rs. 5.59 crore grew by 53% over the previous year. The healthy performance was driven 84 largely by the new jobs for detailed engineering in Ports & Bridges sectors. Outlook Infrastructure development is expected to gather momentum during the balance period of 11th Plan 2007-2012. This is the niche market in which LTR has a distinguished presence. Further, the Company is rolling out a major expansion of its International business in Indian Ocean RIM countries spurred by good market prospects in this sector. INTERNATIONAL SEAPORT DREDGING LTD (ISDL): Subsidiary company Overview International Seaport Dredging Limited (ISDL), a Company promoted by the Belgian Dredging International NV, was incorporated in March 2004. Considering the captive business potential, L&T acquired a majority stake in the Company in May 2006. The business spectrum of ISDL includes dredging, marine engineering services and land reclamation for ports and harbours in India and the Middle East countries. Operations & Performance Capital dredging continues to be the major growth area of the Company. Due to the global slowdown and the liquidity crisis, some of the private port projects were postponed in the year 2008-2009. However with an eye on the future, ISDL contracted for acquiring two new dredgers, which will increase the capacity in the coming years. The fresh orders secured during the year by ISDL include dredging project orders from Karaikal Port and Kakinada Port and an order from charter hire in the Middle East region. While dredging contracts were completed at Gangavaram Port, Sethusamudram and Hazira, the Dhamra Port order is under execution. Due to significant variation in the underlying soil conditions, the Company incurred loss on one of the projects completed during the year. The Company has taken adequate safety measures to mitigate such operational risks with regard to orders under execution and also would stringently evaluate the probable operational risks for new prospects. Outlook With 2/3 rd of the Indian shores amenable for port development and the prospects of significant increase in international & coastal trade, the port sector is expected to attract fresh investments over the next 5 to 10 years. Capital dredging business is therefore expected to grow significantly to reach around 150 million cubic meters per annum over the next 5 years. The Company is gearing up to meet the expected increase in the demand in the coming years. G. SPECTRUM INFOTECH PRIVATE LIMITED (SIPL): Subsidiary company L&T acquired SIPL in the year 2006 in order to strengthen its capabilities in defence electronics. SIPL concentrates largely on product development in embedded solutions, control and signal processing. It has grown from designing and development of sub- systems to a full-fledged production organisation capable of delivering sub-systems. Under the umbrella of L&T's Strategic Electronics Center, SIPL is actively exploring the opportunities for possible tie-ups in various business areas of focus. Operations & Performance Sales revenues during the year 2008-2009 were Rs.8.68 crores as compared to Rs. 7.36 crore in the year 2007-2008. Profit after tax increased to Rs.1.68 crore, registering a marginal improvement over the previous year. Outlook The long term outlook for defence electronics business is quite positive. Public-Private participation during design and development phase is expected to result in a significant share of business for private industry in the production phase. Revision of DPP-2006 regarding offsets and greater Government support for PPP model are also in the offing. In addition, business opportunities for HAWK & ALH production, LCH development, Jaguar aircraft Upgrade programs and MMRCA are likely to fructify in the coming years. H. L&T SHIPBUILDING LIMITED (LTSB): Subsidiary company Overview L&T Shipbuilding Limited has been formed as a joint venture between L&T and Tamilnadu Industrial Development Corporation Limited (TIDCO) for setting up a Shipyard-cum-Minor Port Complex at Kattupalli, near Chennai. L&T has identified shipbuilding as a major thrust area in the heavy engineering sector for growth. Indian Navy and Coast Guard have large requirements of defence vessels and submarines to augment as well as replace the ageing fleet. Tamil Nadu has a coastline of about 1000 kilometres, with plain landmass as hinterland. Due to this vast coastline, the growing hinterland needs a State-of-the Art port with allied infrastructure for effective handling of all types of cargo. The Port Complex of LTSB is expected to meet this requirement and is planned to operate on a commercial basis with a capacity of 2 million TEUs per annum. Project Activities LTSB signed a joint venture agreement with TIDCO in April 2008 to set up a port and a shipyard at Kattupalli, Tamil Nadu. Following the extensive discussions with the Government on the various critical requirements of the project, LTSB has taken possession of 1123 acres of patta land at Kattupalli on 99 years lease basis. About 27 acres of Poromboke land within the project area is under alienation from Government and are likely to be leased out to LTSB by June 2009. The Shipyard is being organised as a heavy engineering sector specific Special Economic Zone (SEZ) under the Special Economic Zones Act, 2005. In February 2009 LTSB received the formal SEZ approval from the Ministry of Commerce and Industry. LTSB has entered into a Licence agreement in February 2009 with Tamilnadu Maritime Board (TNMB) for using 76.86 acres of coastal land at Kattupalli required by the project. LTSB is in advanced stages of getting necessary approvals from various Central and State Government authorities. While the financial closure for the project is in progress, the construction activity is expected to commence in the second quarter of 2009-2010. I. International companies LARSEN & TOUBRO ELECTROMECH LLC (L&T Electromech): Subsidiary company Overview Larsen & Toubro Electromech LLC is a joint venture between Larsen & Toubro Limited, India (L&T) and The Zubair Corporation, Oman (TZC). L&T holds 65% through L&T International FZE, Sharjah and TZC holds 85 the balance. The Company is a leading Civil, Mechanical and Electrical & Instrumentation Construction Company in Oman catering to the Oil and Gas, Refineries, Petrochemicals, Power and Water sectors. Operations & Performance The Company executes projects predominantly in the Hydrocarbon sector which contributes significantly to the Oman's GDP growth. The global meltdown and delays in announcement and award of new projects had a negative impact on the order inflows for the year. The total order inflow during the year 2008 was RO 18.21 mn (INR 237 crore) against RO 42.69 mn (INR 555 crore) in the year 2007. Backed by healthy opening order book, the Company registered a growth of 35% in Sales at Rs. 327.87 crore. Profit after tax increased to RO 1.95 mn (INR 22.10 crore) as against loss of RO 0.46 mn (INR 5 crore) in the year 2007. In order to effectively counter the impact of global slowdown, the Company has initiated various measures on cost optimisation, pre-bid tie-ups with major EPC players and improved contract management to enhance project realisation. Outlook Gulf countries are expected to counter the challenges of falling oil prices and receding investor interest. Major investments in petrochemicals are being delayed on account of gas gap. However, Investment in Enhanced Oil Recovery (EOR) projects is expected to continue and offer good opportunities for EPC projects in Marmul and Nimr areas. Major investments are also planned in Power plants (IWPP & IPP) at Salalah, Barka and Al-Ghubra areas in the Sultanate. In the backdrop of stable fiscal position of the Sultanate, the Company expects to achieve the targeted growth in the medium term. J. L&T MODULAR FABRICATION YARD LLC, OMAN (LTMFYL) Subsidiary company Overview L&T Modular Fabrication Yard LLC (LTMFYL) is a wholly owned Subsidiary formed in Oman, to realise the growing opportunities in the Middle East Oil & Gas sector for manufacture and servicing of platforms and marine structures. LTMFYL will endeavour to build core competencies in high end equipment like Jack Up Drill Rigs, Floating Production Storage & Offloading (FPSO) 86 Vessels, integrated Decks, Skid mounted equipment, in addition to fabrication of large size Offshore Platforms. The Fabrication Yard facility at Sohar has become fully operational during the year. The Yard is expected to be established as a major fabrication service provider for the region's promising offshore oil & gas industry, comparable with some of the biggest fabrication yards of this kind in the region. Operations & Performance LTMFYL executed projects in Upstream Oil & Gas for Oil & Natural Gas Corporation, India, and for Maersk Oil, Qatar and also undertook refurbishment of Rig FDVII for Lynemouth Drilling Limited; U.K. LTMFYL recorded Sales worth Rs. 102.92 crore for the year 2008, its first full financial year. By the end of the year 2008, due to economic meltdown, the Oil & Gas segment witnessed deferment of orders by clients and pressures for lowering of prices quoted by the Yard. Outlook The Middle East Oil & Gas sector is active with bids for projects involving fabrication & integration of Modules for FPSO, though slowdown effect is still pervading the region. While, the refurbishment orders offer opportunities in the short term, the major projects are expected to reach implementation phase only in the latter half of the year 2009. With crude oil prices showing some signs of stability, the sector is expected to hasten up the projects which are already on the drawing board. The Company will endeavor to improve its capacity utilisation by harnessing the opportunities coming its way. K. LARSEN & TOUBRO ATCO SAUDIA COMPANY LLC (L&T-ATCO): Subsidiary company L&T-ATCO is a joint venture between L&T International FZE and Abdulrahman Ali Al -Turki Group of Companies (ATCO) Dammam, a renowned Saudi conglomerate. L&T ATCO was incorporated to take advantage of the enormous electro-mechanical construction opportunities arising in the areas of oil & gas, petrochemicals, power and water related projects in Saudi Arabia. L&T-ATCO is focusing business opportunities in the area of strategic construction equipment & support services, with the core team of engineers operating from Dammam. Having completed all the statutory registration process, is now concentrating on pre-qualification with various customers & is participating in tenders for leading clients. the Company provides engineering, construction and contracting services in Oman. Continuing its excellent track record of 14 years, LTO reported encouraging financial performance for the year 2008. Outlook Firm oil prices, availability of liquidity and the Government's social and economic reforms are positive indicators of the Saudi economic growth. Large projects in the field of hydrocarbon, power, water and oil & gas are being envisaged to sustain the long term development of the country. Specific tie-ups with prominent EPC players who are aware of L&T's capability in refinery & petrochemical and demonstration of on-ground resources could open windows of opportunities for projects. L. OFFSHORE INTERNATIONAL FZC Offshore International FZC (Offshore FZC) is a Joint Venture between L&T International FZE and M/s Petro- Plus Sdn Bhd, Malaysia, a wholly owned subsidiary of Sapura Crest Petroleum Bhd, Malaysia, formed for construction and operation of a Heavy Lift cum Pipe Lay Vessel (HLPV). The Company was incorporated to provide critical in-house installation facility for Offshore Platform projects being executed by L&T and thereby mitigate the risk of dependence on external sub-contractors. Sapura Crest Petroleum Berhad is a leading company in Malaysia with diversified activities having expertise in offshore installation services including subsea pipe- laying, platform and relation installations. Through the joint venture company, Sapura Crest and L&T will be able to tender for installation and EPC contracts. This offers both companies greater competitive advantages especially in the Indian and Malaysian markets - two of the fastest growing oil and gas services markets in the region. The vessel is in an advanced stage of construction in a renowned shipyard in Singapore. The twin deck 160- metre conventional vessel can accommodate about 250 staff and is equipped with a crane capable of lifting heavy loads of up to 3000 ST. The vessel is expected to be available for commercial use in the year 2010. M. LARSEN & TOUBRO (OMAN) LLC (LTO): Subsidiary Company Larsen & Toubro (Oman) LLC, a joint venture between L&T International FZE and Zubair Corporation LLC Operations & Performance During the year LTO handed over Palm Garden Township and Bait Al Barakah projects. The completion of these mega projects enabled LTO to cross RO 100 Million turnover. The year 2008 saw gross income nearly doubling to Rs. 1490.76 crore, with an increase in Net Profit to Rs. 56.79 crore as compared to Rs. 26.24 crore in the year 2007. Outlook With the Government of Oman adopting growth oriented economic policies, Oman is progressing amidst challenging times. The Company sees emerging growth potential in Building & Urban Infrastructure and Power Transmission & Distribution sectors. Whilst its focus on established sectors continues, LTO has initiated its entry into the Infrastructure segment. It will target brown-field and green-field airport projects and highway expansion projects with the active support from L&T, India. N. LARSEN & TOUBRO SAUDI ARABIA LLC (LTSA): Subsidiary Company: LTSA a subsidiary of L&T International FZE is engaged in the business of providing turnkey solution in Civil, Mechanical and Electrical Engineering Projects in the Infrastructure, Building, Power Transmission and Distribution Sectors. Operations & Performance During the year 2008, the Company downsized its operations and did not procure any fresh order. Consequently, revenues recorded during the year 2008 were Rs. 5.10 crore while the losses amounted to Rs. 4.50 crore due to cost overruns. Due to unfavourable business conditions, the Company has decided to wait and watch till the global economy recovers. Outlook In order to exploit the business potential the Company is in the process of identifying a strong local partner who will help in promoting the business of LTSA in the Kingdom of Saudi Arabia. 87 O. LARSEN & TOUBRO QATAR LLC (LTQ): Subsidiary company LTQ, a joint venture between L&T International FZE (49%) and a local Company Al-Jazeera International Trading Company WLL (51%) undertakes Turnkey Engineering and Construction projects in the Building, Infrastructure, Power and Electrical projects in Qatar. Operations & Performance The Company did not submit any tender during the year 2008. Revenues accordingly declined to Rs.4.14 crore as against Rs.29.97 crore in the year 2007. The loss for the year was contained at Rs.0.88 crore (previous year - loss of Rs.8.26 crore). Outlook In order to tap the major projects the Company has decided to revitalise its operations by switching partners. The Company is planning to join hands with a locally strong partner who will help in promoting the business of LTQ in Qatar. The country has proposed an ambitious investment plan of over USD 100 billion by the year 2015 in the Energy, Tourism and other infrastructure projects. With the help of the new partner, it is expected that the Company shall turn around in the near future. P. LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL (LTKC): Subsidiary company LTKC is a limited liability company jointly held by M/s Bader Almulla and Brothers Company WLL, a Kuwaiti company & M/s Larsen & Toubro International FZE, U.A.E. in the shareholding pattern of 51% and 49% respectively. LTKC executes construction projects in Oil & Gas and Power sectors in the State of Kuwait. Performance On the strength of its parent's strong credentials and its own pre-qualification initiatives, LTKC secured orders for fabrication and erection of tank and pressure vessels during the year totaling to KD 5.65 Million (Rs.95.27 crores). The execution of these orders has commenced. Outlook Kuwait has the fourth largest proven reserves of crude oil in the world and is among the world's largest oil producers. Kuwait Petroleum Council has major plans for building its largest refinery. The recent decline in 88 oil price has somewhat impacted the growth sentiments in the region. However, no significant slowdown effects have been noticed in Upstream Projects. The country has taken initiatives to privatise Crude Handling and Refining by inviting private developers on BOO basis. Kuwait is still short of power and therefore investment in Power Sector is envisaged to be around 1 to 2 Billion KD in next 3 to 5 years. Q. LARSEN & TOUBRO READYMIX CONCRETE INDUSTRIES LLC (RMC LLC) Subsidiary company RMC LLC was formed in July 2006 as a joint venture between Mr Shukri Saleh Al Braik, UAE (51%) and Larsen & Toubro International FZE (49%) as per the local law. The first plant was operational in January 2007 and second plant in November 2007. The business was established in a highly competitive market with many MNCs in the fray for Ready-Mix Concrete business. Operations & Performance The year 2008 was the first full year of operations with both the plants producing at rated capacity. RMC LLC recorded sales revenues at Rs. 132.10 crore and net profit of Rs. 15.18 crore. Outlook The Impact of worldwide recession has been acute in Dubai region. New projects have been hard to come by while there has been a market slowdown in the progress of many existing projects. The Company is striving hard to sustain its current performance during the year 2009 inspite of difficult conditions. Efforts have been initiated in reducing raw material costs and also explore opportunities in Abu Dhabi market so as to compensate for the probable shortfall in volumes. IV. POWER DEVELOPMENT A. L&T POWER DEVELOPMENT LIMITED (L&T PDL): Subsidiary company L&T PDL, incorporated in September 2007, is a wholly owned subsidiary of Larsen & Toubro Limited (L&T). The Company is formed as a power development arm of L&T with the objective of developing, investing, operating and maintaining power generation projects of all types namely thermal, hydel, nuclear and other renewable form of energy including captive and co- generation power plants. The Company is developing a 99 MW Singoli Bhatwari Hydro Electric Project through a wholly owned subsidiary L&T Uttaranchal Hydropower Limited (L&T UHPL). The Company is also pursuing opportunities to develop thermal and hydro electric projects in India and abroad. B) L&T UTTARANCHAL HYDROPOWER LIMITED (L&T UHPL): Subsidiary company The Company is executing Singoli Bhatwari Hydro Electric Project on Build-own-operate-transfer (BOOT) basis for a period of 45 years including the construction period. The project is a run-of-the-river scheme on river Mandakini in Rudraprayag district of Uttarakhand. The project involves construction of a 22m high and 57.2m long barrage, 12 km long head race tunnel, surface powerhouse and 12 km transmission line (132 kV). The Project is expected to achieve financial closure in the year 2009-2010 with a total cost estimated at Rs. 1080 crore. V. INFRASTRUCTURE AND PROPERTY DEVELOPMENT A. L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (L&TIDPL): Subsidiary company L&TIDPL has been set up as an Infrastructure development arm of the Group. L&TIDPL, a holding As of March 31, 2009, L&TIDPL's portfolio includes: I. Transportation and Infrastructure Major SPVs Roads and Bridges: Narmada Infrastructure Construction Enterprise Limited L&T Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T Panipat Elevated Corridor Limited L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited company in this segment, works on a "value creation" model so that the Special Purpose Vehicle (SPV) floated for each infrastructure project is nurtured till it reaches a stage of matured operations. The Company has, over a period of time, built up capabilities in identifying and developing infrastructure projects, operation & maintenance of these projects and providing advisory services relating to financing & engineering of the projects. Considering the potential, private equity Investors have contributed 21.6% to the capital of the Company. L&TIDPL portfolio is well diversified with a mix of projects across various sectors such as roads & bridges, ports, airports and urban infrastructure. L&T Urban Infrastructure Limited, a subsidiary of L&TIDPL, houses the property development and urban infrastructure projects. Operations & Performance The Financial Year 2008-2009 was eventful with several of its projects commencing commercial operations. These include Panipat Elevated Corridor (July 2008), Krishnagiri Thopur Toll Road (February 2009), Western Andhra Tollways (March 2009) and Bengaluru International Airport (May 2008). During 2008-2009, the Company divested its stake in Kakinada Seaports Limited. Including the divestment Income L&TIDPL has reported a total income of Rs. 38.40 crore and a profit after tax of Rs. 10.83 crore. Status (% of holding) Stage Subsidiary (100%)* Subsidiary (100%)* Subsidiary (100%)* Subsidiary (100%) Subsidiary (100%) Subsidiary (100%) Operational Operational Operational Operational Operational Operational Operational Second Vivekananda Bridge Tollway Company Private Limited Associate (33%) L&T Interstate Road Corridor Limited L&T Vadodara Bharuch Tollway Limited Ports: Subsidiary (100%) Subsidiary (100%) Construction completed Under implementation International Seaports (Haldia) Private Limited Associate (22%) Operational The Dharma Port Company Limited Joint Venture (50%) Under Implementation 89 II. Urban Infrastructure: Major SPVs L&T Urban Infrastructure Limited Cyber Park Development and Construction Limited L&T Tech Park Limited L&T Arun Excello IT SEZ Private Limited L&T Infocity Limited L & T South City Projects Limited L&T Phoenix Infoparks Private Limited CSJ Infrastructure Private Limited Status (% of holding) Stage Subsidiary (75%) Subsidiary (30.47%) Subsidiary (30.47%) Subsidiary (30.47%) Subsidiary (53.17%) Operational Operational Operational Operational Operational Subsidiary (30.47%) Under Implementation Subsidiary (30.47%) Under Implementation Subsidiary (41.82%) Under Implementation L&T Arun Excello Commercial Projects Private Limited Subsidiary (30.47%) Under Implementation L&T Infrastructure Development Projects Lanka (Private) Limited Subsidiary (75.37%) Under Implementation Outlook The Public Private Partnership model adopted by the country has yielded positive results in terms of increasing the pace of infrastructure development. In order to sustain a much higher level of economic growth over the next decade, the Government has taken proactive steps in creating conducive environment for attracting the private participation in the infrastructure sector. L&T IDPL has appropriately positioned itself to realize the emerging opportunities in the entire gamut of infrastructure development sector. With healthy cash generation expected during the coming year from the operational subsidiaries, the Company is geared up to invest in new projects. Financial performance summary of key operational SPVs: roads, bridges, ports and airports: A. Projects completed: Project cost (Rs.crore) Total income (Rs. crore) 2008-2009 2007-2008 PAT (Rs. crore) 2008-2009 2007-2008 421.50 25.76 NA (31.05) NA 37.75 36.08 16.95 15.17 Sr. no. Name of subsidiary Project details L&T Panipat Elevated Corridor Limited Narmada Infrastructure Construction Enterprise Limited Widening the existing 4 lane Road to 6 lane Road on National Highway No.1 (NH-1). Concession period is 20 years including the construction period. The project was completed much ahead of the schedule during the year 2008-2009. Second Two-Lane Bridge at Zadeshwar across the Narmada River in Gujarat on National Highway 8 (NH-8). Concession period is 15 years on Build-Own-Transfer basis. The bridge is operational since November 2000. 1 2 90 Project cost (Rs.crore) Total income (Rs. crore) 2008-2009 2007-2008 PAT (Rs. crore) 2008-2009 2007-2008 525.00 9.41 NA (5.49) NA 372.83 1.53 NA (1.86) NA 33.68 28.16 8.50 3.22 Sr. no. Name of subsidiary Project details L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Transportation Infrastructure Limited Widening the existing 2 lanes Road to 4 lanes Road from the end of proposed Krishnagiri flyover to Thumpipadi. Concession period is 20 years including the construction period. The project was completed and opened to traffic from February 7, 2009. Construction, development, operation and maintenance of the road from Jadcherla to proposed Kotakatta bypass on NH-7 in the State of Andhra Pradesh. Concession period is 20 years including the construction period. The project was completed and opened to traffic from March 14, 2009. Building a bypass (28 Kms) at Coimbatore Section of National Highway (NH-47) and construction of additional Two-Lane bridge at Athupalam on River Noyyal. Concession period is 32 years including the construcion period. 3 4 5 6 7 L&T Western India Tollbridge Limited Building a two-lane bridge across river Watrak including its approaches. 11.31 10.71 3.01 2.64 L&T Interstate Road Corridor Limited Concession period was 10 years up to the end of 2009. The bridge was constructed and opened for traffic in March 2001. Construction, operation and maintenance of the road on Palanpur Swaroopgunj section of NH 14 in the state of Gujarat and Rajasthan. The road was constructed as per the schedule during the year 2008-2009 554.00 0.09 NA (0.06) NA 91 B. Projects under implementation: Roads and Ports THE DHAMRA PORT COMPANY LIMITED (DPCL): Joint venture The Dhamra Port Company Limited (DPCL), a 50:50 joint venture between L&T IDPL & Tata Steel Limited, has been set up to build a deep water all-weather port at the existing minor port of Dhamra under Build-Own- Operate-Share-Transfer (BOOST) model with a concession awarded by the Government of Orissa for a period of 34 years (including 4 years of construction). Sheltered between the mainland and Kanika sands island on the eastern coast, Dhamra Port will be the deepest all weather port of its kind in India, with a draught of 18.5 meters, which can accommodate super cape -size vessels up to 1,80,000 DWT. This will be an advantage to the mineral hinterland of north Orissa, Jharkand, West Bengal and Chattisgarh where a large number of steel plants and mineral based industries are located. The highly mechanized and advanced material handling facilities planned at the port will offer the users loading and discharge rates comparable to the world's best. The project includes 62.5 km rail connectivity to the main Howrah- Chennai line at Bhadrak. The port will eventually have 13 berths to handle over 83 million tons of cargo per annum. Of these, the first two berths, with a handling capacity of up to 25 million tons of bulk cargo per annum, will come up in the First Phase. When fully developed, the port will handle all types of cargo, such as dry bulk, liquid and container cargo. Apart from Tata Steel who is a co-promoter of the port, a number of other steel plants, mines and industries in the region are expected to use the port, which could become eastern India's major gateway to the world. The construction of the port is progressing as per the schedule and about 50% work has been completed. As part of the environment management system developed in consultation with World Conservation Union (IUCN), the company has undertaken plantation programme along the 62 km rail-road corridor from Bhadrak to Dharma. The status of other major projects under execution is summarised below: Projects under implementation Sr. no. Name of subsidiary Project details Project cost Rs. crore 1450 L&T Vadodara Bharuch Widening the existing road of Vadodara to Tollway Limited Bharuch section on NH-8 in the State of Gujarat to 6 Lane Road. Concession period is 15 years including the construction period. L&T Ahmedabad - Maliya Tollway Private Limited L&T Halol - Shamlaji Tollway Private Limited L&T Rajkot - Vadinar Tollway Private Limited 1481 1302 1075 Widening the existing Two-Lane Road covering Ahmedabad, Viramgam & Maliya, to Four-Lane Road along with the divided Carriageway facility. Concession period is 22 years including the construction period. Widening of existing Two-Lane Road, covering Halol-Godhra-Shamlaji section in Gujarat to Four-Lane Road alongwith divided Carriageway facility. Concession period is 20 years including the construction period. Widening the existing Two-Lane Road, covering Rajkot-Jamnagar-Vadinar section in Gujarat, to Four-Lane Road along with the divided Carriageway facility. Concession period is 20 years including the construction period. 1 2 3 4 92 Project status As at March 31,2009, 95% of the project has been completed and the widened Road would be open for traffic ahead of the schedule. Financial Closure expected to be achieved in the first half of the year 2009, commercial operations expected by the end of the year 2011. Financial Closure expected to be achieved in the first half of the year 2009, commercial operations expected by the second half of the year 2011. Financial Closure expected to be achieved by first half of the year 2009, commercial operation is expected by the second half of the year 2011-2012. II. URBAN INFRASTRUCTURE C. L&T URBAN INFRASTRUCTURE LIMITED (LTUIL): Subsidiary company LTUIL, a subsidiary of L&T Infrastructure Development Projects Limited, has been formed to drive the real estate business of the Group in the fast growing urban areas. The Company over the period of last three years, has built a balanced portfolio of premium urban infrastructure and real estate development projects comprising IT/ITES infrastructure projects, commercial and hospitality projects, and residential projects. Operations & Performance LTUIL has invested in 9 projects, (under IT/ITES sector), of which 6 projects are operational and balance 3 projects are under construction. A total of 50 lakh sq. ft. space has, so far been developed in this sector. A further space of 50 lakh sq. ft. has been envisaged for development as and when the demand picks up in the realty sector. So far LTUIL has invested Rs. 516 crore in the above realty projects. LTUIL earned Total Income of Rs. 13.50 crore during 2008-2009 and has reported a higher profit of Rs. 6.01 crore. Outlook The realty sector has been impacted by the liquidity crisis during the second half of the financial year 2008- 2009. While the interest rates have started softening, the buyers are negotiating for reduced property prices. The 'wait mode' adopted by the customers is forcing the sector to defer / delay the new projects in the offing. Considering that the industry players have already invested in the property at a relatively higher cost, there is little leeway for them to further cutback the rates. Given this uncertain conditions prevailing in the market, the sector sees a subdued performance in the near term. Financial performance summary of key operational SPVs: (Urban Infrastructure) A. Projects completed Sr. no. Name of subsidiary Project details 1 2 3 Cyber Park Development and Construction Limited L&T Tech Park Limited Construction of IT park at Electronic City, Hosur Road, Bangalore. Company has taken land on lease from Software Technology Parks of India for a period of 66 years. The first phase of the project, a multi tenanted facility with a BUA of 3.00 Lac sq.ft. was successfully completed and sold off. The second phase of the project with BUA of 2.00 Lac sq.ft. has also been completed in the year 2008-2009, of which a substantial portion has been marketed. Company formed to set up an IT SEZ within the Infopark, at Kochi, Kerala, as a co-developer. The Company has acquired land of 7.44 acres on lease for a period of 90 years. The company has successfully implemented its first phase of the project, Tejomaya, a multi tenanted facility, with a built up area of 3.86 lakh sq.ft., a major part of which has been sold. L&T Arun Excello IT SEZ Private Limited The company formed for developing a built up area of 3 lakh sft of office space for IT/ITES over 29 acres of land situated at Vallancheri Village, Kancheepuram District, Tamil Nadu. Total Income (Rs.crore) 2008-2009 2007-2008 PAT (Rs.crore) 2008-2009 2007-2008 48.42 17.04 11.14 9.15 17.14 17.38 (1.89) 0.90 1.03 0.40 (0.31) (0.44) 93 Sr. no. Name of subsidiary Project details Total Income (Rs.crore) 2008-2009 2007-2008 PAT (Rs.crore) 2008-2009 2007-2008 Out of the total area of 3 lakh sq.ft. in the Signature Tower, 73,220 sq.ft. space has been booked. 4 L&T Infocity Limited The company focuses on 195.53 194.64 53.42 49.35 (i) Operating and maintaining the multi-tenanted IT Parks (ii) Operating the Built to Suit IT facilities (iii) Facility Management and (iv) Development and Sale of Residential Units in Mega Residential Project 'Serene County'. The modern trade exposition centre developed on a 52.79 acre plot consists of three exhibition halls of 3500 Sq.mtrs. each, open display area, a large parking area and a trade fair building to provide office space for trade fair organisers, vendors and exhibitions service providers. Hyderabad International Trade Expositions Limited 9.90 12.19 (0.81) 1.84 L&T Infocity Lanka Private Limited Development of a Built to Suit Project for HSBC at Colombo, Srilanka. 5.01 4.17 1.78 2.09 5 6 B. Projects under implementation (Urban Infrastructure) Sr. no. Name of subsidiary Project details Project status L&T South City Projects Limited Developing a township consisting of residential complex, school, public health centre, shopping complex etc., over 83.5 acres of land situated at Siruseri Village, Chenglepet District. L&T Phoenix Infoparks Company formed to undertake development of commercial Private Limited properties. Presently it is developing two projects in Hyderabad; namely; HITEC City-2 & Intellicity. CSJ Infrastructure Private Limited Company formed for development of Commercial complexes in Chandigarh. L&T Arun Excello Commercial Projects Private Limited Commercial constructions comprising of a star hotel, a shopping mall and a school on 13 acres of land in the Estancia Township at Vellanchery on GST Road in Chennai. L&T Hitech City Limited Company floated by L&T Infocity Limited, in partnership with APIIC, to set up an IT SEZ at Vijayawada. L&T Infrastructure Development Projects Lanka (Private) Limited The project entails development of a total of about Development, construction, operation and maintenance of a multipurpose hi-rise tower of 51 floors in Colombo, Sri Lanka 1.22 million sq.ft, of residential apartments and commercial space. At present, the first phase of the project is in progress for developing 656 residential units with a built up area of 1.095 mn sq.ft. Phase I: Construction of IT Park with a project cost of Rs.43 crore has commenced during the year and is expected to be completed in the first half of the year 2009-2010. The project is expected to achieve financial closure in the first half of the year 2009-2010 and the construction will be completed in the year 2012-2013. 1 2 3 4 5 6 94 VI. ELECTRICAL & ELECTRONICS A. L&T ELECTRICALS SAUDI ARABIA COMPANY LIMITED, LLC (LTESA): Subsidiary company Overview L&T Electricals Saudi Arabia Company Limited. (LTESA), a joint venture between Larsen & Toubro International FZE, U.A.E. and Yusuf Bin Ahmed Kanoo Group, was formed in September 2006 for manufacturing and marketing switchgear, control gear, PLC panels, AC/DC Drives and Part Assembled Switchboards. Operations & Performance LTESA through its cost competitive solutions is receiving encouraging response from major customers and EPC companies in Saudi Arabia. During the year 2008, the first year of its operations, the Company clocked a turnover of Rs.30.46 crore for the nine month ended December 2008 with a net profit of Rs.0.80 crore. The company ended the year with a healthy order book of Rs.43.16 crore. Outlook Saudi Arabia is the largest market in the Middle East. The policy of the Government is continually inclined towards providing business opportunities for locally established industries. Major investments in Refinery, Petrochemicals, Power and Infrastructure projects offer good prospects for the Company's growth. However, in view of the present change in the economic situation, the finalisation of major projects may get delayed and customers may take an advantage of reduced commodity prices. Despite the above negative signs, LTESA remains a competitive player in high end offering and system business. B. LARSEN & TOUBRO (WUXI) ELECTRIC COMPANY LIMITED (LTW): Subsidiary company LTW is a 100% subsidiary of L&T International FZE, located at Wuxi in Jiangsu province of China. The factory was established in the year 2006 with the state- of-the-art manufacturing facilities, quality control and reliable testing equipment. It was established to support & extend L & T activities related to brand labelling of U Power design of Air Circuit Breakers (ACBs) & D-Sine Moulded Case Circuit Breakers (MCCB's) range. The factory has received ISO 9000 & China Compulsory Certification (CCC) for both the products range. Operations & Performance During the year, the Company recorded sales revenue growth at Rs 30.20 crore and a profit of Rs 1.11 crore. Efforts are on to establish the brand, first in the Chinese market and later on explore into other South Asian markets. Outlook Although the Chinese economy has slowed down, the continuous investments in infrastructure in China makes the prospects attractive for the Company's switchgear products. C. TAMCO GROUP OF COMPANIES Overview In order to gain a strong foothold globally in the low and medium voltage switchgear range, L&T acquired TAMCO Group of Companies in April 2008. The TAMCO Group of Companies comprises of 4 companies, operating in Malaysia, Indonesia, Australia & China. TAMCO Malaysia is a significant player in South East Asia for Medium Voltage (MV) switchgear comprising of Vacuum Circuit Breakers (VCB's), Ring Main Unit (RMG), Gas Insulated Switchgear (GIS), busducts and switchboards. In addition, it addresses the utility markets in Dubai, Qatar, Abu Dhabi, South Africa, Ghana, Sudan etc. TAMCO is now transferring its technology to L&T India to cater to the Indian MV switchgear market. TAMCO Indonesia & TAMCO China have established manufacturing facility in Jakarta & Shanghai respectively for catering to Low Voltage (LV) switchgears market in their respective countries. TAMCO Australia is a supplier of both LV & MV switchgears in the Australian markets with a manufacturing unit in Melbourne. Operations & Performance Despite the economic slowdown, the Order Book position in both Malaysia & Australia for utility segment remains healthy. Indonesia & China, though affected by slowdown, have recently shown signs of revival. During the financial year under review, TAMCO Group received fresh orders totaling to Rs.610 crore predominantly from Utility segments. Post acquisition of TAMCO Group, the group recorded revenue of Rs.424 crore and profit after tax at Rs. 12 crore for the period May 2008 to December 2008. 95 Outlook The demand for Gas Insulated Products in Middle East and India is expected to increase in the coming years. Though the market is showing some signs of slow down, the demand for the switchgear products are expected to be stable in Qatar. New Markets in South Africa, Ghana, Bahrain and Abu Dhabi look promising. In order to address new markets for MV switchgear, a series of products launches are planned during the next two years. While Malaysian plant has already a proven track record, thrust is being given to penetrate into Thailand, Vietnam & other African countries to achieve sustained growth. 2009. The downward trend is expected to continue during 2009-2010 even as the capital intensive industry looks to cheaper sources of finance and drop in steel prices. In the Conveying Equipment segment, the demand has been growing from Cement, Mining & Bulk Material industries since last 2-3 years. However, higher competition is expected to impact the Company's traditional product lines going forward. In order to diversify the product offering, the Company would strive to expand the business of refurbishment of oilfield equipment. B. AUDCO INDIA LIMITED (AIL): VII. MACHINERY & INDUSTRIAL PRODUCTS Domestic companies A. TRACTOR ENGINEERS LIMITED (TENGL): Subsidiary company Tractor Engineers Limited (TENGL) is a wholly owned subsidiary of Larsen & Toubro Limited principally engaged in manufacture of undercarriage systems for excavators, crawler tractors, bull dozers etc., and material handling equipment like apron conveyors, spares for oil field equipment etc., Customer profile is largely OEMs in construction and material handling equipment business. Operations & Performance Sales and other income for the financial year under review were Rs. 167.35 crore as against Rs. 173.31 crore for the previous financial year. Performance for the year was constrained by cancellation / deferment of orders from customers due to slowdown in construction equipment market. Lower capacity utilisation of the expanded facilities coupled with higher steel prices prevailing for major part of the year and higher Interest cost resulted in the Company reporting a loss of Rs 23.80 crore for the year. In order to optimise on the cost of operations and reduce the overhead costs at multiple locations, the Company has decided to utilise the newly established Talegaon facility for manufacture of entire range of products from one location. Outlook Indian Hydraulic Excavator market saw a significant drop in volumes of around 26% during the year 2008- 96 Associate company AIL is a 50:50 joint venture between L&T and Flowserve Corporation, USA. AIL is a leading manufacturer of Industrial Valves and has four manufacturing plants in Tamlinadu. The Company has installed state-of-the-art machines in all its plants. AIL manufactures valves up to 72" size and Class 2500 pressure rating. Besides India, the Industrial Valves manufactured by AIL have significant presence in major global markets such as China, France, Japan, Italy, Singapore, Malaysia, Middle East countries, South Africa, South Korea, United Kingdom, United States of America and Russia. Operations & Performance Performance during the year was impacted by the economic downtrend. Many major projects, particularly in the global markets, were shelved or postponed. As a result, total income at Rs. 737.71 crore was lower by 14.5% as compared to the previous year. However, higher rupee realisation on the exports and improved cost management helped the Company to maintain the profitability achieved in the previous year. Outlook The year 2009-2010 is expected to be a challenging year. On the positive side, oil & gas projects especially upstream and pipeline projects in the Middle East are showing the signs of recovery. In the Indian market, investments in the power and pipelines segments are expected to progress; albeit with a delayed schedule. Considering the current gap in the infrastructure needs, the recovery in demand is foreseen during the second half of 2009-2010. C. L&T-KOMATSU LIMITED (LTK): Associate company Overview LTK is a 50:50 joint venture between Larsen & Toubro Limited and Komatsu Asia Pacific Pte. Ltd., Singapore, a wholly owned subsidiary of Komatsu Limited, Japan. Komatsu is world's largest manufacturer of Hydraulic Excavators and has manufacturing and marketing facilities worldwide. LTK is engaged in the manufacture of Hydraulic Excavators and other associated hydraulic components. Larsen & Toubro Limited markets and provides after sales support for Hydraulic Excavators manufactured by L&T-Komatsu Limited. The major user segments for Hydraulic Excavators are general construction, mining & quarrying, Irrigation, road, granite & marbles etc. Operations & Performance Hydraulic Equipment Industry, witnessed contraction during the year 2008-2009 with market decline of 28% over the previous year. Liquidity crunch and high cost of funds coupled with tighter credit sanctioning norms have discouraged new customers. The decline in market was sharper during the second half of 2008-2009. Gross sales at Rs. 1211.02 crore dropped by 19% as compared to the previous year, though the Company was able to retain its market share at about 31%, same as last year. The drop in capacity utilisation coupled with higher input prices for greater part of the year impacted the profitability of the Company during the year. Profit after tax thus dropped to Rs. 19 crore as against robust achievement of Rs. 133 crore in the previous year. Outlook Difficult year is foreseen for Hydraulic Excavator industry. The market conditions are expected to be subdued and construction activity may not pick up significantly in 2009-2010 in the absence of major investments. The Company will strive to retain its market share in the coming challenging year so as to maximise the capacity utilisation of the current facilities. D. L&T-CASE EQUIPMENT PRIVATE LIMITED (LTCEPL): Associate company Overview L&T Case Equipment Private Limited (LTCEPL) is a 50:50 Joint Venture between L&T & CNH America LLC. The company is engaged in manufacture & marketing of Construction (Earthmoving) Equipment comprising Loader Backhoes & Vibratory Compactors. In a highly competitive Indian market, L&T-Case has a market share of about 10% in Loader Backhoe and 31% in Vibratory Compactor. The manufacturing facility is located at Pithampur, Madhya Pradesh. Operations & Performance With the encouraging economic policy for investment in infrastructure sector, the Construction Equipment industry had experienced growth momentum in the last few years. However, due to the global financial crisis and the consequent slowdown, the domestic market during the year 2008-2009 declined by 43% for Loader & by 26% in Vibratory Compactor. Consequently, the total income of the Company at Rs.336.54 crore declined by 27% as compared to the previous year. With significant price pressures prevailing in the market, coupled with higher input costs, the profit after tax reduced to Rs.11.16 crore for the year. Outlook During the early part of the year 2009, the Construction Equipment Industry has witnessed marginal recovery in the demand. While Loader market may remain subdued due to significant downturn in the realty sector, the Compactor market may witness marginal growth in view of the large investments planned in the Roads sector. E. EWAC ALLOYS LIMITED (EWAC): Associate company EWAC formed in April 1962 is a joint venture with equal shareholding between Larsen & Toubro Limited and Messer Eutectic Castolin Group of Germany. EWAC is a market leader in the business of maintenance & repairs welding & welding solutions for conservation of global metal resources. The principal products and services comprise Maintenance & Repair (M&R) consumables, specification grade electrodes, flux- cored welding wires, wear plates/parts, welding and cutting equipment, Tero Cote Lab services etc. Larsen & Toubro Limited markets EWAC's products in India through strong network of stockists. Operations & Performance Due to adverse business conditions, the manufacturing activity showed marked reduction, which resulted in sharp drop in demand for industrial consumables. EWAC, therefore, reported only a marginal growth in 97 the total income at Rs. 157 crore (previous year: Rs.151 crore). Profit after tax at Rs. 20 crore was lower by 18% as compared to the previous year, mainly due to higher material cost during the first half of the year and relatively lower capacity utilisation during the second half. In addition to the improved R&D operations, various initiatives for the cost control measures like product re-engineering were initiated during the year to reduce material cost. The Company has also taken initiatives to improve the existing asset utilisation, implement energy conservation projects and increase employee productivity. Outlook With the expected improvement in the economic climate and industrial production in later half of the financial year 2009-2010, EWAC is optimistic to perform better in the coming years. F. L&T-DEMAG PLASTICS MACHINERY LIMITED (L&T-Demag): Subsidiary company The Company was a joint venture between L&T and Demag Ergotech GmbH, Germany. Effective March 31, 2009, L&T has bought entire equity held by Demag and hence the venture is now a wholly-owned subsidiary of Larsen & Toubro Limited. The Company is in the business of manufacture of Injection Moulding Machines for the plastics industry and its products find applications in diverse industries like automobiles, electrical goods, packaging, personal care products, writing instruments and white goods. Operations & Performance Order inflow and sales declined by 15% & 19% respectively as compared to the previous year, due to falling demand. Export dipped mainly due to global recession affecting many geographical locations. Company posted a loss of Rs. 6.47 crore for 2008- 2009. Introduction of cost-effective 'S-Tech series' was a major step towards achieving cost leadership. In manufacturing operations, sustained efforts were taken in areas such as manpower reduction, reduction in energy consumption and better management of working capital. The Company continues to enjoy a position of leadership amongst reputed manufacturers of Injection Moulding machines in the domestic market and is a preferred choice for many customers. Going by the enthusiastic response for the new series launched during 2008-2009, the company is working on extending the range to cover medium tonnage segment as well. Machines developed in-house for PET application is one more step by the company towards advancing right technology solution for the industry. Outlook The global slowdown had its toll on the industry resulting in sluggish off-take of machines during the year 2008-2009. However, there are early signs of revival of demand. With no territorial constraints, the Company expects to improve the export volumes during the second half of 2009-2010, when the revival of the global economy is anticipated. G. VOITH PAPER TECHNOLOGY (INDIA) LIMITED (VPTIL) Associate company Voith Paper Technology (India) Limited (VPTIL) is a 50:50 joint venture formed by L&T and Voith Paper, Germany. VPTIL provides comprehensive solutions from fiber to paper, covering the entire paper making process along with extensive life cycle support. The JV Company enjoys technological leadership and is the 'preferred supplier' in the industry. Right from its inception, the Company has ushered in several new technologies with "Perfect Fit" solutions for the Indian Paper Industry. Operations & Performance During the year, 2008-2009, VPTIL executed two major orders for paper making process line package. The sales revenue during the year was at Rs.10.60 crore and profit after tax was Rs. 8.60 crore. Outlook Even though the Indian Paper Industry is adversely impacted with the drop in demand and decrease in realisation, the long term prospects remain quite positive for this sector. Capacity expansion in the industry is anticipated given the growing paper consumption worldwide. With its experience and expertise, VPTIL is well positioned to sustain the growth momentum in the medium term. 98 International companies H. LARSEN & TOUBRO (JIANGSU) VALVE COMPANY LIMITED (LTJVCL): Subsidiary company LTJVCL, a subsidiary of LTIFZE, was set up in Yancheng City, China, for manufacture of certain ranges of valves for global markets. The facility is located in an area of 66,666 Sq Mts., equipped with the best of the plant and machinery. The manufacturing practices adopted by the Company reinforce its commitment to customer satisfaction, employee health, safety and environmental protection. Operations & Performance The factory commenced commercial production of valves in the last quarter of the year 2007 and the products have been well received in the market. The designs for all valves manufactured by LTJVCL are developed, owned and managed by L&T. These designs have been addressing the specific needs of major end users and comply with international emission norms, besides getting ISO 9001:2000, CE Marking & ATEX Certification for its products. The valves manufactured by LTJVCL have been approved by major customers like SHELL, BP, Chevron, Saudi Aramco, Alstom, SASOL, Dow Chemical's etc. In the financial year 2008, its first full year of operations, LTJVCL recorded revenue of Rs.28.30 crore. Due to higher initial overhead and marketing costs, the Company ended the year with a net loss of Rs. 4.20 crore. Outlook With the recent accreditation from major customers, the volume of operations has picked up from the last quarter of the year 2008. Despite the lack of positive investment climate in the Oil & Gas sector globally, a significant trend among the end users is being seen to consider higher sourcing of valves from China. LTJVCL is in a favorable position to capitalise on this demand and the prospects look bright for achieving higher sales volumes in the year 2009 and beyond. I. LARSEN & TOUBRO (QINGDAO) RUBBER MACHINERY COMPANY LIMITED (LT QINGDAO) CHINA: Subsidiary company LT Qingdao is a joint venture between LTIFZE and Qingdao Over World Group Company (OWG) with 95:05 shareholdings. LT Qingdao develops and supplies Tyre Curing Presses and other Rubber Processing Machinery in line with the quality of products being presently supplied by L&T to its global clients. Operations & Performance LT Qingdao completed the construction of the new state-of-the-art factory in October 2008. During the year the Company recorded revenues aggregating to Rs. 25.80 crore and earned a profit of Rs. 0.24 crore. Outlook Some of the International Tyre majors have started operating in China and a few of them have commenced procuring their machines from China. Tyre Curing Presses have been supplied to Pirelli by LT Qingdao & Rubber Mixing Mills have been exported to tyre manufacturing companies in India. The competitive position of LT QINGDAO is expected to improve with the increase in capacity utilisation. J. LARSEN & TOUBRO LLC, HOUSTON, USA (L&T LLC) Subsidiary company Larsen & Toubro LLC (L&T LLC), a wholly-owned Subsidiary of the Company, is based in Houston, USA and represents L&T for stock and sale of industrial valves in the North American market. Operations & Performance L&T LLC has been successful in securing approvals of major end-users while forging global alliances and agreements with key EPC contractors and Oil majors. The main thrust in Valves business has been on Oil and Gas segment. During the year 2008, the sales revenues grew by 36% at Rs.23.90 crore and the net profit by 54% at Rs. 0.62 crore. Outlook The sharp fall in economic activity especially in the USA and the lower consumption has led to postponement of investments by the major oil companies. The consequent emphasis on refurbishment and the long-term agreements with some of the oil majors augur well for the Company's plans in the current year. 99 VIII. LARSEN & TOUBRO INTERNATIONAL FZE (LTIFZE): Subsidiary company LTIFZE, is a wholly owned subsidiary of L&T and is incorporated as a limited liability company in the Hamriyah Free Zone, Sharjah. The Company is engaged in providing strategic support to L&T's growth aspirations in the Middle East, China and Malaysia. Apart from owning strategic equipment portfolio facilitating L&T group's prequalification for construction contracts in the Middle East, LTIFZE functions as an investment arm in the country specific Joint Venture Companies and other strategic entities in the Middle East, Far East and China. Operations & Performance LTIFZE has acquired plant & machinery aggregating to Rs.176 crore as of December 31, 2008. The Company has outstanding capital commitment worth Rs 11 crore for strategic plant & machineries required for construction and hydrocarbon business sector. Outlook Considering the business potential in the Middle East, LTIFZE is poised to play a crucial role to support L&T's operations in the region. The Company is positioned to act as a strategic investment arm of L&T for making investment overseas and a resource base for critical plant & equipment to support international business opportunities. Countrywise investments in the subsidiary and associate companies by LTIFZE 100 Auditors' report to the members of Larsen & Toubro Limited We have audited the attached Balance Sheet of Larsen & Toubro Limited, as at March 31, 2009 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of section 227 of the Companies Act, 1956, we report that: (1) As required by the Companies (Auditor's Report) Order, 2003, issued by the central government of India under sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) Further to our comments in the Annexure referred to above, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes (b) (c) (d) of our audit; in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and (e) on the basis of the written representations received from directors as on March 31, 2009 and taken on record by the board of directors, we report that none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significant accounting policies in schedule Q and notes appearing thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: 1) 2) 3) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009; in the case of the Profit and Loss Account, of the profit for the year ended on that date; and in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Mumbai, May 28, 2009 Annexure to the Auditors' report (Referred to in paragraph (1) of our report of even date) SHARP AND TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 1 2 3 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets. (b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification. (c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern status. (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. (b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the order are not applicable. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the order are not applicable. 101 4 5 6 In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that (b) need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. The Company has accepted deposits from the public and in our opinion and according to the information and explanations given to us, the directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder, where applicable, have been complied with. We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 7 8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of electronic products, viz. industrial electronics including all control instrumentation and automation equipment and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at March 31, 2009 for a period of more than six months from the date they became payable. 9 (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax, excise duty, service tax and income tax as at March 31, 2009 which have not been deposited on account of a dispute pending, are as under: Name of the Statute Nature of the disputed dues Amount Rs.crore* Period to which the amount relates Forum where disputes are pending Central Sales Tax Act, Local Sales Tax Acts and Works Contract Tax Act Non-submission of forms, dispute regarding rate of tax and other matters Non-submission of forms, classification dispute, disallowance of deemed inter-state sales and other matters Non-submission of forms, additional demand for pending forms, rate of tax dispute, disallowance of branch transfer, and other matters Non-submission of forms, disallowance of transit sales, classification dispute and other matters Non-submission of forms, additional demand for pending forms, disallowance of inter-state sales and other matters Non-submission of forms, dispute related to sales in transit and other matters Non-submission of forms, inter-state sales, sub-contractors turnover, rate dispute, disallowance under composition scheme and other matters Inter-state sales, classification dispute, and disallowance of deemed sales in course of 0.48 36.85 1997-1998 to 2001-2002, 2004-2005 and 2005-2006 1992-1993, 1996-1997 to 2005-2006 Commercial Tax Officer Assistant Commissioner (Appeals) 10.30 1989-1990, 1991-1992, 1994-1995 to 1998-1999 and 2000-2001 to 2005-2006 Deputy Commissioner (Appeals) 7.00 1991-1992 to 1994-1995, and 1996-1997 to 2004-2005 (Appeals) Joint Commissioner 2.99 2000-2001 to 2005-2006 Additional Commissioner (Appeals) 1.71 2003-2004 and 2005-2006 Commissioner (Appeals) 114.93 1987-1988 to 1992-1993 1994-1995 to 2003-2004 and 2005-2006 Sales Tax Tribunal 144.10 1986-1987 to 2005-2006 High Court 102 Name of the Statute Nature of the disputed dues Amount Rs.crore* Period to which the amount relates Forum where disputes are pending imports and taxability of subcontractors turnover Dispute regarding taxability of declared goods, arbitrary enhancement and other matters The Central Excise Act, 1944 and Service Tax under the Finance Act, 1994 Classification dispute, exemptions denied, valuation disputes and other matters Export rebate claim Dispute on site mix concrete and PSC grinders Cenvat credit against service tax on freight outward disallowed Demand for service tax on lumpsum turnkey projects and demand for service tax treating "commercial or industrial construction services" Service tax on commercial construction services Dispute regarding tax deducted at source at lower rate on maintenance charges Difference in rate of tax deducted at source The Income Tax Act, 1961 5.57 1991-1992, 1995-1996, 1997-1998, 1999-2000 to 2001-2002 and 2003-2004 Supreme Court 8.86 0.07 0.27 1991-1992, 2001-2002 to 2003-2004 and 2005-2006 2003-2004 1997-1998 CESTAT High Court Supreme Court 0.10 2007-2008 Commissioner (Appeals) 171.44 2002-2003 to 2008-2009 CESTAT 4.04 2005-2006 High Court 0.03 2005-2006 Commissioner (Appeals) 1.56 2007-2008 and 2008-2009 Director of Income Tax (International Taxation) *Net of pre-deposit paid in getting the stay/appeal admitted 10 The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. 11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date. 12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company. 14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name. In our opinion and according to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interests of the Company. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained. 15 16 17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments. 18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year. 19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued. 20 The Company has not raised any money by public issues during the year. 21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management. Mumbai, May 28, 2009 SHARP AND TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 103 Balance Sheet as at March 31, 2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore As at 31-3-2009 As at 31-3-2008 SOURCES OF FUNDS: SHAREHOLDERS’ FUNDS: Share capital Reserves and surplus Employee stock options outstanding (previous year: Rs.279.67 crore) Less: Deferred employee compensation expense (previous year: Rs.165.28 crore) LOAN FUNDS: Secured loans Unsecured loans Deferred tax liabilities [see note no.21] TOTAL APPLICATION OF FUNDS: Fixed assets: Tangible assets Gross block Less: Depreciation and impairment Net block Less: Lease adjustment Capital work-in-progress Intangible assets Gross block Less: Amortisation and impairment Net block Capital work-in-progress Investments Deferred tax assets [see note no.21] Current assets, loans and advances: Interest accrued on investments Inventories Sundry debtors Cash and bank balances Loans and advances Less: Current liabilities and provisions: Liabilities Provisions Net current assets Miscellaneous expenditure (to the extent not written-off or adjusted) TOTAL 469.95 234.29 117.14 12106.89 235.66 1102.38 5453.65 5434.18 1418.32 4015.86 3.07 4012.79 1040.99 156.32 54.79 101.53 39.29 21.56 5805.05 10055.52 775.29 6790.60 23448.02 14775.88 3066.53 17842.41 A B C D E (i) E (ii) F G H I CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the accounts see page nos.136 to 171) J Q 12459.69 6556.03 435.16 19450.88 5053.78 140.82 8263.72 386.69 9555.08 3583.95 244.33 13383.36 3553.43 92.01 6922.26 182.96 58.47 9382.22 114.39 308.53 3275.42 4096.90 1239.40 2857.50 3.07 2854.43 699.00 108.85 47.11 61.74 30.27 14.32 4305.91 7365.01 964.46 3757.08 16406.78 11741.72 2035.42 13777.14 5605.61 0.26 19450.88 2629.64 3.06 13383.36 As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 104 A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 Profit and Loss Account for the year ended March 31, 2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore 2008-2009 2007-2008 K L (i) L (ii) M N O P INCOME: Sales & service (gross) Less: Excise duty Sales & service (net) Other operational income Other income EXPENDITURE: Manufacturing, construction and operating expenses Staff expenses Sales, administration and other expenses Interest expenses and brokerage Depreciation, obsolescence of tangible assets Amortisation of intangible assets Less: Overheads charged to fixed assets Profit before transfer from revaluation reserve Add: Transfer from revaluation reserve Profit before tax Provision for current taxes [see note no.20] Provision for deferred tax [see note no.21] Provision for tax on fringe benefits [see note no.20(iv)] Profit after tax Gain/(loss) on extraordinary items (net of tax) [see note no.10] Profit after tax after extraordinary items Add: Balance brought forward from previous year Less: Dividend paid for previous year Additional tax on dividend paid for previous year Profit available for appropriation Less: Transfer to general reserve Transfer to debenture redemption reserve Profit available for distribution Interim dividend Proposed final dividend Additional tax on dividend Balance carried to Balance Sheet Basic earnings per equity share before extraordinary items (Rupees) Diluted earnings per equity share before extraordinary items (Rupees) Basic earnings per equity share after [see note no.22] extraordinary items (Rupees) Diluted earnings per equity share after extraordinary items (Rupees) Face value per equity share (Rupees) SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the accounts see page nos.136 to 171) Q } 34045.04 398.47 25187.48 332.78 26232.01 1998.02 1863.98 350.22 286.14 21.16 30751.53 24.48 1167.03 10.44 53.74 104.31 0.28 0.05 33646.57 279.80 739.78 34666.15 30727.05 3939.10 1.31 3940.41 1231.21 2709.20 772.46 3481.66 103.98 3585.64 2725.00 43.34 817.30 – 614.97 101.83 100.50 46.30 45.68 59.50 58.70 2.00 19154.00 1535.45 1362.04 122.66 197.97 15.66 22387.78 11.42 892.79 19.95 69.31 78.24 0.66 0.11 24854.70 154.73 520.37 25529.80 22376.36 3153.44 2.03 3155.47 982.05 2173.42 – 2173.42 77.47 2250.89 1575.00 – 675.89 56.83 438.49 76.26 104.31 37.80 36.38 37.80 36.38 2.00 As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 105 Cash Flow Statement for the year ended March 31, 2009 2008-2009 Rs.crore 2007-2008 Rs.crore Cash flow from operating activities: Profit before tax (excluding extraordinary items) Adjustments for: Dividend received Depreciation (including obsolescence), amortisation and impairment Exchange difference on items grouped under financing activity Interest expense Interest income Profit on sale of fixed assets (net) Profit on sale of investments (net) Employee stock option - discount forming part of staff expenses Provision for diminution in value of investments Operating profit before working capital changes Adjustments for: (Increase)/Decrease in trade and other receivables (Increase)/Decrease in inventories (Increase)/Decrease in miscellaneous expenditure Increase/(Decrease) in trade payables and customer advances Cash generated from operations Direct taxes refund/(paid) - [net] Net cash from operating activities ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Cash flow from investing activities: ... Purchase of fixed assets ... Sale of fixed assets ... Investment in subsidiaries, associates and joint ventures ... Divestment of stake in subsidiaries, associates and joint ventures ... Purchase of long term investments ... Sale of long term investments (Purchase)/sale of current investments (net) ... Loans/deposits made with subsidiaries, associates companies and third parties (net) ... ... Advance towards equity commitment ... ... Interest received ... ... Dividend received from subsidiaries ... Dividend received from other investments ... Cash (used in)/from investing activities (before extraordinary items) ... Extraordinary items Cash received (net of expenses) on sale/transfer of ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Ready Mix Concrete business (net of tax of Rs.279.37 crore) ... Cash & cash equivalents discharged pursuant to disposal of Ready Mix Concrete business ... ... Net cash (used in)/from investing activities (after extraordinary items) ... ... ... A. B. C. Cash flow from financing activities: Proceeds from fresh issue of share capital including shares under ESOP schemes ... Proceeds from long term borrowings ... Repayment of long term borrowings ... (Repayments)/proceeds from other borrowings (net) ... Loans from subsidiary and associate companies (net of repayments) ... Dividends paid ... Additional tax on dividend ... Interest paid ... Net cash (used in)/from financing activities ... ... ... Net (decrease)/increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 3940.41 (334.63) 305.99 238.18 350.22 (171.82) (4.78) (94.66) 163.31 8.12 4400.34 (2888.35) (1519.59) 2.80 2356.49 2351.69 (873.12) 1478.57 (2029.63) 49.81 (1749.04) 1201.20 (176.44) 195.86 (510.48) (1251.77) (623.59) 129.77 15.80 318.84 (4429.67) 1121.37 (0.23) (3308.53) 23.04 2574.29 (16.69) (201.13) 4.10 (438.77) (66.65) (237.40) 1640.79 (189.17) 964.46 775.29 3155.47 (185.55) 211.60 138.30 122.66 (84.48) (6.92) (157.09) 91.86 24.42 3310.27 (2418.51) (1304.76) 6.78 3339.79 2933.57 (988.33) 1945.24 (1700.28) 78.16 (1042.53) 9.58 (6.85) 347.83 (3140.66) 43.56 (66.35) 96.68 0.33 138.64 (5241.89) – – (5241.89) 1701.58 1735.62 (52.54) 10.34 (19.47) (114.14) (19.40) (75.31) 3166.68 (129.97) 1094.43 964.46 Notes: 1. Cash Flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. 2. Purchase of fixed assets includes movement of capital work-in-progress during the year. 3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised gain of Rs.23.77 crore (previous year unrealised gain of Rs.0.42 crore) on account of translation of foreign currency bank balances. 4. For cash and cash equivalents not available for immediate use as on the Balance Sheet date, see note no.5(a) and 5(c) of notes forming part of accounts. 5. Previous year’s figures have been regrouped/reclassified wherever applicable. As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 106 A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 Schedules forming part of the Accounts Schedule A Share capital: Authorised: 1,62,50,00,000 equity shares of Rs.2 each (previous year: 1,62,50,00,000 equity shares of Rs.2 each) Issued: 58,56,87,862 equity shares of Rs.2 each (previous year: 29,23,27,390 equity shares of Rs.2 each) Subscribed and paid up: 58,56,87,862 equity shares of Rs.2 each [see note no.1] (previous year: 29,23,27,390 equity shares of Rs.2 each) Schedule B Reserves and surplus: Revaluation reserve: As per last Balance Sheet Less: Transferred to Profit and Loss Account Capital redemption reserve: As per last Balance Sheet Less: Utilised for issue of bonus shares Capital reserve Debenture redemption reserve Created during the year Securities premium account: As per last Balance Sheet Addition during the year Less: Utilised for issue of bonus shares Share issue expenses (Reversal)/write-back of provision made in previous year Foreign projects reserve: As per last Balance Sheet Less: Transferred to general reserve Housing projects reserve: As per last Balance Sheet Less: Transferred to general reserve Carried forward As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 325.00 117.14 117.14 117.14 325.00 58.47 58.47 58.47 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 25.90 1.31 0.02 0.02 4187.25 69.62 4256.87 58.50 – (0.92) 10.83 3.00 3.98 2.25 25.90 0.02 10.52 – 24.59 – 10.52 43.34 27.93 2.03 0.02 – 2064.35 2135.14 4199.49 – 14.64 (2.40) 4199.29 4187.25 19.19 8.36 7.96 3.98 7.83 1.73 4287.30 10.83 3.98 4238.50 107 Schedules forming part of the Accounts (contd.) Schedule B (contd.) Brought forward Hedging reserve (net of tax): Created during the year General reserve: As per last Balance Sheet Add: Transferred from: Foreign projects reserve Housing projects reserve Profit and Loss Account Profit and Loss Account Schedule C Secured loans: As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 5039.41 3.00 2.25 2725.00 4287.30 (50.57) 7769.66 100.50 12106.89 3452.07 8.36 3.98 1575.00 4238.50 – 5039.41 104.31 9382.22 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore Redeemable non-convertible fixed rate debentures 900.00 – Loans from banks: Cash credits/working capital demand loans Other loans Schedule D Unsecured loans: Redeemable non-convertible fixed rate debentures Loans from subsidiary companies Short term loans and advances: From banks Lease finance Sales tax deferment loan Other loans and advances: From banks Lease finance Sales tax deferment loan From others 108 202.38 – 308.46 0.07 202.38 1102.38 308.53 308.53 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 873.36 20.90 18.89 3974.60 125.36 101.14 85.00 250.00 4.40 – 8.50 664.92 0.43 15.16 913.15 680.51 2380.04 0.27 121.10 85.00 4286.10 5453.65 2586.41 3275.42 Schedules forming part of the Accounts (contd.) Schedule E (i) Fixed assets: Tangible Particulars OWNED ASSETS: Land-freehold Ships Buildings Railway sidings Plant and machinery Furniture and fixtures Vehicles Aircraft Owned assets leased out: Buildings Plant and machinery Lease adjustment As at 1-4-2008 116.87 14.34 936.96 0.25 Cost/valuation Depreciation Impairment Book value Additions Deductions As at 31-3-2009 Up to 31-3-2008 For the year Deductions Up to 31-3-2009 As at 31-3-2009 As at 31-3-2009 As at 31-3-2008 Rs.crore 26.91 39.21 194.38 – 6.21 – 137.57 53.55 – 1.71 1.61 1129.73 164.83 – 0.25 0.25 2745.59 1105.94 213.40 3638.13 937.00 124.73 74.29 9.26 44.29 27.44 – 23.66 37.26 3.91 10.36 – – – – – – – – 144.48 101.19 9.26 44.29 27.44 – 61.74 42.95 7.48 4.50 9.78 – – 1.70 26.09 – 232.16 13.90 7.94 0.50 0.64 0.35 – – – – 3.41 0.29 190.63 – 0.25 92.80 1076.36 3.40 8.71 – – – – 72.24 42.18 7.98 5.14 10.13 – – – – – – – – – – 6.93 – 137.57 50.14 939.10 – 116.87 12.63 772.13 – 2561.77 1808.59 72.24 59.01 1.28 39.15 10.38 (3.07) 62.99 31.34 1.78 39.79 10.73 (3.07) Owned assets (sub total - A) 4094.02 1427.36 235.49 5285.89 1230.24 283.28 105.20 1408.32 6.93 3867.57 2853.78 LEASED ASSETS: Assets taken on finance lease: Plant and machinery Vehicles Assets taken on lease (sub total - B) TOTAL (A+B) Previous year Add: Capital work-in-progress Schedule E (ii) Fixed assets: Intangible Particulars Land-leasehold Specialised softwares Lump sum fees for technical knowhow TOTAL Previous year Add: Capital work-in-progress 1.86 1.02 2.88 144.98 1.11 146.09 0.57 0.11 0.68 146.27 2.02 148.29 1.22 1.01 2.23 1.46 0.03 1.49 0.54 0.11 0.65 2.14 0.93 3.07 4096.90 1573.45 236.17 5434.18 1232.47 284.77 105.85 1411.39 2795.32 1353.90 52.32 4096.90 1080.06 195.85 43.44 1232.47 – – – 6.93 6.93 144.13 1.09 145.22 0.64 0.01 0.65 4012.79 2854.43 1040.99 699.00 5053.78 3553.43 Cost/valuation Amortisation Rs.crore Book value As at 1-4-2008 44.07 49.58 15.20 108.85 80.98 Additions Deductions As at 31-3-2009 Up to 31-3-2008 16.52 45.33 – 61.85 35.25 0.97 12.84 0.57 14.38 7.38 59.62 82.07 14.63 156.32 108.85 4.67 33.88 8.56 47.11 32.77 For the year 0.57 16.36 4.23 21.16 15.66 Deductions Up to 31-3-2009 As at 31-3-2009 As at 31-3-2008 0.05 12.85 0.58 13.48 1.32 5.19 37.39 12.21 54.79 47.11 54.43 44.68 2.42 101.53 39.29 140.82 39.40 15.70 6.64 61.74 30.27 92.01 109 Schedules forming part of the Accounts (contd.) Schedule E (contd.) Notes: Schedule E (i) - Tangible assets 1 2 Cost/valuation of freehold land includes Rs.19.42 crore for which conveyance is yet to be completed. Cost/valuation of buildings includes ownership accommodation: (i) (a) in various co-operative societies and apartments and shop-owners’ associations: Rs.95.73 crore, including 2320 shares of Rs.50 each, 207 shares of Rs.100 each and 1 share of Rs.250. in proposed co-operative societies Rs.17.29 crore. (b) of Rs.4.39 crore in respect of which the deed of conveyance is yet to be executed. (ii) (iii) of Rs.8.45 crore representing undivided share in a property at a certain location. 3 4 5 6 7 Additions during the year and capital work-in-progress include Rs.6.17 crore being borrowing cost capitalised in accordance with Accounting Standard (AS)16 on “Borrowing Costs” as specified in the Companies (Accounting Standards) Rules, 2006. Depreciation for the year include obsolescence Rs.1.37 crore (previous year: Rs.2.12 crore). Capital work-in-progress includes advances Rs.103.76 crore (previous year: Rs.119.02 crore). The Company had revalued as at October 1,1984 some of its land, buildings, plant and machinery and railway sidings at replacement/ market value which resulted in a net increase of Rs.108.05 crore. Owned assets given on operating lease have been presented separately in the schedule as per Accounting Standard (AS) 19. Schedule E (ii) - Intangible assets 1 Cost/valuation of leasehold land includes Rs.2.63 crore for land taken at Mysore on lease from KIADB vide agreement dated May 5, 2006. The lease agreement is for a period of 6 years with extension of 3 years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company. Capital work-in-progress includes advances Rs.nil (previous year: Rs.1.40 crore). 2 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore Schedule F Investments (at cost unless otherwise specified): (A) Long term investments: (i) Government and trust securities (ii) Subsidiary companies: (a) Fully paid equity shares (b) Partly paid equity shares (c) Fully paid preference shares (d) Application money for equity shares (iii) Fully paid equity shares - trade investments: (a) Fully paid equity shares in associate companies (b) Fully paid equity shares in incorporated joint ventures (c) Fully paid equity shares in other companies (iv) Other fully paid equity shares (v) Bonds Carried forward 110 – 1776.72 90.12 9.42 1076.54 2952.80 79.40 – 25.35 104.75 198.24 0.50 5.91 2154.49 73.93 9.42 – 2237.84 79.40 3.00 25.35 107.75 21.80 190.46 3256.29 3256.29 2563.76 2563.76 Schedules forming part of the Accounts (contd.) Schedule F (contd.) Brought forward (B) Current investments: (i) Government and trust securities (ii) Bonds (iii) Certificate of deposits (iv) Commercial paper (v) Mutual funds (C) Investment in integrated joint ventures Particulars Quoted investments Book value Market value Unquoted investments Book value Details of investments: Particulars All unquoted unless otherwise specified A) Long term investments: (i) Government and trust securities: 8.07% Government of India bond 2017 of Rs.5 crore (quoted) Government and trust securities - total (ii) Subsidiary companies: (a) Fully paid equity shares: Bhilai Power Supply Company Limited Hi-Tech Rock Products & Aggregates Limited India Infrastructure Developers Limited [see note no.35] International Seaport Dredging Limited International Seaports Pte. Limited L&T - Gulf Private Limited L&T Ahmedabad-Maliya Tollway Private Limited L&T Capital Company Limited L&T Capital Holdings Limited L&T Chennai-Tada Tollway Limited (Rs.1000; previous year: Rs.nil) L&T Concrete Private Limited Carried forward As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 3256.29 2563.76 – 254.09 1261.46 95.52 3268.60 174.65 57.35 – – 4050.65 4879.67 127.76 8263.72 4282.65 75.85 6922.26 As at As at 31-3-2009 31-3-2008 Rs.crore Rs.crore 470.68 279.44 1258.81 1403.92 7793.04 6642.82 Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 5,00,00,000 1 10 10 10 49,950 50,000 5,60,60,000 – – – – 10,000 USD 1 10 10 10 10 10 28,816 18,15,000 10,000 – 50,00,000 – – 1,989 – 12,40,005 10,10,000 1,70,00,000 20,50,000 100 10 10,000 – 1 – – – 5,60,60,000 – – – – – 205 – – 49,950 50,000 – 30,805 18,15,000 12,50,005 10,10,000 2,20,00,000 20,49,795 100 10,000 – – 0.05 0.05 – 30.81 2.36 1.25 1.01 22.00 2.05 – 0.01 59.59 5.91 5.91 0.05 0.05 56.06 28.82 2.36 0.01 – 5.00 – – 0.01 92.36 111 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore – 18,66,91,500 – 10,000 19,30,31,352 50,00,00,000 10,000 – 10,10,000 – – – – 18,66,91,500 – – – 50,00,00,000 10,000 – 10,10,000 10,000 19,30,31,352 – Fully paid equity shares of Subsidiary companies (contd.) Brought forward L&T Engserve Private Limited L&T Finance Limited [see note no.35] L&T Halol-Shamlaji Tollway Private Limited L&T Infra & Property Development Private Limited L&T Infrastructure Development Projects Limited L&T Infrastructure Finance Company Limited [see note no.35] L&T Natural Resources Limited L&T Power Development Limited L&T Power Limited (Previously known as L&T Power Projects Limited) L&T Rajkot-Vadinar Tollway Private Limited L&T Realty Private Limited L&T Seawoods Private Limited L&T Shipbuilding Limited L&T Strategic Management Limited L&T Transco Private Limited L&T Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T-Demag Plastics Machinery Private Limited (prior to March 31, 2009, incorporated joint venture) L&T-Sargent & Lundy Limited L&T-Valdel Engineering Limited Larsen & Toubro Infotech Limited Larsen & Toubro International FZE Larsen & Toubro LLC Narmada Infrastructure Construction Enterprise Limited L&T PNG Tollway Private Limited (Rs.26000, previous year: Rs.Nil) Raykal Aluminum Private Limited Spectrum Infotech Private Limited Tractor Engineers Limited 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 5 Dhs 5,50,500 USD 1 10 10 10 10 1,000 – 2,90,00,000 1,05,01,000 – 4,71,60,700 – 50,000 50,000 10,000 1,08,64,000 1,39,50,007 30,00,000 27,52,129 12,44,500 3,00,00,000 830 50,000 1,26,48,507 – – 4,40,000 68,000 50,000 5,70,00,000 4,08,00,000 10,10,000 – 10,000 – – – – – 1,30,00,000 – – – 862 – – 2,600 40,000 – – Less: Provision for diminution in value Total (ii)(a) (b) Partly paid equity shares: [see note no.13] L&T Infrastructure Development Projects Limited (Re.1 per share paid up) Larsen & Toubro Infotech Limited Rs.3.75 per share paid up (Re.0.55 paid during the year) Total (ii)(b) (c) Fully paid preference shares: 10 5 67,69,518 22,50,000 International Seaport Dredging Limited - 13% preference shares Total (ii)(c) 10,000 9,420 (d) Application money for equity shares: L&T Capital Holdings Limited Total (ii)(d) Subsidiary companies - total 112 – – – – – – 59.59 0.01 – 1.01 0.01 383.42 – 0.05 86.00 51.30 1.01 47.16 0.01 0.05 0.05 0.01 10.86 13.95 13.00 1.53 25.22 15.00 1049.82 0.23 12.65 – 0.04 6.80 0.30 1779.08 2.36 1776.72 0.68 89.44 90.12 9.42 9.42 1076.54 1076.54 2952.80 92.36 – 490.98 – 0.01 383.42 500.00 – 29.00 10.50 – 47.16 – 0.05 0.05 0.01 10.86 13.95 – 1.53 25.22 15.00 516.77 0.23 12.65 – – 6.80 0.30 2156.85 2.36 2154.49 0.68 73.25 73.93 9.42 9.42 – – 2237.84 – – – – – – – – – – – – – – – – – – – – – – – – – – 50,000 8,60,00,000 5,13,01,000 10,10,000 4,71,60,700 10,000 50,000 50,000 10,000 1,08,64,000 1,39,50,007 1,60,00,000 27,52,129 12,44,500 3,00,00,000 1,692 50,000 1,26,48,507 2,600 40,000 4,40,000 68,000 67,69,518 22,50,000 9,420 – Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore (iii) Fully paid equity shares - trade investments: (a) Fully paid equity shares in associate companies: Audco India Limited EWAC Alloys Limited Gujarat Leather Industries Limited L&T-Case Equipment Private Limited L&T-Chiyoda Limited L&T-Komatsu Limited L&T-Ramboll Consulting Engineers Limited Voith Paper Technology (India) Limited Less: Provision for diminution in value Total (iii)(a) (b) Fully paid equity shares in incorporated joint ventures: L&T-Demag Plastics Machinery Private Limited (subsidiary w.e.f. March 31, 2009) Total (iii)(b) (c) Fully paid equity shares in other companies: City Union Bank Limited (quoted) Total (iii)(c) Fully paid equity shares - trade investments - total (iv) Other fully paid equity shares: John Deere Equipment Private Limited Satyam Computer Services Limited (quoted) [see note no.34(f)] Tidel Park Limited UltraTech Cement Limited (quoted) Utmal Multi-purpose Service Co-operative Society Limited [B Class] (Rs.30,000; previous year: Rs.30,000) Other fully paid equity shares - total (v) Bonds: 5.25% Rural Electrification Corporation Limited - capital gain bonds 5.50% National Highway Authority of India - capital gain bonds 5.50% Small Industries Development Bank of India-capital gain bonds 5.65% National Highway Authority of India - capital gain bonds 6.75% Unit Trust of India-tax free bonds (quoted) Bonds - total Long term investments - total 100 100 10 10 10 10 10 10 9,00,000 4,14,720 7,35,000 1,20,05,000 45,00,000 6,00,00,000 18,00,000 15,00,000 10 30,00,000 1 1,50,00,000 35,00,000 – 5,09,19,964 10 2 10 10 100 40,00,000 1,43,03,294 300 0.06 0.04 0.56 12.00 4.50 60.00 1.80 1.00 79.96 0.56 79.40 – – 25.35 25.35 104.75 3.50 176.44 4.00 14.30 – 198.24 – – – – – – – – 9,00,000 4,14,720 7,35,000 1,20,05,000 45,00,000 6,00,00,000 18,00,000 15,00,000 30,00,000 – 1,50,00,000 35,00,000 5,09,19,964 40,00,000 1,43,03,294 300 – – – – – – – 10,000 500 10,000 85,000 10,000 53,000 10,000 100 50,000 1,96,400 500 0.50 85,000 53,000 50,000 1,96,400 – – – – – – – – – – – – – – – – – – – – – – – – – – – 0.06 0.04 0.56 12.00 4.50 60.00 1.80 1.00 79.96 0.56 79.40 3.00 3.00 25.35 25.35 107.75 3.50 – 4.00 14.30 – 21.80 0.50 85.00 53.00 50.00 1.96 0.50 3256.29 190.46 2563.76 113 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars B) Current investments: (i) Government and trust securities: 5.87% Government of India bond 2010 (quoted) 7.99% Government of India bond 2017 (quoted) 8.33% Government of India bond 2036 (quoted) 8.35% Government of India bond 2022 (quoted) Less: Provision for diminution in value Government and trust securities - total (ii) Bonds: Face value per unit Rupees 5,00,00,000 5,00,00,000 5,00,00,000 5,00,00,000 11.25% Gujarat Urja Vikas Nigam Limited bonds 2009 40,000 (quoted) [face value reduced by Rs.30,000 from Rs.70,000] 7.65% HDFC bonds 2016 (quoted) 8.00% HDFC bonds 2017 (quoted) 9.50% HDFC bonds 2013 (quoted) 8.45% Indian Railway Finance Corporation 2018 (quoted) 10.60% Indian Railway Finance Corporation 2018 (quoted) 8.55% Indian Railway Finance Corporation 2019 (quoted) 8.00% Indian Overseas Bank 2016 bonds (quoted) India Infrastructure Finance Company Limited (quoted) 11.25% Power Finance Corporation bonds 2018-C series (quoted) 8.65% Rural Electrification Corporation Limited bonds 2011 (quoted) 10.85% Rural Electrification Corporation Limited bonds 2018 (quoted) 10.85% Rural Electrification Corporation Limited bonds 2018 (quoted) Less: Provision for diminution in value Bonds - total (iii) Certificate of deposits: Bank of Baroda-7.08%, 15 Jan 2010 Bank of Baroda-7.10%, 15 Jan 2010 Canara Bank-6.75%, 12 Feb 2010 Canara Bank-6.98%, 15 Jan 2010 Canara Bank-7.59%, 23 Mar 2010 Corporation Bank-7.25%, 06 Jan 2010 Oriental Bank of Commerce-7.00%, 01 Jan 2010 Oriental Bank of Commerce-7.30%, 15 Jan 2010 Oriental Bank of Commerce-7.39%, 08 Jan 2010 Punjab National Bank-6.50%, 12 May 2009 Punjab National Bank-6.95%, 14 Dec 2009 Punjab National Bank-13.5%, 02 Apr 2009 Punjab National Bank-6.74%, 15 Jan 2010 Punjab National Bank-6.75%, 04 Feb 2010 Carried forward 114 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 5 20 7 3 11 90 210 250 – – – 50 – – – – – – – – – – – – – – – – – – – – – – – – – – – 500 500 50 – 2,500 5,150 600 290 50 3,500 1,500 5,000 10,000 20,000 30,000 5,000 5,000 5,000 2,500 5,000 500 2,500 2,500 5 20 7 3 – 90 210 250 – – – – – 4,450 400 190 – – – – – – – – – – – – – – – – – – – 11 – – – 500 500 50 50 2,500 700 200 100 50 3,500 1,500 5,000 10,000 20,000 30,000 5,000 5,000 5,000 2,500 5,000 500 2,500 2,500 – – – – – – – 0.04 – – – 50.02 57.00 5.00 4.90 25.00 80.51 19.96 10.34 5.68 258.45 4.36 254.09 32.72 14.02 46.90 93.49 185.89 280.34 46.85 47.21 46.57 24.79 47.03 4.73 23.58 23.50 917.62 24.10 102.35 36.90 15.32 178.67 4.02 174.65 0.07 8.56 20.67 25.00 – – – 4.90 – – – – – 59.20 1.85 57.35 – – – – – – – – – – – – – – – Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore (iii) Certificate of deposits (contd.): Brought forward Punjab National Bank-6.80%, 29 Jul 2009 Punjab National Bank-7.69%, 19 Mar 2010 State Bank of Bikaner & Jaipur-6.90%, 27 Aug 2009 State Bank of Bikaner & Jaipur-6.95%, 17 Nov 2009 State Bank of Hyderabad-6.75%, 15 Sep 2009 State Bank of Indore-6.90%, 05 Jan 2010 State Bank of Patiala-6.45%, 09 Jul 2009 Certificates of deposits - total (iv) Commercial paper: HDFC Ltd - 8.15% Commercial paper - total (v) Mutual funds: ABN AMRO China India Fund Dividend ABN AMRO FMP - Series 8 - 1 Year ABN AMRO Money Plus AIG India Liquid Fund Super Institutional Daily Dividend Reinvestment AIG Short Term Fund Institutional Weekly Dividend AIG Treasury Plus Fund Super Institutional Daily Dividend Reinvestment Baroda Pioneer Liquid Fund Birla Cash Plus - Institutional Premium Daily Dividend - Reinvestment Birla Dynamic Bond Fund - Retail - Quarterly Dividend Reinvestment Birla FTP - Institutional - Series AB - Growth Birla Income Plus Birla Interval Income Fund - Institutional - Quarterly - Series 3 Birla Mutual Fund - Income Short Term - Dividend Reinvestment Option Birla Sunlife Dynamic Bond Fund Growth Option Birla Sunlife International Equity Fund Plan - B Birla Sunlife Liquid Plus - IP Birla Sunlife Short Term Opportunites Fund Growth Option Birla Sunlife Special Situations Fund Birla Top 100 Fund - Dividend Reinvestment Birla - BSL Interval Income Fund - Quarterly Series 2 Dividend Canara Robeco Liquid - Super IP - Daily Dividend Reinvestment DBS Chola FI - STF - IP - Growth DBS Chola Short Term Floating Rate Fund Daily Dividend Reinvestment Deutsche Bank MF Insta Cash Plus - Super Institutional Plan Daily - Dividend DSP Merill Lynch Cash Plus Fund DSP Merrill Lynch FMP 3m Series 6 - Institutional Dividend Carried forward 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 5,00,000 10 10 10 1000 1000 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 – – – – – – – – 1,500 20,000 1,500 5,500 1,500 5,000 1,500 2,000 – – – – – – – – 1,500 20,000 1,500 5,500 1,500 5,000 1,500 2,000 50,00,000 2,50,00,000 – – – 41,75,77,193 50,00,000 2,50,00,000 40,45,50,784 – – 1,30,26,409 4,99,685 1,50,743 32,79,668 594 37,79,353 1,51,337 – – 3,51,46,497 – 14,41,70,764 19,99,056 17,43,18,163 – 49,99,098 19,99,056 4,99,14,210 5,48,41,43,137 5,43,73,68,216 9,66,89,131 4,75,04,133 5,00,00,000 – 20,50,09,919 – 2,20,43,474 25,25,14,052 5,00,00,000 – – – 2,20,43,474 7,55,09,113 3,16,02,687 10,71,11,800 – 3,01,60,332 3,00,98,042 – – 50,00,000 50,00,000 4,28,404 1,46,99,58,441 1,29,53,53,531 62,290 15,87,13,629 – – 15,87,13,629 – 17,50,33,314 – 50,00,000 51,32,469 30,42,33,044 – – – 50,00,000 51,32,469 30,42,33,044 – – 5,12,76,782 14,76,966 5,27,53,748 – – – 2,99,73,594 98,70,961 2,00,12,069 – 99,61,525 98,70,961 4,99,29,996 5,60,66,608 10,59,96,604 – 10 1000 – 5,00,046 31,40,71,300 26,51,731 29,30,44,366 31,51,777 2,10,26,934 – 10 3,00,00,000 6,08,104 3,06,08,104 – 917.62 14.66 185.87 14.57 52.63 14.53 46.86 14.72 1261.46 95.52 95.52 – – 13.03 – – 5.00 2.00 96.88 – – 25.46 – – 227.32 – 175.15 304.23 – – – 10.00 10.02 – 21.07 – – 890.16 – – – – – – – – – – – 5.00 25.00 – 50.01 15.07 35.19 – 50.01 50.00 50.00 – 75.51 30.23 – 5.00 0.43 – 5.00 10.00 51.28 – – 50.01 – 50.01 30.00 587.75 115 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars (v) Mutual funds (contd.): Brought forward DSP Merrill Lynch Liquidity Plus Fund - Daily Dividend DWS Money Plus Advantage Fund I/P DWS Short Maturity Fund - Weekly Dividend Fidelity Cash Fund Super Institutional Daily Dividend Reinvestment Fidelity Liquid Plus Super Institutional Fidelity Ultra Short Term Debt Fund S I - Weekly Dividend HDFC Arbitrage Fund Wholesale Plan Monthly Dividend HDFC Cash Management Fund - Savings Plan - Daily Dividend Reinvestment HDFC Cash Management Fund - Savings Plus Plan - Dividend HDFC Income Fund - Dividend Option HDFC Infrastructure Fund HDFC Liquid Fund Premium Plan - Dividend Daily Reinvestment HDFC Midcap Opportunities Fund HDFC Short Term Plan - Dividend Reinvestment HSBC Cash Fund - Institutional Plus - Daily Dividend HSBC Floating Rate - Long Term - Institutional Daily Dividend ICICI Prudential Equity & Derivatives - Income Optimiser Fund ICICI Prudential FMP Series 39 - Six Months Plan A Retail Cumulative ICICI Prudential Interval Fund 1 Month Plan - A Retail Dividend Reinvestment ICICI Prudential Interval Fund Annual Interval Plan Institutional C ICICI Prudential Interval Fund II Quarterly Interval Plan F IDBI Principal CMF - Liquid Option Institutional Premium - Daily Dividend IDFC Cash Fund - IP ING FMP Institutional Growth ING Income Fund - Short Term Plan-Dividend Option ING Vysya Liquid Plus Fund - Institutional Daily Dividend ING Vysya Liquid Super Institutional - Daily Dividend Option JM Arbitrage Advantage Fund - Dividend Plan JM FMP - Series VII - 13 Month Plan 1 JM Interval Fund - Quarterly Plan 1 Institutional JP Morgan India Liquid Fund - Daily Dividend Reinvestment JP Morgan India Liquid Plus Fund JP Morgan India Smaller Companies Fund JPM India Alpha Fund - Dividend Reinvestment Kotak Floater Long Term - Daily Dividend Reinvestment Kotak Floater - Short Term - Dividend - Daily Dividend Reinvestment LIC MF - Floating Rate Fund - Short Term Carried forward 116 Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 1000 10 10 5,00,292 15,17,45,390 5,95,14,882 10,10,889 8,47,484 2,58,306 15,11,181 15,25,92,874 5,97,73,188 – – – 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 5,00,09,349 – 12,00,98,911 9,03,83,536 16,01,11,975 7,02,89,050 99,96,285 2,00,94,486 – 7,76,47,408 1,00,48,987 38,47,528 – 8,14,94,936 1,00,48,987 – 4,70,17,226 1,45,89,90,410 1,50,60,07,636 – – – 1,00,00,000 1,03,94,43,056 9,38,47,946 – 90,06,40,669 7,05,96,018 1,00,00,000 13,88,02,387 2,32,51,928 – – 14,02,734 4,42,10,366 9,99,62,238 – 2,40,02,25,476 2,33,90,39,947 14,02,734 4,44,53,224 92,94,90,010 5,00,63,869 – 9,70,81,445 82,95,27,772 5,45,31,911 6,11,85,529 – 9,68,38,587 – 44,68,042 2,35,18,344 25,61,404 2,60,79,748 5,00,00,000 – 5,00,00,000 4,46,58,807 3,55,005 4,50,13,812 6,00,00,000 – 6,00,00,000 5,00,00,000 20,02,700 5,20,02,700 26,93,84,722 1,05,39,34,036 1,31,83,17,676 1,35,10,25,625 1,32,09,20,701 2,50,00,000 2,18,86,056 – 2,50,00,000 2,18,86,056 – – 10,14,343 12,28,90,118 12,39,04,461 4,99,85,353 7,65,05,509 4,00,00,000 4,99,63,527 4,99,70,712 3,01,36,760 1,00,00,000 – 26,21,62,905 30,63,559 – 10,92,237 20,32,21,527 16,01,11,264 – 92,21,022 31,21,48,258 7,95,69,068 4,00,00,000 5,10,55,764 24,31,86,813 16,70,98,398 1,00,00,000 – – – – – – 50,01,082 3,01,04,924 – – – – – – – 1,00,05,426 2,31,49,626 – 92,21,022 – 3,78,31,042 1,98,41,664 1,79,89,378 1,19,62,830 24,11,35,228 1,38,732 23,77,70,857 1,21,01,562 47,89,06,085 – – 890.16 – – – 10.00 20.10 10.05 – – 139.24 25.32 – 75.01 – 100.41 – 5.02 – – – – – 5.00 30.11 – – – – – – – 10.01 23.17 – 9.23 18.13 – – 1370.96 587.75 50.06 152.65 61.14 50.01 – – 77.75 50.01 – – 10.00 – 1.40 45.69 100.02 – 25.00 50.00 45.00 60.00 50.00 269.40 – 25.00 25.11 1.01 50.01 78.33 40.00 50.00 50.01 30.16 10.00 – – 12.01 245.09 2302.61 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars (v) Mutual funds (contd.): Brought forward LIC MF Fixed Maturity Plan Series 33 - 13 Months Dividend Plan LIC MF Infrastructure Fund - Dividend Plan LIC MF Liquid Fund - Dividend Plan LIC MF Top 100 Fund Lotus India Liquid Fund Institutional Daily Dividend Reinvestment Lotus India Liquid Plus Fund - IP Mirae Asset Liquid Plus Fund - Super IP Principal Floating Rate Fund Principal Income Fund Dividend Reinvestment ICICI Prudential - Super Institutional Daily Dividend ICICI Prudential Technology Fund ICICI Prudential Flexible Income Plan ICICI Prudential Income Fund Institutional Plan Dividend Reinvestment (Quarterly) ICICI Prudential Short Term - IP - Dividend Reinvestment ICICI Prudential - Emerging Star Fund Reliance Income Fund - Retail Plan - Monthly Dividend Reinvestment Reliance Liquid Plus Fund Reliance Medium Term Fund Daily Dividend Plan (Reinvestment) Reliance Mutual Fund Liquidity Fund Daily Dividend Reinvestment Reliance Quarterly Interval Fund Series III Institutional Dividend Reliance Quarterly Interval Fund Series I - Institutional Dividend Plan Reliance Short Term Fund - Retail Plan-Dividend Plan SBI Debt Fund Series - 90 Days-21-(04-Mar-08) - Dividend SBI Debt Fund Series 30 Days (13-Mar-08) Dividend. SBI Liquid Plus Plan SBI Magnum Institutional Income Fund - Savings - Daily Dividend SBI Mutual Fund - Liquid Plan - Dividend Reinvestment Standard Chartered - GSSIF - Short Term - Plan C - Monthly Dividend Standard Chartered Arbitrage Fund Plan-B Dividend Standard Chartered Fixed Maturity Plan Quarterly Series 28 Standard Chartered Liquidity Manager Plus - Dividend Reinvestment Sundaram BNP Money Plus Super Institutional Daily Dividend Plan Sundaram BNP Paribas Interval Fund Quarterly Plan - B Institutional dividend Tata Dynamic Bond Option A Carried forward Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 10 10 10 10 10 10 1000 10 10 10 10 10 10 10 10 10 1000 10 10 10 10 10 10 10 10 10 10 10 10 10 24,43,167 – 5,40,49,646 5,16,06,479 1,00,00,000 1,00,00,000 13,66,36,955 1,68,79,82,916 1,53,47,16,090 1,50,00,000 1,50,00,000 – 9,00,03,146 1,17,89,69,995 1,25,89,76,640 53,02,69,791 51,43,32,134 4,49,55,453 28,75,298 26,75,577 1,99,721 38,47,40,544 33,47,60,754 4,99,79,790 2,14,59,822 2,14,59,822 – 6,81,62,01,541 6,66,30,10,407 – 60,24,097 60,24,097 75,73,43,839 – – 1,01,88,11,056 – – 28,99,03,781 – 99,96,501 2,90,17,796 – – – 153,191,134 – 26,14,67,217 – 5,01,25,070 92,74,101 10,94,85,055 81,023 – 8,78,99,092 5,02,06,093 92,74,101 2,15,85,963 – – – 2,01,746 2,42,69,960 21,02,025 – 23,03,771 2,42,69,960 – – 27,34,80,700 25,51,08,386 1,83,72,314 1370.96 2302.61 – – 318.32 – 10.00 29.06 – – – 153.20 – 276.46 25.29 – – 25.00 – 31.41 51.61 10.00 150.03 15.00 90.02 45.03 20.00 50.04 25.31 – 10.00 – – 55.74 24.25 – 20.20 – 4,99,94,629 4,15,49,75,085 3,84,38,31,140 36,11,38,574 361.25 50.01 10,59,19,444 37,64,263 10,96,83,707 – – 105.92 – 5,73,10,894 6,08,50,173 4,70,30,339 – 5,73,10,894 6,08,50,173 4,70,30,339 5,18,90,318 2,50,50,203 – 9,59,919 1,56,514 27,08,14,413 5,28,50,237 2,52,06,717 24,46,68,772 – – 2,61,45,641 – 38,18,52,997 33,87,95,000 4,30,57,997 7,84,70,466 90,44,11,550 98,28,82,016 2,49,47,614 2,44,66,607 1,52,125 9,99,948 2,50,99,739 2,54,66,555 5,00,00,000 10,91,000 5,10,91,000 1000 5,00,007 24,90,172 29,90,179 – – – – – 60.89 50.21 – – 26.16 72.12 – – – – – 10 10 10 – 30,86,46,090 28,47,97,698 2,38,48,392 24.08 4,99,86,504 4,77,54,926 11,05,601 4,78,17,446 5,10,92,105 9,55,72,372 – – – – – 60.45 51.89 25.05 – – 78.74 25.03 25.42 50.00 50.01 – 50.00 50.16 2834.41 3492.52 117 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Face value per unit Rupees Number of units As at 1-4-2008 Purchased/ Sold subscribed during the year As at 31-3-2009 during the year As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 2834.41 3492.52 10 10 10 1000 10 1000 1000 1000 10 10 5,01,93,814 – 50,00,000 4,48,712 – 2,972 5,01,82,953 35,70,38,157 – 2,99,83,662 6,20,63,434 15,05,119 10,03,76,767 32,65,24,790 50,00,000 3,04,32,374 – 15,08,091 – 3,05,13,367 – – 6,20,63,434 – 2,49,026 1,202 2,50,228 – 4,99,979 – 5,00,00,000 2,32,23,667 30,20,83,643 – 2,36,23,688 25,83,12,694 5,00,00,000 99,958 4,37,70,949 – 10 7,55,97,383 3,29,87,389 10,85,84,772 – 10 1000 10 10,00,00,000 14,71,675 – 21,93,869 1,63,70,144 10,21,93,869 1,74,46,966 1,88,17,07,032 1,75,13,25,862 – 3,94,853 13,03,81,170 10 2,46,55,082 – 2,46,55,082 – – 30.62 – – 75.72 – – 10.00 43.82 – – – 40.25 237.62 – 3272.44 3.84 3268.60 4879.67 – 0.08 2.52 8.84 11.94 69.88 12.17 13.73 – 0.35 8.25 127.76 8263.72 50.25 – 5.00 50.01 – 0.30 25.13 50.01 – 50.00 75.60 100.00 150.03 – 25.15 4074.00 23.35 4050.65 4282.65 0.08 0.07 2.61 7.50 2.23 50.71 8.68 0.16 0.01 0.36 3.44 75.85 6922.26 Particulars (v) Mutual funds (contd.): Brought forward Tata Fixed Income Portfolio Fund Scheme A2 Institutional Tata Floater Fund - Daily Dividend Tata Indo - Global Infrastructure Fund Tata Mutual Fund - Liquid Ship - Daily Dividend Tata Short Term Bond Fund - Dividend Reinvestment Tata Treasury Manager Fund Templeton India Short Term Income Plan Institutional - Weekly Dividend. Templeton India Treasury Management Liquid Plan Daily Dividend Templeton India Ultra Short Term Bond Fund UTI Fixed Income Annual Interval Plan III UTI Fixed Income Interval Fund - Quaterly Plan Series III UTI Fixed Maturity Plan - QFMP - Dividend Reinvestment UTI Liquid Cash Plan Institutional - Daily Dividend UTI Mutual Fund - Money Market UTI Short Term Income Fund Institutional - income Option - Reinvestment C) Less: Provision for diminution in value Mutual funds - total Current investments - total Investment in integrated joint ventures: Bauer-L&T Diaphragm Wall Joint Venture Desbuild-L&T Joint Venture HCC-L&T Purulia Joint Venture International Metro Civil Contractors Joint Venture L&T-Eastern Joint Venture L&T-AM Tapovan Joint Venture L&T-Hochtief Seabird Joint Venture L&T-Sanghai Urban Corporation Group Joint Venture Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Ebene-Cybercity) Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Les Pallies Exhibition Center) Metro Tunneling Group Investment in integrated joint ventures - total Total investment (A+B+C) 118 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments purchased and sold during the year Fully paid equity shares in associate companies: Particulars Face value Rs. per unit Nos. Cost Rs. crore NAC Infrastructure Equipment Limited [see note no.35] 10 45,00,000 4.50 Government and trust securities: 6.05% Government of India bond 2019 (quoted) 7.46% Government of India bond 2017 (quoted) 7.94% Government of India bond 2021 (quoted) 8.24% Government of India bond 2018 (quoted) Bonds: 10.70% Indian Railway Finance Corporation 2023 (quoted) 11.30% IDBI Bank Ltd. 2018 (quoted) 10.95% Rural Electrification Corporation Limited Bonds 2011 (quoted) Deutsche Bank 9%- L&T Finance 2009 8.90% SBI 2023 (quoted) Certificate of deposits: Allahabad Bank-11.5%, 12 Mar 2009 Allahabad Bank-8.24%, 04 Jan 2010 Andhra Bank-14%, 27 Mar 2009 Andhra Bank-14.4%, 27 Mar 2009 Canara Bank-12.65%, 23 Mar 2009 Canara Bank-12.65%, 25 Mar 2009 Canara Bank-14.25%, 26 Mar 2009 Corporation Bank-14.5%, 27 Nov 2008 Corporation Bank-12.05%, 12 Feb 2009 HDFC Bank-12.35%, 13 Mar 2009 IDBI-10.50%, 20 Dec 2008 IDBI-14%, 26 Feb 2009 IDBI-14.25%, 26 Mar 2009 Indian Overseas Bank-13.75%, 27 Mar 2009 Oriental Bank of Commerce-14%, 24 Dec 2008 Oriental Bank of Commerce-11.5%, 25 Mar 2009 Oriental Bank of Commerce-14%, 25 Mar 2009 Oriental Bank of Commerce-9.79%, 03 Dec 2009 Oriental Bank of Commerce-8.19%, 01 Jan 2010 Punjab National Bank-11.7%, 07 Jan 2009 Punjab National Bank-13.5%, 07 Jan 2009 Punjab National Bank-11.5%, 24 Feb 2009 Punjab National Bank-12.05%, 24 Feb 2009 Punjab National Bank-14%, 24 Feb 2009 Punjab National Bank-12.65%, 10 Mar 2009 Punjab National Bank-14.4%, 10 Mar 2009 100 100 100 100 25,00,000 50,00,000 20,00,000 25.03 52.82 20.24 6,30,00,000 705.04 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 260 500 250 200 100 2,500 5,000 500 3,500 1,500 1,000 3,500 1,000 2,500 2,500 500 1,000 2,500 3,000 5,000 2,500 2,500 7,500 5,000 2,500 5,000 2,500 2,500 6,000 500 2,500 25.87 50.00 25.00 19.09 10.00 23.89 46.22 4.73 33.08 14.26 9.50 33.11 9.91 24.12 23.87 4.95 9.55 23.47 28.39 48.99 23.80 23.50 68.33 46.25 24.36 48.49 24.01 24.02 57.00 4.77 23.78 119 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments purchased and sold during the year (contd.) Certificate of deposits (contd.): Particulars Punjab National Bank-13.5%, 12 May 2009 Punjab National Bank-11.6%, 29 Jul 2009 State Bank of Bikaner & Jaipur-13.5%, 06 Jan 2009 State Bank of Bikaner & Jaipur-10.50%, 20 Jan 2009 State Bank of Bikaner & Jaipur-14%, 20 Jan 2009 State Bank of Bikaner & Jaipur-11.75%, 27 Aug 2009 State Bank of Bikaner & Jaipur-11.75%, 22 Sep 2009 State Bank of Bikaner & Jaipur-9.61%, 17 Nov 2009 State Bank of Hyderabad-11.75%, 20 Aug 2009 State Bank of Hyderabad-13.5%, 20 Aug 2009 State Bank of Hyderabad-9.74%, 02 Dec 2009 State Bank of India-13.05%, 19 Mar 2009 State Bank of Indore-14%, 10 Mar 2009 State Bank of Mysore-13.7%, 15 Dec 2008 State Bank of Patiala-14%, 01 Dec 2008 State Bank of Patiala-11.5%, 10 Mar 2009 State Bank of Patiala-11.5%, 17 Mar 2009 State Bank of Patiala-11.6%, 09 Jul 2009 State Bank of Patiala-11.75%, 04 Sep 2009 UCO Bank-14%, 12 Mar 2009 UCO Bank-14.5%, 12 Mar 2009 Vijaya Bank-13.75%, 24 Mar 2009 Vijaya Bank-14%, 24 Mar 2009 Commercial paper: HDFC Ltd - 12.60% Mutual funds: ABN AMRO Institutional Plus Daily Dividend ABN AMRO Interval Fund Monthly Plan A Calendar Monthly Dividend ABN AMRO Interval Fund Quarterly Plan L Dividend Reinvestment ABN AMRO Interval Fund Series 2 Quarterly Plan M Birla Sun Life Income Plus - Growth Birla Sun Life Interval Income - Institutional - Monthly Series 2 - Dividend Birla Sun Life Quarterly Interval - Series 7 - Dividend Reinvestment Birla Sun Life Short Term Fund - Institutional Daily Dividend Birla Sunlife Income Plus - Quarterly Dividend Reinvestment Birla Sunlife Short Term Opportunities Fund - Dividend Reinvestment Birla Sunlife Interval Income - Retail - Monthly - Series 2 - Dividend Birla Sunlife Quarterly Interval - Series 5 Dividend - Reinvestment Birla Sunlife Quarterly Interval Series 6 - Dividend Reinvestment 120 Face value Rs. per unit 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 Nos. 2,500 1,500 5,000 2,000 9,000 1,500 1,500 5,500 2,500 2,500 Cost Rs. crore 23.32 13.75 48.51 19.61 86.74 13.65 13.55 50.37 22.80 22.54 20,000 182.29 500 2,500 2,500 500 2,000 1,000 1,500 2,500 1,000 1,000 2,000 1,500 4.76 23.63 24.44 4.95 19.13 9.54 13.83 22.70 9.50 9.43 18.96 14.19 5,00,000 2,000 88.84 10 10 10 10 10 10 10 10 10 10 10 10 10 15,00,23,411 150.02 3,01,98,970 2,04,34,186 5,10,06,998 2,66,03,871 11,58,59,380 5,10,40,950 13,74,87,171 9,02,27,790 30,26,41,151 5,09,81,242 2,07,71,136 3,06,23,490 30.20 20.43 51.01 105.81 115.86 51.04 137.54 100.00 302.69 50.98 20.77 30.62 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments purchased and sold during the year (contd.) Mutual funds (contd.): Particulars DBS Chola Interval Income Fund - MPI - A - Dividend - Auto Rollover DBS Chola Liquid Fund DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend DWS Money Plus Fund - IP DWS Quarterly Interval Fund-Series 1 Dividend Plan Fortis Overnight Fund - Institutional Plus - Daily Dividend Fortis Short Term Income Fund - Institutional Plus - Monthly Dividend Grindlays FRF - LT - Institutional Plan B HDFC Floating Rate Income Fund - Long Term Plan - Dividend Reinvestment HDFC FMP 90 days July 2008 viii(1) - Wholesale Plan Dividend HDFC FMP 90 days July2008 (ix) (3) - Wholesale Plan Dividend Payout HDFC FMP 90 days June 2008 (viii) (2) - Wholesale Plan Dividend Payout HDFC FMP 90 days Nov 2008 (x)(4) - Wholesale Dividend Payout HDFC FMP 90 days Nov 2008(x)(3) - Wholesale Plan Dividend Payout HDFC FMP 90 days Sep 2008(viii)(4) - Wholesale Plan Dividend Payout HDFC Income Fund - Growth HDFC Quarterly Interval Fund - Plan A - Wholesale Dividend Reinvestment HDFC Quarterly Interval Fund - Plan B - Wholesale Dividend Reinvestment HSBC Fixed Term Series 60 Institutional Dividend - Tenure 90 Days HSBC Liquid Plus Fund - Institutional Plus Plan - Dividend Reinvestment ICICI Prudential FMP Series 44 - 1 Month Plan B - Retail Dividend - Reinvestment ICICI Prudential FMP Series 44 - 1 Month Plan A - Retail Dividend ICICI Prudential FMP Series 44 - 1 Month Plan C - Retail Dividend Payout ICICI Prudential Interval Fund III - Monthly Plan - Retail Dividend Reinvestment IDFC Fixed Maturity Plan - Partly Series 37 - Dividend IDFC Fixed Maturity Plan - Quarterly Series 36 Dividend IDFC Fixed Maturity Plan - Quarterly Series - 31 Dividend IDFC Liquid Plus Fund - TP - Super Institutional - Plan C - Daily Dividend IDFC Super Saver Income Fund - Investment Plan B - Growth IDFC Super Saver Income - Investment Plan B - Quarterly Dividend Reinvestment JPMorgan India Active Bond Fund - Dividend Reinvestment JP Morgan India Active Bond Fund - Institutional - Growth Kotak Bond Fund - Regular Plan - Quarterly Dividend Reinvestment Kotak Flexi Debt Scheme - Daily Dividend Kotak Mahindra MF - Liquid (Institutional premium) - Dividend Reinvestment LIC Gilt Fund - Regular - Dividend LIC Liquid Plus Institutional Plan Lotus India Monthly Interval Fund Plan A - Dividend Mirae Asset Interval Fund - Quarterly - Series I - Institutional Dividend Reinvestment Plan Face value Rs. per unit Nos. Cost Rs. crore 10 10 1000 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2,00,53,229 65,51,27,982 4,91,533 31,18,01,446 5,09,40,060 5,90,13,681 40,52,56,556 22,64,43,913 29,68,88,841 5,00,00,000 5,00,00,000 5,00,00,000 1,50,00,000 2,00,00,000 5,00,00,000 3,97,39,242 2,55,94,468 5,10,59,500 2,55,54,228 16,24,32,106 5,00,00,000 10,00,00,000 5,00,00,000 5,03,05,500 2,55,33,693 10,31,58,125 5,10,31,000 17,60,49,261 2,46,73,327 2,50,00,000 9,86,41,467 9,67,17,180 90,00,881 5,01,06,301 31,62,06,212 15,63,04,242 11,05,35,412 5,03,37,714 3,05,64,714 20.12 657.28 49.16 312.06 50.94 59.03 405.26 226.57 302.13 50.00 50.00 50.00 15.00 20.00 50.00 79.44 25.59 51.06 25.55 162.64 50.00 100.00 50.00 50.31 25.53 103.16 51.03 176.08 25.87 25.00 100.82 106.44 10.42 50.26 386.66 210.00 110.54 50.34 30.57 121 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments purchased and sold during the year (contd.) Mutual funds (contd.): Particulars Face value Rs. per unit Nos. Cost Rs. crore Mirae Asset Liquid Fund Super IP - Daily Dividend Reinvestment 1000 Mirae Asset interval Fund Quarterly Plan - Series II Institutional Dividend Reinvestment Prudential ICICI Institutional Income Plan - Growth Prudential ICICI Liquid Plan - Monthly Dividend Reinvestment Reliance Fixed Horizon Fund viii Series 9 - Institutional Dividend Payout Reliance Fixed Horizon Fund viii - Series 10 - Institutional Dividend Reliance Fixed Horizon Fund - xii - Series 13 - Super Institutional Dividend Plan Reliance Fixed Horizon Fund - xii - Series 14 - Super Institutional Dividend Plan Reliance Income Fund - Retail Plan - Growth Plan - Growth Option Reliance Monthly Interval Fund Series II - Institutional Dividend Reliance Monthly Interval Fund Series - I - Institutional Dividend Reliance Mutual Fund - Income ST - Dividend Reinvestment Reliance RLF Treasury Plan Institutional Option - Monthly Dividend SBI Debt Fund Series - 90 Days - 25 - Dividend Sundaram BNP Paribas Liquid Plus - Sup Income Plan Sundaram BNP Paribas Interval Fund - Quarterly Plan D Institutional Dividend Sundaram BNP Paribas Interval Fund - Quarterly - Plan - B - Institutional Dividend Tata Dynamic Bond Fund Option B - Dividend Tata Fixed Income Portfolio Fund Scheme - B2 Institutional - Dividend Reinvestment Tata Floating Rate Fund-ST- Income Plan - Daily Dividend Reinvestment Templeton India Income Fund Templeton India Income Fund - Growth Templeton Quarterly Interval Plan Institutional - Dividend Reinvestment UTI - Fixed Maturity Plan - QFMP - 06/08 - II - Institutional Dividend Plan UTI Bond Fund - Income Reinvestment UTI Bond Fund - Growth Plan - Regular UTI Fixed Income Fund - Series II - Quareterly Interval vii - Institutional Dividend Reinvestment 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 UTI Fixed Income Interval Fund - Quarterly Plan Series - I - Institutional Dividend Reinvestment 10 UTI Fixed Income Interval Fund - Monthly Interval Plan Series - 1 UTI Liquid Plus Institutional Plan UTI Short Term FMP Series II (90 days) - Institutional Dividend Reinvestment Plan UTI - Floating Rate Fund - Short Term PIan - Dividend Option - Reinvestment Pass through certificates: L&T Finance Pass through certificates 11.75% 22 Aug 2009 L&T Finance Pass through certificates 11.75% 23 Feb 2009 L&T Finance Pass through certificates 11.75% 22 Nov 2008 Non-convertible debentures: 11.45% Reliance Industries 2013 122 10 1000 10 1000 1,00,00,000 1,00,00,000 1,00,00,000 76,51,830 2,55,04,363 3,65,99,350 19,58,38,035 6,00,00,600 6,00,00,000 6,00,18,600 7,00,00,000 2,65,79,204 5,06,10,211 10,13,77,805 6,79,69,622 16,18,04,702 5,37,96,838 9,01,11,213 2,04,22,300 2,55,87,800 4,92,97,615 1,01,71,078 765.68 25.51 106.40 227.53 60.00 60.00 60.02 70.00 77.68 50.64 101.46 75.00 333.07 53.80 90.34 20.42 25.59 50.56 10.17 17,84,51,576 178.65 2,38,89,383 87,74,560 5,09,80,000 5,09,35,513 8,84,31,966 4,06,57,733 3,58,78,567 2,55,83,524 5,06,74,842 36,62,304 4,07,57,541 2,46,373 25 25 25 25.00 25.77 51.04 50.94 100.00 106.19 35.88 25.58 50.67 367.63 40.76 25.52 24.38 24.92 25.14 10,00,000 500 50.00 Schedules forming part of the Accounts (contd.) Schedule G Current assets, loans and advances: Current assets: Interest accrued on investments Inventories: Stock-in-trade, at cost or net realisable value whichever is lower: Raw materials Components Construction materials Stores, spare parts and loose tools Finished goods Work-in-progress: Manufacturing work-in-progress at cost or net realisable value whichever is lower Construction and project related work-in-progress At cost At estimated realisable value on sale Less: Progress bills raised Due from customers Total work-in-progress Sundry debtors: Unsecured: Debts outstanding for more than 6 months Considered good Considered doubtful Other debts: Considered good Less: Provision for doubtful debts Cash and bank balances: Cash on hand Cheques on hand Balances with scheduled banks: on current accounts on fixed deposits including interest accrued thereon [see note no.5(a)] on margin money deposit accounts Balances with non-scheduled banks [see note no.5(b)] Carried forward As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 21.56 14.32 380.49 300.00 20.17 103.39 342.54 1146.59 323.92 1745.24 20774.51 22519.75 18185.21 4334.54 4658.46 2293.78 383.60 2677.38 7761.74 10439.12 383.60 3.56 248.85 269.90 80.66 1.50 170.82 309.27 242.81 6.44 89.55 321.38 969.45 298.93 1757.96 14757.15 16515.11 13477.58 3037.53 3336.46 5805.05 4305.91 1823.74 272.19 2095.93 5541.27 7637.20 272.19 10055.52 7365.01 7.80 270.83 376.82 182.99 1.61 124.41 775.29 16657.42 964.46 12649.70 123 Schedules forming part of the Accounts (contd.) Schedule G (contd.) Brought forward Loans and advances: Secured, considered good: As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 16657.42 12649.70 Loans against mortgage of house property 21.37 24.34 Unsecured: Considered good: Subsidiary companies Loans including interest accrued thereon [see note no.16] Others Associate companies Advances recoverable Advances towards equity commitment Subsidiary companies Inter-corporate deposits Subsidiary companies [see note no.16] Associate companies [see note no.16] Others Advances recoverable in cash or in kind [see note no.15] Balance with customs, port trust, etc. Considered doubtful: Deferred credit against sale of ships Advances recoverable in cash or in kind Less: Provision for doubtful loans and advances 778.00 257.31 24.61 623.58 669.62 5.00 2.01 4377.98 31.12 21.09 62.22 6873.91 83.31 82.19 160.02 13.96 66.35 16.29 10.00 11.02 3347.29 25.62 16.68 23.55 3797.31 40.23 6790.60 23448.02 3757.08 16406.78 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 61.66 62.17 209.76 10.98 6592.83 107.38 3.62 5381.16 6813.57 5492.16 24437.33 19139.52 21512.52 16522.13 2924.81 4871.07 14671.11 2617.39 3518.49 11690.21 Schedule H Current liabilities and provisions: Liabilities: Acceptances Sundry creditors: Due to: Subsidiary companies Micro and small enterprises [see note no.33] Others [see note no.7] Due to customers: Progress bills raised Less: Construction and project related work-in-progress At cost: (previous year: Rs.948.37 crore) At estimated realisable value: (previous year: Rs.15573.76 crore) 1609.67 19902.85 Advances from customers Carried forward 124 Schedules forming part of the Accounts (contd.) Schedule H (contd.) Brought forward Items covered by investor education and protection fund [see note no.36] Unpaid dividend Unpaid matured deposits Unpaid matured debentures/bonds Interest accrued on bonds Due to directors Interest accrued but not due on loans Pension payable under Voluntary Retirement-cum-Pension Scheme Provisions for: Current taxes Tax on fringe benefits Proposed dividend Additional tax on dividend Gratuity Compensated absences Employee pension schemes Post-retirement medical benefit plan Long service awards Other provisions (AS-29 related) [see note no.23] As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 14671.11 11690.21 10.33 0.08 0.15 0.02 1391.60 53.94 614.97 101.83 0.52 237.12 151.80 70.97 7.72 436.06 9.61 0.12 1.58 0.03 10.58 36.37 57.82 – 11.34 22.86 17.27 0.04 14775.88 11741.72 918.12 68.52 438.49 66.60 0.45 209.49 151.35 56.67 14.59 111.14 3066.53 17842.41 2035.42 13777.14 As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore Schedule I Miscellaneous expenditure (to the extent not written off or adjusted) Voluntary Retirement-cum-Pension Schemes/Voluntary Retirement Schemes 0.26 0.26 3.06 3.06 125 Schedules forming part of the Accounts (contd.) Schedule J Contingent liabilities: (a) Claims against the Company not acknowledged as debts (b) Sales tax liability that may arise in respect of matters in appeal (c) Excise duty/service tax liability that may arise in respect of matters in appeal/challenged by the Company in writ Income tax liability (including penalty) that may arise in respect of which the Company is in appeal (d) (e) Guarantees given on behalf of subsidiary companies (f) Guarantees given on behalf of associate companies As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 166.21 66.96 10.93 1.62 361.16 – 112.36 202.98 9.91 0.92 69.18 10.00 Notes: 1. 2. 3. The Company does not expect any reimbursements in respect of the above contingent liabilities. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings. In respect of matters at (e) and (f), the cash outflows, if any, could generally occur during the next three years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowing to which the guarantees relate. Schedule K Sales & service: Manufacturing, trading and property development activity Construction and project related activity Servicing Commission Engineering and service fees Schedule L (i) Other operational income: Income from hire of plant and machinery Technical fees Company’s share in net profit of integrated joint ventures [see note no.14(b)] Lease rentals Profit on sale of fixed assets (net) Income from services to the Group companies Miscellaneous income Unclaimed credit balances 126 2008-2009 Rs.crore 5880.69 27456.22 242.46 201.51 264.16 34045.04 2008-2009 Rs.crore 5.77 52.25 12.53 2.32 2.57 66.53 112.88 24.95 279.80 2007-2008 Rs.crore 6132.85 18441.11 182.85 222.51 208.16 25187.48 2007-2008 Rs.crore 6.62 13.06 1.28 2.14 5.77 42.79 70.08 12.99 154.73 Schedules forming part of the Accounts (contd.) Schedule L (ii) Other income: Interest income: Interest received on inter-corporate deposits, from subsidiary and associate companies,customers and others (Tax deducted at source Rs.13.20 crore; previous year: Rs.3.24 crore) Income from long term investments: Interest on bonds and government securities (Tax deducted at source Rs.0.35 crore; previous year: Rs.nil) Income from current investments: Interest on bonds and government securities (Tax deducted at source Rs.nil; previous year: Rs.0.63 crore) Dividend income: From long term investments: Subsidiary companies Trade investments Other investments From current investments Profit on sale of investments: Profit on sale of long term investments (net) Profit on sale of current investments (net) Lease rental Profit on sale of fixed assets (net) Miscellaneous income Provision no longer required written back Unclaimed credit balances Schedule M Manufacturing, construction and operating expenses: Materials consumed: Raw materials and components Construction materials Less: Scrap sales Purchase of trading goods Carried forward 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 96.75 9.25 65.82 15.80 56.24 8.65 80.69 253.94 – 94.66 47.22 25.78 11.48 171.82 84.48 46.91 11.50 2.42 60.83 124.73 111.82 45.27 185.56 157.09 17.54 1.15 74.55 – – 520.37 334.63 94.66 20.46 2.21 106.69 8.23 1.08 739.78 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 6619.00 7772.53 14391.53 67.73 5845.09 5610.32 11455.41 72.00 14323.80 1678.69 16002.49 11383.41 1626.10 13009.51 127 Schedules forming part of the Accounts (contd.) Schedule M (contd.) Brought forward (Increase)/decrease in stocks: Closing stock: Finished goods Work-in-progress Less: Opening stock: Finished goods Work-in-progress Sub-contracting charges Stores, spares and tools Excise duty Power & fuel Royalty and technical know-how fees Packing and forwarding Hire charges - plant & machinery and others Engineering, technical and consultancy fees Insurance Rent Rates & taxes Travelling and conveyance Repairs to plant & machinery Repairs to buildings General repairs & maintenance Other expenses Schedule N Staff expenses: Salaries, wages and bonus Contribution to and provision for: 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 16002.49 13009.51 342.54 1454.22 1796.76 321.38 1370.27 1691.65 (5.16) 456.39 2.81 117.94 357.67 462.19 75.84 126.17 30.98 281.37 47.58 8.45 97.59 150.47 (105.11) 7223.59 900.75 (746.17) 4485.43 699.54 321.38 1370.27 1691.65 246.93 698.55 945.48 1.60 346.21 1.76 85.58 288.72 356.30 74.35 67.84 20.93 211.45 53.20 7.19 79.54 111.02 2210.29 26232.01 1705.69 19154.00 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 1562.04 1179.04 Provident funds and pension fund Superannuation/employee pension schemes (including provision of Rs.0.45 crore; previous year: Rs.32.79 crore) Gratuity funds (including provision of Rs.0.07 crore; previous year: Rs.0.07 crore) Compensated absences/leave encashment 68.85 40.41 27.65 27.63 59.24 66.48 27.35 0.35 Welfare and other expenses 128 164.54 271.44 1998.02 153.42 202.99 1535.45 Schedules forming part of the Accounts (contd.) 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore Schedule O Sales, administration and other expenses: Power and fuel Packing and forwarding Professional fees Insurance Rent Rates and taxes Travelling and conveyance Repairs to buildings General repairs and maintenance Directors’ fees Telephone, postage and telegrams Advertising and publicity Stationery and printing Commission: Distributors and agents Others Bank charges Miscellaneous expenses Bad debts and advances written off Less: Provision for doubtful debts and advances written back Company’s share in loss of integrated joint ventures [see note no.14(b)] Discount on sales Provision for doubtful debts and advances (net) Provision for foreseeable losses on construction contracts Provision for diminution in value of current investments Other provisions [see note no.23] Schedule P Interest expenses & brokerage: Debentures and fixed loans Others 37.60 9.98 76.59 72.50 26.91 161.04 117.13 6.98 98.73 31.44 198.04 18.28 89.19 0.22 68.93 57.88 34.68 47.58 62.11 363.74 4.09 1.85 45.60 226.99 55.81 8.12 138.64 1863.98 2008-2009 Rs.crore 253.08 97.14 350.22 28.17 9.36 37.67 36.24 19.04 186.72 95.87 6.73 90.54 26.29 152.17 22.78 74.91 0.18 57.54 53.51 27.72 37.53 50.96 259.70 1.43 3.69 47.43 84.32 24.80 24.42 13.76 1362.04 2007-2008 Rs.crore 45.47 77.19 122.66 129 Schedules forming part of the Accounts (contd.) SIGNIFICANT ACCOUNTING POLICIES Schedule Q 1. Basis of accounting The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles [GAAP] except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 prescribed by the central government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account. The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known. 2. Revenue recognition Revenue is recognised based on nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery. a) Sales & service i) ii) Sales and service include excise duty and adjustments made towards liquidated damages and price variation, wherever applicable. Revenue from sale of goods is recognised when the substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract. iii) Revenue from property development activity is recognised when all significant risks and rewards of ownership in the land and/or building are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists. iv) Revenue from construction/project related activity and contracts for supply/commissioning of complex plant and equipment is recognised as follows: a) Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with b) c) the customer. Fixed price contracts received up to March 31, 2003: Contract revenue is recognised by applying percentage of completion to the contract value. Percentage of completion is determined as follows: (i) (ii) Fixed price contracts received on or after April 1, 2003: Contract revenue is recognised by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost. in the case of item rate contracts, as a proportion of the progress billing to contract value; and in the case of other contracts, as a proportion of the cost incurred-to-date to the total estimated cost Full provision is made for any loss in the period in which it is foreseen. v) Revenues from construction/project related activity and contracts executed in joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures"], are recognised on the same basis as similar contracts independently executed by the Company. vi) Revenue from service related activities is recognised using the proportionate completion method. vii) Commission income is recognised as and when the terms of the contract are fulfilled. viii) Revenue from engineering and service fees is recognised as per the terms of the contract. ix) Government subsidy related to shipbuilding contracts is recognised on a prudent basis in the Profit and Loss Account as revenue from operations in proportion to work completed when there is reasonable assurance that the conditions for the grant of subsidy will be fulfilled. b) Profit/loss on contracts executed by integrated joint ventures under profit-sharing arrangement [being jointly controlled entities, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures"] is accounted as and when the same is determined by the joint venture. Revenue from services rendered to such joint ventures is accounted on accrual basis. c) Other operational income represents income earned from the activities incidental to the operations of the business segments and is recognised on rendering of related services as per the terms of the contract. Interest income is accrued at applicable interest rate. d) e) Other items of income are accounted as and when the right to receive arises. 3. Research and development Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets. 130 Schedules forming part of the Accounts (contd.) 4. 5. 6. Employee benefits a) b) ii) Short term employee benefits All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia. are recognised in the period in which the employee renders the related service. Post-employment benefits i) Defined contribution plans: The Company's superannuation scheme, state governed provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. Defined benefit plans: The employees gratuity fund schemes, post-retirement medical care scheme, pension scheme and provident fund scheme managed by trust are the Company's defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans. to recognise the obligation on the net basis. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. c) d) Long term employee benefits The obligation for long term employee benefits such as long term compensated absences, long service award etc. is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. Termination benefits Termination benefits such as compensation under Voluntary Retirement-cum-Pension Scheme is amortised over a defined period. The defined period of amortisation is five years or the period till March 31, 2010, whichever is earlier. Fixed assets Fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment and those which were revalued as on October 1,1984 are stated at the values determined by the valuers less accumulated depreciation, accumulated amortisation and cumulative impairment. Assets acquired on hire purchase basis are stated at their cash values. Specific know-how fees paid, if any, relating to plant and machinery is treated as part of cost thereof. Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets. Own manufactured assets are capitalised at cost including an appropriate share of overheads. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra) Leases a) Lease transactions entered into prior to April 1, 2001: Assets leased out are stated at original cost. Lease equalisation adjustment is the difference between capital recovery included in the lease rentals and depreciation provided in the books. Lease rentals in respect of assets acquired under leases are charged to Profit and Loss Account. b) Lease transactions entered into on or after April 1, 2001: i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. ii) Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis. iii) Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease income is recognised over the period of the lease so as to yield a constant rate of return on the net investment in the lease. iv) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term. v) (Also refer to policy on depreciation, infra) Initial direct costs relating to assets given on finance leases are charged to Profit and Loss Account. 131 Schedules forming part of the Accounts (contd.) 7. Depreciation a) Owned assets i) ii) Revalued assets: Depreciation is provided on straight line method on the values and at the rates given by the valuers. The difference between depreciation provided on revalued amount and on historical cost is transferred from revaluation reserve to Profit and Loss Account. Assets carried at historical cost: Depreciation on assets carried at historical cost is provided on the written down value basis on assets acquired up to March 31, 1968 (at the rates prescribed under Schedule XIV to the Companies Act, 1956) and on straight line method on assets acquired subsequently (at the rates prevailing at the time of their acquisition on assets acquired up to September 30, 1987 and at the rates prescribed under Schedule XIV to the Companies Act, 1956 on assets acquired after that date). However, in respect of the following asset categories, the depreciation is provided at higher rates in line with their estimated useful life. Category of asset Furniture and fixtures Plant and machinery: Rate of depreciation (% p.a.) 10.00 Office equipment Cranes above 1000 ton capacity used for construction activity i) ii) iii) Minor plant & machinery of construction activity iv) Heavy lift equipment of construction activity v) Earthmoving, tunnelling & transmission line equipment (other than employed in heavy construction work) vi) Air conditioning and refrigeration equipment vii) Laboratory and canteen equipment Motor cars 6.67 6.67 20.00 5.00 10.00 8.33 12.50 14.14 iii) Depreciation for, additions to/deductions from, owned assets is calculated pro rata from/to the month of additions/deductions. Extra shift depreciation is provided on a location basis. iv) Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. b) Leased assets i) Lease transactions entered into prior to April 1, 2001: Assets given on lease are depreciated over the primary period of the lease. Accordingly, while the statutory depreciation on such assets is provided for on straight line method as per schedule XIV to the Companies Act, 1956, the difference is adjusted through lease equalisation and lease adjustment account. ii) Lease transactions entered into on or after April 1, 2001: Assets acquired under finance leases are depreciated on a straight line basis over the lease term. Where there is reasonable certainty that the Company shall obtain ownership of the assets at the end of the lease term, such assets are depreciated at the rates prescribed under Schedule XIV to the Companies Act, 1956 or at the higher rates adopted by the Company for similar assets. 8. Intangible assets and amortisation Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: a) b) c) Leasehold land: Over the period of lease. Specialised software: Over a period of three years. Lump sum fees for technical know-how: Over a period of six years in case of foreign technology and three years in the case of indigenous technology. Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the intangible assets. Amortisation on impaired assets is provided by adjusting the amortisation charges in the remaining periods so as to allocate the asset's revised carrying amount over its remaining useful life. 9. Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a) the provision for impairment loss, if any, required; or 132 Schedules forming part of the Accounts (contd.) b) the reversal, if any, required of impairment loss recognised in previous periods. Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined: a) b) in the case of an individual asset, at the higher of the net selling price and the value in use; in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit's net selling price and the value in use. (Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.) 10. Investments Long term investments including interests in incorporated jointly controlled entities, are carried at cost, after providing for any diminution in value, if such diminution is of permanent nature. Current investments are carried at lower of cost or market value. The determination of carrying amount of such investments is done on the basis of specific identification. Investments in integrated joint ventures are carried at cost net of adjustments for Company's share in profits or losses as recognised. 11. Inventories Inventories are valued after providing for obsolescence, as under: a) Raw materials, components, construction materials, stores, spares and loose tools at lower of weighted average cost or net realisable value. b) Work-in-progress i) Work-in-progress (other than project and construction-related) at lower of cost including related overheads or net realisable ii) value. Project and construction-related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at realisable value thereafter. In the case of qualifying assets, cost includes applicable borrowing costs vide policy relating to borrowing costs. Finished goods at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid/ payable on such goods. Property development land at lower of cost or net realisable value. c) d) 12. Securities premium account a) b) Securities premium includes: i) The difference between the market value and the consideration received in respect of shares issued pursuant to Stock Appreciation Rights Scheme. The discount allowed, if any, in respect of shares allotted pursuant to Stock Options Scheme. ii) The following expenses are written off against securities premium account: i) ii) iii) Premium (net of tax) on redemption of debentures/bonds. Expenses incurred on issue of shares. Expenses (net of tax) incurred on issue of debentures/bonds. 13. Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred. 14. Employee stock ownership schemes In respect of stock options granted pursuant to the Company's Stock Options Scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation cost over the vesting period. 15. Miscellaneous expenditure Lump sum compensation paid under Voluntary Retirement-cum-Pension Schemes are amortised over a period of five years or the period till March 31, 2010, whichever is earlier. The future pensions under Voluntary Retirement-cum-Pension Scheme are amortised over the period for which pensions are payable. 16. Foreign currency transactions, foreign operations, forward contracts and derivatives a) The reporting currency of the Company is the indian rupee. 133 Schedules forming part of the Accounts (contd.) b) c) d) e) f) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange differences that arise on settlement of monetary items or on reporting at each Balance Sheet date of the Company's monetary items at the closing rate are: i) adjusted in the cost of fixed assets specifically financed by the borrowings contracted up to March 31, 2004 to which the exchange differences relate adjusted in the cost of fixed assets specifically financed by borrowings contracted between the period April 1, 2004 to March 31, 2007 and to which the exchange differences relate, provided the assets are acquired from outside India recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above. iii) Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows: i) ii) Closing inventories at rates prevailing at the end of the year. Fixed assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated. ii) iii) Other assets and liabilities at rates prevailing at the end of the year. iv) Net revenues at the average rate for the year. Financial statements of foreign operations comprising jobs contracted on or after April 1, 2004, are treated as integral operations and translated as in the same manner as foreign currency transactions, as described above. Exchange differences arising on such translation are recognised as income or expense of the period in which they arise. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 ["The Effects of Changes in Foreign Exchange Rates"], Exchange differences arising on such contracts are recognised in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognised as income/expense of the period in which such roll over/cancellation takes place. All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value as on the Balance Sheet date, in pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives. The Company has adopted Accounting Standard (AS) 30 ["Financial Instruments: Recognition and Measurement"] for accounting of such derivative contracts, not covered under Accounting Standard (AS) 11 ["The Effects of Changes in Foreign Exchange Rates"], as mandated by the ICAI in the aforesaid announcement. Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts covered under Accounting Standard (AS) 30 ["Financial Instruments: Recognition and Measurement"] are recognised in the Profit and Loss Account or Balance Sheet as the case may be after applying the test of hedge effectiveness. The gains or losses are recognised in the Balance Sheet where the hedge is effective, while the same is recognised in the Profit and Loss Account where the hedge is ineffective. The premium paid/ received on a foreign currency forward contract is accounted as expense/income over the period of the contract. 17. Segment accounting a) Segment accounting policies Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting: i) ii) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment revenue. Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "unallocable corporate expenditure." iii) Income which relates to the Company as a whole and not allocable to segments is included in "unallocable corporate income". iv) Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the v) Company. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise trade investments in subsidiaries and associate companies that constitute or relate to the portfolio of the Company's core/thrust areas of business such as infrastructure development and software solutions. Unallocable liabilities include mainly loan funds, provisions for employee retirement benefits and proposed dividend. b) Inter-segment transfer pricing Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis. 134 Schedules forming part of the Accounts (contd.) 18. Taxes on income Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on the expected outcome of assessments/appeals. Deferred tax is recognised on timing differences between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head "capital gains" are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 19. Fringe benefit tax Fringe benefit tax (FBT) on the employee stock options (ESOPs) is recognised in the Profit and Loss Account when the liability crystalises upon vesting of such stock options. Wherever such FBT liability is borne by the employee, the same is not so recognised. FBT on all the other expenses, as specified in the Income Tax Act, 1961, is recognised in the Profit and Loss Account when the underlying expenses are incurred. 20. Accounting for interests in joint ventures Interests in joint ventures are accounted as follows: Type of joint venture Accounting treatment Jointly controlled operations Company's share of revenues, common expenses, assets and liabilities are included in revenues, expenses, assets and liabilities respectively. Jointly controlled assets Share of the assets, according to nature of the assets, and share of the liabilities are shown as part of gross block and liabilities respectively. Share of expenses incurred on maintenance of the assets is accounted as expense. Monetary benefits, if any, from use of the assets are reflected as income. Jointly controlled entities (a) Integrated joint ventures: (i) (ii) Company's share in profits or losses of integrated joint ventures is accounted on determination of the profits or losses by the joint ventures. Investments in integrated joint ventures are carried at cost net of Company's share in recognised profits or losses. (b) Incorporated jointly controlled entities: (i) (ii) Income on investments in incorporated jointly controlled entities is recognised when the right to receive the same is established. Investment in such joint ventures is carried at cost after providing for any permanent diminution in value. Joint venture interests accounted as above, other than investments in incorporated jointly controlled entities, are included in the segments to which they relate. 21. Provisions, contingent liabilities and contingent assets Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if (a) the Company has a present obligation as a result of a past event, (b) a probable outflow of resources is expected to settle the obligation; and (c) the amount of the obligation can be reliably estimated. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of (a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; (b) a present obligation arising from past events, when no reliable estimate is possible;. (c) a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent assets are neither recognised, nor disclosed. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 135 Notes forming part of the Accounts 1. a) Of the equity shares of Rs.2 each comprised in the subscribed and paid-up capital of the Company: i) ii) iii) 9,19,943 (previous year: 9,19,943) equity shares were allotted as fully paid-up, pursuant to contracts, without payment being received in cash. 44,96,76,280 (previous year: 15,70,84,226) equity shares were issued as bonus shares by way of capitalisation of general reserve: Rs.2.35 crore (previous year: Rs.2.35 crore), securities premium: Rs.87.47 crore (previous year: Rs.28.97 crore) and capital redemption reserve: Rs.0.12 crore (previous year: Rs.0.10 crore). 1,48,67,485 (previous year: 1,40,99,067) equity shares were allotted as fully paid up on exercise of grants under Employees Stock Ownership Schemes. b) Options outstanding as at the end of the year on un-issued share capital: Particulars Employee stock options granted and outstanding# Number of equity shares to be issued as fully paid As at 31-3-2009 2,12,89,375 As at 31-3-2008 90,58,363 # The number of options have been adjusted consequent to bonus issue wherever applicable. c) The directors recommend payment of final dividend of Rs.10.50 per equity share of Rs.2 each on the number of shares outstanding as on the record date. Provision for final dividend has been made in the books of account for 58,56,87,862 shares outstanding as at March 31, 2009 amounting to Rs.614.97 crore. Stock option schemes a) The grant of options to the employees under the stock option schemes is on the basis of their performance and other eligibility criteria. The options are vested equally over a period of four years [5 years in the case of Series 2006(A)], subject to the discretion of the management and fulfilment of certain conditions. The details of the grants under the aforesaid schemes under various series are summarised below: b) Series reference Sr. no. 1 Grant price (prior to 2000 2002 (A) 2002 (B) 2003 (A) 2003(B) 2006 2006(A) 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 bonus issue)-Rupees Grant price (post bonus issue)-Rupees Grant dates 7 – 7 3.50 1-6-2000 7 – 7 3.50 19-4-2002 7 3.50 19-4-2002 Vesting commences on 1-6-2001 19-4-2003 19-4-2003 2 3 7 – 35 17.50 35 – 35 17.50 35 – 1202 601 23-5-2003 onwards 23-5-2004 onwards 23-5-2003 onwards 23-5-2004 onwards 1-9-2006 onwards 1-9-2007 onwards – 601 1-7-2007 onwards 1-7-2008 onwards 1202 1202 1202 8400 8400 10750 10750 19850 19850 15726 33216 971468 1299885 7036899 10671500 995270 – – – 8400 16800 – – – – – – – – – – – – – – – – 10750 21500 – – – – – – – – – – – – – – – – 19850 39700 – – – – – – – – – – – – – – – – 15726 31452 – – – – – – – – – 40481 340000 118874 1152113 2304226 – – – – – 163605 59600 120756 6812138 13624276 – – – – – 1276 – 50912 153800 116041 162390 261900 – 3109350 634670 180428 1910970 25034 2700778 5401556 133664 646295 9214 447226 331766 37516 1159921 19012 7000 – 43000 - – – 4 Options granted and outstanding at the beginning of the year 5 Options lapsed/withdrawn prior to bonus issue 6 Options granted prior to bonus issue 7 Options exercised prior to bonus Issue for which shares are allotted 8 Options outstanding as on October 3, 2008 prior to bonus issue Adjusted options as on October 3, 2008 consequent to bonus issue 9 10 Options lapsed/withdrawn post bonus issue 11 Options granted post bonus issue 12 Options exercised post bonus issue for which shares are allotted 13 Options exercised & allocated against shares earlier allotted* 14 Options granted and outstanding at the end of the year of which - Options vested Options yet to vest 16800 8400 21500 10750 39700 19850 31452 15726 1959888 971468 13324860 7036899 5895175 995270 16800 – 8400 – 21500 – 10750 – 39700 – 19850 – 31452 – 15726 – 226326 1733562 34666 936802 5321810 8003050 747179 6289720 279136 5616039 – 995270 *Allocated from the shares returned by former nominee directors in accordance with the consent terms approved by the Hon'ble High Court of Bombay on June 14, 2007. – – – – – – – – 995270 – – 2. 136 Notes forming part of the Accounts (contd.) c) During the year, the Company has recovered Rs.4.80 crore (previous year: Rs.2.60 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes. 3. a) Cash credit facilities including working capital demand loans from banks are secured by hypothecation of stocks, stores and book debts. The total charge on these assets is Rs.1607.84 crore, including on account of bank guarantees as on March 31, 2009. b) Other loans and advances from banks grouped under unsecured loans include loans availed from banks outside India amounting to Rs.46.23 crore secured by corporate guarantee & project-specific receivables. 4. Terms of redemption of debentures a) Secured redeemable non-convertible fixed rate debentures (privately placed): Sr. no. 1 Face value per debenture (Rs.) 10,00,000 Date of allotment December 5, 2008 Amount Rs.crore 500 2 10,00,000 January 5, 2009 Total 400 900 Interest Redeemable at face value 11.45% p.a. payable annually 9.15% p.a. payable annually At the end of 10th year from the date of allotment. The Company has call option to redeem debentures at the end of 5th year from the date of allotment. At the end of 10th year from the date of allotment. Security: The debentures are secured by way of a first charge having pari passu rights on the immovable property at certain locations and a part of a movable property of a business division, both present and future. b) Unsecured redeemable non-convertible fixed rate debentures (privately placed): Sr. no. 1 Face value per Debenture (Rs.) 10,00,000 Date of allotment January 21, 2009 Total Amount Rs.crore 250 250 Interest Redeemable at face value 9.20% p.a. payable annually At the end of 3rd year from the date of allotment. 5. a) Fixed deposits with scheduled banks as on March 31, 2009 include Rs.40.41 crore (previous year: Rs.40.41 crore), in respect of a claim against the Company. The dispute is since resolved in favour of the Company, and the money has been realised on May 6, 2009. b) Balances with non-scheduled banks represent the balances with Indian banks classified as non-scheduled banks by the Reserve Bank of India and with all overseas branches of foreign banks. The balances with non-scheduled banks held in: Particulars i) Current accounts Abu Dhabi Commercial Bank, Abu Dhabi Abu Dhabi Commercial Bank, UAE Abu Dhabi Islamic Bank. UAE Arab Bank PLC, Amman Arab Bank PLC, Bahrain Arab Bank PLC, Jordan Arab Bank PLC, Doha Arab Bank PLC, UAE Bank Muscat Bank of Baroda (Kenya) Ltd, Kenya Bank of Bhutan Bank of Commerce & Development, Libya Bank of Foreign Trade of Russian Federation (as at 31-3-2009: Rs.nil and as at 31-3-2008: Rs.39) Bank of Nova Scotia, Barbados Bank Tuanalem, Kazakhstan Carried forward As at As at Maximum amount outstanding at any time during 31-3-2009 31-3-2008 2008-2009 2007-2008 Rs.crore 3.18 0.41 0.37 0.11 3.30 0.04 1.04 7.63 0.04 0.28 2.30 0.38 – – – 19.08 7.47 20.01 0.02 0.04 1.76 2.48 – – – 0.38 2.22 0.38 – 0.99 – 35.75 25.55 20.01 1.28 2.48 6.54 2.48 8.70 9.54 0.04 50.41 2.30 0.38 – 0.99 – 17.79 20.01 0.33 0.04 1.76 3.87 – – – 2.39 2.22 0.38 0.17 2.56 0.01 137 Notes forming part of the Accounts (contd.) i) Particulars Current accounts (contd.) Brought Forward Citibank, France Citibank, USA Citibank, London Deutsche Bank, Singapore Emirates Bank, UAE Emirates Bank International PJSC Hakrin Bank NV, (USD) Surinam Hakrin Bank NV, (Guilder) Surinam Hongkong & Shanghai Banking Corporation (RMD), China Hongkong & Shanghai Banking Corporation (USD), China HSBC Bank Middle East Limited, Abu Dhabi HSBC Bank Middle East Limited, Dubai HSBC Bank, Qatar HSBC Bank, UK HSBC Bank, UAE Mashreq Bank, Dubai Mashreq Bank, UAE Mizuho Bank, Japan National Bank of Kuwait, Kuwait Nepal Investment Bank Ltd., Nepal Rafidian Bank, Iraq Standard Chartered Bank, Dubai Standard Chartered Bank, Malaysia Standard Chartered Bank, Qatar Union National Bank, Abu Dhabi Uttara Bank Limited, Bangladesh ICICI Bank, Canada ICICI Bank Eurasia, Moscow DBS Bank, Singapore Total (i) ii) Call deposits Mashreq Bank, Dubai Bank of Nova Scotia, Barbados Total (ii) iii) Fixed deposits Bank of Nova Scotia, Barbados Deutsche Bank, Singapore Emirates Bank, UAE HSBC Bank Middle East Ltd, Abu Dhabi HSBC Bank Middle East Ltd. Dubai Mashreq Bank, Dubai Mashreq Bank, UAE National Bank of Kuwait, Kuwait Standard Chartered Bank, Qatar Total (iii) Total (i) + (ii) + (iii) As at As at Maximum amount outstanding at any time during 31-3-2009 31-3-2008 2008-2009 2007-2008 Rs.crore 19.08 0.12 5.23 0.23 – – 14.61 – – 0.22 0.94 19.32 21.98 18.51 0.84 8.62 8.25 4.47 3.55 4.09 0.14 8.25 – 0.19 8.45 0.27 – 0.05 0.38 0.01 147.80 0.69 – 0.69 – – – – 22.33 – – – – 22.33 170.82 35.75 – – – 0.01 1.17 – 0.01 – 0.26 0.37 0.03 0.03 – – 10.42 0.01 13.24 – 10.40 0.17 8.25 0.13 0.35 2.53 1.81 – – 0.10 – 85.04 0.69 – 0.69 – 0.92 7.65 1.23 0.30 0.70 4.37 14.69 8.82 38.68 124.41 0.12 32.91 0.23 0.01 1.17 14.61 – 0.02 0.26 0.94 28.61 61.76 18.51 0.85 27.44 13.25 13.24 3.55 51.68 0.17 8.25 0.14 7.74 9.48 1.81 – 0.05 0.43 0.01 0.69 – – 0.92 7.65 1.23 26.92 2.19 4.37 44.48 8.82 – – – 1.15 1.17 41.07 0.01 0.02 0.50 0.70 12.67 15.72 – – 10.42 20.36 13.24 – 59.56 0.17 8.93 0.81 9.30 14.58 6.03 0.57 – 0.10 – 0.75 7.24 7.23 1.98 7.65 10.28 2.74 197.74 4.37 58.75 8.82 138 Notes forming part of the Accounts (contd.) c) Call deposit with Mashreq Bank, Dubai, UAE, of Rs.0.69 crore is subject to an escrow arrangement duly approved by the Reserve Bank of India, whereby the proceeds of the deposit, together with interest thereon, would be applied towards full and final settlement of loan taken from Rafidian Bank, Iraq, which is included under unsecured loans. Once the UN embargo against Iraq is lifted, the settlement would be effected. 6. Loans and advances include: i) ii) iii) amount due from an officer of the Company: Rs.nil (previous year: Rs.nil). The maximum amount outstanding at any time during the year was Rs.nil (previous year: Rs.nil). rent deposit with whole-time directors: Rs.0.03 crore (previous year: Rs.0.06 crore). The maximum amount outstanding at any time during the year: Rs.0.06 crore (previous year: Rs.0.07 crore). amount, including interest accrued, due from the managing director and whole-time directors in respect of housing loan: Rs.0.63 crore (previous year: Rs.0.73 crore). Maximum amount outstanding at any time during the year: Rs.0.73 crore (previous year: Rs.0.76 crore). 7. 8. Sundry creditors - others include Rs.1.13 crore (previous year: Rs.17.67 crore), being contribution received from the employees of the Company and some of its subsidiary & associate companies, on behalf of L&T Employees Welfare Foundation Trust and held on account for it. Sales and service include Rs.117.72 crore (previous year: Rs.75.10 crore) for price variations net of liquidated damages in terms of contracts with the customers and shipbuilding subsidy Rs.25.49 crore (previous year: Rs.29.29 crore). 9. Disclosures pursuant to Accounting Standard (AS) 7 (Revised) “Construction Contracts”: i) ii) Contract revenue recognised for the financial year Particulars Aggregate amount of contract costs incurred and recognised profits (less recognised losses) as at end of the financial year for all contracts in progress as at that date iii) Amount of customer advances outstanding for contracts in progress as at end of the financial year iv) Retention amounts due from customers for contracts in progress as at end of the financial year Rs.crore 2008-2009 2007-2008 27456.22 18441.11 44032.27 33037.24 4440.91 1741.43 3121.16 1434.17 10. Extraordinary items during the year comprise the following: i. ii. Gain of Rs.958.74 crore (net of tax of Rs.282.08 crore) on sale of the Company's Ready Mix Concrete business. Provision of Rs.186.28 crore in respect of investment in Satyam Computer Services Limited (SCSL) held by the Company as well as by its wholly owned subsidiary, L&T Capital Company Limited (LTCCL). This provision has been made by the Company as a measure of abundant caution and in consonance with its commitment to acquire the investment from LTCCL at book value, as and when such transfer of shares is permitted/takes place. Considering the extraordinary circumstances under which the price of SCSL shares fell in the market, the aforesaid provision has been created based on the principles of "prudence". [see note no.23] 11. Other income for the previous year ended March 31, 2008 included profit on disposal of stake in a subsidiary company amounting to Rs.87.23 crore. 12. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Benefits”: i. Defined contribution plans: [refer accounting policy no.4b(i)] Amount of Rs.62.50 crore (previous year: Rs.54.15 crore) is recognised as an expense and included in "staff expenses" (Schedule N) in the Profit and Loss Account. 139 Notes forming part of the Accounts (contd.) ii. Defined benefit plans: [refer accounting policy no.4b(ii)] a) The amounts recognised in Balance Sheet are as follows: Particulars A) Present value of defined benefit obligation – Wholly funded – Wholly unfunded Less: Fair value of plan assets Less: Unrecognised past service costs Amount to be recognised as liability or (asset) B) Amounts reflected in the Balance Sheet Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan Rs.crore As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at As at As at As at As at 272.41 230.57 0.52 272.93 244.71 – 0.45 231.02 203.42 – – 72.40 72.40 – 1.43 – 58.24 58.24 – 1.57 – 152.78 152.78 – 0.98 – 1001.10 903.75 152.44 – – 152.44 1001.10 903.75 – 1017.06 904.29 1.09 – – 28.22 27.60 70.97 56.67 151.80 151.35 (15.96) @ (0.54) @ Liabilities Assets 28.22 27.60 70.97 56.67 151.80 151.35 14.78 – – – – – – – 9.60 – Net liability/(asset) 28.22 27.60 70.97 56.67 151.80 151.35 14.78 # 9.60 # b) The amounts recognised in Profit and Loss Account are as follows: Particulars 1. Current service cost 2. Interest cost 3. Expected return on plan assets 4. Actuarial losses/(gains) 5. Past service cost 6. Effect of any curtailment or settlement 7. Actuarial gain/(loss) not recognised in books 8. Adjustment for earlier years Total included in "staff expenses" (1 to 8) Actual return on plan assets Rs.crore Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 15.29 19.01 14.16 16.66 (15.21) (11.35) 8.56 7.88 – – – – – – – – 3.39 5.06 – 9.03 0.14 – – – 2.70 3.95 – 0.41 5.38 – – – 27.65 28.34 27.35 17.60 17.62 12.44 – – 4.55 13.01 – 5.18 0.11 (19.57) – – 3.28 – 3.51 39.74** 41.65** 10.07 77.25 69.78 – (78.51) (71.01) 21.65 (19.65) 11.64 0.11 – – – 35.34 – – – – – 20.91+ (10.41) – 39.74 98.16 – 41.65 59.37 140 Notes forming part of the Accounts (contd.) c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: Particulars Opening balance of the present value of defined benefit obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) Employer ii) Employee iii) Transfer-in Add: Actuarial losses Less: Benefits paid Add: Past service cost Less: Effect of any curtailment or settlement Closing balance of the present value of defined benefit obligation Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan Rs.crore As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at As at As at As at As at 231.02 203.45 15.29 19.01 14.16 16.66 – – – – – 0.15~ 21.69 14.13 (14.08) (17.53)## – – – – 58.24 3.39 5.06 – – – 9.03 (3.32) – – 46.36 152.44 119.76 903.75 827.24 2.70 3.96 4.55 13.01 3.51 10.07 39.74** 41.65** 77.25 69.78 – – – 0.41 (2.14) 6.95 – – – 5.18 (2.83) – – (19.57) – – – 21.64 (2.54) – – – 70.72 – – – 83.77 – – (90.36) (118.69) – – – – 272.93 231.02 72.40 58.24 152.78 152.44 1001.10 903.75 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Rs.crore Particulars Gratuity plan Trust-managed provident fund plan Opening balance of the fair value of the plan assets Add: Expected return on plan assets* Add/(less): Actuarial gains/(losses) Add: Contribution by the employer Add: Contribution by plan participants Less: Benefits paid Add: Business combinations Less: Settlements Closing balance of the plan assets As at 31-3-2009 As at 31-3-2008 203.42 152.93 As at 31-3-2009 904.29 15.21 13.13 27.03 – (14.08) – – 11.35 6.25 50.27 0.15~ (17.53)## – – As at 31-3-2008 839.86 71.01 (11.64) 44.59 79.16 78.51 19.65 34.94 70.03 (90.36) (118.69) – – – – 244.71 203.42 1017.06 904.29 Notes: The fair value of the plan assets under the trust-managed provident fund plan has been determined at amounts based on their value at the time of redemption, assuming a constant rate of return to maturity. * Basis used to determine the overall expected return: The trust formed by the Company manages the investments of provident funds and gratuity fund. Expected return on plan assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year. The Company expects to fund Rs.27.70 crore (previous year: Rs.27.15 crore) towards its gratuity plan and Rs.43.80 crore (previous year: Rs.44.15 crore) towards its trust-managed provident fund plan during the year 2009-2010. @ Asset is not recognised in the Balance Sheet # ** + ~ ## Benefits paid includes an amount of Rs.0.29 crore transferred to subsidiary companies Employer's and employees' contribution (net) for March is paid in April Employer's contribution to provident fund The actual return on plan assets is higher than interest cost, but no credit has been taken to the Profit and Loss Account Amounts transferred from subsidiary companies - Rs.0.15 crore 141 Notes forming part of the Accounts (contd.) e) The major categories of plan assets as a percentage of total plan assets are as follows: Particulars Gratuity plan Trust-managed provident fund plan As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at Government of India securities State government securities Corporate bonds Equity shares of listed companies Fixed deposits under special deposit scheme framed by central government for provident funds Insurer managed funds Public sector unit bonds Others 41% 39% – 38% 1% 14% 2% – 4% – 38% 1% 16% 2% – 4% 23% 13% 5% – 22% 13% 5% – 27% 30% – – 32% 30% – – f) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages): 1 Discount rate: a) Gratuity plan 2 3 4 b) Company pension plan c) Post-retirement medical benefit plan Expected return on plan assets Annual increase in healthcare costs (see note below) Salary growth rate: a) Gratuity plan b) Company pension plan 5 Attrition rate: As at 31-3-2009 As at 31-3-2008 7.67% 7.67% 7.67% 7.50% 5.00% 6.00% 7.00% 8.33% 8.35% 8.39% 7.50% 5.00% 6.00% 7.00% a) For post-retirement medical benefit plan & company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups. b) For gratuity plan the attrition rate varies from 1% to 7% (previous year: 1% to 7%) for various age groups 6 7 8 9 The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Profit and Loss Account as actuarial losses. The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: Particulars Effect on the aggregate of the service cost and interest cost Effect on defined benefit obligation Rs.crore Effect of 1% increase Effect of 1% decrease 2008-2009 2007-2008 2008-2009 2007-2008 0.74 4.60 0.60 4.00 (1.18) (3.76) (0.99) (3.30) 142 Notes forming part of the Accounts (contd.) g) The amounts pertaining to defined benefit plans are as follows: Particulars As at 31-3-2009 As at 31-3-2008 As at 31-3-2007 Rs.crore 1 Post-retirement medical benefit plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Defined benefit obligation Plan assets Surplus/(deficit) Experience adjustment plan liabilities Experience adjustment plan assets 3 Post-retirement pension plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 4 Trust managed provident fund plan (funded) Defined benefit obligation Plan assets Surplus/(deficit) h) General descriptions of defined benefit plans: 1. Gratuity plan: 70.97 1.13 272.93 244.71 (28.22) 8.38 13.71 151.80 (6.89) 1001.10 1017.06 15.96 56.67 2.66 231.02 203.42 (27.60) 16.44 (2.92) 151.35 26.87 903.75 904.29 0.54 46.36 – 203.45 152.93 (50.52) 25.84 6.59 118.56 – 827.24 839.86 12.62 The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Company's scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material, is unfunded and managed within the Company. 2. Post-retirement medical care plan: The post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement. 3. Company's pension plan: In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement. 4. Trust managed provident fund plan: The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service. 13. Uncalled liability on shares partly paid is Rs.66.44 crore net of advance paid against equity commitment (previous year: Rs.82.63 crore). 143 Notes forming part of the Accounts (contd.) 14. Disclosures in respect of joint ventures a) List of joint ventures Sr. no. 1 2 Name of joint venture Description of interest/ (description of job) L&T-Hochtief Seabird Joint Venture Integrated joint venture (Construction of breakwater at Karwar) International Metro Civil Contractors Integrated joint venture 3 HCC-L&T Purulia Joint Venture 4 Desbuild-L&T Joint Venture 5 Bauer-L&T Diaphragm Wall Joint Venture 6 7 Larsen & Toubro Limited - Shapoorji Pallonji & Co. Limited Joint Venture (Ebene Cybercity) Larsen & Toubro Limited - Shapoorji Pallonji & Co. Limited Joint Venture (Les Pailles Exhibition Centre) 8 L&T-AM Tapovan Joint Venture 9 L&T-Shanghai Urban Corporation Group Joint Venture 10 L&T-Eastern Joint Venture 11 Metro Tunnelling Group 12 L&T-KBL (UJV) Hyderabad 13 L&T-HCC Joint Venture 14 Patel-L&T Consortium 15 L&T-SVEC Joint Venture 16 L&T-KBL-MAYTAS UJV 17 Consortium of Samsung Heavy Industries Co. Ltd., Korea and L&T (Construction of Delhi metro corridor phase I tunnel project) Integrated joint venture (Construction of pumped storage project) Integrated joint venture (Renovation of US consulate, Chennai) Integrated joint venture (Construction of diaphragm wall for International Metro Civil Contractors) Integrated joint venture (Execution of civil & associated works for Ebene Cybercity Project, Mauritius) Integrated joint venture (Execution of civil & associated works for Les Pailles Exhibition Centre, Mauritius) Integrated joint venture (Construction of head race tunnel for Tapovan Vishnugad Hydro Electric Project at Chamoli, Uttaranchal) Jointly controlled entity (Construction of twin tunnel between IGI airport and sector 21 for DMRC) Jointly controlled entity (Construction and maintenance of 295 residential units at Dubai) Integrated joint venture (Construction of Delhi metro corridor - phase II tunnel project) Jointly controlled operation (Investigation, design, supply and erection for lift irrigation system) Jointly controlled operation (Four laning and strengthening of existing two lane sections from 240 Km to 320 Km on NH 2) Jointly controlled operation (Hydro Electric Project) Jointly controlled operation (Lift Irrigation Project at Hyderabad) Jointly controlled operation (Transmission of 735 MId treated water associated with all civil, electrical & mechanical work at Hyderabad) Jointly controlled operations (Execution of Vasai East Development Project of ONGC Ltd.) 144 Proportion of ownership interest Country of residence 0.90 0.26 0.43 0.49 0.50 0.50 0.50 India India India India India Mauritius Mauritius 0.65 India 0.51 0.65 0.26 – – – – – – India UAE India India India India India India India Notes forming part of the Accounts (contd.) Sr. no. Name of joint venture 18 Consortium of Global Industries Offshore LLC, USA and L&T 19 Lurgi L&T KQKS Consortium 20 Consortium of Toyo Engineering Company and L&T 21 L&T and Scomi Engineering BHD. Joint Venture Description of interest/ (description of job) Jointly controlled operations (Execution of pipeline replacement project of ONGC) Jointly controlled operations (Execution of Melaka Group 3 Lubricant Base Oil Plant for Petronas) Jointly controlled operations (Execution of Naptha Cracker Associated Unit for IOCL, Panipat) Jointly controlled operations (Implementation of Monorail System in Mumbai) Proportion of ownership interest – – – – Country of residence India Malaysia India India Country of incorporation not applicable for the above joint ventures as these are unincorporated joint ventures b) Financial interest in jointly controlled entities Name of the joint venture Assets Liabilities Income Expenses Tax As at March 31, 2009 For the year 2008-2009 Company's share of Rs.crore Sr. no. 1 2 3 4 5 6 7 8 9 10 L&T-Valdel Engineering Private Limited L&T-Demag Plastics Machinery Limited L&T-Hochtief Seabird Joint Venture International Metro Civil Contractors Joint Venture HCC-L&T Purulia Joint Venture Desbuild-L&T Joint Venture Bauer-L&T Diaphragm Wall Joint Venture Larsen & Toubro Limited - Shapoorji Pallonji & Company Limited Joint Venture (Ebene-Cybercity) Larsen & Toubro Limited - Shapoorji Pallonji & Company Limited Joint Venture (Les Pailles Exhibition Centre) L&T-AM Tapovan Joint Venture 11 Metro Tunnelling Group Joint Venture 12 L&T-Eastern Joint Venture 13 L&T-Shanghai Urban Corporation Group Joint Venture TOTAL Share of net assets/profit after tax in jointly controlled entities – (–) – (51.87) 12.55 (9.08) 12.56 (11.51) 6.96 (7.22) 0.08 (0.07) –~ (0.08) 3.64 (3.92) 1.95 (2.04) 199.95 (57.55) 34.93 (29.74) 152.94 (81.10) 69.84 (15.19) 495.40 (269.37) 127.49 (80.78) – (–) – (46.94) 0.38 (0.40) 3.72 (4.01) 4.44 (4.61) –$ (–)$$ –** (–)(cid:3) 3.91 (3.91) 1.60 (1.68) 130.07 (6.84) 26.68 (26.30) 141.00 (78.87) 56.11 (15.03) 367.91 (188.59) – (4.74) 43.26 (52.02) – (–) 0.60 (1.41) 0.06 (0.93) 0.01 (–) – (0.01) – (0.31) – (0.19) 54.83 (25.39) 59.65 (39.34) 246.31 (9.95) 70.50 (0.77) 475.22 (135.06) 7.45 (-9.87) – (3.47) 46.45 (61.35) 0.02 (0.05) 1.44 (1.15) 0.18 (5.17) –^ (–)^^ 0.02 (0.01) 0.18 (–) – (–) 55.44 (24.85) 58.10 (38.95) 236.35 (9.64) 68.06 (0.73) 466.24 (145.37) Amounts less than Rs.0.01 crore: Current year: # Rs.3180, @Rs.4945, $Rs.8107, ^Rs.11145, *Rs.5394,. ~Rs.44014, **Rs.43259, Previous year: $$(Rs.8258), ^^(Rs.27540), (cid:2) (Rs.43259), ¤(Rs.10226) Rs.58935, (cid:2) Rs.13283, – (0.23) 0.04 (-0.83) – (–) –# (0.09) –@ (-0.60) – * (–) –(cid:2) (–)¤ – (0.10) – (0.06) 0.05 (0.23) 0.58 (0.16) – (0.11) 0.86 (0.01) 1.53 (-0.44) 145 Notes forming part of the Accounts (contd.) Notes: i. ii. iii. iv. v. Figures in brackets relate to previous year. Item nos.3 to 13 above are integrated joint ventures/jointly controlled entities Figures for the current year in respect of L&T-Demag Plastics Machinery Limited (LTDPML) relate to the period up to March 30, 2009. LTDPML has become a subsidiary of the Company on March 31, 2009. Figures for the previous year in respect of L&T-Valdel Engineering Private Limited relate to the period up to July 3, 2007, from which date it has become a subsidiary of the Company Contingent liabilities, if any, incurred in relation to interests in joint ventures as at March 31, 2009: Rs.nil (previous year: Rs.nil); and share in contingent liabilities incurred jointly with other ventures as at March 31, 2009: Rs.nil (previous year: Rs.nil) vi. Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as on March 31, 2009: Rs.82.01 crore (previous year: Rs.45.21 crore) vii. Contingent liabilities in respect of liabilities of other ventures of joint ventures as at March 31, 2009: Rs.nil (previous year: Rs.nil) viii. Capital commitments, if any, in relation to interests in joint ventures as at March 31, 2009: Rs.nil (previous year: Rs.nil) 15. Loans and advances include: a) Rs.161 crore (previous year: Rs.200 crore) under “advances recoverable in cash or in kind” towards interest free loan to L&T Employees Welfare Foundation Trust to part-finance its acquisition of equity shares in the Company held by Grasim Industries Limited and its subsidiary. The loan is repayable in 9 years commencing from May 2005 with a minimum repayment of Rs.25 crore in a year. b) Rs.nil (previous year: Rs.43.33 crore) net of provisions, being portfolio of financial assets (comprising lease/hire purchase receivables and term loans) purchased from L&T Finance Limited, a subsidiary of the Company, in earlier years. 16. Particulars in respect of loans and advances in the nature of loans as required by the listing agreement: Name of the company/firm/director (a) Loans and advances in the nature of loans given to subsidiaries: Larsen & Toubro Infotech Limited 1 2 India Infrastructure Developers Limited 3 Bhilai Power Supply Company Limited 4 5 6 7 8 9 10 L&T-MHI Boilers Private Limited 11 L&T Infrastructure Finance Co. Limited Tractor Engineers Limited L&T Finance Limited International Seaport Dredging Private Limited L&T Capital Company Limited L&T Seawoods Private Limited L&T Infrastructure Development Projects Limited TOTAL (b) Loans and advances in the nature of loans given to associates: 1 L&T-Case Equipment Private Limited TOTAL (c) Loans and advances in the nature of loans where repayment schedule is not specified/is beyond 7 years: 1 India Infrastructure Developers Limited 2 Bhilai Power Supply Company Limited 3 L&T Capital Company Limited TOTAL (d) Loans and advances in the nature of loans where interest is not charged or charged below bank rate: India Infrastructure Developers Limited 1 2 Bhilai Power Supply Company Limited 3 L&T Capital Company Limited TOTAL Balance as at 31-3-2009 31-3-2008 Rs.crore Maximum outstanding during 2008-2009 2007-2008 – – 7.19 32.85 – 11.83 770.81 589.94 35.00 – – 1447.62 5.00 5.00 – 7.19 770.81 778.00 – 7.19 770.81 778.00 – – 7.19 5.32 – 10.97 75.00 – – – – 98.48 10.00 10.00 – 7.19 75.00 82.19 – 7.19 75.00 82.19 24.85 38.93 7.19 32.85 500.00 10.97 770.81 589.94 35.00 10.00 100.00 – 36.33 7.19 5.32 800.00 10.97 75.00 – – – – 10.00 15.00 – 7.19 770.81 38.93 7.19 770.81 36.33 7.19 75.00 36.33 7.19 75.00 Note: Loans to employees (including directors) under various schemes of the Company (such as housing loan, furniture loan, education loan, etc.) have been considered to be outside the purview of disclosure requirements. 146 Notes forming part of the Accounts (contd.) 17. Segment reporting: a) Information about business segments (Information provided in respect of revenue items for the year ended March 31, 2009 and in respect of assets/liabilities as at March 31, 2009 - denoted as "CY" below, previous year denoted as "PY") i) Primary segments (business segments): Particulars Revenue - including excise duty External Inter-segment Total revenue Result Segment result Less: Inter-segment margins on capital jobs Unallocated corporate income/ (expenditure) [net] Operating profit (PBIT) Interest expense Interest income Profit before tax (PBT) Provision for current tax Provision for deferred tax Provision for fringe benefit tax Profit after tax (before extraordinary items) Profit from extraordinary items Profit after tax (after extraordinary items) Other information Segment assets Unallocable corporate assets Total assets Segment liabilities Unallocable corporate liabilities Total liabilities Capital expenditure Depreciation (including obsolescence, amortisation and impairment) included in segment expense Non-cash expenses other than depreciation included in segment expense Engineering & Construction Electrical & Electronics Machinery & Industrial Products Others Elimination Total CY PY CY PY CY PY CY PY CY PY CY PY Rs.crore 28192.86 19178.04 2655.21 2598.60 2437.75 2386.71 1039.02 1178.86 – – 34324.84 25342.21 512.26 311.05 122.68 77.30 37.31 29.70 47.68 128.94 (719.93) (546.99) – – 28705.12 19489.09 2777.89 2675.90 2475.06 2416.41 1086.70 1307.80 (719.93) (546.99) 34324.84 25342.21 3447.91 2332.81 316.68 398.73 466.34 431.01 51.84 98.29 – – 4282.77 3260.84 56.39 55.04 4226.38 3205.80 (107.57) (12.15) 4118.81 3193.65 (350.22) (122.66) 171.82 84.48 3940.41 3155.47 1167.03 892.79 10.44 53.74 19.95 69.31 2709.20 2173.42 772.46 – 3481.66 2173.42 19990.66 13938.18 1784.71 1639.75 1120.83 1071.81 301.60 573.87 13373.47 9831.01 538.13 625.62 708.09 633.30 116.30 237.77 1702.89 1181.64 111.84 196.09 214.12 140.71 30.83 22.97 73.44 14.34 76.01 10.47 10.46 14.83 60.76 15.01 94.05 48.16 13.90 6.79 10.08 4.71 8.23 5.95 – – – – 23197.80 17223.61 14095.49 9936.89 37293.29 27160.50 14735.99 11327.70 10097.61 6277.72 24833.60 17605.42 147 Notes forming part of the Accounts (contd.) ii) Secondary segments (geographical segments): Particulars Domestic Overseas CY PY CY PY Rs.crore Total CY PY External revenue by location of customers 27810.59 21194.68 6514.25 4147.53 34324.84 25342.21 Carrying amount of segment assets by location of assets 20757.13 15627.17 2440.67 1596.44 23197.80 17223.61 Cost incurred on acquisition of tangible and intangible fixed assets 1884.18 1511.66 14.45 2.84 1898.63 1514.50 b) Segment reporting: Segment identification, reportable segments and definition of each reportable segment: i) Primary/secondary segment reporting format: (a) The risk-return profile of the Company's business is determined predominantly by the nature of its products and services. (b) Accordingly, the business segments constitute the primary segments for disclosure of segment information. In respect of secondary segment information, the Company has identified its geographical segments as (i) Domestic and (ii) Overseas. The secondary segment information has been disclosed accordingly. ii) Segment identification: Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments: Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 “Segment Reporting”. iv) Segment composition: • Engineering & Construction Segment comprises execution of engineering and construction projects in India/abroad to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/ infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning, procurement/construction and project management. Electrical & Electronics Segment comprises manufacture and sale of low and medium voltage switchgear and control gear, custom-built switchboards, petroleum dispensing pumps & systems, electronic energy meters/protection (relays) systems, control & automation products and medical equipment. Machinery & Industrial Products Segment comprises manufacture and sale of industrial machinery & equipment, marketing of industrial valves, construction equipment and welding/industrial products. Others include (a) ready mix concrete (b) property development activity and (c) e-engineering services & embedded systems. 18. Disclosure of related parties/related party transactions: i. List of related parties over which control exists Sr. no. Name of the related party Relationship 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Tractor Engineers Limited L&T Finance Limited L&T Capital Company Limited Larsen & Toubro Infotech Limited Larsen & Toubro Infotech GmbH L&T Transportation Infrastructure Limited L&T PNG Tollway Private Limited Narmada Infrastructure Construction Enterprise Limited L&T Western India Tollbridge Limited India Infrastructure Developers Limited Larsen & Toubro LLC Larsen & Toubro International FZE L&T Infrastructure Development Projects Limited L&T Infocity Limited Hyderabad International Trade Expositions Limited Andhra Pradesh Expositions Private Limited Wholly owned subsidiary Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary of Larsen & Toubro Infotech Limited Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary * Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary of L&T Infrastructure Development Projects Limited # Wholly owned subsidiary of L&T Capital Holdings Limited Subsidiary * Wholly owned subsidiary Subsidiary * Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Infocity Limited # Wholly owned subsidiary of Hyderabad International Trade Expositions Limited 148 (cid:129) (cid:129) (cid:129) Notes forming part of the Accounts (contd.) Sr. no. Name of the related party Relationship 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Larsen & Toubro (East Asia) SDN. BHD. (formerly known as L&T-ECC Construction (M) SDN. BHD.) Bhilai Power Supply Company Limited Larsen & Toubro (Oman) LLC Raykal Aluminium Company Private Limited Cyber Park Development & Construction Limited L&T-Sargent & Lundy Limited Larsen & Toubro Qatar LLC L&T Overseas Projects Nigeria Limited Chennai Vision Developers Limited Larsen & Toubro Electromech LLC L&T Infocity Lanka Private Limited Larsen & Toubro (Wuxi) Electric Company Limited International Seaports Pte. Limited International Seaports (India) Private Limited 31 L&T Panipat Elevated Corridor Limited 32 33 L&T Tech Park Limited L&T Krishnagiri Thopur Toll Road Limited 34 L&T Western Andhra Tollways Limited 35 L&T Vadodara Bharuch Tollway Limited 36 L&T Interstate Road Corridor Limited 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Spectrum Infotech Private Limited L&T Urban Infrastructure Limited Larsen & Toubro Infotech Canada Limited (formerly known as Larsen & Toubro Information Technology Canada Limited) L&T Infrastructure Finance Company Limited L&T Power Limited (formerly known as L&T Power Projects Limited) International Seaport Dredging Limited L&T Modular Fabrication Yard LLC, Oman Larsen & Toubro (Saudi Arabia) LLC Larsen & Toubro Readymix Concrete Industries LLC L&T Infrastructure Development Projects (Lanka) Private Limited L&T Electricals Saudi Arabia Company Limited LLC Larsen & Toubro Kuwait Construction General Contracting Company WLL Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Larsen & Toubro (Jiangsu) Valve Company Limited L&T-MHI Boilers Private Limited L&T Uttaranchal Hydropower Limited L&T Bangalore Airport Hotel Limited L&T-MHI Turbine Generators Private Limited Subsidiary of Larsen & Toubro International FZE ## Subsidiary * Subsidiary of Larsen & Toubro International FZE # Subsidiary * Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary * Subsidiary of Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE # Wholly owned subsidiary of L&T Realty Private Limited Subsidiary of Larsen & Toubro International FZE # Subsidiary of L&T Infocity Limited # Wholly owned subsidiary of Larsen & Toubro International FZE Wholly owned subsidiary Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Subsidiary of L&T Infrastructure Development Projects Limited # Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited Wholly owned subsidiary Subsidiary of L&T Infrastructure Development Projects Limited # Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary Subsidiary ** Subsidiary of Larsen & Toubro International FZE # Subsidiary of Larsen & Toubro International FZE # Subsidiary of Larsen & Toubro International FZE ## Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary of Larsen & Toubro International FZE # Subsidiary of Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE # Subsidiary of Larsen & Toubro International FZE # Subsidiary of L&T Power Limited # Wholly owned subsidiary of L&T Power Development Limited Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Power Limited # 149 Notes forming part of the Accounts (contd.) Sr. no. Name of the related party Relationship L&T-Demag Plastics Machinery Limited L&T Vision Ventures Limited L&T Phoenix Info Parks Private Limited L&T South City Projects Limited 55 56 57 58 GDA Technologies Inc. 59 60 GDA Technologies Limited 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 Offshore International FZC 77 Qingdao Larsen & Toubro Trading Company Limited CSJ Infrastructure Private Limited L&T Hitech City Limited L&T-Valdel Engineering Limited L&T Arun Excello IT SEZ Private Limited L&T Power Development Limited L&T Shipbuilding Limited L&T Infra & Property Development Private Limited L&T Realty Private Limited L&T Concrete Private Limited L&T Strategic Management Limited L&T General Insurance Company Limited L&T Gulf Private Limited L&T Transco Private Limited Hi-Tech Rock Products & Aggregates Limited L&T Arun Excello Commercial Projects Private Limited 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 Larsen & Toubro ATCO Saudia LLC L&T Realty FZE L&T Seawoods Private Limited L&T Chennai-Tada Tollway Limited L&T Siruseri Property Developers Limited L&T Port Sutrapada Limited Sutrapada SEZ Developers Limited Sutrapada Shipyard Limited L&T Electrical & Automation FZE Larsen & Toubro Heavy Engineering LLC TAMCO Switchgear (Malaysia) SDN. BHD. TAMCO Shanghai Switchgear Company Limited TAMCO Electrical Industries Australia Pty Limited PT TAMCO Indonesia L&T Capital Holdings Limited L&T Natural Resources Limited L&T Ahmedabad-Maliya Tollway Private Limited L&T Halol-Shamlaji Tollway Private Limited L&T Rajkot-Vadinar Tollway Private Limited L&T Engserve Private Limited Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary (w.e.f. March 31, 2009) Wholly owned subsidiary of GDA Technologies Inc. Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Infocity Limited # Subsidiary * Subsidiary of L&T Urban Infrastructure Limited # Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary of L&T Finance Limited Subsidiary * Wholly owned subsidiary Wholly owned subsidiary Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of Larsen & Toubro International FZE # Wholly owned subsidiary of Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Subsidiary of Larsen & Toubro International FZE ## Wholly owned subsidiary of L&T Realty Private Limited Wholly owned subsidiary Wholly owned subsidiary of L&T Transco Private Limited Wholly owned subsidiary of L&T South City Projects Limited Wholly owned subsidiary of L&T Transco Private Limited Wholly owned subsidiary of L&T Transco Private Limited Wholly owned subsidiary of L&T Transco Private Limited Wholly owned subsidiary of Larsen & Toubro International FZE Subsidiary of Larsen & Toubro International FZE # Wholly owned subsidiary of Larsen & Toubro International FZE Wholly owned subsidiary of Larsen & Toubro International FZE Wholly owned subsidiary of Larsen & Toubro International FZE Wholly owned subsidiary of Larsen & Toubro International FZE Subsidiary * Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary The Company holds more than one-half in nominal value of the equity share capital The Company controls the composition of the Board of Directors The Company, together with its subsidiaries, holds more than one-half in nominal value of the equity share capital * ** # ## The Company, together with its subsidiaries controls the composition of the Board of Directors 150 Notes forming part of the Accounts (contd.) ii. Names of the related parties with whom transactions were carried out during the year and description of relationship: Subsidiary companies: 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Cyber Park Development & Construction Limited Larsen & Toubro (Wuxi) Electric Company Limited L&T Capital Company Limited L&T Finance Limited L&T Infrastructure Development Projects Limited L&T Krishnagiri Thopur Toll Road Limited L&T Panipat Elevated Corridor Limited L&T Tech Park Limited L&T Urban Infrastructure Limited L&T Western Andhra Tollways Limited Larsen & Toubro (Oman) LLC Larsen & Toubro Infotech Canada Limited 2 4 6 8 10 12 14 16 18 20 22 24 Larsen & Toubro (East Asia) SDN. BHD. India Infrastructure Developers Limited L&T-Sargent & Lundy Limited L&T Engserve Private Limited L&T Infocity Limited L&T Interstate Road Corridor Limited L&T Arun Excello Commercial Projects Private Limited L&T Chennai-Tada Tollway Limited L&T Vadodara Bharuch Tollway Limited L&T Western India Tollbridge Limited Larsen & Toubro Infotech GmbH Larsen & Toubro International FZE Larsen & Toubro Infotech Limited 26 Raykal Aluminum Company Private Limited Narmada Infrastructure Construction Enterprise Limited 28 Tractor Engineers Limited Larsen & Toubro Saudi Arabia LLC L&T Modular Fabrication Yard LLC, Oman L&T Electrical Saudi Arabia Company Limited, LLC L&T Uttaranchal Hydropower Limited 30 32 34 36 L&T Southcity Projects Limited Larsen & Toubro (Quingdao) Rubber Machinery Company Limited L&T Infrastructure Finance Company Limited L&T Power Limited (formerly known as L&T Power Project Limited) International Seaport Dredging Limited 38 Bhilai Power Supply Company Limited L&T Bangalore Airport Hotel Limited Spectrum Infotech Private Limited Larsen & Toubro Qatar LLC Larsen & Toubro LLC L&T-Valdel Engineering Limited 49 Offshore International FZC 40 42 44 L&T Phoenix Info Parks Private Limited Larsen & Toubro Electromech LLC L&T Seawoods Private Limited 46 Hyderabad International Trade Expositions Limited 48 50 L&T-MHI Boilers Private Limited Larsen & Toubro Readymix Concrete Industries LLC 51 L&T Infrastructure Development Projects (Lanka) Private Limited 52 Larsen & Toubro (Jiangsu) Valve Company Limited 53 Qingdao Larsen & Toubro Trading Company Limited 53 CSJ Infrastructure Private Limited 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 L&T Hitech City Limited L&T Vision Ventures Limited L&T Rajkot-Vadinar Tollway Private Limited Tamco Switchgear (Malaysia) SDN. BHD. L&T Realty Private Limited L&T Transco Private Limited 56 58 60 62 64 66 L&T Port Sutrapada Limited L&T Gulf Private Limited L&T Natural Resources Limited L&T Power Development Limited L&T Shipbuilding Limited L&T Ahmedabad-Maliya Tollway Private Limited L&T Halol-Shamlaji Tollway Private Limited 68 GDA Technologies Limited Larsen & Toubro Kuwait Construction General Contracting Company WLL 70 Larsen & Toubro ATCO Saudia LLC L&T Arun Excello IT SEZ Private Limited L&T Electrical & Automation FZE L&T Transportation Infrastructure Limited L&T Overseas Projects Nigeria Limited L&T Infra & Property Development Private Limited 72 74 76 78 80 L&T Heavy Engineering LLC L&T-Demag Plastics Machinery Limited. L&T PNG Tollway Private Limited L&T-MHI Turbine Generators Private Limited L&T Concrete Private Limited L&T Strategic Management Limited 82 Hi-Tech Rock Products & Aggregates Limited L&T Capital Holdings Limited 151 Notes forming part of the Accounts (contd.) Associate companies: 1 3 5 7 9 Audco India Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited Voith Paper Technology (India) Limited 2 4 6 8 EWAC Alloys Limited L&T-Komatsu Limited L&T-Case Equipment Private Limited Salzer Cables Limited International Seaport (Haldia) Private Limited 10 Second Vivekananda Bridge Tollway Co. Limited 11 L&T Arun Excello Realty Private Limited 12 JSK Electricals Private Limited Joint ventures (other than associates): 1 3 5 7 9 11 13 International Metro Civil Contractors Joint Venture The Dhamra Port Company Limited Metro Tunneling Group Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Les Palles Exhibition Centre) 2 4 6 8 Bauer-L&T Diaphragm Wall Joint Venture L&T-Eastern Joint Venture L&T-Hochtief Seabird Joint Venture Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Eben Cybercity) Desbuild-L&T Joint Venture L&T-AM Tapovan Joint Venture L&T Bombay Developers Private Limited 10 HCC-L&T Purulia Joint Venture 12 L&T-Shanghai Urban Corporation Group Joint Venture Key management personnel & their relatives: 1 3 5 7 Mr. A. M. Naik (Chairman & Managing director) Mr. Y. M. Deosthalee (whole-time director) Mrs. Leena Y. Deosthalee (wife) Mr. R. N. Mukhija (whole-time director) Mrs. Sushma Mukhija (wife) Ms. Debika Ajmani (daughter) 2 4 6 Mr. J. P. Nayak (whole-time director) Mrs. Neeta J. Nayak (wife) Mr. Nitin Nayak (son) Mr. K. Venkataramanan (whole-time director) Mrs.Jyothi Venkataramanan (wife) Mr. K. V. Rangaswami (whole-time director) Mr. V. K. Magapu (whole-time director) 8 Mr. M. V. Kotwal (whole-time director) iii. Disclosure of related party transactions: Sr. no. Nature of transaction/relationship/major parties 1 Purchase of goods & services (including commission paid) Subsidiaries, including: L&T Finance Limited L&T Modular Fabrication Yard LLC Tractor Engineers Limited L&T-Valdel Engineering Limited 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 428.14 193.88 60.07 68.70 – 43.79 69.56 – 35.48 – 821.41 138.73 Associates & joint ventures, including: 934.96 1061.06 Audco India Limited EWAC Alloys Limited 627.65 126.69 TOTAL 1363.10 1254.94 152 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 2 Sale of goods/power/contract revenue & services 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties Rs.crore Subsidiaries, including: 2179.45 1349.59 Larsen & Toubro Infotech Limited L&T Interstate Road Corridor Limited L&T Krishnagiri Thopur Toll Road Private Limited L&T Panipat Elevated Corridor Private Limited L&T Vadodara Bharuch Tollway Limited – 286.67 249.98 – 509.60 Associates & joint ventures, including: 523.54 69.04 Audco India Limited L&T Arun Excello Realty Private Limited L&T-Komatsu Limited Second Vivekananda Bridge Tollway Company Private Limited The Dhamra Port Company Limited TOTAL 3 Purchase/lease of fixed assets Subsidiaries, including: India Infrastructure Developers Limited L&T Finance Limited Associates & joint ventures, including: L&T- Case Equipment Private Limited L&T-Komatsu Limited EWAC Alloys Limited TOTAL 4 Sale of fixed assets Subsidiaries, including: L&T Shipbuilding Limited L&T Heavy Engineering LLC TOTAL 5 Subscription to equity and preference shares (including application money paid and investment in joint ventures) Subsidiaries, including: L&T Finance Limited L&T Infrastructure Finance Company Limited Larsen & Toubro International FZE L&T Capital Holding Limited Associates & joint ventures, including: L&T-Shanghai Urban Corporation Group Joint Venture L&T-AM Tapovan Joint Venture L&T-Eastern Joint Venture TOTAL 6 Purchase of investments Subsidiary: L&T Finance Limited TOTAL – – – – 457.66 – 187.15 2.37 1.19 2.67 1418.63 1.11 20.42 2702.99 215.05 6.23 221.28 21.53 0.25 0.25 0.21 0.04 – – 1758.99 985.01 52.10 – – 533.04 1078.59 13.57 19.17 9.71 47.94 1811.09 1032.95 4.50 4.50 4.50 – – 152.32 154.53 178.17 225.48 204.30 12.45 25.28 11.83 16.05 – 1.08 – 11.13 6.86 2.43 – – 250.00 257.00 336.39 – – 45.25 – – 153 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 7 Sale of investments Subsidiary: L&T Capital Holding Limited TOTAL 8 Receiving of services from related parties Subsidiaries, including: Larsen & Toubro Infotech Limited L&T-Sargent and Lundy Limited L&T-Valdel Engineering Limited Associates & joint ventures including: L&T-Komatsu Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited TOTAL 9 Rent paid, including lease rentals under leasing/hire purchase arrangements including loss sharing on equipment finance Subsidiaries, including: L&T Finance Limited Associates & joint ventures, including: EWAC Alloys Limited L&T-Komatsu Limited Key management personnel Relatives of key management personnel TOTAL 10 Charges for deputation of employees to related parties Subsidiaries, including: L&T-MHI Boilers Private Limited Larsen & Toubro Infotech Limited Offshore International FZC L&T Infrastructure Development Projects Limited L&T-Valdel Enginnering Limited Associates & joint ventures, including: EWAC Alloys Limited L&T-Case Equipment Private Limited Audco India Limited L&T-Komatsu Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited The Dhamra Port Company Limited 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 1051.54 1051.54 1051.54 – – 17.51 14.57 0.13 14.70 17.62 0.87 0.13 0.11 18.73 21.27 1.31 8.81 26.32 24.98 1.07 0.11 0.14 26.30 59.09 26.50 10.35 3.46 2.47 – 7.30 1.38 23.31 0.35 0.72 6.29 – 6.04 – 13.08 2.73 5.27 8.56 3.37 4.46 – – – 10.99 – – 0.13 – – 17.35 0.33 0.53 – 4.32 4.82 2.26 2.28 – – – 0.33 0.10 0.11 0.13 TOTAL 85.59 22.58 154 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 11 Dividend received Subsidiaries, including: HPL Cogeneration Limited Larsen & Toubro Infotech Limited Associates & joint ventures, including: L&T-Komatsu Limited EWAC Alloys Limited Audco India Limited Voith Paper Technology (India) Limited TOTAL 12 Commission received, including those under agency arrangements Subsidiaries, including: Larsen & Toubro Infotech Limited L&T Finance Limited Tractor Engineers Limited L&T-Demag Plastics Machinery Limited Associates & joint ventures, including: L&T-Komatsu Limited TOTAL 13 Rent received, overheads recovered and miscellaneous income Subsidiaries, including: Larsen & Toubro Infotech Limited Larsen & Toubro (Oman) LLC Associates & joint ventures, including: L&T-Case Equipment Private Limited Audco India Limited L&T-Chiyoda Limited L&T-Komatsu Limited Metro Tunneling Group TOTAL 14 Interest received Subsidiaries, including: Bhilai Power Supply Company Limited L&T Seawoods Private Limited Associate: L&T-Case Equipment Private Limited Key management personnel TOTAL 15 Interest paid Subsidiaries, including: L&T Finance Limited Associate: Audco India Limited TOTAL 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 15.80 56.24 72.04 5.88 151.47 157.35 111.52 33.69 145.21 55.59 1.01 0.06 56.66 9.83 7.77 17.60 – 15.80 28.80 12.44 9.00 6.00 – – – 5.88 149.57 55.21 48.04 5.60 7.49 3.27 2.74 7.45 – 35.93 1.01 8.68 7.77 46.91 11.50 58.41 0.84 207.05 207.89 99.91 23.52 123.43 10.09 – 0.03 10.12 6.62 2.35 8.97 28.45 15.64 3.60 1.45 3.60 2.85 0.27 0.23 0.33 – 198.52 42.99 – 4.54 3.63 – – – 2.38 – – 6.15 2.35 155 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 16 Payment of salaries/perquisites Key management personnel: 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 56.46 38.02 A. M. Naik J. P. Nayak Y. M. Deosthalee K. Venkataramanan R. N. Mukhija K. V. Rangaswami V. K. Magapu M. V. Kotwal 12.55 6.39 7.16 7.11 7.07 5.21 5.22 5.75 8.39 4.31 4.83 4.79 4.74 3.54 3.54 3.88 TOTAL 56.46 38.02 "Major parties" denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. iv. Amount due to/from related parties Sr. no. Nature of transaction/relationship/major parties 1 Accounts receivable Subsidiaries, including: L&T Electrical Saudi Arabia Company Limited, LLC Larsen & Toubro Infotech Limited L&T Uttaranchal Hydropower Limited L&T Interstate Road Corridor Limited L&T Vadodara Bharuch Tollway Limited Associates & joint ventures, including: 110.13 L&T Arun Excello Realty Private Limited Second Vivekanand Bridge Tollway Company Private Limited The Dhamra Port Company Limited TOTAL 2 Accounts payable (including acceptance & interest accrued) Subsidiaries, including: Larsen & Toubro Infotech Limited L&T Finance Limited Tractor Engineers Limited Tamco Switchgear (Malaysia) SDN. BHD. Associates & joint ventures, including: Audco India Limited L&T-Hochtief Seabird Joint Venture 600.56 213.15 369.08 As at 31-3-2009 Amount Amounts for major parties As at 31-3-2008 Amount Amounts for major parties Rs.crore 490.43 370.69 51.28 63.26 55.00 – 83.35 17.62 – 83.43 55.44 33.16 – 29.17 267.77 62.86 – 68.64 – 74.65 61.47 15.12 27.71 – 22.41 54.87 11.09 – 254.61 – 44.77 415.46 107.55 298.78 TOTAL 582.23 406.33 156 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 3 Loans & advances recoverable Subsidiaries, including: Offshore International FZC L&T Capital Company Limited L&T Finance Limited L&T Seawoods Private Limited Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Demag Plastics Machinery Limited L&T-Chiyoda Limited L&T-AM Tapovan Joint Venture Key management personnel Relatives of key management personnel TOTAL 4 Advances against equity contribution Subsidiaries, including: L&T Shipbuilding Limited Larsen & Toubro International FZE L&T Power Development Limited L&T Seawoods Private Limited TOTAL 5 Unsecured loans (including lease finance) Subsidiaries, including: India Infrastructure Developers Limited L&T Finance Limited TOTAL As at 31-3-2009 Amount Amounts for major parties As at 31-3-2008 Amount Amounts for major parties Rs.crore 1704.93 258.50 – 770.81 – 591.60 – – – 71.26 248.50 – – 250.00 – 146.19 43.69 0.79 0.06 303.04 66.35 66.35 9.02 9.02 117.76 0.66 0.10 1823.45 623.59 623.59 150.59 150.59 6 Advances received in the capacity of supplier of goods/services classified as "advances from customers" in the Balance Sheet Subsidiaries, including: 118.29 180.32 L&T Interstate Road Corridor Limited L&T Krishnagiri Thopur Toll Road Private Limited L&T-MHI Turbine Generators Private Limited L&T Vadodara Bharuch Tollway Limited L&T Chennai-Tada Tollway Limited L&T Southcity Projects Limited Associates & joint ventures, including: Second Vivekananda Bridge Tollway Company Private Limited L&T Arun Excello Realty Private Limited The Dhamra Port Company Limited – – 25.41 – 34.21 28.97 – 8.03 15.43 23.46 8.89 TOTAL 141.75 189.21 30.11 75.72 48.38 – 12.67 12.05 5.01 4.67 – 46.19 20.00 – 8.50 – 26.83 18.92 – 56.50 – 18.24 1.56 7.33 – 157 Notes forming part of the Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 7 Due to whole-time directors Key management personnel: As at 31-3-2009 Amount Amounts for major parties As at 31-3-2008 Amount Amounts for major parties Rs.crore 35.47 21.96 A. M. Naik J. P. Nayak Y. M. Deosthalee K. Venkataramanan R. N. Mukhija K. V. Rangaswami V. K. Magapu M. V. Kotwal 8.45 4.22 4.22 4.22 4.22 3.38 3.38 3.38 5.23 2.62 2.62 2.61 2.61 2.09 2.09 2.09 TOTAL 35.47 21.96 "Major parties" denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. v. Notes to related party transactions: a) b) c) The Company has a sole selling agreement with L&T-Komatsu Limited (LTK), an associate company, valid for the period of 5 years from October 16, 2006 in line with Government of India (GOI) approval letter dated May 28, 2007. The appointment shall be in effect as long as the joint venture agreement between the parent Company and M/s Komatsu Asia Pacific Pte. Ltd., Singapore (which is a subsidiary of Komatsu Ltd., Japan) remains in force, subject to approval of GOI, under Section 294 AA of the Companies Act, 1956. As per the terms of the agreement, the Company is the exclusive agent of L&T-Komatsu Limited to market LTK machines and provide product support. Pursuant to the aforesaid agreement, LTK is required to pay commission to the Company at specified rates on the sales effected by the Company. The Company has renewed the selling agency agreement from October 1, 2003 with EWAC Alloys Limited (EWAC), an associate company. The agreement shall remain valid until either party gives 12 months' prior written notice to the other for termination. As per the terms of the agreement, the Company is the selling agent authorised to purchase and resell EWAC products in accordance with the prices and other conditions stipulated in the agreement. The Company has a selling agency agreement with L&T-Demag Plastics Machinery Limited (LTDPML), a wholly owned subsidiary. As per the terms of the agreement, the Company is a selling and servicing agent of LTDPML. Pursuant to the aforesaid agreement, LTDPML is required to pay commission to the Company at specified rates on sales effected by the Company. Note: The financial impact of the agreements mentioned at (a) to (c) above has been included in/disclosed vide note no.18(iii) supra. 19. Leases: Where the Company is a lessee: a) Finance leases: i. [a] Assets acquired on finance lease mainly comprise plant & machinery, vehicles and personal computers. The leases have a primary period, which is fixed and non-cancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals (b) rates of depreciation under the Income Tax Act, 1961 and (c) change in the lessor's cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements. 158 Notes forming part of the Accounts (contd.) [b] The minimum lease rentals as at March 31, 2009 and the present value as at March 31, 2009 of minimum lease payments in respect of assets acquired under finance leases are as follows: Particulars Rs.crore Minimum lease payments Present value of minimum lease payments As at 31-3-2009 As at 31-3-2008 As at 31-3-2009 As at 31-3-2008 1. Payable not later than 1 year 2. Payable later than 1 year and not later than 5 years 3. Payable later than 5 years Total Less: Future finance charges Present value of minimum lease payments 42.89 170.65 – 213.54 67.28 146.26 0.50 0.28 – 0.78 0.08 0.70 20.90 125.36 – 146.26 0.43 0.27 – 0.70 ii. Contingent rent recognised/(adjusted) in the Profit and Loss Account in respect of finance leases: Rs.nil (previous year: Rs.nil) b) Operating leases: i. The Company has taken various residential/commercial premises and plant and machinery under cancellable operating leases. These lease agreements are normally renewed on expiry. ii. (a) The Company has taken certain assets like cars, technology assets, etc. on non-cancellable operating leases, the future minimum lease payments in respect of which, as at March 31, 2009 are as follows: Minimum lease payments 1. Payable not later than 1 year 2. Payable later than 1 year and not later than 5 years 3. Payable later than 5 years Total Rs.crore 12.02 9.03 – 21.05 (b) The lease agreements provide for an option to the Company to renew the lease period at the end of the non-cancellable period. There are no exceptional/restrictive covenants in the lease agreements. iii. Lease rental expense in respect of operating leases: Rs.41.50 crore (previous year: Rs.40.91 crore) iv. Contingent rent recognised in the Profit and Loss Account: Rs.0.11 crore (previous year: Rs.0.14 crore) 20. Provision for current tax includes: i. ii. Provision for wealth tax Rs.3.37 crore [including Rs.0.98 crore being provision for wealth tax in respect of earlier years] (previous year: Rs.1.23 crore) Rs.53.84 crore being provision for income tax in respect of earlier years (previous year: provision for income tax of earlier years written back Rs.25.33 crore) iii. Rs.2.07 crore in respect of income tax payable outside India (previous year: Rs.nil) iv. Provision for tax on fringe benefits includes credit for excess provision of Rs.0.20 crore pertaining to earlier years, reversed during the year. (previous year: provision includes Rs.0.79 crore pertaining to earlier years) 159 Notes forming part of the Accounts (contd.) 21. Major components of deferred tax liabilities and deferred tax assets: Particulars Deferred tax liabilities/(assets) Charge/(credit) to Profit and Loss Account Charge/(credit) to reserves Deferred tax liabilities/(assets) As at 31-3-2008 ordinary activity extraordinary activity securities premium account hedging reserve As at 31.3.2009 Rs.crore Deferred tax liabilities: Difference between book and tax depreciation Gain on derivative transactions to be offered for tax purposes in the year of transfer to Profit and Loss Account Disputed statutory liabilities paid and claimed as deduction for tax purposes but not debited to Profit and Loss Account Total Deferred tax (assets): Provision for doubtful debts and advances debited to Profit and Loss Account Loss on derivative transactions to be claimed for tax purposes in the year of transfer to Profit and Loss Account Unpaid statutory liabilities/provision for compensated absences debited to Profit and Loss Account Other items giving rise to timing differences Total Net deferred tax liability/(assets) Previous year 220.21 64.49 2.69 – – 24.12 244.33 2.62 67.11 (100.01) (45.84) – – (48.78) (34.17) (182.96) 61.37 40.19 (19.34) 8.51 (56.67) 10.44 19.95 – – 2.69 – – – – – 2.69 – – – – – – – – – – – 1.23 – 287.39 121.03 121.03 – 121.03 26.74 435.16 – (145.85) (147.06) (147.06) – – (68.12) (25.66) (147.06) (386.69) (26.03) – 48.47 61.37 22. Basic and diluted earnings per share [EPS] computed in accordance with Accounting Standard (AS) 20 “Earnings per Share”. Particulars Before extraordinary items After extraordinary items 2008-2009 2007-2008 2008-2009 2007-2008 Basic Profit after tax as per the accounts (Rs.crore) Weighted average number of shares outstanding Basic EPS (Rupees) Diluted Profit after tax as per the accounts (Rs.crore) Add: Interest/exchange difference (gain)/loss on bonds convertible into equity shares (net of tax) (Rs.crore) A B A/B A B Adjusted profit for diluted earnings per share (Rs.crore) C=A+B Weighted average number of shares outstanding Add: Weighted average number of potential equity shares that could arise on conversion of FCCBs Add: Weighted average number of potential equity shares on account of employee stock options D E F 2709.20 58,51,18,186 2173.42 2173.42 57,50,52,204 58,51,18,186 57,50,52,204 3481.66 46.30 37.80 59.50 37.80 2709.20 2173.42 3481.66 2173.42 – 2709.20 (21.85) 2151.57 – 3481.66 (21.85) 2151.57 58,51,18,186 57,50,52,204 58,51,18,186 57,50,52,204 – 24,59,448 – 24,59,448 79,89,615 1,39,06,732 79,89,615 1,39,06,732 Weighted average number of shares outstanding for Diluted EPS G=D+E+F 59,31,07,801 59,14,18,384 59,31,07,801 59,14,18,384 Diluted EPS (Rupees) C/G 45.68 36.38 58.70 36.38 160 Notes forming part of the Accounts (contd.) 23. Disclosures required by Accounting Standard (AS) 29 "Provisions, Contingent Liabilities and Contingent Assets": a) Movement in provisions: Particulars Product warranties Excise duty Sales tax Rs.crore Class of Provisions Litigation Contractual Others Total obligations related rectification cost- construction contracts Balance as at 1-4-2008 Additional provision during the year Provision for extraordinary item Provision reversed during the year Balance as at 31-3-2009 (5 = 1 + 2 + 3 - 4) 18.09 6.43 – 8.69 4.06 – – 3.96 21.78 20.65 – 1.12 15.83 0.10 41.31 2.11 – – 2.11 – 62.40 128.43 2.70 111.14 10.31 165.82 – 186.28* 186.28 27.18 – 11.30 190.83 187.99 436.06 Sr. no. 1 2 3 4 5 * Refer note no.10 b) Nature of provisions: i. Product warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at March 31, 2009 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two years from the date of Balance Sheet. ii. Provision for excise duty represents the differential duty liability that is expected to materialise in respect of matters in appeal. iii. Provision for sales tax represents mainly the differential sales tax liability on account of non-collection of declaration forms for the period prior to 5 years. iv. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal. v. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under AS 7 (Revised) “Construction Contracts”. c) Disclosure in respect of contingent liabilities is given as part of Schedule J to the Balance Sheet. 24. a) The expenditure on research and development activities, as certified by the management, is Rs.80.19 crore (including capital expenditure of Rs.5.01 crore) [previous year: Rs.67.25 crore, including capital expenditure of Rs.6.61 crore]. b) An amount of Rs.197.46 crore (net loss) (previous year: Rs.280.89 crore [net loss]) has been accounted under respective revenue heads in the Profit and Loss Account towards exchange differences arising on foreign currency transactions and forward contracts covered under Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates”. 25. In line with the Company's risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges. a) The particulars of derivative contracts entered into for hedging purposes outstanding as at March 31, 2009 are as under: Category of derivative instruments For hedging foreign currency risks a) Forward contracts for receivables including firm commitments and highly probable forecasted transactions Forward contracts for payables including firm commitments and highly probable forecasted transactions b) c) Currency swaps d) Option contracts For hedging interest rate risks Interest rate swaps For hedging commodity price risks Commodity futures i ii iii Rs.crore Amount of exposures hedged As at 31-3-2009 As at 31-3-2008 4549.23 1999.09 6800.95 4946.36 108.25 1886.87 3658.49 3595.17 – 150.00 12.98 – 161 Notes forming part of the Accounts (contd.) b) Unhedged foreign currency exposures as at March 31, 2009 are as under: Rs.crore Unhedged foreign currency exposures i ii Receivables, including firm commitments and highly probable forecasted transactions Payables, including firm commitments and highly probable forecasted transactions As at 31-3-2009 As at 31-3-2008 14047.29 7491.61 11000.89 6919.90 26. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.764.98 crore (previous year: Rs.608.16 crore). 27. Managerial remuneration a) Managing and whole-time directors' remuneration: Particulars Salary Perquisites Commission Contribution to provident/superannuation fund Total Rs.crore 2008-2009 2007-2008 5.94 3.87 35.47 11.18 56.46 5.67 2.93 21.96 7.46 38.02 Note: The above figures do not include contribution to gratuity fund, pension scheme and provision for compensated absences, since the same is provided on an actuarial basis for the Company as a whole. b) Managerial remuneration and computation of net profit under Section 349 of the Companies Act, 1956. Profit before tax before extraordinary items as per Profit and Loss Account Add: Managing and whole-time directors' remuneration and commission Commission paid to non-executive directors Directors' fees Depreciation, obsolescence and amortisation charged to the Accounts Less: Transfer from revaluation reserve Provision for diminution in value of investments Less: Provision no longer required for earlier years Provision for doubtful debts and advances (net) Less: Provisions written-back 307.30 1.31 8.12 7.75 226.99 72.50 Provision for foreseeable losses on construction contracts Profit (net) on sale of fixed assets as per Section 349 of the Companies Act, 1956 (net of capital profits) Less:Profit on sale of fixed assets as per Profit and Loss Account (net) Depreciation and obsolescence as per Section 350 of the Companies Act, 1956 Net profit as per Section 198 of the Companies Act, 1956 Maximum permissible remuneration to whole-time directors under Section 198 of the Companies Act, 1956 @ 10% of the profits computed above Restricted as per service agreements to Maximum permissible managerial remuneration to non-executive directors under Section 198 of the Companies Act, 1956 @ 1% Restricted as per shareholders' approval to 56.46 0.90 0.22 305.99 0.37 154.49 55.81 (1.71) 4.78 305.99 Rs.crore 3940.41 572.53 4512.94 310.77 4202.17 420.22 56.46 42.02 0.90 162 Notes forming part of the Accounts (contd.) c) Miscellaneous expenses include provision of Rs.0.90 crore (net) [previous year: Rs.0.90 crore] towards commission payable to non-executive directors of the Company, in terms of the special resolution passed at the annual general meeting held on August 26, 2005. 28. Auditors' remuneration (excluding service tax) and expenses charged to the accounts: Particulars Particulars Particulars Audit fees Certification work Tax audit fees Expenses reimbursed 29. Value of imports (on C.I.F. basis): Raw materials Components and spare parts Spare parts for sale Capital goods 30. Expenditure in foreign currency: On overseas contracts Royalty and technical know-how fees Interest Professional/consultation fees Other matters 31. Dividends remitted in foreign currency: Dividend for the year ended March 31, 2008 to: Particulars Rs.crore 2008-2009 2007-2008 0.68 0.89 0.16 0.16 0.50 0.88 0.18 0.07 Rs.crore 2008-2009 2007-2008 1208.80 2145.65 398.13 617.23 624.75 1430.39 253.52 198.47 Rs.crore 2008-2009 2007-2008 2155.49 1545.01 2.36 100.09 113.10 3.28 56.75 82.04 1142.08 336.72 Rs.crore 2008-2009 2007-2008 i. 9 non-resident shareholders on 7,850 shares held by them (previous year: 7,850 shares) - 0.01 – on 2-9-2008 ii. Custodian of global depositary receipts on 1,09,85,759 shares (previous year: 94,68,501 shares) - 16.48 3.44 on 2-9-2008 32. Earnings in foreign exchange: Export of goods [including Rs.1592.09 crore on FOB basis (previous year: Rs.1432.49 crore)] Particulars Construction and project related activities Export of services Commission Interest and dividend received Other receipts Rs.crore 2008-2009 2007-2008 1651.32 5196.41 452.61 38.14 2.98 6.77 1446.72 3611.31 577.99 2.91 17.66 – 163 Notes forming part of the Accounts (contd.) 33. The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, [MSMED Act] as at March 31, 2009. The disclosure pursuant to the said Act is as under: Particulars Principal amount due to suppliers under MSMED Act, 2006 Interest accrued, due to suppliers under MSMED Act on the above amount. and unpaid Payment made to suppliers (other than interest) beyond the appointed day during the year Interest paid to suppliers under MSMED Act (other than Section 16) Interest paid to suppliers under MSMED Act (Section 16) Interest due and payable towards suppliers under MSMED Act for payments already made Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED Act Rs.crore 2008-2009 2007-2008 9.64 0.12 22.09 – 0.13 0.13 0.25 3.55 0.01 9.43 – 0.06 0.06 0.07 Note: The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available with the Company. 34. The Company has given, inter alia, the following undertakings in respect of its investments: a) Jointly with L&T Infrastructure Development Projects Limited [a subsidiary of the Company], to the term lenders of its subsidiary companies L&T Transportation Infrastructure Limited (LTTIL): i. ii. not to reduce their joint shareholding in LTTIL below 51% until the financial assistance received from the term lenders is repaid in full by LTTIL and to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL. b) c) d) e) f) In terms of Company's concession agreement with Government of India and Government of Gujarat, not to change the control over L&T Western India Tollbridge Limited [a subsidiary of L&T Infrastructure Development Projects Limited] during the period of the agreement. To the debenture holders of L&T Infrastructure Development Projects Limited [a subsidiary of the Company] and to the lenders of its subsidiaries L&T Panipat Elevated Corridor Private Limited & L&T Krishnagiri Thopur Toll Road Limited, not to dilute Company's shareholding below 51%. To the lender of L&T Offshore International FZC (a subsidiary of the Company), not to pledge or reduce it's shareholding in L&T International FZE (the holding company of L&T Offshore International FZC) below 100% of the issued & allotted share capital. Jointly with L&T-MHI Turbine Generators Private Limited (a subsidiary of L&T Power Limited, which is a wholly owned subsidiary of the Company) and Mitsubishi Heavy Industries Limited (JV partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable financial support for the successful execution of APPDCL 2x800 MW Power Project - Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore district, Andhra Pradesh. Not to sell or otherwise transfer, deal with or agree to acquire, sell or otherwise transfer or deal with, in any manner the shares of Satyam Computer Services Limited (SCSL), held by the Company or its affiliates, till October 21, 2009 or a date approved by the appropriate authorities which ever is earlier. 35. During the year, the Company transferred at book value the equity investments held by it in the following companies to its wholly-owned subsidiary L&T Capital Holdings Limited, Name of the company India Infrastructure Developers Limited L&T Finance Limited L&T Infrastructure Finance Company Limited NAC Infrastructure Equipment Limited Sr. no. 1 2 3 4 164 No. of equity shares 5,60,60,000 18,66,91,500 50,00,00,000 45,00,000 Detail of investments Face value per share Amount invested Rupees Rs.crore 10 10 10 10 56.06 490.98 500.00 4.50 Notes forming part of the Accounts (contd.) 36. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2009. 37. According to the Company, Construction is a service activity and therefore, the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act, 1956. 38. Details of sales, raw materials and components consumed, capacities & production, inventories and purchase of trading goods: a) Sales: Class of goods 2008-2009 2007-2008 Unit Quantity Value Quantity Value Tonnes 8,187 Petrol dispensing and metering pumps Nos. 1,979 Earthmoving and agricultural machinery and spares Welding alloys & accessories Industrial machinery Nuclear purpose equipment, de-aerators, ultra high pressure vessels including multiwall vessels, high pressure heat exchangers and high pressure heaters in aggregate Plant & equipment and modules for nuclear power projects, heavy water projects, nuclear and space research and allied projects, including items for Chemical, Oil & Gas, etc. industries Powder metallurgy and industrial products Industrial electronic control panels Valves and accessories Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystalliser plants and pollution control equipment in aggregate Switchgear, all types Electro surgical unit and accessories Ship auxiliaries and components of mechanised sailing vessels Complete cement making machinery, including rotary kilns and fluxo packers in aggregate Transmission line tower Steel structural fabrication Rubber processing machinery and accessories Ultrasound equipment and accessories Patient monitoring system and accessories Electricity meters Ready mix concrete Defence equipment all types Others TOTAL @ Rs.crore 417.77 194.36 318.36 Rs.crore 165.45 329.86 283.61 16,097 Tonnes 13,278 Tonnes 110 30.48 292 20.51 Tonnes 36,388 3583.79 29,423 2972.09 100.83 137.81 781.97 2358.85 1071.91 4.38 37.29 117.68 172.40 871.66 8,771 1178.87 965.74 4.49 6,649 106.14 Tonnes 60 8.70 168 14.57 Nos. Tonnes Tonnes Nos. Nos. Parts for 3 Plants 22,807 13,086 – 240 100.80 121.63 140.75 Parts for 2 Plants 42,297 7,054 – 6,93,771 298.77 195.74 75.25 18.03 299.36 11.12 46.84 111.93 235 297.05 20.05 53.70 144.09 Cu.m. 20,26,416 605.92 30,72,870 1067.62 54.60 2274.44 12813.89 55.47 1541.30 10970.14 165 @ includes Rs.6933.20 crore of construction & project related activity (previous year: Rs.4837.29 crore) Notes forming part of the Accounts (contd.) b) Raw materials and components consumed: i) Class of goods: Particulars Steel Non-ferrous metals Bakelite Cement machinery components Nuclear equipment components, including items for Oil & Gas industries, etc. in aggregate Chemical plant components Switchgear components Electronic devices, test & measuring instruments and industrial electronic control panel components Metering & protection systems and medical equipment and components Industrial machinery components Power plant & machinery components Others TOTAL ii) Classification of goods: 2008-2009 2007-2008 Unit Quantity Value Quantity Value Rs.crore Rs.crore Tonnes Metres 46,976 16,39,248 Sq. mtrs. 14,86,147 Nos./Sets 31,21,882 Tonnes Metres Sq. mtrs. Nos. Tonnes. 2,487 8,18,158 2,147 43,851 376 207.31 209.14 376.14 706.69 86.29 8.92 7.80 13.01 4.26 63.30 1626.55 1176.84 782.55 29.57 170.14 47.89 514.67 587.93 6619.00 73,164 279.84 8,99,498 5,23,345 9,33,089 3,649 7,44,906 1,327 1,03,841 404 79.99 352.48 478.45 112.86 9.62 5.61 9.10 5.05 112.55 1275.90 671.20 767.76 137.21 203.36 43.68 316.87 983.56 5845.09 2008-2009 2007-2008 Particulars % to total consumption Value % to total Rs.crore consumption Value Rs.crore 2343.24 3501.85 40 60 100 5845.09 Imported (including through canalising agencies) Indigenous TOTAL 44 56 100 2935.28 3683.72 6619.00 166 Notes forming part of the Accounts (contd.) c) Capacities & production: Class of goods Scrapper, bulldozer, ripper and loader attachments Road rollers, hot mix plants and other road construction and bridge construction machinery Dairy machinery and equipment - various items in aggregate Chemical plant and machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystalliser plants and pollution control equipment in aggregate Equipment for food processing industry Complete cement making machinery, including rotary kilns and fluxo packers in aggregate Sugarcane and beet diffusion, beet preparation and beet pulp dehydration plants Nuclear purpose equipment, de-aerators, ultra high pressure vessels, vessels including multiwall vessels, high pressure heat exchangersand high pressure heaters in aggregate Plant and equipment and modules for nuclear power projects, heavy water projects, nuclear and space research and allied projects, including items for chemical, oil and gas, etc. industries Complete high speed bottling plants Pulp and paper making plants Suspended particles drying plants Unit Nos Nos Nos Tonnes Tonnes Nos Nos Tonnes Tonnes Nos Tonnes Nos Licensed capacity 250 (250) 150 (150) 35,584 (35,584) 6,567 (6,567) 65 (65) 2 (2) 2 (2) 5,000 (5,000) 10,000 (10,000) 6 (6) 2,000 (2,000) 6 (6) Containers for liquefied gases and chemicals Nos Not applicable * Steel plant valves Nos Ship auxiliaries and components of mechanised sailing vessels Tonnes Rubber processing machinery Switchgear, all types Miscellaneous electrical items Petrol dispensing and metering pumps Nos Nos Nos Nos (Not applicable)* 40 (40) 1,000 (1,000) 109 (109) 26,78,500$ (26,78,500)$ 10,49,100 (10,49,100) 4,800 (4,800) Press tools, jigs, fixtures, dies for pressure castings, moulds for plastic injection and bakelite Rs.Lakh/Nos Rs.220 lakh@ Rs.330 lakh (Rs.220 lakh)@ (Rs.295 lakh) Industrial machinery Tonnes 12,000 (12,000) 12,000 (12,000) Installed capacity Actual production 250 (250) 150 (150) 35,584 (35,584) 6,567 (6,567) 65 (65) – (–) – (–) – (–) 7,507 (9,171) – (–) 2 Parts for 3 plants (2) (Parts for 2 plants) 2 (2) 3,950 (3,950) – (–) 110 (292) 10,000 (10,000) 28,451 # (33,800)# 6 (6) 800 (800) 6 (6) 1,000 tonnes carrying capacity (1,000 tonnes carrying capacity) 40 (40) 1,000 (1,000) 109 (109) 31,74,750 (31,74,750) 10,39,100 (10,39,100) 4,800 (4,800) – (–) – (–) – (–) – (–) – (–) 60 (168) 244 (232) 58,98,474 (50,42,105) – (–) 1,882 (6,757) 510 nos (370 nos) 13,278 (16,169) 167 Notes forming part of the Accounts (contd.) c) Capacities & production (contd.) Class of goods Industrial electronic control panels Electronic devices Electro surgical unit and accessories Ultrasound equipment and accessories Patient monitoring system and accessories Relays Control & relay panels Electricity meters Transmission line tower Steel structural fabrication Steel re-rolling Ready mix concrete Defence equipment. all types Parts for aircraft and other metal products Parts and accessories for prime movers, boilers, steam generating plants and nuclear reactor Commercial ships Unit Nos Nos Nos Nos Nos Nos Nos Nos Tonnes Metric Tonnes Tonnes Licensed capacity 2,500 (2,500) 30,000 (30,000) Not applicable * (Not applicable) * Not applicable * (Not applicable) * Not applicable * (Not applicable) * Not applicable * (Not applicable) * Not applicable * (Not applicable) * Not applicable * (Not applicable) * 90,000 (51,000) 12,000 (12,000) 40,000 (40,000) Installed capacity 2,500 (2,500) 30,000 (30,000) 1,250 (1,250) 1,000 (1,000) 7,000 (7,000) 60,000 (60,000) 100 (100) Actual production 410 (638) – (9,248) 341 (452) 312 (519) 6,239 (6,603) 34,363 (55,222) – (–) 7,00,000 (7,00,000) 6,16,426 (5,83,540) 90,000 (51,000) 12,000 (12,000) 40,000 (40,000) 86,355 (62,804) 30,018 (45,852) 32,453 (31,506) M3 Nos No. Nos Nos – (53,58,400) – (53,58,400) 21,50,002 (34,65,306) 3,971 (3,971) 1,00,000 (–) 25,000 (–) – (–) 3,971 915 parts thereof (3,971) (274 parts thereof) 1,00,000 (–) 25,000 (–) 2 (2) – (–) – (–) – (–) Figures in brackets pertain to previous year. * Licensing not applicable. Installed capacity is based on one of the following: 1. Entrepreneur's memoranda filed with Government of India, Ministry of Industry, New Delhi; 2. Registration with the Directorate General of Technical Development; 3. 4. Approval obtained from the Government of India, Ministry of Industry, New Delhi; Agreement with Government of India, Ministry of Petroleum & Natural Gas. @ Excludes Rs.200 lakh in respect of memorandum no.1322/SIA/IMO/92 dated 27-3-1992 of which capacity of Rs.75 lakh has been installed. Excludes 6,96,250 nos. in respect of memoranda nos.924/SIA/IMO/91 and 922/SIA/IMO/91 dated 11-9-1991 of which capacity of 4,96,250 nos. has been installed. Includes production from external sources $ # 168 Notes forming part of the Accounts (contd.) d) Inventories: Class of goods As at 31-3-2009 As at 31-3-2008 As at 31-3-2007 Unit Quantity Value Quantity Value Quantity Value Rs.crore Rs.crore Rs.crore Electronic, medical and other instruments, accessories and spares Industrial machinery Switchgear, all types Complete cement making machinery, including rotary kilns and fluxo packers in aggregate – Tonnes – 253 – 1.08 132.66 – 253 – 3.52 130.54 – 221 Nos – – Parts for 2 Plants 0.47 Parts for 2 Plants Patient monitoring systems and accessories 5.08 9.43 0.17 4.49 120.03 38.40 7.07 Tonnes 152 495.71 152 444.45 152 568.94 Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystalliser plants and pollution control equipment in aggregate Industrial electronic control panels Spares for earthmoving and agricultural machinery Nuclear purpose equipment, deaerators, ultra high pressure vessels including multiwall vessels, high pressure heat exchangers and high pressure heaters in aggregate Ultrasound equipment and accessories Powder metallurgy and industrial products Petrol dispensing and metering pumps Nos 184 Valves and accessories Earthmoving machinery, including bulldozers, dumpers, scrappers, loaders, vibratory compactors and drag lines (excluding walking drag lines) Welding alloys and accessories Electronic test & measuring instruments Plant and equipment and modules for nuclear power projects, heavy water projects, nuclear and space research and allied projects including items for Chemical, Oil & Gas, etc. industries Defence equipment, all types Commercial Ships Ship auxiliaries and components of mechanised sailing vessels Others Total @ – 74.91 159.24 5.90 10.29 2.28 5.82 25.14 14.61 – 2843.83 283.18 399.99 62.16 700.68 5222.56 281 0.01 57.30 129.91 6.09 10.56 2.92 5.16 18.23 21.62 – 1813.85 665.93 191.17 39.70 227.07 3777.93 @ includes Rs.4880.02 crore shown as construction-related WIP in current year (previous year: Rs.3456.55 crore) 173 0.04 38.49 96.48 6.13 8.18 4.74 2.56 6.22 16.56 0.49 1386.27 – – – 530.82 2836.08 169 Notes forming part of the Accounts (contd.) e) Purchases of trading goods: Class of goods Earthmoving and agricultural machinery and spares Welding alloys and accessories Valves and accessories Electronic, medical & other instruments, accessories and spares Powder metallurgy and industrial products Others Total Notes: Rs.crore 2008-2009 2007-2008 325.50 120.53 603.26 469.95 68.54 90.91 240.51 127.77 764.03 284.13 71.48 138.18 1678.69 1626.10 (a) The installed capacities are as certified by managing/whole-time directors, on which the auditors have placed reliance. (b) In terms of note 3 to para 3 of Part II of Schedule VI, items like spare parts and accessories are given without quantities in respect of sales, purchases and stocks. (c) Quantitative figures for sales are after exclusion of inter-divisional transfers, capitalisation/captive consumption, samples, etc. 39. Miscellaneous expenses include donations aggregating to Rs.4.70 crore made during the year to political parties as follows: Akhil Bharatiya Congress Committee: Rs.2.25 crore, Bharatiya Janata Party: Rs.2.00 crore and Shiv Sena Madhyavarti Karyalaya: Rs.0.45 crore. 40. Certain elements of operational income of business segments forming a part of segment results used to be hitherto categorised as a part of 'other income' in the Profit and Loss Account. During the current year the same have been regrouped under 'other operational income' in the Profit and Loss Account to reflect the proper classification. 41. Interest income, has been shown separately as a part of 'other income' during current year. 42. Figures for the previous year have been regrouped/reclassified wherever necessary. 170 Notes forming part of the Accounts (contd.) 43. Balance Sheet abstract and Company’s general business profile I. Registration details Registration no. Balance Sheet date L 9 9 9 9 9 M H 1 9 4 6 P L C 0 0 4 7 6 8 3 1 Date 2 0 0 9 Year 0 3 Month II. Capital raised during the year (Amount in Rs.thousands) @ Public issue Bonus issue N I L 5 8 5 1 8 4 State Code 1 1 Rights issue Private placement N I L N I L @ The Company also raised capital during the year by way of allotment of shares under Employee Stock Ownership Schemes amounting to Rs.1537 Thousands III. Position of mobilisation and deployment of funds (amount in Rs.thousands) Sources of funds Total liabilities 1 9 4 5 0 8 7 6 0 Paid-up capital 1 1 7 1 3 7 6 * Including employees stock options outstanding Rs.2356655 thousands. Secured loans 1 1 0 2 3 7 9 4 Deferred tax liabilities 4 3 5 1 6 2 6 Application of funds Net fixed assets and net intangible assets 5 1 9 4 5 9 5 6 Net current assets 5 6 0 5 6 0 6 7 Misc. expenditure 2 6 2 2 IV. Performance of Company (Amount in Rs.Thousands) Total assets 1 9 4 5 0 8 7 6 0 Reserves & surplus* 1 2 3 4 2 5 5 3 1 Unsecured loans 5 4 5 3 6 4 3 3 Investments 8 2 6 3 7 2 0 9 Deferred tax assets 3 8 6 6 9 0 6 Accumulated losses N I L Turnover (Including other income) 3 4 6 7 9 7 3 3 8 + – Profit/loss before tax before extraordinary items @ + 3 9 4 0 4 0 7 6 Total expenditure 3 0 7 3 9 3 2 6 2 Profit/loss after tax @ $ 3 4 8 1 6 5 4 9 + – + @ Includes Company’s share in profit of integrated joint ventures Rs.106819 thousands (net of tax). $ Includes extraordinary items Rs.7724613 thousands [net of tax] (see note no.10) Basic earnings per share after extraordinary items in Rupees # Dividend rate% 5 9 . 5 0 5 2 5 V. Generic names of three principal products/services of the Company (as per monetory terms) # Basic earnings per share before extraordinary items - Rs.46.30 Item code no. (ITC code) Product description Construction and project related activity. N A Item code no. (ITC code) 8 4 7 9 8 9 . 0 2 Product description Plant and equipment and modules for nuclear power projects, heavy water projects, nuclear and space research and allied projects including items for chemical, oil and gas, etc. industries. Item code no. (ITC code) Product description 8 4 7 9 8 9 . 0 2 Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystalliser plants and pollution control equipment in aggregate. As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 Signature to Schedules A to Q and Notes A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 171 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies Name of the subsidiary company L&T Finance Limited Larsen & Toubro Infotech Limited 31-3-2009 Larsen & Toubro (Oman) LLC 31-12-2008 India Infrastructure Developers Limited 31-3-2009 L&T Infocity Limited 31-3-2009 Larsen & Larsen & Toubro Infotech Canada Limited 31-3-2009 Toubro International FZE 31-12-2008 Financial year of the subsidiary company ended on 31-3-2009 Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares The extent of interest in subsidiary companies of Larsen & Toubro Limited as at the above date The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: NIL NIL 3,00,00,000 NIL NIL NIL NIL NIL NIL NIL 1,616 NIL NIL NIL 99.99% 100.00% 65.00% 99.99% 53.17% 100.00% 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities Name of the subsidiary company Financial year of the subsidiary company ended on Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities 172 NIL 30.55 98.82 234.92 NIL NIL NIL NIL NIL 15.80 143.91 246.33 450.68 NIL NIL NIL NIL NIL NIL 3.26 36.91 48.79 NIL NIL NIL NIL NIL Narmada L&T L&T-Sargent & Infrastructure Transportation Lundy Limited Infrastructure Construction Limited Enterprise Limited 31-3-2009 31-3-2009 31-3-2009 NIL NIL 3.32 (13.09) NIL NIL NIL NIL NIL Larsen & Toubro (East Asia) SDN.BHD 31-12-2008 NIL 5.28 25.04 81.37 NIL NIL NIL NIL NIL NIL NIL (302.48) (81.07) 76 NIL NIL NIL NIL NIL NIL 2.03 0.39 NIL NIL NIL NIL NIL L&T Western India Tollbridge L&T Larsen & Toubro Infrastructure (Wuxi) Electric Company Development Limited Projects Limited Limited 31-12-2008 31-3-2009 31-3-2009 1,26,48,507 NIL 79.65% 1,08,64,000 NIL 79.65% 27,52,129 NIL 50.00% NIL NIL 30.00% 1,39,50,007 NIL 79.65% 19,30,31,352 NIL 79.65% NIL NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL 13.50 13.36 NIL NIL NIL NIL NIL NIL 1.31 6.77 3.06 NIL NIL NIL NIL NIL NIL 0.03 5.22 3.40 NIL NIL NIL NIL NIL NIL 1.08 0.15 0.03 NIL NIL NIL NIL NIL NIL 1.95 2.40 7.16 NIL NIL NIL NIL NIL NIL NIL 8.63 131.10 NIL NIL NIL NIL NIL NIL NIL 1.11 (2.38) NIL NIL NIL NIL NIL Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary company Cyber Park Development & Construction Limited 31-3-2009 L&T Capital Company Limited 31-3-2009 Larsen & Toubro Infotech, GmbH 31-3-2009 Hyderabad International Trade Expositions Limited 31-3-2009 Tractor Engineers Limited Larsen & Toubro Qatar LLC Larsen & Toubro LLC 31-3-2009 31-12-2008 31-12-2008 Financial year of the subsidiary company ended on Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities Name of the subsidiary company Financial year of the subsidiary company ended on Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities NIL NIL 30.47% 2,20,00,000 NIL 100.00% NIL NIL 100.00% NIL NIL 30.90% 68,000 NIL 100.00% NIL NIL 49.00% 50,000 NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL 3.39 4.33 NIL NIL NIL NIL NIL NIL 0.55 3.50 8.34 NIL NIL NIL NIL NIL NIL NIL 1.84 5.14 NIL NIL NIL NIL NIL NIL NIL (0.25) (1.22) NIL NIL NIL NIL NIL NIL 2.38 (23.80) 24.17 NIL NIL NIL NIL NIL NIL NIL (0.43) (10.38) NIL NIL NIL NIL NIL NIL NIL 0.62 0.48 NIL NIL NIL NIL NIL International Seaports (India) Private Limited 31-3-2009 International Seaports Pte. Limited 31-12-2008 L&T Panipat Elevated Corridor Limited 31-3-2009 L&T Tech Park Limited 31-3-2009 L&T Krishnagiri Thopur Toll Road Limited 31-3-2009 L&T Western Andhra Tollways Limited 31-3-2009 L&T Vadodara Bharuch Tollway Limited 31-3-2009 NIL NIL 79.65% 18,15,000 NIL 100.00% NIL NIL 79.65% NIL NIL 30.47% NIL NIL 79.65% NIL NIL 79.65% NIL NIL 79.65% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL (0.01) (0.74) NIL NIL NIL NIL NIL NIL NIL NIL (2.45) NIL NIL NIL NIL NIL NIL NIL (24.73) NIL NIL NIL NIL NIL NIL NIL NIL (0.58) 0.27 NIL NIL NIL NIL NIL NIL NIL NIL NIL (4.37) (1.48) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 0.19 NIL NIL NIL NIL NIL NIL 173 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary company L&T Interstate Road Corridor Limited 31-3-2009 Spectrum Infotech Private Limited 31-3-2009 L&T Infocity Lanka Private Limited 31-3-2009 L&T Overseas Projects Nigeria Limited 31-12-2008 L&T Infrastructure Development Projects Lanka (Private) Limited 31-3-2009 L&T Infrastructure Finance Company Limited 31-3-2009 Financial year of the subsidiary company ended on Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities Name of the subsidiary company L&T Urban Infrastructure Limited 31-3-2009 NIL NIL 59.74% NIL NIL 79.65% 4,40,000 NIL 100.00% NIL NIL 27.65% NIL NIL 100.00% NIL NIL 75.67% NIL NIL 99.99% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL (0.10) NIL NIL NIL NIL NIL NIL L&T Power Limited NIL NIL 1.68 0.93 NIL NIL NIL NIL NIL NIL NIL 3.59 (1.68) NIL NIL NIL NIL NIL NIL NIL 0.23 0.45 NIL NIL NIL NIL NIL NIL NIL (0.17) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 76.45 50.15 NIL NIL NIL NIL NIL International Seaport Dredging Limited 31-3-2009 L&T Modular Fabrication Yard LLC 31-12-2008 Toubro Saudi Larsen & Larsen & Toubro Larsen & Toubro L&T Electricals Saudi Arabia Readymix (Jiangsu) Valve Company Company Concrete Limited, LLC Arabia LLC Industries LLC Limited 31-3-2009 31-12-2008 31-12-2008 31-12-2008 Financial year of the subsidiary company ended on 31-3-2009 Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: 5,13,01,000 NIL 100.00% 30,805 9,420 46.02% NIL NIL 65.00% NIL NIL 100.00% NIL NIL 49.00% NIL NIL 69.70% NIL NIL 75.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities 174 NIL NIL NIL NIL (0.54) (27.15) NIL NIL NIL NIL NIL NIL 7.43 NIL NIL NIL NIL NIL NIL NIL 0.45 (3.19) NIL NIL NIL NIL NIL NIL NIL (4.52) (50.37) NIL NIL NIL NIL NIL NIL NIL 7.44 (3.68) NIL NIL NIL NIL NIL NIL NIL (2.93) (3.15) NIL NIL NIL NIL NIL NIL NIL (0.29) (0.14) NIL NIL NIL NIL NIL Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary Company Larsen & Toubro Kuwait Construction General Contracting Larsen &Toubro (Qingdao) Rubber Machinery Company, WLL Company Limited 31-12-2008 31-12-2008 L&T-MHI Boilers Private Limited 31-3-2009 L&T Uttaranchal Hydropower Limited 31-3-2009 L&T Bangalore Airport Hotel Limited 31-3-2009 L&T-Valdel Engineering Limited 31-3-2009 L&T Vision Ventures Limited 31-3-2009 Financial year of the subsidiary company ended on Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities Name of the subsidiary Company Financial year of the subsidiary company ended on Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities NIL NIL 49.00% NIL NIL 95.00% NIL NIL 51.00% NIL NIL 100.00% NIL NIL 44.21% 12,44,500 NIL 95.00% NIL NIL 40.62% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL (1.22) (0.32) NIL NIL NIL NIL NIL NIL NIL 0.23 (0.30) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (10.81) (0.76) (0.02) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 2.49 14.82 0.81 NIL NIL NIL NIL NIL NIL NIL (0.03) NIL NIL NIL NIL NIL NIL L&T Phoenix Info Parks Private Limited 31-3-2009 Larsen & Toubro Electromech LLC 31-12-2008 GDA Technologies Inc. GDA Technologies Limited L&T Power Development Limited 31-3-2009 31-3-2009 31-3-2009 Toubro ATCO Larsen & L&T Arun Excello Commercial Projects Saudi LLC Private Limited 31-3-2009 31-12-2008 NIL NIL 30.47% NIL NIL 65.00% NIL NIL 100.00% NIL NIL 100.00% 8,60,00,000 NIL 100.00% NIL NIL 49.00% NIL NIL 30.47% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL (0.44) (0.01) NIL NIL NIL NIL NIL NIL NIL 8.20 5.00 NIL NIL NIL NIL NIL NIL NIL (6.96) (35.99) NIL NIL NIL NIL NIL NIL NIL 3.07 52.01 NIL NIL NIL NIL NIL NIL NIL (3.40) (2.53) NIL NIL NIL NIL NIL NIL NIL NIL NIL (2.03) (0.01) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 175 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary Company L&T L&T-Gulf Private Limited L&T Hitech City Limited HI-Tech Rock Products & Aggregates L&T-MHI Turbine Generators Limited Private Limited 31-3-2009 31-3-2009 L&T Arun Excello IT SEZ Private Limited 31-3-2009 L&T Concrete Shipbuilding Private Limited Limited 31-3-2009 31-3-2009 Financial year of the subsidiary company ended on 31-3-2009 31-3-2009 Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: 12,50,005 NIL 50.00% NIL NIL 39.34% 50,000 NIL 100.00% NIL NIL 51.00% NIL NIL 30.47% 50,000 NIL 100.00% 10,000 NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities Name of the subsidiary Company NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (0.02) (0.18) (0.10) (2.28) (0.10) (2.18) (0.002) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL L&T Transco Private Limited L&T Realty Private Limited L&T Strategic Management Limited L&T Infra & Qingdao Property Larsen & Toubro Development Trading Company Limited Private Limited 31-12-2008 31-3-2009 Chennai Vision Developers Private Limited 31-3-2009 L&T Engserve Private Limited 31-3-2009 Financial year of the subsidiary company ended on 31-3-2009 31-3-2009 31-3-2009 Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: 10,000 NIL 100.00% 4,71,60,700 NIL 100.00% 50,000 NIL 100.00% 10,000 NIL 100.00% NIL NIL 95.00% NIL NIL 100.00% 10,000 NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities 176 NIL NIL NIL NIL NIL NIL NIL NIL (5.22) (3.57) (0.004) (0.002) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 0.04 (0.05) NIL NIL NIL NIL NIL NIL NIL NIL NIL (0.004) (0.004) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary Company L&T Siruseri Andhra Pradesh Expositions Private Limited 31-3-2009 Raykal Aluminium Company Private Limited 31-3-2009 L&T South City Projects Limited 31-3-2009 L&T General Insurance Company Limited 31-3-2009 L&T Property Chennai -Tada Tollway Limited 31-3-2009 Developers Limited 31-3-2009 L&T Seawoods Private Limited 31-3-2009 Financial year of the subsidiary company ended on Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities Name of the subsidiary Company NIL NIL 30.90% 40,000 NIL 80.00% NIL NIL 30.47% NIL NIL 100.00% NIL NIL 30.47% 100 NIL 100.00% 10,000 NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (0.0002) (0.45) (0.02) (0.77) (0.001) (0.16) (1.77) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL L&T Realty FZE Offshore International FZC L&T Natural Resources Limited L&T Capital Holdings Limited L&T Electrical & Automation FZE Larsen & Toubro Heavy Engineering LLC 31-12-2008 TAMCO Switchgear (Malaysia) SDN. BHD 31-12-2008 Financial year of the subsidiary company ended on 31-12-2008 31-12-2008 31-3-2009 31-3-2009 31-12-2008 Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: NIL NIL 100.00% NIL NIL 60.00% 50,000 NIL 100.00% 20,49,795 NIL 99.99% NIL NIL 100.00% NIL NIL 70.00% NIL NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore (i) (ii) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities NIL NIL 0.04 NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (4.98) (1.76) (0.02) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 3.44 NIL NIL NIL NIL NIL NIL NIL NIL (2.67) NIL NIL NIL NIL NIL NIL NIL NIL 7.49 NIL NIL NIL NIL NIL NIL 177 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies (contd.) Name of the subsidiary Company Tamco Tamco Electrical Industries Australia Pty Limted 31-12-2008 Shanghai Switchgear Co. Limted 31-12-2008 PT TAMCO Indonesia 31-12-2008 L&T-Demag Plastics Machinery Limited 31-3-2009 L&T PNG Tollway Private Limited 31-3-2009 Sutrapada SEZ Developers Limited 31-3-2009 Sutrapada Shipyard Limited 31-3-2009 NIL NIL 100.00% NIL NIL 100.00% NIL NIL 99.00% 1,60,00,00 NIL 100.00% 2,600 NIL 74.00% NIL NIL 100.00% NIL NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Financial year of the subsidiary company ended on Number of shares in the subsidiary Company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding Company’s interest in subsidiary Company The net aggregate of profits, less losses, of the subsidiary Company so far as it concerns the members of Larsen & Toubro Limited: (i) (b) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) for the subsidiary’s financial year ended March 31, 2009 and December 31, 2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (b) (ii) Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and March 31, 2009 Fixed assets (net additions) Investments (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary Company other than for meeting current liabilities Name of the subsidiary Company NIL NIL 10.42 NIL NIL NIL NIL NIL NIL Financial year of the subsidiary company ended on Number of shares in the subsidiary company held by Larsen & Toubro Limited at the above date - – – Equity shares Preference shares Holding company’s interest in subsidiary company The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the members of Larsen & Toubro Limited: (i) Dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) (b) for the subsidiary’s financial year ended 31.03.2009 and 31.12.2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited (ii) Not dealt with in the accounts of Larsen & Toubro Limited amounted to: (a) (b) for the subsidiary’s financial year ended March 31.03.2009 and 31.03.2008 for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro Limited Changes in the interest of Larsen & Toubro Limited between the end of the subsidiary’s financial year and March 31, 2009 Number of shares acquired Material changes between the end of the subsidiary’s financial year and 31.03.2009 (i) (ii) (iii) Moneys lent by the subsidiary (iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities Fixed assets (net additions) Investments NIL NIL 1.17 NIL NIL NIL NIL NIL NIL NIL NIL (18.74) NIL NIL NIL NIL NIL NIL L&T Port Sutrapada Limited 31-3-2009 CSJ Infrastructure Private Limited 31-3-2009 NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (0.05) (0.002) (0.002) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL L&T Bhilai Power Supply L&T Ahmedabad- Halol-Shamlaji Rajkot-Vadinar Company Maliya Tollway Tollway Private Tollway Private Limited 31-3-2009 Limited Private Limited 31-3-2009 Limited 31-3-2009 31-3-2009 L&T NIL NIL 100.00% NIL NIL 41.82% 49,950 NIL 99.90% 10,10,000 NIL 100.00% 10,10,000 NIL 100.00% 10,10,000 NIL 100.00% Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore NIL NIL NIL NIL (0.07) (0.20) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL (0.05) (0.06) (0.05) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN Mumbai, May 28, 2009 N. HARIHARAN Company Secretary Directors Mumbai, May 28,2009 178 Information on subsidiary companies (for the financial year or as on, as the case may be) Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference L&T Finance Limited Larsen & Toubro Infotech Limited Larsen & Toubro (Oman) LLC India Infrastructure Developers Limited L&T Infocity Limited Larsen & Larsen & Toubro Infotech Canada Limited Toubro International FZE 31-3-2009 31-3-2009 211.69 633.77 4,693.09 5,538.55 5,538.55 7.01 830.28 145.36 46.53 98.83 – – 15.84 553.78 638.22 1,207.84 1,207.84 222.91 1,975.36 289.43 24.61 264.82 – – 31-12-2008 Omani Riyal 126.5200 4.57 176.37 941.54 1,122.48 1,122.48 – 1,490.76 64.54 7.75 56.79 – – Narmada L&T L&T-Sargent & Infrastructure Transportation Lundy Limited Infrastructure Construction Limited Enterprise Limited 31-3-2009 31-3-2009 31-3-2009 47.35 33.73 63.46 144.54 144.54 – 37.75 19.09 2.14 16.95 – – 41.40 12.34 157.67 211.41 211.41 – 33.68 15.72 7.22 8.50 – – Cyber Park Development & Construction Limited 31-3-2009 L&T Capital Company Limited 31-3-2009 1.00 25.34 23.16 49.50 49.50 – 48.42 15.68 4.54 11.14 – – 22.00 11.84 776.96 810.80 810.80 798.13 6.38 5.18 1.68 3.50 – – 5.50 15.34 26.01 46.85 46.85 18.22 62.74 16.50 6.07 10.43 – – Larsen & Toubro Infotech, GmbH 31-3-2009 Euro 67.4400 0.11 6.98 10.06 17.15 17.15 – 52.12 2.06 0.22 1.84 – – 31-3-2009 31-3-2009 31-12-2008 31-3-2009 USD Canadian Dollar 40.5250 48.7100 56.06 (9.78) 0.04 46.32 46.32 44.35 1.63 3.32 – 3.32 – – Larsen & Toubro (East Asia) SDN.BHD. 31-12-2008 Malaysian Ringitt 14.1075 0.86 0.90 28.96 30.72 30.72 – 115.00 0.57 0.06 0.51 – – 27.00 200.15 316.57 543.72 543.72 30.68 195.53 69.37 15.95 53.42 – – 1,015.53 (257.87) 237.10 994.76 994.76 592.64 (103.39) (302.48) – (302.48) – – 0.0004 2.36 6.75 9.11 9.11 – 25.04 3.04 1.01 2.03 – – L&T Western India Tollbridge L&T Larsen & Toubro Infrastructure (Wuxi) Electric Company Development Limited Limited Projects Limited 31-3-2009 31-3-2009 31-12-2008 Chinese Yuan Renminbi 7.2929 13.95 12.00 0.68 26.63 26.63 – 11.31 3.36 0.35 3.01 – – 298.37 811.31 254.79 1,364.47 1,364.47 1,112.11 38.40 12.03 1.20 10.83 – – 24.61 (0.37) 8.46 32.70 32.70 – 30.20 1.11 – 1.11 – – Hyderabad International Trade Expositions Limited Tractor Engineers Limited Larsen & Toubro Qatar LLC Larsen & Toubro LLC 31-3-2009 31-3-2009 31-12-2008 Qatari Riyal 13.3825 31-12-2008 USD 48.7100 17.01 (4.77) 35.88 48.12 48.12 0.01 9.90 0.06 0.87 (0.81) – – 6.80 19.16 153.26 179.22 179.22 0.01 167.35 (23.92) (0.12) (23.80) – – 0.24 (16.65) 47.29 30.88 30.88 0.13 4.14 (0.88) – (0.88) – – 0.24 1.31 23.50 25.05 25.05 – 26.18 0.94 0.32 0.62 – – 179 Information on subsidiary companies (for the financial year or as on, as the case may be) (contd.) International L&T Seaports Krishnagiri (India) Private Thopur Toll Limited Road Limited International Seaports Pte. Limited L&T Panipat Elevated Corridor Limited L&T Tech Park Limited Particulars Sr. no. L&T Western Andhra Tollways Limited L&T Vadodara Bharuch Tollway Limited Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application 31-3-2009 15-11-2007 Singapore Dollar 29.0725 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference 2.50 (3.90) 1.43 0.03 0.03 – – (0.01) – (0.01) – – 7.85 (7.83) – 0.02 0.02 – – – – – – – 84.30 (31.05) 691.84 745.09 745.09 – 25.76 (31.03) 0.02 (31.05) – – 28.50 4.51 87.65 120.66 120.66 – 17.14 0.04 1.93 (1.89) – – 78.75 (5.49) 815.06 888.32 888.32 – 9.41 (5.48) 0.01 (5.49) – – 56.50 43.09 280.63 380.22 380.22 – 1.53 (1.85) – (1.85) – – 43.50 0.24 1,308.59 1,352.33 1,352.33 – 0.35 0.29 0.05 0.24 – – L&T Interstate Road Corridor Limited 31-3-2009 Spectrum Infotech Private Limited 31-3-2009 L&T Urban Infrastructure Limited 31-3-2009 L&T Infocity Lanka Private Limited L&T Overseas L&T Infrastructure Development Projects Nigeria Projects Lanka Limited (Private) Limited L&T Infrastructure Finance Company Limited 31-3-2009 Sri Lankan Rupees 0.4534 31-12-2008 Nigerian Naira 0.3604 31-3-2009 Sri Lankan Rupees 0.4534 54.12 (0.12) 660.43 714.43 714.43 – 0.09 0.03 0.15 (0.12) – – 0.44 4.47 6.88 11.79 11.79 – 8.68 2.57 0.89 1.68 – – 488.85 11.45 164.68 664.98 664.98 466.68 13.50 7.31 1.29 6.02 – – 8.07 2.66 18.95 29.68 29.68 – 5.01 1.11 0.29 0.82 – – 0.33 (0.16) 0.02 0.19 0.19 – 0.01 (0.17) – (0.17) – – 57.23 1.74 32.62 91.59 91.59 – – – – – – – L&T Power Limited International Seaport Dredging Limited 31-3-2009 31-3-2009 102.49 (0.54) 0.18 102.13 102.13 102.10 – (0.54) – (0.54) – – 85.41 (48.30) 372.71 409.82 409.82 – 329.35 (58.71) 0.29 (59.00) – – L&T Modular Fabrication Yard LLC Larsen & Larsen & Toubro Larsen & Toubro L&T Electricals Saudi Arabia Readymix (Jiangsu) Valve Company Company Concrete Limited, LLC Limited Arabia LLC Industries LLC Toubro Saudi 31-12-2008 Omani Riyal 31-12-2008 Saudi Riyal 126.5200 12.9875 10.48 (2.76) 139.64 147.36 147.36 – 102.92 0.69 – 0.69 – – 4.64 (172.14) 179.52 12.02 12.02 – 5.11 (4.52) – (4.52) – – 31-12-2008 31-12-2008 UAE Dirham Chinese Yuan Renminbi 7.2929 13.2625 1.27 8.06 103.22 112.55 112.55 – 132.10 15.18 – 15.18 – – 36.91 (0.65) 21.26 57.52 57.52 – 28.30 (4.20) – (4.20) – – 31-3-2009 Saudi Riyal 13.5225 22.29 1.48 59.92 83.69 83.69 – 33.44 (0.38) – (0.38) – – 31-3-2009 500.00 126.61 1,783.18 2,409.79 2,409.79 115.00 295.99 113.97 37.51 76.46 – – 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 180 Information on subsidiary companies (for the financial year or as on, as the case may be) (contd.) Larsen & Toubro L&T Kuwait Construction Bangalore General Contracting Airport Hotel Limited Larsen &Toubro (Qingdao) Rubber Machinery Company, WLL Company Limited L&T Uttaranchal Hydropower Limited L&T-MHI Boilers Private Limited Particulars Sr. no. L&T-Valdel Engineering Limited L&T Vision Ventures Limited Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 31-12-2008 Kuwaiti Dinar 176.9025 31-12-2008 Chinese Yuan Renminbi 7.2929 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 32.02 (0.15) 8.42 40.29 40.29 – 7.71 (2.49) – (2.49) – – 26.84 7.11 48.81 82.76 82.76 0.54 25.80 0.24 – 0.24 – – 100.10 (21.20) 11.92 90.82 90.82 23.02 0.68 (21.12) 0.08 (21.20) – – 48.05 (0.76) 95.37 142.66 142.66 – 0.64 (0.68) 0.08 (0.76) – – 72.00 (0.04) 117.17 189.13 189.13 – 0.41 0.08 0.12 (0.04) – – L&T Phoenix Info Parks Private Limited 31-3-2009 Larsen & Toubro Electromech LLC 31-12-2008 Omani Riyal 126.5200 63.02 (1.47) 195.96 257.51 257.51 – 19.52 2.70 4.13 (1.43) – – 3.56 22.29 173.92 199.77 199.77 – 327.87 24.85 2.75 22.10 – – GDA Technologies Inc. GDA Technologies Limited L&T Power Development Limited 31-3-2009 USD 50.7200 5.15 (32.14) 53.22 26.23 26.23 0.38 60.34 (6.96) – (6.96) – – 31-3-2009 31-3-2009 0.17 27.62 6.33 34.12 34.12 – 23.72 2.96 (0.12) 3.08 – – 101.00 (5.93) 15.05 110.12 110.12 79.12 – (3.40) – (3.40) – – 1.31 23.16 23.03 47.50 47.50 19.75 72.46 19.97 4.36 15.61 – – 9.60 (0.08) 0.98 10.50 10.50 – – (0.07) – (0.07) – – Larsen & L&T Arun Excello Commercial Projects Saudi LLC Private Limited Toubro ATCO 31-3-2009 31-12-2008 Saudi Riyal 12.9875 1.08 (4.45) 7.84 4.47 4.47 – 0.97 (3.09) – (3.09) – – 0.96 37.10 37.71 75.77 75.77 – – (0.02) 0.02 (0.04) – – L&T-Gulf Private Limited L&T Hitech City Limited HI-Tech Rock Products & Aggregates L&T-MHI Turbine Generators Limited Private Limited L&T Arun Excello IT SEZ Private Limited L&T Concrete Shipbuilding Private Limited L&T Limited 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 2.50 (0.04) 3.45 5.91 5.91 – 6.69 0.05 0.09 (0.04) – – 19.23 (0.45) 34.39 53.17 53.17 – 0.01 (0.44) 0.01 (0.45) – – 0.05 (0.10) 0.10 0.05 0.05 – – (0.10) – (0.10) – – 100.10 (4.46) 126.88 222.52 222.52 18.46 6.76 (4.43) 0.03 (4.46) – – 18.37 83.78 135.28 237.43 237.43 – 1.03 (0.30) 0.01 (0.31) – – 248.55 (2.18) 19.34 265.71 265.71 – – (2.11) 0.07 (2.18) – – 0.01 – – 0.01 0.01 – – – – – – – 181 Information on subsidiary companies (for the financial year or as on, as the case may be) (contd.) L&T Transco Qingdao Private Property Larsen & Toubro Development Trading Company Limited Limited Private Limited L&T Strategic Management Limited L&T Realty Private Limited L&T Infra & Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars 31-3-2009 31-3-2009 31-3-2009 31-3-2009 50.31 (5.22) 1.51 46.60 46.60 45.40 – (5.21) 0.01 (5.22) – – 47.16 (3.57) 3.96 47.55 47.55 0.17 – (3.49) 0.08 (3.57) – – 0.05 – – 0.05 0.05 – – – – – – – 0.01 – – 0.01 0.01 – – – – – – – 31-12-2008 Chinese Yuan Renminbi 7.2929 0.54 0.16 4.97 5.67 5.67 – 7.79 0.04 – 0.04 – – Chennai Vision Developers Private Limited 31-3-2009 L&T Engserve Private Limited 31-3-2009 0.01 – – 0.01 0.01 – – – – – – – 0.01 – 0.07 0.08 0.08 – – – – – – – Andhra Pradesh Expositions Private Limited Raykal Aluminium Company Private Limited L&T South City Projects Limited L&T General Insurance Company Limited L&T Siruseri Property Developers Limited L&T Chennai-Tada Tollway Limited 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 L&T Seawoods Private Limited 31-3-2009 0.01 – 0.02 0.03 0.03 – – – – – – – 1.27 (0.56) 0.22 0.93 0.93 – – (0.56) – (0.56) – – 56.48 75.77 126.74 258.99 258.99 0.05 1.45 (0.06) 0.01 (0.07) – – 0.05 (0.77) 0.77 0.05 0.05 – – (0.77) – (0.77) – – 0.05 – – 0.05 0.05 – – – – – – – 42.00 (0.16) 0.16 42.00 42.00 – 0.09 (0.15) 0.01 (0.16) – – 250.01 (1.77) 1,680.20 1,928.44 1,928.44 – – (1.74) 0.03 (1.77) – – L&T Realty FZE Offshore International FZC L&T Natural Resources Limited L&T Capital Holdings Limited L&T Electrical & Automation FZE Larsen & Toubro Heavy Engineering LLC TAMCO Switchgear (Malaysia) SDN. BHD Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application 31-12-2008 UAE Dirham 13.2625 31-12-2008 USD 48.7100 31-3-2009 31-3-2009 31-12-2008 UAE Dirham 13.2625 31-12-2008 31-12-2008 Omani Riyal Malaysian Ringitt 14.1075 126.5200 money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference 16.26 3.88 0.01 20.15 20.15 – – 0.04 – 0.04 – – 0.27 (9.48) 448.35 439.14 439.14 – – (8.31) – (8.31) – – 0.05 (1.76) 2.90 1.19 1.19 – – (1.76) – (1.76) – – 1,078.59 (0.02) 0.01 1,078.58 1,078.58 1,076.54 0.03 (0.02) – (0.02) – – 1.09 3.90 22.61 27.60 27.60 – 27.79 3.44 – 3.44 – – 39.71 (1.04) 47.97 86.64 86.64 – – (3.81) – (3.81) – – 119.18 38.84 296.32 454.34 454.34 – 458.62 26.09 10.00 16.09 – – 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 182 Information on subsidiary companies (for the financial year or as on, as the case may be) (contd.) L&T PNG Tollway Private Limited Tamco Tamco Electrical Industries Australia Pty Limted L&T - Demag Plastics Machinery Limited Shanghai Switchgear Co. Limted PT TAMCO Indonesia Particulars Sr. no. Sutrapada SEZ Developers Limited Sutrapada Shipyard Limited 1 2 3 4 5 6 7 8 9 10 11 12 Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference Particulars 31-12-2008 Chinese Yuan Renminbi 7.2929 31-12-2008 Australian Dollar 33.7250 31-12-2008 Indonesian Rupiah 0.0045 26.97 19.11 51.84 97.92 97.92 – 59.43 (6.57) – (6.57) – – 45.20 (53.03) 28.26 20.43 20.43 – 20.12 (5.49) – (5.49) – – 0.22 (34.72) 46.48 11.98 11.98 – 24.78 (10.66) – (10.66) – – L&T Port Sutrapada Limited CSJ Infrastructure Private Limited 31-3-2009 31-3-2009 31-3-2009 31-3-2009 16.00 (6.20) 72.07 81.87 81.87 – 86.51 (6.39) 0.08 (6.47) – – 0.01 (0.06) 0.37 0.32 0.32 – – (0.06) – (0.06) – – 0.05 – – 0.05 0.05 – – – – – – – 0.05 – – 0.05 0.05 – – – – – – – Bhilai Power Supply L&T Ahmedabad - L&T Rajkot - Vadinar Company Maliya Tollway Tollway Private Tollway Private Limited Limited Private Limited L&T Halol - Shamlaji Limited Financial year ending on Currency Exchange rate on the last day of financial year Share capital (including share application money pending allotment) Reserves Liabilities Total liabilities Total assets Investments (details on pages 184 to 191) Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend - equity Proposed dividend - preference 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 31-3-2009 3.50 (0.07) 0.02 3.45 3.45 – – (0.06) 0.01 (0.07) – – 45.89 127.86 350.81 524.56 524.56 – – (0.45) 0.02 (0.47) – – 0.05 – 8.81 8.86 8.86 – – – – – – – 1.02 (0.05) 0.06 1.03 1.03 – 0.01 (0.05) – (0.05) – – 1.02 (0.06) 0.08 1.04 1.04 – 0.01 (0.05) 0.01 (0.06) – – 1.02 (0.05) 0.05 1.02 1.02 – 0.01 (0.05) – (0.05) – – A. M. NAIK Chairman & Managing Director Mumbai, May 28, 2009 183 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company L&T Finance Limited Long term investment (at cost): Government securities: No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted 12% National Saving Certificates 2002 (Rs.4000) 40 100 – Unquoted Subsidiary companies: Fully paid equity shares: L&T General Insurance Company Limited 50,000 Current investment: Fully paid equity shares: 99,400 40,000 1,94,300 18,800 3,83,334 12,002 25,912 15,000 3,500 2,35,500 7,700 1,20,000 30,000 1,65,000 2,60,000 100 Metropoli Overseas Limited Anil Chemicals and Industries Limited Elque Polyesters Limited Monnet Industries Limited Intergrated Digital Info Services Limited ABB Limited Areva T&D India Limited Axis Bank Limited Bharat Heavy Electrical Limited Gujarat NRE Coke Limited Infosys Technologies Limited Jaiprakash Associates Limited Kotak Mahindra Bank Limited Suzlon Energy Limited Unitech Limited Others: LTF Securitisation Trust 2002 (Rs.1000) SUB - TOTAL Less: Provision for diminution in value of investments TOTAL Larsen & Toubro Infotech Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: 10 10 10 10 10 10 2 2 10 10 10 5 2 10 2 2 10 0.05 Unquoted 0.15 0.08 0.19 0.08 0.12 0.72 0.56 0.87 0.50 0.70 1.04 0.83 1.14 0.79 0.86 Unquoted Unquoted Unquoted Unquoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted – Unquoted 8.68 1.67 7.01 Larsen & Toubro Infotech GmbH Larsen & Toubro Infotech Canada Limited GDA Technologies Inc. USA, (at no par Value) 1 100 10 Euro 25,000 CAD 1 each – 0.11 0.66 120.32 Unquoted Unquoted Unquoted Current investment: Liquid funds: Birla Cash Plus - Institutional Premium - Growth Birla Sun Life Savings Funds Institutional - Growth ICICI Prudential Institutional Liquid Plan - Super Institutional - Growth ICICI Prudential Flexible Income Plan - Growth UTI Liquid Cash Plan Institutional - Growth Option 15,72,076 97,76,604 39,02,984 85,66,494 7,769 10 10 10 10 1000 2.15 15.79 Unquoted Unquoted 5.00 13.70 1.05 Unquoted Unquoted Unquoted 184 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company Larsen & Toubro Infotech Limited (contd.) UTI Money Market Fund - Growth Plan UTI Treasury Advantage Fund (Institutional Plan) - Growth Option HDFC Cash Management Fund - Treasury Advantage Plan - Wholesale - Growth Income funds: Birla Sun Life Income Plus - Growth HDFC Income Fund - Growth Short term plans: HDFC Short Term Plan - Growth Fixed maturity plans: Birla Sun Life FTP - INSTL - Series BD - Growth ICICI Purdential FMP Series 41-19 Months ICICI Prudential Internal Fund Annual Internal Plan - I Institutional Cumulative Principal Pnb Fixed Maturity Plan (FMP 50:385 Days Series IX - Aug 08 - Institutional Growth Plan) TATA Fixed Horizon Fund Series 18 Scheme C - Institutional Plan - Growth Templeton Fixed Horizon Fund Series IX - Plan A - Growth Templeton Fixed Horizon Fund Series IX - Plan B - Growth UTI Fixed Term Income Fund Series IV - Plan VII (May/8 - 12 Months) - Institutional Growth Plan UTI - Fixed Term Income Fund Series VI (13 Months) - Growth Plan TOTAL India Infrastructure Developers Limited Current investment: Liquid funds: No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted 21,82,958 73,512 58,23,512 5,00,572 9,92,585 27,84,428 28,03,647 20,00,000 27,53,885 30,00,000 50,00,000 30,00,000 50,00,000 50,00,000 20,00,000 10 1000 10 10 10 10 10 10 10 10 10 10 10 10 10 5.35 Unquoted 8.50 Unquoted 10.93 Unquoted 1.98 1.99 Unquoted Unquoted 4.58 Unquoted 2.80 2.00 Unquoted Unquoted 3.00 Unquoted 3.00 Unquoted 5.00 3.00 5.00 Unquoted Unquoted Unquoted 5.00 Unquoted 2.00 Unquoted 222.91 Birla Sunlife Cash Plus - Institutional Premium - Growth 3,15,35,087 14.06 44.35 Unquoted TOTAL L&T Infocity Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: 44.35 Hyderabad International Trade Exposition Limited L&T Infocity Lanka Private Limited L&T Hitech City Limited 98,84,994 91,00,000 1,42,30,770 10 Sri Lankan Rs.10 10 9.88 4.23 14.23 Unquoted Unquoted Unquoted Associate Company: Fully paid equity shares: Vizag IT Park Limited TOTAL 23,40,000 10 2.34 Unquoted 30.68 185 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company Larsen & Toubro International FZE (as at 31-12-2008) Long term investment (at cost): Subsidiary companies: Fully paid equity shares: Larsen & Toubro Saudi Arabia LLC Larsen & Toubro Electromech LLC Larsen & Toubro (Oman) LLC Larsen & Toubro Qatar LLC Larsen & Toubro (East Asia) SDN.BHD Larsen &Toubro Overseas Projects Nigeria Limited Larsen & Toubro Modular Fabrication Yard LLC Larsen & Toubro Kuwait Construction General Contracting Company WLL L&T - Electricals Saudi Arabia Company Limited Larsen & Toubro Readymix Concrete Industries LLC Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Larsen & Toubro (Jiangsu) Valve Company Limited Offshore International FZC Larsen & Toubro ATCO Saudia LLC Larsen & Toubro Heavy Engineering LLC L&T Electrical & Automation FZE PT TAMCO Indonesia Tamco Electrical Industries Australia Pty Limited Tamco Shanghai Switchgear Co. Limited TAMCO Switchgear (Malaysia) SDN. BHD Larsen & Toubro (Wuxi) Electric Company Limited Associate companies: Fully paid equity shares: L&T - Camp Facilities LLC TOTAL L&T-Sargent and Lundy Limited Current investments: Mutual fund: Birla Sun Life - Qtly Interval - Series7 - Dividend Payout - FMP(3) Birla Sun Life - Liquid Plus Institutional - FN Dividend - Reinvestment Birla Cash Plus - Institutional - Fortnightly Dividend - Payout TATA Fixed Income Portfolio Fund Scheme B2 HDFC Income Fund Reliance Money Manager Fund HDFC CMF Treasury Advantage TATA Liquid Super High Institutional 3,00,000 9,58,693 13,82,208 34,248 17,33,884 37,604 29,97,190 17,398 TOTAL 186 No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted 1,95,000 2,36,786 3,800 Saudi Riyal 1000 each Omani Riyal 1 each Omani Riyal 1 each 98 Qatari Riyal 1000 each 2,25,000 Malaysian Ringitt 1 each Naira 1 each Omani Riyal 99,99,998 6,50,000 – 150 490 980 Kuwaiti Dinar 1000 each 13,500 Saudi Riyal 1000 each AED 1000 each Aggregating to USD 5,700,000 Aggregating to Chinese Renminbi 44,800,000 AED 1000 each Equity share of USD 131,655 Equity share of USD 273,104 Equity Share of AED 1,000,000 Indonesian Rupiah 2010 each 1,35,00,000 Australian Dollar 1 each Aggregating to USD 10,350,563 10,00,00,000 Malaysian Ringitt 1 each Aggregating to USD 6,080,217 2,47,500 1 – 3.31 8.55 0.14 0.01 0.34 8.24 16.63 17.54 0.65 27.76 Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted 27.68 Unquoted 0.20 0.64 Unquoted Unquoted 1.33 Unquoted 1.33 Unquoted 24.88 Unquoted 25.14 50.42 Unquoted Unquoted 344.98 29.62 Unquoted Unquoted Aggregating to US Dollar 667,164 3.25 Unquoted 592.64 10 10 10 10 10 1000 10 1000 0.30 Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted 5.59 1.50 0.03 2.00 3.79 3.01 2.00 18.22 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company L&T Infrastructure Development Projects Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted L&T Transportation Infrastructure Limited Narmada Infrastructure Construction Enterprise Limited L&T Interstate Road Corridor Limited L&T Krishnagiri Thopur Toll Road Limited L&T Panipat Elevated Corridor Limited L&T Vadodara Bharuch Tollway Limited L&T Western Andhra Tollways Limited L&T Urban Infrastructure Limited L&T Infrastructure Development Projects Lanka (Private) Limited International Seaports (India) Private Limited (Rs.45) 3,05,36,000 3,47,01,500 5,41,17,164 7,87,50,000 8,43,00,000 4,35,00,000 5,65,00,000 7,50,00,000 3,50,00,020 25,00,560 10 10 10 10 10 10 10 10 Srilankan Rs.10 10 53.14 63.90 54.12 78.75 84.30 43.50 56.50 75.00 15.72 – Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Fully paid preference shares: L&T Urban Infrastructure Limited Associate company: Fully paid equity shares: 29,16,35,500 10 291.64 Unquoted International Seaports Haldia (Private) Limited Second Vivekananda Bridge Tollway Company Private Limited Ennore Tank Terminals Private Limited 98,30,000 3,23,50,000 1,17,65,000 Fully paid preference shares: Second Vivekananda Bridge Tollway Company Private Limited 1,00,00,000 10 10 10 10 9.83 32.35 11.77 Unquoted Unquoted Unquoted 10.00 Unquoted Jointly controlled entity: Fully paid equity shares: The Dhamra Port Company Limited 15,85,59,066 10 158.56 Unquoted Other companies: Fully paid equity shares: Bangalore International Airport Limited SICAL Iron Ore Terminals Limited 6,53,82,000 71,50,000 10 10 65.38 7.15 Unquoted Unquoted Current investment: Bonds: Rural Electrification Corporation Limited - 5.25% NCR taxable Bonds TOTAL L&T Capital Company Limited Long term investment (at cost): Fully paid equity shares: Aplab Limited Astra Microwave Products Limited The Federal Bank Limited NIIT Technologies Limited Genus Power Infrastructure Limited Jyoti Limited 500 10000 0.50 Unquoted 1112.11 1,48,580 53,00,030 79,95,619 29,20,000 19,471 5,59,437 10 2 10 10 10 10 1.28 23.00 123.76 31.87 0.48 6.04 Quoted Quoted Quoted Quoted Quoted Quoted 187 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company L&T Capital Company Limited (contd.) No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted Kalindee Rail Nirman (Engineers) Limited Satyam Computer Services Limited Salzer Electronics Limited Catholic Syrian Bank Limited TNJ Moduletech Private Limited Salzer Cables Limited Rangsons Electronics Limited Feedback Ventures Private Limited BSCPL Infrastructure Limited [formerly B. Seenaiah & Company (Projects) Limited] JSK Electricals Private Limited 16,72,496 3,02,12,750 9,15,808 7,19,677 8,00,000 74,48,000 10,65,000 37,90,000 3,05,808 21,20,040 TOTAL Hyderabad International Trade Expositions Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: 10 2 10 10 10 5 10 10 10 Quoted Quoted Quoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted 19.75 480.41 8.88 18.81 0.80 7.45 0.53 37.90 35.05 2.12 798.13 Andhra Pradesh Expositions Private Limited 10,000 10 TOTAL Tractor Engineers Limited Long term investment (at cost): Fully paid equity shares: Larsen & Toubro Saudi Arabia LLC (Rs.17,478) Larsen & Toubro LLC 200 2,500 SAR - 1000 each USD - 1 each TOTAL Larsen & Toubro Qatar LLC (as at 31-12-2008) Long term investment (at cost): Joint venture: Larsen & Toubro Qatar & HBK Contracting Co. WLL - JV 100 QTR 100000 TOTAL L&T Urban Infrastructure Limited Long term investment (at cost): Subsidiary companies: Unquoted 0.01 0.01 Unquoted Unquoted – 0.01 0.01 Unquoted 0.13 0.13 Fully paid equity shares: L&T Infocity Limited L&T Phoenix Infoparks Private Limited Cyber Park Development & Construction Limited L&T Tech Park Limited L&T South City Projects Limited L&T Bangalore Airport Hotel Limited L&T Vision Ventures Limited CSJ Infrastructure Private Limited 2,40,30,000 2,55,00,000 5,10,000 1,17,30,000 2,88,02,880 5,32,80,000 33,995 3,21,23,000 10 10 10 10 10 10 10 10 16.02 25.50 0.51 11.73 70.53 53.28 0.03 160.46 Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted 188 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted L&T Urban Infrastructure Limited (contd.) L&T Arun Excello Commercial Projects Private Limited Arun Excello Infrastructue Private Limited Fully paid preference shares: L&T Tech Park Limited Associate company: Fully paid equity shares: L&T Cross Roads Private Limited L&T Arun Excello Realty Private Limited Joint controlled entity: Fully paid equity shares: 4,89,600 93,67,347 28,05,000 90,00,000 3,16,800 L&T Bombay Developers Private Limited (Rs.50,000) 5,000 TOTAL L&T Infrastructure Finance Company Limited Long term investment (at cost): BSCPL Infrastructure Limited [formerly B. Seenaiah & Company (Projects) Limited] Current investments: Mutual fund: 2,18,150 Birla Sun Life - Cash Plus - Institutional Premium - Growth Birla Sun Life - Savings Fund Institutional - Growth IDFC Cash Fund - Super Institutional Plan C - Growth 1,77,76,261 2,40,47,566 2,33,44,414 TOTAL L&T Power Limited (formerly L&T Power Projects Limited) Long term investment (at cost): Subsidiary companies: Fully paid equity shares: L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited 5,10,51,000 5,10,51,000 TOTAL Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: Qingdao Larsen & Toubro Trading Company Limited TOTAL L&T-MHI Boilers Private Limited Current investments: Mutual fund: 10 10 10 10 10 10 10 10 10 10 12.94 71.92 Unquoted Unquoted 5.61 Unquoted 9.00 29.14 Unquoted Unquoted 0.01 Unquoted 466.68 25.00 Unquoted Unquoted Unquoted Unquoted 25.00 40.00 25.00 115.00 10 10 51.05 51.05 Unquoted Unquoted 102.10 0.54 Unquoted 0.54 HDFC Cash Management Fund (Treasury Plan) 1,19,82,544 19 23.02 Unquoted TOTAL 23.02 189 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company L&T-Valdel Engineering Limited Current investments: Mutual fund: DSP Tiger Fund Growth HSBC MIP Savings Plan J P Morgan India Equity Fund Tata Balanced Fund Tata Infrastructure Fund Birla Short Term Fund Birla Sunlife Liquid Plus Installment Growth HDFC Cash Management Fund ICICI Prudential Flexible Income Plan IDFC Money Manager Fund TOTAL GDA Technologies Inc. Long term investment (at cost): Subsidiary companies: Fully paid equity shares: GDA Technologies Limited Current investment: Fully paid equity shares: Arkados Citirix System TOTAL L&T Power Development Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted 44,692 4,54,852 1,46,699 99,101 80,156 42,05,025 10,257 84,24,144 20,16,390 37,23,607 10 10 10 10 10 10 10 10 10 10 Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted Unquoted 0.11 0.49 0.09 0.29 0.14 4.29 0.02 8.44 2.13 3.75 19.75 1,67,234 10 0.18 Unquoted 1,50,000 114 12 1090 Unquoted Quoted 0.19 0.01 0.38 L&T Uttaranchal Hydro Power Limited 4,80,49,994 Other companies: Fully paid equity shares: Everest Power Private Limited Konaseema Gas Power Limited TOTAL L&T-MHI Turbine Generators Private Limited Current investments: Mutual fund 10,00,000 2,10,00,000 10 10 10 48.05 Unquoted 10.02 Unquoted Unquoted 21.05 79.12 UTI Liquid Fund Cash Plan (Dividend Reinvestment) 96,05,836 19.2148 TOTAL 190 Unquoted 18.46 18.46 Annexure to information on subsidiary companies Details of investments as at 31-03-2009/31-12-2008 Name of the company L&T Transco Private Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: L&T Port Sutrapada Limited Sutrapada SEZ Developers Limited L&T Chennai-Tada Tollway Limited Sutrapada Shipyard Limited Associate company: Fully paid equity shares: No. of shares/ units/bonds Face value Book-value (Rs.crore) (Rupees) Quoted/ unquoted 33,00,000 50,000 4,19,99,900 50,000 10 10 10 10 3.30 0.05 42.00 0.05 Unquoted Unquoted Unquoted Unquoted L&T PNG Tollway Private Limited 4,800 10 0.0048 Unquoted TOTAL L&T Realty Private Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: L&T Realty FZE Chennai Vision Developers Private Limited 1 10,000 AED - 150,000 10 TOTAL L&T South City Projects Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: 45.40 Unquoted Unquoted 0.16 0.01 0.17 L&T Siruseri Property Development Limited 50,000 10 0.05 Unquoted TOTAL L&T Capital Holdings Limited Long term investment (at cost): Subsidiary companies: Fully paid equity shares: L&T Finance Limited L&T Infrastructure Finance Company Limited India Infrastructure Developers Limited Associate company: Fully paid equity shares: 18,66,91,500 50,00,00,000 5,60,60,000 NAC Infrastructure Equipment Limited 45,00,000 Share application money pending allotment: L&T Finance Limited TOTAL 0.05 10 10 10 10 490.98 500.00 56.06 Unquoted Unquoted Unquoted 4.50 Unquoted 25.00 1076.54 – 191 This page is intentionally left blank 192 Consolidated Financial Statements 2008-2009 Auditors’ report to the Board of Directors of Larsen & Toubro Limited on consolidated financial statements We have examined the attached Consolidated Balance Sheet of Larsen & Toubro Limited and its subsidiaries, associates and joint ventures (the L&T Group) as at March 31, 2009 and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion. In respect of the financial statements of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These financial statements have been audited/reviewed by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included in respect of the subsidiaries, associates and joint ventures is based solely on the reports of the other auditors. The details of assets and revenues in respect of these subsidiaries and joint ventures and the net carrying cost of investment and current year/period share of profit or loss in respect of these associates, to the extent to which they are reflected in the consolidated financial statements are given below: Audited by other auditors: A B C Indian subsidiaries Foreign subsidiaries Joint ventures D Associates Total assets 6398.85 1966.58 608.76 Net carrying cost of investment 105.07 Rs.crore Total revenues 486.96 3378.38 375.95 Current year/period share of profit/(loss) 8.75 We further report that in respect of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These financial statements have been certified by management and have been furnished to us, and in our opinion, insofar as it relates to the amounts included in respect of the subsidiaries, associates and joint ventures, are based solely on these certified financial statements. Since the financial statements for the financial year ended March 31, 2009, which were compiled by management of these companies, were not audited, any adjustments to their balances could have consequential effects on the attached consolidated financial statements. However, the size of these subsidiaries, associates and joint ventures, in the consolidated position is not significant in relative terms. The details of assets and revenues in respect of these subsidiaries and joint ventures and the net carrying cost of investment and current year/period share of profit or loss in respect of these associates, to the extent to which they are reflected in the consolidated financial statements are given below: Certified by management: A B C Indian subsidiaries Foreign subsidiaries Joint ventures D Associates Total assets 158.58 0.03 7.13 Net carrying cost of investment 68.13 Rs.crore Total revenues 329.35 - - Current year/period share of profit/(loss) (13.54) We report that, the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21, 'Consolidated Financial Statements', (AS) 23, 'Accounting for Investments in Associates in Consolidated Financial Statements' and (AS) 27, 'Financial Reporting of Interests in Joint Ventures' notified by the Companies (Accounting Standards) Rules, 2006 and on the basis of the separate audited/certified financial statements of the L&T Group included in the consolidated financial statements. We report that on the basis of the information and according to the explanations given to us, and on the consideration of the separate audit report on individual audited financial statements of the L&T Group, we are of the opinion that the said consolidated financial statements, read together with significant accounting policies in Schedule Q and notes appearing thereon, give a true and fair view in conformity with the accounting principles generally accepted in India: a) b) in the case of the Consolidated Balance Sheet, of the state of affairs of the L&T Group as at March 31, 2009; in the case of the Consolidated Profit and Loss Account of the consolidated results of operations of the L&T Group for the year ended on that date; and in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the L&T Group for the year ended on that date. c) Mumbai, May 28, 2009 SHARP AND TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 193 Consolidated Balance Sheet as at March 31, 2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore As at 31-3-2009 As at 31-3-2008 SOURCES OF FUNDS: SHAREHOLDERS’ FUNDS: Share capital Reserves and surplus Employee stock option outstanding (previous year: Rs.317.97 crore) Less: Deferred employee compensation expense (previous year: Rs.173.66 crore) Minority interest LOAN FUNDS: Secured loans Unsecured loans Deferred payment liabilities Deferred tax liabilities [see note no.24] TOTAL APPLICATION OF FUNDS: Fixed assets Tangible assets Gross block Less: Depreciation and impairment Net block Less: Lease adjustment Capital work-in-progress Intangible assets Gross block Less: Amortisation and impairment Net block Capital work-in-progress Fixed assets held for sale (at lower of cost or estimated realisable value) Investments Loans and advances towards financing activities Deferred tax assets [see note no.24] Current assets, loans and advances: Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Less: Current liabilities and provisions: Liabilities Provisions Net current assets Miscellaneous expenditure (to the extent not written-off or adjusted) A B C D E (i) E (ii) F G (i) G (ii) H I TOTAL CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the consolidated accounts see page nos.217 to 242) As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 N. HARIHARAN Company Secretary J Q Y. M. DEOSTHALEE N. MOHAN RAJ 194 511.47 239.00 117.14 13598.09 58.47 10628.33 272.47 144.31 13987.70 1058.58 18399.95 1970.09 541.12 35957.44 9483.82 6105.30 0.08 6805.40 7109.94 410.29 10831.11 922.62 12119.91 196.02 327.04 24396.70 6291.27 2232.12 0.08 5552.28 6160.46 205.32 6560.14 5559.77 7090.04 1870.88 5219.16 239.36 4979.80 1311.47 783.68 293.16 490.52 1741.60 5019.00 8234.36 1560.78 38.62 4768.44 19621.20 13457.96 2236.61 15694.57 10494.94 7905.01 9125.00 2338.65 6786.35 239.36 6546.99 2936.83 3336.88 471.67 2865.21 3240.09 7105.78 11643.53 1459.04 68.22 6621.31 26897.88 17538.13 3317.42 20855.55 6042.33 0.28 35957.44 3926.63 28.54 24396.70 A. M. NAIK Chairman & Managing Director S. RAJGOPAL M. M. CHITALE BHAGYAM RAMANI A. K. JAIN Directors Mumbai, May 28, 2009 Consolidated Profit and Loss Account for the year ended March 31, 2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore 2008-2009 2007-2008 K L (i) L (ii) M N O P INCOME: Sales & service (gross) Less: Excise duty Sales & service (net) Other operational income Other income EXPENDITURE: Manufacturing, construction and operating expenses Staff expenses Sales, administration and other expenses Interest expenses and brokerage Depreciation and obsolescence of tangible assets Amortisation and impairment of intangible assets Less: Overheads charged to fixed assets Profit before transfer from revaluation reserve Add: Transfer from revaluation reserve Profit before tax before extraordinary items Provision for current taxes [see note no.23(a)] Provision for deferred tax [see note no.24] Provision for tax on fringe benefits [see note no.23(b)] Profit after tax before extraordinary items Less: Additional tax on dividend distributed/proposed by subsidiary companies (including proportionate share in respect of incorporated joint ventures) Add: Share in profit/(loss) (net) of associate companies Add/(less): Minority interest in (income)/losses Profit after minority interest before extraordinary items Gain/(loss) on extraordinary items (net of tax) [see note no.13] Profit attributable to Group shareholders Less: Dividend paid for the previous year Additional tax on dividend paid for the previous year (net) Profit available for appropriation Less:Transfer to reserve u/s 45 IC of the RBI Act, 1934 Transfer to tonnage tax reserve Transfer to reserve u/s 36(1)(viii) of the Income Tax Act, 1961 Transfer to debenture redemption reserve Profit available for distribution Interim dividend Proposed final dividend Additional tax on dividend Balance carried to Balance Sheet Basic earnings per equity share before extraordinary items (Rupees) Diluted earnings per equity share before extraordinary items (Rupees) Basic earnings per equity share after } [see note no.20] extraordinary items (Rupees) Diluted earnings per equity share after extraordinary items (Rupees) Face value per equity share (Rupees) SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the consolidated accounts see page nos.217 to 242) Q 40607.87 420.87 30212.84 2666.04 2666.82 461.96 537.54 192.09 36737.29 24.48 1328.35 35.36 61.16 0.28 0.05 40187.00 292.87 591.96 41071.83 36712.81 4359.02 1.31 4360.33 1424.87 2935.46 0.80 2934.66 50.90 2985.56 31.44 3017.00 772.46 3789.46 0.33 3789.13 35.27 1.10 2.03 43.34 3707.39 – 614.97 104.52 2987.90 51.56 50.87 64.76 63.89 2.00 29561.11 362.61 22002.90 2049.43 1709.62 203.11 408.78 102.99 26476.83 11.42 1039.27 31.74 76.11 0.66 0.11 29198.50 258.35 425.15 29882.00 26465.41 3416.59 2.03 3418.62 1147.12 2271.50 13.68 2257.82 135.83 2393.65 (68.29) 2325.36 – 2325.36 0.77 2324.59 33.20 – 1.77 – 2289.62 56.83 438.49 76.26 1718.04 40.44 38.95 40.44 38.95 2.00 As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 195 Consolidated Cash Flow Statement for the year ended March 31, 2009 ... ... ... ... ... ... ... ... ... ... ... Cash flow from operating activities: Profit before tax (excluding minority interest and extraordinary items) Adjustments for: Dividend received Depreciation (including obsolescence), amortisation and impairment Lease equalisation Exchange difference on items grouped under financing activity Interest expense Interest income (Profit)/loss on sale of fixed assets (net) (Profit)/loss on sale of investments (net) Employee stock option - discount forming part of staff expenses Provision/(reversal) for diminution in value of investments Operating profit before working capital changes Adjustments for: (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories (Increase)/decrease in miscellaneous expenditure Increase/(decrease) in trade payables and customer advances Cash generated from operations Direct taxes refund/(paid) (net) Net Cash (used in)/from operating activities Cash flow from investing activities: ... Purchase of fixed assets ... Sale of fixed assets ... Purchase of long term investments ... Sale of long term investments (Purchase)/sale of current investments (net) ... Loans/deposits made with associates companies and third parties (net) ... ... Advance towards equity commitment ... Interest received ... Dividend received from associates ... Dividend received from other investments ... Consideration received on disposal of subsidiaries Consideration paid on acquisition of subsidiaries ... Cash & cash equivalents acquired pursuant to acquisition of subsidiaries Cash & cash equivalents discharged pursuant to disposal of a subsidiary Cash (used in)/from investing activities (before extraordinary items) Extraordinary items Cash received (net of expenses) on sale/transfer of Ready Mix Concrete business ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... A. B. C. ... ... (net of tax of Rs.279.37 crore) ... Cash & cash equivalents discharged pursuant to disposal of Ready Mix Concrete business ... Net Cash (used in)/from investing activities (after extraordinary items) ... Cash flow from financing activities: Proceeds from issue of share capital including shares under ESOP schemes Proceeds from long term borrowings Repayment of long term borrowings (Repayments)/proceeds from other borrowings (net) Payment (to)/from minority interest Loans from associate/joint venture companies (net of repayments) Dividends paid Additional tax on dividend Interest paid Net cash (used in)/from financing activities ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Net (decrease)/increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 2008-2009 Rs.crore 2007-2008 Rs.crore 4360.33 (289.09) 728.32 – 374.35 461.96 (136.01) (5.46) (106.97) 174.79 9.62 5571.84 (5078.63) (1947.85) 28.26 3072.66 1646.28 (1150.32) 495.96 (5477.59) 97.10 (878.22) 264.26 (550.22) 106.27 (0.69) 106.41 57.95 289.09 166.66 (412.93) 34.39 (0.51) (6198.03) 1121.37 (0.23) (5076.89) 23.04 5201.74 (523.54) 675.05 146.15 20.00 (438.77) (70.56) (553.92) 4479.19 (101.74) 1560.78 1459.04 3418.62 (152.10) 509.74 21.70 222.18 203.11 (113.56) (20.21) (117.35) 101.12 22.56 4095.81 (6793.86) (1347.35) (11.42) 3985.55 (71.27) (1167.95) (1239.22) (3959.14) 336.93 (236.55) 79.44 (3041.77) 33.59 (10.68) 109.23 12.98 152.10 – (84.85) 3.77 (10.39) (6615.34) – – (6615.34) 1701.58 4168.48 (622.67) 2584.21 177.15 – (114.14) (35.51) (161.78) 7697.32 (157.24) 1718.02 1560.78 Notes: 1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. 2. Purchase of fixed assets includes movement of capital work-in-progress during the year. 3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised gain of Rs.25.64 crore (previous year: unrealised gain of Rs.0.43 crore) on account of translation of foreign currency bank balances. 4. For cash and cash equivalents not available for immediate use as on the Balance Sheet date, see note no.11(a) and (b) of notes forming part of consolidated 5. Previous year’s figures have been regrouped/reclassified wherever applicable. A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 accounts. As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 196 Schedules forming part of the Consolidated Accounts Schedule A Share capital: Authorised: 162,50,00,000 equity shares of Rs.2 each (previous year: 1,62,50,00,000 equity shares of Rs.2 each) Issued: 58,56,87,862 equity shares of Rs.2 each (previous year: 29,23,27,390 equity shares of Rs.2 each) Subscribed and paid-up: 58,56,87,862 equity shares of Rs.2 each [see note no.6] (previous year: 29,23,27,390 equity shares of Rs.2 each) Schedule B Reserves and surplus: Revaluation reserve: As per last Balance Sheet Addition during the year Less: Transferred to Profit and Loss Account Capital redemption reserve: As per last Balance Sheet Less: Utilised for issue of bonus shares Capital reserve: As per last Balance Sheet Addition during the year Capital reserve on consolidation: As per last Balance Sheet Deduction during the year Reserve u/s 45 IC of the RBI Act, 1934: As per last Balance Sheet Add: Transferred from Profit and Loss Account Debenture redemption reserve: Created during the year Securities premium account: As per last Balance Sheet Addition during the year Less: Utilised for issue of bonus shares Transfer to retained earnings Share issue expenses (Reversal)/write-back of provision made in previous year Carried forward As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 325.00 117.14 117.14 117.14 325.00 58.47 58.47 58.47 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 25.90 7.52 1.31 3.16 0.02 10.81 35.80 15.98 0.28 75.75 35.27 4187.26 69.62 4256.88 58.50 0.01 – (0.92) 32.11 3.14 46.61 15.70 111.02 43.34 4199.29 4451.21 27.93 – 2.03 3.16 – 10.67 0.14 16.52 0.54 42.55 33.20 2066.16 2135.14 4201.30 – 1.80 14.64 (2.40) 25.90 3.16 10.81 15.98 75.75 – 4187.26 4318.86 197 Schedules forming part of the Consolidated Accounts (contd.) Schedule B (contd.) Brought forward Foreign projects reserve: As per last Balance Sheet Less: Transferred to retained earnings Housing projects reserve: As per last Balance Sheet Less: Transferred to retained earnings Tonnage tax reserve: As per last Balance Sheet Add: Transferred from Profit and Loss Account Foreign currency translation reserve: As per last Balance Sheet Addition/(deduction) during the year Reserve u/s 36(1)(viii) of Income Tax Act, 1961: As per last Balance Sheet Add: Transferred from Profit and Loss Account Hedging reserve (net of tax): As per last Balance Sheet Addition during the year Deduction during the year Retained earnings: As per last Balance Sheet Less: Adjustments pertaining to deferred tax liabilities (net) Add:Transferred from: Foreign projects reserve Housing projects reserve Securities premium account Profit and Loss Account Schedule C Secured loans: Redeemable non-convertible fixed rate debentures Redeemable non-convertible floating rate debentures Loans from banks: Cash credits/working capital demand loans Other loans Interest accrued and due Loans from financial institutions 198 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 4451.21 4318.86 10.83 3.00 3.98 2.25 0.99 1.10 (11.24) 123.92 1.77 2.03 (4.85) (282.40) 4.85 6307.99 – 6307.99 3.00 2.25 0.01 2987.90 7.83 1.73 2.09 112.68 3.80 19.19 8.36 7.96 3.98 0.99 – (6.55) (4.69) – 1.77 – (4.85) – 10.83 3.98 0.99 (11.24) 1.77 (282.40) (4.85) 4596.91 21.10 4575.81 8.36 3.98 1.80 1718.04 9301.15 13598.09 6307.99 10628.33 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 3615.00 4084.24 1.98 1700.00 200.00 7701.22 893.72 10494.94 2775.76 2300.69 0.05 1047.00 – 5076.50 436.64 6560.14 Schedules forming part of the Consolidated Accounts (contd.) Schedule D Unsecured loans: Redeemable non-convertible fixed rate debentures Redeemable non-convertible floating rate debentures Fixed deposits Short term loans and advances: As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 2145.09 25.33 0.46 18.89 640.00 4377.37 0.54 101.14 161.18 400.00 35.00 0.01 2829.77 4640.23 7905.01 1666.77 26.22 0.25 15.16 900.00 2542.50 0.15 121.10 187.61 100.00 – 0.01 2608.40 2851.36 5559.77 Cost/valuation 1-4-2008 As at Transfer on business combination Additions Deductions As at 31-3-2009 31-3-2008 Up to Transfer on business combination Depreciation Impairment Book value For the year Deductions Up to 31-3-2009 As at 31-3-2009 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore 772.98 190.10 1117.30 0.25 3443.45 277.14 133.27 9.26 785.40 347.44 113.64 – 7.45 – 52.21 – 88.89 73.59 238.24 – 92.45 1686.03 65.16 5.76 66.88 4.55 – – – 6.23 – – 863.09 35.96 263.69 184.19 4.33 1403.42 0.25 0.25 268.66 4953.27 1134.05 120.59 328.61 19.45 73.30 188.38 16.32 7.47 9.26 – – – – – 33.56 104.51 30.22 – 254.76 24.93 24.65 – 564.20 427.02 119.21 – 262.77 19.08 41.50 – – – 5.65 – 66.13 3.92 3.52 – – – – – – 19.05 37.25 – 361.47 37.40 21.92 0.52 35.66 8.03 17.41 – – – 0.38 – – 55.01 226.71 0.25 51.38 1510.27 144.88 17.03 90.01 8.73 7.99 – 74.54 1.51 15.82 – 223.89 25.60 43.09 – 772.98 863.09 – 154.12 – 208.68 960.17 – 1176.71 – – – – 3443.00 2255.01 153.74 – 55.80 – 1.78 – 183.73 98.37 1.27 6.93 – – – 333.38 401.42 76.12 (239.36) 509.55 283.19 72.14 (239.36) 7190.23 162.42 2387.08 619.33 9120.40 1879.16 79.22 538.71 169.39 2327.70 6.93 6546.41 4979.12 4.23 1.10 5.33 – – – 0.01 – 0.01 0.57 0.17 0.74 3.67 0.93 4.60 3.24 1.06 4.30 – – – 0.39 0.02 0.41 0.54 0.15 0.69 3.09 0.93 4.02 – – – 0.58 – 0.58 0.64 0.04 0.68 7195.56 162.42 2387.09 620.07 9125.00 1883.46 79.22 539.12 170.08 2331.72 6.93 6546.99 4979.80 5547.68 124.62 1985.06 567.32 7090.04 1713.44 1.42 404.69 255.60 1863.95 6.93 2936.83 1311.47 9483.82 6291.27 199 From banks From others Lease finance Sales tax deferment loan Commercial paper Other loans and advances: From banks Lease finance Sales tax deferment loan From others Schedule E (i) Fixed Assets - Tangible: Particulars OWNED ASSETS: Land-freehold Ships Buildings Railway sidings Plant and machinery Furniture and fixtures Vehicles Aircraft Owned assets given on operating lease Plant and machinery Buildings Vehicles Lease adjustment Owned assets (sub total - A) LEASED ASSETS: Assets taken under finance lease: Plant and machinery Vehicles Asset taken under finance lease (sub total - B) Total (A+B) Previous year Add: Capital work-in-progress Schedules forming part of the Consolidated Accounts (contd.) Schedule E (ii) Fixed Assets - Intangible: Particulars Goodwill on consolidation Land-leasehold Specialised softwares Lumpsum fees for technical knowhow Toll collection rights Trade marks Total Previous year Add: Capital work-in-progress Cost/valuation 1-4-2008 As at Transfer on business combination Additions Deductions As at 31-3-2009 31-3-2008 Up to Transfer on business combination Amortisation Impairment Book value For the year Deductions Up to 31-3-2009 As at 31-3-2009 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore 251.69 95.63 134.58 20.61 288.46 – 216.23 – 467.92 26.85 – 40.09 – 8.92 0.21 1.89 247.51 4.94 347.12 7.60 74.57 13.28 196.08 92.79 6.50 0.57 28.43 9.53 0.24 0.20 1.02 3.43 0.23 32.62 13.28 112.33 7.01 0.57 16.99 66.94 11.04 – – 218.53 3.84 42.00 358.98 224.12 – – – 336.08 83.75 11.44 80.45 41.59 10.86 – 2070.91 133.50 – 4.05 – – 2000.98 – 2289.44 154.98 – 63.55 1.50 1.50 4.89 – 7.89 1.50 792.47 12.52 2550.68 18.79 3336.88 293.25 1.50 2.96 0.84 147.54 14.08 429.67 42.00 2865.21 490.52 553.26 1.84 239.02 10.44 783.68 190.99 1.15 101.92 1.62 292.44 0.72 3240.09 1741.60 6105.30 2232.12 Notes: (i) 1 (ii) In respect of tangible assets, opening gross block includes Rs.105.52 crore and opening accumulated depreciation includes Rs.19.51 crore on account of exchange differences on translation of value of assets in respect of non integral foreign operations. In respect of intangible assets, opening gross block includes Rs.8.79 crore and opening accumulated amortisation includes Rs.0.81 crore on account of exchange differences on translation of value of assets in respect of non integral foreign operations. Cost/Valuation of: (i) (ii) Freehold land includes Rs.19.42 crore for which conveyance is yet to be completed. Leasehold land includes: (a) Rs.2.63 crore for land taken at Mysore on lease from KIADB vide agreement dated May 5, 2006. The lease agreement is for a period of six years, with extension of 3 years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company. (b) Rs.15.25 crore for land taken on Lease from Maharashtra Airport Development Company Limited for a period of 99 years with effect from June 01,2008 vide agreement dated June 20, 2008 for developing IT Infrastructure facilities. (c) Rs.0.22 crore for land taken at Hubli on lease from KIADB vide agreement dated December 8, 2005. The lease agreement is for a period of six years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company. Cost/Valuation of buildings includes ownership accommodation: (i) (a) in various co-operative societies and apartments and shop-owners’ associations: Rs.96.86 crore, including 2325 shares of Rs.50 each, 207 shares of Rs.100 each and 1 share of Rs.250. in proposed co-operative societies Rs.17.29 crore. (b) of Rs.4.39 crore in respect of which the deed of conveyance is yet to be executed. (ii) (iii) of Rs.8.45 crore representing undivided share in a property at a certain location. Cost/Valuation of buildings includes Rs.46.57 crore for building constructed on lease hold land 90.36 acres (20 acres since surrendered) on a 66 years lease agreement entered with National Academy of Construction (NAC) dated October 1, 2005, yet to be registered with appropriate authority. Additions during the year and capital work-in-progress include Rs.197.77 crore being borrowing cost capitalised in accordance with Accounting Standard (AS) 16 on “Borrowing Costs” Depreciation for the year on tangible assets include obsolescence Rs.1.38 crore (previous year: Rs.3.88 crore) and on intangible assets Rs.41.28 crore (previous year: Rs.nil) on account of impairment loss. Capital work-in-progress - tangible assets includes advances Rs.683.68 crore (previous year: Rs.356.07 crore). Capital work-in-progress - intangible assets includes advances Rs.nil (previous year: Rs.1.40 crore) and Rs.1.74 crore (previous year: Rs.nil) on account of expenditure incurred on exploration and evaluation of potential mineral reserves. The Company had revalued as at October 1,1984 some of its land, buildings, plant and machinery and railway sidings at replacement/ market value which resulted in a net increase of Rs.108.05 crore. One of the subsidiaries has revalued land during the year, based on an estimated market valuation recommended by an external valuer as at March 31, 2008 which resulted in the net increase of Rs.24.69 crore. Owned assets given on operating lease have been presented separately under tangible assets schedule as per Accounting Standard (AS) 19 on “Leases”. 2 3 4 5 6 7 8 9 200 Schedules forming part of the Consolidated Accounts (contd.) Schedule F Investments (at cost, unless otherwise specified): Long term investments: Government and trust securities Investment in associates: [see note below] Fully paid equity shares of associate companies Fully paid preference shares of associate companies Add/(deduct): Accumulated share in profit/(loss) of the associate companies at the beginning of the year Adjustment pursuant to disposal of stake in associates Add/(deduct): Share in profit/(loss) (net) of associate companies - current year Commitment to fresh infusion of equity Dividend received from associate companies during the year Unrealised profits in respect of transactions with associate companies Provision for diminution in value Other fully paid equity shares Bonds Mutual funds Current investments: Government and trust securities (previous year: Rs.186.47 crore) Less: Provision for diminution in value (previous year: Rs.4.02 crore) Other fully paid equity shares (previous year: Rs.0.62 crore) Less: Provision for diminution in value (previous year: Rs.0.50 crore) Bonds (previous year: Rs.59.20 crore) Less: Provision for diminution in value (previous year: Rs.1.85 crore) Mutual funds (previous year: Rs.4354.53 crore) Less: Provision for diminution in value (previous year: Rs.23.35 crore) Investment other securities short term – – 8.66 1.67 258.46 4.36 3604.14 3.84 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 0.50 6.39 220.78 10.00 230.78 351.64 (23.04) 559.38 50.90 3.16 (57.95) (71.17) (0.56) – 6.99 254.10 3600.30 1356.98 483.76 1102.27 0.50 – 1587.03 242.75 10.00 252.75 228.79 – 481.54 135.83 3.16 (12.98) (69.71) (0.56) 182.45 0.12 57.35 4331.18 – 537.28 211.79 225.68 0.04 981.18 Note: Investments in associates include goodwill of Rs.35.71 crore (previous year: Rs.44.73 crore), net of cumulative amortisation of Rs.6.21 crore (previous year: Rs.5.71 crore) and is net of capital reserve of Rs.0.01 crore (previous year: Rs.nil) 201 5218.37 6805.40 4571.10 5552.28 Schedules forming part of the Consolidated Accounts (contd.) Schedule G (i) Loans and advances towards financing activities Secured loans: Considered good: Loans against pledge of shares and securities Infrastructure loans Considered doubtful: Infrastructure loans Less: Provision for non performing assets Unsecured loans: Considered good: Bills discounted Other loans Advance towards lease capital assets Considered doubtful: Other loans Less: Provision for non performing assets As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 7.70 7.70 8.08 8.08 364.17 2267.29 – 219.97 4258.51 – – 7109.94 – – 3.54 3.54 318.95 1833.18 – 230.94 3761.12 16.27 – 6160.46 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore Schedule G (ii) Current assets, loans and advances: Current Assets: Inventories: Stock-in-trade, at cost or net realisable value whichever is lower: Raw materials Components Construction materials Stores, spare parts and loose tools Finished goods Property development land Completed property Work-in-Progress: Manufacturing work-in-progress at cost or net realisable value whichever is lower Construction and project related work-in-progress At cost At estimated realisable value on sale Less: Progress bills raised Due from customers Total work-in-progress Stock on hire: Carried forward 202 557.06 343.91 118.83 116.23 464.65 323.85 9.75 1934.28 566.26 1831.07 22437.29 24268.36 19664.24 4604.12 5170.38 1.12 367.15 265.13 69.04 116.34 349.60 203.22 0.09 1370.57 464.30 1839.35 16052.73 17892.08 14710.31 3181.77 3646.07 2.36 7105.78 7105.78 5019.00 5019.00 Schedules forming part of the Consolidated Accounts (contd.) Schedule G (ii) (contd.) Brought forward Sundry debtors: Unsecured: Debts outstanding for more than 6 months Considered good Considered doubtful Other debts: Considered good Less: Provision for doubtful debts Cash and bank balances: Cash on hand Cheques on hand Balances with scheduled banks: on current accounts on fixed deposits including interest accrued thereon [see note no.11(a)] on margin money deposit accounts Balances with non-scheduled banks [see note no.11(b)] Other current assets: Interest accrued on investments Others Loans and advances: Secured, considered good: Loans against mortgage of house property Unsecured: Considered good: Associate companies Advances recoverable Advances towards equity commitment Others Inter-corporate deposits Associate companies Others Advances recoverable in cash or in kind [see note no.16] Balance with customs, port trust, etc. Lease receivables Considered doubtful: Deferred credit against sale of ships Advances recoverable in cash or in kind Less: Provision for doubtful loans and advances As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 7105.78 5019.00 2421.82 442.18 2864.00 9221.71 12085.71 442.18 11.42 285.24 472.10 284.82 19.33 386.13 17.05 51.17 21.93 26.29 0.69 5.00 5.86 6522.47 37.27 1.80 21.09 63.86 6706.26 84.95 1830.54 291.39 2121.93 6403.82 8525.75 291.39 11643.53 8234.36 11.15 273.61 755.14 313.76 9.25 197.87 14.40 24.22 1560.78 1459.04 68.22 38.62 24.94 15.37 10.68 10.00 58.92 4619.52 27.01 2.00 16.69 29.07 4814.20 45.76 6621.31 26897.88 4768.44 19621.20 203 Schedules forming part of the Consolidated Accounts (contd.) Schedule H Current liabilities and provisions: Liabilities: Acceptances Sundry creditors: Due to: Micro and small enterprises Others [see note no.10] Due to customers: Progress bills raised Less: Construction and project related work-in-progress At cost (previous year: Rs.1053.49 crore) 1939.22 At estimated realisable value (previous year: Rs.16447.45 crore) 22553.07 Advances from customers Items covered by Investor Education and Protection Fund Unpaid dividend Unpaid matured deposits Unpaid matured debentures/bonds Interest accrued on bonds Due to directors Interest accrued but not due on loans Pension payable under Voluntary Retirement-cum-Pension Scheme Provisions for: Current taxes Tax on fringe benefits Proposed dividend Additional tax on dividend Gratuity Compensated absences Employee pension schemes Post-retirement medical benefit plan Long service awards Other provisions [see note no.21] 204 As at 31-3-2009 As at 31-3-2008 Rs.crore Rs.crore Rs.crore Rs.crore 58.54 68.42 11.28 8898.31 4.38 6944.49 8909.59 6948.87 27575.35 20216.22 24492.29 17500.94 3083.06 5355.74 2715.28 3634.24 10.33 0.13 0.15 0.02 1570.89 61.36 614.97 104.52 0.93 292.11 151.81 74.40 8.36 438.07 9.61 0.23 1.58 0.03 10.63 36.37 84.20 – 11.45 22.86 56.80 0.04 17538.13 13457.96 1057.95 78.67 438.49 69.71 0.75 250.29 151.35 58.74 17.40 113.26 3317.42 20855.55 2236.61 15694.57 Schedules forming part of the Consolidated Accounts (contd.) Schedule I Miscellaneous expenditure (to the extent not written off or adjusted) Voluntary Retirement-cum-Pension Schemes/Voluntary Retirement Schemes Preliminary expenses Schedule J Contingent liabilities: (a) Claims against the Company not acknowledged as debts (b) Sales-tax liability that may arise in respect of matters in appeal (c) Excise duty/service tax liability that may arise in respect of matters in appeal/challenged by the Company in WRIT (d) Customs duty demands against which the Group has filed (e) appeals before appellate authorities which are pending disposal. Income-tax liability (including interest and penalty) that may arise in respect of which the Company is in appeal (f) Guarantees given on behalf of associate companies As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 0.28 – 0.28 3.13 25.41 28.54 As at 31-3-2009 Rs.crore As at 31-3-2008 Rs.crore 199.94 82.99 15.30 0.54 102.24 – 117.07 223.46 13.03 – 40.95 10.00 Notes: 1. The Company does not expect any reimbursements in respect of the above contingent liabilities. 2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (e) above pending resolution of the arbitration/appellate proceedings. In respect of matters at (f), the cash outflows, if any, could generally occur during the next three years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur. 3. Schedule K Sales & service: Manufacturing, trading and property development activity Construction and project related activity Software development products and services Income from financing activity/annuity based projects Facilitating charges for power plant Toll collection and related activity Servicing Commission Engineering and service fees 2008-2009 Rs.crore 6811.46 29824.12 2068.74 1124.81 – 97.24 293.64 210.37 177.49 40607.87 2007-2008 Rs.crore 6493.76 20030.30 1671.72 638.02 121.14 60.54 219.98 221.66 103.99 29561.11 205 Schedules forming part of the Consolidated Accounts (contd.) 2008-2009 Rs.crore 2007-2008 Rs.crore 93.65 3.29 13.33 4.67 0.25 3.68 3.23 170.77 292.87 113.11 4.57 10.47 6.59 2.20 1.63 19.06 100.72 258.35 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 58.03 12.71 65.27 11.81 0.30 74.29 27.79 11.48 136.01 113.56 – 2.42 12.11 276.98 10.93 12.70 94.27 2.23 38.50 8.23 591.96 2.42 149.68 9.48 61.62 55.73 1.15 31.51 – 425.15 Schedule L (i) Other operational income: Equipment and property rentals Technical fees Property maintenance recoveries Facility management income Consultancy income Parking recoveries Profit on sale of fixed assets (net) Miscellaneous income Schedule L (ii) Other income: Interest income: Interest received on inter-corporate deposits from associate companies, customers and others Income from long term investments: Interest on debentures, bonds and Government securities Income from current investment: Interest on debentures, bonds and Government securities Dividend Income: From long term investments: Trade investments Other investments Dividend income from current investments Lease rental income Profit on sale of long term investments (net) [see note no.15(a)] Profit on sale of current investments (net) Profit on sale of fixed assets (net) Miscellaneous income Provision no longer required written back 206 Schedules forming part of the Consolidated Accounts (contd.) 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore Schedule M Manufacturing, construction and operating expenses: Materials consumed: Raw materials and components Construction materials Less: Scrap sales Purchase of trading goods (Increase)/decrease in manufacturing and trading stocks: Closing stock: Finished goods Work-in-progress Less: Opening stock: Finished goods (Including stock of Rs.10.19 crore acquired on acquisition of subsidiaries) Work-in-progress (Including stock of Rs.3.50 crore acquired on acquisition of subsidiaries) Sub-contracting charges Stores, spares and tools Excise duty Power and fuel Royalty and technical know-how fees Packing and forwarding Hire charges - plant and machinery and others Engineering, professional, technical and consultancy fees Insurance Rent Rates and taxes Travelling and conveyance Repairs to plant and machinery Repairs to buildings General repairs and maintenance Interest and other financing charges Software development expenses Cost of built up technology park space and property development land: Opening stock Work-in-progress Completed property Property development land Add: Expenses on construction during the year Less: Internal capitalisation during the year Less: Closing stock Work-in-progress Completed property Property development land Other expenses 7242.64 8446.23 15688.87 69.78 464.65 1535.29 1999.94 359.79 1405.81 1765.60 128.21 0.09 203.22 331.52 309.62 641.14 12.87 628.27 174.58 9.75 323.85 508.18 6374.82 5968.37 12343.19 73.26 15619.09 1644.52 12269.93 1630.20 349.60 1402.31 1751.91 264.43 704.92 969.35 125.24 6.16 128.13 259.53 177.38 436.91 6.28 430.63 128.21 0.09 203.22 331.52 (782.56) 4961.64 777.08 1.56 426.30 13.04 86.12 290.85 325.97 80.16 70.44 22.32 211.82 58.22 10.84 79.82 363.37 865.79 99.11 140.88 22002.90 207 (234.34) 7667.78 1070.32 (5.22) 555.92 24.49 123.65 407.59 418.72 81.23 136.60 34.89 284.83 53.55 12.14 102.31 637.68 1257.35 120.09 199.65 30212.84 Schedules forming part of the Consolidated Accounts (contd.) Schedule N Staff expenses: Salaries, wages and bonus Contribution to and provision for: Provident fund and pension fund Superannuation/employee pension schemes Gratuity funds Compensated absences/leave encashment Welfare and other expenses Schedule O Sales, administration and other expenses: Power and fuel Packing and forwarding Professional fees Insurance Rent Rates and taxes Travelling and conveyance Repairs to buildings General repairs and maintenance Directors’ fees Telephone, postage and telegrams Advertising and publicity Stationery and printing Commission: Distributors and agents Others Bank charges Miscellaneous expenses [see note no.15 (b)] Bad debts and advances written off Less: Provision for doubtful debts and advances written back Discount on sales Provision for doubtful debts, advances and non-performing assets (net) Provision for foreseeable losses on construction contracts Provision for diminution in value of investments (net) Other provisions [see note no.21] Schedule P Interest expenses and brokerage: Debentures and fixed loans Others 208 2008-2009 2007-2008 Rs.crore Rs.crore Rs.crore Rs.crore 2148.62 1598.84 74.94 46.79 32.37 30.21 63.51 71.83 30.96 1.87 184.31 333.11 2666.04 33.63 203.33 186.59 25.37 174.19 62.24 327.68 18.78 128.63 0.33 110.06 66.98 45.03 55.08 78.78 624.73 11.74 45.60 264.69 55.65 9.62 138.09 2666.82 322.26 139.70 461.96 168.17 282.42 2049.43 21.30 200.25 127.97 20.93 124.63 55.78 248.22 26.20 105.20 0.29 90.49 61.62 36.70 42.61 59.23 276.14 0.82 47.43 101.80 24.46 22.56 14.99 1709.62 112.21 90.90 203.11 33.25 9.36 46.10 45.28 43.58 11.50 87.08 75.34 Schedules forming part of the Consolidated Accounts (contd.) SCHEDULE Q SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles [GAAP] except for the revaluation of certain fixed assets, and in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards [as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government]. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account. The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates, is recognised in the period in which the results are known. The accounts of Indian subsidiaries, joint ventures and associates have been prepared in compliance with the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government, and those of the foreign subsidiaries, joint ventures and associates have been prepared in compliance with the local laws and applicable accounting standards. Necessary adjustments for differences in the accounting policies, wherever applicable, have been made in the consolidated financial statements. 2. Revenue recognition Revenue is recognised based on the nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery. a) Sales and service i) Sales and service include excise duty and adjustments made towards liquidated damages and price variation wherever applicable. ii) Revenue from sale of goods is recognised when the substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract. iii) Revenue from property development activity is recognised when all significant risks and rewards of ownership in the land and/or building are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists. iv) Revenue from construction/project related activity and contracts for supply/commissioning of complex plant and equipment is recognised as follows: a) Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with the customer. b) Fixed price contracts received up to March 31, 2003: Contract revenue is recognised by applying percentage of completion to the contract value. Percentage of completion is determined as follows: i) ii) in the case of item rate contracts, as a proportion of the progress billing to contract value; and in the case of other contracts, as a proportion of the cost incurred-to-date to the total estimated cost. c) Fixed price contracts received on or after April 1, 2003: Contract revenue is recognised by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost. Full provision is made for any loss in the period in which it is foreseen. v) Revenues from construction/project related activity and contracts executed in joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures"], is recognised on the same basis as similar contracts independently executed by the Company. vi) Revenue from software development is recognised based on software developed or time spent in person hours or person weeks, and billed to customers as per the terms of specific contracts. vii) Income from hire purchase and lease transactions is accounted on accrual basis, pro-rata for the period, at the rates implicit in the transaction. Income from bill discounting, advisory and syndication services and other financing activities is accounted on accrual basis. viii) Facilitation earnings are recognised based on the availability of the facilities for generation of electricity and steam. 209 Schedules forming part of the Consolidated Accounts (contd.) ix) Revenue relatable to construction services rendered in connection with Build-Operate-Transfer (BOT) projects undertaken by the group is recognised during the period of construction using percentage of completion method. Revenue relatable to toll collections of such projects from users of facilities are accounted when the amount is due and recovery is certain. Licence fees for way-side amenities are accounted on accrual basis. Revenue from annuity based projects is recognised in the Profit and Loss Account over the concession period of the respective projects based on the implicit rate of return embedded in the projected cash flows. Such income is duly adjusted for any variation in the amount and timing of the cash flows in the period in which such variation occurs. x) Revenue from service related activities is recognised using the proportionate completion method or completed service contract method. xi) Commission income is recognised as and when the terms of the contract are fulfilled. xii) Revenue from engineering and service fees is recognised as per the terms of the contract. xiii) Government subsidy related to shipbuilding contracts is recognised on a prudent basis in the Profit and Loss Account as revenue from operations in proportion to work completed when there is reasonable assurance that the conditions for the grant of subsidy will be fulfilled. b) Profit/loss on contracts executed by integrated joint ventures under profit-sharing arrangement [being jointly controlled entities, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures"] is accounted as and when the same is determined by the joint venture. Revenue from services rendered to such joint ventures is accounted on accrual basis. c) Other operational income represents income earned from the activities incidental to the operations of the business segments and is recognised on rendering of related services as per the terms of the contract. d) Interest income is accrued at applicable interest rate. e) Other items of income are accounted as and when the right to receive arises. 3. Principles of consolidation a) The financial statements of the Parent Company and its subsidiaries have been consolidated on a line-by-line basis by adding together the book values of the like items of assets, liabilities, income and expenses, after eliminating intra-group balances and the unrealised profits/losses on intra-group transactions, and are presented to the extent possible, in the same manner as the Company's independent financial statements. b) Investments in associate companies have been accounted for, by using the equity method whereby investment is initially recorded at cost and the carrying amount is adjusted thereafter for post acquisition change in the Company's share of net assets of the associate. c) The Company's interests in joint ventures are consolidated as follows: Type of Joint Venture Accounting treatment Jointly Controlled Operations Company's share of revenues, common expenses, assets and liabilities are included in revenues, expenses, assets and liabilities respectively. Jointly Controlled Assets Jointly Controlled Entities Share of the assets, and share of the liabilities are shown as part of gross block and liabilities respectively according to their nature. Share of expenses incurred on maintenance of the assets is accounted as expense. Monetary benefits, if any, from use of the assets are reflected as income. The Company's interest in jointly controlled entities are consolidated on a line-by line basis by adding together the book values of assets, liabilities, income and expenses, after eliminating the unrealised profits/losses on intra group transactions. Joint venture interests accounted as above are included in the segments to which they relate. 4. Research and development Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets. Employee benefits a) Short term employee benefits All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences, etc. and the expected cost of bonus, ex-gratia, are recognised in the period in which the employee renders the related service. 5. 210 Schedules forming part of the Consolidated Accounts (contd.) b) Post-employment benefits i) ii) Defined contribution plans: The Company's superannuation scheme, state governed provident fund scheme, insurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. Defined benefit plans: The employees gratuity fund schemes, post-retirement medical care schemes, pension scheme and provident fund scheme managed by trust are the Company's defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities, of a maturity period equivalent to the weighted average maturity profile of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on the net basis. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight line basis over the average period until the benefits become vested. c) d) Long term employee benefits The obligation for long term employee benefits such as long term compensated absences, long service award, etc. is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. Termination benefits Termination benefits such as compensation under Voluntary Retirement-cum-Pension Scheme is amortised over a defined period. The defined period of amortisation is five years or the period till March 31, 2010, whichever is earlier. Fixed assets Fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment. Fixed asset which were revalued as on October 1, 1984 are stated at the values determined by the valuers less accumulated depreciation, accumulated amortisation and cumulative impairment. Assets acquired on hire purchase basis are stated at their cash values. Specific know-how fees paid, if any, relating to plant and machinery is treated as part of cost thereof. Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets. Own manufactured assets are capitalised at cost including an appropriate share of overheads. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions, infra) Leases a) Lease transactions entered into prior to April 1, 2001: Assets leased out are stated at original cost. Lease equalisation adjustment is the difference between capital recovery included in the lease rentals and depreciation provided in the books of account. Lease rentals in respect of assets acquired under leases are charged to Profit and Loss Account. b) Lease transactions entered into on or after April 1, 2001: i) ii) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis. iii) Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease income is recognised over the period of the lease so as to yield a constant rate of return on the net investment in the lease. iv) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term. v) Initial direct costs relating to assets given on finance leases are charged to Profit and Loss Account. (Also refer to policy on depreciation, infra) 6. 7. 211 Schedules forming part of the Consolidated Accounts (contd.) 8. Depreciation a) Indian companies i) Owned assets a) Revalued assets: Depreciation is provided for based on the straight line method on the values and at the rates given by the valuers. The difference between depreciation provided based on revalued amount and that on historical cost is transferred from revaluation reserve to Profit and Loss Account. b) Assets carried at historical cost: Depreciation on assets carried at historical cost is provided on the written down value basis on assets acquired up to March 31, 1968 (at the rates prescribed under Schedule XIV to the Companies Act, 1956) and on the straight line basis on assets acquired subsequently (at the rates prevailing at the time of their acquisition) on assets acquired up to September 30, 1987. For the assets acquired thereafter, depreciation is provided at the rates prescribed under Schedule XIV to the Companies Act, 1956 or at higher rates in line with the estimated useful lives of the assets. c) Depreciation for additions to/deductions from owned assets is calculated pro rata from/to the month of additions/deductions. Extra shift depreciation is provided on a location basis. d) Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. ii) Leased assets a) Lease transactions entered into prior to April 1, 2001: Assets given on lease are depreciated over the primary period of the lease. Accordingly, while the statutory depreciation on such assets is provided for on the straight line basis as per Schedule XIV to the Companies Act, 1956, the difference is adjusted through lease equalisation and lease adjustment account. b) Lease transactions entered into on or after April 1, 2001: Assets acquired under finance leases are depreciated on a straight line method over the lease term. Where there is reasonable certainty that the Company shall obtain ownership of the assets at the end of the lease term, such assets are depreciated at the rates prescribed under Schedule XIV to the Companies Act, 1956 or at the higher rates adopted by the Company for similar assets. b) Foreign companies Depreciation has been provided by the foreign companies on methods and at the rates required/permissible by the local laws so as to write off the assets over their useful life. 9. Intangible assets and amortisation Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: Leasehold land: over the period of lease. Specialised software: Over a period of three years. Lump sum fees for technical know-how: Over a period of six years in case of foreign technology and three years in the case of indigenous technology. Trade marks over a period of five years. Toll collection rights obtained in consideration for rendering construction services represent the right to collect toll revenue during the concession period in respect of Build-Operate-Transfer (BOT) projects undertaken by the group. Toll collection rights are capitalised as intangible asset upon completion of the project at the cumulative construction costs including related margins (refer accounting policy on revenue recognition above) plus obligation towards negative grants payable to NHAI, if any. Till the completion of the project, the same is recognised as capital work-in-progress. Toll collection rights are amortised over the period of rights given under the concession agreement. Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the intangible assets. Amortisation on impaired assets is provided by adjusting the amortisation charges in the remaining periods so as to allocate the asset's revised carrying amount over its remaining useful life. Goodwill represents the difference between the Group's share in the net worth of a subsidiary or an associate or a joint venture, and the cost of acquisition at each point of time of making the investment in the subsidiary or the associate or the joint venture. For this a) b) c) d) e) 212 Schedules forming part of the Consolidated Accounts (contd.) purpose, the Group's share of net worth is determined on the basis of the latest financial statements prior to the acquisition after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Capital reserve on consolidation represents negative goodwill arising on consolidation. Goodwill arising out of acquisition of equity stake in a subsidiary, an associate or a joint venture is amortised in equal amounts over a period of ten years from the date of first acquisition. In the event of cessation of operations of a subsidiary, associate or joint venture, the unamortised goodwill is written off fully. Exploration and evaluation expenditure incurred for potential mineral reserves is recognised and reported as part of "capital work-in- progress" under "intangible assets" when such costs are expected to be either recouped in full through successful exploration and development of the area of interest or alternatively, by its sale; or when exploration and evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically available reserves and active and significant operations in relation to the area are continuing or are planned for the future. Exploration assets are re-assessed on a regular basis and these costs are carried forward provided that at least one of the conditions outlined above is met. All other exploration and evaluation expenditure is recognised as expense in the period in which it is incurred. 10. Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a) b) the provision for impairment loss, if any, required ; or the reversal, if any, required of impairment loss recognised in previous periods. Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined: a) b) in the case of an individual asset, at the higher of the net selling price and the value in use; in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit's net selling price and the value in use. (Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.) 11. Investments Long term investments (other than associates) are carried at cost, after providing for any diminution in value, to recognise a decline "other than temporary" in nature. Current investments are carried at lower of cost or market value. The determination of carrying amount of such investments is done on the basis of weighted average cost of each individual investment. Investment in associate companies is accounted using the "equity method" as stated in para 3(b) above. 12. Inventories Inventories are valued after providing for obsolescence, as under: a) Raw materials, components, construction materials, stores, spares and loose tools at lower of weighted average cost or net realisable value. b) Work-in-progress i) Work-in-progress (other than project and construction related) at lower of cost including related overheads or net realisable value. ii) Project and construction related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at realisable value thereafter. In the case of qualifying assets, cost includes applicable borrowing costs vide policy relating to borrowing costs. c) Finished goods at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid/ payable on such goods. d) Property development land at lower of cost or net realisable value. e) Completed property is valued at lower of cost or net realisable value. 13. Government grant Grants received from National Highway Authority of India (NHAI) in the nature of "promoter contribution" are credited to "capital reserve". 213 Schedules forming part of the Consolidated Accounts (contd.) 14. Securities premium account a) Securities premium includes: i) The difference between the market value and the consideration received in respect of shares issued pursuant to Stock Appreciation Rights Scheme. ii) The discount allowed, if any, in respect of shares allotted pursuant to Stock Options Scheme. b) The following expenses are written off against securities premium account: i) ii) Expenses incurred on issue of shares. Expenses (net of tax) incurred on issue of debentures/bonds. iii) Premium (net of tax) on redemption of debentures/bonds. 15. Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred. 16. Employee stock ownership schemes In respect of stock options granted pursuant to the Company's Employee Stock Options Schemes, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation cost over the vesting period. 17. Miscellaneous expenditure Lump sum compensation paid under Voluntary Retirement-cum-Pension Schemes are amortised over a period of five years or the period till March 31, 2010, whichever is earlier. The future pensions under Voluntary Retirement-cum-Pension Scheme are amortised over the period for which pensions are payable. 18. Foreign currency transactions, foreign operations, forward contracts and derivatives a) b) The reporting currency of the Company is the Indian Rupee. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange differences that arise on settlement of monetary items or on reporting at each Balance Sheet date of the Company's monetary items at the closing rate are: i) ii) adjusted in the cost of fixed assets specifically financed by the borrowings contracted upto March 31, 2004 to which the exchange differences relate. adjusted in the cost of fixed assets specifically financed by borrowings contracted between the period April 1, 2004 to March 31, 2007 and to which the exchange differences relate, provided the assets are acquired from outside India. iii) recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above. c) Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows: i) ii) Closing inventories at rates prevailing at the end of the year. Fixed Assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated. iii) Other assets and liabilities at rates prevailing at the end of the year. iv) Net revenues at the average rate for the year. d) Financial statements of foreign operations comprising jobs contracted on or after April 1, 2004, are treated as integral operations and translated as in the same manner as foreign currency transactions, as described above. Exchange differences arising on such translation are recognised as income or expense of the period in which they arise. e) Financial statements of overseas non-integral operations are translated as under: i) Assets and liabilities at the rate prevailing at the end of the year. Depreciation is accounted at the same rate at which assets are converted. ii) Revenues and expenses at yearly average exchange rates prevailing during the year. 214 Schedules forming part of the Consolidated Accounts (contd.) f) g) Exchange differences arising on translation of non integral foreign operations are accumulated in the foreign currency translation reserve until the disposal of such operations. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates". Exchange differences arising on such contracts are recognised in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognised as income/expense of the period in which such roll over/cancellation takes place. All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value as on the Balance Sheet date, in pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives. The Company has adopted Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" for accounting of such derivative contracts, not covered under Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates", as mandated by the ICAI in the aforesaid announcement. Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts covered under Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" are recognised in the Profit and Loss Account or Balance Sheet as the case may be after applying the test of hedge effectiveness. The gains or losses are recognised in the Balance Sheet where the hedge is effective, while the same is recognised in the Profit and Loss Account where the hedge is ineffective. The premium paid/ received on a foreign currency forward contract is accounted as expense/income over the period of the contract. 19. Segment Accounting a) Segment accounting policies Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting: i) ii) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue. Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Group as a whole and not allocable to segments are included under "unallocable corporate expenditure." iii) Income which relates to the Group as a whole and not allocable to segments is included in "unallocable corporate income". iv) Segment Result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Group. v) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Group as a whole and not allocable to any segment. Unallocable assets mainly comprise trade investments in associate companies. Unallocable liabilities include mainly loan funds, provisions for employee retirement benefits and proposed dividend. b) Inter-segment transfer pricing Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis. 20. Taxes on income a) Indian companies: Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on the expected outcome of assessments/appeals. Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head "capital gains" are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 215 Schedules forming part of the Consolidated Accounts (contd.) b) Foreign companies: Foreign companies recognise tax liabilities and assets in accordance with the applicable local laws. 21. Fringe benefit tax Fringe benefit tax (FBT) on the Employee Stock Options (ESOPs) is recognised in the Profit and Loss Account when the liability crystalises upon vesting of such stock options. Wherever such FBT liability is borne by the employee, the same is not so recognised. FBT on all other expenses, as specified in Income Tax Act, 1961, is recognised in the Profit and Loss Account when the underlying expenses are incurred. 22. Provisions, contingent liabilities and contingent assets Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if a) b) c) the Company has a present obligation as a result of a past event, a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of: a) b) c) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation a present obligation when no reliable estimate is possible; a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent assets are neither recognised, nor disclosed. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 216 Notes forming part of the Consolidated Accounts 1. Basis of preparation a) The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard (AS) 21 "Consolidated Financial Statements", Accounting Standard (AS) 23 "Accounting for Investments in Associates in Consolidated Financial Statements" and Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures", as specified in the Companies (Accounting Standards) Rules, 2006. The CFS comprises the financial statements of Larsen & Toubro Limited (L&T), its subsidiaries, associates and joint ventures. Reference in these notes to L&T, Company, Parent Company, Companies or Group shall mean to include Larsen & Toubro Limited or any of its subsidiaries, associates and joint ventures, unless otherwise stated. b) The notes and significant policies to the CFS are intended to serve as a guide for better understanding of the Group's position. In this respect, the Company has disclosed such notes and policies which represent the required disclosure. 2. The list of subsidiaries, associates and joint ventures included in the consolidated financial statements are as under:- As at 31-3-2009 As at 31-3-2008 Sr. Name of subsidiary company no. Country of incorporation Indian subsidiaries Tractor Engineers Limited Bhilai Power Supply Company Limited L&T-Sargent & Lundy Limited Spectrum Infotech Private Limited L&T Infrastructure Finance Company Limited International Seaport Dredging Limited* L&T-Valdel Engineering Limited India Infrastructure Developers Limited L&T Shipbuilding Limited L&T Infra & Property Development Private Limited L&T Concrete Private Limited L&T Strategic Management Limited L&T Transco Private Limited L&T Chennai - Tada Tollway Limited 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 HI-Tech Rock Products & Aggregates Limited 16 17 18 19 20 21 22 L&T Seawoods Private Limited L&T Realty Private Limited L&T-Gulf Private Limited L&T Power Limited (formerly known as L&T Power Projects Limited) L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited Larsen & Toubro Infotech Limited 23 GDA Technologies Limited 24 GDA Systems Private Limited @ 25 26 27 28 L&T Finance Limited L&T Capital Company Limited L&T General Insurance Company Limited L&T Power Development Limited 29 Raykal Aluminium Company Private Limited 30 L&T Uttaranchal Hydropower Limited India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India Proportion of Proportion of Proportion of Proportion of ownership voting power held (%) interest (%) voting power held (%) ownership interest (%) 100.00 99.90 100.00 99.90 100.00 99.90 100.00 99.90 50.00009 50.00009 50.00009 50.00009 100.00 100.00 99.99 46.02 95.00 99.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.99 46.02 95.00 99.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 95.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 95.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 50.0002 50.0002 50.0002 50.0002 100.00 51.00 51.00 100.00 100.00 – 99.99 100.00 100.00 100.00 80.00 100.00 100.00 51.00 51.00 100.00 100.00 – 99.99 100.00 100.00 100.00 80.00 100.00 100.00 51.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00 100.00 51.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00 217 Notes forming part of the Consolidated Accounts (contd.) As at 31-3-2009 As at 31-3-2008 Sr. Name of subsidiary company no. Country of incorporation Indian subsidiaries (contd.) 31 32 L&T Infrastructure Development Projects Limited L&T Panipat Elevated Corridor Limited 33 Narmada Infrastructure Construction Enterprise Limited 34 35 36 37 38 39 40 41 42 43 L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Vadodara Bharuch Tollway Limited L&T Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T Interstate Road Corridor Limited International Seaports (India) Private Limited L&T Urban Infrastructure Limited L&T South City Projects Limited L&T Siruseri Property Developers Limited 44 Cyber Park Development & Construction Limited 45 46 47 48 L&T Vision Ventures Limited L&T Tech Park Limited L&T Phoenix Infoparks Private Limited L&T Bangalore Airport Hotel Limited 49 CSJ Infrastructure Private Limited 50 51 52 53 L&T Arun Excello Commercial Projects Private Limited L&T Arun Excello IT SEZ Private Limited L&T Infocity Limited L&T Hitech City Limited 54 Hyderabad International Trade Expositions Limited 55 Andhra Pradesh Expositions Private Limited 56 57 L&T Capital Holdings Limited L&T Port Sutrapada Limited 58 Sutrapada SEZ Developers Limited 59 Sutrapada Shipyard Limited 60 L&T PNG Tollway Private Limited 61 Chennai Vision Developers Private Limited 62 63 64 65 66 67 L&T Ahmedabad-Maliya Tollway Private Limited L&T Halol-Shamlaji Tollway Private Limited L&T Rajkot-Vadinar Tollway Private Limited L&T Engserve Private Limited L&T Natural Resources Limited L&T-Demag Plastics Machinery Limited # India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India India Proportion of Proportion of Proportion of Proportion of ownership voting power held (%) interest (%) voting power held (%) ownership interest (%) 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 59.74 30.47 30.47 30.47 40.62 30.47 30.47 44.21 41.82 30.47 30.47 53.17 39.34 30.90 30.90 99.99 100.00 100.00 100.00 74.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 59.74 30.47 30.47 30.47 40.62 30.47 30.47 44.21 41.82 30.47 30.47 53.17 39.34 30.90 30.90 99.99 100.00 100.00 100.00 74.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 59.74 30.47 30.47 30.47 40.62 30.47 30.47 44.21 41.82 30.47 30.47 53.17 39.34 28.55 28.55 – – – – – – – – – – – – 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 79.65 59.74 30.47 30.47 30.47 40.62 30.47 30.47 44.21 41.82 30.47 30.47 53.17 39.34 28.55 28.55 – – – – – – – – – – – – * The Parent Company controls the composition of board of directors. @ The Company was merged with GDA Technologies Limited w.e.f. April 1, 2008. # Till March 30, 2009, the Company was a jointly controlled entity (Indian joint venture). 218 Notes forming part of the Consolidated Accounts (contd.) As at 31-3-2009 As at 31-3-2008 Proportion of Proportion of Proportion of Proportion of ownership voting power held (%) interest (%) voting power held (%) ownership interest (%) Sr. Name of subsidiary company no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Foreign subsidiaries Larsen & Toubro LLC L&T Realty FZE Larsen & Toubro Infotech, GmbH Larsen & Toubro Infotech Canada Limited (formerly known as Larsen & Toubro Information Technology Canada Limited) GDA Technologies Inc. International Seaports Pte Limited** Larsen & Toubro International FZE Larsen & Toubro (Oman) LLC Larsen & Toubro Electromech LLC L&T Modular Fabrication Yard LLC Larsen & Toubro (East Asia) SDN.BHD ## (formerly known as L&T-ECC Construction (M) SDN. BHD.) Larsen & Toubro Qatar LLC ## L&T Overseas Projects Nigeria Limited L&T Electricals Saudi Arabia Company Limited, LLC Larsen & Toubro Kuwait Construction General Contracting Company, WLL ## Larsen & Toubro (Qingdao) Rubber Machinery Company Limited 17 Qingdao Larsen & Toubro Trading Company 18 19 20 21 Limited Larsen & Toubro (Jiangsu) Valve Company Limited Larsen & Toubro Readymix Concrete Industries LLC ## Larsen & Toubro Saudi Arabia LLC Larsen & Toubro (Wuxi) Electric Company Limited Larsen & Toubro ATCO Saudia LLC ## 22 23 Offshore International FZC 24 L&T Infrastructure Development Projects Lanka (Private) Limited L&T Infocity Lanka Private Limited L&T Electrical & Automation FZE 25 26 27 Tamco Switchgear (Malaysia) SDN BHD 28 Tamco Shanghai Switchgear Co. Ltd. 29 Tamco Electrical Industries Australia Pty Ltd. 30 PT Tamco Indonesia 31 Larsen & Toubro Heavy Engineering LLC Country of incorporation USA UAE Germany Canada USA Singapore UAE Sultanate of Oman Sultanate of Oman Sultanate of Oman Malaysia Qatar Nigeria Saudi Arabia Kuwait China China China UAE Saudi Arabia China Saudi Arabia UAE Sri Lanka Sri Lanka UAE Malaysia China Australia Indonesia Sultanate of Oman 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.00 65.00 65.00 30.00 49.00 100.00 75.00 49.00 95.00 95.00 69.70 49.00 100.00 100.00 49.00 60.00 75.67 27.65 100.00 100.00 100.00 100.00 99.00 70.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.00 65.00 65.00 100.00 100.00 100.00 75.00 75.00 95.00 95.00 69.70 75.00 100.00 100.00 75.00 60.00 75.67 27.65 100.00 100.00 100.00 100.00 100.00 70.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.00 65.00 65.00 30.00 49.00 100.00 75.00 49.00 95.00 95.00 69.70 49.00 100.00 100.00 49.00 60.00 75.67 27.65 – – – – – – ** The Company is under liquidation. ## The Parent Company, together with its subsidiaries controls the composition of board of directors. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.00 65.00 65.00 100.00 100.00 100.00 75.00 75.00 95.00 95.00 69.70 75.00 100.00 100.00 75.00 60.00 75.67 27.65 – – – – – – 219 Notes forming part of the Consolidated Accounts (contd.) As at 31-3-2009 As at 31-3-2008 Country of incorporation India India India India India Sr. Name of associate company no. 1 2 3 4 5 6 7 8 9 L&T-Komatsu Limited Audco India Limited EWAC Alloys Limited L&T-Case Equipment Private Limited Voith Paper Technology (India) Limited International Seaport (Haldia) Private Limited India L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited L&T-Crossroads Private Limited 10 NAC Infrastructure Equipment Limited 11 Second Vivekananda Bridge Tollway Company Private Limited 12 Gujarat Leather Industries Limited** 13 Ennore Tank Terminals Private Limited 14 Vizag IT Park Limited India India India India India India India India 15 Larsen & Toubro Qatar & HBK Contracting LLC*** Qatar 16 TNJ Moduletech Private Limited 17 18 L&T Camp Facilities LLC L&T Arun Excello Realty Private Limited 19 Feedback Ventures Limited 20 Salzer Cables Limited 21 JSK Electricals Private Limited India UAE India India India India Proportion of Proportion of Proportion of Proportion of ownership voting power held (%) interest (%) voting power held (%) ownership interest (%) 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 31.03 26.55 50.00 20.71 13.82 24.50 40.00 49.00 19.71 26.00 48.21 26.00 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 31.03 26.55 50.00 20.71 13.82 24.50 40.00 49.00 19.71 26.00 48.21 26.00 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 31.03 26.55 50.00 20.71 13.82 24.50 40.00 49.00 19.71 26.00 48.21 – 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 31.03 26.55 50.00 20.71 13.82 24.50 40.00 49.00 19.71 26.00 48.21 – ** The Company is under liquidation. *** Accounts have been consolidated for 15 months period ended March 31, 2009. Sr. Name of joint venture no. Jointly controlled entities - Indian joint ventures L&T-AM Tapovan Joint Venture International Metro Civil Contractors Desbuild-L&T Joint Venture HCC-L&T Purulia Joint Venture Bauer-L&T Diaphragm Wall Joint Venture Metro Tunneling Group L&T-Hochtief Seabird Joint Venture L&T-Shanghai Urban Corporation Group Joint Venture The Dhamra Port Company Limited 1 2 3 4 5 6 7 8 9 10 L&T Bombay Developers Private Limited 220 As at 31-3-2009 As at 31-3-2008 Proportion of Proportion of ownership interest(%) ownership interest (%) Country of residence India India India India India India India India India India 65.00 26.00 49.00 43.00 50.00 26.00 90.00 51.00 39.83 29.87 65.00 26.00 49.00 43.00 50.00 26.00 90.00 51.00 39.83 29.87 Notes forming part of the Consolidated Accounts (contd.) Sr. Name of joint venture (Contd.) no. 11 12 13 Jointly controlled entities - foreign joint ventures L&T-Eastern Joint Venture Larsen & Toubro Limited - Shapoorji Pallonji & Company Limited Joint Venture (Les Pailles Exhibition Centre, Mauritius) Larsen & Toubro Limited - Shapoorji Pallonji & Company Limited Joint Venture (Ebene Cybercity Project, Mauritius) Jointly controlled operations - indian joint ventures L&T-HCC Joint Venture L&T-KBL (UJV) Hyderabad 14 15 Patel-L&T Consortium 16 Consortium of Samsung Heavy Industries Co. Ltd., Korea and L&T 17 Consortium of Global Industries Offshore LLC, USA and L&T 18 19 Consortium of Toyo Engineering Company and L&T 20 21 22 L&T-SVEC Joint Venture L&T-KBL - MAYTAS UJV L&T and Scomi Engineering BHD. Joint Venture Jointly controlled operations - foreign joint venture Lurgi L&T KQKS Consortium 23 As at 31-3-2009 As at 31-3-2008 Proportion of Proportion of ownership interest(%) ownership interest (%) 65.00 50.00 50.00 65.00 50.00 50.00 – – – – – – – – – – – – – – – – – – – – Country of residence UAE Mauritius Mauritius India India India India India India India India India Malaysia 3. During the year ended March 31, 2009, an amount of Rs.44.28 crore was amortised from goodwill arising on acquisition of subsidiary and associate companies. (previous year: Rs.23.10 crore) 4. a) Reserves shown in the consolidated Balance Sheet represent the Group's share in the respective reserves of subsidiaries and proportionate reserves of joint ventures. Reserve attributable to minority stakeholders is reported as part of minority interest in the consolidated Balance Sheet. Retained earnings comprise Group's share in general reserve and Profit and Loss Account. b) During the year ended March 31, 2009, preliminary expenses of Rs.25.41 crore pertaining to earlier years were written off to Profit and Loss Account. c) During the year ended March 31, 2009, the Company has adopted the policy of recognising interest income in respect of annuity projects (undertaken on BOT basis) as "income from annuity based project" based on the implicit rate of return embedded in the committed cash flows under the concession agreement. Accordingly, the borrowing cost incurred in respect of such projects is recognised as an expense in the year in which it is incurred. As a result, the profit before tax for the year is higher by Rs.63.09 crore (net of interest expense of Rs.18.18 crore). 5. The effect of acquisition/disposal of stake in subsidiaries during the year on the consolidated financial statements is as under: Name of subsidiary companies a) Acquisitions: L&T Capital Holdings Limited L&T PNG Tollway Private Limited Chennai Vision Developers Limited L&T Ahmedabad-Maliya Tollway Private Limited L&T Halol-Shamlaji Tollway Private Limited L&T Rajkot-Vadinar Tollway Private Limited L&T Engserve Private Limited L&T Natural Resources Limited Carried forward Effect on Group profit/(loss) after minority interest Rs.crore Net assets as at 31-3- 2009 (0.02) (0.05) – (0.05) (0.06) (0.05) – (1.76) (1.99) 1078.58 (0.05) 0.01 0.96 0.96 0.96 0.01 (1.71) 1079.72 221 Notes forming part of the Consolidated Accounts (contd.) Name of subsidiary companies Acquisitions: (contd.) Brought forward L&T Electrical & Automation FZE Larsen & Toubro Heavy Engineering LLC Tamco Switchgear (Malaysia) SDN BHD Tamco Shanghai Switchgear Co., Ltd. Tamco Electrical Industries Australia Pty Ltd. PT Tamco Indonesia L&T-Demag Plastics Machinery Limited Sutrapada SEZ Developers Limited Sutrapada Shipyard Limited L&T Port Sutrapada Limited Total b) Disposals: L&T Infocity Infrastructure Limited Total Effect on Group profit/(loss) after minority Interest Rs.crore Net assets as at 31-3-2009 (1.99) 7.68 (4.17) 43.31 (0.96) (5.48) (8.45) (3.24) – – (0.07) 26.63 0.34 0.34 1079.72 9.85 49.23 330.08 65.22 15.55 (15.47) 5.00 0.05 0.05 3.43 1542.71 10.35 10.35 6. a) Of the equity shares of Rs.2 each comprised in the subscribed and paid-up capital of the Company: i) ii) 9,19,943 (previous year: 9,19,943) equity shares were allotted as fully paid up, pursuant to contracts, without payment being received in cash. 44,96,76,280 (previous year: 15,70,84,226) equity shares were issued as bonus shares by way of capitalisation of general reserve: Rs.2.35 crore (previous year: Rs.2.35 crore), securities premium: Rs.87.47 crore (previous year: Rs.28.97 crore) and capital redemption reserve: Rs.0.12 crore (previous year: Rs.0.10 crore). iii) 1,48,67,485 (previous year: 1,40,99,067) equity shares were allotted as fully paid up on exercise of grants under Employees Stock Ownership Schemes. b) Options outstanding as at the end of the year on un-issued share capital: Particulars Employee stock options granted and outstanding# Number of equity shares to be issued as fully paid As at 31-3-2009 As at 31-3-2008 2,12,89,375 90,58,363 # The number of options have been adjusted consequent to bonus issue wherever applicable. c) The Directors recommend payment of final dividend of Rs.10.50 per equity share of Rs.2 each on the number of shares outstanding as on the record date. Provision for final dividend has been made in the books of account for 58,56,87,862 shares outstanding as at March 31, 2009 amounting to Rs.614.97 crore. 7. Stock Ownership Schemes of Parent Company: a) The grant of options to the employees under the Stock Option Schemes is on the basis of their performance and other eligibility criteria. The options are vested equally over a period of four years [5 years in the case of Series 2006(A)], subject to the discretion of the management and fulfilment of certain conditions. 222 Notes forming part of the Consolidated Accounts (contd.) b) The details of the grants under the aforesaid Schemes under various series are summarised below: Sr. Series reference no. 1 Grant price (prior to bonus issue)- Rupees Grant price (post bonus issue)- Rupees 2000 2002 (A) 2002 (B) 2003 (A) 2003(B) 2006 2006(A) 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 7 3.50 7 – 7 3.50 7 – 7 3.50 7 – 35 17.50 35 – 35 17.50 35 – 1202 1202 1202 1202 601 – 601 2 3 Grant dates 1-6-2000 19-4-2002 19-4-2002 Vesting commences on 1-6-2001 19-4-2003 19-4-2003 23-5-2003 onwards 23-5-2004 onwards 23-5-2003 onwards 23-5-2004 onwards 1-9-2006 onwards 1-9-2007 onwards 1-7-2007 onwards 1-7-2008 onwards 4 Options granted and outstanding at the beginning of the year 5 Options lapsed/withdrawn prior to bonus issue 6 Options granted prior to bonus issue 7 Options exercised prior to bonus issue for which shares are allotted 8 Options outstanding as on October 3, 2008 prior to bonus issue 9 Adjusted options as on October 3, 2008 consequent to bonus issue 10 Options lapsed/withdrawn post bonus issue 11 Options granted post bonus issue 12 Options exercised post bonus issue for which shares are allotted 13 Options exercised & allocated against shares earlier allotted* 8400 8400 10750 10750 19850 19850 15726 33216 971468 1299885 7036899 10671500 995270 – – – 8400 16800 – – – – – – – – – – – – – – – – 10750 21500 – – – – – – – – – – – – – – – – 19850 39700 – – – – – – – – – – – – – – – – 15726 31452 – – – – – – – – – 40481 340000 118874 1152113 2304226 – – – – – 163605 59600 120756 6812138 13624276 – – – – – 1276 50912 116041 261900 3109350 – 153800 162390 – 634670 9214 447226 331766 37516 1159921 180428 1910970 25034 2700778 5401556 133664 646295 19012 7000 – 43000 - – – 14 Options granted and outstanding 16800 8400 21500 10750 39700 19850 31452 15726 1959888 971468 13324860 7036899 5895175 995270 at the end of the year of which - Options vested Options yet to vest 16800 8400 21500 10750 39700 19850 31452 15726 226326 34666 5321810 747179 279136 – – – – – – – – – 1733562 936802 8003050 6289720 5616039 995270 *Allocated from the shares returned by former nominee directors in accordance with the consent terms approved by the Hon'ble High Court of Bombay on June 14, 2007. c) During the year, the Company has recovered Rs.4.80 crore (previous year: Rs.2.60 crore) from its subsidiary companies towards the stock options granted to employees of the subsidiary companies, pursuant to the Employee Stock Option Schemes. 223 – – – – – – – – 995270 – – Notes forming part of the Consolidated Accounts (contd.) 8. Stock Ownership Schemes of subsidiary companies: a) Employee Stock Ownership Scheme (ESOS) Under the Employee Stock Ownership Scheme (ESOS), 25,31,159 options are outstanding as at March 31, 2009. The grant of options to the employees under ESOS is on the basis of their performance and other eligibility criteria. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs.5 each. All vested options can be exercised on the first exercise date as may be determined by the Compensation Committee prior to date of IPO. The details of the grants under the aforesaid scheme are summarised below:- ESOP series I, II & III IV - XVI XVII-XVIII 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 1 Grant price (Rupees) 25 10 2 Options granted and outstanding at the beginning of the year 391653 391653 2102770 2002433 10 – 3 Options granted during the year 4 Options cancelled/lapsed during the year 5 Options exercised and shares allotted during the year 6 Options granted and outstanding at the end of the year of which - Options vested Options yet to vest – 124450 61250 – – – – – – 24514 24113 – – 391653 391653 – 391653 2078256 2102770 391653 – 970917 1107339 970917 1131853 – – 61250 – 61250 – – – – – – – b) Employees Stock Ownership Scheme - 2006 U.S. Stock Option Sub-Plan (Sub-Plan) The Company had instituted the Employees Stock Ownership Scheme - 2006 U.S. Stock Option Sub-Plan for the employees and directors of its subsidiary in USA. The grant of options to the employees under this Sub-Plan is on the basis of their performance and other eligibility criteria. The term of option shall be 5 years from the date of grant. The options are vested over a period of five years, subject to fulfilment of certain conditions specified in the respective option agreement. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs.5 each at an exercise price of USD 12 (equivalent to Rs.530) per share. Under the said plan, options granted and outstanding as at the end of the year are 1,36,500, of which, 50,211 options have been vested while 86,289 options remain unvested. c) Employees Stock Options granted and outstanding as at the end of the year on unissued share capital represent options 26,67,659 (previous year: 26,30,923). 9. Loans and advances include: i) ii) rent deposit with whole-time directors: Rs.0.03 crore (previous year: Rs.0.06 crore). The maximum amount outstanding at any time during the year Rs.0.06 crore (previous year: Rs.0.07 crore). amount, including interest accrued, due from the managing director and whole-time directors in respect of housing loan: Rs.0.63 crore (previous year: Rs.0.73 crore). Maximum amount outstanding at any time during the year: Rs.0.73 crore (previous year: Rs.0.76 crore). 10. Sundry creditors-others include: a. Rs.1.13 crore (previous year: Rs.17.67 crore), being contribution received from the employees of the Company and some of its subsidiary & associate companies, on behalf of L&T Employees Welfare Foundation Trust and held on account for it. b. Advance of Rs.11.77 crore received from M/s. JRE Tank Terminals Private Limited under an agreement dated August 24, 2007 towards sale of 1,17,65,000 equity shares of Rs.10 each in M/s. Ennore Tank Terrminals Private Limited to be transferred as follows : i. ii. Maximum 15% of shares upon completion of construction of the terminal and Balance shares upon completion of 3 calendar years from the date of commencement of commercial operations. 224 Notes forming part of the Consolidated Accounts (contd.) c. d. Down payment of Rs.3.19 crore for sale of the Company's entire investment in International Seaports (Haldia) Private Limited (ISPH) of 98,30,000 equity shares of Rs.10 each, to Energy Investment Limited, UAE and International Lighterage Limited, Mauritius vide agreements for share sale dated December 30, 2008. Certain conditions precedent to agreement for share sale remains to be fulfilled. The sale will, therefore, recognised in the year in which all such conditions are satisfied. Advance of Rs.7.16 crore received from M/s Sical Logistics Limited under an agreement for share sale and purchase dated December 17, 2008 with M/s Sical Logistics Limited for sale of the Company's stake in M/s Sical Iron Ore Terminals Limited. Accordingly, 71,50,000 equity shares of Rs.10 each held by the Company and further shares, if any, subscribed to by the Company will be sold at cost. The sale will be subject to completion of 3 years from the date of commencement of commercial operations of Sical Iron Ore Terminals Private Limited under the license agreement dated September 23, 2006 with Ennore Port Limited. 11. a) Fixed deposits with scheduled banks as on March 31, 2009 include Rs.40.41 crore (previous year: Rs.40.41 crore) in respect of a claim against the Company. The dispute is since resolved in favour of the Company, and the money has been realised on May 6, 2009. b) Balance with non scheduled banks include an amount of Rs.0.69 crore (previous year: Rs.0.69 crore), which is subject to an escrow arrangement duly approved by the Reserve Bank of India, whereby the proceeds of the deposit, together with interest thereon, would be applied towards full and final settlement of loan taken from Rafidian Bank, Iraq, which is included under unsecured loans. Once the UN embargo against Iraq is lifted, the settlement would be effected. 12. Sales and service include Rs.117.72 crore (previous year: Rs.75.10 crore) for price variations net of liquidated damages in terms of contracts with the customers and shipbuilding subsidy Rs.25.49 crore (previous year: Rs.29.29 crore). 13. Extraordinary items during the year comprise the following: i. ii. Gain of Rs.958.74 crore (net of tax of Rs.282.08 crore) on sale of the Company's Ready Mix Concrete business. Provision of Rs.186.28 crore in respect of investment in Satyam Computer Services Limited (SCSL) held by the Company. This provision has been made by the Company as a measure of abundant caution. Considering the extraordinary circumstances under which the price of SCSL shares fell in the market, the aforesaid provision has been created based on the principles of "prudence". (Refer note no.21) 14. Disclosures pursuant to Accounting Standard (AS) 7 (Revised) "Construction Contracts": i) Contract revenue recognised for the financial year Particulars ii) Aggregate amount of contract costs incurred and recognised profits (less recognised losses) as at end of financial year for all contracts in progress as at that date iii) Amount of customer advances outstanding for contracts in progress as at end of financial year iv) Retention amounts due from customers for contracts in progress as at end of financial year Rs.crore 2008-2009 2007-2008 29824.12 20030.30 48760.65 35393.02 4610.60 2136.09 3275.72 1533.88 15. a) Other income for the year ended March 31, 2009 includes a gain of Rs.16.59 crore (net) (previous year: Rs.34.31 crore) recognised on divestment/dilution of the group's stake in four (previous year one) of its subsidiaries. b) An amount of Rs.323.49 crore (net loss) (previous year: Rs.270.23 crore [net loss]) has been accounted under respective revenue heads in the Profit and Loss Account towards exchange differences arising on foreign currency transactions and forward contracts covered under Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates”. 16. Advances recoverable in cash or in kind includes Rs.161.00 crore (previous year: Rs.200.00 crore) towards interest free loan to L&T Employees Welfare Foundation Trust to part-finance its acquisition of equity shares in the company held by Grasim Industries Limited and its subsidiary. The loan is repayable in 9 years commencing from May 2005 with a minimum repayment of Rs.25.00 crore in a year. 17. Segment reporting: a) Information about business segments (information provided in respect of revenue items for the year ended March 31, 2009 and in respect of assets/liabilities as at March 31, 2009 - denoted as "CY" below, previous year denoted as "PY"). 225 Revenue-including excise duty External Inter-segment Total revenue Result Segment result Less: Inter-segment margin on capital jobs Unallocated corporate income/ (expenditure) (net) Operating Profit (PBIT) Interest expense Interest income Profit before tax (PBT) Provision for current tax Provision for deferred tax Provision for fringe benefit tax Profit after tax (before extraordinary items) Profit from extraordinary items Profit after tax (after extraordinary items) Depreciation (including obsolescence amortisation and impairment) included in segment expense Non-cash expenses other than depreciation included in segment expense Notes forming part of the Consolidated Accounts (contd.) i) Primary segments (business segments): Particulars Engineering Electrical & Construction & Electronics Machinery & Industrial Products Financial Services Developmental Projects Others Elimination Total CY PY CY PY CY PY CY PY CY PY CY PY CY PY CY PY Rs.crore 30537.94 20679.14 3231.29 2496.92 2663.27 2653.59 1031.52 642.64 530.55 294.28 2906.17 3052.89 – – 40900.74 29819.46 975.13 403.10 149.39 170.56 41.89 33.00 94.49 115.58 14.83 10.51 80.45 128.94 (1356.18) (861.69) – – 31513.07 21082.24 3380.68 2667.48 2705.16 2686.59 1126.01 758.22 545.38 304.79 2986.62 3181.83 (1356.18) (861.69) 40900.74 29819.46 3442.81 2064.19 352.95 398.21 451.86 422.73 228.07 246.87 108.35 158.91 354.07 387.41 – – 4938.11 3678.32 126.20 53.20 4811.91 3625.12 (125.63) (116.95) 4686.28 3508.17 (461.96) (203.11) 136.01 113.56 4360.33 3418.62 1328.35 1039.27 35.36 61.16 31.74 76.11 2935.46 2271.50 772.46 – 3707.92 2271.50 – – – 45805.94 31350.98 11007.05 8740.29 56812.99 40091.27 – 25757.98 18753.81 16008.73 9583.73 41766.71 28337.54 Segment assets 22777.57 15658.81 2585.69 1631.26 1494.06 1353.96 7717.40 6746.90 9497.42 4335.00 1733.80 1625.05 Unallocable corporate assets Total assets Segment liabilities 14729.40 10748.48 784.13 621.71 789.84 710.14 6389.37 5687.78 2548.00 738.48 517.24 247.22 Unallocable corporate liabilities Total liabilities Capital expenditure 2698.35 1490.14 354.32 209.88 363.78 205.86 60.80 24.62 97.24 21.83 113.47 152.37 97.71 4424.32 537.47 171.90 188.60 16.19 58.61 79.37 87.28 66.24 79.49 83.60 139.43 61.76 13.90 6.19 10.58 8.48 0.76 0.80 – – 8.35 8.66 Particulars Domestic Overseas Total CY PY CY PY CY PY Rs.crore External Revenue by location of customers 28857.21 22296.14 12043.53 7523.32 40900.74 29819.46 Carrying amount of Segment Assets by location of assets 39296.19 27609.34 6509.75 3741.64 45805.94 31350.98 Cost incurred on acquisition of tangible and intangible fixed assets 7352.33 2198.43 546.17 438.84 7898.50 2637.27 226 Notes forming part of the Consolidated Accounts (contd.) b) Segment reporting: segment identification, reportable segments and definition of each reportable segment: i) ii) Primary/secondary segment reporting format: a) The risk-return profile of the Company's business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information. b) In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly. Segment identification: Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments: Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 "Segment Reporting" as specified in the Companies (Accounting Standards) Rules, 2006. iv) Segment composition: Engineering & Construction Segment comprises execution of engineering and construction projects to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning, procurement/construction and project management. Electrical & Electronics Segment comprises manufacture and/or sale of low & medium voltage switchgear and control gear, custom-built switchboards, petroleum dispensing pumps & systems, electronic energy meters/protection (relays) systems, control & automation products and medical equipment. Machinery & Industrial Products Segment comprises manufacture and sale of industrial machinery & equipment, manufacturing & sale of industrial valves, construction equipment and welding/industrial products, manufacture and sale of undercarriage assemblies. Financial Services Segment comprises corporate finance, equipment finance, infrastructure financing and related advisory services. Developmental Projects comprises development, operation and maintenance of basic infrastructure projects, toll collection, development of urban infrastructure and providing related advisory services. Others include ready mix concrete, e-engineering services and embedded systems, power development, information technology services and mining. 18. Disclosure of related parties/related party transactions: i. Names of the related parties with whom transactions were carried out during the year and description of relationship: Associate companies: 1 3 5 7 9 11 13 15 17 19 Audco India Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited Voith Paper Technology (India) Limited 2 4 6 8 EWAC Alloys Limited L&T-Komatsu Limited L&T-Case Equipment Private Limited Salzer Cables Limited International Seaport (Haldia) Private Limited 10 Second Vivekananda Bridge Tollway Company Private Limited L&T Arun Excello Realty Private Limited 12 L&T Camp Facilities LLC L&T-Crossroads Private Limited 14 NAC Infrastructure Equipment Limited TNJ Moduletech Private Limited 16 Vizag IT Park Limited Feedback Ventures Limited 18 JSK Electricals Private Limited Ennore Tank Terminals Private Limited 227 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Notes forming part of the Consolidated Accounts (contd.) Joint ventures (other than associates): 1 3 5 7 9 11 International Metro Civil Contractors Joint Venture The Dhamra Port Company Limited Metro Tunnelling Group Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Les Palles Exhibition Centre) Desbuild-L&T Joint Venture L&T-AM Tapovan Joint Venture Key management personnel & their relatives: Mr. A. M. Naik, (Chairman & Managing director) Mr. Y. M. Deosthalee (whole-time director) Mrs. Leena Y. Deosthalee (wife) Mr. R. N. Mukhija (whole-time director) Mrs. Sushma Mukhija (wife) Ms. Debika Ajmani (daughter) 1 3 5 7 2 4 6 8 10 12 2 4 6 Bauer-L&T Diaphragm Wall Joint Venture L&T - Eastern Joint Venture L&T Hochtief Seabird Joint Venture Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Ebene Cybercity Project) HCC L&T Purulia Joint Venture L&T- Shanghai Urban Corporation Group Joint Venture Mr. J. P. Nayak (whole-time director) Mrs. Neeta J. Nayak (wife) Mr. Nitin Nayak (son) Mr. K. Venkataramanan (whole-time director) Mrs. Jyothi Venkataramanan (wife) Mr. K. V. Rangaswami (whole-time director) Mr. V. K. Magapu (whole-time director) 8 Mr. M. V. Kotwal (whole-time director) ii. Disclosure of related party transactions: Sr. Nature of transaction/relationship/major parties no. Rs.crore 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties 1 Purchase of goods & services (including commission paid) Associates & joint ventures, including: 935.15 1063.43 Audco India Limited EWAC Alloys Limited Total 627.65 126.69 821.41 138.88 935.15 1063.43 2 Sale of goods/power/contract revenue & services Associates & joint ventures, including: 725.15 85.13 Audco India Limited L&T Arun Excello Realty Private Limited L&T-Komatsu Limited Second Vivekananda Bridge Tollway Company Private Limited The Dhamra Port Company Limited Total 3 Purchase/lease of fixed assets Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Komatsu Limited EWAC Alloys Limited Total 228 – – – – 659.27 2.37 1.19 2.68 12.45 25.28 21.02 16.05 – 11.13 6.86 2.43 85.13 20.42 725.15 6.23 6.23 20.42 Notes forming part of the Consolidated Accounts (contd.) Sr. Nature of transaction/relationship/major parties no. Rs.crore 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties 4 Subscription to equity and preference shares (including application money paid and investment in joint ventures) Associates & joint ventures, including: 89.21 169.17 L&T Arun Excello Realty Private Limited L&T-Shanghai Urban Corporation Group Feedback Ventures Limited The Dhamra Port Company Limited L&T-AM Tapovan Joint Venture L&T-Eastern Joint Venture Total Receiving of services from related parties Associates & joint ventures, including: L&T-Komatsu Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited Total Rent paid, including lease rentals under leasing/hire purchase arrangements including loss sharing on equipment finance Associates & joint ventures, including: 5 6 EWAC Alloys Limited L&T-Komatsu Limited Key management personnel Relatives of key management personnel Total 7 Charges for deputation of employees to related parties Associates & joint ventures, including: EWAC Alloys Limited L&T-Case Equipment Private Limited Audco India Limited L&T-Komatsu Limited L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited The Dhamra Port Company Limited Total 8 Dividend received Associates & joint ventures, including: L&T-Komatsu Limited EWAC Alloys Limited Audco India Limited International Seaports (Haldia) Private Limited Voith Paper Technology (India) Limited 89.21 8.81 8.81 1.07 0.11 0.14 1.32 26.50 26.50 57.95 – 13.57 – 35.00 19.17 9.71 – 7.30 1.38 0.35 0.72 2.73 5.27 8.56 3.37 4.46 – – 28.80 12.44 9.00 – 6.00 169.17 0.13 0.13 0.87 0.13 0.11 1.11 1.31 1.31 12.98 Total 57.95 12.98 29.14 – 37.90 30.00 45.25 – 0.13 – – 0.33 0.53 – – – 0.33 0.10 0.11 0.13 3.60 1.45 3.60 1.47 2.85 229 Notes forming part of the Consolidated Accounts (contd.) Sr. Nature of transaction/relationship/major parties no. 9 Commission received, including those under agency arrangements Associates & joint ventures, including: L&T-Komatsu Limited Total 10 Rent received, overheads recovered and miscellaneous income Associates & joint ventures, including: L&T-Case Equipment Private Limited Audco India Limited L&T-Chiyoda Limited L&T-Komatsu Limited Metro Tuneling Group Total 11 Interest received Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Demag Plastic Machinery Limited Key management personnel Total 12 Interest paid Associate: Audco India Limited Total 13 Payment of salaries/perquisites Key management personnel: A. M. Naik J. P. Nayak Y. M. Deosthalee K. Venkataramanan R. N. Mukhija K. V. Rangaswami V. K. Magapu M. V. Kotwal Rs.crore 2008-2009 2007-2008 Amount Amounts for major parties Amount Amounts for major parties 151.47 151.47 60.19 60.19 1.01 0.07 1.08 7.77 7.77 149.57 10.87 16.05 7.73 6.11 7.45 1.01 – 7.77 207.05 207.05 24.95 24.95 1.30 0.03 1.33 2.35 2.35 56.46 38.02 12.55 6.39 7.16 7.11 7.07 5.21 5.22 5.75 198.52 4.61 3.63 6.92 – – – 1.30 2.35 8.39 4.31 4.83 4.79 4.74 3.54 3.54 3.88 Total 56.46 38.02 "Major parties" denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. 230 Notes forming part of the Consolidated Accounts (contd.) iii. Amount due to/from related parties Sr. no. Nature of transaction/relationship/major parties Rs.crore As at 31-3-2009 As at 31-3-2008 Amount Amounts for major parties Amount Amounts for major parties 1 Accounts receivable Associates & joint ventures, including: 209.87 58.27 L&T Arun Excello Realty Private Limited Second Vivekanand Bridge Tollway Company Private Limited The Dhamra Port Company Limited Total 2 Accounts payable (including acceptance & interest accrued) Associates & joint ventures, including: Audco India Limited L&T-Hochtief Seabird Joint Venture Total 3 Loans & advances recoverable Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Demag Plastics Machinery Limited L&T-AM Tapovan Joint Venture Key management personnel Relatives of key management personnel Total 4 Unsecured loans (including lease finance) Joint venture: Metro Tunneling Group Total 5 Advances received in the capacity of supplier of goods/services classified as "advances from customers" in the Balance Sheet Associates & joint ventures, including: Second Vivekananda Bridge Tollway Company Private Limited L&T Arun Excello Realty Private Limited The Dhamra Port Company Limited Total 6 Due to whole-time directors Key management personnel: 209.87 368.17 368.17 118.54 0.66 0.10 119.30 20.00 20.00 23.46 23.46 35.47 A. M. Naik J. P. Nayak Y. M. Deosthalee K. Venkataramanan R. N. Mukhija K. V. Rangaswami V. K. Magapu M. V. Kotwal 58.27 383.17 383.17 105.55 0.79 0.06 106.40 – – 8.89 8.89 21.96 – – 183.16 267.77 62.86 – – 71.26 20.00 – 8.03 15.43 8.45 4.22 4.22 4.22 4.22 3.38 3.38 3.38 Total 35.47 21.96 "Major parties" denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. 15.12 27.71 11.29 254.61 65.90 12.67 12.05 55.07 – 1.56 7.33 – 5.23 2.62 2.62 2.61 2.61 2.09 2.09 2.09 231 Notes forming part of the Consolidated Accounts (contd.) iv. Notes to related party transactions: a) b) c) The Company has a sole selling agreement with L&T- Komatsu Limited (LTK), an associate company, valid for the period of 5 years from October 16, 2006 in line with Government of India (GOI) approval letter dated May 28, 2007. The appointment shall be in effect as long as the joint venture agreement between the Parent Company and M/s Komatsu Asia Pacific Pte. Ltd., Singapore (which is a subsidiary of Komatsu Ltd., Japan) remains in force, subject to approval of GOI, under section 294 AA of the Companies Act, 1956. As per the terms of the agreement, the Company is the exclusive agent of L&T-Komatsu Limited to market LTK machines and provide product support. Pursuant to the aforesaid agreement, LTK is required to pay commission to the Company at specified rates on the sales effected by the Company. The Company has renewed the selling agency agreement from October 1, 2003 with EWAC Alloys Limited (EWAC), an associate company. The agreement shall remain valid until either party gives 12 months' prior written notice to the other for termination. As per the terms of the agreement, the Company is the selling agent authorised to purchase and resell EWAC products in accordance with the prices and other conditions stipulated in the agreement. The Company has a selling agency agreement with L&T-Demag Plastics Machinery Limited (LTDPML), a wholly owned subsidiary. As per the terms of the agreement, the Company is a selling and servicing agent of LTDPML. Pursuant to the aforesaid agreement, LTDPML is required to pay commission to the Company at specified rates on sales effected by the Company. Note: The financial impact of the agreements mentioned at (a) to (c) above has been included in/disclosed vide note no.18(ii) supra. 19. Leases: i) Where the Company is a lessor: a) b) The Company has given on finance leases certain items of plant and machinery. The leases have a primary period that is fixed and non-cancellable and a secondary period. There are no exceptional/restrictive covenants in the lease agreement. The total gross investment in these leases as on March 31, 2009 and the present value of minimum lease payments receivable as on March 31, 2009 is as under: Particulars 1. Receivable not later than 1 year 2. Receivable later than 1 year and not later than 5 years 3. Receivable later than 5 years Gross investment in lease (1+2+3) Less: Unearned finance income Present value of receivables Rs.crore 3.67 3.33 – 7.00 0.78 6.22 c) In respect of one of the leases referred to in (a) above, the lease receivables were recorded at the inception, at the present value of minimum lease payments, and subsequently securitised. ii) Where the Company is a lessee: Finance leases: i) a) Assets acquired on finance lease mainly comprise plant & machinery, vehicles and personal computers. The leases have a primary period, which is fixed and non-cancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals (b) rates of depreciation under the Income tax Act, 1961 and (c) change in the lessor's cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements. The minimum lease rentals as at March 31, 2009 and the present value as at March 31, 2009 of minimum lease payments in respect of assets acquired under finance leases are as follows: Particulars Rs.crore Minimum lease payments Present value of minimum lease payments As at 31-3-2009 As at 31-3-2008 As at 31-3-2009 As at 31-3-2008 1. 2. 3. Payable not later than 1 year Payable later than 1 year and not later than 5 years Payable later than 5 years Total Less: Future finance charges Present value of minimum lease payments 0.50 0.60 – 1.10 0.10 1.00 0.27 0.18 – 0.45 0.04 0.41 0.46 0.54 – 1.00 0.25 0.16 – 0.41 ii) 232 Notes forming part of the Consolidated Accounts (contd.) iii) Contingent rent recognised/(adjusted) in the Profit and Loss Account in respect of finance leases: Rs.nil (previous year: Rs.0.02 crore) b) Operating leases: i. The Company has taken various residential/commercial premises and plant and machinery under cancellable operating leases. These lease agreements are normally renewed on expiry. ii. [a] The Company has taken certain assets on non-cancellable operating leases, the future minimum lease payments in respect of which, as at March 31, 2009 are as follows: 1. 2. 3. Minimum Lease Payments Payable not later than 1 year Payable later than 1 year and not later than 5 years Payable later than 5 years Total Rs.crore 18.34 19.83 2.10 40.27 [b] The lease agreements provide for an option to the Company to renew the lease period at the end of the non-cancellable period. There are no exceptional/restrictive covenants in the lease agreements. iii. Lease rental expense in respect of operating leases: Rs.50.33 crore (previous year: Rs.39.81 crore) 20. Basic and Diluted Earnings per share ["EPS"] computed in accordance with Accounting Standard (AS) 20 "Earnings per Share": Particulars Basic Profit after tax as per accounts (Rs.crore) Weighted average number of shares outstanding Basic EPS (Rupees) Diluted Profit after tax as per accounts (Rs.crore) Add: Interest/exchange difference (gain)/loss on bonds convertible into equity shares (net of tax) (Rs.crore) Before extraordinary items After extraordinary items 2008-2009 2007-2008 2008-2009 2007-2008 3017.00 2325.36 3789.46 2325.36 58,51,18,186 57,50,52,204 58,51,18,186 57,50,52,204 51.56 40.44 64.76 40.44 3017.00 2325.36 3789.46 2325.36 – (21.85) – (21.85) A B A/B A B Adjusted profit for diluted earnings per share (Rs.crore) C=A+B 3017.00 2303.51 3789.46 2303.51 Weighted average number of shares outstanding Add: Weighted average number of potential equity shares that could arise on conversion of FCCBs Add: Weighted average number of potential equity shares on account of employee stock options D E F 58,51,18,186 57,50,52,204 58,51,18,186 57,50,52,204 – 24,59,448 – 24,59,448 79,89,615 1,39,06,732 79,89,615 1,39,06,732 Weighted average number of shares outstanding for diluted EPS G=D+E+F 59,31,07,801 59,14,18,384 59,31,07,801 59,14,18,384 Diluted EPS (Rupees) C/G 50.87 38.95 63.89 38.95 233 Notes forming part of the Consolidated Accounts (contd.) 21. Disclosures required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets": a) Movement in provisions: Particulars Product Warranties Excise Duty Sales Tax Rs.crore Class of Provisions Litigation Contractual Others Total obligations related rectification cost- Construction contracts Balance as at 1-4-2008 19.14 4.06 22.18 2.11 62.40 3.37 113.26 Additional provision during the year Effect of business combination Provision for extraordinary item* 8.33 0.44 – – – – 20.65 – – – – – Provision reversed during the year 9.67 3.96 1.12 2.11 128.43 8.84 166.25 – – 0.44 – 186.28 186.28 – 11.30 28.16 Balance as at 31-3-2009 (6 = 1 + 2 + 3 + 4 - 5) 18.24 0.10 41.71 – 190.83 187.19 438.07 Sr. no. 1 2 3 4 5 6 * Refer note no.13 b) Nature of provisions: i. Product warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at March 31, 2009 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two years from the date of Balance Sheet. ii. Provision for excise duty represents the differential duty liability that is expected to materialise in respect of matters in appeal. iii. Provision for sales tax represents mainly the differential sales tax liability on account of non-collection of declaration forms for the period prior to 5 years. iv. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal. v. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under Accounting Standard (AS) 7 "Construction Contracts". c) Disclosures in respect of contingent liabilities are given as part of Schedule J to the Balance Sheet. 22. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.4350.85 crore (previous year: Rs.3644.58 crore). 23. a) Provision for current tax includes: i) Provision for wealth tax Rs.3.37 crore (including Rs.0.98 crore being provision for wealth tax in respect of earlier years) (previous year: Rs.1.23 crore) ii) Rs.53.94 crore being provision for income tax in respect of earlier years (previous year: reversal of provision of Rs.25.33 crore) iii) Credit for Minimum Alternative Tax (MAT) entitlement Rs.18.59 crore (previous year: Rs.7.57 crore) under section 115JB of the Income Tax Act, 1961. iv) Rs.2.07 crore in respect of income tax payable outside India (previous year: Rs.nil) v) Rs.0.50 crore being provision for income tax in respect of a subsidiary which was sold during the year. b) Provision for tax on fringe benefits includes credit for excess provision of Rs.0.20 crore pertaining to earlier years, reversed during the year. 24. a) Computation of cumulative deferred tax asset/liabilities has not been made in respect of certain foreign subsidiaries of the Group. In the opinion of management, the impact is not material. 234 Notes forming part of the Consolidated Accounts (contd.) b) Major Components of deferred tax liabilities and deferred tax assets: Rs.crore Deferred Charge/(credit) to tax Profit and Loss Account Effect due to Charge/(credit) to reserves Particulars liabilities/ (assets) Ordinary activity 31-3-2008 Extra- acquisition/ Retained Translation reserve earnings disposal ordinary activity Deferred tax liabilities/ Hedging Securities premium (assets) reserve account 31-3-2009 Deferred tax liabilities: Difference between book and tax depreciation Gain on derivative transactions to be offered for tax purposes in the year of transfer to Profit and Loss Account Disputed statutory liabilities paid and claimed as deduction for tax purpose but not debited to Profit and Loss Account Others Total 291.74 78.84 2.69 (2.67) – – 24.25 2.49 11.05 11.78 – – – – – – 327.04 93.11 2.69 (2.67) Deferred tax (assets): Provision for doubtful debts and advances debited to Profit and Loss account Loss on derivative transactions to be claimed for tax purposes in the year of transfer to Profit and Loss Account Unpaid statutory liabilities/provision for compensated absences debited to Profit and Loss Account (104.28) (52.81) – – (49.29) (19.53) Unabsorbed depreciation/brought forward business losses (14.99) Other items giving rise to timing difference (36.76) 6.54 8.05 Total (205.32) (57.75) – – – – – – – – – – (0.16) (0.16) Net deferred tax liability/(assets) 121.72 35.36 2.69 (2.83) – – – – – – – – – – – – (0.08) – – 370.52 – 121.03 – 121.03 – – – – (0.08) 121.03 – – – 26.74 22.83 541.12 – – – (157.09) – (147.06) – (147.06) – – – – – – – – – (68.82) (8.45) (28.87) – (147.06) – (410.29) (0.08) (26.03) – 130.83 Previous year 107.41 31.74 – (39.74) 21.10 (0.02) – 1.23 121.72 25. a) The Group has undertaken various projects on Build-Operate-Transfer (BOT) basis as per the concession agreements with the government authorities. Under the agreements the concession period for toll collection or annuity payments ranges from 15 to 32 years. At the end of the said concession period, the entire facilities are transferred to the concerned government authorities. b) c) The aggregate amount of revenues and profits before tax (net) recognised during the year in respect of construction services related to Build-Operate-Transfer (BOT) projects is Rs.1320.32 crore and Rs.8.29 crore respectively [refer accounting policy disclosed in Schedule ‘Q’ vide para 2(a)(ix)] Loans and advances include Rs.550.31 crore (previous year: Rs.232.84 crore) being cumulative construction costs incurred including related margins in respect of Build-Operate-Transfer (BOT) projects. 26. The Parent Company has given, inter alia, the following undertakings in respect of its investments: a) Jointly with L&T Infrastructure Development Projects Limited (a subsidiary of the Company), to the term lenders of its subsidiary companies L&T Transportation Infrastructure Limited (LTTIL): i. ii. not to reduce their joint shareholding in LTTIL below 51% until the financial assistance received from the term lenders is repaid in full by LTTIL and to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL. 235 Notes forming part of the Consolidated Accounts (contd.) b) c) d) e) f) In terms of Company's concession agreement with Government of India and Government of Gujarat, not to change the control over L&T Western India Tollbridge Limited (a subsidiary of L&T Infrastructure Development Projects Limited) during the period of the Agreement. To the debenture holders of L&T Infrastructure Development Projects Limited (a subsidiary of the Company) and to the lenders of its subsidiaries L&T Panipat Elevated Corridor Private Limited and L&T Krishnagiri Thopur Toll Road Limited, not to dilute Company's shareholding below 51%. To the lender of L&T Offshore International FZC (a subsidiary of the Company), not to pledge or reduce its shareholding in L&T International FZE (the Holding Company of L&T Offshore International FZC) below 100% of the issued & allotted share capital. Jointly with L&T-MHI Turbine Generators Private Limited (a subsidiary of L&T Power Limited, which is a wholly owned subsidiary of the Company) and Mitsubishi Heavy Industries Limited (JV partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable financial support for the successful execution of APPDCL 2x800 MW Power Project - Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh. Not to sell or otherwise transfer, deal with or agree to acquire, sell or otherwise transfer or deal with, in any manner the shares of Satyam Computer Services Limited (SCSL), held by the Company till October 21, 2009 or a date approved by the appropriate authorities whichever is earlier. 27. L&T Infrastructure Development Projects Limited (LTIDPL), a subsidiary of the Parent Company i. ii. iii. iv. v. has pledged its investment in the equity shares of Second Vivekananda Bridge Tollway Company Private Limited (SVBTC) of Rs.32.35 crore to the lenders as security for term loans sanctioned by them to SVBTC. has given an undertaking to the term lenders of SVBTC to subscribe to quasi equity of the Company to the extent of Rs.10 crore. Accordingly, the Company has subscribed in cumulative redeemable convertible preference shares to the extent of Rs.10 crore. has entered into agreements with the lenders to Bangalore International Airport Limited (BIAL) for pledge and non-disposal of shares held by it in BIAL amounting to Rs.19.61 crores. has pledged its investment in the equity shares of The Dhamra Port Company Limited (DPCL) of Rs.80.87 crores. has given the following undertakings jointly with Pacific Alliance Stradec Group Infrastructure Company LLC and SVBTC to the term lenders of SVBTC: a) not to reduce the joint shareholding below 51% during construction period and for 3 years following Commercial Operations Date and below 26% during the balance remaining operations period. vi. has given the following undertakings jointly with Tata Steel Limited and DPCL to the term lenders of DPCL: a) b) to meet the cost overrun to the extent of 10% of the project cost and not to reduce the joint share holding below 51% upto the Commercial Operations Date and below 26% during the balance remaining operations period. vii. has given the undertaking to the term lenders of Narmada Infrastructure Construction Enterprise Limited (NICE) to facilitate the borrower (NICE) to discharge its debt obligation to the extent the loan funds have been placed with LTIDPL and its Group Companies. viii. has pledged its investment in the equity shares of the followings subsidiary companies to the lenders of term loan of the respective companies. Rs.crore Sr. no. Name of the subsidiary companies As at 31-3-2009 As at 31-3-2008 1 2 3 4 5 L&T Panipat Elevated Corridor Limited L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollway Limited L&T Vadodara Bharuch Tollway Limited L&T Interstate Road Corridor Limited 42.99 40.16 28.81 22.18 27.60 17.11 13.32 8.21 22.16 14.82 236 Notes forming part of the Consolidated Accounts (contd.) The Company has also given the following undertaking, to the term lenders of the aforesaid subsidiary companies: a) b) c) not to reduce its shareholding in the said subsidiary companies below 51% upto a period of 3 years after commercial operation date and below 26% till final settlement date. to meet the cost overrun to the extent of 5% of the project cost. in the case of L&T Vadodara Bharuch Tollway Limited: to provide financial support to the borrower to meet shortfall, if any, in meeting the debt repayment after receipt of termination payment from National Highways Authority of India, in the event of a termination of the concession agreement pursuant to occurrence of the concessionarie event of default or any force majeure event as stated in the said concession agreement. 28. 29. In terms of provisions of sub-section 1A of section 115O of the Income Tax Act, 1961, dividend distribution tax payable by the Company, is net of dividend distribution tax paid by its subsidiary company Larsen & Toubro Infotech Limited, amounting to Rs.2.69 crore, related to dividend of Rs.15.80 crore declared by them. Accordingly, the additional tax on dividend includes Rs.2.69 crore paid by the aforesaid subsidiary company. In line with the Company's risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges. a) The particulars of derivative contracts entered into for hedging purposes outstanding as at March 31, 2009 are as under: Category of derivative instruments i) For hedging foreign currency risks a) Forward contracts for receivables including firm commitments and highly probable forecasted transactions b) Forward contracts for payables including firm commitments and highly probable forecasted transactions c) Currency swaps d) Option contracts ii) For hedging interest rate risks Interest rate swaps iii) For hedging commodity price risks Commodity futures Rs.crore Amount of exposures hedged As at 31-3-2009 As at 31-3-2008 4607.57 3004.48 7059.34 4996.36 1203.80 2086.69 3858.49 4983.70 125.00 350.00 12.98 – b) Unhedged foreign currency exposures as at March 31, 2009 are as under: Unhedged foreign currency exposures As at 31-3-2009 i) ii) Receivables, including firm commitments and highly probable forecasted transactions 19213.48 Payables, including firm commitments and highly probable forecasted transactions 12573.50 Rs.crore As at 31-3-2008 14668.08 10264.39 237 Notes forming part of the Consolidated Accounts (contd.) 30. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits": i. Defined contribution plans: [refer accounting policy no.5b(i)] Amount of Rs.70.73 crore (previous year: Rs.56.16 crore) is recognised as an expense and included in "staff expenses" (Schedule N) in the Profit and Loss Account. ii. Defined benefit plans: [refer accounting policy no.5b(ii)] a) The amounts recognised in Balance Sheet are as follows: Particulars Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan Rs.crore As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at As at As at As at As at A) Amounts to be recognised in Balance Sheet Present Value of defined benefit obligation – Wholly funded – Wholly unfunded Less: Fair value of plan assets Less: Unrecognised past service costs 289.74 243.33 0.93 0.75 290.67 255.06 – 244.08 213.22 – Amount to be recognised as liability or (asset) 35.61 30.86 B) Amounts reflected in the Balance Sheet – 75.83 75.83 – 1.43 74.40 – 60.31 60.31 – 1.57 – – 1127.81 1014.16 152.79 152.44 – – 152.79 152.44 1127.81 1014.16 – 0.98 – 1151.80 1014.85 1.09 – – 58.74 151.81 151.35 (23.99)@ (0.69)@ Liabilities Assets 35.61 30.86 74.40 58.74 151.81 151.35 17.45 11.44 – – – – – – – – Net liability/(asset) 35.61 30.86 74.40 58.74 151.81 151.35 17.45# 11.44# b) The amounts recognised in Profit and Loss Account are as follows: Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-Managed provident fund plan 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 2008-2009 2007-2008 Rs.crore 18.86 20.11 17.43 17.44 (16.04) (12.09) 9.46 8.09 – – 0.05 – – (0.07) 32.37 29.09 – – 0.05 – 0.07 (0.04) 30.95 18.58 4.12 5.30 – 9.44 0.13 – – – – – 2.75 4.04 – 1.36 5.45 – – – – – 4.55 13.02 – 5.18 0.11 (19.57) – – – – 3.51 10.07 44.87** 48.72** 87.44 78.28 – (88.86) (79.72) 21.65 (24.11) 12.36 0.11 – – – – – – – – – – – 25.53+ (10.92) – – 44.87 81.60 – – 48.72 67.36 18.99 13.60 3.29 35.34 – – – – Particulars Current service cost Interest cost Expected return on plan assets Actuarial losses/(gains) Past service cost Effect of any curtailment or settlement Adjustment for earlier years Actuarial (loss)/gain not recognised in books Excess provisions 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Amount capitalised out of the above Total included in "staff expenses" (1 to 10) Actual return on plan assets 238 Notes forming part of the Consolidated Accounts (contd.) c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan Rs.crore Particulars Opening balance of the present value of defined benefit obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) Employer ii) Employee Add: Actuarial losses Less: Benefits paid Add: Past service cost Add: Liabilities assumed in an amalgamation/ acquisition Add/(less): Adjustment for earlier years Less: Effect of any curtailment or settlement Closing balance of the present value of defined benefit obligation As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at As at As at As at As at 244.08 212.63 60.31 47.09 152.44 119.76 1014.16 933.74 18.86 20.11 17.43 17.44 – – – – 4.12 5.30 – – 22.51 14.58 (15.51) (18.47) 9.44 (3.34) – – 0.32 0.30 – 0.12 0.35 – – – – – 2.75 4.04 – – 1.36 (2.16) 7.02 – 0.21 4.55 13.02 – – 5.18 (2.83) – – – – (19.57) 3.51 44.87** – 10.07 87.44 78.28 – – 21.64 – 88.34 – 48.72** 98.32 – (2.54) (102.14) (126.97) – – – – – – – – (4.86) (17.93) – – 290.67 244.08 75.83 60.31 152.79 152.44 1127.81 1014.16 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Rs.crore Gratuity plan Trust-managed provident fund plan Particulars Opening balance of the fair value of the plan assets Add: Expected return on plan assets* Add/(less): Actuarial gains/(losses) Add: Contribution by the employer Add: Contribution by plan participants Less: Benefits paid Add: Business combinations/acquisitions Add/(less): Adjustments for earlier years Closing balance of the plan assets As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at 213.22 16.04 13.05 27.91 – (15.51) 0.33 0.02 255.06 160.33 12.09 6.49 52.21 – (18.47) 0.13 0.44 213.22 1014.85 88.86 24.11 44.24 87.02 (102.14) – (5.14) 1151.80 947.84 79.72 (12.36) 47.79 97.16 (126.97) – (18.33) 1014.85 Note: The fair value of the plan assets under the trust-managed provident fund plan has been determined at amounts based on their value at the time of redemption, assuming a constant rate of return to maturity. * Basis used to determine the overall expected return: The Trust formed by the Company manages the investments of provident funds and gratuity fund. Expected return on plan assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year. The Company expect to fund Rs.33.38 crore (previous year: Rs.30.11 crore) towards its gratuity plan and Rs.63.01 (previous year: Rs.51.64 crore) towards its trust-managed provident fund plan during the year 2009-2010. @ Asset is not recognised in the Balance Sheet # ** + Employer's and employees' contribution (net) for March is paid in April Employer's contribution to provident fund The actual return on plan assets is higher than interest cost, but no credit has been taken to the Profit and Loss Account 239 Notes forming part of the Consolidated Accounts (contd.) e) The major categories of plan assets as a percentage of total plan assets are as follows: Gratuity plan Trust-managed provident fund plan Particulars Government of India Securities State Government Securities Corporate Bonds Equity Shares of Listed Companies Fixed Deposits under Special Deposit Scheme framed by Central Government for Provident Funds Insurer Managed Funds Public Sector Unit Bonds Others As at As at 31-3-2009 31-3-2008 31-3-2009 31-3-2008 As at As at 41% – 38% 1% 14% 2% – 4% 39% – 38% 1% 16% 2% – 4% 23% 13% 5% – 27% – 32% – 22% 13% 5% – 30% – 30% – f) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages): 1 Discount rate: a) Gratuity plan b) Company pension plan c) Post-retirement medical benefit plan 2 Expected return on plan assets 3 Annual increase in healthcare costs (see note below) 4 Salary growth rate: a) Gratuity plan b) Company pension plan 5 Attrition rate: As at 31-3-2009 As at 31-3-2008 7.67% 7.67% 7.67% 7.50% 5.00% 6.00% 7.00% 8.33% 8.35% 8.39% 7.50% 5.00% 6.00% 7.00% a) For post-retirement medical benefit plan & company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups. b) For gratuity plan the attrition rate varies from 1% to 7% (previous year: 1% to 7%) for various age groups. 6 7 8 9 The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation on cumulative basis is recognised immediately in the Profit and Loss Account as actuarial losses. The obligation of the company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: Particulars Effect on the aggregate of the service cost and interest cost Effect on defined benefit obligation Rs.crore Effect of 1% increase Effect of 1% decrease 2008-2009 2007-2008 2008-2009 2007-2008 0.88 5.08 0.60 4.00 (1.19) (3.80) (0.99) (3.30) 240 Notes forming part of the Consolidated Accounts (contd.) g) The amounts pertaining to defined benefit plans are as follows: Particulars 1 Post-retirement medical benefit plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Defined benefit obligation Plan assets Surplus/(deficit) Experience adjustment plan liabilities Experience adjustment plan assets 3 Post-retirement pension plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 4 Trust managed provident fund plan (funded) Defined benefit obligation Plan assets Surplus/(deficit) h) General descriptions of defined benefit plans: 1. Gratuity plan: Rs.crore As at 31-3-2009 As at As at 31-3-2008 31-3-2007 74.40 1.13 290.67 255.06 (35.61) 8.38 13.71 151.81 (6.89) 58.74 2.66 47.09 – 244.08 213.22 212.63 160.33 (30.86) (52.30) 16.44 (2.92) 25.84 6.59 151.35 118.56 26.87 – 1127.81 1151.80 23.99 1014.16 1014.85 0.69 933.74 947.84 14.10 The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Company's scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material, is unfunded and managed within the Company. 2. Post-retirement medical benefit plan: The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement. 3. Company's pension plan: In addition to contribution to State-Managed Pension Plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement. 4. Trust-managed provident fund plan: The Company manages provident fund plan through a Provident Fund Trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service. 241 Notes forming part of the Consolidated Accounts (contd.) 31. Miscellaneous expenses include donations aggregating to Rs.4.70 crore made during the year to political parties as follows: Akhil Bharatiya Congress Committee: Rs.2.25 crore, Bharatiya Janata Party: Rs.2.00 crore and Shiv Sena Madhyavarti Karyalaya: Rs.0.45 crore. 32. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2009. 33. Certain elements of operational income of business segments forming a part of segment results used to be hitherto categorised as a part of 'other income' in the Profit and Loss Account. During the current year the same have been regrouped under “other operational income” in the Profit and Loss Account to reflect the proper classification. 34. Interest income, has been shown separately as a part of “other income” during current year. 35. Figures for the previous year have been regrouped/reclassified wherever necessary. As per our report attached SHARP & TANNAN Chartered Accountants by the hand of F. M. KOBLA Partner Membership No.15882 Mumbai, May 28, 2009 A. M. NAIK Chairman & Managing Director Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 28, 2009 ATTENDANCE SLIP Registered Office: L&T House, Ballard Estate, Mumbai - 400 001. ANNUAL GENERAL MEETING - AUGUST 28, 2009 AT 3.00 P.M. NAME & ADDRESS OF THE REGISTERED SHAREHOLDER DP. Id Client Id/ Folio No. No. of Shares I certify that I am a registered shareholder/proxy for the registered shareholder of the Company. I hereby record my presence at the ANNUAL GENERAL MEETING of the Company at Birla Matushri Sabhagar, 19, Marine Lines, Mumbai - 400 020 on Friday, August 28, 2009. Note: Please complete this and hand it over at the entrance of the hall. SIGNATURE Registered Office: L&T House, Ballard Estate, Mumbai - 400 001. FORM OF PROXY ANNUAL GENERAL MEETING - AUGUST 28, 2009 AT 3.00 P.M. I/We .............................................................................................................................................................................. of ............................................ in the district of.........................................................being a member/members of LARSEN & TOUBRO LIMITED hereby appoint ..................................................................................................... of ............................................ in the district of ................................................................................ or failing him ................................................ of .................................. in the district of ................................................................ as my/our proxy to vote for me/us on my/our behalf at the ANNUAL GENERAL MEETING of the Company to be held on Friday, August 28, 2009 and at any adjournment thereof. Signed this ............................. day of ................................2009. DP. Id Client Id/ Folio No. No. of Shares Affix a 15 paise Signature .................................................... Revenue Stamp Note: This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting. . t d L . t v P s r e n i r t P t a m a K y b d e t n i r P 

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