Larsen & Toubro Annual Report 2010

Plain-text annual report

Regd. Office : L&T House, Ballard Estate, Mumbai 400 001 2) 3) 4) 5) 6) 7) 8) 9) NOTICE NOTICE IS HEREBY GIVEN THAT the Sixty-fifth Annual General Meeting of LARSEN & TOUBRO LIMITED will be held at Birla Matushri Sabhagar, 19, Marine Lines, Mumbai - 400 020 on Thursday, August 26, 2010 at 3:00 p.m. to transact the following business :- 1) To consider and adopt the Balance Sheet as at March 31, 2010, the Profit & Loss Account for the year ended on that date and the Reports of the Board of Directors and Auditors thereon; To declare a dividend on equity shares; To appoint a Director in place of Mrs. Bhagyam Ramani, who retires by rotation and is eligible for re-appointment; To appoint a Director in place of Mr. Subodh Bhargava, who retires by rotation and is eligible for re-appointment; To appoint a Director in place of Mr. J. P. Nayak, who retires by rotation and is eligible for re-appointment; To appoint a Director in place of Mr. Y. M. Deosthalee, who retires by rotation and is eligible for re-appointment; To appoint a Director in place of Mr. M. M. Chitale, who retires by rotation and is eligible for re-appointment; To appoint a Director in place of Mr. N. Mohan Raj, who retires by rotation and is eligible for re-appointment; To consider and, if thought fit, to pass with or without modification(s), as an ORDINARY RESOLUTION the following: “RESOLVED THAT pursuant to Section 269 and other applicable provisions, if any, of the Companies Act, 1956, read with Schedule XIII of the said Act, approval be and is hereby granted to the re-appointment of Mr. Y. M. Deosthalee, as the Whole-time Director of the Company with effect from March 3, 2010 upto and including September 5, 2011. RESOLVED FURTHER THAT Mr. Y. M. Deosthalee, in his capacity as the Whole-time Director, be paid remuneration as may be fixed by the Board, from time to time, within the limits approved by the members as per the details given in the explanatory statement.” 10) To consider and, if thought fit, to pass with or without modification(s), as an ORDINARY RESOLUTION the following: “RESOLVED THAT pursuant to Section 269 and other applicable provisions, if any, of the Companies Act, 1956, read with Schedule XIII of the said Act, approval be and is hereby granted to the re-appointment of Mr. M. V. Kotwal, as the Whole-time Director of the Company for a period of five years with effect from August 27, 2010. RESOLVED FURTHER THAT Mr. M. V. Kotwal, in his capacity as the Whole-time Director, be paid remuneration as may be fixed by the Board, from time to time, within the limits approved by the members as per the details given in the explanatory statement.” 1 11) To consider and, if thought fit, to pass with or without modification(s), as a SPECIAL RESOLUTION the following: “RESOLVED THAT subject to the provisions of Sections 198, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956, the Non-Executive Directors of the Company be paid, in addition to the sitting fees for attending the meetings of the Board or Committees thereof, a commission of an amount not exceeding the limit of 1% of the net profits of the Company per annum in the aggregate as specified in the first proviso to Section 309(4) of the Companies Act, 1956, for a period of five years from the financial year 2010-2011. RESOLVED FURTHER THAT the quantum of commission payable to each of the Non-Executive Directors for each year may be decided by the Board as it may deem fit.” 12) To consider and, if thought fit, to pass with or without modification(s), as a SPECIAL RESOLUTION the following: “RESOLVED THAT in supersession of all previous resolutions in this regard and in accordance with the provisions of Section 81(1A) and other applicable provisions, if any, of the Companies Act, 1956, Foreign Exchange Management Act, 1999, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (‘SEBI Regulations’), Listing Agreements entered into by the Company with the Stock Exchanges where the shares of the Company are listed, enabling provisions in the Memorandum and Articles of Association of the Company as also provisions of any other applicable laws, rules and regulations (including any amendments thereto or re-enactments thereof for the time being in force) and subject to such approvals, consents, permissions and sanctions of the Securities and Exchange Board of India (SEBI), Government of India (GOI), Reserve Bank of India (RBI) and all other appropriate and/or concerned authorities, or bodies and subject to such conditions and modifications, as may be prescribed by any of them in granting such approvals, consents, permissions and sanctions which may be agreed to by the Board of Directors of the Company (‘Board’) (which term shall be deemed to include any Committee which the Board may have constituted or hereafter constitute for the time being exercising the powers conferred on the Board by this resolution), the Board be and is hereby authorized to offer , issue and allot in one or more tranches, to Investors whether Indian or Foreign, including Foreign Institutions, Non-Resident Indians, Corporate Bodies, Mutual Funds, Banks, Insurance Companies, Pensions Funds, Individuals or otherwise, whether shareholders of the Company or not, through a public issue and/or on a private placement basis, foreign currency convertible bonds and/ or equity shares through depository receipts and/or bonds with share warrants attached including by way of Qualified Institutions Placement (‘QIP’), to Qualified Institutional Buyers (‘QIB’) in terms of Chapter VIII of the SEBI Regulations, through one or more placements of Equity Shares/Fully Convertible Debentures (FCDs)/Partly Convertible Debentures (PCDs)/Non-Convertible Debentures (NCDs) with warrants or any securities (other than warrants) which are convertible into or exchangeable with equity shares at a later date (hereinafter collectively referred to as “Securities”), secured or unsecured so that the total amount raised through the Securities shall not exceed US$600 mn or INR 2700 crore, if higher (including green shoe option) as the Board may determine and where necessary in consultation with the Lead Managers, Underwriters, Merchant Bankers, Guarantors, Financial and/ or Legal Advisors, Rating Agencies/ Advisors, Depositories, Custodians, Principal Paying/Transfer/Conversion agents, Listing agents, Registrars, Trustees, Auditors, Stabilizing agents and all other Agencies/Advisors. RESOLVED FURTHER THAT for the purpose of giving effect to the above, the Board be and is hereby also authorised to determine the form, terms and timing of the issue(s), including the class of investors to whom the Securities are to be allotted, number of Securities to be allotted in each tranche, issue price, face value, premium amount in issue/ conversion/ exercise/ redemption, rate of interest, redemption period, listings on one or more stock exchanges in India or abroad as the Board may in its absolute discretion deems fit and to make and accept any modifications in the proposals as may be required by the authorities involved in such issue(s) in India and/or abroad, to do all acts, deeds, matters and things and to settle any questions or difficulties that may arise in regard to the issue(s). RESOLVED FURTHER THAT in case of QIP issue it shall be completed within 12 months from the date of this Annual General Meeting. RESOLVED FURTHER THAT in case of QIP issue the relevant date for determination of the floor price of the Equity Shares to be issued shall be - i) in case of allotment of equity shares, the date of meeting in which the Board decides to open the proposed issue. in case of allotment of eligible convertible securities, either the date of the meeting in which the Board decides to open the issue of such convertible securities or the date on which the holders of such convertible securities become entitled to apply for the equity shares, as may be determined by the Board. ii) RESOLVED FURTHER THAT the Equity Shares so issued shall rank pari passu with the existing Equity Shares of the Company in all respects. RESOLVED FURTHER THAT the Equity Shares to be offered and allotted shall be in dematerialized form. RESOLVED FURTHER THAT for the purpose of giving effect to any offer, issue or allotment of Securities the Board, be and is hereby authorised on behalf of the Company to do all such acts, deeds, matters and things as it may, in absolute discretion, deem necessary or desirable for such purpose, including without limitation, the determination of the terms thereof, for entering into arrangements for managing, underwriting, marketing, listing and trading, to issue placement/offer documents and to sign all deeds, documents and writings and to pay any fees, commissions, remuneration, expenses relating thereto and with power on behalf of the Company to settle all questions, difficulties or doubts that may arise in regard to such offer(s) or issue(s) or allotment(s) as it may, in its absolute discretion, deem fit. RESOLVED FURTHER THAT the Board be and is hereby authorised to appoint Lead Manager(s) in offerings of Securities and to remunerate them by way of commission, brokerage, fees or the like and also to enter into and execute all such arrangements, agreements, memoranda, documents, etc. with Lead Manager(s). RESOLVED FURTHER THAT the Company do apply for listing of the new Equity Shares as may be issued with the Bombay Stock Exchange Limited and National Stock Exchange of India Limited or any other Stock Exchange(s). RESOLVED FURTHER THAT the Company do apply to the National Securities Depository Limited and/or Central Depository Services (India) Limited for admission of the above said Equity Shares. RESOLVED FURTHER THAT the Board be and is hereby authorised to create necessary securities on such of the assets and properties (whether present or future) of the Company in respect of facilities obtained as above and to approve, accept, finalize and execute facilities, sanctions, undertakings, agreements, promissory notes, credit limits and any of the documents and papers in connection with availing of the above facilities. RESOLVED FURTHER THAT the Board be and is hereby authorised to delegate all or any of the powers herein conferred in such manner as they may deem fit.” 13) To appoint Auditors and fix their remuneration and for that purpose to pass with or without modification(s), as a SPECIAL RESOLUTION the following: “RESOLVED THAT the Company‘s Auditors, M/s Sharp & Tannan, Chartered Accountants (ICAI Registration No. 109982W), who retire but, being eligible, offer themselves for re-appointment, be and are hereby re-appointed as Auditors of the Company including all its branch offices for holding the office from the conclusion of this Meeting until the conclusion of the next Annual General Meeting at a remuneration of Rs. 90,00,000/- (Rupees Ninety Lac Only) exclusive of service tax, traveling and other out of pocket expenses.” By order of the Board of Directors For LARSEN & TOUBRO LIMITED N. HARIHARAN COMPANY SECRETARY Mumbai, May 17, 2010 Registered Office: L&T House, Ballard Estate, Mumbai 400 001 2 Notes: [a] The information required to be provided under the Listing Agreement entered into with various Stock Exchanges, regarding the Directors who are proposed to be appointed/re-appointed and the relative Explanatory Statement pursuant to Section 173[2] of the Companies Act, 1956 in respect of the business under items 9 to 13 set out above are annexed hereto. [f] Members/Proxies should bring their attendance slips duly completed for attending the Meeting. [g] Pursuant to Section 205A(5) of the Companies Act, 1956 the unpaid dividends that are due for transfer to the Investor Education and Protection Fund are as follows: Dividend No. Date of Due for Declaration year ended Transfer on For the [b] A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. 71 72 22.08.2003 31.03.2003 26.09.2010 23.09.2004 31.03.2004 29.10.2011 [c] The Register of Members and Transfer Books of the Company will be closed from Thursday, August 19, 2010 to Thursday, August 26, 2010 (both days inclusive). [d] Members are requested to furnish bank details, change of address etc. to Sharepro Services (India) Private Limited at Samhita Warehousing Complex, Bldg. No.13 A B, Gala No. 52 to 56, Near Sakinaka Telephone Exchange, Andheri - Kurla Road, Sakinaka, Mumbai - 400 072, who are the Company’s Registrar and Share Transfer Agents so as to reach them latest by Wednesday, August 18, 2010, in order to take note of the same. In respect of members holding shares in electronic mode, the details as would be furnished by the Depositories as at the close of the aforesaid date will be considered by the Company. Hence, Members holding shares in demat mode should update their records at the earliest. [e] All documents referred to in the accompanying Notice and the Explanatory Statement are open for inspection at the Registered Office of the Company on all working days, except Saturdays, between 11.00 a.m. and 1.00 p.m. up to the date of the Annual General Meeting. 73 (Spl.) 25.10.2004 31.03.2005 01.12.2011 74 75 26.08.2005 31.03.2005 01.10.2012 25.08.2006 31.03.2006 30.09.2013 76 (Int.) 13.03.2007 31.03.2007 18.04.2014 77 (Spl.) 03.07.2007 31.03.2008 08.08.2014 78 79 80 24.08.2007 31.03.2007 29.09.2014 29.08.2008 31.03.2008 05.10.2015 28.08.2009 31.03.2009 04.10.2016 Members who have not encashed their dividend warrants pertaining to the aforesaid years may approach the Company/its Registrar, for obtaining payments thereof atleast 20 days before they are due for transfer to the said fund. [h] Investor Grievance Redressal: The Company has designated an exclusive e-mail id viz. igrc@lth.ltindia.com to enable Investors to register their complaints, if any. 3 EXPLANATORY STATEMENT As required by Section 173(2) of the Companies Act, 1956, the following Explanatory Statement sets out material facts relating to the business under Item Nos. 9 to 13 of the accompanying Notice dated May 17, 2010. Item No. 9 : The Board of Directors of the Company at its Meeting held on February 26, 2010, re-appointed Mr. Y. M. Deosthalee, as a Whole-time Director of the Company with effect from March 3, 2010 upto and including September 5, 2011, subject to the approval of the members in the Annual General Meeting. Mr. Y. M. Deosthalee is a qualified Chartered Accountant and holds a degree in law. He joined the Company in 1974 and has been with the Company since then. Through the years, he has held various offices all over the country till he became General Manager (Finance) in the year 1990. While handling the Finance portfolio, he was also in charge of Personnel & Human Resource Development (HRD). In March 1995, he was appointed on the Board of Directors of the Company as Senior Vice President (Finance). He is presently designated as the Chief Financial Officer of the Company. Mr. Deosthalee was instrumental in setting up L&T Finance Limited, which is one of the leading NBFC’s in the country today, engaged in asset backed lending. In the last few years, the Company has expanded its presence in the Financial Services sector. Under Mr. Deosthalee’s leadership, the Company has started Infrastructure Project Finance, General Insurance and AMC businesses. The Company has made a major foray into Infrastructure Project Development through its participation in the Government’s Public Private Partnership programme. The Company today has concessions for many Roads, Ports and other assets. Mr. Deosthalee oversees the operations of this business. Mr. Deosthalee plays an important role in providing strategic direction to Larsen & Toubro Infotech Limited, a subsidiary of the Company, offering software services to global customers. He continues to head the HRD function and was also instrumental in establishing Shared Services Centre in the Company. Besides the above activities, Mr. Deosthalee is also on the Board of several Subsidiary and Associate companies of the Company. He is a member of the Takeover Regulation Advisory Committee (TRAC) constituted by Securities and Exchange Board of India (SEBI) to review the SEBI (Substantial Acquisitions of Shares and Takeover) Regulations, 1997 (Takeover Regulations) and to suggest recommendations for amendment to the Takeover Regulations as it considers necessary. Mr. Deosthalee is also the Co-Chairman of FICCI’s Committee on Corporate Finance. Part III, of Schedule XIII of the Companies Act, 1956 provides that the appointment and remuneration of Managing Directors and Whole-time Directors in accordance with Part I and Part II of the Schedule shall be subject to approval by resolution of the shareholders in a General Meeting. By a Special Resolution passed on September 23, 2004, and amended on August 25, 2006, the shareholders have fixed the maximum limits within which the Board was delegated authority to decide the remuneration of Whole-time Directors of the Company. Pursuant to this, the Board has fixed the remuneration payable to Mr. Y. M. Deosthalee during his tenure as Whole- time Director. The agreement entered into by the Company with Mr. Y. M. Deosthalee, in respect of his re-appointment as Whole-time Director, contains terms and conditions of his re-appointment including remuneration. As from March 3, 2010, during the period of this agreement and so long as the Whole-time Director performs his services as per the terms and conditions provided by this agreement, he shall be entitled to the following: Salary : Rs.6,30,000 (Rupees Six Lakh Thirty Thousand only) per month in the scale of Rs.4,00,000 - Rs.25,000 - Rs.6,00,000 - Rs.30,000 - Rs.7,50,000, with the annual increment due on April 1 every year. Commission : 0.125% of the profits after tax of the Company for and from the year 2009-10. Perquisites : Upto Rs.15 lakh per annum including free furnished accommodation or upto Rs.12 lakh excluding free furnished accommodation. Others : Company’s contribution to retirement funds, official use of car / driver and communication facilities for Company’s business. The Resolution at Item No. 9 is proposed for approval of the members for re-appointment of Mr. Y. M. Deosthalee, as the Whole-time Director as contemplated by Part III of Schedule XIII of the Companies Act, 1956 and other applicable provisions, if any. The Board recommends approval of the re-appointment of Mr. Y. M. Deosthalee, as Whole-time Director of the Company. Mr. Y. M. Deosthalee, the Whole-time Director of the Company, being the appointee, is interested in the proposed Resolution. The Agreement entered into with Mr. Y. M. Deosthalee will be open for inspection by members at the Registered Office of the Company on all working days [except Saturday] between 11.00 a.m. and 1.00 p.m. up to the date of the Annual General Meeting. This explanation together with the accompanying Notice is and should be treated as an abstract of the terms of re-appointment of Mr. Y. M. Deosthalee, as the Whole-time Director of the Company under Section 302 of the Companies Act, 1956. Item No. 10 : The Board of Directors of the Company at its Meeting held on May 17, 2010, re-appointed Mr. M. V. Kotwal, as a Whole-time Director of the Company for a period of five years with effect from August 27, 2010 upto and including August 26, 2015, subject to the approval of the members in the Annual General Meeting. Mr. M. V. Kotwal is a graduate Mechanical Engineer from Sardar Patel College of Engineering, Mumbai. After graduation in Engineering in 1968, he joined the Company at Powai Works, Mumbai, as a junior engineer. After some years of training as a first-line supervisor in Light Fabrication Workshops at Powai, he was selected as part of a small group formed to execute orders for India’s Nuclear Power Program. Mr. Kotwal was associated in various capacities with the manufacture of India’s first Nuclear Power Reactor (235 MW) as well as all the critical reactor equipment. Starting with planning, he was later responsible for the entire manufacturing operations of Nuclear Power Equipment of the Company. Mr. Kotwal’s next major challenge was to manufacture Rocket Motor Casings for India’s Space Research Program. He was given charge of the manufacture of casings for Satellite Launch Vehicles - SLV 3, ASLV as well as PSLV. He was part of a team 4 to select and order some special equipment after visiting a number of companies in the USA. Mr. Kotwal underwent specialized training in the manufacture of critical Paper Machinery, at the works of M/s Voith-Germany and Cement Machinery at M/s F L Smidth - Denmark. A major expansion of the Company’s manufacturing base was undertaken in Hazira. He was part of the team transferred in ’86 to Hazira. He was associated with all activities including selection and installation of machinery, recruitment and training of manpower, transfer of manufacturing know-how from Powai and manufacturing activities in the workshops. Today, Hazira Works is recognized as one of the most advanced Heavy Fabrication facilities matching Global standards. Currently, as a Member of the Board of L&T and Senior Executive Vice President heading the Heavy Engineering Division (HED), Mr. Kotwal is responsible for two Operating Companies - Heavy Equipment & Systems and Shipbuilding. The Heavy Equipment & Systems Operating Company comprises different Strategic Business Units dealing with Domestic as well as International business, covering Equipment & Systems for Refineries, Fertiliser & Chemical Process Plants, Power Plants, Nuclear Power, Defence and Aerospace industries. A number of Workshops & facilities located at Powai, Hazira, Baroda, Vizag, Bangalore, Coimbatore, Talegaon and Oman form part of the Operating Company. The Shipbuilding Operating Company includes an operating shipyard at Hazira and a large new shipyard under construction near Chennai. Part III, of Schedule XIII of the Companies Act, 1956 provides that the appointment and remuneration of Managing Directors and Whole-time Directors in accordance with Part I and Part II of the Schedule, shall be subject to approval by resolution of the shareholders in a general meeting. By a Special Resolution passed on September 23, 2004, and amended on August 25, 2006, the shareholders have fixed the maximum limits within which the Board was delegated authority to decide the remuneration of Whole-time Directors of the Company. Pursuant to this, the Board has fixed the remuneration payable to Mr. M. V. Kotwal during his tenure as Whole-time Director. The agreement to be entered into by the Company with Mr. M. V. Kotwal, in respect of his re-appointment as Whole-time Director, would contain terms and conditions of his re- appointment including remuneration. As from August 27, 2010, during the period of this agreement and so long as the Whole-time Director performs his services as per the terms and conditions provided by this agreement, he shall be entitled to the following: Salary : Upto Rs.5,50,000 (Rupees Five Lakh Fifty Thousand only) per month in the scale of Rs.4,00,000 - Rs.25,000- Rs.6,00,000- Rs.30,000 - Rs.7,50,000 with annual increment due on April 1 every year. Commission : 0.1% per annum on Profits After Tax of the Company for and from the year 2010-11. Perquisites : Upto Rs.12 lakh per annum including free furnished accommodation or upto Rs.9 lakh excluding free furnished accommodation. Others : Company’s contribution to retirement funds, official use of car / driver and communication facilities for Company’s business. The Resolution at Item No. 10 is proposed for approval of the members for re-appointment of Mr. M. V. Kotwal, as the Whole- time Director as contemplated by Part III of Schedule XIII of the Companies Act, 1956 and other applicable provisions, if any. The Board recommends approval of the re-appointment of Mr. M. V. Kotwal, as Whole-time Director of the Company. Mr. M. V. Kotwal, the Whole-time Director of the Company, being the appointee, is interested in the proposed Resolution. The Agreement to be entered into with Mr. M. V. Kotwal will be open for inspection by members at the Registered Office of the Company on all working days [except Saturday] between 11.00 a.m. and 1.00 p.m. up to the date of the Annual General Meeting. This explanation together with the accompanying Notice is and should be treated as an abstract of the terms of re-appointment of Mr. M. V. Kotwal, as the Whole-time Director of the Company under Section 302 of the Companies Act, 1956. Item No. 11 : Presently, the Non-Executive Directors are paid commission not exceeding Rs. 90 lac per annum in the aggregate in terms of the resolution passed by the shareholders at the Annual General Meeting held on August 26, 2005. The said approval was valid for a period of five years with effect from the financial year 2005- 2006. The roles and responsibilities of Non-Executive Directors have undergone significant changes under Corporate Governance norms and made it more onerous for them, demanding their greater involvement in the supervision of the Company. The compensation payable to the Non-Executive Directors of companies should be adequate to attract independent professionals to take up these positions. This practice of payment of remuneration to Non-Executive Directors has been adopted by many leading companies in India. The performance of the Company has also been very buoyant over the past few years. The Company, as a part of its future growth strategy, intends to enlarge its business in the international markets. It would be in the interest of the Company to also have more expatriate expertise on its Board to build its brand in the international markets. Hence, approval of the shareholders is sought to enable the Company to make payment of remuneration in the form of commission to Non-Executive Directors, commensurate with their enhanced role and involvement, in any case not exceeding the limit of 1% of the net profits of the Company per annum in the aggregate, as specified in the first proviso to Section 309(4) of the Companies Act, 1956. The quantum of remuneration payable to each of the Non-Executive Directors within the aforesaid limit will be decided by the Board of Directors from year to year. This Resolution will be effective for a period of five years from April 1, 2010. The Directors recommend passing of the Resolution. All the Non-Executive Directors are or deemed to be, interested in the Resolution. Item No. 12 : The Company, as a part of its future growth strategy aims to emerge as a focused and strong engineering and construction company. The Company would need to invest in expanding its facilities to support a growing order book. Growth in business would also require a larger level of long term working capital. In addition to growing its existing areas of business, the Company plans to enter into and expand its presence in other ventures including infrastructure development projects. The Company may also consider suitable opportunities for inorganic growth. While it is expected that the internal generation of funds would partially finance this programme and debt raising would be 5 another source of funds, it is thought prudent for the Company to raise a part of the funding requirements for the said purposes as well as for such other corporate purposes as may be permitted under applicable laws through the issue of appropriate securities as defined in the resolution, in Indian or international markets. It is, therefore, proposed to raise an amount not exceeding US$600 mn or INR 2700 crore, if higher in one or more tranches, on such terms, in such manner, at such price or prices and at such time as may be considered appropriate by the Board, from the various categories of investors in the Indian or international markets as set out in the resolution. The fund raising programme may be through a mix of equity / equity-linked instruments, as may be appropriate. Members’ approval is sought for the issue of securities linked to or convertible into Equity Shares of the Company. Section 81 of the Companies Act, 1956, provides, inter alia, that whenever it is proposed to increase the subscribed capital of a company by allotment of further shares, such further shares shall be offered to the persons who on the date of the offer are holders of the equity shares of the company in proportion to the capital paid- up on those shares at that date unless the shareholders in a general meeting decide otherwise. The Listing Agreement executed by the Company with the Stock Exchanges also provides that the Company shall, in the first instance, offer all Securities for subscription pro rata to the Shareholders unless the Shareholders in a general meeting decide otherwise. Members’ approval is sought for issuing any such instrument as the Company may deem appropriate to parties other than the existing shareholders. Whilst no specific instrument has been identified at this stage, in the event the Company issues any equity linked instrument, the issue will be structured in a manner such that the additional share capital that may be issued would not be more than 5% of the paid-up capital of the Company (as at the date when the Board recommended passing of the Special Resolution). The equity shares, if any, allotted on issue, conversion of Securities or exercise of warrants shall rank in all respects pari passu with the existing Equity Shares of the Company. The raising of the above resources would be well within the borrowing limit of Rs.2000 crore over and above the aggregate of paid up capital and free reserves of the Company as approved by the Members at the Annual General Meeting of the Company held on 21st August, 1989. The Company may also opt for issue of securities through Qualified Institutions Placement. A Qualified Institutions Placement (QIP) of the shares of the Company would be less time consuming and more economical. Accordingly, the Company may issue securities by way of a QIP in terms of Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (‘SEBI Regulations’). These securities will be allotted only to Qualified Institutional Buyers (QIBs) as per the SEBI Regulations and there will be no issue to retail individual investors and existing retail shareholders. The resolution proposed is an enabling resolution and the exact price, proportion and timing of the issue of the securities will be decided by the Board based on an analysis of the specific requirements after consulting all concerned. Therefore, the proposal seeks to confer upon Board the absolute discretion to determine the terms of issue in consultation with the Lead Managers to the Issue. As per Chapter VIII of the SEBI Regulations, an issue of securities on QIP basis shall be made at a price not less than the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the “relevant date”. ii) The “relevant date” for the above purpose, shall be - i) in case of allotment of equity shares, the date of meeting in which the Board decides to open the proposed issue in case of allotment of eligible convertible securities, either the date of the meeting in which the Board decides to open the issue of such convertible securities or the date on which the holders of such convertible securities become entitled to apply for the equity shares, as may be determined by the Board. The Stock Exchange for the same purpose is the Bombay Stock Exchange Limited / National Stock Exchange of India Limited. In accordance with the SEBI Regulations, special resolution of shareholders under Section 81(1A) of the Companies Act, 1956 is required for a QIP Issue. In case of QIP Issuance the special resolution has a validity period of 12 months before which allotments under the authority of said resolution should be completed. The Board of Directors recommend passing of the Special Resolution. None of the Directors is in any way concerned or interested in the proposed resolution except to the extent of his/her holding of equity shares in the Company. Item No. 13 : Section 224A of the Companies Act, 1956 provides that in the case of a company in which not less than 25% of the subscribed share capital is held whether singly or in any combination, by: a public financial institution or a Government company or a] Central Government or any State Government, or any financial or other institution established by any Provincial or State Act in which a State Government holds not less than 51% of the subscribed share capital, or a nationalized bank or an insurance company carrying on general insurance business; c] b] the appointment or re-appointment at each Annual General Meeting of an Auditor or Auditors shall be made by a Special Resolution. The total share capital held by public financial institutions, nationalized banks and nationalized insurance companies is over 25% of the subscribed share capital of the Company. It is therefore necessary that the re-appointment of Sharp & Tannan, Auditors should be made by a Special Resolution. The Auditors, have informed us vide letter dated May 13, 2010, that their appointment if made would be within the limits prescribed u/s. 224(1B) of the Companies Act, 1956. The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI. The Directors recommend the Resolution for approval of the shareholders. None of the Directors of the Company is concerned or interested in the Resolution. By order of the Board of Directors For LARSEN & TOUBRO LIMITED N. HARIHARAN COMPANY SECRETARY Mumbai, May 17, 2010 Registered Office: L&T House, Ballard Estate, Mumbai 400 001 6 DETAILS OF DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT AT THE FORTHCOMING ANNUAL GENERAL MEETING (PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT) (ANNEXURE TO NOTICE DATED MAY 17, 2010) Name of the Director Mr. J. P. Nayak Mr. Y. M. Deosthalee Mr. M. V. Kotwal Mr. M. M. Chitale Date of Birth November 13, 1943 September 6, 1946 October 10, 1948 November 16, 1949 March 3, 1995 March 3, 1995 August 27, 2005 July 6, 2004 B. Com, L.L.B., A.C.A. B. E. - Mech, University of B.Com, F.C.A. Graduate in Mechanical Engineering and Post Graduate Diploma in Production Engineering General Management and Manufacturing & Marketing of C o n s t r u c t i o n / I n d u s t r i a l Equipment and Cement Vast experience in the fields of Finance and Infotech Business; General Management Mumbai Vast experience in Heavy Engineering business including manufacture of critical equipment for Nuclear Power and Space Research Program Date of Appointment on the Board Qualifications Expertise Directorships held in other public companies (excluding foreign and private companies) Chairmanships/ Memberships of committees across public companies 1. Audco India Limited 2. L&T Plastics Machinery Limited 3. Tractor Engineers Limited 4. L&T Strategic Management Limited 5. Ewac Alloys Limited 6. L&T-Komatsu Limited 7.. NAC Infrastructure Equipment Limited 8. L&T Natural Resources Limited Chairman Audit Committee - 1. Tractor Engineers Limited 2. Audco India Limited 3. Ewac Alloys Limited 4. L&T-Komatsu Limited 5. L&T Plastics Machinery Limited Member Shareholders'Grievance Committee - 1. Larsen & Toubro Limited - - 1. L&T Finance Limited 2. L&T Power Development Limited 3. Larsen & Toubro Infotech Limited 4. L&T Infrastructure Finance Company Limited 5. L&T Infrastructure Development Projects Limited 6. L&T General Insurance Company Limited 7. The Dhamra Port Company Limited 8. L&T Capital Holdings Limited 9. L&T Mutual Fund Trustee Limited Chairman Audit Committee - 1. L&T Finance Limited 2. Larsen & Toubro Infotech Limited 3. The Dhamra Port Company Limited 4. L&T Infrastructure Development Projects Limited 5. L&T Capital Holdings Limited Member Audit Committee - 1. L&T General Insurance Company Limited 2. L&T Mutual Fund Trustee Limited Vast experience in the field of Finance and Accounts 1. ASREC (India) Limited 2. Ram Ratna Wires Limited 3. Shriram Transport Finance Company Limited 4. ONGC Mangalore Petrochemicals Limited 5. ONGC Petro Additions Limited 6. ITZ Cash Card Limited 7. Essel Propack Limited 8. Foseco India Limited Chairman Audit Committee - 1. Larsen & Toubro Limited 2. ITZ Cash Card Limited 3. Foseco India Limited Member Audit Committee - 1. ASREC (India) Limited 2. Ram Ratna Wires Limited 3. Shriram Transport Finance Company Limited 4. Essel Propack Limited Shareholders'/Investors' Grievance Committee - 1. Foseco India Limited Shareholding of Non- Executive Directors Not Applicable Not Applicable Not Applicable 550 Shares Relationships between directors inter-se Nil Nil Nil Nil 7 DETAILS OF DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT AT THE FORTHCOMING ANNUAL GENERAL MEETING (PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT) (ANNEXURE TO NOTICE DATED MAY 17, 2010) Name of the Director Mr. N. Mohan Raj Mr. Subodh Bhargava Mrs. Bhagyam Ramani Date of Birth Date of Appointment on the Board November 29, 1953 March 30, 1942 May 29, 2007 July 3, 2007 January 9, 1952 July 19, 2007 Qualifications M.A. (Economics) Mechanical Engineering [University of Roorkee] M.A. (Economics), Mumbai University Expertise Vast experience in the fields of Insurance, Marketing, Investment, Mutual Funds and Administration Directorships held in other public 1. HEG Limited companies (excluding foreign and private companies) Mr. Subodh Bhargava, a Mechanical Engineer is Chairman Emeritus of Eicher Group. He has held and continues to hold many important positions with various Government Committees and in the field of Education with close association in technical and management education in India 1. Wartsila India Limited 2. Tata Communications Limited 3. Tata Steel Limited 4. Samtel Color Limited 5. TRF Limited 6. Carborundum Universal Limited 7. GlaxoSmithKline Consumer Has 30 years of experience in Investment Operations & presently Director and General Manager in charge of Investment & Accounts in GIC 1. General Insurance Corporation 2. of India IDBI Trusteeship Services Limited 3. Agricultural Insurance Company Limited 4. National Stock Exchange of Healthcare Limited India Limited Chairmanships /Memberships of committees across public companies Member Audit Committee - 1. 2. HEG Limited Larsen & Toubro Limited 8. Batliboi Limited 9. SRF Limited 10. Tata Motors Limited 11. Wireless - TT Info Services Limited Chairman Audit Committee - 1. Samtel Color Limited 2. Carborundum Universal Limited 3. GlaxoSmithKline Consumer Healthcare Limited 4. Tata Steel Limited Member Audit Committee - 1. Tata Communications Limited 2. Wartsila India Limited 3. TRF Limited 4. SRF Limited 5. Batliboi Limited Member Audit Committee - 1. Larsen & Toubro Limited Audit & Investment Committee - IDBI Trusteeship Services 1. Limited 2. Agricultural Insurance Company Limited Shareholding of Non-Executive Directors Relationships between directors inter-se * held jointly with LIC ** held jointly with GIC *200 Shares 500 Shares **200 Shares Nil Nil Nil 8 Dear Shareholders, In the year under review, L&T weathered the impact of the global economic slowdown that began in FY08, and whose after effects continued well into FY10. The past year was also characterised by a period of political uncertainty due to the General Elections in the first half of the year, and a prolonged bout of inactivity when orders for infrastructure and hydrocarbon projects were deferred, and customers slowed down their ongoing expansion initiatives. L&T successfully navigated these crosscurrents for the better part of the year, and capitalised on a more conducive environment during the last few months of FY10 when both ordering and execution conditions turned favourable. The ongoing efforts taken during this period have paid off, and your Company has, once again, performed well. A. M. Naik Chairman & Managing Director Performance Overview L&T posted good results on all key parameters during FY10. Despite the relative slow start during the first 9 months of the year, yearly sales registered a growth of 9% due to favourable project execution conditions in the last quarter of FY10. Fresh Order Inflows and the quantum of the Order Book always determine your Company’s ability to thrive and grow. Results on both these counts have been significant despite a disappointing business environment in international markets. L&T achieved an impressive 35% growth in Order Inflows for FY10. Consequently, the Order Book position stood at a record Rs 100,239 crore as on end FY10. This gives the Company clear revenue visibility over the next couple of years. Margins have, yet again, registered an improvement and your Company is hopeful of sustaining margins at a level close to this, despite volatile commodity prices and competition. Aided by cost efficient execution and risk mitigation measures, Profit after Tax at Rs. 4,376 crore grew 26% during the year. Robust operating cash flows were also achieved, supported by improved working capital management across businesses. The performance of the Subsidiary & Associate companies during the year has also been encouraging. The Group total income for the year reached Rs.43,970 crore while the Group Profit after Tax recorded an impressive Rs.5,451 crore - an increase of 44% year on year. It gives me pleasure to mention that the Board has recommended a 1 dividend of Rs. 12.50 per equity share on a face value of Rs. 2 per share year. The the corresponding dividend during the previous fiscal stood at Rs. 10.50 per share. for Preparing for accelerated growth: The structural changes and growth measures implemented by your Company, even during the turbulent phase of FY09 and FY10, have taken root and are now integral to the organisation. (cid:2) Talent Management: canvas L&T’s reputation as a stable employment destination with an for unparalleled professional development has helped the Company draw talented manpower across the board. Robust HR practices – such as differentiated reward systems, stock option plans and career growth opportunities have played their part in attracting and retaining skilled manpower as part of L&T’s capability building exercise. (cid:2) Technology: Thrust on technology continues to be a focus area of your Company and it has successfully executed large, technologically complex projects that give it a unique and dominant position in the domestic infrastructure space. The Company continues to forge JVs / alliances with technology majors whenever the need arises. On the product development front, the Electrical & Electronics Division continues to view R&D as a core business driver, and filed 128 patents in 2009-2010, making it the third consecutive financial year in which over 100 patents were filed. 2 (cid:2) Business Integration: been L&T constantly seeks to achieve higher levels of vertical integration as a means to strengthen competitive advantage, enhance margins, acquire greater control over business segments and bid for larger, more complex jobs. This successfully has accomplished in several sectors: in Roads and Urban Infrastructure projects, the Company spans the ‘design-build-own’ space; in the power sector, L&T straddles the entire value chain of ‘design- manufacture-EPC-ownership’; and in upstream oil and gas, your gainfully has Company complemented its complex platform design expertise and modular fabrication facility, with its capability to install platforms at sea. In consonance with these on-going initiatives, corporate management ensures that L&T presents an integrated front to every end-customer. (cid:2) IT in our Business: L&T believes that a strong IT- business connect gives it a competitive edge. The Company constantly seeks to automate business and back-end processes in an effort to seamlessly integrate different parts of the organisation. With all businesses running integrated back-end ERP systems, your Company is focusing on advanced decision support systems to give it an advantage in the marketplace. (cid:2) Capacity Expansion: Over the last couple of years, we have added capacities to meet the increasing volumes of business which the Company hopes to garner. At the Group A in the level, Company’s supercritical power plant manufacturing ventures are being commissioned. Heavy Engineering facility adjoining the Company’s Modular Fabrication Oman was facility FY10. commissioned Construction L&T’s Shipbuilding facility cum container port at Kattupalli, near Chennai is underway. The port at Dhamra in Orissa will be soon ready for commissioning, and is expected to provide a fillip to L&T’s Developmental (Asset Ownership) business. in of Renewable Energy: In the context of the global focus on clean energy, the Company has embarked on multiple initiatives in Solar including projects Photovoltaic and manufacture of engineered large size castings for critical applications in wind power turbines. L&T has also targeted installed capacity of 2000 MW in Hydel Power as a Developer and / or EPC Contractor over the next few years. Power Sustainable Development: Your Company acknowledges its responsibility to safeguard the interest of future generations by implementing initiatives to conserve natural resources and protect environment. We have proactively set targets in these areas in line with Government of India's action plan on climate change. Our initiatives to train people from the weaker sections of the society and make them employable have been acclaimed by the august industry bodies, such as, FICCI and BCCI. L&T's Sustainability Report 2009 has secured international distinction, emerging as the only in awards entry from Asia, announced by Global Reporting Initiative at Amsterdam. Economic Scenario: The Company seeks to exploit opportunities available in the domestic market and is viewed by investors as synonymous to an Infrastructure builder to the nation. While some macro-economic parameters such as high fiscal deficit, inflation, increasing interest rates, rising commodity prices and ripples from the European debt crisis do cause some concern, other vital economic parameters like GDP Industrial Index of growth, Production, Capital Formation, high domestic savings rate, favourable demographic profile, ample liquidity, credit expansion and fiscal consolidation measures are healthy drivers for the economic progress of the country. The overall economic canvas appears to be robust and conducive to the continued growth of L&T during the year ahead. Gross Outlook: We are quite hopeful of a healthy growth in Order Inflows during 2010- 2011. Sectors which hold promise of growth are: (cid:2) Infrastructure & Construction I. Roads and Railways The heightened activity in the Roads sector indicates that a spate of concessions is likely to be awarded on BOT basis this year. In the Railways business, L&T sees a diverse basket of opportunity in mass urban transit systems (metro station and mono development, stock manufacturing units for Indian Railways, railway sidings for rolling rails), industrial units, and opportunities in Dedicated Freight Corridor. II. Water This is an area that is likely to witness a significant increase in spends considering depleting water tables across the country and your Company hopes to expand its business in areas of bulk transmission, water treatment, desalination plants and waste water management. III. Urban Infrastructure The Company sees abundant prospects in ‘Design and Build’ projects in the areas of Real Estate, Hospitals, Educational Institutes and Hotels. IV. Mining, Metals & Material Handling The increased activity in mining, steel, ports and power sectors has given rise to a number of business opportunities which the Company hopes to tap in FY11. for design (cid:2) Heavy Engineering I. Heavy Industrial Equipment We continue to be globally respected and manufacture of heavy process plant equipment. This business is expected to grow steadily. The heavy fabrication facility set up under a JV in Oman was inaugurated during the year and will manufacture a range of equipment for the hydrocarbon and power sectors to cater to the growing markets in the GCC countries. II. Nuclear Power A large ordering of nuclear power projects tune of approximately Rs.100,000 crore is scheduled over the next 5 years in India. The Government has the to through announced to install 62,000 MW of nuclear power capacity by 2032, of which 25,000 MW is expected to be added by 2020. This will be partly done through indigenous technology driven reactors for a capacity addition of about 7,000 MW and the balance technology transfers from countries such as Russia, France and USA. L&T has a substantial role to play in the indigenisation programme through its own manufacturing & EPC capabilities. Towards this, we have signed MoUs with almost all the international nuclear technology suppliers, who have been selected for technology transfer and cooperation in India’s nuclear power ambition. In order to further meet these demands, L&T has set up a Joint Venture with Nuclear Power Corporation of India (NPCIL), to set up a Heavy Forging manufacturing facility at Hazira, Gujarat. We have also created and augmented dedicated nuclear reactors and steam generator manufacturing capacity at Hazira. While we already have complete solution for Turbine Island and Balance of Plant, we have decided to additionally invest in building our capabilities to be able to execute Nuclear Island, which will enable L&T to build complete Nuclear Plants on a turnkey basis. One of the Board Members has been assigned the task of spearheading this initiative and the Company is confident in playing a significant role in this emerging opportunity. III. Defence The Government policy initiative for private sector participation in Defence sector has been slow till 3 date. In order to strengthen India’s defence, we hope that changes will happen soon in Government Policy, which will enable L&T to meaningfully participate in the country’s defence production program. (cid:2) Thermal Power The Company is fully geared to cope up with the increasing demands in the Power Sector. I am pleased to inform you that the manufacturing facilities for Boilers and Turbines, which the Company had undertaken to construct in Joint Venture with Mitsubishi Heavy Industries of Japan, have started production activities. The remaining factories to manufacture Power Plant Auxiliaries are in an advanced stage of commissioning. With an average supercritical capacity of approx. 15,000MW expected to be added each year in the country, prospects in the Power Sector seem encouraging and the Company is in readiness to fully harness this potential, backed by its capability to execute complete EPC contracts for power plants. The large expected addition to the generation capacity is likely to boost demand for augmentation of the T&D network across the country. L&T seeks to capitalise on this boom by leveraging its capabilities and track record in setting up Transmission Lines and Substations. To meet this demand, in addition to the Company’s existing two factories, we are in the process of setting up a 3rd Transmission Tower Manufacturing facility in the Eastern part of India. (cid:2) Hydrocarbon India’s energy security needs and the expected hydrocarbon prospects 4 in the Middle East are likely to drive large spends in oil and gas exploration, production, refining facilities and petrochemical complexes. Your Company is poised to tap this business potential by exploiting its capabilities to deliver complex Oil and Gas platforms and solutions in both the upstream and mid / downstream spaces. to To cater the offshore requirements, a state-of-the art heavy lift-cum-pipe lay vessel has been built in Joint Venture with SapuraCrest Petroleum Berhad of Malaysia been commissioned. and has The Company’s 2 nd Modular Fabrication Yard at Oman has augmented its capabilities in the upstream sector. Additionally, to meet the increasing demands in the Hydrocarbon Upstream sector, the Company has undertaken to set up its 3rd Modular Fabrication Yard at Kattupalli, near Chennai which will commence production shortly. the (cid:2) Electrical & Electronics After sluggish growth experienced during the previous year, this business witnessed a healthy turnaround in both growth and profitability in FY10 and is expected to maintain its leadership position in the domestic market in FY11. Our acquisition of medium voltage switchgear company (TAMCO) in Malaysia is doing very well and access to this technology has also helped the Company fill the void in its range of offerings in the Indian market thereby exploiting a larger spectrum of the Indian Switchgear market. In line with the Company’s policy to exit from its non-core businesses, we have sold the Petroleum Dispensing Pumps & Systems Business during the year. (cid:2) Machinery and Industrial Products Having gone through a period of slowdown in the industrial sectors in the recent past, most business units in this Division achieved a healthy recovery in both sales and margin in FY10. The Division expects to register a healthy performance in the coming year with the Construction and Mining machinery business poised for a smart growth. To meet the increasing demand in the Power Sector, a new plant for manufacture of Specialised Valves has commenced operations in Coimbatore. The Rubber Machinery facility in China has already gone into production and will help in providing more competitive offerings, while expanding the market reach. The Company’s manufacturing Campus at Kansbahal near Rourkela is undergoing capacity expansion, with the addition of Apron Feeders and Wheel Loaders in its product range. In addition, to tap the growing opportunities offered by the renewable energy sector, the Company has commissioned a brand new state-of-the-art foundry in Coimbatore for manufacturing Wind Mill Castings. In keeping with the Company’s policy to continually streamline the business portfolio, we have divested our stake in Voith Paper Technology (India) Limited. (cid:2) IT After last two years of slowdown in the IT sector, L&T is hopeful of a healthy growth in its IT business with the industry witnessing a recovery. Leveraging on its global presence, several initiatives have been undertaken to fully exploit this recovery: I. Achieved good progress in operationalising the IT connect to business in areas such as (a) deploying mobile PDA or phone in the insurance business, (b) improving agility of compliance in the BFSI sector, and (c) increasing efficiencies of investment banking brokerage business II. Undertaken several steps towards increasing the agility of manufacturing and process industry by interconnecting operations, business processes and product planning layers. Typical examples are ‘Digital oil field’ for live monitoring of complex offshore operations, ‘Prime Plant’ offering for reducing meantime between failure in process plants etc III. Deploying cutting edge technology like cloud computing and natural user interface IV. Launching the system integration business for large systems like e-governance, railway operations etc in India and the Gulf. footprint With a progressively larger and geographical expanding client base, the Company is confident that the aforesaid initiatives will yield competitive advantage and commensurate growth in its IT business in the coming years. (cid:2) Financial Services This business has grown appreciably during FY10 and now holds assets in excess of Rs 10,000 crore. All performance metrics are robust and the business is expected to post sound growth in FY11. We believe that in a growing economy, Financial Services sector will continue to grow, and it is, therefore, necessary to ensure suitable structuring of the business to exploit its full potential. The Company is exploring various options of unlocking value at an appropriate time in the near future. (cid:2) Developmental Business Your Company has been actively building its concessions business over the last few years. With the increase in the number and maturity of concessions in its fold, the Company is in the process of restructuring them into independent verticals like Infrastructure, Realty and Power Development. The Company will continue to selectively exploit the growing opportunities in all the aforesaid sectors. (cid:2) International Business The sectors of power, hydrocarbon and urban infrastructure hold promise in the international markets. Improved oil prices have enhanced the opportunities in Gulf region. While Middle East and the Far East have yielded results, your Company hopes to exploit opportunities in other geographies as well. The Company is in the process of setting up a new office in Perth, Australia to exploit opportunities in the Hydrocarbon sector and in Johannesburg, South Africa to sell products and undertake projects in the Electrical Sector. We are also looking at possibilities of opening an office in Brazil to sell products and explore opportunities in the Oil & Gas Sector. In order to give further stimulus to our International Business, we are setting up an organisation at the Corporate level to manage the entire International Marketing Network. Before I conclude, I would like to thank all L&T-ites for their commitment and urge to excel in their respective spheres of activity which helps the Company to continue to grow each year. I would also like to express my gratitude to my colleagues on the Board, our shareholders, customers and business associates. We are committed to serving the nation through all our initiatives, while at the same time striving to maximise stakeholder value. We will continue to uphold the faith and trust you have reposed in us. Thank you, A.M. Naik Chairman & Managing Director Mumbai, May 17, 2010 5 Contents Company Information Organisation Structure Leadership Team L&T’s Nationwide Network & Global Presence Standalone Financials - 10 Year Highlights Consolidated Financials - Highlights Graphs Corporate Sustainability Directors’ Report Management Discussion & Analysis Auditors’ Report Balance Sheet Profit and Loss Account Cashflow Statement Schedules forming part of Accounts Notes forming part of Accounts Information on Subsidiary Companies 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 7 8 9 10-11 12 13 14-15 16-20 21-50 51-104 105-107 108 109 110 111-136 137-170 171-177 179 180 181 182 183-202 203-228 6 6 L&T’s registered office in Mumbai. Company Information Board of Directors 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 (Electrical & 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 65th ANNUAL GENERAL MEETING AT BIRLA MATUSHRI SABHAGAR 19, MARINE LINES, MUMBAI 400 020 ON THURSDAY, AUGUST 26, 2010 AT 3.00 P.M. 7 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 8 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 I A J 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 d n a a c i r f A l , t s a E e 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 . 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 , 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 t s a E h t u o S e c n a n F i t n e m p u q E • i i e c n a n F e d a r T • e c n a r u s n I l a r e n e G e c n a n ﬁ o r c M i s d n u F l a u t u M • • • e r u t c u r t s a r f n I • 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 • s r u o b r a H & s t r o P • e r u t c u r t s a r f n I t n e m p o e v e D l s t c e o r P j r e w o P o r d y H s y a w l i a R • • s t c e o r P j i i n o s s m s n a r T • 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 e v e D l s t c e o r P j r e t a W s e n i l i e p P s a G • • y g r e n E l r a o S • s t c e o r P j & l i a c n a h c e M • i y r e n h c a M i i g n n M & n o i t c u r t s n o C t i n e m p u q E c 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 e c v r e S & s e r a p S • s m e t s y S • • • l i i a c n a n F & g n k n a B • i i s e c v r e S l s a t n o z i r o H g n i r e e n g n E i i s e c v r e S e c n a r u s n I • i - r e e n g n E d e t a r g e t n I i s e c v r e S g n i s U B S t n e m e g a n a M e r u t c u r t s a r f n I • i s e c v r e S s m e t s y S d e d d e b m E • e r a w t f o S & i s c n o r t a h c e M i s e c v r e S 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 • g n i r u t c a f u n a M • , l e e S t , 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 • s t c u d o r P t c u d o r P • i g n s s e c o r P r e b b u R • & s m e t s y S l a c i r t c e E • l 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 • s l a c i t r e V i y r e n h c a M l a i r t s u d n I • d r a d n a t S l a c i r t c e E • l t n a P l l a m r e h T & h c e t o f n I T & L s e c i v r e S T I & s t c u d o r P l a i r t s u d n I i y r e n h c a M & l a c i r t c e l E n o i t a m o t u A s r e ﬁ s a G i l a o C • 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 • l e c a r O , P A S – P R E • s t c u d o r P y r d n u o F • t n e m p u q E i l i a c d e M • i g n s s e c o r P s c i t s a P • 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 • • 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 • • s m e t s y S n o i t c e t o r P l s o o T g n i t t u C U B S e r u t c u r t S y v a e H • n o i t a c i r b a F 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 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 • • 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 • i l s c n o r t c e E c g e t a r t i S • s m e t s y S e n i r a M & g n d i l i u b p h S i t ﬁ e R & r i a p e R t n a h c r e M l a v a N • • • i g n g r o F y v a e H s e i t i l i c a F i s c n o v A i g n i r u t c a f u n a M s e i t i l i c a F & s n a F l i a x A • s r e t a e h e r P r i A g n i r u t c a f u n a M s e i t i l i c a F c i t a t s o r t c e E • l g n i r u t c a f u n a M s r o t a t i p c e r P i s e i t i l i c a F t n a P l r e w o P l a m r e h T • g n i r e e n g n E i - y d n u L & i s e c v r e S n o i t c u r t s n o C t n e g r a S T & L • i g n i r e e n g n E y v a e H d e t i i m L r e w o P T & L t n e m p o l e v e D r e w o P e c r u o S l e u F • n o i t a c i r b a F r a u d o M l • j s t c e o r P d e s a b - s a G • t n e m e g a n a M g n i r u t c a f u n a M s e i t i l i c a F d n a s I l r e l i o B • d n a s I l G T S • r e l i o B • s l l i i M g n z i r e v u P • l ) M R V ( i e n b r u T • g n i r u t c a f u n a M s e i t i l i c a F y r d n u o F y v a e H i i g n p P P H • • j t c e o r P a n m u A l i r o f C P E & t n e m p o e v e D l M & O • • s s e c o r P r e t a W • l y g o o n h c e T l a c i t i r c r e p u S s t c e o r P j d e s a b - l a o C • t n e m p o e v e D l r e w o P • n o i t c u r t s n o C & n o i t c u d o r P g n i t a o F • 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 • s m e t s y S a e s b u S • 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 l i a c r e m m o C & l a n o i t u t i t s n I • s e i r o t c a F & s g n d i l i u B s t c e o r P j l a i t n e d s e R i • Z E S & s p h s n w o T • i s g n d i l i u B s t r o p r i A • l s a t i p s o H & s e t o H l • i g n s u o H m e t s y S • s t n a P l l a i r t s u d n I • 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 • s e i r e n ﬁ e R • i g n s s e c o r P s a G - i a d o y h C T & L • • s r e z i l i t r e F 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 g n i r e e n g n E i i s e c v r e S y r t n u o c - s s o r C - C P E • s e n i l e p P i n o i t c u r t s n o C & s t c e o r P j g n i r e e n g n E – i l l ø b m a R T & L • 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 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 • • • • s r u o b r a H & s t r o P • e r u t c u r t s a r f n I s e g d i r B • g n i l d n a H l a i r e t a M k u B • l & t n e m t a e r T r e t a W • 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 • - l l e d a V T & L • s t c u d o r P g n d i l i u B & k r o w m r o F • 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 • • l s n o i t u o S y e k n r u T • s t c e j o r P y a w l i a R g n i r e e n g n E i n o i t a c ﬁ i r t c e E l l a i r t s u d n I • n o i t a t n e m u r t s n I & n o i t c u r t s n o C y a w l i a R • s n o i t a t s b u S • e n i l e p P i f l u G - T & L • s e n L i i i n o s s m s n a r T • . I o C G N T A R E P O . I s o C G N T A R E P O . I o C G N T A R E P O I . s o C G N T A R E P O . I o C G N T A R E P O . I o C G N T A R E P O I . s o C G N T A R E P O I . s o C G N T A R E P O L A P P U I V A R I N A W T A H H C . . K A 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 Leadership Team A. M. Naik Chairman & Managing Director J. P. Nayak President (Machinery & Industrial Products) Y. M. Deosthalee Chief Financial Officer K. Venkataramanan President (Engineering & Construction Projects) R. N. Mukhija President (Electrical & Electronics) K. V. Rangaswami President (Construction) V. K. Magapu Senior Executive Vice President (IT & Technology Services) M. V. Kotwal Senior Executive Vice President (Heavy Engineering) Ravi Uppal CEO & MD L&T Power Limited A. K. Chhatwani Senior Executive Vice President (Power Development) 9 A Nationwide Network Note: The pictorial representation does not purport to be the political map of India 10 A Global Presence Product & Equipment Supply Fabrication Note: Map is broadly representative of L&T’s global presence. 11 STANDALONE FINANCIALS-10 YEAR HIGHLIGHTS Description Proﬁ t and Loss Account Gross sales & service Other income Gross revenues Net sales & service PBDIT ^^ Proﬁ t before tax (excluding extraordinary/exceptional items) Proﬁ t after tax (excluding extraordinary/exceptional items) Extraordinary items (net of tax) Exceptional items (net of tax) Proﬁ t after tax (PAT) Dividend including dividend distribution tax Balance Sheet Share capital Share application money Reserves Net worth Deferred tax liability (net) Loan funds Capital employed Net ﬁ xed assets Investments Net working capital (NWC) Miscellaneous expenditure (to the extent not written-off) Ratios and statistics PBDIT incl. other income as % of total income @ PAT excluding 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 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 Rs.crore 36996 2385 39381 36675 5726 4806 3185 136 1055 4376 34045 1032 35077 33647 4662 3940 2709 773 – 3482 880^ 720^ 120 25 18167 18312 77 6801 25190 6366 13705 5119 – 117 – 12343 12460 48 6556 19064 5195 8264 5605 – 25187 676 25863 24855 3403 3068 2099 – 74 2173 572 58 – 9497 9555 61 3584 13200 3645 6922 2630 3 17901 522 18423 17567 2245 14966 519 15485 14735 1480 13255 732 13987 13050 1115 9807 461 10268 9561 945 9870 302 10172 9360 1047 1982 1385 – 18 1403 428 57 – 5711 5768 40 2078 7886 2225 3104 2547 10 1235 863 70 79 1012 349 27 – 4613 4640 77 1454 6171 1605 1920 2625 21 933 631 – 353 984 407 26 – 3343 3369 95 1859 5323 1083 961 3238 41 769 533 – – 533 225 25 – 2750 2775 114 1324 4213 1015 966 2185 47 510 433 – – 433 211 249 – 3314 3563 841 3176 7580 4056 1160 2300 64 8167 277 8444 7726 1102 401 347 – – 347 174 249 – 3095 3344 853 3463 7660 4264 918 2413 65 7825 310 8135 7390 1116 339 315 – – 315 178 249 – 3751 4000 – 4263 8263 4671 813 2735 44 15.09 13.44 13.37 12.43 9.75 8.30 9.43 10.84 13.76 14.49 8.39 15.92 20.73 0.37:1 13.84 1.24 73.77 303.69 8,14,678 38,785 7.81 18.52 24.67 0.53:1 16.47 1.34 59.50 212.31 9,31,362 37,357 8.25 21.12 28.21 0.38:1 10.44 1.19 37.80 162.95 5,78,177 31,941 7.67 20.71 26.84 0.36:1 14.23 1.27 25.11 101.14 4,28,504 27,191 5.71 16.70 21.88 0.32:1 17.54 1.38 19.02 83.50 3,27,778 23,148 4.70 14.63 21.05 0.56:1 24.43 1.58 19.41 63.48 3,23,908 19,848 5.32 14.40 20.66 0.49:1 22.28 1.47 10.71 54.18 3,65,824 18,996 4.48 7.65 12.91 0.92:1 23.30 1.58 8.71 69.57 4,90,628 21,873 4.34 7.47 9.69 1.07:1 30.42 1.81 6.98 65.13 5,09,922 22,922 4.09 7.47 8.18 1.09:1 34.95 2.11 6.34 78.66 5,13,562 23,988 Figures for the years 2000-2001 to 2002-2003 include demerged cement business. ^^ Proﬁ t before depreciation, interest and tax [PBDIT] (excluding extraordinary/exceptional items) and including other income. ^ Includes dividend distribution tax of Rs. 14.77 crore for FY 2009-2010 and Rs.2.69 crore for FY 2008-2009, paid by direct subsidiary companies 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)]. PAT excluding extraordinary/exceptional items as % of total income [(PAT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items)]. ROCE [(PAT excluding extraordinary/exceptional items+interest-tax on interest)/(average capital employed excluding revaluation reserve and miscellaneous expenditure)]. RONW [(PAT excluding 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 issue of bonus shares/restructuring during the respective years. After considering issue of bonus shares/restructuring during the respective years. @ $ * ** # ## 12 CONSOLIDATED FINANCIALS - HIGHLIGHTS Description Proﬁ t and Loss Account Gross sales & service Other income Gross revenues Net sales & service PBDIT ^^ Proﬁ t before tax (excluding extraordinary/ exceptional items) Proﬁ t attributable to Group shareholders (excluding extraordinary/exceptional items) Extraordinary items (net of tax) Exceptional items (net of tax and minority interest) Proﬁ t attributable to Group shareholders Dividend including dividend distribution tax Balance Sheet Share capital Share application money Reserves Net worth Minority interest Loan funds Deferred payment liabilities Deferred tax liability (net) Capital employed Net ﬁ xed assets Investments Loans & advances towards ﬁ nancing activities Net working capital (NWC) Miscellaneous expenditure (to the extent not written-off) Ratios and statistics PBDIT including other income as % of total income @ PAT excluding 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.) ## 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 2001-2002 Rs.crore 43854 3051 46905 43514 7198 40608 916 41524 40187 5600 29561 684 30245 29199 4097 20700 1071 21771 20336 3013 16747 577 17324 16500 1904 14599 696 15295 14379 1404 11107 488 11595 10849 1271 10857 267 11124 10327 1240 5527 4344 3384 2510 1472 1052 3796 136 1519 5451 880 120 25 20846 20991 1087 22656 1951 153 46838 18979 9928 10935 6996 – 3007 773 9 3789 720 117 – 13871 13988 1058 18400 1970 131 35547 15618 6805 7110 6014 – 2304 – 21 2325 572 58 – 10773 10831 923 12120 196 122 24192 8523 5552 6161 3927 29 1810 – 430 2240 428 57 – 6865 6922 646 6200 232 107 14107 5440 2478 2410 3762 17 1051 70 196 1317 349 27 – 4937 4964 107 3499 – 127 8697 2973 1676 1012 3011 25 697 – 353 1050 407 26 – 3290 3316 105 3454 – 138 7013 2215 615 406 3736 41 921 600 – 147 747 225 25 – 2622 2647 54 2769 – 214 5684 2140 624 375 2498 47 469 380 – – 380 211 249 – 2968 3217 50 4701 – 913 8881 5539 528 323 2392 99 9195 239 9434 8714 1341 414 290 – – 290 174 249 – 2889 3138 44 4978 – 928 9088 5824 358 218 2613 75 16.09 13.63 13.73 14.41 11.32 9.54 11.21 11.70 14.98 8.49 12.68 21.75 1.08:1 0.51:1 15.95 1.29 91.90 348.06 7.32 13.82 24.32 1.32:1 0.84:1 14.81 1.31 64.76 238.27 7.72 16.69 26.68 1.12:1 0.57:1 13.28 1.25 40.44 184.31 8.66 20.74 30.71 0.90:1 0.44:1 18.17 1.36 40.10 121.39 6.25 17.62 25.78 0.71:1 0.49:1 17.98 1.40 24.75 89.36 4.73 14.92 23.96 1.06:1 0.89:1 25.59 1.64 20.70 62.44 5.29 14.01 21.24 1.08:1 0.76:1 22.49 1.50 15.01 51.58 3.59 7.16 12.45 1.52:1 1.27:1 22.03 1.55 7.65 61.99 3.24 6.82 9.24 1.65:1 1.53:1 28.41 1.79 5.83 60.82 Figures for the years 2001-2002 & 2002-2003 include demerged cement business ^^ Proﬁ t before depreciation, interest and tax [PBDIT] (excluding extraordinary/exceptional items) and including other income. @ $ PBDIT as % of total income [(PBDIT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional items)]. PAT excluding extraordinary/exceptional items as % of total Income [(PAT excluding extraordinary/exceptional items)/(total income excluding extraordinary/exceptional item)] ROCE [(proﬁ t available for appropriation excluding extraordinary/exceptional items+minority interest+interest-tax on interest)/(average capital employed excluding revaluation reserve,miscellaneous expenditure and borrowed funds of ﬁ nancial services business)] RONW [(proﬁ t available for appropriation excluding 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 issue of bonus shares/restructuring during the respective years. After considering issue of bonus shares/restructuring during the respective years. * ** # ## 13 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 14 L&T-SEGMENT-WISE ORDER INFLOW 2009-2010 L&T-SEGMENT-WISE SALES 2009-2010 L&T-SEGMENT-WISE RESULT L&T-SEGMENT-WISE EBITDA MARGINS* L&T-SECTOR-WISE ORDER BOOK AS AT MARCH 31, 2010 L&T CONSOLIDATED SALES AND PAT 15 Corporate Sustainability - because progress is best viewed in 3 D There are 3 dimensions to progress – the economic, the environmental and the social. It is now widely accepted that success on any one parameter alone would be lopsided, unstable and, in the end, unsustainable. We at L&T have a long tradition of believing and acting on the principle that all three dimensions must go hand in hand. Building on our rich heritage of fostering development with a human conscience, we have now adopted policies and implemented measures that put us at the vanguard of the sustainability movement within Indian industry. We were among the first corporates to codify policies covering human resources, environment, health and safety. We maintain the highest standards of corporate ethics, with a transparent governance structure, and we contribute significantly to the sustainable growth of our neighbouring communities. We proactively follow the voluntary guidelines on corporate social responsibility issued by the Ministry of Corporate Affairs in December 2009. In fact, L&T was one of the first engineering & construction companies in India to report on Corporate Sustainability performance. These activities are highlighted in the following pages. The full Corporate Sustainability Report can be viewed on www.larsentoubro.com 16 People - those who so proudly wear the L&T badge, those who belong to the extended family of L&T’s supply chain and those who are part of the community around us – are all integral to our future. Employee Engagement Our HR programme covers every aspect of an employee’s engagement with the company. Opportunities are created to widen their horizons in many ways. Cross-over careers give people the chance to enrich different operational areas with their experience and expertise. Continuous in-house training opportunities – both classroom and online – keep them abreast of the latest trends in their sphere of operation as well as impart the soft skills so crucial for accomplishing goals in a socially complex environment. Occupational health and safety continues to receive focus. the Corporate Wellness L&T’s efforts in promoting workplace wellness and sustainable enhancement of health and safety standards have received peer recognition. The Confederation of Indian Industry has honoured L&T with its prestigious Corporate Wellness Award for best health practices. Care extends beyond careers. L&T encourages all-round growth of its people as well as their families. Trained counsellors help them tide over life’s crises. Personality development is enhanced through classes ranging from transactional analysis to interpersonal relationships. An engineering institute has been set up exclusively for the THRUST AREAS ACTIVITIES Education Constructing schools and classrooms, providing teaching aids, conducting enrichment activities, setting up computer and science laboratories and supporting pre- school centres. Establishing vocational training institutes. Employee volunteering Initiatives include blood donation, rallying support during natural calamities, fund-raising, imparting knowledge to youth. Mother & child health Conducting health check-up camps in collaboration with other organizations for women and children, setting up health centres focusing on reproductive health for the underprivileged sections, camps on cataract, anemia, health awareness, malnutrition mitigation, etc. children of employees. Although the nature of our project, product and service offerings has resulted in a male- dominated workforce, the number of women employees is steadily increasing. Fostered by the spirit of professionalism and acceptance by male colleagues, and aided by facilities like crèches at major locations, women are enabled to make a positive contribution to the Company’s growth. L&T views training as a sustainability tool. L&T’s Management Development Centre is in rapid expansion mode - to keep pace with the growth of the Company and the challenges thrown up by the emerging business environment. 17 Social Initiatives In the same spirit of viewing progress in all its dimensions, at L&T, we view social responsibilities as an extension of our people initiatives. Working closely with community leaders and local NGOs to assess pressing community needs, we undertake long-term programmes in health, education and vocational training. Health measures include immunization, mother and child care, periodic health camps, and HIV/AIDS prevention. Educational and vocational programmes focus on building self- sustenance and minimizing dependence. We also minimize adverse social impact at project sites. Through the L&T Charitable Trust, we reach out to rural communities at remote locations. Vocational Training It is accepted that rapid economic growth will expand job opportunities for India’s youth. But in our view, this alone is unlikely to resolve the problems facing the country’s growing population. As we see it, the malaise at the heart of our socio-economic set up is not unemployment but unemployability. To remedy this calls for solutions of a different kind. We on our part have done our bit by initiating and facilitating the training of youth. Here again, we chose the less privileged as our core target group. (The paradox of circumstances making the rich richer and the poor poorer applies to education as well: the qualified seek and secure super specialized training while the unqualified find themselves pushed further behind in the race). We therefore see the vocational training imparted by the Larsen & Toubro Charitable Trust and our role in several Construction Skills Training Institutes (CSTI) as critical in helping society and in sustaining industry. L&T’S GREEN SPECTRUM Projects & Products that are helping industry go green Ultra-low sulphur diesel reactor L&T is one of the few companies in India with the advanced manufacturing capability to design, engineer and manufacture equipment that meets the demands of clean fuel technology. Nuclear Power Plant It is widely acknowledged that the answer to balancing the need for energy with the need for growth is to opt for nuclear power. L&T has developed the capability to supply critical equipment and build complete nuclear power plants. 18 Industry vis a vis the Environment At L&T, we do not regard the earth and industry in adversarial roles. Indeed, our whole concept of sustainability is built upon the premise that an industry which is responsible and conscientious can answer the energy intensive needs of growth without compromising the earth or its future. But clearly, today’s problems cannot be resolved if we continue to apply yesterday’s solutions. That is why L&T keeps itself abreast of the latest developments in technology to apply the most advanced solutions to today’s needs. We constantly seek newer, more eco-sensitive and more efficient answers. Featured below is a selective representation of ‘green- enablers’ – products and systems offered by L&T which are helping industry save energy, reduce carbon emissions, and help preserve the environment. We are committed to incorporating eco- efficiency into the core of our business operations.We are also proactively monitoring how our operations interact with the environment and intervene wherever it is required to implement measures that reduce or mitigate any potential adverse impacts. (cid:2) Design for minimizing waste (cid:2) Conserve water resources (cid:2) Propagate ‘Green Buildings’. This year we have looked at ways to: (cid:2) Minimise energy consumption (cid:2) Follow lean manufacturing practices Together with all our stakeholders, we are confident that the colour of tomorrow will continue to be green. ENERGY CONSERVATION INITIATIVES Initiatives/Interventions Total Energy Conserved during FY 2008-2009 (GJ) Process redesign Optimisation / operational control & efficiency Conversion and retrofitting of equipment Change to CFL lamps Change in maintenance / operation schedule Rationalisation of lighting patterns Others 3,328 6,869 6,682 396 151 3,051 56 The products shown here are only an indicative selection of our multiple offerings that contribute to a greener tomorrow. Our main plant equipment, which in a super critical power plant can reduce CO2 emissions from 2.5% to 5%, are featured elsewhere in the publication. DHDS Units L&T is one of the few companies in India with the capability to set up diesel hydro de-sulphurisation (or clean fuel) projects. L&T executed several of such projects around the country - milestones on our sustainability journey. L&T manufactures India’s widest range of electrical and electronic equipment for control and distribution of power. Part of this range are intelligent systems that enable users to manage and conserve energy. 19 The Environment – a hot button issue Every aspect of environmental protection receives close and continuing attention – energy conservation, water management, material efficiency…. Carbon Footprint mapping The management mantra – ‘You cannot manage what you don’t measure’ is especially relevant for the environment. L&T carried out carbon footprint mapping of its facilities, caused by direct, indirect factors and travel emissions. Energy Consumption There are two dimensions to computation of energy consumption – direct and indirect energy consumption. L&T has achieved reductions on both fronts. In 2009, direct energy consumption was reduced by 11.75 per cent. Indirect energy consumption was reduced by 10.98 per cent. ‘A watt saved is 3 watts generated’ At L&T, we recognise that small steps go a long way in conserving energy. We are therefore promoting an energy conscious culture among all employees. Renewable Energy Around 13 per cent of L&T’s electricity requirement is sourced through wind energy. Solar energy is being tapped at campuses in Powai, Hazira and Mahape. Emissions L&T has achieved a decline in the emission of Green House Gases on indirect emission by 16.15 per cent and in direct emission by 7.25 per cent. Water Management Virtually every water outlet across L&T’s campuses – coolers, water fountains, washrooms and basins – carry graphic 20 The Technology Block at Hazira (above) was awarded the Platinum certification under the internationally recognised LEED (Leadership in Energy & Environmental Design) programme. L&T’s Engineering Design & Research Centre at Chennai (below) secured a silver rating. messages urging minimal usage. The results have been encouraging. The company has set for itself a target of reducing per capita water consumption by 10 per cent. All L&T campuses are targeting a zero discharge goal. Material Efficiency Use of material is inescapable in business, but the critical difference lies in the attitude of responsibility with which material is sourced, used and replenished. We are working with our supplier and contractors to achieve a greener footprint and minimize the chances of accidental waste. The concept of ‘Reuse, Recycle, Recover’ is being communicated to all our constituents. Corporate Sustainability at L&T is not prescriptive but participative – it is not a set of rules that have been laid down by the management but rather a responsibility that is shared by all. The concepts of reducing waste, protecting the environment and contributing to social good therefore find ready champions across the company. Directors’ Report The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2010. FINANCIAL RESULTS 2009-2010 Rs. crore 2008-2009 Rs. crore Proﬁ t before depreciation and tax 6,295.27 4,246.40 Less : Depreciation and amortization 415.90 307.30 5,879.37 3,939.10 Add : Transfer from Revaluation Reserve 1.30 1.31 Proﬁ t before Tax and extraordinary items 5,880.67 3,940.41 Less : Provision for Tax 1,640.87 1,231.21 Proﬁ t after Tax (before extraordinary items) 4,239.80 2,709.20 Gain on extraordinary items (net of tax) 135.72 772.46 Proﬁ t after Tax and extraordinary items 4,375.52 3,481.66 Add: Balance brought forward from 100.50 104.31 previous year Less: Dividend paid for the previous year 2.39 0.33 (including dividend distribution tax) Balance available for disposal which the Directors appropriate as follows: Debenture Redemption Reserve Proposed Dividend Dividend Tax General Reserve 4,473.63 3,585.64 43.34 752.75 110.25 43.34 614.97 101.83 3,460.00 4,366.34 2,725.00 3,485.14 Balance to be carried forward 107.29 100.50 Dividend The Directors recommend payment of dividend of Rs. 12.50 per equity share of Rs. 2/- each on 60,21,95,408 shares 752.75 614.97 YEAR IN RETROSPECT The gross sales and other income for the ﬁ nancial year under review were Rs. 39,381 crore as against Rs. 35,077 crore for the previous ﬁ nancial year registering an increase of 12%. The Proﬁ t before tax and extraordinary items (after interest and depreciation charges) of Rs. 5,881 crore and the Proﬁ t after tax (before extraordinary items) of Rs. 4,240 crore for the ﬁ nancial year under review as against Rs. 3,940 crore and Rs. 2,709 crore respectively for the previous ﬁ nancial year, improved by 49% and 57% respectively. DIVIDEND The Directors recommend payment of dividend of Rs. 12.50 per equity share of Rs. 2/- each. Equity Shares that may be allotted on exercise of Options granted under the Employee Stock Option Schemes as also on conversion of outstanding Foreign Currency Convertible Bonds (FCCBs) 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, 2010, 96.58% of the Company’s total paid-up Capital representing 58,16,17,239 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. CAPITAL & FINANCE During the year under review, the Company allotted 52,20,861 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes. During the year under review, the Company raised Rs. 1,873 crore in India through the Qualiﬁ ed Institutions Placement route for general corporate purposes. The Company also issued unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 200 million to international investors. The FCCBs are convertible into equity shares of the Company, and if not converted, are repayable at the end of 5 years. The FCCBs were issued to ﬁ nance capital expenditure, investment in overseas subsidiaries and overseas acquisitions. For the same purposes, the Company also raised a 3 year foreign currency loan of JPY 1.809 billion (USD 20 million). During the year, the Company repaid a long term Rupee loan of Rs. 85 crore. CAPITAL EXPENDITURE As at March 31, 2010, the gross tangible and intangible assets, including leased assets, stood at Rs. 8,164.29 crore and the net tangible and intangible assets, including leased assets, at Rs. 6,365.76 crore. Additions during the year amounted to Rs. 1,604.25 crore. DEPOSITS 38 Deposits totalling Rs. 0.04 crore which were due for repayment on or before March 31, 2010 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. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues. During the year, the Company has transferred a sum of Rs. 78,78,362 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 was Rs. 8,09,04,801 as on March 31, 2010. SUBSIDIARY COMPANIES During the year under review, the Company subscribed to / acquired equity shares in various subsidiary companies. These subsidiaries are substantially either SPVs executing projects secured through BOT route, or holding companies making investments in companies such as power and ﬁ nancial services. The investment in Larsen & Toubro International FZE is mainly for onward investment in international ventures. The details of investments in subsidiary companies made during the year are as under: (cid:2) 137 equity shares of Dhs. 550,500 each in Larsen & Toubro International FZE for Rs. 97.58 crores at par. 21 (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) (cid:2) (cid:2) (cid:2) 10,21,91,000 equity shares of Rs. 10 each in L&T Power Limited at par. 9,50,00,000 equity shares of 10 each in L&T Power Development Limited at par. 12,50,005 equity shares of Rs. 10 each in L&T-Gulf Private Limited at par. 2,19,80,400 equity shares of Rs. 10 each in PNG Tollway Private Limited at par. 10,000 equity shares of Rs. 10 each in L&T EmSyS Private Limited for a consideration of Re. 1. 50,000 equity shares of Rs. 10 each in L&T Technologies Limited at par. 135,15,41,591 equity shares of Rs. 10 each in L&T Capital Holdings Limited at par. 11,10,00,000 equity shares of Rs. 10 each in L&T Special Steels and Heavy Forgings Private Limited at par. 6,42,55,100 equity shares of Rs. 10 each in L&T Halol- Shamlaji Tollway Private Limited at par. 5,40,05,100 equity shares of Rs. 10 each in L&T Rajkot- Vadinar Tollway Private Limited at par. 6,20,05,100 equity shares of Rs. 10 each in L&T Ahmedabad-Maliya Tollway Private Limited at par. 10,000 equity shares of Rs. 10 each in L&T Aviation Services Private Limited at par. 2,90,00,000 equity shares of Rs. 10 each in L&T General Insurance Company Limited at par. 2,600 equity shares of Rs. 10 each in L&T Samakhiali Gandhidham Tollway Company Private Limited at par. 1,12,50,000 equity shares of Rs. 10 each in L&T Infrastructure Development Projects Limited for a consideration of Rs. 245 crore purchased from IDF. Further contribution of Rs. 1.25 per share & premium of Rs. 131.25 per share on 22,50,000 partly paid-up equity shares in Larsen & Toubro Infotech Limited amounting to Rs. 29.81 crore. With this contribution, these shares have become fully paid-up with paid-up value Rs. 5/- and premium of Rs. 524.995 per share. During the year, International Seaport Dredging Limited issued to the Company 9,420 equity shares of Rs. 10,000 each in in lieu of the 9,420 preference shares of Rs. 10,000 each and 10,000 equity shares of Rs. 10,000 each in lieu of an ICD of Rs. 10 crores. The Company subsequently sold 10,298 equity shares of Rs. 10,000 each in International Seaport Dredging Limited for a consideration of Rs. 10.30 crore. The Company sold 15,00,000 shares representing 50% stake in Voith Paper Technology (India) Limited on September 30, 2009 for a consideration of Euro 10 million (Rs. 69.56 crore). The Company sold 10,000 equity shares of Rs. 10 each in L&T Aviation Services Private Limited at par to L&T Capital Holdings Limited. The Company’s subsidiary Singapore has been liquidated during the year. During the year under review, the Company also accepted the buy- back offers of the following companies: International Seaports Pte. Ltd., (cid:2) (cid:2) 65,500 equity shares of Rs. 10 each in L&T-Valdel Engineering Limited for Rs. 2.10 crore. L&T-Valdel Engineering Limited has now become a wholly owned subsidiary of the Company. 1,18,370 equity shares of Rs. 100 each in AUDCO India Limited for Rs. 27.22 crore. The Company has applied for exemption from annexing the Audited Statement of Accounts, the Reports of the Board of Directors and 22 Auditors of the Subsidiary companies as required under Section 212(8) of the Companies Act, 1956 and the same is awaited. AUDITORS’ REPORT The Auditors’ Report to the Shareholders does not contain any qualiﬁ cation. 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 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 certiﬁ cate obtained from the Statutory Auditors, conﬁ rming 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 certiﬁ cate obtained from the Statutory Auditors conﬁ rming 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. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES By complying with the provisions of the Companies Act and Clause 49 of the Listing Agreement, the Company is complying with major clauses of the Corporate Governance Voluntary Guidelines, 2009. We have reported in Annexure “C” to the Directors’ Report - Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads: 1. Nomination & Remuneration Committee 2. Other Information 3. Audit Committee 4. General Shareholders’ Information CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES The Ministry of Corporate Affairs has released a set of voluntary guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is proactively practicing the guidelines laid down. The Company has been one of the ﬁ rst engineering and construction companies in India to publish its report on Corporate Sustainability. Some of the activities carried out by the Company as a part of its CSR initiatives are brieﬂ y described on page 87 of the Annual Report. A broad note on the subject is featured on pages 16 to 20. The detailed Corporate Sustainability Report is also available on the Company’s website www.larsentoubro.com. DIRECTORS’ RESPONSIBILITY STATEMENT The Board of Directors of the Company conﬁ rms: 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 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, 2010 and of the proﬁ ts of the Company for the year ended on that date; that proper and sufﬁ cient 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; that the annual accounts have been prepared on a going concern basis; and that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company. ii. iii. iv. v. DIRECTORS Mrs. Bhagyam Ramani, Mr. Subodh Bhargava, Mr. J. P. Nayak, Mr. Y. M. Desothalee, Mr. M. M. Chitale and Mr. N. Mohan Raj 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. 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 qualiﬁ cation. AUDITORS The Auditors, M/s. Sharp & Tannan (S&T), hold ofﬁ ce until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certiﬁ cate 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. S&T has submitted the Peer Review certiﬁ cate dated May 6, 2009 issued to them by Institute of Chartered Accountants of India (ICAI). 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. For and on behalf of the Board A. M. Naik Chairman & Managing Director Mumbai, May 17, 2010 The Company has since received from Central Government exemption under Section 212 vide letter no. 47/386/2010-CL-III dated June 23, 2010. Accordingly, 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. As required by the said letter, we have given the information on subsidiary companies in this Annual Report. 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 Ofﬁ ce of the Company on any working day during business hours. The Company has since received from Central Government, vide its order No. 46/54/2010-CL-III dated May 18, 2010, exemption for the ﬁ nancial year ended on March 31, 2010 in respect of disclosure of 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 where the values of the individual items in each category are less than 10% of the total value of the category. Annexure ‘A’ to the Directors’ Report (Additional information given in terms of notiﬁ cation issued by the Ministry of Corporate Affairs) [A] CONSERVATION OF ENERGY: (a) Energy Conservation measures taken: 1 Improving energy effectiveness / efﬁ ciency of equipment and systems (cid:2) (cid:2) Replacement of GLS incandescent / conventional FTL lamps with Compact Fluorescent Lamps (CFL) and metal halide lamps in various ofﬁ ces, workshops and plants. Use of Solar power in various ofﬁ ces for water heaters, installation of water heating system for canteen cooking / washing, use of portable electrical ovens modiﬁ ed with digital temperature controller, green power generation through roof installed grid connect solar power plant. (cid:2) Replacement of high rating induction motors with low rating motors to conserve energy. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Energy savings by installing real time clocks to control operation of centralized A/C plant compressors. Use of Variable Frequency Drive (VFD) for various applications such as welding positioned, tank rotators, EOT cranes, etc. to improve the motor efﬁ ciency and enhance energy saving. Use of solar powered street lights, installing timers, applying reduced voltage to street lights during night time, etc. saving energy. Use of energy saving devices like human sensors, presence sensors, time switches, zone controlled AC, auto hibernation for PC’s, low emission ﬁ lms on glass doors and windows etc. to reduce energy consumption. Stopping air leakages, installing new air solenoid valves in air line to control air combustion, etc. Replacement of Chuck drives with the latest energy efﬁ cient drives, procurement of new high efﬁ ciency welding inverter based welding machines. 23 (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) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Replacement of Air Circulator with the latest energy efﬁ cient Almonard make Air Circulator. Replacement of preheating burners with new designed ST5 burners resulting in reduction of Gas consumption. Conversion of Electrical Furnace / LSR / ISR with energy efﬁ cient PNG Gas Fired Furnace. Procurement of energy efﬁ cient Fronious welding machine & Pre-heat & Post heat panels for PNG gas control. Modiﬁ cation of portable electrical ovens with digital temperature controller to reduce power consumption. Implementation of ‘Powerman’ software for online energy monitoring of energy parameters. Consumer wise monitoring of consumption on pro-rata basis against performance indicators. Monitoring system to track excess consumption and other related parameters. Conducting Energy Audit of ESP & ESE business as well as Faridabad and Baroda campus through Bureau of Energy Efﬁ ciency (BEE) certiﬁ ed external agency for possible suggestions on optimizing energy consumption. Installations of Auto-operations (Timer control) for Forced Draft Ventilation System & A/c plant. Efﬁ ciency enhancement programme for Forced Draft Ventilation plants- regular ﬁ lter cleaning, scheduled preventive maintenance, optimum damper setting, etc. Installation of ‘desuperheaters’ in Chillers. Thermo conductive booster for improvement in split & package AC performance. Close monitoring of AC plants- setting optimum temperatures, controlled usage etc. Operating computers in Power saver mode. Creating awareness on global warming by showing a Documentary ﬁ lm “An Inconvenient Truth” & Energy awareness rally. Celebration of “Earth Hour” to create awareness of climate change. footprint mapping at Hazira, Initiation of carbon Faridabad, Baroda & Powai. The action plan for reducing GHG is under preparation. Replacement of DG sets (with GSEB power) from MFF Jetty operations, resulting in optimization of costs. Replacement of capacitors with high frequency electronic ballast at MFF tower lights. Installation of APFC (automatic power factor controller) panels in the power circuit at MFF thus improving its power factor and enabling MFF to claim rebate in energy bills. Reducing weld groove angle throughout pile fabrication work for MHN project resulting in direct cost & energy saving. Replacement of older ACs with energy efﬁ cient star rated ACs. Use of wind power in ofﬁ ces in Chennai, wheeled from remote wind farms in Tamilnadu. 2 24 (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) (cid:2) Use of solar power packs in construction sites to offset diesel consumption. Use of VFD’s in operating large winches Introduction of VVVF Drives in the place of conventional type starter panels in new cranes and Transfer trolleys installed in new galvanizing plant. (VVVF Drives present in Long travel and hoist operation in all 5 EOT cranes and in all the four motorised transfer trolley) Conversion of Slip ring Motor - Rotor resistance starter system to squirrel cage induction motor with VVVF drive system in two areas in existing crane. Replacement of old Motors used travel applications in Raw material yard EOT Cranes to Energy efﬁ cient type motors (Siemens make). in Long Fixing transparent sheets in between AC sheet in Roof of shop ﬂ oor to improve indoor illumination as well as reducing indoor lights ‘ON’ time. Implementation of Lighting Circuit Energy Savers for Main Lighting Distribution Board. Achieving Power Factor of 0.99 (by adding APFC panel) and maintained the Demand at optimum level in spite of raise in loads. Enhancement of Capacitor Bank capacity to improve power factor. Various initiatives taken to reduce the fuel consumption include: (cid:2) (cid:2) (cid:2) Special Additives added in Fuel for Complete Combustion. Improved Preheating of Fuel. Frequent Cleaning & Monitoring of Burners, Valves, Nozzles & Strainers. (cid:2) Increased throughput (Production Enhancement). Solar Lighting at Canteen & Security Building. Conversion of Pin-Bush type coupling with Tyre coupling which lead to reduced failures and reduced Motor’s initial power consumption. Conversion of dual insulator type current collectors of EOT Cranes into single insulator type, and modiﬁ cation of current collectors thus reducing total weight and enhancing life of bus bar. Replacing conventional Diaphragm operated timer (BCH make) in EOT Cranes to Electronic timer (Telemechanique make), keeping control operation accurate and low power consuming. Improving Manufacturing Processes energy effectiveness / efﬁ ciency of (cid:2) (cid:2) (cid:2) (cid:2) Fitment of VFD’s for EOT cranes. Optimization of the operation of higher cfm compressors resulting in energy saving. Use of Dual track Induction melting process for optimum sharing of power between two furnace crucibles resulting in energy saving and higher productivity. Automatic switch off facility for dust extraction systems and connected equipment when idle for more than 10 minutes. (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) Centralized on / off control for compressors which will operate the compressors based on air consumption. Installation of furnaces with capture hood to avoid heat loss resulting in energy saving. Installation of mechanical reclamation system for furan sand recovery. Use of Turbo ventilators to extract heat in the non air- conditioned areas of factory / ofﬁ ce buildings. Electrode in vacuum sealed packing to eliminate baking. Design & Development of 200 MT & 300 MT Tank Rotator with Anti drift Mechanism. Use of energy efﬁ cient Robotic weld overlay for Filter Vessel & Spud welding machine. Implementation of Data Logger for Welding Equipment for capturing the actual welding parameters. Use of energy efﬁ cient internal ﬁ ring arrangement for SR Furnace & Ceramic blanket on ground for LEMF furnaces. Use of energy efﬁ cient Local Stress Relieve (LSR) technique for 300 mm thick Cr-Mo-V Reactors, Tandem (two wire) SAW PQR using Lincoln AC/DC Power Wave Machine & 150 wide ESSC Strip overlay on thick walled CrMoV reactors. Design and development of Portable Flame cutting machine for Nozzle Cutout. Development & implementation of energy efﬁ cient Twin-Torch GMAW for stiffener rings to shell joint in Torpedo Weapon Complex, Square butt SAW process for dissimilar base metal thickness (14 mm # 30 mm) & GMAW-P process for Square-Butt joint type in Project P-26. Development of energy efﬁ cient hydraulic tube expansion process for thickness tube sheet & portable pipe beveling machine. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Replacement of shop ﬂ oor overhead light with Metal halide light ﬁ ttings. Replacement of existing conventional centralized AC Plant with split air-conditioner units. Installation of solar water heater in Transit houses. Fitment of VFD’s for EOT cranes. Thermal reclamation system implementation work in progress to achieve 98% furan sand recovery. LPG Bullet & distribution system installation in progress to replace usage of diesel with LPG for ladle pre-heating. Procurement of Natural Gas based Converter Kit for Diesel Fired 1250 KVA Generators. Preparation of Wind Power Proposal for Maharashtra, Tamilnadu and Gujarat. Use of Sky shade Solar Light Pipe Fittings for Receiving Store and other Areas. Procurement of Energy Efﬁ cient Flux Baking Ovens. SR Furnace Revamping / Modiﬁ cation to improve Combustion Efﬁ ciency. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Use of LED Light Fittings in place of MH Light Fittings. Development of SS Electrodes in Vacuum Sealed Pack by EWAC. Use of lighting energy saver. Procurement of additional machines instead of rectiﬁ ers for shops. Inverter based welding Use of interlock ﬂ ux recovery units with welding machines. Modiﬁ cation in Autoclave machine cooling system. Bio gas generation plant from canteen waste at Ranoli Works. Use of turbo ventilators in shops. Use of timer in welding m/c to avoid continuous idle running (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: (cid:2) The measures taken have resulted in savings in cost of production, power consumption, reduction in carbon dioxide emissions & processing time. (d) Total Energy Consumption and Energy Consumption per unit of production as per Form A in respect of industries speciﬁ ed in the Schedule: (cid:2) 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. Speciﬁ c areas in which R&D carried out by the Company: (cid:2) (cid:2) (cid:2) (cid:2) Cement & Mineral Process Process Design and related aspects of Cement / Mineral projects; Coal characterization and study of Gasiﬁ cation Technologies / application; Modelling and simulation of entrained ﬂ ow and ﬁ xed bed coal gasiﬁ ers. Chemical Engineering Design, analysis and simulation of chemical processes and equipment, with special emphasis on Oil & Gas applications (Gas Dehydration and Gas Sweetening Units); Capability development for in-house process engineering of Process Gas Compressor modules; Fertilizer plant revamp, Hydrogen, Ammonia and Methanol plants; Refractory engineering for chemical plant equipment. Material Science & Corrosion Engineering Composites with functional properties, nano-materials for strategic applications, eco-friendly corrosion inhibitors, welding of heavy thick duplex stainless steels for oil and gas applications and surface engineering of metals and non-metals. Thermal Engineering Dynamic simulation of captive power plant; CFD analysis of industrial machinery and systems (such as three phase separators); Capability development in Once through Steam Generator and Super Critical Boiler technology. 25 (cid:2) (cid:2) (cid:2) Rotating Machinery Product design / development for Coal Pulverizers of Super Critical Boilers; Performance testing and commissioning of turbo-machinery for Hydrocarbon (Oil & Gas) application; Advanced engineering studies in Vibration and Acoustics for machinery and piping. Mechanical Engineering Design solutions for products through advanced Finite Element analysis; Seismic analysis of onshore buried pipeline; Development of structural design aspects of Waste Heat Recovery Exchangers for offshore platforms; Development of design capability for Cofferdam; Development of capability to analyze structural integrity of ship structures for Airbag Launch, Development of system / conﬁ guration for proper functioning of bellows in complex equipment; Development of capability for design of piping system for wind tunnel application; Development of capability to check integrity of Subsea pipeline spool; Experimental Stress measurements on HLPV during lift test and for other industry critical equipments during load / pressure tests. Ocean Engineering Capability development for structural design solution for Gas Compressor Modules; Capability development for structural analysis of non-grouted Jackets; Capability development for Hydrostatic stability analysis for Jack- up rigs; Design analysis and optimization of complex offshore structures; Capability development for structural design for Heli-deck satisfying ABS and CAP 432 requirements. (cid:2) Water Technologies (cid:2) (cid:2) Design and detailing of water & wastewater, recycling & reuse and zero liquid discharge systems including sea water / brackish water desalination, membrane bioreactor, sequential batch reactor, upﬂ ow anaerobic sludge blanket reactor and other advanced treatment technologies; Conducting lab scale pilot plant studies, treatability studies and analytical studies for water & wastewater. Development and trial testing of Road Miller and Primary Mobile Crushing Plant (electric drive). for curing Off-The-Road Rubber Processing Machinery such as 130” Mechanical Tyre Curing Press tyres, 46”Hydraulic Tyre Curing Press-Tie Rod Design for curing high accuracy radial tyres, Radial Tyre Building Machine for LCV tyres, 104”/91” Slide back Mechanical Press for maintaining accuracy and life of Segmented mould operators and 46” Hydraulic Tyre Curing Press- Frame Design for high performance passenger car radial tyres. (cid:2) Design & development of Equipment for Construction & Road Sector such as Wheel Loader with 2 Cu.m bucket capacity, Tipper Body of 18 Cu.m size for Mining Trucks, 20 Ton Vibratory Soil Compactor. (cid:2) All-Electric Plastic Injection Moulding Machine - 105 Ton Class. (cid:2) Weapon Launch & Control Systems (Structures, mechanisms, drives, controls). (cid:2) Development of Futuristic Combat Vehicles. 26 (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) (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) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Development of Ship Platform Management Systems. Development of Missile / Airframe Components. Development of steam generator design for Nuclear power plant. Development of welding Simulation Technology. Development of Waste Heat Recovery Boiler for Nitric acid plant. Development of High Speed CFRP Tubes. Development of Flexible Composite Seals for Brahmos Vertical Launcher. Development of CFRP liner for Missiles sections. Development of Heat shield for launch vehicles. Development of core technologies for Hypersonic Wind Tunnel Systems. Development of new products / product ranges of Air Circuit Breakers, Moulded Case Circuit Breakers, Miniature Circuit Breakers, Contactors, Relays Switch- Disconnector-Fuses and Change-Over devices. Blume & Redecker Automatic coil winding machine for coil manufacturing at Ahmednagar Switchgear Works. Induction brazing machine in component & ﬁ nishing shop at Ahmednagar Switchgear Works. Fully automatic test benches for product testing at Ahmednagar. Switchgear Works with test data acquisition. 160 T Mechanical and 200 T Hydraulic presses Conveyor based assembly line for Manual Air Circuit Breakers. 50 kA Short Circuit test bench with ﬁ xtures. Microprocessor based controller on battery operated vehicles. Contactor magnet manufacturing process optimized & throughput time reduced by implementing High speed lamination blanking at 650 strokes per minute. Triple action riveting. Single pass grinding. Bar-coding implemented on all products. Modular devices sub-assembly automation for better productivity & improved quality. Multi-cavity hot runner mould for better material utilization & cycle-time reduction. for Miniature Circuit Breaker Eight-cavity moulding housing and cover established with cold manifold & sprue with auto degating. Vision system to arrest possible discrepancies in respect of product packing for Air Circuit Breakers. “Contact-less Measurement” technique in Test benches for “Over Travel” measurement of Contactors during routine testing. integration of Indigenisation of Medium Voltage Switchgear Products. Development of Intelligent Motor Protection Relays. New Design of Low Voltage Motor Control Centres. Power Management System. Terminal Automation System. (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) (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) (cid:2) (cid:2) Toll Management System. Highway Trafﬁ c Management System. Indigenization of Medium Voltage Drive Transformer. New metering data acquisition solution which ﬁ nds its application in Restructured Accelerated Power Development Reforms Program (R-APDRP). A common protocol which enables communication feature in the meters. Indigenous improved NIBP module, new SpO2 module and Predictive Temperature module were developed to achieve technology independence & cost effectiveness for the monitoring products. Concrete paver blocks without cement. Innovative panels with light weight concrete. High performance, high strength and self ﬂ ow concrete. Rapid assessment of cement quality. Automatic vibro compaction for roads. Application of high end PMBs (Polymer Modiﬁ ed Bitumen) for extreme trafﬁ c loads on runways. Application of technology in pavements. recycled materials & construction Application of Genetic Algorithm in reinforced concrete design. RFID’s applications stores management. Development of LIMS management system as per NABL standards Construction laboratories. - Laboratory information for Establishment of Transmission line research and testing station. Design, analysis and optimization of narrow base multicircuit tower. In-house development of advance software transmission line tower analysis and design. Development of GIS based application for transmission line projects. for Advance analytical techniques for design and detailing of transmission tower with sub-bracing pattern. Capability development for in-house engineering of Photovoltaic and Concentrated Solar power plants. Design and optimization of complex structure Photovoltaic and Concentrated Solar power plant. for Development of tracking system for Photovoltaic based power plant. Experimental analysis Photovoltaic based roof top grid connected system. for performance study of Process simulation, design solutions and optimization for E&C projects involving reﬁ nery, fertiliser and chemical plants. Refractory solutions for high-temperature equipment in process plants. Successful / commissioning of plants and equipment in various E&C projects, through multi- disciplinary technology support. testing Material evaluation / characterization; selection of alternative materials; failure analysis support; preservation and corrosion protection of critical equipment. (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) (cid:2) Successful simulation of captive power plant. Design/ optimization of thermal systems. Design upgradation and optimization of coal pulverizers; Failure analysis / trouble-shooting of rotary kiln drives in cement projects. Successful conduct of acceptance testing of turbo-machinery for offshore applications. Development of in-house capability for analyzing ﬂ ow- induced vibration and acoustic vibration in oil & gas piping systems. 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. in-house expertise in high-end Development of engineering analysis (e.g., advanced FEA, CFD, Dynamic Simulation, Acoustic Mapping, Rotor Dynamics, Non-Linear Analysis, seismic analysis of buried pipeline etc.). Eco-friendly building components Improvements in roads & runways infrastructure Recycled use of asphalt pavements. Cost reduction in terms of economical design. Easy identiﬁ cation and retrieval of stocks of materials. Automated testing facilities Optimization of transmission line tower weight and reduction of footprints of foundation. Process design and optimization of CSP plant. Development of capability for in-house engineering of solar PV and CSP plant. 2. Beneﬁ ts derived as a result of above R&D: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Increased our Product Range coupled with Technology upgradations and cost reduction and it has resulted in making our equipment offering more contemporary and competitive. The R&D efforts have boosted our capabilities to offer custom-made equipment and have fetched us orders in stiff international competition. Able to quickly offer new products for Rubber Processing for varied requirements and position our products well against offerings by global players. Created and implemented procedures using PLM for Top-down design of Mobile Equipment by 3D Modelling, Design validation & analysis of complete equipment using ANSYS and Hypermesh and Process for deriving target speciﬁ cations for Mobile Construction / Mining equipment and Industrial Machinery. This initiative offers tremendous business opportunity as and when it is decided to launch new products. Indigenization & development of products for Indian defence sector Savings in Foreign Exchange Increased offerings from L&T meeting the expectations of Indian customer both technically as well as commercially Introduction of new products with a focus on achieving global acceptance, enhancing safety and user features, built- convenience, environment friendly 27 intelligence and communication capability and in conformance to latest Indian and International standards include: (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) U-Power Omega range of Air Circuit Breaker; this range won the best product award in ELECRAMA 2010. Supernova range of Controlgear products with ‘space saving/ design and enhanced customer convenience. the patient monitoring In range, Planet-10, Planet-20, Planet-30, Star 50N, Planet 50N, Skyline M, Skyline 55 V1and ECG recorder - Orion In Surgical Diathermy Maestro Plus 100, a dual output machine Launching of two new platforms for single-phase and four new platforms for poly-phase meters. (cid:2) Improvement in speed of construction. 3. Future Plan of Action: (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) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Plans on anvil for development of new / upgraded products in Surface Miner product line. Plans to develop certain speciﬁ c new products / upgrade existing products for Rubber Processing with focus on energy / cost savings and development of Hydro- Mechanical Presses for Truck and Bus Radial segment as the trend is towards radialisation in these segments by all Tyre majors. Plans to work on expanding product range in Wheel Loaders and All- Electric Plastic Injection Moulding Machine. Creating & implementing Test protocol and ﬁ eld testing for Mobile construction / mining Equipment to simulate functional requirement / ﬁ eld conditions. Development of new / upgraded products in defence equipments. Complete the product offerings in Medium Voltage range by introducing more products. Increase the product range in protection systems and solutions. Development of Cement Automation Package. Development of Electronic Tolling System. Development of Tank Farm Management System. Local assembly of Medium Voltage Inverters. Process technology for coal gasiﬁ cation. Design / simulation of Hydrogen, Ammonia processes and Pre Reformer & Auto Thermal Reformers. Design / Simulation of On-shore oil & gas processing techniques. Study of Synfuels Technology. Applications of Nano Technology, development of nano- materials and coatings. Application of electrochemical noise method characterization of stress corrosion cracking (SCC). for Carbon-ﬁ bre from polymeric ﬁ bres. Technology Analysis of Super Critical Boilers 28 (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) (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) (cid:2) (cid:2) (cid:2) (cid:2) Design and analysis of critical machinery in Jack-up Drilling Rigs. Study on sealing technology for turbo-machinery. Application of Reliability, Availability & Maintainability (RAM) studies in process plants. 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. Recycle, Reuse and Zero-discharge Technologies. Dynamic Simulation of Gas Compressors. Solar Thermal Power Plants. Development of high early strength concrete for faster construction. Development of Sandwich Panel Construction. Development of Cold Mix Design. Improvements in mass housing. Piled raft foundation. Foundations with geo cells. Quick assessment of geotechnical details. Mechanised construction of Industrial Flooring systems. Bench Marking of site labs to NABL Standards. Improvement of bored cast -in-situ piles. IT enablement in construction projects. Development of EHV transmission line tower using tubular and cold formed section. improving current Development of carrying capacity of transmission line using high capacity conductor. techniques for Development of software for design and optimization of transmission tower foundation. Development and performance study of solar power collector structure. Design, analysis and optimization of solar power plant based on CSP technologies. Development of tracking system for CSP structure. Design and development of control and monitoring system for solar farms 4. Expenditure on R&D: (a) Capital (b) Recurring (c) Total (d) Total R&D expenditure as a percentage of total turnover Rs. crore 2009-2010 2008-2009 5.56 85.98 91.54 5.01 75.18 80.19 0.25% 0.24% TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts in brief made towards technology absorption, adaptation and innovation: (cid:2) for various crushing technology Adaptation of emission controlled diesel engine for Surface Miner. Adaptation of applications. Magma software for metal ﬂ ow analysis - gives metal ﬂ ow stream into the mold, impact of metal ﬂ ow, possible causes of rejection during metal ﬂ ow resulting minimum trial runs during development of new items. Evaluated imported equipment designs / technologies and implemented the state-of-the-art technology through indigenous developments along with alternative materials / components. Interaction with external agencies / internal customers / suppliers for exposure to the latest products / designs, manufacturing technologies, processes, analytical techniques and engineering protocols. Indigenization of membrane wall panels for Shell Coal Gasiﬁ ers. Qualiﬁ ed by Sasol for CTL (Coal to Liquid) & GTL (Gas to Liquid) Reactors. Qualiﬁ ed for supplying Lurgi Gasiﬁ ers which are used ﬁ rst time in India for Jindal’s DRI project. 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, Heavy Weight Torpedo Launchers, Universal Vertical Missile launchers, Multi Barrel Rocket Launcher System. Safety Systems for SIL 3 applications from HIMA Germany. Distributed Control System for Power Plant Applications. Automatic Fare Collection System for Metro Rail Projects. Participating in national / international conferences, seminars and exhibitions. Valuation, adaptation and / or modiﬁ cation 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 institutions for technology upgradation. Use of state-of-the-art equipment, software. Analyzing feedback from users to improve processes and services. instrument and research / (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) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) 2. Beneﬁ ts derived as a result of the above efforts, improvement, cost reduction, product e.g., product development, import substitution, etc.: (cid:2) Better fuel efﬁ ciency in the operation of Surface Miner with emission controlled diesel engine and less air pollution. Indigenised various components for Rubber Processing Machinery by designing, developing speciﬁ cations and adapting to Indian conditions. (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) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Consequent to the establishment of facilities for design & development of new products, there is a reduced dependence on external sources for technology required towards new products and upgrading existing products. Indigenisation (import substitution) & development of products for Indian defence sector Expansion of product range and export opportunities. Product improvement. Increase in know-how within the country. Absorption of Application knowhow. Successful simulation / optimization of process design and engineering for various E&C projects (Reﬁ nery, Oil & Gas, fertilizer and chemical plants). Appropriate applications. refractory design for high-temperature Energy conservation using optimal heat exchanger network analysis and conﬁ guration. Building capability for Dynamic Simulation of Power Plants. Successful selection and characterization of materials for critical applications and implementation of suitable preservation / corrosion protection techniques. Development of modeling capability for stack emission predictions using dispersion studies. Development of optimized design for Coal Pulverizers. Establishment of engineering studies in vibration and acoustic. in-house capability for advanced Development of expertise in performance testing of critical turbo-machinery. 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 resources for deepwater Oil & Gas applications. in-house analysis capabilities and testing Successful / 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. for material characterization, Establishment / upgradation of state-of-the art laboratory facilities 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. Big potential for Lurgi Gasiﬁ ers as these are suitable for Indian coals. Now, we are in the league of world’s top three companies who can supply CTL & GTL Reactors. 29 3. Information regarding technology imported during the last 5 years Technology Imported S. No. Year of Import Status a) Manufacturing know-how of 2007 Absorbed Cementing Unit [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 diversiﬁ ed range of products. Each business division of the Company has dedicated cells for giving impetus to exports. The Company has ofﬁ ces 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 identiﬁ ed 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 ofﬁ ces 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): E&C (Projects) Division’s track record in International market stretches from Isthmus of Malaysia to the endless dunes of the Middle East and Africa. Looking at the enormous business potential in the Middle East region, the Headquarter for Gulf operations is set up in Sharjah, the third largest emirate of the United Arab Emirates. The Division is well established in GCC Countries and is “Qualiﬁ ed” by major Oil & Gas Clients. It has executed various projects for key clients including Saudi Aramco, Saudi Kayan / SABIC, Petronas, KNPC, KOC, KAFCO, Qatar Petroleum, Pearl GTL Qatar, ADNOC Group of Companies, Maersk Oil Qatar, Oman Gas Company, Emirates National Oil Company etc. Over the last few years E&C (Projects) Division bagged a number of prestigious orders in the Gulf. E&C (Projects) Division has actively contributed towards clean environment through execution of Clean Fuel projects such as Motor Spirit Quality Upgradation, Diesel Hydro Treating, Hydrogen & Sulphur Block Projects. The cost of oil production by OPEC is far lower than what is produced elsewhere and thus has an advantage over other producers such as Canada & Brazil. GCC countries are seeking to develop gas ﬁ elds due to rising demand from the power and water (desalinated) sectors. Iran and Qatar have major gas deposits. Substantial business prospects in the Hydrocarbon segment, estimated to be in excess of USD 85 billion, exist in GCC Countries. 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. As far as Engineering Construction & Contracts Division (ECC) is concerned, the Electrical and Gulf Projects Operating 30 Company (E&GP OC) continues to focus on GCC Countries for Construction business. The year 2009-2010 was an extremely challenging year. Inordinate delay / deferment of projects by clients affected the order inﬂ ow. However, L&T’s Global Foot Print coupled with project execution capabilities helped the E&GP OC in securing certain prestigious orders in Qatar, UAE and Oman in the Power Transmission and Distribution Sector. The E&GP OC emerged as a market leader for the Power Transmission and Distribution (PTD) business in Oman and substantially improved its market share in UAE & Qatar. PTD business reported signiﬁ cant increase in both revenue and proﬁ tability. The PTD Business has gained momentum and notice inviting tenders for lot of new projects are being announced. The Construction Industry continues to witness slowdown and was very sluggish during the last ﬁ nancial year. The property market in Dubai was very badly affected by the economic meltdown. Even the Dubai Government could not bail out the property developers and faced a severe liquidity crisis and had to ﬁ nally seek the support of neighboring country, Abudhabi to bail them out. The Abudhabi Government, though ﬂ ushed with funds, is adopting a cautious approach which can be seen by the delayed announcement of new projects due to adverse market trend. The economic recession coupled with severe liquidity crisis has dented the growth of the Construction Sector in the Financial Year 2009-2010. The unprecedented volatility in commodity prices is forcing the client to defer launching of new projects to take advantage of falling prices. However, even under difﬁ cult period the E&GP OC has fared better than most of its competitors mainly due to its exposure to diverse client proﬁ le and geographies. The reinforced thrust to re-enter Saudi, Kuwait and geographical expansion to South Africa is expected to yield good results in the years to come. Focusing our attention on PTD Business and penetration into the Middle East market is expected to provide lots of opportunities to sustain the growth momentum. Heavy Engineering Division (HED): HED continues to take a number of initiatives to enhance export growth. In the last ﬁ nancial year, exports accounted for 60% of total sales in HED. South America in general & Brazil in particular is emerging as a major market for process plant equipment. The Division has booked orders for the supply of Reactors & Coke Drums for North East Reﬁ nery project of Petroleo Brasileiro S.A - Petrobras, Brazil. Middle East & North Africa continues to be focus market for HED. Orders for supply of critical equipment to fertilizer projects were received from Oman and Algeria. China remains to be a major market for HED products. Orders for supply of Shell Gasiﬁ ers have been bagged in Vietnam & Australia. Almost all the materials (except for Titanium & high thickness tube-sheets) for the feed heating equipment for Super Critical Power Plants are being sourced locally. A new territory was opened in Vietnam for Urea Plant and Australia for Ammonia Plant equipment. HED has been exploring opportunities for export of Defence, Nuclear Power & Aerospace equipment as well. Orders Establishment of Representative Ofﬁ ces overseas markets. in major (cid:2) have been received from Israeli Aerospace Industries as key Offset Partner in the areas of Weapon Systems, Radars and Aerospace. The Defence Business is also interacting with major international players in the defence industry for technology tie ups and indigenous manufacturing. Impressed with our performance on Indian order, Lurgi SA has shown great interest in taking quotes from us for other gasiﬁ cation projects. Our 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. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Electrical & Electronics Business Division (EBG): Electrical Standard Products (ESP) has bagged orders to supply to Alfanar and Iskara in Gulf Co-operation Council (GCC). ESP has also supplied products to other premium projects in GCC such as Pinancle Towers and Hotel Novotel in Dubai. However, much slower than expected recovery of GCC remains a concern for this business. For Electrical Systems & Equipment (ESE) business, projects in Saudi Arabia are being delayed. However, deﬁ nite signs of revival are seen. Large-size oil & gas projects are showing positive signs of recovery. Investments in Power Distribution, Water management continue and ESE expects good business from these sectors. The Control & Automation Business Unit (C&A) operates as a Turnkey Automation System Integrator in India, the Middle East & North Africa market in Cement, Metal, Oil & Gas, Utility, and Infrastructure verticals. This business unit exports engineered control and automation solutions to the Middle East countries etc. Metering & Protection Systems (MPS) has participated in tenders in Bangladesh. This business will also explore the business opportunities in Indonesia in the near future. EBG ﬁ led 128 patents in 2009-10. This is third consecutive ﬁ nancial year of achieving 100+ patents ﬁ ling. Manufacturing & Industrial Products Division (MIPD): The economic slow-down greatly impacted Valve Business in 2009-10 as the investment plans of many projects were either deferred or dropped. Valves Business Unit (VBU) plans to increase the market reach to leverage the approvals from Oil majors and forge the alliances in new markets such as South America, South Korea, Iran, North Africa, etc. The thrust on upstream market through value added product offerings is expected to yield results in the coming years. VBU is also focusing on Power sector including overseas nuclear plants to offer high pressure and custom built valves. With the new manufacturing plant at Coimbatore gearing up for N&NPT stamps from ASME, the Unit is well placed for growth in this sector. During 2009-10, there was a drop in Industrial machinery exports from Kansbahal primarily due to effect of economic downturn and cautious approach of international customers. However, there was a signiﬁ cant increase in Deemed exports through supply of Multi Layer Packaging Coated Board Machine to Century Pulp & Paper. The year also saw increased inﬂ ow of orders from the international market for Kansbahal. Geographies such as GCC countries, Africa, SE- Asean nations offer good opportunities in the coming years for the Crusher business. Kansbahal has opportunities to provide Pulp & Paper equipment to Voith as supplies for its global requirements. Rubber Machinery Business Unit (LTM BU) has been continuously working on development of new market in exports. During the year, the Unit has been successful in obtaining a signiﬁ cant order from a new customer in Japan for supply of Tyre Curing Press. The following initiatives have been taken by the Company Efforts for strategic alliances with Process Licensors / Technology Providers and reputed international EPC players are underway to undertake high value projects in international markets. (cid:2) Widening new geographical areas for augmenting its exports. (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Exploring for acquisition of specialized engineering outﬁ ts abroad. inorganic growth opportunities the Membership of global like Engineering & Construction Risk Institute (ECRI) and participating in international seminars. forums Implementation of Project KIRAN 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 programs including ﬂ agship Capability & Leadership Development (CALD) programs for catering to the training and development needs of employees. Total foreign exchange used and earned: Rs.Crore 2009-2010 2008-2009 Foreign Exchange earned 6,866.21 7,348.23 Foreign Exchange saved / deemed exports 1,510.05 92.31 Total 8,376.26 7,440.54 Foreign Exchange used 9,158.88 7,899.42 31 Annexure ‘B’ to the Directors’ Report Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 A. PRE RESTRUCTURE: ESOP SERIES Particulars (1) SAR-1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) (a) Options granted (b) The pricing formula 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 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 Stock Exchange, Mumbai, preceding the date of grant i.e., May 23, 2003 – Rs.206/- per share. The average of the two weeks high and low prices of the shares on the Stock Exchange, Mumbai, preceding the date of grant i.e., May 23, 2003 – Rs.206/- per share. 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. (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 5,250 1,46,025 1,25,300 1,07,375 (g) Variation of terms of Options Nil Nil Nil Nil (h) Money realised by exercise of Options 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 (i) Total Number of Options in force 7,94,250 SARs 37,50,360 36,43,050 36,68,035 67,51,000 57,42,500 32 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 A. PRE RESTRUCTURE (Contd.) Particulars (1) SAR-1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) ESOP SERIES (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) Identiﬁ ed 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 1,00,000 1,00,000 1,20,000 1,00,000 1,00,000 1,20,000 1,00,000 1,00,000 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 85,000 80,000 40,000 27,000 30,000 90,000 40,000 – 60,000 60,000 60,000 30,000 20,000 16,000 16,500 80,000 30,000 2,00,000 1,20,000 1,20,000 1,20,000 85,000 22,500 17,500 17,500 60,000 – – 2,00,000 1,20,000 1,20,000 1,20,000 85,000 22,500 17,500 17,500 – – – 40,000 5,37,500 42,000 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. 33 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 B. POST RESTRUCTURE (PRE BONUS ISSUE -2006): Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) ESOP SERIES (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 ) 6,02,670 56,460 35,30,380 Rs.14/- Rs.70/- (c) Options vested 3,97,125 18,75,180 10,22,050 10,02,003 Nil Nil (adjusted on restructure) Add: vested post restructure – – 7,90,312 8,20,708 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 4 Nil 5,613 12,326 14,583 6,94,997 3,23,009 Nil Nil Nil Nil Nil (h) Money realised by exercise of 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 Nil Nil Nil 4,200 Nil 4,200 5,375 14,925 17,389 17,135 Nil Nil 6,29,771 12,75,272 5,375 14,925 6,47,160 12,92,407 (j) Employee-wise details of Options granted 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. 34 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 C. POST RESTRUCTURE (POST BONUS ISSUE 2006 – PRE BONUS ISSUE 2008): Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) ESOP SERIES (a) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) (2) Options granted post Bonus Issue (Equity shares of Rs.2/- each) (b) The pricing formula (Adjusted grant price per share ) (c) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue Total (d) Options exercised (e) Total number of shares arising as a result of exercise of Options* (Equity shares of Rs.2/- each) (f) Options lapsed (g) Variation of terms of Options (h) Money realised by exercise of Options (i) Total Number of Options in force - Vested Unvested Total 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 29,850 34,778 34,270 – – 12,35,430 19,90,863 10,750 29,850 12,70,208 20,25,133 Nil Nil Nil Nil Nil 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 19,850 15,726 81,963 Nil Nil Nil 10,70,150 10,750 19,850 15,726 11,52,113 Nil – Nil Nil Nil Nil Nil Nil Nil Nil Nil (j) Employee-wise details of Options granted Please refer to Part A (j) * During the year 2007-08 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 former Directors in accordance with the consent terms approved by the Hon’ble High Court of Bombay on June 14, 2007. 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. 35 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 C. POST RESTRUCTURE (POST BONUS ISSUE 2008): ESOP SERIES Particulars (1) 1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) (a) (1) Options granted (outstanding Nil 16,800 21,500 39,700 31,452 23,04,226 and adjusted consequent to Bonus Issue) (2) Options granted post Bonus Issue (Equity shares of Rs.2/- each) The pricing formula (b) (Adjusted grant price per share ) (c) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue Total (d) Options exercised (e) Total number of shares arising as a result of exercise of Options (Equity shares of Rs.2/- each) (f) Options lapsed (g) Variation of terms of Options (h) Money realised by exercise of (i) (j) Options Total Number of Options in force - Vested Unvested Total 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 16,800 Nil 16,800 21,500 – 21,500 Nil Nil Nil Nil Nil 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) 3,18,100 26,22,326 1,63,926 13,31,074 14,95,000 13,94,812 13,94,812 31,452 – 31,452 Nil Nil 1,02,534 Nil Nil Nil Nil Rs.2,44,09,210/- 31,452 Nil 31,452 85,644 10,39,336 11,24,980 The number of Options exercised and shares arising as a result of exercise of Options shown in (d) and (e) above include 49,000 Options exercised in March 2010 for which shares were allotted on April 1, 2010. The money realised by exercise of Options shown in (h) includes the corresponding application money of Rs. 8,57,500/-. Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme - 2006 A. PRE BONUS ISSUE 2008: 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 ESOP SERIES 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/-. 36 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme - 2006 A. PRE BONUS ISSUE 2008 (Contd.) 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 – (c) (d) (e) (f) (g) (h) (i) ESOP SERIES Vested Unvested Total (j) Employee-wise details of Options granted to – i) ii) iii) Senior Managerial Personnel Any other employee who receives a grant, in any one year, of Options amounting to 5% or more of Options granted during that year Identiﬁ ed 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) (a) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) (2) Options granted Post Bonus Issue (b) (c) (d) (e) (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) ESOP SERIES Rs.601/- 2006 (2) 1,36,24,276 Nil 1,36,24,276 13,94,276 77,85,535 91,79,811 41,86,060 41,86,060 2006-A (3) 54,01,556 34,54,385 88,55,941 29,688 13,86,875 14,16,563 6,12,599 6,12,599 37 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) 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) Senior Managerial Personnel Any other employee who receives a grant, in any one year, of Options amounting to 5% or more of Options granted during that year Identiﬁ ed 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 iii) 2006 (2) 5,98,241 Nil 251,58,22,060 47,59,655 40,80,320 88,39,975 2006-A (3) 7,66,734 Nil 36,81,71,999 7,69,990 67,06,618 74,76,608 None None None The number of Options exercised, shares arising as a result of exercise of Options shown in (d) and (e) above include 3,78,474 Options exercised under 2006 Series and 41,382 Options exercised under 2006-A Series in March 2010 for which shares were allotted on April 1, 2010. The money realized by exercise of Options shown in (h) includes the corresponding application money of Rs. 22,74,62,874/- and Rs. 2,48,70,582/- respectively. (k) (l) Employee Stock Ownership Scheme -1999-2003 and Employee Stock Option Scheme 2006 Diluted Earning per Share (EPS) pursuant to issue of shares on exercise of Options calculated in accordance with Accounting Standards (AS) 20 The difference between employee compensation cost using intrinsic value method and the fair value of the Options and impact of this difference on proﬁ ts and on EPS. (a) Diluted EPS before extraordinary items Rs.70.15 (b) Diluted EPS after extraordinary items Rs.72.39 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 2009-2010 would have been higher by Rs.73.37 crore (excluding Rs.0.68 crore on account of grants to employees of subsidiary companies). (b) Basic EPS before extraordinary items would have decreased from Rs.71.49 per share to Rs.70.25 per share. (c) Basic EPS after extraordinary items would have decreased from Rs.73.77 per share to Rs.72.54 per share. (d) Diluted EPS before extraordinary items would have decreased from Rs.70.15 per share to Rs. 68.93 per share. (e) Diluted EPS after extraordinary items would have decreased from Rs.72.39 per share (m)(i) (a) Weighted average exercise prices of Options granted during the year where exercise price is less than market price. (b) Weighted average exercise prices of Options granted during the year where exercise price equals market price. to Rs.71.18 per share. Rs.568.75 per option No such grants during the year m(ii) (a) Weigh ted average fair values of Options granted during the year where exercise price is less than market price. Rs.942.75 per option (b) Weighted average fair values of Options granted during the year where exercise price equals market price. No such grants during the year 38 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 Employee Stock Ownership Scheme -1999-2003 and Employee Stock Option Scheme 2006 (n) Method and signiﬁ cant assumptions used to estimate the fair value of Options granted during the year. (a) Method (b) Signiﬁ cant Assumptions Black-Scholes Method. (i) Weighted average risk-free interest rate (ii) Weighted average expected life of Options (iii) Weighted average expected volatility (iv) Weighted average expected dividends (v) Weighted average market price 6.55% 3.92 years 49.11% Rs.48.96 per option Rs.1,374.09 per share Auditors’ certiﬁ cate 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 Employees Stock Option Schemes in accordance with SEBI (Employees 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 17, 2010 SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership No. 8820 39 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 in fact 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. THE GOVERNANCE STRUCTURE The Company has four tiers of Corporate Governance structure, viz.: (i) Strategic Supervision - by the Board of Directors comprising the Executive and Non-Executive Directors. (ii) Executive Management - by the Corporate Management comprising the Executive Directors and two senior Managerial Personnel. (iii) Strategy & Operational Management - by the Operating Company Boards 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 conﬁ dence. 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 ﬁ duciary 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): The CMD is the Chief Executive Ofﬁ cer 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 Board and the Shareholders meetings. d. Executive Directors (ED) / Senior Management Personnel: 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 critical 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: The Company’s policy is to have an appropriate mix of Executive & Non-Executive Directors. 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 Ofﬁ ce of the Company at L&T House, Ballard Estate, Mumbai 400 001. During the year under review, 7 Meetings were held on April 7, 2009, April 12, 2009, May 28, 2009, July 16, 2009, October 22, 2009, January 21, 2010 and February 26, 2010. 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 at least once every quarter inter alia to review the quarterly results. Additional Meetings are held, when necessary. Presentations 40 are made on business operations to the Board by Operating Company / Business Units. 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 is 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 following composition of the Board of Directors is as on May 17, 2010. Their attendance at the Meetings during the year and at the last Annual General Meeting as also number of other Directorships & Memberships / Chairmanships of Committees as on March 31, 2010 are as follows: Name of Director Nature of Director-ship 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 CMD ED ED ED ED ED ED ED NED NED NED NED NED NED NED NED NED $ Representing equity interest of LIC CMD - Chairman & Managing Director Attendance at last AGM Meetings held during the year 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 No of Board Meetings attended 7 7 7 7 7 6 7 5 7 5 7 5 7 7 6 7 3 @ Representing equity interest of GIC YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES ED - Executive Director No of other Directorships No. of Committee Membership – 1 3 – 2 2 1 – 1 6 5 1 2 5 2 2 – # Representing equity interest of SUUTI NED - Non-Executive Director No. of Committee Chairmanship – 5 5 1 – – – – – 4 3 1 – 4 – – – 2 8 10 2 1 3 3 1 1 14 8 3 1 11 4 1 – 1. None of the above Directors are related inter-se. 2. None of the Directors hold the ofﬁ ce of director in more than the permissible number of companies under the Companies Act, 1956. Also, the Committee Chairmanships / Memberships are within the limits under Clause 49 of the Listing Agreement. c. Information to the Board: The Board of Directors has complete access to the information within the Company, which inter alia includes - (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (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 Minutes of meeting of Board of Directors, Audit Committee, Nomination & Remuneration Committee and Shareholders’ / Investors’ Grievance Committee Details of any joint venture, acquisitions of companies or collaboration agreement Materially fatal or serious accidents or dangerous occurrences, any material efﬂ uent or pollution problems Any materially relevant default, if any, in ﬁ nancial 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 d. Post-meeting internal communication system: The important decisions taken at the Board / Committee meetings are communicated to the concerned departments / divisions promptly. 41 F. BOARD COMMITTEES iii) Meetings: The Board currently has 3 Committees: 1) Audit Committee, 2) Nomination and Remuneration Committee and 3) Shareholders’ / Investors’ Grievance Committee. The Board is responsible for constituting, assigning and co-opting the members of the Committees. The Committee met 7 times during the year on April 24, 2009, May 27, 2009, July 16, 2009, October 6, 2009, October 22, 2009, January 21, 2010 and March 20, 2010. The attendance of Members at the Meetings was as follows: 1) Audit Committee Name Status i) Terms of reference: The role of the Audit Committee includes the following: No. of meetings during the year No. of Meetings Attended (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 ﬁ nancial reporting process and disclosure of its ﬁ nancial information Recommending Statutory Auditors and ﬁ xation of remuneration the appointment of the their 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 policies and practices and adoption of applicable Accounting Standards accounting Reviewing major accounting entries involving exercise of judgment by the management Disclosure of contingent liabilities Reviewing, if necessary, the ﬁ ndings of any internal investigations by the Internal Auditors and reporting the matter to the Board Reviewing the risk management mechanisms of the Company compliance with Listing Reviewing of Agreement legal requirements concerning ﬁ nancial statements and related party transactions various other and Reviewing the Quarterly and Half yearly ﬁ nancial results and the Annual ﬁ nancial statements before they are submitted to the Board of Directors Reviewing the operations, new initiatives and performance of the business divisions into Looking for substantial the reasons defaults in payments to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, if any (cid:2) Approval of the appointment of the Chief Financial Ofﬁ cer (CFO). ii) Composition: The Audit Committee of the Board of Directors was formed in 1986 and as on March 31, 2010 comprised three Non-Executive Directors, all of whom are independent. 42 iv) Mr. M. M. Chitale Mr. N. Mohan Raj Chairman Member Mrs. Bhagyam Ramani Member 7 7 7 7 7 5 All the members of the Audit Committee are ﬁ nancially literate and have accounting or related ﬁ nancial management expertise. The Chief Financial Ofﬁ cer and the Chief Internal Auditor are permanent invitees to the Meetings of the Audit Committee. The Company Secretary is the Secretary to the Committee. Internal Audit: The Company has an internal corporate audit team consisting of Chartered Accountants, Engineers & system experts. Over a period of time, the Corporate Audit department has acquired in-depth knowledge about the Company, its businesses, its systems & procedures, which knowledge is now institutionalized. The Company’s Internal Audit function is ISO 9001:2000 certiﬁ ed. The Chief Internal Auditor reports to the Chairman & Managing Director. The staff of Corporate Audit department is rotated periodically. From time to time, the Company’s systems of internal controls covering ﬁ nancial, operational, compliance, IT applications, etc are reviewed by external experts. Presentations are made to the Audit Committee on the ﬁ ndings of such reviews. The minutes of the Audit Committee are circulated to the Board and discussed at Board meetings. The Company’s Audit Committee, inter alia, reviews the adequacy of internal audit function, reviews the internal audit reports including those related to internal control weaknesses and reviews the performance of the Corporate Audit Department. The Audit Committee is provided necessary assistance and information to carry out their function effectively. 2) Nomination & Remuneration Committee (N&R) (earlier known as Nomination & Compensation Committee) i) to review Terms of reference: To review, assess and recommend the appointment of Executive and Non-Executive Directors (NED) and, remuneration package, to recommend compensation to the NEDs 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. their ii) Composition: The Committee has been in place since 1999. As at March 31, 2010, the Committee comprised 3 Non- Executive Directors and the Chairman & Managing Director. iii) Board Membership Criteria: While screening, selecting and recommending to the Board new members, the Committee ensures that the Board is objective, there is absence of conﬂ ict of interest, ensures availability of diverse perspectives, legal, ﬁ nancial & other business experience, expertise, integrity, managerial qualities, practical wisdom, ability to read & understand ﬁ nancial statements, commitment to ethical standards and values of the Company and ensure healthy debates & sound decisions. While evaluating the suitability of a Director for re-appointment, besides the above criteria, the Committee considers the past performance, attendance & participation in and contribution to the activities of the Board by the Director. The Non-Executive Directors comply with the deﬁ nition of Independent Director as given under Clause 49 of the Listing Agreement. As per the deﬁ nition, all our NED’s qualify as “Independent Directors”. While appointing / re-appointing any NED’s on the Board, the Committee, considers the criteria as laid down in the Listing Agreement. All the Independent Directors give a certiﬁ cate conﬁ rming the “independence criteria” as mentioned in Clause 49 of the Listing Agreement. they meet that These certiﬁ cates have been placed on the website of the Company. iv) Meetings: The Committee met 6 times during the year on April 7, 2009, May 28, 2009, August 17, 2009, October 22, 2009, January 21, 2010 and February 22, 2010. The attendance of Members at the Meetings was as follows- Name Status No. of meetings during the year No. of Meetings Attended Mr. S. Rajgopal Mr. S. N. Talwar Chairman Member Mr. Subodh Bhargava Member Mr. A. M. Naik Member 6 6 6 6 6 4 6 6 v) Remuneration Policy: The remuneration of the Board members is based on the Company’s size & global presence, its economic & ﬁ nancial position, industrial trends, compensation paid by the peer companies, etc. Compensation reﬂ ects each Board member’s responsibility and performance. The level of Board compensation to Executive Directors is designed to be competitive in the market for highly qualiﬁ ed executives. (ﬁ xed components) & The Company pays remuneration to Executive Directors by way of salary, perquisites & retirement beneﬁ ts commission (variable component), based on recommendation of the Committee, approval of the Board and the shareholders. The commission is calculated with reference to net proﬁ ts of the Company in the ﬁ nancial year subject to overall ceilings stipulated under Sections 198 & 309 of the Companies Act, 1956. The NEDs are paid remuneration by way of commission & sitting fees. The Company pays sitting fees of Rs. 20,000 per meeting of the Committee and the Board, to the NEDs for attending the meetings of the Board & Committees. The commission is paid as per limits approved by shareholders, subject to a limit not exceeding 1% p.a. of the proﬁ ts of the Company (computed in accordance with Section 309(5) of the Companies Act, 1956). The commission to NEDs is distributed broadly on the basis of their attendance, contribution at the Board, the Committee meetings and Chairmanship of Committees. In the case of nominees of Financial Institutions, the commission is paid to the Financial Institutions. As required by the provisions of 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 vi) Details of remuneration paid / payable to Directors for the year ended March 31, 2010: (a) Executive Directors: The details of remuneration paid / payable to the Executive Directors is as follows- (Rs. Lakh) Names Salary Perquisites 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 138.00 72.00 75.60 72.00 69.00 66.00 66.00 63.00 15.00 15.00 104.08 103.55 103.06 13.80 12.60 82.89 Commission Total Retirement Beneﬁ ts 322.02 161.82 162.79 161.82 161.01 131.73 131.73 130.92 1,054.68 527.34 527.34 527.34 527.34 421.87 421.87 421.87 1,529.70 776.16 869.81 864.71 860.41 633.40 632.20 698.68 (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 43 (b) Non-Executive Directors: ii) Composition: The details of remuneration paid / payable to the Non-Executive Directors is as follows: (Rs. Lakh) Commission Total Names Sitting Fees for Board Meeting Sitting Fees for Committee Meeting 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 1.40 1.00 1.40 1.00* 1.40* 1.40 1.20* 1.40 0.60 1.20 0.80 1.40 – 1.40* 1.20 1.00* 0.60 0.00 11.00 9.00 11.00 9.00* 9.00* 9.00 9.00* 11.00* 9.00 13.60 10.80 13.80 10.00* 11.80* 11.60 11.20* 13.00 9.60 * Payable to respective Institutions they represent. Details of shares and convertible instruments held by the Non-Executive Directors as on March 31, 2010 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 As on March 31, 2010 the Shareholders’ / Investors’ Grievance Committee comprised of 2 Non- Executive Directors and 2 Executive Directors. iii) Meetings: During the year, the Committee held 3 meetings on May 28, 2009, October 22, 2009 and January 21, 2010. The attendance of Members at the Meetings was as follows- Name Status No. of Meetings Attended No. of meetings during the year 3 3 3 3 Mr. Thomas Mathew T. Chairman Member Mr. J. P. Nayak Member Mr. R. N. Mukhija Mr. A. K. Jain* Member * Mr. A. K. Jain chaired all the three meetings held during the year. – 3 3 3 Mr. N. Hariharan, Company Secretary Compliance Ofﬁ cer. is the iv) Number of Requests / Complaints: During the year, the Company has resolved investor grievances expeditiously except for the cases constrained by disputes or legal impediments. During the year, the Company / its Registrar’s received the following complaints from SEBI / Stock Exchanges and queries from shareholders, which were resolved within the time frames laid down by SEBI. Particulars Opening Balance Received Resolved Pending NIL NIL 115 115 Complaints: SEBI / Stock Exchange Shareholder Queries: Dividend Related Transmission / Transfer Demat / Remat Investor queries / complaints shown pending as on March 31, 2010 are less than ten days old and have been subsequently resolved. 10,683 1,019 10,952 1,050 269 31 NIL NIL 169 161 NIL 8 * held jointly with the Institution they represent # has been granted 60,000 stock options 3) Shareholders’ / Investors’ Grievance Committee: i) Terms of reference: The terms of reference of the Shareholders’ / Investors’ Grievance Committee are as follows: (cid:2) (cid:2) Redressal of Shareholders’ complaints / Investors’ Allotment, transfer & transmission of Shares / Debentures or any other securities and issue of duplicate certiﬁ cates and new certiﬁ cates on split / consolidation / renewal etc. as may be referred to it by the Share Transfer Committee. The Board has delegated the powers to approve transfer of shares to a Transfer Committee of Executives comprising 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) Training of Directors: All our present Directors have enough experience as Board members in the Company as well as in other companies. They are aware and are also updated as and when required, of their role, responsibilities & liabilities. They understand basic ﬁ nancial statements. The Company holds Board meetings at its registered ofﬁ ce and also in locations, where its divisions are 44 headquartered and operate. The Board of Directors has complete access to the information within the Company, which inter alia, includes items as mentioned on Page 41 in Annexure ‘C’ to the Directors Report. Presentations are made regularly to the Board / N&R / Audit Committee (AC) (minutes of AC & N&R are circulated to the Board), where Directors get an opportunity to interact with senior managers. Presentations, inter alia, cover business strategies, management structure, HR policy, management development and succession planning, quarterly and annual results, budgets, treasury policy, review of Internal Audit, risk management framework, operations of subsidiaries and associates, etc. Site / factory visits are organized at various locations for the Directors. Independent Directors have the freedom to interact with the Company’s management. Interactions happen during Board / Committee meetings when senior company personnel are asked to make presentations about performance of their Operating Company / Business Unit, to the Board. Such interactions also happen when these Directors meet senior management in informal gatherings. Information is provided to the Independent Directors in the normal course. Additional information is provided to them, when asked for. b) 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 deﬁ ned 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. c) Statutory Auditors: furnished a declaration conﬁ rming The Board has recommended to the shareholders, the re-appointment of Sharp & Tannan (S&T) as auditors. S&T has their independence as well as their arm’s length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company. The Company believes that S&T, over a period of time, has gained extensive knowledge of the Company & its diversiﬁ ed business, which is essential to ensure audit quality & audit objectivity. Robust internal control systems and risk management framework, review of Auditors’ performance by the Audit Committee and peer review of the Audit ﬁ rm, are some of the more important factors that prevent audit failures. The Company will ensure rotation of audit partners and for 2009-2010, Mr. R. D. Kare, has certiﬁ ed and given his report, on behalf of S&T, instead of Mr. F. M. Kobla. d) Proceeds from Public Issues, Rights Issues, Preferential Issues, etc.: During the year under review, the Company has not raised any proceeds from public issue or rights issue. However, it raised Rs. 1,873 crore through Qualiﬁ ed Institutions Placement route by way of allotment of shares to QIBs. e) 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 afﬁ rmed compliance with the Code of Conduct as adopted by the Board of Directors. A. M. Naik Chairman & Managing Director Date: May 17, 2010 Place: Mumbai f) General Body Meetings: The last three Annual General Meetings of the Company were held at Birla Matushri Sabhagar, Mumbai as under: Financial Year Date Time 2008-2009 2007-2008 2006-2007 August 28, 2009 3.00 p.m. August 29, 2008 3.00 p.m. August 24, 2007 2.15 p.m. The following Special Resolutions were passed by the members during the past 3 Annual General Meetings: Annual General Meeting held on August 28, 2009: (cid:2) (cid:2) To approve raising of capital through QIP’s by issue of shares / convertible debentures / securities upto an amount of USD 600 million or Rs. 2400 crore. To approve appointment of Statutory Auditors and remuneration payable to them. Annual General Meeting held on August 29, 2008: (cid:2) (cid:2) To approve raising of capital through QIP’s by issue of shares / convertible debentures / securities upto an amount of USD 600 million or Rs. 2400 crore. To approve appointment of Statutory Auditors and remuneration payable to them. Annual General Meeting held on August 24, 2007: (cid:2) (cid:2) To approve raising of capital in Indian and / or International market by issue of shares / securities. To approve appointment of Statutory Auditors and remuneration payable to them. g) Postal Ballot: No resolution was passed through Postal Ballot in 2009- 2010. None of the Businesses proposed to be transacted in the ensuing Annual General Meeting require passing a resolution through Postal Ballot. h) 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 conﬂ ict with the interests of the Company. 2. Details of all related party transactions form a part of the accounts as required under AS 18 and the same 45 are given on Page 149 to page 159 of the Annual Report. 3. The Company has followed all relevant Accounting Standards notiﬁ ed by the Companies (Accounting Standards) Rules, 2006 while preparing the Financial Statements. 4. The Company makes presentations to Institutional Investors & Equity Analysts on the Company’s performance on a quarterly basis. 5. There were no instances of non-compliance on any matter related to the capital markets, during the last three years. i) Means of communication: Financial Results News Releases Website Corpﬁ ling Annual Report Management Discussion & Analysis corporate Company’s Quarterly & Annual Results are published in prominent daily newspapers viz. The Financial Express, The Hindu Business Line & Loksatta. The results are also posted on the Company’s website: www.larsentoubro.com. Ofﬁ cial news releases are sent to stock exchanges as well as displayed on the Company’s website: www.larsentoubro.com. 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 to their convenience. Presentations made Institutional Investors and the shareholding pattern of the Company on a quarterly basis are also displayed on the website. The entire Annual Report and Accounts of the Company and its subsidiaries are available in downloadable formats. We will also forward the same to the Stock Exchanges. Information to Stock Exchanges is now being ﬁ led through Corporate Filing and Dissemination System (CFDS). Investors can view this information by visiting the website www.corpﬁ ling.co.in. Annual Report is circulated to all the members and all others entitled thereto like auditors, equity analysts, etc. This forms a 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 Thursday, August 26, 2010 at Birla Matushri Sabhagar, Marine Lines, Mumbai - 400 020 at 3.00 p.m. b) Financial calendar: 1. Annual Results of 2009-10 May 17, 2010 2. Mailing of Annual Reports Third week of July, 2010 c) Book Closure: The dates of Book Closure are from Thursday, August 19, 2010 to Thursday, August 26, 2010 (both days inclusive) to determine the members entitled to the dividend for 2009-2010. 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. e) Listing Fees to Stock Exchanges: The Company has paid the Listing Fees for the year 2010- 2011 to the above Stock Exchanges. f) Custodial Fees to Depositories: The Company has paid custodial fees for the year 2010-2011 to National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). g) Stock Code / Symbol: The Company’s equity shares / GDRs are listed on the following Stock Exchanges and admitted for trading in London Stock Exchange: Bombay Stock Exchange (BSE) : Scrip Code - 500510 National Stock Exchange (NSE) : Scrip Code - LT ISIN : INE018A01030 Reuters RIC : LART.BO Luxembourg Exchange Stock Code : 005428157 London Exchange Stock Code : LTOD 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 data for the year 2009-2010: Month 2009 April May June July L&T BSE Price (Rs.) BSE SENSEX High Low Month Close High Low Month Close 924.50 663.00 879.55 11,492.10 9,546.29 11,403.25 1,469.75 895.00 1,405.60 14,930.54 11,621.30 14,625.25 1,800.00 1,372.00 1,568.30 15,600.30 14,016.95 14,493.84 1,662.00 1,305.00 1,506.60 15,732.81 13,219.99 15,670.31 August 1,622.95 1,390.00 1,567.60 16,002.46 14,684.45 15,666.64 September 1,690.00 1,503.00 1,683.20 17,142.52 15,356.72 17,126.84 October 1,727.50 1,541.00 1,567.15 17,493.17 15,805.20 15,896.28 November 1,669.00 1,485.10 1,614.15 17,290.48 15,330.56 16,926.22 3. First Quarter Results During last week of July, 2010* December 1,719.00 1,605.00 1,679.40 17,530.94 16,577.78 17,464.81 4. Annual General Meeting August 26, 2010 5. Payment of Dividend August 30, 2010 6. Second Quarter results During third week of October, 2010* 7. Third Quarter results End of January, 2011* * Tentative 46 2010 January 1,709.00 1,401.15 1,425.05 17,790.33 15,982.08 16,357.96 February 1,581.45 1,371.00 1,566.85 16,669.25 15,651.99 16,429.55 March 1,669.80 1,541.25 1,626.35 17,793.01 16,438.45 17,527.77 Physical shares received for dematerialization are processed and completed 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. As required under Clause 47-C of the Listing Agreement, a certiﬁ cate on half yearly basis conﬁ rming due compliance of share transfer formalities by the Company from Practicing Company Secretary has been submitted to Stock Exchanges within stipulated time. k) Distribution of Shareholding as on March 31, 2010: No. of Shares Shareholders Shareholding Number % Number % Month 2009 April May June July L&T NSE Price (Rs.) High Low Month Close High NIFTY Low Month Close 924.50 661.30 879.35 3,517.25 2,965.70 3,473.95 1,477.00 895.00 1,402.20 4,509.40 3,478.70 4,448.95 1,698.70 1,370.00 1,567.80 4,693.20 4,143.25 4,291.10 1,661.90 1,305.40 1,506.35 4,669.75 3,918.75 4,636.45 Up to 500 501 - 1000 1001 - 2000 2001 - 3000 3001 - 4000 4001 - 5000 5001 - 10000 10001 and above 7,67,240 94.18 5,99,31,162 26,034 11,561 3,399 1,736 1,029 1,933 1,746 3.20 1.42 0.41 0.21 0.13 0.24 0.21 1,90,89,622 1,66,03,853 84,30,561 61,31,438 46,63,025 1,34,51,023 47,38,94,724 August 1,625.00 1,390.00 1,567.45 4,743.75 4,353.45 4,662.10 TOTAL 8,14,678 100.00 60,21,95,408 9.95 3.17 2.76 1.40 1.02 0.77 2.23 78.70 100.00 September 1,697.50 1,503.50 1,689.20 5,087.60 4,576.60 5,083.95 October 1,729.40 1,541.30 1,568.00 5,181.95 4,687.50 4,711.70 November 1,670.00 1,485.30 1,614.60 5,138.00 4,538.50 5,032.70 l) Categories of Shareholders is as under: Category 31.03.2010 31.03.2009 No. of Shares % No. of Shares % December 1,720.00 1,606.55 1,677.60 5,221.85 4,943.95 5,201.05 Financial Institutions 19,85,77,575 32.98 18,76,10,525 2010 January 1,710.40 1,401.00 1,423.85 5,310.85 4,766.00 4,882.05 February 1,583.00 1,389.90 1,564.30 4,992.00 4,675.40 4,922.30 March 1,670.00 1,543.00 1,630.85 5,329.55 4,935.35 5,249.10 Foreign Institutional Investors Shares underlying GDRs Mutual Funds Bodies Corporate 8,69,55,554 14.44 6,97,05,591 1,62,02,709 2.69 1,71,92,103 3,24,73,907 3,77,85,910 5.39 6.27 1.07 3,43,36,111 3,37,60,770 66,67,993 Directors & Relatives 64,23,782 32.03 11.90 2.94 5.86 5.77 1.14 L&T Employees Welfare Foundation Others TOTAL 7,44,04,116 12.36 7,44,04,116 12.70 14,93,71,855 60,21,95,408 24.80 16,20,10,653 100.00 58,56,87,862 27.66 100.00 i) Registrar and Share Transfer Agents (RTA): Sharepro Services (India) Private Limited, Mumbai. j) Share Transfer System: The share transfer activities under physical mode are carried out by the RTA. Shares in physical mode which are lodged for transfer are processed and returned within the stipulated time. The share related information is available online. 47 m) Dematerialization of shares: The Company’s Shares are required to be compulsorily traded in the Stock Exchanges in dematerialized form. During the year, the Company has sent letters to shareholders holding shares in physical form emphasizing the beneﬁ ts of dematerialization. These letters have evoked a reasonable response from the shareholders. The number of shares held in dematerialized and physical mode is as under: No. of shares % of total capital issued 55,92,86,740 92.87 Held in dematerialized form in NSDL Held in dematerialized form in CDSL 2,23,30,499 3.71 3.42 2,05,78,169 60,21,95,408 100.00 Physical Total n) Transmission of Shares in Physical Form: SEBI vide its circular dated January 7, 2010 has made it mandatory to furnish a copy of PAN in the following cases: i) Deletion of name of deceased shareholder(s), where the shares are held in the name of two or more shareholders. ii) Transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares. iii) Transposition of shares - when there is a change in the order of names in which physical shares are held jointly in the names of two or more shareholders. o) Implementation of NECS by RBI: Reserve Bank of India vide its circular dated July 29, 2009 had instructed banks to move to the NECS platform for centralised processing of inward instructions and handling bulk transactions w.e.f. October 1, 2009. Shareholders holding shares in demat mode are instructed to instruct their depository participant to take note of the new account number allotted by their bankers which have implemented the Core Banking 48 System. Shareholders holding shares in physical mode can send the details of their bank account to the Company’s Registrar and Transfer Agent. p) 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. The Company has the following Foreign Currency Convertible Bonds outstanding as on March 31. 2010: 3.50% USD 200 million Foreign Currency Convertible Bonds due 2014 (i) (ii) (iii) Principal Value of the Bonds issued USD 200 million Principal Value of Bonds converted to GDRs since issue. NIL Principal Value of Bonds outstanding as at March 31, 2010 USD 200 million (iv) Underlying Equity Shares / GDR’s issued pursuant to conversion as per (ii) above NIL (v) Underlying Equity Shares / GDR’s that may be to conversion notices in respect of (iii) above issued pursuant 49,07,243 shares These Convertible Bonds are listed on the Singapore Exchange Securities Trading Limited. q) 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) and Bombay Stock Exchange Limited (BSE). r) Debenture Trustees (for privately placed debentures) IDBI Trusteeship Services Limited Ground Floor, Asian Building 17, R. Kamani Marg, Ballard Estate Mumbai - 400 001 s) Plant Locations: The L&T Group’s facilities for design, engineering, manufacture and testing cover the business sectors of engineering & construction, electrical & electronics and machinery and industrial products. They are based at multiple locations within India as well as in the Gulf (Oman, Saudi Arabia, Dubai), South East Asia (Malaysia, Indonesia) China and Australia. Within India, L&T campuses are located at Ahmednagar, Bangalore, Chennai, Coimbatore, Faridabad, Hazira (Surat), Rourkela, Mumbai, Mysore, Pithampur, Puducherry, Talegaon and Vadodara. A shipyard and modular fabrication facility is coming up at Katupalli near Ennore on India’s east coast. The L&T Group also has an extensive network of ofﬁ ces in India and around the globe. t) Address for correspondence: Larsen & Toubro Limited, L&T House, N. M. Marg, Ballard Estate, Mumbai 400 001. Tel. No. (022) 67525 656, Fax No. (022) 67525 893 Shareholder correspondence may be directed the Company’s Registrar and Share Transfer Agent, whose address is given below: to 1. Sharepro Services (India) Private Limited - Unit : Larsen & Toubro Limited Samhita Warehousing Complex, Bldg. No.13 A B, 2nd Floor, Off Sakinaka Telephone Exchange Lane, 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; or Sharepro@shareproservices.com w) Securities Dealing Code: to the SEBI (Prohibition of Pursuant 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, Ofﬁ cers 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 speciﬁ ed limit, permission of Compliance Ofﬁ cer is also required. All the Designated Employees are also required to disclose related information periodically as deﬁ ned in the Code. Directors and designated employees who buy and sell shares of the Company are prohibited from entering into an opposite transaction i.e sell or buy any shares of the Company during the next six months following the prior transactions. Directors and designated employees are also prohibited from taking positions in the derivatives segment of the Company’ shares. Mr. N. Hariharan, Company Secretary has been designated as the Compliance Ofﬁ cer. 2. Sharepro Services (India) Private Limited x) ISO 9001:2008 Certiﬁ cation: Unit : Larsen & Toubro Limited 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai 400 021. Tel : (022) 6613 4700 Fax : (022) 2282 5484 u) Investor Grievances: The Company has designated 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. v) 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 & Remuneration 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. 3. Access to the Audit committee of the Board is also available. The Company’s Secretarial Department which provides secretarial services and investor services for the Company and its Subsidiary and Associate Companies is ISO 9001:2008 certiﬁ ed and subject to periodic audit by the ISO certifying agency. y) Secretarial Audit: As stipulated by SEBI, a Qualiﬁ ed 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 conﬁ rms 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. The secretarial department of the Company at Mumbai Infrastructure & Chennai (overseeing all companies Development Projects), are manned by competent and experienced professionals. The Company has a system to review and audit its secretarial and other compliances by competent professionals, who are employees of the Company. Appropriate actions are taken to continuously improve the quality of compliance. in The Company also has adequate software and systems to monitor compliance. 49 Chief Executive Ofﬁ cer (CEO) and Chief Financial Ofﬁ cer (CFO) Certiﬁ cation To the Board of Directors of Larsen & Toubro Limited Dear Sirs, Sub: CEO / CFO Certiﬁ cate (Issue in accordance with provisions of Clause 49 of the Listing Agreement) We have reviewed the ﬁ nancial statements, read with the cash ﬂ ow statement of Larsen & Toubro Limited for the year ended March 31, 2010 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 ﬁ nancial reporting. We have evaluated the effectiveness of internal control systems of the Company and have disclosed to the Auditors and the Audit Committee, deﬁ ciencies in the design or operation of internal controls, if any, and steps taken or proposed to be taken for rectifying these deﬁ ciencies. (d) We have indicated to the Auditors and the Audit Committee: (i) Signiﬁ cant changes in accounting policies made during the year and that the same have been disclosed suitably in the notes to the ﬁ nancial statements; and (ii) That there were no instances of signiﬁ cant fraud of which we have become aware. Yours sincerely, Y. M. Deosthalee Chief Financial Ofﬁ cer A. M. Naik Chairman & Managing Director Place: Mumbai Date: May 17, 2010 Auditors certiﬁ cate 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, 2010 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 the 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 ﬁ nancial statements of the Company. In our opinion and to the best of our information and according to the explanation 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 efﬁ ciency or effectiveness with which the management has conducted the affairs of the Company. Mumbai, May 17, 2010 50 SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership No. 8820 Management Discussion & Analysis 2009-2010 Macro-economic Overview Despite the global slowdown, the Indian economy expanded by 7.4% during 2009-2010, as against 6.7% during 2008- 2009, supported by the Government's stimulus package. The revival in consumption boosted the industry and services sectors in the economy. The Index of Industrial Production (IIP) continued its upward trend since June 2009, growing by 10.4% in 2009-2010 (4.1% in 2008-2009). The manufacturing sector and capital goods industry made a significant contribution to the growth of the economy. The world economy currently is emerging from the clutches of a wide spread slowdown, triggered by the excesses in the global financial market. While the developed economies are recovering albeit slowly, aided by the liberal stimulus packages, they are grappling with many challenges such as high unemployment, weak and volatile financial markets and impending trade barriers. The lower expectations of growth of these economies could impact the rate of growth in developing countries over the next 3 to 5 years. In the Indian context, negative signs are visible in the sluggish export growth and subdued direct capital flows into the economy. The amount of foreign direct equity investment in the country during 2009-2010 remained sluggish at USD 25.9 Billion. The challenge from an adverse external environment has been recently accentuated with the turmoil in the EU, followed by Portugal, Ireland, Italy, Greece and Spain (PIIGS) as also Hungary. Unsustainable macro economic conditions such as high debt levels, low taxes and rigid labour markets have led to a situation of sovereign default in Greece, raising the risk of contagion in the EU. A collapse has been currently avoided with the European Union, ECB and the IMF putting together a rescue package of almost $1 Trillion. The impact on an already nervous financial system was seen in the rise in Credit Default Swap rates and weakening of Euro. The global economic recovery is likely to take longer on account of the crisis. Along with the current global challenges, the Indian economy also needs to contend with the rising spectra of inflation and tight monetary conditions. There is a need for a second green revolution in the agricultural sector, as otherwise the rising food prices may continue to inflationary conditions. dominate Needless to add, higher economic growth would also require a significant addition to infrastructure as well as increase in across the board productivity levels. The challenges as we know are many, yet, the Indian economy has inherent strengths to rise above these towards challenges and move accelerated growth in the medium to long term. Construction & Project related business scenario The Infrastructure & Construction sectors in India experienced a relatively lower growth during the year. The effect of the low growth of the industrial sector at the beginning of the year adversely impacted the infrastructure sector output. The core infrastructure industries grew by 5.5% in 2009-2010. However, many important initiatives were taken during the year in order to step up the investment in core infrastructure. During the current fiscal year, the transport sector's funding earmarked for the national highways development program increased by 23% compared with the previous year, while funding for railways increased by close to 45%. In the power sector, allocations for the power development program increased by 160%. The investment climate is expected to further improve in 2010-2011 even as the other sectors of the economy pick up the growth momentum. Infrastructure has been the focal point of the Government's budget proposals. A combination of higher government funding and public private partnerships (PPPs) will drive new investments in infrastructure projects. The liberal allocation for infrastructure has been complemented by improved liquidity conditions in the market, which will boost mega-projects in power, highways and railways. In addition, a blue print will be created in 2010-2011 for natural gas pipeline corridors project.All the above initiatives taken by the Government are expected to give a fillip to an all round economic growth in the short to medium term. in The crude prices have strengthened during the year thereby reviving the the investment opportunities Hydrocarbon sector. However, the domestic upstream sector could still experience somewhat sluggish growth in the short term due to unattractive returns and low capital flows. The Hydrocarbon Mid and Downstream sector, may however, attract healthy investment in the current year in its bid to augment capacity and improve product quality. The Middle East countries continue to reel under the impact of global financial 51 crisis experienced in 2008. The current hardening of oil prices is largely due to supply constraints rather than due to hike in global demand. The investment climate is expected to remain subdued in the short term. The bursting of real estate bubble in some Gulf countries is also expected to keep the investors at bay for some time at least in the real estate sector. Challenges Competition is expected to intensify in the domestic infrastructure and construction sectors, post the revival of growth trajectory of the economy. Many mid-size construction and EPC players have been active and expanding their range of project execution skills, which in the medium term, may adversely impact overall project margins. Further, with some of the larger EPC packages requiring longer execution schedule, the timelines for conversion of Order Book to Sales Revenue would be relatively longer. Astute contract and project management have also gained importance due to increased execution timelines and stiffer delivery terms. Inflationary conditions have erupted in the economy due to supply side constraints. This would have a snowballing effect on the raw materials and input prices, which may erode the profitability of capital goods sectors in the near to medium term. Ensuring timely execution within the cost targets and a smart working capital management will be critical success factors for the project business in their efforts to reinforce the market leadership. Collaborations for technology up- gradation, especially in the new and emerging businesses, will continue to enhance the competitive edge and enable the businesses to move up the 52 value chain for realising better margins. On the manufacturing business front, deeper market penetration, improved capacity utilisation and cost efficient operations will be the major success factors. The prospects of certain new and emerging businesses like Defence, Nuclear, Water and Railways will depend on the Government's ability to activate the policy implementation without further delay and manage fiscal health. Strategies the original The Company's Project Lakshya initiated 5 years ago as part of its strategic capability build-up exercise concluded during the year with most of the targets achieved and a few parameters surpassing targets. Continuing this journey of focused growth, the Company has embarked upon a Perspective Plan 2010 - 2015 which may see some restructuring of its current portfolio of businesses. The Company plans to focus on building new capabilities in areas of Power Development, Ship Building, Nuclear Forging and Defence, besides embarking on an accelerated growth path in its other businesses. Hazira and Coimbatore are the major locations where the fabrication and manufacturing facilities are being stepped up to improve the execution capability and delivery time. A new manufacturing facility is being planned at Baroda for catering to expanding electrical products market. The project of new shipyard at Kattupalli, Tamil Nadu for fabricating large defence ships is also being implemented during the budget year. Investments have been made for operationalisation of joint ventures formed for manufacturing super critical boilers and turbines. Power auxiliaries and large forgings are also planned to be manufactured at Hazira to harness the potentials emerging from mega thermal power, nuclear power and hydrocarbon sectors. On the international front, the Company's heavy engineering fabrication facility in Oman has commenced operations. The installation vessel being built under SapuraCrest JV is expected to be launched shortly. The Electrical & Electronics Division has targeted increase in the output from its overseas production facilities in Saudi Arabia & UAE. The Division has completed the integration of the newly acquired TAMCO group of companies by leveraging Medium Voltage products with its existing Low Voltage Switchgear products. In order to expand the international footprint, the Company is planning to enter select international territories in Africa, South East Asia and Latin America to harness the promising business potential in these markets. The E&C Division has enhanced its efforts in engineering & design capabilities, improving product offerings with forays into new fields like Floating Production Systems, Water Process Technology, High-end Pipeline Engineering etc. The product businesses have plans to beef up marketing to ensure on-time infrastructure deliveries and cost competitiveness and customer service. The construction business plans to focus on expanding its market reach beyond the current geography and increase its market share. improved High skilled talent acquisition and retention are critical for sustainable growth. Various initiatives have been planned towards career planning, competency building, succession planning etc. While the businesses have budgeted moderate growth in manpower, emphasis is being given to build higher competencies demanded by the customers. Maximising employee productivity is a major area of attention for the Company to improve its competitive edge. A record Order Book of over Rs.1,00,000 crore at the year end 2009-2010 gives a good visibility to the revenue growth in 2010-2011 and 2011-2012, and hence, the Company is setting its vision on a longer and sustained growth trajectory beyond the medium term. In this backdrop, the Company's business divisions and its Subsidiary and Associate companies present their review of operations for the year 2009- 2010. Performance at a Glance L&T ● Order Inflow at Rs.69,572 crore in 2009-2010 as against Rs.51,621 crore in 2008-2009 - 35% growth y-on-y ● Order Book as at March 31, 2010 Rs.1,00,239 crore as against Rs.70,319 crore as at March 31, 2009- 43% growth y-on-y ● Gross Sales at Rs.36,996 crore in 2009-2010 as against Rs.34,045 crore in 2008-2009 - 9% growth over 2008-2009 ● PAT at Rs.4,376 crore in 2009-2010 as against Rs.3,482 crore in 2008-2009 - growth of 26% over 2008-2009 ● Gross Debt Equity ratio of 0.37:1 (previous year 0.53:1) L&T Group ● Gross Sales at Rs.43,854 crore in 2009-2010 as against Rs.40,608 crore in 2008-2009 - 8% growth over 2008-2009 ● PAT at Rs.5,451 crore in 2009-2010 as against Rs.3,789 crore in 2008-2009 - growth of 44% over 2008-2009 53 K. V. Rangaswami Whole-time Director & President (Construction) Port at Dhamra on India’s east coast developed by L&T in collaboration with the Tata Group. L&T is carrying out complete civil, electrical and mechanical construction for this major port complex. Engineering, Construction & Contracts Division and Overview Engineering, Construction and Contracts Division (ECCD) undertakes engineering design and construction of infrastructure, buildings, factories, water supply & metallurgical and material handling projects covering civil, mechanical, electrical 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, covering all buildings, industrial sectors and infrastructure development, the Division also undertakes lump-sum turnkey construction with single-source responsibility. The Division takes pride in announcing that it has secured the 35th rank amongst all the Construction companies across the globe [source: Engineering News Record (ENR)]. The current year performance of the Division reiterates the Company’s global stature in construction. ECCD consists of Buildings & Factories (B&F OC), Operating Company 54 Infrastructure Operating Company (Infra OC), Rail Infrastructure business, Metallurgical Material Handling and Water (MMHW OC) and Electrical & Gulf Projects Operating Company (E&GP OC). Buildings & Factories Operating Company (B&F OC) B&F OC continues to maintain its leadership position in construction of major airports, IT parks, turnkey hospitals and residential buildings. Relentless business development initiatives along with focus on key account management and specific thrust on design & build projects helped the OC to secure significant order inflows during the year 2009-2010. “Concept to Commissioning” is the theme which continues to drive the growth. This unique capability along with focus on key account management helps the OC to retain its customers. B&F OC is also fully geared up on the technology front for undertaking the construction of tall towers & green buildings. Creation of business specific segments has further boosted the growth that in securing high value helped government projects (hospitals) and many residential projects especially in Mumbai during the year 2009-2010. Some of the major orders bagged during the year include India Tower, Mumbai, Residential Towers for leading promoters like Wadhwa Group, Oberoi Realty, Ahuja and DB Realty etc., ESI Hospitals at Kollam, Coimbatore and Kolkata, IT Park and SEZ at Siruseri for Cognizant, JIPMER phase II, Pondichery and factories orders from Maruti, Honda, Nestle, etc. B&F OC has also reported significant growth in the revenues during the year 2009-2010. Some of the major airport projects under execution include the Delhi International Airport which is in an advanced stage of completion and would be ready for operations well ahead of the Commonwealth Games. At Mumbai International airport, the Terminal 1C built on a Design & Build basis has commenced operations. On the back drop of a healthy order book, B&F OC is again poised to register a satisfactory growth on the revenues during the year 2010-2011. Infrastructure Operating Company (Infra OC) Infrastructure Operating Company undertakes construction of Roads and Runways, Bridges, Metros, Ports, Nuclear/Hydro Power Projects and Defence Projects. During the year 2009- 2010, Infra OC has completed several prestigious projects viz. Vadodara Bharuch Road in Gujarat, Palanpur- Swaroopgunj Road in Gujarat & Rajasthan, Vessel project at Vizag, Alain Duhangan Hydropower project in Himachal, etc. Though India’s Infrastructure sector witnessed slower execution growth in 2009-2010, the second half of the year showed clear signs of recovery. This was visible in the transportation infrastructure segments like roads, metros, elevated corridors which saw a flurry of activities in de- bottlenecking of constraints in pre- qualification & bidding processes. The year witnessed a resurgence of activities by Nuclear Power Corporation of India (NPCIL) in jet setting India’s nuclear power programme and Infra OC has set a strong footprint by bagging the main plant civil package for the first ever 2x700 MW Nuclear power plant (Indigenous technology) upcoming in Kakrapar, Gujarat. Incidentally, this was also the largest ever construction package configured by NPCIL so far in the Nuclear power sector. In Hydro Power sector, Infra OC bagged an additional order at Subansiri HEP for the Surge Tunnel works. Metro Authorities also endeavoured to speed up the implementation of various city metro rail projects in Bangalore, Chennai, Kolkata, Mumbai, etc. and Infra OC has secured elevated packages of Chennai Metro and Bangalore Metro and Underground works for DMRC. Infra OC is also currently constructing L&T’s own greenfield port cum shipyard called Kattupalli Port near Chennai. Public Private Partnership Projects received a huge thrust with Road sector witnessing a revival with the grant of a large number of highway BOT projects and with B.K.Chaturvedi Committee recommendations speeding up highway development. The central government has announced aggressive targets of developing 20 km of roads per day vis- a-vis the current rate of 4-5 km. The Company has secured two BOT projects – Krishnagiri Walajahpet in Tamil Nadu and Gandhidham Samakhiali in Gujarat, construction of which will be undertaken by Infra OC. Rail Infrastructure business The Company established Railways Business Unit (RLBU) to cater to emerging Rail Infrastructure projects in Urban Mass Transport Systems, Railway 400 kV switchyard at a power plant. L&T has executed a host of such projects in India and in GCC countries. Capabilities cover design, survey, manufacture, supply, erection, testing and commissioning of switchyards and transmission lines for power grids and utilities. 55 Rolling Stock Facility, Railway Sidings and Dedicated Freight Corridor Systems. With the opening up of Rail sector to private participation and the growing need for urban mass transport systems, RLBU sees tremendous opportunities for turnkey projects. Accordingly it has built a strong engineering base at Faridabad and is leveraging on the Company’s construction and project management skills while executing the current two mega projects in the rail infrastructure sector. Metallurgical Material Handling and Water (MMHW OC) MMHW OC has sustained its growth story and leadership position again during the financial year 2009-2010. Order Book has increased significantly with major breakthrough orders received from TATA Steel (Coke Oven and RMHS), HINDALCO (Coal Handling Plant, Pot Shell and Pot super structure), BALCO (Pot Shells), UPRVUNL (Coal Handling Plant), Adani Power (Coal Handling Plant), NTPL (Coal Handling Plant), Bhushan Steel (RMHS Packages), UP Jal Nigam (Water & Sewer Projects) and BWSSB (Water Supply Packages). MMHW OC has proven its execution capabilities by successfully completing the projects ahead of time. MMHW OC is currently executing largest Pellet plant for Tata Steel at Jamshedpur and concurrently executing eight coal Handling Plants, which is a landmark. Its key success factor is high customer retention, efficient project management and operational excellence. High growth in the field of ferrous & non ferrous and power sector, and the Government commitment towards infrastructure spending are going to be the key drivers for the MMHW OC during the financial year 2010-2011. Healthy Order Book gives MMHW OC visibility on the revenue growth for the year 2010- 2011. Electrical & Gulf Projects Operating Company (E&GP OC) The demand and supply gap in power drives the business growth of E&GP OC. 56 Terminal III of the Indira Gandhi International Airport, Delhi. L&T is driving the airports revolution in India, building virtually every major new international airport in the country. In addition “Power for all by 2012” is the mission statement as per National Electricity Policy and 11th Power Plan creates ample power development opportunity in technological India. developments help transmitting Quality Power over long distance with minimum transmission losses. This has given a fillip to HT Transmission Line Projects and R-APDRP Projects in the country. This OC is focusing on substations, Industrial Electrification, Transmission Line Projects and Railway Construction in the Domestic Front and Power Transmission & Distribution Projects in Gulf Countries. E&GP OC has successfully completed/ commissioned various projects in India and Gulf. Securing repeat orders from client like PGCIL, various State Electricity Boards, RVNL, ADWEA in AbuDhabi, OETC in Oman, DEWA in Dubai, KAHRAMAA in Qatar, testifies its superior project execution capabilities and timely delivery. Some of the breakthrough orders bagged during the year include construction of first of its kind 1200 kv Substation from PGCIL, EHV Cabling Packages in Delhi for DTL, 765kv Substations for PGCIL & UPPCL, 2 nos of 800 kv HVDC TL for PGCIL, Gulf Projects include first 400 kv OHL with Transco - 96 km, 3 nos. 33 kv S/S & Cabling works for Abudhabi Ports Company, Breakthrough job in Qatar Petroleum – 132/11 kv S/S and associated cabling. With the addition of 3rd bay in its Pondicherry facilities, the installed capacity of the Transmission Line manufacturing has crossed more than 1,00,000 MT per annum. The OC has put up a Transmission Line Research and Testing Center (L&T TLRTC) in Kanchipuram which helps its business unit to test the prototypes faster thereby bringing down the overall project duration. The Gulf Operations have also reported significant growth in revenues. key success factor for E&GP OC continues to be superior project execution capability. Business Environment The year 2009-2010 has been quite challenging for the construction industry as a whole. The overall Order Inflow to the industry has come down by about one fourth in comparison to the previous year. However, the Government’s focus on Infrastructure is quite apparent and the initial delays in awarding of projects are considered to be more of a temporary phenomenon. Corroborating this, the Order Inflows have started showing steady improvement towards the end of the year 2009-2010. For the construction industry, the primary drivers of growth remain robust in many areas. the most important drivers are (a) infrastructure development; (b) core sector capacity enhancement; and (c) urbanisation. These growth drivers are irreversible and are underpinned by India’s domestic demand and the existing social and physical ‘infrastructure deficit’. Construction industry is by nature pro- cyclical. Even with the cyclical downturn in India, construction sector grew by 6.5% in 2009-2010 on top of a growth of 5.9% in 2008-2009. The Union Budget 2010 lays increasing emphasis on infrastructure development with huge budgetary allocation and increased focus on promoting the private – public-partnership route for financing of infrastructure projects. Therefore, demand for infrastructure, especially in areas relating to urban infrastructure, power, roads & water appears sustainable. With manufacturing sector rebounding, there is an increase in demand of ferrous and non-ferrous metals & chemicals. Thus, capacity addition is again in focus. Construction industry, especially the larger firms, is set to gain from this. Power remains the ‘cornerstone’ for social and economic development in a country like India. Thus, the strong focus on power would continue. Investment flow into this sector is less sensitive to economic fluctuations and thus forms a stable source of business. Though real estate the Middle East has considerably slowed down, the planned investments in infrastructure and oil & gas are set to continue and therefore, GCC would continue to offer good potential for the Division’s international in Power business particularly Transmission & Distribution and Infrastructure. in The construction market shows a mixture of optimism and a few concerns. Owing to reduced demand, some sectors like realty (especially premium housing), capacity augmentation in some of the manufacturing sectors are expected to move a bit slower. However, with increasing urbanisation, the housing sector will continue to give lot of opportunities. Mass scale affordable housing is one such opportunity to be harnessed. As per Mid-term appraisal of 11th five year plan, the Government plans to rely more on infrastructure investment by private sector as revised target for private investment contribution is 36% in Eleventh Plan as compared to 30% in original projections and 25% in Tenth Plan. The opportunities in different sectors/geographical locations implicitly offer tremendous market potential to all our business units. Significant Initiatives The Engineering & Construction business has started witnessing the benefits of creating Operating Companies (OCs), particularly in business development initiatives. The OCs have identified Business Development Managers to improve the market share in these difficult times. This initiative very much aligns with the vision of enhancing customer relationship by engaging with clients at the early stages of project proposals. Focus on multi-skilling/job rotation will get a renewed attention and the Division’s initiative to train and retain workmen across India has been strengthened by building training centres in all the regions. Outlook All Business Units are engaged in developing the Strategic Plan for the next 5 years with clear focus on increasing the market share, improving the competitiveness and expanding beyond presently operating geographies. Countries such as South Africa, Saudi Arabia, Qatar and Vietnam offer a plenty of opportunities for many of the Division’s businesses and therefore, the concerned business units are carefully monitoring the developments in these countries and will pitch in at an appropriate time. Overall, the outlook for the Engineering & Construction business remains good owing to robust order book and diversified business portfolio. The Government’s commitment to revitalise the economic scenario through investment in infrastructure, provides immense scope and opportunities to the business units. Vizag Steel Plant. L&T carries out engineering, procurement, manufacture, supply, construction and commissioning of projects in ferrous and non-ferrous metals, mineral beneficiation and coal washeries 57 K. Venkataramanan Whole-time Director & President (Engineering & Construction Projects) BCP-B2 Process Platform and Well-head Complex connected to the pre-existing BPB Complex for Oil & Natural Gas Corporation, located in the Bassein Gas Field, approx. 80 km north-west of Mumbai. Engineering & Construction (Projects) Division Overview Engineering & Construction (Projects) Division delivers “design to build” world- class EPC solutions in the Oil & Gas, Petrochemicals, Fertilizer, Power and Water Technology sectors. In-house expertise and experience, synergised with strategic partnerships enables it to deliver single point solution for every phase of a project – right from the front end design through engineering, fabrication, project management, construction and installation up to commissioning. The key aspects of our business philosophy are on-time delivery, cost competitiveness, high quality standards with focus on best in class HSE practices. Integrated strengths coupled with experienced highly-skilled engineers and workmen, are the key enablers in delivering critical and complex projects in India and in select countries overseas. Over the years, it has garnered a reputation for executing multiple projects in parallel. Significant strengths that have enhanced the Division’s reputation in market & contributed towards growth are: 58 ● Design & Engineering Services: The Engineering arm is equipped with qualified & experienced engineering talent, in-house engineering centers with latest technology, softwares, world class office facilities & robust IT infrastructure. Services are further complemented by specialised support from engineering partners like L&T-Valdel Engineering Limited, L&T-Chiyoda Limited, L&T-Gulf Private Limited. Engineering teams are located at various strategic locations – Mumbai, Faridabad, Vadodara, Bangalore, Chennai & Sharjah. ● Fabrication Capability: Modular fabrication facility in India over the years has provided cost competitive advantage. Located at Hazira, it is one of the largest of its kind in South Asia. Hazira Modular Fabrication Facility meets international quality standards and is capable of meeting compressed delivery schedules. A new Modular Fabrication Yard at Oman is an all-weather yard augmenting capability to fabricate and supply a range of large size ● complex modules. The Yard has facilities for heavy fabrication, sophisticated equipment for testing and load-out facility. Installation Capability: To cater to offshore requirement, a state-of-the- art heavy lift-cum-pipe lay vessel (HLPV), referred to as “LTS – 3000” has been developed in Joint Venture with Sapura Crest Petroleum Berhad (Sapura Crest) of Malaysia. It has capability of lifting 3000 ST & laying 6”-60” of sub-sea Pipelines. This service is expected to offer cost competitive advantage to the business. ● International Business Development: The Division has consolidated its presence in international market, establishing as an emerging player in Middle East & South East Asia. It has set up manufacturing and project execution capabilities in select geographies and offices in UAE (Abu Dhabi & Sharjah) & Qatar (Doha). JV Companies have been set up with reputed local partners in Oman, Kuwait and Saudi Arabia to tap opportunities available in these countries. Branch offices have also been registered in Libya and Brazil to further strengthen the range of services across the international market. In addition to the above advantages, which are critical to the success and provide competitive advantage, the Division is able to deliver sustainable & successful services on account of its ability in: ● Attracting and retaining high quality professionals. ● Having engineering,technology innovation centers. Multi-locational and ● Adopting stringent quality control parameters designed to minimise cost, ensure adherence to pre determined project parameters and reduced delivery time. ● Compliance to highest standards of health, safety, environment and information security. ● Usage of web enabled technology in the complete cycle of execution of EPC projects. ● Capitalising knowledge on management system for providing solutions. ● Providing professional project for accelerating management delivery time of large projects. To drive an accelerated growth and lay closer focus, Hydrocarbon Upstream Operating Company, Hydrocarbon Mid & Downstream vertical and Power Development & Construction vertical have been created. Hydrocarbon Upstream Operating Company (Upstream OC) Upstream OC provides a wide range of EPC solutions for Offshore Oil and Gas Exploration projects such as Process Platforms, Wellhead Platforms, Subsea Pipelines, and Floating Systems. During the year, it has bagged largest ever project order over Rs.5,300 crore from ONGC for an integrated process platform complex. Having a track record of successful completion of projects, it has moved into execution of the largest jacket structure fabrication for Indian waters of 12000 MT at MFY Oman. In order to enhance fabrication capacity and leverage on locational advantages, additional Modular Fabrication Facility at is under in Chennai Kattupalli construction. With the economy recovering from recessionary trends and demand for crude gaining momentum, expansion in oil exploration investments is envisaged. In order to focus on marketing, dedicated teams have been established in India & Abu Dhabi to tap opportunities in Middle East, South East Asia, Australia and West Africa. Hydrocarbon Mid & Downstream Vertical Hydrocarbon Mid & Downstream vertical provides wide range of EPC solutions for turnkey projects in petrochemical industry, green fuel projects, fuel up- gradation, polyolefins, aromatics, hydrogen, fertilizers, gas processing, reformers, cracking furnaces, cross country oil & gas pipelines, gas gathering stations, and crude oil terminals. initiatives on During 2009-2010 operational excellence for the timely completion of ongoing projects were undertaken. We have to our credit, successful commissioning of complex projects like onshore gas processing terminal, at Kakinada, which is the largest of its kind in India (80 MMSCMD) and execution of the insulated pipeline project from Barmer in Rajasthan to Salaya in Gujarat which is one of the longest insulated pipelines in the world. Prospects of growth in refinery sector are promising, owing to domestic demand and favourable investment policies by the Government. Petrochem & fertilizer plants are new areas of our business development and have contributed to significant order inflow in 2009-2010. During the year, we bagged a large order from ONGC Mangalore Petrochemical 290-man 3000 ST heavy-lift-cum-pipelay vessel (LTS 3000) adds installation capabilities to L&T’s EPC offerings to the upstream hydrocarbon sector. 59 award of jobs and manpower attrition are some of major risks faced by the Division. the Measures such as advanced quantitative tools, global sourcing, standard operating procedures, and operational excellence initiatives have been implemented so as to protect profitability & sustainability of the business. Comprehensive risk templates have been introduced for continuous review, focused assessment and monitoring. Adoption of ECRI (Engineering & Construction Risk Institute) Practices & Procedures added to development and sharing of the best practices in risk management. To mitigate the adverse effect of some of these risks, cost control, cost reduction and hedge management policies were put in place. Focused and dedicated teams have been established to combat and manage currency exposures from bidding till completion stage of the project. ● Talent Management to young for People are prime engines of growth. Hence, hiring of qualified individuals and grooming them for leadership roles is essential. A menu of career growth options and training are aspiring offered professionals achieving excellence in engineering and project management skills. Setting up of knowledge city at Vadodara, Gallup e-Voice - Employee Engagement Survey, team building programmes were some important initiatives the year. undertaken during identification and Leadership development been institutionalised in the Division for developing leaders at every level of organisation. has Cracking furnaces and associated units for IOCL at Panipat Naphtha Cracker Project. L&T executed this project in consortium with Toyo Engineering, Japan. Ltd. of over Rs.2,000 crore and orders from the fertilizer sector projects of over Rs.3,000 crore. Business Environment With the Government support measures in place, domestic recovery began in the later part of 2009-2010 as reflected in growth in industrial production, sustained FII inflows, rise in credit growth and improved liquidity conditions. Stability in crude oil prices has brought investments and expansion plans back on track in India and in the Gulf. Despite slow & uncertain economic conditions in the first half of the year and challenging competitive environment, Division was able to maintain an impressive strike rate. The Division was rewarded with orders in excess of Rs.16,500 crore during the year demonstrating the continued trust of domestic and international energy companies. Significant Initiatives ● Growth & Expansion Looking at the enormous business potential in the Middle East region, initiatives have been taken to enhance and strengthen our 60 presence in GCC countries. These include pre-qualification for large projects with major oil & gas sector clients, alignment with major EPC companies for large construction packages & setting up of JV companies. Division has not only spread its wings along geographies but also undertaken significant steps in boosting its own manufacturing capabilities like expanding its facilities at the Modular Fabrication Facility at Hazira, the setting up of the Oman Modular Fabrication Yard and the commissioning of new installation and pipe laying vessel LTS 3000. Work is on for the development of Kattupalli Modular Fabrication Facility near Chennai. ● Risk Management Risk Management is looked upon as a facet of governance contributing towards greater predictability in performance and value creation. Identification, assessment, mitigation of various risks for every project, is done from pre-bid to completion stage. Increased competition, pressures on cost and deliveries, forex and commodity price variations, impact of recessionary trends on ● Operational Excellence To improve business value chains, various key cost & time reduction initiatives such as, easy track for better cash management and crashing invoicing time, project Disha for construction management were undertaken. ● Strategic Plan Strategic Division has embarked on Plan, developing “LAKSHYA 2010-2015” as a part of company-wide launch. Identification of the strengths, addressing key gaps in service offerings, enhancing competitiveness and expanding geographical presence were undertaken through a structured process. As a part of LAKSHYA 2010- 2015, strategic initiatives are being identified along with milestone-driven roadmaps for ensuring timely and speedy implementation of the strategy. Outlook Domestic economy has regained momentum and has shown positive signs of recovery in terms of industrial growth. India is emerging as a global refining hub owing to cost competencies over other countries. Gas demand in India is dominated by the power and fertilizer sectors, which are on the rise. This coupled with the Government’s conducive policy and regulatory framework has made investments in energy sector attractive. E&C Projects Division will be focusing on opportunities in key growth areas such as oil and gas extraction, floating systems in deepwater, subsea field development, gas processing, fertilizer, and petrochemical and onshore pipeline business. The Division is looking forward to building capabilities in an accelerated manner to harness the upcoming business opportunities on the East coast of India, which has large potential for oil & gas production. It is also building comprehensive high-end FEED detailed engineering capabilities for these emerging areas by exploring various options including inorganic growth and entering into joint ventures. The Division also plans to enter into new geographies, establishing new clientele and entering into strategic alliances. Clearly drawn out pre-bid strategies, intense marketing efforts and enhanced execution capabilities will drive the performance in the coming year. Considering business environment, strategic positioning and initiatives taken by the Division coupled with a healthy order book at the end of the March 2010, the Division expects to perform well in the year 2010-2011. positive Laying of 592-km, 24” PUF-insulated crude oil pipeline along with 8” gas pipeline from Barmer to Salaya for Cairn Energy. 61 Ravi Uppal CEO & MD L&T Power Limited EPC Power Division Overview EPC Power division has been organised as a separate Operating Company with effect from April 1, 2009. Financial year 2009-2010 has been the first year of operations in pursuit of the Company’s mega vision to become “the most preferred provider of equipment, services and turnkey solutions for fossil fuel-based power plants and a leading contributor to the nation’s power generation capacity”. EPC Power division’s offerings comprise Supercritical Steam Generators, Steam Turbine Generators and Balance of Plant. The business organisation which includes the Joint Venture Companies with Mitsubishi Heavy Industries, Japan, is geared to address the opportunities tendered by the customers. The customer profile comprises State Utilities, Private Sector IPPs and large corporates seeking to build captive generation capacity. The Company has strong engineering, procurement, construction and project 62 Power plant executed by L&T on an EPC basis at the complex of Indian Oil Corporation in Panipat. execution capabilities built over past few decades, which underpin the foray into EPC for thermal power plants, especially coal-based generation projects. The engineering capabilities are housed in L&T-Sargent & Lundy Limited, a joint venture company. The fast upcoming manufacturing facilities at Hazira Complex will establish the capacities to build Steam Turbine Generators, Boiler pressure parts and Pulverisers based on MHI technology in a phased manner over the next 18-24 months. In addition, the Operating Company will also manufacture Critical piping, Electro-static precipitators, Air-preheaters and Axial fans. This would give the Operating Company comprehensive capabilities to offer world class thermal power plant solutions. Performance Highlights EPC Power Division secured new orders of Rs.13,797 crore. New orders, which spanned the entire range of offerings, were received from the prestigious customers such as GMR Group, Maharashtra State Power Generation, Madhya Pradesh Power Generation, Jayaprakash Group, who are setting up mega power plants. During the year, the Division progressed with the execution of its projects for Indian Oil Corporation Limited at Panipat, Andhra Pradesh Power Development Company Limited at Krishnapatnam and GMT Rajamundhry Energy Ltd at Vemagiri. Business Environment India needs to build substantial power generation capacity. The reliance on coal and natural gas as fuel for power plants will continue for several years to come. With coal-based plants continuing to form a major share of fresh capacity addition, the Division’s offerings based on supercritical technology have huge potential. The capacity addition target for the 11th five year plan ending in 2012 is 78,700 MW and for the 12th plan, the target is 100,000MW. It is expected that a sizeable capacity will be in coal-based Initiatives The Division has undertaken several initiatives such as accelerated indigenisation of manufacturing program for Steam Generators and Steam Turbine Generators, standardisation of product designs, enlargement of vendor base to improve price competitiveness and achieve reliability in project schedules. It has set clear targets in this regard to be realised over the next couple of years. Outlook The Division expects the policy regime to decisively discourage sub-critical technology and support supercritical technology in coal-based power generation. PSU-utilities already require establishment of local manufacturing capacities of power generation equipment. This is in the national interest and should augur well for the Division. With robust demand for power and resultant opportunities for power generation equipment infrastructure, EPC Power Division is confident of growing into a major business for the Company. L&T has the integrated capability, the experience and the expertise to execute complete supercritical power plants on an EPC basis. considerable risks to company’s business. The company expects customers to increasingly demand shorter project schedules and more competitive pricing. power plants with supercritical technology. The Power ministry and the Planning commission are expected to come up with various policy measures to encourage investment in supercritical technology as well as local manufacture. EPC Power Division faces aggressive competition from Chinese players whose faster deliveries and cost advantage pose a formidable challenge. Major international power plant equipment producers are also setting up capacities in India. The leading established domestic players enjoy the leadership position in the space of power plant equipment. In addition, an acute shortage of HR talent could adversely impact the growth aspirations of the Division. In the medium to long-term, possible technological break-through in non-conventional power generation, a faster nuclear power program, sanctions against coal as a fuel and availability of water also present A turbine - part of the critical equipment for power plants that are manufactured by L&T. 63 M. V. Kotwal Whole-time Director & Senior Executive Vice President (Heavy Engineering) Cr-Mo HDS reactor manufactured at L&T's works complex in Sohar, Oman. The complex includes a captive jetty having direct access to the Gulf of Oman. Heavy Engineering Division Overview Heavy Engineering Division (HED) 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 Equipment & Systems for Defence applications. The Division’s Ship Building business is engaged in construction of commercial ships as well as warships for the navy and the coast guard. The Division has manufacturing & fabrication facilities at Mumbai in Maharashtra, Hazira & Baroda in Gujarat and Visakhapatnam in Andhra Pradesh. A Strategic Systems Complex for integration & testing of Weapon systems, Sensors and engineering systems is located at Talegaon in Maharashtra. A Precision Manufacturing Facility has been set up at Coimbatore in Tamilnadu to cater to needs of precision machined/ manufactured components and assemblies. Defence Electronics Systems design & 64 centers engineering is supported through a dedicated Strategic Electronic Center at Bangalore in Karnataka. Dedicated engineering support manufacturing at all locations. Three “Technology Development Centers” operate from Powai - for new product development in process plant equipment and for defence/nuclear equipment as well as one focused on electronics systems/sub-systems. Presently the Division has its Ship Building facility at Hazira in Gujarat. Construction of a new modern Shipyard is in progress at Kattupalli in Tamilnadu. The new facility will mainly concentrate on construction/refits – repairs of naval ships and submarines and repair of commercial vessels. A heavy fabrication facility set up as a joint venture in Oman was inaugurated during 2009-2010. The facility will manufacture a range of equipment for the hydrocarbon & power sector – mainly for the GCC countries. Heavy Engineering Division’s operations are managed through two Operating Companies viz. Heavy Equipment & Systems Operating Company and Shipbuilding Operating Company. Heavy Equipment & Systems Operating Company (HES OC) Business Environment HES OC achieved a significant increase in customer sales during 2009-2010 on the back of a robust Order Book at the start of the year. However, the Order Inflow was impacted adversely due to the global economic meltdown. Export orders particularly were sharply down due to deferment/cancellation of planned projects across geographies. This may have adverse impact on customer sales of the OC during 2010-2011. Though the world wide economic situation has been improving, internationally many new projects are still awaiting due to inadequate refining margins. There is intense competition for business – mainly from Korean & Italian competitors. HES OC sees some of the international refinery and gas projects taking off with the oil price hovering around $80/bbl. Middle East, Iran and South America offer good potential. However, the policy of Chinese Government of offering credit to Iran and the African countries for promoting Chinese suppliers is putting the OC at a disadvantage. Coal gasification business from China continues to show promise in the short to medium term, though competition from local Chinese fabricators is increasing with active support from the Chinese government. During 2009-2010, the economic crisis had slowed down the pace of work in new power projects. Domestic power plant equipment business has now started looking up. Competition from Chinese and Korean suppliers is putting pressure on power plant equipment prices. Fertilizer sector shows promise. There is potential from the new grassroot fertilizer plants as well as the planned expansion projects of existing plants. New investment in fertilizer plants is expected in Iran and Brazil. As the Central Government has maintained the ratio of Defence expenditure to GDP even during the economic slow down, the Defence sector shows definite promise in the medium to long term. With the growth momentum maintained, the government continues to simplify procurement procedures, initiate creation of policy environment for increased indigenisation and inclusion of private sector in the modernisation of India’s armed forces. for past more than a decade. Indigenous product development & system integration capability in private sector is not yet well harnessed towards cutting imports. The much awaited grant of Raksha Udyog Ratna (RUR) to system integrators in private sector is still awaited and not in sight in the short run. Defence Procurement Policy 2008 Amendment 2009 (DPP) introduced a new procurement category called “Buy and Make (Indian)” for the Indian Defence programs. Under this category, while Indian industry will be the lead bidder for these programs, it can have foreign collaboration/ technology providers for up to a maximum of 50 % value of the program. The new policy facilitates understanding the Industry view through Apex Chambers of Indian Industry before making decisions on categorisation of programs for procurement. The Defence sector thus shows definite promise in the medium to long term in the segments of interest to the OC. There is a Nuclear Power Renaissance the world over, which offers growth potential both in domestic as well as international market. A number of new projects are planned in India, USA, Russia, China & UK. There is potential for supply of equipment & systems for new build as well as refurbishment of existing Nuclear Power Plants in USA & Europe. Significant Initiatives The Operating Company has launched a number of key initiatives aimed at maintaining a leadership position in the global process plant equipment market and for gaining an early mover advantage in the Defence equipment sector. The pace of liberalisation, however, has slowed down and imports continue to remain at 70 % of the Defence budget Capability Building HES OC is moving ahead on a major initiative “Enterprise-wide Collaboration Multi-barrel rocket-launch system for India’s defence forces, designed and developed by L&T - largely through in-house R&D. 65 Indian Nuclear Power program. Supply of these forgings has been a major bottleneck globally. During the year a Joint Venture Agreement was signed with Nuclear Power Corporation of India Limited (NPCIL) for setting up a fully integrated special steel and heavy forgings facility. This facility will produce heavy forgings required for both the Hydrocarbon sector and the Nuclear power sector. The OC has put in place a Materials Portal for offering better visibility during negotiations and for making spend decisions. A common system based vendor performance evaluation system is planned for implementation during 2010-2011. Productivity Improvement Initiatives For improving operational efficiency, the Operating Company continues its focus on “Operational Excellence”. A number of teams are working on various improvement projects. “Critical Chain Project Management” methodology of the “Theory of Constraints” is used for managing planning & execution of projects and for improving delivery performance. A Product Life Cycle Management solution implemented across the Operating Company’s locations helps improve knowledge management and collaborative working across functions. The Operating Company is using automation of design and drawing activities for reducing the cycle time of engineering activities and for improving quality of the design process. The Operating Company is making use of I.T. enabled re-engineering to improve its systems & processes. Special efforts are taken to improve productivity using extensive automation in manufacturing operations. SGP Reactors for Qatar Shell Gas to Liquid project ready for despatch. L&T's Hazira Manufacturing Complex has its own roll-on-roll-off jetty, offering direct access to the Arabian Sea for Alignment with Strategy” (ECAS), launched in 2008-2009, which aims to align operations to the strategy of Customer Intimacy, concurrent with enhancement of Organisational Excellence for improved performance. An apex body and 10 councils comprising members from across functions and locations have been formed to launch and monitor specific projects for Organisational Excellence. The Technology Development Centers focus on continuous development/ adaptation of manufacturing technology and development of new products as well as up-gradation/modification of existing products. Tie-ups and partnerships with national joint laboratories development keep the Technology Development Centers at the forefront of technological development. Technology Development Centers are working closely with select customers for analysing plant performance to develop ways to improve plant efficiency. for HES OC focuses on talent acquisition to enhance organisational performance for growth by fostering a learning & development culture. Various initiatives 66 for skill/capability building include tie-ups for training, knowledge sharing & up gradation. The Operating Company lays a great emphasis on protection of its Intellectual Property Rights. During 2009-2010, the operating company received two patents while three patent applications are awaiting clearance. Capacity Augmentation An ultra modern Heavy Fabrication facility has been commissioned at Sohar, Oman as a joint venture for manufacture of a range of process plant equipment – principally targeting the market in the GCC countries. The heavy fabrication facilities at Hazira continue to be upgraded to maintain a competitive edge. The doubling of assembly – integration capacity for Weapon Systems and Engineering Systems at the Strategic Systems Complex at Talegaon is under implementation and will get ready during the first half of 2010-2011. Securing Supply Chain Reliable supply of nuclear grade heavy forgings is a major requirement of the Shipbuilding Operating Company (SHBD OC) Business Environment The international shipbuilding market is still volatile having gone through a down turn due to falling demand for bulk cargo resulting in low freight rates. This in turn led to a great fall in ship prices and negligible ordering activity. Globally, the shipyards were under constant pressure of cancellations mainly in the bulkers segment. However, by the end of 2011, there could be some upswing depending on the availability of financing for new builds. Last year, the Government of India had committed to grant shipbuilding subsidy to all eligible orders for ships booked prior to August 14, 2007. The Shipbuilders Association of India has made representations to the Government for continuation of the subsidy scheme to enable Indian shipyards to compete with foreign yards effectively. The domestic naval shipbuilding market continues to be promising. The Indian Navy is moving ahead with its major expansion programs. The Indian Coast Guard is also expected to accelerate their fleet expansion program. During 2009- 2010, a maiden order for construction of 36 numbers fast speed interceptor boats was received by the OC. Significant Initiatives The Warship & Submarine Design Centre is being strengthened to support in-house design of naval vessels. The centre is equipped with the latest software tools and is supported by a Virtual Reality facility. The team for design work of commercial vessels is also being strengthened. Resources and facilities at Hazira for shipbuilding are being further augmented. The Operating Company is focusing on proper systems and processes to increase operational efficiencies and reduce cycle time to meet customer expectations on quality and delivery. The construction of the modern ship yard at Kattupalli is proceeding at a fast pace. Outlook Many of the projects deferred due to the global economic crisis have started moving forward. Middle East, Iran and South America offer good prospects in the short to medium term. The Division expects good prospects from overseas Refinery and Gas/LNG projects. Fertilizer sector in India gets preferential allotment of gas. This will attract investment in new grassroots projects as well as expansion projects of existing players. There are prospects from Iran as well as Brazil for Fertilizer projects. There are prospects for coal gasification projects from China as well as Australia. India is in the process of getting inducted in a global civilian nuclear commercial trade after NSG clearance, signing of India specific IAEA safeguards and Indo –US nuclear deal. The Division has signed Memorandums of Understanding with major technology providers like Westinghouse, GE Hitachi, Atomstroy export, Atomic Energy of Canada Limited and Rolls Royce, which will offer business opportunities in the medium to long term. Though the international commercial shipbuilding sector has been badly affected by the economic crisis, the heavy lift multipurpose cargo carriers segment is relatively less affected by the global downturn. The Division envisions itself to be a total solutions provider for specialised ships giving services from designing to building and repairing of ships in about 3 – 5 years. The Division has a strong presence in naval vessels business where it is currently executing Hull fabrication, Outfitting, Weapon Launchers and Marine Equipment on standalone basis. The next step is to offer the complete platforms to Indian Navy. The Division sees good prospects in the naval vessels business in the medium to long term. Overall, the Division envisages good market opportunities in the medium to long term. The photograph is for representational purposes only, and does not purport to be a photograph of the actual nuclear-powered submarine built by L&T. L&T made a critical contribution to India’s first nuclear-powered submarine - the INS Arihant. L&T offers a wide range of equipment and systems for the defence forces encompassing sea, land and air. 67 R. N. Mukhija Whole-time Director & President (Electrical & 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. Electrical & Electronics Division Overview Electrical & Electronics Division comprises of Electrical and Automation Operating Company (EAOC) and business unit Medical Equipment & Systems (MED). Petroleum Dispensing Pump & Systems (PDP) was divested to Gilbarco Inc. during the year and the business transfer got concluded in March 2010. The four Strategic Business Units under Electrical and Automation Operating Company are: Electrical Standard Products (ESP), Electrical Systems & Equipment (ESE), Control & Automation (C&A) and Metering & Protection Systems (MPS). & Equipment Electrical Standard Products business has manufacturing facilities at Powai and Ahmednagar in Maharashtra. Electrical Systems has manufacturing facilities at Powai, Ahmednagar and at Coimbatore in Tamilnadu. Control & Automation business operates from its “Automation Campus” at Navi Mumbai. Metering & Protection Systems business is based at Mysore in Karnataka while Medical 68 Equipment Business operates from newly constructed manufacturing facility in Mysore, Karnataka. At L&T group level, Electrical and Electronics Division has four subsidiary companies. L&T Electricals Saudi Arabia (LTESA), with manufacturing facility at Dammam- Saudi Arabia; L&T Electrical Automation Free Zone Enterprise (LTEAFZE), with manufacturing facility at Jebel Ali- UAE; L&T Wuxi (LTW ), at Wuxi in China and TAMCO with manufacturing facilities in Malaysia, Indonesia, Australia and China. Business Environment Post economic slowdown, government’s initiatives to stimulate economy and recovery of domestic demand have acted as prime drivers of growth. With Government’s investments in ports, airports, metro and monorail projects, ‘infrastructure’ sector has shown positive signs of growth. Similarly power sector continues to grow with major projects coming under execution and many of the projects under implementation. However, Core sectors such as metals and cement had fewer opportunities in 2009-2010. Under Restructured Accelerated Power Development Reforms Program (R- APDRP), Control & Automation business has been awarded a contract by Maharashtra State Electricity Distribution Company Limited (MSEDCL) for automation, metering IT implementation work. and Majority of the international business of EAOC comes from the Gulf region. Projects in Gulf region got affected due to economic slowdown in international market and Dubai debt crisis. Many projects which were in anvil were deferred by the customers thereby affecting the international business. Medical business has strengthened its presence through various road shows and service camps, despite the competition from multinational companies. The year 2009-2010 witnessed aggressive efforts by multinational companies with newly built up capacities, to push the piled up inventory. Given this scenario, the Division had to compromise somewhat on realisation to remain competitive in the market. Going ahead, the major challenge in 2010-2011 will be to improve upon gross margins while achieving top line as per the budget. 2009-2010 was the year of awards for this Division. It bagged ‘five star health and safety award’ from British Safety Council for its Powai campus. Electrical Standard Products business won the prestigious Golden Peacock National Quality Award 2010, Ram Krishna Bajaj National Quality Award 2009 and the best product prize for its U-Power Omega Air Circuit Breaker at ELECRAMA 2010. Significant Initiatives A pan-India advertisement campaign, carried out by Standard Products business was aimed at building L&T brand and improving visibility of the products offered. A preferred integrator agreement was signed with Toshiba Mitsubishi Electric Industrial Systems Corporations. This agreement would cover specific control system solutions in the metal sector and paper industry. There has been an effort to reduce credit to the market by focusing on cash sales and increasing channel finance through third party financing in standard products business. On human resources front, the Division took an initiative to analyse and improve upon employee satisfaction index. Medical business has moved to a new environment-friendly facility in Mysore in October 2009. Further, LEAN initiatives such as 5S and Value Stream Mapping are inherently implemented in this facility. With recently launched customer interaction centre, Medical business will be able to offer better service levels to its customers. Process Improvement Business operations across the Division were integrated with SAP ECC 6.0 in 2009-2010 to achieve significant improvement in terms of process capability. Six-sigma is the one of the most important tools that all line managers in the Division use to improve satisfaction level of both internal and external customers. In 2009-2010, 224 six sigma projects were completed as against 130 last year. An initiative was taken to monitor and improve ‘product sigma’ for all the products in order to elevate the quality of products offered to the customers. trying Through 5S journey the Division has been to create a LEAN environment. 5S process has not remained restricted just to our factories; but it has been extended to our vendors. With certain manufacturing locations already reached 5S level, we have created a pool of internal auditors for 5S certification. Going through LEAN journey, it also focused on Value Stream Mapping as it offers proven and universal approach to eliminate waste, simplify the process and in turn improvement in bottom line. Value engineering is another tool that is extensively used to improve the bottom line. Total number of value engineering projects has crossed a mark of 1500 since we started this initiative in early 2000. New Product Development Development of new products and technologies continues to be the top priority for the Division. Standard Products completed business development of U-Power Omega series of Air Circuit breakers in 2009-2010 which also won the ‘best product prize’ award 2010. in ELECRAMA Development of D-sine Moulded Case Circuit Breakers with new protection release was also completed in the same period. Standard product portfolio was further enriched with development of new frames of changeover switch, complete range of MO contactors and new thermal overload relays. A complete new range of Low Voltage distribution board, T-ERA, has been unveiled by Electrical Systems & Equipment business. This product offers increased safety, reduced maintenance time and environment-friendly design to the customer. Metering business launched two new platforms for single-phase and four new platforms for poly-phase meters. With this, meter costs dropped substantially making this business further cost competitive in the market. New metering data acquisition solution was developed which finds its application in Restructured Accelerated Power Development Reforms Program (R-APDRP). Metering business also developed a common protocol which enables communication feature in the meters. An Advance Traffic Management System (ATMS) along with its toll management system has been developed by Control L&T’s custom-designed low and medium voltage switchgear has been widely installed in industries around the world. 69 however, the outlook for markets like Abu Dhabi and Qatar is positive. Various Oil & Gas sector projects in Saudi Arabia are showing revival and utility industries are coming up with new projects. Even though Dubai was adversely affected by the credit crunch, it is expected to show signs of recovery in 2010-2011. In 2010- 2011, the Division expects about 31% of business including that of group companies from international market. The growth in Energy, Infrastructure and Building segments will be favorable. Development in energy management and smart grid will open opportunities for the Division. In 2010-2011, all the businesses will add new geographies to their existing portfolios. With regard to Medical business, the medical sector in India is experiencing growth due to increased government expenditure under the National Rural Health Mission. Also there is growth seen in corporate hospitals chains driven by increased health insurance coverage and increase in medical tourism. In summary, the Division’s budget theme aim at expanding its products and services offerings in the domestic market, enhancing its capability to serve power sector and focusing on new geographies outside India. L&T’s Control & Automation systems reflect the growing convergence of electrical, communication and automation technologies. and 22 design registrations. In fact, 2009- 2010 is the third consecutive year where the Division filed more than 100 patents. With this total number of live patents filed so far stands at 560. Out of 128 patents filed in 2009-2010, 6 patents were filed by Medical business taking their tally of total live filings to 82. Outlook Indian industrial manufacturing is showing recovery and it is led by investments in infrastructure and power. On international business front, the Gulf market continues to be sluggish; and Automation business. The systems comprise newly developed advanced software called Lane-XTM. This business also introduced a standard package which offers remote control of substation at an affordable cost, power monitoring, management & control of electrical substation. Most of the new products introduced by Electrical and Automation Operating Company were showcased in ELECRAMA 2010. In 2009-2010, Medical business completely revamped its product basket by offering new products in the segments of patient monitoring system and surgical diathermy. In the monitoring range 8 new products were released namely Planet 10, Planet 20, Planet 30, Skyline M, Planet 50N, Star 50N, Skyline 55 V1 (ECG full disclosure), Orion (ECG machine with Bluetooth PC interface) and in Surgical Diathermy, Maestro plus 100 (Dual output surgical diathermy). Intellectual Property Rights (IPR) This Division has continued its commitment towards development of intellectual property. Encouraging employees to generate new ideas helps in development of new, better and technologically advanced products. In 2009-2010 Electrical and Electronics Division filed 128 patents, 22 trademarks 70 L&T’s range of electronic energy meters and relays. J. P. Nayak Whole-time Director & President (Machinery & Industrial Products) L&T-Komatsu PC200-6 Hydraulic Excavator. L&T markets within India the construction and mining equipment manufactured by L&T-Komatsu Limited as well as equipment supplied by Komatsu worldwide. Machinery & Industrial Products Division Overview Machinery and Industrial Products Division (MIPD) consists of Industrial Products & Machinery Operating Company (IPM OC) and Construction Machinery Business Sector (CMBS). Industrial Products & Machinery (IPM OC) IPM OC has two distinct business streams - Industrial Products and Industrial Machinery. Industrial Products comprises Industrial Valves, Welding Products and Cutting Tools while Industrial Machinery consists of Machinery for Paper & Pulp, Crushing, Mining, Mineral processing, Steel and Rubber & Plastic Processing Industries. IPM OC consists of the following Strategic Business Units and Joint Venture Units. Industrial Products Valves Business Unit (VBU) VBU markets Industrial Valves and allied products manufactured by Valves Manufacturing Unit (VMU), Audco India Limited (AIL) and Larsen & Toubro (Jiangsu) Valve Company Limited, China, besides a few Indian & overseas manufacturers. VBU is one of the few select suppliers of Valves for global oil majors. AIL is a 50:50 JV with Flowserve Corporation USA and manufactures a wide range of Industrial valves at its 3 factories in southern India. Larsen & Toubro (Jiangsu) Valve Company Limited is a 100% owned subsidiary of LTIFZE set up in Yancheng in Jiangsu province, China, for manufacture of certain ranges of Industrial Valves for global markets. VMU has set up a plant at Coimbatore to manufacture Valves for Power Sector and also offers Valves supplied through contract manufacturing in ranges not fully supported by AIL, besides providing the technology support for new product development of Valves. Welding Products Business (WPB) WPB markets products manufactured by EWAC Alloys Limited. It also markets Inverter based welding machines from Fronius, Austria, and Oxy-Fuel Equipment such as Industrial Gas Regulators and Gas Torches from Messer, Germany. WPB also markets indigenously developed MIG Welding Inverter Welding Machines and Machines. In addition, WPB provides comprehensive solutions to its major clients towards Repair & Maintenance of critical Industrial Components. EWAC Alloys Limited (EWAC) is a 50:50 JV 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. Industrial Cutting Tools Business (INP) INP provides metal cutting solutions to the domestic manufacturing industry covering Automobile, Engineering and Machine Tool segments through marketing of Industrial Cutting Tools manufactured by ISCAR Limited, Israel. 71 Foundry Business L&T has set up a state-of-the-art Casting Manufacturing Unit at Coimbatore having an annual capacity of 30,000 tonnes to manufacture large sized SG Iron and Special Iron Castings for Wind Power and other Engineering Sectors. The Foundry can produce castings in the weight range of 3T to 28T. In addition, this Business Unit also has a Foundry operating at Kansbahal Works, Odisha Campus) (Rourkela manufacturing Steel, Alloy Iron, SG Iron & Grey Iron castings and also addresses requirement of large Wear and Abrasion resistant castings for Power and Cement sectors. Industrial Machinery Rourkela Campus (KBL) Rourkela Campus, which includes Kansbahal Plant, is involved in design, manufacturing & marketing of Mineral Crushing Solutions (Limestone, Coal and other minerals), Surface Miners and Specialised Equipment for Steel Plants (such as Torpedo Ladle Cars) and Machinery for Paper & Pulp. LTM Business Unit (LTM BU) LTM BU manufactures and markets Rubber Processing Machinery for the Tyre Industry across the globe. Currently, the unit has manufacturing facilities at Manapakkam, Chennai and Kancheepuram near Chennai. L&T Plastics Machinery Limited (LTPML) LTPML manufactures and markets Injection Moulding Machines and Auxiliary Units 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. Product Development Center (PDC) PDC based at Coimbatore renders engineering and product development 72 support to all the businesses across MIPD. Construction Machinery Business Sector (CMBS) CMBS markets and renders support for Construction & Mining Equipment. The Sector comprises; ● 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 Trucks available from Scania. ● ● L&T-Komatsu Limited (LTK) is a 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) is a 50:50 JV with CNH Global N.V., which manufactures and markets Loader Backhoes and Vibratory Compactors. ● Tractor Engineers Limited (TENGL) is a wholly-owned subsidiary, which and markets manufactures for Undercarriage Systems Excavators and Material Handling Systems like Apron Conveyors etc. Business Environment The businesses of IPM OC are yet to come back to the levels which prevailed in early 2008 before the on set of financial crisis. The global valves market showed a decline in orders in the year due to postponement of investments in various projects; though the domestic market started improving in the second half of the year. The fewer number of projects in Oil & Gas segment resulted in severe price competition from the existing players in the valves market. The customers also encouraged entry of new players and re-visited supplies from China giving considerations to the low prices quoted by them. As a result, the margins in the valves market remained under pressure. The scenario for Rubber Processing Machinery in the international market was slightly dull, as the regular L&T-Case 770 loader-backhoe. L&T-Case Equipment (P) Ltd. is a joint venture between L&T and CNH, a global leader in manufacture of loader-backhoes. customers in key business segments such as Automobile and General Engineering industry, where customers have shown faster recovery. Government’s focus on renewable Wind Energy sector continued ensuring consistent growth in business from wind mill products. focus of Infrastructure The the Government of India coupled with various proactive stimulus measures enabled the CMBS to register a growth over 2008-2009 demand as against initial expectation of further deterioration. However, the competition is increasing in the sector. Key players in the Construction equipment market have added the capacity in the last few years. Apart from this, new players have either made announcements of new capacities or are offering imported equipment. Most international players are present in the Indian market on their own or in joint ventures with Indian players. 25% respectively during the previous year. Significant Initiatives In Valves business, additional distributors have been appointed to increase MRO sales and initiatives taken to enhance the customer coverage in India. Sales personnel have been posted in Abu Dhabi and UK the geographical coverage and secure additional business. Valves Business Unit is currently working on obtaining on approval of its products in Algeria, Brazil and Mexico. increase to A new initiative for development of valves to address the growing Power segment went on stream at Valves Manufacturing Unit, Coimbatore. The manufacturing licence in LTJVCL, China was obtained, which will allow marketing of LTJVCL products within China. We have also obtained the approval from Pemex, Mexico for our products. The market for Hydraulic Excavators during 2009-2010 grew by 5% as against a reduction of 21% during 2008-2009. Similarly market for Loader Backhoes and Vibratory Compactors also grew by 54% and 17% respectively during 2009- 2010 as against reductions of 43% and Several new products for Rubber Processing Machinery such as a new range of Hydraulic Presses, Hybrid presses and slide back presses were introduced during the year 2009-2010. The product offering was also expanded by offering Tyre Handling Automation Wide range of industrial valves offered by L&T, addressing applications in the oil & gas, petrochemical and power sectors. 73 Hydraulic tyre-curing press, manufactured by LTM BU. It is used by tyre suppliers to manufacture passenger car radial tyres. customers in Europe did not go in for expansion, resulting in lower order inflow from overseas market. However, the demand from the domestic market compensated for the reduced off-take from international players. The domestic tyre industry market witnessed a surge in the requirement of Tyre Curing Presses, fueled by the increasing demand of automobiles and shift of Truck and Bus tyre technology from “Bias” to “Radial”. Almost, all the domestic tyre majors companies have expansion plans in place and have placed or committed orders. Triggered by ample growth opportunities in Infrastructure sector, Indian Cement Industry saw a spurt in activities post previous years’ recessionary “wait and watch” approach. Nearly 60MT cement capacity additions are now in different stages of execution. This helped good order growth in Crusher business. All the industries which WPB and INP BUs cater to are showing positive growth. There has been a gradual recovery to normal conditions by most of the solutions to the tyre Industry jointly along with CIMCORP of Finland. A dedicated workshop area within Kansbahal Works is being remodeled for manufacture of Wheel Loaders. The commercial production of Wheel Loaders is slated to begin by first quarter of the year 2010-2011. Also, new products such as indigenously developed Cold Milling Machine (used for milling of roads before them afresh) were asphalting indigenously developed. A number of initiatives are in the pipeline in the Welding business, some of them being launching new products, expanding manufacturing capacity of indigenous inverter and wear plate. It is also proposed to start new training & development centre at Kolkata which shall be operational in June 2010. inaugurated The Foundry project of 30,000 TPA for manufacturing of wind mill castings at Coimbatore was in December 2009 and has now begun its commercial production of castings. The foundry at Coimbatore has the latest control, pollution conservation of environment and natural resource measures including Furan Sand system with Mechanical & Thermal Sand Reclamation systems. control, fire Many new cutting tools used in drilling, milling and turning have been launched successfully in the market. These new introductions are expected to enhance the competitive position and build market share for the Iscar Cutting Tool business. All the businesses continue to maintain their efforts that were started through “War Room meetings” towards close monitoring to ensure reduction in Working capital and in particular, Receivables, besides ensuring healthy order booking and execution. Other initiatives taken during the year are: 74 ● Enhancement of after-sales support capability 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 ● Tie-up with major financiers for providing attractive finance options to dealers and customers. ● Launch of PC300 Mighty Excavator to address heavy applications ● Triple Offset Butterfly Valve is increasingly replacing large-size Gate Valves and we plan to develop the full range of Triple Offset Butterfly Valves. Also, in order to address the is upstream market, Audco expediting development of Trunnion Mounted Metal Seated Ball Valves. ● Customers prefer ready-to-use wear components rather than using welding electrodes for building the worn out components. This opens up new business opportunities even while this may gradually shrink the market size for Maintenance & Welding products. Outlook The Indian economy has shown consistent growth and remarkable resilience after the slump in 2008-2009 and early part of 2009-2010. Power and Infrastructure sectors in India are set to witness strong growth in the coming year with the boost from policy measures and budgetary allocations. India is likely to emerge as the “Refining Hub” of the world with capacity additions planned. Government’s focus on exploration and production to meet the growing energy requirement of the country through NELP, the Natural Gas discoveries in the East Coast and Oil discovery in Rajasthan and Gulf of Cambay, plan for cross-country pipelines provide promising business prospects to valves business in the medium term. Demand for machinery from Mineral processing Industries are expected to grow in 2010-2011 backed by huge infrastructure requirements. The outlook for Wind Mill Castings is positive driven by good demand and backed by readiness of world class foundry facility in Coimbatore. The Global tyre manufacturing facilities are moving more towards Asia due to lower manufacturing costs. The market demand for Construction Equipment is expected to improve on account of the increase in spending in the urban infrastructure, general construction sectors and spending by the Government on various infrastructure projects. Gap between coal demand and supply continues to provide a growing opportunity for Mining Equipment. CMBS is well placed to take advantage of these opportunities through supply of large size construction and mining equipments. the Division envisages Overall, improvement in Industrial trends in the coming year and a return to better growth trends around second half of the year. Innovative solutions for welding, cutting and wear protection of metal components. V. K. Magapu Whole-time Director & Senior Executive Vice President (IT & Technology Services) Headquarters of L&T Infotech at Powai, Mumbai. Integrated Engineering Services Overview Integrated Engineering Services (IES) headquarter is at Vadodara, Gujarat and its design centers span the cities of Bangalore, Chennai, Mysore, and Mumbai. It has about 2,700 employees delivering high-quality engineering and design solutions. The end-to-end services are product design, analysis, prototyping & testing, embedded system design, production engineering, plant engineering, buildings & factories design, asset information management & sourcing support using cutting-edge CAD/CAM/CAE technology in the engineering domains of Automotive, Aerospace, Marine, Off-highway Machinery, Railway, Industrial Products, Consumer Electronics, Medical Devices, Consumer Goods, Pharmaceuticals, Minerals & Metals, Oil & Gas and Utilities. Packaged Business Environment The evolution of the outsourced engineering services market has been phenomenal over the past few years. In the initial years, the bulk of engineering services work coming to India was of comparatively low-end, such as drafting, legacy conversions, and elementary design. 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. With an increase in the volume of work and a challenging business environment, IES is keeping ahead of the competition by leveraging the rich engineering heritage of L&T. IES focuses not just on providing high-quality services to its esteemed customers but also ensures that customers have a memorable service experience. This has enabled IES to build a strong brand for itself and become synonymous with customer the outsourced satisfaction engineering services industry. in Significant initiatives IES has taken major steps to realign it self into Verticals, Horizontals, Platinum and Strategic Accounts to set new benchmarks of customer satisfaction in the engineering services industry and start a journey of multi-fold growth. Specific initiatives include: ● A Center of Excellence (CoE) of Aerospace has been set up at Bangalore in which about 70+ engineers from Mechanical and Avionics domains have come together to set up a one-stop shop for Aerospace clients. ● IES has realigned its mechanical engineering and embedded systems engineering services in line with the industry domains, known as Vertical Business Units. VBU ensures that a customer from its domain gets all its engineering services needs met from a single window. ● The Sales force has been organised geographically with special emphasis on North America, Europe, Asia Pacific, Middle East and Africa. ● Platinum Accounts have been crafted profitability complete with 75 experienced domain specialists from L&T’s other operating divisions into this new business area, developing sound processes for engineering activities and operational efficiency measures. 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, IES has managed to hold its own. in With the winds of economic recession yet to die down completely and the competition the outsourced engineering services market being stiffer than ever, the year promises to be challenging one. However, IES with its new look is confident of taking on the challenges and deliver excellent results on the back of the initiatives described above. Embedded Systems’ design facility at Mysore. L&T offers end-to-end Integrated Engineering Services and solutions to clients across the globe. responsibility to enable closer co- ordination between sales and delivery and hence faster decision- making. Through these and other actions, IES continues to reaffirm its commitment to customer satisfaction and its desire to propel itself on the fast track to growth. In order to prepare itself for upcoming opportunities, IES has put in place several measures including structured training of new recruits, transfer of The Headquarters of L&T’s Integrated Engineering Services at Vadodara. 76 A. K. Chhatwani Senior Executive Vice President (Power Development) 90 MW co-generation power plant at IPCL, Gandhar. Power Development Group (Thermal) Overview Power Development Group has been formed with the objective of developing, investing, operating and maintaining grid linked Independent Power Plants, Cogeneration and Captive Power Plants on Build-Own-Operate (BOO), Build- Own-Operate-Maintain (BOOM) and Build-Lease-Operate (BLO) basis. Some of the key activities of the Power Development group include: ● Identification of new opportunities for grid-connected & captive power plants ● Evaluation of risks and strategies for mitigation of these risks. ● Ensuring statutory various clearances for the development of power project. ● Evaluation of various financing structures and arranging the requisite financial package for investment. ● Setting up joint ventures with government undertakings and PSUs with equity participation. Power Development Group has a good track record of development and construction of power plants. Some of the projects developed by the Group, which are working successfully, are: ● ● 116 MW Naptha-fired combined Cycle Co-generation Power Plant on BOO basis to deliver 116 MW of Power and 120 TPH Steam for Haldia Petrochemicals Limited, Haldia, West Bengal. 90 MW Naptha/Natural gas-fired Co- generation Power Plant on BLO basis to deliver 90 MW of Power and 240 TPH of process steam for Indian Petrochemicals Corporation Limited, Gandhar, Gujarat. Power Development group is currently developing a 1400 MW (2x700 MW) supercritical coal-fired power plant in Punjab. The Power Development Group is organised into two teams: ● Business Development ● Fuel Sourcing All projects implemented by the Group would be through Special Purpose Vehicles (SPV). These SPVs will be financed through non-recourse project financing. This strategy will help in de- risking or ring fencing the business of parent company and at the same time help in leveraging the project. This strategy also helps the Company to endeavour large size projects with lower equity investment. Business Environment Persisting power shortage is the major impediment in the path of economic development in India. There was a shortage of 10.1% in terms of total energy requirements and 13.3% in terms of peak demand requirements in the year 2009- 2010. The demand/supply gap for electricity in India has been primarily due to the slow pace of capacity addition. During the 10th plan period, capacity addition achieved as compared to target was 51.5%. During the 11th plan period, 28.3% capacity addition has been achieved till date. 77 India has one of the lowest electricity consumption levels in the world at approx. 750 units in 2009, compared to the world average of 3000 units and 2650 units in China. This presents a significant potential for sustainable growth in the demand for electricity in India. The Government of India (GoI) has taken significant steps to restructure the industry, attract investment and plan for fast track capacity addition through incentivised policy initiatives. These included measures such as restructuring the State Electricity Boards (SEBs) to improve their financial condition, regulatory and policy intervention such as the Electricity Act, the National Electricity Policy 2005, the Tariff Policy 2006, Tariff Based Bidding Guidelines 2005 and the National Hydro Policy 2008, among others. Given the significant supply deficits, high growth potential and conducive government policies, a large opportunity exists for private players to enter the power generation segment. While there are a number of opportunities in the power generation sector, there are also a number of challenges. Delay in land acquisition, environmental clearances and approvals remain an area of concern. In addition, availability of coal continues to be one of the biggest challenges for coal-fired power projects in India. The development of mines has not kept pace with our ambitious program for the addition of generation capacities. Significant Initiatives Power Plant in Punjab The Group is currently developing a 1400 MW (2x700 MW) supercritical coal-fired power plant in Punjab. This project was won through the process of competitive tariff-based (Case-2) bidding. The Plant site is around 28 kms from Chandigarh airport, while Patiala and Ambala towns are at 28km and 20 km distance respectively. 78 The sale of electricity from the Power Plant to PSEB is backed by a 25-year Power Purchase Agreement. Coal requirement for the plant would be sourced from South Eastern Coal Fields (SECL) Korba mines in Chhattisgarh. The steam generator & turbine are being sourced from the L&T-MHI JV companies which employ cutting edge technology to manufacture proven state of the art supercritical equipment. The BTG-BOP and related civil and electrical works would be carried out by the Company. The performance of the plant is expected to match the best operating power plants worldwide, in terms of reliability and efficiency leading to lower coal consumption and therefore, lower emission of green house gases. The Power Development Group is also looking at other opportunities including in the state of Chhattisgarh & Odisha. Outlook According to the 17th Electric Power Survey (EPS) report, India’s energy requirement will grow at a CAGR of 7.1% over a period of 10 years (Fiscal 2007 to Fiscal 2017). Demand drivers for growth of the power segment would largely emanate from growth in manufacturing sector, increase in per capita electricity consumption, rural electrification and demand for refurbishment of old power plants with the new super-critical technology. There has been a paradigm shift in Government policies so as to create a facilitating and enabling environment conducive to private participation in projects. development power Consequently there are now ample opportunities to develop power projects through Public-Private partnership. In the light of the above, Power Development Group has set for itself ambitious targets in the power generation space. The vision is to achieve capacity of 10,000 MW by 2015, out of which 5,000 MW would be operational and financial closure would be achieved for the balance 5,000 MW. The Chief Minister of Punjab, Mr. Parkash Singh Badal and Chairman & Managing Director of L&T, Mr. A. M. Naik, at the foundation stone laying ceremony of the 2 x 700 MW coal-fired power plant at Rajpura. Y. M. Deosthalee Whole-time Director & Chief Financial Ofﬁ cer Financial Review 2009-2010 L&T Standalone I. LAYING A STRONG FOUNDATION FOR LONG TERM GROWTH leadership position On the back of the Indian economy emerging stronger from the global meltdown, the Company consolidated its the Engineering and in Construction business during 2009-2010. Alongside newer business opportunities being explored in the Nuclear and Railways sectors, the Company has succeeded in bagging a slew of prestigious orders in the Power, Hydrocarbon, Fertiliser, Infrastructure and Defence sectors during the year. The Company, during 2009-2010 secured fresh orders totaling to Rs.69,572 crore recording a healthy growth of 35% over the previous year. Large project orders over Rs.300 crore constituted over 60% of the total Order Inﬂ ow. longer average execution period of 27 months, largely due to increased share of power sector orders, in its Order Book. Over the past 5 years, the compound growth rate of Order Inﬂ ow is 33% and of Order Book is 42%. Sales & Service Income Gross Sales and Service income at Rs.36,996 crore grew by 10.6% over 2008-2009 on like to like basis (after excluding the Ready Mix Concrete sales from the previous year). The tightening of credit on the aftermath of global ﬁ nancial crisis impacted certain clients’ preparedness to proceed on projects, thereby adversely affecting project execution in the ﬁ rst half of the year. The moderate sales growth was also due to drop in demand for Industrial Machinery and Products during a major part of the year. The Company closed the year 2009-2010 with a record Order Book of Rs.1,00,239 crore. The composition of projects in its Order Book involves a The Company registered a compound growth of 25% in its revenues over the last 5 years, underlining its premier position in the industry. Operating Cost and Margin Analysis Manufacturing, Construction and Operating expenses for the year 2009-2010 amounted to Rs.28,454 crore, translating to 75.0% of the Total Income of 79 Rs.37,945 crore excluding exceptional/extraordinary items. As compared to the previous year, the costs reduced by 80 basis points due to a combination of favorable factors, such as improved product mix, favourable input prices, improved productivity and operational excellence initiatives. The Company continued its strategy of inducting fresh talent into its existing and new ventures. There was a net addition of 1,428 employees during the year, taking its strength to 38,785 as at March 31, 2010. The Staff Expenses for the year 2009-2010 at Rs.2,379 crore increased by 20% as compared to the previous year, which as a percentage of Total Income excluding exceptional/extraordinary items, increased by 60 basis points. Excluding exceptional/extraordinary items, Sales, Administration and Other expenses for 2009-2010 at Rs.1,387 crore represented 3.6% of Total Income. There was a reduction by 150 basis points in the expenses during 2009-2010 over that of previous 80 year. Over the past two years, concerted efforts were made to reduce the administrative and marketing overheads so as to improve the Company’s operating margin. During 2009-2010, the provisions towards defect liabilities, foreign exchange variations and doubtful customer receivables were lower than the previous year. Proﬁ t before Depreciation, Interest and Tax (PBDIT), excluding exceptional/extraordinary items for the year 2009-2010 at Rs.5,726 crore increased by 23% over the previous year. PBDIT at 15.1% of Total Income excluding exceptional/extraordinary items improved by 170 basis points over the previous year. The Company took adequate risk mitigation measures so as to safeguard the margins in the ongoing projects. The improvement in margins seen in the recent years reﬂ ects the Company’s ability to select, compete, win and execute turnkey and construction projects within the agreed cost and time lines consistently, year after year. Other Income The Company disposed of some of its strategic investments at an exceptional gain of Rs.1,115 crore. These investments consisted of the Company’s holding in UltraTech Cement Limited (gain of Rs.1,020 crore), holding in one of its associate companies (gain of Rs.68 crore), and buy back of the Company’s part equity holding by one of its associate companies (gain of Rs.27 crore). Net of tax exceptional gain works out to Rs.1,095 crore. Other gains on sale of investments included a gain of Rs.86 crore made on sale of part investment in the equity shares of Satyam Computer Services Limited. Dividend income from long term investments during the year 2009-2010 at Rs.109 crore mainly comprised dividend from Group companies. Temporary surplus funds, invested judiciously in low risk short term investments, also earned a dividend income of Rs.278 crore. Finance Cost The Company mobilised additional average borrowings of Rs.1,608 crore during 2009-2010 to ﬁ nance its capital expenditure and working capital requirements resulting in increased interest expense at Rs.505 crore. The weighted average interest cost on borrowings at 7.2% for the year was still low, though marginally higher as compared to the previous year. Major part of the foreign currency borrowings were hedged against currency and interest rate risks. Proﬁ t Growth The overall Proﬁ t after Tax, inclusive of exceptional and extraordinary items, at Rs.4,376 crore registered a growth of 26% over the previous year. Despite infusion of addiontal equity capital, the Earnings per Share (EPS) at Rs.73.77 showed a growth of 24% over the previous year. The Company made a net exceptional gain of Rs.1,075 crore during the year 2009-2010 comprising (a) an exceptional gain of Rs.1,115 crore (net of tax Rs.1,095 crore) from sale of its strategic investments as elaborated under ‘Other Income’ above and (b) an exceptional provision of Rs.40 crore towards diminution in the carrying value of investment in an associate company. The extraordinary gain of Rs.136 crore made by the Company during the year comprised (i) Rs.73 crore from disposal of Petroleum Dispensing Pumps & Systems business, as a part of the Company’s strategy to exit non-core businesses and (ii) Rs.63 crore from reversal of proportionate provision made in respect of investment in Satyam Computer Services Limited, pursuant to the part sale of the said investment in 2009-2010. Funds Employed and Returns As a % of sales, gross working capital for the year ended March 31, 2010 at Rs.26,362 crore has increased by 5.7 percentage points due to higher work in progress, customer receivables and increased advances towards equity, given to subsidiary companies pursuing growth initiatives. Net customer receivables as at the end of the year stood at Rs.11,164 crore, representing 110 Days of Sales. Concerted efforts are being initiated to expedite the collections. Excluding the exceptional and extraordinary items, PAT stood at Rs.3,185 crore. Over a period of 5 years, PAT excluding exceptional and extraordinary items registered a compound growth of 38% and EPS multiplied by almost 4 times from Rs.19.02 in 2005-2006 to Rs.73.77 in 2009-2010, reﬂ ecting the uninterrupted track record of healthy performance of the Company. Net working capital at Rs.5,119 crore was marginally lower due to better inﬂ ow of customer advances and improved credit terms from suppliers. While the funds employed for 2009-2010 declined by nearly 6% over the previous year at the operating segment level, allocation of capital for new ventures as part of growth initiatives neutralised this reduction at the Company level. 81 The Company incurred Rs.1,604 crore towards capital expenditure during the year. While Project businesses invested in creating additional fabrication facilities and adding construction equipment, the Product businesses expanded the existing production facilities at Coimbatore, Ahmednagar and Talegaon. At the Company level, investments and loans to subsidiary & associate companies increased by Rs.2,571 crore. Major investments were made in Power Development, Ship Building, Infrastructure Development and Financial Services ventures. Proceeds from capital raised during 2009-2010 were temporarily deployed in current investments. The increase in current investment portfolio was Rs.3,085 crore during 2009-2010. Accordingly, the overall Funds Employed by the Company at Rs.25,190 crore as at March 31, 2010 increased by Rs.6,126 crore as compared to the previous year end position. Both the Return on Net Worth and Return on Capital 82 Employed have declined in 2009-2010. The Return on Net Worth for the year 2009-2010 at 20.7% and the Return on Capital Employed (ROCE) at 15.9% showed reduction by 400 and 260 basis points respectively, as compared to the previous year. The relative reduction in the returns is attributable to the investment in the growth needs of emerging businesses and expansion of facilities that are yet to generate returns. Economic Value Added from normal operations correspondingly reduced to Rs.590 crore, pulled down by the additional capital charge due to the increased strategic investments. from Liquidity & Gearing Cash accruals the operations signiﬁ cantly increased by Rs.4,004 crore as compared to the previous year lending a strong support to the Company’s capital expenditure and investment plans. The divestment proceeds of Rs.1,576 crore further supplemented the operational cash accruals. The Company successfully mobilised additional capital of Rs.1,873 crore by way of Qualiﬁ ed Institutional issued Foreign Currency Placement and also Convertible Bonds to the tune of Rs.929 crore. The response which the resource raising programmes commanded signiﬁ ed the investor conﬁ dence in the Company’s long term growth prospects. Liquidity & capital resources Rs.crore Cash & cash equivalents at the beginning of the year Add: Net cash provided / (used) by: Operating activities Investing activities Divestment proceeds Financing activities 2009-2010 2008-2009 775 964 5483 (7648 ) 1576 1246 1479 (4430 ) 1121 1641 Cash & cash equivalents at the end of year 1432 775 With a signiﬁ cant increase in Net Worth of the Company, the Gross Debt Equity ratio improved from 0.53:1 as at March 31, 2009 to 0.37:1 as at March 31, 2010. The creditable performance of the Corporate Treasury during the difﬁ cult days of global ﬁ nancial crisis earned laurels and awards for the Company in domestic and international forums. The strong ﬁ nancial position of the Company will support its ambition for long term growth and higher shareholder value creation. slowdown, delayed ﬁ nancial closures and clients’ unpreparedness to proceed with the new projects already committed by them. BUSINESS SEGMENT WISE PERFORMANCE Engineering & Construction Segment (E&C) The performance of the E&C segment during 2009- 2010 was good considering the depressed investment climate during the ﬁ rst half of the year arising out of global meltdown. Despite the reduced ordering from infrastructure sectors and Gulf region, the E&C segment was successful in bagging project orders worth Rs.63,899 crore from the diverse sectors such as Power, Hydrocarbon Upstream and Midstream, Fertiliser and Industrial, Commercial & Residential buildings registering a growth of 41% over the previous year. Good execution coupled with prudent risk mitigation measures enabled the Segment to report healthy improvement in EBITDA margins for 2009-2010 by 80 basis points over the previous year. With the liquidity position improving in the last two quarters, the Segment obtained project advances from its customers and also improved the vendor credit position enabling it to reduce the funds employed by Rs.170 crore to Rs.6,291 crore by the end of March 2010. Electrical & Electronics Segment (E&E) Continued global downturn and uncertainties in the domestic industrial sectors impacted adversely the demand for Electrical Standard Products in the ﬁ rst half of 2009-2010. Though the segment recovered during the second half, its revenue for the year 2009- 2010 at Rs.2,987 crore could only grow moderately by 7%. The administered petroleum product pricing The gross revenue for the year at Rs.32,316 crore grew by 12.6% over the previous year, driven by Construction and Heavy Equipment businesses. The revenue growth was impacted by the economic 83 for to depress regime continued Petroleum Dispensing Pumps & Systems through-out the year, until the eventual disposal of this business in March 2010. the demand Notwithstanding the subdued volume growth, the Segment achieved healthy improvement in margins by 180 basis points during 2009-2010 over the previous year. Increased margin at 14.5% was possible due to higher proportion of Standard Products sales and improved performance by Metering Protection & Systems business. With increase in manufacturing products sales by 9%, the capacity utilisation also improved. The segment closing Funds Employed at Rs.1,132 crore reduced by 9% as compared to that of previous year, due to tighter control on working capital. Machinery & Industrial Products Segment (MIP) The segment performance was adversely affected during 2009-2010 due to depressed capital expenditure plan of the industrial sectors, both within and outside the country. Particularly the Industrial Valves business unit had to bear the brunt of global meltdown as its volumes shrunk signiﬁ cantly during the year. While other businesses of the segment recovered during the second half of the year, the overall segment revenue for 2009-2010 at Rs.2,220 crore was lower by 10% as compared to the previous year. to The segment margins however, continued show improvement during 2009-2010 largely due to improved performance of Rubber Processing Machinery business and Construction & Mining Equipment business. The Net Funds Employed in the segment at Rs.224 crore showed a decrease of 46% as compared to the previous year, largely due to 84 signiﬁ cant reduction in the year end working capital, aided by close monitoring of receivables and inventory. “Others” Segment Integrated Engineering Services Performance of (IES) included as part of the “Others” Segment, was adversely affected by lower outsourcing by US and European customers and stronger Indian rupee. The gross revenue of IES business for 2009-2010 at Rs.330 crore was lower by 10% as compared to the previous year. The business, however, could improve the working capital to 22% of the revenue as against 36% for the previous year, through tighter control on Receivables. II. RISK MANAGEMENT The Company is exposed to a variety of risks across its entire range of business operations. To ensure its long-term success, risks are regularly identiﬁ ed, analysed and appropriately mitigated. Indian economy experienced low growth conditions in the ﬁ rst half of 2009-2010 in the wake of global economic slowdown. All the major sectors experienced slowdown, consequently delaying their capital expenditure plans. This also led to increased competition in the wake of declining number of opportunities. In spite of this adverse situation, the Company was able to achieve healthy growth in order inﬂ ow, revenue and proﬁ tability due to a number of appropriate measures backed by a comprehensive Risk Management framework within the Company. The Risk Management process practised in the Company is comprehensive and enterprise-wide. The process being followed in the business units of Engineering and Construction Segment was extended during the year to the other new businesses like Railways and Power as well. A separate policy for Environmental and Social Risk Management was also implemented throughout the organisation. The Company has been successfully following a process of Pre-Bid Risk Review which assesses the complexion of projects on risk-return proﬁ le prior to bidding. Once a project is awarded by the client, the impact of various risks is monitored throughout the project life cycle. Risk Management forms an integral part of the Company’s business processes and constitutes an important element of decision-making. Both qualitative and quantitative methods are employed for risk assessment in a uniformly structured way across the Company. The methods include value at risk (VaR) calculations to continuously determine the Company’s exposures. Latest simulation techniques are used while calculating contingencies for the pricing of project proposals. The Company is a sponsor of the Engineering & Construction Risk Institute (ECRI) USA and conducts regular interaction with other sponsoring world-class corporations to benchmark its Risk Management processes with the global best practices. The Company believes in spreading a culture which encourages risk taking for commensurate returns after appropriate due diligence. The Risk Management processes are periodically reviewed and revised to keep in tune with the changing business requirements. Corporate Audit Services conduct targeted reviews of risk management processes to check compliance. The Audit Committee of the Board also periodically reviews the reliability of the Risk Management structure and the efﬁ ciency of the process. The Company was able to effectively counter the market risks in the face of the business downturn, through its diversiﬁ ed portfolio of businesses spanning both manufacturing and projects. A well thought-out approach towards international presence helped the Company to enhance its opportunities globally. Internal Controls The Company believes that a strong Internal Controls framework is one of the important pillars of Corporate Governance. While internal control is embedded in most of the processes of the Company, a separate corporate cell oversees the Internal Controls of business processes, corporate technology systems. The Company, through its corporate policy on functions and information Internal Controls, provides a structured framework for identiﬁ cation, rectiﬁ cation, monitoring and reporting of Internal Control status in the Company. It speciﬁ es the responsibilities and tasks enjoined upon employees in all positions. to and authorisation The Company has well documented policies, procedures guidelines commensurate with the level of responsibility and the standard operating procedures speciﬁ c respective businesses. The effectiveness of internal control mechanism independent internal audits carried out by Corporate Audit Services from time to time. There is also an independent review of Internal Control systems by statutory auditors. Any signiﬁ cant deﬁ ciency in internal control observed during the audits is reviewed by the Audit Committee of the Board along with the status on implementation of recommended remedial measures. is reviewed by III. FINANCIAL RISKS a) Capital Structure, Liquidity and Interest rate risks The Company started the year 2009-2010 with adequate liquidity and conservative gearing levels. During the year it enabled itself for ﬁ nancing medium- to-long term growth initiatives by raising equity and equity-linked capital. Apart from adding to liquidity, this contributed to a lower gearing, creating head room for debt capital as and when necessary. Sale of its minority stake in UltraTech Cement Limited further added to liquidity and to a larger equity base. These activities led to an increase in investible surpluses during the year. The Company managed its portfolio of investible surpluses judiciously to optimise liquidity, safety and return considerations. Simultaneously, the Company has also increased its working capital lines with banks, which may be used to ﬁ nance business needs at short notice. The borrowings of the Company are generally for long term and are raised on favourable terms / security structures. The Company manages the risks relating to capital structure by adopting conservative gearing policies and focusing on long term growth perspectives. It manages liquidity risks by holding adequate investible surpluses in line with economic situations and business needs, expanding access to suppliers of long-term and short-term capital, and maintaining a strong credit proﬁ le. The interest rate risks are managed through a mix of fund-raising and investment products across 85 maturity proﬁ les, and through various tools approved under a robust risk management framework. (cid:2) b) Foreign Exchange and Commodity Price Risks The Company is exposed to changes in foreign exchange rates and commodity prices across its various business segments. Further, the Company also has exposures to other foreign currency denominated assets and liabilities. In many cases, such exposures are partly off-set by suitable pass-through clauses built into contracts with customers. For the balance portion, institutionalised risk management mechanism to effectively manage the risks. Appropriate hedge tools are used under the framework of a Board approved Risk Management Policy. The review of exposures and underlying hedges under respective business segment are conducted at regular intervals. The Risk Management mechanism is also subject to periodic review by the Audit Committee. the Company has IV. REVITALISING HUMAN CAPITAL The Company believes that the development of employees is one of the most important enablers for an organisation like ours, engaged in nation building. This is being done at both individual and team levels. Sustained development of its employees, professional and personal, is the hallmark of its human resource policies. Recruitments across all levels, extensive training and skill enhancement activities are carried out at all locations, in line with the Company’s expansion and growth plans. Being an engineering conglomerate, the Company needs a large pool of engineering talent. In line with the growing business needs, the Company has recruited Graduate and Diploma Engineer Trainees from engineering colleges across the country during 2009-2010. Further addition of capability is underway from the best engineering colleges to match the Company’s growing order book and execution needs. talent, to develop Apart from the wide variety of initiatives already running including core- development & competency-based programmes and e-learning, the Company has launched a in new Management Education Programme association with IIM Ahmedabad. Two batches are already undergoing this programme. (cid:2) (cid:2) 86 In the Company’s endeavour to stay abreast of the current global scenario, many new initiatives have been planned including a Programme on Management of Change, Business Simulation on Corporate Entrepreneurship etc. During 2009-2010 the Company took many major steps towards transforming the Company’s Management Development Centre (MDC) at Lonavla into a world- class centre for learning. New initiatives included releasing management updates on latest industry trends and publishing the MDC journal ‘Corporate Entrepreneurship’ with an excellent collection of industry articles by eminent academicians and practitioners. Such initiatives aimed at transforming MDC into a truly holistic reservoir of learning resources and modern infrastructural facilities. The Company recognises the importance of human leadership in realising its growth ambitions and believes in nurturing talent within the organisation to take up leadership positions. Towards achieving this, the Company has in place a structured leadership program to identify leaders and to develop them. The Company continues to build a leadership pipeline in a systematic and scientiﬁ c way, using the most sophisticated human technologies so as to achieve the targets to be set out under Perspective Plan 2015. The Company has well-established processes to attract talent and identify strengths, as also areas of improvement. An array of structured alternative avenues are provided to employees to build competencies. The Company also provides customised solutions to employees to set the pace for their learning and thereby support their growth within the organisation. increasing productivity of V. LEVERAGING IT FOR BUSINESS BENEFITS: OPTIMISING IT COSTS The Company has experienced the beneﬁ cial role of Information Technology systems in enabling efﬁ ciency the employees and through automation of all business processes since many years. Over the years, the investments in Information Systems are being balanced between standard systems like the ERPs for business process automation and niche systems and cutting-edge technologies to provide leverage and competitive advantage to our businesses. for to current implementations that During 2009-2010, many commenced the new the previous year in businesses were completed. Some systems were upgraded technology versions with increased functionality and new systems to enable better analytics and decision making were also implemented. Beneﬁ ts realisation and usage studies were conducted regularly to extract returns from the investment being made in Information Technology. taken A number of measures were towards optimisation of IT costs through standardisation, consolidation and application of new technologies. The Company also did some pilot rollouts of collaboration and communication portals using new web 2.0 technologies to tap into the collective creativity and knowledge of the employees for innovation. All the facets of IT Infrastructure were enhanced to ensure high performance, high availability and therefore increased productivity. Information Security and Disaster Recovery were beefed up as an ongoing process through a systematic framework and adherence to global standards. IT Governance processes were followed as designed, to provide appropriate oversight to the IT functions to deliver value to the business and to manage associated IT risks. VI. CORPORATE SUSTAINABILITY INITIATIVES The Company has undertaken several initiatives in the areas of Water and Energy conservation and Occupational Health and Safety. Manufacturing units and project locations endeavor to control fresh water consumption and have adopted “Zero Discharge Approach”. This was achieved by implementation of 3R’s principles i.e. Reduce, Reuse and Recycle. Energy has been identiﬁ ed as one of the key natural resources for operations. Sustainability targets related to energy conservation included conducting energy audit at all manufacturing & ofﬁ ce locations, monitoring & conserving energy and developing location wise roadmap for increasing the use of renewable energy. Process re-engineering, conversion and retroﬁ tting of equipment, change in schedule and rationalisation of lighting patterns etc. are some of the energy conservation initiatives implemented at the Company’s manufacturing locations. optimisation, process Occupational health and safety continues to be an unremitting focus area for the Company. The safety strategy is to nurture a ‘Zero Accident’ culture and to reinforce it with fail-safe procedures, the best training and vigilant protective gear, continuous inspection. The Company’s Heavy Engineering and Electrical Business divisions based in Powai campus, Mumbai won the Prestigious “Swords of Honour” from the British Safety Council (BSC), after receiving Five Star rating for their exemplary performance in the ﬁ eld of Occupational Health and Safety Management. The Corporate Social Initiatives (CSI) Cell works closely with community leaders and local NGOs to assess pressing community needs. The Cell then applies management experience and expertise to harness the most effective levers and enable long term solutions to their needs. The CSI Cell based in Mumbai acts as an apex body to bring in consistency and to extend as well as expand community initiatives across various locations 87 GROWING SUBSIDIARIES & ASSOCIATES PORTFOLIO As on March 31, 2010, Larsen & Toubro Group comprised 110 subsidiaries, 21 associate companies and 12 joint venture entities within its fold. These Group companies broadly operate in and focus on the following sectors: i. Information Technology Services; ii. Financial Services; iii. Engineering & Construction services; iv. Power Equipment manufacturing; v. Power Development projects; vi. Infrastructure and Property Development projects; vii. Electrical & Electronics; viii. Machinery and Industrial products; ix. International Investments L&T has invested in companies incorporated both in India and abroad. Most of the investments in companies incorporated overseas are through L&T’s wholly owned subsidiary company, L&T International FZE based at Sharjah. In view of the vast opportunity landscape both within and outside India, L&T over the past years has been investing in its subsidiary & associate companies to accelerate their growth in the medium to long term. Some of the ventures are capital intensive in nature and are in the formative stage. Most of the special purpose entities formed for the development of infrastructure projects under the public private partnership programme are in the construction stage or in their initial phase of operations. These ventures are yet to contribute signiﬁ cantly to the Group’s revenues. For the year ended March 31, 2010, Consolidated Sales and Operational Income was at Rs.43,970 crore after elimination of inter-company sales at the group level. Proﬁ t after tax for the Group at Rs.5,451 crore increased by 44% over the previous year. The consolidated gross Debt:Equity ratio as at March 31, 2010 was 1.08:1, an improvement over the previous year Debt:Equity ratio of 1.32:1. 88 A review of the major operating subsidiary & associate companies is presented below: I. INFORMATION TECHNOLOGY SERVICES A. LARSEN & TOUBRO INFOTECH LIMITED (L&T Infotech): Subsidiary Company Overview L&T Infotech, a wholly owned subsidiary of L&T, is a global IT services and solutions provider to various industries, and helps its clients to maximise the value through IT spend. The Company offers comprehensive, end-to-end software solutions and services in industry verticals like banking & ﬁ nancial services, insurance, energy & petrochemicals, manufacturing and product engineering services, including telecom sector. The Company’s key service areas are application maintenance & application outsourcing, legacy modernisation, package implementations in SAP/Oracle, infrastructure management services and specialised services like data warehousing and business intelligence. These have been augmented by newer offerings like testing services, consulting services, business analytics and system integration. development, Operations & Performance In the wake of global recessionary condition, some of the large clients have had to curtail their discretionary IT spend resulting in lower outsourcing orders, particularly during the ﬁ rst half of 2009-2010. With the clients’ renegotiations on the pricing of on-going projects and rupee appreciating during the year, the proﬁ tability came under pressure. However, with increased focus on building better offsite ratio and taking adequate ﬁ nancial risk mitigation measures, L&T Infotech was able to improve the operating margin during 2009-2010. (cid:2) the crore during L&T Infotech has achieved total revenues year of Rs.1812 2009-2010 compared to Rs.1799 crore (on a comparable basis excluding revenues from engineering services) achieved last year, registering an increase of 1%. On consolidated basis including subsidiaries in Canada, Germany and GDA Technologies Inc., the total income stood at Rs.1915 crore in 2009-2010. (cid:2) Proﬁ t after tax at Rs.281 crore grew by 6% as compared to 2008-2009. With an increase in offshore development by 4%, the operating costs reduced by 9% as compared to the previous year, thereby improving the margin. The export business continues to be predominantly USA based, the contribution being 65% for 2009- 2010. Europe and Asia-Paciﬁ c contributed 17% and 10% respectively, while contribution of Middle East & Africa increased to 8%. Onsite services accounted for 49% of L&T Infotech exports. Outlook Business process outsourcing spend in 2010-2011 is expected to be increasingly driven by back- end processing in Finance & Accounts segment and procurement, followed by HR outsourcing. Signiﬁ cant opportunities exist in core vertical of Banking Financial services & Insurance (BFSI) as also in other vertical markets such as retail, healthcare and public sector. Business prospects exist in the core geographic segment viz. USA, and emerging geographies of Asia-Paciﬁ c (specially Japan, Singapore and Australia). During 2010-2011, discretionary spending specially in areas of application development is expected to rebound. Non-discretionary spending especially in application maintenance, where the Company has signiﬁ cant presence, remote infrastructure management and BPO are also expected to grow. With rapidly changing customer expectations, emergence of new offshore locations, along with new service providers delivering services through the cloud, the IT industry is expected to undergo signiﬁ cant changes in the medium term. To take advantage of emerging opportunities, L&T Infotech is focusing on internal efﬁ ciencies and cost reduction. Given the industry’s resilience to withstand various challenges as demonstrated in the recent past, the Company is conﬁ dent to sustain the growth momentum in the medium term. B. LARSEN & TOUBRO INFOTECH GmbH (L&T Infotech GmbH): Subsidiary Company L&T Infotech GmbH, wholly owned subsidiary of L&T Infotech, provides software services in Banking & Finance, Insurance & Communication technology businesses and Embedded in Germany. During the year 2009-2010, L&T Infotech GmbH recorded total income of Rs.64 crore, registering a growth of 23% over 2008- 2009. Infotech, provides software services C. LARSEN & TOUBRO INFORMATION TECHNOLOGY CANADA LIMITED (LTIT Canada): Subsidiary Company LTIT Canada, wholly owned subsidiary of L&T in ﬁ nancial, Insurance and Oil & Gas sectors in Canada. During the year 2009-2010, the total income of LTIT Canada amounted to Rs.17 crore as against Rs.26 crore in 2008-2009. The decrease was mainly on account of recessionary condition witnessed in the market and curtailment on discretionary IT spend by the major clients. 89 D. GDA TECHNOLOGIES INC. (GDA): Subsidiary Company GDA, a wholly owned subsidiary of L&T Infotech, was acquired in 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. the Despite impact of global economic income of downturn, GDA clocked total Rs.66 crore for year ended March 31, 2010 against Rs.60 crore in 2008-2009. Proﬁ t after tax was Rs.2 crore vis-à-vis loss of Rs.2 crore in 2008-2009. II. FINANCIAL SERVICES A. L&T CAPITAL HOLDINGS LIMITED (L&TCHL): Subsidiary Company Overview in investments L&T CHL, a wholly owned subsidiary of L&T, was incorporated in 2008, with a view to consolidate the ﬁ nancial services L&T’s business and give a distinct identity to the business segment. L&T CHL is the holding company for L&T’s investments in the non banking ﬁ nancial companies and mutual fund business and also a few other strategic investments in the sector. It is registered with the Reserve Bank of India as a non-banking ﬁ nancial company. Operations & Performance The Company’s investments in its subsidiaries and strategic investments increased from Rs.1076 crore as at March 31, 2009 to Rs.1629 crore as at March 31, 2010. During the year, the Company has reported dividend income of Rs.5 crore and proﬁ t after tax of Rs.3 crore. B. L&T FINANCE LIMITED (LTF): Subsidiary Company Overview LTF, a wholly owned subsidiary of L&T Capital Holdings Limited, is a diversiﬁ ed non-banking ﬁ nancial company with product offerings catering to diverse segments of the corporate and retail sectors. LTF has a growing presence 90 in microﬁ nance and is also engaged in the distribution of various ﬁ nancial products. LTF, with its pan India presence backed by a robust credit appraisal, operational and credit delivery model, is well equipped to cater to customers across the country. Operations & Performance LTF recorded signiﬁ cantly improved performance during the ﬁ nancial year 2009-2010, in comparison to the preceding ﬁ nancial year. This was facilitated by the growth in India’s economy, increased investment in infrastructure and higher rural incomes. The positive environment for raising resources was also a contributor to the improved performance. The highlights of the Company’s ﬁ nancial performance are as below: (cid:2) (cid:2) (cid:2) Total assets grew to Rs.7567 crore on March 31, 2010 from Rs.5327 crore on March 31, 2009; Total income grew to Rs.966 crore in 2009- 2010 vis-a-vis Rs.830 crore in 2008-2009; tax grew Proﬁ t after in 2009-2010 vis-à-vis Rs.99 crore 2008-2009. to Rs.156 crore in likely India’s economic growth further momentum Outlook to With gain in ﬁ nancial year 2010-2011 and with the Government’s continued thrust on infrastructure, credit growth off-take is expected to be robust. Growth of the agricultural sector will lead to higher disposable rural incomes which, in turn, would offer continued demand for rural credit. However, current inﬂ ationary pressures may lead to monetary tightening, leading to higher interest rates and pressure on net interest margin. C. L&T INFRASTRUCTURE FINANCE COMPANY LIMITED (LTIFCL): Subsidiary Company Overview LTIFCL, a wholly owned subsidiary of L&T Capital Holdings Limited is a non-banking ﬁ nance company focused on ﬁ nancing of infrastructure projects, covering various sectors. LTIFCL the leverages L&T’s domain knowledge engineering and construction ﬁ elds to provide infrastructure ﬁ nancing solutions through a mix of debt, sub-debt, quasi-equity and equity participation. It also offers project advisory and loan syndication services. in Operations & Performance Mutual fund markets were buoyant in 2009-2010. Major stock market indices and net asset values of most equity mutual funds improved. The improved capital market had its positive impact on LTCCL’s income and proﬁ ts. Operations & Performance the strength of LTIFCL recorded improved performance during the growth 2009-2010, on momentum of the Indian economy and investment ﬂ ow into infrastructure projects, supported by a positive environment for resource raising. The highlights of its ﬁ nancial performance are as below: (cid:2) (cid:2) (cid:2) Total assets grew to Rs.4,249 crore on March 31, 2010 from Rs.2,398 crore on March 31, 2009. Total income grew to Rs.450 crore in 2009- 2010 from Rs.296 crore in 2008-2009. Proﬁ t after tax grew to Rs.111 crore in 2009- 2010 from Rs.76 crore in 2008-2009. Outlook the its ability The increased focus on infrastructure investment through the public private partnership model on the back of strong economic fundamentals would provide the required growth impetus to LTIFCL. increasing competition, Notwithstanding LTIFCL, with timely and appropriate solutions to the customer, is positive about its growth outlook. While inﬂ ationary trends may lead to tightening of credit and money supply, it is expected that the demand for infrastructure and Government’s focus on the sector would provide the required drivers for continued growth. to offer D. L&T CAPITAL COMPANY LIMITED (LTCCL): Subsidiary Company Overview LTCCL, a fully owned subsidiary of L&T, is a portfolio manager registered with the Securities and Exchange Board of India, with over Rs.1650 crore under its fund management. It is also a mutual fund distributor/advisor. LTCCL holds and monitors a signiﬁ cant portion of the L&T Group’s strategic investments. During 2009-2010, the company’s gross income clocked at Rs.20 crore, registering a jump of 215% over 2008-2009. The proﬁ t after tax was signiﬁ cantly higher at Rs.14 crore, an increase of 292% over 2008-2009. The company declared an interim dividend of Rs.4 per share during the year. III. ENGINEERING & CONSTRUCTION SERVICES Domestic Companies A. L&T-SARGENT & LUNDY LIMITED (LTSL): Subsidiary Company Overview LTSL, a company where L&T has 50% stake, renders 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 LTSL received fresh orders aggregating to Rs.144 crore during the year 2009-2010, reﬂ ecting a growth of 58% over 2008-2009. Besides orders received from L&T, LTSL bagged a number of orders from Sargent & Lundy LLC, third party international and domestic customers. The sales and other income for 2009-2010 at Rs.67 crore registered a growth of 7%. Exports accounted for 44% of the total income. Proﬁ t after tax registered a 25% growth at Rs.13 crore for 2009-2010 as compared to 2008-2009 level of Rs.10 crore, aided by lower operating cost. Outlook LTSL will leverage the increased demand for power in the country supported by the 11th and the 12th plan capacity addition planned in India. LTSL also expects a few international projects to materialise this year by focusing on the Middle East market which is on the recovery path. Given the good opportunities both in India and abroad, 91 LTSL has bright prospects in the medium to long term. B. L&T-CHIYODA LIMITED (LTC): Associate Company Overview LTC, a company where L&T has 50% stake, 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 L&T with an equal stake. LTC offers total engineering solution to hydrocarbon sector and related industries including petroleum reﬁ neries, petrochemical units, oil and gas onshore processing facilities, LNG/LPG plants, fertilizer plants and chemical plants. Operations & Performance With a healthy order book at the beginning of the year, the Company reported sales revenue of Rs.83 crore recording a growth of 8% over 2008- 2009. However, the proﬁ tability was lower due to relatively higher sub contracting costs resulting in lower proﬁ t after tax at Rs.9 crore as compared to Rs.10 crore in 2008-2009. C. L&T-VALDEL ENGINEERING LIMITED (LTV): Subsidiary Company Overview LTV, a wholly owned subsidiary of L&T, provides complete engineering solutions for upstream oil & gas sector and offers design engineering services as well as project management services globally. Operations & Performance The order book for the ﬁ nancial year 2009-2010 stood at Rs.90 crore. Sales revenue for the year was subdued at Rs.60 crore as compared to Rs.72 crore for 2008-2009. Proﬁ t after tax for 2009-2010 was lower at Rs.11 crore as compared to Rs.16 crore in 2008-2009 due to decrease in capacity utilisation. D. L&T-RAMBØLL CONSULTING ENGINEERS LIMITED (LTR) Associate Company Overview LTR, a consultancy ﬁ rm where L&T has 50% stake, was established in 1998 by L&T and RAMBOLL A/S of Denmark. LTR provides engineering and 92 project consultancy services for transportation infrastructure projects relating to Ports & Marine, Roads & Airports, Bridges & Metros and SEZ Planning & Environmental Engineering. Operations & Performance The Company has consolidated its position in the domestic market as advisors and consultants to developers of projects. Backed by order inﬂ ow at Rs.50 crore, LTR registered a growth of 15% in total income for the year 2009-2010 to Rs.34 crore. The proﬁ t after tax at Rs.10 crore grew by 63% over 2008-2009. E. SPECTRU M INFOTECH PRIVATE LIMITED (SIPL): Subsidiary Company Overview SIPL, a wholly owned subsidiary of L&T, provides capabilities in defence electronics and systems. SIPL concentrates largely on product development in embedded solutions, control and signal processing for defence sector. It has grown from designing and development of sub-systems to a full-ﬂ edged production organisation delivering sub-systems. Operations & Performance revenues during year 2009- Sales 2010 stood at Rs.9 crore, same as in 2008-2009. Proﬁ t after tax remained ﬂ at at Rs.2 crore for 2009-2010. the F. L&T SHIPBUILDING LIMITED (LTSB): Subsidiary Company Overview LTSB, a wholly owned subsidiary of L&T, has been formed for setting up a Shipyard Cum Minor Port Complex at Kattupalli, near Chennai. L&T has identiﬁ ed shipbuilding as a major thrust area in the heavy engineering sector for growth. 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. Operations & Performance LTSB has a Joint Venture agreement with TIDCO to set up the port and shipyard at Kattupalli, Tamil Nadu. LTSB has taken possession of 1143 acres of patta land at Kattupalli on 99 year lease basis. The Company has commenced construction activities from October 2009 and has also received the formal SEZ approval from the Ministry of Commerce and Industry. LTSB has entered into a Licence agreement with Tamilnadu Maritime Board (TNMB) for using 76.86 acres of coastal land at Kattupalli required by the project. The Company has obtained environmental clearances from the Government. The Company has tied up entire equity and debt funds for meeting the project cost and achieved ﬁ nancial closure recently. International Companies G. LARSEN & TOUBRO ELECTROMECH LLC (L&T Electromech): Subsidiary Company Overview L&T Electromech is a Joint Venture between L&T and The Zubair Corporation, Oman (TZC). L&T, through its wholly owned subsidiary L&T International FZE holds 65% in the Company. The Company is a leading Civil, Mechanical and Electrical & Instrumentation Construction Company in Oman undertaking projects in Oil and Gas, Reﬁ neries, Petrochemicals, Power and Water Treatment sectors. Operations & Performance During the year under review, the Company bagged orders worth Rs.390 crore against Rs.237 crore in 2008, thus registering a growth of 65%. However, as the award of these orders were delayed due to the global meltdown, sales for the year (Rs.249 crore) fell by over 24% vis-à-vis 2008. Notwithstanding the reduction in sales, proﬁ t after tax at Rs.34 crore grew by a healthy 55% over 2008. The improvement in proﬁ tability was largely attributed to risk mitigation measures and pre-bid tie-ups with vendors. Outlook The Company has established itself as one of the major construction companies providing composite in Civil, Mechanical, Electrical & Instrumentation (CMEI) works in Oman. Considering its eminent position construction service in the oil & gas sector of Oman, the current growth momentum is expected to continue in the medium term. H. L&T MODULAR FABRICATION YARD LLC, OMAN (LTMFYL): Subsidiary Company Overview LTMFYL is a Joint Venture company between Zubair Corporation and L&T International FZE established in Sultanate of Oman. L&T, through its wholly owned subsidiary L&T International FZE holds 65% in the Company. The Company has developed core competencies in manufacture of high end equipment like Jack up Drill Rigs, Floating Production Storage & Ofﬂ oading (FPSO) Vessels, Integrated Decks, Skid mounted equipment, in addition to fabrication of large size offshore platforms. Operations & Performance During t he year 2009, LTMFYL’s sales revenue stood at Rs.137 crore, registering a growth of 33% compared to 2008. Proﬁ t after tax for the year 2009 stood at Rs.2 crore vis-a-vis Rs.1 crore in 2008. I. LARSEN & TOUBRO ATCO SAUDIA COMPANY LLC (L&T ATCO): Subsidiary Company Overview L&T ATCO is a strategic Joint Venture of L&T International FZE and Abdulrahman Ali Al -Turki Group of Companies (ATCO) Dammam, a renowned Saudi conglomerate. L&T-ATCO was incorporated as an In - Kingdom Company in 2007 to take advantage of the electro-mechanical construction opportunities arising in the areas of oil & gas, petrochemicals, power and water related projects in Saudi Arabia. L&T, through its wholly owned subsidiary L&T International FZE holds 49% in the company. Operations & Performance During 2009 the Company’s total income stood at Rs.7 crore against Rs.1 crore in 2008. The company has bagged a major order of Rs.74 crore from a leading Korean Company in Saudi Arabia, for mechanical erection works for SATORP in Jubail, Saudi Arabia. The Company registered a 93 loss of Rs.4 crore in 2009 vis-à-vis a loss of Rs.3 crore in 2008. Outlook Future looks encouraging with large projects on the cards in the ﬁ eld of hydrocarbon, power, water and oil & gas. Speciﬁ c tie-ups with prominent EPC players who are aware of L&T’s capability in reﬁ nery & petrochemical and demonstration of on-ground resources could open windows of opportunities for the Company. J. OFFSHORE INTERNATIONAL FZC (OIFZC): Subsidiary Company Overview Offshore International FZC (OIFZC) is a Joint Venture between L&T International FZE and M/s Petro-Plus Sdn Bhd, Malaysia, a wholly owned subsidiary of SapuraCrest Petroleum Bhd, Malaysia for construction and operation of a Heavy Lift cum Pipe Lay Vessel (HLPV). L&T, through its wholly owned subsidiary L&T International FZE holds 60% in the Company. An element of risk was always associated with dependence on external sub-contractors for installation part of the project for Oil and Gas industry. This risk is being mitigated in the form of having own in-house installation capability through this JV. SapuraCrest Petroleum Berhad (SapuraCrest) is a leading company in Malaysia with diversiﬁ ed activities having expertise in offshore installation services including sub-sea pipe-laying, platform and related installations. The JV offers both the companies greater competitive advantages especially in the Indian and Malaysian markets – two of the fastest growing oil and gas services markets in the region. installation The vessel will provide offshore services including sub-sea pipe laying, platform installation across India, the Middle East, South East Asia, Australia and the Sakhalin region. The vessel is available for commercial use in 2010. K. LARSEN & TOUBRO (OMAN) LLC (LTO): Subsidiary Company Overview LTO, a Joint Venture with Zubair Corporation LLC, provides engineering, construction and contracting services for the last 15 years in Sultanate of Oman. Its track record in civil projects has been excellent 94 and continues to enjoy customer preference in the country. L&T, through its wholly owned subsidiary L&T International FZE holds 65% in the company. Operations & Performance Despite the slowdown in the economy due to global recessionary condition, LTO secured order inﬂ ows of Rs.1511 crore during the year. The revenue for 2009 stood at Rs.1549 crore as against Rs.1491 crore achieved during 2008. The proﬁ t after tax for the year 2009 grew by 74% to Rs.99 crore. Outlook After the global economic crisis witnessed in 2008 and ﬁ rst half of 2009, the economy of Oman has stabilised and is heading towards a phase of recovery. The Government of Oman is expected to increase allocation of funds to the urbanisation, infrastructure, health and development activities in 2010 which will augment the opportunity landscape for the Company in power transmission & distribution, infrastructure and the buildings & utilities sectors. L. LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL (LTKC): Subsidiary Company Overview LTKC is a strategic Joint Venture between M/s Bader Almulla and Brothers Company WLL, a Kuwaiti company & Larsen & Toubro International FZE. L&T, through its wholly owned subsidiary L&T International FZE, holds 49% in the Company. LTKC executes construction projects in Oil & Gas and Power sectors in the State of Kuwait. Operations & Performance LTKC recorded sales revenue of Rs.56 crore and proﬁ t after tax of Rs.1 crore for year 2009. LTKC, however, could not bag any new orders during 2009 due to subdued market conditions in the country. M. LARSEN & TOUBRO READYMIX CONCRETE INDUSTRIES LLC (RMC LLC): Subsidiary Company Overview RMC LLC is a Joint Venture between Mr. Majed Al Mehairi (51%), UAE and Larsen & Toubro International FZE (49%), a wholly owned subsidiary L&T. Operations & Performance With the construction and real estate activity slowing down consequent to ﬁ nancial crisis, the demand for ready mix concrete reduced in 2009. Accordingly, the sales revenue at Rs.108 crore was lower by 17% as compared to 2008. Proﬁ t after tax at Rs.15 crore grew by 1% due to introduction of high value added products like coloured concrete and light weight concrete. IV. POWER EQUIPMENT MANUFACTURING A. L&T-MHI TURBINE GENERATORS PRIVATE LIMITED: Subsidiary Company Overview L&T has entered into Joint Venture with Mitsubishi Heavy Industries, Japan (MHI) to manufacture super critical steam turbines & generators (STG package). L&T-MHI Turbine Generators Private Limited was formed in 2008 through L&T Power Limited (a wholly owned subsidiary of L&T) holding 51% share to leverage on the parent company’s EPC capabilities in the emerging mega power sector. The JV’s manufacturing facility at Hazira-Gujarat will produce STG equipment of capacity ranging from 500 MW to 1000 MW and is expected to be on stream during 2011. Operations & Performance While the maiden order obtained during is being executed with the previous year 100% import from MHI, the orders received for 5 more STG package during the year 2009-2010 are expected to be manufactured from the new facility being constructed at Hazira. With order inﬂ ow worth Rs.2136 crore on hand, the Company is gearing up for efﬁ cient execution. The total capacity being installed is 4000 MW. The ﬁ rst order under execution has enabled the Company to report Sales revenue of Rs.422 crore for 2009-2010. As the equipment package is being supplied by the JV partner, the Company is not likely to make any proﬁ ts from this order. B. L&T-MHI BOILERS PRIVATE LIMITED: Subsidiary Company Overview L&T and MHI have entered into another Joint Venture to manufacture & supply Supercritical Boilers for large coal based power utilities. L&T- MHI Boilers Private Limited has been formed with L&T holding the majority share of 51% of the equity, through its subsidiary L&T Power Limited. The JV has envisaged manufacturing of equipment in the capacity range of 500 MW to 1000 MW for sale in India. Operations & Performance The Company has secured orders of Rs.5550 crore. The Company is establishing a state-of-the- art manufacturing facility at Hazira, Gujarat. The Company proposes to commence operations with the manufacture of 2 Boiler packages in 2012- 2013. The total capacity being installed is 4000 MW. Outlook The power sector presently provides a window of both an opportunity and challenge to manufacture high technology and complex power equipment with comprehensive range of services. The primary growth driver for the sector is the government’s favorable policy to encourage super critical power projects and “Power for all by 2012” programme, which is designed to develop substantial power generation capacity in the country. Both the companies viz. L&T-MHI Boilers Private Limited and L&T-MHI Turbine Generators Private Limited are conﬁ dent of meeting the market requirements in super critical technology with focused efforts to manufacture/deliver the products and to become cost competitive in the coming years. V. POWER DEVELOPMENT PROJECTS A. L&T POWER DEVELOPMENT LIMITED (L&T PDL): Subsidiary Company Overview L&T PDL, incorporated in September 2007, is a wholly owned subsidiary of L&T. The company has been 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. Operations & Performance During the year 2009-2010, the Company has been awarded two projects under competitive bidding process; 1320 MW Rajpura thermal project in Punjab (being developed through a 95 wholly owned subsidiary, Nabha Power Limited) and 149 MW Sach-Khas hydro electric project in Himachal Pradesh. In addition to this, the Company is developing a 60 MW Tagurshit hydro electric project in Arunachal Pradesh. Detailed project report is under preparation and survey & investigations work is being carried out. The 99 MW Singoli-Bhatwari hydro electric project is also being developed by the Company through a wholly owned subsidiary, L&T Uttaranchal Hydropower Limited (L&T UHPL). During the year 2009-2010, the Company has reported a total income of Rs.7 crore by way of project facilitation and advisory service fees. Proﬁ t after tax stood at Rs.3 crore. Outlook The Power Sector in India presents tremendous opportunities for private developers. The continuing power deﬁ cits encourage private players to set up merchant power plants. Also, large hydel projects are being planned in the himalayan states of India. The Company has appropriately positioned itself to realise the emerging opportunities and is actively pursuing opportunities to develop thermal and hydro electric projects in India and abroad. B. L&T UTTARANCHAL HYDROPOWER LIMITED (L&T UHPL): Subsidiary Company Overview L&T UHPL, is a wholly owned subsidiary of L&T PDL. The Company was formed to undertake the development, construction and operation of 99 MW 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 located in the Garhwal region of the state of Uttarakhand, District Rudraprayag, on Mandakini River, the right bank tributary of Alaknanda. The Company signed the Implementation Agreement with Government of Uttarakhand in 2009 which enables it to commence full- ﬂ edged construction at the site. The project is in implementation phase and is expected to achieve ﬁ nancial closure in ﬁ rst half of FY 2010-2011. The total cost of the project is estimated to be Rs.1045 crore. VI. INFRASTRUCTURE AND PROPERTY DEVELOPMENT A. L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (L&TIDPL): Subsidiary Company Overview L&TIDPL has been set up as an infrastructure development arm of the Group, where L&T has 84.27% stake. L&TIDPL, a holding company in this segment, works on a “value creation” model so that the Special Purpose Vehicle (SPV) ﬂ oated for each infrastructure project is nurtured till it reaches a stage of matured operation. 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 ﬁ nancing & engineering of the projects. Considering the large potential in the portfolio, the Company has decided to re-acquire the private equity investors’ holding at a valuation. L&TIDPL portfolio is well diversiﬁ ed with a mix of projects under development across various sectors such as roads & bridges, ports, and urban infrastructure. L&T Urban Infrastructure Limited, a subsidiary of L&TIDPL, houses the property development and urban infrastructure project development business. Operations & Performance L&TIDPL has reported a total income of Rs.698 crore and a proﬁ t after tax of Rs.512 crore. This includes exceptional gain of Rs.462 crore arising from divestment of its stake in Bangalore International Airport Limited and Second Vivekananda Bridge Tollway Company Private Limited. 96 As of March 31, 2010, L&TIDPL’s portfolio includes: I. Transportation and Infrastructure Major SPVs Roads and Bridges: Status Stage L&T Panipat Elevated Corridor Limited Subsidiary Operational Narmada Infrastructure Construction Enterprise Limited Subsidiary Operational L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Transportation Infrastructure Limited L&T Interstate Road Corridor Limited L&T Vadodara Bharuch Tollway Limited Ports: Subsidiary Operational Subsidiary Operational Subsidiary Operational Subsidiary Operational Subsidiary Operational The Dhamra Port Company Limited Joint Venture Under Implementation International Seaport (Haldia) Private Limited Associate Operational II. Urban Infrastructure: Major SPVs L&T Urban Infrastructure Limited Status Stage Subsidiary Operational Cyber Park Development and Construction Limited Subsidiary Operational L&T Tech Park Limited L&T Arun Excello IT SEZ Private Limited L&T Infocity Limited L&T South City Projects Limited CSJ Infrastructure Private Limited Subsidiary Operational Subsidiary Operational Subsidiary Operational Subsidiary Under Implementation Subsidiary Under Implementation L&T Arun Excello Commercial Projects Private Limited Subsidiary Under Implementation L&T Infrastructure Development Projects Lanka (Private) Limited Subsidiary Under implementation L&T Vision ventures Limited Subsidiary Under Implementation Transportation and Infrastructure Financial performance summary of key operational SPVs: Roads and Bridges A. Projects completed: Sr. No. 1 Name of Subsidiary Project Detail Project Cost L&T Panipat Elevated Corridor Limited Widening of the existing Road on National Highway No.1 (NH-1) on BOT basis. 422 Total Income PAT 2009-2010 36 2008-2009 26 2009-2010 (45) 2008-2009 (31) Rs.crore 97 Name of Subsidiary Project Detail Project Cost Sr. No. 2 3 4 5 6 7 Narmada Infrastructure Construction Enterprise Limited L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Transportation Infrastructure Limited L&T Interstate Road Corridor Limited L&T Vadodara Bharuch Tollway Limited Construction, development, operation and maintenance of Second Two-Lane Bridge at Zadeshwar across the Narmada River in Gujarat on National Highway 8 (NH-8). Widening of the existing Road from the end of proposed Krishnagiri ﬂ yover to Thumpipadi on BOT basis. Construction, development, operation and maintenance of the road from Jadcherla to proposed Kotakatta bypass on NH-7 in the State of Andhra Pradesh. Building a bypass at Coimbatore Section of National Highway (NH- 47) and construction of additional bridge at Athupalam on River Noyyal on BOT basis. Construction, operation and maintenance of the road on Palanpur Swaroopgunj section of NH-14 in the state of Gujarat and Rajasthan on BOT basis. Widening the existing road of Vadodara to Bharuch section on NH-8 in the State of Gujarat on BOT basis. Rs.crore Total Income PAT 2009-2010 53 2008-2009 38 2009-2010 23 2008-2009 17 67 32 9 2 (30) (21) (5) (2) 142 525 373 104 37 34 13 9 537 89 1461 135 1 – 8 (1) (73) – B. Projects under implementation: Ports THE DHAMRA PORT COMPANY LIMITED (DPCL): Joint Venture Overview DPCL, a 50:50 Joint Venture between L&TIDPL and TATA Steel has been set up to build a deep water all weather port at Dhamra, under Build- (BOOST) model Own-Operate-Share-Transfer with a concession awarded by the Government of Odisha for a period of 34 years (including period of construction). Operations & Performance With a draft of 18.5 meters, the port can accommodate super cape size vessels up to 1,80,000 DWT. This will be an advantage to the mineral hinterland of north Odisha, Jharkand, West Bengal and Chattisgarh where a large number of steel plants and mineral based industries are located. The project includes 62.5 km rail connectivity to the main Howrah-Chennai lines at Bhadrak. The port is expected to become an infrastructural hub of Eastern Coast of India by providing the efﬁ cient port facilities for the industrial and economic development of the region and the country. The Construction of the port is nearing completion and the port will be commissioned in 2010-2011. 98 Roads and Bridges The Status of other major projects under execution is summarised below: Sr. No. 1 Name of Subsidiary L&T Ahmedabad - Maliya Tollway Private Limited Project Details Widening the existing Two-Lane Road covering Ahmedabad, Viramgam Maliya section in Gujarat, to Four-Lane Road along with the divided Carriageway facility. Project cost (Rs.crore) 1497 Project Status Financial closure completed during the year. The commercial operation expected by the end of year 2011. 2 3 4 L&T Halol - Shamlaji Tollway Private Limited Widening of existing Two-Lane Road, covering Halol-Godhra-Shamlaji section in Gujarat to Four- Lane Road along with divided Carriageway facility. L&T Rajkot - Vadinar Tollway Private Limited Widening of existing Two-Lane Road, covering in Gujarat, Rajkot-Jamnagar-Vadinar section the divided to Four-Lane Road along with Carriageway facility. 1305 1096 Financial closure concluded during the year. The commercial operation expected by the second half of year 2011. Financial closure completed during the year. The commercial operation expected by the end of year 2011. L&T Chennai- Tada Tollway Limited Widening of existing Chennai – Tada section of NH-5 in the state of Tamil Nadu on BOT basis. 848 Project is in the initial stage of execution. II. URBAN INFRASTRUCTURE L&T URBAN INFRASTRUCTURE LIMITED (L&TUIL): Subsidiary Company Overview L&TUIL, the real estate arm of L&T Infrastructure Development Projects Limited, has built a balanced portfolio of Urban Infrastructure related projects in IT/ITES, Commercial, Hospitality and Residential sectors over the past 4 years. L&T though its subsidiary L&TIDPL holds 75% in the Company. Operations & Performance L&TUIL increased its portfolio investment to Rs.613 crore as at March 31, 2010, bulk of which is in the Commercial & Hospitality sector. The Company earned total income of Rs.29 crore with a proﬁ t after tax of Rs.10 crore for the year 2009- 2010. The ongoing projects under the Residential sector are Serene County at Hyderabad, Eden Park at Siruseri, Chennai, Estancia Residential at GST Road, Chennai. While Serene County, at Hyderabad has successfully marketed about 80% of its development, Eden Park at Chennai is progressing well with good number of bookings. The total space developed so far under this sector is about 3 mio sft. Under Commercial and Hospitality segment, the ﬁ rst phase of hotel project at Bangalore is under advanced stage of construction and is expected to go on stream by end of 2010. The commercial cum mixed development project at Chandigarh has commenced construction and is expected to become partially operational by 2011-2012. As part of the portfolio review policy, L&TUIL does strategic divestments, especially in projects which attain a mature stage. During 2009-2010, L&TUIL divested its stake in one of its IT/ITES infrastructure projects, L&T Phoenix Infoparks Private Limited, Hyderabad. Stake held by L&T Infocity in its subsidiary at Lanka is slated for sale during the early part of 2010-2011. 99 Financial Performance Summary of key operational SPVs: (Urban Infrastructure) A. Projects completed Sr. No. Name of Subsidiary Cyber Park 1 Development and Construction Limited L&T Tech Park Limited Project Details Construction of an IT park at Electronic City, Hosur Road, Bangalore. Multi-tenanted facility with BUA of 3 Lakh sq.ft (Phase I) and BUA of 2 Lakh sq. ft. (Phase II) completed. Company formed to set up an IT SEZ within the Infopark, at Kochi, Kerala, as a co-developer. L&T Arun Excello IT SEZ Private Limited Phase I of the project, with a built up area of 3.86 lakh sq.ft. has been completed. Company formed for developing a built up area of 3 lakh sq.ft of ofﬁ ce space for IT/ITES at Vallancheri Village, Kancheepuram District, Tamil Nadu. Total area developed 3.67 lakh sq.ft. L&T Infocity Limited Company focuses on (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. 2 3 4 5 6 Development of a Built to Suit Project for HSBC at Colombo, Srilanka. Hyderabad International Trade Expositions Limited L&T Infocity Lanka Private Limited Total Income PAT Rs.crore 2009-2010 5 11 1 2008-2009 48 17 2009-2010 0.35 2008-2009 11 (4) (2) 1 (3) (0.31) 206 196 57 53 12 6 10 5 0.07 3 (1) 2 B. Projects under implementation (Urban Infrastructure) Name of Subsidiary Project Details Project Status L&T South City Projects Limited CSJ Infrastructure Private Limited L&T Arun Excello Commercial Projects Private Limited L&T Hitech City Limited L&T Infrastructure Development Projects Lanka (Private) Limited formed for development of 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. The Company Commercial complexes in Chandigarh. 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. Company ﬂ oated by L&T Infocity Limited, in partnership with APIIC, to set up an IT SEZ at Vijayawada. and construction, Development, maintenance of a multipurpose hi-rise tower comprising residential apartments and commercial space in Colombo, Sri Lanka operation The SPV is currently executing phase-I of the project. Around 50% of the apartments under phase-I are expected to be handed over from July, 2010. The company has achieved the ﬁ nancial closure during the year. The project is under implementation stage. Land has been acquired construction of residential complex, commercial complex. for development and IT park and Phase-I of the project comprising construction of IT park has been completed during the year. The project is expected to achieve ﬁ nancial closure in 2010-2011. Sr. No. 1 2 3 4 5 100 VII. ELECTRICAL & ELECTRONICS A. TAMCO GROUP OF COMPANIES: Subsidiary Companies Overview B. L&T ELECTRICALS SAUDI ARABIA COMPANY LIMITED, LLC (LTESA): Subsidiary Company Overview The TAMCO Group comprises of four companies. Companies operating from Malaysia, Australia and China are wholly owned by L&T International FZE and the company operating from Indonesia is wholly owned by L&T International FZE and Tamco Switchgear (Malaysia) SDN BHD. The TAMCO Group has manufacturing facilities in each of these countries. L&T, through L&T International FZE, acquired TAMCO Group in 2008 to strengthen its global offering in medium voltage switchgears to complement L&T Group’s established range of low voltage products. TAMCO Malaysia has established its brand for Medium Voltage (MV) switchgear not only in the home country but also in Dubai, Qatar, Abu Dhabi, South and West African countries. The utility segment in the Gulf countries is also being well catered to apart from the foray in Indian markets. Operations & Performance Notwithstanding the impact of global slowdown particularly in the Gulf countries, TAMCO Group was able to secure order inﬂ ows worth Rs.651 crore during 2009, recording a growth of 7% over 2008. Buoyed by the surge in demand for its products particularly in Qatar, TAMCO group registered customer sales of Rs.707 crore for the year 2009. Proﬁ t after tax stood at Rs.79 crore for the year 2009, bolstered by the turnaround in performance of Indonesian and Australian companies. TAMCO has applied for registration of its brand with 23 new countries to realise the scale beneﬁ ts. It has recently launched Vacuum circuit breakers in the Indian market after obtaining all the necessary certiﬁ cations. Outlook With the oil prices hardening in the recent past, the economies in the Gulf region will accelerate the investment in new utility and infrastructure projects. TAMCO products having penetrated the Indian market, localisation of its product range coupled with L&T’s low voltage range would provide ample market potential. Besides, new customers are likely to be added in UAE, UK, Thailand and Philippines for the MV range of products. The Group will endeavor continuous research and development so as to bring out new products in the market and sustain the growth momentum in the coming years. LTESA, a Joint Venture between Larsen & Toubro International FZE, UAE and Yusuf Bin Ahmed Kanoo Group was formed in September 2006 with its headquarters at Dammam in the Eastern Province of Saudi Arabia. L&T, through its wholly owned subsidiary L&T International FZE, holds 75% equity stake while the partner holds 25%. LTESA is in the business of manufacturing and marketing Switchgear, Controlgear, PLC Panels, AC/DC Drives and part assembled switchboards; including design, installation, maintenance and operation of these products in accordance with Saudi Arabian General Investment Authority (SAGIA). Operations & Performance The Company ended the year with low Order Inﬂ ow of Rs.35 crore due to slow down in gulf region. However, due to healthy opening order book, LTESA reported higher sales revenue at Rs.56 crore in 2009 as compared to the level of Rs.30 crore achieved in 2008. Outlook LTESA remains competitive in high end offering and system business. LTESA has obtained approvals from Saudi Aramco for Low Voltage Switchgear and MCCs, and MV Switchgear from Saudi Basic Industries Corporation (SABIC) which will help in participation in major projects. C. LARSEN & TOUBRO (WUXI) ELECTRIC COMPANY LIMITED (LTW): Subsidiary Company Overview factory was established LTW is a wholly owned subsidiary of L&T International FZE. It is located at Wuxi in the Jiangsu province of People’s Republic of China. in 2006 with The manufacturing facilities, quality control and testing equipments. LTW supports L&T activities related to brand labeling of U-Power Air Circuit Breakers (ACBs) and D-Sine Moulded Case Circuit Breaker (MCCB) range. Operations & Performance Sales revenue for 2009 stood at Rs.31 crore against Rs.29 crore in 2008. Due to the economic slowdown, many projects were either delayed or cancelled. 101 VIII. MACHINERY & INDUSTRIAL PRODUCTS Domestic Companies A. TRACTOR ENGINEERS LIMITED (TENGL): Subsidiary Company Overview is a wholly owned subsidiary of TENGL L&T principally engaged in manufacture of undercarriage systems for crawler machines, material handling systems like apron feeders and scrapper conveyors, mud pump spares and centrifugal pumps for the oil and gas sector. TENGL’s centrifugal pumps and mud pump expendables have wide usage in oil exploration. Operations & Performance Sales and other income for 2009-2010 stood at Rs.140 crore as against Rs.167 crore for 2008- 2009. The Company has made a proﬁ t after tax of Rs.1 crore in 2009-2010 as against loss of Rs.24 crore in 2008-2009. B. AUDCO INDIA LIMITED (AIL): Associate Company Overview AIL is a Joint Venture with equal equity holding by L&T and Flowserve Corporation, USA. AIL is a leading manufacturer of Industrial Valves. AIL caters to all major industries viz Reﬁ neries & Pipelines, Power, Offshore Platforms, Petro Chemicals, Chemicals, Fertilizers, Food & Pharma, etc. AIL Valves are approved by international Oil majors such as Shell, Chevron, EXXON, Aramco, PDO, ADCO, which helps in participating in their worldwide projects. Operations & Performance During the year 2009-2010, AIL posted gross revenues of Rs.401 crore as against Rs.766 crore in 2008-2009 and a proﬁ t after tax of Rs.32 crore as compared to Rs.71 crore in 2008- 2009. Outlook During the end of 2009-2010, there have been signs of recovery and AIL hopes to capitalise on the recovery momentum. C. L&T-KOMATSU LIMITED (LTK): Associate Company Overview LTK is a 50:50 Joint Venture between L&T and Komatsu Asia Paciﬁ c 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 102 other associated hydraulic components. L&T markets and provides after sales support for Hydraulic Excavators manufactured by LTK. Operations & Performance The revival in demand of construction equipment was slow in the ﬁ rst half of 2009-2010, but picked up in the later half of the year. In particular, Hydraulic Equipment Industry registered 6% growth in 2009-2010 as against the decline of 28% in 2008-2009. Net sales at Rs.1,110 crore for 2009-2010 was higher by 3%, though in terms of the volume the growth was better at 5% arising from improved market share of models PC 71 & PC 130. With the favourable rupee parity vis–a-vis the Japanese Yen and implementation of cost optimisation initiatives, signiﬁ cantly reduced, thereby resulting in higher proﬁ t after tax at Rs.66 crore in 2009-2010 compared to Rs.19 crore for 2008-2009. the material cost Outlook With the Indian economy on revival path and Government’s aspiration to drive GDP growth to double digit in next few years, outlook for Hydraulic Excavator market is positive. Based on current economic condition, the market is expected to grow signiﬁ cantly with further scope to improve on the back of mega infrastructure projects taking off. D. L&T-CASE EQUIPMENT PRIVATE LIMITED (LTCEPL): Associate Company Overview LTCEPL, a company with L&T’s stake at 50%, is engaged in manufacture & marketing of construction & earthmoving equipment, namely, loader backhoes and vibratory compactors. In highly competitive Indian market for loader backhoes and vibratory compactors, LTCEPL has an overall market share of about 11%, and 29% respectively. The manufacturing facility situated at Pithampur, Madhya Pradesh has been expanded during the past two years to cater to the increased demand. Operations & Performance LTCEPL reported 48% increase in total income at Rs.497 crore in 2009-2010. The proﬁ t after tax for 2009-2010 was Rs.29 crore which grew by more than 150% over 2008-2009. Outlook Growth momentum in 2010-2011 in view of Government’s focus on infrastructure spending and upturn in real estate sector. LTCEPL has set an ambitious target of to continue likely is improving its market share in loader market while maintaining market share in compactors. E. EWAC ALLOYS LIMITED (EWAC): Associate Company Overview EWAC, a company in which L&T has 50% stake, is a renowned welding solutions provider. EWAC is formed as a Joint Venture between L&T and Messer Eutectic Castolin Group of Germany. EWAC is a market leader in the business of maintenance and repairs welding & welding solutions for conservation of global metal resources. L&T markets EWAC’s products in India with a strong dealer network. Operations & Performance EWAC reported a total income of Rs.143 crore in 2009-2010 against Rs.157 crore in 2008-2009. Proﬁ t after tax stood at Rs.24 crore vis-a-vis Rs.20 crore in 2008-2009. Although sales declined by 8% due to slowdown in the Industrial sector, there was an improvement in proﬁ t after tax by 17%. The growth in proﬁ tability was mainly on account of change in product mix as compared to last year resulting in lower overall material cost. Outlook With a positive outlook for the Indian economy in general and Industrial sector in particular, EWAC expects to improve its volume in the year 2010- 2011. F. L&T-PLASTICS MACHINERY LIMITED (LTPML): Subsidiary Company Overview LTPML is a wholly-owned subsidiary of L&T. The Company is in the business of manufacture of Injection Moulding Machines and Auxiliary Systems for the plastics industry. The Company’s products ﬁ nd applications in diverse industries like automobiles, electrical goods, packaging, personal care products, writing instruments and white goods. Operations & Performance to Due the recovery of market and strict control of expenses, in the year 2009-2010 the operating parameters were higher all than 2008-2009. In comparison to the year registered an 2008-2009, order booking increase of 67%. Sales for 2009-2010 at Rs.133 crore grew by 54% over 2008- 2009. Proﬁ t after tax for 2009-2010 stood at Rs.6 crore as against loss of Rs.6 crore for 2008- 2009. Outlook The business for the Company’s products is expected to continue the growth during the year 2010-2011. The demand for plastic products is also expected to grow in the near future leading to continued demand for the company’s products in the domestic market. International Companies G. LARSEN & TOUBRO (JIANGSU) VALVE COMPANY LIMITED (LTJVCL): Subsidiary Company Overview LTJVCL is a wholly owned subsidiary of L&T International FZE. LTJVCL manufactures a range of valves for global markets. Effective November 2009, LTJVCL became a fully owned subsidiary of L&T International FZE upon buy-out of 30% stake from its erstwhile JV Partner. Operations & Performance The Company’s revenue for the year 2009 stood at Rs.28 crore with a net loss of Rs.3 crore. Outlook The gradual improvement in the prospects of the reﬁ ning sector provides opportunities for LTJVCL to secure sizeable orders in 2010 and thereafter. H. LARSEN & TOUBRO (QINGDAO) RUBBER MACHINERY COMPANY LIMITED (LT QINGDAO): Subsidiary Company Overview LT QINGDAO is a 100% subsidiary of L&T International FZE, set up in Jiaonan, Qingdao, PRC. Effective November 2009, L&T Qingdao became a fully owned subsidiary of L&T International FZE upon buy-out of 5% stake from its erstwhile JV Partner. LT QINGDAO develops and supplies Tyre Curing Presses and other Rubber Processing Machinery on par with the quality of products being supplied by L&T to its global clients. Operations & Performance During the year 2009 LT QINGDAO posted revenues of Rs.52 crore as against Rs.26 crore in 2008. Proﬁ t after tax clocked at Rs.1 crore during 2009. Outlook LT QINGDAO has been successful in securing sizeable orders including important orders from Pirelli for Hybrid Presses. The Company has a healthy order book at the end of the year and has plans to further enhance volumes in the year 2010 thereby increasing market share as well. 103 I. LARSEN & TOUBRO LLC, HOUSTON, USA (L&T LLC): Subsidiary Company Overview L&T LLC, a wholly owned subsidiary of L&T, is based in Houston, USA and represents L&T for stock and sale of industrial valves in the North American market. Operations & Performance During the year 2009 the revenues stood at Rs.60 crore as against Rs.26 crore in 2008. Outlook Given the current market scenario, with a view to enhance the presence in USA, appropriate steps are being implemented. IX LARSEN & TOUBRO INTERNATIONAL FZE (LTIFZE): Subsidiary Company Overview LTIFZE, a wholly owned subsidiary of L&T, has been incorporated in the Hamriyah Free Zone, Sharjah as a Free Zone Establishment (FZE). The Company is engaged in providing strategic support to L&T’s growth aspirations in the Middle and Far East. Apart from owning strategic equipments facilitating L&T group’s prequaliﬁ cation for construction contracts in the Middle East, LTIFZE functions as a holding Company by investing in country speciﬁ c Joint Venture companies and other strategic entities in Middle and Far East. The aggregate value of investments made by the Company in several ventures of L&T group outside India amounts to Rs.602 crore (USD 13 Million). Operations & Performance The Company’s total income and proﬁ t after tax for 2009 amounted to Rs.56 crore and Rs.9 crore respectively. The income mainly comprised of revenue from hire of plant & machinery and dividend income from investments in subsidiary companies. LTIFZE has made additions to plant & machinery aggregating to Rs.27 crore during the year. The gross block of ﬁ xed assets at the end of the year stood at Rs.176 crore. COUNTRYWISE INVESTMENTS IN SUBSIDIARY AND ASSOCIATE COMPANIES BY LTIFZE 104 Auditors’ report to the members of Larsen & Toubro Limited We have audited the attached Balance Sheet of Larsen & Toubro Limited as at 31 March 2010 and also the Proﬁ t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These ﬁ nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these ﬁ nancial 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 ﬁ nancial statements are free of material misstatement. An audit includes examining on test basis, evidence supporting the amounts and disclosures in ﬁ nancial statements. An audit also includes assessing the accounting principles used and signiﬁ cant estimates made by management, as well as evaluating the overall ﬁ nancial statement 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 speciﬁ ed 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 (b) (c) (d) purposes 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, Proﬁ t 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, Proﬁ t 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 written representations received from directors as on 31 March 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualiﬁ ed as on 31 March 2010 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 signiﬁ cant accounting policies in schedule Q and the 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 the affairs of the Company as at 31 March 2010; in the case of the Proﬁ t and Loss Account, of the proﬁ t of the Company for the year ended on that date; and in the case of the Cash Flow Statement, of the cash ﬂ ows for the year ended on that date. Mumbai, 17 May 2010 Annexure to the Auditors’ report (Referred to paragraph (1) of our report of even date) SHARP & TANNAN Chartered Accountants ICAI registration no. 109982W by the hand of R. D. Kare Partner Membership no. 8820 1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all ﬁ xed assets. (b) We are informed that the Company has formulated a programme of physical veriﬁ cation of all the ﬁ xed 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 veriﬁ cation of the ﬁ xed assets have been carried out by management during the year and no material discrepancies were noticed on such veriﬁ cation. (c) The Company has not disposed off any substantial part of its ﬁ xed assets so as to affect its going concern status. (a) As explained to us, inventories have been physically veriﬁ ed by management at reasonable intervals during the year. In our opinion, 2 the frequency of such veriﬁ cation is reasonable. (b) As per the information given to us, the procedures of physical veriﬁ cation 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 veriﬁ cation between the physical stocks and the book records were not material. 3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, ﬁ rms 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. 105 4 5 6 (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, ﬁ rms 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. 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 the purchase of inventory, ﬁ xed assets and for the 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 (b) that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been 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 ﬁ ve 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 had 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 section 58A and 58AA and the relevant provisions of the Companies Act, 1956 and 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. As of the date of the Balance Sheet, the Company has no ﬁ xed deposits other than unpaid matured deposits. In our opinion, the Company has an internal audit system commensurate with its size and the 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 31 March 2010 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 31 March 2010 which have not been deposited on account of a dispute pending, are as under: Name of the statute Nature of the disputed dues 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, disallowance of deemed inter-state sales, classiﬁ cation dispute and other matters Non-submission of forms, additional demand for pending forms, rate of tax dispute, disallowance of branch transfer, transit sale, export claim disallowance and other matters Non-submission of forms, disallowance of transit sales, classiﬁ cation 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, classiﬁ cation dispute and disallowance of deemed sales in course of imports and taxability of sub-contractors turnover Amount Rs.crore* 0.55 85.84 32.69 Period to which the amount relates 1997-1998 to 2001-2002 and 2004-2005 to 2005-2006 1991-1992, 1992-1993,1996-1997 and 1998-1999 to 2005-2006 1989-1990, 1991-1992 to 1997-1998 and 1999-2000 to 2007-2008 Forum where disputes are pending Commercial Tax Ofﬁ cer Assistant Commissioner (Appeals) Deputy Commissioner (Appeals) 10.92 1993-1994 to 2005-2006 3.08 2000-2001 to 2006-2007 Joint Commissioner (Appeals) Additional Commissioner (Appeals) 8.40 2003-2004 and 2005-2006 Commissioner (Appeals) 38.05 1987-1988 to 1991-1992 and 1994-1995 to 2005-2006 Sales Tax Tribunal 229.34 1987-1988 to 2006-2007 High Court 106 Name of the statute Nature of the disputed dues The Central Excise Act,1944 and Service Tax under Finance Act, 1994 Income Tax Act, 1961 Taxability of sub-contractor turnover, rate of tax for declared goods and inter-state rate Classiﬁ cation dispute, exemptions denied, valuation disputes and other matters Dispute on site mix concrete and PSC grinder Valuation dispute and disallowance of cenvat against service tax on freight onward Demand of service tax including penalty and interest on lumpsum turnkey jobs and demand of penalty on late payment of service tax Export rebate claim, service tax on commercial construction service Dispute regarding tax deducted at source at lower rate on maintenance charges Difference in rate of tax deducted at source Amount Rs.crore* 5.78 36.63 0.27 215.09 120.72 Period to which the amount relates 1991-1992, 1995-1996, 1997- 1998 and 1999-2000 to2004-2005 2002-2003 to 2005-2006 1997-1998 2003-2004 to 2005-2006 and 2009-2010 2002-2003 and 2005-2006 Forum where disputes are pending Supreme Court CESTAT Supreme Court Commissioner (Appeals) CESTAT 4.11 2003-2004 to 2005-2006 High Court 0.03 2005-2006 Commissioner (Appeals) 1.73 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 31 March 2010 and it has not incurred cash losses in the ﬁ nancial year ended on that date or in the immediately preceding ﬁ nancial 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 ﬁ nancial 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 beneﬁ t 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 subsidiary companies from banks or ﬁ nancial 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, 17 May 2010 SHARP & TANNAN Chartered Accountants ICAI registration no. 109982W by the hand of R. D. Kare Partner Membership no. 8820 107 Balance Sheet as at March 31, 2010 SOURCES OF FUNDS: SHAREHOLDERS’ FUNDS: Share capital Employee stock options application money [Note no.2(e)] Reserves and surplus Employee stock options outstanding (previous year: Rs.469.95 crore) Less: Deferred employee compensation expense (previous year: Rs.234.29 crore) LOAN FUNDS: Secured loans Unsecured loans Deferred tax liabilities [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 Net block Capital work-in-progress Investments Deferred tax assets [Note no.21] 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) TOTAL Schedule As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore A B C D E(i) E(ii) F G H I 566.23 282.34 18311.64 6800.83 389.27 25501.74 6223.08 142.68 13705.35 311.88 120.44 25.09 17882.22 283.89 955.73 5845.10 7093.10 1724.61 5368.49 3.07 5365.42 857.66 196.99 70.85 126.14 16.54 1415.37 11163.70 1431.87 6353.22 5997.45 26361.61 19054.50 2188.36 21242.86 117.14 - 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 1470.51 9903.13 775.29 4356.10 5819.36 22324.39 14776.15 1942.63 16718.78 12459.69 6556.03 435.16 19450.88 5053.78 140.82 8263.72 386.69 5118.75 – 25501.74 5605.61 0.26 19450.88 CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the accounts see page nos.137 to 170) J Q As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 108 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 17, 2010 Proﬁ t and Loss Account for the year ended March 31, 2010 2009-2010 2008-2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore 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 of intangible assets Less: Overheads charged to ﬁ xed assets Proﬁ t before transfer from revaluation reserve Add: Transfer from revaluation reserve Proﬁ t before taxes before extraordinary items Provision for current taxes including fringe beneﬁ t tax [Note no.20] Provision for deferred tax [Note no.21] Proﬁ t after taxes before extraordinary items Gain/(loss) on extraordinary items (net of tax) [Note no.9] Proﬁ t after taxes after extraordinary items Add: Balance brought forward from previous year Less: Dividend paid for previous year Additional tax on dividend paid for previous year Proﬁ t available for appropriation Less: Transfer to general reserve Transfer to debenture redemption reserve Proﬁ t available for distribution Proposed 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 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.137 to 170) [Note no.22] As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 K L(i) L(ii) M N O P Q 36995.93 320.78 34045.04 398.47 28453.55 2379.14 1462.74 505.31 384.95 30.95 33216.64 36.25 36675.15 359.65 2024.96 39059.76 33180.39 5879.37 1.30 5880.67 26271.62 1974.46 1794.76 415.56 286.14 21.16 30763.70 24.48 1644.25 (3.38) 1220.77 10.44 104.31 0.28 0.05 100.50 2.04 0.35 1640.87 4239.80 135.72 4375.52 98.11 4473.63 3460.00 43.34 970.29 752.75 110.25 107.29 71.49 70.15 73.77 72.39 2.00 33646.57 291.97 739.78 34678.32 30739.22 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 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 17, 2010 109 Cash Flow Statement for the year ended March 31, 2010 A. Cash ﬂ ow from operating activities: Proﬁ t before tax (excluding extraordinary items) Adjustments for: Dividend received Depreciation (including obsolescence), and amortisation Exchange difference on items grouped under ﬁ nancing activity Interest expense Interest income Proﬁ t on sale of ﬁ xed assets (net) Proﬁ t on sale of investments (net) Employee stock option - discount forming part of staff expenses Provision/(reversal) for diminution in value of investments Operating proﬁ t before working capital changes Adjustments for: (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories Decrease in miscellaneous expenditure Increase/(decrease) in trade payables and customer advances Cash (used in)/generated from operations Direct taxes refund/(paid)-net Net cash (used in)/from operating activities B. Cash ﬂ ow from investing activities: Purchase of ﬁ xed assets Sale of ﬁ xed 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 Petroleum Dispensing Pumps & ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Systems business (net of tax Rs.21.61 crore) Cash received (net of expenses) on sale/transfer of Ready Mix Concrete business ... ... (net of tax Rs.279.37 crore) ... Cash and cash equivalents discharged persuant to disposal of Ready Mix Concrete business ... ... Net cash (used in)/from investing activities (after extraordinary items) ... ... C. Cash ﬂ ow from ﬁ nancing 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 (including cash ﬂ ows from interest rate swaps) Net cash (used in)/from ﬁ nancing 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 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 2009-2010 Rs.crore 5880.67 (387.03 ) 414.60 7.04 505.31 (128.39 ) (4.02 ) (1254.44 ) 162.98 47.10 5243.82 (2974.35 ) 34.47 0.26 4697.83 7002.03 (1519.28 ) 5482.75 (1571.89 ) 12.13 (2140.62 ) 130.34 (488.06 ) 1381.89 (3043.22 ) (494.74 ) (478.46 ) 104.80 88.91 298.12 (6200.80 ) 129.07 – – (6071.73 ) 2132.74 1255.88 (587.91 ) (324.42 ) 20.00 (617.01 ) (102.18 ) (531.54 ) 1245.56 656.58 775.29 1431.87 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 2008-2009 Rs.crore 3940.41 (334.63 ) 305.99 238.18 415.56 (171.82 ) (4.78 ) (94.66 ) 163.31 8.12 4465.68 (4185.37 ) (222.57 ) 2.80 2291.15 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 Notes: 1. 2. 3. 4. 5. Cash ﬂ ow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3: “Cash Flow Statements” as speciﬁ ed in the Companies (Accounting Standards) Rules, 2006. Purchase of ﬁ xed assets includes movement of capital work-in-progress during the year. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised loss of Rs.16.24 crore (previous year unrealised gain of Rs.23.77 crore) on account of translation of foreign currency bank balances. For cash and cash equivalents not available for immediate use as on the Balance Sheet date, see note no.5(b) of notes forming part of accounts. Previous year’s ﬁ gures have been regrouped/reclassiﬁ ed wherever applicable. As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 110 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 17, 2010 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: 60,21,95,408 equity shares of Rs.2 each (previous year: 58,56,87,862 equity shares of Rs.2 each) Subscribed and paid up: 60,21,95,408 equity shares of Rs.2 each [Note no.1] (previous year: 58,56,87,862 equity shares of Rs.2 each) Schedule B Reserves and surplus: Revaluation reserve: As per last Balance Sheet Less: Transferred to Proﬁ t and Loss Account Capital redemption reserve: As per last Balance Sheet Less: Utilised for issue of bonus shares Capital reserve Debenture redemption reserve: As per last Balance Sheet Add: Transferred from Proﬁ t and Loss Account Securities premium account: As per last Balance Sheet Addition during the year Less: Utilised for issue of bonus shares Share /bond issue expenses (net of tax) (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 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore 325.00 120.44 120.44 120.44 325.00 117.14 117.14 117.14 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 24.59 1.30 – – 43.34 43.34 4199.29 2249.19 6448.48 – 45.84 – 7.83 7.83 1.73 1.73 24.59 – 10.52 43.34 23.29 – 10.52 86.68 25.90 1.31 0.02 0.02 – 43.34 4187.25 69.62 4256.87 58.50 – (0.92) 6402.64 4199.29 10.83 3.00 3.98 2.25 – – 6523.13 7.83 1.73 4287.30 111 Schedules forming part of the Accounts (contd.) Schedule B (contd.) Brought forward Hedging reserve (net of tax): As per last Balance Sheet Addition/(deduction) during the year (net) General reserve: As per last Balance Sheet Add: Transferred from: Foreign projects reserve Housing projects reserve Proﬁ t and Loss Account Proﬁ t and Loss Account Schedule C Secured loans: Redeemable non-convertible ﬁ xed rate debentures Loans from banks: Cash credits/working capital demand loans Other loans [Note no.3(b)] Schedule D Unsecured loans: Redeemable non-convertible ﬁ xed rate debentures 3.50% Foreign currency convertible bonds Loans from subsidiary companies Short term loans and advances: From banks Lease ﬁ nance Sales tax deferment loan From others Other loans and advances: From banks Lease ﬁ nance Sales tax deferment loan From others 112 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 6523.13 4287.30 (50.57) 63.15 7769.66 7.83 1.73 3460.00 – (50.57) 5039.41 3.00 2.25 2725.00 12.58 11239.22 107.29 17882.22 (50.57) 7769.66 100.50 12106.89 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 49.83 5.90 900.00 55.73 955.73 202.38 – 900.00 202.38 1102.38 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 639.14 24.34 27.23 25.00 3789.02 101.06 66.91 – 250.00 898.00 24.40 250.00 – 4.40 864.42 20.90 18.89 – 715.71 904.21 3983.54 125.36 101.14 85.00 3956.99 5845.10 4295.04 5453.65 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 ﬁ xtures Vehicles Aircraft Owned assets leased out: Buildings Plant and machinery Lease adjustment As at 1-4-2009 137.57 53.55 1129.73 0.25 3638.13 144.48 101.19 9.26 44.29 27.44 – Cost/valuation Depreciation Impairment Book value Additions Deductions As at 31-3-2010 Up to 31-3-2009 For the year Deductions Up to 31-3-2010 As at 31-3-2010 As at 31-3-2010 As at 31-3-2009 Rs.crore 242.93 17.91 377.41 – 0.06 380.44 – 71.46 6.41 1500.73 – 0.25 1026.59 72.44 4592.28 38.70 42.12 4.48 – – – 4.89 3.55 3.12 178.29 139.76 10.62 – – – 44.29 27.44 – – 3.41 190.63 0.25 1076.36 72.24 42.18 7.98 5.14 10.13 – – 4.10 32.61 – – – – 7.51 2.60 220.64 – 0.25 296.58 58.48 1314.46 84.93 52.41 5.52 5.83 16.94 12.31 0.66 0.69 0.26 – 4.25 2.08 3.12 – – – – – – – – – – – – 10.39 6.93 # – – Owned assets (sub total - A) 5285.89 1750.14 90.47 6945.56 1408.32 364.15 70.53 1701.94 6.93 5233.62 LEASED ASSETS: Assets taken on ﬁ nance lease: Plant and machinery Vehicles Asset taken on lease (sub total - B) Total (A+B) Previous year 146.27 2.02 148.29 5434.18 – – – 0.75 145.52 – 2.02 0.75 147.54 2.14 0.93 3.07 1750.14 91.22 7093.10 1411.39 4096.90 1573.45 236.17 5434.18 1232.47 13.12 0.27 13.39 377.54 284.77 0.72 14.54 – 1.20 0.72 15.74 – – – 71.25 1717.68 105.85 1411.39 6.93 6.93 Add: Capital work-in-progress # Impairment up to 31-3-2009 Rs.6.93 crore, during the year Rs.Nil Schedule E(ii) Fixed assets-Intangible: Particulars Land-leasehold Specialised softwares Lumpsum fees for technical knowhow TOTAL Previous year Add: Capital work-in-progress As at 1-4-2009 59.62 82.07 14.63 156.32 108.85 Cost/valuation Additions Deductions 36.22 23.97 – 60.19 61.85 7.30 11.02 1.20 19.52 14.38 As at 31-3-2010 88.54 95.02 13.43 196.99 156.32 Up to 31-3-2009 5.19 37.39 12.21 54.79 47.11 Amortisation For the year Deductions 0.85 28.09 2.01 30.95 21.16 2.67 11.02 1.20 14.89 13.48 Up to 31-3-2010 3.37 54.46 13.02 70.85 54.79 380.44 63.95 1280.09 – 137.57 50.14 939.10 – 3277.82 2561.77 93.36 87.35 5.10 38.46 10.12 (3.07) 72.24 59.01 1.28 39.15 10.38 (3.07) 3867.57 130.98 0.82 131.80 5365.42 144.13 1.09 145.22 4012.79 857.66 6223.08 1040.99 5053.78 Rs.crore Book value As at 31-3-2010 85.17 40.56 0.41 126.14 16.54 142.68 As at 31-3-2009 54.43 44.68 2.42 101.53 39.29 140.82 113 Schedules forming part of the Accounts (contd.) Schedule E (contd.) Notes: Schedule E(i)-Tangible assets: 1 Cost/valuation of freehold land includes Rs.0.14 crore for which conveyance is yet to be completed. 2 Additions to freehold land include Rs.4.63 crore being the book value of leasehold land reclassiﬁ ed as freehold land pursuant to acquisition of ownership rights in it. 3 Cost/valuation of buildings includes ownership accommodation: (i) (a) (b) in various co-operative societies and apartments and shop-owners’ associations: Rs.95.84 crore, including 2473 shares of Rs.50 each and 50 shares of Rs.100 each. in proposed co-operative societies Rs.21.17 crore. 4 (ii) of Rs.4.39 crore in respect of which the deed of conveyance is yet to be executed. (iii) of Rs.8.45 crore representing undivided share in a property at a certain location. Additions during the year and capital work-in-progress include Rs.27.72 crore (previous year Rs.6.17 crore) being borrowing cost capitalised in accordance with Accounting Standard (AS)16 on “Borrowing Costs” as speciﬁ ed in the Companies (Accounting Standards) Rules, 2006 5 Depreciation for the year includes obsolescence Rs.7.41 crore (previous year Rs.1.37 crore). 6 Capital work-in-progress includes advances Rs.74.82 crore (previous year Rs.103.76 crore). 7 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. 8 Own 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: (i) 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 fulﬁ lment of certain conditions by the Company. 2 (ii) Rs.18.57 crore added during the year in respect of which lease agreements are yet to be executed. Leashold land rights at a certain location have been reclassiﬁ ed as freehold land under tangible assets, pursuant to acquisition of ownership rights in it during the year. (See note no.2 on tangible assets.) As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore Schedule F Investments (at cost unless otherwise speciﬁ ed): (A) Long term investments: (i) Subsidiary companies: (a) Fully paid equity shares (b) Partly paid equity shares (c) Fully paid preference shares (d) Application money for equity shares (ii) Trade investments: (a) Fully paid equity shares in associate companies (b) Fully paid preference shares in associate companies (c) Fully paid equity shares in other companies (iii) Other fully paid equity shares (iv) Bonds Carried forward 114 4098.70 0.68 – 1014.00 5113.38 78.39 – – 78.39 440.29 – 1776.72 90.12 9.42 1076.54 2952.80 79.40 – 25.35 104.75 198.24 0.50 5632.06 5632.06 3256.29 3256.29 Schedules forming part of the Accounts (contd.) Schedule F (contd.) Brought forward (B) Current investments: (i) Government and trust securities (ii) Bonds (iii) Certiﬁ cate of deposits (iv) Commercial paper (v) Debentures - subsidiary companies (vi) Debentures - others (vii) Mutual funds (C) Investment in integrated joint ventures Details of quoted/unquoted investments: Particulars Quoted investments Book value Market value Unquoted investments Book value Details of investments: Particulars All unquoted unless otherwise speciﬁ ed A) Long term investments: (i) Subsidiary companies: (a) Fully paid equity shares: Bhilai Power Supply Company Limited Hi- Tech Rock Products & Aggregates Limited International Seaport Dredging Limited (associate company w.e.f. May 21, 2009) International Seaports Pte. Limited # L&T-Gulf Private Limited L&T Ahmedabad-Maliya Tollway Private Limited L&T Aviation Services Private Limited [Note no.35] (subscribed and sold at Rs.0.01 crore) L&T Capital Company Limited L&T Capital Holdings Limited L&T Chennai-TADA Tollway Private Limited [Rs.1000 (previous year: Rs.1000)] L&T Concrete Private Limited L&T Engserve Private Limited L&T EmSyS Private Limited [Re.1 (previous year: Rs.nil)] L&T General Insurance Company Limited L&T Halol-Shamlaji Tollway Private Limited Carried forward * Reclassiﬁ ed as trade investment # Liquidated during the year As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 5632.06 3256.29 534.51 150.41 478.44 – 235.44 777.17 5788.56 – 254.09 1261.46 95.52 – – 3268.60 7964.53 108.76 13705.35 4879.67 127.76 8263.72 As at 31-3-2010 Rs.crore As at 31-3-2009 Rs.crore 1933.81 2033.61 11771.54 470.68 1258.81 7793.04 Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 As at 31-3-2010 Rs.crore As at 31-3-2009 Rs.crore 49,950 50,000 30,805 18,15,000 12,50,005 10,10,000 – – – – – 12,50,005 6,20,05,100 10,000 2,20,00,000 20,49,795 100 – 1,35,15,41,591 – 10,000 10,000 – – – 10,000 – 10,10,000 2,90,00,000 6,42,55,100 – – 30,805* 18,15,000 – – 10,000 – – – – – – – – 49,950 50,000 – – 25,00,010 6,30,15,100 – 2,20,00,000 1,35,35,91,386 100 10,000 10,000 10,000 2,90,00,000 6,52,65,100 0.05 0.05 – – 2.50 63.02 – 22.00 1353.59 – 0.01 0.01 – 29.00 65.27 1535.50 0.05 0.05 30.81 2.36 1.25 1.01 – 22.00 2.05 – 0.01 0.01 – – 1.01 60.61 115 Face value per unit Rupees 10 10 10,000 USD 1 10 10 10 10 10 10 10 10 10 10 10 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 Face value per unit Rupees Particulars Fully paid equity shares of Subsidiary companies (contd.) Brought forward L&T Infra & Property Development Private Limited L&T Infrastructure Development Projects Limited L&T Natural Resources Limited L&T Power Development Limited L&T Power Limited L&T Rajkot-Vadinar Tollway Private Limited L&T Realty Private Limited L&T Samakhiali Gandhidham Tollway Private Limited [Rs.26000 (previous year: Rs.nil)] L&T Seawoods Private Limited L&T Shipbuilding Limited L&T Special Steels and Heavy Forgings Private Limited L&T Strategic Management Limited L&T Transco Private Limited L&T Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T Plastics Machinery Limited (Formerly known as ‘L&T-Demag Plastics Machinery Limited’) L&T-Sargent & Lundy Limited L&T-Technologies Limited L&T-Valdel Engineering Limited Larsen & Toubro Infotech Limited Larsen & Toubro International FZE Larsen & Toubro LLC Narmada Infrastructure Construction Enterprise Limited PNG Tollway Private Limited (previous year: Rs.26000) (Formerly known as L&T PNG Tollway Private Limited) Raykal Aluminum Private Limited Spectrum Infotech Private Limited Tractor Engineers Limited Less: Provision for diminution in value Total (i)(a) (b) Partly paid equity shares: L&T Infrastructure Development Projects Limited (Re.1 per share paid up) Larsen & Toubro Infotech Limited Rs.5 per share paid up (Rs.1.25 paid during the year, now fully paid) Total (i)(b) (c) Fully paid preference shares: 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 10,000 19,30,31,352 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 10 5 67,69,518 22,50,000 – 1,12,50,000 – 9,50,00,000 10,21,91,000 5,40,05,100 – 2,600 – – 11,10,00,000 – – – – – – 50,000 – 22,50,000 137 – – 2,19,80,400 – – – – – – – – – – – – – – – – – – – – – – – – – – 65,500 – – – – – – – – – 22,50,000∆ 9,420* – – 10,000 20,42,81,352 50,000 18,10,00,000 15,34,92,000 5,50,15,100 4,71,60,700 2,600 10,000 50,000 11,10,00,000 50,000 10,000 1,08,64,000 1,39,50,007 1,60,00,000 27,52,129 50,000 11,79,000 3,22,50,000 1,829 50,000 1,26,48,507 2,19,83,000 40,000 4,40,000 68,000 67,69,518 – – – – As at 31-3-2010 Rs.crore 1535.50 0.01 628.42 0.05 181.00 153.49 55.02 47.16 – 0.01 0.05 111.00 0.05 0.01 10.86 13.95 13.00 1.53 0.05 23.89 134.25 1147.40 0.23 12.65 21.98 0.04 6.80 0.30 4098.70 – 4098.70 0.68 – 0.68 – – As at 31-3-2009 Rs.crore 60.61 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 9.42 739.00 275.00 – 1076.54 1014.00 5113.38 1076.54 2952.80 13% preference share - International Seaport Dredging Limited 10,000 9,420 (associate company w.e.f. May 21, 2009) Total (i)(c) (d) Application money for equity shares: L&T Power Development Limited L&T Capital Holdings Limited (Allotment of 107,65,41,591 no. of shares received against opening application money of Rs.1076.54 crore and fresh application of Rs.275 crore made during the year) Total (i)(d) Subsidiary companies - total * Reclassiﬁ ed as trade investment ∆ Reclassiﬁ ed as fully paid shares 116 – – – – Schedules forming part of the Accounts (contd.) Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 Face value per unit Rupees As at 31-3-2010 Rs.crore As at 31-3-2009 Rs.crore Schedule F-Details of investments (contd.) Particulars (ii) Trade Investments (a) Fully paid equity shares in associate companies: Audco India Limited EWAC Alloys Limited Gujarat Leather Industries Limited International Seaport Dredging Limited (prior to May 21, 2009, subsidiary company) 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 (ii)(a) (b) Fully paid preference shares in associate companies: 100 100 10 9,00,000 4,14,720 7,35,000 – – – 1,18,370 – – 10,000 – 50,225 10,298 10 10 10 10 10 1,20,05,000 45,00,000 6,00,00,000 18,00,000 15,00,000 – – – – – – – – – 15,00,000 13% preference share - International Seaport Dredging Limited 10,000 – 9,420~ 9,420** (prior to May 21, 2009, subsidiary company) Total (ii)(b) (c) Fully paid equity shares in other companies: City Union Bank Limited (quoted) [see note no. 35] 1 1,50,00,000 – 1,50,00,000 Total (ii)(c) Trade investments- total (iii) Other fully paid equity shares: John Deere Equipment Private Limited Satyam Computer Services Limited (quoted) 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 (iv) Bonds: 10 2 10 10 100 40,00,000 1,43,03,294 300 5.25% Rural Electriﬁ cation Corporation Limited - capital gain bonds (quoted) 10,000 500 Bonds -total Long term investments -Total - (A) ~ Reclassiﬁ ed as trade investment from fully paid preferential shares in subsidiary company **Converted into fully paid equity shares 35,00,000 – 35,00,000 5,09,19,964 3,02,12,750 2,72,43,414 5,38,89,300 – – – – – 40,00,000 1,43,03,294 – – 300 500 – 7,81,630 4,14,720 7,35,000 39,927 1,20,05,000 45,00,000 6,00,00,000 18,00,000 – – – – 0.05 0.04 0.56 39.93 12.00 4.50 60.00 1.80 – 118.88 40.49 78.39 – – – – 78.39 – 436.29 4.00 – – 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 – 440.29 198.24 – – 0.50 0.50 5632.06 3256.29 117 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars B) Current investments: (i) Government and trust securities: 7.94% Government of India bond 2021 (quoted) 6.49% Government of India bond 2015 (quoted) 7.32% Government of India bond 2014 (quoted) 6.35% Government of India bond 2020 (quoted) Less: Provision for diminution in value Government and trust securities-total (ii) Bonds: 11.25% Gujarat Urja Vikas Nigam Limited bonds 2009 (quoted) 8.45% Indian Railway Finance Corporation 2018 (quoted) 8.46% Indian Railway Finance Corporation 2014 (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) 6.85 % India Infrastructure Finance Company Limited 2014 (quoted) 11.25% Power Finance Corporation bonds 2018-C Series (quoted) 8.65% Rural Electriﬁ cation Corporation Limited bonds 2019 (quoted) 10.85% Rural Electriﬁ cation Corporation Limited bonds 2018 (quoted) 10.85% Rural Electriﬁ cation Corporation Limited bonds 2018 (quoted) Less: Provision for diminution in value Bonds - total (iii) Certiﬁ cate of deposits: 7.08% Bank of Baroda, 15 Jan 2010 7.10% Bank of Baroda, 15 Jan 2010 6.75% Canara Bank, 12 Feb 2010 6.98% Canara Bank, 15 Jan 2010 7.59% Canara Bank, 23 Mar 2010 6.01% Canara Bank, 3 Dec 2010 7.25% Corporation Bank, 06 Jan 2010 7.00% Oriental Bank of Commerce, 01 Jan 2010 7.30% Oriental Bank of Commerce, 15 Jan 2010 7.39% Oriental Bank of Commerce, 08 Jan 2010 6.50% Punjab National Bank, 12 May 2009 6.95% Punjab National Bank, 14 Dec 2009 13.5% Punjab National Bank, 02 Apr 2009 6.74% Punjab National Bank, 15 Jan 2010 6.75% Punjab National Bank, 04 Feb 2010 6.80% Punjab National Bank, 29 Jul 2009 7.685% Punjab National Bank, 19 Mar 2010 5.83% Punjab National Bank, 15 Oct 2010 6.90% State Bank of Bikaner & Jaipur, 27 Aug 2009 6.95% State Bank of Bikaner & Jaipur, 17 Nov 2009 5.73% State Bank of Bikaner and Jaipur, 15 Oct 2010 6.75% State Bank of Hyderabad, 15 Sep 2009 Carried forward 118 Face value per unit Rupees 100 100 100 100 40,000 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 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 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 As at 31-3-2010 Rs.crore As at 31-3-2009 Rs.crore – – – – 2,15,00,000 25,00,000 2,50,00,000 50,00,000 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 1,500 20,000 – 1,500 5,500 – 1,500 – – 100 – – – – – – 190 – – – – – – 20,000 – – – – – – – – – – – 5,000 – – 10,000 – – – – – 11 – – 500 – – – 700 – – – 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 1,500 20,000 – 1,500 5,500 – 1,500 2,15,00,000 25,00,000 2,50,00,000 50,00,000 – 500 100 – 50 50 2,500 – 200 290 50 – – – – – 20,000 – – – – – – – – – – – 5,000 – – 10,000 – 217.40 24.06 251.88 44.97 538.31 3.80 534.51 – 50.02 10.09 – 5.00 4.90 25.00 – 19.96 31.25 5.68 151.90 1.49 150.41 – – – – – 192.12 – – – – – – – – – – – 48.45 – – 96.97 – 337.54 – – – – – – – 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 14.66 185.87 – 14.57 52.63 – 14.53 1199.88 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars (iii) Certiﬁ cate of deposits (contd.): Brought forward 6.90% State Bank of Indore, 05 Jan 2010 6.45% State Bank of Patiala, 09 Jul 2009 5.87% State Bank of Patiala, 16 Nov 2010 5.75% State Bank of Patiala, 15 Oct 2010 6.00% State Bank of Patiala, 20 Apr 2010 5.87% State Bank of Travancore, 08 Nov 2010 Certiﬁ cate of deposits - total (iv) Commercial paper 8.15% HDFC Limited Commercial paper - total (v) Debentures - subsidiary companies L&T Finance - 10.24% Secured Redeemable Non convertible Debentures, 2019 (quoted) L&T Infrastructure Finance Company Limited - 7.5% Non convertible Debentures, 2012 (quoted) Less: Provision for diminution in value Debentures-subsidiary companies - total (vi) Debentures-others Tata Chemicals Limited - 10% Unsecured Non convertible Redeemable Debentures (quoted) IDFC Limited - 7.53% Non convertible Debentures, 2012 ETHL Communication Holding Limited - 9.25% Non convertible Debentures, 2011 (quoted) Debentures-others - total (vii) Mutual funds AIG India Treasury Fund Super Institutional Plan - Daily Dividend Reinvestment Baroda Pioneer Liquid Fund Birla Sun Life Cash Plus - Institutional Plan Premium - Daily Birla Sun Life Floating Rate Fund - Long Term Plan - Institutional Plan - Weekly Dividend Birla Sun Life Income Plus - Quarterly Dividend Reinvestment Birla Sun Life Short Term Fund - Institutional Plan - Daily Dividend Reinvestment Birla Sunlife Dynamic Bond Fund Growth Option Birla Sunlife Saving Fund - Institutional Plan - Daily Dividend Reinvestment Birla Sunlife Short Term Opportunites Fund Growth Option Birla Sunlife Short Term Opportunities Fund - Weekly Dividend Reinvestment Canara Robeco Liquid - Super Institutional Plan - Daily Dividend Reinvestment Canara Robeco Treasury Advantage - Super Institutional Plan - Daily Dividend Reinvestment DSP Black Rock FMP 13M Series 2 - Growth DSP Blackrock Floating Rate Fund - Institutional Plan - Dividend Reinvestment DWS Fixed Term Fund - Series 67 - Growth DWS Insta Cash Plus Fund - Super Institutional Plan - Daily Dividend Reinvestment DWS Money Plus Advantage - Institutional Plan - Monthly Dividend DWS Treasury Fund - Cash Plan - Daily Dividend Reinvestment DWS Treasury Fund - Investment Institutional Plan - Dividend Reinvestment Fidelity Cash Fund - Super Institutional Plan - Daily Dividend Reinvestment Fidelity Ultra Short Term Debt Fund - Super Institutional Plan - – Weekly Dividend Reinvestment Carried forward Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 5,000 1,500 – – – – 2,000 – – – – – – – 2,500 5,000 2,500 4,500 – 5,000 1,500 – – – – 2,000 – – 2,500 5,000 2,500 4,500 – 8,43,174 4,73,404 3,69,770 2,000 790 2,000 7,775 – – – 1,875 2,000 790 2,000 5,900 Face value per unit Rupees 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 5,00,000 1,000 10,00,000 10,00,000 10,00,000 10,00,000 10 10 10 10 10 10 10 10 10 10 10 10 10 1,000 10 10 10 10 10 10 10 49,99,098 19,99,056 9,66,89,131 – 2,20,43,474 2,32,17,166 32,11,00,040 8,09,12,68,889 2,10,89,858 32,30,99,096 8,11,30,93,735 71,26,406 – 7,48,64,285 54,94,77,461 17,56,97,648 – 19,77,41,122 54,94,77,461 – – 15,87,13,629 3,81,94,429 – – 15,87,13,629 3,81,94,429 – 17,50,33,314 30,42,33,044 4,26,96,96,596 – 4,05,33,71,991 30,42,33,044 39,13,57,919 – – 20,13,38,055 – 20,13,38,055 99,61,525 8,17,10,992 9,16,72,517 – – – – – 4,61,79,467 3,00,00,000 1,19,088 6,00,00,000 4,29,24,399 – 49,283 – 2,10,26,934 – – 1,26,84,64,967 9,78,13,877 8,23,66,945 1,18,97,83,253 – 7,47,03,275 32,55,068 3,00,00,000 69,805 6,00,00,000 9,97,08,648 9,78,13,877 76,63,670 – 1,00,07,495 – 1,00,07,495 99,96,285 6,00,19,837 7,00,16,122 1,00,48,987 2,01,23,840 3,01,72,827 – – As at 31-3-2010 Rs.crore 337.54 – – 24.09 48.47 24.92 43.42 478.44 – – 36.98 200.00 236.98 1.54 235.44 79.00 200.00 498.17 777.17 7.13 – 75.01 551.18 – 38.22 – 391.62 – 201.38 – 4.04 30.00 7.07 60.00 100.01 104.19 7.70 10.05 – – 1587.60 As at 31-3-2009 Rs.crore 1199.88 46.86 14.72 – – – – 1261.46 95.52 95.52 – – – – – – – – – 5.00 2.00 96.88 – 25.46 – 227.32 175.15 304.23 – 10.00 – – – – 21.07 – – – 10.00 10.05 887.16 119 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars (vii) Mutual funds (contd.): Brought forward Fidelity Ultra Short Term Debt Fund - Super Institutional Plan - Daily Dividend Reinvestment Fortis Money Plus Institutional Plan - Daily Dividend Reinvestment HDFC Arbitrage Fund - Whole Plan - Growth HDFC Cash Management Fund - Treasury Advantage Plan - Wholesale - Daily Dividend Reinvestment HDFC Income Fund - Dividend Option HDFC Liquid Fund Premium Plan - Dividend Daily Reinvestment HDFC Short Term Plan - Dividend Reinvestment HSBC Floating Rate - Long Term Plan Institutional Plan - Weekly Dividend ICICI Prudential Medium Term Plan - Premium Plus - Monthly Dividend Reinvestment ICICI Prudential Banking & PSU Debt Fund - Daily Dividend Reinvestment ICICI Prudential Equity & Derivatives - Income Optimiser Fund ICICI Prudential Flexible Income Plan - Premium - Daily Dividend Reinvestment ICICI Prudential FMP Series 51 - 14 Month Plan D - Growth ICICI Prudential FMP Series 51 - 13 Months Plan C - Growth ICICI Prudential Income Fund - Institutional Plan - Quarterly Dividend Reinvestment ICICI Prudential Ultra Short Term Plan - Super Premium - Daily Dividend Reinvestment IDFC Cash Fund - Super Institutional Plan - C - Daily Dividend Reinvestment JP Morgan India Alpha Fund - Dividend Reinvestment JM Arbitrage Advantage Fund - Dividend Plan JP Morgan India Liquid Fund - Daily Dividend Reinvestment JP Morgan India Treasury Fund - Super Institutional Plan - Daily Dividend Reinvestment Kotak Equity Arbitrage Fund - Dividend Reinvestment Kotak Floater Long Term - Daily Dividend Reinvestment Kotak FMP 370 Days Series 2 - Growth Kotak Quarterly Interval Plan - Series 1 - Dividend Reinvestment Kotak Quarterly Interval Plan Series 6 - Dividend Reinvestment Kotak Quarterly Interval Plan - Series VIII - Dividend Reinvestment L&T Fixed Maturity Plan Series 12 - Plan 15M - March 10 - I Growth L&T FMP Series 12 (91D) March 10 - I - Dividend Payout L&T FMP Series 12 (91D) March 10 - II - Dividend Payout L&T Freedom Income - Short Term Fund - Institutional Plan - Daily Dividend Reinvestment L&T Liquid Fund - Institutional Plan Plus - Daily Dividend Reinvestment L&T Select Income Fund - Flexi Debt Plan - Institutional Plan - Dividend Reinvestment LIC Income Plus Fund - Dividend LICMF Liquid Fund - Dividend Magnum Insta Cash Fund - Daily Dividend Reinvestment Principal Cash Management - Liquid Option - Institutional Plan Premium - Daily Dividend Reinvestment Principal Floating Rate Fund - Fixed Maturity Plan - Institutional Plan - Daily Dividend Reinvestment Prudential ICICI IP Liquid - Super Institutional Plan - Daily Dividend Reinvestment Reliance Income Fund - Retail Plan - Monthly Dividend Reinvestment Reliance Liquidity Fund - Dividend Plan - Daily Dividend Reinvestment Reliance Medium Term Fund - Daily Dividend Reinvestment Plan Carried forward 120 Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 Face value per unit Rupees 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 10 10 10 10 10 10 9,99,79,586 4,86,62,869 – 3,00,00,000 3,00,00,000 2,00,94,486 8,14,35,337 10,15,29,823 – 1,30,26,409 – 46,90,82,547 21,17,36,183 48,21,08,956 – – 21,17,36,183 13,88,02,387 2,32,51,928 6,11,85,529 9,68,38,587 1,82,47,01,354 – 3,45,32,89,468 21,28,774 1,96,35,03,741 2,32,51,928 3,51,44,74,997 9,89,67,361 44,68,042 17,066 44,85,108 – – – – – – – – 5,02,99,416 9,99,79,586 9,65,38,049 – 4,78,75,180 – 5,02,99,416 26,14,67,217 – – 2,33,10,12,352 3,00,00,000 3,00,00,000 2,59,24,79,569 – – 2,15,85,962 29,31,21,265 31,47,07,227 – – 60,58,28,297 10,47,79,962 50,10,48,335 3,01,04,924 92,21,022 – 1,00,05,426 2,31,49,626 – 1,79,89,378 – – – – – – – 62,85,74,830 2,90,899 15,29,44,302 27,78,72,575 24,08,13,693 7,36,25,737 2,39,02,48,322 3,00,00,000 5,00,04,539 10,05,51,763 6,74,55,437 2,00,00,000 2,00,00,000 1,50,00,000 65,86,79,754 95,11,921 2,96,87,470 28,78,78,001 26,39,63,319 – 2,40,82,37,700 – – – – – – – – – 12,32,56,832 – – 7,36,25,737 – 3,00,00,000 5,00,04,539 10,05,51,763 6,74,55,437 2,00,00,000 2,00,00,000 1,50,00,000 98,70,961 – 1,55,84,01,732 1,73,69,19,664 78,77,73,752 1,71,31,92,559 78,04,98,941 2,37,27,105 – – 28,99,03,781 4,30,57,997 9,10,00,633 2,83,11,98,891 12,47,45,43,705 33,08,97,506 – 2,58,81,45,328 12,45,75,04,645 32,91,75,347 9,10,00,633 24,30,53,563 30,69,42,841 4,47,80,156 50,01,082 10,05,48,614 10,55,49,696 – – 6,51,96,792 5,60,69,353 91,27,439 15,31,91,134 5,37,92,00,920 5,53,23,92,054 2,42,69,960 14,66,61,493 17,09,31,453 36,11,38,574 1,83,72,314 7,73,24,50,292 1,48,557 8,09,35,88,866 1,85,20,871 – – – – As at 31-3-2010 Rs.crore 1587.60 – – 246.74 – – – – – 50.35 100.20 50.41 – 30.00 30.00 – 502.10 – – 125.44 – – 78.70 – 30.00 50.00 100.55 67.46 20.00 20.00 15.00 792.61 24.00 91.29 243.10 337.03 75.01 – 9.14 – – – – 4676.73 As at 31-3-2009 Rs.crore 887.16 20.10 13.03 – 139.24 25.32 75.01 100.41 5.02 – – – 276.46 – – 25.29 – 30.11 9.23 – 10.01 23.17 – 18.13 – – – – – – – 10.02 – – – 318.32 72.12 5.00 – 153.20 25.00 361.25 31.41 2634.01 Schedules forming part of the Accounts (contd.) Schedule F-Details of investments (contd.) Particulars (vii) Mutual funds (contd.): Brought forward Reliance Quarterly Interval Fund Series I - Institutional Plan - Dividend Plan Reliance Short Term Fund - Retail Plan - Dividend Plan Religare Arbitrage Fund - Dividend Reinvestment Religare Fixed Maturity Plan - Series II - Plan A - Growth Religare FMP - Series II - Plan C (15Months) - Growth Religare Liquid Fund - Super Institutional Plan - Daily Dividend Reinvestment Religare Ultra Short Term Fund - Institutional Plan - Daily Dividend Reinvestment SBI Arbitrage Opportunities Fund - Dividend SBI SHDF - Ultra Short Term - Institutional Plan - Daily Dividend Reinvestment Sundaram BNP Money Fund Super Institutional Plan - Daily Dividend Reinvestment Sundaram BNP Paribas Ultra Short Term - Super Institutional Plan - Daily Dividend Reinvestment Tata Fixed Income Portfolio Fund - B3 - Institutional Plan - Quarterly Dividend Reinvestment Tata Floater Fund - Daily Dividend Reinvestment Tata Short Term Bond Fund - Dividend Reinvestment Templeton Floating Rate Income Fund - Long Term - Super Institutional Plan Templeton India Treasury Management Account - Liquid Plan - Daily Dividend Templeton India Ultra Short Bond Fund - Super Institutional Plan - Dividend UTI- Liquid Fund - Cash Plan - Institutional Plan - Income UTI FIIF - Series 2 - Quarterly Interval Plan V - Institutional Plan - Dividend UTI Fixed Income Interval Fund - Monthly Interval Plan - II - Dividend UTI Money Market - Institutional Plan - Daily Dividend Reinvestment UTI Money Market Fund - Daily Dividend Option - Reinvestment UTI Short Term Income - Retail - Dividend Reinvestment UTI Short Term Income Fund - Institutional Plan - Income Option - Reinvestment UTI - Floating Rate Fund - Short Term Pl - Dividend Option - Reinvestment C) Less: Provision for diminution in value Mutual funds - total Current investments - total - (B) Investment in integrated 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 (Les Pallies Exhibition Center) Metro Tunneling Group Investment in integrated joint venture - total - (C) Total investment (A+B+C) Number of units As at 1-4-2009 Purchased/ subscribed/addition during the year Sold/deduction during the year As at 31-3-2010 Face value per unit Rupees As at 31-3-2010 Rs.crore 4676.73 As at 31-3-2009 Rs.crore 2634.01 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 1,000 10 1,000 10 10 1,000 10 10 10 1,000 6,08,50,173 4,70,30,339 – – – 1,37,746 18,92,65,344 5,10,25,136 5,00,03,770 6,00,05,126 6,09,87,919 23,62,95,683 – – – – – 5,10,25,136 5,00,03,770 6,00,05,126 99,96,501 2,07,17,55,033 1,99,97,94,074 8,19,57,460 2,90,17,796 – 1,33,38,19,843 2,35,70,345 1,36,28,37,639 – – 2,35,70,345 2,61,45,641 34,81,03,699 32,38,19,406 5,04,29,934 2,38,48,392 17,14,55,690 19,53,04,082 – – 12,09,63,517 7,39,62,683 4,70,00,834 – 3,05,13,367 6,20,63,434 3,00,00,000 76,98,03,833 5,47,180 – 80,03,17,200 6,26,10,614 3,00,00,000 – – – 7,54,40,002 5,99,40,060 1,54,99,942 99,958 1,43,97,023 1,44,96,981 4,37,70,949 3,94,853 87,05,80,883 1,35,81,106 9,143,51,832 1,39,75,959 – – – – – 52.21 50.00 60.01 82.01 – 25.58 50.46 – 47.17 30.00 – – 15.50 – – – – 10,05,71,481 – 10,05,71,481 100.57 – – 13,03,81,170 – 6,00,00,000 21,91,08,865 1,53,61,51,377 7,40,89,726 – 21,86,10,497 1,66,65,32,547 – 6,00,00,000 4,98,368 – 7,40,89,726 60.00 50.01 – 88.01 – – 9,94,04,567 – 9,94,04,567 100.00 57,45,633 26,97,921 30,47,712 305.01 5793.27 4.71 5788.56 7964.53 0.05 1.68 8.91 14.97 62.03 12.17 5.39 – 60.89 50.21 – – – 10.00 29.06 – 26.16 24.08 – – 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 3.56 108.76 13705.35 8.25 127.76 8263.72 121 Schedules forming part of the Accounts (contd.) Schedule F- Details of investments purchased and sold during the year Particulars Face value Rs.per unit Nos. Cost Rs.crore Other fully paid equity shares: Genus Power Infrastructures Limited (quoted) Jyoti Limited (quoted) Aplab Limited (quoted) Government and trust securities: 6.05% Government of India bond, 2019 (quoted) 6.90% Government of India bond, 2019 (quoted) 7.02% Government of India bond, 2016 (quoted) Bonds and debentures: JM Financial Services Private Limited, December 8, 2009 JM Financial Services Private Limited, January 6, 2010 JM Financial Services Private Limited, December 31, 2010 10 10 10 100 100 100 19,471 5,59,437 1,48,580 2,00,00,000 10,30,00,000 3,75,00,000 1,00,00,000 1,00,00,000 1,00,00,000 25 11 6 0.48 6.04 1.28 195.30 994.34 368.54 25.00 11.00 6.00 Essar THI Communication Limited - 9.15% Non convertible Debentures, July 22, 2011 10,00,000 1,875 163.93 Commercial papers: 12.60% HDFC Limited Mutual funds: 5,00,000 2,000 88.84 AIG India Liquid Fund Super Institutional Plan - Daily Dividend Reinvestment 1,000 2,29,790 23.00 Baroda Pioneer Treasury Advantage Fund - Institutional Plan - Daily Dividend Reinvestment Benchmark S&P CNX 500 Fund - Dividend Plan Birla Dynamic Bond Fund - Retail - Quarterly Dividend Reinvestment Birla Sunlife Advantage Fund - Dividend Reinvestment Birla Sunlife Dynamic Bond Fund - Monthly Dividend Reinvestment Birla Sunlife Equity Fund Birla Sunlife Frontline Euity Fund - Dividend Reinvestment Birla Sunlife Income Plus - Quarterly Dividend Reinvestment Birla Top 100 Fund - Dividend Reinvestment Birlasunlife Enhanced Arbitrage Fund - Institutional Plan DBS Chola Liquid Super Institutional Plan - Cumulative 10 10 10 10 10 10 10 10 10 10 10 32,43,32,439 2,78,37,164 22,65,24,099 15,30,925 9,16,35,072 1,15,62,283 4,13,82,354 13,34,08,302 5,38,63,554 6,14,89,722 32,03,45,974 DSP Blackrock Liquidity Fund - Institutional Plan - Daily Dividend Reinvestment 1,000 1,19,986 DWS Cash Opportunities Fund Institutional Plan - Daily Dividend Reinvestment DWS Ultra Short Term Fund - Institutional Plan - Dividend Fortis Overnight Fund - Institutional Plan Plus - Daily Dividend Reinvestment Franklin Bluechip Fund HDFC Arbitrage Fund - Institutional Plan - Dividend Reinvestment HDFC Cash Management Fund - Savings Plan - Daily Dividend Reinvestment HDFC Equity Fund - Dividend Reinvestment HDFC Floating Rate Income Fund - Short Term Fund HDFC High Interest Fund - Quarterly Dividend Reinvestment 10 10 10 10 10 10 10 10 10 15,05,42,636 56,85,57,550 47,19,01,770 2,96,03,276 29,53,09,926 44,96,91,139 4,22,11,096 92,56,77,012 8,97,86,756 122 324.63 50.00 250.00 15.00 95.76 75.00 75.00 151.51 85.00 61.61 400.00 12.00 150.91 569.58 472.04 80.00 299.44 478.31 130.00 933.17 100.00 Schedules forming part of the Accounts (contd.) Schedule F- Details of investments purchased and sold during the year (contd.) Particulars Face value Rs.per unit Nos. Cost Rs.crore Mutual funds (contd.): HDFC High Interest Fund Short Term Plan - Dividend HDFC Top 200 Fund - Dividend Reinvestment ICICI Prudencial Blended Plan - Option A - Dividend ICICI Prudential Gilt Fund - Half Yearly Dividend Reinvestment ICICI Prudential Short Term Fund - Institutional Plan - Dividend Reinvestment Fortnightly ICICI Prudential Ultra Short Term Plan - Super Premium - Weekly IDFC Arbitrage Fund Plan - B - Institutional Plan - Dividend Reinvestment IDFC Money Manager Fund - TP - Super Institutional Plan C - Daily Dividend Reinvestment ING Vysya Liquid Super Institutional Plan - Daily Dividend Option JM High Liquid - Super Institutional Plan - Daily Dividend Reinvestment Kotak Flexi Debt Scheme - Daily Dividend Reinvestment Kotak Liquid - Institutional Plan - Premium Plan - Daily Dividend Reinvestment LIC MF Index Fund - Nifty Dividend Plan Prudential ICICI Growth Plan Prudential ICICI Liquid Plan - Monthly Dividend Reinvestment Reliance Equity Advantage Fund - Institutional Plan - Dividend Reliance Growth Fund - Equity - Dividend Reinvestment Reliance Infrastructure Fund - Institutional Plan - Dividend 10 10 10 10 10 10 10 10 10 10 10 10 10 10 100 10 10 10 9,44,70,842 3,30,79,737 4,89,24,158 8,21,75,370 8,26,00,206 2,53,35,880 9,82,40,555 100.31 105.00 50.00 102.10 100.25 25.34 102.04 56,87,84,827 568.87 50,21,831 4,99,22,722 7,47,13,168 3,03,09,28,818 19,22,10,070 2,67,80,932 99,90,437 3,21,17,163 30,99,830 2,50,00,000 5.02 50.01 75.07 3706.25 175.00 50.00 10.04 30.00 100.00 25.00 Reliance Money Manager - Institutional Plan Option - Daily Dividend Reinvestment 1,000 4,40,05,210 4405.52 Reliance Mutual Fund - Vision Fund - Dividend Reinvestment Religare Credit Opportunities - Monthly Dividend Reinvestment SBI Mutual Fund - Liquid Plan - Dividend Reinvestment Sundaram BNP Paribas Balanced Fund - Institutional Plan - Dividend Payout Tata Mutual Fund - Liquid Ship - Daily Dividend Reinvestment Tata Treasury Manager Fund - Ship - Daily Dividend Reinvestment UTI Bond Fund - Dividend Reinvestment UTI Liquid Plus Institutional Plan UTI Nifty Index Fund - Dividend Payout 10 10 10 10 1,000 1,000 10 1,000 10 17,21,112 15,16,19,687 14,95,66,545 2,53,63,812 1,14,91,081 11,84,003 4,43,41,912 2,77,28,121 2,13,98,797 30.00 152.13 150.05 40.00 1280.70 119.62 50.36 2773.41 25.00 123 Schedules forming part of the Accounts (contd.) As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore Schedule G Current assets, loans and advances: Current assets: Inventories: Stock-in-trade and manufacturing work-in-progress: (at cost or net realisable value whichever is lower) Stock-in-trade: Raw materials Components Construction materials Stores, spare parts and loose tools Finished goods Manufacturing 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 ﬁ xed deposits including interest accrued thereon on margin money deposit accounts Balances with non-scheduled banks [Note no.5(a)] Other current assets: Interest accrued on investments Due from customers (Construction and project related activity) Carried forward 124 276.71 310.52 27.12 120.77 325.30 1060.42 354.95 2697.91 465.15 3163.06 8465.79 11628.85 465.15 2.12 245.46 463.56 325.26 1.72 393.75 45.15 6308.07 380.49 300.00 20.17 103.39 342.54 1146.59 323.92 1415.37 1470.51 2293.78 383.60 2677.38 7609.35 10286.73 383.60 11163.70 9903.13 3.56 248.85 269.86 80.70 1.50 170.82 1431.87 775.29 21.56 4334.54 6353.22 20364.16 4356.10 16505.03 Schedules forming part of the Accounts (contd.) Schedule G (contd.) Brought forward Loans and advances: Secured, considered good: As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 20364.16 16505.03 Loans against mortgage of house property 16.80 21.37 Unsecured: Considered good: Subsidiary companies: Loans [Note no.16] Advances towards equity commitment Inter-Corporate deposits [Note no.16] Others Associate companies: Advances recoverable Inter-corporate deposits [Note no.16] Inter-corporate deposits-other company Advances recoverable in cash or in kind [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 452.38 1587.41 447.72 775.18 9.17 – – 2664.57 44.22 18.67 70.04 6086.16 88.71 778.00 623.58 669.62 257.31 24.61 5.00 2.01 3406.74 31.12 21.09 62.22 5902.67 83.31 5997.45 26361.61 5819.36 22324.39 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 40.50 61.66 Schedule H Current liabilities and provisions: Liabilities: Acceptances Sundry creditors: Due to: Subsidiary companies Micro and small enterprises [Note no.33] Others 204.27 22.07 9281.69 209.76 11.12 6606.86 Due to customers (Construction and project related acitivity) Advances from customers Carried forward 9508.03 2334.07 7065.39 18947.99 6827.74 2924.81 4857.17 14671.38 125 Schedules forming part of the Accounts (contd.) As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 18947.99 14671.38 10.58 36.37 57.82 14776.15 12.84 45.19 48.48 19054.50 12.79 0.04 – 0.01 410.07 752.75 110.25 0.50 296.67 135.61 78.99 5.73 397.79 10.33 0.08 0.15 0.02 321.64 614.97 101.83 0.52 237.12 151.80 70.97 7.72 436.06 2188.36 21242.86 1942.63 16718.78 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore – – 0.26 0.26 Schedule H (contd.) Brought forward Items covered by investor education and protection fund [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 Provisions for: Current taxes (Net of payments made Rs.1125.82 crore; previous year: Rs.1123.90 crore) Proposed dividend Additional tax on dividend Gratuity Compensated absences Employee pension schemes Post-retirement medical beneﬁ t plan Long service awards Other provisions (AS-29 related) [Note no.23] Schedule I Miscellaneous expenditure (to the extent not written off or adjusted) Voluntary Retirement-cum-Pension Schemes/Voluntary Retirement Schemes 126 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 (d) Income-tax liability (including penalty) that may arise in respect of which the Company is in appeal (e) Corporate guarantees given on behalf of subsidiary companies As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore 158.21 158.78 10.28 8.45 805.38 166.21 66.96 10.93 1.62 361.16 Notes: 1. The Company does not expect any reimbursements in respect of the above contingent liabilities. 2. 3. It is not practicable to estimate the timing of cash outﬂ ows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings. In respect of matters at (e) , the cash outﬂ ows, 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 outﬂ ows, 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 proﬁ t of Integrated joint ventures [ Note no.14(b)] Lease rentals Proﬁ t on sale of ﬁ xed assets (net) Income from services to the Group companies Miscellaneous income Unclaimed credit balances 2009-2010 Rs.crore 5121.99 31252.17 254.64 153.16 213.97 36995.93 2009-2010 Rs.crore 1.93 62.26 7.84 2.28 0.43 66.26 198.22 20.43 359.65 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 50.32 141.26 24.95 291.97 127 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.5.03 crore; previous year: Rs.13.20 crore) Income from long term investments: Interest on bonds and government securities (Tax deducted at source Rs.nil; previous year: Rs.0.35 crore) Income from current investments: Interest on bonds and government securities (Tax deducted at source Rs.nil; previous year: Rs.nil) Dividend income: From long term investments: Subsidiary companies Trade investments Other investments From current investments Proﬁ t on sale of investment: Proﬁ t on sale of long term investments (net) Proﬁ t on sale of current investments (net) Proﬁ t on sale of ﬁ xed assets (net) Lease rental 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 128 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 25.20 0.02 103.17 88.91 19.01 1.20 109.12 277.91 1205.62 48.82 96.75 9.25 65.82 128.39 171.82 15.80 56.24 8.65 80.69 253.94 – 94.66 387.03 1254.44 3.59 24.73 226.10 0.59 0.09 2024.96 334.63 94.66 2.21 20.46 106.69 8.23 1.08 739.78 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 6863.16 7478.08 14341.24 61.12 7056.22 7509.99 14566.21 67.73 14280.12 1574.28 15854.40 14498.48 1678.69 16177.17 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 Value of materials,tools,and work-in-progress transferred on sale of undertaking Sub-contracting charges Stores, spares and tools Other manufacturing, construction and operating expenses: Excise duty Power and fuel Royalty and technical know-how fees Packing and forwarding Hire charges - plant & machinery and others Engineering, technical and consultancy fees Insurance Rent Rates and taxes Travelling and conveyance Repairs to plant and machinery Repairs to buildings General repairs and maintenance Bank guarantee charges Other expenses Schedule N Staff expenses: Salaries, wages and bonus Contribution to and provision for: 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 15854.40 16177.17 325.30 1048.47 1373.77 342.54 1454.22 1796.76 (3.47) 334.08 2.54 124.28 357.70 523.86 162.78 146.63 35.12 315.91 44.30 5.50 118.88 111.71 202.78 342.54 1454.22 1796.76 321.38 1370.27 1691.65 422.99 (20.45) 8661.75 1052.26 (105.11) – 7053.27 900.75 (5.16) 456.39 2.81 117.94 357.75 472.46 74.99 127.58 31.38 265.26 47.58 8.45 98.09 40.70 149.32 2482.60 28453.55 2245.54 26271.62 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 1922.50 1605.20 Provident funds and pension fund Superannuation/employee pension schemes (including reversal of provision, Rs.2.75 crore; previous year: Rs.0.45 crore) Gratuity funds (including reversal of provision, Rs.0.02 crore; previous year: Rs.0.07 crore) 77.94 42.47 47.51 Welfare and other expenses 68.85 18.82 26.80 167.92 288.72 2379.14 114.47 254.79 1974.46 129 Schedules forming part of the Accounts (contd.) 2009-2010 2008-2009 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 [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 investments (net) Other provisions [Note no.23] 27.89 45.66 61.12 27.60 Schedule P Interest expenses & brokerage: Debentures and ﬁ xed loans Others 130 31.28 116.45 106.05 12.03 90.56 40.43 133.08 12.08 94.68 0.18 65.51 58.39 32.52 73.55 20.65 211.30 33.52 8.18 57.83 114.55 78.54 47.10 24.28 1462.74 2009-2010 Rs.crore 352.73 152.58 505.31 37.59 9.99 76.59 72.52 26.91 161.04 106.85 6.47 97.32 31.04 172.41 18.28 88.69 0.22 68.93 57.88 34.68 47.58 21.42 376.45 4.07 1.85 45.60 226.99 53.34 8.12 138.62 1794.76 2008-2009 Rs.crore 253.08 162.48 415.56 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 ﬁ xed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as speciﬁ ed 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 ﬁ nancial 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 ﬁ nancial statements. Examples of such estimates include the useful lives of tangible and intangible ﬁ xed assets, provision for doubtful debts/advances, future obligations in respect of retirement beneﬁ t 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) 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 signiﬁ cant 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 represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is determined as a proportion of cost of work performed-to-date to the total estimated contract costs. Full provision is made for any loss in the period in which it is foreseen. Project and construction related work-in-progress is reﬂ ected at cost till such time the outcome of the job cannot be ascertained reliably and at realisable value thereafter. 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 fulﬁ lled. 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 Proﬁ t 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 fulﬁ lled. b) Proﬁ t/loss on contracts executed by integrated joint ventures under proﬁ t-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 business and is recognised when the right to receive the income is established as per the terms of the contract. Interest income is accrued at applicable interest rate. d) e) Dividend income is accounted when the right to receive the same is established. Dividends declared by subsidiary companies after the date of the Company’s Balance Sheet are also included if they are in respect of accounting period which closed on or before the date of the Company’s Balance Sheet. f) Other items of income are accounted as and when the right to receive arises. 131 Schedules forming part of the Accounts (contd.) 3. Research and development Revenue expenditure on research and development is accounted under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of ﬁ xed assets and depreciated on the same basis as other ﬁ xed assets. 4. Employee beneﬁ ts a) Short term employee beneﬁ ts All employee beneﬁ ts falling due wholly within twelve months of rendering the service are classiﬁ ed as short term employee beneﬁ ts. The beneﬁ ts 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. b) Post-employment beneﬁ ts i) Deﬁ ned contribution plans: The Company’s superannuation scheme, state governed provident fund scheme, employee state insurance scheme and employee pension scheme are deﬁ ned contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. ii) Deﬁ ned beneﬁ t plans: The employees gratuity fund schemes, post-retirement medical care scheme, pension scheme and provident fund scheme managed by trust are the Company’s deﬁ ned beneﬁ t plans. Wherever applicable, the present value of the obligation under such deﬁ ned beneﬁ t 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 beneﬁ t entitlement and measures each unit separately to build up the ﬁ nal obligation . The obligation is measured at the present value of the estimated future cash ﬂ ows. The discount rate used for determining the present value of the obligation under deﬁ ned beneﬁ t plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity proﬁ le of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Proﬁ t and Loss Account. The interest element implicit in the actuarial valuation of deﬁ ned beneﬁ t plans is classiﬁ ed under interest expense and balance charge is recognised as employee beneﬁ ts in the Proﬁ t and Loss Account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the deﬁ ned beneﬁ t plans. to recognise the obligation on the net basis. Gains or losses on the curtailment or settlement of any deﬁ ned beneﬁ t 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 beneﬁ ts become vested. c) Long term employee beneﬁ ts The obligation for long term employee beneﬁ ts such as long term compensated absences, long service award etc. is recognised in the similar manner as in the case of deﬁ ned beneﬁ t plans as mentioned in (b) (ii) above. d) Termination beneﬁ ts Termination beneﬁ ts such as compensation under voluntary retirement-cum-pension scheme is amortised over a deﬁ ned period. The deﬁ ned period of amortisation is ﬁ ve years or the period till March 31, 2010, whichever is earlier. 5. 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. Speciﬁ c 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 speciﬁ cally attributable to construction or acquisition of ﬁ xed assets or bringing the ﬁ xed assets to working condition are allocated and capitalised as a part of the cost of the ﬁ xed 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) 6. 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 Proﬁ t and Loss Account. b) Lease transactions entered into on or after April 1, 2001: Finance leases: i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classiﬁ ed as ﬁ nance 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. 132 Schedules forming part of the Accounts (contd.) iii) Operating leases: i) ii) Assets given under a ﬁ nance 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. Initial direct costs relating to assets given on ﬁ nance leases are charged to Proﬁ t and Loss Account. Assets acquired on leases where a signiﬁ cant portion of the risks and rewards of ownership are retained by the lessor are classiﬁ ed as operating leases. Lease rentals are charged to the Proﬁ t and Loss Account on accrual basis. ii) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term. (Also refer to policy on depreciation, infra) 7. Depreciation a) Owned assets i) 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 Proﬁ t and Loss Account. ii) 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 ﬁ xtures Plant and machinery: Rate of Depreciation (% p.a.) 10.00 i) Ofﬁ ce equipment ii) Cranes above 1000 ton capacity used for construction activity iii) Minor plant and 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) ii) 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. Lease transactions entered into on or after April 1, 2001: Assets acquired under ﬁ nance 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 beneﬁ ts that are attributable to the asset will ﬂ ow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: a) Leasehold land: over the period of lease. b) Specialised software: Over a period of three years. c) Lumpsum 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. 133 Schedules forming part of the Accounts (contd.) Administrative and other general overhead expenses that are speciﬁ cally 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. the provision for impairment loss, if any; and the reversal of impairment loss recognised in previous periods, if any, . Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a) b) 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; and in the case of a cash generating unit (a group of assets that generates identiﬁ ed, independent cash ﬂ ows), 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 ﬂ ows 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 speciﬁ c identiﬁ cation. Investments in integrated joint ventures are carried at cost net of adjustments for Company’s share in proﬁ ts 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) Manufacturing work-in-progress at lower of cost including related overheads or net realisable value. In the case of qualifying assets, cost also 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. 12. 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: Expenses incurred on issue of shares. i) ii) Expenses (net of tax) incurred on issue of debentures/bonds. iii) Premium (net of tax) on redemption 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 Lumpsum compensation paid under Voluntary Retirement-cum-Pension Schemes are amortised over a period of ﬁ ve 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. b) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the 134 Schedules forming part of the Accounts (contd.) transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items, 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 of monetary items at each Balance Sheet date at the closing rate are: i) adjusted in the cost of ﬁ xed assets speciﬁ cally ﬁ nanced by the borrowings contracted up to March 31, 2004 to which the exchange differences relate adjusted in the cost of ﬁ xed assets speciﬁ cally ﬁ nanced 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. ii) iii) c) Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows: i) Closing inventories at rates prevailing at the end of the year. ii) 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) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted ﬁ rm 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. f) All the other derivative contracts, including forward contracts entered into, to hedge foreign currency risks on unexecuted ﬁ rm commitments and highly probable forecast transactions, are recognised in the ﬁ nancial 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 Proﬁ t 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 Proﬁ t and Loss Account where the hedge is ineffective. g) 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 speciﬁ c accounting policies have been followed for segment reporting: i) Segment revenue includes sales and other income directly identiﬁ able with/allocable to the segment including intersegment revenue. ii) Expenses that are directly identiﬁ able 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 proﬁ t before tax of the Company. v) Segment assets and liabilities include those directly identiﬁ able 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. 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. 135 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 ﬁ nancial statements and the taxable income for the year, and quantiﬁ ed 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 sufﬁ cient 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 sufﬁ cient future taxable income will be available against which such deferred tax assets can be realised. 19. Fringe beneﬁ t tax Fringe beneﬁ t tax (FBT) on the employee stock options (ESOPs) is recognised in the Proﬁ t 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 speciﬁ ed in the Income Tax Act, 1961, is recognised in the Proﬁ t 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 Jointly controlled operations Jointly controlled assets Jointly controlled entities Accounting treatment Company’s share of revenues, common expenses, assets and liabilities are included in revenues, expenses, assets and liabilities respectively. 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 beneﬁ ts, if any, from use of the assets are reﬂ ected as income. (a) Integrated joint ventures: (i) Company’s share in proﬁ ts or losses of integrated joint ventures is accounted on (b) (ii) determination of the proﬁ ts or losses by the joint ventures. Investments in integrated joint ventures are carried at cost net of Company’s share in recognised proﬁ ts or losses. Incorporated jointly controlled entities: (i) 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. (ii) 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 the amount of the obligation can be reliably estimated. 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 outﬂ ow of resources is expected to settle the obligation; and c) 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 outﬂ ow of resources will be required to settle the obligation; a possible obligation arising from past events where the probability of outﬂ ow of resources is not remote. b) a present obligation arising from past events, when no reliable estimate is possible; and c) Contingent assets are neither recognised, nor disclosed. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 136 Notes forming part of Accounts 1. 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: 44,96,76,280) 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.87.47 crore) and capital redemption reserve: Rs.0.12 crore (previous year: Rs.0.12 crore). iii) 2,00,88,346 (previous year: 1,48,67,485) equity shares were allotted as fully paid up on exercise of grants under Employees Stock Ownership Schemes. b) During the year, the Company has issued and allotted 1,12,86,685 equity shares of Rs.2 each by way of Qualiﬁ ed Institutional Placement (‘QIP’) at issue price of Rs.1659.30 per share. The shares rank pari passu in all respects with the existing equity shares of the Company. c) On October 21, 2009, the Company issued 5 years & 1 day, 3.50% US$ denominated Foreign Currency Convertible Bonds (‘FCCB’) at par, aggregating to US$ 200 million (INR 928.80 crore as on the date of issue) comprising 2000 bonds of US$ 1,00,000 each. The bonds are convertible into the Company’s fully paid up equity shares of Rs.2 each at a conversion price of Rs.1908.20 per share at the option of the bond holders at any time after December 1, 2009 up to October 15, 2014. The bonds are redeemable, subject to fulﬁ lment of certain conditions, in whole but not in part, at the option of the Company, on or at any time after October 21, 2012 but not less than seven business days prior to the maturity date, at the principal amount together with accrued interest till the date ﬁ xed for redemption, unless the bonds have been previously redeemed, converted or purchased and cancelled. d) Options outstanding as at the end of the year on un-issued share capital: Particulars Employee stock options granted and outstanding # 3.5% 5 years & 1 day, US$ denominated Foreign Currency Convertible Bonds Number of equity shares to be issued as fully paid As at 31-3-2009 2,12,89,375 – As at 31-3-2010 1,75,51,015 49,07,243 # The number of options have been adjusted consequent to bonus issue wherever applicable. e) The Directors recommend payment of ﬁ nal dividend of Rs.12.50 per equity share of Rs.2 each on the number of shares outstanding as on the record date. Provision for ﬁ nal dividend has been made in the books of account for 60,21,95,408 shares outstanding as at March 31, 2010 amounting to Rs.752.75 crore. 2. 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 4 years [5 years in the case of Series 2006(A)], subject to the discretion of the management and fulﬁ lment of certain conditions. b) The details of the grants under the aforesaid schemes under various series are summarised below: 1 2 3 4 5 6 7 8 9 10 11 12 13 2000 2002 (A) 2002 (B) 2003 ( A) 2003(B) 2006 2006(A) Series reference Sr. No. Grant price (prior to bonus issue) -Rupees Grant price (post bonus issue) - Rupees Grant dates 2008-2009 7 3.50 2009-2010 – 3.50 1-6-2000 2008-2009 7 3.50 2009-2010 – 3.50 19-4-2002 2008-2009 7 3.50 2009-2010 – 3.50 19-4-2002 Vesting commences on 1-6-2001 19-4-2003 19-4-2003 2008-2009 35 17.50 2009-2010 – 17.50 23-5-2003 onwards 23-5-2004 onwards 2008-2009 35 17.50 2009-2010 – 17.50 23-5-2003 onwards 23-5-2004 onwards 2008-2009 1202 601 2009-2010 – 601 1-9-2006 onwards 1-9-2007 onwards 2008-2009 1202 601 2009-2010 – 601 1-7-2007 onwards 1-7-2008 onwards Options granted and outstanding at the beginning of the year Options lapsed/withdrawn prior to bonus issue Options granted prior to bonus issue Options exercised priorto bonus issue Options outstanding as on October 3, 2008 prior to bonus issue Adjusted options as on October 3, 2008 consequent to bonus issue Options lapsed/withdrawn post bonus issue Options granted post bonus issue Options exercised post bonus issue [see note 2(c)] 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 – – – – – – – – – – – 8400 16800 – – – – – – – – – – – – – – 10750 21500 – – – – – – – – – – – - - - 19850 39700 – – – – – – – – – – – - - - 15726 31452 – – – – – – – – 51622 164300 947586 40481 340000 118874 1152113 2304226 50912 153800 447226 163605 59600 120756 6812138 13624276 – – – – – – – – – – 336341 – 4148544 261900 – 37516 633070 2808090 593587 180428 1910970 25034 2700778 5401556 133664 646295 19012 16800 16800 21500 21500 39700 39700 31452 31452 1124980 1959888 8839975 13324860 7476608 5895175 16800 – 16800 – 21500 – 21500 – 39700 – 39700 – 31452 – 31452 – 85644 1039336 226326 1733562 4759655 4080320 5321810 8003050 769990 6706618 279136 5616039 137 Notes forming part of Accounts (contd.) c) Employee Stock Options (ESOP) exercised during the year 2009-2010 include options pending for allotment # of shares as on March 31, 2010 as follows: Series reference 2003B 2006A 2006 # Since allotted in April 2010. No. of options 49,000 41,382 3,78,474 d) During the year, the Company has recovered Rs.3.60 crore (previous year: Rs.4.80 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes. e) Application money received amounting to Rs.25.09 crore will be appropriated towards share capital Rs.0.09 crore and security premium account Rs.25.00 crore on allotment of shares. 3. a) Working capital facilities from banks including cash credits, demand loans, bank guarantees and letters of credit are secured by hypothecation of inventories, book debts and receivables. The total charge on these assets is Rs.2037.51 crore as on March 31, 2010. b) Other secured loans from banks represent loans amounting to Rs.5.90 crore (previous year: Rs.nil) availed under bill discounting facility and are secured against speciﬁ c receivables. 4. Terms of redemption of debentures a) Secured redeemable non-convertible ﬁ xed 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 11.45% p.a. payable annually Interest Redeemable at face value 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. 2 10,00,000 January 5, 2009 Total 400 900 9.15% p.a. payable annually Security: The debentures are secured by way of a ﬁ rst 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 ﬁ xed 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) Balances with non-scheduled banks represent the balances with Indian banks classiﬁ ed 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 As at 31-3-2010 As at 31-3-2009 i) Current accounts ABN AMRO Bank, The Netherlands 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 Carried forward 138 0.16 7.38 0.53 0.16 0.03 10.91 0.03 7.81 5.39 32.40 – 3.18 0.41 0.37 0.11 3.30 0.04 1.04 7.63 16.08 Rs.crore Maximum amount outstanding at any time during 2009-2010 2008-2009 2.20 7.38 5.36 0.37 0.11 25.09 3.39 85.82 51.10 – 25.55 20.01 1.28 2.48 6.54 2.48 8.70 9.54 Notes forming part of Accounts (contd.) Particulars As at 31-3-2010 As at 31-3-2009 Rs.crore Maximum amount outstanding at any time during 2009-2010 2008-2009 i) Current accounts (contd.) Brought forward Bank Muscat Bank of Baroda (Kenya) Limited, Kenya Bank of Bhutan Bank of Commerce & Development, Libya Bank of Nova Scotia, Barbados Citibank, France Citibank, USA Citibank, London Danske Bank, Denmark Deutsche Bank, Singapore Emirates Bank, UAE Emirates Bank International PJSC Hakrin Bank NV, (Guilder) Surinam Handels Bank, Sweden 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 Limited, Nepal Raﬁ dian Bank, Iraq Standard Chartered Bank, Dubai Standard Chartered Bank, Malaysia Standard Chartered Bank, Qatar Union National Bank, Abu Dhabi ICICI Bank, Canada ICICI Bank Eurasia, Moscow Total (i) ii) Call deposits Mashreq Bank, Dubai Total (ii) iii) Fixed deposits Arab Bank, Doha Arab Bank, UAE Deutsche Bank, Singapore Emirates Bank, UAE HSBC Bank Middle East Limited, Abu Dhabi HSBC Bank UAE HSBC Bank Middle East Limited, Dubai Mashreq Bank, Dubai Mashreq Bank, UAE National Bank of Kuwait, Kuwait Standard Chartered Bank, Qatar Total (iii) Total (i)+(ii)+(iii) 32.40 0.02 – 34.30 0.40 – 0.38 20.32 0.23 0.48 0.01 – 0.75 – 0.81 0.01 0.01 17.23 0.01 6.82 2.32 1.63 15.47 1.31 2.15 1.88 0.14 8.25 – 0.61 6.30 0.17 0.97 0.05 155.43 0.69 0.69 116.76 24.45 – – 2.29 48.90 – 45.23 – – – 237.63 393.75 16.08 0.04 0.28 2.30 0.38 – 0.12 5.23 0.23 – 0.01 – 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 0.38 147.80 0.69 0.69 – – – – – – 22.33 – – – – 22.33 170.82 0.04 0.28 57.41 0.40 – 1.37 98.80 0.23 3.65 0.01 – 18.99 – 1.34 0.22 0.94 29.70 21.98 75.10 4.85 33.91 17.73 27.71 7.91 24.87 0.14 10.42 – 3.91 15.94 0.27 1.12 0.43 0.04 50.41 2.30 0.38 0.99 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 0.69 0.69 121.56 24.45 – – 22.54 71.44 – 45.23 – – – – – 0.92 7.65 1.23 – 26.92 2.19 4.37 44.48 8.82 139 Notes forming part of Accounts (contd.) b) 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 ﬁ nal settlement of loan taken from Raﬁ dian Bank, Iraq, which is included under unsecured loans. 6. Loans and advances include: a) Rent deposit with whole-time directors: Rs.0.03 crore (previous year: Rs.0.03 crore). The maximum amount outstanding at any time during the year: Rs.0.03 crore (previous year: Rs.0.03 crore). b) Amount, including interest accrued, due from the managing director and whole-time directors in respect of housing loan: Rs.0.61 crore (previous year: Rs.0.63 crore). Maximum amount outstanding at any time during the year: Rs.0.63 crore (previous year: Rs.0.73 crore). 7. Sales and service include Rs.142.83 crore (previous year: Rs.117.72 crore) for price variations net of liquidated damages in terms of contracts with the customers and shipbuilding subsidy Rs.56.80 crore (previous year: Rs.25.49 crore). 8. Disclosures pursuant to Accounting Standard (AS) 7 (Revised) “Construction Contracts”: i) ii) Contract revenue recognised for the ﬁ nancial year Particulars Aggregate amount of contract costs incurred and recognised proﬁ ts (Less recognised losses) as at end of the ﬁ nancial 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 ﬁ nancial year iv) Retention amounts due from customers for contracts in progress as at end of the ﬁ nancial year Rs.crore 2009-2010 2008-2009 31252.17 71270.55 6626.24 2346.43 27456.22 54929.12 4440.91 1741.43 9. Extraordinary items during the year comprise the following: a) Proportionate reversal of Rs.62.55 crore, out of the provision made in previous year in respect of the Company’s investment in shares of Satyam Computer Services Limited (SCSL), pursuant to sale of a part of its holding in SCSL during the year. b) Gain of Rs.73.17 crore (net of tax of Rs.21.61 crore) on sale of the Company’s Petroleum Dispensing Pumps & Systems business. 10. Other income for the year ended March 31, 2010 includes: a) Proﬁ t of Rs.1019.88 crore on sale of the Company’s long term investment in UltraTech Cement Limited. b) Gain of Rs.67.61 crore on sale of the Company’s stake in Voith Paper Technology (India) Limited, an associate company. c) Proﬁ t of Rs.27.22 crore, pursuant to buy back of the Company’s part equity holding by Audco India Limited, an associate company. 11. Sales, administration and other expenses include a provision of Rs.39.93 crore, for diminution in the company’s investment in an associate company. 12. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Beneﬁ ts”. i. Deﬁ ned contribution plans: [accounting policy no.4b(i)] Amount of Rs.70.03 crore (previous year: Rs.63.43 crore) is recognised as an expense and included in “Staff Expenses” (Schedule N) in the Proﬁ t and Loss Account. 140 Notes forming part of Accounts (contd.) ii. Deﬁ ned beneﬁ t plans: [accounting policy no.4b(ii)] a) The amounts recognised in Balance Sheet are as follows: Particulars Gratuity plan Post-retirement medical beneﬁ t plan Company pension plan Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 Rs.crore A) Present value of deﬁ ned beneﬁ t 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 reﬂ ected in the Balance Sheet 319.91 272.41 0.50 320.41 279.30 – 0.52 272.93 244.71 – – 80.28 80.28 – 1.29 – 72.40 72.40 – 1.43 – 136.47 136.47 – 0.86 – 1199.77 1001.10 152.78 – – 152.78 1199.77 1001.10 – 1186.01 1017.06 0.98 – – 41.11 28.22 78.99 70.97 135.61 151.80 13.76 (15.96) @ Liabilities Assets 41.11 28.22 78.99 70.97 135.61 151.80 18.02 14.78 – – – – – – – – Net liability/(asset) 41.11 28.22 78.99 70.97 135.61 151.80 18.02 # 14.78 # b) The amounts recognised in Proﬁ t and Loss Account are as follows: Rs.crore 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 (1 to 8) I Amount included in “staff expenses” II Amount included as part of “Interest” Total (I + II) Actual return on plan assets Gratuity plan Post-retirement medical beneﬁ t plan Company pension plan Trust-managed provident fund plan 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 19.22 20.85 15.29 19.01 (17.93) (15.21) 19.19 8.56 – – – – 41.33 47.51 (6.18) 41.33 20.14 – – – – 27.65 26.80 0.85 27.65 28.34 4.39 5.74 – 1.52 0.14 – – – 11.79 11.87 (0.08) 11.79 – 3.39 5.06 – 9.03 0.14 – – – 17.62 4.79 12.83 17.62 – 3.81 11.90 – (28.60) 0.11 – – – 4.55 61.85 ** 39.74 ** 13.01 91.17 77.25 – (91.08) (78.51) 5.18 21.38 (19.65) 0.11 (19.57) – – – – – – (21.47) 20.91 + – – (12.78) 3.28 61.85 39.74 0.67 (21.14) 61.85 39.74 (13.45) (12.78) – 24.42 – – 3.28 61.85 39.74 – 69.70 98.16 141 Notes forming part of Accounts (contd.) c) The changes in the present value of deﬁ ned beneﬁ t obligation representing reconciliation of opening and closing balances thereof are as follows: Particulars Opening balance of the present value of deﬁ ned beneﬁ t obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) ii) iii) Employer Employee Transfer-in Add/(less): Actuarial losses/(gains) Less: Beneﬁ ts paid Add: Past service cost Less: Effect of any curtailment or settlement Closing balance of the present value of deﬁ ned beneﬁ t obligation Gratuity plan As at 31-3-2010 As at 31-3-2009 Post-retirement medical beneﬁ t plan As at 31-3-2010 As at 31-3-2009 Company pension plan Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 Rs.crore 272.93 19.22 20.85 – – 3.10 ~ 21.40 (17.09) – – 231.02 15.29 19.01 – – – 21.69 (14.08) – – 72.40 4.39 5.74 – – – 1.52 (3.77) – – 58.24 3.39 5.06 – – – 9.03 (3.32) – – 152.78 3.81 11.90 – – – (28.60) (3.42) – – 152.44 1001.10 903.75 4.55 13.01 61.85 ** 91.17 39.74 ** 77.25 – – – 103.97 – – – 5.18 (58.32) – – – (2.83) (19.57) – 70.72 – – (90.36) – – 320.41 272.93 80.28 72.40 136.47 152.78 1199.77 1001.10 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Rs.crore 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: Beneﬁ ts paid Add: Business combinations Less: Settlements Closing balance of the plan assets Gratuity plan Trust-managed provident fund plan As at 31-3-2010 244.71 17.93 2.21 28.57 2.97 ## (17.09) – – 279.30 As at 31-3-2009 203.42 15.21 13.13 27.03 – (14.08) – – 244.71 As at 31-3-2010 1017.06 91.08 (21.38) 55.13 102.44 (58.32) – – 1186.01 As at 31-3-2009 904.29 78.51 19.65 34.94 70.03 (90.36) – – 1017.06 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.40.61 crore (previous year: Rs.27.70 crore) towards its gratuity plan and Rs.65.56 crore (previous year: Rs.43.80 crore) towards its trust-managed provident fund plan during the year 2010-2011. @ 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 Proﬁ t and Loss Account + ~ Amount transferred from subsidiary companies – Rs.3.10 crore ## Amount transferred from subsidiary companies – Rs.2.97 crore 142 Notes forming part of Accounts (contd.) e) The major categories of plan assets as a percentage of total plan assets are as follows: 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 Gratuity plan Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 28% 13% 6% 3% 12% 1% 33% 4% 25% 16% 4% 1% 14% 2% 34% 4% 23% 12% 6% - 23% - 36% - 23% 13% 5% - 27% - 32% - f) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages): 2 3 4 5 6 7 8 9 1 Discount rate: a) Gratuity plan b) Company pension plan c) Post-retirement medical beneﬁ t plan Expected return on plan assets: Annual increase in healthcare costs (see note below) Salary Growth rate: a) Gratuity plan b) Company pension plan As at 31-3-2010 As at 31-3-2009 8.01% 8.01% 8.01% 7.50% 5.00% 6.00% 7.00% 7.67% 7.67% 7.67% 7.50% 5.00% 6.00% 7.00% Attrition Rate: a) For post-retirement medical beneﬁ t 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. The estimates of future salary increases, considered in actuarial valuation, take into account inﬂ ation, 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 Proﬁ t and Loss Account as actuarial losses. The obligation of the Company under the post-retirement medical beneﬁ t 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 deﬁ ned beneﬁ t obligation: Particulars Effect on the aggregate of the service cost and interest cost Effect on deﬁ ned beneﬁ t obligation Rs.crore Effect of 1% increase Effect of 1% decrease 2009-2010 2008-2009 2009-2010 2008-2009 0.88 5.59 0.74 4.60 (1.37) (4.56) (1.18) (3.76) 143 Notes forming part of Accounts (contd.) g) The amounts pertaining to deﬁ ned beneﬁ t plans are as follows: Particulars As at 31-3-2010 As at 31-3-2009 As at 31-3-2008 As at 31-3-2007 Rs.crore 1 Post-retirement medical beneﬁ t plan (unfunded) Deﬁ ned beneﬁ t obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Deﬁ ned beneﬁ t obligation Plan assets Surplus/(deﬁ cit) Experience adjustment plan liabilities Experience adjustment plan assets 3 Post-retirement pension plan (unfunded) Deﬁ ned beneﬁ t obligation Experience adjustment plan liabilities 4 Trust managed provident fund plan (funded) Deﬁ ned beneﬁ t obligation Plan assets Surplus/(deﬁ cit) h) General descriptions of deﬁ ned beneﬁ t plans: 1. Gratuity plan: 78.99 5.73 320.41 279.30 (41.11) 30.67 2.21 135.61 (4.11) 70.97 1.13 272.93 244.71 (28.22) 8.38 13.13 151.80 (6.89) 1199.77 1186.01 (13.76) 1001.10 1017.06 15.96 56.67 2.66 231.02 203.42 (27.60) 16.44 6.25 151.35 26.87 903.75 904.29 0.54 46.36 – 203.45 152.93 (50.52) 25.84 (2.91) 118.56 – 827.24 839.86 12.62 The Company operates gratuity plan through a trust wherein every employee is entitled to the beneﬁ t equivalent to ﬁ fteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The beneﬁ t vests after ﬁ ve 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 beneﬁ t 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 notiﬁ ed 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 beneﬁ t under this plan vests immediately on rendering of service. 13. Uncalled liability on shares partly paid is Rs.36.62 crore net of advance paid against equity commitment (previous year: Rs.66.44 crore). 144 Notes forming part of Accounts (contd.) 14. Disclosures in respect of joint ventures a) List of joint ventures Sr. no. Name of joint venture Description of interest/ (description of job) 1 2 3 4 5 6 7 8 9 L&T-Hochtief Seabird Joint Venture International Metro Civil Contractors HCC-L&T Purulia Joint Venture Desbuild-L&T Joint Venture Bauer-L&T Diaphragm Wall Joint Venture Larsen & Toubro Limited-Shapoorji Pallonji & Co. Limited Joint Venture (Ebene Cybercity)* Larsen & Toubro Limited – Shapoorji Pallonji & Company Limited Joint Venture (Les Pailles Exhibition Centre)* L&T-AM Tapovan Joint Venture 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 Integrated joint venture(Construction of breakwater at Karwar) Integrated joint venture(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) 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 NH2) 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) 17 Consortium of Samsung Heavy Industries Company Limited, Korea and L&T Jointly controlled operation (Execution of Vasai east development project of ONGC) Integrated joint venture(Construction of Delhi metro corridor-phase II tunnel project) 0.26 Proportion of ownership interest 0.90 0.26 0.43 0.49 0.50 Country of residence India India India India India 0.50 Mauritius 0.50 Mauritius 0.65 India 0.51 India 0.65 UAE - - - - - – India India India India India India India 145 Notes forming part of Accounts (contd.) Sr. no. 18 Name of joint venture Description of interest/ (description of job) Consortium of Global Industries Offshore LLC, USA and L&T Jointly controlled operation (Execution of pipeline replacement project of ONGC) Proportion of ownership interest – Country of residence India 19 Lurgi L&T KQKS Consortium 20 Consortium of Toyo Engineering Company and L&T 21 L&T and Scomi Engineering Bhd. JV Jointly controlled operation (Execution of Melaka Group 3 lubricant base oil plant for Petronas) Jointly controlled operation (Execution of naptha cracker associated unit for IOCL, Panipat) Jointly controlled operations (Implementation of monorail system in Mumbai) – – – Malaysia India India Country of incorporation is not applicable for the above joint ventures as these are unincorporated joint ventures. * The joint venture has been terminated w.e.f. December 31, 2009 b) Financial interest in jointly controlled entities Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 Name of the joint venture As at March 31, 2010 L&T- Plastics Machinery Limited (Previously known as L&T-Demag Plastics Machinery Limited ) L&T-Hochtief Seabird Joint Venture International Metro Civil Contractors HCC-L&T Purulia Joint Venture Desbuild-L&T Joint Venture Assets – (–) 12.54 (12.55) 12.60 (12.56) 6.07 (6.96) 0.34 (0.08) 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 JV Metro Tunnelling Group L&T – Eastern Joint Venture L&T – Shanghai Urban Corporation Group Joint Venture Total Share of net assets/proﬁ t after tax in jointly controlled entities (–) ~ – (3.64) – (1.95) 201.10 (199.95) 18.38 (34.93) 49.58 (152.94) 26.07 (69.84) 326.68 (495.40) 108.76 (127.49) Liabilities – (–) 0.38 (0.38) 3.70 (3.72) 4.39 (4.44) 0.28 (–) $ – $# (–) ** – (3.91) – (1.60) 139.06 (130.07) 14.81 (26.68) 34.61 (141.00) 20.69 (56.11) 217.92 (367.91) Company’s share For the Year 2009-2010 Expenses Income – (43.26) – (–) 0.06 (0.60) 0.05 (0.06) – ^^^ (0.01) – (–) (cid:2) 0.03 (–) – (–) 91.60 (54.83) 24.72 (59.65) 84.50 (246.31) 72.92 (70.50) 273.88 (475.22) -0.34 (7.45) – (46.45) – *** (0.02) 0.05 (1.44) 0.02 (0.18) – % (–) ^ – (0.02) – $$$ (0.18) – @@@ (–) 99.45 (55.44) 22.30 (58.10) 81.09 (236.35) 69.30 (68.06) 272.21 (466.24) Rs.crore Tax – (0.04) – ## (–) – (–) !! – %% (–) @ – %^ (–) * – (–) (cid:3) -0.52 (–) 0.33 (–) – (0.05) 0.83 (0.58) – (–) 1.36 (0.86) 2.01 (1.53) Amounts less than Rs.0.01 crore: Current Year: *** Rs.-70945, ## Rs.21922, !! Rs.3180, %% Rs.86783, ^^^Rs -28538, %Rs.9406, %^ Rs.109, $#$ Rs.44014, $# Rs.43259. $$$ Rs.19635, @@@ Rs.552 Previous Year: # (Rs.3180), @ (Rs.4945), $(Rs.8107), ^(Rs.11145), *(Rs.5394), , ~(Rs.44014), **(Rs.43259), (cid:2)(Rs.58935), (cid:3) (Rs.13283), 146 Notes forming part of Accounts (contd.) Figures in brackets relate to previous year. Item nos.2 to 12 above are integrated joint ventures/jointly controlled entities. Notes: i. ii. iii. Contingent liabilities, if any, incurred in relation to interests in joint ventures as at March 31, 2010: Rs.nil (previous year: Rs.nil); and share in contingent liabilities incurred jointly with other ventures as at March 31, 2010: Rs.nil (previous year: Rs.nil). iv. Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as on March 31, 2010: Rs.88.78 crore (previous year: Rs.82.01 crore). v. Contingent liabilities in respect of liabilities of other ventures of joint ventures as at March 31, 2010: Rs.nil (previous year: Rs.nil). vi. Capital commitments, if any, in relation to interests in joint ventures as at March 31, 2010: Rs.nil (previous year: Rs.nil). 15. Loans and advances include Rs.136 crore (previous year: Rs.161 crore) under “advances recoverable in cash or in kind” towards interest free loan to L&T Employees Welfare Foundation Trust to part-ﬁ nance 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. 16. Particulars in respect of loans and advances in the nature of loans as required by the listing agreement: Name of the company/ﬁ rm/director (a) Loans and advances in the nature of loans given to subsidiaries: Larsen & Toubro Infotech Limited India Infrastructure Developers Limited Bhilai Power Supply Company 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 1 2 3 4 5 6 7 8 9 10 L&T-MHI Boilers Private Limited 11 L&T Infrastructure Finance Company Limited 12 L&T Realty Private Limited 13 L&T Arun Excello IT SEZ Private Limited 14 L&T Arun Excello Commercial Projects Private 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 speciﬁ ed/is beyond 7 years: Bhilai Power Supply Company Limited 1 L&T Capital Company Limited 2 TOTAL (d) Loans and advances in the nature of loans where interest is not charged or charged below bank rate: 1 2 3 4 Bhilai Power Supply Company Limited L&T Capital Company Limited Tractor Engineers Limited L&T Realty Private Limited TOTAL Balance as at Maximum outstanding during 31-3-2010 31-3-2009 2009-2010 2008-2009 Rs.crore – 125.02 7.19 29.00 – – 124.19 – – – 152.58 292.00 145.10 25.02 900.10 – – 7.19 – 7.19 7.19 124.19 29.00 292.00 452.38 – – 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 – 125.02 7.19 72.85 – 11.83 1533.12 589.94 80.00 165.00 152.87 292.00 145.10 25.02 24.85 38.93 7.19 32.85 500.00 10.97 770.81 589.94 35.00 10.00 100.00 – – – 5.00 10.00 7.19 770.81 7.19 770.81 7.19 1533.12 72.85 292.00 7.19 770.81 – – 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. 147 Notes forming part of Accounts (contd.) 17. Segment reporting: a) Information about business segments (information provided in respect of revenue items for the year ended March 31, 2010 and in respect of assets/liabilities as at March 31, 2010 – denoted as “CY” below, previous year denoted as “PY”) i) Primary segments (business segments): Others Elimination Total Rs.crore Engineering & construction CY PY Electrical & electronics CY PY Machinery & industrial products PY CY CY PY 31988.44 28200.00 327.33 512.26 32315.77 28712.26 2829.29 157.25 2986.54 2660.70 122.68 2783.38 2173.29 46.24 2219.53 2437.29 37.31 2474.60 364.56 – 364.56 1039.02 47.68 1086.70 CY – PY CY PY – 37355.58 34337.01 (530.82) (530.82) (719.93) (719.93) – – 37355.58 34337.01 4095.01 3473.48 394.19 323.01 451.90 470.60 44.34 52.63 – – 4985.44 4319.72 58.35 4927.09 1330.50 6257.59 (505.31) 128.39 5880.67 1644.25 (3.38) 4239.80 135.72 4375.52 56.39 4263.33 (79.18) 4184.15 (415.56) 171.82 3940.41 1220.77 10.44 2709.20 772.46 3481.66 27068.37 19676.23 46744.60 19218.46 9214.50 28432.96 23045.40 13124.26 36169.66 14735.99 8973.98 23709.97 23732.74 19835.68 1939.41 1784.71 1081.95 1120.83 314.27 304.18 17442.07 13373.47 807.65 538.13 857.95 708.09 110.79 116.30 901.95 1702.89 140.73 111.84 213.27 73.44 6.36 10.46 302.11 214.72 39.24 30.83 19.57 14.34 7.48 14.83 89.12 94.05 10.16 13.90 7.83 10.08 7.26 8.23 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 proﬁ t (PBIT) Interest expense Interest income Proﬁ t before tax (PBT) Provision for current tax including fringe beneﬁ t tax Provision for deferred tax Proﬁ t after tax (before extraordinary items) Proﬁ t from extraordinary items Proﬁ t 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 and amortisation) included in segment expense Non-cash expenses other than depreciation included in segment expense 148 Notes forming part of Accounts (contd.) (ii) Secondary segments (geographical segments): Particulars External revenue by location of customers Carrying amount of segment assets by location of assets Cost incurred on acquisition of tangible and intangible ﬁ xed assets Rs.crore Domestic Overseas CY 30923.22 24045.91 1125.20 PY 27822.76 20604.73 1884.18 CY 6432.36 3022.46 137.11 PY 6514.25 2440.67 14.45 Total CY PY 37355.58 27068.37 1262.31 34337.01 23045.40 1898.63 b) Segment reporting: segment identiﬁ cation, reportable segments and deﬁ nition of each reportable segment: i) Primary/secondary segment reporting format: [a] The risk-return proﬁ le 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 identiﬁ ed its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly. ii) Segment identiﬁ cation: Business segments have been identiﬁ ed on the basis of the nature of products/services, the risk-return proﬁ le of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments: Reportable segments have been identiﬁ ed as per the criteria speciﬁ ed in Accounting Standard (AS) 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India. iv) Segment composition: (cid:4) (cid:4) 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, custom- built switchboards, control gear, petroleum dispensing pumps & systems, electronic energy meters/protection (relays) systems, control & automation products and medical equipment. (cid:4) Machinery & Industrial Products Segment comprises manufacture and sale of industrial machinery & equipment, marketing of industrial valves, construction equipment and welding/industrial products. (cid:4) Others include (a) property development activity (b) integrated engineering services and (c) ready mix concrete [up to the date of sale in previous year] 18. Disclosure of related parties/related party transactions: i. List of related parties over which control exists Sr. no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Name of the related party Tractor Engineers Limited L&T Capital Company Limited Larsen & Toubro Infotech Limited Larsen & Toubro International FZE Spectrum Infotech Private Limited L&T- Plastics Machinery Limited (formerly known as L&T- Demag Plastics Machinery 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 Transco Private Limited Hi Tech Rock Products & Aggregates Limited L&T Seawoods Private Limited L&T Power Limited Relationship Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary 149 Notes forming part of Accounts (contd.) Sr. no. 17 18 19 20 21 22 23 24 25 26 Name of the related party 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 L&T EmSyS Private Limited L&T Technologies Limited L&T-Valdel Engineering Limited L&T General Insurance Company Limited PNG Tollways Private Limited Relationship Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Subsidiary * 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 (formerly known asL&T PNG Tollway Private Limited) Larsen & Toubro LLC L&T Infrastructure Development Projects Limited Bhilai Power Supply Company Limited Raykal Aluminum Company Private Limited L&T-Sargent & Lundy Limited L&T-Gulf Private Limited L&T Capital Holdings Limited L&T Special Steels & Heavy Forgings Private Limited L&T Trustee Company Private Limited L&T Real Estate India Fund L&T Asset Management Company Limited L&T Chennai-Tada Tollway Limited L&T Port Sutrapada Limited Sutrapada SEZ Developers Limited Sutrapada Shipyard limited L&T Samakhiali Ganhidham Tollway Private Limited Chennai Vision Developers Private Limited L&T Realty FZE L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited Larsen & Toubro Infotech GmbH Larsen & Toubro Information Technology Canada Limited Larsen & Toubro Infotech LLC GDA Technologies Inc. GDA Technologies Limited India Infrastructure Developers Limited L&T Infrastructure Finance Company Limited L&T Aviation Services Private Limited L&T Finance Limited L&T Investment Management Limited L&T Mutual Fund Trustee Limited L&T Uttaranchal Hydropower Limited Nabha Power Limited L&T Electrical & Automation FZE Tamco Switchgear (Malaysia) SDN. BHD Tamco Shanghai Switchgear Company Limited Tamco Electrical Industries Australia Pty Limited Larsen & Toubro (Wuxi) Electric Company Limited Pathways FZE L&T Overseas Projects Nigeria Limited Larsen & Toubro (Jiangsu) Valve Company Limited Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Peacock Investments Limited Lotus Infrastructure Investments Limited Mango Investments Limited Larsen &Toubro Saudi Arabia LLC PT Tamco Indonesia L&T Electricals Saudi Arabia Company Limited Larsen & Toubro Electromech LLC Larsen & Toubro (Oman) LLC Subsidiary * Subsidiary * Subsidiary * Subsidiary * Subsidiary * Subsidiary * Subsidiary * Subsidiary * Wholly owned subsidiary of L&T Capital Company Limited Wholly owned subsidiary of L&T Capital Company Limited Wholly owned subsidiary of L&T Capital Company 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 L&T Transco Private Limited Subsidiary of L&T Transco Private Limited # Wholly owned subsidiary of L&T Realty Private Limited Wholly owned subsidiary of L&T Realty Private Limited Subsidiary of L&T Power Limited # Subsidiary of L&T Power Limited # Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary of Larsen & Toubro Infotech Limited Wholly owned subsidiary of GDA Technologies Inc. Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary of L&T Capital Holdings Limited Wholly owned subsidiary of L&T Finance Limited Wholly owned subsidiary of L&T Finance Limited Wholly owned subsidiary of L&T Power Development Limited Wholly owned subsidiary of L&T Power Development Limited 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 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 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 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 Larsen & Toubro International FZE # 150 Notes forming part of Accounts (contd.) Sr. no. 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 Name of the related party L&T Modular Fabrication Yard LLC Offshore International FZC Larsen & Toubro Heavy Engineering LLC Larsen & Toubro Qatar LLC Larsen & Toubro (East Asia) SDN. BHD. Larsen & Toubro Readymix Concrete Industries LLC Larsen & Toubro Kuwait Construction General Contracting Company WLL Larsen & Toubro ATCO Saudia LLC Qingdao Larsen & Toubro Trading Company Limited International Seaports (India) Private Limited L&T Panipat Elevated Corridor Limited Narmada Infrastructure Construction Enterprise Limited L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Vadodara Bharuch Tollway Limited L&T Interstate Road Corridor Limited L&T Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T Infrastructure Development Projects Lanka (Private) Limited L&T Urban Infrastructure Limited Cyber Park Development & Construction Limited L&T Tech Park Limited L&T Bangalore Airport Hotel Limited L&T Vision Ventures Limited CSJ Infrastructure Private Limited L&T Arun Excello IT SEZ Private Limited L&T Arun Excello Commercial Projects Private Limited L&T Infocity Limited L&T South City Projects Limited L&T Siruseri Property Developers Limited Andhra Pradesh Expositions Private Limited Hyderabad International Trade Expositions Limited L&T Infocity Lanka Private Limited L&T Hitech City Limited Relationship 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 Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE ## Wholly owned subsidiary of Larsen & Toubro (Qingdao) Rubber Machinery Company 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 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 Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure Limited # Subsidiary of L&T Urban Infrastructure 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 L&T South City Projects Limited Wholly owned subsidiary of Hyderabad International Trade Expositions Limited Subsidiary of L&T Infocity Limited # Subsidiary of L&T Infocity Limited #. Subsidiary of L&T Infocity Limited # The Company holds more than one-half in nominal value of the equity share capital. 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. ii. Names of the related parties with whom transactions were carried out during the year and description of relationship: Subsidiary companies: 1 Cyber Park Development & Construction Limited 3 Larsen & Toubro (Wuxi) Electric Company Limited 5 L&T Capital Company Limited 7 L&T Finance Limited 9 L&T Infrastructure Development Projects Limited 11 L&T Krishnagiri Thopur Toll Road Limited 13 L&T Panipat Elevated Corridor Limited 15 L&T Tech Park Limited 17 L&T Urban Infrastructure Limited 19 L&T Western Andhra Tollways Limited 21 Larsen & Toubro (Oman) LLC 23 Larsen & Toubro Information Technology Canada Limited 25 Larsen & Toubro Infotech Limited 27 Narmada Infrastructure Construction Enterprise Limited 29 Larsen & Toubro Saudi Arabia LLC 31 L&T Modular Fabrication Yard LLC, Oman 33 L&T Electrical Saudi Arabia Company Limited, LLC 35 L&T Uttaranchal Hydropower Limited 2 Larsen & Toubro (East Asia) SDN. BHD. 4 India Infrastructure Developers Limited 6 L&T-Sargent & Lundy Limited 8 L&T Engserve Private Limited 10 L&T Infocity Limited 12 L&T Interstate Road Corridor Limited 14 L&T Arun Excello Commercial Projects Private Limited 16 L&T Chennai-Tada Tollway Limited 18 L&T Vadodara Bharuch Tollway Limited 20 L&T Western India Tollbridge Limited 22 Larsen & Toubro Infotech GmbH 24 Larsen & Toubro International FZE 26 Raykal Aluminum Company Private Limited 28 Tractor Engineers Limited 30 L&T Southcity Projects Limited 32 L&T (Qingdao) Rubber Machinery Company Limited 34 L&T Infrastructure Finance Company Limited 36 L&T Power Limited 151 Notes forming part of Accounts (contd.) 37 Nabha Power Limited 39 L&T Bangalore Airport Hotel Limited 41 Spectrum Infotech Private Limited 43 Larsen & Toubro Qatar LLC 45 Larsen & Toubro LLC 47 L&T-Valdel Engineering Limited 49 Offshore International FZC 51 L&T Infrastructure Development Projects (Lanka) Private Limited 38 Bhilai Power Supply Company Limited 40 L&T Phoenix Info Parks Private Limited 42 Larsen & Toubro Electromech LLC 44 L&T Seawoods Private Limited 46 Hyderabad International Trade Expositions Limited 48 L&T-MHI Boilers Private Limited 50 Larsen & Toubro Readymix Concrete Industries LLC 52 Larsen & Toubro (Jiangsu) Valve Company Limited 53 Qingdao Larsen & Toubro Trading Company Limited 55 L&T Hitech City Limited 57 L&T Vision Ventures Limited 59 L&T Rajkot-Vadinar Tollway Private Limited 61 Tamco Switchgear (Malaysia) SDN. BHD. 63 L&T Realty Private Limited 65 L&T Transco Private Limited 67 L&T Halol-Shamlaji Tollway Private Limited 69 Larsen & Toubro Kuwait Construction General Contracting 54 CSJ Infrastructure Private Limited 56 L&T Trustee Company Private Limited 58 L&T Gulf Private Limited 60 L&T Natural Resources Limited 62 L&T Power Development Limited 64 L&T Shipbuilding Limited 66 L&T Ahmedabad-Maliya Tollway Private Limited 68 GDA Technologies Limited 70 Larsen & Toubro ATCO Saudia LLC Company WLL 71 L&T Arun Excello IT SEZ Private Limited 73 L&T Electrical & Automation FZE 75 L&T Transportation Infrastructure Limited 77 L&T Overseas Projects Nigeria Limited 79 L&T Infra & Property Development Private Limited 81 L&T Strategic Management Limited 83 L&T Capital Holdings Limited 85 Chennai Vision Developers Limited 87 Larsen & Toubro Infotech LLC 89 International Seaports Pte. Limited 91 L&T Technologies Limited Associate companies: 1 Audco India Limited 3 L&T-Chiyoda Limited 5 L&T-Ramboll Consulting Engineers Limited 7 Voith Paper Technology (India) Limited # 9 International Seaport (Haldia) Private Limited 11 L&T Arun Excello Realty Private Limited Joint ventures (other than associates): 1 International Metro Civil Contractors Joint Venture 3 The Dhamra Port Company Limited 5 Metro Tunneling Group 7 Desbuild-L&T Joint Venture 9 L&T-AM Tapovan Joint Venture Key management personnel & their relatives: 1 Mr. A.M. Naik, (Chairman & Managing Director) 72 L&T Heavy Engineering LLC 74 L&T -Plastics Machinery Limited. 76 PNG Tollway Private Limited 78 L&T-MHI Turbine Generators Private Limited 80 L&T Concrete Private Limited 82 Hitech Rock Products & Aggregates Limited 84 L&T Aviation Services Private Limited 86 L&T Special Steels & Heavy Forgings Private Limited 88 L&T General Insurance Company Limited 90 International Seaports (India) Private Limited 92 L&T EmSyS Private Limited 2 EWAC Alloys Limited 4 L&T-Komatsu Limited 6 L&T-Case Equipment Private Limited 8 Salzer Electronics Limited 10 Feedback Ventures Limited 12 International Seaport Dredging Limited* 2 Bauer-L&T Diaphragm Wall Joint Venture 4 L&T-Eastern Joint Venture 6 L&T Hochtief Seabird Joint Venture 8 L&T-Shanghai Urban Corporation Group Joint Venture 10 HCC-L&T Purulia Joint Venture 2 Mr. J.P. Nayak (whole-time director) Mrs. Neeta J. Nayak (wife) Mr. Nitin Nayak (son) 3 Mr. Y. M. Deosthalee (whole-time director) 4 Mr. K. Venkataramanan (whole-time director) 5 Mr. R. N. Mukhija (whole-time director) Mrs. Sushma Mukhija (Wife) Ms. Debika Ajmani (daughter) Mrs. Jyothi Venkataramanan (wife) 6 Mr. K. V. Rangaswami (whole-time director) 7 Mr. V. K. Magapu (whole-time director) 8 Mr. M. V. Kotwal (whole-time director) # Investment sold during the year * Associate company w.e.f. May 21, 2009 152 Notes forming part of Accounts (contd.) iii. Disclosure of related party transactions: Sr. no. Nature of transaction/relationship/major parties 1 Purchase of goods & services (including commission paid) 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore Subsidiaries, including: 719.72 428.14 L&T Finance Limited L&T Modular Fabrication Yard LLC L&T-MHI Turbine Generators Private Limited L&T-Valdel Enginnering Limited Associates & joint ventures, including: Audco India Limited EWAC Alloys Limited Salzer Electronics Limited TOTAL 2 Sale of goods/contract revenue & services Subsidiaries, including: L&T Shipbuilding Limited L&T Interstate Road Corridor Limited L&T Krishnagiri Thopur Toll Road Private Limited L&T Vadodara Bharuch Tollway Limited L&T Halol-Shamlaji Tollway Private Limited Associates & joint ventures, including: The Dhamra Port Company Limited TOTAL 3 Purchase/lease of ﬁ xed assets Subsidiaries, including: Larsen & Toubro International FZE L&T Finance Limited Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Komatsu Limited Audco India Limited EWAC Alloys Limited TOTAL 4 Sale of ﬁ xed assets Subsidiaries, including: L&T Shipbuilding Limited L&T Engserve Private Limited L&T Heavy Engineering LLC TOTAL 695.53 1415.25 1569.31 597.52 2166.83 109.30 76.08 185.38 0.88 – – 426.75 – 331.62 115.94 136.43 259.29 – – – 156.92 539.19 108.00 – – – 58.40 – – 0.79 – 934.96 1363.10 2179.45 523.54 2702.99 215.05 6.23 221.28 0.25 0.88 0.25 60.07 68.70 – 43.79 627.65 126.69 – – 286.67 249.98 509.60 – 457.66 – 187.15 2.37 1.19 – 2.67 0.21 – 0.04 153 Notes forming part of Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 5 Subscription to equity and preference shares (including application money paid and investment in joint ventures) 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore Subsidiaries, including: 2202.14 1758.99 L&T Power Development Limited L&T Infrastructure Development Projects Limited Larsen & Toubro International FZE L&T Capital Holding Limited Associates & joint ventures, including: L&T Shanghai Urban Corporation Group L&T-AM Tapovan Joint Venture International Seaport Dredging Limited L&T-Eastern Joint Venture TOTAL 6 Purchase of investments from Subsidiary including: L&T Capital Company Limited L&T Finance Limited TOTAL 7 Conversion of preference shares into equity shares Associate: International Seaport Dredging Limited TOTAL 8 Sale of investments to Subsidiary: L&T Capital Holding Limited TOTAL 9 Buy back of shares by Subsidiary: L&T-Valdel Engineering Limited Associate: Audco India Limited TOTAL 10 Receiving of services from: Subsidiaries, including: Larsen & Toubro Infotech Limited L&T-Sargent and Lundy Limited L&T-Valdel Engineering Limited Associates & joint ventures, including: L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited TOTAL 154 13.10 834.00 245.00 – 550.00 – – 10.00 3.03 52.10 2215.24 1811.09 – 533.04 1078.59 13.57 19.17 – 9.71 – 4.50 – 4.50 4.50 – – 1051.54 1051.54 1051.54 – – – 17.51 8.81 26.32 – – 10.35 3.46 2.47 7.30 1.38 7.86 7.86 9.42 9.42 25.36 25.36 2.10 27.23 29.33 53.59 3.72 57.31 7.81 – 9.42 25.36 2.10 27.23 35.47 – 7.60 3.71 – Notes forming part of Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 11 Resettlement expenses paid to: Subsidiary: Tractor Engineers Limited TOTAL 12 Rent paid, including lease rentals under leasing/hire purchase arrangements including loss sharing on equipment ﬁ nance Subsidiaries, including: L&T Finance Limited Larsen & Toubro Infotech Limited Associates & joint ventures, including: EWAC Alloys Limited L&T-Komatsu Limited L&T-Chiyoda Limited Key management personnel Relatives of key management personnel TOTAL 13 Charges for deputation of employees to related parties Subsidiaries, including: L&T-MHI Boilers Private Limited Offshore International FZC L&T-Valdel Enginnering Limited L&T Shipbuilding Limited 7.00 7.00 18.03 1.16 0.06 0.24 19.49 40.48 Associates & joint ventures, including: 26.85 EWAC Alloys Limited L&T-Case Equipment Private Limited Audco India Limited L&T-Komatsu Limited L&T-Chiyoda Limited TOTAL 14 Dividend received Subsidiaries, including: Larsen & Toubro Infotech Limited Associates & joint ventures, including: L&T-Komatsu Limited EWAC Alloys Limited Audco India Limited Voith Paper Technology (India) Limited TOTAL 15 Commission received, including those under agency arrangements Subsidiaries, including: L&T (Qingdao) Rubber Machinery Company Limited L&T-Plastics Machinery Limited Associates & joint ventures, including: L&T-Komatsu Limited TOTAL 67.33 88.91 19.01 107.92 3.26 115.96 119.22 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 7.00 13.58 2.99 0.17 0.72 0.28 – 7.84 4.88 7.18 2.78 5.60 8.32 4.16 4.75 80.11 4.20 4.56 6.30 3.95 0.46 2.69 115.17 – – 24.98 1.07 0.11 0.14 26.30 59.09 26.50 85.59 15.80 56.24 72.04 5.88 151.47 157.35 – 23.31 – 0.35 0.72 – 6.29 6.04 13.08 – 2.73 5.27 8.56 3.37 4.46 15.80 28.80 12.44 9.00 6.00 - 5.88 149.57 155 Notes forming part of Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 16 Rent received, overheads recovered and miscellaneous income 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 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 EWAC Alloys Limited Metro Tunneling Group TOTAL 17 Interest received from Subsidiaries, including: L&T Infrastructure Finance Company Limited L&T-MHI Boilers Private Limited L&T Seawoods Private Limited Associates & joint ventures, including: L&T-Case Equipment Private Limited International Seaport Dredging Limited Key management personnel TOTAL 18 Interest paid to Subsidiaries, including: L&T Finance Limited Associate: Audco India Limited TOTAL 19 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 197.22 24.22 221.44 10.75 0.80 0.03 11.58 24.70 12.96 37.66 68.65 111.52 33.69 145.21 55.59 1.01 0.03 56.63 9.83 7.77 17.60 56.46 47.04 31.44 2.85 – 6.65 – 8.54 – 2.87 1.86 – – 0.79 21.94 12.96 15.30 7.76 8.70 8.65 8.60 6.33 6.32 6.99 55.21 48.04 5.60 7.49 3.27 2.74 – 7.45 – – 35.93 1.01 – 8.68 7.77 12.55 6.39 7.16 7.11 7.07 5.21 5.22 5.75 Total 68.65 56.46 “Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. 156 Notes forming part of Accounts (contd.) 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 Vadodara Bharuch Tollway Limited L&T Shipbuilding Limited Associates & joint ventures, including: L&T Arun Excello Realty 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 L&T Modular Fabrication Yard LLC Tamco Switchgear ( Malasia) SDN. BHD. Associates & joint ventures, including: Audco India Limited L&T-Hochtief Seabird Joint Venture TOTAL 3 Loans & advances recoverable Subsidiaries, including: L&T Capital Company Limited L&T Seawoods Private Limited L&T-MHI Boilers Private Limited L&T Realty Private Limited L&T-MHI Turbine Generators Private Limited As at 31-3-2010 Amount Amounts for major parties As at 31-3-2009 Amount Amounts for major parties Rs.crore 497.54 490.43 98.88 596.42 204.71 360.95 565.66 1675.28 – – – – 180.30 – 87.92 21.41 35.43 21.83 – 306.97 – – – 282.22 292.01 329.26 110.13 600.56 213.15 369.08 582.23 1704.93 Associates & joint ventures, including: 11.78 117.76 Audco India Limited L&T-Ramboll Consulting Engineers 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 L&T Seawoods Private Limited TOTAL 1.62 1.61 4.10 – 623.08 858.25 0.66 0.10 1823.45 623.59 623.59 0.64 0.12 1687.82 1587.41 1587.41 51.28 63.26 55.00 83.35 – 17.62 83.43 55.44 33.16 – 29.17 267.77 62.86 770.81 591.60 – – – – – – 71.26 248.50 250.00 157 Notes forming part of Accounts (contd.) Sr. no. Nature of transaction/relationship/major parties 5 Unsecured loans (including lease ﬁ nance) Subsidiaries, including: L&T-MHI Boilers Private Limited L&T Finance Limited TOTAL 6 Advances received in the capacity of supplier of goods/services classiﬁ ed as “advances from customers” in the Balance Sheet Subsidiaries including: L&T Ahmedabad-Maliya Tollway Private Limited L&T PNG Tollway Private Limited L&T Shipbuilding Limited L&T-MHI Turbine Generators Private Limited L&T Halol-Shamlaji Tollway Private Limited Nabha Power Limited Chennai Tada Tollway Limited L&T Southcity Projects Limited Associates & joint ventures, including: L&T Arun Excello Realty Private Limited The Dhamra Port Company Limited TOTAL 7 Due to whole time directors 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 TOTAL As at 31-3-2010 Amount Amounts for major parties As at 31-3-2009 Amount Amounts for major parties Rs.crore 149.76 149.76 811.82 0.10 811.92 44.29 150.59 150.59 118.29 23.46 141.75 35.47 20.00 125.36 97.60 79.33 115.87 – 106.73 185.82 – – 0.10 – 10.55 5.27 5.27 5.27 5.27 4.22 4.22 4.22 – 146.19 – – – 25.41 – – 34.21 28.97 8.03 15.43 8.45 4.22 4.22 4.22 4.22 3.38 3.38 3.38 44.29 35.47 “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) 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 Paciﬁ c Pte. Limited, Singapore (which is a subsidiary of Komatsu Limited, 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 speciﬁ ed rates on the sales effected by the Company. b) 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. 158 Notes forming part of Accounts (contd.) c) The Company had a selling agency agreement till August 31, 2009, with L&T-Plastics Machinery Limited (formerly known as L&T-Demag Plastics Machinery Limited), a wholly owned subsidiary. As per the terms of the agreement, the Company was a selling and servicing agent of L&T-Plastics Machinery Limited. Pursuant to the aforesaid agreement, L&T-Plastics Machinery Limited was required to pay commission to the Company at speciﬁ ed rates on sales effected by the Company. Note: The ﬁ nancial 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 ﬁ nance lease mainly comprise plant and machinery, vehicles and personal computers. The leases have a primary period, which is ﬁ xed and noncancellable. 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. [b] The minimum lease rentals as at March 31, 2010 and the present value as at March 31, 2010 of minimum lease payments in respect of assets acquired under ﬁ nance leases are as follows: Particulars 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 ﬁ nance charges Present value of minimum lease payable Rs.crore Present value of minimum lease payments As at 31.3.2010 24.34 101.06 – 125.40 As at 31.3.2009 20.90 125.36 – 146.26 Minimum lease payments As at 31.3.2010 42.69 128.00 – 170.69 45.29 125.40 As at 31.3.2009 42.89 170.65 – 213.54 67.28 146.26 ii. Contingent rent recognised/(adjusted) in the Proﬁ t and Loss Account in respect of ﬁ nance leases: Rs.nil (previous year: Rs.nil) b) Operating leases: i. ii. The Company has taken various commercial premises and plant and machinery under cancellable operating leases. These lease agreements are normally renewed on expiry. [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 are as follows: Particulars 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 Rs.crore Minimum lease payments As at 31.3.2010 6.58 2.98 – 9.56 As at 31.3.2009 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.23.77 crore (previous year: Rs.41.50 crore). iv. Contingent rent recognised in the Proﬁ t and Loss Account: Rs.0.04 crore (previous year: Rs.0.11 crore). 20. Provision for current tax includes: Provision for wealth tax Rs.2.70 crore (previous year: Rs.3.37 crore). i. ii. Rs.133.29 crore being provision for income tax in respect of earlier years (previous year: Rs.53.84 crore). The amount provided in the current year is mainly arising out of the retrospective amendment to Section 80IA of the Income Tax Act, 1961 brought about during 2009-2010. iii. Rs.10.02 crore in respect of income tax payable outside India (previous year: Rs.2.07 crore). iv. Reversal of excess provision for tax on fringe beneﬁ ts Rs.10.01 crore (previous year provision for tax on fringe beneﬁ ts Rs.0.20 crore) pertaining to earlier years. 159 Notes forming part of Accounts (contd.) 21. Major components of deferred tax liabilities and deferred tax assets: Particulars Deferred tax liabilities/(assets) As at 31.3.2009 Charge/(credit) to Charge/(credit) to reserves Ordinary activity Extraordinary activity Securities premium account Hedging reserve Rs.crore Deferred tax liabilities/(assets) As at 31.3.2010 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 Proﬁ t and Loss Account Disputed statutory liabilities paid and claimed as deduction for tax purposes but not debited to Proﬁ t and Loss Account Total Deferred tax (assets): Provision for doubtful debts and advances debited to Proﬁ t and Loss Account Loss on derivative transactions to be claimed for tax purposes in the year of transfer to Proﬁ t and Loss Account Unpaid statutory liabilities/provision for compensated absences debited to Proﬁ t and Loss Account Other items giving rise to timing differences Total Net deferred tax liability/(assets) Previous year 287.39 38.81 121.03 26.74 435.16 – 3.85 42.66 (145.85) (31.93) (147.06) – (68.12) (25.66) (386.69) 48.47 61.37 (20.15) 6.04 (46.04) (3.38) 10.44 – – – – – – – – – – 2.69 – – – – – – – – – – – – 326.20 (88.55) 32.48 – (88.55) 30.59 389.27 – (177.78) 120.85 (26.21) – – 120.85 32.30 (26.03) (88.27) (19.62) (311.88) 77.39 48.47 22. Basic and diluted earnings per share [EPS] computed in accordance with Accounting Standard (AS) 20 “Earnings per Share”. Particulars Basic Proﬁ t after tax as per accounts (Rs.crore) Weighted average number of shares outstanding Basic EPS (Rupees) Diluted Proﬁ t after tax as per accounts (Rs.crore) Weighted average number of shares outstanding Add: Weighted average number of potential equity shares on account of employee stock options Before extraordinary items After extraordinary items 2009-2010 2008-2009 2009-2010 2008-2009 A B A/B A B C 4239.80 2709.20 4375.52 3481.66 59,31,01,390 58,51,18,186 59,31,01,390 58,51,18,186 71.49 46.30 73.77 59.50 4239.80 59,31,01,390 1,13,27,980 2709.20 58,51,18,186 79,89,615 4375.52 59,31,01,390 1,13,27,980 3481.66 58,51,18,186 79,89,615 Weighted average number of shares outstanding for diluted EPS D=B+C 60,44,29,370 59,31,07,801 60,44,29,370 59,31,07,801 Diluted EPS (Rupees) Face value per share (Rupees) A/D 70.15 2 45.68 2 72.39 2 58.70 2 Note: Potential equity shares that could arise on conversion of FCCBs are not resulting into dilution of EPS. Hence, they have not been considered in working of diluted EPS in accordance with AS 20. 160 Notes forming part of 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 Others Total Class of Provisions Litigation related obligations Contractual rectiﬁ cation cost-construction contracts Balance as at 1.4.2009 Additional provision during the year Provision used during the year Provision reversed during the year Balance as at 31.3.2010 (5=1+2-3-4) 15.83 15.28 0.06 9.14 21.91 0.10 41.31 – – 0.10 9.50 0.44 5.04 – 8.24 – – 190.83 187.99 436.06 67.49 5.95 9.80 – 57.36 62.79 # 106.46 10.30 134.43 397.79 – 45.33 8.24 191.16 131.15 Sr. no 1 2 3 4 5 # includes an amount Rs.62.55 crore being proportionate reversal of an extraordinary item of Rs.186.28 crore included in opening provision. [reference note no.9(a)] 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, 2010 represents the amount of the expected cost of meeting such obligations of rectiﬁ cation/replacement. The timing of the outﬂ ows is expected to be within a period of two years from the date of Balance Sheet. ii. 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. iii. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal. iv. Contractual rectiﬁ cation 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 certiﬁ ed by the management, is Rs.91.54 crore (including capital expenditure of Rs.5.56 crore) (previous year: Rs.80.19 crore, including capital expenditure of Rs.5.01 crore). b) An amount of Rs.74.37 crore (net loss) [previous year: Rs.197.46 crore (net loss)] has been accounted under respective revenue heads in the Proﬁ t and Loss Account towards exchange difference 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 ﬁ nancial 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, 2010 are as under: Category of derivative instruments i For hedging foreign currency risks a) Forward contracts for receivables including ﬁ rm commitments and highly probable forecasted transactions Rs.crore Amount of exposures hedged As at 31-3-2010 As at 31-3-2009 7696.47 4549.23 b) Forward contracts for payables including ﬁ rm commitments and 6495.92 6800.95 highly probable forecasted transactions c) Currency Swaps d) Option Contracts For hedging commodity price risks ii Commodity futures 5475.93 75.30 5,075.81 108.25 34.38 12.98 161 Notes forming part of Accounts (contd.) b) Unhedged foreign currency exposures as at March 31, 2010 are as under: Unhedged foreign currency exposures i ii Receivables, including ﬁ rm commitments and highly probable forecasted transactions Payables, including ﬁ rm commitments and highly probable forecasted transactions As at 31-3-2010 19875.68 15670.82 Rs.crore As at 31-3-2009 14047.29 10158.11 26. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.578.29 crore (previous year: Rs.764.98 crore). 27. Managerial remuneration a) Managing and whole-time directors’ remuneration: Particulars Salary Perquisites Commission Contribution to Provident/superannuation Fund Total 2009-2010 6.22 4.50 44.29 13.64 68.65 Rs.crore 2008-2009 5.94 3.87 35.47 11.18 56.46 Note: The above ﬁ gures 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 proﬁ t under section 349 of the Companies Act, 1956 Particulars Proﬁ t before tax before extraordinary items as per Proﬁ t 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 Provision for foreseeable losses on construction contracts Less: Proﬁ t on sale of ﬁ xed assets as per Proﬁ t and Loss Account (net) Proﬁ t on sale of long-term investments as per Proﬁ t and Loss Account (net) Depreciation and obsolescence as per Section 350 of the Companies Act, 1956 (net) Net Proﬁ t 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 proﬁ ts 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 2009-2010 Rs.crore 5880.67 415.90 1.30 47.10 – 114.55 27.60 68.65 0.90 0.18 414.60 47.10 86.95 78.54 4.02 1205.62 414.60 696.92 6577.59 1624.24 4953.35 495.34 68.65 49.53 0.90 162 Notes forming part of Accounts (contd.) c) Miscellaneous expenses include provision of Rs.0.90 crore (net) [previous year: Rs.0.90 crore (net)] towards commission payable to nonexecutive 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 Audit fees Certiﬁ cation work Tax audit fees Expenses reimbursed Rs.crore 2009-2010 2008-2009 0.68 1.11 0.21 0.15 0.68 0.89 0.16 0.16 Note: The above ﬁ gures exclude fees paid for QIP and FCCB issue amounting to Rs.0.09 crore (previous year: Rs.nil) charged to securities premium account during the year. 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: Particulars Particulars Rs.crore 2009-2010 2008-2009 1053.88 3135.21 229.15 479.13 1208.80 2145.65 398.13 617.23 Rs.crore 2009-2010 2008-2009 2488.84 2155.49 3.17 81.32 170.45 1498.84 2.36 100.09 113.10 1142.08 Rs.crore Particulars 2009-2010 2008-2009 Dividend for the year ended March 31, 2009 to: i. 9 non-resident shareholders on 15,700 shares held by them (previous year: 7,850 shares) ~ on 2-9-2009 0.01 0.01 ii. Custodian of global depositary receipts on 1,79,77,454 shares (previous year: 1,09,85,759 18.88 16.48 shares) ~ on 2-9-2009 32. Earnings in foreign exchange: Export of goods [including Rs.507.90 crore on FOB basis (previous year: Rs.1592.09 crore)] Particulars Construction and project related activities Export of services Commission Interest and dividend received Other receipts Rs.crore 2009-2010 2008-2009 510.14 5914.57 368.70 33.64 0.22 38.94 1651.32 5196.41 452.61 38.14 2.98 6.77 163 Notes forming part of 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, 2010. The disclosure pursuant to the said Act is as under: Principal amount due to suppliers under MSMED Act, 2006 Particulars 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 2009-2010 2008-2009 21.57 0.28 35.36 – 0.29 0.22 0.50 9.64 0.12 22.09 – 0.13 0.13 0.25 Note: The information has been given in respect of such vendors to the extent they could be identiﬁ ed 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. not to reduce their joint shareholding in LTTIL below 51% until the ﬁ nancial 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 ﬁ nancial assistance received from the term lenders is repaid in full by LTTIL . ii. b. 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. c. 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%. d. 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 and allotted share capital. e. To National Highway Authority of India, to hold minimum 26% stake in L&T Samakhiali Gandhidham Tollway Private Limited till 180 days from the date of concession agreement. However, the Company has decided to hold this stake for a period of 2 years after the construction period. To National Highway Authority of India, to hold minimum 26% stake in L&T PNG Tollway Private Limited till the commercial operations date. f. g. To Gujarat State Road Development Corporation Limited, to hold in L&T Ahmedabad Maliya Tollway Private Limited: (cid:4) (cid:4) (cid:4) 100% stake during the construction period; 51% stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and 51% stake during operational period. h. To Gujarat State Road Development Corporation Limited, to hold in L&T Rajkot-Vadinar Tollway Private Limited: 100% stake during the construction period; 51% stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and 51% stake during operational period. (cid:4) (cid:4) (cid:4) To Gujarat State Road Development Corporation Limited, to hold in L&T Halol-Shamlaji Tollway Private Limited: (cid:4) (cid:4) (cid:4) To the lenders of L&T Ahmedabad Maliya Tollway Private Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited. 100% stake during the construction period; 51% stake for 5 years from the date of Commercial Operation Date or end of construction of the project, whichever is later; and 51% stake during operational period. i. j. k. To the lenders of L&T Rajkot-Vadinar Tollway Private Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited. 164 Notes forming part of Accounts (contd.) l. 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 ﬁ nancial support for the successful execution of APPDCL 2x800 MW Power Project – Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh. m. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than ﬁ fty one percent stake in L&T Seawood Private limited (LTSPL) until CIDCO execute the lease deed for land in favour of LTSPL. 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: Sr. no. 1 2 Name of the Company L&T Aviation Services Private Limited City Union Bank Limited Details of investment No. of equity shares Face value per share Book value 10,000 1,50,00,000 Rupees Rs.crore 10 1 0.01 25.35 36. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2010. 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 Unit 2009-2010 Quantity Value Rs.crore 503.90 206.39 350.03 2008-2009 Quantity 13278 Value Rs.crore 417.77 194.36 318.36 Tonnes 13,940 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 Petrol dispensing and metering pumps Ship auxiliaries and components of mechanised sailing vessels Complete cement making machinery, including rotary kilns and ﬂ uxo packers in aggregate Transmission line tower Steel structural fabrication Rubber processing machinery and accessories Tonnes 146 25.20 110 30.48 Tonnes 19,936 Tonnes 12,500 Nos. Tonnes Nos. Tonnes Tonnes Nos. 117 9913 4884 319 3,607.98 106.70 86.88 410.39 2167.04 1,160.32 5.70 20.77 30.18 82.90 57.63 45.48 245.97 36388 8187 1979 60 Parts for 3 plants 22807 13086 240 3583.79 100.83 137.81 781.97 2358.85 1071.91 4.38 37.29 8.70 100.80 121.63 140.75 299.36 165 Notes forming part of Accounts (contd.) Class of goods Unit 2009-2010 Quantity Ultrasound equipment and accessories Patient monitoring system and accessories Electricity meters Ready mix concrete* Design, development and manufacturing of airborne assemblies, system and equipment for Aircrafts, Helicopters & uninhabited aerial vehicles and equipments for the aviation sector Commercial ships Defence equipment , all types Others Total Value Rs.crore 9.47 54.99 212.12 – 2008-2009 Quantity 2026416 Value Rs.crore 11.12 46.84 111.93 605.92 Cu.m. – Nos. 617 1 50.70 126.51 183.84 2044.21 11795.30 @ – – – – 54.60 2274.44 12813.89 @ @ * includes Rs.6673.31 crore of construction & project related activity (previous year: Rs.6933.20 crore) Ready mix concrete business is divested during the previous year. b) Raw materials and components consumed: i) Class of goods: Particular Unit 2009-2010 2008-2009 Quantity Value Quantity 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 & components Industrial machinery components Power plant & machinery components Others TOTAL Tonnes Metres 45,955 9,24,421 Sq.mtrs. 57,68,806 Rs.crore 167.10 43.03 348.15 46,976 16,39,248 14,86,147 Nos./Sets 41,80,651 1333.13 31,21,882 Tonnes Metres Sq.mtrs. Nos. Tonnes 2,517 1171084 5995 161469 432 2487 818158 2147 43851 376 85.84 5.44 2.59 88.69 3.97 – 659.97 1141.45 469.71 210.65 185.87 24.84 766.98 1325.75 6863.16 Value Rs.crore 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 1025.15 7056.22 166 Notes forming part of Accounts (contd.) ii) Classiﬁ cation of goods: Particulars Imported (including through canalising agencies) Indigenous TOTAL c) Capacities & production: Class of goods Scrapper, bulldozer, ripper and loader attachments Unit Nos. Road rollers, hot mix plants and other road construction and bridge Nos. construction machinery 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 Tonnes Tonnes Complete cement making machinery, including rotary kilns and ﬂ uxo Nos. packers in aggregate Sugarcane and beet diffusion, beet preparation and beet pulp Nos. dehydration plants Nuclear purpose equipment, de-aerators, ultra high pressure vessels, vessels including multiwall vessels, high pressure heat exchangers and 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 Containers for liqueﬁ ed gases and chemicals Steel plant valves Tonnes Tonnes Nos. Tonnes Nos. Nos. Nos. Ship auxiliaries and components of mechanised sailing vessels Tonnes Rubber processing machinery Switchgear, all types Miscellaneous electrical items Petrol dispensing and metering pumps Press tools, jigs, ﬁ xtures, dyes for pressure castings, moulds for plastic injection and bakelite Nos. Nos. Nos. Nos. Rs.Lakh/ Nos 2009-2010 2008-2009 % to total consumption Value % to total consumption 54 46 100 Rs.crore 3735.72 3127.44 6863.16 42 58 100 Value Rs.crore 2935.28 4120.94 7056.22 Licensed capacity 250 (250) 150 (150) 6,067 (6,567) 65 (65) 2 (2) 2 (2) 5,000 (5,000) 10,000 (10,000) 6 (6) 2,000 (2,000) 6 (6) Not applicable * (Not applicable) * 40 (40) 1,000 (1,000) 109 (109) 49,52,750 $ (26,78,500) $ 10,49,100 (10,49,100) 34,800 (4,800) Rs.730@ lakh (Rs.220 lakh) @ Installed capacity 250 (250) 150 (150) 6,067 (6,567) 65 (65) 2 (2) 2 (2) 3,950 (3,950) 10,000 (10,000) 6 (6) 800 (800) 6 (6) 1,000 tonnes carrying capacity (1,000 tonnes carrying capacity) 40 (40) 1,000 (1,000) 400 (109) 49,52,750 (31,74,750) 10,39,100 (10,39,100) 10,800 (4,800) Rs.730 lakh (Rs.330 lakh) Actual production – (–) – (–) 12,347 (7,507) – (–) Parts for 3 plants (Parts for 3 plants) – (–) 146 (110) 19,936 # (28,451) # – (–) – (–) – (–) – (–) – (–) 117 (60) 334 (244) 86,04,157 (58,98,474) – (–) 1,819 (1,882) 490 nos (510 nos) 167 Notes forming part of Accounts (contd.) c) Capacities & production (contd.) Class of goods Industrial machinery 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 Tonnes Nos. Nos. Nos. Nos. Nos. Nos. Nos. Nos. Tonnes Metric Tonnes Tonnes M3 Nos. Nos. Nos. Nos. Licensed capacity 12,000 (12,000) 2,500 (2,500) – (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) * 95,000 (90,000) 12,000 (12,000) 40,000 (40,000) – – 3,971 (3,971) 1,00,000 (1,00,000) 25,000 (25,000) – (–) Installed capacity 12,000 (12,000) 2,500 (2,500) – (30,000) 2,500 (1,250) 1,000 (1,000) 10,000 (7,000) 30,000 (60,000) – (100) 26,40,000 (7,00,000) 95,000 (90,000) 12,000 (12,000) 40,000 (40,000) – – 3,971 (3,971) 1,00,000 (1,00,000) 25,000 (25,000) 2 (2) Actual production 13,940 (13,278) 1,412 (410) – (–) 648 (341) 220 (312) 10,298 (6,239) 30,909 (34,363) – (–) 20,38,391 (6,16,426) 97,723 (86,355) 28,528 (30,018) 45,589 (32,453) – (21,50,002) 1658 parts thereof (915 parts thereof) 5 (–) – (–) 1 (–) Figures in brackets pertain to previous year. * Licensing not applicable. installed capacity is based on one of the following: 1. Entrepreneur’s memoranda ﬁ led with Government of India, Ministry of Industry, New Delhi; 2. Registration with the Director General of Technical Development; 3. Approval obtained from the Government of India, Ministry of Industry, New Delhi; 4. 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. # ## Ready mix concrete business is divested during the previous year. 168 Notes forming part of Accounts (contd.) d) Inventories: Class of goods Unit Switchgear, all types Patient monitoring systems and accessories Industrial electronic control panels Spares for earthmoving and agricultural machinery Ultrasound equipment and accessories Powder metallurgy and industrial products Petrol dispensing and metering pumps Nos. – Valves and accessories Earthmoving machinery, including bulldozers, dumpers, scrappers, loaders, vibratory compactors and drag lines (excluding walking drag lines) Welding alloys and accessories Others Total e) Purchases of trading goods: As at 31-3-2010 As at 31-3-2009 As at 31-3-2008 Quantity Value Quantity Value Quantity Value Rs.crore 136.51 Rs.crore 132.66 Rs.crore 130.54 3.95 6.81 60.99 1.89 9.34 – 3.05 21.59 13.96 67.21 325.30 184 5.08 - 74.91 5.90 10.29 2.28 5.82 25.14 14.61 65.85 342.54 281 9.90 0.01 57.30 6.09 10.56 2.92 5.16 18.23 21.62 59.05 321.38 Rs.crore Class of goods 2009-2010 2008-2009 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 329.30 130.12 313.46 676.03 65.86 59.51 325.50 120.53 603.26 469.95 68.54 90.91 1574.28 1678.69 Notes: (a) The installed capacities are as certiﬁ ed 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 ﬁ gures for sales are after exclusion of inter-divisional transfers, capitalisation/captive consumption, samples, etc. 39. Figures for the previous year have been regrouped/reclassiﬁ ed wherever necessary. 169 Rights issue N I L Private placement ## 2 2 5 7 3 Total assets 2 5 5 0 1 7 4 7 7 Reserves and surplus * 1 8 1 6 6 1 1 2 4 Unsecured loans 5 8 4 5 1 0 0 3 Investments 1 3 7 0 5 3 5 2 4 Deferred tax assets 3 1 1 8 8 2 9 Accumulated losses N I L Total expenditure 3 3 1 7 9 0 8 6 6 Notes forming part of Accounts (contd.) 40. Balance Sheet abstract and Company’s general business proﬁ le 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 0 3 Month 2 0 1 0 Year State Code 1 1 II Capital raised during the year (Amount in Rs. thousands) @ Public issue Bonus issue N I L N I L ## Raised by way of Qualiﬁ ed Institutional Placement @ The Company also raised capital during the year by way of allotment of shares under Employee Stock Ownership Schemes amounting to Rs.10442 Thousands III Position of mobilisation and deployment of funds (Amount in Rs. thousands) Sources of funds Total liabilities 2 5 5 0 1 7 4 7 7 Paid-up capital 1 2 0 4 3 9 1 * Including employees stock options outstanding Rs.2838915 thousands. Application of funds Share application money 2 5 0 9 4 1 Secured loans 9 5 5 7 2 9 3 Deferred tax liabilities 3 8 9 2 7 2 5 Net tangible and Intangible assets 6 3 6 5 7 5 9 0 Net current assets 5 1 1 8 7 5 3 4 Misc. expenditure IV Performance of Company (amount in Rs. thousands) N I L Turnover (including other income) 3 9 0 5 9 7 5 2 3 + - Proﬁ t/loss before tax before extraordinary items @ + 5 8 8 0 6 6 5 7 + - Proﬁ t/loss After Tax @ $ + 4 3 7 5 5 1 5 3 Please tick appropriate box + for Proﬁ t, - for Loss @ Includes Company’s share in loss of Integrated joint ventures Rs.3436 thousands (net of tax). $ Includes extraordinary items Rs.1357217 thousands [net of tax] (refer note no.9) Basic earnings per share after extraordinary items in Rs. # Dividend rate % 7 3 . 7 7 # Basic earnings per share before extraordinary items - Rs.71.49 6 2 5 V Generic names of three principal products/services of the Company (as per monetary terms) Item code no. (ITC code) Product description Item code no. (ITC code) Product description Item code no. (ITC code) Product description As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 170 N A . 0 2 Construction and project related activity 8 4 7 9 8 9 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 8 4 7 9 8 9 Chemical plant and machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystalliser plants and pollution control equipment in aggregate . 0 2 Signatures 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 17, 2010 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Particulars L&T Finance Limited Larsen & Toubro Infotech Limited Larsen & Toubro (Oman) LLC India Infrastructure Developers Limited L&T Infocity Limited Larsen & Toubro International FZE Larsen & Toubro Infotech Canada Limited Rs.crore Narmada Infrastructure Construction Enterprise Limited L&T Transportation Infrastructure Limited Financial year ending on 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Particulars Omani Riyal 120.8575 8.98 263.19 760.55 1032.72 1032.72 – – – – 1546.75 111.57 12.68 98.89 – – – – 16.13 942.96 505.16 1464.24 1464.24 – – 160.03 160.03 1776.76 314.75 33.62 281.14 80.11 – – – 212.17 914.76 6739.57 7866.50 7866.50 – 98.18 5.09 103.27 955.82 236.32 79.85 156.47 – – – – USD Canadian Dollar 46.5300 44.1800 56.06 (6.98) 127.56 176.64 176.64 – – – – 3.28 3.03 0.23 2.80 – – – – 27.00 250.24 231.76 508.99 508.99 – 2.34 – 2.34 202.75 73.17 16.14 57.03 – – 5.94 – 1147.40 (287.71) 129.56 989.25 989.25 – 3.51 – 3.51 45.94 9.26 – 9.26 – – – – 0.0004 2.70 2.46 5.16 5.16 – – – – 16.98 0.18 0.06 0.12 – – – – 47.35 56.46 50.18 153.98 153.98 – – – – 41.13 27.39 4.65 22.73 – – – – 41.40 25.59 155.36 222.36 222.36 – – – – 20.07 15.81 2.56 13.25 – – – – L&T-Sargent & Lundy Limited Larsen & Toubro (East Asia) SDN. BHD L&T Western India Tollbridge Limited L&T Infrastructure Development Projects Limited Larsen & Toubro (Wuxi) Electric Company Limited Cyber Park Development & Construction Limited L&T Capital Company Limited Larsen & Toubro Infotech GmbH Hyderabad International Trade Expositions Limited Financial year ending on 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Malaysian Ringgit 13.5900 Chinese Yuan Renminbi 6.8787 5.50 28.36 20.77 54.63 54.63 – – 25.46 25.46 64.71 19.48 6.46 13.02 – – – – 0.86 0.71 3.62 5.20 5.20 – – – – – (0.09) – (0.09) – – – – 13.95 15.19 0.78 29.92 29.92 – – – – 7.31 3.85 0.66 3.19 – – – – 298.37 1323.02 304.25 1925.64 1925.64 – 275.22 39.35 314.57 6.30 637.92 126.20 511.71 – – – – 24.61 3.97 13.78 42.36 42.36 – – – – 30.99 0.18 - 0.18 – – – – 1.00 25.69 13.54 40.23 40.23 – – – – 5.04 0.56 0.21 0.35 – – – – 22.00 15.27 130.49 167.76 167.76 – 158.26 – 158.26 13.37 18.40 4.67 13.72 8.80 – – – Euro 60.4525 0.11 7.75 18.57 26.43 26.43 – – – – 63.96 2.22 0.46 1.77 – – – – 17.01 (4.69) 34.88 47.19 47.19 – – – – 11.00 0.71 0.63 0.07 – – – – 171 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Rs.crore Particulars Tractor Engineers Limited Larsen & Toubro Qatar LLC Larsen & Toubro LLC International Seaports (India) Private Limited L&T Panipat Elevated Corridor Limited L&T Tech Park Limited L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited L&T Vadodara Bharuch Tollway Limited Financial year ending on 31-3-2010 31-12-2009 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Qatari Riyal USD 12.7825 46.5300 6.80 19.83 129.65 156.29 156.29 0.01 – – 0.01 132.92 0.67 – 0.67 – – – – 0.24 (31.00) 38.49 7.73 7.73 – 0.13 – 0.13 – (7.95) – (7.95) – – – – 0.24 1.34 19.82 21.40 21.40 – – – – 57.31 0.22 0.12 0.10 – – – – 2.50 (3.91) 1.43 0.02 0.02 – – – – – (0.01) – (0.01) – – – – 84.30 (75.79) 689.55 698.06 698.06 – – – – 35.52 (44.73) – (44.73) – – – – 31.63 2.38 87.36 121.37 121.37 – – – – 10.67 (2.86) 1.14 (4.00) – – – – 78.75 (35.56) 793.69 836.88 836.88 – – – – 66.85 (30.08) – (30.08) – – – – 56.50 22.35 274.84 353.69 353.69 – – – – 31.39 (20.74) – (20.74) – – – – 43.50 (72.78) 1419.56 1390.28 1390.28 – – – – 135.14 (73.02) – (73.02) – – – – Particulars L&T Interstate Road Corridor Limited Spectrum Infotech Private Limited L&T Urban Infrastructure Limited L&T Infocity Lanka Private Limited L&T Overseas Projects Nigeria Limited L&T Infrastructure Development Projects (Lanka) Private Limited L&T Infrastructure Finance Company Limited L&T Power Limited L&T Modular Fabrication Yard LLC Financial year ending on 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-12-2009 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Sri Lankan Rupees Nigerian Naira Sri Lankan Rupees 0.3953 0.3165 0.3953 Omani Riyal 120.8575 8.06 4.72 13.64 26.42 26.42 – – – – 5.41 3.71 0.38 3.33 – – – – 0.33 (0.22) 0.04 0.15 0.15 – – – – – (0.04) – (0.04) – – – – 58.15 (7.66) 30.31 80.80 80.80 – – – – – (3.53) – (3.53) – – – – 683.40 329.17 3391.17 4403.73 4403.73 – 25.00 – 25.00 450.42 165.32 54.46 110.86 – – – – 153.49 (1.28) 0.91 153.12 153.12 – – – – – (0.74) – (0.74) – – – – 10.48 (1.01) 148.90 158.37 158.37 – – – – 136.52 2.18 – 2.18 – – – – 57.16 7.66 462.11 526.93 526.93 – – – – 88.05 11.73 3.95 7.78 – – – – 0.44 6.14 6.76 13.34 13.34 – – – – 9.09 2.54 0.88 1.66 – – – – 488.85 21.51 223.49 733.84 733.84 – 38.14 – 38.14 4.77 18.45 8.36 10.09 – – – 0.04 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 172 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Rs.crore Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Particulars Larsen & Toubro Saudi Arabia LLC Larsen & Toubro Readymix Concrete Industries LLC Larsen & Toubro (Jiangsu) Valve Company Limited L&T Electricals Saudi Arabia Co. Ltd. (LLC) L&T Kuwait Construction General Contracting Company WLL L&T (Qingdao) Rubber Machinery Company Limited L&T-MHI Boilers Private Limited L&T Uttaranchal Hydropower Limited L&T Bangalore Airport Hotel Limited Financial year ending on 31-12-2009 31-12-2009 31-12-2009 31-12-2009 31-12-2009 31-12-2009 31-3-2010 31-3-2010 31-3-2010 Currency Saudi Riyal UAE Dirham Chinese Yuan Renminbi Saudi Riyal Kuwaiti Dinar Chinese Yuan Renminbi Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Particulars 12.4075 4.64 (22.87) 27.37 9.14 9.14 – – – – – (14.56) – (14.56) – – – – 12.6700 1.27 20.86 86.66 108.79 108.79 – – – – 107.71 15.30 – 15.30 – – 1.94 – 6.8787 36.91 (5.80) 17.88 48.99 48.99 – – – – 28.36 (3.22) – (3.22) – – – – 11.9725 22.29 162.0975 32.02 2.77 37.86 62.92 62.92 – – – – 55.86 2.71 – 2.71 – – – – (1.88) 12.91 43.05 43.05 – – – – 55.71 0.99 – 0.99 – – – – 6.8787 26.84 6.07 59.92 92.83 92.83 – – – – 51.42 0.89 – 0.89 – – – – 150.10 123.05 72.00 (56.42) 646.32 740.00 740.00 – – 284.59 284.59 29.67 (28.28) 0.003 (28.28) – – – – (0.65) 34.33 156.73 156.73 – – – – – 0.33 0.23 0.11 – – – – (0.12) 145.59 217.47 217.47 – – – – – (0.03) 0.05 (0.08) – – – – L&T Valdel Engineering Limited L&T Vision Ventures Limited Larsen & Toubro Electromech LLC GDA Technologies Inc GDA Technologies Limited L&T Power Development Limited Larsen & Toubro ATCO Saudia LLC L&T Arun Excello Commercial Projects Private Limited L&T Gulf Private Limited Financial year ending on 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-12-2009 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference 1.18 29.94 20.56 51.68 51.68 – – 11.69 11.69 59.98 12.64 1.79 10.85 – – – – Omani Riyal 120.8575 3.56 48.82 141.35 193.73 193.73 – – – – 248.62 39.19 4.90 34.29 – – 7.25 – 9.67 (0.36) 1.09 10.40 10.40 – – – – – (0.29) – (0.29) – – – – USD 44.9000 5.15 (27.81) 55.00 32.34 32.34 – – 0.10 0.10 65.71 1.99 0.01 1.98 – – – – Saudi Riyal 12.4075 1.08 (7.97) 11.36 4.47 4.47 – – – – 4.45 (3.82) – (3.82) – – – – 920.00 (3.32) 13.77 930.45 930.45 – 31.08 – 31.08 6.53 2.61 – 2.61 – – – – 0.17 28.80 5.50 34.46 34.46 – – – – 20.05 2.20 1.02 1.18 – – – – 0.96 35.52 52.93 89.41 89.41 – – – – – (1.13) 0.45 (1.58) – – – – 5.50 (4.05) 4.60 6.05 6.05 – – – – 4.51 (4.00) 0.01 (4.01) – – – – 173 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Particulars L&T Hitech City Limited Hi-Tech Rock Products & Aggregates Limited L&T-MHI Turbine Generators Private Limited L&T Arun Excello IT SEZ Private Limited L&T Shipbuilding Limited L&T Concrete Private Limited L&T Transco Private Limited L&T Realty Private Limited Rs.crore L&T Strategic Management Limited Financial year ending on 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Particulars 20.00 (1.89) 47.79 65.89 65.89 – – – – 0.22 (1.45) – (1.45) – – – – 0.05 0.01 3.29 3.35 3.35 – – – – 48.34 0.16 0.05 0.11 – – – – 150.10 18.37 623.13 0.01 105.43 47.16 (76.04) 926.78 1000.84 1000.84 – – 112.04 112.04 422.39 (64.90) 0.00 (64.90) – – – – 80.79 169.44 268.60 268.60 – – – – 1.25 (2.99) – (2.99) – – – – (2.24) 226.08 846.97 846.97 – – – – – (0.05) 0.00 (0.06) – – – – (0.00) 0.00 0.01 0.01 – – – – – (0.001) – (0.001) – – – – (13.65) 0.44 92.23 92.23 – 40.58 – 40.58 – (8.43) 0.00 (8.43) – – – – (3.01) 292.37 336.52 336.52 – 291.04 – 291.04 – 0.77 0.21 0.56 – – – – 0.05 (0.01) 0.01 0.05 0.05 – – – – – (0.001) – (0.001) – – – – L&T Infra & Property Development Limited Qingdao Larsen & Toubro Trading Company Limited L&T General Insurance Company Limited L&T Siruseri Property Developers Limited CSJ Infrastructure Private Limited Bhilai Power Supply Company Limited Andhra Pradesh Expositions Limited Raykal Aluminium Company Private Limited L&T South City Projects Limited Financial year ending on 31-3-2010 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Chinese Yuan Renminbi 6.8787 0.54 0.14 2.85 3.53 3.53 – – – – 3.37 0.02 – 0.02 – – – – 0.01 (0.00) 0.00 0.01 0.01 – – – – – (0.001) – (0.001) – – – – 29.00 (8.09) 2.99 23.90 23.90 – – – – – (7.31) – (7.31) – – – – 0.05 (0.01) 0.00 0.04 0.04 – – – – – (0.002) – (0.002) – – – – 45.89 127.36 511.13 684.38 684.38 – – – – – (0.49) 0.02 (0.51) – – – – 0.05 – 8.81 8.86 8.86 – – – – – – – - – – – – 0.01 (0.01) – – – – – – – – (0.01) – (0.01) – – – – 1.39 (0.62) 0.19 0.96 0.96 – – – – – (0.06) – (0.06) – – – – 56.48 75.17 223.53 355.17 355.17 – – – – – (0.60) – (0.60) – – – – Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 174 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Particulars L&T Chennai - Tada Tollway Private Limited L&T Seawoods Private Limited L&T Realty FZE Offshore International FZC L&T Natural Resources Limited L&T Capital Holdings Limited L&T Electrical and Automation FZE Larsen & Toubro Heavy Engineering LLC Rs.crore Tamco Switchgear (Malaysia) SDN BHD Financial year ending on 31.3.2010 31.3.2010 31.12.2009 31.12.2009 31.3.2010 31.3.2010 31.12.2009 31.12.2009 31.12.2009 Currency UAE Dirham USD UAE Dirham Omani Riyal Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) 42.00 858.26 Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Particulars 12.6700 9.66 2.08 0.01 11.75 11.75 – – – – – 0.30 – 0.30 – – – – 46.5300 0.27 (17.54) 612.63 595.36 595.36 – – – – – (8.81) – (8.81) – – – – 0.05 1628.59 12.6700 1.09 120.8575 50.65 (5.33) 5.37 0.10 0.10 – – – – – (3.57) – (3.57) – – – – 2.80 0.18 1631.56 1631.56 – 156.14 – 156.14 5.36 2.87 0.06 2.81 – – – – 21.14 41.07 63.30 63.30 – – – – 123.14 18.19 – 18.19 – – – – (18.38) 123.83 156.10 156.10 – – – – 10.22 (15.46) – (15.46) – – – – (0.16) 168.91 210.75 210.75 – – – – – 0.03 0.03 0.003 – – – – (3.52) 1122.25 1976.98 1976.98 – – – – – (1.75) – (1.75) – – – – Tamco Shanghai Switchgear Co Ltd Tamco Electrical Industries Australia Pty Ltd PT Tamco Indonesia L&T Plastics Machinery Limited PNG Tollway Private Limited Sutrapada SEZ Developers Limited Sutrapada Shipyard Limited L&T Port Sutrapada Limited Malaysian Ringgit 13.5900 119.18 94.51 183.24 396.93 396.93 0.01 – – 0.01 582.24 101.27 25.33 75.94 – – 13.59 – Chennai Vision Developers Private Limited Financial year ending on 31-12-2009 31-12-2009 31-12-2009 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-3-2010 Currency Chinese Yuan Renminbi Australian Dollar Indonesian Rupiah Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference 6.8787 26.97 12.74 53.56 93.27 93.27 – – – – 84.34 (3.91) – (3.91) – – – – 41.8525 45.20 (47.22) 46.58 44.56 44.56 – – – – 59.93 7.01 – 7.01 – – – – 0.0049 0.22 (37.76) 47.27 9.73 9.73 – – – – 16.18 0.40 – 0.40 – – – – 16.00 (0.45) 46.28 61.83 61.83 – – – – 132.64 5.95 0.19 5.75 – – – – 84.55 (0.83) 79.19 162.91 162.91 – – – – – (0.81) 0.02 (0.83) – – – – 0.05 (0.01) 0.01 0.05 0.05 – – – – – (0.01) – (0.01) – – – – 0.05 (0.01) 0.01 0.05 0.05 – – – – – (0.01) – (0.01) – – – – 4.16 (0.91) 0.01 3.26 3.26 – – – – – (0.84) 0.00 (0.84) – – – – 0.01 (0.01) 0.00 0.00 0.00 – – – – – (0.003) – (0.003) – – – – 175 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Rs.crore Particulars 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 Peacock Investments Limited Lotus Infrastructure Investments Limited Mango Investments Limited L&T Aviation Services Private Limited L&T Investment Management Limited Financial year ending on 31-3-2010 31-3-2010 31-3-2010 31-3-2010 31-12-2009 31-12-2009 31-12-2009 31-3-2010 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference Particulars 63.02 65.27 55.02 (0.67) 138.45 200.80 200.80 – – – – – (0.58) 0.04 (0.62) – – – – (0.43) 224.75 289.58 289.58 – – – – – (0.27) 0.11 (0.37) – – – – (0.29) 104.58 159.31 159.31 – – – – – (0.11) 0.12 (0.23) – – – – USD 46.5300 0.004 (0.06) 0.07 0.01 0.01 – – – – – (0.06) – (0.06) – – – – USD 46.5300 0.004 (0.06) 0.07 0.01 0.01 – – – – – (0.06) – (0.06) – – – – USD 46.5300 0.004 (0.06) 0.07 0.01 0.01 – – – – – (0.06) – (0.06) – – – – 0.01 (0.21) 0.21 0.01 0.01 – – – – – (0.21) – (0.21) – – – – 1.00 110.00 (0.05) 0.05 1.00 1.00 – – – – – (0.05) – (0.05) – – – – (84.86) 9.27 34.40 34.40 – – 28.21 28.21 3.52 (27.19) – (27.19) – – – – L&T Mutual Fund Trustee Limited Larsen and Toubro Infotech LLC L&T Trustee Company Private Limited L&T Asset Management Company L&T Real Estate India Fund Nabha Power Limited Pathways FZE L&T Technologies Limited Financial year ending on 31-3-2010 31-3-2010 31-3-2010 31-12-2009 31-12-2009 31-3-2010 31-12-2009 31-3-2010 Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference USD 44.9000 – 1.40 1.27 2.66 2.66 – – – – 23.79 1.48 – 1.48 – – – – 0.05 0.03 0.04 0.12 0.12 – – 0.05 0.05 – (0.001) – (0.001) – – – – USD 46.5300 0.00 (0.06) 0.07 0.01 0.01 – – – – – (0.06) – (0.06) – – – – USD 46.5300 0.00 (0.10) 0.11 0.01 0.01 – – – – – (0.11) – (0.11) – – – – 0.01 (0.00) 0.00 0.01 0.01 – – – – – (0.00) – (0.00) – – – – UAE Dirham 12.6700 0.20 (0.11) 0.006 0.10 0.10 – – – – 55.86 (0.10) – (0.10) – – – – 732.21 0.13 1.32 733.66 733.66 – – 2.00 2.00 509.65 0.19 0.06 0.13 – – – – 0.05 (0.00) 0.00 0.05 0.05 – – – – – (0.003) – (0.003) – – – – Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 176 Information on Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 (for the ﬁ nancial year or as on, as the case may be) (contd.) Particulars Sr. No. Financial year ending on Currency Exchange rate on the last day of ﬁ nancial year Share Capital (including Share Application money pending allotment) Reserves Liabilities Total Liabilities Total Assets Long Term Investments - fellow subsidiaries - others Current Investments Total Investments (excluding subsidiary companies) Turnover Proﬁ t before taxation Provision for taxation Proﬁ t after taxation Interim dividend - Equity Interim dividend - Preference Proposed dividend - Equity Proposed dividend - Preference 1 2 3 4 5 6 7 8 9 10 11 12 13 14 L&T Samakhiali Gandhidham Tollway Private Limited L&T Special Steels and Heavy Forging Private Limited L&T Emsys Private Limited 31.3.2010 31.3.2010 31.3.2010 Rs.crore 0.01 – 0.47 0.48 0.48 – – – – – – – – – – – – 150.00 (5.61) 11.94 156.33 156.33 – – 54.19 54.19 – (4.60) 0.06 (4.65) – – – – 0.01 (0.09) 0.09 0.01 0.01 – – – – – (0.09) – (0.09) – – – – A. M. NAIK Chairman & Managing Director Mumbai, May 17, 2010 Note: The above information is presented in accordance with the exemption received from the Central Government as stated on page no. 23 of the Annual Report. 177 This page is intentionally left blank 178 Consolidated Financial Statements 2009-2010 Auditors’ report to the Board of Directors of Larsen & Toubro Limited on consolidated ﬁ nancial 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, 2010 and also the Consolidated Proﬁ t and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date, annexed thereto. These ﬁ nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these ﬁ nancial 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 ﬁ nancial statements are prepared, in all material respects, in accordance with an identiﬁ ed ﬁ nancial reporting framework and are free of material misstatements. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the ﬁ nancial statements. An audit also includes assessing the accounting principles used and signiﬁ cant estimates made by management, as well as evaluating the overall ﬁ nancial statements. We believe that our audit provides a reasonable basis for our opinion. In respect of the ﬁ nancial statements of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These ﬁ nancial 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 proﬁ t or loss in respect of these associates, to the extent to which they are reﬂ ected in the consolidated ﬁ nancial statements are given below: Audited by other auditors: Indian subsidiaries A B Foreign subsidiaries C Joint ventures D Associates Total assets 9065.84 1885.17 33.20 Net carrying cost of investment 119.96 Rs.crore Total revenues 1013.39 3242.55 185.07 Current year/period share of proﬁ t or (loss) 15.65 We further report that in respect of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These ﬁ nancial statements have been certiﬁ ed 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 certiﬁ ed ﬁ nancial statements. Since the ﬁ nancial statements for the ﬁ nancial year ended March 31, 2010, which were compiled by management of these companies, were not audited, any adjustments to their balances could have consequential effects on the attached consolidated ﬁ nancial statements. However, the size of these subsidiaries, associates and joint ventures, in the consolidated position is not signiﬁ cant 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 proﬁ t or loss in respect of these associates, to the extent to which they are reﬂ ected in the consolidated ﬁ nancial statements are given below: Certiﬁ ed by management: Indian subsidiaries A B Joint ventures C Associates Total assets 0.41 1333.66 Rs.crore Total revenues – 0.02 Net carrying cost of investment 59.81 Current year/period share of proﬁ t or (loss) 6.89 We report that, the consolidated ﬁ nancial 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’ notiﬁ ed by the Companies (Accounting Standards) Rules, 2006 and on the basis of the separate audited/certiﬁ ed ﬁ nancial statements of the L&T Group included in the consolidated ﬁ nancial 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 ﬁ nancial statements of the L&T Group, we are of the opinion that the said consolidated ﬁ nancial statements, read together with signiﬁ cant 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, 2010; in the case of the Consolidated Proﬁ t 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 ﬂ ows of the L&T Group for the year ended on that date. c) Mumbai, May 17, 2010 SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 179 Consolidated Balance Sheet as at March 31, 2010 SOURCES OF FUNDS: SHAREHOLDERS’ FUNDS: Share capital Employee stock options application money [Note no.8(e)] Reserves and surplus Employee stock options outstanding (previous year: Rs.511.47 crore) Less: Deferred employee compensation expense (previous year: Rs.239.00 crore) Minority interest LOAN FUNDS: Secured loans Unsecured loans Deferred payment liabilities [Note no.33] Deferred tax liabilities [Note no.25] 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 Deferred tax assets [Note no.25] Loans and advances towards ﬁ nancing activities 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) TOTAL Schedule As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore A B C D E(i) E(ii) F G(i) G(ii) H I 120.44 25.09 20521.37 117.14 - 13598.09 324.36 272.47 610.30 285.94 13987.70 1058.58 18399.95 1970.09 541.12 35957.44 9509.51 6108.09 0.08 6805.40 410.29 7109.94 20991.26 1087.25 22656.06 1951.26 508.45 47194.28 12070.43 6908.43 0.08 9927.86 355.42 10935.15 14185.92 8470.14 10957.95 2762.84 8195.11 239.36 7955.75 4114.68 5150.09 745.41 4404.68 2503.75 2378.23 12527.98 3321.59 7443.29 5094.70 30765.79 21294.61 2474.27 23768.88 10494.94 7905.01 9125.33 2338.81 6786.52 239.36 6547.16 2962.35 3336.55 471.52 2865.03 3243.06 2501.66 11491.13 1459.04 4672.43 5417.94 25542.20 17538.42 1989.93 19528.35 6996.91 – 47194.28 6013.85 0.28 35957.44 CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of the consolidated accounts see page nos.203 to 228) J Q As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 180 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 17, 2010 Consolidated Proﬁ t and Loss Account for the year ended March 31, 2010 2009-2010 2008-2009 Schedule Rs.crore Rs.crore Rs.crore Rs.crore 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, impairment and obsolescence of tangible assets Amortisation and impairment of intangible assets Less: Overheads charged to ﬁ xed assets Proﬁ t before transfer from revaluation reserve Add: Transfer from revaluation reserve Proﬁ t before tax before extraordinary items Provision for current taxes including fringe beneﬁ t tax [Note no.24] Provision for deferred tax [Note no.25] K L(i) L(ii) M N O P Proﬁ t after tax before extraordinary items Less: Additional tax on dividend distributed/proposed by subsidiary companies Add: Share in proﬁ t/(loss) (net) of associate companies Add/(less): Minority interest in (income)/losses Proﬁ t after minority interest before extraordinary items Gain/(loss) on extraordinary items (net of tax) [Note no.14] Proﬁ t attributable to Group shareholders Less: Dividend paid for the previous year Additional tax on dividend paid for previous year Proﬁ t available for appropriation Less: Transfer to debenture redemption reserve 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 Proﬁ t available for distribution Proposed dividend Additional tax on dividend Balance carried to Balance Sheet Basic earning per equity share before extraordinary items (Rupees) Diluted earning per equity share before extraordinary items (Rupees) Basic earning per equity share after extraordinary items (Rupees) Diluted earning per equity share after extraordinary items (Rupees) Face value per equity share (Rupees) } [Note no.21] SIGNIFICANT ACCOUNTING POLICIES (For notes forming part of consolidated accounts see page nos.203 to 228) Q 43854.24 340.66 40607.87 420.87 32256.16 3065.83 2278.07 691.92 640.51 340.11 39272.60 52.02 2039.77 (2.37) 2.04 0.35 43513.58 456.22 2594.83 46564.63 39220.58 7344.05 1.30 7345.35 2037.40 5307.95 1.35 5306.60 105.95 5412.55 (97.53) 5315.02 135.72 5450.74 2.39 5448.35 143.34 55.34 – 6.08 5243.59 752.75 125.02 4365.82 89.61 87.92 91.90 90.16 2.00 30230.07 2636.49 2644.52 528.06 537.54 192.09 36768.77 24.48 1389.51 35.36 0.28 0.05 40187.00 324.06 592.25 41103.31 36744.29 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 43.34 35.27 1.10 2.03 3707.39 614.97 104.52 2987.90 51.56 50.87 64.76 63.89 2.00 As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 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 17, 2010 181 Consolidated Cash Flow Statement for the year ended March 31, 2010 2009-2010 Rs.crore 2008-2009 Rs.crore A. Cash ﬂ ow from operating activities: Proﬁ t before tax (excluding minority interest and extraordinary items) Adjustments for: Dividend received Depreciation (including obsolescence), amortisation and impairment Exchange difference on items grouped under ﬁ nancing activity Interest expense Interest income (Proﬁ t)/loss on sale of ﬁ xed assets (net) (Proﬁ t)/loss on sale of investments (net) Employee stock option - discount forming part of staff expenses Provision/(reversal) for diminution in value of investments Operating proﬁ t 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 B. Cash ﬂ ow from investing activities: Purchase of ﬁ xed assets Sale of ﬁ xed 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 and cash equivalents acquired pursuant to acquisition of subsidiaries Cash and 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 Petroleum Dispensing Pumps & Systems business (net of tax Rs.21.61 crore) Cash received (net of expenses) on sale/transfer of Ready Mix Concrete business (net of tax 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) C. Cash ﬂ ow from ﬁ nancing activities: Proceeds from issue of share capital 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 ﬁ nancing activities Net (decrease)/increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at beginning of the year Less: Cash and bank balance transferred on subsidiary becoming an associate Cash and cash equivalents at end of the year ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 7345.35 (310.23 ) 979.32 (60.52 ) 691.92 (136.58 ) (9.84 ) (1987.03 ) 170.31 21.61 6704.31 (7550.45 ) 564.57 0.28 4153.85 3872.56 (1754.72 ) 2117.84 (4539.71 ) 59.71 (109.45 ) 2305.92 (3269.67 ) (113.84 ) (0.93 ) 101.93 20.28 310.23 48.47 (79.18 ) 32.06 (2.65 ) (5236.83 ) 129.07 – – (5107.76 ) 2132.74 8657.42 (3909.07 ) (438.54 ) 11.44 (20.02 ) (617.01 ) (104.86 ) (831.33 ) 4880.77 1890.85 1459.04 (28.30 ) 3321.59 4360.33 (289.09 ) 728.32 374.35 528.06 (137.23 ) (5.46 ) (106.97 ) 174.79 9.62 5636.72 (6500.99 ) (525.49 ) 28.26 3007.78 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 Notes: 1. Cash ﬂ ow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 : “Cash Flow Statements” as speciﬁ ed in the Companies (Accounting Standards) Rules, 2006. 2. Purchase of ﬁ xed 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 loss of Rs.25.92 crore (previous year unrealised gain of Rs.25.64 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, please refer note no.12 of notes forming part of consolidated accounts. 5. Previous year’s ﬁ gures have been regrouped/reclassiﬁ ed wherever applicable. A. M. NAIK Chairman & Managing Director As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 182 Y. M. DEOSTHALEE S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ BHAGYAM RAMANI A. K. JAIN N. HARIHARAN Company Secretary Directors Mumbai, May 17, 2010 Schedules forming part of the Consolidated 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: 60,21,95,408 equity shares of Rs.2 each (previous year: 58,56,87,862 equity shares of Rs.2 each) Subscribed and paid up: 60,21,95,408 equity shares of Rs.2 each [Note no.6] (previous year: 58,56,87,862 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 Proﬁ t and Loss Account Capital redemption reserve: As per last Balance Sheet Add: Transferred from retained earnings 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 Addition during the year Deduction during the year Reserve u/s 45 IC of the RBI Act, 1934: As per last Balance Sheet Add: Transferred from Proﬁ t and Loss Account Debenture redemption reserve: As per last Balance Sheet Add: Trasferred from Proﬁ t and Loss Account Securities premium account: As per last Balance Sheet Addition during the year Less: Utilised for issue of bonus shares Transfer to retained earnings Share/bond issue expenses (net of tax) (Reversal)/write-back of provision made in previous year Carried forward As at 31-3-2010 Rs.crore As at 31-3-2009 Rs.crore 325.00 120.44 120.44 120.44 325.00 117.14 117.14 117.14 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 32.11 – 1.30 3.14 0.13 – 46.61 – 15.70 1.04 2.50 111.02 55.34 43.34 143.34 4199.29 2249.19 6448.48 – – 45.84 – 25.90 7.52 1.31 3.16 – 0.02 10.81 35.80 15.98 – 0.28 75.75 35.27 – 43.34 4187.26 69.62 4256.88 58.50 0.01 – (0.92) 30.81 3.27 46.61 14.24 166.36 186.68 6402.64 6850.61 32.11 3.14 46.61 15.70 111.02 43.34 4199.29 4451.21 183 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 Proﬁ t and Loss Account Less: Transferred to retained earnings 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 Proﬁ t and Loss Account Hedging reserve (net of tax): As per last Balance Sheet Addition/(deduction) during the year (net) Retained earnings: As per last Balance Sheet Add/(Less): Transferred from/(to): Foreign projects reserve Housing projects reserve Tonnage tax reserve Capital redemption reserve Securities premium account Proﬁ t and Loss Account Schedule C Secured loans: Redeemable non-covertible ﬁ xed rate debentures Redeemable non-covertible ﬂ oating rate debentures Loans from banks: Cash credits/working capital demand loans Other loans Interest accrued and due Loans from ﬁ nancial institutions 184 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 6850.61 4451.21 7.83 7.83 1.73 1.73 2.09 – 2.09 112.68 (75.63) 3.80 6.08 (282.40) 227.74 9301.15 7.83 1.73 2.09 (0.13) – 4365.82 – – – 37.05 9.88 10.83 3.00 3.98 2.25 0.99 1.10 – (11.24) 123.92 1.77 2.03 (4.85) (277.55) 7.83 1.73 2.09 112.68 3.80 (54.66) (282.40) 6307.99 3.00 2.25 – – 0.01 2987.90 13678.49 20521.37 9301.15 13598.09 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 635.56 8962.05 0.15 3848.02 350.00 9597.76 390.14 14185.92 796.76 7441.12 1.98 1700.00 200.00 8239.86 355.08 10494.94 Schedules forming part of the Consolidated Accounts (contd.) Schedule D Unsecured loans: 3.50% Foreign currency convertible bonds Redeemable non-covertible ﬁ xed rate debentures Redeemable non-covertible ﬂ oating rate debentures Fixed deposits Short term loans and advances: From banks From others Lease ﬁ nance Sales tax deferment loan Commercial paper Other loans and advances: From banks Lease ﬁ nance Sales tax deferment loan From others Schedule E(i) Fixed Assets - Tangible: As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 1305.24 166.93 0.18 27.23 1405.00 4214.83 0.40 66.91 60.42 898.00 325.00 – – 2904.58 4342.56 8470.14 2136.16 25.33 0.46 18.89 640.00 4386.30 0.54 101.14 161.18 – 400.00 35.00 0.01 2820.84 4649.16 7905.01 Rs.crore Cost/valuation Depreciation Impairment Book value As at 1-4-2009 Transfer on business combination 863.09 263.69 1403.42 0.25 4953.60 328.61 188.38 9.26 564.20 427.02 119.21 – 9120.73 3.67 0.93 4.60 – – – – 2.14 0.10 0.95 – – – – – 3.19 – – – Particulars OWNED ASSETS: Land-freehold Ships Buildings Railway sidings Plant and machinery Furniture and ﬁ xtures 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 ﬁ nance lease: Plant and machinery Vehicles Assets taken under ﬁ nance lease (sub total-B) Total (A+B) Previous year Add: Capital work-in-progress Deductions Up to 31-3-2010 As at 31-3-2010 As at 31-3-2010 Foreign currency ﬂ uctuation As at 31-3-2010 Up to 31-3-2009 Deductions Transfer on business combination (0.07) – (12.95) – (50.55) (2.33) (5.69) – – (4.02) – – (75.61) 38.51 210.14 11.52 – 161.28 11.03 8.74 3.12 1218.25 71.46 1966.18 0.25 6017.93 372.72 230.06 10.62 – 55.01 226.01 0.25 1510.35 144.88 90.01 7.98 17.67 93.39 19.15 – 569.75 351.98 144.93 –– 574.55 10954.13 223.89 25.60 43.09 2327.07 – – – – 1.48 0.04 0.14 – – – – – 1.66 Additions 393.74 17.91 587.23 – 1274.02 57.37 55.16 4.48 23.22 22.37 44.87 – 2480.37 For the year – 4.10 48.69 – 464.59 40.53 26.04 0.66 Foreign currency ﬂ uctuation – – (1.39) – (12.40) (0.73) (2.81) – – 51.60 4.45 – – 7.51 268.86 0.25 97.30 1866.72 176.03 8.69 107.52 5.86 5.52 3.12 18.74 7.42 19.89 – 630.66 – (0.32) – – (17.65) 7.97 1.51 10.41 – 234.66 31.19 52.57 – 190.91 2750.83 – – – – – – 0.76 0.02 0.78 2.91 0.91 3.82 3.09 0.93 4.02 – – – 0.53 – 0.53 – – – 0.72 0.02 0.74 2.90 0.91 3.81 9125.33 7195.56 3.19 162.42 2480.37 2387.42 (75.61) – 575.33 10957.95 9125.33 620.07 2331.09 1883.46 1.66 79.22 631.19 538.49 (17.65) – 191.65 2754.64 170.08 2331.09 – – 0.70 – 0.49 0.08 – – 6.93 – – – 8.20 – – – 8.20 7.72 As at 31-3-2009 863.09 208.68 1176.71 – 3443.16 183.73 98.37 1.28 1218.25 63.95 1696.62 – 4150.72 196.61 122.54 5.10 328.16 320.79 92.36 (239.36) 7955.74 333.38 401.42 76.12 (239.36) 6546.58 0.01 – 0.01 0.58 – 0.58 7955.75 6547.16 4114.68 12070.43 2962.35 9509.51 185 Schedules forming part of the Consolidated Accounts (contd.) Schedule E (contd.) Schedule E(ii) Fixed Assets - Intangible: Cost/valuation As at 1-4-2009 467.92 347.12 200.97 28.43 2289.11 3.00 3336.55 792.47 Transfer on business combination – – 1.38 – Additions 196.58 130.73 56.20 10.67 – – 1.38 12.52 1476.66 – 1870.84 2550.35 Foreign currency ﬂ uctuation 19.29 (5.99) (0.73) 0.16 – – 12.73 – 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 Amortisation Impairment Book value Rs.crore As at 31-3-2010 683.79 464.56 246.21 38.06 3714.47 3.00 5150.09 3336.55 Up to 31-3-2009 66.94 11.04 113.18 16.99 218.37 3.00 429.52 293.25 Transfer on business combination – – 1.03 – For the year 47.06 6.27 50.93 3.93 – – 1.03 2.96 231.13 – 339.32 147.39 Foreign currency ﬂ uctuation (0.23) (0.58) (0.10) 0.20 – – (0.71) – Deductions – 2.67 10.58 1.20 51.30 – 65.75 14.08 Deductions – 7.30 11.61 1.20 51.30 – 71.41 18.79 Up to 31-3-2010 113.77 14.06 154.46 19.92 398.20 3.00 703.41 429.52 As at 31-3-2010 42.00 – – – – – 42.00 42.00 As at 31-3-2010 528.02 450.50 91.75 18.14 3316.27 – 4404.68 As at 31-3-2009 358.98 336.08 87.79 11.44 2070.74 – 2865.03 2503.75 6908.43 3243.06 6108.09 Notes: 1 Additions to freehold land include Rs.4.63 crore being the book value of leasehold land reclassiﬁ ed as freehold land pursuant to acquisition of ownership rights in it. 2 Cost/valuation of: (i) Freehold land includes: (a) Rs.0.14 crore (previous year: Rs.19.42 crore) for which conveyance is yet to be completed. (ii) 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 6 years, with extension of 3 years, at the end of which sale deed would be executed, on fulﬁ llment of certain conditions by the Company. (b) Rs.15.25 crore for land taken at Nagpur on lease from Maharashtra Airport Development Company Limited for a period of 99 years with effect from June 1, 2008 vide agreement dated June 20, 2008 for developing IT Infrastructure facilities. (c) Rs.18.57 crore added during the year in respect of which lease agreements are yet to be executed. 3 Cost/valuation of buildings includes ownership accommodation: (i) (a) in various co-operative societies and apartments and shop-owners’ associations: Rs.96.99 crore, including 2478 shares of Rs.50 each and 50 shares of Rs.100 each. in proposed co-operative societies Rs.21.17 crore. (b) of Rs.4.39 crore in respect of which the deed of conveyance is yet to be executed. of Rs.8.48 crore representing undivided share in a property at a certain location. (ii) (iii) 4 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. 5 Additions during the year and capital work-in-progress include Rs.192.73 crore (previous year: Rs.197.77 crore) being borrowing cost capitalised in accordance with Accounting Standard (AS) 16 on “Borrowing Costs”. 6 Depreciation for the year on tangible assets include obsolescence Rs.10.01 crore (previous year: Rs.1.38 crore) and Rs.0.48 crore (previous year: Rs.0.79 crore) on account of impairment loss. Amortisation for the year on intangible assets includes Rs.Nil (previous year: Rs.41.28 crore) on account of impairment loss. 7 Capital work-in-progress - tangible assets includes advances Rs.124.98 crore (previous year: Rs.654.17 crore). Capital work-in-progress - intangible assets includes advance Rs.58.05 crore (previous year: Rs.6.28 crore) and Rs.0.92 crore (previous year: Rs.1.74 crore) on account of exploration and evaluation of potential mineral reserves. 8 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. 9 One of the subsidiaries has revalued land in the ﬁ nancial year 2008-2009 , based on an estimated market valuation recommended by an external valuer as at March 31, 2008 which resulted in a net increase of Rs.24.69 crore. 10 Owned assets given on operating lease have been presented separately under tangible assets schedule as per Accounting Standard (AS) 19 on “Leases”. 186 Schedules forming part of the Consolidated Accounts (contd.) Schedule F Investments (at cost, unless otherwise speciﬁ ed): 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 proﬁ t/(loss) of the associate companies at the beginning of the year Adjustment pursuant to subsidiary becoming an associate Adjustment pursuant to dilution/divestment of stake and buy-back in associates Add/(deduct): Share in proﬁ t/(loss) (net) of associate companies - current year Commitment to fresh infusion of equity Dividend received from associate companies during the year Unrealised proﬁ ts in respect of transactions with associate companies Provision for diminution in value Debentures Other fully paid equity shares Bonds Current investments: Government and trust securities Less: Provision for diminution in value 538.32 3.81 Other fully paid equity shares (previous year: Rs.8.67 crore) Less: Provision for diminution in value 4.60 0.11 (previous year: Rs.1.67 crore) Bonds (previous year Rs.258.45 crore) Less: Provision for diminution in value (previous year: Rs.4.36 crore) Debentures Mutual funds (previous year: Rs. 3604.14 crore) Less: Provision for diminution in value (previous year: Rs.3.84 crore) Other securities 151.90 1.49 6619.47 4.71 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 0.50 0.50 234.50 – 234.50 317.85 (27.37) (16.00) 508.98 105.95 3.21 (20.28) (74.36) (17.49) 534.51 4.49 150.41 777.17 6614.76 478.44 224.48 10.00 234.48 351.64 – (26.74) 559.38 50.90 3.16 (57.95) (71.17) (0.56) – 7.00 254.09 – 3600.30 1356.98 506.01 67.00 794.57 – 1368.08 483.76 – 1102.27 0.50 1587.03 Note: Investments in associates include goodwill of Rs.31.52 crore (previous year: Rs.35.71 crore), net of cumulative amortisation of Rs.10.40 crore (previous year: Rs.6.21 crore) and is net of capital reserve of Rs.0.26 crore (previous year: Rs.0.01 crore). 8559.78 9927.86 5218.37 6805.40 187 Schedules forming part of the Consolidated Accounts (contd.) Schedule G(i) Loans and advances towards ﬁ nancing activities: Secured loans: Considered good: Loans against pledge of shares and securities Infrastructure and other loans Considered doubtful: Infrastructure and other loans Less: Provision for non performing assets Unsecured loans: Considered good: Bills discounted Other loans Considered doubtful: Other loans Less: Provision for non performing assets As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 483.90 9140.22 62.55 9686.67 62.55 184.31 1126.72 1.35 1312.38 1.35 364.17 5857.89 15.72 6237.78 15.72 9624.12 6222.06 219.97 667.91 0.07 887.95 0.07 1311.03 10935.15 887.88 7109.94 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore Schedule G(ii) Current assets, loans and advances: Current assets: Inventories: Stock-in-trade, manufacturing work-in-progress and stock on hire: (at cost or net realisable value whichever is lower) Stock-in-trade: Raw materials Components Construction materials Stores, spare parts and loose tools Finished goods Property development land Completed property Manufacturing work-in-progress Stock on hire 397.80 340.35 122.89 130.23 399.85 417.10 130.08 1938.30 438.81 1.12 Carried forward 188 556.01 344.96 118.83 116.23 464.65 323.85 9.75 1934.28 566.26 1.12 2378.23 2378.23 2501.66 2501.66 Schedules forming part of the Consolidated Accounts (contd.) Schedule G(ii) (contd.) Brought forward Sundry debtors: Secured: Debts outstanding for more than 6 months: Considered good Considered doubtful Other debts: Considered good Less: Provision for doubtful debts 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 ﬁ xed deposits including interest accrued thereon on margin money deposit accounts Balances with non-scheduled banks [Note no.12] Other current assets: Interest accrued on investments Due from customers (Construction and project related activity) Others As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore 2378.23 Rs.crore 2501.66 10.29 41.21 51.50 159.83 211.33 41.21 170.12 3048.04 517.10 3565.14 9309.82 12874.96 517.10 12357.86 20.40 249.04 933.82 1474.90 2.36 641.07 45.51 7340.33 57.45 13.43 14.33 27.76 139.11 166.87 14.33 152.54 2408.39 427.85 2836.24 8930.20 11766.44 427.85 11338.59 12527.98 11491.13 11.42 285.24 472.10 284.82 19.33 386.13 3321.59 1459.04 17.07 4604.12 51.24 7443.29 4672.43 Loans and advances: Secured, considered good: Loans against mortgage of house property 17.12 Unsecured: Considered good: Associate companies: Advances recoverable Inter-corporate deposits Advances towards equity commitment Inter-corporate deposits Advances recoverable in cash or in kind [Note no.17] 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 11.07 – 0.93 3.60 5010.38 49.75 1.85 18.67 71.52 5184.89 90.19 21.93 26.29 5.00 0.69 5.86 5319.11 37.26 1.80 21.09 63.86 5502.89 84.95 5094.70 30765.79 5417.94 25542.20 189 Schedules forming part of the Consolidated Accounts (contd.) Schedule H Current liabilities and provisions: Liabilities: Acceptances Sundry creditors: As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore Rs.crore Rs.crore 40.50 58.54 Due to: Micro and small enterprises Others [Note no.11] 24.51 11634.58 11.43 8912.34 Due to customers (Construction and project related activity) 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 Provisions for: Current taxes (Net of payment made Rs.1359.41 crore; previous year: Rs.1327.48 crore) Proposed dividend Additional tax on dividend Gratuity Compensated absences Employee pension schemes Post-retirement medical beneﬁ t plan Long service awards Other provisions (AS-29 related) [Note no.22] 12.79 0.09 – 0.01 596.26 752.75 126.37 20.04 354.14 135.61 82.55 5.80 400.75 11659.09 2499.88 6903.29 12.89 45.19 133.77 21294.61 10.33 0.13 0.15 0.02 304.77 614.97 104.51 0.93 292.11 151.80 74.40 8.37 438.07 8923.77 3083.06 5341.85 10.63 36.37 84.20 17538.42 2474.27 23768.88 1989.93 19528.35 190 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 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 ﬁ led appeals before appellate authorities which are pending disposal. (e) Income-tax liability (including interest and penalty) that may arise in respect of which the Company is in appeal As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore – – 0.28 0.28 As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore 188.90 177.63 67.76 0.35 135.99 199.94 82.99 15.30 0.54 102.24 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 outﬂ ows, if any, in respect of matters at (a) to (e) above pending “resolution of the arbitration/appellate proceedings”. Schedule K Sales & service: Manufacturing, trading and property development activity Construction and project related activity Software development products and services Income from ﬁ nancing activity/annuity based projects Toll collection and related activity Servicing Commission Engineering and service fees 2009-2010 Rs.crore 6227.59 33153.67 1966.18 1476.01 337.41 294.50 153.72 245.16 43854.24 2008-2009 Rs.crore 6811.46 29824.12 2068.74 1124.81 97.24 293.64 210.37 177.49 40607.87 191 Schedules forming part of the Consolidated Accounts (contd.) Schedule L(i) Other operational income: Equipment and property rentals Technical fees Property maintenance recoveries Facility management income Proﬁ t on sale of ﬁ xed assets (net) Unclaimed credit balances Miscellaneous income Schedule L(ii) Other income: Interest income: 2009-2010 Rs.crore 2008-2009 Rs.crore 85.92 7.75 19.56 7.20 6.25 24.68 304.86 456.22 93.58 3.29 17.01 4.67 3.25 24.95 177.31 324.06 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore Interest received on inter-corporate deposits from associate companies,customers and others Income from long term investments: 32.99 Interest on debentures, bonds and Government securities 0.08 Income from current investment: Interest on debentures, bonds and Government securities 103.51 58.06 12.71 66.46 Dividend income: From long term investments: Trade investments Other investments From current investments Proﬁ t on sale of investments: 136.58 137.23 12.74 – 12.74 297.49 11.81 0.30 12.11 276.98 310.23 289.09 Proﬁ t on sale of long term investments (net) [Note no.16(a)] Proﬁ t on sale of current investments (net) 1923.58 63.45 12.70 94.27 Proﬁ t on sale of ﬁ xed assets (net) Lease rental Unclaimed credit balances Miscellaneous income Provision no longer required written back 192 1987.03 3.59 9.68 0.09 146.52 1.11 2594.83 106.97 2.21 10.93 1.08 36.51 8.23 592.25 Schedules forming part of the Consolidated Accounts (contd.) 2009-2010 2008-2009 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 stocks: Closing stock: Finished goods Work-in-progress Less: Opening stock: Finished goods Work-in-progress Value of materials, tools, and WIP transferred on sale of undertaking 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 Bank guarantee charges Engineering, 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 ﬁ nancing charges Software development expenses (including provision for gratuity fund Rs.2.25 crore; previous year Rs.2.87 crore) 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: Value of WIP transferred on sale of stake in subsidiary Less: Internal capitalisation during the year Less: Closing Stock: Work-in-progress Completed property Property development land Other expenses [Note no.16(c)] 6722.49 8374.14 15096.63 64.93 399.85 1112.36 1512.21 464.65 1535.29 1999.94 174.58 9.75 323.85 508.18 208.35 11.80 704.73 – 704.73 65.93 130.08 417.10 613.11 7242.48 8336.78 15579.26 69.78 15031.70 1530.95 15509.48 1644.52 464.65 1535.29 1999.94 359.79 1516.63 1876.42 128.21 0.09 203.22 331.52 310.71 – 642.23 12.87 629.36 174.58 9.75 323.85 508.18 487.73 (20.45) 9141.83 1160.08 (3.45) 375.45 2.99 134.75 350.53 111.71 467.00 162.65 159.75 36.81 317.96 38.76 7.44 124.14 667.65 1089.36 91.62 789.20 32256.16 (123.52) – 7670.77 1070.32 (5.22) 534.28 24.49 123.65 407.42 40.70 428.29 80.38 138.20 35.03 268.67 53.55 12.14 102.80 637.72 1257.78 121.18 197.44 30230.07 193 Schedules forming part of the Consolidated Accounts (contd.) Schedule N Staff expenses: Salaries, wages and bonus Contribution to and provision for: 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 2518.90 2190.54 Provident funds and pension fund Superannuation/employee pension schemes Gratuity funds 84.44 55.34 52.77 74.53 25.20 29.19 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 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 [Note no.22] Schedule P Interest expenses and brokerage: Debentures and ﬁ xed loans Others 194 192.55 354.38 3065.83 128.92 317.03 2636.49 2009-2010 2008-2009 Rs.crore Rs.crore Rs.crore Rs.crore 39.43 47.46 112.36 29.71 55.35 135.26 165.74 30.61 172.06 80.21 244.59 12.45 152.42 0.29 106.49 75.30 42.62 86.89 48.91 358.00 82.65 57.83 199.19 124.37 21.61 25.23 2278.07 2009-2010 Rs.crore 500.70 191.22 691.92 43.58 11.50 87.08 75.34 55.27 203.33 177.02 24.86 172.78 62.08 302.10 18.78 128.13 0.33 110.06 66.98 45.03 55.08 38.09 661.69 11.74 45.60 264.69 53.17 9.62 138.09 2644.52 2008-2009 Rs.crore 322.26 205.80 528.06 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 ﬁ xed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards [as speciﬁ ed 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 ﬁ nancial 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 ﬁ nancial statements. Examples of such estimates include the useful lives of tangible and intangible ﬁ xed assets, provision for doubtful debts/advances, future obligations in respect of retirement beneﬁ t 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 speciﬁ ed 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 ﬁ nancial 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 signiﬁ cant 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 represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is determined as a proportion of cost of work performed to-date to the total estimated contract costs. Full provision is made for any loss in the period in which it is foreseen. Project and construction related work-in-progress is reﬂ ected at cost till such time the outcome of the job cannot be ascertained reliably and at realisable value thereafter. 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 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 speciﬁ c 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 ﬁ nancing activities is accounted on accrual basis. viii) Revenue relatable to construction services rendered in connection with Build-Operate-Transfer (BOT) projects undertaken by the group is recognized during the period of construction using percentage of completion method. Revenue relatable to toll 195 Schedules forming part of the Consolidated Accounts (contd.) 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 Proﬁ t and Loss Account over the concession period of the respective projects based on the implicit rate of return embedded in the projected cash ﬂ ows. Such income is duly adjusted for any variation in the amount and timing of the cash ﬂ ows in the period in which such variation occurs. ix) Revenue from service related activities is recognised using the proportionate completion method. x) Commission income is recognised as and when the terms of the contract are fulﬁ lled. xi) Revenue from engineering and service fees is recognised as per the terms of the contract. xii) Government subsidy related to shipbuilding contracts is recognised on a prudent basis in the Proﬁ t 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 fulﬁ lled. xiii) Trusteeship fees are accounted on an accrual basis in accordance with the trust deed and are dependent on the net asset value as recorded by the respective mutual fund schemes. b) Proﬁ t/loss on contracts executed by integrated joint ventures under proﬁ t-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 business and is recognised when the right to receive the income is established as per the terms of the contract. d) Interest income is accrued at applicable interest rate. e) Dividend income is accounted when the right to receive the same is established. f) Other items of income are accounted as and when the right to receive arises. 3. Principles of consolidation a) The ﬁ nancial 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 proﬁ ts/losses on intra-group transactions, and are presented to the extent possible, in the same manner as the Company’s independent ﬁ nancial statements. b) Investments in associate companies have been accounted for, by using 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. The carrying amount of investment in associate companies is reduced to recognise any decline which is other than temporary in nature and such determination of decline in value, if any, is made for each investment individually. 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 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 beneﬁ ts, if any, from use of the assets are reﬂ ected as income. Jointly Controlled Entities The Company’s interest in jointly controlled entities are proportionately consolidated on a line-by line basis by adding together the book values of assets, liabilities, income and expenses, after eliminating the unrealised proﬁ ts/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 accounted under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of ﬁ xed assets and depreciated on the same basis as other ﬁ xed assets. 5. Employee beneﬁ ts a) Short term employee beneﬁ ts All employee beneﬁ ts falling due wholly within twelve months of rendering the service are classiﬁ ed as short term employee beneﬁ ts. The beneﬁ ts 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. 196 Schedules forming part of the Consolidated Accounts (contd.) b) Post-employment beneﬁ ts i) Deﬁ ned contribution plans: The Company’s superannuation scheme, state governed provident fund scheme, insurance scheme and employee pension scheme are deﬁ ned contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. ii) Deﬁ ned beneﬁ t plans: The employees gratuity fund schemes, post-retirement medical care schemes, pension scheme and provident fund scheme managed by trust are the Company’s deﬁ ned beneﬁ t plans. Wherever applicable, the present value of the obligation under such deﬁ ned beneﬁ t 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 beneﬁ t entitlement and measures each unit separately to build up the ﬁ nal obligation. The obligation is measured at the present value of the estimated future cash ﬂ ows. The discount rate used for determining the present value of the obligation under deﬁ ned beneﬁ t plans, is based on the market yield on government securities, of a maturity period equivalent to the weighted average maturity proﬁ le of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Proﬁ t and Loss Account. The interest element implicit in the actuarial valuation of deﬁ ned beneﬁ t plans is classiﬁ ed under interest expense and balance charge is recognised as employee beneﬁ ts in the Proﬁ t and Loss Account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the deﬁ ned beneﬁ t plans to recognise the obligation on the net basis. Gains or losses on the curtailment or settlement of any deﬁ ned beneﬁ t 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 beneﬁ ts become vested. c) Long term employee beneﬁ ts The obligation for long term employee beneﬁ ts such as long term compensated absences, long service award, etc. is recognised in the similar manner as in the case of deﬁ ned beneﬁ t plans as mentioned in (b)(ii) above. d) Termination beneﬁ ts Termination beneﬁ ts such as compensation under Voluntary Retirement-cum-Pension Scheme is amortised over a deﬁ ned period. The deﬁ ned period of amortisation is ﬁ ve years or the period till March 31, 2010, whichever is earlier. 6. 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. Speciﬁ c 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 speciﬁ cally attributable to construction or acquisition of ﬁ xed assets or bringing the ﬁ xed assets to working condition are allocated and capitalised as a part of the cost of the ﬁ xed 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.) 7. Leases The determination of whether an agreement is, or contains, a lease is based on the substance of the agreement at the date of inception. 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 Proﬁ t and Loss Account. b) Lease transactions entered into on or after April 1, 2001: Finance leases: i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classiﬁ ed as ﬁ nance 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 given under leases where the Company has transferred substantially all the risks and rewards of ownership to lessee, are classiﬁ ed as ﬁ nance leases. Where under a contract, the Company has agreed to manufacture/construct an asset and convey, in substance, a right to the beneﬁ ciary to use the asset over a major part of its economic life, for a pre-determined consideration, such arrangement is also accounted as ﬁ nance lease. 197 Schedules forming part of the Consolidated Accounts (contd.) iii) Assets given under a ﬁ nance lease are recognised as a receivable at an amount equal to the net investment in the lease. Wherever the asset is manufactured/constructed by the Company, the fair value of the asset, representing the net investment in the lease, is recognised as sales revenue in accordance with the Company’s revenue recognition policy. 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) Initial direct costs relating to assets given on ﬁ nance leases are charged to Proﬁ t and Loss Account. Operating leases: i) Assets acquired on leases where a signiﬁ cant portion of the risks and rewards of ownership are retained by the lessor are classiﬁ ed as operating leases. Lease rentals are charged to the Proﬁ t and Loss Account on accrual basis. ii) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term. (Also refer to policy on depreciation, infra) 8. Depreciation a) Indian companies i) Owned assets a) Revalued assets: Depreciation is provided for based on 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 Proﬁ t 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 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 straight line method 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 ﬁ nance 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 beneﬁ ts that are attributable to the asset will ﬂ ow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: a) Leasehold land: over the period of lease. b) Specialised software: Over a period of three years. c) 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. d) Trade-marks over a period of ﬁ ve years. e) 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 198 Schedules forming part of the Consolidated Accounts (contd.) 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 National Highway Authority of India (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 speciﬁ cally 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 purpose, the Group’s share of net worth is determined on the basis of the latest ﬁ nancial statements prior to the acquisition after making necessary adjustments for material events between the date of such ﬁ nancial 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 ﬁ rst 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 signiﬁ cant 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; or the reversal of impairment loss recognised in previous periods, if any. 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 identiﬁ ed, independent cash ﬂ ows), 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 ﬂ ows 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 “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. i) Manufacturing work-in-progress at lower of cost including related overheads or net realisable value. In the case of qualifying assets, cost also includes applicable borrowing costs vide policy relating to borrowing costs. b) Finished goods at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid/ payable on such goods. c) Property development land at lower of cost or net realisable value. d) Completed property is valued at lower of cost or net realisable value. 199 Schedules forming part of the Consolidated Accounts (contd.) 13. Government grant Grants received from NHAI in the nature of “promoter contribution” are credited to “capital reserve”. 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) Expenses incurred on issue of shares. ii) 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 ﬁ ve 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) The reporting currency of the Company is the Indian Rupee. b) 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, 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 of monetary items at each Balance Sheet date at the closing rate are: i) ii) adjusted in the cost of ﬁ xed assets speciﬁ cally ﬁ nanced by the borrowings contracted upto March 31, 2004 to which the exchange differences relate. adjusted in the cost of ﬁ xed assets speciﬁ cally ﬁ nanced 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) Closing inventories at rates prevailing at the end of the year. ii) 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 and amortisation 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 and amortisation is accounted at the same rate at which assets are converted. 200 Schedules forming part of the Consolidated Accounts (contd.) ii) Revenues and expenses at yearly average exchange rates prevailing during the year. Exchange differences arising on translation of non integral foreign operations are accumulated in the foreign currency translation reserve until the disposal of such operations. f) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted ﬁ rm 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. g) All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted ﬁ rm commitments and highly probable forecast transactions, are recognised in the ﬁ nancial 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 Proﬁ t 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 Proﬁ t and Loss Account where the hedge is ineffective. h) 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 speciﬁ c accounting policies have been followed for segment reporting: i) Segment revenue includes sales and other income directly identiﬁ able with/allocable to the segment including inter-segment revenue. ii) Expenses that are directly identiﬁ able 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 under “unallocable corporate income”. iv) Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the proﬁ t before tax of the Group. v) Segment assets and liabilities include those directly identiﬁ able 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. 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 quantiﬁ ed 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 sufﬁ cient 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 sufﬁ cient future taxable income will be available against which such deferred tax assets can be realised. b) Foreign companies: Foreign companies recognise tax liabilities and assets in accordance with the applicable local laws. 201 Schedules forming part of the Consolidated Accounts (contd.) 21. Fringe beneﬁ t tax Fringe beneﬁ t tax (FBT) on the employee stock options (ESOPs) is recognised in the Proﬁ t 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 speciﬁ ed in Income Tax Act, 1961, is recognised in the Proﬁ t 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) the Company has a present obligation as a result of a past event, b) a probable outﬂ ow 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 outﬂ ow of resources will be required to settle the obligation; b) a present obligation when no reliable estimate is possible; c) a possible obligation arising from past events where the probability of outﬂ ow 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. 202 Notes forming part of 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 speciﬁ ed in the Companies (Accounting Standards) Rules, 2006. The CFS comprises the ﬁ nancial 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 signiﬁ cant 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. The list of subsidiaries, associates and joint ventures included in the consolidated ﬁ nancial statements are as under:- 2 Name of subsidiary company Sr. no. As at 31-3-2010 As at 31-3-2009 Country of incorporation Proportion of ownership interest (%) Proportion of voting power held (%) Proportion of ownership interest (%) Proportion of voting power held (%) 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 1 2 3 4 5 6 7 8 9 10 L&T Infra and Property Development Private Limited L&T Concrete Private Limited 11 12 L&T Strategic Management Limited 13 L&T Transco Private Limited 14 L&T Chennai-Tada Tollway Limited 15 HI-Tech Rock Products & Aggregates Limited 16 L&T Seawoods Private Limited 17 L&T Realty Private Limited 18 L&T-Gulf Private Limited 19 L&T Power Limited 20 L&T-MHI Boilers Private Limited 21 L&T-MHI Turbine Generators Private Limited 22 Larsen & Toubro Infotech Limited 23 GDA Technologies Limited 24 L&T Finance Limited 25 L&T Capital Company Limited 26 L&T General Insurance Company Limited 27 L&T Power Development Limited 28 Raykal Aluminium Company Private Limited 29 L&T Uttaranchal Hydropower Limited 30 L&T Infrastructure Development Projects Limited 31 L&T Panipat Elevated Corridor Limited 32 Narmada Infrastructure Construction Enterprise Limited 33 L&T Krishnagiri Thopur Toll Road Limited 34 L&T Western Andhra Tollways Limited 35 L&T Vadodara Bharuch Tollway Limited 36 L&T Transportation Infrastructure 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 100.00 99.90 50.00 100.00 99.99 – 100.00 99.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 50.00 100.00 51.00 51.00 100.00 100.00 99.99 100.00 100.00 100.00 80.00 100.00 84.27 84.27 84.27 84.27 84.27 84.27 84.27 100.00 99.90 50.00 100.00 99.99 – 100.00 99.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 50.00 100.00 51.00 51.00 100.00 100.00 99.99 100.00 100.00 100.00 80.00 100.00 84.27 84.27 84.27 84.27 84.27 84.27 84.27 100.00 99.90 50.00 100.00 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 50.00 100.00 51.00 51.00 100.00 100.00 99.99 100.00 100.00 100.00 80.00 100.00 79.65 79.65 79.65 79.65 79.65 79.65 79.65 100.00 99.90 50.00 100.00 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 50.00 100.00 51.00 51.00 100.00 100.00 99.99 100.00 100.00 100.00 80.00 100.00 79.65 79.65 79.65 79.65 79.65 79.65 79.65 203 Notes forming part of Consolidated Accounts (contd.) As at 31-3-2010 As at 31-3-2009 Country of incorporation Proportion of ownership interest (%) Proportion of voting power held (%) Proportion of ownership interest (%) Proportion of voting power held (%) Name of subsidiary company Sr. no. Indian subsidiaries (contd.) 37 L&T Western India Tollbridge Limited 38 L&T Interstate Road Corridor Limited 39 International Seaports (India) Private Limited 40 L&T Urban Infrastructure Limited 41 L&T South City Projects Limited 42 L&T Siruseri Property Developers Limited 43 Cyber Park Development and Construction Limited 44 L&T Vision Ventures Limited 45 L&T Tech Park Limited 46 L&T Phoenix Info Parks Private Limited @ 47 L&T Bangalore Airport Hotel Limited 48 CSJ Infrastructure Private Limited 49 L&T Arun Excello Commercial Projects Private Limited 50 L&T Arun Excello IT SEZ Private Limited 51 L&T Infocity Limited 52 L&T Hitech City Limited 53 Hyderabad International Trade Expositions Limited 54 Andhra Pradesh Expositions Private Limited 55 L&T Capital Holdings Limited 56 L&T Port Sutrapada Limited 57 Sutrapada SEZ Developers Limited 58 Sutrapada Shipyard Limited 59 PNG Tollway Private Limited (formerly known as L&T PNG Tollway Private Limited) 60 Chennai Vision Developers Private Limited 61 L&T Ahmedabad-Maliya Tollway Private Limited 62 L&T Halol-Shamlaji Tollway Private Limited 63 L&T Rajkot-Vadinar Tollway Private Limited 64 L&T Engserve Private Limited 65 L&T Natural Resources Limited 66 L&T-Plastics Machinery Limited (formerly known as L&T-Demag Plastics Machinery Limited) 67 L&T Technologies Limited 68 L&T EmSyS Private Limited 69 L&T Special Steels & Heavy Forgings Private Limited 70 L&T Trustee Company Private Limited 71 L&T Aviation Services Private Limited 72 Nabha Power Limited 73 L&T Investment Management Limited (formerly known as DBS Cholamandalam Asset Management 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 84.27 84.27 84.27 63.20 32.23 32.23 32.23 42.98 32.23 – 46.77 51.83 32.23 32.23 56.25 41.63 32.68 32.68 99.99 100.00 100.00 100.00 74.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 74.00 100.00 99.99 100.00 99.99 99.99 84.27 84.27 84.27 63.20 32.23 32.23 32.23 42.98 32.23 – 46.77 51.83 32.23 32.23 56.25 41.63 32.68 32.68 99.99 100.00 100.00 100.00 74.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 74.00 100.00 99.99 100.00 99.99 99.99 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 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 – – – – – – – – – 74 L&T Mutual Fund Trustee Limited (formerly known as India DBS Cholamandalam Trustees Limited) 75 L&T Samakhiali-Gandhidham Tollway Private Limited * The Company has become an associate w.e.f May 16, 2009 and shown under “Associates” in item no. 22 below. For the previous year ended March 31, 2009, the Parent Company controlled the composition of board of directors. India 100.00 100.00 @ The Parent Company has sold its stake w.e.f March 30, 2010. 204 Notes forming part of Consolidated Accounts (contd.) As at 31-3-2010 Proportion of ownership interest (%) Proportion of voting power held (%) As at 31-3-2009 Proportion of ownership interest (%) Proportion of voting power held (%) Name of subsidiary company Sr. no. Foreign subsidiaries Larsen & Toubro LLC L&T Realty FZE Larsen & Toubro Infotech,GmbH Larsen & Toubro Infotech Canada Limited 1 2 3 4 5 GDA Technologies Inc. International Seaports Pte Limited** 6 Larsen & Toubro International FZE 7 Larsen & Toubro (Oman) LLC 8 9 Larsen & Toubro Electromech LLC 10 L&T Modular Fabrication Yard LLC 11 Larsen & Toubro (East Asia) SDN. BHD. ## 12 Larsen & Toubro Qatar LLC ## 13 L&T Overseas Projects Nigeria Limited 14 L&T Electricals Saudi Arabia Company Limited 15 Larsen & Toubro Kuwait Construction General Contracting Company, WLL ## 16 Larsen &Toubro (Qingdao) Rubber Machinery Company Limited 17 Qingdao Larsen & Toubro Trading Company Limited 18 Larsen & Toubro (Jiangsu) Valve Company Limited 19 Larsen & Toubro Readymix Concrete Industries LLC ## 20 Larsen & Toubro Saudi Arabia LLC 21 Larsen & Toubro (Wuxi) Electric Company Limited 22 Larsen & Toubro ATCO Saudi LLC ## 23 Offshore International FZC 24 L&T Infrastructure Development Projects Lanka (Private) Limited 25 L&T Infocity Lanka Private Limited 26 L&T Electrical & Automation FZE 27 Tamco Switchgear (Malaysia) SDN. BHD. 28 Tamco Shanghai Switchgear Company Limited 29 Tamco Electrical Industries Australia Pty Limited 30 PT Tamco Indonesia 31 Larsen & Toubro Heavy Engineering LLC 32 L&T Real Estate India Fund *** 33 L&T Asset Management Company Limited *** 34 Larsen & Toubro Infotech LLC 35 Peacock Investments Limited ### 36 Mango Investments Limited ### 37 Lotus Infrastructure Investments Limited ### 38 Pathways FZE Country of incorporation USA UAE Germany Canada USA Singapore UAE Sultanate of Oman Sultanate of Oman Sultanate of Oman Malaysia Qatar Nigeria Kindgom of Saudi Arabia Kuwait Peoples Republic of China Peoples Republic of China Peoples Republic of China UAE Kingdom of Saudi Arabia Peoples Republic of China Kingdom of Saudi Arabia UAE Sri Lanka Sri Lanka UAE Malaysia Peoples Republic of China Australia Indonesia Sultanate of Oman Republic of Mauritius Republic of Mauritius USA Republic of Mauritius Republic of Mauritius Republic of Mauritius UAE 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 49.00 100.00 100.00 100.00 49.00 100.00 100.00 49.00 60.00 80.37 29.25 100.00 100.00 100.00 100.00 100.00 70.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – 100.00 65.00 65.00 65.00 100.00 100.00 100.00 75.00 75.00 100.00 100.00 100.00 100.00 100.00 100.00 75.00 60.00 80.37 29.25 100.00 100.00 100.00 100.00 100.00 70.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 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 – – – – – – – ** The Company has been liquidated during the year. ## The Parent Company, together with its subsidiaries controls the composition of board of directors. *** Accounts have been consolidated for the period March 24, 2009 to December 31, 2009. ### Accounts have been consolidated for the period September 11, 2008 to December 31, 2009. 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 – – – – – – – 205 Notes forming part of Consolidated Accounts (contd.) Name of associate company Sr. no. L&T-Komatsu Limited 1 Audco India Limited 2 Ewac Alloys Limited 3 L&T-Case Equipment Private Limited 4 Voith Paper Technology (India) Limited ## 5 International Seaport (Haldia) Private Limited 6 L&T-Chiyoda Limited 7 L&T-Ramboll Consulting Engineers Limited 8 9 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 15 Larsen & Toubro Qatar & HBK Contracting LLC 16 TNJ Moduletech Private Limited 17 L&T Camp Facilities LLC 18 L&T Arun Excello Realty Private Limited 19 Feedback Ventures Private Limited 20 Salzer Cables Limited ** 21 JSK Electricals Private Limited 22 International Seaport Dredging Limited 23 Salzer Electronics Limited *** 24 Asia Alloys Precicasters Private Limited 25 Rishi Consfab Private Limited. As at 31-3-2010 As at 31-3-2009 Proportion of ownership interest (%) 50.00 50.00 50.00 50.00 – 18.80 50.00 50.00 31.60 30.00 – Proportion of voting power held (%) 50.00 50.00 50.00 50.00 – 18.80 50.00 50.00 31.60 30.00 – Proportion of ownership interest (%) 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 30.00 26.55 Proportion of voting power held (%) 50.00 50.00 50.00 50.00 50.00 17.77 50.00 50.00 29.87 30.00 26.55 Country of incorporation India India India India India India India India India India India India India India Qatar India UAE India India India India India India India India 50.00 – 14.63 24.50 40.00 49.00 20.86 23.16 – 26.00 24.74 26.06 26.00 26.00 50.00 – 14.63 50.00 40.00 49.00 20.86 23.16 – 26.00 24.74 26.06 26.00 26.00 50.00 20.71 13.82 24.50 40.00 49.00 19.71 23.16 48.21 26.00 – – – – 50.00 20.71 13.82 50.00 40.00 49.00 19.71 23.16 48.21 26.00 – – – – ## The Parent Company has sold its stake during the year w.e.f September 30, 2009. * The Company is no longer an associate due to divestment/reduction of stake during the year. @The Company is under liquidation. ** The Company has been merged with Salzer Electronics Limited. *** Accounts have been consolidated for nine months period ended December 31, 2009. Name of joint venture Sr. 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 1 2 3 4 5 6 Metro Tunneling Group L&T-Hochtief Seabird Joint Venture 7 L&T-Shanghai Urban Corporation Group Joint Venture 8 9 The Dhamra Port Company Limited 10 L&T Bombay Developers Private Limited 206 As at 31-3-2010 Proportion of ownership interest (%) As at 31-3-2009 Proportion of 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 42.14 31.60 65.00 26.00 49.00 43.00 50.00 26.00 90.00 51.00 39.83 29.87 Notes forming part of Consolidated Accounts (contd.) Name of joint venture (Contd.) Sr. no. Jointly controlled entities-foreign joint ventures L&T-Eastern Joint Venture 11 12 Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Les Pailles Exhibition Centre, Mauritius)* 13 Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited Joint Venture (Ebene Cybercity Project, Mauritius)* 14 IndIran Engineering Projects and System** Jointly controlled operations-Indian joint ventures 15 L&T-HCC Joint Venture 16 Patel-L&T Consortium 17 Consortium of Samsung Heavy Industries Co. Ltd., Korea and L&T 18 Consortium of Global Industries Offshore LLC, USA and L&T 19 L&T-KBL (UJV) Hyderabad 20 Consortium of Toyo Engineering Company and L&T 21 L&T-SVEC Joint Venture 22 L&T-KBL-MAYTAS UJV 23 L&T and Scomi Engineering BHD. Joint Venture Jointly controlled operations-foreign joint venture 24 Lurgi L&T KQKS Consortium *The joint venture has been closed w.e.f December 31, 2009. ** The accounts have been consolidated for the period ending December 31, 2009 Country of residence UAE Republic of Mauritius Republic of Mauritius Iran India India India India India India India India India Malaysia As at 31-3-2010 Proportion of ownership interest (%) As at 31-3-2009 Proportion of ownership interest (%) 65.00 – – 50.00 – – – – – – – – – – 65.00 50.00 50.00 – – – – – – – – – – – 3. During the year ended March 31, 2010, an amount of Rs.51.25 crore was amortised from goodwill arising on acquisition of subsidiary and associate companies. (previous year: Rs.44.28 crore) 4. Reserves and surplus shown in the consolidated Balance Sheet includes 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 Proﬁ t and Loss Account. 5. The effect of acquisition (including newly formed)/disposal of stake in subsidiaries during the year on the consolidated ﬁ nancial statements is as under: a) Acquisitions(including newly formed): Name of subsidiary companies L&T Special Steels & Heavy Forgings Private Limited L&T Technologies Limited L&T Trustee Company Private Limited L&T Aviation Services Private Limited L&T EmSyS Private Limited L&T Investment Management Limited (formerly known as DBS Cholamandalam Asset Management Limited) L&T Mutual Fund Trustee Limited (formerly known as DBS Cholamandalam Trustees Limited) Nabha Power Limited L&T Samakhiali-Gandhidham Tollway Private Limited L&T Asset Management Company Limited L&T Real Estate India Fund Peacock Investments Limited Lotus Infrastructure Investments Limited Mango Investments Limited Pathways FZE Larsen and Toubro Infotech LLC Total Effect on Group proﬁ t/(loss) after minority interest for the period ended March 31, 2010 (3.44) – – (0.05) (0.09) (9.44) – (0.51) – (0.06) (0.11) (0.06) (0.06) (0.06) (0.13) 1.48 (12.53) Rs.crore Net Assets as at 31-3-2010 144.39 0.05 0.01 0.95 (0.08) 57.37 0.08 731.70 0.01 (0.06) (0.10) (0.05) (0.05) (0.05) 0.06 1.40 935.63 207 Notes forming part of Consolidated Accounts (contd.) b) Disposal: Name of subsidiary companies Effect on Group proﬁ t/(loss) after minority interest for the period ended March 31, 2010 Net assets as at 31-3-2010 Effect on Group proﬁ t/(loss) after Minority Interest for the period ended March 31, 2009 Rs.crore Net assets as at 31-3-2009 L&T Phoenix Infoparks Private Limited Total (0.89) (0.89) 58.64 58.64 (0.44) (0.44) 61.55 61.55 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: 44,96,76,280) 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.87.47 crore) and capital redemption reserve: Rs.0.12 crore (previous year: Rs.0.12 crore). iii) 2,00,88,346 (previous year: 1,48,67,485) equity shares were allotted as fully paid up on exercise of grants under Employees Stock Ownership Schemes. b) During the year, the Company has issued and allotted 1,12,86,685 equity shares of Rs.2 each by way of Qualiﬁ ed Institutional Placement (QIP) at an issue price of Rs.1659.30 per share. The shares rank pari passu in all respects with the existing equity shares of the Company. c) On October 21, 2009, the Company issued 5 years & 1 day, 3.50% US$ denominated Foreign Currency Convertible Bonds (‘FCCB’) at par, aggregating to US$ 200 million (INR 928.80 crore as on the date of issue) comprising 2000 bonds of US$ 1,00,000 each. The bonds are convertible into the Company’s fully paid up equity shares of Rs.2 each at a conversion price of Rs.1908.20 per share at the option of the bond holders at any time after December 1, 2009 up to October 15, 2014. The bonds are redeemable, subject to fulﬁ lment of certain conditions, in whole but not in part, at the option of the Company, on or at any time after October 21, 2012 at the principal amount together with accrued interest till the date ﬁ xed for redemption, unless the bonds have been previously redeemed, converted or purchased and cancelled. d) 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 31-3-2010 As at 31-3-2009 1,75,51,015 2,12,89,375 3.5% 5 years & 1 day, US$ denominated Foreign Currency Convertible Bonds 49,07,243 – # the number of options has been adjusted consequent to bonus issue wherever applicable. 7. The Directors recommend payment of ﬁ nal dividend of Rs.12.50/-per equity share of Rs.2 each on the number of shares outstanding as on the record date. Provision for ﬁ nal dividend has been made in the books of account for 60,21,95,408 shares outstanding as at March 31, 2010 amounting to Rs.752.75 crore. 8. 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 4 years [5 years in the case of Series 2006(A)], subject to the discretion of the management and fulﬁ lment of certain conditions. 208 Notes forming part of Consolidated Accounts (contd.) b) The details of the grants under the aforesaid schemes under various series are summarised below: Series reference Sr. no. 2000 2002(A) 2002(B) 2003(A) 2003(B) 2006 2006(A) 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 1 2 3 4 5 6 7 8 9 10 11 12 13 Grant price (prior to bonus issue)- Rupees Grant price (post bonus issue)- Rupees Grant dates 7 3.50 – 3.50 1-6-2000 7 3.50 – 3.50 19-4-2002 7 3.50 – 3.50 19-4-2002 Vesting commences on 1-6-2001 19-4-2003 19-4-2003 – 35 – 35 – 1202 – 1202 17.50 17.50 23-5-2003 onwards 23-5-2004 onwards 17.50 17.50 23-5-2003 onwards 23-5-2004 onwards 601 601 1-9-2006 onwards 1-9-2007 onwards 601 601 1-7-2007 onwards 1-7-2008 onwards Options granted and outstanding at the beginning of the year Options lapsed/withdrawn prior to bonus issue Options granted prior to bonus issue Options exercised prior to bonus issue Options outstanding as on October 3, 2008 prior to bonus issue Adjusted options as on October 3, 2008 consequent to bonus issue Options bonus issue Options granted post bonus issue Options exercised post bonus issue [see note 2.(c)] Options granted and outstanding at the end of the year of which- Options vested Options yet to vest lapsed/withdrawn post 16800 8400 21500 10750 39700 19850 31452 15726 1959888 971468 13324860 7036899 5895175 995270 – – – – – – – – – – – 8400 16800 – – – – – – – – – – – – – – 10750 21500 – – – – – – – – – – – – – – 19850 39700 – – – – – – – – – – – – – – 15726 31452 – – – – – – – – 40481 340000 118874 1152113 – – – – 163605 59600 120756 6812138 2304226 – 13624276 – – – – – 180428 1910970 25034 2700778 5401556 51622 164300 50912 153800 336341 - 261900 - 633070 2808090 133664 646295 947586 447226 4144794 37516 593587 19012 16800 16800 21500 21500 39700 39700 31452 31452 1124980 1959888 8839975 13324860 7476608 5895175 16800 – 16800 – 21500 – 21500 – 39700 – 39700 – 31452 – 31452 – 85644 1039336 226326 1733562 4759655 4080320 5321810 8003050 769990 6706618 279136 5616039 c) Employee stock options (ESOP) exercised during the year 2009-2010 include options pending for allotment# of shares as on March 31, 2010 as follows: Series 2003B 2006A 2006 # since allotted in April’ 2010 No. of options 49000 41382 378474 d) During the year, the Company has recovered Rs.3.60 crore (previous year: Rs.4.80 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes. e) Application money received for the aforesaid options amounting to Rs.25.09 crore will be appropriated towards share capital Rs.0.09 crore and securities premium account Rs.25.00 crore on allotment of shares. 9. Stock ownership schemes of subsidiary companies: a) Employee stock ownership scheme (‘ESOS Plan’) Under the employee stock ownership scheme (ESOS) of one of the domestic subsidiary of the Company, 25,84,459 options are outstanding as at March 31, 2010. (previous year: 25,31,159) 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. 209 Notes forming part of Consolidated Accounts (contd.) All vested options can be exercised on the ﬁ rst exercise date as may be determined by the Compensation Committee prior to date of IPO of said subsidiary. The details of the grants under the aforesaid scheme are summarised below:- ESOP Series 1 Grant price (Rupees) 2 Options granted and outstanding at the beginning of the year 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 I, II & III IV-XVIII XIX-XX 2009-2010 2008-2009 2009-2010 2008-2009 2009-2010 2008-2009 25 10 393003** – – – 393003 393003 – 393003** – – – 393003 393003 – 2139506 – 9300 – 2130206 970917 1159289 2102770 61250 24514 – 2139506 970917 1168589 10 – 61250 – – 61250 – 61250 – 61250 – – 61250 – 61250 ** Includes the adjustment made during the year on account of reinstatement of options inadvertently considered as cancelled/ lapsed in earlier years 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 (‘Sub-Plan’) for the employees and directors of its foreign subsidiary. 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 5 years, subject to fulﬁ lment of certain conditions speciﬁ ed 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 96,500 options. 58,693 options have been vested while 37,807 options remain unvested, as at the end of the year. Employees stock options granted and outstanding as at the end of the year on unissued share capital represent options 26,80,959 (previous year: 26,67,659). c) Employee stock option plan 2008 (ESOP 2008). The employee stock option plan 2008 of one of the domestic subsidiary of the Company is designed to provide stock options to employees in a speciﬁ c category. All grants under the plan are to be issued and allotted by the allotment committee of the Board of the said subsidiary. The options are to be granted to the eligible employees based on certain criteria and approval of the allotment committee of the Board and as per the detailed and respective employee stock option agreements that the said subsidiary enters into with them. The options have been granted on September 10, 2009. Options have been granted at an exercise price equal to the fair market value of the shares as determined by an independent valuer. The employees shall be allotted a pre-deﬁ ned number of equity shares against each option and the options will vest over a period of ﬁ ve years from the date of grant at a pre-deﬁ ned percentage of the total vesting, which shall each be subject to the condition that the employees will secure speciﬁ c annual performance ratings for every allotment and Company achieving certain performance target. Options can be exercised anytime within a period of 5 years from the date of vesting. The employees also have the exit option which they can exercise under certain events. Summary of stock options Options outstanding on April 1, 2009 Options granted during the year Options forfeited/lapsed during the year Options exercised during the year Options outstanding on March 31, 2010 Options vested but not exercised on March 31, 2010 No. of stock options – 66,60,000 1,20,000 – 65,40,000 – Weighted average exercise price (Rs.) – 10.50 – – 10.50 – Information in respect of options outstanding as at March 31, 2010. Range of exercise price Rs.10.50 Number of options 65,40,000 Weighted average remaining life upto April 2013 Since the options have been granted at an exercise price equal to the fair market value of the shares as determined by an independent valuer there is no charge to the Proﬁ t and Loss Account. 210 Notes forming part of Consolidated Accounts (contd.) 10. Loans and advances include: a) rent deposit with whole-time directors: Rs.0.03 crore (previous year: Rs.0.03 crore). The maximum amount outstanding at any time during the year Rs.0.03 crore (previous year: Rs.0.03 crore). b) amount including interest accrued, due from the managing director and whole-time directors in respect of housing loan: Rs.0.61 crore (previous year: Rs.0.63 crore). Maximum amount outstanding at any time during the year: Rs.0.63 crore (previous year: Rs.0.73 crore). 11. Sundry creditors-Others include a) Advance of Rs.6.78 crore received from M/s.JRE Tank Terminals Private Limited under an agreement dated August 24, 2007 towards sale of 67,87,500 equity share of Rs.10 each in M/s. Ennore Tank Terminals Private Limited to be transferred on completion of 3 calendar years from the date of commencement of commercial operation. The said project has commenced commercial operations on January 15, 2009. Accordingly, the above equity shares will be transferred on or after January 15, 2012. b) Advance of Rs.12.10 crore received from M/s. Sical Logistics Limited against sale of 1,21,00,000 equity shares of Rs.10 each in Sical Iron Ore Terminals Limited at cost (including further shares, if any subscribed) to Sical Logistics Limited vide agreement for share sale and purchase dated December 17, 2008, subject to the condition that the transfer will be completed only after three years from the date of commencement of commercial operation by Sical Iron Ore Terminals Limited as per clause 18.2.2 (i) (d) of the license agreement dated September 23, 2006 with Ennore Port Limited. 12. 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 ﬁ nal settlement of loan taken from Raﬁ dian Bank, Iraq, which is included under unsecured loans. 13. Sales and service include Rs.142.83 crore (previous year: Rs.117.72 crore) for price variations net of liquidated damages in terms of contracts with the customers and shipbuilding subsidy Rs.56.80 crore (previous year: Rs.25.49 crore). 14. Extraordinary items during the year comprise the following: a) Proportionate reversal of Rs.62.55 crore, out of the provision made in previous year in respect of the Company’s investment in shares of Satyam Computer Services Limited (SCSL), pursuant to sale of a part of its holding in SCSL during the year. b) Gain of Rs.73.17 crore (net of tax of Rs.21.61 crore) on sale of the Company’s Petroleum Dispensing Pumps & Systems business. 15. Disclosures pursuant to Accounting Standard (AS) 7 (Revised) “Construction Contracts” i) ii) Contract revenue recognised for the ﬁ nancial year Aggregate amount of contract costs incurred and recognised proﬁ ts (Less recognised losses) as at the end of the ﬁ nancial year for all contracts in progress as at that date Particulars 2009-2010 33153.67 76811.42 Rs.crore 2008-2009 29824.12 59657.50 iii) Amount of customer advances outstanding for contracts in progress as at the end of the ﬁ nancial year iv) Retention amounts due from customers for contracts in progress as at the end of the ﬁ nancial year 6531.81 2638.12 4610.60 2136.09 16. a) Proﬁ t on sale of long term investments under other income for the year ended March 31, 2010 includes the following: (cid:2) Gain of Rs.20.71 crore recognised on divestment of the group’s stake in a subsidiary company (previous year: Rs.16.59 crore on divestment of group’s stake in four subsidiaries). (cid:2) Gain of Rs.173.48 crore (net) recognised on divestment/dilution of the group’s stake in four of its associate companies. (cid:2) Proﬁ t of Rs.1019.88 crore on sale of Company’s long term investment in UltraTech Cement Limited and gain of Rs.621.13 crore on sale of investment in Bangalore International Airport Limited. b) An amount of Rs.40.07 crore [net gain] (previous year: Rs.323.49 crore [net loss]) has been accounted under respective revenue heads in the Proﬁ t 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”. c) Other expenses under manufacturing, construction and operating expenses includes Rs.508.95 crore towards construction of 1400 MW power plant at Rajpura, Punjab. 17. Loans and advances include Rs.136 crore (previous year: Rs.161 crore) under ‘Advances recoverable in cash or in kind’ towards interest free loan to L&T Employees Welfare Foundation Trust to part-ﬁ nance 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. 211 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 proﬁ t (PBIT) Interest expense Interest income Proﬁ t before tax (PBT) Provision for current tax including fringe beneﬁ t tax Provision for deferred tax Proﬁ t after tax (before extraordinary items) Proﬁ t from extraordinary items Proﬁ t after tax (after extraordinary items) 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 Notes forming part of Consolidated Accounts (contd.) 18. Segment reporting: a) During the year, segment reporting has been reconstituted in compliance with the threshold norms for reportable segments. b) Consequently, segment ﬁ gures for the previous year have been regrouped. Information about business segments (Information provided in respect of revenue items for the year ended March 31, 2010 and in respect of assets/liabilities as at March 31, 2010-denoted as “CY” below, previous year denoted as “PY”) i) Primary segments (business segments): Rs.crore Engineering & Construction Electrical & Electronics CY PY CY PY Machinery & Industrial Products PY CY Financial Services Infrastructure Development Others Elimination Total CY PY CY PY CY PY CY PY CY PY 33798.64 1049.38 34848.02 30547.40 975.13 31522.53 3617.08 184.61 3801.69 3247.19 149.39 3396.58 2510.80 55.10 2565.90 2663.47 41.89 2705.36 1436.85 19.43 1456.28 1031.52 94.49 1126.01 731.57 1.98 733.55 533.48 14.83 548.31 2215.52 39.14 2254.66 2908.87 80.45 2989.32 (1349.64) (1349.64) (1356.18) (1356.18) 44310.46 - 44310.46 40931.93 - 40931.93 4169.76 3468.52 491.34 359.28 464.70 456.81 406.77 228.03 195.08 108.36 332.17 354.98 6059.82 4975.98 151.67 5908.15 126.20 4849.78 1992.54 7900.69 (691.92) 136.58 7345.35 2039.77 (2.37) 5307.95 (98.62) 4751.16 (528.06) 137.23 4360.33 1389.51 35.36 2935.46 135.72 772.46 5443.67 57829.12 13134.04 70963.16 33048.74 15835.91 48884.65 3707.92 45653.54 9832.25 55485.79 25757.98 14681.53 40439.51 Rs.crore 28504.76 22622.59 2711.21 2585.69 1441.08 1494.06 12150.26 7717.40 11608.41 9497.42 1413.40 1736.38 18229.95 14729.40 941.49 784.13 922.47 789.84 10076.88 6389.37 2425.32 2548.00 452.63 517.24 2237.56 2698.35 157.31 354.32 305.18 97.24 269.89 152.37 2019.51 4424.32 67.96 171.9 422.67 363.78 78.62 60.80 28.94 21.83 48.37 58.61 263.02 87.28 86.61 79.49 92.29 139.43 10.16 13.90 8.02 10.58 0.36 0.76 0.04 – 7.26 8.35 ii) Secondary segments (geographical segments): Particulars Domestic CY PY Overseas CY PY Total CY PY External revenue by location of customers 32819.84 28888.40 11490.62 12043.53 44310.46 40931.93 Carrying amount of segment assets by location of assets 51697.58 39143.79 6131.54 6509.75 57829.12 45653.54 Cost incurred on acquisition of tangible and intangible ﬁ xed assets 4369.37 7352.33 688.04 546.17 5057.41 7898.50 212 Notes forming part of Consolidated Accounts (contd.) c) Segment reporting: segment identiﬁ cation, reportable segments and deﬁ nition of each reportable segment: i) Primary/secondary segment reporting format a) The risk-return proﬁ le 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 identiﬁ ed its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly. ii) Segment identiﬁ cation Business segments have been identiﬁ ed on the basis of the nature of products/services, the risk-return proﬁ le of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments Reportable segments have been identiﬁ ed as per the criteria speciﬁ ed in Accounting Standard (AS) 17 “Segment Reporting” as speciﬁ ed in the Companies (Accounting Standards) Rules, 2006. iv) Segment composition (cid:2) (cid:2) 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. (cid:2) (cid:2) 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 of services such as corporate ﬁ nance, equipment ﬁ nance, infrastructure ﬁ nancing, mutual fund services and related advisory services. Developmental Projects comprises development, operation and maintenance of basic infrastructure projects, toll collection including annuity based project, power development, development of urban infrastructure and providing related advisory services. (cid:2) (cid:2) Others include ready mix concrete, e-engineering services and embedded systems, information technology services and mining. 19. 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 Rishi Consfab Private Limited International Seaport (Haldia) Private Limited L&T Arun Excello Realty Private Limited L&T-Crossroads Private Limited TNJ Moduletech Private Limited Feedback Ventures Limited Ennore Tank Terminals Private Limited 2 4 6 8 10 12 14 16 18 20 EWAC Alloys Limited L&T-Komatsu Limited L&T-Case Equipment Private Limited Asia Alloys Precicasters Private Limited Salzer Electronics Limited L&T Camp Facilities LLC NAC Infrastructure Equipment Limited Vizag IT Park Limited JSK Electricals Private Limited International Seaport Dredging Limited 213 Notes forming part of Consolidated Accounts (contd.) 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 Desbuild-L&T Joint Venture 2 4 6 8 Bauer-L&T Diaphragm Wall Joint Venture L&T-Eastern Joint Venture L&T-Hochtief Seabird Joint Venture Larsen & Tourbo Limited-Shapoorji Pallonji & Company Limited Joint Venture (Ebene Cybercity Project) Larsen & Tourbo Limited-Shapoorji Pallonji & Company Limited Joint Venture (Les Palles Exhibition Centre) 10 HCC L&T Purulia Joint Venture L&T-AM Tapovan Joint Venture 12 L&T-Shanghai Urban Corporation Group Joint Venture IndIran Engineering Projects and System Key management personnel & their relatives: 1 3 5 7 Mr. A.M. Naik, (Chairman & Managing director) Mr. Y. M. Deosthalee (whole-time director) Mr. R. N. Mukhija (whole-time director) Mrs. Sushma Mukhija (wife) Ms. Debika Ajmani (daughter) Mr. V. K. Magapu (whole-time director) ii. Disclosure of related party transactions: Sr. No. Nature of transaction/relationship/major parties 1 Purchase of goods & services (including commission paid) 2 4 6 8 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. M. V. Kotwal (whole-time director) 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore Associates & joint ventures, including: 695.53 935.15 Audco India Limited EWAC Alloys Limited Salzer Electronics Limited TOTAL 2 3 Sale of goods/power/contract revenue & services Joint ventures: The Dhamra Port Company Limited TOTAL Purchase/lease of ﬁ xed assets Associates & joint ventures, including: L&T-Case Equipment Private Limited L&T-Komatsu Limited EWAC Alloys Limited Audco India Limited 695.53 597.62 597.62 76.08 331.62 115.94 136.43 539.19 – – – 58.40 935.15 725.15 725.15 6.23 627.65 126.69 – 659.27 2.37 1.19 2.67 – TOTAL 76.08 6.23 214 Notes forming part of Consolidated Accounts (contd.) Sr. No. 4 Nature of transaction/relationship/major parties Subscription to equity and preference shares (including application money paid and investment in joint ventures) 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore Associates & joint ventures, including: 115.70 89.21 L&T Shanghai Urban Corporation Group The Dhamra Port Company Limited L&T-AM Tapovan Joint Venture L&T-Eastern Joint Venture TOTAL 5 Receiving of services from related parties Associates & joint ventures, including: L&T-Chiyoda Limited L&T-Ramboll Consulting Engineers Limited TOTAL 6 Rent paid, including lease rentals under leasing/hire purchase arrangements including loss sharing on equipment ﬁ nance Associates & joint ventures, including: EWAC Alloys Limited L&T-Komatsu Limited L&T-Chiyoda 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 TOTAL 8 Dividend received Associates & joint ventures, including: L&T-Komatsu Limited EWAC Alloys Limited Audco India Limited Voith Paper Technology (India) Limited TOTAL 9 Commission received, including those under agency arrangements Associates & joint ventures, including: L&T-Komatsu Limited TOTAL – 87.94 – – 3.71 – 0.17 0.72 0.28 2.78 5.60 8.32 4.16 4.75 4.20 4.56 6.30 3.95 115.17 89.21 8.81 8.81 1.07 0.11 0.14 1.32 26.50 26.50 57.95 57.95 151.47 151.47 115.70 3.72 3.72 1.16 0.06 0.24 1.46 26.85 26.85 20.28 20.28 115.96 115.96 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 6.00 149.57 215 Notes forming part of Consolidated Accounts (contd.) Sr. No. Nature of transaction/relationship/major parties 2009-2010 2008-2009 Amount Amounts for major parties Amount Amounts for major parties Rs.crore 10 Rent received, overheads recovered and miscellaneous income Associates & joint ventures, including: 24.79 33.69 L&T-Case Equipment Private Limited Audco India Limited L&T-Chiyoda Limited Metro Tuneling Group Ewac Alloys Limited L&T-Komatsu Limited TOTAL 11 Interest received Associates & joint ventures, including: L&T-Case Equipment Private Limited International Seaport Dredging Limited Key management personnel TOTAL 12 Interest paid Associates: Audco India Limited TOTAL 13. Buy back of shares by Associates: Audco India Limited TOTAL 14 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 24.79 0.80 0.03 0.83 12.96 12.96 27.23 27.23 68.65 33.69 1.01 0.03 1.04 7.77 7.77 – – 56.46 2.85 – 6.65 – 8.54 – – 0.79 12.96 27.23 15.30 7.76 8.70 8.65 8.60 6.33 6.32 6.99 5.60 7.49 3.27 7.45 – 2.74 1.01 – 7.77 – 12.55 6.39 7.16 7.11 7.07 5.21 5.22 5.75 TOTAL 68.65 56.46 “Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. 216 Notes forming part of Consolidated Accounts (contd.) iii. Amount due to/from related parties: Sr. No. Nature of transaction/relationship/major parties 1 Accounts receivable Associates & joint ventures, including: 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-Ramboll Consulting Engineers Limited L&T-Chiyoda Limited Audco India Limited L&T-AM Tapovan Joint Venture L&T Camp Facilities LLC Key management personnel Relatives of key management personnel TOTAL 4 Unsecured loans (including lease ﬁ nance) Joint ventures: Metro Tunneling Group TOTAL 5 Advances received in the capacity of supplier of goods/services classiﬁ ed as “advances from customers” in the Balance Sheet Associates & joint ventures, including: L&T Arun Excello Realty Private Limited The Dhamra Port Company Limited TOTAL 6 Due to whole time directors 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 TOTAL As at 31-3-2010 Amount Amounts for major parties Rs.crore As at 31-3-2009 Amount Amounts for major parties 99.98 99.98 359.30 359.30 11.61 0.64 0.12 12.37 – – 0.10 0.10 44.29 44.29 87.92 306.97 – 1.61 4.10 1.62 – 1.49 – 0.10 10.55 5.27 5.27 5.27 5.27 4.22 4.22 4.22 209.87 209.87 368.17 368.17 118.54 0.66 0.10 119.30 20.00 20.00 23.46 23.46 35.47 35.47 183.16 267.77 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 “Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. 217 Notes forming part of Consolidated Accounts (contd.) iv. Notes to related party transactions: a) 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 Paciﬁ c 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 speciﬁ ed rates on the sales effected by the Company. b) 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. c) The Company had a selling agency agreement till August 31, 2009, with L&T-Plastics Machinery Limited (formerly known as ‘L&T-Demag Plastics Machinery Private Limited’), a wholly owned subsidiary. As per the terms of the agreement, the Company was a selling and servicing agent of L&T-Plastics Machinery Limited. Pursuant to the aforesaid agreement, L&T-Plastics Machinery Limited was required to pay commission to the Company at speciﬁ ed rates on sales effected by the Company. Note: The ﬁ nancial impact of the agreements mentioned at (a) to (c) above has been included in/disclosed vide note no.19 (ii) supra. 20. Leases: i) Where the Company is a Lessor: a) The Company has given on ﬁ nance leases certain items of plant and machinery. The leases have a primary period that is ﬁ xed and non-cancellable and a secondary period. There are no exceptional/restrictive covenants in the lease agreement. b) The total gross investment in these leases as on March 31, 2010 and the present value of minimum lease payments receivable as on March 31, 2010 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 ﬁ nance income Present value of receivables Rs.crore Minimum lease payments Amount 31-3-2010 22.40 56.53 – 78.93 15.81 63.12 Amount 31-3-2009 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: a) Finance leases: i) Assets acquired on ﬁ nance lease mainly comprise plant & machinery, vehicles and personal computers. The leases have a primary period, which is ﬁ xed 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. ii) The minimum lease rentals as at March 31, 2010 and the present value as at March 31, 2010 of minimum lease payments in respect of assets acquired under ﬁ nance leases are as follows: Particulars Payable not later than 1 year i. ii. Payable later than 1 year and not later than 5 years iii. Payable later than 5 years Total Less: Future ﬁ nance charges Present value of minimum lease payable Rs.crore Present value of minimum lease payments As at 31-3-2010 0.18 0.40 – 0.58 As at 31-3-2009 0.46 0.54 – 1.00 Minimum lease payments As at 31-3-2010 0.20 0.45 – 0.65 0.07 0.58 As at 31-3-2009 0.50 0.60 – 1.10 0.10 1.00 218 Notes forming part of Consolidated Accounts (contd.) iii) Contingent rent recognised/(adjusted) in the Proﬁ t and Loss Account in respect of ﬁ nance leases: Rs.nil (previous year: Rs.nil) b) Operating leases: i. ii. The Company has taken various commercial premises and plant and machinery under cancellable operating leases. These lease agreements are normally renewed on expiry. [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, 2010 are as follows: Particulars i. Payable not later than 1 year ii. Payable later than 1 year and not later than 5 years iii. Payable later than 5 years Total Rs.crore Minimum Lease Payments As at 31-3-2010 As at 31-3-2009 15.21 16.62 76.24 108.07 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.33.04 crore (previous year: Rs.50.33 crore). 21. 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 2009-2010 2008-2009 2009-2010 2008-2009 Basic Proﬁ t after tax as per accounts (Rs.crore) Weighted average number of shares outstanding Basic EPS (Rupees) Diluted Proﬁ t after tax as per 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 5315.02 3017.00 5450.74 3789.46 59,31,01,390 58,51,18,186 59,31,01,390 58,51,18,186 89.61 51.56 91.90 64.76 5315.02 18.50 3017.00 – 5450.74 18.50 3789.46 – Adjusted proﬁ t for diluted earnings per share(Rs crore) C=A+B 5333.52 3017.00 5469.24 3789.46 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 59,31,01,390 58,51,18,186 59,31,01,390 58,51,18,186 21,78,009 – 21,78,009 – 1,13,27,980 79,89,615 1,13,27,980 79,89,615 Weighted average number of shares outstanding for diluted EPS G=D+E+F 60,66,07,379 59,31,07,801 60,66,07,379 59,31,07,801 Diluted EPS (Rupees) Face value per share (Rupees) C/G 87.92 2 50.87 2 90.16 2 63.89 2 219 Notes forming part of Consolidated Accounts (contd.) 22. Disclosures required by Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets”: a) Movement in provisions: Particulars of disclosure Product Warranties Excise Duty Sales Tax Class of Provisions Litigation related obligations Contractual rectiﬁ cation cost- Construction contracts Rs.crore Others Total Balance as at 1-4-2009 Additional provision during the year Provision reversed during the year Balance as at 31-3-2010 (4=1+2-3) 18.24 18.06 11.02 25.28 0.10 41.71 – 0.10 9.50 5.48 – 45.73 – 8.24 – 8.24 190.83 187.19 67.49 5.94 438.07 109.23 67.16 62.79 # 146.55 191.16 130.34 400.75 Sr. no 1 2 3 4 # includes an amount Rs.62.55 crore being proportionate reversal of an extraordinary item of Rs.186.28 crore included in opening provision. (reference note no.14(a) supra) 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, 2010 represents the amount of the expected cost of meeting such obligations of rectiﬁ cation/replacement. The timing of the outﬂ ows is expected to be within a period of two years from the date of Balance Sheet. ii. 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 iii. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal. iv. Contractual rectiﬁ cation 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 (Revised) “Construction Contracts”. c) Disclosures in respect of contingent liabilities are given as part of Schedule J to the Balance Sheet. 23. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.9128.60 crore (previous year: Rs.4350.85 crore). 24. Provision for current tax (net of tax deducted at source and advance tax) includes: i) Provision for wealth tax Rs.2.70 crore (previous year: Rs.3.37 crore) ii) Rs.134.41 crore being provision for income tax in respect of earlier years (previous year: Rs.53.94 crore). The amount provided in current year mainly arose out of the retrospective amendment to Section 80IA of the Income Tax Act, 1961 brought about during the ﬁ nancial year 2009-2010 iii) Credit for Minimum Alternative Tax (MAT) entitlement Rs.26.59 crore (previous year: Rs.18.59 crore) under section 115JB of the Income Tax Act, 1961. iv) Rs.27.81 crore (previous year: Rs.21.88 crore) in respect of income tax payable outside India. v) Rs.0.37 crore (previous year: Rs.0.50 crore) being provision for income tax in respect of a subsidiary which was sold during the year. vi) Reversal of excess provision for tax on fringe beneﬁ ts of Rs.10.03 crore (previous year: Rs.0.20 crore) pertaining to earlier years. 25. 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. 220 Notes forming part of Consolidated Accounts (contd.) b) Major components of deferred tax liabilities and deferred tax assets: Particulars Deferred tax liabilities/ (assets) 31-3-2009 Charge/(credit)to Proﬁ t and Loss Account Ordinary activity Extra- Ordinary activity Effect due to acquisition/ disposal Charge/(credit) to Reserves Retained earnings Translation reserve Hedging reserve Securities premium Deferred tax liabilities: Difference between book and tax depreciation 370.52 67.14 Gain on derivative transactions to be offered for tax purposes in the year of transfer to Proﬁ t and Loss Account Disputed statutory liabilities paid and claimed as deduction for tax purpose but not debited to Proﬁ t and Loss Account Others Total Deferred tax (assets): Provision for doubtful debts and advances debited to Proﬁ t and Loss account Loss on derivative transactions to be claimed for tax purposes in the year of transfer to Proﬁ t and Loss Account Unpaid statutory liabilities/provision for compensated absences debited to Proﬁ t and Loss Account Unabsorbed depreciation/brought forward business losses Other items giving rise to timing difference Total Net deferred tax liability/(assets) Previous year 121.03 – 26.74 22.83 541.12 3.85 (7.38) 63.61 (157.09) (54.26) (147.06) – (68.82) (20.30) (8.45) 2.51 (28.87) (410.29) 130.83 121.72 6.07 (65.98) (2.37) 35.36 – – – – – – – – – (7.54) – – – (7.54) – – – – – – – 2.69 – – (7.54) (2.83) – – – – – – – – – – – – – (0.19) – – (88.55) – – (0.19) – – (88.55) – – – – – – (0.19) (0.08) – 120.85 – – – 120.85 32.30 (26.03) – – – – – – – – – – – – – Rs.crore Deferred tax liabilities/ (assets) 31-3-2010 429.93 32.48 30.59 15.45 508.45 (211.35) (26.21) (89.12) (5.94) (22.80) (355.42) 153.03 130.83 26. 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) The aggregate amount of revenues and proﬁ ts before tax (net) recognised during the year in respect of construction services related to Build-Operate-Transfer (BOT) projects is Rs.547.38 crore and Rs.34.21 crore respectively [refer accounting policy disclosed in Schedule Q vide para 2(a)(viii)] c) Loans and advances include Rs.516.00 crore (previous year: Rs.550.31 crore) being cumulative construction costs incurred including related margins in respect of annuity based Build-Operate-Transfer (BOT) projects. 27. 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. not to reduce their joint shareholding in LTTIL below 51% until the ﬁ nancial 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 ﬁ nancial assistance received from the term lenders is repaid in full by LTTIL . ii. 221 Notes forming part of Consolidated Accounts (contd.) b. 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. c. 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%. d. 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 and allotted share capital. e. To National Highway Authority of India, to hold minimum 26% stake in L&T Samakhiali Gandhidham Tollway Private Limited till 180 days from the date of concession agreement. However, the Company has decided to hold this stake for a period of 2 years after the construction period. To National Highway Authority of India, to hold minimum 26% stake in L&T PNG Tollway Private Limited till the commercial operations date. f. g. To Gujarat State Road Development Corporation Limited, to hold in L&T Ahmedabad Maliya Tollway Private Limited: (cid:2) (cid:2) (cid:2) 100% stake during the construction period; 51% stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and 51% stake during operational period. h. To Gujarat State Road Development Corporation Limited, to hold in L&T Rajkot-Vadinar Tollway Private Limited (cid:2) (cid:2) 100% stake during the construction period; 51% stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and 51% stake during operational period. (cid:2) To Gujarat State Road Development Corporation Limited, to hold in L&T Halol-Shamlaji Tollway Private Limited (cid:2) (cid:2) 100% stake during the construction period; 51% stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and 51% stake during operational period. (cid:2) To the lenders of L&T Ahmedabad Maliya Tollway Private Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited. i. j. k. To the lenders of L&T Rajkot-Vadinar Tollway Private Limited (a subsidiary of the Company), not to divest control without the l. prior approval of the lenders or Gujarat State Road Development Corporation Limited. 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 (joint venture partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable ﬁ nancial support for the successful execution of APPDCLs 2x800 MW Power Project-Steam Turbine Generator Package tender, near Krishnapatnam, Nellore District, Andhra Pradesh. m. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than 51% stake in L&T Seawoods Private limited (LTSPL) until CIDCO execute the lease deed for land in favour of LTSPL. 28. L&T Infrastructure Development Projects Limited (IDPL), a subsidiary of the Parent Company: has given the following undertakings jointly with Tata Steel Limited and The Dhamra Port Company Limited (DPCL) to the term lenders of DPCL: a) b) not to reduce the joint share holding below 51% upto the commercial operations date and below 26% during the balance to meet the cost overrun to the extent of 10% of the project cost and remaining operations period. has given the following 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. i) ii) 222 Notes forming part of Consolidated Accounts (contd.) iii) has pledged its investment in the equity shares of the following subsidiary companies to the lenders of term loan of the respective companies. Name of companies As at 31-3-2010 As at 31-3-2009 Rs.crore (a) Subsidiary companies 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 (b) Jointly controlled entity 1. The Dhamra Port Company Limited 42.99 40.16 28.81 22.18 27.59 125.71 42.99 40.16 28.81 22.18 27.60 80.87 The Company has also given the following undertaking, to the term lenders of the aforesaid subsidiary companies: a. 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 ﬁ nal 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 ﬁ nancial support to the borrower to meet shortfall, if any, in meeting the debt repayment after receipt of termination payment from National Highway Authority of India, in the event of a termination of the concessionaire agreement pursuant to occurrence of the concessionaire event of default or any force majeure event as stated in the said concessionaire agreement. b. c. 29. 30. 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 L&T Infotech Limited and L&T Capital Company Limited, amounting to Rs.14.77 crore, related to dividend of Rs.88.91 crore declared by them. Accordingly the additional tax on dividend includes Rs.14.77 crore paid by the aforesaid subsidiary companies. In line with the Company’s risk management policy, the various ﬁ nancial 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 are as under: Category of derivative instruments Rs.crore Amount of exposures hedged As at 31-3-2010 As at 31-3-2009 i) For hedging foreign currency risks a) Forward contracts for receivables including ﬁ rm commitments and highly probable 10956.44 4607.57 forecasted transactions b) Forward contracts for payables including ﬁ rm commitments and highly probable 7721.13 7059.34 forecasted transactions ii) c) Currency swaps d) Option contracts For hedging interest rate risks Interest rate swaps iii) For hedging commodity price risks Commodity futures b) Unhedged foreign currency exposures are as under: 5583.69 874.99 5125.81 1203.80 300.00 125.00 34.38 12.98 Unhedged foreign currency exposures i) ii) Receivables, including ﬁ rm commitments and highly probable forecasted transactions Payables, including ﬁ rm commitments and highly probable forecasted transactions As at 31-3-2010 23755.61 19686.05 Rs.crore As at 31-3-2009 19213.48 15240.00 223 Notes forming part of Consolidated Accounts (contd.) 31. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Beneﬁ ts”: i. Deﬁ ned contribution plans: Amount of Rs.73.40 crore (previous year: Rs.70.73 crore) is recognised as an expense and included in “staff expenses” (Schedule N) in the Proﬁ t and Loss Account. ii. Deﬁ ned beneﬁ t plans: a) The amounts recognised in Balance Sheet are as follows: Particulars Gratuity plan Post-retirement medical beneﬁ t plan Company pension plan Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 Rs.crore A Amounts to be recognised in Balance Sheet Present value of deﬁ ned beneﬁ t 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 reﬂ ected in the Balance Sheet Liabilities Assets Net liability/(asset) 338.23 20.04 358.27 294.56 – 63.71 63.71 – 63.71 289.74 0.93 290.67 255.06 – 35.61 35.61 – 35.61 – 83.84 83.84 – 1.29 82.55 82.55 – 82.55 – 75.83 75.83 – 1.43 74.40 74.40 – 74.40 – 136.47 136.47 – 0.86 135.61 135.61 – 135.61 – 1364.97 152.78 – 152.78 1364.97 – 1350.42 – 151.80 14.55 0.98 1127.81 – 1127.81 1151.80 – (23.99) @ 151.80 20.95 – – 151.80 20.95 # 17.45 – 17.45 # b) The amounts recognised in Proﬁ t and Loss Account are as follows: Rs.crore Particulars 1 2 3 4 5 6 7 8 9 10 I II III 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 Translation adjustments Amount capitalised out of the above Total (1 to 10) Amount included in “staff expenses” Amount included in “manufacturing, construction and operating expenses” Amount included in “interest expenses” Total (I to III) Actual return on plan assets Gratuity plan 2009-2010 28.24 22.19 (19.19) 18.45 – – 0.16 – (0.83) (0.07) 48.95 52.77 2.25 (6.07) 48.95 21.48 2008-2009 18.86 20.11 (16.04) 9.46 – – 0.05 – – (0.07) 32.37 29.19 2.87 0.31 32.37 29.09 Post-retirement medical beneﬁ t plan 2009-2010 5.29 6.04 – 0.55 0.17 – – – – – 12.05 11.42 2008-2009 4.12 5.30 – 9.44 0.13 – – – – – 18.99 6.57 – 0.63 12.05 – – 12.42 18.99 – 224 Company pension plan 2008-2009 Trust-managed provident fund plan 2009-2010 74.15 ** 2009-2010 3.81 11.90 – (28.60) 0.11 – – – – – (12.78) 0.67 – (13.45) (12.78) – (19.57) 5.18 0.11 4.55 13.01 103.07 – (103.53) 25.57 – – – – – (25.11) – – – – 74.15 3.28 74.15 (21.14) 2008-2009 44.87 ** 87.44 (88.86) (24.11) – – – 25.53 + – – 44.87 44.87 – 24.42 3.28 – – – 74.15 77.96 – – 44.87 112.97 Notes forming part of Consolidated Accounts (contd.) c) The changes in the present value of deﬁ ned beneﬁ t obligation representing reconciliation of opening and closing balances thereof are as follows: Particulars Opening balance of the present value of deﬁ ned beneﬁ t obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) Employer ii) Employee Add/(less): Actuarial losses/(gains) Less: Beneﬁ ts paid Add: Past service cost Add: Liabilities assumed in an amalgamation/ acquisition Add: Adjustment for earlier years Less: Effect of any curtailment or settlement Closing balance of the present value of deﬁ ned beneﬁ t obligation Gratuity plan As at 31-3-2010 As at 31-3-2009 Post-retirement medical beneﬁ t plan As at 31-3-2010 As at 31-3-2009 Company pension plan Rs.crore Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 290.67 28.24 22.19 – – 20.74 (18.36) – 0.12 14.67 – 244.08 18.86 20.11 – – 22.51 (15.51) – 0.32 0.30 – 75.83 5.29 6.04 – – 0.55 (3.87) – – – – 60.31 4.12 5.30 – – 9.44 (3.34) – – – – 152.79 3.81 11.90 – – (28.60) (3.43) – 152.44 1127.81 1014.16 74.15 ** 4.55 13.01 103.07 44.87 ** 87.44 – – – 125.94 – (76.46) – – 5.18 (2.83) – – – – – (19.57) – 10.46 – – 88.34 – (102.14) – – (4.86) – 358.27 290.67 83.84 75.83 136.47 152.78 1364.97 1127.81 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Rs.crore 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: Beneﬁ ts paid Add: Business combinations/acquisitions Add: Adjustments for earlier years Closing balance of the plan assets Gratuity plan Trust-managed provident fund plan As at 31-3-2010 255.06 19.19 2.29 35.42 – (18.36) 0.10 0.86 294.56 As at 31-3-2009 213.22 16.04 13.05 27.91 – (15.51) 0.33 0.02 255.06 As at 31-3-2010 1151.80 103.53 (25.57) 67.30 123.66 (76.46) – 6.16 1350.42 As at 31-3-2009 1014.85 88.86 24.11 44.24 87.02 (102.14) – (5.14) 1151.80 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 fund and gratuity fund. Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities. The Company expect to fund Rs.43.67 crore (previous year: Rs.33.38 crore) towards its gratuity plan and Rs78.60 (previous year: Rs.63.01 crore) towards its trust-managed provident fund plan during the year 2009-10 Employer’s and employees’ contribution (net) for March is paid in April @ Asset is not recognised in the Balance Sheet # ** 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 Proﬁ t and Loss Account 225 Notes forming part of Consolidated Accounts (contd.) e) The major categories of plan assets as a percentage of total plan assets are as follows: 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 Gratuity plan Trust-managed provident fund plan As at 31-3-2010 As at 31-3-2009 As at 31-3-2010 As at 31-3-2009 28% 13% 6% 3% 12% 1% 33% 4% 25% 16% 4% 1% 14% 2% 34% 4% 23% 12% 6% – 23% – 36% – 23% 13% 5% – 27% – 32% – 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 beneﬁ t plan Expected return on plan assets Annual increase in healthcare costs (see note below) Salary growth rate: a) Gratuity plan As at 31-3-2010 As at 31-3-2009 8.01% 8.01% 8.01% 7.50% 5.00% 7.67% 7.67% 7.67% 7.50% 5.00% 6.00% 6.00% b) Company pension plan Attrition rate: a) For post-retirement medical beneﬁ t plan & company pension plan, the attrition rate varies from 2% to 8% (previous 7.00% 7.00% 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 The estimates of future salary increases, considered in actuarial valuation, take into account inﬂ ation, 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 Proﬁ t and Loss Account as actuarial loss. The obligation of the company under the post-retirement medical beneﬁ t 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 deﬁ ned beneﬁ t obligation: Particulars Effect on the aggregate of the service cost and interest cost Effect on deﬁ ned beneﬁ t obligation Rs.crore Effect of 1% increase Effect of 1% decrease 2009-2010 2008-2009 2009-2010 2008-2009 1.03 6.11 0.88 5.08 (1.59) (4.93) (1.19) (3.80) 2 3 4 5 6 7 8 9 226 Notes forming part of Consolidated Accounts (contd.) g) The amounts pertaining to deﬁ ned beneﬁ t plans are as follows: Particulars As at 31-3-2010 As at 31-3-2009 As at 31-3-2008 As at 31-3-2007 Rs.crore 1 Post-retirement medical beneﬁ t plan (unfunded) Deﬁ ned beneﬁ t obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Deﬁ ned beneﬁ t obligation Plan assets Surplus/(deﬁ cit) Experience adjustment plan liabilities Experience adjustment plan assets 3 Post-retirement pension plan (unfunded) Deﬁ ned beneﬁ t obligation Experience adjustment plan liabilities 4 Trust managed provident fund plan (funded) Deﬁ ned beneﬁ t obligation Plan assets Surplus/(deﬁ cit) h) General descriptions of deﬁ ned beneﬁ t plans: 1. Gratuity plan: 82.55 5.73 358.27 294.56 (63.71) 30.67 2.29 135.61 (4.11) 1364.97 1350.42 (14.55) 74.40 1.13 290.67 255.06 (35.61) 8.38 13.05 151.80 (6.89) 1127.81 1151.80 23.99 58.74 2.66 244.08 213.22 (30.86) 16.44 6.49 151.35 26.87 1014.16 1014.85 0.69 47.09 – 212.63 160.33 (52.30) 25.84 (3.03) 118.56 – 933.74 947.84 14.10 The Company operates gratuity plan wherein every employee is entitled to the beneﬁ t equivalent to 15 days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The beneﬁ t vests after 5 years of continuous service. The company’s scheme is more favorable 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 beneﬁ t plan: The Post-retirement medical beneﬁ t 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 notiﬁ ed 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 beneﬁ t under this plan vests immediately on rendering of service. 227 Notes forming part of Consolidated Accounts (contd.) 32. The Company’s share in respect of the assets, liabilities, reserves, income and expenses, related to its interests in the jointly controlled entities, incorporated in the consolidated ﬁ nancial statements are: I Assets Fixed assets Investments 1 2 3 Current assets, loans and advances II Liabilities III Reserves IV Income V Expenses (a) Inventories (b) Sundry debtors (c) Cash and bank balances (d) Other current assets (e) Loans and advances 1 Secured loans 2 Unsecured loans 3 Current liabilities and provisions (a) Current liabilities (b) Provisions 1 Sales 2 Other income 1 Operating expenses 2 Staff expenses 3 Sales administration and other expenses 4 5 Depreciation 6 Provision for tax Interest expense Rs.crore As at 31-3-2010 1318.10 109.09 As at 31-3-2009 803.98 16.07 127.55 15.68 58.13 0.20 275.19 954.36 150.00 441.74 2.39 100.18 271.13 7.00 175.41 20.77 18.59 5.36 56.28 2.55 113.55 125.89 61.42 0.07 139.59 540.33 – 452.62 1.78 89.86 472.81 0.13 327.42 43.06 54.79 3.83 35.08 1.77 33. Deferred payment liability of Rs.1951.26 crore (previous year: Rs.1970.09 crore) represents- a) Negative grant of Rs.704.28 crore (previous year: Rs.711.49 crore) payable to National Highway Authority of India (NHAI), as per the concession agreement entered into with NHAI. b) Deferred conversion fee liability of Rs.161.98 crore (previous year: Rs.139.36 crore) towards conversion of land from Industrial to c) commercial use as per the approval from Chandigarh Housing Board (CHB) Lease premium amounting to Rs.1085.00 crore (previous year: Rs.1085.00 crore) payable to City and Industrial Development Corporation of Maharashtra (CIDCO) pursuant to conferment of development-cum-leasehold rights to execute the lease deed for land. d) Future consideration payable Rs.Nil crore (previous year: Rs.34.24 crore) in respect of acquisition of subsidiaries. In respect of the total amount of Rs.1951.26 crore, an amount of Rs.37.81 crore is payable within a period of one year. 34. 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. 35. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2010. 36. Figures for the previous year have been regrouped/reclassiﬁ ed wherever necessary. 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 17, 2010 As per our report attached SHARP & TANNAN Chartered Accountants ICAI registration no.109982W by the hand of R. D. KARE Partner Membership no.8820 Mumbai, May 17, 2010 228 Notes 229 Notes 230 ATTENDANCE SLIP Registered Office: L&T House, Ballard Estate, Mumbai - 400 001. ANNUAL GENERAL MEETING - AUGUST 26, 2010 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 Thursday, August 26, 2010. 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 26, 2010 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 Thursday, August 26, 2010 and at any adjournment thereof. Signed this ............................. day of ................................2010. 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. Advertisement released by L&T in the media, advocates a more responsibile approach to the environment.

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