Larsen & Toubro
Annual Report 2013

Plain-text annual report

BUILDING THE FUTURE 68th Annual Report 68th Annual Report 2012-2013 2012-2013 A. M. Naik Group Executive Chairman Dear Shareholders, It has been a challenging year for Indian industry. The economy, impacted by decelerating GDP growth, mounting fiscal deficit and high Current Account Deficit, has seen lacklustre investment momentum in infrastructure, energy and industrial capital expenditure. The few positives to emerge from this scenario were the clutch of fiscal reforms introduced in the latter half of the year with a view to revving up the economy. These measures range from phased deregulation of diesel prices, formation of a Cabinet Committee on Investments, direct transfer of subsidies to beneficiaries and efforts to reduce the losses of state-owned power distribution companies. These measures will need to be sustained and supplemented by a slew of others to effectively recharge the economy and restore its growth trajectory. Performance Overview Against the backdrop of this challenging environment, your Company has turned in a commendable performance on all key performance parameters. Order Inflows which are the mainstay of any company engaged predominantly in Engineering & Construction business, clocked in at 88,035 Cr representing an impressive 25% growth over the previous year. The 1 unexecuted Order Book at the year-end stands at 153,604 Cr. This provides a healthy revenue and margin visibility over the next few years. Project execution was largely on track - borne out in the 14% growth in Gross Revenues which came in at 61,471 Cr. Profit after Tax registered 4,911 Cr which translates to a growth of 10% over the previous year. At the Group level, Gross Revenues displayed a growth of 16% and stood at 75,195 Cr for the year under review. PAT, at 5,206 Cr represents a growth of 11% over the previous year. It gives me pleasure to announce that your Company has recommended dividend of 18.50 per equity share on a face value of 2 per share for the year. The corresponding dividend during the previous fiscal was at 16.50 per equity share. In addition, I am glad to share that, in the th anniversary year, your Company has also recommended bonus shares in the ratio of 1:2 (i.e., one bonus equity share of 2/- each for every two equity shares of 2/- each held). Internationalisation In times of challenge, a mix of long range strategy and agile tactical responses are critical to success. Your Company has countered the slowdown in the domestic market by expanding its footprint and intensifying operations in geographies with promising business potential. This outreach is predominantly in the Gulf countries, South East Asia Regions and now working to extend to Australia, a few CIS countries and select African nations. Quite a few senior business development executives of different nationalities and having rich domain experience with customer insight have been inducted at the local level in these countries. The thrust on penetration into international markets is yielding results. International Order Inflows represent 17% of the total inflows during the year under review. become a global phenomenon and is not restricted to India. Hence development of human resources, along with talent acquisition continues to receive focussed attention in your Company. People remain the cornerstone of the organisation. We ensure that employees gain ample opportunities for personal and professional growth. Our Leadership Development Academy in Lonavala - Maharashtra, Project Management Institutes at Vadodara - Gujarat and at Chennai - Tamil Nadu, and systematic career progression of staff are a few of the multiple initiatives that will facilitate succession planning. We recognize that the process of internationalization involves adopting and embracing a multi-cultural work ethos - while retaining our core national identity. We have intensified recruitment of lateral hires at the management level, particularly in the Gulf countries and for new growth geographies. Sustainable Development Your Company has aligned itself with the Millennium Development Goals formulated by the United Nations, and has progressed well on the Social, Environmental and Economic agenda pursued over the last few years. Considerable headway has been made in the areas of energy conservation, healthcare, environment protection and social uplift of the deprived sections of society. The Company harnesses untapped energy of India’s youth through broad-based skill development centres and promotes social development through on-going mother & child healthcare programmes. Your Company has been recognised in various national and international forums for its sustainability efforts. Outlook Even as the macro environment remains challenging, your Company is effectively targeting specific opportunities within India and internationally. Segments that hold promise in FY14 include – Talent Management In the last two decades, we have seen the young generation being attracted to new economy sectors, resulting in lack of top talent coming into the core sector, particularly in Project and Construction industry. This has 1) Infrastructure - a) Roads – This segment witnessed severe contraction in ordering by NHAI in FY13 but is expected to pick up in FY14 through ordering of more than 3,500 km of new projects on Engineering, 2 Procurement & Construction (EPC) mode. We being the distinct leader in the segment, will selectively participate in these EPC bids where the prospects meet our internal viability benchmarks. Some upcoming road projects in the Gulf countries are also being targeted in FY14. b) Metro and Mono Rails – The Company has been involved in the execution of metro rail projects in cities across the country and India’s first monorail in Mumbai (trial runs conducted in FY13). This enables the Company to exploit opportunities to secure contracts in India, where multiple cities are initiating metro rail projects. We are also participating in mass rapid transport prospects in the Gulf countries. c) Railways Business – The thrust on strengthening the rail network across the country holds good prospects for our railways business. We have already secured an initial order in consortium with a Japanese company for a major section of the Dedicated Freight Corridor. We are also exploring international markets, especially the Gulf countries where several projects are coming up. d) Water & Renewable Energy – Backed by strong project execution capabilities and operational excellence, the Company has achieved good growth in Water and Renewable Energy sector in FY13. With current Order Backlog and good order prospects, the business from these sectors is expected to see an upswing in FY14. e) Urban Infrastructure – Opportunities in residential buildings, office space, hospitals, hotels, educational institutions, shopping complexes and factories continue to provide a large canvass of business potential. Your Company has become the EPC contractor of choice for major developers and this is driving profitable growth. f) Airports – Increasing passenger and cargo traffic has sustained growth in aviation industry. On the back of excellent track record in this sector, we are well-positioned for airport projects within and outside India. 2) Heavy Engineering & Shipbuilding - We have the capability to meet the requirements for high technology critical equipment and systems. In the process plant equipment segment, the international market looks promising in the medium term. The domestic nuclear segment is expected to see ordering activity in FY14. The defence sector has been adversely impacted by the slow pace of decision making as well as deferral of contract awards. However, recent initiatives to involve private sector in defence equipment manufacturing augurs well for your Company. The shipyard at Kattupalli has been completed and is capable of building warships, submarines and specialized commercial vessels. It is equipped with a state-of-the- art shiplift that enables it to undertake simultaneous new build, repair & refits. While the global commercial shipbuilding trend remains subdued, we envisage that the Indian defence sector is likely to open up and provide opportunities for building defence vessels. 3) Hydrocarbon – On the domestic front, Exploration & Production (E&P) spends in upstream hydrocarbon segment is expected to sustain during FY14. The announcement of the recent policy to treat fertiliser production on priority basis will result in setting up new fertilizer plants. This will provide increased opportunities. Onshore gas processing segment is also expected to witness implementation of redevelopment projects. Large investments are also expected in cross-country pipeline projects. In the upstream sector, the Company is equipped to repair, rebuild and construct new Jack-ups, drilling rigs and FPSO topsides. The business is well placed to leverage its multi-locational Modular Fabrication Facilities to respond to global trends towards modularization of onshore Gas Processing plants. We have improved our international presence through several prestigious orders. We are increasingly pursuing opportunities overseas through alliances with the leading global EPC companies. This has necessitated putting in place a multi-national organization, with a cross-cultural team possessing local knowledge and domain expertise. The Company proposes to form a subsidiary for its Hydrocarbon Business. This will enable greater autonomy and formulation of HR policies in line with industry practices so as to attract the best talent. 3 4) Thermal Power - Policy paralysis, negative market sentiments and procedural bottlenecks have adversely affected the domestic Power sector in the last couple of years. Pressing concerns with respect to land, fuel, financing and statutory approvals have dried up the order pipeline, putting pressure on the Company’s capacity utilization. This is further aggravated by large scale imports since the country’s policies do not provide a level playing field, particularly against imports from ‘managed’ economies. Under the circumstances, we are doing our best to be competitive through cost reduction, design optimisation and smart sourcing. Emphasis will also be on expanding our spectrum of services to select Gulf countries and the Southeast Asia for Gas based power plants. 5) Power Transmission & Distribution - Government policies lay stress on investments in strengthening the power grid and the power distribution system through central and multilateral funding agencies. We have demonstrated a steady growth in order book position in domestic and international markets. The emphasis on strengthening of transmission grids in Gulf countries will continue to provide significant business opportunities for power transmission and distribution business in the coming years. 6) Metallurgical and Material Handling - The short-term outlook in this area continues to be challenging, due to prevailing complexities of policies governing mining, land acquisition and absence of new power projects. These are sought to be resolved through various government proposals, legislations and policies. As the economy grows, demand for metals particularly steel, aluminium and copper will necessitate expansion of capacity. We are well positioned to benefit from the confidence we enjoy because of our track record and timely completion of projects. Material Handling prospects in areas of power, mining, ports and long distance conveyors for bulk ores are likely to grow in line with economic growth. 4 7) Electrical & Automation - The Electrical & Automation business continues to maintain its leadership position in LV Switchgear. It has also made a mark in the MV segment through an acquisition of an international company a few years ago. Product development in both LV and MV Switchgear continues to forge ahead. The project business has enhanced its focus on international markets. The coming year should see an upward momentum. The Company has also acquired two small companies which will bridge technology gaps in one case and enhance product range in another. 8) Machinery & Industrial Products - The Construction Machinery business maintained its leadership position in premium excavators segment despite shrinkage in construction equipment market and entry of new competitors. In Industrial Products, the valves business maintained the positive trend in FY13, registering a growth in sales of 9% over the previous year. Major investments in the oil & gas segment planned in the USA, Middle East and other countries provide good opportunities for international operations. 9) Information Technology & Integrated Engineering Services Business - L&T Infotech, a wholly owned subsidiary, grew at 22% Y-o-Y on a consolidated basis. Profit after Tax grew by 49%. L&T Infotech has embarked on building a strong sales and marketing team globally with emphasis on the Americas, Europe, Gulf countries and the Far East. The Company has also undertaken some major initiatives intended to make the L&T Infotech name more visible and distinctive because of differentiated solutions it offers in multiple domains. Technology Services, a Strategic Business Unit of L&T, is being formed into a subsidiary, which will result into consolidation of all engineering services business of L&T and L&T Infotech. This subsidiary will provide autonomous functioning in line with industry practices. 10) Financial Services - This business, which was listed in 2011, continues to grow profitably with a loan book in excess of 33,000 Cr at the end of FY13. Net Interest Margins at 5.5% reflect the healthy interest spreads that the business earns. The business has successfully concluded acquisitions in mutual funds business and housing finance. The insurance business is also joining hands with the Future Group and the Generali Group to leverage the complementary strengths of both players and to enable achievement of scale and early profitability. 11) Developmental Projects - Development projects undertaken by the Company in roads, ports, metro rail and power continue to progress satisfactorily, with some of these projects currently operational. The Company plans to open up alternate funding lines to enable commissioning of the upcoming projects and reduce dependencies on your Company’s balance sheet. Before I conclude, I would like to extend my thanks to Team L&T, customers, vendors and other stakeholders, without whom our continued growth momentum would not have been possible. I would also like to thank my fellow Board Members for their unstinted support and encouragement. Thank You A. M. Naik Group Executive Chairman Mumbai, May 22, 2013 5 Contents Company Information Organisation Structure Leadership Team L&T Nationwide Network & Global Presence Corporate Sustainability Annual Business Responsibility Report Standalone Financials - 10 Year Highlights Consolidated Financials - 10 Year Highlights Graphs Directors’ Report Management Discussion & Analysis Auditors’ Report Balance Sheet Statement of Profit and Loss Cash Flow Statement Notes forming part of Accounts Auditors’ Report on Consolidated Financial Statements Consolidated Balance Sheet Consolidated Statement of Profit and Loss Consolidated Cash Flow Statement Notes forming part of Consolidated Accounts Information regarding Subsidiary Companies 6 7 8 - 9 10 12 - 13 14 - 21 22 - 37 38 39 40 - 41 42 - 86 87 - 146 147 - 149 150 151 152 153 - 221 222 - 223 224 225 226 227 - 288 289 - 308 Company Information Board of Directors MR. A. M. NAIK Group Executive Chairman MR. K. VENKATARAMANAN Chief Executive Officer & Managing Director MR. M. V. KOTWAL Whole-time Director & President (Heavy Engineering) MR. S. N. SUBRAHMANYAN Whole-time Director & Senior Executive Vice President MR. R. SHANKAR RAMAN Whole-time Director & Chief Financial Officer MR. SHAILENDRA ROY Whole-time Director & Senior Executive Vice President (Construction & Infrastructure) (Corporate Affairs & Power) MR. S. RAJGOPAL Independent Director MR. S. N. TALWAR Independent Director MR. M. M. CHITALE Independent Director MR. N. MOHAN RAJ Nominee of LIC MR. SUBODH BHARGAVA Independent Director MR. A. K. JAIN Nominee of SUUTI MR. M. DAMODARAN Independent Director MR. VIKRAM SINGH MEHTA Independent Director MR. SUSHOBHAN SARKER Nominee of LIC Company Secretary Registered Office Auditors Solicitors Mr. N. Hariharan L&T House, Ballard Estate, Mumbai - 400 001 M/s. Sharp & Tannan M/s. Manilal Kher Ambalal & Co. Registrar & Share Transfer Agents Sharepro Services (India) Private Limited 68th ANNUAL GENERAL MEETING AT BIRLA MATUSHRI SABHAGAR, 19, MARINE LINES, MUMBAI 400 020 ON THURSDAY, AUGUST 22, 2013 AT 3.00 P.M. 7 8 9 Leadership Team A. M. Naik Group Executive Chairman K. Venkataramanan CEO & Managing Director M. V. Kotwal President (Heavy Engineering) S. N. Subrahmanyan Sr. Executive Vice President (Construction & Infrastructure) R. Shankar Raman Chief Financial Offi cer Shailendra Roy Sr. Executive Vice President (Corporate Affairs & Power) S. C. Bhargava Sr. Vice President (Electrical & Automation) 10 11 Nationwide Network 12 Global Presence 13 Corporate Social Responsibility The Company’s social responsiveness long predates the entry into the corporate lexicon of terms like ‘CSR’. Our people feel the pulse of the social milieu in which they operate. They believe in inclusive growth and reach out to assist the communities around them - not because it is the magic formula for sustainability, but simply because that is, and always has been, part of the collective character of Team L&T. answers to the many and complex problems confronting communities. There are no ‘Mr. Know-It-Alls’ in our teams, ready to show the light to all those in need. Instead our qualified and trained social development professionals are committed to working with community members, listening to them and understanding the problems from their perspective. It is together, in a close and collaborative spirit, that we arrive at lasting solutions. We are well aware that being a leading engineering and technology company does not mean that we have the The Company invests in the growth of communities around its campuses through various social initiatives. of the nation’s youth through skill development initiatives and nurture mother & child health care programmes. Thrust Areas We empower via education, harness the untapped energy Over the years, our efforts to strengthen the foundations of the social pyramid have intensified and expanded. 14 14 SOCIAL SCORE-CARD • Reached out to half a million beneficiaries • Seven community health centres set-up, and more underway • Livelihood for over 5000 underprivileged women • Engagement with over 50 community learning centres • Outreach to over 150 schools and over 10,000 underprivileged children. Education The Company’s social interventions in this sphere are focused on providing primary education, infrastructure development and enhancing the learning experience for children in schools in the vicinity of our units across India. We adopt innovative teaching techniques and focus on subjects like Mathematics and English which many children find challenging. Our mobile teaching unit - ‘Science on Wheels’ visits schools and provides pupils with a ‘hands on’ opportunity to perform science experiments . We also extend support to pre-schools, assist in infrastructure development, set up computer labs and libraries as well as provide teaching-aids and uniforms to the needy. Other activities include organizing summer camps and conducting sports events. Mother & Child Health A woman is the nucleus of the family, which in turn is the focal point of society. Mother & child heath, therefore is one of the thrust areas of our social initiatives. Initiatives for maternal and child health include: setting up of health centres with a focus on reproductive health, conducting diagnostic and clinical health camps that support maternal and child health care, immunization and health education. Health camps are conducted by qualified and experienced teams. Mobile clinics enhance our reach to those in need. ‘Science on Wheels’ - L&T joins hands with an NGO to promote science in schools. This is part of L&T’s broad spectrum of community initiatives. 1515 Skill Building Scaffolding erection training at CSTI, Chennai The Company is one of the few construction organizations in India with dedicated skill training institutes which offer the prospect of subsequent employment with contractors at the Company’s project sites. L&T provides formal vocational training in construction for the largely unorganized workforce in this sector through Construction Skills Training Institute (CSTI). CSTIs provides free-of-cost training in construction skills to rural and urban youth in various trades such as bar bending, formwork carpentry, masonry, scaffolding and welding etc. This training is a transformational process that improves the skill set of the underprivileged youth and enhances their employability. The Company has also introduced vocational training programmes in tailoring, beautician skills, home nursing and food processing for women. Such training helps build self-reliance and reduce vulnerabilities. L&T-eering 16 16 Employee volunteering is a company-wide movement driven solely by the passion to serve. More and more L&T-ites are opting to be ‘L&T-eers’, and add value to society through their time, energy and expertise. L&T encourages employees to volunteer for CSR activities and make a tangible difference to the world in which they live by investing their time and personal resources to serve the communities around them. Ladies Clubs The Ladies Clubs led by the spouses of Company employees across various locations are a unique group. They pool their skills and resources in the spirit of service to work towards the development of communities. Ladies Clubs are involved in several initiatives which include providing educational support programmes for schools, organizing vocational training courses for underprivileged youth and enabling women to enhance their income generation capacity. The Clubs also provide support to the disabled. Larsen & Toubro Public Charitable Trust (LTPCT) LTPCT is committed to the inclusive growth of society through interventions in education, vocational training, health care and water management. Over a hundred check dams have been constructed by the Trust in drought-prone rural Maharashtra. The dams help in irrigation, facilitate ground water recharge and have resulted in stemming migration to cities. The ‘Science on Wheels’ mobile teaching unit has introduced over 1,50,000 children across the country to the wonders of science. Towards a Greener Tomorrow Air, water and earth are the givers and sustainers of life. And the irony is that the very survival of these lifelines is now in our hands. If we choose to conduct ourselves with care and responsibility, our natural assets will continue to nourish life as they have been doing for ages. If we let expediency and immediate self-interest prevail, however, we could well be cutting off our own lifelines. With every passing year the issue of climate change finds deeper resonance in the Company. It influences our decision making in key areas, spurs product and process innovation and determines our product mix to clients. Our initiatives are aimed at reduction in carbon intensity, utilisation of clean and renewable energy sources and engineering of green buildings. As builders to the nation, the Company’s strategies are also in synch with the nation’s needs, be it infrastructure development or environmental management. Our initiatives and actions closely follow the Government of India’s Nation Action Plan on Climate Change. From commissioning India’s largest solar power plant to becoming an energy auditor accredited by a leading, global body, from sowing saplings of change to spreading sustainability knowledge, from undertaking carbon sequestration study to water footprint mapping - our progress on the eight national missions is rapid and decisive. 17 17 Here is how our businesses are contributing to preserving the environment: Construction The uncertainties and anxieties around the impact of construction on the environment has been converted into an opportunity. We now lead the way in eco-friendly construction, having built more certified green buildings than any other company. We have secured several LEED certifications for buildings constructed for ourselves and for our customers. partnership mode. Like all such systems, the Hyderabad Metro will help make the city green, reduce automobile traffic, save fuel and arrest GHG emissions. In Mumbai, we are also building and developing a mono rail - a ‘first’ for India. In addition, we contribute significantly to the metro systems being built in other major cities around the country. Solar Power The Company is India’s industry leader in building solar PV power plants. L&T has constructed ITC’s 600-room five-star hotel - the world’s largest LEED-certified green hotel Solar PV panels installed at Powai campus Metro Rail The Company is constructing and developing a metro rail system in Hyderabad - one of the largest mass rapid transit systems in the world being built through the public-private Wastewater Treatment We provide solutions for desalination, wastewater re-cycling and re-use. We also provide technologies for zero discharge of wastewater. The Hyderabad Metro Rail Project being developed by L&T IDPL in partnership with the government. This project will drastically cut down commuting time and enhance the quality of life in Hyderabad. 18 18 Hydrocarbon The Company has a long track record of EPC execution of projects for fuel switch, dehydrogenation and desulphurization for fertiliser manufacturers and refineries. Power Power plants present the typical dilemma of development. They are essential for progress and yet they are known to impact the environment. The Company offers the supercritical solution. Supercritical thermal power plants uses steam in a way that improves the turbine cycle heat rate. This reduces carbon dioxide emissions as well as other lifecycle costs such as land and water. Heavy Engineering We all know that the energy clock is ticking, and traditional sources of fuel are getting rapidly depleted. Under a technical tie-up with Shell, the Company manufactures and supplies equipment that helps to derive gas from coal. This is one of the many ways in which we are helping reduce dependency on a single, increasingly finite fuel source. Electrical & Automation A range of products in the Company’s electrical & automation portfolio is helping industries and domestic consumers at home and commercial complexes to increase energy efficiency. Prayas - a special effort for special people. This is one of multiple social initiatives that the Company is engaged in. 19 19 L&T Aligns with National Action Plan Missions Solar Enhanced Energy Efficiency Achievements include providing EPC solutions for solar PV power plants, commissioning India’s largest solar power plant (40 MWp), and executing 6 MWp solar PV power plants in less than three months. The Company’s units in Chennai, Hazira, Talegaon, Mahape, Vadodara, Ahmednagar, Mysore, Coimbatore and Sohar (Oman) continue to harness the power of the sun. L&T has executed a total of 114 MWp solar EPC power plants. The Company introduced energy-efficient products and processes, saving 123,417 GJ of energy, indirectly reducing over 27,000 tonnes of CO2 emission. Renewable energy constitutes 10.48% of L&T’s energy mix. The Company’s E&A business offers products and solutions that enable customers reduce their energy consumption. It can provide energy audit services and is accredited by the Bureau of Energy Efficiency (BEE). Sustainable Habitat Water The Company has constructed over 14.4 million sq. ft. of green buildings for clients in the reporting year, taking L&T’s green-building tally to 25.2 million sq. ft to date. Seven buildings measuring 1.6 million sq. ft. on the Company premises are certified green buildings – two each Platinum, Gold and Silver, and one Certified. Water-footprint mapping at six campuses helped the Company identify water-efficiency opportunities. 16 out of 22 locations adopted the zero-wastewater-discharge approach, reducing the total water consumption by 6.3% w.r.t. 2008-09 scope. For Thane’s water-deficient tribals, the Company built 50 check dams with a total capacity of approx.191 million litres. The Company executes large water-management projects covering distribution, water treatment, etc. 20 20 Green India Sustainable Agriculture The Company conducted a carbon sequestration study at six campuses, which have sequestered 16,309 tonnes of CO2 to date. A green cover clothes around 35% of the available open land at our manufacturing locations. Across L&T’s campuses and project sites, the Company has planted over 265,000 tree saplings, and nurtures over 150,000 fully-grown trees. In the fertiliser sector, the Company executed eco-friendly projects specifically to reduce energy consumption in urea plants. Also reduced are SOx emissions and ammonia discharge into wastewater via ‘fuel switch’ projects. The Company is preferred by most Indian fertiliser plants for critical equipment. The Company’s electrical products enable agricultural irrigation. Sustaining the Himalayan Ecosystem Strategic Knowledge for Climate Change The Company has strengthened its focus on employment opportunities and infrastructure development, and conducts community engagement initiatives – such as medical camps and tree plantation. The Company is reinforcing ‘skill-building’ training programmes at project sites. The Company’s corporate sustainability initiatives are available on www.lntsustainability.com. The Company participates in forums, pertaining to sustainability and climate change. Green initiatives are shared through factory visits, and related information is disseminated to new employees. The Company is developing a pool of certified ‘sustainability assurance practitioners’, and organizes capacity-building training related to energy auditing / management certified by BEE. 21 21 Annual Business Responsibility Report (ABRR) The Business Responsibility Report (BRR) format conforms to Securities & Exchange Board of India (SEBI) listing requirement. It covers the National Voluntary Guidelines (NVG) based on Social, Environmental & Economic Responsibilities of Business released by the Ministry of Corporate Affairs, India. The Company also publishes a Sustainability Report every year, prepared as per the Global Reporting Initiative (GRI) G3 guidelines. The Sustainability Reports are externally assured and are ‘GRI Checked Application Level A+’, signifying the highest level of disclosure in public domain since 2008. The report can be accessed at www.lntsustainability.com. The Company is the first engineering & construction company in India to report on its Corporate Sustainability performance, and among the earliest to state its conformance with the eight missions announced by the Prime Minister of India in the National Action Plan on Climate Change (NAPCC). Section A: General Information about the Company 1. Corporate Identity Number (CIN) of the Company: L99999MH1946PLC004768 2. Name of the Company: Larsen & Toubro Limited 3. Registered address: L&T House, Ballard Estate, Mumbai: 400 001, India 4. Website: www.larsentoubro.com 5. Email id: sustainability-ehs@larsentoubro.com 6. Financial Year reported: 1st April 2012-31st March 2013 7. Sector(s) that the Company is engaged in (industrial activity code-wise): Group Class Sub Class Description Manufacture of electric motors, generators, transformers and electricity distribution and control apparatus Manufacture of parts and accessories for machinery / equipment used by construction and mining industries. Building of commercial vessels, passenger vessels, ferry boats, cargo ships, tankers, tugs, hovercraft (except recreation type hovercraft), etc. Building of warships and scientifi c investigation ships, etc. Construction of fl oating or submersible drilling platforms. Construction of buildings carried out on own-account basis or on a fee or contract basis. Construction and maintenance of motorways, streets, roads, other vehicular and pedestrian ways, highways, bridges, tunnels and subways. Construction and maintenance of railways and rail-bridges. Construction and maintenance of power plants Construction / erection and maintenance of power, telecommunication and transmission lines. Construction and maintenance of industrial facilities such as refi neries, chemical plants, etc. Wholesale of construction and civil engineering machinery and equipment. Real estate activities with own or leased property. Architectural and engineering activities and related technical consultancy. 28246 30111 30112 30114 41001 42101 42102 42201 42202 42901 46594 68100 71100 271 2710 282 301 2824 3011 410 421 4100 4210 422 4220 465 681 711 4659 6810 7110 22 8. List three key products/services that the Company manufactures/provides (as in balance sheet) 1. Construction and project related activity. 2. Manufacturing and trading activity. 3. Engineering service. 9. Total number of locations where business activity is undertaken by the Company i. Number of International Locations: 35 ii. Number of National Locations: 100 10. Markets served by the Company – Local/State/National/International: All Section B: Financial Details of the Company 1. Paid up Capital (INR): `123.08 Crore 2. Total Turnover (INR): `61,470.86 Crore 3. Total profit after taxes (INR): `4,910.65 Crore 4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%): 1.49% 5. List of activities in which expenditure in 4 above has been incurred: Community and social engagements broadly covering; a. Education b. Skill Building c. Mother & Child Care d. Environment protection Section C: Other Details 1. Does the Company have any Subsidiary Company/Companies? Yes 2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s): Yes. The Business Responsibility (BR) initiatives of the company are extended to the Subsidiary/Associate Companies and these are encouraged to participate in various related activities of BR. 3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%]: Yes. The Company promotes BR initiatives in its value chain. At present, less than 30% of its suppliers/ distributors participate in BR initiatives. Section D: BR Information 1. Details of Director/Directors responsible for BR a) Details of the Director/Director responsible for implementation of the BR policy/policies • DIN Number: Not Applicable • Name: Mr. R. N. Mukhija • Designation: Advisor to the Chairman 23  b) Details of the BR head S. No. Particulars Details 1. 2. 3. 4. 5. DIN Number (If applicable) Not Applicable Name Designation Mr. Ajit Singh Executive Vice President – Corporate Infrastructure & Services Telephone Number +91-22-67053431 Email ID Sustainability-ehs@larsentoubro.com 2. Principle-wise (as per NVGs) BR Policy/policies (Reply in Y/N) Name of principles: P1 – Businesses should conduct and govern themselves with Ethics, Transparency and Accountability P2 – Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle P3 – Businesses should promote the well-being of all employees P4 – Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized P5 – Businesses should respect and promote human rights P6 – Businesses should respect, protect, and make efforts to restore the environment P7 – Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner P8 – Businesses should support inclusive growth and equitable development P9 – Businesses should engage with and provide value to their customers and consumers in a responsible manner S. No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 1. 2. 3. 4. 5. 6. 7. 8. Do you have a policy/policies for Has the policy being formulated in consultation with the relevant stakeholders? Does the policy conform to any national /international standards? If yes, specify? (50 words) Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Yes. The policies are aligned with NVG guidelines and applicable international standards of ISO 9001, ISO 14001, OHSAS 18001 and ILO principles. Has the policy being approved by the Board? Yes. Meanwhile approved by the Executive Management Committee (EMC)1 If yes, has it been signed by MD/owner/CEO/appropriate Board Director? Signed by the Group Executive Chairman Does the company have a specifi ed committee of the Board/ Director/ Offi cial to oversee the implementation of the policy? Yes. Mr. R. N. Mukhija, Advisor to the Chairman and also member of the EMC. Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Indicate the link for the policy to be viewed online? www.lntsustainability.com Has the policy been formally communicated to all relevant internal and external stakeholders? Does the company have in-house structure to implement the policy/policies. Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 1 EMC of the Company comprises executive directors, senior managerial personnel and advisors to the Chairman. 24 Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 S. No. 9. Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders’ grievances related to the policy/ policies? 10. Has the company carried out independent audit/evaluation of the work- ing of this policy by an internal or external agency? Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 2a. If answer to S.No. 1 against any principle, is ‘No’, please explain why: (Tick up to 2 options) S. No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 1. 2. 3. 4. 5. 6. The company has not understood the Principles The company is not at a stage where it fi nds itself in a position to formu- late and implement the policies on specifi ed principles The company does not have fi nancial or manpower resources available for the task It is planned to be done within next 6 months It is planned to be done within the next 1 year Any other reason (please specify) ------- ------- ------- ------- ------- ------- 3. Governance related to BR • Indicate the frequency with which the Board of Directors, Committee of the Board or CEO assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year o Annually • Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published? Yes, the Company has been publishing its Sustainability Report annually as per the framework of Global Reporting Initiative (GRI) G3 since 2008. The sustainability reports are externally assured and are ‘GRI Checked Application Level A+’, signifying the highest level of disclosure. The report can be accessed at www.lntsustainability.com Section E: Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency and Accountability Ethics, transparency and accountability are the bedrock of the Company’s operations. Its commitment to these values is articulated in the Company’s Vision Statement and in the following policies: • Corporate Social Responsibility (CSR) • Corporate Environment, Health & Safety (EHS) • Corporate Human Resources These policies are extended to subsidiary & associate companies. The environmental & social code of conduct for suppliers includes clauses on ethics and transparency. The Company’s corporate governance, social and environmental disclosure practices are proactive and demonstrate high standards of ethics. Review of policies, procedures and guidelines is an on-going process. 25 The Company’s board and senior management affirm the ‘Code of Conduct’ annually. In addition, policies, procedures and guidelines have been formulated to clearly lay down norms on action and conduct of its employees such as the whistle-blower policy and guidelines on communication and marketing. The Company’s Executive Managing Committee (EMC) ensures effective formulation and implementation of the sustainability strategy. EMC decides on policies to be implemented across the Company. In addition, at the corporate level, sustainability initiatives and performance are regularly reviewed by a nominated member of the EMC. The Company has been disclosing its sustainability performance in public domain within the framework of Global Reporting Initiative (GRI). All Sustainability Reports published by the Company are GRI Checked Application Level A+. For details related to stakeholder complaints, refer the Director’s Report Section of this Annual Report. Principle 2: Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle The Company is a technology, engineering, construction, and manufacturing company. Over 85% of the Company’s revenues are from the Engineering and Construction (E&C) business. The Company recognizes that its projects and products are technology-intensive and meet critical needs. Safety and sustainability are therefore integrated right at the design stage. Technology Block, Hazira PLATINUM (LEED) Green Buildings at L&T Locations Office Complex, Talegaon L&T TC III, Chennai PLATINUM (LEED) SILVER (LEED) Office Complex, Ahmednagar L&T TC II, Chennai GOLD (IGBC) CERTIFIED (LEED) EDRC, Chennai SILVER (LEED) Knoweldge City, Vadodara GOLD (LEED) In addition to initiatives that reduce the Company’s own carbon footprint, it is also a green enabler - helping its customers “Go Green” too. A high degree of expertise has been developed in the following: ‘Green Buildings’, solar EPC power plants, fuel switch projects, Dehydrogenation & Desulphurization (DHDS) projects, coal gasifiers, super critical thermal power plant & equipment, electricity transmission & distribution systems, and energy-saving electrical & automation equipment. Green buildings constructed by the Company help to reduce water consumption by over 30%, utilise recycled material to the extent of 10% and largely source material locally. The Company is a leading EPC solution provider 26 for Solar Photo Voltaic (PV) based power plants. Typically, a 40 MW solar power plant leads to a reduction of nearly 70,000 MT of CO2 annually. The Industrial Drive systems of Electrical & Automation business save energy up to 30% or more. The hydrocarbon business of the Company executes energy conservation and fuel switch projects for fertiliser plants and refineries. Fertiliser plants are increasingly being encouraged to switch from fuel oil & Low Sulphur Heavy Stock (LSHS) based ammonia plants to natural gas and Re-gasified Liquefied Natural Gas (R-LNG) based plants. The Company is at the forefront of executing these conversion projects which significantly help clients reduce sulphur emissions and improving product quality. The Company has proven capability in reducing SOx / NOx emissions during crude oil refining and also achieving energy efficiency. The heavy engineering business of the Company manufactures coal gasifiers for core industries. Many developed countries use coal gasifier technology as energy conservation and environmental friendly measures. At project sites, safety is an overriding concern. The Company fosters a strong safety culture through best practices, continuous training and vigilant supervision. Safety tool box talk The Company is the first company in the E&C space in India to establish a full-fledged Safety Innovation School. The Company undertakes the following initiatives to mitigate adverse environmental impacts • Noise barriers & noise monitoring • Dust suppression & air quality monitoring • Recycling & reuse of wastewater The Company practices greener ways of construction and manufacturing; covering material optimization, using eco-friendly raw materials, and adopting energy efficient processes. Product performance extends beyond product specifications and takes into account life cycle assessments, legal requirements as well as Environment, Health & Safety (EHS) aspects. The labelling process is implemented in line with the relevant codes & specifications. The Company’s electrical & automation products and industrial machinery carry the BIS label, most of these products have international certifications and are tested at independent laboratories. Sustainability Practices in Value Chain The Company views each of its vendors as partners in the shared process of growth. The Company invests time and effort in building mutually beneficial relationships. The Company guides small & medium scale enterprises in process and system improvement and enhanced technical know-how. Specific encouragement is provided to local sourcing as it improves logistics as well as helps to develop the local economy. Around 80% of the Company’s requirements are met by local suppliers. In addition, the Company’s customers are encouraged to purchase from locally approved vendors. Being an engineering and construction company and owing to the nature of its products and services, the scope for direct product recycling is limited. However in many of the projects executed by the Company, it has provided retrofitting services to extend product life cycle span. Company recycled materials amount to less than 5% of its total material consumption. In the construction businesses, alternate materials such as fly ash in place of cement, crushed sand instead of natural sand, blast furnace slag in road construction in place of natural aggregate etc. are used. Through dedicated steel centres, generation of steel scrap is minimized. During the manufacturing process, zinc is recovered from zinc waste and reused in plating operations. 27 An environment and social ‘Code of Conduct’, developed for the supply chain, has been adopted by key suppliers. The code propagates environment-friendly, occupational health & safety and socially-responsible business practices. The Company conducts capacity building programmes for the supply chain, provides training and technical expertise on various manufacturing and operational practices such as value engineering, six sigma and lean manufacturing. Systems are in place related to information security management and confidentiality, and norms are followed covering intellectual property rights. Principle 3: Business should promote well-being of employees An organisation’s success is the aggregation of the individual successes of its employees. The Company believes a happy employee is a productive employee who will, given a conducive environment, surpass his/ her industry peers. The Company’s achievements in building plant and equipment of unmatched scale and sophistication would never have been possible without the wholehearted involvement of its employees. The Company integrates HR practices with business strategies to provide employees the opportunity to fulfil their career aspirations and development needs. The Company encourages its employees to think laterally and nurtures a feeling of ownership. No. of employees (Standalone) Refer “Standalone Financials – 10 Year Highlights” section of the Annual Report Number of permanent women employees 2,635 Contract workmen (predominantly at project sites) 3,82,472 The Company has provided direct employment to 74 persons with disabilities. In addition, 110 such individuals are employed within its value chain. The Company practices and propagates equal opportunity 28 Health Check-up at Project sites in employment and does not discriminate on the basis of caste, religion, gender or handicap. The Company does not employ any child, forced or compulsory labour, and has similar systems in place for its contractors. Occupational health and safety receives close and continuing attention. Companies manufacturing units are ISO 14001 and OHSAS 18001 certified. The policy on ‘Protection of Women’s right at Workplace’ reflects the Company’s commitment to provide a safe and caring environment to female employees. The Company, being predominantly in E&C business, engages a large number of contract labour for its project activities. The Company has recognized employee unions and associations at manufacturing establishments which are affiliated to different trade union bodies. The percentage of permanent employees covered under this category is 8.79%. The Company’s HR development team formulates a wide variety of training programmes to nurture the competencies of its employees. These interventions are not limited to technical and functional domains; they also encompass behavioural and managerial aspects. In addition, programmes to enhance safety standards and EHS competency building are a focus area. A focussed initiative to build employee health and well- being is in place. This programme creates awareness on prevention of lifestyle diseases, encourages employees to make positive health choices and builds a healthy workplace. Similarly, several welfare initiatives such as yoga, counselling, recreational and developmental programmes are available to employees and their families to promote work-life balance. The Company has institutionalised many training including a state-of-the-art Leadership enablers Development Academy at Lonavala near Mumbai. Leadership Development Programmes (LDP), Management Development Programmes (MDP), Global Expat Programmes, Project management, etc. are some of the key development programmes. In FY 2012-13, the Company’s permanent employees received a total of 34,84,259 man-hours of safety and skill-up-gradation training. All employees of contractors receive mandatory safety training before entering the Company premises. No complaints relating to child labour, forced labour, involuntary labour or sexual harassment were received in the FY 2012-13. Principle 4: Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised Such interactions with key internal and external stakeholders help the Company to understand material issues and evolve thrust areas for implementation. The Company provides strategic social interventions by working hand-in-hand with local NGOs and communities. The details of such programmes are stated under Principle 8. The Company’s Corporate Brand Management & Communications department facilitates an on-going dialogue between the organisation and its stakeholders. Communication channels adopted include: For External Stakeholders For Internal Stakeholders Stakeholders engagement sessions Client satisfaction surveys Employee satisfaction survey GALLUP Engagement Survey for further improvement in employees’ engagement process Regular business interaction, supplier, dealer and stockist meets Circulars Social initiatives Welfare initiatives for employees and their families Online news bulletins to convey topical developments A large bouquet of print and on-line in-house magazines - some location specific, some business specific Periodic feedback mechanism Press Releases AGM (Shareholders interaction) Investors meet and shareholder visit to works A corporate website that presents an updated picture of capabilities & activities Access to the business media to provide information & respond to queries Shareholders visit Powai Campus The Company is one of the most widely held companies in India. Its shareholding is diffused, diverse and transparent, and the Company is committed to delivering on their individual expectations. The Company has mapped its stakeholders as a part of its stakeholder engagement process. Through community need assessment surveys & engagements, the Company has identified disadvantaged sections of society. Introduced recently, the Company Infodesk, an online service, provides a single point contact for information on the Company’s products and services and other particulars of the company to the external stakeholders. 29 Principle 5: Businesses should respect and promote Human Rights Principle 6: Business should respect, protect, and make efforts to restore the environment The Company upholds the sanctity of Human Rights in letter and spirit. It complies with applicable local laws and regulatory requirements like conventions of the International Labour Organisation (ILO), The Factories Act 1948, Building & Other Construction Workers (Regulation of Employment & Conditions of Service) Act 1996, Central Rules 1998, and Industrial Disputes Act 1947. The Company does not permit child labour or forced labour in any of its operations. Communication processes such as induction training programmes, interactive sessions, intranet, policy manuals and posters sensitize employees on human rights. These are practiced in the Company and extended to Subsidiary and Associate companies. The Company is conscious of its role and responsibility in protecting the environment, conservation of resources and mitigating climate change & its impacts. It continues to focus on efficient consumption of materials, energy and water through structured and systematic approach. The Company has a system in place to identify and assess potential environmental risks and opportunities in its operations. The Company’s strong alignment with NAPCC is demonstrated through initiatives for energy and Greenhouse gas (GHG) emission intensity reduction, L&T released a policy for the protection of women’s rights at the workplace Solar Photo Volatic (PV) power Plant commisioned by L&T Diversity and equal opportunity are strategic and important aspects of our work ethos. No employee is discriminated against on grounds of gender, ethnicity, nationality, sexual orientation, political and religious affiliation. The Company’s environmental and social ‘Code of Conduct for Suppliers’ also propagates Human Rights principles. There were no reported complaints related to human rights violations during the FY 2012-13. increased use of renewable energy, promotion of green building construction, and enhancement of green cover, provision of solar & renewable energy solutions to customers and building of capacity for environmental management. The Company’s environment preservation policy and initiatives are propagated within its Subsidiary and Associate Companies and its key suppliers are also encouraged to follow such practices. 30 Environmental regulatory approvals precede commencement of operations at units and project sites. An internal compliance report is periodically reviewed in businesses to ensure fulfilment of environmental and local regulations. The Company regularly submits compliance reports to Central Pollution Control Board (CPCB) / State Pollution Control Boards (SPCB) as per the environmental legal requirements. During the financial year, there are no pending or unresolved show cause/legal notices from CPCB/SPCB. Wastewater treatment and reuse Industrial and domestic wastewater is treated at Effluent Treatment Plant (ETP) and Sewage Treatment Plant (STP) based on state-of-the-art technology at the campuses of the Company. Treated wastewater is used for gardening, toilet flushing and for cooling tower applications as a water conservation measure. Details of efforts made for reconstruction of biodiversity The Company maintains a green cover and encourages new plantation in and around all of its manufacturing facilities and project sites. In the reporting period, the Company planted over 265,000 saplings across its operations. The campuses of the Company have over 150,000 fully grown trees and around 35% of the available open land at its manufacturing locations have a green cover. In the reporting year, adequate care was taken to ensure that the Company’s operations do not adversely impact the biodiversity. Recycled raw material Most of the Company’s products are Engineered to Order (ETO) and are made in line with stringent international design and manufacturing codes as per the requirements of the customers. Input materials meet specified conditions and are tested for physical, chemical and other properties before they are certified for use. It is, therefore, difficult to use recycled input material for most of the product range. In the construction business, Company promotes eco- friendly technologies that continually replace natural resources like sand, aggregates, cement, bricks and wood with recycled material. Crushed sand is used in place of natural sand, fly-ash partially substitutes cement and Ground Granulated Blast Furnace Slags (GGBS) is used in place of aggregates. In the production cycle, zinc is recovered from the plating process and reused for coating applications. Sustainability roadmap The Company prepared its short term sustainability targets for 2009-12 and the progress is shared in the Corporate Sustainability report along with the sustainability targets for 2012-15. The focus is on: • Energy Conservation • Climate Change • Water Conservation • Material Management • Safety • Health • Corporate Social Initiatives (For more details please refer to www.lntsustainability.com) The Company has a registered project by its Infrastructure Development arm (L&T IDPL) on Clean Development Mechanism (CDM) under United Nations Framework Convention on Climate Change (UNFCCC) related to Green Power Generation Project (8.7 MW wind farm). The National CDM Authority - Ministry of Environment & Forests, Government of India has approved this as a ‘Project contributing to sustainable development’ and given ‘Host country approval’ for the project on 12th June 2012. This project aims to reduce approximately 16,128 tonnes of CO2 equivalent per annum. 31 Principle 7: Responsible Public Advocacy The Company engages with policy making and regulatory bodies through multiple business forums and trade organisations. The Company’s senior executives participate in the development of public policy that addresses issues affecting industry, business, products and customers through collaborative interactions. The Company contributes to the policy-making process through memberships of associations and forums. Some such institutions are: • Confederation of Indian Industry (CII) • Federation of Indian Chambers of Commerce and Industry (FICCI) • Associated Chambers of Commerce and Industry of India (ASSOCHAM) • Bombay Chamber of Commerce & Industry (BCCI) • Bureau of Indian Standards • Construction Industry Development Council (CIDC) • Indian Electrical and Electronics Manufacturers Association • National Safety Council • Indian Institute of Chemical Engineers (IIChE) • National Fire Protection Institution • Association of Business Communicators of India The Company’s senior executives have been closely interacting with CII on focussed initiatives on Sustainable Development and have been members of working groups on energy efficiency, EHS and corporate social responsibility of many industry chambers across India. Principle 8: Support Inclusive Growth Education: One of Thrust areas of L&T’s social initiatives Company’ Ladies Clubs – a unique network of spouses of employees. Larsen & Toubro Public Charitable Trust works towards community welfare through its activities for the underprivileged sections of the society. Corporate Social Initiatives (CSI) of the Company oversees implementation of social programmes across the organisation in the following thrust areas: • Mother & Child Health Care • Education • Skill Building The Company collaborates with NGOs, local forums and government bodies for programme management. These programmes in the community are taken up as an outcome of need-assessment surveys and community interaction. The Company also conducts periodical evaluation of these interventions for on-going improvements. Communities are integral part of programme management; their participation is built in through regular dialogue and involvement. Many team members are drawn from the beneficiary community, ensuring greater acceptance and community participation. A brief overview of the Company’s social portfolio is as below: The Company responds positively to emerging societal expectations as a part of its Corporate Social Responsibility. It invests in the growth of communities through a broad spectrum of social interventions. These programmes are undertaken at multiple levels - through the Company’s units and project sites, employee volunteers and the Education The Company’s social interventions covering educational initiatives are focused on providing primary education, infrastructure development and enhancing the learning experience for children in several schools in the vicinity of its units across India. 32 The initiative also covers support to pre-schools, setting up computer labs, providing teaching aids and uniforms to the needy, capacity-building of teachers, organising summer camps, sports activities and upgrading school resources etc. Presently, the Company supports over 147 schools across India and reaches out to over 100,000 underprivileged children. Health Around its establishments across India, the Company actively contributes to the health and welfare of the community. Major initiatives include setting up of health centres with a focus on reproductive health, conducting diagnostic and clinical health camps that support maternal and child health care, immunization and health education. The Company has seven community health centres at Mumbai, Thane, Surat, Chennai, Coimbatore, Ahmednagar and Kansbahal which provide health care for the less privileged. Skill Building The Company draws on its domain expertise to fill skill gaps in society, and contribute to a talent pool that will benefit industry. Constructions Skills Training Institutes (CSTI), set up by the Company, provide formal vocational training in various construction trades to youth from the weaker sections of society. CSTIs provide free training in trades such as bar bending, formwork carpentry, masonary, scaffolding and welding etc. The three months training module enhances employability of underprivileged youth and turns social dropouts into productive members of society. The Company has set up 8 such CSTIs and has collaborated with several ITIs and NGOs to impart job-oriented training. Construction Skills Training Institute (CSTI) Vocational training programs in the areas of tailoring, beautician, home-nursing and food processing for women are also being conducted through the Larsen & Toubro Public Charitable Trust. In addition, 100 check dams have been constructed in the drought prone areas of Maharashtra to facilitate irrigation and ground water recharge for rural communities. The Company contributed Rs. 73.04 Crores in 2012-13 towards social development. Principle 9: Engage with and provide value to customers The Company’s strong customer orientation is widely recognized. It enhances product value through continuous investments in R&D, design, technology and through customized solutions tailored to meet the specific needs of its clients. The Company’s products and services take into account safety and stringent quality standards. The labelling process for products is implemented in line with relevant codes, specifications and regulations. Providing Operation and Maintenance manuals to customers is an integral part of the Company’s business process. Products are benchmarked against the best and conform to national and international standards like IS, IEC and BIS. The Company has a well-established customer feedback mechanism which enables it to have regular interactions with clients. These include regular customer meets, periodic customer satisfaction surveys, market research and training programs for client personnel. The quantum of repeat orders received is an indicator of customer satisfaction. The Company adheres to all norms, standards and voluntary codes related to marketing communications and fair-trade practices including advertising, promotion, and sponsorship. There were no cases filed by any stakeholder against the Company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour in the last five years, and there are no pending cases as on March 31, 2013. 33 Annexure: Mapping of Annual Business Responsibly Report (ABRR) Question Reference (AR – Annual Report; BRR – Business Responsibility Report) Section Section A : General Information about the Company 1. Corporate Identity Number (CIN) of the Company 2. Name of the Company 3. Registered Address 4. Website 5. Email id 6. Financial Year Reported 7. Sector(s) that the Company is engaged in (industrial activity code-wise) 8. List three key products/services that the Company manufactures/provides (as in balance sheet) 9. Total number of locations where business activity is undertaken by the Company i. Number of International Locations (Provide details of major 5) ii. Number of National Locations 10. Markets served by the Company – Local/State/National/International Section B: Financial Details of the Company 1. Paid up Capital (INR) AR (BRR Section) AR (BRR Section) AR (L&T Nationwide Network & Global Presence) AR (L&T Nationwide Network & Global Presence) AR (L&T Nationwide Network & Global Presence) AR (BRR Section) 2. Total Turnover (INR) 3. Total profit after taxes (INR) AR (Standalone Financials –10 Year Highlights Section) 4. Total spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) 5. List of activities in which expenditure in 4 above has been incurred: - Section C : Other Details AR (BRR Section) AR (BRR Section) 1. Does the Company have any Subsidiary Company/ Companies? AR (Management Discussion & Analysis Section) 2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s) 3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with; participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%] AR (BRR Section) AR (BRR Section) 34 Question Section D: BR Information 1. Details of Director/Directors responsible for BR a) Details of the Director/Director the BR policy/policies • DIN Number • Name • Designation b) Details of the BR head • DIN Number (if applicable) • Name • Designation • Telephone number • e-mail ID 3. Governance Related to BR Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published? Section E : Principle-wise Performance Principle 1: Ethics, Transparency and Accountability Does the policy relating to ethics, bribery and corruption cover only the company? Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs / Others? How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? Principle 2 : Sustainable Products and Services List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional): Does the company have procedures in place for sustainable sourcing (including transportation)? Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work? Reference (AR – Annual Report; BRR – Business Responsibility Report) Section AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (Directors Report, Annexure C, Section F : Board Committees) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) 35 Question Reference (AR – Annual Report; BRR – Business Responsibility Report) If yes, what steps have been taken to improve their capacity and capability of local and small vendors? Does the company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as <5%, 5-10%, >10%). Also, provide details thereof, in about 50 words or so. Principle 3: Employee Well Being Total number of employees. Total number of employees hired on temporary/contractual/casual basis. Number of permanent women employees. Number of permanent employees with disabilities Do you have an employee association that is recognised by management? What percentage of your permanent employees is members of this recognized employee association? Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year. What percentage of your under mentioned employees were given safety and skill up gradation training in the last year? Principle 4: Valuing Marginalised Stakeholders Has the company mapped its internal and external stakeholders? Out of the above, has the company identified the disadvantaged, vulnerable & marginalised stakeholders? Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders. Principle 5: Human Rights Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others? How many stakeholder complaints have been received in the past financial year and what percent were satisfactorily resolved by the management? Principle 6: Environment Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/others. Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc? 36 Section AR (BRR Section) AR (BRR Section) AR (Standalone Financials – 10 Year Highlights) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) Question Reference (AR – Annual Report; BRR – Business Responsibility Report) Does the company identify and assess potential environmental risks? Does the company have any project related to Clean Development Mechanism? Has the company undertaken any other initiatives on – clean technology, energy efficiency, renewable energy, etc. Y/N. Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported? Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year. Principle 7: Policy Advocacy Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with: Have you advocated/lobbied through above associations for the advancement or improvement of public good? Principle 8: Inclusive Growth Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? Are the programmes/projects undertaken through in-house team/own foundation/external NGO/government structures/any other organisation? Have you done any impact assessment of your initiative? What is your company’s direct contribution to community development projects - Amount in INR and the details of the projects undertaken. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Principle 9: Value to Customers in responsible manner What percentage of customer complaints/consumer cases are pending as on the end of financial year. Does the company display product information on the product label, over and above what is mandated as per local laws? Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as of end of financial year Did your company carry out any consumer survey/ consumer satisfaction trends? Section AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (BRR Section) AR (Directors Report, Annexure C, Section F : Board Committees & BRR Section) 37 STANDALONE FINANCIALS-10 YEAR HIGHLIGHTS Description 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 crore Operational Indicators Order inflow (including Integrated Joint Ventures) Order book (including Integrated Joint Ventures) Statement of Profit and Loss 88035 70574 80362 69519 51680 42561 31047 22383 14976 13259 153604 145723 130949 100412 70820 53555 37306 24875 17831 16973 Gross revenue from operations 61471 53738 44296 37356 34337 25342 17938 14995 13362 PBDIT^^ 6407 6283 5640 4816 3922 2969 1784 1126 855 9889 566 Profit after tax (excluding extraordinary/ exceptional items) Profit after tax (including extraordinary/ exceptional items) Balance Sheet Net worth 4695 4413 3676 3185 2709 2099 1385 863 631 533 4911 4457 3958 4376 3482 2173 1403 1012 984 533 29143 25223 21846 18312 12460 9555 5768 4640 3369 2775 Deferred tax liability (net) 242 133 263 77 48 61 Loan funds Capital employed Ratios and statistics 8834 9896 7161 6801 6556 3584 38219 35252 29270 25190 19064 13200 40 2078 7886 PBDIT as % of net revenue from operations @ 10.53 11.82 12.84 13.00 11.56 11.87 10.14 PAT as % of net revenue from operations $ 7.71 8.30 8.37 8.60 7.98 8.39 7.87 ROCE % * RONW % ** 14.60 17.29 15.09 15.03 15.92 18.52 18.77 18.33 20.73 24.67 21.12 28.21 20.71 26.84 77 1454 6171 7.63 5.85 16.70 21.88 95 1859 5323 6.50 4.80 14.63 21.05 114 1324 4213 5.87 5.53 14.40 20.66 Gross Debt: Equity ratio 0.30:1 0.39:1 0.33:1 0.37:1 0.53:1 0.38:1 0.36:1 0.32:1 0.56:1 0.49:1 Basic earnings per equity share ( ) # 79.99 72.92 65.33 73.77 59.50 37.80 25.11 Book value per equity share ( ) 473.24 411.53 358.45 303.69 212.31 162.95 101.14 Dividend per equity share ( ) 18.50 16.50 14.50 12.50 10.50 8.50 6.50 19.02 83.50 5.50 19.41 63.48 4.38 10.71 54.18 4.00 No. of equity shareholders 8,54,151 9,26,719 8,53,485 8,14,678 9,31,362 5,78,177 4,28,504 3,27,778 3,23,908 3,65,824 No. of employees 54,092 48,754 45,117 38,785 37,357 31,941 27,191 23,148 19,848 18,996 ^^ Profit before depreciation, interest and tax (PBDIT) is excluding extraordinary/exceptional items and other income @ $ Profit After Tax (PAT) as % of net revenue from operations = [(PAT excluding extraordinary/exceptional items)/(gross revenue from operations less PBDIT as % of net revenue from operations = [PBDIT/(gross revenue from operations less excise duty)] excise duty)] * Return on Capital Employed (ROCE) = [(PAT excluding extraordinary/exceptional items+interest-tax on interest)/(average capital employed excluding revaluation reserve and miscellaneous expenditure)] Return on Net Worth (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 ** # 38 CONSOLIDATED FINANCIALS - 10 YEAR HIGHLIGHTS Description 2012-2013 2011-2012 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 v crore Statement of Profit and Loss Gross revenue from operations 75195 64960 52470 44310 40932 29819 20877 16809 14717 11232 PBDIT^^ 9859 8884 7677 4605 5008 3672 2120 1388 826 909 Profit attributable to group shareholders (excluding extraordinary/exceptional items) 4911 4649 4238 3796 3007 2304 1810 1051 697 600 Profit attributable to group shareholders (including extraordinary/exceptional items) 5206 4694 4456 5451 3789 2325 2240 1317 1050 747 Balance Sheet Net worth 33860 29387 25051 20991 13988 10831 6922 4964 3316 2647 Deferred tax liability (net) 184 82 311 153 131 122 107 127 138 214 Loan funds 61994 47150 32798 22656 18400 12120 6200 3499 3454 2769 Capital employed 102644 82790 63697 46839 35547 24192 14107 8697 7013 5684 Ratios and statistics PBDIT as % of net revenue from operations @ 13.23 13.81 14.75 10.92 12.37 12.48 10.59 8.51 5.84 8.28 PAT as % of net revenue from operations $ 6.59 7.23 8.14 9.01 7.43 7.83 9.04 6.42 4.92 5.47 RONW % ** 15.54 17.10 18.43 21.75 24.32 26.68 30.71 25.78 23.96 21.24 Gross debt:equity ratio 1.83:1 1.61:1 1.31:1 1.08:1 1.32:1 1.12:1 0.9:1 0.71:1 1.06:1 1.08:1 Basic earnings per equity share (v) # 84.79 76.81 73.56 91.90 64.76 40.44 40.10 24.75 20.70 15.01 Book value per equity share (v) 549.89 479.46 410.95 348.06 238.27 184.31 121.39 89.36 62.44 51.58 Dividend per equity share (v) 18.50 16.50 14.50 12.50 10.50 8.50 6.50 5.50 4.38 4.00 ^^ Profit before depreciation, interest and tax (PBDIT) is excluding extraordinary/exceptional items and other income @ $ ** PBDIT as % of net revenue from operations = [PBDIT/(gross revenue from operation less excise duty)] PAT as % of net revenue from operations = [(PAT excluding extraordinary/exceptional items)/(gross revenue from operation less excise duty)] Return on Net Worth (RONW) = [(profit 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 39 L&T - ORDER INFLOW (INCLUDING INTEGRATED JOINT VENTURES) L&T - GROSS REVENUE FROM OPERATIONS L&T - PBDIT AS % OF NET REVENUE FROM OPERATIONS L&T - INTEREST COVERAGE RATIO L&T - PAT AND BASIC EPS L&T - FIXED ASSET TURNOVER RATIO 40 L&T - SEGMENT-WISE ORDER INFLOW 2012-13 L&T - SEGMENT-WISE REVENUE 2012-13 L&T - SEGMENT-WISE RESULT 2012-13 L&T - SEGMENT-WISE EBIDTA MARGINS* L&T - SECTOR-WISE ORDER BOOK AS AT MARCH 31, 2013 L&T CONSOLIDATED GROSS REVENUE FROM OPERATIONS AND PAT 41 Directors’ Report The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2013. FINANCIAL RESULTS Profit before depreciation, exceptional and extraordinary items and tax 2012-13 crore 7,275.56 2011-12 crore 6,954.79 Less: Depreciation, amortization and 819.42 700.45 obsolescence Add: Transfer from Revaluation Reserve 0.95 0.99 6,456.14 6,254.34 TRANSFER OF HYDROCARBON BUSINESS The Board of Directors of the Company at its Meeting held on May 22, 2013 has approved a Scheme of Arrangement between Larsen & Toubro Limited and L&T Hydrocarbon Engineering Limited, a wholly owned subsidiary of the Company (“LTHE”) and their respective Shareholders and Creditors which inter alia envisages transfer of the Hydrocarbon Business undertaking along with related assets and liabilities into LTHE and other consequential matters under the provisions of Sections 391 to 394 of the Companies Act, 1956. The Appointed Date of the Scheme would be April 01, 2013. There would be no issue of Shares by LTHE to the Shareholders of the Company pursuant to transfer of Hydrocarbon business. Profit before exceptional and extraordinary items and tax 6,457.09 6,255.33 ISSUE OF BONUS SHARES Add: Exceptional items 175.95 55.00 Profit before extraordinary items and tax 6,633.04 6,310.33 Add: Extraordinary items 78.11 – Profit before tax Less: Provision for Tax Profit after Tax 6,711.15 6,310.33 1800.50 1,853.83 4,910.65 4,456.50 Add: Balance brought forward from 152.39 105.68 previous year Less: Dividend paid for the previous year (including dividend distribution tax) 2.71 3.89 Balance available for disposal which the directors appropriate as follows : 5,060.33 4,558.29 Debenture Redemption Reserve Proposed Dividend Dividend Tax General Reserve Balance to be carried forward Dividend The Directors recommend payment of final dividend of 18.50 per equity share of 2/- each on pre-bonus capital of 61,53,85,981 shares. YEAR IN RETROSPECT 50.25 44.00 1,138.47 1,010.46 85.86 101.44 3,500.00 3,250.00 4,774.58 4,405.90 285.75 152.39 1,138.47 1,010.46 63,322 crore as against The gross sales and other income for the financial year under 55,076 crore for review were the previous financial year registering an increase of 15%. The Profit before tax excluding extraordinary and exceptional items was 6,457 crore and the Profit after tax excluding extraordinary and exceptional items of 4,695 crore for the financial year under review as against 6,255 crore and 4,413 crore respectively for the previous financial year, registering an increase of 3% and 6% respectively. To commemorate the occasion of the Platinum Jubilee of the Company, the Board of Directors of the Company in its meeting held on May 22, 2013, has recommended for approval of the shareholders issue of bonus shares to the holders of equity shares of the Company in the ratio of 1:2 (i.e. one bonus equity share of 2/- each for every two fully paid up equity shares of 2/- each held). The approval of the shareholders will be sought through postal ballot. DIVIDEND 18.50 The Directors recommend payment of dividend of per equity share of 2/- each on the pre-bonus share capital which works out to 12.33 per share post issue of bonus shares. DEPOSITORY SYSTEM As the members are aware, the Company’s shares are compulsorily tradable in electronic form. As on March 31, 2013, 97.39% of the Company’s total paid-up Capital representing 59,93,26,527 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 from either of the Depositories. CAPITAL & FINANCE During the year under review, the Company allotted 29,87,082 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes. During the year under review, 250 crores were raised by the Company via issuance of Non-Convertible Debentures. Further, the Company has drawn down long term foreign currency loans in USD & JPY equivalent to approximately 2,660 crores. 42 During the year, the Company repaid a part of its long term foreign currency loans, equivalent to about 1,615 crore. CAPITAL EXPENDITURE As at March 31, 2013, the gross fixed and intangible assets, 12,582 crore and the including leased assets, stood at net fixed and intangible assets, including leased assets, at 8,902 crore. Capital expenditure during the year amounted to 1,505 crore. DEPOSITS There are no deposits which were due for repayment on or before March 31, 2013. All unclaimed deposits were transferred to Investor Education & Protection Fund during the year. 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 73,11,898/- 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 10,63,57,861/- as on March 31, 2013. SUBSIDIARY COMPANIES During the year under review, the Company subscribed to/ acquired equity shares in various subsidiary companies. The details of investments in subsidiary companies during the year are as under: A) Shares acquired during the year:- Name of the company L&T Aviation Services Private Limited L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited L&T General Insurance Company Limited L&T Power Development Limited L&T Shipbuilding Limited L&T Special Steels and Heavy Forgings Limited Larsen Toubro Arabia LLC L&T Metro Rail (Hyderabad) Limited No. of shares 2,16,00,000 71,40,000 4,61,55,000 9,00,00,000 43,70,00,000 81,86,30,000 6,66,00,000 7,500 9,30,000 Name of the company L&T Technology Services Limited Audco India Limited (see Note 1) No. of shares 50,000 7,81,630 B) Shares sold/transferred/reduction in face value during the year: Name of the company L&T- Sargent & Lundy Limited (under buy-back) No. of shares 9,09,092 L&T Plastics Machinery Private Limited (See Note 2) 1,60,00,000 L&T Power Limited (See Note 3) 51,157 Note: 1. During the year, the Company acquired 50% stake in Audco India Limited. With this acquisition, Audco India Limited is now a wholly owned subsidiary of the Company. 2. The Company has sold its entire stake in L&T Plastics Machinery Private Limited during the year. 3. During the year, the face value of the share was reduced from 30,000 per share to 10 per share. The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011 dated February 8, 2011, has granted general exemption under Section 212(8) of the Companies Act, 1956, subject to certain conditions being fulfilled by the Company. As required under the circular, the Board of Directors has, at its meeting held on January 25, 2013, passed a resolution giving consent for not attaching the Balance Sheet of the subsidiary companies. We have also given the required 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 uploaded on the Company’s Website viz. www.larsentoubro.com and will also be available for inspection by any shareholder at the Registered Office of the Company, on any working day during business hours. AUDITORS’ REPORT The Auditors’ Report to the Shareholders does not contain any qualification. DISCLOSURE OF PARTICULARS Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure ‘A’ forming part of this Report. OTHER DISCLOSURES The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory 43 Auditors, confirming compliance, is provided in Annexure ‘B’ forming part of this Report. Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure ‘C’ forming part of this Report. PERSONNEL The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in Annexure forming part of the Report. In terms of Section 219(1)(b) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company. BUSINESS RESPONSIBILITY REPORTING SEBI, vide its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed companies, based on market capitalization at BSE and NSE, to include Business Reponsibility Report as part of the Annual Report. Accordingly as per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting forms a part of this Annual Report (pages 22-37). CORPORATE GOVERNANCE VOLUNTARY GUIDELINES By complying with the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company is complying with all the 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 The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability. The activities carried out by the Company as a part of its CSR initiatives are covered in the Business Responsibility Reporting forming a part of this Annual Report. 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 confirms: i. ii. iii. iv. v. 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, 2013 and of the profits of the Company for the year ended on that date; that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 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. DIRECTORS During the year under review, Mr. Ravi Uppal, Whole-time Director of the Company resigned with effect from September 15, 2012. Mr. V.K. Magapu, Whole-time Director of the Company retired on September 30, 2012. Mr. M. Damodaran was appointed as an Additional Director with effect from October 22, 2012. Mr. Vikram Singh Mehta was appointed as an Additional Director with effect from October 22, 2012. CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES MCA had released a set of guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is substantially complying with the guidelines laid down. Mr. Thomas Mathew T., the Nominee Director of the Company representing ‘Life Insurance Corporation of India’, resigned with effect from November 19, 2012. Mr. Sushobhan Sarker was appointed as the Nominee Director representing ‘Life Insurance Corporation of India’ 44 with effect from December 15, 2012 to fill the casual vacancy caused by the resignation of Mr. Thomas Mathew T. Mr. Subodh Bhargava, Mr. Shailendra Roy, Mr. R. Shankar Raman and Mr. M. M. Chitale retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting. Mr. M. Damodaran and Mr. Vikram Singh Mehta, Additional Directors of the Company hold office up to the date of the forthcoming Annual General Meeting and are eligible for appointment. Mrs. Bhagyam Ramani, Nominee of General Insurance Corporation of India, resigned w.e.f. May 8, 2012. Mrs. Bhagyam Ramani would have been liable for retirement by rotation in ensuing AGM. The said vacancy is not proposed to be filled at the ensuing AGM. The notice convening the Annual General Meeting includes the proposal for appointment/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 qualification. AUDITORS The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. S&T has submitted the Peer Review Certificate dated September 21, 2010 issued to them by Institute of Chartered Accountants of India (ICAI). COST AUDITORS Pursuant to the Cost Audit Order dated January 24, 2012 issued by the Ministry of Corporate Affairs (MCA), the Board of Directors has appointed M/s. R. Nanabhoy & Co., Cost Accountants, as Cost Auditors for audit of cost accounting records of “Engineering machinery (including electrical and electronic products)”, for the Financial Year ended March 31, 2013. The appointment has been approved by the Central Government. The Report of the Cost Auditors for the Financial Year ended March 31, 2013 is under finalization and will be filed with the MCA within the prescribed period. Based on the Audit Committee recommendations, the Board of Directors at its meeting held on May 22, 2013, has approved the re-appointment of M/s. R. Nanabhoy & Co. as the Cost Auditors of the Company for the Financial Year ending March 31, 2014, for applicable Product Groups covered under MCA Cost Audit Order No. 52/56/CAB-2010 dated November 6, 2012. The appointment is subject to approval of the Central Government ACKNOWLEDGEMENT Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various 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 Group Executive Chairman Mumbai, May 22, 2013 45 Annexure ‘A’ to the Directors’ Report (Additional information given in terms of notification issued by the Ministry of Corporate Affairs) [A] CONSERVATION OF ENERGY: (a) Energy Conservation measures taken: 1 Improving energy effectiveness/efficiency of Equipment and Systems  Installation of energy saving devices for lighting.  Installation of Roof Top Solar PV system in various locations such as CSTI, Kanchipuram and in Hazira Campus.  Re-engineering-Change in Design of BEMCO Bending machines resulting in power saving by 20%  Modification in Process Design in Rolling mill in Puducherry factory reducing the power consumption by 1390 kWH/ day  Replacement of Mercury vapour lamps with Induction lamp fittings in the factory premises leading to consumption of less energy and giving more illumination as well as assisting in maintaining power factor to unity.  Interconnection of air compressor line of MV mod-2 with LV module & MV mod-1.  Single Switch Control in Fabrication shop & Stores.  Power generation from the existing solar system.  Optimized use of AC & FSD at Vadodara campus.  Retrofitting of LED lights.   Installation of Bio Mass plant for Power generation and Solid Waste management. Introduction of VSD based compressor at FORM Work factory Unit-II at Karasur, Puducherry resulted in 120% saving from the existing standard compressor  Installation of CFL lamps and T5 fittings instead of Metal halide lamps  Pillar drilling machine limit on/off operation.   Installation of P20 Energy saver panel for street lighting. Oxsilan process pretreatment plant phosphating process) in paint shop. (Cold  Installation of Solar air heating system.      Installation of 1.5kW and 2.4kW Solar standalone systems/sodium vapour lamps for street lighting. Installation of High Lumen/per watt Induction lamp for shop floor. Substitution of power taken from the grid for its operations by the energy generated by the wind mills installed by the Company. Implementation by factories of ISO 50001 – Energy management systems which will help in measuring and improving the energy usage. Reduction of primary energy consumption of High speed diesel oil and Furnace oil by changing the process to LPG firing which is an environment friendly fuel.     Controlling all exhaust fans at Pithampur factory (300W x 20 Nos.) through timer thus reducing their operation by 50% and resulting in Energy Saving of 936 KW per Annum. Replacement of Incandescent lamps, Tube lights and CFL lamps with LED lamps in office & on shop floor for hand lamps and machine lamps. Installation of occupancy sensors in offices & shops for auto switch-off. Use of Variable frequency drive in motors for welding positioners, EOT cranes, AHU, Water pumps, Welding trolleys, Rotary table & Machine tools to improve the motor efficiency.  Installation of AC Drive for Turn Table.      Introduction of inverter based welding systems (3 nos) for SAW booms. Use of magnetic resonators for improving the efficiency in fuel consumption of Vapor Absorption Machine (VAM). Conversions of DC drive to AC drive in Asquith Machine. Installation of Smart Energy Saver in 840D system on CNC machine. Provided energy efficient cooling tower in place of old cooling tower in big rolling machine.  Modification of PLC program in SIRMU DHD Machine between 2 drilling cycle.  Use of energy savers and programmable on/ off switch for optimization of air conditioner operations in SBU VRF. 46 Installation of Liquid Desiccant Dehumidifier in new DFE for HVAC. machines will get OFF, while welding operation is suspended.     Special Purpose Machine for Composite Canister machining to achieve 75% energy saving. Shifting to Cyclone type Dust extraction system for Composite Machining Vibration analysis for better transmission efficiency of rotary equipment.  Load sharing of high frequency generator in shops.              Use of Timers & efficiency check for HVAC and Street Lighting to conserve energy. Installation of solar pipes & solar water heaters to reduce use of conventional energy. Installation of Bio toilets (designed by DRDO) to conserve energy on sewage treatment. Installation of transparent sheets & sky light panels on shop sides for using day light which obviates use of hand lamps during day time. Installations of turbo ventilators for shop floor roofs. Rationalizing the operational time period and temperature of office ACs. Optimizing use of mobile cranes for material handling for reducing HSD consumption. Split ACs in place of Centralized AC in locations which are not used throughout the day. Use of 62.5 KVA DG set for continuous operation in ESS Test facility when required instead of 400 KVA DG set provisioned by the building owner thereby saving energy. Use of smart metering system for optimum use of energy. Installation of Energy saver in one Lighting High Mast and successfully achieved 17% Energy Saving. Same concept is planned for other High Mast Tower in the yard in phased manner for other illumination systems. Introduction of double circuit in High mast light towers to reduce illumination and power consumption during non-working hours. Installation Auto temperature controller with the use of VFD and PID controller in HVAC of MFF EPC Block.            Replacement of diesel operated Shot blasting equipments with efficient Electrical operated Blasting Equipments. Installation of presence sensors/occupational sensors in porta offices, rest rooms, etc. to control operation of lights and AC. Appointment of MR and formed the core team for implementation of Energy Management System: ISO 50001 with an objective to get the certificate for MFF in 2013-14. Replacement of ETP blower with new efficient blower. Installation of separate switches for lighting in Group-II building so as to ensure optimum utilization of power. Installation of centralized Compressed Air Management System to optimize the generation of compressed air. Observing ‘Walk-to-Work’ day on 2nd Saturday of every month at Kansbahal. Observed ‘Earth Hour’ during March 2013 at Kansbahal. Initiatives by Foundry Business Unit (FBU) such as IMF Mixers running time reduced from 15 minutes to 5 minutes, conversion of Shot blasting M/c Bucket Elevator & Rotary Screen from contactor to Drive unit resulting in energy saving of 15%, interlocking of GK Shake out OBMS with feeder reducing Idle running time, reduction in peak hour power consumption and shifting production to night shift for gaining Night Hours rebate of 5%, etc. Initiatives by Rubber Processing Machinery Unit (LTRPM) such as Occupancy sensors provided in Shop floor cabins, Operation of 232 CFM compressor in 3rd Shift instead of 432 CFM compressor, etc. Initiatives by Valves Manufacturing Unit (VMU) such as Saving of Energy by switching of Hyd. Power pack during Idle running of machine, installation of Lower capacity Cranes, provision of Auto Off for water pump, procurement of HSD from an alternate source, connection of STP water line to Garden water sump for Sprinkler system, etc.  Calibration of contractor welding rectifiers to ensure working of Energy Saver, so that welding  Initiatives by Construction & Mining Business (CMB) such as installation of light sensitive sensors 47 at Bahadurgarh, efficient use of natural light at workshop at EMS service station at Kanchipuram, etc. 2 Improving energy effectiveness/efficiency of Manufacturing Processes       Installation of new servo drive systems in SKZ & MKVTL machines. Installation of IR heating system for preheating thereby reduction of PNG consumption. Revamping of PH furnace resulting in reduced cycle time & PNG consumption. Introduction of CNG conversion kits in petrol driven wagons. Eliminate the throttling and reduce the speed of VFD in 300 MT & 125 MT Boogie air supply blower. Reduce specific power consumption from 0.30 KW/CFM to 0.18 KW/CFM, by refurbishment & overhauling of Messer Plasma CNC cutting m/cold Messer and HFS-4B Compressor.  Purchase of Green Power from third party to reduce the carbon footprint.  Use of Biogas plant to reduce the canteen waste. Development of manufacturing & machining process for Rod baffles (Reliance PTA). Use of bolted type blanks in place of welded blanks for pneumatic & Helium leak testing of Dry Shielded Canister. Replacement of rolled section/ pipes by Centrifugal & Investment casting for Refinery internals. Extensive use of advance metal cutting process like water jet, laser cutting & nibbling to eliminate milling/drilling/slotting & grinding operation. Edge beveling of SS plates by stacking multiple plates together. Standby mode for the shop overhead cranes and climatic chambers Programmable on/off Environmental Stress Screening chambers. switching for all Remote Monitoring of All Climatic chambers to avoid emergency Power Drainage.         48    Controlled & Continual DM water flow for climatic Chambers for Damp Heat Test. Design optimization and rationalization of the number of ovens required for electrode baking and storage. Batch-wise loading of jobs in Heat Treatment Furnace instead of piece meal basis to conserve energy. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:    Implementation of ISO 50001 (Energy Management System). Implementation of Platinum rated green building ‘West Block’. Installation of DC power source Auto OFF manual ON system in SAW in all the power sources.  Thermography of curing ovens and freezer.    Replacement of existing motors with High Efficiency motors (EFF1/EFF2). Replacement of existing transformers with energy efficient distribution transformer. Drip irrigation for newly developed Garden area, to conserve energy of water pump & save water.  Biogas plant at the Canteen & Garden waste disposal.    (c)  Admin Building Terrace repainting with Heat shield paint for reduction in HVAC load. Installation of Wind turbines in shop floor instead of electrical exhaust fans. Budgeted for further replacement of CFL, MHL with LED lighting & Installation of occupancy sensors. Installation of solar street lights in LTRPM leading to annual energy savings of 1903 KWH/Year consumption of energy. Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The measures taken have resulted in savings in cost of production, cost of power consumption, energy savings and reduction in maintenance cost, reduction in carbon dioxide emissions & processing time/cycle time. (d) Total Energy Consumption and Energy Consumption per unit of production as per Form A in respect of industries specified in the Schedule: FORM A FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY A. POWER & FUEL CONSUMPTION FOUNDRY Reporting Year 2012-13 FOUNDRY Previous Year 2011-12 258.492 L KWhr 261.247 L KWhr 1,734.95 L 1,519.72 L 6.71 (Average) 5.82 (Average) 1. Electricity (a) Purchased Unit Total amount Rate/Unit (b) Own generation (i) Through diesel generator Unit 4.2387L KWHr 2.35 L KWHr FOUNDRY Reporting Year 2012-13 FOUNDRY Previous Year 2011-12 8,984 Tons – KWH/Ton 2,060.02 – 14,694 Tons – KWH/Ton 1,735 – 41.43 Ltr/Ton – NIL NIL 43.80 Ltr/Ton – NIL NIL A. Consumption per unit of production Stands (if any) Products (with details) unit Casting Ferro Alloy Electricity Casting Ferro Alloy H S D Casting Ferro Alloy Coal (specify quality) Others (specify) [B] TECHNOLOGY ABSORPTION: Efforts made in technology absorption as per Form B. FORM B (Disclosure of particulars with respect to Technology Absorption) Unit per ltr. Of diesel oil 3.33 Units 3.10 Units RESEARCH AND DEVELOPMENT (R&D) Cost/unit 13.17 12.75 1. Specific areas in which R&D carried out by the (ii) Through steam turbine/generator Unit Unit per ltr. of fuel oil/ gas Cost/unit 2. Coal (specify quality and where used) Quantity (tons) Total cost Average rate 3. H S D Quantity (k.ltrs.) Total amount Average rate 4. Others/internal generation Quantity (k.ltrs.) Total cost Rate/unit NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 372.17 235.509 L 63.28/Ltr 643.22 265.14 L 41.22/Ltr NIL NIL NIL NIL NIL NIL Company: The Company has well-established R&D facilities for carrying out applied research in the areas of Chemical Engineering, Material Science & Corrosion, Thermal Engineering, Machinery & System Engineering, Mechanical Engineering and Water Technologies. Research work is currently focused on the following:  Process engineering for Oil & Gas and Chemical Plant applications; Ammonia/Urea processes for Fertilizer sector; Offshore and Onshore Gas Processing technologies; Process simulation for Refineries and Chemical industries; Coal Gasification Technologies for Process Plant and IGCC applications; Use of Refinery Residue for Gasification application; Process Technologies for Petrochemicals (PX/PTA) and Polymers (PE/PP); Refractory Engineering for high-temperature processes.  Material selection/verification and suggestion for alternative materials; Material characterization techniques for Oil & Gas, Fertilizer, Chemical and Petrochemical applications; Surface treatment and process qualification of coatings and plating after 49 surface modification for functional and corrosion resistance properties; Identification and evaluation of corrosion/material degradation mechanisms and implementation of corrosion control measures; Trouble-shooting and failure analysis; Advanced material development and application of emerging materials (such as nano and composites) for strategic applications. Design, analysis and optimization of Thermal and Fluid systems; Computational Fluid Dynamics (CFD) studies for troubleshooting and design optimization; Dynamic Simulation of power plants; Energy storage and recovery systems; Super Critical Boilers; Non-conventional energy sources. Advanced engineering support for rotating machinery and systems in Oil & Gas, Process and Power industries; Vibration and Acoustic technologies for fault diagnosis; Noise Assessment of Factories, Process Plants, Pipelines, Substations and Offshore Platforms using Noise Mapping Technique; Machinery design and optimization using advanced Finite Element techniques; Rotor- dynamic analysis of turbo-machinery; Tribology of Gears, Bearings and Lubrication systems; Testing and performance assessment of turbo-machinery; Plant Reliability studies; Flow and Acoustic Induced Vibration studies for pipelines. Stress analysis for Equipments, Structures and Piping systems; Advanced engineering analysis involving Creep, Fatigue, Shock/Impact and Thermal effects; Non-linear and Transient analysis techniques; Composite Analysis of complex industrial plants; Capability development in FFS (Fitness for Service) studies; Experimental stress analysis. Water Management solutions; Water, Wastewater & Effluent treatment and recycling plants; Oil Water Separation technologies; Desalination technologies; Bench-scale and pilot plant studies in Water Technology; Corporate Sustainability & Management of Environmental issues.      Chemical Engineering Design, analysis and simulation of chemical processes and equipment, with special emphasis on Gas Processing applications (Gas/Liquid Separation, Gas Dehydration and Gas Sweetening Units); Capability development in process simulation for Ammonia and Urea Plants; Process Engineering for Gas Compressor Modules; Technology Evaluation of Air Separation Units; Flow simulation studies for Oil & Gas Projects; Refractory engineering for Fertilizer and Refinery Plant equipment; Modeling and process simulation of fixed bed and entrained bed Coal Gasifiers; Failure analysis and troubleshooting of various process units; Solid handling processes in Petrochemical applications.  Material Science & Corrosion Engineering Material selection, verification and characterization; Risk assessment for corrosion damage; Adequacy check of material for RLA (Residual Life Assessment) studies in various Oil & Gas Projects; Failure Analysis studies for components (such as waste heat recovery system, heat exchangers, thrust plates for pulverizers, components of various equipments, fasteners, fittings, coatings etc.); Reverse engineering and material development support for Defence equipment; Preservation and restoration techniques for critical systems; Cathodic protection system for marine vessels; Eco-friendly corrosion inhibitors; Chemical cleaning/surface engineering of metals and non-metals; Characterization of composites with state-of-art instrumentation; Nano-materials for strategic applications.  Thermal Engineering Application of CFD technique in design optimization and troubleshooting of equipment and systems (such as flare and exhaust stack, gas dehydration and gas sweetening units, multi-phase separators); Safety studies for safe helideck operation at offshore platforms; Radiation and dispersion analysis; Failure analysis for false ceiling in AC room; Risk analysis for simultaneous heavy lift and installation of offshore platform along with drilling operation; Check-rating and design optimization of waste heat recovery coils and heat exchangers; Support for commissioning of boiler, offshore well head platform and process platform; String Testing of Process Gas Compressor modules for Offshore Platform; Failure analysis and troubleshooting involving heat exchangers, boilers, heaters and furnaces; Conjugate heat transfer analysis for post-weld heat treatment; Troubleshooting of RG Boiler for noise and vibration; Low-temperature thermal desalination processes; Design of cored brick heater; Design of HVAC system for offshore platform; Dynamic Simulation study of sub-critical and supercritical power plants.  Machinery & System Engineering Advanced engineering studies in Vibration and Acoustics for machinery and piping; Stress analysis and design optimization of rotary 50 absorber unit; Dynamic stress analysis of piping network in Refinery Complex considering flow- induced and acoustic induced vibration; Design of acoustic insulation for critical piping system; Troubleshooting of machinery vibration problems in high-speed pumps, turbines, motors, drive gearboxes and compressors; Troubleshooting of Deck Cranes at offshore platforms; Plant noise assessment for Refinery Complex, Gas Gathering Station and Sub-station; Product development/ design optimization studies for Coal Pulverizer units for Supercritical Boilers; String test of PGC Modules; Technical support during Acceptance Test and Commissioning for critical machinery.  Mechanical Engineering Design solutions for critical equipment through advanced Finite Element Analysis; Fitness For Service (FFS) assessment of in-service equipment and structures containing damage or flaws; Thermal-Structural composite analysis of systems integrating equipment, piping and structure; Advanced analysis (such as Boat Impact and Pushover Analysis) of offshore jacket structures involving high orders of non-linearity; Buckling analysis of sub-sea pipelines; Fatigue analysis of critical joints of offshore jacket structures; Structural analysis of floating offshore structures such as semi-submersibles and spars; Experimental stress analysis of critical offshore equipment such as pedestal deck crane and Blow Out Preventer (BOP) lifting cradle during load testing.  Water Technologies Total water management solutions including technology evaluation, design & detailing of water/ wastewater facilities for Oil & Gas – Upstream & Mid & Downstream sector; Focus on advanced treatment technologies such as Sea water/ Brackish water Thermal Desalination, Membrane Bioreactor, Sequential Batch Reactor, Up-flow Anaerobic Sludge Blanket Reactor etc.; Oil-water Separation processes; Waste minimization/ recycling techniques; Methodologies for achieving Zero-discharge from plants; Testing-facilities for water & wastewater characterization; Lab-scale pilot plant studies for treatability aspects of water and wastewater.   Development of high strength non-shrink grout for precast panel wall applications. Development of Ultra High Performance Concrete (UHPC) above M100.  Development of light weight concrete for infill applications in buildings.  Studies on precast panel connections.  Evaluation of composite pavements of high speed corridor using falling weight deflectometer.  Development of cost chemical modified bitumen.  Development of alternate cold mix for pothole repair.  Development of indigenous Creep testing facility.    Alternate arterial road construction with Modified sub-base layers. Micro-grid project in progress at L&T Construction campus, Chennai for documenting the stability and reliability of power system using multiple power sources and advanced control system for source and load control. Test-beds involving different technologies of Solar Photovoltaic (PV) modules and Balance of Plant systems planned across various Construction Skills Training Institutes (CSTIs) of L&T Construction.  Development of welding Simulation Technology.  Development of Steam Generator & Moisture Separator for Nuclear Power Plant.  Development of LNG vaporizer.    Development of cyclone separator for FCC regenerator in refinery. Weapon Launch Systems – Structures, Mechanisms, Stabilization Systems, Drives & Control Systems Field & Air Defence Guns – Ballistics, Mechanisms, Fire Control Systems, Optronics  Robotics & remotely operated/unmanned systems  RF, Microwave & telemetry systems  Video Analytics  Composites – Design & Process Technologies    Development of High Mach number wind tunnel facility including various subsystems Development of Titanium Structure for Strategic programs. Development of Dry Shielded Canister for Boiling water type Nuclear Reactor 51  Development of Retort for Titanium Sponge Plant  Indigenous development of   SPM for Composite Canister machining. This results in eliminating use of Heavy Boring & Radial Drilling machines and reducing machining cycle time by 90%. 7 Axis Machine for Ultrasonic Testing of Composite Air Frame 3D profile – Cycle time reduction by 70 %  Heavy duty lathe with dual Carriage & Tool post to reduce machining cycle time by 40%.  Development of ion-mobility spectroscopy (IMS) based chemical agent monitors (CAM).  Development of military communication hardware  Radio Relay  Field Wireless system  Vehicle Intercom System  Communication N/W field deployable router  Development of new products by LTRPM such as:  82.5” MECHANICAL PRESS  95” MECHANICAL PRESS WITH VCL  118” MECHANICAL PRESS WITH TOP SMO  118” MECHANICAL PRESS WITH BOTTOM SMO  TYRE BUILDING MACHINE 12”-18”  51” HYDRAULIC TCP WITH VCL & SMO  INTEGRATED AUTOMATION SOLUTION for Non-Tyre industry  Developments by VMU such as:    Development and supply of Bellow Sealed Butterfly Valves for high vacuum applications in BARC projects Design & Development of Control Valves and Actuators Design & Development of Double Block and Bleed high integrity positive shut off valves for variety of applications including Leased Automated Custody Transfer (LACT), Product metering, Aviation & Military fuelling, product isolation, bleeding, multi product manifolds and tank storage 52   Design & Development of Containment Isolation Valves, Bellow Seal Instrumentation Valves for Indian Nuclear Power Plants Design & Development of Quick Closing Non Return Valves for Supercritical Power plants. Design and establish manufacturing process for development of large size high pressure valves in forged steel construction. R&D Laboratories in the areas of Vibration & Acoustics, Experimental Stress Analysis, Materials Technology, Corrosion Studies and Water Technology have been upgraded by addition of new, state-of-the-art instruments and software tools to carry out the above studies effectively. The research facilities are augmented with the latest computer workstations, operating systems and communication network/data storage facilities. A fully computerized Technical Library, having the latest technical publications, research journals and product/ technology databases further supplement the R&D resources. Emphasis is given on creating Intellectual Properties (IP) and managing the Intellectual Property Rights (IPR). The Electrical & Automation (E&A) business’s in-house R&D has design and development capabilities for its products and solutions that are among the best in the industry. These facilities, located at Powai-Mumbai, Ahmednagar, Mysore and Coimbatore, are approved by the Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology. The Switchgear Design & Development Centre (SDDC) is the product and technology development wing of E&A and supports its leadership position in the market through proven excellence in product design. E&A’s engineers network with International labs, testing centres and academic institutions to keep abreast of new technology trends and introduce those for customers in different segments. Focused R&D activities have enabled the Electrical Standard Products (ESP) business to have a healthy New Product Intensity (NPI) index of >30%-an index which measures the sales of products introduced in the market in last five years to the total sales in the financial year. Currently, more than 400 engineers are pursuing these activities and working on diverse projects. In FY14 major new product development programs have been initiated by E&A in Powergear, Controlgear, Final Distribution Products and LV Panels and Systems. The new products being developed, in addition to setting global benchmarks in the industry, would also address the needs arising from the increased use of non- conventional energy sources in the future. A greater emphasis has been given to environmental friendly design concepts – in terms of material consumption, use of environmental friendly raw materials & processes as also energy usage. The culmination of these development programs is expected to give a cutting edge to the product portfolio and enhance the market share and profitability. In addition to these, life cycle management programs for product upgrades based on customer feedback, new applications and changing competitive scenario have also been initiated. This will help the businesses to address different market segments and certain niche applications. The above initiatives will help businesses maintain technology control and have a contemporary product portfolio. The Electrical & Automation (E&A) business is confident of higher growth with the Utility segment indicating increased activities along with revival in the Building segment in GCC region. Africa has become a destination of new opportunities. Prospects of turnkey automation projects are improving and opportunities in the energy management segment should contribute to better growth for automation products and solutions. 2. Benefits derived as a result of above R&D:          In-house testing facility is created as import substitution. Reliable test results and timely delivery of test results. Sustainable product and environment friendly. National standards improvement. Alternate methods of construction have the potential to reduce the consumption of natural materials. Indigenization & development of products for Indian Defence sector. Indigenization & development of products for Indian Space sector. Indigenization & development of products for Indian Nuclear sector. Requirements of IMS CAM for Homeland security and Indian Defence with prospects of large order inflow.  The R&D efforts from LTRPM helped them to compete with international competitors on their range of machines (Mechanical, Hydraulic Presses, Tyre building machines and Tyre handling system).  In case of VMU, benefits were as follows    Establishment of indigenous expertise in development and supply of high pressure valves for supercritical applications. Establishment of manufacturing cycle for development of large size valves in forged steel construction Successful supply of valves to BARC projects as import substitution Successful in-house development of Nuclear Valves and Control Valves Complete process simulation, design solutions and optimization for Hydrocarbon projects in the Fertilizer sector, involving Reformers, Ammonia Plant and Urea Plant. Establishment of in-house capability in Process Simulation and FEED Verification of on-shore / off- shore Gas Processing Plants and design optimization of associated equipment. In-house expertise for complete Refractory solutions (e.g., material selection, engineering, commissioning and troubleshooting) in high- temperature equipment for process plants. Development of in-house capability in multi-phase flow simulation studies for Oil & Gas Projects. Successful testing/commissioning of plants and equipment in various Hydrocarbon projects, through multi-disciplinary technology support. Approximately two thirds of ESP business and almost the whole of the LV panel business come from products and systems which are designed and developed in-house. Complete support to business units for all Materials related assignments (such as material verification/ selection/evaluation/characterization; selection of alternative materials; failure analysis; preservation and corrosion protection of critical equipment; development of new materials for strategic applications, identification of newer technologies and commercially available proven products and their implementation).         Development of in-house expertise related to manufacturing processes, welding, heat treatment, failure mechanisms and corrosion protection/ preservation issues of equipment having special metallurgy for critical Oil & Gas applications. 53          Acquisition of know-how pertaining to special materials and their applications. Successful troubleshooting/design optimization of Oil & Gas Processing equipment, heat exchangers, flares and exhaust stack etc.; Dispersion and radiation studies for offshore platform; Safety studies for safe helideck operation; Risk analysis for simultaneous heavy lift installation and drilling, using advanced CFD technique; Design and check- rating of critical thermal equipment for heat exchange/heat recovery applications; Capability development in newer applications such as low- temperature thermal desalination, design of cored brick heater; Design of HVAC system for offshore platform; Evaluation of technology proposals on cold fusion and geothermal power generation. Establishment of in-house capabilities in analysis of piping system for flow-induced and acoustic- induced vibrations; Conduct of Plant Noise studies utilizing in-house expertise; Development of in-house capabilities in special acoustic studies such as piping insulation design and valve noise/ vent noise assessment. Development of in-house expertise in advanced FEA and fatigue analysis techniques for specialized systems (Orifice Chamber/associated piping); Design upgrade and optimization of coal pulverizers. Successful completion of failure analysis/ troubleshooting assignments for critical machinery; Technical support to business units for machinery acceptance testing and commissioning. Development of in-house expertise in Fitness for Service (FFS) Level 1 & Level 2 assessment of in-service equipment and structures. Establishment of in-house expertise in structural FE analysis of offshore floating structures. Establishment of in-house capability in composite analysis of complex systems involving equipment, piping and structures; Design methodology for advanced FE analysis involving non-linear effects, shock/impact, thermal fatigue and high-pressure/ high-temperature processes. Development of in-house expertise in specialized applications such as buckling analysis of sub-sea pipeline and boat impact studies. Technical support to Oil & Gas, Refinery, Chemicals & Fertilizer Projects for complete Water and Wastewater management solutions; Produced Water Injection Water and Utility Water Management; Design of sludge and effluent treatment systems; Development of water recycling, reuse and zero-discharge schemes; Appropriate technical solutions for water treatment, filtration and desalination applications.  Savings in Foreign Exchange. 3. Future Plan of Action: The R&D Centre is committed to providing appropriate technology support to all Hydrocarbon Projects, as required by various business units. Future development activities are identified based on the expected needs of upcoming Projects as well as requirements for in-house capability development. The following key areas have been identified under R&D Action Plan:    In-house design/simulation capability of Ammonia and Urea Processes. Rate-based model development and simulation for Pre-Reformer, HTER and Auto-thermal Reformer. Capability development in multi-phase flow assurance studies using OLGA software.  Use of Refinery Residue for Gasification application.            Process design capabilities in Petrochemical/ Polymer Plants. Process technology for coal gasification (technology evaluation, coal characterization, performance simulation, design optimization and system integration for EPC Projects). Modularization of Process Plants. Carbon Capture and Sequestration techniques for Oil & Gas Projects. (CCS) Cryogenic Air Separation Processes (technology evaluation, process simulation, heat integration and system engineering). Use of CFD techniques for performance assessment of coal gasifiers. Emerging (Non-traditional) energy solutions such as CBM, Shale Gas and Tar Sands. Design of Cryogenic Vaporizers and Cold Boxes for Air Separation plants. Design of Combustion Air Pre-heaters for Reformers in Ammonia Plants. Design analysis of Bulk Flow coolers in Urea Plants. Application of Low Temperature Thermal Desalination process for commercial use. 54                  Design/engineering of molten salt based thermal energy storage system for electric arc furnace with intermittent operation. Power generation solutions for offshore process platforms using wind power. Development of in-house design/analysis capability involving Recycle, Reuse and Zero-discharge Technologies. Solar energy based desalination plants for “Clean Energy” initiative. Advanced Finite Element Analysis (FEA) techniques for process equipment subjected to thermal shock. Techniques for Reliability, Availability & Maintainability (RAM) studies as part of specialized engineering support for Process Plants. Stress analysis of refractory lined equipment and reinforced concrete structures. Fitness for Service (Level-3) assessment using FEA. Advanced FEA based buckling analysis of sub-sea pipelines. Theoretical and experimental study on degradation mechanisms in material of construction for Ammonia Convertor. Chemical synthesis of Platinum nano-particles for development of electrodes for Electro-chemical applications, with appropriate characterization tools. Study on degradation/failure mechanisms for High-Strength Steel and Duplex Stainless Steels; Characterization of different heat treated (Normalized + Tempered and normalized + accelerated cooling + tempered) low alloy steel for hydrogen service; Evaluation of hydrogen charged DSS. Development of environmentally-friendly (non- toxic and bio-degradable) chemical formulations for chemical cleaning and pickling of steels; Characterization and optimization of selected chemicals based on surface cleaning efficiency and material weight loss. Development of suitable concrete for hydroelectric projects. Development of suitable products for buildings. Development of design tools. Development of indigenous connection systems for precast structural members.       Industrial scale manufacturing of the products and implementation at site. Algorithms for real time visual projections into digital. Improving the standards on composite pavement. Development of new/upgraded products in defence equipment. Development of new/upgraded products in space equipment. Development of product as well as technological development in the areas of Refineries, Fertilizer, Petrochemical & Energy.  Development of technologies for   Automating integration of Composite # Metallic Inside and Outside Perforation of Composite Air Frame  Development of Hydraulic presses for passenger car and truck- bus tyres and development of all electric presses for the same segment by LTRPM. Some of the products planned are as follows:       Development of All Electric Tyre Curing Press 160”/180” Mechanical Tyre Curing Press 45” Economy version hydraulic Tyre Curing Press 68.5” Column design hydraulic Tyre Curing Press 47” Hydraulic press for curing bias tyres Factory automation system for non-tyre industries  Integrated development of SMO & BCM VBU: Indigenous design, manufacture and supply of entire valve packages including control valves for process and power plants Complete process simulation, design solutions and optimization for Hydrocarbon projects in Fertilizer sector, involving Reformers, Ammonia Plant and Urea Plant. Establishment of in-house capability in Process Simulation and FEED Verification of on-shore/off- shore Gas Processing Plants and design optimization of associated equipment. In-house expertise for complete Refractory solutions (e.g., material selection, engineering, commissioning and troubleshooting) in high- temperature equipment for process plants.     55  Development of in-house capability in multi-phase flow simulation studies for Oil & Gas Projects. Technical support to business units for machinery acceptance testing and commissioning.      Successful testing/commissioning of plants and equipment in various Hydrocarbon projects, through multi-disciplinary technology support. Complete support to business units for all Materials related assignments (such as material verification/ selection/evaluation/characterization; selection of alternative materials; failure analysis; preservation and corrosion protection of critical equipment; development of new materials for strategic applications, identification of newer technologies and commercially available proven products and their implementation). Development of in-house expertise related to manufacturing processes, welding, heat treatment, failure mechanisms and corrosion protection/ preservation issues of equipment having special metallurgy for critical Oil & Gas applications. Acquisition of know-how pertaining to special materials and their applications. Successful troubleshooting/design optimization of Oil & Gas Processing equipment, heat exchangers, flares and exhaust stack etc.; Dispersion and radiation studies for offshore platform; Safety studies for safe helideck operation; Risk analysis for simultaneous heavy lift installation and drilling, using advanced CFD technique; Design and check- rating of critical thermal equipment for heat exchange/heat recovery applications; Capability development in newer applications such as low- temperature thermal desalination, design of cored brick heater; Design of HVAC system for offshore platform; Evaluation of technology proposals on cold fusion and geothermal power generation.  Establishment of in-house capabilities in analysis of piping system for flow-induced and acoustic- induced vibrations; Conduct of Plant Noise studies utilizing in-house expertise; Development of in-house capabilities in special acoustic studies such as piping insulation design and valve noise/ vent noise assessment.      Development of in-house expertise in Fitness for Service (FFS) Level 1 & Level 2 assessment of in-service equipment and structures. Establishment of in-house expertise in structural FE analysis of offshore floating structures. Establishment of in-house capability in composite analysis of complex systems involving equipment, piping and structures; Design methodology for advanced FE analysis involving non-linear effects, shock/impact, thermal fatigue and high-pressure/ high-temperature processes. Development of in-house expertise in specialized applications such as buckling analysis of sub-sea pipeline and boat impact studies. Technical support to Oil & Gas, Refinery, Chemicals & Fertilizer Projects for complete Water and Wastewater management solutions; Produced Water Injection Water and Utility Water Management; Design of sludge and effluent treatment systems; Development of water recycling, reuse and zero-discharge schemes; Appropriate technical solutions for water treatment, filtration and desalination applications. 4. Expenditure on R&D: Capital Recurring Total Total R&D expenditure as a percentage of total turnover crore 2012-13 57.17 98.17 155.34 0.25% TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts in brief made towards technology absorption, adaptation and innovation:  Development of in-house expertise in advanced FEA and fatigue analysis techniques for specialized systems (Orifice Chamber/associated piping); Design upgrade and optimization of coal pulverizers.  Complete process simulation, design solutions and optimization for Hydrocarbon projects in Fertilizer sector, involving Reformers, Ammonia Plant and Urea Plant.  Successful completion of failure analysis/ troubleshooting assignments for critical machinery;  Establishment of in-house capability in Process Simulation and FEED Verification of on-shore/off- 56       shore Gas Processing Plants and design optimization of associated equipment. In-house expertise for complete Refractory solutions (e.g., material selection, engineering, commissioning and troubleshooting) in high- temperature equipment for process plants. Development of in-house capability in multi-phase flow simulation studies for Oil & Gas Projects. Successful testing/commissioning of plants and equipment in various Hydrocarbon projects, through multi-disciplinary technology support. Complete support to business units for all Materials related assignments (such as material verification/ selection/evaluation/characterization; selection of alternative materials; failure analysis; preservation and corrosion protection of critical equipment; development of new materials for strategic applications, identification of newer technologies and commercially available proven products and their implementation). Development of in-house expertise related to manufacturing processes, welding, heat treatment, failure mechanisms and corrosion protection/ preservation issues of equipment having special metallurgy for critical Oil & Gas applications. Acquisition of know-how pertaining to special materials and their applications. Successful troubleshooting/design optimization of Oil & Gas Processing equipment, heat exchangers, flares and exhaust stack etc.; Dispersion and radiation studies for offshore platform; Safety studies for safe helideck operation; Risk analysis for simultaneous heavy lift installation and drilling, using advanced CFD technique; Design and check- rating of critical thermal equipment for heat exchange/heat recovery applications; Capability development in newer applications such as low- temperature thermal desalination, design of cored brick heater; Design of HVAC system for offshore platform; Evaluation of technology proposals on cold fusion and geothermal power generation.  Establishment of in-house capabilities in analysis of piping system for flow-induced and acoustic- induced vibrations; Conduct of Plant Noise studies utilizing in-house expertise; Development of in-house capabilities in special acoustic studies such as piping insulation design and valve noise/ vent noise assessment.             Development of in-house expertise in advanced FEA and fatigue analysis techniques for specialized systems (Orifice Chamber/associated piping); Design upgrade and optimization of coal pulverizers. Successful completion of failure analysis/ troubleshooting assignments for critical machinery; Technical support to business units for machinery acceptance testing and commissioning. Development of in-house expertise in Fitness for Service (FFS) Level 1 & Level 2 assessment of in-service equipment and structures. Establishment of in-house expertise in structural FE analysis of offshore floating structures. Establishment of in-house capability in composite analysis of complex systems involving equipment, piping and structures; Design methodology for advanced FE analysis involving non-linear effects, shock/impact, thermal fatigue and high-pressure/ high-temperature processes. Development of in-house expertise in specialized applications such as buckling analysis of sub-sea pipeline and boat impact studies. Technical support to Oil & Gas, Refinery, Chemicals & Fertilizer Projects for complete Water and Wastewater management solutions; Produced Water Injection Water and Utility Water Management; Design of sludge and effluent treatment systems; Development of water recycling, reuse and zero-discharge schemes; Appropriate technical solutions for water treatment, filtration and desalination applications. Pre-Engineered RCC building with complete precast components for the first time – Cognizant Pune Canteen building. 3D Solid modelling techniques used for Concrete design of TCS Customer Care centre. Creation of a 3D studio (1st of its kind in the construction industry) where ideas get created synergized and the designs culminate into virtual reality. Exploring Precast & Composite construction as alternates to conventional system for enhanced benefits. Usage of Building Information Modelling as a platform (Shift from 2D to 3D) for producing integrated clash free drawings for all type of projects. 57                  Development of hinged launching girder for sharp radius. Development of movable type winch launching girder with provision to lift segment anywhere. Development of mould system for pre-casting of monorail guide way beams of radius of curvature varying 47m to straight. Implementation of Rail Structure Interaction (RSI). RSI analysis has been performed for HMRL for first time in Indian Metros. Use of controlled low strength material (PCC mixture with definite workability density and strength) for backfilling the open foundations in the viaduct portion of metro. Technology absorption & adaptation development of Combat Vehicles for Development of Internals made by Centrifugal & Investment casting for Refinery. Development of Auto-TIG welding for Aero equipment. Adaptation of advance metal cutting process like Water jet & Laser cutting for Stainless Steel & other exotic material. Development of Special Purpose Machine for Nozzle Cut-outs (with Weld Edge preparation) on shells for pressure vessels. Development of Weld Overlay Process for Super Duplex Stainless Steel material. Development of in-house Aluminium painting process. Interaction with external agencies/technology partners for exposure to the latest products/ designs, manufacturing technologies, processes, analytical techniques and engineering protocols. Active involvement with International/National Professional Societies (such as IChemE, AIChE/ CCPS, IIChE, ICC, FRI, ASME, NACE, ASM, ASTM, AISC, ACS, TERI, HTFS, HTRI, STLE, TSI, NAFEMS, TSI, etc.). Active participation in National/International Innovation forums and Innovation contests. Institutionalization of in-house schemes (such as ICONs and KnowNet) for identifying, nurturing and implementing innovative ideas and technology solutions. Networking and knowledge sharing through national/international conferences, seminars and exhibitions. 58   Valuation, adaptation and/or modification of imported designs/technologies to suit indigenous requirements, alternative materials/components. Parametric studies involving theoretical models duly validated by experimental studies at in-house laboratories and pilot plants, as well as feedback and operating data during commissioning of various plants and machinery.  Review of Patents in relevant technology areas.         Nomination of R&D engineers to external training programs, expert groups and technical committees. Collaborative efforts with educational/research institutions for research projects. Use of state-of-the-art equipment, instrument and software as well as the latest Codes and Standards. Analysing feedback from Customers/internal users to continually improve processes and services. Process change in HDP fabrication considering aging distortion. Development of in-house Rain test facility for defence products. Development of proprietary internals by casting process is in discussion with CLG. LTRPM indigenized various components for Rubber Processing Machines by designing, developing specifications and adapting to Indian conditions.  VBU made following efforts:      Knowledge sharing and participation in national and international valve conferences, seminars and exhibitions Collaborate with external agencies/technology partners for exposure to latest developments in control valves and indigenous development of the same. Establish state-of-the-art equipment, instrument and software for Nuclear Qualification of Valves Active involvement with National and International professional societies like ASME. Establish range of metal seated Trunnion Mounted Ball Valves for oil and gas projects. Some of the new products that were introduced were by the E&A Business during the year are MOC range of capacitor duty contactors, RTO thermal overload relays, EXORA range of MCBs, new range of electronic trip units & stored energy motor operator for d sine range of MCCBs, new frames in change-over-switches, Solar lantern, extension of range in T-ERA panels up to 5500 A etc.  2. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution, etc.:             Indigenization (import substitution) & development of products for Indian Defence & Space sector. Indigenization (import substitution) & development of products for markets of Middle East. Expansion of product range and export opportunities. Product improvement. Increase in know how within the country. Cycle time reduction. Complete process simulation, design solutions and optimization for Hydrocarbon projects in Fertilizer sector, involving Reformers, Ammonia Plant and Urea Plant. Establishment of in-house capability in Process Simulation and FEED Verification of on-shore/off- shore Gas Processing Plants and design optimization of associated equipment. In-house expertise for complete Refractory solutions (e.g., material selection, engineering, commissioning and troubleshooting) in high- temperature equipment for process plants. Development of in-house capability in multi-phase flow simulation studies for Oil & Gas Projects. Successful testing/commissioning of plants and equipment in various Hydrocarbon projects, through multi-disciplinary technology support. Complete support to business units for all Materials related assignments (such as material verification/ selection/evaluation/characterization; selection of alternative materials; failure analysis; preservation and corrosion protection of critical equipment; development of new materials for strategic applications, identification of newer technologies and commercially available proven products and their implementation).  Development of in-house expertise related to manufacturing processes, welding, heat treatment, failure mechanisms and corrosion protection/ preservation issues of equipment having special metallurgy for critical Oil & Gas applications.         Acquisition of know-how pertaining to special materials and their applications. Successful troubleshooting/design optimization of Oil & Gas Processing equipment, heat exchangers, flares and exhaust stack etc.; Dispersion and radiation studies for offshore platform; Safety studies for safe helideck operation; Risk analysis for simultaneous heavy lift installation and drilling, using advanced CFD technique; Design and check- rating of critical thermal equipment for heat exchange/heat recovery applications; Capability development in newer applications such as low- temperature thermal desalination, design of cored brick heater; Design of HVAC system for offshore platform; Evaluation of technology proposals on cold fusion and geothermal power generation. Establishment of in-house capabilities in analysis of piping system for flow-induced and acoustic- induced vibrations; Conduct of Plant Noise studies utilizing in-house expertise; Development of in-house capabilities in special acoustic studies such as piping insulation design and valve noise/ vent noise assessment. Development of in-house expertise in advanced FEA and fatigue analysis techniques for specialized systems (Orifice Chamber/associated piping); Design upgrade and optimization of coal pulverizers. Successful completion of failure analysis/ troubleshooting assignments for critical machinery; Technical support to business units for machinery acceptance testing and commissioning. Development of in-house expertise in Fitness for Service (FFS) Level 1 & Level 2 assessment of in-service equipment and structures. Establishment of in-house expertise in structural FE analysis of offshore floating structures. Establishment of in-house capability in composite analysis of complex systems involving equipment, piping and structures; Design methodology for advanced FE analysis involving non-linear effects, shock/impact, thermal fatigue and high-pressure/ high-temperature processes. Development of in-house expertise in specialized applications such as buckling analysis of sub-sea pipeline and boat impact studies. Technical support to Oil & Gas, Refinery, Chemicals & Fertilizer Projects for complete Water and Wastewater management solutions; Produced Water Injection Water and Utility Water 59 Management; Design of sludge and effluent treatment systems; Development of water recycling, reuse and zero-discharge schemes; Appropriate technical solutions for water treatment, filtration and desalination applications.     Cost reduction. Successful in-house development of supercritical valves as import substitution. Indigenization & development of Nuclear Valves. Expansion of product range to grab export opportunities. 3. Information regarding technology imported during the last 5 years S. No. a) b) Technology Imported Year of Import Status Design of control valves 2011-12 Under absorption Crushing Technology On continuous basis at Kansbahal [C] FOREIGN EXCHANGE EARNINGS AND OUTGO: Activities relating to exports, initiatives taken to increase exports; development of new export markets for products and services; and export plans. Overview: The Company has a diversified range of products. The Company has offices abroad and agents in various countries to boost exports. The Company is intensifying efforts in selected countries and exploring new markets. The Company regularly participates in prestigious international exhibitions and conducts market surveys and direct mail campaigns. The Company has an international presence, with a global spread of offices and joint ventures with world leaders. Its large technology base and pool of experienced personnel enable it to offer integrated services in world markets. Hydrocarbon (HC): The Business has executed large size complex projects internationally, mainly in GCC region. As a part of Strategic Plan, “Internationalization” has been identified as a major theme to drive a business growth going forward. The HC Business has been taking various initiatives to provide fillip to its international operations viz. Investments in strategic construction equipments & fabrication yards, appointments of Expats for business building activities in key customer markets such as GCC, South East Asia and CIS Countries. Also there have been few alliances & tie ups with major international players to pursue large value EPC projects. Experienced and top 60 performer employees have been moved from domestic operations to international to inculcate the Company’s best practices in the projects management & execution. Prequalification has been received for major international EPC projects from reputed customers in Saudi Arabia, Iraq, South East Asia and South Africa region. The Business has incorporated an In-Kingdom EPC (IK-EPC) company in Saudi Arabia to participate in EPC prospects reserved for local companies by Saudi Aramco. The Business has also registered a Construction Service Provider Representative Office (CSPRO) in Indonesia which will enable bidding for EPC projects in the country. The Business has bagged a few major international orders during the year including a repeat order from Petroleum Development Oman for Up-gradation of Gas Compression Facilities on turnkey basis. These, recent order wins both in Upstream and Mid & Downstream segment, reconfirms the growth potential for the HC Business in international segment. The Business continues to improve on its safety performance. During the year there have been several accolades and appreciations by clients and National & International agencies which include National Safety Council, American Society of Safety Engineers, British Safety Council and RoSPA. Heavy Engineering (HE): New Qualifications/Approvals were undertaken as per SAIPEM specification for supply of Urea Equipment as per Philips-66 process for Gasification equipment & for Supply of equipment in emerging technologies in Russia. Qualification is in progress as per STAMICARBON specification for High Pressure Urea Equipment and for Syn-gas cooler (new product line). The Business is pursuing approval from Shell & UOP for Supply of proprietary internals for Process Plant Equipment. Export efforts have been initiated in tapping:       Replacement Market business in Indonesia, Venezuela & New Zealand New market in Iraq and CIS countries Potential market for Modification, Revamp and Upgrade projects for refineries in Middle East countries New Fertilizer investments in USA & Africa LNG equipment business in USA New opportunities in Petrochemical emerging out of increased Shell Gas availability. Efforts are also made for alignment with Leading Process Licensors such as KBR, Urea Casale & Invista to increase Export business. The HE Business has entered new geographical market by supplying Ammonia and Urea Equipment to China, Coal Gasification equipment to Vietnam, Tube bundle to Venezuela, CCR reactor to New Zealand and Clad vessels to Iraq. It has also received orders for supply of fertilizer equipment & LNG equipment to USA, Revamp Project in Petrochemical plant in Saudi Arabia, Supply of Ammonia, Urea equipment and Boiler package to Nigeria and Supply Equipment for Boiler & Reactor packages to Hydrogen plant in Russia. The Business has supplied High Value Reactors, Coke drums and High Pressure Heat Exchangers to Green field Refinery projects in Brazil. HE expects business from Ammonia Casale/UHDE for supply of Ammonia Converter Baskets and exploring standalone supplier of Reactor Internals for Refinery Business. The Business has been exploring opportunities for export of Defence, Nuclear Power & Aerospace equipment as well. Orders have been received for Supply of Casks & Canisters to US Customer, Supply of equipment to Israel Aerospace Industries & ITER (International Thermonuclear Experimental Reactor). Construction: The Focus on GCC Countries occupies a predominant position for PT&D for its International Business. The year 2012-13 was an extremely challenging year. Long lead time between bid submission & Finalization has affected the Order Inflow in the Gulf. The Company’s Global Foot Print coupled with project execution capabilities helped the Construction Business in securing major orders in UAE & Qatar. The Business has substantially improved its market share in Qatar. In order to expand the business horizon, it has embarked on the ASEAN/African Market. Efforts are on to penetrate the market by focusing some of the East African Countries. Business Environment: Construction industry continues to witness slowdown and was very sluggish during the2012-13. In UAE, the Abu Dhabi Government despite being highly liquid and cash rich is very cautious in their approach. It is evident from the delay in placement of Tender/Award of Contracts. Business Performance: The Construction Business achieved a major Breakthrough in 220 kV Segment in UAE by securing 220/33 kV Grid Station at Zakher & Ayn Al Faydha for AADC in addition to 132kV GIS substations for FEWA. The business has also bagged a prestigious order to execute 11 kV Power Distribution Network for Emirates Palace. A Major Breakthrough in Airport Segment in Gulf Market was attained by securing Special Airport System Package for Concourse 4 of Dubai International Airport and also E&I Works for Abu Dhabi Airport Airside works. Volatility in Commodity Prices: Though oil price was not seen with much oscillation, the Commodity Price had lot of volatility. However the Construction Business protected its margin by mitigating the risk through proper hedging. Outlook: In the International (Gulf) market, the combination of historically high oil prices, expanded oil production and low interest rates is supporting buoyant economic activity. Fiscal and external surplus are large, inflation is moderate, and prospects for growth remain positive. GCC investment plans on Grid Strengthening & infrastructural development continues to be in line with economic development offering substantial potential in T&D Sector. Intensifying Power Demand in Africa & South East Asian countries unleashes significant potential & new opportunities in T&D sector. With its foot firmly established in all GCC countries now, the business has set its sight to expand to African Countries & corner a significant market share in GCC markets. Electrical & Automation (E&A): During financial year 2012-13, E&A registered 44% increase over the previous year in Order Inflow from international markets. E&A Business earned 10% of its revenue from international sales in FY 2013. The LV & MV switchboard business could get higher orders from the Middle-East market, largely from the oil & gas sector. There also was a flow of good order from the utility sector in Kenya. One of the major initiatives taken by E&A Business during the financial year was to create an International Sales Organization in order to focus on select geographies divided into five clusters. The sales organizational unit, called Cluster Sales Unit (CSU), will present a single face and be responsible for all the customer front-end activities related to the geography. They will have full responsibility for the implementation and delivery of the Lakshya plan in so far as the order input targets for the individual BUs under them are concerned. The acquisition of Servowatch in the UK and Henikwon Corporation in Malaysia will further boost E&A’s business prospects. During the year, E&A filed 159 Patent applications, 29 Trademark applications, 36 Design registrations and 2 Copyrights as well as 10 international Patent applications including 6 Patent Cooperation Treaty (PCT) and 4 Gulf Cooperation Council (GCC) Patent 61 applications. This was the 6th consecutive year of filing more than 100 Patent applications. Continuous efforts on IP creation and its management earned the business the highest awards in patents filing and design registration, instituted by the Indian Patents Office, viz. ‘The Top Indian Private Company (Large Scale) in Patents 2012’ and ‘The Top Indian Organization in Designs 2012’ Future Outlook: According to the Lakshya plan 2016, the switchboard business will continue to focus on improving its share of international business and target achieving at least 25% of its total revenue. As far as products business is concerned, E&A has a target to earn about 10% revenue. This will help the business to increase its overall earning from international market in FY 2013-14 and achieve 13% target by the end of Lakshya plan 2016. Power: The Power Business is engaged in technology solutions to setup Coal based Power Plants and Gas based Power Plants. Since coal is not a permitted fuel in several countries, the potential for projects is seriously limited. Hence, the focus is on opportunities for Gas Based Power Plant in relevant countries where the Power Business is confident of being competitive as well as capable of successful execution. The focus is on Middle East, where the business has set up two smaller power projects, and South East Africa. The Power Business is pursuing active leads in these regions and striving for a major breakthrough. The Critical Piping unit which Manufactures High Pressure Piping Spools for Thermal Power Plants is seeking opportunities in Middle East. Steps have been taken to build a business development and Marketing team at Abu Dhabi. The Joint Ventures with Mitsubishi Heavy Industries for manufacture of Steam Turbines and Steam Generators are seeking to supply components to MHI’s third country projects. Manufacturing & Industrial Products (MIP): (LTRPM) has Rubber Machinery Business Unit successfully supplied the prototype Press to a major European Tyre Manufacturer and the trial is completed. Based on this successful performance, LTM has received communication for quoting towards serial production of 10 Nos. of presses to their plants worldwide. LTM also succeeded in obtaining an order from another Major American Tyre Major and delivered Automatic Truck Tyre 62 Building Machines, which opens a new market segment for the unit. In line with the strategy, Valves Business has strengthened marketing network in the Middle East and it has yielded results in brand acceptance and customer approvals with the National Oil Companies in the region. Sustained oil & gas project activity in the Middle East, North Africa and Australia provided good opportunity for valves. Long-term relationships with key end-users and EPCs in the Middle East and Far East were leveraged to enhance our market presence. In the Valves business, approximate 51% of our total revenue was from exports. A few initiatives detailed: The following initiatives are being followed on a continuous basis by the Company:        Widening new geographical areas for augmenting its exports. Exploring inorganic growth opportunities for the acquisition of specialized engineering outfits abroad. Membership of global forums like Engineering & Construction Risk Institute (ECRI) and participating in international seminars. Implementation of internal processes towards operational excellence and creating a lean high performance organization. Knowledge dissemination through various platforms within the organization. Bringing in high caliber resources in the areas of front-end marketing, engineering, project risk management, contract management, administration, etc., to strengthen the overseas operations. Customized Talent Management programs catering to the training and development needs of employees. Total foreign exchange used and earned: Foreign Exchange earned Foreign Exchange saved/deemed exports Total Foreign Exchange used crore 2012-13 13,123.69 3,871.12 16,994.81 15,212.90 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 – 184/- per share. The average market price on the Stock Exchange, Mumbai, on the date of grant i.e., April 19, 2002 – 172/- per share. The average market price on the Stock Exchange, Mumbai, on the date of grant , i.e, April 19, 2002 – 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 – 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 – 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 199/- per share. (c) Options vested 10,60,750 38,64,050 20,67,250 20,19,830 (d) Options exercised (e) Total number of shares arising as a result of exercise of Options (Equity shares of 10/- each) 2,66,500 1,04,318 52,415 52,415 12,750 12,750 6,250 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 10,43,180/- 96,44,360/- 21,93,000/- 10,75,000/- Options 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 63 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 A. PRE RESTRUCTURE (contd.): ESOP SERIES Particulars (1) SAR-1999 (2) 2000 (3) 2002-A (4) 2002-B (5) 2003-A (6) 2003-B (7) (j) Employee-wise details of Options granted to – i) Senior Managerial Personnel: Mr. A. M. Naik 1,25,000 2,00,000 2,00,000 2,00,000 2,00,000 2,00,000 Mr. K. Venkataramanan Mr. V. K. Magapu Mr. M. V. Kotwal Mr. S. N. Subrahmanyan Mr. R. Shankar Raman Mr. Y. M. Deosthalee Mr. K. V. Rangaswami Mr. J. P. Nayak Mr. R. N. Mukhija Mr. A. Ramakrishna Mr. P. M. Mehta Mr. M. Karnani 60,000 20,000 16,500 – – 60,000 16,000 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 35,000 27,000 5,400 5,000 35,000 27,000 4,800 13,000 40,000 30,000 3,400 14,000 22,500 17,500 3,250 12,500 22,500 17,500 3,250 12,500 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 25,000 25,000 27,000 17,500 17,500 60,000 1,00,000 1,00,000 1,20,000 1,20,000 1,20,000 30,000 80,000 30,000 40,000 60,000 85,000 1,25,000 1,25,000 60,000 42,000 85,000 – 80,000 90,000 40,000 – 85,000 60,000 – – 85,000 – – – 5,37,500 8,84,400 8,99,800 8,84,400 7,78,250 7,18,250 ii) Any other employee None None None None None None iii) who receives a grant, in any one year, of Options amounting to 5% or more of Options granted during that year Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant 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 2/- for every two Options and repriced at 14/- per Option in respect of ESOP Series 1999, 2000, 2002-A & 2002-B and 70/- per Option in respect of ESOP Series 2003-A & 2003-B. 64 (a) (b) (c) (d) (e) (f) 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) (1) Options granted (outstanding 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 2/- each) The pricing formula (Adjusted grant price per share ) Options vested (adjusted on restructure) ESOP SERIES 1999 (2) 3,97,125 2000 (3) 18,75,180 2002-A (4) 18,21,525 2002-B (5) 18,34,018 2003-A (6) 33,75,500 2003-B (7) 28,71,250 14/- 3,97,125 18,75,180 10,22,050 10,02,003 6,02,670 56,460 35,30,380 Nil 70/- Nil Add: vested post restructure – – 7,90,312 8,20,708 20,51,220 19,32,585 3,97,125 3,97,121 3,97,121 18,75,180 18,65,367 18,65,367 18,12,362 18,03,824 18,03,824 18,22,711 18,04,510 18,04,510 20,51,220 20,33,343 20,33,343 19,32,585 19,14,964 19,14,964 4 5,613 12,326 14,583 6,94,997 3,23,009 Nil 55,59,694/- Nil 2,61,15,138/- Nil 2,52,53,536/- Nil 2,52,63,140/- Nil 14,23,34,010/- Nil 13,40,47,480/- Nil Nil Nil 4,200 Nil 4,200 5,375 Nil 5,375 14,925 Nil 17,389 6,29,771 17,135 12,75,272 14,925 6,47,160 12,92,407 Please refer to Part A(j) Total Options exercised Total number of shares arising as a result of exercise of Options (Equity shares of 2/- each) Options lapsed and/or withdrawn Variation of terms of Options (g) (h) Money realised by exercise of (i) (j) Options Total Number of Options in force - Vested Unvested Total Employee-wise details of Options granted Options granted to Senior Managerial Personnel post Restructure Pre Bonus Issue 2006: Mr. Shailendra Roy 10,000 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 14/- and 70/- was readjusted to 7/- and 35/- respectively. – – – – – 65 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): ESOP SERIES (a) (b) (c) Particulars (1) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) (2) Options granted post Bonus Issue (Equity shares of 2/- each) The pricing formula (Adjusted grant price per share ) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue (d) (e) Total Options exercised Total number of shares arising as a result of exercise of Options* (Equity shares of 2/- each) Options lapsed (f) (g) Variation of terms of Options (h) Money realised by exercise of Options (i) Total Number of Options in force- Vested Unvested (j) Total Employee-wise details of Options granted Options granted to Senior Managerial Personnel post Bonus Issue 2006 (Pre Bonus Issue 2008): Mr. S.N. Subrahmanyan Mr. R. Shankar Raman Mr. Shailendra Roy 1999 (2) 2000 (3) 2002-A (4) 2002-B (5) Nil 8,400 10,750 29,850 2003-A (6) 12,94,320 2003-B (7) 25,84,814 7,18,430 33,03,244 7/- 35/- 8,400 10,750 29,850 34,778 34,270 – – – 12,35,430 19,90,863 8,400 10,750 29,850 Nil 10,000 12,70,208 12,52,754 12,45,754 20,25,133 19,38,270 18,95,270 Nil Nil 70,000/- 25,840 Nil 4,36,01,390/- 2,12,861 Nil 6,63,34,450/- Nil Nil Nil Nil Nil 10,750 Nil 19,850 Nil 15,726 Nil 81,963 10,70,150 10,750 19,850 15,726 11,52,113 Please refer to Part A (j) and Part B (j) – – – – – – – – – 7,000 9,000 6,500 Nil Ni Nil Nil Nil 8,400 Nil 8,400 – – – Nil – Nil Nil Nil Nil Nil Nil Nil Nil Nil – – – 22,500 * 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 7/- and 35/- was readjusted to 3.50 and 17.50 respectively. 66 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (I) Employee Stock Ownership Scheme-1999-2003 D. 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 2/- each) (b) (c) The pricing formula (Adjusted grant price per share ) Options vested (adjusted on Bonus Issue) Add: vested post Bonus Issue Total (d) Options exercised (e) (f) (g) Total number of shares arising as a result of exercise of Options (Equity shares of 2/- each) Options lapsed Variation of terms of Options (h) Money realised by exercise of Options (i) Total Number of Options in force - Vested Unvested Total (j) Employee-wise details of Options granted Options granted to Senior Managerial Personnel post Bonus Issue 2008: 8,31,200 31,35,426 Nil – Nil Nil Nil Nil Nil Nil Nil Nil Nil 3.50 17.50 16,800 21,500 39,700 31,452 1,63,926 – – – – 24,33,134 16,800 21,500 39,700 31,452 25,97,060 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 24,45,579 24,45,579 2,54,645 Nil 4,27,97,632.50 16,800 Nil 21,500 Nil 39,700 Nil 31,452 Nil 1,09,802 3,25,400 16,800 21,500 39,700 31,452 4,35,202 Please refer to Part A (j), Part B (j) and Part C (j) Mr. Ravi Uppal – – – – – 20,000 67 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme-2006 A. PRE BONUS ISSUE 2008 ESOP SERIES (a) (b) (c) (d) (e) Particulars (1) (1) Options granted (Pre Bonus Issue) Options Outstanding and adjusted consequent to Bonus Issue# (2) Options granted Post Bonus Issue (Equity shares of 2/- each) The pricing formula 2006 (2) 53,35,750 1,06,71,500 6,94,270 2006-A (3) – – 29,06,240 The latest available closing price on National Stock Exchange of India Limited on August 31, 2006, preceding the date of initial grant i.e., September 1, 2006 – 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 – 2,198/- per share (Discounted grant price per share – 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 2,404/- was readjusted to 1, 202/-. Options vested Options exercised Total number of shares arising as a result of exercise of Options (Equity shares of 2/- each) Options lapsed and/or withdrawn Variation of terms of Options 20,13,200 12,80,677 12,80,677 40,524 25,034 25,034 32,72,955 Nil 153,93,73,754 1,80,428 Nil 3,00,90,868 (f) (g) (h) Money realised by exercise of Options (i) Total Number of Options in force – Vested Unvested (j) Total Senior Managerial Personnel Employee-wise details of Options granted to – i) 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 Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant iii) 6,97,138 61,15,000 68,12,138 14,844 26,85,934 27,00,778 None None None 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 1202/- was readjusted to 601/-. 68 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 (II) Employee Stock Option Scheme-2006 B. POST BONUS ISSUE 2008: Particulars (1) (a) (1) Options granted (outstanding and adjusted consequent to Bonus Issue) ESOP SERIES 2006 (2) 1,36,24,276 (2) Options granted Post Bonus Issue Nil (Equity shares of 2/- each) 2006-A (3) 54,01,556 96,55,230 1,36,24,276 1,50,56,786 (b) (c) The pricing formula (Adjusted grant price per share) Options vested (Adjusted on Bonus Issue) 601/- 13,94,276 Add: Vested post Bonus Issue 1,17,96,055 Total (d) Options exercised (e) (f) (g) Total number of shares arising as a result of exercise of Options (Equity shares of 2/- each) Options lapsed and/or withdrawn Variation of terms of Options 1,31,90,331 1,17,54,447 1,17,54,447 9,58,361 Nil 29,688 72,30,442 72,60,130 47,15,162 47,15,162 30,52,295 Nil (h) Money realised by exercise of Options 706,44,22,647 283,38,12,362 (i) Total Number of Options in force – Vested Unvested Total (j) Employee-wise details of Options granted to – i) Senior Managerial Personnel ii) Any other employee who receives a grant, in any one year, of Options amounting to 5% or more of Options granted during that year iii) Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant 9,11,468 Nil 9,11,468 21,35,578 51,53,751 72,89,329 None None None 69 Information required to be disclosed under SEBI (ESOS & ESPS) Guidelines, 1999 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 Standard (AS) 20 (k) (l) The difference between employee compensation cost using intrinsic value method and the fair value of the Options and impact of this difference on profits and on EPS. a. Diluted EPS before extraordinary items 78.18 b. Diluted EPS after extraordinary items 79.33 Had fair value method been adopted for expensing the compensation arising from employee share-based payment plans: The employee compensation charge debited to the a. Statement of Profit and Loss for the year 2012-13 would have been higher by 29.85 crore (previous year: 25.99 crore) [excluding 2.30 crore (previous year: 4.79 crore) on account of grants to employees of subsidiary companies] Basic EPS before extraordinary items would have decreased from 78.82 per share to 78.33 per share Basic EPS after extraordinary items would have decreased from 79.99 per share to 79.50 per share b. c. d. Diluted EPS before extraordinary items would have decreased from 78.18 per share to 77.70 per share e. Diluted EPS after extraordinary items would have decreased from 79.33 per share to 78.85 per share (m)(i) (a) Weighted average exercise price of Options granted during the 543.15 per share year where exercise price is less than market price. (b) Weighted average exercise price of Options granted during the No such grants during the year year where exercise price equals market price. m(ii) (a) Weighted average fair value of Options granted during the year 909.35 per share where exercise price is less than market price. (b) Weighted average fair value of Options granted during the year No such grants during the year where exercise price equals market price. (n) Method and significant assumptions used to estimate the fair value of Options granted during the year. (a) Method (b) Significant Assumptions Black-Scholes Option Pricing Model (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 8.05% 4.26 years 39.38% 70.24 per option 1317.81 per option AUDITORS’ CERTIFICATE ON EMPLOYEE STOCK OPTION SCHEMES We have examined the books of account and other relevant records and based on the information and explanations given to us, certify that in our opinion, the Company has implemented the Employees Stock Option Schemes in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the resolutions of the Company in general meetings held on 26 August, 1999, 22 August, 2003 and 25 August, 2006. Mumbai, May 22, 2013 70 SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 ANNEXURE ‘C’ TO THE DIRECTORS’ REPORT A. CORPORATE GOVERNANCE Corporate Governance is a set of principles, processes and systems which govern a company. The elements of Corporate Governance are independence, transparent, accountability, responsibility, compliance ethics, values and trust. Corporate Governance enables an organization to perform efficiently and ethically generate long term wealth and create value for all its stakeholders. The Company believes that sound Corporate Governance is critical for enhancing and retaining investor trust and your Company always seeks to ensure that its performance goals are met with integrity. The Company has established systems and procedures to ensure that its Board of Directors is well informed and well equipped to fulfill its overall responsibilities and to provide management with the strategic direction needed to create long term shareholders value. The Company has adopted many ethical and transparent governance practices even before they were mandated by law. The Company has always worked towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate. 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 of the Executive Directors and one Senior Managerial Personnel and four Advisors to the Chairman. (iii) Strategy & Operational Management – by the Independent Company (not legal entities) Boards of each Independent Company (IC) comprising of representatives from the Company Board, Senior Executives from the IC and independent members. (iv) Operational Management – by the Business Unit (BU) Heads. The four-tier governance structure, besides ensuring greater management accountability and credibility, facilitates increased autonomy of businesses, performance discipline and development of business leaders, leading to increased public confidence. D. ROLES OF VARIOUS CONSTITUENTS OF CORPORATE GOVERNANCE IN THE COMPANY a. Board of Directors (the Board): The Directors of the Company are in a fiduciary position, empowered to oversee the management functions with a view to ensure its effectiveness and enhancement of shareholder value. The Board reviews and approves management’s strategic plan & business objectives and monitors the Company’s strategic direction. b. Executive Management Committee (EMC): The EMC plays an important role in maintaining the linkage between IC’s and the Company’s Board as well as in realizing inter-IC synergies and cross cutting opportunities. The key responsibilities of the EMC include approval of policies cutting across IC’s and at Corporate level such as capital investments, expansions, customer and supplier synergy, Corporate Social Responsibility (CSR) and reviewing the consolidated financials and budgets before they are presented to the Company Board. c. Group Executive Chairman (GEC): The GEC is the Chairman of the Board and the Executive Management Committee. His primary role is to provide leadership to the Board and the Corporate Management for realizing the approved strategic plan and business 71 objectives. He presides over the Board and the Shareholders’ meetings. The Group Executive Chairman provides leadership and devotes his full attention to certain core actions which include, inter alia, focus on restructuring, mentor senior executives, succession planning, corporate governance, interface with critical Government entities and major customers for the Company and Group Companies and provide support, wherever necessary. d. Chief Executive Officer and Managing Director (CEO & MD): The CEO & MD will be fully accountable to the Board for the Company’s business results, people development, operational excellence, business development and other related responsibilities. e. Executive Directors (ED)/Senior Management Personnel: The Executive Directors, as members of the Board, along with the Senior Management Personnel in the Executive Management Committee, 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. f. 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. g. Independent Company Board (IC Board): In 2010-11, the Company developed its strategic plan for 2010-15 (LAKSHYA 2015) which, inter alia, defined various business areas to be focused on over the next five years. The thrust of LAKSHYA 2015 was increased accountability and ownership for performance, making the Company less complex to manage and be more focused on its core business. The Company was restructured into 12 independent Companies (ICs) [not legal entities] with each IC having its own Board, with members within the Company, independent members and a representative from the Company’s Board. Since the formulation of “LAKSHYA 2015” the development in domestic and international environment impacted the performance and future expectations of many of the Company’s existing businesses compared to the original targets in “LAKSHYA 2015”. During the year, the Company undertook the Mid-Term Review of the Strategy and evolved the revised Strategic Plan called “Lakshya 2016” to initiate various Strategic changes in the original plan. 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 Group Executive Chairman, Chief Executive Officer and Managing Director, 4 Executive Directors and 9 Non-Executive Directors. The composition of the Board is in conformity with Clause 49 of the Listing Agreement. b. Meetings of the Board: The Meetings of the Board are generally held at the Registered Office of the Company at L&T House, Ballard Estate, Mumbai 400 001 and also if necessary, in locations, where the Company operates. During the year under review, 10 Meetings were held on April 4, 2012, April 5, 2012, April 6, 2012, April 7, 2012, May 14, 2012, July 23, 2012, October 22, 2012, December 15, 2012, January 24, 2013 and January 25, 2013. The Company Secretary prepares the agenda and the explanatory notes, in consultation with the Group Executive Chairman and CEO & 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 are made on business operations to the Board by Independent 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 72 the Group Executive Chairman. 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 March 31, 2013. Their attendance at the Meetings during the year and at the last Annual General Meeting is as under: Name of Director Category Meetings held during the year No of Board Meetings attended Attendance at last AGM Mr. A. M. Naik Mr. K. Venkataramanan Mr. V. K. Magapu ^ Mr. M. V. Kotwal Mr. Ravi Uppal @ Mr. S. N. Subrahmanyan Mr. R. Shankar Raman Mr. Shailendra Roy Mr. S. Rajgopal Mr. S. N. Talwar Mr. M. M. Chitale Mr. Thomas Mathew T. (Note 1) * Mr. N. Mohan Raj (Note 1) Mr. Subodh Bhargava Mr. A. K. Jain (Note 2) Mr. J. S. Bindra $ Mr. M. Damodaran # Mr. Vikram Singh Mehta # Mr. Sushobhan Sarker (Note 1) % GEC CEO & MD ED ED ED ED ED ED NED NED NED NED NED NED NED NED NED NED NED 10 10 6 10 6 10 10 10 10 10 10 7 10 10 10 6 4 4 2 Meetings held during the year are expressed as number of meetings eligible to attend. Note: 1. Representing equity interest of LIC 10 10 6 10 6 10 10 10 10 10 10 2 10 9 10 6 4 4 2 YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES NO NO NO NO 2. Representing equity interest of SUUTI ceased to be a director w.e.f. 24.08.2012. resigned as a whole-time director w.e.f. close of working hours of 15.09.2012. retired as a whole-time director w.e.f. close of working hours of 30.09.2012. ceased to be a director w.e.f. 19.11.2012. Appointed as an Additional Director w.e.f. 22.10.2012. $ @ ^ * # % Appointed as a Director w.e.f 15.12.2012 GEC – Group Executive Chairman CEO & MD – Chief Executive Officer and Managing Director ED – Executive Director NED – Non-Executive Director 1. None of the above Directors are related inter-se. 2. None of the Directors hold the office of director in more than the permissible number of companies under the Companies Act, 1956. 73 As on March 31, 2013, the number of other Directorships & Memberships/Chairmanships of Committees of the Board of Directors are as follows: Name of Director Mr. A. M. Naik Mr. K. Venkataramanan Mr. M. V. Kotwal Mr. S. N. Subrahmanyan Mr. R. Shankar Raman Mr. Shailendra Roy Mr. S. Rajgopal Mr. S. N. Talwar Mr. M. M. Chitale Mr. N. Mohan Raj Mr. Subodh Bhargava Mr. A. K. Jain Mr. M. Damodaran Mr. Vikram Singh Mehta Mr. Sushobhan Sarker No of other company Directorships 3 2 2 1 6 14 1 13 9 1 7 2 9 4 6 No. of Committee Membership 1 – – 1 7 5 1 5 5 1 3 1 5 1 1 No. of Committee Chairman-ship – – – – – 1 – 4 5 – 2 1 2 1 1  Committee memberships include memberships of Audit Committee and Shareholders’ Grievance Committee in all public limited companies (whether listed or not) and excludes private limited companies, foreign companies and Section 25 companies.  The Committee Chairmanships/Memberships are within the limits laid down in 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 -  Annual revenue budgets and capital expenditure plans  Quarterly results and results of operations of Independent Company 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    Quarterly report on fatal or serious accidents or dangerous occurrences, any material effluent or pollution problems Any materially relevant default, if any, in financial obligations to and by the Company or substantial non- payment for goods sold or services rendered, if any Any issue, which involves possible public or product liability claims of substantial nature, including any Judgment or Order, if any, which may have strictures on the conduct of the Company  Developments in respect of human resources  Compliance or Non-compliance of any regulatory, statutory nature or listing requirements and investor service such as non-payment of dividend, delay in share transfer, etc., if any d. Post-meeting internal communication system: The important decisions taken at the Board/Committee meetings are communicated to the concerned departments/ Independent Company promptly. 74 F. BOARD COMMITTEES The Board currently has 3 Committees: 1) Audit Committee, 2) Nomination and Remuneration Committee and 3) Shareholders’/Investors’ Grievance Committee. The terms of reference of the Board Committees are determined by the Board from time to time. The Board is responsible for constituting, assigning and co-opting the members of the Committees. The meetings of each Board Committee are convened by the respective Committee Chairman. The role and composition of these Committees, including the number of meetings held during the financial year and the related attendance are provided below. 1) Audit Committee (AC) i) Terms of reference: The role of the Audit Committee includes the following:       Overseeing the Company’s financial reporting process and disclosure of its financial information Recommending the appointment of the Statutory Auditors and fixation of their remuneration Reviewing and discussing with the Statutory Auditors and the Internal Auditor about internal control systems t h e a d e q u a c y R e v i e w i n g a n d independence of the Internal Audit function, and observations of the Internal Auditor Reviewing major accounting policies and practices and adoption of applicable Accounting Standards Reviewing major accounting entries involving exercise of judgment by the management  Disclosure of contingent liabilities Reviewing, if necessary, the findings of any internal investigations by the Internal Auditors and reporting the matter to the Board Reviewing mechanisms of the Company the risk management         Reviewing the Quarterly and Half yearly financial results and the Annual financial statements before they are submitted to the Board of Directors Reviewing the operations, new initiatives and performance of the business, formation of committee at Independent Company time Looking into the reasons for substantial defaults in payments to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, if any Approval of the appointment of the Chief Financial Officer (CFO). Recommendation of appointment of cost auditor. Minutes of the Audit Committee Meetings are circulated to the Members of the Board of Directors and taken note of. ii) Composition: The Audit Committee of the Board of Directors was formed in 1986 and as on March 31, 2013 comprised four Non-Executive Directors, all of whom are independent. iii) Meetings: During the year ended March 31, 2013, 8 meetings of the Audit Committee were held on May 2, 2012, May 14, 2012, June 18, 2012, July 23, 2012, August 24, 2012, October 22, 2012, November 28, 2012 and January 24, 2013. The attendance of Members at the Meetings was as follows: Name Status No. of meetings during the year No. of Meetings Attended Mr. M. M. Chitale Chairman Mr. N. Mohan Raj Mr. A. K. Jain Mr. M. Damodaran $ Member Member Member 8 8 8 1 8 8 8 1 Reviewing of compliance with Listing Agreement and various other legal requirements concerning financial statements and related party transactions Meetings held during the year are expressed as number of meetings eligible to attend. $ Mr. M. Damodaran has been appointed as a member of Audit Committee on 15.12.2012 75 and has attended the only meeting held since that date. All the members of the Audit Committee are financially literate and have accounting or related financial management expertise. The CEO & MD, the Chief Financial Officer and the Head of Corporate Audit Services are permanent invitees to the Meetings of the Audit Committee. The Company Secretary is the Secretary to the Committee. iv) 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 9001:2008 certified. The Head of Corporate Audit Services reports jointly to the Group Executive Chairman and Chief Executive Officer & Managing Director. The staff of Corporate Audit department is rotated periodically. From time to time, the Company’s systems of internal controls covering financial, operational, compliance, IT applications, etc. are reviewed by external experts. Presentations are made to the Audit Committee on the findings 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) Terms of reference: To review, assess and recommend the appointment of Executive and Non-Executive 76 Directors (NED) and, to review their 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. ii) Composition: The Committee has been in place since 1999. As at March 31, 2013, the Committee comprised 3 Non-Executive Directors and the Group Executive Chairman. iii) Meetings: During the year ended March 31, 2013, 9 meetings of the Nomination & Remuneration Committee were held on April 6, 2012, May 14, 2012, July 23, 2012, August 24, 2012, September 27, 2012, October 22, 2012, January 7, 2013 and January 25, 2013 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 Mr. Subodh Bhargava Mr. A. M. Naik Chairman Member Member Member Mr. Thomas Mathew T. $ Member Mr. J. S. Bindra * Member 9 9 9 9 6 4 9 9 9 9 5 4 Meetings held during the year are expressed as number of meetings eligible to attend. $ Ceased to be a member w.e.f. 19.11.2012 * Ceased to be a member w.e.f. 24.08.2012 iv) 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 conflict of interest, ensures availability of diverse perspectives, business experience, legal, financial & other expertise, integrity, managerial qualities, practical wisdom, ability to read & understand financial 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 definition of Independent Director as given under Clause 49 of the Listing Agreement. As per the definition, 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 certificate confirming that they meet the “independence criteria” as mentioned in Clause 49 of the Listing Agreement. Committees. The commission is paid as per limits approved by shareholders, subject to a limit not exceeding 1% p.a. of the profits 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, Chairmanship of Committees and participation in IC meetings. 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 These certificates have been placed on the website of the Company. Directors for the year ended March 31, 2013: v) Remuneration Policy (a) Executive Directors: The remuneration of the Board members is based on the Company’s size & global presence, its economic & financial position, industrial trends, compensation paid by the peer companies, etc. Compensation reflects 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 qualified executives. The Company pays remuneration to Executive Directors by way of salary, perquisites & retirement benefits (fixed components) & commission (variable component), based on recommendation of the Committee, approval of the Board and the shareholders. The commission is calculated with reference to net profits of the Company in the financial 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 20,000 per meeting of the Committee and the Board to the NEDs for attending the meetings of the Board & The details of remuneration paid/payable to the Executive Directors is as follows: Lakh Commission Names Salary Perquisites Mr. A. M. Naik Mr. K. Venkataramanan Mr. V. K. Magapu ^ Mr. M. V. Kotwal Mr. Ravi Uppal @ Mr. S. N. Subrahmanyan Mr. R. Shankar Raman Mr. Shailendra N. Roy @ resigned as a whole-time director w.e.f. close of working hours of 15.09.2012. ^ retired as a whole-time director w.e.f. close of working hours of 30.09.2012. 1374.00 824.00 222.00 287.00 135.00 552.00 435.00 251.00 264.00 163.20 61.50 123.00 52.25 105.00 93.00 80.60 25.87 174.02 8.00 76.06 13.70 18.40 18.40 65.47 Retirement Benefits 442.26 266.54 76.55 110.70 50.56 177.39 142.56 89.53    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 77 (b) Non-Executive Directors: The details of remuneration paid/payable to the Non-Executive Directors is as follows: Lakh Commission Total Names Sitting Fees for Board Meeting 2.00 2.00 2.00 0.40* 2.00* 1.80 2.00 1.20 0.80 0.80 0.40 Sitting Fees for Committee Meeting 1.80 1.80 1.60 1.00* 1.60* 1.80 2.00 0.80 0.20 0.20 0.20 44.05 36.00 37.00 15.00 37.00 42.00 30.75 US$ 1,17,780 15.00 19.70 5.63 Mr. S. Rajgopal Mr. S. N. Talwar Mr. M. M. Chitale Mr. Thomas Mathew T. † Mr. N. Mohan Raj Mr. Subodh Bhargava Mr. A. K. Jain Mr. J. S. Bindra $ Mr. M. Damodaran # Mr. Vikram Singh Mehta # Mr. Sushobhan Sarker % * Payable to respective Institutions they represent. $ ceased to be a director w.e.f. 24.08.2012. † ceased to be a director w.e.f. 19.11.2012. # Appointed as an Additional Director w.e.f. 22.10.2012. % Appointed as a Director w.e.f 15.12.2012 47.85 39.80 40.60 16.40 40.60 45.60 34.75 – 16.00 20.70 6.23 Details of shares and convertible instruments held by the Non-Executive Directors as on March 31, 2013 are as follows: Names Mr. S. Rajgopal # Mr. S. N. Talwar Mr. M. M. Chitale Mr. N. Mohan Raj * Mr. Subodh Bhargava Mr. A. K. Jain * Mr. M. Damodaran Mr. Vikram Singh Mehta Mr. Sushobhan Sarker * * held jointly with the Institution they represent # has been granted 60,000 stock options but not yet exercised No. of Shares held 900 6,000 1,086 200 500 400 100 590 100 3) Shareholders’/Investors’ Grievance Committee: i) Terms of reference: The terms of reference of the Shareholders’/ Investors’ Grievance Committee are as follows:   Redressal of Shareholders’/Investors’ complaints Allotment, transfer & transmission of Shares/Debentures or any other securities and issue of duplicate certificates and new certificates on split/consolidation/renewal 78 etc. as may be referred to it by the Share Transfer Committee. ii) Composition: As on March 31, 2013 the Shareholders’/ Investors’ Grievance Committee comprised of 2 Non-Executive Directors and 1 Executive Director. iii) Meetings: During the year ended March 31, 2013, 3 meetings of the Shareholders’/Investors Grievance Committee were held on May 14, 2012, July 23, 2012 and January 25, 2013. The attendance of Members at the Meetings was as follows- Name Status No. of Meetings Attended No. of meetings during the year 2 2 2 1 1 1 2 2 2 1 1 1 Chairman Mr. A. K. Jain @ Member Mr. V. K. Magapu ^ Member Mr. Ravi Uppal $ Chairman Mr. Vikram Singh Mehta * Mr. Sushobhan Sarker * Member Mr. S. N. Subrahmanyan * Member Meetings held during the year are expressed as number of meetings eligible to attend. @ Ceased to be a member w.e.f. 15.12.2012 * Inducted as a member w.e.f. 15.12.2012 ^ Ceased to be a member w.e.f. 30.09.2012 $ Ceased to be a member w.e.f. 15.09.2012 Mr. N. Hariharan, Company Secretary is the Compliance Officer. 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 Complaints: SEBI/Stock Exchange Received Resolved Pending* Opening Balance NIL 84 84 NIL Particulars Received Resolved Pending* Opening Balance Shareholder Queries: Dividend Related Transmission/Transfer Demat/Remat * 995 29 1 6,556 1,074 446 6,781 1,066 446 770 37 1 Investor complaints/queries shown outstanding as on March 31, 2013 have been subsequently resolved. The substantial increase in number of queries is on account of the Company’s repeated reminders to shareholders regarding unclaimed shares and dividends. 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 49 meetings during the year and approved the transfer of shares lodged with the Company. G. OTHER INFORMATION a) Training of Directors: All our directors are aware and are also updated as and when required, of their role, responsibilities & liabilities. The Company holds Board meetings at its registered office and also if necessary, in locations, where it operates. Site/factory visits are organized at various locations for the Directors. b) Information to Directors: The Board of Directors has complete access to the information within the Company, which inter alia, includes items as mentioned on Page 74 in Annexure ‘C’ to the Directors Report. Presentations are made regularly to the Board/N&R/ 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. 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 Independent Company/Business Unit, to the Board. Such interactions also happen when these Directors meet senior management in IC meetings and informal gatherings. c) Risk Management Framework: The Company has in place mechanisms to inform Board Members about the risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly defined framework. A detailed note on risk management is given in the Financial Review section of Management’s Discussion and Analysis report elsewhere in this Report. d) Statutory Auditors: The Board has recommended to the shareholders, the re-appointment of Sharp & Tannan (S&T) as auditors. S&T has furnished a declaration confirming 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 diversified 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 firm, are some of the more important factors that prevent audit failures. Mr. Milind P. Phadke has signed the audit report for 2012-13 on behalf of S&T. 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 affirmed compliance with the Code of Conduct as adopted by the Board of Directors. K. Venkataramanan Chief Executive Officer & Managing Director Date: May 8, 2013 Place: Mumbai 79 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 2011-12 2010-11 2009-10 August 24, 2012 3.00 p.m. August 26, 2011 3.00 p.m. August 26, 2010 3.00 p.m. The following Special Resolutions were passed by the members during the past 3 Annual General Meetings: Annual General Meeting held on August 24, 2012:   To approve appointment of Mr. A. M. Naik as the Group Executive Chairman of the Company. To approve raising of capital through QIP’s by issue of shares/convertible debentures/ securities upto an amount of USD 600 million or 3200 crore.  To approve appointment of Statutory Auditors and remuneration payable to them. Annual General Meeting held on August 26, 2011:  To approve appointment of Statutory Auditors and remuneration payable to them. Annual General Meeting held on August 26, 2010:   To approve payment of commission to non- executive directors not exceeding 1% of the net profits of the Company. To approve raising of capital through QIP’s by issue of shares/convertible debentures/ securities upto an amount of USD 600 million or 2700 crore.  To approve appointment of Statutory Auditors and remuneration payable to them. g) Disclosures: 1. During the year, there were no transactions of material nature with the Directors or the Management or the subsidiaries or relatives that had potential conflict with the interests of the Company. 2. Details of all related party transactions form a part of the accounts as required under AS 80 18 and the same are given on page 189 to page 200 of the Annual Report. 3. The Company has followed all relevant Accounting Standards notified 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. h) Means of communication: Financial Results 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. News Releases Official news releases are sent to stock exchanges as well as displayed on the Company’s website: www.larsentoubro.com. Website Corpfiling The Company’s corporate website www.larsentoubro.com provides comprehensive information about its portfolio of businesses. Section on “Investors” serves to inform and service the Shareholders allowing them to access information at their convenience. Presentations made to Institutional Investors on a quarterly basis and the quarterly shareholding pattern of the Company is also displayed on the website. The entire Annual Report and Accounts of the Company and subsidiary are available in downloadable formats. It will also be made available on the websites of the Stock Exchanges. Information to Stock Exchanges is now being filed through corp-filing. Investors can view this information by visiting the website www.corpfiling.co.in. Annual Report Annual Report is circulated to all the members and all others like auditors, equity analysts, etc. Management Discussion & Analysis This forms a part of the Annual Report which is mailed to the shareholders of the Company. H. UNCLAIMED SHARES As required under Clause 5A of the Listing Agreement, the Company had sent 3 reminders to the shareholders whose shares were lying unclaimed/undelivered with the Company. The Company has received a substantial number of requests to claim these share certificates which are released after a through due diligence. As on today, the Company has only 1.43% of the total shareholders whose shares are lying unclaimed/undelivered. These will be transferred to the Unclaimed Suspense Account as required under the Listing Agreement. The Company has already opened the “Unclaimed Suspense Account” and is in the process of completing the formalities for transferring the shares. I. GENERAL SHAREHOLDERS’ INFORMATION a) Annual General Meeting: The Annual General Meeting of the Company has been convened on Thursday, August 22, 2013 at Birla Matushri Sabhagar, Marine Lines, Mumbai – 400 020 at 3.00 p.m. 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) National Stock Exchange (NSE) ISIN Reuters RIC Luxembourg Exchange Stock Code London Exchange Stock Code : Scrip Code-500510 : Scrip Code-LT INE018A01030 : : LART.BO : 005428157 : LTOD The Company’s shares constitute a part of BSE 30 Index of the BSE Limited as well as NIFTY Index of the National Stock Exchange of India Limited. b) Financial calendar: h) Stock market data for the year 2012-13: 1. Annual Results of 2012-13 May 22, 2013 2. Mailing of Annual Reports Third week of July, 2013 3. First Quarter Results During the last week of July 2013 * 4. Annual General Meeting August 22, 2013 5. Payment of Dividend August 26, 2013 6. Second Quarter results During last week of October, 2013 * 7. Third Quarter results During last week of January, 2014 * * Tentative c) Book Closure: The dates of Book Closure are from Friday, August 16, 2013 to Thursday, August 22, 2013 (both days inclusive) to determine the members entitled to the dividend for 2012-13. d) Listing of equity shares/shares underlying GDRs on Stock Exchanges: The shares of the Company are listed on The BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). GDRs are listed on Luxembourg Stock Exchange and London Stock Exchange. e) Listing Fees to Stock Exchanges: The Company has paid the Listing Fees for the year 2013-2014 to the above Stock Exchanges. f) Custodial Fees to Depositories: The Company has paid custodial fees for the year 2013-2014 to National Securities Depository Month L&T BSE Price ( ) Low High Month Close BSE SENSEX Low High 2012 April May June July August September October November December 2013 January February March ) ( E S B - T & L 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 1,364.80 1,237.00 1,400.00 1,441.85 1,481.20 1,619.00 1,719.50 1,691.60 1,699.00 1,192.55 1,111.00 1,106.40 1,308.00 1,324.10 1,310.00 1,581.50 1,537.20 1,572.50 1,226.30 1,172.30 1,397.35 1,369.65 1,341.40 1,596.75 1,624.75 1,667.10 1,605.85 17,664.10 17,432.33 17,448.48 17,631.19 17,972.54 18,869.94 19,137.29 19,372.70 19,612.18 17,010.16 15,809.71 15,748.98 16,598.48 17,026.97 17,250.80 18,393.42 18,255.69 19,149.03 1,661.00 1,556.35 1,531.30 1,500.00 1,352.00 1,331.00 20,203.66 19,966.69 19,754.66 1,542.90 1,365.80 1,364.90 Stock Performance L&T BSE ( ) BSE SENSEX 19,508.93 18,793.97 18,568.43 Apr 12 May 12 Jun 12 Jul 12 Oct 12 Sep 12 Nov Aug 12 12 Daily Closing Price Dec 12 Jan 13 Feb 13 Mar 13 Month Close 17,318.81 16,218.53 17,429.98 17,236.18 17,429.56 18,762.74 18,505.38 19,339.90 19,426.71 19,894.98 18,861.54 18,835.77 23000 22000 21000 20000 19000 18000 17000 16000 15000 14000 13000 X E S N E S E S B 81 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, 2013: No. of Shares Upto 500 501 – 1000 1001 – 2000 2001 – 3000 3001 – 4000 4001 – 5000 5001 – 10000 10001 & ABOVE TOTAL Shareholders Number 8,07,166 25,466 7,473 4,178 2,080 4,059 1,876 1,853 Shareholding % Number 94.50 5,91,95,330 2.98 1,86,38,938 0.87 92,50,728 0.49 74,29,147 0.24 47,01,462 0.48 1,42,65,079 1,31,83,323 0.22 0.22 48,87,21,974 8,54,151 100.00 61,53,85,981 % 9.62 3.03 1.50 1.21 0.76 2.32 2.14 79.42 100.00 l) Categories of Shareholders is as under: Category 31.03.2013 31.03.2012 No. of Shares % No. of Shares % Financial Institutions 18,79,45,375 30.54 19,65,45,867 32.09 Foreign Institutional Investors Shares underlying GDRs 10,20,52,770 16.58 9,56,38,792 15.62 220,48,741 3.58 1,90,99,263 3.12 Mutual Funds 3,42,05,671 Bodies Corporate 4,41,01,953 Directors & Relatives 26,57,738 5.56 7.17 0.43 2,64,30,606 4,29,38,374 28,36,544 4.32 7.01 0.46 L&T Employees Welfare Foundation 7,44,04,116 12.09 7,44,04,116 12.15 General Public 14,79,69,617 24.05 15,45,05,337 25.23 TOTAL 61,53,85,981 100.00 61,23,98,899 100.00 Month L&T NSE Price ( ) Low High Month Close High 1,367.20 1,237.00 1,401.00 1,442.00 1,481.70 1,619.80 1,720.00 1,690.00 1,699.00 1,192.00 1,109.45 1,106.05 1,307.90 1,324.35 1,309.05 1,307.25 1,536.10 1,572.60 1,226.85 1,172.60 1,397.80 1,369.40 1,342.90 1,596.80 1,626.85 1,667.90 1,607.15 5,378.75 5,279.60 5,286.25 5,348.55 5,448.60 5,735.15 5,815.35 5,885.25 5,965.15 1,661.30 1,555.45 1,532.30 6,111.80 6,052.95 5,971.20 1,499.00 1,351.25 1,333.50 1,541.85 1,367.80 1,366.20 Stock Performance L&T NSE ( ) NSE NIFTY 2012 April May June July August September October November December 2013 January February March ) ( E S N - T & L 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 NIFTY Low 5,154.30 4,788.95 4,770.35 5,032.40 5,164.65 5,215.70 4,888.20 5,548.35 5,823.15 5,935.20 5,671.90 5,604.85 Month Close 5,248.15 4,924.25 5,278.90 5,229.00 5,258.50 5,703.30 5,619.70 5,879.85 5,905.10 6,034.75 5,693.05 5,682.55 6500 6250 6000 5750 5500 5250 5000 4750 4500 4250 4000 Y T F I N E S N Apr 12 May 12 Jun 12 Jul 12 Oct 12 Sep 12 Nov Aug 12 12 Daily Closing Price Dec 12 Jan 13 Feb 13 Mar 13 i) Registrar and Share Transfer Agents (RTA): Sharepro Services (India) Private Limited, Andheri, 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. 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 certificate on half yearly basis confirming due compliance of share transfer 82  m) Dematerialization of shares: The Company’s Shares are required to be compulsorily traded in the Stock Exchanges in dematerialized form. The Company had sent letters to shareholders holding shares in physical form emphasizing the benefits of dematerialization. The number of shares held in dematerialized and physical mode is as under: No. of shares % of total capital issued Held in dematerialized form in NSDL Held in dematerialized form in CDSL Physical Total 57,42,49,023 93.32 2,50,77,504 4.07 1,60,59,454 61,53,85,981 2.61 100.00 n) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on equity: The outstanding GDRs are backed up by underlying equity shares which are part of the existing paid-up capital. The Company has the following Foreign Currency Convertible Bonds outstanding as on March 31, 2013: 3.50% USD 200 million Foreign Currency Convertible Bonds due 2014 (i) (ii) (iii) (iv) (v) Principal Value of the Bonds issued Principal Value of Bonds converted to GDRs since issue Principal Value of Bonds outstanding as at March 31, 2011 Underlying Equity Shares/GDR’s issued pursuant to conversion as per (ii) above Underlying Equity Shares/GDR’s that may be issued pursuant to conversion notices in respect of (iii) above USD 200 million NIL USD 200 million NIL 49,07,243 shares These Convertible Bonds are listed on the Singapore Exchange Securities Trading Limited. o) Listing of Debt Securities: The redeemable Non-Convertible debentures issued by the Company are listed on the Wholesale Debt Market (WDM) of National Stock Exchange of India Limited (NSE) and/or BSE Limited (BSE). p) Debenture Trustees (for privately placed debentures) IDBI Trusteeship Services Limited Ground Floor, Asian Building 17, R. Kamani Marg Ballard Estate Mumbai-400 001 q) Plant Locations: The L&T Group’s facilities for design, engineering, manufacture and modular fabrication are based at multiple locations within India including Ahmednagar, Bangalore, Chennai, Coimbatore, Faridabad, Hazira (Surat), Katupalli (Ennore), Raigad, Rourkela, Mumbai, Mysore, Pithampur, Puducherry, Talegaon and Vadodara. L&T’s manufacturing footprint covers the Gulf (Oman, Saudi Arabia, Dubai), South East Asia (Malaysia, Indonesia) China and Australia. The L&T Group also has an extensive network of offices in India and around the globe. r) Address for correspondence: Larsen & Toubro Limited, L&T House, Ballard Estate, Mumbai 400 001. Tel. No. (022) 67525 656, Fax No. (022) 67525 893 Shareholder correspondence may be directed to the Company’s Registrar and Share Transfer Agent, whose address is given below: 1. Sharepro Services (India) Private Limited Unit : 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; Sharepro@shareproservices.com 83 2. Sharepro Services (India) Private Limited Unit : Larsen & Toubro Limited 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai 400 021. Tel : (022) 6613 4700 Fax : (022) 2282 5484 s) Investor Grievances: The Company has designated an exclusive e-mail id viz. IGRC@LARSENTOUBRO.COM to enable investors to register their complaints, if any. The Company strives to reply to the complaints within a period of 3 working days. t) Non-mandatory requirements on Corporate Governance recommended under the Clause 49 of the Listing Agreement: The Company has adopted the following non- mandatory requirements on Corporate Governance recommended under Clause 49 of the Listing Agreement: 1. A Nomination & Remuneration Committee is in place since 1999. The Committee comprises of five 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. u) Securities Dealing Code: Pursuant to the SEBI (Prohibition of Insider Trading) Regulations 1992, a Securities Dealing Code for prevention of insider trading is in place. The objective of the Code is to prevent purchase and/or sale of shares of the Company by an Insider on the basis of unpublished price sensitive information. Under this Code, Designated Persons (Directors, Advisors, Officers and other concerned employees/persons) are prevented from dealing in the Company’s shares during the closure of Trading Window. To deal in securities beyond specified limit, permission of Compliance Officer is also required. All the Designated Employees are also required to disclose related information periodically as defined in the Code. 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’s shares. Mr. N. Hariharan, Company Secretary has been designated as the Compliance Officer. v) ISO 9001:2008 Certification: The Company’s Secretarial Department which provides secretarial services and investor services for the Company and its Subsidiary and Associate Companies is ISO 9001:2008 certified. w) Secretarial Audit: As stipulated by SEBI, a Qualified Practising Company Secretary carries out Reconciliation of Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. This audit is carried out every quarter and the report thereon is submitted to the Stock Exchanges. The Audit confirms that the total Listed and Paid-up capital is in agreement with the aggregate of the total number of shares in dematerialized form and in physical form. The secretarial department of the Company at Mumbai & Chennai (overseeing all companies in Infrastructure 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. The Company also has adequate software and systems to monitor compliance. 84 Chief Executive Officer (CEO) and Chief Financial Officer (CFO) Certification To the Board of Directors of Larsen & Toubro Limited Dear Sirs, Sub: CEO/CFO Certificate (Issue in accordance with provisions of Clause 49 of the Listing Agreement) We have reviewed the financial statements, read with the cash flow statement of Larsen & Toubro Limited for the year ended March 31, 2013 and that to the best of our knowledge and belief, we state that; (a) (i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that may be misleading; (ii) These statements present a true and fair view of the Company’s affairs and are in compliance with current accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the Company’s code of conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of internal control systems of the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, and steps taken or propose to be taken for rectifying these deficiencies. (d) We have indicated to the Auditors and the Audit Committee: (i) Significant changes in accounting policies made during the year ended 31st March 2013 and that the same have been disclosed suitably in the notes to the financial statements; and (ii) that there were no instances of significant fraud of which we have become aware. R. Shankar Raman Chief Financial Officer Yours sincerely, K. Venkataramanan Chief Executive Officer & Managing Director A. M. Naik Group Executive Chairman Place: Mumbai Date: May 22, 2013 Auditors Certificate on Compliance of Conditions of Corporate Governance To the members of Larsen & Toubro Limited We have examined the compliance of conditions of corporate governance by Larsen & Toubro Limited for the year ended 31 March 2013 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 financial 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 efficiency or effectiveness with which the management has conducted the affairs of the Company. Mumbai, May 22, 2013 SHARP AND TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 85 Notes 86 Management Discussion & Analysis 2012-13 Global Economic Condition : In the year 2012-13, the global economy continued to be in the throes of challenges and uncertainties. There was a divergence in growth and prospects across geographies as both governments and central banks attempted to revive fledgling growth. To some extent growth was supported by aggressive monetary easing measures by the central banks of developed economies which also encouraged capital flows into emerging markets. Not overlooking the old dangers and new turbulence in the global markets, the near-term risk picture however has improved as recent policy actions in Europe and US have addressed some of the serious short-term risks. Over the past six months, policymakers of advanced economies have successfully defused two of the biggest short-term threats to the global recovery viz. the threat of a Euro area breakup and a sharp fiscal contraction in the US caused by a plunge off the “fiscal cliff”. The year also witnessed a noticeable slowdown in the emerging economies, a reflection of slack demand in the advanced economies, domestic policy tightening amidst inflationary conditions and end of investment boom in some of the major emerging economies. Economic performance across the Middle East and North Africa (MENA) was mixed in 2012. Political uncertainty continued to weigh on the economies of the MENA region. Growth in 2012 however increased to above the 2010 levels largely driven by recovery in the oil exporting countries. In 2013, while slower growth is projected in oil & gas production due to lower global oil demand, healthy growth is expected in non-oil sectors. The Omani economy continued to grow at a rapid pace. The Government has entered into the second year of the Eighth Five-Year development plan (2011-2015) allocating USD 6.50 Billion a year for large public investment programs, particularly in infrastructure and social sectors. This is enabling the economy to sustain the domestic demand and strengthen the economic diversification program. While the world economy is expected to grow at a better pace than the last few years with activity gradually accelerating in major advanced economies, with US in the lead, the overall global economic environment still remains fragile although the balance of risk is now less skewed to the downside than in the recent years. The short-term risks are lower as hard landing of the key emerging economies has receded. Nonetheless, medium term risk still abounds due to very low growth or stagnation in the Euro area; probability of fiscal trouble in the US or Japan; risks related to unconventional monetary policy; and lower potential output in key emerging market economies. Overview of Indian Economy : The Indian economy in 2012-13, witnessed a decadal low growth in GDP of 5.0%. The country has seen economic expansion drop since the start of the 2011 to levels even below the crisis years of 2008-09. The slowdown which started in the industrial sector also extended to services sector which has been the mainstay of India’s growth story. The weakness in the economy is not only cyclical but also structural in nature. Domestic supply bottlenecks and policy obstacles have seen growth decelerate and investment and industrial output slump. Global uncertainties also adversely affected growth. The pipeline of new investment dried up and existing projects stalled due to bottlenecks and implementation gaps. Also, the country continued to face persistent challenges due to high inflation, tight monetary policy and the deteriorating external balance. Despite good capital inflows in 2012-13, the economy reported worrisome current account deficit. A slowdown was witnessed in almost all the sectors of the economy in 2012-13. While the moderation in growth in agriculture (1.9%) was largely on account of the rainfall deficiency, the deceleration of industrial production growth to 1.2% in 2012-13 from 2.7% in 2011-12 was mainly due to contraction in mining and slowing growth in manufacturing and electricity sectors. Capital goods segment continued its dismal performance in 2012-13, indicating the lack of investment demand in the economy. The services sector saw a further deceleration to a growth of 6.8% in 2012-13 as compared to 7.9% mainly on account of a slowdown in trade, transport, hospitality and financial services. 87 The spurt in the economic growth of the country in the past was led by the consumption story. However, along with investment slowdown, India now faces a challenge of a consumption led slowdown. Government expenditure growth decelerated from 8.6% in 2011-12 to 3.9% in 2012-13 due to the fiscal consolidation by the government to reduce the deficit. The impact on fiscal deficit hence was immediate as it fell to 4.8% of GDP compared to the target of 5.2%. The private final consumption expenditure which has the largest share in the GDP of 60% also slowed down to a growth of 4.0% in 2012-13 from 8.0% in the previous fiscal. The investments throughout the fiscal continued to remain in gloomy territory with growth in gross fixed capital formation being just at 1.7% in 2012-13 as against 4.4% in 2011-12. Business Scenario : Delayed policy measures, slow-down in industrial production, persistently high interest rates and liquidity concerns adversely impacted the investment climate in India in 2012-13. Consequently, the commitments on capital expenditure and fresh investments were deferred, impacting growth prospects of businesses of the Company operating in certain sectors such as Power, Minerals and Metals, Defence and Fertilizer. The sectoral bottlenecks also had an impact on progress on a few ongoing projects. Product businesses of the Company, recorded low sales performance on account of sluggish industrial demand. The businesses of the Company faced intense competition from domestic as well as international players constraining the ability of the prices to absorb the cost increases. Despite the economic challenges, the Company has managed to sustain its growth momentum during 2012-13 on the back of proven track record, presence in diverse sectors and forays in the select international markets. • The infrastructure development is an irreversible process for energising growth in India. The Government has reiterated its commitment to kick-start delayed projects in the infrastructure space. The Government has also taken measures to reduce fiscal deficit to provide stability and protect the credit standing. New investments are expected in Transport Infrastructure, Urban Infrastructure, Oil & Gas, Fertilizer, Renewable Energy sectors. Speedy resolution of issues relating to mining, land acquisition, implementation of Power sector reforms, 88 private sector participation in indigenisation and defence manufacturing will boost the Company’s prospects. Growth Strategies and Thrust Areas : • Business Structure and Strategic Plan : The Company structure is well-crafted and is providing necessary focus to encash growth opportunities. Businesses have drawn strategic plan “Lakshya 2016” and are taking initiatives to enhance performance and long term value creation. • Strengthening Execution & Operational Efficiency : The businesses have taken up various initiatives for cost optimization and productivity enhancement. Operational excellence, smart contract management are key focus areas to improve margins on large sized, long cycle jobs under execution. • Capacity Augmentation : The Company has been investing in capacity ramp-up in emerging businesses as well as its core business to enhance execution capabilities. The Company has undertaken capital expenditure in 2012-13 mainly to acquire plant & machinery for its Engineering and Construction businesses. During the year, the Shipbuilding cum port facilities at Kattupalli, Tamil Nadu, have commenced its commercial operations. The Special Steel & Heavy Forgings facility, being one of the longest forging facilities in the world, has also been commissioned. International Business : On the international front, the countries in the Middle East, South Asia, select markets in CIS region, and Africa hold good prospects. The businesses are focusing on securing pre-qualifications and strengthening of international organization. Higher share of international business provide excellent de-risking opportunities and necessary impetus to the performance of the Company. The international business, however, poses various challenges in terms of stiff competition pressures on delivery time lines and margins, volatility in the exchange rates, compliance with the local laws, requirements of local sourcing etc. • Human Resource Development : The Company strives to be an Employer of Choice. High quality recruitment supports the talent management practices of the Company. To augment the journey of internationalisation of the Company and create a multicultural work force, strengthening leadership cadre with appropriate domain competencies has been done, particularly in the Middle East and for other growth areas. High potential and high performing employees continue to be developed through a six-step leadership development module. The Company continues to foster a high performance culture by recognising good performers and providing them with career enhancing opportunities. Several HR initiatives have been taken for the strategic alignment of the HR function with the business objectives. These initiatives encompass employee engagement, learning & development besides improved internal communication mechanism with employees. The Company’s Project Management Institute in Baroda hosts several programs on project execution excellence to complete projects in time and within cost and is directly linked to the vision of the Company of being a global player in its project businesses. Accordingly, the Company is positioned well for growth and to create value for all its stakeholders. It is in this background that the Company’s various businesses present their operations review for the year 2012-13 as under : 89 Hydrocarbon Business Mumbai High North Complex of ONGC, executed by L&T on an EPC basis. The massive complex comprises a process platform, a living quarters platform & control room, three process gas compression platforms, two flare platforms and two jackets including one weighing 13,500 tonnes. Overview : The Hydrocarbon business provides complete EPC solutions for the global Oil & Gas Industry. It possesses the capabilities to deliver end-to-end solutions for every phase of project – from front end design engineering through fabrication, project management, procurement, construction, installation right up to commissioning. Integrated strengths coupled with an experienced and highly skilled work force, are the key enablers in repeatedly delivering large, complex projects. The capabilities of the Hydrocarbon business includes in-house engineering, R&D centre, engineering joint ventures with reputed international companies, offshore installation capabilities, world class modular fabrication facilities, an experienced & competent project execution team and a safe work culture. The key aspects of business philosophy are excellence in corporate governance, high quality standards, best in class HSE protocol, IT security practices, timely execution and cost competitiveness. 90 The business has major work centres in India at Powai (Mumbai), Vadodara, Chennai, Bengaluru, Faridabad, Hazira and Kattupalli. It has established its presence in Middle East and South East Asia. Internationally, it has a fabrication facility at Sohar (Oman), project execution capabilities in the UAE (Abu Dhabi and Sharjah), Muscat (Oman), Qatar (Doha), Al-Khobar (Kuwait and Saudi Arabia) and business development offices at Houston, London, Singapore, South Korea, Australia, Malaysia and Indonesia. The Hydrocarbon business is structured into the following three Strategic Business Groups (SBGs) : • Hydrocarbon Upstream • Hydrocarbon Mid & Downstream (HMD) • Hydrocarbon Construction & Pipelines (HCP) Hydrocarbon Upstream : The Hydrocarbon Upstream SBG provides turnkey solutions to the offshore Oil & Gas industry encompassing well-head platforms, process platforms & modules, subsea pipelines, brown field developments, floating systems & offshore drilling rigs. The SBG has successfully executed large offshore platforms and pipeline projects in east and west coast of India, Middle East, South East Asia and Africa for global companies such as ONGC, GSPC, Songas, Qatar Petroleum, Maersk Oil Qatar, PTTEP, Petronas and Bunduq. The SBG has also established experience in the Jack-up rig refurbishment and is qualified to build new Jack-up rigs, floating production storage & off-loading (FPSO) topsides and subsea projects. The Upstream SBG has three state-of-the-art fabrication facilities at strategically important locations for modular structures, heavy jackets and oil rigs offering round-the- year delivery. Hazira, near Surat in Gujarat, caters to business opportunities in the West Coast of India (Mumbai High). Kattupalli near Chennai in Tamil Nadu caters to opportunities from East Coast (KG Basin) and South East Asia. Sohar at Oman caters to opportunities in the MENA region. These yards have a total fabrication capacity of about 150,000 MT per year. L&T’s heavy-lift-cum-pipelay vessel LTS 3000 installing a topside for Newfield Peninsula in Malaysia. The SBG has business development offices at Abu Dhabi, Singapore, Houston and Perth to provide the necessary thrust for its international growth vision. Additionally, the SBG is exploring upcoming opportunities in the CIS region and East Africa. The SBG through a joint venture (JV) with Sapura Crest Petroleum Bhd, Malaysia, owns and operates a Heavy Lift Pipe Lay vessel, LTS3000, enhancing its offshore installation capabilities. The three engineering centres at Bengaluru, Chennai and Faridabad housed in its wholly owned subsidiary, L&T Valdel, along with a centralized procurement capability centre at Mumbai enable the SBG to offer integrated EPC services to E&P companies. During the year, the SBG bagged two projects from ONGC to be executed in the West Coast of India. It also got a second order from Myanmar, this time for Petronas Carigali, Yetagun North field. The SBG recently completed installation for PTTEPI & GSPC-PLQP project and also sail-out of refurbished rig (Sagar Uday) for ONGC. The largest order from ONGC for Mumbai High North Complex of USD 1.2 Billion, was successfully commissioned during the year. Hydrocarbon Mid & Downstream (HMD) : Hydrocarbon Mid & Downstream SBG provides a wide range of EPC solutions for hydrocarbon refining, petrochemical and fertilizer (ammonia & urea complexes) sectors. Multiple large value projects can be executed simultaneously by HMD on a turnkey basis with detailed engineering support drawn from L&T-Chiyoda Limited – an associate company of L&T and in-house Engineering Resource Centers located at Mumbai, Faridabad and Vadodara, which house over 1500 experienced engineers catering to the complete spectrum of feed, process and detailed engineering. HMD has rich experience of project execution with technologies from process licensors like UOP, Axens, Haldor Topsoe, CB&I Lummus, Black & Veatch, Ortloff, ExxonMobil, BOC Parsons, Du-Pont (Invista) & Davy Process Technologies. In addition, strategic alliances with internationally renowned companies has helped to be a strong contender for the Fertilizer projects. Carrying forward the internationalization initiative, business development capabilities have also been established in CIS countries, South East Asia and Korea in addition to the existing ones at Sharjah and Al-Khobar. HMD is prequalified by major international Oil & Gas producers such as Saudi Aramco, ORPC, Petronas, Dragon Oil, Pertamina & KNPC, for their large value upcoming projects. 91 HMD has reinforced its foot prints in the Middle East by bagging repeat order from PDO Oman for Onshore Gas Processing project for Saih Rawl facilities. Additionally, HMD has successfully bagged a project for gas processing facility from Dolphin Energy, Qatar. HMD achieved record commissioning of 7 projects during the year (MRPL DHT & HGU, NFL Panipat & Bhatinda, ONGC Uran, CPCL Toyo & GNFC) of which NFL Bhatinda and Panipat were commissioned ahead of time. The other major projects approaching completion are the world scale Aromatic Complex at ONGC Mangalore Petrochemicals Ltd (OMPL), Reactor Regenerator Package as part of FCC unit for IOCL Paradip & ONGC Uran gas processing facility. Hydrocarbon Construction & Pipelines (HCP) : Hydrocarbon Construction & Pipelines SBG undertakes lump-sum turnkey projects for cross-country pipelines for Oil & Gas and construction of refinery, petrochemicals, chemical plants, fertilizers, gas gathering stations, crude oil & gas terminals, underground cavern storage systems for LPG. HCP has world class engineering capabilities undertaken through its JV with Gulf Interstate Engineering of USA for cross-country pipeline construction. Additionally, major capabilities include heavy lift competency, automatic welding and world class quality adherence. HCP has strategically invested in plant and machinery and key construction equipment such as All Terrain Cranes of various capacities, pipe layers and entire range of pipeline spreads, earth moving equipment and automatic welding machines. To cater to the needs of international market, especially in GCC, HCP has setup local partnership ventures of repute in Kingdom of Saudi Arabia, Kuwait and Oman. Internationally, HCP has been executing various projects for key customers such as GASCO (UAE), ADCO (UAE), SADARA [Kingdom of Saudi Arabia (KSA)], KOC (Kuwait), Dolphin Energy (Qatar), Petroleum Development Oman (Oman), Oil Tanking Odfjell Terminal Company (Oman), either directly or through other EPC contractors. Domestic clientele include Cairn, HMEL, RIL and Indian PSU oil companies. Business Environment : The domestic business environment continues to remain uncertain. Though the government has initiated some policy decisions, its impact on investments is yet to be seen. Large value fertilizer orders and onshore gas processing orders have got repeatedly deferred. Due to limited opportunities available, competition tends to be aggressive. Operational excellence initiatives are helping the business to improve its competitiveness. The international business segment continues to be very active and several projects are slated for tendering in the near term particularly in KSA, UAE and Oman. Also, new geographies identified offer growth opportunities, though the award of projects may take longer. Significant Initiatives : During the year, the business achieved several pre- qualifications for major upcoming projects in KSA, UAE, Kuwait and entered into strategic alliances with major EPC bidders for targetted projects. Operational excellence measures such as productivity monitoring,integrated project execution, knowledge management across projects, effective contract management, optimum inventory management are undertaken for projects under execution. The business continued to engage key business development personnel and international business heads in select geographies. Also, the Company is in the process of establishing branch/representative offices in Turkmenistan and Indonesia. During the year, an In-Kingdom EPC Company was registered in Saudi Arabia in order to bid for projects reserved for In-Kingdom Company. Habshan-Ruwais-Shuweihat Pipeline being executed on an EPC basis in Abu Dhabi. L&T has constructed over 4,000 km of pipeline across some of the world’s toughest terrain. Health, Safety and Environment are core values for hydrocarbon business. The business strives for continuous improvement for the protection and development of 92 health, safety, and environmental assets of its employees and stakeholders. During the year, the business continued its thrust on the safety cultural transformation through various initiatives. Through its robust HSE Management System and dedicated organizational support led by committed leadership, the business continued to emphasize on the Zero Incident Credo. Despite working at peak, with 110 million man-hours being clocked, the business achieved zero fatality during the year. Eight projects were commissioned safely without any reportable incident during the year. Various training programs were conducted at offices & project sites on key topics including safety in design. A world class Safety Innovation School was inaugurated at Hazira to enhance the safety competency of the personnel through experiential and innovative learning process. Various internal & external audits were conducted during the year to monitor the implementation of various safety systems at the project sites along with a close follow up for closure of the recommendations. Campaigns on various on-job and off-job safety issues such as Traffic Safety, Home Safety along with Environmental issues were conducted during the year. Environment protection remains a priority for the business and various initiatives adopted at office campuses and project sites have led to significant conservation of precious resources such as energy and water. During the year, a number of international safety certifications were achieved, which are vital in view of the growing international operations. The business won several recognitions, accolades and appreciations on safety from clients and national and international agencies, which includes National Safety Council, American Society of Safety Engineers, British Safety Council & RoSPA. MFF Hazira & MFY Sohar Fabrication Yards have received the prestigious Green Banding & Amber Banding respectively for its sustainable safety systems from M/s. SHELL through OGP pre-qualification assessment methodology. The Hydrocarbon business has a strong resource base of skilled and experienced people working in various disciplines. HR efforts are targeted to ensure that the right talent is sourced, selected, trained and deployed across the organisation. Special efforts are being put to identify high potential leaders and groom them through six stages of leadership development to take on higher responsibilities in the future. As a part of its drive towards building international project management capabilities, several senior professionals have been recruited from top notch international EPC companies during the year. Today, one out of every 5 people working in the Gulf countries for the business is a foreign national. 900 tpd ammonia plant of National Fertilizers Limited, Panipat - one of the many downstream hydrocarbon projects executed by L&T, on a licence plus EPC basis 93 L&T’s modular fabrication facility at Sohar in Oman has the capability to execute large scale fabrication up to 20,000 tonnes. Picture shows a jacket, a platform and a jack up rig. Hydrocarbon business has set up an in-house training Centre at the Sohar Yard, Oman for training local people in trades such as Welders, Crane Operator, Riggers, Electricians and Safety Marshals. Since inception, 450 locals have been trained. In addition, L&T Sohar yard in collaboration with Ministry of Manpower, Oman plans to provide welder training to young people on a continuing basis. The Hydrocarbon business has institutionalised risk management processes with clear policies and guidelines and usage of quantitative tools to enhance/protect operating margins. The Risk Management process is aimed at identification, assessment, mitigation and monitoring risks from pre-bid to execution stage and also capturing learnings after project close-out. Industry-wide tools like Palisade, @Risk, Primavera Risk Analysis are deployed for cost estimation and schedule risk analysis to 94 enhance quantitative risk management. The challenges in the form of growing competition, newer geographies, forex and commodity price fluctuations and manpower attrition are effectively mitigated through specific actions like operational excellence initiatives, appointing local representatives in target countries, proactive hedge management and employee engagement programmes. L&T is one of the sponsor members for Engineering and Construction Risk Institute (ECRI), USA-an initiative of World Economic Forum which has sponsor membership of 37 leading global companies from Engineering and Construction industry. Project Managers/Project team members of the business are undergoing certified Risk Induction Programme conducted by ECRI (Engineering & Construction Risk Institute) on a continuous basis to get acquainted with Global Best Practices in Engineering & Construction Risk Management. Outlook : With oil prices expected to be steady, rising demand for oil & gas from the developing world, the business believes that there will be a revival in Oil & Gas capex in FY14, resulting in expected increase in award activities. Also, the business observes a trend of increasing brown field jobs due to ‘Enhanced Oil Recovery’ requirements of existing fields. Gradual depletion of shallow water prospects makes it imperative to be ready for deepwater offerings. L&T SAPURA SHIPPING PRIVATE LIMITED (LTSSPL) : Subsidiary Company : LTSSPL is a JV between L&T and Nautical Power Pte Ltd, Singapore, a wholly owned subsidiary of Sapura Crest Petroleum Bhd, Malaysia, formed in September 2010 with L&T holding 60% equity stake. This JV operates Heavy Lift cum Pipe Lay Vessel (HLPV), named LTS3000, for installation of offshore platforms and laying of sub-sea pipelines. The business has established a good presence in the Jack-up rig refurbishment market and is now looking at new build Jack-ups & FPSO Topsides collaborating with leading players in the field. Focused emphasis is being laid on developing sub-sea business segment, possibly through alliances. Government has cleared the Urea Investment Policy 2012, which augurs well for investments in this sector. Accordingly, sustained investments in this sector through Brownfield Urea expansion projects in lump-sum turnkey mode is expected. Good opportunities are also visible in onshore gas processing projects especially in India and refinery expansion projects both in India and Overseas. Large investments are also expected in cross-country pipeline projects over the next three to five years. The business is confident of capturing the market given its strength in in-house engineering, key strategic equipments and experienced workforce. Pipelines prospects are increasing in KSA, Oman and Iraq while such prospects have reduced in UAE and Qatar. New gas finds in Oman coupled with Government’s keenness to develop more fields is an encouraging sign. Major Subsidiary and Associate Companies L&T-VALDEL ENGINEERING LIMITED (LTV) : Subsidiary Company : LTV, wholly owned by Larsen & Toubro (L&T), is an engineering solutions arm specializing in upstream oil & gas. It is diversified along full value chain of engineering – Concept, FEED, Pre-bid support, Detailed Engineering, As-built, Yard support and installation support engineering – for a wide range of offshore facilities : Process Platforms, Well-heads, FPSO topsides, shallow and deep-water pipelines, Jack-up Rigs, and extensive brown-field projects. During the year, LTV has succeeded in getting repeat orders from its major customers, while adding new customers. During the year, the vessel (LTS3000) has successfully installed 10 offshore structures (5 Jackets & 5 topsides) and laid over 56 kms of sub-sea pipeline at various oil fields in Malaysia and Myanmar, registering highest utilisation. L&T MODULAR FABRICATION YARD LLC, OMAN (LTMFYL) : Subsidiary Company : LTMFYL is a JV between Zubair Corporation & L&T, established in the Sultanate of Oman. L&T, through its wholly owned subsidiary Larsen & Toubro International FZE, holds 65% in the company. Its core competencies include fabrication of large size Offshore Platforms, Jack-up Rigs, Floating Production Storage & Offloading (FPSO) Modules, Integrated Decks, Skid Mounted Equipment, Onshore Process Modules etc. LTMFYL is now a major fabrication service provider in the Middle East and international offshore oil & gas industry, comparable with the biggest fabrication yards in the region. The yard was optimally utilised during the year with major fabrication work for PTTEP and ADMA OPCO projects as well as lay-up and repair work for Jack-up Rig for ONGC is underway. LARSEN & TOUBRO ATCO SAUDIA LLC (L&T ATCO) : Subsidiary Company : L&T ATCO is a JV between L&T 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 Larsen & Toubro International FZE holds a 49% stake in the company. The Company has achieved pre-qualifications for major upcoming projects of Saudi Aramco and SABIC. During the year, Company has bagged project for Wasit Gas Development from SK Engineering & Construction Co. Ltd. 95 The Company is currently executing the SADARA project, bagged in the previous year. LARSEN & TOUBRO ELECTROMECH LLC (L&T Electromech) : Subsidiary Company : L&T Electromech is a JV between L&T and The Zubair Corporation, Oman (TZC). L&T, through its wholly owned subsidiary Larsen & Toubro 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 & Gas, Refineries, Petrochemicals, Power and Water Treatment sectors. The Company achieved growth during the year mainly on account of good order book and a number of orders received. It is currently executing two major jobs, one from DALEEL Petroleum for Power Generation & Distribution Facility and another for PDO Lekhwair Gas Field development project, besides O&M jobs. LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL (LTKC) : Subsidiary Company : LTKC is a JV between L&T and M/s Bader Almulla and Brothers Company WLL. L&T, through its wholly owned subsidiary Larsen & Toubro International FZE, holds 49% in the Company. LTKC executes construction projects in Oil & Gas and Power sectors in the State of Kuwait. During the year, LTKC has received an order from Kuwait Oil Company (KOC) for New GC 16 Cluster Development. Currently, it is also executing the construction portion in Effluent water Injection/Sea water injection job of KOC being executed by Petrofac. L&T-CHIYODA LIMITED (LTC) : Associate Company : LTC is an internationally reputed Design & Engineering Consultancy catering to the Hydrocarbon Processing Industry. LTC was set up in the year 1994 as a JV between Chiyoda Corporation of Japan and L&T with an equal stake. LTC offers total engineering solution to hydrocarbon related industries including Petroleum Refineries, Petrochemical Units, Oil and Gas Onshore Processing Facilities, LNG/LPG Plants, Fertilizer Plants and Chemical Plants. Engineering and Consultancy services offered by the Company include Feasibility Studies, Basic Engineering, Front End Design & Engineering (FEED), Detailed Engineering, Procurement Assistance, Construction Supervision, Commissioning Assistance and Project Management Consultancy, to many global and Indian Oil Companies. 96 Buildings and Factories Business Crescent Bay - an elite residential project coming up in the heart of Mumbai, India’s commercial capital. Overview : Buildings & Factories (B&F) business undertakes engineering design and construction of Airports, IT Parks, office spaces, educational institutions, stadiums, convention centers, metro stations, hospitals, hotels, residential buildings, factories, cement plants and warehouses. The thrust is on focused development in various building segments and expanding customer base by providing “Concept to Commissioning” solutions. This helps in maintaining the leadership position, retaining key customers, entering new markets and securing major orders. Construction excellence coupled with technology, experience and expertise gained over several decades has established B&F business as one of the premium contractors in the industry. Business Environment : Despite a global economic slowdown and lower GDP growth in India, B&F business stood out in the market during 2012-13 with impressive growth in terms of revenue and order book. The B&F business saw a considerable growth in the order book in residential segment due to the increased focus in affordable housing and real estate development in Tier II cities along with the metros. It leveraged upon the same by bagging a number of major orders and expanding its geographical presence. In IT space segment, the business was able to match the order inflow plans despite weak economic scenarios in US and Europe which adversely affected the expansion plans of IT companies. The year was challenging for some segments like factories and airports. In factories segment, companies preferred split up packages with low project value. For airport segment, 97 major domestic airport projects got delayed due to hurdles in land acquisition. After strengthening itself in Mumbai, the residential business unit has marked a pan-India presence by bagging major orders from leading real estate developers across the country. In factories segment, B&F business received a major order to construct a defence facility. In airports segment, it bagged orders to construct the passenger terminal building in Chandigarh and Sindhudurg. In IT space, orders were bagged to construct IT Parks for major IT companies. In institutional segment, the business was successful in winning a bid to construct a new campus for the Indian Institute of Technology (IIT). B&F business also received orders to construct 5-star hotels for major hospitality companies. It strengthened its position in UAE by bagging a major order for construction of a specialty hospital in Abu Dhabi for NMC Healthcare, thereby increasing its international share. Some of the key projects commissioned by B&F business during the year include ITC Grand Chola, a 5-star luxury hotel in Chennai, Elante mall in Chandigarh, ATC Tower and a single span hangar for Mumbai International Airport, IT Parks in Chennai and Gandhinagar, GIFT City in Gandhinagar, cement plants and river view apartments in Lucknow. Significant Initiatives : Apart from continuing its focus on emerging trends in technological enhancements, B&F business also targeted to sharpen its business strategy. Key moves were made in order to have a better picture on emerging markets, new businesses and strategic tie-up. Strategic initiatives had been planned and implemented by each business unit to spread across geographies, improve operational excellence and expand customer portfolio. In order to harness new opportunities in Africa and the Kingdom of Saudi Arabia (KSA), new offices were setup in Nairobi in Kenya and Riyadh in KSA. With the thrust to bridge the gaps in the niche areas for business growth and enhance project execution capabilities through an integrated human resource approach,strong focus was laid on talent acquisition while hiring expats, professionals, and students from premier institutes. Customised programs were conducted for the employees in order to address the skill gaps through a number of 98 in-house training and development programs. Employee performance was also reviewed through a sophisticated performance management system. Various workmen management centers have been set up in order to improve their skills and increase work efficiency. Institutionalising strong internal control mechanisms covering total operations has been the thrust areas of the business. Further, it has well documented policies and guidelines for evaluation and authorisation of tenders being submitted/work orders and purchase orders being placed. B&F business has constituted a separate cell to monitor various business processes at project locations for identifying and rectifying any weaknesses observed. Outlook : Some key decisions by the Government are expected to facilitate major prospects in the coming years. The Government has decided on increasing fund allocation to health sectors, setting up new educational institutions, allowing FDI in aviation and retail and relaxation in floor space index in high rise structures. All these decisions create favorable scenarios for sectors like IT space, hospitals, institutional space, aviation, mixed use development and residential space. In the private sector, IT companies’ plans to expand into non-metros and expansion plans by auto, pharmaceutical and cement companies will add to business prospects. In order to capitalise on the positive outlook for 2013-14, B&F business has taken steps to strengthen its presence in UAE and Oman and also establish its footprint in other countries such as Africa, Kuwait, Bahrain, Qatar and KSA by forming strategic tie-ups and targeting major orders. Major Subsidiary Company LARSEN & TOUBRO OMAN LLC (LTO) : Subsidiary Company : LTO is a JV with Muscat Trading Company LLC (Zubair Corporation Group), providing engineering, construction and contracting services for over 15 years in Sultanate of Oman. The Company has an excellent track record in civil projects and continues to enjoy customer preference in the country. L&T, through its wholly owned subsidiary Larsen & Toubro International FZE holds 65% in the company. B&F business is one of the major business segments of LTO. During the year 2012-13, LTO bagged major orders in Residential and Institutional segments from clients like GLOREI, Royal Court Affairs and Ministry of Defence. Some of the key projects commissioned in Oman are German University and Ministry of Manpower Head Quarters in Muscat. The completion of major prestigious projects within stringent timelines, demonstrates B&F business’ superior project management and project execution capabilities in handling large design build and turnkey projects. Prospects appear attractive in segments like Airports, Residential, Institutional space and commercial buildings as major orders are in pipeline in these segments. Based on positive economic scenario in Oman and its proven track record, LTO is well positioned for expanding the business portfolio in the region. Scale and splendour at the new Elante Mall in Chandigarh L&T Business Park at Powai, Mumbai One of multiple high rise residential and commercial complexes being built by L&T that are changing the skyline of Mumbai L&T offers a single point, design-to-build solution for the infrastructural needs of the entire manufacturing sector 99 Transportation Infrastructure Business An elevated road corridor decongests the bustling metropolis of Nashik. L&T undertakes a wide range of critical infrastructure projects Overview : Infrastructure business comprises Transportation of four business units namely, Roads, Runways & Elevated Corridors, International Infrastructure, Railway Construction & Railway Systems. It maintains leadership as premier construction major in both the transportation infrastructure sectors of Road & Rail in India. Transportation Infrastructure business has consolidated its presence and made considerable inroads in the Gulf in the year 2012-13. Business Environment : Due to the continuing policy inaction and sluggish economic scenario in India, much of the mega projects have been delayed in recent past posing a challenge for new BOT orders in the domestic market. In smaller EPC projects and railway projects the competition remains intense due to a large number of players with aggressive bidding strategies. In international market a lot of local players with huge asset base are chasing new projects. Strategic tie-ups with local players appears imperative for achieving success. 100 Major orders bagged in 2012-13 include Delhi Agra Road Project-179.5 Km, Amravati Jalgaon Road Project, KMDA Project, Sindhudurg Airport, various Railway Construction Projects and Infra projects in UAE-ADAC. In Railway segment, the business captured 41% of Rail Vikas Nigam Limited (RVNL) Market in the year 2012-13. Dedicated Freight Corridor Corporation (DFCC) has come to a decisive phase of contract award for CTP 1 & 2. Four Unincorporated Joint Ventures (UJVs) have been formed with Darwish, Sraiya, Delma & Hashemi in UAE and Qatar for Roadway Projects. Two JVs have been formed with Fujita and Ansaldo for Etihad Rail & Riyadh Metro for Railway Projects respectively. Significant Initiatives : The business has rolled out operational excellence measures for all domestic as well as international projects. Key operational excellence initiatives include cost reduction and productivity improvement in subcontracting, procurement, manpower cost reduction, improved equipment utilisation L&T’s capabilities in bridge-building include design and construction of many types of bridges of different span lengths using innovative techniques and construction methods. and optimisation, deployment of better construction methodology & lean processes, enhancing efficiency in project management and contract management. For improved optimisation of resources the business has adopted the approach of cluster as an operational centre whereby each cluster of projects will be supported by strong sub-contractor base and smart mobilisation model for optimum utilisation of assets & manpower during preconstruction period. Strengthening in-house design capabilities is one of the major thrust areas and the business has taken several steps in this regard. Outlook : The business sees good prospects in road, rail sector in the year 2013-14. A few large NHAI road projects and a major EPC package from DFCC are on anvil. Further, the Cabinet Committee on Investment is set up, to resolve issues in infra projects greater than 1000 crore. This will expedite processes of granting environment and forest clearances for mega projects. NHAI has expressed willingness to compensate Developers/Contractors for delays in projects caused by the circumstances beyond their control, which will revive the BOT project space. In addition, the 12th five year plan mentioned the formation of the master plan for expressways to be developed for both the passenger and freight movements in the high traffic density corridors. Also National Expressway Authority of India expected to be formed to take up initiatives for both the land acquisition and to get the work executed under the BOT mode. In Rail Sector, there is a thrust on doubling and electrification by Indian Railways. Large opportunities are expected out of expansion of Delhi Metro Phase III and other new upcoming metro projects such as MEGA, Ahmedabad and Kochi Metro. Sheikh Khalifa Interchange - linking the emirates of Abu Dhabi and Dubai. 101 On the international front, thrust of the Governments in Gulf region on infrastructure projects both in Roadways and Railways is expected to open up more opportunities in UAE, Qatar, Oman & Kuwait. Several projects which have been tendered in the recent past in UAE and Oman and the thrust on infrastructure development is expected to continue at steady pace in these countries. Qatar projects are likely to kick start in later part of 2013-14. With its top class engineering and execution the business is targeting growth in the order inflow and revenue in 2013-14. Major Subsidiary Company LARSEN & TOUBRO OMAN LLC (LTO) : Subsidiary Company : The economy in Oman continued its growth in a sustained manner during 2012-13. The Government of Oman has allocated funds for large public investment programs, particularly in infrastructure and social sectors. LTO is targeting large value road and expressway orders from upcoming projects in Oman. The company is expanding Plant & Machinery base considering the expected investments by Government of Oman in large infrastructure projects. 102 Heavy Civil Infrastructure Business L&T is constructing India’s first monorail network in Mumbai – India’s commercial capital. The project involves design, construction, installation, testing and commissioning the 19.7-km corridor on a turnkey basis. This includes project management, civil work, DC traction systems, interface management, automatic fare collection system and E&M services. Overview : Heavy Civil Infrastructure business undertakes design, engineering and construction of projects in Metros, Ports, Tunnels, Special Bridges, Hydro Power, Nuclear Power and Defence infrastructure sectors. Business Environment : The year 2012-13 saw limited tenders in many of the business segments such as Ports, Hydel and Nuclear due to delays in policy decisions and financing of large scale projects. However, the business recorded good performance and succeeded in achieving most of its plan with its focussed approach. The operational and financial performance of the business reflected healthy growth in 2012-13. Some of the major orders secured during the year 2012-13 include various underground and elevated packages of Delhi Metro project, 171 MW Lata Tapovan Hydropower project in Uttarakhand, 850 MW Ratle Hydropower Project in Jammu & Kashmir, Natural Draught Cooling Tower package of Kakrapar Nuclear Power Project 3 & 4, Design & Construction of C17 Beddown Infrastructure facilities, Taxiways, Aprons and other Buildings etc. at Hindan Air base, Ghaziabad. Some of the key projects completed by the business include Kattupalli port cum shipyard facilities in Tamil Nadu, 520 MW Parbati HEP in Himachal Pradesh, etc. The business has also achieved substantial completion of works in 330 MW Srinagar HEP in Uttarakhand, Elevated Corridor at Nashik, Bangalore metro, Kudankulam Nuclear Power Project (unit 1&2) etc. Significant Initiatives : Heavy Civil Infrastructure business has undertaken several initiatives to improve the cost competiveness with clear focus on supply chain management, operational excellence, value engineering and improved capacity utilisation. The other initiatives include thrust on project monitoring and operations by placing capable organisation structure and exclusive team building for contracts administration. 103 The Rajasthan Atomic Power Plant. L&T has supplied critical equipment and built almost every nuclear power plant in India. Ports are part of the wide portfolio of major infrastructure projects built by L&T. Heavy Civil Infrastructure business has also taken several steps to enter international markets especially in the Middle East. It has made project specific tie-ups for such international projects and it is participating in tenders for Qatar and Riyadh metros. Attracting and retaining talent with requisite competencies and focusing on training and development to enhance productivity are the key focus areas to support the business needs. Outlook : Given the huge gap between infrastructure demand and supply in a growing economy like India, all businesses relating to heavy civil infrastructure are likely to witness good growth over a sustained period. With the specific and continuous thrust on business development, the business is looking at new opportunities across various business segments in India as well as in the international markets. The healthy order book position of Heavy Civil Infrastructure business gives the confidence of registering a substantial growth in revenues during the year 2013-14. Major Subsidiary Company L&T GEOSTRUCTURE LLP (LTGS) : Subsidiary Company : LTGS was formed in 2012-13 under Heavy Civil Infrastructure business. The LLP is a joint venture (JV) with Transworld Infraprojects Private Limited with Larsen & Toubro (L&T) holding 74% stake. LTGS undertakes projects in the business areas of ground engineering namely soil investigation, deep excavation, earth retaining structures, piling, ground improvement, microtunneling, mine shafts and other related activities. 104 Metallurgical & Material Handling (MMH) Business Coal handling plant executed by L&T at Koderma in Jharkhand. L&T is a single point solution provider for a comprehensive range of material handling systems. Overview : Metallurgical & Material Handling (MMH) business undertakes EPC (Engineering, Procurement & Construction) projects for ferrous (iron & steel making) and non-ferrous (aluminium, copper, lead & zinc) metal industries, bulk material & ash handling systems in power, port, steel and mining sector. It has a well-established Industrial Machinery & Foundry work shop at Kansbahal, Odisha and a fabrication shop at Kanchipuram, Tamil Nadu to cater to the specific requirements of the customer. Business Environment : Economic scenario has been generally challenging with the down-trend in investments during the year 2012-13, impacting fresh order intake by the business. Moreover, it is also experiencing keen competition from overseas players like China and other break-way countries of erstwhile USSR. Braving the challenging business environment, the business has not only retained its market leadership but also enhanced its market share during the year 2012-13. MMH business has been partnering various steel producers in their capacity expansions, which added another 10 Million Tons per annum domestic production capacity in the year 2012-13. Some of the major plants executed by MMH business and commissioned in FY 2012-13 are : Sinter Plant (2*204 sqm) for IISCO, Burnpur; Sinter Plant #3 (360 sqm) for SAIL, Rourkela; Blast Furnace (3813 cum) for RINL, Visakhapatnam; Pellet Plant (6 MTPA) for Tata Steel, Jamshedpur; ‘I’ Blast Furnace (3 MTPA) for Tata Steel, Jamshedpur; LD shop for Tata Steel, Jamshedpur; Sinter Plant (204 sqm) for Bhushan Steel, Angul and 4 MTPA Dry Circuit Material Processing (DCMP) Plant for Tata Steel, Joda. Material Handling Business Units of MMH business have also been supporting the major power producers commission their projects and the major ones commissioned in the year 2012-13 are Unit#1-Coal Handling Plant (6*150 MW) for Hindalco, Mahan; Unit # 1 to 3-Coal Handling Plant (5*660 MW) for Adani Power, Tiroda; Unit#1-Coal Handling Plant (5*270 MW) for Indiabulls Power, Amravati; Unit#4-Coal Handling Plant 105 (2*500 MW) for NTPC, Simhadri Stage-2 and Unit#2-Coal Handling Plant (2*500 MW) for DVC, Koderma. MMH business managed to stay ahead of its competitors in the major bids in the year 2012-13 including Beneficiation & Pellet Plant, Coke Oven Rebuild for SAIL; Ore Handling Plant for OMC; secured orders for Coal & Ash Handling Plant for RRVUNL, Chhabra (L&T Power); Coal Handling Plant for BIDCO TPS, Lalitpur; Port Handing Facility for Adani. MMH business is currently executing major metallurgical projects at Kalinganagar & Jamshedpur for Tata Steel, at Bhillai for SAIL, at Angul for Bhushan Steel, at Bellary for JSW, at Angul for JSPL, at Rayagada for Utkal Alumina and at Mahan for Hindalco. Material Handling packages at Lalitpur for BIDCO, at Rajpura for Nabha Power Thermal Power Plant, at Anpara for UPRUVNL, at Raigarh for DB Power, at Tiroda for Adani Power Limited, at Joda & Noamundi for Tata Steel, at Tuticorin for NTPL and 10 other Material Handling Plants are being executed concurrently for various customers. With the inclusion of Industrial Machinery & Foundry Business Unit, Kansbahal, MMH business has forayed into high end customised manufacturing needs of steel, power & other metallurgical sector customers. The primary products of Kansbahal includes Surface Miner, Crushing Systems, Paper Machinery, Apron Feeder and key equipment for coke oven, pellet and steel making segment. The business is now fully equipped for manufacturing of High end Equipment for metallurgical sector involving Heavy fabrication, intricate castings, precision machining and critical assembly. The fabrication shop at Kanchipuram continues to provide the support and strength of heavy fabrication and assembly of Material Handling Equipment like Stackers, Reclaimers and host of other mid precision level equipment catering to the steel and other process plants. Key success factor for the business is high customer retention, operational efficiency and consistent performance. It is establishing international organisation to tap the large business potential in the Middle East market in ferrous, non-ferrous and material handling sectors. The business has successfully secured orders in JSIS-Oman and EMAL- UAE in 2012-13. It intends to carry forward this initiative with impetus to explore newer geographical locations in Sub-Sahara Africa and South-East Asia. 106 Coke Oven Battery at one of India’s major seel plants. Limestone crusher manufactured by L&T Blast furnace at Vizag Steel Plant. The company undertakes detailed engineering, procurement, manufacture, supply, construction, erection and commissioning of projects in the areas of ferrous and non-ferrous metals and mineral beneficiation. Significant Initiatives : MMH business has made strategic alliance with leading global technologist as a part of business line diversification in ferrous segment which include : • Paul Wurth-For Blast Furnace, Coke Oven and By-Product Plant; • Outotec-For Sinter plant and Pellet plant; • Nippon Steel-For Coke-dry- quenching and Continuous Annealing & Proceeding line; • METSO-For iron ore beneficiation. To avail new concept & technology for increased capacity in material handling sector, MMH business has technology tie-ups with global technologists which include : • Ashton Bulk, UK-for crescent type wagon tipplers, high capacity side-arm-chargers and ducking tripper type stacker reclaimer; • Norwest, US-for coal waheries; • • UCC, US-for ash handling system. FLCE, France-for long belt conveyors; Efforts are on to strengthen the team of domain experts in the significant target business segments to build core competency and in-house technology capability. Further, after embarking on an operational excellence program to enhance productivity and cut cost of operations, the roll out at various projects and departments have started bearing fruit. Outlook : Land and mining reforms and renewed investments in the field of Ferrous, Non-Ferrous, Ports and Power sector will be key drivers for Metallurgical & Material Handling business. In spite of the current slowdown, Steel industry has been performing well in India and is expected to witness increase in demand in the year 2013-14. Government’s initiatives to boost private investment in Power & Port sector likely to bring fresh inflow of capital. Investment allowance of 15%, coal block linkages, developing ports in PPP mode are precursor to revival of the sector. The business has aligned itself towards providing solution on Value added/debottlenecking efforts of industry majors, focusing upon operation agility during this challenging scenario. With the opening order book and expected orders during the year, the business is confident of posting good performance in 2013-14. 107 Power Transmission & Distribution (PT&D) Business L&T executes a wide variety of transmission line projects across some of the world’s toughest terrain. Overview : The PT&D business is a leading EPC player in the field of Power Transmission and Distribution business offering integrated solutions and end-to-end services ranging from design, manufacture, supply installation and commissioning of transmission lines, substations, distribution networks, electrical & instrumentation works for power, process & infrastructure projects, communication systems in both domestic & international markets. Industrial Electrification Business Unit provides turnkey electrical, Instrumentation & Communication (E&IC) solutions for major power plants including Thermal & Nuclear plants, Process plants, Hydro carbon & Pipeline Projects, IT Parks, Airports, Sea Ports, Metros, Intra City Power Transmission Network etc. Substation Business Unit focuses on providing turnkey solutions for Power Evacuation schemes from Power 108 plants, Main Grid Substations for Utilities, Power Distribution & Power Quality Improvement works under Rural Electrification (R-APDRP, RGGVY schemes) Projects. Transmission Line Business offers turnkey solutions in building Transmission lines for Power Evacuations Systems, boosted by its state-of-the-art tower manufacturing units at Puducherry and Pithampur with a total installed capacity of 1 lakh tpa & complemented by its tower testing facility at Kanchipuram. PT&D’s International Business Units in Gulf Countries namely UAE, Qatar, Kuwait, Oman & Saudi Arabia offer complete solutions in the field of High Voltage Substations, Power Transmission Lines, EHV Cabling, E&IC Works for Infrastructure Projects such as Airports, Oil & Gas Industries etc. Business Environment : During the year 2012-13, power scenario in India continued to be very challenging. Power generation sector plagued by many unresolved policy issues resulted in no major investments. Fuel shortages, stringent land clearance & environmental norms & a host of other issues are affecting capacity additions in power generation while the financial performance of state utilities affected transmission sector, imposing constraints in order inflow. Even in this challenging environment, the business managed to secure major orders from central utilities such as PGCIL, NPCIL, state utilities and other private players in Generation, EHV transmission & distribution segment. The business also identified new and exciting opportunities in LV Power distribution Segments, which are funded by Central Government funding agencies. Utilities have embarked upon strengthening their respective distribution networks for better accountability. The focus on this segment has fetched good dividends by securing major orders from various state utilities & DISCOM’s. The business was also successful in tapping the potential available in electrification works of Process Plants & Urban Mass Transit (Metro) Projects. Volatility in commodity prices, higher interest rates and inflation had an impact on the performance of PT&D business. In the international arena the PT&D business bagged significant orders in UAE & Qatar. The business however was unable to realise the full potential due to deferred decision making and delayed award. Major orders secured during 2012-13 include 765 kV Substations at Bara & Lalitpur for Jaypee & BIDCO respectively, 765/400 kV, 400/220 kV Substation at various locations across India for PGCIL & TNEB, Power Distribution & Quality improvement works under Rural Electrification schemes for various DISCOM’s & State utilities such as Punjab, West Bengal, Karnataka etc. Major Transmission Line projects include 800 kV HVDC Line from Champa to Kurukshetra, 400kV Line from Kurukshetra to Jalandhar, Barh to Gorakhpur & Biharsharif to Sasaram for PGCIL. Industrial Projects include E&I Works for HSM, SMS & RMHS packages for Tata Steel & E&I Works for Blast Furnace for NMDC, prestigious order for Field Instrumentation Works for NPCIL Kakrapar Atomic Plant,11 kV & 22 kV Ring Main Distribution Network for TANGEDCO, Electrical & Mechanical Works for Bangalore Metro Network. On the order inflow front in international market, PT&D business achieved a major breakthrough in 220 kV Segment in UAE by securing 220/33 kV Grid Station at Zakher & Ayn Al Faydha for AADC in addition to 132kV GIS substations for FEWA. The business also bagged a prestigious order to execute 11 kV Power Distribution Network for Emirates Palace. A major breakthrough in Airport Segment in Gulf Market was attained by securing Special Airport System Package for Concourse 4 of Dubai International Airport and also E&I Works for Abu Dhabi Airport Airside works. International orders include 132 kV GIS Substation & 33 kV Power Distribution Network orders from Qatar Petroleum & 220/66 kV GIS substation and associated EHV Cabling Package from KAHRAMAA in Qatar. The PT&D business also installed & commissioned first of its kind 1200kV National Test Station at Bina for PGCIL, 48 No’s of 500MVA, 765/400kV transformers were commissioned at various substations of PGCIL across India, 400/132kV Bulk Power Receiving Station for TATA, the first of its kind 132kV Hybrid GIS substation for RRVPNL, 765kV Transmission Line from Agra to Jatikalan for PGCIL, 400kV Transmission Line from Korba to Bhillai for CSPTCL, 400kV Transmission Line from North Chennai to Almathy for TANTRANSCO, Electrical & Instrumentation works for Bhushan Steel plant, Rourkela Steel Plant for SAIL & Burnpur Steel Plant for ISP, Synchronized Unit-1 of 2x500MW Mauda TPP for NTPC, Unit -3 of 6x660MW Sasan TPP for Reliance. In international operations, PT&D business commissioned a major electrical project comprising EHV & MV Power System Network for Qatar Petroleum and 132kV GIS substation for KAHRAMAA. The business also commissioned a 132kV Substation for DEWA, 7 No’s 33/11kV Substations in Al Ain, 3 No’s 33/11kV Substation for ADPC along with the first ever 220 kV Substation & overhead Line to a private consumer in Bahrain. Significant Initiatives : In its continuing efforts to improve operational excellence, PT&D business developed and launched many project management tools such as : • EDMS (EIP Document Management System, an online tool for engineering process); 109 • SST (Supply Schedule Tracker, an online tool for Procurement monitoring); • PRIME (Project Review & Information Management Enterprise, a progress monitoring tool) in the domestic BU’s; Rolled out animation video on transmission line stringing procedure as a part of the endeavor for workmen skill development; • • Also, on a pilot basis EPPM (Enterprise Project Portfolio Management-Primavera) has been launched in our overseas operations. The PT&D business is targeting to diversify its portfolio in GCC countries and is exploring opportunities in infra electrics segment and has been successful in bagging initial orders in this segment. As part of PT&D business’s internationalisation strategy to expand into new geographies, dedicated business development teams have been deployed across strategic locations in Africa & South East Asia to identify & strongly pursue emerging potential. Outlook : In domestic market, good business prospects exist as Government policies lay stress on Power System Grid Strengthening Schemes through Central & Multilateral funding agencies. Central & State Utilities are likely to proceed with their Investment Plans. Debt Restructuring Plan of DISCOM’s/State Utilities and power tarif revisions will also pave way for financial health revival & faster project implementation. Power Distribution & Power Quality Improvement Projects under Rural Electrification Schemes will drive the business in MV & LV Distribution Segment. Key drivers for growth are likely to emerge from the opportunities in Steel, Cement and Oil & Gas Sector by way of various Greenfield and Brownfield projects, telecom & EHV Power Cabling Networks, Metros etc. 400 kV GIS Switchyard, NTECL Vallur of 3 x 500 MW Thermal Power Plant Switchyards are part of L&T’s capability in executing projects for power transmission and distribution 110 GCC investment plans on Grid Strengthening & infrastructural development continues to be in line with economic development, offering substantial potential. intensifying power demand in Africa & South East Asian countries unleashes significant potential and new opportunities. Major Subsidiary Company : LARSEN & TOUBRO OMAN LLC (LTO) : Subsidiary Company : LTO is a JV with Muscat Trading Company LLC (Zubair Corporation Group), providing engineering, construction and contracting services for over 15 years in Sultanate of Oman. LTO has well established itself in the PT&D business in Oman. The Company has been awarded the prestigious “Infrastructure project of the year” award by Construction Week, Oman for the 220 kV Grid station & TL Jhaloot Project. This is a great achievement for PT&D business, given the technical challenges in execution of the project. LTO is well positioned to harness the upcoming opportunities in Oman in PT&D segment supported by proven track record and strong construction capabilities. 111 Water & Renewable Energy Business L&T has wide experience in design and construction services for water processing, transmission and distribution facilities. Overview : The Water & Renewable Energy business comprises Water & Effluent Treatment Strategic Business Group (SBG) and Renewable Energy Business Unit (BU). These two diverse lines of businesses provide services covering the entire value chain (Concept to Commissioning) and are playing important roles in creating a water-surplus, energy-secure and green future. The Water & Effluent Treatment SBG caters to turnkey infrastructure projects in Water Supply & Distribution, Waste Water Collection, Treatment, Disposal, Re-Use and Industrial & Large Water Systems. Furthermore, the business also has presence in Gulf countries, where cutting-edge technologies are being deployed for Water and Waste Water Treatment projects. The Renewable Energy BU provides turnkey EPC services for projects on Utility-scale Photovoltaic/Concentrated Solar Power Plants, Decentralized Solar PV Systems, Wind 112 Power Plants, Micro-grids, Smart-grids and Integrated Security Solutions. The BU has plans to expand to Gulf nations where substantial investments are envisaged in Solar industry. Business Environment : Recognizing the urgent need for building quality water infrastructure and tapping clean sources of energy, governments across the globe are coming out with policies encouraging investment in these sectors. In India, major water infrastructure projects are being promoted by local governing bodies (State Governments and Municipalities) with support from the Central Government under innovative schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and funding from international agencies like Japan International Cooperation Agency (JICA). The Water & Effluent Treatment SBG has affirmed its status as a leading player in Water Infrastructure projects in India in 2012-13. Major projects commissioned in 2012-13 include a 20 MGD Water Treatment Plant in Delhi for Delhi Jal Board (DJB), Barmer Water Supply Scheme in Rajasthan and Utkal Alumina Water Supply Scheme in Odisha. Also, fresh orders have been secured which include Cuttack Sewerage Scheme for Odisha Water Supply and Sewerage Board (which includes micro- tunneling of 10 km), 25 MGD and 50 MGD Water Supply Schemes for Gujarat Industrial Development Corporation (GIDC) at Dahej, Water Supply Schemes to five districts in Rajasthan for PHED, Sewerage Scheme in Bhatpara Town under National Ganga River Basin Authority (NGRBA) for Kolkata Municipal Development Authority in West Bengal, Hanamapur Lift-Irrigation Scheme for Krishna Bhagya Jala Nigam Ltd. (KJBNL) in Karnataka and 110 MGD Raw Water Pumping Station, Raw Water Transmission Main, 50 MGD Water Treatment Plant & Clear Water Pumping Station at Kolkata for Kolkata Municipal Corporation. For Renewable Energy projects, some challenges are technology risk of solar module performance, weak compliance towards Renewable Purchase Obligations (RPOs), demand for crashed project timelines and operational and logistical hurdles due to remoteness of sites. Intense competition from emerging local and experienced international players is also a major challenge. The Renewable Energy BU is executing a 125 MW Solar Thermal Power Project, the largest of its kind in Asia, based on Compact Linear Fresnel technology provided by Areva, for Reliance Power. Apart from the above, a 20 MW Solar Photovoltaic (PV) Plant has been commissioned for Kiran Energy at Phalodi, Rajasthan and a 17 MW Solar PV Plant has been commissioned for Malpani Group at Pokhran, Rajasthan. Also, new orders have been secured, which include a 55 MW Solar PV Plant for Kiran Energy in Tamil Nadu under REC mechanism and a 20 MW Solar PV Plant for another leading developer in Rajasthan. With over 300 MW of Solar projects executed/under-execution Thermal desalination plants are part of L&T’s capabilities in the water sector India’s largest solar plant built by L&T in Rajasthan. 113 till date, L&T is the first and only Indian company to enter the list of leading international Solar EPC players as per a report published by IMS Research. Significant Initiatives : The Water & Renewable Energy business has grown at a good pace in previous years and looks set to grow sustainably in the future. Some initiatives that have been taken to drive growth are : 1. Expansion of presence in India to new states by formation of new project clusters; 2. Targeting new geographies to tap emerging opportunities in water and renewable energy sectors; 3. Focus on emerging businesses like Desalination, Water Management and Solar Thermal Applications; 4. Deploying best-in-class technologies such as Micro- tunneling, Tracker-based projects, Micro-grids for achieving market differentiation. The business is also differentiating from competition its customer-oriented, quality-conscious through and technology-driven approach towards business. Benchmarks are being created for operational excellence through efficient internal systems and processes. Outlook : Rapid urbanisation and industrialisation in India is providing impetus for creation of efficient and reliable Water infrastructure for supply of potable water and collection, treatment & re-use of waste water. Stringent pollution control norms and their enforcement is also a major driver for investment in effective effluent-treatment systems. Also substantial investments are envisaged in lift- irrigation projects. It is encouraging to note that more than 15,000 crore have been earmarked for various water supply and sewerage projects in India in 2013-14. The demand for clean and green sources of energy is on the rise. The National Action Plan on Climate Change (NAPCC) envisages a 15% mix of renewable energy in India by 2020. The 12th five year plan (2012-2017) has targeted a capacity addition of 15 GW in Wind sector. The Jawaharlal National Solar Mission has targeted a total installed capacity of 20 GW of grid-connected Solar plants by 2022. The year 2013-14 is going to see a large PV capacity of around 4000 MW being allocated in India. For Wind Power projects, the reinstatement of Generation- based Incentives (GBIs) is expected to give impetus to investments. With expected thrust on Renewable Purchase Obligation (RPO) compliance, restructuring of financials of state distribution companies and augmentation of transmission and distribution infrastructure, the renewable energy sector looks all set for a period of accelerated growth. Also, the business environment for Integrated Security Solutions looks bright with tenders being floated by various government authorities for city surveillance systems, intelligent traffic monitoring systems and security systems for critical infrastructure setups like nuclear power plants and airports. 114 Power Business L&T’s joint venture with Mitsubishi Heavy Industries introduced world-class supercritical technology to India. L&T is rapidly building a presence in India in pursuit of its mission to become the ‘most preferred provider of equipment, services and turnkey solutions for fossil-fuel-based power plants in the Indian market’. Overview : Power business is an integrated concept-to-commissioning solutions provider for thermal power plants engaged in setting up of coal and gas based power generation projects on a lump sum turnkey basis. With world class manufacturing facilities for supercritical boilers, steam turbines, generators, pressure piping, axial fans, air-preheaters and electrostatic precipitators, and an unparalleled experience in project management, engineering & construction management, the business has the capability to cater to 85% (by value) of the power generation value chain. The business has an organization structure dovetailed for performance with focused business units supported by competency-based capability centers and service functions. Geographically, the business has a pan-India presence with multiple project sites and project management centers at Vadodara, Faridabad and Chennai. The manufacturing facilities for critical piping and electrostatic precipitators are located at Hazira. The facilities for boilers, turbines, generators, axial fans and air preheaters (housed in joint venture companies) are also located at Hazira. The business has set up establishments in various locations in India to assist business development, with procurement being supported by a China office. The Company is a significant domestic player in the power market, with substantial investments in manufacturing capacity for supercritical power equipment. Multinational companies have also taken steps to create India facilities by tying up with or acquiring a local company. With these,the domestic supercritical manufacturing capacity is slated to cross 25,000 MW by 2014-15. 115 Business Environment : The year 2012-13 witnessed weak environment with continuing problems of coal and gas supply, land acquisition hurdles and regulatory uncertainty. The inflation levels, which remained high for better part of the year, and the resulting high interest rates further contributed to the subdued sentiment. As a result, IPPs vanished from the market, leading to a slump in order prospects. Excluding NTPC Bulk orders which were announced in previous years, the total ordering in 2012-13 was a meager 6,600 MW. In response to industry demand for duty imposition on imported power equipment, the government imposed 21% duty (5% basic customs duty + 12% countervailing duty + 4% special additional duty) on power equipment imports. Consequently, excise duty of 12% has also been levied on domestic suppliers,due to which the overall benefit of duty imposition has been diluted. To counter this duty imposition, foreign suppliers have started utilizing their competitive advantage of low interest rates to bundle low-cost financing as an additional offering to owners. The gas output of the country reached all-time low in 2012-13. This has led to a near shutdown of the gas-based power market in the nation. The business has taken this weak domestic situation as an opportunity to explore tapping overseas markets, predominantly in South East Asia and Middle East. The year 2012-13 also saw extremely aggressive competition with incumbents bidding low prices to bag awards in the shrunk market. The business has initiated aggressive cost saving measures to shield margins in an enviornment of price pressures. For 2013-14, a slight improvement is expected in the market opportunities, with government tenders worth 9,000 MW on the anvil. Moreover, state electricity boards are now leaning towards EPC ordering mode which is positive for integrated EPC players like the Company’s Power business. Post the market downturn of 2011 and 2012, the second half of fiscal 2013 witnessed Power business revive itself with multiple order wins across business units. Two major awards bagged during the year came from RRVUNL for their 2x660 MW EPC project at Chhabra (Rajasthan) and NPCIL for the Balance of Turbine Island job at their 2x700 MW Rawatbhata (Rajasthan) project. On the execution front, the year saw critical milestones like stator erection, hydro-test, turbine box-up being achieved in some of the projects. The business also successfully executed complicated multi-modal logistics plans for heavy equipment across long distances and difficult terrain. 116 The difficult interest rate regime for the better part of the year meant that the business had to keep a rigid focus on working capital management and ensure collection of customer outstandings. Despite some slowdown by lenders in disbursals to power sector, Power business could manage to collect the dues from its customers and ended the year with a healthy cash flow position. Significant Initiatives : The Power business introduced a slew of operational initiatives during the year to counter the market slowdown. The business also received critical recognition for its capabilities across various competencies. The state- of-the-art “Project Monitoring System” which allows real-time single-touch monitoring of all project sites of the business was recognized by NASSCOM which conferred the NASSCOM INNOVATION 3.0 award on the business for “best IT driven innovation in manufacturing vertical”. The Quality Management Capability Center bagged the prestigious “Golden Peacock National Quality Award” for excellence in implementing quality initiatives and improving business practices. Safety is one of the most crucial factors that has upheld the execution excellence reputation of the business. Bolstering this reputation, Power business received the British Safety Council’s Sword of Honour, which is the most coveted award in the area of Health and Safety worldwide. The Power Training Institute, set up at Vadodara last year, to develop a pool of talented power professionals conducted training programs across the gamut of competencies during the year. Strong emphasis has been placed on engineering and technology services to bring in cutting-edge execution practices. To insulate the business portfolio from the volatility of a single market, Power business has taken steps to expand operations beyond India. Since coal is not a permitted fuel in several countries, the potential for coal projects overseas is limited. Thus the focus is on opportunities for Gas Based Power Plants in the countries where the business is confident of being competitive as well as capable of successful execution. The focus is on Middle East where the business has set up two small power projects and South East Asia. The business is pursuing active leads in these regions and striving for a major breakthrough. The Critical Piping unit which Manufactures High Pressure Piping Spools for Thermal Power Plants is seeking opportunities in Middle East. Steps have been taken to build a business development team at Abu Dhabi. The Joint Ventures with Mitsubishi Heavy Industries for manufacture of Steam Turbines and Steam Generators are seeking to supply components to MHI’s third country projects. Outlook : While the year 2012-13 saw increased awareness and acknowledgement of problems plaguing the power sector with many announcements on reforms, it is important for these announcements to translate into action on the ground for the sector environment to improve. Government promises on fuel supply agreements, fuel price pooling are yet to fructify as also are the issues of standard bidding documents (SBD) and fuel pass-through for imported coal based plants. Though serious discussions are currently underway between industry and the government, it is likely that these deliberations will take 12 to 18 months to yield results. Thus the year 2013-14 is likely to remain subdued for the industry with continued pricing pressures as domestic players chase the few available opportunities. With the IPP market having dried up, opportunities for the business during the year will come from PSUs like NTPC and State Electricity Boards. For gas-based opportunities in South East Asia and Middle East, we have made good progress on prequalification and significant efforts have been made to make a breakthrough in 2013-14. Driven by its relentless focus on execution excellence, Power business is well placed to capitalize on the thermal power opportunities as they emerge and fortify its place as a credible integrated power EPC player in India. Major Subsidiary & Associate Companies : L&T-MHI BOILERS PRIVATE LIMITED (LMB) : Subsidiary Company : LMB is a joint venture between L&T and Mitsubishi Heavy Industries, Japan incorporated in India for the engineering, design, manufacture, erection and commissioning of super critical boilers in India. L&T has a 51% stake in the joint venture. The manufacturing hub of LMB is at Hazira, Gujarat while it has established design and engineering centers at Faridabad & Chennai. The Company has total installed capacity of 4000 MW for manufacture of boilers. The Company is presently at an advanced stage of executing its various orders and is confident of meeting the market requirements with focused efforts to manufacture/ deliver the products to become more cost competitive in the coming years. The Company is making efforts to introduce advance ultra-supercritical Steam Generators for the Indian market to remain ahead of competition by providing energy efficient and environment friendly products. The export market thrust which is an integral part of the company’s business strategy got impetus as the company bagged a prestigious order from MHI to supply pressure parts for Rabigh Arabian Water Electricity Company, Saudi Arabia. Company is also trying to make inroads in the Indian market for operational spares for pressure parts and coal pulverisers. L&T-MHI TURBINE GENERATORS PRIVATE LIMITED (LMTG) : Subsidiary Company : LMTG is a joint venture between L&T and Mitsubishi Group, Japan comprising of MHI and Mitsubishi Electric Corp. (MELCO). The Company is engaged in the engineering, design, manufacture, erection and commissioning of super critical turbines and generators in India. L&T has a 51% stake in the joint venture. The Company has a state of the art manufacturing facility at Hazira, Gujarat for manufacture of STG equipment of capacity ranging from 500 MW to 1000MW. During the past year, the competition has further intensified with many international players setting up or in the process of setting up manufacturing facility in India and competing intensely for the few orders that are being tendered. The aggressive pricing and delivery terms from competitors has put severe pressure on the prices. To face the twin challenges of weak business environment and intense competition, the Company is focusing on Cost competitiveness, better supply chain management, control over working capital and efficient utilization of resources. The Company is confident of meeting the market requirements to manufacture & deliver cost competitive products in the coming years. L&T HOWDEN PRIVATE LIMITED (LTH) : Subsidiary Company : LTH is a joint venture between L&T and Howden Group, UK. The Company was formed in 2010 with the objective of supplying high end fans and air pre-heaters for super critical power plants being set up in India. L&T has a stake of 50.10% in the joint venture. The Company has a state of the art manufacturing facility for manufacture of fans and air preheaters at Hazira, Gujarat along with a Fan Testing facility. It also has a design and engineering centre at Faridabad near New Delhi. During the past year, the Company won a major order for supply of fans and air preheaters for one of NTPC Limited’s super critical power plants under construction in South India. The coming year holds a new set of challenges due to subdued market apart from continued threat of import of power equipment from Chinese manufacturers. With several existing power plants in India being quite old, the Aftermarket segment is expected to have a huge potential which the Company is poised to exploit. 117 L&T-SARGENT & LUNDY LIMITED (LTSL) : Subsidiary Company : LTSL is an equal joint venture between L&T and Sargent & Lundy, USA. LTSL offers complete gamut of Power Plant Engineering & Consultancy services-from concept to commissioning. Its experience list includes overseas projects in USA, Saudi Arabia, Oman, UAE, Jordan, China, Thailand, Malaysia, Sri Lanka, Bangladesh, Nigeria, Panama, Kuwait, Morocco and Kenya. Besides having considerable expertise in gas based and sub-critical coal based power projects, LTSL is also involved in engineering of super-critical coal based projects and forms the engineering base for L&T’s thrust into turnkey execution of super-critical technology. As of now, it has engineered around 19,000 MW of generation capacity of gas-turbine based power plants and around 17,000 MW of generation capacity of coal-based power plants across the globe. LTSL’s prospects will be coming from L&T, S&L and Third party domestic and international customers. Though the domestic market does not seem encouraging, the projects stalled for long are expected to be awarded in this FY. The international market provides opportunity to bid for projects in the emerging nations. Apart from established contacts in Middle East and S.Korea, LTSL intends to build business relationships with clients located in other identified countries such as Turkey, Brazil, South Africa, Indonesia and Malaysia. LTSL will continue its thrust on new areas of business viz. Project and Construction management services at site, Transmission and Distribution and Solar projects Supercritical turbine being assembled at L&T’s Hazira Campus. Supercritical boiler manufactured at L&T’s state-of-the-art manufacturing facilities at Hazira. Natural gas-fired combined cycle power plant built by L&T at Vemagiri in Andhra Pradesh, India 118 Heavy Engineering (HE) Business World’s largest vacuum distillation column - weighing 975 MT - fabricated by L&T for Paradip refinery (Orissa, India). Overview : The Heavy Engineering (HE) business manufactures and supplies custom designed, engineered critical equipment & systems to core sector industries like Fertiliser, Refinery, Petrochemical, Chemical, Oil & Gas, Thermal & Nuclear Power, Aerospace and equipment & systems for Defence applications. HE business has manufacturing & fabrication facilities at Mumbai in Maharashtra, at Vadodara & Hazira in Gujarat, at Visakhapatnam in Andhra Pradesh and at Sohar in Oman. At Talegaon in Maharashtra; it has a Strategic Systems Complex for integration and testing of Weapons Systems, Sensors & Engineering Systems. A Precision Manufacturing Facility has been set up at Coimbatore in Tamil Nadu to manufacture precision machined components & assemblies. A Military Communications and Avionics facility is set up at Bangalore in Karnataka. This center is integrated with a development center and small scale production facility for Defence Electronics and Embedded software in these domains. Project management teams at each location are supported by detailed design and engineering centres. Manufacturing teams are backed by production engineering and manufacturing process development centres at each location. The business has “Technology and Product Development Centres” in Mumbai – for new product development in process plant equipment and for equipment & systems (including electronic systems/sub- systems) for strategic sector. Strategic Submarine Design Centre is also located in Mumbai. 119 Reactors sail out from L&T’s manufacturing facility at Hazira for coal gasification plants in Vietnam. Business Environment : Despite the weak global economic scenario and pending policy decisions on the domestic front the business booked higher Order Inflow & Sales during 2012-13 with successes in the overseas markets. Lack of level playing field due to Free Trade Agreements signed by the Government of India has increased competition in the domestic market. The process plant equipment business faces aggressive pricing, deliveries and payment terms offered by European, Korean and Japanese fabricators. Localization policies of certain countries and preference to local suppliers by certain EPC companies due to socio-political conditions have also impacted the HE business. The business’s competitiveness is also influenced by the absence of competitively priced, long tenor financing from Indian export credit agencies for exported engineering products. The defence business was impacted by delay in decision making on ordering and long bid to award cycle. While numerous new programs were initiated through the issue of request of information (RFIs) and request for proposals (RFPs), the procurement process has not picked pace given the controversies in defence procurement and budget cuts enforced in the last quarter of the financial year. Defence offset opportunities have not fructified in significant value terms due to delayed procurement and dilution in offset related guidelines viz.; inclusion of homeland security & civil aviation (as eligible for offset credits) and introduction of multipliers for small & medium enterprises. 120 Significant Initiatives : In the pursuit of manufacturing excellence and productivity, the business is committed and continues to invest in its campaign titled ‘UDAAN’ which signifies flight or breaking free from existing mindsets to scale new heights. UDAAN was initiated with the objective of achieving an exclusive position in the global process plant equipment and to fortify our lead position as supplier of defence equipment & systems from the private sector. Some of the initiatives under “UDAAN” are : Implementation of Theory of Constraints • Lakshya • Enterprise-wide Collaboration for Alignment with • Strategy (ECAS) Employee Engagement Innovation Sustainability • • • ‘Theory of Constraints’ based ‘Critical Chain Project Management’ targets improving execution and delivery performance. The business undertook a mid-term review of its ‘Lakshya’ – a five year strategic plan for identifying strategies and action plans that are expected to drive growth during the plan period. ECAS seeks to enhance Organizational Excellence through a strategy of promoting Customer Intimacy and promoting a culture of Collaboration. Employee engagement, feedback and ideation workshops are conducted with the objective of creating an innovative, involved and committed work force. Technology & Product Development Centers are focused on process technologies, manufacturing technologies, mechanical systems technologies, defence electronics technologies, embedded software solutions and submarine designs. These centers provide specific emphasis on welding & metallurgy, composite materials, heat transfer, hydrodynamics, computational fluid dynamics, stress analysis, microwave & RF technologies, embedded systems, high availability systems, military communication and drives technologies. Outlook : In the hydrocarbon sector, business prospects are promising in the medium term to long term with expected investments in greenfield, upgradation and revamp projects in the USA, Middle East, CIS and South East Asian markets. Increased shale gas availability in USA and Australia could result in announcement of LNG and GTL projects. The new urea investment policy is expected to incentivize domestic investments in fertilizer plants. In the nuclear equipment business, the civil nuclear liability implementation rules have been tabled in Parliament but ambiguity in respect of the extent of liability remains. For domestic nuclear power plants procurement process for long lead items is expected to commence. The Ministry of Defence has announced a decision to give impetus to indigenization as a thrust area. Under this new policy Defence procurement programs are expected to follow hierarchical categorization process by preference to Buy (Indian), Buy & Make (Indian), Make categories ahead of Buy & Make (Global) and Buy (Global) categories. This would benefit the Indian industry with proven track record over the medium to long term. The business is also leveraging its product portfolio of multiple engineering systems to tap overseas market opportunities in the defence segment. With superior technology, a lot of it home grown, state of the art manufacturing facilities and a committed work force, the HE business is well poised to tap upcoming business opportunities. Major Subsidiary Companies L&T SPECIAL STEELS AND HEAVY FORGINGS PRIVATE LIMITED (LTSHF) : Subsidiary Company : LTSHF is a joint venture (JV) between Larsen & Toubro (L&T) and Nuclear Power Corporation of India Limited (NPCIL) The photograph is for representation purposes only, and does not purport The photograph is for representation purposes only, and does not purport to be a photograph of the actual nuclear-powered submarine built by L&T. 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 – INS Arihant. L&T offers a wide range of equipment and systems for defence - army, navy and airforce L&T will build the cryostat for the prestigious ITER alternative energy project that will help meet growing global energy needs.. India’s PSLV C-19 takes off from SHAR, Sriharikota. L&T is closely associated with programmes of the Indian Space Research Organisation (ISRO). (Photo : Courtesy ISRO). 121 with L&T holding 74% equity stake. The JV Company has set up a fully integrated manufacturing facility at Hazira to produce ingots and finished forgings required for critical equipment in nuclear power and hydrocarbon industry, rotors in power industry, rolls in steel plants and other heavy forgings for general engineering applications. The JV is a major strategic step towards achieving India’s independence from imports of heavy forgings and ensuring timely supply of heavy forgings for nuclear power plants. LTSHF commenced commercial operations from October 1, 2012 with a capacity to produce a single piece ingot up to 300 MT and forgings up to 125 MT in the first phase. During the year, the Company has successfully made large size ingots and heavy forgings required for critical equipment in refineries, fertilizers, nuclear and other segments. SPECTRUM INFOTECH PRIVATE LIMITED (SIPL) : Subsidiary Company : SIPL,a wholly owned subsidiary of L&T, possesses capabilities in defence electronics and avionics systems. SIPL concentrates largely on product development in embedded solutions, control and signal processing for defence sector and undertakes technology development and manufacture of avionics LRUs for military applications. SIPL is certified by Centre for Military Airworthiness and Certification (CEMILAC) of the Ministry of Defence, India. SIPL has obtained AS9100 Rev C, ISO 9001 and ISO 27001 certifications. LARSEN & TOUBRO HEAVY ENGINEERING LLC: Subsidiary Company : Larsen & Toubro Heavy Engineering LLC is a Joint Venture between Zubair Corporation and L&T, established in Sultanate of Oman. L&T, through its wholly owned subsidiary Larsen and Toubro International FZE, holds 70% in the Company. The heavy engineering facility was commissioned in October 2009 and is based at Sohar in Oman. The Company focuses on business in the Middle East, mainly GCC countries and supplements manufacturing and fabrication facilities located in India. With more than USD 100 billion worth of investment plans in oil, gas and petrochemical projects in the Middle East and Oman planning to invest USD 50 billion in the hydrocarbon sector in the next 10 years, the JV Company sees good prospects in the region. 122 Electrical & Automation (E&A) Business India’s widest range of switchgear, offered by L&T. Switchgear is part of L&T’s broad range of electrical and electronic systems, widely used in industrial, agricultural, building and commercial sectors. Overview : Electrical & Automation (E&A) is one of the core businesses of the Company. Its suite of offerings include low and medium voltage Switchgear, Electrical Systems, Marine Switchgear, Industrial and Building Automation Solutions, Surveillance Systems,Energy Meters & Relays. Its products and solutions cater to a variety of segments like industries, utilities, infrastructure, buildings and agriculture. A major strength of the E&A business is its in-house design and development capability for its products and solutions. It also has state of the art high precision tool manufacturing facilities, a pre-requisite for high quality products. It runs four Switchgear Training Centres (STCs) across India that imparts training to engineers, consultants, technicians and electricians. The manufacturing facilities are located at Mumbai (Powai), Navi Mumbai (Mahape & Rabale), Ahmednagar, Vadodara, Coimbatore and Mysore in India as well as in Saudi Arabia, UAE, Malaysia, Indonesia, Australia and the UK. The E&A business comprises two Strategic Business Groups (SBGs) and designated subsidiaries. Further, there are business units that operate under each SBG. The Products SBG includes Electrical Standard Products (ESP) and Metering & Protection System (MPS) while Projects SBG has Electrical Systems & Equipment (ESE) and Control & Automation (C&A). 123 Business Environment : The E&A business witnessed sluggish economic conditions, affected by factors such as tight liquidity, delayed policy decisions and deferments in projects finalization, Rupee weakening against US Dollar, volatility in commodity prices and rise in input costs. The E&A business, however, sees better business prospects in Middle East evidenced by increase in enquiries/ order inflow. Business performance in sectors such as solar, telecom, oil & gas and agriculture were better in comparison to the traditional sectors like infrastructure, power, utilities etc. ESP focuses on Tier II/III cities/towns in India, in-line with their growth strategy. The MPS business, that is primarily restricted to institutional clients like state- owned distribution companies, remained flat amidst fierce competition. ESE continued its focus to strengthen its position in Medium Voltage. C&A is putting continuous efforts on adding higher value through own IP based solutions and strengthening the delivery process. Despite these odds, the E&A business registered a growth in order inflow and revenue in the year 2012-13. Significant Initiatives : Not withstanding the economic slowdown, E&A was on course to improving its performance in a variety of ways that comprised restructuring business, acquisitions, new capacity creation, launch of new products and numerous process improvement initiatives. E&A business set up common sales teams for Low & Medium voltage and automation projects for identified international territories broken into five clusters. During FY 2012-13, E&A acquired UK-based Servowatch Limited, one of the leading suppliers of advanced integrated ship control systems for offering cutting edge technology in control & automation space not only for marine application but also for other emerging segments like Security Surveillance System. To expand and strengthen its scope of offerings, E&A business acquired a leading Malaysia-based busduct systems manufacturer, Henikwon Corporation in July 2012. The year also saw new capacity creation for ramping up production of MCCBs (Moulded Case Circuit Breaker) and start of U-POWER ACB (Air Circuit Breaker) production by opening a switchgear factory at Vadodara, for modular devices at Ahmednagar and addition of new module 124 for LV Switchgear at Coimbatore. The Vadodara facility is supported by a well-equipped centre for research, development and engineering of circuit breakers. The E&A business also made history by implementing for the first time in India Product Lifecycle Management (PLM) 7.01 version for CAD data integration with SAP to speed up introduction of new projects. Another major initiative taken during the year was securing ISO 27001 certification for tightening Information Security Systems for BU functions across all manufacturing locations. The Precision Machining Centre (PMC) of Engineered Tooling Solutions was awarded the ‘Gold Certificate of Merit-2012’ in India Manufacturing Excellence Award (IMEA) instituted by Economic Times in association with Frost & Sullivan. PMC was also certified for the tough aerospace standards AS 9100 Rev. C and is well poised to cater to global clients in aerospace markets. MPS participated in the prestigious Indian Merchant Chambers Ramakrishna Bajaj National Quality (IMC-RBNQ) Award and got the commendation certificate in 2012 in the manufacturing category. Initiatives on spreading a culture of operational excellence through ongoing improvement initiatives continued under the banner of ‘ELITE’, an acronym for E&A’s Lean Initiative Towards Excellence. These were Lean-5S, VSM (Value Stream mapping), Value Engineering, Six Sigma, TPM-JH (Total Productive Maintenance -JishuHozen) and PFMEA (Process Failure Mode Effect Analysis). As in the previous years, the E&A business was successful in achieving significant savings on account of Value Engineering (VE) and majority of the projects were focused on reduction in material consumption. Two initiatives, started recently-TPM for machines and PFMEA for identifying potential defects in a process and addressing them well before they surface-have started yielding results. MPS business unit embarked on technology up-grade for integration of radio modules for facilitating collection of data over mesh network and development of pre-paid meter and smart meter. A number of new products/variants were launched during the year that comprised Mpower GSM Module for controllers for the agriculture segment, Contactors, premium range of Miniature Circuit Breakers (EXORA), improved range of standard duty capacitors and new protection relay (Mcomp). A solar lantern – Diva-was launched by ESP BU, a cost effective solution for the power deficit areas of the country and symbolizing the use of clean energy. registrations and 2 Copyrights as well as 10 international Patent applications including 6 Patent Cooperation Treaty (PCT) and 4 Gulf Cooperation Council (GCC) Patent applications. This was the 6th consecutive year of filing more than 100 patent applications. The C&A business unit introduced new solutions for solar plants. Its i-Visionmax solar package is a cost effective and efficient tool that continuously controls and monitors the plant thereby resulting in lower downtime and enhanced improvement of the plant’s overall profitability. E&A’s in-house R&D has design & development capabilities for its products and solutions that are among the best in the industry. The in-house R&D facilities located as Powai–Mumbai ,Ahmednager, Mysore and Coimbatore are approved by Department of Scientific & Industrial Research, Ministry of Science & Technology. The R&D centre networks with international labs, testing centres and academic institutions to keep abreast of new technology trends and introduce those for customers in different segments. Focused R&D activities have enabled ESP to have a healthy New Product Intensity (NPI) index of >30%-an index which measures the sales of products introduced in the market in last five years to the total sales in the financial year. During the year, the E&A business filed 159 Patent applications, 29 Trademark applications, 36 Design Continuous efforts on IP creation and its management earned the E&A business the highest awards in patents filing and design registration, instituted by the Indian Patents Office, viz. ‘The Top Indian Private Company (Large Scale) in Patents 2012’ and ‘The Top Indian Organisation in Designs 2012’ Outlook : It is expected that business sentiments in 2013-14 will see an improvement over the current year and, therefore, will offer better opportunities. The Government’s focus on developing infrastructure sector holds promise and that the industry could see investments and good growth. There are indications of good growth in certain sectors and the retail segment supported largely by Tier II/III cities and towns in India. The country will witness higher growth in energy efficient products as well as focus on development of alternate energy sources would gain ground. Water is another segment where investment is foreseen. In projects business, EPC awards in major projects may pick-up during FY 2013-14. Local content /value addition/ presence is fast becoming a crucial factor in GCC Medium Voltage Switchboard Panels of Tamco, an L&T subsidiary. 125 countries such as Oman and Qatar and also CIS (especially Kazakhstan). Political uncertainty will still be a factor in some countries. The C&A BU is optimistic about the Terminal Automation projects from oil refining companies which are coming up in a phased manner – 60 locations in next 2 years. The meter market is poised for healthy growth. MPS BU expects large procurements expected from state utilities like Rajasthan, West Bengal, Kerala, UP, Tamil Nadu and Andhra Pradesh. Major Subsidiary and Associate Companies : TAMCO GROUP OF COMPANIES : Subsidiary Companies : TAMCO Group of companies operating from Malaysia, Indonesia and Australia are the wholly owned subsidiaries of Larsen & Toubro International FZE. TAMCO is a leading medium voltage switchgear manufacturer in South East Asia and exports more than 50% of its produce to Middle East, Africa & UK. Its products are widely used in power, oil & gas, mining, heavy industries and construction. TAMCO spends more than 3% of its revenue in R&D and has over the years designed and developed the complete range of medium voltage products in line with international standards. TAMCO’s strength has been its quality and flexibility to meet customers’ complex needs and has a significant market share in Malaysia, Qatar, Dubai and Oman. TAMCO is favourably placed. The approval by electricity companies of UAE has opened good prospects for the company and in the coming year, the company is hopeful of getting good orders from them. TAMCO’s new factory in Indonesia is a world class manufacturing facility for Low and Medium Voltage Switchgears. TAMCO Indonesia showed a significant improvement in orders and revenue. TAMCO group aims to continue making new product developments in-line with “Lakshya 2016” Strategic plan. The new products would facilitate in-roads in markets like Kingdom of Saudi Arabia (KSA), United Kingdom (UK) in the coming year. Besides this, TAMCO plans to build a new manufacturing facility nearer to its customers. It is also developing new OEM’s to expand its global reach. L&T ELECTRICAL & AUTOMATION FZE (LTEAFZE) : Subsidiary Company : LTEAFZE, established in 2008 and operating from its own Integration Centre, at Jebel Ali Free Zone in United Arab Emirates (UAE), is a wholly owned subsidiary of Larsen & Toubro International FZE. The Company provides integrated control solutions to industry verticals like Oil & Gas, Water & Waste Water, Power and Infrastructure in the Middle East, Africa and CIS markets with expertise in automation, telecommunication, electrical & instrumentation segments. Outside of Malaysia, there are excellent prospects in Qatar due to FIFA 2022. There are large tenders for AIS (air insulated switchgear) and RMU (ring main Unit)in which With major customer approvals in place, this business is focusing to provide solutions and services to Engineering Procurement & Construction (EPC) companies and to end Supervisory Control and Data Acquisition system - SCADA A section of L&T’s range of electronic meters and relays. 126 users for both new and brown field projects. The company has further strengthened its position in infrastructure and telecom segments and expects to grow in these areas during the coming years. L&T ELECTRICALS AND AUTOMATION SAUDI ARABIA COMPANY LIMITED, LLC (LTEASA) : Subsidiary Company : LTEASA is a joint venture between L&T, India and Yusuf Bin Ahmed Kanoo Group, KSA with a state-of-the-art integrated manufacturing facility in Dammam, mainly to cater to the customers in and around Saudi Arabia. The Company offers complete range of electrical systems and switchgear components in Low and Medium Voltage categories, Pre-Fabricated/Packaged Substations, Variable Frequency Drive panels and Automation systems etc. The Kingdom of Saudi Arabia has increased it’s spend in sectors like healthcare, education, housing, water and transportation infrastructure. Major projects like Riyadh Metro, King Abdulaziz International Airport etc., have been tendered and are expected to be awarded during 2013-14. The Company expects to get the Saudi Electric Company approval for its products during 2013-14, thus paving the way for access to the huge SEC and government/ministries market. All these developments augur well for the company. HENIKWON CORPORATION SDN BHD, MALAYSIA : Subsidiary Company : Established in 1982, Henikwon Corporation is a leading manufacturer of Low Voltage (LV) & Medium Voltage (MV) bus duct systems. Henikwon is globally well recognized and its offerings include high quality products compliant with international quality standards. The Henikwon acquisition brought strong customer base of large corporations to E&A’s business and complemented its portfolio and has enabled offering of comprehensive solutions for the building & infrastructure segments. It further enhances our presence in South East Asia and in catering to Indian and Middle East markets. Henikwon products include wide range of LV & MV bus- ducts with contemporary features & reliable quality that are now part of L&T offerings in India. This is complemented by Henikwon’s own brand equity and customer loyalty in various other regions. Henikwon has a strong market presence in most of the ASEAN countries. 127 Machinery and Industrial Products (MIP) Business L&T’s flow-control solutions for the hydrocarbon and power sectors are used worldwide. High-pressure valves for supercritical and nuclear power plants are a vital part of its product portfolio. Overview : Machinery and Industrial Products (MIP) comprises two Strategic Business Groups (SBGs) – Machinery and Industrial Products. Machinery SBG : Machinery SBG consists of Construction & Mining Machinery, Rubber Processing Machinery and Foundry Business Units. Construction and Mining Machinery Business Unit (CMB) markets equipment manufactured by L&T-Komatsu Limited and the entire range of Equipment available from Komatsu worldwide. CMB also represents Scania, Sweden for their Mining Tipper Trucks. CMB also provides product support for all the equipment distributed by them. L&T-Komatsu Limited manufacturers Hydraulic Excavators and Hydraulic Components, all of which are distributed in India by CMB. Rubber Processing Machinery Business Unit (RPM BU) manufacturers and markets Rubber Processing Machinery for the tyre industry. Currently, the Unit has manufacturing facilities at Manapakkam, Chennai and Kancheepuram near Chennai. The Foundry Business Unit manufactures large sized SG Iron and special Iron casting for Wind Power and other Engineering sectors at its state-of-the-art Casting Manufacturing Unit at Coimbatore that has an annual capacity of 30,000T. The foundry can produce castings in the weight range of 3T to 28T. MIP has set up manufacturing facility for its Rubber Processing Machinery business through the joint venture, L&T Kobelco Machinery Private Limited, Karai, Kancheepuram that manufactures Internal Mixers and Twin Screw Roller Head Extruders. 128 Industrial Products SBG : Industrial Products (IP) SBG consists of businesses related to industrial valves, welding equipment & products and cutting tools. Valves Business Unit (VBU) markets valves and allied products manufactured by Audco India Limited and a few Indian and Overseas manufacturers. VBU is one of the few select suppliers of valves for global oil majors. L&T’s Valves Manufacturing Unit (VMU) in Coimbatore is responsible for manufacturing of Valves for Power Sector and providing the technology support for new product development of Valves. L&T’s wholly owned subsidiary EWAC Alloys Limited (EWAC) having its facility at Ankleshwar, Gujarat manufactures and sells welding products. The principal products and services comprise welding consumables for maintenance and repair (M&R) segment, specification grade electrodes, flux cored welding wires, wear plates, welding and cutting equipment, tero cote lab services etc. Industrial Cutting Tools (INP) business provides metal cutting solutions to the Indian manufacturing industry covering automobile, engineering and machine tools segments through marketing of Industrial cutting tools manufactured by ISCAR Limited, Israel. Product Development Center (PDC) of MIP business based at Coimbatore renders Engineering and Product Development support across all the businesses of MIP. Business Environment : The Construction and Mining Machinery BU was affected as Construction equipment industry shrank by 15% over 2011-12 largely on account of the lower demand from road sector and general construction activities while the Mining Equipment demand was affected by lack of legislative action and pro-active legal impediments though long-term prospects remain bright. In last few years competition in Construction Equipment has increased with existing manufacturers adding new capacity and entry of new players who have also taken to aggressive pricing eyeing market share. Consequently, pricing continued to remain under pressure. The year 2012-13 saw several Indian tyre majors postponing investments due to sluggish automobile demand. However, the Global tyre companies continued their investments in India and in other emerging economies such as, South East Asia, Brazil, Russia and China. RPM has been successful in tapping some of these opportunities from the Global Tyre companies and was able to double its order inflow from overseas business. The Foundry Business Unit (FBU) suffered a substantial decline during the year 2012-13 and this coupled with cheaper imports of castings from China resulted in FBU being under great strain for most part of the year. Expected re-introduction of Generation-based Incentive and consolidation of market amongst key players will enhance opportunity for FBU. WTG market is repositioning itself with multi-megawatt Units (against fractional mega-watt units) which require larger size castings. This will ideally suit the FBU facility. The forecast appreciation of Chinese currency (vis-à-vis INR) and the rising costs in China are expected to help Indian suppliers to the WTG industry becoming more competitive. Grid connectivity and performance of State Electricity Boards continue to impact WTG installations. In the case of Industrial Products SBG, Industrial Valves segment continued to face challenging environment. The targeted projects in international oil & gas sector were on schedule. The Domestic Power Projects have not taken off due to various issues resulting in lower domestic orders and this is reflected in the order inflows being stagnant in the domestic segments. Project investments in North America and Europe continue to be sluggish. Overall project costs are coming down due to competitive bids from EPCs in South Korea & China. This has caused all major EPCs trying to put valve package proposals under significant price pressures. In the Indian market, project activity – including in de-bottlenecking projects-in domestic oil & gas segment was low, resulting in lower off-take from both Projects and Distributors. On power sector, this has been a disappointing year with all major projects hitting road blocks. In addition, due to delays in payments, order execution was also delayed by many customers resulting in lower sales. Expecting to cater to the once promising Power Industry, many international valve manufacturers have set up shop in India. With this additional capacity among valve manufacturers in India the intensity of competition is likely to increase in power projects. For Welding Product business, the year gone by has been a difficult and challenging one in terms of the external operating business environment. Poor investment climate and high interest rates resulted in weak sentiments in the Capital goods sector which had direct impact on our equipment business. Tight liquidity conditions and low economic activity affected sales of consumables. With 129 continuing rise in prices of fuel, electricity and other input costs coupled with additional cost of shifting of operations during the year there was pressure on bottomline. For INP business, overall, there was lower demand through the year 2012-13 from key business segments led by the automobile industry though there was increased buying from government sectors such as railways and defence. The rupee depreciation in forex market also affected profitability, leading to higher cost of imports. All the SBUs in the MIP business have faced challenging business environment throughout the year. Significant Initiatives : CMB have expanded the company’s after-sales support capability through long-term full-maintenance contracts and site support agreements to improve machine uptime and capping operating costs. RPM took several initiatives in terms of product range expansion and customer base expansion and service offerings, significant among them is the development of high-end radial Truck & Bus Tyre building machines (first time in India), application of specialty coatings on critical parts, PVD on special materials to enhance life and functional improvements on the machines. Introduction of new products helped the unit to manage the downturn in the industry. Apart from newer sizes of presses, the Company was also successful in getting approvals of hydraulic press and Tyre building machines from a few Global Tyre majors based in Europe and USA, which is likely to open up opportunities in the Indian and International market in the year 2013-14. RPM successfully implemented Operational Excellence (OPEX) initiatives in the area of Supply Chain Management resulting in appreciable reductions in material cost as well as inventory levels apart from creating capacities for critical processes. A certification program in Tyre Machinery operation and maintenance has been started at the facility in Kancheepuram and has received good reviews from the couple of batches that have attended the program. This certification program is targeted towards engineering and maintenance personnel in the Tyre Industry. FBU established itself as the most preferred source to some of its key customers. FBU was awarded TN Government’s “GREEN AWARD” for environment friendly processes amidst participation across industries. FBU continues to maintain the standards and be a benchmark foundry in terms of safety and environment management. FBU also 130 has implemented successfully a number of initiatives aimed at cost reduction during the year. Valves Business Unit has expanded the approvals from key oil companies and Power customers in the international market. International network has been strengthened with senior personnel posted in key markets such as the Middle East and South Africa. A Global Valves Sales Head has now been positioned in Jebel-Ali. Market coverage of domestic channel business has been strengthened with a number of Market development activities and product promotions. Valves Business unit has been focusing on Oil & Gas in the international market, both downstream and upstream segments. Sustained oil & gas project activity in the Middle East and Asia Pacific provided good opportunity for valves. Long-term relationships with key end-users and EPCs in these regions were leveraged to enhance our market presence and exceed the order inflow targets for the year. New products addressing the upstream and tankage segments were well received in the international market. During the year a beginning was made in the International power segment with orders from major Power customers for power projects across the globe. INP business, over the last year successfully launched many new products in drilling, milling and turning in the market under ‘High IQ’ theme .These new introductions are expected to enhance the competitive position and build market share for the business. Outlook : The market demand for Hydraulic Excavators is expected to improve on account of the increase in spending in the urban infrastructure, roads, general construction sectors and spending by the Government on various infrastructure projects. Coal Sector will continue to be the main demand driver for the Mining Equipment Business. The projected Gap between domestic coal demand and supply of around 200 million tonnes during FY 2013-14 portends opportunity subject to political actions leading to investments. CMB is well placed to take advantage of these opportunities through supply of large size Mining Equipment both to the public and private coal producing companies. Environmental & land acquisition issues continue to be areas of concern and may cause near team difficulties in mining equipment demands translating to orders. Escalating cost of conventional energy, continued dependence on fuel imports and envisaged regulations on commitment to proportional use of renewable energy, makes it attractive for the growth of core segment – Wind Turbine Generators. A 30% growth over FY 2012-13 in terms of MW installation is expected in FY 2013-14. This will help FBU position itself as the premium supplier to the major WTG players. Major oil and gas sector investments are planned in Middle East, Australia and SE Asia. In India a large Petrochemical project is being set up offering good business prospects. NTPC’s expansion plans are on stream and offer a good opportunity for our power Valves. Similarly the proposed NPCIL expansion plans offer scope for specialty valves. of metal resources. The principal products and services comprise Maintenance & Repair (M&R) consumables, specification grade electrodes, flux-cored welding wires, wear plates/parts, welding and cutting equipment, Tero Cote Lab services etc. In the current year, EWAC completed expansion of its facilities at Ankleshwar consolidating all its manufacturing operations at one place. The year gone by has been a challenging one in terms of the external operating business environment. Poor investment climate and high interest rates resulted in weak sentiments in the capital goods sector which had direct impact on equipment and consumables business. For INP, the growth is expected to resume from second half of 2013-14 due to anticipated recovery in automotive and exports by key business segments and also better liquidity coming from lower interest rates. However, EWAC expects the situation to improve in the year 2013-14 and has planned major initiatives for addressing export markets and providing integrated solutions to customers in welding and cutting spheres. Overall, business outlook for 2013-14 continues to remain challenging for most businesses of MIP and performance improvement is expected with the turnaround in GDP, impetus in Infrastructure investments and increased government expenditure. Major Subsidiary and Associate Companies EWAC ALLOYS LIMITED (EWAC) : Subsidiary Company : EWAC is a market leader in the business of maintenance & repairs welding & welding solutions for conservation L&T KOBELCO MACHINERY PRIVATE LIMITED (LTKM) : Subsidiary Company : LTKM is a joint venture (JV) of Larsen & Toubro (L&T) and Kobe Steel Ltd, Japan to manufacture Internal Mixers and Twin Screw Roller-head Extruders for the tyre industry. This venture has been successfully complementing the business of L&T’s Rubber Processing Machinery Business Unit by providing world-class Internal Mixers and Twin Screw Extruders to the customers. Hydraulic tyre-curing press – part of L&T’s wide range, manufactured and supplied to tyre manufacturers globally. 131 During the year, LTKM had set up the state-of-the-art factory at Karai Village, Kanchipuram to manufacture Internal Mixers and Twin Screw Roller head Extruders for the tyre industry and commenced its commercial operations. LTKM also successfully completed the commercial production of Extruders during the year and delivered to customer in India and Italy/Russia. L&T-KOMATSU LIMITED (LTK) : Associate Company : LTK is a JV between L&T and Komatsu Asia Pacific Pte. Ltd., Singapore, a wholly owned subsidiary of Komatsu Limited, Japan. L&T-Komatsu Limited has been engaged in the manufacture of Hydraulic Excavators and other associated hydraulic components, marketed by L&T. The company was able to maintain its market share in its addressable premium market segment, but saw its overall share dropping due to shift in market demand towards low-priced non-premium excavators. AUDCO INDIA LIMITED (AIL) : Subsidiary Company : AIL is a 100% subsidiary of L&T. AIL is a leading manufacturer of Industrial Valves. AIL manufactures various types of valves such as Gate, Globe, Check, Trunnion Mounted Ball, Butterfly, catering to all major industries viz Refineries & Pipelines, Power, Offshore Platforms, Petro Chemicals, Chemicals, Fertilizers, etc. AIL Valves are approved by international Oil majors such as Shell, Chevron, EXXON, Aramco, PDO, ADCO, KOC which helps in participating in their worldwide projects. AIL also has a unique advantage of Indian Nuclear Industry approval. AIL products are distributed globally by L&T’s Valves Business Unit. L&T 9020 Wheel Loader-part of the wide range of machines for the construction and mining sector EWAC Alloys - a subsidiary of L&T - offers a wide range of welding alloys and processes that extend machine life and help in the conservation of resources. Valve testing in progress. L&T Komatsu PC 210 LC at work. 132 Integrated Engineering Services (IES) Knowledge City, Vadodara. The campus houses the global headquarters of Integrated Engineering Services. Overview : Integrated Engineering Services (IES) is today acknowledged as one of the emerging leaders in the Indian Engineering Research and Development (ER&D) service segment. The Zinnov 2012 Global Service Provider Ranking, (GSPR) has placed IES’s Industrial Products Domain in the Leadership Zone for the second time in a row. This is a true reflection of the commitment to be on the fast track of being the “BEST” in engineering outsourcing service industry. IES is head-quartered at Vadodara, India with design centers located in cities of Vadodara, Bengaluru, Chennai, Mysore and Mumbai with global footprints and offices in the US, Europe, Middle East and Asia Pacific. IES’s service offerings include product design, analysis, prototyping, testing, embedded system design, manufacturing engineering, plant engineering & construction management and asset information management using cutting-edge Computer Aided Design/Computer Aided Manufacturing/ Computer Aided Engineering technology in various domains. IES has supported innovation through co-authoring of over 70 patents. IES also has alliances and partnerships with AUTOSAR (Automotive Open System Architecture), National Instruments, Intel, GENIVI and maintains high quality and data security standards. IES was the first in the world which received ISO/IEC 27001 : 2005 certification for IT Security Management Systems. IES is an ISO 9001 : 2008 and a CMMI level 5 certified organization. 133 Business Environment : The year 2012-13 has seen outsourcing trends closely tied to how the world economy has rapidly changed. The financial uncertainty being created in some markets drove corporates to reposition themselves through new transformational initiatives. If the business climate continues to suffer, companies will look to outsourcing – particularly of non-core functions – as a means to save costs. On the other hand, if the economy improves and business needs increase, outsourcing remains attractive because it offers a way for companies to keep up with increased demand and workflow. Regardless of the economic outcome, market expects cost-cutting to remain a top priority for global companies for the indefinite future. As a result, engineering services industry will likely see vendor-managed services on the rise, as companies see the benefits and flexibility of using variable staffing models. Large outsourcing providers would create business opportunities in emerging economies, which may provide more onshore outsourcing options. Engineering Research & Development (ER&D) outsourcing to India has shown remarkable growth from $8.3Bn in 2009 to $15 Bn in 2012. Based on the economic conditions in Americas and Europe, analysts have revised growth projections for 2013 to 10% from 16%. Mega trends impacting the outsourcing industry are convergence of Technologies/Industries : • Products and Solutions with multiple functionalities are emerging especially in industries such as Consumer Electronics, Medical Devices, Automotive and Mobile Devices with cross-industry collaborations • Open standards driven innovation • Electronics and software emerging as a key value differentiator • Adoption of cloud computing, big data, and software driven infrastructure is opening new opportunities for cost savings and innovation across many industries including Telecom, Consumer, Healthcare, Utilities and Manufacturing Significant Initiatives : IES has taken significant initiatives towards overcoming the challenges posed by the market and to grow significantly in comparison with its peers. • Apart from expanding its global footprints, a key initiative for IES is focusing on global account management Significant investments in the solutioning space with emphasis on setting up Test Labs, Tear down studios • 134 • • and onboarding of solution architects & domain experts to build new service offerings and industry specific solutions that can be taken to the market To foster an innovative culture and to ensure inclusive growth, IES has invested in setting up of the Technology Solutions and Innovation center (TSIC). The Tech Panorama was an output of the TSIC which was conducted across all of IES’ locations to encourage employee participation and bring out the creativity and innovation within the organization To be best-in-class, IES has embarked on a journey of bringing in operational efficiencies and standardization and process consistency across the organization. Significant investments have been made in this space-the Project Management tool, CRM tool, Productivity improvement & financial systems are some of the initiatives that will be rolled out in the new fiscal year Majority of the revenue for IES is dependent on North America and Europe regions. The market conditions prevalent in these regions have high impact on the business. To minimize this risk as well as to focus on newer geographies, IES has increased its business focus on Rest of the World (ROW) and Asia-Pacific (APAC) markets. IES is also focusing on farming the current clientele and hiring local talent to meet client expectations. IES is actively working towards increasing its business share through outcome based model from Resourcing-based models. It is focusing more on Solution-based customer engagement, which helps partner with a customer in his NPD programs. The significant long term contracts won during the year are a testimony to these endeavors. Recruiting people of different skills, domains and experience is a major challenge for the ER&D service industry. IES has been able to minimize this to some extent by setting up a Engineering talent is drawn from India’s premier academic institutes. vertical oriented recruitment organization and by initiating various training and capability development programs to fulfill the ever changing customer needs. Being a service provider to all major industry segments, the projects executed by IES are varied in nature and require different kinds of project management (PM) techniques. In this regard, IES have initiated various training programs in collaboration with L&T Institute of Project Management and is also in the process of implementing“PULSE”-a Project Management Tool to monitor and control project performance parameters. Outlook : Global trends in the economy today motivate the people in general to invest in businesses which have been growing significantly over the years. Engineering Services is one such industry. IES added 40 new clients during the year and has been serving 35 fortune 500 companies. With the initiatives taken in 2012-13, actions planned in the next year and addition of new geographies, IES is confident of achieving impressive growth in 2013-14. 135 International revenue at 12198 crore doubled during the year 2012-13 over that of the previous year. The international revenue is mainly contributed by execution of airport, other infrastructure development projects, Oil & Gas EPC contracts in GCC countries and by growth in revenue of Integrated Engineering Services. Financial Review 2012-13 I. GROWTH AMIDST CHALLENGES A. L&T STANDALONE Braving challenging business conditions, the Company has registered impressive increase in order inflow, growth in the revenue and closed the year 2012-13 with strong order book and healthy balance sheet. The Company successfully secured new orders worth 88035 crore during the year 2012-13, registering a robust growth of 24.7% over the previous year. The order intake was notable against the backdrop of subdued investment climate, lower GDP growth and delays in policy decisions in India. Buildings and Factories, Power Transmission & Distribution, Transportation Infrastructure and Power EPC businesses contributed significantly to the order inflows during the year. Despite global uncertainties and stiff competition, the Company recorded a growth of 18% in the international order inflow over 2011-12 aided by focused efforts to develop the international markets for its offerings. The Company relies on its good execution capabilities to achieve revenue growth. Operating Cost Manufacturing, Construction and Operating expenses at 47952 crore for the year 2012-13 increased by 17%. These expenses mainly comprise cost of construction & other materials and subcontracting expenses. As compared to the previous year, these costs have increased, reflecting inflationary pressures and the mix of jobs under execution during the year 2012-13. The Order Book as at the year end stood at 153604 crore providing revenue visibility for the next few years. 49% of the order book represents orders received from the infrastructure sector. Revenue from Operations Gross revenue for the year 2012-13 at 61471 crore grew by 14.4% over the previous year. Certain businesses viz. Buildings and Factories, Transportation Infrastructure, Water and Solar projects registered good increase in the revenue on the back of healthy order pipeline. The sales of the product businesses, however, were impacted due to low industrial demand. 136 The Staff Expenses for the year 2012-13 at 4436 crore increased by 21% as compared to the previous year. There was a net addition of 5338 employees during the year, taking the Company’s manpower strength to 54092 as at March 31, 2013. Sales and administration expenses for 2012-13 at 2077 crore decreased to 3.4% of net sales revenue due to reversal of warranty/receivables provisions on successful close out of jobs and recovery of dues. Depreciation & Amortisation charge Depreciation and amortisation charge for the year 2012-13 at 818 crore increased by 17% over the previous year. Increase in the depreciation charge for the year reflects the impact of the depreciation on the additions made to the fixed assets. Other Income Other income for the year 2012-13 amounted to 1851 crore as against 1338 crore for the previous year. It includes profit of 219 crore on sale of certain surplus properties. Dividends from Group companies during the year 2012-13 amounted to 585 crore. The short term investments made in low risk securities yielded income at 575 crore for the year. The Company as a part of its portfolio management, divested its stake in L&T Plastics Machinery Limited at an exceptional gain of 214 crore. The Company paid compensation to employees pursuant to Voluntary Retirement Scheme (VRS) amounting to 38 crore. The exceptional gains, net of VRS expenses and on post-tax basis, amounted to 144 crore for the year 2012-13. Finance cost 982 crore The interest expenses for the year 2012-13 at were higher vis-à-vis 666 crore for the previous year. The increase is due to higher average borrowing incurred by the Company for financing the capex/working capital needs and investments in the Group companies. The loan portfolio of the Company comprises a blend of domestic and suitably hedged foreign currency loans. The average borrowing cost for the year 2012-13 was at 8.8% p.a., despite the elevated interest rate scenario and tight liquidity conditions. Profit after tax and EPS Besides exceptional gains (net of tax) of 144 crore earned during the year, the Company also earned an extraordinary gain (net of tax) of 72 crore. The said gain represents reversal of provision made for the diminution in the value of investment in Satyam Computer Services Limited and gain of 19 crore on sale of Medical business. over the previous year. Overall PAT including extraordinary and exceptional items, for the year was 4911 crore vis-à-vis 4457 crore for the year 2011-12, recording an increase of 10.2%. The Earnings per Share (EPS) including exceptional and extraordinary items, for the year 2012-13 at 79.99 showed an improvement of 9.7% over the previous year. Funds Employed and Returns The overall Funds Employed by the Company at 38219 crore as at March 31, 2013 increased by 2967 crore as compared to the year end position as on March 31, 2012. 1505 crore towards capital The Company incurred expenditure during the year. The major expenditure was incurred on acquisition of various plant and equipment for the businesses in Engineering and Construction segment. Gross Working capital as at March 31, 2013 was 43422 crore, representing 70.6% of sales vis-à-vis 72.9% for the previous year. Net customer receivables as at the end of the year stood at 22613 crore, which include 15532 crore of receivables contractually not yet due as on March 31, 2013. The balance customer receivables which were contractually due as on March 31, 2013 at 42 days’ sales have decreased by 1 day’s sales over the previous year. Net Working capital as at March 31, 2013 at 10255 crore, however, increased to 16.7% of sales due to relatively lower advances from customers. During the year, investments and loans to subsidiary and associate companies increased by 1593 crore. Major investments have been made in Power Development, Shipbuilding, Machinery and Industrial Products and Realty business. Excluding extraordinary and exceptional items, the Profit after Tax (PAT) at 4695 crore recorded a growth of 6.4% Balance sheet lightening and divestment of non-core businesses are among the key focus areas. During the year 137 2012-13, the Company has carried out certain divestments at remunerative prices with a view to free up the resources to meet the increasing requirement of funds for core as well as emerging businesses. Major divestitures during the year 2012-13 comprise sale of Medical Equipment business, divestment from Plastics Machinery business, sale of certain surplus properties and exit from its investment in the Satyam Computer Services Limited. Return on Net Worth (RONW) including the gains on divestitures for the year 2012-13 is at 17.3% as against 18.8% for the previous year. Return on Capital Employed (ROCE) for the year 2012-13 is at 14.6% as against 15.1% for the previous year. The relative reduction in the return on net worth is attributable to the investments through Group companies in the emerging businesses and expansion of facilities that are yet to start yielding returns. Economic Value Added (EVA) from normal operations for the year 2012-13 is at 219 crore. Increase in funds employed, contraction of margins and higher funding cost have contributed to a reduction in the EVA for 2012-13 as compared to the previous year. Liquidity & Gearing Tight liquidity position prevailed through the year 2012-13 increasing pressure on the funds employed. The Company strived to achieve the balance between generation of funds at economical rates and their deployment for meeting the increasing business requirements. Cash accruals from the operations were higher at 2115 crore as compared to the previous year mainly due to tight working capital management. Proceeds from sale of short term investments, divestitures, dividend and interest income aided cash generation during the year 2012-13. Apart from deployment of cash for capital expenditure and investments in the Group companies, the Company repaid some of its long term loans amounting to 2300 crore 138 during the year 2012-13. Consequently, there was net cash outflow of 411 crore for the year 2012-13. Cash Flow Statement Cash & bank balance at the start of year Cash generated by: Operating activities Other investing activities (Mainly dividend and interest income) Proceeds from sale of short term investments Divestment proceeds Cash used by: Capital expenditure Investments in Group companies Financing Activities (Mainly refund of loans, interest & dividend payments) Cash & bank balance at the end of year crore 2012-13 2011-12 1905 1730 2115 1728 1447 388 (1505) (1593) (2990) 1495 1082 1191 629 126 (1730) (2139) 1016 1905 With a significant increase in Net Worth and reduction in borrowings, the gross Debt Equity ratio improved to 0.30:1 as at March 31, 2013 from 0.39:1 as at March 31, 2012. Net of investment in liquid funds, the Company has a low net debt equity ratio of 0.07:1 as at March 31, 2013. B. L&T GROUP PERFORMANCE As at March 31, 2013, L&T Group consists of 139 subsidiaries, 14 associates and 14 joint venture companies. Apart from extension of the Company’s core businesses in the group companies, certain businesses such as Information Technology, Financial Services and Developmental Projects form part of the Group through investments in subsidiary and associate (S&A) companies. The Group Revenue at 75195 crore for the year 2012-13 registered a growth of 15.8% over the previous year. S&A companies operating in Financial Services, Information Technology, Hydrocarbon, Electrical & Electronics businesses have registered a healthy growth during the year 2012-13. The state of the art heavy forgings facilities at Hazira in Gujarat, ship yard & port facilities in Kattupalli, Tamil Nadu were successfully commissioned during the year 2012-13. The construction work of major developmental projects viz. Thermal Power Development plant at Rajpura in Punjab, Seawoods project in Navi Mumbai, Hyderabad Metro Rail project at Hyderabad progressed during the year. The Group exited from two loss making ventures in China and divested from certain real estate projects during the year 2012-13. The Group also divested its stake in Federal Bank Limited during the year. The Company has changed its accounting policy on goodwill on consolidation for more appropriate presentation of financial statements. As per the revised accounting policy, the goodwill will not be amortised but the same will be tested for impairment. Pursuant to the aforesaid policy change, the consolidated PAT for 2012-13 is higher by 526 crore. The overall Group Profit after tax at 5206 crore for 2012-13 registered a y-o-y increase of 10.9%. The Financial Services and Infotech businesses contributed significantly to the increase in the consolidated PAT. The investments in the road concessions forming part of developmental project business are incurring book losses, as the newly commissioned projects are yet to reach the optimum traffic levels. Moreover, the newly commissioned forgings facilities, ship yard and port with lower initial business volume but higher interest and depreciation charge,have adversely impacted the PAT at the Group level. The Earnings per Share (EPS) including exceptional and extraordinary items for the year 2012-13 at 84.79 showed an improvement of 10.4% over the previous year. C. SEGMENT WISE PERFORMANCE 1. Engineering & Construction Segment (E&C) 1.1. L&T Standalone: Order inflow of the segment during the year at 79766 crore registered a healthy growth of 25% over the previous year. Orders were mainly procured by Buildings & Factories, Transportation and Heavy Civil Infrastructure, and Power businesses. The segment revenue for the year at 54501 crore grew by 15% over the previous year, mainly driven by Buildings & Factories and Transportation Infrastructure businesses. This revenue growth was achieved despite of delays in obtaining clearances in a few projects under execution. International sales revenue during 2012-13 at 10124 crore doubled as compared to 4826 crore for 2011-12 propelled by execution progress on Hydrocarbon, Airport and Infrastructure jobs. 139 The composition of jobs under execution during 2012-13 was dominated by international jobs with relatively lower margins. The slow progress on certain jobs especially in the power, minerals & metals sectors impacted margins. The segment recorded EBITDA margin of 11.5% for 2012-13 vis-a-vis 12.7% earned in the previous year. 1.2. L&T Group: Group level order inflows in the E&C segment grew by 20.4% to 83484 crore for the year ended year driven by subsidiaries operating in Hydrocarbon, Buildings & Factories and Infrastructure sectors. The subsidiary companies operating in the Power, Power distribution and Transmission businesses however recorded decline in sales reflecting adverse business environment and slow pace of execution. The Group Segment recorded EBITDA Margin of 12.3% during the year ended March 31, 2013 vis-à-vis 13.1% in 2011-12. 2. Electrical & Electronics Segment (E&E) 2.1. L&T Standalone: The segment revenue of E&E business stood at 3644 crore for 2012-13, recording a marginal increase over the previous year. Intense competition and sluggish market conditions posed considerable challenges for the segment during the year. March 31, 2013. The growth was driven by subsidiary companies operating in the Heavy Engineering and Infrastructure sectors. At Group level, E&C segment recorded gross segment revenue of 58616 crore for the year ended March 31, 2013 registering 13.8% growth over the previous 140 The EBITDA margin for the year improved by 90 basis points to 13.6% mainly contributed by Electrical Standard Products and Electrical Systems and Equipment businesses. 2.2. L&T Group At Group level, E&E segment recorded gross segment revenue of 4846 crore for the year ended March 31, 2013 registering 12.6% growth over the previous year.The revenue growth at the group level was driven by the Tamco Group of subsidiary companies. The Group Segment recorded EBITDA Margin of 16.5% during the year ended March 31, 2013 vis-à-vis 13.3% in 2011-12. adversely impacted due to slow-down in manufacturing and mining sectors in India and divestment of stake from L&T Plastics Machinery Limited. Amongst the group companies, EWAC Alloys Limited registered a y-o-y increase of 9% in revenue at 400 crore. 3. Machinery & Industrial Products Segment (MIP) 3.1. L&T Standalone: The Segment revenue declined in the year 2012-13 to 2395 crore due to sluggish industrial demand. Revenue from International sales during 2012-13 at 533 crore, however, registered 21% growth over the previous year. The MIP Segment recorded an EBITDA Margin of 16.7% during the year 2012-13 as against 18.3% during the previous year. 4. IT & Technology Services (IT&TS) At Group level, IT&TS segment recorded segment gross revenue of 4999 crore for the year ended March 31, 2013 registering an impressive 25.7% growth over the previous year. Most of its revenue is from international customers. The EBITDA margin of the segment declined during 2012-13 largely due to lower sales volume and unfavorable sales mix. 3.2. L&T Group: MIP Group segment recorded gross segment revenue 3374 crore of for 2011-12. At the Group level the performance was 2880 crore, lower as compared to 141 Integrated Engineering Services business, a SBU at L&T showed a robust growth of 43.6% in revenue for 1253 crore. Enhanced business volumes 2012-13 at coupled with favourable foreign currency rates enabled the segment to post growth in its revenue. In USD terms, IES registered a healthy 24.9% growth in its revenue over the previous year. There was a net addition of 1097 employees by IES during 2012-13. L&T Infotech group recorded total income of 3862 crore during the year ended March 31, 2013, registering 22% growth over the previous year. There was a net addition of around 1270 employees by L&T Infotech Group during 2012-13. The segment recorded a healthy EBITDA margin of 25.1% during the year ended March 31, 2013 as against 21% during the previous year. 6. Development Projects (DP) Infrastructure The Company has diversified development business portfolio with a mix of projects under development across various sectors such as roads and bridges, ports and metro. The Company owns 22 concessions in transportation infrastructure development space under its fold out of which 18 are roads and bridges, 3 are ports and 1 is a metro project with total estimated project cost of 43711 crore. As on March 31, 2013, 3 projects are under development, 6 projects are under construction while 13 projects are completed and commissioned. In addition, the Company has 5 power projects under development/ implementation, of which 1 is thermal power project and 4 are hydel power projects with total estimated project cost of 21934 crore. DP Segment recorded gross segment revenue of 1406 crore for the year ended March 31, 2013, 5. Financial Services (FS) FS Segment continued its growth momentum during the year ended March 31, 2013 with an impressive 4080 crore. The 34.9% growth in its revenue at segment recorded net interest margin of 5.44% as against 5.51% in the previous year. The loan book of the segment at 33310 crore as at March 31, 2013, registered a healthy growth of 29.8% over the previous year with increased focus on project and long maturity term loans. The FS segment disbursed fresh loans and advances of 22995 crore during the year 2012-13, recording moderate growth of 6.1% over the previous year. Net Non-performing Assets (NPA) of the segment stood at 1.26% of loan assets as at March 31, 2013 as against 1.17% as on March 31, 2012. 142 registered a growth of 26.2% over the previous year. The segment recorded EBITDA of 979 crore for the year 2012-13 vis-à-vis 536 crore for the corresponding period of the previous year. II. RISK MANAGEMENT The Company’s primary activity of engineering and construction business has a lot of uncertainty and associated risks and opportunities. Enterprise Risk Management (ERM) is an important function for sustainability of the Company’s businesses. The ability to anticipate risks and respond effectively is critical for achieving the Company’s objectives and provide value to stakeholders. The slowdown in the economy has impacted the overall business prospects. The Company has been doing its part to improve the efficiency by undertaking quality jobs, reducing costs, improving productivity and managing the risks better. Increased competition for available opportunities in domestic markets has steered the Company to explore opportunities globally with focus on markets in the Middle East, South-East Asia, Africa and CIS countries. With this, the overall risk universe of the organisation has expanded. Country risk and client risk are the key risks to be evaluated in addition to execution challenges, political and local issues, changing regulatory laws, taxation and economic conditions of the country. The commercial terms are important for managing risks relating to the cash flow and performance liability. All projects undergo a well-structured pre-bid risk review process by risk management committee at business and corporate level with well-defined authorisation levels. The process involves a detailed assessment of risks and deliberation on mitigation measures by the risk management committee. In case of first time entry to a new country or geography, a country clearance process is carried out by evaluating the risks and opportunities. The Company strongly believes in ensuring certainty of the project outcome and follows a system of on-going projects risk review at regular intervals. Suitable strategies are discussed to mitigate the changing complexion of active risks and periodical execution risk reviews continue till the completion of the project. International large value projects are mainly characterised by technological challenges, interface and logistics issues, claims management, resource mobilisation and EHS compliance amongst others. The large size of the project, execution complexities, new technology, new geography at times make it necessary to bid in consortium with one or more partners on technology or construction front. The challenge of selecting a suitable partner for seamless execution needs due consideration on scope clarity, financial strength, commercial arrangement regarding non-performance or delay, revenue and profit sharing mechanism, liability sharing, legal & dispute settlement. On the domestic front, the Company is executing large power projects in which apart from technological challenges and tight delivery schedules, other important risk factors include client creditworthiness, financial closure, fuel linkage, power availability and environment clearances. Similarly, some of the critical risk factors in infrastructure and construction projects are land availability, various statutory and local body approvals and redressal mechanism on default of client obligations. The on-going slowdown witnessed over last one year in domestic economy and the challenging liquidity conditions, the Company has made suitable progress in the area of improving the receivables management. The global slump and unfavourable Government policies have impacted the performance of a few subsidiaries operating in areas of nuclear, forging and shipbuilding. The Company is actively engaging with its subsidiaries to address these concerns. While on one side the economic slowdown and severe competition has put pressure on margins, the ERM strategy of structured risk review process and the culture built over the years has helped in effective management of all risks and creation of value for the organisation. The risk management process also addresses long term strategic and operational planning, talent acquisition and retention, treasury management, financial reporting and controls, information technology and security, environment health and safety compliance, legal, taxation, communication, regulatory compliance and code of conduct for employees. The Company believes that risk is an integral part of every business and promotes a culture of building ability to anticipate and manage the risks effectively and converting them into opportunities. The Company’s risk management practices ensure that the Company accepts risks within defined parameters for which it is adequately compensated and thereby managing the risk portfolio of the organisation. The Audit Committee of the Board oversees the effectiveness of the risk management process. Every independent business segment has its risk management policy and procedure within the overall ERM framework of the Company. The process followed by the Company is in compliance with the International Risk Management Standard ISO 31000:2009. The Company is also a member of the Engineering & Construction Risk Institute (ECRI), USA and actively participates in training and knowledge sharing. Internal Controls The Company believes that a strong internal control mechanism is an important pillar of Corporate Governance. It has established internal control mechanism commensurate with the size and complexity of its business. Changing business structure and increased focus on international operations require continuous review of internal control efficacy in all business segments of the Company A corporate policy on internal control is in place which provides structured framework for identification,rectification, monitoring and reporting of internal control weaknesses in the Company. The Company regularly issues accounting guidelines to ensure uniformity and reliability of financial statements and also has financial authorisation guidelines covering purchasing, selling, authorising of expenses, etc. which is followed throughout the Company. Individual businesses of the Company have well documented standard operating procedures (SOPs) for various processes which they review from time to time for any changes required due to change in business needs. The Company has an internal audit department staffed adequately with qualified professionals in both technical and financial field. The department conducts audit of all 143 units of the Company and its major S&A companies at regular intervals. Based on observations of internal audit department, respective process owners carry out necessary process/system improvements and thereby strengthen overall control mechanism. All significant observations and corrective actions taken are reviewed by the Management and Audit Committee of the Board. There is also an internal control department in the Company which helps in formulation of internal control policy and guidelines for areas of weakness identified during internal audit or by process owners or by management. Apart from the internal mechanism to review and monitor internal controls, the Company also periodically engages independent professional firms to carry out review of the effectiveness of various control processes in businesses and support functions. Their observations and suggestions on good practices are reviewed by the Management and the Audit Committee of the Board for implementation and strengthening of the controls. III. FINANCIAL RISKS 1. Capital Structure, Liquidity and Interest Rate Risks The Company continues its policy of maintaining a conservative capital structure which has ensured that it retains the highest credit rating amidst an adverse economic environment. Low gearing levels also equip the Company with the ability to navigate business stresses on one hand and raise growth capital on the other. This policy also provides flexibility of fund-raising options for future, which is especially important in times of global economic volatility. The Company holds necessary levels of liquidity, judiciously deployed in short term investments in line with the corporate treasury policy. The Company constantly assesses liquidity levels in view of business, economic and capital market conditions and maintains access to the lowest cost means of sourcing liquidity including banking lines, trade finance and capital markets. The Company dynamically manages interest rate risks through a mix of fund-raising products, investment products and derivative products across maturity profiles and currencies within a robust risk management framework. 2. Foreign Exchange and Commodity Price Risks The various businesses of the Company are exposed to fluctuations in foreign exchange rates and commodity prices. Additionally, it has exposures to foreign currency denominated financial assets and liabilities. managed contractually by inclusion of price pass through or variations clauses, the Company’s loan portfolio is managed by an appropriate choice of loan currency and also by contracting appropriate treasury products, with a view to balancing risks and at the same time optimising the borrowing costs. Hedging actions are carried out under the framework of a Board approved Risk Management Policy. Financial risks in each business portfolio are measured and managed centrally within the Company. These risks are reviewed periodically and managed in line with the objective laid out in the Risk Management Policy of the Company. The process is also subject to an annual review by the Audit Committee. IV. INFORMATION TECHNOLOGY The Company views Information Technology (IT) as a key enabler for efficiency and providing competitive advantage. IT is accordingly managed through a robust governance process that covers value delivery, cost optimisation, technology management, support and education. The Information Technology systems in the Company form the backbone for carrying out all the business processes, for communication, collaboration and for providing information for effective decision making, monitoring and management control. The Information Systems at Company, implemented over many years are maintained systematically to enhance capability with new features and also to remain current on technology with upgrades. These systems are improving productivity and efficiency of all our operations. Over the years, the newer systems help us to connect with customers, provide better products and services and enable better execution of large projects. The Information Technology initiatives completed during the year 2012-13 have been a healthy mix of introduction of new technology, extending technology applications to new areas and businesses and maintenance and enhancements of existing systems. Mobile technology has been implemented for a number of applications. One of them was for the Company Board. An Application on iPad now enables all board papers to be made securely available on the iPads of all the directors with features for directors to make annotations before and during the meetings. The Board has thus become paperless and the board members have access to the required information while they are on the move thus increasing their efficiency. The Secretarial Department’s efficiency has also been increased because the processes of printing, compiling and couriering the papers have been eliminated. While the business related financial risks,especially involving commodity prices are to a reasonable extent, To improve efficiencies in procurement of material and services and to enable access to new suppliers and new markets, 144 an advanced sourcing system has been implemented and integrated with the ERP and is proving to be very beneficial. A state of the art Project Management Center system has been established that brings together project completion information, a live visual status and communication with project team all in a single instance to facilitate better monitoring and review of projects by senior management. On the manufacturing side, a Product Lifecycle Management system has been implemented to facilitate new product introduction and to tighten the integration between design, procurement and manufacturing processes. An innovation portal was launched to spur innovation, tracking ideas from generation through the funnel to fruition. Solutions for increased collaboration and knowledge management are finding more traction with users. The popularity of our eLearning solutions is increasing with more users using the courses thereat. While every business has been equipped with an ERP solution, the year saw many enhancements, standardisations, roll outs of the ERPs to overseas and new locations thereby enabling seamless workflows between national and international sites. IT Infrastructure is being continuously enhanced and improved with the commissioning of a new data center, new computer and storage solutions, increased bandwidth, video conferencing and telepresence systems for communications. IT Risk Management is addressed holistically covering all aspects of Information Security and Business Continuity Planning. Many of the IT centers have been certified under the ISO 27001 standard after due implementation of all the processes. V. CORPORATE SOCIAL RESPONSIBILITY The sustainability journey of the Company has been rewarding with recognition at the national as well as global levels. The Company was ranked as the 4th Greenest Company in the industrial segment in the World by Newsweek Magazine. The Company has also been included in Dow-Jones Sustainability Index – 2012 (emerging markets) and ranked as the sector leader in construction & material section. Social responsibility at the Company is born out of heightened social consciousness. The Company and the individual L&T-ite have always considered themselves as integral parts of the larger social mosaic. The Company identifies growing aspirations of communities, eagerly participates in the collaborative quest for answers to society’s myriad problems and ensures that its actions and operations do not impinge on the collective good. responsibility’ entered the public lexicon. The Company disclosed environmental, social and economic performance based on GRI framework in 2008, and since then have been publishing the Sustainability Report on an annual basis. A robust sustainability structure, commitment from top management and innovation at the core gives strength to sustainability reporting. All sustainability reports are ‘GRI Checked Application Level A+’ signifying the highest levels of disclosures. After successful completion of first short term sustainability targets (2009-12), the Company released its Sustainability Roadmap for the period 2012-15. The roadmap emphasises on energy conservation & GHG mitigation through innovation, inducting a ‘safety culture’ and actively propagating the concepts of water conservation, material management and enhancing the health index of the organisation. The Company believes that focused activities will lead to a sustained impact. The Company has therefore enunciated three distinct ‘Thrust Areas’. These are:  Mother & child   Education Skill building Company’s strategies are in harmony with National Action Plan on Climate Change released by Government of India. Some of the highlights from the Company’s sustainability journey are carbon sequestration study at key campuses, large scale tree plantation across manufacturing units and project locations, increasing energy conservation by more than 15% y-o-y and developing a talent pool of energy auditors. L&T’s green product portfolio identified from existing businesses helps customers to reduce their carbon footprint during the operations and help them to move towards low carbon growth economy. Company’s water conservation initiatives are not only limited to reducing water consumption at its manufacturing units but also creating alternative water source to communities by creating water bodies (check dams) in tribal areas. In addition to 18 campuses which became ‘Zero wastewater discharge units’, the Company’s Powai Campus at Mumbai achieved water neutral status. L&T Public Charitable Trust completed construction of the 100th check dam in the tribal belt of Talasari in Thane district, Maharashtra. The Company responds positively to emerging societal expectations and helps to catalyse the harmonised growth of society. Programs undertaken have grown in terms of reach across Company’s locations and affirmative progress has been made by strengthening the interventions in education, health and skill building. There has been no radical change in the way the Company expresses the social concern after the concept of ‘mandated Many seemingly complex social problems have down-to- earth solutions - but these solutions need to be found, and 145 then implemented. The Company stepped in by augmenting sanitation facilities in schools. It was the first step in a chain reaction to improve education standards and reduce gender disparity. More girl children have chosen to continue their studies and education has received a boost. The spread of Company’s community health care centers was further widened with the addition of two new health centers at Chennai and Coimbatore. Several health camps and outreach programs were carried out in locations and project sites across India in collaboration with local NGO’s and hospitals, benefitting larger sections of society. The skill building activities for rural and urban youth under the Construction Skills Training Institutes covers 8 locations and reach out to an increasing number of beneficiaries. The model is being further scaled-up through partnerships with ITI’s and NGO’s to extend training closer to rural population. Other initiatives taken up include vocational training for computer education, beautician and nursing assistant courses. Training is also provided to empower self-help groups of underprivileged women for income generation opportunities. Through Working on Wellness (WoW) initiatives, the Company is working towards enhancing the employee well-being by conducting programs such as power yoga, stress management, health talks and preventive health care. 146 Independent Auditors’ Report To the Members of Larsen & Toubro Limited Report on the financial statements We have audited the accompanying financial statements of Larsen & Toubro Limited (“the Company”), which comprise the balance sheet as at March 31, 2013, and the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) (b) (c) Report on other legal and regulatory requirements 1. in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2013; in the case of the statement of profit and loss, of the profit for the year ended on that date; and in the case of the cash flow statement, of the cash flows for the year ended on that date. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the central government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. As required by section 227(3) of the Act, 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 purpose of our 2. b. c. d. e. 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, statement of profit and loss and cash flow statement dealt with by this Report are in agreement with the books of account; in our opinion, the balance sheet, statement of profit and loss, and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the board of directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. Mumbai, May 22, 2013 Annexure to the Auditors’ report (Referred to in paragraph (1) of our report of even date) SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 1 The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets. (a) (b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification. The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status. (c) 147 2 3 4 5 6 7 8 9 (c) (a) (a) (b) (b) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable. According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the Order are not applicable. 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, fixed 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. According to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956; accordingly paragraph 4(v) (b) of the Order is not applicable. 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 fixed deposits other than unclaimed matured deposits. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business. 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 all its manufacturing and construction activities and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at March 31, 2013 for a period of more than six months from the date they became payable except for tax deducted at source on works contract aggregating to 0.02 crore which has since been paid. 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, customs duty and income tax as at March 31, 2013 which have not been deposited on account of a dispute pending are as under: (b) Name of the statute Nature of the disputed dues Amount crore* Period to which the amount relates Forum where disputes are pending Commercial Tax Officer Non-submission of forms and other matters 0.87 1991-92, 1992-93, 1996-97 to 2000-01, 2005-06 to Non-submission of forms, dispute related to sales-in-transit, rejection of exemption certificates, rate of tax dispute and other matters Non-submission of forms, additional demand for pending forms, rate of tax dispute, disallowance of branch transfer, sub-contractor’s turnover, interest demand on road permit, disallowance of exemptions on sale of assets, transit sale and other matters Non-submission of forms, disallowance of transit sales, high seas sales, classification dispute and other matters Non-submission of forms and disallowance of exemption certificates Non-submission of forms, dispute related to sales-in-transit and other matters Non-submission of forms, labour and service charges, sub- contractors turnover, pumping and freight charges, inter- state sales turnover, arbitrary demand raised, TDS disallowed, rate dispute, classification dispute, disallowance of works contract tax and other matters Inter-state sales, classification dispute and disallowance of deemed sales in course of imports and taxability of sub- contractors turnover Taxability of sub-contractor turnover, rate of tax for declared goods, inter-state sales, non-submission of forms and high seas sales 2008-09 6.10 1991-92, 1992-93, 1996-97, 1997-98, 1999-00 to 2008-09, 2010-11 and 2011-12 Assistant Commissioner (Appeals) 956.03 1989-90, 1991-92 to 2011-12 Deputy Commissioner (Appeals) 143.19 1993-94, 1996-97, 1997-98, 2001-02 to 2009-10 Joint Commissioner (Appeals) 12.81 2001-02, 2003-04 to 2008-09, 2010-11 and 2011-12 Additional Commissioner 0.99 1994-95, 2001-02, 2002-03 and 2005-06 to 2008-09 Commissioner (Appeals) (Appeals) 290.62 1987-88, 1989-90 to 2011-12 Sales Tax Tribunal 298.38 1986-87, 1987-88, 1998-99 to 2011-12 High Court 197.89 1991-92, 1995-96, 1997-98 and 1999-00 to 2006-07 Supreme Court Central Sales Tax Act, Local Sales Tax Acts and Works Contract Tax Act 148 Name of the statute Nature of the disputed dues The Central Excise Act, 1944, Service Tax under Finance Act, 1994 and Customs Act, 1962 Demand of excise duty on steel price variation claims, changes in assessable value due to reduction in billing schedule quantity and demand on fabrication of tanks, platforms and ladders Interest on excise duty demand for duty paid on trading registration in place of manufacturing registration and demand for custom duty on software Demand of excise duty on site fabricated steel structure, export rebate disallowance, valuation dispute, excise duty on concrete mix made at site, non-maintenance of proper records, demand of service tax on various services and other matters Dispute on site mix concrete and PSC grinder Demand of service tax on lumpsum turnkey jobs and other matters 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 and service tax on commercial construction service Amount crore* Period to which the amount relates 0.86 1989-90 to 2011-12 Forum where disputes are pending Additional Commissioner 0.02 2006-07 and 2012-13 Commissioner (Appeals) 131.76 1991-92, 2001-02, 2003-04 to 2009-10, and 2011-12 CESTAT 0.27 1997-98 220.02 2003-04 to 2011-12 Supreme Court Commissioner (Appeals) 151.59 1991-92, 2001-02, 2003-04 to 2009-10 and 2011-12 CESTAT 7.00 2003-04, 2006-07 to 2008-09 High Court Income-tax Act, 1961 Dispute regarding tax not deducted on bank guarantee 2.20 2010-11 and 2011-12 Assessing Officer charges, interest charges and purchase of software Dispute regarding tax deducted at source at lower rate on maintenance charges Difference in rate of tax deducted at source 0.03 2005-06 2.23 2007-08 and 2008-09 Commissioner (Appeals) Director of Income Tax (International Taxation) *Net of pre-deposit paid in getting the stay/appeal admitted 10 11 12 13 14 15 16 17 18 19 20 21 The Company has no accumulated losses as at March 31, 2013 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date. 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. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company. 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 financial institutions are not prima facie prejudicial to the interests of the Company. In our opinion and according to the information and explanations given to us, on an overall basis the term loans have been applied for the purposes for which they were obtained. 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. 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. 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. The Company has not raised any money by public issues during the year. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management. Mumbai, May 22, 2013 SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 149 Balance Sheet as at March 31, 2013 EQUITY AND LIABILITIES: Shareholders’ Funds Share capital Reserves and surplus Non- current liabilities Long term borrowings Deferred tax liabilities (net) Other long term liabilities Long term provisions Current liabilities Short term borrowings Current maturities of long term borrowings Trade payables Other current liabilities Short term provisions TOTAL ASSETS: Non current assets Fixed Assets Tangible assets Intangible assets Capital-work-in-progress Intangible assets under development Non current investments Long term loans and advances Cash and bank balances Other non-current assets Current assets Current investments Inventories Trade receivables Cash and bank balances Short term loans and advances Other current assets TOTAL CONTINGENT LIABILITIES COMMITMENTS (Capital and others) OTHER NOTES FORMING PART OF THE ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES As at 31-3-2013 As at 31-3-2012 Note crore crore crore crore A B 123.08 29019.64 122.48 25100.54 29142.72 25223.02 7271.03 242.22 502.03 285.92 734.53 828.65 16730.65 14352.65 2083.81 8219.00 86.14 491.05 105.79 5580.69 2064.18 22613.01 1455.66 5498.84 11790.66 5330.06 133.01 376.35 275.05 8301.20 6114.47 2936.72 1628.99 15607.76 14009.40 2112.04 34730.29 72174.21 36294.91 67632.40 8901.98 10522.70 3664.17 39.02 43.30 8363.66 9084.71 4055.97 127.14 14.07 7528.00 76.98 697.53 61.15 6787.19 1776.62 18716.94 1778.12 5005.62 11922.36 49003.04 72174.21 45986.85 67632.40 C(I) Q(13) C(II) C(III) D(I) D(II) D(III) D(IV) D(V) E(I) E(II) E(I) E(II) F G(I) G(II) G(III) H(I) H(II) H(III) H(IV) H(V) H(VI) I J Q R As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 150 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER Directors Mumbai, May 22, 2013 N. HARIHARAN Company Secretary Statement of Profit and Loss for the year ended March 31, 2013 2012-13 Note crore crore 2011-12 crore crore REVENUE: Revenue from operations (gross) Less: Excise duty Revenue from operations (net) Other income Total revenue EXPENSES: Manufacturing, construction and operating expenses: Cost of raw materials, components consumed Construction materials consumed Purchase of stock-in-trade Stores, spares and tools consumed Sub-contracting charges Changes in inventories of finished goods, work-in-progress and stock-in-trade Other manufacturing, construction and operating expenses Employee benefits expense Sales, administration and other expenses Finance costs Depreciation, amortisation and obsolescence Less: Transfer from revaluation reserve Less: Overheads charged to fixed assets Total expenses Profit before exceptional and extraordinary items and tax Exceptional items Profit before extraordinary items and tax Extraordinary items Profit before tax Tax expenses Current tax Deferred tax Profit after tax carried to Balance Sheet Basic earnings per equity share before extraordinary items ( ) Diluted earnings per equity share before extraordinary items ( ) Basic earnings per equity share after extraordinary items ( ) Diluted earnings per equity share after extraordinary items ( ) Face value per equity share ( ) OTHER NOTES FORMING PART OF ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES } K L M N O P Q(3)(a) Q(3)(b) Q(5) Q(13) Q(12) Q R 61470.86 597.60 53737.78 567.26 60873.26 1850.90 62724.16 53170.52 1338.28 54508.80 10892.29 14581.12 2063.23 2288.10 14472.06 (1132.03) 4787.63 819.42 0.95 1664.71 135.79 47952.40 4436.32 2091.08 982.40 818.47 56280.67 13.60 56267.07 6457.09 175.95 6633.04 78.11 6711.15 1800.50 4910.65 78.82 78.18 79.99 79.33 2.00 10092.12 12527.42 2369.40 1622.83 10747.27 (539.77) 4203.12 700.45 0.99 1814.13 39.70 41022.39 3666.09 2218.18 666.10 699.46 48272.22 18.75 48253.47 6255.33 55.00 6310.33 – 6310.33 1853.83 4456.50 72.92 72.23 72.92 72.23 2.00 As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 N. HARIHARAN Company Secretary A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER Directors Mumbai, May 22, 2013 151 Cash Flow Statement for the year ended March 31, 2013 A. Cash flow from operating activities: Profit before tax (excluding extraordinary and exceptional items) Adjustments for: Dividend received Depreciation, amortisation and obsolescence Exchange difference on items grouped under financing/investing activities Expenditure on voluntary retirement scheme Interest expense Interest income Profit on sale of fixed assets (net) Profit on sale of investments (net) Employee stock option-discount forming part of staff expenses Provision/(reversal) for diminution in value of investments Operating profit before working capital changes Adjustments for: (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories Increase/(decrease) in trade payables and customer advances Cash (used in)/generated from operations Direct taxes refund/(paid)-net Net cash (used in)/from operating activities Cash flow from investing activities: Purchase of fixed assets Sale of fixed assets (including advance received) 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) Deposits/Loans (given)/repaid (net)-subsidiaries, associates, joint venture companies and third parties (net) Advance towards equity commitment (net) Interest received Dividend received from subsidiaries Dividend received from other investments Cash (used in)/from investing activities (before extraordinary items) Extraordinary item Cash received (net of expenses) on sale of Medical Business Net cash (used in)/from investing activities (after extraordinary items) Cash flow from financing activities: Proceeds from fresh issue of share capital Proceeds from long term borrowings Repayment of long term borrowings (Repayments)/Proceeds from other borrowings (net) Dividends paid Additional tax on dividend Interest paid (including cash flows from interest rate swaps) Net cash (used in)/from financing activities B. C. Net (decrease)/increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 2012-13 crore 6457.09 (589.66 ) 818.47 347.89 (38.34 ) 982.40 (532.69 ) (226.29 ) (248.92 ) 85.41 (17.24 ) 7038.12 (4118.15 ) (302.81 ) 1365.37 3982.53 (1867.78 ) 2114.75 (1505.14 ) 313.10 (907.74 ) 388.21 (35.99 ) 218.26 1446.55 57.79 (743.00 ) 590.87 583.21 6.45 412.57 52.36 464.93 163.14 3494.96 (2300.14 ) (2377.22 ) (1,012.79 ) (101.82 ) (856.39 ) (2990.26 ) (410.58 ) 1905.26 1494.68 2011-12 crore 6255.33 (464.19 ) 699.46 172.51 - 666.10 (568.94 ) (13.24 ) (122.64 ) 156.73 (6.44 ) 6774.68 (7300.21 ) (214.80 ) 4007.28 3266.95 (2185.37 ) 1081.58 (1729.50 ) 132.36 (1753.23 ) 126.40 – 17.94 629.03 512.58 (898.74 ) 576.69 385.13 79.06 (1922.28 ) – (1922.28 ) 192.63 1979.70 (1543.10 ) 1950.33 (886.19 ) (113.36 ) (564.40 ) 1015.61 174.91 1730.35 1905.26 Notes: 1. Cash Flow Statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3: “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. Purchase of fixed assets includes movement of capital work-in-progress during the year. 2. 3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised loss of 1.68 crore (previous year : unrealised loss of 0.76 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 G(II)(a)]. 4. 5. Cash and cash equivalents are reflected in the Balance Sheet as follows: (a) Cash and cash equivalents disclosed under current assets [Note H(IV)] (b) Cash and cash equivalents disclosed under non-current assets [Note G(II)] Total cash and cash equivalents as per Cash Flow Statement 6. Previous year’s figures have been regrouped/reclassified wherever applicable. 2012-13 crore 1455.66 39.02 1494.68 2011-12 crore 1778.12 127.14 1905.26 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director S. RAJGOPAL N. MOHAN RAJ M. DAMODARAN R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director M. M. CHITALE A. K. JAIN SUSHOBHAN SARKER N. HARIHARAN Company Secretary Directors Mumbai, May 22, 2013 As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 152 Notes forming part of the Accounts NOTE [A] Share capital A(I) Share capital authorised, issued, subscribed and paid up: Particulars Authorised: Equity shares of 2 each Issued, subscribed and fully paid up: Equity shares of 2 each As at 31-3-2013 As at 31-3-2012 Number of shares crore Number of shares crore 1,62,50,00,000 325.00 1,62,50,00,000 325.00 61,53,85,981 123.08 61,23,98,899 122.48 A(II) Reconciliation of the number of equity shares and share capital: Particulars As at 31-3-2013 As at 31-3-2012 Number of shares crore Number of shares crore Issued, subscribed and fully paid up equity shares outstanding at the beginning of the year 61,23,98,899 122.48 60,88,52,126 121.77 Add: Shares issued on exercise of employee stock options during the year 29,87,082 0.60 35,46,773 0.71 Issued, subscribed and fully paid up equity shares outstanding at the end of the year 61,53,85,981 123.08 61,23,98,899 122.48 A(III) Terms/rights attached to equity shares: The Company has only one class of share capital, i.e. equity shares having face value of 2 per share. Each holder of equity share is entitled to one vote per share. A(IV) Shareholder holding more than 5% of equity shares as at the end of the year: Name of the shareholder Life Insurance Corporation of India L&T Employees Welfare Foundation Administrator of the Specified Undertaking of the Unit Trust of India As at 31-3-2013 As at 31-3-2012 Number of shares 10,12,52,038 7,44,04,116 Shareholding % 16.45 12.09 Number of shares 11,04,05,734 7,44,04,116 Shareholding % 18.03 12.15 5,06,17,308 8.23 5,05,72,216 8.26 A(V) Shares reserved for issue under 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 As at 31-3-2013 As at 31-3-2012 Number of equity shares to be issued as fully paid 87,45,451 @ crore (At face value) Number of equity shares to be issued as fully paid 1.75 * 1,14,28,854 @ crore (At face value) 2.29 * convertible bonds (FCCB) ## 49,07,243 0.98 ** 49,07,243 0.98 ** The equity shares will be issued at a premium of 491.96 crore (previous year: 640.32 crore) * ** The equity shares will be issued at a premium of 935.42 crore (previous year: 935.42 crore) on the exercise of options by the bond holders # Note A(VIII) for terms of employee stock option schemes ## Note C(I)(b) for terms of foreign currency convertible bonds @ The number of options have been adjusted consequent to bonus issue wherever applicable 153 Notes forming part of the Accounts (contd.) A(VI) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2013 are 29,25,92,054 (previous period of five years ended March 31, 2012: 29,25,92,054 shares) A(VII) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding five years ended March 31, 2013 – Nil (previous period of five years ended March 31, 2012: Nil) A(VIII) Stock option schemes a) Terms: i. 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 fulfillment of certain conditions. ii. Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. Management has discretion to modify the exercise period. b) The details of the grants under the aforesaid schemes under various series are summarised below: Sr. No. Series reference 1 Grant price - 2 Grant dates 3 Vesting commences on 4 Options granted and outstanding at the beginning of the year 5 Options lapsed during the year 6 Options granted during the year 7 Options exercised during the year 8 Options granted and outstanding 2000 2002 (A) 2002 (B) 2003 (A) 2003(B) 2006 2006(A) 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 3.50 3.50 3.50 3.50 3.50 3.50 17.50 17.50 17.50 17.50 601.00 601.00 601.00 601.00 1-6-2000 1-6-2001 19-4-2002 19-4-2003 19-4-2002 23-5-2003 onwards 23-5-2003 onwards 1-9-2006 onwards 1-7-2007 onwards 19-4-2003 23-5-2004 onwards 23-5-2004 onwards 1-9-2007 onwards 1-7-2008 onwards 16800 16800 21500 21500 39700 39700 31452 31452 647302 932880 2026751 3974443 8645349 8936534 – – – – – – – – – – – – – – – – – – – – – – – – 62150 56711 42513 89849 781908 817452 118000 118400 – – 1072250 1867930 267950 347267 1072770 1857843 1646362 1341663 at the end of the year 16800 16800 21500 21500 39700 39700 31452 31452 435202 647302 911468 2026751 7289329 8645349 of which – Options vested 16800 16800 21500 21500 39700 39700 31452 31452 109802 104202 911468 2011951 2135578 1751546 Options yet to vest – – – – – – – – 325400 543100 - 14800 5153751 6893803 9 Weighted average remaining contractual life of options (in years) Nil Nil Nil Nil Nil Nil Nil Nil 5.12 4.87 1.51 1.51 4.39 4.85 c) The number and weighted average exercise price of stock options for the following group of options are as follows: Particulars (i) Options granted and outstanding at the beginning of the year (ii) Options granted during the year (iii) Options allotted during the year (iv) Options lapsed during the year (v) Options granted and outstanding at the end of the year (vi) Options exercisable at the end of the period out of (v) 2012-13 2011-12 No. of stock options 1,14,28,854 11,90,250 29,87,082 8,86,571 87,45,451 Weighted average exercise price ( ) 562.27 543.15 548.66 560.10 564.54 No. of stock options 1,39,53,309 19,86,330 35,46,773 9,64,012 1,14,28,854 Weighted average exercise price ( ) 557.33 566.22 543.87 566.67 562.27 supra 32,66,300 561.50 39,77,151 569.38 154 Notes forming part of the Accounts (contd.) d) Weighted average share price at the date of exercise for stock options exercised during the period is 1452.14 (previous year: 1540.11) per share. e) (i) In respect of stock options granted pursuant to the Company’s 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 over the vesting period. (ii) Expense on Employee Stock Option Schemes debited to the Statement of Profit and Loss during 2012-13 is 85.41 crore (previous year: 156.73 crore) net of recoveries of 6.18 crore (previous year: 10.52 crore) from its group companies towards the stock options granted to deputed employees, pursuant to the employee stock option schemes. (Note N). The entire amount pertains to equity-settled employee share-based payment plans. f) During the year, the Company has recovered 12.44 crore (previous year: 31.51 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes. g) Had fair value method been adopted for expensing the compensation arising from employee share-based payment plans: a. The employee compensation charge debited to the Statement of Profit and Loss for the year 2012-13 would have been higher by 29.85 crore (previous year: 25.99 crore) [excluding 2.30 crore (previous year: 4.79 crore) on account of grants to employees of subsidiary companies] b. Basic EPS before extraordinary items would have decreased from 78.82 per share to 78.33 per share c. Basic EPS after extraordinary items would have decreased from 79.99 per share to 79.50 per share d. Diluted EPS before extraordinary items would have decreased from 78.18 per share to 77.70 per share e. Diluted EPS after extraordinary items would have decreased from 79.33 per share to 78.85 per share h) Weighted average fair values of options granted during the year is 909.35 (previous year: 745.94) per option i) The fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows: Sr. no. Particulars (i) Weighted average risk-free interest rate (ii) Weighted average expected life of options (iii) Weighted average expected volatility 2012-13 2011-12 8.05% 4.26 years 39.38% 8.28% 4.33 years 41.09% (iv) Weighted average expected dividends over the life of the option 70.24 per option 62.84 per option (v) Weighted average share price 1317.81 per option 1146.53 per option (vi) Weighted average exercise price 543.15 per share 566.22 per share (vii) Method used to determine expected volatility Expected volatility is based on the historical volatility of the Company’s share price applicable to the total expected life of each option. j) The balance in share option outstanding account as on March 31, 2013 is 393.96 crore (net) (previous year: 431.94 crore), including 154.32 crore (previous year: 134.00 crore) for which the options have been vested to employees as on March 31, 2013. A(IX) The Directors recommend payment of final dividend of 18.50 per equity share of 2 each on the number of shares outstanding as on the record date. Provision for final dividend has been made in the books of account for 61,53,85,981 equity shares outstanding as at March 31, 2013 amounting to 1138.47 crore. 155 Notes forming part of the Accounts (contd.) NOTE [B] Reserves and surplus Particulars Capital reserve Securities premium account: [Note Q(5)(b)] As per last Balance Sheet Addition during the year Less: Share/bond issue expenses (net of tax) Reversal of recoveries credited in previous years Debenture redemption reserve: As per last Balance Sheet Add: Transferred from Surplus Statement of Profit and Loss Less: Transferred to general reserve Revaluation reserve: As per last Balance Sheet Less: Transferred to Statement of Profit and Loss Share options outstanding account: Employee stock options outstanding: As per last Balance Sheet Addition during the year Deduction during the year Deferred employee compensation expense: As per last Balance Sheet Addition during the year Deduction during the year Hedging reserve (net of tax): [Note Q(13)] As per last Balance Sheet Addition/(deduction) during the year (net) General reserve: As at 31-3-2013 As at 31-3-2012 crore 7206.35 309.05 7515.40 0.57 2.72 118.01 50.25 – 21.14 0.95 709.00 92.20 215.31 (277.06) (92.20) 177.33 (301.53) (31.34) crore 10.52 crore crore 10.52 6879.37 327.31 7206.68 0.33 – 7512.11 7206.35 136.51 44.00 62.50 168.26 118.01 22.13 0.99 20.19 21.14 805.82 115.27 212.09 585.89 709.00 (437.51) (115.27) 275.72 (191.93) (277.06) 52.75 (354.28) (332.87) (301.53) As per last Balance Sheet Add: Transferred from Surplus Statement of Profit and Loss Add: Transferred from debenture redemption reserve 17461.72 3500.00 – 14149.22 3250.00 62.50 Carried forward 156 20961.72 28733.89 17461.72 24948.15 Notes forming part of the Accounts (contd.) NOTE [B] Reserves and surplus (contd.) Particulars Brought forward Surplus Statement of Profit and Loss As per last Balance Sheet Profit for the year Less: Dividends paid for previous year Additional tax on dividend paid for previous year Transfer to general reserve Transfer to debenture redemption reserve Proposed dividend [Note A (IX)] Additional tax on dividend As at 31-3-2013 As at 31-3-2012 crore crore 28733.89 crore crore 24948.15 152.39 4910.65 5063.04 2.33 0.38 3500.00 50.25 1138.47 85.86 4777.29 105.68 4456.50 4562.18 3.35 0.54 3250.00 44.00 1010.46 101.44 4409.79 152.39 25100.54 285.75 29019.64 NOTE [C(I)] Long term borrowings Particulars Note Secured Unsecured Total * Secured Unsecured Total * As at 31-3-2013 As at 31-3-2012 Redeemable non-convertible fixed rate debentures 3.50% Foreign currency convertible bonds Term loans from banks Sales tax deferment loan Long term maturities of finance lease obligations [Note Q(11)(ii)(b)] C(I)(a) C(I)(b) C(I)(c) C(I)(d) C(I)(e) crore 900.00 – – – crore 1050.00 1085.70 4227.08 8.25 crore 1950.00 1085.70 4227.08 8.25 crore 900.00 – – – crore 800.00 1017.50 2557.85 15.54 crore 1700.00 1017.50 2557.85 15.54 – – – – 39.17 39.17 900.00 6371.03 7271.03 900.00 4430.06 5330.06 *Loans guaranteed by directors Nil (previous year: Nil) C(I)(a) i) Secured redeemable non-convertible fixed rate debentures (privately placed): Date of allotment 31-3-2013 crore 31-3-2012 crore Interest for the year 2012-13 Terms of repayment for debentures outstanding as on 31-3-2013 Face value per debenture ( ) 10,00,000 Sr. no. 1 2 January 5, 2009 400 400 9.15% p.a. payable annually 10,00,000 December 5, 2008 500 500 11.45% p.a. payable annually Redeemable at face value at the end of 10th year from the date of allotment. 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. Total 900 900 Security: The debentures are secured by way of a first charge having pari passu rights on the immovable property at certain locations and part of a movable property of a business division, both present and future. 157 Notes forming part of the Accounts (contd.) C(I)(a) (contd.) ii) Unsecured redeemable non-convertible fixed rate debentures (privately placed): Sr. no. Face value per debenture ( ) Date of allotment 31-3-2013 crore 31-3-2012 crore Interest for the year 2012-13 1 2 3 4 10,00,000 10,00,000 10,00,000 10,00,000 April 10, 2012 May 26, 2010 May 11, 2010 April 13, 2010 250 300 300 200 – 9.75% p.a. payable annually 300 8.95% p.a. payable annually 300 9.15% p.a. payable annually 200 8.80% p.a. payable annually Terms of repayment for debentures outstanding as on 31-3-2013 Redeemable at face value at the end of 10th year from the date of allotment. Redeemable at face value at the end of 10th year from the date of allotment. Redeemable at face value at the end of 10th year from the date of allotment. Redeemable at face value at the end of 10th year from the date of allotment. C(I)(b) Foreign Currency Convertible Bonds: Total 1050 800 3.50% US$ denominated 5 years & 1 day Foreign Currency Convertible Bonds (FCCB) carried at 1085.70 crore as on March 31, 2013 ( 1017.50 crore as on March 31, 2012) represent 2000 bonds of US$ 1,00,000 each .The bonds are convertible into the Company’s fully paid equity shares of 2 each at a conversion price of 1908.20 per share at the option of the bond holders at any time on and after December 1, 2009 up to October 15, 2014.The bonds are redeemable, subject to fulfillment 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 (calculated upto but excluding the date of redemption) on the date fixed for redemption, unless the bonds have been previously redeemed, converted or purchased and cancelled. C(I)(c) Term loans (unsecured): External Commercial Borrowings (ECBs) 31-3-2012 crore Rate of interest Terms of repayment of term loan outstanding as on 31-3-2013 Sr. no. 1 31-3-2013 crore 1085.70 542.85 108.57 542.85 – USD LIBOR + Spread – USD LIBOR + Spread – USD LIBOR + Spread – USD LIBOR + Spread 352.01 129.25 JPY LIBOR + Spread 323.01 247.85 JPY LIBOR + Spread 255.11 274.05 JPY LIBOR + Spread 858.65 168.04 190.00 922.40 JPY LIBOR + Spread 180.52 JPY LIBOR + Spread 178.06 USD LIBOR + Spread Repayable in 5 equal quarterly installments commencing from January 17, 2019 and ending on January 17, 2020 Repayment due on January 01, 2018 Repayment due on September 27, 2017 Repayable in 3 equal annual installments on September 02, 2016, September 05, 2017 and September 04, 2018 Repayable in 3 equal annual installments on April 25, 2016, April 24, 2017 and April 24, 2018 Repayable in 3 equal annual installments commencing from March 12, 2016 and ending on March 12, 2018 Repayable in 4 equal annual installments commencing from December 24, 2015 and ending on December 24, 2018 Repayment due on July 26, 2014 Repayment due on November 21, 2013 Repayable in 6 equal installments payable annually from September 18, 2013 to September 18, 2017 with the final installment due on June 18, 2018 Repayment due on April 15, 2013 625.73 JPY LIBOR + Spread 486.06 JPY LIBOR + Spread 112.09 JPY LIBOR + Spread 101.75 USD LIBOR + Spread 872.77 JPY LIBOR + Spread 582.48 – – – – 5009.27 782.19 4227.08 4130.53 1572.68 Current portion of long term borrowings [Note D(II)] 2557.85 Long term borrowings as disclosed in Note C(I) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Less: 158 Notes forming part of the Accounts (contd.) C(I)(d) Sales tax deferment loan (Unsecured): Sr. No. As at 31-3-2013 crore As at 31-3-2012 crore Rate of Interest Terms of repayment as on March 31, 2013 1 2 3 4 5 6 7 8 Total Less: 0.39 0.60 0.58 0.31 0.15 0.05 13.46 – 15.54 7.29 8.25 Repayable in 5 equal annual installment of 0.08 crore ending April 26, 2018 Repayable in 5 equal annual installment of 0.12 crore ending April 26, 2017 Repayable in 4 equal annual installment of 0.14 crore ending April 26, 2016 Interest Free Repayable in 3 equal annual installment of 0.10 crore ending April 26, 2015 Repayable in 2 equal annual installment of 0.07 crore ending April 26, 2014 Repayable on April 26, 2013 Repayable on April 1, 2013 : 6.80 crore, Repayable on April 1, 2014: 6.66 crore 0.39 0.60 0.72 0.42 0.22 0.10 20.26 15.73 38.44 22.90 Current portion of long term borrowings [Note D(II)] 15.54 Long term borrowings as disclosed in [Note C(I)] C(I)(e) Long term maturities of finance lease obligations: Sr. No. As at 31-3-2013 crore As at 31-3-2012 crore Rate of interest for the year 2012-13 Terms of repayment as on March 31, 2013 1 Total Less: 39.17 39.17 39.17 Nil 72.58 16.02 % Repayable in equal monthly installments by March 2014 72.58 33.41 Current portion of long term borrowings [Note D(II)] 39.17 Long term borrowings as disclosed in [Note C(I)] NOTE [C(II)] Other long term liabilities Forward contract payable Others Particulars As at 31-3-2013 As at 31-3-2012 crore 485.44 16.59 502.03 crore 347.24 29.11 376.35 159 Notes forming part of the Accounts (contd.) NOTE [C(III)] Long term provisions Particulars As at 31-3-2013 As at 31-3-2012 Provision for employee benefits Employee pension scheme [Note Q(8)(ii)(a)] Post-retirement medical benefits plan [Note Q(8)(ii)(a)] Interest rate guarantee-provident fund [Note Q(8)(ii)(a)] NOTE [D(I)] Short term borrowings crore 186.38 99.54 – 285.92 crore 174.19 82.18 18.68 275.05 Particulars Secured Unsecured Total* Secured Unsecured Total* crore crore crore crore crore crore As at 31-3-2013 As at 31-3-2012 Loans repayable on demand from banks [Note D(I)(a)], [Note H(IV)(a)] Short term loans and advances from banks [Note D(I)(a)(b)] Intercorporate borrowings : 209.26 124.75 8.94 218.20 132.58 8.94 141.52 391.58 516.33 420.76 2041.44 2462.20 Loans from related parties (subsidiary companies) – – – – 333.00 333.00 334.01 400.52 734.53 553.34 2383.38 2936.72 * Loans guaranteed by directors Nil (previous year: Nil) D(I) (a) Loans repayable on demand from banks include fund based working capital facilities viz. cash credits and demand loans. The secured portion of loans repayable on demand from banks of 209.26 crore (previous year: 132.58 crore), short term loans and advances from banks of 124.75 crore (previous year: 420.76 crore), working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit, are secured by hypothecation of inventories, book debts and receivables. D(I) (b) Short term loans and advances from banks includes loans amounting to under bill discounting facility and are secured against specific receivables. 10.21 crore (previous year: 254.88 crore) availed NOTE [D(II)] Current maturities of long term borrowings Particulars Unsecured Term loan from banks [Note C(I)(c)] Sales tax deferment loan [Note C(I)(d)] Finance lease obligation [Note C(I)(e)] Loans guaranteed by directors Nil (previous year: Nil) 160 As at 31-3-2013 As at 31-3-2012 crore 782.19 7.29 39.17 828.65 crore 1572.68 22.90 33.41 1628.99 Notes forming part of the Accounts (contd.) NOTE [D(III)] Trade payables Particulars Acceptances Due to related parties: Subsidiary companies Associate companies Joint venture companies Micro and small enterprises [Note Q(22)] Due to others NOTE [D(IV)] Other current liabilities Particulars Interest accrued but not due on borrowings Interest accrued and due on borrowings Unclaimed dividend Unclaimed matured deposits Due to customers (Construction & project related activity) Advances from customers Other payables (including sales tax, service tax, excise duty and others) [Note D(IV)(a)] As at 31-3-2013 As at 31-3-2012 crore 607.23 2288.05 44.39 30.32 68.40 13692.26 16730.65 crore 142.10 1659.85 199.61 6.34 62.37 13537.49 15607.76 As at 31-3-2013 As at 31-3-2012 crore 116.42 0.02 23.85 – 4369.41 8723.26 1119.69 crore 113.99 – 19.52 0.01 2911.75 9812.57 1151.56 14352.65 14009.40 D(IV) (a) Other payables includes due to directors 40.80 crore (previous year: 42.08 crore) being provision for commission to directors. NOTE [D(V)] Short term provisions Particulars As at 31-03-2013 As at 31-3-2012 crore crore crore crore Provision for employee benefits: Gratuity [Note Q(8)(ii)(a)] Compensated absences Employee pension scheme [Note Q(8)(ii)(a)] Post-retirement medical benefits plan [Note Q(8)(ii)(a)] Bonus provision Others: Current tax [Net of payments made 1658.05 crore] Proposed dividend [Note A(IX)] Additional tax on dividend Other provisions (AS 29 Related) [Note Q(15)] 1.11 416.54 11.98 5.77 10.79 3.74 1138.47 85.86 409.55 0.85 369.18 9.84 4.83 12.17 446.19 396.87 – 1010.46 101.44 603.27 1637.62 2083.81 1715.17 2112.04 161 Notes forming part of the Accounts (contd.) NOTE [E(I)] Tangible assets Class of assets As at 1-4-2012 Additions Deductions Cost/valuation As at 31-3-2013 Up to 31-3-2012 Depreciation For the year Deductions Impairment As at 31-3-2013 Book value As at 31-3-2013 As at 31-3-2012 Up to 31-3-2013 crore Land Freehold Leashold Sub total - Land Buildings Owned Leased out Sub total - Buildings Plant and equipment Owned Leased out Taken on lease Sub total - Plant & equipment Computers Owned Taken on lease Sub total - Computers Office equipment Owned Sub total - Office equipment Furniture and fixtures Owned Sub total - Furniture & fixture Vehicles Owned Taken on lease Sub total - Vehicles Other assets Owned Railway sidings Aircraft Ships Sub total - Other assets Lease adjustment Total 412.93 127.05 539.98 2244.94 144.28 2389.22 6138.05 37.53 142.10 6317.68 418.55 0.47 419.02 183.18 183.18 216.92 216.92 206.75 2.02 208.77 30.11 11.13 41.24 332.76 24.76 357.52 995.97 – – 995.97 93.07 – 93.07 27.45 27.45 31.02 31.02 44.13 – 44.13 40.57 – 40.57 32.55 – 32.55 38.73 – – 38.73 15.38 0.37 15.75 4.45 4.45 10.25 10.25 15.08 0.91 15.99 402.47 138.18 540.65 2545.15 169.04 2714.19 7095.29 37.53 142.10 7274.92 496.24 0.10 496.34 206.18 206.18 237.69 237.69 235.80 1.11 236.91 0.25 10.62 71.46 82.33 – 10357.10 – – – – – 1590.40 – 10.62 – 10.62 – 168.91 0.25 – 71.46 71.71 – 11778.59 – 5.88 5.88 307.30 4.13 311.43 1964.54 11.24 40.86 2016.64 216.58 0.45 217.03 81.01 81.01 101.40 101.40 80.58 1.56 82.14 0.25 6.97 17.50 24.72 – 2840.25 – 1.34 1.34 56.44 2.76 59.20 561.42 1.08 13.88 576.38 73.17 – 73.17 24.64 24.64 22.00 22.00 26.18 0.17 26.35 – 0.18 4.97 5.15 – 788.23 – – – 7.22 – 7.22 29.92 – – 29.92 14.07 0.36 14.43 3.66 3.66 7.59 7.59 7.92 0.90 8.82 – 7.15 – 7.15 – 78.79 – 7.22 7.22 356.52 6.89 363.41 2496.04 12.32 54.74 2563.10 275.68 0.09 275.77 101.99 101.99 115.81 115.81 98.84 0.83 99.67 0.25 – 22.47 22.72 – 3549.69 – – – – – – – 6.93 # – 6.93 – – – – – – – – – – – – – – – 6.93 previous year 8797.58 1717.13 157.61 10357.10 2218.52 673.52 51.79 2840.25 6.93 Add : Asset held for sale Add : Capital work-in-progress 402.47 130.96 533.43 2188.63 162.15 2350.78 4599.25 18.28 87.36 4704.89 220.56 0.01 220.57 104.19 104.19 121.88 121.88 136.96 0.28 137.24 – – 48.99 48.99 (3.07) 8218.90 0.10 8219.00 491.05 8710.05 412.93 121.17 534.10 1937.64 140.15 2077.79 4173.51 19.36 101.24 4294.11 201.97 0.02 201.99 102.17 102.17 115.52 115.52 126.17 0.46 126.63 – 3.65 53.96 57.61 (3.07) 7506.85 21.15 7528.00 697.53 8225.53 # Impairment up to 31-3-2013 6.93 crore. During the year Nil 1. Cost/valuation of freehold land includes 0.14 crore for which conveyance is yet to be completed. 2. Cost/valuation of buildings includes ownership accommodation: (i) (a) in various co-operative societies and apartments and shop-owners’ associations: 82.58 crore, including 2340 shares of 50 each, 232 shares of 100 each and 2 shares of 250 each. 162 Notes forming part of the Accounts (contd.) NOTE [E(I)] (contd.) (b) in various co-operative societies and apartments and shop-owners’ associations : 20.92 crore for which share certificates are yet to be issued. (c) in proposed co-operative societies 12.80 crore. (ii) of 4.39 crore in respect of which the deed of conveyance is yet to be executed. (iii) of 8.45 crore representing undivided share in properties at various locations. 3. Additions during the year and capital work-in-progress include 10.54 crore (previous year: 19.79 crore) being borrowing cost capitalised in accordance with Accounting Standard (AS)16 on “Borrowing Costs” as specified in the Companies (Accounting Standards) Rules,2006. Asset wise break-up of borrowing costs capitalised is as follows: Asset class Building owned Plant and equipment owned Computer owned Office equipment owned Owned Building Leased Out Capital Work-in-Progress Total 2012-13 17.06 6.61 1.06 – 3.17 (17.36) 10.54 crore 2011-12 6.07 0.25 0.16 0.22 – 13.09 19.79 4. Depreciation for the year as per Statement of Profit and Loss include obsolescence 8.26 crore (previous year: 8.53 crore) 5. 6. The Company had revalued as at October 1,1984 some of its land, buildings, plant and equipment and railway sidings at replacement/ market value which resulted in a net increase of 108.05 crore. The Company had taken land for converted into freehold land w.e.f June 4, 2012. 2.63 crore in Mysore from KIADB based on lease and sale agreement. The aforesaid land got 7. Own assets given on operating lease have been presented separately as leased out in the note as per Accounting Standard (AS) 19 ”Leases“. 8. Cost/valuation as at April 1, 2012 of individual assets has been reclassified wherever necessary. 9. Out of its lease hold land at Hazira, the Company has given certain portion of land for the use of its subsidiary companies. The lease deeds in respect of leasehold land given to the subsidiary companies are under execution. NOTE [E(II)] Intangible assets Particulars As at 1-4-2012 Additions Deductions Cost/valuation As at 31-3-2013 Up to 31-3-2012 Amortisation For the year Deductions crore Book value Up to 31-3-2013 As at 31-3-2013 As at 31-3-2012 Specialised softwares Technical knowhow New product design and development 163.13 25.74 6.24 182.63 16.21 – 1.42 6.78 – – 17.63 6.78 89.67 12.69 – 20.35 1.22 1.36 4.39 105.63 77.00 – – 13.91 1.36 3.72 5.42 73.46 3.52 – Total previous year Add: Intangible assets under development 179.34 33.94 6.24 207.04 102.36 22.93 4.39 120.90 86.14 76.98 159.09 20.25 – 179.34 83.96 18.40 – 102.36 105.79 191.93 61.15 138.13 163 Notes forming part of the Accounts (contd.) NOTE [F] Non-current investments (at cost unless otherwise specified) Particulars Long term investments (1) Trade Investments (i) Investments in fully paid equity instruments (a) Subsidiaries companies (b) Associate companies Less: Provision for diminution in value (c) Other companies Less: Provision for diminution in value (ii) Other investments Investment in integrated joint ventures (2) Other Investments Other fully paid equity shares Non-current Investments (at cost unless otherwise specified) Particulars (1) Trade Investments (i) Investments in fully paid equity instruments (a) Subsidiary companies: As at 31-3-2013 As at 31-3-2012 crore crore crore crore 10221.23 8687.19 66.91 0.56 19.90 15.90 92.46 0.56 42.90 15.90 91.90 27.00 182.57 10522.70 – 10522.70 66.35 4.00 140.88 8898.42 186.29 9084.71 Face value per unit Number of units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore Audco India Limited * (prior to March 28, 2013, associate company) Bhilai Power Supply Company Limited EWAC Alloys Limited Hi-Tech Rock Products & Aggregates Limited Kesun Iron & Steel Company Private Limited Larsen & Toubro Consultoria E Projeto Ltda L&T-Gulf Private Limited L&T Ahmedabad-Maliya Tollway Limited [ 1000 (previous year 1000)] L&T Aviation Services Private Limited L&T Capital Company Limited L&T Cassidian Limited L&T Finance Holdings Limited (quoted) L&T Chennai-Tada Tollway Limited [ 1000 (previous year 1000)] L&T Devihalli Hassan Tollway Limited [ 1000 (previous year 1000)] L&T General Insurance Company Limited L&T Halol-Shamlaji Tollway Limited [ 1000 (previous year 1000)] L&T Howden Private Limited L&T Infocity Limited L&T Metro Rail (Hyderabad) Limited Carried forward 100 10 100 10 10 R$ 1 10 10 10 10 10 10 10 10 10 10 10 10 10 15,63,260 49,950 8,29,440 50,000 9,500 96,819 40,00,016 100 4,56,00,000 2,20,00,000 37,000 1,41,70,24,221 100 100 41,50,00,000 100 1,50,30,000 2,40,30,000 53,00,000 201.54 0.05 150.24 0.05 0.01 0.27 4.00 – 45.60 22.00 0.04 1778.59 – – 415.00 – 15.03 16.02 5.30 2653.74 – 0.05 150.24 0.05 0.01 0.27 4.00 – 24.00 22.00 0.04 1778.59 – – 325.00 – 15.03 16.02 4.37 2339.67 164 Notes forming part of the Accounts (contd.) NOTE [F] Non-current investments (at cost unless otherwise specified) (contd.) Particulars (a) Subsidiary companies: (contd.) Brought forward L&T Infrastructure Development Projects Limited L&T Kobelco Machinery Private Limited L&T Krishnagiri Walajahpet Tollway Limited [ 26000 (previous year 26000)] L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited L&T Natural Resources Limited L&T Power Development Limited L&T Power Limited (Face value reduced from 30000 to 10 each) L&T PowerGen Limited L&T Rajkot-Vadinar Tollway Limited [ 1000 (previous year 1000)] L&T Realty Limited L&T Samakhiali Gandhidham Tollway Limited L&T Sapura Offshore Private Limited L&T Sapura Shipping Private Limited L&T Seawoods Private Limited L&T Shipbuilding Limited L&T Solar Limited L&T Special Steels and Heavy Forgings Private Limited L&T Electricals and Automation Limited L&T Transportation Infrastructure Limited L&T Plastics Machinery Limited L&T-Sargent & Lundy Limited (Buyback of 625,001 shares @ 80 per share and Buyback of 284,091 shares @ 88 per share) L&T Technologies Limited L&T Technology Services Limited L&T-Valdel Engineering Limited Larsen & Toubro Infotech Limited Larsen & Toubro International FZE Larsen Toubro Arabia LLC Larsen & Toubro LLC Narmada Infrastructure Construction Enterprise Limited PNG Tollway Limited Raykal Aluminum Company Private Limited Spectrum Infotech Private Limited Tractor Engineers Limited Total [1]-(i) (a) (b) Associate companies: AIC Structural Steel Construction (India) Private Limited Audco India Limited (subsidiary company w.e.f. March 28, 2013) Gujarat Leather Industries Limited JSK Electricals Private Limited L&T-Chiyoda Limited L&T-Komatsu Limited L&T-Ramboll Consulting Engineers Limited Magtorq Private Limited Carried forward Face value per unit Number of units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 – 10 31,28,59,096 2,55,00,000 2,600 11,93,91,000 17,37,06,000 50,000 1,79,90,00,000 51,157 50,000 100 4,71,60,700 13,000 6,000 9,53,11,850 10,000 81,86,80,000 50,000 39,96,00,000 50,000 1,08,64,000 – 27,82,736 10 10 10 5 Dhs 550500 Saudi Riyals 1000 USD 1 10 10 10 10 1,000 10 100 10 10 10 10 10 100 50,000 50,000 11,79,000 3,22,50,000 1,829 7,500 50,000 1,26,48,507 4,39,66,000 37,750 4,40,000 68,000 26,000 7,81,630 7,35,000 21,20,040 45,00,000 6,00,00,000 18,00,000 9,000 2653.74 2696.47 25.50 – 119.39 173.71 0.05 1799.00 0.05 0.05 – 47.16 0.01 0.01 95.31 0.01 818.68 0.05 399.60 0.05 10.86 – 0.82 0.05 0.05 23.89 134.25 1147.40 11.08 0.23 12.65 43.97 0.04 6.80 0.30 10221.23 0.03 – 0.56 2.12 4.50 60.00 1.80 4.42 73.43 2339.67 2696.47 25.50 – 112.25 127.55 0.05 1362.00 153.47 0.05 – 47.16 0.01 0.01 95.31 0.01 0.05 0.05 333.00 0.05 10.86 13.00 1.09 0.05 – 23.89 134.25 1147.40 – 0.23 12.65 43.97 0.04 6.80 0.30 8687.19 – 0.05 0.56 – 4.50 60.00 1.80 – 66.91 165 Notes forming part of the Accounts (contd.) NOTE [F] Non-current investments (at cost unless otherwise specified) (contd.) Particulars (b) Associate companies: (contd.) Brought forward Rishi Consfab Private Limited Salzer Electronics Limited (quoted) Less: Provision for diminution in value Total [1]-(i) (b) (c) Other companies: International Seaport Dredging Limited Tidel Park Limited Astra Microwave Products Limited (quoted) Less: Provision for diminution in value Total [1]-(i) (c) (ii) Other investments 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 Shanghai Urban Corporation Group Joint Venture Metro Tunneling Group Metro Tunneling Delhi - L&T SUCG Joint Venture Metro Tunneling Chennai - L&T SUCG Joint Venture L&T-Shapoorji Pallonji & Co. Ltd. Joint Venture -TCS Total Trade Investments-Total (1) (2) Other Investments Investments in fully paid equity Instruments Other companies: Satyam Computer Services Limited (quoted) Utmal Multi purpose Service Co-operative Society Limited (B Class) – 100 – 300 [ 30,000 (previous year 30,000)] Other Investments-Total (2) Total non current investments (1+2) * Net of 50.02 crore being dividend received out of pre-acquisition profits. Details of quoted/unquoted investments: Particulars (a) Aggregate amount of quoted investments and market value thereof; Book Value Market Value (b) Aggregate amount of unquoted investments; Book Value (c) Aggregate provision for diminution in value of investments: 16.46 crore (previous year 16.46 crore) 166 Face value per unit Number of units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore 10 10 27,04,000 26,79,808 10,000 10 2 15,899 40,00,000 79,50,045 73.43 2.70 16.33 92.46 0.56 91.90 15.90 4.00 23.00 42.90 15.90 27.00 0.05 0.06 8.39 4.06 83.03 19.20 12.73 14.65 6.32 28.89 5.19 182.57 10,522.70 – – – 10522.70 66.91 – – 66.91 0.56 66.35 15.90 4.00 – 19.90 15.90 4.00 0.05 0.37 9.21 11.50 71.33 19.36 12.53 13.02 3.03 0.48 – 140.88 8898.42 186.29 – 186.29 9084.71 As at 31-3-2013 crore As at 31-3-2012 crore 1817.92 10503.90 1964.88 6965.91 8704.78 7119.83 Notes forming part of the Accounts (contd.) NOTE [G(I)] Long term loans and advances Particulars Secured considered good: Loans against mortgage of house property Rent deposit (KMP’s) Capital advances Unsecured considered good Capital advances Loans and advances to related parties: Subsidiary companies Loans [Note Q(2)(a)] Advances towards equity commitment Inter-corporate deposits including interest accrued [Note Q(2)(a)] Joint venture companies: Loans Other loans and advances Security deposits Earnest money deposits Advances recoverable in cash or in kind Balances with customs, port trust etc. Lease receivable NOTE [G(II)] Cash and bank balances Particulars Cash and bank balances not available for immediate use [Note G(II)(a)] As at 31-3-2013 As at 31-3-2012 crore 5.60 0.01 1.69 122.36 – 2264.85 294.01 453.37 107.92 0.51 413.47 0.32 0.06 3664.17 crore 8.93 0.01 3.28 107.13 241.50 2382.08 633.64 283.63 75.16 0.60 319.27 0.32 0.42 4055.97 As at 31-3-2013 As at 31-3-2012 crore 39.02 39.02 G (II)(a) Particulars of cash and bank balances not available for immediate use Particulars 1 2 3 4 Amount deposited under credit support arrangement which is refundable only on cessation of exposure to a Bank Amount received including interest accrued thereon from customers of property development business – to be handed over to housing society on its formation Contingency deposit (including interest accrued thereon) received from customers of property development business towards their sales tax liability - to be refunded/adjusted depending on the outcome of the legal case Other bank balances not available for immediate use being in the nature of security offered for bids submitted, loans availed, guarantees issued by bank on behalf of the company, collaterals, earmarked grants etc. Total Less: Amount reflected under current assets [Note H-IV] Amount reflected under non-current assets [Note G-II] crore 127.14 127.14 crore As at 31-3-2013 As at 31-3-2012 104.77 125.25 18.65 17.64 12.81 10.28 38.49 174.72 135.70 39.02 7.28 160.45 33.31 127.14 167 Notes forming part of the Accounts (contd.) NOTE [G(III)] Other Non Current Asset Particulars Unamortised expenses NOTE [H(I)] Current Investments Particulars (a) Current investments Government and trust securities Less: Provision for diminution in value Debentures & Bonds Less: Provision for diminution in value Mutual funds Less: Provision for diminution in value Other current investments Less: Provision for diminution in value (b) Current portion of long term investments As at 31-3-2013 As at 31-3-2012 crore 43.30 43.30 crore 14.07 14.07 As at 31-3-2013 As at 31-3-2012 crore crore crore crore 112.87 0.86 1101.08 0.56 2102.56 – 2265.83 0.23 371.28 7.89 605.02 4.61 920.63 0.02 4907.76 6.37 112.01 1100.52 2102.56 2265.60 – 5580.69 363.39 600.41 920.61 4901.39 1.39 6787.19 Other particulars in respect of current investment mentioned in H(1) are as follows: Particulars (a) Current investments: (1) Government and trust securities: 6.35% Government of India Bonds 2020 (quoted) 8.28% Government of India Bonds 2032 (quoted) 8.79% Government of India Bonds 2021 (quoted) 8.15% Government of India Bonds 2022 (quoted) 8.33% Government of India Bonds 2026 (quoted) Less: Provision for diminution in value Government and trust securities-Total (2) Debentures and Bonds (i) Subsidiary companies: L&T Finance Limited-10.24% Secured Redeemable Non-Convertible Debentures, 2019 (quoted) L&T Infrastructure Finance Company Limited-8.91% Non-Convertible Debentures, 16-Apr-2012 (quoted) Carried forward 168 Face value per unit Number of Units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore 100 100 100 100 100 – 5,00,000 – 5,00,000 1,00,00,000 – 4.91 – 5.09 102.87 112.87 0.86 112.01 1,000 3,69,770 36.98 10,00,000 – – 36.98 40.48 4.99 325.81 – – 371.28 7.89 363.39 36.98 24.98 61.96 Notes forming part of the Accounts (contd.) Note [H(I)] Current investments (contd.) Particulars Face value per unit Number of Units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore (i) Subsidiary companies: (contd.) Brought forward L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 16-Apr-2013 (quoted) L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 16-Apr-2014 (quoted) L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 16-Apr-2015 (quoted) L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 15-Apr-2016 (quoted) L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 14-Apr-2017 (quoted) L&T Infrastructure Finance Company Limited - 8.91% Non-Convertible Debentures, 16-Apr-2018 (quoted) Less: Provision for diminution in value Subsidiary companies-Total (ii) Other Debentures and Bonds Citi Corporation Non-Convertible Debentures - Series 409 - 2014 (quoted) 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,00,000 HDFC Limited 9.95% Non-Convertible Debentures 2012 (quoted) ICICI Bank Ltd. Non-Convertible Debentures 9.15% 10,00,000 10,00,000 - 31 December 2022 (quoted) Tata Steel Limited 11.8% Non-Convertible Debentures, Perpetual (quoted) 9.05% HDFC Ltd. Non-Convertible Debentures 29 January 2014 (quoted) 9.62% HDFC Ltd. Non-Convertible Debentures 27 February 2014 (quoted) 9.62% HDFC Ltd. Non-Convertible Debentures 26 February 2014 (quoted) 9.18% HDFC Ltd. Non-Convertible Debentures 22 October 2014 (quoted) 6.86% IIFCL 26 March 2023 (quoted) 7.18% IRFC Ltd. 19 February 2023 (quoted) 10.75% The Tata Power Co. Ltd. Non-Convertible Debentures 21 August 2072 (quoted) 8.00% Indian Overseas Bank 2016 Bonds (quoted) 8.20% Power Finance Corporation 2022 (quoted) 9.32% National Bank for Agricultural and Rural Developement 2015 (quoted) 9.40% National Bank for Agricultural and Rural Developement 2015 (quoted) 9.46% Power Finance Corporation 2026 (quoted) 9.61% Power Finance Corporation 2021 (quoted) 9.70% Power Finance Corporation 2021 (quoted) 9.75% Rural Electrification Corporation Limited 2021 (quoted) 8.20% National Highway Authority of India 2022 (quoted) 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,000 1,000 10,00,000 10,00,000 1,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 1,000 Less: Provision for diminution in value Other Debentures and Bonds-Total Debentures-Total 250 250 250 – – – – – 50 – 1,500 1,000 750 150 2,50,000 30,00,000 1,000 50 8,54,355 100 – 200 16 100 50 7,41,713 36.98 24.95 24.95 24.95 – – – 111.83 0.30 111.53 – – 5.00 – 149.74 100.34 75.29 14.99 25.00 300.00 101.05 4.90 89.23 10.00 – 19.99 1.60 10.03 5.18 76.91 989.25 0.26 988.99 1100.52 61.96 24.98 24.98 24.98 24.98 24.98 24.97 211.83 3.06 208.77 50.13 5.00 – 101.75 – – – – – – – 4.90 85.44 10.00 25.00 19.99 1.60 10.03 5.18 74.17 393.19 1.55 391.64 600.41 169 Notes forming part of the Accounts (contd.) Note [H(I)] Current investments (contd.) Particulars (3) Mutual funds: Face value per unit Number of Units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore Baroda Pioneer Liquid Fund-Plan A-Growth Birla Sun Life Fixed Term Plan-Series CY-Growth (quoted) Birla Sun Life Fixed Term Plan-Series DB (369 Days) Growth (quoted) DSP Blackrock Liquidity Fund-IP-Growth DWS Fixed Term-Series 80-Growth (quoted) DWS Insta Cash Plus Fund-Regular Bonus-Growth DWS Insta Cash Plus Fund-Super Institutional Plan-Bonus DWS Money Plus Fund-Regular Plan-Bonus DWS Treasury Fund-Cash-Reg-Bonus DWS Ultra Short Term Fund-Regular Bonus Option HDFC Liquid Fund-Growth ICICI Prudential FMP Series 56-1Year Plan E-Growth (quoted) IDBI Liquid Fund-Growth IDFC Cash Fund-Reg-Growth JM High Liquidity Fund-Bonus Option-Bonus Units JP Morgan India Liquid Fund-Super IP-Growth JP Morgan India Treasury Fund-Direct Plan-Bonus L&T Cash Fund-Growth L&T FMP-II (Jan 15M A)-Growth (quoted) L&T FMP-III (June 366D A)-Growth (quoted) L&T FMP-V (December 366D A)-Growth (quoted) L&T FMP-V (December 368D A)-Growth (quoted) L&T FMP-V (February 368D A)-Growth (quoted) L&T FMP-VII (January 507D A)-Growth (quoted) L&T FMP-VII (March 13M A)-Growth (quoted) L&T FMP-VII (March 367D A)-Growth (quoted) L&T FMP-VII (March 367D B)-Growth (quoted) L&T FMP-VII (March 381D A)-Growth (quoted) L&T FMP-IV (September 367D A)-Growth (quoted) L&T Income Opportunities Fund-Growth L&T Liquid Fund-Growth L&T Liquid Fund-Institutional Plus Plan-Daily Dividend Reinvest L&T Short Term Opportunities Fund-Growth LIC Nomura FMP Series 48 Growth (quoted) Principal Cash Management Fund-Growth-Bonus Reliance Fixed Horizon Fund XIX-Series 4-Growth (quoted) Religare FMP Series IX Plan D (370 Days) Growth (quoted) Religare FMP Series VII-Plan C (369 Days) Growth (quoted) Religare FMP-Series XI-Plan E (371 Days)-Growth (quoted) Religare Liquid Fund-Growth SBI Premier Liquid Fund-Growth SBI Premier Liquid Fund-Super Institutional Plan - Daily Dividend Reinvestment UTI Fixed Term Income Fund-Series IX-II (369 Days)-Dividend (quoted) UTI Fixed Term Income Fund-Series IX-(367 Days)-Growth (quoted) UTI Treasury Advantage Fund IP-Bonus 1,000 10 10 1,000 10 10 100 10 10 10 10 10 1,000 1,000 7,44,632 – – 2,98,155 – – 13,95,466 5,70,81,186 15,12,022 – 2,16,45,022 – 1,98,809 3,50,958 10 45,49,23,434 3,29,12,709 10 6,57,31,094 10 28,24,285 1,000 – 10 – 10 – 10 – 10 – 10 2,00,00,000 10 1,00,00,000 10 1,00,00,000 10 50,00,000 10 1,00,00,000 10 – 10 – 10 21,77,844 1,000 – 1,000 2,23,49,962 10 – 10 3,36,795 1,000 – 10 – 10 – 10 – 10 6,20,694 1,000 5,42,948 1,000 1,000 10 10 1,000 – – – 2,32,098 Less: Provision for diminution in value Mutual funds-Total (4) Other Current investments: (i) Collateralized borrowing and lending obligation (CBLO) CBLO-Total (ii) Commercial paper: 10.25% IDFC Limited 22 October 2012 NA 5,00,000 NA – Less: Provision for diminution in value Commercial paper-Total 170 100.00 – – 50.00 – – 13.92 55.79 14.79 – 50.00 – 25.00 50.00 446.91 50.00 100.00 450.00 – – – – – 20.00 10.00 10.00 5.00 10.00 – – 350.00 – 25.09 – 37.50 – – – – 100.00 100.00 – – – 28.56 2102.56 – 2102.56 – – – – – – – 53.19 10.60 – 37.22 8.71 – – – 88.81 – 26.60 – – – – – – 10.87 7.36 5.00 8.03 12.00 – – – – – 2.50 30.46 – 250.11 – 10.39 – 21.26 4.00 15.92 10.00 – – 260.12 32.35 15.13 – 920.63 0.02 920.61 71.96 71.96 93.64 93.64 0.45 93.19 Notes forming part of the Accounts (contd.) Note [H(I)] Current investments (contd.) Particulars (iii) Certificate of deposits: Face value per unit Number of Units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore Allahabad Bank 10 June 2013 Allahabad Bank 31 May 2012 Andhra Bank 14 June 2012 Axis Bank 06 June 2013 Axis Bank 31 January 2013 Axis Bank 21 February 2013 Axis Bank 22 November 2012 Axis Bank 29 June 2012 Bank of Baroda 06 December 2013 Bank of India 15 March 2013 Canara Bank 01 March 2013 Canara Bank 07 March 2013 Canara Bank 13 December 2012 Canara Bank 14 December 2012 Canara Bank 14 March 2013 Canara Bank 18 March 2013 Canara Bank 20 February 2013 Canara Bank 24 February 2014 Canara Bank 26 December 2012 Canara Bank 26 February 2013 Central Bank of India 15 February 2013 Central Bank of India 15 June 2012 Central Bank of India 17 December 2012 Central Bank of India 18 February 2013 Corporation Bank 05 December 2013 Corporation Bank 06 March 2014 Corporation Bank 10 December 2013 Corporation Bank 17 February 2014 Corporation Bank 19 June 2012 Corporation Bank 22 November 2013 IDBI Bank 12 July 2012 IDBI Bank 05 December 2013 IDBI Bank 10 February 2014 IDBI Bank 24 December 2012 IDBI Bank 26 June 2012 Indian Overseas Bank 06 July 2012 Indian Overseas Bank 22 January 2013 Indian Overseas Bank 14 March 2014 Oriental Bank of Commerce 03 January 2014 Oriental Bank of Commerce 05 March 2014 Oriental Bank of Commerce 06 December 2012 Oriental Bank of Commerce 07 August 2012 Oriental Bank of Commerce 07 December 2012 Oriental Bank of Commerce 12 December 2012 Oriental Bank of Commerce 13 December 2012 Oriental Bank of Commerce 20 June 2012 Oriental Bank of Commerce 21 January 2013 Oriental Bank of Commerce 30 May 2013 Oriental Bank of Commerce 30 November 2012 Punjab and Sind Bank 21 June 2012 Punjab National Bank 03 July 2012 Punjab National Bank 05 March 2014 Punjab National Bank 06 Decemebr 2012 Punjab National Bank 10 March 2014 Punjab National Bank 12 July 2012 Punjab National Bank 14 June 2012 Carried forward 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 22,500 – – 20,000 – – – – 2,500 – – – – – – – – 5,000 – – – – – – 7,500 10,000 5,000 15,000 – 5,000 – 2,500 2,500 – – – – 5,000 5,000 2,500 – – – – – – – 10,000 – – – 25,000 – 20,000 – – 220.86 – – 196.61 – – – – 23.55 – – – – – – – – 46.20 – – – – – – 70.67 92.17 47.06 138.79 – 47.25 – 23.54 23.18 – – – – 46.04 46.76 23.08 – – – – – – – 98.48 – – – 230.86 – 184.48 – – 1559.58 – 98.13 48.86 – 181.76 45.38 22.80 96.41 – 91.15 294.95 90.49 46.58 69.21 113.98 45.22 90.84 – 160.75 136.31 22.85 48.84 69.28 160.09 – – – – 48.80 – 22.77 – – 23.01 72.61 22.90 45.66 – – – 68.80 46.56 68.98 91.26 23.08 48.79 136.63 – 92.28 48.78 23.89 – 23.12 – 22.89 48.87 2913.56 171 Notes forming part of the Accounts (contd.) Note [H(I)] Current investments (contd.) Particulars (iii) Certificate of deposits: (contd.) Brought forward Punjab National Bank 15 March 2013 Punjab National Bank 18 December 2012 Punjab National Bank 25 February 2013 Punjab National Bank 25 March 2014 Punjab National Bank 29 November 2012 Punjab National Bank 31 January 2013 State Bank of Bikaner & Jaipur 10 September 2012 State Bank of Bikaner & Jaipur 19 December 2012 State Bank of Bikaner & Jaipur 24 December 2012 State Bank of Hyderabad 03 December 2012 State Bank of Hyderabad 06 December 2012 State Bank of Hyderabad 06 September 2013 State Bank of Hyderabad 07 November 2012 State Bank of Hyderabad 13 March 2014 State Bank of Hyderabad 23 January 2013 State Bank of Hyderabad 26 December 2012 State Bank of Mysore 29 November 2013 State Bank of Mysore 24 May 2012 State Bank of Patiala 03 June 2013 State Bank of Patiala 03 August 2012 State Bank of Patiala 03 September 2012 State Bank of Patiala 12 December 2012 State Bank of Travancore 13 August 2012 State Bank of Travancore 22 November 2013 Syndicate Bank 06 August 2012 Syndicate Bank 15 June 2012 Syndicate Bank 18 December 2012 Syndicate Bank 26 December 2012 Syndicate Bank 28 September 2012 Syndicate Bank 21 January 2013 Syndicate Bank 30 July 2012 UCO Bank 03 April 2012 UCO Bank 05 June 2012 UCO Bank 05 March 2014 UCO Bank 10 March 2014 UCO Bank 14 March 2014 Union Bank of India 03 December 2012 United Bank of India 24 May 2013 Less: Provision for diminution in value Certificate of deposits-Total Other Current investments-Total (5) (i+ii+iii) (b) Current portion of long term investments: H(1)(b) Bonds Nakheel Anka Sukuk Limited Bonds-Total Total current investments-(a+b) Details of quoted/unquoted investments: Particulars Face value per unit Number of Units As at 31-3-2013 As at 31-3-2013 crore As at 31-3-2012 crore – – – 10,000 – – – – – – – 5,000 – 5,000 – – 25,000 – 2,500 – – – – 5,000 – – – – – – – – – 2,500 5,000 5,000 – 10,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 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 AED 10,000 1559.58 – – – 91.60 – – – – – – – 48.12 – 46.08 – – 235.79 – 23.66 – – – – 47.25 – – – – – – – – – 23.08 46.08 46.08 – 98.51 2265.83 0.23 2265.60 2265.60 – – 5580.69 2913.56 91.12 138.81 90.85 – 46.40 182.36 94.67 92.51 23.22 46.31 22.93 – 23.34 – 68.72 22.81 – 24.02 – 46.00 92.03 138.82 22.85 – 46.58 73.32 23.05 45.96 94.20 91.07 46.41 44.95 48.99 – – – 46.30 – 4742.16 5.92 4736.24 4901.39 1.39 1.39 6787.19 As at 31-3-2013 crore As at 31-3-2012 crore 1268.94 1324.54 1246.20 1275.22 4311.75 5540.99 (a) Aggregate amount of quoted current investments and market value thereof; Book Value Market Value (b) Aggregate amount of unquoted current investments; Book Value (c) Aggregate provision for diminution in value of current investments: 1.65 crore (previous year 18.89 crore) 172 Notes forming part of the Accounts (contd.) NOTE [H(II)] Inventories (at cost or net realisable value whichever is lower) Particulars Raw Materials [Includes goods-in-transit 34.75 crore (previous year 16.93 crore)] Components [Includes goods-in-transit 77.64 crore (previous year 52.72 crore)] Construction material [Includes goods-in-transit 0.31 crore (previous year 1.99 crore)] Manufacturing work-in-progress [Note Q(25)(d)] Finished goods Stock in trade (in respect of goods acquired for trading) [Includes goods-in-transit 31.82 crore (previous year 50.99 crore)] Stores and spares [Includes goods-in-transit 4.14 crore (previous year 2.43 crore)] Loose tools Property development related work-in-progress [Note Q(6)(b)] NOTE [H(III)] Trade receivables As at 31-3-2013 As at 31-3-2012 crore 451.07 348.08 0.74 646.59 209.11 169.19 84.62 5.02 149.76 2064.18 crore 418.58 330.94 2.02 466.29 237.88 196.33 80.05 4.51 40.02 1776.62 Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Secured: Other debts (Debts outstanding for less than 6 months) Considered good Unsecured: Debts outstanding for more than 6 months Considered good Considered doubtful Other debts: [Note H(III)(a)] Considered good Considered doubtful Less: Allowance for doubtful debts 0.77 – 0.77 – 1978.70 514.40 2493.10 20633.54 0.34 23126.98 514.74 1633.70 603.16 2236.86 17083.24 – 19320.10 603.16 22612.24 22613.01 18716.94 18716.94 H(III)(a) Unsecured-other debts includes 15531.50 crore (previous year: 12393.15 crore) contractually not due. 173 Notes forming part of the Accounts (contd.) NOTE [H(IV)] Cash and bank balances Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Cash and cash equivalent Balance with banks Cheques and drafts on hand Cash on hand Fixed deposits with banks (maturity less than 3 months) Other bank balances Fixed deposits with banks including interest accrued thereon [including Nil crore of bank deposits with more than 12 months maturity (previous year: 0.02 crore)] Earmarked balances with banks-unclaimed dividend Margin money deposits Cash and bank balances not available for immediate use [Note G(II)(a)] Bank balances subject to restriction on repatriation [Note H(IV)(a)] 708.93 337.20 3.23 230.16 2.58 23.85 5.07 135.70 8.94 555.71 272.60 2.87 856.93 1279.52 1688.11 13.09 19.52 15.15 33.31 8.94 176.14 1455.66 90.01 1778.12 crore The balance represents fixed deposit/call deposit against loan taken from Rafidian Bank. The deposit with Mashreq Bank is subject to an escrow arrangement duly approved by the Reserve Bank of India. The proceeds of both deposits, together with interest thereon, would be applied towards full and final settlement of loan taken from Rafidian Bank, Iraq which is disclosed as loan repayable on demand vide Note (D)(I) for an equivalent amount of 8.94 crore. NOTE H(IV)(a) Particulars Rafidian Bank 31-3-2013 31-3-2012 8.25 8.25 Mashreq Bank 0.69 0.69 Total 8.94 8.94 NOTE [H(V)] Short term loans and advances Particulars Secured considered good: Loans against mortgage of house property: Key management personnel Others Unsecured Considered good: Subsidiary companies Loans [Note Q(2)(a)] Inter-corporate deposits including interest accrued [Note Q(2)(a)] Others Carried forward 174 As at 31-3-2013 As at 31-3-2012 crore crore – 1.72 200.00 605.35 841.00 1648.07 0.28 1.76 318.20 49.51 1116.77 1486.52 Notes forming part of the Accounts (contd.) NOTE [H(V)] Short term loans and advances (contd.) Particulars Brought forward Associate companies Advance recoverable Joint ventures companies Loans Advance recoverable Advances to supliers Others Considered good: Security deposits Earnest money deposits Advances recoverable in cash or kind Income tax receivable of current year [net of provision of 1814.10 crore in previous year] Balance with customs, port trust etc. Lease receivable Considered doubtful: Deferred credit against sale of ships Security deposits Other loans and advances Less: Allowance for doubtful loans and advances As at 31-3-2013 As at 31-3-2012 crore 1648.07 6.69 – 0.04 20.48 167.50 72.40 3528.78 – 54.44 0.44 22.58 1.40 131.79 5654.61 155.77 5498.84 crore 1486.52 11.47 84.04 – 10.18 132.64 36.16 3078.60 95.22 70.34 0.45 21.16 0.47 130.80 5158.05 152.43 5005.62 NOTE [H(VI)] Other current asset Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Other current assets: Due from customers (construction and project related activity) Due from customers (property development activity) [Note (Q)(6)(b)] Interest accrued on investments Unbilled revenue Unamortised expenses 11692.89 1.83 35.66 48.63 11.65 11781.47 - 93.84 42.33 4.72 11790.66 11790.66 11922.36 11922.36 175 Notes forming part of the Accounts (contd.) NOTE [I] Contingent liabilities Particulars (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 (d) in appeal/challenged by the Company in WRIT Income-tax liability (including penalty) that may arise in respect of which the Company is in appeal (e) Corporate guarantees given on behalf of subsidiary companies As at 31-3-2013 As at 31-3-2012 crore 177.97 112.60 41.21 390.39 4422.32 crore 198.15 107.04 28.59 198.38 1570.47 Notes: 1. 2. 3. The Company does not expect any reimbursements in respect of the above contingent liabilities. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above, pending resolution of the arbitration/appellate proceedings. In respect of matters at (e), the cash outflows, if any, could generally occur up to eight years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowing to which the guarantees relate. NOTE [J] Commitments Particulars (a) Estimated amount of contracts remaining to be excuted on capital account (net of advances ) As at 31-3-2013 As at 31-3-2012 crore 390.48 crore 397.30 (b) Estimated amount of committed funding by way of equity/loans to subsidiary and associate companies 7453.00 7809.00 NOTE [K] Revenue from operations Particulars Sales & service: 2012-13 2011-12 Note crore crore crore crore Manufacturing and trading activity Property development activity Construction and project related activity Servicing Commission Engineering and service fees Q (25)(a) (i) Q(25)(a)(ii), Q(6)(b) Q(6)(a), Q(25)(a)(iii) Q(25)(a)(iv) Q(25)(a)(v) Q(25)(a)(vi) 6375.70 73.79 52618.63 406.08 158.77 1215.03 6367.59 21.70 45356.71 285.63 205.01 875.74 60848.00 53112.38 Other operational revenue: Income from hire of plant and equipment Technical fees Company’s share in profit of Integrated joint ventures Lease rentals Income from services to the Group companies Premium earned (net) on related forward exchange contract Miscellaneous income Q14(b) 9.63 53.80 10.10 49.73 95.62 245.91 158.07 9.95 62.58 5.13 40.72 67.44 254.72 184.86 622.86 61470.86 625.40 53737.78 176 Notes forming part of the Accounts (contd.) K(I) Revenue from sales & service include: (a) 691.63 crore (previous year: 298.88 crore) for price variations net of liquidated damages in terms of contracts with the customers. (b) Shipbuilding subsidy 10.02 crore (previous year : 2.09 crore) and reversal of shipbuilding subsidy of 7.22 crore (previous year : 18.24 crore). Note [L] Other Income Particulars Interest income: Interest income on long term investments Interest income on current investments Interest income on others: Subsidiary and associate companies Others Dividend income: From long term investments: Subsidiary companies Associate companies Other trade investments Other investments From current investments Net gain/(loss) on sale of investment: Long term investments (net) Current investments (net) Net gain/(loss) on sale of fixed assets (net) Lease rental Miscellaneous income (net of expenses) [Note L(I)] 2012-13 2011-12 crore crore crore crore 0.40 310.92 181.27 40.10 583.21 1.80 – 1.20 586.21 3.45 24.71 224.21 0.35 407.20 126.97 34.42 532.69 568.94 385.13 22.58 7.50 1.20 416.41 47.78 (1.75) 124.39 589.66 248.92 226.29 43.68 209.66 1850.90 464.19 122.64 13.24 18.98 150.29 1338.28 [L(I)] Miscellaneous income includes recoveries from subsidiary, joint venture and associate companies towards directly attributable expenses incurred on employees deputed to these companies. Such expenses, the details of which are given hereunder, have been netted off from miscellaneous income. Expenses 2012-13 2011-12 Salaries Contribution to Provident Fund Compensation for Employee Stock Option Plan (ESOP) Welfare expenses Other expenses Total crore 81.06 1.94 6.18 1.02 2.31 92.51 crore 74.07 1.84 10.52 2.93 2.46 91.82 177 Notes forming part of the Accounts (contd.) NOTE [M] Manufacturing, construction and operating expenses Particulars 2012-13 2011-12 crore crore crore crore Materials consumed: Raw materials and components [Note Q(25)(b)] Less: Scrap sales Construction materials Purchase of stock in trade [Note Q(25)(c)] Value of stock in trade transferred on sale of business Stores, spares and tools consumed Sub-contracting charges Changes in inventories of finished goods, work-in-progress and stock-in-trade and property development: Closing stock: Finished goods Stock in trade Work-in-progress Less: Opening stock: Finished goods Stock in trade Work-in-progress Other manufacturing, construction and operating expenses: Excise duty Power and fuel [Note O(I)] Royalty and technical know-how fees Packing and forwarding [Note O(I)] Hire charges-plant & equipment and others Engineering, technical and consultancy fees Insurance [Note O(I)] Rent [Note O(I)] Rates and taxes [Note O(I)] Travelling and conveyance [Note O(I)] Repairs to plant and equipment Repairs to buildings [Note O(I)] General repairs and maintenance [Note O(I)] Bank guarantee charges Miscellaneous expenses [Note O(I)] 178 11039.28 146.99 2078.47 (15.24) 209.11 169.19 3199.91 3578.21 237.88 196.33 2011.97 2446.18 (6.27) 758.99 7.07 240.33 1031.57 690.66 137.34 282.76 180.97 720.41 47.80 13.41 208.89 77.74 395.96 10092.12 12527.42 2369.40 1622.83 10747.27 10892.29 14581.12 2063.23 2288.10 14472.06 10203.82 111.70 2384.73 (15.33) 237.88 196.33 2011.97 2446.18 233.37 200.66 1472.38 1906.41 (1132.03) (539.77) 16.27 638.79 18.07 210.75 879.63 786.48 121.00 209.24 186.21 530.37 51.24 12.68 177.91 66.46 298.02 4787.63 47952.40 4203.12 41022.39 Notes forming part of the Accounts (contd.) NOTE [N] Employee benefits expense Particulars Salaries, wages and bonus Contribution to and provision for: Provident funds and pension fund Superannuation/employee pension schemes [Including provision 10.53 crore (previous year: 17.97 crore)] Gratuity funds [Note Q(8)(b)] [Including provision 0.26 crore (previous year: 0.01 crore)] Expenses on Employee Stock Option Schemes [Note A(VIII)(e)(ii)] Insurance expenses-Medical and others [Note O(I)] Staff welfare expenses [Note L(I) for employee benefits expense netted off] NOTE [O] Sales, administration and other expenses Particulars Power and fuel [Note O(I)] Packing and forwarding [Note O(I)] Professional fees Audit fees [Note Q(17)] Insurance [Note O(I)] Rent [Note O(I)] Rates and taxes [Note O(I)] Travelling and conveyance [Note O(I)] Repairs to buildings [Note O(I)] General repairs and maintenance [Note O(I)] Directors’ fees Telephone, postage and telegrams Advertising and publicity Stationery and printing Commission: Distributors and agents Others Bank charges Carried Forward 2012-13 2011-12 crore crore crore 3602.34 crore 2863.47 120.89 31.69 44.97 102.39 28.79 53.38 197.55 85.41 53.01 498.01 4436.32 2012-13 2011-12 crore crore crore 59.08 204.93 157.98 3.44 15.35 109.01 55.57 222.12 13.43 207.57 0.28 99.25 81.46 45.09 29.24 3.41 29.21 17.00 32.65 42.31 1349.52 184.56 156.73 40.10 421.23 3666.09 crore 49.10 103.70 170.50 2.44 9.75 95.02 38.65 178.03 21.14 168.91 0.30 83.04 76.86 37.85 46.21 34.75 1116.25 179 Notes forming part of the Accounts (contd.) NOTE [O] Sales, administration and other expenses (contd.) Particulars Brought Forward Miscellaneous expenses [Note O(I)] Bad debts and advances written off Less: Allowance for doubtful debts and advances written back Company’s share in loss of integrated joint ventures [Note Q(14)(b)] Discount on sales Allowance for doubtful debts and advances (net) Provision/(reversal) for foreseeable losses on construction contracts Provision/(reversal) for diminution in value of investments(net) Exchange (gain)/loss (net) Other provisions [Note Q(15)(a)] 2012-13 2011-12 crore crore crore 41.40 31.30 101.57 78.58 1349.52 299.06 22.99 22.62 72.17 (5.83) 44.89 (17.24) 396.02 (93.12) 2091.08 O(I) Aggregation of expenses disclosed vide notes M, N and O in respect of specific items are as follows: crore 1116.25 288.61 10.10 23.99 58.43 180.11 42.86 (6.44) 458.55 45.72 2218.18 crore Note O 59.08 204.93 15.35 109.01 55.57 222.12 13.43 207.57 299.06 Sr No. Nature of expenses 2012-13 Note M Note N 758.99 240.33 137.34 282.76 180.97 720.41 13.41 208.89 395.96 – – 53.01 – – – – – – 1 2 3 4 5 6 7 8 Power and fuel Packing & forwarding Insurance Rent Rates & taxes Travelling and conveyance Repairs to buildings General repairs and maintenance 9 Miscellaneous expenses NOTE [P] Finance costs Particulars Interest expenses Other borrowing costs Exchange loss (attributable to finance costs) Total Note M Note N Note O Total 2011-12 818.07 445.26 205.70 391.77 236.54 942.53 26.84 416.46 695.02 638.79 210.75 121.00 209.24 186.21 530.37 12.68 177.91 298.02 2012-13 crore 916.30 7.83 58.27 982.40 – – 49.10 687.89 103.70 314.45 40.10 9.75 170.85 – – – – – – 95.02 304.26 38.65 224.86 178.03 708.40 21.14 33.82 168.91 346.82 288.61 586.63 2011-12 crore 604.11 6.14 55.85 666.10 180 Notes forming part of the Accounts (contd.) NOTE [Q] Q(1) The Balance Sheet as on March 31, 2013 and the Statement of Profit and Loss for the year ended March 31, 2013 are drawn and presented as per the new Schedule VI to the Companies Act, 1956. Q(2) Particulars in respect of loans and advances in the nature of loans as required by the listing agreement: crore Name of the company Balance as at 31-3-2013 31-3-2012 Maximum outstanding during 2011-12 2012-13 (a) Loans and advances in the nature of loans given to subsidiaries: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Larsen & Toubro Infotech Limited Tractor Engineers Limited L&T Finance Limited L&T Capital Company Limited L&T Seawoods Private Limited L&T Infrastructure Development Projects Limited L&T Infrastructure Finance Company Limited L&T Realty Limited L&T Chennai Projects Private Limited (Formally known as L&T Arun Excello IT SEZ Private Limited) L&T Commercial Projects Private Limited (Formally known as L&T Arun Excello Commercial Projects Private Limited) L&T Finance Holdings Limited L&T Shipbuilding Limited L&T Special Steels & Heavy Forgings Private Limited L&T Uttaranchal Hydropower Limited L&T Sapura Offshore Private Limited L&T Rajkot-Vadinar Tollway Limited PNG Tollway Limited L&T Urban Infrastructure Limited L&T Infocity Limited EWAC Alloys Limited – – – – – – – 751.47 177.01 – – – 46.09 – 4.12 – 47.84 36.83 36.00 – – 168.01 – – 25.26 – 13.14 – – – Total 1099.36 * 1242.85 * ( b) Loans and advances in the nature of loans where repayment schedule is not specified/is beyond 7 years: L&T Shipbuilding Limited PNG Tollway Limited 1 2 Total (c) Loans and advances in the nature of loans where interest is not charged or charged below bank rate: L&T Capital Company Limited L&T Realty Limited L&T Seawoods Private Limited Tractor Engineers Limited 1 2 3 4 Total – 47.84 47.84 – 200.00 – – 200.00 168.00 13.14 181.14 103.50 200.00 256.20 – 559.70 – 24.25 – 103.50 256.20 – – 465.00 159.92 5.00 24.37 – 103.50 265.20 – – 809.93 177.01 101.48 49.00 100.05 103.50 256.20 253.29 231.32 1002.08 159.93 27.57 29.07 27.57 – 169.19 46.09 – 26.25 – 47.84 338.81 135.23 11.98 470.37 182.46 – 264.90 25.26 39.02 13.14 – – – 169.19 47.84 182.46 13.14 103.50 200.00 265.20 18.00 103.50 796.00 256.20 – * Long term loans and advances [Note G(I)] - 294.01 crore (previous year: 875.14 crore) Short term loans and advances [Note H(V)] - 805.35 crore (previous year: 367.71 crore) 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. 181 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Q(3) Extraordinary and Exceptional Items [Note R(4)]: (a) Exceptional items for the year ended March 31, 2013 include the following: Expenses incurred amounting to 38.34 crore on voluntary retirement scheme; (i) (ii) Gain of 214.29 crore on sale of the Company’s stake in L&T Plastics Machinery Private Limited, a subsidiary company. Exceptional items for the year ended March 31, 2012 included profit of Raykal Aluminium Company Private Limited, a subsidiary company. 55.00 crore on sale of the Company’s part stake in (b) Extraordinary items during the year ended March 31, 2013 represent the following: (i) Reversal of 52.89 crore (previous year: Nil) being provision made in earlier years in respect of the Company’s Investment in shares of Satyam Computer Services Limited (SCSL); (ii) Gain of 25.22 crore (net of tax 18.72 crore) on sale of the Company’s Medical Equipment Business unit. Tax of 6.50 crore included under current tax. Q(4) The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is 98.17 crore (previous year: 83.33 crore). Further, the Company has incurred capital expenditure on research and development activities as follows: (a) on tangible assets of 12.45 crore (previous year: 17.17 crore); (b) on intangible assets being expenditure on new product development of 43.76 crore (previous year: 38.58 crore) [Note 5(b)]; and (c) on other intangible assets of 0.96 crore (previous year: 1.11 crore). In addition, the Company has carried out work of a developmental nature of partially/fully paid for by the customers. 21.27 crore (previous year: 13.06 crore) which is Q(5) (a) Provision for current tax includes 20.25 crore in respect of income tax payable outside India (previous year : 8.32 crore) (b) Tax effect of 0.17 crore (previous year : 0.03 crore) on account of debenture issue expenses has been credited to securities premium account. Q(6) (a) Disclosures pursuant to Accounting Standard (AS) 7 (Revised) “Construction Contracts”: Particulars i) ii) iii) iv) Contract revenue recognised for the financial year [Note (K)] Aggregate amount of contract costs incurred and recognised profits (Less recognised losses) as at end of the financial year for all contracts in progress as at that date Amount of customer advances outstanding for contracts in progress as at end of the financial year Retention amounts by customers for contracts in progress as at end of the financial year 2012-13 2011-12 crore crore 52618.63 153205.39 45356.71 118453.74 7985.16 9250.11 6974.96 4973.43 b) Disclosures pursuant to Guidance Note on Accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India, adopted by the Company with effect from April 1, 2012. Particulars i) ii) Amount of project revenue recognised for the financial year [Note (K)] Aggregate amount of costs incurred and profits recognised (Less recognised losses) as at the end of the financial year iii) Amount of advances received iv) Amount of work in progress and the value of inventories [Note H(II)] v) Excess of revenue recognised over actual bills raised (unbilled revenue) [Note H(VI)] Q(7) Disclosures pursuant to Accounting Standard (AS) 13 “Accounting for Investments” 2012-13 crore 73.79 70.24 158.32 149.76 1.83 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 company L&T Transportation Infrastructure Limited (LTTIL): i. not to reduce their joint shareholding in LTTIL below 51% until the financial assistance received from the term lenders is repaid in full by LTTIL; and 1. 182 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) ii. to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL . b. To the lenders of L&T Krishnagiri Thopur Toll Road Limited, not to dilute Company’s shareholding in L&T Infrastructure Development Projects Limited below 51%. c. To Gujarat State Road Development Corporation Limited: i. to hold in L&T Ahmedabad-Maliya Tollway Limited, L&T Halol-Shamlaji Tollway Limited and L&T Rajkot-Vadinar Tollway Limited along with L&T Infrastructure Development Projects Limited:   100% stake during the construction period; 51% stake for 5 years from the date of commercial operation or end of construction of the project, whichever is later; and  51% stake during operational period. ii. not to divest the stake in L&T Infrastructure Development Projects Limited until the aforesaid undertakings are valid. d. e. f. To National Highway Authority of India, to hold together with its associates in L&T Samakhiali Gandhidham Tollway Limited minimum 51% stake for a period of 2 years after the construction period. To National Highway Authority of India, to hold minimum 26% stake in PNG Tollway Limited till the commercial operations date. To National Highway Authority of India, to hold together with its associates, in L&T Devihalli Hassan Tollway Limited, minimum 51% stake for a period of 2 years after construction period. g. To National Highway Authority of India, to hold together with its associates in L&T Krishnagiri Walajahpet Tollway Limited: i. minimum 51% stake during the construction period ii. minimum 33% stake for 3 years from project completion date and iii. Minimum 26% or such lower stake as may be permitted by National Highway Authority of India during remaining concession period. h. i. j. k. l. To the lenders of PNG Tollway Limited, to hold together with L&T Infrastructure Development Projects Limited and Ashoka Buildcon Limited, minimum 51% stake in PNG Tollway Limited, until final settlement date. To the Security Trustee of the lenders of L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited (a subsidiary of the Company) at least 51% stake till final settlement date. To the Government of Andhra Pradesh (GoA) with respect to shareholding in L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited – i. ii. 51% stake till the second anniversary of the commercial operation date (COD) of the project; 33% stake till the third anniversary of the commercial operation date of the project; iii. 26% stake (or such lower proportion as may be permitted by the GoA), till the remaining concession period. Jointly with L&T-MHI Turbine Generators Private Limited (a 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 financial support for the successful execution of APPDCL 2x800 MW Power Project – Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh. To hold certain minimum stake in its subsidiary companies namely, L&T–MHI Boilers Private Limited and L&T–MHI Turbine Generators Private Limited. These undertakings have been given to the customers/potential customers of the Company, as also those of L&T–MHI Boilers Private Limited. The undertakings will remain valid till the end of defect liability period or till such period as prescribed in the related bid documents/contracts. m. To the Security Trustee of the lenders of L&T Sapura Shipping Private Limited, not to sell or transfer equity stake without prior approval. n. o. p. To hold 15,899 shares comprising 9.85% of the issued capital of International Seaport Dredging Limited till January 24, 2016. To the Security Trustee of L&T Aviation Services Private Limited, to hold at least 51% stake, directly or indirectly, in L&T Aviation Services Private Limited, until any amount is outstanding under the Credit Facility Agreement. 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 executes the lease deed for land in favour of LTSPL. 183 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) q. r. To the lenders of L&T Seawoods Private Limited, to maintain a minimum 51% stake in L&T Seawoods Private Limited, until any amount is outstanding under banking credit facilities. To the debenture trustee of L&T Shipbuilding Limited, to maintain at least 26% stake in L&T Shipbuilding Limited, until any amount is outstanding under the debentures. Q(8) Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Benefits”. i. Defined contribution plans: [Note R(6)(b)(i)] Amount of 103.80 crore [including 17.17 crore in respect of earlier years] (previous year: 74.52 crore) is recognised as an expense and included in “employee benefits expense” (Note N) in the Statement of Profit and Loss. ii. Defined benefit plans: [Note R(6)(b)(ii)] a) The amounts recognised in Balance Sheet are as follows: Particulars Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 crore A) Present value of defined benefit obligation Wholly funded Wholly unfunded Less: Fair value of plan assets Less: Unrecognised past service costs Amount to be recognised as liability or (asset) B) Amounts reflected in the Balance Sheet Liabilities Assets Net liability/(asset) Net liability/(asset) - current Net liability/(asset) - non-current 363.34 1.11 364.45 311.80 – 52.65 52.65 – 52.65 52.65 – 340.22 0.85 341.07 291.66 – 49.41 49.41 – 49.41 49.41 – – 106.56 106.56 – 1.25 105.31 105.31 – 105.31 5.77 99.54 – 88.44 88.44 – 1.43 87.01 87.01 – 87.01 4.83 82.18 – 198.89 198.89 – 0.53 198.36 198.36 – 198.36 11.98 186.38 b) The amounts recognised in Statement of Profit and Loss are as follows: – 1665.13 184.67 10.81 184.67 1675.94 – 1648.23 – 27.71 0.64 184.03 1526.04 18.68 1544.72 1507.47 – 37.25 184.03 – 184.03 9.84 174.19 37.32 27.72 – – 27.72 37.32 27.72 # 18.64 # 18.68 – crore Particulars Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan 1 2 3 4 5 6 Current service cost Interest cost Expected (return) on plan assets Actuarial losses/(gains) Past service cost Actuarial gain/(loss) not recognised in books Total (1 to 6) I Amount included in “employee benefits expense” Amount included as part of finance costs Amount capitalised on new product development Amount recovered from S&A Companies II III IV Total (I + II+III+IV) Actual return on plan assets 2012-13 19.36 28.57 (21.13) 25.43 – 2011-12 24.25 24.90 (20.80) 21.08 – 2012-13 6.07 7.91 – 9.33 0.18 2011-12 5.95 7.75 – (13.26) 0.18 2012-13 0.98 15.45 – 9.14 0.11 2011-12 2012-13 2011-12 5.12 102.80 $ 79.67 $ 110.70 13.27 114.60 (110.70) – (114.60) 11.57 (15.99) – – 12.54 0.11 – 52.23 44.97 6.61 0.08 0.57 52.23 34.55 – 49.43 53.38 (5.56) – 1.61 49.43 20.70 – 23.49 7.82 15.67 – – 23.49 – – 0.62 0.06 0.56 – – 0.62 – – 25.68 0.82 25.95 – (1.09) 25.68 – – 31.04 (0.08) 86.73 7.11 98.35 27.12 102.80 (16.07) 2.59 79.67 18.68 – 1.33 31.04 – – 86.73 – 122.72 – – 98.35 117.81 184 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: Particulars Opening balance of the present value of defined benefit obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) ii) iii) Employer Employee Transfer-in/(out)~ Add/(less): Actuarial losses/(gains) Less: Benefits paid Add: Past service cost Closing balance of the present value of defined benefit obligation Gratuity plan As at 31-3-2013 As at 31-3-2012 Post-retirement medical benefit plan As at 31-3-2013 As at 31-3-2012 Company pension plan crore Trust-managed provident fund plan As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 341.07 19.36 28.57 – – – 38.85 (63.40) – 336.33 24.25 24.90 – – (2.03) 20.98 (63.36) – 88.44 6.07 7.91 – – – 9.33 (5.19) – 92.92 5.95 7.75 – – – (13.26) (4.92) – 184.67 0.98 15.45 – – – 9.14 (11.35) – 162.89 1544.72 1396.21 5.12 102.80 $ 79.67 $ 13.27 114.60 110.70 – – – 175.46 – – 12.54 (7.87) (9.15) (253.77) – – – 150.63 – 18.68 (211.17) – 364.45 341.07 106.56 88.44 198.89 184.67 1675.94 1544.72 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Particulars Opening balance of the fair value of the plan assets Add: Expected Return on Plan Assets* Add/(Less): Actuarial gains/(losses) Add: Contribution by the employer Add: Contribution by Plan participants Less: Benefits paid Closing balance of the plan assets Gratuity plan crore Trust-managed provident fund plan As at 31-3-2013 291.66 21.13 13.42 48.99 – (63.40) 311.80 As at 31-3-2012 308.38 20.80 (0.10) 25.94 – (63.36) 291.66 As at 31-3-2013 1507.47 114.60 8.12 97.12 174.69 (253.77) 1648.23 As at 31-3-2012 1369.08 110.70 7.11 83.29 148.46 (211.17) 1507.47 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 funds. 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. Note Q(8)(ii)(f)(7). The Company expects to fund (previous year: 84.45 crore) towards its trust-managed provident fund plan during the year 2013-14. 51.53 crore (previous year: 48.56 crore) towards its gratuity plan and 108.96 crore # $ ~ Employer’s and employees’ contribution (net) for March is paid in April. Employer’s contribution to provident fund Amount transferred (to)/from subsidiary & associate companies and transferred out on sale of business undertakings (net) Nil crore [previous year (2.03) crore] 185 Notes forming part of the Accounts (contd.) NOTE [Q] (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 As at 31-3-2013 29% 15% 26% 2% As at 31-3-2012 35% 10% 16% 3% Trust-managed provident fund plan As at 31-3-2013 24% 13% 7% – As at 31-3-2012 24% 12% 7% – – 1% 20% 7% – 1% 29% 6% 14% – 42% – 17% – 40% – f) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages): 1 2 3 4 Post-retirement medical benefit plan Discount rate: a) Gratuity plan b) Company pension plan c) Expected return on plan assets Annual increase in healthcare costs (see note below) Salary growth rate: a) Gratuity plan b) Company pension plan 5 Attrition rate: As at 31-3-2013 As at 31-3-2012 8.09% 8.09% 8.09% 7.50% 5.00% 5.00% 6.00% 8.59% 8.59% 8.59% 7.50% 5.00% 5.00% 6.00% a) For post-retirement medical benefit plan & Company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups. b) For gratuity plan, the attrition rate varies from 1% to 6% (previous year: 1% to 6%) for various age groups. 6 7 8 9 The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial losses. The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: crore Particulars Effect of 1% increase Effect of 1% decrease 2012-13 2011-12 2012-13 2011-12 Effect on the aggregate of the service cost and interest cost Effect on defined benefit obligation 2.73 11.11 2.15 8.74 (2.10) (8.84) (1.67) (7.02) 186 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) g) The amounts pertaining to defined benefit plans are as follows: Particulars As at 31-3-2013 As at 31-3-2012 As at 31-3-2011 As at 31-3-2010 As at 31-3-2009 crore 1 Post-retirement medical benefit plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Defined benefit obligation Plan assets Surplus/(deficit) Experience adjustment plan liabilities Experience adjustment plan assets 3 Post-retirement pension plan (unfunded) 105.31 1.62 364.45 311.80 (52.65) 26.26 13.01 87.01 (6.60) 91.31 7.91 78.99 5.73 70.97 1.13 341.07 291.66 (49.41) 30.52 (0.45) 336.33 308.38 (27.95) 30.00 4.48 320.41 279.30 (41.11) 30.67 2.21 272.93 244.71 (28.22) 8.38 13.13 Defined benefit obligation 198.36 184.03 162.14 135.61 151.80 Experience adjustment plan liabilities (2.79) 23.21 17.46 (4.11) (6.89) 4 Trust managed provident fund plan (funded/unfunded) Defined benefit obligation 1675.94 1544.72 1396.21 1199.77 1001.10 Plan assets Surplus/(deficit) 1648.23 1507.47 1369.08 1186.01 1017.06 (27.71) (37.25) (27.13) (13.76) 15.96 h) General descriptions of defined benefit plans: 1. Gratuity plan: The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Company’s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material, is unfunded and managed within the Company. 2. Post-retirement medical benefit plan: The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement. 3. Company’s pension plan: In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement. 4. Trust managed provident fund plan: The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement, whichever is earlier. The benefit under this plan vests immediately on rendering of service. 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 Statement of Profit and Loss as actuarial loss. Any loss/gain arising out of the investment 187 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) risk and actuarial risk associated with the plan is also recognised as expense or income in the period in which such loss/gain occurs. Further, the provision of 18.68 crore, which was created in 2011-12 based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan, has been reversed in the current year, because the balance in surplus account of the fund is higher than the interest obligation of 10.81 crore as on March 31, 2013. Q(9) Disclosures pursuant to Accounting Standard (AS) 17 “Segment Reporting” a) Information about business segments (information provided in respect of revenue items for the year ended March 31, 2013 and in respect of assets/liabilities as at March 31, 2013 denoted as “CY” below, previous year denoted as “PY”) i) Primary segments (business segments): crore Particulars Engineering & construction CY PY Electrical & electronics CY PY Machinery & industrial products PY CY Others Elimination Total CY PY CY PY CY PY Revenue – including excise duty External Inter-segment Total revenue Result Segment result Inter-segment margins on capital jobs Unallocated corporate income/ (expenditure) (net) Operating profit (PBIT) Interest expense Interest income Profit before tax (PBT) Provision for current tax Provision for deferred tax Profit after tax (before extraordinary items) Profit from extraordinary items Profit after tax (after extraordinary items) Other information Segment assets Unallocable corporate assets Total assets Segment liabilities Unallocable corporate liabilities Total liabilities Capital expenditure Depreciation, amortisation and obsolescence (included in segment expense) Non-cash expenses other than depreciation included in segment expense 188 54378.29 47067.97 3403.12 240.83 210.73 54500.97 47278.70 3643.95 122.68 3250.54 2302.72 328.89 92.47 3579.43 2395.19 2474.72 1386.73 27.12 2553.94 1413.85 79.22 944.55 – 18.47 (483.10) 963.02 (483.10) – 61470.86 53737.78 (637.31) – – (637.31) 61470.86 53737.78 5598.17 5440.78 358.00 364.21 403.35 443.42 422.62 190.33 – – 6782.14 6438.74 (17.52) 6764.62 (25.42) 6413.32 (5.83) 318.13 6407.49 7082.75 (666.10) (982.40) 568.94 532.69 6633.04 6310.33 (1658.21) (1814.13) (39.70) (135.79) 4456.50 4839.04 71.61 4910.65 – 4456.50 49249.83 43958.12 22924.38 23674.28 72174.21 67632.40 31551.15 30486.45 11480.34 11922.93 43031.49 42409.38 44159.07 39287.44 2434.57 2460.91 1355.09 1312.58 1301.10 897.19 29187.69 28307.30 1153.48 1097.46 759.08 784.45 450.90 297.24 845.67 628.29 1213.31 538.60 184.06 74.68 170.45 65.91 49.07 27.73 24.51 26.24 142.60 32.60 101.88 20.81 105.76 156.98 5.63 8.41 1.96 5.97 8.33 12.88 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) ii) Secondary segments (geographical segments): crore Particulars External revenue by location of customers Carrying amount of segment assets by location of assets Domestic Overseas CY PY CY 49272.75 47308.33 12198.11 6284.66 42965.17 39931.64 PY PY 6429.45 61470.86 53737.78 4026.48 49249.83 43958.12 Total CY Cost incurred on acquisition of tangible and 1082.20 1447.34 139.20 62.81 1221.40 1510.15 intangible fixed assets b) Segment reporting: segment identification, reportable segments and definition of each reportable segment: i) Primary/secondary segment reporting format: [a] The risk-return profile of the Company’s business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information. [b] In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly. ii) Segment identification: Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments: Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India. iv) Segment composition:   Engineering & construction segment comprises execution of engineering and construction projects in India/abroad to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning, procurement/construction and project management. Electrical & electronics segment comprises manufacture and sale of low and medium voltage switchgear components, custom built low and medium voltage switchboards, electronic energy meters/protection (relays) systems, control & automation products and medical equipment (upto the date of sale).  Machinery & industrial products segment comprises manufacture and sale of rubber processing machinery and castings, manufacture and marketing of industrial valves, construction equipment and industrial products. Machinery & Industrial Products also include marketing of welding products in the previous year.  Others include property development and integrated engineering services. Q(10) Disclosure of related parties/related party transactions pursuant to Accounting Standard (AS) 18 “Related Party Disclosures” i. List of related parties over which control exists and status of transactions entered during the year Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 Name of the related party Relationship Tractor Engineers Limited Bhilai Power Supply Company Limited L&T-Sargent & Lundy Limited Spectrum Infotech Private Limited L&T-Valdel Engineering Limited L&T Shipbuilding Limited L&T Electricals and Automation Limited Hi-Tech Rock Products & Aggregates Limited L&T Seawoods Private Limited L&T-Gulf Private Limited L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited Wholly owned Subsidiary Subsidiary* Subsidiary* Wholly owned Subsidiary Wholly owned Subsidiary Subsidiary* Wholly owned Subsidiary Wholly owned Subsidiary Wholly owned Subsidiary Subsidiary* Subsidiary* Subsidiary* Transaction entered during the year (Yes/No) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 189 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Name of the related party Relationship Sr. No. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 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 Raykal Aluminium Company Private Limited L&T Natural Resources Limited L&T Plastics Machinery Limited @ L&T Technologies Limited L&T Special Steels and Heavy Forgings Private Limited PNG Tollway Limited L&T Rajkot-Vadinar Tollway Limited Kesun Iron & Steel Company Private Limited L&T Howden Private Limited L&T Solar Limited L&T Sapura Shipping Private Limited L&T Sapura Offshore Private Limited L&T PowerGen Limited Ewac Alloys Limited L&T Kobelco Machinery Private Limited L&T Realty Limited L&T Asian Realty Project LLP L&T Parel Project LLP Chennai Vision Developers Private Limited L&T Urban Infrastructure Limited L&T South City Projects Limited L&T Siruseri Property Developers Limited L&T Vision Ventures Limited L&T Tech Park Limited L&T Bangalore Airport Hotel Limited CSJ Infrastructure Private Limited L&T Commercial Projects Private Limited (formerly known as L&T Arun Excello Commercial Projects Private Limited) @@ L&T Chennai Projects Private Limited (formerly known as L&T Arun Excello IT SEZ Private Limited) L&T Power Limited L&T Cassidian Limited L&T General Insurance Company Limited L&T Aviation Services Private Limited L&T Infocity Limited L&T Hitech City Limited Hyderabad International Trade Expositions Limited Larsen & Toubro Infotech Limited GDA Technologies Limited L&T Finance Holdings Limited L&T Finance Limited L&T Investment Management Limited L&T Mutual Fund Trustee Limited L&T FinCorp Limited L&T Infrastructure Finance Company Limited L&T Infra Investment Partners Advisory Private Limited L&T Infra Investment Partners Trustee Private Limited L&T Unnati Finance Limited L&T Access Financial Advisory Services Limited (formerly known as L&T Access Financial Advisory Services Private Limited) L&T Capital Company Limited L&T Trustee Company Private Limited 190 Subsidiary* Wholly owned Subsidiary Wholly owned Subsidiary Wholly owned Subsidiary Subsidiary* Subsidiary*** Subsidiary of L&T Infrastructure Development Projects Limited # Subsidiary* Subsidiary* Wholly owned Subsidiary Subsidiary* Subsidiary* Wholly owned Subsidiary Wholly owned Subsidiary Subsidiary* Wholly owned Subsidiary Subsidiary of L&T Realty Limited # Subsidiary of L&T Realty Limited Wholly owned Subsidiary of L&T Realty Limited Wholly owned Subsidiary of L&T Realty Limited Subsidiary of L&T Urban Infrastructure Limited # Wholly owned Subsidiary of L&T South City 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 # Wholly owned Subsidiary of L&T Urban Infrastructure Limited Transaction entered during the year (Yes/No) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Wholly owned Subsidiary of L&T Urban Infrastructure Limited Subsidiary* Subsidiary* Wholly owned Subsidiary Wholly owned Subsidiary Subsidiary* Subsidiary of L&T Infocity Limited # Subsidiary of L&T Infocity Limited # Wholly owned Subsidiary Subsidiary of GDA Technologies Inc.# Subsidiary* Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Infrastructure Finance Company Limited Wholly owned Subsidiary of L&T Infrastructure Finance Company Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary Wholly owned Subsidiary of L&T Capital Company Limited Yes Yes Yes Yes Yes Yes No Yes Yes No Yes Yes Yes No Yes Yes Yes Yes No Yes Yes No Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Sr. No. 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 Name of the related party Relationship L&T Power Development Limited L&T Uttaranchal Hydropower Limited L&T Arunachal Hydropower Limited L&T Himachal Hydropower Limited Nabha Power Limited L&T Infrastructure Development Projects 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 Transportation Infrastructure Limited L&T Western India Tollbridge Limited L&T Interstate Road Corridor Limited International Seaports (India) Private Limited L&T Port Kachchigarh Limited L&T Ahmedabad-Maliya Tollway Limited L&T Halol-Shamlaji Tollway Limited L&T Krishnagiri Walajahpet Tollway Limited L&T Devihalli Hassan Tollway Limited L&T Metro Rail (Hyderabad) Limited L&T Transco Private Limited L&T Chennai–Tada Tollway Limited L&T BPP Tollway Limited L&T Deccan Tollways Limited L&T Samakhiali Gandhidham Tollway Limited Larsen & Toubro LLC Larsen & Toubro Infotech GmbH Larsen & Toubro Infotech Canada Limited Larsen & Toubro Infotech LLC L&T Infotech Financial Services Technologies Inc. GDA Technologies Inc. L&T Infrastructure Development Projects Lanka (Private) Limited Wholly owned Subsidiary Wholly owned Subsidiary of L&T Power Development Limited Wholly owned Subsidiary of L&T Power Development Limited Wholly owned Subsidiary of L&T Power Development Limited Wholly owned Subsidiary of L&T Power Development Limited Subsidiary* Wholly owned Subsidiary of L&T Infrastructure Development Projects Limited Subsidiary of L&T Western India Tollbridge 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 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 Infrastructure Development Projects Limited Subsidiary of L&T Infrastructure Development Projects Limited Subsidiary of L&T Infrastructure Development Projects Limited Wholly owned Subsidiary of L&T Infrastructure Development Projects Limited 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* 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 Larsen & Toubro Infotech Limited Subsidiary of L&T Infrastructure Development Projects Limited # 95 Peacock Investments Limited 96 Mango Investments Limited 97 98 Lotus Infrastructure Investments Limited L&T Diversified India Equity Fund (formerly known as L&T Real Estate India Fund) L&T Asset Management Company Limited L&T Realty FZE Larsen & Toubro International FZE Larsen & Toubro (Oman) LLC Larsen & Toubro Electromech LLC L&T Modular Fabrication Yard LLC Larsen & Toubro (East Asia) SDN.BHD Larsen & Toubro Qatar LLC L&T Overseas Projects Nigeria Limited L&T Electricals & Automation Saudi Arabia Company LLC (formerly known as L&T Electricals Saudi Arabia Company LLC) Larsen & Toubro Kuwait Construction General Contracting Company, WLL 99 100 101 102 103 104 105 106 107 108 109 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 Capital Company Limited Wholly owned Subsidiary of L&T Capital Company Limited Wholly owned Subsidiary of L&T Realty Limited Wholly owned Subsidiary 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 ## Transaction entered during the year (Yes/No) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes No No No Yes No No No No No No No Yes Yes Yes Yes Yes No Yes Yes Yes 191 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Name of the related party Relationship Sr. No. 110 111 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Qingdao Larsen & Toubro Trading Company Limited 112 Jiangsu Shengye Valve Co., Ltd. (formerly known as Larsen & Toubro (Jiangsu) Valve Company Limited) @@@ Larsen & Toubro Readymix Concrete Industries LLC Larsen & Toubro Saudi Arabia LLC Larsen & Toubro (Wuxi) Electric Company Limited @@@@ Larsen & Toubro ATCO Saudia LLC Tamco Switchgear (Malaysia) SDN. BHD Tamco Electrical Industries Australia Pty Ltd PT Tamco Indonesia Larsen & Toubro Heavy Engineering LLC L&T Electrical & Automation FZE Larsen & Toubro Consultoria E Projeto Ltda Larsen & Toubro T&D SA (Proprietary) Limited L&T East-West Tollway Limited L&T Great Eastern Highway Limited Servowatch Inc $ Servowatch Systems Limited L&T Geostructure LLP Larsen Toubro Arabia LLC Henikwon Corporation SDN.BHD L&T Housing Finance Limited L&T Tejomaya Limited Audco India Limited ** L&T Technology Services Limited (originally formed as L&T Technology And Engineering Services Company Limited and name changed subsequently) CSJ Hotels Private Limited Consumer Financial Services Limited Family Credit Limited L&T Capital Markets Limited L&T Infra Debt Fund Limited L&T Trustee Services Private Limited (formerly known as FIL Trustee Company Private Limited) L&T Fund Management Private Limited (formerly known as FIL Fund Management Private Limited) Larsen & Toubro Infotech South Africa (PTY) Limited Thalest Limited Bond Instrumentation & Process Control Limited Wholly owned Subsidiary of Larsen & Toubro International FZE Wholly owned Subsidiary of Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Wholly owned Subsidiary of Larsen & Toubro International FZE Subsidiary of Larsen & Toubro International FZE ## Subsidiary of Larsen & Toubro International FZE# Wholly owned Subsidiary of Larsen & Toubro International FZE Subsidiary of Larsen & Toubro International FZE ## Wholly owned Subsidiary of Larsen & Toubro International FZE Wholly owned Subsidiary of Larsen & Toubro International FZE Wholly owned Subsidiary of Larsen & Toubro International FZE 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 # Wholly owned Subsidiary of L&T Infrastructure Development Projects Limited Wholly owned Subsidiary of L&T Infrastructure Development Projects Limited Wholly owned Subsidiary of Thalest Limited Wholly owned Subsidiary of Thalest Limited Subsidiary* Subsidiary* Wholly owned Subsidiary of Tamco Switchgear (Malaysia) SDN. BHD Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned subsidiary of L&T Tech Park Limited Wholly owned Subsidiary Wholly owned Subsidiary Wholly owned Subsidiary of CSJ Infrastructure Private Limited Wholly owned Subsidiary of L&T Housing Finance Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Finance Holdings Limited Wholly owned Subsidiary of L&T Mutual Fund Trustee Limited Wholly owned Subsidiary of L&T Investment Management Limited Transaction entered during the year (Yes/No) Yes No Yes Yes Yes No Yes Yes No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No No Subsidiary of Larsen & Toubro Infotech Limited# Wholly owned Subsidiary of Larsen & Toubro International FZE Wholly owned Subsidiary of Thalest Limited 142 143 144 * @ # ** *** @@ ## @@@ The Company’s subsidiary has sold 75% stake on September 4, 2012 @@@@ The Company’s subsidiary has sold its stake on July 18, 2012 $ The Company holds more than one-half in nominal value of the equity share capital The Company has sold its stake on September 28, 2012 The Company’s subsidiary/wholly owned subsidiary holds more than one-half in nominal value of the equity share capital Associate became a wholly owned subsidiary w.e.f. March 28, 2013 The Company, together with its subsidiaries holds more than one-half in nominal value of the equity share capital The Company’s subsidiary has sold its stake on November 26, 2012 The Company, together with its subsidiaries controls the composition of the Board of Directors. The Company was acquired during the year and has been dissolved w.e.f. February 28, 2013 192 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) ii (a) Names of the associates and joint ventures with whom transactions were carried out during the year: Associate companies: Audco India Limited *** L&T-Chiyoda Limited 2 4 Salzer Electronics Limited L&T-Komatsu Limited L&T-Ramboll Consulting Engineers Limited 6 Magtorq Private Limited 1 3 5 7 3 5 7 JSK Electricals Private Limited Joint ventures (other than associates): 1 Metro Tunneling Group Desbuild L&T Joint Venture L&T-AM Tapovan Joint Venture 8 2 4 6 AIC Structural Steel Construction (India) Private Limited L&T Hochtief Seabird Joint Venture L&T-Shanghai Urban Construction (Group) Corporation Joint Venture HCC-L&T Purulia Joint Venture The Dhamra Port Company Limited 8 Metro Tunneling Delhi-L&T SUCG Joint Venture 9 Metro Tunneling Chennai L&T SUCG Joint Venture 10 L&T-Eastern Joint Venture 11 L&T-Shapoorji Pallonji & Co. Ltd. 12 L&T-Shanghai Urban Construction (Group) Joint Venture-TCS Joint Venture CC27 Delhi **** 13 International Metro Civil Contractors *** Associate became wholly owned subsidiary w.e.f. March 28, 2013 **** The joint venture has been entered into on November 5, 2012. Funds yet to be infused in the joint venture. ii (b) Names of the Key management personnel and their relatives with whom transactions were carried out during the year: Key management personnel & their relatives: 1 Mr. A.M. Naik (Group Executive Chairman) 2 Mr. K. Venkataramanan (CEO & Managing Director) Mrs. Jyothi Venkataramanan (wife) 3 Mr. V. K. Magapu (Whole-time director)* 4 Mr. M. V. Kotwal (Whole-time director) 5 Mr. S. N. Subrahmanyan (Whole-time Director ) 6 Mr. R. Shankar Raman (CFO & Whole-time Director) 7 Mr. S. N. Roy (Whole-time Director ) 8 Mr. Ravi Uppal (Whole-time director)** * Retired w.e.f. the close of working hours of September 30, 2012 ** Ceased to be director w.e.f the close of working hours of September 15, 2012 iii. Disclosure of related party transactions: Nature of transaction/relationship/major parties Sr. no. Amount Amounts for major parties Amount Amounts for major parties 1 Purchase of goods & services (including commission paid) Subsidiaries, including: 4961.52 3384.26 2012-13 2011-12 crore L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited Associates & joint ventures, including: 830.56 Audco India Limited Salzer Electronics Limited 2023.78 1205.39 587.68 118.75 746.39 Total 5792.08 4130.65 1438.86 1224.75 493.83 106.44 193 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Nature of transaction/relationship/major parties Sr. no. 2 Sale of goods/contract revenue & services Subsidiaries, including: L&T Shipbuilding Limited Nabha Power Limited Associates & joint ventures, including: The Dhamra Port Company Limited Total 3 Purchase/lease of fixed assets Subsidiaries, including: L&T Shipbuilding Limited Larsen & Toubro International FZE Ewac Alloys Limited Associate: L&T-Komatsu Limited Total 4 Sale of fixed assets Subsidiaries, including: L&T Special Steels and Heavy Forgings Private Limited L&T-MHI Turbine Generators Private Limited L&T-MHI Boilers Private Limited PT Tamco Indonesia L&T Plastics Machinery Limited 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore 7112.83 5928.13 45.84 – 2390.13 43.17 100.68 692.60 2069.94 99.97 7158.67 6028.81 34.65 41.20 3.76 38.41 0.54 14.83 11.55 7.57 3.76 0.40 0.13 1.74 42.94 65.59 Total 0.54 65.59 5 Subscription to equity and preference shares (including application money paid and Investment in joint ventures) Subsidiaries, including: 1486.19 1651.29 L&T Infrastructure Development Projects Limited L&T Power Development Limited L&T Shipbuilding Limited Associates & joint ventures, including: L&T-AM Tapovan Joint Venture Metro Tunneling Chennai L&T SUCG Joint Venture Total 6 Purchase of investments from Subsidiaries: 41.72 437.00 818.63 11.69 28.41 86.00 1527.91 1737.29 25.57 906.19 L&T Infrastructure Development Projects Limited L&T Capital Company Limited – 25.57 Total 25.57 906.19 194 24.68 – 10.38 1.74 26.41 19.61 13.45 – – 1339.66 – – 71.33 – 16.02 890.17 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Nature of transaction/relationship/major parties Sr. no. Amount Amounts for major parties Amount Amounts for major parties 2012-13 2011-12 crore 7 Sale of investments to Subsidiaries: L&T Infrastructure Development Projects Limited L&T Capital Company Limited Total 8 Buy back of shares by Subsidiary: L&T-Sargent & Lundy Limited Total 9 Capital reduction by Subsidiary: L&T Power Limited Total 10 Receiving of services from: Subsidiaries, including: Larsen & Toubro Infotech Limited L&T Aviation Services Private Limited Associates & joint ventures, including: L&T-Chiyoda Limited Total 11 Rent paid, including lease rentals under leasing/hire purchase arrangements Subsidiaries, including: L&T Finance Limited L&T Infocity Limited Larsen & Toubro Infotech Limited Larsen and Toubro Kuwait Construction General Contracting Company, WLL Associates: Audco India Limited L&T-Komatsu Limited Key management personnel Total 12 Charges for deputation of employees to related parties Subsidiaries, including: L&T Power Development Limited L&T-Valdel Engineering Limited L&T Parel Project LLP Associates & joint ventures, including: L&T-Chiyoda Limited Audco India Limited L&T-Komatsu Limited – – 7.50 7.50 153.42 153.42 89.35 6.65 96.00 2.48 2.01 0.01 4.50 57.18 58.21 – – 7.50 153.42 33.10 27.14 6.48 – 1.29 0.57 0.36 0.66 1.35 10.19 11.66 8.52 35.24 16.31 5.93 Total 115.39 113.66 958.71 958.71 68.97 889.74 2.40 2.40 – – 71.16 3.57 74.73 4.29 0.86 0.02 5.17 58.83 54.83 2.40 – 39.55 18.15 3.57 2.84 1.26 – – – 0.86 10.30 9.44 – 29.61 13.86 7.52 195 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Nature of transaction/relationship/major parties Sr. no. 13 Dividend received ^^ Subsidiaries, including: Larsen & Toubro Infotech Limited L&T Infocity Limited Ewac Alloys Limited Audco India Limited Associates: L&T-Komatsu Limited L&T- Ramboll Consulting Engineers Limited Audco India Limited 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore 583.21 385.13 303.15 134.57 59.64 50.03^^ 1.80 22.58 – 1.80 – Total 585.01 407.71 ^^ Out of total dividend of 50.02 crore has been credited to investment account being in the nature of dividend out of pre-acquisition profits. 14 Commission received, including those under agency 100.05 crore declared, arrangements Subsidiaries: Larsen & Toubro (Qingdao) Rubber Machinery Company Limited L&T Kobelco Machinery Private Limited Tractor Engineers Limited Associate: L&T-Komatsu Limited Total 15 Rent received, overheads recovered and miscellaneous income Subsidiaries, including: Larsen & Toubro Infotech Limited Larsen & Toubro (Oman) LLC L&T-MHI Boilers Private Limited Associates & joint ventures, including: Audco India Limited L&T-Chiyoda Limited Total 16 Interest received from Subsidiaries, including: L&T Chennai Projects Private Limited (formerly L&T Arun Excello IT SEZ Private Limited) L&T Realty Limited L&T Urban Infrastructure Limited L&T Infrastructure Finance Company Limited L&T Infrastructure Development Projects Limited L&T Uttaranchal Hydropower Limited L&T Shipbuilding Limited L&T Finance Holdings Limited Joint venture: The Dhamra Port Company Limited Key management personnel Total 0.96 2.23 0.38 0.48 0.10 138.68 80.31 40.87 52.18 – 3.55 18.99 64.31 25.40 – – – – – 41.62 138.68 139.64 310.96 6.01 316.97 139.65 41.62 – 181.27 187.96 190.19 275.82 5.61 281.43 131.41 26.99 0.01 158.41 196 254.78 115.34 – – 13.20 – 9.38 2.23 – – 187.96 74.60 43.01 48.59 0.70 4.23 16.58 – – 36.09 13.29 14.95 14.46 14.37 26.99 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Nature of transaction/relationship/major parties Sr. no. Amount Amounts for major parties Amount Amounts for major parties 2012-13 2011-12 crore 27.35 18.48 17 Interest paid to Subsidiaries, including: L&T Finance Limited L&T-MHI Boilers Private Limited L&T Transportation Infrastructure Limited L&T Infrastructure Development Projects Limited Associate: Audco India Limited Total 18 Transfer of Business to: Subsidiary: Ewac Alloys Limited Total – 27.35 – – 19 Payment of salaries/perquisites (Other than commission) 21.72 Key management personnel: A. M. Naik Y. M. Deosthalee ^^^ K. Venkataramanan K. V. Rangaswami V. K. Magapu * ^^^^ M. V. Kotwal Ravi Uppal **^^ S. N. Subrahmanyan R. Shankar Raman S. N. Roy Total 20 Commission to directors @ Key management personnel : A. M. Naik Y. M. Deosthalee K. Venkataramanan K. V. Rangaswami V. K. Magapu * M. V. Kotwal Ravi Uppal ** S. N. Subrahmanyan R. Shankar Raman S. N. Roy 21.72 51.82 4.24 22.72 16.39 16.39 20.91 20.91 49.33$ 9.25 – 13.73 3.20 – – 3.61 – 2.58 – 7.40 1.89 2.05 1.52 1.37 1.30 17.45 – 10.47 – 2.82 3.64 1.71 7.01 5.53 3.19 14.20 2.27 – – 4.24 16.39 2.68 7.24 1.59 3.75 1.32 1.42 1.33 0.93 0.62 0.03 15.06 2.96 6.53 1.36 5.44 5.05 5.28 4.66 2.71 0.28 Total 51.82 49.33 Retired w.e.f. the close of working hours of September 30, 2012 * ** Ceased to be director w.e.f. the close of working hours of September 15, 2012 Includes leave encashment payment 1.25 crore ^^ ^^^ Includes leave encashment payment 6.67 crore ^^^^ Includes leave encashment payment 6.54 crore $ Out of total provision of 53.45 crore made during 2011-12, an amount of 4.12 crore was reversed during 2012-13. 197 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) @ Commission to directors comprises Sr. Particulars no. 1 2 3 Commission Contribution to provident fund on commission Contribution to superannuation fund on commission Total 2012-13 40.80 4.90 6.12 51.82 crore 2011-12 38.84 4.66 5.83 49.33 “Major parties” denote entities accounting for 10% or more of the aggregate for that category of transaction during respective period. iv. Amount due to/from related parties: Nature of transaction/relationship/major parties Sr. no. 1 Accounts receivable Subsidiaries, including: Nabha Power Limited L&T Ahmedabad-Maliya Tollway Limited L&T Rajkot-Vadinar Tollway Limited Associates & joint ventures, including: The Dhamra Port Company Limited Total 2 Accounts payable (including acceptance & interest accrued) Subsidiaries, including: L&T-MHI Boilers Private Limited L&T-MHI Turbine Generators Private Limited As at 31-3-2013 As at 31-3-2012 Amount Amounts for major parties Amount Amounts for major parties crore 2563.66 1418.24 70.81 2634.47 2970.21 1345.20 – – 70.81 1274.69 974.45 79.43 1497.67 1675.49 Associates & joint ventures, including: 74.71 205.95 Audco India Limited Metro Tunneling Chennai L&T SUCG Joint Venture L&T-Chiyoda Limited Salzer Electronics Limited Total 3 Investment in Debt Securities Subsidiaries: L&T Infrastructure Finance Company Limited L&T Finance Limited Total 4 Loans & advances recoverable Subsidiaries, including: L&T Seawoods Private Limited L&T-MHI Boilers Private Limited L&T Realty Limited L&T-MHI Turbine Generators Private Limited Associates & joint ventures, including: The Dhamra Port Company Limited Key management personnel Total 198 – 18.99 15.23 18.87 74.85 36.98 – – 751.37 – 453.41 1881.44 211.83 211.83 2456.20 389.28 0.29 2845.77 3044.92 111.83 111.83 1980.01 480.57 0.01 2460.59 363.70 224.03 172.02 73.56 874.44 587.74 134.69 27.70 20.80 174.85 36.98 257.01 468.43 466.11 359.05 367.67 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Sr. no. 5 Nature of transaction/relationship/major parties Advances against equity contribution Subsidiaries, including: L&T Shipbuilding Limited L&T Seawoods Private Limited L&T Realty Limited Total 6 Unsecured loans (including lease finance) Subsidiaries: L&T Infrastructure Development Projects Limited L&T Transportation Infrastructure Limited L&T Finance Limited As at 31-3-2013 As at 31-3-2012 Amount Amounts for major parties Amount Amounts for major parties crore 2264.85 2382.08 421.86 1143.99 699.00 2264.85 2382.08 39.17 405.58 – – 39.17 Total 39.17 405.58 7 Advances received in the capacity of supplier of goods/services classified as “advances from customers” in the Balance Sheet Subsidiaries, including: 1289.74 1603.34 Nabha Power Limited L&T Metro Rail (Hyderabad) Limited L&T Seawoods Private Limited L&T BPP Tollway Limited Total 8 Due to whole time directors Key management personnel : 369.32 445.70 151.70 159.66 1289.74 1603.34 40.80 38.84 $ A. M. Naik Y. M. Deosthalee K. Venkataramanan K. V. Rangaswami V. K. Magapu * M. V. Kotwal Ravi Uppal ** S. N. Subrahmanyan R. Shankar Raman S. N. Roy 13.74 – 8.24 – 2.22 2.87 1.35 5.52 4.35 2.51 Total 40.80 38.84 Retired w.e.f. the close of working hours of September 30, 2012 * ** Ceased to be director w.e.f. the close of working hours of September 15, 2012 $ Out of total commission due to whole time directors of 42.08 crore during 2011-12, an amount of 3.24 crore was reversed during 2012-13. “Major parties” denote entities accounting 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, 2011 in line with Government of India (GOI) approval letter ref no. 12/3/2011-CL-VI dated November 17, 2011. The appointment shall be in effect as long as the joint venture agreement between the parent Company and M/s Komatsu Asia Pacific 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 199 852.49 781.99 706.00 178.00 155.00 72.58 890.18 168.16 – – 11.86 2.33 5.14 1.07 4.28 3.98 4.16 3.67 2.13 0.22 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) is the exclusive agent of LTK to market Hydraulic Excavators and products manufactured by LTK and to provide after sales product support. Pursuant to the aforesaid agreement, LTK is required to pay commission to the Company at specified rates on the sales effected by the Company. The financial impact of the aforesaid agreement has been included in/disclosed vide Note Q(10)(iii) supra. Q(11) Disclosure in respect of Leases pursuant to Accounting Standard (AS 19) “Leases” (i) Where the Company is a Lessor: a. The Company has given on finance leases certain items of plant and equipment. The leases have a primary period that is fixed and non-cancellable. The leases are cancellable upon payment by the lessee of an additional amount such that, at inception, continuation of the lease is reasonably certain. There are no exceptional/restrictive covenants in the lease agreement. b. The total gross investment in these leases as on March 31, 2013 and the present value of minimum lease payments receivable as on March 31, 2013 is as under: 1. Receivable not later than 1 year 2. Receivable later than 1 year and not later than 5 years Particulars Gross investment in lease (1+2+3) Less: Unearned finance income Present value of receivables (ii) Where the Company is a lessee: a) Finance leases: crore 31-3-2013 31-3-2012 0.51 0.06 0.57 0.07 0.50 0.45 0.90 1.35 0.48 0.87 i. [a] Assets acquired on finance lease mainly comprise plant and equipment, vehicles and personal computers. The leases have a primary period, which is fixed and non-cancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals (b) rates of depreciation under the Income Tax Act, 1961 and (c) change in the lessor’s cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements. [b] The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance leases are as follows: Particulars Minimum lease payments Present value of minimum lease payments As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 crore 1. Payable not later than 1 year [Note (d) (II)] 2. Payable later than 1 year and not later than 5 years [Note (c)(I)(e)] Total Less: Future finance charges Present value of minimum lease payments [Note (c)(I)(e)] 42.66 – 42.66 3.49 39.17 42.66 42.66 85.32 12.74 72.58 39.17 – 33.41 39.17 39.17 72.58 ii. Contingent rent recognised/(adjusted) in the Statement of Profit and Loss in respect of finance leases: Nil (previous year: Nil) 200 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) b) Operating leases: i. The Company has taken various commercial premises and plant and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry. ii. [a] The Company has taken certain assets like cars, technology assets, etc. on non-cancellable operating leases, the future minimum lease payments in respect of which are as follows: Particulars 1. 2. Payable not later than 1 year Payable later than 1 year and not later than 5 years Total crore Minimum lease payments As at 31-3-2013 As at 31-3-2012 1.75 0.17 1.92 1.73 1.63 3.36 [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: 86.78 crore (previous year: 89.37 crore). iv. Contingent rent recognised in the Statement of Profit and Loss: Nil (previous year: 0.03 crore). Q(12) Basic and diluted earnings per share [EPS] computed in accordance with pursuant to Accounting Standard (AS) 20 “Earnings per Share”. Basic Particulars Before extraordinary items After extraordinary items 2012-13 2011-12 2012-13 2011-12 Profit after tax as per accounts ( crore) Weighted average number of shares outstanding Basic EPS ( ) Diluted Profit after tax as per accounts ( crore) Weighted average number of shares outstanding Add: Weighted average number of potential equity A B A/B A B C 4839.04 4456.50 4910.65 4456.50 61,39,26,551 61,11,08,916 61,39,26,551 61,11,08,916 78.82 72.92 79.99 72.92 4839.04 4456.50 4910.65 4456.50 61,39,26,551 61,11,08,916 61,39,26,551 61,11,08,916 shares on account of employee stock options 50,50,853 58,66,093 50,50,853 58,66,093 Weighted average number of shares outstanding D=B+C 61,89,77,404 61,69,75,009 61,89,77,404 61,69,75,009 for diluted EPS Diluted EPS ( ) A/D 78.18 72.23 79.33 72.23 Face value per share ( ) 2 2 2 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 Accounting Standard (AS) 20. 201 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Q(13) Major components of deferred tax liabilities and deferred tax assets: pursuant to Accounting Standard (AS 22) “Accounting for Taxes on Income” Particulars Deferred tax liabilities: Deferred tax liabilities/ (assets) As at 31-3-2012 Charge/ (credit) to Statement of Profit and Loss Charge/ (credit) to Hedging reserve* crore Deferred tax liabilities/ (assets) As at 31-3-2013 Difference between book and tax depreciation 557.58 85.39 _ 642.97 Gain on derivative transactions to be offered for tax purposes in the year of transfer to the Statement of Profit and Loss 1.76 _ 21.82 23.58 Disputed statutory liabilities paid and claimed as deduction for tax purposes but not debited to the Statement of Profit and Loss Other items giving rise to timing differences Total Deferred tax (assets): 55.65 28.47 26.67 65.62 _ _ 82.32 94.09 643.46 177.68 21.82 842.96 Provision for doubtful debts and advances debited to the Statement of Profit and Loss (238.28) 16.45 – (221.83) Loss on derivative transactions to be claimed for tax purposes in the year of transfer to the Statement of Profit and Loss (146.57) – (48.40) (194.97) Unpaid statutory liabilities/provision for compensated absences debited to the Statement of Profit and Loss Other items giving rise to timing differences Total Net deferred tax liability/(assets) previous year (111.74) (13.86) (510.45) 133.01 263.47 (20.25) (38.09) (41.89) 135.79 – – (131.99) (51.95) (48.40) (600.74) (26.58) 242.22 39.70 (170.16) 133.01 (332.87 crore) [previous year : (301.53 crore)] represents net gains/(losses) on effective hedges recognised in * The amount of hedge reserve, applying the principles of hedge accounting set out in the Accounting Standard (AS) – 30 “Financial Instruments: Recognition and Measurement”. The amount is after considering the net deferred tax asset of 26.58 crore (previous year : 170.16 crore). Q(14) Disclosures in respect of joint ventures pursuant to Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures” a) List of joint ventures Name of joint venture Description of interest/(description of job) Proportion of ownership interest (%) Country of residence L&T-Hochtief Seabird Joint Venture International Metro Civil Contractors Jointly controlled entity (Construction of breakwater at Karwar) Jointly controlled entity (Construction of Delhi metro corridor phase I tunnel project) 90 26 India India Sr. no. 1 2 202 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Sr. no. Name of joint venture Description of interest/(description of job) Proportion of ownership interest (%) Country of residence 3 4 5 6 7 8 9 HCC-L&T Purulia Joint Venture Desbuild-L&T Joint Venture Metro Tunnelling Group L&T-AM Tapovan Joint Venture Jointly controlled entity (Construction of pumped storage project) Jointly controlled entity (Renovation of US consulate, Chennai) Jointly controlled entity (Construction of Delhi metro corridor-phase II tunnel project) Jointly controlled entity (Construction of head race tunnel for Tapovan Vishnugad hydroelectric project at Chamoli, Uttaranchal) L&T-Shanghai Urban Corporation Group Joint Venture Jointly controlled entity (Construction of twin tunnel between IGI airport and sector 21 for DMRC) L&T-Eastern Joint Venture Metro Tunnelling Chennai L&T–SUCG Joint Venture Jointly controlled entity maintenance of 295 residential units at Dubai) (Construction and Jointly controlled entity (Construction of UG Station at Nehru Park, KMC and Pachiyappas College and associated tunnels for Chennai Metro Rail Limited) 10 Metro Tunneling Delhi-L&T SUCG Joint Venture Jointly controlled entity (Construction of Delhi metro corridor tunnel project phase – CC5) 11 12 L&T-Shapoorji Pallonji & Co. Ltd. Joint Venture -TCS Jointly controlled entity [Design & build work for construction of TCS SEZ at Kolkata, West Bengal (JV with Shapoorji Pallonji & Co. Ltd)] L&T-Shanghai Urban Construction (Group) Joint Venture CC27 Delhi Jointly Controlled Entity (Design and Construction of Tunnel for Delhi MRTS Project for Phase-III) 13 L&T-KBL (UJV) Hyderabad 14 L&T-HCC Joint Venture Jointly controlled operations (Investigation, design, supply and erection of lift irrigation system) Jointly controlled operations (Four laning and strengthening of existing two lane sections from 240 Km to 320 Km on NH2) Patel-L&T Consortium Jointly controlled operations (Hydroelectric project) 15 16 L&T-SVEC Joint Venture 17 L&T-KBL-MAYTAS UJV Jointly controlled operations (Lift irrigation project at Hyderabad) Jointly controlled operations (Transmission of 735 mId treated water associated with all civil, electrical & mechanical work at Hyderabad) 18 19 Consortium of Toyo Engineering Company and L&T Jointly controlled operations (Execution of naphtha cracker associated unit for IOCL, Panipat) L&T and Scomi Engineering BHD. Joint Venture Jointly controlled operations (Implementation of monorail system in Mumbai) 43 49 26 65 51 65 75 60 50 68 - - - - - – – India India India India India UAE India India India India India India India India India India India 203 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) b) Financial interest in jointly controlled entities (to the extent of the Company’s share) Sr. no. 1 2 Name of Integrated joint ventures/jointly controlled entities L&T-Hochtief Seabird Joint Venture International Metro Civil Contractors 3 Metro Tunnelling Group 4 5 6 7 8 L&T-Shanghai Urban Corporation Group Joint Venture HCC-L&T Purulia Joint Venture L&T-AM Tapovan JV Desbuild-L&T Joint Venture L&T – Eastern Joint Venture 9 Metro Tunnelling Chennai L&T-SUCG JV-CMRL 10 DMRC– CC 05 JV 11 12 L&T–Shapoorji Pallonji & Co. Ltd. Joint Venture-TCS L&T–SUCG JV – CC27- Delhi Total Share of net assets in jointly controlled entities Amounts less than 0.01 crore: As at March 31, 2013 Assets Liabilities Income Expenses For the Year 2012-13 Tax Company’s share 46.89 (47.13) 3.84 (4.49) 7.03 (8.14) 5.08 (5.06) 2.91 (2.96) 57.98 (60.19) -0.01 (0.28) 32.57 (32.70) 141.76 (143.78) 117.23 (6.98) 52.24 (–) 103.65 (–) 571.17 (311.71) – # (–) 0.02 (0.01) 3.00 (1.72) 0.77 (2.62) 0.01 (0.01) 0.36 (0.05) -1.63 (0.36) 0.47 (0.30) – (–) – (0.48) 0.69 (-0.52) 0.09 (0.74) – $ – % – ^ (0.20) 30.08 (91.31) (0.01) 44.73 (114.77) – Ω (–) ## – € (–) @@ 0.41 (2.17) 181.09 (109.24) 110.12 (3.13) 92.51 (–) 18.57 (–) 436.57 (210.40) 8.04 (1.15) 170.57 (108.51) 108.51 (3.13) 92.24 (–) 18.57 (–) 441.87 (228.29) (0.03) – (–) – (–) – (–) 3.41 (0.24) 0.50 (–) 0.08 (–) – (–) 4.77 (0.97) 66.09 (66.49) 12.23 (13.70) 21.68 (21.16) 17.82 (17.59) 2.98 (3.33) 141.00 (131.51) 0.04 (0.34) 36.63 (44.20) 170.65 (144.26) 123.54 (10.01) 57.43 (–) 103.65 (–) 753.74 (452.59) 182.57 (140.88) crore Net loss (Note O) – ¥ (0.01) 0.34 (0.52) – (–) – (–) – ‡ (–) 14.65 (23.46) – † (–) Ω Ω 7.63 (–) – (–) – (–) – (–) – (–) 22.62 (23.99) Net profit (Note K) – (–) – (–) 1.48 (1.88) 0.21 (1.58) – (0.16) – (–) – (–) – (1.02) 7.11 (0.49) 1.11 (–) 0.19 (–) – (–) 10.10 (5.13) Current Year: # 39313, ¥ 11925, $ 46549, % 47781, ^ 7326, ‡ 8558, Ω 520, € 8289, † 7769 previous Year: ## ( 1213), @@ ( 8258), Ω Ω ( 7045) Figures in brackets ( ) relate to previous year. Notes: i. ii. Contingent liabilities, if any, incurred in relation to interests in joint ventures as at March 31, 2013: Nil); and share in contingent liabilities incurred jointly with other ventures as at March 31, 2013: Nil). Nil (previous year: Nil (previous year: iii. Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as at March 31, 2013: 65.95 crore (previous year: 61.43 crore). iv. Contingent liabilities in respect of liabilities of other ventures of joint ventures as at March 31, 2013: Nil (previous year: Nil). v. Capital commitments, if any, in relation to interests in joint ventures as at March 31, 2013: 37.18 crore (previous year: 28.56 crore) 204 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Q(15) Disclosures required by pursuant to Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets”: a) Movement in provisions: Particulars Product warranties Balance as at 1-4-2012 Additional provision during the year Provision used/reversed during the year Provision transferred due to transfer of business Balance as at 31-3-2013 (5=1+2-3-4) 10.84 6.71 (8.12) (0.07) 9.36 Sr. no. 1 2 3 4 5 Expected tax liability in respect of indirect taxes 59.13 21.05 (2.65) – 77.53 crore Others Total Class of Provisions Litigation related obligations Contractual rectification cost- construction contracts 471.36 52.89 – 141.54 (299.29) (52.89) # 603.27 177.51 (371.16) ## 9.05 8.21 (8.21) – 9.05 313.61 – – – (0.07) 409.55 # ## being reversal of an extraordinary item included in opening provision [Note 3(b) supra] includes provision used during the year 47.64 crore (previous year: 2.43 crore) b) Nature of provisions: i. ii. 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, 2013 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two years from the date of Balance Sheet. Expected tax liability in respect of indirect taxes 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 rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under AS 7 (Revised) “Construction Contracts”. v. Others represent residual provision in respect of Company’s investment in shares of Satyam Computer Services Limited. c) Disclosure in respect of contingent liabilities is given as part of Note (l) to the Balance Sheet. Q(16) In line with the Company’s risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges. a) The particulars of derivative contracts entered into for hedging purposes outstanding as at March 31, 2013 are as under: Category of derivative instruments For hedging foreign currency risks: a) Forward contracts for receivables including firm commitments and highly probable forecasted transactions Forward contracts for payables including firm commitments and highly probable forecasted transactions b) c) Currency Swaps d) Option Contracts e) Currency futures For hedging commodity price risks: Commodity futures i ii crore Amount of exposures hedged As at 31-3-2013 As at 31-3-2012 7940.24 10540.83 10046.71 8692.37 4051.11 21.99 – 5003.17 39.35 330.69 242.59 171.67 205 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) b) Un-hedged foreign currency exposures as at March 31, 2013 are as under: Un-hedged foreign currency exposures i ii Receivables, including firm commitments and highly probable forecasted transactions Payables, including firm commitments and highly probable forecasted transactions Q(17) Auditors’ remuneration (excluding service tax) and expenses charged to the accounts: As auditor For Taxation matters For Other services For reimbursement of expenses Q(18) Value of imports (on C.I.F. basis): Raw materials Components and spare parts Capital goods Q(19) Expenditure in foreign currency: On overseas contracts Royalty and technical know-how fees Interest Professional/consultation fees Other matters Q(20) Dividends remitted in foreign currency: Particulars Particulars Particulars Particulars Dividend for the year ended March 31, 2012 remitted to: i. 12 non-resident shareholders on 15,700 shares held by them (previous year: 15,700 shares) on 28-8-2012 As at 31-3-2013 28042.53 24924.49 crore As at 31-3-2012 24678.23 26301.62 2012-13 1.08 0.26 2.03 0.07 2012-13 1961.34 3051.19 377.93 2012-13 8254.18 7.03 161.43 242.46 1124.86 crore 2011-12 0.90 0.22 1.22 0.10 crore 2011-12 1273.10 4027.24 714.61 crore 2011-12 3103.88 16.14 103.11 130.94 1571.65 crore 2012-13 2011-12 0.03 0.02 ii. Custodian of global depositary receipts on 1,96,66,240 shares (previous year: 2,50,91,514 32.45 36.38 shares) on 28-8-2012 Q(21) Earnings in foreign exchange: Particulars Export of goods [including 978.53 crore on FOB basis (previous year: 825.78 crore)] Construction and project related activities Export of services Commission Interest received Other receipts 2012-13 1016.03 10693.89 1319.77 19.08 0.05 74.87 crore 2011-12 852.97 6173.43 884.49 27.19 0.04 99.93 206 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Q(22) The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, [MSMED Act] as at March 31, 2013. 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 crore 2012-13 2011-12 67.17 0.05 8.65 – 0.02 0.08 0.32 60.53 0.05 39.85 – 0.22 0.37 0.37 Q(23) (a) The Company has adopted a new accounting policy [Note R(18)(f)] for separate accounting of embedded derivatives with effect from April 1, 2012, for more appropriate presentation of the financial statements. The profit before tax is lower by 55.36 crore pursuant to adoption of the new accounting policy for separate accounting of embedded derivatives. (b) The Company has changed the accounting policy for recognition of revenue from real estate development transactions pursuant to the guidance note on accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India [Note R(3)(A)(a)(iii)]. The profit before tax of the Company is higher by 2.39 crore pursuant to change in the accounting policy of revenue recognition for real estate development transactions. Q(24) There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2013. Q(25) Details of sales, raw materials and components consumed, manufacturing work-in-progress and purchase of stock in trade: a) Sales: Class of goods (i) Manufacturing and trading activity: Switchgear, all types Valves and accessories Earthmoving and agriculture machinery and spares Industrial Machinery Electricity meters Rubber processing machinery and accessories Parts and accessories for Prime movers, Boilers, Steam Generating Plants and Nuclear reactors Welding alloys and accessories Industrial electronic control panels Patient monitoring system and accessories Defence equipment, all types Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystallizer plants and pollution control equipment in aggregate Transmission line tower Steel structural fabrication 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. 2012-13 2011-12 crore crore 1987.02 1531.17 852.19 656.96 473.69 311.14 293.05 0.19 – 91.30 38.42 35.99 45.12 39.06 25.72 777.36 616.91 560.24 371.37 324.92 88.90 71.46 68.08 62.02 56.60 53.34 38.82 14.48 140.50 12.46 207 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) Class of goods Electro surgical unit and accessories Nuclear purpose equipment, de-aerators, ultra high pressure vessels including multiwall vessels, high pressure heat exchangers and high pressure heaters in aggregate Design, development and manufacturing of airborne assemblies, system and equipment for Aircrafts, Helicopters & unmanned aerial vehicles and equipment for the aviation sector Ultrasound equipment and accessories Ship auxiliaries and components of mechanised sailing vessels Others Total (ii) Property development activity (iii) Construction and project related activity: Civil / Infrastructure / Mechanical / Electrical Construction Thermal/Hydro/Gas power plants Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystallizer plants and pollution control equipment 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. Defence equipment, all types Nuclear purpose equipment, de-aerators, ultra high pressure vessels including multiwall vessels, high pressure heat exchangers and high pressure heaters in aggregate Ship auxiliaries and components of mechanised sailing vessels Parts and accessories for Prime movers, Boilers, Steam generating plants and Nuclear reactors Design, development and manufacturing of airborne assemblies, system and equipment for Aircrafts, Helicopters & unmanned aerial vehicles and equipment for the aviation sector Commercial ships Others Total (iv) Servicing (v) Commission (vi) Engineering and service fees Total Sales & service (i) to (vi)-[Note K] 2012-13 2011-12 crore 2.61 crore 5.36 – 4.69 1.67 – 0.71 1.48 0.92 0.62 1380.36 1706.39 6375.70 6367.59 73.79 21.70 32699.95 26633.56 8023.74 7239.73 3592.03 4871.31 5143.41 445.77 117.91 1.65 4673.12 371.27 30.73 22.24 9.34 14.24 14.13 (71.26) 8.43 6.41 2641.96 1485.67 52618.63 45356.71 406.08 158.77 1215.03 285.63 205.01 875.74 60848.00 53112.38 208 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) b) Raw materials and components consumed: i) Class of goods: Class of goods Power plant & machinery components Chemical plant components Nuclear equipment components, including items for oil & gas industries, etc. in aggregate Steel Switchgear components Electronic devices, test & measuring instruments and industrial electronic control panel components Non-ferrous metals Metering & protection systems and medical equipment and components Industrial machinery components Bakelite Others Sub-total Less: Sale value of scrap Total [Note M] ii) Classification of goods: 2012-13 2011-12 crore 4431.24 1759.20 crore 3747.86 2575.95 1778.01 1169.08 694.89 857.39 46.57 132.17 35.16 11.54 – 656.49 669.04 138.84 129.09 33.17 11.05 4.75 1293.11 1068.50 11039.28 10203.82 146.99 111.70 10892.29 10092.12 Classification of goods Imported (including through canalising agencies) Indigenous Total 2012-13 2011-12 % to total consumption crore % to total consumption crore 42 58 4574.84 6317.45 39 61 3943.31 6148.81 100 10892.29 100 10092.12 c) Purchases of stock in trade Class of goods Electronic, medical & other instruments, accessories and spares Valves and accessories Earthmoving and agricultural machinery and spares Industrial Machinery Welding alloys and accessories Others Total [Note M] 2012-13 crore 772.62 519.80 302.13 105.39 – 363.29 2011-12 crore 872.23 520.10 385.62 120.86 49.66 420.93 2063.23 2369.40 209 Notes forming part of the Accounts (contd.) NOTE [Q] (contd.) d) Details of Work-in-progress: Class of goods 2012-13 crore 2011-12 crore Industrial Machinery Defence equipment, all types Steel structural fabrication Switchgear, all types Transmission line tower Chemical plant & machinery, including pharmaceutical, dyestuff, distillery, brewery and solvent extraction plants, evaporator and crystallizer plants and pollution control equipment in aggregate Low voltage and Medium voltage switchboards and panels 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 Casting products Rubber processing machinery and accessories Nuclear purpose equipment, de-aerators, ultra high pressure vessels including multiwall vessels, high pressure heat exchangers and high pressure heaters in aggregate Ship auxiliaries and components of mechanised sailing vessels Parts for aircraft Valves and accessories Servicing of construction machinery AC drives, DC drives, programmable logic controllers Meters and protection systems Patient monitoring system and accessories Others Total [Note H(II)] 59.79 63.97 37.86 49.13 60.64 49.09 61.44 35.04 20.38 19.34 5.67 93.39 – 1.89 10.58 2.06 0.58 – 68.01 63.53 53.16 46.97 46.36 43.43 35.41 23.81 20.09 16.49 4.56 4.12 2.26 2.06 1.60 1.18 0.29 0.02 75.74 646.59 32.94 466.29 Q(26) Figures for the previous year have been regrouped/reclassified wherever necessary. 210 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting The Company maintains its accounts on accrual basis following the historical cost convention [except for the revaluation of certain fixed assets], in accordance with generally accepted accounting principles [“GAAP”] in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 prescribed by the central government. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations viz. SEBI guidelines override the same requiring a different treatment. The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known. 2. Presentation of financial statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI to the Companies Act, 1956 (“the Act”). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule VI to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement. Amounts in the financial statements are presented in Indian Rupees in crore [1 crore = 10 million] rounded off to two decimal places in line with the requirements of Schedule VI. Per share data are presented in Indian Rupees to two decimals places. 3. 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. Revenue from operations a. Sales & Service i. ii. Sales and service include excise duty and adjustments made towards liquidated damages and price variation, wherever applicable. Escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account. Revenue from sale of manufactured and traded 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 which are in substance similar to delivery of goods is recognised when all significant risks and rewards of ownership in the land and/or building are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists. Revenue from those property development activities [Note no.Q23(b)] which have the same economic substance as that of a construction contract is recognised based on the ‘Percentage of Completion method’ (POC) when the outcome of a real estate project can be estimated reliably upon fulfillment of all the following conditions: a. All critical approvals necessary for commencement of the project have been obtained; b. When the stage of completion of the project reaches a reasonable level of development i.e. contract costs for work performed bears a reasonable proportion to the estimated total contract costs. For this purpose, a reasonable level of development is treated as achieved only if the cost incurred (excluding cost of land/developmental rights and borrowing cost) is atleast 25% of the total of such cost; c. Atleast 25% of the saleable project area is secured by contracts or agreements with buyers; d. Atleast 10 % of the total revenue as per the agreements of sale or any other legally enforceable documents are realised at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts. 211 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) The costs incurred on property development activities are carried as “inventories” till such time the outcome of the project cannot be estimated reliably and all the aforesaid conditions are fulfilled. When the outcome of the project can be ascertained reliably and all the aforesaid conditions are fulfilled, revenue from property development activity is recognized at cost incurred plus proportionate margin, using percentage of completion method. Percentage of completion is determined based on the proportion of actual cost incurred to the total estimated cost of the project. For this purpose, actual cost includes cost of land and developmental rights but excludes borrowing cost. Expected loss, if any, on the project is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. 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: Contract revenue is recognized only to the extent of cost incurred till such time the outcome of the job cannot be ascertained reliably. When the outcome of the contract is ascertained reliably, contract revenue is recognized at cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs. Government grants in the nature of subsidy related to customer contracts is recognised as revenue from operations in the Statement of Profit and Loss, on a prudent basis, in proportion to work completed when there is reasonable assurance that the conditions for the grant of subsidy will be fulfilled. Expected loss, if any, on the construction/project related activity is recognized as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included in contract revenue is taken into consideration. v. Revenue from contracts for the rendering of services which are directly related to the construction of an asset is recognised on similar basis as stated in (iv) above. vi. Revenue 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. vii. Revenue from service related activities is recognised using the proportionate completion method. viii. Commission income is recognised as and when the terms of the contract are fulfilled. ix. Revenue from engineering and service fees is recognised as per the terms of the contract. x. Profit/loss on contracts executed by Integrated Joint Ventures under profit-sharing arrangement [being Jointly Controlled Entities, in terms of Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”] is accounted as and when the same is determined by the joint venture. Revenue from services rendered to such joint ventures is accounted on accrual basis. b. Other operational revenue Other operational revenue 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. B. Other Income i. Interest income is accrued at applicable interest rate. ii. Dividend income is accounted in the period in which the right to receive the same is established. 212 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) iii. Other Government grants, which are revenue in nature and are towards compensation for the related costs, are recognised as income in the Statement of Profit and Loss in the period in which the matching costs are incurred. iv. Other items of income are accounted as and when the right to receive arises. 4. Extraordinary and exceptional Items Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company, is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the notes to accounts. 5. Research and development a. Revenue expenditure on research is expensed under respective heads of account in the period in which it is incurred. b. Development expenditure on new products is capitalised as intangible asset, if all of the following can be demonstrated: i. The technical feasibility of completing the intangible asset so that it will be available for use or sale ii. The Company has intention to complete the intangible asset and use or sell it iii. The Company has ability to use or sell the intangible asset iv. v. The manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself or if it is to be used internally, the usefulness of intangible assets The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset and vi. The Company has ability to measure the expenditure attributable to the intangible asset during its development reliably The development expenditure capitalised as intangible asset is amortised over its useful life. Other development costs that do not meet above criteria are expensed in the period in which they are incurred. 6. Employee benefits a. Short term employee benefits: All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service. b. Post-employment benefits: i. Defined contribution plans: The Company’s superannuation scheme, state governed provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. ii. Defined benefit plans: The employees’ gratuity fund schemes, post-retirement medical care scheme, pension scheme and provident fund scheme managed by trust are the Company’s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. 213 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) The interest element in the actuarial valuation of defined benefit plans, which comprises the implicit interest cost and the impact of changes in discount rate, is classified under finance costs. The balance charge is recognised as employee benefit expenses in the Statement of Profit and Loss. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. Long term employee benefits: The obligation for long term employee benefits such as long term compensated absences, long service award etc. is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b)(ii) above. Termination benefits: Termination benefits such as compensation under voluntary retirement cum pension scheme are recognised as expense in the period in which they are incurred. c. d. 7. Tangible Fixed assets Tangible fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation 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 and cumulative impairment. Assets acquired on hire purchase basis are stated at their cash values. Specific know-how fees paid, if any, relating to plant and equipment is treated as part of cost thereof. Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets. Own manufactured assets are capitalised at cost including an appropriate share of overheads. Tangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “capital work-in-progress”. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.) 8. 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. Lease rentals in respect of assets acquired under leases are charged to Statement of Profit and Loss. 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 classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. ii. Assets given under Leases where the Company has transferred substantially all the risks and rewards of ownership to lessee, are classified as finance leases. Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease income is recognised over the period of the lease so as to yield a constant rate of return on the net investment in the lease. iii. Initial direct costs relating to assets given on finance leases are charged to Statement of Profit and Loss. 214 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) Operating leases: i) Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss 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). 9. 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 Statement of Profit and Loss. 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. Furniture and fixtures i) ii) Office Equipment Category of asset Multifunctional devices (fax machine/scanner/printers), inkjet/laserjet printers, switches (audio/video) and projectors Others iii) Computers Desktop, Server & related components iv) Plant and Equipment general a) Cranes below 100 ton capacity used for construction activity b) Minor plant & equipment of construction activity c) Heavy lift equipment of construction activity d) Equipment for tunnelling & laying electrical transmission lines (other than those employed in heavy construction work) Equipment used in construction industry for concreting, road making, crushing, piling, pipeline laying, welding etc. e) Erection winches above 2 tons Strand Jack system, theodolite, total station etc. used in construction industry Specialised machine tools, dies, jigs, fixtures, gauges for electrical business Desktops and laptops given to employees under the Company’s scheme f) DG sets above 30 kva g) h) i) j) k) Other laptops l) Tunnel Boring Machine v) Air conditioning and refrigeration equipment vi) vii) Motor cars Laboratory and canteen equipment Rate of Depreciation (% p.a.) 10.00 25.00 6.67 16.67 6.67 20.00 5.00 10.00 8.33 8.33 8.33 8.33 20.00 33.33 25.00 50.00 8.33 12.50 14.14 215 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) iii. Depreciation for additions to/deductions from, owned assets is calculated pro rata from/to the month of additions/ deductions. Extra shift depreciation is provided on a location basis. iv. Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. b. Leased assets: i. Lease transactions entered into prior to April 1, 2001: Lease charge comprising statutory depreciation and lease equalisation charge is provided for assets given on lease over the primary period of the lease equal to recovery of net investment in the lease. Accordingly, while the statutory depreciation on such assets is provided for on straight line method as per Schedule XIV to the Companies Act, 1956, the difference is adjusted through lease equalisation and lease adjustment account. ii. Lease transactions entered into on or after April 1, 2001: Assets acquired under finance leases are depreciated on a straight line 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. iii. Leasehold land: Land acquired under long term lease is classified under “tangible assets” and is depreciated over the period of lease. 10. Intangible assets and amortisation Intangible assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortisation and cumulative impairment. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: a. Specialised software: over a period of six years b. Technical know-how: over a period of six years in case of foreign technology and three years in the case of indigenous technology c. Development costs for new products: over a period of five years Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the intangible assets. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible assets under development”. 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. 11. Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a. the provision for impairment loss, if any; and b. 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. in the case of an individual asset, at the higher of the net selling price and the value in use; b. in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use. (Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life). 216 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 12. Investment: Trade investments comprise investments in subsidiary companies, joint ventures, associate companies and in the entities in which the Company has strategic business interest. Investments, which are readily realisable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments. Long term investments including trade investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary in nature. Investments in integrated joint ventures are carried at cost net of adjustments for Company’s share in profits or losses as recognised. Current investments are carried at lower of cost and fair value. The determination of carrying amount of such investments is done on the basis of weighted average cost of each individual investment. Purchase and sale of investments are recognised based on the trade date accounting. 13. 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 and stock in trade (in respect of goods acquired for trading) at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid/payable on such goods d. Completed property/Work-in-progress (including land) in respect of property development activity at lower of cost or net realisable value 14. Cash and bank balances Cash and bank balances also include fixed deposits, margin money deposits, earmarked balances with banks and other bank balances which have restrictions on repatriation. Short term and liquid investments being not free from more than insignificant risk of change in value, are not included as part of cash and cash equivalents. 15. 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 16. Borrowing Costs: Borrowing costs include interest, commitment charges, amortisation of ancillary costs, amortisation of discounts/premium related to borrowings, finance charges in respect of assets acquired on finance lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs. Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised/inventorised as part of cost of such asset till such time 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. 217 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 17. 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. 18. Foreign currency transactions, foreign operations, forward contracts and derivatives a. The reporting currency of the Company is 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 fixed assets specifically financed by the borrowings contracted up to March 31, 2004 to which the exchange differences relate adjusted in the cost of fixed assets specifically financed by borrowings contracted between the period April 1, 2004 to March 31, 2007 and to which the exchange differences relate, provided the assets are acquired from outside India iii. recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above c. Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows: i. ii. Closing inventories at rates prevailing at the end of the year Fixed assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated iii. Other assets and liabilities at rates prevailing at the end of the year iv. Net revenues at the average rate for the year d. e. 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 recognized as income or expense of the period in which they arise. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates”. Exchange differences arising on such contracts are recognised in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognised as income/expense of the period in which such roll over/cancellation takes place. f. All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value as on the Balance Sheet date, in pursuance of the announcement of the ICAI dated March 29, 2008 on accounting of derivatives. In addition, the derivative arrangements embedded in the contracts entered in the course of business are accounted separately if the economic characteristics and risks of the embedded derivatives are not closely related to economic characteristics and risks of the host contract [Note Q23(a)]. 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. 218 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts (including embedded derivatives) covered under Accounting Standard (AS) 30 “Financial Instruments: Recognition and Measurement” are recognised in the Statement of Profit and Loss or Balance Sheet as the case may be after applying the test of hedge effectiveness. Where the hedge in respect of off-balance sheet items is effective, the gains or losses are recognised in the “hedging reserve” which forms part of “reserves and surplus” in the Balance Sheet. The amount recognised in the “hedging reserve” is transferred to the Statement of Profit and Loss in the period in which the underlying hedged item affects the Statement of Profit and Loss. Gains or losses in respect of ineffective hedges are recognised in the Statement of Profit and Loss in the period in which such gains or losses are incurred. g. The premium paid/received on a foreign currency forward contract is accounted as expense/income over the life of the contract. 19. Segment accounting a. Segment accounting policies Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting: i. ii. iii. iv. v. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment revenue Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under “unallocable corporate expenditure Income which relates to the Company as a whole and not allocable to segments is included in “unallocable corporate income” Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Company Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment 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 Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/appeals. Deferred tax is recognised on timing differences between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head “capital gains” are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 21. Accounting for interests in Joint Ventures Interests in joint ventures are accounted as follows: Type of joint venture Accounting treatment Jointly controlled operations Company’s share of revenues, common expenses, assets and liabilities are included in revenues, expenses, assets and liabilities respectively. 219 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) Type of joint venture Accounting treatment Jointly controlled assets Share of the assets, according to nature of the assets, and share of the Liabilities are shown as part of gross block and liabilities respectively. Share of expenses incurred on maintenance of the assets is accounted as expense. Monetary benefits, if any, from use of the assets are reflected as income. Jointly controlled entities (a) integrated joint ventures: (i) Company’s share in profits or losses of integrated joint ventures is accounted on determination of the profits or losses by the joint ventures. (ii) Investments in integrated joint ventures are carried at cost net of Company’s share in recognised profits or losses. (b) Incorporated jointly controlled entities: (i) (ii) Income on investments in incorporated jointly controlled entities is recognised when the right to receive thesame is established. Investment in such joint ventures is carried at cost after providing for any diminution in value which is otherthan temporary in nature. Joint venture interests accounted as above, other than investments in incorporated jointly controlled entities, are included in the segments to which they relate. 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 outflow of resources is expected to settle the obligation and c. the amount of the obligation can be reliably estimated Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of a. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation b. a present obligation arising from past events, when no reliable estimate is possible c. a possible obligation arising from past events where the probability of outflow of resources is not remote Contingent assets are neither recognised, nor disclosed. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 23. Commitments Commitments are future liabilities for contractual expenditure. Commitments are classified and disclosed as follows: a. Estimated amount of contracts remaining to be executed on capital account and not provided for b. Uncalled liability on shares and other investments partly paid c. Funding related commitment to subsidiary, associate and joint venture companies and d. Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management. Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details. 220 Notes forming part of the Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 24. Operating cycle for current and non-current classification Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realisation of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business. 25. Cash Flow Statement Cash Flow Statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of: I. transactions of a non-cash nature II. any deferrals or accruals of past or future operating cash receipts or payments and III. items of income or expense associated with investing or financing cash flows Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure. As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER Directors Mumbai, May 22, 2013 N. HARIHARAN Company Secretary 221 Consolidated Financial Statements 2012-13 Independent Auditors’ Report To the Board of Directors of Larsen & Toubro Limited We have audited the accompanying consolidated financial statements of Larsen & Toubro Limited (“the Company”) and its subsidiaries, associates and joint ventures (“the L&T Group”) which comprise the consolidated balance sheet as at March 31, 2013, and the consolidated statement of profit and loss and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the consolidated financial statements Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on the financial statements of the subsidiaries, associates and joint ventures as noted below, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the consolidated balance sheet, of the state of affairs of the L&T Group as at March 31, 2013; b) in the case of the consolidated statement of profit and loss, of the profit of the L&T Group for the year ended on that date; and c) in the case of the consolidated cash flow statement, of the cash flows of the L&T Group for the year ended on that date. Other matters In respect of the financial statements of a subsidiary, we carried out the audit jointly with other auditor. The details of assets, revenues and net cash flows in respect of the subsidiary to the extent to which they are reflected in the consolidated financial statements are given below: Jointly audited : crore crore crore Total assets Total revenues Net cash inflows / (outflows) Indian subsidiary 418.83 140.57 (0.34) In respect of the financial statements of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These financial statements have been audited 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, revenues and net cash flows in respect of these subsidiaries and joint ventures and the net carrying cost of investment 222 and current year share of net profit in respect of these associates, to the extent to which they are reflected in the consolidated financial statements are given below: Audited by other auditors: crore crore crore Total assets Total revenues Net cash inflows / (outflows) A B C Indian subsidiaries Foreign subsidiaries Joint ventures 32549.44 5260.25 2089.08 2552.03 3961.34 382.53 111.89 (40.16) 64.02 Net carrying cost of investment Current year share of net profit D Associates 68.66 4.33 We further report that in respect of certain subsidiaries, associates and joint ventures, we did not carry out the audit. These financial statements have been certified by management and have been furnished to us, and in our opinion, insofar as it relates to the amounts included in respect of the subsidiaries, associates and joint ventures, are based solely on these certified financial statements. Since the financial statements for the financial year ended March 31, 2013, which were compiled by management of these companies, were not audited, any adjustments to their balances could have consequential effects on the attached consolidated financial statements. However, the size of these subsidiaries, associates and joint ventures, in the consolidated position is not significant in relative terms. The details of assets, revenues and net cash flows in respect of these subsidiaries and joint ventures and the net carrying cost of investment and current year/period share of net profit in respect of these associates, to the extent to which they are reflected in the consolidated financial statements are given below: Certified by management : crore crore crore Total assets Total revenues Net cash inflows / (outflows) A B C Indian subsidiaries Foreign subsidiaries Joint ventures 103.15 0.60 112.14 16.33 2.92 180.62 3.60 (1.12) 0.22 D Associates 56.31 6.29 Our opinion is not qualified in respect of these matters. Net carrying cost of investment Current year/period share of net profit Mumbai, May 22, 2013 SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W MILIND P. PHADKE Partner Membership No.33013 223 Consolidated Balance Sheet as at March 31, 2013 EQUITY AND LIABILITIES: Shareholders’ funds Share capital Reserves and surplus Minority interest Non-current liabilities Long term borrowings Deferred payment liabilities for acquisition of fixed assets Deferred tax liabilities (net) Other long term liabilities Long term provisions Current liabilities Short term borrowings Current maturities of deferred payment liabilities for acquisition of fixed assets Current maturities of long term borrowings Trade payables Other current liabilties Short term provisions TOTAL ASSETS: Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in-progress Intangible assets under development Goodwill on consolidation Current assets Non-current investments Deferred tax assets (net) Long term loans and advances Long term loans and advances towards financing activities Cash and bank balances Other non-current assets Current investments Inventories Trade receivables Cash and bank balances Short term loans and advances Short term Loans and advances towards financing activities Other current assets TOTAL CONTINGENT LIABILITIES COMMITMENT (capital and others) OTHER NOTES FORMING PART OF THE ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 224 N. HARIHARAN Company Secretary As at 31-3-2013 As at 31-3-2012 Note crore crore crore crore 33859.69 2652.87 29386.78 1753.46 122.48 29264.30 36656.42 3953.58 210.88 842.38 312.19 52717.18 41975.45 5256.36 464.09 5237.30 17401.23 15495.26 2341.37 53875.31 143105.05 46195.61 119311.30 41740.00 1262.95 194.20 2200.47 21839.90 59.65 114.62 34316.47 1564.87 129.04 2043.96 16605.10 143.56 101.76 14116.20 4233.15 8056.20 6857.03 1053.89 7224.62 4228.16 20651.10 3378.58 5429.54 8168.82 15325.72 75693.26 143105.05 64406.54 119311.30 A B 123.08 33736.61 C(I) Q(22) Q(15) C(II) C(III) 47400.16 3481.45 377.87 1114.12 343.58 D(I) 7287.86 Q(22) D(II) D(III) D(IV) D(V) 472.53 7305.70 18812.03 17457.81 2539.38 20860.52 7452.92 4017.49 7289.32 2119.75 7504.55 5169.47 23014.91 3571.54 6251.84 10162.21 20018.74 E(I) E(II) E(I) E(II) E(III) F Q(15) G(I)(a) G(I)(b) G(II) G(III) H(I) H(II) H(III) H(IV) H(V) H(V)(a) H(VI) I J Q R A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER Directors Mumbai, May 22, 2013 Consolidated Statement of Profit and Loss for the year ended March 31, 2013 REVENUE: Revenue from operations (gross) Less: Excise duty Revenue from operations (net) Other income Total revenue EXPENSES: Manufacturing, construction and operating expenses Cost of raw materials, components consumed Construction materials consumed Purchase of stock-in-trade Stores, spares and tools consumed Sub-contracting charges Value of stock transferred on disposal of subsidiary/business Changes in inventories of finished goods, work-in-progress and stock-in-trade Other manufacturing, construction and operating expenses Finance cost of financial services business Staff expenses for software development business Employee benefits expense Sales, administration and other expenses Finance costs Depreciation, amortisation, impairment and obsolescence Less: Transfer from revaluation reserve Less: Overheads charged to fixed assets Total expenses Profit before exceptional and extraordinary items and tax Exceptional items Profit before extraordinary items and tax Extraordinary items Profit before tax Tax expense: Current tax Deferred tax (net) Profit after tax Less: Additional tax on dividend distributed/proposed by subsidiary companies Add: Share in profit/(loss) (net) of associate companies Add/(less): Minority interest in (income)/losses Balance carried to Balance Sheet Basic earnings per equity share before extraordinary items ( ) Diluted earnings per equity share before extraordinary items ( ) Basic earnings per equity share after extraordinary items ( ) Diluted earnings per equity share after extraordinary items ( ) Face value per equity share ( ) OTHER NOTES FORMING PART OF THE ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES } As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 N. HARIHARAN Company Secretary 2012-13 Note crore crore 2011-12 crore crore K L M N O P Q(5) Q(6) Q(8) Q(15) Q(14) Q R 75195.31 697.31 64960.08 646.97 74498.00 1095.93 75593.93 64313.11 828.97 65142.08 10790.24 15562.64 2179.87 2705.02 14322.47 (51.23) (1514.33) 6132.88 2350.16 2215.23 1651.71 14.64 2241.79 143.75 10863.96 13037.00 2456.02 2184.29 10969.25 (15.33) (598.76) 4653.56 1664.12 1876.38 1581.28 0.99 2314.33 (31.78) 47090.49 4998.23 3368.44 1215.85 1580.29 58253.30 27.96 58225.34 6916.74 56.77 6973.51 - 6973.51 2282.55 4690.96 8.67 4682.29 46.16 4728.45 (34.76) 4693.69 76.81 76.08 76.81 76.08 2.00 54692.95 6224.17 3772.23 2095.02 1637.07 68421.44 50.56 68370.88 7223.05 336.76 7559.81 78.11 7637.92 2385.54 5252.38 12.96 5239.42 38.43 5277.85 (72.18) 5205.67 83.63 82.94 84.79 84.10 2.00 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER Directors Mumbai, May 22, 2013 225 Consolidated Cash Flow Statement for the year ended March 31, 2013 A. Cash flow from operating activities: Profit before tax (excluding minority interest, exceptional and extraordinary items) Adjustments for: Dividend received Depreciation, amortisation, impairment and obsolescence Exchange difference on items grouped under financing/investing activity Expenditure on voluntary retirement scheme Interest expense Interest income (Profit)/loss on sale of fixed assets (net) (Profit)/loss on sale of investments (net) Employee stock option-discount forming part of staff expenses Provision/(reversal) for diminution in value of investments Operating profit before working capital changes Adjustments for: (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories Increase/(decrease) in trade payables and customer advances Cash generated from operations before financing activities (Increase)/decrease in loans and advances towards financing activities Cash generated from operations Direct taxes refund/(paid) (net) Net cash (used in)/from operating activities Cash flow from investing activities: Purchase of fixed assets Sale of fixed assets Purchase of long term investments Sale of long term investments Purchase/sale of current investments (net) Loans/deposits made with associate companies and third parties (net) Interest received Dividend received from associates Dividend received from other investments Consideration received on disposal of subsidiaries Consideration paid on acquisition of subsidiaries Cash & cash equivalents acquired pursuant to acquisition of subsidiaries Cash & cash equivalents discharged pursuant to disposal of subsidiaries Cash (used in)/from investing activities Extraordinary item Cash received (net of expenses) on sale of medical business Net cash (used in)/from investing activities (after extraordinary items) B. C. Cash flow from financing activities: Proceeds from issue of share capital Proceeds from long term borrowings Repayment of long term borrowings Proceeds from other borrowings (net) Payment (to)/from minority interest (net) Dividends paid Additional tax on dividend Interest paid (including cash flows on account of interest rate swaps) Net cash (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2012-13 crore 7223.05 (68.65) 1637.07 302.87 (38.34) 2095.02 (489.55) (202.22) (292.54) 99.21 (9.85) 10256.07 (7284.76) (675.81) 2358.53 4654.03 (5882.45) (1228.42) (2531.72) (3760.14) (7832.32) 394.55 (273.17) 984.04 (263.06) (84.82) 520.08 4.61 68.65 292.98 (1116.27) 355.24 (14.41) (6963.90) 52.36 (6911.54) 163.14 18760.13 (6829.16) 1909.49 803.27 (1012.79) (187.98) (2825.37) 10780.73 109.05 3522.14 3631.19 2011-12 crore 6916.74 (145.41) 1580.29 333.52 – 1215.85 (487.92) (12.31) (180.86) 205.27 (4.70) 9420.47 (9535.91) (448.75) 4251.53 3687.34 (7062.53) (3375.19) (2851.58) (6226.77) (7302.38) 198.44 (429.52) 644.64 437.98 (91.44) 464.37 25.35 145.41 42.97 – – – (5864.18) – (5864.18) 192.63 18794.88 (8343.81) 3201.32 1441.69 (886.19) (176.52) (2256.35) 11967.65 (123.30) 3645.44 3522.14 Notes: 1. Cash Flow Statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. Purchase of fixed assets includes movement of capital work-in-progress during the year. 2. 3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised gain of 27.61 crore (previous year: unrealised gain of 70.81 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 G(II) & Note H(IV). 4. 5. Cash and cash equivalents are reflected in the Balance Sheet as follows: (a) Cash and cash equivalents disclosed under current assets [Note H(IV)] (b) Cash and cash equivalents disclosed under non-current assets [Note G(II)] Total cash and cash equivalents as per Cash Flow Statement 6. Previous year’s figures have been regrouped/reclassified wherever applicable. 2012-13 crore 3571.54 59.65 3631.19 2011-12 crore 3378.58 143.56 3522.14 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director S. RAJGOPAL N. MOHAN RAJ M. DAMODARAN R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director M. M. CHITALE A. K. JAIN SUSHOBHAN SARKER N. HARIHARAN Company Secretary Directors Mumbai, May 22, 2013 As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 226 Notes forming part of the Consolidated Accounts NOTE [A] Share capital A(I) Share capital authorised, issued, subscribed and paid up: Particulars Authorised: Equity shares of 2 each Issued, subscribed and fully paid up: Equity shares of 2 each As at 31-3-2013 As at 31-3-2012 Number of shares crore Number of shares crore 1,62,50,00,000 325.00 1,62,50,00,000 325.00 61,53,85,981 123.08 61,23,98,899 122.48 A(II) Reconciliation of the number of equity shares and share capital: Particulars Issued, subscribed and fully paid up equity shares outstanding at the beginning of the year Add: Shares issued on exercise of employee stock options during the year Issued, subscribed and fully paid up equity shares outstanding at the end of the year A(III) Terms/rights attached to equity shares: As at 31-3-2013 As at 31-3-2012 Number of shares crore Number of shares crore 61,23,98,899 122.48 60,88,52,126 121.77 29,87,082 0.60 35,46,773 0.71 61,53,85,981 123.08 61,23,98,899 122.48 The Company has only one class of share capital, i.e. equity shares having face value of 2 per share. Each holder of equity share is entitled to one vote per share. A(IV) Shareholders holding more than 5% of equity shares as at the end of the year: Name of the shareholder Life Insurance Corporation of India L&T Employees Welfare Foundation Administrator of the Specified Undertaking of the Unit Trust of India As at 31-3-2013 As at 31-3-2012 Number of shares 10,12,52,038 7,44,04,116 5,06,17,308 Shareholding % 16.45 12.09 8.23 Number of shares 11,04,05,734 7,44,04,116 5,05,72,216 Shareholding % 18.03 12.15 8.26 A(V) Shares reserved for issue under 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 (FCCB) As at 31-3-2013 As at 31-3-2012 Number of equity shares to be issued as fully paid 87,45,451 @ 49,07,243 crore (At face value) Number of equity shares to be issued as fully paid 1.75 * 1,14,28,854 @ 0.98 ** 49,07,243 crore (At face value) 2.29 * 0.98 ** The equity shares will be issued at a premium of 491.96 crore (previous year: 640.32 crore) * ** The equity shares will be issued at a premium of 935.42 crore (previous year: 935.42 crore) on the exercise of options by the bond holders Note A(VIII) for terms of employee stock option schemes The number of options have been adjusted consequent to bonus issue wherever applicable # @ 227 Notes forming part of the Consolidated Accounts (contd.) A(VI) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2013 are 29,25,92,054 (previous period of five years ended March 31, 2012: 29,25,92,054 shares) A(VII) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding five years ended March 31, 2013 – Nil (previous period of five years ended March 31, 2012: Nil) A(VIII) Stock option schemes a) Terms: i. 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 fulfillment of certain conditions. ii. Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. Management has discretion to modify the exercise period. b) The details of the grants under the aforesaid schemes under various series are summarised below: Sr. No. Series reference 1 Grant price ( ) 2 Grant dates 3 Vesting commences on 4 Options granted and outstanding at the beginning of the year 5 Options lapsed during the year 6 Options granted during the year 7 Options exercised during the year 8 Options granted and outstanding 2000 2002 (A) 2002 (B) 2003 (A) 2003 (B) 2006 2006 (A) 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 3.50 3.50 3.50 3.50 3.50 3.50 17.50 17.50 17.50 17.50 601.00 601.00 601.00 601.00 1-6-2000 1-6-2001 19-4-2002 19-4-2003 19-4-2002 23-5-2003 onwards 23-5-2003 onwards 1-9-2006 onwards 1-7-2007 onwards 19-4-2003 23-5-2004 onwards 23-5-2004 onwards 1-9-2007 onwards 1-7-2008 onwards 16,800 16,800 21,500 21,500 39,700 39,700 31,452 31,452 6,47,302 9,32,880 20,26,751 39,74,443 86,45,349 89,36,534 – – – – – – – – – – – – – – – – – – – – – – 62,150 56,711 42,513 89,849 7,81,908 8,17,452 – 1,18,000 1,18,400 – – 10,72,250 18,67,930 – 2,67,950 3,47,267 10,72,770 18,57,843 16,46,362 13,41,663 at the end of the year 16,800 16,800 21,500 21,500 39,700 39,700 31,452 31,452 4,35,202 6,47,302 9,11,468 20,26,751 72,89,329 86,45,349 of which – Options vested Options yet to vest 9 Weighted average remaining contractual life of options (in years) 16,800 16,800 21,500 21,500 39,700 39,700 31,452 31,452 1,09,802 1,04,202 9,11,468 20,11,951 21,35,578 17,51,546 – Nil – Nil – Nil – Nil – Nil – Nil – Nil – 3,25,400 5,43,100 - 14,800 51,53,751 68,93,803 Nil 5.12 4.87 1.51 1.51 4.39 4.85 c) The number and weighted average exercise price of stock options for the following group of options are as follows: 2012-13 2011-12 Particulars No. of stock options (i) Options granted and outstanding at the beginning of the year (ii) Options granted during the year (iii) Options allotted during the year (iv) Options lapsed during the year (v) Options granted and outstanding at the end of the year (vi) Options exercisable at the end of the period out of (v) supra 1,14,28,854 11,90,250 29,87,082 8,86,571 87,45,451 32,66,300 Weighted average exercise price ( ) 562.27 543.15 548.66 560.10 564.54 561.50 No. of stock options 1,39,53,309 19,86,330 35,46,773 9,64,012 1,14,28,854 39,77,151 Weighted average exercise price ( ) 557.33 566.22 543.87 566.67 562.27 569.38 d) Weighted average share price at the date of exercise for stock options exercised during the period is 1452.14 (previous year: 1540.11) per share. e) In respect of stock options granted pursuant to the Company’s 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 over the vesting period. 228 Notes forming part of the Consolidated Accounts (contd.) f) Had fair value method been adopted for expensing the compensation arising from employee share-based payment plans: a. The employee compensation charge debited to the Statement of Profit and Loss for the year 2012-13 would have been higher by 32.15 crore (previous year: 30.78 crore). b. Basic EPS before extraordinary items would have decreased from 83.63 per share to 83.10 per share. c. Basic EPS after extraordinary items would have decreased from 84.79 per share to 84.27 per share. d. Diluted EPS before extraordinary items would have decreased from 82.94 per share to 82.42 per share. e. Diluted EPS after extraordinary items would have decreased from 84.10 per share to 83.58 per share. g) Weighted average fair values of options granted during the year is 909.35 (previous year: 745.94) per option. h) The fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows: Sr. no. Particulars (i) Weighted average risk-free interest rate (ii) Weighted average expected life of options (iii) Weighted average expected volatility 2012-13 2011-12 8.05% 4.26 years 39.38% 8.28% 4.33 years 41.09% (iv) Weighted average expected dividends over the life of the option 70.24 per option 62.84 per option (v) Weighted average share price (vi) Weighted average exercise price (vii) Method used to determine expected volatility 1317.81 per option 1146.53 per option 543.15 per share 566.22 per share Expected volatility is based on the historical volatility of the Company’s share price applicable to the total expected life of each option. A(IX) The Directors recommend payment of final dividend of 18.50 per equity share of 2 each on the number of shares outstanding as on the record date. Provision for final dividend has been made in the books of account for 61,53,85,981equity shares outstanding as at March 31, 2013 amounting to 1138.47 crore. A(X) Stock ownership schemes of subsidiary companies: a) Employee Stock Ownership Scheme (‘ESOS Plan’) Under the Employee Stock Ownership Scheme (ESOS), 25,48,200 options are outstanding as at March 31, 2013. 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 5 each. All vested options can be exercised on the First Exercise Date as may be determined by the Compensation Committee prior to date of IPO. The details of the grants under the aforesaid scheme are summarised below: Sr. No. 1 2 3 4 5 6 Series reference Grant Price ( ) I, II & III IV – XX 2012-13 2011-12 2012-13 2011-12 25.00 25.00 10.00 10.00 Options granted and outstanding at the beginning of the year 3,93,003 3,93,003 21,79,953 22,03,092 Options granted during the year Options cancelled/lapsed during the year Options exercised and shares allotted during the year – – – – – – – – 24,756 23,139 – – Options granted and outstanding at the end of the year 3,93,003 3,93,003 21,55,197 21,79,953 of which - Options vested Options yet to vest 3,93,003 3,93,003 9,70,917 9,70,917 – – 11,84,280 12,09,036 229 Notes forming part of the Consolidated Accounts (contd.) b) Employees Stock Ownership Scheme–2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) One of the subsidiaries of the Company has 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 five years, subject to fulfillment of certain conditions specified in the respective Option agreement. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of 5 each at an exercise price of USD 12 per share. Under the said plan, options granted and outstanding as at the end of the year are 90,100 options, all vested. Employees Stock Options granted and outstanding as at the end of the year on unissued share capital represent options 26,38,300 (previous year: 26,63,056) c) Employee Stock Option Plan 2008 (ESOP 2008) The Employee Stock Option Plan 2008 of one of the domestic subsidiaries of the Company is designed to provide stock options to employees in a specific 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-defined number of equity shares against each option and the options will vest over a period of five years from the date of grant at a pre-defined percentage of the total vesting, which shall each be subject to the condition that the employees will secure specific annual performance ratings for every allotment and Company achieving certain performance target and vesting of shares can be carried forward to maximum 2 years. 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 2012-13 2011-12 No. of stock options Weighted average exercise price ( ) No. of stock options Weighted average exercise price ( ) Options granted and outstanding at the beginning of the year 3,20,000 10.50 65,40,000 10.50 Options granted during the year – – – – Options forfeited/lapsed during the year 2,60,000 10.50 62,20,000 10.50 Options exercised during the year – – – – Options granted and outstanding at the end of the year of which - 60,000 10.50 3,20,000 10.50 Options vested Options yet to vest Weighted average remaining contractual life of options (comprising the vesting period and the exercise period) (in years) – 60,000 6.33 – – – 3,20,000 7.08 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 Statement of Profit and Loss. 230 Notes forming part of the Consolidated Accounts (contd.) d) Stock option scheme One of the domestic subsidiaries of the Company has formulated Employee Stock Option Scheme 2010 (ESOP Scheme-2010) and 2010-A (ESOP Scheme 2010-A).The grant of options to the employee under the Stock Options scheme is on the basis of their performance and other eligibility criteria. The options are vested over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the management and fulfillment of certain conditions.Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. Management has discretion to modify the exercise period. The details of the grant under the aforesaid scheme are summarised below: Series reference Sr. No. Grant price ( ) Grant date Vesting commence on 1 2 3 4 5 6 7 8 2010 2010-A 2012-13 2011-12 2012-13 2011-12 44.20 44.20 44.20 44.20 November 30, 2010 onwards July 4, 2012 November 30, 2011 July 4, 2013 Options granted and outstanding at the beginning of the year 1,35,72,440 1,06,15,400 – Options granted during the year – 47,10,500 9,05,000 Options cancelled/lapsed during the year 13,52,565 17,21,635 Options exercised during the year 19,98,920 31,825 – – Options granted and outstanding at the end of the year of which – 1,02,20,955 1,35,72,440 9,05,000 Options vested Options yet to vest 14,98,419 13,50,666 – 87,22,536 1,22,21,774 9,05,000 – – – – – – – – 9 Weighted average remaining contractual life of options (in years) 1.67 2.67 3.33 Weighted average fair values of options granted during the year is 15.37 (previous year: 28.18) per option. The fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows: Sr. No. Particulars 2012-13 2011-12 a) Weighted average risk-free interest rate b) Weighted average expected life of options c) Weighted average expected volatility 8.17% 8.30% 3.68 years 3.63 years 33.82% 41.81% d) Weighted average expected dividends 1.84 per option 0.75 per option e) Weighted average share price f) Weighted average exercise price g) Method used to determine expected volatility 44.30 per option 60.42 per option 44.20 per share 51.357 per share Expected volatility is based on the historical volatility of the Company’s shares price applicable to the expected life of each option. 231 Notes forming part of the Consolidated Accounts (contd.) NOTE [B] Reserves and surplus Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Capital reserve As per last Balance Sheet Addition during the year Capital reserve on consolidation As per last Balance Sheet Addition during the year Capital redemption reserve As per last Balance Sheet Securities premium account [Note Q(8)(b)] As per last Balance Sheet Addition during the year Less: Share/bond issue expenses (net of tax) Reversal of recoveries credited in previous years Debenture redemption reserve As per last Balance Sheet Less: Transferred to retained earnings Add: Transferred from retained earnings Revaluation reserve As per last Balance Sheet Addition during the year Less: On asset sold or obsoleted during the year Less: Transferred to statement of profit and loss Share options outstanding account Employee share options outstanding account As per last Balance Sheet Addition during the year Deduction during the year Deferred employee compensation expense As per last Balance Sheet Addition during the year Deduction during the year Carried forward 232 833.30 110.29 15.52 130.26 3.27 7206.36 309.04 7515.40 0.57 2.72 651.00 321.00 98.46 24.57 10.27 – 14.64 767.99 92.54 218.92 (284.81) (92.54) 182.66 46.66 786.64 943.59 833.30 15.52 3.27 145.78 3.27 14.31 1.21 3.27 6879.37 327.32 7206.69 – 0.33 7512.11 7206.36 456.51 – 194.49 428.46 651.00 29.65 – 4.09 0.99 20.20 24.57 861.41 119.46 212.88 641.61 767.99 (447.56) (119.46) 282.21 (194.69) 9500.33 (284.81) 9217.20 Notes forming part of the Consolidated Accounts (contd.) NOTE [B] Reserves and surplus (contd.) Particulars Brought forward Reserve u/s 45 IC of the RBI Act, 1934 As per last Balance Sheet Add: Transferred from retained earnings Reserve u/s 29C of National Housing Bank Act, 1987 As per last Balance Sheet Add: Transferred from retained earnings Tonnage tax reserve As per last Balance Sheet Add: Transferred from retained earnings Foreign currency translation reserve As per last Balance Sheet Addition during the year (net) Less: Transferred to Statement of Profit and Loss on divestment of stake in subsidiaries Reserve u/s 36(1)(viii) of Income Tax Act, 1961 As per last Balance Sheet Add: Transferred from retained earnings Hedging reserve (net of tax) [Note Q(15)] As per last Balance Sheet Less: Transferred from retained earnings Addition/(deduction) during the year Retained earnings As per last Balance Sheet Profit for the year Add/(less): Transferred from/(to): Debenture redemption reserve Reserve u/s 45 IC of the RBI Act, 1934 Reserve u/s 29C of National Housing Bank Act, 1987 Tonnage tax reserve Reserve u/s 36(1)(viii) of Income Tax Act, 1961 Hedging reserve Other appropriation: Dividend paid for previous year Additional tax on dividend paid for previous year Proposed dividend Additional dividend tax [Note Q(21)] Less: As at 31-3-2013 As at 31-3-2012 crore 360.40 197.28 – 0.04 4.48 0.02 296.35 130.16 9.52 46.86 92.26 (581.79) – (29.91) 19920.80 5205.67 25126.47 222.54 (197.28) (0.04) (0.02) (92.26) – 2.33 0.38 1138.47 188.58 crore 9500.33 crore crore 9217.20 252.89 107.51 557.68 360.40 0.04 4.50 416.99 – – 4.48 – 82.11 214.24 – 21.53 25.33 – 4.48 296.35 139.12 46.86 (7.96) 0.60 (573.23) (611.70) (581.79) 16732.11 4693.69 21425.80 (194.49) (107.51) – – (25.33) 0.60 3.35 0.54 1010.46 163.92 23729.65 33736.61 19920.80 29264.30 233 Notes forming part of the Consolidated Accounts (contd.) NOTE [C(I)] Long term borrowings Particulars Secured Unsecured Total * Secured Unsecured Total * As at 31-3-2013 As at 31-3-2012 Redeemable non-convertible fixed rate debentures Redeemable non-convertible floating rate debentures 3.50% Foreign currency convertible bonds Term loans from banks Term loans from others Loans from financial institutions Sales tax deferment loan Long term maturities of finance lease obligations [Note Q(13)(ii)(a)(ii)] Refinance from National Housing Bank Perpetual debt * Loans guaranteed by directors Nil (previous year: Nil) NOTE [C(II)] Other long term liabilities Forward contract payable Interest accrued but not due Others [Note C(II)(a)] Particulars crore 8515.42 100.00 – 23596.53 330.08 742.56 – – crore 2966.04 – 1085.70 8772.59 1082.03 – 8.25 0.25 crore 11481.46 100.00 1085.70 32369.12 1412.11 742.56 8.25 0.25 crore 5648.13 100.00 – 22390.97 300.10 461.09 – – crore crore 6523.13 875.00 100.00 – 1017.50 1017.50 5449.81 27840.78 697.89 461.09 15.54 0.49 397.79 – 15.54 0.49 0.71 – – 200.00 0.71 200.00 – – – – – – 33285.30 14114.86 47400.16 28900.29 7756.13 36656.42 As at 31-3-2013 As at 31-3-2012 crore 603.08 340.01 171.03 1114.12 crore 542.79 115.71 183.88 842.38 C(II)(a) Other long term liabilities–others include Advance received against sale of investments represents advance of 14.30 crore received from M/s. Sical Logistics Limited against sale of 1,43,00,000 equity shares of 10 each in M/s. Sical Iron Ore Terminals Limited at cost to M/s.Sical Logistics Limited vide agreement for share sale and purchase dated December 17, 2008. The sale is subject to the condition that it can be completed only after three years from the date of commencement of commercial operation by M/s. Sical Iron Ore Terminals Limited as per clause 18.2.2 (i) (d) of the license agreement dated September 23, 2006 between M/s. Sical Iron Ore Terminals Limited and M/s. Ennore Port Limited. As of March 31, 2013, M/s. Sical Iron Ore Terminals Limited is yet to commence commercial operations. NOTE [C(III)] Long term provisions Particulars Provision for employee benefits: Employee pension schemes [Note Q(10)(ii)(a)] Post-retirement medical benefit plan [Note Q(10)(ii)(a)] Interest rate guaranteed-provident fund [Note Q(10)(ii)(a)] Others: Periodic major maintenance (AS 29 related) [Note Q(18)] 234 As at 31-3-2013 As at 31-3-2012 crore 186.38 102.70 0.69 53.81 343.58 crore 174.19 83.43 20.61 33.96 312.19 Notes forming part of the Consolidated Accounts (contd.) NOTE [D(I)] Short term borrowings Particulars Secured Unsecured Total* Secured Unsecured Total* crore crore crore crore crore crore As at 31-3-2013 As at 31-3-2012 Loans repayable on demand: From banks Other loans and advances: From banks Commercial paper Loans from related parties From others 1637.58 286.08 1923.66 710.38 108.94 819.32 988.57 670.42 1658.99 1119.89 3079.14 4199.03 – – – 3404.47 3404.47 30.00 30.00 – – 270.74 270.74 11.96 108.15 108.15 30.00 87.90 30.00 99.86 2626.15 4661.71 7287.86 1842.23 3414.13 5256.36 * Loans guaranteed by directors Nil (previous year: Nil) NOTE [D(II)] Current maturities of long term borrowings Particulars Secured Unsecured Total* Secured Unsecured Total* crore crore crore crore crore crore As at 31-3-2013 As at 31-3-2012 Redeemable non-convertible fixed rate debentures 1428.50 349.00 1777.50 1030.00 250.00 1280.00 Term loans from banks Loans from financial institutions Refinance from National Housing Bank Sales tax deferment loan Finance lease obligation [Note Q(13)(ii)(a)(ii)] 4118.15 1351.23 5469.38 1772.08 2143.60 3915.68 50.34 0.93 – – – – 7.29 0.26 50.34 18.40 0.93 7.29 0.26 – – – – – 22.90 0.32 18.40 – 22.90 0.32 5597.92 1707.78 7305.70 2820.48 2416.82 5237.30 * Loans guaranteed by directors Nil (previous year: Nil) NOTE [D(III)] Trade payables Acceptances Due to related parties: Associate Companies Micro and small enterprises Due to others Particulars As at 31-3-2013 As at 31-3-2012 crore 609.42 45.61 91.60 18065.40 18812.03 crore 182.26 202.22 84.48 16932.27 17401.23 235 Notes forming part of the Consolidated Accounts (contd.) NOTE [D(IV)] Other current liabilities Particulars Interest accrued but not due on borrowings Interest accrued and due on borrowings Unclaimed dividend Unclaimed interest on debentures Unclaimed matured deposits Due to customers (construction and project related activity) Advances from customers Other payables (including sales tax,service tax,excise duty and others) [Note D(IV)(a)] As at 31-3-2013 As at 31-3-2012 crore 574.08 16.27 23.85 7.96 – 4416.97 8500.53 3918.15 crore 312.93 8.67 19.52 1.58 0.01 3016.21 9152.07 2984.27 17457.81 15495.26 D(IV)(a) Other current liabilities–other payables include (i) Advance received against sale of investments represents advance received from M/s. JRE Tank Terminals Private Limited (JRETTPL) under an agreement dated August 24, 2007 towards sale of 67,87,500 equity shares of 10 each at cost in M/s. Ennore Tank Terminals Private Limited (ETTPL) to be transferred on completion of three calendar years from the date of commencement of commercial operations. The said project has commenced commercial operations on January 15, 2009. The Company has initiated the share transfer process and it is expected to be completed in 2013-14 once the approval of M/s. Ennore Port Limited is obtained by JRETTPL. (ii) Provision for commission to directors 40.80 crore (previous year: 42.08 crore) NOTE [D(V)] Short term provisions Particulars Provision for employee benefits: Gratuity [Note Q(10)(ii)(a)] Compensated absences Employee pension schemes [Note Q(10)(ii)(a)] Post-retirement medical benefit plan [Note Q(10)(ii)(a)] Bonus provision Others: Current taxes [net of payments made 1822.78 crore (previous year: 99.85 crore)] Proposed dividend [Note A(IX)] Additional tax on dividend Reserve for unexpired risks Other provisions (AS 29 related) [Note Q(18)] 236 As at 31-3-2013 As at 31-3-2012 crore crore crore crore 70.01 565.28 11.98 15.00 22.12 32.26 1138.47 136.52 86.71 461.03 45.99 471.89 9.84 9.21 20.64 684.39 557.57 24.11 1010.46 123.35 53.77 572.11 1854.99 2539.38 1783.80 2341.37 Notes forming part of the Consolidated Accounts (contd.) Cost/valuation Depreciation Impairment Book value crore NOTE [E(I)] Tangible assets Particulars Land Freehold Leasehold Sub total - Land Buildings Owned Leased out Sub total - Building Plant & equipment Pursuant to acquisition of subsidiaries As at 1-4-2012 1135.70 797.96 1933.66 3427.36 442.83 3870.19 Owned Leased out 8745.12 567.66 Sub total - Plant & equipment 9312.78 Computers Owned Leased out Taken on lease Sub total - Computers Office equipment 734.22 59.88 2.82 796.92 Owned Leased out Sub total - Office equipment Furniture and fixtures Owned Leased out Sub total - Furniture & fixtures Vehicles Owned Leased out Taken on lease Sub total - Vehicles Other assets Owned Railway sidings Aircraft Ships Dredged channel Breakwater structures Sub total - Other assets Lease adjustment Total 333.49 0.79 334.28 447.82 18.06 465.88 343.44 178.50 0.91 522.85 313.37 129.70 790.16 378.90 – 1612.13 Foreign currency fluctuation Deductions As at 31-3-2013 Up to 31-3-2012 Pursuant to acquisition of subsidiaries 1.25 3.10 4.35 20.64 – 20.64 38.03 – 38.03 2.01 – – 2.01 2.94 – 2.94 3.51 – 3.51 4.88 – – 4.88 – – – – – – 91.94 22.71 114.65 109.26 – 109.26 152.12 28.70 180.82 27.47 13.36 0.37 41.20 6.57 0.08 6.65 32.72 0.02 32.74 22.78 46.16 0.91 69.85 – 10.62 – – – 10.62 1096.08 946.81 2042.89 5009.02 866.96 5875.98 – 35.17 35.17 432.09 25.51 457.60 12045.07 543.39 12588.46 2624.43 227.39 2851.82 895.42 46.88 2.58 944.88 413.87 0.72 414.59 520.13 18.30 538.43 419.93 206.67 – 626.60 318.84 119.08 1670.50 1135.57 656.93 3900.92 420.22 33.70 2.81 456.73 167.13 0.15 167.28 203.88 3.09 206.97 155.91 52.30 0.91 209.12 13.70 13.27 77.66 11.41 – 116.04 – – – 12.67 – 12.67 55.85 – 55.85 22.72 – – 22.72 9.28 – 9.28 9.45 – 9.45 2.40 – – 2.40 – – – – – – Additions 46.70 168.46 215.16 1632.37 424.13 2056.50 3335.09 4.43 3339.52 160.53 0.36 0.13 161.02 72.36 0.01 72.37 89.49 0.26 89.75 91.26 74.33 – 165.59 5.47 – 880.34 756.67 656.93 2299.41 For the year – 17.62 17.62 119.78 6.45 126.23 853.95 14.45 868.40 120.58 7.30 0.04 127.92 49.13 0.09 49.22 49.05 1.40 50.45 50.64 28.84 – 79.48 15.14 6.86 57.69 20.80 8.34 108.83 4.37 – 4.37 37.91 – 37.91 78.95 – 78.95 26.13 – – 26.13 11.65 – 11.65 12.03 – 12.03 3.13 – – 3.13 – – – – – – 18848.69 174.17 8399.32 76.36 565.79 26932.75 4500.73 112.37 1428.15 Previous year 14624.62 – 4427.24 138.41 341.58 18848.69 3477.50 – 1136.83 Add: Asset held for sale Add: Capital work-in-progress Foreign currency fluctuation Deductions Up to 31-3-2013 As at 31-3-2013 As at 31-3-2013 As at 31-3-2012 – 0.71 0.71 4.38 – 4.38 16.63 – 16.63 1.41 – – 1.41 1.53 – 1.53 2.04 – 2.04 3.68 – – 3.68 – – – – – – – 3.18 3.18 19.04 – 19.04 – 50.32 50.32 549.88 31.96 581.84 84.60 16.87 101.47 3466.26 224.97 3691.23 24.80 10.03 0.37 35.20 5.44 0.05 5.49 22.18 0.01 22.19 13.20 25.76 0.91 39.87 – 7.15 – – – 7.15 540.13 30.97 2.48 573.58 221.63 0.19 221.82 242.24 4.48 246.72 199.43 55.38 – 254.81 28.84 12.98 135.35 32.21 8.34 217.72 5.91 – 5.91 21.13 0.69 21.82 2.97 6.93 9.90 – – – – – – – 0.07 – 0.07 – – – – – – – – – – 30.38 45.75 233.59 5838.04 37.70 # 159.35 4500.73 13.74 1090.17 896.49 1986.66 4438.01 834.31 5272.32 8575.84 311.49 8887.33 355.29 15.91 0.10 371.30 192.24 0.53 192.77 277.82 13.82 291.64 220.50 151.29 – 371.79 1130.16 762.79 1892.95 2994.57 417.32 3411.89 6120.20 333.34 6453.54 314.00 26.18 0.01 340.19 166.36 0.64 167.00 243.86 14.97 258.83 187.53 126.20 – 313.73 290.00 106.10 1535.15 1103.36 648.59 3683.20 (239.36) 20817.65 299.67 116.43 712.50 367.49 – 1496.09 (239.36) 14094.86 21.34 42.87 14116.20 20860.52 4017.49 ## 8056.20 22172.40 24878.01 # Impairment upto 31-03-2013 37.70 crore, out of which 24.86 crore is debited to the Statement of Profit and Loss, 0.36 crore is debited to foreign currency translation reserve and 1.26 crore is transferred to asset held for sale ## Capital work-in-progress is net of impairment of 7.94 crore upto 31-03-2013, during the year 7.94 crore 237 Notes forming part of the Consolidated Accounts (contd.) NOTE [E(II)] Intangible assets Cost/valuation Amortisation Impairment Book value crore Particulars Specialised softwares Technical knowhow Trade marks New product design and development Customer contracts and relationship Toll collection rights Utility right to use Total Previous year Pursuant to acquisition of subsidiaries 17.17 – – 8.07 – – – 25.24 Foreign currency fluctuation 14.11 (0.12) – – 4.96 – – 18.95 Deductions 17.48 0.83 3.00 – – 153.60 – 174.91 As at 31-3-2013 806.44 85.54 – 18.05 110.67 8079.12 1.53 9101.35 Pursuant to acquisition of subsidiaries 14.76 – – 3.71 – – – 18.47 Up to 31-3-2012 279.63 29.05 3.00 – 13.21 895.01 – 1219.90 Additions 159.95 34.88 – 9.98 – 3572.68 1.53 3779.02 For the year 98.29 8.27 – 2.04 11.00 445.32 0.08 565.00 – 1081.27 1.00 190.04 5453.05 918.67 – 305.76 As at 1-4-2012 632.69 51.61 3.00 – 105.71 4660.04 – 5453.05 4560.82 Foreign currency fluctuation 1.32 (0.14) – – 0.69 – – 1.87 1.51 Deductions 14.55 0.39 3.00 – – 138.87 – 156.81 Up to 31-3-2013 379.45 36.79 – 5.75 24.90 1201.46 0.08 1648.43 6.04 1219.90 Add: Intangible assets under development NOTE [E(III)] Goodwill on consolidation As at 31-3-2013 – – – – – – – – – As at 31-3-2013 426.99 48.75 – 12.30 85.77 6877.66 1.45 7452.92 As at 31-3-2012 353.06 22.56 – – 92.50 3765.03 – 4233.15 7289.32 6857.03 14742.24 11090.18 Particulars Goodwill on consolidation Previous year Pursuant to acquisition of subsidiaries – – As at 1-4-2012 1454.53 1336.19 Cost/valuation Foreign currency fluctuation 17.28 33.51 Additions* 727.92 84.83 Amortisation Impairment Book value crore Deductions 12.24 – As at 31-3-2013 2187.49 1454.53 Up to 31-3-2012 359.35 212.45 Pursuant to acquisition of subsidiaries – – For the year (341.64) # 136.68 Foreign currency fluctuation (12.85) 10.22 Deductions 4.86 – Up to 31-3-2013 – 359.35 As at 31-3-2013 67.74 ## 41.29 As at As at 31-3-2012 31-3-2013 2119.75 1053.89 1053.89 1082.45 # Net of amortisation charge of 0.56 crore for current year in respect of subsidiaries sold during the year ## Impairment upto 31-03-2013 67.74 crore, during the year 26.45 crore debited to the Statement of Profit and Loss * Additions in goodwill represents consideration paid in excess of share in net worth of subsidiaries acquired during the year During the quarter and year ended March 31, 2013, the Company has revised its accounting policy of amortisation of goodwill on consolidation for more appropriate presentation of financial statements [Note R(4)(c)]. Accordingly, the goodwill on consolidation will be subjected to impairment test and will not be amortised. Consequently, the accumulated amortisation of goodwill till December 31, 2012 has been credited to the Consolidated Financial Statements. Had the Company continued to follow the accounting policy of 352.04 crore being amortisation of goodwill, the profit for the year in the Consolidated Financial Statements would have been lower by accumulated amortisation in respect of earlier years) as follows: 525.72 crore (including write back of Particulars Accumulated goodwill amortised as on April 1, 2012 in respect of subsidiaries credited to the Consolidated Statement of Profit and Loss. Accumulated goodwill amortised as on April 1, 2012 in respect of associates credited to the Consolidated Statement of Profit and Loss. [Note F(I)] Amortisation charge for the year 2012-13 had the Company continued to follow the policy of amortisation of goodwill Total crore Amount 342.20 9.84 173.68 525.72 Notes: 1 Cost/valuation of: (i) Freehold land includes 0.14 crore (previous year: 0.14 crore) for which conveyance is yet to be completed. (ii) Leasehold land includes: (a) 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. (b) Nil (previous year: 5.25 crore) added during the year in respect of which lease agreements are yet to be executed. 2 Cost/valuation of Buildings includes ownership accommodation: (i) (a) in various co-operative societies and apartments and shop-owners’ associations: 111.34 crore, including 2365 shares of 50 each, 232 shares of 100 each and 2 shares of 250 each. 238 Notes forming part of the Consolidated Accounts (contd.) (b) (c) in proposed co-operative societies 12.80 crore. in various co-operative societies and apartments and shop-owners’ associations: 22.64 crore, for which share certificates are yet to be issued. (ii) of 4.39 crore in respect of which the deed of conveyance is yet to be executed. (iii) of 8.48 crore representing undivided share in a property at a certain location. Cost/valuation of buildings includes 49.49 crore for building constructed on leasehold land of 52.79 acres (out of 90.36 acres of leasehold land, 37.57 acres has been taken back by the lessor) on a 66 years lease agreement entered with National Academy of Construction (NAC) dated October 1, 2001 yet to be registered with appropriate authority. The Company had taken land for converted into freehold land w.e.f June 4, 2012. Depreciation for the year on tangible assets/capital work-in-progress includes obsolescence 16.38 crore (previous year: 9.72 crore) and impairment 6.81 crore (previous year: 5.54 crore). The Company has revalued as at October 1, 1984 some of its land, buildings, plant & equipment and railway sidings at replacement/ market value, which resulted in a net increase of 108.05 crore. 2.63 crore in Mysore from KIADB based on lease and sale agreement. The aforesaid land got 3 4 5 6 7 Owned assets given on operating lease have been presented separately under tangible assets note as per Accounting Standard (AS) 19 8 9 10 “Leases”. As per para 63 of Accounting Standard (AS) 26 “Intangible Assets”, presently the subsidiaries with Toll Collection Rights amortise the asset on Straight line method (SLM) over the concession period. The amortisation computed above, is higher than amortisation computed in terms of the Notification No.G.S.R. 298 (E) dated April 17, 2012 issued by the Ministry Of Corporate Affairs (on amortisation of intangible assets created under ”Build-Operate-Transfer, Build-Own-Operate-Transfer“ and other forms of ”Public- Private-Partnership“ Route). Accordingly, the subsidiaries continue to amortise the Toll Collection Rights on a straight line basis over the concession period. In case of two subsidiaries, deductions in respect of toll collection rights amounting to Nil (previous year: 23.70 crore) and Nil (previous year: 159.80 crore) pertain to reimbursement of claims from National Highways Authority of India (NHAI) and decapitalisation of toll expenditure to intangible assets respectively. In case of one subsidiary, capital work-in-progress amounting to Nil (previous year: 611.65 crore) has been reclassified to inventory in view of the management’s decision to sell the area instead of leasing it. 11 Cost/valuation as at April 1, 2012 of individual assets has been reclassified, wherever necessary. 12 Additions during the year and capital work-in-progress/intangible assets under development include 903.57 crore (previous year: 1198.47 crore) being borrowing cost capitalised in accordance with Accounting Standard (AS) 16 “Borrowing Costs” as specified in the Companies (Accounting Standards) Rules, 2006. Asset wise break-up of borrowing costs capitalised is as follows: Asset Class 2012-13 2011-12 crore Tangible Leasehold land Dredged channel Breakwater structures Building owned Leased out building Plant & equipment owned Computer owned Office equipment owned Furniture and fixture owned Vehicle owned Railway sidings Intangible Specialised software Technical knowhow Toll collection rights Capital work-in-progress Intangible assets under development Total 0.60 1.20 2.79 29.68 3.17 26.54 1.09 0.05 0.86 0.01 0.17 0.04 0.14 0.49 483.39 353.35 903.57 30.11 – – 116.86 – 65.11 0.70 0.26 0.01 0.01 48.59 0.19 – – 447.67 488.96 1198.47 239 Notes forming part of the Consolidated Accounts (contd.) NOTE [F] Non-current investments (at cost unless otherwise specified) Particulars Long term investment Trade investments: Investments in equity instruments Fully paid equity shares Less: Provision for diminution in value Investment in associates: [Note F(I)] Fully paid equity shares of associate companies Add/(deduct): Accumulated share in profit/(loss) of the associate companies at the beginning of the year Adjustment pursuant to an associate becoming a subsidiary Adjustment pursuant to dilution/divestment of stake in associates Add/(deduct): Share in profit/(loss) (net) of associate companies- during the year Share in non-statutory reserves of associate companies- during the year Commitment to fresh infusion of equity Dividend received from associate companies during the year Unrealised profits in respect of transactions with associate companies Provision for diminution in value Other investment: Government and trust securities Debentures and bonds Less: Provision for diminution in value Mutual funds Other fully paid equity shares Less: Provision for diminution in value Fully paid preference shares Security receipt Investment in venture capital units Share application money pending allotment As at 31-3-2013 As at 31-3-2012 crore crore crore crore 42.90 15.90 150.81 363.77 (175.84) (2.93) 335.81 38.43 – 2.75 (4.61) (48.57) (0.56) 312.94 0.01 205.63 0.54 19.90 15.90 160.72 341.02 – 1.92 503.66 46.16 0.02 2.76 (25.35) (56.79) (0.56) 209.88 – 533.81 0.56 27.00 323.25 92.64 312.93 44.00 205.09 243.00 8.67 2.00 4.37 1262.95 4.00 469.90 74.83 209.88 2.00 533.25 243.00 24.23 – 3.78 1564.87 F(I) Investments in associates include goodwill of crore) and is further net of capital reserve of of goodwill of associate company sold during the year 2012-13. [Note E(III) & Note R(4)(c)]. 9.84 crore was credited to the Statement of Profit and Loss and 23.95 crore (previous year: 24.24 crore net of cumulative amortisation of 19.01 0.25 crore (previous year: 0.25 crore). During the year, accumulated amortisation 9.17 crore was deducted in respect of stake in 240 Notes forming part of the Consolidated Accounts (contd.) NOTE [G(I)(a)] Long term loans and advances Particulars Secured considered good Loans against mortgage of house property Capital advances Rent deposit (KMP’s) Unsecured considered good Capital advances Loan and advances to related parties Associate companies Advances recoverable Joint ventures Loans Advance recoverable Other loans and advances Security deposits Earnest money deposits Advances recoverable in cash or in kind Income tax receivable of current year [net of provision for tax of 159.50 crore (previous year: 228.66 crore)] Balance with customs, port trust, etc. Lease receivables Considered doubtful Capital advances Other loans and advances Less: Allowance for doubtful loan and advances NOTE [G(I)(b)] Long term loans and advances towards financing activities As at 31-3-2013 As at 31-3-2012 crore crore crore 5.62 6.98 0.01 161.05 crore 9.01 60.93 0.01 180.80 12.11 453.37 0.28 213.36 6.09 1321.86 18.26 0.32 1.16 1.86 0.33 1563.24 2.19 8.20 283.63 – 465.76 291.83 268.89 1.33 1225.00 4.26 0.32 1.58 – – 1501.38 – 1561.05 2200.47 1501.38 2043.96 Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Secured loans: Considered good: Term loans Finance lease Debentures Considered doubtful: Term loans [Note G(I)(b)(i)] Less: Allowance for non-performing assets Less: Contingent provisions against standard assets Less: Provision for standard assets Carried forward 20439.34 91.67 768.33 169.69 21469.03 169.69 72.26 85.38 15479.35 109.48 670.27 90.30 16349.40 90.30 48.32 8.09 21141.70 21141.70 16202.69 16202.69 241 Notes forming part of the Consolidated Accounts (contd.) NOTE [G(I)(b)] Long term loans and advances towards financing activities (contd.) Particulars Brought forward Unsecured loans: Considered good: Term loans Debentures Considered doubtful: Term loans [Note G(I)(b)(i)] Less: Allowance for non-performing assets Less: Contingent provisions against standard assets As at 31-3-2013 As at 31-3-2012 crore crore 21141.70 crore crore 16202.69 661.18 40.00 83.57 784.75 83.57 2.98 378.75 28.00 67.79 474.54 67.79 4.34 698.20 21839.90 402.41 16605.10 G(I)(b)(i) Loans and advances towards financing activities are classified as doubtful to the extent of provision made following prudential norms for provisioning of assets prescribed by the Reserve Bank of India. NOTE [G(II)] Cash and bank balances Particulars Cash and bank balances not available for immediate use NOTE [G(III)] Other non-current assets Particulars Interest accrued on investments and others Unamortised expenses Others NOTE [H(I)] Current investments Particulars Current investments: Fully paid equity shares Less: Provision for diminution in value Carried forward 242 As at 31-3-2013 As at 31-3-2012 crore 59.65 59.65 crore 143.56 143.56 As at 31-3-2013 As at 31-3-2012 crore 21.95 92.67 – 114.62 crore 24.96 76.09 0.71 101.76 As at 31-3-2013 As at 31-3-2012 crore 11.05 2.00 crore crore crore 6.86 – 9.05 9.05 6.86 6.86 Notes forming part of the Consolidated Accounts (contd.) NOTE [H(I)] Current investments (contd.) Particulars Brought forward Government and trust securities Less: Provision for diminution in value Debentures and bonds Less: Provision for diminution in value Mutual funds Less: Provision for diminution in value Other investments Less: Provision for diminution in value Current portion of long term investments: Debentures and bonds Mutual funds NOTE [H(II)] Inventories (at cost or net realisable value whichever is lower) Particulars Raw materials [including goods-in-transit 43.42 crore (previous year: 20.40 crore)] Components [including goods-in-transit 77.64 crore (previous year: 53.32 crore)] Construction materials [including goods-in-transit 0.33 crore (previous year: 1.99 crore)] Manufacturing work-in-progress Finished goods (includes 25.78 crore on an associate becoming a subsidiary) Stock-in-trade (in respect of goods acquired for trading) [including goods-in-transit 32.98 crore (previous year: 52.82 crore)] Stores and spares [including goods-in-transit 4.19 crore (previous year: 3.12 crore)] Loose tools Property development projects (including land) Completed property As at 31-3-2013 As at 31-3-2012 crore 113.37 0.86 989.25 0.25 4080.21 – 2289.01 0.23 – 25.00 crore 9.05 112.51 989.00 4080.21 crore 381.10 7.89 393.69 1.55 1157.29 0.02 4922.37 6.37 crore 6.86 373.21 392.14 1157.27 2288.78 4916.00 100.12 279.02 25.00 7504.55 379.14 7224.62 As at 31-3-2013 As at 31-3-2012 crore 868.91 488.27 397.96 811.56 282.20 189.54 153.48 6.47 1969.75 1.33 5169.47 crore 970.97 399.49 129.27 562.37 302.69 220.48 111.31 4.84 1500.09 26.65 4228.16 243 Notes forming part of the Consolidated Accounts (contd.) NOTE [H(III)] Trade receivables Trade receivables Secured Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Debts outstanding for more than 6 months Considered good Other debts Considered good Unsecured Debts outstanding for more than 6 months Considered good Considered doubtful Other debts Considered good Less: Allowance for doubtful debts NOTE [H(IV)] Cash and bank balances Particulars Cash and cash equivalents 3.71 4.81 1991.06 548.16 2539.22 21015.33 23554.55 548.16 0.39 3.78 8.52 4.17 1888.55 636.82 2525.37 18758.38 21283.75 636.82 23006.39 23014.91 20646.93 20651.10 As at 31-3-2013 As at 31-3-2012 crore crore crore crore Balance with banks Cheques and drafts on hand Cash on hand Fixed deposits with banks (maturity less than 3 months) 1272.31 424.12 19.59 644.85 1315.98 298.39 17.10 1211.20 Other bank balances Fixed deposits with banks including interest accured thereon 1002.50 429.21 [includes 80.14 crore (previous year: 22.57 crore) of bank 2360.87 2842.67 deposit with more than 12 months maturity] Earmarked balances with banks-unclaimed dividend Earmarked balances with banks-others Margin money deposits Cash and bank balances not available for immediate use Bank balances subject to restriction on repatriation 23.85 14.82 5.21 155.35 8.94 19.52 10.45 15.30 52.49 8.94 1210.67 3571.54 535.91 3378.58 244 Notes forming part of the Consolidated Accounts (contd.) NOTE [H(V)] Short term loans and advances Particulars Secured considered good: Loans against mortgage of house property Key management personnel Others Others loans and advances Unsecured: Loans and advances to related parties Considered good: Associates: Advance recoverable Joint ventures Loans Advance recoverable Others Considered good: Security deposits Earnest money deposit Advances recoverable in cash or in kind Income tax receivable of current year [net of provision for tax of 288.74 crore (previous year: 1986.25 crore)] Balance with customs, port trust etc. Lease receivables Considered doubtful: Deferred credit against sale of ships Security deposits Other loans and advances Less: Allowance for doubtful loans and advances As at 31-3-2013 As at 31-3-2012 crore crore crore crore – 1.80 – 6.69 – 0.04 477.46 72.57 5525.83 62.22 104.74 0.49 22.58 1.40 131.79 6399.08 155.77 0.28 1.80 100.00 1.80 102.08 11.48 84.04 – 6.73 95.52 216.14 36.16 4748.06 152.66 78.42 0.50 21.16 0.47 130.80 5384.37 152.43 6243.31 6251.84 5231.94 5429.54 245 Notes forming part of the Consolidated Accounts (contd.) NOTE [H(V)(a)] Short term loans and advances towards financing activities Particulars As at 31-3-2013 As at 31-3-2012 crore crore crore crore Secured loans: Considered good: Term loans Finance lease Debentures Less: Contingent provision against standard assets Unsecured loans: Considered good: Term loans Less: Contingent provision against standard assets NOTE [H(VI)] Other current assets Particulars Due from customers (construction and project related activity) Due from customers (property development activity)[Note Q(9)(b)] Interest accrued on investments and others Unbilled revenue Unamortised expenses Billed interest and other receivable Others 7978.82 56.45 182.99 8218.26 25.77 1975.06 5.34 6367.43 54.13 96.32 6517.88 19.34 8192.49 6498.54 1674.69 4.41 1969.72 10162.21 1670.28 8168.82 As at 31-3-2013 As at 31-3-2012 crore 19322.35 1.83 419.93 161.64 29.82 56.90 26.27 crore 14815.91 – 271.05 144.14 26.33 37.41 30.88 20018.74 15325.72 246 Notes forming part of the Consolidated Accounts (contd.) NOTE [I] Contingent liabilities Particulars (a) Claims against the Company not acknowledged as debts (b) Sales-tax liability that may arise in respect of matters in appeal (c) Excise duty/service tax liability that may arise in respect of matters in appeal/challenged by the Company in WRIT (d) Customs duty demands against which the Group has filed appeals (e) before Appellate Authorities which are pending disposal Income-tax liability (including interest and penalty) that may arise in respect of which the Company is in appeal As at 31-3-2013 As at 31-3-2012 crore 319.49 124.96 54.43 0.21 535.63 crore 382.75 118.89 36.86 0.21 292.06 Notes: 1. 2. 3. The Company does not expect any reimbursements in respect of the above contingent liabilities. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (e) supra, pending resolution of the arbitration/appellate proceedings. Particulars of contingent liabilities in respect of joint venture is given in Note Q(17). NOTE [J] Commitments: Particulars Estimated amount of contracts remaining to be executed on capital account (net of advances)* Estimated amount of committed funding by way of loans to joint venture companies * Particulars of capital commitments in respect of joint ventures is given in Note Q(17) As at 31-3-2013 As at 31-3-2012 crore 26611.46 – crore 19248.07 50.00 NOTE [K] Revenue from operations Particulars Sales & service: 2012-13 2011-12 crore crore crore crore Manufacturing and trading activity Construction and project related activity [Note Q(9)(a)] Property development activity [Note Q(9)(b)] Software development products and services Income from financing activity/annuity based projects Toll collection and related activity Servicing Commission Engineering and service fees Income from port services Charter hire income Investment/portfolio management and trusteeship fees Premium earned (net) 7629.30 55880.96 228.92 3760.20 3971.62 720.32 570.96 158.84 1293.81 198.14 137.37 33.06 111.70 Carried forward 7674.19 48158.37 351.54 3057.18 2976.78 431.69 385.60 204.51 923.05 76.65 90.57 12.13 36.16 74695.20 74695.20 64378.42 64378.42 247 Notes forming part of the Consolidated Accounts (contd.) NOTE [K] Revenue from operations (contd.) Particulars Brought forward Other operational revenue: 2012-13 crore crore 74695.20 2011-12 crore crore 64378.42 Income from hire of plant and equipment Technical fees Lease rentals Property maintenance recoveries Facility management income Premium earned (net) on related forward exchange contract Miscellaneous income 7.75 0.24 107.31 15.16 14.17 165.82 189.66 0.85 0.12 91.18 14.81 11.87 233.31 229.52 K(I) Revenue from sales & service include: (a) 691.51 crore (previous year: 303.99 crore) for price variations net of liquidated damages in terms of contracts with the customers. (b) Shipbuilding subsidy year: 18.24 crore). 10.02 crore (previous year: 2.09 crore) and reversal of shipbuilding subsidy of 7.22 crore (previous 500.11 75195.31 581.66 64960.08 NOTE [L] Other income Interest income Particulars 2012-13 2011-12 crore crore crore crore Interest Income on long term investments Interest Income on current investments Interest Income on others Joint venture & associate companies Others Dividend income From long term investments Trade investments Others From current investments Net gain/(loss) on sale of investments Long term investments (net) Current investments (net) Net gain/(loss) on sale of fixed assets (net) Lease rental Miscellaneous income (net of expenses) 248 25.52 316.32 41.62 106.09 2.22 54.82 57.04 11.61 22.46 270.08 8.96 375.64 26.99 76.33 489.55 487.92 16.58 74.49 91.07 54.34 68.65 145.41 9.41 171.45 292.54 202.22 2.55 40.42 1095.93 180.86 12.31 1.08 1.39 828.97 Notes forming part of the Consolidated Accounts (contd.) NOTE [M] Manufacturing, construction and operating expenses Particulars Materials consumed: Raw materials and components Less: Scrap sales Construction materials Purchase of stock-in-trade Stores, spares and tools consumed Sub-contracting charges Value of stock transferred on disposal of subsidiary/business Change in inventories of finished goods, work-in-progress and stock-in-trade: Closing stock: Finished goods Stock-in-trade Work-in-progress Less: Opening stock: Finished goods (includes 2.14 crore on acquisition of a subsidiary) Stock-in-trade Work-in-progress (includes 2.45 crore on acquisition of a subsidiary) Other manufacturing, construction and operating expenses: Excise duty Power and fuel [Note O(I)] Royalty and technical know-how fees Packing and forwarding [Note O(I)] Hire charges-plant and equipment and others Bank guarantee charges Insurance claim incurred (net) Engineering, professional, technical and consultancy fees Insurance [Note O(I)] Rent [Note O(I)] Rates and taxes [Note O(I)] Travelling and conveyance [Note O(I)] Repairs to plant and equipment Repairs to buildings [Note O(I)] General repairs and maintenance [Note O(I)] Port operation expenses Carried forward 2012-13 2011-12 crore crore crore crore 10944.59 154.35 10977.80 113.84 10863.96 13037.00 2456.02 2184.29 10969.25 (15.33) (598.76) 10790.24 15562.64 2179.87 2705.02 14322.47 (51.23) (1514.33) 302.69 220.48 2078.45 2601.62 297.92 209.43 1495.51 2002.86 17.13 701.11 70.08 216.81 939.18 66.98 63.94 564.51 136.98 233.50 201.36 540.80 61.23 17.40 220.33 31.49 43994.68 4082.83 38896.43 249 256.42 189.54 3674.58 4120.54 304.83 220.48 2080.90 2606.21 (6.52) 890.89 49.36 283.67 1204.88 78.60 109.17 688.74 161.33 318.21 270.22 744.84 67.51 17.35 310.91 67.54 5256.70 Notes forming part of the Consolidated Accounts (contd.) NOTE [M] Manufacturing, construction and operating expenses (contd.) Particulars Brought forward Cost of built up space and property development land: Opening stock: Work-in-progress Completed property Property development land Add: Expenses on construction during the year Add: Transferred from fixed asset to inventory Less: Closing Stock: Work-in-progress Completed property Property development land Operating cost of shipping business Miscellaneous expenses [Note O(I)] Finance cost of financial services business: Interest and other financing charges Staff expenses for software development business: Salaries, wages and bonus Contribution to and provision for Provident fund and pension fund Superannuation/employee pension schemes Gratuity funds [Note Q(10)(ii)(b)] Expenses on employee stock option scheme Staff welfare expenses 2012-13 2011-12 crore 5256.70 crore 43994.68 crore 4082.83 crore 38896.43 1268.11 26.65 231.98 1526.74 383.56 – 1910.30 1722.04 1.33 247.71 1971.08 (60.78) 53.78 883.18 292.35 107.94 345.71 746.00 104.89 611.65 1462.54 1268.11 26.65 231.98 1526.74 (64.20) 36.86 598.07 6132.88 4653.56 2350.16 1664.12 2350.16 1664.12 1754.14 137.06 5.63 9.41 0.50 308.49 1435.82 105.18 8.99 14.70 1.64 310.05 2215.23 54692.95 1876.38 47090.49 M(I) Other manufacturing, construction and operating expenses include 2964.62 crore (previous year: 1930.54 crore) towards construction of 1400 MW power plant at Rajpura, Punjab. 250 Notes forming part of the Consolidated Accounts (contd.) NOTE [N] Employee benefits expense Particulars Salaries, wages and bonus Contribution to and provision for: Provident fund and pension fund Superannuation/employee pension schemes Gratuity funds [Note Q(10)(ii)(b)] Expenses on employee stock option scheme Employee medical & other insurance premium expenses [Note O(I)] Staff welfare expenses NOTE [O] Sales, administration and other expenses Particulars Power and fuel [Note O(I)] Packing and forwarding [Note O(I)] Insurance [Note O(I)] Rent [Note O(I)] Rates and taxes [Note O(I)] Travelling and conveyance [Note O(I)] Repairs to buildings [Note O(I)] General repairs and maintenance [Note O(I)] Professional fees Directors’ fees Telephone, postage and telegrams Advertising and publicity Stationery and printing Commission: Distributors and agents Employees and others Bank charges Discount on sales Miscellaneous expenses [Note O(I)] Bad debts and advances written off Less: Allowances for doubtful debts and advances written back Allowances for doubtful debts,advances and non-performing assets (net) Provision for foreseeable losses on construction contracts Provision/(reversal) for diminution in value of investments(net) Exchange (gain)/loss Provision for standard assets Other provisions [Note Q(18)(a)] 2012-13 crore crore 5139.08 2011-12 crore crore 3998.60 146.10 54.92 73.07 123.31 37.90 72.25 2012-13 crore 40.96 9.39 353.69 116.58 274.09 98.71 62.42 649.87 6224.17 crore 99.24 234.85 38.60 276.26 137.72 437.65 15.19 330.50 375.56 1.99 176.08 140.22 62.36 50.35 86.52 72.17 518.16 237.11 5.64 14.77 (9.85) 488.08 58.68 (75.62) 3772.23 2011-12 crore 32.04 23.37 174.60 50.38 233.46 203.63 38.35 524.19 4998.23 crore 78.65 145.03 26.25 240.29 91.00 339.81 22.12 258.57 363.49 1.06 142.73 105.98 51.86 55.41 61.39 58.43 375.27 124.22 212.52 6.00 (4.70) 570.07 29.07 13.92 3368.44 251 Notes forming part of the Consolidated Accounts (contd.) NOTE O(I) Aggregation of expenses disclosed vide notes M, N and O in respect of specific items are as follows: crore Sr. no. Nature of expenses 2012-13 2011-12 Note M Note N Note O Total Note M Note N Note O Total 1 2 3 4 5 6 7 8 Power and fuel Packing and forwarding 890.89 283.67 – – 99.24 990.13 701.11 234.85 518.52 216.81 – – 78.65 779.76 145.03 361.84 Insurance Rent Rates and taxes Travelling and conveyance Repairs to buildings General repairs and maintenance 161.33 62.42 38.60 262.35 136.98 38.35 26.25 201.58 318.21 270.22 744.84 17.35 310.91 – – – – – 276.26 594.47 233.50 137.72 407.94 201.36 437.65 1182.49 540.80 15.19 32.54 17.40 330.50 641.41 220.33 – – – – – 240.29 473.79 91.00 292.36 339.81 880.61 22.12 39.52 258.57 478.90 9 Miscellaneous expenses 883.18 – 518.16 1401.34 598.07 – 375.27 973.34 NOTE [P] Finance costs Particulars Interest expenses Other borrowing costs Exchange loss (attributable to finance costs) 2012-13 crore 1971.69 17.50 105.83 2095.02 2011-12 crore 1021.05 10.15 184.65 1215.85 NOTE [Q] Q(1) The Balance Sheet as on March 31, 2013 and the Statement of Profit and Loss for the year ended March 31, 2013 are drawn and presented as per the new Schedule VI to the Companies Act, 1956. Q(2) Basis of preparation a) The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard (AS) 21 “Consolidated Financial Statements”, Accounting Standard (AS) 23 “Accounting for Investments in Associates in Consolidated Financial Statements” and Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”, as specified in the Companies (Accounting Standards) Rules, 2006. The CFS comprises the financial statements of Larsen & Toubro Limited (L&T), its subsidiaries, associates and joint ventures. Reference in these notes to L&T, Company, Parent Company, Companies or Group shall mean to include Larsen & Toubro Limited or any of its subsidiaries, associates and joint ventures, unless otherwise stated. b) The notes and significant policies to the CFS are intended to serve as a guide for better understanding of the Group’s position. In this respect, the Company has disclosed such notes and policies which represent the required disclosure. 252 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Q(3) The list of subsidiaries,associates and joint ventures included in the Consolidated Financial Statements are as under: Name of subsidiary company Sr. no. Indian Subsidiaries 1 Tractor Engineers Limited 2 Bhilai Power Supply Company Limited 3 L&T-Sargent & Lundy Limited 4 Spectrum Infotech Private Limited 5 L&T-Valdel Engineering Limited 6 L&T Shipbuilding Limited 7 L&T Electricals and Automation Limited 8 Hi-Tech Rock Products & Aggregates Limited 9 L&T Seawoods Private Limited 10 L&T-Gulf Private Limited 11 L&T-MHI Boilers Private Limited 12 L&T-MHI Turbine Generators Private Limited 13 Raykal Aluminium Company Private Limited 14 L&T Natural Resources Limited 15 L&T Plastics Machinery Limited # 16 L&T Technologies Limited 17 L&T Special Steels and Heavy Forgings Private Limited 18 PNG Tollway Limited 19 Kesun Iron & Steel Company Private Limited 20 L&T Howden Private Limited 21 L&T Solar Limited 22 L&T Sapura Shipping Private Limited 23 L&T Sapura Offshore Private Limited 24 L&T PowerGen Limited 25 Ewac Alloys Limited 26 L&T Kobelco Machinery Private Limited 27 L&T Geostructure LLP 28 Audco India Limited @ 29 L&T Realty Limited 30 L&T Asian Realty Project LLP 31 L&T Parel Project LLP 32 Chennai Vision Developers Private Limited 33 L&T Urban Infrastructure Limited 34 L&T South City Projects Limited 35 L&T Siruseri Property Developers Limited 36 L&T Vision Ventures Limited 37 L&T Tech Park Limited 38 L&T Bangalore Airport Hotel Limited 39 CSJ Infrastructure Private Limited 40 CSJ Hotels Private Limited 41 L&T Commercial Projects Private Limited (formerly known as L&T Arun Excello Commercial Projects Private Limited) ## 42 L&T Chennai Projects Private Limited (formerly known as L&T Arun Excello IT SEZ Private Limited) 43 L&T Power Limited As at 31-3-2013 As at 31-3-2012 Country of incorporation Proportion of ownership interest (%) Proportion of voting power held (%) Proportion of ownership interest (%) Proportion of voting power held (%) 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 India India India India India India 100.00 99.90 50.0002 100.00 100.00 97.00 100.00 100.00 100.00 50.0002 51.00 51.00 75.50 100.00 – 100.00 74.00 72.11 95.00 50.10 100.00 60.00 60.00 100.00 100.00 51.00 74.00 100.00 100.00 50.00 100.00 100.00 100.00 51.00 51.00 68.00 51.00 74.00 82.00 82.00 – 100.00 99.90 50.0002 100.00 100.00 97.00 100.00 100.00 100.00 50.0002 51.00 51.00 75.50 100.00 – 100.00 74.00 72.11 95.00 50.10 100.00 60.00 60.00 100.00 100.00 51.00 74.00 100.00 100.00 55.00 100.00 100.00 100.00 51.00 51.00 68.00 51.00 74.00 82.00 82.00 – 100.00 100.00 99.99 99.99 100.00 99.90 50.0002 100.00 100.00 100.00 100.00 100.00 100.00 50.0002 51.00 51.00 75.50 100.00 100.00 100.00 74.00 72.11 95.00 50.10 100.00 60.00 60.00 100.00 100.00 51.00 – – 100.00 50.00 100.00 100.00 100.00 51.00 51.00 68.00 51.00 74.00 82.00 – 51.00 51.00 99.99 100.00 99.90 50.0002 100.00 100.00 100.00 100.00 100.00 100.00 50.0002 51.00 51.00 75.50 100.00 100.00 100.00 74.00 72.11 95.00 50.10 100.00 60.00 60.00 100.00 100.00 51.00 – – 100.00 55.00 100.00 100.00 100.00 51.00 51.00 68.00 51.00 74.00 82.00 – 51.00 51.00 99.99 253 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Name of subsidiary company Sr. no. Country of incorporation 44 L&T Cassidian Limited 45 L&T General Insurance Company Limited 46 L&T Aviation Services Private Limited 47 L&T Infocity Limited 48 L&T Hitech City Limited 49 Hyderabad International Trade Expositions Limited 50 Larsen & Toubro Infotech Limited 51 GDA Technologies Limited 52 L&T Finance Holdings Limited 53 L&T Housing Finance Limited 54 Consumer Financial Services Limited 55 Family Credit Limited 56 L&T Finance Limited 57 L&T Capital Markets Limited 58 L&T Investment Management Limited 59 L&T Mutual Fund Trustee Limited 60 L&T Trustee Services Private Limited (Formerly known as FIL Trustee Company Private Limited) 61 L&T Fund Management Private Limited (formerly known as FIL Fund Management Private Limited) 62 L&T FinCorp Limited 63 L&T Infrastructure Finance Company Limited 64 L&T Infra Debt Fund Limited 65 L&T Infra Investment Partners Advisory Private Limited 66 L&T infra Investment Partners Trustee Private Limited 67 L&T Unnati Finance Limited 68 L&T Access Financial Advisory Services Limited (formerly known as L&T Access Financial Advisory Services Private Limited) 69 L&T Capital Company Limited 70 L&T Trustee Company Private Limited 71 L&T Power Development Limited 72 L&T Uttaranchal Hydropower Limited 73 L&T Arunachal Hydropower Limited 74 L&T Himachal Hydropower Limited 75 Nabha Power Limited 76 L&T Infrastructure Development Projects Limited 77 L&T Panipat Elevated Corridor Limited 78 Narmada Infrastructure Construction Enterprise Limited 79 L&T Krishnagiri Thopur Toll Road Limited 80 L&T Western Andhra Tollways Limited 81 L&T Vadodara Bharuch Tollway Limited 82 L&T East-West Tollway Limited 83 L&T Great Eastern Highway Limited 84 L&T Transportation Infrastructure Limited 85 L&T Western India Tollbridge Limited 86 L&T Interstate Road Corridor Limited 87 International Seaports (India) Private Limited 88 L&T Port Kachchigarh 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 India India India India India India India India As at 31-3-2013 As at 31-3-2012 Proportion of ownership interest (%) 74.00 100.00 100.00 89.00 65.86 51.71 100.00 100.00 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 Proportion of voting power held (%) 74.00 100.00 100.00 89.00 65.86 51.71 100.00 100.00 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 Proportion of ownership interest (%) 74.00 100.00 100.00 89.00 65.86 51.71 100.00 100.00 82.64 – – – 82.64 – 82.64 82.64 – Proportion of voting power held (%) 74.00 100.00 100.00 89.00 65.86 51.71 100.00 100.00 82.64 – – – 82.64 – 82.64 82.64 – 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 100.00 100.00 100.00 100.00 100.00 100.00 100.00 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 82.54 82.54 82.54 82.54 82.54 82.54 82.54 82.54 100.00 100.00 100.00 100.00 100.00 100.00 100.00 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 97.45 – 82.64 82.64 – 82.64 82.64 82.64 82.64 100.00 100.00 100.00 100.00 100.00 100.00 100.00 97.45 97.45 97.45 97.45 97.45 97.45 – – 97.45 97.45 97.45 97.45 97.45 – 82.64 82.64 – 82.64 82.64 82.64 82.64 100.00 100.00 100.00 100.00 100.00 100.00 100.00 97.45 97.45 97.45 97.45 97.45 97.45 – – 97.45 97.45 97.45 97.45 97.45 254 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Name of subsidiary company Sr. no. Country of incorporation 89 L&T Ahmedabad-Maliya Tollway Limited 90 L&T Halol-Shamlaji Tollway Limited 91 L&T Krishnagiri WalajahpetTollway Limited 92 L&T Devihalli Hassan Tollway Limited 93 L&T Metro Rail (Hyderabad) Limited 94 L&T Transco Private Limited 95 L&T Chennai Tada Tollway Limited 96 L&T BPP Tollway Limited 97 L&T Rajkot-Vadinar Tollway Limited 98 L&T Deccan Tollways Limited 99 L&T Samakhiali Gandhidham Tollway Limited 100 L&T Technology Services Limited (originally formed as L&T Technology And Engineering Services Company Limited and name changed subsequently) 101 L&T Tejomaya Limited India India India India India India India India India India India India India # The Company has sold its stake on September 28, 2012 ##The Company has sold its stake on November 26, 2012 @ Associate became a wholly owned subsidiary w.e.f. March 28, 2013 As at 31-3-2013 As at 31-3-2012 Proportion of ownership interest (%) 97.45 97.45 97.45 97.45 97.48 97.45 97.45 97.45 97.45 97.45 97.45 100.00 Proportion of voting power held (%) 97.45 97.45 97.45 97.45 97.48 97.45 97.45 97.45 97.45 97.45 97.45 100.00 Proportion of ownership interest (%) 97.45 97.45 97.45 97.45 97.48 97.45 97.45 97.45 97.45 97.45 97.45 – Proportion of voting power held (%) 97.45 97.45 97.45 97.45 97.48 97.45 97.45 97.45 97.45 97.45 97.45 – 51.00 51.00 – – Name of subsidiary company Sr. no. Foreign Subsidiaries As at 31-3-2013 As at 31-3-2012 Country of incorporation Proportion of ownership interest (%) Proportion of voting power held (%) Proportion of ownership interest (%) Proportion of voting power held (%) 1 Larsen & Toubro LLC 2 Larsen & Toubro Infotech GmbH 3 Larsen & Toubro Infotech Canada Limited 4 Larsen & Toubro Infotech LLC 5 L&T Infotech Financial Services Technologies Inc. 6 GDA Technologies Inc. 7 Larsen & Toubro Infotech South Africa (PTY) Limited 8 L&T Infrastructure Development Projects Lanka (Private) Limited 9 Peacock Investments Limited 10 Mango Investments Limited 11 Lotus Infrastructure Investments Limited 12 L&T Diversified India Equity Fund (formerly known as L&T Real Estate India Fund) USA Germany Canada USA Canada USA South Africa Sri Lanka Mauritius Mauritius Mauritius Mauritius 13 L&T Asset Management Company Limited 14 L&T Realty FZE 15 Larsen & Toubro International FZE 16 Thalest Limited 17 Bond Instrumentation & Process Control Limited 18 Servowatch Systems Limited 19 Servowatch Inc* 20 Larsen & Toubro (Oman) LLC 21 Larsen & Toubro Electromech LLC 22 L&T Modular Fabrication Yard LLC 23 Larsen & Toubro (East Asia) SDN.BHD ## Mauritius UAE UAE UK UK UK USA Sultanate of Oman Sultanate of Oman Sultanate of Oman Malaysia 100.00 100.00 100.00 100.00 100.00 100.00 74.90 93.44 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – 65.00 65.00 65.00 30.00 100.00 100.00 100.00 100.00 100.00 100.00 74.90 93.44 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – 65.00 65.00 65.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – 93.43 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – – – – 65.00 65.00 65.00 30.00 100.00 100.00 100.00 100.00 100.00 100.00 – 93.43 100.00 100.00 100.00 100.00 100.00 100.00 100.00 – – – – 65.00 65.00 65.00 100.00 255 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Name of subsidiary company Sr. no. Country of incorporation 24 Larsen & Toubro Qatar LLC ## 25 L&T Overseas Projects Nigeria Limited 26 L&T Electricals & Automation Saudi Arabia Company LLC (formerly known as L&T Electricals Saudi Arabia Company LLC) 27 Larsen & Toubro Kuwait Construction General Contracting Qatar Nigeria Kindgom of Saudi Arabia Kuwait Company, WLL ## 28 Larsen & Toubro (Qingdao) Rubber Machinery Company Limited 29 Qingdao Larsen & Toubro Trading Company Limited 30 Jiangsu Shengye Valve Co., Ltd. (formerly known as Larsen & Toubro (Jiangsu) Valve Company Limited) @@ 31 Larsen & Toubro Readymix Concrete Industries LLC ## 32 Larsen & Toubro Saudi Arabia LLC 33 Larsen Toubro Arabia LLC 34 Larsen & Toubro (Wuxi) Electric Company Limited @ 35 Larsen & Toubro ATCO Saudia LLC ## 36 Tamco Switchgear (Malaysia) SDN. BHD 37 Henikwon Corporation SDN. BHD 38 Tamco Electrical Industries Australia Pty Limited 39 PT Tamco Indonesia 40 Larsen & Toubro Heavy Engineering LLC 41 L&T Electrical & Automation FZE 42 Larsen & Toubro Consultoria E Projeto Ltda 43 Larsen & Toubro T&D SA (Proprietary) Limited Peoples Republic of China Peoples Republic of China Peoples Republic of China UAE Kindgom of Saudi Arabia Kindgom of Saudi Arabia Peoples Republic of China Kindgom of Saudi Arabia Malaysia Malaysia Australia Indonesia Sultanate of Oman UAE Brazil South Africa As at 31-3-2013 As at 31-3-2012 Proportion of ownership interest (%) 49.00 100.00 75.00 Proportion of voting power held (%) 100.00 100.00 75.00 Proportion of ownership interest (%) 49.00 100.00 75.00 Proportion of voting power held (%) 100.00 100.00 75.00 49.00 100.00 100.00 – 49.00 100.00 75.00 – 49.00 100.00 100.00 100.00 100.00 70.00 100.00 100.00 72.50 75.00 100.00 100.00 49.00 100.00 75.00 100.00 100.00 100.00 – 100.00 100.00 100.00 100.00 75.00 49.00 100.00 100.00 100.00 – – – 100.00 100.00 75.00 100.00 100.00 100.00 100.00 70.00 100.00 100.00 72.50 49.00 75.00 100.00 – 100.00 100.00 70.00 100.00 100.00 72.50 100.00 – 100.00 100.00 70.00 100.00 100.00 72.50 ## The Parent Company, together with its subsidiaries controls the composition of Board of Directors @ The Company has sold its stake on July 18, 2012 @@ The Company has sold 75% stake on September 4, 2012 and balance 25% is disclosed vide investment in other fully paid equity shares [Note F] * The Company was acquired during the year and has been dissolved w.e.f. February 28, 2013 Name of associate company Sr. no. Country of incorporation 1 L&T-Komatsu Limited 2 Audco India Limited ** 3 L&T-Chiyoda Limited 4 L&T-Ramboll Consulting Engineers Limited 5 Gujarat Leather Industries Limited @ 6 NAC Infrastructure Equipment Limited 7 International Seaport (Haldia) Private Limited 8 Vizag IT Park Limited 9 Larsen & Toubro Qatar & HBK Contracting LLC 10 L&T Camp Facilities LLC India India India India India India India India Qatar UAE As at 31-3-2013 As at 31-3-2012 Proportion of ownership interest (%) 50.00 – 50.00 50.00 50.00 24.76 21.74 23.14 24.50 49.00 Proportion of voting power held (%) 50.00 – 50.00 50.00 50.00 24.76 21.74 23.14 50.00 49.00 Proportion of ownership interest (%) 50.00 50.00 50.00 50.00 50.00 24.79 21.74 23.14 24.50 49.00 Proportion of voting power held (%) 50.00 50.00 50.00 50.00 50.00 24.79 21.74 23.14 50.00 49.00 256 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Name of associate company Sr. no. Country of incorporation 11 L&T Arun Excello Realty Private Limited * 12 Feedback Infrastructure Services Private Limited 13 JSK Electricals Private Limited 14 Salzer Electronics Limited # 15 Rishi Consfab Private Limited. 16 Magtorq Private Limited 17 AIC Structural Steel Construction (India) Private Limited India India India India India India India @ The Company is under liquidation * The Company has sold its stake on May 4, 2012 # The accounts have been consolidated for twelve months period ended December 31, 2012 ** Associate became a wholly owned subsidiary w.e.f. March 28, 2013 As at 31-3-2013 As at 31-3-2012 Proportion of ownership interest (%) – 19.12 26.00 26.06 26.00 42.85 26.00 Proportion of voting power held (%) – 19.12 26.00 26.06 26.00 42.85 26.00 Proportion of ownership interest (%) 33.00 23.16 26.00 26.06 26.00 42.85 – Proportion of voting power held (%) 33.00 23.16 26.00 26.06 26.00 42.85 – Name of joint venture Sr. No. Country of residence As at 31-3-2013 Proportion of ownership interest (%) As at 31-3-2012 Proportion of ownership interest (%) 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 Metro Tunneling Group L&T-Hochtief Seabird Joint Venture L&T-Shanghai Urban Construction (Group) Corporation Joint Venture Metro Tunneling Chennai L&T SUCG Joint Venture The Dhamra Port Company Limited 1 2 3 4 5 6 7 8 9 10 Metro Tunneling Delhi-L&T SUCG Joint Venture 11 12 L&T-Shapoorji Pallonji & Company Limited Joint Venture-TCS L&T-Shanghai Urban Construction (Group) Joint Venture CC27 Delhi ^^ Jointly controlled entities-foreign joint ventures L&T-Eastern Joint Venture Indiran Engineering Projects and Systems Jointly controlled operations-Indian joint ventures L&T-HCC Joint Venture Patel–L&T Consortium L&T-KBL (UJV) Hyderabad Consortium of Toyo Engineering Company and L&T L&T-SVEC Joint Venture L&T–KBL–MAYTAS UJV L&T and Scomi Engineering BHD. Joint Venture 13 14 15 16 17 18 19 20 21 65.00 26.00 49.00 43.00 26.00 90.00 51.00 75.00 48.72 60.00 50.00 68.00 65.00 50.00 65.00 26.00 49.00 43.00 26.00 90.00 51.00 75.00 48.72 60.00 50.00 – 65.00 50.00 India India India India India India India India India India India India UAE Iran India India India India India India India ^^ The joint venture has been entered into on November 05, 2012 Q(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 Statement of Profit and Loss. Q(5) Exceptional items [Note R(5)]: a. b. c. Expenses incurred amounting to 38.34 crore on voluntary retirement scheme. Profit on sale of shares held as equity investment by a subsidiary 237.93 crore (previous year: Nil). Loss on impairment of Group’s share in net worth of a subsidiary 52.44 crore (previous year: Nil). 257 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) d. e. f. Profit on divestment of the Group’s stake in three subsidiaries 181.16 crore (net) (previous year: Nil). Profit on divestment of the Group’s part stake in a subsidiary part stake in a subsidiary 55.02 crore). 1.89 crore (previous year: profit on divestment of the Group’s Profit on divestment of the Group’s stake in an associate company 6.56 crore (previous year: profit on divestment of the Group’s stake in two associates 1.75 crore). Q(6) Extraordinary items [Note R(5)]: a. Reversal of 52.89 crore (previous year: Nil), being provision made in earlier years in respect of the Company’s investment in shares of Satyam Computer Services Limited (SCSL). b. Gain of 25.22 crore (net of tax 18.72 crore) on sale of the Company’s medical equipment business unit. Tax of 6.50 crore included under current tax. Q(7) The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is 106.96 crore (previous year: 89.03 crore). Further, the Company has incurred capital expenditure on research and development activities as follows: a) on tangible assets of 19.26 crore (previous year: 17.17 crore) b) on intangible assets being expenditure on new product development of 43.76 crore (previous year: 38.58 crore) [Note R(6)(b)] and c) on other intangible assets of 13.64 crore (previous year: 3.49 crore) In addition, the Company has carried out work of a developmental nature of partially/fully paid for by the customers. Q(8) a) Provision for current tax includes: 21.27 crore (previous year: 13.06 crore) which is i) Provision for income tax in respect of earlier years 8.23 crore (net gain) [previous year: 16.02 crore (net loss)] ii) Credit for Minimum Alternative Tax (MAT) entitlement 34.49 crore (previous year: 29.17 crore) under section 115JB of the Income Tax Act, 1961. iii) Translation effect on account of non-integral foreign operation 0.01 crore (net gain) [previous year: 2.07 crore (net gain)] b) Tax effect of securities premium account. 0.17 crore (previous year: 0.03 crore) on account of debenture issue expenses which have been credited to Q(9) (a) Disclosures pursuant to Accounting Standard (AS) 7 (Revised) “Construction Contracts” Particulars i) ii) iii) iv) Contract revenue recognised for the financial year Aggregate amount of contract costs incurred and recognised profits (less recognised losses) as at the end of the financial year for all contracts in progress as at that date Amount of customer advances outstanding for contracts in progress as at the end of the financial year Retention amounts due from customers for contracts in progress as at the end of the financial year 2012-13 55880.96 167087.08 crore 2011-12 48158.37 131510.11 7199.49 8193.35 6597.60 5296.91 (b) Disclosures pursuant to Guidance Note on Accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India, adopted by the Company with effect from April 1, 2012. Particulars i) ii) iii) iv) v) Amount of project revenue recognised for the financial year [Note K] Aggregate amount of costs incurred and profits recognised (less recognised losses) as at the end of the financial year for all contracts in progress as at that date Amount of customer advances outstanding for the contracts in progress as at the end of the financial year Amount of work-in-progress and the value of inventories as at the end of the financial year Excess of revenue recognised over actual bills raised (unbilled revenue) [Note H(VI)] crore 2012-13 228.92 70.24 327.29 1968.43 1.83 Q(10) Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Benefits” i. Defined contribution plans: [Note R(7)(b)(i)] Amount of 114.12 crore (previous year: 84.48 crore) is recognised as an expense and included in “employee benefit expenses” [Note N] in the Statement of Profit and Loss. 258 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) ii. Defined benefit plans: [Note R(7)(b)(ii)] a) The amounts recognised in Balance Sheet are as follows: Particulars A) Present value of defined benefit obligation Wholly funded Wholly unfunded Less: Fair value of plan assets Less: Unrecognised past service costs Add: Amount not recognised as an asset (limit in para 59(b)) Amount to be recognised as liability or (asset) B) Amounts reflected in the Balance Sheet Liabilities Assets Net liability/(asset) Net liability/(asset)-current Net liability/(asset)-non-current Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 crore 442.48 70.01 512.49 382.83 0.14 4.11 133.63 133.63 – 133.63 133.63 – 386.30 45.99 432.29 322.04 0.03 0.17 110.39 110.39 – 110.39 110.39 – – 118.95 118.95 – 1.25 – 117.70 117.70 – 117.70 15.00 102.70 – 94.07 94.07 – 1.43 – 92.64 92.64 – 92.64 9.21 83.43 – 198.89 198.89 – 0.53 – 198.36 198.36 – 198.36 11.98 186.38 – 2047.41 184.67 11.50 184.67 2058.91 – 2027.93 – 0.64 1812.84 20.61 1833.45 1791.04 – – 184.03 – 30.98 – 42.41 184.03 – 184.03 9.84 174.19 45.39 – 45.39 30.98 – 30.98 30.29 # 24.78 # 0.69 20.61 b) The amounts recognised in Statement of Profit and Loss are as follows: Particulars Gratuity plan Post-retirement medical benefit plan Company pension plan Trust-managed provident fund plan crore 1 2 3 4 5 6 7 8 Current service cost Interest cost Expected (return) on plan assets Actuarial losses/(gains) Past service cost Adjustment for earlier years Business Combination Actuarial gain/(loss) not recognised in books Translation adjustments Amount capitalised out of the above 9 10 Total (1 to 10) I II Amount included in “employee benefits expense” Amount included as part of ‘’manufacturing construction and operating expenses” Amount included as part of “finance costs” Amount capitalised on new product development Total (I+II+III+IV) III IV Actual return on plan assets 2012-13 44.00 33.51 (23.31) 30.36 0.33 (0.06) (0.03) 2011-12 49.53 27.68 (22.23) 30.41 0.02 (1.37) – – 5.71 (0.78) 89.73 73.07 9.41 7.18 0.07 89.73 38.08 – 2.11 (0.60) 85.55 72.25 14.70 (1.40) – 85.55 22.63 2012-13 7.33 8.50 – 9.13 3.77 – – – – – 28.73 2011-12 7.20 8.22 – (14.28) 0.18 – – – – – 1.32 2012-13 0.98 15.45 – 9.14 0.11 – – – – – 25.68 2011-12 2012-13 2011-12 5.12 138.23 $ 107.94 $ 13.27 138.32 – (138.54) (19.11) – – – 129.56 (129.56) 10.34 – – – 12.54 0.11 – – – – – 10.27 2.00 – – – – 31.04 120.90 128.55 8.29 (0.09) (0.27) 28.45 138.23 107.94 4.87 15.57 – 28.73 – – 1.41 – 1.32 – – 25.95 – 25.68 – – 2.59 – (17.33) – 20.61 – – 31.04 120.90 – 148.53 – 128.55 139.83 259 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: Particulars Opening balance of the present value of defined benefit obligation Add: Current service cost Add: Interest cost Add: Contribution by plan participants i) ii) iii) Employer Employee Transfer-in/(out) Add/(less): Actuarial losses/(gains) Less: Benefits paid Add: Past service cost Add: Liabilities assumed on transfer of employees Add/(less): Business combination/acquisition Add: Adjustment for earlier years Add/(less): Translation adjustments Closing balance of the present value of defined benefit obligation Gratuity plan As at 31-3-2013 As at 31-3-2012 432.29 44.00 33.51 389.90 49.53 27.68 – – 0.26 ~ 45.13 (68.58) 0.33 – – (2.03) ~ 30.81 (69.22) 1.62 – 22.75 – 2.80 – (0.01) 0.39 3.62 Post-retirement medical benefit plan As at 31-3-2013 As at 31-3-2012 Company pension plan Trust-managed provident fund plan As at 31-3-2013 As at 31-3-2012 As at 31-3-2013 As at 31-3-2012 crore 94.07 7.33 8.50 – – – 9.13 (5.33) 3.59 – 1.66 – – 97.60 7.20 8.22 – – – (14.28) (5.08) – 0.41 – – – 184.67 0.98 15.45 – – – 9.14 (11.35) – – – – – 162.89 1833.45 1615.09 5.12 138.23 $ 107.94 $ 129.56 13.27 138.32 – – – 232.13 – – 12.54 (9.12) (9.15) (287.51) – – – 198.09 – 20.61 (237.84) – – – – – – 13.41 – – – – – – 512.49 432.29 118.95 94.07 198.89 184.67 2058.91 1833.45 d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: 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/(less): Transfer in/(out) Add: Contribution by Plan participants Less: Benefits paid Add: Business combination/disposal (net) Add: Adjustment for earlier years Closing balance of the plan assets crore Gratuity plan Trust-managed provident fund plan As at 31-3-2013 322.04 23.31 14.77 68.47 (0.28) – (68.58) 23.09 0.01 382.83 As at 31-3-2012 327.89 22.23 0.40 38.69 – – (69.22) 2.03 0.02 322.04 As at 31-3-2013 1791.04 138.54 9.99 131.92 – 230.66 (287.51) 13.29 – 2027.93 As at 31-3-2012 1583.61 129.56 10.27 110.74 – 194.70 (237.84) – – 1791.04 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 [Note Q(10)(ii)(f)(7)]. The Company expects to fund 59.65 crore (previous year: 64.51 crore) towards its gratuity plan and 146.47 crore (previous year: 114.42 crore) towards its trust-managed provident fund plan during the year 2013-14. Employer’s and employees’ contribution (net) for March is paid in April. Employer’s contribution to provident fund Amount transferred (out)/in on sale/purchase of business undertakings (net) 0.26 crore (previous year: (2.03) crore) 260 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (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 As at 31-3-2013 29% 15% 26% 2% As at 31-3-2012 35% 10% 16% 3% Trust-managed provident fund plan As at 31-3-2013 24% 13% 7% – As at 31-3-2012 24% 12% 7% – – 1% 20% 7% – 1% 29% 6% 14% – 42% – 17% – 40% – f) Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages): 1 2 3 4 Post-retirement medical benefit plan Discount rate: a) Gratuity plan b) Company pension plan c) Expected return on plan assets Annual increase in healthcare costs (see note below) Salary growth rate: a) Gratuity plan b) Company pension plan 5 Attrition Rate: As at 31-3-2013 As at 31-3-2012 8.09% 8.09% 8.09% 7.50% 5.00% 5.00% 6.00% 8.59% 8.59% 8.59% 7.50% 5.00% 5.00% 6.00% a) For post-retirement medical benefit plan & Company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups. b) For gratuity plan the attrition rate varies from 1% to 6% (previous year: 1% to 6%) for various age groups. 6. 7. 8. The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial losses. The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a. 9. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: crore Particulars Effect of 1% increase Effect of 1% decrease 2012-13 2011-12 2012-13 2011-12 Effect on the aggregate of the service cost and interest cost Effect on defined benefit obligation 3.47 13.02 2.46 9.43 (2.66) (10.32) (1.91) (7.57) 261 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) g) The amounts pertaining to defined benefit plans are as follows: Particulars As at 31-3-2013 As at 31-3-2012 As at 31-3-2011 As at 31-3-2010 As at 31-3-2009 crore 1 Post-retirement medical benefit plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities 2 Gratuity plan (funded/unfunded) Defined benefit obligation Plan assets Surplus/(deficit) Experience adjustment plan liabilities Experience adjustment plan assets 3 4 Post-retirement pension plan (unfunded) Defined benefit obligation Experience adjustment plan liabilities Trust managed provident fund plan (funded) 117.70 0.69 512.49 382.83 (133.64) 26.18 (13.96) 92.64 (6.62) 432.29 322.04 (110.39) 30.18 (0.19) 198.36 (2.79) 184.03 23.21 95.99 7.91 389.90 327.89 (61.99) 30.37 4.38 162.14 17.46 82.55 5.73 358.27 294.56 (63.71) 30.67 2.29 135.61 (4.11) 74.40 1.13 290.67 255.06 (35.61) 8.38 13.05 151.80 (6.89) Defined benefit obligation Plan assets Surplus/(deficit) 2058.91 2027.93 (30.98) 1833.45 1791.04 (42.41) 1615.09 1583.61 (31.48) 1364.97 1350.42 (14.55) 1127.81 1151.80 23.99 h) General descriptions of defined benefit plans: 1. Gratuity plan: The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Company’s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material is unfunded and managed within the Company. 2. Post-retirement medical benefit plan: The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement. 3. Company’s pension plan: In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement. 4. Trust managed provident fund plan: The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service. 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 Statement of Profit and Loss as actuarial loss. Any loss/gain arising out of the investment risk and actuarial risk associated with the plan is also recognised as expense or income in the period in which such loss/gain occurs. Further, the provision of 20.61 crore, which was created in 2011-12 based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan, has been reversed in the current year, because the balance in surplus account of the fund is higher than the interest obligation of 11.50 crore as on March 31, 2013. Q(11) Disclosure pursuant to Accounting Standard (AS) 17 ‘’Segment Reporting’’ a) During the year ended March 2013, Technology Services, a business segment earlier classified as “Others”, has crossed the threshold norm for reportable segment provided in AS 17. Accordingly, in compliance with AS 17, Technology Services has been 262 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) disclosed as a separate segment for the year ended March 31, 2013 and the related segment figures for the corresponding previous year have been regrouped. b) Information about business segments (information provided in respect of revenue items for the year ended March 31, 2013 and in respect of assets/liabilities as at March 31, 2013–denoted as “CY” below, previous year denoted as “PY”) i. Primary segments (business segments): Particulars Engineering & construction Electrical & electronics CY PY CY PY Machinery & industrial products CY IT & Technology Services Financial services Developmental projects Others Elimination Total PY CY PY CY PY CY PY CY PY CY PY CY PY crore Revenue–including excise duty External Inter-segment Total revenue Result Segment result Inter-Segment margins on capital jobs Unallocated corporate income/ (expenditure) (net) Operating Profit (PBIT) Interest expense Interest income Profit before tax (PBT) (before extraordinary items) Profit from extraordinary items Profit before tax (PBT) (after extraordinary items) Provision for current tax Provision for deferred tax Profit after tax Additional tax on dividend distributed/proposed by subsidiary companies Share in profit of associates Minority interest in income in subisidiaries Profit after tax, minority interests and share of profit of associates Other information Segment assets Unallocable corporate assets Total assets Segment liabilities Unallocable corporate liabilities Total liabilities Capital expenditure Depreciation, amortisation, impairment & obsolescence included in segment expense Reversal of accumulated amortisation of goodwill on consolidation Non-cash expenses other than depreciation included in segment expense 57667.12 949.10 58616.22 49785.79 1714.11 51499.90 4314.03 531.90 4845.93 3933.65 369.37 4303.02 2742.77 3203.58 170.34 137.17 2879.94 3373.92 4961.84 36.94 4998.78 3910.50 64.97 3975.47 4079.78 – 4079.78 2997.09 26.79 3023.88 1397.09 8.58 1405.67 1066.55 47.73 1114.28 32.68 19.65 52.33 62.92 19.57 82.49 – 1683.34 1683.34 – 2412.88 2412.88 75195.31 – 75195.31 64960.08 – 64960.08 6050.81 5739.83 546.53 428.16 457.75 533.30 1107.31 715.33 848.08 556.02 411.60 216.72 7.67 (14.17) – – 9429.75 8175.19 (104.87) 9324.88 (214.92) 7960.27 (159.60) 9165.28 (2095.02) 489.55 (258.83) 7701.44 (1215.85) 487.92 7559.81 78.11 6973.51 – 7637.92 (2241.79) (143.75 ) 5252.38 6973.51 (2314.33) 31.78 4690.96 (12.96) (8.67) 38.43 46.16 (72.18) (34.76) 5205.67 4693.69 131736.64 106293.16 11368.41 13018.14 143105.05 119311.30 59679.51 69956.02 28491.55 36636.47 88171.06 106592.49 263 52170.19 45548.07 3657.66 3411.03 2146.02 1936.45 3218.49 2693.99 36592.88 26999.59 33755.00 25484.73 196.40 219.30 29782.27 29036.44 1539.90 1356.23 943.27 952.78 870.17 793.04 30141.86 21984.46 6658.32 5473.48 20.23 83.08 2395.87 3932.86 238.51 187.30 193.53 75.68 236.99 279.31 774.85 251.89 5325.20 3461.29 0.22 53.86 985.36 759.22 94.74 108.13 43.14 47.17 140.48 121.13 85.39 79.54 580.98 395.71 12.97 9.93 (22.75) – (95.79) – (16.49) – (55.20) – (7.25) – (144.17) – – – 115.89 180.33 5.63 8.41 1.98 6.09 6.76 11.61 2.92 4.07 1.58 1.27 0.22 0.63 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) ii) Secondary segments (geographical segments): crore Particulars Domestic Overseas Total CY PY CY PY CY PY External revenue by location of customers 55313.36 51703.76 19881.95 13256.32 75195.31 64960.08 Carrying amount of segment assets by location of assets Cost incurred on acquisition of tangible and intangible fixed assets 120238.55 99780.65 11498.09 6512.51 131736.64 106293.16 8739.69 7834.96 425.47 407.23 9165.16 8242.19 c) Segment reporting: segment identification, reportable segments and definition of each reportable segment: i) Primary/secondary segment reporting format: a] The risk-return profile of the Company’s business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information. b] In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly. ii) Segment identification Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company. iii) Reportable segments Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 “Segment Reporting” as specified in the Companies (Accounting Standards) Rules, 2006. iv) Segment composition • • Engineering & construction segment comprises execution of engineering and construction projects in India/ abroad to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/ supply, erection& commissioning, procurement/construction and project management. Electrical & electronics segment comprises manufacture and sale of low and medium voltage switchgear components, custom built low and medium voltage switchboards, electronic energy meters/protection (relays) systems, control & automation products and medical equipment (upto the date of sale). • Machinery & industrial products segment comprises manufacture and sale of rubber processing machinery & castings, manufacture and marketing of industrial valves, construction equipment and industrial products and marketing of welding products (previous year). It also includes manufacture and sale of plastic processing machinery (upto date of sale of stake), manufacture and sale of undercarriage assemblies, manufacture and sale of welding and cutting equipment. • • Financial services segment comprises retail and corporate finance, housing finance, infrastructure finance, general insurance, asset management of mutual fund schemes and related advisory services. Developmental projects segment comprises development, operation and maintenance of basic infrastructure projects, toll collection including annuity based projects, development of urban infrastructure, power development, development and operation of port facilities and providing related advisory services. • IT & Technology Services segment comprises information technology and integrated engineering services. • Others include ready-mix concrete, mining and aviation. 264 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Q(12) Disclosure of related parties/related party transactions pursuant to Accounting Standard (AS) 18 ‘’Related Party Disclosures’’: i. Names of the related parties with whom transactions were carried out during the year and description of relationship: Associate companies: 1 Audco India Limited @ 3 L&T-Chiyoda Limited 2 Salzer Electronics Limited 4 L&T-Komatsu Limited 5 L&T-Ramboll Consulting Engineers Limited 6 Magtorq Private Limited 7 JSK Electricals Private Limited 9 Vizag IT Park Limited 11 L&T Arun Excello Realty Private Limited 8 AIC Structural Steel Construction (India) Private Limited 10 Feedback Infrastructure Services Private Limited @ Associate became a wholly owned subsidiary w.e.f. March 28, 2013 Joint ventures: 1 Metro Tunneling Group 3 Desbuild L&T Joint Venture 2 L&T-Hochtief Seabird Joint Venture 4 L&T-Shanghai Urban Construction (Group) Corporation Joint Venture 5 L&T-AM Tapovan Joint Venture 6 HCC-L&T Purulia Joint Venture 7 The Dhamra Port Company Limited 8 Metro Tunneling Delhi-L&T SUCG Joint Venture 9 Metro Tunneling Chennai L&T SUCG Joint Venture 10 L&T-Eastern Joint Venture 11 L&T-Shapoorji Pallonji & Company Limited Joint 12 L&T-Shanghai Urban Construction (Group) Joint Venture-TCS Venture CC27 Delhi * 13 International Metro Civil Contractors * The joint venture has been entered into on November 05, 2012. Funds yet to be infused in the joint venture. Key management personnel & their relatives: 1 Mr. A. M. Naik (Group Executive Chairman) 2 Mr. K. Venkataramanan (CEO & Managing Director) Mrs. Jyothi Venkataramanan (wife) 3 Mr. V. K. Magapu (Whole-time Director)* 4 Mr. M. V. Kotwal (Whole-time Director) 5 Mr. S. N. Subrahmanyan (Whole-time Director) 6 Mr. R. Shankar Raman (CFO & Whole-time Director) 7 Mr. S. N. Roy (Whole-time Director) 8 Mr. Ravi Uppal (Whole-time Director)** * Retired w.e.f. the close of working hours of September 30, 2012 ** Ceased to be a director w.e.f. the close of working hours of September 15, 2012 ii. Disclosure of related party transactions: Sr. no. 1  Nature of transaction/relationship/major parties Purchase of goods & services (including commission paid) Associates & joint ventures, including: Audco India Limited Salzer Electronics Limited Total 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore 830.64 746.39 587.68 118.75 830.64 746.39 493.83 106.44 265 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore Sr. no.  Nature of transaction/relationship/major parties 2 Sale of goods/contract revenue & services Associates & joint ventures, including: The Dhamra Port Company Limited Total 3 Purchase/lease of fixed assets Associate: L&T-Komatsu Limited Total 4 Subscription to equity and preference shares Associates including: AIC Structural Steel Construction (India) Private Limited L&T-Komatsu Limited L&T Arun Excello Realty Private Limited Total 5 Receiving of services from related parties Associates & joint ventures, including: L&T-Chiyoda Limited Total 6 Rent paid, including lease rentals under leasing/hire purchase arrangements including loss sharing on equipment finance Associates: Audco India Limited L&T-Komatsu Limited Key management personnel Total 47.75 47.75 3.76 3.76 0.03 0.03 6.65 6.65 2.01 0.01 2.02 43.17 3.76 0.03 – – 6.48 0.66 1.35 100.91 100.91 1.74 1.74 119.02 119.02 5.94 5.94 0.86 0.02 0.88 7 Charges for deputation of employees to related parties Associates & joint ventures, including: 58.32 64.32 Audco India Limited L&T-Komatsu Limited L&T-Chiyoda Limited 16.31 5.93 35.34 Total 58.32 64.32 266 99.97 1.74 – 60.00 29.14 5.94 – 0.86 13.86 7.52 29.61 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Sr. no. 8  Nature of transaction/relationship/major parties Dividend received Associates & joint ventures, including: L&T-Komatsu Limited Audco India Limited Feedback Infrastructure Services Private Limited L&T-Ramboll Consulting Engineers Limited Vizag IT Park Limited Magtorq Private Limited Total 9 Commission received, including those under agency arrangements Associate: L&T-Komatsu Limited Total 10 Rent received, overheads recovered and miscellaneous income Associates & joint ventures, including: Audco India Limited L&T-Chiyoda Limited L&T-Komatsu Limited Total 11 Interest received Joint venture: The Dhamra Port Company Limited Key management personnel Total 12 Interest paid Associates: Audco India Limited Total 13 Payment of salaries/perquisites (other than commission) Key management personnel: A.M. Naik Y.M. Deosthalee ^^^ K.Venkataramanan K.V. Rangaswami V. K. Magapu * ^^^^ M. V. Kotwal Ravi Uppal **^^ S. N. Subrahmanyan R. Shankar Raman S. N. Roy 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore 4.61 25.35 25.35 187.96 187.96 5.61 5.61 26.99 0.01 27.00 4.24 4.24 20.91 4.61 138.68 138.68 6.02 6.02 41.62 – 41.62 – – – 21.72 – – 0.66 1.80 1.19 0.63 138.68 – 3.56 – 41.62 3.61 – 2.58 – 7.40 1.89 2.05 1.52 1.37 1.30 13.20 9.38 – – – – 187.96 0.70 4.23 0.47 26.99 4.24 2.68 7.24 1.59 3.75 1.32 1.42 1.33 0.93 0.62 0.03 267 Total 21.72 20.91 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Sr. no. 14  Nature of transaction/relationship/major parties Commission to directors [Note Q(12)(iii)] @ Key management personnel: 2012-13 2011-12 Amount Amounts for major parties Amount Amounts for major parties crore 51.82 49.33 $ A. M. Naik Y. M. Deosthalee K. Venkataramanan K. V. Rangaswami V. K. Magapu * M. V. Kotwal Ravi Uppal ** S. N. Subrahmanyan R. Shankar Raman S. N. Roy 17.45 – 10.47 – 2.82 3.64 1.71 7.01 5.53 3.19 Total 51.82 49.33 Retired w.e.f. the close of working hours of September 30, 2012 * ** Ceased to be director w.e.f. the close of working hours of September 15, 2012 ^^ Includes leave encashment payment of 1.25 crore ^^^ Includes leave encashment payment of 6.67 crore ^^^^ Includes leave encashment payment of 6.54 crore $ @ Out of total provision of 53.45 crore made during 2011-12, an amount of 4.12 crore was reversed during 2012-13. Commision to directors comprises of: Sr. no. 1 2 3 Particulars Commission Contribution to provident fund on commission Contribution to superannuation fund on commission Total 2012-13 40.80 4.90 6.12 51.82 15.06 2.96 6.53 1.36 5.44 5.05 5.28 4.66 2.71 0.28 crore 2011-12 38.84 4.66 5.83 49.33 “Major parties” denote entities accounting for 10% or more of the aggregate for that category of transaction during respective period. iii. Amount due to/from related parties:  Sr. No. 1 Accounts receivable  Nature of transaction/relationship/major parties 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-Chiyoda Limited Salzer Electronics Limited Total 268 As at 31-3-2013 As at 31-3-2012 Amount Amounts for major parties Amount Amounts for major parties crore 71.98 71.98 45.61 70.81 – 16.43 18.87 79.43 79.43 202.22 73.56 134.69 27.70 20.80 45.61 202.22 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.)  Sr. No.  Nature of transaction/relationship/major parties 3 Loans & advances recoverable Associates & joint ventures, including: The Dhamra Port Company Limited Key management personnel Total 4 Due to whole-time directors [Note Q(12)(iii)] Key management personnel: A. M. Naik Y. M. Deosthalee K. Venkataramanan K.V. Rangaswami V. K. Magapu * M. V. Kotwal Ravi Uppal ** S. N. Subrahmanyan R. Shankar Raman S. N. Roy As at 31-3-2013 As at 31-3-2012 Amount Amounts for major parties Amount Amounts for major parties crore 472.49 0.01 472.50 40.80 453.41 13.74 – 8.24 – 2.22 2.87 1.35 5.52 4.35 2.51 387.35 0.29 387.64 38.84 $ 367.67 11.86 2.33 5.14 1.07 4.28 3.98 4.16 3.67 2.13 0.22 Total 40.80 38.84 Retired w.e.f. the close of working hours of September 30, 2012 * ** Ceased to be director w.e.f. the close of working hours of September 15, 2012 $ Out of total commission due to whole-time directors of 42.08 crore during 2011-12, an amount of 3.24 crore was reversed during 2012-13. “Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction during respective period. iv. Notes to related party transactions: 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, 2011 in line with Government of India (GOI) approval letter dated November 17, 2011. The appointment shall be in effect as long as the joint venture agreement between the Parent Company and M/s Komatsu Asia Pacific 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 specified rates on the sales effected by the Company. The financial impact of the aforesaid agreement has been included in/disclosed vide Note Q(12)(ii) supra. Q(13) Disclosure in respect of leases pursuant to Accounting Standard (AS) 19 ‘’Leases’’: i. Where the Company is a lessor: (a) Finance leases: i) The Company has given certain assets on finance leases. The leases have a primary period that is fixed and non- cancellable and a secondary period. There are no exceptional/restrictive covenants in the lease agreement. 269 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) ii) The total gross investment in these leases as on March 31, 2013 and the present value of minimum lease payments receivable as on March 31, 2013 is as under: Particulars i. ii. Receivable not later than 1 year Receivable later than 1 year and not later than 5 years iii. Receivable later than 5 years Gross investment in lease (i+ii+iii) Less: Unearned finance income Present value of receivables crore As at 31-3-2013 As at 31-3-2012 64.56 112.66 0.24 177.46 31.68 145.78 69.59 130.25 1.85 201.69 39.06 162.63 iii) In respect of one of the leases referred to in Note Q(13)(I)(a)(i), the lease receivables were recorded at the inception, at the present value of minimum lease payments, and subsequently securitised. (b) Operating leases: i) The Company has given assets under non-cancellable operating lease, the future minimum lease payments receivable in respect of which, as at March 31, 2013 are as follows: Particulars i. ii. Receivable not later than 1 year Receivable later than 1 year and not later than 5 years iii. Receivable later than 5 years Total ii) Where the Company is a lessee: (a) Finance leases: crore As at 31-3-2013 As at 31-3-2012 73.36 109.09 0.12 182.57 66.77 93.61 – 160.38 i) Assets acquired on finance lease mainly comprise plant and equipment, vehicles and personal computers. The leases have a primary period, which is fixed and non-cancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any,leviable on the lease rentals (b) rates of depreciation under the Income Tax Act, 1961 and (c) change in the lessor’s cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements. ii) The minimum lease rentals as at March 31, 2013 and the present value as at March 31, 2013 of minimum lease payments in respect of assets acquired under finance leases are as follows: Particulars Payable not later than 1 year Payable later than 1 year and not later than 5 years i. ii. iii. Payable later than 5 years Total Less: Future finance charges Present value of minimum lease payments crore Present value of minimum lease payments As at 31-3-2013 0.26 0.25 – 0.51 As at 31-3-2012 0.32 0.49 – 0.81 Minimum lease payments As at 31-3-2013 0.30 0.29 – 0.59 0.08 0.51 As at 31-3-2012 0.37 0.57 – 0.94 0.13 0.81 iii) Contingent rent recognised/(adjusted) in the Statement of Profit and Loss in respect of finance leases: Nil (previous year: Nil). 270 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) (b) Operating leases: i) The Company has taken various commercial premises and plant and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry. ii) [a] The Company has taken certain assets on non-cancellable operating leases, the future minimum lease payments in respect of which, as at March 31, 2013 are as follows: Particulars i. ii. Payable not later than 1 year Payable later than 1 year and not later than 5 years iii. Payable later than 5 years Total crore As at 31-3-2013 As at 31-3-2012 28.06 32.18 60.12 120.36 51.57 95.42 150.68 297.67 [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: 138.40 crore (previous year: 165.88 crore) iv) Contingent rent recognised in the Statement of Profit and Loss: Nil (previous year: 0.01 crore) Q(14) 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 2012-13 2011-12 2012-13 2011-12 Basic Profit after tax as per accounts ( crore) Weighted average number of shares outstanding Basic EPS ( ) Diluted Profit after tax as per accounts ( crore) Add: Interest/exchange difference (gain)/loss on bonds convertible into equity shares (net of tax) ( crore) A B A/B A B 5134.06 4693.69 5205.67 4693.69 61,39,26,551 61,11,08,916 61,39,26,551 61,11,08,916 83.63 76.81 84.79 76.81 5134.06 4693.69 5205.67 4693.69 – – – – Adjusted profit for diluted earnings per share ( crore) C=A+B 5134.06 4693.69 5205.67 4693.69 Weighted average number of shares outstanding Add: Weighted average number of potential equity D E 61,39,26,551 61,11,08,916 61,39,26,551 61,11,08,916 shares on account of employee stock options 50,50,853 58,66,093 50,50,853 58,66,093 Weighted average number of shares outstanding for diluted EPS Diluted EPS ( ) Face value per share ( ) F=D+E 61,89,77,404 61,69,75,009 61,89,77,404 61,69,75,009 C/F 82.94 2 76.08 2 84.10 2 76.08 2 Note: Potential equity shares that could arise on conversion of FCCBs are not resulting into dilution of EPS in the current year. Hence, they have not been considered in working of diluted EPS in accordance with Accounting Standard (AS) 20 ‘’Earnings Per Share’’. 271 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Q(15) Major components of deferred tax liabilities and deferred tax assets pursuant to Accounting Standard (AS) 22‘’Accounting for Taxes on Income‘’: Particulars 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 Statement of Profit and Loss Disputed statutory liabilities paid and claimed as deduction for tax purposes but not debited to Statement of Profit and Loss Other items giving rise to timing differences Total Deferred tax (assets): Provision for doubtful debts and advances debited to Statement of Profit and Loss Loss on derivative transactions to be claimed for tax purposes in the year of transfer to Statement of Profit and Loss Unpaid statutory liabilities/provision for compensated absences debited to Statement of Profit and Loss Unabsorbed depreciation/brought forward business losses Difference between book and tax depreciation Other items giving rise to timing differences Total Net deferred tax liability/(assets) Previous year Deferred tax liabilities/ (assets) as at 31-3-2012 Charge/ (credit) to Statement of Profit and Loss Effect due to acquisition/ disposal Netted off against unamortised borrowing cost Charge/(credit) to reserves Hedging reserve * Foreign currency translation reserve crore Deferred tax liabilities/ (assets) as at 31-3-2013 703.19 329.14 6.35 1.76 0.03 – 55.65 91.54 852.14 26.67 74.93 430.77 – 4.60 10.95 (321.46) 54.78 (14.00) (146.57) – – (120.49) (62.98) (2.88) – – – – – – – – – – – – – – – – – 1038.68 21.82 23.61 – – 21.82 82.32 171.07 1315.68 – (280.68) (49.89) (196.46) – (186.35) (108.76) (2.03) (70.99) (770.30) 81.84 310.93 (209.08) (15.06) (54.68) (287.02) 143.75 (31.78) (3.59) (0.54) (3.52) (24.53) (13.58) – – – – – – (26.53) – – (0.27) (0.27) (0.27) (0.62) – – – (49.89) (28.07) (170.16) (321.43) (17.63) (129.46) (1132.01) 183.67 81.84 * The amount of 611.70 crore (previous year: 581.79 crore) representing net(gains)/losses on effective hedges recognised in hedge reserve, applying the principles of hedge accounting set out in Accounting Standard (AS) 30 ‘’Financial Instruments: Recognition and Measurement’’. The amount is after considering the net deferred tax asset of 28.07 crore (previous year: 170.16 crore). Q(16) The effect of acquisitions (including newly incorporated subsidiaries) and disposals during the year on the Consolidated Financial Statements is as under: a) Acquisitions(including newly incorporated): Sr. No. 1 2 3 4 5 Name of company L&T East-West Tollway Limited L&T Great Eastern Highway Limited Bond Instrumentation And Process Control Limited Servowatch Inc Servowatch Systems Limited Effect on Group profit/(loss) after minority interest for the period ended March 31, 2013 (0.43) (0.28) (1.47) (1.69) (7.40) crore Net assets as at March 31, 2013 14.71 11.99 – (0.33) (4.84) 272 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Sr. No. Name of company Thalest Limited L&T Geostructure LLP Larsen Toubro Arabia LLC Henikwon Corporation SDN.BHD Larsen & Toubro Infotech South Africa (Pty) Limited 6 7 8 9 10 11 Consumer Financial Services Limited 12 13 14 15 16 17 18 19 20 Audco India Limited 21 CSJ Hotels Private Limited Family Credit Limited L&T Housing Finance Limited L&T Fund Management Private Limited L&T Trustee Services Private Limited L&T Capital Markets Limited L&T Infra Debt Fund Limited L&T Technology Services Limited L&T Tejomaya Limited Total b) Disposals: Effect on Group profit/(loss) after minority interest for the period ended March 31, 2013 2.09 1.00 (0.24) (3.38) 0.16 – 21.11 0.17 0.29 0.14 (1.31) – – (0.01) – – 8.75 crore Net assets as at March 31, 2013 17.01 1.35 14.16 14.83 0.49 0.37 198.67 122.50 634.72 0.42 0.96 – 0.05 0.04 311.13 0.01 1338.24 Sr. No. 1 2 3 4 Name of company L&T Commercial Projects Private Limited Jiangsu Shengye Valve Company Ltd. Larsen & Toubro (Wuxi) Electric Company Limited L&T Plastics Machinery Limited Total Effect on Group profit/(loss) after minority interest for the period ended March 31 2012-13 (2.06) (1.78) (0.62) 2011-12 (8.92) (0.36) (2.02) 1.48 (2.98) 4.66 (6.64) crore Net assets as at March 31, 2012 Net assets as at the date of disposal (during 2012-13) 19.71 33.73 34.90 29.20 117.54 21.62 35.51 35.52 27.73 120.38 Q(17) 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 Financial Statements are: I Assets Non-current assets Particulars 1 Fixed assets (a) Tangible assets (b) Intangible assets (c) Capital work-in-progress Long term loans and advances Other non-current assets 2 3 31-3-2013 crore 31-3-2012 1740.94 1618.20 2.46 48.50 41.52 0.38 3.14 110.30 49.60 – 273 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) 1 2 3 4 5 1 2 1 2 3 4 1 2 1 2 3 4 5 6 1 2 3 1 2 II Liabilities III IV V Reserves Income Expenses VI Contingent liability VII Capital Commitments Particulars Current assets Inventories Trade receivables Cash and bank balances Short term loans and advances Other current assets Non-current liabilities Long term borrowings Other long term liabilities Current liabilities Short term borrowings Trade payables Other current liabilities Short term provisions Revenue from operations Other income Operating expenses Staff expenses Sales, administration and other expenses Interest expense Depreciation and amortisation Provision for tax Contingent liabilities, if any, incurred in relation to interests in joint ventures Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable Contingent liabilities in respect of liabilities of other ventures of joint ventures Capital commitments, if any, in relation to interests in joint ventures Share in capital commitments of joint ventures themselves for which the Company is contingently liable 31-3-2013 crore 31-3-2012 17.35 187.30 153.52 246.66 82.43 1674.45 11.79 32.63 333.38 436.19 34.34 (143.78) 676.65 9.68 490.86 23.87 40.57 201.82 106.90 4.77 – 67.48 – 8.55 37.18 8.86 87.39 84.73 250.92 48.30 1589.82 2.15 15.71 228.32 215.31 31.30 102.54 299.94 2.14 248.20 16.82 26.50 169.23 88.68 0.86 – 61.43 – 24.18 28.56 Q(18) Disclosures pursuant to Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets”: a) Movement in provisions: Sr. no. Particulars 1 Balance as at 01-04-2012 2 3 4 Additional provision during the year Provision used/reversed during the year Adjustments pursuant to acquisition of subsidiaries (net of transfer of business) Translation adjustments Balance as on 31-03-2013 (6=1+2-3+4+5) 5 6 Product warranties/ liquidity damages 14.72 11.98 (9.69) 38.70 – 55.71 Expected tax liability in respect of indirect taxes 60.99 21.52 (2.65) – – 79.86 crore Others Total Class of provisions Litigation related obligations Periodic major maintenance Contractual rectification cost- construction contracts 14.82 8.21 (13.82) – 0.38 9.59 33.96 19.85 – – – 53.81 428.02 141.54 (255.95) 53.56 606.07 204.69 (335.00) ## 1.59 (52.89) # – – 313.61 – – 2.26 38.70 0.38 514.84 # Being reversal of an extraordinary item included in opening provision [Note Q6(a) supra] ## Includes provision used during the year 1.80 crore (previous year: 14.71 crore) 274 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) b) Nature of provisions: i. Product warranties/liquidity damages: 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, 2013 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two years from the date of Balance Sheet. Liquidity damages represent the estimated cost the Company is likely to incur due to delay in delivery as per its contract obligations and accrued on the basis of advice from distributors/customers. ii. Expected tax liability in respect of indirect taxes 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. Periodic major maintenance represents provision made for resurfacing obligations in accordance with the terms of concession agreement with National Highway Authority of India (NHAI). v. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under Accounting Standard (AS) 7 (Revised) “Construction Contracts”. vi. Others mainly represent residual provision in respect of Company’s investment in shares of Satyam Computer Services Limited. c) Disclosures in respect of contingent liabilities are given as part of Note [I] to the Balance Sheet. Q(19) In line with the Company’s risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges. a) The particulars of derivative contracts entered into for hedging purposes outstanding as at March 31, 2013 are as under: Category of derivative instruments i) For hedging foreign currency risks: crore Amount of exposures hedged As at 31-3-2013 As at 31-3-2012 a) b) Forward contracts for receivables including firm commitments and highly probable forecasted transactions 12109.45 14059.90 Forward contracts for payables including firm commitments and highly probable forecasted transactions 11855.20 9779.10 c) Currency swaps d) Option contracts e) Currency futures ii) For hedging interest rate risks: Interest rate swaps iii) For hedging commodity price risks: Commodity futures b) Unhedged foreign currency exposures as at March 31, 2013 are as under: Unhedged foreign currency exposures 4949.06 5483.88 217.42 – 433.24 330.69 251.45 235.65 242.59 328.37 crore As at 31-3-2013 As at 31-3-2012 i) ii) Receivables, including firm commitments and highly probable forecasted transactions 36051.91 32180.55 Payables, including firm commitments and highly probable forecasted transactions 32288.98 30534.20 275 Notes forming part of the Consolidated Accounts (contd.) NOTE [Q] (contd.) Q(20) 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 35 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 profits before tax (net) recognised during the year in respect of construction services related to Build-Operate-Transfer (BOT) projects is 2359.53 crore (previous year: 1993.32 crore) and 317.26 crore (previous year: 287.95 crore) respectively [Note R(3)(A)(a)(ix)]. c. Loans and advances include 420.50 crore (previous year: 454.83 crore) being cumulative construction costs incurred including related margins in respect of annuity based Build-Operate-Transfer (BOT) projects. Q(21) 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 companies which are not subsidiaries of any other company amounting to 102.72 crore, relating to dividend of 633.23 crore declared by them. Q(22) Deferred payment liability of 3953.98 crore (previous year: 4417.67 crore) represents: a. Negative grant/additional concession fee of 3154.73 crore (previous year: 3237.15 crore) payable to National Highway Authority of India (NHAI), as per the concession agreement entered into with NHAI. b. Commitment payable to National Housing Development Authority (NHDA) amounting to 6.99 crore (previous year: 6.60 crore) as per the joint venture agreement entered into with NHDA. c. Deferred conversion fee liability of 69.26 crore (previous year: 88.92 crore) towards conversion of land from Industrial to commercial use as per the approval from Chandigarh Housing Board (CHB). d. 723.00 crore (previous year: 1085.00 crore) payable to City and Industrial Development Lease premium amounting to Corporation of Maharashtra (CIDCO) pursuant to conferment of development-cum-leasehold rights to execute the lease deed for land. In respect of the total amount of 3953.98 crore, an amount of 472.53 crore (previous year: 464.09 crore) is payable within a period of one year. Q(23) One of the subsidiaries, which has been awarded a Build-Operate-Transfer (BOT) project for construction of a bypass toll road and a bridge over the River Noyyal in Coimbatore District of Tamil Nadu State, under the Concession Agreement dated October 3, 1997, had received a termination notice from the Ministry of Surface Transport, Government of India. The ground of termination was Government of India’s subsequent intention to go for four-laning of the existing two lane road. The subsidiary has obtained injunction from Delhi High Court against the said notice of the Government and is accordingly continuing to collect the toll. The tolling rights of the subsidiary are protected under the aforesaid concession agreement. The subsidiary had filed an application opting for arbitration for resolution of disputes and an Arbitral Tribunal has been constituted as provided in the concession agreement. The Company has submitted the Statement of Claims before the Arbitral Tribunal and hearings are in progress. Pending outcome of the Arbitration, the subsidiary has filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court to continue the operations. Pleadings have been completed during the current year on the said application and the matter is now posted for arguments before the Hon’ble High Court. Q(24) (a) The Company has adopted a new accounting policy [Note R(20)(g)] for separate accounting of embedded derivatives with effect from April 1, 2012, for more appropriate presentation of the financial statements. The profit before tax is higher by 189.44 crore pursuant to adoption of the new accounting policy for separate accounting of embedded derivatives. (b) The Company has changed the accounting policy for recognition of revenue from real estate development transactions pursuant to the Guidance Note on Accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India [Note R(3)(A)(a)(iii)]. The profit before tax of the company is higher by 2.39 crore pursuant to change in the accounting policy of revenue recognition for real estate development transactions. Q(25) There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2013. Q(26) Figures for the previous year have been regrouped/reclassified wherever necessary. 276 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting The Company maintains its accounts on accrual basis following the historical cost convention [except for the revaluation of certain fixed assets], in accordance with generally accepted accounting principles [“GAAP”] in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 prescribed by the Central Government. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable, except to the extent where compliance with other statutory promulgations viz. SEBI guidelines override the same requiring a different treatment. The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known. The accounts of Indian subsidiaries, joint ventures and associates have been prepared in compliance with the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government, and those of the foreign subsidiaries, joint ventures and associates have been prepared in compliance with the local laws and applicable Accounting Standards. Necessary adjustments for differences in the accounting policies, wherever applicable, have been made in the Consolidated Financial Statements. 2. Presentation of financial statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI to the Companies Act, 1956 (“the Act”). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule VI to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement. Amounts in the financial statements are presented in Indian Rupees in crore [1 crore = 10 million] rounded off to two decimal places in line with the requirements of Schedule VI. Per share data are presented in Indian Rupees to two decimal places. 3. 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. Revenue from operations a. Sales & service i. ii. Sales and service include excise duty and adjustments made towards liquidated damages and price variation, wherever applicable. Escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account. Revenue from sale of manufactured and traded 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 which are in substance similar to delivery of goods, is recognised when all significant risks and rewards of ownership in the land and/or building are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists. Revenue from those property development activities [Note Q(24)(b)] which have the same economic substance as construction contract is recognised based on the ‘Percentage of Completion method’ (POC) when the outcome of a real estate project can be estimated reliably upon fulfillment of all the following conditions: a. All critical approvals necessary for commencement of the project have been obtained; b. When the stage of completion of the project reaches a reasonable level of development i.e. contract costs for work performed bears a reasonable proportion to the estimated total contract costs. For this purpose, a reasonable level of development is treated as achieved only if the cost incurred (excluding cost of land/developmental rights and borrowing cost) is at least 25% of the total of such cost; 277 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) c. At least 25% of the saleable project area is secured by contracts or agreements with buyers; d. At least 10% of the total revenue as per the agreements of sale or any other legally enforceable documents are realised at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts. The costs incurred on property development activities are carried as “inventories” till such time the outcome of the project cannot be estimated reliably and all the aforesaid conditions are fulfilled. When the outcome of the project can be ascertained reliably and all the aforesaid conditions are fulfilled, revenue from property development activity is recognised at cost incurred plus proportionate margin, using percentage of completion method. Percentage of completion is determined based on the proportion of actual cost incurred to the total estimated cost of the project. For this purpose, actual cost includes cost of land and developmental rights but excludes borrowing cost. Expected loss, if any, on the project is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. 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: Contract revenue is recognised only to the extent of cost incurred till such time the outcome of the job cannot be ascertained reliably. When the outcome of the contract is ascertained reliably contract revenue is recognised at cost of work performed on the contract plus proportionate margin, using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date to the total estimated contract costs. Government grants in the nature of subsidy related to customer contracts are recognised as revenue from operations in the Statement of Profit and Loss, on a prudent basis, in proportion to work completed when there is reasonable assurance that the conditions for the grant of subsidy will be fulfilled. Expected loss, if any, on the construction/project related activity is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included in contract revenue are taken into consideration. v. Revenue from contracts for rendering of services which are directly related to the construction of an asset is recognised on similar basis as stated in (iv) supra. vi. Revenue from construction/project related activity and contracts executed in joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”], is recognised on the same basis as similar contracts independently executed by the Company. vii. Revenue from software development is recognised based on software developed or time spent in person hours or person weeks, and billed to customers as per the terms of specific contracts. Unbilled revenue represents value of services performed in accordance with the contract terms but not billed. viii. Income from hire purchase and lease transactions is accounted on accrual basis, pro-rata for the period, at the rates implicit in the transaction. Income from bill discounting, advisory and syndication services and other financing activities is accounted on accrual basis. Income from interest-bearing assets is recognised on accrual basis over the life of the asset based on the constant effective yield. Loan origination income i.e. processing fees and other charges collected upfront, are recognised at the inception of the loan. Income including interest or any other charges on non-performing asset is recognised only when realised. Any such income recognised before the asset became non-performing and remaining unrealised is reversed. ix. Revenue relatable to construction services rendered in connection with Build-Operate-Transfer (BOT) projects undertaken by the Group is recognised during the period of construction using percentage of completion method. After the completion of construction period, revenue relatable to toll collections of such projects from users of facilities are accounted when the amount is due and recovery is certain. Licence fees for way-side amenities are accounted 278 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) on accrual basis. Revenue from annuity based projects is recognised in the Statement of Profit and Loss over the concession period of the respective projects based on the implicit rate of return embedded in the projected cash flows. Such income is duly adjusted for any variation in the amount and timing of the cash flows in the period in which such variation occurs. x. Revenue from service related activities is recognised using either the proportionate completion method or completed service contract method, whichever is considered appropriate. xi. Commission income is recognised as and when the terms of the contract are fulfilled. xii. Revenue from engineering and service fees is recognised as per the terms of the contract. xiii. Income from investment management fees is recognised in accordance with the Investment Management Agreement and SEBI regulations based on average Assets Under Management (AUM) of mutual fund schemes over the period of the agreement in terms of which services are performed. Portfolio management fees are recognised in accordance with Portfolio Management Agreement entered with respective clients over the period of the agreement in terms of which the services are rendered. 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. xiv. Revenue from port operation services including rail infrastructure is recognised on completion of respective services. xv. Revenue from charter hire is recognised based on the terms of the time charter agreement. xvi. Insurance premium (net of service tax) is recognised as income over the contract period or period of risk, as appropriate, after adjusting for unearned premium (unexpired risk) and premium deficiency, if any. Premium deficiency, if any, is recognised if the sum of expected claim costs and related claim management costs exceed related reserve for unexpired risk for every line of business. Reserve for unexpired risk is recognised net of reinsurance ceded and represents premium written that is attributable and to be allocated to succeeding accounting periods for risks to be borne by the Company under contractual obligations on a contract period basis or risk period basis, whichever is appropriate. It is calculated on a daily pro-rata basis, written on policies during the twelve months preceding the Balance Sheet date for fire, marine cargo and miscellaneous business (excluding project related engineering insurance contracts) and 100% for marine hull business, on all unexpired policies at Balance Sheet date, in accordance with Section 64 V(1)(ii)(b) of the Insurance Act, 1938. The reserve for unexpired risk is computed for project related engineering insurance contract through the usage of Cubic Curve Method. A reserve for unexpired risks is recorded at 50% of the net premium retro-ceded to the Company from India Motor Third Party Insurance Pool (IMTPIP) during the year. Reinsurance premium ceded is accounted in the year in which the risk commences and over the period of risk in accordance with the treaty arrangements with the reinsurers. Reinsurance premium ceded on unearned premium is carried forward to the period of risk and is set off against related unearned premium. Premium on excess of loss reinsurance cover is accounted as per the terms of the reinsurance arrangements. Commission on reinsurance ceded is recognised as income on ceding of reinsurance premium. Profit commission under re-insurance treaties, wherever applicable, is recognised in the year of final determination of the profits. Claims incurred comprise claims paid, estimated liability for outstanding claims made following a loss occurrence reported and estimated liability for claims Incurred But Not Reported (‘IBNR’) and claims Incurred But Not Enough Reported (‘IBNER’). Further, claims incurred also include specific claim settlement costs such as survey/legal fees and other directly attributable costs. Claims (net of amounts receivable from reinsurers/co-insurers) are recognised on the date of intimation based on estimates from surveyors/insured in the respective revenue accounts. Estimated liability for outstanding claims at Balance Sheet date is recorded net of claims recoverable from/payable to co-insurers/reinsurers and salvage to the extent there is certainty of realisation. Estimated liability for outstanding claims is determined by management on the basis of ultimate amounts likely to be paid on each claim based on the past experience. These estimates are progressively revalidated on availability of further information. IBNR represents that amount of claims that may have been incurred during the accounting period but have not been reported or claimed. The IBNR provision also includes provision, if any, required for claims IBNER. Estimated liability for claims Incurred But Not Reported (‘IBNR’) and claims Incurred But Not Enough Reported (‘IBNER’) is based on actuarial estimate duly certified by the appointed actuary of the Company. IBNR/IBNER has been created on reinsurance accepted from Indian Motor Third Party Insurance Pool (IMTPIP) based on actuarial estimates received from the IMTPIP. 279 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) b. Other operational revenue Other operational revenue 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. B. Other income a. Interest income is accrued at applicable interest rate. b. Dividend income is accounted in the period in which the right to receive the same is established. c. Other Government grants, which are revenue in nature and are towards compensation for the related costs, are recognised as income in the Statement of Profit and Loss in the period in which the matching costs are incurred. d. Other items of income are accounted as and when the right to receive arises. 4. Principles of consolidation a. b. The financial statements of the Parent Company and its subsidiaries have been consolidated on a line-by-line basis by adding together the book values of the like items of assets, liabilities, income and expenses, after eliminating intra-group balances and the unrealised profits/losses on intra-group transactions, and are presented to the extent possible, in the same manner as the Parent Company’s independent financial statements. 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. The unrealised profits/losses on transactions with associate companies are eliminated by reducing the carrying amount of investment. c. Goodwill on consolidation represents the difference between the Group’s share in the net worth of a subsidiary, an associate or a joint venture, and the cost of acquisition at each point of time of making the investment in the subsidiary, the associate or the joint venture as per Accounting Standard (AS) 21 “Consolidated Financial Statements”. For this purpose, the Group’s share of net worth is determined on the basis of the latest financial statements, prior to the acquisition, after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Capital reserve on consolidation represents negative goodwill arising on consolidation. Goodwill arising on consolidation as per Accounting Standard (AS) 21 ”Consolidated Financial Statements“ is not amortised, however, it is tested for impairment. In the event of cessation of operations of a subsidiary, associate or joint venture, the unimpaired goodwill is written off fully. d. The gains/losses in respect of part dilution of stake in subsidiary companies pursuant to issue of additional shares to minority shareholders are recognised directly in capital reserve under reserves and surplus in the Balance Sheet. The gains/losses in respect of part divestment of stake in subsidiary companies pursuant to sale of shares by the holding company are recognised in the Statement of Profit and Loss. e. The Company’s interests in joint ventures are consolidated 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 benefits, if any, from use of the assets are reflected as income. 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 profits/losses on intra-group transactions. Joint venture interests accounted as above are included in the segments to which they relate. 5. Extraordinary and exceptional items Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. 280 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company, is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the notes to accounts. 6. Research and development a. Revenue expenditure on research is expensed under respective heads of account in the period in which it is incurred. b. Development expenditure on new products is capitalised as intangible asset, if all of the following can be demonstrated: i. ii. The technical feasibility of completing the intangible asset so that it will be available for use or sale The Company has intention to complete the intangible asset and use or sell it iii. The Company has ability to use or sell the intangible asset iv. v. The manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself or if it is to be used internally, the usefulness of intangible assets The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset and vi. The Company has ability to measure the expenditure attributable to the intangible asset during its development reliably The development expenditure capitalised as intangible asset is amortised over its useful life. Other development costs that do not meet above criteria are expensed in the period in which they are incurred. 7. Employee benefits a. Short term employee benefits: All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service. b. Post-employment benefits: i. Defined contribution plans: The Company’s superannuation scheme, state governed provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. ii. Defined benefit plans: The employees gratuity fund schemes, post-retirement medical care scheme, pension scheme and provident fund scheme managed by trust are the Company’s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. The interest element in the actuarial valuation of defined benefit plans, which comprises the implicit interest cost and the impact of changes in discount rate, is classified under finance cost and balance charge is recognised as employee benefit expenses in the Statement of Profit and Loss. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight line basis over the average period until the benefits become vested. c. Long term employee benefits: The obligation for long term employee benefits such as long term compensated absences, long service award etc. is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b)(ii) supra. d. Termination benefits: Termination benefits such as compensation under voluntary retirement cum pension scheme are recognised as expense in the period in which they are incurred. 281 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 8. Tangible fixed assets Tangible fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation 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 and cumulative impairment. Assets acquired on hire purchase basis are stated at their cash values. Specific know-how fees paid, if any, relating to plant and equipment is treated as part of cost thereof. Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets. Own manufactured assets are capitalised at cost including an appropriate share of overheads. Tangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “capital work-in-progress”. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.) 9. 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 the Statement of Profit and Loss. 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 classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. ii. Assets given under leases where the Company has transferred substantially all the risks and rewards of ownership to lessee, are classified as finance leases. Where under a contract, the Company has agreed to manufacture/construct an asset and convey, in substance, a right to the beneficiary to use the asset over a major part of its economic life, for a pre-determined consideration, such arrangement is also accounted as finance lease. iii. Assets given under a finance 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 finance leases are charged to the Statement of Profit and Loss. Operating leases: i. Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss 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.) 10. Depreciation A. Indian companies 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 the Statement of Profit and Loss. 282 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 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. 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. iii. Depreciation for additions to/deductions from owned assets is calculated pro-rata from/to the month of additions/ deductions. Extra shift depreciation is provided on a location basis. iv. Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. b. Leased assets i. Lease transactions entered into prior to April 1, 2001: Lease charge comprising statutory depreciation and lease equalisation charge is provided for assets given on lease over the primary period of the lease equal to recovery of net investment in the lease. Accordingly, while the statutory depreciation on such assets is provided for on straight line method as per Schedule XIV to the Companies Act, 1956, the difference is adjusted through lease equalisation and lease adjustment account. ii. Lease transactions entered into on or after April 1, 2001: Assets acquired under finance leases are depreciated on a straight line 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. iii. Leasehold land: Land acquired under long term lease is classified under “tangible assets” and is depreciated over the period of lease. B. Foreign companies Depreciation has been provided on methods and at the rates required/permissible by the local laws so as to write off the assets over their useful life. 11. Intangible assets and amortisation Intangible assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortisation and cumulative impairment. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: a. b. c. Specialised software: over a period of three to ten years Technical know-how: over a period of three to seven years Trade-marks: over a period of five years d. Development costs for new products: over a period five years e. Customer contracts and relationships: over a period of ten years f. Toll collection rights obtained in consideration for rendering construction services represent the right to collect toll revenue during the concession period in respect of Build-Operate-Transfer (BOT) projects undertaken by the Group. Toll collection rights are capitalised as intangible asset upon completion of the project at the cumulative construction costs including related margins (refer to policy on revenue recognition supra) 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 intangible assets under development. The revenue towards collection of toll/other income during the period of construction is reduced from the cost of intangible asset under development. Toll collection rights are amortised over the period of rights given under the concession agreement. g. Exploration and evaluation expenditure incurred for potential mineral reserves is recognised and reported as part of “intangible assets under development” 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 283 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically available reserves and active and significant operations in relation to the area are continuing or are planned for the future. Exploration assets are re-assessed on a regular basis and these costs are carried forward provided that at least one of the conditions outlined above is met. All other exploration and evaluation expenditure is recognised as expense in the period in which it is incurred. h. Utility right to use costs are amortised over the period of ’agreement to use‘, but not exceeding 10 years. Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the intangible assets. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “intangible assets under development”. Amortisation on impaired assets is provided by adjusting the amortisation charges in the remaining periods so as to allocate the assets‘ revised carrying amount over its remaining useful life. 12. 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; and 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 identified, independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use. (Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.) 13. Investments Trade investments comprise investments in entities in which the Company has strategic business interest. Investments, which are readily realisable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments. Long term investments (other than associates) including trade investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary in nature. Current investments are carried at lower of cost and fair 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” [Note R(4)(b)]. Purchase and sale of investments are recognised based on the trade date accounting. 14. 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 and stock-in-trade (in respect of goods acquired for trading) at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid/payable on such goods d. Completed property/work-in-progress (including land) in respect of property development activity at lower of cost or net realisable value 284 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 15. Cash and bank balances Cash and bank balances also include fixed deposits, margin money deposits, earmarked balances with banks and other bank balances which have restrictions on repatriation. Short term and liquid investments being not free from more than insignificant risk of change in value, are not included as part of cash and cash equivalents. 16. Government grant of capital nature Grants received/receivable from NHAI in the nature of “promoter contribution” are credited to “capital reserve”. 17. Securities premium account a. Securities premium includes: i. The difference between the market value and the consideration received in respect of shares issued pursuant to Stock Appreciation Rights Scheme ii. The discount allowed, if any, in respect of shares allotted pursuant to Stock Options Scheme b. The following expenses are written off against securities premium account: i. ii. Expenses incurred on issue of shares Expenses (net of tax) incurred on issue of debentures/bonds iii. Premium (net of tax) on redemption of debentures/bonds 18. Borrowing costs Borrowing costs include interest, commitment charges, amortisation of ancillary costs, amortisation of discounts/premium related to borrowings, finance charges in respect of assets acquired on finance lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs. Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised/inventorised as part of cost of such asset till such time 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. 19. 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. 20. Foreign currency transactions, foreign operations, forward contracts and derivatives a. b. The reporting currency of the Company is Indian Rupee. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items, 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 fixed assets specifically financed by the borrowings contracted upto March 31, 2004 to which the exchange differences relate adjusted in the cost of fixed assets specifically financed by borrowings contracted between the period April 1, 2004 to March 31, 2007 and to which the exchange differences relate, provided the assets are acquired from outside India iii. recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above c. Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows: i. ii. Closing inventories at rates prevailing at the end of the year Fixed assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated 285 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 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. 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 firm commitments or highly probable forecasted 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 firm commitments and highly probable forecasted transactions, are recognised in the financial statements at fair value as on the Balance Sheet date, in pursuance of the announcement of the ICAI dated March 29, 2008 on accounting of derivatives. In addition, the derivative arrangements embedded in the contracts entered in the course of business are accounted separately if the economic characteristics and risks of the embedded derivatives are not closely related to economic characteristics and risks of the host contract. [Note Q(24)(a)] 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 (including embedded derivatives) covered under Accounting Standard (AS) 30 “Financial Instruments: Recognition and Measurement” are recognised in the Statement of Profit and Loss or Balance Sheet as the case may be after applying the test of hedge effectiveness. Where the hedge in respect of off-balance sheet items is effective, the gains or losses are recognised in the “hedging reserve” which forms part of “reserves and surplus” in the Balance Sheet. The amount recognised in the “hedging reserve” is transferred to the Statement of Profit and Loss in the period in which the underlying hedged item affects the Statement of Profit and Loss. Gains and losses in respect of ineffective hedges are recognised in the Statement of Profit and Loss in the period in which such gains or losses are incurred. h. The premium paid/received on a foreign currency forward contract is accounted as expense/income over the life of the contract. 21. Segment accounting a. Segment accounting policies Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting: i. ii. iii. iv. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment revenue Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under “unallocable corporate expenditure” Income which relates to the Company as a whole and not allocable to segments is included in “unallocable corporate income” Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Company 286 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the 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. 22. 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 income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head “capital gains” are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. b. Foreign companies: Foreign companies recognise tax liabilities and assets in accordance with the applicable local laws. 23. Provisions, contingent liabilities and contingent assets Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if a. b. c. the Company has a present obligation as a result of a past event a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of a. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation b. a present obligation arising from past events, when no reliable estimate is possible c. a possible obligation arising from past events, where the probability of outflow of resources is not remote Contingent assets are neither recognised, nor disclosed. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 24. Commitments Commitments are future liabilities for contractual expenditure. Commitments are classified and disclosed as follows: a. Estimated amount of contracts remaining to be executed on capital account and not provided for b. Uncalled liability on shares and other investments partly paid c. Funding related commitments to associate and joint venture companies and d. Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management. Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details. 287 Notes forming part of the Consolidated Accounts (contd.) NOTE [R] SIGNIFICANT ACCOUNTING POLICIES (contd.) 25. Operating cycle for current and non-current classification Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realisation of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business. 26. Deferred payment liabilities The obligation towards additional concession fee payable to NHAI is recognised as deferred payment liability when the Company, in its capacity of Concessionaire, becomes entitled to exercise the right and collect toll in accordance with the terms of the concession agreement on Commercial Operations Date. 27. Cash flow statement Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of: a. transactions of a non-cash nature b. any deferrals or accruals of past or future operating cash receipts or payments and c. items of income or expense associated with investing or financing cash flows Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure. As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No.109982W by the hand of MILIND P. PHADKE Partner Membership No.33013 Mumbai, May 22, 2013 A. M. NAIK Group Executive Chairman K. VENKATARAMANAN Chief Executive Officer & Managing Director R. SHANKAR RAMAN Chief Financial Officer & Whole-time Director S. RAJGOPAL M. M. CHITALE N. MOHAN RAJ A. K. JAIN M. DAMODARAN SUSHOBHAN SARKER N. HARIHARAN Company Secretary Directors Mumbai, May 22, 2013 288 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) L&T Investment Management Limited L&T Mutual Fund Trustee Limited L&T General Insurance Company Limited L&T Finance Limited L&T Finance Holdings Limited L&T FinCorp Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 L&T Infrastructure Finance Company Limited 31-03-2013 crore L&T Aviation Services Private Limited 31-03-2013 Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year 1 Share capital (including share application 235.86 0.05 415.00 238.42 2466.76 199.44 829.23 45.60 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 412.34 38.59 686.79 686.79 25.64 33.06 (58.49) – (58.49) – – – – (0.08) 0.16 0.13 0.13 0.02 0.05 (0.05) 0.01 (0.06) – – – – Particulars Sr. no. GDA Technologies Limited GDA Technologies Inc. (266.35) 271.65 420.30 420.30 250.46 119.62 (93.28) – (93.28) – – – – Larsen & Toubro Infotech Limited 1870.47 12808.50 14917.39 14917.39 76.13 2060.54 313.41 102.38 211.03 – – 110.39 – Larsen & Toubro Infotech GmbH Financial year ending on Currency 31-03-2013 31-03-2013 USD 31-03-2013 31-03-2013 Euro Exchange rate on the last day of financial year 54.29 69.50 1813.79 1230.02 5510.57 5510.57 752.92 171.98 367.46 56.14 311.32 – – 171.68 1.50 230.48 1871.84 2301.76 2301.76 – 171.26 26.85 (4.76) 31.61 – – – – 1473.56 12945.54 15248.33 15248.33 749.49 1591.50 469.94 125.73 344.21 19.90 – – – (3.87) 78.89 120.62 120.62 – 29.42 3.93 0.46 3.47 – – – – Larsen & Toubro Infotech Canada Limited 31-03-2013 Canadian Dollar 53.44 Larsen & Toubro Infotech LLC 31-03-2013 USD 54.29 L&T Infotech Financial Services Technologies Inc. 31-03-2013 Canadian Dollar 53.44 L&T Capital Company Limited 31-03-2013 1 Share capital (including share application 0.17 5.15 16.13 0.11 0.00 – 280.00 22.00 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 30.87 0.30 31.34 31.34 26.85 0.22 2.12 0.05 2.07 2.69 – – – (31.02) 47.01 21.14 21.14 0.09 7.84 (3.74) (0.20) (3.54) – – – – 1218.46 956.86 2191.45 2191.45 21.73 3613.42 739.29 177.72 561.57 303.15 – – – 13.86 3.45 17.42 17.42 – 73.06 2.56 0.64 1.92 – – – – 5.64 8.98 14.62 14.62 – 46.86 0.82 0.16 0.66 – – – – 7.00 0.38 7.38 7.38 – 27.01 1.64 – 1.64 – – – – 96.04 84.07 460.11 460.11 – 242.13 20.57 8.48 12.09 – – – – 6.60 1.08 29.68 29.68 3.20 10.29 3.42 0.79 2.63 17.60 – – – 289 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. L&T Trustee Company Private Limited L&T Asset Management Company Limited Financial year ending on Currency Exchange rate on the last day of financial year 31-03-2013 31-12-2012 USD 55.00 1 Share capital (including share application 0.01 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year – – 0.01 0.01 – – – – – – – – – L&T Chennai Projects Private Limited (formerly known as L&T Arun Excello IT SEZ Private Limited) 31-03-2013 L&T Diversified India Equity Fund (formerly known as L&T Real Estate India Fund) 31-12-2012 USD 55.00 0.19 (0.40) 0.26 0.05 0.05 – – (0.09) – (0.09) – – – – L&T Infocity Limited L&T Hitech City Limited L&T South City Projects Limited Hyderabad International Trade Expositions Limited crore L&T Siruseri Property Developers Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 17.01 2.92 32.97 52.90 52.90 – 23.13 9.41 2.38 7.03 4.25 – – – 27.00 75.00 56.48 81.92 173.17 282.09 282.09 2.84 46.65 12.56 2.87 9.69 151.20 – – – (17.05) 5.54 63.49 63.49 – 0.81 (1.34) 1.04 (2.38) – – – – 101.31 50.48 208.27 208.27 – 33.16 3.86 1.58 2.28 16.94 – – – 0.05 (0.05) 0.00 0.00 0.00 – – (0.04) – (0.04) – – – – 0.15 (0.27) 0.15 0.03 0.03 – – (0.08) – (0.08) – – – – L&T Bangalore Airport Hotel Limited CSJ Infrastructure Private Limited L&T Urban Infrastructure Limited L&T Vision Ventures Limited L&T Tech Park Limited L&T Chennai – Tada Tollway Limited L&T Samakhiali Gandhidham Tollway Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 1 Share capital (including share application 18.37 72.00 45.89 574.42 0.05 31.63 42.00 80.54 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 290 (12.68) 218.94 224.63 224.63 – 0.66 (39.12) 2.16 (41.28) – – – – (44.98) 364.66 391.68 391.68 – – (44.59) – (44.59) – – – – 133.28 1248.80 1427.97 1427.97 – 124.76 31.31 19.83 11.48 – – – – (40.39) 64.42 598.45 598.45 – 14.21 (142.22) (1.04) (141.18) – – – – (4.59) 10.78 6.24 6.24 – – (2.27) – (2.27) – – – – 10.15 70.88 112.66 112.66 – 16.11 2.79 1.44 1.35 – – – – (0.19) 234.88 276.69 276.69 – – – – – – – – – (0.04) 2933.53 3014.03 3014.03 – – – – – – – – – Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year L&T Transco Private Limited 31-03-2013 L&T Infrastructure Development Projects Limited 31-03-2013 L&T Panipat Elevated Corridor Limited 31-03-2013 Narmada Infrastructure Construction Enterprise Limited 31-03-2013 L&T Krishnagiri Thopur Toll Road Limited L&T Western Andhra Tollways Limited 31-03-2013 31-03-2013 L&T Vadodara Bharuch Tollway Limited 31-03-2013 crore L&T Interstate Road Corridor Limited 31-03-2013 1 Share capital (including share application 0.01 321.05 84.30 47.35 78.75 56.50 43.50 57.16 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year (17.75) 38.53 20.79 20.79 – – (0.21) – (0.21) – – – – 2703.01 565.49 3589.55 3589.55 362.92 61.81 24.10 4.40 19.70 – – – – L&T Western India Tollbridge Limited L&T Transportation Infrastructure Limited 31-03-2013 31-03-2013 (201.59) 696.48 579.19 579.19 – 45.28 (37.19) – (37.19) – – – – L&T Infrastructure Development Projects Lanka (Private) Limited 31-03-2013 Sri Lankan Rupee 0.43 142.98 1.07 191.40 191.40 4.00 35.41 37.97 7.63 30.33 – – – – (75.65) 704.01 707.11 707.11 – 101.55 (3.75) – (3.75) – – – – (22.73) 277.97 311.74 311.74 – 48.07 (11.20) – (11.20) – – – – (251.69) 1277.95 1069.76 1069.76 6.00 226.76 (40.46) 0.01 (40.47) – – – – 31.15 441.99 530.30 530.30 3.00 86.42 10.89 2.18 8.71 – – – – International Seaports (India) Private Limited L&T Krishnagiri Walajahpet Tollway Limited L&T Devihalli Hassan Tollway Limited L&T Metro Rail (Hyderabad) Limited L&T Halol - Shamlaji Tollway Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 1 Share capital (including share application 13.95 41.40 65.43 2.50 90.00 90.00 530.00 130.50 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 14.92 0.01 28.88 28.88 – – (0.02) – (0.02) – – – – 59.15 134.78 235.33 235.33 25.00 24.79 16.39 3.32 13.07 – – – – (3.04) 26.17 88.56 88.56 – – – – – – – – – (3.93) 1.45 0.02 0.02 – – (0.01) – (0.01) – – – – 2.92 520.53 613.45 613.45 – – 1.12 0.36 0.76 – – – – 161.84 201.59 453.43 453.43 10.00 – 2.32 0.76 1.56 – – – – 0.26 1356.09 1886.35 1886.35 7.01 – 1.32 0.03 1.29 – – – – (125.80) 1289.70 1294.40 1294.40 – 83.75 (125.13) – (125.13) – – – – 291 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year L&T Ahmedabad - Maliya Tollway Limited 31-03-2013 L&T Port Kachchigarh Limited L&T Uttaranchal Hydropower Limited Nabha Power Limited L&T Power Development Limited L&T Arunachal Hydropower Limited L&T Himachal Hydropower Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 crore Larsen & Toubro (Oman) LLC 31-12-2012 Omani Rial 142.85 1 Share capital (including share application 149.00 4.16 131.05 1373.00 1799.00 32.14 150.00 17.96 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. (85.08) 1413.07 1476.99 1476.99 – 77.78 (84.28) – (84.28) – – – – (4.50) 0.35 0.01 0.01 – – (0.31) – (0.31) – – – – 3.24 364.92 499.21 499.21 12.29 – 1.44 0.01 1.43 – – – – Larsen & Toubro (East Asia) SDN. BHD Larsen & Toubro International FZE Larsen & Toubro Qatar LLC (92.27) 5559.61 6840.34 6840.34 40.24 3261.69 (97.08) – (97.08) – – – – L&T Overseas Projects Nigeria Limited 1.73 3.38 1804.11 1804.11 21.05 21.72 2.37 0.92 1.45 – – – – Larsen & Toubro Electromech LLC Financial year ending on Currency Exchange rate on the last day of financial year 31-12-2012 Malaysian Ringgit 17.99 31-12-2012 USD 31-12-2012 Qatari Rial 55.00 15.10 31-12-2012 Nigerian Naira 0.35 31-12-2012 Omani Rial 142.85 0.16 2.73 35.03 35.03 0.23 – 0.06 0.00 0.06 – – – – (0.10) 15.90 165.80 165.80 0.33 – 0.06 0.00 0.06 – – – – L&T Electrical & Automation FZE L&T Electrical And Automation Saudi Arabia Company Limited LLC (formerly known as L&T Electricals Saudi Arabia Company Limited, LLC) 31-12-2012 31-12-2012 UAE Saudi Riyal Dirham 14.98 14.67 1 Share capital (including share application 0.86 1147.40 0.24 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 0.44 2.12 3.42 3.42 – 1.85 0.05 0.01 0.04 – – – – (36.06) 33.67 1145.01 1145.01 15.94 5.80 24.10 0.62 23.48 – – – – (35.70) 40.16 4.70 4.70 0.13 – – – – – – – – 0.33 (0.27) 0.04 0.10 0.10 – – (0.03) – (0.03) – – – – 3.56 22.29 1.09 160.47 206.64 370.67 370.67 – 594.67 34.78 4.19 30.59 – – – – (2.12) 63.83 84.00 84.00 – 74.00 (6.99) – (6.99) – – – – 101.58 117.27 219.94 219.94 – 252.43 34.13 – 34.13 – – – – 292 512.93 1356.97 1887.86 1887.86 – 1995.24 17.23 2.39 14.84 6.34 – – – Larsen & Toubro Kuwait Construction General Contracting Company, WLL 31-12-2012 Kuwaiti Dinar 198.36 32.02 6.74 53.42 92.18 92.18 – 87.11 6.62 – 6.62 – – – – Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Larsen & Toubro Readymix Concrete Industries LLC 31-12-2012 UAE Dirham L&T Modular Fabrication Yard LLC Larsen & Toubro Saudi Arabia LLC Larsen & Toubro ATCO Saudia LLC Larsen & Toubro Heavy Engineering LLC crore Tamco Switchgear (Malaysia) SDN.BHD 31-12-2012 Omani Rial 31-12-2012 Saudi Riyal 31-12-2012 Saudi Riyal 31-12-2012 Omani Rial 31-12-2012 Malaysian Ringgit 14.98 142.85 14.67 14.67 142.85 17.99 1.27 32.75 4.64 1.08 68.49 119.18 5.04 102.43 108.74 108.74 – 64.31 (5.17) – (5.17) – – – – 70.69 210.52 313.96 313.96 – 476.42 17.61 0.49 17.12 – – – – (64.66) 550.12 490.10 490.10 – 647.90 (16.35) 2.86 (19.21) – – – – (3.15) 150.38 148.31 148.31 – 115.88 3.39 0.42 2.97 – – – – (110.95) 323.56 281.10 281.10 – 150.99 (26.70) – (26.70) – – – – 279.72 248.15 647.05 647.05 – 575.36 74.08 5.89 68.19 – – 22.50 – 0.54 0.96 0.03 1.53 1.53 – 1.28 0.56 0.02 0.54 – – – – Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year Larsen & Toubro (Qingdao) Rubber Machinery Company Limited 31-12-2012 Chinese Yuan Renminbi 8.73 Qingdao Larsen & Toubro Trading Company Limited 31-12-2012 Chinese Yuan Renminbi 8.73 1 Share capital (including share application 41.10 (9.15) 92.49 124.44 124.44 – 40.24 (24.57) – (24.57) – – – – money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year Tamco Electrical Industries Australia Pty Ltd. 31-12-2012 Australian Dollar 57.07 PT Tamco Indonesia Peacock Investments Limited Lotus infrastructure Investments Limited Mango Investments Limited Larsen & Toubro Consultoria E Projeto LTDA Larsen & Toubro T&D SA (PTY) LTD 31-12-2012 Indonesian Rupiah 0.01 31-12-2012 USD 31-12-2012 USD 31-12-2012 USD 55.00 55.00 55.00 31-12-2012 Brazilian Real 26.86 31-03-2013 South African Rand 5.87 L&T Realty Limited 31-03-2013 1 Share capital (including share application 45.20 14.71 0.16 0.16 0.16 2.69 0.00 200.00 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference (13.54) 54.18 85.84 85.84 – 117.59 9.95 – 9.95 – – – – (7.79) 78.78 85.70 85.70 – 45.34 1.68 – 1.68 – – – – (0.24) 0.10 0.02 0.02 – – (0.06) – (0.06) – – – – (0.24) 0.10 0.02 0.02 – – (0.06) – (0.06) – – – – (0.24) 0.10 0.02 0.02 – – (0.06) – (0.06) – – – – (1.90) 0.12 0.91 0.91 – – (1.61) – (1.61) – – – – 2.75 0.32 3.07 3.07 – – (0.26) – (0.26) – – – – (1.96) 1311.41 1509.45 1509.45 0.31 – 0.92 0.20 0.72 – – – – 293 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year Chennai Vision Developers Private Limited 31-03-2013 L&T Realty FZE L&T Power Limited L&T-Valdel Engineering Limited L&T Natural Resources Limited 31-03-2013 31-03-2013 31-03-2013 31-12-2012 UAE Dirham 14.98 Hi-Tech Rock Products & Aggregates Limited 31-03-2013 Tractor Engineers Limited 31-03-2013 crore Bhilai Power Supply Company Limited 31-03-2013 1 Share capital (including share application 0.01 9.66 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year (0.02) 0.01 0.00 0.00 – – – – – – – – – (2.01) 0.02 7.67 7.67 – – (0.10) – (0.10) – – – – 0.05 3.94 0.05 4.04 4.04 3.98 – 3.84 0.00 3.84 13.43 – – – 1.18 0.05 0.05 6.80 0.05 48.44 15.85 65.47 65.47 0.83 83.99 8.62 2.40 6.22 – – – – (6.31) 6.38 0.12 0.12 – – (0.02) – (0.02) – – – – 1.32 15.55 16.92 16.92 – 111.51 0.99 0.31 0.68 – – – – 15.83 22.20 44.83 44.83 2.16 8.57 (17.31) – (17.31) – – – – – 8.81 8.86 8.86 – – – – – – – – – L&T-Sargent & Lundy Limited Spectrum Infotech Private Limited 31-03-2013 31-03-2013 Larsen & Toubro LLC L&T Shipbuilding Limited L&T-Gulf Private Limited 31-03-2013 31-03-2013 31-12-2012 USD 55.00 Raykal Aluminium Company Private Limited 31-03-2013 L&T Electricals and Automation Limited 31-03-2013 L&T Seawoods Private Limited 31-03-2013 1 Share capital (including share application 5.57 0.44 0.24 1265.86 8.00 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference 294 49.96 21.63 77.16 77.16 46.07 102.27 10.17 2.64 7.53 – – – – 13.07 20.39 33.90 33.90 – 24.46 3.45 0.82 2.63 – – – – 1.25 2.78 4.27 4.27 – 5.71 0.20 0.02 0.18 – – – – (202.12) 3167.69 4231.43 4231.43 82.38 104.82 (196.54) – (196.54) – – – – 5.50 3.16 16.66 16.66 0.02 19.81 6.66 2.19 4.47 – – – – 0.05 0.43 0.45 0.93 0.93 – – 1.29 0.26 1.03 – – – – 0.05 1144.00 (0.01) 0.01 0.05 0.05 – – (0.00) – (0.00) – – – – (4.25) 1523.67 2663.42 2663.42 75.34 – 0.62 – 0.62 – – – – Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year L&T Rajkot - Vadinar Tollway Limited Kesun Iron & Steel Company Private Limited L&T Technologies Limited 31-03-2013 31-03-2013 31-03-2013 L&T Special Steels and Heavy Forgings Private Limited 31-03-2013 crore L&T Howden Private Limited L&T Solar Limited L&T Sapura Shipping Private Limited L&T Sapura Offshore Private Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 1 Share capital (including share application 110.00 0.01 0.05 540.00 30.00 0.05 158.85 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year (129.42) 1013.25 993.83 993.83 – 59.26 (113.46) – (113.46) – – – – (0.25) 0.25 0.01 0.01 – – (0.00) – (0.00) – – – – (0.01) 0.01 0.05 0.05 – – (0.00) – (0.00) – – – – L&T PowerGen Limited Ewac Alloys Limited L&T Kobelco Machinery Private Limited (175.85) 1371.62 1735.77 1735.77 12.73 14.07 (155.74) – (155.74) – – – – L&T-MHI Boilers Private Limited (10.68) 132.27 151.59 151.59 – 156.12 2.95 2.29 0.66 – – – – L&T-MHI Turbine Generators Private Limited (0.01) 0.01 0.05 0.05 – – (0.00) – (0.00) – – – – (17.57) 588.82 730.10 730.10 – 232.42 29.98 0.51 29.47 – – – – PNG Tollway Limited L&T Cassidian Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 0.01 0.41 16.38 16.80 16.80 – 0.26 4.08 2.37 1.71 – – – – L&T Infra Investment Partners Advisory Private Limited 31-03-2013 1 Share capital (including share application 0.05 8.29 50.00 234.10 340.60 169.10 0.05 5.00 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference (0.01) 0.01 0.05 0.05 – – (0.00) – (0.00) – – – – 67.00 115.07 190.36 190.36 – 384.53 86.52 28.45 58.07 34.42 – – – (14.73) 49.04 84.31 84.31 2.67 13.83 (13.76) – (13.76) – – – – 47.60 2956.31 3238.01 3238.01 450.18 2359.76 163.41 21.98 141.43 – – – – (221.88) 2839.14 2957.86 2957.86 – 992.34 (89.46) 0.01 (89.47) – – – – (38.46) 1402.26 1532.90 1532.90 – 17.75 (37.58) – (37.58) – – – – (0.01) 0.00 0.04 0.04 – – (0.00) – (0.00) – – – – (9.92) 16.39 11.47 11.47 0.53 – (5.31) – (5.31) – – – – 295 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. Financial year ending on Currency Exchange rate on the last day of financial year 1 Share capital (including share application money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference Particulars Sr. no. L&T Unnati Finance Limited L&T Infra Investment Partners Trustee Private Limited 31-03-2013 31-03-2013 L&T Access Financial Advisory Services Limited (formerly L&T Access Financial Advisory Services Private Limited) 31-03-2013 L&T BPP Tollway Limited L&T Deccan Tollways Limited Audco India Limited CSJ Hotels Private Limited crore L&T Housing Finance Limited 31-03-2013 31-03-2013 31-03-2013 31-03-2013 31-03-2013 0.10 (0.05) 0.02 0.07 0.07 – – (0.04) – (0.04) – – – – 4.50 6.00 196.94 (0.28) 497.04 501.26 501.26 233.55 – (0.32) (0.07) (0.25) – – – – (9.54) 10.25 6.71 6.71 – 3.47 (13.75) (4.23) (9.52) – – – – (1.62) 701.00 896.32 896.32 – – (0.19) 0.02 (0.21) – – – – 23.68 (1.01) 0.69 23.36 23.36 – – (0.97) – (0.97) – – – – Consumer Financial Services Limited Family Credit Limited L&T Capital Markets Limited L&T Trustee Services Private Limited (formerly known as FIL Trustee Company Private Limited) 31-03-2013 L&T Fund Management Private Limited (formerly known as FIL Fund Management Private Limited ) 31-03-2013 15.63 0.01 43.92 219.87 267.73 503.23 503.23 – 650.72 60.90 21.10 39.80 100.05 – – – (0.00) 0.00 0.01 0.01 – – (0.00) – (0.00) – – – – 99.40 224.75 368.07 368.07 0.61 28.66 22.25 (2.14) 24.39 – – – – L&T Infra Debt Fund Limited L&T East- West Tollway Limited L&T Great Eastern Highway Limited 31-03-2013 31-03-2013 31-03-2013 Financial year ending on Currency Exchange rate on the last day of financial year 31-03-2013 31-03-2013 31-03-2013 1 Share capital (including share application 1.00 154.31 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference (0.63) 0.00 0.37 0.37 – – 0.01 – 0.01 – – – – 142.28 1518.08 1814.67 1814.67 – 328.05 71.03 (15.93) 86.96 – – – – 2.55 (1.59) 1.28 2.24 2.24 – – (1.59) – (1.59) – – – – 0.01 1.58 0.03 1.62 1.62 – – 0.23 0.07 0.16 – – – – 323.00 (292.96) 1.46 31.50 31.50 2.27 – 0.35 – 0.35 – – – – – – – – – – – – – – – – – – 15.15 (0.44) 1.34 16.05 16.05 – – (0.44) – (0.44) – – – – 12.28 (0.29) 1.04 13.03 13.03 – – (0.29) – (0.29) – – – – 296 Information on Subsidiary Companies (for the financial year ended or as on, as the case may be) Particulars Sr. no. L&T Technology Services Limited L&T Tejomaya Limited Larsen & Toubro Infotech South Africa (PTY) Limited Thalest Limited Bond Instrumentation & Process Control Limited Servowatch Systems Limited Larsen Toubro Arabia LLC crore Henikwon Corporation SDN.BHD Financial year ending on 31-03-2013 31-03-2013 31-03-2013 31-12-2012 31-12-2012 31-12-2012 31-12-2012 31-12-2012 Currency Exchange rate on the last day of financial year 1 Share capital (including share application 0.05 0.05 money pending allotment) 2 Reserves 3 Liabilities 4 Total liabilities 5 Total assets 6 Investments (details on pages 298 to 308) 7 Turnover 8 Profit before taxation 9 Provision for taxation 10 Profit after taxation 11 Interim dividend - equity 12 Interim dividend - Preference 13 Proposed dividend - equity 14 Proposed dividend - preference – 0.00 0.05 0.05 – – – – – – – – – (0.01) 0.01 0.05 0.05 – – (0.01) – (0.01) – – – – South African Rand 5.87 0.27 0.22 16.96 17.45 17.45 – 26.37 0.31 0.09 0.22 – – – – British Pound 88.92 British Pound 88.92 British Pound 88.92 Saudi Riyal Malaysian Ringgit 14.67 17.99 1.10 0.00 0.41 14.78 10.80 6.46 11.12 18.68 18.68 – – 2.91 – 2.91 – – – – – – 0.00 0.00 – – – – – – – – – (4.61) 23.50 19.30 19.30 – 14.56 (6.74) (0.16) (6.58) – – – – (0.39) 0.28 14.67 14.67 – – (0.27) – (0.27) – – – – (20.67) 28.74 18.87 18.87 – 31.91 (12.75) 0.34 (13.09) – – – – 297 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Finance Limited Long term investment: Government securities: 12% National saving certificates 2002 ( 4,000) – – – Unquoted Security receipts: Phoenix ARC Private Limited : Phoenix ARF Scheme 5 Phoenix ARF Scheme 6 Phoenix ARF Scheme 7 Phoenix ARF Scheme 8 Phoenix ARF Scheme 9 Phoenix ARF Scheme 10 Share application money paid pending allotment Other company: Fully paid equity shares: Invent Assets Securitisation & Reconstruction Private Limited Alpha Micro Finance Consultants Private Limited Metropoli Overseas Limited Anil Chemicals and Industries Limited Elque Polyesters Limited Monnet Industries Limited Monnet Ispat And Energy Limited Monnet Sugar Limited Intergrated Digital Info Services Limited SUB -TOTAL Long term investment: Infrastructure Development Finance Limited 8,501 9,843 23,238 38,195 6,612 18,889 71,00,000 2,00,000 99,400 40,000 1,94,300 5,640 3,008 11,280 3,83,334 905 1000 985 545 1000 1000 10 10 10 10 10 10 10 10 10 0.77 Unquoted 0.98 Unquoted 2.29 Unquoted 2.08 Unquoted 0.66 Unquoted 1.89 Unquoted 4.37 Unquoted 15.98 Unquoted 0.20 Unquoted 0.15 Unquoted 0.08 Unquoted 0.19 Quoted 0.02 Quoted 0.01 Quoted 0.05 Quoted 0.12 Quoted 29.84 IDFC Ltd. (M+150bps) 16 May 2017 400 1000000 46.84 Quoted SUB -TOTAL Less: Provision for diminution in value TOTAL 46.84 0.55 76.13 298 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted Larsen & Toubro Infotech Limited Current investments: Mutual funds: Liquid investments: L&T Ultra Short Fund -IP-DDR L&T Liquid Super IP DDR Fixed Maturity Plans: 58,07,773 37,889 10 1000 5.90 Quoted 3.83 Quoted HDFC FMP 372D Februarry 2013 (1) - Growth 20,00,000 ICICI Prudential FMP Series 66 - 366 Days Plan F- Growth 20,00,000 Kotak FMP series 94- 370D - Growth L&T FMP VII (March 367D A) - Growth Religare FMP Series XVII- Plan B- Growth IDFC FMP 36 Months Series 2 Dividend Payout 20,00,000 20,00,000 20,00,000 20,00,000 10 10 10 10 10 10 2.00 Quoted 2.00 Quoted 2.00 Quoted 2.00 Quoted 2.00 Quoted 2.00 Quoted 21.73 TOTAL Larsen & Toubro International FZE (as at 31-12-2012) Long term investment: Associate company: Fully paid equity shares: L&T-Camp Facilities LLC Jointly controlled entity: Fully paid equity shares: 2,450 AED 1000 3.67 Unquoted IndIran Engg & Project Services Krish LLC 875 Irani Riyal 1000000 each 0.48 Unquoted Others Fully paid equity shares: Jiangsu Shengye Valve Co., Limited (formerly known as Larsen & Toubro (Jiangsu) Valve Company Limited) TOTAL 11.79 Unquoted 15.94 299 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T-Sargent & Lundy Limited Non-Current Investments: Mutual fund: L&T FMP-V (Feb 419 Day A) 40,00,000 10 4.00 Unquoted Current investments: Mutual fund: Axis Treasury Advantage Fund- Daily Dividend Reinvestment 40,106 10000 4.01 Unquoted HDFC Short Term Opportuunty Fund - Div. Reinvestment L&T STDF Quarterly Dividend 33,03,709 23,91,555 L&T Short Term Opportunity Fund - Monthly Dividend 1,77,17,532 DSP Strategic Bond Fund DWS FMP Series 24 Direct Plan Growth L&T Liquid Fund Super IP L&T Ultra STF-IP BSL Short Term Fund-Dividend Payment TOTAL L&T Infrastructure Development Projects Limited Long term investment: Associate companies: Fully paid equity shares: 37,157 20,00,000 887 27,56,231 43,05,482 10 10 10 10000 10 1000 10 10 3.32 Unquoted 2.50 Unquoted 18.50 Unquoted 3.85 Unquoted 2.00 Unquoted 0.09 Unquoted 2.80 Unquoted 5.00 Unquoted 46.07 International Seaports Haldia (Private) Limited 98,30,000 10 9.83 Unquoted Jointly controlled entity: Fully paid equity shares: The Dhamra Port Company Limited 32,39,99,960 10 324.00 Unquoted Other companies: Fully paid equity shares: SICAL Iron Ore Terminals Limited Second Vivekananda Bridge Tollway Company Private Limited Current investments: Fully paid equity shares: 1,43,00,000 1,000 10 10 14.30 Unquoted 0.00 Unquoted Ennore Tank Terminals Private Limited 67,87,500 10 6.79 Unquoted Mutual Funds L&T Liquid Fund Growth TOTAL 300 49,779 1000 8.00 Quoted 362.92 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Capital Company Limited Current investments: Mutual fund: Kotak Floater Short Term - Growth Kotak Bond Scheme Plan A - Direct Plan- Growth 1,605 8,61,621 10 10 0.30 2.90 3.20 Quoted Quoted Larsen & Toubro Qatar & HBK Contracting Co WLL -JV 100 QR 100000 Unquoted 0.13 0.13 TOTAL Larsen & Toubro Infotech GmbH Long term investment: Other company: Fully paid equity shares: Pan Health, USA TOTAL Larsen & Toubro Qatar LLC (as at 31-12-2012) Long term investment: Associate company: Fully paid equity shares: TOTAL L&T Infrastructure Finance Company Limited Long term investment: Other company: Fully paid equity shares: Feedback Infrastructure Services Private Limited BSCPL Infrastructure Ltd. Tikona Digital Networks Pvt. Ltd. Bhoruka Power Corporation Limited Ardom Telecom Ltd Compulsory Convertible Debentures: Tikona Digital Networks Pvt. Ltd Cumulative Redeemable Preference Shares Anrak Aluminium Limited KSK Energy Ventures Limited Cumulative Convertible Preference Shares Ardom Telecom Ltd Venture Capital Units 1,00,000 USD 1 Unquoted 0.00 0.00 37,90,000 10,47,916 316 5,87,850 6,48,649 100 10 10 10 10 37.90 60.05 0.09 50.00 2.00 Unquoted Unquoted Unquoted Unquoted Unquoted 5,19,212 2840 147.46 Unquoted 12,50,00,000 10,00,00,000 10 10 125.00 100.00 Unquoted Unquoted 1,800 100000 18.00 Unquoted LICHFL Urban Development Fund 2,000 10000 2.00 Unquoted Current Investments: Equity Shares C&C Construction Limited ICOMM Tele Limited Mutual Funds 8,77,081 41,667 Fidelity Cash Fund (Super Institutional) Daily Dividend L&T Floating Fund 9,98,116 5,38,69,467 TOTAL 10 10 1000 10 2.72 – Quoted Unquoted 102.14 102.13 749.49 Unquoted Unquoted 301 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Power Limited Current investments: Mutual fund: L&T Liquid Fund - Institutional Plan Plus- DDR 39,350 1000 TOTAL L&T - MHI Boilers Private Limited Current investments: Mutual fund: Short term debt plan: Unquoted 3.98 3.98 BSL Floating Rate Fund STP Growth- Direct BSL Short Term Fund _Growth- Direct HDFC High Int. DP Short Term Growth ICICI Prudential Liquid - Direct Plan- Growth Kotak Floater Short Term Growth Kotak Floater Short Term - Direct Plan -Growth L&T Liquid Direct Plan - Growth Reliance Liquidity Fund- Treasury Plan- Direct Growth Plan Reliance Medium Term Fund - Direct Growth Plan SBI Short Term Debt Fund - Direct Plan- Growth Tata Income Fund Direct Plan- Growth UTI Short Term Income Fund - Institutuional Option - Direct Plan- Growth 3,70,805 1,15,26,368 2,16,28,636 23,08,136 57,602 2,10,737 2,92,441 21,060 1,76,59,065 3,71,04,983 1,59,56,884 3,57,19,644 TOTAL L&T-Valdel Engineering Limited Current investments: Mutual fund: 100 10 10 100 1000 1000 1000 1000 10 1000 10 10 Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted 5.75 50.00 50.00 40.00 11.00 40.43 47.00 6.00 43.00 50.00 57.00 50.00 450.18 L&T Short Term Opp Fund Dividend 7,99,477 10 TOTAL GDA Technologies Inc. Current Investment: Other companies: Fully paid equity shares: Arkadoc Group, Inc Citrix System, Inc. SUB -TOTAL Less: Provision for diminution in value TOTAL L&T Power Development Limited Long term investment: Other companies: Fully paid equity shares: Konaseema Gas Power Limited TOTAL 302 1,50,000 114 USD 1 USD 1 Unquoted 0.83 0.83 Quoted Quoted 0.09 0.03 0.12 0.03 0.09 2,10,00,000 10 21.05 21.05 Unquoted Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company L&T Finance Holdings Limited Long term investment: Associate company: Fully paid equity shares: No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted NAC Infrastructure Equipment Limited 45,00,000 10 4.50 Unquoted Current investments: Mutual fund: L&T Ultra STF - Daily Dividend Reinvestment Plan L&T Liquid Fund - Daily Dividend Reinvestment Plan L&T Cash Fund - Daily Dividend Plan L&T Flexi Bond Fund - Dividend Option Plan 10,05,47,830 32,15,170 29,32,282 2,53,02,304 10 1000 1000 10 102.15 Unquoted 325.26 Unquoted 300.06 Unquoted 25.45 Unquoted SUB -TOTAL Less: Provision for diminution in value TOTAL L&T Investment Management Limited Current investments: Mutual fund: 757.42 4.50 752.92 L&T Liquid Fund Direct Plan - Growth 1,60,372 1000 25.64 Unquoted TOTAL L&T Mutual Fund Trustee Limited Current investments: Mutual fund: L&T Ultra Short Term Fund - Growth L&T Ultra Short Term Fund Regular - Cumulative 9,290 2,878 10 10 TOTAL Nabha Power Limited Current investments: Mutual fund: 25.64 0.02 Unquoted 0.00 Unquoted 0.02 L&T Liquid Inst Daily Dividend Reinvestment Plan HDFC Liquid Plan HDFC Floating Rate Income Fund-Short Term Plan - Wholesale option Direct Plan-DDR Birla Sun Life Cash plus- Instl. Prem - Daily Dividend Reinvestment Axis Liquid Fund- Instituional Plan- Daily Dividend ICICI Prudential Flexible Income Plan Premium - Daily Dividend ICICI Prudential Liquid Super Institutional Plan - Daily Dividend TOTAL 3,33,055 29,962 57,93,160 50,664 528 9,686 1,518 1000 33.70 Unquoted 10 10 100 1000 100 100 0.03 Unquoted 5.84 Unquoted 0.51 Unquoted 0.05 Unquoted 0.10 Unquoted 0.01 Unquoted 40.24 303 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T General Insurance Company Limited Long term investment: Government securities: 7.80% Government Stock 03-05-2020 8.15% GOI CG 11-06-2022 8.19% GOI CG 16-01-2020 8.20% Government Stock 15-02-2022 8.26% Government Stock 02-08-2027 8.33% Government Stock 09-07-2026 8.85% MH SDL SG 2022 8.97% Government Stock 05-12-2030 9.15% Government Stock 14.11.2024 Bonds: 10.06% L&T IDPL BS 27-04-2015 C 10.06% L&T IDPL BS 28-04-2015 10.60% Shriram Transport Finance DB 05-06-2018 11.69% Tata Teleservices NCD 14-08-2025 7.70% NHPC BS 31-03-2018 8.79% HDFC Ltd. NCB 21-07-2020 8.80% GAIL BS 13-12-2018 8.80% GAIL BS 13-12-2019 8.84% Powergrid Bonds-21-10-2020 8.90% PGC BS 25-02-2015 8.95% IBS Ltd NCD 15-09-2020 9.00% ICICI Bank DB 04-06-2018 9.30% DAMODAR DB 30-03-2027 9.35% IOC NCB 30-04-2017 XII 9.35% PGC BS 29-08-2016 A 9.35% PGC DB 29-08-2020 9.40% NABARD BS 30-03-2015 9.40% NHB BS 10-01-2015 9.55% HINDALCO DB 24-04-2022 9.55% HINDALCO DB 25-04-2022 9.63% PFC BS 15-12-2015 9.68% HDFC LTD BS 09-02-2015 9.95% SBI BS 16-03-2026 Current investments: Other Securities (Short Term) AXIS Bank CD 16-09-2013 8.40% LIC HF NCD 18-08-2013 Mutual Funds: Franklin Templeton India TMA-Super Institutional Plan J P Morgan India Liquid-Super Inst. Growth Kotak Short Term Floater Growth 1000 L&T Liquid Fund Sup Inst Plan Plus Cumulative - Growth TOTAL 304 15,00,000 5,00,000 5,00,000 20,00,000 5,00,000 5,00,000 10,00,000 10,00,000 10,00,000 5,00,000 2,50,000 10,00,000 3,00,000 1,00,000 4,00,000 5,00,000 5,00,000 5,00,000 50,000 1,30,000 15,00,000 10,00,000 15,00,000 3,00,000 2,00,000 5,00,000 5,00,000 5,00,000 5,00,000 5,00,000 5,00,000 5,00,000 20,00,000 5,00,000 24,792 29,90,424 38,901 1,412 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 10 10 1000 1000 15.58 5.00 5.01 20.74 4.95 5.03 10.01 10.79 10.85 4.98 2.49 10.00 3.06 0.94 3.97 4.92 4.91 5.00 0.50 1.25 15.00 10.30 15.08 3.00 2.02 5.01 5.00 5.00 5.07 5.06 5.00 5.19 Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted 18.51 4.97 Quoted Quoted 4.26 4.44 7.35 0.22 250.46 Quoted Quoted Quoted Quoted Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Infocity Limited Long term investment: Associate company: Fully paid equity shares: Vizag IT Park Limited Current Investments: Government securities: 23,40,000 10 2.34 Unquoted NHAI- Non-convertible Redeemable - Taxable Bonds 500 10000 0.50 Unquoted TOTAL GDA Technologies Limited Current investments: Mutual Funds: Birla Sunlife Asset Management Co Ltd. Franklin Templeton FRIF-Super IP-DDRDO L&T Ultra Short Term Fund IP DDR TOTAL L&T Uttaranchal Hydropower Limited Current investments: Mutual Funds 2.84 6,49,521 1,27,82,716 74,22,791 100 10 10 6.50 Quoted 12.81 Quoted 7.54 Quoted 26.85 L&T Ultra STF Direct Plan-DDR 1,20,99,923 10 TOTAL L&T Arunachal Hydropower Limited Current investments: Mutual Funds L&T Freedom Income Fund ST/IP/DDR 2,30,040 10 TOTAL L&T Himachal Hydropower Limited Current investments: Mutual Funds L&T Freedom Income Fund ST/IP/DDR 3,19,981 10 TOTAL L&T Transportation Infrastructure Limited Current investments: Mutual Funds L&T Liquid Growth Fund 1,55,560 1000 TOTAL 12.29 12.29 Quoted Quoted 0.23 0.23 Quoted 0.33 0.33 25.00 25.00 Quoted 305 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted Narmada Infrastructure Construction Enterprise Limited Current investments: Mutual Funds L&T Liquid Fund Growth 24,890 1000 TOTAL L&T Fund Management Private Limited Current investments: Mutual Funds L&T Cash Fund - (Direct Plan) Growth 14,432 1000 TOTAL L&T Infra Investment Partners Advisory Private Limited Current investments: Mutual Funds ICICI Prudential Liquid - Regular Plan Daily Dividend. 52,636 100 TOTAL L&T Special Steels and Heavy Forgings Private Limited Current investments: Mutual Funds: ICICI Prudential Flexible Income DDR Plan Birla Sunlife Cash Plus DDR Plan 4,82,208 7,61,264 100 100 TOTAL L&T Vadodara Bharuch Tollway Limited Current investments: Mutual Funds L&T Liquid Fund - Growth 37,334 1000 TOTAL L&T Interstate Road Corridor Limited Current investments: Mutual Funds L&T Ultra Short Term Fund - Growth 15,82,696 10 TOTAL L&T Realty Limited Current Investments: Mutual Funds: L&T Liquid-Fund-Growth 1,968 1000 TOTAL 306 Quoted 4.00 4.00 Unquoted 2.27 2.27 Quoted 0.53 0.53 Unquoted Unquoted 5.10 7.63 12.73 Unquoted 6.00 6.00 Unquoted 3.00 3.00 Unquoted 0.31 0.31 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Kobelco Machinery Private Limited Current Investments: Mutual Funds: L&T Liquid Fund Direct Plan Growth L&T Cash Fund Direct Plan- Growth TOTAL L&T Metro Rail (Hyderabad) Limited Current Investments: Mutual Funds 7,470 9,290 1000 1000 1.20 1.47 2.67 Quoted Quoted L&T Liquid Fund-Daily Dividend 69,250 1000 TOTAL L&T Devihalli Hassan Tollway Limited Current Investments: Mutual Funds L&T Ultra Short Term Fund 52,75,653 10 7.01 7.01 Quoted 10.00 10.00 Quoted TOTAL L&T Unnati Finance Limited Long term investment: Fully paid equity shares: City Union Bank Limited Current Investments: Mutual Funds: 1,91,95,012 10 33.39 Quoted L&T Liquid Fund - Daily Dividend Reinvestments Plan 19,78,566 1000 TOTAL L&T-Gulf Private Limited Current Investments: Mutual Funds: L&T Liquid Fund Direct Plan Daily Dividend Reinvestment Plan 198 1000 TOTAL L&T Housing Finance Limited Long term investment: Fully paid equity shares: The Kalyan Janatha Sahkari Bank Limited The Malad Sahakari Bank Limited Government Securities: 7.50% Government of India Stock 2034 6.13% Government of India Stock 2028 Bonds: 7.30% Food Corporation of India Bonds 2015 SUB -TOTAL Less: Provision for diminution in value TOTAL 20,000 1,000 14,000 40,000 10,000 25 10 100 100 100 200.16 233.55 Quoted Unquoted 0.02 0.02 0.05 – Unquoted Unquoted Quoted Quoted Quoted 0.14 0.38 0.10 0.67 0.06 0.61 307 Annexure to Information regarding Subsidiary Companies Details of Investments as at 31-03-2013/31-12-2012 Name of the Company No. of Shares/ Units/Bonds Face Value ( ) Book Value ( crore) Quoted/ Unquoted L&T Seawoods Private Limited Current Investments: Mutual Funds: L&T Liquid Fund Direct Plan Daily Dividend Reinvestment Plan L&T Cash Fund Direct Plan Daily Dividend Reinvestment Plan 3,43,078 3,97,077 1000 1000 34.71 Unquoted 40.63 Unquoted TOTAL L&T Shipbuilding Limited Current Investments: Mutual Funds: L&T Liquid Fund - Growth Plan Franklin Templeton - Growth Plan Axis Liquid Fund - Growth Plan DWS Treasury Fund - Growth Plan IDFC Cash Fund Growth Plan SBI Premier Liquid Fund - Growth Plan L&T Cash Fund Growth Plan TOTAL Tractor Engineers Limited Current Investments: Mutual Funds: 25,494 51,089 72,438 44,903 1,40,459 1,08,648 1,25,584 1000 1000 1000 100 1000 1000 1000 L&T Ultra STF Direct Plan - Daily Dividend Reinvestment 21,44,533 10 TOTAL 75.34 3.97 Unquoted 8.74 Unquoted 9.11 0.56 Quoted Quoted 20.00 Quoted 20.00 Quoted 20.00 Quoted 82.38 Quoted 2.16 2.16 308 Notes Notes LARSEN & TOUBRO LIMITED Regd. Office : L&T House, Ballard Estate, Mumbai 400 001. ANNUAL GENERAL MEETING - AUGUST 22, 2013 AT 3.00 P.M. ATTENDANCE SLIP NAME AND ADDRESS OF THE REGISTERED SHAREHOLDER D.P.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 22, 2013. Note : Please complete this and hand it over at the entrance of the hall. SIGNATURE LARSEN & TOUBRO LIMITED Regd. Office : L&T House, Ballard Estate, Mumbai 400 001. ANNUAL GENERAL MEETING - AUGUST 22, 2013 AT 3.00 P.M. FORM OF PROXY 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 22, 2013 and at any adjournment thereof. Signed this __________ day of _______________2013 D.P.Id Client Id/ Folio No. No. of Shares Signature ................................................................... Affix a 1 Rupee 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. . d L t i a d e M a d r u B T H y b d e t n i r P 

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