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Auditor Report of Larsen & Toubro Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Larsen & Toubro Limited ("the Company"), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss, the cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's responsibility for the standalone financial statements

The Company's board of directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. 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 the 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, 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 on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31 March 2015, and its profit and its cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1 As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the central government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2 As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The balance sheet, the statement of profit and loss, and the cash flow statement dealt with by this report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditor's Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - refer notes I, note (II) in Q(16) and Q(17) to the financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - refer notes C(II), D(IV) and Q(7)(a) to the financial statements; and

iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' report (Referred to paragraph (1) under 'Report on other legal and regulatory requirements' of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 According to the information and explanations given to us, there are no companies, firms and other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, paragraphs 3(iii)(a) and (b) of the Order are not applicable.

4 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 and 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.

5 According to the information and explanations given to us, the Company has not accepted deposits from the public and accordingly, paragraph 3(v) of the Order is not applicable.

6 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 148(1) of the Companies Act, 2013 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.

7 (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, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, 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, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, cess and other statutory dues outstanding as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of income-tax, sales-tax, wealth tax, service tax, duty of custom, duty of excise, value added tax or cess as at 31 March 2015 which have not been deposited on account of a dispute pending are as under:

Name of the Nature of the disputed dues Amount statute Rs. crore*

Central Sales Tax Taxability of sub-contractor turnover, rate of tax for 3.20 Act, Local Sales Tax declared goods, inter-state sales and non- submission of Acts and Works forms

Contract Tax Act Dispute regarding question of law, non-submission of 260.26 forms, classification dispute, tax deducted at source at lower rate, sales in transit, high seas sales, labour turnover, local VAT, local WCT, rate of tax on declared goods and other matters

Non-submission of forms, classification disputes, 344.55 disallowance of sales occasioning import, arbitrary demand raised, sub-contractors turnover disallowed, pumping and freight charges, inter-state sales turnover, tax deducted at source disallowed, rates of tax of declared goods, classification dispute, disallowance of WCT and other matters

Forms submitted but rejected by Assessing Officer 0.78





Name of the statute Period to which the amount relates Forum where disputes are pending

Central Sales Tax Act, Local Sales Tax Acts and Works Contract Tax Act 1991-92, 1995-96, 1997-98, 1999-2000 Supreme Court to 2005-06

1986- 87 to 2011-12 High Court

1987- 88 to 1991-92, 1994-95 to 2011-12 Sales Tax Tribunal

2008-09 Commissioner (Appeals)



Name of the Nature of the disputed dues Amount statute Rs. crore*

Non-submission of forms 13.92

Non-submission of forms, disallowance of sales in transit, 158.19 high seas sales, sales occasioning imports and other matters

Non-submission of forms, additional demands for 986.17 pending forms, rate of tax dispute, disallowance of branch transfer, sub-contractors turnover, interest demand on road permit, disallowance of sales in transit, sales occasioning imports and other matters

Non-submission of forms, disallowance of sales 1.83 occasioning imports, rate of tax dispute and other matters

Non-submission of forms and dispute related to sales 1.73 in transit

The Central Excise Dispute of excise duty on site mix concrete and PSC 0.27 Act, 1944, Service grinder

Tax under Finance Demand of excise duty on site fabricated steel structures, 565.06 Act, 1994 export rebate disallowance, valuation disputes, excise duty on concrete mix made at site, non-maintenance of separate records and other matters

Disallowance of cenvat credit, excise duty refund, short 1.76 payment of service tax, excise duty on concrete mix made at site, service tax rate dispute and other matters

Export rebate claim, service tax on commercial 42.48 construction services, service tax liability against rate change and penalty imposed for wrong availment of cenvat credit

Demand of service tax including penalty, interest on 15.24 lump-sum turnkey jobs, demand of penalty on late payment of service tax and other matters

Income-tax Act, Assessment under section 143(3) read with section 454.90 1961 144C(13) and demand of tax deducted at source on bank guarantee charges and internet charges Dispute regarding tax deducted at source at lower rates 0.05

Name of the statute Period to which the amount relates Forum where disputes are pending

1995-96, 1997-98, 2001-02 to 2004-05, Additional Commissioner 2006-07 to 2012-13 (Appeals)

1997-98, 1999-2000, 2001-02, 2003-04 Joint Commissioner to 2011-12 (Appeals)

1991-92, 1992-93, 1994-95, 1996-97, Deputy Commissioner

1997-98, 1999-2000 to 2013-14 (Appeals)

1991-92, 1992-93, 1996-97 to 2005-06 Assistant Commissioner and 2008-09 (Appeals)

1994-95 to 2014-15 Commercial Tax Officer

The Central Excise Act, 1944, Service Tax under Finance Act, 1994 1997-98 Supreme Court

1991-92, 2001-02 to 2011-12 CESTAT

2006- 07, 2008-09 to 2012-13 and 2014-15 Commissioner (Appeals)

2003- 04, 2005-06 and 2006-07 High Court

2004- 05 to 2010-11 CESTAT

Income-tax Act, 1961 2007- 08 to 2012-13 ITAT

2005- 06 Commissioner (Appeals)

*Net of pre-deposit paid in getting the stay/appeal admitted

(c) The amounts required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1 956 (1 of 1 956) and rules made thereunder are transferred to such fund within time.

8 The Company has no accumulated losses as at 31 March 2015 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

9 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.

10 I n our opinion and according to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interests of the Company.

11 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.

12 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.

SHARP & TANNAN Chartered Accountants Firm's Registration No. 109982W by the hand of

MILIND P PHADKE Partner

Membership No.33013

Mumbai, May 30, 2015




Mar 31, 2014

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, 2014, 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 notified under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13 September 2013, of the Ministry of Corporate Affairs, in respect of section 133 of the Companies Act, 2013. 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, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 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) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. 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.

2. 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 audit;

b. 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;

c. 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;

d. in our opinion, the balance sheet, statement of profit and loss, and cash flow statement comply with the Accounting Standards notifed under the Act read with the General Circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of section 133 of the Companies Act, 2013; and

e. on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the board of directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the Order are not applicable.

4 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.

5 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.

6 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.

7 In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of 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.

9 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at 31 March 2014 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax, excise duty, service tax, customs duty, income tax and profession tax as at 31 March 2014 which have not been deposited on account of a dispute pending are as under:

Name of the statute Nature of the disputed dues Amount

Rs. crore*

Central Sales Tax Non-submission of forms 1.46 Act, Local Sales Tax

Acts and Works Non-submission of forms, dispute related to sales in transit, 3.56

Contract Tax Act rejection of exemption certificates, rate of tax dispute and other matters

Non-submission of forms, additional demand for pending 399.00 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 51.65 seas sales, classification dispute and other matters Non-submission of forms 8.52

Non-submission of forms, dispute related to sales in transit and 0.52 other matters

Non-submission of forms, labour and service charges, sub- 325.24 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

Classification dispute,tax deducted at source at lower rate, sales 259.46 in transit, local VAT, local WCT, rate of tax of declared goods

Name Period to which the amount relates Forum where disputes are pending

Central Sales Tax 1991-92, 1992-93, 1994-95, 1996-97 to 2003-04, Commercial Tax Officer 2005-06 to 2009-10

1991-92, 1992-93, 1993-94, 1996-97, 1997-98 Assistant Commissioner and 1999-00 to 2011-12 (Appeals)

1989-90, 1991-92 to 2011-12 Deputy Commissioner(Appeals)

1993-94, 1996-97, 1997-98, 1999-00, 2001-02 Joint to 2009-10 Commissioner(Appeals)

1997-98, 2002-03 to 2011-12 Additional Commissioner(Appeals)

2001-02 to 2004-05, 2006-07 and 2008-09 Commissioner (Appeals)

1987-88, 1989-90 to 2011-12 Sales Tax Tribunal

1986-87, 1987-88, 1998-99 to 2011-12 High Court

10 The Company has no accumulated losses as at March 31, 2014 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 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.

16 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.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

20 The Company has not raised any money by public issues during the year.

21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN

Chartered Accountants

Firm’s Registration No.109982W

by the hand of

MILIND P. PHADKE

Partner

Mumbai, May 30, 2014 Membership No. 33013


Mar 31, 2013

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.

Managements 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.

Auditors 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 auditors 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 Companys 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 bur 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) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditors 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.

2. 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 audit;

b. 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;

c. 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;

d. 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 -

e. 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.

Annexure to the Auditors report

(Referred to in paragraph (1) of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iiiXb), (c) and (d) of the Order are not applicable,

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the Order are not applicable.

4 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. .

5 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.

6 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.

7 In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of 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.

9 (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 Rs. 0.02 crore which has since been paid.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax, excise duty, service tax, customs duty and income tax as at March 31,2013 which have not been deposited on account of a dispute pending are as under .

Name of the statute Nature of the disputed dues Amount Rs. crore*

Central Sales Tax Act, Non-submission of forms and other matters 0.87 Local Sales Tax Acts and Works Contract Non-submission of forms, dispute related to sales-in-transit, 6.10 Tax Act rejection of exemption certificates, rate of tax dispute and other matters

Non-submission of forms, additional demand for pending 956.03 forms, rate of tax dispute, disallowance of branch transfer, sub-contractors 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 143.19 seas sales, classification dispute and other matters

Non-submission of forms and disallowance of exemption 12.81 certificates

Non-submission of forms, dispute related to sales-in-transit 0.99 and other matters

Non-submission of forms, labour and service charges, sub- 290.62 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 298.38 deemed sales in course of imports and taxability of sub- contractors turnover

Taxability of sub-contractor turnover, rate of tax for declared 197.89 goods, inter-state sales, non-submission of forms and high seas sales

Name of the Statute Period to which the amount relates Forum where disputes are pending

Central Sales Tax Act, Local Sales Tax Acts and Works Contract Tax Act 1991-92,1992-93, 1996-97 to 2000-01, 2005-06 to Commercial Tax Officer 2008-09

1991 -92,1992-93,1996-97, 1997-98,1999-00 to Assistant Commissioner 2008-09,2010-11 and 2011-12 (Appeals)

1989-90,1991-92 to 2011-12 Deputy Commissioner (Appeals)

1993-94,1996-97,1997-98, 2001-02 to 2009-10 Joint Commissioner (Appeals)

2001-02, 2003-04 to 2008-09,2010-11 and 2011-12 Additional Commissioner (Appeals)

1994-95,2001 -02,2002-03 and 2005-06 to 2008-09 Commissioner (Appeals)

1987-88, 1989-90 to 2011-12 Sales Tax Tribunal

1986-87,1987-88,1998-99 to 2011-12 High Court

1991-92,1995-96,1997-98 and 1999-00 to 2006-07 Supreme Court

Name of the statute Nature of the disputed dues Amount Rs. crore*

The Central Excise Demand of excise duty on steel price variation claims, 0.86 Act, 1944, Service Tax changes in assessable value due to reduction in billing under Finance Act, schedule quantity and demand on fabrication of tanks, 1994 and Customs platforms and ladders Act, 1962 interest on excise duty demand for duty paid on trading 0.02 registration in place of manufacturing registration and demand for custom duty on software

Demand of excise duty on site fabricated steel structure, 131.76 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 0.27

Demand of service tax on lumpsum turnkey jobs and other 220.02 matters

Demand of service tax including penalty and interest on 151.59 lumpsum turnkey jobs and demand of penalty on late payment of service tax

Export rebate claim and service tax on commercial 7.00 construction service

Income-tax Act, 1961 Dispute regarding tax not deducted on bank guarantee 2.20 charges, interest charges and purchase of software

Dispute regarding tax deducted at source at lower rate on 0.03 maintenance charges

Difference in rate of tax deducted at source 2.23

Name of the Statute Period to which the amount relates Forum where disputes are pending

The Central Excise Act, 1994, Service Tax under Finance Act, 1994 and Cutoms Act, 1962 1989-90 to 2011-12 Additional Commissioner

2006-07 and 2012-13 Commissioner (Appeals)

1991-92,2001-02,2003-04 to 2009-10, and 2011-12 CESTAT

1997-98 Supreme Court

2003-04 to 2011-12 Commissioner (Appeals)

1991-92,2001-02, 2003-04 to 2009-10 and 2011-12 CESTAT

2003-04,2006-07 to 2008-09 High Court

Income-tax Act 1961 2010-11 and 2011-12 Assessing Officer

2005-06 Commissioner (Appeals)

2007-08 and 2008-09 Director of Income Tax (International Taxation)

*Net of pre-deposit paid in getting the stay/appeal admitted

10 The Company has no accumulated losses as at March 31, 2013 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 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.

16 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.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

20 The Company has not raised any money by public issues during the year.

21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN

Chartered Accountants

Firms Registration No. 109982W

by the hand of

MIUND P. PHADKE

Partner

Mumbai, May 22, 2013 Membership No.33013


Mar 31, 2012

We have audited the attached Balance Sheet of Larsen & Toubro Limited as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In accordance with the provisions of section 227 of the Companies Act, 1956, we report that:

(1) As required by the Companies (Auditors Report) Order, 2003, issued by the central government of India under sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(2) Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) 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;

(c) 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;

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Art, 1956; and

(e) on the basis of written representations received from directors as on March 31, 2012, and taken on record by the board of directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1) in the case of the Balance Sheet, of the state of the affairs of the Company as at March 31, 2012;

2) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

3) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors report

(Referred to paragraph (1) of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification. .

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the Order are not applicable.

4 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.

5 (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6 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 unpaid matured deposits.

7 In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of 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.

9 (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, 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax, excise duty, service tax, customs duty and income tax as at March 31, 2012 which have not been deposited on account of a dispute pending are as under:

Name of the Nature of the disputed dues Amount Period to which the amount relates stature Crore

Central Sales Non-submission of forms, dispute regarding rate of tax and 0.47 1997-1998 to 1999-2000,2005-2006 and

Tax Act, Local other matters 2007-2009

Sales Tax Acts Non-submission of forms, disallowance of deemed inter- 298.26 1991-1992 to 2011-2012 and Works state sales, classification dispute and other matters

Contract Tax Non-submission of forms, additional demand for pending 37.23 1989-1990,1991-1992 and 1993-1994 to Act forms, rate of tax dispute, disallowance of branch transfer, 2010-2011 transit sale, export claim disallowance and other matters

Non-submission of forms, disallowance of transit sales, 146.22 1993-1994, 1994-1995,1996-1997 to 2009-2010 classification dispute and other matters

Non-submission of forms, additional demand for pending 14.94 1991-1992, 1992-1993, 1996-1997 to 2011-12 forms, disallowance of inter-state sales and other matters

Non-submission of forms, dispute related to sales in transit 79.39 2003-2004 to 2008-2009 and other matters

Non-submission of forms, inter-state sales, sub- contractors 162.80 1987-1988 to 2005-2006 and 2008-2009

turnover, rate dispute, disallowance under composition scheme and other matters

Inter-state sales, classification dispute and disallowance of 934.83 1987-1988 to 2008-2009, 2010-2011 and deemed sales in course of imports and taxability of sub- 2011-2012 contractors turnover

Taxability of sub- contractor turnover, rate of tax for declared 6.14 1991-1992, 1995-1996, 1997-1998 and 1999- goods and inter-state sales 2000 to 2004- 2005

The Central Demand of excise duty on fabrication 0.39 1989-1990 to 2011-2012

Excise Demand for custom duty for fuel, software and on export 0.02 2006-2007 and 2008-2009 Act, 1944, under rebate Service Tax under Finance Classifi cation dispute, exemp tions denied, valuation 84.72 1991-1992, 2001-2002, 2003-2004 to 2006-2007, Act, 1994 and disputes and other matters 2008-2009 and 2009-2010

Customs Act, Dispute on site mix concrete and PSC grinder 0.27 1997-1998

1962 Valuation dispute and disallowance of cenvat against 220.46 2003-2004 to 2010-2011 service tax on freight onward

Demand of service tax including penalty and interest on 127.47 2002-2003 to 2006-2007 lumpsum turnkey jobs and demand of penalty on late payment of service

Export rebate claim, service tax on commer cial construction 0.07 2003-2004 service

The Income- tax Dispute regarding tax not deducted on purchase of software 1.92 2010-2011 Act, 1961 Dispute regarding tax deducted at source at lower rate on 0.03 2005-2006 maintenance charges

Difference in rate of tax deducted at source 2.07 2007-2008 and 2008-2009 Name of the Forum where disputes Statute are pending

Central sales Commercial Tax Officer Tax Act,Local Sales Tax Acts Assistant Commissioner and Works (Appeals) Contract Tax Deputy Commissioner Act (Appeals)

Joint Commissioner (Appeals)

Additional Commissioner (Appeals) Commissioner (Appeals)

Sales Tax Tribunal

High court

Supreme Court

The Central Additional Commissioner Excise Act,1944, Commissioner (Appeals) Service Tax Under Finance CESTAT Act,1994 and Supreme Court Customs Act, commissioner (Appeals) 1962 CESTAT High court

The income Assessing officer tax Act,1961 Commissioner (Appeals) Director of Income Tax (International Taxation)

*Net of pre-deposit paid in getting the stay/appeal admitted_;_

10 The Company has no accumulated losses as at March 31, 2012 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 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.

16 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.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

20 The Company has not raised any money by public issues during the year.

21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN

Chartered Accountants

ICAI registration no. 109982W

by the hand of

R. D. KARE

Partner

Mumbai, May 14, 2012 Membership no. 8820


Mar 31, 2011

We have audited the attached Balance Sheet of Larsen & Toubro Limited as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

In accordance with the provisions of section 227 of the Companies Act, 1956, we report that:

(1) As required by the Companies (Auditor's Report) Order, 2003, issued by the central government of India under sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(2) Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) 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;

(c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

(e) on the basis of written representations received from directors as on March 31, 2011, and taken on record by the board of directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies in schedule Q and the notes appearing thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1) in the case of the Balance Sheet, of the state of the affairs of the Company as at March 31, 2011;

2) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

3) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors7 report {Referred to paragraph (1) of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets have been carried out by management during the year and no material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable,

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecurec 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.

4 In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurat* 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 am services. Further, on the basis of our examination of the books and records of the Company, and according to the information anc explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesse in the aforesaid internal control systems.

5 (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangement; that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of sucr contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding th< value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regarc to the prevailing market prices at the relevant time.

6 The Company had accepted deposits from the public and in our opinion and according to the information and explanations giver to us, the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA and the relevant provisions o the Companies Act, 1956 and rules framed thereunder, where applicable, have been complied with. We are informed that no orde has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any othe tribunal. As of the date of the balance sheet, the Company has no fixed deposits other than unpaid matured deposits.

7 In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of electronic products viz. industrial electronics including all control instrumentation and automation equipment and are of the opinion that prim; fade the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not beer examined by us.

9 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, th« Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protectior fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other materia 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 stats insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding a; at March 31, 2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars oi sales tax, excise duty, service tax, customs duty and income tax as at March 31, 2011 which have not been deposited on accoun" of a dispute pending are as under:

Name of the Nature of the disputed dues Amount statute Rs. crore*

Central Sales Tax Non-submission of forms, dispute regarding rate of tax and 1.37 Act, Locai Sales other matters Tax Acts and Non-submission of forms, disallowance of deemed inter-state 141,51 Works Contract sales, classification dispute and other matte's Tax Act Non-submission of forms, additional demand for oending 33.61 forms, rate of tax dispute, disallowance of branch transfer, transit sale, export claim disallowance and other matters Non-suomission of forms, disallowance of transit sales, 10.27 classification dispute and otner matters

Non-submission of forms, additional demand for pending 2.85 forms, disallowance of inter-state sales and other matters Non-submission of forms, dispute related to sales in transit and 19,95 other matters

Non-suomission of forms, inter-state sales, sub-contractors 65.28 turnover, rate dispute, disallowance under composition scheme and other matters Inter-state sales, classification dispute and disallowance of 495.03 deemed sales in course of imports ano taxability of sub- contractors turnover Taxability of sub-contractor turnover, rate of tax for declared 2,35 goods and inter-state saies



Name of the Period to which the amount relates Forum where disputes Statue are pending

Central Saies Tax Act, Local Sales Tax Acts and Works Contract Tax Act 1996-1997 to 2005-2006 Commercial Tax Officer

1991-1992 to 1994-1995, 1997-1998, Assistant Commissioner

1999-2000 to 2007-2008 and 2009-2010 (Appeals)

1989-1990 and 1993-1994 to 2010-2011 Deputy Commissioner (Appeals)

1993-1994, 1994-1995, 1997-1998 to joint Commissioner

2007-2008 and 2009-2010 (Appeals)

1991-1992, 1992-1993, 1996-1997 and Additional Commissioner

2000-2001 to 2006-2007 (Appeals)

2003-2004 to 2007-2008 Commissioner (Appeals)

1987-1988 to 1996-1997, 1998-1999 to Sales Tax Tribunal 2003-2004 and 2005-2006

1987-1988 to 2006-2007 High Court

1991-1992, 1995-1996, 1997-1998 and Supreme Court 1999-2000 to 2004-2005

Name of the Nature of the disputed dues Amount statute Rs. crore*

The Central Excise Demand for custom duty for fuel, software and on export 0.70 Act, 1944, Service under rebate

Tax under Finance Classification dispute, exemptions denied, valuation disputes 40.71 Act, 1994 and and other matters Customs Act, Dispute on site mix concrete and PSC grinder 0.27 1962 Valuation dispute and disallowance of cenvat against service 219.96 tax on freight onward

Demand of service tax including penalty and interest on 124.19 lumpsum turnkey jobs and demand of penalty on late payment of service tax Export rebate claim, service tax on commercial construction 0.07 service

Income-tax Act, Dispute regarding tax not deducted on purchase of software 0.52 1961 Dispute regarding tax deducted at source at lower rate on 0.03 maintenance charges

Difference in rate of tax deducted at source 1.90

Name of the Period to which the amount relates Forum where disputes Statue are pending



The Central Excise Art, 1944, Service Tax under Finance Act, 1994 and Customs Act, 1962 2006-2007 to 2008-2009 Commissioner (Appeals)

1991-1992, 2001-2002, 2003-2004 to CESTAT 2006-2007, 2008-2009 and 2009-2010

1997-1998 Supreme Court

1997-1998, 2003-2004 to 2010-2011 Commissioner (Appeals)

2002-2003 to 2006-2007 CESTAT

2003-2004 High Court

Income-tax Ad, 1961 2006-2007 to 2009-2010 Assessing Officer 2005-2006 Commissioner (Appeals)

2007-2008 and 2008-2009 Director of Income Tax (International Taxation)

* Net of pre-deposit paid in getting the stay/appeal admitted.

10 The Company has no accumulated losses as at March 31, 2011 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 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.

16 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.

17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

20 The Company has not raised any money by public issues during the year.

21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN

Chartered Accountants

ICAI Registration no. 109982 W

by the hand of

R. D. KARE

Partner

Mumbai, May 19, 2011 Membership no.8820




Mar 31, 2010

We have audited the attached Balance Sheet of Larsen & Toubro Limited as at 31 March 2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In accordance with the provisions of section 227 of the Companies Act, 1956, we report that:

(1) As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India under sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(2) Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) 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;

(c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

(e) on the basis of written representations received from directors as on 31 March 2010, and taken on record by the Board of Directors. we report that none of the directors is disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies in schedule Q and the notes appearing thereon, give the information required by the Companies Act. 1956. in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31 March 2010;

2) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

3) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors report (Referred to paragraph (1) of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, he physical verification of the fixed assets have been carried out by management during the year and no material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(f) and (g) of the Order are not applicable.

4 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.

5 (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements

that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6 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 unpaid matured deposits.

7 In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of electronic products viz. industrial electronics including all control instrumentation and automation equipment and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us.

9 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the

Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us. there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at 31 March 2010 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax, excise duty, service tax and income tax as at 31 March 2010 which have not been deposited on account of a dispute pending, are as under:

Name of the statute Nature of the disputed dues Amount Rs.crore*

Central Sales Tax Act, Non-submission of forms, dispute regarding rate 0.55 Local Sales Tax Acts of tax and other matters and Works Contract Non-submission of forms, disallowance of 85.84 Tax Act deemed inter-state sales, classification dispute and other matters

Non-submission of forms, additional demand for 32.69 pending forms, rate of tax dispute, disallowance of branch transfer, transit sale, export claim disallowance and other matters

Non-submission of forms, disallowance of transit 10.92 sales, classification dispute and other matters

Non-submission of forms, additional demand for 3.08 pending forms, disallowance of inter-state sales and other matters

Non-submission of forms, dispute related to 8.40 sales in transit and other matters

Non-submission of forms, inter-state sales, sub- 38.05 contractors turnover, rate dispute, disallowance under composition scheme and other matters Inter-state sales, classification dispute and 229.34 disallowance of deemed sales in course of imports and taxability of sub-contractors turnover

Name of the Period to which the amount Forum where disputes are relates pending

Central Sales Tax, 1997-1998 to 2001-2002 and Commercial Tax Officer Local Sales Tax 2004-2005 to 2005-2006 and Works Contract 1991 -1992,1992-1993, 1996-1997 Assistant Commissioner Tax Act and 1998-1999 to 2005-2006 (Appeals)

1989-1990,1991 -1992 to Deputy Commissioner 1997-1998 and 1999-2000 to (Appeals) 2007-2008

1993-1994 to 2005-2006 Joint Commissioner (Appeals)

2000-2001 to 2006-2007 Additional Commissioner (Appeals)

2003-2004 and 2005-2006 Commissioner (Appeals) 1987-1988 to 1991-1992 and Sales Tax Tribunal 1994-1995 to 2005-2006

1987-1988 to 2006-2007 High Court



Name of the statute Nature of the disputed dues Amount Rs.crore*

Taxability of sub-contractor turnover, rate of tax 5.78 for declared goods and inter- state rate The Central Excise Classification dispute, exemptions denied, 36.63 Act,1944 and Service valuation disputes and other matters Tax under Finance Act, Dispute on site mix concrete and PSC grinder 0.27 1994

Valuation dispute and disallowance of cenvat 215.09 against service tax on freight onward

Demand of service tax including penalty and 120.72 interest on lumpsum turnkey jobs and demand of penalty on late payment of service tax

Export rebate claim, service tax on commercial 4.11 construction service

Income Tax Act, 1961 Dispute regarding tax deducted at source at 0.03 lower rate on maintenance charges Difference in rate of tax deducted at source 1.73





Income Tax Act, 1961

Name of the Period to which the amount Forum where disputes are Statue relates pending

1991-1992,1995-1996,1997- Supreme Court 1998 and 1999-2000 to2004-2005

The Central Excise Act,1944 and Service Tax under Finance Act, 1994 2002-2003 to 2005-2006 CESTAT 1997-1998 Supreme Court

2003-2004 to 2005-2006 and Commissioner (Appeals) 2009-2010

2002-2003 and 2005-2006 CESTAT

2003-2004 to 2005-2006 High Court

Income Tax Act, 1961 2005-2006 Commissioner (Appeals) 2007-2008 and 2008-2009 Director of Income Tax (International Taxation)

*Net of pre-deposit paid in getting the stay/appeal admitted

10 The Company has no accumulated losses as at 31 March 2010 and it has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 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.

16 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.

17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

20 The Company has not raised any money by public issues during the year.

21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN

Chartered Accountants

ICAI registration no. 109982W

by the hand of

R. D. Kare

Partner Membership no. 8820

Mumbai, 17 May 2010

 
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