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Directors Report of Larsen & Toubro Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Annual Report and Audited Financial Statements for the year ended March 31, 2015.

FINANCIAL RESULTS

2014-15 2013-14 Rs. crore Rs. crore

Profit before depreciation, exceptional and extraordinary items and tax 7352.21 747183

Less: Depreciation, amortisation, impairment and obsolescence 1009.74 793.36

6342.47 6678.47

Add: Transfer from Revaluation Reserve 1.59 0.94

Profit before exceptional and extraordinary items and tax 6344.06 6679.41

Add: Exceptional items 357.16 588.50

Profit before tax 6701.22 7267.91

Less: Provision for tax 1645.04 1774.78

Profit for the period carried to Balance Sheet 5056.18 5493.13

Add: Balance brought forward from previous year 333.45 285.75

Less: Dividend paid for the previous year (including dividend distribution tax) 2.20 2.78

Less: Depreciation charged against retained earnings 86.28 -

Add: Reversal of deferred tax on depreciation charged against retained earnings 29.33 -

Balance available for disposal 5330.48 5776.10 (which the directors appropriate as follows):

Debenture Redemption Reserve 256.50 44.00

Proposed Dividend 1510.54 1320.85

Dividend Tax 134.33 77.80

General Reserve - 4000.00

1901.37 5442.65

Balance to be carried forward 3429.11 333.45

Dividend 1510.54 1320.85

The Directors recommend payment of final dividend of Rs. 16.25 per equity share of Rs. 2/- each on 92,95,62,061 shares.

CAPITAL & FINANCE

During the year under review, the Company allotted 26,49,403 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Scheme.

The Company tied up long term foreign currency loans of approximately Rs. 1,093.75 crore and issued Non-Convertible Debentures (NCDs) worth Rs. 1,150 crore. In addition, the Company also refinanced USD 200 million foreign currency loan through a Foreign Currency Convertible Bond (FCCB) issuance to reduce its interest cost. Apart from this, the Company also repaid a part of its long term foreign currency debt of USD 5.83 million.

CAPITAL EXPENDITURE

As at March 31,2015, the gross fixed and intangible assets, including leased assets, stood at Rs. 12,784 crore and the net fixed and intangible assets, including leased assets, at Rs. 7,981 crore. Capital expenditure during the year amounted to Rs. 953 crore.

DEPOSITS

There were no deposits which were due for repayment on or before March 31, 2015. All unclaimed deposits were transferred to Investor Education & Protection Fund during the year.

DEPOSITORY SYSTEM

As the members are aware, the Company's shares are compulsorily tradable in electronic form. As on March 31, 201 5, 97.77% of the Company's total paid-up capital representing 90,87,91,21 1 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The Company sends letters to all shareholders, whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year the Company has transferred a sum of Rs. 1,47,21,816 to Investor Education & Protection Fund, the amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said fund was Rs. 13,05,29,159 as on March 31, 2015.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

During the year under review, the Company subscribed / acquired equity / preference shares in various subsidiary / associate / joint venture companies. These subsidiaries include companies in general insurance, real estate, infrastructure, engineering services and manufacturing sectors. The details of investments in subsidiary companies during the year are as under:

1. During the year, the Company acquired 50% stake in L&T Infrastructure Engineering Limited (formerly known as L&T-Ramboll Consulting Engineers Limited) from the Joint Venture partner, with this acquisition, L&T Infrastructure Engineering Limited is now a wholly owned subsidiary of the Company.

2. To comply with, inter-alia the minimum public shareholding requirement in L&T Finance Holdings Limited by August 2014, the Company has sold shares of L&T Finance Holdings Limited.

The Company has formulated a policy on the identification of material subsidiaries and the same is placed on the website at http://investors.larsentoubro.com/Listing-Compliance.aspx.

C) Performance and Financial Position of each subsidiary/associate/joint venture companies:

A statement containing the salient features of the financial statement of subsidiary/associate/joint venture companies is provided on pages 342 to 350 of this Annual Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY

The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided on pages 222 to 224 of this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy and the same has been uploaded on the Company's website http://investors.larsentoubro.com/Listing-Compliance.aspx.

The Company has a process in place to periodically review and monitor Related Party Transactions.

All the related party transactions were in the ordinary course of business and at arm's length. The Audit Committee has approved all related party transactions for FY 2014-15 and estimated transactions for FY 2015-16.

There were no material transactions with the related parties during the year.

YEAR IN RETROSPECT

The gross sales and other income for the financial year under review were Rs. 59,841 crore as against Rs. 59,045 crore for the previous financial year registering an increase of 1.35%. The profit before tax from continuing operations including extraordinary and exceptional items was Rs. 6,701 crore for the financial year under review as against Rs. 7,268 crore for the previous financial year, registering a decrease of 7.8%. The profit after tax from continuing operations including extraordinary and exceptional items of Rs. 5,056 crore for the financial year under review as against Rs. 5,493 crore for the previous financial year, registering a decrease of 7.96%.

AMOUNT CARRIED TO RESERVE

The Company has not transferred any amount to the reserves during the current financial year.

DIVIDEND

The Directors recommend payment of dividend of Rs. 16.25 per equity share of Rs. 2/- each on the share capital.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required to be given under Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure 'A' forming part of this Report.

RISK MANAGEMENT POLICY

The Company has constituted a Risk Management Committee comprising of Mr. A. M. Naik, Mr. K. Venkataramanan and Mr. R. Shankar Raman and concerned heads of Independent Companies as members. Mr. A. M. Naik is the Chairman of the Committee.

The Company has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly designed framework.

A detailed note on risk management is given under financial review section of the Management Discussion and Analysis on pages 182 to 183 of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility Committee comprising of Mr. Vikram Singh Mehta, Mr. M. V. Kotwal and Mr. R. Shankar Raman as the Members. Mr. Vikram Singh Mehta is the Chairman of the Committee.

The details of the various projects and programs to be undertaken by the Company as a part of its CSR policy framework is available on its website http://investors.larsentoubro.com/Listing-Compliance.aspx.

The disclosures required to be given under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure 'D' forming part of this Report.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED/RESIGNED/RETIRED DURING THE YEAR

Mr. S. Rajgopal and Mr. S. N. Talwar, Independent Directors, retired at the conclusion of the Annual General Meeting (AGM) held on August 22, 2014.

Mr. A. K. Jain, Nominee Director representing Administrator of the 'Specified Undertaking of Unit Trust of India' (SUUTI) resigned with effect from February 10, 2015, consequent to the withdrawal of his nomination.

The Board places on record its appreciation of the immense contribution made by Mr. S. Rajgopal, Mr. S. N. Talwar and Mr. A. K. Jain to the Company.

The Board has appointed Mr. Akhilesh Krishna Gupta as an Independent Director of the Company from September 9, 2014 to September 8, 2019, subject to the approval of the shareholders. Mr. Akhilesh Gupta, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

The Board has appointed Mr. Bahram Navroz Vakil as an Independent Director of the Company from March 16, 2015 to March 1 5, 2020, subject to the approval of the shareholders. Mr. Vakil, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

The Board has appointed Mr. Swapan Dasgupta as a Director in the casual vacancy caused by the resignation of Mr. A. K. Jain as a Director representing SUUTI, with effect from April 1, 2015.

The Board has appointed Mrs. Sunita Sharma as a Director in the casual vacancy caused by the resignation of Mr. N. Mohan Raj as a Director representing 'Life Insurance Corporation of India', with effect from April 1, 2015.

The Board has appointed Mr. Thomas Mathew T. as an Independent Director of the Company from April 3, 2015 to April 2, 2020, subject to the approval of the shareholders. Mr. Mathew, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

The Board has appointed Mr. Ajay Shankar as an Independent Director of the Company from May 30, 2015 to May 29, 2020, subject to the approval of the shareholders. Mr. Ajay Shankar, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

Mr. Sushobhan Sarker, Mr. Shailendra Roy and Mr. R. Shankar Raman retire from the Board by rotation and are eligible for re-appointment at the forthcoming AGM.

The notice convening the AGM includes the proposal for appointment / re-appointment of Directors.

The terms and conditions of appointment of the Independent Directors are placed on the website of the Company http://investors.larsentoubro.com/Listing-Compliance.aspx.

The Company has also disclosed the Directors' familiarization programme on its website http://investors.larsentoubro.com/Listing-Compliance.aspx.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

This information is given in Annexure 'C' - Report on Corporate Governance forming part of this Report. Members are requested to refer to page 57 of this Annual Report.

AUDIT COMMITTEE

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Clause 49 of the Listing Agreement. The details relating to the same are given in Annexure 'C' - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 59 to 61 of this Annual Report.

COMPANY POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Company has in place a Nomination & Remuneration Committee in accordance with the requirements of the Companies Act, 2013 read with the rules made thereunder and Clause 49 of the Listing Agreement. The details relating to the same are given in Annexure 'C' - Report on Corporate Governance forming part of this Report. Members are requested to refer to pages 61 to 63 of this Annual Report.

The Committee has formulated a policy on Director's appointment and remuneration including recommendation of remuneration of the key managerial personnel and other employees, board diversity, composition and the criteria for determining qualifications, positive attributes and independence of a Director.

DECLARATION OF INDEPENDENCE

The Company has received Declarations of Independence as stipulated under Section 149(7) of the Companies Act, 2013 and Clause 49 of the Listing Agreement from Independent Directors confirming that he is not disqualified from appointing/continuing as an Independent Director. The same are also displayed on its website http://investors.larsentoubro.com/Listing-Compliance.aspx.

EXTRACT OF ANNUAL RETURN

As per the provisions of Section 92(3) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as Annexure 'G' to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms that:

a) In the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down an adequate system of internal financial control to be followed by the Company and that such internal financial controls are adequate and were operating efficiently; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)(e) of the Companies Act, 2013. For the year ended March 31, 2015, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material weakness exist. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Company's operations.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS

The Nomination & Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, Committees and individual Directors has to be made.

It includes circulation of questionnaires to all Directors for evaluation of the Board and its Committees, Board composition and its structure, its culture, its effectiveness, its functioning, information availability, etc. These questionnaires also cover specific criteria and the grounds on which all Directors in their individual capacity will be evaluated.

The Individual Directors responses on the questionnaire on the performance of the Board, Committee(s), Directors and Chairman were analyzed to arrive at unbiased conclusions.

The inputs given by all the directors were discussed in the meeting of the Independent Directors held on March 23, 2015, as per Schedule IV of the Companies Act, 2013.

The performance evaluation of the Board, Committees and Directors was also reviewed by the Nomination & Remuneration Committee.

DISCLOSURE OF REMUNERATION

The details of remuneration as required to be disclosed under the Companies Act, 2013 and the rules made thereunder is given in Annexure 'H' forming part of this Report.

The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The details of employees receiving remuneration exceeding Rs. 5 lakh per month or Rs. 60 lakh per annum is provided in Annexure 'E' forming part of this Report. In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

RECEIPT OF REMUNERATION BY MANAGING DIRECTOR FROM SUBSIDIARY COMPANY

Mr. K. Venkataramanan, Chief Executive Officer and Managing Director of the Company, is also the Managing Director of a wholly owned subsidiary, L&T Hydrocarbon Engineering Limited. During the year 2014-15, part of the remuneration received by Mr. Venkataramanan was debited to L&T Hydrocarbon Engineering Limited. Kindly refer to page 242 of this Annual Report for details.

OTHER DISCLOSURES

The disclosures relating to Employee Stock Options required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure 'B' forming part of this Report.

Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure 'C' forming part of this Report.

VIGIL MECHANISM

As per the provisions of Section 177(9) of the Companies Act, 2013, the Company is required to establish an effective Vigil Mechanism for Directors and employees to report genuine concerns.

The Company has a Whistle-blower Policy in place since 2004 to report concerns about unethical behaviour, actual/ suspected frauds and violation of Company's Code of Conduct or Ethics Policy. The Policy has been suitably modified to meet the requirements of Vigil Mechanism under the Companies Act, 2013. The policy provides for adequate safeguards against victimisation of persons who avail the same and provides for direct access to the Chairperson of the Audit Committee. The Audit Committee of the Company oversees the implementation of the Whistle-Blower Policy.

The Company has disclosed information about the establishment of the Whistle Blower Policy on its website http://investors.larsentoubro.com/corporateaovernance.aspx.

BUSINESS RESPONSIBILITY REPORTING

The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting forms a part of this Annual Report (refer pages 18 to 35).

The detailed Corporate Sustainability Report is also available on the Company's website http://www.larsentoubro.com/corporate/sustainability.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

The Auditors report to the shareholders does not contain any qualification, observation or adverse comment.

SECRETARIAL AUDIT REPORT

The Secretarial Audit Report issued by M/s. S. N. Ananthasubramanian & Co., Practicing Company Secretaries is attached as Annexure 'F' to this Report.

The Secretarial Auditor's report to the shareholders does not contain any qualification.

REPORTING OF FRAUD

The Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013.

AUDITORS

The Company's auditors M/s. Sharp & Tannan, (firm registration number 109982W) have already completed more than ten years as Statutory Auditors of the Company.

In accordance with provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, they can continue as Auditors for a further period of two years i.e up to March 31, 2017. It is proposed to appoint them from conclusion of 70th Annual General Meeting till the conclusion of 72nd Annual General Meeting.

In view of the mandatory rotation of auditor requirement and to ensure smooth transition during this period, it is also proposed to appoint M/s. Deloitte Haskins & Sells LLP as Statutory Auditors for a period of 5 continuous years i.e., from the conclusion of 70th Annual General Meeting till the conclusion of 75th Annual General Meeting of the Company.

Both the Auditors will be jointly and severally responsible during the first two financial years 2015-16 and 2016-17.

Sharp & Tannan and Deloitte Haskins & Sells LLP, have informed the Company vide letters dated May 30, 201 5 & May 26, 2015 respectively, that their appointment if made would be within the limits prescribed under section 141 of the Companies Act, 2013.

Sharp & Tannan and Deloitte Haskins & Sells LLP, have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.

Sharp & Tannan and Deloitte Haskins & Sells LLP, have also furnished a declaration confirming their independence as well as their arm's length relationship with the Company and declared that they have not taken up any prohibited non-audit assignments for the Company.

COST AUDITORS

Pursuant to the provisions of Section 148(3) of the Companies Act, 2013 the Board of Directors had appointed M/s R. Nanabhoy & Co., Cost Accountants, as Cost Auditors of the Company, for conducting the audit of cost records for the financial year ended March 31, 2015. The audit is in progress and report will be filed with Ministry of Corporate Affairs within the prescribed period.

The Board, on the recommendation of the Audit Committee, at its meeting held on May 30, 201 5, has approved the appointment of M/s R. Nanabhoy & Co., Cost Accountants as the Cost Auditors of the Company, for conducting audit of cost records for the financial year ending March 31,2016. There is an additional coverage of products under audit during the year.

A proposal for ratification of remuneration of the Cost Auditors for FY 2014-15 as well as FY 2015-16 is placed before the shareholders.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board A. M. Naik

Group Executive Chairman (DIN: 00001514)

Mumbai, May 30, 2015




Mar 31, 2013

To the Members,

The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

2012-13 2011-12 Rs. crore Rs. crore

Profit before depreciation, exceptional 7,275.56 6,954.79 and extraordinary items and tax

Less: Depreciation, amortization and 819.42 700.45 obsolescence

6,456.14 6,254.34

Add: Transfer from Revaluation Reserve 0.95 0.99

Profit before exceptional and 6,457.09 6,255.33 extraordinary items and tax

Add: Exceptional items 175.95 55.00

Profit before extraordinary items and tax 6,633.04 6,310.33

Add: Extraordinary items 78.11 -

Profit before tax 6,711.15 6,310.33

Less: Provision for Tax 1800.50 1,853.83

Profit after Tax 4,910.65 4,456.50

Add: Balance brought forward from 152.39 105.68 previous year

Less: Dividend paid for the previous 2.71 3.89 year (including dividend distribution tax)

Balance available for disposal which the 5,060.33 4,558.29 directors appropriate as follows :

Debenture Redemption Reserve 50.25 44.00

Proposed Dividend 1,138.47 1,010.46

Dividend Tax 85.86 101.44

General Reserve 3,500.00 3,250.00

4,774.58 4,405.90

Balance to be carried forward 285.75 152.39

Dividend 1,138.47 1,010.46

The Directors recommend payment of final dividend of Rs. 18.50 per equity share of Rs. 21- each on pre-bonus capital of 61,53,85,981 shares.

YEAR IN RETROSPECT

The gross sales and other income for the financial year under review were Rs. 63,322 crore as against X 55,076 crore for the previous financial year registering an increase of 15%. The Profit before tax excluding extraordinary and exceptional items was Rs. 6,457 crore and the Profit after tax excluding extraordinary and exceptional items of f 4,695 crore for the financial year under review as against Rs. 6,255 crore and Rs. 4,413 crore respectively for the previous financial year, registering an increase of 3% and 6% respectively.

TRANSFER OF HYDROCARBON BUSINESS

The Board of Directors of the Company at its Meeting held on May 22, 2013 has approved a Scheme of Arrangement between Larsen & Toubro Limited and L&T Hydrocarbon Engineering Limited, a wholly owned subsidiary of the Company ("LTHE") and their respective Shareholders and Creditors which inter alia envisages transfer of the Hydrocarbon Business undertaking along with related assets and liabilities into LTHE and other consequential matters under the provisions of Sections 391 to 394 of the Companies Act, 1956. The Appointed Date of the Scheme would be April 01, 2013. There would be no issue of Shares by LTHE to the Shareholders of the Company pursuant to transfer of Hydrocarbon business.

ISSUE OF BONUS SHARES

To commemorate the occasion of the Platinum Jubilee of the Company, the Board of Directors of the Company in its meeting held on May 22, 2013, has recommended for approval of the shareholders issue of bonus shares to the holders of equity shares of the Company in the ratio of 1:2 (i.e. one bonus equity share of Rs. 21- each for every two fully paid up equity shares of Rs. 2/- each held). The approval of the shareholders will be sought through postal ballot.

DIVIDEND

The Directors recommend payment of dividend of Rs. 18.50 per equity share of Rs. 2/- each on the pre-bonus share capital which works out to Rs. 12.33 per share post issue of bonus shares.

DEPOSITORY SYSTEM

As the members are aware, the Companys shares are compulsorily tradable in electronic form. As on March 31, 2013, 97.39% of the Companys total paid-up Capital representing 59,93,26,527 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the Depositories.

CAPITAL & FINANCE

During the year under review, the Company allotted 29,87,082 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

During the year under review, Rs. 250 crores were raised by the Company via issuance of Non-Convertible Debentures. Further, the Company has drawn down long term foreign currency loans in USD & JPY equivalent to approximately Rs. 2,660 crores.

During the year, the Company repaid a part of its long term foreign currency loans, equivalent to about Rs. 1,615 crore.

CAPITAL EXPENDITURE

As at March 31, 2013, the gross fixed and intangible assets, including leased assets, stood at Rs. 12,582 crore and the net fixed and intangible assets, including leased assets, at Rs. 8,902 crore. Capital expenditure during the year amounted to Rs. 1,505 crore.

DEPOSITS

There are no deposits which were due for repayment on or before March 31, 2013. All unclaimed deposits were transferred to Investor Education & Protection Fund during the year.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of Rs. 73,11,898/- to Investor Education & Protection Fund, the amount which was due & payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said Fund was Rs. 10,63,57,861/- as on March 31, 2013.

SUBSIDIARY COMPANIES

During the year under review, the Company subscribed to/ acquired equity shares in various subsidiary companies. The details of investments in subsidiary companies during the year are as under:

A) Shares acquired during the year:-

Name of the company No. of shares

L&T Aviation Services Private Limited 2,16,00,000

L&T-MHI Boilers Private Limited 71,40,000

L&T-MHI Turbine Generators Private Limited 4,61,55,000

L&T General Insurance Company Limited 9,00,00,000

L&T Power Development Limited 43,70,00,000

L&T Shipbuilding Limited 81,86,30,000

L&T Special Steels and Heavy Forgings Limited 6,66,00,000

Larsen Toubro Arabia LLC 7,500

L&T Metro Rail (Hyderabad) Limited 9,30,000

L&T Technology Services Limited 50,000

Audco India Limited (see Note 1) 7,81,630

B) Shares sold/transferred/reduction in face value during the year:

Name of the company No. of shares

L&T- Sargent & Lundy Limited (under buy-back) 9,09,092

L&T Plastics Machinery Private Limited (See Note 2) 1,60,00,000

L&T Power Limited (See Note 3) 51,157

Note:

1. During the year, the Company acquired 50% stake in Audco India Limited. With this acquisition, Audco India Limited is now a wholly owned subsidiary of the Company.

2. The Company has sold its entire stake in L&T Plastics Machinery Private Limited during the year.

3. During the year, the face value of the share was reduced from Rs. 30,000 per share to Rs. 10 per share.

The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011 dated February 8, 2011, has granted general exemption under Section 212(8) of the Companies Act, 1956, subject to certain conditions being fulfilled by the Company. As required under the circular, the Board of Directors has, at its meeting held on January 25, 2013, passed a resolution giving consent for not attaching the Balance Sheet of the subsidiary companies. We have also given the required information on subsidiary companies in this Annual Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiaries will be provided the same on receipt of a written request from them. These documents will be uploaded on the Companys Website viz. www.larsentoubro.com and will also be available for inspection by any shareholder at the Registered Office of the Company, on any working day during business hours.

AUDITORS REPORT

The Auditors Report to the Shareholders does not contain any qualification.

DISCLOSURE OF PARTICULARS

Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure A forming part of this Report.

OTHER DISCLOSURES

The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure B forming part of this Report.

Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure C forming part of this Report.

PERSONNEL

The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in Annexure forming part of the Report. In terms of Section 219( 1 )(b) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

BUSINESS RESPONSIBILITY REPORTING

SEBI, vide its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed companies, based on market capitalization at BSE and NSE, to include Business Reponsibility Report as part of the Annual Report.

Accordingly as per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting forms a part of this Annual Report (pages 22-37).

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES

By complying with the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company is complying with all the major clauses of the Corporate Governance Voluntary Guidelines, 2009.

We have reported in Annexure "C" to the Directors Report- Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads:

1. Nomination & Remuneration Committee

2. Other Information

3. Audit Committee

4. General Shareholders Information

CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES

MCA had released a set of guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is substantially complying with the guidelines laid down.

The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.

The activities carried out by the Company as a part of its CSR initiatives are covered in the Business Responsibility Reporting forming a part of this Annual Report. The detailed- Corporate Sustainability Report is also available on the Companys website www.larsentoubro.com.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profits of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis; and

v. that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company.

DIRECTORS

During the year under review, Mr. Ravi Uppal, Whole-time Director of the Company resigned with effect from September 15, 2012.

Mr. V.K. Magapu, Whole-time Director of the Company retired on September 30, 2012.

Mr. M. Damodaran was appointed as an Additional Director with effect from October 22, 2012.

Mr. Vikram Singh Mehta was appointed as an Additional Director with effect from October 22, 2012.

Mr. Thomas Mathew T., the Nominee Director of the Company representing Life Insurance Corporation of India, resigned with effect from November 19, 2012.

Mr. Sushobhan Sarker was appointed as the Nominee Director representing Life Insurance Corporation of India with effect from December 15, 2012 to fill the casual vacancy caused by the resignation of Mr. Thomas Mathew T. Mr. Subodh Bhargava, Mr. Shailendra Roy, Mr. R. Shankar Raman and Mr. M. M. Chitale retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting.

Mr. M. Damodaran and Mr. Vikram Singh Mehta, Additional Directors of the Company hold office up to the date of the forthcoming Annual General Meeting and are eligible for appointment.

Mrs. Bhagyam Ramani, Nominee of General Insurance Corporation of India, resigned w.e.f. May 8, 2012. Mrs. Bhagyam Ramani would have been liable for retirement by rotation in ensuing AGM. The said vacancy is not proposed to be filled at the ensuing AGM.

The notice convening the Annual General Meeting includes the proposal for appointment/re-appointment of Directors.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

The Auditors Report to the Shareholders does not contain any qualification.

AUDITORS

The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

S&T has submitted the Peer Review Certificate dated September 21, 2010 issued to them by Institute of Chartered Accountants of India (ICAl).

COST AUDITORS

Pursuant to the Cost Audit Order dated January 24, 2012 issued by the Ministry of Corporate Affairs (MCA), the Board of Directors has appointed M/s. R. Nanabhoy & Co., Cost Accountants, as Cost Auditors for audit of cost accounting records of "Engineering machinery (including electrical and electronic products)", for the Financial Year ended March 31, 2013. The appointment has been approved by the Central Government.

The Report of the Cost Auditors for the Financial Year ended March 31, 2013 is under finalization and will be filed with the MCA within the prescribed period.

Based on the Audit Committee recommendations, the Board of Directors at its meeting held on May 22, 2013, has approved the re-appointment of M/s. R. Nanabhoy & Co. as the Cost Auditors of the Company for the Financial Year ending March 31, 2014, for applicable Product Groups covered under MCA Cost Audit Order No. 52/56/CAB-2010 dated November 6, 2012. The appointment is subject to approval of the Central Government

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners/Associates.

For and on behalf of the Board

A. M. Naik

Group Executive Chairman

Mumbai, May 22, 2013


Mar 31, 2012

The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2012.

FINANCIAL RESULTS

2011-2012 2010-2011 Rs crore Rs crore

Profit before depreciation, exceptional 6,954.79 6,167.78 and extraordinary items and tax

Less: Depreciation, amortization and 700.45 600.28 obsolescence

6,254.34 5,567.50

Add: Transfer from revaluation reserve 0.99 1.06

Profit before exceptional and 6,255.33 5,568.56 extraordinary items and tax

Add: Exceptional items 55.00 262.07

Profit before extraordinary items and tax 6,310.33 5,830 63 Extraordinary items - 70.84

Profit before tax 6,310.33 5,901.47

Less: Tax expenses 1,853.83 1,943.58

Profit after tax 4,456.50 3,957.89

Add: Balance brought forward from 105.68 107.29 previous year

Less: Dividend paid for the previous 3.89 4.01 year (including additional tax on dividend)

Balance available for disposal which 4,558.29 4,061.17 the directors appropriate as follows :

Debenture redemption reserve 44.00 49.83

Proposed Dividend 1,010.46 882.84 Additional tax on dividend 101.44 112.82

General reserve 3,250.00 2,910.00

4,405.90 3,955.49

Balance to be carried forward 152.39 105.68

Dividend 1010.46 882.84 The Directors recommend payment of final dividend of Rs 16.50 per equity share of Rs 2/- each on 61,23,98,899 shares

YEAR IN RETROSPECT

The gross sales and other income for the financial year under review were Rs 55,076 crore as against Rs 45,444 crore for the previous financial year registering an increase of 21 %. The Profit before tax excluding extraordinary and exceptional items was Rs 6,255 crore and the Profit after tax excluding extraordinary and exceptional items of Rs 4,413 crore for the financial year under review as against Rs 5,569 crore and Rs 3,676 crore respectively for the previous financial year, registering an increase of 12% and 20% respectively.

DIVIDEND

The Directors recommend payment of dividend of Rs 16.50 per equity share of Rs 2/- each.

DEPOSITORY SYSTEM

As the members are aware, the Companys shares are compulsorily tradable in electronic form. As on March 31, 2012, 97.19% of the Companys total paid-up Capital representing 59,52,14,789 shares is in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the Depositories.

CAPITAL & FINANCE

During the year under review, the Company allotted 35,46,773 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

During the year under review, Rs 540 crore were drawn by the Company under the partly-paid Non-Convertible Debentures issued in 2010-2011. Further the Company tied up long term foreign currency loans equivalent to approximately USD 145 million, half of which was drawn during the year, the balance to be drawn in 2012-2013.

During the year, the Company repaid a part of the long term foreign currency loans, equivalent to about Rs 615 crore and redeemed Non-Convertible Debentures of Rs 250 crore.

CAPITAL EXPENDITURE

As at March 31, 2012, the gross fixed and intangible assets, including leased assets, stood at Rs 1 1,295 crore and the net fixed and intangible assets, including leased assets, at Rs 8,364 crore. Additions during the year amounted to Rs 1,725 crore.

DEPOSITS

7 Deposits totalling Rs 71,000 which were due for repayment on or before March 31, 2012 were not claimed by the depositors on that date. As on the date of this report, none of these deposits have been claimed and paid.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

As provided in Section 205C(2) of the Companies Act, 1956, dividend amount which was due and payable and remained unclaimed and unpaid for a period of seven years has to be transferred to Investor Education & Protection Fund. Despite the reminder letters sent to each shareholder, an amount of Rs 1,10,97,033/- remained unclaimed and was transferred to Investor Education & Protection Fund by the Company during the year. Cumulatively, the amount transferred to the said fund was Rs 9,90,45,963/- as on March 31, 2012.

SUBSIDIARY COMPANIES

During the year under review, the Company subscribed to / sold / acquired equity shares in various subsidiary companies. These subsidiaries are either SPVs executing projects secured through Build Operate Transfer (BOT) route, or holding companies making investments in companies such as those engaged in power and financial services business. The details of investments in subsidiary companies during the year are as under:

A) Shares acquired during the year:

Name of the company No. of shares

L&T Cassidian Limited 50,000

L&T Howden Private Limited 1,00,20,000

Larsen & Toubro Consultoria E Projecto Ltda 96,819

L&T General Insurance Company Limited 12,50,00,000

L&T Power Development Limited 3,20,00,000

L&T Infrastructure Development Projects Limited 6,94,08,226

PNG Tollway limited 2,19,83,000

L&T Special Steels and Heavy Forgings Pvt. Limited 11,10,00,000

L&T Kobelco Machinery Private Limited 1,02,00,000

L&T Metro Rail (Hyderabad) Limited 9,30,000

L&T Sapura Shipping Private Limited 1,72,911

L&T Infocity Limited 2,40,30,000



B) Shares sold / transferred during the year:

Name of the company No. of shares

L&T Cassidian Limited 13,000

L&T- Sargent & Lundy Limited (under buy-back) 4,36,366

L&T Rajkot Vadinar Tollway Limited 5,50,15,000

L&T Western India Tollbridge Limited 1,39,50,007

Raykal Aluminium Company Private Limited 2,250

L&T Power Limited* 7

*During the year the share capital of the Company was consolidated from 15,34,92,000 equity shares of Rs 10 each into 51,164 equity shares of Rs 30,000 each.

The Ministry of Corporate Affairs (MCA), vide its circular No. 2/2011 dated February 8, 2011, has granted general exemption under Section 212(8) of the Companies Act, 1956, subject to certain conditions being fulfilled by the Company. As required under the circular, the Board of Directors has, at its meeting held on January 23, 2012, passed a resolution giving consent for not attaching the Balance Sheet of the subsidiary companies. We have also given the required information on subsidiary companies in this Annual Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiaries will be provided the same on receipt of a written request from them. These documents will be uploaded on the Companys Website viz. www.larsentoubro.com and will also be available for inspection by any shareholder at the Registered Office of the Company, on any working day during business hours.

AUDITORS REPORT

The Auditors Report to the Shareholders does not contain any qualification.

DISCLOSURE OF PARTICULARS

Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure A forming part of this Report.

OTHER DISCLOSURES

The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure B forming part of this Report.

Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure C forming part of this Report.

PERSONNEL

The Board of Directors wishes to express its appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in Annexure forming part of the Report. In terms of Section 219(1 )(b) (iv) of the Act, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES

By complying with the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company is complying with all the major clauses of the Corporate Governance Voluntary Guidelines, 2009.

We have reported in Annexure C to the Directors Report - Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads;

1. Nomination & Remuneration Committee

2. Other Information

3. Audit Committee

4. General Shareholders Information

CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES

MCA had released a set of guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is substantially complying with the guidelines laid down.

The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.

The activities carried out by the Company as a part of its CSR initiatives are briefly described on pages 14 to 19 and 106 of the Annual Report. The detailed Corporate Sustainability Report is also available on the Companys website www.larsentoubro.com.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms;

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profits of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis; and

v. that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company.

DIRECTORS

During the year under review, Mr. K. V. Rangaswami Whole- time Director of the Company retired as Director of the Company on June 30, 2011.

Mr. S. N. Subrahmanyan was inducted as Whole-time Director of the Company w.e.f. July 1, 2011.

Mr. Y. M. Deosthalee, Chief Financial Officer and Whole- time Director of the Company retired on September 5,2011.

The Board has appointed Mr. R. Shankar Raman as Chief Financial Officer w.e.f. September 6, 2011 and as a Whole- time Director of the Company w.e.f. October 1, 2011.

Pursuant to the Articles of Association of the Company, Mr. A. M. Naik is proposed to be appointed as a Director liable to retire by rotation, with effect from October 1,2012, in the forthcoming Annual General Meeting, in view of his appointment as Executive Chairman from October 1, 2012 upto September 30, 2017.

Mr. K. Venkataramanan is appointed as Chief Executive Officer and Managing Director of the Company w.e.f. April 1, 2012 upto September 30, 2015. Pursuant to the Articles of Association of the Company he will not be liable to retire by rotation.

Mr. Shailendra Roy was inducted as a Whole-time Director of the Company w.e.f. March 9, 2012.

Consequent to her retirement from General Insurance Company Limited (GIC), Mrs. Bhagyam Ramani resigned as a Director w.e.f. May 8, 2012.

Mr. Thomas Matthew T., Mr. M.V. Kotwal, Mr. V. K. Magapu and Mr. Ravi Uppal retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting.

Mr. J. S. Bindra retires from the Board of Directors but has not sought re-appointment at the forthcoming Annual General Meeting. Accordingly, a suitable resolution will be placed before the shareholders for their approval.

The notice convening the Annual General Meeting includes the proposal for appointment/re-appointment of Directors.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

The Auditors Report to the Shareholders does not contain any qualification.

AUDITORS

The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

S&T has submitted the Peer Review Certificate dated September 21, 2010 issued to them by Institute of Chartered Accountants of India (ICAI).

COST AUDITORS

The Ministry of Corporate Affairs (MCA) has introduced The Companies (Cost Audit Report) Rules, 2011 vide its notification no. GSR 430(E) dated June 3, 2011. These rules make it mandatory for industries to appoint a Cost Auditor within 90 days of the commencement of the financial year. The Cost Audit Order No. 52/26/CAB/2010 dated January 24, 2012 covers engineering machinery (including electrical and electronic products) due to which some of the Companys manufacturing operations will get covered w.e.f. April 1, 2012.

Based on the Audit Committee recommendations at its meeting held on May 2, 2012, the Board has approved the appointment of M/s R. Nanabhoy & Co. as the Cost Auditors of the Company for the financial year 2012-2013, subject to approval of the Central Government.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board

A. M. Naik

Chairman & Managing Director

Mumbai, May 14, 2012


Mar 31, 2011

Dear Members, The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2011.

FINANCIAL RESULTS

2010-2011 2009-2010 Rs. crore Rs. crore

Profit before depreciation and tax 6,432.13 6,295.27

Less: Depreciation and amortization 600.28 415.90

5,831.85 5,87937 Add: Transfer from Revaluation Reserve 1.06 1.30

Profit before Tax and extraordinary 5,832.91 5,880.67

items Less: Provision for Tax 1,945.86 1,640.87

Profit after Tax (before extraordinary3,887.05 4,239.80 items)

Gain on extra-ordinary items (net of tax) 70.84 135.72

Profit after Tax and extraordinary items 3,957.89 4,375.52

Add: Balance brought forward from 107.29 700.50

previous year Less: Dividend paid for the previous 4.01 2.39 year (including dividend distribution tax)

Balance available for disposal which the 4,061.17 4,473.63 directors appropriate as follows:

Debenture Redemption Reserve 49.83 43.34

Proposed Dividend 882.84 752.75

Dividend Tax 112.82 110.25

General Reserve 2,910.00 3,460.00

3,955.49 4,366.34

Balance to be carried forward 105.68 107.29

Dividend

The Directors recommend payment of 882.84 752.75 final dividend of Rs. 14.50 per equity share of Rs. 2 each on 60,88,52,126 shares

YEAR IN RETROSPECT

The gross sales and other income for the financial year under review were Rs. 45,738 crore as against f 39,381 crore for the previous financial year registering an increase of 16%. The Profit before tax excluding extraordinary and exceptional items was Rs. 5,571crore and the Profit after tax excluding extraordinary and exceptional items of Rs. 3,676 crore for the financial year under review as against Rs. 4,806 crore and Rs. 3,185 crore respectively for the previous financial year, registering an increase of 16% and 15% respectively.

DIVIDEND

The Directors recommend payment of dividend of Rs. 14.50 per equity share of Rs. 2 each.

Equity Shares that may be allotted on exercise of Options granted under the Employee Stock Option Schemes as also on conversion of outstanding Foreign Currency Convertible Bonds (FCCBs) before the Book Closure for payment of dividend will rank pari passu with the existing shares and be entitled to receive the dividend.

DEPOSITORY SYSTEM

As the members are aware, the Company's shares are compulsorily tradable in electronic form. As on March 31, 2011, 96.95% of the Company's total paid-up Capital representing 59,02,88,225 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the Depositories.

CAPITAL & FINANCE

During the year under review, the Company allotted 66,56,718 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

During the year under review, the Company tied up Rs. 800 crore of debt, through multiple issuances of Non- Convertible Debentures, which have maturity of 10 years and are unsecured. Of this, f 260 crore have been drawn in 2010-11, the balance Rs. 540 crore to be drawn in 2011-12. In 2011-12, for one of the issuances, the Company has an option to not draw Rs. 270 crore and prepay Rs. 30 crore.

The debentures were issued for general corporate purposes. During the year under review, the Company repaid a part of the long term foreign currency loans, equivalent to about Rs. 430 crore.

CAPITAL EXPENDITURE

As at March 31, 2011, the gross tangible and intangible assets, including leased assets, stood atRs. 9,770.61crore and the net fixed and intangible assets, including leased assets, at Rs. 7,458.13 crore. Additions during the year amounted to Rs. 1,705.68 crore.

DEPOSITS

22 Deposits totalling Rs. 0.03 crore which were due for repayment on or before March 31, 2011, were not claimed by the depositors on that date. As on the date of this report, deposits aggregating to Rs. 0.01 crore thereof have been claimed and paid.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar & Share Transfer Agent to locate the shareholders who have not claimed their dues.

During the year under review, the Company has transferred a sum of Rs. 70,44,129 to Investor Education & Protection Fund, the amount which was due & payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said Fund was Rs. 8,79,48,930 as on March 31, 2011.

SUBSIDIARY COMPANIES

During the year under review, the Company subscribed to/acquired equity shares in various subsidiary companies. These subsidiaries are either SPVs executing projects secured through Build Operate Transfer (BOT) route, or holding companies making investments in companies such as power and financial services. The details of investments in subsidiary companies made during the year are as under:

- 11,22,51,000 equity shares of Rs. 10 each in L&T-MHI Boilers Private Limited.

- 12,75,51,000 equity shares of Rs. 10 each in L&T-MHI Turbine Generators Private Limited.

6,34,32,835 equity shares of Rs. 10 each in L&T Finance Holdings Limited (formerly L&T Capital Holdings Limited).

- 50,000 equity shares of Rs. 10 each in L&T Solar Limited.

- 3,24,00,000 equity shares of Rs. 10 each of L&T Infrastructure Development Projects Limited.

114,90,00,000 equity shares of Rs. 10 each in L&T Power Development Limited.

15,00,006 equity shares of Rs. 10 each in L&T-Gulf Private Limited.

17,10,00,000 equity shares of Rs. 10 each in L&T General Insurance Company Limited.

2,600 equity shares of Rs. 10 each in L&T Krishnagiri Walajahpet Tollway Private Limited.

100 equity shares of Rs. 10 each in L&T Devihalli Hassan Tollway Private Limited.

- 2,40,00,000 equity shares of Rs. 10 each in L&T Aviation Services Private Limited.

- 50,10,000 equity shares of Rs. 10 each in L&T Howden Private Limited.

- 34,40,000 equity shares of Rs. 10 each in L&T Metro Rail (Hyderabad) Limited (formerly L&T Hyderabad Metro Rail Private Limited).

- 9,51,38,939 equity shares of Rs. 10 each in L&T Sapura Shipping Private Limited.

6,000 equity shares of Rs. 10 each in L&T Sapura Offshore Private Limited.

50,000 equity shares of Rs. 10 each in L&T PowerGen Limited.

4,14,720 equity shares of Rs. 100 each representing 50% stake of EWAC Alloys Limited.

10,400 equity shares of Rs. 10 each in L&T Samakhiali Gandhidham Tollway Private Limited.

- 1,53,00,000 equity shares of 7 10 each in L&T Kobelco Machinery Private Limited.

- 11,10,00,000 equity shares of Rs. 10 each in L&T Special Steels and Heavy Forgings Private Limited.

Further contribution in 67,69,518 partly paid-up equity shares in L&T Infrastructure Development Projects Limited. With this contribution, these shares have become fully paid-up.

During the year, L&T-Sargent & Lundy Limited issued to the Company 13,76,065 equity shares of Rs. 10 each as bonus shares.

The Company transferred 6,52,65,000 equity shares of Rs. 10 each in L&T Halol-Shamlaji Tollway Limited to L&T Infrastructure Development Projects Limited.

The Company transferred 6,30,15,000 equity shares of Rs. 10 each in L&T Ahmedabad-Maliya Tollway Limited to L&T Infrastructure Development Projects Limited.

The Company transferred 10,000 equity shares of Rs. 10 each in L&T Transco Private Limited to L&T Infrastructure Development Projects Limited.

The Company sold 500 equity shares of Rs. 10 each in Kesun Iron & Steel Company Private Limited.

Three subsidiary companies had applied for strike off under the Easy Exit Scheme, 2010 (EES 2010). We have received communication from ROC that these companies have been struck off the register under Section 560(5) of the Companies Act, 1956 and they stand dissolved.

MCA, vide it's Circular No. 2/2011 dated February 8, 2011, has granted general exemption under Section 212(8) of the Companies Act, 1956, for not attaching annual reports of subsidiary companies subject to certain conditions being fulfilled by the Company. As required under the circular, the Board of Directors has, at its meeting held on April 6, 2011, passed a resolution giving consent for not attaching the Balance Sheet of the subsidiary companies. We have also given the required information on subsidiary companies in this Annual Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiaries will be provided the same on receipt of a written request from them. These documents will be put up on the Company's Website viz. www.larsentoubro.com and will also be available for inspection by any shareholder at the Registered Office of the Company, on any working day during business hours.

AUDITORS' REPORT

The Auditors' Report to the shareholders does not contain any qualification.

DISCLOSURE OF PARTICULARS

Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure 'A' forming part of this Report.

OTHER DISCLOSURES

The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure 'B' forming part of this Report.

Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure 'C forming part of this Report.

PERSONNEL

The Board of Directors wishes to express it's appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956, and the Rules made thereunder, are provided in Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure, Any shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES

By complying with the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company is complying with major clauses of the Corporate Governance Voluntary Guidelines, 2009.

We have reported in Annexure 'C to the Directors' Report - Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads:

1. Nomination & Remuneration Committee

2. Other Information

3. Audit Committee

4. General Shareholders' Information

CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES

MCA had released a set of guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is substantially complying with the guidelines laid down.

The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.

The activities carried out by the Company as a part of its CSR initiatives are briefly described on pages 18 to 22 and 101 of the Annual Report. The detailed Corporate Sustainability Report is also available on the Company's website www.larsentoubro.com.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profits of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis; and

v. that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company.

DIRECTORS

Mr. R. N. Mukhija and Mr. J. P. Nayak, Whole-time Directors of the Company retired at close of working hours of October 23, 2010 and March 31, 2011 respectively. The Directors record their appreciation of the valuable services rendered by Mr. R. N. Mukhija and Mr. J. P. Nayak.

The Board has inducted Mr. Ravi Uppal and Mr. S. N. Subrahmanyan as Whole-time Directors of the Company w.e.f. November 1, 2010 and July 1, 2011 respectively.

Mr. S. N. Subrahmanyan has been appointed as a Director with effect from July 1, 2011, in the casual vacancy to be caused by retirement of Mr. K. V. Rangaswami and holds office of Director until conclusion of the ensuing Annual General Meeting. Mr. K. Venkataramanan, Mr. S. Rajgopal, Mr. A. K. Jain and Mr. S. N. Talwar retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting. The notice convening the Annual General Meeting includes the proposal for re- appointment of directors.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

The Auditors' Report to the Shareholders does not contain any qualification.

AUDITORS

The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re- appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

S&T has submitted the Peer Review Certificate dated May 6, 2009 issued to them by Institute of Chartered Accountants of India (ICAI).

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and the stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board

A. M. Naik

Chairman & Managing Director

Mumbai, May 19, 2011


Mar 31, 2010

The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2010.

FINANCIAL RESULTS

2009-2010 2008-2009 Rs. crore Rs. crore

Profit before depreciation and tax 6,295.27 4,246.40

Less: Depreciation and amortization 415.90 307.30

5,879.37 3,939.10

Add: Transfer from Revaluation Reserve 1.30 1.31

Profit before Tax and extraordinary items 5,880.67 3,940.41

Less: Provision for Tax 1,640.87 1,231.21

Profit after Tax 4,239.80 2,709.20 (before extraordinary items)

Gain on extraordinary items (net of tax) 135.72 772.46

Profit after Tax and extraordinary items 4,375.52 3,481.66

Add: Balance brought forward from 100.50 104.31 previous year

Less: Dividend paid for the previous year 2.39 0.33 (including dividend distribution tax)

Balance available for disposal 4,473.63 3,585.64

which the Directors appropriate as follows:

Debenture Redemption Reserve 43.34 43.34

¦ Proposed Dividend 752.75 614.97

Dividend Tax 110.25 101.83

General Reserve 3,460.00 2,725.00

4,366.34 3,485.14

Balance to be carried forward 107.29 700.50

Dividend

The Directors recommend payment of dividend of Rs. 12.50 per equity share of Rs. 21- each on 60,21,95,408 shares 752.75 614.97

YEAR IN RETROSPECT

The gross sales and other income for the financial year under review were Rs. 39,381 crore as against Rs. 35,077 crore for the previous financial year registering an increase of 12%. The Profit before tax and extraordinary items (after interest and depreciation charges) of Rs. 5,881 crore and the Profit after tax (before extraordinary items) of Rs. 4,240 crore for the financial year under review as against Rs. 3,940 crore and Rs. 2,709 crore respectively for the previous financial year, improved by 49% and 57% respectively.

DIVIDEND

The Directors recommend payment of dividend of Rs. 12.50 per equity share of Rs. 21- each.

Equity Shares that may be allotted on exercise of Options granted under the Employee Stock Option Schemes as also on conversion of outstanding Foreign Currency Convertible Bonds (FCCBs) before the Book Closure for payment of dividend will rank pari passu with the existing shares and be entitled to receive the dividend.

DEPOSITORY SYSTEM

As the members are aware, the Companys shares are compulsorily tradable in electronic form. As on March 31, 2010, 96.58% of the Companys total paid-up Capital representing 58,16,17,239 shares are in dematenalized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization on either of the Depositories.

CAPITAL & FINANCE

During the year under review, the Company allotted 52,20,861 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes.

During the year under review, the Company raised Rs. 1,873 crore in india through the Qualified Institutions Placement route for general corporate purposes. The Company also issued unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 200 million to international investors. The FCCBs are convertible into equity shares of the Company, and if not converted, are repayable at the end of 5 years. The FCCBs were issued to finance capital expenditure, investment in overseas subsidiaries and overseas acquisitions. For the same purposes, the Company also raised a 3 year foreign currency loan of JPY 1.809 billion (USD 20 million). During the year, the Company repaid a long term Rupee loan of Rs. 85 crore.

CAPITAL EXPENDITURE

As at March 31, 2010, the gross tangible and intangible assets, including leased assets, stood at Rs. 8,164.29 crore and the net tangible and intangible assets, including leased assets, at Rs. 6,365.76 crore. Additions during the year amounted to Rs. 1,604.25 crore.

DEPOSITS

38 Deposits totalling Rs. 0.04 crore which were due for repayment on or before March 31, 2010 were not claimed by the depositors on that date. As on the date of this report, deposits aggregating to Rs. 0.01 crore thereof have been claimed and paid.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of Rs. 78,78,362 to Investor Education & Protection Fund, the amount which was due & payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. Cumulatively, the amount transferred to the said Fund was Rs. 8,09,04,801 as on March 31, 2010.

SUBSIDIARY COMPANIES

During the year under review, the Company subscribed to / acquired equity shares in various subsidiary companies. These subsidiaries are substantially either SPVs executing projects secured through BOT route, or holding companies making investments in companies such as power and financial services. The investment in Larsen & Toubro International FZE is mainly for onward investment in international ventures. The details of investments in subsidiary companies made during the year are as under:

- 137 equity shares of Dhs. 550,500 each in Larsen & Toubro International FZE for Rs. 97.58 crores at par.

10,21,91,000 equity shares of Rs. 10 each in L&T Power Limited at par.

- 9,50,00,000 equity shares of 10 each in L&T Power Development Limited at par.

- 12,50,005 equity shares of Rs. 10 each in L&T-Gulf Private Limited at par.

2,19,80,400 equity shares of Rs. 10 each in PNG Tollway Private Limited at par. 10,000 equity shares of Rs. 10 each in L&T EmSyS Private Limited for a consideration of Re. 1.

- 50,000 equity shares of Rs. 10 each in L&T Technologies Limited at par. 135,15,41,591 equity shares of Rs. 10 each in L&T

Capital Holdings Limited at par.

11,10,00,000 equity shares of Rs. 10 each in L&T Special

Steels and Heavy Forgings Private Limited at par.

6,42,55,100 equity shares of Rs. 10 each in L&T Halol- Shamlaji Tollway Private Limited at par.

5,40,05,100 equity shares of Rs. 10 each in L&T Rajkot- Vadinar Tollway Private Limited at par.

6,20,05,100 equity shares of Rs. 10 each in L&T Ahmedabad-Maliya Tollway Private Limited at par.

- 10,000 equity shares of Rs. 10 each in L&T Aviation Services Private Limited at par.

. 2,90,00,000 equity shares of Rs. 10 each in L&T General Insurance Company Limited at par.

- 2,600 equity shares of Rs. 10 each in L&T Samakhiali Gandhidham Tollway Company Private Limited at par.

1,12,50,000 equity shares of Rs. 10 each in L&T Infrastructure Development Projects Limited for a consideration of Rs. 245 crore purchased from IDF.

- Further contribution of Rs. 1.25 per share & premium of Rs. 131.25 per share on 22,50,000 partly paid-up equity shares in Larsen & Toubro Infotech Limited amounting to Rs. 29.81 crore. With this contribution, these shares have become fully paid-up with paid-up value Rs. 5/- and premium of Rs. 524.995 per share.

During the year, International Seaport Dredging Limited issued to the Company 9,420 equity shares of Rs. 10,000 each in in lieu of the 9,420 preference shares of Rs. 10,000 each and 10,000 equity shares of Rs. 10,000 each in lieu of an ICD of Rs. 10 crores. The Company subsequently sold 10,298 equity shares of Rs. 10,000 each in International Seaport Dredging Limited for a consideration of Rs. 10.30 crore.

The Company sold 15,00,000 shares representing 50% stake in Voith Paper Technology (India) Limited on September 30, 2009 for a consideration of Euro 10 million (Rs. 69.56 crore). The Company sold 10,000 equity shares of Rs. 10 each in L&T Aviation Services Private Limited at par to L&T Capital Holdings Limited.

The Companys subsidiary International Seaports Pte. Ltd., Singapore has been liquidated during the year. During the year under review, the Company also accepted the buy- back offers of the following companies:

- 65,500 equity shares of Rs. 10 each in L&T-Valdei Engineering Limited for Rs. 2.10 crore. L&T-Valdel Engineering Limited has now become a wholly owned subsidiary of the Company.

1,18,370 equity shares of Rs. 100 each in AUDCO India Limited for Rs. 27.22 crore.

The Company has applied for exemption from annexing the Audited Statement of Accounts, the Reports of the Board of Directors and

Auditors of the Subsidiary companies as required under Section 212(8) of the Companies Act, 1956 and the same is awaited.

AUDITORS REPORT

The Auditors Report to the Shareholders does not contain any qualification.

DISCLOSURE OF PARTICULARS

Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure A forming part of this Report.

OTHER DISCLOSURES

The Company has disclosed in the notes forming part of accounts the quantitative details in respect of sales, raw materials and components consumed and inventories as required vide sub-paras 3(i)(a), 3(ii)(a)(1) and (2) and 3(ii)(b) of Part II of Schedule VI to the Companies Act, 1956.

The disclosures required to be made under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, together with a certificate obtained from the Statutory Auditors, confirming compliance, is provided in Annexure B forming part of this Report, Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a Report on Corporate Governance and a certificate obtained from the Statutory Auditors confirming compliance, is provided in Annexure C forming part of this Report. PERSONNEL

The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company during the year. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in Annexure forming part of the Report. In terms of Section 219(1 ){b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES

By complying with the provisions of the Companies Act and Clause 49 of the Listing Agreement, the Company is complying with major clauses of the Corporate Governance Voluntary Guidelines, 2009.

We have reported in Annexure "C" to the Directors Report - Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads:

1. Nomination & Remuneration Committee

2. Other Information

3. Audit Committee

4. General Shareholders Information

CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES

The Ministry of Corporate Affairs has released a set of voluntary guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is proactively practicing the guidelines laid down. The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability.

Some of the activities carried out by the Company as a part of its CSR initiatives are briefly described on page 87 of the Annual Report. A broad note on the subject is featured on pages 16 to 20. The detailed Corporate Sustainability Report is also available on the Companys website www.larsentoubro.com.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profits of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis; and

v. that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company.

DIRECTORS

Mrs. Bhagyam Ramani, Mr. Subodh Bhargava, Mr. J. P. Nayak, Mr. Y. M. Desothalee, Mr. M. M. Chitale and Mr. N. Mohan Raj retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting. The Notice convening the Annual General Meeting includes the proposals for re-appointment of Directors.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

The Auditors Report to the Shareholders does not contain any qualification.

AUDITORS

The Auditors, M/s. Sharp & Tannan (S&T), hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

S&T has submitted the Peer Review certificate dated May 6, 2009 issued to them by Institute of Chartered Accountants of India (ICAI).

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and the stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board

A. M. Naik

Chairman & Managing Director

Mumbai, May 17, 2010

 
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