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Notes to Accounts of Larsen & Toubro Ltd.

Mar 31, 2016

Q(1) Contribution to political parties include:

Contribution to political parties aggregating to Rs. Nil (Previous year: Rs. 11.00 crore made during the year as follows: Indian National Congress: Rs. 5.00 crore, Bharatiya Janata Party: Rs. 5.00 crore and Shiv Sena: Rs. 1.00 crore).

Q(2) a) Amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year: Rs. 101.46 crore.

b) The amount recognised as expense in the Statement of Profit and Loss on CSR related activities is Rs. 119.89 crore, which comprises of:

Q(3) During the year, the Company transferred at book value the equity investments held by it:

a) to facilitate the merger with wholly owned subsidiary company viz. L&T Capital Company Limited:

Q(4) Figures for the previous year have been regrouped/reclassified wherever necessary.


Mar 31, 2015

A(III) Terms/rights attached to equity shares:

The Company has only one class of share capital, i.e., equity shares having face value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share.

A(VI) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31,2015 are 30,82,94,576 (previous period of five years ended March 31, 2014: 30,82,94,576 shares)

A(VII) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding last five years ended on March 31, 2015: Nil (previous period of five years ended March 31, 2014: Nil)

A(VIII) Stock option schemes

a) Terms:

i. The grant of options to the employees under the stock option schemes is on the basis of their performance and other eligibility criteria. The options are vested equally over a period of 4 years [5 years in the case of series 2006(A)], subject to the discretion of the management and fulfillment of certain conditions.

ii. Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of issue of equity shares. Management has discretion to modify the exercise period.

d) Weighted average share price at the date of exercise for stock options exercised during the period is Rs. 1554.71 (previous year: Rs. 112061) per share.

e) (i) In respect of stock options granted pursuant to the Company's stock options schemes, the intrinsic value of the options

(excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

(ii) Expense on Employee Stock Option Schemes debited to the Statement of Profit and Loss during 2014-15 is Rs. 49.11 crore (previous year: Rs. 55 88 crore) net of recoveries of Rs. 2.54 crore (previous year: Rs. 3.30 crore) from its group companies towards the stock options granted to deputed employees, pursuant to the employee stock option schemes (Note N). The entire amount pertains to equity-settled employee share-based payment plans.

f) Pursuant to the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the Company has adopted the guidance note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India and revised the method of computation of stock option compensation based on the number of grants that are expected to vest. Consequently, the charge on account of employee stock option compensation for the year ended March 31,2015 is lower and the profit before tax is higher by Rs. 13.99 crore.

g) During the year, the Company has recovered Rs. 14.60 crore (previous year: Rs. 16.01 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes.

h) Had fair value method been adopted for expensing the compensation arising from employee share-based payment plans:

(i) The employee compensation charge debited to the Statement of Profit and Loss for the year 2014-15 would have been higher by Rs. 9.10 crore (previous year: Rs. 21.30 crore) [excluding Rs. 2.05 crore (previous year: Rs. 5.45 crore) on account of grants to employees of subsidiary companies]

(ii) Basic EPS before extraordinary items would have decreased from Rs. 54.46 per share to Rs. 54.37 per share

(iii) Basic EPS after extraordinary items would have decreased from Rs. 54.46 per share to Rs. 54.37 per share

(iv) Diluted EPS before extraordinary items would have decreased from Rs. 54.10 per share to Rs. 54.00 per share

(v) Diluted EPS after extraordinary items would have decreased from Rs. 54.10 per share to Rs. 54.00 per share

i) Weighted average fair values of options granted during the year is Rs. 1190.22 (previous year: Rs. 556.06) per option

k) The balance in share option outstanding account as on March 31, 2015 is Rs. 252.56 crore (net) (previous year: Rs. 323.70 crore), including Rs. 135.98 crore (previous year: Rs. 148.22 crore) for which the options have been vested to employees as on March 31, 2015.

A(IX) The Directors recommend payment of final dividend of Rs. 16.25 per equity share of Rs. 2 each on the number of shares outstanding as on the record date.

Provision for final dividend has been made in the books of account for 92,95,62,061 equity shares outstanding as at March 31,2015 amounting to Rs. 1510.54 crore.

C(I)(b) Foreign Currency Convertible Bonds:

0.675% US$ denominated 5 years & 1 day Foreign Currency Convertible Bonds (FCCB) carried at Rs. 1250 crore as on March 31, 2015 represent 1000 bonds of US$ 2,00,000 each .The bonds are convertible into the CompanyRs.s fully paid equity shares of Rs. 2 each at a conversion price of Rs. 1916.50 per share at the option of the bond holders at any time on and after December 1,2014 up to October 15, 2019. The bonds are redeemable, subject to fulfillment of certain conditions, in whole but not in part, at the option of the Company, on or at any time after October 22, 2017 but not less than seven business days prior to the maturity date, at the principal amount together with accrued interest (calculated up to but excluding the date of redemption) on the date fixed for redemption, unless the bonds have been previously redeemed, converted or purchased and cancelled.

D(I)(a) Loans repayable on demand from banks include fund based working capital facilities viz. cash credits and demand loans. The secured portion of loans repayable on demand from banks of Rs. 57.79 crore (previousyear: Rs. 104.45 crore), short term loans and advances from the banks of Rs. 206.25 crore (previous year: Rs. 103.92 crore), working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit, are secured by hypothecation of inventories, book debts and receivables.

D(IV)(a) Other payable includes due to directors Rs. 50.61 crore (previous year: Rs. 52.90 crore) on account of commission.

(c) in various co-operative societies Rs. 12.88 crore for which share certificates are yet to be issued.

(d) in proposed co-operative societies Rs. 0.53 crore.

(ii) of Rs. 4.39 crore in respect of which the deed of conveyance is yet to be executed.

(iii) of Rs. 8.45 crore representing undivided share in properties at various locations.

4. Depreciation for the year include obsolescence Rs. 30.68 crore (previous year Rs. 17.09 crore).

5. Own assets given on operating lease have been presented separately in the schedule as per Accounting Standard (AS) 19.

6. Cost/valuation as at April 1,2014 of individual assets has been reclassified wherever necessary.

7. Out of its lease hold land at Hazira, the Company has given certain portion of land for the use of its subsidiary company. The lease deed in respect of leasehold land given to the subsidiary company is under execution.

8. With effect from April 1,2014, depreciation has been computed and provided on the basis of useful life of fixed assets as specified in Schedule II to the Companies Act, 2013 except in respect of assets specified in Note 9 below where the useful life was determined by technical evaluation, considering business specific usage, the consumption pattern of the assets and the past performance of similar assets. Consequently, the depreciation for the year ended March 31,2015 is higher and the profit before tax lower to the extent of Rs. 147.41 crore.

In respect of assets where useful life specified in Schedule II has expired as on April 1, 2014, the carrying amount of Rs. 86.28 crore before tax (Rs. 56.95 crore net of tax of Rs. 29.33 crore) was adjusted against retained earnings as on April 1,2014.

NOTE [I]

Contingent liabilities

As at 31-3-2015 As at 31-3-2014 Particulars Rs. crore Rs. crore

(a) Claims against the Company not acknowledged as debts 883.06 184.75

(b) Sales-tax liability that may arise in respect of matters in appeal 173.96 122.11

(c) Excise duty/Service Tax liability that may arise in respect of matters in appeal/challenged by the Company in WRIT 55.41 41.80

(d) Income-tax liability (including penalty) that may arise in respect of which the Company is in appeal 826.44 463.58

(e) Corporate guarantees for debt given on behalf of Subsidiary companies 8723.55 3772.85

(f) Corporate and bank guarantees for performance given on behalf of Subsidiary companies 9201.96 5627.07

Notes:

1. The Company does not expect any reimbursements in respect of the above contingent liabilities.

2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.

3. In respect of matters at (e), the cash outflows, if any, could generally occur up to twelve years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowing to which the guarantees relate.

4. In respect of matters at (f), the cash outflows, if any, could generally occur up to four years, being the period over which the validity of the guarantees extends.

5. Contingent liability with respect to interest in joint ventures - Note Q(16)

NOTE [K(I)]

Revenue from sales & service include:

(a) Rs. 1443.57 crore (previousyear: Rs. 1558.70 crore) for price variations net of liquidated damages in terms of contracts with the customers.

(b) Shipbuilding subsidy Rs. Nil (previous year: Rs. Nil) and reversal of shipbuilding subsidy of Rs. Nil (previous year: Rs. 31.54 crore)

NOTE [Q]

Q(1) The balance sheet as on March 31, 2015 and the Statement of Profit and Loss for the year ended March 31,2015 are drawn and presented as per the format prescribed under Schedule III to the Companies Act, 2013.

Q(2) Particulars in respect of loans and advances in the nature of loans as required by the listing agreement:

Q(4) Exceptional Item [Note R4]:

Exceptional item for the year ended March 31, 2015 includes gain of Rs. 357.16 crore (previous year: Rs. 588.50 crore) on sale of the Company's part stake in L&T Finance Holdings Limited, a subsidiary company.

Q(5) The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is Rs. 139.44 crore (previous year: Rs. 114.15 crore). Further, the company has incurred capital expenditure on research and development activities as follows:

(a) on tangible assets of Rs. 6.50 crore (previous year: Rs. 5.02 crore);

(b) on intangible assets being expenditure on new product development of Rs. 56.93 crore (previous year: Rs. 60.73 crore) [Note R5(b)]; and

(c) on other intangible assets of Rs. 0.69 crore (previous year: Rs. 1.20 crore).

Q(6) (a) Provision for current tax includes Rs. Nil crore in respect of income tax payable outside India (previous year: Rs. 9.74 crore)

(b) Tax effect of Rs. 9.29 crore (previous year: Rs. 2.00 crore) on account of debenture/share/foreign currency convertible bond issue expenses and premium on inflation linked debenture has been credited to securities premium account.

Q(8) Disclosures pursuant to Accounting Standard (AS) 13 "Accounting for Investments"

1. The Company has given, inter alia, the following undertakings in respect of its investments:

a. Jointly with L&T Infrastructure Development Projects Limited (a subsidiary of the Company), to the term lenders of its subsidiary companies L&T Transportation Infrastructure Limited (LTTIL):

i. not to reduce their joint shareholding in LTTIL below 51% until the financial assistance received from the term lenders is repaid in full by LTTIL and

ii. to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL.

b. To the lenders of L&T Krishnagiri Thopur Toll Road Limited (KTTL), not to dilute Company's shareholding in L&T Infrastructure Development Projects Limited below 51% until the borrowings received from the lenders is repaid in full by KTTL.

c. To Gujarat State Road Development Corporation Limited:

i. to hold in L&T Ahmedabad-Maliya Tollway Limited, L&T Halol-Shamlaji Tollway Limited and L&T Rajkot-Vadinar Tollway Limited alongwith L&T Infrastructure Development Projects Limited:

- 100% stake during the construction period;

- 51% stake for 5 years from the date of commercial operation or end of construction of the project, whichever is later; and

- 51% stake during operational period.

ii. not to divest the stake in L&T Infrastructure Development Projects Limited until the aforesaid undertakings are valid.

d. To National Highway Authority of India, to hold along with its associates minimum 51% stake in L&T Samakhiali Gandhidham Tollway Limited for a period of 2 years after the construction period.

e. To National Highway Authority of India, to hold minimum 26% stake in PNG Tollway Limited till the commercial operations date.

f. To National Highway Authority of India, to hold together with its associates in L&T Devihalli Hassan Tollway Limited, minimum 51% equity stake for a period of 2 years after construction period.

g. To National Highway Authority of India, to hold together with its associates in L&T Krishnagiri Walajahpet Tollway Limited:

(i) minimum 51% equity stake during the construction period

(ii) minimum 33% stake for 3 years from project completion date and

(iii) minimum 26% or such lower stake as may be permitted by National Highway Authority of India during remaining concession period

h. To the Security Trustee of:

(i) the lenders of PNG Tollway Limited, to hold along with L&T Infrastructure Development Projects Limited and Ashoka Buildcon Limited minimum 51% equity stake in PNG Tollway Limited, until the financial assistance received from the term lenders is repaid in full by PNG Tollway Limited. The aforesaid minimum stake can, however, be disposed off before final settlement date with prior approval of lenders;

(ii) the lenders of L&T Krishnagiri Walajahpet Tollway Limited, to hold along with L&T Infrastructure Development Projects Limited minimum 51% equity stake in L&T Krishnagiri Walajahpet Tollway Limited, until the financial assistance received from the term lenders is repaid in full. The aforesaid minimum stake can, however, be disposed off before final settlement date with prior approval of lenders.

(iii) the lenders of L&T Samakhiali Gandhidham Tollway Limited, to hold along with L&T Infrastructure Development Projects Limited minimum 51% equity stake in L&T Samakhiali Gandhidham Tollway Limited, until the financial assistance received from the term lenders is repaid in full by L&T Samakhiali Gandhidham Tollway Limited. The aforesaid minimum stake can, however, be disposed off before final settlement date with prior approval of lenders;

(iv) the lenders of L&T Metro Rail (Hyderabad) Limited, to hold along with L&T Infrastructure Development Projects Limited minimum 51% equity stake and retain management control in L&T Metro Rail (Hyderabad) Limited until the financial assistance received from the term lenders is repaid in full. The aforesaid minimum stake can, however, be disposed off before final settlement date with prior approval of lenders;

(v) the lenders of L&T Sapura Shipping Private Limited, not to sell or transfer equity stake without prior approval;

(vi) L&T Aviation Services Private Limited, to hold atleast 51% stake, directly or indirectly, in L&T Aviation Services Private Limited, until any amount is outstanding under the Credit Facility Agreement.

i. To the Government of Telangana (erstwhile Government of Andhra Pradesh) with respect to shareholding in L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited -

(i) 51% stake till the second anniversary of the commercial operation date (COD) of the project;

(ii) 33% stake till the third anniversary of the COD of the project;

(iii) 26% stake (or such lower proportion as may be permitted by the Government of Telangana (erstwhile Government of Andhra Pradesh), till the remaining concession period.

j. To hold certain minimum stake in its subsidiary companies namely, L&T-MHPS Boilers Private Limited and L&T-MHPS Turbine Generators Private Limited. These undertakings have been given to the customers/potential customers of the Company and customers/potential customers of L&T-MHPS Boilers Private Limited. The undertakings will remain valid till the end of defect liability period or till such period as prescribed in the related bid documents/contracts.

k. To hold 15,899 shares comprising 9.85% of the issued capital of International Seaport Dredging Limited till January 24, 2016.

l. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than 51% stake in L&T Seawoods Limited (formerly known as L&T Seawoods Private Limited) until CIDCO executes the lease deed for land in favour of L&T Seawoods Limited (formerly known as L&T Seawoods Private Limited).

m. To the lenders of L&T Seawoods Limited (formerly known as L&T Seawoods Private Limited), to maintain a minimum 51% stake in L&T Seawoods Limited (formerly known as L&T Seawoods Private Limited) until any amount is outstanding towards banking credit facilities.

n. To the debenture trustee of L&T Shipbuilding Limited, to maintain atleast 26% stake in L&T Shipbuilding Limited, until any amount is outstanding towards the debentures.

o. To the lender of L&T Shipbuilding Limited, to maintain minimum 76% stake in L&T Shipbuilding Limited, until any amount is outstanding towards the working capital loan.

p. To the joint venture partner in L&T Howden Private Limited, to not sell, transfer or dispose of any stake in L&T Howden Private Limited till December 17, 2017 (90 months from the date of incorporation).

Q(9) Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits".

i. Defined contribution plans: [Note R(6)(b)(i)] Amount of Rs. 82.64 crore (previous year Rs. 74.85 crore) is recognised as an expense and included in "employee benefits expense" (Note N) in the Statement of Profit and Loss Account.

ii. Defined benefit plans: [Note R(6)(b)(ii)]

h) General descriptions of defined benefit plans:

1. Gratuity Plan:

The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The company's scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material, is unfunded and managed within the Company.

2. Post-retirement medical care plan:

The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement.

3. Company's pension plan:

In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement.

4. Trust managed provident fund plan:

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement, whichever is earlier. The benefit under this plan vests immediately on rendering of service.

The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the statement of Profit and Loss as actuarial loss. Any loss/gain arising out of the investment risk and actuarial risk associated with the plan is also recognised as expense or income in the period in which such loss/gain occurs. Further, the provision of Rs. 27.55 crore created in 2013-14 based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan, has been reversed to the extent of Rs. 22.69 crore in the current year, because the balance in surplus account of the fund is higher than the interest obligation of Rs. 27.78 crore as on March 31, 2015.

c) Segment reporting: segment identification, reportable segments and definition of each reportable segment:

i) Primary/secondary segment reporting format:

[a] The risk-return profile of the Company's business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

[b] In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly.

ii) Segment identification:

Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company.

iii) Reportable segments:

Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 "Segment Reporting".

iv) Segment composition:

- Infrastructure segment comprises engineering and construction of building and factories, transportation infrastructure, heavy civil infrastructure, power transmission & distribution and water & renewable energy projects.

- Power segment comprises turnkey solutions for Coal-based and Gas-based thermal power plants including power generation equipment with associated systems and/or balance-of-plant packages.

- Metallurgical & Material Handling segment comprises turnkey solutions for ferrous (iron & steel making) and non-ferrous (aluminium, copper, lead & zinc) metal industries, bulk material & ash handling systems in power, port, steel and mining sector including manufacture and sale of industrial machinery and equipment.

- Heavy Engineering segment comprises manufacture and supply of custom designed, engineered critical equipment & systems to core sector industries like Fertiliser, Refinery, Petrochemical, Chemical, Oil & Gas, Thermal & Nuclear Power, Aerospace and Defence.

- Electrical & Automation segment comprises manufacture and sale of low and medium voltage switchgear components, custom built low and medium voltage switchboards, electronic energy meters/protection (relays) systems and control & automation products.

- Others segment includes realty, shipbuilding, marketing and servicing of construction & mining machinery and parts thereof, manufacture and sale of rubber processing machinery & castings. Others also included integrated engineering services, manufacture and marketing of industrial valves and cutting equipment (up to the date of transfer) in the previous year.

v) The businesses of marketing and servicing of construction & mining machinery and parts thereof, manufacture and sale of rubber processing machinery & castings which was hitherto reported as the Machinery and Industrial Products segment have been grouped under "Others" segment during the year based on internal restructuring. The figures pertaining to the previous year have been regrouped and restated for proper comparison.

The businesses of manufacture and marketing of industrial valves and cutting equipment (up to the date of transfer) which were reported as part of the Machinery and Industrial Products segment in the previous year have also been grouped under "Others" segment in the previous year.

vi) Pursuant to the business transfer agreement dated March 15, 2014, the Company has transferred at book value to its wholly owned subsidiary L&T Technology Services Limited, the business of integrated engineering services as a going concern effective April 1,2014. The same was hitherto reported as part of the "Others" segment [Note Q(15)].

Q(12) Disclosure in respect of Leases pursuant to Accounting Standard (AS 19) "Leases"

(i) Where the Company is a Lessor:

a. The Company had given on finance leases certain items of plant and equipment. The leases had a primary period that is fixed and non-cancellable. The leases were cancellable upon payment by the lessee of an additional amount such that, at inception, continuation of the lease was reasonably certain. There were no exceptional/restrictive covenants in the lease agreement.

(ii) Where the Company is a lessee: a) Operating leases:

i. The Company had taken various commercial premises and plant and equipment under cancellable operating leases. Those lease agreements were normally renewed on expiry.

[b] The lease agreements provided for an option to the Company to renew the lease period at the end of the non-cancellable period. There were no exceptional/restrictive covenants in the lease agreements.

iii. Lease rental expense in respect of operating leases: Rs. 87.14 crore (previous year: Rs. 102.18 crore).

iv. Contingent rent recognised in the Statement of Profit and Loss: Rs. Nil (previous year: Nil).

Q(15) Pursuant to the business transfer agreement dated March 15, 2014, the Integrated Engineering Service business of the Company has been transferred at book value to a wholly owned subsidiary L&T Technology Services Limited as a going concern with effect from April 1, 2014 for a lump sum consideration of Rs. 549.49 crore.

Q(17) Disclosures pursuant to Accounting Standard (AS) 29 "Provisions, Contingent Liabilities and Contingent Assets":

b) Nature of provisions:

i. Product warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at March 31, 2015 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of five years from the date of Balance Sheet.

ii. Expected tax liability in respect of indirect taxes represents mainly the differential sales tax liability on account of non- collection of declaration forms.

iii. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.

iv. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under (AS) 7 (Revised) "Construction Contracts".

c) Disclosure in respect of contingent liabilities is given as part of Note (I) to the Balance Sheet.

Q(18) In line with the Company's risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges.

Q(27) Contribution to political parties include:

Contribution to political parties aggregating to Rs. 11.00 crore (previous year: Rs. Nil) made during the year as follows: Indian National Congress: Rs. 5.00 crore, Bharatiya Janata Party: Rs. 5.00 crore and Shiv Sena Rs. 1.00 crore.

Q(28) a) Amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year Rs. 106.21 crore.

Q(29) Figures for the previous year have been regrouped/reclassified wherever necessary.


Mar 31, 2013

A(1) Revenue from sales & service include:

(a) Rs. 691.63 crore (previous year: Rs. 298.88 crore) for price variations net of liquidated damages in terms of contracts with the customers.

(b) Shipbuilding subsidy Rs. 10.02 crore (previous year: Z 2.09 crore) and reversal of shipbuilding subsidy of Rs. 7.22 crore (previous year : f 18.24 crore). .

[B(l)] Miscellaneous income includes recoveries from subsidiary, joint venture and associate companies towards directly attributable expenses incurred on employees deputed to these companies. Such expenses, the details of which are given hereunder, have been netted off from miscellaneous income.

C(1) The Balance Sheet as on March 31, 2013 and the Statement of Profit and Loss for the year ended March 31, 2013 are drawn and presented as per the new Schedule VI to the Companies Act, 1956.

C(2) Particulars in respect of loans and advances in the nature of loans as required by the listing agreement:

C(3) Extraordinary and Exceptional Items [Note R(4)]:

(a) Exceptional items for the year ended March 31, 2013 include the following:

(i) Expenses incurred amounting to Rs. 38.34 crore on voluntary retirement scheme;

(ii) Gain of Rs. 214.29 crore on sale of the Companys stake in L&T Plastics Machinery Private Limited, a subsidiary company. Exceptional items for the year ended March 31, 2012 included profit of Rs. 55.00 crore on sale of the Companys part stake in Raykal Aluminium Company Private Limited, a subsidiary company.

(b) Extraordinary items during the year ended March 31, 2013 represent the following:

(i) Reversal of Rs. 52.89 crore (previous year: Rs. Nil) being provision made in earlier years in respect of the Companys Investment in shares of Satyam Computer Services Limited (SCSL);

(ii) Gain of Rs. 25.22 crore (net of tax Rs. 18.72 crore) on sale of the Companys Medical Equipment Business unit. Tax of Rs. 6.50 crore included under current tax.

C(4) The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is Rs. 98.17 crore (previous year: Rs. 83.33 crore). Further, the Company has incurred capital expenditure on research and development activities as follows:

(a) on tangible assets of Rs. 12.45 crore (previous year: Rs.17.17 crore);

(b) on intangible assets being expenditure on new product development of Rs. 43.76 crore (previous year: Rs. 38.58 crore) [Note 5(b)]; and

(c) on other intangible assets of Rs. 0.96 crore (previous year: Rs.1.11 crore).

In addition, the Company has carried out work of a developmental nature of Rs. 21.27 crore (previous year: Rs. 13.06 crore) which is partially/fully paid for by the customers.

C(5) (a) Provision for current tax includes Rs. 20.25 crore in respect of income tax payable outside India (previous year: Rs. 8.32 crore)

(b) Tax effect of t 0.17 crore (previous year: Rs. 0.03 crore) on account of debenture issue expenses has been credited to securities premium account.

C(6) Disclosures pursuant to Accounting Standard (AS) 13 "Accounting for Investments"

1. The Company has given, inter alia, the following undertakings in respect of its investments:

a. Jointly with L&T Infrastructure Development Projects Limited (a subsidiary of the Company), to the term lenders of its subsidiary company L&T.Transportation Infrastructure Limited (LTTIL):

i. not to reduce their joint shareholding in LTTIL below 51 % until the financial assistance received from the term lenders is repaid in full by LTTIL; and

ii. to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL .

b. To the lenders of L&T Krishnagiri Thopur Toll Road Limited, not to dilute Companys shareholding in L&T Infrastructure Development Projects Limited below 51 %.

c. To Gujarat State Road Development Corporation Limited:

i. to hold in L&T Ahmedabad-Maliya Tollway Limited, L&T Halol-Shamlaji Tollway Limited and L&T Rajkot-Vadinar Tollway Limited along with L&T Infrastructure Development Projects Limited:

- 100% stake during the construction period;

- 51 % stake for 5 years from the date of commercial operation or end of construction of the project, whichever . is later; and

- 51% stake during operational period.

ii. not to divest the stake in L&T Infrastructure Development Projects Limited until the aforesaid undertakings are valid.

d. To National Highway Authority of India, to hold together with its associates in L&T Samakhiali Gandhidham Tollway Limited minimum 51 % stake for a period of 2 years after the construction period.

e. To National Highway Authority of India, to hold minimum 26% stake in PNG Tollway Limited till the commercial operations date.

f. To National Highway Authority of India, to hold together with its associates, in L&T Devihalli Hassan Tollway Limited, minimum 51 % stake for a period of 2 years after construction period.

g. To National Highway Authority of India, to hold together with its associates in L&T Krishnagiri Walajahpet Tollway Limited:

i. minimum 51 % stake during the construction period

ii. minimum 33% stake for 3 years from project completion date and

iii. Minimum 26% or such lower stake as may be permitted by National Highway Authority of India during remaining concession period.

h. To the lenders of PNG Tollway Limited, to hold together with L&T Infrastructure Development Projects Limited and Ashoka Buildcon Limited, minimum 51% stake in PNG Tollway Limited, until final settlement date.

i. To the Security Trustee of the lenders of L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited (a subsidiary of the Company) at least 51 % stake till final settlement date.

j. To the Government of Andhra Pradesh (GoA) with respect to shareholding in L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited -

i. 51 % stake till the second anniversary of the commercial operation date (COD) of the project;

ii. 33% stake till the third anniversary of the commercial operation date of the project;

iii. 26% stake (or such lower proportion as may be permitted by the GoA), till the remaining concession period.

k. Jointly with L&T-MHI Turbine Generators Private Limited (a subsidiary of the Company) and Mitsubishi Heavy Industries Limited (joint venture partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable financial support for the successful execution of APPDCL 2x800 MW Power Project - Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh.

I. To hold certain minimum stake in its subsidiary companies namely, L&T-MHI Boilers Private Limited and L&T-MHI Turbine Generators Private Limited. These undertakings have been given to the customers/potential customers of the Company, as also those of L&T-MHI Boilers Private Limited. The undertakings will remain valid till the end of defect liability period or till such period as prescribed in the related bid documents/contracts, m. To the Security Trustee of the lenders of L&T Sapura Shipping Private Limited, not to sell or transfer equity stake without prior approval.

n. To hold 15,899 shares comprising 9.85% of the issued capital of International Seaport Dredging Limited till January 24, 2016.

o. To the Security Trustee of L&T Aviation Services Private Limited, to hold at least 51% stake, directly or indirectly, in L&T Aviation Services Private Limited, until any amount is outstanding under the Credit Facility Agreement, p. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than 51 % stake in L&T Seawoods Private Limited (LTSPL) until CIDCO executes the lease deed for land in favour of LTSPL.

q. To the lenders of L&T Seawoods Private Limited, to maintain a minimum 51 % stake in L&T Seawoods Private Limited, until any amount is outstanding under banking credit facilities.

r. To the debenture trustee of L&T Shipbuilding Limited, to maintain at least 26% stake in L&T Shipbuilding Limited, until any amount is outstanding under the debentures.

C(7) Disclosure pursuant to Accounting Standard (AS) -15 (Revised) "Employee Benefits.

i. Defined contribution plans: [Note R(6)(b)(i)) Amount of Rs. 103.80 crore [including Rs.17.17 crore in respect of earlier years] (previous year: Rs. 74.52 crore) is recognised as an expense and included in "employee benefits expense" (Note N) in the Statement of Profit and Loss.

ii. Defined benefit plans: [Note R(6)(b)(ii)]

a) The amounts recognised in Balance Sheet are as follows:

C(8) Disclosures pursuant to Accounting Standard (AS) 17 "Segment Reporting"

a) Information about business segments (information provided in respect of revenue items for the year ended March 31, 2013 and in respect of assets/liabilities as at March 31, 2013 denoted as "CY" below, previous year denoted as "PY")

C(9) Disclosure in respect of Leases pursuant to Accounting Standard (AS 19) "Leases"

(i) Where the Company is a Lessor:

a. The Company has given on finance leases certain items of plant and equipment. The leases have a primary period that is fixed and non-cancellable. The leases are cancellable upon payment by the lessee of an additional amount such that, at inception, continuation of the lease is reasonably certain. There are no exceptional/restrictive covenants in the lease agreement.

b. The total gross investment in these leases as on March 31, 2013 and the present value of minimum lease payments receivable as on March 31, 2013 is as under:

(ii) Where the Company is a lessee: a) Finance leases:

i. [a] Assets acquired on finance lease mainly comprise plant and equipment, vehicles and personal computers. The leases have a primary period, which is fixed and non-canceliable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals (b) rates of depreciation under the Income Tax Act, 1961 and (c) change in the lessors cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements.

C(10) In line with the Companys risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges.

C(11) (a) The Company has adopted a new accounting policy [Note R(18)(f)] for separate accounting of embedded derivatives with effect from April 1, 2012, for more appropriate presentation of the financial statements. The profit before tax is lower by Rs. 55.36 crore pursuant to adoption of the new accounting policy for separate accounting of embedded derivatives.

(b) The Company has changed the accounting policy for recognition of revenue from real estate development transactions pursuant to the guidance note on accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India [Note R(3)(A)(a)(iii)]. The profit before tax of the Company is higher byRs. 2.39 crore pursuant to change in the accounting policy of revenue recognition for real estate development transactions.

C(12) There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2013.

C(13) Figures for the previous year have been regrouped/reclassified wherever necessary.


Mar 31, 2012

1 Contingent liabilities

As at 31-3-2012 As at 31-3-2011

Particulars - -

Rs crore Rs crore

(a) Claims against the Company not acknowledged as debt 198.15 263.47

(b) Sales-tax liability that may arise in respect of matters in appeal 107.04 194.31

(c) Excise duty/service tax liability that may arise in respect of matters

in appeal/challenged by the Company in WRIT 28.59 11.95

(d) Income-tax liability (including penalty) that may arise in respect of which the Company is in appeal 198.38 1.95

(e) Corporate guarantees given on behalf of Subsidiary Companies 1570.47 775.66

Notes:

1. The Company does not expect any reimbursements in respect of the above contingent liabilities.

2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.

3. In respect of matters at (e), the cash outflows, if any, could generally occur up to eight years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowing to which the guarantees relate.

2(1) Revenue from sales & service includes:

(a) Rs 320.47 crore (previous year: Rs 352.04 crore) for price variations net of liquidated damages in terms of contracts with the customers.

(b) Ship building subsidy Rs 2.09 crore (previous year: Rs 32.16 crore) and reversal of shipbuilding subsidy of Rs18.24 crore (previous year: f nil).

Q(1) The Balance Sheet as on March 31, 2012 and the Statement of Profit and Loss for the year ended March 31, 2012 are drawn and presented as per the new format prescribed under Schedule VI to the Companies Act, 1956 applicable for the financial year commencing from April 1, 2011. The amounts pertaining to the previous year have been recast to conform with the new format.

2(2) Exceptional Items [accounting policy no.R(4)]:

Exceptional items for the year ended March 31, 2012 include profit of Rs 55.00 crore on sale of the Companys part stake in Raykal Aluminium Company Private Limited.

Exceptional items for the year ended March 31, 2011 include the following:

a) Profit of Rs 25.00 crore on sale of the Companys part stake in Kesun Iron & Steel Company Private Limited, a subsidiary of the Company to a strategic partner.

b) Gain of Rs 213.04 crore on sale of the Companys entire stake in L&T-Case Equipment Private Limited, an associate company.

c) Part reversal of provision of Rs 24.03 crore made in the earlier years for diminution in the value of investment in the International Seaport Dredging Limited, pursuant to divestment of the Companys part stake in the said company.

2(3) The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is Rs 78.14 crore (previous year: 168.26 crore). Further, the Company has incurred capital expenditure on research and development activities as follows:

(a) on tangible assets of Rs 17.17 crore (previous year: f 16.67 crore)

(b) on intangible assets being expenditure on new product development of 138.58 crore (previousyear: Rs22.72) [accounting policy no.R(5)(b)) and

(c) on other intangible assets of Rs 1.11 crore (previousyear: f 1.33 crore).

In addition, the Company has carried outwork of a developmental nature of Rs 13.06 crore (previous year: Rs 16.46) which is partially/ fully paid for by the customers.

2(4) (a) Provision for current tax includes:

i. Rs 8.32 crore in respect of income tax payable outside India (previous year: 7 3.58 crore)

ii. Rs nil being provision for income tax in respect of earlier years (previous year: Rs 87.39 crore).

(b) Tax effect of Rs 0.03 crore (previous year: Rs 0.62 crore) on account of debenture issue expenses has been credited to securities premium account.

2(5) Disclosures pursuant to Accounting Standard (AS) 13 "Accounting for Investments"

The Company has given, inter alia, the following undertakings in respect of its investments:

a. Jointly with L&T Infrastructure Development Projects Limited (a subsidiary of the Company), to the term lenders of its subsidiary companies L&T Transportation Infrastructure Limited (LTTIL):

i. not to reduce their joint shareholding in LTTIL below 51 % until the financial assistance received from the term lenders is repaid in full by LTTIL and

ii. to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL.

b. To the debenture holders of L&T Infrastructure Development Projects Limited (a subsidiary of the Company) and to the lenders of its subsidiaries L&T Panipat Elevated Corridor Limited and L&T Krishnagiri Thopur Toll Road Limited, not to dilute Companys shareholding below 51 %.

c. To National Highway Authority of India, to hold minimum 26% stake in L&T Samakhiali Gandhidham Tollway Limited till 180 days from the date of concession agreement. However, the Company has decided to hold this stake for a period of 2 years after the construction period.

d. To National Highway Authority of India, to hold minimum 26% stake in PNG Tollway Limited till the commercial operations date.

e. To Gujarat State Road Development Corporation Limited:

(i) to hold in L&T Ahmedabad-Maliya Tollway Limited and in L&T Halol - Shamlaji Tollway Limited alongwith L&T Infrastructure Development Projects Limited:

- 100% stake during the construction period;

- 51 % stake for 5 years from the date of commercial operation or end of construction of the project, whichever is later; and

- 51 % stake during operational period.

(ii) not to divest the stake in L&T Infrastructure Development Projects Limited until the aforesaid undertakings are valid.

f. To Gujarat State Road Development Corporation Limited, to hold in L&T Rajkot - Vadinar Tollway Limited:

- 100% stake during the construction period;

- 51 % stake for 5 years from the date of commercial operation or end of construction of the project, whichever is later; and

- 51 % stake during operational period.

g. To the lenders of L&T Ahmedabad-Maliya Tollway Limited (a subsidiary of the Company), not to divest control directly or indirectly without the prior approval of the lenders or Gujarat State Road Development Corporation Limited.

h. To the lenders of L&T Rajkot - Vadinar Tollway Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited.

i. Jointly with L&T-MHI Turbine Generators Private Limited (a subsidiary of the Company) and Mitsubishi Heavy Industries Limited (JV partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable financial support for the successful execution of APPDCL 2x800 MW Power Project-Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh.

j. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than 51 % stake in L&T Seawoods Private Limited (LTSPL) until CIDCO execute the lease deed for land in favour of LTSPL.

k. To National Highway Authority of India, to hold together with its associates in L&T Devihalli Hassan Tollway Limited, minimum 51 % equity stake for a period of 2 years after construction period.

I. To National Highway Authority of India, to hold together with its associates in L&T Krishnagiri Walajanpet Tollway Limited:

(i) minimum 51 % equity stake during the construction period

(ii) minimum 33% stake for 3 years from project completion date and

(iii) minimum 26% or such lower stake as may be permitted by National Highway Authority of India during remaining concession period

m. To the lenders of PNG Tollway Limited, to hold minimum 51 % equity stake PNG Tollway Limited, until final settlement date.

n. To the security trustee of the lenders of L&T Sapura Shipping Private Limited, not to sell or transfer equity stake without prior approval.

o. To hold 15,899 shares comprising 9.85% of the issued capital of International Seaport Dredging Limited till January 24, 2016.

p. To the Security Trustee of the lenders of L&T Metro Rail (Hyderabad) Limited, to hold and maintain along with L&T Infrastructure Development Projects Limited (a subsidiary of the Company) at least 51 % stake till final settlement date.

q. To hold certain minimum stake in its subsidiary companies namely, L&T - MHI Boilers Private Limited and L&T-MHI Turbine Generators Private Limited. These undertakings have been given to the customers/potential customers of the Company, as also those of L&T-MHI Boilers Private Limited. The undertakings will remain valid till the end of defect liability period or till such period as prescribed in the related bid documents/contracts.

r. To the Security Trustee of L&T Aviation Services Private Limited, to hold at least 51 % stake, directly or indirectly, in L&T Aviation Services Private Limited, until any amount is outstanding under the Credit Facility Agreement.

s. To the lenders of L&T Seawoods Private Limited, to maintain a minimum 51 % stake in L&T Seawoods Private Limited, until any amount is outstanding under banking credit facilities.

Q(8) Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits".

i. Defined contribution plans: [accounting policy no.R(6)(b)(i)] Amount of Rs 74.52 crore (previous year: Rs 89.62 crore) is recognised as an expense and included in "employee benefits expense" (note no. N) in the Statement of Profit and Loss.

ii. Defined benefit plans: {accounting policy no.R(6)(b)(ii)]

* Basis used to determine the overall expected return:

The trust formed by the Company manages the investments of provident funds and gratuity fund. Expected return on plan assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year. Refer Note no.Q(8)(ii)(f)(7) below.

The Company expects to fund Rs 48.56 crore (previous year: Rs 27.11 crore) towards its gratuity plan and Rs 84.45 crore (previous year: Rs 78.63 crore) towards its trust-managed provident fund plan during the year 2012-2013.

# Employers and employees contribution (net) for March is paid in April.

$ Employers contribution to provident fund

~ Amount transferred (to)/from subsidiary & Associate companies and transferred out on sale of business undertakings (net) Rs (2.03) crore (previous year: Rs (1.73) crore)

3 Attrition rate:

a) For post-retirement medical benefit plan & Company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups.

b) For gratuity plan the attrition rate varies from 1 % to 6% (previous year: 1 % to 6%) for various age groups.

4 The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

5 The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial losses.

6 The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5% p.a.

7 A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation:

General descriptions of defined benefit plans:

1. Gratuity plan:

The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Companys scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material is unfunded and managed within the Company.

2. Post-retirement medicai benefit plan:

The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement.

3. Companys pension plan:

in addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement.

4. Trust managed provident fund plan:

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.

The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognized immediately in the Statement of Profit and Loss as actuarial loss. Any loss/gain arising out of the investment risk and actuarial risk associated with the plan is also recognized as expense or income in the period in wnich such ioss/gain occurs. Further, an amount of t 18.68 crore has been provided based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan.

8 Disclosures pursuant to Accounting Standard (AS) 17 "Segment Reporting1

a) Information about business segments (information provided in respect of revenue items for the year ended March 31,2012 and in respect of assets/liabilities as at March 31, 2012 denoted as "CY" below, previous year denoted as "PY").

b) Segment reporting: segment identification, reportable segments and definition of each reportable segment:

i) Primary/secondary segment reporting format:

[a] The risk-return profile of the Companys business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

[b] In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly.

ii) Segment identification:

Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company.

iii) Reportable segments:

Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 "Segment Reporting" issued by the Institute of Chartered Accountants of India.

iv) Segment composition:

- Engineering & construction Segment comprises execution of engineering and construction projects in India/abroad to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning, procurement/construction and project management.

- Electrical & electronics Segment comprises manufacture and sale of low and medium voltage switchgear components, custom-built switchboards, custom built low and medium voltage switchboards, electronic energy meters/protection (relays) systems, control & automation products, medical equipment.

- MachinerySt industrial Products Segment comprises manufacture and sale of industrial machinery & equipment, manufacture and marketing of industrial valves, construction equipment and welding/industrial products.

- Others include property development and integrated engineering services.

vi. Notes to related party transactions:

a) The Company has a sole selling agreement with L&T-Komatsu Limited (LTK), an associate company, valid for the period of 5 years from October 16, 2006 in line with Government of India (Gol) approval letter dated May 28, 2007. The appointment shall be in effect as long as the joint venture agreement between the parent Company and M/s Komatsu Asia Pacific Pte. Limited, Singapore (which is a subsidiary of Komatsu Limited, Japan) remains in force, subject to approval of Gol, under section 294 AA of the Companies Act, 1956. As per the terms of the agreement, the Company is the exclusive agent of L&T-Komatsu Limited to market LTK machines and provide product support. Pursuant to the aforesaid agreement, LTK is required to pay commission to the Company at specified rates on the sales effected by the Company.

b) The Company had the Selling Agency Agreement (SAA) from October 1, 2003 with EWAC Alloys Limited (EWAC). a wholly owned subsidiary company till June 30, 2011, As per the terms of agreement, the Company through its Welding Products Business Unit (WPBU), was authorised to purchase and sell the products in accordance with the prices and otner conditions stipulated therein. The Company, effective July 1,2011 transferred the WPBU to EWAC along-with ali employees on the asset transfer basis. WPBU now functions as the marketing arm of EWAC. Pursuant to transfer of WPBU to EWAC, the SAA stands terminated.

Note: The financial impact of the agreements mentioned at (a) to (b) above has been included in/disclosed vide Note no.QdOHiin supra.

QC11) Disclosure in respect of Leases pursuant to Accounting Standard (AS 19) "Leases"

ii Where the Company is a Lessor;

a. The Company has given on finance leases certain items of plant and equipment. The leases have a primary period that is fixed and non-cancellable. The leases are cancellable upon payment by the lessee of an additional amount such that, at inception, continuation of the iease is reasonably certain. There are no exceptional/restrictive covenants in the lease agreement.

ii) Where the Company is a lessee:

a) Finance leases.

i. [a] Assets acquired on finance lease mainly comprise plant and equipment, venicies and personal computers. The leases have a primary period, which is fixed and non-cancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the iease rentals (b) rates of depreciation under tne Income Tax Act, 1961 and (c) change in the lessors cost of borrowings. There are no exceptional/restrictive covenants in the iease agreements.

ii. Contingent rent recognised/(adjusted) in the Statement of Profit and Loss in respect of finance leases: Rs nil (previous year: Rs nil).

b) Operating leases:

i. The Company has taken various commercial premises and plant and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry.

[b] The lease agreements provide for an option to the Company to renew the lease period at the end of the non- cancellable period. There are no exceptional/restrictive covenants in the lease agreements.

iii. Lease rental expense in respect of operating leases: Rs 89.37 crore (previous year: Rs 76.70 crore).

iv. Contingent rent recognised in the Statement of Profit and Loss: Rs 0.03 crore (previous year: Rs 0.03 crore).

Notes:

i. Figures in brackets relate to previous year

ii. Contingent liabilities, if any, incurred in relation to interests in joint ventures as at March 31, 2012: Rs nil (previous year: Rs nil): and share in contingent liabilities incurred jointly with other ventures as at March 31, 2012: Rs nil (previous year: Rs nil).

iii. Share in contingent liabilities of joint ventures themselves for which the Company is contingently liable as on March 31, 2012: Rs 134.98 crore (previous year: Rs 95.97 crore).

iv. Contingent liabilities in respect of liabilities of other ventures of joint ventures as at March 31, 2012: Rs nil (previous year: T nil).

v. Capital commitments, if any, in relation to interests in joint ventures as at March 31, 2012: Rs 28.56 crore (previous year: Rs nil).

b) Nature of provisions:

i. Product warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at March 31, 2012 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two years from the date of Balance Sheet.

ii. Provision for sales tax represents mainly the differential sales tax liability on account of non-collection of declaration forms for the period prior to 5 years.

iii. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.

iv. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under AS 7 (Revised) "Construction Contracts".

v. Others represent residual provision in respect of companys investment in shares of Satyam Computer Services Limited.

c) Disclosure in respect of contingent liabilities is given as part of Note no.(l) to the Balance Sheet.

9 In line with the Companys risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges.


Mar 31, 2010

(i)-Tangible assets:

1 Cost/valuation of freehold land includes Rs.0.14 crore for which conveyance is yet to be completed.

2 Additions to freehold land include Rs.4.63 crore being the book value of leasehold land reclassified as freehold land pursuant to acquisition of ownership rights in it.

3 Cost/valuation of buildings includes ownership accommodation:

(i) (a) in various co-operative societies and apartments and shop-owners associations: Rs.95.84 crore, including 2473 shares of Rs.50 each and 50 shares of Rs.100 each. (b) in proposed co-operative societies Rs.21.17 crore. (ii) of Rs.4.39 crore in respect of which the deed of conveyance is yet to be executed. (iii) of Rs.8.45 crore representing undivided share in a property at a certain location.

4 Additions during the year and capital work-in-progress include Rs.27.72 crore (previous year Rs.6.17 crore) being borrowing cost capitalised in accordance with Accounting Standard (AS)16 on "Borrowing Costs" as specified in the Companies (Accounting Standards) Rules, 2006

5 Depreciation for the year includes obsolescence Rs.7.41 crore (previous year Rs. 1.37 crore).

6 Capital work-in-progress includes advances Rs.74.82 crore (previous year Rs.103.76 crore).

7 The Company had revalued as at October 1, 1984 some of its land, buildings, plant and machinery and railway sidings at replacement/ market value which resulted in a net increase of Rs. 108.05 crore.

8 Own assets given on operating lease have been presented separately in the schedule as per Accounting Standard (AS) 19.

Schedule E(ii)-lntangible assets:

1 Cost/valuation of leasehold land includes:

(i) Rs.2.63 crore for land taken at Mysore on lease from KIADB vide agreement dated May 5, 2006, The lease agreement is for a period of six years with extension of 3 years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company.

(ii) Rs. 18.57 crore added during the year in respect of which lease agreements are yet to be executed.

2 Leashold land rights at a certain location have been reclassified as freehold land under tangible assets, pursuant to acquisition of , ownership rights in it during the year. (See note no. 2 on tangible assets.)

As at 31-3-2010 As at 31-3-2009 Rs.crore Rs.crore

Schedule J Contingent liabilities:

(a) Claims against the Company not acknowledged as debts 158.21 166.21

(b) Sales-tax liability that may arise in respect of matters in appeal 158.78 66.96

(c) Excise duty/service tax liability that may arise in respect 10.28 10.93 of matters in appeal/ challenged by the Company in write

(d) Income-tax liability (including penalty) that may arise in respect 8.45 162 of which the Company is in appeal

(e) Corporate guarantees given on behalf of subsidiary companies 805.38 361.16

Notes:

1. The Company does not expect any reimbursements in respect of the above contingent liabilities.

2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.

3. In respect of matters at (e), the cash outflows, if any, could generally occur during the next three years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowing to which the guarantees relate.



a) Segment accounting policies

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including intersegment revenue.

ii) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "unallocable corporate expenditure."

iii) Income which relates to the Company as a whole and not allocable to segments is included in "unallocable corporate income".

iv) Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Company.

v) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

10. Taxes on income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

Deferred tax is recognised on timing differences between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head "capital gains" are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

11. Fringe benefit tax

Fringe benefit tax (FBT) on the employee stock options (ESOPs) is recognised in the Profit and Loss Account when the liability crystalises upon vesting of such stock options. Wherever such FBT liability is borne by the employee, the same is not so recognised. FBT on all the other expenses, as specified in the Income Tax Act, 1961, is recognised in the Profit and Loss Account when the underlying expenses are incurred.

12. Provisions, contingent liabilities and contingent assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event,

b) a probable outflow of resources is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of

a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

b) a present obligation arising from past events, when no reliable estimate is possible; and

c) a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent assets are neither recognised, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

1. a) Of the equity shares of Rs.2 each comprised in the subscribed and paid-up capital of the Company:

i) 9,19,943 (previous year: 9,19,943) equity shares were allotted as fully paid up, pursuant to contracts, without payment being received in cash.

ii) 44,96,76,280 (previous year: 44,96,76,280) equity shares were issued as bonus shares by way of capitalisation of general reserve: Rs.2.35 crore (previous year: Rs.2.35 crore), securities premium: Rs.87.47 crore (previous year: Rs.87.47 crore) and capital redemption reserve: Rs.0.12 crore (previous year: Rs.0.12 crore).

iii) 2,00,88,346 (previous year: 1,48,67,485) equity shares were allotted as fully paid up on exercise of grants under Employees

Stock Ownership Schemes.

b) During the year, the Company has issued and allotted 1,12,86,685 equity shares of Rs.2 each by way of Qualified Institutional Placement (QIP) at issue price of Rs.1659.30 per share. The shares rank pari passu in all respects with the existing equity shares of the Company.

c) On October 21, 2009, the Company issued 5 years & 1 day, 3.50% US$ denominated Foreign Currency Convertible Bonds (FCCB) at par, aggregating to US$ 200 million (INR 928.80 crore as on the date of issue) comprising 2000 bonds of US$ 1,00,000 each. The bonds are convertible into the Companys fully paid up equity shares of Rs.2 each at a conversion price of Rs. 1908.20 per share at the option of the bond holders at any time after December 1, 2009 up to October 15, 2014.

The bonds are redeemable, subject to fulfilment of certain conditions, in whole but not in part, at the option of the Company, on or at any time after October 21, 2012 but not less than seven business days prior to the maturity date, at the principal amount together with accrued interest till the date fixed for redemption, unless the bonds nave been previously redeemed, converted or purchased and cancelled.

13. a) Working capital facilities from banks including cash credits, demand loans, bank guarantees and letters of credit are secured b hypothecation of inventories, book debts and receivables. The total charge on these assets is Rs.2037.51 crore as on March 31 2010. b) Other secured loans from banks represent loans amounting to Rs.5.90 crore (previous year: Rs.nil) availed under bill discountini facility and are secured against specific receivables.

14 Loans and advances include:

a) Rent deposit with whole-time directors: Rs.0.03 crore (previous year: Rs.0.03 crore). The maximum amount outstanding at any time during the year: Rs.0.03 crore (previous year: Rs.0.03 crore).

b) Amount, including interest accrued, due from the managing director and whole-time directors in respect of housing loan: Rs.0.61 crore (previous year: Rs.0.63 crore). Maximum amount outstanding at any time during the year: Rs.0.63 crore (previous year: Rs 0.73 crore).

15 Sales and service include Rs.142.83 crore (previous year: Rs.117.72 crore) for price variations net of liquidated damages in terms of contracts with the customers and shipbuilding subsidy Rs.56.80 crore (previous year: Rs.25.49 crore).

16. Extraordinary items during the year comprise the following:

a) Proportionate reversal of Rs.62.55 crore, out of the provision made in previous year in respect of the Companys investment in shares of Satyam Computer Services Limited (SCSL), pursuant to sale of a part of its holding in SCSL during the year.

b) Gain of Rs.73.17 crore (net of tax of Rs.21.61 crore) on sale of the Companys Petroleum Dispensing Pumps & Systems business.

17. Other income for the year ended March 31, 2010 includes:

a) Profit of Rs.1019.88 crore on sale of the Companys long term investment in Ultra Tech Cement Limited.

b) Gain of Rs.67.61 crore on sale of the Companys stake in Voith Paper Technology (India) Limited, an associate company.

c) Profit of Rs.27.22 crore, pursuant to buy back of the Companys part equity holding by Audco India Limited, an associate company.

18. Sales, administration and other expenses include a provision of Rs.39.93 crore, for diminution in the companys investment in an associate company

19. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits".

i. Defined contribution plans: [accounting policy no.4b(i)]

Amount of Rs.70.03 crore (previousyear: Rs.63.43 crore) is recognised as an expense and included in "Staff Expenses" (Schedule N) in the Profit and Loss Account.

h) General descriptions of defined benefit plans:

1. Gratuity plan:

The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The companys scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. A small part of the gratuity plan, which is not material is unfunded and managed within the Company.

2. Post-retirement medical care plan:

The Post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement.

3. Companys pension plan:

In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement.

4. Trust managed provident fund plan:

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.

20. Uncalled liability on shares partly paid is Rs.36.62 crore net of advance paid against equity commitment (previous year: Rs.66.44 crore).

b) Segment reporting: segment identification, reportable segments and definition of each reportable segment: i) Primary/secondary segment reporting format:

[a] The risk-return profile of the Companys business is determined predominantly by the nature of its products and services. Accordingly, the business segments constitute the primary segments for disclosure of segment information.

[b] In respect of secondary segment information, the Company has identified its geographical segments as (i) domestic and (ii) overseas. The secondary segment information has been disclosed accordingly.

ii) Segment identification:

Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses, the organisational structure and the internal reporting system of the Company.

iii) Reportable segments:

Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 "Segment Reporting" issued by the Institute of Chartered Accountants of India. iv) Segment composition:

- Engineering & Construction Segment comprises execution of engineering and construction projects in India/abroad to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core/infrastructure sectors including railways, shipbuilding and supply of complex plant and equipment to core sectors. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning, procurement/construction and project management.

- Electrical & Electronics Segment comprises manufacture and sale of low and medium voltage switchgear, custom- built switchboards, control gear, petroleum dispensing pumps & systems, electronic energy meters/protection (relays) systems, control & automation products and medical equipment.

- Machinery & Industrial Products Segment comprises manufacture and sale of industrial machinery & equipment, marketing of industrial valves, construction equipment and welding/industrial products.

- Others include (a) property development activity (b) integrated engineering services and (c) ready mix concrete [up to the date of sale in previous year]

21. Disclosure of related parties/related party transactions: i. List of related parties over which control exists

Sr. no. Name of the related party Relationship

1 Tractor Engineers Limited Wholly owned subsidiary

2 L&T Capital Company Limited Wholly owned subsidiary

3 Larsen & Toubro Infotech Limited Wholly owned subsidiary

4 Larsen & Toubro International FZE Wholly owned subsidiary

5 Spectrum Infotech Private Limited Wholly owned subsidiary

6 L&T- Plastics Machinery Limited Wholly owned subsidiary

(formerly known as L&T- Demag Plastics Machinery Limited)

7 L&T Power Development Limited Wholly owned subsidiary

8 L&T Shipbuilding Limited Wholly owned subsidiary

9 L&T Infra & Property Development Private Limited Wholly owned subsidiary

10 L&T Realty Private Limited Wholly owned subsidiary

11 L&T Concrete Private Limited Wholly owned subsidiary

12 L&T Strategic Management Limited Wholly owned subsidiary

13 L&T Transco Private Limited Wholly owned subsidiary

14 Hi Tech Rock Products & Aggregates Limited Wholly owned subsidiary

15 L&T Seawoods Private Limited Wholly owned subsidiary

16 L&T Power Limited Wholly owned subsidiary

Sr.no. Name of the related party Relationship

17 L&T Natural Resources Limited Whciy ovnca ajcsid ary

18 L&T Ahmedabad-Maliya Tollway Private Limited Wholly owned suasidiary

19 L&T Halol-Shamlaji Tollway Private Limited Wholly owned subsidiary

20 L&T Rajkot-Vadinar Tollway Private Limited Wholly owned subsidiary

21 L&T Engserve Private Limited Wholly owned subsidiary

22 L&T EmSyS Private Limited Wholly owned subsidiary

23 L&T Technologies Limited Wholly owned subsidiary

24 L&T-Valdel Engineering Limited Wholly owned subsidiary

25 L&T General Insurance Company Limited Wholly owned subsidiary

26 PNG Tollways Private Limited Subsidiary *

(formerly known asL&T PNG Tollway Private Limited)

27 Larsen & Toubro LLC Subsidiary *

28 L&T Infrastructure Development Projects Limited Subsidiary *

29 Bhilai Power Supply Company Limited Subsidiary *

30 Raykal Aluminum Company Private Limited Subsidiary *

31 L&T-Sargent & Lundy Limited Subsidiary*

32 L&T-Gulf Private Limited Subsidiary *

33 L&T Capital Holdings Limited Subsidiary *

34 L&T Special Steels & Heavy Forgings Private Limited Subsidiary *

35 L&T Trustee Company Private Limited Wholly owned subsidiary of L&T Capital Company Limited

36 L&T Real Estate India Fund Wholly owned subsidiary of L&T Capital Company Limited

37 L&T Asset Management Company Limited Wholly owned subsidiary of L&T Capital Company Limited

38 L&T Chennai-Tada Tollway Limited Wholly owned subsidiary of L&T Transco Private Limited

39 L&T Port Sutrapada Limited Wholly owned subsidiary of L&T Transco Private Limited

40 Sutrapada SEZ Developers Limited Wholly owned subsidiary of L&T Transco Private Limited

41 Sutrapada Shipyard limited Wholly owned subsidiary of L&T Transco Private Limited

42 L&T Samakhiali Ganhidham Tollway Private Limited Subsidiary of L&T Transco Private Limited #

43 Chennai Vision Developers Private Limited Wholly owned subsidiary of L&T Realty Private Limited

44 L&T Realty FZE Wholly owned subsidiary of L&T Realty Private Limited

45 L&T-MHI Boilers Private Limited Subsidiary of L&T Power Limited #

46 L&T-MHI Turbine Generators Private Limited Subsidiary of L&T Power Limited #

47 Larsen & Toubro Infotech GmbH Wholly owned subsidiary of Larsen & Toubro Infotech Limited

48 Larsen & Toubro Information Technology Canada Limited Wholly owned subsidiary of Larsen & Toubro Infotech Limited

49 Larsen & Toubro Infotech LLC Wholly owned subsidiary of Larsen & Toubro Infotech Limited

50 GDA Technologies Inc. Wholly owned subsidiary of Larsen & Toubro Infotech Limited

51 GDA Technologies Limited Wholly owned subsidiary of GDA Technologies Inc.

52 India Infrastructure Developers Limited Wholly owned subsidiary of L&T Capital Holdings Limited

53 L&T Infrastructure Finance Company Limited Wholly owned subsidiary of L&T Capital Holdings Limited

54 L&T Aviation Services Private Limited Wholly owned subsidiary of L&T Capital Holdings Limited

55 L&T Finance Limited Wholly owned subsidiary of L&T Capital Holdings Limited

56 L&T Investment Management Limited Wholly owned subsidiary of L&T Finance Limited

57 L&T Mutual Fund Trustee Limited Wholly owned subsidiary of L&T Finance Limited

58 L&T Uttaranchal Hydropower Limited Wholly owned subsidiary of L&T Power Development Limited

59 Nabha Power Limited Wholly owned subsidiary of L&T Power Development Limited

60 L&T Electrical & Automation FZE Wholly owned subsidiary of Larsen & Toubro International FZE

61 Tamcc Switchgear (Malaysia) SDN. BHD Wholly owned subsidiary of Larsen & Toubro International FZE

62 Tamco Shanghai Switchgear Company Limited Wholly owned subsidiary of Larsen & Toubro International FZE

63 Tamco Electrical Industries Australia Pty Limited Wholly owned subsidiary of Larsen & Toubro International FZE

64 Larsen & Toubro (Wuxi) Electric Company Limited Wholly owned subsidiary of Larsen & Toubro International FZE

65 Pathways FZE Wholly owned subsidiary of Larsen & Toubro International FZE

66 L&T Overseas Projects Nigeria Limited Wholly owned subsidiary of Larsen & Toubro International FZE

67 Larsen & Toubro (Jiangsu) Valve Company Limited Wholly owned subsidiary of Larsen & Toubro International FZE

68 Larsen & Toubro (Qingdao) Rubber Machinery Company Limited Wholly owned subsidiary of Larsen & Toubro International FZE

69 Peacock Investments Limited Wholly owned subsidiary of Larsen & Toubro International FZE

70 Lotus Infrastructure Investments Limited Wholly owned subsidiary of Larsen & Toubro International FZE

71 Mango Investments Limited Wholly owned subsidiary of Larsen & Toubro International FZE

72 Larsen &Toubro Saudi Arabia LLC Subsidiary of Larsen & Toubro International FZE #

73 PT Tamco Indonesia Subsidiary of Larsen & Toubro International FZE #

74 L&T Electricals Saudi Arabia Company Limited Subsidiary of Larsen & Toubro International FZE #

75 Larsen & Toubro Electromech LLC Subsidiary of Larsen & Toubro International FZE #

76 Larsen & Toubro (Oman) LLC Subsidiary of Larsen & Toubro International FZE #

77 L&T Modular Fabrication Yard LLC Subsidiary of Larsen & Toubro International FZE #

78 Offshore international FZC Subsidiary of Larsen & Toubro International FZE #

79 Larsen & Toubro Heavy Engineering LLC Subsidiary of Larsen & Toubro International FZE #

80 Larsen & Toubro Qatar LLC Subsidiary of Larsen & Toubro International FZE ##

81 Larsen & Toubro (East Asia) SDN. BHD. Subsidiary of Larsen & Toubro International FZE ##

82 Larsen & Toubro Readymix Concrete Industries LLC Subsidiary of Larsen & Toubro International FZE ##

83 Larsen & Toubro Kuwait Construction

General Contracting Company WLL Subsidiary of Larsen & Toubro International FZE ##

84 Larsen & Toubro ATCO Saudia LLC Subsidiary of Larsen & Toubro International FZE ##

85 Qingdao Larsen & Toubro Trading Company Limited Wholly owned subsidiary of Larsen & Toubro (Qingdao) Rubber Machinery

Company Limited

86 International Seaports (India) Private Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

87 L&T Panipat Elevated Corridor Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

88 Narmada Infrastructure Construction Enterprise Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

89 L&T Krishnagiri Thopur Toll Road Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

90 L&T Western Andhra Tollways Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

91 L&T Vadodara Bharuch Tollway Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

92 L&T Interstate Road Corridor Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

93 L&T Transportation Infrastructure Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

94 L&T Western India Tollbridge Limited Wholly owned subsidiary of L&T Infrastructure Development Projects Limited

95 L&T Infrastructure Development Projects Lanka (Private) Limited Subsidiary of L&T Infrastructure Development Projects Limited #

96 L&T Urban Infrastructure Limited Subsidiary of L&T Infrastructure Development Projects Limited #

97 Cyber Park Development & Construction Limited Subsidiary of L&T Urban Infrastructure Limited #

98 L&T Tech Park Limited Subsidiary of L&T Urban Infrastructure Limited #

99 L&T Bangalore Airport Hotel Limited Subsidiary of L&T Urban Infrastructure Limited #

100 L&T Vision Ventures Limited Subsidiary of L&T Urban Infrastructure Limited #

101 CSJ Infrastructure Private Limited Subsidiary of L&T Urban Infrastructure Limited #

102 L&T Arun Excello IT SEZ Private Limited Subsidiary of L&T Urban Infrastructure Limited #

103 L&T Arun Excello Commercial Projects Private Limited Subsidiary of L&T Urban Infrastructure Limited #

104 L&T Infocity Limited Subsidiary of L&T Urban Infrastructure Limited #

105 L&T South City Projects Limited Subsidiary of L&T Urban Infrastructure Limited #

106 L&T Siruseri Property Developers Limited Wholly owned subsidiary of L&T South City Projects Limited

107 Andhra Pradesh Expositions Private Limited Wholly owned subsidiary of Hyderabad International Trade Expositions Limited

108 Hyderabad International Trade Expositions Limited Subsidiary of L&T Infocity Limited #

109 L&T Infocity Lanka Private Limited Subsidiary of L&T Infocity Limited #.

110 L&T Hitech City LimitedSubsidiary of L&T Infocity Limited #

* The Company holds more than one-half in nominal value of the equity share capital.

# The Company, together with its subsidiaries, holds more than one-half in nominal value of the equity share capital. ## The Company, together with its subsidiaries controls the composition of the Board of Directors.

ii. Names of the related parties with whom transactions were carried out during the year and description of relationship:

Subsidiary companies:

1 Cyber Park Development & Construction Limited 2 Larsen & Toubro (East Asia) SDN. BHD.

3 Larsen & Toubro (Wuxi) Electric Company Limited 4 India Infrastructure Developers Limited

5 L&T Capital Company Limited 6 L&T-Sargent & Lundy Limited

7 L&T Finance Limited 8 L&T Engserve Private Limited

9 L&T Infrastructure Development Projects Limited 10 L&T Infocity Limited

11 L&T Krishnagiri Thopur Toll Road Limited 12 L&T Interstate Road Corridor Limited

13 L&T Panipat Elevated Corridor Limited 14 L&T Arun Excello Commercial Projects Private Limited

15 L&T Tech Park Limited 16 L&T Chennai-Tada Tollway Limited

17 L&T Urban Infrastructure Limited 18 L&T Vadodara Bharuch Tollway Limited

19 L&T Western Andhra Tollways Limited 20 L&T Western India Tollbridge Limited

21 Larsen & Toubro (Oman) LLC 22 Larsen & Toubro Infotech GmbH

23 Larsen & Toubro Information Technology Canada Limited 24 Larsen & Toubro International FZE

25 Larsen & Toubro infotech Limited 26 Raykal Aluminum Company Private Limited

27 Narmada Infrastructure Construction Enterprise Limited 28 Tractor Engineers Limited

29 Larsen & Toubro Saudi Arabia LLC 30 L&T Southcity Projects Limited

31 L&T Modular Fabrication Yard LLC, Oman 32 L&T (Qingdao) Rubber Machinery Company Limited

33 L&T Electrical Saudi Arabia Company Limited, LLC 34 L&T infrastructure Finance Company Limited

35 L&T Uttaranchal Hydropower Limited 36 L&T Power Limited

37 Nabha Power Limited 38 Bhilai Power Supply Company Limited

39 L&T Bangalore Airport Hotel Limited 40 L&T Phoenix Info Parks Private Limited

41 Spectrum Infotech Private Limited 42 Larsen & Toubro Electromech LLC

43 Larsen & Toubro Qatar LLC 44 L&T Seawoods Private Limited

45 Larsen & Toubro LLC 46 Hyderabad International Trade Expositions Limited

47 L&T-Valdel Engineering Limited 48 L&T-MHI Boilers Private Limited

49 Offshore International FZC 50 Larsen & Toubro Readymix Concrete Industries LLC

51 L&T Infrastructure Development Projects (Lanka) 52 Larsen & Toubro (Jiangsu) Valve Company Limited Private Limited

53 Qingdao Larsen & Toubro Trading Company Limited

54 CSJ Infrastructure Private Limited

55 L&T Hitech City Limited 56 L&T Trustee Company Private Limited

57 L&T Vision Ventures Limited 58 L&T Gulf Private Limited

59 L&T Rajkot-Vadinar Tollway Private Limited 60 L&T Natural Resources Limited

61 Tamco Switchgear (Malaysia) SDN. BHD. 62 L&T Power Development Limited

63 L&T Realty Private Limited 64 L&T Shipbuilding Limited

65 L&T Transco Private Limited 66 L&T Ahmedabad-Maliya Tollway Private Limited

67 L&T Halol-Shamlaji Tollway Private Limited 68 GDA Technologies Limited

69 Larsen & Toubro Kuwait Construction General Contracting 70 Larsen & Toubro ATCO Saudia LLC Company WLL

71 L&T Arun Excello IT SEZ Private Limited 72 L&T Heavy Engineering LLC

73 L&T Electrical & Automation FZE 74 L&T-Plastics Machinery Limited.

75 L&T Transportation Infrastructure Limited 76 PNG Tollway Private Limited

77 L&T Overseas Projects Nigeria Limited 78 L&T-MHI Turbine Generators Private Limited

79 L&T Infra & Property Development Private Limited 80 L&T Concrete Private Limited

81 L&T Strategic Management Limited 82 Hitech Rock Products & Aggregates Limited

83 L&T Capital Holdings Limited 84 L&T Aviation Services Private Limited

85 Chennai Vision Developers Limited 86 L&T Special Steels & Heavy Forgings Private Limited

87 Larsen & Toubro Infotech LLC 88 L&T General Insurance Company Limited

89 International Seaports Pte. Limited 90 International Seaports (India) Private Limited

91 L&T Technologies Limited 92 L&T EmSyS Private Limited

Associate companies:

1 Audco India Limited 2 EWAC Alloys Limited

3 L&T-Chiyoda Limited 4 L&T-Komatsu Limited

5 L&T-Ramboll Consulting Engineers Limited 6 L&T-Case Equipment Private Limited

7 Voith Paper Technology (India) Limited # 8 Salzer Electronics Limited

9 International Seaport (Haldia) Private Limited 10 Feedback Ventures Limited

11 L&T Arun Excello Realty Private Limited_12 International Seaport Dredging Limited*_

Joint ventures (other than associates):

1 International Metro Civil Contractors Joint Venture 2 Bauer-L&T Diaphragm Wall Joint Venture

3 The Dhamra Port Company Limited 4 L&T-Eastem Joint Venture

5 Metro Tunneling Group 6 L&T Hochtief Seabird Joint Venture

7 Desbuild-L&T Joint Venture 8 L&T-Shanghai Urban Corporation Group Joint Venture

9 L&T-AM Tapovan Joint Venture 10 HCC-L&T Purulia Joint Venture

Key management personnel & their relatives:

1 Mr. A.M. Naik, (Chairman & Managing Director) 2 Mr. J.P. Nayak (whole-time director)

Mrs. Neeta J. Nayak (wife) Mr. Nitin Nayak (son)

3 Mr. Y. M. Deosthalee (whole-time director) 4 Mr. K. Venkataramanan (whole-time director)

Mrs. Jyothi Venkataramanan (wife)

5 Mr. R. N. Mukhija (whole-time director) 6 Mr. K. V Rangaswami (whole-time director) Mrs. Sushma Mukhija (Wife) Ms. DebikaAjmani (daughter)

7 Mr. V K. Magapu (whole-time director) 8 Mr. M. V Kotwal (whole-time director)

# Investment sold during the year

* Associate company w.e.f. May 21, 2009

19. Leases:

Where the Company is a lessee: a) Finance leases:

i. [a] Assets acquired on finance lease mainly comprise plant and machinery, vehicles and personal computers. The leases have a primary period, which is fixed and noncancellable. In the case of vehicles, the Company has an option to renew the lease for a secondary period. The agreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals (b) rates of depreciation under the Income Tax Act, 1961 and (c) change in the lessors cost of borrowings. There are no exceptional/restrictive covenants in the lease agreements.

20. Provision for current tax includes:

i. Provision for wealth tax Rs.2.70 crore (previous year: Rs.3.37 crore).

ii. Rs.133.29 crore being provision for income tax in respect of earlier years (previous year: Rs.53.84 crore). The amount provided in the current year is mainly arising out of the retrospective amendment to Section 80IA of the Income Tax Act, 1961 brought about during 2009-2010.

iii. Rs.10.02 crore in respect of income tax payable outside India (previous year: Rs.2.07 crore).

iv. Reversal of excess provision for tax on fringe benefits Rs.10.01 crore (previous year provision for tax on fringe benefits Rs.0.20 crore) pertaining to earlier years.

22. a) The expenditure on research and development activities, as certified by the management, is Rs.91.54 crore (including capital expenditure of Rs.5.56 crore) (previous year. Rs.80.19 crore, including capital expenditure of Rs.5.01 crore). b) An amount of Rs.74.37 crore (net loss) [previous year: Rs.197.46 crore (net loss)] has been accounted under respective revenue heads in the Profit and Loss Account towards exchange difference arising on foreign currency transactions and forward contracts covered under Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates".

23. In line with the Companys risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates and commodity prices are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges.

24. Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs.578.29 crore (previous year: Rs.764.98 crore).

25. The Company has given, inter alia, the following undertakings in respect of its investments:

a. Jointly with L&T Infrastructure Development Projects Limited (a subsidiary of the Company), to the term lenders of its subsidiary companies L&T Transportation Infrastructure Limited (LTTIL):

i. not to reduce their joint shareholding in LTTIL below 51% until the financial assistance received from the term lenders is repaid in full by LTTIL and

ii. to jointly meet the shortfall in the working capital requirements of LTTIL until the financial assistance received from the term lenders is repaid in full by LTTIL .

b. In terms of Companys concession agreement with Government of India and Government of Gujarat, not to change the control over L&T Western India Tollbridge Limited (a subsidiary of L&T Infrastructure Development Projects Limited) during the period of the agreement.

c. To the debenture holders of L&T Infrastructure Development Projects Limited (a subsidiary of the Company) and to the lenders of its subsidiaries L&T Panipat Elevated Corridor Private Limited and L&T Krishnagiri Thopur Toll Road Limited, not to dilute Companys shareholding below 51%.

d. To the lender of L&T Offshore International FZC (a subsidiary of the Company), not to pledge or reduce its shareholding in L&T International FZE (the holding company of L&T Offshore International FZC) below 100% of the issued and allotted share capital.

e. To National Highway Authority of India, to hold minimum 26% stake in L&T Samakhiaii Gandhidham Tollway Private Limited till 180 days from the date of concession agreement. However, the Company has decided to hold this stake for a period of 2 years after the construction period.

f. To National Highway Authority of India, to hold minimum 26% stake in L&T PNG Tollway Private Limited till the commercial operations date.

g. To Gujarat State Road Development Corporation Limited, to hold in L&TAhmedabad Maliya Tollway Private Limited:

- 100% stake during the construction period;

- 51 % stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and

- 51% stake during operational period.

h. To Gujarat State Road Development Corporation Limited, to hold in L&T Rajkot-Vadinar Tollway Private Limited:

- 100% stake during the construction period;

- 51 % stake for 5 years from the date of commercial operation date or end of construction of the project, whichever is later; and

- 51% stake during operational period.

i. To Gujarat State Road Development Corporation Limited, to hold in L&T Halol-Shamlaji Tollway Private Limited:

- 100% stake during the construction period;

- 51% stake for 5 years from the date of Commercial Operation Date or end of construction of the project, whichever is later; and

- 51% stake during operational period.

j. To the lenders of L&T Ahmedabad Maliya Tollway Private Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited. k. To the lenders of L&T Rajkot-Vadinar Tollway Private Limited (a subsidiary of the Company), not to divest control without the prior approval of the lenders or Gujarat State Road Development Corporation Limited.

I. Jointly with L&T-MHI Turbine Generators Private Limited (a subsidiary of L&T Power Limited, which is a wholly owned subsidiary of the Company) and Mitsubishi Heavy Industries Limited (JV partners in L&T-MHI Turbine Generators Private Limited), to Andhra Pradesh Power Development Company Limited (APPDCL) to render unconditional and irrevocable financial support for the successful execution of APPDCL 2x800 MW Power Project - Steam Turbine Generator Package Tender, near Krishnapatnam, Nellore District, Andhra Pradesh.

m. To City and Industrial Development Corporation of Maharashtra Limited (CIDCO) that it shall continue to hold not less than fifty one percent stake in L&T Seawood Private limited (LTSPL) until CIDCO execute the lease deed for land in favour of LTSPL.

26. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2010.

37. According to the Company, construction is a service activity and therefore, the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act, 1956.

39. Figures for the previous year have been regrouped/reclassified wherever necessary.

 
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