Notes to Accounts of L&T Finance Ltd.

Mar 31, 2025

1.25. Provisions, contingent liabilities and contingent assets:

Provisions are recognised only when:

(i) an company entity has a present obligation (legal or constructive) as a result of a past event; and

(ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and

(iii) a reliable estimate can be made of the amount of the obligation

Provision is measured using the cash flows estimated to settle the present obligation and when the effect of
time value of money is material, the carrying amount of the provision is the present value of those cash flows.
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; and

b. a present obligation arising from past events, when no reliable estimate is possible.

Contingent assets are disclosed where an inflow of economic benefits is probable. Provisions, contingent
liabilities and contingent assets are reviewed at each Balance Sheet date.

Where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received under such contract, the present obligation under the contract is recognised and
measured as a provision.

1.26.Commitment:

Commitments are future liabilities for contractual expenditure, classified and disclosed as follows:

(a) estimated amount of contracts remaining to be executed on capital account and not provided for;

(b) uncalled liability on shares and other investments partly paid;

(d) other non-cancellable commitments, if any, to the extent they are considered material and relevant in
the opinion of management.

Other commitments related to sales/procurements made in the normal course of business are not disclosed
to avoid excessive details.

1.27.Statement of cash flows:

Statement of cash flows is prepared segregating the cash flows into operating, investing and financing
activities. Cash flow from operating activities is reported using indirect method adjusting the profit before
tax for the effects of:

(i) changes during the period in operating receivables and payables transactions of a non-cash nature;

(ii) non-cash items such as depreciation, provisions, deferred taxes, unrealised gains and losses; and

(iii) all other items for which the cash effects are investing or financing cash flows.

Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items
which are not available for general use as on the date of Balance Sheet.

1.28. Earnings per share:

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per
share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares.

1.29. Key source of estimation:

The preparation of financial statements in conformity with Ind AS requires that the management of the
Company makes estimates and assumptions that affect the reported amounts of income and expenses of the
period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of
the date of the financial statements. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates include useful lives of property, plant and equipment & intangible
assets, expected credit loss on loan books, future obligations in respect of retirement benefit plans, fair value
measurement etc. Difference, if any, between the actual results and estimates is recognised in the period in
which the results are known.

1.30. Recent Pronouncements:

The Ministry of Corporate Affairs ("MCA") notifies new standards or amendment to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
March 31,2025, MCA has notified Ind AS - 117 Insurance contracts and amendments to Ind AS 116 - Leases,
relating to sale and leaseback transactions, applicable to the Company w.e.f. April 1, 2024. The Company
has reviewed the new pronouncements based on its evaluation has determined that it does not have any
significant impact in its financial statements.

(h) Capital Management

- The objective of the Company''s Capital Management is to maximise shareholder value, safeguard
business continuity and support the growth of its Group. The Group determines the capital requirement
based on annual operating plans and long-term and other strategic investment plans. The funding
requirements are met through loans and operating cash flows generated. The debt equity ratio is
3.65 as at March 31,2025 (as at March 31, 2024 was 3.30).

- During the year ended March 31,2025, the Company has paid the final dividend of ? 2.50 per equity
share for the year ended March 31,2024 amounting to ? 622.46 crore. (PY 2023-24 ? 496.61 crore).

The Company has proposed a final dividend of ? 2.75 per share in the Board meeting subject to approval

from shareholders.

(I) Employee Stock Option Scheme

- The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme-2010) and 2013
(ESOP Scheme 2013). 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 allotted under the scheme
2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively
from the end of 12 months from the date of grant, subject to the discretion of the management and
fulfillment of certain conditions. The options granted under the scheme 2013 are vested in a graded
manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year,
commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a
graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each
year, commencing from the end of 12 months from the date of grant.

- Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the
date of grant and would be settled by way of equity. The option granted under scheme 2013 can be
exercised anytime within a period of 8 years from the date of grant. Management has discretion to
modify the exercise period.

- The option granted under scheme 2010 is at exercise price of ? 44.20. The option granted under
scheme 2013 can be exercised either at market price which was the last closing price on National
stock exchange preceding the date of grant or w.e.f. July 10,2019 ? 10 respectively.

- During the year ended March 31, 2025 65,000 and 58,62,791 options were allotted under the
scheme 2010 and 2013 respectively.

2. Securities premium: The amount received in excess of face value of the equity shares is recognised in
Securities Premium. The reserve can be utilised only for limited purposes such as issuance of bonus shares
in accordance with the provisions of the Companies Act, 2013.

3. General Reserve: The Companies (Transfer of Profits to Reserves) Rules, 1975 read with Section 205(2A)
of the Companies Act, 1956, prohibited declaration of dividend for any financial year out of profits of
the company for that year except after the transfer of a specified percentage of the profits not exceeding
10%, to its reserves. Amounts were transferred to General Reserve to comply with these provisions. The
Companies Act, 2013, does not mandate such a transfer.General reserve is a free reserve available to the
Company.

4. Reserve u/s 45 IC of Reserve Bank of India Act, 1934: The Company created a reserve pursuant to
section 45 IC the Reserve Bank of India Act, 1934 by transferring amount not less than twenty percent
of its net profit every year as disclosed in the Statement of Profit and Loss and before any dividend is
declared.

5. Reserve u/s 29C of National Housing Bank, 1987: During the financial year 2020-21, upon
amalgamation of the erstwhile L&T Housing Finance Limited (the "Transferor Companies") with erstwhile
L&T Finance Limited (the "Transferee Company"), the statutory reserves (i.e. Reserve under section 29C of
National Housing Bank, 1987) of the Transferor Companies is also transfer to the Transferee Company.

6. Reserve u/s 36(1)(viii) of Income tax Act, 1961: In respect of any special reserve created and maintained
by a specified entity, an amount not exceeding twenty percent of the profits derived from eligible business
computed under the head "Profits and gains of business or profession" (before making any deduction
under this clause) is carried to such reserve account.

7. Retained earnings: Retained earnings represent the amount of accumulated earnings of the Company.

8. Employee stock option outstanding account: The reserve is used to recognise the fair value of the
options issued to employees of the Company and subsidiary companies under Company''s employee stock
option scheme.

9. Impairment Reserve: As per the RBI circular RBI/2019-20/170 dated March 13, 2020, where the
guidelines require NBFCs to hold impairment allowances as required by Ind AS. In parallel NBFCs are
required to compute provisions as per extant prudential norms on Income Recognition, Asset Classification
and Provisioning (IRACP). A comparison, as prescribed, between provisions required under IRACP and
impairment allowances made under Ind AS 109 is required to be disclosed by NBFCs in the notes to their
financial statements to provide a benchmark to their Boards, RBI supervisors and other stakeholders, on
the adequacy of provisioning for credit losses. Where impairment allowance under Ind AS 109 is lower
than the provisioning required under IRACP (including standard asset provisioning), NBFCs are required to
appropriate the difference from their net profit or loss after tax to a separate ''Impairment Reserve''. The
balance in the ''Impairment Reserve'' shall not be reckoned for regulatory capital. Further, no withdrawals
shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.
The said reserve was created in erstwhile L&T Infra Credit Limited which has been merged with the
Company (refer note 53).

10. Capital Redemption Reserve: Capital redemption reserve (CRR) represents reserve created pursuant to
Section 55 (2) (c) of the Companies Act, 2013 by transfer of an amount equivalent to nominal value of
the Preference shares redeemed. The CRR may be utilised by the Company, in paying up unissued shares
of the Company to be issued to the members of the Company as fully paid bonus shares in accordance
with the provisions of the Companies Act, 2013.

33 Disclosure pursuant to Ind AS 19 âEmployee Benefits"

(i) Defined Contribution Plan:

The Company''s state governed provident fund scheme are defined contribution plan for its employees and
for a certain categories of employees made to a trust viz. the Larsen & Toubro Officers & Supervisory Staff
Provident Fund constituted by the ultimate parent company, which is permitted under The employee''s
Provident Funds and Miscellaneous Provisions Act, 1952. The Contribution by the employer and employee
together with interest accumulated there on are payable to the employee at the time of separation from
company or retirement whichever is earlier. The benefit vets immediately on rendering of services by the
employee. In addition to the above, information relating to the scheme operated by the trust constituted
by the holding company is given in the note (iii) below.

The Company has recognised charges of ? 73.91 crore (previous year: ? 56.67 crore) for provident fund
contribution contribution is included in "Note 29 Employee Benefits Expenses" in the Statement of Profit
and Loss.

(ii) Defined Benefits Gratuity Plan :

The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit
equivalent to fifteen days last salary 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 favorable as compared to the obligation under Payment of
Gratuity Act, 1972. These benefit plans expose the Company to actuarial risks, such as longevity risk,
interest rate risk and investment risk.

(A) Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at
the valuation date for the estimated term of the obligations.

(B) Average historic yield on the investment portfolio:

The average rate of return earned on the investment portfolio of provident fund in the previous
three years.

Expected investment return is determined by adding the yield spread to the discount rate for a
term of the obligation, where yield spread is the difference between the average historic yield on
the investment portfolio & discount rate for the remaining term to maturity of the investment
portfolio.

(D) Guaranteed rate of return:

The Regional Provident Fund Commissioner has not yet declared the interest rate for its own
subscribers for the current financial year 2024-25. However, in view of the fall in equity values as
at March 31, 2025 and fall in the returns on fixed income instruments, we are of the view that
going forward the future guaranteed rate is unlikely to be in excess of 8.25% p.a. (previous year:
8.25% p.a.).

iv) Interest expense on lease liabilities for F.Y. 2024-25 is ? 5.65 crore and for F.Y. 2023-24 is
? 4.43 crore

v) Expense relating to leases for which underlying asset is of low value for F.Y. 2024-25 is
? 1.43 crore and for F.Y. 2023-24 is ? 5.39 crore

vi) Expense related to short-term leases for F.Y. 2024-25 is ? 45.25 crore and for 2023-24 is
? 63.01 crore.

vii) Expense related to variable lease payments for F.Y. 2024-25 is Nil and F.Y. 2023-24 is Nil

viii) Income from sub-leasing of right of use assets for F.Y. 2024-25 is Nil and for F.Y. 2023-24 is
? 0.87 crore

ix) There are no gains or losses arising from sale and leaseback transactions for FY 2024-25 and
FY 2023-24

x) Maturity Analysis - Contractual Undiscounted Cash Flow (Refer note 43)
b) Finance Lease : Not Applicable

II) Company as Lessor

a) Finance Lease

i) The Company has given on finance leases certain items of plant and equipment. The leases
have a primary period that is fixed and noncancellable and a secondary period. There are no
exceptional/restrictive covenants in the lease agreement. There are no significant risks associated
with rights that the Company retains in underlying assets.

(c) Excess during the financial year 2023-24

The Company has spent excess amount towards new project(s) / program(s) and the excess spent amount
shall be set off against the required 2% CSR expenditure in the next three financial years.

(d) Nature of CSR activities during the financial year 2023-24

The payment for the CSR activities are done for Digital Financial Literacy and Entrepreneurship
Development, Tree Plantation, Capacity Building of Water User Groups, creating awareness on Road
Safety and Healthcare.

(e) Excess during the financial year 2024-25

The Company has spent excess amount towards new project(s) / program(s) and the excess spent amount
shall be set off against the required 2% CSR expenditure in the next three financial years.

46 Risk Management
Basis

Robust risk management involves a systematic approach to identification, measurement and control of various
risks. All employees of the Company are responsible for the management of risks, including the Board of
Directors. The Board of Directors and its Risk Management Committee ensure that Management takes into
consideration all the relevant risk factors which could lead to unexpected fluctuations in financials or loss of
capital employed. Risks are evaluated from time to time and control measures as per defined frameworks as
approved by the board are executed. This helps in aligning the risk appetite to the Company''s strategy to
deliver sustainable, long-term returns to its investors.

Types of risk

As a lending non-banking financial company, the most important risks faced are as follows:

â¢ Credit risk

â¢ Market risk

â¢ Capital risk

In addition to the above Risks, Enterprise Risks, Operational Risks, Model Risks and Information Security risks
are also identified and monitored.

Credit risk

Credit risk is the risk of suffering financial loss due to customers or counterparties failing to fulfil their
contractual obligations which can result in losses for the company.

a) Default Risk - Borrower fails to repay

b) Credit worthiness risk - Borrower''s credit profile deteriorates

c) Concentration Risk - over exposure to an industry or borrower or geography

The Company is also exposed to other credit risks arising from investments in debt securities and exposures
arising from its trading activities ("Trading Exposures") as well as settlement balances with market
counterparties.

Credit risk is the one of the largest risk for the Company''s business. Management therefore carefully manages
its exposure to credit risk. A centralized risk management function oversees the risk management framework,
and an overview of credit risk of portfolio is periodically presented to the Risk Management Committee.

Credit-worthiness in terms of intention to pay and cashflows assessment is evaluated prior to signing any
contracts, based on underwriting process including employing market information. Management endeavors
to constantly upgrade and improve its underwriting standards to reduce the credit risk and build a risk
calibrated portfolio.

Loans and advances (including loan commitments and guarantees)

The estimation of the risk of credit exposures is complex, as the same varies with changes in market conditions,
expected cash flow and the passage of time. Wholesale and retail portfolios are managed separately to reflect
the differing nature of the business strategy. As the Company is completely existing the wholesale business by
way of sell down, the wholesale portfolio is classified as Fair Value through Profit and Loss Account ("FVTPL")
and valued accordingly as per Ind AS 109. As regards the retail portfolio, the same is classified as amortized
cost as per Ind AS 109 and assessed accordingly. The assessment of credit risk of the retail portfolio entails
estimations as to the likelihood of defaults occurring and of the associated loss ratios. The Company measures
credit risk for each class of loan assets using inputs such as Probability of Default (PD) and Loss Given Default
(LGD). PD and LGD are ascertained as per applicable standards culminating in Expected Credit Loss ("ECL").

Retail Business- (Rural and Urban Finance)

A combination of credit models along with policy rules are deployed as approved by the designated officials
for the respective product. The rules are regularly monitored and updated to ensure that the learnings from
the portfolio performance and changes in the economic environment have been factored into strengthening
measures are implemented.

Trading Exposures

For debt securities in the trading portfolio, external rating agency credit grades are used for evaluating the
credit risk.

Expected Credit Loss (''ECL'')

The Company prepares its financial statements in accordance with the IND AS framework. As per the RBI
notification, on acceptance of IND AS for regulatory reporting, the Company computes provision as per IND
AS 109 as well as per extant prudential norms on Income Recognition, Asset Classification and Provisioning
(IRACP). Where impairment allowance in aggregate for the Company under Ind AS 109 is lower than the
provisioning required under IRACP (including standard asset provisioning) for the Company, the difference is
appropriated from net profit or loss after tax, to a separate ''Impairment Reserve''. Any withdrawals from this
reserve shall be made only with prior permission from the RBI.

ECL allowances recognized in the financial statements also reflect the effect of a range of possible economic
outcomes, calculated on a probability weighted basis, based on certain economic scenarios. The recognition
and measurement of ECL involves the use of significant judgment and estimation. Forward looking economic
forecasts are used in developing the ECL estimates. The multi-variable regression framework is used to
establish a linkage between company''s default rates and various macroeconomic variables like unemployment
rate, Government total expenditure, Government consumer expense, domestic credit investment, and farm
reservoir levels amongst others on case to case basis. Three scenarios sufficient to calculate unbiased ECL
are used - representing the "most likely outcome" (the "Central" scenario) and two "less likely outcome"
scenarios (the "Upside" and "Downside" scenarios). Probability weights have been assigned to each scenario
based on past patterns observed in the multi variable regression process.

Management oversees the estimation of ECL including:

(i) setting requirements in policy, including key assumptions and the application of key judgements

(ii) the design and execution of models; and

(iii) review of ECL results.

As required by Ind AS 109, a ''three-stage'' model for impairment based on changes in credit quality since initial
recognition was built as summarized below:

â¢ A loan asset that is not credit-impaired, on initial recognition, is classified in ''Stage 1'' and has its credit
risk continuously monitored by Management. The company categorises loan assets as ''Stage 1'' primarily
based on 0-30 Days Past Dues status.

â¢ If a significant increase in credit risk (''SICR'') since initial recognition is identified, the loan asset is moved to
''Stage 2'' but is not yet deemed to be credit impaired. (See note 1.7 for a description of how the Company
determines when a significant increase in credit risk has occurred). The company categorises loan assets
as ''Stage 2'' primarily based on 31-90 Days Past Dues status.

â¢ If the financial instrument is credit-impaired, the financial instrument is then moved to ''Stage 3''. (See note
1.7 for a description of how the Company defines credit-impaired and default). The company categorises
loan assets as ''Stage 3'' primarily based on more than 90 Days Past Dues status.

(Refer note 47 for Stage wise gross carrying amount of loans and loss allowance provisioning).

The following are additional considerations for each type of portfolio held by the Company:

Retail Business- (Rural and Urban Finance)

Retail lending credit quality is determined on a collective basis based on a 12-month point in time ("PIT")
probability weighted PD for all loan asset that are not credit-impaired and for assets with SICR, lifetime
probability weighted PIT PD is used. PD for credit impaired asset is 1 as the DPD is 90 .

A centralized impairment model summarises the historical payment behaviors of the borrowers within a retail
portfolio which data is used to build the PD estimates. For estimating PD, day-past-due (DPD) status, vintage
of customer as measured by the Month-on-Book (MOB) and/ or a few other product specific parameters
(Prime/Non-Prime customers, New Book/ Old Book split, etc.) are considered for segmenting the portfolio to
differentiate the default risk within the respective retail products. The weighted average is determined (using
the count of customers as the weight) from quarterly snapshots.

LGD has been estimated for all the retail products using the defaulted accounts which are eventually closed
(either through normal repayments or through settlement/waivers) along with defaulted active accounts with
high DPD as of the end of the performance period allowing a reasonable window for collections post the
default. LGD is computed as average of 1 - (the ratio of recovery from the defaulted accounts / Principal
Outstanding (POS) at the time of default), the average being computed over the accounts considered for the
LGD estimation. The PD and LGD ratio were used to arrive at the ECL for all stages of loan assets.

Exposure at Default (EAD)

EAD represents the expected balance at default, taking into account the repayment of principal and interest
from the Balance Sheet date to the date of default together with any expected drawdowns of committed
facilities.

The Company''s net exposure to credit risk, after taking into account credit risk mitigation, have been tabulated

K ci I r\\ a / Â¦

Footnote:

Retail loans, other than unsecured loans aggregating ? 51,579.46 crore as of March 31, 2025, are generally
secured by a charge on the asset financed (farm equipment loans, two-wheeler loans, home loans and loans
against property) (as of March 31,2024: ? 42,732.48 crore). If the customer fails to pay, the Company would,
as applicable, liquidate collateral and/or set off accounts. For most products, the Company obtains direct debit
instructions from the customer. It is a criminal offence in India to issue a bad cheque.

Of the unmitigated on balance sheet exposure, a significant portion relates to cash held with banks, settlement
balances, and debt securities issued by governments all of which are considered to be lower risk.

Besides growth in the loan assets portfolio, increases in trading portfolio assets and financial assets at fair
value through the Statement of Profit and Loss have also contributed to the increase in the Company''s net
exposure to credit risk. Investments in debt instruments are predominantly investment grade except where the
instrument is received in connection with loan granted.

Where collateral has been obtained in the event of default, the Company does not, ordinarily, use such assets
for its own operations and they are usually sold and off set against the outstanding loan assets.

The Company has invoked pledge of equity shares and non-convertible debentures ("NCD") in the companies,
pledged with the Company as collateral by the borrowers and these shares are being held by the Company as
bailee. (Refer note 39).

Concentration of exposure:

on a quarterly basis to ensure that the overall portfolio is steered within the approved limits to minimize
concentration risk. The Risk Limits cover risk of concentration to a particular geography, industry, Company/
borrower or revenue counterparty of the borrowers etc. as are relevant to the respective product.

Market Risk Management:

Liquidity Risk:

This is the risk that the Company may be unable to service its contractual or contingent liabilities or support
its committed disbursements due to lack of adequate funding or liquidity.

Liquidity risk management in the Company is guided by the Board-approved Asset-Liability Management
(''ALM'') Policy, which provides the framework for the identification, measurement, monitoring and reporting of
liquidity risk arising from the Company''s lending and borrowing activities. This risk is measured and managed
by setting up limits on structural liquidity gaps across various time-buckets and on relevant liquidity stock
ratios. Monthly reports on actual liquidity gaps against established limits are submitted to the Asset Liability
Management Committee (ALCO). The Company has been maintaining positive cumulative liquidity gaps for
all the time-buckets up to 1 year as a prudent risk management practice.

The Company manages liquidity risk through periodic stress testing and maintains a substantial liquidity buffer.
This buffer, designed to withstand a 30-day survival period under a severe stress scenario, includes High-Quality
Liquid Assets, Fixed Deposits, and Mutual Funds. The Company also continuously monitors its Liquidity Coverage
Ratio (LCR) above regulatory minimums and uses Early Warning Indicators (EWI) within its Contingency Funding
Plan to proactively address potential liquidity challenges. These EWIs are monitored on a regular basis.

Further, RBI has issued final guidelines on Liquidity Risk Management Framework under Master Direction -
Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulation) Directions, 2023. As per the
said guidelines, NBFC are required to publicly disclose the below information related to liquidity risk on a quarterly
basis. Basis the above, the disclosure on liquidity risk for L&T Finance Limited as at March 31,2025 is given below:

(vi) Institutional set-up for Liquidity Risk Management

The Company''s Board of Directors is responsible for overseeing and managing all risks, including liquidity
risk, in the Company''s business. The Board approves the governance structure, policies, strategy and the
risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the
Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review
of various aspects and types of risks, including liquidity risk, faced by the Company. The meetings of
RMC are held at quarterly interval. Further, the Board of Directors also approves constitution of Asset
Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability

management of the Component from risk-return perspective and within the risk appetite and guard-rails/
limit approved by the Board. The main objective of ALCO is to assist the Board and RMC in effective
discharge of the responsibilities of asset-liability management, market risk management, liquidity and
interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board.
ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment
of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time
to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next
meeting for its perusal/approval/ratification.

(vi) Disclosure on Liquidity Coverage Ratio

RBI has issued final guidelines on Liquidity Risk Management Framework for Non-Banking Financial
Companies and Core Investment Companies on November 04, 2019. As per the said guidelines, LCR
requirement shall be binding on all non-deposit taking systemically important NBFCs with asset size of
? 10,000 crore and above from December 1, 2020, with the minimum LCR to be 50%, progressively
increasing, till it reaches the required level of 100%, by December 1,2024, as per the time-line given below:

Foreign Exchange Rate Risk:

In the normal course of its business, the Company does not deal in foreign exchange in a significant way. Any
foreign exchange exposure on account of foreign exchange borrowings is fully hedged to safeguard against
exchange rate risk. The Company''s treasury risk management policy covers the framework for managing
currency risk including hedging. The Company determines hedge effectiveness for hedging instrument
at the inception of the hedge relationship and through periodic prospective effectiveness assessments
to ensure that an economic relationship exists between the hedged item and hedging instrument. The
Company enters into hedge relationships where the critical terms of the hedging instrument match with the
terms of the hedged item, and so a qualitative and quantitative assessment of effectiveness is performed.

Interest Rate Risk:

Interest rate risk, which arises from changes in market interest rates affecting the Company''s Net Interest
Income (NII) is mitigated by the Company''s ALM Policy, which stipulates Interest Rate Sensitive Gaps for all the
time-buckets. An Interest Rate Sensitivity Statement, prepared monthly and presented to ALCO, tracks these
gaps, specifically the mismatch between the Rate Sensitive Assets and Liabilities across various time buckets.

Security Prices:

The Company''s investment portfolios consist of government securities, corporate bonds and debentures.
To mitigate credit and interest rate risk, risk limits in the form of portfolio size limits, concentration limits
and mark to market (MTM) limit are stipulated. Early warning indicators in the form of alarm limits have
also been put in place. Reporting periodicity and escalation matrix upon the breach of alarm limits as well
as risk limits have been clearly defined. The Company does not invest in Equity stocks and therefore is not
exposed to equity price risk.

b) the additional Gross NPAs identified by RBI exceeds 5 percent of the reported Gross NPAs for financial year
2024-25 : Nil

49.15 Disclosure of Gold Loan Portfolio

There were no loans given against the collateral of gold jewellery and hence the percentage of such loans to
the total outstanding asset is Nil (Previous Year Nil).

49.16 Disclosure of Gold Auction

The company doesn''t have any gold loan product. Hence Not applicable.

49.17 Overseas Assets (for those with Joint Ventures and Subsidiaries abroad)

The company does not have any joint venture or subsidiary abroad, hence not applicable.

49.18 Off-balance Sheet SPVs sponsored

The company does not have any Off-balance Sheet SPVs sponsored, hence not applicable.

49.19 Credit Default Swaps

The company has not undertaken any Credit Default swaps transaction during the current year and previous
year.

49.20 Participation in Currency Options and Currency Futures

The company has not undertaken any transaction during the current year and previous year for currency
options and currency futures.

49.21 Asset Liability Management Maturity pattern of certain items of Assets and Liabilities:

Footnote: As per para 2(b) of RBI circular RBI/2019-20/170/DOR (NBFC).CC.PD.No.109/22.10.106/2019-
20 dated March 13, 2020, Where impairment allowance under Ind AS 109 is lower than the provisioning
required under Income Recognition, Asset Classification and Provisioning (IRACP) (including standard asset
provisioning), NBFCs shall appropriate the difference from their net profit or loss after tax to a separate
''Impairment Reserve''. However total IND AS 109 impairment allowance is higher by ? 3,066.28 crore as
compare to IRACP, hence appropriation to impairment reserve is not required during the financial year.

49.23 Schedule to the Balance Sheet of non-banking financial company (as required in terms of paragraph 31 of
Reserve Bank of India Non-Banking Financial Company Scale Based Regulation) Directions 2023, issued by
Reserve Bank of India dated October 19, 2023 as amended vide circular No. RBI/DoR/2023-24/106DoR.FIN.
REC.NO.45 /03.10.119/2023 24 (the "RBI Master Directions")

*Included for the purpose of arithmetical accuracy

Note : 1 This includes one-time restructuring implemented as prescribed in the notifcation no. RBI/2020-21/16 DOR.NO.BP.
BC/3/21.04.048/2020-21 Resolution Framework for COVID-19-related Stress and RBl/2021-22/31/DOR.STR.REC. 11
/21.04.048/2021-22 Resolution Framework - 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses
dated May 05, 2021.

2 Since the disclosure of restructured accounts pertains to section âOthers", the first two sections namely âUnder CDR
Mechanism" and âUnder SME Debt Restructuring Mechanism" as per the format prescribed in the Master Direction -
Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, company are not
included above.

51 The Company uses accounting softwares for maintaining its books of account, which has a feature of recording
audit trail (edit log) facility and that has operated throughout the year for all relevant transactions recorded in
these softwares.

However, the audit trail/logs in respect of direct changes made at the database level, if any, are not enabled. The
Company uses an alternate tool to monitor such database-level changes. Further, the audit trail records except
for the database-level changes as mentioned above, have been preserved by the Company in accordance with
the applicable statutory requirements relating to the retention of books of account.

52 The following additional information (other than what is already disclosed elsewhere) is disclosed
in terms of amendments dated March 24, 2021 in Schedule III to the Companies Act 2013 with effect
from 1st day of April, 2021:-

(a) There is no proceeding initiated or pending against the company during the year for holding any benami
property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(b) The company is not declared wilful defaulter by any bank or financial Institution or any other lenders.

(c) Being a systemically important non-banking financial company registered with the Reserve Bank of India
as per Reserve Bank of India Act, 1934 (2 of 1934), the provisions prescribed under clause (87) of section
2 of the companies Act 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not
applicable to the company.

(d) There is no scheme of arrangements has been approved during the year by the Competent Authority in
terms of sections 230 to 237 of the Companies Act, 2013 other than disclosed under note 53.

(e) There is no transaction that has not been recorded in the books of accounts and surrendered or disclosed
as income during the year in the tax assessments under the Income Tax Act, 1961.

(f) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial
year.

(g) The Company has obtained borrowings from banks or financial institutions on the basis of security of
current assets and quarterly returns or statements of current assets filed by the Company with banks or
financial institutions are in agreement with the books of accounts.

(h) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium
or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary
shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(i) The Company has not received any funds from any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Company
shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(j) There are no creation or satisfaction of charges as at March 31, 2025 pending with ROC beyond the
statutory period.

(k) The Company has utilised all the borrowings for the purpose for which they have been borrowed.

53 The amalgamation of the erstwhile L&T Finance Limited, L&T Infra Credit Limited and L&T Mutual Fund Trustee
Limited with the Company, with appointed date of April 1,2023, by way of merger by absorption pursuant to
a scheme of arrangement (the Scheme) under the provisions of Sections 230 - 232 read with Section 52 and
other relevant provisions of the Companies Act, 2013 (including the rules thereunder) has become effective
from December 04, 2023 in accordance with the terms of the scheme.

Pursuant to the aforesaid scheme and necessary approval inter alia from the Registrar of Companies, name of
the Company has been changed from L&T Finance Holdings Limited to L&T Finance Limited w.e.f. March 28,
2024.

54 There are no due and outstanding amount to be credited to Investor Education & Protection Fund as at
March 31, 2025.

55 Previous year figures have been regrouped/reclassified wherever necessary, to make them comparable with
the current year figures.

56 The above financial statements have been reviewed by the Audit Committee and subsequently approved by
the Board of Directors at its meeting held on April 25, 2025.

In terms of our report attached of even date For and on behalf of the Board of Directors of

For Brahmayya and Co., For T R Chadha & Co LLP L&T Finance Limited

Chartered Accountants Chartered Accountants (formerly Known as L&T Finance Holdings Limited)

ICAI FRN: 000515S ICAI FRN: 006711N/N500028

P.S. Kumar Vikas Kumar S. N. Subrahmanyan Sudipta Roy

Partner Partner Non-Executive Chairman Managing Director &

Membership No. 015590 Membership No. 075363 (DIN: 02255382) Chief Executive Officer

(DIN: 08069653)

Sachinn Joshi Apurva Rathod

Chief Financial Officer Company Secretary

Membership No: A18314

Place : Mumbai Place : Mumbai Place : Mumbai

Date : April 25, 2025 Date : April 25, 2025 Date : April 25, 2025

Mar 31, 2024

Nature of Security :

The Debentures are secured by way of first/second charges, having pari passu right, as the case may be, on the company''s specified immovable properties and specified lease/term loan receivables.

Secured redeemable non convertible debentures public issue :

The Company has utilised fund raised through public issue for the purpose of onward lending, financing, refinancing the existing indebtedness of the Company (payment of interest and/or repayment/prepayment of principal of borrowings) and general corporate purpose. Total unutilised balance amount of Nil is in current account (includes ? 0.11 crore unutilised from amount raised in previous year).

Nature of Security :

The Debentures are secured by way of first/second charges, having pari passu right, as the case may be, on the company''s specified immovable properties and specified lease/term loan receivables.

Secured redeemable non convertible debentures public issue :

The Company has utilised fund raised through public issue for the purpose of onward lending, financing, refinancing the existing indebtedness of the Company (payment of interest and/or repayment/prepayment of principal of borrowings) and general corporate purpose. Total unutilised balance amount of ? 0.11 crore is in current account (includes ? 0.13 crore unutilised from amount raised in previous year).

The Company has only one class of equity shares having a par value of ? 10 per share. Members of the Company holding equity shares capital therein have a right to vote, on every resolution placed before the Company and right to receive dividend. The voting rights on a poll is in proportion to the share of the paid up equity capital of the Company held by the shareholders. The Company declares dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(h) Capital Management

- The objective of the Company''s Capital Management is to maximise shareholder value, safeguard business continuity and support the growth of its Group. The Group determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through loans and operating cash flows generated. The debt equity ratio is 3.30 as at March 31,2024 (as at March 31, 2023 was 3.90).

- During the year ended March 31,2024, the Company has paid the final dividend of ? 2.00 per equity share for the year ended March 31, 2023 amounting to ? 496.61 crore. (PY 2022-23 - ? 123.75 crore).

The Compnay has proposed a final dividend of ? 2.50 per share in the Board meeting subject to approval

from shareholders.

(I) Employee Stock Option Scheme

- The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme-2010) and 2013 (ESOP Scheme 2013). 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 allotted under the scheme 2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively from the end of 12 months from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under the scheme 2013 are vested in a graded manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year, commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each year, commencing from the end of 12 months from the date of grant.

- Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

- The option granted under scheme 2010 is at exercise price of ? 44.20. The option granted under scheme 2013 can be exercised either at market price which was the last closing price on National stock exchange preceding the date of grant or w.e.f. July 10,2019 ? 10 respectively.

- During the year ended March 31, 2024 4,98,750 and 87,70,443 options were allotted under the scheme 2010 and 2013 respectively.

- During the year, the Company has debited to the Statement of Profit and Loss ? 38.01 crore (previous year ? 25.74 crore) {net of recovery from its subsidiary companies during the year ? -0.16 (Previous year ? -0.09 crore)} towards the stock options granted to their employees, pursuant to the employee stock option schemes.

- Weighted average fair values of options granted during the year is ? 118.74 (Previous year: ? 69.48) per options.

Notes:

1. Debenture Redemption Reserve: The Ministry of Corporate Affairs vide notification dated August 16, 2019, amended the Companies (Share capital and Debenture) Rules, 2014 by which the Company is no longer required to create DRR towards the debentures issued. Earlier to this amendment, the Company was required to maintain a DRR of 25% of the value of debentures issued, either by a public issue or on a private placement basis and the amounts credited to the DRR was not to be utilised by the Company except to redeem debentures. The above amount represents the DRR created out of profits of the Company prior to the said notification.

2. Securities Premium: The amount received in excess of face value of the equity shares is recognised in Securities Premium. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

3. Capital Reserve: It represents the gains of capital nature which mainly include the excess of value of net assets acquired over consideration paid by the Company for business amalgamation transactions.

4. General Reserve: The Companies (Transfer of Profits to Reserves) Rules, 1975 read with Section 205(2A) of the Companies Act, 1956, prohibited declaration of dividend for any financial year out of profits of the company for that year except after the transfer of a specified percentage of the profits not exceeding 10%, to its reserves. Amounts were transferred to General Reserve to comply with these provisions. The Companies Act, 2013, does not mandate such a transfer.General reserve is a free reserve available to the Company.

5. Reserve u/s 45 IC of Reserve Bank of India Act, 1934: The Company created a reserve pursuant to section 45 IC the Reserve Bank of India Act, 1934 by transferring amount not less than twenty per cent of its net profit every year as disclosed in the Statement of Profit and Loss and before any dividend is declared.

6. Reserve u/s 29C of National Housing Bank, 1987: During the financial year 2020-21, upon amalgamation of the erstwhile L&T Housing Finance Limited (the "Transferor Companies") with L&T Finance Limited (the "Transferee Company"), the statutory reserves (i.e. Reserve under section 29C of National Housing Bank, 1987) of the Transferor Companies is also transfer to the Transferee Company.

7. Reserve u/s 36(1)(viii) of Income Tax Act, 1961: In respect of any special reserve created and maintained by a specified entity, an amount not exceeding twenty percent of the profits derived from eligible business computed under the head "Profits and gains of business or profession" (before making any deduction under this clause) is carried to such reserve account.

8. Amalgamation Adjustment Account: Upon amalgamation of the erstwhile L&T Finance Limited and the erstwhile L&T Fincorp Limited (the "Transferor Companies") with Family Credit Limited (the "Transferee Company" which was renamed as L&T Finance Limited") the statutory reserves (i.e. Debenture Redemption Reserve, Reserve under section 45 IC of the Reserve Bank of India Act, 1934 and Reserve under section 36(1)(viii) of the Income tax Act, 1961) of the Transferor Companies as on April 01, 2016 (the Appointed Date") with a corresponding debit to Amalgamation Adjustment Account. As the corresponding statutory reserve unwind, the Amalgamation Adjustment Account is also reversed.

9. Retained Earnings: Retained earnings represent the amount of accumulated earnings of the Company.

10. Employee Stock Option Outstanding Account: The reserve is used to recognise the fair value of the options issued to employees of the Company and subsidiary companies under Company''s employee stock option scheme.

11. Impairment Reserve: As per the RBI circular RBI/2019-20/170 dated March 13, 2020, where the guidelines require NBFCs to hold impairment allowances as required by Ind AS. In parallel NBFCs are required to compute provisions as per extant prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP). A comparison, as prescribed, between provisions required under IRACP and

impairment allowances made under Ind AS 109 is required to be disclosed by NBFCs in the notes to their financial statements to provide a benchmark to their Boards, RBI supervisors and other stakeholders, on the adequacy of provisioning for credit losses. Where impairment allowance under Ind AS 109 is lower than the provisioning required under IRACP (including standard asset provisioning), NBFCs are required to appropriate the difference from their net profit or loss after tax to a separate ''Impairment Reserve''. The balance in the ''Impairment Reserve'' shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI. The said reserve was created in LTICL and the company previously, which has been now carried forward to amalgamated Company (refer note 55).

34 Disclosure pursuant to Ind AS 19 âEmployee Benefits"

(i) Defined Contribution Plan:

The Company''s state governed provident fund scheme are defined contribution plan for its employees and for a certain categories of employees made to a trust viz. the Larsen & Toubro Officers & Supervisory Staff Provident Fund constituted by the ultimate parent company, which is permitted under The employee''s Provident Funds and Miscellaneous Provisions Act, 1952. The Contribution by the employer and employee together with interest accumulated there on are payable to the employee at the time of separation from company or retirement whichever is earlier. The benefit vets immediately on rendering of services by the employee. In addition to the above, information relating to the scheme operated by the trust constituted by the holding company is given in the note (iii) below.

The Company has recognised charges of ? 56.67 crore (previous year: ? 47.14 crore) for provident fund contribution, is included in "Note 30 Employee Benefits Expenses" in the Statement of Profit and Loss.

The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days last salary 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 favorable as compared to the obligation under Payment of Gratuity Act, 1972. These benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and investment risk.

(A) Discount rate:

The discount rate based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

(B) Salary escalation rate:

The estimates of future salary increase considered takes into account the inflation, seniority, promotion and other relevant factors.

(g) Attrition Rate:

The attrition rate varies from 6% to 44% (previous year: 6% to 31%) for various age groups.

(h) Mortality:

Published rates under the Indian Assured Lives Mortality (2012-14) Ult table.

In respect of the contribution by the employer and employee to the provident fund trust constituted by the ultimate parent company, in terms of the guidance note issued by the Institution of Actuarial of India for the measurement of provident fund liabilities, the actuary engaged by the Company has provide the following information in this regards:

(A) Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the valuation date for the estimated term of the obligations.

(B) Average historic yield on the investment portfolio:

The average rate of return earned on the investment portfolio of provident fund in the previous three years.

Expected investment return is determined by adding the yield spread to the discount rate for a term of the obligation, where yield spread is the difference between the average historic yield on the investment portfolio & discount rate for the remaining term to maturity of the investment portfolio.

(D) Guaranteed rate of return:

The Regional Provident Fund Commissioner has not yet declared the interest rate for its own subscribers for the current financial year 2023-24.

However, in view of the fall in equity values as at March 31, 2024 and fall in the returns on fixed income instruments, we are of the view that going forward the future guaranteed rate is unlikely to be in excess of 8.25% p.a. (previous year: 8.15% p.a.).

iv) Interest expense on lease liabilities for F.Y. 2023-24 is ? 4.43 crore and for F.Y. 2022-23 is ? 2.82 crore.

v) Expense relating to leases for which underlying asset is of low value for F.Y. 2023-24 is ? 5.39 crore and for F.Y. 2022-23 is ? 7.03 crore

vi) Expense related to short-term leases for F.Y. 2023-24 is ? 83.21 crore and for F.Y. 2022-23 is ? 56.45 crore

vii) Expense related to variable lease payments for F.Y. 2023-24 is Nil and F.Y. 2022-23 is Nil

viii) Income from sub-leasing of right of use assets for F.Y. 2023-24 is ? 0.87 crore and for F.Y. 2022-23 is ? 2.09 crore

ix) There are no gains or losses arising from sale and leaseback transactions ? Nil for F.Y. 2023-24 and F.Y. 2022-23.

b) Finance Lease : Not Applicable

II) Company as Lessor a) Finance Lease

i) The Company has given on finance leases certain items of plant and equipment. The leases have a primary period that is fixed and noncancellable and a secondary period. There are no exceptional/restrictive covenants in the lease agreement. There are no significant risks associated with rights that the Company retains in underlying assets.

iii) Lease income recognised in Profit & Loss account (Other than variable lease payment) for F.Y. 2023-24 is Nil crore and for F.Y. 2022-23 is ? 0.07 crore

iv) Lease income relating to variable lease payments not depending on index/rate : Nil

36 Corporate Social Responsibility (CSR)

Amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year is ? 1.23 crore (previous year: ? 17.46 crore).

(a) The amount recognised as expense in the Statement of Profit and Loss on CSR related activities is ? 1.23 crore (previous year: ? 17.46 crore) (Refer note no. 32 of financial statements), which comprises of:

New project(s) / program(s) of on-going nature were identified and launched during the financial year on account of which the entire mandated CSR spend amount could not be consumed within the FY under review. The unspent amount against the said project(s) / program(s) has since been transferred into the "Unspent CSR Account" to be utilized for these project(s) / program(s) within the next three financial years.

(d) Nature of CSR activities during the financial year 2022-23

The payment for the CSR activities are done for Digital Financial Literacy and Entrepreneurship Development, Tree Plantation and Capacity Building of Water User Groups, creating awareness on Road Safety and Healthcare.

(e) Nature of CSR activities during the financial year 2023-24

The payment for the CSR activities are done for Digital Financial Literacy and Entrepreneurship Development, Tree Plantation, Capacity Building of Water User Groups, creating awareness on Road Safety and Healthcare.

(f) Excess during the financial year 2023-24

The Company has spent excess amount towards new project(s) / program(s) and the excess spent amount shall be set off against the required 2% CSR expenditure in the next three financial years.

38 Disclosures pursuant to Ind AS 37 âProvisions, Contingent Liabilities and Contingent Assets" (? in crore)
Particulars	As at March 31, 2024	As at March 31, 2023
Contingent Liabilities: a) Claim against the Company not acknowledged as debt: - Income Tax matter in dispute*	11.07	11.12
- Sales tax/ VAT / Service Tax / Stamp duty matter in dispute*	466.71	528.59
- Legal matter in dispute*	1.82	1.67
b) Bank Guarantees	56.00	6.00
c) Other money for which the Company is contingently liable	-	260.05
Liability towards Letter of Credit(net of margin money) Commitments a) Estimated amount of contracts remaining to be executed on	30.10	25.06
capital account and not provided for# b) Undisbursed Commitment	972.34	847.52

Note: *In respect of disputes, the company is of view of succeeding in appeals and does not expect any significant liabilities to materialise.

# Figures reported above are excluding GST

46 During the previous year, Due to data migration issues, the first installment principal repayment on nonconvertible security (INE691I07240) amounting to ? 71.43 crore was credited to bondholders account on October 19, 2022, instead of the due date of October 18, 2022, along with the applicable additional interest for 1 day. This delay was promptly resolved to ensure that future payments are not affected and appropriate disclosures were made to stock exchange & rating agencies. Credit reports further confirmed that this was a one-off event due to a technical issue and did not reflect any liquidity stress or financial inability of the

Company to service its debt on time. The Company had sufficient liquidity available in the form of cash and liquid investments of ? 7,511 crore as on September 30, 2022 (around ? 4,500 crore as on October 18, 2022), in addition to unutilised bank lines & credit line from Larsen & Toubro Limited and the incident did not indicate any change in the Company''s inherent credit quality.

47 Exceptional items in the year ended March 31, 2023 of the aforesaid results includes:

(i) Gain of ? 283 crore on the reduction of 3,12,00,000 (Three Crore Twelve Lakh) fully paid-up equity shares of face value of ? 10 each of the wholly owned subsidiary company, L&T Investment Management Limited ("LTIM")

(ii) Gain of ? 2,575.09 crore on the divestment of its entire stake in the subsidiary company, LTIM and

(iii) The one-time fair valuation loss of ? 2,687.17 crore on reclassification consequent to change in business model and fair valuation of the wholesale loan asset portfolio as part of Lakshya 2026 strategy.

48 Risk Management Basis

Great importance is attached to the identification, measurement and control of risks. All employees of the Company are responsible for the management of risk, with the ultimate accountability residing with the Board of Directors. The Board of Directors and its Risk Management Committee ensure that Management takes into consideration all the relevant risk factors which could lead to unexpected fluctuations in results or to a loss of capital employed. Recommendations for risk control measures are derived from the evaluation of the risk factors. Certain risks are also recognized as opportunities. The aim in such cases is to achieve an appropriate balance between the possible losses which might result and the potential gains. Risks which primarily represent loss potential are minimized. This helps in aligning the risk appetite to the Company''s strategy to deliver sustainable, long term returns to its investors.

The risks are reviewed periodically every quarter.

Types of risk

As a lending non-banking financial company, the most important risks it is faced with are the following:

â¢ Credit risk

â¢ Market risk

â¢ Capital risk Credit risk

Credit risk is the risk of suffering financial loss, should any of the Company''s customers or counterparties fail to fulfill their contractual obligations to the Company.

Credit risk arises mainly from retail and wholesale loans and advances and loan commitments arising from such lending activities; but could also arise from credit enhancement provided, such as financial guarantees and letters of credit. The Company is also exposed to other credit risks arising from investments in debt securities and exposures arising from its trading activities ("Trading Exposures") as well as settlement balances with market counterparties.

Credit risk is the single largest risk for the Company''s business. Management therefore carefully manages its exposure to credit risk. A centralised risk management function oversees the risk management framework and an overview of credit risk of portfolio is periodically presented to the Risk Management Committee.

Credit-worthiness is assessed prior to signing any contracts, based on underwriting process including employing market information. Management endeavours to improve its underwriting standards to reduce the credit risk the Company is exposed to from time to time.

Loans and advances (including loan commitments and guarantees)

The estimation of credit exposure for risk management purposes is complex, as the exposure varies with changes in market conditions, expected cash flows and the passage of time. Wholesale and retail portfolios are managed separately to reflect the differing nature of the business strategy. As the Company is completely exiting the wholesale business by way of sell down, the wholesale portfolio is classified as Fair Value through Profit and Loss Account ("FVTPL") and valued accordingly as per Ind AS 109. As regards the retail portfolio, the same is classified as amortized cost as per Ind AS 109 and assessed accordingly. The assessment of credit risk of the retail portfolio entails estimations as to the likelihood of defaults occurring and of the associated loss ratios. The Company measures credit risk for each class of loan assets using inputs such as -Probability of Default ("PD") and Loss Given Default ("LGD"). PD and LGD are ascertained as per Ind AS 109.

Retail Business (Rural and Urban Finance)

The Company has deployed standardised credit decision rules, as approved by the designated officials for the specific product. The rules are regularly monitored to ensure that the learnings from the portfolio performance and changes in the economic environment have been factored into the credit decision rules.

Trading Exposures

For debt securities in the trading portfolio, external rating agency credit grades and internal rating are used for evaluating the credit risk.

Expected Credit Loss (''ECL'')

As required by the extant guidelines (notification dated March 30, 2016 issued by the Ministry of Corporate Affairs) the Company adopted IND AS (with effect from April 1, 2017) and has been preparing IND AS based financial statements for accounting period beginning from April 1,2018 onwards.

As per RBI notification on acceptance of IND AS for regulatory reporting, the Company computes provision as per IND AS 109 as well as per extant prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP). Where impairment allowance in aggregate for the Company under Ind AS 109 is lower than the provisioning required under IRACP (including standard asset provisioning) for the Company, the difference is appropriated from net profit or loss after tax to a separate ''Impairment Reserve''. Any withdrawals from this reserve shall be done only with prior permission from the RBI.

ECL allowances recognised in the financial statements also reflect the effect of a range of possible economic outcomes, calculated on a probability weighted basis, based on certain economic scenarios. The recognition and measurement of ECL involves use of significant judgment and estimation. Forward looking economic forecasts are used in developing the ECL estimates. Multi variable regression framework is used to establish a linkage between company''s default rates and various macroeconomic variables like unemployment rate, GDP, inflation, domestic credit investment, farm reservoir levels amongst others. Three scenarios sufficient to calculate unbiased ECL are used - representing the "most likely outcome" (the "Central" scenario) and two "less likely outcome" scenarios (the "Upside" and "Downside" scenarios).Probability weights have been assigned to each scenario based on Company''s outlook of the economic forecasts.

Management oversees the estimation of ECL including:

i. setting requirements in policy, including key assumptions and the application of key judgements;

ii. the design and execution of models; and

iii. review of ECL results.

As required by Ind AS 109, a ''three-stage'' model for impairment based on changes in credit quality since initial recognition was built as summarised below:

â¢ A loan asset that is not credit-impaired, on initial recognition, is classified in ''Stage 1'' and has its credit risk continuously monitored by Management.

â¢ If a significant increase in credit risk (''SICR'') since initial recognition is identified, the loan asset is moved to ''Stage 2'' but is not yet deemed to be credit-impaired. (See note 1.8 for a description of how the Company determines when a significant increase in credit risk has occurred).

â¢ If the financial instrument is credit-impaired, the financial instrument is then moved to ''Stage 3''. (See note 1.8 for a description of how the Company defines credit-impaired and default).

The following are additional considerations for each type of portfolio held by the Company:

Retail Business- (Rural and Urban Finance)

Retail lending credit quality is determined on a collective basis based on a 12-month point in time ("PIT") probability weighted PD for all loan asset that are not credit-impaired and for assets with SICR, lifetime probability weighted PIT PD is used. PD for credit impaired asset is 1 as the DPD is 90 .

A centralised impairment model summarises the historical payment behavior of the borrowers within a retail portfolio which data is used to build the PD estimates. For estimating PD, information on days-past-due and month-on-book (vintage) (for certain products) form key differentiating characteristics. The weighted average is determined (using count of customers as the weight) from quarterly snapshots.

LGD is computed based on actual history of loss (on settlement/repossession and disposal of security/ enforcement action) from the same historical quarterly snapshots. The loss divided by the principal outstanding at the time of default is the loss ratio for a credit impaired loan asset in a specific snapshot. The weighted average of loss ratios (using the principal outstanding in respect of such credit impaired loan assets in the corresponding snapshot as the weight) is used to determine the LGD ratio for credit impaired loan assets.

The PD and LGD ratio are used to arrive at the ECL for all stages of loan assets.

Exposure at Default (EAD)

EAD is the amortised cost as at the period end, after considering repayments of principal and interest received in advance, if any.

(i) Retail loans, other than unsecured loans aggregating ? 42,732.48 crore as of March 31,2024, are generally secured by a charge on the asset financed (farm equipment loans, two-wheeler loans, Home loans and loans against property) (as of March 31,2023: ? 34,109.08 crore). If the customer fails to pay, the Company would, as applicable, liquidate collateral and/or set off accounts. For most products, the Company obtains direct debit instructions from the customer. It is a criminal offence in India to issue a bad cheque.

(ii) Wholesale loan assets are secured with current assets as well as immovable property and property, plant and equipment in some cases. However, collateral securing each individual loan may not be adequate in relation to the value of the loan. If the customer fails to pay, the Company would, as applicable, liquidate collateral and/or set off accounts. For most products, the Company obtains direct debit instructions from the customer. It is a criminal offence in India to issue a bad cheque

Of the unmitigated on balance sheet exposure, a significant portion relates to cash held with banks, settlement balances, and debt securities issued by governments all of which are considered to be lower risk.

Besides growth in the loan assets portfolio, increases in trading portfolio assets and financial assets at fair value through the Statement of Profit and Loss have also contributed to the increase in the Company''s net exposure to credit risk. Investments in debt instruments are predominantly investment grade.

Where collateral has been obtained in the event of default, the Company does not, ordinarily, use such assets for its own operations and they are usually sold and off set against the outstanding loan assets.

The Company has invoked pledge of equity shares and Non-Convertible debentures ("NCD") (Refer Note 40), pledged with the Company as collateral by the borrowers and those shares are being held by the Company as bailee.

Concentration of exposure

Concentrations of credit risk arise when a number of counterparties or exposures have comparable economic characteristics, or such counterparties are engaged in similar activities or operate in the same geographical areas or industry sectors so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political or other conditions. The Company has established a diversified borrower base and as at March 31, 2024. The Company has put in place a framework of Risk Limits, which are monitored on a quarterly basis to ensure that the overall portfolio is steered within the approved limits to minimize concentration risk. The Risk Limits cover risk of concentration to a particular geography, industry, Company/ borrower or revenue counterparty of the borrowers etc. as are relevant to the respective product.

Market Risk Management

Liquidity Risk:

The risk that the Company is unable to service its contractual or contingent liabilities or that it does not have the adequate amount of funding and liquidity to support its committed disbursements.

Liquidity risk management in the Company is managed as per the guidelines of Board-approved Asset-Liability Management (''ALM'') Policy. The ALM Policy provides the governance framework for the identification, measurement, monitoring and reporting of liquidity risk arising out of Company''s lending and borrowing activities. The liquidity risk is measured in terms of structural liquidity gaps across various time-buckets and also by setting up limits on relevant liquidity stock ratios. Actual liquidity gaps against the Gap Limits are reported every month to the Asset Liability Management Committee (''ALCO''). Given the current market scenario, the Company has been maintaining positive cumulative liquidity gaps for all the time-buckets upto 1 year as a prudent risk management practice.

The Company also periodically undertakes liquidity stress testing under various liquidity stress scenarios. It maintains liquidity buffer for survival period of 30 days in the forms of High Quality Liquid Assets under 1-in-10 liquidity stress scenario, wherein hair-cut of 40% on undrawn bank lines and collection shortfall of 15% is assumed. To effectively manage the fallout of the COVID-19 pandemic related RBI measures on its funding and liquidity, the Company has been continuously maintaining higher level of liquidity buffer as a

safeguard against any likely disruption in the funding and market liquidity. Further the Company has defined a few Early Warning Indicators (EWI) and its thresholds as part of its Contingency Funding Plan (CFP) to help signal towards a potential evolving liquidity crisis and so as to enable appropriate steps to be taken in a timely manner. These EWIs are monitored on a regular basis.

Further, Reserve Bank of India has issued final guidelines on Liquidity Risk Management Framework for NonBanking Financial Companies and Core Investment Companies on November 04, 2019. As per the said guidelines, NBFC are required to publicly disclose the below information related to liquidity risk on a quarterly basis. Accordingly, the disclosure on liquidity risk as at March 31, 2024 is as under:

â¢ A "Significant counterparty" is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the NBFC-NDSI''s, NBFC-Ds total liabilities and 10% for other non-deposit taking NBFCs.

â¢ Total Liabilities has been computed as Total Assets less Equity share capital less Reserve & Surplus and computed basis extant regulatory ALM guidelines.

â¢ Commercial Paper for stock ratio is the Gross outstanding (i.e. Maturity amount).

â¢ Other Short-term Liabilities has been computed as Total Short-term Liabilities less Commercial paper less Non-convertible debentures (Original maturity of less than one year), basis extant regulatory ALM guidelines.

(vi) Institutional set-up for Liquidity Risk Management

The Board of Directors of the Company has an overall responsibility and oversight for the management of all the risks, including liquidity risk, to which the Company is exposed to in the course of conducting its business. The Board approves the governance structure, policies, strategy and the risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company. The meetings of RMC are held at quarterly interval. Further, the Board of Directors also approves constitution of Asset Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and guard-rails/ limits approved by the Board. The main objective of ALCO is to assist the Board and RMC in effective discharge of the responsibilities of asset-liability management, market risk management, liquidity and interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board. ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusal/approval/ratification.

(vii) Disclosure on Liquidity Coverage Ratio

RBI has issued final guidelines on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies on November 04, 2019. As per the said guidelines, LCR

requirement shall be binding on all non-deposit taking systemically important NBFCs with asset size of ? 10,000 crore and above from December 1, 2020, with the minimum LCR to be 50%, progressively increasing, till it reaches the required level of 100%, by December 1, 2024, as per the time-line given below:

1 Unweighted values calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows). Averages are calculated basis simple average of daily observations for the quarterly LCR.

2 Weighted values calculated after the application of respective haircuts (for HQLA) and stress factors on inflow and outflow

3 Unsecured wholesale funding includes cash outflow on account of CP, ICD & unsecured Debenture repayments

4 Secured wholesale funding includes all other borrowing repayments

5 Other cash inflows amongst others includes liquidity maintained in the form of Liquid Mutual funds, Fixed deposit placed with banks as well as available undrawn funding lines

6 All of the HQLA, cash inflows and outflows are in rupee terms and there is no currency mismatch.

7 The above LCR ratios are prepared on the baisis of RBI guidelines prescribed for liquidity risk management framework and same has been reported by management on quartely basis and same is relied upon by auditors.

Foreign Exchange Rate Risk:

In the normal course of its business, the Company does not deal in foreign exchange in a significant way. Any significant foreign exchange exposure on account of foreign exchange borrowings is fully hedged to safeguard against exchange rate risk.

Interest Rate Risk:

Interest rate risk is the risk where changes in market interest rates affect the Company''s financial position due to change in its Net Interest Income (NII). To mitigate interest rate risk, ALM Policy of the Company stipulates Interest Rate Sensitive Gaps for all the time-buckets. Interest Rate Sensitivity Statement is prepared every month and placed before ALCO. The Statement captures the Rate Sensitive Gaps i.e. the mismatch between the Rate Sensitive Assets and Liabilities, in various time buckets.

Security Prices:

The Company manages investment portfolios comprising government securities, corporate bonds and debentures. To safeguard against the credit risk and interest rate risk in the investment portfolios, risk limits in the form of portfolio size limits, concentration limits and stop loss limit are stipulated. To provide early warning indicators, alarm limits have also been put in place. Reporting periodicity and escalation matrix upon the breach of alarm limits as well as risk limits have been clearly defined. The Company does not invest in Equity stocks and therefore is not exposure to equity price risk on this account.

49.9 Capital management (i) Risk management

As an NBFC, the RBI requires us to maintain a minimum capital to risk weighted assets ratio ("CRAR") consisting of Tier I and Tier II capital of 15% of our aggregate risk weighted assets out of which Tier I Capital should be at least 9% of risk weighted assets. Further, the total of our Tier II capital cannot exceed 100% of our Tier I capital at any point of time. The capital management process of the Company ensures to maintain a healthy CRAR at all the times. Refer note 51.1 for the Company''s Capital ratios.

The Company''s objectives when managing capital are to

(a) safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

(b) Maintain an optimal capital structure to reduce the cost of capital.

(c) The Company''s assessment of capital requirement is aligned to its planned growth which forms part of an annual operating plan which is approved by the Board and also a long range strategy. These growth plans are aligned to assessment of risks - which include credit, liquidity and market.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

51 The following additional information is disclosed in the terms of Master Direction - Non-Banking Financial Company - Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India vide circular no. RBI/ DNBR/2016-17/45 Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 as amended (the âRBI Master Directions").

The disclosures as required by the RBI Master Directions has been prepared as per Indian Accounting Standards as mentioned in RBI circular RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13, 2020.

During the current financial year, L&T Finance Limited ("LTF"), L&T Infra Credit Limited (formerly known as L&T Infra Debt Limited) ("ICL") and L&T Mutual Fund Trustee Limited ("LTMFTL") merged with the company i.e. L&T Finance Holdings Limited which under the scheme is renamed as L&T Finance Limited ("the Company") (refer note 55). The Figures for the current financial year under the disclosure as required in RBI Master Directions represents the figures of the amalgamated Company from the appointed date April 01, 2023. The Figures for the previous financial year are same as disclosed in the previous year audited financial Statement of the Company, hence figures for the current year ended March 31, 2024 are not comparable with figures for the previous year ended March 31, 2023.

II) Exchange Traded Interest Rate (IR) Derivatives: The Company has not traded in exchanged traded Interest Rate Derivative during the financial year ended March 31, 2024 (Previous year : Nil).

III) Disclosures on Risk Exposure in Derivatives Qualitative Disclosure

The Company has a Treasury Risk Management Policy approved by the Assets Liability Committee and the Board. This policy provides the framework for managing various risks including interest rate risk and currency risk. The policy provides for use of derivative instruments in managing the risks.

The Company has sourced External Commercial Borrowing in foreign currency. The same has been hedged as required by RBI.

II) Details of securitisation transactions undertaken by applicable NBFCs

There are no securitisation transactions during the year (previous year : Nil), hence relevant disclosure is not applicable.

III) Details of Assignment transactions undertaken by applicable NBFCs

There are no assignment transactions during the year (previous year : Nil), hence relevant disclosure is not applicable.

IV) Details of non-performing financial assets purchased/sold from/to NBFCs: During the current and previous year, no non-performing financial assets has been purchased/sold from/to other NBFCs.

Footnotes:

1. As defined in point xxvii of paragraph 3 of Chapter-II of these Directions.

2. Provisioning norms shall be applicable as prescribed in Indian Accounting Standards by MCA.

3. All Indian Accounting Standards issued by MCA are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt.

52 The following additional information is disclosed in the terms of Master Direction - Non-Banking Financial Company - Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India vide circular no. RBI/2021-22/112 DOR.CRE.REC.No.60/03.10.001/2021-22 dated October 22, 2021 as amended (the âRBI Master Directions")

(refer note 55). The Figures for the current financial year under the disclosure as required in RBI Master Directions represents the figures of the amalgamated Company from the appointed date April 01,2023. The Figures for the previous financial year are same as disclosed in the previous year audited financial Statement of the Company, hence figures for the current year ended March 31, 2024 are not comparable with figures for the previous year ended March 31, 2023.

8. Corporate Governance

1) Breach of Covenant

During the year ended March 31, 2024 , there is no instance of breach of covenant of loan availed or debt securities issued (applicable if any) by the company.

2) Divergence in Asset Classification and Provisioning

a) the additional provisioning requirements assessed by RBI exceeds 5 percent of the reported profits before tax and impairment loss on financial instruments for financial year 2023-24 : Nil

b) t he additional Gross NPAs identified by RBI exceeds 5 percent of the reported Gross NPAs for financial year 2023-24 : Nil

53 The accounting software used by the Company to maintain its Books of account have a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software as also in data base maintained with respect thereto.

54 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of amendments dated March 24, 2021 in Schedule III to the Companies Act 2013 with effect from 1st day of April, 2021:-

(a) There is no proceeding initiated or pending against the company during the year for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(b) The company is not declared wilful defaulter by any bank or financial Institution or any other lenders.

(c) Being a systemically important non-banking financial company registered with the Reserve Bank of India as per Reserve Bank of India Act, 1934 (2 of 1934), the provisions prescribed under clause (87) of section 2 of the companies Act 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the company.

(d) There is no scheme of arrangements has been approved during the year by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 other than disclosed under note 55.

(e) There is no transaction that has not been recorded in the books of accounts and surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

(f) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(g) The Company has obtained borrowings from banks or financial institutions on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

(h) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(i) The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Company shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(j) There are no creation or satisfaction of charges as at March 31, 2024 pending with ROC beyond the statutory period.

(k) The Company has utilised all the borrowings for the purpose for which they have been borrowed.

55 Amalgamation of erstwhile L&T Finance Limited (âLTFâ), L&T Infra Credit Limited (formerly known as L&T Infra Debt Limited) (âICLâ) and L&T Mutual Fund Trustee Limited (âLTMFTLâ) with the Company

1 During the financial year under report, erstwhile L&T Finance Limited (""LTF""), L&T Infra Credit Limited (formerly known as L&T Infra Debt Limited) (""ICL"") and L&T Mutual Fund Trustee Limited (""LTMFTL"") merged with the Company i.e. L&T Finance Holdings Limited which under the scheme is renamed as L&T Finance Limited (""the Company""). LTF and ICL were registered with the Reserve Bank of India (""RBI"") as non-deposit taking Systemically Important (NBFC-ND-SI) companies. LTMFTL was a registered company providing trusteeship services to a mutual fund, however with the disinvestment of stake in the mutual fund business, it no longer acts as trustee company for any mutual fund. In order to consolidate the business of lending entities for creation of a single larger unified entity, it was proposed that LTF, ICL and LTMFTL be amalgamated with the Company. Amalgamation will lead to consolidation and help synergise integration of the businesses of transferor companies and the transferee company to enable better operational management, greater focus and simplification of group corporate structure.

The Board of Directors of the Company had, in its meeting dated January 13, 2023, approved the proposed amalgamation of the LTF, ICL and LTMFTL with itself, with appointed date of April 1, 2023, by way of merger by absorption pursuant to a scheme of arrangement (the Scheme) under the provisions of Sections 230 - 232 read with Section 52 and other relevant provisions of the Companies Act, 2013 (including the rules thereunder).

The Reserve Bank of India vide its letter dated March 24, 2023, BSE Limited and National Stock Exchange of India Limited vide their respective letters dated April 26, 2023 had conveyed that they have no objection to the proposed amalgamation. Pursuant to the sanction granted by the Hon''ble NCLT benches at Mumbai and Kolkata vide orders dated October 13, 2023 and October 17, 2023 respectively, the Scheme has become effective from December 04, 2023 taking effect from Appointed date being April 01, 2023 in accordance with the terms of the Scheme.

The financial information in the financial statements in respect of previous financial year has been restated as if the business combination had occurred from the beginning of the previous year in the financial statements, irrespective of the actual date of the combination.

2 The amalgamation was accounted as a common control business combination in accordance with the accounting prescribed under "pooling of interest" method in Appendix C of the Indian Accounting Standard (Ind AS) 103 - "Business Combinations" and as per the specific provisions of the Scheme. Accordingly, the Scheme has been given effect to in these financial statements and all assets, liabilities and reserves and income and expenditure of the Transferor companies stand transferred at carrying value and vested in the Transferee Company. The inter-corporate investments / deposits / loans and advances or any receivables and payables between and amongst the Amalgamated Company and the Amalgamating companies will stand eliminated by set-off against each other and be cancelled.

3 No shares were issued to give effect of the said amalgamation since the wholly owned subsidiary companies merged with the parent/Holding Company. The difference between the equity share capital of the transferor companies and the carrying value of investments in the said transferor companies in the books of the transferee Company is recognised as capital reserve (refer statement of changes in equity). Pursuant to the scheme, the company has adjusted the debit balance of capital reserve (including capital reserve arising on account of amalgamation) and debit balance of amalgamation adjustment reserve account in the books of the Company post amalgamations against the Securities Premium Account of the Company, as per the terms of the Approved scheme.

4 As per the approved scheme of amalgamation, the amalgamating companies carried their respective business for and on behalf of the Company from the appointed date till the effective date.

56 There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March

31, 2024.

57 Previous year figures have been regrouped/reclassified whenever necessary, to make them comparable with the current year figures.

58 The above financial statements have been reviewed by the Audit Committee and subsequently approved by the Board of Directors at its meeting held on April 27, 2024.

Mar 31, 2023

i. Terms/rights attached to CRPS:

The CRPS do not have voting rights other than in respect of matters directly affecting it. In the event of any due and payable dividends remain unpaid for aggregate period of at least 2 years prior to the start of any general meeting of the equity shareholders, CRPS holders shall have voting rights in line with their voting rights of the equity shareholders. The CRPS will be redeemed at the end of 3 to 5 years from the date of allotment and the payment of dividend would be in accordance with the terms agreed at the time of issuance of Preference Shares. On winding or repayment of capital, CRPS holders enjoy preferential rights vis a vis equity shareholders, for repayment of capital paid up and shall include any unpaid dividends and any fixed premium, if applicable.

The Company has only one class of equity shares having a par value of R 10 per share. Members of the Company holding equity shares capital therein have a right to vote, on every resolution placed before the Company and right to receive dividend. The voting rights on a poll is in proportion to the share of the paid up equity capital of the Company held by the shareholders. The Company declares dividends in Indian rupees. the final dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

(IX) Capital Management

- The objective of the Company''s Capital Management is to maximise shareholder value, safeguard business continuity and support the growth of its subsidiaries. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through loans and operating cash flows generated. The debt equity ratio is 0.00 as at March 31, 2023 (as at March 31, 2022 is 0.01)

- During the year ended March 31, 2023, the Company has paid the final dividend of R 0.50 per equity share for financial year 2021-22 amounting to R 123.75 crore. (PY 2021-22 - R Nil).

(X) Employee stock option scheme

- The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme-2010) and 2013 (ESOP Scheme 2013). 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 allotted under the scheme 2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively from the end of 12 months from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under the scheme 2013 are vested in a graded manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year, commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each year, commencing from the end of 12 months from the date of grant.

anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

- The option granted under scheme 2010 is at exercise price of R 44.20. The option granted under scheme 2013 can be exercised either at market price which was the last closing price on National stock exchange preceding the date of grant or w.e.f. July 10,2019 R 10 respectively.

- During the year ended March 31,2023 1,96,500 and 54,39,129 options were allotted under the scheme 2010 and 2013 respectively.

- During the year, the Company has debited to the Statement of Profit and Loss R 1.44 crore (previous year R 4.47 crore) {net of recovery from its subsidiary companies during the year R 24.21 crore (Previous year R 21.95 crore)} towards the stock options granted to their employees, pursuant to the employee stock option schemes.

- Weighted average fair values of options granted during the year is R 69.48 (Previous year: R 72.69) per options.

1. Retained earnings: Retained earnings represent the amount of accumulated earnings of the Company.

2. Securities premium account: The amount received in excess of face value of the equity shares is recognised in Securities Premium Account. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium account. The account is utilised in accordance with the provisions of the Companies Act 2013.

3. Reserve u/s 45 IC of the Reserve Bank of India Act, 1934: The Company created a reserve pursuant to section 45 IC the Reserve Bank of India Act, 1934 by transferring amount not less than twenty per cent of its net profit every year as disclosed in the Statement of Profit and Loss and before any dividend is declared.

4. General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

5. Employee stock option outstanding account: The reserve is used to recognise the fair value of the options issued to employees of the Company and subsidiary companies under Company''s employee stock option scheme.

6. Impairment reserve: As per the RBI circular RBI/2019-20/170 dated March 13, 2020, where the guidelines require NBFCs to hold impairment allowances as required by Ind AS. In parallel NBFCs are required to compute provisions as per extant prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP). A comparison, as prescribed, between provisions required under IRACP and impairment allowances made under Ind AS 109 is required to be disclosed by NBFCs in the notes to their financial statements to provide a benchmark to their Boards, RBI supervisors and other stakeholders, on the adequacy of provisioning for credit losses. Where impairment allowance under Ind AS 109 is lower than the provisioning required under IRACP (including standard asset provisioning), NBFCs are required to appropriate the difference from their net profit or loss after tax to a separate ''Impairment Reserve''. The balance in the ''Impairment Reserve'' shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

7. Cash flow hedge reserves: The Company has designated its hedging instruments as cash flow hedges and any effective portion of cashflow hedge is maintained in the said reserve. In case the hedging becomes ineffective, the amount is recognised in the Statement of Profit and Loss.

35 Disclosure pursuant to Ind AS 107 "Financial Instruments: Disclosures": Financial risk management

The Company being a Core Investment Company as per the Core Investment Companies (RBI) Directions, 2016 is required to invest or lend majority of it''s fund to subsidiaries. The Company''s principal financial liabilities comprise borrowings and trade and other payables. The main purpose of these financial liabilities is to finance and support Company''s operations. The Company''s principal financial assets include inter corporate deposites, loans, cash and cash equivalents and other receivables.

The Company is exposed to market risk, credit risk, equity price risk, and liquidity risk.The Company''s management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Committee provides assurance to the Company''s senior management. The Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The major risks are summarised below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. In the case of the Company, market risk primarily impacts financial instruments measured at fair value through profit or loss.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have exposure to the risk of changes in market interest rate as it has debt obligations with fixed interest rates which are measured at amortised cost.

Credit risk

Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or a customer contract, leading to a financial loss. The Company is exposed to credit risk from its financing activities towards inter corporate deposits to subsidiaries, where no significant impact on credit risk has been identified.

Equity price risk:

The Company''s investment in non-listed equity securities are accounted at cost in the financial statement net of impairment. The expected cash flow from these entities are regularly monitored to identify impairment indicators.

Liquidity risk

The Company manages its liquidity requirement by analysing the maturity pattern of the Company''s cash flow of financial assets and financial liabilities. The Company''s objective is to maintain a balance between continuity of funding and flexibility through issuance of equity shares, commercial paper etc. The Company invests its surplus funds in fixed deposits as well as debt schemes of mutual funds, which carry low mark to market risks.

(h) Cash flow and fair value interest rate risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

39 Disclosure pursuant to Ind AS 19 âEmployee benefits":

(i) Defined contribution plans

The Company recognise charges of R 0.26 crore (previous year R 0.26 crore) as an expense for provident fund contribution and is included in Note 29 "employee benefits expenses" in the statement of profit and loss.

(ii) Defined benefits gratuity plans

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 favorable compared to the obligation under the Payment of Gratuity Act, 1972.

Discount Rate:

The discount rate based on the prevailing market yield of Indian government securities at the balance sheet date for the estimated term of the obligations.

Salary escalation rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

h) Attrition rate:

The attrition rate varies from 0% to 1% (previous year: 0% to 1%) for various age groups.

i) Mortality rate:

Published rates under the Indian Assured Lives Mortality (2012-14) Ult table.

Provident fund

The Company''s state governed provident fund scheme are defined contribution plan for its employees. The Contribution by the employer and employee together with interest accumulated there on are payable to the employee at the time of separation from company or retirement whichever is earlier. The benefit vests immediately on rendering of services by the employee.

The Company had entered into a definitive agreement with HSBC Asset Management (India) Private Limited ("HSBC AMC") on December 23, 2021 to sell 100% equity shares of L&T Investment Management Limited ("LTIM"), a wholly owned subsidiary of the Company, which is the investment manager of L&T Mutual Fund. The Company has concluded the sale of its mutual fund business, post receipt of regulatory approvals, to HSBC AMC on the closing date of November 25, 2022. The Company has (i) received R 3,485.44 crore (equivalent of USD 425 million) as consideration for the sale and (ii) also realised surplus cash balance of R 763.93 crore in LTIM pursuant to the definitive documents.

(B) Exceptional item

Exceptional item includes (i) Gain of R 283 crore on the reduction of 3,12,00,000 (Three Crore Twelve Lakh) fully paid-up equity shares of face value of R 10 each of the wholly owned subsidiary company, LTIM pursuant to the order of Mumbai NCLT Bench dated July 8, 2022 sanctioning the said capital reduction and letter of Registrar of Companies dated August 18, 2022 approving the Form INC-28 and (ii) Gain of R 2,575.09 crore on the divestment of its entire stake in the subsidiary company, L&T Investment Management Limited (LTIM) for the year ended March 31, 2023.

44 Contingent liabilities and commitments

('' in crore)

Particulars

As at

March 31, 2023

As at

March 31, 2022

Contingent Liabilities

The Company has assessed its obligations arising in the normal course of business, proceedings pending with tax authorities and other contracts including derivative and long term contracts wherever applicable. In accordance with the provisions of Indian Accounting Standard (Ind AS) - 37 on ''Provisions, Contingent Liabilities and Contingent Assets'', the Company recognises a provision for material foreseeable losses when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made as contingent liabilities in the financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.

Footnote: The management has identified micro and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) on the basis of information made available by the supplier or vendors of the Company. Based on the information available with the Company, as at the year end, there are no dues to micro and small Enterprises that are reportable under the MSMED Act, 2006. The above information is provided by the management of the company and relied upon by the auditors.

48 There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2023.

49 Events after the reporting period:

There have been no events after the reporting date that require disclosure in the financial statements.

50 The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934.

51 Disclosures in terms of RBI Master Direction for Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and Master Direction- Core Investment Companies (Reserve Bank) Directions , 2016 have been given under Annexure-I to these financial statements:

11. Derivatives:

1) Forward Rate Agreement / Interest Rate Swap: The Company has not traded in forward rate agreement/ Interest Rate Derivative during the financial year ended March 31, 2023 (Previous year: Nil)

2) Exchange Traded Interest Rate (IR) Derivatives: The Company has not traded in Exchange Traded Interest Rate (IR) Derivative during the financial year ended March 31, 2023 (Previous year: Nil)

12. Securitisation: No securitisation deal (including assignment deal) has carried out during the year ended March 31, 2023 (Previous year: Nil)

13. Asset Liability Management Maturity Pattern: Refer note no. 2 of Annexure-I of note 51 for details of Asset Liability Management Maturity Pattern

14. Exposures:

I) Exposures to Real Estate Sector: Refer note no. 1 of Annexure-I of note 51 for details of exposures to Real Estate Sector

II) Exposures to Capital Markets: None

III) Details of financing of parent company products: None

52 Impairment reserve

As per the RBI circular RBI/2019-20/170 dated 13th March, 2020, where impairment allowance under Ind AS 109 is lower than the provisioning required under IRACP (including standard asset provisioning), NBFCs/ARCs shall appropriate the difference from their net profit or loss after tax to a separate ''Impairment Reserve''. The balance in the ''Impairment Reserve'' shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

(vi) Institutional set-up for Liquidity Risk Management

its business. The Board approves the governance structure, policies, strategy and the risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company. The meetings of RMC are held at quarterly interval. Further, the Board of Directors also approves constitution of Asset Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and guard-rails approved by the Board. The main objective of ALCO is to assist the Board and RMC in effective discharge of the responsibilities of asset-liability management, market risk management, liquidity and interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board. ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusal/approval/ratification.

56 The Company has assessed its obligations arising in the normal course of business, proceedings pending with tax authorities and other contracts including derivative and long term contracts. In accordance with the provisions of Indian Accounting Standard (Ind AS) - 37 on ''Provisions, Contingent Liabilities and Contingent Assets'', the Company recognises a provision for material foreseeable losses when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made as contingent liabilities in the financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

57 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of amendments dated March 24, 2021 in Schedule III to the Companies Act 2013 with effect from 1st day of April, 2021:

1. There are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory

period as applicable.

2. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year 2022-2023.

3. There is no proceeding which has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

4. The details is not applicable to the Company, related to transactions not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under any scheme and shall also state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.

5. The Company is not declared wilful defaulter by any bank or financial Institution or other lender.

6. The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

7. The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

8. The compliance with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rule, 2017 is not applicable as the company is registered as non banking financial company with Reserve Bank of India.

58 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of RBI circular DOR.CRE.REC.No.60/03.10.001/2021-22 dated October 22, 2021 on ''Scale Based Regulation (SBR):

A Revised Regulatory Framework'' for NBFCs, which inter-alia envisages certain specific disclosures read with circular no. DOR.ACC.REC.No.20/21.04.018/2022-23 dated April 19, 2022 for "Disclosures in Financial Statements - Notes to Accounts of NBFCs".

(vi) Breach of Covenant

During the year ended March 31,2023 , there is no instance of breach of covenant of loan availed or debt securities issued (applicable if any) by the company.

(vii) Divergence in Asset Classification and Provisioning*

a) the additional provisioning requirements assessed by RBI exceeds 5 percent of the reported profits before tax and impairment loss on financial instruments for financial year 2021-22 : Nil"

b) the additional Gross NPAs identified by RBI exceeds 5 percent of the reported Gross NPAs for financial year 2021-22 : Nil

Foot Note

*Final Inspection report for the financial year 2021-22 is not issued by the Reserve Bank of India as on March 31, 2023.

59 The Board of Directors of L&T Finance Holdings Limited (''the Company'' or "LTFH'') at its meeting held on January 13, 2023, approved the merger of L&T Finance Limited ("LTF"), L&T Infra Credit Limited ("LTICL") and L&T Mutual Fund Trustee Limited ("LTMFTL") (direct and indirect wholly owned subsidiaries of the Company) with the Company ("the Scheme"), pursuant to a scheme of arrangement under Sections 230 to 232 read with Section 52 and other applicable provisions of the Companies Act, 2013 ("the Act") and the Rules made thereunder. The Scheme will become effective upon fulfilment of all the conditions set out in the Scheme including approval of the Scheme by the National Company Law Tribunal (''NCLT''), Reserve Bank of India and other Regulatory approvals. The appointed date for the Scheme is April 1,2023.

The Scheme will, inter alia, result in the transfer and vesting of the assets, liabilities (including debt securities) and the entire undertaking of the LTF, LTICL and LTMFTL into Company, followed by the dissolution without winding up of LTF, LTICL and LTMFTL, the consequent cancellation of the equity shares held by the Company in the LTF, LTICL and LTMFTL, and certain adjustments to the securities premium account of Company.

60 The above standalone financial statements have been reviewed by the audit committee and subsequently approved by the Board of Directors at its meeting held on April 28, 2023.

61 Previous year figures have been regrouped / reclassified to make them comparable with those of current year.

Mar 31, 2021

i. Terms/rights attached to CRPS

ii. During the year ended March 31, 2021, the Company has paid a dividend of R 95.96 crore on CRPS of R 100 each fully paid (previous year R 113.22 crore).

(II) Terms/rights attached to equity shares

(VII) Capital Management

- The objective of the Company''s Capital Management is to maximise shareholder value, safeguard business continuity and support the growth of its subsidiaries. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through loans and operating cash flows generated. The debt equity ratio is 0.16 as at March 31, 2021 (as at March 31,2020 is 0.44)

- During the year ended March 31, 2021, the Company has not paid any dividend (for the year ended

March 31, 2020 interim dividend of R 0.90 per equity share amounting to R 180.44 crore was paid).

(VIII) Employee stock option scheme

- The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme-2010) and 2013 (ESOP Scheme 2013). 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 allotted under the scheme 2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively from the end of 12 months from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under the scheme 2013 are vested in a graded manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year, commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each year, commencing from the end of 12 months from the date of grant.

- Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date

of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

- During the year ended March 31, 2021, 6,84,500 and 26,02,573 options were allotted under the scheme 2010 and 2013 respectively.

1. Retained earnings: Retained earnings represent the amount of accumulated earnings of the Company.

and Provisioning (IRACP). A comparison, as prescribed, between provisions required under IRACP and impairment allowances made under Ind AS 109 is required to be disclosed by NBFCs in the notes to their financial statements to provide a benchmark to their Boards, RBI supervisors and other stakeholders, on the adequacy of provisioning for credit losses. Where impairment allowance under Ind AS 109 is lower than the provisioning required under IRACP (including standard asset provisioning), NBFCs are required to appropriate the difference from their net profit or loss after tax to a separate ''Impairment Reserve''. The balance in the ''Impairment Reserve'' shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

36 Disclosure pursuant to Ind AS 107 "Financial Instruments: Disclosures": Financial risk management

Market risk

Credit risk

Equity price risk:

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s corporate treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies relatedto such risks are overseen by senior management. The Company manages its liquidity requirement by analysing the maturity pattern of the Company''s cash flow of financial assets and financial liabilities. The Company''s objective is to maintain a balance between continuity of funding and flexibility through issuance of equity shares, commercial paper etc. The Company invests its surplus funds in debt schemes of mutual funds, which carry low mark to market risks.

40 Disclosure pursuant to Ind AS 19 "Employee benefits":

(i) Defined contribution plans

The Company recognise charges of R 0.29 crore (previous year R 0.30 crore) as an expense for provident fund contribution and is included in Note 30 "employee benefits expenses" in the statement of profit and loss.

(ii) Defined benefits gratuity plans

Discount Rate:

The discount rate based on the prevailing market yield of Indian government securities at the balance sheet date for the estimated term of the obligations.

Salary escalation rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

g) Attrition rate:

The attrition rate varies from 0% to 1% (previous year: 0% to 1%) for various age groups.

h) Mortality rate:

Published rates under the Indian Assured Lives Mortality (2012-14) Ult table.

Provident fund

# Amalgamation of L&T Infrastructure Finance Company Limited ("LTIFC"), L&T Housing Finance Limited ("LTHFC") and L&T Finance Limited ("LTFL"): Pursuant to order of National Company Law Tribunal Benches, Mumbai and Kolkata dated March 15, 2021 and March 19, 2021 respectively, the scheme of amalgamation for merger of LTIFC and LTHFC (wholly owned subsidiaries of the Company) with LTFL is effected from April 12, 2021. As a consequence, effective April 12, 2021, LTIFC and LTHFC stands merged with LTFL with appointed date being April 01, 2020.

During the year ended March 31, 2021, there was a divestment of entire stake in the subsidiary company, L&T Capital Markets Limited. The transaction was concluded on April 24, 2020.

$ During the year ended March 31,2021, L&T Capital Markets (Middle East) Limited, a wholly owned subsidiary incorporated in Dubai has been dissolved and ceased to exist, with effect from December 17, 2020.

Investment held for sale as at March 31, 2020 included equity investment in wholly owned subsidiary company, L&T Capital Markets Limited (LTCM) at R 71.10 Crore. L&T Finance Holdings Limited ("The Holding Company) had entered into a definitive share purchase agreement dated August 28, 2019 with IIFL Wealth Finance Limited to sell 100% shareholdings of LTCM at a base purchase consideration as per agreement. The necessary regulatory approvals from the Department of Economic Affairs, Ministry of Finance were received on April 8, 2020 and consequently the deal has been concluded on April 24, 2020.

Investment held for sale as at March 31, 2020 also included equity investment in wholly owned subsidiary company, L&T Capital Markets (Middle East) Limited (LTCM-ME), a wholly owned subsidiary incorporated in Dubai, at R 11.80 Crore. During the year ended March 31,2021, LTCM-ME, has been dissolved and ceased to exist, with effect from December 17, 2020.

49 There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 202150 Events after the reporting period

There have been no events after the reporting date that require disclosure in the financial statements.

51 The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934.

52 Disclosures in terms of RBI Master Direction for Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and Master Direction- Core Investment Companies (Reserve Bank) Directions , 2016 have been given under Annexure-I to these financial statements:

11) Derivatives:

1) Forward Rate Agreement / Interest Rate Swap: The Company has not traded in Forward Rate Agreement/ Interest Rate Derivative during the financial year ended March 31, 2021 (Previous year: Nil)

2) Exchange Traded Interest Rate (IR) Derivatives: The Company has not traded in Exchange Traded Interest Rate (IR) Derivative during the financial year ended March 31, 2021 (Previous year: Nil)

12) Securitization: No securitization deal (including assignment deal) has carried out during the financial year ended March 31,2021 (Previous year: Nil)

13) Asset Liability Management Maturity Pattern: Refer note no. 2 of Annexure-I for details of Asset Liability Management Maturity Pattern

14) Exposures:

I) Exposures to Real Estate Sector: Refer note no. 1 of Annexure - I of note 52 for details of exposures to Real Estate Sector

II) Exposures to Capital Markets: None

III) Details of financing of parent company products: None

IV) The particulars of unsecured advances net off provision are given below:

15) Miscellaneous

I) Registration obtained from other financial sector regulators: No registration has been obtained from other financial sector regulators.

II) Penalties imposed by RBI and other regulators: No penalties have been imposed by RBI or other regulators during the year. (Previous Year: NIL)

53 Impairment reserve

54 Disclosures in terms of RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated November 04, 2019 have been given under Annexure-II to these financial statements:

ANNEXURE-II - Disclosure on Liquidity Risk

RBI has issued final guidelines on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies on November 04, 2019. As per the said guidelines, NBFC are required to publicly disclose the below information related to liquidity risk on a quarterly basis. Accordingly, the disclosure on liquidity risk as at March 31, 2021 is as under:

Notes:

- A "Significant counterparty" is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the NBFC-NDSI''s, NBFC-Ds total liabilities and 10% for other non-deposit taking NBFCs

- Total Liabilities has been computed as Total Assets less Equity share capital less Reserve & Surplus and computed basis extant regulatory ALM guidelines

(vi) Institutional set-up for Liquidity Risk Management

The Board of Directors of the Company has an overall responsibility and oversight for the management of all the risks, including liquidity risk, to which the Company is exposed to in the course of conducting its business. The Board approves the governance structure, policies, strategy and the risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company. The meetings of RMC are held at quarterly interval. Further, the Board of Directors also approves constitution of Asset Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability management of the Company from risk-return perspective and within the risk appetite and guard-rails approved by the Board. The main objective of ALCO is to assist the Board and RMC in effective discharge of the responsibilities of asset-liability management, market risk management, liquidity and interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board. ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next meeting for its perusal/approval/ratification.

56 Exceptional Items

Exceptional items during year ended March 31,2021 represents net gain of R 224.68 crore on the divestment of entire stake in the subsidiary company, L&T Capital Markets Limited. The transaction was concluded on April 24, 2020.

57 Amalgamation of L&T Infrastructure Finance Company Limited ("LTIFC"), L&T Housing Finance Limited ("LTHFC") and L&T Finance Limited ("LTFL"):

Pursuant to order of National Company Law Tribunal Benches, Mumbai and Kolkata dated March 15, 2021 and March 19, 2021 respectively, the scheme of amalgamation for merger of LTIFC and LTHFC (wholly owned subsidiaries of the Company) with LTFL is effected from April 12, 2021. As a consequence, effective April 12, 2021, LTIFC and LTHFC stands merged with LTFL with appointed date being April 01, 2020.

58 Estimation uncertainty relating to COVID-19 global health pandemic:

In assessing the recoverability of loans, receivables, and investments, the Company has considered internal and external sources of information, including credit reports, economic forecasts and industry reports upto the date of approval of these standalone financial statements. The Company has performed sensitivity analysis on the assumptions used and based on current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets. The Company has developed estimates and applied management overlays for the purpose of determination of the provision for impairment of financial assets. The extent to which the second wave of the COVID19 pandemic, that has significantly increased the number of cases in India, will have an impact on the Company''s results and operations, will depend on ongoing as well as future developments, which are highly uncertain, including, among other things, any new information concerning the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact. "

59 Previous year figures have been regrouped / reclassified to make them comparable with those of current year.

60 The above standalone financial statements have been reviewed by the audit committee and subsequently approved by the Board of Directors at its meeting held on April 29, 2021.

Mar 31, 2019

Notes forming part of the Financial Statements

39 Disclosure of related parties/related party transactions pursuant to Ind AS 24 " Related Party Disclosures" (a) Name of the related parties and description of relationship:

S. No	Particulars	Relationship
1	Larsen & Toubro Limited	Holding Company
2	L&T Infrastructure Finance Company Limited	Subsidiary Companies
3	L&T Financial Consultants Limited	Subsidiary Companies
4	L&T Investment Management Limited	Subsidiary Companies
5	L&T Housing Finance Limited	Subsidiary Companies
6	L&T Finance Limited	Subsidiary Companies
7	L&T Capital Markets Limited $	Subsidiary Companies
8	L&T Infra Debt Fund Limited	Subsidiary Companies
9	L&T Capital Markets (Middle East) Limited #	Subsidiary Companies
10	L&T Electromech LLC	Fellow Subsidiary
11	Mr. Dinanath Dubhashi	Managing Director & Chief
		Executive Officer
12	Dr. (Mrs) Rajani R. Gupte (appointed as director w.e.f . June 28, 2018)	Independent director
13	Mr. Harsh Mariwala	Independent director
14	Mr. P. V. Bhide	Independent director
15	Mr. Pavninder Singh (appointed as director w.e.f. June 15, 2017)	Nominee director
16	Mr. Prabhakar B. (appointed as director w.e.f. June 28, 2018)	Non-executive director
17	Mr. S. V. Haribhakti	Non-executive chairman
		(Independent director)
18	Mr. Thomas Mathew T	Independent director
19	Ms. Nishi Vasudeva (appointed as director w.e.f. June 15, 2017)	Independent director
20	Ms. Vaishali Kasture (appointed as director w.e.f. June 15, 2017 and	Independent director
	ceased to be director w.e.f. May 29, 2018)
21	Mr. B.V. Bhargava (ceased to be director w.e.f. August 31, 2017)	Independent director
22	Mr. Y. M. Deosthalee (ceased to be director w.e.f. May 31, 2017)	Non-executive chairman
23	Mr. Amit Chandra (ceased to be director w.e.f. June 15, 2017)	Nominee director

# During the current year L&T Capital Markets (Middle East) Limited, a wholly owned subsidiary of L&T Finance Holdings Ltd was incorporated in Dubai w.e.f. July 01, 2018

$ During the previous year, L&T Access Distribution Services Limited merged into L&T Capital Markets Limited w.e.f. April 01, 2017, being the appointed date.

Note: The above list contains name of only those related parties with whom the company has undertaken transactions in current or previous year.

(b) Related parties transactions:

			(Rs in crore)
S. No.	Nature of Transactions	2018-19	2017-18
1	Subscription to equity shares of
	L&T Infrastructure Finance Company Limited	1,300.39	450.00
	L&T Finance Limited	-	1,400.00
	L&T Housing Finance Limited	-	600.00
	L&T Infra Debt Fund Limited	-	16.35
	L&T Capital Markets (Middle East) Limited	5.41	-
2	Inter corporate deposits disbursed
	L&T Infrastructure Finance Company Limited	2,754.75	4,224.65
	L&T Finance Limited	8,036.51	7,421.03
	L&T Housing Finance Limited	1,917.72	2,340.07
	L&T Infra Investment Partners Advisory Private Limited	0.15	-
	L&T Investment Management Limited	36.22	-
	L&T Capital Markets Limited	-	16.52
	L&T Capital Markets (Middle East) Limited	15.66	-
	L&T Financial Consultants Limited	371.29	392.68
3	Inter corporate deposits repaid (including interest)
	L&T Infrastructure Finance Company Limited	2,759.11	4,231.36
	L&T Finance Limited	8,626.02	6,992.96
	L&T Housing Finance Limited	1,936.31	2,327.92
	L&T Infra Investment Partners Advisory Private Limited	0.15	-
	L&T Investment Management Limited	36.31	-
	L&T Capital Markets Limited	-	16.55
	L&T Capital Markets (Middle East) Limited**	-	-
	L&T Financial Consultants Limited	366.34	468.68
	** amounts less than Rs. 50,000
4	Professional fees expense
	Larsen & Toubro Limited	0.04	0.04
5	Rent & maintenance expenditure
	L&T Financial Consultants Limited	1.42\|	1.37
6	Reimbursement of expense to
	Larsen & Toubro Limited	0.11	0.08
	L&T Financial Consultants Limited	0.03	-
	L&T Electromech LLC#	-	0.00
	# amounts less than Rs. 50,000
7	Reimbursement of expense from
	L&T Infrastructure Finance Company Limited	-	0.08
	L&T Finance Limited	-	0.08
	L&T Housing Finance Limited	-	0.08
	L&T Investment Management Limited	-	0.08
	L&T Capital Markets Limited	-	0.08
8	ESOP charges recovered
	L&T Infrastructure Finance Company Limited	8.11	5.49
	L&T Finance Limited	25.91	15.39
	L&T Housing Finance Limited	1.33	0.69
	L&T Infra Debt Fund Limited	0.38	0.13
	L&T Investment Management Limited	20.88	11.57
	L&T Capital Markets Limited	3.51	2.35
	L&T Financial Consultants Limited	0.37	0.13
9	Inter corporate borrowings taken
	Larsen & Toubro Limited	1,000.00	-
	L&T Infrastructure Finance Company Limited	469.00	-
10	Inter corporate borrowings repaid (including interest)
	Larsen & Toubro Limited	1,017.95	-
	L&T Infrastructure Finance Company Limited	469.44	-
9	Interest income on inter corporate deposit
	L&T Infrastructure Finance Company Limited	4.36	6.71
	L&T Finance Limited	95.09	31.29
	L&T Housing Finance Limited	3.58	2.86
	L&T Infra Investment Partners Advisory Private Limited^	0.00	-
	L&T Investment Management Limited	0.09	-
	L&T Financial Consultants Limited	34.66	32.12
	L&T Capital Markets Limited	-	0.03
	L&T Capital Markets (Middle East) Limited	0.16	-
	^amounts less than Rs. 50,000
10	Interest expense on inter corporate borrowings
	Larsen & Toubro Limited	17.95	-
	L&T Infrastructure Finance Company Limited	0.44	-
11	Management fees income
	L&T Infrastructure Finance Company Limited	4.09	1.96
	L&T Finance Limited	7.36	2.62
	L&T Housing Finance Limited	2.45	0.65
	L&T Infra Debt Fund Limited	0.82	0.33
	L&T Investment Management Limited	0.82	0.65
	L&T Capital Markets Limited	0.82	0.33
12	Dividend income
	L&T Infrastructure Finance Company Limited	-	151.46
	L&T Finance Limited	191.90	-
	L&T Housing Finance Limited	114.92	173.44
	L&T Investment Management Limited	30.22	-
	L&T Financial Consultants Limited	6.75	52.03
13	Subscription to equity shares of the company by
	Larsen & Toubro Limited	-	2,000.00
14	Repayment of security deposit to
	L&T Financial Consultants Limited	0.06	-
15	Remuneration to key management personnel
	Short-term employee benefits paid to
	Mr. Dinanath Dubhashi	5.63	8.21
	Dr. (Mrs) Rajani R. Gupte	0.08	-
	Mr. Harsh Mariwala	0.17	0.27
	Mr. P. V. Bhide	0.16	0.25
	Mr. Pavninder Singh	0.08	0.15
	Mr. Prabhakar B.	0.08	-
	Mr. S. V. Haribhakti	0.57	0.57
	Mr. Thomas Mathew T.	0.20	0.26
	Ms. Nishi Vasudeva	0.15	0.12
	Ms. Vaishali Kasture	0.03	0.07
	Mr. B.V. Bhargava	-	0.07
	Mr. Y. M. Deosthalee	-	0.08
	Mr. Amit Chandra	-	0.03

(Rs. in crore)

S. No.	Nature of Transactions	2018-19	2017-18	2016-17
1	Receivable from/ (payable to)
	L&T Infrastructure Finance Company Limited	1.10	8.17	2.68
	L&T Finance Limited	3.59	27.56	14.42
	L&T Housing Finance Limited	0.50	1.22	0.86
	L&T Infra Debt Fund	0.22	0.13	-
	L&T Investment Management Limited	2.91	16.49	7.17
	L&T Capital Markets Limited	0.40	3.95	1.60
	L&T Financial Consultants Limited	0.04	0.13	0.00
	L&T Capital Markets (Middle East) Limited	0.41	-	-
	Larsen & Toubro Limited	(0.01)	(0.02)	0.07
2	Outstanding balance of inter corporate deposits given
	L&T Finance Limited	166.11	660.54	201.18
	L&T Housing Finance Limited	-	15.01	-
	L&T Capital Markets (Middle East) Limited	15.82	â	â
	L&T Financial Consultants Limited	382.15	342.54	386.43
3	Security deposit given to
	L&T Financial Consultants Limited	0.25	0.31	0.31
4	Dividend receivable from
	L&T Infrastructure Finance Company Limited	â	151.46	86.00
	L&T Finance Limited	191.90	-	-
	L&T Housing Finance Limited	61.18	72.26	-
	L&T Investment Management Limited	30.22	-	-
	L&T Financial Consultants Limited	6.75	â	â

40 Basic and Diluted Earnings per share [EPS] computed in accordance with Indian Accounting Standard (Ind AS) 33 "Earnings per Share":

Particulars		For the year ended March 31, 2019	For the year ended March 31, 2018
Basic
Profit after tax (Rs. crore)	A	267.06	266.05
Weighted average number of equity shares outstanding during the year (Nos.)	B	1,99,71,65,629	1,82,44,19,741
Basic earning per share (?)	A/B	1.34	1.46
Diluted
Profit after tax (Rs. crore)	A	267.06	266.05
Weighted average number of equity shares outstanding during the year (Nos.)	B	1,99,71,65,629	1,82,44,19,741
Add: Weighted average no. of potential equity shares on account of employee stock options (Nos.)	C	77,03,279	1,76,13,844
Weighted average number of shares outstanding for diluted EPS (Nos.)	D=B C	2,00,48,68,908	1,84,20,33,585
Diluted earnings per share (?)	A/D	1.33	1.44
Face value of shares (?)		10.00	10.00

41 Disclosure pursuant to Ind AS 7 "Statement of Cash Flows" - Changes in liabilities arising from financing activities:

					(Rs. in crore)
Particulars	April 1, 2018	Cash flows	Changes in fair values	Others	March 31, 2019
Debt Securities	-	1,162.49	-	-	1,162.49
Borrowings (other than debt securities)	468.70	(463.71)	â	â	4.99
Subordinated debt	1,030.12	â	â	2.17	1,032.29

					(Rs. in crore)
Particulars	April 1, 2017	Cash flows	Changes in fair values	Others	March 31, 2018
Debt Securities	568.97	(568.94)	-	(0.03)	-
Borrowings (other than debt securities)	433.99	â	â	34.71	468.70
Subordinated debt	1,206.24	(179.00)	-	2.88	1,030.12

42	Contingent liabilities and commitments		(Rs. in crore)
	Particulars 2018-19 Contingent Liabilities	2017-18	2016-17
	Income tax matter in dispute \|	-	4.51
43	Expenditure in foreign currency:		(Rs. in crore)
	Nature of Transactions	2018-19	2017-18
	Professional and other fees (including reimbursement)	0.30	1.35
	Directors sitting fees and commission (including reimbursements)	-	0.12
	Total	0.30	1.47

(a) Statement of reconciliation of equity under Ind AS and equity reported under Previous GAAP:

				(Rs in crore)
s. No.	Particulars	Note	As at March 31, 2018	As at April 1, 2017
	Equity as per Previous GAAP		8,651.57	5,323.73
(a)	Redeemable preference capital classified as liability	a	(1,034.40)	(1,213.40)
(b)	Incremental cost on fair valuation of employee stock options plan previously recognised on the basis of intrinsic value	b	52.22	26.43
(c)	Increase in borrowing cost pursuant to application of effective interest rate method as issue expenses were previously adjusted against Securities Premium account	a	4.28	7.16
(d)	Others		0.02	0.59
(e)	Deferred taxes	d	-	(0.20)
	Equity as per Ind AS		7,673.69	4,144.31

(b) Statement of reconciliation for the year ended March 31,2018:			(Rs in crore)
S. No.	Particulars	Note	Year ended March 31, 2018
	Net profit after tax as per Previous GAAP		367.84
(a)	Incremental cost on fair valuation of employee stock options plan previously recognised on the basis of intrinsic value	b	(4.83)
(b)	Increase in borrowing cost pursuant to application of effective interest rate method as issue expenses were previously adjusted against Securities Premium Account	a	(95.95)
(c)	Others		(1.21)
(d)	Deferred taxes	d	0.20
	Net profit/(loss) after tax as per Ind AS		266.05
(e)	Other comprehensive income (net of tax) attributable to owners of the Company	c	0.62
	Total comprehensive income as per Ind AS		266.67

(c) Statement of reconciliation of cash flow statement under Ind AS and cash flow statement reported under Previous GAAP:

			(Rs. in crore)
Particulars	Previous GAAP	Adjustments	Ind AS
Net cash used in operating activities (A)	(157.92)	114.11	(272.03)
Net cash used in investing activities (B)	(2,191.00)	-	(2,191.00)
Net cash generated from financing activities (C)	2,359.65	(114.11)	2,473.76
Net increase in cash and cash equivalents (A B C)	10.73		10.73
Cash and cash equivalents at beginning of the year	0.53		0.53
Cash and cash equivalents at the end of the year	11.26		11.26

Notes to previous GAAP and Ind AS

a Under IGAAP, CRPS formed part of the Equity Share Capital. The share issue expenses were debited to securities premium account. As per Ind AS 32, since there is no term for conversion of the instrument on the date of issuance, such instrument is classified as a liability and interest cost is accrued at the rate of dividend applicable along with dividend distribution tax (DDT) thereto. The share issue expenses are net off upon initial recognition from the borrowings and amortised under effective interest rate method, resulting in increase in security premium account and decrease in borrowings on account of CRPS.

b Under IGAAP, the ESOPs of the holding company given to employees of the Group were recorded at intrinsic value. Under Ind AS, the option fair value cost is amortised over the vesting period in the Statement of Profit and Loss and a corresponding liability for ESOP outstanding is created.

c Actuarial gains and losses pertaining to defined benefit obligations and re-measurement pertaining to return on plan assets are recognised in Other Comprehensive Income in accordance with Ind AS 19 and are not reclassified to profit or loss.

d Deferred tax under Ind AS has been recognised for temporary differences between tax base and the book base of the relevant assets and liabilities. Under the Previous GAAP, the deferred tax was accounted based on timing differences impacting the Statement of Profit and Loss for the period.

51 Previous year previous GAAP figures have been regrouped / reclassified to make them comparable with IND AS presentation

52 The above financial statements have been reviewed by the audit committee and subsequently approved by the Board of Directors at its meeting held on April 28, 2019.

For and on behalf of the Board of Directors of
L&T Finance Holdings Limited
S. V. Haribhakti	Dinanath Dubhashi
Non-Executive Chairman	Managing Director &
(DIN: 00007347)	Chief Executive Officer
	(DIN: 03545900)
Apurva Rathod	Sachinn Joshi
Company Secretary	Chief Financial Officer
Place : Mumbai
Date: April 28, 2019

Mar 31, 2018

1.Notes on Financial Statements

2.Stock option scheme

a) In respect of stock options granted pursuant to Company''s stock options scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) The grant of options to the employees under the stock option scheme is on the basis of their performance and other eligibility criteria. The options allotted under scheme 2010 are vested over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under scheme 2013 are vested in a graded manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year, commencing from the end of 24 month from the date of grant.

c) Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

d) The option granted under scheme 2010 is at exercise price of Rs, 44.20. The option granted under scheme 2013 was at market price which was the last closing price on National stock exchange preceding the dates of grant respectively.

e) During the year ended March 31, 2018, 1,691,008 and 3,580,500 options were allotted under scheme 2010 and 2013 respectively.

g) During the year, the Company has debited to the Statement of Profit and Loss Rs, 41.93 lakh (Previous year Rs, 63.63 lakh) {net of recovery from its subsidiary companies during the year Rs, 994.88 lakh (Previous year: Rs, 8.29 lakh)} towards the stock options granted to their employees, pursuant to the employee stock option schemes.

h) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2018 is Rs, 5,156.05 lakh (Previous year: Rs, 553.74 lakh), including Rs, 24.96 lakh (Previous year: Rs, 232.27 lakh) for which the options have vested to employees as on March 31, 2018.

i) Weighted average fair values of options granted during the year is Rs, 68.27 (Previous year: Rs, 27.24) per options.

j) Had the Company opted for accounting of employee compensation cost under Rs,Fair value Method'', Profit after tax would have been lower by Rs, 483.43 lakh (Previous year: Rs, 45.79 lakh) and Earnings per share Basic and diluted would have been Rs, 1.48 & Rs, 1.47 respectively. (Previous year: Rs, 0.71 & Rs, 0.70 respectively)

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

i) Defined Contribution Plans:

The company recognized charges of Rs, 48.62 lakh (Previous year '' 119.10 lakh) is as an expense for provident fund and super annotation fund and included in employee contribution in the statement of profit and loss.

ii) Defined Benefit Plans:

The company offers the following employee benefits scheme to its employees; Gratuity expense which included in employee benefits expense in Note 18.

4. Segment Reporting: Accounting Standard - 17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) 17 on ''Segment Reporting''.

5. Related Party Disclosures: Accounting Standard - 18 a. List of Related Parties and Relationships

A. Holding Company

Larsen & Toubro Limited

B. Subsidiary Companies

L&T Infrastructure Finance Company Limited

L&T Financial Consultants Limited

(erstwhile known as L&T Vrindavan Properties Limited)

L&T Investment Management Limited

L&T Housing Finance Limited

L&T Finance Limited (erstwhile known as Family Credit Limited)

L&T Capital Markets Limited #

L&T Infra Debt Fund Limited

C. Fellow Subsidiary (with whom Company has undertaken transaction during current or previous year)

L&T Electromech LLC

L&T General Insurance Company Limited (till September 8, 2016)

D. Key Management Personnel

Mr. Dinanath Dubhashi (from April 14, 2016)

Mr. Y.M. Deosthalee (till September 5, 2016)

# During the current year, L&T Access Distribution Services Limited merged into L&T Capital Markets Limited w.e.f. April 1, 2017, being appointed date.

Note: The above list contain name of only those related parties with whom the company has undertaken transactions in current or previous year.

6. During the year, the Company has allotted 5,271,508 equity shares of Rs, 10 each fully paid up, on exercise of options by employees, in accordance with the Company''s stock option schemes.

7. The Board of Directors have recommended a final dividend of Rs, 1 per Equity Share of Rs, 10 each (Previous year Rs, 0.80 per share) subject to approval of shareholders in forthcoming Annual General Meeting.

8. During the year, the Company has paid interim dividend of Rs, 8,891.19 lakh on cumulative compulsorily redeemable preference shares of Rs, 100 each fully paid and redeemed cumulative compulsory redeemable preference shares (CRPS) amounting Rs, 17,900.00 lakh and paid dividend of Rs, 415.36 lakh on these shares.

9. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2018.

10. The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934.

11 Disclosures regarded to exposure to real estate sector and maturity pattern of assets and liabilities as required by RBI as per Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 notified on August 25, 2016 vide RBI/DNBR/2016-17/39 & Master Direction DNBR. PD. 003/03.10.119/2016-17.

12. Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company as required in terms of paragraph 70 of Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 notified on September 01, 2016 vide RBI/DNBR/2016-17/45 & Master Direction DNBR. PD. 008/03.10.119/2016-17.

2) Derivatives:

I) Forward Rate Agreement / Interest Rate Swap: The Company has not traded in Forward Rate Agreement/ Interest Rate Derivative during the financial year ended March 31, 2018 (Previous year: Nil)

II) Exchange Traded Interest Rate (IR) Derivatives: The Company has not traded in Exchange Traded Interest Rate (IR) Derivative during the financial year ended March 31, 2018 (Previous year: Nil)

3) Securitization: No securitization deal (including assignment deal) has carried out during the financial year ended March 31, 2018 (Previous year: Nil)

4) Asset Liability Management Maturity Pattern: Refer note no. 22.14 -2) for details of Asset Liability Management Maturity Pattern

13. Previous year figures have been regrouped/ reclassified wherever necessary to correspond with current year''s classification/disclosure.

Mar 31, 2017

1 Share Capital

(I) Share capital authorised, issued and subscribed

(II) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Members of the Company holding equity shares capital therein have a right to vote, on every resolution placed before the Company and right to receive dividend. The voting rights on a poll is in proportion to the share of the paid up equity capital of the Company held by the shareholders. The Company declares dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

(III) Terms/rights attached to Cumulative Compulsorily Redeemable Preference Shares (CRPS)

The CRPS will not have voting rights other than in respect of matters directly affecting it. In the event of any due and payable dividends remain unpaid for aggregate period of at least 2 years prior to the start of any general meeting of the equity shareholders, CRPS holders shall have voting rights in line with their voting rights of the equity shareholders. The CRPS will be redeemed at the end of 3 to 5 years from the date of allotment and the payment of dividend would be in accordance with the terms agreed at the time of issuance of Preference Shares. Provided that the tenure may be extended by a further period, not exceeding 5 days from the Proposed Tenure, which shall be notified to the Investors at the time of allotment. On winding or repayment of capital, CRPS holders enjoy preferential rights vis a vis equity shareholders, for repayment of capital paid up and shall include any unpaid dividends and any fixed premium (if applicable).

2 Money received against share warrants

Money received against share warrants represents amounts received towards warrants which entitles the warrant holders, the option to apply for and be allotted equivalent number of equity shares of the face value of Rs.10 each

During the previous year, the Company issued 6,38,20,990 share warrants at an issue price of Rs.74 each to BC Asia Growth Investments on a preferential basis, having option to apply for and be allotted an equivalent number of equity shares of a face value of Rs.10 each at a premium of Rs.64 each determined in accordance with Regulation 76 of the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 (âSEBI ICDR Regulationsâ). The holder of the warrants has paid upfront 25% of the price per warrant (i.e. Rs.18.50 per warrant); the balance can be exercised within 18 months.

3. Stock option scheme

a) In respect of stock options granted pursuant to Companyâs stock options scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) The grant of options to the employees under the stock option scheme is on the basis of their performance and other eligibility criteria. The options allotted under scheme 2010 are vested over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under scheme 2013 are vested in a graded manner over a period of four year with15 %, 20%, 30 % and 35 % of grants vesting each year, commencing from the end of 24 month from the date of grant.

d) The option granted under scheme 2010 is at exercise price of Rs.44.20. The option granted under scheme 2013 was at market price which was the last closing price on National stock exchange preceding the dates of grant respectively.

e) During the year ended March 31, 2017, 1,803,810 and 519,500 options were allotted under scheme 2010 & 2013 respectively.

f) The details of the grants are summarised below:

g) During the year, the Company has debited to the Statement of Profit and Loss Rs.63.63 lakh (previous year : Rs.36.72) {net of recovery from its subsidiary companies during the year Rs.8.29 lakh (previous year : Rs.95.46 lakh) } towards the stock options granted to their employees, pursuant to the employee stock option schemes.

h) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2017 is Rs.553.74 lakh (previous year: Rs.845.97 lakh), including Rs.232.27 lakh (previous year : Rs.415.97 lakh) for which the options have vested to employees as on March 31, 2017.

i) Weighted average fair values of options granted during the year is Rs.27.24 (previous year: Rs.32.02) per options.

j) Had the Company opted for accounting of employee compensation cost under âFair value Methodâ, Profit after tax would have been lower by Rs.45.79 lakh (Previous year: Rs.120.45 lakh) and Earnings per share Basic and diluted would have been Rs.0.71 & Rs.0.70 respectively. (Previous year: Rs.0.88 & Rs.0.88 respectively).

k) The Fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows:

4 Disclosure pursuant to Accounting Standard (AS) 15 Revised âEmployee Benefitsâ :

i) Defined Contribution Plans :

The company recognized charges of Rs.119.10 lakh (previous year Rs.251.24 lakh) is as an expense for provident fund and super annuation fund and included in employee contribution in the statement of profit and loss.

ii) Defined Benefit Plans :

The company offers the following employee benefit schmeme to its employees; Gratuity expense which included in employee benefit expense in Note 20.

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

b) The amount recognised in the statement of profit and loss account are as follows:

c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balance thereof are as follows:

d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows:

The trust formed by the Company manages the investment of 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.

5 Segment Reporting : Accounting Standard -17

6 Related Party Disclosures: Accounting Standard - 18

a. List of Related Parties and Relationships

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited ¹

2. L&T Infrastructure FinanceCompany Limited

3. L&T FinCorp Limited *

4. L&T Financial Consultants Limited (erstwhile known as L&T Vrindavan Properties Limited)

5. L&T Access Distribution Services Limited

6. L&T Investment Management Limited

7. L&T Housing Finance Limited

8. L&T Finance Limited * (erstwhile known as Family Credit Limited)

9. L&T Capital Markets Limited

10. L&T Infra Debt Fund Limited

* During the current year, L&T Finance Limited & L&T Fincorp Limited merged into Family Credit Limited w.e.f April 1, 2016. Subsequently Family Credit Limited was renamed as L&T Finance Limited.

C. Fellow Subsidiary(with whom Company has undertaken transaction during current or previous year)

1. L&T Metro Rail (Hyderabad) Limited

2. L&T General Insurance Company Limited (till September 8, 2016)

D. Key Management Personnel

1. Mr. Dinanath Dubhashi (from April 14, 2016)

2. Mr. Y. M. Deosthalee (till September 5, 2016)

3. Mr. N. Sivaraman (till FY 2015-2016)

Note: The above list contain name of only those related parties with whom the company has undertaken transactions in current or previous year.

7 The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2017. This information is given in respect of such vendors as could be identified as âMicro/Medium/Small Enterprisesâ on the basis of information available with the company.

8 Expenditure in foreign currency:

For Professional and Other Fees (including reimbursement) Rs.462.50 lakh (previous year Rs.205.16 lakh)

For Directors Sitting Fees and commission (including reimbursements) Rs.23.39 lakh (previous year Rs.22.90 lakh)

9 The Company has contingent liability

(a) Claims against the company not acknowledged as debt:

Income Tax matter in dispute:Rs.451.00 lakh (previous year: NIL).

10 During the year, the Company has allotted 2,323,310 equity shares of Rs.10 each fully paid up, on exercise of options by employees, in accordance with the Companyâs stock option schemes.

11 The Board of Directors have recommended a final dividend of Rs.0.80/- per Equity Share of Rs.10/- each (previous year Rs.0.80/- per share) subject to approval of shareholders in ensuing Annual General Meeting. In terms of revised Accounting Standard (AS-4) âContingencies and events occurring after Balance Sheetâ as notified by Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendments Rules, 2016 dated March 30, 2016, proposed dividend of Rs.14,556 lakh and dividend distribution tax (net) thereon is not recognised as liability as on March 31, 2017.

12 During the year, the Company has paid interim dividend (incl. Dividend Distribution Tax) of Rs.12,443.41 lakh on Cumulative Compulsorily Redeemable Preference Shares of Rs.100/- each fully paid.

13 There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2017.

14 âThe Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934.

15 Disclosures regarded to exposure to real estate sector and maturity pattern of assets and liabilities as required by RBI as per Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 notified on August 25, 2016 vide RBI/DNBR/2016-17/39 & Master Direction DNBR. PD. 003/03.10.119/2016-17.

16 Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Companyas required in terms of paragraph 21of Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016 notified on August 25, 2016 vide RBI/DNBR/2016-17/39 & Master Direction DNBR. PD. 003/03.10.119/2016-17.

17 Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company as required in terms of paragraph 70 of Master Direction - Non-Banking Financial Company - Systemically ImportantNon-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 notified on September 01, 2016 vide RBI/DNBR/2016-17/45 & Master Direction DNBR. PD. 008/03.10.119/2016-17.

1) Investments :

2) Derivatives :

I) Forward Rate Agreement / Interest Rate Swap : The Company has not traded in Forward Rate Agreement/ Interest Rate Derivative during the financial year ended March 31, 2017 (Previous year: Nil)

II) Exchange Traded Interest Rate (IR) Derivatives: The Company has not traded in Exchange Traded Interest Rate (IR) Derivative during the financial year ended March 31, 2017 (Previous year: Nil)

3) Securitization : No securitization deal (including assignment deal) has carried out during the financial year ended March 31, 2017 (Previous year : Nil)

4) Asset Liability Management Maturity Pattern :Refer note no. 24.14 -2) for details of Asset Liability Management Maturity Pattern

5) Exposures :

I) Exposures to Real Estate Sector : Refer note no. 24.14 -1) for details of exposures to Real Estate Sector

II) Exposures to Capital Markets : None

III) Details of financing of parent company products: None

IV) The particulars of Unsecured Advances net off provision are given below:

6) Miscellaneous

I) Registration obtained from other financial sector regulators : No registration has been obtained from other financial sector regulators.

II) Penalties imposed by RBI and other regulators : No penalties has been imposed by RBI or other regulators during the year. (Previous Year: NIL)

III) Ratings assigned by credit rating agencies and migration of ratings during the Year

IV) Postponements of revenue recognition: Current year: Nil (Previous year: Nil)

7) Provisions and Contingencies :

I) Break up of âProvisions and Contingenciesâ shown under the head Expenditure in Profit and Loss Account:

18 The company does not maintain any cash and hence, the disclosure requirement with respect to Specified Bank Notes as per notification dated 30th March, 2017 issued by Ministry of Company Affairs does not apply to the company.

19 Previous year figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2016

1.1 Stock option scheme

a) In respect of stock options granted pursuant to Company''s stock options scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) The grant of options to the employees under the stock option scheme is on the basis of their performance and other eligibility criteria. The options allotted under scheme 2010 are vested over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under scheme 2013 are vest in a graded manner over a period of four year with15 %, 20%, 30 % and 35 % of grants vesting each year, commencing from the end of 24 month from the date of grant.

c) Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

d) The option granted under scheme 2010 is at exercise price of Rs. 44.20. The option granted under scheme 2013 was at exercise price Rs. 67.85 which was at the last closing price on National stock exchange preceding the date of grant.

e) During the year ended March 31, 2016, 9,00,000 options were allotted under scheme 2010

f) The details of the grants are summarised below:

g) During the year, the Company has debited to the Statement of Profit and Loss Rs. 36.72 lakh (previous year Rs. Nil) {net of recovery from its subsidiary companies during the year Rs. 95.46 lakh (previous year Rs. 123.72 lakh) } towards the stock options granted to their employees, pursuant to the employee stock option schemes.

h) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2016 is Rs. 845.97 lakh (previous year: Rs. 813.27 lakh), including Rs. 415.97 lakh (previous year : Rs. 416.28 lakh) for which the options have vested to employees as on March 31, 2016.

i) Weighted average fair values of options granted during the year is Rs. 32.02 (previous year: Rs. 25.40) per options.

j) Had the Company opted for accounting of employee compensation cost under ''Fair value Method'', Profit after tax would have been lower by Rs. 120.45 lakh (Previous year: Rs. Nil) and Earnings per share (Basic and diluted) would have been Rs. 1.24 (Previous year: Rs. 0.88)

k) The Fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows:

1.2 Segment Reporting : Accounting Standard Â 17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) 17 on ''Segment Reporting''.

1.3 Related Party Disclosures: Accounting Standard - 18 a. List of Related Parties and Relationships

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited

2. L&T Infrastructure Finance Company Limited

3. L&T FinCorp Limited

4. L&T Vrindavan Properties Limited

5. L&T Access Distribution Services Limited

6. L&T Investment Management Limited

7. L&T Mutual Fund Trustee Limited

8. L&T Infra Investment Partners Advisory Private Limited

9. L&T Infra Investment Partners Trustee Private Limited

10. L&T Housing Finance Limited

11. Family Credit Limited

12. L&T Capital Markets Limited

13. Consumer Financial Services Limited

14. L&T Infra Debt Fund Limited

15. Mudit Cement Private Limited

C. Fellow Subsidiary (with whom Company has undertaken transaction during current or previous year)

1. L&T Metro Rail (Hyderabad) Limited

2. L&T Infrastructure Development Projects Limited

3. L&T General Insurance Company Limited

D. Associate Company

1. Feedback Infrastructure Services Private Limited

E. Key Management Personnel

1. Y. M. Deosthalee Â Chairman & Managing Director

2. N. Sivaraman Â President & Wholetime Director

1.4 The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2016. This information is given in respect of such vendors as could be identified as "Micro/Medium/Small Enterprises" on the basis of information available with the company.

1.5 Expenditure in foreign currency:

For Professional and Other Fees (including reimbursement) Rs. 205.16 lakh (previous year Rs. 193.66 lakh)

For Directors Sitting Fees and commission (including reimbursements) Rs. 22.90 lakh (previous year Rs. 8.51 lakh)

1.6 The Company does not have contingent liability as at March 31, 2016 (previous year performance guarantee Rs. 945.00 lakh).

1.7 During the year, the Company has allotted 12,75,680 equity shares of Rs. 10 each, fully paid up, on exercise of options by employees, in accordance with the Company''s stock option schemes and 3,18,36,971 equity shares of Rs. 10 each, fully paid up, on preferential basis.

1.8 The directors recommend payment of final dividend of Rs. 0.80 per equity share of Rs. 10 each on the number of shares outstanding on the record date. Provision for final dividend has been made in the books of accounts for the 1,753,398,551 equity shares outstanding as at March 31, 2016 amounting to Rs. 14,027.19 lakh.

1.9 In terms of provision of sub-section 1A of Section 115-O of the Income Tax Act, 1961, dividend distribution tax payable by the Company is net of dividend distribution tax paid by its subsidiary companies amounting to Rs. 6,147.57 lakh, relating to dividend of Rs. 30,197.85 lakh declared by them.

1.10 There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2016.

1.11 The Company, during the current year has issued 60,000,000 Cumulative Compulsorily Redeemable Preference Shares (CRPS) of Rs. 100 each fully paid up.

1.12 Schedule to the Balance Sheet of a Non-Banking Financial Company as required by RBI as per their Circular RBI/ 2008-09/ 116 DNBS(PD).CC.No.125/ 03.05.002/ 2008-2009, Guidelines for NBFC-ND-SI as regards capital adequacy, liquidity and disclosure norms:

1.13 Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2015.

1.14 "The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934

1.15 Previous year figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2015

1. (I) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Members of the Company holding equity shares capital therein have a right to vote, on every resolution placed before the Company and right to receive dividend. The voting rights on a poll is in proportion to the share of the paid up equity capital of the Company held by the shareholders. The Company declares dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(II) Terms/rights attached to preference shares

The CRPS will not have voting rights other than in respect of matters directly affecting it. In the event any due and payable dividends remain unpaid for aggregate period of at least 2 years prior to the start of any general meeting of the equity shareholders, CRPS holders shall have voting rights in line with their voting rights of the equity shareholders. The CRPS will be redeemed at the end of 3 to 5 years from the date of allotment. Provided that the tenure may be extended by a further period, not exceeding 5 days from the Proposed Tenure, which shall be notified to the Investors at the time of allotment.

2. Notes on Financial Statements

i) Stock option scheme

a) In respect of stock options granted pursuant to Company''s stock options scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) The grant of options to the employees under the stock option scheme is on the basis of their performance and other eligibility criteria. The options allotted under scheme 2010 are vested over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under scheme 2013 are vest in a graded manner over a period of four year with15 %, 20%, 30 % and 35 % of grants vesting each year, commencing from the end of 24 month from the date of grant.

c) Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.

d) The option granted under scheme 2010 is at exercise price of Rs. 44.20. The option granted under scheme 2013 was at exercise price Rs. 67.85 which was at the last closing price on National stock exchange preceding the date of grant.

e) During the year ended March 31, 2015, 2,50,000 options were allotted under scheme 2010 and 2,63,50,000 options were allotted under scheme 2013.

g) During the year, the Company has recovered Rs. 123.72 Lakhs (previous year Rs. 149.43 Lakhs) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes.

h) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2015 is Rs. 813.27 Lakhs (previous year: Rs. 975.27 Lakhs), including Rs. 416.28 Lakhs (previous year : Rs. 254.89 Lakhs) for which the options have vested to employees as on March 31, 2015.

i) Weighted average fair values of options granted during the year is Rs. 25.40 (previous year:Rs.34.53) per options.

ii) Disclosure pursuant to Accounting Standard (AS) 15 Revised "Employee Benefits" :

i) Defined Contribution Plans :

Amount of Rs. 168.51 Lakhs (previous year Rs. 183.82 Lakhs) is recognized as an expense and included in employee benefits expenses in the statement of profit and loss.

ii) Defined Benefit Plans (Gratuity):

3. Segment Reporting : Accounting Standard - 17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) 17 on ''Segment Reporting''.

4. Related Party Disclosures: Accounting Standard - 18 a. List of Related Parties and Relationships

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited

2. L&T Infrastructure Finance Company Limited

3. L&T FinCorp Limited

4. L&T Vrindavan Properties Limited (formerly: L&T Unnati Finance Limited)

5. L&T Access Distribution Services Limited (formerly: L&T Access Financial Advisory Services Limited)

6. L&T Investment Management Limited

7. L&T Mutual Fund Trustee Limited

8. L&T Infra Investment Partners Advisory Private Limited

9. L&T Infra Investment Partners Trustee Private Limited

10. L&T Housing Finance Limited

11. Family Credit Limited

12. L&T Capital Markets Limited

13. L&T Trustee Services Private Limited

(amalgamated with L&T Mutual Fund Trustee Ltd w.e.f. 4th September 2014)

14. Consumer Financial Services Limited

15. L&T Infra Debt Fund Limited

16. Mudit Cement Private Limited

C. Fellow Subsidiary (with whom Company has undertaken transaction during current or previous year)

1. L&T Capital Company Limited

2. Larsen & Toubro InfoTech Limited

3. L&T Metro Rail (Hyderabad) Limited

4. L&T Infrastructure Development Projects Limited

5. L&T General Insurance Company Limited

D. Associate Company

1. NAC Infrastructure Equipment Limited ( till 25th August 2014)

2. Feedback Infra Private Limited (formerly Feedback Infrastructure Services Private Limited)

E. Key Management Personnel

1. Y. M. Deosthalee - Chairman & Managing Director

2. N. Sivaraman - President & Wholetime Director

5. The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2015. This information is given in respect of such vendors as could be identified as "Micro/Medium/Small Enterprises" on the basis of information available with the company.

6. L&T Mutual Fund Trustee Limited, subsidiary of L&T Finance Holdings Ltd had filed a Scheme of Amalgamation (the "Scheme") for the amalgamation of L&T Trustee Services Pvt. Ltd. with the L&T Mutual Fund Trustee Limited with the Honorable High Court of Judicature at Bombay (the "Court"). The Honorable Court sanctioned the Scheme with effect from April 01,2013, (the "Appointed Date") vide its Order dated August 08, 2014. The certified copies of the Order of the Court sanctioning the Scheme were filed with the Registrar of Companies, Maharashtra on September 04, 2014 (the "Effective Date").

7. Expenditure in foreign currency:

For Professional Fees (including reimbursements) Rs. 193.66 Lakhs (previous year Rs. 189.03 Lakhs)

For Directors Sitting Fees and commission (including reimbursements) Rs. 8.51 Lakhs (previous year Rs. 7.45 Lakhs)

8. The Company does not have contingent liability as at March 31, 2015 except performance guarantee of Rs. 945.00 Lakhs (previous year Rs. 945.00 Lakhs).

9. During the year, the Company has allotted 18,36,925 equity shares of Rs. 10 each, fully paid up, on exercise of options by employees, in accordance with the Company''s stock option schemes.

10. The directors recommend payment of final dividend of Rs. 0.80 per equity share of Rs. 10 each on the number of shares outstanding on the record date. Provision for final dividend has been made in the books of accounts for the 1,720,285,900 equity shares outstanding as at March 31, 2015 amounting to Rs. 13,762.29 Lakhs.

11. In terms of provision of sub-section 1A of Section 115O of the Income Tax Act, 1961, dividend distribution tax payable by the Company is net of dividend distribution tax paid by its subsidiary companies amounting to Rs. 4,943.10 Lakhs, relating to dividend of Rs. 24,722.77 Lakhs declared by them.

12. Cumulative Compulsorily Redeemable Preference Shares (CRPS) of Rs. 100 each fully paid up.

13. Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2015.

14. "The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11,2013 under Section 45-IA of the Reserve Bank of India Act, 1934

15. Previous year figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2014

1 Notes on Financial Statements

1.1 Stock Options Scheme

a) In respect of stock options granted pursuant to Company''s Stock Options Scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) 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 over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the Management and fulfillment of certain conditions.

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

d) The details of the grants under the aforesaid schemes are summarised below:

e) During the year, the Company has recovered Rs. 149.43 Lakh (previous year Rs. 302.61 Lakh) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes.

f) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2014 is Rs. 975.27 Lakh (previous year: Rs. 927.23 Lakh), including Rs. 254.89 Lakh (previous year : Rs. 135.80 Lakh) for which the options have vested to employees as on March 31, 2014.

g) Weighted average fair values of option granted during the year is Rs. 34.53 (previous year: Rs. 15.37) per Option.

1.2 Disclosure pursuant to Accounting Standard (AS) 15 Revised "Employee Benefits" :

i) Defined Contribution Plans :

Amount of Rs. 183.82 Lakh (previous year Rs. 37.51 Lakh) is recognized as an expense and included in employee benefits expenses in the Statement of Profit and Loss.

1.3 Segment Reporting : Accounting Standard Â 17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) 17 on ''Segment Reporting''.

1.4 Related Party Disclosures: Accounting Standard - 18 a. List of Related Parties and Relationships

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited

2. L&T Infrastructure Finance Company Limited

3. L&T FinCorp Limited

4. L&T Vrindavan Properties Limited (formerly: L&T Unnati Finance Limited)

5. L&T Access Distribution Services Limited (formerly: L&T Access Financial Advisory Services Limited)

6. L&T Investment Management Limited

7. L&T Mutual Fund Trustee Limited

8. L&T Infra Investment Partners Advisory Private Limited

9. L &T Infra Investment Partners Trustee Private Limited

10. L&T Housing Finance Limited

11. Family Credit Limited

12. L&T Capital Markets Limited

13. L&T Trustee Services Private Limited

14. Consumer Financial Services Limited

15. L&T Infra Debt Fund Limited

16. Mudit Cement Private Limited (w.e.f December 27, 2013)

C. Fellow Subsidiary (with whom Company has undertaken transactions during current or previous year)

1. L&T Capital Company Limited

2. Larsen & Toubro InfoTech Limited

3. L&T Metro Rail (Hyderabad) Limited

4. L&T Infrastructure Development Projects Limited

5. L&T General Insurance Company Limited

D. Associate Company

1. NAC Infrastructure Equipment Limited

2. Feedback Infrastructure Services Private Limited

E. Key Management Personnel

1. Y. M. Deosthalee Â Chairman & Managing Director

2. N. Sivaraman Â President & Whole-time Director

1.5 The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at 31st March, 2014.

1.6 Expenditure in foreign currency:

For Professional Fees Rs. 189.03 Lakh (previous year Rs. 163.42 Lakh)

For Directors Sitting Fees and commission Rs. 7.45 Lakh (previous year Rs. 4.69 Lakh)

1.7 The Company does not have contingent liability as at 31st March, 2014 except performance guarantee of Rs. 945.00 Lakh (previous year Rs. 945.00 Lakh).

1.8 Exceptional items during the previous year represent profit on sale of investment in Federal Bank Limited amounting to Rs. 23,792.92 Lakh and expenditure of Rs. 220.00 Lakh incurred towards employee cost in connection with acquisition of L&T Fund Management Private Limited (formerly: FIL Fund Management Private Limited).

1.9 During the year, the Company has allotted 1,688,443 equity shares of Rs. 10 each, fully paid up, on exercise of options by employees, in accordance with the Company''s stock option schemes.

1.10 The directors recommend payment of final dividend of Rs. 0.75 per equity share of Rs. 10 each on the number of shares outstanding on the record date. Provision for final dividend has been made in the books of accounts for the 1,718,448,975 equity shares outstanding as at March 31, 2014 amounting to Rs. 12,888.37 Lakh.

1.11 In terms of provision of sub-section 1A of Section 115O of the Income Tax Act, 1961, dividend distribution tax payable by the Company is net of dividend distribution tax paid by its subsidiary companies amounting to Rs. 3,478.41 Lakh, relating to dividend of Rs. 20,467.24 Lakh declared by them.

1.12 The Company, during the current year has issued 25,000,000, 9.00% Cumulative Compulsorily Redeemable Preference Shares (CRPS) of Rs. 100 each fully paid up.

1.13 Schedule to the Balance Sheet of a Non-Banking Financial Company as required by RBI as per their Circular RBI/ 2008-09/ 116 DNBS(PD).CC.No.125/ 03.05.002/ 2008-2009, Guidelines for NBFC-ND-SI as regards capital adequacy, liquidity and disclosure norms:

1.14 "The Company has obtained the Certificate of Registration from the RBI as a Non-Banking Financial Institution - Core Investment Company (NBFC-CIC) on September 11, 2013 under Section 45-IA of the Reserve Bank of India Act, 1934

1.15 Provision for Income Tax for previous year has been made in accordance with Section 115 JB of Income Tax Act, 1961.

1.16 Previous year figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2013

1.1 Stock option scheme

a) In respect of stock options granted pursuant to Company''s Stock Options Scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) 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 over a period of 4 years in ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the Management and fulfillment of certain conditions.

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

d) The details of the grants under the aforesaid schemes are summarised below:

e) During the year, the Company has recovered Rs. 302.61 lakhs (previous year Rs. 434.85 lakhs) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes.

f) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2013 is Rs. 927.23 lakhs (previous year: Rs. 1,230.07 lakhs), including Rs. 135.80 lakhs (previous year : Rs. 122.41 lakhs) for which the options have vested to employees as on March 31, 2013.

g) Weighted average fair values of options granted during the year is Rs. 15.37 (previous year: Rs. 28.18) per option.

h) The Fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows:

1.2 Disclosure pursuant to Accounting Standard (AS) 15 Revised "Employee Benefits" :

i) Defined Contribution Plans :

Amount of Rs. 37.51 lakhs (previous year Rs.154.73 lakhs) is recognised as an expense and included in employee benefit expenses in the Statement of Profit and Loss.

ii) Defined Benefit Plans (Gratuity):

The details of the Company''s post-retirement benefit plans for gratuity for its employees are given below which are certified by the actuary and complied by the Management upon which auditors have relied:

1.3 Segment Reporting : Accounting Standard - 17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India. As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) 17 on ''Segment Reporting''.

1.4 Related Party Disclosures: Accounting Standard - 18

a. List of Related Parties and Relationships

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited

2. L&T Infrastructure Finance Company Limited

3. L&T Fincorp Limited

4. L&T Unnati Finance Limited

5. L&T Access Financial Advisory Services Limited

6. L&T Investment Management Limited

7. L&T Mutual Fund Trustee Limited

8. L&T Infra Investment Partners Advisory Private Limited

9. L &T Infra Investment Partners Trustee Private Limited

10. L&T Housing Finance Limited (Formerly Indo Pacific Housing Finance Limited) (w.e.f. October 9, 2012)

11. Family Credit Limited (w.e.f. December 31, 2012)

12. L&T Capital Markets Limited (w.e.f. February 7, 2013)

13. L&T Fund Management Limited (Formerly FIL Fund Management Private Limited) (w.e.f. November 23, 2012)

14. L&T Trustee Services Private Limited (FIL Trustee Company Private Limited (w.e.f. November 23, 2012)

15. Consumer Financial Services Limited (w.e.f October 9, 2012)

C. Fellow Subsidiary (with whom Company has undertaken transaction during current or previous year)

1. L&T Capital Company Limited

2. Larsen & Toubro Infotech Limited

D. Associate Company

1. NAC Infrastructure Equipment Limited

2. Feedback Infrastructure Services Private Limited (w.e.f. September 28, 2012)

E. Key Management Personnel

1. Y. M. Deosthalee - Chairman & Managing Director

2. N. Sivaraman - President & Whole-time Director

1.5 Operating Lease:

Assets taken on lease:

Lease Payments of Rs. NIL (previous year Rs. 137.45 lakhs) recognised in the Statement of Profit and Loss. The future minimum lease payments in respect of which are as follows:

1.6 The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2013.

1.7 Expenditure in foreign currency:

For Professional Fees Rs. 163.42 lakhs (previous year Rs. 527.09 lakhs)

For Directors Sitting Fees and commission Rs. 4.69 lakhs (previous year Rs. 0.60 lakhs)

1.8 The Company does not have contingent liability as at March 31, 2013 except performance guarantee of Rs. 945.00 lakhs (previous year Rs. 945.00 lakhs).

1.9 Exceptional items represent profit on sale of investment in Federal Bank Limited amounting to Rs. 23,792.92 lakhs and expenditure of Rs. 220.00 lakhs incurred towards employee cost in connection with acquisition of L&T Fund Management Private Limited (formerly: FIL Fund Management Private Limited).

1.10 During the year, the Company has acquired 100% shareholding in L&T Investment Management Limited and L&T Mutual Fund Trustee Limited from L&T Finance Limited (wholly owned subsidiary) in order to simplify the holding structure and to bring the operational entities directly under L&T Finance Holdings Limited. Consequently, the Company became the sponsor of L&T Mutual Fund.

1.11 During the year, the Company has allotted 1,998,920 equity shares of Rs. 10 each, fully paid up, on exercise of options by employees, in accordance with the Company''s stock option schemes.

1.12 The directors recommend payment of final dividend of Rs. 0.75 per equity share of Rs. 10 each on the number of shares outstanding on the record date. Provision for final dividend has been made in the books of account for the 1,716,760,532 equity shares outstanding as at March 31, 2013 amounting to Rs. 128,75.70 lakhs.

1.13 In terms of provision of sub-section 1A of Section 115O of the Income Tax Act, 1961, dividend distribution tax payable by the Company is net of dividend distribution tax paid by its subsidiary companies amounting to Rs. 2,121.57 lakhs, relating to dividend of Rs. 13,029.11 lakhs declared by them.

1.14 The Company, during the current year has issued 75,000,000, 8.75% Cumulative Compulsorily Redeemable Preference Shares (CRPS) of Rs. 100 each fully paid up.

1.15 The Company had made initial public offer (IPO) during 2011-12. The utilisation of IPO proceeds are as follows:

1.16 Schedule to the Balance Sheet of a Non-Banking Financial Company as required by RBI as per their Circular RBI/ 2008-09/ 116 DNBS(PD).CC.No.125/03.05.002/ 2008-2009, Guidelines for NBFC-ND-SI as regards capital adequacy, liquidity and disclosure norms:

1.17 Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2007

1.18 Provision for Income Tax has been made in accordance with Section 115 JB of Income Tax Act, 1961.

1.19 Previous year figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2012

(I) Terms/rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 10 per share. Members of the Company holding equity share capital therein have a right to vote on every resolution placed before the Company and right to receive dividend. The voting rights on a poll is in proportion to the share of the paid-up equity capital of the Company held by the shareholders.

Note No. 1 : Notes on Financial Statements

1.1 Stock options Scheme

a) In respect of stock options granted pursuant to the Company''s Stock Options Scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation over the vesting period.

b) The grant of options to the employees under stock options schemes is on the basis of their performance and other eligibility criteria. The options are vested over a period of 4 years in the ratio of 15%, 20%, 30% and 35% respectively from the date of grant, subject to the discretion of the Management and fulfilment of certain conditions.

c) Options can be exercised any time within a period of 7 years from the date of grant and would be settled by way of equity Management has discretion to modify the exercise period.

e) During the year, the Company has recovered Rs. 434.85 lakhs (previous year Rs. 122.59 lakhs) from its subsidiary companies towards stock options granted to their employees, pursuant to the employee stock option schemes.

f) Total carrying amount of liabilities arising from employee share-based payment plans as on March 31, 2012 is Rs. 1,230.07 lakhs (previous year: Rs. 846.62 lakhs), including Rs. 122.41 lakhs (previous year: Rs. Nil) for which the options have been vested to employees as on March 31, 2012.

g) Weighted average fair values of options granted during the year is Rs. 28.18 (previous year: Rs. 21.21) per option 22.2 Disclosure pursuant to Accounting Standard (AS) 15 Revised "Employee Benefits" :

i) Defined Contribution Plans:

Amount of Rs. 154.73 lakhs (previous year: Rs. Nil) is recognised as expense and included in personnel expenses in the Statement of Profit and Loss.

ii) Defined Benefit Plans (Gratuity):

The details of the Company''s post-retirement benefit plans for gratuity for its employees are given below which are certified by the actuary and relied upon by the auditors:

Since the Company is under an arrangement to join the Group Gratuity Scheme of Life Insurance Corporation of India (LIC) administered by trustees and managed by LIC, the disclosure with regard to movement and investment pattern of planned assets has not been made.

1.2 Segment Reporting: Accounting Standard (AS) -17

The Company operates mainly in the business segment of investment activity. Further, all activities are carried out within India As such, there are no separate reportable segments as per the provisions of Accounting Standard (AS) - 17 on ''Segment Reporting'' issued by the Institute of Chartered Accountants of India.

1.3 Related Party Disclosures: Accounting Standard (AS) -18 (a) List of Related Parties and Relationships:

A. Holding Company

1. Larsen & Toubro Limited

B. Subsidiary Companies

1. L&T Finance Limited

2. L&T Infrastructure Finance Company Limited

3. L&T FinCorp Limited (Formerly India Infrastructure Developers Limited)

4. L&T Unnati Finance Limited (Date of incorporation: June 16, 2011)

5. L&T Access Financial Advisory Services Private Limited (Date of incorporation: November 29, 2011)

6. L&T Infra Investment Partners Trustee Private Limited (Date of incorporation : August 12, 2011)

7. L&T Mutual Fund Trustee Limited

8. L&T Investment Management Limited

9. L&T Infra Investment Partners Advisory Private Limited (Date of incorporation: May 30, 2011)

C. Fellow Subsidiary (with whom Company has undertaken transaction during current or previous year) 1. L&T Capital Company Limited

D. Key Management Personnel

1. Y. M. Deosthalee - Chairman & Managing Director

2. N. Sivaraman - President & Whole-time Director

* Includes Rs. 570.33 Lakhs towards provision for variable remuneration and does not include contribution to gratuity fund, pension scheme and provision for compensated absences, since the same is provided on actuarial basis for the Company as a whole.

* Inclusive of Service Tax

1.4 The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2012.

1.5 During the year, the Company has signed definitive agreements to acquire Indo Pacific Housing Finance Limited and the said acquisition is subject to appropriate regulatory approvals.

1.6 The Company does not have contingent liability as at March 31, 2012 except performance guarantee Rs. 945 lakhs (previous year Rs. Nil).

Mar 31, 2011

1) During the year, the Company has issued and allotted 63,432,835 equity shares of Rs. 10 each to Larsen & Toubro Limited at issue price of Rs. 67 per share.

2) Stock option scheme

The Company has formulated Employee Stock Option Scheme 2010 (ESOP SchemeÂ2010) in the year 2010Â11, for which intrinsic value method is used.

The Plan is designed to provide stock options to employees of the Company, its subsidiaries and holding Company. All grants under the Plan are to be issued and allotted by the Nomination and Remuneration Committee of the Company. The options are to be granted to the eligible employees based on certain criteria and approval of the Committee and as per the respective Employee Stock Option Agreements that the Company enters into with them.

The Company has granted 10,750,000 options on November 30, 2010.

Options have been granted at an exercise price which will be at a discount of 15% of the issue price of equity shares being offered in the initial public offering (IPO) which is under consideration.

The Employees shall be allotted a preÂdefined number of equity shares against each option and the options will vest over a period of four years from the date of grant at a preÂdefined percentage of the total vesting, which shall each be subject to the conditions as per respective Employee Stock Option Agreements that the Company enters into with them.

Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity.

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method wherein the fair market value of equity shares has been determined by an independent valuer.

During the year, the Company has recovered Rs. 122.59 lakhs (previous year Rs. Nil) from its subsidiary companies towards the stock options granted to their employees, pursuant to the employee stock option schemes.

3) i) Segment Reporting

Primary Segment (Business Segment)

The Company operates mainly in the business segment of investments activity. The other business segment not have income and / or assets more than 10% of the total income and / or assets of the Company. Accordingly, separate segment information for different business segments is not disclosed.

Secondary Segment (Geographical Segment)

The Company operates only in the domestic market. As a result separate segment information for different geographical segments is also not disclosed.

(ii) Related Party Disclosure

i. List of related parties who exercises control:

Larsen & Toubro Limited Holding Company

(b) The Company has a deferred tax asset of Rs. 0.77 lakh (previous year Rs. 0.77 lakh) in respect of deduction of preliminary expenses as per Income Tax Act, 1961 lower than as per books of account. The Company has not accounted for the deferred tax asset on ground of prudence.

4) The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2011.

5) The President & Whole time Director is on deputation from the Parent Company and compensation debited to the Company is in accordance with the agreement between the Companies. During the year, in accordance with the agreement with the Parent Company, the Company has not received any debit for compensation paid to him.

6) Manager is on deputation from the Parent Company and his compensation is debited to the extent of debit received from the Parent Company

7) The Company does not have any contingent liability as at March 31, 2011.

8) Previous year figures have been regrouped / reclassified wherever necessary.

9) Schedule to the Balance Sheet of a nonÂdeposit taking NonÂBanking Financial Company (as required in terms of paragraph 13 of NonÂBanking Financial (NonÂDeposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2007

10) Schedule to the Balance Sheet of a NonÂBanking Financial Company as required by RBI as per their circular RBI/2008Â09/116 DNBS(PD). CC.No. 125/03.05.002 / 2008Â009, Guidelines for NBFCÂNDÂSI as regards capital adequacy, liquidity and disclosure norms:

Mar 31, 2010

A. The Company does not have any contingent liability as at March 31, 2010

B. The length of current accounting period differs from the length of previous accounting period. Current accounting period is of twelve months i.e. from April 1, 2009 to March 31, 2010. Previous accounting period was of 11 months i.e. from May 1, 2008 to March 31, 2009. Therefore the figures of the two periods are not strictly comparable.

C. Related Party Disclosure : AS 18

i. List of related parties who exercises control:

1. Larsen & Toubro Limited Holding Company

ii. List of related parties over which control exists:

1. L&T Finance Limited Wholly Owned Subsidiary Company

2. India Infrastructure Developers Limited Wholly Owned Subsidiary Company

3. L&T Infrastructure Finance Company Limited Wholly Owned Subsidiary Company

4. L&T Aviation Services Private Limited Wholly Owned Subsidiary Company

5. NAC Infrastructure Equipment Limited Associate Company

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

1. Larsen & Toubro Limited Holding Company

2. L&T Finance Limited Wholly Owned Subsidiary Company

3. L&T Infrastructure Finance Company Limited Wholly Owned Subsidiary Company

4. L&T Aviation Services Private Limited Wholly Owned Subsidiary Company

5. India Infrastructure Developers Limited Wholly Owned Subsidiary Company

E. The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2010.

F. The Company has a deferred tax asset of Rs. 77,582 on account of deduction of preliminary expenses as per income tax being lower than that as per books of accounts. However, the Company has not accounted for the deferred tax asset on ground of prudence.

G. Previous year figures have been regrouped / reclassified wherever necessary.

Mar 31, 2009

1. The Company was incorporated on May 1, 2008 and hence the accounts are drawn for the period from May 1, 2008 to March 31, 2009.

2. (i) Segment Reporting : AS-17

As the Company''s business activity falls within a single primary business segment, viz., investments and a single geographical segment, i.e. India, the disclosure requirements of Accounting Standard (AS-17) - Segment Reporting, issued by the Institute of Chartered Accountants of India, are not applicable.

3. The Company has no amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2009 .

4. Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2007.

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