Particulars KD Million R Lakhs KD Million R Lakhs

Transcription

1 DIRECTORS REPORT The s have pleasure in presenting the Sixth Annual Report and Accounts for Larsen & Toubro Kuwait Construction General Contracting Company WLL for the year ended December 31, FINANCIAL RESULTS Particulars KD Million R Lakhs KD Million R Lakhs Total Income , , Profit / (Loss) after tax (0.053) (90.49) DIVIDEND The s do not recommend payment of any dividend. PERFORMANCE OF THE COMPANY The Company has submitted bids to various clients, which are expected to get realized during the Financial Year During the year, the Company has achieved sales of KD Million (equivalent R Lakhs). CAPITAL EXPENDITURE As at December 31, 2012, the gross Fixed Assets stood at KD Million (R Lakhs). The additions during the year were KD Million (equivalent R Lakhs). AUDITORS REPORT The Auditors Report to the shareholders does not contain any qualifications. DISCLOSURE OF PARTICULARS The Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure of Particulars in the Report of Board of s) Rules, 1988 are not relevant and hence have not been furnished. PARTICULARS OF EMPLOYEES The Company being registered outside India, the disclosures required to be made in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are not relevant and hence have not been furnished. SUBSIDIARY COMPANIES The Company has no subsidiary companies. DIRECTORS The present s of the Company are: Mr. K. Ravindranath Mr. P. S. Kapoor Dr. Mohammed Farid Sammur Mr. Rajesh Srivastava During the year, Mr. D. S. Shevde resigned from the ship of the Company on April 23, The Board places on record its appreciation of the services rendered by Mr. D. S. Shevde during his tenor as of the Company. Mr. Yogi Sriram was appointed as of the Company in the place of Mr. D. S. Shevde w.e.f. April 23, During 2013, Mr. Yogi Sriram resigned from the ship of the Company on April 14, The Board places on record its appreciation of the services rendered by Mr. Yogi Sriram during his tenor as of the Company. Dr. Mohammed Farid Sammur is appointed as of the Company in the place of Mr. Yogi Sriram w.e.f. April 14, 2013 DIRECTORS RESPONSIBILITY STATEMENT The Board of s of the Company confirm: i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure; ii. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2012 and of the profit of the Company for the year ended on that date; iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; S-126

2 iv. that the annual accounts have been prepared on a going concern basis; and v. that the Company has adequate internal systems and controls in place to ensure compliance of laws applicable to the Company. AUDITORS The auditors Deloitte & Touche Al Fahad Al Wassan & Co, continue to be the auditors of the Company for the financial year DISCLOSURE UNDER CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009 The Company being registered outside India, many of the particulars suggested in the guidelines are not applicable. Notwithstanding the above, the s wish to voluntarily disclose certain information in accordance with the said guidelines as under: Separation of Offices of Chairman and Chief Executive Officer The roles and offices of Chairman and Chief Executive are separated. Mr. K. Ravindranath chairs the meetings of the Board of s whereas Mr. Pratik R Desai is the Chief Executive. Company s Corporate Governance Philosophy As a part of L&T group, the Company has embraced the strong values of transparency, integrity, professionalism and accountability across its operations. The Company continuously endeavours to improve upon these aspects on an ongoing basis and adopts innovative approaches for leveraging resources, converting opportunities into achievements through proper empowerment and motivation, fostering a healthy growth and development of human resources to take L&T Group forward. Board of s a) Composition of the Board: The Board comprises of four non-executive directors out of which three are nominated by L&T group and one by Bader Al Mulla, L&T s Joint Venture partner. b) Meetings of the Board: The Meetings of the Board are held in Kuwait. The senior-most member amongst the L&T nominated directors Chair the meetings. The agenda and explanatory notes are circulated in advance to the members of the Board. The minutes of the meetings are circulated in a draft form inviting comments from the s before being finalised and signed by the Chairman of the Meeting. c) Information to the Board: The Board of s has full access to all information in the Company, which inter alia include: Annual Revenue Budgets including Capital Expenditure budgets Financial statements and books of account Minutes of Board meetings Reports of Statutory and Internal auditors Financing plans of the Company Safety statistics including fatal accidents, Lost Time Injuries and Near Miss Incidents Compliance including non-compliances, if any, reports Any acts of default which has a potential of materially impacting the financial performance or project performance Localisation, Industrial relations and human resource related matters and issues arising there from d) Post-meeting internal communication system: The important decisions taken at the Board meeting are communicated to the concerned departments promptly. Internal Auditors The Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services to the Company. Audits are conducted on an annual basis and detailed reports are sent to the management as well as the Board of s of the Company. Internal Controls The Company has in place adequate internal control systems commensurate with its size and nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company has a well-defined delegation of power with authority limits for approving revenues as well as expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down. The Board ensures the effectiveness of the Company s system of internal controls including financial, operational and compliance controls and risk management systems. Secretarial Audit The Secretarial audit of the Company is conducted at regular intervals by the Corporate Secretarial department of Larsen & Toubro Limited, which has competent professionals to carry out the said audit. S-127

3 Related Party Transactions The details of all the related party transactions form part of the accounts as required under AS 18 and the same is given in Note c of Schedule K forming part of Accounts. ACKNOWLEDGEMENTS The s acknowledge the invaluable support extended by the customers, vendors, bankers and employees of the Company. For and on behalf of the Board K. RAVINDRANATH P. S. KAPOOR S-128

4 AUDITORS REPORT LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL TO THE MEMBERS OF LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL The financial statements of LARSEN & TOUBRO KUWAIT CONSTRUCTION GENERAL CONTRACTING COMPANY WLL for the year ended 31 December 2012, being a Company registered in the State of Kuwait, are audited by Deloitte & Touche Al-Fahad Al-Wazzan & Co. and we have been furnished with their audit report dated 29 January We are presented with the accounts in Indian Rupees prepared on the basis of the aforesaid accounts to comply with the requirements of Section 212 of the Companies Act, We give our report as under: We have audited the attached Balance Sheet of Larsen & Toubro Kuwait Construction General Contracting Company WLL as at 31 December 2012 and the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year to that date, annexed thereto. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that: (1) As required by the Companies (Auditor s Report) Order, 2003, issued by the central government of India under sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) Further to our comments in the Annexure referred to above, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; and (e) as regards reporting on the disqualification of directors under Section 274(1)(g) of the Indian Companies Act, 1956, since the Company is registered in the State of Kuwait, no reporting is required to be made under the said Section. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: 1 in the case of the Balance Sheet, of the state of affairs of the Company as at 31 December 2012; 2 in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and 3 in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. SHARP & TANNAN Chartered Accountants Firm s registration no w by the hand of FIRDOSH D. BUCHIA Partner Membership no S-129

5 ANNEXURE TO THE AUDITORS REPORT (Referred to paragraph (1) of our report of even date) 1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets. (b) The assets were physically verified by management during the year. In our opinion, the frequency of such verification is reasonable. We were informed that no material discrepancies were noticed on such verification (c) The assets disposed of during the year are not substantial in relation to the Company and do not affect its going concern status. 2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. (b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. 3 There are no loans, secured or unsecured, either granted to or taken from companies, firms or other parties. However, no register is required to be maintained under Section 301 of the Companies Act, 1956 since the Company is incorporated and doing business only in the State of Kuwait. Accordingly, paragraphs 4(iii)(b) to (g) of the Order are not applicable. 4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in the aforesaid internal control procedures. 5 The Company is incorporated in the State of Kuwait and accordingly, maintenance of records under Section 301 of the Companies Act, 1956 is not required. Accordingly, paragraphs 4(v)(a) and (b) of the Order are not applicable. 6 The Company has not accepted deposits and the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder are not applicable. 7 The Company has an internal audit system commensurate with the size of the Company and the nature of its business. 8 The Company is not required to maintain cost records under Section 209(1)(d) of the Companies Act, 1956 and accordingly paragraph 4(viii) of the Order is not applicable to the Company. 9 (a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues with appropriate authorities and there are no undisputed statutory dues outstanding for a period exceeding six months as at 31 December (b) According to the information and explanations given to us, there are no dues towards income tax, sales tax, service tax customs duty, excise duty and wealth tax that were under dispute as at 31 December The Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash loss in the current financial year but has made cash loss in the immediately preceding financial year. 11 According to the information and explanations given by management, the Company has neither borrowed from a bank or financial institution nor has it issued any debentures. 12 According to the information and explanations given by management, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities. 13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company. 14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. 15 According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. 16 The Company has not availed any term loans during the year. 17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments. 18 The Company has not made any preferential allotment of shares to any party during the year. 19 The Company has not issued debentures during the year and accordingly, no security is required to be provided. 20 The Company has not raised any money by public issues during the year. 21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management. SHARP & TANNAN Chartered Accountants Firm s registration no w by the hand of FIRDOSH D. BUCHIA Partner Membership no S-130

6 BALANCE SHEET AS AT DECEMBER 31, 2012 Note No As at As at R R R R EQUITY & LIABILITIES Shareholders Funds Share capital A 320,221, ,221,984 Reserves and Surplus B 67,447,084 (11,039,434) 387,669, ,182,550 Current Liabilities Trade Payables C (I) 285,637, ,770,157 Other Current Liabilities C (II) 221,674, ,227,773 Short Term Provisions C (III) 26,848,333 12,341, ,160, ,339,653 TOTAL 921,829, ,522,203 ASSETS Non Current Assets Fixed assets: Tangible Assets D 42,636,243 20,116,006 42,636,243 20,116,006 Current assets Inventories E(I) 714,691 1,075,720 Trade Receivables E(II) 72,339, ,055,200 Cash and bank balances E(III) 413,423, ,702,942 Short Term Loans and advances E(IV) 36,814,821 44,051,377 Other current assets E(V) 355,900, ,520, ,193, ,406,197 TOTAL 921,829, ,522,203 OTHER NOTES FORMING PART OF ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES K L As per our attached report on even date SHARP & TANNAN Chartered Accountants (Firm s registration No W) By the hand of For and on behalf of the Board FIRDOSH D. BUCHIA Partner Membership No K. RAVINDRANATH P. S. KAPOOR S-131

7 STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED DECEMBER 2012 Note No R R R R INCOME Revenue from operations F 871,090, ,758,457 Other income G 10,366,145 10,502,533 Total Revenue 881,456, ,260,990 EXPENDITURE Manufacturing, Construction and operating expenses H Construction materials consumed 347,746,786 14,845,025 Stores, spares and tools consumed 4,359,064 3,469,614 Sub-contracting charges 84,000,284 65,810,339 Other manufacturing, construction and operating expenses 165,741, ,164, ,847, ,289,930 Employee benefits expense I 185,252, ,645,096 Sales, administration and other expenses J 18,817,837 13,258,946 Depreciation 9,336,299 5,115,725 Profit / (Loss) before tax 66,202,276 (9,048,706) Provision for current year taxes Profit / (Loss) after tax carried to Balance Sheet 66,202,276 (9,048,706) Face Value per Equity Share KD 1000/- Earnings per equity share - Basic / Diluted 33,101 (4,524) OTHER NOTES FORMING PART OF ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES K L As per our attached report on even date SHARP & TANNAN Chartered Accountants (Firm s registration No W) By the hand of For and on behalf of the Board FIRDOSH D. BUCHIA Partner Membership No K. RAVINDRANATH P. S. KAPOOR S-132

8 CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, v v A Cash Flow from operating activities Net profit/(loss) before tax 66,202,276 (9,048,707) Adjustments for: Depreciation 9,336,299 5,115,725 Interest (net) (7,284,478) (8,002,989) (Increase)/Decrease in Translation Reserve 12,284,242 53,944,293 Operating profit before working capital changes 80,538,339 42,008,322 (Increase) / decrease in trade and other receivables (141,427,802) (196,036,135) (Increase) / decrease in inventories 361,029 2,243,031 Increase / (decrease) in trade payables 143,820, ,769,781 Cash generated from operations (A) 83,292,469 62,984,999 B Cash Flow from Investing Activities Purchase of Fixed assets (31,474,822) (18,654,708) Difference in opening balance of fixed assets due to exchange fluctuation (1,259,488) (3,333,226) Difference in opening balance of cumulative depreciation due to exchange fluctuation 877,773 2,766,982 Interest received 7,284,478 8,002,989 Net Cash (used in) / from investing activities (B) (24,572,059) (11,217,963) C Cash Flow from Financing activties (C) Net increase in cash and cash equivalents (A+B+C) 58,720,410 51,767,038 Cash and cash equivalents at beginning of the year 354,702, ,935,904 Cash and cash equivalents at end of the period 413,423, ,702,942 Cash and cash equivalents at end of the period 413,423, ,702,942 Notes: 1 Cash Flow Statement has been prepared under the Indirect method as set out in the Accounting Standard (AS)3 - Cash Flow Statements as specified in the Companies (Accounting Standards) Rules, Cash & Cash Equivalents at end of the period represents cash and bank balances and include unrealised gain of R Nil (previous year R Nil) on account of translation of foreign currency bank balances. 3 Previous year figures have been regrouped / reclassified wherever applicable. As per our attached report on even date SHARP & TANNAN Chartered Accountants (Firm s registration No W) By the hand of For and on behalf of the Board FIRDOSH D. BUCHIA Partner Membership No K. RAVINDRANATH P. S. KAPOOR S-133

9 NOTES FORMING PART OF ACCOUNTS As at As at Number of shares R Number of shares R NOTE - A SHARE CAPITAL Authorised: 2,000 Equity shares of KD each 2, ,221,984 2, ,221,984 Issued, Subscribed and Fully Paid up 2,000 Equity shares of KD each 2, ,221,984 2, ,221,984 TOTAL 320,221, ,221,984 Reconciliation of equity shares Issued, Subscribed and fully paid up equity shares outstanding at beginning of the Year Issued, Subscribed and fully paid up equity shares outstanding at end of the Year 2, ,221,984 2, ,221,984 2, ,221,984 2, ,221,984 Terms/Rights attached to equity shares: The Company has only one class of share capital, i.e equity shares having face value of KD 1000 per share. Each holder of equity share is entitled to one vote per share Holding Company 980 equity shares of Face Value KD 1,000 each amounting to R 15,69,08,772 are held by Larsen & Toubro International FZE, which is the immediate holding Company by virtue of its control over The Board of s of L&T Kuwait Construction General Contracting Company WLL. The ultimate holding Company is Larsen & Toubro Limited, India Shareholders holding more than 5% of equity shares as at the end of the year As at As at Number of shares % Number of shares % Bader Al Mulla & Bros. Company WLL 1,020 51% 1,020 51% Larsen & Toubro International FZE % % As at As at R R R R NOTE - B RESERVES AND SURPLUS Foreign Currency Translation Reserve As per last Balance Sheet 50,941,077 (3,003,215) Addition/(deduction) during the year 12,284,242 53,944,292 63,225,319 50,941,077 Surplus Statement of Profit and Loss As per Last Balance Sheet (61,980,511) (52,931,805) Add/(less): Profit/(Loss) for the year 66,202,276 (9,048,706) 4,221,765 (61,980,511) TOTAL 67,447,084 (11,039,434) NOTE - C (I) TRADE PAYABLES Due to related parties Ultimate Holding Company 84,562,340 83,030,778 Due to Others 201,075, ,739, ,637, ,770,157 TOTAL 285,637, ,770,157 S-134

10 NOTES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE - C (II) OTHER CURRENT LIABILITIES Due to customers (construction and project related acitivity) 87,222,264 6,024,454 Advance from customers 89,730, ,203,319 Other Payables : Due to Ultimate holding Company 4,256,113 : Due to Shareholder exerting significant influence over the Company 40,465, ,674, ,227,773 TOTAL 221,674, ,227,773 NOTE - C (III) SHORT TERM PROVISIONS Provision for employee benefits End of service benefit 12,835,243 6,548,437 Provision for Leave encashment 14,013,090 5,793,286 26,848,333 12,341,723 TOTAL 26,848,333 12,341,723 NOTE - D FIXED ASSETS DESCRIPTION COST DEPRECIATION NET BLOCK As at Exchange Additions Deductions As at Upto Exchange For the Deductions As at As at As at Difference Difference Year v v v v v v v v v v v v Plant & Machinery 5,886, ,305 7,989,941 14,071, ,802 92,154 2,453,236 3,007,192 11,064,466 5,424,611 Office Equipments 4,216, , ,202 5,057,283 3,062, , ,288 3,825,638 1,231,646 1,153,392 Furniture 6,287, ,600 11,197,471 17,693,216 4,233, ,014 2,141,566 6,581,521 11,111,695 2,053,204 Vehicles 21,567, ,695 11,586,208 1,563,275 32,306,497 10,083, ,057 4,098,209 1,563,275 13,078,061 19,228,436 11,484,799 Total 37,957,620 1,259,488 31,474,822 1,563,275 69,128,655 17,841, ,773 9,336,299 1,563,275 26,492,412 42,636,243 20,116,006 Previous Year 15,969,686 3,333,226 18,654,708 37,957,620 9,958,906 2,766,982 5,115,726 17,841,614 As at As at R R R R NOTE - E(I) INVENTORIES (at cost or net realisable value whichever is lower) Stores, spares and consumables 714,691 1,075,720 TOTAL 714,691 1,075,720 NOTE - E (II) TRADE RECEIVABLES Unsecured Debts outstanding for more than 6 months 68,868, ,055,200 Other Debts: Considered good 3,470,944 TOTAL 72,339, ,055,200 S-135

11 NOTES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE - E (III) CASH & BANK BALANCES Cash & Cash Equivalents Cash on hand 1,427,653 1,380,446 Balance with banks 32,645,800 62,956,979 Fixed Deposits with banks (maturity less than 3 months) 79,344, ,417,453 64,337,425 Other bank balances Fixed Deposits with banks 297,540, ,985,000 Interest Accrued 2,465,900 2,380, ,005, ,365,517 TOTAL 413,423, ,702,942 NOTE - E (IV) SHORT TERM LOANS & ADVANCES Unsecured Loans & Advances to related parties, Considered Good Due from related parties Ultimate Holding Company 32,713,519 35,514,897 Fellow Subsidiaries 1,659, ,750 34,372,716 35,712,647 Others Considered Good Unamortised Expenses 613,924 8,122,933 Advances recoverable in cash or in kind 1,828, ,797 2,442,105 8,338,730 TOTAL 36,814,821 44,051,377 NOTE - E (V) OTHER CURRENT ASSETS Due from customers (Construction and project related activity) 355,900, ,520,958 TOTAL 355,900, ,520, R R R R NOTE - F REVENUE FROM OPERATIONS Sales & Service Construction and project related activity 871,090, ,758,457 TOTAL 871,090, ,758,457 S-136

12 NOTES FORMING PART OF ACCOUNTS (Contd.) R R R R NOTE - G OTHER INCOME Interest income 7,284,478 8,002,989 Project Management Services 2,306,299 Professional Fees/Service Agency Fees 2,504, ,245 Motor Car Insurance Claim Settlement 577,410 TOTAL 10,366,145 10,502,533 NOTE - H MANUFACTURING, CONSTRUCTION & OPERATING EXPENSES Construction materials 347,746,786 14,845,025 Sub contracting charges 84,000,284 65,810,339 Stores, spares and tools 4,359,064 3,469,614 Direct expenses on jobs 62,044,514 49,871,045 Power & Fuel 101, ,529 Travelling & Conveyance 40,968,998 21,577,809 Food Expenses 360, ,158 Plant and Machinery Hire chgs 29,484,084 13,790,470 Site Repairs & Maintanance - others 2,327,816 1,347,244 Rent 8,673,805 12,993,575 Technical fees 21,780,290 7,033,122 TOTAL 601,847, ,289,930 NOTE - I EMPLOYEE BENEFITS EXPENSE Salaries, wages and bonus 182,607, ,673,077 Welfare and other expenses 2,645,542 3,972,019 TOTAL 185,252, ,645,096 NOTE - J SALES, ADMINISTRATION AND OTHER EXPENSES Rent 10,670,537 7,458,372 Travelling & Conveyance 1,136,475 1,283,453 Telephone, postage and telegrams 2,022,027 1,202,801 Stationery and printing 397, ,696 Insurance 477, ,491 Bank charges 5,486 4,720 General repairs and maintenance - others 1,583, ,388 Visa Expenses 298, ,050 Miscellaneous expenses 2,213,140 1,684,782 Camp Maintenance 13, ,193 TOTAL 18,817,837 13,258,946 S-137

13 NOTES FORMING PART OF ACCOUNTS (Contd.) NOTE - J(I) AGGREGATION OF EXPENSES DISCLOSED VIDE NOTE H AND J IN RESPECT OF SPECIFIC ITEMS IS AS FOLLOWS: Nature of Expenses Note G Note I Total Note G Note I Total R R R R R R Rent 8,673,805 10,670,537 19,344,342 12,993,575 7,458,372 20,451,946 Repairs & Maintanance - others 2,327,816 1,583,600 3,911,416 1,347, ,388 1,846,632 Travelling & Conveyance 40,968,998 1,136,475 42,105,473 21,577,809 1,283,453 22,861,262 LEGAL STATUS Larsen & Toubro Kuwait Construction General Contracting W.L.L. is a Company incorporated in Kuwait. The main activities of the Company are general contracting. NOTE - K OTHER NOTES FORMING PART OF ACCOUNTS a) The Balance Sheet as on December 31, 2012 and the Statement of Profit and Loss for the year ended December 31, 2012 are drawn and presented as per the new format prescribed under Schedule VI to the Companies Act, 1956 applicable for the financial year commencing from April 1, The amounts pertaining to the previous year have been recast to conform with the new format b) Disclosure pursuant to Accounting Standard (AS) 7 (Revised) Amount in v Particulars i) Contract revenue recognized for the financial year 871,090, ,758,457 ii) Aggregate amount of contract costs incurred and recognized profits (less recognized losses) as at 881,428, ,344,941 end of the financial year for all contracts in progress as at that date iii) Amount of customer advances outstanding for contracts in progress as at end of the financial year 89,730, ,203,218 iv) Retention amounts due from customers for contracts in progress as at end of the financial year 28,417,847 Nil c) (i) List of Companies who exercise control Larsen & Toubro International FZE- Holding Company Larsen & Toubro Limited - Ultimate Holding Company (ii) Disclosure of major transactions with related parties Amount in v Related Party Nature of relationship Nature of transaction Year 2012 Year 2011 Larsen & Toubro Limited Ultimate Holding Company Contract Revenues 609,297, ,566,020 Larsen & Toubro Limited Ultimate Holding Company Income from Project management - 2,306,299 Larsen & Toubro Infotech Limited Fellow Subsidiary Service Agency Fees received 1,486,831 Larsen & Toubro Limited Ultimate Holding Company Cost of Sales 351,445,986 Larsen & Toubro Limited Ultimate Holding Company Technical charges paid 21,780,290 7,033,122 Key management personnel Short term benefits 10,981,760 9,685,814 Key management personnel Termination benefits 393, ,741 S-138

14 NOTES FORMING PART OF ACCOUNTS (Contd.) (iii) Amount due to / due from related parties Amount in v Due Due Related Party Relationship From To From To Trade Payables Larsen & Toubro Limited Ultimate Holding Company 84,562,340 83,030,778 Advance from customers Larsen & Toubro Limited Ultimate Holding Company 88,957, ,455,285 Other Current Liabilities - Other Payables Larsen & Toubro Limited Ultimate Holding Company 4,256,113 Bader Al Mulla & Bros Co WLL Shareholder exerting significant influence over the Company 40,465,380 Loans & Advances Larsen & Toubro Limited Ultimate Holding Company 32,713,519 35,514,897 Larsen &Toubro Infotech Limited Fellow Subsidiary 1,651, ,750 L&T Electromech Oman LLC Fellow Subsidiary 7,330 Due from customers Larsen & Toubro Limited Ultimate Holding Company 355,900, ,998,898 TOTAL - R 390,273, ,241, ,423, ,486,063 (iv) No amount due from Group companies has been written-off as bad debts during the year. d) Taxation Provision for income tax for the current period has not been made in the financial statements due to accumulated net loss carried forward in local GAAP financial statements. e) Borrowing cost capitalised during the period is RNil. f) There are no transactions with micro and small enterprises as defined in the Micro and Small and Medium Enterprises Development Act 2006, during the period. g) Auditor s remuneration and expenses charged to the accounts: Particulars Audit Fees 917, ,575 h) Estimated amount of contracts remaining to be executed on capital account (net of advances) is Nil i) Contingent Liabilities There are no obligations, past or present, which have arisen from past events which have not been provided for in the books at the Balance Sheet date. j) Earnings per share (EPS) Particulars Profit for the year 66,202,276 (9,048,706) Average number of Equity shares 2,000 2,000 Basic & diluted EPS 33,101 (4,524) k) Previous year figures have been regrouped / reclassified wherever necessary. NOTE - L SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting The accounts have been prepared using historical cost convention and on accrual basis and is in accordance with the provisions of Section 211(3C) and the other provisions of the Companies Act, S-139

15 NOTES FORMING PART OF ACCOUNTS (Contd.) The preparation of financial statements in conformity with Generally Accepted Accounting Principles 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 disclosure relating to contingent liabilities as of the date of the financial statements. Example of such estimates include the useful life of fixed assets and intangible assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans etc. Actual results could differ from these estimates. b) Presentation of Financial Statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI to the Companies Act, 1956 ( the Act ). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 Cash Flow Statements. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule VI to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards c) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the services in the ordinary course of the Company s activities. Revenue is shown net of rebates and discounts. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. i) Rendering of services Revenue from maintenance contracts is recognized when the service is rendered. ii) Interest income Interest income is recognized on a time-proportion basis using the effective interest method. iii) Construction contracts Revenue from construction contracts is recognized in accordance with the percentage of completion method of accounting measured by reference to the percentage that actual costs incurred to date bear to total estimated costs for each contract. Profit is only recognized when the contract reaches a point where the ultimate profit can be estimated with reasonable certainty. The Company consistently considers that the outcome of a construction contract can be estimated reliably with a reasonable certainty only when the contract reaches an advanced completion stage, until which stage, revenue shall be recognized only to the extent of contract costs incurred. Claims, variation orders and incentive payments are included in the determination of contract profit when approved by contract owners. Anticipated losses on contracts are recognized in full as soon as they become apparent. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are incurred. d) Cash and cash equivalents Cash and cash equivalents includes cash in hand and demand & time deposits with banks that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value and whose original maturities do not exceed three months. e) Inventories Inventories are valued at the lower of cost or net realizable value after providing allowances for any obsolete or slow-moving items. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses. f) Fixed assets Fixed assets are stated at cost less accumulated depreciation and impairment losses. The initial cost of fixed assets comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the fixed asset has been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to income in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of fixed asset beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of fixed assets. g) Depreciation Depreciation is computed on a straight-line basis over the estimated useful lives of fixed assets as follows: Furniture and Fixtures 15 % Office Equipments 25 % Motor Vehicles % Plant & Machinery 25 % The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956 for the respective categories. S-140

16 NOTES FORMING PART OF ACCOUNTS (Contd.) h) Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine a) the provision for impairment loss, if any, required or b) the reversal, if any, required of impairment loss recognized in previous periods. Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. i) Retirement termination benefits Provision is made for amounts payable to employees under the Kuwaiti Labour Law and employee contracts. This liability, which is unfunded, represents the amount payable to each employee as a result of involuntary termination on the Balance Sheet date, and approximates the present value of the final obligation. j) Statutory reserve As required by the Commercial Law and the Company s Articles of Association, 10% of annual (net) profit is transferred to statutory reserve. The Company may resolve to discontinue such annual transfers when the reserve equals 50% of the capital. This reserve is not available for distribution except in cases stipulated by Law and the Company s Articles of Association. No transfer has been made due to accumulated net losses being carried forward in local GAAP financial statements. Accumulated balance of Profit & Loss account shows gain in IGAAP statements due to translation gains. k) Voluntary reserve As required by the Company s Articles of Association, 10% of net profit is transferred to the voluntary reserve. The partners may resolve to discontinue such transfer upon recommendation from management. No transfer has been made due to accumulated net losses being carried forward in local GAAP financial statements. Accumulated balance of Profit & Loss account shows gain in IGAAP statements due to translation gains. l) Translation of financial statements in foreign currency to Indian Rupees Accounts are translated in Indian Rupees as follows: a. Share capital and Legal Reserve are retained at the initial contribution amount. b. Fixed Assets, Current & Non Current assets and Current & Non Current liabilities are translated at year-end rates. c. Revenue transactions are translated at the average rates. The resultant difference is accounted as translation reserve in the Balance Sheet. m) Operating Cycle for current and non-current classification Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business. n) Cash Flow Statement Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of: a. transactions of a non-cash nature b. any deferrals or accruals of past or future operating cash receipts or payments and c. items of income or expense associated with investing or financing cash flows. Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure As per our attached report on even date SHARP & TANNAN Chartered Accountants (Firm s registration No W) By the hand of For and on behalf of the Board FIRDOSH D. BUCHIA Partner Membership No K. RAVINDRANATH P. S. KAPOOR S-141