Particulars R Lakhs

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1 DIRECTORS REPORT Dear Members, The Directors are pleased to present the report on the business and operations of the Company together with the Audited Statements of Accounts and the Auditor s Report for the year ended March 31, FINANCIALS & PERFORMANCE OF THE COMPANY R Lakhs R Lakhs Revenue (Net) 103, ,744 Other Income & Premia on FC (4,271) 494 Operating Margin 3,275 3,957 Less: Depreciation 6,031 4,123 Less: Finance Cost 6,190 7,327 Profit Before Tax (8,946) (7,493) Less: Provision for Tax Nil Nil Profit After Tax (8,946) (7,493) Provision for Deferred Tax (1) 5,780 Balance Carried Forward (20,448) (11,502) The financial year has been one of the challenging years for the Company. The combined effect of general economic slowdown along with the problems faced by the power sector has impacted the performance of the Company. The Company was not able to meet order inflow targets for the year for reasons beyond its control, consequently the revenue has reduced by 15.7% compared to previous year. However, the Company has made a good progress in completing the major portion of the existing customer projects. Due to sustained effort from the Management to remain competitive in the market has resulted in improvements in the manufacturing processes and the Supply chain initiative, the Company is able to achieve significant improvement in Operating Margin. However, mark-to-market loss (MTM) on term loans has resulted in bringing down the margin significantly during the year. The Company has fully completed the manufacturing facility including the Heavy Casting Unit establishment at Hazira, Surat. The Company has received ISO/IEC certification for Information Security Management Systems and ISO 50001:2011 certification for Energy Management Systems. Our Company is the first engineering Company in India to get all the ISO certifications. During the year the Company is also accredited with the British Safety Council s 5 star rating and sword of honor for Occupational Health, Safety & Environment management system. Further, the Company has increased the talent pool and trained the employees to absorb the manufacturing technology to meet the market demands. During the year, the Company has received small orders for export of components to United States and Middle East countries. The Company is confident of receiving major orders in the coming months and is expected to achieve the targets in the coming years. APPROPRIATIONS There are no appropriations to the Company s earnings. DIVIDEND The Board of Directors has not recommended any dividend for the financial year under review. DEPOSITS During the year under review, the Company has not accepted any deposit from the Public. CAPITAL EXPENDITURE As at March 31, 2013, the gross tangible and intangible assets, including capital work in progress, stood at R 130,967 lakhs and the net tangible and intangible assets, including capital work in progress stood at R 119,684 lakhs. Additions during the year amounted to R 38,399 lakhs including capital work in progress. SHARE CAPITAL During the year R 9,050 Lakhs has been infused as Share Capital of the Company. The total Equity Share Capital as on March 31, 2013 is R 34,060 lakhs. AUDITOR S REPORT The Auditors Report to the Shareholders does not contain any qualification. S-802

2 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO A. CONSERVATION OF ENERGY The operations of the Company are energy intensive. Company has taken various measures to procure energy efficient equipments and taken utmost care in building the energy efficient state-of-the-art manufacturing facility. The new concept of Green Building is initiated and the administrative building is accredited Gold Category by Indian Green Building Council. The Company is in the process of introducing advance ultra-supercritical turbines which are environment friendly. As an on-going manufacturing facility, the Company continuously adopts new technologies and techniques to make infrastructure more energy efficient. (a) Energy Conservation measures taken: 1) Improving energy effectiveness/efficiency of equipment and systems- Use of GLS incandescent/conventional FTL lamps in various offices, workshops and LED light fixtures for street lighting/use of T5 Light fixtures in all the Shop Offices The factory building designed to use natural light during the day Energy savings by installing real time clocks to control operation of centralized A/C plant compressors. Installations of Auto-operations (Timer control) for Ventilation System & A/C plant. Thermo conductive booster for improvement in split & package AC performance. Close monitoring of AC plants- setting optimum temperatures, controlled usage, Running of HVAC on Fresh Air during winter in Administrative building, etc. Use of energy saving devices like time switches, zone controlled AC, auto hibernation for PC s, etc. to reduce energy consumption Installation of energy efficient star rated ACs. Use of Variable Frequency Drive (VFD) for various applications such as welding positioner, EOT cranes, cooling water Pumps, etc. to improve the motor efficiency and enhance energy saving. Stopping air leakages, installing new air solenoid valves in air line to control air combustion, etc. Operating computers in Power saver mode. Installation of APFC (automatic power factor controller) panels in the power circuit thus improving its power factor and enabling to claim rebate in energy bills. Installation of VVVF Drives in new cranes and Transfer trolleys installed in shops. (VVVF Drives present in Long travel and hoist operation in all EOT cranes and motorized transfer trolley). Installation of solar energy panels in Administration building to harness the renewable source of energy to the extent of 10% of the consumption. Energy conservation through separate set up for Hydro test. Installation of PFC (power factor control) panels in the power circuit thus improving its power factor and enabling to claim rebate in energy bills. 2) Improving energy effectiveness/efficiency of Manufacturing Processes Fitment of VFD s for EOT cranes. Optimization of the operation of higher CFM compressors resulting in energy saving. Centralized on/off control for compressors which will operate the compressors based on air consumption. Use of Turbo ventilators to extract heat in the non air-conditioned areas of factory buildings. Shifting the Blade manufacturing Process from 5 Axis Machines to 4 Axis Machine. Process sequence change- Shifting of work centre from high power consuming machines to Low Power Consuming Machines. Revising the Parameters and CNC Programme to reduce the Cycle time Optimization of the operation of two compressors by connecting them with common header resulting in running one compressor instead of two. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Use of lighting energy saver. Use of additional Inverter based welding machines for production shops. Use of Autoclave machine cooling system. Use of timer in welding machine to avoid continuous idle running. Waste heat recovery & insulation improvement in Furnace Installation of Lighting Transformer to further optimize Lighting Voltage. S-803

3 Commissioning of Chilled water pumps with VFD on closed loop feedback. Providing variable air volume (VAV) in Admin building (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The measures taken have resulted in savings in cost of production, power consumption, reduction in carbon dioxide emissions & processing time. (d) Total Energy Consumption and Energy Consumption per unit of production as per Form A in respect of industries Specified in the Schedule is not applicable. B. TECHNOLOGY The Company continues to implement new technologies to meet the market needs. Since the manufacturing is in the initial stage, all the efforts are in absorbing the technology from parent Company, hence there are no specific R&D activities during the year. No separate record of the expenditure incurred is maintained by the Company. Technology Absorption, adaptation and innovation 1) Efforts made towards technology absorption, adaptation and innovation: Evaluated imported equipment designs/technologies and implemented the state-of-the-art technology through indigenous developments along with alternative materials/components. Interaction with external agencies/internal customers/suppliers for exposure to the latest products/designs. Participating in national/international conferences, seminars and exhibitions. Valuation, adaptation and/or modification of imported designs/technologies to suit indigenous requirements, alternative materials/ components. Use of state-of-the-art equipment, instrument and software. Analyzing feedback from users to improve processes and services. 2) Benefits derived as a result of the above efforts are not quantifiable. 3) Information regarding technology imported during the last 5 years. Technology Imported Year of Import Status Knowhow and technical information for design, engineering and manufacture of supercritical Turbine from MHI, Japan and Generators from MELCO, Japan. Nov 2007 onwards Under Absorption C. FOREIGN EXCHANGE EARNINGS AND OUTGO The Company is supplying Supercritical Steam Turbines and Generators to mega power plants which are classified as deemed exports. (R in lakhs) Foreign Exchange Earnings 1, Foreign Exchange saved/deemed exports 85,150 49,871 Foreign Exchange Outgo Capital Expenditure 6,168 9,045 Materials & Components 78,283 39,750 Others 4,500 2,539 DISCLOSURE OF PARTICULARS OF EMPLOYEES U/S 217 (2A) of employees as required under Section 217 (2A) of the Companies Act, 1956, read with Companies ( of Employees) Rules, 1975, as amended: There was no employee Employed through out the year, who has drawn aggregate remuneration of R 60 lakhs per annum. Employed for part of the financial year, who has drawn remuneration at the rate of Rs 5 lakhs per month. Who holds 2% or more of the Equity shares of the Company and has been employed throughout or part of the financial year for remuneration OCCUPATIONAL HEALTH, SAFETY & ENVIRONMENT The Company s commitment towards environment is reflected in all its activities, products and services, providing safe and healthy working S-804

4 environment to all stakeholders. As a safety first Company, we measure and monitor all the parameters to improve the HSE standards through continual improvement. During the year the Company started its journey in Behaviour Based Safety (BBS) to know Why people behave the way they behave. This has helped in creating the inventory of unsafe acts and which will lead to achieve the ZERO accident targets. The Company is working actively on the green front, with considerable headway in energy conservation, renewable energy usage, water conservation, waste management and mapping of carbon/water foot prints. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors of the Company confirms: i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure; ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profits of the Company for the year ended on that date; iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. that the annual accounts have been prepared on a going concern basis; v. that proper system is in place to ensure compliance of all laws applicable to the Company; and vi. as required under the Voluntary Corporate Governance Guidelines, 2009, the details of all the related party transactions form part of the accounts as required under Accounting Standard 18 issued by ICAI DIRECTORS Mr. Shailendra Roy, Mr. Yozaburo Mabuchi, Mr. Masayuki Kubo, Mr. Y. V. S. Sravankumar, Mr. Hideshi Kawamoto, Mr. Sunil Pande, Mr. Subrat Kumar Das and Mr. Hisashi Fukuda are the present Directors of the Company. During the year under review, Mr. V. C. Bedi resigned as Director of the Company with effect from 26th April, Mr. Subrat Kumar Das, Chief Executive and Mr. Hisashi Fukuda, Chief Operating Officer were appointed as Whole-time Directors of the Company not liable to retire by rotation, with effect from 22nd May, Mr. Ravi Uppal, Chairman resigned with effect from 30th August, Mr. Shailendra Roy has been appointed as the Chairman and Director nominated by Larsen & Toubro Limited on 30th August, 2012 to fill up the casual vacancy caused by the resignation of Mr. Ravi Uppal. Mr. Sankar Suryanarayanan was appointed as the Director nominated by Larsen & Toubro Limited on 30th August, 2012 to fill up the casual vacancy caused by the cessation of Mr. V. C. Bedi. Mr. Sankar Suryanarayanan resigned with effect from 5th December, Mr. Sunil Pande has been appointed as the Director nominated by Larsen & Toubro Limited on 5th December, 2012 to fill up the casual vacancy caused by the resignation of Mr. Sankar Suryanarayanan. The Board of Directors places on record its appreciation for the contribution made by Mr. Ravi Uppal, Mr. V.C. Bedi and Mr. Sankar Suryanarayanan during their tenure as Director and welcomes Mr. Shailendra Roy and Mr. Sunil Pande on the Board. Mr. Sunil Pande and Mr. Hideshi Kawamoto retire by rotation in the forthcoming Annual General Meeting and being eligible, have offered themselves for reappointment. They are senior and experienced business executives in the Industry and the Board considers their appointment to be beneficial to the Company. AUDITORS The Auditors M/s Sharp & Tannan hold office until the conclusion of the ensuing Annual General Meeting. The Directors recommend that M/s Sharp & Tannan, Chartered Accountants be appointed as the Statutory Auditors of the Company at the forthcoming Annual General Meeting of the Company to hold office till the conclusion of the next Annual General Meeting of the Company. Certificate from the auditors has been received to the effect that their reappointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, The Company does not advocate rotation of Auditors as envisaged in Corporate Governance Voluntary Guidelines, 2009 in view of the domain knowledge acquired by the Auditors over a period of time. However, the signing partner shall be rotated every three years. COST AUDITORS Pursuant to The Companies (Cost Accounting Records) Rules, 2011 issued by the Ministry of Corporate Affairs on June 3, 2011, certification of the Cost Compliance Report by a Cost Accountant is essential. In this regard M/s R. Nanabhoy & Co., Cost Accountant having Membership Number 00010, were appointed as Cost Auditors vide circular resolution dated June 25, 2012, for the purpose of certifying the Cost Compliance Report for the year ended March 31, The Ministry of Corporate Affairs has also introduced the Companies (Cost Audit Report) Rules, 2011 vide its notification no. GSR.430 (e) dated June 3, The Cost Audit Order No.52/26/CAB/2010 dated January 24, 2012 covers engineering machinery (including electrical and S-805

5 electronic products) due to which manufacturing operations of the Company will get covered with effect from 1st April, 2013 as the turnover of the Company is in excess of R100 crores for the year ended March 31, Hence in accordance with the Cost Audit Report Rules 2011, M/s R. Nanabhoy & Co., Cost Accountant have been appointed as Cost Auditors of the Company in the Board meeting held on 4th May, 2013 for the financial year , subject to approval of Central Government. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009 The Company has familiarized itself with the requirement of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and it is in the process of implementing many of the suggestions. A gist of our compliance with the said guidelines is given below. A) Separation of Offices of Chairman & Chief Executive Officer The roles and offices of Chairman and Chief Executive are separated. Mr. Shailendra Roy has been the Chairman of the Board whereas Mr. Subrat Kumar Das, Whole-time Director is the Chief Executive of the Company. B) Remuneration of Directors The Directors are not paid any remuneration. C) Independent Directors All the members of the Board of the Company are independent in the sense that none of the Directors have any direct or indirect personal interest in the Company D) Number of Companies in which an Individual may become a Director The Company has appraised its board members about the restriction on number of other directorships and the same is being complied with. E) Responsibilities of the Board Presentations to the Board are made in the areas such as financial results, budgets, business prospects etc. which give Directors, an opportunity to interact with senior managers and other functional heads. Directors are also updated about their role, responsibilities and liabilities. The Company ensures necessary training to the Directors relating to its business through formal/informal interactions. Systems, procedures and resources are available to ensure that every Director is supplied, in a timely manner, with precise and concise information in a form and of a quality appropriate to effectively enable/discharge his duties. The Directors are given time to study the data and contribute effectively to Board discussions. The Non-Executive Directors through their interactions and deliberations give suggestions for improving overall effectiveness of the Board and its Committees. Their inputs are also utilized to determine the critical skills required for prospective candidates for election to the Board. The system of risk assessment and compliance with statutory requirements are in place. F) Internal Auditors Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services. G) Internal Control The Board ensures the effectiveness of the Company s system of internal controls including financial, operational and compliance controls and risk management systems. H) Secretarial Audit The Secretarial Audit, at regular intervals, is conducted by the Corporate Secretarial department of Larsen & Toubro Limited, which has competent professionals to carry out the said audit. I) Related Party Transactions The details of all the related party transactions form part of the accounts as required under Accounting Standard 18 issued by ICAI. ACKNOWLEDGEMENTS The Directors wish to thank the Customers, Vendors and business associates for their continued support and valuable co-operation during the year. The Directors also wish to place on record their appreciation of the contribution made by employees at all levels. Our progress in setting up of world class hi-tech manufacturing facility and meeting challenges of project deliveries was made possible by their hard work, commitment, cooperation and support. The Directors thank the Reserve Bank of India, Financial Institutions, Japan Bank for International Cooperation, Banks, Central & State Governments authorities and the stakeholders for their continued co-operation and support to the Company. For and on behalf of the Board of Directors Place: Mumbai Date: May 4, 2013 SHAILENDRA ROY Chairman MASAYUKI KUBO Director S-806

6 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF L&T-MHI TURBINE GENERATORS PRIVATE LIMITED REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of L&T-MHI TURBINE GENERATORS PRIVATE LIMITED, which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss for the year ended, and a summary of significant accounting policies and other explanatory information. MANAGEMENT S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the L&T-MHI Turbine Generators Private Limited in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ( the Act ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. AUDITOR S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Work s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a. in the case of the Balance Sheet, of the state of affairs of the L&T-MHI Turbine Generators Private Limited as at March 31, 2013; b. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 1. As required by the Companies (Auditor s Report) Order, 2003 ( the Order ) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by Section 227(3) of the Act, we report that: a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b. in our opinion proper books of account as required by law have been kept by the L&T-MHI Turbine Generators Private Limited so far as appears from our examination of those books; c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account; d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; and e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the board of directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any rules under the said Section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company. SHARP & TANNAN Chartered Accountants ICAI Registration No W R. D. KARE Place : Mumbai Partner Date : May 6, 2013 Membership No S-807

7 ANNEXURE TO THE AUDITORS REPORT (referred to in paragraph (1) of our report of even date) 1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets. (b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification. (c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern status. 2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year and, 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 and of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noted on such verification between physical stocks and book records were not material. 3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, Accordingly, paragraphs 4(iii) (b), (c) and (d) of the Order are not applicable. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, Accordingly, paragraphs 4(iii) (f) and (g) of the Order are not applicable. 4 In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for purchase of plant and machinery, equipment, other assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems. 5 According to the information and explanations given to us, there are no transactions with parties that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 and accordingly paragraphs 4(v)(a) and (b) of the Order are not applicable. 6 The Company has not accepted deposits from the public in terms of provisions of Sections 58A and 58AA of the Companies Act, In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business. 8 We have broadly reviewed the books of account and records maintained pursuant to the Cost Accounting Record Rules prescribed by the central government for the maintenance of cost record under Section 209 (1) (d) of the Companies Act, 1956 in respect of Product Groups relevant to Turbine and Generators and are of the opinion that prima facie the accounts and records have been maintained in accordance with the said Rules. 9 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at March 31, 2013 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and the records of the Company examined by us, there were no disputed amounts in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess as at 31 March (a) The accumulated losses of the Company, at the end of the financial year, are more than fifty percent of its net worth. (b) Further, the Company has incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. 11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date. 12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company. 14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. 15 In our opinion and 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 In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained. 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8 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 According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company. 19 The Company has not issued any secured debentures during the year and accordingly, paragraph 4(xix) of the Order is not applicable. 20 The Company has not raised any money by public issues during the year. 21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management. SHARP & TANNAN Chartered Accountants ICAI Registration No W by the hand of R. D. KARE Place : Mumbai Partner Date : May 6, 2013 Membership No S-809

9 BALANCE SHEET AS AT MARCH 31, 2013 As at As at Note No. R R R R EQUITY AND LIABILITIES Shareholder s funds Share capital A 3,406,000,000 2,501,000,000 Reserve & Surplus B (2,218,840,255) (1,172,005,319) Non Current Liabilities Long Term Borrowings C (i) 9,577,333,570 8,707,283,500 Deferred tax liabilities (Net) Other Long term liabilities C (ii) Long Term Provisions C (iii) Current Liabilities Short Term Borrowings D (i) 3,476,947,154 1,652,755,888 Trade Payables D (ii) 11,866,058,918 12,591,569,689 Other Current Liabilites D (iii) 3,404,391,595 3,787,700,960 Other Short term Provisions D (iv) 66,707, ,527,628 18,814,105,571 18,709,554,165 TOTAL EQUITY AND LIABILITIES 29,578,598,886 28,745,832,346 ASSETS Non Current Assets Fixed assets Tangible Assets E (i) 10,126,200,798 6,891,293,130 Intangible Assets E (ii) 147,776, ,029,846 Capital work in progress E (i) 1,694,421,118 2,298,789,042 Intangible Assets under Development E (ii) 11,968,397,991 9,337,112,018 Non Current Investments F Deferred tax assets (Net) 577,946, ,999,270 Long Term Loans & Advances G (i) 143,562, ,995,521 Current Assets Current Investment H (i) Inventories H (ii) 1,326,514, ,956,236 Trade Receivables H (iii) 9,782,999,608 5,910,980,135 Cash and bank Equivalents H (iv) (83,666,887) 303,286 Short Term Loans & Advances H (v) 1,798,160,028 1,375,650,516 Other Current Assets H (vi) 4,064,683,986 10,924,835,364 16,888,691,282 18,459,725,537 TOTAL ASSETS 29,578,598,886 28,745,832,346 COMMITMENTS (Capital and others) CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES I J Q As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants ICAI Registration No W R. D. KARE S. K. DAS SHAILENDRA ROY MASAYUKI KUBO Partner Chief Executive & Whole Time Director Chairman Director Membership No Place : Mumbai Place : Mumbai Date : May 6, 2013 Date : May 4, 2013 S-810

10 STATEMENT OF PROFIT & LOSS FOR THE PERIOD ENDED MARCH 31, 2013 As at As at Note No. R R R R INCOME Revenue from Operations (Gross) K 10,574,103,691 13,004,132,229 Less: Excise Duty 650,685, ,923,000 Revenue from Operations (Net) 9,923,418,080 12,288,209,229 Other Income L (106,160) 35,635,321 TOTAL REVENUE 9,923,311,920 12,323,844,550 EXPENDITURE Manufacturing, Construction and Operating expenses M Cost of Raw Materials & Components Consumed 7,259,831,026 10,511,038,886 Stores, spares and tools 356,793, ,248,600 Sub-Contracting Charges 137,250, ,218,323 Other Manufacturing, Construction and Operating expenses 670,185, ,200,674 Employee Benefit Expenses N 438,739, ,119,832 Sales, administration and other expenses O 732,969,998 99,345,392 Finance Cost P 619,014, ,665,672 Depreciation, Amortisation, Obsolescence & Impairment 603,130, ,354,718 TOTAL EXPENSES 10,817,915,541 13,073,192,097 Profit/(Loss) before exceptional & extraordinary items & taxes (894,603,621) (749,347,547) Exceptional Items Profit/(Loss) before extraordinary items & taxes (894,603,621) (749,347,547) Extra-Ordinary Items Profit Before Tax (894,603,621) (749,347,547) Tax Expenses Current Tax Provision for Deferred Tax 52,553 (577,999,270) 52,553 (577,999,270) Profit After Tax (894,656,174) (171,348,277) Profit/(Loss) brought forward (1,150,185,435) (978,837,157) Balance carried to Balance Sheet (2,044,841,609) (1,150,185,435) Earnings per Share before extraordinary items a) Basic (2.95) (0.69) b) Diluted (2.95) (0.69) Earnings per Share after extraordinary items a) Basic (2.95) (0.69) b) Diluted (2.95) (0.69) Face value per share COMMITMENTS (Capital and others) R CONTINGENT LIABILITIES R As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants ICAI Registration No W R. D. KARE S. K. DAS SHAILENDRA ROY MASAYUKI KUBO Partner Chief Executive & Whole Time Director Chairman Director Membership No Place : Mumbai Place : Mumbai Date : May 6, 2013 Date : May 4, 2013 S-811

11 CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2013 As at R As at R A. Cash Flow from Operating Activities Net Profit/(Loss) before tax & extraordinary items (894,603,621) (749,347,547) Adjustment for : Depreciation and Amortisation 603,130, ,354,718 (Profit)/Loss on Sale of Investment (27,402,602) Preliminary Expense Written Off Pre-Operative Expense Written Off Dividend from Investment Interest from investments (8,190,713) Interest Expenses 590,913, ,556,724 Unrealised gains/losses on translation 420,341, ,812,868 Operating Profit before working capital changes 719,782, ,783,446 Adjustments For : (Increase)/Decrease in Loans and Advances 2,793,055,018 (5,149,445,159) (Increase)/Decrease in Inventory (1,078,558,309) (196,748,604) Increase/(Decrease) in Trade Payables (47,627,355) 3,602,304,498 Cash generated from operations 2,386,651,837 (1,263,105,818) Direct taxes paid (net of refund) Net Cash from Operating Activities (A) 2,386,651,837 (1,263,105,818) B. Cash Flow from Investing Activities Purchase of Fixed Assets and Intangible Assets (3,234,416,752) (2,045,138,031) Purchase of Investment Sale of Investment 339,561,845 Pre-operative Expenses Dividend Received from Investments Interest received from investments 8,190,713 Net Cash/(used in) from Investing Activities (B) (3,234,416,752) (1,697,385,473) C. Cash Flow from Financing Activities Proceeds from Issue of Share Capital 905,000,000 Application money received Proceeds from Unsecured loan 449,708,137 3,563,295,162 Interest on term loan (590,913,395) (731,556,724) Expenses incurred for increase in Authorised Capital Net cash/(used in) from Financing Activities (C) 763,794,742 2,831,738,438 Net (decrease)/increase in cash and cash equivalents (A+B+C) (83,970,173) (128,752,854) Cash and Cash equivalents as at the beginning (including cash credit from banks) 303, ,056,140 Cash and Cash equivalents as at the end (83,666,887) 303,286 Notes: 1. Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard 3 issued by the Institute of Chartered Accountants of India. As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants ICAI Registration No W R. D. KARE S. K. DAS SHAILENDRA ROY MASAYUKI KUBO Partner Chief Executive & Whole Time Director Chairman Director Membership No Place : Mumbai Place : Mumbai Date : May 6, 2013 Date : May 4, 2013 S-812

12 NOTES FORMING PART OF ACCOUNTS NOTE A - SHARE CAPITAL A(i) SHARE CAPITAL AUTHORISED, ISSUED & SUBSCRIBED As at As at R R Authorised Equity Share Capital of R 10 each 3,900,000,000 2,650,000,000 Issued Equity Share Capital of R 10 each 3,406,000,000 2,501,000,000 Subscribed & Fully Paid-up Equity Share Capital of R 10 each 3,406,000,000 2,501,000,000 TOTAL 3,406,000,000 2,501,000,000 A(ii) RECONCILIATIONS OF EQUITY SHARE As at No. of Shares R Subscribed and fully paid at beginning of the year 250,100,000 2,501,000,000 Add: Additions during the year 90,500, ,000,000 Subscribed and fully paid at the end of the year 340,600,000 3,406,000,000 A(iii) SHAREHOLDERS HOLDING MORE THAN 5% EQUITY SHARES AS AT THE END OF THE YEAR As at No. of Shares Shareholding % R Larsen & Toubro Limited (Holding Co.) 173,706, ,737,060,000 Mitsubishi Heavy Industries Limited 132,834, ,328,340,000 Mitsubishi Electric Corporation 34,060, ,600,000 TOTAL 340,600, ,406,000,000 NOTE B - RESERVES AND SURPLUS As at As at R R R R Reserve & Surplus Hedging Reserve As per Last Balance Sheet (21,819,885) 22,847,238 Add: Additions/(Deductions) during the year (152,178,761) (44,667,123) (173,998,646) (21,819,885) Profit & Loss Account As per last Balance Sheet (1,150,185,435) (978,837,157) Add: Profit/(Loss) for the period (894,656,175) (171,348,277) (2,044,841,609) (1,150,185,434) TOTAL (2,218,840,255) (1,172,005,319) NOTE C - NON CURRENT LIABILITIES C(i) LONG TERM BORROWINGS Unsecured Term loans from banks 9,577,333,570 8,707,283,500 TOTAL 9,577,333,570 8,707,283,500 S-813

13 NOTES FORMING PART OF ACCOUNTS (Contd.) C(i)(a) DETAILS OF TERM LOANS (UNSECURED) External Commercial Borrowings from Japan Bank of International Co-Operation External Commercial Borrowings from Bank of Tokyo Mitsubishi UFJ Ltd. R 5,374,215, ,445,370 3,416,963, ,710,000 TOTAL 9,577,333,570 As at As at R R R R NOTE D - CURRENT LIABILITIES D(i) SHORT TERM BORROWINGS Secured Loan repayable on demand Banks- Cash Credit 2,180,925,776 1,635,627,408 From Bank- Others 1,296,021,379 17,128,480 3,476,947,154 1,652,755,888 Unsecured Inter corporate borrowings Short term Loans from subsidiary companies ICO Other Loans and Advances TOTAL 3,476,947,154 1,652,755,888 D(ii) TRADE PAYABLES Due to related parties 188,844, ,712,821 Micro and Small Enterprises 38,264,377 99,740,994 Others 11,638,949,700 12,248,115,874 11,866,058,918 12,591,569,689 TOTAL 11,866,058,918 12,591,569,689 D(iii) OTHER CURRENT LIABILITIES Interest accrued but not Due on Borrowings 31,710,377 Advances from customers 1,962,013,765 3,474,091,216 Security Deposits 1,625,494 1,005,871 Forward contract payable 481,755,371 (1,847,050) Other payables 927,286, ,450,923 TOTAL 3,404,391,595 3,787,700,960 S-814

14 NOTES FORMING PART OF ACCOUNTS (Contd.) L&T-MHI TURBINE GENERATORS PRIVATE LIMITED As at As at R R R R D(iv) SHORT TERM PROVISIONS Provisions For Employee Benefits: Gratuity ESOPs Performance Linked Rewards 35,000,000 30,000,000 LTA Claims Compensated Absences 31,707,904 66,707,904 30,000,000 Other Provision 647,527,628 TOTAL 66,707, ,527,628 NOTE E(i) - ASSET CLASS WISE DETAILS OF TANGIBLE ASSETS COST / VALUATION DEPRECIATION BOOK VALUE TANGIBLE ASSET As at Additions Deductions Transfer In Transfer Out As at As at Additions Deductions Transfer In Transfer Out As at As at As at R R R R R R R R R R R R R R Leasehold Land 446,325, ,325,901 3,120,060 4,508,528 7,628, ,697, ,205,841 Building 1,666,704, ,802,554 3,325,683 4,242,946 2,482,589,418 47,060,659 70,079, , , ,158,550 2,365,430,868 1,619,643,468 Plant & Equipment 4,734,857,474 2,834,141, ,585,686 41,804,749 7,658,779, ,657, ,974,608 8,046,775 3,896, ,782,698 6,850,996,952 4,380,199,696 Furniture & Fixtures 62,365,033 33,986,774 2,906,245 99,258,052 7,474,235 8,240, ,551 15,863,872 83,394,180 54,890,798 Vehicles 7,423,547 3,449,769 1,586,822 9,286,494 2,496,754 1,167, ,894 3,005,283 6,281,211 4,926,793 Electrical Equipments 358,038, ,190,050 1,004,953 95,728, ,505,105 15,779,338 17,622,859 51,713 4,487,255 28,966, ,538, ,258,805 Air Conditioners 6,828, , ,128 7,795, , ,554 27,054 1,206,410 6,589,268 6,250,580 Tools, Jigs & Fixtures 3,257,380 3,257,380 1,370, ,410 1,738,546 1,518,834 1,887,244 Office Equipments 5,591, ,332 5,610, ,913 11,309, ,260 1,934,739 1,622, ,537 4,008,627 7,300,472 4,838,330 Computers 43,847,855 6,253, ,250 1,822,960 4,041,095 47,376,041 10,656,283 7,854, , ,835 1,575,760 16,922,790 30,453,251 33,191,572 TOTAL 7,335,239,434 3,797,354,457 2,094, ,507, ,524,745 11,130,482, ,946, ,352,514 1,015,925 10,438,026 10,438,901 1,004,282,021 10,126,200,798 6,891,293,127 Capital Work In Progress 1,694,421,118 1,341,909,893 TOTAL 7,335,239,434 3,797,354,457 2,094, ,507, ,524,745 11,130,482, ,946, ,352,514 1,015,925 10,438,026 10,438,901 1,004,282,021 11,820,621,916 8,233,203,021 Previous Year 5,039,449,311 2,297,919,558 2,129,435 7,335,239,435 69,796, ,025, , ,946,307 8,233,203,021 NOTE E(ii) - ASSET CLASS WISE DETAILS OF INTANGIBLE ASSETS COST / VALUATION DEPRECIATION IMPAIRMENT BOOK VALUE TANGIBLE ASSET As at Additions Deductions Transfer In Transfer Out As at As at Additions Deductions Transfer In Transfer Out As at As at As at As at R R R R R R R R R R R R R R R Computer Software 24,641,127 5,940,365 17,000 30,598,492 8,810,247 5,373, ,185,094 16,413,398 15,830,880 Engineering & 204,628,007 36,568, ,196,007 73,429,041 36,404, ,833, ,362, ,198,966 Technical Know-how Fees TOTAL 229,269,134 42,508,365 17, ,794,499 82,239,288 41,778, ,018, ,776, ,029,846 Capital Work In Progress TOTAL 229,269,134 42,508,365 17, ,794,499 82,239,288 41,778, ,018, ,776, ,029,846 Previous Year 202,217,999 27,051, ,269,134 44,909,971 37,329,318 82,239, ,029,845 As at As at R R NOTE F - NON CURRENT INVESTMENT Non Current Investments (At cost, unless otherwise specified): TOTAL S-815

15 NOTES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE G(i) - LONG TERM LOANS & ADVANCES Secured (Considered Good) Capital Advances 52,963, ,533,642 Unsecured (Considered Good) Capital Advances 41,071,441 Security deposits 49,528,244 48,039,648 Loans and advances to related parties Inter-Corporate deposits 114,422,231 TOTAL 143,562, ,995,521 NOTE H(i) - CURRENT INVESTMENTS Current Investments Mutual Funds TOTAL NOTE H(ii) - INVENTORIES (At Cost or Net Realizable Value whichever is lower) Raw material 162,860,855 11,103,146 Components 1,093,087, ,787,011 Stores - Tools, Jigs & Fixtures 70,565,757 71,066,079 TOTAL 1,326,514, ,956,236 NOTE H(iii) - TRADE RECEIVABLES Unsecured Debts outstanding for More than 6 months: Considered Good 132,852,699 1,140,877,771 Other Debts: Considered Good 4,366,213,124 4,770,102,364 TOTAL 4,499,065,823 5,910,980,135 Unsecured Retention money outstanding for More than 6 months: Considered Good 3,199,867,989 Other Retention money: Considered Good 2,084,065,796 5,283,933,785 TOTAL 9,782,999,608 5,910,980,135 NOTE H(iv) - CASH & BANK BALANCES Cash and cash equivalents a) Balance with Banks (83,807,250) 249,545 b) Cash on hand 140,363 53,741 Other Bank Balances Bank deposits with more than 3 months maturity including Interest Accrued thereon TOTAL (83,666,887) 303,286 S-816

16 NOTES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE H(v) - SHORT TERM LOANS & ADVANCES Other Loans and advances Advances to Suppliers 785,568,181 1,211,563,454 Advance to Employees 858,643 1,881,516 Advance Taxes 16,934,284 9,842,601 Balance with Customs, Central Excise Authorities etc. 671,593,308 69,354,204 Embedded Derivative Receivable (ED Asset) Gratuity Asset 5,674,528 3,924,782 Advance to ECC 21,298,441 Forward Contract Receivable 284,239,195 66,416,335 Other receivables 7,499,585 11,645,976 Prepaid Expenses 4,493,863 1,021,648 1,798,160,028 1,375,650,516 TOTAL 1,798,160,028 1,375,650,516 NOTE H(vi) - OTHER CURRENT ASSETS Receivables Work-in-progress at cost AS 7 4,338,900,000 11,199,051,378 Provision for Expected losses Cost Jobs (274,216,014) (274,216,014) 4,064,683,986 10,924,835,364 TOTAL 4,064,683,986 10,924,835,364 NOTE J - COMMITMENTS Net Capital Commitment 265,665,452 1,334,053,719 TOTAL 265,665,452 1,334,053,719 R R R R NOTE K - REVENUE FROM OPERATIONS Sales & Services Manufacturing, trading & property development activity Construction and project related activity Charged for completed jobs: Charged for Completed Jobs AS 7 - Products 6,568,595,274 1,767,417,427 Charged for Completed Jobs AS 7 - Services 93,990,833 23,839,928 WIP at close including materials WIP at Close Including Materials at Site AS 7 New ICO 4,338,900,000 11,199,051,378 Embedded Derivative 11,001,486,107 12,990,308,733 Other operational Income Miscellaneous Income Non- Production scrap sale 813,304 1,523,883 Other receipts 845,800 7,361 Premium on forward contracts (429,041,520) 12,292,252 (427,382,416) 13,823,496 TOTAL 10,574,103,691 13,004,132,229 S-817

17 NOTES FORMING PART OF ACCOUNTS (Contd.) R R R R NOTE L - OTHER INCOME Interest Income From current investments: Interest Received on ICD - Others (Long Term) ICO 5,733,360 Interest Received from Others 2,457,353 8,190,713 Net gain/(loss) on sale of investments Current Investments 27,402,602 Profit on sale of fixed assets (net) (106,160) 42,005 TOTAL (106,160) 35,635,321 NOTE M - MANUFACTURING, CONSTRUCTING & OPERATING EXPENSES Materials Consumed Raw Materials 1,637,790, ,391,671 Components 5,576,493,908 10,148,451,240 Freight Inward 78,668,321 90,080,959 7,292,953,187 10,530,923,870 Less: Manufacturing Scrap Sales 33,122,161 19,884,984 7,259,831,026 10,511,038,886 Sub Contracting Charges 137,250, ,218,323 Tools, jigs and fixtures 356,793, ,248,600 Other Manufacturing Construction & Operating Expenses Consumables Power and fuel 143,803,943 95,938,880 Packing & Forwarding Charges 27,305,855 42,014,983 Royalty and Technical Knowhow fees 27,316,000 9,556,693 Hire charges plant machinery and others 5,902,947 7,176,516 Engineering, Technical & Consultancy Fees 288,172, ,627,484 Water Charges paid 176, ,005 Repairs to Plant & Equipment 10,637,760 5,501,304 Repairs to Buildings 419, ,072 General Repairs & Maintanence 70,044,052 5,289,670 Travelling & Conveyance 88,278 Other Expenses 96,406, ,123,789 TOTAL 8,424,059,885 11,439,706,483 NOTE N - EMPLOYEE BENEFIT EXPENSES Salaries, Wages and bonus 388,033, ,552,930 Contribution to & Provision for Provident funds and Pension fund 8,900,667 6,158,788 Superannuation Pension Schemes 3,860,931 2,935,660 Gratuity Fund 1,252,872 1,531,531 14,014,470 10,625,979 Employee medical and other insurance premium expenses (Group Insurance premium) 2,189,100 2,562,633 Staff welfare expenses 34,503,171 33,378,290 TOTAL 438,739, ,119,832 S-818

18 NOTES FORMING PART OF ACCOUNTS (Contd.) R R R R NOTE O - SALES, ADMINISTRATION & OTHER EXPENSES Power & Fuel 9,229,520 Professional Fees 16,494,490 14,574,643 Audit fees 320, ,300 Insurance 9,662,174 7,791,677 Rent 4,110,918 4,000,631 Rates & Taxes 45,117 2,500 Travelling and conveyance 41,869,340 46,789,832 Repairs to buildings 428, ,222 General Repairs and Maintenance 108,239,349 59,397,526 Telephone, Postage and Telegrams 4,554,000 10,465,871 Advertising & Publicity 147, ,806 Stationery and printing 2,364,617 2,845,718 Bank charges 44,468,051 20,863,380 Miscellaneous Expenses 79,923,332 43,010,219 Foreign Exchange (Gain)/Loss Exchange Gain Loss - Others 626,985, ,525,327 Exchange Gain Loss - Debtors 413,389,937 (12,242,494) Exchange Gain Loss - Creditors (859,669,089) (604,866,395) Exchange Gain Loss - Forward Contract - Debtors 15,869, ,391,559 Exchange Gain Loss - Forward Contract - Creditors 223,766,329 56,004, ,341, ,812,868 Provision for foreseable losses on construction contracts (242,362,321) (242,362,321) TOTAL 732,969,998 99,345,392 NOTE P - FINANCE COST Interest Expenses Interest paid on Term loan from Banks 266,053, ,753, ,053, ,753,375 Other Borrowing Cost Interest paid on Cash Credit 197,392,634 Other Interest paid 27,985,961 1,028,954 Interest Exchange Differences AS ,467, ,803,349 Interest Accrued and due- Supplier Under MSMED Section ,617 79, ,961, ,912,297 TOTAL 619,014, ,665,672 S-819