Add: Profit for the year Add: Hedge reserve Balance to be carried forward (90.73)

Transcription

1 DIRECTORS REPORT 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 Auditors Report for the year ended 31st March FINANCIAL RESULTS Particulars V Crs. V Crs. Total Income 2, , Profit before Interest, Depreciation and Tax Less: a) Interest b) Depreciation and amortization c) Income Tax Expense Profit After Tax Reserves At the beginning of the year (90.73) (101.83) Add: Profit for the year Add: Hedge reserve (3.10) Balance to be carried forward (90.73) YEAR IN RETROSPECT The gross sales and other income for the financial year under review were V 2,379 Crores as against V 2,448 Crores for the previous financial year showing marginal decline of 2.81% mainly due to deferment of some of project s milestones of JP project to fiscal year The profit after tax for the financial year under review registered an exponential growth at V Crores as against V Crores for the previous financial year mainly due to advance progress of projects under execution and gains accrued pursuant to adoption of Accounting Standards 30, 31 and 32 issued by The Institute of Chartered Accountants of India on Embedded Derivative Accounting. During the year , the Company has focused on timely execution of its existing projects amid multiple challenges on the business prospects front. The continuous focus on training of people and adopting best manufacturing processes are expected to add significantly to its ability to meet the requirements of complex jobs. The Company has been recommended for ISO 14001:2004 certification for Environment Management Systems. The Company has been certified with OHSAS 18001:2007 certification for Occupational Health and Safety Management Systems and Certificates of Authorization from ASME. Order booking position remains area of concern due to depressed market conditions. The Company booked order worth V 1,931 Crores in the year. The order book stands at V 9,041 Crores as on 31st March APPROPRIATIONS There are no appropriations to the Company s earnings. DIVIDEND The directors do not recommend dividend for the financial year under review to conserve cash in the business. CAPITAL EXPENDITURE The Company has spent V Crores during the year on capital expenditure. Gross tangible and intangible assets, including leased assets are V Crores as at March 31, AUDITOR S REPORT The Auditor s Report to the Shareholders does not contain any qualification. DISCLOSURE OF PARTICULARS OF EMPLOYEES U/S 217 (2A) There are no employees coming under the purview of Section 217(2A) of the Companies Act, 1956, as amended by Companies (Particulars of Employees) Rules, COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009 a) Bifurcation of Offices of Chairman &Group Chief Executive The Board has bifurcated the roles and offices of Chairman and Group Chief Executive. Mr. Shailendra Roy is elected as Chairman of the Board whereas Mr. A. S. Lamba is Group Chief Executive. S-829

2 b) Remuneration of Directors The Directors are not paid any remuneration by way of sitting fees or otherwise. 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 Control The Board ensures the effectiveness of the Company s system of internal controls including financial, operational and compliance controls and risk management systems. g) Internal Auditors The Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services to the Company. 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 The Institute of Chartered Accountants of India (Refer Note no. N4 of Notes forming part of the Accounts). DIRECTOR S 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; and iv. that the annual accounts have been prepared on a going concern basis; and v. that proper systems are in place to ensure compliance of all laws applicable to the Company. DIRECTORS At the Board meeting held on 26th April, 2012, Mr. A. S. Lamba and Mr. Hidetoshi Aiki were appointed as Whole-time Directors of the Company with effect from 24th May, 2012, not liable to retire by rotation. Mr. V. C. Bedi, submitted his resignation from the Board in the Board meeting held on 26th April, 2012 effective from the conclusion of the said Board meeting. Mr. Yoshiyuki Hanasawa, submitted his resignation from the Board in the Board meeting held on 26th April, 2012 from the conclusion of the said Board meeting. Mr.Hideshi Kawamoto, has been appointed as Director to fill up the said casual vacancy, with effect from 26th April Mr. Ravi Uppal submitted his resignation from the Board with effect from the Board meeting held on 31st August Mr. Shailendra Roy was nominated by Larsen & Toubro Limited as Director and was appointed as Director and Chairman of the Board in the casual vacancy caused by resignation of Mr. Ravi Uppal from the Board with effect from 31st August, Mr. Sunil Pande, has been appointed as Director to fill up the casual vacancy caused by the resignation of Mr. V. C. Bedi, with effect from 31st August, Mr. Hidetoshi Aiki resigned from the Board with effect from 31st August, 2012 and Mr. Yoshiyuki Wakabayashi was appointed as a Whole Time Director to fill up the said casual vacancy with immediate effect. S-830

3 The Board of Directors places on record their appreciation for the contribution made by Mr. Ravi Uppal, Mr. V. C. Bedi, Mr. Hanasawa and Mr. Hidetoshi Aiki during their tenure as Director of the company and welcomed Mr. Shailendra Roy, Mr. A. S. Lamba, Mr. Yoshiyuki Wakabayashi, Mr. Hideshi Kuwamoto and Mr. Sunil Pande to the Board. Mr. Shailendra Roy and Mr. Sunil Pande 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. STATUTORY 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. MAINTENANCE OF COST RECORDS 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 with effect from 1st day of April In this regard, Compliance report along with annexures was prepared for Financial Year duly certified by Cost Accountant and the same was approved by the Board of Directors in the board meeting held on 31st August COST AUDIT The Ministry of Corporate Affairs has 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 electronic products) due to which manufacturing operations of the Company will get covered with effect from 1st April, 2012 as the turnover of the Company is in excess of V 100 crores for the financial year ended 31st March, In this regard M/s. Manubhai & Associates, Cost Accountant having Membership Number M-2502 was appointed as Cost Auditor of the Company for the financial year DISCLOSURE OF PARTICULARS Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure A forming part of this Report. ACKNOWLEDGEMENTS The Directors take this opportunity to thank the Financial Institutions, Banks, Customers, Central and State government authorities 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. The progress in setting up of world class hi-tech manufacturing facility was made possible by their hard work, commitment, cooperation and support. For and on behalf of the Board of Directors MR. S. N. ROY MR. MASAYUKI KUBO Place : Mumbai Director Director Date : May 4, 2013 ANNEXURE A TO THE DIRECTORS REPORT [A] CONSERVATION OF ENERGY (a) Energy Conservation measures taken: 1) Improving energy effectiveness / efficiency of equipment and systems- Installed energy management system in entire factory for real time monitoring of energy consumption of all the shops and buildings. Switching-off the under loaded transformers in the power distribution to reduce the energy losses in electrical network. Installed astronomical timers in open yard fabrication lighting and street light circuits for precise switching ON and OFF. Switching off non-essential shop lights during dinner and night shift snacks break to reduce factory lighting energy consumption. Close monitoring of HVAC system- energy savings by setting optimum temperatures, reducing HVAC operation timings based on office working hours. Use of energy saving devices like time switches, auto hibernation for PCs, etc. to reduce energy consumption Power saving by switching off the electrical appliances when not in use by installation of timer circuits in utility buildings-admin, change room, security building etc. S-831

4 Maintaining the power factor near to unity (0.99) in power distribution which improves the life of electrical equipments and enabling to claim rebate in energy bills from state electricity board. 2) Improving energy effectiveness / efficiency of Manufacturing Processes Made changes in PLC programming for the various machines in manufacturing shops to avoid idle running of non-essential drives thereby enhancing energy savings and increasing life of the equipment. Provided reliable power backup at RHF using an existing UPS to replace the hired DG set thus improving process efficiency and reducing energy consumption. Installed variable frequency drive for the roller hearth furnace blower thereby reducing energy consumption. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Implementation of timer circuit for the exhaust system in canteen kitchen area to avoid energy wastage. Installation of flow meters in Natural gas and Ar+CO2 line for effective monitoring of consumption. Procurement of only high efficiency motors at the time of replacements and new installations. (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 energy saving measures taken has resulted in annual savings of INR 2.17 million. This has reduced LMB Hazira carbon footprint by about 216 tons of carbon dioxide equivalent. [B] TECHNOLOGY ABSORPTION: Efforts made in technology absorption are as per appended Form B of this Annexure. [C] FOREIGN EXCHANGE EARNINGS AND OUTGO: (V Crs) Particulars Earnings: Foreign exchange earned/deemed exports 1, , Outgo: Foreign exchange used 1, , Form B Research & Development (R&D) The Company continues to implement new technologies to meet the market needs. No separate record of the expenditure incurred is maintained TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION 1. Efforts in brief 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: 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 May 2007 onwards Under Absorption supercritical boilers from MHI, Japan S-832

5 INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF L&T-MHI BOILERS PRIVATE LIMITED Report on the financial statements We have audited the accompanying financial statements of L&T-MHI BOILERS PRIVATE LIMITED ( the Company ), which comprise the Balance Sheet as at March 31, 2013, and the statement of profit and loss and the Cash Flow Statement for the year then 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 and cash flows of the Company 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 Company 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 Company 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 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; and d. in our opinion, the Balance Sheet, statement of profit and loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, SHARP & TANNAN Chartered Accountants Firm s Registration Number W By the hand of FIRDOSH D. BUCHIA Place : Mumbai Partner Date : May 4, 2013 Membership No 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 Company has physically verified fixed assets during the year and no material discrepancies were noted 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. S-833

6 (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 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 nature of its business. 8 We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the central government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the Company s manufacturing activity and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us. 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, investor education and protection 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, investor education and protection 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 undisputed amounts in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, The Company has no accumulated losses as at March 31, 2013 and it has not incurred any cash losses in the financial year ended on that date or in 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. The Company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name. 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 tem loans have been applied for the purposes for which they were obtained. 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 made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year. 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 Firm s Registration Number W By the hand of FIRDOSH D. BUCHIA Place : Mumbai Partner Date : May 4, 2013 Membership No S-834

7 BALANCE SHEET AS AT MARCH 31, 2013 As at As at Note No. v v v v EQUITY AND LIABILITIES: Shareholders funds Share capital A 2,341,000,000 2,201,000,000 Reserves and surplus 475,987,545 (907,319,626) 2,816,987,545 1,293,680,374 Non- Current Liabilities Long-term borrowings C 4,853,795,100 4,807,177,375 Deferred tax liabilities(net) N.6 204,948,549-5,058,743,649 4,807,177,375 Current Liabilities Short-term borrowings D(i) 5,196,124,955 1,459 Trade payables D(ii) 7,810,642,386 6,591,228,806 Other current liabilities D(iii) 11,436,991,400 18,902,520,114 Short-term provisions D(iv) 60,618,201 41,910,732 24,504,376,942 25,535,661,111 TOTAL 32,380,108,136 31,636,518,860 ASSETS: Non- Current Assets Fixed Assets Tangible assets E(i) 4,708,068,510 4,585,263,341 Intangible assets E(ii) 178,377,560 61,933,666 Capital-work-in-progress 12,229, ,501,412 Intangible assets under development 143,146,050 4,898,675,809 5,066,844,469 Long-term loans and advances F 49,242,651 67,255,084 49,242,651 67,255,084 Current Assets Current investments G (i) 4,501,800, ,630,361 Inventories G (ii) 1,648,522,566 3,682,379,283 Trade receivables G (iii) 15,301,380,727 14,411,787,099 Cash and cash equivalents G (iv) 4,273,777, ,599,001 Short term loans and advances G (v) 1,587,948,647 3,739,190,872 Other current assets G (vii) 118,759,864 3,464,832,691 27,432,189,676 26,502,419,307 TOTAL 32,380,108,136 31,636,518,860 COMMITMENTS (CAPITAL AND OTHERS) N.16 CONTINGENT LIABILITIES N.18 NOTES FORMING PART OF ACCOUNTS N SIGNIFICANT ACCOUNTING POLICIES O As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants Firm s registration no W by the hand of FIRDOSH D. BUCHIA RAJU IYER S. N. ROY MASAYUKI KUBO Partner Company Secretary Director Director Membership No Place : Mumbai Place : Mumbai Date : May 4, 2013 Date : May 4, 2013 S-835

8 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, Note No. v v v v REVENUE: Revenue from operations (gross) H 23,708,644,198 24,574,683,578 Less : Excise duty 111,023, ,920,234 Revenue from operations (net) 23,597,621,006 24,249,763,344 Other income I 192,645, ,901,948 TOTAL REVENUE 23,790,266,748 24,478,665,292 EXPENSES: Manufacturing, construction and operating expenses J Cost of raw materials and components 17,169,899,756 19,259,847,202 Stores,spares and tools 106,185, ,924,008 Sub-contracting charges 1,239,784, ,050,838 Other manufacturing, construction and operating expenses 1,701,818,394 1,505,293,259 20,217,687,559 21,752,115,307 Employee benefits expense K 922,810, ,428,034 Sales, administration and other expenses L 396,742,649 1,124,567,808 Finance costs M 304,674, ,827,879 Depreciation and amortisation expense 314,271, ,676,277 TOTAL EXPENSES 22,156,186,507 24,367,615,305 Profit before tax 1,634,080, ,049,987 Tax expense: Current Tax Minimum Alternate Tax N.7 304,257,423 MAT Credit N.7 (304,257,423) Deferred tax N.6 219,816, ,816,315 Profit after tax 1,414,263, ,049,987 Basic earnings per equity share before extraordinary items N Diluted earnings per equity share before extraordinary items N Basic earnings per equity share after extraordinary items N Diluted earnings per equity share after extraordinary items N Face value per equity share NOTES FORMING PART OF ACCOUNTS N SIGNIFICANT ACCOUNTING POLICIES O As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants Firm s registration no W by the hand of FIRDOSH D. BUCHIA RAJU IYER S. N. ROY MASAYUKI KUBO Partner Company Secretary Director Director Membership No Place : Mumbai Place : Mumbai Date : May 4, 2013 Date : May 4, 2013 S-836

9 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2013 L&T-MHI BOILERS PRIVATE LIMITED v v A. Cash flow from Operating Activities: Net Profit before tax (excluding extraordinary item) 1,634,080, ,049,987 Adjustments for : Depreciation (including obsolescence), amortisation and impairment 314,271, ,676,277 (Gain)/Loss Foreign Exchange Transaction 793, ,187,151 Interest Expense 304,674, ,827,879 Interest (Income) (118,879,469) (60,935,124) (Profit)/Loss on sale of fixed assets (net) (179,176) (28,892) (Profit)/Loss on sale of investments (net) (9,405,980) (128,147,348) Dividend Received (57,955,975) (14,083,247) Operating profit before working capital changes 2,067,398, ,546,683 Adjustments for : (Increase)/ Decrease in trade and other receivables 4,625,733,857 (5,759,043,259) (Increase)/ Decrease in inventories 2,033,856,717 (1,525,299,673) Increase/ (Decrease) in trade payables (6,227,407,665) 2,777,233,221 Cash generated from operations 2,499,581,734 (3,847,563,028) Direct taxes refund/(paid)- net Net Cash from Operating Activities 2,499,581,734 (3,847,563,028) B. Cash flow from Investing Activities: Purchase of fixed assets (302,324,740) (2,083,258,647) Sale of fixed assets 156,400, ,248 Purchase of investments (11,298,480,235) (6,355,923,491) Sale of investments 7,791,716,575 8,796,765,903 Interest received 118,879,469 60,935,124 Dividend received from other investments 57,955,975 14,083,247 Net Cash (used in)/ from Investing Activities (3,475,852,171) 432,705,384 C. Cash flow from Financing Activities: Proceeds from issue of share capital 140,000,000 Proceeds from long term borrowings 2,509,449,681 Proceeds from short term borrowings 5,196,123,496 Interest paid (304,674,188) (311,827,879) Net Cash (used in)/ from Financing Activities 5,031,449,308 2,197,621,802 Net (decrease) / increase in cash and cash equivalents (A + B + C) 4,055,178,871 (1,217,235,842) Cash and cash equivalents at beginning of the year 218,599,001 1,435,834,843 Cash and cash equivalents at end of the year 4,273,777, ,599,001 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, Purchase of fixed assets includes movement of capital work-in-progress during the year. 3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised (loss)/profit of Nil (previous year V 3,114,373) on account of translation of foreign currency bank balances. 4. Previous year s figures have been regrouped/reclassified wherever applicable. As per our report attached For and on behalf of the Board SHARP & TANNAN Chartered Accountants Firm s registration no W by the hand of FIRDOSH D. BUCHIA RAJU IYER S. N. ROY MASAYUKI KUBO Partner Company Secretary Director Director Membership No Place : Mumbai Place : Mumbai Date : May 4, 2013 Date : May 4, 2013 S-837

10 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 As at As at Number of v Number of shares shares A SHARE CAPITAL A(i) Share capital authorised, issued and subscribed: Authorised Equity shares of V 10 each 235,000,000 2,350,000, ,000,000 2,350,000,000 Issued Equity shares of V 10 each 234,100,000 2,341,000, ,100,000 2,201,000,000 Subscribed and paid up Equity shares of V 10 each 234,100,000 2,341,000, ,100,000 2,201,000,000 TOTAL 2,341,000,000 2,201,000,000 A(ii) Reconciliation of share capital Subscribed and fully paid at beginning of the year 220,100,000 2,201,000, ,100,000 2,201,000,000 Add: Allotment of shares to Larsen & Toubro Limited 7,140,000 71,400,000 Allotment of shares to Mitsubishi Heavy Industries Limited 6,860,000 68,600, Subscribed and fully paid at end of the year 234,100,000 2,341,000, ,100,000 2,201,000,000 A(iii) Terms/rights attached to equity shares The Company has only one class of share capital, i.e. equity shares having face value of V 10 per share. Each holder of equity holder is entitled to one vote per share. A(iv) Shareholders holding more than 5% of equity shares as at the end of the year Larsen & Toubro Limited, India 119,391,000 1,193,910, ,251,000 1,122,510,000 Mitsubishi Heavy Industries Limited, Japan 114,709,000 1,147,090, ,849,000 1,078,490,000 TOTAL 234,100,000 2,341,000, ,100,000 2,201,000,000 A(v) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediate preceding five years ended March 31, 2013 are Nil (previous year - Nil) A(vi) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediate preceding five years ended March 31, 2013 are Nil (previous year - Nil) As at As at v v v v B. RESERVES AND SURPLUS Hedging Reserve Fund As per last Balance Sheet (27,014,122) Add: Additions [Note N(9)] (30,956,755) 32,046,303 Less: Transfer to Statement of Profit & Loss Account (5,032,181) (30,956,755) Profit and Loss Account Opening balance (907,319,626) (1,018,369,613) Profit for the year 1,414,263, ,049, ,944,300 (907,319,626) TOTAL 475,987,545 (907,319,626) v S-838

11 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) C(i) LONG TERM BORROWINGS Amount in V Particulars As at As at Secured Unsecured Total Secured Unsecured Total Long term unsecured loan from banks 4,853,795,100 4,853,795,100 4,807,177,375 4,807,177,375 4,853,795,100 4,853,795,100 4,807,177,375 4,807,177,375 C(ii) NATURE OF LONG TERM BORROWINGS AND TERMS OF REPAYMENT Sr. No. Nature of term loans V Rate of interest Terms of repayment 1 External commercial borrowings 2 External commercial borrowings 2,969,389,500 USD 6M LIBOR + predetermined margin 1,884,405,600 JPY 6M LIBOR + predetermined margin TOTAL 4,853,795,100 Presentation of term loans in the Balance Sheet is as follows: (i) Long term borrowing : V 4,853,735,100 (ii) Current portion of long term borrowing Nil Term loans guaranteed by directors - Nil D(i) SHORT TERM BORROWINGS Repayable in 6 equal half yearly installments commencing from 15/09/2016 and ending on 15/03/2019 Repayable in 4 equal half yearly installments commencing from 15/07/2015 and ending on 15/01/2017 Amount in V Particulars As at As at Secured Unsecured Total Secured Unsecured Total Loans repayable on demand from banks 2,401,251,416 1,820,945,873 4,222,197,289 1,459 1,459 Short term loans and advances from banks 973,927, ,927,666 3,375,179,082 1,820,945,873 5,196,124,955 1,459 1,459 D(i) (a) Loans repayable on demand from banks include fund based working capital facilities viz. cash credits and overdraft. The secured portion of working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit are secured by hypothecation of inventories, book debts and receivables. As at As at v v v v D(ii) TRADE PAYABLES Due to related parties - Larsen & Toubro Limited and fellow subsidiary companies 1,909,588,788 1,972,057,236 - Mitsubishi Heavy Industries Limited and fellow subsidiary 350,333,723 21,355,576 2,259,922,511 1,993,412,812 Micro and small enterprises Amounts due to MSMED [Note N(14)] 146,199,652 61,655,106 Interest accrued and due to MSMED suppliers [Note N(14)] 959, , ,158,997 62,238,199 Due to Others 5,403,560,878 4,535,577,795 5,403,560,878 4,535,577,795 TOTAL 7,810,642,386 6,591,228,806 D(iii) OTHER CURRENT LIABILITIES Due to customers (construction & project related activity) 6,226,780,546 1,262,210,118 Advances from customers 4,036,147,563 8,794,876,791 Interest accrued but not due on term loan 13,839,013 18,408,291 Others 1,160,224,278 8,827,024,914 TOTAL 11,436,991,400 18,902,520,114 S-839

12 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) As at As at v v v v D(iv) SHORT TERM PROVISIONS Provision for employee benefits Gratuity [Note N(2)(a)] 2,878,669 5,721,421 Compensated absences 57,698,019 36,110,311 60,576,688 41,831,732 Other provisions 41,513 79,000 TOTAL 60,618,201 41,910,732 E (i) TANGIBLE ASSETS PARTICULARS COST / VALUATION DEPRECIATION BOOK VALUE As at Additions Adjustments/ As at As at For the Year Adjustments/ As at As at As at Deductions Deductions R R R R R R R R R R Leasehold land 293,716, ,071, ,644,144 2,034,397 1,544,584 1,026,715 2,552, ,091, ,681,615 Building 1,154,812, ,709,747 1,378,522,680 57,806,374 51,758, ,564,900 1,268,957,780 1,097,006,559 Plant and machinery 3,283,858, ,887,050 7,919,278 3,608,826, ,051, ,212,462 1,558, ,705,639 3,169,120,399 3,059,806,280 Furniture and fixtures 150,662,897 5,188, ,851,045 24,587,396 17,129,867 41,717, ,133, ,075,501 Vehicles 14,324,338 3,062,718 2,969,538 14,417,518 3,630,951 1,912, ,663 4,652,847 9,764,671 10,693,387 Total 4,897,374, ,847, ,960,684 5,306,261, ,111, ,557,998 3,476, ,192,915 4,708,068,510 4,585,263,342 Previous year 2,724,866,066 2,172,718, ,000 4,897,374, ,834, ,412, , ,111,105 Capital work-in-progress 12,229, ,501,412 Total tangible assets 4,720,298,249 4,861,764,754 E (ii) INTANGIBLE ASSETS PARTICULARS COST / VALUATION AMORTISATION BOOK VALUE As at Additions Adjustments/ Deductions As at As at For the year Adjustments/ Deductions As at As at As at R R R R R R R R R R Specialised softwares 70,463,325 1,748,750 4,011,592 68,200,483 25,460,265 10,475,600 1,300,558 34,635,307 33,565,176 45,003,060 Lumpsum fees for technical knowhow 69,631, ,146, ,777,125 52,700,469 15,264,272 67,964, ,812,384 16,930,606 Total 140,094, ,894,800 4,011, ,977,608 78,160,734 25,739,872 1,300, ,600, ,377,560 61,933,666 Previous year 118,011,002 22,083, ,094,400 58,896,885 19,263,849 78,160,734 Capital work-in-progress 143,146,050 Total intangible assets 178,377, ,079,716 As at As at v v v v F. LONG TERM LOANS AND ADVANCES Unsecured Capital advances 49,207,651 67,220,084 Deposits 35,000 35,000 TOTAL 49,242,651 67,255,084 G(I) CURRENT INVESTMENTS Investments in mutual funds at cost 4,501,800, ,630,361 TOTAL 4,501,800, ,630,361 G (II) INVENTORIES Raw materials 1,458,456,780 2,739,778,521 Components 171,467, ,770,217 Stores spares parts 18,597,930 14,830,545 TOTAL 1,648,522,566 3,682,379,283 S-840

13 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) As at As at v v v v G (III) TRADE RECEIVABLES Unsecured: Debts outstanding for more than 6 months Considered Good 1,584,249,991 Considered Doubtful 1,584,249,991 Other debts: Considered Good 15,301,380,727 12,827,537,108 Considered Doubtful 15,301,380,727 12,827,537,108 TOTAL 15,301,380,727 14,411,787,099 G (IV) CASH AND CASH EQUIVALENTS: Cash and cash equivalents: Balances with scheduled banks current account 6, ,665,063 Balances with non scheduled banks current account 40,909,236 Cash on hand 12,964 24,702 Fixed deposits with banks (maturity less than 3 months) 286,500, ,519, ,599,001 Other bank balances Fixed deposits with banks 3,987,257,938 TOTAL 4,273,777, ,599,001 G (V) SHORT TERM LOAN AND ADVANCES Unsecured Security deposit 4,810,066 16,097,381 Advances to suppliers 711,461,523 3,379,240,311 Advance to employees 608,100 10,149,441 Other advances recoverable in cash or kind 123,439,159 34,530,062 Income tax receivable (net of provision) 425,953,245 88,628,038 Balance with excise, sales tax, service tax etc 321,676, ,545,639 TOTAL 1,587,948,647 3,739,190,872 G (VII)OTHER CURRENT ASSETS Due from customers 118,245,497 3,464,567,262 Interest accrued 514, ,429 TOTAL 118,759,864 3,464,832,691 S-841

14 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) H v v v v REVENUE FROM OPERATIONS Sales and service Construction and project related activity* 23,681,725,710 24,572,993,578 Sale of services 26,918,488 1,690,000 23,708,644,198 24,574,683,578 TOTAL 23,708,644,198 24,574,683,578 *Revenue from sales and services includes V 968,477,304 (previous year nil) for price variations in terms of contract with the customer I J OTHER INCOME Interest income Interest received on intercorporate deposits 26,998,805 Interest received on bank deposits 117,685,623 33,530,734 Interest received from others 1,193, , ,879,469 60,935,124 Dividend income From current investments 57,955,975 14,083,247 Gain / loss on sale of investments Current investments 9,405, ,147,348 Other non-operating income Profit on sale of fixed asset 179,176 28,892 Other income 6,225,142 25,707,337 TOTAL 192,645, ,901,948 MANUFACTURING, CONSTRUCTION AND OPERATING EXPENSES Material consumed Raw material and component 17,226,802,886 19,302,329,261 Less: Scrap Sale 56,903,130 42,482,059 17,169,899,756 19,259,847,202 Sub contracting charges 1,239,784, ,050,838 Stores, spares and tools 106,185, ,924,008 Other manufacturing, construction and operating expenses Royalty and technical knowhow, engineering fees 575,073, ,164,457 Power and fuel 138,952, ,783,614 Packing and forwarding - primary packing 330,059, ,299,322 Hire charges - plant and machinery 115,531,604 51,127,001 Repairs and maintenance 50,106,769 69,106,440 Travelling and conveyance 84,724,129 53,842,935 Insurance 11,023,805 19,906,915 Rent 91,057,436 54,758,077 Rates and taxes 262, ,597 Software fees & maintenance cost 60,304,320 74,536,776 Other expenses 244,722, ,974,125 1,701,818,394 1,505,293,259 TOTAL 20,217,687,559 21,752,115,307 S-842

15 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) v v v v K STAFF COST Salaries & Wages 778,749, ,897,907 Contribution to and provision for Providend Fund & Pension fund 28,591,643 24,127,916 Gratuity Fund 2,878,669 4,549,627 Compensated absence / Leave Encashment 25,361,597 7,554,866 56,831,909 36,232,409 Employee Insurance Premium expenses 5,235, ,525 Welfare and other Expenses 81,992,764 74,700,193 TOTAL 922,810, ,428,034 L SALES, ADMINISTRATION AND OTHER EXPENSES Professional Fees 489,749, ,687,007 Rent 12,290,717 32,182,192 Rates & Taxes 254,868 3,289,333 Travelling and Conveyance 18,626,866 37,782,618 Repairs & Maintenance 45,297,511 13,305,253 Telephone, Postage 10,926,784 11,512,909 Advertisement Expenses 2,316, ,413 Stationery & printing 5,302,456 7,553,951 Bank charges 8,749,951 24,262,060 Provision for foreseeable losses on construction contracts (316,929,502) (133,070,498) Embedded Derivative Gain (740,904,722) - Exchange (gain)/ loss (net) 818,779, ,356,662 Miscellaneous Expenses 42,282,423 46,297,908 TOTAL 396,742,649 1,124,567,808 M FINANCE COST Interest Expense 293,912, ,375,776 Others 10,761, ,103 TOTAL 304,674, ,827,879 S-843

16 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) N(1) DISCLOSURE PURSUANT TO ACCOUNTING STANDARD (AS) 7 (REVISED): Particulars i Contract revenue recognised for the fi nancial year 23,570,702,518 24,248,073,344 ii Aggregate amount of contract costs incurred and recognised profi ts (less recognised 58,226,037,962 34,338,405,941 losses) as at end of the fi nancial 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 4,036,147,564 8,794,876,791 fi nancial year iv Retention amounts due from customers for contracts in progress as at end of the fi nancial year NIL NIL N(2) Employee benefits provision for / contributions to retirement benefit schemes are made in accordance with Accounting Standard 15 Employee Benefits as follows General Description of Defined Benefit Plans The Company makes contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to employees at the time of retirement, death while in employment or termination of employment, of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed five years in service. a. Amount recognized in the Balance Sheet Particulars Gratuity plan (wholly funded) Trust managed provident fund plan a) Present value of defi ned benefi t obligation 22,173,980 18,400, ,337, ,827,949 Less: Fair value of plan assets 19,295,311 12,678, ,170, ,506,526 Amount to be recognized as liability or (asset) 2,878,669 57,21,421 1,166,252 1,321,423 b) Amount refl ected in the Balance Sheet Liabilities 2,878,669 57,21,421 4,441,368* 3,891,911* Assets NIL NIL NIL NIL Net liability / (asset) 2,878,669 5,721,421 4,441,368* 3,891,911* * Employers and employee s contribution (net) for March is paid in April b. Amounts recognized in the statement of profit and loss Account Particulars Gratuity plan Trust managed provident fund plan Current service cost 6,934,577 5,564,075 23,143,464 20,933, Interest cost 2,156,889 1,463,370 13,615,160 8,944, Expected return on plan assets (1,145,935) (665,306) (13,615,160) (8,944,288) 4. Actuarial losses / (gains) (5,066,862) (702,364) (704,629) (928,414) 5. Actuarial gain/(loss) not recognized in books NIL NIL 704, , Cost Transfer to Larsen and Toubro Limited NIL (1,120,148) (2,687,843) NIL 7. Liabilities booked for previous year NIL NIL NIL NIL Total Expenses for the year NIL NIL NIL NIL 8. Total Included in Staff Expenses (1 to 4) 2,878,669 4,539,627 20,455,621 20,933,996 S-844

17 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.) c. The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows. Particulars Gratuity plan Trust managed provident fund plan Opening balance of the present value of defi ned benefi t obligation 18,400,050 13,321, ,827,949 49,800,000 Add: Current service cost 6,934,577 5,564,075 23,143,464 20,933,996 Add: Interest cost 2,156,889 1,463,370 13,615,160 8,944,288 Add: Liabilities assumed on transfer of employees NIL NIL NIL NIL Contribution by plan participants NIL NIL 34,217,999 32,520,414 Add / (Less): Actuarial losses / (gains) (4,811,637) (615,441) NIL NIL Less: Benefi t paid (505,899) (1,333,849) (15,467,559) (9,370,749) Closing balance of the present value of defi ned benefi t obligation 22,173,980 18,400, ,337, ,827,949 d. Changes in the fair value of plan assets representing reconciliation of opening and closing balances thereof are as follows: Particulars Gratuity plan Trust managed provident fund plan Opening balance of fair value of the plan assets 12,678,629 6,464, ,506,526 48,721,242 Add: Expected return of plan assets 1,145, ,306 13,615,160 8,944,288 Less: Actuarial gains / (loss) 255,225 86, , ,414 Add: Contribution by the employer 5,721,421 6,795,657 22,916,591 20,478,238 Add: Contribution by plan participants NIL NIL 33,895,415 31,805,092 Less: Benefi ts paid (505,899) (1,333,849) (15,467,559) (9,370,749) Closing balance of fair value of defi ned benefi t obligation 19,295,311 12,678, ,170, ,506,526 The Company expects to contribute V 2,878,669 (previous year V 6,795,657) towards its gratuity plan during the FY e. The major categories of plan assets as a percentage of total plan assets are as follows: Particulars Gratuity plan Trust managed provident fund plan Govt. of India securities NIL NIL 24% 24% State Govt. securities NIL NIL 13% 12% Corporate bonds NIL NIL 7% 7% Public Sector bonds NIL NIL 42% 41% Special deposit scheme NIL NIL 14% 16% Insurer managed fund (LIC) 100% 100% NIL NIL Equity shares of listed companies NIL NIL NIL NIL Others NIL NIL NIL NIL f. Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages) Particulars Gratuity plan Discount rate as at March % 8% Expected Return on Plan Assets as at March % 7.50% Attrition Rate 2% to 4% 2% to 4% Salary Growth Rate 6% 6% The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. S-845