The Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2013.

Transcription

1 DIRECTORS REPORT The Directors hae pleasure in presenting their Report and Audited Accounts for the year ended March 31, FINANCIAL RESULTS in Lakhs in Lakhs Gross Profit 8, , Less: Depreciation Profit before taxes 8, , Proision for Current taxes (2,715.00) (2,718.00) Add: Deferred Tax Asset for the current year (130.00) Leaing a balance aailable for disposal 5, , Add: Balance b/f from preious year Appropriations Diidend 3, , Tax on Diidend General Resere Profit & Loss A/c- Balance c/o 2, YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY The sales (inclusie of excise) and other income for the financial year under reiew are 40,169 lakhs as against 36,787 lakhs for the preious financial year. The profit before tax (after interest and depreciation charges) is 8,652 lakhs and profit after tax is 5,807 lakhs for the financial year under reiew as against 8,182 lakhs and 5,529 lakhs respectiely for the preious year. The Company had closed its entire manufacturing operations at its Powai Works, Mumbai as at the end of the preious year (ending March 31, 2012) and majority of the moeable assets existing at Powai works hae now been shifted to Ankleshwar. There was no material impairment of assets required to be made on completion of shifting and re-installation at Ankleshwar. DIVIDEND The Directors hae declared and paid during the year three interim diidends aggregating to 415 per share on 829,440 equity shares of 100 each. The Directors do not recommend any further diidend for the year. 3. CAPITAL EXPENDITURE As at March 31, 2013 the gross fixed assets stood at 10,052 Lakhs and the net fixed assets at 8,050 Lakhs. Additions during the year (net) amounted to 3,276 Lakhs. 4. AUDITORS REPORT The Auditors Report to the Shareholders does not contain any qualifications. The notes to the accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments of Directors. 5. DISCLOSURE OF PARTICULARS Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conseration of energy, technology absorption, foreign exchange earnings and outgo are gien in Annexure A forming part of the report. 6. OTHER DISCLOSURES Information regarding Safety, Health & Enironment is gien in Annexure B. 7. COST AUDITORS The Board of Directors at its meeting held on 28 June, 2012 appointed M/s. R. Nanabhoy & Co. Cost Accountant within the meaning of Cost & Works Accountants Act as the Cost Auditor for conducting the Cost Audit for the financial year PERSONNEL There are no employees coered by the proisions of the Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors of the Company confirms: i) that in the preparation of the annual accounts, the applicable Accounting Standards hae been followed and there has been no material departure; ii) that the selected Accounting Policies were applied consistently and the directors made judgements and estimates that are reasonable and prudent so as to gie a true and fair iew of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for the year ended on that date; S-484

2 iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the proisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preenting and detecting fraud and other irregularities; i) that the Annual Accounts hae been prepared on a going concern basis; and ) that proper systems are in place to ensure compliance of all laws applicable to the Company 10. BOARD OF DIRECTORS The Corporate Goernance framework in the Company is based on an effectie independent Board, the separation of the Board s functions of goernance and executie management and the constitution of the Board generally comprising a majority of independent Directors. In accordance with proisions of Articles of Association of the Company, Mr. V. J. Shukla will retire from the Board by rotation and is eligible for re-appointment. 11. AUDIT COMMITTEE The Audit Committee consists of three non executie directors. The present members of the Committee are Mr. J. P. Nayak, Mr. S. Raghaan and Mr. V. J. Shukla. Mr. J. P. Nayak is the Chairman of the Audit Committee The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report. 12. AUDITORS The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for reappointment. Certificate from the auditors has been receied to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009 The Company has familiarized itself with the requirement of the Corporate Goernance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and it is in the process of implementing many of the suggestions. Our compliance with the said guidelines is gien below A. SEPARATION OF OFFICES OF CHAIRMAN & CHIEF EXECUTIVE The roles and offices of Chairman and Chief Executie are separated. Mr. J. P. Nayak chairs the meetings of the Board and Shareholders and Mr. A. Shikumar is the Chief Executie and Manager of the Company under Companies Act, B. INDEPENDENT DIRECTORS All the members of the Board of the Company are independent in the sense that none of them are inoled in the day-to-day management of the Company. Directors are updated about their role, responsibilities and liabilities. C. NUMBER OF COMPANIES IN WHICH AN INDIVIDUAL MAY BECOME A DIRECTOR The Directors of the Company comply with the requirements of the maximum number of other directorships prescribed under the Guidelines. D. STATUTORY AUDITORS The Company has obtained a certificate from the auditors certifying its independence. E. INTERNAL AUDITORS The Corporate Audit Serices department of Larsen & Toubro Limited proides internal audit serices to all its group companies including the Company. F. INTERNAL CONTROL The Board ensures the effectieness of the Company s system of internal controls. G. SECRETARIAL AUDIT The Corporate Secretarial department of Larsen & Toubro Limited proides secretarial serices to many of its group companies including the Company. 14. ACKNOWLEDGEMENTS The Board of Directors thanks 1) Bankers 2) Vendors 3) Suppliers 4) Customers for their continued co-operation and support to the Company. The Directors are pleased to place on record their appreciation for the aluable contribution made by the employees of the Company. For and on behalf of the Board Place: Mumbai Date: April 19, 2013 J. P. NAYAK V. J. SHUKLA Director Director S-485

3 ANNNEXURE A THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTORS REPORT FOR THE YEAR ENDED MARCH 31, 2013 A. CONSERVATION OF ENERGY a) Energy conseration measures taken Programmable timers to put off Cooling Fans for Electrode baking oen after completion of baking cycle. Timers for putting off Water Coolers after working hours. On line Data logger for on line monitoring of oen baking cycles leading to energy control. Installation of TFT screen for office computers leading to energy conseration. Administratie Control on Continual basis. Replacement of Tube lights with PL/CFL lamps on continual basis. Modification of oen panels for precise control of Heater energy. Installation of cooling fan for Melting Furnace Panel for effectie utilization of Thyristorised control circuitry. Remote on/off control for ease of Air Compressor operation towards energy Saing. T-5, energy saing tube light fitting for offices area. Modification of coneyor shrink packing machine of packing line-ii to reduce heat loss and energy saing. Inerter type welding power sources for wear plate manufacturing. Astronomical timer for street lighting. Modification of acuum dryer (Thermic fluid) insulation to aoid Heat loss. b) Impact of the measure at (a) aboe for reduction of energy consumption and consequent impact on the cost of production of Goods The measures taken hae resulted in energy conseration with consequent reduction in cost. c) Total consumption and energy consumption per unit of production as per Form A in respect of industries specified in the schedule hereto Not Applicable B. TECHNOLOGY ABSORPTION a) Efforts made in technology absorption as per Form B. Details are furnished in Form B attached. b) Foreign exchange earnings and outgo. Actiities relating to exports initiaties taken to increase exports, deelopment of new export market for products and serices. c) Total foreign exchange used and earned in Lakhs Used 6,295 Earned 431 ANNEXURE B INFORMATION REGARDING THE SAFETY HEALTH & ENVIRONMENT: a) Installation of tertiary leel Effluent Treatment & Sewage Treatment Plant based on latest MBBR technology. b) Conseration of natural resource - water by reusing it in the factory after treatment. c) Installation & Commissioning of Fume Extraction with air pollution control deices. d) Installation & commissioning of Fire Protection & Firefighting system. e) Installation & commissioning of Air entilation system for improing the workplace Enironment. f) Safety Performance Criteria Ankleshwar Works No. of Reportable Accidents 0 Accident frequency Rate 0 Seerity Rate 0 Accident Free period to S-486

4 FORM B Form for disclosure of particulars with respect to technology absorption Research and Deelopment (R & D) a) Specific areas in which R & D carried out by the Company EWAC R&D was engaged in assisting marketing wing for business growth to improe market share. During the financial year , the following actiities took place: Product Deelopment: Series of New products introduced in wear plate, specialty electrodes & brazing applications. Introduced specialty products for wear surfacing, high temperature applications as well as joining applications. Established brazing paste to address growing market of automobile components. Introduced series of new products for reclamation of mining & construction application. Obtained a Certificate of Renewal of Recognition of in-house R&D from DSIR, Department of Science & Technology, New Delhi alid upto New Process / Technology: Introduced new method of making wear plate (can process) to beat the competition. Seeral new application, deelopments & recommendations gien to customer to sole problems. Other Initiaties : Customer isits, participated in conferences and exhibition to explore new opportunities. Assisting Marketing in establishing new applications. Technical paper presentation in L&T technology conclae & receied best paper presentation award. 2) Benefits deried as a result of aboe R & D Introduction of new range of wear plate has widened for product based and help in exploring more applications. Introduction of brazing paste will improe our brazing market share Deelopment of new applications and technology shall open a new business opportunity. 3) Future Plan of Action Continue to deelop new products and technology that will help in automation and cost reduction: Focus product deelopment in specific areas like Steel, cement, construction, power etc., which are growing at a high pace. Work towards cost reduction by product re-engineering and deelopment of low cost alternate raw materials. Focus on deelopment of high performance nano based electrode. Strengthening infrastructure of R&D with specialists and world class analytical instruments. Increase interaction with Uniersities / Research Institutions. 4) Expenditure on R & D Nature of Expenditure Lakhs Capital 0 Recurring/Reenue 100 Total 100 Total R & D expenditure as a percentage of total turnoer 0.25% Technology Absorption, Adaptation and Innoation The in-house technology deeloped for producing wear plates through bulk welding route was adopted and in process of successfully establishing in production plant, Collaboratie efforts with education / research institutions to work on new technology and added researchers to the R&D unit. Participation in national/international conferences, seminars and exhibitions. Benefits deried as a result of the aboe efforts, e.g. product improement, cost reduction, product deelopment, import substitution, etc. Established new application with the help of Cu paste in brazing. Import substitution of some raw materials by establishing indigenous equialents. Expansion of product range and cost reduction. Saings to industry by use of high performance products. S-487

5 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EWAC ALLOYS LIMITED Report on the Financial Statements We hae audited the accompanying financial statements of EWAC ALLOYS LIMITED (the Company ), which comprise the Balance Sheet as at March 31, 2013, 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 gie a true and fair iew of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, This responsibility includes the design, implementation and maintenance of internal control releant to the preparation and presentation of the financial statements that gie a true and fair iew 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 inoles performing procedures to obtain audit eidence 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 releant 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 ealuating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as ealuating the oerall presentation of the financial statements. We beliee that the audit eidence we hae obtained is sufficient and appropriate to proide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations gien to us, the financial statements gie the information required by the Companies Act, 1956, in the manner so required and gie a true and fair iew 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 31st March, 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 and amended by the Companies (Auditor s Report) (Amendment) Order, 2004 (together the Order ) issued by the Central Goernment of India in terms of Section 227(4A) of the Companies Act, 1956, we gie 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 Companies Act, 1956, we report that: (a) we hae obtained all information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law hae been kept by the Company, so far as appears from our examination of those books; (c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Statement of Profit and Loss, the Balance Sheet and the Cash Flow Statement comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956; and (e) on the basis of the written representations receied from directors of the Company as on March 31, 2013, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, SHARP & TANNAN Chartered Accountants Registration No W by the hand of Place : Mumbai Date : April 19, 2013 MILIND P. PHADKE Partner Membership No S-488

6 ANNEXURE TO THE INDEPENDENT AUDITOR S REPORT (Referred to in paragraph 1 of our report of een date) (i) (a) The Company is maintaining proper records showing full particulars, including quantitatie details and situation of fixed assets. (b) As explained to us, these fixed assets hae been physically erified by the management, in accordance with a phased programme of erification, which in our opinion, is reasonable, haing regard to the size of the Company and nature of its assets. The frequency of physical erification is reasonable and no material discrepancies were noticed on such erification. (c) The Company has not disposed of any substantial part of its fixed assets during the year so as to affect its going concern status. (ii) (a) As explained to us, inentories hae been physically erified by management at reasonable interals during the year. In our opinion, the frequency of such erification is reasonable. (b) As per the information gien to us, the procedures of physical erification of inentory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inentory. No material discrepancies were noticed on physical erification. (iii) According to the information and explanations gien to us, the Company has neither granted nor taken any loans, secured or unsecured to companies, firms or other parties coered in the register maintained under Section 301 of the Companies Act, Accordingly, the Paragraph 4(iii)(b), (c), (d), (f) and (g) of the Order are not applicable. (i) In our opinion and according to the information and explanations gien to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inentory and fixed assets and for the sale of goods and serices. Further, we hae neither come across nor hae been informed of any continuing failure to correct major weaknesses in internal control system. () (a) According to the information and explanations gien to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of Companies Act 1956 hae been so entered. (b) In our opinion and according to the information and explanations gien to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the alue of rupees fie lakhs in respect of any party during the year, hae been made at prices which are reasonable haing regard to the preailing market prices at the releant time. (i) The Company has not accepted any deposits during the year from the public to which the directies issued by the Resere Bank of India and the proisions of Section 58A, 58AA and any other releant proisions of the Companies Act, 1956 and the rules framed thereunder apply. (ii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business. (iii) We hae broadly reiewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Goernment for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of manufacture of welding consumables and are of the opinion that prima facie, the prescribed accounts and records hae been made and maintained. Howeer, we hae not made a detailed examination of the records. (ix) (a) According to the information and explanations gien to us, the Company is regular in depositing undisputed statutory dues including proident fund, inestor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, serice tax, custom duty, excise duty, cess and any other statutory dues with the appropriate authorities. According to the information and explanations gien to us, there are no arrears of outstanding statutory dues as at the last day of the financial year for a period of more than six months from the date they became payable. (b) According to the information and explanations gien to us and the records of the Company examined by us, the particulars of sales tax and excise duty as at March 31, 2013 which hae not been deposited on account of a dispute pending, are as under: Name of the Statute Nature of the disputed dues * Period to which the amount relates The Central Sales Tax Act and Local Sales Tax Acts. The Central Excise Act, 1944 Disallowances of high sea sales and other related matters. Disallowances CST sales, Non-submission of C Forms Disallowance of Form - N - 14B sale by Appellate authority which was earlier allowed by assessing authority. Demand for duty on sales through interconnected units. 10,849, to Forum where disputes are pending Joint Commissioner of Sales Tax (Appeals)-II 107, Joint Commissioner of Sales Tax (Appeals)-II 1,083, Sales Tax Tribunal 683,214, to CESTAT (*net of pre-deposit paid in getting the stay/ appeal admitted) (x) The Company has no accumulated losses as at March 31, 2013 and it has not incurred cash losses in the financial year and in the immediately preceding financial year. (xi) According to the information and explanations gien to us and as per the records of the Company examined by us, the Company has not defaulted in repayment of dues to banks. The Company did not hae any outstanding dues to any financial institutions. The Company has not issued any debentures. Accordingly, the Paragraph 4(xi) of the Order is not applicable. S-489

7 (xii) According to the information and explanations gien to us, the Company has not granted loans and adances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the Paragraph 4(xii) of the Order is not applicable. (xiii) The proisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company. (xi) In our opinion and according to the information and explanations gien to us, the Company is not dealing or trading in shares, securities, debentures and other inestments. The Company has inested surplus funds in mutual funds. According to the information and explanations gien to us, proper records hae been maintained of the transactions and contracts and timely entries hae been made therein. The inestments in mutual funds hae been held by the Company in its own name. (x) According to the information and explanations gien to us, the Company has not gien any guarantee for loans taken by others from banks or financial institutions. Accordingly, the Paragraph 4(x) of the Order is not applicable. (xi) In our opinion and according to the information and explanations gien to us and on an oerall basis the term loan hae been applied for the purpose for which it was obtained. (xii) According to the information and explanations gien to us and on an oerall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis hae been used for long-term inestment. (xiii) The Company has not made any preferential allotment of shares to parties and companies coered in the register maintained under Section 301 of the Companies Act, 1956 during the year. Accordingly, the Paragraph 4(xiii) of the Order is not applicable. (xix) According to the information and explanations gien to us, the Company has not issued any debentures during the year. Accordingly, the Paragraph 4(xix) of the Order is not applicable. (xx) The Company has not raised any money by public issues during the year. Accordingly, the Paragraph 4(xx) of the Order is not applicable. (xxi) During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanations gien to us, we hae neither come across any fraud on or by the Company noticed or reported during the year, nor hae we been informed of such case by management. SHARP & TANNAN Chartered Accountants Registration No W by the hand of Place : Mumbai Date : April 19, 2013 MILIND P. PHADKE Partner Membership No S-490

8 BALANCE SHEET AS AT MARCH 31, 2013 As at As at Note No. EQUITY AND LIABILITIES Shareholders funds Share capital A 82,944,000 82,944,000 Reseres and surplus B 669,985, ,300, ,929, ,244,829 Non-current liabilities Long-term borrowings C (1) 320,000,000 80,000,000 Deferred tax liabilities (net) C (2) 29,875,697 16,876,067 Long-term proisions C (3) 12,352,877 8,382, ,228, ,258,672 Current liabilities Short-term borrowings D (1) 115,000,000 - Current maturities of long-term borrowings D (2) - 80,000,000 Trade payables D (3) 537,554, ,180,903 Other current liabilities D (4) 41,207, ,407,711 Short-term proisions D (5) 94,666, ,042, ,428,470 1,287,631,191 TOTAL 1,903,586,656 1,965,134,692 ASSETS Non-current assets Fixed assets Tangible assets E (1) 749,868, ,408,978 Intangible assets E (2) 5,159,131 - Capital work-in-progress E (3) 49,984, ,330,430 Intangible assets under deelopment E (4) - 4,428,300 Asset held for sale - 350,000 Long-term loans and adances F (1) 41,555,394 71,412,303 Other non-current assets F (2) 15,401,361 7,177, ,969, ,107,342 Current assets Current inestments G (1) - 81,964,744 Inentories G (2) 469,310, ,195,043 Trade receiables G (3) 430,407, ,213,640 Cash and bank balances G (4) 83,567,439 93,667,697 Short-term loans and adances G (5) 58,331,918 54,986,226 1,041,617,314 1,380,027,350 TOTAL 1,903,586,656 1,965,134,692 COMMITMENTS (Capital and others) CONTINGENT LIABILITIES SIGNIFICANT ACCOUNTING POLICIES H I O The accompanying notes are an integral part of the financial statements. As per our report attached SHARP & TANNAN Chartered Accountants Registration No W By the hand of For and on behalf of the Board of Directors MILIND P. PHADKE Partner Membership No Place: Mumbai Date : April 19, 2013 A. SHIVKUMAR SUBHODH SHETTY J. P. NAYAK V. J. SHUKLA Chief Executie Company Secretary Director Director Place: Mumbai Date : April 19, 2013 S-491

9 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, Note No. REVENUE Reenue from operations (gross) J 4,001,840,579 3,669,927,982 Less: Excise duty 156,583, ,791,147 Reenue from operations (net) 3,845,256,756 3,512,136,835 Other income K 15,027,435 8,758,890 TOTAL 3,860,284,191 3,520,895,725 EXPENSES Manufacturing and operating expenses Cost of materials consumed L (1) 489,764, ,184,754 Purchases of stock-in-trade L (2) 1,152,589,713 1,393,368,689 Store, spares and tools L (3) 15,812,659 18,657,173 Sub-contracting charges L (4) 454,504, ,716,007 Changes in inentories of finished goods, work-in-progress L (5) 155,027,163 (349,786,647) and stock-in-trade Other manufacturing and operating expenses L (6) 46,589,966 35,875,848 Employee benefits expense M 294,274, ,745,000 Sales, administration and other expenses N 330,875, ,925,843 Finance costs 25,121,405 1,485,116 Depreciation, obsolescence and amortisation expense E (1) 30,482,260 28,513,746 TOTAL 2,995,041,478 2,702,685,529 Profit before tax 865,242, ,210,196 Tax expense: Current tax 271,500, ,800,000 Deferred tax P (15) 12,999,630 (6,508,678) 284,499, ,291,322 Profit after tax 580,743, ,918,874 Earnings Per Share - (Basic and Diluted) P (12) Face alue per equity share () SIGNIFICANT ACCOUNTING POLICIES O The accompanying notes are an integral part of the financial statements. As per our report attached SHARP & TANNAN Chartered Accountants Registration No W By the hand of For and on behalf of the Board of Directors MILIND P. PHADKE Partner Membership No Place: Mumbai Date : April 19, 2013 A. SHIVKUMAR SUBHODH SHETTY J. P. NAYAK V. J. SHUKLA Chief Executie Company Secretary Director Director Place: Mumbai Date : April 19, 2013 S-492

10 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, A. Cash flows from operating actiities Net profit before tax 865,242, ,210,196 Adjustments for: Depreciation, obsolescence and amortisation 30,482,260 28,513,746 Interest income (364,404) (339,222) Income from inestments (3,576,084) (6,533,840) Proisions for compensated absences/leae encashment 1,399,007 9,237,222 Proisions for long serice award (1,115,071) Interest paid 25,121,405 1,485,116 Profit/loss on sale of fixed assets (net) (1,392,576) (1,105,378) Operating profit before working capital changes 916,912, ,352,769 Adjustments for: (Increase)/decrease in trade and other receiables 125,381,352 (309,852,639) (Increase)/decrease in inentories 146,884,484 (362,101,109) Increase/(decrease) in proisions (188,950,352) 73,584,279 Increase/(decrease) in trade payables (49,626,349) 500,580,012 Cash generated from operations 950,601, ,563,312 Direct taxes paid (275,787,923) (277,161,277) Net cash from operating actiities (A) 674,813, ,402,035 B. Cash flows from inesting actiities Purchase of fixed assets (345,550,231) (403,745,346) Sale of fixed assets 17,965,668 6,303,798 Purchase of inestments (480,000,000) (506,533,840) Sale of Inestments 561,964, ,689,264 Interest income 364, ,222 Income from inestments 3,576,084 6,533,840 Net cash (used in)/from inesting actiities (B) (241,679,331) (404,413,062) C. Cash flows from financing actiities Term loan taken 240,000, ,000,000 Term loan repaid (80,000,000) ICD taken 230,000,000 ICD repaid (115,000,000) Diidend paid (596,367,360) (150,128,640) Tax paid on diidend (96,745,695) (24,354,619) Interest paid (25,121,405) (1,485,116) Net cash (used in)/from financing actiities (C) (443,234,460) (15,968,375) Net (decrease)/increase in cash and cash equialents (A+B+C) (10,100,258) 53,020,598 Cash and cash equialents at the beginning of the year 93,667,697 40,647,099 Cash and cash equialents at the end of the year 83,567,439 93,667,697 Notes: 1. Cash Flow Statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 Cash Flow Statements. 2. Purchase of fixed assets includes moement of Capital work-in-progress during the year. 3. Cash and cash equialents at the end of the year represent cash and bank balances. 4. Preious year figures hae been regrouped whereer necessary. As per our report attached SHARP & TANNAN Chartered Accountants Registration No W By the hand of MILIND P. PHADKE Partner Membership No Place: Mumbai Date : April 19, 2013 For and on behalf of the Board of Directors A. SHIVKUMAR SUBHODH SHETTY J. P. NAYAK V. J. SHUKLA Chief Executie Company Secretary Director Director Place: Mumbai Date : April 19, 2013 S-493

11 NOTES TO THE FINANCIAL STATEMENTS As at As at A. SHARE CAPITAL Authorised: 1,500,000 Equity Shares of 100 each 150,000, ,000,000 Issued and subscribed: 829,440 Equity Shares of 100 each fully paid up 82,944,000 82,944,000 (1) There were no moements in the number of equity shares outstanding at the beginning and at the end of the year. (2) There are no rights, preferences and restrictions attaching to shares inluding restrictions on the distribution of diidends and the repayment of capital. (3) All the equity shares are held by Larsen & Toubro Limited, the holding Company and its nominees. (4) The shares in the Company held by each shareholder holding more than 5% shares (Please see note (3) aboe). (5) There are no shares resered for issue under options and contracts/commitments for the sale of shares/disinestment, including the terms and amounts. (6) For the period of fie years immediately preceeding the date as at which the Balance Sheet is prepared: No shares were alloted as fully paid up pursuant to contract(s) without payment being receied in cash. No shares were alloted as fully paid up by way of bonus shares. No shares were bought back. (7) There are no securities conertible into equity/preference shares at a later date. (8) There are no calls unpaid on issued share capital. (9) There are no forfieted shares. As at As at B. RESERVES AND SURPLUS Capital redemption resere As per last Balance Sheet 64,512,000 64,512,000 Addition/(dedution) during the year 64,512,000 64,512,000 General resere As per last Balance Sheet 326,322, ,322,213 Addition/(dedution) during the year 59,000,000 56,000, ,322, ,322,213 Statement of profit and loss As per last Balance Sheet 98,466,616 69,085,756 Profit for the year 580,743, ,918, ,209, ,004,630 Less: Diidend paid 344,217, ,128,640 Additional tax on diidend paid 55,840,700 24,354,619 Proposed Diidend 252,149,760 Additional tax on proposed diidend 40,904,995 Transfer to General resere 59,000,000 56,000, ,151,399 98,466,616 TOTAL 669,985, ,300,829 S-494

12 As at As at C. NON CURRENT LIABILITIES (1) Long term borrowings Unsecured Term loan from related party [Also refer Note No. P (2)] 320,000,000 80,000,000 (2) Deferred tax liabilities (Net) Deferred tax liabilities 43,239,618 28,594,074 Less: Deferred tax assets [Also refer Note No. P (15)] 13,363,921 11,718,007 29,875,697 16,876,067 (3) Long term proisions Post retirement medical benefits [Also refer Note No. P (9)] 12,352,877 8,382,605 12,352,877 8,382,605 TOTAL 362,228, ,258,672 D. CURRENT LIABILITIES (1) Short term borrowings Loan repayable on demand from banks (Secured by hypothecation of stock, book debts and receiables) Loan from a related party 115,000,000 (2) Current maturities of long term borrowings Term loan from a related party [Also refer Note No. P (2)] 80,000,000 (3) Trade payables Due to micro and small enterprises 7,217,441 6,895,835 [Also refer Note No. P (6)] Due to other than micro and small enterprises 530,337, ,285, ,554, ,180,903 (4) Other current liabilities Adances from customers 16,371,457 24,815,260 Other payables 24,836, ,592,451 41,207, ,407,711 (5) Short term proisions Proision for employee benefits Post retirement medical benefits 1,106,283 1,275,884 Compensated absences/leae encashment 58,109,646 56,710,639 [Also refer Note No. P (9)] Others Current taxes 5,361,277 Proposed diidend 252,149,760 Additional tax on diidend 40,904,995 Other proisions [Also refer Note No. P (16)] 35,450,076 26,640,022 94,666, ,042,577 TOTAL 788,428,470 1,287,631,191 S-495

13 E. FIXED ASSETS (Amount in ) PARTICULARS As at Additions on transfer GROSS BLOCK (AT COST) DEPRECIATION/OBSOLESCENCE/AMORTISATION NET BLOCK Additions Deductions As at Upto On transfer For the year Deductions Upto (1) Tangible Assets Leasehold land 1,029,113 1,029, ,606 10, , , ,507 Buidings 72,643, ,803,392 23,957, ,489,631 41,133,666 9,228,887 8,933,785 41,428, ,060,863 31,510,099 Plant and equipments 240,145,172 79,857,447 1,794, ,208, ,226,622 16,074,187 1,448, ,852, ,356, ,918,550 Furniture and fixtures 22,803,409 13,252,520 7,014 36,048,915 18,581,950 1,278,557 7,007 19,853,500 16,195,415 4,221,459 Office equipments 56,644,019 1,197,810 3,408,300 54,433,529 47,996,398 2,067,628 2,645,234 47,418,792 7,014,737 8,647,621 Vehicles 8,846,850 55, ,929 8,791,797 2,461, ,624 20,295 3,265,437 5,526,360 6,385,742 Sub total 402,112, ,167,045 29,278, ,001, ,703,350 29,484,175 13,055, ,132, ,868, ,408,978 (2) Intangible assets 6,157,216 6,157, , ,085 5,159,131 (3) Capital work in progress 49,984, ,330,430 (4) Intangible assets under 4,428,300 deelopment Total 402,112, ,324,261 29,278,175 1,005,158, ,703,350 30,482,260 13,055, ,130, ,012,587 Preious year 361,355,594 63,613,921 19,460,908 42,318, ,112, ,555,409 33,403,870 18,722,821 26,978, ,703, ,167,708 (a) Buildings include 24,660,984 (Preious year 3,497,633 as Capital work in progress) being borrowing costs capitalised in accordance with Accounting Standard (AS) 16 Borrowing Costs As at As at (b) Expenses capitalised as a part of Building / capital work in progress; Current year Preious year 1. Professional charges and other expenses 16,024,612 9,349, Traeling and coneyance 176,412 78,012 16,201,024 9,427,091 As at As at F. Long-term Loans and Adances (1) Loans and adances Unecured, Considered good Capital adances 113,000 18,871,094 Security deposits 41,044,517 52,475,835 Others 397,877 65,374 41,555,394 71,412,303 Considered doubtful Security deposits 6,855,084 6,855,084 48,410,478 78,267,387 Less: Allowance for bad and doubtful adances 6,855,084 6,855,084 41,555,394 71,412,303 (2) Other non-current assets Earnest money deposit 15,401,361 7,177,331 15,401,361 7,177,331 TOTAL 56,956,755 78,589,634 S-496

14 As at As at G. CURRENT ASSETS (1) Current inestments (at cost) Mutual funds L&T Ultra STF Institutional -Daily Diidend Reinestment Plan 8,071, Units of Rs each (Sold during the year) 81,964,744 81,964,744 Note: Unquoted inestments Book alue 81,964,744 (2) Inentories (at lower of cost and net realisable alue) Materials 87,868,440 80,787,642 [(including in transit 10,358,015; (Preious year 1,396,239)] Work-in-progress 47,631,145 54,916,535 Finished goods 126,443, ,265,494 Stock-in-trade [(including in transit 11,598,258; 203,545, ,464,543 (Preious year 18,320,042)] Consumables, stores and spare parts 3,822,710 2,760, ,310, ,195,043 (3) Trade receiables Unsecured, outstanding for more than six months from due date Considered good 80,133,036 98,333,989 Considered doubtful 25,027,892 18,064,892 Other debts, considered good 350,274, ,879, ,435, ,278,532 Less: Allowance for bad and doubtful debts 25,027,892 18,064, ,407, ,213,640 (4) Cash and bank balances Balances with banks 83,545,917 93,480,963 Cash on hand 21, ,734 83,567,439 93,667,697 (5) Short-term loans and adances Considered good Adances to suppliers 13,208,684 13,200,928 Adance payment of taxes (net of proisions 271,500,000) 4,287,923 Adances recoerable in cash or in kind or for alue to be receied 25,206,878 19,403,647 Balances with central excise 15,628,433 22,381,651 58,331,918 54,986,226 TOTAL 1,041,617,314 1,380,027,350 H. COMMITMENTS (CAPITAL AND OTHERS) Estimated amounts of contracts remaining to be executed on capital accounts and not proided for (net of adances) 3,316, ,409,474 I. Contingent Liabilities Sales tax liabilty that may arise in respect of matters in appeals 33,858,103 33,858,103 Excise Duty liability that may arise in respect of matters in appeals 54,372,588 TOTAL 88,230,691 33,858, It is not practicable to estimate the timing of cash outflows, if any, in respect of aboe matter pending appellate proceedings. 2. The Company does not expect any reimbursements in respect of aboe contingent liabilities. S-497

15 J. REVENUE FROM OPERATIONS Sale of products 3,296,126,891 3,321,398,361 Sale of serices 695,354, ,374,435 Other operational reenues: Commission 10,356,475 16,791,299 Other operating income 3,000 1,363,887 10,359,475 18,155,186 TOTAL 4,001,840,579 3,669,927,982 K. OTHER INCOME Rent 753,600 Interest 364, ,222 Income from inestments 3,576,084 6,533,840 Profit on sale of fixed assets (net) 1,392,576 1,105,378 Other non-operating income 9,694,371 26,850 TOTAL 15,027,435 8,758,890 L. MATERIALS, MANUFACTURING AND OPERATING EXPENSES (1) Cost of materials consumed Opening stock 83,548,471 71,234,009 Add: Purchases 510,392, ,239,535 Less: Closing stock 91,691,150 83,548, ,249, ,925,073 Less: Scrap sales 12,485,079 7,740, ,764, ,184,754 (2) Purchases of stock-in-trade 1,152,589,713 1,393,368,689 (3) Stores, spares and tools 15,812,659 18,657,173 (4) Sub-contracting charges 454,504, ,716,007 (5) Changes in inentories of finished goods, work-in-progress.and stock-in-trade Closing stock Finished goods 126,443, ,265,494 Work-in-progress 47,631,145 54,916,535 Stock-in-trade 203,545, ,464, ,619, ,646,572 Less: Opening stock Finished goods 236,265,494 55,978,868 Work-in-progress 54,916,535 39,134,238 Stock-in-trade 241,464,543 87,746, ,646, ,859, ,027,163 (349,786,647) (6) Other manufacturing and operating expenses Excise duty on finished goods (net) (2,517,839) (4,955,324) Power and fuel 17,338,343 18,770,586 Royalty 11,508,684 12,368,574 Repairs to : Buildings 9,515,911 2,798,760 Plant and equipments 10,744,867 6,893,252 46,589,966 35,875,848 TOTAL 2,314,288,045 2,187,015,824 S-498

16 M. EMPLOYEE BENEFITS EXPENSE (1) Salaries, wages and bonus 250,934, ,175,393 (2) Contribution to / Proisions for Proident funds and pension scheme 9,103,050 7,620,022 Superannuation fund 3,652,902 Gratuity fund 553, ,654 Compensated absences/leae encashment 1,399,007 9,237,222 11,055,816 21,040,800 (3) Staff welfare expenses 32,284,214 21,528,807 TOTAL 294,274, ,745,000 N. SALES, ADMINISTRATION AND OTHER EXPENSES Rent (including lease rentals ; Preious year 236,600) 7,303,744 4,780,258 Rates and taxes 9,448,515 6,238,837 Repairs and maintenance - others 5,491,010 3,634,367 Insurance 1,306, ,218 Traelling and coneyance 72,962,751 54,107,640 Postage, telephone and courier 6,575,232 5,930,950 Printing and stationery 3,891,733 2,636,697 Legal and professional charges 36,473,243 29,060,439 Auditors remuneration [Also refer Note No. P (4)] 839, ,517 Serice charges 41,276,675 32,602,786 Analysis and testing expenses 2,702,256 2,730,979 Software expenses 7,710,466 3,733,195 Security serice charges 2,930,935 3,771,588 Selling agency commission 3,325,913 7,319,290 After sales serices including warranties 13,556,445 11,337,678 Adertising and publicity 27,174,073 13,747,306 Packing and forwarding 35,240,686 23,327,028 Bank charges 5,991,975 5,166,583 Allowance for bad and doubtful debts 6,963,000 Miscellaneous expenses 39,711,480 9,692,487 TOTAL 330,875, ,925,843 O. SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting The Company maintains its accounts on accrual basis following the historical cost conention in accordance with Generally Accepted Accounting Principles ( GAAP ) and in compliance with the proisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 notified by the Central Goernment. Further, the guidance notes/ announcements issued by the Institute of Chartered Accountants of India are also considered, whereer applicable. The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lies of tangible and intangible assets, proision for doubtful debts/adances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known. 2. Reenue recognition Reenue is recognised based on the nature of actiity when consideration can be reasonably measured and there exists reasonable certainty of its recoery. S-499

17 a. Sales include excise duty and adjustments made towards discount, if any, gien to customers. b. Reenue from the sale of manufactured and traded goods is recognised when the substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract. c. Reenue from serice related actiities is recognised using the proportionate completion method. d. Commission income is recognised as and when the terms of contract are fulfilled. e. Interest income is accrued at applicable interest rate. f. Other items of income are accounted as and when the right to receie arises. 3. Research and deelopment a. Reenue expenditure on research is expensed under respectie heads of account in the period of which it is incurred. b. Deelopment expenditure on new products is capitalised as intangible asset, if all of the following can be demonstrated: i. The technical feasibility of completing the intangible asset so that it will be aailable for use or sale. ii. The Company has intention to complete the intangible asset and use or sell it. iii. The Company has ability to use or sell the intangible asset. i. The manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself of if it is to be used internally, the usefulness of intangible assets.. The aailability of adequate technical, financial and other resources to complete the deelopment and to use or sell the intangible asset and i. The Company has ability to measure the expenditure attributable to the intangible asset during its deelopment reliably. The deelopment expenditure capitalised as intangible asset is amortised oer its useful life. Other deelopment costs that do not meet aboe criteria are expensed in the period in which they are incurred. 4. Employee benefits a. Short-term employee benefits All employee benefits falling due wholly within twele months of rendering the serice are classified as short-term employee benefits. Benefits, such as, salaries, wages, short-term compensated absences, etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related serice. b. Post employment benefits i. Defined contribution plans: The Company s superannuation scheme, proident fund scheme, employees state insurance scheme and employees pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related serice. ii. Defined benefit plans: The employees gratuity fund schemes and post-retirement medical care benefit plan are the Company s defined benefit plans. The present alue of the obligation under such defined benefit plans is determined based on actuarial aluation using the Projected Unit Credit Method, which recognizes each period of serice as giing rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present alue of the estimated future cash flows. The discount rates used for determining the present alue of the obligation under defined benefit plans, is based on the market yield on Goernment securities as at the Balance Sheet date, haing maturity periods equialent to the weighted aerage maturity profile of related obligations. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. The interest element in the actuarial aluation of defined benefits plans, which comprises the implicit interest cost and impact of changes in discount rate, is classified under finance costs. The balance charge is recognised as employee benefit expense in the Statement of Profit and Loss. In case of funded plans, the fair alue of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on net basis. Gains and losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past serice cost is recognised as expense on a straight-line basis oer the aerage period until the benefits become ested. c. Long-term employee benefits The obligation for long-term employee benefits, such as, long-term compensated absences, long serice award, etc., is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) aboe. d. Termination benefits Termination benefits are recognised as expenses in the period in which they are incurred. S-500

18 5. Fixed assets a. Fixed assets are stated at original cost (net of duty credits aailed,if any) less accumulated depreciation and accumulated amortisation. b. Administratie and other general oerhead expenses that are specifically attributable to acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets. c. Expenditure relating to existing fixed assets is added to the cost of the assets, where it increases the performance / life of the asset as assessed earlier. d. Fixed assets are eliminated from financial statements either on disposal or when retired from actie use. e. Own manufactured assets are capitalised at cost including an appropriate share of oerheads. 6. Leases a. Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of fair alue or present alue of minimum lease payments and a liability is created for an equialent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. b. Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis. 7. Depreciation a. Depreciation on assets is proided on written down alue method on assets added upto 30th September,1986 and on straight-line method on assets added after that date, at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, as amended from time to time, except for computers, the depreciation is proided at the rate of 33.33%, which is higher rate, in line with their estimated useful life. b. Depreciation on additions to/deductions from is calculated pro-rata from/to the month of additions/deductions during the year. Indiidual assets costing less than 5,000 are depreciated at 100% in the year of purchase. c. Assets acquired under finance leases are depreciated on a straight-line method oer the lease term. 8. Intangible assets and amortisation a. Intangible assets are stated at original cost net of tax/duty credits aailed, if any, less accumulated amortization and cumulatie impairment. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortised as follows: i. Leasehold land: Oer the period of lease. ii. Specialised software: Oer a period of three years. b. Administratie and other general oerhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of cost of the intangible assets. c. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as Intangible assets under deelopment. d. Amortisation on impaired assets is proided by adjusting the amortisation charges in the remaining period, so as to allocate the asset s reised carrying amount oer its remaining useful life. 9. Impairment of assets a. As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: i. the proision for impairment loss, if any; and ii. the reersal of impairment loss recognised in preious periods, if any. b. Impairment loss is recognised when the carrying amount of an asset exceeds its recoerable amount. c. Recoerable amount is determined: i. in the case of an indiidual asset, at the higher of net selling price and the alue in use; and ii. in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of cash generating unit s net selling price and alue in use. (Value in use is determined as the present alue of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.) 10. Inestments a. Inestments, which are readily realizable and are intended to be held for not more than one year from the date of acquisition, are classified as current inestment. All other inestments are classified as long-term inestments. b. Long-term inestments are carried at cost, after proiding for any diminution in alue, if such diminution is other than temporary in nature. S-501