81 Auditors’ Report to the members of Larsen & Toubro Limited Auditors’ Report to the members of Larsen & Toubro Limited Auditors’ Report to the members of Larsen & Toubro Limited Auditors’ Report to the members of Larsen & Toubro Limited Auditors’ Report to the members of Larsen & Toubro Limited We have audited the attached balance sheet of Larsen & Toubro Limited, as at March 31, 2006 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of section 227 of the Companies Act, 1956, we report that: (1) As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India under sub-section (4A) of section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. (2) Further to our comments in the Annexure referred to above, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and (e) on the basis of the written representations received from directors as on March 31, 2006 and taken on record by the board of directors, we report that none of the directors is disqualified as on March 31, 2006 from being appointed as a director in terms of clause (g) of sub– section (1) of section 274 of the Companies Act, 1956. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significant accounting policies in schedule Q and notes appearing thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: 1) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2006; 2) in the case of the profit and loss account, of the profit for the year ended on that date; and 3) in the case of the cash flow statement, of the cash flows for the year ended on that date. SHARP & TANNAN Chartered Accountants by the hand of F.M. KOBLA Partner Mumbai, May 25, 2006 Membership No.15882 Annexure to the Auditors’ Report Annexure to the Auditors’ Report Annexure to the Auditors’ Report Annexure to the Auditors’ Report Annexure to the Auditors’ Report (Referred to in paragraph (1) of our report of even date) 1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets. (b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification. However, in the case of furniture and fixtures at certain locations, the Company is in the process of reconciling the book records with the physical count and, in the opinion of management, discrepancies will not be material. (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. In our opinion, the frequency of such verification is reasonable. (b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. 3 (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, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable.
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Auditors’ Report to the members of Larsen & Toubro LimitedAuditors’ Report to the members of Larsen & Toubro LimitedAuditors’ Report to the members of Larsen & Toubro LimitedAuditors’ Report to the members of Larsen & Toubro LimitedAuditors’ Report to the members of Larsen & Toubro LimitedWe have audited the attached balance sheet of Larsen & Toubro Limited, as at March 31, 2006 and also the profit and loss account and the cash flowstatement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides areasonable basis for our opinion.
In accordance with the provisions of section 227 of the Companies Act, 1956, we report that:
(1) As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India under sub-section (4A) of section 227of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and5 of the said Order.
(2) Further to our comments in the Annexure referred to above, we report that:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(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 thosebooks;
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and
(e) on the basis of the written representations received from directors as on March 31, 2006 and taken on record by the board of directors, wereport that none of the directors is disqualified as on March 31, 2006 from being appointed as a director in terms of clause (g) of sub–section (1) of section 274 of the Companies Act, 1956.
In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significantaccounting policies in schedule Q and notes appearing thereon, give the information required by the Companies Act, 1956 in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted in India:
1) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2006;
2) in the case of the profit and loss account, of the profit for the year ended on that date; and
3) in the case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
by the hand of
F.M. KOBLAPartner
Mumbai, May 25, 2006 Membership No.15882
Annexure to the Auditors’ ReportAnnexure to the Auditors’ ReportAnnexure to the Auditors’ ReportAnnexure to the Auditors’ ReportAnnexure to the Auditors’ Report(Referred to in paragraph (1) of our report of even date)
1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.
(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of three yearswhich, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verificationof the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.However, in the case of furniture and fixtures at certain locations, the Company is in the process of reconciling the book records with thephysical count and, in the opinion of management, discrepancies will not be material.
(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. In our opinion, thefrequency of such verification is reasonable.
(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion,reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and thebook 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, 1956. Accordingly, paragraphs 4(iii)(b),(c) and (d) of the Order are not applicable.
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(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, 1956. 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 thesize of the Company and the nature of its business for purchase of inventory, fixed assets and for sale of goods and services. Further, on thebasis of our examination of the books and records of the Company, and according to the information and explanations given to us, we haveneither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.
5 (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that needto be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts orarrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees fivelakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market pricesat the relevant time.
6 The Company has accepted deposits from the public and in our opinion and according to the information and explanations given to us, thedirectives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA and other relevant provisions of the Companies Act,1956 and the rules framed thereunder, where applicable, have been complied with. We are informed that no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.
7 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 centralgovernment for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of electronic products, viz.industrial electronics including all control instrumentation and automation equipment and are of the opinion that prima facie the prescribedaccounts 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 Companyis generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employeesstate insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues asapplicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amountspayable 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, 2006 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of sales tax,excise duty and service tax as at March 31, 2006 which have not been deposited on account of a dispute pending, are as under:
Name Nature of the disputed dues Amount Period to Forum whereStatute Rs.crore* which the disputes are pending
amount relates
Central Sales Tax Act, Disallowance of branch transfers 0.02 1996-1997 Sales Tax OfficerLocal Sales Tax Actsand Works ContractTax Act
Non-submission of forms, classification 3.93 1988-1989 to 1994-1995, Assistant Commissionerdispute, rate dispute, branch transfers, 1996-1997 and 1998-1999 (Appeals)transit sales, turnover tax and to 2003-2004non-receipt of WCT TDS certificates
Non-submission of forms, entry tax, 3.93 1989-1990 to 2003-2004 Deputy Commissionerinter-state and branch sales, (Appeals)subcontractor’s turnover, second sale,transit sale, disallowance of deemedsale in the course of import andother matters
Non-submission of forms, entry tax, 1.37 1993-1994 to 1996-1997 Joint Commissionerinter-state sales, transit sales, and 1998-1999 to (Appeals)exemptions disallowed and 2002-2003other matters
Non-submission of forms, sales in 0.95 1988-1989, 1992-1993 Additional Commissionertransit, exemption on inter-state and 2000-2001, 2002-2003 (Appeals)second sale and 2005-2006
Non-submission of forms 0.04 2000-2001 and 2001-2002 Commissioner (Appeals)
Non-submission of forms, inter-state 36.82 1985-1986 to 2002-2003 Sales Tax Tribunalsales, method of calculation in specialcases, rate dispute, high seas sales,disallowance under composition schemeand deemed sales in course of imports
Inter-state sales, entry tax, classification 4.56 1981-1982, 1993-1996,dispute, transit sales and disallowance 1997-1998 1999-2000exemption for subcontractors turnover and 2001-2002 High Court
The Central Excise Valuation disputes 0.36 1997-1998 and Commissioner (Appeals)Act, 1944 and 2000-2001Service Taxunder theFinance Act, 1994
Exemptions denied and 7.62 1985-1986 to 2001-2002 CESTATvaluation disputes
Export rebate claim 0.07 2003-2004 High Court
Dispute on site mix concrete and 1.52 1997-1998 Supreme CourtPSC grinders
Service Tax demand on commission 7.03 2001-2002 to 2002-2003 CESTATearned under the head C&F agentinstead of exempting as commissionagent service
*Net of pre-deposit paid in getting the stay/appeal admitted
10 The Company has no accumulated losses as at March 31, 2006 and it has not incurred any cash losses in the financial year ended on that dateor 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 inrepayment 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 ofpledge 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 Companyhas invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper recordshave been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securitiesand 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 terms and conditions of guarantees given by the Company forloans taken by others from banks or financial institutions are not prima facie prejudicial to the interests of the Company.
16 In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for thepurposes 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 nofunds raised on short term basis have been used for long term investments.
18 The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301of the Companies Act, 1956 during the year.
19 According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of thedebentures issued.
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 auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
by the hand of
F.M. KOBLAPartner
Mumbai, May 25, 2006 Membership No. 15882
Name Nature of the disputed dues Amount Period to Forum whereStatute Rs.crore* which the disputes are pending
amount relates
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Balance Sheet as at March 31, 2006Balance Sheet as at March 31, 2006Balance Sheet as at March 31, 2006Balance Sheet as at March 31, 2006Balance Sheet as at March 31, 2006As at 31-3-2006 As at 31-3-2005
Schedules Rs.crore Rs.crore Rs.crore Rs.croreSOURCES OF FUNDS:SHAREHOLDERS’ FUNDS:
Share capital A 27.48 25.98Reserves and surplus B 4577.70 3314.96Employee stock options outstanding 134.62
(Previous year Rs.43.43 crore)Less : Deferred employee compensation expense 99.63
(Previous year Rs.15.24 crore) 34.99 28.19
4640.17 3369.13LOAN FUNDS:
Secured loans C 465.79 793.72Unsecured loans D 987.78 1065.34
1453.57 1859.06Deferred tax liabilities (See Note No.27) 209.79 218.48
TOTAL 6303.53 5446.67
APPLICATION OF FUNDS:Fixed Assets E (i)
Gross block 2250.34 2060.51Less: Depreciation and impairment 954.57 1063.32
Net block 1295.77 997.19Less: Lease adjustment 3.07 3.07
1292.70 994.12Capital work-in-progress (net of impairment) 283.89 65.82
1576.59 1059.94Intangible Assets E (ii)
Gross block 50.34 46.04Less: Amortisation and impairment 24.58 23.15
Net block 25.76 22.89Capital work-in-progress (net of impairment) 2.17 -
27.93 22.89Fixed Assets held for sale 0.10 0.23
(at lower of cost or estimated realisable value)Investments F 1919.52 960.93Deferred tax assets (See Note No.27) 132.51 123.95Current Assets, Loans and Advances: G
Interest accrued on investments 17.26 3.95Inventories 2210.27 2261.26Sundry debtors 4814.16 4027.57Cash and bank balances 583.20 828.02Loans and advances 1911.63 1674.61
9536.52 8795.41
Less: Current Liabilities and Provisions: HLiabilities 5896.25 4760.82Provisions 1015.37 795.75
6911.62 5556.57
Net current assets 2624.90 3238.84Miscellaneous expenditure I 21.98 39.89
(For Notes forming part of Accounts, see page Nos.109 to 135)A.M. NAIK
As per our report attached Chairman & Managing DirectorSHARP & TANNAN J.P. NAYAK K.V. RANGASWAMI S.N. TALWARChartered Accountants Y.M. DEOSTHALEE M.V. KOTWAL M.M. CHITALEby the hand of K. VENKATARAMANAN S. RAJGOPAL SURINDER NATHF.M. KOBLA R.N. MUKHIJA B.P. DESHMUKHPartner V.K. MAGAPU KRANTI SINHAMembership No.15882 N. HARIHARANMumbai, May 25, 2006 Company Secretary Directors Mumbai, May 25, 2006
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Profit and Loss Account for the year ended March 31, 2006Profit and Loss Account for the year ended March 31, 2006Profit and Loss Account for the year ended March 31, 2006Profit and Loss Account for the year ended March 31, 2006Profit and Loss Account for the year ended March 31, 20062005-2006 2004-2005
Schedules Rs.crore Rs.crore Rs.crore Rs.croreINCOME:Sales & Service (Gross) K 14883.68 13254.56Less: Excise duty 230.76 204.77
Sales & Service (Net) 14652.92 13049.79Other operational income L (i) 110.16 106.94Other income L (ii) 435.55 591.53
15198.63 13748.26EXPENDITURE:Manufacturing, construction and operating expenses M 11590.33 10474.65Staff expenses N 890.03 764.51Sales, administration and other expenses O 1216.95 1077.95Interest and brokerage P 75.07 53.99Depreciation, obsolescence and impairment 108.61 89.06Amortisation of intangible assets 7.37 6.65
13888.36 12466.81Less: Overheads charged to fixed assets 1.89 3.15
13886.47 12463.66
Profit before transfer from Revaluation reserve 1312.16 1284.60Add: Transfer from Revaluation reserve 1.49 1.54
Profit before tax before extra-ordinary items 1313.65 1286.14Provision for current taxes (See Note No.25) 364.94 321.17Provision for deferred tax (See Note No.27) (15.35) (18.88)Provision for tax on Fringe Benefits 21.67 -
371.26 302.29
Profit after tax before extra-ordinary items 942.39 983.85Profit on sale/transfer of businesses (net of tax) [See Note No.13] 69.75 -
Profit after tax after extra-ordinary items 1012.14 983.85Add: Balance brought forward from previous year 55.62 51.39Less: Dividend paid for the year 2004-2005 3.88 -
Additional tax on dividend for the year 2004-2005 0.54 -
51.20 51.39
Profit available for appropriation 1063.34 1035.24Less: Transfer to General Reserve 663.00 573.00
Profit available for distribution 400.34 462.24Special interim dividend - 129.84Proposed final dividend 302.25 227.37Additional tax on dividend 42.39 49.41
Balance carried to Balance Sheet 55.70 55.62
Basic Earnings Per Equity Share (Rupees) 76.05 77.62Diluted Earnings Per Equity Share (Rupees) 72.45 70.85Basic Earnings Per Equity Share after excluding (See Note No.26)
extra-ordinary items (Rupees) 70.81 77.62Diluted Earnings Per Equity Share after excluding
extra-ordinary items (Rupees) 67.53 70.85Face Value Per Equity Share (Rupees) 2.00 2.00SIGNIFICANT ACCOUNTING POLICIES Q
(For Notes forming part of Accounts, see page Nos.109 to 135)A.M. NAIK
As per our report attached Chairman & Managing DirectorSHARP & TANNAN J.P. NAYAK K.V. RANGASWAMI S.N. TALWARChartered Accountants Y.M. DEOSTHALEE M.V. KOTWAL M.M. CHITALEby the hand of K. VENKATARAMANAN S. RAJGOPAL SURINDER NATHF.M. KOBLA R.N. MUKHIJA B.P. DESHMUKHPartner V.K. MAGAPU KRANTI SINHAMembership No.15882 N. HARIHARANMumbai, May 25, 2006 Company Secretary Directors Mumbai, May 25, 2006
}
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Cash Flow Statement for the year ended March 31, 2006Cash Flow Statement for the year ended March 31, 2006Cash Flow Statement for the year ended March 31, 2006Cash Flow Statement for the year ended March 31, 2006Cash Flow Statement for the year ended March 31, 20062005-2006 2004-2005
Rs.crore Rs.croreA. Cash flow from Operating Activities:
Net Profit before tax (including extra-ordinary items) ... ... ... 1383.40 1286.14Adjustments for:Dividend Received ... ... ... (160.14) (72.80)Depreciation (including obsolescence), amortisation and impairment ... ... ... 114.49 94.17Unrealised foreign exchange difference - net (gain)/loss ... ... ... 9.69 (17.57)Interest(net) ... ... ... 75.06 53.99(Profit)/Loss on sale of fixed assets (net) ... ... ... (4.12) (17.91)(Profit)/Loss on sale of investments (net) ... ... ... (128.04) (373.67)Employee Stock Option-Compensation debited to Profit & Loss Account (net) ... ... 22.08 16.30Gain on sale/transfer of Dairy & Milk Processing Equipment Business... ... ... (49.22) -Gain on sale/transfer of Glass Container Business
(including earnest money deposit received and retained) ... ... ... (30.53) -Loss on reassumption of debt ... ... ... 55.91 -Provision/(Reversal) for diminution in value of investments ... ... ... 1.65 (0.91)
Operating profit before working capital changes ... ... ... 1290.23 967.74967.74967.74967.74967.74Adjustments for: ...(Increase)/Decrease in trade and other receivables ... ... ... (932.80) (997.13)(Increase)/Decrease in inventories ... ... ... 89.39 (493.15)(Increase)/Decrease in miscellaneous expenditure ... ... ... 17.92 6.32Increase/(Decrease) in trade payables ... ... ... 1234.16 909.45
Cash generated from operations ... ... ... 1698.90 393.23393.23393.23393.23393.23Direct taxes refund/(paid)- net ... ... ... (329.65) (281.22)
Net Cash from Operating Activities ... ... ... 1369.25 112.01112.01112.01112.01112.01
B. Cash flow from Investing Activities:Purchase of fixed assets and intangible assets ... ... ... (682.56) (198.57)
(Including interest capitalised Rs.0.98 crore, previous year Rs.0.28 crore)Sale of fixed assets and intangible assets ... ... ... 4.61 49.33Purchase of investments ... ... ... (6167.39) (5053.53)Sale of investments ... ... ... 5344.21 5435.08Loans/Deposits made with subsidiaries/associates and third parties (net) ... ... (15.55) (87.43)Advance towards equity commitment ... ... ... (108.26) (9.02)Interest received ... ... ... 42.16 27.62Dividend received from subsidiaries ... ... ... 67.22 60.16Dividend received from other investments ... ... ... 92.92 12.64Cash received on sale/transfer of Dairy & Milk Processing Equipment Business ... ... 21.56 -Cash received on sale/transfer of Glass Container Business
(net of part refund of earnest money) ... ... ... 74.78 -
Net (decrease)/increase in cash and cash equivalents (A + B + C) ... ... (244.82) 452.75Cash and cash equivalents at beginning of the year ... ... ... 828.02 375.27
Cash and cash equivalents at end of the year ... ... ... 583.20 828.02828.02828.02828.02828.02
Notes1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3: “Cash Flow Statements” issued
by the Institute of Chartered Accountants of India.2. Purchase of fixed assets and intangible assets includes movement of Capital Work-in-Progress during the year.3. Cash and cash equivalents at end of the year represent cash and bank balances and include unrealised gain of Rs.2.70 crore
(previous year unrealised loss of Rs.1.95 crore) on account of translation of foreign currency bank balances.4. Previous year’s figures have been regrouped/reclassified wherever applicable.
A.M. NAIKAs per our report attached Chairman & Managing DirectorSHARP & TANNAN J.P. NAYAK K.V. RANGASWAMI S.N. TALWARChartered Accountants Y.M. DEOSTHALEE M.V. KOTWAL M.M. CHITALEby the hand of K. VENKATARAMANAN S. RAJGOPAL SURINDER NATHF.M. KOBLA R.N. MUKHIJA B.P. DESHMUKHPartner V.K. MAGAPU KRANTI SINHAMembership No.15882 N. HARIHARANMumbai, May 25, 2006 Company Secretary Directors Mumbai, May 25, 2006
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Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.croreSchedule AShare Capital:Authorised:162,50,00,000 Equity shares of Rs.2 each 325.00 325.00
(Previous year 162,50,00,000 Equity shares of Rs.2 each)
Issued:13,73,85,777 Equity shares of Rs.2 each 27.48 25.98
(Previous year 12,99,24,182 Equity shares of Rs.2 each)
Subscribed and paid up:13,73,85,777 Equity shares of Rs.2 each (See Note No.1) 27.48 25.98
(Previous year 12,99,24,182 Equity shares of Rs.2 each)
27.48 25.98
As at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule BReserves and Surplus:Revaluation Reserve:
As per last Balance Sheet 30.90 32.61Less: On assets sold or obsoleted during the year 0.04 0.13
Transferred to General Reserve - 0.04Transferred to Profit and Loss Account 1.49 1.54
29.37 30.90
Cash Subsidy Reserve:As per last Balance Sheet 0.25 0.25
Capital Redemption Reserve:As per last Balance Sheet 0.02 0.02
Capital Reserve:As per last Balance Sheet 0.12 0.12
Debenture Redemption Reserve:As per last Balance Sheet 50.80 117.46Less: Transferred to General Reserve 32.05 66.66
18.75 50.80
Securities Premium Account:As per last Balance Sheet 1326.63 1286.35Addition during the year 601.20 52.99
1927.83 1339.34Less: Debenture/Bond issue expenses (net of tax) 3.52 4.39
Share issue expenses 0.62 -Amortisation of premium payable on redemption of
Debentures/Bonds (net of tax) 3.21(previous year Rs.8.32 crore)
Less: Write-back of provision made in previous yearpursuant to conversion of Bonds 7.34(previous year Rs.Nil)
(4.13) 8.32
1927.82 1326.63
Carried forward 1976.33 1408.72
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Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule B (Contd.)Brought forward 1976.33 1408.72
General Reserve:As per last Balance Sheet 1774.47 1179.62Add: Transferred from:
Loans from banks:Cash credits / Working Capital Demand Loans 120.11 321.51Other loans 47.57 51.39Interest accrued and due 0.03 0.10
167.71 373.00Loans from others 223.08 218.72
465.79 793.72
89
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
(including loans from shareholders Rs.0.49 crore;previous year Rs.1.69 crore)
Loans from subsidiary companies 2.10 6.16Short term loans and advances:
From banks 172.46 207.89Lease finance 3.25 2.85Sales tax deferment loan 5.10 5.15Commercial Paper-Face Value Rs.Nil (previous year Rs.50.00 crore)Less: Future Interest Obligation Rs.Nil (previous year Rs.2.29 crore)(Maximum amount outstanding at any time during the year Rs.50.00 crore;previous year Rs.50.00 crore) - 47.71
Cost / Valuation Depreciation Impairment Book Value
Fixed Assets As at As at Up to For the Up to As at As at As at1-4-2005 Additions Deductions 31-3-2006 31-3-2005 year Deductions 31-3-2006 31-3-2006 31-3-2006 31-3-2005Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs. crore Rs.crore Rs.crore
Add: Capital work-in-progress 283.89 66.27Less: Impairment of Capital work-in-progress (Buildings) - 0.45
1576.59 1059.94
90
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedule E (ii)
Cost / Valuation Amortisation Impairment Book Value
Intangible Assets As at As at Up to For the Up to As at As at As at1-4-2005 Additions Deductions 31-3-2006 31-3-2005 year Deductions 31-3-2006 31-3-2006 31-3-2006 31-3-2005Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs. crore Rs.crore Rs.crore
(a) Rs.0.14 crore for which conveyance is yet to be completed.
(b) Rs.0.72 crore of leasehold land which has become freehold during the year vide agreement with Karnataka Industrial Area DevelopmentBoard (KIADB).
(ii) Leasehold land includes:
(i) Rs.5.95 crore for land taken at Bangalore on lease from KIADB vide agreement dated January 21, 2002. The lease agreement is fora period of six years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company.
(ii) Rs.0.22 crore for land taken at Hubli on lease from KIADB vide agreement dated December 8, 2005. The lease agreement is for aperiod of six years, at the end of which sale deed would be executed, on fulfilment of certain conditions by the Company.
2 Cost / Valuation of Buildings includes ownership accommodation:
(i) (a) in various co-operative societies and apartments and shop-owners’ associations: Rs.89.16 crore, including 1300 shares of Rs.50each, 177 shares of Rs.100 each, 100 shares of Rs.10 each and 1 share of Rs.250.
(b) in proposed co-operative societies Rs.16.08 crore.
(ii) of Rs.4.45 crore in respect of which the deed of conveyance is yet to be executed.
(iii) of Rs.3.36 crore representing undivided share in a property at a certain location.
3 Additions during the year and capital work-in-progress include:
(i) Rs.1.28 crore being the exchange loss; and
(ii) Rs.0.98 crore being borrowing cost capitalised in accordance with Accounting Standard (AS)16 on “Borrowing Costs” issued by the Instituteof Chartered Accountants of India.
4 Deductions include cost Rs.212.56 crore and depreciation Rs.98.25 crore (book value Rs.46.87 crore net of impairment of Rs.67.44 crore)relating to the Glass Container business transferred under a Business Transfer Agreement.
5 During the year, the Company has reviewed the useful life of certain categories of assets. Consequently, the depreciation rates have beenrevised, resulting in an additional charge of Rs.13.29 crore.
6 The Company has reclassified certain assets from Bulidings and Furnitures & Fixtures to Plant & Machinery. Consequently, the cost/valuationand accumulated depreciation of Buildings is lower by Rs.41.70 crore and Rs.19.24 crore respectively and that of Furniture & Fixtures byRs.109.67 crore and Rs.54.53 crore respectively. The cost/valuation and accumalated depreciation of Plant & Machinery is higher to that extent.
There is no impact of this change on the depreciation for the year.
7 Capital work-in-progress includes advances Rs.34.28 crore (previous year Rs.24.84 crore).
8 The Company had revalued as at October 1, 1984 some of its land, buildings, plant and machinery and railway sidings at replacement/marketvalue which resulted in a net increase of Rs.108.05 crore.
91
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule F
Investments (At cost, unless otherwise specified):Long Term Investments:
Government and trust securities 5.91 5.91Fully paid equity shares of subsidiary companies 496.94 369.41Application money pending allotment of equity shares in a
subsidiary company 0.45 0.23Fully paid preference shares of a subsidiary company 31.22 31.22Fully paid equity shares (Trade Investments) 115.41 222.82Other fully paid equity shares 3.43 2.87Bonds 469.96 281.96Mutual funds 2.21 3.84
1125.53 918.26Current Investments:
Bonds 48.74 0.16Mutual funds 715.87 11.03
764.61 11.19Investment in Integrated Joint Ventures 29.38 31.48
1919.52 960.93
NOTE: As at As at31-3-2006 31-3-2005
Rs.crore Rs.croreQuoted Investments
Book value 25.60 25.70Market value 999.29 528.52
Unquoted InvestmentsBook value 1893.92 935.23
Particulars of Investments:
All Unquoted unless otherwise specified
A) Long Term Investments:
Government and trust securities:1 8.07 % Government of India Bond 2017
9,91,91,494 shares of Rs.10 each 140.98 90.98(1,25,00,000 shares of Rs.10 each subscribed during the year)
Larsen & Toubro Infotech Limited3,00,00,000 shares of Rs.5 each 15.00 15.00
L&T Infocity Limited(2,40,30,000 shares of Rs.10 each sold during the year) - 16.02(See Note No. 42)
L&T Transportation Infrastructure Limited1,08,64,000 shares of Rs.10 each [See Note No.40(b)] 10.86 10.86
Narmada Infrastructure Construction Enterprise Limited1,26,48,507 shares of Rs.10 each [See Note No.40(b)] 12.65 12.65
India Infrastructure Developers Limited3,50,00,000 shares of Rs.10 each [See Note Nos.40(a) and 45] 35.00 35.00
HPL Cogeneration Limited3,12,12,000 shares of Rs.10 each (See Note No.41) 31.21 31.21
Carried forward 245.70 5.91 211.72 5.91
92
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
L&T Western India Tollbridge Limited1,39,50,007 shares of Rs.10 each [See Note No.40(d)] 13.95 13.95
L&T Infrastruture Development Projects Limited15,10,40,767 shares of Rs.10 each [See Note No.40(e)] 151.04 84.05(6,69,90,767 shares of Rs.10 each subscribed during the year)
Tractor Engineers Limited68,000 shares of Rs.1,000 each 0.30 0.30
Larsen & Toubro LLC50,000 shares of USD 1 each 0.23 0.23
Larsen & Toubro International FZE66 shares of Dhs 550,500 each 43.72 36.44(11 shares of Dhs 550,500 each subscribed during the year)
L&T Power Investments Private Limited2,10,60,000 shares of Rs.10 each (See Note No.45) 21.06 21.06
Bhilai Power Supply Company Limited49,950 shares of Rs.10 each 0.05 0.05
International Seaports Pte. Limited18,15,000 shares of USD 1 each 2.36 -(11,92,500 shares of USD 1 each purchased during the year)
L&T-Sargent & Lundy Limited27,52,129 shares of Rs.10 each 1.53 1.61(1,44,846 shares of Rs.10 each tenderedunder buy-back scheme during the year)
Larsen & Toubro (Wuxi) Electric Company Limited(USD 11,56,027.47 representing 21.02% of theregistered capital) 5.20 -
Spectrum Infotech Private Limited4,40,000 shares of Rs.10 each 6.80 -(4,40,000 shares of Rs.10 each subscribed during the year)
L&T Capital Company Limited50,00,000 shares of Rs.10 each 5.00 -(50,00,000 shares of Rs.10 each subscribed during the year)
496.94 369.41
Application money pending allotment of equity shares
Larsen & Toubro International FZEUSD 1,00,000 (USD 50,000 paid during the year) 0.45 0.23
Fully paid preference shares:
HPL Cogeneration Limited3,12,12,000 15% Cumulative RedeemablePreference shares of Rs.10 each 34.88 34.88
Less: Provision for diminution in value 3.66 3.66
31.22 31.22
Fully paid equity shares (Trade Investments):
(i) Fully paid equity shares in Associate companies
Ewac Alloys Limited4,14,720 shares of Rs.100 each 0.04 0.04
Audco India Limited9,00,000 shares of Rs.100 each 0.06 0.06
Carried forward 0.10 534.52 0.10 406.77
93
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Gujarat Leather Industries Limited7,35,000 shares of Rs.10 each 0.56 0.56
L&T-Niro Limited(40,00,000 shares of Rs.10 each, sold during the year) - 4.00
L&T-Chiyoda Limited45,00,000 shares of Rs.10 each 4.50 4.50
L&T-Komatsu Limited6,00,00,000 shares of Rs.10 each 60.00 60.00
International Seaports Pte. Limited6,22,500 shares of USD 1 each - 2.36
John Deere Equipment Private Limited(formerly L&T-John Deere Private Limited)(8,40,00,000 shares of Rs.10 each sold during the year) - 87.50
L&T-Ramboll Consulting Engineers Limited18,00,000 shares of Rs.10 each 1.80 1.80(2 shares of Rs. 10 each purchased during the year)
L&T-Case Equipment Private Limited1,20,05,000 shares of Rs.10 each 12.00 12.00
The Dhamra Port Company Limited(1,11,03,022 shares of Rs.10 each sold during the year) - 11.10(See Note No.42)
Kakinada Seaports Limited(86,30,975 shares of Rs.10 each sold during the year) - 8.63(See Note No.42)
L&T-Crossroads Private Limited90,00,000 shares of Rs.10 each 9.00 9.00
Sharp Business Systems (India) Limited(23,40,000 shares of Rs.10 each sold during the year) - 2.34
Voith Paper Technology (India) Limited15,00,000 shares of Rs.10 each 1.00 1.00(5,00,000 shares of Rs.10 each receivedas bonus shares during the year)
88.96 204.89Less: Provision for diminution in value 0.56 0.56
88.40 204.33
(ii) Fully paid equity shares in Incorporated Joint Venture:
L&T-Valdel Engineering Private Limited6,55,000 shares of Rs.10 each;(Previous year 1 share of Rs.10) 9.02 -(6,54,999 shares of Rs.10 each purchased during the year)
(iii)Fully paid equity shares in other companies :
UltraTech Cement Limited (Quoted)1,43,03,294 shares of Rs.10 each 14.30 14.30
John Deere Equipment Private Limited(Formerly known as L&T-John Deere Private Limited)35,00,000 shares of Rs. 10 each 3.50 -
Tullow India Operations Limited1,000 shares of GBP 1 each 0.19 0.19
Tidel Park Limited(40,00,000 shares of Rs.10 each sold during the year) - 4.00(See Note No. 42)
115.41 222.82
Carried forward 649.93 629.59
94
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule F (Contd.)Brought forward 649.93 629.59
Other fully paid equity shares:
Housing Development Finance Corporation Limited(Quoted)74,356 shares of Rs.10 each 0.10 0.20(76,000 shares of Rs.10 each sold during the year)
Gujarat Ambuja Cements Limited(Quoted)5,00,310 shares of Rs.2 each 3.33 3.33(Consequent upon stock split, 66,708 shares offace value Rs.10 each were cancelled and3,33,540 shares of face value Rs.2 each were issuedduring the year.1,66,770 shares were issuedas bonus shares during the year)
Utmal Multi purpose Service Co-operative Society Limited300 “B” class shares of Rs.100 each: Rs.30,000(as at 31.03.2005: Rs.30,000) - -
3.43 3.53
Less: Provision for diminution in value - 0.66
3.43 2.87
Bonds:Unit Trust of India
1,96,400 6.75% tax-free bonds of Rs.100 each (Quoted) 1.96 1.96
NABARD-Capital Gain Bonds1,00,000 5.40% bonds of Rs.10,000 each 100.00 100.00
National Housing Bank-Capital Gain Bonds1,80,000 5.45% bonds of Rs.10,000 each 180.00 180.00
SIDBI-Capital Gain Bonds53,000 5.50% bonds of Rs.10,000 each 53.00 -(purchased during the year)
National Highways Authority of India-Capital Gain Bonds (See Note85,000 5.50% bonds of Rs. 10,000 each No.17) 85.00 -(purchased during the year)
50,000 5.65% bonds of Rs. 10,000 each 50.00 -(purchased during the year)
469.96 281.96
Mutual fund:India Project Development Fund
22.105694 units of Rs.10,00,000 each 2.21 3.84
(5.157606 units of Rs.10,00,000 each purchased during the year)
(21.461037 units of Rs.10,00,000 each sold during the year)
Carried forward 1125.53 918.26
}
95
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule F (Contd.)Brought forward 1125.53 918.26B) Current Investments:
Bonds:
Gujarat Electricity Bond 20061 12% bond of Rs.5,00,000 each (Redeemed during the year) - 0.05
Gujarat Electricity Bond 200911 11.25% bonds of Rs.1,00,000 each 0.11 0.11
HDFC 2016 Bonds90 7.65% bonds of Rs.10,00,000 each 8.56 -(purchased during the year)
HDFC 2017 Bonds210 8% bonds of Rs.10,00,000 each 20.67 -(purchased during the year)
State Bank of India 2015 Bonds50 7.45% bonds of Rs.10,00,000 each 4.72 -(purchased during the year)
Power Finance Corporation 2016 Bonds100 7.95% bonds of Rs.10,00,000 each 9.78 -(purchased during the year)
Indian Overseas Bank 2016 Bonds50 8% bonds of Rs.10,00,000 each 4.90 -(purchased during the year)
48.74 0.16
Mutual funds:
Birla Sun Life Basic Industries Fund-Dividend Reinvestment Option14,39,040 units of Rs.10 each purchased during the year 6.12 -
Birla Cash Plus-Institutional Premium Plan-Dividend Reinvestment4,49,19,602 units of Rs.10 each purchased during the year 45.01 -(23,01,92,572 units of Rs.10 eachpurchased and sold during the year)
Deutsche Bank Insta Cash Plus Fund-Institutional Plan-Daily Dividend Option4,49,19,671 units of Rs.10 each purchased during the year 45.01 -(1,79,90,963 units of Rs.10 eachpurchased and sold during the year)
DSP Merill Lynch Mutual Fund-Top 100 Equity Fund-Dividend Reinvestment20,29,221 units of Rs.10 each purchased during the year 5.00 -
HDFC Mutual Fund-Growth Fund-Dividend Reinvestment20,43,235 units of Rs.10 each purchased during the year 5.00 -
HDFC Core & Satellite Fund-Dividend Reinvestment Option25,63,708 units of Rs.10 each purchased during the year 5.00 -(63,67,622 units of Rs.10 eachpurchased and sold during the year)
HSBC Advantage India Fund-Dividend Reinvestment Option47,18,895 units of Rs.10 each purchased during the year 5.00 -
HSBC Midcap Equity Fund-Dividend Reinvestment Option29,34,290 units of Rs.10 each purchased during the year 5.00 -(1,24,56,414 units of Rs.10 eachpurchased and sold during the year)
Carried forward 121.14 1174.27 - 918.42
96
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
50,93,541 units of Rs.10 each purchased during the year 11.04 -
Tata Mutual Fund-Liquid Super High Investment Fund-Daily Dividend
1,21,172 units of Rs.1000 each purchased during the year 13.50 -(10,91,470 units of Rs.1000 each
purchased and sold during the year)
Carried forward 293.29 1174.27 11.03 918.42
97
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Unit Trust of India-Money Market Fund-Dividend Reinvestment2,58,24,074 units of Rs.10 each purchased during the year 45.01 -(5,78,10,780 units of Rs.10 eachpurchased and sold during the year)
Prudential ICICI-Emerging Star Fund23,49,624 units of Rs.10 each purchased during the year 5.00 -(1,22,52,721 units of Rs.10 eachpurchased and sold during the year)
Reliance Equity Opportunities Fund-Dividend Reinvestment58,72,927 units of Rs.10 each purchased during the year 10.00 -(84,47,295 units of Rs.10 eachpurchased and sold during the year)
Franklin India Flexi Cap Fund32,39,855 units of Rs.10 each purchased during the year 5.57 -(1,93,11,563 units of Rs.10 eachpurchased and sold during the year)
SBI Multi Cap Fund35,81,662 units of Rs.10 each purchased during the year 5.00 -(1,00,00,000 units of Rs.10 eachpurchased and sold during the year)
LIC Mutual Fund Liquid Plan-Daily Dividend Option12,03,23,439 units of Rs.10 each purchased during the year 131.77 -(39,72,55,463 units of Rs.10 eachpurchased and sold during the year)
DSP Merrill Lynch-T.I.G.E.R. Fund-Diviend Reinvestment55,62,480 units of Rs.10 each purchased during the year 10.00 -(57,37,617 units of Rs.10 eachpurchased and sold during the year)
Kotak -30 Dividend Reinvestment15,30,878 units of Rs.10 each purchased during the year 5.00 -(40,69,712 units of Rs.10 eachpurchased and sold during the year)
DSP Merrill Lynch Liquid Fund-Institutional-Daily Dividend Option9,75,064 units of Rs.1000 each purchased during the year 97.52 -(26,80,525 units of Rs.1000 eachpurchased and sold during the year)
Prudential ICICI-Super Institutional-Liquid Plan-Daily Dividend Option4,50,07,540 units of Rs.10 each purchased during the year 45.01 -(19,01,36,251 units of Rs.10 eachpurchased and sold during the year)
Kotak Mutual Fund-Fixed Maturity Plan2,00,00,000 units of Rs.10 each purchased during the year 20.00 -
ING Vysya Mutual Fund-Fixed Maturity Plan2,50,00,000 units of Rs.10 each purchased during the year 25.00 -
Tata Mutual Fund-Fixed Maturity Plan2,00,00,000 units of Rs.10 each purchased during the year 20.00 -
718.17 11.03
Less: Provision for diminution in value 2.30 -
715.87 11.03
Carried forward 1890.14 929.45
98
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule F (Contd.)Brought forward 1890.14 929.45C) Investments in Integrated Joint Ventures:
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule GCurrent Assets, Loans and Advances:Current Assets:
Interest accrued on investments 17.26 3.95Inventories:
Stock-in-trade, at cost or net realisable value whichever is lower:Raw materials 169.55 139.74Components 100.48 76.95Construction materials 4.92 4.28Stores, spare parts and loose tools 48.43 45.61Finished goods 190.42 252.23
513.80 518.81
Work-in-Progress:Manufacturing work-in-progress at cost or
net realisable value whichever is lower 258.20 353.43
Construction and Project related work-in-progressAt cost 933.69 752.16At estimated realisable value on sale 7208.71 6543.40
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Advances recoverable in cash or in kind (See Note No.19) 1483.70 1412.16Balance with customs, port trust, etc. 47.94 34.11Lease receivables - 0.19
Considered doubtful:
Deferred credit against sale of ships 18.55 18.19Advances recoverable in cash or in kind 49.12 44.78
1979.30 1737.58Less: Provision for doubtful loans and advances 67.67 62.97
1911.63 1674.61
9536.52 8795.41
As at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule HCurrent Liabilities and Provisions:Liabilities:
Acceptances 75.49 70.65Sundry creditors:Due to: Subsidiary Company 172.08 228.48
Small Scale Industries 36.34 35.55Others (See Note No.10) 2837.86 2626.50
3046.28 2890.53
Due to customers:Progress bills raised 9963.79 6654.59Less: Construction and Project related work-in-progress 9022.95 6307.80
[At cost: Rs.758.43 crore (Previous year Rs.173.43 crore) 940.84 346.79At estimated realisable value: Rs.8264.52 crore(Previous year Rs.6134.37 crore)]
Advances from customers 1800.29 1403.82Items covered by Investor Education and Protection Fund:
(See Note No.47)Unpaid dividend 9.34 9.60Unpaid matured deposits 0.61 0.90Unpaid matured debentures/bonds 2.90 4.22Interest accrued on bonds 0.09 0.13
12.94 14.85Due to Directors (net) 10.68 8.73Interest accrued but not due on loans 8.12 22.41Pension payable under Voluntary Retirement-cum-Pension Schemes 1.61 3.04
(payable within one year:Rs.1.11 crore)
Carried Forward 5896.25 4760.82
101
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsAs at 31-3-2006 As at 31-3-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule H (Contd.)Brought forward 5896.25 4760.82
Provisions for:
Current Taxes 368.56 321.17Tax on Fringe Benefits 21.67 -Proposed dividend 302.25 227.37Additional tax on dividend 42.39 31.89Gratuity 0.31 0.29Leave encashment 123.86 104.30Pension scheme 92.92 78.34Other Provisions (See Note No.28) 63.41 32.39
1015.37 795.75
6911.62 5556.57
As at 31-3-2006 As at 31-3-2005
Rs.crore Rs.croreSchedule IMiscellaneous expenditure(to the extent not written off or adjusted)Voluntary Retirement-cum-Pension Schemes/Voluntary Retirement Schemes 21.98 39.89
(a) Claims against the Company not acknowledged as debts 48.05 95.98(b) Sales tax liability that may arise in respect of matters in appeal 61.18 82.99(c) Excise duty / Service Tax liability that may arise in respect of 16.86 13.12
matters in appeal/challenged by the Company in writ
(d) Income tax liability (including penalty) that may arise in respect
of which the Company is in appeal 0.16 0.16
(e) Guarantees given on behalf of Subsidiary Companies 6.95 61.07
(f) Guarantees given on behalf of Associate Companies 91.53 129.42
(g) Guarantees given on behalf of others - 11.21
Notes:
1. The Company does not expect any reimbursements in respect of the above contingent liabilities.
2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings.
3. In respect of matters at (e) and (f), the cash outflows, if any, could generally occur during the next three years, being the period over which thevalidity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of theborrowing to which the guarantees relate.
102
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of Accounts2005-2006 2004-2005
Rs.crore Rs.croreSchedule K
Sales & Service:
Manufacturing, trading and property development activity 4198.02 3393.93
Construction and project related activity 10392.03 9636.53
Servicing 114.73 89.72
Commission 81.96 50.72
Compensation, engineering and service fees 96.94 83.66
14883.68 13254.56
2005-2006 2004-2005
Rs.crore Rs.croreSchedule L (i)
Other Operational Income:
Income from hire of plant and machinery 2.73 6.81
Commercial leadership fees received from Integrated Joint Ventures 4.86 13.21
Technical fees 15.20 2.26
Company’s share in profit of Integrated Joint Ventures (net of tax) 6.44 19.10(See Note No.18)
Freight and pumping charges for ready mix concrete 80.93 65.56
110.16 106.94
2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule L (ii)
Other Income:
Dividend income from long term investments:
Investments in Subsidiary companies 67.22 60.16
Trade investments 12.30 11.30
Other investments 2.49 1.14
82.01 72.60
Income from current investments in mutual funds 78.13 0.20
Lease rental 11.92 14.11
Profit on sale of current investments (net) - 0.49
Profit on sale of long term investments (net) [See Note No.14(i)] 145.14 373.18
Profit on sale of fixed assets (net) 4.12 17.91
Consideration for transfer of marketing function - 8.65
Gain on extinguishment of debt [See Note No.14(ii)] 1.01 3.05
Miscellaneous income 105.51 93.32
Unclaimed credit balances 7.71 8.02
435.55 591.53
103
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of Accounts2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule MManufacturing, Construction and Operating Expenses:Raw materials and components consumed 2939.49 3534.20Add: Purchase of trading goods 1145.80 847.13
4085.29 4381.33Less: Scrap sales 43.41 42.51
4041.88 4338.82Construction materials 3003.76 2035.94Sub-contracts 3270.01 2990.95Stores, spares and tools 367.57 514.75Direct expenses on jobs 331.87 266.55
11015.09 10147.01(Increase) / Decrease in manufacturing and trading stocks:
118.38 (86.84)Value of materials,tools,work-in-progress and finished goods
transferred on sale of undertaking (15.14) -Excise duty 23.10 9.79Power & fuel 221.50 189.44Royalty and technical know-how fees 8.34 6.21Packing and forwarding 57.92 56.13Hire charges - Plant & machinery and others 117.81 128.27Repairs to:
Plant and machinery 33.72 19.01Buildings 9.61 5.63
43.33 24.64
11590.33 10474.65
2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule NStaff Expenses:Salaries, wages and bonus 622.20 546.16Contribution to and provision for:
Provident funds and pension fund 56.95 48.31Superannuation/Pension schemes (including provision of
Rs.14.58 crore; previous year Rs.17.25 crore) 33.06 34.36Gratuity funds
(including provision of Rs.0.02 crore; previous year Rs.0.04 crore) 6.97 17.74Leave encashment 19.85 10.23
116.83 110.64Welfare and other expenses 151.00 107.71
890.03 764.51
104
Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of Accounts2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.croreSchedule OSales, Administration and Other Expenses:Rent (includes lease rental Rs.31.16 crore; previous year Rs.35.17 crore) 96.57 81.99Rates and taxes 37.99 38.71Packing and forwarding 58.25 48.95Travelling and conveyance 240.10 204.90Directors’ fees 0.26 0.24Telephone, postage and telegrams 42.53 39.62Advertising and publicity 29.97 29.54Stationery and printing 20.93 19.98Insurance 68.32 86.31Power and fuel 13.25 12.19Repairs to buildings 7.28 5.23Commission:
Distributors and agents 29.79 28.68Employees and others 7.05 11.05
36.84 39.73Bank charges 41.83 33.06General repairs and maintenance 92.99 83.22Professional fees 124.58 75.17Miscellaneous expenses 84.09 77.09Provision for doubtful debts and advances (net) 39.89 99.88Provision for foreseeable losses on construction contracts 29.99 41.04Bad debts and advances written off 74.52 80.56Less:Provision for doubtful debts and advances written back 62.61 74.50
11.91 6.06Provision for diminution in value of investments 1.65 -Loss on sale of current investments (net) 17.10 -Loss on reassumption of debt (See Note No.15) 55.91 -Discount on sales 31.68 37.45Other Provisions (See Note No.28) 33.04 17.59
130.54 87.76Less: (i) Received on inter-corporate deposits, from subsidiary and
associate companies, customers and others (tax deducted 35.48 24.84at source Rs.1.43 crore; previous year Rs.1.96 crore)
(ii) Income from long term investments:Interest on debentures, bonds and Government Securities 17.37 5.56(tax deducted at source Rs.40532; previous year Rs.0.01 crore)
(iii) Income from current investments:Interest on debentures, bonds, Government Securities andCommercial paper (tax deducted at source Rs.Nil; 2.62 3.37previous year Rs.Nil)
55.47 33.77
75.07 53.99
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Schedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedules forming part of AccountsSchedule QSIGNIFICANT ACCOUNTING POLICIES1. Basis of Accounting
The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accountingprinciples [“GAAP”] except for the revaluation of certain fixed assets, and in compliance with the Accounting Standards referred to in Section211(3C) and other requirements of the Companies Act, 1956. However, certain escalation and other claims, which are not ascertainable /acknowledged by customers, are not taken into account.
The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptionsthat affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relatingto contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of fixed assets and intangibleassets, provision for doubtful debts / advances, future obligations in respect of retirement benefit plans, etc. Actual results could differ from theseestimates.
2. Revenue Recognition(a) Sales and service include excise duty and adjustments made towards liquidated damages, price variation and charges paid for discounting
of receivables arising from construction / project contracts on a non-recourse basis, wherever applicable.
(b) Revenue is recognised based on the nature of activity when consideration can be reasonably measured and there exists reasonablecertainty of its recovery.
(i) Revenue from sale of goods is recognised when the substantial risks and rewards of ownership is transferred to the buyer under theterms of the contract.
(ii) Revenue from construction / project related activity and contracts for supply / commissioning of complex plant and equipment isrecognised as follows:
a) Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with thecustomer
b) Fixed price contracts received up to March 31, 2003: Contract revenue is recognised by applying percentage of completion to thecontract value. Percentage of completion is determined as follows:i in the case of item rate contracts, as a proportion of the progress billing to contract value; andii in the case of other contracts, as a proportion of the cost incurred-to-date to the total estimated cost
c) Fixed price contracts received on or after April 1, 2003: Contract revenue is recognised by adding the aggregate cost andproportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of costincurred-to-date to the total estimated contract cost.
Full provision is made for any loss in the period in which it is foreseen.
(iii) Revenue from property development activity is recognised when all significant risks and rewards of ownership in the land and / orbuilding are transferred to the customer and a reasonable expectation of collection of the sale consideration from the customer exists.
(iv) Revenue from service related activities is recognised using the proportionate completion method
(v) Commission income is recognised as and when the terms of the contract are fulfilled.
(vi) Revenues from construction / project related activity and contracts executed in Joint Ventures under work-sharing arrangement [beingJointly Controlled Operations, in terms of Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”], isrecognised on the same basis as similar contracts independently executed by the Company.
(vii) Other income is accounted on accrual basis as and when the right to receive arises.
(c) Profit / Loss on contracts executed by Integrated Joint Ventures under profit-sharing arrangement [being Jointly Controlled Entities, in termsof Accounting Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”], is accounted as and when the same is determined bythe Joint Venture. Revenue from services rendered to such Joint Ventures is accounted on accrual basis.
3. Research and DevelopmentRevenue expenditure on research and development is charged under respective heads of account. Capital expenditure on research anddevelopment is included as part of fixed assets and depreciated on the same basis as other fixed assets.
4. Retirement BenefitsProvisions for / contributions to retirement benefit schemes are made as follows:a) Provident fund on actual liability basis.b) Superannuation / Pension schemes on the basis of actual liability/actuarial valuation.c) Gratuity based on actuarial valuation.d) Leave encashment benefit on retirement on actuarial valuation basis.
Liability in respect of medical benefits provided to retired employees (net of reimbursements received from the insurance company) is accountedon cash basis.
5. Fixed AssetsFixed assets are stated at original cost net of tax / duty credits availed, if any, less accumulated depreciation, accumulated amortization andcumulative impairment and those which were revalued as on October 1,1984 are stated at the values determined by the valuers less accumulateddepreciation, accumulated amortization and cumulative impairment. Assets acquired on hire purchase basis are stated at their cash values.Specific know-how fees paid, if any, relating to plant and machinery is treated as part of cost thereof.Revenue expenses incurred in connection with project implementation insofar as such expenses relate to the period prior to the commencementof commercial production are treated as part of project cost and capitalised.Own manufactured assets are capitalised at cost including an appropriate share of overheads.(Also refer to policy on Leases, Borrowing Costs, Impairment of Assets and Foreign Currency Transactions infra.)
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6. Leasesa) Lease transactions entered into prior to April 1, 2001:
Assets leased out are stated at original cost. Lease equalisation adjustment is the difference between capital recovery included in the leaserentals and depreciation provided in the books.Lease rentals in respect of assets acquired under leases are charged to Profit and Loss Account.
b) Lease transactions entered into on or after April 1, 2001:i. 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 the fair value or the present value of minimum leasepayments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interestcost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
ii. Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classifiedas operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.
iii. Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Leaseincome is recognised over the period of the lease so as to yield a constant rate of return on the net investment in the lease.
iv. Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term.v. Initial direct costs relating to assets given on finance leases are charged to Profit and Loss Account.(Also refer to policy on Depreciation, infra)
7. DepreciationI) Owned assets
a) Revalued Assets:Depreciation is provided for based on straight line method on the values and at the rates given by the valuers. The difference betweendepreciation provided based on revalued amount and that on historical cost is transferred from Revaluation Reserve to Profit and LossAccount.
b) Assets carried at historical cost:Depreciation on assets carried at historical cost is provided on the written down value basis on assets acquired up to March 31, 1968(at the rates prescribed under Schedule XIV to the Companies Act, 1956) and on straight line basis on assets acquired subsequently(at the rates prevailing at the time of their acquisition on assets acquired up to September 30, 1987 and at the rates prescribed underSchedule XIV on assets acquired after that date). However, in respect of the following asset categories, the depreciation is providedat higher rates in line with their estimated useful life.
Category Rate of Depreciation (% p.a.)Furniture and Fixtures 10.00Office Equipments (under Plant & Machinery) 6.67Air conditioning and Refrigeration Equipment (under Plant & Machinery) 8.33Laboratory and Canteen Equipment (under Plant & Machinery) 12.50Motor cars 14.14
c) Depreciation for additions to /deductions from owned assets is calculated pro-rata from / to the month of additions / deductions. Extrashift depreciation is provided on a location basis.
d) Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the assetis allocated over its remaining useful life.
II) Leased assetsi. Lease transactions entered into prior to April 1, 2001:
Assets given on lease are depreciated over the primary period of the lease. Accordingly, while the statutory depreciation on suchassets is provided for on straight line method as per Schedule XIV to the Companies Act, 1956, the difference is adjusted throughlease equalisation and lease adjustment account.
ii. Lease transactions entered into on or after April 1, 2001:Assets acquired under finance leases are depreciated on a straight line basis over the lease term. Where there is reasonable certaintythat the Company shall obtain ownership of the assets at the end of the lease term, such assets are depreciated at the ratesprescribed under Schedule XIV to the Companies Act, 1956 or at the higher rates adopted by the Company for similar assets.
8. Intangible Assets and AmortisationIntangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 “Intangible Assets” issued by the Institute ofChartered Accountants of India and are amortised as follows:i. Leasehold land: Over the period of lease.ii. Jetty: Over the period of the concession agreement signed with the appropriate authority such that the cumulative amortisation is not less
than the cumulative rebate availed by the Company.iii. Specialised software: Over a period of three yearsiv. Lump sum fees for technical know-how: Over a period of six years in case of foreign technology and three years in the case of indigenous
technologyAmortisation on impaired assets is provided by adjusting the amortisation charges in the remaining periods so as to allocate the asset’s revisedcarrying amount over its remaining useful life.
9. Impairment of AssetsAs at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:a) the provision for impairment loss, if any, required; or
b) the reversal, if any, required of impairment loss recognised in previous periods.
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Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.Recoverable amount is determined:a) in the case of an individual asset, at higher of the net selling price and the value in use;b) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at higher of the cash generating
unit’s net selling price and the value in use.(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at theend of its useful life)
10. InvestmentsLong term investments including interests in incorporated Jointly Controlled Entities, are carried at cost, after providing for any diminution invalue, if such diminution is of permanent nature. Current investments are carried at lower of cost or market value. The determination of carryingamount of such investments is done on the basis of specific identification. Investments in Integrated Joint Ventures are carried at cost net ofadjustments for Company’s share in profits or losses as recognised.
11. InventoriesInventories are valued after providing for obsolescence, as under:a) Raw materials, components, construction materials, stores, spares and loose tools at lower of weighted average cost or net realisable
value.b) Work-in-progress
i) Work-in-progress (other than project and construction-related) at lower of cost including related overheads or net realisable value.ii) Project and construction-related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at
realisable value thereafter.In the case of qualifying assets, cost includes applicable borrowing costs vide policy relating to Borrowing Costs,
c) Finished goods at lower of weighted average cost or net realisable value. Cost includes related overheads and excise duty paid / payableon such goods.
d) Property development land at lower of cost or net realisable value.12. Securities Premium Account
a) Securities premium includes:i. The difference between the market value and the consideration received in respect of shares issued pursuant to Stock Appreciation
Rights Scheme.ii. The discount allowed, if any, in respect of shares allotted pursuant to Stock Options Scheme.
b) The following expenses are written off against securities premium account:i. Issue expenses pertaining to sharesii. Issue expenses pertaining to debentures / bonds, net of tax.iii. Premium on redemption of debentures / bonds, net of tax.
13. Borrowing CostsBorrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of suchasset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial periodof time to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.
14. Employee Stock Ownership SchemesIn respect of stock options granted pursuant to the Company’s Stock Option Schemes, the intrinsic value of the options (excess of market priceof the share over the exercise price of the option) is treated as discount and accounted as employee compensation cost over the vesting period.
15. Miscellaneous ExpenditureLump sum compensation paid under Voluntary Retirement-cum-Pension Schemes are amortised over a period of five years. The future pensionsunder Voluntary Retirement-cum-Pension Schemes are amortised over the period for which pensions are payable.
16. Foreign Currency Transactions, Foreign Operations, Forward Contracts and Derivativesa) The reporting currency of the Company is the Indian Rupee.b) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the
transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items whichare carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company’s monetaryitems at the closing rate are:i. adjusted in the cost of fixed assets specifically financed by the borrowings to which the exchange differences relateii. adjusted in the cost of fixed assets specifically financed by borrowings contracted after April 1, 2004 and to which the exchange
differences relate, provided the assets are acquired from outside Indiaiii. recognised as income or expense in the period in which they arise, in cases other than (i) and (ii) above.
c) Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows:i. Closing inventories at rates prevailing at the end of the year.ii. Fixed assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are
at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated.iii. Other assets and liabilities at rates prevailing at the end of the year.iv. Net revenues at the average rate for the year.
d) Financial statements of foreign operations comprising jobs contracted on or after April 1, 2004, are treated as Integral operations andtranslated in the same manner as foreign currency transactions, as described above. Exchange differences arising on such translation arerecognised as income or expense of the period in which they arise.
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e) Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments or of highly probableforecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on suchcontracts are recognised in the period in which they arise and the premium paid/received is accounted as expense/income over the periodof the contract.Cash flows arising on account of roll over/cancellation of forward contracts are recognised as income/expense of the period in line with themovement in the underlying exposures.
f) Derivative transactions are considered as off-balance sheet items and cash flows arising therefrom are recognised in the books of accountas and when the settlements take place in accordance with the terms of the respective contracts over the tenor thereof.
Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policieshave been followed for segment reporting:a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment revenue.b) Expenses that are directly identifiable with/allocable to segments are considered for determining the Segment Result. Expenses which
relate to the Company as a whole and not allocable to segments are included under “Unallocable Corporate Expenditure.”c) Income which relates to the Company as a whole and not allocable to segments is included in “Unallocable Corporate Income”.d) Segment Result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Company.e) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and
liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocableassets mainly comprise trade investments in Subsidiaries and Associate companies that constitute or relate to the portfolio of theCompany’s core/thrust areas of business such as infrastructure development and software solutions. Unallocable liabilities includemainly loan funds, provisions for employee retirement benefits and proposed dividend.
ii. Inter-segment transfer pricingSegment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between thesegments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.
18. Taxes on IncomeTax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisionsof the Income Tax Act, 1961, and based on the expected outcome of assessments/appeals.Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using thetax rates and laws enacted or substantively enacted as on the Balance Sheet date.Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
19. Accounting for Interests in Joint VenturesInterests in Joint Ventures are accounted as follows:
Type of Joint Venture Accounting treatmentJointly Controlled Operations Company’s share of revenues, common expenses, assets and liabilities are included in Revenues,
Expenses, Assets and Liabilities respectively.Jointly Controlled Assets Share of the Assets, according to nature of the assets, and share of the Liabilities are shown as part
of Gross Block and Liabilities respectively. Share of expenses incurred on maintenance of the assetsis accounted as expense. Monetary benefits, if any, from use of the assets are reflected as income.
Jointly Controlled Entities (i) Integrated Joint Ventures:a) Company’s share in profits or losses of Integrated Joint Ventures is accounted on
determination of the profits or losses by the Joint Ventures.b) Investments in Integrated Joint Ventures are carried at cost net of Company’s share in
recognised profits or losses.(ii) Incorporated Jointly Controlled Entities:
a) Income on investments in incorporated Jointly Controlled Entities is recognised when theright to receive the same is established.
b) Investment in such Joint Ventures are carried at cost after providing for any permanentdiminution in value.
Joint Venture interests accounted as above, other than investments in Incorporated Jointly Controlled Entities, are included in the segments towhich they relate.
20. Provisions, Contingent Liabilities and Contingent AssetsProvisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event,b) a probable outflow of resources is expected to settle the obligation, andc) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that thereimbursement will be received.Contingent liability is disclosed in case of
a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation,b) a present obligation when no reliable estimate is possible, andc) a possible obligation arising from past events where the probability of outflow of resources is not remote.
Contingent Assets are neither recognised, nor disclosed.Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
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Notes forming part of AccountsNotes forming part of AccountsNotes forming part of AccountsNotes forming part of AccountsNotes forming part of Accounts1. a) Of the Equity Shares of Rs.2 each comprised in the subscribed and paid-up capital of the Company :
i) 9,19,941 (previous year 9,19,941) Equity shares were allotted as fully paid-up, pursuant to contracts, without payment being received in cash.
ii) 1,70,64,871 (previous year 1,70,64,871) Equity shares were issued as bonus shares by way of capitalisation of General Reserve:Rs.2.35 crore (previous year Rs.2.35 crore), Share Premium: Rs.0.97 crore (previous year Rs.0.97 crore) and Capital RedemptionReserve: Rs.0.10 crore (previous year Rs.0.10 crore).
iii) 78,96,749 (previous year 56,10,253) Equity shares were allotted as fully paid-up on exercise of grants under Employee StockOwnership Scheme
iv) 51,75,099 (previous year Nil) Equity shares were allotted as fully paid up pursuant to exercise of options by bondholders of 5 Year1.25% US$ denominated Foreign Currency Convertible Bonds convertible into International Global Depository Shares representingequity shares of the Company.
b) Options outstanding as at the end of the year on unissued share capital:
Number of equity sharesto be issued as fully paid
Particulars As at 31-3-2006 As at 31-3-2005As at 31-3-2005As at 31-3-2005As at 31-3-2005As at 31-3-2005
On conversion of 5 Year 1.25% US$ Foreign Currency Convertible Bonds 8,76,741 60,51,840
On conversion of 5 year zero coupon 17,94,916 -Japanese Yen Foreign Currency Convertible Bonds
Employee Stock Options granted and outstanding 39,58,827 56,97,803
c) The Directors recommend payment of final dividend of Rs.22 per equity share of Rs.2 each on the number of shares outstanding as on therecord date. Provision for final dividend has been made in the books of account for 13,73,85,777 shares outstanding as on March 31, 2006amounting to Rs.302.25 crore.
2. Stock Ownership Schemes
a) The grant of options to the employees under the Stock Options Scheme is on the basis of their performance and other eligibility criteria. Theoptions are vested over a period of four years, subject to fulfilment of certain conditions.
b) The details of the grants under the aforesaid Scheme under various series are summarised below:
10 Options exercised duringthe year for which sharesare allotted 1875 395246 20075 1840892 435684 1012812 443535 986339 719673 672014 665654 615083
11 Options granted andoutstanding at the endof the year - 1875 8600 28675 360703 798500 389561 836353 1298417 2051662 1901546 1980738
of which –Options vested - 1875 8600 28675 4500 54075 13250 51438 11450 48711 9502 14941Options yet to vest - - - - 356203 744425 376311 784915 1286967 2002951 1892044 1965797
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)3. Secured Redeemable Non-Convertible Debentures:
Particulars Face Value Date of Allotment Amount Interest Redemption(Rs.crore)
Fixed Rate Rs.1,00,00,000 December 31, 1999 75 12.08% p.a. payable Each debenture will be redeemed atDebentures each annually face value at the end of the 7th year
from the date of allotment.
Note: The Company retains the option to purchase the Debentures in the secondary markets, and cancel, hold or re-issue the same atsuch price and on such terms as the Company may deem fit, or as permitted under the Company Law.
Security: The Debentures are secured by way of first charge, having pari passu rights, as the case may be, on the immovable / movableproperties (other than plant & machinery, stocks & spares) at certain locations, both present and future.
4. a) The following loans are secured by a first mortgage on the Company’s immovable properties at certain locations and / or by hypothecationof movables at those locations (save and except book debts) both present and future, having pari passu rights, subject to prior charges, onspecific assets in favour of the Company’s bankers:
i) Loans in foreign currencies equivalent to Rs.47.57 crore (forming part of Loans from Banks – ‘Other Loans’) are secured byhypothecation and / or mortgage of the assets at certain locations.
ii) Loans of Rs.223.08 crore (forming part of ‘Loans from Others’)
b) Cash Credit facilities including Working Capital Demand Loans from banks are secured by hypothecation of stocks, stores and book debts.The charge on these assets to the extent of Rs.585.92 crore also extends to bank guarantees as on March 31, 2006.
5. a) During the year, the Company has issued at par, 5-Year Zero Coupon Japanese Yen (JPY) denominated Foreign Currency ConvertibleBonds (“FCCB”) aggregating to JPY 11.57 billion (INR 435.38 crore as on the date of issue) comprising 1157 bonds of JPY 10 million eachto finance capital expenditure and acquisitions. The bond-holders have an option of converting these bonds into International GlobalDepository shares at an initial conversion price of Rs.2498.45 per share, at any time on or after March 9, 2006 upto January 21, 2011. TheBonds are redeemable on January 28, 2011 at 103.30 per cent of their principal amount, unless previously converted, redeemed orpurchased and cancelled.
b) Expenses incurred in connection with the issue of FCCB totaling to Rs.3.51 crore and the redemption premium of Rs.0.36 crore, being thepro-rata charge for the year, have been adjusted net of tax against Securities Premium Account.
c) The bond-holders have not exercised their option of converting into International Global Depository shares as on March 31, 2006.
6. a) Balances with Non-scheduled banks represent the balances with Indian banks classified as non-scheduled banks by the Reserve Bank ofIndia and with all overseas branches of foreign banks. The balances with Non-Scheduled banks held in:
Maximum amount outstandingAs at As at at any time during
31-3-2006 31-3-2005 2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.crorei) Current Accounts
Abu Dhabi Commercial Bank, Abu Dhabi 0.09 - 2.36 -Abu Dhabi Commercial Bank, UAE 4.40 2.22 4.40 8.61Abu Dhabi Islamic Bank , UAE 0.57 2.16 4.41 11.93Arab Bank PLC, Amman - 0.08 0.08 1.44Arab Bank PLC, Bahrain 3.44 0.90 7.45 2.26Arab Bank PLC, Bahrain - 0.46 0.46 4.63Arab Bank PLC, Bahrain - 3.88 - 5.42Arab Bank, Jordan 3.33 0.97 17.21 2.26Bank of Baroda (Kenya) Limited, Kenya - 0.38 0.38 1.54Bank of Bhutan 10.59 - 14.92 -Bank of Commerce & Development, Libya 0.36 - 0.36 -Bank of Ceylon, Colombo, Sri Lanka - 0.01 0.01 0.01Bank of Foreign Economic Affairs, CIS, Moscow - - - -
(as at 31-3-2006 Rs.Nil, as at 31-3-2005 Rs.12,000; andmaximum outstanding in 2005-2006 Rs.12,000 andin 2004-2005 Rs.12000)
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Maximum amount outstanding
As at As at at any time during
31-3-2006 31-3-2005 2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.crore
Bank of Foreign Trade of Russian Federation (as at 31-3-2006Rs.2405 and maximum outstanding in 2005-2006 Rs.10,894) - - - -
Bank of Nova Scotia, Barbados 8.47 - 15.42 -Bank of Thimpu, Bhutan (as at 31-3-2006: Rs.Nil and - - - -
as at 31-3-2005 Rs.1,095) (maximum outstanding in 2005-2006Rs.1095 and in 2004-2005 Rs.10,435)
Bank Tuanalem, Kazakhstan 0.03 0.01 0.04 0.01BFTRF US$ Moscow Office, Moscow (as at 31-3-2006 Rs.Nil and - - - -
as at 31-3-2005 Rs.11,735) (maximum outstanding in 2005-2006Rs.11,735 and in 2004-2005 Rs.11,735)
Citibank, Dubai - 0.02 0.02 0.10Citibank, New York - 1.67 1.67 622.24Citibank, Tanzania 0.22 - 0.29 0.05Citibank, Tokyo (USD) 3.44 - 107.65 -Citibank, Tokyo (JPY) 0.14 - 235.56 -Deutsche Bank, Singapore 2.31 0.02 2.31 7.53Hakrin Bank NV, (USD) Surinam - 0.17 0.17 0.17Hakrin Bank NV, (Guilder) Surinam (as at 31-3-2006 Rs.2,655, - - 0.35 0.05
as at 31-3-2005 Rs.12,000)Hongkong & Shanghai Banking Corporation (RMD), China 0.02 0.08 0.13 0.21Hongkong & Shanghai Banking Corporation (USD), China 0.17 0.14 0.24 0.14Hongkong & Shanghai Banking Corporation, Abu Dhabi - 0.46 - 27.52Hongkong & Shanghai Banking Corporation, Dubai - 0.08 - 44.75Hongkong & Shanghai Banking Corporation, Singapore - - - 40.50HSBC Bank Middle East Limited, Abu Dhabi 5.93 - 33.40 -HSBC Bank Middle East Limited, Dubai 0.20 - 5.97 -HSBC Bank, UAE 1.16 - 6.23 -Mashreq Bank, Dubai (0.30) 1.42 16.46 10.09Mashreq Bank, UAE 0.05 - 22.82 -National Bank of Kuwait, Kuwait 0.32 0.85 21.06 25.56Nepal Bank Limited, Kathmandu, Nepal - - - 2.72Nepal Indo Suez Bank, Kathmandu, Nepal - 0.05 0.05 0.19Nepal Investment Bank Limited, Nepal 0.01 ----- 2.72 -Rafidian Bank, Abu Dhabi - 8.99 8.99 8.99Rafidian Bank, Iraq 9.17 ----- 9.17 -Standard Chartered Bank, Dubai 2.69 5.65 25.30 25.30Standard Chartered Bank, Tanzania 0.15 0.12 3.50 1.09Standard Chartered Bank, Malaysia 1.08 ----- 1.08 -State Bank of Mauritius, Mauritius - 0.96 0.96 4.00Union Bank of Bhutan, Jongkhar, Bhutan - 7.24 7.24 14.92Union National Bank, Abu Dhabi 2.70 1.13 36.08 2.32Uttara Bank Limited, Bangladesh 0.04 1.83 4.17 4.17
Total (i) 60.78 41.95
ii ) Call Deposits
a) Mashreq Bank, Dubai 0.77 0.76 0.77 0.76
b) Standard Chartered Bank, Dubai - 0.12 0.12 0.13
c) Arab Bank, Jordan (as at 31-3-2005 Rs.Nil; maximum - - - -outstanding in 2004-2005 Rs.767)
Total (ii) 0.77 0.88
112
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Maximum amount outstanding
As at As at at any time during
31-3-2006 31-3-2005 2005-2006 2004-2005
Rs.crore Rs.crore Rs.crore Rs.crore
iii ) Fixed DepositsDeutsche Bank, Singapore - 1.97 1.97 10.92Hongkong & Shanghai Banking Corporation, Abu Dhabi - 6.56 6.56 24.21Hongkong & Shanghai Banking Corporation, Dubai - 2.30 2.30 52.84Hongkong & Shanghai Banking Corporation, Singapore - - - 22.46HSBC Bank Middle East Limited, Abu Dhabi 3.35 ----- 20.68 -HSBC Bank Middle East Limited, Dubai - ----- 3.15 -HSBC Middle East Fixed Deposit Account, UAE 7.96 ----- 7.96 -Mashreq Bank, Dubai 116.96 84.82 176.45 87.54National Bank of Kuwait, Kuwait - 8.61 8.61 8.62Standard Chartered Bank, Malaysia 10.90 ----- 10.90 -Union National Bank, Abu Dhabi - 35.29 35.29 35.29
Total (iii) 139.17 139.55
Total (i) + (ii) + (iii) 200.72 182.38
b) Call deposit with Mashreq Bank, Dubai, UAE, Rs.0.77 crore is subject to an escrow arrangement duly approved by the Reserve Bank ofIndia, whereby the proceeds of the deposit, together with interest thereon, would be applied towards full and final settlement of loan takenfrom Rafidian Bank, Iraq, which is included under Unsecured Loans. Once the UN embargo against Iraq is lifted, the settlement would beeffected.
7. Bank balances include Rs.196.95 crore held abroad, being unconverted portion of the FCCB proceeds (previous year Rs.434.43 crore).
8. Loans and advances include:
i) amount due from an officer of the Company: Rs.0.04 crore (previous year Rs.0.06 crore). The maximum amount outstanding at any timeduring the year: Rs.0.06 crore (previous year Rs.0.06 crore).
ii) rent deposit with whole-time directors: Rs.0.07 crore (previous year Rs.0.06 crore). The maximum amount outstanding at any time duringthe year: Rs.0.09 crore (previous year Rs.0.08 crore).
iii) amount, including interest, due from the Managing Director and whole-time directors in respect of Housing Loan: Rs.1.13 crore (includinginterest accrued) (previous year Rs.1.36 crore). Maximum amount outstanding at any time during the year: Rs.1.36 crore (previous yearRs.2.47 crore).
9. Sundry creditors include overdue amounts (mainly unclaimed) of Rs.3.13 crore (including interest of Rs.0.58 crore) payable to Small Scale andAncillary Industries.
10. Sundry creditors – Others include Rs.12.25 crore (previous year Rs.19.50 crore), being contribution received from the employees of theCompany, some of its Subsidiary & Associate Companies, on behalf of L&T Employees Welfare Foundation Trust and held on account for it.
11. Sales and Service include Rs.23.74 crore (previous year Rs.82.25 crore) for price variations net of liquidated damages in terms of contracts withthe customers and receivable discounting charges.
12. Disclosures pursuant to Accounting Standard (AS) 7 (Revised):
Rs.crore
i) Contract revenue recognized for the year ended March 31, 2006 10392.03
ii) Aggregate amount of contract costs incurred and recognized profits (less recognized losses) up to March 31, 2006for all contracts in progress as at March 31, 2006 17165.35
iii) Amount of customer advances outstanding for contracts in progress as at March 31, 2006 1492.43
iv) Retention amounts due from customers for contracts in progress as at March 31, 2006 796.11
13. Profit on sale/transfer of businesses (net of tax) includes:
i) Gain of Rs.49.22 crore (tax: Nil) on sale of Dairy & Milk Processing Equipment Business under a Business Purchase Agreement withL&T-Niro Limited.
ii) Gain of Rs.20.53 crore (tax: Nil) on sale of Glass Container Business under a Business Transfer Agreement with Ace Glass ContainersLimited.
113
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)14. Other income for the year ended March 31, 2006 includes:
i) Profit on sale of long-term investments:
a) Gain of Rs.7 crore on sale of entire 50% holding in L&T-Niro Limited, in terms of the Share Purchase Agreement signed with Niro AS,Denmark.
b) Gain of Rs.127.83 crore on sale of 48% holding in L&T-John Deere Private Limited, in terms of the Share Purchase Agreement signedwith John Deere India Private Limited.
ii) Gain on extinguishment of debt of Rs.1.01 crore (previous year Rs.3.05 crore) represents excess of deferred sales tax loans extinguished(by way of prepayment in accordance with the scheme providing for such repayment) over the amount paid.
15. Loss on re-assumption of debt includes Rs.78.90 crore, being the cost of re-assumption of liability for sales tax deferment loans, pursuant tocertain divestments by the Company, net of a gain of Rs.22.99 crore arising on prepayment of part of the aforesaid liability.
16. The Company has reviewed the useful life of certain categories of fixed assets during the year. Consequently, depreciation rates have beenrevised resulting in additional charge of depreciation of Rs.13.29 crore and profit before tax for the year is lower to that extent.
17. During the year, the Company invested Rs.188 crore in specified securities under Section 54EC of the Income Tax Act, 1961 out of the incomereferred to in Notes 13 & 14 (i) and computed the provision for tax on the basis of exemption from Capital Gains Tax under that Section.
18. Disclosures in respect of Joint Ventures:
a) List of Joint Ventures
Sr. Name of Joint Venture Description of interest/ Proportion of Country ofNo. (Description of job) Ownership
5 Desbuild-L&T Integrated Joint Venture (Renovation ofJoint Venture US Consulate, Chennai) 0.49 # India
6 Bauer-L&T Diaphragm Integrated Joint Venture (Construction ofWall Joint Venture Diaphragm Wall for International Metro Civil
Contractors) 0.50 # India
7 Larsen & Toubro Limited- Integrated Joint Venture (Execution ofShapoorji Pallonji & Company Civil & associated works for EbeneLimited Joint Venture Cybercity Project, Mauritius 0.50 # Mauritius
8 Larsen & Toubro Limited- Integrated Joint Venture (Execution ofShapoorji Pallonji & Company Civil & associated works for Les PaillesLimited Joint Venture Exhibition Centre, Mauritius) 0.50 # Mauritius
9 L &T-HCC Joint Venture Jointly Controlled Operation(Four laning andstrengthening of existing two lane sectionsfrom 240 Km to 320 Km on NH2) - # India
10 Patel-L&T Consortium Jointly Controlled Operation(Hydro Electric Project) - # India
11 Consortium of Samsung Jointly Controlled OperationHeavy Industries Company (Execution of Vasai East Development project forLimited, Korea and L&T Oil & Natural Gas Corporation Limited) - # India
12 Consortium of Global Jointly Controlled OperationIndustries Offshore LLC, (Execution of Pipeline Replacement project forUSA and L&T Oil & Natural Gas Corporation Limited) - # India
13 Lurgi L&T KQKS Jointly Controlled OperationConsortium (Execution of Melaka Group 3 Lubricant
Base Oil Plant for Petronas) - # Malaysia
# Country of Incorporation not applicable as these are Unincorporated Joint Ventures
114
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)b) Financial interest in Jointly Controlled Entities Rs.crore
Sr. Company’s share of
No. Name of the Joint Venture Assets Liabilities Income Expenses Tax
Notes: i. Figures in brackets relate to previous year.
ii. Item Nos. 2 to 8 above are Integrated Joint Ventures
c) Contingent liabilities, if any, in relation to interests in Joint Ventures as on March 31, 2006 Rs.Nil (previous year Rs.Nil); and share inContingent Liabilities jointly with other venturers as on March 31, 2006 Rs.Nil (previous year Rs.Nil)
d) Share in Contingent Liabilities of Joint Ventures themselves for which the Company is contingently liable as on March 31, 2006: Rs.26.10crore (previous year Rs.21.10 crore)
e) Contingent Liabilities in respect of liabilities of other venturers of Joint Ventures as on March 31, 2006 Rs.Nil (previous year Rs.Nil)
f) Capital commitments, if any, incurred in relation to interests in Joint Ventures as on March 31, 2006 Rs.Nil (previous year Rs.Nil)
19. Advances recoverable in cash or in kind includes:
a) an interest-free loan of Rs.250 crore (previous year Rs.275 crore) to L&T Employees Welfare Foundation Trust to part-finance itsacquisition of the equity shares in the Company held by Grasim Industries Limited and its subsidiary aggregating to 15.73% of thesubscribed equity share capital of the Company. The loan is repayable in 9 years with a minimum repayment of Rs.25 crore in a year.
b) Rs.137.89 crore, being portfolio of financial assets (comprising lease/hire purchase receivables and term loans) purchased from L&TFinance Limited, a wholly owned subsidiary of the Company. The income from the portfolio is accounted as and when the cash flows arerealised, by using the implicit rate of discount at which the portfolio was acquired.
115
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)20. a) Sundry debtors (Unsecured, considered good) include the following amounts due from private limited companies in which the Directors of
the Company are Directors:Rs.crore
As at 31-3-2006 As at 31-3-2005
Sr. Name of the Company Outstanding Others Outstanding OthersNo. for more than for more than
6 months 6 months
1 L&T-Case Equipment Private Limited(outstanding for more than 6 months as at 31-3-2006 Rs.13,654) ----- ----- - 0.05
2 L&T-Demag Plastics Machinery Private Limited*(outstanding for more than 6 months Rs.Nil; as at 31-3-2005 Rs.11,744) ----- ----- - 0.56
4 L&T-Crossroads Private Limited (outstanding for more than 6 monthsRs.Nil; as at 31-3-2005 Rs.20,000) - - - -
b) Loans and advances – Unsecured and considered good, and Inter-Corporate deposits include the following amounts due from privatelimited companies in which the Directors of the Company are Directors:
Rs.crore
Sr. Advances Recoverable Inter-Corporate Deposits
No. Name of the Company As at As at As at As at31-3-2006 31-3-2005 31-3-2006 31-3-2005
* L&T-Demag Plastics Machinery Private Limited has become a public limited company w.e.f. July 11, 2005.
21. Particulars in respect of Loans and Advances in the nature of loans as required by the Listing Agreement:Rs.crore
Maximum outstandingName of the Company/Firm/Director Balance as at during
31-3-2006 31-3-2005 2005-2006 2004-2005
A Loans and advances in the nature of Loans given to Subsidiaries:1 Larsen & Toubro Infotech Limited 5.50 - 5.50 8.132 India Infrastructure Developers Limited 36.33 36.33 36.33 36.333 Bhilai Power Supply Company Limited 85.49 82.62 85.49 82.624 Larsen & Toubro LLC - - - 0.465 Tractor Engineers Limited - 3.00 3.00 3.006 L&T Finance Limited 35.63 - 35.63 -
Total 162.95 121.95
B Loans and advances in the nature of loans given to Associates:1 L&T-Case Equipment Private Limited 10.00 10.00 10.00 10.002 The Dhamra Port Company Limited - 0.58 0.58 0.583 Kakinada Seaports Limited - - - 0.30
Total 10.00 10.58
C Loans and advances in the nature of loans where repaymentschedule is not specified/is beyond 7 years:1 India Infrastructure Developers Limited [See Note (b) below] 36.33 36.33 36.33 36.332 Bhilai Power Supply Company Limited [See Note (c) below] 85.49 82.62 85.49 82.62
Total 121.82 118.95
D Loans and advances in the nature of loans where interest isnot charged or charged below bank rate:1 India Infrastructure Developers Limited [See Note (b) below] 36.33 36.33 36.33 36.332 Bhilai Power Supply Company Limited [See Note (c) below] 85.49 82.62 85.49 82.62
Total 121.82 118.95
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes:a) Loans to employees (including Directors) under various schemes of the Company (such as housing loan, furniture loan, education loan,
etc.) have been considered to be outside the purview of disclosure requirements.
b) The Company constructed a Captive Power Plant for being given on lease to Indian Petrochemicals Corporation Limited. India InfrastructureDevelopers Limited (IIDL), a wholly-owned subsidiary of the Company, was used as a Special Purpose Vehicle (SPV) to finance the leaseof the said power plant. The amount advanced to IIDL as above, to optimise its capital structure and to fund its cash flow gaps, would berepaid out of surpluses generated over the tenor of the lease. Accordingly, no repayment period has been prescribed in respect of theimpugned loan. Further, the amount has been granted as an interest-free loan, as IIDL is a wholly-owned subsidiary and is mandated toremain so over the lease tenor.
c) Bhilai Power Supply Company Limited is a special purpose vehicle (SPV) formed to build and operate a power plant at Bhilai. TheEngineering & Construction segment of the Company was to set up the power plant on turnkey basis. Pursuant to the agreement with theco-promoters of the project, the Company advanced certain monies to the SPV in order to place a security deposit with the MadhyaPradesh Electricity Board (MPEB), as part of the project terms. MPEB is obliged to refund the deposit together with interest at the StateBank of India’s rate for term deposits using 6-monthly rests. As MPEB did not sanction the escrow arrangement, the project did notmaterialise. Accordingly, the SPV has commenced action for recovery of the security deposit from MPEB. Pursuant to the interim directivesfrom the Supreme Court, MPEB has deposited a sum of Rs.27.66 crore with the Registrar General, Supreme Court on March 29, 2005.Pursuant to the recent directives from the Supreme Court in May 2006, a sum of Rs.27.66 crore deposited earlier with the Supreme Courtby MPEB is now payable to the SPV. The SPV is confident of securing and making over the monies to the Company.
22. Segment Reporting
a) Information about Business Segments (Information provided in respect of revenue items for the year ended March 31, 2006 and in respectof assets/liabilities as at March 31, 2006 – denoted as “CY” below, previous year denoted as “PY”)
i) Primary Segments (Business Segments):
Rs.crore
Particulars Engineering & Electrical &Construction Electronics Others Eliminations Total
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Rs.crore
Particulars Engineering & Electrical &Construction Electronics Others Eliminations Total
Non-cash expenses other thanDepreciation included in segmentexpense 6.25 6.27 6.51 6.60 3.34 2.66
(ii) Secondary Segments (Geographical segments):Rs.crore
Particulars Domestic Overseas Total
CY PY CY PY CY PY
External Revenue by location of customers 12351.49 10900.94 2642.35 2460.56 14993.84 13361.50
Carrying amount of Segment Assets by location of assets 8593.86 7181.65 880.26 1163.23 9474.12 8344.88
Cost incurred on acquisition of tangible and intangible fixed assets 463.91 153.95 34.36 12.82 498.27 166.77
b) Segment Reporting: Segment Identification, Reportable Segments and definition of each reportable segment:
i) Primary / Secondary Segment Reporting Format:
(a) The risk-return profile of the Company’s business is determined predominantly by the nature of its products and services.Accordingly, the business segments constitute the primary segments for disclosure of segment information.
(b) In respect of secondary segment information, the Company has identified its geographical segments as (i) Domestic and (ii)Overseas. The secondary segment information has been disclosed accordingly.
ii) Segment Identification:
Business segments have been identified on the basis of the nature of products/services, the risk-return profile of individual businesses,the organisational structure and the internal reporting system of the Company.
iii) Reportable Segments:
Reportable segments have been identified as per the criteria specified in Accounting Standard (AS) 17 “Segment Reporting” issued bythe Institute of Chartered Accountants of India.
iv) Segment Composition:
• Engineering & Construction Segment comprises execution of Engineering and Construction projects in India/abroad to providesolutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core sectors/infrastructureindustries. The segment capabilities include basic/detailed engineering, equipment fabrication/supply, erection & commissioning,procurement/construction and project management.
• Electrical & Electronics Segment comprises manufacture and sale of low voltage switchgear and control gear, custom-builtswitchboards, petroleum dispensing pumps & systems, electronic energy meters/protection (relays) systems, control & automationproducts and medical equipment.
• Others includes (a) ready mix concrete (b) property development activity (c) marketing of [i] welding and industrial products and[ii] construction equipment and (d) glass packaging business (for a part of the year).
118
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)23. Disclosure of related parties / related party transactions:
i. List of related parties over which control exists
40 Larsen & Toubro Information Technology Canada Wholly Owned Subsidiary of Larsen & Toubro Infotech LimitedLimited
* The Company holds more than one-half in nominal value of the equity share capital
** The Company controls the composition of the Board of Directors
119
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)ii. Names of the related parties with whom transactions were carried out during the year and description of relationship:
Subsidiary Companies:
1 Tractor Engineers Limited 2 Bhilai Power Supply Company Limited
3 Cyber Park Development & Construction Limited 4 HPL Cogeneration Limited
5 Hyderabad International Trade Expositions Limited 6 India Infrastructure Developers Limited
7 Raykal Aluminum Company Private Limited 8 International Seaports Pte. Limited
9 L&T (Wuxi) Electric Company Limited 10 L&T-Sargent & Lundy Limited
11 L&T Capital Company Limited 12 L&T-ECC Construction (M) SDN. BHD.
7 L&T Valdel Engineering Private Limited 8 The Dhamra Port Company Limited
9 Larsen & Toubro Limited-Shapoorji Pallonji & Company Limited 10 Larsen & Toubro Limited-Shapoorji Pallonji & Company LimitedJoint Venture (Ebene Cybercity Project, Mauritius) Joint Venture (Les Pailles Exhibition Centre, Mauritius)
Key Management Personnel & their relatives:
1 Mr. A.M. Naik, Chairman & Managing Director 2 Mr. J.P. Nayak (Whole-time Director)Mrs. Neeta J. Nayak (Wife)
3 Mr. Y.M. Deosthalee (Whole-time Director) 4 Mr. K. Venkataramanan (Whole-time Director)Mrs. Leena Y. Deosthalee (Wife) Mrs. Jyothi Venkataramanan (Wife)Mrs. Deepa P. Gumaste (Daughter)
5 Mr. R.N. Mukhija (Whole-time Director) 6 Mr. V.K. Magapu (Whole-time Director)Mrs. Sushma Mukhija (Wife) Mrs. M.V. Ramalaxmi (Wife)
7 Mr. K.V. Rangaswami (Whole-time Director) 8 Mr. M.V. Kotwal (Whole-time Director)
120
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)iii. Disclosure of related party transactions: Rs.crore
Sr. Nature of transaction / relationship / major parties 2005-2006 2004-2005
No. Amount Amounts Amount Amountsfor major for major
parties parties1 Purchase of goods & services (including Commission paid)
5 Subscription to equity and preference sharesSubsidiaries, including: 141.27 56.72
L&T Finance Limited 50.00 -L&T Infrastructure Development Projects Limited 66.99 -Larsen &Toubro International FZE 7.28 35.25L&T Power Investments Private Limited - 21.00
Associates & Joint Ventures - 3.00
Total 141.27 59.72
6 Purchase of InvestmentsSubsidiary 0.22 -
Larsen &Toubro International FZE 0.22 -
Total 0.22 -
7 Sale of Investments / Buyback of SharesSubsidiaries, including: 16.10 8.14
L&T Infocity Limited 16.02 -Larsen &Toubro International FZE - 8.14
Associates & Joint Ventures, including: 22.07 -The Dhamra Port Company Limited 11.10 -Kakinada Seaports Limited 8.63 -
Total 38.17 8.14
121
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Rs.crore
Sr. Nature of transaction / relationship / major parties 2005-2006 2004-2005
No. Amount Amounts Amount Amountsfor major for major
parties parties8 Receiving of services/overheads charged by related parties
“Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction.
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Rs.crore
Sr. Nature of transaction / relationship / major parties 2005-2006 2004-2005
No. Amount Amounts Amount Amountsfor major for major
parties parties
123
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)iv. Amount due to / from related parties Rs.crore
Sr. Nature of transaction / relationship / major parties As at 31-3-2006 As at 31-3-2005
No. Amount Amounts Amount Amountsfor major for major
“Major parties” denote entities who account for 10% or more of the aggregate for that category of transaction.
124
v. Notes to related party transactions:
a) The Company had a sole-selling agency agreement with L&T-Komatsu Limited (LTK), an associate company since February 1, 1998.As per the terms of the agreement, the Company was the exclusive agent of L&T-Komatsu Limited to market LTK machines and provideproduct support. As per provisions of the Companies Act, 1956, a sole selling agreement requires approval from Government of India (GOI)every five years. LTK has sought revision in some of the conditions granted vide the last GOI approval dated January 7, 2005. Pendingreceipt of the revised approval from GOI, LTK has entered into a non-exclusive agreement with the Company for sale of its products witheffect from March 1, 2004. Pursuant to the aforesaid agreement, LTK is required to pay commission to the Company at specified rates onthe sales effected by the Company.
b) The Company has entered into a five year distributorship agreement from April 26, 2002 with Audco India Limited (AIL), an associatecompany. Pursuant to the aforesaid agreement, AIL is required to pay commission to the Company at specified rates on the sales effectedby the Company. Further, as per the terms of the agreement, the Company is the non-exclusive distributor of AIL products and is authorisedto purchase and resell the same in accordance with the terms stipulated in the agreement.
c) The Company has entered into a five year selling agency agreement from October 1, 1998 with Ewac Alloys Limited (EWAC), an associatecompany. As per the terms of the agreement, the Company is the selling agent authorised to purchase and resell EWAC products inaccordance with the prices and other conditions stipulated in the agreement. The renewal of the agreement is under negotiation andpending finalisation of the new agreement, the previous agreement would continue to have effect.
d) The Company has a selling agency agreement with L&T-Demag Plastics Machinery Limited (LTDPML), a joint venture company effectiveJanuary 1, 2001. As per the terms of the agreement, the Company is a selling and servicing agent of LTDPML. Pursuant to the aforesaidagreement, LTDPML is required to pay commission to the Company at specified rates on sales effected by the Company.
Note: The financial impact of the agreements mentioned at (a) to (d) above has been included in / disclosed vide Note 23 (iii) supra.
24. Leases
Where the Company is a Lessee:
a) Finance Leases:
i. [a] Assets acquired on finance lease mainly comprise cars and personal computers. The leases have a primary period, which isfixed and non-cancellable. In the case of cars, the Company has an option to renew the lease for a secondary period. Theagreements provide for revision of lease rentals in the event of changes in (a) taxes, if any, leviable on the lease rentals,(b) rates of depreciation under the Income-tax Act, 1961 and (c) change in the lessor’s cost of borrowings. There are noexceptional/restrictive covenants in the lease agreements.
[b] The minimum lease rentals as at March 31, 2006 and the present value as at March 31, 2006 of minimum lease payments inrespect of assets acquired under finance lease are as follows:
Rs.crore
Particulars Minimum Lease Payments Present Value ofMinimum Lease Payments
As at As at As at As at 31-3-2006 31-3-2005 31-3-2006 31-3-2005
i. Payable not later than 1 year 3.64 3.50 3.25 2.85
ii. Payable later than 1 year and not later than 5 years 1.49 4.79 1.33 4.19
iii. Payable later than 5 years - - - -
Total ( i + ii + iii ) 5.13 8.29 4.58 7.04
Less: Future finance charges 0.55 1.25
Present Value of Minimum Lease Payments 4.58 7.04
ii. Contingent rent recognised / (adjusted) in the Profit and Loss Account in respect of finance leases: Rs.(0.01) crore
b) Operating leases:
i. The Company has taken various residential / commercial premises and plant and machinery under cancellable operating leases.These lease agreements are normally renewed on expiry.
ii. [a] The Company has taken on non-cancellable operating leases certain assets, the future minimum lease payments in respect ofwhich, as at March 31, 2006 are as follows:
Minimum Lease Payments Rs.crore
i. Payable not later than 1 year 15.98
ii. Payable later than 1 year and not later than 5 years 30.98
iii. Payable later than 5 years 0.10
Total 47.06
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)
125
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)[b] The lease agreements provide for an option to the Company to renew the lease period at the end of the non-cancellable
period. There are no exceptional/restrictive covenants in the lease agreements.
iii. Lease rental expense in respect of operating leases Rs.28.57 crore (previous year Rs.74.96 crore)
iv. Contingent rent recognised in the Profit and Loss Account Rs.Nil (previous year Rs.Nil).
25. Provision for current tax:
a) is net of Rs.5.14 crore written back in respect of earlier years (previous year Rs.Nil)
b) includes provision for wealth tax Rs.0.75 crore (previous year Rs.0.75 crore)
c) is net of Rs.Nil (previous year Rs.0.58 crore) being provision for wealth tax of earlier years written back.
26. Basic and Diluted Earnings per share [“EPS”] computed in accordance with Accounting Standard (AS) 20 “Earnings per Share”
Particulars Including Excludingextraordinary items extraordinary items
Basic 2005-2006 2004-2005 2005-2006 2004-2005
Profit after tax as per Accounts (Rs. crore) A 1012.14 983.85 942.39 983.85
Weighted average number of shares outstanding B 13,30,74,981 12,67,57,369 13,30,74,981 12,67,57,369
Basic EPS (Rupees) A / B 76.05 77.6277.6277.6277.6277.62 70.81 77.6277.6277.6277.6277.62
Diluted
Profit after tax as per Accounts (Rs. crore) A 1012.14 983.85 942.39 983.85
Add: Interest / Exchange difference (gain) / loss onbonds convertible into equity shares (net of tax) B 15.50 (7.96) 15.50 (7.96)
Adjusted profit for diluted earnings per share C=A+B 1027.64 975.89 957.89 975.89
Weighted average number of shares outstanding D 13,30,74,981 12,67,57,369 13,30,74,981 12,67,57,369
Add: Weighted average number of potential equity sharesthat could arise on conversion of FCCBs E 49,29,486 20,06,226 49,29,486 20,06,226
Add: Weighted average number of potential equity shares onaccount of employee stock options F 38,25,659 89,68,435 38,25,659 89,68,435
Weighted average number of shares outstanding G=D+E+F 14,18,30,126 13,77,32,030 14,18,30,126 13,77,32,030
Difference between book depreciation and tax depreciation 189.57 195.25
Provision for doubtful debts and advances debited to Profit and Loss Account 86.82 95.42
Disputed statutory liabilities paid and claimed as deduction for tax purposesbut not debited to Profit and Loss Account 19.81 22.39
Unpaid statutory liabilities/provision for Leave Encashment debited toProfit and Loss Account 35.39 25.38
Other items giving rise to timing differences 10.30 0.41 3.15 0.84
Total 132.51 209.79 123.95123.95123.95123.95123.95 218.48218.48218.48218.48218.48
Net Deferred Tax Liability 77.28 94.53
Net incremental liability charged/(credited) to Profit and Loss Account (15.35) (18.88)(18.88)(18.88)(18.88)(18.88)
Charged/(Credited) to Securities Premium Account (1.90) -
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)28. Disclosures required by Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets”:
a) Movement in provisions:Rs.crore
Sr. Class of Provisions
No. Particulars of disclosure Product Excise Sales Tax Litigation Others Total Warranties Duty related
obligation
1 Balance as at 1-4-2005 19.07 0.10 11.14 1.23 0.85 32.39
2 Additional provision during the year 10.10 - 2.51 29.19 1.63 43.43
3 Provision used during the year - - 2.02 - - 2.02
4 Provision reversed during the year 6.40 - 3.99 - - 10.39
5 Balance as at 31-3-2006 (5=1+2-3-4) 22.77 0.10 7.64 30.42 2.48 63.41
b) Nature of provisions:
i. Product Warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items thatfail to perform satisfactorily during the warranty period. Provision made as at March 31, 2006 represents the amount of the expectedcost of meeting such obligations of rectification / replacement. The timing of the outflows is expected to be within a period of twoyears.
ii. Provision for Excise duty represents the differential duty liability that is expected to materialise in respect of matters in appeal.
iii. Provision for Sales Tax represents mainly the differential sales tax liability on account of non-collection of declaration forms for theperiod prior to 5 years.
iv. Provision for litigation-related obligations represent liabilities that are expected to materialise in respect of matters in appeal.
c) Disclosure in respect of Contingent Liabilities is given as part of Schedule J to the Balance Sheet.
29. The expenditure on Research and Development activities, as certified by the Management is Rs.39.26 crore (including capital expenditure ofRs.1.80 crore) (previous year Rs.32.86 crore including capital expenditure of Rs.2.40 crore).
30. The exchange difference arising on foreign currency transactions amounting to Rs.4.85 crore (net loss) has been accounted under respectiverevenue heads.
31. The Company is exposed to various financial risks, most of which relate to changes in exchange rates, interest rates and commodity prices. TheCompany hedges risks of the aforesaid nature using a combination of natural hedges, forward contracts, swaps and other derivative products.The outstanding position and exposure are as under:
(i) As at March 31, 2006 , the Company does not have any outstanding position in respect of any of the derivative products.
(ii) As at March 31, 2006, un-hedged foreign currency exposure is Rs.1607.46 crore net receivable.
32. Estimated amount of contracts remaining to be executed on capital account (net of advances): Rs.80.70 crore (previous year Rs.231.15 crore).
33. Managerial Remuneration
a. Managing and Whole-time Directors’ remuneration:Rs.crore
2005-2006 2004-2005
Salary 2.40 3.45Perquisites 1.71 1.31Commission 9.78 8.42Contribution to Provident/Superannuation Fund 3.29 2.75
Total 17.18 15.9315.9315.9315.9315.93
Note: The above figures do not include contribution to gratuity fund, pension scheme and provision for leave encashment benefit as separatefigures are not available for the managing/whole time directors.
b. The appointment and remuneration of a whole-time director with effect from August 27, 2005 is subject to approval of the members in thegeneral meeting. The remuneration by way of salary, perquisites and commission payable from the said date has been fixed by the Boardof Directors in accordance with the powers delegated by the members vide resolution passed at the annual general meeting held onSeptember 23, 2004.
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)c. Computation of Managerial Remuneration:
Rs.crore
Profit before tax before extra-ordinary items as per Profit and Loss Account 1313.65
Add: Managing and Whole-time Directors’ remuneration and commission 17.18
Commission paid to non-executive directors (net) 0.86
Directors’ fees 0.26
Depreciation, obsolescence and amortisation charged to Accounts 115.98
Less: Transfer from Revaluation Reserve 1.49
114.49
Loss on sale of current investments 17.10
Provision for diminution in value of investments 1.65
Provision for doubtful debts and advances (net) 39.89
Provision for foreseeable losses on construction contracts 29.99
Profit (net) on sale of fixed assets as per Section 349 of the Companies Act, 1956(net of capital profits) (1.33)
220.09
1533.74
Less: Profit on sale of fixed assets as per Profit and Loss Account (net) 4.12
Profit on sale of long-term investments as per Profit and Loss Account 145.14
Debenture/Bond and Share issue expenses charged to Securities Premium Account 4.14
Premium on redemption of debentures charged to Securities Premium Account (4.13)
Depreciation and obsolescence as per Section 350 of the Companies Act, 1956 (net) 98.52
Depreciation on leased assets 1.17
248.96
Net Profit as per Section 198 of the Companies Act, 1956 1284.78
Maximum permissible remuneration to whole-time directors under Section 198 of theCompanies Act, 1956 @ 10% of the profits computed above 128.48
Restricted as per service agreements to 17.18
Maximum permissible managerial remuneration to non-executive directorsunder Section 198 of the Companies Act, 1956 @ 1% 12.85
Restricted as per shareholder approval to 0.90
d. Miscellaneous expenses include provision of Rs.0.90 crore (net) [previous year: Rs.0.30 crore (net)] towards commission payable to non-executive directors of the Company, in terms of the special resolution passed at the Annual General Meeting held on August 26, 2005.
34. Auditors’ remuneration (excluding service tax) and expenses charged to the accounts:2005-2006 2004-2005
Rs.crore Rs.crore
Audit fees 0.38 0.38
Certification work 0.36 0.40
Tax audit fees 0.12 0.09
Other services 0.06 0.03
Expenses reimbursed[excludes fees paid for FCCB issue of Rs.0.03 crore (previous year Rs.0.03 crore) charged toSecurities Premium Account during the year] 0.09 0.10
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)2005-2006 2004-2005
Rs.crore Rs.crore
35. Value of Imports (on C.I.F. basis):
Raw materials 502.72 287.79
Components and spare parts 796.95 1046.74
Spare parts for sale 129.34 112.15
Capital goods 30.75 34.69
36. Expenditure in foreign currency:
On overseas contracts 1075.54 1207.29
Royalty and technical know-how fees 8.31 6.13
Interest 28.04 24.59
Professional / Consultation fees 10.90 3.20
Other matters 344.10 383.99
37. Dividends remitted in foreign currency:
a) Dividend for the year ended March 31, 2006 to:
i. 9 non-resident shareholders on 3,925 shares held by them (previous year 4,70,226 shares) 0.01 0.92
ii. Custodian of Global Depository Receipts: 59,79,728 shares (previous year 58,89,976 shares) 10.46 9.42
b) Special dividend declared in 2004-2005 to:Custodian of Global Depositary Receipts: 57,10,824 shares - 5.71
38. Earnings in foreign exchange:
Export of goods [including Rs.774.42 crore on FOB basis (previous year Rs.717.74 crore)] 790.40 814.18
Construction and related activities 1738.23 1609.05
Export of services 100.45 46.70
Commission 3.48 3.62
Interest and dividend received 16.44 5.53
Other receipts 528.99 188.29
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39. List of Small Scale Industrial Undertakings to whom the Company owes monies for more than 30 days as at March 31, 2006:
1 A Bond Strands Pvt. Ltd. 2 A K Enterprises 3 A N Instruments Pvt. Ltd.
4 A S Enterprises 5 A-1 Pouches (I) 6 Aakansha Apartments
151 Iresco Electricals Pvt. Ltd. 152 J C Engineering Works 153 J J Industries
154 J Mangsun & Company 155 Jai Bhawani Mata Industries 156 Jai Engineers
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)
130
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)157 Janpriya Engineering Works 158 Jay Industries 159 Jayant Brothers
160 Jayaram Engineering Works 161 Jayco Industries 162 Jaywant Engineering Works
163 Jethwa Tailors 164 Jothi Engineering Works 165 Joy Engineering Company
313 Quality Products 314 R J Industrial Corporation 315 R K Engineering Works
131
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)316 R K Industries 317 Radha Plastics & Engineering Works 318 Radix Sensors Pvt. Ltd.
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)40. The Company has given, inter alia, the following undertakings in respect of its investments:
a) To the debenture-holders of India Infrastructure Developers Limited (IIDL), a wholly owned subsidiary, in connection with financing thelease of a captive power plant to a third party:
i) not to reduce its shareholding in IIDL below 100% and/or relinquish management control and/or majority representation on the Boardof Directors, without the specific approval of the Trustees and
ii) to compensate the subsidiary for any shortfall in receivables on account of variations in rates of interest, depreciation, corporatetaxes, other statutory levies etc., during the currency of the lease.
b) Jointly with L&T Infrastructure Development Projects Limited [a wholly owned subsidiary of the Company], to the term lenders of its subsidiarycompanies L&T Transportation Infrastructure Limited (LTTIL) and Narmada Infrastructure Construction Enterprise Limited (NICE):
i) not to reduce their joint shareholding in LTTIL & NICE below 51% until the financial assistance received from the term lenders isrepaid in full by LTTIL & NICE and
ii) to jointly meet the shortfall in the working capital requirements of LTTIL & NICE until the financial assistance received from the termlenders is repaid in full by LTTIL & NICE.
c) To one of the term lenders of NICE to meet the shortfall, if any, in repayment of the FCNR-B loans availed by NICE on account offluctuation in exchange rates.
d) In terms of Company’s Concession Agreement with Government of India and Government of Gujarat, not to change the control over L&TWestern India Tollbridge Limited (a wholly-owned subsidiary of the Company) during the period of the agreement.
e) To the debenture-holders of L&T Infrastructure Development Projects Limited (a wholly-owned subsidiary of the Company) and to thelenders of its subsidiary L&T Panipat Elevated Corridor Private Limited, not to dilute the Company’s shareholding in L&T InfrastructureDevelopment Projects Limited below 51%.
41. The Company’s investment in HPL Cogeneration Limited [a subsidiary of the Company] has been pledged as security in favour of the consortiumof lenders in respect of the term loans provided to HPL Cogeneration Limited.
42. During the year, the Company transferred the equity investments held by it in the following entities, to its wholly owned subsidiary, L&TInfrastructure Development Projects Limited:
Details of Investment
Sr. Name of the Company No. of equity Face value Amount InvestedNo. shares (Rs.crore)
1 L&T Infocity Limited 2,40,30,000 Rs.10 each 16.02
2 Kakinada Seaports Limited 86,30,975 Rs.10 each 8.63
3 The Dhamra Port Company Limited 1,11,03,022 Rs.10 each 11.10
4 Tidel Park Limited 40,00,000 Rs.10 each 4.00
The transfer has been effected at book value.
43. According to the Company, construction activity is a service activity and therefore, the same is covered under para 3(ii)(c) of Part II of ScheduleVI to the Companies Act, 1956.
44. In terms of the exemption granted by the Central Government, vide its order No. 46/104/2006-CL-III dated March 30, 2006, for the financial yearended on March 31, 2006, the Company has not disclosed quantitative details in respect of Sales, Raw Materials and Components consumedand Inventories required vide sub-paras 3(i)(a) and 3(ii)(a) (1) &(2) of Part II of Schedule VI to the Companies Act, 1956.
45. A Scheme of Amalgamation of L&T Power Investments Private Limited (a wholly owned subsidiary of the Company) (Transferor Company) withIndia Infrastructure Developers Limited (a wholly owned subsidiary of the Company) (Transferee Company), duly approved by the shareholders ofboth the companies is pending before the High Court of Judicature at Bombay.
In terms of the Scheme of Amalgamation, the assets and liabilities of the Transferor Company will get transferred at book value to the TransfereeCompany with effect from April 1, 2005.
Consequent upon the effectiveness of the Scheme of Amalgamation, the shares held by the Company in L&T Power Investments Private Limitedwill be extinguished, and in lieu thereof, the Transferee Company will allot 2,10,60,000 equity shares of Rs.10 each as fully paid up, to theCompany.
46. Pursuant to a Scheme of Rehabilitation between Datar Switchgear Limited, Larsen & Toubro Limited, a new Company and their respectiveShareholders and Creditors, as the case may be (hereinafter referred to as “the Scheme”), filed before the Board for Industrial and FinancialReconstruction (hereinafter, referred to as BIFR), the Company intends merging the residual business of Datar Switchgear Limited, postdemerger of the electronics business of Datar Switchgear Limited into the new Company, with effect from April 1, 2005. No effect has been givenin the financial results for the year 2005-2006 for the proposed merger. The impact of the proposed merger will be ascertained on receipt ofapproval of the Scheme from BIFR and concerned stakeholders.
47. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2006.
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Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)48. Details of imported raw materials and components consumed, purchase of trading goods and capacities & production :
(A) RAW MATERIALS AND COMPONENTS CONSUMED :2005-2006 2004-2005
% to total Value % to total Valueconsumption Rs.crore consumption Rs.crore
Earthmoving and agricultural machinery and spares 125.75 77.94Welding alloys and accessories 105.90 89.60Valves and accessories 470.54 326.83Electronic, medical and other instruments, accessories and spares 192.91 -Powder metallurgy and industrial products 48.28 37.56Others 202.42 315.20
1145.80 847.13
(C) CAPACITIES & PRODUCTION:
CLASS OF GOODS UNIT LICENSED INSTALLED ACTUALCAPACITY CAPACITY PRODUCTION
ultra high pressure vessels, includingmultiwall vessels, high pressure heat exchangersand high pressure heaters in aggregate Tonnes 5,000 3,950 110
(5,000) (3,950) (263)Plant and equipment and modules for nuclear
power projects, heavy water projects, nuclearand space research and allied projects, includingitems for chemical, oil and gas, etc. industries Tonnes 10,000 10,000 10,877
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)CLASS OF GOODS UNIT LICENSED INSTALLED ACTUAL
CAPACITY CAPACITY PRODUCTION
Steel plant valves Nos. 40 40 -(40) (40) (-)
Containers for liquefied gases and chemicals Nos. Not applicable* 1,000 tonnes -carrying capacity
Notes: (a) The installed capacities are as certified by Managing/Wholetime Directors on which certificates the auditors have placed reliance(b) Figures in brackets pertain to previous year.
* Licensing not applicable. Installed capacity is based on one of the following :a. Entrepreneur’s Memoranda filed with Government of India, Ministry of Industry, New Delhi;b. Registration with the Directorate General of Technical Developmentc. Approval obtained from the Government of India, Ministry of Industry, New Delhi;d. Agreement with Government of India, Ministry of Petroleum & Natural Gas.
** As per Entrepreneur’s Memorandum no. 2327/SIA/IMO/94 dated 19.07.94 filed with Government of India, Ministry of Industry, New Delhi.&& Includes production from external sources.@ Excludes Rs.200 lakh in respect of Memorandum No. 1322/SIA/IMO/92 dated 27.03.92 of which capacity of Rs.75 lakh has been installed.$ Excludes 6,96,250 nos. in respect of Memoranda Nos. 924/SIA/IMO/91 and 922/SIA/IMO/91 dated 11.09.91 of which capacity of
4,96,250 Nos. has been installed.+ Installed capacity includes 9,600 tonnes for which no licence is required.
49. Figures for the previous year have been regrouped/reclassified wherever necessary.
135
50 Balance Sheet Abstract and Company’s General Business ProfileI Registration Details
Registration No. 1 1 - 0 4 7 6 8 State Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 6II Capital Raised during the year (Amount in Rs.thousands)**
Public Issue Rights IssueN I L N I L
Bonus Issue Private Placement #N I L 1 0 3 5 0
# Conversion of Foreign Currency Convertible Bonds** The Company also raised capital during the year by way of allotment under Employee Stock Ownership Schemes amounting to Rs.4573
thousands.III Position of Mobilisation and Deployment of funds (Amount in Rs.thousands)
Total Liabilities Total Assets6 3 0 3 5 2 5 0 6 3 0 3 5 2 5 0
+ - Profit/Loss Before Tax before extra-ordinary items + - Profit/Loss after Tax after extra-ordinary items $+ 1 3 1 3 6 4 7 8 + 1 0 1 2 1 3 9 5
Please tick appropriate box + for Profit, - for Loss$ Includes Profit on sale/transfer of businesses Rs.697506 thousands (net of tax)
Basic Earnings Per Share in Rs. Dividend Rate %R s. 7 6 P. 0 5 1 1 0 0
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N . A .(ITC Code)Product Description Construction and project related activity
Item Code No. 8 4 7 9 8 9 . 0 2(ITC Code)Product Description Plant and equipment and modules for nuclear power projects, heavy water
projects, nuclear and space research and allied projects including itemsfor chemical, oil and gas, etc. industries
Item Code No. 8 4 7 9 8 9 . 0 2(ITC Code)Product Description Chemical plant and machinery including pharmaceutical,dyestuff,distillery,
brewery and solvent extraction plants, evaporator and crystalliser plantsand pollution control equipment in aggregate
Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)Notes forming part of Accounts (contd.)
Signatures to Schedules A to Q and NotesA.M. NAIK
As per our report attached Chairman & Managing Director
SHARP & TANNAN J.P. NAYAK K.V. RANGASWAMI S.N. TALWARChartered Accountants Y.M. DEOSTHALEE M.V. KOTWAL M.M. CHITALEby the hand of K. VENKATARAMANAN S. RAJGOPAL SURINDER NATHF.M. KOBLA R.N. MUKHIJA B.P. DESHMUKHPartner V.K. MAGAPU KRANTI SINHAMembership No.15882 N. HARIHARANMumbai, May 25, 2006. Company Secretary Directors Mumbai, May 25, 2006.
136
Name of the subsidiary company L&T Finance Larsen & HPL Larsen & India L&T Larsen &Limited Toubro Cogeneration Toubro Infrastructure Infocity Toubro
Financial year of the subsidiary company ended on 31-3-2006 31-3-2006 31-3-2006 31-12-2005 31-3-2006 31-3-2006 31-12-2005
Number of Shares in the subsidiary company heldby Larsen & Toubro Limited at theabove date - Equity shares 9,91,91,494 3,00,00,000 3,12,12,000 Nil 3,50,00,000 24,030,000 66
- Preference shares Nil Nil 3,12,12,000 Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil 15.00 47.59 1.08 Nil 2.88 Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 30.55 98.25 75.46 1.12 Nil 2.40 Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 35.13 53.08 Nil 9.11 (8.46) 9.94 53.43(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 43.28 101.67 41.85 9.39 (10.02) 60.07 (0.07)
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil Nil Nil
Statement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toSubsidiary Companies:Subsidiary Companies:Subsidiary Companies:Subsidiary Companies:Subsidiary Companies:
Name of the subsidiary company Narmada L&T L&T-Sargent L&T-ECC L&T L&T Cyber ParkInfrastructure Transportation & Lundy Construction Western Infrastructure DevelopmentConstruction Infrastructure Limited (M) India Development &
Financial year of the subsidiary company ended on 31-3-2006 31-3-2006 31-3-2006 31-12-2005 31-3-2006 31-3-2006 31-3-2006
Number of Shares in the subsidiary company heldby Larsen & Toubro Limited at theabove date - Equity shares 1,26,48,507 1,08,64,000 27,52,129 Nil 1,39,50,007 15,10,40,767 Nil
- Preference shares Nil Nil Nil Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited Nil Nil Nil 1.08 1.95 Nil Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 4.02 8.64 (2.30) 0.13 0.86 (8.41) (3.00)(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited (11.36) (10.43) (2.35) (0.39) 3.08 (8.06) (0.22)
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil Nil Nil
137
Name of the subsidiary company L&T Capital L&T Power Larsen & Hyderabad Tractor Larsen & Larsen &Company Investments Toubro International Engineers Toubro Toubro
Financial year of the subsidiary company ended on 31-3-2006 31-3-2006 31-12-2005 31-3-2006 31-3-2006 31-12-2005 31-12-2005
Number of Shares in the subsidiary company heldby Larsen & Toubro Limited at theabove date - Equity shares 50,00,000 2,10,60,000 Nil Nil 68,000 50,000 Nil
- Preference shares Nil Nil Nil Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to :(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil 0.68 Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 0.55 Nil Nil Nil 1.70 Nil Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 1.21 35.35 0.19 (0.32) 5.46 0.10 (1.06)(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 1.38 0.06 2.98 (2.88) 6.13 (0.26) (0.03)
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil Nil Nil
Statement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toSubsidiary Companies:Subsidiary Companies:Subsidiary Companies:Subsidiary Companies:Subsidiary Companies:
Name of the subsidiary company L&T (Wuxi) International International L&T Panipat L&T L&T L&T WesternElectric Seaports Seaports Pte. Elevated Tech Krishnagiri Andhra
Company (India) Limited Corridor Park Thopur Toll TollwaysLimited Private Private Limited Road Private Private
Limited Limited Limited LimitedFinancial year of the subsidiary company ended on 31-12-2005 31-3-2006 31-12-2005 31-3-2006 31-3-2006 31-3-2006 31-3-2006
Number of Shares in the subsidiary company heldby Larsen & Toubro Limited at theabove date - Equity shares (*) Nil 18,15,000 Nil Nil Nil Nil
- Preference shares Nil Nil Nil Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to :(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited Nil Nil Nil Nil Nil Nil Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 0.00 (0.59) 0.11 Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 0.00 0.00 Nil Nil Nil Nil Nil
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil Nil Nil
(*) USD 11,56,027.47
138
Statement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toStatement pursuant to Section 212 of the Companies Act, 1956 relating toSubsidiary Companies (contd.)Subsidiary Companies (contd.)Subsidiary Companies (contd.)Subsidiary Companies (contd.)Subsidiary Companies (contd.)
Name of the subsidiary company L&T L&T Spectrum L&T Larsen & L&T L&TVadodara Interstate Infotech Urban Toubro Infocity Infocity
Financial year of the subsidiary company ended on 31-3-2006 31-3-2006 31-3-2006 31-3-2006 31-12-2005 31-3-2006 31-3-2006Number of Shares in the subsidiary company held
by Larsen & Toubro Limited at theabove date - Equity shares Nil Nil 4,40,000 Nil Nil Nil Nil
- Preference shares Nil Nil Nil Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited Nil Nil Nil Nil Nil Nil Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 0.00 0.00 0.00 0.00 (0.34) 0.10 0.87(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited 0.00 0.00 0.00 0.00 0.00 0.00 (0.00)
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil Nil Nil
Name of the subsidiary company L&T Overseas Bhilai Power Andhra Pradesh Raykal Aluminium Larsen & ToubroProjects Supply Expositions Company Electromech
Nigeria Limited Company Limited Private Limited Private Limited LLC #Financial year of the subsidiary company ended on 31-12-2005 31-3-2006 31-3-2006 31-3-2006 31-12-2005Number of Shares in the subsidiary company held
by Larsen & Toubro Limited at theabove date - Equity shares Nil 49,950 Nil Nil Nil
- Preference shares Nil Nil Nil Nil NilThe net aggregate of profits, less losses, of the subsidiary
company so far as it concerns the members ofLarsen & Toubro Limited:
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore(i) Dealt with in the accounts of Larsen & Toubro
Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited Nil Nil Nil Nil Nil
(ii) Not dealt with in the accounts ofLarsen & Toubro Limited amounted to:(a) for the subsidiary’s financial year ended
March 31, 2006 and December 31, 2005 Nil Nil Nil Nil Nil(b) for previous financial years of the subsidiary
since it became subsidiary ofLarsen & Toubro Limited Nil Nil Nil Nil Nil
Changes in the interest of Larsen & Toubro Limitedbetween the end of the subsidiary’s financial yearand March 31, 2006:
Number of shares acquired Nil Nil Nil Nil NilMaterial changes between the end of the
subsidiary’s financial year and March 31, 2006:(i) Fixed assets (net additions) Nil Nil Nil Nil Nil(ii) Investments Nil Nil Nil Nil Nil(iii) Moneys lent by the subsidiary Nil Nil Nil Nil Nil(iv) Moneys borrowed by the subsidiary company
other than for meeting current liabilities Nil Nil Nil Nil Nil# Formerly known as Zubair Kilpatrick LLC
Note: L&T Overseas Projects Nigeria Limited, Andhra Pradesh Expositions Private Limited, Bhilai Power Supply Company Limited, Raykal Aluminium Company Private Limited, L&TPanipat Elevated Corridor Private Limited, L&T Krishnagiri Thopur Toll Road Private Limited, L&T Western Andhra Tollways Private Limited, L&T Vadodara Bharuch TollwayLimited, L&T Interstate Road Corridor Limited, L&T Tech Park Limited and L&T Urban Infrastructure Limited are yet to commence operations.
