S-2059 LARSEN & TOUBRO INTERNATIONAL FZE DIRECTORS’ REPORT Your Directors have pleasure in presenting to you the Annual Report and Audited Accounts of Larsen & Toubro International FZE (LTIFZE) for the year ended December 31, 2012. FINANCIAL RESULTS Financial Results 2012 R in Lakhs 2011 R in Lakhs Total Income 3,769.70 4,023.05 Profit for the year 3,044.13 3,344.21 OVERVIEW OF THE YEAR During the year under review, activity in the field of construction and real estate was generally subdued in the Middle East due to various economic reasons. In spite of the general downward trend in the market, your Company posted a profit of V 3,044 lakhs for the year 2012, mainly by way of dividend from subsidiary companies. The Company has been making equity Investments in Subsidiary & Associate Companies in various countries after careful analysis. In 2012, an additional investment/ advance towards equity of V 2,035 lakhs was made and loan of V 4047 lakhs was advanced to various JV companies/ subsidiaries in the Middle East and United Kingdom. During the year, Company reviewed the performance of two subsidiaries in China and took a decision to sell two Companies as the return on investment was very low. In the year under review one Company namely Larsen & Toubro (Wuxi) Electric Company Limited, was sold at V 3,679 Lakhs and made a profit of V 335 lakhs and 75% of the holding in Larsen & Toubro Jiangsu Valve Company Limited, was sold at V 2,986 lakhs and incurred loss of V 544 lakhs. CURRENT BUSINESS SCENARIO & FUTURE OUTLOOK It appears the general economic conditions in the world and in particular Gulf is appearing to be positive in the coming year. The various operational subsidiary & associate companies in which the Company has invested funds are working towards improved performance. CAPITAL EXPENDITURE During the year, the Company sold Plant & Machinery worth V 1,171 lakhs to parent company. PERSONNEL The Officers of the Company are working in ex-officio capacity and are employees of the parent company. AUDITORS’ REPORT The Auditors’ report to the shareholders does not contain any qualifications. AUDITORS The auditors M/s PKF continue to be the auditors of the Company for the year 2012. COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009 The Company has familiarized itself with the requirement of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and it is in the process of implementing many of the suggestions. Our compliance with the said guidelines is given below - A) Separation of Offices of Chairman & Chief Executive The Chairman is elected during each Board Meeting by the Directors from amongst those present. All the Directors are Non-Executive and the role of Chairman is confined to the proper conduct of the Board Meeting. B) Remuneration Of Directors The Directors are not paid any remuneration by way of sitting fees, etc. C) Independent Directors All the members of the Board of the Company are independent in the sense that none of them are involved in the day-to-day management of the Company. The Directors are updated about their role, responsibilities and liabilities. D) Number of Companies in which an Individual may become a Director The Company has appraised its board members about the restriction on number of other directorships and the same is being complied with. E) Responsibilities of the Board Directors are regularly updated about their role, responsibilities and liabilities. The Company ensures necessary training to the Directors relating to its business through formal/ informal interactions. Systems, procedures and resources are available to ensure that every Director is supplied, in a timely manner, with precise and concise information in a form and of a quality appropriate to effectively enable/ discharge his duties. The system of risk assessment and compliance with statutory requirements are in place.
Transcript
S-2059
LARSEN & TOUBRO INTERNATIONAL FZE
DIRECTORS’ REPORT
Your Directors have pleasure in presenting to you the Annual Report and Audited Accounts of Larsen & Toubro International FZE (LTIFZE) for the year ended December 31, 2012.
FINANCIAL RESULTS
Financial Results 2012R in Lakhs
2011R in Lakhs
Total Income 3,769.70 4,023.05
Profit for the year 3,044.13 3,344.21
OVERVIEW OF THE YEARDuring the year under review, activity in the field of construction and real estate was generally subdued in the Middle East due to various economic reasons. In spite of the general downward trend in the market, your Company posted a profit of V 3,044 lakhs for the year 2012, mainly by way of dividend from subsidiary companies.
The Company has been making equity Investments in Subsidiary & Associate Companies in various countries after careful analysis. In 2012, an additional investment/ advance towards equity of V 2,035 lakhs was made and loan of V 4047 lakhs was advanced to various JV companies/subsidiaries in the Middle East and United Kingdom.
During the year, Company reviewed the performance of two subsidiaries in China and took a decision to sell two Companies as the return on investment was very low. In the year under review one Company namely Larsen & Toubro (Wuxi) Electric Company Limited, was sold at V 3,679 Lakhs and made a profit of V 335 lakhs and 75% of the holding in Larsen & Toubro Jiangsu Valve Company Limited, was sold at V 2,986 lakhs and incurred loss of V 544 lakhs.
CURRENT BUSINESS SCENARIO & FUTURE OUTLOOKIt appears the general economic conditions in the world and in particular Gulf is appearing to be positive in the coming year. The various operational subsidiary & associate companies in which the Company has invested funds are working towards improved performance.
CAPITAL EXPENDITUREDuring the year, the Company sold Plant & Machinery worth V 1,171 lakhs to parent company.
PERSONNELThe Officers of the Company are working in ex-officio capacity and are employees of the parent company.
AUDITORS’ REPORTThe Auditors’ report to the shareholders does not contain any qualifications.
AUDITORSThe auditors M/s PKF continue to be the auditors of the Company for the year 2012.
COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009The Company has familiarized itself with the requirement of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and it is in the process of implementing many of the suggestions. Our compliance with the said guidelines is given below -
A) Separation of Offices of Chairman & Chief Executive The Chairman is elected during each Board Meeting by the Directors from amongst those present. All the Directors are Non-Executive and
the role of Chairman is confined to the proper conduct of the Board Meeting.
B) Remuneration Of Directors The Directors are not paid any remuneration by way of sitting fees, etc.
C) Independent Directors All the members of the Board of the Company are independent in the sense that none of them are involved in the day-to-day management of
the Company. The Directors are updated about their role, responsibilities and liabilities.
D) Number of Companies in which an Individual may become a Director The Company has appraised its board members about the restriction on number of other directorships and the same is being complied with.
E) Responsibilities of the Board Directors are regularly updated about their role, responsibilities and liabilities. The Company ensures necessary training to the Directors
relating to its business through formal/ informal interactions. Systems, procedures and resources are available to ensure that every Director is supplied, in a timely manner, with precise and concise information in a form and of a quality appropriate to effectively enable/ discharge his duties. The system of risk assessment and compliance with statutory requirements are in place.
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LARSEN & TOUBRO INTERNATIONAL FZE
F) Statutory Auditors The Company does not advocate rotation of Auditors as envisaged in these guidelines in view of the domain knowledge acquired by the
Auditors over a period of time.
G) Internal Auditors The Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services to all its group companies.
H) Internal Control The Board ensures the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls
and risk management systems.
I) Secretarial Audit The Secretarial Audit, at regular intervals, is conducted by the Corporate Secretarial department of Larsen & Toubro Limited, which has
competent professionals to carry out the said audit.
PARTICULARS OF EMPLOYEESThere are no employees covered by the provisions of the Section 217(2A) of the Companies Act, read with the Companies (Particulars of Employees) Rules, 1975.
DISCLOSURE OF PARTICULARSThe Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not relevant. Hence, the same has not been furnished.
MATERIAL CHANGES, IF ANY, BETWEEN DATE OF THE BALANCE SHEET & DATE OF THE DIRECTORS’ REPORTThere are no material changes that have taken place in the Company between the date of the Balance Sheet and the date of the Directors’ Report.
DIVIDENDIn view of the accumulated losses the Directors do not recommend any dividend for the year.
DIRECTORSDuring the year Mr. J. S. Sudarsan had taken over as Head of PT&D IC in India and as a result he resigned from the Company and Mr. V. A. K. Shenoi was inducted as director. Mr. P. S. Banerjee resigned and Mr. N. Hariharan was inducted as director. Mr. Habibulla also resigned during the year. The management places on record their appreciation regarding the valuable guidance and suggestions given by Mr. P. S. Banerjee , Mr. J. S. Sudarsan and Mr. Habibulla to the Company during their tenure as Directors.
DIRECTOR’S RESPONSIBILITY STATEMENT1. That in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material
departure.
2. That the selected Accounting policies were applied consistently and the Directors made Judgments and estimates that are responsible and prudent so as to give true and fair view of the states of affairs of the Company as at December 31, 2012 and the profits of the Company for the year ended on that date.
3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other regularities and
4. That the annual accounts have been prepared on a going concern basis; and
5. That proper systems are in place to ensure compliance of all laws applicable to the Company.
ACKNOWLEDGEMENTSThe Directors acknowledge the invaluable support extended by the customers, vendors, bankers, Auditors, L&T India and staff of the Company.
For and on behalf of the Board
Place : Mumbai S. N. SUBRAHMANYAN N. HARIHARAN V. A. K. SHENOI R. GOVINDAN
Date : May 17, 2013 Director Director Director Director
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LARSEN & TOUBRO INTERNATIONAL FZE
AUDITORS’ REPORT
TO THE MEMBERS OF LARSEN & TOUBRO INTERNATIONAL FZE
The financial statements of LARSEN & TOUBRO INTERNATIONAL FZE for the year ended December 31, 2012, being a Company registered in the United Arab Emirates, are audited by PKF and we have been furnished with their audit report dated March 14, 2013.
We are presented with the accounts in Indian Rupees prepared on the basis of the aforesaid accounts to comply with the requirements of Section 212 of the Companies Act, 1956. We give our report as under:
We have audited the attached Balance Sheet of Larsen & Toubro International FZE as at December 31, 2012 and the Statement of Profit and Loss and the Cash Flow Statement of the Company 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, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; and
(e) as regards reporting on the disqualification of directors under Section 274(1)(g) of the Indian Companies Act, 1956, since the Company is registered in the United Arab Emirates, no reporting is required to be made under the said Section.
In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies in Note N and other 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 December 31, 2012;
2 in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
3 in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Firm’s Registration No. 109982WBy the hand of
FIRDOSH D. BUCHIAPlace : Mumbai PartnerDate : May 17, 2013 Membership No. 38332
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LARSEN & TOUBRO INTERNATIONAL FZE
ANNEXURE TO THE AUDITORS’ REPORT(Referred to paragraph (1) of our report of even date)
1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.
(b) We are informed that the Company has physically verified the fixed assets during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of such verification is reasonable.
(c) During year, the Company has disposed off substantial part of fixed assets. Based on the information and explanations given by the management, we are of the opinion that the sale of the said assets has not affected the going concern status of the Company.
2 The Company has no inventories and accordingly, paragraphs 4(ii) (a), (b) and (c) are not applicable.
3 The Company is incorporated in the United Arab Emirates and accordingly, maintenance of records under Section 301 of the Companies Act, 1956 is not required. Accordingly, paragraphs 4(iii) (b) to (g) of the Order are not applicable.
4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in the aforesaid internal control procedures.
5 The Company is incorporated in the United Arab Emirates and accordingly, maintenance of records under Section 301 of the Companies Act, 1956 is not required. Accordingly, paragraphs 4(v) (a) and (b) of the Order are not applicable.
6 The Company has not accepted deposits and the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder are not applicable.
7 In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
8 The Company is not required to maintain cost records under Section 209(1)(d) of the Companies Act, 1956 and accordingly paragraph 4 (viii) of the Order is not applicable to the Company.
9 (a) According to the information and explanations given to us, the Company is regular in depositing undisputed statutory dues with appropriate authorities and there are no undisputed statutory dues outstanding for a period exceeding six months as at December 31, 2012.
(b) According to the information and explanations given to us, there are no dues towards income tax, sales tax, service tax, customs duty, excise duty and wealth tax that were under dispute as at December 31, 2012.
10 The Company’s accumulated losses are less than fifty percent of its net worth. The Company has not incurred cash losses in the current financial year.
11 According to the information and explanations given by management, the Company has neither borrowed from a bank nor a financial institution from India and neither has it issued any debentures.
12 According to the information and explanations given by management, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.
13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.
14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.
15 According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.
16 The Company has not availed any term loans during the year.
17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.
18 The Company has not made any preferential allotment of shares to any party during the year.
19 The Company has not issued debentures during the period and accordingly, no security is required to be provided.
20 The Company has not raised any money by public issues during the year.
21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
Firm’s Registration No. 109982WBy the hand of
FIRDOSH D. BUCHIAPlace : Mumbai PartnerDate : May 17, 2013 Membership No. 38332
S-2063
LARSEN & TOUBRO INTERNATIONAL FZE
BALANCE SHEET AS AT DECEMBER 31, 2012As at December 31, 2012 As at December 31, 2011
Note No. R R R R
EQUITY AND LIABILITIES
Shareholders' Funds:
Share capital A 11,473,973,500 11,473,973,500
Reserves and Surplus B (288,781,547) (976,582,296)
11,185,191,953 10,497,391,204
Non - Current Liabilities
Long term provisions C 515,632 370,460
Current Liabilities
Short term Borrowings D(i) 333,808,871 329,623,850
Trade payables D(ii) 823,715 –
Other Current liabilities D(iii) 1,588,586 33,990,545
336,221,172 363,614,395
TOTAL 11,521,928,757 10,861,376,059
ASSETS
Non - Current Assets
Fixed assets
Tangible Assets E 85,129,345 190,890,437
Non - Current Investments F 6,727,018,098 6,965,698,044
Long-term Loans and Advances G 2,009,022,345 1,672,067,748
Current Assets
Trade Receivables H(i) 16,272,415 14,143,029
Cash and bank balances H(ii) 2,176,043,425 1,997,738,088
Short term loans and advances H(iii) 508,443,129 20,838,713
2,700,758,969 2,032,719,830
TOTAL 11,521,928,757 10,861,376,059
CONTINGENT LIABILITIES O(9) & P(13)
COMMITMENTS O(7) & P(14)
OTHER NOTES FORMING PART OF ACCOUNTS
O
SIGNIFICANT ACCOUNTING POLICIES P
As per our report attached
SHARP & TANNANChartered AccountantsFirm’s Registration No. 109982WBy the hand of
For and on behalf of the Board
FIRDOSH D. BUCHIAPartnerMembership No. 38332
N. HARIHARAN R. GOVINDANDirector Director
Place : MumbaiDate : May 17, 2013
Place : MumbaiDate : May 17, 2013
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LARSEN & TOUBRO INTERNATIONAL FZE
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 2012
2012 2011
Note No. R R R R
REVENUE
Revenue from operations I 57,356,634 48,034,647
Other Income J 319,613,781 346,336,592
TOTAL REVENUE 376,970,415 394,371,239
EXPENSES
Operating Expenses K 3,162,020 2,007,641
Employee benefit expenses L 14,258,956 11,928,445
Administration and other expenses M 14,741,530 5,299,041
Finance Costs N 6,804,964 9,100,562
Depreciation on tangible assets 27,389,452 22,889,844
Profit after tax carried to Balance Sheet 304,413,120 334,421,968
Earnings per equity share : Basic and Diluted (v) O(10) 166,437 182,844
Face Value per Equity Share (US $) 150,000 150,000
OTHER NOTES FORMING PART OF ACCOUNTS O
SIGNIFICANT ACCOUNTING POLICES p
As per our report attached
SHARP & TANNANChartered AccountantsFirm’s Registration No. 109982WBy the hand of
For and on behalf of the Board
FIRDOSH D. BUCHIAPartnerMembership No. 38332
N. HARIHARAN R. GOVINDANDirector Director
Place : MumbaiDate : May 17, 2013
Place : MumbaiDate : May 17, 2013
S-2065
LARSEN & TOUBRO INTERNATIONAL FZE
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012
2012R
2011R
A. Cash Flow from Operating ActivitiesNet profit/(Loss) before tax 310,613,493 343,145,705Adjustments for:Dividend Income (301,962,521) (285,107,932)Depreciation 27,389,452 22,889,844(Profit) / Loss on sale of fixed assets (619,243) (1,039,923)Furniture, Fixtures and Office equipment written off – 10,658Interest expense 6,804,964 9,100,562Interest Income (35,576,018) (17,027,226)Loss /(Gain) on sale of longterm of investments 18,740,185 (42,945,916)Foreign currency translation reserve 11,449,174 36,533,724
Operating profit before working capital changes 36,839,486 65,559,497(Increase) / decrease in trade and other receivables (469,276,082) 53,369,410Increase / (decrease) in trade payables (32,657,076) (78,743,773)
Cash (used in) / generated from Operating Activities (465,093,672) 40,185,133
B. Cash Flow from Investing ActivitiesPurchase of Fixed assets (87,002) (50,705,472)Sale of fixed assets 85,011,106 6,652,830Loans & Advances to subsidiaries / associates / joint venture partners (296,658,649) (71,397,601)Investment in subsidiaries / associates (203,681,187) (369,353,559)Proceeds on disposal of investments 664,527,075 497,394,547Proceeds on voluntary winding up subsidiary – 448,897Dividend received from subsidiaries 301,962,521 285,107,932Interest received 35,576,018 17,027,226
Net Cash (used in) / from Investing Activities 586,649,882 315,174,800
C. Cash Flow from Financing Activities(Repayments) / Proceeds from other borrowings – –Interest paid (6,804,964) (9,100,562)Loans from Subsidiary and Associate Companies (net of repayment) (7,545,149) –
Net cash (used in) / from Financing Activities (14,350,113) (9,100,562)
Net (decrease) / increase in cash and cash equivalents (A+B+C) 107,206,097 346,259,372Cash and cash equivalents at beginning of the year 1,997,738,088 1,390,252,451Foreign Exchange difference in cash and cash equivalents 71,099,240 261,226,265
Cash and cash equivalents at end of the year 2,176,043,425 1,997,738,088
Notes :1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3; “Cash Flow Statements”, as
specified in the Companies (Accounting Standards) Rules, 20062. Cash & Cash equivalent represent fixed deposits, cash and bank balances.3. Previous year’s figure have been regrouped / reclassified wherever necessary
As per our report attached
SHARP & TANNANChartered AccountantsFirm’s Registration No. 109982WBy the hand of
For and on behalf of the Board
FIRDOSH D. BUCHIAPartnerMembership No. 38332
N. HARIHARAN R. GOVINDANDirector Director
Place : MumbaiDate : May 17, 2013
Place : MumbaiDate : May 17, 2013
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LARSEN & TOUBRO INTERNATIONAL FZE
NOTES FORMING PART OF ACCOUNTS
As at December 31, 2012 As at December 31, 2011
R R
NOTE - ASHARE CAPITAL
A(i) Authorised, issued, subscribed and paid-up:
Authorised:
USD 380,000,000 in Equivalent Shares of USD 150,000 each(Previous year USD 380,000,000 in Equivalent shares of USD 150,000 each)
16,588,690,735 16,588,690,735
Issued, Subscribed and Paid up
1829 Equity Shares of USD 150,000 each(Previous year 1829 Equity Shares of USD 150,000 each)Note : All the above equity shares are held by Larsen & Toubro Limited, the holding company.
11,473,973,500 11,473,973,500
Note : All the above equity shares are held by Larsen & Toubro Limited, the holding company.
A(ii) Reconciliation of the number of equity shares and share capital:
As at December 31, 2012 As at December 31, 2011
No. of Shares R No. of Shares R
Issued, Subscribed and fully paid up equity shares outstanding at 1,829 11,473,973,500 1,829 11,473,973,500
Add : Shares issued during the year – – – –
Issued, Subscribed and fully paid up equity shares outstanding at 1,829 11,473,973,500 1,829 11,473,973,500
A(iii) Terms / rights / restriction attached to equity shares
The Company has only one class of equity shares having a par value of USD 1,50,000 per share. Each holder of equity shares is entitled to one vote per share.
A(iv) The Company has not reserved any shares for issue under options and contracts/commitments for the sale of shares/disinvestments.
A(v) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended December 31, 2012: Nil (previous period of five years ended December 31, 2011 is Nil)
A(vi) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding five years ended December 31, 2012: Nil (previous period of five years ended December 31, 2011 is Nil)
A(vii) The Directors have not recommended payment of dividend during the year.No
As at December 31, 2012 As at December 31, 2011
R R R R
NOTE - B
RESERVES AND SURPLUS
Foreign Currency Translation ReserveAs per last Balance Sheet 2,168,612,162 522,769,131Addition/(deduction) during the year 383,387,630 1,645,843,031
2,551,999,792 2,168,612,162Surplus / (deficit) in the Statement of Profit and LossAs per last Balance Sheet (3,145,194,459) (3,479,616,426)Profit / (Loss) for the year 304,413,120 334,421,968
(2,840,781,339) (3,145,194,458)
TOTAL (288,781,547) (976,582,296)
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LARSEN & TOUBRO INTERNATIONAL FZE
As at December 31, 2012 As at December 31, 2011
R R R R
NOTE - CLONG TERM PROVISIONS
Provision for employee benefits
Gratuity 515,632 370,460
TOTAL 515,632 370,460
NOTE - D(i)
SHORT TERM BORROWINGS
Loans from related parties:
Inter-corporate borrowings from subsidiary company (unsecured) 333,808,871 329,622,788
TOTAL 333,808,871 329,623,850
NOTE - D(i)(a)
SHORT TERM BORROWINGS
Nature As at 31-12-2012 As at 31-12-2011 Rate of Interest Terms of Repayment of loan outstanding as at December 31, 2012
R R
Inter-corporate Borrowings from subsidiary company (unsecured)
333,808,871 329,622,788 At pre-determined rates
Repayable on Demand (The lender and Borrower reserve the right to call back or repay the same on demand)
As at December 31, 2012 As at December 31, 2011R R R R
25 Larsen & Toubro Consultoria E Projeto Ltda Subsidiary*
* The Company holds more than one-half in nominal value of the share capital
** The Company controls the composition of the Board of Directors.
III. Names of the related parties with whom transactions were carried out during the year, description of relationship and particulars of transactions.
Sr No. Related partyNature of relationship
Nature of transaction2012
Amount in R2011
Amount in R1. Larsen & Toubro Limited Holding
CompanyEquipment Hire Income 35,036,805 31,508,684
12 IndIran Engineering Project & Systems Kish (LLC)
Loan advanced
Jointly Controlled Entity
2,887,238 – 2,788,013 –
13 L&T Electricals & Automation FZE
Loan advanced
Subsidiary Company
40,020,191 – 38,644,827 –
14 Larsen & Toubro ATCO Saudia LLC
Loan advanced
Subsidiary Company
73,631,156 – 70,787,478 –
15 Larsen & Toubro Saudi Arabia LLC
Loan advanced
Subsidiary Company
172,785,711 – 166,847,626 –
16 Larsen & Toubro Heavy Engineering LLC
Loan advanced
Subsidiary Company
791,817,625 – 412,177,697 –
17 Tamco Switchgear (Malaysia) Sdn.Bhd.
Loan advanced
Subsidiary Company
– – 404,500 –
18 Tamco Switchgear (Malaysia) Sdn.Bhd.
Loan availed Subsidiary Company
– 333,808,856 – 329,622,788
(v) Notes to Related Party Transactions:
a) The Company has made a provision towards doubtful advances as at December 31, 2012 towards amounts due from Larsen & Toubro Qatar LLC which has accumulated losses as at December 31, 2012 - V 244,249,788 (Previous year : V 235,855,714)
b) The Company has also made a provision towards doubtful debt amounting to V 98,089,962 in earlier years.
c) The long term loans which are interest-free, are for the term of those subsidiaries and associates, except for the loans given to L&T Electrical & Automation Saudi Arabia Co. Ltd and L&T Readymix Concrete Industries LLC which bear interest at the rate of 5% per annum and 4.42% p.a. respectively.
O(2) Operating Lease
(i) The Company has entered into non-cancellable operating lease for rent of plot of land situated at Hamriyah Free Zone. The future minimum lease payments are as follows: Amount in R
2012 2011
Not later than one year 1,165,234 1,085,572
Between one and five year 4,113,406 4,283,821
Later than 5 years Not Established Not Established
S-2076
LARSEN & TOUBRO INTERNATIONAL FZE
NOTES FORMING PART OF ACCOUNTS (Contd.) (ii) Contingent rent recognized in Profit and Loss Account is V Nil (previous year Nil).
(iii) Lease Rental expense in respect of operating leases: V 1,006,497 (previous year : V 596,672).
O(3) Taxation
There is no income tax payable in UAE where the Company is registered. However, the provision for current tax includes withholding tax of V 6,200,373 on sale of investment in subsidiaries (previous year V 8,723,738).
O(4) There are no transactions with micro and small enterprises as defined in the Micro, Small & Medium Enterprises Development Act, 2006 during the year.
O(5) Auditors remuneration and expenses charged to the accounts:
2012 2011 R R
Audit fees 464,246 381,872
O(6) Segment Reporting:
• As per Accounting Standard 17 on Segmental Reporting, the Company is engaged in the business of hiring of plant & equipment and forward trading.
• The Company has income only from equipment hiring in the current and previous year and there are no forward trading transactions.
• The entire operations of the Company are in United Arab Emirates.
O(7) The estimated amount of contracts remaining to be executed on capital account (net of advances): V NIL (previous year V NIL)
O(8) The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount is more than the amount carried in the books. Accordingly, no provision is required to be made for impairment in the accounts.
O(9) Contingent Liabilities:
2012 2011 R R
Banker’s Letters of guarantee issued as counter- 39,885,784 166,527,402 guarantee for the facilities granted to Subsidiary/ Associate Companies
Corporate Guarantees given to Banks with respect 14,156,427,935 8,846,602,635 to facilities availed by Subsidiary Companies
O(10) Basic and diluted Earnings per share (EPS):
Particulars 2012 2011
Profit after tax as per accounts (V) 304,413,120 334,421,968
Weighted average number of equity shares 1,829 1,829
Basic & Diluted EPS (V) 166,437 182,844
O(11) Previous year’s figures have been regrouped / reclassified wherever necessary to confirm to the presentation adopted in the current year.
NOTE - P
1. SIGNIFICANT ACCOUNTING POLICIES:
Brief Description of the Company Larsen & Toubro International FZE (“the entity”) was incorporated on September 25, 2001 in the Hamriyah Free Zone, Sharjah as a Free Zone
Establishment with Limited Liability under Hamriyah Free Zone Implementing Rules and Regulations issued pursuant to SharjahEmiri Decree No. 6 of 1995.
1. Basis of Accounting The Company maintains its accounts on accrual basis following the historical cost convention in accordance with the Generally Accepted
Accounting Principles (GAAP) in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 prescribed by the Central Government. Further the guidance notes/announcements issued by ICAI are also considered, wherever applicable.
The preparation of financial statements in conformity with GAAP requires the management of the Company to make estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts / advances etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.
S-2077
LARSEN & TOUBRO INTERNATIONAL FZE
NOTES FORMING PART OF ACCOUNTS (Contd.)
2. Presentation and disclosure of financial statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI
to theCompanies Act, 1956 (“the Act”). The Cash Flow Statement has been prepared and presented as per the requirements of AccountingStandard (AS) 3 “Cash flowStatements”. The disclosure requirements with respect to items in the Balance Sheet and Statement ofProfit and Loss, as prescribed in the Schedule VI to the Act, are presented by way of notes forming part of accounts along with theother notes required to be disclosed under the notified Accounting Standards.
3. Revenue Recognition a) Interest income is accrued at applicable interest rate.
b) Dividend Income is accounted when right to receive the same is established.
c) Revenue from hire charges of equipment is accounted based on contract with customers.
4. Extraordinary and exceptional items Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified
as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company,is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the notes to accounts.
5. Tangible Fixed Assets Tangible fixed assets are stated at original cost net of tax / duty credits availed, if any, less accumulated depreciation and accumulated
impairment.
Administrative and other general overhead expenses that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalised as a part of the cost of the fixed assets.
Tangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “capital work-in-progress”.
(Also refer to policy on impairment of assets and borrowing costs).
6. Depreciation Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Category of Asset Rate of Depreciation (% p.a)
Plant and equipment 10% to 50%
Vehicles 20%
Furniture & Fixtures 33.33%
Office Equipment 33.33%
Buildings 10%
The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956 for the respective categories.
Depreciation for, additions to / deductions from, owned assets is calculated pro rata from / to the month of additions / deductions. Extra shift depreciation is provided on a location basis.
Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the assets is allocated over its remaining useful life.
7. Intangible assets and amortization Intangible assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortization and cumulative impairment.
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are amortized over their useful life as follows:
Specialized Software is amortized over a period of six years.
Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalized as a part of the cost of the intangible assets. Amortization on impaired assets is provided by adjusting the amortization charges in the remaining periods so as to allocate the assets’ revised carrying amount over its remaining useful life.
8. Impairment As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:
a) the provision of impairment loss, if any; and
b) the reversal of impairment loss recognized in previous periods, if any.
S-2078
LARSEN & TOUBRO INTERNATIONAL FZE
NOTES FORMING PART OF ACCOUNTS (Contd.)
Impairment loss recognized when the carrying amount of assets exceeds its recoverable amount.
Recoverable amount is determined:
a) in the case of an individual asset, at the 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 the higher of the cash generating unit’s net selling price and the value in use.
(Value in use is determined as present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life).
9. Investments Trade investments comprise investments in subsidiary companies and entities in which the Company has strategic business interest.
Investments, which are readily realizable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments.
Long term investments including trade investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary in nature.
Current investments are carried at lower of cost and fair value. The determination of carrying amount of such investments is done on the basis of weighted average cost of each individual investment.
Purchase and sale of investments are recognised based on the trade date of accounting.
10. Cash and bank balances Cash and bank balances also include fixed deposits, margin money deposits, earmarked balances with banks and other bank balances
which have restrictions on repatriation. Short term and liquid investments being not free from more than insignificant risk of change in value, are not included as part of cash and cash equivalents.
11. Borrowing Costs Borrowing costs that are attributable to the acquisition, construction, or production of a qualifying asset are capitalized or inventorised
as part of such asset till such time as the asset is ready for its intended use or sale. Qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the year in which they are incurred.
12. Foreign Currency Transactions a) The functional currency of the Company is United States Dollar (USD). Accounts are translated in Indian Rupees as follows:. b) Share capital is retained at the initial contribution amount. c) All other assets and liabilities are translated at year end rate. d) Revenue transactions are translated at the average rate. e) The resultant difference is accounted as translation reserve in the Balance Sheet.
13. Provisions, contingent liabilities and contingent assets Provisions are recognized 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 and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.
Contingent Liability is disclosed in the case of
a) a present obligation arising from a past events, when it is not probable that an outflow of resources will be required to settle the obligation.
b) a present obligation arising from past events when no reliable estimate is possible.
c) a possible obligation arising from past events where the probability of outflow of resources is not remote.
Contingent Assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
S-2079
LARSEN & TOUBRO INTERNATIONAL FZE
NOTES FORMING PART OF ACCOUNTS (Contd.)
14. Commitments Commitments are future liabilities for contractual expenditure.
Commitments are classified as and disclosed as follows:
a) Estimated amount of contracts remaining to be executed on capital account and not provided for.
b) Uncalled liability on shares and other investments partly paid.
c) Funding related commitment to Subsidiary, Associate and Joint Venture Companies and
d) Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of the management.
Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details.
15. Operating cycle for current and non-current classification: Operating cycle for the business activities of the Company covers the duration of the specific project / contract / service including the
defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
16. Cash Flow Statement: Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating
activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of:
a) transactions of a non-cash nature
b) any deferrals or accruals of past or future operating cash receipts or payments and
c) items of income or expense associated with investing or financing cash flows.
Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure.
17. Service end-of-service gratuity: Provision is made for end-of-service gratuity payable to the staff at the Balance Sheet date in accordance with the local labour laws.
18. The Company’s interest in joint ventures are consolidated as follows :
Type of Joint Ventures Accounting Treatment
Joint 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 assets is accounted as expense. Monetary benefits, if any, from use of the assets are reflected as income.
Joint Controlled Entities The Company’s interest in Jointly controlled entities are proportionately consolidated on a line by line basis by adding together the book values of assets, liabilities, income and expenses, after eliminating unrealised profits/losses on intra group transactions.
As per our report attached
SHARP & TANNANChartered AccountantsFirm’s Registration No. 109982WBy the hand of
For and on behalf of the Board
FIRDOSH D. BUCHIAPartnerMembership No. 38332
N. HARIHARAN R. GOVINDANDirector Director
Place : MumbaiDate : May 17, 2013
Place : MumbaiDate : May 17, 2013
S-2080
LARSEN & TOUBRO INTERNATIONAL FZE
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANIESName of the subsidiary company Larsen &
Toubro Electromech
LLC
Larsen & Toubro
(Oman) LLC
Larsen & Toubro Saudi
Arabia LLC
Larsen & Toubro Qatar
LLC
Larsen & Toubro (East
Asia) SDN.BHD
Larsen & Toubro
Overseas Projects Nigeria Limited
Larsen & Toubro
Modular Fabrication
Yard LLC
Financial year of the subsidiary company ended on 31.12.2012 31.12.2012 31.12.2012 31.12.2012 31.12.2012 31.12.2012 31.12.2012
Number of Shares in the subsidiary company held by Larsen & Toubro International FZE at the above date -
- Equity shares 195,000 of RO 1 each
947,144 of RO 1 each
3,800 of SR 1000 each
98 of QR 1000 each
296,249 of RM 1 each
1,000,000 of Naira 1 each
1,875,000 of RO 1 each
- Preference shares Nil Nil Nil Nil Nil Nil Nil
The Extent of interest in Subsidiary Companies of Larsen & Toubro International FZE as at above date 65% 65% 95% 49% 39.5% 100% 65%
The net aggregate of profits/(losses), of the subsidiary company so far as it concerns the members of Larsen & Toubro International FZE:
(i) Dealt with in the accounts of Larsen & Toubro International FZE amounted to :
(a) for the subsidiary’s financial year ended December 31, 2012 8.09 4.59 0.00 0.00 0.00 0.00 0.00
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 15.89 14.07 0.00 0.00 0.00 0.00 0.00
(ii) Not dealt with in the accounts of Larsen & Toubro International FZE amounted to:
(a) for the subsidiary’s financial year ended December 31, 2012 19.88 9.65 (18.24) 0.00 0.03 (0.03) 11.13
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 73.89 265.69 (8.33) (29.32) (0.16) (0.24) 21.92
Changes in the interest of Larsen & Toubro International FZE between the end of the subsidiary's financial year and December 31, 2012
Number of shares acquired Nil Nil Nil Nil Nil Nil Nil
Material changes between the end of the subsidiary's financial year and December 31, 2012
(i) Dealt with in the accounts of Larsen & Toubro International FZE amounted to :
(a) for the subsidiary’s financial year ended December 31, 2012 0.00 0.00 0.00 0.00 0.00 0.00
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 2.72 0.00 0.00 0.00 0.00 0.00
(ii) Not dealt with in the accounts of Larsen & Toubro International FZE amounted to:
(a) for the subsidiary’s financial year ended December 31, 2012 (5.17) (5.24) 4.97 (24.57) 0.54 (18.69)
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 8.33 0.46 (4.64) (0.41) 0.07 (56.72)
Changes in the interest of Larsen & Toubro International FZE between the end of the subsidiary's financial year and December 31, 2012
Number of shares acquired Nil Nil Nil Nil Nil Nil
Material changes between the end of the subsidiary's financial year and December 31, 2012
(i) Dealt with in the accounts of Larsen & Toubro International FZE amounted to :
(a) for the subsidiary’s financial year ended December 31, 2012 17.37 0.00 0.00 0.00 0.00 0.15
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 52.59 0.00 0.00 0.00 0.00 0.00
(ii) Not dealt with in the accounts of Larsen & Toubro International FZE amounted to:
(a) for the subsidiary’s financial year ended December 31, 2012 68.18 (0.19) 9.95 1.68 2.23 34.13
(b) for previous financial years of the subsidiary since it became subsidiary of Larsen & Toubro International FZE 155.40 (1.14) (28.67) (36.11) (4.06) 57.06
Changes in the interest of Larsen & Toubro International FZE between the end of the subsidiary's financial year and December 31, 2012
Number of shares acquired Nil Nil Nil Nil Nil Nil
Material changes between the end of the subsidiary's financial year and December 31, 2012
