DIRECTORS’ REPORT · 2013. 8. 7. · L&T-MHI BOILERS PRIVATE LIMITED DIRECTORS’ REPORT The...

S-829

L&T-MHI BOILERS PRIVATE LIMITED

DIRECTORS’ REPORT

The Directors are pleased to present the report on the business and operations of the Company together with the Audited Statements of Accounts and the Auditors’ Report for the year ended 31st March 2013.

FINANCIAL RESULTS

Particulars 2012-13 2011-12

V Crs. V Crs.

Total Income 2,379.03 2,447.87

Profit before Interest, Depreciation and Tax 225.31 64.55

Less:

a) Interest 30.47 31.18

b) Depreciation and amortization 31.43 22.27

c) Income Tax Expense 21.98 –

Profit After Tax 141.43 11.10

Reserves

At the beginning of the year (90.73) (101.83)

Add: Profit for the year 141.43 11.10

Add: Hedge reserve (3.10) –

Balance to be carried forward 47.60 (90.73)

YEAR IN RETROSPECTThe gross sales and other income for the financial year under review were V 2,379 Crores as against V 2,448 Crores for the previous financial year showing marginal decline of 2.81% mainly due to deferment of some of project’s milestones of JP project to fiscal year 2013-14.

The profit after tax for the financial year under review registered an exponential growth at V 141.43 Crores as against V 11.10 Crores for the previous financial year mainly due to advance progress of projects under execution and gains accrued pursuant to adoption of Accounting Standards 30, 31 and 32 issued by “The Institute of Chartered Accountants of India” on Embedded Derivative Accounting.

During the year 2012-13, the Company has focused on timely execution of its existing projects amid multiple challenges on the business prospects front. The continuous focus on training of people and adopting best manufacturing processes are expected to add significantly to its ability to meet the requirements of complex jobs. The Company has been recommended for ISO 14001:2004 certification for Environment Management Systems. The Company has been certified with OHSAS 18001:2007 certification for Occupational Health and Safety Management Systems and Certificates of Authorization from ASME.

Order booking position remains area of concern due to depressed market conditions. The Company booked order worth V 1,931 Crores in the year. The order book stands at V 9,041 Crores as on 31st March 2013.

APPROPRIATIONSThere are no appropriations to the Company’s earnings.

DIVIDENDThe directors do not recommend dividend for the financial year under review to conserve cash in the business.

CAPITAL EXPENDITUREThe Company has spent V 14.23 Crores during the year on capital expenditure. Gross tangible and intangible assets, including leased assets are V 559.95 Crores as at March 31, 2013.

AUDITOR’S REPORTThe Auditor’s Report to the Shareholders does not contain any qualification.

DISCLOSURE OF PARTICULARS OF EMPLOYEES U/S 217 (2A)There are no employees coming under the purview of Section 217(2A) of the Companies Act, 1956, as amended by Companies (Particulars of Employees) Rules, 1975.

COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009a) Bifurcation of Offices of Chairman &Group Chief Executive

The Board has bifurcated the roles and offices of Chairman and Group Chief Executive.

Mr. Shailendra Roy is elected as Chairman of the Board whereas Mr. A. S. Lamba is Group Chief Executive.

S-830


b) Remuneration of Directors

The Directors are not paid any remuneration by way of sitting fees or otherwise.

c) Independent Directors

All the members of the Board of the Company are independent in the sense that none of the Directors have any direct or indirect personal interest in the Company.

d) Number of Companies in which an Individual may become a Director

The Company has appraised its board members about the restriction on number of other directorships and the same is being complied with.

e) Responsibilities of the Board

Presentations to the Board are made in the areas such as financial results, budgets, business prospects etc. which give Directors, an opportunity to interact with senior managers and other functional heads. Directors are also updated about their role, responsibilities and liabilities.

The Company ensures necessary training to the Directors relating to its business through formal/ informal interactions. Systems, procedures and resources are available to ensure that every Director is supplied, in a timely manner, with precise and concise information in a form and of a quality appropriate to effectively enable/ discharge his duties. The Directors are given time to study the data and contribute effectively to Board discussions. The Non-Executive Directors through their interactions and deliberations give suggestions for improving overall effectiveness of the Board and its Committees. Their inputs are also utilized to determine the critical skills required for prospective candidates for election to the Board. The system of risk assessment and compliance with statutory requirements are in place.

f) Internal Control

The Board ensures the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls and risk management systems.

g) Internal Auditors

The Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services to the Company.

h) Secretarial Audit

The Secretarial Audit, at regular intervals, is conducted by the Corporate Secretarial department of Larsen & Toubro Limited, which has competent professionals to carry out the said audit.

i) Related Party Transactions

The details of all the related party transactions form part of the accounts as required under Accounting Standard – 18 issued by The Institute of Chartered Accountants of India (Refer Note no. N4 of Notes forming part of the Accounts).

DIRECTOR’S RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profits of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. that the annual accounts have been prepared on a going concern basis; and

v. that proper systems are in place to ensure compliance of all laws applicable to the Company.

DIRECTORSAt the Board meeting held on 26th April, 2012, Mr. A. S. Lamba and Mr. Hidetoshi Aiki were appointed as Whole-time Directors of the Company with effect from 24th May, 2012, not liable to retire by rotation.

Mr. V. C. Bedi, submitted his resignation from the Board in the Board meeting held on 26th April, 2012 effective from the conclusion of the said Board meeting.

Mr. Yoshiyuki Hanasawa, submitted his resignation from the Board in the Board meeting held on 26th April, 2012 from the conclusion of the said Board meeting. Mr.Hideshi Kawamoto, has been appointed as Director to fill up the said casual vacancy, with effect from 26th April 2012.

Mr. Ravi Uppal submitted his resignation from the Board with effect from the Board meeting held on 31st August 2012. Mr. Shailendra Roy was nominated by Larsen & Toubro Limited as Director and was appointed as Director and Chairman of the Board in the casual vacancy caused by resignation of Mr. Ravi Uppal from the Board with effect from 31st August, 2012.

Mr. Sunil Pande, has been appointed as Director to fill up the casual vacancy caused by the resignation of Mr. V. C. Bedi, with effect from 31st August, 2012.

Mr. Hidetoshi Aiki resigned from the Board with effect from 31st August, 2012 and Mr. Yoshiyuki Wakabayashi was appointed as a Whole Time Director to fill up the said casual vacancy with immediate effect.

S-831


The Board of Directors places on record their appreciation for the contribution made by Mr. Ravi Uppal, Mr. V. C. Bedi, Mr. Hanasawa and Mr. Hidetoshi Aiki during their tenure as Director of the company and welcomed Mr. Shailendra Roy, Mr. A. S. Lamba, Mr. Yoshiyuki Wakabayashi, Mr. Hideshi Kuwamoto and Mr. Sunil Pande to the Board.

Mr. Shailendra Roy and Mr. Sunil Pande retire by rotation in the forthcoming Annual General Meeting and being eligible, have offered themselves for reappointment. They are senior and experienced business executives in the Industry and the Board considers their appointment to be beneficial to the Company.

STATUTORY AUDITORS

The Auditors M/s Sharp & Tannan hold office until the conclusion of the ensuing Annual General Meeting. The Directors recommend that M/s Sharp & Tannan, Chartered Accountants be appointed as the Statutory Auditors of the Company at the forthcoming Annual General Meeting of the Company to hold office till the conclusion of the next Annual General Meeting of the Company. Certificate from the auditors has been received to the effect that their reappointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956.

The Company does not advocate rotation of Auditors as envisaged in Corporate Governance Voluntary Guidelines, 2009 in view of the domain knowledge acquired by the Auditors over a period of time.

MAINTENANCE OF COST RECORDSPursuant to The Companies (Cost Accounting Records) Rules, 2011 issued by the Ministry of Corporate Affairs on June 3, 2011, certification of the Cost Compliance Report by a Cost Accountant is essential with effect from 1st day of April 2011. In this regard, Compliance report along with annexures was prepared for Financial Year 2011-12 duly certified by Cost Accountant and the same was approved by the Board of Directors in the board meeting held on 31st August 2012.

COST AUDITThe Ministry of Corporate Affairs has introduced the Companies (Cost Audit Report) Rules, 2011 vide its notification no. GSR. 430(e) dated June 3, 2011. The Cost Audit Order No.52/26/CAB/2010 dated January 24, 2012 covers engineering machinery (including electrical and electronic products) due to which manufacturing operations of the Company will get covered with effect from 1st April, 2012 as the turnover of the Company is in excess of V 100 crores for the financial year ended 31st March, 2013. In this regard M/s. Manubhai & Associates, Cost Accountant having Membership Number M-2502 was appointed as Cost Auditor of the Company for the financial year 2012-13.

DISCLOSURE OF PARTICULARSInformation as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is provided in Annexure “A” forming part of this Report.

ACKNOWLEDGEMENTSThe Directors take this opportunity to thank the Financial Institutions, Banks, Customers, Central and State government authorities and business associates for their continued support and valuable co-operation during the year. The Directors also wish to place on record their appreciation of the contribution made by employees at all levels. The progress in setting up of world class hi-tech manufacturing facility was made possible by their hard work, commitment, cooperation and support.

For and on behalf of the Board of Directors

MR. S. N. ROY MR. MASAYUKI KUBOPlace : Mumbai Director DirectorDate : May 4, 2013

ANNEXURE “A” TO THE DIRECTORS’ REPORT

[A] CONSERVATION OF ENERGY (a) Energy Conservation measures taken:

1) Improving energy effectiveness / efficiency of equipment and systems-

• Installed energy management system in entire factory for real time monitoring of energy consumption of all the shops and buildings.

• Switching-off the under loaded transformers in the power distribution to reduce the energy losses in electrical network.

• Installed astronomical timers in open yard fabrication lighting and street light circuits for precise switching ON and OFF.

• Switching off non-essential shop lights during dinner and night shift snacks break to reduce factory lighting energy consumption.

• Close monitoring of HVAC system- energy savings by setting optimum temperatures, reducing HVAC operation timings based on office working hours.

• Use of energy saving devices like time switches, auto hibernation for PCs, etc. to reduce energy consumption

• Power saving by switching off the electrical appliances when not in use by installation of timer circuits in utility buildings-admin, change room, security building etc.

S-832


• Maintaining the power factor near to unity (0.99) in power distribution which improves the life of electrical equipments and enabling to claim rebate in energy bills from state electricity board.

2) Improving energy effectiveness / efficiency of Manufacturing Processes

• Made changes in PLC programming for the various machines in manufacturing shops to avoid idle running of non-essential drives thereby enhancing energy savings and increasing life of the equipment.

• Provided reliable power backup at RHF using an existing UPS to replace the hired DG set thus improving process efficiency and reducing energy consumption.

• Installed variable frequency drive for the roller hearth furnace blower thereby reducing energy consumption.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

• Implementation of timer circuit for the exhaust system in canteen kitchen area to avoid energy wastage.

• Installation of flow meters in Natural gas and Ar+CO2 line for effective monitoring of consumption.

• Procurement of only high efficiency motors at the time of replacements and new installations.

(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

• The energy saving measures taken has resulted in annual savings of INR 2.17 million. This has reduced LMB Hazira carbon footprint by about 216 tons of carbon dioxide equivalent.

[B] TECHNOLOGY ABSORPTION: Efforts made in technology absorption are as per appended Form B of this Annexure.

[C] FOREIGN EXCHANGE EARNINGS AND OUTGO:(V Crs)


Earnings:

Foreign exchange earned/Deemed exports 1,568.39 1,803.13

Outgo:

Foreign exchange used 1,061.99 1,098.50

Form B

Research & Development (R&D)

The Company continues to implement new technologies to meet the market needs. No separate record of the expenditure incurred is maintained

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION1. Efforts in brief made towards technology absorption, adaptation and innovation:

• Evaluated imported equipment designs / technologies and implemented the state-of-the-art technology through indigenous developments along with alternative materials/components.

• Interaction with external agencies / internal customers /suppliers for exposure to the latest products / designs.

• Participating in national / international conferences, seminars and exhibitions.

• Valuation, adaptation and / or modification of imported designs / technologies to suit indigenous requirements, alternative materials / components.

• Use of state-of-the-art equipment, instrument and software.

• Analyzing feedback from users to improve processes and services.

2. Benefits derived as a result of the above efforts:

Not quantifiable

3. Information regarding technology imported during the last 5 years

Technology Imported Year of Import Status

Knowhow and technical information for design, engineering and manufacture of supercritical boilers from MHI, Japan

May 2007 onwards Under Absorption

S-833


INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF L&T-MHI BOILERS PRIVATE LIMITEDReport on the financial statementsWe have audited the accompanying financial statements of L&T-MHI BOILERS PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2013, and the statement of profit and loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statementsManagement is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other legal and regulatory requirements1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the central government of India in terms of sub-section

(4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.2. As required by section 227(3) of the Act, we report that: a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of

our audit; b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of

those books; c. the Balance Sheet, statement of profit and loss and Cash Flow Statement dealt with by this Report are in agreement with the books of

account; and d. in our opinion, the Balance Sheet, statement of profit and loss, and Cash Flow Statement comply with the Accounting Standards referred

to in subsection (3C) of section 211 of the Companies Act, 1956.SHARP & TANNAN

Chartered AccountantsFirm’s Registration Number 109982W

By the hand of

FIRDOSH D. BUCHIAPlace : Mumbai PartnerDate : May 4, 2013 Membership No. 38332

ANNEXURE TO THE AUDITORS’ REPORT(Referred to paragraph (1) of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) The Company has physically verified fixed assets during the year and no material discrepancies were noted on such verification.

(c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern status.

2 (a) As explained to us, inventories have been physically verified by management at reasonable intervals during the year and, in our opinion, the frequency of such verification is reasonable.

S-834


(b) As per the information given to us, the procedures of physical verification of inventory followed by management are, in our opinion, reasonable and adequate in relation to the size and of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noted on such verification between physical stocks and book records were not material.

3 (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 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 the size of the Company and the nature of its business for purchase of plant and machinery, equipment, other assets and for sale of services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control systems.

5 According to the information and explanations given to us, there are no transactions with parties that need to be entered in the register maintained under section 301 of the Companies Act, 1956 and accordingly paragraphs 4(v)(a) and (b) of the Order are not applicable.

6 The Company has not accepted deposits from the public in terms of provisions of sections 58A and 58AA of the Companies Act, 1956.7 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 central

government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the Company’s manufacturing activity and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us.

9 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues outstanding as at March 31, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there were no undisputed amounts in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2013.

10 The Company has no accumulated losses as at March 31, 2013 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

12 According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company

has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The investments in marketable securities and mutual funds have been held by the Company in its own name.

15 In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16 In our opinion and according to the information and explanations given to us, on an overall basis, the tem loans have been applied for the purposes for which they were obtained.

17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investments.

18 The Company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

19 The Company has not issued any secured debentures during the year and accordingly, paragraph 4(xix) of the Order is not applicable.20 The Company has not raised any money by public issues during the year.21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing

practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

SHARP & TANNAN Chartered Accountants

Firm’s Registration Number 109982WBy the hand of

FIRDOSH D. BUCHIAPlace : Mumbai PartnerDate : May 4, 2013 Membership No. 38332

S-835


BALANCE SHEET AS AT MARCH 31, 2013

As at 31.03.2013 As at 31.03.2012Note No. v v v v

EQUITY AND LIABILITIES:Shareholders’ fundsShare capital A 2,341,000,000 2,201,000,000Reserves and surplus 475,987,545 (907,319,626)

2,816,987,545 1,293,680,374Non- Current LiabilitiesLong-term borrowings C 4,853,795,100 4,807,177,375Deferred tax liabilities(net) N.6 204,948,549 -

5,058,743,649 4,807,177,375Current LiabilitiesShort-term borrowings D(i) 5,196,124,955 1,459Trade payables D(ii) 7,810,642,386 6,591,228,806Other current liabilities D(iii) 11,436,991,400 18,902,520,114Short-term provisions D(iv) 60,618,201 41,910,732

24,504,376,942 25,535,661,111

TOTAL 32,380,108,136 31,636,518,860

ASSETS:Non- Current AssetsFixed Assets Tangible assets E(i) 4,708,068,510 4,585,263,341 Intangible assets E(ii) 178,377,560 61,933,666 Capital-work-in-progress 12,229,739 276,501,412 Intangible assets under development – 143,146,050

4,898,675,809 5,066,844,469Long-term loans and advances F 49,242,651 67,255,084

49,242,651 67,255,084Current AssetsCurrent investments G (i) 4,501,800,000 985,630,361Inventories G (ii) 1,648,522,566 3,682,379,283Trade receivables G (iii) 15,301,380,727 14,411,787,099Cash and cash equivalents G (iv) 4,273,777,872 218,599,001Short term loans and advances G (v) 1,587,948,647 3,739,190,872Other current assets G (vii) 118,759,864 3,464,832,691

27,432,189,676 26,502,419,307

TOTAL 32,380,108,136 31,636,518,860

COMMITMENTS (CAPITAL AND OTHERS) N.16CONTINGENT LIABILITIES N.18NOTES FORMING PART OF ACCOUNTS NSIGNIFICANT ACCOUNTING POLICIES O

As per our report attached For and on behalf of the Board

SHARP & TANNAN Chartered Accountants Firm’s registration no. 109982Wby the hand of

FIRDOSH D. BUCHIA RAJU IYER S. N. ROY MASAYUKI KUBOPartner Company Secretary Director DirectorMembership No. 38332

Place : Mumbai Place : MumbaiDate : May 4, 2013 Date : May 4, 2013

S-836


STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2013

2012-13 2011-12

Note No. v v v v

REVENUE:Revenue from operations (gross) H 23,708,644,198 24,574,683,578Less : Excise duty 111,023,192 324,920,234

Revenue from operations (net) 23,597,621,006 24,249,763,344Other income I 192,645,742 228,901,948

TOTAL REVENUE 23,790,266,748 24,478,665,292

EXPENSES:Manufacturing, construction and operating expenses JCost of raw materials and components 17,169,899,756 19,259,847,202Stores,spares and tools 106,185,016 178,924,008Sub-contracting charges 1,239,784,393 808,050,838Other manufacturing, construction and operating expenses 1,701,818,394 1,505,293,259

20,217,687,559 21,752,115,307Employee benefits expense K 922,810,319 956,428,034Sales, administration and other expenses L 396,742,649 1,124,567,808Finance costs M 304,674,188 311,827,879Depreciation and amortisation expense 314,271,792 222,676,277

TOTAL EXPENSES 22,156,186,507 24,367,615,305

Profit before tax 1,634,080,241 111,049,987Tax expense: Current Tax Minimum Alternate Tax N.7 304,257,423 – MAT Credit N.7 (304,257,423) – Deferred tax N.6 219,816,315 –

219,816,315 –

Profit after tax 1,414,263,926 111,049,987

Basic earnings per equity share before extraordinary items N.5 6.20 0.50

Diluted earnings per equity share before extraordinary items N.5 6.20 0.50

Basic earnings per equity share after extraordinary items N.5 6.20 0.50

Diluted earnings per equity share after extraordinary items N.5 6.20 0.50

Face value per equity share 10.00 10.00

NOTES FORMING PART OF ACCOUNTS N

SIGNIFICANT ACCOUNTING POLICIES O





S-837


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 20132012-13 2011-12

v v

A. Cash flow from Operating Activities:Net Profit before tax (excluding extraordinary item) 1,634,080,241 111,049,987Adjustments for :Depreciation (including obsolescence), amortisation and impairment 314,271,792 222,676,277(Gain)/Loss Foreign Exchange Transaction 793,204 217,187,151Interest Expense 304,674,188 311,827,879Interest (Income) (118,879,469) (60,935,124)(Profit)/Loss on sale of fixed assets (net) (179,176) (28,892)(Profit)/Loss on sale of investments (net) (9,405,980) (128,147,348)Dividend Received (57,955,975) (14,083,247)

Operating profit before working capital changes 2,067,398,825 659,546,683Adjustments for :(Increase)/ Decrease in trade and other receivables 4,625,733,857 (5,759,043,259)(Increase)/ Decrease in inventories 2,033,856,717 (1,525,299,673)Increase/ (Decrease) in trade payables (6,227,407,665) 2,777,233,221

Cash generated from operations 2,499,581,734 (3,847,563,028)Direct taxes refund/(paid)- net

Net Cash from Operating Activities 2,499,581,734 (3,847,563,028)

B. Cash flow from Investing Activities:Purchase of fixed assets (302,324,740) (2,083,258,647)Sale of fixed assets 156,400,785 103,248Purchase of investments (11,298,480,235) (6,355,923,491)Sale of investments 7,791,716,575 8,796,765,903Interest received 118,879,469 60,935,124Dividend received from other investments 57,955,975 14,083,247

Net Cash (used in)/ from Investing Activities (3,475,852,171) 432,705,384

C. Cash flow from Financing Activities:Proceeds from issue of share capital 140,000,000 –Proceeds from long term borrowings – 2,509,449,681Proceeds from short term borrowings 5,196,123,496 –Interest paid (304,674,188) (311,827,879)

Net Cash (used in)/ from Financing Activities 5,031,449,308 2,197,621,802

Net (decrease) / increase in cash and cash equivalents (A + B + C) 4,055,178,871 (1,217,235,842)Cash and cash equivalents at beginning of the year 218,599,001 1,435,834,843

Cash and cash equivalents at end of the year 4,273,777,872 218,599,001

Notes 1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 : “Cash Flow Statements” as

specified in the Companies (Accounting Standards) Rules, 2006.2. Purchase of fixed assets includes movement of capital work-in-progress during the year.3. Cash and cash equivalents at the end of the year represent cash and bank balances and include unrealised (loss)/profit of Nil (previous year

V 3,114,373) on account of translation of foreign currency bank balances.4. Previous year’s figures have been regrouped/reclassified wherever applicable.





S-838


NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013

As at 31.03.2013 As at 31.03.2012Number of

sharesv Number of

sharesv

A SHARE CAPITALA(i) Share capital authorised, issued and subscribed:

AuthorisedEquity shares of V 10 each 235,000,000 2,350,000,000 235,000,000 2,350,000,000

IssuedEquity shares of V 10 each 234,100,000 2,341,000,000 220,100,000 2,201,000,000

Subscribed and paid upEquity shares of V 10 each 234,100,000 2,341,000,000 220,100,000 2,201,000,000

TOTAL 2,341,000,000 2,201,000,000

A(ii) Reconciliation of share capitalSubscribed and fully paid at beginning of the year 220,100,000 2,201,000,000 220,100,000 2,201,000,000Add:Allotment of shares to Larsen & Toubro Limited 7,140,000 71,400,000 – –Allotment of shares to Mitsubishi Heavy Industries Limited 6,860,000 68,600,000.00 – –

Subscribed and fully paid at end of the year 234,100,000 2,341,000,000 220,100,000 2,201,000,000

A(iii) Terms/rights attached to equity shares The Company has only one class of share capital, i.e. equity shares having face value of V 10 per share. Each holder of equity holder is entitled

to one vote per share.

A(iv) Shareholders holding more than 5% of equity shares as at the end of the year

Larsen & Toubro Limited, India 119,391,000 1,193,910,000 112,251,000 1,122,510,000Mitsubishi Heavy Industries Limited, Japan 114,709,000 1,147,090,000 107,849,000 1,078,490,000

TOTAL 234,100,000 2,341,000,000 220,100,000 2,201,000,000

A(v) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediate preceding five years ended March 31, 2013 are Nil (previous year - Nil)

A(vi) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediate preceding five years ended March 31, 2013 are Nil (previous year - Nil)

As at 31.03.2013 As at 31.03.2012v v v v

B. RESERVES AND SURPLUSHedging Reserve FundAs per last Balance Sheet – (27,014,122)Add: Additions [Note N(9)] (30,956,755) 32,046,303Less: Transfer to Statement of Profit & Loss Account – (5,032,181)

(30,956,755) –Profit and Loss AccountOpening balance (907,319,626) (1,018,369,613)Profit for the year 1,414,263,926 111,049,987

506,944,300 (907,319,626)

TOTAL 475,987,545 (907,319,626)

S-839


NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2013 (Contd.)

C(i) LONG TERM BORROWINGS

Amount in V

Particulars As at 31.03.2013 As at 31.03.2012

Secured Unsecured Total Secured Unsecured Total

Long term unsecured loan from banks – 4,853,795,100 4,853,795,100 – 4,807,177,375 4,807,177,375

– 4,853,795,100 4,853,795,100 – 4,807,177,375 4,807,177,375

C(ii) NATURE OF LONG TERM BORROWINGS AND TERMS OF REPAYMENT

Sr. No. Nature of term loans V Rate of interest Terms of repayment

1 External commercial borrowings

2,969,389,500 USD 6M LIBOR + predetermined margin

Repayable in 6 equal half yearly installments commencing from 15/09/2016 and ending on 15/03/2019

2 External commercial borrowings

1,884,405,600 JPY 6M LIBOR + predetermined margin

Repayable in 4 equal half yearly installments commencing from 15/07/2015 and ending on 15/01/2017

TOTAL 4,853,795,100

Presentation of term loans in the Balance Sheet is as follows:

(i) Long term borrowing : V 4,853,735,100

(ii) Current portion of long term borrowing Nil

Term loans guaranteed by directors - Nil

D(i) SHORT TERM BORROWINGS Amount in V

Particulars As at 31.03.2013 As at 31.03.2012

Secured Unsecured Total Secured Unsecured Total

Loans repayable on demand from banks 2,401,251,416 1,820,945,873 4,222,197,289 1,459 – 1,459

Short term loans and advances from banks 973,927,666 – 973,927,666 – – –

3,375,179,082 1,820,945,873 5,196,124,955 1,459 – 1,459

D(i) (a) Loans repayable on demand from banks include fund based working capital facilities viz. cash credits and overdraft. The secured portion of working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit are secured by hypothecation of inventories, book debts and receivables.

As at 31.03.2013 As at 31.03.2012v v v v

D(ii) TRADE PAYABLESDue to related parties- Larsen & Toubro Limited and fellow subsidiary companies 1,909,588,788 1,972,057,236- Mitsubishi Heavy Industries Limited and fellow subsidiary 350,333,723 21,355,576

2,259,922,511 1,993,412,812Micro and small enterprisesAmounts due to MSMED [Note N(14)] 146,199,652 61,655,106Interest accrued and due to MSMED suppliers [Note N(14)] 959,345 583,093

147,158,997 62,238,199Due to Others 5,403,560,878 4,535,577,795

5,403,560,878 4,535,577,795

TOTAL 7,810,642,386 6,591,228,806

D(iii) OTHER CURRENT LIABILITIESDue to customers (construction & project related activity) 6,226,780,546 1,262,210,118Advances from customers 4,036,147,563 8,794,876,791Interest accrued but not due on term loan 13,839,013 18,408,291Others 1,160,224,278 8,827,024,914

TOTAL 11,436,991,400 18,902,520,114

S-840



As at 31.03.2013 As at 31.03.2012v v v v

D(iv) SHORT TERM PROVISIONSProvision for employee benefitsGratuity [Note N(2)(a)] 2,878,669 5,721,421Compensated absences 57,698,019 36,110,311

60,576,688 41,831,732Other provisions 41,513 79,000

TOTAL 60,618,201 41,910,732

E (i) TANGIBLE ASSETSPARTICULARS COST / VALUATION DEPRECIATION BOOK VALUE

As at 01.04.2012 Additions Adjustments/ Deductions

As at 31.03.2013 As at 01.04.2012

For the Year Adjustments/ Deductions

As at 31.03.2013 As at 31.03.2013 As at

31.03.2012

R R R R R R R R R R

Leasehold land 293,716,012 – 145,071,868 148,644,144 2,034,397 1,544,584 1,026,715 2,552,266 146,091,878 291,681,615Building 1,154,812,933 223,709,747 – 1,378,522,680 57,806,374 51,758,526 – 109,564,900 1,268,957,780 1,097,006,559Plant and machinery 3,283,858,266 332,887,050 7,919,278 3,608,826,038 224,051,986 217,212,462 1,558,809 439,705,639 3,169,120,399 3,059,806,280Furniture and fixtures 150,662,897 5,188,148 – 155,851,045 24,587,396 17,129,867 – 41,717,263 114,133,782 126,075,501Vehicles 14,324,338 3,062,718 2,969,538 14,417,518 3,630,951 1,912,559 890,663 4,652,847 9,764,671 10,693,387Total 4,897,374,446 564,847,663 155,960,684 5,306,261,425 312,111,104 289,557,998 3,476,187 598,192,915 4,708,068,510 4,585,263,342Previous year 2,724,866,066 2,172,718,379 210,000 4,897,374,446 108,834,320 203,412,429 135,644 312,111,105Capital work-in-progress 12,229,739 276,501,412Total tangible assets 4,720,298,249 4,861,764,754

E (ii) INTANGIBLE ASSETS

PARTICULARS COST / VALUATION AMORTISATION BOOK VALUEAs at

01.04.2012 Additions Adjustments/

Deductions As at

31.03.2013As at

01.04.2012 For the year Adjustments/

Deductions As at

31.03.2013As at

31.03.2013As at

31.03.2012R R R R R R R R R R

Specialised softwares 70,463,325 1,748,750 4,011,592 68,200,483 25,460,265 10,475,600 1,300,558 34,635,307 33,565,176 45,003,060Lumpsum fees for technical knowhow 69,631,075 143,146,050 – 212,777,125 52,700,469 15,264,272 – 67,964,741 144,812,384 16,930,606Total 140,094,400 144,894,800 4,011,592.00 280,977,608 78,160,734 25,739,872 1,300,558 102,600,048 178,377,560 61,933,666Previous year 118,011,002 22,083,398 – 140,094,400 58,896,885 19,263,849 – 78,160,734 –Capital work-in-progress – 143,146,050Total intangible assets 178,377,560 205,079,716

As at 31.03.2013 As at 31.03.2012v v v v

F. LONG TERM LOANS AND ADVANCES

Unsecured

Capital advances 49,207,651 67,220,084

Deposits 35,000 35,000

TOTAL 49,242,651 67,255,084

G(I) CURRENT INVESTMENTS

Investments in mutual funds at cost 4,501,800,000 985,630,361

TOTAL 4,501,800,000 985,630,361

G (II) INVENTORIES

Raw materials 1,458,456,780 2,739,778,521

Components 171,467,856 927,770,217

Stores spares parts 18,597,930 14,830,545

TOTAL 1,648,522,566 3,682,379,283

S-841



As at 31.03.2013 As at 31.03.2012v v v v

G (III) TRADE RECEIVABLES

Unsecured:

Debts outstanding for more than 6 months

Considered Good – 1,584,249,991

Considered Doubtful – –

– 1,584,249,991

Other debts:

Considered Good 15,301,380,727 12,827,537,108

Considered Doubtful – –

15,301,380,727 12,827,537,108

TOTAL 15,301,380,727 14,411,787,099

G (IV) CASH AND CASH EQUIVALENTS:

Cash and cash equivalents:

Balances with scheduled banks current account 6,970 177,665,063

Balances with non scheduled banks current account – 40,909,236

Cash on hand 12,964 24,702

Fixed deposits with banks (maturity less than 3 months) 286,500,000 –

286,519,934 218,599,001

Other bank balances

Fixed deposits with banks 3,987,257,938 –

TOTAL 4,273,777,872 218,599,001

G (V) SHORT TERM LOAN AND ADVANCES

Unsecured

Security deposit 4,810,066 16,097,381

Advances to suppliers 711,461,523 3,379,240,311

Advance to employees 608,100 10,149,441

Other advances recoverable in cash or kind 123,439,159 34,530,062

Income tax receivable (net of provision) 425,953,245 88,628,038

Balance with excise, sales tax, service tax etc 321,676,554 210,545,639

TOTAL 1,587,948,647 3,739,190,872

G (VII)OTHER CURRENT ASSETS

Due from customers 118,245,497 3,464,567,262

Interest accrued 514,367 265,429

TOTAL 118,759,864 3,464,832,691

S-842



2012-13 2011-12v v v v

H REVENUE FROM OPERATIONS

Sales and service

Construction and project related activity* 23,681,725,710 24,572,993,578

Sale of services 26,918,488 1,690,000

23,708,644,198 24,574,683,578

TOTAL 23,708,644,198 24,574,683,578

*Revenue from sales and services includes V 968,477,304 (previous year nil) for price variations in terms of contract with the customer

I OTHER INCOME

Interest income

Interest received on intercorporate deposits – 26,998,805

Interest received on bank deposits 117,685,623 33,530,734

Interest received from others 1,193,846 405,585

118,879,469 60,935,124

Dividend income

From current investments 57,955,975 14,083,247

Gain / loss on sale of investments

Current investments 9,405,980 128,147,348

Other non-operating income

Profit on sale of fixed asset 179,176 28,892

Other income 6,225,142 25,707,337

TOTAL 192,645,742 228,901,948

J MANUFACTURING, CONSTRUCTION AND OPERATING EXPENSES

Material consumed

Raw material and component 17,226,802,886 19,302,329,261

Less: Scrap Sale 56,903,130 42,482,059

17,169,899,756 19,259,847,202

Sub contracting charges 1,239,784,393 808,050,838

Stores, spares and tools 106,185,016 178,924,008

Other manufacturing , construction and operating expenses

Royalty and technical knowhow, engineering fees 575,073,052 612,164,457

Power and fuel 138,952,889 112,783,614

Packing and forwarding - primary packing 330,059,470 264,299,322

Hire charges - plant and machinery 115,531,604 51,127,001

Repairs and maintenance 50,106,769 69,106,440

Travelling and conveyance 84,724,129 53,842,935

Insurance 11,023,805 19,906,915

Rent 91,057,436 54,758,077

Rates and taxes 262,318 793,597

Software fees & maintenance cost 60,304,320 74,536,776

Other expenses 244,722,602 191,974,125

1,701,818,394 1,505,293,259

TOTAL 20,217,687,559 21,752,115,307

S-843



2012-13 2011-12v v v v

K STAFF COST

Salaries & Wages 778,749,956 844,897,907

Contribution to and provision for

Providend Fund & Pension fund 28,591,643 24,127,916

Gratuity Fund 2,878,669 4,549,627

Compensated absence / Leave Encashment 25,361,597 7,554,866

56,831,909 36,232,409

Employee Insurance Premium expenses 5,235,690 597,525

Welfare and other Expenses 81,992,764 74,700,193

TOTAL 922,810,319 956,428,034

L SALES, ADMINISTRATION AND OTHER EXPENSES

Professional Fees 489,749,452 459,687,007

Rent 12,290,717 32,182,192

Rates & Taxes 254,868 3,289,333

Travelling and Conveyance 18,626,866 37,782,618

Repairs & Maintenance 45,297,511 13,305,253

Telephone, Postage 10,926,784 11,512,909

Advertisement Expenses 2,316,192 408,413

Stationery & printing 5,302,456 7,553,951

Bank charges 8,749,951 24,262,060

Provision for foreseeable losses on construction contracts (316,929,502) (133,070,498)

Embedded Derivative Gain (740,904,722) -

Exchange (gain)/ loss (net) 818,779,653 621,356,662

Miscellaneous Expenses 42,282,423 46,297,908

TOTAL 396,742,649 1,124,567,808

M FINANCE COST

Interest Expense 293,912,994 311,375,776

Others 10,761,194 452,103

TOTAL 304,674,188 311,827,879

S-844


N(1) DISCLOSURE PURSUANT TO ACCOUNTING STANDARD (AS) 7 (REVISED):

Amount R


i Contract revenue recognised for the fi nancial year 23,570,702,518 24,248,073,344

ii Aggregate amount of contract costs incurred and recognised profi ts (less recognised losses) as at end of the fi nancial year for all contracts in progress as at that date

58,226,037,962 34,338,405,941

iii Amount of customer advances outstanding for contracts in progress as at end of the fi nancial year

4,036,147,564 8,794,876,791

iv Retention amounts due from customers for contracts in progress as at end of the fi nancial year

NIL NIL

N(2) Employee benefits – provision for / contributions to retirement benefit schemes are made in accordance with Accounting Standard – 15 Employee Benefits as follows –

General Description of Defined Benefit Plans

The Company makes contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to employees at the time of retirement, death while in employment or termination of employment, of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed five years in service.

a. Amount recognized in the Balance Sheet

Amount R

Particulars Gratuity plan (wholly funded) Trust managed provident fund plan2012-13 2011-12 2012-13 2011-12

a) Present value of defi ned benefi t obligation 22,173,980 18,400,050 158,337,013 102,827,949

Less: Fair value of plan assets 19,295,311 12,678,629 157,170,761 101,506,526

Amount to be recognized as liability or (asset) 2,878,669 57,21,421 1,166,252 1,321,423

b) Amount refl ected in the Balance Sheet“

Liabilities 2,878,669 57,21,421 4,441,368* 3,891,911*

Assets NIL NIL NIL NIL

Net liability / (asset) 2,878,669 5,721,421 4,441,368* 3,891,911*

* Employers and employee’s contribution (net) for March is paid in April

b. Amounts recognized in the statement of profit and loss Account

Amount R

Particulars Gratuity plan Trust managed provident fund plan2012-13 2011-12 2012-13 2011-12

1. Current service cost 6,934,577 5,564,075 23,143,464 20,933,996

2. Interest cost 2,156,889 1,463,370 13,615,160 8,944,288

3. Expected return on plan assets (1,145,935) (665,306) (13,615,160) (8,944,288)

4. Actuarial losses / (gains) (5,066,862) (702,364) (704,629) (928,414)

5. Actuarial gain/(loss) not recognized in books NIL NIL 704,629 928,414

6. Cost Transfer to Larsen and Toubro Limited NIL (1,120,148) (2,687,843) NIL

7. Liabilities booked for previous year NIL NIL NIL NIL

Total Expenses for the year NIL NIL NIL NIL

8. Total Included in Staff Expenses (1 to 4) 2,878,669 4,539,627 20,455,621 20,933,996


S-845


c. The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows.

Amount RParticulars Gratuity plan Trust managed provident

fund plan2012-13 2011-12 2012-13 2011-12

Opening balance of the present value of defi ned benefi t obligation 18,400,050 13,321,895 102,827,949 49,800,000Add: Current service cost 6,934,577 5,564,075 23,143,464 20,933,996Add: Interest cost 2,156,889 1,463,370 13,615,160 8,944,288Add: Liabilities assumed on transfer of employees NIL NIL NIL NILContribution by plan participants NIL NIL 34,217,999 32,520,414Add / (Less): Actuarial losses / (gains) (4,811,637) (615,441) NIL NILLess: Benefi t paid (505,899) (1,333,849) (15,467,559) (9,370,749)Closing balance of the present value of defi ned benefi t obligation 22,173,980 18,400,050 158,337,013 102,827,949

d. Changes in the fair value of plan assets representing reconciliation of opening and closing balances thereof are as follows:


fund plan2012-13 2011-12 2012-13 2011-12

Opening balance of fair value of the plan assets 12,678,629 6,464,592 101,506,526 48,721,242Add: Expected return of plan assets 1,145,935 665,306 13,615,160 8,944,288Less: Actuarial gains / (loss) 255,225 86,923 704,629 928,414Add: Contribution by the employer 5,721,421 6,795,657 22,916,591 20,478,238Add: Contribution by plan participants NIL NIL 33,895,415 31,805,092Less: Benefi ts paid (505,899) (1,333,849) (15,467,559) (9,370,749)Closing balance of fair value of defi ned benefi t obligation 19,295,311 12,678,629 157,170,761 101,506,526

The Company expects to contribute V 2,878,669 (previous year V 6,795,657) towards its gratuity plan during the FY 2013-14.

e. The major categories of plan assets as a percentage of total plan assets are as follows:


fund plan2012-13 2011-12 2012-13 2011-12

Govt. of India securities NIL NIL 24% 24%State Govt. securities NIL NIL 13% 12%Corporate bonds NIL NIL 7% 7%Public Sector bonds NIL NIL 42% 41%Special deposit scheme NIL NIL 14% 16%Insurer managed fund (LIC) 100% 100% NIL NILEquity shares of listed companies NIL NIL NIL NILOthers NIL NIL NIL NIL

f. Principal actuarial assumptions at the Balance Sheet date (expressed as weighted averages)

Amount RParticulars Gratuity plan

2012-13 2011-12Discount rate as at March 31 8.05% 8%Expected Return on Plan Assets as at March 31 8.50% 7.50%Attrition Rate 2% to 4% 2% to 4%Salary Growth Rate 6% 6%

The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.


S-846


g. The amount pertaining to defined benefit plans for the current year are as follows:


fund plan2012-13 2011-12 2012-13 2011-12

Defi ned benefi t obligation 22,173,980 18,400,050 158,337,013 102,827,949Plan assets 19,295,311 12,678,629 157,170,761 101,506,526Surplus / (defi cit) (2,878,669) (5,721,421) (1,166,252) (1,321,423)

h. The Company has contributed V 8,136,022 (previous year V 7,158,311) towards employees pension scheme during the year, which is included in schedule K (Employee expenses)

i. The provident fund is managed by the holding company – Larsen & Toubro Limited. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by provident fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.

N(3) SEGMENT REPORTING The Company is engaged in the single business segment. However the Company operates in domestic as well as overseas market, hence

the Company has identified geographical segment as the primary reportable segment.

i) Primary segments (geographical segments):

The Company has identified its geographical segments as (i) Domestic and (ii) Overseas pursuant to commencement of overseas business in the CY 2012-13. The primary segment information has been disclosed accordingly.

Amount VParticulars Domestic Overseas Total

CY PY CY PY CY PYRevenue - including excise dutyExternal 23,767,602,392 24,249,763,344 22,664,356 – 23,790,266,748 24,249,763,344Inter-segment – – – – – –Total revenue 23,767,602,392 24,249,763,344 22,664,356 – 23,790,266,748 24,249,763,344ResultSegment Result 1,813,614,875 388,941,547 6,260,085 – 1,819,874,960 388,941,547Inter-segment margins on capital jobs – –

1,819,874,960 388,941,547Unallocated corporate income/(expenditure)(net) – –Operating profi t (PBIT) 1,819,874,960 388,941,547Interest expense (304,674,188) (311,827,879)Interest income 118,879,469 33,936,319Profi t before tax (PBT) 1,634,080,241 111,049,987Provision for current tax –Provision for deferred tax (219,816,315) –Profi t after tax 1,414,263,926 111,049,987Other InformationSegment assets 32,363,809,394 31,636,518,860 16,298,742 – 32,380,108,136 31,636,518,860Unallocable corporate assetsTotal Assets 32,380,108,136 31,636,518,860Segment liabilities 32,166,281,149 31,636,518,860 213,826,987 – 32,380,108,136 31,636,518,860Unallocable corporate liabilitiesTotal liabilities 32,380,108,136 31,636,518,860Capital expenditure 157,252,872 2,083,258,647 – –Depreciation (including amortisation and obsoles-cence) included in segment expense

314,271,792 222,676,277 – –

Non-cash expenses other than depreciation included in segment expense

– – – –

ii) Secondary Segments (Business Segments): The operations of the Company are only in single business segment of “Designing, Engineering, Manufacturing and Commissioning of

Super Critical Steam Generators” and hence, there is no secondary business segment as per the requirements of Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India.


S-847


N(4) RELATED PARTY DISCLOSURE a. List of related parties over whom control exists and who exercise control: i) Larsen & Toubro Limited, India ii) Mitsubishi Heavy Industries Limited, Japan

b. Names of related parties with whom transactions were carried out during the year and description of relationship:

Sr. No. Related Party Relationship1 Larsen & Toubro Limited Holding Company2 Mitsubishi Heavy Industries Limited Joint Venture Partner3 L&T-MHI Turbine Generators Private Limited Fellow subsidiary4 L&T-Sargent & Lundy Limited Fellow subsidiary

5 L&T Infrastructure Finance Company Limited Fellow subsidiary6 L&T Howden Private Limited Fellow subsidiary7 Larsen & Toubro Infotech Limited Fellow subsidiary8 L&T Power Development Limited Fellow subsidiary9 Ewac Alloys Limited Fellow subsidiary10 Nabha Power Limited Fellow subsidiary11 Mistubishi Heavy Industries India Private Limited Fellow subsidiary12 Mitsubishi Power Systems India Private Limited Fellow subsidiary13 MHI Technical Services Corporation Fellow subsidiary14 L&T Special Steel and Heavy Forgings Limited Fellow subsidiary

c. Disclosure of related party transactionsParticulars Holding

CompanyJV Partner Fellow Subsidaries

Larsen & Tou-bro Limited

Mitsubishi Heavy

Industries Limited

L&T–MHI Turbine

Gen-erators Private Limited

L&T–Sar-gent & Lundy

Limited

L&T Howden Private Limited

L&T Infra-structure Finance

Company Limited

Larsen & Toubro

Infotech Limited

L&T Special Steels &

Heavy Forgings

Private Limited

L&T Power Develop-

ment Limited

Ewac Alloys

Limited

Nabha Power

Limited

Mistubishi Heavy

Industries India Private

Limited

Mitsubishi Power Sys-tems India

Private Limited

MHI Technical Services

Corporation

Transactions with the related parties:Allotment of Equity Shares

71,400,000 68,600,000 – – – – – – – – – – – –(–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

Purchase of assets 1,339,329 – – – – – – – – 26,115,986 – – – 16,785,905(31,421,395) (–) (–) (–) (–) (–) (–) (–) (–) (21,953,938) (–) (–) (–) (8,634,056)

Sale of Assets 41,635 – – – – – – – – – – – – –(–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

Sales (project related activities)

19,901,566,126 16,298,742 – – – – – – – – – – – –(14,387,765,271) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

Other Sales 8,743,000 – 156,490 – – – – 1,720,680 – – – – – –(–) (–) (–) (–) (–) (–) (–) (167,170) (–) (–) (–) (–) (–) (–)

Deputation Fees 12,458,015 6,185,850 – – – 283,271 – – – – 81,279 31,203,057 50,213,627 –(21,157,983) (11,792,100) (–) (–) (–) (1,173,017) (–) (–) (–) (–) (73,519) (104,430,084) (5,923,803) (–)

Engineering services, purchase of goods, sub–contracting and other revenue Charges

4,112,958,634 1,633,373 1,146,176 1,503,721 1,543,489,971 – 1,496,025 – 15,827 – – – – –(2,833,656,760) (5,357,562) (3,393,634) (21,159,924) (–) (–) (–) (–) (–) (–) (–) (7,651,507) (–) (–)

Royalty – 732,076,327 – – – – – – – – – – – –(–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

Land development charges

– – – – – – – – – – – – – –(6,379,867) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

Year end balances with related parties:Balance due from Related Parties

13,053,601,038 16,298,742 96,180 290,417 12,474,991 – – – – – 61,526 – – –(5,611,441,676) (–) (1,481,862) (–) (200,239,721) (–) (–) (–) (–) (–) (19,914) (–) (–) 2,019,282

Balance due to Related Parties

1,622,276,501 343,344,181 2,180,994 31,965 271,120,264 – 126,405 – 4,871 5,522,418 – 1,849,052 5,589,119 –(1,968,873,035) (6,172,741) (–) (805,163) (–) (166,496) (645,255) (–) (–) (1,567,287) (–) (15,182,835) (5,923,803) (–)

Note: Figures in parentheses represent respective amount pertaining to previous fi nancial year 2011-12. d. Provision for doubtful debts made for the amount outstanding from related parties during the year is V NIL (previous year : V NIL) e. Amount written off or written back in respect of debts due from or to related parties in V NIL (previous year : V NIL)


S-848


N(5) BASIC AND DILUTED EARNINGS PER SHARE (EPS) COMPUTED IN ACCORDANCE WITH ACCOUNTING STANDARD (AS) 20 “EARNINGS PER SHARE”:


Profi t / (loss) after tax as per accounts (v) 1,414,263,926 111,108,987

Number of shares outstanding (Nos.) 234,100,000 220,100,000

Weighted average number of shares outstanding (Nos.) 228,269,863 220,100,000

Basic and diluted earning per share (v) 6.20 0.50

N(6) DEFERRED TAX: Taxes on Income have been accounted for in accordance with the provisions of Accounting Standard 22, as per details given below:

Amount R

Particulars Charge/(credit) to Profi t and

Loss Account (see note

below)

Charge/(credit) to Hedging

reserve

Deferred tax (asset)/liability as at 31 March

2013

Deferred tax liabilities:Difference between book and Income Tax depreciation 397,995,521 – 397,995,521

Deferred tax liabilities: 397,995,521 – 397,995,521Deferred tax assets:Unpaid statutory liabilities/provision for compensated absences (18,720,122) – (18,720,122)

Loss on derivative transactions to be claimed for tax purposes in the year of trans-fer to statement of profi t and loss

– (14,867,766) (14,867,766)

Other items giving rise to timing differences (24,012,847) – (24,012,847)

Carry forward losses and unabsorbed depreciation (135,446,237) – (135,446,237)

Deferred tax assets: (178,179,206) (14,867,766) (193,046,972)Net deferred liability/(asset) 219,816,315 (14,867,766) 204,948,549

Note: In the previous year, the Company had not accounted for net deferred tax asset aggregating to V 150,319,260 on grounds of prudence.

N(7) The Company, having inadequate taxable income in the current financial year, is required to pay minimum alternate tax (MAT) under section 115JB of the Income-tax Act, 1961. The provisions of the said Act permits the Company to recover MAT paid out of the future taxable profits of the Company (arising from those under section 115JB) within a period of ten tears. The Company’s future profitability as projected by management shows that the MAT paid will be recovered within the period and the manner permitted by the said Act. In accordance with the guidance issued by the Institute of Chartered Accountants of India in its “Guidance note on accounting for credit available in respect of minimum alternate tax under the Income-tax Act, 1961” the Company has carried forward MAT entitlement of V 304,257,423 as an asset that will be recovered out of future tax payable (other than section 115JB).

N(8) In Line with the Company’s risk management policy, the various financial risks mainly relating to changes in the exchange rates, interest rates are hedged by using a combination of forward contracts and other derivative contracts, besides the natural hedges.

a. The particulars of derivative contracts entered into for hedging of foreign currency risks and outstanding as at March 31, 2013 are as under:

Amount R

Category of Derivative Instruments Hedged Exposure2012-13 2011-12

Forward contracts for receivables including fi rm commitments and highly probable forecasted transactions

3,136,713,558 5,041,992,169

Forward contracts for payables including fi rm commitments and highly probable forecasted transactions

819,994 NIL

Forward contracts for ECB loan & interest 2,995,563,926 3,653,076,628

SWAP for ECB loan & interest 1,223,559,622 NIL


S-849


b. Unhedged foreign currency exposures as at March 31, 2013 are as under:

Amount R

Unhedged foreign currency exposures Unhedged Exposure2012-13 2011-12

Receivables including fi rm commitments and highly probable forecasted transactions 6,937,390,589 16,598,842,276

Payables including fi rm commitments and highly probable forecasted transactions 7,004,731,194 14,491,157,373

ECB loan and interest 666,528,840 1,196,696,271

N(9) EMBEDDED DERIVATIVES

The Company enters into contracts (primarily with Indian companies in foreign currencies) that have an element of embedded derivatives within the contracts. Management is of the view that accounting for such embedded derivatives in accordance with the principles laid down in Accounting Standard 30 – Financial Instruments: Recognition and Measurement (though not mandatory at present) would present the economic substance of such contracts more appropriately and would lead to a better presentation of the financial statements. Accordingly, this accounting has been adopted during the year and consequently long-term liabilities and current liabilities are higher by V 8,707,095 and V 43,934,659 respectively, hedge reserve is lower by V 45,824,521 (net) and profit before tax is higher by V 740,904,722 (net).

N(10) AUDITORS REMUNERATION AND EXPENSES CHARGED TO ACCOUNTS

Amount R


Audit fees 250,000 100,000

Tax audit fees 20,000 20,000

Transfer pricing 10,000 10,000

Certifi cation work 177,500 61,000

VAT audit fees 20,000 20,000

Others 22,097 –

N(11) CIF VALUE OF IMPORTS:

Amount R


Raw material 10,137,712,001 9,766,557,529

Stores & spares 7,884,314 170,352,357

Capital expenditure 143,686,741 949,746,790

N(12) EXPENDITURE IN FOREIGN CURRENCY

Amount R


Supervision/deputation charges 96,624,113 11,335,575

Engineering support fees 115,336,317 30,674,648

Interest 93,882,856 54,281,154

Travellling and other revenue expenses 6,051,605 2,054,698

N(13) EARNINGS IN FOREIGN CURRENCY

Amount R


Product sales 15,147,704,241 17,696,513,551

Service sales 536,216,520 334,791,066


S-850


N(14) The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSME) as at March 31, 2013. The disclosure pursuant to the said Act is as under

Amount R


Principal Amount due to suppliers under MSMED Act,2006 146,199,652 61,655,107

Interest accrued, due to suppliers under MSMED Act on above amount and unpaid 959,345 539,487

Payment made to suppliers (other than interest) beyond the appointed day during the year NIL NIL

Interest paid to suppliers under MSMED Act (other than section 16) NIL NIL

Interest paid to suppliers under MSMED Act (section 16) NIL NIL

Interest due and payable towards suppliers under MSMED Act for payment already made NIL NIL

Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED Act NIL NIL

The information has been given in respect of such vendors to the extent they could be identified as “Micro and Small” enterprises on the basis of information available with the Company. Provision of interest is made based on principle of prudence.

N(15) Details of sales, raw material and component consumed, capacities & production , inventories and purchase of trading goods:

a) Sales:

Amount R

Class of Goods 2012-13 2011-12

Pressure parts and structure for supercritical boiler 32,225,442,700 30,841,941,427

b) Raw materials and components consumed:

i. Class of goods Amount R

Class of goods 2012-13 2011-12

Steel and structure and other materials 17,169,899,756 16,916,917,909

ii. Classification of goods


% of total consumption

Value R % of total consumption

Value R

Imported 59% 10,137,712,001 51% 9,766,557,529

Indegenous 41% 7,089,090,885 49% 9,535,771,732

c) Inventories

Amount R

Class of goods 2012-13 2011-12

Steel & structure and other materials 1,648,522,566 3,682,379,283

N(16) Estimated amount of contracts remaining to be executed on capital account (net of advances) V 6,413,935 (previous year - V 402,946,579)

N(17) Pursuant to the Employees Stock Options Scheme established by the holding company (i.e. Larsen & Toubro Limited), stock options were granted to the employees of the Company. Total cost incurred by the holding company, in respect of the same is V 395,787,661 (previous year V 411,343,522). The same is being recovered over the period of vesting by the holding company. Accordingly, cost of V 307,923,496 (previous year V 267,126,500) has been recovered by the holding company upto current year, out of which, V 40,796,995 (previous year V 114,602,532) was recovered during the year. Balance V 87,864,166 will be recovered in future periods.

N(18) There are no contingent liabilities as at Balance Sheet date.

N(19) Previous years figures have been re-grouped/reclassified wherever necessary.


S-851


NOTES FORMING PART OF THE ACCOUNTS

O SIGNIFICANT ACCOUNTING POLICIES 1. Basis of accounting The accompanying financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP)

under the historical cost convention and on an accrual basis. GAAP comprises the applicable provisions of the Companies Act, 1956 and mandatory Accounting Standards as prescribed under Companies (Accounting Standards) Rules, 2006 prescribed by the central government. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable, except to the extent where compliance with other statutory promulgations override the same requiring a different treatement.

The preparation of financial statements in conformity with GAAP requires management 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 of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowances for doubtful debts/advances, provisions for operating expenses, future obligations under income tax, useful lives of fixed assets, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

2. Presentation 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 (Revised)

to the Companies Act, 1956 (“the Act”). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule VI (Revised) of the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards.

Amounts in the financial statements are presented in Indian Rupees rounded off to nearest rupee in line with the requirements of Schedule VI (Revised).

3. Revenue recognition A. Operational Income: Contract revenue from construction related activity is recognized by adding the aggregate cost and proportionate margin using the

percentage completion method. Percentage of completion is determined as a proportion of cost incurred to date (including work performed by major suppliers) to the total estimated contract cost. Full provision is made for any loss in the period in which it is foreseen. Revenue from engineering and service fees is recognized as per the terms of the contract

B. Other Income: i) Interest income is accrued at applicable interest rate

ii) Dividend income is accounted in the period in which the right to receive the same is established.

iii) Other items of income are accounted as and when the right to receive arises.

4. Extraordinary and exceptional items Income or expenses that arise from events or transaction 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 wherever applicable. 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. Employee benefits Short term employee benefit i) All employee benefits payable within one year like salaries, wages, accumulated short term compensated absences (“leave

entitlements”), etc. are recognized in the period in which the employee renders the related service which entitles him to avail such benefits.

ii) The expected cost of bonus payments are recognized when (i) there is a present obligation to make such payments as a result of past events and (ii) a reliable estimate of the liability can be made.

Post employment benefits i) Defined contribution plans: State administered pension scheme is classified as defined contribution plan. The contribution paid/

payable under defined contribution plan is recognized during the period in which the employee renders related service.

ii) Defined benefit plans: The employee group gratuity-cum life assurance scheme with Life Insurance Corporation of India and the provident fund scheme managed by the holding company are defined benefit plans. Wherever applicable, the present value of obligation under such defined benefit plans are determined based on actuarial valuation using the projected unit credit method. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognize the obligation on the net basis.

S-852


NOTES FORMING PART OF THE ACCOUNTS (Contd.)

6. Fixed assets and depreciation

Fixed assets are stated at cost less depreciation. Cost comprises purchase price (net of discounts and taxes/duties where credits are availed) plus directly attributable costs of bringing the asset to its location and working condition.

Administrative and other general overhead expenses that are specifically attributable to acquisition of fixed assets or bringing the fixed assets to working condition are allocated and capitalized as a part of the cost of the fixed assets.

Depreciation on assets has been provided on straight line basis at the rates prescribed in Schedule XIV of the Companies Act, 1956 except for given below class of assets.

Asset class Depreciation rate based on useful life

Furniture and fixtures 10%

Office equipment 6.67%

Motor car 14.14%

Computer for employees under company’s scheme 33.33%

Laptops 25%

Printers 25%

Welding machines 8.33%

DG sets 8.33%

Depreciation for, additions to/deductions from, owned assets is calculated pro rata from/to the month of additions/deductions.

Intangible assets and amortization

Intangible assets are recognized as per the criteria specified in Accounting Standard 26 – Intangible assets prescribed under the Companies (Accounting Standards) Rules, 2006. Intangible assets are amortized as under:

i. Specialized software over a period of six years

ii. Engineering fees and lump sum fee for technical know-how over a period of six years

Impairment

As 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; and

b) the reversal of impairment loss recognised in previous periods, if any,

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 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 the 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.)

7. Investments

Current investments are carried at lower of cost or market value. The determination of carrying amount of such investments is done on the basis of specific identification.

8. Inventories

Raw material, components, stores, spares and loose tools are valued at lower of weighted average cost or net realizable value.

9. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such assets 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 period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

S-853



10. Foreign currency transactions, forward contracts and derivatives

i. The reporting currency of the Company is the Indian rupee.

ii. 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-monetory items, carried at historical cost denominated in foreign currency, are reported using the exchange rate at the date of the transactions. Exchange differences that arise on subsequent settlement/year end re-statement are recognized in the statement of Profit and Loss Account.

iii. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 [“The Effects of Changes in Foreign Exchange Rates]. Exchange differences arising on such contracts are recognized in the period in which they arise.

Gains and losses arising on account of roll over / cancellation of forward contracts are recognized as income/expense of the period in which such roll over/cancellation takes place.

The premium paid/received on a foreign currency forward contract is accounted as expense/income over the period of the contract.

iv. All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value as at Balance Sheet date, in pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives. The Company has adopted Accounting Standard (AS) 30 “Financial Instruments: Recognition and Measurement” for accounting of such derivative contracts, not covered under Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates”, as mandated by the ICAI in the aforesaid announcement. Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts covered under Accounting Standard (AS) 30 “Financial Instruments: Recognition and Measurement” are recognised in the statement of Profit and Loss Account or Balance Sheet as the case may be after applying the test of hedge effectiveness. Where the hedge is effective, the gains or losses are recognised in the hedging reserve which forms part of reserves and surplus.

v. With effect from 1 April 2012, embedded derivatives that are separated from the host contract are recognised as assets or liabilities at fair value and are accounted as follows:

(a) To the extent that the embedded derivatives can be designated as hedging instruments (and the hedge criteria are fulfilled) the profit or loss is accounted under hedge reserve. When the underlying hedged item is recognised in the statement of profit and loss, the related profit or loss of the embedded derivative is accounted under the corresponding head of account;

(b) In other cases, it is accounted through the statement of profit and loss as exchange gain/loss in sales, administration and other expenses.

(Also refer note no N.9)

11. Taxes on income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on expected outcome of assessments.

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets relating to unabsorbed depreciation/business losses, losses under the head capital gains are recognized and carried forward to the extent that there is virtual certainty that sufficient further taxable income will be available against which such deferred tax assets can be realized.

Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

12. Segment Accounting

a). Segment accounting policies:

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting.

i) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment revenue.

ii) Expenses that are directly identifiable with/allocable to segments are considered for determing the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under “unallocable corporate expenditure”.

iii) Income which relates to the Company as a whole and not allocable to segments in included in “unallocable corporate income”

iv) Segment result includes margins on inter-segment capital jobs, which are reduced in arriving at the profit before tax of the Company.

v) 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.

S-854



b) Inter-segment transfer pricing:

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

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.

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 probable obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation or

b) a possible obligation, unless 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.





Date post:	19-Jan-2021
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

DIRECTORS’ REPORT · 2013. 8. 7. · L&T-MHI BOILERS PRIVATE LIMITED DIRECTORS’ REPORT The...

Documents