LARSEN & TOUBRO LIMITED ANNEXURE TO DIRECTORS’ REPORT 2003-2004 REPORTS AND ACCOUNTS - SUBSIDIARY COMPANIES Contents Pages Larsen & Toubro Infotech Limited S 2 - 20 Larsen & Toubro Infotech GmbH S 21 - 27 L&T Transportation Infrastructure Limited S 28 - 37 L&T Western India Toll Bridge Limited S 38 - 48 Narmada Infrastructure Construction Enterprise Limited S 49 - 58 Cyberpark Development & Construction Limited S 59 - 68 L&T Infocity Limited S 69 - 84 Andhra Pradesh Expositions Private Limited S 85 - 91 Hyderabad International Trade Expositions Limited S 92 - 104 L&T ECC Construction (M) SDN. BHD. S 105 - 114 Larsen & Toubro (Oman) LLC S 115 - 124 Larsen & Toubro International FZE S 125 - 130 Larsen and Toubro Ceylinco (Private) Limited S 131 - 140 L&T Finance Limited S 141 - 166 L&T Capital Company Limited S 167 - 177 L&T Holdings Limited S 178 - 189 Tractor Engineers Limited S 190 - 209 Larsen & Toubro LLC S 210 - 216 HPL Cogeneration Limited S 217 - 233 Bhilai Power Supply Company Limited S 234 - 242 L&T Power Investments Private Limited S 243 - 249 Raykal Aluminium Company Private Limited S 250 - 254 India Infrastructure Developers Limited S 255 - 270 L&T-Sargent & Lundy Limited S 271 - 287
Transcript
LARSEN & TOUBRO LIMITEDANNEXURE TO DIRECTORS' REPORT 2003-2004
REPORTS AND ACCOUNTS - SUBSIDIARY COMPANIES
Contents Pages
Larsen & Toubro Infotech Limited S 2 - 20
Larsen & Toubro Infotech GmbH S 21 - 27
L&T Transportation Infrastructure Limited S 28 - 37
L&T Western India Toll Bridge Limited S 38 - 48
Narmada Infrastructure Construction Enterprise Limited S 49 - 58Cyberpark Development & Construction Limited S 59 - 68
L&T Infocity Limited S 69 - 84
Andhra Pradesh Expositions Private Limited S 85 - 91Hyderabad International Trade Expositions Limited S 92 - 104
L&T ECC Construction (M) SDN. BHD. S 105 - 114Larsen & Toubro (Oman) LLC S 115 - 124
Larsen & Toubro International FZE S 125 - 130
Larsen and Toubro Ceylinco (Private) Limited S 131 - 140
L&T Finance Limited S 141 - 166L&T Capital Company Limited S 167 - 177
L&T Holdings Limited S 178 - 189
Tractor Engineers Limited S 190 - 209
Larsen & Toubro LLC S 210 - 216
HPL Cogeneration Limited S 217 - 233Bhilai Power Supply Company Limited S 234 - 242L&T Power Investments Private Limited S 243 - 249Raykal Aluminium Company Private Limited S 250 - 254
India Infrastructure Developers Limited S 255 - 270
L&T-Sargent & Lundy Limited S 271 - 287
LARSEN & TOUBRO INFOTECH LIMITED
Directors’ Report
The Directors have pleasure in submitting the Seventh Annual Report and Accounts of Larsen & Toubro Infotech Limited for the year ended March 31,2004.
FINANCIAL RESULTS 2003-04 2002-03Rs. Million Rs. Million
Total Income 3662.60 2526.58Operating Profit (PBIDT) 422.56 363.53Less : Interest 30.99 33.10Less : Depreciation and amortisation 227.86 161.76Less : Amortisation of deferred revenue expenditure 40.59 29.46Profit Before Tax (PBT) 123.12 139.21Less : Provision for Current Tax 4.22 10.45Add/ Less: Writeback / further provision for earlier years - (5.10)Add/ Less: Writeback / further provision for Deferred Tax (3.53) 1.31Profit After Tax (PAT) 122.43 132.55Add : Balance brought forward from previous year 169.72 133.72Balance available for disposal which Directors appropriate as follows : 292.15 266.27Dividends - 75.00Transfer to General Reserve - 21.55Balance to be carried forward 292.15 169.72
DIVIDEND
The Directors do not recommend payment of any dividend for the year.
FINANCIAL PERFORMANCE
Total income from all sources was Rs. 3662.60 million (increase of 45% over previous year). Software exports amounted to Rs. 3339.06 million(increase of 49% over previous year).
Operating profit (PBIDT) was Rs. 422.56 million (increase of 16% over previous year). Profit before tax was Rs. 123.12 million (decrease of 12% overprevious year) and Profit after tax was Rs. 122.43 million (decrease of 8% over previous year). Earnings per share were Rs. 4.08 per equity share ofRs.5 each.
YEAR IN RETROSPECT
The year 2003-04 witnessed increasing trend towards offshoring as a measure to counter the effect of global slowdown. In the second half of the year,US economy has started showing a positive outlook. With competition continuing to be intense, the billing rates have been under pressure, though theyhave stabilised in the wake of increased spending by large companies.
With the proven offshore outsourcing model and expectation of long term cost leveraging, US Companies continue large scale outsourcing. However, inthe fear of loss of jobs various countries have been increasingly monitoring the inflow of foreign labour which is imposing restrictions on the freemovement of software professionals.
QUALITY INITIATIVES
During the year, the Company achieved PCMM Level 5 Certification for three of its six development centres in India and expects to have the othercentres certified by the end of next quarter. The Company has also undertaken the IT Security Certification exercise under BS7799 standard and hopesto receive the certification in the near future.
ORGANISATION
During the past year, the Company has been able to establish the following milestones :
l Worthy of being ranked among the top five Indian Information Technology Service vendors in the business arena of multi year, multi skill globaldelivery annuity engagements calling for extended sales cycles, significant business development expenses, significant ramp up expenses andcapability to undertake risk bearing service level agreements.
l Establish international track record in end-to-end package implementation including annuity O&M contracting in multiple ERPs like SAP, Oracleand Peoplesoft – JD Edwards.
l Emerged as a vendor of choice for several Europe based companies in the mobile handset business for solutions with critical time to marketcycles.
l Accelerated growth in Banking and Financial services arena, where active search has been triggered for acquisition opportunities.
During the coming year the thrust will be on presenting focussed solutions to the market in the manufacturing arena in areas like Product Life CycleManagement (PLM), Global Supply Chain Management (SCM), Multi-tier Decision Support Systems (DSS) and fine tuned Customer RelationshipManagement (CRM).
LARSEN & TOUBRO INFOTECH LIMITED
These milestones underscore the confidence that the Company is at an accelerated growth path in chosen lines of business.
Substantial investment has been made during the year in strengthening the sales and marketing organisation by recruiting senior industry professionals.These investments are expected to give results during the coming year.
On the strength of the parental support from L&T, the Company has been successful in securing certain long term contracts which are expected to spurthe growth in the coming years. In view of this the Company is confident of significantly improving its performance in the next year.
CAPITAL EXPENDITURE
As at 31st March 2004 the gross Fixed Assets stood at Rs.1490.43 million out of which assets amounting to Rs.133.43 million were added during theyear.
DEPOSITS
During the period under review, the Company has not accepted any deposits from the public.
SUBSIDIARY COMPANIES
As required under Section 212 of the Companies Act, 1956, the Audited Statement of Accounts, the Reports of the Board of Directors and Auditors ofthe subsidiary are annexed.
AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications. The notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy,technology absorption, foreign exchange earnings and outgo is given in Annexure A forming part of this report.
PERSONNEL
The Board of Directors wishes to express its appreciation to all the employees of the Company for their outstanding contribution to the operations of theCompany during the year.
The information required under Section 217 (2A) of the Companies Act, 1956 & the rules made thereunder, are given in a separate annexure to thisReport and forms part of the Report. The Report and the Accounts are being sent to the shareholders excluding the aforesaid annexure. AnyShareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered office of the Company.
DIRECTORS’ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) which was introduced by the Companies (Amendment) Act, 2000, your Directors confirm that :-
(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure.
(ii) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2004 and of the profit or loss of the Company forthe year ended 31st March, 2004.
(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
(iv) The Directors have prepared the annual accounts on a going concern basis.
DIRECTORS
Mr. A. M. Naik retires from the Board of Directors by rotation and is eligible for re-appointment.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Y M Deosthalee, Mr. A M Naik and Mr. J P Nayak, all non-wholetime directors of the Company with Mr. Y MDeosthalee as its Chairman. The role, terms of reference, the authority and power of the Audit Committee are in conformity with the requirements of theCompanies Act, 1956.
AUDITORS
The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Vendors, Suppliers and Customers.
For and on behalf of the Board
A. M. NAIK Y. M. DEOSTHALEEDirector Director
Mumbai, 22nd May, 2004
LARSEN & TOUBRO INFOTECH LIMITED
ANNEXURE 'A' TO THE DIRECTORS' REPORT
INFORMATION AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2004.
A. Conservation of energy
(a) Since the Company is engaged in software development, it is not a major consumer of energy.
B. Technology absorption
(b) Efforts made in technology absorption as per Form B of the Annexure Details furnished in Form B.
C. Foreign exchange earnings and outgo
(c) Activities relating to exports; initiatives taken to increase exports, The Company exports customised software and professionaldevelopment of new export markets for products and services; and services mainly to North America, Western Europe, Japan,export plans Korea and Singapore. The Company plans to conduct road
shows in USA to promote offshore execution of softwareservices from India. It also maintains constant contact withprospective customers for its offerings by way of participationin International Trade Fairs.
(d) Total foreign exchange used and earned 2003-04 (Rs. Million)
Used 1794.44
Earned 3339.12
FORM B
(Disclosure of particulars with respect to Technology Absorption)
RESEARCH AND DEVELOPMENT (R & D)
1. Specific areas in which R & D carried out by the Company
2. Benefits derived as a result of the above R & D
3. Future plan of action
4. Expenditure on R & D Not Applicable
a) Capital
b) Recurring
c) Total
d) Total R&D expenditure as a percentage of total Turnover
Technology absorption, adaptation and innovation
1. Efforts in brief made towards technology absorption, adaptation and innovation: The Company operates Centres of Excellence in respect ofemerging and existing technologies which collate, disseminateand spread knowledge to all employees in the Company.Employees are trained using state of the art methodologies,which results in better productivity. The Company has createda software component library to ensure reusability of softwareand consistency in implementation. These find particular usein B2B market place implementations where adherence tostandards and compatibility with different platforms is veryimportant.
2. Benefits derived as a result of the above efforts : Repeat business, expansion into various new technologydomains and productivity improvements through use of latestsoftware tools.
}
TO THE MEMBERS OF LARSEN & TOUBRO INFOTECH LIMITED
We have audited the attached balance sheet of Larsen & Toubro Infotech Limited as at 31 March 2004 and the annexed profit and loss account and thecash flow statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of theCompany’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 auditto obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting pr inciples used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
In accordance with the provisions of section 227 of the Companies Act, 1956, we report as under:
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 thosebooks;
c) the said balance sheet and profit and loss account are in agreement with the books of account;
d) in our opinion, the balance sheet and profit and loss account comply with the accounting standards referred to in section 211 (3C) of theCompanies Act, 1956; and
e) on the basis of written representations received from the directors as on 31 March 2004, and taken on record by the board of directors, we reportthat none of the directors is disqualified as on 31 March 2004 from being appointed as director in terms of clause (g) of sub-section (1) of section274 of the Companies Act, 1956.
In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significantaccounting policies in schedule P and the notes appearing thereon, give the information required by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the balance sheet, of the state of the affairs of the Company as at 31 March 2004;
ii) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and
iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.
As required by the Companies (Auditor’s Report) Order, 2003 issued by the central government under section 227(4A) of the Companies Act, 1956, wereport as under:
1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.
(b) The assets were physically verified by management during the year. In our opinion, the frequency of such verification is reasonable. We wereinformed that no material discrepancies were noticed on such verification.
(c) Fixed assets disposed off during the year are not substantial in relation to the Company and do not affect the going concern.
2 There are no loans either granted to or taken from companies, firms or other parties that are covered in the register maintained under section 301of the Companies Act, 1956.
3 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe 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 tothe information and explanations given to us, there is no continuing failure to correct major weaknesses in internal controls.
4 According to the information and explanations given to us, there are no transactions that need to be entered into the register to be maintainedunder section 301 of the Companies Act, 1956.
5 The Company has not accepted any deposits in terms of provisions of sections 58A and 58AA of the Companies Act, 1956.
6 We are of the opinion that the Company has an internal audit system commensurate with the size and the nature of its business.
7 We are informed by management that cost records are not required to be maintained by the Company.
8 (a) According to the information and explanations given to us and as per the records of the Company, the Company has been regular indepositing undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax,custom duty, excise duty and other statutory dues 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, sales tax, income tax, customduty, wealth tax, excise duty and other statutory dues were outstanding as at 31 March 2004 for a period of more than six months from thedate they became payable. We were informed by management that there are no dues payable under the Employees State Insurance Act.
(b) According to the information and explanations given to us and according to the records of the Company, there are no dues of sales tax,income tax, custom duty, wealth tax and excise duty that have not been deposited with the appropriate authorities on account of any dispute.
9 There are no accumulated losses at the end of the financial year and the Company has not incurred cash losses in the current financial year or inthe immediately preceding financial year.
Auditors’ Report
LARSEN & TOUBRO INFOTECH LIMITED
10 Based on our audit procedures and the information and explanations given by management, we are of the opinion that the Company has notdefaulted in repayment of dues to a financial institution, bank or debenture holder.
11 The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.
12 The Company is not dealing in shares, securities, debentures and other investments.
13 According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks orfinancial institutions.
14 To the best of our knowledge and belief and according to the information and explanations given by management, we are of the opinion that theCompany has applied term loans for the purpose for which the loans were obtained.
15 Based on our examination and the information and explanations given by management, we are of the opinion that the funds raised by the Companyon short term basis are not used for long term investment and vice-versa.
16 Based on our audit procedures and the information and explanations given by management, we report that no fraud on or by the Company hasbeen noticed or reported during the course of our audit.
17 Clauses (ii)(a), (ii)(b), (ii)(c), (xiii), (xviii), (xix), and (xx) of paragraph 4 of the Order are not applicable to the Company in the current year.
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 22nd May, 2004
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees
SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDSShare capital A 150,000,000 150,000,000Reserves and surplus B 812,148,742 689,718,801
962,148,742 839,718,801LOAN FUNDSSecured loans C 791,719,697 707,657,729Unsecured loans D 91,067,394 176,076,735
Current assets,loans and advancesSundry debtors G 790,211,992 719,124,109Cash and bank balances H 44,013,684 47,961,222Loans and advances I 546,244,475 344,925,000
1,380,470,151 1,112,010,331Less : Current liabilities and provisions JCurrent liabilities 302,362,108 289,732,935Provisions 37,853,248 25,170,280
340,215,356 314,903,215
Net current assets 1,040,254,795 797,107,116
Deferred revenue expenditure K 11,128,350 51,718,082(To the extent not written off or adjusted)
TOTAL 1,845,658,134 1,727,706,208
SIGNIFICANT ACCOUNTING POLICIES PAND NOTES TO ACCOUNTS
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountantsby the hand ofR. D. KAREPartner
Mumbai, 22nd May, 2004
V. K. MAGAPUManager
Y. M. DEOSTHALEEDirector
A. M. NAIKDirector
S. S. PRABHUDESAICompany Secretary
Mumbai, 22nd May, 2004
LARSEN & TOUBRO INFOTECH LIMITED
Profit and Loss Account for the year ended 31st March, 20042003-2004 2002-2003
Other income L 16,573,426 14,770,0843,662,602,326 2,526,583,365
EXPENDITURE:Software development expenses M 2,222,187,802 1,420,732,954Sales, administration and other expenses N 1,017,851,603 742,315,030
3,240,039,405 2,163,047,984
Operating profit (PBIDT) 422,562,921 363,535,380Interest O 30,993,709 33,103,489Depreciation on tangible assets 125,161,222 107,134,423Amortisation of intangible assets 102,695,144 54,630,591Amortisation of deferred revenue expenditure 40,589,732 29,461,375Profit before tax (PBT) 123,123,114 139,205,502Provision for taxes (including Rs 200,000 for wealth tax; 4,223,815 10,448,280previous year Rs. 400,000)
(Write back)/further provision for tax earlier years (net) - (5,099,820)Deferred tax (3,530,642) 1,311,289Profit after tax (PAT) 122,429,941 132,545,753Add : Balance brought forward from previous year 169,718,801 133,725,169Profit available for appropriation 292,148,742 266,270,922Less: Transfer to general reserve - 21,552,121Profit available for distribution 292,148,742 244,718,801Interim dividend - 75,000,000Balance to be carried forward 292,148,742 169,718,801
Basic and diluted earnings per share (EPS) 4.08 4.42Equivalent number of shares of Rs.5 each 30,000,000 30,000,000
SIGNIFICANT ACCOUNTING POLICIES PAND NOTES ON ACCOUNTS
As per our report attached
SHARP & TANNANChartered Accountantsby the hand ofR. D. KAREPartner
Mumbai, 22nd May, 2004
V. K. MAGAPUManager
Y. M. DEOSTHALEEDirector
A. M. NAIKDirector
S. S. PRABHUDESAICompany Secretary
Mumbai, 22nd May, 2004
Cash Flow Statement for the year ended 31st March, 20042003-2004 2002-2003
Rupees RupeesA Cash flow from operating activities :
Net profit before tax 123,123,114 139,205,502Adjustments for :Depreciation and amortisation 227,856,366 161,765,014Interest paid 31,377,153 42,436,417Unrealised foreign exchange difference 18,763,058 5,571,338Dividend received from subsidiary company - (11,966,602)Income from other investments (151,468) (438,100)Deferred revenue expenditure amortised 40,589,732 29,461,375Cost of long term projects amortised 6,285,538 -Deferred revenue expenditure - (81,179,457)Cost of long term projects (41,878,192) -(Profit)/loss on sale of fixed assets 2,311,593 122,541Operating profit before working capital changes 408,276,894 284,978,028Changes in working capital(Increase)/decrease in trade receivables (71,087,884) (154,317,557)(Increase)/decrease in other receivables (177,833,388) (111,257,340)Increase/(decrease) in trade payables 15,761,341 106,467,990(Increase)/decrease in working capital (233,159,931) (159,106,907)Cash generated from operations 175,116,963 125,871,121Direct taxes paid (4,266,335) (299,557)Net cash from operating activities 170,850,628 125,571,564
B Cash flow from investing activities :Purchase of fixed assets (217,585,132) (467,185,809)Sale of fixed assets 68,523,192 2,962,586Investments 3,500,000 (3,500,000)Interest received 383,444 9,332,928Dividend received from subsidiary - 26,883,602Dividend received from other investments 151,468 403,558Net cash from investing activities (145,027,028) (431,103,135)
C Cash flow from financing activities :Proceeds from other borrowings (net) 91,052,626 296,174,464Inter corporate borrowings (92,000,000) 170,000,000Financial expenses (28,823,764) (53,161,922)Dividend paid - (112,500,000)Dividend tax paid - (9,945,000)Net cash from financing activities (29,771,138) 290,567,542Net (decrease)/increase in cash and cash equivalents (A+B+C) (3,947,538) (14,964,029)Cash and cash equivalents at the beginning of the year 47,961,222 62,925,251Cash and cash equivalents at the end of the year 44,013,684 47,961,222
Notes:1 Cash flow has been prepared under the indirect method as set out in the Accounting Standard - 3 issued by the Institute of Chartered Accountants
of India.
2 Purchase of fixed assets includes movements of capital work-in-progress between the beginning and end of the year.
3 Previous year’s figures have been regrouped /reclassified wherever applicable.
As per our report attached
SHARP & TANNANChartered Accountantsby the hand ofR. D. KAREPartner
Mumbai, 22nd May, 2004
V. K. MAGAPUManager
Y. M. DEOSTHALEEDirector
A. M. NAIKDirector
S. S. PRABHUDESAICompany Secretary
Mumbai, 22nd May, 2004
LARSEN & TOUBRO INFOTECH LIMITED
As at 31-3-2004 As at 31-3- 2003Rupees Rupees
SCHEDULE A
Share capitalAuthorised : 3,05,00,000 Equity shares of Rs.5 each
(Previous year 3,00,00,000 of Rs. 5 each) 152,500,000 150,000,000Issued and Subscribed :3,00,00,000 Equity Shares for Rs. 5 each 150,000,000 150,000,000(Previous year 3,00,00,000 of Rs. 5 each)
Paid up :3,00,00,000 Equity Shares for Rs. 5 each 150,000,000 150,000,000(Previous year 3,00,00,000 of Rs. 5 each)
All the above Equity shares (Same as previous year)
are held by Larsen and Toubro Limited, the holding
Company
150,000,000 150,000,000
SCHEDULE B
Reserves and surplusGeneral reserve
As per last balance sheet 520,000,000 498,447,879Add : Transferred from profit and loss account - 21,552,121
520,000,000 520,000,000Profit and loss account 292,148,742 169,718,801
812,148,742 689,718,801
SCHEDULE C
Secured loansLoans from banks 791,719,697 707,657,729
791,719,697 707,657,729
SCHEDULE D
Unsecured loansInter corporate borrowings (from holding company) 78,000,000 170,000,000Lease finance (due within one year Rs. 3,775,004) 13,067,394 6,076,735
91,067,394 176,076,735
Schedules forming part of the accounts
Schedules forming part of the accounts
GROSS BLOCK DEPRECIATION /AMORTISATION NET BLOCK
Block BlockFixed Assets As at As at Up to For the On As At As at As at
Note : Additions and Capital Work In Progress includeRs.1,800,000 being borrowing costs capitalised in accordance with Accounting Standard -16 “Borrowing Costs” issued by Institute of Chartered Accountants of India.Rs.149,764 (net) being exchange difference.
As at 31-3-2004 As at 31-3-2003Rupees Rupees
SCHEDULE F
Investments (at cost,unquoted)Long term investment1, fully paid equity share of Euro 25,000/- in 1,140,650 1,140,650L&T Infotech GmbH, wholly owned subsidiaryCurrent investmentsPrincipal Asset Management Co. Ltd. - Money at call option. - 3,500,000Details of investments purchased and sold during the year :(3,57,50,000 units of Rs. 10 each subscribed; Cost Rs. 35,75,00,000)(3,92,50,000 units of Rs. 10 each sold ; Sale value Rs. 39,25,00,000)
1,140,650 4,640,650SCHEDULE G
Sundry debtorsUnsecuredDebts outstanding for a period exceeding six monthsConsidered good 110,371,172 75,648,705Considered doubtful 82,180,633 78,955,069
192,551,805 154,603,774Other DebtsConsidered good
- Due from subsidiary 6,253,596 14,592,265- Others 673,587,225 628,883,139
Considered doubtfulLess : Provision for doubtful debts 82,180,634 78,955,069
790,211,992 719,124,109
SCHEDULE E1 & E2
LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of the accounts
As at 31-3-2004 As at 31-3-2003Rupees Rupees
SCHEDULE H
Cash and bank balancesCash on hand 319,532 315,484Balances with scheduled banks
in current accounts (including remittances in transit) 12,734,349 14,204,115Balances with non-scheduled banks 30,959,803 33,441,623(see schedule P note 2) 44,013,684 47,961,222
SCHEDULE I
Loans and advancesSecured :Loans against mortgage of house property 6,579,515 8,222,241Unsecured :Unbilled revenues 202,029,971 11,724,833Due from subsidiary company 4,880,000 4,880,000Advances recoverable in cash or in kind 297,162,335 320,097,926Cost of long term projects 35,592,654 -(see schedule P note 16 )
546,244,475 344,925,000
SCHEDULE J
Current Liabilities and provisionsCurrent Liabilities :
Sundry creditors 253,813,164 164,140,610Due to holding company 48,313,944 125,542,325Due to directors 235,000 50,000
Deferred Revenue Expenditure(To the extent not written off or adjusted)
Restructuring expenses - 25,751,924Expenses for SEI CMM Level 5 11,128,350 25,966,158
11,128,350 51,718,082
SCHEDULE L
Other incomeDividend from subsidiary - 11,966,602Income from other investments 151,468 438,100Provision no longer required - 1,548,000Miscellaneous income 16,421,958 817,382
16,573,426 14,770,084
Schedule forming part of the accounts2003-2004 2002-2003
Rupees RupeesSCHEDULE M
Software development expensesSalaries including overseas staff expenses 1,529,168,942 1,146,969,414Staff welfare 86,606,618 75,472,788Contribution to provident and other funds 29,530,039 23,868,547Contribution to superannuation fund 13,339,014 9,788,171Contribution to gratuity fund 4,101,593 2,463,228Communication expenses 93,989,557 30,512,643Consultancy charges 372,413,988 73,400,027Cost of Software packages for own use 32,475,211 24,063,373Cost of bought-out items for resale 60,562,840 34,194,763
2,222,187,802 1,420,732,954
SCHEDULE N
Sales, Administration and other expensesSalaries including overseas staff expenses 326,119,536 226,531,197Travelling and conveyance 160,104,341 129,850,319Rent (lease rent Rs. 6,705,608 ; previous year Rs. 6,705,608 ) 103,190,225 75,077,929Telephone charges and postage 70,648,077 47,201,239Legal and professional charges 79,439,553 69,174,854Printing and stationery 21,206,488 18,211,516Advertisement 7,449,436 7,300,241Advertisement for Vacancies 15,300,581 6,765,847Repairs to building 1,147,741 2,591,743Repairs to computers 7,204,691 8,533,941General repairs and maintenance 35,822,558 26,769,620Loss on sale of Fixed Assets 2,311,593 122,541Power and fuel 38,656,205 24,068,778Establishment expenses 43,980,934 28,844,093Insurance charges 13,919,184 6,521,002Rates and taxes 6,072,859 4,744,053Auditors’ remuneration 744,803 679,350Bad debts 21,850,477 -Provision for doubtful debts (net) 3,225,565 24,792,691Commission charges 12,970,583 6,680,248Books and periodicals 7,290,617 6,533,928Entertainment 7,336,729 5,939,550Directors' fees 235,000 50,000Miscellaneous expenses 25,338,289 15,330,350Amortisation of cost of long term projects 6,285,538 -
1. Basis of accountingThe Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accountingprinciples (“GAAP”) and in compliance with the Accounting Standards referred to in section 211(3C) and other requirements of the Companies Act,1956.The preparation of financial statements in confirmity with GAAP requires the management of the Company to make estimates and assumptionsthat affect the income and expense reported for the period and assets and liabilities reported as of the date of the financial statements. Examples ofsuch estimates include the useful lives of the fixed assets, provision for doubtful debts, future obligations in respect of retirement benefit plans, etc.Actual results could vary from these estimates.
2. Revenue recognitionRevenue earned from services provided on “time and material” basis is recognised based on software developed or time spent in person hours orperson weeks and billed to customers as per the terms of specific contracts.
Revenue from services performed on “fixed-price” basis is recognised using the percentage of completion method. Unbilled revenue representsvalue of services performed in accordance with the contract terms but not billed.Revenue on sale of software packages is accounted on despatch to customers.
3. Retirement benefitsContribution to provident and super-annuation funds are accounted on actual liability basis. Provision for leave encashment benefit on retirement ismade on the basis of actuarial valuation. Gratuity contribution is made to the group gratuity scheme of the Life Insurance Corporation of India.
4. Fixed AssetsTangibleFixed Assets are stated at cost less depreciation.IntangibleComputer software developed in-house is capitalised at cost.
5. Leases(a) Lease transactions entered into prior to April 1, 2001:
The lease rentals in respect of such assets are charged to the profit and loss account.(b) Lease transactions entered into on or after April 1, 2001:
(i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as financeleases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of minimum leasepayments and a liability is created for an equivalent amount. Each lease rental is allocated between the liability and the interest cost, soas to obtain a constant periodic rate of interest on the outstanding liability for each period.
(ii) Assets acquired under lease where a significant portion of the risks and rewards of ownership are retained by the lessor are classifiedas operating leases. Lease rentals are charged to the profit and loss account on accrual basis.
6. DepreciationTangible - Owned assets
Depreciation on all assets is calculated using straight line method at rates prescribed by schedule XIV to the Companies Act, 1956, except for thefollowing:l Plant and machinery 20%
l Computers 30%l Servers 25%
l Furniture and fixtures 10%l Office equipments 20%l Motor cars 14.14%
Tangible - Leased assetsAssets acquired under finance leases are depreciated at the rates applicable to similar assets owned by the Company as there is reasonablecertainty that the Company shall obtain ownership of the assets at the end of the lease term.
Schedules forming part of the accounts
Intangible assetsThe basis of amortisation of intangible assets is as follows:
l Leasehold land over the residual period of the leasel Computer software 33.33%
l Business Rights over a period of five yearsDepreciation / amortisation on additions / disposals is calculated pro-rata from / to the month of additions / disposals.
7. Borrowing costBorrowing cost that are attributable to the acquisition and construction of qualifying assets are capitalised as part of cost of such assets till suchtime as the asset is ready for its use. A qualifying asset is one that requires a substantial period of time to get ready for its intended use. All otherborrowing costs are recognised as an expense in the period in which they are incurred.
8. Deferred revenue expenditureThe expenses disclosed under Miscellaneous Expenditure are amortised as follows:
(a) Restructuring expenses over a period of two years(b) Expenses incurred for obtaining SEI CMM Level 5 certification are amortised over a period of two years from completion of the exercise.
9. Foreign currency transactionsForeign currency transactions are recorded at the rates prevailing on the date of the transaction.Translation of foreign currency transaction of overseas branches is as under:l revenue items at the average rate for the period;
l fixed assets and investments at the rates prevailing on the date of the transaction; andl other assets and liabilities at year end rates.
Exchange difference on settlement / year end conversion is adjusted to:l cost of fixed assets, if foreign currency liability pertains to fixed assets; and
l profit and loss account in other cases.Profit or loss on forward contracts is accounted over the period of the contract.
10. Income taxProvision for income tax for the current year is based on the taxable profits for the year after considering tax exemptions / allowances.
Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax asset, on timing differences being the differencesbetween taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
Schedules forming part of the accounts
LARSEN & TOUBRO INFOTECH LIMITED
Notes forming part of Accounts
1. The secured loans from banks are secured against hypothecation of the Company’s movable assets and accounts receivables.
2. Balances with non-scheduled banks held in :Max. amount outstanding
As at As at at any time during31.3.2004 31.3.2003 2003-2004 2002-2003
Rupees Rupees Rupees Rupee
Current accountCitibank N.A., New Jersey (Collection) 9,675,426 34,023,098 140,068,518 111,342,239Citibank N.A., New Jersey (Checking) 487,517 (9,277,961) 139,110,440 84,541,823Citibank N.A., Paris 1,611,631 - 22,740,211 -Citibank N.A., Singapore 300,775 - 7,946,303 -Fleet Boston, New Jersey 3,121,228 - 68,299,151 -HSBC, London (GBP) 1,277,112 (3,521,400) 16,546,465 33,360,842HSBC, London (USD) 2,196,549 355,454 14,517,920 55,930,242HSBC, London (EUR) 186,434 2,878,778 10,214,413 2,667,936State Bank of India, Tokyo 623,001 3,537,407 6,624,731 4,731,401State Bank of India, New Jersey - (6,618,857) - 37,524,879Tokyo Mitsubishi Bank, Tokyo 4,235,254 470,441 10,926,400 6,242,344Total 23,714,927 21,846,960Deposit accountCitibank N.A., New Jersey 7,244,876 11,594,663 7,244,876 11,594,663
3. The Company is mainly engaged in the business of software development. This is not capable of being expressed in the form of generic units.Hence it is not possible to give quantitative details and information required under Paragraphs 3, 4c of part II of Schedule VI to the Companies Act,1956.
4. The net exchange gain arising on foreign currency transactions amounting to Rs. 65,645,072 (previous year loss of Rs. 10,94,842) has beenaccounted under respective revenue heads.
Total 744,803 651,8509. Value of imports on C.I.F. basis :
Capital goods 43,020,895 74,024,475Others 25,772,483 1,950,363Total 68,793,378 75,974,838
10. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for:Rs. 16,946,938 (previous year : Rs. 19,085,957)
11. The break-up of net deferred tax liability as at March 31, 2004 is as under:
Deferred tax asset/ Current year Deferred tax asset/ (liability)(liability) as at March 31, 2003 (charge) / credit as at March 31, 2004
(to the extent not written off /adjusted) (1,484,311) 1,164,927 (319,384)l Cost of long-term projects (1,030,628) (1,030,628)
l Total (6,529,093) 189 (6,528,904)Deferred tax assetl Unabsorbed depreciation - 3,453,675 3,453,675l Provision for doubtful debts 2,266,010 92,575 2,358,585l Others 10,140 (15,797) (5,657)
l Total 2,276,150 3,530,453 5,806,603Net deferred tax liability (42,52,943) 3,530,642 (722,301)
12. Sale and lease-back :
In the current year, vehicles having net book value of Rs. 62,621,921 were sold at the book value and taken back on operating lease.
13. Leases :
Finance LeasesIn accordance with Accounting Standard 19 “Leases” issued by the Institute of Chartered Accountants of India, the assets acquired under financeleases on or after April 1, 2001 are capitalised and a loan liability is recognised for an equivalent amount. Consequently depreciation is provided onsuch leases. Lease rentals paid are allocated to the liability and the interest charged to profit and loss account.
Consequently, the gross block of fixed assets is higher by Rs. 18,637,727, depreciation for the year is higher by Rs. 3,708,025 and charge to profitand loss account in respect of lease rentals is lower by Rs. 5,668,758, interest expense is higher by Rs.1,486,460 and the profit is higher byRs. 474,273.Assets acquired on finance lease comprise of servers. The minimum lease rentals and their present value as at March 31, 2004 in respect ofassets acquired under finance lease are as follows:
RupeesMinimum lease payments- Payable not later than 1 year 4,895,047- Payable after 1 year but not later than 5 years 10,762,020- Total 15,657,067Less : future finance charges 2,589,673- Total 13,067,394Present value of minimum lease payments- Payable not later than 1 year 3,775,004- Payable after 1 year but not later than 5 years 9,292,390- Total 13,067,394
LARSEN & TOUBRO INFOTECH LIMITED
Operating LeasesThe Company has taken employee used cars under non-cancellable operating leases. The rental expense in respect of operating leases wasRs. 8,301,495 and the future rentals payable are as follows:
Minimum lease payments- Payable not later than 1 year 23,042,711- Payable after 1 year but not later than 5 years 75,964,693- Total 99,007,404
14. Related party disclosure:The related parties with whom the Company had transactions during the year are :
Figures in brackets pertain to the previous year.No amounts were written off / provided or written back in respect of related party transactions during the year.
15. Segmental reporting:
Segmental reporting of revenues for the Company is on the basis of the geographical location of the customers and is as under:
USA Europe Asia Pacific India Rest of the World TotalRupees Rupees Rupees Rupees Rupees Rupees
Fixed assets used and liabilities contracted for performing the Company’s business have not been identified to any of the above reported segmentsas the fixed assets and services are used interchangeably among segments.
16. Cost incurred for long term projects mainly comprise of legal and employee related costs to secure long term projects. These costs are amortisedover a period of two years commencing from the date of securing the project.
17. Based on the information and records available with the Company, there are no amounts payable to small-scale undertakings due for more than 30days as at March 31, 2004.
18. Previous year’s figures have been regrouped, wherever necessary, to conform to classifications of the current year.
Notes f orming part of the accounts (Contd.)
19. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (Contd.)
I Registration Details
Registration No. 1 1 1 0 4 6 9 3 State Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. )
Public Issue@ Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Rupees thousands)Total Liabilities Total Assets
1 8 4 5 6 5 8 1 8 4 5 6 5 8
Sources of Funds Paid-up Capital Reserves & Surplus
IV Performance of Company (Amount in Rupees thousands)
Turnover (including other income) Total Expenditure
3 6 6 2 6 0 2 3 5 3 9 4 7 9
+ - Profit/Loss Before Tax * + - Profit/Loss After Tax *
1 2 3 1 2 3 1 2 2 4 3 0
Please tick Ap-propriate box + for Profit, - for Loss
Earnings Per Share of Rs.5 Dividend Rate %R S 4 P 0 8
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N A(ITC Code)Product Description S O F T W A R E D E V E L O P M E N T
+ -+
N A
+ +
As per our report attached
SHARP & TANNANChartered Accountantsby the hand ofR. D. KAREPartner
Mumbai, 22nd May, 2004
V. K. MAGAPUManager
Y. M. DEOSTHALEEDirector
A. M. NAIKDirector
S. S. PRABHUDESAICompany Secretary
Mumbai, 22nd May, 2004
LARSEN & TOUBRO INFOTECH LIMITED
Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiarycompany
Name of the subsidiary company Larsen & Toubro Infotech GmbH
Financial year of the subsidiary company ended on 31/03/2004
Number of Shares in the subsidiary company held by 1
Larsen & Toubro Infotech Limited at the above date
The net aggregate of profits, less losses, of the
subsidiary company so far as it concerns
the members of Larsen & Toubro Infotech Limited:
(i) Dealt with in the accounts of Larsen & Toubro Infotech Limited
amounted to:
(a) for the subsidiary's financial year ended 31st March, 2004 Nil
(b) for previous financial years of the subsidiary
since it became subsidiary of Larsen & Toubro Infotech Limited Euro 600,000
(ii) Not dealt with in the accounts of Larsen & Toubro Infotech Limited
amounted to:
(a) for the subsidiary's financial year ended 31st March, 2004 Euro 16,174
(b) for previous financial years of the subsidiary since it became
subsidiary of Larsen & Toubro Infotech Limited Euro 222,332
Changes in the interest of Larsen & Toubro Infotech Limited between the end of the subsidiary's
financial year and 31st March 2004:
Number of shares acquired Nil
Material changes between the end of the subsidiary's financial year and
31st March, 2004 Not applicable
V. K. MAGAPUManager
Y. M. DEOSTHALEEDirector
A. M. NAIKDirector
S. S. PRABHUDESAICompany Secretary
Mumbai, 22nd May, 2004
Directors' ReportThe Directors have pleasure in presenting the Fifth Annual report and the audited accounts of the Company for the year ended 31st March 2004.
Financial Results(Amount in Euros)
2003-04 2002-03
Total Income 5,686,611 3,995,184Profit before tax 242,662 130,838Diminution in value of investment 113,494 -Taxes (Incl. Euro 47370 for prior year) 112,623 52,111Profit after tax 16,174 78,727
Review of OperationsThe Company registered total income of Euro 5.69 Million and profit before tax (before diminution in value of investment) of Eu ro 0.24 Million. Afterconsidering the diminution in the value of investment in PanHealth.com Inc., USA, the profit before tax was Euro 0.13 Million.
The thrust on focused offerings enabled the Company to consolidate its presence and improve the performance despite competitive pressures. TheCompany is cautiously optimistic and hopes to improve the performance in the coming year.
DividendIn view of lower disposable profit, the Directors do not recommend dividend for the current year.
DirectorsDuring the year under review, Mr. Rajgopalan Venkatesh ceased to be the Director of the Company. The Board places on record its sincereappreciation of the valuable contribution made by him. Mr. Karan Singh has been appointed as Director in place of Mr. Rajgopalan Venkatesh.
AuditorsDuring the year under review, pursuant to the notice received from the Member of the Company, the auditors M/s Grant Thornton ADVIDATA AG werereplaced by M/s Pohner & Von Loeben. M/s Pohner & Von Loeben have indicated their willingness for reappointment.
For and on behalf of the Board
Place : Leipzig KARAN SINGH VINAY RAJADHYAKSHADated : 6th May, 2004 Director Director
LARSEN & TOUBRO INFOTECH GmbH LIMITED
Auditors’ OpinionWe have audited the annual financial statements, together with the bookkeeping system. The maintenance of the books and records and thepreparation of the annual financial statements in accordance with German commercial law (and supplementary provisions in the articles of incorporationagreement) are the responsibility of the Company's management. Our responsibility is to express an opinion on the annual financial statements,together with the bookkeeping system based on our audit.
We conducted our audit of the annual financial statements in accordance with § 317 HGB (German Commercial Code) and the Generally AcceptedStandards for the audit of German financial statements promulgated by the Institit der Wirtschaftsprüfer (IDW) in Germany. Those Standards requirethat we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results ofoperations in the annual financial statements in accordance with German principles of proper accounting are detected with reasonable assurance.Knowledge of the business activities and the economic and legal environment of the Company and evaluations of possible misstatements are takeninto account in the determination of audit procedures. The effectiveness of the internal control system and the evidence supporting the disclosures inthe books and records as well as in the annual financial statements are examined primarily on a test basis within the framework of the audit. Theaudit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statementpresentation of the annual financial statements. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, the annual financial statements give a true and fair view of the net assets, financial position and results of operations of the Companyin accordance with German principles of proper accounting.
Pöhner von LoebenMunich, 6th May, 2004 Wirtschaftsprüfer vereidigter Buchprüfer
LARSEN & TOUBRO INFOTECH GmbH LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Euros Rupees Euros Rupees
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital A 25,000.00 1,140,650 25,000.00 1,140,650
Reserves and Surplus B 238,506.26 13,871,351 222,332.13 12,403,865
263,506.26 15,012,001 247,332.13 13,544,515
LOAN FUNDS
Unsecured loans C 110,000.00 4,880,000 110,000.00 4,880,000
the holding company 110,000.00 4,880,000 110,000.00 4,880,000
110,000.00 4,880,000 110,000.00 4,880,000
SCHEDULE DFIXED ASSETS
Assets Currency Gross Block Depreciation Net BlockWDV as at Additions during Cost as at As at For the year As at As at01-04-2003 the year 31-03-2004 01-04-2003 31-03-2004 31-03-2004
SCHEDULE KOther IncomeInterest income 89.17 4,831 7,934.95 384,528Other Income 58,641.69 3,177,207 - -Insurance reimbursement - - 514.12 24,914Currency exchange income 45,803.98 2,481,660 - -Exchange difference on consolidation
104,534.84 5,663,698 8,449.07 409,442
Schedules forming part of accounts
LARSEN & TOUBRO INFOTECH GmbH LIMITED
As at 31-3-2004 As at 31-3-2003Euros Rupees Euros Rupees
SCHEDULE LSoftware development services and productsSalaries including overseas staff expenses 2,374,495.98 128,650,192 1,361,690.14 65,987,505Staff welfare 280,314.39 15,187,434 233,699.04 11,325,055Contribution to provident and other funds - - 12,000.00 581,520Contribution to Superannuation fund - - - -Consumables - - - -Software development services 2,289,934.59 123,096,669 2,132,012.54 101,570,843Cost of software packages - - -for own use - - -for resale - - -
4,944,744.96 266,934,295 3,739,401.72 179,464,923SCHEDULE MSales, administration and other expensesTravelling charges and conveyance 30,331.76 1,643,375 14,882.48 721,205Car expenditures 8,183.32 443,372 - -Rent 14,521.31 786,765 26,083.14 1,263,989Telephone charges 20,117.66 1,089,975 29,073.74 1,408,913Legal and professional charges 53,765.68 2,913,025 119,632.69 5,797,401Printing and stationery 2,169.98 117,570 3,134.61 151,903Advertisement 8,523.81 461,820 - -Gifts 281.79 15,267 111.28 5,393Repairs to computer 1,125.98 61,006 556.86 26,985General repairs and maintenance 696.74 37,749 292.50 14,175Power and fuel 409.01 22,160 2,465.13 119,460Establishment expenses 431.71 23,390 439.76 21,311Insurance charges 12,910.30 699,480 9,680.02 469,094Rates and taxes - - 8,079.18 391,517Auditors' remuneration 12,000.00 650,160 7,600.00 368,296Provision for doubtful debts 90,564.78 4,840,687 - -Commission charges - - - -Books and periodicals 258.04 13,981 380.67 18,447Entertainment 1,755.31 95,103 1,622.51 78,627Bad debts written off - - - -Directors' fee - - - -Bank charges and currency exchange loss 10,375.30 562,134 9,988.96 484,065Currency exchange rate loss 17,542.16 950,434 5,285.86 256,153Exchange difference on consolidation - 723,569 - (692,482)Employee administration and travel cost 49,080.21 2,659,166 51,826.17 2,511,496Stamps and courier 5,922.83 320,899 4,184.46 202,779Education and training 405.00 21,943 64.66 3,133Provision for expenditure - - - -Miscellanous expenses 40,186.39 2,177,297 4,980.31 241,346
Schedules forming part of accountsSchedule ONotes to Financial StatementsGenerallyThe Company is a small company in the sense of section 267 para 1 Commercial Code.
For the Profit & Loss Account the cost of sales method has been applied according to section 275 Commercial Code.
Significant Accounting PoliciesMethod of AccountingThe Company maintains its accounts on accrual basis following the historical cost convention. The financial statements comply with the generallyaccepted accounting principles and German legal provisions.
Fixed AssetsFixed Assets are stated at original purchase or production cost of the Company. As far as amortisable assets are concerned, the original purchase orproduction cost have been reduced by depreciation as scheduled.
DepreciationDepreciation on all assets has been calculated using the straight line method.
In accordance with the simplification rule under the tax regulations, full depreciation has been applied for assets added in the first half year and halfdepreciation for assets added in the second half year.
Low item assets with original purchase cost of not more than EUR 631 (Previous year EUR 285) have been depreciated in the year of addition at the fullamount.
InvestmentsCurrent investments are carried at lower of cost or market value. Long term investments are carried at cost, after providing for any diminution in value, ifsuch diminution is of a permanent nature.
Current assets, loans and advancesFrom the current assets, loans and advances there were taken provisions for doubtful debts calculated specially for each item.
ProvisionsThe provisions were stated at the amount of the probable liabilities.
LiabilitiesThe liabilities have a remaining term of less than one year and are stated at the amount repayable.
RevenuesEUR 5,640,435. Revenue from software development is recognised based on software developed or time spent in person hours or person weeks andbilled to the customer as per the terms of specific contracts. Revenues reported are excluding value added tax. Previous year's figures have also beenreflected accordingly.
Labour CostEUR 2,654,810
Foreign currency transactionsSales and expenses are recorded at rates prevailing on the date of the transaction. Expenses related to overseas offices are converted at average ratesduring the year. Current assets & current liabilities are accounted at rates prevailing on the date of balance sheet. Exchange differences on settlement /conversion are adjusted to Profit & Loss account.
Shareholder and affiliated companies:Larsen & Toubro Infotech Limited
Mumbai, India
May 6, 2004 Leipzig
KARAN SINGH VINAY RAJADHYAKSHADirector Director
L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Directors' ReportThe Directors have pleasure in presenting their report and Accounts for the year ended 31st March 2004.
I. FINANCIAL RESULTS
Amount in Rupees
Description 2003-2004 2002-2003
Profit before depreciation & tax 4,91,41,807 (82,48,292)Depreciation 3,49,31,451 3,49,15,935Profit / (Loss) before tax 1,42,10,356 (4,31,64,227)Provision for tax - -Profit / (Loss) after tax 1,42,10,356 (4,31,64,227)Balance brought forward from Previous year (16,88,02,652) (12,56,38,424)Balance carried to Balance Sheet (15,45,92,296) (16,88,02,651)
II. DIVIDEND
Though the Company has reported profits for the first time, the Directors recommend no dividend in view of the accumulated losses.
III. PERFORMANCE OF THE COMPANY
For the first time since inception, the company has recorded profits in its books.
There has been a considerable increase in Toll fee collection from the users of facility this year in comparison to last year. The compliance levelsat Athupalam Bridge has improved. One of the users at Athupalam, who had suspended payment, had resumed payment from the last quarter ofthe year, including clearing of previous arrears, in instalments.
Consequent to the restructuring of the High cost Term Loans, there has been a decrease in the interest cost. These factors have contributedtowards the profitability of the company.
IV. CAPITAL EXPENDITURE:
As at 31st March 2004, the gross fixed assets stood at Rs.99,42,97,333/- and the net fixed assets at Rs.84,23,14,211/-. Additions during the yearamounted to Rs.35,756/-
V. DEPOSITS:
The Company has not accepted any deposits from the public.
VI. AUDITORS’ REPORT:
The Auditors’ Report to the Shareholders does not contain any qualifications.
VII. DISCLOSURE OF PARTICULARS:
As the company is engaged in developing, operating and maintaining toll road cum bridge, there are no particulars to be disclosed as per theCompanies’ (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
VIII. PARTICULARS OF EMPLOYEES:
There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.
IX. DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms:
1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no materialdeparture;
2. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2004 and of the profit of the Company for theyear ended on that date;
3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern basis.
X. DIRECTORS:
During the year, Mr.T.V.Anantharaman and Mr.R.Balasubramanian, resigned from the Board of the company due to personal reasons. TheMembers of the Board expressed their sincere gratitude for the contribution rendered by Mr.T.V.Anantharaman and Mr.R.Balasubramaniantowards the performance of the company.
Mr.K.Venkatesh retires from the Board of Directors by rotation and being eligible offers himself for re-appointment.
L&T TRANSPORTATION INFRASTRUCTURE LIMITED
XI. AUDIT COMMITTEE:
The Audit Committee consists of three non executive and independent directors. The present members of the Committee are
1. Mr.K.V.Rangaswami Member
2. Mr.K.Venkatesh Member
3. Mr.B.Ramakrishnan Member
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The Committee met periodically during the year and helds discussions with the auditors on internal control systems and internal audit report.
XII. AUDITORS:
The Auditors, M/s Sharp & Tannan, Chartered Accountants, being statutory auditors of the Company hold office until the conclusion of the ensuingAnnual General Meeting and are recommended for reappointment. Certificate from Auditors has been received to the effect that their appointment,if made, would be within the limits prescribed under Section 224(1B) of the Companies Act.
XIII. ACKNOWLEDGEMENTS:
The Directors acknowledge the invaluable support extended to the company by the Financial Institutions, Bankers, employees of the company &staff management of the parent company.
K.V. Rangaswami
B. Ramakrishnan
K. Venkatesh
Directors
For and on behalf of the Board
Place : ChennaiDated : 4th May, 2004
Auditors’ ReportTO THE MEMBERS OF L&T TRANSPORTATION INFRASTRUCTURE LIMITEDWe have audited the attached balance sheet of L&T Transportation Infrastructure Limited as at 31st March 2004, and also the profit and loss account forthe year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress 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 auditto 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 the financial statements. An audit also includes assessing the accounting pr inciples used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.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 purpose of the audit;b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of these
books;c) The balance sheet and profit and loss accounts dealt with by this report are in agreement with the books of account;d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-
section (3C) of section 211 of the Companies Act, 1956;e) On the basis of the written representations received from the Directors of the Company as on 31st March 2004, and taken on record by the Board
of Directors, we report that none of the Directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted inIndia:i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004; andii) In the case of the profit and loss account, of the profit for the year ended on that date.
SHARP & TANNANChartered Accountants
By the hand ofV. R. Lalitha
Place : Chennai PartnerDate : 4th May 2004 Membership No.: 18284
}
L&T TRANSPORTATION INFRASTRUCTURE LIMITED
ANNEXURE TO THE AUDITORS’ REPORTWith reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of L&T Transportation Infrastructure Limited onthe accounts for the year ended 31st March 2004, we report that:
(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets of the company have been disposed off during the year and hence do not affect the going concern assumption.
(ii) As the Company is engaged in the business of infrastructure development and maintenance, the clauses relating to inventory are not applicable.
(iii) The Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business, for the purchase of fixed assets. During the course of our audit we have not observed anycontinuing failure to correct major weaknesses in internal control.
(v) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into the register inpursuance of Section 301 of the Companies Act, 1956.
(vi) The company has not accepted deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of cost records under section 209 (1)(d) of the Companies Act, 1956 for theoperations of the Company and hence reporting under this clause is not applicable to the Company.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, and other statutory dues during the yearwith the appropriate authorities. As at 31st March 2004, there are no undisputed statutory dues payable for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us, there are no disputed statuary liabilities .
(x) The Company has accumulated losses of Rs.15,45,92,296 at the end of the financial year and has not incurred cash losses in the financial yearbut has incurred cash loss of Rs.81,27,336 in the immediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to banks. The Company does not have any borrowings by way of debentures .
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xv) The company has not given any guarantee for loans taken by others from banks .
(xvi) The Company has not obtained any Term Loan during the year.
(xvii) The Company has not raised funds on short term / long term basis during the year.
(xviii) The Company has not made any preferential allotment of shares during the year.
(xix) The Company has not issued debentures during the year. Accordingly, no securities need to be created.
(xx) The Company has not raised any money by public issue during the year.
(xxi) According to the information and explanations given by the Management and on the basis of audit checks carried out by us , we report that nofraud on or by the Company has been noticed or reported during the year.
For SHARP & TANNAN
Chartered Accountants
By the hand of
V. R. LALITHA
Place : Chennai Partner
Date : 4th May 2004 Membership No.: 18284
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 414,000,000 414,000,000
Loan Funds
Secured Loans B 645,300,446 630,490,556
Total 1,059,300,446 1,044,490,556
APPLICATION OF FUNDS :
Fixed Assets: C
Gross Block 994,297,333 994,261,577
Less : Depreciation 151,983,122 117,051,671
Net Block 842,314,211 877,209,906
Investments D - -
Current Assets, Loan and Advances E
Sundry Debtors 4,483,274 -
Cash and bank balances 60,829,240 3,041,160
Loans and advances 4,625,695 2,811,393
69,938,209 5,852,553
Less : Current liabilities and provisions F
Liabilities 7,455,745 7,979,334
Provisions 88,525 -
7,544,270 7,979,334
Net Current Assets 62,393,939 (2,126,781)
Miscellaneous Expenditure
(to the extent not written off or adjusted)
Preliminary Expenses - 604,780
Profit & Loss account 154,592,296 168,802,651
Total 1,059,300,446 1,044,490,556
Significant Accounting Policies I
Notes forming part of Accounts J
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
V. R. LALITHAPartnerMembership No. 18284
Place : Chennai
Date : 4th May, 2004
K. SRINATHANSecretary
K. VENKATESHK.V. RANGASWAMI
B. RAMAKRISHNAN
Directors
Place : Chennai
Date : 4th May, 2004
L&T TRANSPORTATION INFRASTRUCTURE LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
INCOME
Fee collection from users of facility 129,637,467 105,216,717
Licence fees for wayside amenities 1,043,972 1,158,526
Other income G 2,631,842 2,929,443
TOTAL 133,313,281 109,304,686
EXPENDITURE
Operating & maintenance expenses H 39,624,016 20,905,616
Preliminary expenses written off 604,780 120,956
Interest & Finance charge 43,942,677 96,526,406
Depreciation 34,931,451 34,915,935
TOTAL 119,102,924 152,468,913
Profit / (Loss) before taxes 14,210,356 (43,164,227)
Provision for taxes - -
Profit / (Loss) after taxes 14,210,356 (43,164,227)
Add: Profit/(Loss) brought forward from previous year (168,802,652) (125,638,424)
Balance carried to Balance Sheet (154,592,296) (168,802,651)
Earnings per share (Basic & Diluted) 0.34 (1.04)
Significant Accounting Policies I
Notes forming part of Accounts J
Profit and Loss Account for the year ended 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
V. R. LALITHAPartnerMembership No. 18284
Place : Chennai
Date : 4th May, 2004
K. SRINATHANSecretary
K. VENKATESHK.V. RANGASWAMI
B. RAMAKRISHNAN
Directors
Place : Chennai
Date : 4th May, 2004
Schedules forming part of accountsAs at 31-3-2004 As at 31-3-2003
5,00,00,000 Equity Shares of Rs. 10/- each 500,000,000 500,000,000Issued and Subscribed:
41,400,000 Equity Shares of Rs. 10/- each fully paid up 414,000,000 414,000,000( The entire equity shares are held by Larsen & Toubro
Limited its subsidiaries and its nominees)
414,000,000 414,000,000SCHEDULE - BSecured Loans
From Banks
Term Loan - Karnataka Bank 190,490,556 190,490,556Term Loan - SBI 304,809,890 290,000,000Term Loan - UBI 150,000,000 150,000,000(Above loans are secured by a pari passu charge
on all the movable and immovable properties of the
company present and future ) 645,300,446 630,490,556Schedule - C
Fixed Assets Cost Depreciation Book ValueAs at Additions Deletions As at Upto For the year Deduction upto As at As at
* Building includes Bypass road and bridge over river Noyyal (known as Athupalam bridge) constructed on land provided by Government of Tamilnaduunder the Concession Agreement dated 3rd October, 1997 with Ministry of Surface Transport, Government of India and Department of Highways,Government of Tamilnadu, and the cost of the bridge and bypass are being amortised equally over a period of 20 years and 30 years respectively,commencing from 12th December 1998 and 19th January 2000 respectively.
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
Schedule - DInvestments - -Details of investments purchased and sold during the year Face value Cost
Rs. Per unit Nos. (Rs)Mutual funds:
Sundaram Money Fund - Dividend Reinvest Daily 10.00 9,667,512 97,530,644Sundaram Money Fund - Appreciation 10.00 121,400 1,600,000GDFC Grindlays Cash Fund - Daily Dividend 10.00 331,782 3,510,575
L&T TRANSPORTATION INFRASTRUCTURE LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
Schedule - ECurrent Assets, Loans and AdvancesSundry Debtors
Other Debts:Considered good 4,483,274 4,483,274 - -
Cash and bank balancesCash on hand 790,002 698,383Balances with scheduled bank
on Current Account 20,263,965 1,599,861on Fixed Deposits (including interestaccrued thereon Rs.9,60,392 (previous year Rs. Nil) 38,960,392 -
on Margin money Deposits ( including interest accruedthereon Rs.13,805 ( previous year Rs. 2,42,916) 814,881 60,829,240 742,916 3,041,160Loans & Advances
Advances recoverable in cash or in kind 4,625,695 2,811,393
69,938,209 5,852,553Schedule - FCurrent Liabilities and Provisions:
LiabilitiesSundry Creditors- Small scale industries- Others 7,455,745 7,979,334
ProvisionsProvision for Leave Encashment 88,525 -
7,544,270 9,765,560
2003-2004 2002-2003Rupees Rupees
Schedule - GOther income
Interest on fixed deposit 1,638,002 87,241(tax deducted at source Rs. 5,944 (previous
year Rs.85,626) )Dividend Income 291,220 -Profit on sale of investments 13,209 -Miscellaneous Income 689,411 2,842,202
Schedules forming part of accountsSchedule - ISIGNIFICANT ACCOUNTING POLICIES:1. Basis of Accounting
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the Accounting Standardsreferred to in Section 211 (3c) and the other requirement of the Companies Act, 1956. However, certain claims as per Concession Agreement willbe accounted for as and when such claims are approved.
2. IncomeFee collections from users of facility are accounted for as and when the amount is due and recovery is certain.
Licence fees for wayside amenities are accounted on accrual basis.
3. Retirement BenefitsContributions to Provident Fund are accounted on actual liability basis. Leave encashment provision has been made on actual basis.
4. Fixed AssetsFixed assets are stated at original cost. Pre-operative expenses are capitalised as part of fixed assets till the date of commencement ofcommercial operations.
5. InvestmentsInvestments are stated at cost.
6. Leasesi. Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases.
Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and aliability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtainaconstant periodic rate of interest on the outstanding liability for each period.
ii. Assets acquired as leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified asoperating leases. Lease rentals are charged to the Profit & Loss Account on accrual basis.
7. DepreciationDepreciation on assets has been provided on straight line basis at the rates and in the manner specified in the Schedule XIV of the CompaniesAct, 1956. Assets constructed on land not owned by the company are amortised over a period of the rights given under the concession agreementwith the Ministry of Surface Transport, Government of India dated 3rd October, 1997.
8. Borrowing CostBorrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of suchassets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowingcosts are recognised as an expense in the period in which they are incurred.
9. Taxes on IncomeTax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisions ofthe Income Tax Act, 1961, and based on expected outcome of assessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and thetaxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.
Schedule - JNotes forming part of Accounts:1. The company has been awarded a composite contract on Build Operate and Transfer (BOT) basis, the construction of a bypass and a bridge over
the River Noyyal (known as Athupalam bridge) in Coimbatore district of Tamil Nadu state, under the Concession Agreement dated 3rd October1997 with Ministry of Surface Transport, Government of India and Department of Highways, Government of Tamilnadu. The company hadcompleted construction of bypass road on 18.1.2000 and Bridge on 11.12.98. The concession period is 20 years for Athupalam bridge and 30years for the Bypass.
2. The company had no transactions during the year with any small scale industrial undertakings and hence reporting details of interest on overdueoutstandings and amount outstanding for more than thirty days, does not arise.
3. The company is a service company and accordingly information required under paragraph 4(C) of Part II of Schedule VI to the Companies Act,1956 has not been furnished.
4. Manager’s salary and perquisites of Rs. 2,39,974/- (Previous year – Rs.2,18,612/-) for the year ended 31st March, 2004 have been charged to theaccounts.
5. None of the employees have completed five years of service, hence the Provisions of Payment of Gratuity Act, 1972 are not applicable.
7. No provision for income tax has been made for the current year as there is no taxable income under the provisions of Sec 115 JB of the IncomeTax Act, 1961. No provision for wealth tax has been made for the current year as there is no taxable wealth under the Wealth Tax Act 1957.
8. Premium paid on prepayment of term loan amounting to Rs.Nil (Previous year - 94,90,556/-) is charged to the Profit and Loss Account andincluded under Interest and Finance charges.
9. As per Accounting Standard 22 on Taxes on Income –The Company has a net deferred tax asset of Rs. 55,306,111/-. (Previous year –Rs.60,408,161).
(Amount in Rs.) 31.03.2004 31.03.2003
Deferred tax assetsOn account of Unabsorbed loss / depreciation as per 137,904,351 131,221,962
Income tax return
Unpaid statutory liabilities debited to Profit & Loss A/c - 9,070Preliminary expenses 173,572 -
138,077,923 131,231,032Less: Deferred Tax liabilitiesOn account of Difference between carrying amount of fixed
Assets in the books and WDV for income tax purposes. 82,771,811 70,822,87182,771,811 70,822,871
Net deferred tax asset 55,306,111 60,408,161However on a prudent basis, the company has not accrued the said deferred tax asset in these accounts.
10. The company has not capitalised any borrowing cost during the year (Previous year- Rs. NIL)
11. Accounting Standard 18 on Related Party Disclosure is not applicable to the company since the turnover of the company does not exceed Rs. 50Crores for the year.
12. Leases:
a. The company has taken commercial premises under cancellable operating lease. The lease agreement is renewable on expiry.
b. The company has taken on non-cancellable operating lease certain asset, the future minimum lease payment in respect of which, as at 31stMarch 2004 are as follows:
Particulars Rs.
i. Payable not later than 1 year 87,964
ii. Payable later than 1 year and not later than 5 years 3,07,874
Total minimum Lease payments 3,95,838
The lease agreements provide for an option to the Company to renew the lease period at the end of the non-cancellable period. There are noexceptional / restrictive covenants in the lease agreements.
13. Segment Reporting – The Company is in the business of operating a Toll bridge and Bypass and the entire income represents Collections.Accordingly, segment reporting does not arise.
14. a Exchange difference arising on account of foreign currency transactions amounting to Rs. 1,48,09,890 has been debited to Profit and LossAccount. (Previous year – Rs. Nil)
b. Foreign Exchange fluctuations capitalized during the year – Nil (Previous year – Nil)
15. During the year, the company has written off Rs.6,04,780, being the unamortised preliminary expenses to comply with the provisions of AccountingStandard 26 – Intangible Assets.
16. Figures for the previous year have been regrouped/re-classified where necessary.
Notes forming part of accounts
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (contd.)
I Registration Details
Registration No. 1 8 - 3 9 1 0 2 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. Thousands)
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Rupees Thousands)Total Liabilities Total Assets
IV Performance of Company (Amount in Rupees Thousands)
Turnover (including other income) Total Expenditure1 3 3 3 1 3 1 1 9 1 0 3
+ - Profit/Loss Before Tax + - Profit/Loss After Tax1 4 2 1 0 1 4 2 1 0
Earnings Per Share in Rs. Dividend Rate %0 . 3 4 N I L
V Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
Item Code No. N A
Product description INFRASTRUCTURE PROJECT ON BOT BASIS
Signatures to Schedules A to J
Please tick apprepriate Box + for profit for loss
þ þ
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
V. R. LALITHAPartnerMembership No. 18284
Place : Chennai
Date : 4th May, 2004
K. SRINATHANSecretary
K. VENKATESHK.V. RANGASWAMI
B. RAMAKRISHNAN
Directors
Place : Chennai
Date : 4th May, 2004
L&T WESTERN INDIA TOLLBRIDGE LIMITED
The Directors have pleasure in presenting their Report and Accounts for the year ended 31st March 2004.
I. FINANCIAL RESULTS
(Amount in Rupees)
Description 2003-2004 2002-2003Profit Before Depreciation & Tax 7,07,04,997 7,53,08,955Depreciation 5,91,59,902 5,64,64,277Profit / (Loss) Before Tax 1,15,45,095 1,89,16,678Provision for tax 8,87,529 14,89,688Profit / (Loss) After Tax 1,06,57,566 1,74,26,990Balance brought forward from previous year 81,43,784 12,16,800Interim Dividend — 1,05,00,006Transfer to General Reserves 1,25,00,000 —Balance carried to Balance Sheet 63,01,350 81,43,784
II. DIVIDEND
The Directors have not recommended any dividend for the year 2003-2004.
III. BUY BACK OF SHARES
At the Extra-ordinary General Meeting held on 1.3.2004 the Members of the Company have approved buy back of shares to the extent of 10% ofthe paid-up capital.
Considering the availability of funds, the Company has proposed to buy back 7% of the paid-up capital of the Company, which constitutes10,50,000 shares @ 11.50 per share. The buy back was completed on 8.4.2004.
IV. PERFORMANCE OF THE COMPANY
Toll collection was affected during the year due to the toll free opening up of the Ahmedabad - Nadiad section of Ahmedabad-Baroda Expresswayand also due to the diversion of traffic via Bagodana-Watama state highway which was also toll free till 16.1.2004.
V. CAPITAL EXPENDITURE
As at 31st March, 2004, the gross fixed assets stood at Rs. 51,72,75,731/- and the net fixed assets at Rs. 34,06,21,986/-. Additions during the yearamounted to Rs. 10,69,326/-.
VI. DEPOSITS
The Company has not accepted any deposits from the public.
VII. AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
VIII. DISCLOSURE OF PARTICULARS
As the company is engaged in developing, operating and maintaining toll bridge, there are no particulars to be disclosed as per the Companies'(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
IX. PARTICULARS OF EMPLOYEES
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.
X. DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no materialdeparture;
ii. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2004 and of the profit of the Company for theyear 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 theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.
XI. DIRECTORS
During the year, Mr. K.G. Hariharan retired from the Board of Directors of the Company. The Members of the Board expressed their sinceregratitude for the contribution rendered by Mr. K.G. Hariharan towards the performance of the company.
Mr. J. Ganguly retires from the Board of Directors by rotation and being eligible offers himself re-appointment.
Directors’ Report
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Directors’ Report (contd.)XII. AUDIT COMMITTEE
The Audit Committee consists of three non executive and independent directors. The present members of the Committee are:
1. Mr. K.V. Rangaswami Member
2. Mr. K. Venkatesh Member
3. Mr. J. Ganguly Member
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The Committee met periodically during the years and held discussions with the auditors on internal control systems and internal audit report.
XIII. AUDITORS
The Auditors, M/s. Sharp & Tannan, Chartered Accountants, being statutory auditors of the Company hold office until the conclusion of the ensuingAnnual General Meeting and are recommended for reappointment. Certificate from Auditors has been received to the effect that their appointment, ifmade, would be within the limits prescribed under Section 224(1B) of the Companies Act.
XIV. ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the company by the Bankers, employees of the company & staff and management ofthe parent company.
Auditors’ ReportTO THE MEMBERS OF L&T WESTERN INDIA TOLLBRIDGE LIMITED
We have audited the attached balance sheet of L&T Western India Tollbridge Limited as at 31st March 2004, and also the profit and loss account for theyear ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to expressan 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 auditto 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 the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 purpose of the audit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of thesebooks;
c) The balance sheet, profit and loss accounts dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from the Directors of the Company as on 31st March 2004, and taken on record by the Boardof Directors, we report that none of the Directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted inIndia:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004; and
ii) In the case of the profit and loss account, of the profit for the year ended on that date.
SHARP & TANNANChartered Accountants
V. R. LALITHAPlace : Chennai PartnerDate : 4th May, 2004 Membership No.18284
Chennai, 4th May, 2004
For and on behalf of the Board
K. V. RANGASWAMI
R. BALASUBRAMANIAN
K. VENKATESH
Directors}
L&T WESTERN INDIA TOLLBRIDGE LIMITED
ANNEXURE TO THE AUDITORS’ REPORT
With reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of L&T Western India Tollbridge Limited on theaccounts for the year ended 31st March 2004, we report that:
(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets of the company have been disposed off during the year and hence do not affect the going concern assumption.
(ii) As the Company is engaged in the business of infrastructure development and maintenance, the clauses relating to inventory are not applicable.
(iii) The Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business, for the purchase of fixed assets. During the course of our adudit, we have not observed anycontinuing failure to correct major weaknesses in internal control.
(v) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into the register inpursuance of Section 301 of the Companies Act, 1956.
(vi) The company has not accepted deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the operationsof the Company and hence reporting under this clause is not applicable to the Company.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, and other statutory dues during theyear with the appropriate authorities. As at 31st March 2004, there are no undisputed statutory dues payable for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanations given to us, there are no disputed statuary liabilities in respect of income tax
(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and inthe immediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to banks during the year. The Company does not have any borrowings by way of debentures.
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xv) The company has not given any guarantee for loans taken by others from bank or financial institutions.
(xvi) The Company has not obtained any Term Loan during the year.
(xvii) The Company has not raised funds on short - term basis during the year.
(xviii) The Company has not made any preferential allotment of shares during the year.
(xix) The Company has not issued debentures during the year. Accordingly, no securities need to be created.
(xx) The Company has not raised any money by public issue during the year.
(xxi) According to the information and explanations given by the management and on the basis of audit checks carried out by us, we report that nofraud on or by the Company has been noticed or reported during the year.
SHARP & TANNANChartered Accountants
V. R. LALITHAPlace : Chennai PartnerDate : 4th May, 2004 Membership No.18284
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 150,000,070 150,000,070
Reserves & Surplus B 18,801,350 8,143,784
Loan Funds
Secured Loans C 163,798,787 223,226,001
Total 332,600,207 381,369,855
APPLICATION OF FUNDS :
Fixed Assets: D
Gross Block 517,275,731 516,206,405
Less : Depreciation 176,653,745 117,493,843
Net Block 340,621,986 398,712,562
Capital Work-In-Progress - 340,621,986 738,682 399,451,244
Investments E 9,112,895 26,000
Current Assets, Loan and Advances F
Cash and bank balances 4,096,147 3,609,305
Loans and advances 3,597,412 4,430,224
7,693,559 8,039,529
Less : Current liabilities and provisions G
Liabilities 22,406,714 23,662,644
Provisions 2,421,519 2,484,274
24,828,233 26,146,918
Net Current Assets (17,134,674) (18,107,389)
Total 332,600,207 381,369,855
Significant Accounting Policies 1
Notes forming part of Accounts 2
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
V. R. LALITHAPartnerMembership No : 18284
Place : ChennaiDate : 4th May, 2004
V. RAVICHANDRANSecretary
K. V. RANGASWAMI
R. BALASUBRAMANIAN
K. VENKATESH
Directors
For and on behalf of the Board
Place : ChennaiDate : 4th May, 2004
}
L&T WESTERN INDIA TOLLBRIDGE LIMITED
As at 31-3-2004 As at 31-3-2003
Schedules Rupees Rupees Rupees Rupees
INCOME :
Fee collection from users of facilities 104,078,346 112,245,423
Other income H 487,736 10,678,834
TOTAL 104,566,082 122,924,257
EXPENDITURE
Operating & maintenance expenses I 16,579,634 14,707,753
Interest 17,281,451 32,835,549
Depreciation 59,159,902 56,464,277
TOTAL 93,020,987 104,007,579
Profit before taxes 11,545,095 18,916,678
Provision for taxes 887,529 1,489,688
Profit after taxes 10,657,566 17,426,990
Add : Balance brought forward from previous year 8,143,784 1,216,800
Profit available for appropriation 18,801,350 18,643,790
Less: Transfer to General reserve 12,500,000 -
Profit available for distribution 6,301,350 18,643,790
Interim Dividend - 10,500,006
Balance carried to Balance Sheet 6,301,350 8,143,784
Earnings per share - Basic and Diluted 0.71 1.16
Significant Accounting Policies 1
Notes forming part of Accounts 2
Profit and Loss Account for the year ended 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
V. R. LALITHAPartnerMembership No : 18284
Place : ChennaiDate : 4th May, 2004
V. RAVICHANDRANSecretary
K. V. RANGASWAMI
R. BALASUBRAMANIAN
K. VENKATESH
Directors
For and on behalf of the Board
Place : ChennaiDate : 4th May, 2004
}
Schedules forming part of accountsAs at 31-3-2004 As at 31-3-2003
Rupees Rupees Rupees RupeesSCHEDULE - AShare Capital :
Authorised :
21,000,000 Equity Shares of Rs. 10/- each 210,000,000 210,000,000
Issued and Subscribed:
15,000,007 Equity Shares of Rs. 10/- each fully paid up 150,000,070 150,000,070
150,00,007 shares are held by Larsen & Toubro Limited (the Holding Company) and its nominees
150,000,070 150,000,070
SCHEDULE - BReserves & Surplus :
General Reserve
As per last Balance Sheet -
Add : Transferred during this year 12,500,000 12,500,000
Profit and Loss Account 6,301,350 8,143,784
18,801,350 8,143,784
SCHEDULE - CSecured Loans :
From Banks
Term Loan-State Bank of Hyderabad 163,693,224 213,072,223
Term Loan-Bank Muscat - 10,000,000
Interest Accrued and due on Term Loan 105,563 163,798,787 153,778 223,226,001
(Secured by pari passu charge on the company’s 163,798,787 223,226,001movable assets, present and future )
SCHEDULE - D (Rupees)
Fixed Assets Cost Depreciation Book ValueAs at Additions As at Upto For the year Upto As at As at
Total 516,206,405 1,069,326 517,275,731 117,493,843 59,159,902 176,653,745 340,621,986 398,712,562
Previous Year 496,161,885 20,044,520 516,206,405 61,029,566 56,464,277 117,493,843 398,712,562
Building includes bridge over river Watrak constructed on land provided by Government of Gujarat under the Concession Agreement dated 1st March,1999withMinistry of Surface Transport, Government of India and Roads and Buildings Department, Government of Gujarat and the cost incurred on the saidbridge is being amortised equally over a period of 106 months from March,2001.
L&T WESTERN INDIA TOLLBRIDGE LIMITED
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE - E
Investments :
Unquoted:
Intertoll ICS (Ahmedahad -Mahesana) Toll ManagementCompany Pvt. Ltd. - 2600 Equity shares of Rs.10 each 26,000 26,000Mutual Funds
Sundarm Money Fund - Dividend reinvest daily 9,086,895 900464.25 Units of Rs.10 each (purchase during the year) Market value Rs. 9,087,575/-
9,112,895 26,000
Face value Cost
Details of investments purchased and sold during the year Rs. Per unit Nos. (Rs)
Mutual funds:
Sundarm Money Fund - Dividend reinvest daily 10 2,941,196.79 38,751,284
Grindlays Cash Fund - Dividend (Daily) 10 1,632,446.66 17,272,845
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE - FCurrent Assets, Loans and Advances :
Cash and bank balances
Cash on hand 686,972 948,660Balances with scheduled bank
on current account 1,177,658 2,447,208on fixed deposits ( Including interest accrued thereon 2,003,726 -
Rs. 3726 /- . Previous year Rs.Nil /-)
on margin money (including the interest accrued 227,791 4,096,147 213,437 3,609,305thereon -Rs.27,791 /-. Previous year - Rs.16,377/-)
Loans & Advances
Advances recoverable in cash or in kind 3,597,412 4,430,224
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the Accounting Standards referredto in Section 211(3C) and the other provisions of the Companies Act, 1956.
2. Income
Fee collections from users of facilities are accounted for as and when the amount is due and recovery is certain.
3. Retirement Benefits
Contributions to Provident fund are accounted on actual liability basis.
Leave encashment provision has been made on actual basis based on the accumulated unavailed leave as on the last date of the financial year.
4. Fixed Assets
Fixed assets are stated at original cost. Pre-operative expenses (incurred till the date of commencement of commercial operations) are capitalisedas part of fixed assets.
5. Depreciation
Depreciation on the assets has been provided on straight line basis at the rates and in the manner specified in the Schedule XIV of the CompaniesAct, 1956. Assets constructed on land not owned by the company and acquired / installed thereon are amortised over the period of the rights givenunder the concession agreement dated 1st March, 1999 with the Ministry of Surface Transport, Government of India and Public Works Department,Government of Gujarat.
6. Investments
Long term investments stated at cost and short term investments stated at cost or market value, whichever is lower.
7. Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of suchassets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or for sale. All otherborrowing costs are recognised as an expense in the period in which they are incurred.
8. Miscellaneous Expenditure
Preliminary expenses are written off in the year of commencement of commercial operations.
9. Foreign Currency Transactions
(i) Foreign currency assets and liabilities are converted at contracted / year-end rates as applicable.
(ii) All other foreign currency transactions are accounted for at the rates prevailing on the dates of the transactions.
(iii) The exchange differences on settlement / conversion are adjusted to:
a. Cost of fixed assets, if the foreign currency liability relates to fixed assets
b. Profit & loss account in other cases. Wherever forward contracts are entered into, the exchange differences are dealt with in the Profit &Loss account over the period of the contracts.
10. 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 ofthe Income Tax Act, 1961, and based on expected outcome of assessments.
Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet date.
SCHEDULE ‘2’
Notes forming part of Accounts:
1. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. NIL /- (previous year NIL /-).
2. The company had no transactions during the year with any small-scale industrial undertakings and hence reporting details of interest on overdueoutstanding and amount outstanding more than thirty days, does not arise.
3. The company has been awarded on Build Operate and Transfer (BOT) basis, the construction of the second two-lane bridge at Kheda across theRiver Watrak on National Highway 8, in the State of Gujarat under a Concession Agreement Dated 1st March,1999 with Ministry of Surface Transport,Government of India and Roads and Buildings Department, Government of Gujarat. The construction was completed in February,2001 and theconcession is valid till December, 2009.
Schedules forming part of accounts4. The company is a service company and accordingly information required under paragraph 4C of Part II of Schedule VI to the Companies Act, 1956
has not been furnished.
5. Manager’s salary and perquisites on deputation of Rs. 2,40,214 (Previous year Rs. 2,13,758 /-) have been charged to accounts.
6. Auditor’s remuneration:
(Amount in Rupees)
2003-2004 2002-2003
Audit Fees 50,000 25,000
Tax Audit Fees 7,500 8,500
Certification Fee 76,000 1,500
Reimbursement of Expenses 1,500 1,025
7. The Company is governed by the provisions of Sec 115JB of the Income Tax Act, 1961. Accordingly provision for income tax has been made underthe provisions of Minimum Alternative Tax under the said Act. No provision forWealth Tax has been made since the Company does not have taxablewealth under the provisions of the Wealth Tax Act,1957.
8. Borrowing cost capitalised during the year is NIL.
9. Accounting Standard - 18 on Related Party Disclosures is not applicable to the Company since the turnover of the Company does not exceed Rs.50 Crores for the year.
10. The Company has not entered into any lease transaction and hence AS19 is not applicable.
11. As per Accounting Standard 22 on Accounting for Taxes on Income – the Company has a deferred tax liability as detailed below:
(Amount in Rs.)
Deferred Tax liabilities 31.03.04 31.03.03
Difference between carrying amount of 5,15,30,370 4,92,76,395fixed assets in the books and the income tax return.
Total (A) 5,15,30,370 4,92,76,395
Less : Deferred tax assets
Unabsorbed loss / deprecation as per income tax return 3,65,33,995 3,83,76,050
Difference between carrying amount of preliminary expenses 45,774 91,547Unpaid statutory liabilities debited
To Profit & Loss Account - -
Total 3,65,79,769 3,84,67,597
Net deferred tax liability 1,49,50,601 1,08,08,798
However, no provision for the said liability is made since the company is eligiblefor benefit u/s 80IA of the Income Tax Act, 1961 for the entire periodof its operations as per the Concession Agreement.
12. Segment Reporting – The Company is mainly in the business of operating a Tollbridge and the entire income represents Toll Collections. Accordingly,segment reporting is not applicable.
13. Since none of the employees have completed 5 years of service, the gratuity provisions are not applicable
14. The Company proposes to buy back 10, 50, 000 equity shares constituting 7% of the total outstanding shares @ Rs. 11.50 per equity share andhas issued a Letter of Offer to the existing shareholders. The buyback is to be completed on or before 8th April, 2004 as per the provisions ofSection 77A of the Companies Act, 1956.
15. Figures for the previous year have been regrouped / re-classified wherever necessary.
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Notes forming part of accounts (Contd.)16. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI Registration Details
Registration No. 4 2 5 1 8
Balance Sheet Date 3 1 0 3 0 4
N I L
Public Issue
Bonus Issue
II Capital Raised during the year (Amount in Rs. Thousands) (including advance against share capital)
Total LiabilitiesIII Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)
Paid-up Capital(incl. Adv. against Shr. CapitalSource of Funds:
Secured Loans
Net Fixed Assets InvestmentsApplication of Funds:
Miscellaneous Expenditure
Turnover (Including other income)
IV Performance of Company (Amount in Rs. Thousands)
Profit/Loss Before Tax
Earnings Per Share in Rs.
+ –
V Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
N I L
State Code 1 8
N I L
Rights Issue
Private Placement
N I L
Total Assets
Reserves & Surplus
Unsecured Loans
Net Current Assets
Accumulated Losses
Dividend Rate %
Total Expenditure
0 0 0 0 8 8 0 11
N I L
0 6 2 24 1 1 39
5 6 640
5 4 511
Profit/Loss After Tax
2 1039
6 5 801
1
5
3 3 2 6 0 0 3 3 2 6 0 0
3 7 9 96
1 7 1 3-
0 7 1.
8 -1
Date Month Year
1
1
3
5 N I L
N I L
+ –3 3
N I L
I N F R A S T R U C T U R E P R O J E C T S O N B O T B A S I S
Signatuares to Schedules A to I
As per our report attached
SHARP & TANNANChartered Accountants
V. R. LALITHAPartnerMembership No : 18284
Place : ChennaiDate : 4th May, 2004
V. RAVICHANDRANSecretary
K. V. RANGASWAMI
R. BALASUBRAMANIAN
K. VENKATESH
Directors
For and on behalf of the Board
Place : ChennaiDate : 4th May, 2004
}
Directors’ ReportThe Directors have pleasure in presenting their report and Accounts for the year ended 31st March 2004.
I. FINANCIAL RESULTSAmount in Rupees
Description 2003-04 2002-03Profit before depreciation & tax 11,46,59,461 6,10,63,588Depreciation 11,81,04,107 11,79,31,226Profit / (Loss) before tax (34,44,646) (5,68,67,638)Provision for tax - -Profit / (Loss) after tax (34,44,646) (5,68,67,638)Balance brought forward from Previous year (16,00,95,312) (10,32,27,674)Balance carried to Balance Sheet (16,35,39,958) (16,00,95,312)
II. DIVIDENDThe Directors do not recommend dividend in view of the accumulated losses.
III. PERFORMANCE OF THE COMPANYThe Directors are pleased to inform, that there has been an increase in Toll fee collection in the current year in comparison to the previous year.Consequent to the restructuring of the High cost Term Loans, there has been a decrease in the interest cost. These factors have contributedtowards reducing the losses of the company.
IV. CAPITAL EXPENDITURE:As at 31st March 2004, the gross fixed assets stood at Rs.1,41,78,52,640/- and the net fixed assets at Rs.1,01,59,46,222/-. Additions during theyear amounted to Rs.24,49,491/-
V. DEPOSITS:The Company has not accepted any deposits from the public.
VI. AUDITORS’ REPORT:The Auditors’ Report to the Shareholders does not contain any qualifications.
VII. DISCLOSURE OF PARTICULARS:As the company is engaged in developing, operating and maintaining toll bridge, there are no particulars to be disclosed as per the Companies’(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
VIII. PARTICULARS OF EMPLOYEES:There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.
IX. DIRECTORS RESPONSIBILITY STATEMENT:The Board of Directors of the Company confirms:i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material
departure;ii. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2004 and of the profit of the Company for theyear 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 theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.X. DIRECTORS:
During the year, Mr.T.V.Anantharaman, resigned from the Board of Directors of the company due to personal reasons. The Members of the Boardexpressed their sincere gratitude for the contribution of Mr.T.V.Anantharaman towards the growth of the company.Mr.K.Venkatesh retires from the Board of Directors by rotation and being eligible offers himself for re-appointment.
XI. AUDIT COMMITTEE:The Audit Committee consists of three non-executive and independent directors. The present members of the Committee are1. Mr.K.V.Rangaswami Member2. Mr.K.Venkatesh Member3. Mr.K.Ramchand Member
(Mr.Mukund Sapre, Alternate Director)The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.The Committee met periodically during the year and held discussions with the auditors on internal control systems and internal audit report.
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
XII. AUDITORS:
The Auditors, M/s Sharp & Tannan, Chartered Accountants, being statutory auditors of the Company hold office until the conclusion of the ensuingAnnual General Meeting and are recommended for reappointment. Certificate from Auditors has been received to the effect that their appointment,if made, would be within the limits prescribed under Section 224(1B) of the Companies Act.
XIII. ACKNOWLEDGEMENTS:
The Directors acknowledge the invaluable support extended to the company by the Financial Institutions, Bankers, employees of the company &staff management of the parent company.
For and on behalf of the Board
K. V. RANGASWAMI K. VENKATESH B. RAMAKRISHNAN K. RAMCHANDDirector Director Director Director
Place : ChennaiDate : 4th May, 2004
TO THE MEMBERS OF NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
We have audited the attached balance sheet of Narmada Infrastructure Construction Enterprise Limited as at 31st March 2004, and also the profit andloss account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the auditto 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 the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 purpose of the audit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of thesebooks;
c) The balance sheet and profit and loss accounts dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from the Directors of the Company as on 31st March 2004, and taken on record by the Boardof Directors, we report that none of the Directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted inIndia:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004; and
ii) In the case of the profit and loss account, of the loss for the year ended on that date.
Sharp & TannanChartered Accountants
Place : Chennai
Date : 4th May 2004 V. R. LALITHAPartner
Membership No.18284
Auditors' Report
ANNEXURE TO THE AUDITORS’ REPORT
With reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of Narmada Infrastructure ConstructionEnterprise Limited on the accounts for the year ended 31st March 2004, we report that:
(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets of the company have been disposed off during the year and hence do not affect the going concern assumption.
(ii) As the Company is engaged in the business of infrastructure development and maintenance, the clauses relating to inventory are not applicable.
(iii) The Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business, for the purchase of fixed assets. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in internal control.
v) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into the register inpursuance of Section 301 of the Companies Act, 1956.
(vi) The company has not accepted deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of cost records under section 209 (1)(d) of the Companies Act, 1956 for theoperations of the Company and hence reporting under this clause is not applicable to the Company.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, and other statutory dues during theyear with the appropriate authorities. As at 31st March 2004, there are no undisputed statutory dues payable for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanations given to us, there are no disputed statuary liabilities .
(x) The Company has accumulated losses of Rs.16,35,39,958 at the end of the financial year and has not incurred cash losses in the financial yearand in the immediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to banks or financial institutions . The Company does not have any borrowings by way ofdebentures .
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.
(xvi) The Company has not obtained any Term Loan during the year.
(xvii) The Company has not raised funds on short term / long term basis during the year.
(xviii) The Company has not made any preferential allotment of shares during the year.
(xix) The Company has not issued debentures during the year. Accordingly, no securities need to be created.
(xx) The Company has not raised any money by public issue during the year.
(xxi) According to the information and explanations given by the Management and on the basis of audit checks carried out by us, we report that nofraud on or by the Company has been noticed or reported during the year.
Sharp & TannanChartered Accountants
Place : Chennai
Date : 4th May, 2004 V. R. LALITHAPartner
Membership No.18284
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:
Shareholders’ Funds
Share Capital A 473,500,070 473,500,070
Loan Funds
Secured Loans B 972,756,861 956,930,374
Total 1,446,256,931 1,430,430,444
APPLICATION OF FUNDS :
Fixed Assets: C
Gross Block 1,417,852,640 1,415,403,149
Less : Depreciation 401,906,418 283,802,311
Net Block 1,015,946,222 1,131,600,838
Capital work-in-progresss - 1,015,946,222 2,253,118 1,133,853,956
Current Assets, Loan and Advances D
Cash and bank balances 277,671,016 169,902,985
Loans and advances 6,853,782 4,934,721
284,524,798 174,837,706
Less : Current liabilities and provisions E
Liabilities 17,151,535 37,788,487
Provisions 602,512 568,043
17,754,047 38,356,530
Net Current Assets 266,770,751 136,481,176
Profit & Loss account 163,539,958 160,095,312
Total 1,446,256,931 1,430,430,444
Significant Accounting Policies H
Notes forming part of Accounts I
Balance Sheet as at 31st March, 2004
As per our report attached K. V. RANGASWAMI J. GANGULYSHARP & TANNAN K. VENKATESHCHARTERED ACCOUNTANTS B. RAMAKRISHNAN K. RAMACHAND
V. R. LALITHA K. R. PARTHASARATHYPartner Secretary
Membership No.: 18284
Place : Chennai Place : Chennai
Dated : 4th May, 2004 Dated : 4th May, 2004
Directors]
Profit and Loss Account for the period ended 31st March, 20042003-2004 2002-2003
Schedules Rupees Rupees Rupees RupeesINCOME
Fee collection from users of facility 214,464,754 204,333,083
Other income F 15,065,389 27,873,337
TOTAL 229,530,143 232,206,420
EXPENDITURE
Operating & maintenance expenses G 50,009,043 50,599,771
Interest & Finance Charges 64,861,639 120,543,061
Depreciation 118,104,107 117,931,226
232,974,789 289,074,058
TOTAL
Profit / (Loss) before taxes (3,444,646) (56,867,638)
Provision for taxes - -
Profit / (Loss) after taxes (3,444,646) (56,867,638)
Add: Profit/(Loss) carried forward from previous year (160,095,312) (103,227,674)
Balance carried to Balance Sheet (163,539,958) (160,095,312)
Earnings per share Basic and Diluted (0.07) (1.20)
Significant Accounting Policies H
Notes forming part of Accounts I
As per our report attached K. V. RANGASWAMI J. GANGULYSHARP & TANNAN K. VENKATESHCHARTERED ACCOUNTANTS B. RAMAKRISHNAN K. RAMACHAND
V. R. LALITHA K. R. PARTHASARATHYPartner Secretary
Membership No.: 18284
Place : Chennai Place : Chennai
Dated : 4th May, 2004 Dated : 4th May, 2004
Directors]
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
47,350,007 Equity Shares of Rs. 10/- each fully paid up 473,500,070 473,500,070( 37,880,007 equity shares are held by Larsen & Toubro
Limited, its subsidiaries and its nominees)
473,500,070 473,500,070
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees Rupees
Schedule B - Secured Loans
Loans from Banks
Term Loans - SBI 472,756,861 456,930,374
Loans from Financial Institutions
Term Loan - IDFC 500,000,000 500,000,000(Above loans are secured by a pari passu charge on allthe movable and immovable properties of the company,present and future )
972,756,861 956,930,374
Schedule C- FIXED ASSETS (Figures in Rupees
C O S T DEPRECIATION BOOK VALUE
Fixed Assets As at As at Upto As at As at As at1-4-2003 ADDITIONS 31-3-2004 31-03-2003 For the year 31-3-2004 31-3-2004 31-3-2003
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Building * 1,391,113,933 - 1,391,113,933 279,426,559 115,802,236 395,228,795 995,885,138 1,111,687,374
Total 1,415,403,149 2,449,491 1,417,852,640 283,802,311 118,104,107 401,906,418 1,015,946,222 1,131,600,838
Previous year 1,412,939,315 2,463,834 1,415,403,149 165,871,085 117,931,226 283,802,311 1,131,600,838 1,247,068,230
Note:
* Building includes bridge over river Narmada constructed on land provided by Government of Gujarat under the Concession Agreement dated 21stNovember, 1997 with Ministry of Surface Transport, Government of India and Public Works Department, Government of Gujarat and the cost incurred onthe said bridge is being amortised equally over a period of 12 years commencing from 11th November, 2000.
Schedules forming part of the accounts
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees Rupees
Schedule D - Current Assets, Loans and Advances
Cash and bank balances
Cash on hand 1,230,502 1,551,436
Balances with scheduled bank
on current account 7,120,848 51,641,909
on fixed deposits (including interest accrued thereon Rs.200,74,661 (Previous year Rs.99,68,414)) 268,306,100 115,468,414
on margin money deposit accounts (including interestRs. 13,566 (Previous year Rs.2,41,226)) 1,013,566 277,671,016 1,241,226 169,902,985
Loans & Advances
Advances recoverable in cash or in kind 6,853,782 4,934,721
284,524,798 174,837,706
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees Rupees
Schedule E- Current Liabilities and Provisions
Liabilities
Sundry Creditors
- Small scale industrial undertakings - -
- Others 6,076,192 26,856,981
- Interest accrued but not due on loans 11,075,343 17,151,535 10,931,506 37,788,487
Provisions
Provision for taxation 568,043 568,043
Provision for Leave Encashment 34,469 602,512
17,754,047 38,356,530
2003-04 2002-03Rupees Rupees
Schedule F- Other incomeInterest on fixed deposit 14,835,439 8,110,907(tax deducted at source - Rs.28,25,330
(previous year Rs. 1,80,978/- ))
Other income 229,950 19,762,430
15,065,389 27,873,337
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
Schedules forming part of the accounts2003-04 2002-03Rupees Rupees
Schedule - G Operating Maintenance Expenses
Toll management fees 4,845,706 5,898,013
Security Services 2,329,488 2,275,789
Salaries & wages 3,106,217 2,776,457
Rates & taxes 2,098 4,049
Printing & stationery 713,342 680,567
Travelling & conveyance 281,675 392,711
Electricity charges 325,116 294,354
Exchange Gain / Loss 21,670,381 10,906,753
Professional Fees 7,469,510 20,493,723
Insurance 4,439,336 4,118,091
Repairs & Maintenance
Building 2,314,493 1,085,352
Plant & Machinery 89,357 144,822
Others 248,632 645,127
Postage & Telephone Expenses 119,571 128,662
Miscellaneous Expenses 2,054,121 755,302
50,009,043 50,599,771
SCHEDULE ‘H’ SIGNIFICANT ACCOUNTING POLICIES:1. Basis of Accounting
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the provisions of Section211(3C) and the other provisions of the Companies Act, 1956. However, certain claims as per Concession Agreement will be accounted for as andwhen such claims are approved.
2. IncomeFee collections from users of facilities are accounted for as and when the amount is due and recovery of which is certain.
3. Retirement BenefitsContributions to Provident Fund are accounted on actual liability basis. Leave encashment provision has been made on actual basis
4. Fixed AssetsFixed assets are stated at original cost. Pre-operative expenses are capitalised as part of fixed assets till the date of commencement of commercialoperations.
5. DepreciationDepreciation on assets has been provided on straight line basis at the rates and in the manner specified in the Schedule XIV of the Companies Act,1956. Assets constructed on land not owned by the company and acquired / installed thereon are amortised over a period of the rights given underthe concession agreement dated 21st November, 1997 with the Ministry of Surface Transport, Government of India and Public Works Department,Government of Gujarat.
6. Borrowing CostBorrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of suchassets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowingcosts are recognised as an expense in the period in which they are incurred.
7. Miscellaneous ExpenditurePreliminary expenses are written off in the year of commencement of commercial operations.
8. Foreign Currency Transactions(i) Foreign currency assets and liabilities are converted at contracted / year-end rates as applicable.
(ii) All other foreign currency transactions are accounted for at the rates prevailing on the dates of the transactions.
(iii) The exchange differences on settlement / conversion are adjusted to:
a. Cost of fixed assets, if the foreign currency liability relates to fixed assets
b. Profit & loss account in other cases. Wherever forward contracts are entered into, the exchange differences are dealt with in the Profit &Loss account over the period of the contracts.
Notes forming part of accounts
9. Taxes on IncomeTax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisions of theIncome Tax Act, 1961, and based on expected outcome of assessments / appeals.Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet date.Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.
SCHEDULE ‘I’Notes forming part of Accounts:1. The company has been awarded on Build Operate and Transfer (BOT) basis, the construction of the second two lane bridge at Zadeshwar across
the River Narmada on National Highway – 8, under the Concession Agreement dated 21st November, 1997 with Ministry of Surface Transport,Government of India and Public Works Department, Government of Gujarat The bridge was completed on 11.11.2000 and the concession period isfor 12 years.
2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. NIL (previous yearRs.9,76,421/-).
3. The company had no transactions during the year with any small scale industrial undertakings and hence reporting details of interest on overdueoutstandings and amount outstanding for more than 30 days, does not arise.
4. The company is a service company and accordingly information required under paragraph 4(C) of Part II of Schedule VI to the Companies Act,1956 has not been furnished.
5. Manager’s salary and perquisites (on deputation) of Rs.2,18,233/- (previous year – Rs.1,93,443/-) for the year ended 31st March 2004 has beencharged to the accounts.
6. None of the employees have completed five years of service, hence the provisions of Payment of Gratuity Act, 1972 are not applicable.7. Auditor’s Remuneration
2003-2004 2002-2003Audit Fees (Excluding Service Tax ) 50,000 50,000Tax Audit Fees 8,100 7,500Certification Expenses 9,180 6,300Reimbursement of Expenses 1,962 1,678
8. No provision for income tax/wealth tax has been made for the current year in these accounts as there is no taxable income/wealth under theprovisions of the Income Tax Act 1961 and Wealth Tax Act 1957.
9. CIF value of imports 2003 – 2004 2002 – 2003Capital goods NIL NIL
10. Expenditure in Foreign currency:Interest on Term Loan (FCNRB) Rs. 93,44,757 Rs.45,43,278
11. Premium paid on prepayment of term loan amounting to Nil (Previous year Rs. 13,108,502/-) is charged to the Profit and Loss account andincluded under Interest and Finance charges
12. a.. Exchange difference arising on account of foreign currency transactions amounting to Rs. 2,16,70,381 has been debited to Profit and Lossaccount. (Previous year-Rs.1,09,06,753)
b. Foreign Exchange fluctuations capitalized during the year– Nil (Previous year- Nil)13. The company has not capitalised any borrowing cost during the year (Previous year- NIL)14. As per Accounting Standard 22 on Taxes on Income – the company has a deferred tax asset as below:
(Amount in Rs.)31.03.04 31.03.03
Deferred Tax AssetsOn account of Unabsorbed loss / depreciation as per income tax return 234,023,500 212,296,455Difference between carrying amount of preliminary expenses not written off 391,424 456,661Unpaid statutory liabilities debited to Profit & Loss A/c. - 526
On account of Difference between carrying amount 175,451,700 155,066,566of fixed assets in the books and the income tax return.Net deferred tax asset 58,963,224 57,687,076The company has not accrued the above deferred tax asset in the accounts, since the company is eligible for benefit under Section 80 IA of theIncome Tax Act during the entire concession period under the Concession Agreement concluded on 21.12.2002 and the deferred tax asset will getreversed during the period.
Notes forming part of accounts (contd.)
NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
15. The company has not taken any asset on finance / operating lease. The income from cancellable operating lease is accounted on accrual basis.16. Accounting Standard 18 on Related Party Disclosure is not applicable to the company since the turnover of the company does not exceed Rs. 50
Crores for the year.17. Segment Reporting – The Company is in the business of operating and maintaining a toll bridge and the majority of its income represents toll
collections. Accordingly, segment reporting is not applicable.18. Figures for the previous year have been regrouped/re-classified where necessary.
19. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (contd.)
I Registration Details
Registration No. 1 8 - 3 8 1 7 5 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rupees thousands )
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Rupees thousands)Total Liabilities Total Assets
Net Current Assets Misc. Expenditure2 6 6 7 7 1 N I L
Accumulated Losses1 6 3 5 4 0
IV Performance of Company (Amount in Rupees thousands)Turnover (including other income) Total Expenditure
2 2 9 5 3 0 2 3 2 9 7 5
+ - Profit/Loss Before Tax * + - Profit/Loss After Tax *3 4 4 5 3 4 4 5
Earnings Per Share in Rs. Dividend Rate %-. 0 . 0. 7 N A
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N A
Product Description INFRASTRUCTURE PROJECT ON BOT BASIS
Date Month Year
Signatures to Schedule A to I
þ þ
As per our report attached K. V. RANGASWAMI J. GANGULYSHARP & TANNAN K. VENKATESHCHARTERED ACCOUNTANTS B. RAMAKRISHNAN K. RAMACHAND
V. R. LALITHA K. R. PARTHASARATHYPartner Secretary
Membership No.: 18284
Place : Chennai Place : Chennai
Dated : 4th May, 2004 Dated : 4th May, 2004
Directors]
The Directors have pleasure in presenting their Second Report and Accounts for the year ended 31st March 2004.
1. FINANCIAL RESULTS :
(Rupees)
2003-04
Sales Turnover NIL
Loss : Before Income Tax (11,08,509)
Provision for Income Tax -
Profit after Income Tax (11,08,509)
This being the first year of operations there was no comparative previous year’s financial years figures. Your Directors do not recommend dividendon the Equity Share Capital.
2. REVIEW OF OPERATIONS :
The Company has entered into a Development Agreement for the construction of Software Development Park at Bangalore on 16th June, 2003with Software Technology Park of India, Bangalore. The phase I of the project for the construction of 3.12 lakhs square feet of built up area ofCyber Park at Bangalore is in progress and is expected to be completed by end of June 2004.
3. CAPITAL EXPENDITURE :
During the Company has incurred capital expenditure of Rs.342,700.
4. SHARE CAPITAL :
The Promoters of the Company viz., M/s. L & T Holdings Limited and M/s. J.K. Bros Constrafin Limited Hyderabad have entered into aShareholders agreement on 30th April, 2003. According to the Agreement M/s. L & T Holdings and M/s. J.K. Bros Constrafin Limited hold 51% and49% of the Equity Capital of Rs.100 Lakhs.
In terms of the Agreement M/s. L & T Holdings Limited has brought in additional capital of Rs.46 Lakhs and M/s. J.K. Bros Constrafin Limited hasbrought in Rs.49 lakhs. The Company has made allotment in respect of the above on 16th July, 2003.
5. DEPOSITS :
The Company has not accepted any deposits from the public.
6. DISCLOSURE OF PARTICULARS :
The Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, require the disclosure of particulars regardingconservation of Energy in Form A and Technology absorption in Form B prescribed by the Rules. The Company, not being a manufacturingcompany, is advised that Forms A and B are not applicable to it.
7. PARTICULARS OF EMPLOYEES :
There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.
8. DIRECTORS RESPONSIBILITY STATEMENT :
The Board of Directors of the Company confirms:
a. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no materialdeparture;
b. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2004 and of the profit of the Company for theyear ended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. that the annual accounts have been prepared on a going concern basis.
9. DIRECTORS :
Mr. K. V. Rangaswami, Director retire by rotation and being eligible offers himself for re-election.
Mr. B. Ramachandra Rao, Mr. M. Ravi, were appointed as Additional Directors in terms of Section 260 of the Companies Act, 1956 in conformity ofthe Shareholders Agreement entered amongst the two Promoters. They will hold office upto to the date the Annual General Meeting and beingeligible offers themselves for reappointment.
10. AUDITORS :
The Auditors, M/s Sharp & Tannan, Chartered Accountants, being statutory auditors of the Company hold office until the conclusion of the ensuingAnnual General Meeting and are recommended for reappointment. Certificate from Auditors has been received to the effect that their appointment,if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
Directors’ Report
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
11. SECRETARIAL COMPLIANCE CERTIFICATE :
The Secretarial Compliance Certificate for the year ended March 31, 2004 issued by M/s.R.Sridharan & Associates, Company Secretaries in termsof Section 383A of the Companies Act, 1956 is placed below. The said Compliance Certificate forms part of this Report.
12. ACKNOWLEDGEMENTS :
The Directors acknowledge the valuable support extended by the two promoters namely M/s. L & T Holdings Limited and M/s. J.K. Bros ConstrafinLimited and STPI, Bangalore,. Your Directors express their grateful thanks for the assistance, co-operation and support extended to your Companyby the Government of India, Government of Karnataka, HDFC, commercial banks and all others who are associated with the Company. The Boardwishes to place on record its sincere appreciation for the services rendered by the employees at all levels.
For and on behalf of the board
K. V. RANGASWAMIV. B. GADGILK. VENKATESHM. RAVIB. RAMACHANDRA RAO
Place : ChennaiDate : 4th May 2004
Directors’ Report (contd.)
Directors}Auditors’ ReportTO THE MEMBERS OF CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
We have audited the attached balance sheet of Cyberpark Development & Construction Limited as at 31st March, 2004, and also the profit and lossaccount for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the auditto 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 the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
1. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of theCompanies Act, 1956, 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) have obtained all information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination ofthose books;
(c) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account;
(d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from directors of the Company as at 31st March, 2004, and taken on record by the Boardof Directors, we report that none of the directors is disqualified as on 31st March, 2004 from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the Companies Act, 1956; and
(f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004; and
ii) in the case of the profit and loss account, of the loss for the year ended on that date.
For SHARP & TANNANChartered Accountants
L. VAIDYANATHANPartner
Chennai, 4th May, 2004 (Membership No. 16368)
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 1 of our report of even date)
(i) (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.(b) The fixed assets have been verified by the management during the year and there is regular programme of verification which in our opinion
is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on suchverification.
(c) No fixed asset has been disposed off during the year and hence do not affect the going concern assumption(ii) (a) As explained to us inventory representing property development land and work-in-progress have been physically verified by the management
at reasonable intervals during the year.(b) As per information given to us the procedures of physical verification of inventory followed by management are, in our opinion, reasonable
and adequate in relation to the size of the Company and the nature of its business.(iii) (a) The company has not taken or granted any loans secured / unsecured from companies, firms or other parties listed in the register
maintained under Section 301 of the Companies Act, 1956.Since the company has not taken or granted any loan from the companies, firms and parties listed in the register maintained under Section 301 ofthe Companies Act, 1956 reporting under Clause (iii)(b), (c) & (d) does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business for the purchase of inventory and fixed assets. During the course of our audit, no majorweaknesses have been noticed in internal control.
(v) (a) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into aregister in pursuance of Section 301 of the Companies Act, 1956.
(b) There are no transactions that need to be entered into the register in pursuance of Section 301 of the Companies Act 1956, and hencereporting under this clause does not arise.
(vi) The Company has not accepted / renewed any deposits from the public.(vii) The paid up share capital of the company and reserves do not exceed Rs.50 lakhs as at the commencement of the financial year and the
company has been in existence for less than three years (Registered on 28th February 2002) and hence reporting under this clause on internalaudit does not arise.
(viii) As informed to us, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) ofSection 209 of the Companies Act, 1956, for the operations of the company
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen regular in depositing undisputed statutory dues including Provident Fund, Income-tax, Custom Duty and other statutory dues applicableto it during the year with appropriate authorities. There are no undisputed dues as at 31st March, 2004 payable for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanations given to us, there are no amounts in respect of income tax / customs duty and other statutorydues that have not been deposited with the appropriate authorities on account of any dispute.
(x) The company has been registered for a period less than five years and hence reporting under this clause on accumulated losses does not arise.(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the
company has no instalment due for repayment in respect of loans taken during the year to financial institutions. The Company did not have anyoutstanding debentures or any outstanding loans from any banks during the year.
(xii) According to the information and explanations given by the management, the Company has not granted any loans and advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures & other
investments and accordingly reporting under this clause does not arise.(xv) According to the information and explanation given to us, the company has not given any guarantee for loans taken by others from banks or
financial institutions.(xvi) In our opinion, the term loans obtained have been applied for the purpose for which they were obtained.(xvii) According to the information and explanations given by the management, the Company has not raised any funds on short-term basis. Funds
raised on long term basis have not been used for short-term investments though surplus funds not required for immediate utilization have beengainfully put in fixed deposits receivable on demand. There are no amounts in fixed deposits at year end.
(xviii) The company has not made any preferential allotment of shares to parties or companies to be covered in the register maintained under Section301 of the Companies Act, 1956.
(xix) The Company did not have outstanding debentures during the year. Accordingly, no securities have been created.(xx) The Company has not raised any money by public issue during the year.(xxi) According to the information and explanations given by the management and on the basis of audit checks carried out by us, we report that no
fraud on or by the Company has been noticed or reported during the year.
For SHARP & TANNANChartered Accountants
L. VAIDYANATHANPartner
Chennai, 4th May, 2004 (Membership No. 16368)
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
As at 31-3-2004 As at 31-3-2004 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 10,000,000 500,000
Loan Funds
Secured Loan B 210,800,000 -
Unsecured Loans C 94,557,076 -
Total 315,357,076 500,000
APPLICATION OF FUNDS :
Fixed Assets: D
Gross Block 359,955 17,255
Less : Depreciation 37,227 546
Net Block 322,728 16,709
Current Assets, Loan and Advances E
Inventories 407,819,355 3,270,386
Cash and bank balances 972,406 500,000
Loans and advances 36,824,336 -
445,616,097 3,770,386
Less : Current liabilities and provisions F
Current Liabilities 131,684,633 3,489,287
Provisions 5,625 -
131,690,258 3,489,287
Net Current Assets 313,925,839 281,099
Miscellaneous expenditure
(To the extent not written off or adjusted.) - 202,192
Profit & Loss account 1,108,509 -
Total 315,357,076 500,000
Significant Accounting Policies 1
Notes forming part of Accounts 2
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHANPartnerMembership No : 16368
Place : Chennai
Date : 4th May, 2004
K. V. RANGASWAMY
B. RAMACHANDER RAO
V. B. GADGIL
RAVI MANDAVA
K. VENKATESH
Directors
For and on behalf of the Board
Place : Chennai
Date : 4th May, 2004
}
As at 31-3-2004
Schedules Rupees Rupees
INCOME :
Other income H 652,074
TOTAL 652,074
EXPENDITURE
Construction Expenses 407,819,355
Less : Work in Progress G 407,819,355
-
Staff Expenses I 227,879
Sales,Administration and Other Expenses J 1,532,704
TOTAL 1,760,583
Loss before taxes (1,108,509)
Provision for tax -
Loss after tax carried to Balance Sheet (1,108,509)
Earning per Share -Basic/Diluted (1.56)
Profit and Loss Account for the year ended 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHANPartnerMembership No : 16368
Place : Chennai
Date : 4th May, 2004
K. V. RANGASWAMY
B. RAMACHANDER RAO
V. B. GADGIL
RAVI MANDAVA
K. VENKATESH
Directors
For and on behalf of the Board
Place : Chennai
Date : 4th May, 2004
}
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Schedules forming part of accountsAs at 31-3-2004 Aa at 31-3-2003
Rupees Rupees Rupees RupeesSCHEDULE - AShare Capital :
Authorised :
1,000,000 Equity Shares of Rs. 10/- each 10,000,000 10,000,000
Issued and Subscribed and paid up
1,000,000 Equity Shares of Rs. 10/- each fully paid 10,000,000 500,000
950,000 equity shares of Rs10/ each issued during the year
Of the above 510,000 shares of Rs.10/- each is
held by the holding company L & T Holdings Limited and its nominees
10,000,000 500,000
SCHEDULE - BSecured Loan
Loan from a Financial Institution.
Term Loan 210,800,000 -
(The above loan is secured by equitable mortgage ofundivided share of leasehold land and buildingconstructed thereon)
210,800,000 -
SCHEDULE - C
Unsecured Loans
Loans from :
Holding Company - L&T Holdings Limited 45,200,000 -
Total 17,255 342,700 359,955 546 36,681 37,227 322,728 16,709
Previous year 17,255 17,255 - 546 546 16,709
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE - ECurrent Assets, Loans and Advances :
Current Assets
Inventories - At cost
Work- in- progress 407,819,355 3,270,386
Cash and bank balances:
Cash on hand 1,579
Balance with scheduled bankon current account 970,827 500,000
972,406 500,000
Loans & Advances
Unsecured, considered good
Advances recoverable in cash or in kind 36,824,336
445,616,097 3,770,386
SCHEDULE - F
Current Liabilities and Provisions:
Liabilities
Sundry Creditors
- Small scale industrial undertakings -
- Others 130,076,604 3,489,287
-Interst accrued but not due 1,608,029 131,684,633
Provisions
- Provision for Leave Encashment 5,625
131,690,258 3,489,287
As at Additions During As at1.4.03 the year 31-3-2004
Rs. Rs. Rs.SCHEDULE - GWork- in- progress
Construction Expenses 353,042,429 353,042,429
Consultancy fee 594,600 19,958,400 20,553,000
Fee paid for Power Connection 5,697,000 5,697,000
Professional Charges 930,550 1,092,304 2,022,854
Rent, Rates & Taxes 842,860 159,838 1,002,698
Printing & Stationery 23,057 - 23,057
Travelling & Conveyance 364,050 979,244 1,343,294
Miscellaneous expenses 514,723 75,785 590,508
Finance & Interest charges 23,507,288 23,507,288
Depreciation 546 36,681 37,227
TOTAL 3,270,386 404,548,969 407,819,355
Schedules forming part of accounts
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
2003-2004
RupeesSCHEDULE - H
Other Income 652,074
Interest on Fixed deposit
(Tax deducted at Source-Rs.124046/- Previous year Nil) 652,074
SCHEDULE - I
Staff expenses
Salaries,wages and Bonus 201,929
Contribution to Provident and Pension Funds 17,345
Provision for Leave Encashment 5,625
Welfare and other expenses 2,980
227,879
SCHEDULE - J
Sales, administration and other expenses
Rates & taxes 12,710
Insurance 599
Membership and Subscription 22,397
Printing and stationery 50,031
Travelling and conveyance 34,627
Professional Fees 20,000
Recruitment expenses 154,715
Postage and Telephone Expenses 96,504
Sales Promotion expenses 702,196
Preliminary expenses 202,192
Miscellaneous Expenses 236,733
1,532,704
Schedules forming part of accounts
Schedules forming part of accountsSCHEDULE - I
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accountingprinciples, and in compliance with the Accounting Standards referred to in Section 211(3C) and the other provisions of the Companies Act,1956.
2. FIXED ASSETS :
Fixed Assets are stated at original costs.
3. DEPRECIATION :
Depreciation is provided on straight line basis at the rates and in the manner prescribed under schedule XIV to the Companies Act,1956.
4. INVENTORIES :
Inventories are valued at cost or market value whichever is lower.
5. BORROWING COSTS :
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of suchasset, till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily takes a substantial period oftime to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.
6. RETIREMENT BENEFITS :
Contributions to Provident Fund and Provision for Leave Encashment are made on actual liability basis.
SCHEDULE ‘2’
NOTES ON ACCOUNTS
1. The company has taken land on lease for the Cyberpark project from Software Technology Parks of India, Government of India, New Delhi (STPI)for a period of sixty six years from the date of obtaining occupancy (to be obtained upon completion of the project - Phase I) vide DevelopmentAgreement dated 16th June 2003 for a consideration of 42,000 sq.ft of constructed area in Phase I of the proposed project in the said land to beallocated with absolute rights to STPI.
2. Capital Commitment as at 31st March, 2004 is Rs.Nil
3. No provision for income tax / wealth tax has been made for the current year in the accounts as there is no taxable income / wealth under theprovisions of the Income Tax Act,1961 and Wealth Tax Act, 1957.
4. Auditors remuneration and expenses reckoned in the accounts :
2003-04 2002-03
Audit fee (excluding service tax) Rs.50,000 Rs. 25,000
Reimbursement of out of pocket expenses Rs.7,765 -
5. Expenditure in Foreign Currency NIL
6. The Company does not have any dealings with small scale industrial undertakings and hence reporting details of interest on delayed payments andamounts due to them does not arise.
7. The company has not entered into any lease transactions during the year, Hence reporting under AS 19 - Accounting for lease does not arise.
8. Deferred tax asset of Rs.58,029 pertaining to timing difference on account of Preliminary expenses has not been recognised in the accounts as ameasure of prudence
9. Accounting Standard 18 on Related Party Disclosure is not applicable to the company since the turnover of the company does not exceed Rs.50crores for the year.
10. Basic and Diluted Earnings per share computed in accordance with Accounting Standard 20 - Earnings per Share
Profit after Tax (Rupees) (1,108,509)
Weighted average number of shares outstanding (No.) 709,290
Basic and Diluted EPS (Rupees) (1.56)
11. Interest accrued but not due of Rs.59,57,076 included under unsecured loan represents interest at 10% p.a. payable together with principal amountafter repayment of all dues to the secured loan lenders as per Shareholders’ Agreement dated 30th April 2003.
12. Figures for the previous period have been re-classified/re-grouped where necessary.Figures for the previous period has not been furnished in respectof Profit and Loss Account as this is the first year of commercial operation of the Company.
CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Notes forming part of accounts (Contd.)16. BALANCE SHEET ABSTRACT AND COMPANY’S BUSINESS PROFILEI Registration Details
Registration No.
Balance Sheet Date 3 1 0 3 2 0
N I L
Public Issue
Bonus Issue
II Capital Raised during the year (Amount in Rs. Thousands)
Total LiabilitiesIII Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)
Paid-up CapitalSource of Funds:
Secured / Unsecured Loans
Net Fixed Assets InvestmentsApplication of Funds:
Miscellaneous Expenditure
Turnover (Including other income)
IV Performance of Company (Amount in Rs. Thousands)
Profit/Loss Before Tax
Earnings Per Share in Rs.
+ –
V Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
N I L
State Code 0 8
N I L
Rights Issue
Private Placement
5 0 0
Total Assets
Reserves & Surplus
Deferred tax liability
Net Current Assets
Accumulated Losses
Dividend Rate %
Total Expenditure
0 0 0 0 N I L
N I L
3 2 3 N I L
6 5 2
1 0 91
Profit/Loss After Tax
6 171
1 0 91
1
3 1 5 3 5 7 3 1 5 3 5 7
5 3 5 70
1 3 9 23
1 5 6.
Date Month Year
3
6 N I L
1 0 8
+ –3 3
N I L
D E V E L O P M E N T O F S O F T W A R E P A R K
C I N - U 4 5 2 0 2 K A 2 0 0 2 P L C 0 3 0 1 8 0
0 4
9
1
+ –3
Item code No. N A
Product Description
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHANPartnerMembership No : 16368
Place : ChennaiDate : 4th May, 2004
K. V. RANGASWAMI
B. RAMACHANDER RAO
V. B. GADGIL
RAVI MANDAVA
K. VENKATESH
Directors
For and on behalf of the Board
Place : ChennaiDate : 4th May, 2004
}
The Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March, 2004.
FINANCIAL RESULTS
2003 – 2004 2002 – 2003Rs. Rs.
Profit before depreciation 41,91,37,899 11,50,16,268
Depreciation 3,87,15,670 2,97,54,960
Profit before Tax 38,04,22,229 8,52,61,308
Provision for Tax 1,48,14,619 (12,03,881)
Profit after Tax 36,56,07,610 8,64,65,189
Add: Excess provision for Tax of earlier years written back - 34,85,140
Profit after tax and taxation adjustment of earlier years 36,56,07,610 8,99,50,329
Add: Balance brought forward from previous years 21,74,79,812 12,75,29,483
Balance available for disposal which the Directors appropriate as follows: 58,30,87,422 21,74,79,812
Bonus Shares 9,00,00,000 -
Dividend 2,70,00,000 -
Dividend Tax 34,59,375 -
Transfer to General Reserve 10,00,000 -
Balance to be carried forward 46,16,28,047 21,74,79,812
DIVIDEND
The Directors recommend payment of maiden dividend of Rs. 1 per share ofRs. 10/- each on 2,70,00,000 shares. 2,70,00,000 -
PERFORMANCE OF THE COMPANY
During the year under review, the Company sold pre-leased area of 3.38 Lakh sq.ft in Cyber Towers & Cyber Gateway to various FinancialIntermediaries. The Company incorporated ‘Vizag IT Park Limited’ to undertake development of an IT Park in Vizag. Construction of the facility of1.93 Lakh sq.ft was completed during 2003-04. The Company also commenced the construction of a built-to-suit facility for HSBC in Colombothrough its subsidiary L&T Infocity-Lanka Private Limited’. This building with a built-up area of 1.83 Lakh sq.ft shall be ready for occupation byDec’2004.
PROSPECTS FOR 2004-2005
Deriving strengths from the success of VIZAG IT Park and COLOMBO IT Park, during the year 2004-05, the company plans to promote and develop‘built-to-suit’ campuses aggressively in Hyderabad and other cities like Mohali, KolKatta, etc. The company has gained expertise in building managementservices and thereby proposes to undertake these services beyond HITEC City as a separate business line. During the year 2004-05, the Companyplans to undertake Consultancy Services for setting up IT Parks, with the participation of other developers, in various places, across the country. Inthis direction it is already rendering consultancy services to Delhi Metro Rail Corporation (DMRC) for an IT Park in New Delhi. The Company plansto undertake Residential project in Hyderabad on 31.29 acres of land, near HITEC City, to be completed in a phased manner over 7 years.Construction of Phase I of the project consisting of 400 flats shall commence during 2004-05.
FINANCE
During the year, the Company repaid term loans to the extent of Rs.77.5 Crs. out of amounts generated from operations.
CAPITAL EXPENDITURE
As at 31st March, 2004 the gross fixed assets stood at Rs. 113.94 Crs. and the net fixed assets at Rs.104.24Crs. Additions during the yearamounted to Rs.9.51 Crs.
DEPOSITS
During the period under review the Company has not accepted any deposits from the public.
SUBSIDIARY COMPANIES
As required by Section 212 of the Companies Act, 1956, the Audited statement of Accounts, the Reports of the Board of Directors and Auditors ofthe subsidiary companies are annexed.
AUDITORS' REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications. The notes to the accounts referred to in the Auditors’ Report are selfexplanatory and therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
As the Company is engaged in the business of construction, operation and maintenance of IT Parks, there are no particulars to be disclosed as perthe Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
L&T INFOCITY LIMITED
Directors Report
L&T INFOCITY LIMITED
PERSONNEL
There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules,1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
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 judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Company for theyear 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 theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr. M.V.S.Prasad resigned from the Board of Directors of the Company on 13th November 2003. He was a Director since 16th November 2001.
In the Board Meeting of the Company held on 13th November 2003, Mr. L.V.Subrahmanyam was appointed as Director in the casual vacany causedby the resignation of Mr.M.V.S.Prasad under section 262. He holds office upto the date of the ensuing Annual General Meeting when Mr. M.V.S.Prasadwould have retired by rotation, and is eligible for re-appointment.
In terms of Section 256 of the Companies Act 1956, Mr.V.B.Gadgil and Mr. K.Venkatesh retire by rotation and being eligible, offers themselves forreappointment.
FOREIGN EXCHANGE EARNINGS AND OUTGO2003-2004 2002-2003
Rs. Rs.Foreign exchange earnings Nil NilForeign exchange used
The Audit Committee consists of three directors. The present members of the Committee are Mr.K.V.Rangaswami, Mr.L.V.Subrahmanyam &Mr.K.Venkatesh. Mr. L.V.Subrahmanyam is the Chairman of the Audit Committee
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956. TheCommittee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report and given itsreport and recommendations to the Board of Directors for Corporate Governance and overall improvement in the functioning of the company.
AUDITORS
The Auditors, M/s. Sharp & Tannan hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, vendors, suppliers and customers.The Directors are pleased to place on record their appreciation for the valuable contribution made by the employees of the Company.
For and on behalf of the BoardPlace : Hyderabad
Date : 26th April, 2004 L. V. SUBRAHMANYAM
K. VENKATESH } Director
Auditors' ReportTO THE MEMBERS OF L&T INFOCITY LIMITED
We have audited the attached balance sheet of L & T Infocity Limited (the Company) as at 31st March 2004, and also the profit and loss accountfor the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of theCompanies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 purpose of theaudit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination ofthese books;
c) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from directors of the Company as at 31st March 2004, and taken on record by the Boardof Directors, we report that no director is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March 2004;
ii) In the case of the profit and loss account, of the profit for the year ended on that date;
SHARP & TANNANChartered Accountants
Place : Hyderabad sd/-
Date : 26th April, 2004 L. VAIDYANATHANPartner
Membership No.16368
Annexure to the Auditors’ ReportWith reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of L & T Infocity Limited on the accounts forthe year ended 31st March 2004, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets were disposed off during the year and hence do not affect the going concern assumption.
(ii) (a) The inventory has been physically verified by the management during the current year. In our opinion, the frequency of such verification isreasonable.
(b) The procedures for the physical verification of inventory followed by the management are reasonable and adequate in relation to the sizeof the company and the nature of its business.
(c) The company has maintained proper records of inventory. No material discrepancies were noticed on physical verification of inventory.
(iii) (a) According to the information and explanations given to us, there are companies, firms or other parties of the nature required to be coveredin the register maintained under Section 301 of the Companies Act, 1956.
(b) The Company has not given any loans during the year nor has it taken any loans.
L&T INFOCITY LIMITED
(c) Since the company has not granted any loans commenting on recovery of principal and interest does not arise.
(d) There are no loans given and hence commenting on overdue amounts of more than Rupees one lakh does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the Company and nature of its business for the purchase of inventory and fixed assets and there are no sale of goods. In ouropinion, and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internalcontrol.
(v) The company has not accepted any deposit from the public and hence reporting compliance under the provisions of section 58A and section58AA of the companies Act 1956 and rules framed there under and the directives of Reserves Bank of India does not arise.
(vi) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(vii) The Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act 1956, in respect ofthe companies business and hence reporting on this clause does not arise.
(viii) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Companyhas been generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, Wealth Tax, Custom Duty,cess and any other dues during the year with the appropriate authorities. As at 31st March 2004, there are no undisputed dues payablefor a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no amounts in respect of income tax / customs duty / wealth tax/ cess that have not been deposited with the appropriate authorities on account of any dispute.
(ix) The Company has no accumulated losses and hence commenting on this clause does not arise.
(x) The Company did not have any outstanding debentures or any outstanding loans from any financial institution or bank during the year.
(xi) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.
(xii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xiv) The company has not given any guarantee for loans taken by others from bank and financial institutions.
(xv) The Company has obtained term loans during the year from bank and the same has been utilised for the purpose for which it was availed.
(xvi) According to the information and explanations given to us, the Company has not raised any funds on short term during the year. However,long term loan raised during the year the year has been utilised for the purpose for which it was raised.
(xvii) The Company did not have outstanding debentures during the year. Accordingly, no securities have been created.
(xviii) The Company has not raised any money by public issues during the year.
(xix) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.
SHARP & TANNANChartered Accountants
Place : Hyderabad sd/-
Date : 26th April, 2004 L. VAIDYANATHANPartner
Membership No.16368
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS :
Share Capital 1 270,000,000 180,000,000
Reserves & Surplus 2 553,449,196 308,300,961
LOAN FUNDS
Secured Loans 3 551,914,403 1,364,724,458
DEFERRED TAX LIABILITY 17,959,489 33,591,543
TOTAL 1,393,323,089 1,886,616,962
APPLICATION OF FUNDS
FIXED ASSETS 4
GROSS BLOCK 1,137,392,340 1,572,625,055
Less: Depreciation 94,995,961 75,966,101
NET BLOCK 1,042,396,379 1,496,658,954
INVESTMENTS 5 164,549,980 64,549,980
CURRENT ASSETS, LOANS & ADVANCES 6
CURRENT ASSETS
a) Inventories 4,157,388 284,913,557
b) Cash and Bank Balances 40,444,436 38,215,302
LOANS & ADVANCES 356,808,973 242,072,649
401,410,797 565,201,508
Less: CURRENT LIABILITIES & PROVISIONS 7
a) Current Liabilities 153,319,808 232,963,923
b) Provisions 61,714,259 7,695,502
215,034,067 240,659,425
NET CURRENT ASSETS 186,376,730 324,542,083
MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted ) - 865,945
TOTAL 1,393,323,089 1,886,616,962
SIGNIFICANT ACCOUNTING POLICIES 13
NOTES ON ACCOUNTS 14
Balance Sheet as at 31st March, 2004
As per our report attached
Sharp & TannanChartered Accountants
L. VAIDYANATHANPartnerMembership No. : 16368
A. RAMAKRISHNADirector
K. VENKATESHDirector
L.V. SUBRAHMANYAMDirector
U. RAMAKRISHNACompany Secretary
Place : HyderabadDate : 26th April, 2004
Place : HyderabadDate : 26th April, 2004
For and on behalf of the Board
L&T INFOCITY LIMITED
Profit and Loss Account for the year ended 31st March, 20042003-2004 2002-2003
Schedules Rupees Rupees
INCOMESales 300,274,508 364,698,478
Other Income 8 532,143,942 224,573,612
TOTAL 832,418,450 589,272,090
EXPENDITURE
Cost of Sale of Space sold 9 226,853,346 286,803,630
Staff Expenses 10 5,713,027 4,823,271
Sales, Administration and Other Expenses 11 80,430,657 62,309,109
Interest & Brokerage 12 94,872,084 117,532,411
Depreciation 38,715,670 29,754,960
Preliminary Expenses written off 865,945 173,189
Provision for doubtful Advances 4,545,492 2,614,212
TOTAL 451,996,221 504,010,782
Profit / (Loss) for the Year 380,422,229 85,261,308
Provision For Taxes 30,446,673 7,391,190
Provision for Deferred Tax (15,632,054) (8,595,071)
Profit after Tax 365,607,610 86,465,189
Excess provision for Tax of earlier year written back - 3,485,140
Profit after tax and taxation adjustment of earlier years 365,607,610 89,950,329
Profit available for appropriation 583,087,422 217,479,812
Appropriation
Bonus Shares 90,000,000 -
Proposed Dividend 27,000,000 -
Tax on dividend 3,459,375 -
Transfer to General Reserve 1,000,000
Balance Carried to Balance Sheet 461,628,047 217,479,812
Earning per Share - Basic & Diluted 13.54 4.80
SIGNIFICANT ACCOUNTING POLICIES 13
NOTES ON ACCOUNTS 14
As per our report attached
Sharp & TannanChartered Accountants
L. VAIDYANATHANPartnerMembership No. : 16368
A. RAMAKRISHNADirector
K. VENKATESHDirector
L.V. SUBRAHMANYAMDirector
U. RAMAKRISHNACompany Secretary
Place : HyderabadDate : 26th April, 2004
Place : HyderabadDate : 26th April, 2004
For and on behalf of the Board
Schedules forming part of Balance SheetAs at As at
31st March, 2004 31st March, 2003
Rupees Rupees
SCHEDULE - 1
SHARE CAPITAL
AUTHORISED :
6,00,00,000 Equity Shares of Rs10 each 600,000,000 600,000,000
ISSUED, SUBSCRIBED AND PAID UP :
2,70,00,000 Equity Shares of Rs 10 each 270,000,000 180,000,000
Out of the above
1) 19,80,000 shares are alloted as fully paid up pursuant to an agreement without payments being received in cash
2) 2,40,30,000 shares are held by Larsen & Toubro Limited, the Holding Company.
3) Bonus Shares:
90,00,000 shares of Rs. 10/- have been issued as Bonus Shares during the year 2003 - 2004
SCHEDULE - 2
RESERVES AND SURPLUS
GENERAL RESERVE
As per last Balance Sheet 90,821,149 90,821,149
Add: Transfer from Profit & Loss Account 1,000,000 -
91,821,149 90,821,149
Profit & Loss Account 461,628,047 217,479,812
TOTAL 553,449,196 308,300,961
SCHEDULE - 3
SECURED LOANS
Term Loan from
HDFC Limited 439,795,290 1,012,957,081
Union Bank of India 29,992,602 209,992,602
(Including Interest accrued thereon)
Andhra Bank 82,126,511 90,682,198
(Including Interest accrued thereon)
Bank of Baroda - 51,092,577
(Including Interest accrued thereon)
TOTAL 551,914,403 1,364,724,458
Term Loans from HDFC Ltd. and Union Bank of India are secured by mortgage of piece and parcel of land bearing survey no 64 admeasuring 8.65acres and 6 acres, situated at Madhapur Village Serlingampally Mandal Ranga Reddy District, Andhra Pradesh, with construction present thereonand future, to the extent owned by the Company.
Term Loan from Andhra Bank is secured by a second charge on 39,370 sft of space given on lease to various customers including lease rentals.
L&T INFOCITY LIMITED
Schedules forming part of Balance SheetSCHEDULE 4 - FIXED ASSETS
GROSS BLOCK DEPRECIATION NET BLOCKDESCRIPTION As at ADDITIONS DISPOSALS As at As at FOR THE ON As At As at As at
1-4-2003 DURING THE DURING THE 31-3-2004 1-4-2003 YEAR DISPOSALS 31-3-2004 31-3-2004 31-3-2003YEAR
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Free Hold Land 55,172,247 3,510,167 25,996,902 32,685,512 - - - - 32,685,512 55,172,247
Previous Year Rs.3,57,556/-) 40,444,436 38,215,302
LOANS AND ADVANCES
Advances recoverable in cash or in kind or for value to be received 356,808,973 242,072,649
(Unsecured considered good)
Advances considered Doubtful 17,179,692 12,634,200
Less : Provision for Doubtful Advances 17,179,692 - 12,634,200 -
356,808,973 242,072,649
TOTAL 401,410,797 565,201,508
SCHEDULE -7
CURRENT LIABILITIES & PROVISIONS
A) CURRENT LIABILITIES
a) Sundry Creditors 58,503,256 60,117,360
b) Advances from Customers 94,816,552 172,633,542
153,319,808 232,750,902
B) PROVISIONS
a) Taxation 30,446,673 7,391,190
b) Proposed Dividend 27,000,000 -
c) Tax on Dividend 3,459,375 -
d) Leave encashment 455,571 304,312
e) Gratuity 352,640 213,021
61,714,259 7,908,523
TOTAL 215,034,067 240,659,425
L&T INFOCITY LIMITED
Schedule forming part of Profit & Loss Account2003-2004 2002-2003
Rupees Rupees
SCHEDULE - 8
OTHER INCOME
Lease Rentals (Tax Deducted at Source Rs.1,72,18,616; Previous Year Rs. 24,63,067) 214,761,197 139,474,576
Maintenance Recovery (Tax Deducted at Source Rs.9,13,978; Previous Year Rs. 2,18,671 ) 57,469,047 36,922,656
Parking Charges (Tax Deducted at Source Rs.7,97,025; Previous Year Rs. 1,38,389) 8,317,675 9,209,439
Miscellaneous Income (Tax Deducted at Source Rs.26,624; Previous Year Rs. 96,510) 615,597 7,142,232
Consultancy Income (Tax Deducted at Source Rs.2,82,072; Previous Year Rs. 1,32,683) 34,769,507 2,494,031
Profit on Sale of Fixed Asset (net) 216,210,919 29,330,678
TOTAL 532,143,942 224,573,612
SCHEDULE - 9
COST OF SALE OF SPACE SOLD
Opening Stock 271,660,960 761,430,154
Add :Expenses on Construction during the year 35,577,680 421,958,408
Others 3,239,086 57,193,803
TOTAL 310,477,726 1,240,582,365
Less: Internal Capitalisation during the year
Buildings 68,132,501 446,688,266
Plant & Machinery 21,076,920 145,015,713
Less: transferred to Loans & Advances - 104,270,097
TOTAL 221,268,304 544,608,289
Less: Closing Stock 4,113,399 271,660,960
Cost of space sold (A) 217,154,905 272,947,328
Cost of Land
Opening Stock 13,252,597 49,361,803
Add: Additions during the year - -
TOTAL 13,252,597 49,361,803
Less : Capitalised 3,510,167 22,252,904
TOTAL 9,742,431 27,108,899
Less: Closing Stock 43,990 13,252,597
Cost of Land sold ( B ) 9,698,441 13,856,302
TOTAL ( A + B ) 226,853,346 286,803,630
2003-2004 2002-2003
Rupees Rupees Rupees Rupees
SCHEDULE - 10
STAFF EXPENSES
Salaries, Wages and Bonus 4,437,782 4,026,063
Contribution to and Provision for
Provident Fund 239,084 224,586
Superannuation Fund 178,604 144,538
Gratuity Fund 139,619 81,152
Leave Encashment 151,259 708,566 124,455 574,731
Welfare and other expenses 566,679 222,477
TOTAL 5,713,027 4,823,271
SCHEDULE - 11
SALES, ADMINISTRATION AND OTHER EXPENSES
2003 - 2004 2002 - 2003
Rupees Rupees
Rent 730,388 404,317
Electricity & Water Charges 1,511,677 2,097,862
Rates & Taxes 3,528,311 3,107,739
Telephone Postage & Telegrams 454,889 402,560
Advertiment & Publicity 433,902 2,158,448
Sundries Others 1,351,839 1,265,696
Travelling & Conveyance 3,744,187 3,024,090
Property Maintenance 42,582,041 36,694,403
Professional & Consultancy Fees 21,923,000 12,433,367
Insurance Charges 4,170,424 720,627
80,430,657 62,309,109
SCHEDULE - 12
INTEREST AND BROKERAGE
Interest on Term Loan 68,953,305 102,914,111
Interest on others 31,583,336 20,068,612
100,536,641 122,982,723
Less: Interest received (Tax Deducted at Source 5,664,557 5,450,312
Rs.1,68,313; Previous Year Rs. 157503)
TOTAL 94,872,084 117,532,411
Schedule forming part of Proft & Loss accounts
L&T INFOCITY LIMITED
SCHEDULE - 13SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING:
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the provisions of Section 211(3C) and the other provisions of the Companies Act, 1956.
2. FIXED ASSETS:
Fixed Assets are stated at original cost.
3. DEPRECIATION:
Depreciation is provided in the accounts on straight line basis at the rates and in the manner prescribed in Schedule XIV of the Companies Act,1956.
4. INVESTMENTS:
Long term investments are stated at cost. Short terms investments are stated at cost or market value whichever is lower.
5. INVENTORIES:
(i) Work in Progress is valued at cost plus proportionate direct expenses allocated.
(ii) Completed property is valued at lower of cost or net realisable sales value.
6. SALES:
Sales are recognised when the registration of the space sold is complete.
Income from lease of premises is accounted for, based on lease agreements with the lessees.
7. RETIREMENT BENEFITS:
Contributions to Super Annuation Fund under LIC Group Super Annuation scheme is made based on the actual liability basis.
Contributions to Provident Fund are made on actual liability basis.
Gratuity and Leave encashment is accounted for based on acturial valuation.
8. PRIOR PERIOD AND EXTRA ORDINARY ITEMS:
Income and Expenditure pertaining to prior period as well as extraordinary items, where material, affecting the operating results is disclosedseparately.
9. BORROWING COSTS:
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of suchasset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All otherborrowing costs are recognised as an expense in the period in which they are incurred.
10. TAXES ON INCOME
Taxes on income for the current period is determined on the basis of taxable Income and tax credits computed in accordance with theprovisions of the Income Tax Act 1961, and based on expected outcome of assessments / appeals.
Deferred tax is recognized on timing differences between the accounting Income and the taxable income for the year and quantified using thetax rates and laws enacted or substantively enacted as on the Balance Sheet.
Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable incomewill be available against which such deferred tax assets can be realized.
11. LEASES
a) Lease rental paid on assets taken on operating lease are charged to profit & loss account.
b) Assets given out under operating lease are Capitalised at original cost. Rental income is accounted on accrual basis
Schedules forming part of accounts
SCHEDULE - 14NOTES ON ACCOUNTS:1. a) The company does not have taxable wealth, hence no provision for the wealth tax has been made as per the provisions of the Wealth Tax
Act, 1957.
b) The Company is governed by the provisions of section 115 JB of the Income Tax Act,1961, since the taxable income as per normalcomputation is Nil. Accordingly Provision for tax for the year has been made under the provision of Minimum Alternate Tax.
2. Additional information pursuant to paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 has been furnished to the extent applicablesince the Company is engaged in construction and sale of immovable property together with land.
3. Expenditure in Foreign Currency
2003-2004 2002-2003Rs. Rs.
(i) Travel 4,45,771 95,565
(ii) Consultancy 1,00,458 Nil
(iii) Others 8,248 Nil
4. Manager’s salary and perquisites Rs.8,54,943/- (Previous year Rs.7,64,438/-)
5. The company does not have any dealings with small scale industrial undertakings and hence reporting regarding interest on delayed paymentsand amounts due to them does not arise.
6. Auditors’ remuneration and expenses charged to the accounts:
2003-2004 2002-2003Rs. Rs.
Audit fees (excluding service tax) 2,00,000 1,00,000
Taxation matters 1,67,320 90,700
Expenses reimbursed 63,240 32,670
7. Segment Reporting:
A. PRIMARY SEGMENT INFORMATION (Rs. in Lacs)Sl. No Sale of Space Lease Rental Total1. SEGMENT REVENUE 3,002.75 2,147.61 5,150.36
2. SEGMENT RESULT 734.21 1,958.12 2,692.33
Less: Unallocated expenses net of recoveries and other Income 1,111.89
PROFIT BEFORE TAX - - 3,804.22
Less : Provision for tax 304.47
Less : Provision for Deferred tax (156.32)
PROFIT AFTER TAX 3656.08
3. SEGMENT ASSETS - 6,255.16 6,255.16
Unallocated assets 5,118.77 5,118.77
TOTAL ASSETS 11,373.92 11,373.92
4. SEGMENT LIABILITIES - - -
Unallocated Liabilities - - 7,544.49
TOTAL LIABILITIES - - 7,544.49
Note : Sale of space represents property developed and sold. Hence no assets are employed directly for sale of space.
B. SECONDARY SEGMENT INFORMATIONThe Company is engaged in the business of developing and operating Industrial Parks/Software Technology Park, and hence does nothave any exports. Therefore disclosure of secondary segment information does not arise.
Schedules forming part of accounts
L&T INFOCITY LIMITED
Schedules forming part of accountsSCHEDULE - 14 (contd.)8. The disclosure regarding the Related Party transactions are as follows:
A. Controlling Companies: Relationship
(i) Larsen & Toubro Limited Holding Company
B. Subsidiary controlled by the Company(i) Hyderabad International Trade Expositions Limited
(ii) Andhra Pradesh Expositions Private Limited
C. Associate Company(i) L&T Infocity – Ascendas Limited
(ii) Vizag IT Park Limited
D. Transactions with Related Parties(Rs. in Lacs)
S.
No Name of the Party Relationship Nature of Transaction Amount Amount due Amount dueto from
1. Larsen & Toubro Limited Holding Company i) Contract for 802.44 211.93 NilBuildingConstruction
ii) Consultancy for 64.19 24.62 Nilfor Design &Architecture
(No amounts pertaining to the related parties have been written off or written back during the period.)
9. The Company has not entered into any Finance lease.
The Company has taken residential premises under operating leases. These lease agreements are normally renewed on expiry. The rentalexpenses in respect of the above operating leases was Rs.5,54,850 (Previous year Rs. 4,35,875)
10. The Company has adopted Accounting Standard 22 (AS 22): Accounting for Taxes on Income which is mandatory with effect from 1st April,2001. Accordingly, the net decrease in the deferred tax liability for the year amounting to 1,56,32,054 has been accounted.
Schedules forming part of accountsSCHEDULE - 14 (contd.)Major components of Deferred Tax Assets and Deferred Tax Liabilities:
As at 31.03.2004 As at 31.03.2003PARTICULARS Rs. Rs.
Difference between Depreciation on Assets as per books of
account and as per provisions of Income Tax Act. 2,29,60,957 41,500,174
Provision for Doubtful Advances debited to Profit & Loss Account 16,30,695 4,537,859
Total 16,30,695 2,29,60,957 4,537,859 41,500,174
Net Deferred Tax Liability 2,13,30,261 3,69,62,315
Net decrease in liability charged to Profit & Loss Account (1,56,32,056)
11. Details of Earning per Share:
Particulars 2003 – 2004 2002 – 2003Rs. Rs .
Profit before Tax 38,04,22,229 8,52,61,308
Less: Provision for Tax 3,04,46,673 73,91,190
Less: Provision for Deferred Tax (1,56,32,054) (85,95,071)
Profit after Tax 36,56,07,610 8,64,65,189
No: of Equity Shares 2,70,00,000 1,80,00,000
Earning per share – Basic 13.54 4.80
12. Loans and Advances include Rs. 7,22,07,966 Lakhs representing expenses incurred on development of infrastructure facilities for 87 acres ofsaleable land in HITEC City area, owned by Government of Andhra Pradesh. As and when land is sold by the Government of Andhra Pradesh,the Government will reimburse the expenses to the Company. Accordingly, the total amount incurred net off recovery made has been shown asrecoverable in the accounts.
L&T INFOCITY LIMITED
13. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accountsSCHEDULE - 14 (contd.)
I Registration Details
Registration No. 0 1 - 2 6 8 8 5 State Code 0 1
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. Thousands)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
9 0 0 0 0 N I L
III Position of Mobilisation and Deployment of funds (Amount in Rupees)Total Liabilities Total Assets
1 3 9 3 3 2 3 1 3 9 3 3 2 3
Sources of Funds Paid-up Capital (incl. Sh. App. Money) Reserves & Surplus
2 7 0 0 0 0 5 5 3 4 4 9
Secured Loans Deferred Tax Liability
5 5 1 9 1 4 1 7 9 6 0
Application of FundsNet Fixed Asets Investments
1 0 4 2 3 9 6 1 6 4 5 5 0
Net Current Assets Misc. Expenditure
1 8 6 3 7 7 N I L
Accumulated Loses
N I L
IV Performance of Company (Amount in Rupees)Turnover (including other income) Total Expenditure (incl. prior year adj.)
8 3 4 2 1 8 4 5 1 9 9 6
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
3 8 0 4 2 2 3 6 5 6 0 8
Basic Earnings Per Share in Rs. Dividend Rate %
R s. 1 3 . 5 4 1 0
V Names of Three Principal Products/Services of the Company(as per monetary terms)
Item Code No. N I L.
(ITC Code)
Product Description D E V E L O P M E N T O F
S O F T W A R E P A R K
14. Previous year figures have been regrouped wherever necessary.
Sharp & TannanChartered Accountants
L. VAIDYANATHANPartnerMembership No. : 16368
A. RAMAKRISHNADirector
K. VENKATESHDirector
L.V. SUBRAHMANYAMDirector
U. RAMAKRISHNACompany Secretary
Place : HyderabadDate : 26th April, 2004
Place : HyderabadDate : 26th April, 2004
Date Month Year
For and on behalf of the Board
+ -ü
ü ü
Your Directors have pleasure in presenting their Second Report and Accounts for the period ending 31st March 2004.
FINANCIAL RESULTS
As the company has not started its operations, the Profit and Loss account has not been prepared. Hence there are no financial results to bereported.
PROSPECTS OF THE COMPANY
Three International Exhibitions on Agriculture, Consumer Life style products and Careers are scheduled to be conducted during the next financialyear at Hyderabad. This shows good prospects for bringing International, National and State level exhibitions at Hyderabad and your company isexpected to leap forward in conducting the events at Hyderabad.
DEPOSITS
The company has not invited or accepted any deposits from the public during the year.
DISCLOSURE OF PARTICULARS
As the company is engaged in Organising, Hosting of national and International Trade Fairs, Exhibitions, Seminars, conferences and other relatedevents, there are no particulars to be disclosed as per the companies (Disclosure of Particulars in the Report of Directors) Rules 1988.
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees)Rules 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no materialdeparture;
ii) that the selected accounting policies were applied consistently and the directors made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company at March 31, 2004 and of the profit of the company for the yearended 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 thecompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Shri K V Rangaswami and Shri V B Gadgil retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment to the Board.
AUDITORS
The company’s auditors Sharp & Tannan, hold office upto the conclusion of the forthcoming Annual General Meeting and being eligible, arerecommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment if made be within theprescribed limits u/s 224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENT
The Directors are pleased to place on record their appreciation of the co-operation extended by the employees of L&T Infocity Limited andHyderabad International Trade Expositions Limited.
For and on behalf of the Board
Place : HyderabadDate : 26th April, 2004
ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Directors' Report
K.V. RANGASWAMI
V.B. GADGIL } Director
ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
TO THE MEMBERS OF ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
We have audited the attached balance sheet of Andhra Pradesh Expositions Private Limited (the Company) as at 31st March 2004. No profit and lossaccount for the year has been prepared since the company has not commenced commercial operations. These financial statements are the responsibilityof 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 auditto 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 the financial statements. An audit also includes assessing the accounting pr inciples used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 purpose of the audit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of thesebooks;
c) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from directors of the Company as at 31st March 2004, and taken on record by the Board ofDirectors, we report that no director is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted inIndia:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March 2004;
Sharp & TannanChartered Accountants
L. VAIDYANATHANPlace: Hyderabad PartnerDate : 26th April, 2004 Membership No.16368
ANNEXURE TO THE AUDITORS’ REPORT
With reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of Andhra Pradesh Expositions Private Limitedon the accounts for the year ended 31st March 2004, we report that:
(i) (a) There are no fixed assets in the books of the Company. Hence reporting on this clause does not arise.
(ii) (a) The company being a service company does not hold any inventory in its books. Hence this clause is not applicable.
(iii) (a) According to the information and explanations given to us, there are companies, firms or other parties of the nature required to be covered inthe register maintained under Section 301 of the Companies Act, 1956.
(b) The Company has not given any loans during the year nor has it taken any loans.
(c) Since the company has not granted any loans commenting on recovery of principal and interest does not arise.
(d) There are no loans given and hence commenting on overdue amounts of more than Rupees one lakh does not arise.
(iv) Since the company has not purchased any fixed assets, inventory or sold any goods during the year, reporting on this clause does not arise
(v) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into a register inpursuance of Section 301 of the Companies Act, 1956.
(vi) The company has not accepted any deposit from the public and hence reporting compliance under the provisions of section 58A and section58AA of the companies Act 1956 and rules framed there under and the directives of Reserves Bank of India does not arise.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
Auditors’ Report
(viii) The Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act 1956, in respect of thecompanies business and hence reporting on this clause does not arise.
(ix) (a) There are no statutory payments due by this company during the year since there is no business activity during the year. Hence reportingon this clause does not arise.
(b) According to the information and explanations given to us, there are no amounts in respect of income tax / customs duty / wealth tax / cessthat have not been deposited with the appropriate authorities on account of any dispute.
(x) The Company has no accumulated losses and hence commenting on this clause does not arise.
(xi) The Company did not have any outstanding debentures or any outstanding loans from any financial institution or bank during the year.
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xv) The company has not given any guarantee for loans taken by others from bank and financial institutions.
(xvi) The Company has not obtained term loans during the year from bank.
(xvii) According to the information and explanations given to us, the Company has not raised any funds on short term / long term during the year.
(xviii) There are companies of the nature required to be covered in the register maintained under section 301 of the Companies Act, 1956.
(xix) The Company did not have outstanding debentures during the year. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issues during the year.
(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.
Sharp & TannanChartered Accountants
L. VAIDYANATHANPlace: Hyderabad PartnerDate : 26th April, 2004 Membership No.16368
ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rs. Rs. Rs. Rs.
SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDS :
Share Capital 1 100,000 100,000
TOTAL 100,000 100,000
APPLICATION OF FUNDS
Pre Operative Expenses 2 10,900
CURRENT ASSETS, LOANS & ADVANCES 3
CURRENT ASSETS
a) Cash and Bank Balances 99,800 99,800
99,800 99,800
Less: CURRENT LIABILITIES & PROVISIONS 4
a) Current Liabilities 127,250 116,350
127,250 (27,450) 116,350 (16,550)
NET CURRENT ASSETS
Miscellaneous Expenditure - -
Preliminary Expenses 116,550 116,550
TOTAL 100,000 100,000
SIGNIFICANT ACCOUNTING POLICIES 5
NOTES ON ACCOUNTS 6
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
L . VAIDYANATHANPartnerMembership No. 16368
Place : Hyderabad
Date : 26th April, 2004
For and on behalf of the Board
Place : Hyderabad
Date : 26th April, 2004
K.V. RANGASWAMI
V.B. GADGIL } Director
Schedules forming part of balance sheet
As at 31st March, 2004 As at 31st March, 2003Rupees Rupees
SCHEDULE - 1
SHARE CAPITAL
AUTHORISED
5,00,000 Equity Shares of Rs10 each 5,000,000 5,000,000
ISSUED SUBSCRIBED & PAIDUP
10,000 Equity Shares of Rs 10 each fully paid up. 100,000 100,000
The Entire Shares are held by Hitex Limited, theholding Company and its nominees.
b) Bank Balances with scheduled Banks in current account 99,780 99,800 99,780 99,800
TOTAL 99,800 99,800
As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees Rupees
SCHEDULE - 4
CURRENT LIABILITIES & PROVISIONS
CURRENT LIABILITIES
a) Sundry Creditors 127,250 116,350
(Due to Small Scale Industrial undertakings - NIL)
TOTAL 127,250 116,350
ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Schedules forming part of accountsSCHEDULE 5 -
SIGNIFICANT ACCOUNTING POLICIES1. BASIS OF ACCOUNTING:
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the provisions of section 211 (3C)and the other provisions of the Companies Act, 1956.
2. MISC EXPENDITURE:Preliminary expenses are written off in the year in which the company’s commercial operation starts.
SCHEDULE - 6NOTES ON ACCOUNTS:1. Additional information pursuant to paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 is not applicable since the Company is service
company.
2. The company does not have any dealings with small scale industrial undertakings and hence reporting regarding interest on delayed payments andamounts due to them does not arise.
3. Auditors’ remuneration and expenses charged to the accounts:
2003-2004 2002-2003
Rs. Rs.
Audit Fees (Excluding Service Tax) 5,000 5,000
Certification nil nil
4. Disclosure of Related Parties
A. Controlling Companies: Relationship(i) HITEX Limited Holding Company
(ii) L&T Infocity Limited Ultimate Holding Company
B. (a) There are no transaction between the company and the related parties during the year.
(b) No amounts pertaining to the related parties have been written off or written back during the period.
5. The figures for the previous year has been regrouped or reclassified where necessary.
6. The Company is yet to commence its commercial operations and hence no Profit & Loss Account has been made.
47. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (contd.)
I Registration Details
Registration No. 0 1 3 8 4 8 7 State Code 0 1
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. Thousands)
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Thousands)Total Liabilities Total Assets
Net Fixed Asets (Including CWIP & Pre-operative expenses) Investments1 1 N I L
Net Current Assets Misc. Expenditure- 2 7 1 1 6
Accumulated Loses Accumulated LossesN I L
IV Performance of Company (Amount in Rs. Thousands)Turnover (including other income) Total Expenditure
N I L N I L
+ - Profit/Loss Before Tax *@ + - Profit/Loss After Tax *N I L N I L
Earnings Per Share in Rs. Dividend Rate %N I L N I L
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N . A(ITC Code)Product Description O R G A N I S I N G T R A D E F A I R S & E X H I B I T I O N S
As per our report attached
SHARP & TANNANChartered Accountants
L . VAIDYANATHANPartnerMembership No. 16368
Place : Hyderabad
Date : 26th April, 2004
For and on behalf of the Board
Place : Hyderabad
Date : 26th April, 2004
K. V. RANGASWAMI
V. B. GADGIL } Director
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Directors' ReportYour Directors have pleasure in presenting their Third Report and the Audited Statement of Accounts for the year ended 31st March 2004.
FINANCIAL RESULTS2003-2004 2002-2003
Rs. (14-1-2003 to31-3-2003) Rs.
Income 55,264,970 18,622,836
Profit/(Loss) before depreciation 1,840,633 4,624,028
Less : Depreciation & Miscellaneous Expenditure written off 9,772,325 2,059,578
Profit/(Loss) after depreciation (7,931,692) 2,564,450
PERFORMANCE OF THE COMPANY
During the year Ten Events were conducted by prominent organizers like Dubai World Trade Centre, Department of Horticulture, Government of AndhraPradesh, Andhra Pradesh Mineral Development Corporation, CIDEX Trade Fairs Pvt Ltd, Fairfest Media Pvt Ltd, Unitech Pvt Ltd,Showbiz Entertainment,and Gravity Entertainment. Build 4 India a major construction industry related show was organized jointly by HITEX and CIDEX. Global participantswere immensely satisfied with the facilities and services provided at the Exhibition centre.
OUTLOOK
Your company has a confirmed order booking for Eighteen events for the financial year 2004-05.
FINANCE
During the financial year the company received a sum of Rs 200 lakhs from L&T Infocity Ltd, Rs 50 lakhs from the Department of Tourism, Governmentof Andhra Pradesh as Equity amount and a sum of Rs 9 Crores from Housing Development Finance Corporation (HDFC) as Construction Finance Loanfor the project.
CAPITAL EXPENDITURE
As at 31st March, 2004 the gross fixed assets stood at Rs 507,563,264 and the net fixed assets at Rs.495,751,791 Additions during the year amountedto Rs.558,983.
DEPOSITS
The Company has not invited or accepted any deposits from the public during the year.
SUBSIDIARY COMPANIES
As required by Section 212 of the Companies Act, 1956 the Audited statement of Accounts, reports of the Board Directors and Auditors of AndhraPradesh Expositions (Pvt) Ltd is enclosed.
DISCLOSURE OF PARTICULARS
As the company is engaged in providing infrastructure facilities to exhibitors there are no particulars to be disclosed as per the Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988.
PERSONNEL
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees)Rules, 1975.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
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 judgements and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the company at March 31, 2004 and of the profit of the company for the year ended on thatdate;
iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of thecompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the annual accounts have been prepared on a going concern basis.
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
DIRECTORS
Shri K V Rangaswami and Shri V B Gadgil retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment to the Board.
Shri.R.C.Sinha, Director has resigned from the Board on 28th February 2004 and Maj. Gen. (Retd.) C.T.Chari has been appointed as Director in causalvacancy under section 262 of the Companies Act 1956, with effect from 1st March 2004.
FOREIGN EXCHANGE EARNINGS AND OUTGO2003-2004 2002-2003
The Audit Committee has met periodically during the year and given its report and recommendations to the Board of Directors for CorporateGovernance and overall improvement in the functioning of the company.
AUDITORS
The company’s auditors Sharp & Tannan, hold office upto the conclusion of the forthcoming Annual General Meeting and being eligible, are recommendedfor re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment if made be within the prescribed limits u/s224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENT
The Directors are pleased to place on record their appreciation of the co-operation extended by L&T Infocity Limited, Housing Development FinanceCorporation and the Government of Andhra Pradesh in for their active support given to the company. The Directors place on record their appreciation ofthe valuable contribution made by the staff of the company.
For and on behalf of the Board
K.V. RANGASWAMI V.B. GADGILPlace : Hyderabad Directors
Date : 26.4.2004
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Auditors' Report
ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF HPL COGENERATION LIMITED
With reference to the Annexure referred to in paragraph 3 of the report of the Auditor’s to the Members of Hyderabad International Trade ExpositionsLimited on the accounts for the year ended 31st March 2004, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets were disposed off during the year and hence do not affect the going concern assumption.
(ii) (a) The company being a service industry does not hold any inventory in its books. Hence this clause is not applicable.
(iii) (a) According to the information and explanations given to us, there are no companies, firms or other parties of the nature required to becovered in the register maintained under Section 301 of the Companies Act, 1956.
(b) The Company has not given any loans during the year nor has it taken any loans.
(c) Since the company has not granted any loans commenting on recovery of principal and interest does not arise.
(d) There are no loans given and hence commenting on overdue amounts of more than Rupees one lakh does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods. In our opinion, andaccording to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.
(v) The register required u/s 301 has been maintained.
(vi) The company has not accepted any deposit from the public and hence reporting compliance under the provisions of section 58A and section58AA of the companies Act 1956 and rules framed there under and the directives of Reserves Bank of India does not arise.
MEMBERS OF HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
We have audited the attached balance sheet of Hyderabad International Trade Expositions Limited (the Company) as at 31st March 2004, and also theprofit and loss account 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 auditto 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 the financial statements. An audit also includes assessing the accounting pr inciples used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 purpose of the audit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of thesebooks;
c) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from directors of the Company as at 31st March 2004, and taken on record by the Board ofDirectors, we report that no director is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted inIndia:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March 2004;
ii) In the case of the profit and loss account, of the loss for the year ended on that date; and
Sharp & TannanChartered Accountants
Place : Hyderabad
Date : 26th April, 2004 L. VAIDYANATHANPartner
Membership No.16368
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act 1956, in respect of thecompanies business and hence reporting on this clause does not arise.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, Wealth Tax, Custom Duty, cess andany other dues during the year with the appropriate authorities. As at 31st March 2004, there are no undisputed dues payable for a periodof more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no amounts in respect of income tax / customs duty / wealth tax /cess that have not been deposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses less than 50% of its net worth and hence commenting on this clause does not arise.
(xi) The Company did not have any outstanding debentures or any outstanding loans from any financial institution or bank during the year.
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society.
(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
(xv) The company has not given any guarantee for loans taken by others from bank and financial institutions.
(xvi) The Company has obtained term loans during the year from bank and the same has been utilised for the purpose for which it was availed.
(xvii) According to the information and explanations given to us, the Company has not raised any funds on short term or long term basis during theyear. However, long term loan raised during the year has been utilised for the purpose for which it was raised.
(xviii) The register required u/s 301 has been maintained.
(xix) The Company did not have outstanding debentures during the year. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issues during the year.
(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.
Sharp & TannanChartered Accountants
Place : Hyderabad
Date : 26th April, 2004 L. VAIDYANATHANPartner
Membership No.16368
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
1,52,00,000 Equity Shares of Rs10/- each 152,000,000 150,000,000
ISSUED, SUBSCRIBED AND PAID UP :
50,000 Equity Shares of Rs.10/- Each fully 500,000 500,000paid up.
The entire Shares are held by L&T Infocity Limited
- holding company and its nominies.
As at 31st March,2003
SCHEDULE - 2 - RESERVES AND SURPLUSProfit and Loss Account 2,362,500
TOTAL 2,362,500
SCHEDULE - 3 - TERM LOAN FROM
HDFC Limited As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees Rupees
400,000,000 310,000,000
(Secured by mortgage of leasehold rights on 90.36Acres of Leasehold Land on survey no.5/2 to 5/23of Izzat Nagar Village, Lingampalli Mandal, RangaReddy Dist., AP and all structures of the TradeCentre both present & future.) 400,000,000 310,000,000
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees RupeesSCHEDULE - 4 - UNSECURED LOANInterest free loan from M/s Cidex Trade Fairs Pvt Limited repayable 1,059,590
at the end of the 10th year from 17th April, 2003 being the date of
receipt of the loan amount vide Memorandum of Understanding
dated 23rd May, 2002.
TOTAL 1,059,590 -
Schedules forming part Balance ShetSCHEDULE 5- FIXED ASSETS
GROSS BLOCK (Rs.) DEPRECIATION (Rs.) NET BLOCK (Rs.)DESCRIPTION As at ADDITIONS DISPOSALS As at As at FOR THE ON As At As at As at
1-4-2003 DURING THE DURING THE 31-3-2004 01-04-2003 YEAR DISPOSALS 31-3-2004 31-3-2004 31-3-2003YEAR YEAR Rs. Rs. Rs. Rs. Rs.
LOANS AND ADVANCESAdvances recoverable in cash or in kind 1,859,713 3,770,595or for value to be received.
(Unsecured considered good)
1,859,713 3,770,595TOTAL 40,959,403 7,022,414
Note : ** The Building is constructed on lease hold land (90.36 Acres) on a 66 years Lease Agreement entered with National Academy of Construction (NAC). A sum ofRs.100/- per year for the period
Commencing from 01.10.2001 to 30.09.2007 is payable to NAC as Lease Rent and to be paid at a predetermined rate as per lease agreement dated 01.10.2001 for balanceunexpired period of lease.
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of Balance SheetAs at As at
Schedule forming part of Pr ofit & Loss Accounts2003- 2004 2002-2003
Rupees Rupees Rupees Rupees
SCHEDULE 12 - INTEREST AND BROKERAGE
Interest and Finance Charges on Term Loan 34,247,535 6,798,110
Interest on others 70,156 -
TOTAL 34,317,691 6,798,110
2003- 2004 2002-2003Rupees Rupees Rupees Rupees
SCHEDULE 13 - DEPRECIATION
Depreciation for the year 9,676,731 2,126,668
Less : Capitalised under preoperative expenditure - 90,988
TOTAL 9,676,731 2,035,680
Schedules forming part of the accountsSCHEDULE A
SIGNIFICANT ACCOUNTING POLICIES
I BASIS OF ACCOUNTING:
The company maintains its accounts on accrual basis following the historical cost convention, in compliance with the provisions of section 211 (3C)and the other provisions of the Companies Act, 1956.
2. FIXED ASSETS:
Fixed Assets are stated at original cost including preoperative expenses incurred upto the date of commencement of commercial operations.
3. DEPRECIATION:
Depreciation is provided in the accounts on straight line basis at the rates and in the manner prescribed in Schedule XIV of the Companies Act,1956.
4. RETIREMENT BENEFITS:
Contributions to Provident Fund are made on actual liability basis.
Leave Encashment is accounted for based on actual liability.
5. REVENUE RECOGNITION :
Income from Services :-
a) Rental income from Trade Fair Building is accounted for based on agreements with the tenants.
b) Rental income from Exhibition Halls is accounted for based on the rates agreed with organizers of exhibitions and where the recovery iscertain.
6. TAXES ON INCOME :
Taxes on Income for the current period is determined on the basis of taxable Income and tax credits computed in accordance with the provisions ofthe Income Tax Act 1961, and based on expected outcome of assessments / appeals.
Deferred Tax is recognized on timing differences between the accounting Income and the taxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet.
Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realized.
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
SCHEDULE B
NOTES ON ACCOUNTS:1. a) The Company does not have taxable wealth under the provisions of the Wealth Tax Act, 1956.
b) The Company does not have taxable income under the provision of the Income Tax Act, 1961. Since the taxable income as per normalcomputation and u/s 115 JB is Nil, no provision for income tax has been made.
2. Deferred Tax Liability of Rs.2,53,30,934/- including for the Current year Rs.1,55,87,196/-, pertaining to timing difference on accounts of depreciationhas been recognized and Deferred Tax Asset of Rs.85,89,189/- has not been recognized by the management in the accounts as a measure ofprudence.
3. Additional information pursuant to paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 is not applicable to the Company.
4. Expenditure in Foreign Currency
2003-2004 2002-2003Rs. Rs.
Travel 2,49,179 4,18,287
Consultancy 23,22,211 20,50,045
5. The company does not have any dealings with small scale industrial undertakings and hence reporting regarding interest on delayed payments andamounts due to them does not arise.
6. Auditors’ remuneration and expenses charged to the accounts:
2003-2004 2002-2003Rs. Rs.
Audit Fees (Excluding Service Tax) 40,000 15,000
Certification 1,000 -
Tax Audit 7,500 -
7. Disclosure of Related Parties
A. Controlling Companies: Relationship
(i) L&T Infocity Limited Holding Company
(ii) Larsen & Toubro Limited Ultimate Holding Company
B. Transactions with Related Parties
S. No Name of the Party Relationship Nature of Transaction Opening Transactions Amount due Amount dueBalance or the year as at 31.03.04 from
2. Larsen & Toubro Limited Ultimate Holding Company Building Construction
Contract 976,96,601 - 123,81,220 -
(No amounts pertaining to the related parties have been written off or written back during the period.)
8. Manager’s Salary and Perquisites :
2003-2004 2002-2003Rs. Rs.
a) Salary 3,83,741 3,04,189
b) Perquisites 2,77,760 2,39,939
9. The provisions of the Payment of Gratuity Act, 1972 and Payment of Bonus Act, 1965 are not applicable since the company is in infancy period.
Schedules forming part of the accounts
10. Details of Earning per Share:
Particulars 2003 – 2004 2002 – 2003Rs. Rs.
Profit before Tax (79,31,692) 25,64,470
Less: Provision for Tax - 2,01,950
Less: Provision for Deferred Tax 2,53,30,934 -
Profit after Tax (3,32,62,626) 23,62,520
No: of Equity Shares issued 50,000 50,000
Earning per share – Basic (665.25) 47.25
Share Capital including share application money 12,12,00,060 9,62,00,060
No: of Equity Shares 1,21,20,006 96,20,006
Earning per share – Diluted (2.74) 0.25
Schedules forming part of the accounts
BUSINESS PROFILE:
I. Registration Details:
Registration No. State Code No. 0 1
0 1 - 3 7 1 0 5
Balance Sheet Date
3 1 0 3 2 0 0 4
Date Month Year
II. Capital raised during the year (Amount in Rs.Thousands)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in.Thousands)
Total Liabilities Total Assets
5 4 7 5 9 1 5 4 7 5 9 1
Sources of FundsPaid up Capital (incl.Share Appl. Money) Reserves & Surplus
1 2 1 2 0 0 N I L
Secured Loans Unsecured Loans
4 0 0 0 0 0 1 0 6 0
Deferred Tax Liability
2 5 3 3 1
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Application of Funds
Net Fixed Assets(including CWIP & Pre-operative expenses) Investments
4 9 8 6 4 5 1 0 0
Net Current Assets Misc.Expenditure
1 7 9 4 6 3 0 9 0 0
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs.Thousands)Turnover (incl.other income) Total Expenditure
5 5 2 6 5 6 3 1 9 7
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
- 7 9 3 2 - 3 3 2 6 3
Earning per share (Rs.)(Basic&Diluted) Dividend Rate %
- 2 . 7 4 N I L
V. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code)
N . A
Product Description
P R O V I D I N G I N F R A S T R U C T U R E F O R T R A D E F A I R S
12. Previous year figures have been regrouped wherever necessary.
As per our report attached
Sharp & TannanChartered Accountants
L. VAIDYANATHANPartner
Membership No.16368
Place : HyderabadDate : 26th April, 2004
For and on behalf of the Board
Place : HyderabadDate : 26th April, 2004
A. RAMAKRISHNAP. V. RAOK. VENKATESH
Directors}
Directors Report and Statement By DirectorsThe directors have pleasure in submitting their report and the audited financial statements of the Company for the year ended 31 December 2003.
PRINCIPAL ACTIVITIESThe principal activities of the Company consist of engineering and construction. There have been no significant changes in the nature of theseactivities during the financial year.
RESULTSRM
Loss for the year after taxation (406,098)
Accumulated losses brought forward (360,762)
Accumulated losses carried forward (766,860)
RESERVES AND PROVISIONSThere were no material transfers to or from reserves or provisions during the financial year.
BAD AND DOUBTFUL DEBTS(a) Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in
relation to the writing off of bad debts and the making of allowance for doubtful debts, and that all known bad debts had been written off andadequate allowance had been made for doubtful debts.
(b) At the date of this report, the directors of the Company are not aware of any circumstances that would render the amount written off for baddebts, or the amount of the allowance for doubtful debts, in the Company inadequate to any substantial extent.
CURRENT ASSETS(a) Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain whether any current assets,
other than debts, were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Company andto the extent so ascertained, were written down to an amount they might be expected to realise.
(b) At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in thefinancial statements of the Company misleading.
VALUATION METHODSAt the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing method ofvaluation of assets or liabilities in the financial statements of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES(a) At the date of this report, there does not exist:
(i) any charge on the assets of the Company that has arisen since the end of the financial year and which secures the liabilities of any person, or
(ii) any contingent liability in respect of the Company that has arisen since the end of the financial year.
(b) No contingent liability or other liability of the Company has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Company to meetits obligations as and when they fall due.
CHANGE OF CIRCUMSTANCESAt the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of theCompany, that would render any amount stated in the respective financial statements misleading.
DIRECTORS OF THE COMPANY(a) Directors who served since the date of the last report are:-
Mr. Sivajothi A/L Muhtiah Rajendram
Mr. Anumolu Ramakrishna
Mr. Kodiyalam Vasudevan Rangaswami
Mr. Pallipuram Krishnaiyer Venkatakrishnan
Mr. Rajasingam A/L Mayilvaganam
En. Syed Mohsen B. Abdul Rahman Alhabshi
(b) According to the Register of Directors’ Shareholdings, particulars of interest of directors who held office at the end of the financial year in theshares in the Company are as follows:-
Syed Mohsen B. Abdul Rahman Alhabshi - 225,000 - 225,000
The other directors do not have any interest in the shares in the Company.
L & T - ECC CONSTRUCTION (M) SDN. BHD.
L & T - ECC CONSTRUCTION (M) SDN. BHD.
(c) In accordance with the Company’s Articles of Association, Mr. Kodiyalam Vasudevan Rangaswami and Mr. Rajasingam A/L Mayilvaganamretire from the Board at the Annual General Meeting and, being eligible, offer themselves for re-election.
DIRECTORS’ BENEFITS(a) Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit by reason of
a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a companyin which the director has a substantial financial interest other than those disclosed in the financial statements.
(b) Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object is to enable the directors toacquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
STATEMENT BY DIRECTORSIn the opinion of the directors, the financial statements set out on pages 7 to 16 are drawn up in accordance with applicable approved accountingstandards so as to give a true and fair view of the state of affairs of the Company as at 31 December 2003 and of its results and the cash flow for theyear then ended.
AUDITORSThe auditors, Messrs. Ahmad Abdullah & Goh, Chartered Accountants, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors,
SIVAJOTHI A/L MUHTIAH RAJENDRAM SYED MOHSEN B. ABDUL RAHMAN ALHABSHI
Directors
Date : 27th April 2004.
Statutory DeclarationI, SYED MOHSEN B. ABDUL RAHMAN ALHABSHI, being the officer primarily responsible for the financial management of L & T - ECCCONSTRUCTION (M) SDN. BHD., do solemnly and sincerely declare that the financial statements set out on pages 7 to 16 are to the best of myknowledge and belief correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of theStatutory Declarations Act, 1960.
Subscribed and solemnly declared by the above-named SYED MOHSEN B. ABDUL RAHMAN ALHABSHI at Kuala Lumpur in the Federal Territorythis 27th day of April, 2004.
SYED MOHSEN B. ABDUL
RAHMAN ALHABSHI
Auditors’ Report
TO THE MEMBERS OF L & T - ECC CONSTRUCTION (M) SDN. BHD.
We have audited the financial statements set out on pages 7 to 16 the preparation of which is the responsibility of the Company’s directors. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We have conducted our audit in accordance with approved auditing standards. These standards require that we plan and perform the audit to obtainall the information and explanations which we considered necessary to provide us with sufficient evidence to give reasonable assurance that thefinancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosuresin the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by the directorsas well as evaluating the adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis forour opinion.
In our opinion:
(a) the financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accountingstandards so as to give a true and fair view of:
(i) the state of affairs of the Company at 31 December 2003 and of its results and the cash flow for the year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial statements.
(b) the accounting and other records and registers required by the Act to be kept by the Company have been properly kept in accordance withthe provisions of the Act.
AHMAD ABDULLAH & GOH AF-0381 GOH KENG JUAY 461/05/05(J)
Chartered Accountants Chartered Accountant
An Independent Member of Partner
BAKER TILLY INTERNATIONAL
Kuala Lumpur,
27th April, 2004
L & T - ECC CONSTRUCTION (M) SDN. BHD.
2003 2002
RM INR RM INRFIXED ASSETS
Motor Vehicle 103,507 1,245,296 103,507 1,306,258
Office Equipment 28,449 342,271 16,650 210,123
Computers 13,399 161,204 13,399 169,095
Accumulated Depreciation
Motor Vehicle (47,441) (570,764) (21,564) (272,138)
Gain on disposal of fixed assets - - (18,833) (237,672)
Operating loss before working capital changes (368,804) (4,437,092) (83,188) (1,049,833)
Decrease in debtors 101,744 1,224,085 1,432,656 18,080,119
Decrease in creditors (75,030) (902,688) (1,138,603) (14,369,170)
Net cash from/(used in) operating activities (342,090) (4,115,695) 210,865 2,661,116
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (11,799) (141,954) (34,107) (430,430)
Interest received 901 10,840 902 11,383
Proceeds from disposal of fixed assets - - 33,000 416,460
Net cash used in investing activities (10,898) (131,114) (205) (2,587)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of hire purchase loans (13,170) (158,449) (10,272) (129,633)
Hire purchase interest (4,038) (48,581) (4,068) (51,338)
Net cash used in financing activities (17,208) (207,030) (14,340) (180,971)
Net increase / (decrease) in cash and cash equivalents (370,196) (4,453,839) 196,320 2,477,558
CASH AND CASH EQUIVALENTS BROUGHT FORWARD 504,346 6,067,802 308,026 3,887,288
CASH AND CASH EQUIVALENTS CARRIED FORWARD 134,150 1,613,963 504,346 6,364,847
CASH AND CASH EQUIVALENTS
Fixed Deposit 29,596 356,070 28,694 362,118
Cash and bank balances 104,554 1,257,892 475,652 6,002,728
134,150 1,613,963 504,346 6,364,847
Malaysian Ringgit (RM) 1 = Rs. 12.03103 as on 31.12.2003
Malaysian Ringgit (RM) 1 = Rs. 12.62 as on 31.12.2002
Notes to the financial statements for the year ended 31st December, 20031. GENERAL INFORMATION
(a) The principal activities of the Company consist of engineering and construction.
(b) The Company is a private limited liability company, incorporated and domiciled in Malaysia.
(c) The registered office of the Company is located at Block B, Unit B-3A-10, Phileo Damansara 1, Jalan 16/11, 46350 Petaling Jaya,Selangor Darul Ehsan.
(d) The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 27 April2004.
2. Basis of PreparationThe financial statements of the Company are prepared in accordance with provisions of the Companies Act, 1965 and applicable approvedaccounting standards.
The financial statements of the Company are prepared under the historical cost convention.
(b) Fixed AssetsFixed assets are stated at cost less accumulated depreciation. Cost comprises their purchase cost and any incidental cost incurred.Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverableamount.
(c) DepreciationFixed assets are depreciated on the straight line basis at rates designed to write off the cost of the assets over the estimated useful livesof the assets concerned. The principal annual rates used are as follows :-
Motor vehicles 25%
Computers and office equipment 50%
(d) Income RecognitionProfit from engineering and construction projects is recognised on the percentage of completion basis which provides for the periodicrecognition of costs and revenue based on the estimated percentage of completion. Profit is recognised when costs to complete can bereasonably estimated but losses are taken up when they are expected.
(e) Trade DebtorsKnown bad debts are written off and specific allowance is made for any debts considered to be doubtful of collection.
(f) TaxationThe tax expense in the income statement comprises current and deferred tax. Current tax is the expected amount of income taxes payablein respect of taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assetsand liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxabletemporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused taxcredits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused taxlosses and unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, basedon tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the incomestatement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged orcredited directly in equity.
(g) Hire PurchaseThe cost of assets acquire under hire purchase is capitalised as fixed assets and depreciated over their respective estimated useful lives.The related financing charges are charged to the income statement over the hire purchase terms.
(h) Financial InstrumentsFinancial instruments carried on the balance sheet include cash and bank balances, fixed deposits, receivables and payables.
(i) Cash Flow StatementThe Company adopts the indirect method in the preparation of the cash flow statement. Cash and cash equivalents comprise cash inhand, bank balances and fixed deposits.
(j) Impairment of AssetsAt each balance sheet date, the Company reviews the carrying amounts of its assets to determine whether there is any indication ofimpairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverableamounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted futurecash flows. An impairment loss is recognised as an expense in the income statement.
L & T - ECC CONSTRUCTION (M) SDN. BHD.
(k) Employee BenefitsWages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services arerendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services arerendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensatedabsences such as sick leave are recognised when the absences occur. As required by law, companies in Malaysia make contributions tothe Employees Provident Fund. Such contributions are recognised as an expense in the income statement as incurred.
4. Financial Risk Management Objectives and PoliciesThe Company’s financial risk management policies seek to ensure that adequate financial resources are available for the development of theCompany’s business whilst managing its risks.
(a) Credit Risk
Credit risk arises when sales are made on deferred credit terms. All accounts are reviewed on a regular basis and appropriate recoveryaction taken on overdue amounts.
(b) Liquidity Risk
The Company ensures that there are adequate funds to meet all their obligations in a timely and cost effective manner.
5. FIXED ASSETSDetails of fixed assets are as follows :-
Balance at 31.12.2003 103,507 28,449 13,399 145,355
Accumulated DepreciationBalance at 1.1.2003 21,564 16,644 11,013 49,221
Depreciation 25,877 5,899 2,381 34,157
Balance at 31.12.2003 47,441 22,543 13,394 83,378
Net Book ValueBalance at 31.12.2003 56,066 5,906 5 61,977
Balance at 31.12.2002 81,943 6 2,386 84,335
Depreciation for 2002 22,397 - 3,225 25,622
6. TRADE DEBTORSThe normal credit term ranges from 30 days to 45 days. Other credit terms are assessed and approved on a case by case basis.
The Company has no significant concentration of credit risk that may arise from exposure to a single debtor or to groups of debtors.
7. TRADE CREDITORSThe normal credit term granted to the Company ranges from 30 days to 60 days..
8. HIRE PURCHASE CREDITORHire purchase liabilities are payable as follows :-
2003 2002Principal Interest Total Principal Interest Total
RM RM RM RM RM RMBalance at year end 48,558 5,934 54,492 61,728 9,972 71,700
Less: Amount payable within the next twelve months 14,156 3,052 17,208 10,302 4,038 14,340
34,402 2,882 37,284 51,426 5,934 57,360
Amount payable :
After one and up to two years 15,216 1,992 17,208 23,636 5,044 28,680
After two and up to five years 19,186 890 20,076 27,790 890 28,680
34,402 2,882 37,284 51,426 5,934 57,360
Notes to the financial statements for the year ended 31st December, 2003
Equivalent amount in Indian Rupees (Rs.) are as under:
2003 2002Principal Interest Total Principal Interest Total
Rs. Rs. Rs. Rs. Rs. Rs.Balance at year end 584,202 71,392 655,595 779,007 125,847 904,854
Less: Amount payable within the next twelve months 170,311 36,718 207,030 130,011 50,960 180,971
413,891 34,674 448,565 648,996 74,887 723,883
Amount payable :
After one and up to two years 183,064 23,966 207,030 298,286 63,655 361,941
After two and up to five years 230,827 10708 241,535 350,710 11,232 361942
413,891 34,674 448,565 648,996 74,887 723,883
9. OPERATING REVENUEOperating revenue represents progress billings rendered during the financial year and excludes all other income.
10. LOSS BEFORE TAXATION2003 2002
RM RMLoss before taxation is arrived at after charging:
Audit fee 4,200 4,200
Rent 62,711 80,403
Hire of motor vehicles 5,245 22,000
Consultancy fee paid to a director 8,000 -
Consultancy fees paid to a firm in which a director has an interest 11,030 8,560
Depreciation 34,157 25,622
Hire purchase interest 4,038 4,068
and crediting:
Fixed deposit interest 901 902
Equivalent amount in Indian Rupees (Rs.) are as under:
2003 2002Rs. Rs.
Loss before taxation is arrived at after charging:
Audit fee 50,530 53,004
Rent 762,186 1,297,917
Hire of motor vehicles 63,103 277,640
Consultancy fee paid to a director 96,248 -
Consultancy fees paid to a firm in which a director has an interest 132,702 108,027
Depreciation 410,944 323,350
Hire purchase interest 48,581 51,338
and crediting:
Fixed deposit interest 10,840 11,383
11. TAXATION2003 2002
RM RMTaxation for the year - -
Income tax is calculated at Malaysian statutory tax rate of 20% and 28% (2002: 28%) of the estimated assessable profit for the year.
Notes to the financial statements for the year ended 31st December, 2003
L & T - ECC CONSTRUCTION (M) SDN. BHD.
12. DEFERRED TAXATION2003 2002
RM RMDetails of deferred taxation assets relate to the following temporary differences :-
Temporary difference between depreciation and corresponding taxation allowances 4,815 9,233
Unrelieved losses (2,712,920) (2,320,777)
Unabsorbed capital allowance (42,553) (24,233)
Total difference (2,750,658) (2,335,777)
Deferred taxation assets at 20% (2002: 28%) not recognised in the financial statements (550,132) (654,018)
Equivalent amount in Indian Rupees (Rs.) are as under: 2003 2002Rs. Rs.
Temporary difference between depreciation and corresponding taxation allowances 57,929 116,520
Unrelieved losses (32,639,222) (29,288,206)
Unabsorbed capital allowance (511,956) (305,820)
Total difference (33,093,249) (29,477,506)
Deferred taxation assets at 20% (2002: 28%) not recognised in the financial statements (6,618,650) (5,895,501)
The unrelieved tax losses and unabsorbed capital allowances are available indefinitely for offset against future taxable profits of the Company.Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable profits will be available againstwhich the Company can utilise these benefits.
14. CASH FLOW STATEMENTDuring the previous financial year, the Company purchased fixed assets costing RM 106,107 (Equivalent Rs. 1,276,577) of which RM 72,000(Equivalent Rs. 866,234) was financed by means of a hire purchase facility.
2003 2002RM RM
15. EMPLOYEES INFORMATIONSalaries and other benefits 127,349 217,177
Equivalent amount in Indian Rupees (Rs.) are as under:
2003 2002Rs. Rs.
Salaries and other benefits 1,726,529 2,703,966
The number of employees of the Company at the end of the financial year was 4 (2002 :10 employees).
16. FINANCIAL INSTRUMENTSThe carrying amounts of the financial assets and liabilities of the Company at the year end approximated their fair values.
Notes to the financial statements for the year ended 31st December, 2003
Auditor s’ Repor tTO THE SHAREHOLDERS OF LARSEN & TOUBRO (OMAN) LLC
We have audited the accompanying financial statements of LARSEN & TOUBRO (OMAN) LLC for the year ended 31st December 2003 set out onpages 2 to 14.
Respective responsibilities of the Management and the Auditors
These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financialstatements based on our audit.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing. Those Standards required that we plan and perform the audit toobtain 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 the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
Opinion
In our opinion, the financial statements, present fairly, in all material respects, the financial position of LARSEN & TOUBRO (OMAN) LLC as of 31stDecember 2003, and of the results of its operations and its cash flows for the year ended in accordance with International Financial ReportingStandards.
RSM & Co.Chartered Accountants
Place : Muscat Sultanate of OmanDate : 3rd March 2004
Accounts and other receivablesContract Receivables 3,380,498 400,703,950 216,011 27,026,864Contract retentions receivable 1,042,416 123,561,738 247,037 30,908,775Advances to subcontractors 789,741 93,611,160 32,777 4,100,993Amounts due from related parties 446,221 52,892,360 2,783,118 348,218,158Advances to suppliers 112,847 13,376,206 - -Prepaid expenses 59,711 7,077,784 24,992 3,126,949Other receivables 65,673 7,784,483 29,222 3,656,198
Amount due from customers for contract work 354,856 42,062,501 214,173 26,796,897Cash and cash equivalents 1,404,585 166,491,078 106,606 13,338,330Total 7,880,180 934,069,256 3,814,391 477,248,973
TOTAL ASSETS 8,181,988 969,843,766 3,961,128 495,608,413EQUITY AND LIABILITIES:SHAREHOLDER’S FUNDSShare capital 364,286 43,180,277 250,000 31,279,500Legal Reserve 121,428 14,393,347 78,594 9,833,524Retained Earnings 555,224 65,812,922 105,462 13,195,195Total 1,040,938 123,386,545 434,056 54,308,219NON CURRENT LIABILITYEmployees’ end of service gratuity 56,909 6,745,651 46,771 5,851,894CURRENT LIABILITIESAccounts and other payables:Trade accounts payable 381,004 45,161,928 703,455 88,014,883Subcontract payables 701,270 83,124,338 683,343 85,498,509Amounts due to related parties 255,408 30,274,532 452,883 56,663,815Accrued expenses 3,953,816 468,661,626 1,323,199 165,556,012Retentions payable 383,411 45,447,239 293,666 36,742,903Advance on contracts 1,322,995 156,819,889 23,755 2,972,178Amount due to a customer for contract work 22,820 2,704,946 - -Provision for tax 63,417 7,517,071 - -TOTAL EQUITY AND LIABILITIES 8,181,988 969,843,766 3,961,128 495,608,413Omani Riyal (RO) 1 = Rs. 118.534 as on 31.12.2003Omani Riyal (RO) 1 = Rs. 125.118 as on 31.12.2002
Balance Sheet as at 31st December , 2003
V. B. GADGIL RASHAD MAL ZUBAIRDIRECTORS3rd March, 2004
NET CASH FROM OPERATING ACTIVITIES 1,400,222 167,523,281 613,763 76,792,799
INVESTING ACTIVITIES
Purchase of property, plant and equipment (221,674) (21,563,594) (51,408) (6,432,066)
Proceeds from sale of equipment - - 775 96,966
Interest income received 5,145 626,707 7 876
NET CASH USED IN INVESTING ACTIVITIES (216,529) (20,936,887) (50,626) (6,334,224)
CASH FLOWS FROM FINANCING ACTIVITY
Issue of share capital 114,286 13,546,777 - -
NET CASH FROM FINANCING ACTIVITY 114,286 13,546,777 - -
Increase in cash and cash equivalents 1,297,979 160,133,171 563,137 70,458,575
Cash and cash equivalents at the beginning of the year 106,606 13,338,330 (456,531) (57,120,246)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,404,585 173,471,500 106,606 13,338,330
Omani Riyal (RO) 1 = Rs. 118.534 as on 31.12.2003
Omani Riyal (RO) 1 = Rs. 125.118 as on 31.12.2002
LARSEN & TOUBRO (OMAN) LLC
Notes to the financial statements f or the year ended 31st December , 20031. LEGAL STATUS AND BUSINESS ACTIVITY
a) Larsen & Toubro (Oman) LLC is a limited liability company registered in the Sultanate of Oman and is engaged in civil, mechanical andelectrical contract works. The ultimate parent company is Larsen & Toubro Limited – India, a company incorporated in India. The registeredaddress of the company is P.O.Box 598, Ruwi, Postal Code 112, Sultante of Oman.
b) The company operates in Sultanate of Oman and employed 716 employees as of 31 December 2003 (2002 – 470).
c) The financial statements are prepared in Rials Omani.
2. SIGNIFICANT ACCOUNTING POLICIESa) Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards including International AccountingStandards and Interpretations issued or adopted by the International Accounting Standards Board and the applicable requirements of theCommercial Companies Law of Oman.
b) Accounting conventionThe financial statements are prepared under the historical cost convention.
The accounting policies are consistent with those adopted in the previous year.
c) Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation is calculated on a straight line basis over the estimated useful lives of assets as follows:
Fabricated Buildings Over 6 2/3 years
Machinery Over 3 to 6 2/3 years
Other equipment Over 6 2/3 years
Vehicles Over 3 years
Furniture Over 3 years
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate thecarrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount,the assets are written down to their recoverable amount.
d) InventoriesInventories are stated at the lower of cost and net realizable value after making due allowance for obsolete and slow moving items. Costs arethose expenses incurred in bringing each product to its present location and condition, as follows:
Stores, spares and consumables Weighted average cost
Tools, scaffolding materials, tackles, etc. Weighted average cost less amortization over estimated useful life.
Construction Materials Weighted Average Cost
Net realizable value is based on estimated selling price less any further estimated costs expected to be incurred on disposal.
e) Accounts receivableAccounts receivable are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts ismade when collection of the full amount is no longer probable. Bad debts are written off as incurred.
f) Amounts due from/to customers for contract workAmounts receivable are stated at original invoice amount less an allowance for any uncollectable amounts. An estimate for doubtful debts ismade when collection of the full amount is no longer probable. Bad debts are written off as incurred.
g) Cash and cash equivalentsCash and cash equivalents comprise cash, bank current accounts and bank fixed deposits accounts free of encumbrance with a maturitydate of three months or less from the date of deposit.
h) Financial Instrumentsl Financial instruments of the company comprise accounts and other receivables, bank current and fixed deposit balances, cash,
accounts and other payables, and amounts due from/to customers for contract work.
l An assessment is made at each balance sheet date to determine whether there is objective evidence that a financial asset or group offinancial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and anyimpairment loss recognised for the difference between the recoverable amount and the carrying amount.
l Financial assets that do not have an active market and whose fair value cannot be estimated reliably, are measured at amortised costless any write-down for impairment if there is no fixed maturity date.
l Financial liabilities with no fixed maturity date are measured at cost, and at amortised cost if they have a fixed maturity date.
l Changes in values of such financial assets and financial liabilities are recognised in the income statement.
i) Legal reserveAs required by the commercial companies law of the Sultanate of Oman, 10% of the net profit of each year is to be transferred to legalreserve until the reserve has reached a minimum of one third of the issued share capital. The company has resolved to discontinue suchtransfers in future since the reserve has now reached one third of the issued share capital. The legal reserve is not available for distribution.
j) Employees’ end of service benefitsPayment is made to the Omani Government Social Security scheme under Royal Decree 72/91 for Omani employees.
Accruals for employees end of service benefits comprising of leave salary and end of service gratuity for non-Omani employees is inaccordance with company’s rules and is based on the liability which would arise if the employment of all staff were terminated at the year end.The total expenses recognised in the income statement for staff end of service benefits amounts to RO. 28,111/- (previous year RO 25,197/-)
Employees’ benefit cost comprising staff passage for non-Omani employees is accounted on cash basis.
k) TaxationProvision for tax has been made on the basis of net profit as per the company’s financial statements, applying the tax rates specified in theLaw of Income-tax on companies in Oman. Additional tax liability that may arise in future on finalisation of pending tax assessments andappeals for the tax years 1994 to 2003 is not expected to be material to the company’s financial position, and would be paid for and accountedin the financial statements of the year in which the tax assessments and appeals are finalised.
l) RevenueContract revenue comprising the total value of construction work performed during the year is recognized on a percentage of completionbasis. The percentage of completion is determined on the basis of progress of each contract measured by reference to proportion thatcontract costs incurred for work performed to date bear to the estimated total contract costs. No profit is recognised until a contract hasprogressed to the point where the ultimate realizable profit can be reasonably determined. Provision is made for all losses incurred to theaccounting date together recorded on the basis of progress bills prepared by the company and are considered as revenue to the extent thatthey are probable of being certified and recovered.
Interest revenue is recognized as it accrues.
m) Finance costsFinance costs are recognised as an expense in the period in which they are incurred.
n) Foreign currenciesTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated inforeign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.
As at 31 st December 2003 43,086 558,752 170,181 19,576 145,801 937,396
Accumulated DepreciationAs at 1 st January 2003 10,213 391,179 78,332 10,095 79,166 568,985
Depreciation for the year 3,547 30,242 15,285 3,966 13,563 66,603
As at 31 st December 2003 13,760 421,421 93,617 14,061 92,729 635,588
Net Book valueAs at 31 st December 2002 7,691 82,989 37,358 6,688 12,011 146,737
As at 31 st December 2003 29,326 137,331 76,564 5,515 53,073 301,808
4) INVENTORIES 2003 2002RO RO
Stores, spares and consumables 165,253 136,473
Construction Materials 58,379 23,982
223,632 160,455
Notes to the financial statements f or the year ended 31st December , 2003
LARSEN & TOUBRO (OMAN) LLC
5) ACCOUNTS AND OTHER RECEIVABLES 2003 2002RO RO
Contracts Receivables 3,380,498 216,011Contract retentions receivable * 1,042,416 247,037Advances to subcontractors 789,741 32,777Amounts due from related parties (note 11)** 446,221 2,783,118Advances to suppliers 112,847 —Prepaid expenses 59,711 24,992Other receivables 65,673 29,222
5,897,107 3,333,157* - Included in contract retentions receivable are amounts of RO. 1,036,706/- due after one year from the year end.
** - Included in amounts due from related parties is an amount of RO. 375,194/- due from the parent company.
6) CASH AND CASH EQUIVALENTSCash and cash equivalents included in the statement of cash flows comprise the following items:
2003 2002RO RO
Cash on hand 8,238 7,029Bank Balances:
Current accounts 430,609 99,577Fixed deposits 965,738 —
1,404,585 106,6067) SHARE CAPITAL
2003 2002RO RO
Shares of RO.1/- each, fully paid 364,284 250,0008) DIVIDENDS
Dividends proposed after the year end of RO 145,715/- (Equivalent Rs. 17,261,035/-) represent a dividend per share of RO 0.400 (EquivalentRs. 47/-)
9) ACCOUNTS AND OTHER PAYABLES2003 2002
RO ROTrade accounts payable 381,004 703,455Subcontract payables 701,270 683,343Amounts due to related parties (note 11)* 255,408 452,883Accrued expenses 3,953,816 1,323,199Retentions payable 383,411 293,666Advance to contracts 1,322,995 23,755* - Included in amounts due to related parties is an amount of RO 248,632/- (Equivalent Rs. 29,452,325/-) due to the parent company.
10) CONTRACT WORK IN PROGRESS2003
ROContract costs incurred plus recognised profits 9,191,262Progress billing 8,859,226Advances received 1,318,137Retentions receivable 711,002
Notes to the financial statements f or the year ended 31st December , 2003
11. RELATED PARTIESThe company enters into transactions with parties that fall within the definition of a related party as contained in International AccountingStandard 24 : Related Party Disclosures. The management considers such transactions to be in the normal course of business and at termswhich correspond to terms on normal arm’s length transactions with third parties. Related parties comprise shareholders, companies undercommon ownership and/or common management control and shareholders.
The nature of significant related party transactions and the amounts involved are as follows:
2003 2002RO RO
Contract revenue 3,068,180 9,186,032Contract costs and administrative expenses 266,445 284,174Purchase of property, plant and equipment 28,229 —Rent expense 3,000 —The balances with related parties at the balance sheet date have been separately disclosed in the financial statements under notes 5 and 9.
The following amounts are included in amounts due from and due to related parties:
a) contract receivables of RO 358,122 (2002 – RO 2,565,332/-) and contract retention of RO 80,815/- (2002 – RO 176,832/-) due fromrelated parties.
b) Contract retentions amounting to RO Nil (2002 – RO 51,135/-) and a contract advance of RO Nil (2002 – RO 70,726/-)
12. TAXATIONa) In the opinion of the board of directors and consistent with the position set out by the company to the tax authorities, technical fees paid/
payable to Larsen & Toubro, India has been considered as fully deductible expenditure for tax purposes. Accordingly, no related chargefor Omani income tax has been made in the financial statements. However, in the assessments issued by the tax department for taxyears 1994 to 1998 the tax department has disallowed a major portion of technical fees paid. The Company has filed an appeal with theTax Committee in respect of technical fees disallowed in the assessment for tax years 1994 to 1998 and is confident that the decisionwill be awarded in favour of the company. The decision of the Tax Committee on the appeal is awaited.
b) Further, in the assessments issued by the tax department for the tax years 1997 and 1998 the tax department has disallowed somedepreciation claimed as it is not as per the depreciation rates prescribed in the income tax law.
c) Should the Tax Committee reject the appeal made by the company for technical fees as stated in para 12-a above, and depreciation isdisallowed as stated in para 12-b above, the additional tax payable for tax years 1994 to 2003 would be approximately RO 80,000(Equivalent Rs. 9,476,600/-) based on the applicable tax rates.
13. CONTRACT COSTS2003 2002
RO ROMaterials Consumed 822,211 1,603,738Subcontractors and consultancy charges 8,538,911 7,614,965Depreciation 55,973 65,701Wages and benefits 774,240 713,050Other contract costs 999,296 605,761
a) CREDIT, INTEREST RATE AND EXCHANGE RATE RISK EXPOSURESCredit riskFinancial assets which potentially expose the company to credit risks and concentrations of credit risk comprise principally, bank currentand fixed deposit accounts, accounts and other receivables, amounts due from customers for contract work and amounts due fromrelated parties. The maximum credit risk exposure of financial assets recognised in the balance sheet approximate to the carryingamount of the assets.
LARSEN & TOUBRO (OMAN) LLC
The company’s bank current and fixed deposit accounts are placed with reputed financial institutions. At the balance sheet date, 90% ofcontract receivables and retentions was due from two customers (previous year 46% due from the one customer). At the balance sheetdate, the company’s maximum exposure to credit risk from the parent company in India is Rs. 126,562/-. At the balance sheet date,contract receivables and retentions of RO 1,457,743/- (Equivalent Rs. 172,680,591/-) are in the process of being certified by consultants/clients.
There are no other significant concentrations of credit risk with any single debtor or group of companies or to debtors from a particularindustry or to debtors outside the country in which the company operates.
Interest rate riskThe company is exposed to interest rate risk on its interest bearing asset, namely bank fixed deposits which are at fixed commercialinterest rates generally obtained in the Sultanate of Oman. All other financial assets and financial liabilities are non interest bearing.
Exchange rate riskThere are no significant exchange rate risk as substantially all financial assets and financial liabilities are denominated in Rials Omani orUAE Dirhams/US Dollars to which the Rial Omani is fixed.
b) FAIR VALUESThe fair value of the company’s financial assets and financial liabilities approximate to their carrying values.
16. CONTINGENT LIABILITIES2003 2002
RO ROBankers’ letter of guarantee 4,936,577 1,182,293Letter of credit – Utilised 987,440 —Letter of credit – Acceptances 126,029 —
6,050,046 1,182,293Bank facilities are secured against:
a) assignment of project receivables from Larsen & Toubro Limited, India and Royal Flight Hangar project, and insurance policies,a nd
b) Bank guarantee of RO 250,000 (Equivalent Rs. 29,614,375/-) from a nominated subcontractor of a client of the company.
17. COMPARATIVE FIGURESPrevious year’s figures have been reclassified wherever necessary to conform with the presentation adopted in the current year.
2003 2002
USD INR USD INR
NON-CURRENT ASSETS
Plant & Equipment 149,673 6,825,089 - -
Accumulated Depreciation (9,355) (426,588) - -
CURRENT ASSETS
Prepaid Expenses 4,196 191,338 - -
Amount due from a related party 8,061 367,582 - -
Cash and cash equivalent:
Bank balance in current account 116,618 5,317,781 259,776 12,458,857
Total 269,193 12,275,201 259,776 12,458,857
SHARE HOLDERS FUNDS
Share Capital 300,000 13,680,000 300,000 14,388,000
Accumulated Loss (32,177) (1,467,271) (41,594) (1,994,848)
CURRENT LIABILITY
Accrued expenses 1,370 62,472 1,370 65,705
Total 269,193 12,275,201 259,776 12,458,857
1 USD = Rs. 45.6 as on 31.12.2003
1 USD = Rs. 47.96 as on 31.12.2002
Balance Sheet as at 31st December, 2003
LARSEN & TOUBRO INTERNATIONAL FZE
Auditor’s Report
TO THE SHAREHOLDERS OF LARSEN & TOUBRO INTERNATIONAL FZE
We have audited the accompanying financial statements of LARSEN & TOUBRO INTERNATIONAL FZE (the “enterprise”) for the year ended 31 December2003 set out on pages 2 to 9.
Respective responsibilities of the management and the auditors
These financial statements are the responsibility of the enterprise’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of LARSEN & TOUBRO INTERNATIONAL FZE as of 31 December2003 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Also, asrequired by the Hamriyah Free Zone Implementing Rules and Regulations issued pursuant to Sharjah Emiri Decree No. (6) of 1995, we confirm that properbooks of account and other records have been maintained and the financial statements have been properly prepared by the enterprises in accordance withthe said regulation.
PANNELL KERR FORSTER
Abu Dhabi
United Arab Emirates
28th March, 2004
LARSEN & TOUBRO INTERNATIONAL FZE
2003 2002
USD INR USD INR
Hire Charges 22,852 1,042,051 - -
Administrative Expenses:
Rent (1,826) (83,266) (10,954) (525,354)
Maintenance & other expenses (609) (27,770) (18,596) (891,864)
Licence & other professional fees (1,645) (75,012) (12,044) (577,630)
Depreciation of property, plant & equipment (9,355) (426,588) - -
NET PROFIT/(LOSS) FOR THE YEAR 9,417 429,415 (41,594) (1,994,848)
1 USD = Rs. 45.6 as on 31.12.2003
1 USD = Rs. 47.96 as on 31.12.2002
Income Statement for the year ended 31st December, 2003
Statement of changes in equity for the year ended 31 December, 2003
SHARE CAPITAL ACCUMULATED LOSSES TOTALRO INR RO INR RO INR
Share Capital Subscribed 300,000 14,388,000 - - 300,000 14,388,000
Net Loss for the period - - (41,594) (1,994,848) (41,594) (1,994,848)- -
As at 31.12.2002 300,000 14,388,000 (41,594) (1,994,848) 258,406 12,393,152
Net profit for the year - - 9,417 429,415 9,417 429,415
As at 31.12.2003 300,000 13,680,000 (32,177) (1,565,433) 267,823 12,822,567
1 USD = Rs. 45.6 as on 31.12.2003
1 USD = Rs. 47.96 as on 31.12.2002
Note : In Balance Sheet we are taking the closing rate for converting RO into INR. Similarly in the above statement also, the value of share capital inINR should be the same as in Balance Sheet.
Cash Flow Statement for the year ended 31st December, 20032003 2002
RO INR RO INR(12 months) (15 months)
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(loss) for the year/period 9,417 429,415 (41,594) (1,994,848)
Adjustments for:
Depreciation of property, plant & equipment 9,355 426,588 - -
Operating loss before changes in operatingassets and liabilities 18,772 856,003 (41,594) (1,994,848)
Increase in prepaid expenses (4,196) (191,338) - -
Increase in amount due from a related party (8,061) (367,582) - -
Increase in accrual - - 1,370 65,705
Net cash from/(used in)operating activities (A) 6,515 297,084 (40,224) (1,929,143)
Cash flows from investing activities
Purchase of property, plant & equipment (149,673) (6,825,089) - -
Net cash used in investing activities (B) (149,673) (6,825,089) - -
Cash flows from financing activities
Subscription to share capital - - 300,000 14,388,000
Net cash from financing activities ( C) - - 300,000 14,388,000
Cash and cash equivalents at beginning of the year/period 259,776 11,845,786 - -
Cash and cash equivalents at end of the year/period 116,618 5,317,781 259,776 12,458,857
1 USD = Rs. 45.6 as on 31.12.2003
1 USD = Rs. 47.96 as on 31.12.2002
LARSEN & TOUBRO INTERNATIONAL FZE
LARSEN & TOUBRO INTERNATIONAL FZE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2003
1. LEGAL STATUS AND BUSINESS ACTIVITY
a) LARSEN & TOUBRO INTERNATIONAL FZE (the “enterprise”) was incorporated on 25 September 2001 in the Hamriyah Free Zone, Sharjah asa Free Zone Establishment with Limited Liability under the Hamriyah Free Zone Implementing Rules and Regulations issued pursuant to SharjahEmiri Decree No. 6 of 1995. The enterprise is a wholly owned subsidiary of Larsen and Toubro Limited, a company incorporated in India, whichis the ultimate parent company.
b) The enterprise is licenced to carry on business of import and hire of plant, machinery and other equipment.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared under the historical cost convention and in accordance with International Financial Reporting standardsadoptedby the International Accounting Standards Board. The significant accounting policies adopted are as follows :
a) Depreciation of property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost is depreciated using the straightline method over their useful lives estimated at eight years.
b) Cash and cash equivalents
Cash and cash equivalents for the purpose of the cash flow statement comprise cash, bank current accounts, deposits free of encumbrance witha maturity date of three months or less from the date of deposit and highly liquid investments with a maturity date of three months or less from thedate of investment.
c) Revenue
Revenue represents the net amount invoiced for hire charges of equipment delivered during the year.
d) Foreign currency transactions
Transactions in foreign currencies are translated into US Dollars at the rates of exchange ruling on the date of the transactions.
Monetary assets and liabilities expressed in foreign currencies are translated into US Dollars at the rates of exchange rulling at the balance sheetdate.
e) Financial Instruments
Financial instruments of the enterprise comprise cash and cash equivalents, payables and amounts due from a related party.
Financial assets that do not have an active market and whose fair value cannot be estimated reliably, are measured at amortised cost less anywrite-down for impairment if there is no fixed maturity date.
Financial liabilities with no fixed maturity date are measured at cost and at amortised cost if they have a fixed maturity date.
Changes in values of such financial assets and financial liabilities are recognized in the income statement.
3. PROPERTY, PLANT AND EQUIPMENT
Plant & Equipment Total
US$ US$
Cost
As at 1.1.2003 - -
Additions during the year 149,673 149,673
As at 31.12.2003 149,673 149,673
Accumulated depreciation
As at 1.1.2003 - -
Depreciation for the year 9,355 9,355
As at 31.12.2003 9,355 9,355
Net book value
As at 31.12.2002 - -
As at 31.12.2003 140,318 140,318
4. RELATED PARTIES
The enterprise enters into transactions with the parent company and other enteprises which fall within the definition of a related party as contained inInternational Accounting Standard 24. The management consider such transactions to be in the normal course of business and at terms agreed upon.
At the balance sheet date, balances with a related party is included in the current assets at US$ 8,061 (previous year- US$ Nil).
The nature of significant related party transactions and the amount involved is as under:
2003 2002US$ US$
(12 months) (15 months)
Hire charges of equipment 22.852 -
The enterprise also provides funds to and receives funds from related parties as and when required as working capital facilities.
The enterprise also receives administrative support for carrying out its activities from its related parties.
Financial assets which potentialy exposes the enterprise to credit risk comprise principally bank current account and amount due from related party.
The enterprise bank current account is placed with a high credit quality financial institution.
Exchange rate risk
There is no exchange rate risk as the bank current account is denominated in US Dollars.
10. OPERATING LEASE COMMITMENTS
The enterprise has entered into non-cancellable operating lease for rent of plot of land situated at Hamriyah Free Zone. The total of the future leasepayment is as follows:
2003 2002US$ US$
Not later than one year 8,217 5,478
Between one and five years 41,085 38,346
Later than five years 21,912 32,868
71,214 76,692
11. COMPARATIVE FIGURES
a) Previous periods figures have been regrouped/reclassified wherever necessary to conform to the presentation adopted in the current year.
b) Current year’s figures are not comparable with previous periods figures of fifteen months.
For LARSEN & TOUBRO INTERNATIONAL FZE
V.B. VENKATAKRISHNANDIRECTOR
The Directors have pleasure in presenting their Annual Report and Audited Accounts for the year ended 31st December 2003.
FINANCIAL RESULTS AND OPERATIONS
SHARE CAPITAL
The issued share capital of the company was Rs. 500,000,000/- as at 31st December 2003.
ACCOUNTS
The Profit and Loss Statement for the Year ended 31st December 2003.
Notes 31/12/2003 31/12/2002
Rs. Rs.
Revenue 2,829,050,505 1,594,407,053
Cost of Sales (2,592,488,698) (1,466,631,997)
Gross Profit 236,561,807 127,775,056
Other Operating Income 1 264,246 1,730,029
Administrative Expenses (32,906,854) (31,513,648)
Distribution Expenses (42,851,882) (51,709,812)
Pre-Operational Expense Amortised - (11,365,412)
Other Operating Expenses (2,404,300) (1,779,872)
Profit from Operating Activites 2 158,663,017 33,136,341
Net Financial Cost 3 (14,687,583) (71,672,083)
Profit / (Loss) before Taxation 143,975,434 (38,535,742)
Income Tax Expense 4 - -
Profit/(Loss) for the year 143,975,434 (38,535,742)
Earnings/(Loss) per Share 5 3.14 (1.54)
CEMENT OPERATIONS:
During the year, the Company dispatched 0.32 million metrIc tones of bulk and bagged cement put together as against 0.29 million metric tones in theprevious year and achieved a market share of 11%.
The Sales and other income for the financial year under review were Rs. 1,872 Million as against Rs. 1,594 Million during the previous year, and theprofit for the year was Rs. 144 Million as against loss of Rs. 39 Million during the previous year.
The performance for the year was far better in comparison with the previous year, which was mainly due to good price realisation, stability in exchangerate and cost reduction. Further, the company had incurred lower finance cost during the year on account of reduction in interest rate and on earlierrepayment of borrowings on receipt of Rs. 50 million towards share capital.
All these resulted into total turnaround of the company's business and the company has started making profits.
CONSTRUCTION ACTIVITY
The construction of the power project was completed and it is expected to hand over the project in earlier 2004.
SHARE ISSUE
The company received Rs. 200 million during the year 2002 from Larsen & Toubro Limited and Rs. 50 million in year 2004 from M/s. Ceylinco InsuranceCompany Limited towards the rights issue of shares which were allotted in March 2003.
FINANCE
During the year, the Company repaid Rs. 150 Million of balance Redeemable Secured Debentures issued to DFCC Bank against project finance andsettled all the short term bank borrowings. With this the company is debt free as of date.
MARKET
The economy has started looking up and due to growth in construction and other related industries the cement consumption is expected to grow ataround 8% to 10% in the year 2004.
DIVIDENDS
The Directors recommend a first and final dividend of 20% for the year ended 31st December 2003.
Directors' Report
L&T CEYLINCO (PVT.) LIMITED
DIRECTORATE
The Directors of the Company during the financial year under review are shown under Corporate Information. Mr. Ajay Kumar Sinha (alternate directorto Mr. D. Razdan) resigned from the Board of Directors with effect from 24th August 2003) and Mr. Arun Kumar Singh was appointed alternate Directorto Mr. D. Razdan effective 24th August 2003.
RETIREMENT OF DIRECTORS
In terms of the Articles of Association of the Company the Directors are not subject to retirement by rotation.
DIRECTORS' INTERESTS IN CONTRACTS
The Directors have no direct or indirect interest in any contract or proposed contract of the company.
EMPLOYEES
The management wishes to express its appreciation to all the employees of the company for their outstanding contribution to the operation of thecompany during this year too.
AUDITORS
The Accounts for the year ended 31st December 2003 have been audited by M/s. K P M G Ford, Rhodes, Thornton & Co., Chartered Accountants. TheDirectors recommend their re-appointment.
By order of the Board
(Sgd)
Authorised Signatory
INTERNATIONAL CONSULTANCY AND CORPORATE SERVICES (PVT) LIMITED
SECRETARIES TO LARSEN AND TOUBRO CEYLINCO (PRIVATE) LIMITED.
01st March 2004
Colombo
L&T CEYLINCO (PVT.) LIMITED
TO THE MEMBERS OF LARSEN AND TOUBRO CEYLINCO (PRIVATE) LIMITED
We have audited the balance sheet of Larsen & Toubro Ceylinco (Private) Limited as at 31st December, 2003, and the related statements of income,changes in equity and cash flows for the year then ended, together with the accounting policies and notes thereon.
Respective Responsibilities of Directors and Auditors
The Directors are responsible for preparing and presenting these financial statements in accordance with the Sri Lanka Accounting Standards. Ourresponsibility is to express an opinion on these financial statements, based on our audit.
Basis of Opinion
We conducted our audit in accordance with the Sri Lanka Auditing Standards, which require that we plan and perform the audit to obtain reasonableassurance about whether the said financial statements are free of material misstatements. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the said financial statements, assessing the accounting principles used and significant estimates made bythe directors, evaluating the overall presentation of the financial statements, and determining whether the said financial statements are prepared andpresented in accordance with the Sri Lanka Accounting Standards. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the Company maintained proper books of account for the year ended 31st December, 2003, andto the best of our information and according to the explanations given to us, the said balance sheet and related statements of income, changes in equityand cash flows and the accounting policies and notes thereto, which are in agreement with the said books and have been prepared and presented inaccordance with the Sri Lanka Accounting Standards, provide the information required by the Companies Act No. 17 of 1982 and give a true and fairview of the Company's state of affairs as at 31st December, 2003, and of its profit and cash flows for the year then ended.
Directors' Interests in Contracts with the Company
According to the information made available to us, the directors of the Company were not directly or indirectly interested in contracts with the Companyduring the year ended 31st December, 2003, except as stated in Note 20 to these financial statements.
FOR KPMG FORD, RHODES, THORNTON & CO.Chartered Accountants
Colombo
13th February, 2004
Auditors’ Report
L&T CEYLINCO (PVT.) LIMITED
Balance Sheet as at 31st December, 200331.12.2003 31.12.2002
TOTAL ASSETS 1,268,926,599 595,488,573 1,790,368,531 887,419,346
EQUITY AND LIABILITIESCAPITAL AND RESERVESShare Capital 12 500,000,000 234,642,639 250,000,000 123,915,737Advance Received in lieu of Share Capital - 0 200,000,000 99,132,590Retained Losses (167,273,950) (78,499,202) (311,249,384) (154,274,788)Shareholders Funds 332,726,050 156,143,437 138,750,616 68,773,539Pre - Operational Expenses - -
TOTAL EQUITY AND LIABILITIES 1,268,926,599 595,488,573 1,790,368,531 887,419,346
The figures in INR is converted at the rate of: 2.1309=96.70/45.38 2.0175=96.76/47.96
The above balance sheet is to be read in conjunction with the accounting policies and notes to the accounts.
Signed for and on behalf of the Board ,
D. J. L. B. KotelawalaJ. P. NayakD. RazdanA. R. GunawardenaC. R. V. SubramaniumA. K. Singh
April 24, 2003
FOR THE YEAR ENDED 31ST DECEMBER, 200331.12.2003 31.12.2002
SLR INR SLR INR
Profit for the period 143,975,434 67,565,552 (38,535,742.30) (19,100,740)Add :Loss Brought forwardfrom Last year (311,249,384) (146,064,754) (272,713,642.00) (135,174,048.00)Loss Carried Forward (167,273,950) (78,499,202) (311,249,384) (154,274,788)
Net Cash used in Operating Activities 271,699,898 134,399,843 (98,469,162) (44,718,309)Cash Flows from Investing ActivitiesPurchase & Construction of Property, Plant & Equipment (1,429,417) (689,673) (201,501) (102,052)Interest Received 958,771 462,593 7,459 3,778Proceeds from Sale of Property,Plant & Equipment 2,077,583 1,002,404 1,553,374 786,718
Net Cash from Investing Activities 1,606,937 775,324 1,359,332 688,444
Cash Flows from Financing ActivitiesDebenture Redemption (150,000,000) (72,372,865) (60,000,000) (30,387,440)Advance Received in lieu of Share Capital - - 200,000,000 101,291,466Issue of new share capital 50,000,000 24,124,288
Net Cash from Financing Activities (100,000,000) (48,248,577) 140,000,000 70,904,026
Net Increase/(Decrease) in Cash & Cash Equivalents 173,306,835 86,926,590 42,890,170 26,874,161Cash and Cash Equivalents at the beginning of the year (212,158,382) (105,159,049) (255,048,552) (132,033,210)Cash and Cash Equivalents at the end of the year (38,851,547) (18,232,459) (212,158,382) (105,159,049)
The Company entered into a contract to Install, Erect and Commission a diesel powered cycle power station with AES
Kelanitissa (Pvt) Ltd. The project did not have any financial implications on the business operations of the Company.
20 Directors Interest in ContractsNo director of the Company is directly or indirectly interested in any contract with the
Company other than the following:
The Company entered in to a contract to Install, Erect and Commission a power station with AES Kelanitissa (Pvt) Ltd.Larsen and Toubro Ltdhad agreed to reimburse Larsen & Toubro Ceylinco Ltd, loss if any suffered by the Company in respect of the AES Contract. Consequently,Larsen and Toubro Ltd- India, has made certain payments on this account.
J.P.Nayak, is also a director of the company and also a director of Larsen & Toubro Limited.
Mr. Ajith Gunawardena a Director of the company is also a director of following companies.
Ceylinco Developers (Pvt) Ltd
Ceylinco Homes International (Lotus Tower) Ltd
Ceylinco International Trading Company Ltd.
Mr. Lalith Kothalawala a Director of the Company is also a Director of the following Companies.
21 Capital CommitmentsAs at 31.12.2003 there were no capital commitments which would require disclosure.
22 Contingent LiabilitiesThere are no Contingent Liabilities as at the balance sheet date which would require adjustments or disclosure.
Directors' Report
The Directors have pleasure in presenting their Report and Accounts for the year ended 31st March 2004.
FINANCIAL RESULTS
Year ended Year ended31/03/2004 31/03/2003
Rs. Cr. Rs. Cr.
Gross Income 78.18 64.18
Profit before Tax 14.30 6.14
Provision for Tax 0.86 0.06
Profit after Tax 13.44 6.08
Add : Balance brought forward from previous years 6.41 3.62
Balance available for appropriations 19.85 9.71
Appropriations :
Reserve u/s 451C of RBI Act, 1934 2.70 1.23
Debenture Redemption Reserve 0.25 0.25
General Reserve - I 6.00 3.00
General Reserve - II 3.00 -
Interim Dividend - 3.60
Dividend 5.20 -
Dividend Tax 0.67 -
Surplus c/f to Balance Sheet 2.03 1.63
As the accounts reflect the status as the amalgamated entity, figures for the current year are not comparable with those of theprevious year.
AMALGAMATION
During the year under review three companies which were wholly owned subsidiaries of Larsen & Toubro Ltd. namely L&T NetcomLtd., LTM Ltd. and L&T Equipment Leasing Company Ltd. and the Company’s own subsidiary L&T Trade.Com Ltd. were amalgamatedwith the Company. Pursuant to the Scheme of Amalgamation duly approved by the High Court of Judicature at Bombay and by theHigh Court of Judicature at Chennai, the entire business of the transferor companies including the assets and liabilities were transferredas a going concern to L&T Finance Ltd. The effective date for the amalgamation for all four companies is April 1, 2003.
The amalgamation was effected to augment the capital of the company and thereby provide an impetus to growth.
The Company will continue to operate the business carried on by the amalgamated entities and seek opportunities to suitably expandthe operations
DIVIDEND
The Directors recommend a Dividend of Rs.0.60 per equity share on 8,66,91,500 equity shares of Rs. 10 each. (Previous year Rs.0.60per equity share on 6,00,00,000 equity shares).
PERFORMANCE OF THE COMPANY
This has been a year of consolidation of the corporate and the construction equipment financing business. A beginning hasbeen made in financing tractors as a first time foray into financing in the rural sector of the country. The company achievedsignificant volumes in its first year of operations in this business. The company added three new branches during the year.
Effective management of treasury operations and judicious use of swaps and derivatives has significantly reduced the cost ofborrowings, which has led better profitability.
Despite increasing competition from the banking sector particularly the private sector banks, the company has built a large customerbase and is constantly improving upon customer-service. The company is confident of further growth during the coming years.
L&T FINANCE LIMITED
In order to make an entry into the growing business of Equipment Hire, the company has decided to invest upto 30% in a newlyincorporated company viz. NAC Infrastructure Equipment Ltd. The National Academy of Construction, India Infrastructure EquipmentLtd. and Nagarjuna Construction Company Ltd. are the other shareholders. The Company has, as on date of this report, contributedRs.1, 50,000 towards the initial equity of NAC Infrastructure Equipment Ltd. Commercial operations have not yet commenced.
RESOURCES
During the year under review the Company has borrowed on different instruments from various sources for varying tenors aggregatingRs.1365.50 crores. During the year, loans aggregating Rs.1361.51 crores were repaid on respective due dates. The quantum of long-term loans raised during the year is Rs.283.60 crores.
DEPOSITS
Fixed deposits held by the company stands at Rs.1.14 cr. as against Rs. 4.18 cr. during the previous year. 368 nos. deposits totalingRs. 41,70,000 due for repayment on or before March 31, 2004 were unclaimed by depositors. 7 nos. deposits aggregating to Rs.75,000have since been claimed and paid as on the date of this report. The company has sent reminders / intimations to depositors for thebalance unclaimed deposits.
SUBSIDIARY COMPANIES
As required u/s 212 of the Companies Act, 1956, the Audited Statement of Accounts, the reports of the Board of Directors and Auditorsof the subsidiary companies are annexed.
AUDITORS’ REPORT
The Auditors’ Report to the shareholders does not contain any qualifications. The notes to the Accounts referred to in the Auditors’Report are self-explanatory and do not call for further comments.
DISCLOSURE OF PARTICULARS
As the company is engaged in rendering non-banking financial services there are no particulars to be disclosed as perCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
The company has no foreign exchange inflow. There has been foreign exchange outgo of Rs.12.49 cr. for import of Lease / HirePurchase assets and interest on loans.
PERSONNEL
There are no employees covered by the provisions under Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of the Employees) Rules, 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has beenno material departure ;
2. that the selected accounting policies were applied consistently and the Directors made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and the profitof 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 theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities ;
4. that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr.Y.M.Deosthalee retires by rotation and being eligible offers himself for re-appointment.
AUDIT COMMITTEE
The committee consists of three non-executive Directors. Consequent upon the resignation of Mr.A.M.Naik, Mr.R.Shankar Ramanhas been appointed to the Committee. The present members of the Committee are Mr.J.P.Nayak, Mr.Y.M.Deosthalee andMr.R.Shankar Raman. Mr.Y.M.Deosthalee is the Chairman of the Audit Committee.
The role, terms of reference, the authority and power of the Chairman are in conformity with the requirements of the Companies Act,1956.
The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal auditreport.
AUDITORS
The Auditors, M/s Sharp and Tannan, Chartered Accountants, hold office until conclusion of the ensuing Annual General Meeting andare recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made,would be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956.
Pursuant to the Non Banking Financial Companies Auditors’ Report (Reserve Bank) Directions, 1998, a report from the statutoryauditors to the Board of Directors, has been received by the Company. This report has certified that the Company has complied withall the Directions and Prudential Norms as prescribed under the Reserve Bank of India Act, 1934.
ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Vendors, Suppliersand Customers. The Directors are pleased to place on record their appreciation for the contributions made by the employees of theCompany.
For and on behalf of the Board
J. P. NAYAK Y. M. DEOSTHALEE R. SHANKAR RAMANDirector Director Director
Place : MumbaiDated : 14th May, 2004
L&T FINANCE LIMITED
Auditors’ Report
TO THE MEMBERS OF L&T FINANCE LIMITED
1. We have audited the attached balance sheet of L&T Finance Limited as at 31st March, 2004, and also the Profit and LossAccount and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements basedon our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(a) We have obtained all information and explanations which, to the best of our knowledge and belief, were necessary for thepurpose of the audit;
(b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from ourexamination of these books;
(c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the booksof account;
(d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from directors of the Company as at 31st March, 2004, and taken onrecord by the Board of Directors, we report that none of the director is disqualified as on 31st March, 2004 from beingappointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
(f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity withthe accounting principles generally accepted in India:
i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004;
ii) in the case of the profit and loss account, of the profit for the year ended on that date; and
iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
For Sharp & TannanChartered Accountants
By the hand of
MILIND P. PHADKEPartner
(Membership No. 33013)
Place : MumbaiDate : 14th May, 2004
Annexure to the Auditors’ ReportWith reference to the Annexure referred to in paragraph 3 of the report of the Auditors’ to the Members of L&T Finance Limited on theaccounts for the year ended 31st March, 2004, we report that:1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) In respect of owned assets as explained to us, all the fixed assets have been physically verified by the management during theyear. In respect of leased assets the Company has formulated a program of physical verification of all the fixed assets over a periodof three years which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No materialdiscrepancies were noticed on such verification.
(c) Fixed Assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.2. The Company is an NBFC (Non Banking Finance Company) and does not hold any inventory.3. According to the information and explanations given to us, there are no companies, firms or other parties of the nature required to be
covered in the register maintained under Section 301 of the companies Act, 1956.4. 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 with regard to purchases of inventory, fixed assets and with regard to thesale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.
5. In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into aregister in pursuance of Section 301 of the Companies Act, 1956.
6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the depositsaccepted from the public. No order has been passed by the Company Law Board.
7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.8. The Central Government has not prescribed for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.9. (a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed
statutory dues including provident fund, investor education protection fund, employees’ state insurance, income-tax, sales-tax,wealth-tax, custom duty, excise duty, cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax,sales tax, customs duty and excise duty were outstanding, as at 31st March, 2004 for a period of more than six months from thedate they became payable.
(c) According to the records of the Company, there are no dues of customs duty, wealth-tax, excise duty, cess, which have not beendeposited on account of any dispute.
In respect of Income Tax and Sales Tax, demands amounting to Rs. 15,74,67,294/- and Rs. 3,68,34,960/- respectively are in appeal withvarious authorities.
10. The Company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses during thefinancial year covered by our audit and the immediately preceding financial year.
11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that theCompany has not defaulted in repayment of dues to a financial institution, bank or debenture holders.
12. Based on our examination of documents and records, we are of the opinion that the Company has maintained adequate records wherethe Company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
13. The Company is not a Chit Fund/ Nidhi/ Mutual Benefit Fund/ Society.14. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have
been maintained of the transaction and contracts and timely entries have been made in those records. We also report that the Companyhas held the shares, securities, debentures and other securities in its own name.
15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.16. The term loans have been applied for the purpose for which they were raised.17. According to 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 investment. No long-term funds have been used to finance short-termassets except permanent working capital.
18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section301 of the Act.
19. As at the year end 140 debentures of Rs. 1,00,00,000 each were outstanding, out of which the Company has not created any security inrespect of 70 debentures of Rs. 1,00,00,000 each.
20. The Company has not raised any money by way of public issues during the year.21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the course of our audit.For Sharp & Tannan
Chartered AccountantsBy the hand of
MILIND P. PHADKEPlace : Mumbai PartnerDate : 14th May, 2004 (Membership No. 33013)
L&T FINANCE LIMITED
Schedules As at 31.03.2004 As at 31.03.2003Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs
Miscellaneous Expenditure 9 - 1.90(To the extent not written off or adjusted)
Total 61,295.78 54,240.39
Significant Accounting Policies 14
Notes Forming Part of Accounts 15
Balance Sheet Abstract & Company’s General
Business Profile 16
Balance Sheet as at 31st March, 2004
As per our Report attached
SHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : Mumbai Place : MumbaiDated : 14th May, 2004 Dated : 14th May, 2004
J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors}
Profit & Loss Account for the year ended 31st March, 2004
Schedules Year Ended Year Ended
31.03.2004 31.03.2003
Rs. Lacs Rs. Lacs
INCOME :
Income From Operations 10 7,817.87 6,418.20
Total 7,817.87 6,418.20
EXPENDITURE :
Personnel Expenses 11 304.43 268.12
Administration & Other Expenses 12 1,484.42 1,063.09
Interest & Other Finance Charges 13 3,720.24 4,292.77
Depreciation 878.33 179.86
Total 6,387.42 5,803.84
Profit before taxes 1,430.45 614.36
Provision for taxes (Net) 86.19 5.50
Profit after taxes 1,344.26 608.86
Add:Balance brought forward from last Accounts 641.40 362.33
Profit available for appropriation 1,985.66 971.19
Transfer to Reserve u/s. 45 IC of RBI Act,1934 270.00 123.00
Transfer to Debenture Redemption Reserve 25.00 25.00
Transfer to General Reserve - I 600.00 300.00
Transfer to General Reserve - II 300.00 -
Proposed Equity Dividend 520.15 -
Interim Equity Dividend - 360.00
Additional Tax on Dividend 66.64 -
Balance carried to balance Sheet 203.87 163.19
Basic and Diluted earning per Equity Shares See Note No. L(iii) 1.60 1.01
Face value per Equity Shares 10.00 10.00
Significant Accounting Policies 14
Notes Forming Part of Accounts 15
Balance Sheet Abstract & Company’s General
Business Profile 16
As per our Report attached
SHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : Mumbai Place : MumbaiDated : 14th May, 2004 Dated : 14th May, 2004
J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors}
L&T FINANCE LIMITED
Cash Flow Statement for the year ended 31st March, 20042003-2004 2002-2003
Rs. Lacs Rs. LacsA. Cash Flow from Operating Activities
Net Profit before tax 1,430.46 614.36Adjustment for:Depreciation 878.32 179.86(Profit)/ Loss on Sale of Investments (net) (2.90) (71.43)(Profit)/Loss on Sale of Fixed Assets (74.96) 0.90Interest and Dividend received on Investments (119.74) (230.02)Provision for Leave Encashment 5.21 4.30Miscellaneous Expenditure written off 1.90 20.15Provision for Diminution in value of Investments 0.52 2.55Provision for Non Performing Assets (net) 522.75 569.75Operating Profit before Working Capital Changes 2,641.56 1,090.42Adjustment for :(Increase)/ Decrease in net Stock on hire 5,305.82 (300.53)(Increase)/ Decrease in Trade and Other Receivables (7,414.48) (4,231.27)Increase/ (Decrease) in Trade and other payables 684.27 (272.84)Increase/ (Decrease) in Trade and other payables 390.97Cash Generated from Operations 1,608.15 (3,714.22)Direct Taxes paid (61.98) (294.62)Net Cash Flow from Operating Activities (A) 1,546.17 (4,008.84)Net Cash Flow from Operating Activities on Account of Merger (B)(Increase) in Trade and Other Receivables (78.76) -Increase / (Decrease) in Reserves 1,254.87 -
1,176.11 -B. Cash Flows from Investing Activities
Purchase of fixed assets (including capital work in progress) (4,262.58) (2,096.38)Proceeds/Adjustments from sale of fixed assets 828.43 1.47Purchase of Investments (49,684.19) (38,760.46)Sale of investments 49,591.64 39,215.17Interest or Dividend received on Investments 119.74 230.02Net Cash from Investing Activities (C) (3,406.97) (1,410.18)Net Cash from Investing Activities on Account of Merger (D)Increase in Fixed assets (2,106.06) -Increase in Investments (1,964.98) -
(4,071.04) -C. Cashflows from Financing Activities
Increase / (Decrease ) in Secured Loans 15,184.95 (254.31)Increase / (Decrease ) in Unsecured Loans (net) (13,892.44) 7,024.50Dividends paid during the year - (660.00)Increase / (Decrease ) in Share Capital 902.84 -Net Cash Generated (Used in) / from Financing Activities (E) 2,195.35 6,110.19Net Cash Generated (Used In) / from Financing Activities on Account of Merger (F)Increase / (Decrease) in Secured Loans 1,277.19 -Increase / (Decrease) in Unsecured Loans 4.18 -Equity Shares issued 1,766.31 -
3,047.68 -
Net Cash increase/(Decrease) in Cash And Cash Equivalents (A+C+E) 334.55 691.17Net Cash increase/(Decrease) in Cash And Cash Equivalents On Account of Merger (B+D+F) 152.75 -Cash And Cash Equivalent As At Beginning of The Year 1,362.23 671.06Cash And Cash Equivalent As At End of The Year 1,849.54 1,362.23
Notes :1. Cash Flow statement has been prepared under indirect method as set out in the Accounting Standards (AS-3) - issued by the Institute of Chartered Accountants of India.2. Purchase of fixed assets includes movements of capital work in progress between the beginning and end of the year.3. Cash & cash equivalents represent cash and bank balances.
Place : Mumbai Place : MumbaiDated : 14th May, 2004 Dated : 14th May, 2004
As per our Report attached
SHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
}J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMANDirectors
As at 31.03.2004 As at 31.03.2003Rs. lacs Rs. lacs Rs. lacs Rs. lacs
SCHEDULE - 1
SHARE CAPITAL
Authorised
10,00,00,000 (Previous Year 6,00,00,000) Equity Shares of Rs. 10 each. 10,000.00 6,000.00
Fixed Assets GROSS BLOCK DEPRECIATION Net Block Net Block
Assets Opening Add i t i ons S a l e / As On Opening For t he Deduc t i on / As On As On As OnBalance Adjustment 31.03.2004 Balance Period Adjustment 31-03-2004 31-03-2004 31-03-2003
Previous Year 16,551.97 2,024.20 1,370.49 5,505.68 4,514.18 179.86 4,446.71 247.33
Add:Capi ta l Work- in-Progress 1,221.16 876.21
10,871.41 6,134.56
As at 31.03.2004 As at 31.3.2003Rs. lacs Rs. lacs Rs. lacs Rs. lacs
SCHEDULE - 6INVESTMENTS(At cost or market value whichever is lower)Long Term Investments :Government Securities 13.55 13.55Bonds 200.00 200.00Shares 3,744.57 1,791.15
Less: Diminution in Value of Investments 74.31 73.79TOTAL 4,064.62 2,004.71
Schedules forming part of accounts as at 31st March, 2004
Particulars of Investments :NOTE :Quoted Investments (Market Value-Rs.2,13,00,000/-) 213.00 213.52(Previous Year Rs. 2,13,81,900/-)Unquoted Investments 3,851.62 1,791.19
4,064.62 2,004.71Particulars of Investments :LONG TERM INVESTMENTSGovernment Securities :12.50% Maharashtra State Development Loan 2004 13.52 13.52(Face Value Rs.13,00,000/-)12% National Saving Certificate 2002 0.03 0.03(Face Value Rs.3,000)(Pledged as security deposit with Sales Tax authorities)
TOTAL (A) 13.55 13.55
Bonds :13.85% Pradeshiya Industrial and Investment Corporation 200.00 200.00of U.P Ltd. 2006200 State Government Guaranteed, Non-Convertible,Non-Cummulative ,Redeemable ,Taxable Bonds of Rs.1,00,000/-each.TOTAL (B) 200.00 200.00Shares (fully paid up of Rs.10/- each) :Subsidiary Companies :L & T Capital Co. Ltd. 550.00 550.00(54,99,997 equity shares)L & T Trade.com Ltd. - 5.00(49,998 equity shares)(see note R (c))
Details of Investments purchased and sold during the year
Face Value Nos. Rs. LacsRs. Per Unit
Money Market Mutual FundPrincipal Cash Management Fund-Money At Call-Growth Plan 10.00 8,940,753.49 1,050.00-Liquid Option Dividend Reinvestment-Daily 10.00 22,433,919.80 2,243.40-Liquid Option -Growth Plan 10.00 14,214,461.47 1,698.00-Money At Call - Dividend Reinvestment-Daily 10.00 104,563,802.01 10,456.38-Instl Plan -Dividend Reinvestment Daily 10.00 146,768,029.33 14,677.90-Prudential ICICI Liquid Plan Institutional Plus Plan -Daily Dividend Option 10.00 25,347,314.18 3,004.04-Prudential ICICI Liquid Plan Institutional Plan -Daily Dividend Option 10.00 33,790,229.54 4,004.03-Prudential ICICI Institutional Plan -Dividend Option 10.00 16,507,324.43 1,956.19-Grindlays Floating Rate Institutional Plan -Daily Dividend 10.00 53,538,233.49 5,391.52-HDFC Liquid Fund-Dividend Reinvestment 10.00 20,606,973.40 2,231.21-HDFC Cash management Fund-Savings Plan -Daily Dividend Reinvestemnt 10.00 9,426,723.60 1,002.66-Kotak Liquid Institiutional Premium Plan -Daily Dividend 10.00 16,195,652.75 1,980.42
SCHEDULE - 7CURRENT ASSETS, LOANS & ADVANCESCurrent AssetsStock-on-Hire 7,286.96 12,562.15(Secured by Hire Purchase Agreements)Stock on Hire of Assets Repossessed 8.79 39.42(at cost or market value whichever is less)
7,295.75 12,601.57Sundry DebtorsUnsecured - Considered GoodOutstanding for more than six months 44.18 111.83Others 583.68 297.23
627.86 409.06
Mutual Funds:Kotak Liquid Institiutional Premium Plan -Daily Dividend 107.01 -(8,75,135 units of Rs. 10/- each.)
TOTAL (E) 107.01 -
OthersLTFL Securitisation Trust 2002 0.01 0.01
TOTAL F. 0.01 0.01
Total (A+B+C+D+E+F) 4,138.93 2,078.50
Less: Diminution in Value of Investments 74.31 73.79
TOTAL 4,064.62 2,004.71
Schedules forming part of accounts as at 31st March, 2004As at 31.03.2004 As at 31.3.2003
Rs. lacs Rs. lacs Rs. lacs Rs. lacs
Cash & Bank BalancesCash in hand 0.44 0.86Cheques on hand 196.94 -Balances with Scheduled Bankson Current Account 1,621.53 1,357.10In Fixed Deposit (Including interest accrued thereon) 30.63 4.27(Pledged with Sales Tax Authorities as security& with Banks as margin money against guaranteesissued).
1,849.54 1,362.23Other Current AssetsAccrued Interest : Investments 17.45 18.17
Others 1,431.61 879.05
1,449.06 897.22Loans & Advances:Secured,Considered Good :Other Loans 928.65 1,362.63Unsecured,Considered Good :Bills Discounted 6,171.86 9,933.14Other LoansSubsidiary Companies - 1.40Others 29,025.85 18,205.40(Including Intercorporate Deposits Rs. 220.41 lacs, P.Y. Rs. 783.00 lacs) 29,025.85 18,206.80Unsecured, Considered Doubtful :Bills Discounted 33.81 225.36Loans against pledge of shares - 75.00Other Loans 1,366.07 2,764.92(Including Intercorporate Deposits Rs. Nil, P.Y. Rs. 94.00 lacs) 1,399.88 3,065.28Less: Provision for Non Performing Assets 616.39 1,427.54
783.49 1,637.74Advances towards capital assets 54.84 58.00Advances recoverable in cash or in kind 4,065.68 3,858.25
41,030.37 35,056.56SCHEDULE - 8CURRENT LIABILITIES AND PROVISIONSLiabilities :Sundry Creditors 3,610.23 3,068.59Security Deposits 772.45 533.27Advances Received - Hire Purchase/Lease 49.41 150.71Income /Charges accounted in Advance 189.30 155.67Interest accrued but not due 560.95 289.60
710.49 29.58SCHEDULE - 9MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred Revenue Expenses :Brokerage on Fixed Deposits - 1.90
- 1.90
L&T FINANCE LIMITED
Schedules forming part of Profit & Loss Account for the year ended 31st March, 2004.
Year Ended 31.03.2004 Year Ended 31.03.2003Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs
SCHEDULE - 10INCOME FROM OPERATIONSLease & Hire Purchase 3,839.69 4,114.78Bills Discounting 893.93 647.98Other Financing Activities 2,143.50 1,339.48Networking Activity 431.72 -Income from Investments- Dividend from Subsidiary Company 55.00 -- Others 67.64 301.45
122.64 301.45Other Income- Others 386.39 14.51
7,817.87 6,418.20SCHEDULE - 11PERSONNEL EXPENSESSalaries 240.91 208.30Contribution to and provision for :Provident fund and Pension fund 12.20 11.43Gratuity fund 4.29 4.43Superannuation Fund 7.99 4.21Leave encashment 8.73 6.54Welfare & Other Expenses 30.31 33.21
The Company maintains its accounts on accrual basis following the historical cost convention, in compliance with the Accounting Standardsspecified to be mandatory by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
B. Revenue Recognition :
(i) Income from Hire purchase and Lease transactions are accounted on accrual basis, pro-rata for the period, at the rates implicit in thetransactions. Income from Bill Discounting, Other financing activities, Investments, Processing Fees/Management Fees and Othercompensation are accounted on accrual basis.
(ii) Income from Operating lease is recognized on straight line basis over the lease term and accounted on the dates as per the contractualterms.
C. Brokerage on Fixed Deposits is charged over the period of Deposits.
D. The Company complies with guidelines issued by the Reserve Bank of India in respect of Prudential Norms for Income Recognition andProvisioning for Non-Performing Assets.
E. Retirement Benefits :
Contribution to Provident Fund, Family Pension Fund and Superannuation is accounted on actual liability basis. Contribution to Gratuityfund and Provision for Leave encashment benefit is made on the basis of actuarial valuation.
F. Fixed Assets :
i) Owned Assets :
Assets held for own use are stated at original cost less accumulated depreciation.
ii) Leased Assets :
Assets leased under finance lease are stated as “Loans & Advances” as required by Accounting Standards (AS - 19) - Leases,issued by the Institute of Chartered Accountants of India.
Assets under operating lease are stated at original cost less accumulated depreciation.
iii) Assets Taken on Lease :
Assets taken on lease on or after 1.4.2001 are stated at original cost less accumulated depreciation as required by Accounting Standards(AS –19) – Leases issued by the Institute of Chartered Accountants of India.
G. Depreciation on Fixed Assets:
i) Owned Assets:
Depreciation on assets held for own use is provided on Straight Line Basis as per Schedule XIV to the Companies Act, 1956, exceptfor computer software. Computer software is depreciated at 33.33% per annum. These rate are fixed in consonance with the expecteduseful life of the assets.
Depreciation on assets acquired and given to employees under the Hard Furnishing Scheme is provided at 18% per annum on StraightLine Basis.
ii) Assets given on Lease :
(a) In respect of the assets given on finance lease, Accounting Standards (AS-19) – Leases, is applied. Investment in leased assets isshown under Loans & Advances duly adjusted for recoveries during the lease period as required under the said Standard.
(b) In respect of assets given on operating lease, depreciation is provided on straight line basis pro-rata from the month of acquisition/capitalization at the rates which have been determined on the basis of type of the asset, lease tenor, economic life of the asset etc.These rates vary from 7% to 20% per annum.
iii) Assets taken on Lease :
Accounting Standards (AS-19) - Leases, is applied to the assets taken on lease on or after 1.4.2001. These assets are depreciatedover the period of lease for a value net of its residual value implied in the transactions.
H. Investments :
Current investments are carried at lower of cost or market value. The determination of the carrying costs of such investments is done onthe basis of specific identification. Long-term investments are carried at cost, after providing for any diminution in value, if such diminutionis of a permanent nature.
I. Foreign Currency Transactions :
Foreign currency transactions are accounted for at the rates prevailing on the date of transactions. Wherever forward contracts areentered into, the exchange difference is dealt with in the Profit & Loss Account over the period of the contracts.
Foreign currency assets & liabilities are converted at contracted rates as applicable. The exchange differences on settlement are adjustedto the Profit & Loss Account.
L&T FINANCE LIMITED
J. Borrowing Costs :
Borrowing Cost attributable to the acquisition, construction or production of qualifying assets is capitalised as part of the cost of suchassets. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use or sale. All otherborrowing costs are recognized as an expense in the period in which they are incurred.
SCHEDULE - 15
NOTES FORMING PART OF ACCOUNTS AS AT 31 st MARCH, 2004
A. Contingent Liabilities :
i) Estimated amount of contracts remaining to be executed on Capital Account (net of advances) and not provided for including ownedassets : Rs. 107.41 lacs (P.Y. Rs. Nil)
ii) Income Tax Liability in respect of matters in Appeal : Rs. 1574.67 lacs (P.Y. Rs. 1547.48 lacs)
iii) Interest Tax liability in respect of matters in Appeal : Rs. 53.67 lacs (P.Y. Rs. 53.67 lacs)
iv) Sales Tax Liability in respect of matters in Appeal : Rs. 368.35 lacs (P.Y. Rs. 451.85 lacs)
v) Counter guarantees given to banks against guarantees given by them on behalf of the Company Rs. 25.38 lacs (P.Y. Rs. 20.87 lacs)
vi) Bond executed in respect of legal matters Rs. 10.00 lacs (P.Y. Rs. Nil)
B. Secured Redeemable Non-convertible Debentures :
Sr. Face Value Date of Allotment Amount Interest RedemptionNo. Rs. Lacs
i Rs. 100.00 lacs each November 20, 2002 2000.00 8.25% p.a. Redeemable at par, at the end ofpayable annually 24 months from the date of allotment.
ii Rs. 100.00 lacs each December 4,2002 2000.00 8.10% payable Redemption at par at the end of 24quarterly months from the date of allotment.
iii Rs. 100.00 lacs each April 7, 2003 1500.00 7.75% payable Redemption at par at the end of 24 months annually from the date of allotment or
On exercise of Put or Call option –12 months after date of allotment.
iv` Rs. 100.00 lacs each April 8, 2003 1500.00 7.75% payable Redemption at par at the end of 24 monthsannually from the date of allotment or
On exercise of Put or Call option –12 months after date of allotment.
v Rs. 100.00 lacs each January 2, 2004 3000.00 6.00% payable at the Redemption at par at the end of 364 daystime of redemption from the date of allotment.
vii Rs. 100.00 lacs each January 21, 2004 4000.00 6.00% payable Redemption at par at the end of 36 monthsannually from the date of allotment or
On exercise of Put or Call option –12 months after date of allotment.
TOTAL 14000.00
Security: The Debentures are/will be secured by way of first/second charge, having pari passu rights, as the case may be, on thecompany’s specified immovable properties and specified Hire Purchase/Lease/Term Loan receivables.
C. (i) Cash Credit / Working Capital Demand Loan of Rs.1800.00 lacs is secured by hypothecation of specified Hire Purchases/LeaseAssets and book debts relating to Lease, Hire Purchase and other Activities.
(ii) Term Loan of Rs. 8000.00 lacs is secured by hypothecation of specified Hire Purchase/Lease and Loan receivables.
(iii) Term Loan of Rs. 33.74 lacs is secured by assignment of specified Lease receivables.
(iv) Term Loan of Rs. 2175.81 lacs is secured by hypothecation of specified fixed assets of the Company and exclusive first charge onspecified receivables.
(v) Foreign Currency loan of Rs. 5673.35 lacs is secured by hypothecation of specified Hire Purchases/Lease Assets and Term Loanreceivables and book debts relating to Lease, Hire Purchase and other Activities.
D. The Company has taken certain assets on lease costing Rs. 332.97 lacs (P.Y. Rs. 149.71 lacs) the future lease obligation againstwhich is Rs. 116.07 lacs (P.Y. Rs. 81.99 lacs)
E. i) Finance Lease obligations on leases taken on or after 1.4.2001 :
The Company normally acquires assets/equipments under finance lease with the respective underlying assets/equipments as security.Minimum lease payments outstanding as of 31st March ,2004 in respect of these assets are as under :
(Rs. Lacs)
Due Total Minimum Lease Interest Present Value ofPayments outstanding as Not Due Minimum Lease
On 31st March 2004 Payments
Within one year 18.27 5.65 12.62
Later than one year and not later than five years 47.22 5.29 41.93
65.49 10.94 54.55
ii) Finance Lease Obligations given on lease :
The Company has given assets on finance lease to its customers with respective underlying assets/equipments as security.
Minimum Lease payments outstanding as of 31st March 2004 in respect of these assets are as under.
(Rs. Lacs)
Due Total Minimum Lease Interest Present Value ofPayments outstanding as Not Due Minimum Lease
On 31st March 2004 Payments
Within one year 966.62 164.93 801.69
Later than one year and not later than five years 1444.78 236.53 1208.25
Later than five years Nil Nil Nil
2411.40 401.46 2009.94
F. Income from other financing activities include interest on Loans & Advances of Rs. 2207.69 lacs
G. Advances recoverable in cash or in kind include :
i) Loans to Officers Rs. 5.44 lacs (P.Y. Rs. 4.11 lacs) , Maximum amount outstanding during the Year Rs. 5.94 lacs (P.Y. Rs. 6.08lacs)
ii) Rs. 28.18 lacs being sales tax paid upto 31/12/97 in various states on inter-state lease/Hire Purchase transactions. Due to ambiguityin certain provisions of Sales Tax Act in respective states with respect to such transactions, recovery of the same from the customersis kept in abeyance. The Company has since then been paying sales tax on such transactions under protest in various states to theextent it is collected from the customers.
H. Stock-on-hire includes receivables of Rs.1265.36 lacs (P.Y. Rs. 1585.03 lacs) detailed hereunder.
As at 31.03.2004 As at 31.03.2003
Secured (Rs. Lacs) (Rs. Lacs)
Outstanding for more than six months
Considered Good 1012.95 760.29
Others: Considered Good 726.01 1172.38
1738.96 1932.67
Less : Provision for non-performing assets 473.60 347.64
1265.36 1585.03
I. Assignment of Receivables :
The Company has assigned/sold some of the Lease and Hire Purchase receivables amounting to Rs. 10502.49 lacs . This assignment/sale is without recourse to the Company. The Company has given additional cash collateral of Rs. 821.87 lacs to the Assignee/s/Purchaser/s and has also hypothecated underlying Lease and Hire purchase assets in favor of Assignees/Purchasers.
J. Manager’s salary and perquisites charged to Accounts - Rs. 16.66 lacs (P.Y. Rs. 12.97 lacs)
K. Value of imports (on CIF basis) :
Capital Goods Rs. 1200.37 lacs (P.Y. Rs. 2059.01 lacs)
L&T FINANCE LIMITED
L. (i) Segment Reporting : AS-17
The Company operates mainly in the business segment of fund based financing activity. The other business segment does not haveincome and/or assets more than 10% of the total income and/or assets of the company.
(ii) Related Party Disclosure : AS-18
The following related party transaction were carried out during the year ended 31.3.2004 :
(Rs. Lacs)
No. Controlling Company Relationship Nature of Amount Amount AmountTransaction Due to Due From
1 Larsen & Toubro Limited Holding Company Transaction :ICD borrowed 15,450.00ICD lent 13,825.00Lease Finance given (AS-19) 360.86 79.97Bank Guarantee provided 200.00Capital Goods 86.86IncomeLease Finance Charges 18.78Operating Lease Rental 1,144.24 88.77Service charges received 410.44 295.14Interest Received on ICD lent 23.05ExpenditureService Charges paid 40.25Reimbursement of Expenses 54.94Payment of Interest on ICD 137.33
2 India Infrastructure Fellow Subsidiary Transaction :Developers Limited Company Hire Purchase & Term Loan
Securitised - 922.38Term Loan Receivable 1,172.22 1,058.78DiscountingLease Receivable Discounting 631.92 615.90IncomeService Charges 14.40ExpenditurePayment of Interest on ICD 22.93
3 Larsen & Toubro Infotech Fellow Subsidiary Transaction :Limited Company Lease Finance given (AS-19) 111.73 102.40
L (iii) Earning per share [“EPS”] computed in accordance with Accounting Standard 20: “Earnings per share”:
Particulars 2003-04 2002-03
(a) Profit after tax for the year 1,344.26 608.86
(b) Weighted average number of equity shares 8,66,91,500 6,00,00,000
(c) i) Nominal value of shares (Rs.) 10.00 10.00
(c) ii) Earnings per share Basic and diluted (Rs.) 1.60 1.01
L&T FINANCE LIMITED
M. Disclosure in respect of operating leases as required under Accounting Standards (AS 19) - Leases:
a) Gross value of assets and accumulated depreciation as on balance sheet date:
2003-04 2002-03
Rs. Lacs Rs. Lacs
- Gross value of assets:
Plant & machinery 4000.22 1073.43
Vehicles 3114.62 811.78
Computers 20.50 9.88
- Accumulated depreciation
Plant & machinery 596.18 46.20
Vehicles 414.52 42.69
Computers 4.04 0.16
b) The total lease depreciation recognised in the Profit and Loss Account for the year is Rs.759.93 lacs (previous year : Rs. 89.06 lacs).No contingent rent has been recognised in the Profit & Loss Account during the year (previous year: Rs. Nil).
c) The Company provides vehicles, computers, construction equipment & other plant & machinery on operating lease for varying per iodsand the lease can be renewed as per mutual agreement. Contractually, the lessee has the option to reduce the lease period and hencethe agreements are treated as cancellable in nature.
N. Expenditure in Foreign currency:
On Interest Rs. 167.62 lacs (P.Y. Rs. 178.38 lacs)
On other matters Rs. 42.80 lacs (P.Y. Rs. 558.71 lacs)
O. PROVISION FOR TAXES :
(a) i) Income Tax Rs. 88.00 lacs (P.Y. Rs. Nil)
ii) Wealth Tax Rs. 6.55 lacs (P.Y. Rs. 5.50 lacs)
iii) Excess provision for Wealth Tax of Rs. 8.36 lacs written back during the year. (P.Y. Rs. Nil)
(b) The Company is entitled to a future Tax Credits of Rs 73.80 lacs under section 115JAA of the Income Tax Act, 1961.
(c) Deferred Tax Liability : In terms of the interim injunction dated 6th December 2001 restraining the Institute of Chartered Accountantsof India from implementing the Accounting Standards (AS-22) - Accounting for Taxes on Income, with reference to Non-bankingFinance Companies, issued by the High Court of Judicature at Madras in response to the Miscellaneous Petition no. 27682 of 2001 inWrit Petition No. 18827 of 2001 filed by the Association of Leasing & Financial Services Companies of which the company is amember, pending final disposal of this Petition no provision has been made in the accounts towards deferred tax liability, if any
P. The Company has entered into certain derivative transactions including transactions involving foreign currencies. These derivativetransactions, being considered as off-Balance Sheet transactions, the cash flows arising therefrom are recognised in the books ofaccount as and when settlements take place in accordance with the terms of the respective contracts.
Q. Miscellaneous Expenditure includes Rs. 74.38 lacs (P.Y. Rs. 107.11 lacs) on account of loss on foreclosure of certain Hire Purchaseagreements.
R. Disclosure as per Accounting Standards (AS 14) - Accounting for Amalgamations
(a) Amalgamation of LTM Limited (Transferor Company), a wholly owned subsidiary company of Larsen & Toubro Limited with L&T FinanceLimited (Transferee Company) :
Pursuant to the Scheme of Amalgamation u/s 391 and 394 of the Companies Act, 1956 duly approved by the High Court Of JudicatureAt Bombay, the entire business along with all the assets and liabilities of the Transferor Company as Going Concern was transferredto the Transferee Company with effect from 1st April, 2003, being the “Appointed Date”. The activity of Transferor Company wasinvestment in companies engaged in executing infrastructure development projects like roads, ports, bridges etc.
The accounting of amalgamation is carried out as per the “Pooling of Interest Method” by recording assets, liabilities and reserves ofthe Transferor Company at their existing carrying amounts in the books of accounts of the Transferee Company as on the “AppointedDate”.
Assets taken over : Rs. 2038.32 Lacs
Liabilities taken over : Rs. 55.94 Lacs
Reserves merged : Rs. 1313.23 Lacs
Upon the transfer of the undertaking of the Transferor Company as per the scheme and the amalgamation becoming effective in termsof the scheme, the Transferee Company has paid and satisfied the consideration by issuing at par and allotting to the share holders ofthe Transferor Company 10 (Ten) equity shares of Rs. 10/- each, fully paid-up in the capital of the Transferee Company for everyequity share of Rs. 100/- each fully paid-up, aggregating to Rs. 669. 15 lacs ( 66,91,500 equity shares of Rs. 10/- each fully paid-up)
(b) Amalgamation of L&T Equipment Leasing Company Limited (Transferor Company) ,a wholly owned subsidiary company of Larsen &Toubro Limited with L&T Finance Limited (Transferee Company) :
Pursuant to the Scheme of Amalgamation u/s 391 and 394 of the Companies Act, 1956 duly approved by the High Court Of JudicatureAt Madras, the entire business along with all the assets and liabilities of the Transferor Company as Going Concern was transferred tothe Transferee Company with effect from 1st April, 2003, being the “Appointed Date”. The activity of Transferor Company was purchasingand letting on lease or hire all kinds of machinery, plants, tools, jigs and fixtures, construction machinery, electronic equipment’s etc.
The accounting of amalgamation is carried out as per the “Pooling of Interest Method” by recording assets, liabilities and reserves ofthe Transferor Company at their existing carrying amounts in the books of accounts of the Transferee Company as on the “AppointedDate”.
Assets taken over : Rs. 2217.97 Lacs
Liabilities taken over : Rs. 1526.96 Lacs
Reserves merged : Rs. 191.01 Lacs
Upon the transfer of the undertaking of the Transferor Company as per the scheme and the amalgamation becoming effective in termsof the scheme, the Transferee Company has paid and satisfied the consideration by issuing at par and allotting to the share holders ofthe Transferor Company 1 (One) equity share of Rs. 10/- each, fully paid-up in the capital of the Transferee Company for every equityshare of Rs. 10/- each fully paid-up, aggregating to Rs. 1000.00 lacs ( 1,00,00,000 equity shares of Rs. 10/- each fully paid-up including50000000 equity shares towards corresponding additional shares of 10/- each issued at par and allotted as fully paid-up by the TransferorCompany after the appointed date).
(c) Amalgamation of L&T Trade.com Limited (Transferor Company), a wholly owned subsidiary company of L&T Finance Limited with L&TFinance Limited (Transferee Company) :
Pursuant to the Scheme of Amalgamation u/s 391 and 394 of the Companies Act, 1956 duly approved by the High Court Of JudicatureAt Bombay, the entire business along with all the assets and liabilities of the Transferor Company as Going Concern was transferredto the Transferee Company with effect from 1st April, 2003, being the “Appointed Date”. The activity of Transferor Company wasengaged in providing web based solutions for various financial products.
The accounting of amalgamation is carried out as per the “Pooling of Interest Method” by recording assets, liabilities and reserves ofthe Transferor Company at their existing carrying amounts in the books of accounts of the Transferee Company as on the “AppointedDate”.
Assets taken over : Rs. 122.55 Lacs
Liabilities taken over : Rs. 176.75 Lacs
Reserves merged : Rs. (59.20) Lacs
Upon the transfer of the undertaking of the Transferor Company as per the scheme and the amalgamation becoming effective in termsof the scheme, since the Transferee Company is the Holding Company of the Transferor Company, the shares of the TransferorCompany have been cancelled and corresponding investment in the books of accounts of the Transferee Company representingthese shares has been cancelled.
(d) Amalgamation of L&T Netcom Limited (Transferor Company) ,a wholly owned subsidiary company of Larsen & Toubro Limited withL&T Finance Limited (Transferee Company) :
Pursuant to the Scheme of Amalgamation u/s 391 and 394 of the Companies Act, 1956 duly approved by the High Court Of JudicatureAt Bombay, the entire business along with all the assets and liabilities of the Transferor Company as Going Concern was transferredto the Transferee Company with effect from 1st April, 2003, being the “Appointed Date”. The activity of Transferor Company was ofproviding internet services and infrastructure facilities to facilitated electronic commerce.
The accounting of amalgamation is carried out as per the “Pooling of Interest Method” by recording assets, liabilities and reserves ofthe Transferor Company at their existing carrying amounts in the books of accounts of the Transferee Company as on the “AppointedDate”.
Assets taken over : Rs. 529.12 Lacs
Liabilities taken over : Rs. 39.78 Lacs
Reserves merged : Rs. (107.82) Lacs
Upon the transfer of the undertaking of the Transferor Company as per the scheme and the amalgamation becoming effective in termsof the scheme, the Transferee Company has paid and satisfied the consideration by issuing at par and allotting to the share holders ofthe Transferor Company 1 (One) equity share of Rs. 10/- each, fully paid-up in the capital of the Transferee Company for every equityshare of Rs. 10/- each fully paid-up, aggregating to Rs. 1000.00 lacs ( 1,00,00,000 equity shares of Rs. 10/- each fully paid-up including4028390 equity shares towards corresponding additional shares of 10/- each issued at par and allotted as fully paid-up by the TransferorCompany after the appointed date).
L&T FINANCE LIMITED
S. The assets and liabilities including deferred tax liability/asset of the Transferor Companies have been restated to bring those in line withthe accounting policies of the Transferee Company. The differences arising on such re-statement have been adjusted against the openingReserves.
T. (i) The Gross Block and Depreciation as on 01.04.2003 include following assets and corresponding depreciation thereon of TransferorCompanies:
(Rs. Lacs)
Description Gross Block Depreciation
Owned Assets
Plant & Machinery 2159.08 326.45
Furniture & Fixtures 7.66 0.78
Vehicles 220.31 68.29
Computers 60.59 25.08
Assets taken on Lease
Plant & Machinery 5.85 1.82
(ii) Reserves & Surplus as on 01.04.2003 include following items of Reserves & Surplus of Transferor Companies:
Rs. Lacs
Description Amount
General Reserve – II 694.42
Capital Redemption Reserve 82.25
Profit & Loss Account 478.20
(iii) Addition during the year to Capital Work in Progress includes Rs. 57.32 lacs being borrowing cost capitalised in accordance withAccounting Standard (AS 16) - Borrowing Costs, issued by The Institute of Chartered Accountants of India.
(U) Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 9BB of Non-BankingFinancial Companies Prudential Norms (Reserve Bank) Directions, 1998
(Rs. Lacs)Particulars
Liabilities side :Amount Amount
Outstanding Overdue1 Loans and advances availed by the NBFCs inclusive of interest accrued
thereon but not paid:
(a) Debentures : Secured 14,000.00
: Unsecured 12,500.00 -
(other than falling within the
meaning of public deposits*)
(b) Deferred Credits - -
(c) Term Loans 16,509.33 -
(d) Inter-corporate loans and borrowing 471.00 -
(e) Commercial Paper - -
(f) Public Deposits* 113.97 -
(g) Other Loans (Foreign Currency Loan) 5,673.35 -
(h) Lease Finance 54.55 -
2 Break-up of (1)(f) above (Outstanding public deposits inclusive of
interest accrued thereon but not paid):
(a) In the form of Unsecured debentures - -
(b) In the form of partly secured debentures i.e. - -
debentures where there is a shortfall in the value of security
(c) Other public deposits 113.97 -
Assets side :
AmountOutstanding
3 Break-up of Loans and Advances including bills receivables [other thanthose included in (4) below] :
(a) Secured 928.65
(b) Unsecured 40,478.73
4 Break up of Leased Assets and stock on hire and hypothecation loanscounting towards EL/HP activities
(i) Lease assets including lease rentals under sundry debtors :
(a) Financial lease 1,699.91
(b) Operating lease 6,314.10
(ii) Stock on hire including hire charges under sundry debtors:
(a) Assets on hire 7,286.96
(b) Repossessed Assets 8.79
(iii) Hypothecation loans counting towards EL/HP activities -
(a) Loans where assets have been repossessed -
(b) Loans other than (a) above -
5 Break-up of Investments :Current Investments :
1. Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others (please specify) -
2. Unquoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others (please specify) -
Long Term investments :
1. Quoted :
(i) Shares : (a) Equity -
(b) Preference -
(ii) Debentures and Bonds 213.00
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others (please specify) -
2. Unquoted :
(i) Shares : (a) Equity 3,744.57
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds 107.01
(iv) Government Securities 0.03
(v) Others (please specify) 0.01
L&T FINANCE LIMITED
6 Borrower group-wise classification of all leased assets, stock-on-hireand loans and advances :Category Amount net of provisions
Secured Unsecured Total
1. Related Parties
(a) Subsidiaries - - -
(b) Companies in the same group - 329.58 329.58
(c) Other related parties - - -
2. Other than related parties 928.65 55,458.91 56,387.56
Total 928.65 55,788.49 56,717.14
7 Investor group-wise classification of all investments (current and longterm) in shares and securities (both quoted and unquoted):Category Market Value Book Value
/ Break up or (Net offair value or Provisions)
NAV
1. Related Parties
(a) Subsidiaries 550.00 550.00
(b) Companies in the same group 3,194.57 3,194.57
(c) Other related parties - -
2. Other than related parties 320.05 320.05
Total 4,064.62 4,064.62
8 Other information
Particulars Amount
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 2,550.09
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 1,460.10
(iii) Assets acquired in satisfaction of debt 1,879.53
V. Pursuant to the Scheme of Amalgamation u/s 391 and 394 of the Companies Act, 1956 duly approved by High Court Of Judicature AtBombay and High Court of Judicature at Madras, L&T Equipment Leasing Company, LTM Limited and L&T Netcom Limited (Wholly ownedSubsidiary Companies of Larsen & Toubro Limited) and L&T Trade.com Limited (A Wholly owned Subsidiary Company of L&T FinanceLimited) have been amalgamated with L&T Finance Limited w.e.f. 1st April, 2003 being “Appointed Date”. The accounts for the year endedon 31st March, 2004 do reflect the status as the Amalgamated Entity.
In view of this the current year figures are not comparable with the corresponding figures of the previous year. Previous year figureshowever have been regrouped/reclassified wherever necessary.
As per our Report attached
SHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : Mumbai Place : MumbaiDated : 14th May, 2004 Dated : 14th May, 2004
J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors}
16. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details:
State Code1 1 - 8 3 1 4 7 1 1
II. Capital raised during the year (Amount in Rs. Thousands)Note : 2,66,91,500 equity shares of Rs.10/- each fully paid up aggregating to Rs. 2,66,915.00 (Rs. in Thousands) issued for considerationotherwise than in cash pursuant to the scheme of Amalgamation approved by The High Court of Judicature at Bombay and The High Courtof Judicature at Madras.
Schedules forming part of accounts as at 31st March, 2004
Registration No.
Sources of Fund
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities
Paid-up Capital
Secured Loans
Net Fixed Assets
Net Current Assets
Accumulated Losses
Total Assets
Reserves & Surplus
Investments
Unsecured Loan
Miscellaneous Expenditure
8 6 6 9 1 5
N I L
Application of Funds
6 1 2 9 5 7 8 6 1 2 9 5 7 8
3 1 6 8 2 9 0
3 3 0 4 4 3
1 7 6 3 9 3 0
1 0 8 7 1 4 1 4 0 6 4 6 2
4 6 3 5 9 7 5 N I L
Turnover
Profit Before Tax
Total Expenditure
Profit After Tax
**Earning Per Share in Rs.**Annualised
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)
Item Code No. (ITC Code)
Product Description H I R E P U R C H A S E F I N A N C E
IV. Performance of Company (Amount in Rs. Thousands)
Dividend Rate %
N A
L E A S N GI
B I L L D I S C O U N T I N GS
7 8 1 7 8 7 6 3 8 7 4 2
1 4 3 0 4 5 1 3 4 4 2 6
1 . 6 0 6 . 0 0
Rights Issue
Private Placement
Public Issue
Bonus Issue
N I L
N I L N I L
N I L
Date Month Year
3 1 - 0 3 - 0 4Balance Sheet Date
As per our Report attached
SHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : Mumbai Place : MumbaiDated : 14th May, 2004 Dated : 14th May, 2004
J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors}
L&T FINANCE LIMITED
Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies
Name of the subsidiary company L&T Capital Co. Ltd.
Financial year of the subsidiary ended on 31st March, 2004
Number of shares of the subsidiary company heldby L&T Finance Ltd. and/or its nominee at the above date 55,00,000
The net aggregate of profits/(losses), of the subsidiarycompany so far as it concerns the members of
L&T Finance Ltd.
(I) Dealt with in the accounts of L&T Finance Ltd. amounted to:
a) for the subsidiary's financial year ended 31/3/2004 Rs. 55.00 lacs
b) for the previous financial years of the subsidiary since itbecame subsidiary of L&T Finance Ltd. Nil
(II)Not dealt with in the accounts of L&T Finance Ltd.amounted to:
a) for the subsidiary's financial year ended 31/3/2004 Rs. 19.41 lacs
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T Finance Ltd. Rs. 47.55 lacs
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
MumbaiDated : 14th May, 2004
J. P. NAYAK
Y. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors}
The Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March, 2004.
1. FINANCIAL RESULTS
Year ended Year ended
31/03/2004 31/03/2003
Rs. Lacs Rs. Lacs
Gross Income 333.78 251.65
Total expenses 204.58 173.87
Profit Before Tax 129.20 77.78
Adjustments (Deferred Tax) 0.53 (0.97)
Profit After Tax 81.46 47.55
Equity Dividend incl. tax on Dividend 62.05 —
Surplus carried forward 94.50 75.09
2. DIVIDEND
The company had declared an interim dividend of 5% in the month of December, 2003. The Directors recommend an additional finaldividend of 5% for the year ended 31st March, 2004.
3. YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY
This was the company’s third full year of operations. The company’s operating income recorded an increase of 42% with syndication feecontributing significantly to the total income. The Profit after Tax has recorded an impressive growth of 70% over the previous year.
4. CAPITAL EXPENDITURE
As at 31st March 2004, the gross fixed assets stood at Rs.39.18 lacs and the net fixed assets at Rs.28.55 lacs. Additions during the year amountedto Rs. 6.7 lacs.
5. DEPOSITS
During the year under review, the Company has not accepted any deposits from the public.
6. AUDITORS’ REPORT
The Auditors’ Report to the Shareholders is enclosed and does not contain any qualifications. The notes to the accounts referred to in the Auditors’Report are self-explanatory and therefore do not call for any further comments from Directors.
7. DISCLOSURE OF PARTICULARS
As the company is engaged in rendering non-banking financial services, there are no particulars to be disclosed as per the Companies’(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy and technology absorption.
The Foreign Exchange Earnings during the year was Rs. Nil while the Foreign Exchange outgo recorded for the year was Rs. 1.51 Lacs.
8. PERSONNEL
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975.
9. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been nomaterial departure;
ii) that the selected accounting policies were applied consistently and the directors made judgements and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Companyfor 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 theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) that the annual accounts have been prepared on a going concern basis.
10.DIRECTORS
In terms of Section 256 of the Company’s Act 1956, Mr. Y. M. Deosthalee and Mr. R. Shankar Raman retire by rotation and being eligible offerthemselves for re-appointment.
11.AUDIT COMMITTEE
The Audit Committee consists of three non-executive directors. The present members of the Committee are Mr. S. V. Subramanian, Mr. R.Shankar Raman and Mr. N. Sivaraman. Mr. S. V. Subramanian is the Chairman of the Audit Committee. The role, terms of reference, the authority
Directors' Report
L&T CAPITAL COMPANY LIMITED
and power of Chairman are in conformity with the requirements of the Companies Act, 1956. The Committee met periodically during the yearand had discussions with the auditors on internal control systems and internal audit report.
The financial statements have been audited by M/s Sharp & Tannan, Chartered Accountants and have been discussed with the Audit Committee.
12.AUDITORS
The Statutory Auditors, M/s. Sharp & Tannan, Chartered Accountants hold office until the conclusion of the ensuing Annual General Meetingand are recommended for re-appointment. Certificate from the auditors has been received to the effect that their re-appointment, if made, wouldbe within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
14.ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Investors and Customers.The Directors are pleased to place on record their appreciation for the valuable contribution made by the employees of the Company.
For and on behalf of the Board
Y M DEOSTHALEE
S V SUBRAMANIAN
R SHANKAR RAMAN
N SIVARAMAN
Mumbai,
Date : 24th April, 2004
Directors}Auditor's Report to the Shareholders
1. We have audited the attached Balance Sheet of L&T Capital Company Limited as at 31st March, 2004, and also the Profit and Loss Account forthe year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and performthe 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 the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of theCompanies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
(a) We have obtained all information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of theaudit;
(b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination ofthese books;
(c) The Balance Sheet, Profit and Loss Account dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from directors of the Company as at 31st March, 2004, and taken on record by the Boardof Directors, we report that none of the director is disqualified as on 31st March, 2004 from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the Companies Act, 1956; and
(f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2004;and
ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.
For SHARP & TANNANChartered Accountants
By the hand of
Mumbai, MILIND P. PHADKEDate : 24th April, 2004 Partner
(Membership No. 33013)
Annexure to the Auditors’ Report with reference to the Annexure referred to in paragraph 3 of the report of the Auditors’ to the Members ofL&T Capital Company Limited on the accounts for the year ended 31st March, 2004, we report that:
1. (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.
(b) We are informed that all the fixed assets have been physically verified by the management, during the year and no material discrepancieswere noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.
2. The company is in the business of Merchant Banking hence does not have inventories.
3. According to the information and explanations given to us, there are no companies, firms or other parties of the nature required to becovered in the register maintained under Section 301 of the Companies Act, 1956.
4. In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the Company and nature of its business for the purchase and sale of fixed assets. In our opinion, and according to theinformation and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.
5. In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into aregister in pursuance of Section 301 of the Companies Act, 1956.
6. The Company has not accepted or renewed during the year any deposits from the public under the provisions of section 58A and 58AAof the Companies Act, 1956.
7. In our opinion, the company has an internal audit system commensurate with the size and nature of its business.
8. The company is in the business of Merchant Banking hence provisions regarding maintenance of cost records prescribed under Section209(1)(d) of the Companies Act, 1956 are not applicable.
9. (a) According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutorydues including provident fund, investor education protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, customduty, excise-duty, cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax,customs duty and excise duty were outstanding, as at 31st March, 2004 for a period of more than six months from the date they becamepayable.
(c) According to the records of the company, there are no dues of income tax, sales tax, customs duty, wealth-tax, excise duty, cess, whichhave not been deposited on account of any dispute.
10. The Company does not have any accumulated losses at the end of the financial years and has not incurred any cash losses during thecurrent financial year and the immediately preceding the current financial year.
11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the companyhas not defaulted in repayment of dues to banks. The Company did not have any outstanding debentures or any outstanding loans fromany financial institution during the year.
12. According to the information and explanations given by the management, the Company has not granted any loans and advances on thebasis of security by way of pledge of shares, debentures and other securities.
13. The Company is not a chit fund/ nidhi/ mutual benefit fund/ society.
14. According to the information and explanations given by the management, the Company is not dealing or trading in shares, securities,debentures and other investments.
15. The company has not given any guarantee for loans taken by others from bank or financial institutions.
16. The term loans have been applied for the purpose for which they were raised.
17. According to the information and explanations given by the management, the Company has not raised any funds on short- term and long-term basis.
18. The company has not made any preferential allotment of shares to parties or companies to be covered in the register maintained underSection 301 of the Companies Act, 1956.
19. The Company did not have outstanding debentures during the year. Accordingly, no securities have been created.
20. The Company has not raised any money by public issue during the year.
21. According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reportedduring the year.
For SHARP & TANNANChartered Accountants
By the hand of
Mumbai, MILIND P. PHADKEDate : 24th April, 2004 Partner
Total 655.80 638.53Significant Accounting Policies 14Notes Forming Part of Accounts 15Balance Sheet Abstract 16
Balance Sheet as at 31st March, 2004
As per our Report attachedSHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
Mumbai, Dated : 24th April, 2004
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEES. V. SUBRAMANIANR. SHANKAR RAMANN. SIVARAMAN
Mumbai, Dated : 24th April, 2004
Directors}
Schedules Year ended Year ended31.03.2004 31.03.2003
Rs. Lacs Rs. LacsINCOME :Income From Operations 9 281.90 198.49
Other Income 10 51.88 53.16
Total 333.78 251.65EXPENDITURE :Personnel Expenses 11 84.73 84.65
Administration & Other Expenses 12 112.15 83.46
Interest & Other Finance Charges 13 1.53 1.22
Depreciation 5.14 3.52
Preliminary Expenses written off 1.03 1.03
Total 204.58 173.87
Profit/(Loss) Before Taxes 129.20 77.78
Provision for Taxes
Current Taxes 48.27 29.26
Deferred Tax charge / (credit) (0.53) 0.97
Profit/Loss after taxes 81.46 47.55
Add: Balance brought forward from previous year 75.09 27.54Profit available for appropriation / distribution 156.55 75.09Less: Interim Dividend Paid 27.50
Dividend tax in Interim Dividend 3.53Proposed Final Dividend 27.50Dividend tax payable 3.52 62.05
Balance carried to balance Sheet 94.50 75.09Earning Per ShareBasic and Diluted (Rs.) 1.48 0.90
Significant Accounting Policies 14Notes Forming Part of Accounts 15Balance Sheet Abstract 16
Profit & Loss Account for the year ended 31st March, 2004
As per our Report attachedSHARP & TANNANChartered AccountantsBy the hand of
MILIND P. PHADKEPartner(Membership No. 33013)
Mumbai, Dated : 24th April, 2004
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEES. V. SUBRAMANIANR. SHANKAR RAMANN. SIVARAMAN
Mumbai, Dated : 24th April, 2004
Directors}
L&T CAPITAL COMPANY LIMITED
SCHEDULE-4: FIXED ASSETS : Rs. Lacs
GROSS BLOCK DEPRECIATION NET BLOCK
FIXED ASSETS As at Additions As at As at For the As at As at As at01/04/2003 31/03/2004 01/04/2003 Year 31/03/2004 31/03/2004 31/03/2003
Rs. Lacs Rs. LacsSCHEDULE-1: SHARE CAPITALAuthorised:55,00,000 Equity Shares of Rs 10. Each 550.00 550.00
550.00 550.00
Issued, Subscribed and Paid-up :55,00,000 Equity Shares of Rs 10/- each 550.00 550.00
Fully paid-up
(54,99,994 shares are held by the holding
Company, M/s L & T Finance Ltd.) 550.00 550.00
SCHEDULE-2: RESERVES & SURPLUSProfit & Loss Account 94.50 75.09
94.50 75.09
SCHEDULE - 3: FINANCE LEASE OBLIGATIONSLease Finance (Due within a year) 2.41 2.14
Lease Finance (Due beyond one year) 8.89 11.30
11.30 13.44
Schedules forming part of accounts as at 31st March, 2004
SCHEDULES FORMING PART OF ACCOUNTS AS AT 31ST MARCH, 2004
As at 31.03.2004 As at 31.03.2003Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs
SCHEDULE - 5: INVESTMENTS(At cost or market value whichever is lower)Current Investments:
Units of Mutual Fund (unquoted) 529.56 57.12(Market Value Rs. 540.11) 529.56 57.12
529.56 57.12Particulars of investments:Mutual Funds
JM Income Fund (Growth Option) - 157703.01 units of Rs.10 each 35.03 35.03IDBI Principal - Income Fund 76630.70 units of Rs.10 each 10.00 10.00Pioneer ITI Income Builder (Templeton) 26164.312 units of Rs.10 each 5.00 5.00HDFC MF – Liquid Scheme 74201.117 units of Rs.10 each 7.48 7.09Reliance Fixed Term Scheme 4220474 Units of Rs. 10 each 422.05 -(purchased during the year)Reliance Liquid Fund 324639.488 units of Rs.10 each 50.00 -(Purchased during the year)
SCHEDULE - 6 : CURRENT ASSETS,LOANS & ADVANCESCurrent Assets
Sundry Debtors - Unsecured:Debts outstanding for period exceeding six months 0.04 15.29Other Debts - Considered Good 3.34 18.41
3.38 33.69Cash & Bank BalancesCash in Hand 0.09 0.01Balance with Scheduled Bank
On Current Account 19.06 1.60In Fixed Deposit (Including interest accrued thereon) 20.24 20.60
39.39 22.21Loans & Advances -
Unsecured considered good:UnsecuredInter Corporate DepositHolding Company 171.00 512.00Advances recoverable in cash or in kind 78.80 69.97Deposit with Industrial Development Bank of India(Including interest accrued thereon) - 8.26Deposit with Kotak Mahindra Bank Ltd. (Including interest accrued thereon) - 8.34
249.80 598.57292.57 654.47
SCHEDULE - 7 : CURRENT LIABILITIESAND PROVISIONSLiabilities :
281.90 198.49SCHEDULE - 10: OTHER INCOMEInterest on:
Inter Corporate Deposit 48.86 45.84Tax Deducted at Source -Rs.10.02 (PY - Rs.9.80)Fixed Deposit 2.06 2.58Tax Deducted at Source -Rs.0.79 (PY - Rs.0.25)Interest received from Income Tax 0.36 2.79Income from Mutual Fund 0.54 0.09Profit on Sale of Investment 0.01 0.01Others 0.02 -Provision for expenses written back 0.03 1.85
Contribution to and provision for :Provident fund and Pension fund 3.37 3.54Gratuity 1.88 0.74Superannuation 2.21 1.34Leave Encashment 2.59 2.40Welfare & Other Expenses 3.56 2.00
The accounts are prepared on accrual basis under the historical cost convention. The financial statements comply with the mandatoryaccounting standards issued by the Institute of Chartered Accountants of India and are in accordance with the provisions of The CompaniesAct, 1956.
NOTES FORMING PART OF ACCOUNTS AS AT 31st MARCH, 2004b) Revenue Recognition
Fees are recognized as income on successful completion of assignments.c) Fixed Assets
(i) Fixed Assets are stated at original cost less depreciation.(ii) Assets taken on Financial lease have been capitalised at fair value on the date of execution of the Lease Agreements.
d) Depreciation(i) Depreciation on assets held has been provided on Straight Line Basis as per Schedule XIV to the Companies Act, 1956.(ii) Depreciation on assets taken on Financial lease has been provided on Straight Line Basis over the lease term of the asset.(iii) Depreciaiton on assets acquired and given to employees under the Hard Furnishing Scheme has been provided @ 18 % per annum on
straight line method.e) Borrowing Costs
Borrowing costs that are attributable to the acquisitions, constructions or production of qualifying assets are capitalised as part of the cost ofsuch assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All otherborrowing costs are recognised as an expense in the period in which they are incured.
f) InvestmentsCurrent investments are valued at the lower of cost or market value. Marketable securities are valued at market value. Diminution in value hasbeen provided wherever necessary.
g) Retirement BenefitsContribution to Provident Fund, Family Pension Fund and Superannuation are accounted on actual liability basis. Provisions for gratuity andleave encashment benefit on retirement are made on actuarial valuation basis.
h) TaxationIn accordance with Accounting Standard 22 -Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India, thedeferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have beenenacted or substantively enacted as of the balance sheet date.Deferred tax assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets canbe realised in future.
i) Miscellaneous ExpenditurePreliminary expenses are amortised over a period of five years from the year of commencement of operations.
SCHEDULE - 15:i) Finance Lease Obligations
The Company normally acquires vehicles under finance lease with the respective underlying assets as security. Minimum lease paymentsoutstanding as of 31st March, 2004 in respect of these assets are as under:Due Total Minimum Lease Payments Total Minimum Lease Payments
outstanding as on 31/03/2004 outstanding as on 31/3/2003Within one year 2.41 2.14Later than one year and not later than five years 8.89 11.30
11.30 13.44ii) Deferred Tax
The Company has adopted Accounting Standard 22 - Accounting for Taxes on Income with effect from 1st April 2001. The accumulated netdeferred tax asset has been credited to the Reserves and Surplus Account.The break up of net deferred tax asset as at 31st March, 2004 is as under:-
As at 31st March 04 As at 31st March 03Deferred tax Deferred tax Deferred tax Deferred tax
asset liability asset liabilityTiming differences on account of:Difference between Book - 3.71 - 3.30Depreciation and Depreciation under the Income Tax Act, 1961Expenditure under Section 43B of the Income-tax Act, 1961- Payment / reversal of provision - - - -- Provision 3.67 - 2.85 -Lease Assets 0.20 - 0.09 -
v) Segment Reporting: Accounting Standard 17The Company operates in a single business segment of Merchant Banking Activity
vi) Related Party Disclosures: Accounting Standard 18a) List of Related Parties
Parties where control exists:L&T Finance Limited (Holding Company)Larsen & Toubro Limited (Parent Holding Company)Other related parties with whom transactions have taken place during the year:Fellow Subsidiaries of Larsen & Toubro LimitedL&T InfocityAssociates of Larsen & Toubro LimitedL&T-Ramboll Consulting Engineers Ltd.
b) Transaction with related parties: -Parent Holding Co. Holding Co. Subsidiaries Associates
(L&T) (LTF) of L&T of L&Ti) Sales, Services and other income
(1.97) - - (0.78)ii) Expenditure on Consultancy Services - - - -iii) Expenditure on other services
Professional Charges paid for various services 32.40 - - -(15.71) - (0.89) -
iv) Capital expenditure for Office Equipments Fixed Assets - - - -
v) Other expenditure Expenses Reimbursed 31.29 - -
(7.30) (1.52) - - Dividend paid 55.00
vi) Outstanding balances as at 31st March 2004 Debtors - - - 3.34
(2.74) - - (5.88) Creditors 58.06 - - -
(18.49) (1.40) (0.89) - Loans & Advances - - - -
- - - -* Previous Year figures are in bracket
vii) Expenditure in Foreign Currency:Travel & Other Expenses Rs.1.51 (Previous year Rs.0.79)
viii) Earning Per Share (EPS) - Computed in accordance with Accounting Standard 20: "Earning Per Share"Particulars 2003-2004 2002-2003
(a) Profit after tax for the year 81.46 47.55(b) Weighted average number of equity shares 5500000 5302740(c) (i) Nominal value of shares (Rs.) 10.00 10.00
(ii) Earning per share - Basic and Diluted (Rs.) 1.48 0.90ix) Previous year’s figures are regrouped / reclassified, wherever necessary.
As per our Report attachedSHARP & TANNANChartered AccountantsBy the hand ofMILIND P. PHADKEPartner(Membership No. 33013)Mumbai, Dated : 24th April, 2004
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEES. V. SUBRAMANIANR. SHANKAR RAMANN. SIVARAMAN
Mumbai, Dated : 24th April, 2004
Directors}
16. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
IV. Performance of Company (Amount in Rs. Thousands)
Turnover
Profit Before Tax
Total Expenditure
ProfitAfter Tax
Earning Per Share in Rs.DividendRate %
3 3 3 7 8
1 . 4 8
Item Code No. (ITC Code) : 1 0 . 0 0
Product Description : MERCHANT BANKER
2 0 4 5 8
8 1 4 6
N . A .
Mumbai, Dated : 24th April, 2004 Mumbai, Dated : 24th April, 2004
1 2 9 2 0
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
I . Registration Details:
II. Capital raised during the year (Amount in Rs. Thousands)
Sources of Fund
State Code1 1 - 1 2 5 6 5 3 1 1
Date Month Year
Rights Issue
Private Placement
Public Issue
Bonus Issue
Total Liabilities
Paid-up Capital
Secured Loans
Net Fixed Assets
Net Current Assets
Deferred Tax
Total Assets
Reserves & Surplus
Investments
Unsecured Loan
MiscellaneousExpenditure
3 1 - 0 3 - 2 0 0 4
Application of Funds
Balance Sheet Date
Registration No.
2 8 5 5
Accumulated Losses
N I L
N I L
5 5 0 0 0
6 5 5 8 0
9 6 5 0
1 7
1 1 3 0
N I L
N I L
6 5 5 8 0
9 4 5 0
N I L
5 2 9 5 6
1 0 2
N I L
As per our Report attachedSHARP & TANNANChartered AccountantsBy the hand of
Milind P. PHADKEPartner(Membership No. 33013)
M. PUSHPANGADAN
Y. M. DEOSTHALEES. V. SUBRAMANIANR. SHANKAR RAMANN. SIVARAMAN
Directors}Chief Executive
LARSEN & TOUBRO HOLDINGS LIMITED
Directors' ReportThe Directors have pleasure in presenting their report and Accounts for the year ended 31st March 2004.
I FINANCIAL RESULTSAmount in Rs. Lakhs
Description 2003-04 2002-03Profit before depreciation & tax (238.32) (219.38)Depreciation - -Profit / (Loss) before tax (238.32) (219.38)Provision for tax 0.04 (4.55)Profit / (Loss) after tax (238.36) (214.83)Balance brought forward from
Previous year (232.64) (17.81)Balance carried to Balance Sheet (471.00) (232.64)
II. DIVIDENDDividend is not declared by the company due to accumulated losses.
III. PERFORMANCE OF THE COMPANYDuring the year under review, the Company had rendered project advisory services to its parent company and accrued an income of Rs 104 lakhs(previous year NIL) under this activity. The Company also generated Rs 78.42 lakhs (previous year Rs 0.50 lakhs) as income from short-terminvestments and Rs. 38.58 lakhs as interest on sub-debt granted to one of its subsidiary company. The income from investments in theinfrastructure projects are yet to materialize as they are essentially long term in nature. The Company reported a loss of Rs.238.36 lakhs (previousyear Rs 214.83 lakhs). The loss is mainly on account of interest on borrowings raised for investment in infrastructure projects.
During the year, the company has invested in projects in Roads & Bridges, and Industrial water supply sectors.
The Government’s thrust to promote employment and labour opportunities by way of infrastructure development provides enough potential for theCompany to expand its activities on a risk-sharing basis in the areas of roads & bridges, ports, airports, cyber-parks, water-management, etc. Thusthe company would be able to achieve a diversified portfolio of investments in infrastructure projects.
IV. CAPITAL EXPENDITUREThe Company has incurred capital expenditure of Rs.12.50 lakhs during the year.
V. DEPOSITSThe Company has not accepted any deposits from the public.
VI. DISCLOSURE OF PARTICULARSThere are no particulars to be disclosed as per the Companies’ (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
VII. PARTICULARS OF EMPLOYEESThere are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies read with theCompanies (Particulars of Employees) Rules, 1975.
VIII. DIRECTORS 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 materialdeparture;
ii. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2004 and of the profit of the Company for theyear 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 theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.
IX. DIRECTORSMr.Y.M.Deosthalee, retires from the Board of Directors by rotation and is eligible for reappointment.
X. AUDIT COMMITTEEThe Audit Committee consists of three non executive and independent directors. The present members of the Committee are
1. Mr.Y.M.Deosthalee Member
2. Mr.K.V.Rangaswami Member
3. Mr.R.Shankar Raman Member
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report.
LARSEN & TOUBRO HOLDINGS LIMITED
XI. AUDITORSThe Auditors, M/s Sharp & Tannan, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and arerecommended for reappointment. Certificate from Auditors has been received to the effect that their appointment, if made, would be within the limitsprescribed under Section 224(1B) of the Companies Act, 1956.
XII. ACKNOWLEDGEMENTSThe Directors acknowledge the invaluable support extended to the company by the Financial Institutions, Bankers, Investors and Reserve Bank ofIndia.
The Directors are pleased to place on record their appreciation for the support received from the parent company.
Place : Mumbai
Dated : 30th April, 2004
K. V. RANGASWAMIY. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors
For and on behalf of the Board
LARSEN & TOUBRO HOLDINGS LIMITED
Auditors’ Report
TO THE MEMBERS OF L&T HOLDINGS LIMITED
WE have audited the attached balance sheet of L & T Holdings Limited (the Company) as at 31st March 2004, and also the profit and loss account forthe year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is toexpress 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 auditto obtain reasonable assurance about whether the financial statements are free of material missstatement. An audit includes examining on test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting pr inciples used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under
1. AS required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of theCompanies Act, 1956, 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 wwhich to the best of our knowledge and belief were necessary for the purposes ofour audit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination ofthose books;
c) The said balance sheet and profit and loss account with by this report are in agreement with the books of account;
d) In our opinion, the said balance sheet, profit and loss account comply with the accounting standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;
e) On the basis of the written representations received from the directors of the Company as at 31st March 2004 and taken on record by theBoard of Directors, we report that none of the Directors is disqualified as on 31st March 2004 from being appointed as a director in terms ofclause (g) of sub-sectionn (1) of section 274 of the Companies Act, 1956; and
f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March 2004, and
ii) In the case of the profit and loss account, of the loss for the year ended on that date.
SHARP & TANNAN
Chartered Accountants
L. VIDYANATHAN
Place : Mumbai Partner
Date : 30th April, 2004 Membership No.: 16368
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets.
(b) The management has physically verified during the year all its fixed assets. No material discrepancies were noticed on such verification.
(c) No Fixed assets of the company has been disposed off during the year and hence do not affect the going concern status.
(ii) As the Company is engaged in the business of investing in infrastructure companies reporting on the clauses relating to inventory 4 (ii) (a) (b) and(c) of the Companies (Auditor's Report) Order 2003 does not arise.
(iii) (a) The Company has not granted or taken any loans, secured or unsecured, to / from companies, firms, and other parties covered in the registermaintained under section 301 of the Companies Act, 1956.
(b) Since the Company has not taken / granted loans commenting on clause 4 (iii) (b), (c) and (d) of Companies (Auditor's Report) Order 2003does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business, for the purchase of fixed assets. In our opinion, and according to the information andexplanations given to us, there is no continuing failure to correct major weaknesses in internal control.
(v) In our opinion, and according to the information and explanations given to us, there are no transactions that need to be entered into the register inpursuance of Section 301 of the Companies Act, 1956. Hence reporting on the reasonableness of the transaction under clause 4 (v) (b) of theCompanies (Auditors' Report) Order 2003 does not arise.
(vi) The company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for theoperations of the company and hence reporting of the maintenance of cost records does not arise.
(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company hasbeen generally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, and other statutory dues during the yearwith the appropriate authorities.
(b) According to the information and explanations given to us, there are no dues of income tax / customs duty / wealth tax / cess which have notbeen deposited with the appropriate authorities on account of any dispute.
(c) According to the information and explanations given to us, there are no dues of income tax / customs duty / wealth tax / cess which have notbeen deposited with the appropriate authorities on account of any dispute.
(x) The Company is registered for a period less than five years, hence reporting on accumulated losses and cash loss incurred for the financial yearand the immediate preceding financial year does not arise.
(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a bank ordebenture holders. The company has not availed any loan from a financial institution.
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor'sReport) Order 2003 are not applicable to the Company.
(xiv) In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provision ofclause 4(xiv) of the Companies (Auditors' Report) order, 2003 are not applicable to the Company.
(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xvi) The Company has not obtained any Term Loan during the year.
(xvii) The Company has raised funds on short - term basis during the year to bridge the gap in availing long term loans for long term investment.
(xviii) The Company has not made any allotment of shares during the year under audit and hence reporting whether preferential allotment made tocompanies covered in the register maintained under section 301 of the Act is not prejudicial to the interest of the Company under clause 4(XVIII)of the Companies (Auditor's Report) order, 2003 does not arise.
(xix) According to the information and explanations given to us, during the year covered by our audit report, the company had issued 60 debentures ofRs. 1 Crore each. The company is in the process of creating security in respect of debentures issued. (Refer Note No. 3a in Schedule - 2)
(xx) The Company has not raised any money by public issue during the year covered by our audit.;
(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of ouraudit.
SHARP & TANNANChartered Accountants
L. VIDYANATHANPlace : Chennai PartnerDate : 30th April, 2004 Membership No.: 16368
LARSEN & TOUBRO HOLDINGS LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
Schedules forming part of accountsSchedule 1Significant Accounting Policies:a. Basis of Accounting
The company maintains its accounts on accrual basis following the historical cost convention and in compliance with the Accounting Standardsreferred to in Section 211(3C) and the other provisions of the Companies Act, 1956.
b. Revenue Recognition:Incomes from Investments are accounted when the same is legally due. Sale of investments is accounted for on the basis of contracts with parties.Consultancy / Advisory fee is accounted for based on agreement with customers.
c. InvestmentsLong term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanent nature. Currentinvestments are stated at lower of cost or market value
d. Taxes on incomeTaxes on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisions ofthe Income Tax Act, 1961, and based on expected outcome of assessments / appeals.
Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.
e. Miscellaneous Expenditure:Preliminary expenses are written off in the year of commencement of operations.
Schedule 2
Notes forming part of Accounts1. The company had no transactions during the year with any small scale industrial undertaking and hence reporting details on outstanding exceeding
30 days and interest on over due outstanding does not arise.
2. The company is an investment company and accordingly information required under paragraph 4(C) of Part II of Schedule VI of the CompaniesAct, 1956 has not been furnished.
3. a. 5.35% Redeemable Non-convertible Debentures for Rs.60 crores issued during the year (60 debentures of face value of Rs 1 crore eachissued on 17/3/2004) are to be secured by creation of a first charge on buildings supported by a letter of comfort issued by the parentcompany Larsen & Toubro Limited and redeemable at par on 14.6.04.
b. The Redeemable Non convertible Debentures Series I and II for Rs.50 crores are guaranteed by unconditional irrevocable guarantee by M/s.Larsen & Toubro Limited, the holding company as detailed below :
i. 8 % Redeemable Non convertible Debentures - Series I of Rs.30,00,00,000 (30 debentures of face value of Rs. 1 crore each issued on31/3/2003) are redeemable at par on 31.03.08 or on exercise of a conditional put option by the subscriber.
ii. 7.85 % Redeemable Non convertible Debentures - Series II of Rs.20,00,00,000 (20 debentures of face value of Rs. 1 crore each issuedon 31/3/2003) are redeemable at par on 31.03.06 or on exercise of a conditional put option by the subscriber.
c. Since the above debentures are privately placed, creation of Debenture Redemption Reserve does not arise.
4. The company has availed inter-corporate deposit from M/s. Larsen & Toubro Limited, the holding company, during the year and repaid in full. Themaximum amount outstanding at any time during the year Rs.47,84,00,000. (Previous year Rs.70,26,50,000).
5. a. The company had pledged its investment in the equity shares of Second Vivekananda Bridge Tollway Company Private Limited (SVBTC) ofRs.32,35,00,000 to the Senior Lenders as security for the Term Loans sanctioned by them to SVBTC.
b. The company has given an undertaking to the Term lenders of SVBTC to subscribe to quasi equity to the extent of Rs.10 crores of thecompany.
c. The company has given the following undertakings jointly with Pacific Alliance Stradec Group Infrastructure Company LLC and SVBTC to theterm lenders of SVBTC :
i. to meet the cost overrun and
ii. not to reduce the joint shareholding below 51% during Construction period and for 3 years following Commercial Operations Date andbelow 26% during balance remaining operations period.
6. The company has pledged its investment in the equity shares of GVK Jaipur Kishengarh Expressway (P) Limited of Rs.21,40,00,000 to the SeniorLenders as security for the Term Loans sanctioned by them.
7. The company has given the following undertakings jointly with Larsen & Toubro Limited (holding company), to the term lenders of L&T TransportationInfrastructure Limited (LTTIL) and Narmada Infrastructure Construction Enterprise Limited (NICE), the subsidiary companies of Larsen & ToubroLimited:
LARSEN & TOUBRO HOLDINGS LIMITED
i. not to reduce their joint shareholding in LTTIL & NICE below 51% until the financial assistance received from the term lenders is repaid in fullby LTTIL & NICE and
ii. to jointly meet the shortfall in the Working Capital requirements of LTTIL & NICE until the financial assistance received from the term lendersis repaid in full by LTTIL & NICE.
accrued in the profit & loss account 4,393 (4,54,553)10. Since the turnover of the Company has not exceeded Rs. 50 crores during the year,reporting under the following Accounting Standards does not
arise.
Accounting Standard – 17 - Segment Reporting
Accounting Standard – 18 - Related Party Disclosure
11. Figures for the previous year have been regrouped / re-classified where necessary.
Notes forming part of accounts
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (Contd.)
I Registration Details
Registration No. U65993TN2001PLC46691 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. Thousands)
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)Total Liabilities Total Assets
IV Performance of Company (Amount in Rs. Thousands)Turnover (including other income) Total Expenditure
2 2 1 0 1 4 5 9 3 3
+ - Profit/Loss Before Tax + - Profit/Loss After Tax2 3 8 3 2 2 3 8 3 7
Earnings Per Share in Rs. Dividend Rate %0 . 2 8 N I L
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)
Item Code No. N A
Product Description Investment in Securities
Signatures to Schedules A to I and notes
Please tick appropriate Box + for profit - for loss
3 3
3
+ -
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
L. VAIDYANATHANPartnerMembership No. 16368
Place : Mumbai
Date : 30th April, 2004
R. SRIDHARSecretary
K. V. RANGASWAMIY. M. DEOSTHALEE
R. SHANKAR RAMAN
Directors
Place : Mumbai
Date : 30th April, 2004
TRACTOR ENGINEERS LIMITED
The Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March 2004.
1. FINANCIAL RESULTS2003-04 2002-03Rupees Rupees
Profit Before Depreciation & Tax 57,658,140 31,701,674
Less/(Add): Depreciation on Fixed Assets 8,969,969 9,340,218
Profit Before Tax 48,688,171 22,361,456
Provision for Current tax 18,590,000 9,183,842
Provision for Deferred tax 64,207 (563,474)
(Write back)/Provision of/for prior years 73 (987,357)
Profit After Tax 30,033,891 14,728,445
Add: Balance brought forward from previous year 13,632,108 (1,096,337)
Balance available for disposal which the directors appropriate as follows: 43,665,999 13,632,108
Dividend 10,200,000 —
Dividend tax 1,306,875 —
General Reserve 1,501,695 —
13,008,570 —
Balance carried to Balance Sheet 30,657,429 13,632,108
DividendThe directors recommend payment of dividend of Rs. 150 each per share ofRs. 1000 each on 68,000 shares 10,200,000 NIL
2. YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY Sales and other income for the financial year under review were Rs. 520,009,646 as against Rs. 340,298,208 for the previous financial year. Due toincrease in the domestic demand for undercarriage products there was increase in sales to OEMs. The Profit before tax (after interest & depreciation)was Rs.48,688,171 against Rs.22,361,456 for the previous financial year.
In the year under review, the new models (7T, 35T, 60T) introduced in the previous year were stabilized. Further two new variants of 6T and 20Tmodel were developed and dispatched in the current year.
The Company had discontinued its operations at Navi Mumbai Plant. Consequently, the fixed assets located there were retired from active use and arebeing held for sale.
In the coming years, the Company plans to introduce new models to fight the competition, concentrate on increasing sales in spares market and explorepossibilities of enhancing business in defence sector and apron conveyors. In the Defence area Company is working on seven different projects on whichthe work is at advanced stages of invoicing.
In the current year, one set of frame for the agricultural tractor was successfully developed as a prototype and exported to M/s AGCO Corporation, USA.Company is also working to develop export market for its existing products.
3. CAPITAL EXPENDITUREAs at 31st March 2004, the gross fixed assets stood at Rs. 163,829,698 and the net fixed assets at Rs. 47,377,620 (after excluding assets at Navi Mumbaiplant). Assets at Navi Mumbai plant are being held for disposal and are valued at Rs. 37,798,973 as on 31st March,2004. Additions during the yearamounted to Rs.7,632,840.
4. DEPOSITS25 deposits totalling Rs.286,000 due for payment on or before 31st March 2004 remained unclaimed. As on the date of this report, deposits aggregatingRs 70,000 thereof have been claimed and paid.
5. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUNDDuring the year, the Company has transferred a sum of Rs. 10,000 being the amount due & payable and remaining unpaid for a period of 7 years, asprovided in Section 205C of the Companies Act, 1956.
6. AUDITORS’ REPORTThe Auditors’ Report to the Shareholders does not contain any qualifications.
7. 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 are given in Annexure ‘A’ forming part of this report.
Directors’ Report
TRACTOR ENGINEERS LIMITED
8. PERSONNELThe Board of Directors wishes to express its appreciation to all the employees of the Company for their contribution to the operations of the Companyduring the year. There are no employees coming within the purview of Section 217(2A) of the Companies Act, 1956 as amended by Companies(Particulars of Employees) Rules, 1975.
9. DIRECTORS’ 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 judgements and estimates that are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Company for the year ended on thatdate;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the companiesAct, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.
10. DIRECTORSMr. M. S. Krishnamoorthy retires by rotation and being eligible offers himself for re-appointment.
11. AUDIT COMMITTEEThe Audit Committee consists of three non-executive and independent directors. The present members of the Committee are Mr. J.P.Nayak, Mr. M.S.Krishnamoorthy and Mr. T.S. Sundaresan. Mr. J.P. Nayak is the Chairman of Audit Committee.
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The financial statements have been audited by M/S Sharp & Tannan, Chartered Accountants, and have been discussed with the Audit Committee.
12. AUDITORSThe Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B)of the Companies Act, 1956.
13. ACKNOWLEDGEMENTSThe Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, vendors, suppliers and customers.The Directors are pleased to place on record their appreciation for the valuable contribution made by the employees of the Company.
Mumbai, 24th April, 2004
S. V. SUBRAMANIAN
T. S. SUNDARESAN
J. P. NAYAK
M. S. KRISHNAMOORTHY
Directors
For and on behalf of the Board
Directors’ Report
TRACTOR ENGINEERS LIMITED
A. CONSERVATION OF ENERGYa) Energy conservation measures taken:
One electrically heated pusher furnace has been converted to a gas fired one using piped natural gas. This has enabled the Company to switch to a cheaperform of energy.
b) Proposals:i. In case of track pins, a mass produced component of undercarriage, trials are being conducted with a different grade of steel which would facilitate
replacing the current process requiring double heat treatment cycles with a new process of single shift heat treatment. This would result in significantreduction in consumption of energy.
ii. To convert another electrically fired pusher furnace to a PNG fired one.c) Impact of above:
Measures taken will result in reduction in consumption of energy.d) Total energy consumption and energy consumption per unit of production as per Form - A in respect of Industries specified in the Schedule.
- Not applicable.B. TECHNOLOGY ABSORPTION
e) Efforts made in technology absorption as per Form BFORM B
(Disclosure of particulars with respect to Technology Absorption)RESEARCH AND DEVELOPMENT (R&D)
1. Specific areas in which R&D carried out by the Companyl Development of new products/ designs/ processes/ methods/ material / tools, improvement of systems in existing products/ processes in
related manufacturing areas of undercarriage components, oil field equipments and apron conveyors.2. Benefits derived as a result of the above R&D
l Improved product service life.l Reducing manufacturing / delivery timel Improved product quality.l Cost reduction / Improved utilisation of material & energy.
3. Future plan of actionl Continuation of the present work in R&D for introduction of new products and processes, improvement in existing products and processes
in various areas in which the Company is operating.l Faster introduction of new products and processes.l Actively associating with the Defence Ministry (indigenisation plans) for parts for Combat Crawler Equipments, Design work for products used
by various Defence forces.4. Expenditure on R&D (Rs.)
2003-04 2002-03i) Capital — —ii) Recurring 3,843,080 2,858,232iii) Total 3,843,080 2,858,232iv) Total R&D Expenditure as a 1% 1%
percentage of total turnoverTECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION1. Efforts, in brief, made towards technology absorption, adaptation and innovation:
l Product and process technology developed through in-house R&D i.e. for design and manufacture of undercarriage for excavators has been absorbedand several models upgraded to new designs.
2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import subst itution, etc.:l Improvement in existing processes and product quality, performance, safety and serviceability.l Import substitution and reduced dependence on technology.l Introduction of new products with indigenous know-how.
3. Information regarding technology imported during the last five yearsThe Company has not imported any technology in the last five year
C) FOREIGN EXCHANGE EARNINGS AND OUTGO:f) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and ser vices and export
plans:l Working to promote export of our products directly to other countries.l One set of frame for a agricultural tractor was successfully developed as a prototype and exported to M/s AGCO Corporation, USA.
g) Total foreign exchange earned and used (Rs.)2003-04 2002-03
Foreign exchange earned 15,517,262 12,611,630Foreign exchange used 61,171,808 38,402,080
Annexure A to the Director's Report
Auditors’ Report
TO THE SHAREHOLDERS OF TRACTOR ENGINEERS LIMITED
We have audited the attached balance sheet of Tractor Engineers Limited, as at 31st March 2004, and also the profit and loss account and the cash flowstatement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the auditto 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 the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
In accordance with the provisions of section 227 of the Companies Act, 1956, we report as under :
1) 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;
2) 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
3) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account.
4) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referredto in sub-section (3C) of section 211 of the Companies Act, 1956;
5) On the basis of written representations received from the directors, as on 31st March 2004 and taken on record by the Board of Directors, we reportthat none of the directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section (1) of section274 of the Companies Act, 1956;
6) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significantaccounting policies in Schedule Q and the notes forming part of accounts in Schedule R give the information required by the Companies Act, 1956, inthe manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2004;
(ii) in the case of the profit and loss account, of the profit for the year ended on that date; and
(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.
As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of theCompanies Act, 1956, we report as under :
1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
2. We are informed that the fixed assets have been physically verified by the management at reasonable intervals during the year and no materialdiscrepancies were noticed on such verification.
3. During the year, the Company has disposed off certain plant & machinery and furniture & fixtures. Based on the information and explanation given bythe management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the said fixed assets has not affected thegoing concern status of the Company.
4. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.
5. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Companyand the nature of its business.
6. On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. No materialdiscrepancies were noticed on physical verification of stocks as compared to book records.
7. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under section301 of the Companies Act, 1956
8. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under section301 of the Companies Act, 1956.
9. Since the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the register maintainedunder section 301 of the Companies Act, 1956, the question of commenting on the rate of interest and other terms and conditions of such loans, regularityof payment of principal amount and interest and taking reasonable steps for recovery/payment of overdue amounts does not arise.
10. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with thesize of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. During the course ofour audit, no major weakness has been noticed in the internal controls.
11. According to the information and explanations given to us, the Company has not done any transactions that need to be entered into the register maintainedunder section 301 of the Companies Act, 1956.
12. According to the information and explanations given, to us, no transactions were made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year.
13. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AAof the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from the public. No order has been passed by theCompany Law Board.
TRACTOR ENGINEERS LIMITED
14. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
15. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company.
16. According to the records of the Company, the Company is regular in depositing with the appropriate authorities undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth-tax, Custom duty, Excise duty,Cess and other statutory dues applicable to it.
17. According to the information and explanations given to us, there are no arrears of statutory dues as at 31st March 2004 for a period of more than sixmonths from the date they became payable.
18. According to the records of the Company and the information and explanations given to us, there are no dues of sales tax, customs duty/wealth-tax andexcise duty, which have not been deposited on account of any dispute.However, the following disputed dues of income tax and cess have not beendeposited by the Company :
Name of the Statute Nature of dues Amount (Rs) Forum where dispute is pendingBombay Provincial Municipal Corporation Cess & Interest thereon 1,208,627 Bombay High Court(Cess on entry of Goods) Rules,1996
Income Tax Act,1961 Income tax & Interest for 4,976,506 Commissioner of Income Tax
AY2001-02 (Appeals)
19. The Company does not have any accumulated losses as at 31st March 2004.The Company has not incurred any cash losses during the financial yearcovered by our audit and the immediately preceding financial year.
20. Based on our audit procedures and on the information and explanations given to us, we are of the opinion that the Company has not defaulted in repaymentof dues to a financial institution, bank or debenture holders.
21. Based on our examination of documents and records, and according to the information and explanations given to us, the Company has not granted anyloans and advances on the basis of security by way of pledge of shares, debentures and other securities.
22. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the Company.
23. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintainedof the transactions and contracts in relation to dealing in shares, securities, debentures and other investments and timely entries have been made inthose records. We also report that the Company has held the shares, securities, debentures and other securities in its own name.
24. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financialinstitutions.
25. The Company has not taken any term loans.
26. Based on our examination of the Balance Sheet of the Company and the information and explanation given to us, we are of the opinion that the fundsraised by the Company on short term basis are not used for long term investment and vice versa.
27. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of theAct.
28. The Company has not created any security in respect of debentures issued during the year, as the same were/are redeemed/redeemable within ninetydays of issue.
29. The Company has not raised any money by public issues during the year.
30. Based upon the audit procedures performed and information and explanations given to us, no fraud on or by the Company has been noticed or reportedduring the year.
For SHARP & TANNANChartered Accountants
by the hand of
A. B. CHOPRAPartner
(Membership No : 38159)
Place : Mumbai
Date : 24th April, 2004
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :Shareholders’ Funds:
Share capital A 68,000,000 68,000,000Reserves and surplus B 209,246,555 190,719,539
277,246,555 258,719,539Loan Funds :
Secured loans C 40,553,625 10,855,714Unsecured loans D 3,955,000 33,034,000
121,720,383 81,799,266Net current assets 171,069,504 153,660,361Miscellaneous expenditure I 3,194,266 4,031,076(To the extent not written off or adjusted)TOTAL 336,120,337 316,910,203CONTINGENT LIABILITIES JSIGNIFICANT ACCOUNTING POLICIES QNotes forming part of Accounts R
Sales, administration and other expenses O 41,773,641 32,153,728
Interest & Brokerage P 2,439,159 275,768
Depreciation and obsolescence 8,969,969 9,340,218
471,321,475 317,936,752
PROFIT/(LOSS) BEFORE TAX 48,688,171 22,361,456
Provision for Tax
- Current tax - including Wealth Tax 18,590,000 9,183,842
Rs. 37,500 (previous year Rs.40,000 )
- Deferred Tax 64,207 (563,474)
- (Write Back)/Provision of/for tax pertaining to prior
years 73 (987,357)
18,654,280 7,633,011
PROFIT/(LOSS) AFTER TAX 30,033,891 14,728,445
Add:Balance brought forward from previous year 13,632,108 (1,096,337)
PROFIT AVAILABLE FOR APPROPRIATION 43,665,999 13,632,108
Less : Transferred to General Reserve 1,501,695 -
PROFIT AVAILABLE FOR DISTRIBUTION 42,164,304 13,632,108
Proposed Dividend 10,200,000 -
Corporate dividend tax on above 1,306,875 -
Balance carried to Balance Sheet 30,657,429 13,632,108
Basic and Diluted Earnings Per Share (Rs.) R 441.67 216.59
SIGNIFICANT ACCOUNTING POLICIES Q
Notes forming part of Accounts R
Profit and Loss Account for the year ended 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
A. B. CHOPRAPartnerMembership No. 38159
Place : Mumbai
Date : 24th April, 2004
D. D. UPPONIManager
S. V. SUBRAMANIAN
T. S. SUNDARESAN
J. P. NAYAK
M. S. KRISHNAMOORTHY
Directors
For and on behalf of the Board
Place : Mumbai
Date : 24th April, 2004
Cash Flow Statement for the year ended 31st March, 20042003-04 2002-03
A CASH FLOW FORM OPERATING ACTIVITIES:Net Profit before tax & extraordinary activities 48,688,171 22,361,456Adjustments for:
Depreciation 8,969,969 9,340,218Interest (Net) 2,439,159 275,768Provision for diminution in value of Investments 10,544 -Dividend Received (1,162,578) (561,701)(Profit)/Loss on Sale of Fixed Assets (212,048) 1,318(Profit)/Loss on Sale of Investments (271,347) (3,729,517)Operating profit before working capital changes 58,461,870 27,687,542Adjustments for:
(Increase)/Decrease in Trade & other receivables (15,399,173) 14,317,445(Increase)/Decrease in Inventories (41,973,166) (16,858,105)(Increase)/Decrease in Miscellaneous Expenditure not W/off 836,810 303,767Increase/(Decrease) in Trade Payables 26,982,196 12,190,142Cash Generated from Operations 28,908,537 37,640,791Direct taxes paid/payable(Net) 17,158,027 5,656,630Net Cash from operating activities 11,750,510 31,984,161
B Cash Flow from Investing activitiesPurchase of fixed assets including CWIP (7,832,840) (1,720,216)Sale of fixed assets 271,462 5,339,980Purchase of Investments (3,573,541) (30,100,760)Dividend Received 1,162,578 561,701Interest Received - 2,028,288Net Cash (used in)/from Investing activities (9,972,341) (23,891,007)
C Cash Flow from Financing activitiesProceeds from Long term & other borrowings 16,618,911 (23,254,942)Loan /Deposits from Banks/FD/Corporates (16,000,000) 16,000,000Interest paid (2,439,159) (2,304,056)Net Cash (used in)/from Financing activities (1,820,248) (9,558,998)
D Net(decrease)/increase in cash & cash equivalents(A+B+C) (42,079) (1,465,844)Cash & Cash equivalents at the beginning of the year 315,778 1,781,622Cash & Cash equivalents at the end of the year 273,699 315,778
Notes :
1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard - 3 issued by the Institute of CharteredAccountants of India.
2 Purchase of fixed assets includes movements of Capital Work-in-Progress between the beginning and end of the year.
3 Cash and cash equivalents represent cash on hand and bank balances on current accounts.
4 Previous year’s figures have been regrouped / reclassified wherever necessary.
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
A. B. CHOPRAPartnerMembership No. 38159
Place : Mumbai
Date : 24th April, 2004
D. D. UPPONIManager
S. V. SUBRAMANIAN
T. S. SUNDARESAN
J. P. NAYAK
M. S. KRISHNAMOORTHY
Directors
For and on behalf of the Board
Place : Mumbai
Date : 24th April, 2004
TRACTOR ENGINEERS LIMITED
Schedules forming part of accountsAs at 31-3-2004 As at 31-3-2003
Rupees Rupees Rupees RupeesSCHEDULE AShare Capital :
Income from current investments 1,162,578 561,701Profit on sale of current investments 271,347 3,729,517Profit on sale of fixed tangible assets 212,048 -Miscellaneous income 1,656,161 387,122
Interest from Inter Corporate Deposits and others 1,324,421 3,929,344(Tax deducted at source Rs. 1584 ,
previous year Rs.425,942 )Interest on Long term, non-trade investments 121,359 1,445,780 - 3,929,344
2,439,159 275,768
Schedules forming part of accountsSCHEDULE Q
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING - The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generallyaccepted accounting principles [“GAAP”] and in compliance with the Accounting Standards referred to in Section 211(3C) and other requirements ofthe Companies Act, 1956.
The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions thataffect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingentliabilities as of the date of the financial statements. Examples of such estimates include useful lives of fixed assets, provision for doubtful debts/advances,future obligations in respect of retirement benefit plans etc. Actual results could differ from these estimates.
2. FIXED TANGIBLE AND INTANGIBLE ASSETS are stated at cost less depreciation / amortisation.
Interest on borrowings for fixed assets acquisition and revenue expenses incurred at project site for the period prior to commencement of commercialproduction are capitalised as part of asset cost. Fluctuations in exchange rates are adjusted to the cost of the fixed assets.
Depreciation on fixed tangible assets is provided at the rates prescribed from time to time under Schedule XIV of the Companies Act, 1956, on the writtendown value method on all existing assets upto 30th September, 1987 and on straight line method on assets acquired from 1st October, 1987 exceptin the case of vehicles which are depreciated at 14.14% Depreciation on additions/deductions is calculated pro rata from/to the month of additions/deductions. The value of leasehold land is amortised over the period of the lease. Specialised software is amortised over a period of three years.
3. BORROWING COSTS that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of cost of suchassets. 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 borrowingcosts are recognised as expense in the period in which they are incurred.
4. INVESTMENTS -
i) Long Term investments are carried at cost.
ii) Current investments are carried at lower of cost or market value.
5. INVENTORIES are valued at lower of cost or net realisable value as under after providing for obsolescence:
Loose Tools Weighted average cost method.
Raw material, and stores & spare parts Weighted average cost method.
Work in progress & Finished Goods Weighted average cost method
The cost include costs directly related to production and a systematic allocation of fixed and variableproduction overheads Finished Goods Inventory is inclusive of excise duty paid/payable.
6. FOREIGN CURRENCY transactions are accounted for at the rates prevailing on the dates of the transactions. Foreign Currency assets and liabilitiesare converted at contracted/year end rates as applicable. The exchange difference on settlement / conversion are adjusted to:
i) Cost of Fixed Assets, if the foreign currency liability relates to Fixed Assets.
ii) Profit and Loss Account in other cases. Wherever forward contracts are entered into, the exchange difference are dealt with in the Profit and LossAccount over the period of the contracts.
7. RETIREMENT BENEFITS - Contributions are made to the Provident Funds and Super-annuation Fund on actual liability basis and to the Gratuity Fundson actuarial valuation basis. Provision for Leave Encashment on retirement is made on actuarial valuation basis.
8. PRIOR PERIOD AND EXTRAORDINARY ITEMS - Income and expenditure pertaining to prior period as well as extraordinary items, where material,are disclosed separately.
9. DEFERRED REVENUE EXPENDITURE -
Future pensions under Voluntary Retirement cum Pension scheme are amortised over the period for which such pensions are payable. Lump sumcompensation paid under Voluntary Retirement Scheme is amortised over a period of five years.
10. 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 theIncome Tax Act, 1961,and based on expected outcome of the assessments /appeals.
Deferred tax is recognised on timing difference between the accounting income and taxable income for the year and quantified using the tax rates andlaws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.
TRACTOR ENGINEERS LIMITED
SCHEDULE R
NOTES FORMING PART OF ACCOUNTS
1. Of the total shares issued, 67,994 Equity shares (Previous year 67,994 Equity shares) are held by the Holding Company – Larsen & Toubro Limited.
2. Of the total shares issued, 62,000 Equity shares were issued as bonus shares by way of capitalisation of General Reserve of Rs.62,000,000.3. Sundry creditors include interest of Rs.Nil (previous year Rs.Nil) on overdue amounts payable to Small Scale and Ancillary Industrial Undertakings.4. In pursuance of Sec.441A of the Companies Act, 1956 as inserted by the Companies (Second Amendment) Act,2003 provision is required to be made
for payment of Cess towards a fund to be established for rehabilitation and revival of sick industrial units. However no provision has been made in thebooks of account in the absence of notification specifying the effective date and the applicable rate for the Company for calculation of Cess.
5. Estimated amount of contracts remaining to be executed on capital account (net of advances) is Rs. 1,500,000 (in respect of intangible assets)(previous year Rs. 1,440,000 – in respect of fixed assets).
6. The Company had discontinued its operations at Navi Mumbai Plant, consequently, fixed assets located at the Navi Mumbai plant have been retiredfrom active use and are being held for disposal. Accordingly, the Company, as on 31st March 2004, has valued fixed assets located at the Navi Mumbaiplant based on estimated realisable value (as per Valuation Report) or book value, whichever is less.
7. Cash credit facilities from banks are secured by hypothecation of stocks, stores and book-debts.8. Details of the Debentures are :
Description Face value Date of allotment Amount (Rs.) Interest Redemption
Secured Rs. 10,000,000 17th March, 2004 20,000,000 5.35% p.a. payable Will be redeemed after 89Redeemable each at maturity days i.e. on 14th June,2004Non-convertible at face valueDebentures (2 nos.)
The debentures will be secured by way of a first charge over fixed tangible assets of the Company at certain locations.
9. Expenditure on research and development activities, as certified by the Management is Rs. 3,843,080 (previous year Rs. 2,858,232).
10. The Company has taken on operating lease certain assets costing Rs. 678,978 (previous year Rs.3,195,395). Total minimum future lease paymentsin this respect are as follows :
2003-04 2002-03
Due :
Not later than one year 172,296 708,717
Later than one year but not later than five years 584,099 223,632
Later than five years Nil Nil
Total 756,395 932,349
11. Loans and advances include:
As at 31.3.2004 As at 31.3.2003Rupees Rupees
Due from an Officer of the Company (Maximum amount outstanding at any time duringthe year Rs. 1,027,788 ) (previous year Rs.1,065,156) 907,819 1,027,788
12. The Company owes a sum which is outstanding for more than 30 days to the following small scale industrial undertakings:
1. Srinivas Engineering 7. Seema Industries2. Gala Springs Private Limited 8. Electropneumatics P. Ltd.3. Electoscope Systems 9. Dashmesh Engineering Works4. Kohinoor Mech. Elec. & Engg. Works 10. Ronomats (India)5. Vako seals 11. Sidma Engineering P. Ltd.6. Alucast Industries 12. Accurate Equipment Manufacturers Private Limited
The above information and that given in schedule H – current liabilities regarding small scale industrial undertakings has been determined to the extentsuch parties have been identified on the basis of information available with the Company. This is relied on by the auditors.
13. The exchange loss (net) arising on Foreign Currency transactions amounting to Rs. 2,936,205 has been provided for in the respective revenue accounts.(previous year loss (net) Rs. 625,573)
14. Segment ReportingThe Company’s activities fall within a single segment, viz. undercarriage and related products. Accordingly, Segment Reporting is not applicable.
Schedules forming part of accounts
15. Disclosure of related parties / related party transactions :
I. List of related parties :
Sr. Name of the Related Party RelationshipNo.
1. Larsen & Toubro Limited Holding Company
2. L & T Finance Limited Fellow Subsidiary
3. L & T Capital Company Limited Fellow Subsidiary
5. Leasing or hire purchase arrangements NIL 161,015 NIL 161,015(NIL) (NIL) (NIL) (NIL)
6. Investments in shares of fellow subsidiaries NIL NIL NIL NIL during 2002-03 (NIL) (54,019,886) (NIL) (54,019,886)
7. Finance (including loans and equity 10,000,000 NIL NIL 10,000,000contributions in cash or in kind) – Inter (16,000,000) (NIL) (NIL) (16,000,000)Corporate Deposits taken from L&T
a) Inter Corporate Deposits repaid to L&T 26,000,000 NIL NIL 26,000,000(NIL) (NIL) (NIL) (NIL)
b) Inter Corporate Deposits given to L&T NIL NIL NIL NIL(25,000,000) (NIL) (NIL) (25,000,000)
c) Inter Corporate Deposits repaid by L&T NIL NIL NIL NIL(25,000,000) (NIL) (NIL) 25,000,000)
a) Accounts receivable 19,861,839 NIL NIL 19,861,839(10,368,124) (89,250) (NIL) (10,457,374)
b) Accounts payable 8,863,209 287,107 NIL 9,150,316(4,968,929) (NIL) (NIL) (4,968,929)
c) Inter Corporate Deposit taken (including interest) NIL NIL NIL NIL(160,19,726) (NIL) (NIL) (160,19,726)
d) Dues in respect of Advances given NIL NIL 907,819 907,819(NIL) (NIL) (1,027,788) (1,027,788)
Note : Figures in bracket relate to previous year
16. Earnings Per Share:
2003-04 2002-03
1. Basic Earnings Per Share (Rs.) 441.67 216.59
2. Diluted Earnings Per Share (Rs.) 441.67 216.59
3. Profit/(Loss) After Tax as per Profit & Loss Account (Rs.) 30,033,891 14,728,445
4. Weighted average number of equity shares outstanding 68,000 68,000
5. Nominal Value per Equity Share Rs.1,000 Rs.1,000
17. The Company has during the year, in accordance with Accounting Standard (AS-22),”Accounting for Taxes on Income” issued by theInstitute of Chartered Accountants of India, recognised in the Profit & Loss Account, the difference of Rs.64,207 between net deferredtax liabilities of Rs14,365,157 as at 31st March 2004 and net deferred tax liabilities of Rs 14,300,950 as at 31st March 2003 .
Deferred Tax Assets and Liabilities are on account of the following timing differences:
2003-04 2002-03Rupees Rupees
Deferred Tax Liabilities
Depreciation 13,620,656 14,162,807
Expenditure claimed on Payment basis for tax purposes 1,048,105 768,419
Figures in brackets are in respect of previous year.
24. Value of imports (on C.I.F. basis): 2003-04 2002-03Rupees Rupees
Raw materials 60,661,853 38,201,27225. Expenditure in foreign currency:
Repairs 72,482 — Other matters 437,473 200,808
Total 509,955 200,808
26. Earnings in foreign exchange: 2003-04 2002-03Rupees Rupees
Export of goods on F.O.B. basis 14,591,062 12,611,630 Tooling Costs 926,200 —
15,517,262 12,611,63027. Figures for the previous year have been regrouped/reclassified wherever necessary.
Notes forming part of accounts (contd.)28. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI Registration Details
Registration No. 0 8 8 9 3
Balance Sheet Date 3 1 0 3 0 4
N I L
Public Issue
Bonus Issue
II Capital Raised during the year (Amount in Rs. Thousands)
Total Liabilities (including Paid-up CapitalIII Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)
Paid-up CapitalSource of Funds:
Secured Loans
Net Fixed Assets
Investments
Application of Funds:
Miscellaneous Expenditure
Turnover (Including other income)
IV Performance of Company (Amount in Rs. Thousands)
Profit/Loss Before Tax
Earnings Per Share in Rs.
+ –
Item Code No. (ITC Code)
V Generic Names of Three Principal Products/Services of the Company
N I L
State Code 1 1
N I L
Rights Issue
Private Placement
N I L
Total Assets
Reserves & Surplus
Unsecured Loans
Net Current Assets
Accumulated Losses
Dividend Rate %
Total Expenditure
Product Description
–
8 0 0 0 0 9 2 4 62
9 5 5
5 6 7 68 7 1 0 7 01
1 9 4
0 1 002
6 8 884
Profit/Loss After Tax
3 2 2174
0 3 403
5
3
6
3 3 6 1 2 0 3 3 6 1 2 0
0 5 5 44
Deferred Tax Liabilities (net)
4 3 6 51
6 1 8 07 - -
3
1 6 744 1 5
. 3 148
.
P A R T S O F E A R T H M O V I N G M A C H I N E R Y
M A T E R I A L H A N D L I N G E Q U I P M E N T S
O I L F I E L D E Q U I P M E N T S
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
A. B. CHOPRAPartnerMembership No. 38159
Place : Mumbai
Date : 24th April, 2004
D. D. UPPONIManager
S. V. SUBRAMANIAN
T. S. SUNDARESAN
J. P. NAYAK
M. S. KRISHNAMOORTHY
Directors
For and on behalf of the Board
Place : Mumbai
Date : 24th April, 2004
L&T LLC
Directors' ReportThe Directors have pleasure in presenting their Annual Report and Accounts for the year ended 31st December 2003.
FINANCIAL RESULTS
Year ended Year ended31.12.2003 31.12.2002
US$ US $
Gross Profit /(Loss) 16582 (22708)
Less: Depreciation on fixed assets 16319 14905
Profit / (Loss) before taxes 263 (37613)
Provision for taxes - -
Provision for deferred taxes - (9100)
Profit /(Loss) after taxes 263 (28513)
SALES AND OTHER INCOME
Income from Sales and other sources amounted to US$ 914628 for the year ended 31st December 2003 as against US$ 807091 in the previous year.
REVIEW OF OPERATIONS
As a result of special efforts we were able to broad-base the customers / distributors who regularly buy from the warehouse. This has also helped inimproving margins. However overall sales growth was sluggish because of the postponement of maintenance shutdowns and projects in the Oil andGas industry during the year.
FUTURE OUTLOOK
We observe that the activity in the maintenance and projects in the Oil & gas sector has picked up and we expect increased demand due to this. Growthpotential is good, considering the additional markets addressed with a larger number of distributors.
Place : Chennai K. SURENDRADated: 17th April, 2004 Director
L&T LLC
April 17, 2004
TO THE MEMBERS OF LARSEN & TOUBRO LLC, HOUSTON, TEXAS.
We have audited the accompanying balance sheet of Larsen & Toubro LLC (a Delaware Limited Liability Company) as of December 31, 2003, and the
related statements of operations, members' equity, cash flows, for the year then ended. 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 audit standards generally accepted in the United States of America. 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 the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Larsen & Toubro LLC as of
December 31, 2003 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally
Net ordinary income 263.00 223241.40 2.23 -28512.69 -1367468.61 -13.67
Average exchange rate considered 46.780 31.12.2002 47.9600 31.12.2001 48.220031.12.2003 45.6000 31.12.2002 47.9600
Avg 46.7800 Avg 48.0900
L&T LLC
Statement of Cash Flows For the Year Ended December 31, 2003
Cash flows from operating ActivitiesNet Income (Loss) $ 263
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 16,319
(Increase) decrease in accounts receivable (208,887)
(Increase) decrease in inventories (120,920)
Increase (decrease) in accounts payable 18,953
(Increase) decrease in prepaid expenses (1,339)
(Increase) decrease in other assets 670
Total adjustments (295,204)
Net cash provided (used) by operating activities (294,941)
Cash flow from investing activities:
Cash payments for the purchase of property (29,199)
Net cash provided (used) by investing activities (29,199)
Cash flow from financing activities:
Amounts owed from affiliate (23,340)
Amounts borrowed from affiliate 298,134
Principal payments on long-term debt (15,200)
Proceeds from issuance of long-term debt 27,528
Proceeds from issuance of common stock 2,500
Net cash provided (used) by financing activities 289,622
Net increase (decrease) in cash and equivalents (34,518)
Cash and equivalents, beginning of year 73,385
Cash and equivalents, end of year $ 38,867
Supplemental Information:
Interest paid $ 539
Income taxes paid $ 0
Place : Chennai K. SURENDRADated: 17th April, 2004 Director
(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe Company began operations in 2001. Since its inception, Larsen & Toubro LLC has primarily sold and stocked Gate, Globe & Check Valvesmanufactured by Audco India Limited, a related party. The Company is organized as a Delaware limited liability company. The limited members areLarsen & Toubro Ltd. with 95.00% and Tractor Engineers Ltd with 5.00%
A summary of the significant accounting policies utilized by the Company in preparing its financial statements follows:
Cash and EquivalentsFor purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instrumentswith original maturities of three months or less.
Property and EquipmentProperty and equipment are recorded at cost. Maintenance and minor repairs and replacements are charged directly to expense as incurred; majorrenewals and battlements are charged to the respective property and equipment account. When property and equipment is sold or otherwisedisposed of, the asset accounts and related accumulated depreciation accounts are relieved and any gain or loss is included in operations.
Assets are being depreciated under the 200 percent declining balance method over their estimated useful lives.
The useful lives of property and equipment, for the purposes of computing depreciation, are
Years
Leasehold improvements 39
Machinery and equipment 5 - 7
Furniture and fixtures 5 - 7
Trucks and autos 5
Use of EstimatesThe preparation of financial statements in conformity with the United States generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilites at thedate of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.
Inventoried CostsInventories are stated primarily at the lower of average cost or market and consists of finished goods.
Federal Income TaxesThe limited liability corporation has elected to be taxed as a C-Corporation for federal taxes. Amounts provided for federal income taxes are basedon the earnings reported for financial statement purposes, adjusted for permanent differences between reported financial and taxable income.Deferred federal income taxes relate to items of revenue and expense, which are reported in different periods for federal income tax and financialstatement purposes. Such differences result primarily from differences caused by the utilization of the Company's net operating losses.
(2) ALLOWANCE FOR DOUBTFUL ACCOUNTSManagement currently believes that all receivables are collectible. Therefore, no allowance for doubtful accounts has been reflected at December31, 2003.
(3) NOTES PAYABLEA summary of notes payable is as follows:
Note Payable to a Leasing company, due in 24 monthly installments of
$516.27, including interest at 5.18%, through April 14, 2004, secured
by an automobile. Paid off in 2003. $ -
Note Payable to a Leasing Company, due in 36 monthly installments of
$674.63, including interest at 3.00%, through February 6, 2006, secured by
a forklift 21,401
Less current portion (7,557)
Long-Term Note Payable $ 13,844
The following are maturities of long-term debt for each of the next four years ending:
December 31, 2004 $ 7,557
December 31, 2005 7,787
December 31, 2006 6,057
December 31, 2007 -
$ 21,401
Notes to Financial Statements December 31, 2003
L&T LLC
(4) INCOME TAXESThe deferred asset as of December 31, 2003 consists primarily of timing differences for the net operating losses from the previous years.
(5) CONCENTRATION OF RISKThe Company holds cash and time deposit(s) with a local bank that during the year exceeded the Federal Depository Insurance Corporation(FDIC) limit.
The Company concentrates its sale activity primarily with two customers who accounted for eighty-three percent (83%) of the Company'srevenues or $702,385 of the total sales and $372,620 of the accounts receivable balance as of December 31, 2003.
(6) RELATED PARTY TRANSACTIONSIn the ordinary course of business, the Company has finished goods supplied from an affiliated joint venture of L & T and the Flowserve Group(USA), Audco India Limited.
Purchases during the twelve month period totaled $682,832, net of credits. The Company has amounts owed at December 31, 2003 to its affiliatein the amount of $1,024,616 for inventory purchases.
The Company receives reimbursement for expenses incurred by the Houston location by two affiliated companies in the amount of $68,511. Thereimbursement had not been received as of December 31, 2003.
A new member, Tractor Engineers Limited, a wholly owned subsidiary of Larsen & Toubro Limited invested $2,500 shares of $1 each in theCompany during 2003.
(7) PROPERTY, PLANT AND EQUIPMENTProperty, plant and Equipment consist of the following:
(8) LEASESThe Company entered into a lease for office and warehouse space. The terms of the lease expires February 29, 2004. The Company paid $ 56,884under this lease during the current year.
(9) SUBSEQUENT EVENTSThe Company received $ 100,000 from Larsen & Toubro Ltd. on January 16, 2004. The loan is repayable after one year at a rate of interestcalculated at the libor plus three-fourths of BPS.
Notes to Financial Statements
Place : Chennai K. SURENDRADated: 17th April, 2004 Director
Directors' ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March, 2004.
1. FINANCIAL RESULTS
Rs. In Lacs
2003 - 2004 2002 - 2003
Profit before depreciation and tax 9700.53 9804.95
Less : Depreciation on Fixed Assets 2749.11 2716.74
Profit before tax 6951.41 7088.21
Provision for current tax 534.39 558.19
Provision for deferred tax (net) 2443.03 2977.42 2488.74 3046.93
Profit after Tax 3973.99 4041.28
Add: Balance Brought forward from last year 739.79 1102.64
Balance available for disposal of which the Directors appropriate as follows: 4713.78 5143.92
General Reserve 397.40 404.13
Dividend 3703.00 4000.00
Additional Tax on Dividend 474.44 -
4574.84 4404.13
leaving a balance to be carried forward of 138.94 739.79
2. DIVIDEND
The Directors recommend a final Dividend of 15% ( Rs. 1.50 per share) on 6,12,00,000 Preference shares of Rs. 10 each, and 45.5% (Rs. 4.551 pershare) on 6,12,00,000 Equity shares of Rs 10 each.
3. YEAR IN RETROSPECT
The plant is operating in a stable manner and is meeting the power and steam requirements of Haldia Petrochemicals Limited successfully. The Salesand Other Income for the financial year under review were Rs. 13517.08 Lacs. Profit before Tax and Profit after Tax for the financial year under reviewwas Rs. 6951.41 Lacs and Rs. 3973.99 Lacs respectively.
4. FINANCE
During the year the Company did not borrow any money. The Company repaid loan installments of Rs. 5257.61 Lacs during the year.
5. CAPITAL EXPENDITURE
As at 31st March, 2004 the gross fixed assets stood at Rs. 52414.48 Lacs and the net fixed assets at Rs. 40996.98 Lacs. Additions during the yearamounted to Rs. 1248.63 Lacs.
6. DEPOSITS
During the period under review the Company has not accepted any deposits from the public.
7. AUDITORS’ REPORT
The Auditors’ Report to the Shareholders, together with the notes to the accounts referred to in the Auditors’ Report, are self-explanatory and thereforedoes not call for any further comments.
8. DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy,technology absorption, foreign exchange earnings and outgo are given in Annexure ‘A’ forming part of the report.
9. PERSONNEL
There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules,1975.
10. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;
HPL COGENERATION LIMITED
HPL COGENERATION LIMITED
ii) that the selected accounting policies were applied consistently and the directors made judgements and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Company for the year ended onthat date;
iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the annual accounts have been prepared on a going concern basis.
11. DIRECTOR
Mr. K.Venkataramanan, Mr. V.K.Magapu, Mr. N.Sivaraman, Mr. Swapan K Bhowmik and Mr. A. Bose retire by rotation and are eligible for re-appointment.
12. AUDIT COMMITTEE
The Audit Committee consists of three non executive directors. The present members of the Committee are Mr. V.K.Magapu, Mr. N.Sivaraman &A.Bose. Mr. A.Bose is the Chairman of the Audit Committee
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report.
13. AUDITORS
The Auditors, M/s.S.R.Batliboi & Co, Chartered Acccountants, hold office until the conclusion of the ensuing Annual General Meeting and arerecommended for re-appointment. Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within thelimits prescribed under Section 224(1B) of the Companies Act, 1956.
14. ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, vendors, suppl iers and customers.The Directors are pleased to place on record their appreciation for the valuable contribution made by the employees of the Company.
For and on behalf of the Board
Place : Mumbai K. VENKATARAMANAN N. SIVARAMANDate : 19-05-2004 Director Director
Annexure - A to the Directors' ReportA. CONSERVATION OF ENERGY
a) Energy Conservation measures taken
1) Introduction of photo cells for Plant lighting.
2) Running of Three (03) Cooling Tower Fans in slow Speed Instead Of Two (02) Cooling Fans in High Speed, during normal operation.
3) Introduction of energy saver i.e. Digitex ILT for Plant lighting.
b) Additional investments and proposals, if any, being implemented for reduction of conservation of energy :
Not Applicable.
c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production o fthe goods.
Total energy savings during the year is 175560 KWH.
d) Total energy consumption and energy consumption per unit of production as per Form A of the Annexure in respect of theindustries specified in the schedule thereto
Not Applicable.
B TECHNOLOGY ABSORPTION
e) There are no particulars to be disclosed under this head
C FOREIGN EXCHANGE EARNINGS AND OUTGO
f) There are no particulars to be disclosed under this head.
TO THE MEMBERS OF HPL COGENERATION LIMITED
1.0 We have audited the attached Balance Sheet of HPL COGENERATION LIMITED, as at 31st March 2004 and also the Profit and Loss Accountand the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audit.
2.0 We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and performthe 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 the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.
3.0 As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4.0 Without qualifying our opinion, we draw attention to Note no II, 1 of Schedule N to the financial statements regarding claims from HaldiaPetrochemicals Limited, which are under discussion against which the Company does not expect to incur any significant liability. The ultimateoutcome of the matter cannot presently be determined and no provision for any liability, that may result, has been made in the financialstatements.
5.0 Further to our comments in the Annexure referred to vide paragraph 3.0 above, we report that:–(i) 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;(ii) Subject to accounting for certain payments on cash basis as referred to vide Accounting Policy I (a) of Schedule N, in our opinion, proper
books of account as required by law have been kept by the company, so far as it appears from our examination of such books;(iii) The Balance Sheet, Profit and Loss Account and cash flow statement referred to in this report are in agreement with the books of account;(iv) In our opinion, the Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;(v) On the basis of written representations received from the directors, as on 31st March 2004, and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
6.0 In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to our observation videparagraph 5 (ii) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view inconformity 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, 2004;(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date;(c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
S. R. BATLIBOI & CO.
CHARTERED ACCOUNTANTS
Per
22, Camac Street ( RAHUL ROY )Block 'C', 3rd Floor a PartnerKolkata - 700 016 Membership No. 53956
Date : 19th May, 2004
Auditors' Report
ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF HPL COGENERATION LIMITED
REFERRED TO IN OUR REPORT OF EVEN DATE
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.(b) Fixed assets have been physically verified by the management during the year which in our opinion is reasonable having regard to the
size of the Company and the nature of its fixed assets.(c) There was no substantial disposal of fixed assets during the year, which would affect the going concern of the company.
ii. (a) The management has conducted physical verification of inventory at reasonable intervals.(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.
iii. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other partiescovered in the register maintained under section 301 of the Companies Act, 1956 and as such clauses (iii) (a) to (iii)(d) are not applicable.
iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and the nature of its business, for the purchase of inventory and fixed assets. There is no continuing failure to correctmajor weaknesses in the internal control.
HPL COGENERATION LIMITED
v. According to the information and explanations provided by the management, we are of the opinion that there have been no transactions thatneed to be entered into the register maintained under section 301 and hence clause (v) (b) is also not applicable.
vi. The Company has not accepted any deposit from public within the meaning of sections 58A and 58AA of the Companies Act, 1956.vii. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.viii. We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central government for the
maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.
ix. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including Provident Fund,Income-tax, Custom Duty, cess and other statutory dues applicable to it with the appropriate authorities According to the informationand explanations given to us, except for the cases stated below, there are no undisputed amounts payable in respect of income tax andcess which were outstanding, at the year end for a period of more than six months from the date they became payable :–
Name of the Statute Nature of the dues Amount Period to which the(Rs. in lacs) amount relates
Research & Development Cess Cess on foreign remittances to O&M 34.57 2001-02, 2002-03 and 2003-04Act, 1986 contractors provided but not paid in
view of an approval letter received byits holding company i.e. L&T from RBI.
As informed by the Company, Employees’ State Insurance Act is not applicable to the company. According to the information andexplanations given to us, there is no amount payable in respect of sales tax, wealth tax and excise duty for a period of more than sixmonths.
(b) There are no dues outstanding of sales tax, income tax, custom tax and cess on account of any dispute, other than the following :
Name of the Statute Nature of Dues Amount Period to which Forum where(Rs. in lacs) the amount dispute is pending
relates relates
Customs Act, 1962 Claim raised by the customs authorities 2,570.50 1999-2000 Assistantconsidering the plant as “captive consumption Commissioner ofpower plant” Customs, Calcutta
x. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current andimmediately preceding financial year.
xi. As per books and records maintained by the Company and according to the information and explanations given to us, the Company has notdefaulted in repayment of dues to a financial institution or bank or debenture holders.
xii. According to the information and explanations given to us and based on the documents and records produced to us, the Company has notgranted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
xiii. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract anyspecial statute applicable to chit fund and nidhi / mutual benefit fund / societies.
xiv. As informed and explained to us, the Company has not dealt / traded in securities or debentures during the year. In our opinion and accordingto the information and explanations given to us, proper records have been maintained of the transactions and contracts relating to dealing /tradings in Shares and Other investments and timely entries have been made therein. The shares and other investments have been held bythe Company, in its own name.
xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by its associates orsubsidiaries from bank or financial institutions.
xvi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans wereobtained.
xvii. On the basis of information received from the management and based on our examination of the balance sheet of the company as at 31stMarch, 2004 we find that the funds raised on a short-term basis have not been used for long term investment and vice-versa.
xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301of the Companies Act, 1956.
xix. The Company did not have any outstanding debentures during the year.xx. The Company has not raised any money through a public issue during the year.xxi. Based on information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the
Company noticed or reported during the year.S. R. BATLIBOI & CO.
CHARTERED ACCOUNTANTS
Per
22, Camac Street ( RAHUL ROY )Block 'C', 3rd Floor a PartnerKolkata - 700 016 Membership No. 53956
Date : 19th May, 2004
To
The Board of DirectorsHPL Cogeneration LimitedKolkata.
Certificate on Disqualification of a Director under Section 274(1)(g)
We refer to the Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003 which requires us tofurnish a certificate each year as to whether on the basis of our examination of the books and records of the Company, any director of the Companyis disqualified for appointment as a director or not.
On the basis of information provided by the Company and our examination of the books and records, the Company has not failed to file the annualaccounts and returns, or failed to repay any deposit, interest, dividend, or failed to redeem its debentures, as described in clauses (A) and (B) ofclause (g) of sub-section (1) of Section 274, and accordingly has not filed Form DD-B.
On the basis of written representations received from the directors, as on 31st March 2004, and taken on record by the Board of Directors, we reportthat none of the directors is disqualified as on 31st March 2004 from being appointed as a director in terms of clause (g) of sub-section (1) of section274 of the Companies Act, 1956.
S. R. BATLIBOI & CO.CHARTERED ACCOUNTANTS
Per(RAHUL ROY)
Date : May 19, 2004 a PartnerMembership No. 53956
HPL COGENERATION LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
Capital Work-in-Progress - 4,099,698,356 - 4,419,703,697
INVESTMENTS E 552,722,575 -
CURRENT ASSETS, LOANS AND ADVANCES F
Inventory 39,405,441 36,216,229
Sundry Debtors - 46,515,257
Cash and Bank Balances 265,678,072 98,456,825
Loans and Advances 142,096,333 860,517,375
447,179,846 1,041,705,686
LESS : CURRENT LIABILITIES AND PROVISIONS G
Current Liabilities 138,716,932 147,344,211
Provisions 100,910,885 55,835,191
239,627,817 203,179,402
NET CURRENT ASSETS 207,552,029 838,526,284
MISCELLANEOUS EXPENDITURE H(to the extent not written off or adjusted) - 799,792
TOTAL 4,859,972,960 5,259,029,773
Accounting Policies & Notes to the Accounts N
Balance Sheet as at 31st March, 2004
As per our report attached of even date
S.R. Batliboi & Co.Chartered Accountants
PER RAHUL ROYa Partner
Place : KolkataDate : 19th May, 2004
S. M. SHAMIM EQBALManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
P. R. LILAOONWALASecretary
Profit and Loss Account for the year ended 31st March, 20042003-2004 2002-2003
Schedules Rupees Rupees Rupees RupeesINCOME
Earnings from facilitation charges 1,350,810,856 1,431,452,983
Other Income I 897,545 7,706,803
1,351,708,401 1,439,159,786
EXPENDITURE
Operating Expenses J 114,139,807 125,923,087
Staff Expenses K 496,477 537,484
Administration & Other Expenses L 46,167,488 43,927,004
Interest M 220,851,701 288,276,930
Depreciation 274,911,382 271,673,981
656,566,855 730,338,486
Profit/(Loss) before Tax 695,141,546 708,821,300
Provision for current tax 53,439,005 55,819,677
Provision for deferred tax(net) 244,303,463 248,873,669
Profit/(Loss) after tax 397,399,078 404,127,954
Add/(Less): Balance brought forward from previous year 73,979,575 110,264,416
Profit available for appropriation 471,378,653 514,392,370
Less: Transferred to : General Reserve 39,739,908 40,412,795
Profit available for distribution 431,638,745 473,979,575
Preference dividend 91,800,000 91,800,000
Interim Equity dividend 278,500,000 308,200,000
Additional tax on dividend 47,444,688 -
Balance/(Deficit) carried to Balance Sheet 13,894,057 73,979,575
Accounting Policies & Notes to the Accounts N
Earning Per Share - Basic & Diluted (Rs.) 4.99 5.10
As per our report attached of even date
S.R. Batliboi & Co.Chartered Accountants
PER RAHUL ROYa Partner
Place : KolkataDate : 19th May, 2004
S. M. SHAMIM EQBALManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
P. R. LILAOONWALASecretary
HPL COGENERATION LIMITED
Cash Flow Statement for the year ended 31st March, 20042003-2004 2002-2003Rs. crore Rs. crore
A. Cash flow from Operating Activities:Net Profit before Taxation and extraordinary item 695,141,546 708,821,300Adjustments for:Depreciation 274,911,382 271,673,981Interest 220,851,701 288,276,930Miscellaneous Expenditure written off 799,791 799,791Operating Profit before Working Capital changes 1,191,704,420 1,269,572,002Adjustments for:(Increase)/Decrease in Trade and Other Receivables 42,551,855 107,543,628(Increase)/Decrease in Inventories (3,189,212) 2,844,807Increase/(Decrease) in Payables (12,269,606) (22,568,500)Cash generated from operations 1,218,797,457 1,357,391,937Direct Taxes paid 30,149,829 47,780,534(net of refund for earlier years Rs.19,344,164 (Rs.9,484,648))
Net Cash from Operating activities 1,188,647,628 1,309,611,403B. Cash Flow from Investing Activities
Purchase of Fixed Assets (124,862,842) (792,058)Realisation against discard of fixed assets 32,500,000 -Puchase of Investments (2,070,778,847) (1,438,400,000)(including Fixed Deposits when considerd as investments)
Disposal of investments 2,055,500,000 1,446,500,000Interest received 53,055,316 63,010,560Net Cash (used in)/ from Investing activities (54,586,373) 70,318,502
C. Cash Flow from Financing ActivitiesRepayment of Long Term Borrowings (525,760,983) (537,327,999)Dividend paid (370,300,000) (400,000,000)Additional Tax on Dividend - (19,351,440)Interest paid (288,242,389) (364,227,867)Net Cash (used in)/from Financing Activities (1,184,303,372) (1,320,907,306)Net(decrease)/Increase in cash & cash equivalents (A+B+C) (50,242,117) 59,022,599Cash & cash equivalents at the beginning of the year 98,443,733 39,421,134Cash & cash equivalents at the end of the year 48,201,616 98,443,733
Notes:
1. Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard - 3 issued by the Institute of CharteredAccountants of India.
2. Previous year’s figures have been regrouped / rearranged wherever necessary.
1. The above Term Loans are secured by equitable mortgage of all immovable properties of the company and by hypothecation of all its movableassets including book debts.
2. Out of the above Rs. 514,510,667 ( previous Rs.532,594,667 ) is due for repayment within 1 year.
HPL COGENERATION LIMITED
Schedules forming part of the accountsSchedule D- FIXED ASSETS
GROSS BLOCK DEPRECIATION NET BLOCKFixed Assets As at As at As at As At As at As at
Previous Year Total 5325200302 792058 39450665 5286541695 595164017 271673981 0 866837998
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees RupeesSchedule E - Investments
Current Investments (At lower of cost and market value)
20000000.000 no. of units of Rs.10.0000 each in JM Mutual Fund 200,000,000 -11901817.473 no. of units of Rs.14.2335 each in SBI Mutual Fund 169,404,519 -11885863.893 no. of units of Rs.15.4232 each in Reliance Mutual Fund 183,318,056 552,722,575 - -
552,722,575 -
As at As at31st March, 2004 31st March, 2003
Rupees Rupees Rupees RupeesSchedule F - Current Assets, Loans and Advances
Current Assets:
(a) Inventories:- Stores & Spare Parts 39,405,441 39,405,441 36,216,229 36,216,229
(b) Sundry Debtors:Unsecured, considered goodDebts outstanding for more than six months -Other Debts - - 46,515,257 46,515,257
(c) Cash and Bank Balances:Cash in Hand 17204 -With scheduled Banks on :- on Current accounts * 48,184,412 88,393,733- on Fixed Deposits 217,356,272 10,050,000(including Rs. 50,000 pledged with bank against letterof guarantee)Interest accrued on Fixed Deposits 120,184 265,678,072 13,092 98,456,825Loans and AdvancesUnsecured, considered good- Loans to employees 40,000 1,000- Advances recoverable in cash or in kind 101,853,214 105,064,320 or for value to be received- Insurance claim receivable 40,203,119- Intercorporate Deposits including accrued interest thereon - 142,096,333 755,452,055 860,517,375
447,179,846 1,041,705,686
* (including cheques in hand of Rs. 30,000,000 (previous Rs.50,000,000))
Term Loans 273,362,054 346,757,309Others - 2,839,206
273,362,054 - 349,596,515Less:
(1) Received on Inter-Corporate deposits, customers & others(tax deducted at source Rs.10,776,861 Previous year Rs.12,254,536 ) 52,510,353 61,319,585
220,851,701 288,276,930
Schedule N - ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES
I Significant Accounting Policies(a) Basis of Accounting
The Company maintains its accounts on accrual basis, following the historical cost convention, in compliance with the Accounting Standardsspecified to be mandatory by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, except forInsurance claims and Interest on delayed payments received from customer which are accounted for on cash basis except as stated elsewhere.
(b) Revenue RecognitionIn terms of the Power Agreement entered into with Haldia Petrochemicals Limited, facilitation earnings are recognised upon availability of facilitiesfor the generation of electricity and steam.
(c) Fixed AssetsFixed Assets are stated at the cost of acquisition, inclusive of duties, taxes, incidental expenses, erection/commissioning expenses and interestupto the date the asset is ready for intended use. Fixed assets are net off decapitalisation, if any, during the year valued at best estimates of valueof the assets at the time of decapitalisation.
(d) Depreciation(i) The classification of Plant & Machinery into continuous and non-continuous process is done as per technical certification and depreciation
thereon is provided accordingly.(ii) Depreciation is provided under straight line method at the rates prescribed in Schedule XIV of the Companies Act, 1956.(iii) Depreciation on Fixed Assets added/disposed off during the year is provided on pro-rata basis, with reference to the date of addition/disposal.
(e) InventoriesInventories of Stores and Spare parts are valued at weighted average cost or net realisable value whichever is lower.
(f) InvestmentsInvestments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investmentsare classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investmentbasis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary inthe value of the investments.
(g) Foreign Currency Transactions(i) Foreign currency transactions are recorded on the basis of exchange rates prevailing on the date of their occurrence.(ii) Foreign Currency Assets and Liabilities (other than those covered by Forward Contracts) as on the Balance Sheet date are revalued in the
accounts on the basis of exchange rates prevailing at the close of the year and exchange difference arising therefrom is adjusted to the costof Fixed Assets or charged to the Profit & Loss Account, as the case may be.
(h) Retirement BenefitsLiability for Leave encashment and Gratuity is provided for on the basis of actuarial valuation.
(i) Research & DevelopmentResearch & Development Expenditure of revenue nature are charged to Profit & Loss Account, while such expenditure of capital nature are addedto the cost of Fixed Assets in the year in which these are incurred.
(j) Miscellaneous ExpenditurePreliminary expenses are carried forward to be amortised over a period of 5 years from the date of commencement of commercial operations.Expenditure incurred prior to Commercial Operation date, not directly connected with the setting up of the Company’s plant at Haldia, is carriedforward under Deferred Revenue Expenditure to be amortised over a period of 5 years from the date of commencement of commercial operations.
(k) ContingenciesMaterial Potential Liabilities whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed byway of notes to the accounts.
(l) Taxes on IncomeTax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions ofthe Income Tax Act 1961, and based on expected outcome of assessments / appeals.Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the taxrates and laws enacted or substantively enacted as on the Balance Sheet date.Deferred tax assets are recognised and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.
(m) Borrowing CostBorrowing Costs that are not eligible for capitalisation under Accounting Policy I (c) are recognised as an expense in the period in which they areincurred.
(n) Segment ReportingThe Company is engaged in generation of Power & Steam for the captive consumption of Haldia Petrochemicals Limited which is the onlyBusiness and Geographical segment.
Schedules forming part of the accounts
HPL COGENERATION LIMITED
Schedule N (Contd...)
II Notes forming Part of Accounts1. Contingent Liability not provided for :
Claims against the Company not acknowledged as debts –(i) Subjudice claims against Customs Duty, with full recourse to Haldia Petrochemicals Limited Rs.257,049,919
in the event of any eventual payment. (previous year Rs.257,049,919)
(ii) The Company has received certain claims from Haldia Petrochemicals Limited (HPL) arising on account of delays in completion of the captivepower plant. The claims are being discussed between HPL, Larsen & Toubro Limited and the Company for a settlement. Based oncontractual documents, the Company does not expect to incur any significant liability on account of such claims. The maximum liquidateddamages that can be claimed as per the Contract is limited to Rs.36.90crores.
2. Leasehold land represents 16.29 acres given on lease by Haldia Petrochemicals Limited for twenty years at lease premium of Re.1.3. Exchange rate gain during the year of Rs. 97,253,683 (previous year gain of Rs.39,450,665) on the foreign currency Term Loan liability, incurred
for financing the Fixed asset has been adjusted against related Fixed Assets.4. Miscellaneous Expenses shown in Schedule L includes payment to auditors as follows:
(b) Total number of units consumed in Generating Stations.Steam Tons 707201 781990Power Kwhr 21198000 24341000
(c) Total number of units delivered to the system.Steam Tons 903284 824878Power Kwhr 499676000 446467000
(d) Total number of units imported from the GridPower Kwhr 21261000 15835800
7. The installed capacity of the Generating stations of the Company (as per certification of technical expert) is 116 MW (Previous year 116 MW). TheCompany has received approval u/s 18A of Electricity Supply Act, 1948 from Government of West Bengal, Department of Power to operate at 116MW.
8. Managerial Remuneration :Professional charges for reimbursement of emoluments paid to Manager by Larsen & Toubro Limited – Rs. 808,473 (previous year Rs.753,871).
9. Claims recoverable Rs.40,203,119 (previous year Nil) represents unpaid balance amount of insurance claim of Rs.72,703,119, lodged for damageof Plant & Machinery. In the absence of specific segregated asset value, the related asset has been decapitalised at the full claim amountconsidering that to be a fair estimate of the written down value of such assets.
10. The net Deferred Tax Liability amounting to Rs. 244,303,463 for the year has been charged to Profit & Loss Account.The Break-up of Deferred Tax Liability (net) at 31.03.2004 is as follows:
Deferred Tax Asset on unabsorbed depreciation has been recognised in view of virtual certainty of realising this asset against future taxableincome. Virtual certainty is evidenced by existence of a long term agreement with Haldia Petrochemicals Limited, for supply of power & steamgenerated by the Company, the proceeds of which are expected to result in sufficient future taxable income.
Schedules forming part of the accounts
Schedules forming part of the accounts10. A. Related Party relationships/transactions, warranting disclosures under AS-18 issued by Institute of Chartered Accountants of India are as
follows:Nature of Transaction Holding Company Subsidiaries/Associates Promoter Total
of Holding Co.Transaction Outstanding Transaction Outstanding Transaction Outstanding Transaction OutstandingValue Balance Value Balance Value Balance Value Balance
Purchase of spares 446,201 Dr. 1,034,225 Cr. 446,201 Dr. 1,034,225 Cr.2,881,296 Cr. (Previous year 2,881,296 Cr. (Previous year(Previous Year 982,203 Dr.) (Previous Year 982,203 Dr.)88240853 Dr. 88240853 Dr.
32,925,991Cr.)Interest Paid Nil Nil Nil Nil
(Previous Year (Previous Year (Previous Year (Previous28,39,206 ) Nil) 28,39,206) Year Nil )
Interest received on 21,628,871 Nil 30,542,464 Nil 52,171,335 NilInter Corporate Deposits (Previous Year (Previous Year (Previous Year (Previous Year (Previous Year (Previous Year
(Previous Year (Previous Year (Previous Year312,120,000) 299,880,000) 612,000,000)
Preference Share holding 205,120,000 299,880,000 505,000,000(Previous Year (Previous Year (Previous Year205,120,000) 299,880,000) 505,000,000)
Purchase of Fixed Asset 10,201,925 10,201,925 10,201,925 10,201,925(Previous Year (Previous Year (Previous Year (Previous YearNil) Nil) Nil) Nil)
Inter Corporate Deposits 1,300,700,000 Nil Nil Nil 1,300,700,000 NilGiven (Previous Year (Previous Year (Previous Year (Previous Year (Previous Year (Previous Year
1,801,300,000) 354,800,000) 400,000,000) 400,000,000) 2,201,300,000) 754,800,000)Inter Corporate Deposits 1,655,500,000 400,000,000 2,055,500,000Redeemed (Previous Year (Previous Year (Previous Year
1,446,500,000) Nil) 1,446,500,000)
Dividend – Equity Shares 142,035,000 136,465,000 278,500,000(Previous Year (Previous Year (Previous Year157,182,000) 151,018,000 ) 308,200,000 )
Dividend - Preference 46,818,000 44,982,000 91,800,000Shares (Previous Year (Previous Year (Previous Year
30,768,000) 44,982,000) 75,750,000)Manpower Deployment 1,805,108 Dr. 185,121 Cr. 1,805,108 Dr. 185,121 Cr.
2,787,918 Cr. (Previous Year 2,787,918 Cr. (Previous Year(Previous Year 759,742 Dr.) (Previous Year 797,689 Dr.)14,195,679 Dr. 12,453,408 Dr.13,435,937 Cr.) 11,655,719 Cr.)
Earnings from Facilitation 1,350,810,856 20,090,701 Cr. 1,350,810,856 20,090,701 Cr.charges. (Previous year (Previous Year (Previous year (Previous Year
1,431,452,983) 46,515,257 Dr.) 1,431,452,983) 46,515,257 Dr.)Administrative & 4,976,419 Dr. 1,884,519 Cr. 4,976,419 Dr. 1,884,519 Cr.Mgt. Expenses 4,682,233 Cr. (Previous Year 4,682,233 Cr. (Previous Year
(Previous Year 2,178,705 Cr.) (Previous Year 2,178,705 Cr.)3,042,556 Dr. 3,042,556 Dr.3,713,564 Cr.) 3,713,564 Cr.)
Lease Rent 59,843 Dr. 92867 Cr. 59,843 Dr. 92867 Cr.590,710 Cr. (Previous Year 590,710 Cr. Previous Year(Previous Year Nil) (Previous Year Nil)122,174,888 Dr. 122,174,888 Dr.122,147,888 Cr.) 122,147,888 Cr.)
Software Development Expenses Nil Nil Nil Nil(Previous Year (Previous Year (Previous Year (Previous Year829,000) 829,000) 829,000) 829,000)
10.B. Related Party Disclosure :Nature of Relationship Name
(i) Holding Company Larsen & Toubro Limited(ii) Promoter Haldia Petrochemicals Limited(iii) Subsidiaries of Holding Company L&T Finance Limited
Larsen & Toubro Infotech Limited(iv) Associates of Holding Company Nil
HPL COGENERATION LIMITED
Schedules forming part of the accounts
11. Mutual Funds (Refer Schedule – E) includes Rs.552,722,575 (Rs.Nil) held for debt servicing requirements of the lenders. Bank balances includesRs.217,306,272 (Rs.Nil) in designated accounts for the same purpose.
12. The Company has only one Business Segment viz., generation of power & steam, and only one Geographical Segment viz., India. As such, noseparate segment information has been furnished in the accounts.
13. O&M expenses includes Rs.3,420,986 ( previous Rs. Nil) pertaining to last year.
14. The Company has been informed vide letter dated March 18, 2004 by HDFC Bank, preference shareholders, that they have sold their entirepreference shareholding in the Company, to Larsen & Toubro Limited in the month of March, 2004. However, legal transfer of such shares in thename of Larsen & Toubro Limited is still pending. Pending such transfer of legal title, these shares have not been shown to be held by Larsen &Toubro Limited in the accounts. Interim dividend on such shares have been paid to Larsen & Toubro Limited in terms of direction from HDFCLimited in the above captioned letter.
15. Earnings Per Share (EPS)
2003-04 2002-03
Profit as per Profit & Loss Account 397,399,078 404,127,954
Weighted Average Number of Equity Shares 61,200,000 61,200,000
Basic & Diluted Earning Per Share (Rs.) 4.99 5.10
Nominal Value of Shares (Rs.) 10.00 10.00
16. Previous year figures have been regrouped & rearranged wherever necessary.
As per our report attached of even date
S.R. Batliboi & Co.Chartered Accountants
PER RAHUL ROYa Partner
Place : KolkataDate : 19th May, 2004
S. M. SHAMIM EQBALManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
P. R. LILAOONWALASecretary
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I Registration Details
Registration No. 2 1 8 3 4 3 4 State Code 2 1
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. )
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Rupees)Total Liabilities Total Assets
Earnings Per Share in Rs. Dividend Rate %R s. 4 -. 9 9 4 6
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N I L.(ITC Code)Product Description P O W E R & S T E A M
Place : KolkataDate : 19th May, 2004
S. M. SHAMIM EQBALManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
P. R. LILAOONWALASecretary
BHILAI POWER SUPPLY COMPANY LIMITED
Directors' ReportThe Directors have pleasure in presenting the Ninth Annual Report along with the Accounts for the year ended 31st March, 2004.
FINANCE
During the period under review, the Company did not carry out any commercial activities and accordingly no Profit and Loss Accounthas been prepared.
OPERATIONS
Pursuant to the Order passed by the Hon’ble Supreme Court (SC) the Company had filed a demand letter with Madhya Pradesh ElectricityBoard (MPEB) for obtaining the refund of security deposit from MPEB. MPEB responded that the Company should approach ChattisgarhState Electricity Board (CSEB) since their liability was allocated to CSEB as per an Order passed by the Ministry of Power, Governmentof India under Sec.58(4) of the Madhya Pradesh Reorganization Act, 2000.
The Company approached the SC for further directions in relation to its orders for refund. MPEB also filed a petition in the SC to modifythe aforesaid SC Orders based on Government of India Order (re: allocation of liabilities of MPEB between MPSEB & CSEB).
Subsequently, the Company filed Execution Proceedings against MPEB for non-payment of security deposit before the District Court atJabalpur who has referred the matter to the High Court for giving guidance on the issue relating to execution of the Orders passed bythe SC. The hearing for the above mentioned case has been completed and the Judgement is awaited.
CAPITAL EXPENDITURE
During the period under review, the Company did not incur any capital expenditure.
FIXED DEPOSITS
During the year under review, the Company did not accept any deposits from the public.
AUDITORS’ REPORT
The notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments ofDirectors.
DISCLOSURE OF PARTICULARS
As the Company could not commence commercial operations, there are no particulars to be disclosed as per Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988.
PARTICULARS OF EMPLOYEES
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particularsof Employees) Rules, 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been nomaterial departure;
ii. that the selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr. A. M. Naik resigned from the Board of Directors of the Company with effect from 21st November 2003. The Directors record theirappreciation of the valuable services rendered by Mr. Naik.
Mr.V. K. Magapu retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
AUDITORS
The Auditors, M/s. Sharp and Tannan retire at the ensuing Annual General Meeting and are eligible for re-appointment.
For and on behalf of the Board
K. VENKATARAMANAN V. K. MAGAPU
Place : Mumbai DirectorsDated : 8th May, 2004
BHILAI POWER SUPPLY COMPANY LIMITED
Auditors’ Report
We have audited the attached Balance Sheet of Bhilai Power Supply Company Limited as at 31st March 2004. No Profit and Loss Account has beenprepared for the year ended 31st March, 2004 for the reason referred to in Note No.1 on Schedule E to the accounts. These financial statements arethe 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 theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides 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 (CARO) issued by the Central Government of India in terms of sub-section (4A)of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the 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 ofour 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 ofthose books;
c) the Balance Sheet dealt with by this report is in agreement with the books of account;
d) in our opinion, the Balance Sheet dealt by this report complies with the Accounting Standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31st March, 2004 and taken on record by the Board of Directors,we report that none of the directors is disqualified as on 31st March, 2004 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
f) in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet, read together withthe significant accounting policies in Schedule D, note 4 regarding termination notice received from Steel Authority of India Limited, note 5with respect to the interest on security deposit with Madhya Pradesh Electricity Board and the other notes appearing in Schedule E, givethe information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India in the case of the Balance Sheet, of the state of affairs of the company as at 31st March,2004.
SHARP & TANNANChartered Accountants
By the hand of
PAVAN K. AGGARWALPlace : New Delhi PartnerDate : 11th May 2004 Membership No.: 91466
BHILAI POWER SUPPLY COMPANY LIMITED
Annexure to the Auditors’ Report(Referred in paragraph (1) of our report of even date)
1. The company has not yet acquired any fixed assets.
2. As informed to us, the company has not taken or granted any loan, secured or unsecured, to/from companies, firms or other parties covered inthe register required to be maintained under section 301 of the Companies Act, 1956.
3. To the best of our knowledge and as explained there was no transaction exceeding the value of Rs. 5,00,000/- that need to be entered into theregister required to be maintained under section 301.
4. According to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning ofsection 58A of the Companies Act, 1956.
5. According to the records produced to us the company is generally regular in depositing undisputed statutory dues like Income Tax. Since thecompany had not employed any employee during the year the question of P.F./ESI did not arise. Sales tax, custom duty, excise duty cess andother statutory dues are not applicable to the company during the year. According to the information and explanations given to us, no disputedamounts payable in respect of income tax were outstanding at the year end for a period of more than six months from the date they becamepayable.
6. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company hasnot availed any credit facilities from any bank/financial institution.
7. According to the information and explanations given to us and based on the documents and records produced to us, the company has notgranted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
8. In our opinion and according to the information and explanations given to us, the nature of activities of the company does not attract any specialstatute applicable to chit fund and nidhi/mutual benefit fund/Societies.
9. To the best of our knowledge and as explained the company is not dealing/ trading in securities and other investments.
10. According to the information and explanations given to us, the company has not given any guarantee for loans taken by associates and others,from bank or financial institutions.
11. To the best of our knowledge and as explained the company has not availed of any term loan during the year.
12. To the best of our knowledge and as explained the company has not raised any fund for long term or short term during the year.
13. The company has not made any preferential allotment of shares to parties or companies covered in the register required to be maintained undersection 301 of the Companies Act, 1956.
14. To the best of our knowledge and as explained the company has not issued any Debentures.
15. To the best of our knowledge and as explained the company has not raised any money through a public issue during the year.
16. Based upon the audit procedures performed by us for expressing our opinion of these financial statements and information and explanationsgiven by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.
17. Other clauses of the order are not applicable for the current year.
SHARP & TANNANChartered Accountants
By the hand of
PAVAN K. AGGARWALPlace : New Delhi PartnerDate : 11th May 2004 Membership No.: 91466
As at 31-3-2004 As at 31-3-2003
SOURCES OF FUNDS Schedules (Rupees) (Rupees)
SHAREHOLDERS FUNDS:
Share Capital A 5,00,000 5,00,000
LOAN FUNDS
Unsecured Loans B 82,22,51,852 77,97,75,990
TOTAL 82,27,51,852 78,02,75,990
APPLICATION OF FUNDS
CURRENT ASSETS, LOANS AND ADVANCES :
Bank Balances :
On current account with Standard Chartered Bank 97,000 1,01,000
On current account with State Bank of India 9,500 Nil
Security Deposit with Madhya Pradesh Electricity Board 82,22,51,852 77,97,75,990
Interest accrued but not due on Security Deposit 43,75,234 47,00,020
TOTAL 82,67,33,586 78,45,77,010
Less : CURRENT LIABILITIES AND PROVISIONS:
Sundry Creditors-Others 8,07,474 4,71,522
Advances from promoters:
Larsen and Toubro Limited —- 12,10,66,154
PSEG Bhilai Energy Company Limited, Mauritius —- 11,84,58,461
Steel Authority of India Limited 11,96,014 11,96,014
Other Liabilities 82,08,922 96,75,282
Interest accrued but not due on loans 43,75,234 47,00,020
TOTAL 1,45,87,644 25,55,67,453
Net Current Assets 81,21,45,942 52,90,09,557
MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)
Preliminary expenses and Pre-operative Expenses C 1,06,05,910 25,12,66,433
TOTAL 82,27,51,852 78,02,75,990
Significant Accounting Policies D
Notes forming part of accounts E
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
PAVAN K. AGGARWALPartnerMembership No. 91466
Place : New DelhiDate : 11th May, 2004
For and on behalf of the Board
K. VENKATARAMANAN
V. K. MAGAPU
Place : Mumbai
Date : 8th May, 2004
Directors}
BHILAI POWER SUPPLY COMPANY LIMITED
Schedules forming part of accountsAs at 31-3-2004 As at 31-3-2003
(Rupees) (Rupees)
SCHEDULE - A
SHARE CAPITAL
Authorised
100 preference shares of Rs. 10/- each 1,000 1,000
50,00,000 Equity shares of Rs. 10/- each 5,00,00,000 5,00,00,000
TOTAL 5,00,01,000 5,00,01,000
Issued, Subscribed and Paid up
50,000 Equity shares of Rs. 10/- each 5,00,000 5,00,000
(99.9% of the above equity shares (same as previous year)are held by Larsen & Toubro Limited, the holding company) 5,00,000 5,00,000
SCHEDULE - B
UNSECURED LOANS
(a) Larsen & Toubro Limited :
i) Principal Amount 52,55,40,000 52,55,40,000
ii) Interest accrued 25,55,99,259 21,52,47,191
Sub-Total 78,11,39,259 74,07,87,191
(b) Steel Authority of India Limited
i) Principal Amount 2,76,60,000 2,76,60,000
ii) Interest accrued 1,34,52,593 1,13,28,799
Sub-Total 4,11,12,593 3,89,88,799
TOTAL of (a) + (b) 82,22,51,852 77,97,75,990
Schedules forming part of accountsUpto 31-3-2003 2003-2004 As at 31-3-2004
(Rupees) (Rupees) (Rupees)SCHEDULE - C
PRELIMINARY AND PRE-OPERATIVE EXPENSES
PRELIMINARY EXPENSES
Stamp Duty for MOA/AOA 120 Nil 120
Registration Charges 1,58,580 Nil 1,58,580
Miscellaneous 1,750 Nil 1,750
Total - A 1,60,450 Nil 1,60,450
PRE-OPERATIVE EXPENSES
(Project Development Expenses)
Travelling and Conveyance 1,60,96,369 Nil 1,60,96,369
Printing and Stationery 4,63,723 Nil 4,63,723
Telephone and Telex 11,80,091 Nil 11,80,091
Advertisement and Business Promotion 17,38,247 Nil 17,38,247
Entertainment 12,66,158 Nil 12,66,158
Professional Fees 20,05,33,833 12,70,190 20,18,04,023
Commitment Charges 2,41,08,700 Nil 2,41,08,700
Rent, Rates and Taxes 12,15,727 3,500 12,19,227
Repairs and Maintenance 23,36,467 Nil 23,36,467
Auditors’ Remuneration 2,81,510 79,225 3,60,735
Sundry Expenses 18,85,158 41,452 19,26,610
Total - B 25,11,05,983 13,94,367 25,25,00,350
SUB-TOTAL (A + B) 25,12,66,433 13,94,367 25,26,60,800
(b) PSEG Bhilai Energy Company Limited —- 11,84,58,461 11,84,58,461
Total - C 24,20,54,890 24,20,54,890
TOTAL : (A + B) – C 25,12,66,433 (24,06,60,523) 1,06,05,910
BHILAI POWER SUPPLY COMPANY LIMITED
Schedules forming part of accountsSCHEDULE - D
Significant Accounting Policies
1. Method of Accounting
The company maintains its accounts on accrual basis.
2. Foreign Currencies
Actual foreign currency expenditure is booked at the exchange rate prevailing on the date of the transaction. Outstanding foreign currencyliabilities are translated at exchange rate prevailing at the year end. The exchange variations, if any, arising out of such transactions is adjustedin pre-operative expenditure.
SCHEDULE - E
Notes forming part of accounts
1. As there were no commercial activities during the year, no profit and loss account has been prepared. All the expenditure incurred by thecompany have been carried forward as pre-operative expenses.
2003-04 2002-03
2. Expenditure in foreign currency :- Nil Nil
3. Auditors’ Remuneration (excluding Service Tax) and expenses charged to the accounts includes:-
2003-04 2002-03
Audit Fee Rs. 20000 Rs. 20000
Tax Audit Fee Rs. 5000 Rs. 5000
Other Services Rs. 50000 Rs. 35900
Reimbursement of expenses Rs. 4225 Rs. 13620
4. The Board of Directors of the company in their meeting held on the 29th June 2000, has not accepted the notice of termination of 25th May2000 given to them by Steel Authority of India Ltd. The treatment in the accounts for SAIL’s share as a continuing partner for the year endedon 31st March 2004 is given accordingly as in past.
5. No confirmation has been received from MPEB for the Security Deposit including interest thereon kept by the Company with them as on 31st
March 2004. However the interest on Security Deposit has been computed in the accounts as per the rates given by SBI on six monthly restbasis.
The Hon’ble Supreme Court has directed Madhya Pradesh Electricity Board to pay a sum of Rs.55.32 crores (deposited as security depositequal to an amount of 2% of the project cost on 20.08.1998) to the company along with interest at the rate charged by the State Bank of Indiafor fixed deposits in 12 equal monthly instalments commencing from 1st March, 2003. Inspite of serving repeated demand notices on MPEB,refund of money has not been made. The company filed a petition in District Court at Jabalpur for execution of the Supreme Court Order. TheHon’ble District Judge, Jabalpur had however referred the matter to the Hon’ble High Court, Jabalpur.
6. The company has been continuing the dialogue with Chhattisgarh Government Authorities to explore the possibilities of obtaining a paymentsecurity mechanism for the Bhilai Power Project to achieve the financial closure. The Management based on its business plan, also expects tostart study on the development of other power projects and related activities to achieve positive results in the forthcoming years. In view of theabove, these financial statements are continued to be prepared on a ”Going Concern Basis”.
7. Larsen & Toubro Limited, the Holding Company entered into an agreement with PSEG Bhilai Energy Company Limited to acquire their shareholding(45 Equity Shares of Rs.10/- each) in the Company and made an application to Reserve Bank of India for their approval, which is still pending.
8. Disclosure of related parties / related party transactions
a) Name of the related party Relationship
Larsen & Toubro Limited Holding Company
b) Name of the related parties with whom transaction were carried out
during the year and description of relationship
Larsen & Toubro Limited Holding Company
c) Disclosure of related party transactions
Transactions/Nature of relationship
Transaction Relationship Value of transaction(Rs./lacs)
Interest accrued Holding company 400.44(460.73)
Reduction in liability Holding Company 1235.96(Nil)
d) Amount due to related parties
Transaction Relationship Amount Due
i) Unsecured loan Holding Company 7811.39(7407.87)
ii) Interest accrued but not due on loans Holding Company 41.56(44.65)
iii) Accounts payable Holding Company Nil(1210.66)
Note : Figures in brackets relate to previous year
9. Previous year’s figures have been regrouped wherever necessary to conform to figures of the current year.
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
PAVAN K. AGGARWALPartnerMembership No. 91466
Place : New DelhiDate : 11th May, 2004
For and on behalf of the Board
K. VENKATARAMANAN
V. K. MAGAPU
Place : Mumbai
Date : 8th May, 2004
Directors}
BHILAI POWER SUPPLY COMPANY LIMITED
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Notes forming part of accounts (Contd.)
I Registration Details
Registration No. 5 5 0 7 0 7 0 4 State Code 5 5
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year (Amount in Rs. Thousands)
Public Issue Rights IssueN I L N I L
Bonus Issue Private PlacementN I L N I L
III Position of Mobilisation and Deployment of funds (Amount in Thousands)Total Liabilities Total Assets
8 2 2 7 5 2 8 2 2 7 5 2Sources of Funds Paid-up Capital Reserves & Surplus
5 0 0 N I LSecured Loans Unsecured Loans
N I L 8 2 2 2 5 2Application of Funds
Net Fixed Asets InvestmentsN I L N I L
Net Current Assets Misc. Expenditure8 1 2 1 4 6 1 0 6 0 6
Accumulated LosesN I L
IV Performance of Company (Amount in Rs. Thousands)Turnover (including other income) Total Expenditure
N I L N I L
+ - Profit/Loss Before Tax + - Profit/Loss After TaxN I L N I L
Earnings Per Share in Rs. Dividend Rate %N / A N / A
V Generic Names of Three Principal Products/Services of the Company
(as per monetary terms) N o a c t i v i t i e s d u r i n g t h e y e a r
Please tick apprepriate Box + for profit/ -for loss
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
PAVAN K. AGGARWALPartnerMembership No. 91466
Place : New DelhiDate : 11th May, 2004
For and on behalf of the Board
K. VENKATARAMANAN
V. K. MAGAPU
Place : Mumbai
Date : 8th May, 2004
Directors}
Directors' ReportYour Directors present the Annual Report and Balance Sheet for the year ended 31st March 2004.
FINANCIAL RESULTS
During the year under review, the Company did not carry on any business activities and accordingly no Profit and Loss Account has been prepared.
FINANCE
During the year under review, the authorised capital of the Company increased from Rs.10 lakh to Rs.22 crore.
CAPITAL EXPENDITURE
During the period under review, the Company did not incur any capital expenditure.
SUBSIDIARY
As required by Section 212 of the Companies Act, 1956, the Audited Statement of Accounts, the Reports of the Board of Directors and Auditors ofRaykal Aluminium Company Private Limited are annexed.
AUDITORS’ REPORT
The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
The Company did not carry on business activities and hence there are no particulars to be disclosed as per Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988.
PARTICULARS OF EMPLOYEES
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
I. that in the preparation of the annual accounts, the accounting standards have been followed to the extent applicable and there has been nomaterial departure;
II. that the selected accounting policies were applied consistently and the directors made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2004;
III. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies 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.
DIRECTORS
Mr. N. Sivaraman is liable to retire by rotation and is eligible for re-appointment.
AUDITORS
The Auditors, M/s. Sharp & Tannan, Chartered Accountants, retire at the Annual General Meeting and are eligible for re-appointment.
For and on behalf of the Board
S. V. SUBRAMANIAN N. SIVARAMANDirectors
Place: MumbaiDate: 8th May, 2004
L&T POWER INVESTMENTS PRIVATE LIMITED
L&T POWER INVESTMENTS PRIVATE LIMITED
Auditors' Report
TO THE SHAREHOLDERS OF L&T POWER INVESTMENTS PRIVATE LIMITED
We have audited the attached Balance Sheet of L&T Power Investments Private Limited as at 31st March, 2004. No Profit and Loss Account hasbeen prepared as the Company has not carried out any activities. 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 theaudit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
1. As the Company satisfies all the conditions mentioned in paragraph 2 (iv) of Companies (Auditor’s Report) Order, 2003, issued by the CentralGovernment of India in terms of section 227(4A) of the Companies Act, 1956, reporting under the said order is not required.
2. Further to our comments in paragraph 1 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 ofour 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 ofthose books;
(c) the balance sheet dealt with by this report is in agreement with the books of account;
(d) in our opinion, the balance sheet dealt with by this report complies with the accounting standards referred to in Section 211(3C) of theCompanies Act, 1956, to the extent applicable;
(e) on the basis of written representations received from the directors as on 31st March, 2004, and taken on record by the Board of Directors,we report that none of the directors is disqualified as on 31st March, 2004 from being appointed as a director in terms of Section 274(1)(g)of the Companies Act, 1956; and
(f) in our opinion and to the best of our information and according to the explanations given to us, the said balance sheet read together withthe significant accounting policies appearing in Schedule 'F' and other notes appearing in Schedule 'G' gives the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India , of the state of Company’s affairs as at 31st March, 2004.
SHARP & TANNA NChartered Accountants
by the hand of
R.D. KAREPartner
Place : Mumbai, Membership No. 008820
Date : 8th May, 2004
As at 31-3-2004 As at 31-3-2003 Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:
Shareholders’ Funds:
Share Capital A 6,00,000 6,00,000
Reserves and surplus
Total 6,00,000 6,00,000
APPLICATION OF FUNDS:
Fixed Assets - -
Investments B 93,00,000 5,00,000
Current Assets, loans and advances C 2,77,632 99,800
Less: Current liabilities and provisions D 1,06,42,110 20,031
Net current assets (1,03,64,478) 79,769
Miscellaneous expenditure E 16,64,478 20,231(to the extent not written-off or adjusted)
Total 6,00,000 6,00,000
Significant Accounting Policies F
Notes forming part of Accounts G
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountantsby the hand of
R.D. KAREPartner
Place : MumbaiDate : 8th May, 2004
N. SIVARAMANS.V. SUBRAMANIAN
Place : MumbaiDate : 8th May, 2004
For and on behalf of the Board
Directors
L&T POWER INVESTMENTS PRIVATE LIMITED
Schedules f orming part of accounts:
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE ‘A’ - SHARE CAPITALAuthorised:22,000,000 Equity shares of Rs.10 each 22,00,00,000 10,00,000
(Previous year - 100,000 Equity shares of Rs.10 each)Issued and Subscribed:60,000 Equity shares of Rs. 10 each fully paid 6,00,000 6,00,000(All the shares are held by Larsen & Toubro Limited,
the holding Company and its nominees)
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE ‘ B’ - INVESTMENTSLong Term Investments at cost:
Subsidiary companies:
Fully paid equity shares:
Raykal Aluminium Company Private Limited
50,000 shares of Rs. 10/- each 5,00,000 5,00,000Current Investments at cost:
Mutual Funds:
Deutsche Insta Cash Plus Fund - Growth Plan 88,00,000 - 836,303.160 Units of Rs.10 each 93,00,000 500,000 (purchased during the year)
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SCHEDULE ‘ C’ - CURRENT ASSETS, LOANS AND PROVISIONSCash and Bank balances:
Cash in hand - -Balances with scheduled banks:
On current account with Bank of India 83,632 95,800Loans and advances:Unsecured:
Considered good:
Subsidiary company 9,500 4,000Advances recoverable in cash or in kind 184,500 -
277,632 99,800
As at 31-3-2004 As at 31-3-2003
Rupees Rupees Rupees Rupees
SCHEDULE ‘ D’ - CURRENT LIABILITIES AND PROVISIONSLiabilities:
The Accounts have been prepared using historical cost convention and on going concern basis, in accordance with generally accepted accountingprinciples and in compliance with Accounting Standard referred to in Section 211(3C) and other requirements of the Companies Act, 1956.
2. Miscellaneous Expenditure ( to the extent not written off or adjusted)
Expenditure incurred under this head is being amortised over a period of ten years, commencing from the year in which the Company hascommenced operations.
Schedule G - NOTES FORMING PART OF ACCOUNTS
1. Contingent liabilities not provided for Rs. NIL.
2. No Profit and Loss Account has been prepared, as the Company did not carry out any activity during the year.
3. Previous year's figures have been regrouped wherever necessary.
4. Additional information required to be disclosed under Part II to Schedule VI of the Companies Act, 1956, is not presently applicable to theCompany.
L&T POWER INVESTMENTS PRIVATE LIMITED
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)Total AssetsTotal Liabilities
Sources of Funds
Application of Funds
Paid-up Capital Reserves & Surplus
Secured Loans Unsecured Loans
InvestmentNet Fixed Assets
Net Current Assets Misc. Expenditure
IV. PERFORMANCE OF COMPANY (AMOUNT IN RS. THOUSANDS)Turnover Total Expenditure
Profit / Loss Before Tax Profit / Loss After Tax
6 0 0
Earning Per Share (in Rs.) Dividend Rate (%)
A N AN
N I L
6 0 06 0 0
N I L N I L
N I L 9 3 0 0
1 6 6 4
N I L N I L
N I L N I L
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCT/SERVICES OF THE COMPANY (as per monetary terms)
Accumulated Losses
(-) 1 0 3 6 4
No activities during the year
5. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. REGISTRATION DETAILS
Registration No.
Balance Sheet Date
Public Issue Rights Issue
0 3 2 0
1 11 1 2 5 6
3 1
Date Month Year
Private PlacementBonus Issue
N I L
0 4
II. CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. THOUSANDS)
State Code
N I L
N I L
N I L
1 - 5 2
+ - + -
Please tick appropriate box + for Profit - for Loss
N I L
As per our report attached
SHARP & TANNANChartered Accountantsby the hand of
R.D. KAREPartner
Place : MumbaiDate : 8th May, 2004
N. SIVARAMANS.V. SUBRAMANIAN
Place : MumbaiDate : 8th May, 2004
For and on behalf of the Board
Directors
Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies
Name of the subsidiary company Raykal Aluminium Company Private Limited
Financial of the subsidiary ended on 31st March, 2004
Number of shares of the Subsidiary Companyheld by L&T Power Investments Private Limited 50,000and/or its nominee at the above date.
The net aggregate of profits/ (losses), of the SubsidiaryCompany so far as it concerns the members of L&T PowerInvestments Private Limited:
(i) Dealt with in the accounts of L&T Power InvestmentsPrivate Limited amounted to:
a) for the subsidiary’s financial year ended 31-3-2004 Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T PowerInvestments Private Limited Nil
(ii) Not dealt with in the accounts of L&T Power InvestmentsPrivate Limited amounted to:
a) for the subsidiary’s financial year ended 31-3-2004 Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T PowerInvestments Private Limited Nil
For and on behalf of the Board
S. V. SUBRAMANIAN N. SIVARAMANDirectors
Place: MumbaiDate: 8th May, 2004
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
Directors' ReportYour Directors present the Annual Report and Balance Sheet for the year ended 31st March 2004.
FINANCIAL RESULTS
During the year under review, the Company did not carry on any business activities and accordingly no Profit and Loss Account has been prepared.
CAPITAL EXPENDITURE
During the period under review, the Company did not incur any capital expenditure.
AUDITORS’ REPORT
The notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
The Company did not carry on business activities and hence there are no particulars to be disclosed as per Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988.
PARTICULARS OF EMPLOYEES
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees)Rules, 1975.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms:
I. that in the preparation of the annual accounts, the accounting standards have been followed to the extent applicable and there has been no materialdeparture;
II. that the selected accounting policies were applied consistently and the directors made judgements and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 31, 2004;
III. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Com-panies 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.
AUDITORS
The Directors recommend that M/s Sharp & Tannan, Chartered Accountants be appointed as the Statutory Auditors of the Company at the forthcomingAnnual General Meeting of the Company to hold office till the conclusion of the tenth Annual General Meeting of the Company.
For and on behalf of the Board
V. K. MAGAPU A. K. CHHATWANIDirectors
Place : MumbaiDate : 8th May, 2004
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
Auditors' Report of the Shareholders
We have audited the attached Balance Sheet of Raykal Aluminium Company Private Limited as at 31st March,2004. No Profit and Loss Account hasbeen prepared as the Company has not carried out any activities. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.
1. As the Company satisfies all the conditions mentioned in paragraph 2 (iv) of Companies (Auditor’s Report) Order, 2003 issued by the CentralGovernment of India in terms of Section 227(4A) of the Companies Act, 1956, reporting under the said Order is not required.
2. Further to our comments in paragraph 1 above, we report that :
(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of thosebooks;
(c) the balance sheet dealt with by this report is in agreement with the books of account;
(d) in our opinion, the balance sheet dealt with by this report complies with the accounting standards referred to in Section 211(3C) of the CompaniesAct, 1956, to the extent applicable;
(e) on the basis of written representations received from the directors as on 31st March, 2004, and taken on record by the Board of Directors, wereport that none of the directors is disqualified as on 31st March, 2004 from being appointed as a director in terms of Section 274(1)(g) of theCompanies Act, 1956; and
(f) in our opinion and to the best of our information and according to the explanations given to us, the said balance sheet read together with thenotes thereon, gives the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of Company’s affairs as at 31st March, 2004.
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Place : Mumbai, Membership No. 008820
Date : 8th May, 2004
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
As at 31-3-2004 As at 31-3-2003Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:Shareholders’ Funds:
Share Capital
Authorised
1,00,000 Equity Shares of Rs.10 each 1,000,000 1,000,000Issued, Subscribed & Paid up
50,000 Equity Shares of Rs.10 each fully paid-up 500,000 500,000 (All the shares are held by L&T Power Investments
Private Limited)
Unsecured LoanLoan from Directors 28,800 28,800
Total 528,800 528,800APPLICATION OF FUNDS:
Current Assets, Loans and Advances
Cash and bank balances:
Cash in hand - -Balance with Scheduled bank in Current Account 3,700 499,800
3,700 499,800Loans and Advances
Unsecured and considered good
Advances recoverable in cash or in kind
Loan given to holding company L&T including interest accrued 527,041 -530,741 499,800
In terms of our report of even date attached herewith
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Place : MumbaiDate : 8th May, 2004
A. K. CHHATWANIV. K. MAGAPU
For and on behalf of the Board
Directors
Place : MumbaiDate : 8th May, 2004
Notes f orming part of accounts1. The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting
principles (“GAAP”) and in compliance with the accounting standards referred to in Section 211 (3C) and other requirements of the Companies Act,1956.
2. As the Company has not yet started commercial operations, no Profit & Loss Account has been prepared.
Rupees
3. Preliminary & pre-operative expenses include :
Preliminary Expenses 13,320
Profit & Loss account (Opening Debit balance) 21,680
35,000
Add : Expenses during the year
ROC fees 2,900
Audit Fees 160
Other Expenses 5,751
8,811
Less: Income during the year
Interest accrued but not due on ICD with L&T 27,041
Add: Provision for tax on interest accrued 9,701
TOTAL 26,471
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)Total AssetsTotal Liabilities
Sources of Funds
Application of Funds
Paid-up Capital Reserves & Surplus
Secured Loans Unsecured Loans
InvestmentNet Fixed Assets
Net Current Assets Misc. Expenditure
IV. PERFORMANCE OF COMPANY (AMOUNT IN RS. THOUSANDS)
Turnover Total Expenditure
Profit / Loss Before Tax Profit / Loss After Tax
5 0 0
Earning Per Share (in Rs.) Dividend Rate (%)
A N AN
N I L
5 2 95 2 9
N I L 2 9
N I L N I L
5 0 2 2 7
N I L N I L
N I L N I L
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCT/SERVICES OF THE COMPANY (as per monetary terms)
Accumulated Losses
N I L
No activities during the year
4. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. REGISTRATION DETAILS
Registration No.
Balance Sheet Date
Public Issue Rights Issue
0 3 2 0
1 55 0 5 6 7
3 1
Date Month Year
Private PlacementBonus Issue
N I L
0 4
II. CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS. THOUSANDS)
State Code
N I L
N I L
N I L
1 - 3
+ -+ -
Please tick appropriate box + for profit, - for loss
In terms of our report of even date attached herewith
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Place : MumbaiDate : 8th May, 2004
A. K. CHHATWANIV. K. MAGAPU
For and on behalf of the Board
Directors
Place : MumbaiDate : 8th May, 2004
Directors' ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March, 2004.
1. FINANCIAL RESULTS
Year ended Year ended31-03-2004 31-03-2003(Rs.lakhs) (Rs.lakhs)
Gross Income 6392.60 6799.39Profit before depreciation 2847.80 2555.49
Depreciation 2413.03 2574.79Profit/(Loss) before tax 434.77 (19.30)Less : Provision for taxation
- Current year 35.00 NilProfit/(Loss) after taxation 399.77 (19.30)Add : Deferred tax liability for prior Nil 2477.39
Years written back
Add : Debit balance brought forward (1462.44) (3920.53)From previous years
Loss carried forward to Balance Sheet (1062.67) (1462.44)
2. DIVIDEND
The Directors do not recommend payment of any dividend for the year.
3. YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY
The company was formed to provide 2 X 45 MW captive cogeneration plant on lease to Indian Petrochemicals Corporation Limited at Gandhar. Thelease rentals are received in time. During the year ended 31st March, 2004 the Company registered a total income of Rs.64 Crs, profit before tax ofRs.4.35 Crs and profit after tax of Rs.4.00 Crs.
4. DEPOSITS
During the period under review the Company has not accepted any deposits from the public.
5. AUDITORS' REPORT
As regards Auditors' comment vide para 2(d) of the Auditors' Report in respect of Accounting for Taxes on Income, the Company has relied on theinterim injunction dated 6th December, 2001 restraining the Institute of Chartered Accountants of India from implementing the Accounting Standard- 22, "Accounting for Taxes on Income" with reference to Non-Banking Finance Companies, issued by the High of Judicature at Chennai. A note tothis effect is attached to the Notes forming part of the Accounts. (Refer Schedule No. 8, Note No. 5)
There are no other qualifications in the Auditors' Report to the Shareholders.
The notes to the accounts referred to in the Auditors' Report are self explanatory and therefore do not call for any further comments of Directors.
6. DISCLOSURE OF PARTICULARS
As the Company is engaged in leasing activities, there are no particulars to be disclosed as per the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988.
7. OTHER DISCLOSURES
Pursuant to Clause 34 of the NSE (Debt market segment) Listing Agreement, a report on Corporate Governance is given in Annexure 'A'.
8. PERSONNEL
There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules,1975.
9. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
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 judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Company for theyear ended on that date;
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
III. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
IV. that the annual accounts have been prepared on a going concern basis.
10. DIRECTORS
Mr.N.Sivaraman retires from the Board of Directors and is eligible for re-appointment.
11. AUDIT COMMITTEE
The Audit Committee consists of three non executive directors. The present members of the Committee are Mr.K.Venkataramanan, Mr.V.K.Magapuand Mr.N.Sivaraman. Mr.K.Venkataramanan is the Chairman of the Committee.
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956.
The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report.
12. AUDITORS
The Auditors, M/s.Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section224(1B) of the Companies Act, 1956.
Pursuant to the Non-Banking Financial Companies Auditors' Report (Reserve bank) Directions, 1998, a report from the statutory auditors to theBoard of Directors has been received by your Company. This report has certified that the Company has complied with all the Directions and PrudentialNorms as prescribed under the Reserve Bank of India Act, 1934.
14. ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, and the customers.
For and on behalf of the Board
K. VENKATARAMANAN V. K. MAGAPU N. SIVARAMANDirector Director Director
Place : Mumbai
Date : 30th April, 2004
Annexure ‘A’ to Directors’ ReportCORPORATE GOVERNANCE(a) Company’s philosophy
The Company firmly believes in and continues to practice good Corporate Governance. The Company’s essential character is shaped by the veryvalues of transparency, professionalism and accountability. The Company continuously endeavors to improve on these aspects on an ongoingbasis.
(b) Board of DirectorsThe Board of Directors comprises of 3 Non- Executive Independent Directors.
During the year, 4 Board Meetings were held on 10-05-2003, 31-07-2003, 31-10-2003, 31-01-2004.
The attendance of Directors at Board Meetings held during the year and at the last Annual General Meeting as also number of other directorships/memberships of committees are as follows:
Name of Director No. of Board Attendance at No. of other Committee Membershipmeetings attended last AGM Directorships
Member ChairmanMr. K. Venkataramanan 4 Yes 10 1 2
Mr. V. K. Magapu 4 No 4 3 -
Mr. N. Sivaraman 4 Yes 4 3 -
(c) Audit Committee:1. Terms of reference:
The terms of reference of Audit Committee includes review and discussions with the auditors about internal control systems, the scope ofaudit including the observations of the auditors, and the review of quarterly, half yearly and annual financial statements before they aresubmitted to the Board of Directors.
2. Composition:The Audit Committee of the Board of Directors was formed in 2001 and as on today it comprises of 3 Non- Executive Independent Directors.The Committee met 3 times during the year and the attendance of Members at the Meeting was as follows:
Name of Member Status No. of Meetings AttendedMr. K. Venkataramanan Chairman 3
Mr. V.K. Magapu Member 3
Mr. N. Sivaraman Member 3
The Company Secretary is the Secretary of the Committee.
(d) Remuneration of Directors:No remuneration was paid to the Directors during the year.
(e) General Body Meetings:The last three General Meetings were held as under:
Financial Year Date Time Location2002-03 22-08-03 10.00 A.M. L&T House, Ballard Estate, Mumbai – 400 001
No special resolutions were passed in the previous 3 AGMs.
No special resolutions were required to be put through postal ballot last year.
No special resolutions on matters requiring postal ballot are placed for shareholders’ approval at the ensuing Annual General Meeting.
(f) Disclosures:1. During the year, there were no transactions of material nature with the directors or the management or their subsidiaries or relatives that had
potential conflict with the interest of the Company.
2. There were no instances of non-compliance on any matter related to the capital markets, during the last 3 years.
3. For the preparation of Annual Accounts, the Accounting Standards have been followed and applied consistently to the extent applicable.
(g) Means of Communication:1. Quarterly results are published in prominent daily newspapers viz. Free Press Journal and Navshakti.
Particulars Period ended on Newspaper/Publication Published onAnnual results of previous year 31st March, 2003 Free Press Journal & Navshakti 11-05-2003
2. Management Discussion & Analysis forms part of the Annual Report sent to the shareholders.
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
(h) General Shareholders Information:1. Annual General Meeting will be held on : 23 rd September, 20042. Financial Calendar:
Annual results of previous year Mid May
First Quarterly results End of July
Second Quarterly results End of October
Third Quarterly results End of January
3. Date of Book Closure: 23 rd September, 20044. Listing of equity shares/debentures on Stock Exchanges at:
The Debentures are listed in the wholesale Debt Market Segment of the National Stock Exchange of India Limited (NSE). The equity sharesof the Company are not listed on the Stock Exchange.
5. Distribution of shareholding as on 31 st March, 2004:NO. OF SHARES SHAREHOLDERS SHAREHOLDING
Nos. % Nos. %100 6 85.72 600 00.01
34999400 1 14.28 34999400 99.99
7 100.00 35000000 100.00
6. Dematerialisation of Debentures:As on 31stMarch, 2004, 100% of the Company’s Debentures (constituting 818 debentures) were held in dematerialised form. These debenturesare partly redeemed on a monthly basis and interest payments are also on a monthly basis.
7. Plant Location:The Company was formed to provide 2x45 MW captive cogeneration plant on lease to Indian Petrochemicals Corporation Limited at Gandharpetrochemical facility in Gujrat.
8. Address for correspondence:L&T House, Ballard Estate,
Mumbai – 400 001.
Tel: 2268 5656 Fax: 2268 5893
9. The Company adopted the following non- mandatory requirements on Corporate Governance recommended under Clause 34 of ListingAgreement with NSE (Debt Market Segment).
i) The half yearly results of the Company are communicated to the shareholders individually.
ii) The Company has not passed any resolution requiring approval of the shareholders by postal ballot.
Auditors Report on Compliance of Corporate Governance
We have examined the compliance of conditions of Corporate Governance by India Infrastructure Developers Limited for the year ended on 31st March, 2004as stipulated in Clause 34 of the Listing Agreement of the said Company with the National Stock Exchange of India Limited.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures andimplementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor anexpression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied in all material respectswith the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the managementhas conducted the affairs of the Company.
SHARP & TANNANChartered Accountants
by the hand of
R.D. KAREPartner
Mumbai, 30th April, 2004 (Membership No. 008820)
Auditor's Report to the ShareholdersWe have audited the attached Balance Sheet of India Infrastructure Developers Limited as at 31st March, 2004, the Profit and Loss Account and the CashFlow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the CompaniesAct, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred to above, we report that:
(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the profit and loss account, balance sheet and cash flow statement dealt with by this report comply with the accounting standardsreferred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable, except in respect of Accounting Standard (AS) 22 - Accountingfor Taxes on Income (Refer Note 5 of Schedule 8);
(e) on the basis of written representations received from the directors as on 31st March, 2004, and taken on record by the Board of Directors, we reportthat none of the directors is disqualified as on 31st March, 2004 from being appointed as a director in terms of Section 274(1)(g) of the CompaniesAct, 1956; and
(f) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the SignificantAccounting Policies in Schedule - 7 and other Notes appearing in Schedule - 8 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;
(i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2004;
(ii) in the case of the profit and loss account, of the profit for the year ended on that date.
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date .
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 30th April, 2004 (Membership No 008820)
Annexure to the Auditor's Report
(Referred to in paragraph 1 of our Report of even date)
1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) In respect of owned assets, we are informed that these assets have been physically verified by the management at the year-end. In respect ofleased assets, the Company has formulated a programme of physical verification of fixed assets at regular intervals, which in our opinion, isreasonable and no material discrepancies were noticed on such verification.
(c) We are informed that the Company has not disposed off any substantial part of fixed assets during the year and accordingly, reporting on the goingconcern does not arise.
2. The Company did not purchase any materials / stores during the year nor hold any inventory and hence Clause (ii) (a), (b) and (c) of the aforesaid Orderare not applicable.
3. (a) The Company has neither granted nor taken any loans, secured or unsecured to / from companies, firms or other parties in the register maintainedunder Section 301 of the Companies Act,1956.
(b) With respect to the Company’s inter-corporate deposits with companies, the rate of interest and terms and conditions of such inter-corporatedeposits are prima facie not prejudicial to the interest of the Company.
(c) The payment of principal amount and interest are regular.
(d) There are no overdue amount which is more than rupees one lakh.
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with thesize of the Company and the nature of its business for the purchase of fixed assets. The Company, in the normal course of business do not purchaseor sale of goods.
5. In our opinion and according to the information and explanations given to us, there are no transactions that need to be entered into a register maintainedunder Section 301 of Companies Act 1956, have been so entered. Accordingly, reporting on sub-clause (b) does not arise.
6. The Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section58A and 58AA of the Companies Act, 1956 and the rules framed thereunder apply.
7. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
8. Clause (viii) of the Order is not applicable to the Company with respect to maintenance of cost records under Section 209(1)(d) of the Companies Act,1956.
9. (a) According to the information and explanations given to us, the Company is regular in depositing undisputed statutory dues, namely income-tax,with the appropriate authorities.
(b) According to the information and explanations given to us, there are no dues in respect of income tax, that have not been deposited with theappropriate authorities on account of dispute.
10. The accumulated losses of the Company are not more than fifty percent of its net worth and has not incurred cash losses for the financial year and alsofor the financial year immediately preceding such financial year.
11. According to the information and explanations given us, the Company has not defaulted in repayment of dues to debenture holders. There are no amountsdue to a financial institution or a bank.
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 pledgeof shares, debentures and other securities.
13. The Company is not a chit fund /nidhi/ mutual benefit fund /society, accordingly, the provisions of special statute applicable to chit fund are not compliedwith.
14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.
15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.
16. The Company has not taken any term loan from bank / financial institution during the year.
17. The Company has neither raised funds on short term nor on long term basis during the year.
18. The Company has not made any preferential allotment of shares during the year to any parties or companies covered in the Register maintained underSection 301 of the Companies Act, 1956.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by public issue during the year.
21. According to information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 30th April, 2004 (Membership No 008820)
As at 31-03-2003Schedules Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:Shareholders' Funds:Share Capital 1 350,000,000 350,000,000
Loan Funds
Secured Loans
14.25% Secured RedeemableNon-Convertible Debentures 2,085,642,080 2,670,474,155(Due within one year Rs.60,52,23,124;previous year Rs.58,48,32,075)
Current Assets, Loans and Advances 3Sundry Debtors 66,654,452 71,808,537Cash and Bank Balances 134,303 46,058,456Loans and Advances 321,953,346 283,820,665
388,742,101 401,687,658
Less: Current Liabilities and Provisions 4
Liabilities 107,734,994 193,167,682
Provisions 3,500,000 -
111,234,994 193,167,682
Net Current Assets 277,507,107 208,519,976
Miscellaneous Expenditure(to the extent not written off or adjusted)
Preliminary Expenses - 352,251
Profit and Loss Account 106,267,232 146,244,042
Total 2,798,911,519 3,383,743,594
Significant accounting policies 7
Notes forming part of accounts 8
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountantsby the hand of
R.D. KAREPartner(Membership No. 008820)
Mumbai, 30th April, 2004
A.N. MANIManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
V.K. MAGAPUDirector
Mumbai, 30th April, 2004
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
Profit and Loss Account for the year ended 31st March, 2004As at 31-03-2003
Schedules Rupees Rupees RupeesINCOME
Lease rentals 491,912,261 572,602,264(Tax deducted at source Rs.479,857;Previous year Rs.1,338,641)
Interest 32,331,990 34,508,157(Tax deducted at source Rs.328;
Previous year Rs.764,751)
Bill discounting charges - 3,174,758
Profit on sale of receivables - 23,809,531
Profit on sale of asset 34,242,518 -
Other income 80,773,049 45,843,990
639,259,818 679,938,700
EXPENDITURE
Administration Expenses 5 9,581,071 3,743,146
Interest 6 344,546,805 420,294,632
Depreciation 241,302,881 257,478,959
Preliminary Expenses written off 352,251 352,250
595,783,008 681,868,987
Profit / (Loss) before taxation 43,476,810 (1,930,287)
Provision for income tax 3,500,000 -
Profit / (Loss) after taxation 39,976,810 (1,930,287)
Add : Debit balance brought forward from the previous year (146,244,042) (392,053,176)
Deferred tax liability for prior years written back - 247,739,421
Debit balance carried to Balance Sheet (106,267,232) (146,244,042)
Basic / diluted earnings per share 1.14 (0.06)
Nominal value per share 10 10
Significant accounting policies 7
Notes forming part of accounts 8
As per our report attached
SHARP & TANNANChartered Accountantsby the hand of
R.D. KAREPartner(Membership No. 008820)
Mumbai, 30th April, 2004
A.N. MANIManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
V.K. MAGAPUDirector
Mumbai, 30th April, 2004
Cash Flow Statement for the year ended 31st March 20042002-03
Rupees Rupees
A. Cash Flow from operating activitiesProfit / (Loss) before taxation and extraordinary item 43,476,810 (1,930,287)Add :Depreciation 241,302,881 257,478,959Lease Equalisation 322,180,782 264,616,712Miscellaneous Expenditure written off 352,251 352,250Operating Profit before working capital changes 607,312,724 520,517,634Add :/(Less)(Increase)/Decrease in Sundry Debtors 5,154,085 (1,504,828)(Increase)/Decrease in Loans and Advances (33,714,931) 105,376,774(Increase/Decrease in Trade Payables (85,432,688) (156,310,515)Cash generated from Operations 493,319,190 468,079,065Direct Tax paid 4,417,750 -Net Cash from Operating Activities 488,901,440 468,079,065
B. Cash flow from investing activities :Sale of fixed assets 50,006,482 107,440,470Net Cash (used in)/from Investing Activites 50,006,482 107,440,470
C. Cash flow from financing activities :Repayment of long term borrowings (584,832,075) (509,324,565)Proceed from other borrowings (Net) 0 (24,632,654)Net Cash (used in)/from Financing Activites (584,832,075) (533,957,219)Net (decrease)/increase in cash and cash equivalents (A+B+C) (45,924,153) 41,562,316Cash and cash equivalents at beginning of the year 46,058,456 4,496,140Cash and cash equivalents at end of the year 134,303 46,058,456
(45,924,153) 41,562,316
Notes :
1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) - 3 issued by the Institute of CharteredAccountants of India.
2. Cash and cash equivalents represent cash and bank balances.3. Previous year's figures have been regrouped/reclassified wherever applicable.
A.N. MANIManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
V. K. MAGAPUDirector
To
The Board of DirectorsIndia Infrastructure Developers LimitedMumbai
We have examined the attached cash flow statement of India Infrastructure Developers Limited for the year ended 31st March, 2004. The statement hasbeen prepared by the Company in accordance with the requirements of Accounting Standard AS 3 - Cash Flow Statement made mandatorily applicablefrom 1st April, 2001 in case of enterprises whose equity or debt securities are listed on the recognised stock exchanges and is based on and in agreementwith the corresponding Profit & Loss Account and Balance Sheet of the Company covered by our report of 30th April, 2004 to the members of theCompany
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 30th April, 2004 (Membership No. 008820)
Mumbai, 30th April, 2004
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
Schedules forming part of the accounts : 31st March, 2004As at
31-03-2003Rupees Rupees
SCHEDULE 1 - SHARE CAPITAL:Authorised:
35,000,000 Equity shares of Rs. 10 each 350,000,000 350,000,000
Issued and Subscribed
35,000,000 Equity shares of Rs.10 each, fully paid 350,000,000 350,000,000(All the shares are held by Larsen & Toubro Limited,holding company)
350,000,000 350,000,000
SCHEDULE 2 - FIXED ASSETS
GROSS BLOCK DEPRECIATION NET BLOCK Lease Net Block afterTerminal Lease Terminal
Adjustment Adjustment
Fixed Assets As at As at Upto For the As At As at As at As at As at As at01-04-2003 Additions Deductions 31-03-2004 31-03-2003 year Deductions 31-03-2004 31-03-2004 31-03-2003 31-03-2004 31-03-2004 31-03-2003
Rupees Rupees Rupees RupeesSCHEDULE 3 - CURRENT ASSETS, LOANS AND ADV ANCES
Sundry Debtors, unsecuredDebts outstanding for a period exceeding six months
Considered good - 2,475,756Considered doubtful 5,176,656 5,185,656
5,176,656 7,661,412
Other debts, considered good 66,654,452 69,332,781
71,831,108 76,994,193
Less : Provision for non-performing assets 5,176,656 5,185,656
66,654,452 71,808,537
Cash and Bank BalancesCash and cheque on hand - 45,801,990Balances with Scheduled Banks
on current accounts 134,303 256,466
134,303 46,058,456
Schedules forming part of the accounts : 31st March, 2004
As at31-03-2003
Rupees Rupees Rupees RupeesSCHEDULE 3 - CURRENT ASSETS, LOANS AND ADVANCES (Contd.)
Loans and Advances, unsecuredConsidered good:
Loans including interest accrued thereon 314,109,529 273,048,359Advances recoverable in cash or in kind or forvalue to be received 7,843,817 10,772,306
321,953,346 283,820,665
Considered doubtful:
Advances recoverable in cash or in kind or forvalue to be received 5,588,794 -
327,542,140 283,820,665
Less : Provision for non-performing assets 5,588,794 -
321,953,346 283,820,665
388,742,101 401,687,658
As at31-03-2003
Rupees Rupees Rupees Rupees
SCHEDULE 4 - CURRENT LIABILITIES AND PROVISIONS
Liabilities
Sundry creditors 94,834,132 179,756,370
Unmatured lease rentals 12,900,862 13,411,312
107,734,994 193,167,682
Provisions
Provision for taxation 3,500,000 -
111,234,994 193,167,682
2002-2003Rupees Rupees Rupees Rupees
SCHEDULE 5 - ADMINISTRATION EXPENSES
Service charges 1,653,000 1,418,100Rent 12,000 12,000Rates and taxes 159,475 83,745Legal and professional charges 1,909,300 1,934,400Auditors remuneration (excluding service tax)
Travelling and conveyance - 107,163Bank charges 3,165 6,284Miscellaneous expenses 184,837 96,454Provision for non performing assets 5,579,794 -
9,581,071 3,743,146
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
Schedules forming part of the accounts : 31st March, 20042002-2003
Rupees Rupees Rupees Rupees
SCHEDULE 6 - INTEREST
Debentures 344,546,805 420,054,315
Others - 240,317
344,546,805 420,294,632
SCHEDULE - 7
SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Accounting:
The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accountingprinciples and in compliance with the accounting standards referred to in Section 211(3C) and other requirements of the Companies Act, 1956, tothe extent applicable.
2. Revenue Recognition:Income from lease transactions and bill discounting are accounted on accrual basis.
3. Lease Equalisation:Lease equalisation adjustment is the difference between capital recovery included in lease rentals and depreciation provided in books.
4. Fixed Assets:Assets held for own use and leased assets are stated at original cost. Interest on borrowings for acquisition of fixed assets and revenue expensesincurred are capitalised as part of asset cost in so far as such interest and expense relate to the period prior to its installation.
5. Depreciation:(a) Owned assets:
Depreciation on assets held for own use has been provided on straight line method at the rates and in the manner specified in the ScheduleXIV to the Companies Act, 1956.
Depreciation on additions / deductions is calculated pro rata from / to the month of additions / deductions.
(b) Leased assets:Leased assets are depreciated over the primary period of lease. Accordingly, statutory depreciation on such assets is provided for on straightline method at the rates and in the manner specified in the Schedule XIV to the Companies Act, 1956 and the difference is adjusted throughthe lease equalisation and lease adjustment account.
However, with respect to assets where the primary period of lease is over, depreciation is provided for on straight line method at the rates andin the manner specified in the Schedule XIV to the Companies Act, 1956.
6. Preliminary expenses:Preliminary expenses are written off over a period of five years.
SCHEDULE - 8
NOTES FORMING PART OF ACCOUNTS1. The Company issued 818 secured redeemable non convertible debentures of Rs. 50 lacs each in March, 1999. The terms of issue are as under:
Tenure : 105 months
Interest : 14.25% p.a. on monthly basis
Redemption : Redemption of debentures is structured on monthly basis, payment starting from 31st January, 2000 as per debentureredemption schedule. The Company has repaid Rs.2,004,357,920 as per the repayment schedule upto 31st March, 2004.
Security : The debentures as aforesaid are secured by way of :
a) a first charge on the power plant assets pertaining to the captive co-generation plant being put up at IndianPetrochemicals Corporation Limited (IPCL), Gandhar Petrochemicals Complex; and
b) a first charge on all the monies, including the lease rentals received / to be received from IPCL during the tenure ofthe debentures.
2. Lease rentals are net of lease equalisation Rs. 322,180,782; (Previous year Rs. 264,616,712)3. The Company has entered into certain derivative transactions including transactions involving foreign currencies. These derivative transactions,
being considered as off-Balance Sheet transactions, the cash flows arising therefrom are recognised in the books of account as and when thesettlements take place in accordance with the terms of the respective contracts over the tenor thereof.
4. Provision for Income tax has been made in terms of Section 115JB of the Income Tax Act, 1961.
5. As per the terms of the interim injunction dated 6th December, 2001 restraining the Institute of Chartered Accountants of India from implementingthe Accounting Standard (AS) 22 - "Accounting for Taxes on Income", with reference to the Non Banking Finance Companies, issued by the HighCourt of Judicature at Chennai in response to the Miscellaneous Petition No. 27682 of 2001 in Writ Petition No. 18827 of 2001 filed by the Associationof Leasing and Financial Services Companies, pending final disposal of this Petition. Consequently, there is no provision for deferred tax liability.
6. Related party disclosures:
The Following related party transaction were entered into during the year
Name of the Company Relat ionship Nature o f 2003-04 2002-03 (Due to) / (Due to) /
Transact ions f rom2003-04 from 2002-03
Rupees Rupees Rupees Rupees
L a r s e n & To u b r o L t d . H o l d i n g c o m p a ny - I n t e r C o r p o r a t e 1 , 1 4 2 , 8 0 1 , 0 0 0 1 , 2 1 3 , 3 3 1 , 9 5 0 8 , 4 9 , 0 5 , 0 0 0 1 3 , 5 0 0 , 0 0 0 d e p o s i t s
I n c o m e : -I n t e r e s t o n i n t e r 1 0 , 8 6 0 , 4 6 0 1 1 , 4 1 6 , 3 5 5 2 7 0 , 6 8 0 8 1 , 7 4 0c o r p o ra t e d e p o s i t s
- I n c o m e f r o m - 4 5 , 8 0 1 , 9 9 0 - - H e d g i n g o p e ra t i o n s
E x p e n d i t u r e :
- I n t e r e s t o n t e r m - - - - l o a n
- I n t e r e s t a c c r u e d - - - - a n d d u e
L & T F i n a n c e L i m i t e d Fe l l ow s u b s i d i a r y S u n d r y c r e d i t o r s - - - -b a l a n c e
I n t e r C o r p o r a t e - 7 0 , 0 0 0 , 0 0 0 - 3 6 , 2 6 7 , 8 9 4D e p o s i t s
I n c o m e :
- I n t e r e s t o n i n t e r 2 2 , 9 2 , 5 6 8 1 , 1 0 2 , 0 6 5 - 1 0 , 0 5 2 c o r p o r a t e d e p o s i t s
E x p e n d i t u r e :
- S e r v i c e c h a r g e s 1 , 4 4 0 , 0 0 0 1 , 2 0 0 , 0 0 0 - -
- I n t e r e s t o n c r e d i t b a l a n c e - 2 4 0 , 3 1 7 - -
Note : No amounts pertaining to the related parties have been written off or written back during the year
7. As the Company's business activity falls within a single primary business segment namely, financial services, and a single geographical segment,i.e. India, the disclosure requirement of Accounting Standard (AS) 17 - Segment Reporting, issued by the Institute of Chartered Accountants ofIndia, is not applicable.
8. Calculation of Earnings Per Share in accordance with the Accounting Standard (AS) 20 - Earnings Per Share issued by the Institute of CharteredAccountant of India, as amended from time to time :-
Net Profit after tax and extra ordinary items Rs.39,976,810
Number of Equity shares outstanding 35,000,000
Basic / Diluted earnings per share Rs.1.14
Nominal value per Equity share Rs.10/-
Schedules forming part of the accounts : 31st March, 2004
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
SCHEDULE - 8 NOTES FORMING PART OF ACCOUNTS (Contd.)
9. Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 9BB of Non-Banking Finance CompaniesPrudential Norms (Reserve Bank) Directions, 1998
Particulars (in Rupees)
Liabilities side Amount AmountOutstanding Overdue
(A) Loans and advances availed by the NBFC inclusive of interest accrued thereon by not paid:
(a) Debentures : Secured 2,085,642,080 NIL
: Unsecured NIL NIL
(other than falling within the meaning of public deposits*)
(b) Deferred Credits NIL NIL
(c) Term Loans (from holding company) 363,269,439 NIL
(d) Inter-corporate loans and borrowing NIL NIL
(e) Commercial paper NIL NIL
(f) Public Deposits* NIL NIL
(g) Other Loans (Foreign Currency Loan) NIL NIL
(B) Break-up of (A)(f) above (Outstanding public deposits Inclusive of interest accrued thereon but not paid):
(a) In the form of Unsecured debentures NIL NIL
(b) In the form of partly secured debentures i.e. NIL NIL
debentures where there is a shortfall in the value of security.
(c) Other public deposits NIL NIL
(C) Break-up of Loans and Advances including bills receivables (other than those included in (D) below)
(a) Secured NIL
(b) Unsecured 314,109,529
Assets Side : AmountOutstanding
(D) Break-up of Leased Assets and stock on hire and
Hypothecation loans counting towards EL/HP activities
(i) Lease assets including lease rentals under sundry debtors:
(a) Financial Lease 2,481,015,352
(b) Operating lease NIL
(ii) Stock on hire including hire charges under sundry debtors
(a) Assets on hire NIL
(b) Repossessed Assets NIL
(iii) Hypothecation loans counting towards EL/HP activities
(a) Loans where assets have been repossessed NIL
(b) Loans other than (a) above NIL
(E) Break-up of Investments:
Current Investments:
1. Quoted:
(i) Shares: (a) Equity NIL
(b) Preference NIL
(ii) Debentures and Bonds NIL
(iii) Units of mutual funds NIL
(iv) Government Securities NIL
(v) Others (Please specify) NIL
Schedules forming part of the accounts : 31st March, 2004
Schedules forming part of the accounts : 31st March, 2004
SCHEDULE - 8 NOTES FORMING PART OF ACCOUNTS (Contd.)Amount
Outstanding2. Unquoted:
(i) Shares: (a) Equity NIL
(b) Preference NIL
(ii) Debentures and Bonds NIL
(iii) Units of mutual funds NIL
(iv) Government Securities NIL
(v) Others (Please specify) NIL
Long Term investments:
1. Quoted:
(i) Shares: (a) Equity NIL
(b) Preference NIL
(ii) Debentures and Bonds NIL
(iii) Units of mutual funds NIL
(iv) Government Securities NIL
(v) Others (Please specify) NIL
2. Unquoted:
(i) Shares: (a) Equity NIL
(b) Preference NIL
(ii) Debentures and Bonds NIL
(iii) Units of mutual funds NIL
(iv) Government Securities NIL
(v) Others (Please specify) NIL
(F) Borrower group-wise classification of all leased assets,
Stock -on-hire and loans and advances
Category Amount net of provisions
Secured Unsecured Total
1. Related Parties
(a) Subsidiaries NIL NIL NIL
(b) Companies in the same group NIL 85,175,680 85,175,680
(c) Other related parties NIL NIL NIL
2. Other than related parties 2,481,015,352 228,139,989 2,709,155,341
Total 2,481,015,352 313,315,669 2,794,331,021
(G) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted)
Category Market Value Book Value/Break up or (Net offair value or Provisions)
NAV
1. Related Parties
(a) Subsidiaries NIL NIL
(b) Companies in the same group NIL NIL
(c) Other related parties NIL NIL
2. Other than related parties NIL NIL
Total NIL NIL
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
Schedules forming part of the accounts : 31st March, 2004SCHEDULE - 8 NOTES FORMING PART OF ACCOUNTS (Contd.)
Market Value Book Value/Break up or (Net offair value or Provisions)
NAV
(H) Other information
Particulars
(i) Gross Non-Performing Assets(a) Related parties NIL(b) Other than related parties 10,765,450
(ii) Net Non-Performing Assets(a) Related parties NIL(b) Other than related parties NIL
(iii) Assets acquired in satisfaction of debt NIL
10. Balance sheet abstract and Company's general business profile:I. Registration Details
a) Registration No. 108179 b) State Code 11c) Balance Sheet Date 31-03-2004
II. Capital raised during the period (Amount in Rupees thousands)a) Public Issue Nil b) Right Issue Nilc) Bonus Issue Nil d) Private Placement Nil
III. Position of Mobilisation and Deployment of funds (Amount in Rupees thousands)a) Total Liabilities 2,798,912 b) Total Assets 2,798,912Sources of fundsa) Paid-up Capital 350,000 b) Reserves and Surplus Nilc) Secured Loans 2,085,642 d) Unsecured Loans 363,269e) Others -Application of fundsa) Net Fixed Assets 2,415,137 b) Investments Nilc) Net Current Assets 277,507 d) Miscellaneous Expenditure Nile) Accumulated Losses 106,267
IV. Performance of Company (Amount in Rupees thousands)a) Turnover 639,260 b) Total Expenditure 595,783c) Profit before tax 43,477 d) Profit after tax 39,977e) Earning per share (Rs.) 1.14 f) Dividend Rate % Nil
V. Generic Names of three principal products/services of the CompanyItem Code No. : N.A.(ITC Code)Product Description : Leasing
11. Previous year figures are regrouped wherever necessary.Signature to Schedule 1 to 8
SHARP & TANNANChartered Accountantsby the hand of
R.D. KAREPartner(Membership No. 008820)
Mumbai, 30th April, 2004
A.N. MANIManager
N. SIVARAMANDirector
K. VENKATARAMANANDirector
V.K. MAGAPUDirector
Mumbai, 30th April, 2004
Director's ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended 31st March 2004.
FINANCIAL RESULTS
2003-04 2002-03
(Rs. Million) (Rs. Million)
Profit before depreciation and tax 5.03 80.59
Less : Depreciation on Fixed Assets 3.77 5.40
Profit before tax 1.26 75.19
Provision for Current Tax 0.33 16.70
Provision for Deferred Tax (1.11) (2.14)
Profit after tax 2.04 60.63
Add: Balance brought forward from the previous year 29.65 26.89
Less: Deferred Tax Liability as on 1-Apr-2002 NIL 1.80
Leaving the balance available for disposal which the directors appropriate as follows: 31.69 85.72
Dividend NIL 49.97
Tax on Dividend NIL Nil
Premium on buyback of shares NIL Nil
Transfer to General Reserve NIL 6.10
Transfer to Capital Redemption Reserve 10.04 Nil
Leaving a balance to be carried forward 21.65 29.65
DIVIDEND
The Directors do not propose any dividend for the financial year 2003-04.
PERFORMANCE OF THE COMPANY
The Sales and other income for the financial year under review, were Rs.119.19 Million (including exports of Rs.29.54 Million), as against Rs.214.96Million (including exports of Rs.177.14 Million) for the previous financial year. The profit before tax (after depreciation) was Rs.1.26 Million againstRs.75.19 Million for the previous financial year. After making provisions for tax (including deferred tax) of Rs. (0.78) Million, profit after tax was Rs.2.04Million.
The performance of the Company was adversely affected by the recessionary conditions prevailing in the US and Domestic markets, particularly in thePower Sector.
CAPTIAL EXPENDITURE
As at 31st March 2004 the gross fixed assets stood at Rs.51.23 Million and the net fixed assets at Rs.8.37 Million. Additions during the year amountedto Rs. 0.18 Million.
DEPOSITS
During the year under review the Company has not accepted any deposits from the public.
AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
The notes to accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
Information as per the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy,technology absorption, foreign exchange earnings and outgo are given in Annexure “A” forming part of this Report.
PERSONNEL
There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975.
L & T – SARGENT & LUNDY LIMITED
L & T – SARGENT & LUNDY LIMITED
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirm:
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 judgements and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and of the profit of the Company for the year ended onthat date;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a going concern basis.
DIRECTORS
There has been no change in the composition of the Board of Directors during the year under review.
AUDIT COMMITTEE
The audit committee consists of all non-executive directors of the Company.
The role, terms of reference, the authority and powers of the Audit Committee are in conformity with the requirements of the Companies Act, 1956.
The committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report.
AUDITORS
The Auditors, Sharp & Tannan, hold office until conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. Certificatefrom the Auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224 (1B) of theCompanies Act, 1956.
FURTHER ISSUE OF EQUITY SHARES
During the year, the Company has made a further issue of 100 equity shares to Larsen & Toubro Limited on preferential basis. This has resulted in theCompany becoming Subsidiary Company of Larsen & Toubro Limited.
ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the bankers, suppliers and customers.
The Directors are pleased to place on record their appreciation for the valuable contribution made by employees of the Company.
For and on behalf of the Board
K. VENKATARAMANAN
B. RAMACHANDRAN
Place : BarodaDate : 26th April, 2004
Directors}
Annexure 'A' to the Directors' Report
(Additional information given in terms of notification issued by the Department of Company Affairs)
A. CONSERVATION OF ENERGY :
(a) Energy Conservation measures taken :
(b) Additional investments & proposals, if any, beingimplemented for reduction of consumption of energy :
(c) Impact of the measures at (a) & (b) above for reductionof energy consumption and consequent impact on thecost of production of goods :
B. TECHNOLOGY ABSORPTION
FORM B
(Disclosure of particulars with respect to Technology Absorption)
Research & Development (R&D) :
1. Specific areas in which R&D carried out by the Company
2. Benefits derived as a result of the above R&D
3. Future plan of action
4. Expenditure on R&D :
(a) Capital
(b) Recurring
(c) Total R&D expenditure as a percentage oftotal turnover
Technology Absorption, Adaptation & Innovation
1. Efforts in brief, made towards technology absorption,adaptation and innovation
2. Benefits derived as a result of the above efforts, e.g.product improvement cost-reduction, product improvementetc.
C. FOREIGN EXCHANGE EARNINGS & OUTGO
(1) Activities relating to exports; initiatives taken to increaseexports; development of new export markets for productand services; and export plans
(2) Total Foreign Exchange used and earned :
- Foreign Exchange earned Rs. 30.21 Million.
- Foreign Exchange used Rs. 7.12 Million.
The company provides Engineering from an Engineering office It is, therefore,not a significant user of Energy. All computers used in the office has built-inenergy saving features.}
The Company’s primary activity is the provision of Engineering services infield of power generating plants. The services provided fall in the category ofDesign and Engineering and as such the Company’s total operations can bedeemed to be R&D.}
We are absorbing technology transferred from our principals which will resultin innovative design of power plants.}Efforts are continuing to secure export orders.}
L & T – SARGENT & LUNDY LIMITED
TO THE SHAREHOLDERS
We have audited the attached Balance Sheet of L & T – Sargent & Lundy Limited as at 31st March 2004 and the Profit & Loss Account of the Companyfor the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility isto express an opinion on these financial statements based on our audit.
We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
1. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the CompaniesAct, 1956, we enclose in the Annexure, our report on the matters specified in the paragraphs 4 and 5 of the said Order.
2. Further to our above comments and in accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of thosebooks;
(c) The said Balance Sheet and the Profit & Loss account are in agreement with the books of account;
(d) In our opinion the said Balance Sheet and Profit and Loss Account comply with the mandatory accounting standards referred to in Section211(3C) of the Companies Act, 1956 to the extent applicable;
(e) On the basis of the written representations received from the Directors of the Company as at 31st March, 2004 and taken on record by theBoard of Directors, none of the directors is disqualified from being appointed as a director of the Company under Section 274(1)(g) of theCompanies Act, 1956; and
(f) In our opinion and to the best of our information & according to the explanations given to us, the said accounts read together with thesignificant accounting policies in schedule M and the notes appearing thereon in schedule N give the information required by the CompaniesAct, 1956 in the manner so required & give a true and fair view in conformity with the accounting principles generally accepted in India:
i) In case of the Balance Sheet, of the state of the Company’s affairs as at 31st March, 2004 and
ii) In case of the Profit & Loss Account, of the profit for the year ended on that date.
SHARP AND TANNANChartered Accountants
By the hand of
R. D. KAREPartner
Place: Mumbai (Membership No. 8820)
Date: 29th April, 2004
Auditors' Report
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph (1) of our Report of even date)
1. The Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets. We are informedthat these fixed assets have been physically verified by the management during the year. In our opinion, the frequency of such verification isreasonable. We were informed that no material discrepancies were noticed on such verification. Fixed assets disposed off during the year are notsubstantial in relation to the Company and do not effect the going concern.
2. The Company did not purchase any materials/stores during the year; nor did it hold any stocks of materials, stores or finished goods at any timeduring the year / at the year-end and accordingly clauses (iii), (iv), (v), (vi) and (xii) of sub paragraph 4(A) of the aforesaid Order are not applicableto the Company.
3. The Company has no loans, secured or unsecured either granted to or taken from companies, firms or other parties listed in the registermaintained under section 301 of The Companies Act, 1956.
4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate withthe size of the Company and the nature of its business for the purchase of plant and machinery, equipment and other assets. There were no salesof goods during the period. In our opinion and according to the information and explanations given to us, there is no continuing failure to correctmajor weaknesses in internal controls.
5. According to the information and explanations given to us, purchase of goods and materials and sale of goods, materials and services made inpursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating duringthe year to Rs. 5,00,000/- or more in value in respect of each party have been at prices which are reasonable having regard to the prevailingmarket prices at the relevant time for such goods, materials or services or the prices at which transactions for similar goods or services havebeen made with other parties.
6. The Company has not accepted any deposits in terms of provisions of Section 58 A and 58 AA 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. The provisions of clause (xvi) of sub paragraph 4 (A) of the aforesaid Order regarding maintenance of cost records are not applicable to theCompany.
9. The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriateauthorities.
10. According to the information and explanations given to us, there were no undisputed amounts payable as on 31st March 2004 in respect ofIncome Tax, Wealth Tax, Sales Tax, Customs duty, Excise duty and Cess.
In respect of Income Tax, demands amounting to Rs. 21.54 Lakhs are in appeal with various authorities.
11. The Company is registered for more than 5 years and has no accumulated losses as at the date of Balance Sheet.
12. The Company has not defaulted in the repayment of dues to a financial institution or bank.
13. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.
14. The Company is not a chit fund / nidhi / mutual benefit fund / society.
15. The Company is dealing or trading in mutual funds and other investments. Proper records have been maintained of the transactions and contractsand entries have been made therein and also mutual funds and other investments have been held by the Company in its own name.
16. The Company has not given any guarantee for loans taken by others from bank or financial institutions, and the terms and conditions whereof arenot prejudicial to the interest of the company.
17. The term loan was applied for the purpose for which the loan was obtained.
18. The Company has not raised any funds, whether short term or long term.
19. The Company has not made preferential allotment of shares to company covered in the Register maintained under Section 301 of the Act.
20. The Company has not issued any debentures.
21. The Company has not raised any money by public issue.
22. During the checks carried out by us, no fraud on or by the Company has been noticed or reported during the year under report.
SHARP AND TANNANChartered Accountants
By the hand of
R. D. KAREPartner
Place: Mumbai (Membership No. 8820)
Date: 29th April, 2004
L & T – SARGENT & LUNDY LIMITED
As at 31-3-2004 As at 31-3-2003 Schedules Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)
SOURCES OF FUNDS
SHAREHOLDERS FUNDS
Share Capital A 57,939 75,937
Reserves and Surplus B 39,658 97,597 48,414 124,351
LOAN FUNDS
Secured Loans C 3,562 1
Unsecured Loans D 2,001 5,563 2,816 2,817
TOTAL 103,160 127,168
APPLICATION OF FUNDS
FIXED ASSETS E
Gross Block 51,232 51,380
Less : Depreciation 42,865 39,169
Net Block 8,367 8,367 12,211 12,211
INVESTMENTS F 42,462 33,671
DERERRED TAX
Deferred tax assets (Refer Note 16) 1,456 340
CURRENT ASSETS LOANS AND ADVANCES G
Inventories 18,754 196
Sundry Debtors 43,772 53,610
Cash and Bank balances 2,516 36,295
Loans and Advances 78,017 74,905
143,059 165,006
LESS : CURRENT LIABILITIES AND PROVISIONS H
Liabilities 31,999 25,093
Provisions 61,317 60,099
93,316 85,192
NET CURRENT ASSETS 49,743 79,814
DERERRED REVENUE ITEMS
Miscellaneous Expenditure(to the extend not written-off or adjusted) I 1,132 1,132
TOTAL 103,160 127,168
SIGNIFICANT ACCOUNTING POLICIES N
NOTES FORMING PART OF ACCOUNTS O
Balance Sheet as at 31st March, 2004
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 29th April, 2004 Baroda, 26th April, 2004
P. K. MUKHERJIManager
B. RAMACHANDRANDirector
K. VENKATARAMANANDirector
P. M. MANOHARSecretary
Profit and Loss Account for the year ended 31st March, 20042003-2004 2002-2003
OPERATION & ESTABLISHMENT EXPENSES K 58,066 75,113
STAFF EXPENSES L 55,259 58,453
DEPRECIATION 3,774 5,395
INTEREST M 834 799
117,933 139,760
PROFIT BEFORE TAX 1,258 75,195
PROVISION FOR CURRENT TAX 330 16,700
PROVISION FOR DEFERRED TAX (1,116) (2,142)
PROFIT AFTER TAX 2,044 60,637
Add : Balance brought forward from previous year 29,652 26,884
Less : Deferred tax liability as on 01.04.2002 0 29,652 1,802 25,082
PROFIT AVAILABLE FOR APPROPRIATION 31,696 85,719
Less : Premium on buy back of shares 0 0
Transferred to General Reserve 0 6,100
Transferred to Capital Redemption Reserve 10,038 0
Interim dividend paid 0 49,967
Additional Tax on dividend 0 10,038 0 56,067
BALANCE CARRIED TO BALANCE SHEET 21,658 29,652
SIGNIFICANT ACCOUNTING POLICIES N
NOTES FORMING PART OF ACCOUNTS O
As per our report attached
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Mumbai, 29th April, 2004 Baroda, 26th April, 2004
P. K. MUKHERJIManager
B. RAMACHANDRANDirector
K. VENKATARAMANANDirector
P. M. MANOHARSecretary
L & T – SARGENT & LUNDY LIMITED
Schedules forming part of the accounts2003-2004 2002- 2003
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)Schedule A
Share capital :
Authorised :
150,00,000 Equity Shares of Rs. 10 each 150,000 150,000
Issued and Subscribed :
75,93,750 ( Previous Year 56,25,000 ) Equity Shares of Rs. 10 each 75,938 75,937
fully paid
Less : 18,00,000 ( Previous Year 14,06,250 ) Equity Shares acquired under Buy back Rules 18,000 0
57,938 75,937
Add : 100 ( Previous Year NIL ) Equity Shares of Rs 10/- Each at par issued to Larsen & Toubro Limited on Preferential basis . 1 0
57,93,850 ( Previous Year 75,93,750 ) Equity Shares of Rs. 10 each 57,939 75,937 (Out of the above 28,96,975 equity shares are held by Larsen & Toubro Limited, the Holding Company)
Add : Transferred from Profit & Loss Account 0 6,100
18,763 18,762
Less : Transferred to Capital redemption Reserve 7,963
Less : Utilised for Premium on Buyback of shares 10,800 0 0 18,762
Capital Redemption Reserve
As per last Balance Sheet 0 0
Add : Transferred from Profit & Loss Account 10,038 0
(on buy back of shares ) 10,038 0
Add : Transferred from General ReserveAccount 7,962 18,000 0 0 (on buy back of shares )
Profit & Loss Account 21,658 29,652
39,658 48,414
Schedule C
Secured Loans
Loan from Banks
Cash credit 3,562 1
3,562 1
Schedule D
Unsecured Loans
From Housing Development Finance Corporation Limited 263 395
Lease Finance 1738 2,421
2,001 2,816
Schedules forming part of the accountsSchedule E
Cost Additions Sales Cost DEPRECIATION
Fixed Assets As at During During As at Upto For the Deductions Total upto Net Block Net Block1-4-2003 the the 31-3-2004 Year Year 31-3-2004 As at As at
Year Year 31-3-2003 31-3-2004 31-3-2003Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
A. Tang ib le Asse ts
Owned Asse ts :
- P lan t and Mach inery 37 ,201 0 0 37 ,201 29 ,967 2 ,792 0 32 ,759 4 ,442 7 ,234
- O f f i ce Equ ipmen ts 3 ,121 175 0 3 ,296 1 ,415 250 0 1 ,665 1 ,631 1 ,706
- Fur n i tu re & F ix tu res 4 ,123 0 0 4 ,123 3 ,212 177 0 3 ,390 733 911
42,462 33,671NOTE : As at 31-03-2004 As at 31-03-2003
Rs. Rs.Quoted Investments
Book Value 42,462 33,671Market Value 0 0
Unquoted InvestmentsBook Value 0 0
Cost Additions Sales Cost DEPRECIATION
Fixed Assets As at As at During As at Upto For the Deductions Total upto Net Block Net Block31-3-2004 the 01-04-2003 31-3-2003 Year Year 31-3-2004 31-3-2004 As at As at
1-4-2003 Year Year 31-3-2003 31-3-2004 31-3-2003Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Rupees Rupees Rupees RupeesParticulars of investments :
A. Mutual Fund:
1 Kotak Mahindra Mutual Fund “ K-Bond Wholesale - Bonus” 0 0(3,48,013 units of Rs.10 each redeemed during the year
2 Kotak Mahindra Mutual Fund “ K-Bond Short Term - Growth” 0 0(13,12,853 units of Rs.10 each purchased during the yearand 13,12,853 units redeemed during the year)
3 Kotak Mahindra Mutual Fund “Liquid Fund Institutional Plan - Growth” 0 0(9,72,053 units of Rs.10 each purchased during the yearand 9,72,053 units redeemed during the year)
4 Kotak Mahindra Mutual Fund “Liquid Fund - Growth” 0 10,675(6,14,477 units of Rs.10 each purchased during the year14,98,813 units of Rs.10 each purchased during the year)
5 Kotak Mahindra Mutual Fund “K-Bond Floater - Growth” 19906 019,27,415 units of Rs 10 each(25,75,875 units of Rs.10 each purchased during the yearand 6,48,460 units redeemed during the year)
6 Kotak Mahindra Mutual Fund “K-Bond Dynamic - Growth” 8598 08,53,811 units of Rs 10 each(10,93,068 units of Rs.10 each purchased during the yearand 2,39,258 units redeemed during the year)
7 Prudential ICICI Flexible Income Plan 0 0(3,00,499 units of Rs.10 each purchased during the year3,00,499 units of Rs.10 each purchased during the year)
8 Grindlays Dynamic Bond Fund - Growth 5316 04,46,323 units of Rs 10 each(12,62,830 units of Rs.10 each purchased during the yearand 8,16,507 units redeemed during the year)
9 Templeton India Income Builder Account-Growth 0 9,247(4,51,487 units of Rs.10 each purchased during the year)9,58,982 units of Rs 10 each redeemed during the year)
10 Templeton India Floating Rate Fund-Growth 2236 01,97,281 units of Rs 10 each(1,97,281 units of Rs 10 each purchased during the year)
11 HDFC Floating Rate Fund - Short Term - Growth 1101 01,04,457 units of Rs 10 each(2,46,693 units of Rs.10 each purchased during the year)1,42,237 units of Rs 10 each redeemed during the year)
12 HDFC Floating Rate Fund - Long Term - Growth 2000 01,90,771 units of Rs 10 each(1,90,771 units of Rs.10 each purchased during the year)
13 Templeton India Treasury Management Account-Growth 1418 0918 units of Rs 10 each(10,069 units of Rs.10 each purchased during the year)9,347 units of Rs 10 each redeemed during the year)
14 Franklin Bluechip Fund-Growth 0 2,920(26,052 units of Rs.10 each purchased during the year)1,53,280 units of Rs 10 each redeemed during the year)
15 Franklin Bluechip Fund-Dividend Reinvestment 138 07,185 units of Rs 10 each(7,185 units of Rs.10 each purchased during the year)
16 Franklin Prima Fund - Dividend Reinvestment 699 032,187 units of Rs 10 each(71,924 units of Rs.10 each purchased during the year)39,737 units of Rs 10 each redeemed during the year)
17 HDFC Income Fund - Growth 0 0(2,34,806 units of Rs.10 each purchased during the yearand 2,34,806 units redeemed during the year)
18 HDFC Equity Fund - Dividend Payout 1,050 3,47075,986 units of Rs.10 each(52,350 units of Rs.10 each purchased during the year)2,47,101 units of Rs 10 each redeemed during the year)
19 HDFC Equity Fund - Growth 0 0(7983 units of Rs.10 each purchased during the year)7,983 units of Rs 10 each redeemed during the year)
19 HDFC Prudence Fund - Growth 0 1,000(43,387 units of Rs.10 each purchased during the year)86,579 units of Rs 10 each redeemed during the year)
20 HDFC Liquid Fund - Growth 0 3,000(24,88,099 units of Rs.10 each purchased during the yearand 31,52,431 units redeemed during the year)
21 HDFC Short Term Fund - Growth 0 3,506(3,24,490 units redeemed during the year)
42,462 33,817
Less: Provision for diminution in the value 0 146
42,462 33,671
42,462 33,671
As at As at31st March, 2004 31st March, 2003
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)
Schedule G
Current Assets, Loans and Advances:Current Assets:
The company maintains its accounts on accrual basis under historical cost convention. The financial statements are in compliance with mandatoryaccounting standards issued by the Institute of Chartered Accountants of India and are in accordance with the requirements of the Companies Act,1956.
Revenue Recognition
Revenue earned from services provided on man hour basis is recognised based on time spent in man-hours or man months and billed to customers asper the terms of specific contracts.
Revenue earned from services performed on “fixed price” basis is recognised using the percentage of completion method or delivered milestones billedto customers as per the terms of specific contracts.
Retirement Benefits
Contributions to Provident and Superannuation Funds are accounted on actual liability basis. Provisions for contributions to Gratuity Fund and provisionfor leave encashment benefit on retirement are made on actuarial valuation basis.
Fixed Assets
Fixed assets are stated at cost.
Depreciation
Depreciation is provided on the written down value method at the rates as per schedule XIV of the Companies Act, 1956. Depreciation on additions /deductions is calculated pro-rata from / to the month of addition / deductions. Leased assets are amortised over the period of lease term.
Investments
Investments intended to be held for one year or more are classified as long term investments and are carried at cost. Current investments are carried atlower of cost or market value. The determination of the carrying costs of such investments is done on the basis of specific identification.
Inventories
Inventories are valued as under:
Work-in-Progress (Engineering Services) at the difference in realisable value of completed part and billed part of the job, where the job is for a lumpsumconsideration, if major portion of the job is complete and at cost in other cases.
Deferred Revenue Expenditure
The expenses disclosed under Miscellaneous Expenditure are amortised as follows:
Lump sum compensation paid under Voluntary Retirement Scheme launched from the year 2002-03 are amortised over a period of five years.
Foreign Currency Transactions
Foreign Currency Transactions have been accounted at the exchange rates prevailing on the transaction date .The exchange difference on settlement/conversion is taken to Profit & Loss Account. Foreign currency assets and liabilities are converted at year end rates.
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 theIncome Tax Act, 1961, and based on expected outcome of assessments/appeals.
Deferred Tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the tax ratesand laws enacted or substantively enacted as on the balance sheet date.
Deferred Tax assets are recognised and carried forward to the extend that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised
Schedules forming part of the accountsSchedule O
NOTES FORMING PART OF ACCOUNTS
1. Sales (Income from Engineering Services) is net of estimated future job revision cost as at 31st March, 2004 Rs. 6,356 (Previous Year Rs.10,017).
2. Remuneration (including perquisites) to the Manager and Directors:
2003-04 2002-03(Rs.’000) (Rs.’000)
1. Salaries and allowances 944 1,014
2. Perquisites 197 1763. Retirement benefits etc. 149 140
4. Director sitting fees 24 18
3. Auditors remuneration and expenses charged to the accounts:
7. Dividend remitted for the year ended 31 March, 2004 in foreign currency Rs. NIL (Previous year Rs.24,983)
8. (i) The company carries on the business of providing Engineering and associated services for thermal and combined cycle power projects.
(ii) With regard to clause 3(ii) of Part II of Schedule VI of the Companies Act, 1956, the Company is of the view that in respect of the activitiesmentioned in (i) above, the company is not a “manufacturing” or a “trading“ company falling under sub-clause(a)and (b) thereof, but it is acompany falling under sub-clause (c) thereof.
(iii) As the company is not a “manufacturing” company, clause 4C of Part II of Schedule VI of the Companies Act, 1956, is not applicable to it.
9. Contingent Liabilities:
(a) Guarantees given to President of India for export obligation against EPCG license Rs.1,232.
(b) Income Tax (including interest) that may arise in respect of which the Company is in appeal Rs.2,154. (Previous Year Rs. 1,604).
10. Estimated amounts of contracts remaining to be executed on capital account Rs.Nil (Previous Year Rs. Nil).
11. Accounting Standard – 18 as Related Party Disclosure is not applicable to the Company since the turnover of the Company does not exceed Rs.50 crores for the year.
12. Company has taken on lease certain assets upto 31.03.2001, the liability for future rentals on account of which is Rs. 586. (Previous Year Rs.1,210).
13. Assets acquired prior to April 1, 2001 under finance leases have been accounted in accordance with the “Guidance Note on Leases” issued by theInstitute of Chartered Accountants of India. The cost of the assets taken on lease is Rs.2876, the future lease obligation against, which is Rs. 2,220as at March, 2004.
L & T – SARGENT & LUNDY LIMITED
Schedules forming part of the accounts14. Disclosure in respect of finance lease (LTSL as a lessee) as required by AS – 19
a) Finance lease liabilities – Minimum lease payments:
1) Difference between book value of depreciable assets as per books of accounts and written down value for tax purpose 195 — — 538
2) Capital Loss carried forward — — — —
3) Provision for doubtful debts and advances 101 — 103 -
4) Preliminary Expenses 26 — 56 —
5) Provision for Leave Encashment 1134 — 666 —
6) Other items giving rise to timing differences — — 53 —
Total 1456 — 878 538
Net Deferred tax Asset / Liability 1456 340
Net decrease in liability credited to Profit & Loss Account 1116
17. Loans and Advances include amount due from officers of the company Rs.860 (Previous year Rs.1,201).Maximum amount outstanding at anytime during the year Rs.953 (Previous Year Rs. 1233).
18. The exchange difference arising on foreign currency transactions amounting to Rs. 1,045 (net loss) has been accounted under the respectiverevenue heads.
19. The Cash Credit facilities from Bank are secured by hypothecation of book debts. The charge on these assets also extends to Bank Guaranteesupto Rs. 3,368.
20. Sundry Creditors include Rs. NIL payable to small scale industrial units.
21 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I Registration Details
Registration No. 0 8 8 0 9 9 State Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 4
II Capital Raised during the year
Public Issue Rights IssueN I L N I L
Bonus Issue Preferential IssueN I L 1
III Position of Mobilisation and Deployment of fundsTotal Liabilities Total Assets
1 0 3 1 6 0 1 0 3 1 6 0Sources of Funds Paid-up Capital Reserves & Surplus
5 7 9 3 9 3 9 6 5 8Secured Loans Unsecured Loans
3 5 6 3 2 0 0 1Application of Funds
Net Fixed Asets Investments8 3 6 7 4 2 4 6 2
Deferred Tax Assets Net Current Assets1 4 5 6 4 9 7 4 3
Deferred Revenue Items1 1 3 2
IV Performance of Company (Amount in Rupeess)Turnover (including other income) Total Expenditure
1 1 9 1 9 0 1 1 7 9 3 2
+ - Profit/Loss Before Tax * + - Profit/Loss After Tax *1 2 5 8 2 0 4 4
Earnings Per Share in Rs. Dividend Rate %R s. 0 . 3 5 N I L
V Generic Names of Three Principal Products/Services of the Company(as per monetary terms)Item Code No. N O T A P A P L I C A B L E(ITC Code)Product Description E N G I N E E R I N G S E R V I C E S
22. Figures for the previous year have been regrouped/reclassified wherever necessary.
