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ANNEXURE TO DIRECTORS’ REPORT 2004-2005REPORTS AND ACCOUNTS - SUBSIDIARY COMPANIES
Contents Pages
Larsen & Toubro Infotech Limited S 2 - 20
Larsen & Toubro Infotech GmbH S 21 - 32
L&T Finance Limited S 33 - 61
L&T Capital Company Limited S 62 - 75
L&T Transportation Infrastructure Limited S 76 - 87
L&T Western India Tollbridge Limited S 88 - 100Narmada Infrastructure Construction Enterprise Limited S 101 - 112
Cyberpark Development & Construction Limited S 113 - 127
L&T Infrastructure Development Projects Limited S 128 - 142(Formerly L&T Holdings Limited)
L&T Infocity Limited S 143 - 160
L&T Infocity Lanka Private Limited S 161 - 169
L&T Infocity Infrastructure Limited S 170 - 178
Andhra Pradesh Expositions Private Limited S 179 - 185
Hyderabad International Trade Expositions Limited S 186 - 200
HPL Cogeneration Limited S 201 - 217
Bhilai Power Supply Company Limited S 218 - 226
India Infrastructure Developers Limited S 227 - 240
L&T Power Investments Private Limited S 241 - 251
Raykal Aluminium Company Private Limited S 252 - 256
Larsen & Toubro LLC S 257 - 266
L&T-ECC Construction (M) SDN.BHD. S 267 - 280
Larsen & Toubro (Oman) LLC S 281 - 293
Larsen & Toubro International FZE S 294 - 303
Larsen & Toubro Qatar LLC S 304 - 313
Zubair Kilpatrick LLC S 314 - 324
Tractor Engineers Limited S 325 - 347
L&T-Sargent & Lundy Limited S 348 - 365
S-2
LARSEN & TOUBRO INFOTECH LIMITED
Directors’ ReportThe Directors have pleasure in submitting the Eighth Annual Report and Accounts of Larsen & Toubro Infotech Limited for the year ended March 31, 2005.
FINANCIAL RESULTS2004-05 2003-04
Rs. Million Rs. Million
Total Income 5637.74 3660.29Operating Profit (PBIDT) 803.96 422.56Less : Interest 34.23 30.99Less : Depreciation and Amortisation 252.81 227.86Less : Amortisation of deferred revenue expenditure 11.13 40.59
Profit Before Tax (PBT) 505.79 123.12Less : Provision for Current Tax 31.22 4.22Add/ Less: (Writeback) / further provision for earlier years 14.52 -Add/ Less: (Writeback) / further provision for Deferred Tax 1.04 (3.53)
Profit After Tax (PAT) 459.01 122.43Add : Balance brought forward from previous year 292.15 169.72
Balance available for disposal which Directors appropriate as follows: 751.16 292.15Dividends 225.00 -Tax on Dividend 29.41 -Transfer to General Reserve 180.00 -
Balance to be carried forward 316.75 292.15
DIVIDEND
The Directors have paid Interim Dividend of Rs.7.50 per share on
30,000,000 Equity Shares of Rs.5/- each 225.00 -
The Directors do not recommend any final dividend.
FINANCIAL PERFORMANCE
Total income from all sources was Rs.5637.74 million (increase of 54% over previous year). Software exports amounted to Rs.5374.80 million (increaseof 61% over previous year).
Operating profit (PBIDT) was Rs.803.96 million (increase of 90% over previous year). Profit before tax was Rs.505.79 million (increase of 311% overprevious year) and Profit after tax was Rs.459.01 million (increase of 275% over previous year). Earnings per share were Rs.15.30 per equity share ofRs.5 each.
YEAR IN RETROSPECT
The year 2004-05 witnessed an increase in the worldwide IT spending and further acceleration is expected in 2005. During the year, the Company hasregistered a significant growth in Exports Revenue (61%) and USA continues to be the leading destination contributing 63% to the total software exports.The Offshoring has seen a rise with a shift from cost-only focus to a cost-and-quality or cost-and-business-impact focus. Companies are looking tooutsource beyond non-core functions as part of a broader effort to improve profitability.
With increased competition, offshoring is becoming mainstream and getting commoditized with billing rates under constant pressure. Consolidation of smallplayers and offshore presence of multinational or global service providers is further adding to the competition.
With the proven offshore outsourcing model and expectation of long term cost leveraging, US Companies continue large-scale outsourcing, despite localpressure to retain jobs. Servicing of engagements in the country of the client (especially USA) is becoming very restrictive and will be the major limitingfactor in the growth of business.
ORGANISATION
During last year, the Company acquired some key clients in ERP practices and financial services and further consolidated its presence in the Manufacturingand Communications and Embedded Systems space.
The Company plans to leverage its parentage in the manufacturing IT space. During the coming year the thrust will be on presenting focused solutionsto the market in the manufacturing arena in areas like Product Life Cycle Management (PLM), Global Supply Chain Management (SCM), Multi-tier DecisionSupport Systems (DSS), fine tuned Customer Relationship Management (CRM) and Manufacturing Excellence System (MES).
The Company has been able to qualify as an approved vendor in certain strategic accounts and hopes to make some breakthrough in the coming year.The Company has mapped certain key accounts with growth potential and initiatives have been undertaken to provide value-added and end-to-endsolutions to such clients.
QUALITY INITIATIVES
During the year, the Company received the IT Security Certification (BS7799 standard). The Company has also launched CMMi initiative, while continuingselect programmes of six-sigma implementation.
S-3
LARSEN & TOUBRO INFOTECH LIMITED
CAPITAL EXPENDITURE
As at March 31, 2005 the gross Fixed Assets stood at Rs.1753.17 million out of which assets amounting to Rs.354.08 million were added during the year.
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 company 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, technologyabsorption, 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 this Reportand forms part of the Report. The Report and the Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholderinterested 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 confirms 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 March 31, 2005 and of the profit or loss of the Companyfor the year ended March 31, 2005;
(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; and
(iv) the Directors have prepared the annual accounts on a going concern basis.
DIRECTORS
Mr. J.P. Nayak resigned from the Board of Directors of the Company on August 13, 2004. He was a Director since February 22, 2001.The Directors wishto place on record their appreciation of the invaluable services rendered by him as a Director of the Company.
In the Board Meeting of the Company held on August 13, 2004, Mr. V.K. Magapu has been appointed as a Director in casual vacancy caused byresignation of Mr. J. P. Nayak.
Mr. R.N. Mukhija was appointed as an Additional Director of the Company on August 13, 2004 and will hold office till the conclusion of the ensuing AGM.
Mr. Y.M.Deosthalee 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. V. K. Magapu, all non-wholetime directors of the Company with Mr.Y. M. Deosthalee as its Chairman. The role, terms of reference, the authority and power of the Audit Committee are in conformity with the requirementsof the Companies 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 Bankers, Vendors and Customers.
For and on behalf of the Board
Y. M. DEOSTHALEE V. K. MAGAPUDirectors
Place : MumbaiDate : April 29, 2005
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LARSEN & TOUBRO INFOTECH LIMITED
ANNEXURE - A
INFORMATION AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 ANDFORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED MARCH 31, 2005.
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, Koreaexport plans and Singapore. The Company plans to conduct road shows in
USA to promote offshore execution of software services fromIndia. It also maintains constant contact with prospectivecustomers for its offerings by way of participation in InternationalTrade Fairs.
(d) Total foreign exchange used and earned 2004-05 (Rs. Million)Used 2645.40Earned 5378.45
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 Not Applicable
2. Benefits derived as a result of the above R & D Not Applicable
3. Future plan of action Not Applicable
4. Expenditure on R & D Not Applicablea) 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, whichresults in better productivity. The Company has created a softwarecomponent library to ensure reusability of software and consistencyin implementation. These find particular use in B2B marketplaceimplementations where adherence to standards and compatibilitywith different platforms is very important.
2. Benefits derived as a result of the above efforts Repeat business, expansion into various new technology domainsand productivity improvements through use of latest softwaretools.
S-5
LARSEN & TOUBRO INFOTECH LIMITED
Auditors’ ReportTO THE MEMBERS OF LARSEN & TOUBRO INFOTECH LIMITED
We have audited the attached balance sheet of Larsen & Toubro Infotech Limited as at March 31, 2005 and the annexed profit and loss account andthe cash 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 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.
In accordance with the provisions of section 227 of the Companies Act, 1956, we report as under:
1. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India under 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 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 said balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standardsreferred to in Section 211(3C) of the Companies Act, 1956; and
e) on the basis of written representations received from directors as on March 31, 2005, and taken on record by the board of directors, we reportthat none of the directors is disqualified as on March 31, 2005, from being appointed as director in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956.
We report that in our opinion and to the best of our information and according to the explanations given to us, the said accounts read togetherwith the significant accounting policies in Schedule M and the notes appearing thereon, give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the balance sheet, of the state of the affairs of the Company as at March 31, 2005;
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.
SHARP & TANNANChartered Accountants
By the hand of
R.D.KAREPartner
(Membership no. 8820)
Place : MumbaiDate : April 29, 2005
S-6
LARSEN & TOUBRO INFOTECH LIMITED
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our report of even date)1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.
(b) 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 status of theCompany.
2 The Company has no inventories and hence reporting under clause 4(ii)(a), (b) and (c) is not applicable.3 We are informed by management that there are no companies, firms or other parties that are required to be listed in the register maintained under
Section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b) (c) and (d) of the Order are not applicable.4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the
size of the Company and the nature of its business for the purchase of fixed assets and for the sale of goods and services. Further, on the basisof our examination of the books and records of the Company and according to the information and explanations given to us, we have neither comeacross nor have we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.
5 We are informed by management that there are no companies, firms or other parties that are required to be listed in the register maintained underSection 301 of the Companies Act, 1956. Accordingly, paragraphs 4(v)(a) and (b) of the Order are not applicable.
6 The Company has not accepted any deposits in terms of provisions of Section 58A and 58AA of the Companies Act, 1956.7 We are of the opinion that the Company has an internal audit system commensurate with the size and the nature of its business.8 We are informed by management that the Company is not required to maintain cost accounts and records under section 209(1)(d) of the Companies
Act, 1956.9 (a) According to the information and explanations given to us and as per the records of the Company examined by us, in our opinion, the Company
is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealthtax, custom duty, excise duty and other material statutory dues as applicable with the appropriate authorities. According to the information andexplanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, incometax, sales tax, wealth tax, custom duty, excise duty and other statutory dues outstanding as at March 31, 2005 for a period of more than sixmonths from the date they became payable. We were informed by management that there are no dues payable under the Employees StateInsurance 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, incometax, custom duty, wealth tax, and excise duty that have not been deposited with the appropriate authorities on account of any dispute.
10 The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current financial year or in theimmediately preceding financial year.
11 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted inrepayment of dues to any financial institution or bank or debenture holder as at the balance sheet date.
12 The Company has not granted any loans or 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 The Company is not dealing in shares, securities, debentures and other investments.15 According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial
institutions.16 In our opinion and according to the information and explanations given to us, we are of the opinion that the Company has applied term loans for
the purpose for which the loans were obtained.17 According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that no
funds raised on short term basis have been used for long term investments.18 The Company has not made any preferential allotment of shares during the year.19 The Company did not have any outstanding secured 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 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given to us, we have neither come across any instances of fraud on or by theCompany, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
By the hand of
R.D.KAREPartner
(Membership no. 8820)Place : MumbaiDate : April 29, 2005
S-7
LARSEN & TOUBRO INFOTECH LIMITED
Balance Sheet as at March 31, 2005As at 31.3.2005 As at 31.3.2004
Schedules Rupees RupeesSOURCES OF FUNDSShareholders’ FundsShare Capital A 150,000,000 150,000,000Reserves and Surplus B 1,016,750,933 812,148,742
1,166,750,933 962,148,742Loan FundsSecured Loans C 804,591,602 791,719,697Unsecured Loans D 9,467,942 91,067,394
814,059,544 882,787,091Deferred Tax Liability (net) 1,760,656 722,301(see Schedule P, note 11)
TOTAL 1,982,571,133 1,845,658,134
APPLICATION OF FUNDSTangible Assets E1Gross Block 1,217,107,954 932,530,788Less : Depreciation 610,305,992 496,940,784
Net Block 606,801,962 435,590,004Capital work-in-progress 31,205,065 106,225,822
638,007,027 541,815,826Intangible Assets E2Gross Block 494,471,490 424,972,753Less : Amortisation 319,697,852 200,353,997
Net Block 174,773,638 224,618,756Capital work-in-progress 10,387,257 26,699,757
185,160,895 251,318,513Investments F 1,140,649 1,140,650Current Assets, Loans and AdvancesSundry Debtors G 1,330,449,398 790,211,992Cash and Bank Balances H 41,408,112 44,013,684Loans and Advances I 443,248,328 546,244,475
1,815,105,838 1,380,470,151Less : Current Liabilities and Provisions JCurrent Liabilities 581,101,205 306,219,831Provisions 75,742,071 33,995,526
656,843,276 340,215,356
Net Current Assets 1,158,262,562 1,040,254,795
Deferred revenue expenditure K - 11,128,350(To the extent not written off or adjusted)
TOTAL 1,982,571,133 1,845,658,134
SIGNIFICANT ACCOUNTING POLICIES PAND NOTES TO ACCOUNTS
As per our report attachedSHARP & TANNANChartered Accountantsby the hand ofR. D. KARE S. S. PRABHUDESAI V. K. MAGAPU Y. M. DEOSTHALEEPartner Company Secretary Manager / Director Director(Membership No.8820)
Place : Mumbai Place : MumbaiDate : April 29, 2005 Date : April 29, 2005
S-8
LARSEN & TOUBRO INFOTECH LIMITED
Profit & Loss Account for the year ended March 31, 20052004-05 2003-04
Schedules Rupees RupeesINCOMESoftware development services and products
Overseas 5,374,799,513 3,339,060,442
Domestic 249,686,813 306,968,458
Other income L 13,256,536 14,261,833
5,637,742,862 3,660,290,733
EXPENDITURESoftware development expenses M 3,395,457,370 2,222,187,802
Sales, administration and other expenses N 1,438,326,518 1,015,540,010
4,833,783,888 3,237,727,812
Operating profit (PBIDT) 803,958,974 422,562,921Interest O 34,234,582 30,993,709
Depreciation on tangible assets 133,463,523 125,161,222
Amortisation of intangible assets 119,343,855 102,695,144
Amortisation of deferred revenue expenditure 11,128,350 40,589,732
Profit before tax (PBT) 505,788,664 123,123,114Provision for taxes 31,227,373 4,223,815
(including Rs.1,04,000 for wealth tax; previous year Rs.200,000)
(including Rs.1,25,715.76 paid for current year)
Short provision for taxes in previous years 14,516,055 -
Deferred tax 1,038,356 (3,530,642)
Profit after tax (PAT) 459,006,880 122,429,941Add : Balance brought forward from previous year 292,148,742 169,718,801
Profit available for appropriation 751,155,622 292,148,742
Less: Transfer to general reserve 180,000,000 -
Profit available for distribution 571,155,622 292,148,742
Interim dividend 225,000,000 -
Tax on dividend 29,404,689 -
Balance to be carried forward 316,750,933 292,148,742
Basic and diluted earnings per share (EPS) 15.30 4.08
Equivalent number of shares of Rs.5 each 30,000,000 30,000,000
SIGNIFICANT ACCOUNTING POLICIES PAND NOTES ON ACCOUNTS
As per our report attachedSHARP & TANNANChartered Accountantsby the hand ofR. D. KARE S. S. PRABHUDESAI V. K. MAGAPU Y. M. DEOSTHALEEPartner Company Secretary Manager / Director Director(Membership No.8820)
Place : Mumbai Place : MumbaiDate : April 29, 2005 Date : April 29, 2005
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LARSEN & TOUBRO INFOTECH LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
Rupees RupeesA Cash flow from operating activities:
Net profit before tax 505,788,664 123,123,114Adjustments for:Depreciation and Amortisation 252,807,378 227,856,366Interest paid 34,234,583 31,377,153Unrealised foreign exchange difference 28,645,730 18,763,058Income from other investments (320,851) (151,468)Deferred revenue expenditure amortised 11,128,350 40,589,732Cost of long term projects amortised 15,429,014 6,285,538Cost of long term projects (6,841,538) (41,878,192)(Profit)/loss on sale of fixed assets (10,320) 2,311,593Operating profit before working capital changes 840,861,010 408,276,894Changes in working capital(Increase)/decrease in trade receivables (562,291,464) (71,087,884)(Increase)/decrease in other receivables 36,451,592 (177,833,388)Increase/(decrease) in trade payables 314,330,805 15,761,341(Increase)/decrease in working capital (211,509,067) (233,159,931)Cash generated from operations 629,351,943 175,116,963Direct taxes paid 13,468,125 (4,266,335)Net cash from operating activities 642,820,068 170,850,628
B Cash flow from investing activities :Purchase of fixed assets (282,840,961) (217,585,132)Sale of fixed assets 10,320 68,523,192Investments - 3,500,000Interest received 1,940,563 383,444Dividend received from other investments 320,851 151,468Net cash from investing activities (280,569,227) (145,027,028)
C Cash flow from financing activities:Proceeds from other borrowings (net) 9,272,453 91,052,626Inter corporate borrowings (78,000,000) (92,000,000)Financial expenses (41,724,178) (28,823,764)Dividend paid (225,000,000) -Dividend tax paid (29,404,689) -Net cash from financing activities (364,856,414) (29,771,138)Net (decrease)/increase in cash and cash equivalents (A+B+C) (2,605,572) (3,947,538)Cash and cash equivalents at the beginning of the year 44,013,684 47,961,222Cash and cash equivalents at the end of the year 41,408,112 44,013,684
Notes: 0 01 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 attachedSHARP & TANNANChartered Accountantsby the hand ofR. D. KARE S. S. PRABHUDESAI V. K. MAGAPU Y. M. DEOSTHALEEPartner Company Secretary Manager / Director Director(Membership No.8820)
Place : Mumbai Place : MumbaiDate : April 29, 2005 Date : April 29, 2005
S-10
LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of accountsAs at 31.3.2005 As at 31.3.2004
Rupees RupeesSCHEDULE A
Share CapitalAuthorised:3,05,00,000 Equity Shares of Rs.5 each(Previous year 3,05,00,000 of Rs. 5 each) 152,500,000 152,500,000
Issued 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 & Toubro Limited, the holdingCompany
150,000,000 150,000,000
SCHEDULE B
Reserves and SurplusGeneral ReserveAs per last Balance Sheet 520,000,000 520,000,000Add : Transferred from Profit and Loss Account 180,000,000 -
700,000,000 520,000,000Profit and Loss Account 316,750,933 292,148,742
1,016,750,933 812,148,742
SCHEDULE C
Secured LoansTerm loan from bank 137,482,500 -Other loans from banks 667,109,102 791,719,697
804,591,602 791,719,697
SCHEDULE D
Unsecured LoansInter corporate borrowings (from holding company) - 78,000,000Lease finance (due within one year Rs.2,973,551) 9,467,942 13,067,394
9,467,942 91,067,394
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LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of accountsSCHEDULE E
FIXED ASSETS Rupees
Gross Block Depreciation / Amortisation Net Block Net BlockFixed and Intangible Assets As at As at As at For the Up to As at As at
1-Apr-04 Additions Deductions 31-Mar-05 1-Apr-04 Year Deductions 31-Mar-05 31-Mar-05 31-Mar-04
Schedule E1-Tangible
Assets-Own
Buildings 173,210,325 56,784,694 - 229,995,019 34,489,941 7,933,117 - 42,423,058 187,571,961 138,720,385
Plant and machinery 59,175,554 3,334,401 74,679 62,435,276 54,125,057 2,444,307 74,679 56,494,685 5,940,591 5,050,497
Computers 377,409,931 112,235,248 19,915,902 469,729,277 253,213,024 71,660,371 19,915,902 304,957,493 164,771,784 124,196,905
Furniture and fixtures 299,478,793 130,754,850 107,734 430,125,909 147,748,680 45,981,628 107,734 193,622,574 236,503,335 151,730,115
Vehicles 4,618,458 192,897 - 4,811,355 2,217,930 634,330 - 2,852,260 1,959,095 2,400,527
Sub Total (A) 913,893,061 303,302,090 20,098,315 1,197,096,836 491,794,632 128,653,753 20,098,315 600,350,070 596,746,766 422,098,429
Tangible Assets - leasedComputers 18,637,727 1,373,391 - 20,011,118 5,146,152 4,809,770 - 9,955,922 10,055,196 13,491,575
Sub Total (B) 18,637,727 1,373,391 - 20,011,118 5,146,152 4,809,770 - 9,955,922 10,055,196 13,491,575
Add: Capital work-in-progress(including Advances) - - - - - - - - 31,205,065 106,225,822
Total of Tangible Assets 932,530,788 304,675,481 20,098,315 1,217,107,954 496,940,785 133,463,523 20,098,315 610,305,992 638,007,027 541,815,826
Previous Year 895,687,017 150,448,036 113,604,265 932,530,788 414,549,040 125,161,222 42,769,478 496,940,784 - -Schedule E2 -Intangible AssetsLeasehold Land 12,268,579 - - 12,268,579 1,214,528 128,820 - 1,343,348 10,925,231 11,054,051Software 314,654,174 69,498,737 - 384,152,911 174,626,969 99,605,035 - 274,232,004 109,920,907 140,027,205Business Rights 98,050,000 - - 98,050,000 24,512,500 19,610,000 - 44,122,500 53,927,500 73,537,500Add: Capital work-in-progress-(including Advances) - - - - - - - - 10,387,257 26,699,757
Total of Intangible Assets 424,972,753 69,498,737 - 494,471,490 200,353,997 119,343,855 - 319,697,852 185,160,895 251,318,513
Previous Year 328,388,005 96,584,748 - 424,972,753 97,658,853 102,695,144 - 200,353,997 - -
As at 31.3.2005 As at 31.3.2004
Rupees RupeesSCHEDULE FInvestments (at cost,unquoted)Long term investment1, fully paid equity share of Euro 25,000/- in 1,140,649 1,140,650Larsen & Toubro Infotech GmbH, wholly owned subsidiary
1,140,649 1,140,650
SCHEDULE GSundry DebtorsUnsecuredDebts outstanding for a period exceeding six monthsConsidered good 54,927,466 110,371,172Considered doubtful 108,666,571 82,180,633
163,594,037 192,551,805Other DebtsConsidered good- Due from subsidiary 78,627,732 6,253,596- Others 1,196,894,200 673,587,225Considered doubtfulLess : Provision for doubtful debts 108,666,571 82,180,634
1,330,449,398 790,211,992
S-12
LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of accountsAs at 31.3.2005 As at 31.3.2004
Rupees Rupees
SCHEDULE H
Cash and bank balances
Cash on hand 1,857,308 319,532Balances with scheduled banksin current accounts (including remittances in transit) 4,154,587 12,734,349Balances with non-scheduled banks 35,396,217 30,959,803(see schedule P note 2)
41,408,112 44,013,684
SCHEDULE I
Loans and Advances
Secured :Loans against mortgage of house property 5,994,675 6,579,515Unsecured :Unbilled revenues 52,822,341 202,029,971Due from subsidiary company 4,880,000 4,880,000Advances recoverable in cash or in kind 359,387,672 297,162,335Cost of long term projects 20,163,640 35,592,654(see schedule P note 15)
443,248,328 546,244,475
SCHEDULE J
Current Liabilities and Provisions
Current Liabilities:Sundry Creditors 452,076,727 255,625,497Advance billing 33,036,109 2,045,389Due to holding company 95,748,369 48,313,944Due to directors 240,000 235,000
581,101,205 306,219,830Provisions:Taxes 40,867,071 13,204,525Leave encashment 34,875,000 20,791,000
75,742,071 33,995,525
656,843,276 340,215,356
SCHEDULE K
Deferred Revenue Expenditure(To the extent not written off or adjusted)Expenses for SEI CMM Level 5 - 11,128,350
- 11,128,350
2004-05 2003-04
Rupees RupeesSCHEDULE L
Other income
Income from investments 320,851 151,468Gain on sale of fixed asset 10,320 (2,311,593)Miscellaneous income 12,925,365 16,421,958
13,256,536 14,261,833
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LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of accounts2004-05 2003-04
Rupees RupeesSCHEDULE M
Software development expenses
Salaries including overseas staff expenses 2,429,922,071 1,529,168,942Staff welfare 153,010,992 86,606,618Contribution to provident and other funds 42,306,021 29,530,039Contribution to superannuation fund 18,449,289 13,339,014Contribution to gratuity fund 4,730,000 4,101,593Communication expenses 99,740,372 93,989,557Consultancy charges 563,636,251 372,413,988Cost of Software packages for own use 44,595,166 32,475,211Cost of bought-out items for resale 39,067,208 60,562,840
3,395,457,370 2,222,187,802
SCHEDULE N
Sales, Administration and other expenses
Salaries including overseas staff expenses 490,144,345 326,119,536Travelling and conveyance 209,372,700 160,104,341Rent (lease rent Rs.20,477,873; previous year Rs.6,705,608) 141,261,367 103,190,225Telephone charges and postage 86,069,988 70,648,077Legal and professional charges 91,031,397 79,439,553Printing and stationery 26,719,443 21,206,488Advertisement 7,314,531 7,449,436Advertisement for Vacancies 20,735,586 15,300,581Repairs to building 4,448,696 1,147,741Repairs to computers 20,087,672 7,204,691General repairs and maintenance 50,326,458 35,822,558Power and fuel 54,040,096 38,656,205Establishment expenses 29,198,798 43,980,934Equipment hire charges 22,899,583 5,230,664Insurance charges 25,860,830 13,919,184Rates and taxes 9,954,339 6,072,859Auditors’ remuneration 875,500 744,803Bad debts 36,918,376 21,850,477Provision for doubtful debts (net) 26,485,937 3,225,565Commission charges 14,995,360 12,970,583Books and periodicals 7,560,385 7,290,617Entertainment 11,304,832 7,336,729Directors’ fees 240,000 235,000Miscellaneous expenses 29,023,071 20,107,625Amortisation of cost of long term projects 21,457,228 6,285,538
1,438,326,518 1,015,540,010
SCHEDULE O
Interest paid onFixed loans 3,106,589 6,035,985On others 28,338,534 12,914,833Lease finance charges 4,730,022 12,426,335Less : Interest received 1,940,563 383,444
34,234,582 30,993,709
S-14
LARSEN & TOUBRO INFOTECH LIMITED
Schedules forming part of accountsSCHEDULE PSignificant 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 (“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 conformity with GAAP requires the management of the Company to make estimates and assumptions thataffect the income and expense reported for the period and assets and liabilities reported as of the date of the financial statements. Examples of suchestimates include the useful lives of the fixed assets, provision for doubtful debts, future obligations in respect of retirement benefit plans, etc. Actualresults could vary from these estimates.
2. Revenue recognition
Revenue 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 represents valueof 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 benefits
Contribution 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 Assets
TangibleFixed 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 finance leases.
Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of minimum lease paymentsand a liability is created for an equivalent amount. Each lease rental is allocated between the liability and the interest cost, so as to obtaina 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. DEPRECIATION
Tangible - 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:• Plant and machinery 20%• Computers 30%• Servers 25%• Furniture and fixtures 10%• Office equipments 20%• Motor cars 14.14%Tangible - Leased assets
Assets acquired under finance leases are depreciated at the rates applicable to similar assets owned by the Company as there is reasonable certainitythat the Company shall obtain ownership of the assets at the end of the lease term.
Intangible assets
The basis of amortisation of intangible assets is as follows:• Leasehold land over the residual period of the lease• Computer software 33.33%• Business Rights over a period of five years
Depreciation / amortisation on additions / disposals is calculated pro-rata from / to the month of additions / disposals.
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LARSEN & TOUBRO INFOTECH LIMITED
7. Borrowing cost
Borrowing cost that are attributable to the acquisition and construction of qualifying assets are capitalised as part of cost of such assets till such timeas 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 other borrowingcosts are recognised as an expense in the period in which they are incurred.
8. Deferred revenue expenditure
The expenses disclosed under Miscellaneous Expenditure are amortised as follows:
(a) 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 transactions
Foreign 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:
• revenue items at the average rate for the period;
• fixed assets and investments at the rates prevailing on the date of the transaction; and
• other assets and liabilities at year end rates.
Exchange difference on settlement / year end conversion is adjusted to:
• profit and loss account
Profit or loss on forward contracts is accounted over the period of the contract.
10. Income tax
Provision 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 accounts
S-16
LARSEN & TOUBRO INFOTECH LIMITED
Notes forming part of accounts1. 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
during31.3.2005 31.3.2004 2004-05 2003-04
Rupees Rupees Rupees RupeesCurrent account
Citibank N.A., New Jersey (Collection) 8,125,388 9,675,426 107,278,741 140,068,518
Citibank N.A., New Jersey (Checking) 645,351 487,517 64,887,968 139,110,440
Citibank N.A., Paris 6,344,499 1,611,631 17,525,364 22,740,211
Citibank N.A., Singapore 652,823 300,775 4,997,228 7,946,303
Fleet Boston, New Jersey 6,234,769 3,121,228 6,216,954 68,299,151
HSBC, London (GBP) (1,437,108) 1,277,112 13,727,623 16,546,465
HSBC, London (USD) 4,488,647 2,196,549 26,510,455 14,517,920
HSBC, London (EUR) 175,112 186,434 9,329,044 10,214,413
State Bank of India, Tokyo 735,593 623,001 9,048,309 6,624,731
Tokyo Mitshubishi Bank, Tokyo 1,735,588 4,235,254 16,595,219 10,926,400
Total 27,675,963 23,714,927
Deposit account
Citibank N.A., New Jersey 7,375,936 7,244,876 7,375,936 7,244,876
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. Henceit 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.51,381,635 (previous year gain of Rs.65,645,072) has beenaccounted under respective revenue heads.
5. Expenditure in foreign currency :2004-05 2003-04
Rupees Rupees
Overseas staff costs 1,746,790,236 1,119,988,994
Foreign travel 57,472,194 42,627,829
Agency commission 14,995,189 12,970,583
Interest 4,168,701 2,286,874
Others (includes overseas office expenses) 739,227,711 547,769,253
Total 2,562,654,631 1,725,643,532
6. Earnings in foreign currency:Software exports 5,376,148,893 3,339,060,442
Other income 2,303,480 63,802
Total 5,378,452,373 3,339,124,244
7. Manager’s remuneration includes:
Salary 1,336,438 2,510,865
Perquisites 191,836 272,421
Retirement benefits 128,467 271,350
Total 1,654,312 3,054,636
The remuneration for the current year is for the period upto 12.08.2004. The above figures do not include contribution to gratuity fund, pensionscheme and leave encashment benefit.
S-17
LARSEN & TOUBRO INFOTECH LIMITED
Notes forming part of accounts2004-05 2003-04
Rupees Rupees8. Auditors’ remuneration (excluding service tax) and expenses charged to the accounts include :
Audit fees 450,000 450,000Tax audit fees 219,500 180,000Certification fees 206,000 111,507Reimbursement of expenses - 3,296
Total 875,500 744,803
9. Value of imports on C.I.F. basis:Capital goods 70,311,735 43,020,895Others 12,433,519 25,772,483
Total 82,745,254 68,793,378
10. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs.45,819,526 (previous year:Rs.16,946,938)
11. The break-up of net deferred tax liability as at March 31, 2005 is as under:Deferred tax asset/ Current year Deferred tax asset/ (liability)
(liability) as at March 31, 2004 (charge) / credit as at March 31, 2005Rupees Rupees Rupees
Deferred tax liabilities• Depreciation / amortisation (4,915,076) 1,979,181 (2,935,895)• Amortisation of intangible assets (263,816) 168,415 (95,401)• Miscellaneous expenditure
(to the extent not written off /adjusted) (319,384) 319,384 -• Cost of long-term projects (1,030,628) 691,274 (339,354)• Others (5,657) (1,681) (7,338)
Total (6,534,561) 3,156,573 (3,377,988)
Deferred tax asset• Unabsorbed depreciation 3,453,675 (3,453,675) -• Provision for doubtful debts 2,358,585 (741,253) 1,617,332
Total 5,812,260 (4,194,928) 1,617,332
Net deferred tax liability (722,301) (1,038,355) (1,760,656)
12. LeasesFinance 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 providedon such 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.20,011,118 (previous year Rs.18,637,727), depreciation for the year is higher byRs.4,809,770 (previous year Rs.3,708,025) and charge to profit and loss account in respect of lease rentals is lower by Rs.6,408,739 (previous yearRs.5,668,758) interest expense is higher by Rs.1,435,895 (previous year Rs.1,486,460) and the profit is higher by Rs.163,074 (previous yearRs.474,273).
Assets acquired on finance lease comprise of servers. The minimum lease rentals and their present value as at March 31, 2005 in respect of assetsacquired under finance lease are as follows:
RupeesMinimum lease payments- Payable not later than 1 year 3,826,902- Payable after 1 year but not later than 5 years 7,171,218
- Total 10,998,120Less : future finance charges 1,530,178
9,467,942
Present value of minimum lease payments- Payable not later than 1 year 2,973,551- Payable after 1 year but not later than 5 years 6,494,391
- Total 9,467,942
S-18
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.27,022,515 (Rs. 8,301,495) and the future rentals payable are as follows:
Minimum lease payments- Payable not later than 1 year 29,157,949- Payable after 1 year but not later than 5 years 69,944,863
- Total 99,102,812
13. Related party disclosure:
The related parties with whom the Company had transactions during the year are :
Name Relationship
Larsen & Toubro Limited Holding CompanyLarsen & Toubro Infotech GmbH 100% subsidiaryTractor Engineers Limited Fellow subsidiaryL&T Finance Limited Fellow subsidiaryA summary of transactions with related parties is given below:Transaction Holding Co. Subsidiary Fellow Subsidiaries
Rupees Rupees Rupees
· Sale of services / products 114,104,644 130,703,503 4,055,000(151,518,657) (109,034,705) (1,640,314)
· Purchase of goods and assets/ lease of assets 13,523,053 - 1,373,391(3,202,522) (-) (73,794,881)
· Sale of assets - - -(-) (-) (62,621,921)
· Purchase of services 168,747,016 52,771,151 -(103,185,685) (75,763,704) (-)
· Overheads charged by 72,720,360 - -(110,583,472) (-) (-)
· Overheads charged to 526,907 - -(6,256,247) (-) (1,160,400)
· Lease rent paid - - 30,465,285(-) (-) (15,980,925)
· Interest / Dividend received - - -(-) (-) (-)
· Interest / Dividend paid 229,276,102 - 1,441,044(18,312,664) (-) (1,552,039)
· Unsecured loan - - -(78,000,000) (-) (-)
· Trade receivable - 78,627,732 -- (4,253,597) (6,892,109)
· Trade payable 96,562,625 - 5,338,294(48,313,944) (-) (-)
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.
14. Segmental reportingSegmental 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
Revenue 3,578,646,903 1,074,210,307 692,799,929 249,686,813 29,142,374 5,624,486,326(2,160,754,176) (614,110,378) (529,177,994) (306,968,458) (35,197,894) (3,646,028,900)
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.
15. 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.
16. 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, 2005.
17. Previous year’s figures have been regrouped, wherever necessary, to conform to classifications of the current year.
Notes forming part of accounts
S-19
LARSEN & TOUBRO INFOTECH LIMITED
Notes forming part of accounts18. Balance Sheet abstract and Company’s general business profile
I Registration Details
Registration No. 1 1 1 0 4 6 9 3 Status Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 5
Day 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 Rs. Thousands)
Total Liabilities Total Assets
1 9 8 2 5 7 1 1 9 8 2 5 7 1
Sources of Funds
Paid-up Capital Reserves & Surplus
1 5 0 0 0 0 1 0 1 6 7 5 1
Secured Loans Unsecured Loans
8 0 4 5 9 2 9 4 6 8
Deferred Tax
+ -
+ 1 7 6 0
Application of Funds
Net Fixed Assets Investments
8 2 3 1 6 8 1 1 4 1
Net Current Assets Misc. Expenditure
1 1 5 8 2 6 3 N I L
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
5 6 3 7 7 4 3 5 1 3 1 9 5 4
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
+ 5 0 5 7 8 9 + 4 5 9 0 0 7
Please tick Appropriate box + for Profit, - for Loss
Earnings Per Share of Rs. 5 Dividend Rate %
R S 1 5 P 3 0 1 5 0
V Generic Names of Three Principal Products/Services of the Company
(as per monetary items)
Item Code No. N A
(ITC Code)
Product Description SOFTWARE DEVELOPMENT
As per our report attachedSHARP & TANNANChartered Accountantsby the hand ofR. D. KARE S. S. PRABHUDESAI V. K. MAGAPU Y. M. DEOSTHALEEPartner Company Secretary Manager / Director Director(Membership No.8820)
Place : Mumbai Place : MumbaiDate : April 29, 2005 Date : April 29, 2005
S-20
LARSEN & TOUBRO INFOTECH LIMITED
Statement pursuant to Section 212 of the Companies Act, 1956 relating tosubsidiary company:Name of the subsidiary company: Larsen & Toubro Infotech GmbH
Financial year of the subsidiary company ended on: 31/03/2005
Number of Shares in the subsidiary company held byLarsen & Toubro Infotech Limited at the above date 1
The net aggregate of profits, less losses, of thesubsidiary company so far as it concernsthe members of Larsen & Toubro Infotech Limited:
(i) Dealt with in the accounts of Larsen & Toubro Infotech Limitedamounted to:
(a) for the subsidiary’s financial year ended March 31, 2005 Nil
(b) for previous financial years of the subsidiarysince it became subsidiary of Larsen & Toubro Infotech Limited Rs.24,979,000
(ii) Not dealt with in the accounts of Larsen & Toubro Infotech Limitedamounted to:
(a) for the subsidiary’s financial year ended March 31, 2005 Rs.15,901,513
(b) for previous financial years of the subsidiary since itbecame subsidiary of Larsen & Toubro Infotech Limited. Rs.13,902,438
Changes in the interest of Larsen & Toubro Infotech Limited between the end of thesubsidiary’s financial year and March 31, 2005
Number of shares acquired Nil
Material changes between the end of the subsidiary’s financialyear and March 31, 2005 Not applicable
S. S. PRABHUDESAI V. K. MAGAPU Y. M. DEOSTHALEECompany Secretary Manager / Director Director
Place : MumbaiDate : April 29, 2005
S-21
LARSEN & TOUBRO INFOTECH GmbH
Directors’ ReportThe Directors have pleasure in presenting the Sixth Annual report and the audited accounts of the Company for the year ended March 31, 2005.
Financial Results 2004-05 2003-04Euro Rupees Euro Rupees
Total Income 5,893,585 336,088,226 5,686,611 307,823,946
Profit before tax 312,807 19,166,755 242,291 14,165,436
Diminution in value of investment - - 113,494 5,872,436
Taxes (incl. Prior year taxes, Nil, previous year Euro 47,370) 57,731 3,265,242 112,623 6,101,945
Profit after tax 255,076 15,901,513 16,174 2,191,055
Review of Operations
The Company registered total income of Rs. 336 Million, marginally higher than the previous year. The profit before tax amounted to Rs.19.17 Million.
The Company has been able to sustain the competitive pressures and hopes to further improve the performance in the coming year.
Dividend
In order to conserve the resources for future business growth, the Directors do not recommend dividend for the current year.
Directors
During the year under review, Mr. Vinay Rajadhyaksha ceased to be the Director of the Company. The Board places on record its sincere appreciationof the valuable contribution made by him. Mr. Sunil Sapre has been appointed as Director in place of Mr. Vinay Rajadhyaksha.
Auditors’ Report
The Auditors’ Report to the Shareholders does not contain any qualifications.
Disclosure of Particulars
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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, 2005 and of the profits of the Company for the year endedon 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
Auditors
M/s Sharp & Tannan, the Auditors of the Company have indicated their willingness and are eligible for reappointment.
For and on behalf of the Board,
KARAN SINGH SUNIL SAPREDirectors
Place : LeipzigDated: April 29, 2005
S-22
LARSEN & TOUBRO INFOTECH GmbH
Auditors’ ReportTo the members of Larsen & Toubro Infotech GmbH
The financial statements of Larsen & Toubro Infotech GmbH for the year ended March 31, 2005, being a company registered in Germany, are auditedby Günther Pöhner and Christopher von Loeben and we have been furnished with their audit report dated April 29, 2005.
We are presented with the accounts in Indian Rupees prepared on the basis of the aforesaid accounts to comply with the requirements ofSection 212 of the Companies Act, 1956. We give our report as under:
We have audited the attached balance sheet of Larsen & Toubro Infotech GmbH as at March 31, 2005 and the annexed profit and loss account andthe cash 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 a test basis,evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides areasonable basis for our opinion.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:
(1) As required by the Companies (Auditor’s Report) Order, 2003, issued by the central government of India under sub-section (4A) of Section 227of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and5 of the said Order.
(2) Further to our comments in the Annexure referred to above, we report that:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 of thosebooks;
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; and
(e) as regards reporting on the disqualification of directors under Section 274(1)(g) of the Indian Companies Act, 1956, since the Company isregistered in Germany, no reporting is required to be made under the said section.
In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significantaccounting policies in schedule O and notes appearing thereon, give the information required by the Companies Act, 1956 in the manner sorequired and give a true and fair view in conformity with the accounting principles generally accepted in India:
1 in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2005;
2 in the case of the profit and loss account, of the profit for the year ended on that date; and
3 in the case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
by the hand ofR. D. KARE
Place : Mumbai PartnerDate : April 29, 2005 (Membership No. 8820)
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LARSEN & TOUBRO INFOTECH GmbH
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our report of even date)1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.
(b) We are informed that the Company has physically verified the fixed assets during the year and no material discrepancies were noticed onsuch verification. In our opinion, the frequency of such verification is reasonable.
(c) Fixed assets disposed off during the year are not substantial in relation to the Company and do not affect the going concern.2 The Company has no inventories and hence reporting under paragraphs 4(ii) (a), (b) and (c) is not applicable.3 There are no loans, secured or unsecured, either granted to or taken from companies, firms or other parties. However, no register is required
to be maintained under Section 301 of the Companies Act, 1956 since the Company is incorporated and doing business only in Germany.4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with
the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. In our opinion and accordingto the information and explanations given to us, there is no continuing failure to correct major weaknesses in the aforesaid internal controlprocedures.
5 The Company is incorporated in Germany and accordingly, maintenance of records under Section 301 of the Companies Act, 1956 is not required.6 The Company has not accepted any deposits from the public.7 We are of the opinion that the Company has an internal audit system commensurate with the size and the nature of its business.8 Cost records are not required to be maintained under Section 209(1)(d) of the Companies Act, 1956 by the Company as it is incorporated in
Germany and is doing business outside India.9 The Company being registered in Germany, has no statutory liabilities in India and accordingly reporting for paragraphs 4(ix) (a) and (b) is not
required.10 The Company has no accumulated losses as at March 31, 2005 and it has not incurred any cash losses in the financial year ended on that date.11 According to the information and explanations given by management, the Company has neither borrowed from a bank or financial institution nor
has it issued any debentures.12 The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.13 The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.14 In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.15 According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or
financial institutions.16 The Company has not availed any term loans during the year.17 According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that
no funds raised on short term basis have been used for long term investments.18 The Company has not made any preferential allotment of shares to any party during the year.19 The Company has not issued debentures during the period and accordingly, no security is required to be provided.20 The Company has not raised any money by public issues during the year.21 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
by the hand ofR. D. KARE
Place : Mumbai PartnerDate : April 29, 2005 (Membership No. 8820)
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LARSEN & TOUBRO INFOTECH GmbH
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule EUROS RUPEES EUROS RUPEES
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital A 25,000.00 1,140,650 25,000.00 1,140,650Reserves and Surplus B 493,582.70 29,803,951 238,506.26 14,740,802
518,582.70 30,944,601 263,506.26 15,881,452
LOAN FUNDS
Unsecured loans C 110,000.00 4,880,000 110,000.00 4,880,000
110,000.00 4,880,000 110,000.00 4,880,000
TOTAL 628,582.70 35,824,601 373,506.26 20,761,452
APPLICATION OF FUNDS
Fixed Assets D
Gross Block 22,766.37 1,052,851 21,329.19 971,564Less: Depreciation 17,205.37 826,549 16,084.26 763,139
Net Block 5,561.00 226,302 5,244.93 208,425
InvestmentsPan Health, U.S.A. E 1.00 53 1.00 53
1.00 53 1.00 53
Current assets, loans and advances
Sundry debtors F 1,398,906.12 79,567,629 499,982.99 27,593,542Cash and bank balances G 236,563.63 13,406,061 261,276.02 13,965,203Loans and advances H 1,035,918.41 58,705,496 400,032.24 21,381,724
2,671,388.16 151,679,186 1,161,291.25 62,940,469
Less: Current liabilities and provisions
Liabilities I 1,646,316.46 93,296,710 392,769.43 20,993,518Provisions J 402,051.00 22,784,230 400,261.49 21,393,977
2,048,367.46 116,080,940 793,030.92 42,387,495
Net current assets 623,020.70 35,598,246 368,260.33 20,552,974
TOTAL 628,582.70 35,824,601 373,506.26 20,761,452
SIGNIFICANT ACCOUNTING POLICIES O(0.00) 0 0.00 (0)AND NOTES ON ACCOUNTS
As per our report attached KARAN SINGH SUNIL SAPRESHARP & TANNAN DirectorsChartered Accountantsby the hand of
R. D. KAREPartner(Membership No.8820)
Place : Mumbai Place : LeipzigDate : April 29, 2005 Date : April 29, 2005
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LARSEN & TOUBRO INFOTECH GmbH
Profit & Loss Account for the year ended March 31, 2005
2004-2005 2003-2004
Schedule EUROS RUPEES EUROS RUPEES
INCOME
Software development services and products
Overseas 315,374.04 17,837,556 435,623.16 23,602,063
Domestic 5,538,247.21 313,243,262 5,033,048.73 272,690,580
Other income K 42,861.76 5,171,319 104,534.84 5,663,698
5,896,483.01 336,252,137 5,573,206.73 301,956,341
EXPENDITURE
Software development expenses L 5,244,794.94 297,510,951 4,944,744.96 266,934,295
Sales, administration and other expenses M 314,195.19 18,178,199 381,559.07 20,606,758
Dimunition in value of investment - - 113,493.50 5,872,436
5,558,990.13 315,689,150 5,439,797.53 293,413,489
Operating profit (PBIDT) 337,492.88 20,562,987 133,409.20 8,542,852
Interest 20,420.29 1,154,972 459.88 24,917
Depreciation on tangible assets 4,265.55 241,260 4,151.62 224,935
Profit before tax 312,807.04 19,166,755 128,797.70 8,293,000
Taxes on income N 57,730.60 3,265,242 112,623.57 6,101,945
Profit after tax 255,076.44 15,901,513 16,174.13 2,191,055
Add: Balance brought forward from previous year 238,506.26 13,902,438 222,332.13 11,711,384
Balance Carried to Balance Sheet 493,582.70 29,803,951 238,506.26 13,902,438
Number of equity share 1 1
Basic and diluted earnings per share (EPS) 15,901,513 2,191,055
SIGNIFICANT ACCOUNTING POLICIES OAND NOTES ON ACCOUNTS
As per our report attached KARAN SINGH SUNIL SAPRESHARP & TANNAN DirectorsChartered Accountantsby the hand of
R. D. KAREPartner(Membership No.8820)
Place : Mumbai Place : LeipzigDate : April 29, 2005 Date : April 29, 2005
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LARSEN & TOUBRO INFOTECH GmbH
Cash Flow Statement for the year ended March 31, 20052004-2005 2003-2004
RUPEES RUPEESA Cash flow from operating activities :
Net profit before tax 19,166,755 8,293,000
Adjustments for:Depreciation and amortisation 241,260 224,935
Interest paid 991,061 20,086
Unrealised foreign exchange difference (16,024,999) (6,403,338)
Translation reserve - 838,364
Operating profit before working capital changes (14,792,679) (5,319,953)Changes in working capital(Increase)/decrease in trade receivables (51,974,087) 7,629,145
(Increase)/decrease in other receivables (37,323,773) (20,217,069)
Increase/(decrease) in trade payables 68,652,448 (998,929)
(Increase)/decrease in working capital (20,645,412) (13,586,853)
Cash generated from operations (35,438,091) (18,906,806)Direct taxes paid 35,788,723 16,253,153
Net cash from operating activities 350,632 (2,653,653)
B Cash flow from investing activities :Purchase of fixed assets 81,287 264,537
Interest received 163,911 4,831
Net cash from investing activities 245,198 269,368
C Cash flow from financing activities :Financial expenses (1,154,972) (24,917)
Net cash from financing activities (1,154,972) (24,917)Net (decrease)/increase in cash and cash equivalents (A+B+C) (559,142) (2,409,203)Cash and cash equivalents at the beginning of the year 13,965,203 16,374,406Cash and cash equivalents at the end of the year 13,406,061 13,965,203
Notes: 0 (0)
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 Previous year’s figures have been regrouped /reclassified wherever applicable.
As per our report attached KARAN SINGH SUNIL SAPRESHARP & TANNAN DirectorsChartered Accountantsby the hand of
R. D. KAREPartner(Membership No.8820)
Place : Mumbai Place : LeipzigDate : April 29, 2005 Date : April 29, 2005
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LARSEN & TOUBRO INFOTECH GmbH
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
EUROS RUPEES EUROS RUPEESSCHEDULE AShare CapitalAuthorised: 1 equity share of EUR 25,000 each 25,000.00 1,140,650 25,000.00 1,140,650
Issued and Subscribed1 Equity Share of Eur 25,000 each 25,000.00 1,140,650 25,000.00 1,140,650
Paid up1 Equity Share of Eur 25,000 each 25,000.00 1,140,650 25,000.00 1,140,650by Larsen & Toubro Infotech LimitedCalled up1 Equity Share of Eur 25,000 each 25,000.00 1,140,650 25,000.00 1,140,650All the above Equity shares are heldby Larsen & Toubro Infotech Limited
25,000.00 1,140,650 25,000.00 1,140,650
SCHEDULE BReserves and SurplusTranslation Reserve - - - 838,364Profit & Loss Account 493,582.70 29,803,951 238,506.26 13,902,438
493,582.70 29,803,951 238,506.26 14,740,802
SCHEDULE CUnsecured LoansLoan from Larsen & Toubro Infotech Limited,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 Block
WDV as at Additions Disposals Cost as at As at For the On As at As at01.04.04 during 31-03-05 01-04-04 year disposal 31-03-05 31-03-05
the year
Computer RUPEES 971,564 259,136 177,850 1,052,850.79 763,139 241,260 177,850 826,548.96 226,302Equipment EUROS 21,329.19 4,581.62 3,144.44 22,766.37 16,084.26 4,265.55 3,144.44 17,205.37 5,561.00
As at 31-03-2005 As at 31-03-2004
EUROS RUPEES EUROS RUPEESSCHEDULE EInvestments (at cost, unquoted)1,00,000 fully paid Equity Shares of USD 1 eachin Pan Health, U.S.A. 1.00 53 1.00 53
1.00 53 1.00 53
SCHEDULE FSundry DebtorsDebts outstanding for a period exceeding six monthsConsidered good 10,370.11 587,675 - -Considered doubtful 162,111.67 9,186,868 90,564.78 4,840,687
172,481.78 9,774,543 90,564.78 4,840,687
Other DebtsConsidered good 1,373,233.46 77,821,140 499,982.99 27,593,542Considered doubtful - - - -
1,545,715.24 87,595,683 590,547.77 32,434,229
Less: Provision for doubtful debts 146,809.12 8,028,054 90,564.78 4,840,687
1,398,906.12 79,567,629 499,982.99 27,593,542
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LARSEN & TOUBRO INFOTECH GmbH
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
EUROS RUPEES EUROS RUPEES
SCHEDULE G
Cash and Bank balancesBank balance with other banks 236,563.63 13,406,061 261,276.02 13,965,203
236,563.63 13,406,061 261,276.02 13,965,203
SCHEDULE H
Loans and AdvancesUnsecured, considered good:Deposits for premises 13,857.13 785,284 13,857.13 740,664Work-in-progress 779,287.00 44,162,194 - -Advances recoverable in cash or in kind 75,159.63 4,259,296 81,816.32 4,373,083Prepaid Salary - - 20,339.22 1,087,131VAT Prepayments 63,616.59 3,605,152 45,426.15 2,428,028Advance Taxes 103,998.06 5,893,570 238,593.42 12,752,818
1,035,918.41 58,705,496 400,032.24 21,381,724
SCHEDULE I
LiabilitiesLiabilites against Larsen & Toubro Infotech Limited 1,387,467.37 78,627,732 116,999.15 6,253,597Liabilities social insurances 41,197.36 2,334,654 38,018.84 2,032,107Liabilities wage withholding tax 37,082.77 2,101,481 47,590.10 2,543,691Liabilities employees 1,267.00 71,801 12,464.81 666,244Liabilities others 154,741.70 8,769,212 187,520.30 8,932,580
1,621,756.20 91,904,880 382,193.20 20,428,219Sundry creditors 21,260.26 1,204,819 10,576.23 565,299Interest accrued but not due on loans 3,300.00 187,011 - -
1,646,316.46 93,296,710 392,769.43 20,993,518
SCHEDULE J
ProvisionsProvision for taxes:Provision for municipal trade tax 343,951.00 19,491,703 295,751.00 15,807,891Provision for corporate income tax 45,500.00 2,578,485 24,200.00 1,293,490Provision for solidarity surcharge tax 2,500.00 141,675 1,300.00 69,485
391,951.00 22,211,863 321,251.00 17,170,866
Accidental insurance for employees 10,100.00 572,367 54,000.00 2,886,300Office, business and other expenses - - 4,610.49 246,431
10,100.00 572,367 79,010.49 4,223,111
402,051.00 22,784,230 400,261.49 21,393,977
2004-2005 2003-2004
EUROS RUPEES EUROS RUPEES
SCHEDULE K
Other IncomeInterest income 2,898.00 163,911 89.17 4,831Other Income 36,942.66 2,089,477 58,641.69 3,177,207Currency exchange income 2,021.22 114,320 45,803.98 2,481,660Exchange difference on translation 999.88 2,803,611 - -
42,861.76 5,171,319 104,534.84 5,663,698
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LARSEN & TOUBRO INFOTECH GmbH
Schedules forming part of accounts2004-2005 2003-2004
EUROS RUPEES EUROS RUPEES
SCHEDULE LSoftware development services and productsSalaries including overseas staff expenses 2,357,242.00 133,325,608 2,374,495.98 128,650,192Staff welfare 279,622.70 15,815,460 280,314.39 15,187,434Software development services 2,607,930.24 148,369,883 2,289,934.59 123,096,669
5,244,794.94 297,510,951 4,944,744.96 266,934,295
SCHEDULE MSales, administration and other expensesTravelling charges and conveyance 49,232.16 2,784,571 30,331.76 1,643,375Car expenditures 3,032.57 171,522 8,183.32 443,372Rent 8,977.93 507,792 14,521.31 786,765Telephone charges 18,637.35 1,054,129 20,117.66 1,089,975Legal and professional charges 107,039.31 6,054,143 53,765.68 2,913,025Printing and stationery 1,148.27 64,946 2,169.98 117,570Advertisement - - 8,523.81 461,820Gifts 230.20 13,020 281.79 15,267Repairs to computer - - 1,125.98 61,006General repairs and maintenance 395.55 22,372 696.74 37,749Power and fuel 816.78 46,197 409.01 22,160Establishment expenses 216.20 12,228 431.71 23,390Insurance charges 9,634.20 544,910 12,910.30 699,480Auditor’s remuneration 8,500.00 480,760 12,000.00 650,160Provision for doubtful debts 49,152.18 3,187,367 90,564.78 4,840,687Books and periodicals 336.03 19,006 258.04 13,981Entertainment 1,532.55 86,681 1,755.31 95,103Bank charges and currency exchange loss 8,826.52 499,228 27,917.46 1,512,568Employee administration and travel cost - - 49,080.21 2,659,166Stamps and courier 3,048.61 172,429 5,922.83 320,899Education and training 12,750.00 721,140 405.00 21,943Miscellanous expenses 30,688.78 1,735,758 40,186.39 2,177,297
314,195.19 18,178,199 381,559.07 20,606,758
SCHEDULE NTaxesMunicipal trade tax 50,224.00 2,840,669 21,422.50 1,160,671Corporate income tax 5,414.00 306,216 87,497.51 4,740,615Solidarity surcharge tax 2,092.60 118,357 3,703.56 200,659
57,730.60 3,265,242 112,623.57 6,101,945
S-30
LARSEN & TOUBRO INFOTECH GmbH
Schedules forming part of accountsSchedule O
1. Legal Status
Larsen & Toubro Infotech GmbH is a company registered in Germany and is engaged in the business of software development services. It is whollyowned subsidiary of Larsen & Toubro Infotech Limited which is a company incorporated in India.
2. Significant Accounting Policies
a. Basis of preparation
The accounts have been prepared using 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.
The preparation of financial statements in conformity 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. Actualresults could vary from these estimates.
b. Revenue recognition
Revenue from software development is recognised based on software developed or time spent in person hours or person weeks and billed tothe customer as per the terms of specific contracts.
c. Fixed assets and depreciation
Fixed Assets are stated at original purchase less accumulated depreciation.
Depreciation is calculated using the straight line method over the estimated useful lives of the assets. The rate of depreciation is 25% forcomputer equipment which is higher than the rates specified under schedule XIV of the Companies Act, 1956.
d. Foreign currency transactions
The accounts are translated in Indian Rupees as follows:
• Share capital is retained at the initial contribution amount.
• Revenue transactions are translated at the average rates.
• Current assets and current liabilities are translated at rates prevailing on the date of Balance Sheet.
• The resultant differences are accounted as exchange difference in the Profit & Loss Account.
e. Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the law ofincome tax in Germany.
3. Related Parties
The related parties with whom the Company had transactions during the year are:
Name Relationship
Larsen & Toubro Infotech Limited Holding companyLarsen & Toubro Limited Holding company of holding company
The nature of significant related party transactions and the amounts involved are as under:
Larsen & Toubro Infotech Ltd. Larsen & Toubro Ltd.
Purchase of services 130,703,503 3,788,703(109,034,705) (-)
Sale of services 52,771,151 -(75,763,704) (-)
Trade payable 78,627,732 3,634,530(4,253,597) (-)
4. Balances with non-scheduled banks
Rs.As at 31.3.05 Max. amount
outstanding at anytime during the year
Current account
Deutsche Bank 11,650,101 39,536,720Dresdner Bank 1,755,960 6,747,317
5. The Company has not taken any asset on operating / finance lease.
6. Borrowing cost capitalised during the year : Rs. Nil
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LARSEN & TOUBRO INFOTECH GmbH
7. Auditor’s remuneration charged to the accounts amounted to Rs.480,760/- during the year (Rs. 650,160/- in previous year).
8. There are no transactions with small-scale industries during the year.
9. The Company is mainly in the business of software development. This is not capable of being expressed in the form of generic units. Hence itis not possible to give quantitative details and information required under Paragraphs 3, 4c of part II of Schedule VI to the Companies Act,1956.
10. Segmental reportingSegmental reporting of revenues for the Company is on the basis of the geographical location of the customers and is as under:
Rs.Germany Rest of World Total
Revenue 313,243,262 17,837,556 331,080,818(272,690,580) (23,602,063) (296,292,643)
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.
11. Deferred tax is not accounted for as temporary timing differences are not material.
12. The Company is considered an integral part of operation of Larsen & Toubro Infotech Limited (the holding company). In accordance with AccountingStandard – 11 (revised 2003) the exchange differences on translation are accounted in the profit and loss account. In the earlier year the saidtranslation differences were accounted directly to reserves. Had the same treatment been given to the exchange differences on translation in thecurrent year, the profit for the current year would have been lower by Rs.2,803,611/-. There would have been no impact on reserves.
Schedules forming part of accounts
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LARSEN & TOUBRO INFOTECH GmbH
13. Balance Sheet Abstract and Company’s general business profile
I Registration Details
Registration No. H R B 1 5 9 5 8 State Code N A
Balance Sheet Date 3 1 0 3 2 0 0 5
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 Rs. Thousands)
Total Liabilities Total Assets
3 5 8 2 4 3 5 8 2 4
Sources of Funds
Paid-up Capital Reserves & Surplus
1 1 4 0 2 9 8 0 4
Secured Loans Unsecured Loans
N I L 4 8 8 0
+ - Deferred Tax
+ N I L
Application of Funds
Net Fixed Assets Investments
2 2 6 -
Net Current Assets Misc. Expenditure
3 5 5 9 8 N I L
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
3 3 6 2 5 2 3 1 7 0 8 5
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
+ 1 9 1 6 7 + 1 5 9 0 2
Earnings Per Share Dividend Rate %
1 5 9 0 2 N I L
V Generic Names of Three Principal Products/Services of the Company
(as per monetary items)
Item Code No. N A
(ITC Code)
Product Description SOFTWARE DEVELOPMENT
Schedules forming part of accounts
As per our report attached KARAN SINGH SUNIL SAPRESHARP & TANNAN DirectorsChartered Accountantsby the hand of
R. D. KAREPartner(Membership No.8820)
Place : Mumbai Place : LeipzigDate : April 29, 2005 Date : April 29, 2005
S-33
L&T FINANCE LIMITED
Directors’ Report
The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2005.
FINANCIAL RESULTSYear ended Year ended31.03.2005 31.03.2004
Rs. Crore Rs. Crore
Gross Income 110.05 78.18
Profit before Tax 26.11 14.30
Provision for Tax 2.08 0.86
Profit after Tax 24.03 13.44
Add : Balance brought forward from previous years 2.04 6.41
Balance available for appropriations 26.07 19.85
Appropriations:
Reserve u/s 45 IC of RBI Act, 1934 4.81 2.70
Transfer from Debenture Redemption Reserve (1.50) 0.25
General Reserve – 1 - 6.00
General Reserve – 2 10.00 3.00
Interim Dividend 4.33 -
Tax on dividend 0.57 -
Final Dividend 4.33 5.20
Tax on Dividend 0.57 0.67
Surplus c/f to Balance Sheet 2.96 2.03
DIVIDEND
The Directors recommend a final Dividend of Rs.0.50 per equity share aggregating to a total dividend of Rs. 1.00 per equity share on 8,66,91,500 equityshares of Rs.10 each (Previous year Rs.0.60 per equity share on 8,66,91,500 equity shares).
PERFORMANCE OF THE COMPANY
This year has seen significant growth of assets in retail Tractor Financing, Construction Equipment and in Corporate Finance. The year also saw theCompany making a start in retail Commercial Vehicle Financing. Going forward this segment would require expansion of our network to cover importantcentres and would contribute significantly to business.
There has been considerable growth in earnings in all segments of the Company’s business. Interest costs have been contained by sound treasurymanagement.
The Company is confident of continuing to show profitable performance during the coming years.
RESOURCES
During the year under review the Company has borrowed on different instruments from various sources for varying tenors aggregating Rs.2722.23crores. During the year, loans aggregating Rs.2496.92 crore were repaid on respective due dates. The quantum of long-term loans raised during theyear is Rs.298.27 crore.
DEPOSITS
Fixed deposits held by the Company stands at Rs.0.48 cr. as against Rs.1.14 cr. during the previous year. 247 deposits totalingRs.30,03,000/- due for repayment on or before March 31, 2005 were unclaimed by depositors. The Company has sent reminders / intimations todepositors for the balance 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 Auditors of the subsidiarycompanies are annexed.
ASSOCIATE COMPANY
NAC Infrastructure Equipment Ltd., has completed its first full year of operations. Gross revenues for the period was Rs.3.96 cr., with a Profit before Taxof Rs.0.08 cr. and Profit after Tax of Rs.0.03 cr. The market for equipment hire is expected to show considerable growth in the years to come.
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L&T FINANCE LIMITED
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 per Companies (Disclosure ofParticulars 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.31.14 cr. for import of Lease / Hire Purchase assets,interest on loans and expenses.
PERSONNEL
There are no employees covered by the provisions under 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:
1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;
2. that the selected accounting policies were applied consistently and the Directors made 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, 2005 and the profit of the Company for the year ended onthat 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; and
4. that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr. R. Shankar Raman retires by rotation and being eligible offers himself for re-appointment.
AUDIT COMMITTEE
The present members of the Committee are Mr. J. P. Nayak, Mr. Y. M. Deosthalee and Mr. R. Shankar Raman. Mr. Y. M. Deosthalee is the Chairmanof the Audit Committee.
The role, terms of reference, the authority and power of the Chairman are in confirmity 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, M/s Sharp and Tannan, Chartered Accountants, hold office until conclusion of the ensuing Annual General Meeting and are recommendedfor reappointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribedunder Section 224(1B) of the Companies Act, 1956.
NON BANKING FINANCIAL COMPANIES AUDITORS’ REPORT (RESERVE BANK) DIRECTIONS, 1998
Pursuant to the Non Banking Financial Companies Auditors’ Report (Reserve Bank) Directions, 1998, a report from the statutory auditors to the Boardof Directors, has been received by the Company. This report has certified that the Company has complied with all the Directions and Prudential Normsas 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, Suppliers and Customers.The Directors are pleased to place on record their appreciation for the contributions made by the employees of the Company.
For and on behalf of the Board
J. P. NAYAK Y. M. DEOSTHALEE R. SHANKAR RAMANDirectors
Place : MumbaiDate : April 30, 2005
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L&T FINANCE LIMITED
Auditors’ ReportAuditors’ Report to the Members of L&T Finance Limited
1. We have audited the attached balance sheet of L&T Finance Limited as at March 31, 2005, and also 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.Our responsibility is 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 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.
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 and cash flow statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from directors of the Company as at March 31, 2005, and taken on record by the Boardof Directors, we report that none of the director is disqualified as on March 31, 2005 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 informationrequired by the Companies Act, 1956, in the manner so required and give a true and fair view in confirmity 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 March 31, 2005;
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 : April 30, 2005
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L&T FINANCE LIMITED
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 the accounts for theyear ended March 31, 2005, 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 the year. Inrespect of leased assets the company has formulated a program of physical verification of all the fixed assets over a period of three yearswhich in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies werenoticed 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 inthe 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 is adequate internal control system commensurate with the sizeof the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During thecourse of our audit, no major weakness has been noticed in the internal control system.
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 inpursuance 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 Sections 58A, 58AAor any other provision of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits acceptedfrom 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 statutorydues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, servicetax, 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, service tax,sales tax, customs duty and excise duty were outstanding, as at March 31, 2005 for a period of more than six months from the date theybecame payable.
c) According to the records of the Company, there are no dues of customs duty, wealth-tax, service 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.3,47,00,096/- respectively are in appeal with various 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 the financialyear 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 the Company hasnot 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 where theCompany 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 beenmaintained of the transaction and contracts and timely entries have been made in those records. We also report that the Company has held theshares, securities, debentures and other securities in its own name.
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L&T FINANCE LIMITED
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 fundsraised on short-term basis have been used for long term investment. No long-term funds have been used to finance short-term assets exceptpermanent working capital.
18) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of theAct.
19) As at the year end 113 debentures of Rs.1,00,00,000 each were outstanding, out of which the Company has not created any security in respectof 78 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 theCompany has been noticed or reported during the course of our audit.
For SHARP & TANNANChartered Accountants
By the hand of
MILIND P. PHADKEPartner
(Membership No. 33013)Place : MumbaiDate : April 30, 2005
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L&T FINANCE LIMITED
Balance Sheet as at March 31, 2005
Schedules As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SOURCES OF FUNDS:
Shareholders’ Funds
Share Capital 1 8,669.15 8,669.15
Reserves & Surplus 2 4,727.45 3,304.43
Loan Funds
Secured Loans 3 27,721.53 31,682.90
Unsecured Loans 4 44,207.01 17,639.30
Total 85,325.14 61,295.78
APPLICATION OF FUNDS:
Fixed Assets
Gross Block 5 14,746.53 11,014.26
Less : Depreciation 2,342.19 1,364.01
Net Block 12,404.34 9,650.25
Capital Work-in-Progress 2,697.11 1,221.16
15,101.45 10,871.41
Investments 6 6,234.93 4,064.62
Current Assets, Loans & Advances 7
Stock-on-Hire 2,618.08 7,295.75
Sundry Debtors 973.83 627.86
Cash & Bank Balances 1,683.65 1,849.54
Other Current Assets 25.68 1,449.06
Loans & Advances 65,689.67 41,030.37
70,990.91 52,252.58
Less:Current Liabilities & Provisions 8
Liabilities 6,275.46 5,182.34
Provisions 726.69 710.49
7,002.15 5,892.83
Net Current Assets 63,988.76 46,359.75
Total 85,325.14 61,295.78
Significant Accounting Policies 13
Notes Forming Part of Accounts 14
Balance Sheet Abstract & Company’s General
Business Profile 15
J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
Place : MumbaiDate : April 30, 2005
As per our Report attached
SHARP & TANNAN A. N. MANIChartered Accountants ManagerBy the hand of
MILIND P. PHADKE V. C. RAJEPartner Vice President - Accounts &Membership No.33013 Company Secretary
Place : MumbaiDate : April 30, 2005
}
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L&T FINANCE LIMITED
Profit & Loss Account for the year ended March 31, 2005
Schedules Year Ended Year Ended31.03.2005 31.03.2004
Rs. Lakh Rs. LakhINCOME :
Income From Operations 9 11,004.79 7,817.87
Total 11,004.79 7,817.87
EXPENDITURE :
Personnel Expenses 10 355.86 304.43
Administration & Other Expenses 11 1,982.34 1,484.42
Interest & Other Finance Charges 12 4,710.50 3,720.24
Depreciation 1,344.90 878.33
Total 8,393.60 6,387.42
Profit before taxes 2,611.19 1,430.45
Provision for taxes 208.00 86.19
Profit after taxes 2,403.19 1,344.26
Add:Balance brought forward from last Accounts 203.91 641.40
Profit available for appropriation 2,607.10 1,985.66
Transfer to Reserve u/s. 45 IC of RBI Act, 1934 481.00 270.00
Transfer from Debenture Redemption Reserve (150.00) 25.00
Transfer to General Reserve - I - 600.00
Transfer to General Reserve - II 1,000.00 300.00
Proposed Final Equity Dividend 433.46 520.15
Interim Equity Dividend 433.46 -
Additional Tax on Dividend 113.29 66.64
Balance carried to Balance Sheet 295.89 203.87
Basic and Diluted earning per Equity Share See Note No. L(iii) Rs.2.77 Rs.1.60
Face value per Equity Share Rs.10.00 Rs.10.00
Significant Accounting Policies 13
Notes Forming Part of Accounts 14
Balance Sheet Abstract & Company’s General Business Profile 15
}J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
Place : MumbaiDate : April 30, 2005
As per our Report attached
SHARP & TANNAN A. N. MANIChartered Accountants ManagerBy the hand of
MILIND P. PHADKE V. C. RAJEPartner Vice President - Accounts &Membership No.33013 Company Secretary
Place : MumbaiDate : April 30, 2005
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L&T FINANCE LIMITED
Cash Flow Statement for the year ended on March 31, 2005Year Ended Year Ended31.03.2005 31.03.2004
A. Cash Flow from Operating Activities Rs. lakh Rs. lakhNet Profit before tax 2611.19 1430.46Adjustment for:Depreciation 1344.90 878.32(Profit)/ Loss on Sale of Investments (net) (162.98) (2.90)(Profit)/Loss on Sale of Fixed Assets (36.44) (74.96)Interest and Dividend received on Investments (202.09) (119.74)Provision for Leave Encashment 2.28 5.21Miscellaneous Expenditure written off - 1.90Provision for Diminution in value of Investments 240.33 0.52Provision for Non Performing Assets (net) 163.24 522.75Operating Profit before Working Capital Changes 3960.43 2641.56Adjustment for :(Increase)/ Decrease in net Stock on hire 4677.67 5305.82(Increase)/ Decrease in Trade and Other Receivables (23745.14) (7414.48)Increase/ (Decrease) in Trade and other payables 616.93 684.27Increase/ (Decrease) in Trade and other payables - 390.97
Cash Generated from Operations (14490.11) 1608.15Direct Taxes paid (208.00) (61.98)
Net Cash Flow from Operating Activities (A) (14698.11) 1546.17
Net Cash Flow from Operating Activities on Account of Merger (B)(Increase)/Decrease in Trade and Other Receivables - (78.76)Increase / (Decrease) in Reserves - 1254.87
- 1176.11B. Cash Flows from Investing Activities
Purchase of fixed assets (including capital work in progress) (7045.91) (4262.58)Proceeds/Adjustments from sale of fixed assets 1507.40 828.43Purchase of Investments (36336.03) (49684.19)Sale of investments 34088.42 49591.64Interest or Dividend received on Investments 202.09 119.74
Net Cash from Investing Activities (C) (7584.02) (3406.97)
Net Cash from Investing Activities on Account of Merger (D) - -Increase in Fixed Assets - (2106.06)Increase in Investments - (1964.98)
- (4071.04)C. Cash Flows from Financing Activities
Increase / (Decrease) in Secured Loans (3961.36) 15184.95Increase / (Decrease) in Unsecured Loans (net) 26567.71 (13892.44)Dividends paid during the year (490.11) 0.00Increase / (Decrease) in Share Capital - 902.84
Net Cash Generated (Used in) / from Financing Activities (E) 22116.24 2195.35
Net Cash Generated (Used in) / from Financing Activities on Account of Merger (F)Increase / (Decrease) in Secured Loans - 1277.19Increase / (Decrease) in Unsecured Loans - 4.18Equity Shares issued - 1766.31
- 3047.68
Net Cash Increase/(Decrease) in Cash And Cash Equivalents (A+C+E) (165.89) 334.55Net Cash Increase/(Decrease) in Cash And Cash Equivalents On Account of Merger (B+D+F) - 152.75Cash And Cash Equivalent As At Beginning of The Year 1849.54 1362.23Cash And Cash Equivalent As At End of The Year 1683.65 1849.54
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.
J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
Place : MumbaiDate : April 30, 2005
As per our Report attached
SHARP & TANNAN A. N. MANIChartered Accountants ManagerBy the hand of
MILIND P. PHADKE V. C. RAJEPartner Vice President - Accounts &Membership No.33013 Company SecretaryPlace : MumbaiDate : April 30, 2005
}
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L&T FINANCE LIMITED
Schedules forming part of accounts
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 1
SHARE CAPITAL
Authorised
10,00,00,000 (Previous Year 10,00,00,000) Equity 10,000.00 10,000.00
Shares of Rs.10 each. 10,000.00 10,000.00
Issued,Subscribed & Paid up
8,66,91,500 Equity Shares of 8,669.15 8,669.15Rs.10 each, fully paid up.
i) 2,66,91,500 Equity Shares of Rs.10 each fullypaid-up issued for a consideration other thancash consequent on amalgamation
ii) 8,66,91,494 shares are held by the HoldingCompany, Larsen & Toubro Limited 8,669.15 8,669.15
SCHEDULE - 2
RESERVES & SURPLUS
Reserve u/s. 45 IC of RBI Act, 1934
As per last Balance Sheet 1,173.89 903.89
Add : Transferred from Profit & Loss A/c 481.00 270.00
1,654.89 1,173.89Debenture Redemption Reserve
As per last Balance Sheet 150.00 125.00
Less : Transferred to Profit & Loss A/c (150.00) 25.00
- 150.00
General Reserve - I
As per last Balance Sheet 700.00 300.00
Add : Transferred from Profit & Loss A/c - 600.00
Less : Utilised during the year - 200.00
700.00 700.00
General Reserve - II
As per last Balance Sheet 994.41 694.42
Add : Transferred from Profit & Loss A/c 1,000.00 300.00
1,994.41 994.41
Capital Redemption Reserve 82.25 82.25
Profit & Loss Account 295.90 203.87
4,727.45 3,304.43
SCHEDULE - 3SECURED LOANSSecured Redeemable Non Convertible Debentures 3,500.00 14,000.00
From Banks:
Cash Credit / Working Capital Demand Loans 1,500.00 1,800.00Term Loan 16,651.45 10,209.55Foreign Currency Loan 6,070.08 5,673.35
27,721.53 31,682.90
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L&T FINANCE LIMITED
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 4
UNSECURED LOANS
Fixed Deposits 48.16 113.97
(Repayable within one year-Rs.48,16,000/-)
Loans and Advances from subsidiary 299.00 171.00
Short Term Loans & Advances :
From Banks 32,000.00 4,499.78
From Others
i) Non Convertible Debentures 7,800.00 12,500.00
ii) Others 4,000.00 300.00
Other Loans & Advances:
Lease Finance 59.85 54.55
44,207.01 17,639.30
Schedules forming part of accounts
SCHEDULE - 5
FIXED ASSETS Rs. Lakh
Fixed Assets Gross Block Depreciation Net Block Net Block
Particulars Opening Additions Sale / As On Opening For the Deduction / As On As On As OnBalance Adjustment 31/3/2005 Balance Period Adjustment 31/3/2005 31/3/2005 31/3/2004
As on As on1/4/2004 1/4/2004
OWNED ASSETS
Building 3,419.04 - - 3,419.04 151.48 55.73 - 207.21 3,211.83 3,267.58
Plant & Machinery 4,221.72 2,499.07 10.30 6,710.48 689.96 530.01 9.54 1,210.43 5,500.05 3,531.76
Furniture & Fixtures 35.29 0.71 3.80 32.21 7.81 4.02 3.80 8.04 24.17 27.48
Motor Car 2,690.02 2,674.69 1,802.65 3,562.06 291.61 599.79 348.38 543.01 3,019.05 2,398.41
Vehicles 424.60 174.48 - 599.08 122.91 92.65 - 215.56 383.52 301.68
Specialised Software 18.37 51.70 - 70.07 6.71 9.48 - 16.20 53.87 -
Computers 128.88 164.01 20.94 271.95 66.98 39.37 5.00 101.35 170.60 73.55
10,937.92 5,564.66 1,837.69 14,664.89 1,337.46 1,331.05 366.72 2,301.80 12,363.09 9,600.46
ASSETS TAKEN ON LEASE
Plant & Machinery 5.85 - - 5.85 2.77 0.95 - 3.71 2.14 3.08
Vehicles 70.49 5.30 - 75.79 23.78 12.90 - 36.68 39.11 46.71
76.34 5.30 - 81.64 26.55 13.85 - 40.39 41.25 49.79
TOTAL 11,014.26 5,569.96 1,837.69 14,746.53 1364.01 1,344.90 366.72 2,342.19 12,404.34 9,650.25
Previous Year 7,959.17 3,992.61 937.53 11,014.25 669.74 878.32 184.05 1,364.01
Add:Capital Work-in-Progress 2,697.11 1,221.16
15,101.45 10,871.41
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L&T FINANCE LIMITED
Schedules forming part of accounts
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 6INVESTMENTS(At cost or market value whichever is lower)Long Term Investments:Government Securities 0.03 13.55Bonds - 200.00Shares 4,043.07 3,744.57
4,043.10 3,958.12Current Investments:Shares 2,482.01 73.79Mutual Funds - 107.01Others 0.01 0.01
2,482.02 180.81
6,525.12 4,138.93Less: Diminution in Value of Investments 290.19 74.31
TOTAL 6,234.93 4,064.62
Note:Quoted Investments (Market Value-Rs.2191.82 Lakh) 2,191.82 213.00(Previous Year Rs.213.00 Lakh)Unquoted Investments 4,043.11 3,851.62
6,234.93 4,064.62
Particulars of Investments :LONG TERM INVESTMENTSGovernment Securities :12.50% Maharashtra State Development Loan 2004 - 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) 0.03 13.55
Bonds:13.85% Pradeshiya Industrial and Investment Corporation - 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
Shares (fully paid up of Rs.10/- each):Subsidiary Companies :L&T Capital Company Limited 550.00 550.00(54,99,997 equity shares)
550.00 550.00Other Companies:Narmada Infrastructure Construction Enterprise Limited 1,656.92 1,656.92(86,77,250 Equity Shares)L&T Transportation Infrastructure Limited 1,236.15 1,236.15(1,02,50,000 Equity Shares)L&T-Demag Plastics Machinery Private Limited 300.00 300.00(30,00,000 Equity Shares)NAC Infrastructure Equipment Limited 300.00 1.50(30,00,000 Equity Shares)(29,85,000 shares purchased during the year)
3,493.07 3,194.57
TOTAL (C) 4,043.07 3,744.57
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L&T FINANCE LIMITED
CURRENT INVESTMENTSShares:Shares (Fully paid up) :JJ Spectrum Ltd. 10 - 8.95(89,500 equity shares)Metropoli Overseas Ltd. 10 14.91 14.91(99,400 equity shares)Anil Chemicals Ltd. 10 8.00 8.00(40,000 equity shares)Pashupati Fabrics Ltd. 10 - 14.98(1,49,800 equity shares)Elque Polyesters Ltd. 10 19.43 19.43(1,94,300 equity shares)Monnet Industries Ltd. 10 7.52 7.52(18,800 equity shares)Ahmedabad Electricity Company Ltd. 10 14.65 -(10000 equity shares)Andhra Sugars Ltd. 10 36.01 -(24000 equity shares)Apollo Hospitals Enterprise Ltd. 10 82.66 -(25000 equity shares)Arvind Mills Ltd. 10 66.90 -(50000 equity shares)Associated Cement Company Ltd. 10 91.07 -(25000 equity shares)Atul Products Ltd. 10 16.84 -(20000 equity shares)Bank Of Baroda 10 22.18 -(10000 equity shares)Bank of Rajasthan 10 17.65 -(24000 equity shares)Bharat Petroleum Corporation Ltd. 10 113.31 -(24000 equity shares)Bharati Tele Systems Ltd. 10 90.22 -(40000 equity shares)BOC Ltd. 10 24.71 -(25000 equity shares)Canara Bank 10 43.96 -(20000 equity shares)Century Textiles & Industries Ltd. 10 61.78 -(25000 equity shares)CESC Ltd. 10 22.37 -(10000 equity shares)Chennai Petroleum Ltd. 10 0.22 -(100 equity shares)Crompton Greaves Ltd. 10 89.78 -(20000 equity shares)Cummins India Ltd. 2 34.34 -(25000 equity shares)Eveready Industries Ltd. 10 0.80 -(1000 equity shares)Exide Industries Ltd. 10 4.89 -(3109 equity shares)
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. Lakh Rs. Lakh
Face Valueper Unit
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L&T FINANCE LIMITED
Gujarat Ambuja Cement Ltd. 10 205.89 -(45000 equity shares)Gujarat NRE Coke Ltd. 10 24.28 -(25120 equity shares)HDFC Bank Ltd. 10 122.32 -(20000 equity shares)HEG Ltd. 10 13.99 -(10000 equity shares)India Glycol Ltd. 10 29.74 -(20000 equity shares)India Tobacco Company Ltd. 10 105.76 -(7866 equity shares)Indian Petrochemicals Corporation Ltd. 10 36.98 -(20000 equity shares)Jaiprakash Associates Ltd. 10 28.39 -(15000 equity shares)Jayshree Tea Ltd. 10 21.97 -(19999 equity shares)Jet Airways Ltd. 10 64.82 -(5000 equity shares)Kesoram Industries Ltd. 10 4.40 -(3448 equity shares)Mahanagar Telephone Nigam Ltd. 10 6.57 -(4602 equity shares)National Thermal Power Corporation Ltd. 10 30.80 -(32712 equity shares)New Delhi Television Ltd. 4 48.02 -(25000 equity shares)Neyveli Lignite Corporation Ltd. 10 37.13 -(50000 equity shares)Nicholas Piramal India Ltd. 2 48.00 -(15893 equity shares)Opto Circuits (India) Ltd. 10 43.84 -(25000 equity shares)Orient Paper & Industries Ltd. 10 32.09 -(20000 equity shares)Rashtriya Chemicals and Fertilizers Ltd. 10 20.54 -(50000 equity shares)Reliance Industries Ltd. 10 148.99 -(25330 equity shares)Shree Cements Ltd. 10 32.20 -(10000 equity shares)State Bank of India 10 72.88 -(10000 equity shares)Steel Authority of India Ltd. 10 17.40 -(25000 equity shares)Strides Arcolab Ltd. 10 22.21 -(10000 equity shares)Tata Motors Ltd. 10 74.89 -(15000 equity shares)Tata Tea Ltd. 10 55.27 -(10000 equity shares)
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. Lakh Rs. Lakh
Face Valueper Unit
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L&T FINANCE LIMITED
Tata Tele Services (Maharashtra) Ltd. 10 15.77 -(50000 equity shares)Thermax Ltd. 10 62.17 -(10000 equity shares)Tinplate Company Ltd. 10 14.42 -(25000 equity shares)Titan Industries Ltd. 10 52.67 -(20000 equity shares)Trent Ltd. 10 61.33 -(10000 equity shares)Videocon International Ltd. 10 32.29 -(50000 equity shares)Zensar Technology Ltd. 10 9.79 -(4500 equity shares)
TOTAL D 2,482.01 73.79
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) 6,525.12 4,138.93
Less: Diminution in Value of Investments 290.19 74.31
TOTAL 6,234.93 4,064.62
Details of Investments purchased and sold during the yearFace Value Nos. Cost
Rs. Per Unit Rs. LakhMoney Market Mutual Fund:Kotak Liquid Institiutional Premium Plan-Daily Dividend 10 23,75,43,041 29,047.00Grindlays Floating Rate ST Super Institutional Plan C 10 101,21,57,604 1,01,217.48-Daily DividendGrindlays Cash Fund-Super Institutional Plan C 10 14,23,42,590 14,234.26HSBC Cash Fund-Institutional Plus - Daily Dividend 10 37,42,73,968 37,443.20HDFC Cash Management Fund-Savings Plan 10 34,20,42,046 36,380.96- Daily Dividend ReinvestmentMagnum Institutional Income - Savings - Dividend 10 1,99,39,602 2,000.44Birla Cash Plus-Institutional Premium -Daily Dividend 10 1,99,67,242 2,000.00Principal Cash Management Fund - Liquid Option Institutional Plan -Dividend Reinvestment-Daily 10 2,75,09,657 2,751.36 - Liquid Option Institutional Premium Plan 10 5,75,28,962 5,753.04 Dividend Reinvestment-DailyPrudential ICICI Liquid Plan Institutional Plus Plan 10 15,47,76,081 18,335.00-Daily Dividend OptionPrudential ICICI Floating Rate Fund-Plan C-Dividend Option 10 8,91,90,703 8,920.23ABN AMRO Cash Fund-Daily Dividend 10 7,50,38,371 7,504.26
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. Lakh Rs. Lakh
Face Valueper Unit
S-47
L&T FINANCE LIMITED
Equity Shares:Andhra Sugars Ltd. 10 1,000 1.50Associated Cement Company Ltd. 10 15,000 54.20Atul Products Ltd. 10 5,522 4.65Bajaj Auto Ltd. 10 20,000 229.93Ballarpur Industries Ltd. 10 18,000 18.36Balrampur Chini Ltd. 1 16,453 93.30Bank of Rajasthan 10 26,000 18.83Bharat Forge Ltd. 10 12,500 167.52Bharat Heavy Electricals Ltd. 10 40,000 313.24Bharat Petroleum Corporation Ltd. 10 1,000 4.72Bharati Tele Systems Ltd. 10 10,000 22.55Bhushan Steel Ltd. 10 10,000 22.65BOC Ltd. 10 60,000 57.49Century Textiles & Industries Ltd. 10 76,800 172.23Chennai Petroleum Ltd. 10 9,900 21.50Cipla Ltd. 2 20,000 62.66Crompton Greaves Ltd. 10 10,000 41.14Dabur India Ltd. 1 20,000 21.46Dhampur Sugar Mills Ltd. 10 45,000 47.84Escorts Ltd. 10 39,000 36.42Essar Steel Ltd. 10 25,000 16.25Eveready Industries Ltd. 10 19,000 15.28Exide Industries Ltd 10 9,145 14.39Gas Authority of India Ltd. 10 20,000 47.45Grasim Industries Ltd. 10 28,345 372.95Gujarat Ambuja Cement Ltd. 10 40,000 177.72Gujarat Narmada Ltd. 10 25,000 18.61Gujarat NRE Coke Ltd. 10 24,880 24.05Hero Honda Motors Ltd. 2 20,000 120.55Hindalco Industries Ltd. 10 5,000 68.46Hindustan Oil Exploration Co. Ltd. 10 50,000 51.75Hotel Leela Venture Ltd. 10 15,988 25.32ICICI Bank Ltd. 10 49,802 192.95I-Flex Solutions Ltd. 5 10,000 62.71India Glycol Ltd. 10 4,814 7.24India Tobacco Company Ltd. 10 14,500 195.81Infosys Technologies Ltd. 5 5,000 100.85Infotech Enterprise Ltd. 10 43,132 107.78Jaiprakash Associates Ltd. 10 25,000 51.14KEC International Ltd. 10 25,000 42.37Kesoram Industries Ltd. 10 16,552 21.14Mahanagar Telephone Nigam Ltd. 10 20,398 29.11Mahindra & Mahindra Ltd. 10 25,000 133.80Max India Ltd. 10 35,471 148.30Money Market Mutual Fund:Moser Baer Ltd. 10 10,000 23.60National Aluminium Company Ltd. 10 10,000 18.69New Delhi Television Ltd. 4 25,000 43.47Nicholas Piramal India Ltd. 2 4,107 12.40Oil And Natural Gas Corporation Ltd. 10 5,000 41.01Radico Khaitan Ltd. 10 21,309 65.98Reliance Industries Ltd. 10 1,71,587 930.52
Schedules forming part of accountsDetails of Investments purchased and sold during the year
Face Value Nos. CostRs. Per Unit Rs. Lakh
Money Market Mutual Fund:
S-48
L&T FINANCE LIMITED
Sesa Goa Ltd. 10 70,785 831.89Shree Cements Ltd. 10 10,000 30.47Sri Adhikari Brothers Ltd. 10 20,000 22.42State Bank of India 10 35,000 232.77Steel Authority of India Ltd. 10 50,000 33.55Tata Chemicals Ltd. 10 40,000 62.64Tata Iron & Steel Company Ltd. 10 50,000 199.88Tata Tea Ltd. 10 10,000 53.01Titan Industries Ltd. 10 20,000 52.00Zensar Technology Ltd. 10 30,500 66.33
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 7
CURRENT ASSETS, LOANS & ADVANCES
Current Assets
Stock-on-Hire 2,584.24 7,286.96(Secured by Hire Purchase Agreements)
Stock on Hire of Assets Repossessed 33.84 8.79(at cost or market value whichever is less)
2,618.08 7,295.75
Sundry Debtors
Unsecured - Considered Good
Outstanding for more than six months 286.05 44.18
Others 687.78 583.68
973.83 627.86
Cash & Bank Balances
Cash in hand 0.55 0.44
Cheques on hand 2.48 196.94
Balances with Scheduled Bankson Current Account 1,649.93 1,621.53
In Fixed Deposit (including interest accrued thereon) 30.69 30.63
(Pledged with Sales Tax Authorities as security& with banks as margin money against guaranteesissued).
1,683.65 1,849.54
Other Current AssetsAccrued Interest : Investments 3.58 17.45
Others 22.10 1,431.61
25.68 1,449.06
Schedules forming part of accountsDetails of Investments purchased and sold during the year
Face Value Nos. CostRs. Per Unit Rs. Lakh
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L&T FINANCE LIMITED
Loans & Advances:Secured, Considered Good : Loans against pledge of shares 450.00 - Other Loans - 928.65Unsecured, Considered Good : Bills Discounted 6,450.49 6,171.86 Other Loans 33,495.96 29,025.85 (Including Intercorporate Deposits Rs.Nil, P.Y. Rs.220.41 lakh)Unsecured, Considered Doubtful Bills Discounted - 33.81 Other Loans 44.59 1,366.07
44.59 1,399.88Less: Provision for Non Performing Assets 16.84 616.39
27.75 783.49 Advances towards capital assets 66.56 54.84 Advances recoverable in cash or in kind 25,198.91 4065.68
65,689.67 41,030.37
SCHEDULE - 8CURRENT LIABILITIES AND PROVISIONSLiabilities :Sundry Creditors 4,990.52 3,610.23Security Deposits 822.49 772.45Advances Received - Hire Purchase/Lease 41.72 49.41Income /Charges accounted in Advance - 189.30Interest accrued but not due 420.73 560.95
6,275.46 5,182.34
Provisions for:Taxes 208.00 94.55Proposed Equity Dividend 433.45 520.15Additional Tax on Dividend 56.65 66.64Gratuity 1.45 4.29Leave Encashment 27.14 24.86
726.69 710.49
Year Ended 31.03.2005 Year Ended 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 9INCOME FROM OPERATIONSLease & Hire Purchase 3,473.36 3,839.69Bills Discounting 737.00 893.93Other Financing Activities 5,989.04 2,143.50Networking Activity 394.86 431.72Income from Investments - Dividend from Subsidiary Company - 55.00 - Others 365.08 67.64
365.08 122.64Other Income 45.45 386.39
11,004.79 7,817.87
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
Schedules forming part of accounts
S-50
L&T FINANCE LIMITED
Year Ended 31.03.2005 Year Ended 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
Schedules forming part of accounts
SCHEDULE - 10PERSONNEL EXPENSES
Salaries 306.50 240.91Contribution to and provision for : Provident fund and Pension fund 12.81 12.20 Gratuity fund 1.45 4.29 Superannuation Fund 3.92 7.99 Leave encashment 5.37 8.73Welfare & Other Expenses 25.81 30.31
355.86 304.43
SCHEDULE - 11ADMINISTRATIVE & OTHER EXPENSESTravelling & Conveyance 163.34 142.40Printing & Stationery 14.10 12.13Telephone, Postage & Telegrams 298.57 252.62Directors’ Sitting Fees 0.48 0.42Brokerage & Service Charges 222.20 71.43Advertising & Publicity 8.25 2.00Repairs & Maintenance - Building 0.50 0.30Repairs & Maintenance - Plant & Machinery 3.98 2.49Repairs & Maintenance - Others 95.49 12.48Rent 54.73 128.11Rates & Taxes 70.46 112.34Electricity Charges 13.00 11.75Insurance 41.80 35.95Auditors Remuneration : Audit Fees 3.32 2.70 Tax Audit Fees 0.78 0.78 Certification 1.10 0.68 Expenses Reimbursed 0.59 0.42
5.79 4.58Provision for Non-Performing Assets / Write offs 163.24 722.75Less : Transfer from General Reserve - I 0.00 200.00
163.24 522.75Provision for Diminution in value of Investments 240.33 0.52Miscellaneous Expenses 586.08 172.15
1982.34 1484.42
SCHEDULE - 12INTEREST & OTHER FINANCE CHARGESFixed Loans 4,503.39 3,624.56Others 207.11 95.68
4,710.50 3,720.24
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L&T FINANCE LIMITED
SCHEDULE - 13
SIGNIFICANT ACCOUNTING POLICIES.
A. Method 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.
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. Processing fees/Management Fees, Income from Bill Discounting, other financing activities, other compensation and Investmentsare 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 the guidelines issued by the Reserve Bank of India in respect of Prudential Norms for Income Recognition andProvisioning for Non-Performing Assets.
E. Retirement Benefits :
Contributions to Provident Fund, Family Pension Fund and Superannuation are accounted on actual liability basis. Contributions to Gratuity fundand Provision for Leave encashment benefit on retirement are 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 theInstitute 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 has been 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 rates are fixed in consonance with the expecteduseful life of the assets.
Depreciation on assets acquired and given to employees under the Hard Furnishing Scheme has been provided at 18% per annum onStraight Line Basis.
ii) Assets given on Lease:
(a) In respect of the assets given on finance lease, Accounting Standards (AS – 19) – Leases has been applied. Investment in leasedassets is shown 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.
Schedules forming part of accounts
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L&T FINANCE LIMITED
iii) Assets taken on Lease:
Accounting Standards (AS – 19) - Leases, has been applied to the assets taken on lease on or after 1.4.2001. These assets have beendepreciated over 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 on the basisof specific identification. Long-term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanentnature.
I. Foreign Currency Transactions:
Foreign Currency Transactions are accounted for at the rates prevailing on the date of transactions. Wherever forward contracts are entered 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 difference on settlement are adjusted to theProfit & Loss Account.
J. Borrowing Costs:
Borrowing Costs attributable to the acquisitions, constructions or production of qualifying assets are capitalised as part of the cost of such 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 other borrowing costsare recognized as an expense in the period in which they are incurred.
SCHEDULE - 14
NOTES FORMING PART OF ACCOUNTS AS AT MARCH 31, 2005
A. Contingent Liabilities:i) Estimated amount of contract remaining to be executed on Capital Account (net of advances) and not provided for, including owned
assets : Rs.681.55 lakh (P. Y. Rs.107.41 lakh)ii) Income Tax Liability in respect of matters in Appeal : Rs.1574.67 lakh ( P.Y. Rs.1574.67 lakh)iii) Interest Tax liability in respect of matters in Appeal : Rs.53.67 lakh (P.Y. Rs.53.67 lakh)iv) Sales Tax Liability in respect of matters in Appeal : Rs.347.00 lakh (P.Y. Rs.368.35 lakh)v) Counter guarantees given to banks against guarantees given by them on behalf of the Company Rs Nil (P. Y. Rs. 25.38 lakh)
vi) Bond executed in respect of legal matters Rs.10.00 lakh (P. Y. Rs.10.00 lakh)
B. Secured Redeemable Non-convertible Debentures:
Sr. Face Value Date of Allotment Amount Interest RedemptionNo. Rs. Lakh
i) Rs. 100.00 lacs April 7, 2003 1500.00 7.75% Redeemable at par, at the end of 24 monthseach Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the dateof allotment
ii) Rs. 100.00 lacs April 8, 2003 500.00 7.75% Redeemable at par, at the end of 24 months each Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the date of allotment
iii) Rs. 100.00 lacs April 8, 2003 500.00 7.75% Redeemable at par, at the end of 24 monthseach Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the dateof allotment
iv) Rs. 100.00 lacs January 21, 2004 1000.00 6.00%. Redeemable at par, at the end of 36 monthsPayable from the date of allotment or on exercise ofannually Put or Call Option – 12 months after the date
of allotment
TOTAL 3500.00
Security: The Debentures are secured by way of first/second charge, having pari passu rights, as the case may be, on the company’s specifiedimmovable properties and specified Hire Purchase/Lease/Term Loan receivables.
Schedules forming part of accounts
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L&T FINANCE LIMITED
C. (i) Cash Credit/Working Capital Demand Loan of Rs.1500.00 lakh is secured by hypothecation of specified Hire Purchases/Lease Assetsand book debts relating to Lease, Hire Purchase and other Activities.
(ii) Term Loan of Rs.14583.33 lakh is secured by hypothecation of specified Hire Purchase/Lease/Loan receivables.
(iii) Foreign Currency loan of Rs. 6070.09 lakh is secured by hypothecation of specified Hire Purchases/Lease Assets and Term Loanreceivables and book debts relating to Lease, Hire Purchase and other Activities.
(iv) Term Loan of Rs.2068.12 lakh is secured by hypothecation of specified fixed assets of the Company and exclusive first charge onspecified receivables.
D. The Company has taken certain assets on lease costing Rs. 75.79 lakh (P.Y. Rs.332.97 lakh) the future lease obligation against which isRs. 65.46 lakh (P.Y. Rs.116.07 lakh)
E. i) Finance Lease Obligations taken on lease 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 March 31, 2005 in respect of these assets are as under:
Rs. Lakh
Due Total Minimum Lease Interest Not Due Present Value ofPayments Outstanding Minimum Lease
as on March 31, 2005 Payments
Within One Year 34.35 3.63 30.72
Later than one year and not later than five years 31.11 1.98 29.13
Later than five years Nil Nil Nil
65.46 5.61 59.85
ii) Finance Lease Obligations given on lease on or after 1.4.2001 :
The Company has given assets on finance lease to its customers with respective underlying assets/equipments as security. Minimumlease payments outstanding as of March 31, 2005 in respect of these assets are as under:
Rs. Lakh
Due Total Minimum Lease Interest Not Due Present Value ofPayments Outstanding Minimum Lease
as on March 31, 2005 Payments
Within One Year 247.65 23.53 224.12
Later than one year and not later than five years 659.93 59.99 599.94
Later than five years Nil Nil Nil
907.58 83.52 824.06
F. Income from other financing activities include interest on Loans & Advances of Rs.5075.30 lakh (P.Y. Rs.2207.69 lakh){Tax deducted at source Rs.183.17 lakh (P.Y. Rs.110.80 lakh ) }
G. Advances recoverable in cash or in kind include
i) Loan to Officers Rs.5.59 lakh (P.Y. Rs.5.44 lakh), maximum amount outstanding during the year Rs.5.80 lakh(P.Y. Rs.5.94 lakh)
ii) Rs.28.18 lakh being sales tax paid upto 31/12/97 in various states on inter-state lease/Hire Purchase Transactions. Due to ambiguity incertain provisions of Sales Tax Act in respective states with respect to such transactions, recovery of the same from the customers iskept in abeyance. The Company has since then been paying sales tax on such transactions under protest in various states to the extentit is collected from the customers.
Schedules forming part of accounts
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L&T FINANCE LIMITED
H. Stock-on-hire includes receivables of Rs.452.60 lakh (P.Y. Rs.1265.36 lakh) detailed hereunder.
As at 31.03.2005 As at 31.03.2004Secured Rs. lakh Rs. lakhOutstanding for more than six months
Considered Good 286.05 1012.95
Others: Considered Good 275.60 726.01
561.65 1738.96
Less : Provision for non-performing assets 109.05 473.60
452.60 1265.36
I. Assignment of Receivables:
The Company has assigned/sold some of the Lease, Hire Purchase Assets/receivables and Term Loan receivables amounting toRs.34,836.69 lakh. This assignment/sale is without recourse to the Company. The Company does not expect any contingent or other liabilityin future in respect of these assigned/sold assets/receivables.
J. Managers salary and perquisites amounting to Rs.17.25 lakh (P.Y. Rs.16.66 lakh) have been charged to the Accounts.
K. Value of imports (on CIF basis) :
Capital Goods Rs.2694.60 lakh (P.Y. Rs.1200.37 lakh)
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 31.03.2005 Rs. Lakh
No. Controlling Relationship Nature of Amount Amount AmountCompany Transaction due to due from
Transaction1 Larsen & Toubro Holding Company ICD Borrowed 38325.00
LimitedLease finance given 87.00Assignment/Sale of Lease/HPReceivables/Assets and TermLoan Receivables 22419.00 21419.00ExpenditureInterest on ICD borrowed 103.50Service Charges 128.19 6.75IncomeLease Finance Charges 11.44Operating Lease Rental 2089.50 280.50Service Charges 458.60 101.28
Transaction2 India Infrastructure Fellow Subsidiary Assignment of Hire Purchase/
Developers Limited Company Term Loan Receivables 1539.60Sundry Creditors 0.04IncomeService Charges 14.40Interest 0.24
Schedules forming part of accounts
S-55
L&T FINANCE LIMITED
Transaction3 HPL Cogeneration Fellow Subsidiary ICD Borrowed 4000.00 4000.00
Limited Company ExpenditureInterest 263.28
Transaction4 L&T Capital Subsidiary Company ICD Borrowed 271.00 299.00
Company Limited ExpenditureInterest 18.01 18.01Professional Fees 5.00
Transaction5 Larsen & Toubro Fellow Subsidiary Lease Finance Given 13.73
Infotech Limited Company ExpenditureService Charges 39.96 81.50IncomeLease Finance Charges 11.72Operating Lease Rentals 265.13Service Charges 22.15
Transaction6 L&T – Sargent & Fellow Subsidiary Lease Finance Given 9.48
Lundy Limted Company IncomeLease Finance Charges 1.29
Income7 Tractors Engineers Fellow Subsidiary Operating Lease Rentals 2.65
Limited Company Service Charges 2.00
Transaction8 NAC Infrastructure Associate Company Investment Purchase 300.00
Equipment Limited
(iii) Earning per share (“EPS”) computed in accordance with Accounting Standard 20 : “Earnings Per Share” :
Particulars 2004-05 2003-04
(a) Profit after tax for the year — Rs. Lakh 2403.19 1344.26
(b) Weighted average number of equity shares 8,66,91,500 8,66,91,500
(c) i) Nominal value of shares (Rs.) 10.00 10.00
ii) Earnings per share Basic and Diluted (Rs.) 2.77 1.60
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 :2004-05 2003-04
Rs. Lakh Rs. Lakh
- Gross Value of assetsPlant & Machinery 6493.40 4000.22
Vehicles 4613.22 3114.62
Computers 138.61 20.50
- Accumulated DepreciationPlant & Machinery 1091.27 596.18
Vehicles 952.29 414.52
Computers 9.62 4.04
Rs. Lakh
No. Controlling Relationship Nature of Amount Amount AmountCompany Transaction due to due from
Schedules forming part of accounts
S-56
L&T FINANCE LIMITED
b) The total lease depreciation recognised in the Profit and Loss Account for the year is Rs.1198.01 lakh (P. Y. Rs 759.93 lakh). Nocontingent rent has been recognised in the Profit and Loss Account during the year (P. Y. Rs.Nil)
c) The Company provides vehicles, computers, construction equipment and other plant & machinery on operating lease for varying periodsand 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.418.38 lakh (P.Y. Rs.167.62 lakh)
On other matters Rs.1.12 lakh (P.Y. Rs.42.80 lakh)
O. PROVISION FOR TAXES :
(a) i) Income Tax Rs.200.00 lakh (P.Y. Rs.88.00 lakh)
ii) Wealth Tax Rs.8.00 lakh (P.Y. Rs.6.55 lakh)
iii) Excess provision for Wealth Tax of Rs Nil ( P. Y. Rs.8.36 lakh) written back during the year.
(b) The Company is entitled to a future Tax Credit of Rs Nil Lakh (P. Y. 73.80 lakh) under Section 115JAA of the Income Tax Act, 1961.
(c) Deferred Tax Liability : In terms of the interim injunction dated December 6, 2001 restraining the Institute of Chartered Accountants ofIndia from implementing the Accounting Standards (AS-22) -Accounting for Taxes on Income, with reference to Non-banking FinanceCompanies, issued by the High Court of Judicature at Madras in response to the Miscellaneous Petition no.27682 of 2001 in WritPetition No. 18827 of 2001 filed by the Association of Leasing & Financial Services Companies of which the company is a member,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 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.
Q. Miscellaneous Expenditure includes Rs.48.10 lakh (P.Y. Rs.74.38 lakh) on account of loss on foreclosure of certain Hire Purchase agreements,and provision of Rs.370.00 lakh (P.Y. Rs.Nil) on account of losses on future expected foreclosures and servicing costs.
R. Pursuant to the Employees Stock Options (ESOP) Scheme established by the Holding Company (i.e. Larsen & Toubro Limited), stock optionshave been granted to the employees of the Company in respect of which, cost of Rs.22.75 lakh has been incurred by the Holding Companyduring the Year.
S. 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. LakhLiabilities Side:Particulars Amount Amount
Outstanding Overdue1 Loans and advances availed by the NBFCs inclusive of
interest accrued thereon but not paid
(a) Debentures : Secured 3500.00 -
: Unsecured (Other than fallingwithin the meaning of Public Deposits) 7800.00 -
(b) Deferred Credits - -
(c) Term Loans 50151.45 -
(d) Inter-Corporate Loans and Borrowings 4299.00 -
(e) Commercial Paper - -
(f) Public Deposits 48.16 -
(g) Other Loans (Foreign Currency Loan) 6070.08 -
(h) Lease Finance 59.85 -
Schedules forming part of accounts
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L&T FINANCE LIMITED
2 Break-up of (1)(f) above (Outstanding public depositsinclusive 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 48.16 -
Assets Side:3 Break-up of Loans and Advances including bills receivables
[Other than those included in (4) below]:
(a) Secured 33142.00 -
(b) Unsecured 29687.00 -
4 Break-up of Leased Assets and Stock on Hire andhypothecation loans counting towards EL/HP activities:
(i) Lease assets including lease rentals under sundry debtors:
(a) Financial Lease 824.06 -
(b) Operating Lease 7839.18 -
(ii) Stock on hire including hire charges under sundry debtors:
(a) Assets on Hire 2584.23 -
(b) Repossessed Assets 33.84
(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) - -
Rs. LakhLiabilities Side:Particulars Amount Amount
Outstanding Overdue
Schedules forming part of accounts
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L&T FINANCE LIMITED
Long Term Investments:
1. Quoted
(i) Shares :
(a) Equity 2191.82 -
(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 4043.07 -
(ii) Debentures and Bonds - -
(iii) Units of Mutual Funds - -
(iv) Government Securities 0.03 -
(v) Others (please specify) 0.01 -
6 Borrower group-wise classification of all leased assets,stock-on-hire and loans and advances
(Rs. Lakh)Category Amount net of provisions Secured Unsecured Total
1. Related Parties
(a) Subsidiaries - - -
(b) Companies in the same group - - -
(c) Other related parties - 8022.86 8022.86
2. Other than related parties 33142.00 32945.45 66087.45
Total 33142.00 40968.31 74110.31
7 Investor group-wise classification of all investments(current and long term in shares and securities)(both quoted and unquoted):
Rs. LakhCategory Market Value/ Book Value
Break up or (Net of Provisions)fair value or NAV
1. Related Parties
a) Subsidiaries 550.00 550.00
b) Companies in the same group 3493.07 3493.07
c) Other related parties - -
2. Other than related parties 2191.86 2191.86
Total 6234.93 6234.93
Rs. LakhAssets Side:Particulars Amount Amount
Outstanding Overdue
Schedules forming part of accounts
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L&T FINANCE LIMITED
8 Other information
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 192.83
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 66.95
(iii) Assets acquired in satisfaction of debt 2502.79
T. Previous year figures have been regrouped/reclassified wherever necessary.
AmountRs. Lakh
Schedules forming part of accounts
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L&T FINANCE LIMITED
U. Balance Sheet Abstract and Company’s General Business ProfileI. Registration Details
Registration No. 1 1 - 8 3 1 4 7 State Code 1 1
Balance Sheet Date 3 1 0 3 0 5
Date Month Year
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 consideration otherwisethan in cash pursuant to the Scheme of Amalgamation approved by the High Court of Judicature at Bombay and the High Court of Judicatureat Madras.
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 Rs. Thousands)Total Liabilities Total Assets
8 5 3 2 5 1 4 8 5 3 2 5 1 4
Sources of FundPaid-up Capital Reserves & Surplus
8 6 6 9 1 5 4 7 2 7 4 5
Secured Loans Unsecured Loans
2 7 7 2 1 5 3 4 4 2 0 7 0 1
Application of FundsNet Fixed Assets Investments
1 5 1 0 1 4 5 6 2 3 4 9 3
Net Current Assets Miscellaneous Expenditure
6 3 9 8 8 7 6 N I L
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs. Thousands)Turnover Total Expenditure
1 1 0 0 4 7 9 8 3 9 3 6 0
Profit before tax Profit after tax
2 6 1 1 1 9 2 4 0 3 1 9
** Earning per Share in Rs. Dividend rate %
2 . 7 7 1 0 . 0 0
** Annualised
Item Code. N A(ITC Code)
Prodct Description L o a n s
L e a s i n g / H i r e P u r c h a s e
B i l l s D i s c o u n t i n g
Schedules forming part of accounts
}J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
Place : MumbaiDate : April 30, 2005
As per our report attached
SHARP & TANNAN A. N. MANIChartered Accountants ManagerBy the hand of
MILIND P. PHADKE V. C. RAJEPartner Vice President - Accounts &Membership No.33013 Company SecretaryPlace : MumbaiDate : April 30, 2005
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L&T FINANCE LIMITED
Statement Pursuant to Section 212 of the Companies Act,1956 relating toSubsidiary CompaniesName of the subsidiary company L&T Capital Company Limited
Financial year of the subsidiary ended on March 31, 2005
Number of shares of the subsidiary company held by 5,500,000L&T Finance Ltd.and/or its nominee at the above date.
The net aggregate of profits/ (losses), of the subsidiary company sofar 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 March 31, 2005 Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T Finance Ltd. Rs.55.00 lakh
(II) Not dealt with in the accounts of L&T Finance Ltd.amounted to
a) for the subsidiary’s financial year ended March 31, 2005 Rs.55.08 lakh
b) for the previous financial years of the subsidiary sinceit became subsidiary of L&T Finance Ltd. Rs.94.50 lakh
J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : MumbaiDate : April 30, 2005
}
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L&T FINANCE LIMITED
Loans & Advances:Secured, Considered Good : Loans against pledge of shares 450.00 - Other Loans - 928.65Unsecured, Considered Good : Bills Discounted 6,450.49 6,171.86 Other Loans 33,495.96 29,025.85 (Including Intercorporate Deposits Rs.Nil, P.Y. Rs.220.41 lakh)Unsecured, Considered Doubtful Bills Discounted - 33.81 Other Loans 44.59 1,366.07
44.59 1,399.88Less: Provision for Non Performing Assets 16.84 616.39
27.75 783.49 Advances towards capital assets 66.56 54.84 Advances recoverable in cash or in kind 25,198.91 4065.68
65,689.67 41,030.37
SCHEDULE - 8CURRENT LIABILITIES AND PROVISIONSLiabilities :Sundry Creditors 4,990.52 3,610.23Security Deposits 822.49 772.45Advances Received - Hire Purchase/Lease 41.72 49.41Income /Charges accounted in Advance - 189.30Interest accrued but not due 420.73 560.95
6,275.46 5,182.34
Provisions for:Taxes 208.00 94.55Proposed Equity Dividend 433.45 520.15Additional Tax on Dividend 56.65 66.64Gratuity 1.45 4.29Leave Encashment 27.14 24.86
726.69 710.49
Year Ended 31.03.2005 Year Ended 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
SCHEDULE - 9INCOME FROM OPERATIONSLease & Hire Purchase 3,473.36 3,839.69Bills Discounting 737.00 893.93Other Financing Activities 5,989.04 2,143.50Networking Activity 394.86 431.72Income from Investments - Dividend from Subsidiary Company - 55.00 - Others 365.08 67.64
365.08 122.64Other Income 45.45 386.39
11,004.79 7,817.87
As at 31.03.2005 As at 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
Schedules forming part of accounts
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L&T FINANCE LIMITED
Year Ended 31.03.2005 Year Ended 31.03.2004Rs. Lakh Rs. Lakh Rs. Lakh Rs. Lakh
Schedules forming part of accounts
SCHEDULE - 10PERSONNEL EXPENSES
Salaries 306.50 240.91Contribution to and provision for : Provident fund and Pension fund 12.81 12.20 Gratuity fund 1.45 4.29 Superannuation Fund 3.92 7.99 Leave encashment 5.37 8.73Welfare & Other Expenses 25.81 30.31
355.86 304.43
SCHEDULE - 11ADMINISTRATIVE & OTHER EXPENSESTravelling & Conveyance 163.34 142.40Printing & Stationery 14.10 12.13Telephone, Postage & Telegrams 298.57 252.62Directors’ Sitting Fees 0.48 0.42Brokerage & Service Charges 222.20 71.43Advertising & Publicity 8.25 2.00Repairs & Maintenance - Building 0.50 0.30Repairs & Maintenance - Plant & Machinery 3.98 2.49Repairs & Maintenance - Others 95.49 12.48Rent 54.73 128.11Rates & Taxes 70.46 112.34Electricity Charges 13.00 11.75Insurance 41.80 35.95Auditors Remuneration : Audit Fees 3.32 2.70 Tax Audit Fees 0.78 0.78 Certification 1.10 0.68 Expenses Reimbursed 0.59 0.42
5.79 4.58Provision for Non-Performing Assets / Write offs 163.24 722.75Less : Transfer from General Reserve - I 0.00 200.00
163.24 522.75Provision for Diminution in value of Investments 240.33 0.52Miscellaneous Expenses 586.08 172.15
1982.34 1484.42
SCHEDULE - 12INTEREST & OTHER FINANCE CHARGESFixed Loans 4,503.39 3,624.56Others 207.11 95.68
4,710.50 3,720.24
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L&T FINANCE LIMITED
SCHEDULE - 13
SIGNIFICANT ACCOUNTING POLICIES.
A. Method 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.
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. Processing fees/Management Fees, Income from Bill Discounting, other financing activities, other compensation and Investmentsare 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 the guidelines issued by the Reserve Bank of India in respect of Prudential Norms for Income Recognition andProvisioning for Non-Performing Assets.
E. Retirement Benefits :
Contributions to Provident Fund, Family Pension Fund and Superannuation are accounted on actual liability basis. Contributions to Gratuity fundand Provision for Leave encashment benefit on retirement are 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 theInstitute 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 has been 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 rates are fixed in consonance with the expecteduseful life of the assets.
Depreciation on assets acquired and given to employees under the Hard Furnishing Scheme has been provided at 18% per annum onStraight Line Basis.
ii) Assets given on Lease:
(a) In respect of the assets given on finance lease, Accounting Standards (AS – 19) – Leases has been applied. Investment in leasedassets is shown 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.
Schedules forming part of accounts
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L&T FINANCE LIMITED
iii) Assets taken on Lease:
Accounting Standards (AS – 19) - Leases, has been applied to the assets taken on lease on or after 1.4.2001. These assets have beendepreciated over 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 on the basisof specific identification. Long-term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanentnature.
I. Foreign Currency Transactions:
Foreign Currency Transactions are accounted for at the rates prevailing on the date of transactions. Wherever forward contracts are entered 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 difference on settlement are adjusted to theProfit & Loss Account.
J. Borrowing Costs:
Borrowing Costs attributable to the acquisitions, constructions or production of qualifying assets are capitalised as part of the cost of such 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 other borrowing costsare recognized as an expense in the period in which they are incurred.
SCHEDULE - 14
NOTES FORMING PART OF ACCOUNTS AS AT MARCH 31, 2005
A. Contingent Liabilities:i) Estimated amount of contract remaining to be executed on Capital Account (net of advances) and not provided for, including owned
assets : Rs.681.55 lakh (P. Y. Rs.107.41 lakh)ii) Income Tax Liability in respect of matters in Appeal : Rs.1574.67 lakh ( P.Y. Rs.1574.67 lakh)iii) Interest Tax liability in respect of matters in Appeal : Rs.53.67 lakh (P.Y. Rs.53.67 lakh)iv) Sales Tax Liability in respect of matters in Appeal : Rs.347.00 lakh (P.Y. Rs.368.35 lakh)v) Counter guarantees given to banks against guarantees given by them on behalf of the Company Rs Nil (P. Y. Rs. 25.38 lakh)
vi) Bond executed in respect of legal matters Rs.10.00 lakh (P. Y. Rs.10.00 lakh)
B. Secured Redeemable Non-convertible Debentures:
Sr. Face Value Date of Allotment Amount Interest RedemptionNo. Rs. Lakh
i) Rs. 100.00 lacs April 7, 2003 1500.00 7.75% Redeemable at par, at the end of 24 monthseach Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the dateof allotment
ii) Rs. 100.00 lacs April 8, 2003 500.00 7.75% Redeemable at par, at the end of 24 months each Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the date of allotment
iii) Rs. 100.00 lacs April 8, 2003 500.00 7.75% Redeemable at par, at the end of 24 monthseach Payable from the date of allotment or on exercise of
annually Put or Call Option – 12 months after the dateof allotment
iv) Rs. 100.00 lacs January 21, 2004 1000.00 6.00%. Redeemable at par, at the end of 36 monthsPayable from the date of allotment or on exercise ofannually Put or Call Option – 12 months after the date
of allotment
TOTAL 3500.00
Security: The Debentures are secured by way of first/second charge, having pari passu rights, as the case may be, on the company’s specifiedimmovable properties and specified Hire Purchase/Lease/Term Loan receivables.
Schedules forming part of accounts
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L&T FINANCE LIMITED
C. (i) Cash Credit/Working Capital Demand Loan of Rs.1500.00 lakh is secured by hypothecation of specified Hire Purchases/Lease Assetsand book debts relating to Lease, Hire Purchase and other Activities.
(ii) Term Loan of Rs.14583.33 lakh is secured by hypothecation of specified Hire Purchase/Lease/Loan receivables.
(iii) Foreign Currency loan of Rs. 6070.09 lakh is secured by hypothecation of specified Hire Purchases/Lease Assets and Term Loanreceivables and book debts relating to Lease, Hire Purchase and other Activities.
(iv) Term Loan of Rs.2068.12 lakh is secured by hypothecation of specified fixed assets of the Company and exclusive first charge onspecified receivables.
D. The Company has taken certain assets on lease costing Rs. 75.79 lakh (P.Y. Rs.332.97 lakh) the future lease obligation against which isRs. 65.46 lakh (P.Y. Rs.116.07 lakh)
E. i) Finance Lease Obligations taken on lease 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 March 31, 2005 in respect of these assets are as under:
Rs. Lakh
Due Total Minimum Lease Interest Not Due Present Value ofPayments Outstanding Minimum Lease
as on March 31, 2005 Payments
Within One Year 34.35 3.63 30.72
Later than one year and not later than five years 31.11 1.98 29.13
Later than five years Nil Nil Nil
65.46 5.61 59.85
ii) Finance Lease Obligations given on lease on or after 1.4.2001 :
The Company has given assets on finance lease to its customers with respective underlying assets/equipments as security. Minimumlease payments outstanding as of March 31, 2005 in respect of these assets are as under:
Rs. Lakh
Due Total Minimum Lease Interest Not Due Present Value ofPayments Outstanding Minimum Lease
as on March 31, 2005 Payments
Within One Year 247.65 23.53 224.12
Later than one year and not later than five years 659.93 59.99 599.94
Later than five years Nil Nil Nil
907.58 83.52 824.06
F. Income from other financing activities include interest on Loans & Advances of Rs.5075.30 lakh (P.Y. Rs.2207.69 lakh){Tax deducted at source Rs.183.17 lakh (P.Y. Rs.110.80 lakh ) }
G. Advances recoverable in cash or in kind include
i) Loan to Officers Rs.5.59 lakh (P.Y. Rs.5.44 lakh), maximum amount outstanding during the year Rs.5.80 lakh(P.Y. Rs.5.94 lakh)
ii) Rs.28.18 lakh being sales tax paid upto 31/12/97 in various states on inter-state lease/Hire Purchase Transactions. Due to ambiguity incertain provisions of Sales Tax Act in respective states with respect to such transactions, recovery of the same from the customers iskept in abeyance. The Company has since then been paying sales tax on such transactions under protest in various states to the extentit is collected from the customers.
Schedules forming part of accounts
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L&T FINANCE LIMITED
H. Stock-on-hire includes receivables of Rs.452.60 lakh (P.Y. Rs.1265.36 lakh) detailed hereunder.
As at 31.03.2005 As at 31.03.2004Secured Rs. lakh Rs. lakhOutstanding for more than six months
Considered Good 286.05 1012.95
Others: Considered Good 275.60 726.01
561.65 1738.96
Less : Provision for non-performing assets 109.05 473.60
452.60 1265.36
I. Assignment of Receivables:
The Company has assigned/sold some of the Lease, Hire Purchase Assets/receivables and Term Loan receivables amounting toRs.34,836.69 lakh. This assignment/sale is without recourse to the Company. The Company does not expect any contingent or other liabilityin future in respect of these assigned/sold assets/receivables.
J. Managers salary and perquisites amounting to Rs.17.25 lakh (P.Y. Rs.16.66 lakh) have been charged to the Accounts.
K. Value of imports (on CIF basis) :
Capital Goods Rs.2694.60 lakh (P.Y. Rs.1200.37 lakh)
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 31.03.2005 Rs. Lakh
No. Controlling Relationship Nature of Amount Amount AmountCompany Transaction due to due from
Transaction1 Larsen & Toubro Holding Company ICD Borrowed 38325.00
LimitedLease finance given 87.00Assignment/Sale of Lease/HPReceivables/Assets and TermLoan Receivables 22419.00 21419.00ExpenditureInterest on ICD borrowed 103.50Service Charges 128.19 6.75IncomeLease Finance Charges 11.44Operating Lease Rental 2089.50 280.50Service Charges 458.60 101.28
Transaction2 India Infrastructure Fellow Subsidiary Assignment of Hire Purchase/
Developers Limited Company Term Loan Receivables 1539.60Sundry Creditors 0.04IncomeService Charges 14.40Interest 0.24
Schedules forming part of accounts
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L&T FINANCE LIMITED
Transaction3 HPL Cogeneration Fellow Subsidiary ICD Borrowed 4000.00 4000.00
Limited Company ExpenditureInterest 263.28
Transaction4 L&T Capital Subsidiary Company ICD Borrowed 271.00 299.00
Company Limited ExpenditureInterest 18.01 18.01Professional Fees 5.00
Transaction5 Larsen & Toubro Fellow Subsidiary Lease Finance Given 13.73
Infotech Limited Company ExpenditureService Charges 39.96 81.50IncomeLease Finance Charges 11.72Operating Lease Rentals 265.13Service Charges 22.15
Transaction6 L&T – Sargent & Fellow Subsidiary Lease Finance Given 9.48
Lundy Limted Company IncomeLease Finance Charges 1.29
Income7 Tractors Engineers Fellow Subsidiary Operating Lease Rentals 2.65
Limited Company Service Charges 2.00
Transaction8 NAC Infrastructure Associate Company Investment Purchase 300.00
Equipment Limited
(iii) Earning per share (“EPS”) computed in accordance with Accounting Standard 20 : “Earnings Per Share” :
Particulars 2004-05 2003-04
(a) Profit after tax for the year — Rs. Lakh 2403.19 1344.26
(b) Weighted average number of equity shares 8,66,91,500 8,66,91,500
(c) i) Nominal value of shares (Rs.) 10.00 10.00
ii) Earnings per share Basic and Diluted (Rs.) 2.77 1.60
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 :2004-05 2003-04
Rs. Lakh Rs. Lakh
- Gross Value of assetsPlant & Machinery 6493.40 4000.22
Vehicles 4613.22 3114.62
Computers 138.61 20.50
- Accumulated DepreciationPlant & Machinery 1091.27 596.18
Vehicles 952.29 414.52
Computers 9.62 4.04
Rs. Lakh
No. Controlling Relationship Nature of Amount Amount AmountCompany Transaction due to due from
Schedules forming part of accounts
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L&T FINANCE LIMITED
b) The total lease depreciation recognised in the Profit and Loss Account for the year is Rs.1198.01 lakh (P. Y. Rs 759.93 lakh). Nocontingent rent has been recognised in the Profit and Loss Account during the year (P. Y. Rs.Nil)
c) The Company provides vehicles, computers, construction equipment and other plant & machinery on operating lease for varying periodsand 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.418.38 lakh (P.Y. Rs.167.62 lakh)
On other matters Rs.1.12 lakh (P.Y. Rs.42.80 lakh)
O. PROVISION FOR TAXES :
(a) i) Income Tax Rs.200.00 lakh (P.Y. Rs.88.00 lakh)
ii) Wealth Tax Rs.8.00 lakh (P.Y. Rs.6.55 lakh)
iii) Excess provision for Wealth Tax of Rs Nil ( P. Y. Rs.8.36 lakh) written back during the year.
(b) The Company is entitled to a future Tax Credit of Rs Nil Lakh (P. Y. 73.80 lakh) under Section 115JAA of the Income Tax Act, 1961.
(c) Deferred Tax Liability : In terms of the interim injunction dated December 6, 2001 restraining the Institute of Chartered Accountants ofIndia from implementing the Accounting Standards (AS-22) -Accounting for Taxes on Income, with reference to Non-banking FinanceCompanies, issued by the High Court of Judicature at Madras in response to the Miscellaneous Petition no.27682 of 2001 in WritPetition No. 18827 of 2001 filed by the Association of Leasing & Financial Services Companies of which the company is a member,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 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.
Q. Miscellaneous Expenditure includes Rs.48.10 lakh (P.Y. Rs.74.38 lakh) on account of loss on foreclosure of certain Hire Purchase agreements,and provision of Rs.370.00 lakh (P.Y. Rs.Nil) on account of losses on future expected foreclosures and servicing costs.
R. Pursuant to the Employees Stock Options (ESOP) Scheme established by the Holding Company (i.e. Larsen & Toubro Limited), stock optionshave been granted to the employees of the Company in respect of which, cost of Rs.22.75 lakh has been incurred by the Holding Companyduring the Year.
S. 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. LakhLiabilities Side:Particulars Amount Amount
Outstanding Overdue1 Loans and advances availed by the NBFCs inclusive of
interest accrued thereon but not paid
(a) Debentures : Secured 3500.00 -
: Unsecured (Other than fallingwithin the meaning of Public Deposits) 7800.00 -
(b) Deferred Credits - -
(c) Term Loans 50151.45 -
(d) Inter-Corporate Loans and Borrowings 4299.00 -
(e) Commercial Paper - -
(f) Public Deposits 48.16 -
(g) Other Loans (Foreign Currency Loan) 6070.08 -
(h) Lease Finance 59.85 -
Schedules forming part of accounts
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L&T FINANCE LIMITED
2 Break-up of (1)(f) above (Outstanding public depositsinclusive 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 48.16 -
Assets Side:3 Break-up of Loans and Advances including bills receivables
[Other than those included in (4) below]:
(a) Secured 33142.00 -
(b) Unsecured 29687.00 -
4 Break-up of Leased Assets and Stock on Hire andhypothecation loans counting towards EL/HP activities:
(i) Lease assets including lease rentals under sundry debtors:
(a) Financial Lease 824.06 -
(b) Operating Lease 7839.18 -
(ii) Stock on hire including hire charges under sundry debtors:
(a) Assets on Hire 2584.23 -
(b) Repossessed Assets 33.84
(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) - -
Rs. LakhLiabilities Side:Particulars Amount Amount
Outstanding Overdue
Schedules forming part of accounts
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L&T FINANCE LIMITED
Long Term Investments:
1. Quoted
(i) Shares :
(a) Equity 2191.82 -
(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 4043.07 -
(ii) Debentures and Bonds - -
(iii) Units of Mutual Funds - -
(iv) Government Securities 0.03 -
(v) Others (please specify) 0.01 -
6 Borrower group-wise classification of all leased assets,stock-on-hire and loans and advances
(Rs. Lakh)Category Amount net of provisions Secured Unsecured Total
1. Related Parties
(a) Subsidiaries - - -
(b) Companies in the same group - - -
(c) Other related parties - 8022.86 8022.86
2. Other than related parties 33142.00 32945.45 66087.45
Total 33142.00 40968.31 74110.31
7 Investor group-wise classification of all investments(current and long term in shares and securities)(both quoted and unquoted):
Rs. LakhCategory Market Value/ Book Value
Break up or (Net of Provisions)fair value or NAV
1. Related Parties
a) Subsidiaries 550.00 550.00
b) Companies in the same group 3493.07 3493.07
c) Other related parties - -
2. Other than related parties 2191.86 2191.86
Total 6234.93 6234.93
Rs. LakhAssets Side:Particulars Amount Amount
Outstanding Overdue
Schedules forming part of accounts
S-59
L&T FINANCE LIMITED
8 Other information
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 192.83
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 66.95
(iii) Assets acquired in satisfaction of debt 2502.79
T. Previous year figures have been regrouped/reclassified wherever necessary.
AmountRs. Lakh
Schedules forming part of accounts
S-60
L&T FINANCE LIMITED
U. Balance Sheet Abstract and Company’s General Business ProfileI. Registration Details
Registration No. 1 1 - 8 3 1 4 7 State Code 1 1
Balance Sheet Date 3 1 0 3 0 5
Date Month Year
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 consideration otherwisethan in cash pursuant to the Scheme of Amalgamation approved by the High Court of Judicature at Bombay and the High Court of Judicatureat Madras.
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 Rs. Thousands)Total Liabilities Total Assets
8 5 3 2 5 1 4 8 5 3 2 5 1 4
Sources of FundPaid-up Capital Reserves & Surplus
8 6 6 9 1 5 4 7 2 7 4 5
Secured Loans Unsecured Loans
2 7 7 2 1 5 3 4 4 2 0 7 0 1
Application of FundsNet Fixed Assets Investments
1 5 1 0 1 4 5 6 2 3 4 9 3
Net Current Assets Miscellaneous Expenditure
6 3 9 8 8 7 6 N I L
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs. Thousands)Turnover Total Expenditure
1 1 0 0 4 7 9 8 3 9 3 6 0
Profit before tax Profit after tax
2 6 1 1 1 9 2 4 0 3 1 9
** Earning per Share in Rs. Dividend rate %
2 . 7 7 1 0 . 0 0
** Annualised
Item Code. N A(ITC Code)
Prodct Description L o a n s
L e a s i n g / H i r e P u r c h a s e
B i l l s D i s c o u n t i n g
Schedules forming part of accounts
}J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
Place : MumbaiDate : April 30, 2005
As per our report attached
SHARP & TANNAN A. N. MANIChartered Accountants ManagerBy the hand of
MILIND P. PHADKE V. C. RAJEPartner Vice President - Accounts &Membership No.33013 Company SecretaryPlace : MumbaiDate : April 30, 2005
S-61
L&T FINANCE LIMITED
Statement Pursuant to Section 212 of the Companies Act,1956 relating toSubsidiary CompaniesName of the subsidiary company L&T Capital Company Limited
Financial year of the subsidiary ended on March 31, 2005
Number of shares of the subsidiary company held by 5,500,000L&T Finance Ltd.and/or its nominee at the above date.
The net aggregate of profits/ (losses), of the subsidiary company sofar 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 March 31, 2005 Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T Finance Ltd. Rs.55.00 lakh
(II) Not dealt with in the accounts of L&T Finance Ltd.amounted to
a) for the subsidiary’s financial year ended March 31, 2005 Rs.55.08 lakh
b) for the previous financial years of the subsidiary sinceit became subsidiary of L&T Finance Ltd. Rs.94.50 lakh
J.P. NAYAK
Y.M. DEOSTHALEE Directors
R. SHANKAR RAMAN
A. N. MANIManager
V. C. RAJEVice President - Accounts &Company Secretary
Place : MumbaiDate : April 30, 2005
}
S-62
L&T CAPITAL COMPANY LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2005.1. FINANCIAL RESULTS
Amount in Rs. Lakh
Year Ended31.03.2005 31.03.2004
Gross Income 321.95 333.78
Total Expenses 235.58 204.58
Profit Before Tax 86.37 129.20
Current Taxes 32.03 48.27
Adjustments (Deferred Tax credit) (0.74) (0.53)
Ballance Brought forward from previous year 94.50 75.09
Profit After Tax 55.08 81.46
Equity Dividend incl. tax on Dividend - 62.05
Surplus carried forward 149.58 94.502. DIVIDEND
The Directors do not recommend payment of dividend for the year.3. YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY
The Company’s operating income recorded a marginal increase of 3% over the last financial year. The expenditure during 2004-2005, however, washigher by 15% as compared to the previous year resulting in lower profit after tax of Rs. 55.08 lakhs for the year.
4. CAPITAL EXPENDITUREAs at March 31, 2005, the gross fixed assets and net fixed assets were Rs.38.83 lakhs and Rs.23.76 lakhs respectively. Additions during the yearamounted to Rs. 2.63 lakhs.
5. DEPOSITSDuring the period under review, the Company has not accepted any deposits from the public.
6. AUDITORS’ REPORTThe 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 PARTICULARSAs the Company is engaged in rendering non-banking financial services, there are no particulars to be disclosed as per the Companies (Disclosureof 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 were Rs. Nil while the Foreign Exchange outgo recorded for the year was Rs. 0.51 Lakh.
8. PERSONNELThere 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 STATEMENTThe 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 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, 2005 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.10. DIRECTORS
The Board of Directors at its meeting held on April 22, 2005 accepted the resignation of Mr. S.V. Subramanian. The Directors record theirappreciation of the valuable services rendered by Mr. S.V. Subramanian.In terms of Section 256 of the Companies Act, 1956 Mr. N. Sivaraman retires by rotation and is eligible for re-appointment.
11. AUDIT COMMITTEEThe Audit Committee consists of three non-executive directors. The members of the Committee were Mr. S. V. Subramanian, Mr. R. Shankar Ramanand Mr. N. Sivaraman. The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the CompaniesAct, 1956. The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal auditreport.The Board of Directors at its meeting held on April 22, 2005 reconstituted the Audit Committee consequent to the resignation of Mr. S.V.Subramanian and accordingly Mr. Y.M. Deosthalee, Mr. R. Shankar Raman and Mr. N. Sivaraman are the members of the reconstituted AuditCommittee with Mr. R. Shankar Raman as its Chairman.The Committee records their appreciation of the valuable services rendered by Mr. S.V. Subramanian.
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L&T CAPITAL COMPANY LIMITED
12. AUDITORS
The Statutory Auditors, M/s. Sharp & Tannan Chartered Accountants, hold office until the 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 bewithin the limits prescribed under Section 224(1B) of the Companies Act, 1956.
13. ACKNOWLEDGEMENT
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Investors and Customers. TheDirectors 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 R. SHANKAR RAMAN N. SIVARAMAN
Place: Mumbai Directors
Date: April 22, 2005
Auditors’ Report to the Members1. We have audited the attached Balance Sheet of L&T Capital Company Limited as at March 31, 2005, and the Profit and Loss Account and also the
Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audit.
2. 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.
3. As required by the Companies (Auditor’s 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 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 Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from directors of the Company as at March 31, 2005, and taken on record by the Boardof Directors, we report that none of the directors is disqualified as on March 31, 2005 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 March 31, 2005; and
ii) in the case of the Profit and Loss Account, of the profits for the year ended on that date.
iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For SHARP & TANNANChartered Accountants
by the hand of
MILIND P. PHADKEPlace : Mumbai PartnerDate : April 22, 2005 (Membership No. 33013)
S-64
L&T CAPITAL COMPANY LIMITED
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 Capital Company Limited on the accountsfor the year ended March 31, 2005, 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 discrepancies werenoticed 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 and does not have inventories.
3. The Company has not taken any secured / unsecured loans from companies, firms or other parties listed in the register maintained under Section301 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 nature of its business for the purchase and sale of fixed assets and services. 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 a register inpursuance 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, 58AA or any otherrelevant provisions of the Companies Act, 1956.
7. We are of the opinion that the Company has an internal audit system commensurate with its size and the nature of its business.
8. Provisions regarding maintenance of cost records prescribed under Section 209(1)(d) of the Companies Act, 1956 are not applicable to the Company.
9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has beengenerally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees StateInsurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other dues during the year with theappropriate authorities.
(b) According to information and explanations given to us, as at March 31, 2005, there are no undisputed dues payable for a period of more thansix months from the date they became payable.
(c) According to the information and explanations given to us, there are no amounts in respect of Income Tax, Sales Tax, Wealth Tax, ServiceTax, Customs Duty, Excise Duty, Cess that have not been deposited with the appropriate authorities 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 the currentfinancial year and in 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 the Company has notdefaulted in repayment of dues to banks. The Company did not have any outstanding debentures or any outstanding loans from any financialinstitution during the year.
12. 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.
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, debenturesand other investments.
15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.
16. The Company does not have any term loans.
17. According to the information and explanations given by the management, the Company has not raised any funds on short-term or 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 under Section 301of the Companies Act, 1956.
19. The Company did not have outstanding debentures during the year. Accordingly, no security or charge has 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 reported during theyear.
For SHARP & TANNANChartered Accountants
by the hand of
MILIND P. PHADKEPlace : Mumbai PartnerDate : April 22, 2005 (Membership No. 33013)
S-65
L&T CAPITAL COMPANY LIMITED
Balance Sheet as on March 31, 2005Schedules As at 31.03.2005 As at 31.03.2004
Rs. Rs.
SOURCES OF FUNDS:
Shareholders’ Funds
Share Capital 1 55,000,000 55,000,000
Reserves & Surplus 2 14,958,357 9,450,119
Total 69,958,357 64,450,119
Loan Funds
Finance Lease Obligations 3 752,026 1,130,030
Total 70,710,383 65,580,149
APPLICATION OF FUNDS:
Fixed Assets
Gross Block 4 3,882,831 3,917,558
Less : Depreciation 1,506,614 1,062,627
Net Block 2,376,217 2,854,931
Investments 5 42,953,434 52,955,697
Current Assets, Loans & Advances 6
Sundry Debtors 1,443,126 337,994
Cash & Bank Balances 2,285,713 3,939,012
Loans & Advances 40,278,828 24,980,021
44,007,667 29,257,027
Less:Current Liabilities & Provisions 7
Liabilities 9,426,147 7,810,112
Provisions 9,291,809 11,796,993
18,717,956 19,607,105
Net Current Assets 25,289,711 9,649,922
Deferred Tax Asset / (Liability) 91,022 17,001
Miscellaneous Expenditure 8 0 102,598(To the extent not written off or adjusted)
Total 70,710,383 65,580,149
Significant Accounting Policies 14
Notes Forming Part of Accounts 15
Balance Sheet Abstract 16
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
MILIND P.PHADKEPartner(Membership No.33013)
Place : MumbaiDated : April 22, 2005
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEE
R. SHANKAR RAMAN Directors
N. SIVARAMAN
Place : MumbaiDated : April 22, 2005
}
S-66
L&T CAPITAL COMPANY LIMITED
Profit & Loss Account for the year ended March 31, 2005Schedules Year Ended Year Ended
31.03.2005 31.03.2004
Rs. Rs.
INCOME:
Income from Operations 9 29,158,909 28,190,012
Other Income 10 3,035,809 5,187,798
Total 32,194,718 33,377,810
EXPENDITURE:
Personnel Expenses 11 8,283,549 8,472,612
Administration & Other Expenses 12 14,462,018 11,215,001
Interest & Other Finance Charges 13 122,365 153,705
Depreciation 587,298 513,795
Preliminary Expenses written off 102,598 102,598
Total 23,557,828 20,457,710
Profit/(Loss) before Taxes 8,636,890 12,920,100
Provision for Taxes
Current Taxes 3,202,673 4,827,379
Deferred Tax Charge / (credit) (74,021) (53,375)
Profit/(Loss) after Taxes 5,508,238 8,146,096
Add: Balance brought forward from previous year 9,450,119 7,508,711
Profit available for appropriation / distribution 14,958,357 15,654,807
Less: Interim Dividend Paid - 2,750,000
Dividend tax on Interim Dividend - 352,344
Proposed Final Dividend - 2,750,000
Dividend tax payable - - 352,344 6,204,688
Balance carried to Balance Sheet 14,958,357 9,450,119
Earnings per Share
Basic and Diluted (Rs.) 1.00 1.48
Significant Accounting Policies 14
Notes Forming Part of Accounts 15
Balance Sheet Abstract 16
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
MILIND P.PHADKEPartner(Membership No.33013)
Place : MumbaiDated : April 22, 2005
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEE
R. SHANKAR RAMAN Directors
N. SIVARAMAN
Place : MumbaiDated : April 22, 2005
}
S-67
L&T CAPITAL COMPANY LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04Rupees Rupees
A. Cash Flow from operating activities
Profit / (Loss) before taxation and extraordinary item 8,636,890 12,920,100
Add :
Depreciation 587,298 513,795
Miscellaneous Expenditure written off 102,598 102,598
Provision for Leave encashment 122,900 69,198
Provision for Gratuity 132,784 159,383
Interest Expenses 122,365 153,705
(Profit) on sale of investment (994,475) (241)
(Income) from investment (91,388) (54,148)
Provision for expenses written back 62,630 3,271
Operating Profit before working capital changes 8,681,602 13,867,661
Add :/(Less)
(Increase)/Decrease in Sundry Debtors (1,105,132) 3,031,284
(Increase)/Decrease in Loans and Advances (17,371,164) 31,211,259
(Increase/Decrease in Trade Payables (1,307,792) 1,271,692
Cash generated from Operations (11,102,487) 49,381,896
Direct Tax paid (2,072,357) (3,665,912)
Net Cash from Operating Activities (9,030,130) 53,047,808
B. Cash flow from investing activities :
Sale of fixed assets 154,262 -
Purchase of fixed Asset (262,845) (670,157)
Sale of investment 11,745,433 47,244,180
Purchase of investment (748,694) (94,487,882)
Income from investment 91,388 54,148
Net Cash (used in)/from Investing Activites 10,979,543 (47,859,711)
C. Cash flow from financing activities :
Repayment of long term borrowings (378,004) (213,784)
Proceed from other borrowings (Net) (122,365) (153,705)
Dividend Paid (Including Taxes) (3,102,344) (3,102,344)
Net Cash (used in)/from Financing Activites (3,602,713) (3,469,833)
Net (decrease)/increase in cash and cash equivalents (A+B+C) (1,653,299) 1,718,264
Cash and cash equivalents at beginning of the year 3,939,012 2,220,748
Cash and cash equivalents at end of the year 2,285,713 3,939,012
Notes :1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 Cash Flow Statement,
issued by the Institute of Chartered Accountants of India.2. Cash and cash equivalents represent cash and bank balances.3. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
MILIND P.PHADKEPartner(Membership No.33013)
Place : MumbaiDated : April 22, 2005
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEE
R. SHANKAR RAMAN Directors
N. SIVARAMAN
Place : MumbaiDated : April 22, 2005
}
S-68
L&T CAPITAL COMPANY LIMITED
Schedules forming part of accountsAs at As at
31.03.2005 31.03.2004Rs. Rs.
SCHEDULE - 1:
SHARE CAPITAL
Authorised
55,00,000 Equity Shares of Rs.10 each 55,000,000 55,000,000
55,000,000 55,000,000
Issued,Subscribed & Paid up
55,00,000 Equity Shares of Rs.10 each fully paid-up 55,000,000 55,000,000(54,99,994 shares are held by the HoldingCompany, M/s L&T Finance Limited)
55,000,000 55,000,000
SCHEDULE - 2:
RESERVES & SURPLUS
Profit & Loss Account 14,958,357 9,450,119
14,958,357 9,450,119
SCHEDULE - 3:
FINANCE LEASE OBLIGATIONS
Lease Finance (Due within a year) 214,685 240,902
Lease Finance (Due beyond one year) 537,341 889,128
752,026 1,130,030
SCHEDULE - 4:
FIXED ASSETSAmount in Rs.
Fixed Assets Gross Block Depreciation Net Block
As at As at As at For the As at As at As at1.04.04 Additions Deletions 31.03.05 1.04.04 Year Deletions 31.03.05 31.03.05 31.3.04
Computers & Peripherals 1,326,304 176,650 - 1,502,954 535,940 240,692 - 776,632 726,322 790,364
Plant & Machinery 1,018,869 86,195 16,573 1,088,492 98,193 109,139 3,760 203,572 884,920 920,676
Furniture & Fixtures 14,400 - - 14,400 539 912 - 1,451 12,949 13,861
Leased Assets 1,557,985 - 281,000 1,276,985 427,955 236,555 139,551 524,959 752,026 1,130,030
Total 3,917,558 262,845 297,573 3,882,831 1,062,627 587,298 143,311 1,506,614 2,376,217 2,854,931
As at As at As at For the As atPrevious Year 1.04.03 Additions Deletions 31.03.04 1.04.03 Year Deletions 31.03.04
Computers & Peripherals 1,149,039 177,265 - 1,326,304 337,366 198,574 - 535,940
Plant & Machinery 540,377 478,492 - 1,018,869 28,517 69,676 - 98,193
Furniture & Fixtures - 14,400 - 14,400 - 539 - 539
Leased Assets 1,557,985 - - 1,557,985 182,949 245,006 - 427,955
Total 3,247,401 670,157 - 3,917,558 548,832 513,795 - 1,062,627
S-69
L&T CAPITAL COMPANY LIMITED
Schedules forming part of accountsAs at As at
31.03.2005 31.03.2004Rs. Rs.
SCHEDULE - 5:
INVESTMENTS
(At cost or market value whichever is lower)Current Investments:
Units of Mutual Fund (unquoted) 42,953,434 52,955,697(Market Value Rs.45,227,677) 42,953,434 52,955,697(PY Market Value Rs.54,011,191)
42,953,434 52,955,697
Particulars of investments:Mutual Funds
JM Income Fund (Growth Option) - - 3,503,264157703.01 units of Rs.10 each
Nil units purchased & 157703.01 units of Rs.10 eachsold during the year(Nil units purchased & sold during previous year)
IDBI Principal - Income Fund - 1,000,00076630.70 units of Rs.10 each
Nil units purchased & 76630.70 units of Rs.10 eachsold during the year(Nil units purchased & sold during previous year)
Pioneer ITI Income Builder (Templeton) - 500,00026164.312 units of Rs.10 each
Nil units purchased & 26164.312 units of Rs.10 eachsold during the year(Nil units purchased & sold during previous year)
HDFC MF – Liquid Scheme - 747,69374201.117 units of Rs.10 each
248119.256 units of Rs.10 each purchased &324669.056 units sold during the year(298160.351 units of Rs.10 each purchased &298130.722 units sold during previous year)
Chola Liquid Inst Plus 748,694 -64763.119 units of Rs.10 each
(Purchased during the year)810916.179 units of Rs.10 each purchased &713998.288 units sold during the year
Reliance Fixed Term Scheme 42,204,740 42,204,7404220474 units of Rs.10 each
Nil units purchased & sold during the year(4220474 units of Rs.10 each purchased &NIL units sold during previous year)
Reliance Liquid Fund - 5,000,000324639.488 units of Rs.10 each
22597.265 units of Rs.10 each purchased &334333.111 units sold during the year(324639.488 units of Rs.10 each purchased &NIL units sold during previous year)
S-70
L&T CAPITAL COMPANY LIMITED
Schedules forming part of accountsAs at As at
31.03.2005 31.03.2004Rs. Rs.
SCHEDULE - 6:
CURRENT ASSETS, LOANS & ADVANCES
Current Assets:
Sundry DebtorsUnsecured:
Debts outstanding for periodexceeding six months - 3,587Other Debts - Considered Good 1,443,126 334,407
1,443,126 337,994Cash & Bank BalancesCash in Hand 13,156 8,695Balance with Scheduled Bank
On Current Account 407,864 1,906,243In Fixed Deposit 1,864,692 2,024,074(including interest accrued thereon)
2,285,713 3,939,012Loans & Advances:
Unsecured considered good:Unsecured
Inter Corporate DepositHolding Company 29,900,000 17,100,000
Advances recoverable in cash or in kind 10,378,828 7,880,02140,278,828 24,980,021
44,007,668 29,257,028
SCHEDULE - 7:
CURRENT LIABILITIES AND PROVISIONS
Liabilities:
Sundry Creditors 9,426,147 7,810,112Provisions for:Taxes 8,011,796 7,670,320Proposed Dividend - 2,750,000Additional tax on Dividend - 352,344Gratuity 657,374 524,590Leave Encashment 622,639 499,739
9,291,809 11,796,993
18,717,956 19,607,105
SCHEDULE - 8:
MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)Preliminary Expenses - 102,598
- 102,598
Year Ended Year Ended31.03.2005 31.03.2004
Rs. Rs.SCHEDULE - 9:
INCOME FROM OPERATIONS
Arrangers Fee 6,248,310 3,675,000Consultancy Fees 1,698,338 1,530,000Syndication Fees - Money Markets 21,212,261 22,985,012
29,158,909 28,190,012
S-71
L&T CAPITAL COMPANY LIMITED
SCHEDULE - 10:OTHER INCOMEInterest on:
Inter Corporate Deposit 1,772,490 4,886,348Tax Deducted at Source -Rs.1,37,060.(PY - Rs.10,01,716/-)Fixed Deposit 99,639 205,720Tax Deducted at Source -Rs.20,834.(PY - Rs.78,969/-)
Interest received from Income Tax - 36,256Income from Mutual Fund 91,388 54,148Profit on sale of Investment 994,476 241Others 15,186 1,815Provision for expenses written back 62,630 3,271
3,035,809 5,187,798
3,035,809 5,187,798
SCHEDULE - 11:PERSONNEL EXPENSESSalaries 7,019,847 7,111,508Contribution to and provision for:
Provident fund and Pension fund 320,482 336,514Gratuity 167,399 187,652Superannuation 211,200 221,340Leave Encashment 265,551 258,996
Welfare & Other Expenses 299,069 356,602
8,283,549 8,472,612
SCHEDULE - 12:ADMINISTRATIVE & OTHER EXPENSESTravelling & Conveyance 2,013,201 2,331,934Printing & Stationery 108,976 117,337Telephone, Postage & Telegrams 480,820 496,756Registration Charges - 250,000Service Charges 310 2,281Computer Software Expenses 22,077 125,000Repairs & Maintenance
Plant & Machinery 591,576 842,683Building - -Others 2,007,600 305
Rent - -Rates & Taxes 255,500 1,000Insurance 11,995 22,102Loss on sale of Investments - -Diminution in Investments - 214Auditors’ Remuneration:
Audit Fees 75,000 75,600Tax Audit Fee 21,600 21,600Other matters 30,000 32,400Expenses reimbursed -
Electricity Charges 352,906 304,610Reuters Leased Line 2,456,222 2,269,881Professional Charges 3,460,988 3,845,500Business Promotion 6,000 -Bad Debts - -Miscellaneous Expenses 2,567,248 475,798
14,462,018 112,15,001
Schedules forming part of accountsYear Ended Year Ended31.03.2005 31.03.2004
Rs. Rs.
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L&T CAPITAL COMPANY LIMITED
Schedules forming part of accountsYear Ended Year Ended
31.03.2005 31.03.2004Rs. Rs.
SCHEDULE - 13:INTEREST & OTHER FINANCE CHARGESInterest on leased assets 120,438 149,320Interest on others 850 106Short Term Capital Loss 1,077 4,279
122,365 153,705
SCHEDULE - 14:SIGNIFICANT ACCOUNTING POLICIES
a) Accounting ConventionThe accounts are prepared on accrual basis under the historical cost convention. The financial statements comply with the mandatory accountingstandards issued by the Institute of Chartered Accountants of India and are in accordance with the provisions of The Companies Act, 1956.
b) Revenue RecognitionFees 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) Depreciation on assets acquired and given to employees under the Hard Furnishing Scheme has been provided @18% per annum on straight
line method.
e) Borrowing CostsBorrowing costs that are attributable to the acquisitions, constructions 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.
f) InvestmentsCurrent investments are valued at the lower of cost or market value. Marketable securities are valued at market value. Diminution in value has beenprovided wherever necessary.
g) Retirement BenefitsContribution to Provident Fund, Family Pension Fund and Superannuation are accounted on actual liability basis. Provisions for gratuity and leaveencashment 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, the deferredtax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted orsubstantively enacted as of the balance sheet date.
Deferred tax assets arising from temporary timing differences are recognised to the extent there is reasonable certainity that the assets can berealised in future.
i) Miscellaneous ExpenditurePreliminary expenses are amortised over a period of five years from the year of commencement of operations.
SCHEDULE - 15:NOTES FORMING PART OF ACCOUNTSi) Finance Lease Obligations
The Company normally acquires vehicles under finance lease with the respective underlying assets as security. Minimum lease payments outstandingas of March 31, 2005 in respect of these assets are as under:
Due Total Minimum Lease Total Minimum LeasePayments outstanding Payments outstandingas on March 31, 2005 as on March 31, 2004
Within one year 214,685 240,902Later than one year andnot later than five years 537,341 889,128
752,026 1,130,030
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L&T CAPITAL COMPANY LIMITED
Schedules forming part of accountsSCHEDULE - 15: (contd.)
ii) Deferred Tax
The Company has adopted Accounting Standard 22 - Accounting for Taxes on Income with effect from April 1, 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 March 31, 2005 is as under:- Rs.
As at March 31, 2005 As at March 31, 2004Deferred tax Deferred tax Deferred tax Deferred tax
asset liability asset liability
Timing differences on account of:
Difference between Book - - - -
Depreciation and Depreciation
under the Income Tax Act, 1961 - 400,729 - 370,692
Expenditure under Section 43B of the
Income-tax Act, 1961
- Payment / reversal of provision - - - -
- Provision 468,389 - 367,478 -
Lease Assets 23,362 - 20,215 -
491,751 400,729 387,693 370,692
Net Deferred Tax Asset 91,022 - 17,001 -
Net Deferred Tax Liability - - - -
iii) Advances recoverable in cash or in kind include loan to officers Rs.63,275 (PY 2,05,089).
iv) Managerial Remuneration: Rs.
Salary 1,978,653
Perquisites 54,007
PF Employer’s Contribution 55,423
Retirement Benefits 77,400
Total 2,165,483
P. Y. Rs.19,89,139/-
v) Segment Reporting: Accounting Standard 17
The Company operates in a single business segment of Merchant Banking Activity
vi) ESOP
Pursuant to the Employees Stock Options (ESOP) Scheme established by the Holding Company (i.e Larsen & Toubro Limited), stock options havebeen granted to the employees of the Company in respect of which, cost of Rs.3,39,600 has been incurred by he Holding Company during the year.
vii) Related Party Disclosures: Accounting Standard 18
a) 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 Limited:L&T Transportation Infrastructure Limited, L&T Infocity LimitedAssociates of Larsen & Toubro Limited:L&T-Ramboll Consulting Engineers Limited
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L&T CAPITAL COMPANY LIMITED
SCHEDULE - 15: (contd.)
b) Transaction with related parties: Rs.Parent Holding Co. Holding Co. Subsidiaries Associates
(L&T) (LTF) of L&T of L&T
i) Sales, Services and other Income
Arranger’s Fee - - 1,191,717 -
(250,000) - - -
Consultancy Fees - 500,000 - 625,000
- (25,000) (795,000)
Syndication Fees - Money Markets - - - -
Other Income
Interest on ICD - 1,772,490 - -
- (4,886,348) - -
Expenses Reimbursed 229,955 - - 1,989
- - - (40,226)
ii) Expenditure on Consultancy Services - - - -
iii) Expenditure on other services
Professional Charges paid for
various services 5,361,023 - - -
(3,240,000) - - -
vi) Capital expenditure for Office Equipments
Fixed Assets - - - -
v) Other expenditure
Expenses Reimbursed 3,088,000 - - -
(3,128,709) - - -
Dividend paid - (5,500,000) - -
vi) Outstanding balances as at March 31, 2005
Debtors - 1,236,137 - 76,989
- - - (334,407)
Creditors 8,076,553 - - -
(5,805,817) - - -
Loans & Advances - 29,900,000 - -
- (17,100,000) - -
* Previous Year figures are in bracket
vii) Expenditure in Foreign Currency:
Travel & Other Expenses Rs.50,854 (Previous year Rs.1,50,755)
viii) Earning Per Share (EPS) - Computed in accordance with Accounting Standard 20: “Earnings Per Share”
Particulars 2004-05 2003-04
(a) Profit after tax for the year (Rs.) 5,508,238 8,146,096
(b) Weighted average number of equity shares 5,500,000 5,500,000
(c) (i) Nominal value of shares (Rs.) 10 10
(ii) Earning per share - Basic and Diluted (Rs.) 1.00 1.48
ix) Previous year’s figures are regrouped / reclassified, wherever necessary.
Schedules forming part of accounts
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L&T CAPITAL COMPANY LIMITED
16. Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details
Registration No. 1 1 - 1 2 5 6 5 3 State Code 1 1
Balance Sheet Date 3 1 0 3 0 5
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 Rs. Thousands)
Total Liabilities Total Assets
7 0 7 1 0 7 0 7 1 0
Sources of Fund
Paid-up Capital Reserves & Surplus
5 5 0 0 0 1 4 9 5 8
Secured Loans Unsecured Loans
7 5 2 N I L
Application of Funds
Net Fixed Assets Investments
2 3 7 6 4 2 9 5 3
Net Current Assets Miscellaneous Expenditure
2 5 2 9 0 N I L
Deferred Tax Accumulated Losses
9 1 N I L
IV. Performance of Company (Amount in Rs. Thousands)
Turnover Total Expenditure
3 2 1 9 5 2 3 5 5 8
Profit before tax Profit after tax
8 6 3 7 5 5 0 8
Earning per Share in Rs. Dividend rate %
1 . 0 0
Item Code. N A
(ITC Code)
Product Description Merchant Banker
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
MILIND P.PHADKEPartner(Membership No.33013)
Place : MumbaiDated : April 22, 2005
M. PUSHPANGADAN Chief Executive
Y. M. DEOSTHALEE
R. SHANKAR RAMAN Directors
N. SIVARAMAN
Place : MumbaiDated : April 22, 2005
}
Schedules forming part of accounts
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Accounts for the year ended March 31, 2005.
I. FINANCIAL RESULTS:
Amount in Rupees
Description 2004-05 2003-04
Profit before depreciation & tax 8,55,43,343 4,91,41,807
Depreciation 3,48,83,891 3,49,31,451
Profit / (Loss) before tax 5,06,59,452 1,42,10,356
Provision for tax 3,96,000 -
Profit / (Loss) after tax 5,02,63,452 1,42,10,356
Balance brought forward from previous year (15,45,92,296) (16,88,02,652)
Balance carried to Balance Sheet (10,43,28,844) (15,45,92,296)
II. DIVIDEND:
The Directors have not declared dividend in view of the accumulated losses.
III. PERFORMANCE OF THE COMPANY:
The Company has made a good performance during the year recording a profit before tax amounting to Rs.5,06,59,452. There has been a sizableincrease in Toll fee collection from the users of facility this year in comparison to last year. The compliance level at Athupalam Bridge has alsoimproved.
The Company has earned exchange gain of Rs.82,01,565 during the year which has increased the other income. Consequent to the restructuringof the high cost term loans, there has been reduction in the interest cost. These factors have helped to increase the profits for the year.
IV. CAPITAL EXPENDITURE:
As at March 31, 2005, the gross fixed assets stood at Rs.99,44,61,123 and the net fixed assets at Rs.80,75,99,787.
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 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 and prudentso as to give a true and fair view of the state of affairs of the Company as at March 31, 2005 and of the profit of the Company for the yearended 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:
Mr.B.Ramakrishnan retires from the Board of Directors by rotation and being eligible offers himself for re-appointment.
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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 Member2. Mr. K.Venkatesh Member3. Mr. B.Ramakrishnan Member
The role, terms of reference, the authority and power of Chairman are in confirmity 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.
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, 1956.
XIII. ACKNOWLEDGEMENT:
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Employees of the Company &staff and management of the parent company.
K. V. RANGASWAMI
K. VENKATESH Directors
B. RAMAKRISHNANPlace : ChennaiDate : April 21, 2005
}
Auditors’ ReportTO THE MEMBERS OF L&T TRANSPORTATION INFRASTRUCTURE LIMITED
We have audited the attached balance sheet of L&T Transportation Infrastructure Limited as at March 31, 2005, 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 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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:
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 which, to the best of our knowledge and belief, were necessary for the purposes 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 ofthose books;
(c) the balance sheet, profit and loss accounts and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standardsreferred 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 March 31, 2005, and taken on record by the Boardof Directors, we report that none of the Directors is disqualified as on March 31, 2005 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 March 31, 2005;
(ii) in the case of the profit and loss account, of the profit for the year ended on that date; and
(iii) in case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
V.R. LALITHAPlace : Chennai PartnerDate : April 21, 2005 (Membership No.18284)
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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 March 31, 2005, 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) Fixed assets disposed off during the year were not substantial and does not affect the going concern concept.
(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. Hence reporting under clause-4(iii)(a) to (g) dose not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of fixed assets and sale of services . In our opinion, and according to theinformation and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.
(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 registerin pursuance of Section 301 of the Companies Act, 1956 and hence reporting under clause (b) dose not arise.
(vi) The Company has not accepted deposits from the public with in the meaning of Section 58A, 58AA or any other relevant provisions of theCompanies Act, 1956.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(viii) Maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 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 March 31, 2005, 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 in respect of income tax, service tax andcess .
(x) The Company has accumulated losses of less than fifty percent of its networth as at the end of the financial year and has not incurred cash lossesin the financial year and in the immediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to financial institution or bank or debenture holders, 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 or financial institutions.
(xvi) In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purposesfor which they were obtained.
(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 security or charge need to be created.
(xx) The Company has not raised any money by public issue during the year.
(xxi) During the course of our examination of the books and the records of the Company, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
V.R. LALITHAPlace : Chennai PartnerDate : April 21, 2005 (Membership No.18284)
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 414,000,000 414,000,000
Loan Funds
Secured Loans B 623,383,851 645,300,446
Total 1,037,383,851 1,059,300,446
APPLICATION OF FUNDS :
Fixed Assets: C
Gross Block 994,461,123 994,297,333
Less : Depreciation 186,861,336 151,983,122
Net Block 807,599,787 842,314,211
Investments D 2,092,537 -
Current Assets, Loans and Advances E
Sundry Debtors 1,474,284 4,483,274
Cash and bank balances 94,968,661 60,829,240
Loans and advances 40,859,544 4,625,695
137,302,489 69,938,209Less : Current liabilities and provisions F
Current Liabilities 13,476,596 7,455,745
Provisions 463,210 88,525
13,939,806 7,544,270Net Current Assets 123,362,683 62,393,939
Profit & Loss account 104,328,844 154,592,296
Total 1,037,383,851 1,059,300,446
Significant Accounting Policies I
Notes forming part of Accounts J
As per our report attachedSHARP & TANNANChartered Accountants
V.R. LALITHA K. SRINATHANPartner Secretary(Membership No. 18284)
Place : ChennaiDate : April 21, 2005
K. VENKATESHDirectors
B. RAMAKRISHNAN
Place : ChennaiDated : April 21, 2005
}
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Profit and Loss Account for the year ended March 31, 20052004-05 2003-04
Schedule Rupees Rupees Rupees Rupees
INCOME
Fee collection from users of facility 141,221,614 129,637,467
Licence fees for wayside amenities 1,846,340 1,043,972
Other income G 13,805,363 2,631,842
TOTAL 156,873,317 133,313,281
EXPENDITURE
Operating & maintenance expenses H 35,348,971 39,624,016
Preliminary expenses written off - 604,780
Interest & Finance charge 35,981,003 43,942,677
Depreciation 34,883,891 34,931,451
TOTAL 106,213,865 119,102,924
Profit / (Loss) before taxes 50,659,452 14,210,356
Provision for taxes 396,000 -
Profit / (Loss) after taxes 50,263,452 14,210,356
Add: Profit/(Loss) brought forward from previous year (154,592,296) (168,802,652)
Balance carried to Balance Sheet (104,328,844) (154,592,296)
Earnings per share (Basic & Diluted) 1.22 0.34
Significant Accounting Policies I
Notes forming part of Accounts J
As per our report attachedSHARP & TANNANChartered Accountants
V.R.LALITHA K.SRINATHANPartner Secretary(Membership No. 18284)
Place : ChennaiDate : April 21, 2005
K.VENKATESHDirectors
B.RAMAKRISHNAN
Place : ChennaiDated : April 21, 2005
}
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04Rupees Rupees
A. Cash Flow from operating activitiesNet Profit / (Loss) before tax & extraordinary items 50,659,452 14,210,356Adjustments for :Dividend Received (544,446) (291,220)Depreciation 34,883,891 34,931,451Unrealised foreign exchange difference - net (gain) / loss (8,201,565) 14,809,890Interest paid 35,981,003 43,942,677Interest received (4,511,858) (1,638,002)(Profit) / Loss on sale of investments (net) (448,091) -(Profit) / Loss on sale of fixed assets (net) 12,733 (13,209)Provision for dimunition of value of investments -Operating Profit before Working Capital changes 107,831,119 105,951,943Adjustments For :(Increase) / Decrease in trade and other receivables 3,008,990 (4,483,274)(Increase) / Decrease in Miscellaneous expenditure - 604,780(Increase) / Decrease in Loans and Advances 266,151 (1,814,302)Increase / (Decrease) in trade payables 5,999,536 (435,064)
Cash generated from operations 117,105,796 99,824,083Direct taxes paid (net of refund) - -
Net Cash from operating activities (A) 117,105,796 99,824,083
B. Cash Flow from Investing activities :Purchase of Fixed Assets (183,600) (35,756)(Interest Capitalised Rs. Nil previous year : Rs. Nil)Sale of Fixed Assets 1,400 -Purchase of investments (115,620,804) (102,641,219)Sale of investments 113,976,357 102,654,428Loans / advances to subsidiaries / associates (net) (36,500,00) -Interest received 4,511,858 1,638,002Dividend received from other investments 544,446 291,220
Net Cash (used in) / from investing activities (B) (33,270,343) 1,906,675
C. Cash Flow from Financing Activities(Repayment)/Proceeds from other borrowings (13,715,030) -Dividend Paid - -Tax on distributed profits - -Interest Paid (35,981,003) (43,942,677)Net cash (used in) / from financing activities (C) (49,696,033) (43,942,677)Net increase in cash and cash equivalents (A+B+C) 34,139,400 57,788,081Cash and Cash equivalents as at the beginning 60,829,241 3,041,160(including cash credit from banks)Cash and Cash equivalents as at the end 94,968,661 60,829,241
NOTES1. Cash flow statement has been prepared under the Indirect Method as set of in the Accounting Standard 3 issued by the Institute of Chartered
Accountants of India.2. Cash and cash equivalents represent cash and bank balances.3. Purchase of Fixed Assets include movement of capital work-in-progress during the year.4. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountants
V.R.LALITHA K.SRINATHANPartner Secretary(Membership No. 18284)
Place : ChennaiDate : April 21, 2005
K.VENKATESHDirectors
B.RAMAKRISHNAN
Place : ChennaiDated : April 21, 2005
}
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSCHEDULE - AShare Capital
Authorised:
5,00,00,000 Equity Shares of Rs.10/- each 500,000,000 500,000,000
Issued 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 & ToubroLimited, its subsidiaries and its nominees)
414,000,000 414,000,000
SCHEDULE - BSecured LoansFrom Banks
Term Loan - Karnataka Bank 176,775,526 190,490,556
Term Loan - SBI 296,608,325 304,809,890
Term Loan - UBI 150,000,000 150,000,000(Above loans are secured by a pari passu chargeon all the movable and immovable properties of thecompany present and future)
623,383,851 645,300,446
SCHEDULE - C Rupees
Fixed Assets Cost Depreciation Book Value
As at Additions Deductions As at Upto For the Deduction upto As at As at01.04.2004 31.3.2005 31.03.2004 year 31.3.2005 31.3.2005 31.3.2004
Land 607,315 - - 607,315 - - - - 607,315 607,315Building * 984,009,379 178,000 - 984,187,379 146,628,108 33,753,978 - 180,382,086 803,805,293 837,381,271Plant & Machinery 8,319,673 3,600 19,810 8,303,463 4,844,102 1,009,454 5,677 5,847,879 2,455,584 3,475,571Furniture & Fixtures 341,724 2,000 - 343,724 94,960 23,631 - 118,591 225,133 246,764Vehicles 1,019,242 - - 1,019,242 415,952 96,828 - 512,780 506,462 603,290
Total 994,297,333 183,600 19,810 994,461,123 151,983,122 34,883,891 5,677 186,861,336 807,599,787 842,314,211
Previous Year 994,261,577 35,756 - 994,297,333 117,051,671 34,931,451 - 151,983,122 842,314,211 -
Note:* 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 October 3, 1997 with Ministry of Surface Transport, Government of India and Department of Highways, Governmentof Tamilnadu, and the cost of the bridge and bypass are being amortised equally over a period of 20 years and 30 years respectively, commencing fromDecember 12, 1998 and January 19, 2000 respectively.
As at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSchedule - DInvestments
Mutual funds:Sundaram Money Fund Institutional - Dividend Reinvest Daily
157,108 units of Rs.10 each purchased during the year 1,586,052 - - -Sundaram Floater ST Regular - Monthly Dividend
50,000 units of Rs.10 ech purchased during the year 506,485 2,092,537 - -
2,092,537 -
Note: 2004-05 2003-04Rupees Rupees
Quoted InvetmentsBook Value 2,092,537 -Market Value 2,092,537 -
Details of investments purchased and sold during the year Face value CostRs. Per unit Nos. (Rs)
Mutual funds:Sundaram Money Fund Institutional - Dividend Reinvest Daily 10.00 6,858,292.47 69,300,950Sundaram Money Fund - Appreciation 10.00 3,278,319.46 44,300,950
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Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSchedule - ECurrent Assets, Loans and AdvancesSundry Debtors
UnsecuredDebts outstanding for more than six monthsConsidered good 1,192,660 -
Other debts:Considered good 281,624 1,474,284 4,483,274 4,483,274
Cash and bank balancesCash on hand 785,160 790,002Balances with scheduled bank
on Current Account 7,028,523 20,263,965on Fixed Deposits (including interest accrued thereon 86,302,802 38,960,392
Rs.2,31,602 (previous year Rs.9,60,392)on Margin money Deposits (including interest accrued
thereon Rs.51,790 (previous year Rs.13,805) 852,176 94,968,661 814,881 60,829,240Loans & Advances
Advances recoverable in cash or in kind 4,359,544 4,625,695Inter Corporate Deposits 36,500,00 40,859,544 – 4,625,695
137,302,489 69,938,209
Schedule - FCurrent Liabilities and Provisions:Liabilities
Sundry Creditors- Small scale industries - -- Others 13,476,596 7,455,745
Provisions forTaxes 39,600 -Leave Encashment 67,210 463,210 88,525 88,525
13,939,806 7,544,270
2004-05 2003-04
Rupees RupeesSchedule - GOther income
Interest on fixed deposit 2,538,234 1,638,002(tax deducted at source Rs.2,48,952 (previous year Rs.5,944 )Interest received - others 1,973,624 -Dividend Income 544,446 291,220Profit on sale of investments 448,091 13,209Exchange Gain 8,201,565 -Miscellaneous Income 99,403 689,411
13,805,363 2,631,842
Schedule - HOperating Maintenance Expenses
Security services 7,253,201 6,998,945Salaries & wages 5,827,495 4,950,751Rent, Rates & Taxes 269,491 391,919Printing & Stationery 489,199 566,097Travelling & conveyance 695,141 754,658Electricity charges 1,089,052 1,061,894Exchange Loss - 14,809,890Insurance 2,176,862 2,217,801Repairs & Maintenance- Buildings 7,797,308 1,216,700- Plant & Machinery 294,563 362,550- Others 604,559 424,501Postage & Telephone expenses 206,125 286,364Miscellaneous expenditure 8,645,975 5,581,947
35,348,971 39,624,017
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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 (“GAAP”) except for the revaluation of certain fixed assets, and in compliance with the Accounting Standards referred to in Section211(3C) and the other requirements of the Companies Act, 1956. However, certain escalation and other claims, which are not ascertainable /acknowledged by customers, are not taken into account.
The preparation of financial statements in confirmity with GAAP requires that the Management of the Company makes estimates and assumptionsthat affected the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relatingto contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets and intangibleassets, provision for doubtful debts / advances before obligations in respect of retirement benefit plans, etc. Actual result could differ from theseestimates.
2. Income
Fee 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 Benefits
Contributions to Provident Fund are accounted on actual liability basis. Leave encashment provision has been made on actual basis.
4. Fixed Assets
Fixed Assets are recorded at cost. The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excessof their recoverable amount. Where carrying values exceed this recoverable amount assets are written down to their recoverable amount.
5. Depreciation
Depreciation 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 are amortised over a period of the rights given under the concession agreement withthe Ministry of Surface Transport, Government of India dated October 3, 1997.
Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods so as to allocate the assets revised carryingamount over its remaining useful life.
6. Investments
Investments are stated at lower of cost or market value.
7. Leases
i. Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases.Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments anda liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtaina constant 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 as operatingleases. Lease rentals are charged to the Profit & Loss Account on accrual basis.
8. 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 sale. All other borrowingcosts are recognised as an expense in the period in which they are incurred.
9. 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 / 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 certainity that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
SCHEDULE ‘J’
NOTES 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 overthe River Noyyal (known as Athupalam bridge) in Coimbatore district of Tamilnadu state, under the Concession Agreement dated October 3, 1997with Ministry of Surface Transport, Government of India and Department of Highways, Government of Tamilnadu. The Company had completed
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L&T TRANSPORTATION INFRASTRUCTURE LIMITED
construction of bypass road on 18.1.2000 and Bridge on 11.12.98. The concession period is 20 years for Athupalam bridge and 30 years for theBypass.
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 (4C) of Part II of Schedule VI to the Companies Act, 1956has not been furnished.
4. Manager’s salary and perquisites of Rs.3,11,845/- (Previous year 2,39,974/-) for the year ended March 31, 2005 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.
6. Auditor’s remuneration: Rupees
2004-05 2003-04
Audit Fees (including service tax) 33060 30,000Tax Audit Fees 16530 16,200Certification Fees - 1,620Reimbursement of Expenses 440 2,400
7. Provision for Income tax amounting to Rs.39,600/- has been made in the Accounts under Minimum Alternate Tax as per the provisions of the Incometax Act, 1961.
8. No provision for wealth tax has been made for the current year as there is no taxable wealth under the Wealth Tax Act, 1957.
9. As per Accounting Standard 22 on “Taxes on Income” - The Company has a net deferred tax asset as given below: Rupees
31.03.05 31.03.04
Deferred tax assets
Unabsorbed loss / depreciation as per 9,34,21,899 137,904,351
Income tax return
Unpaid statutory liabilities debited to Profit & Loss A/c - -
Preliminary expenses 1,31,830 1,73,572
138,077,923
Less: Deferred Tax liabilities
On account of Difference between carrying amount of fixed
Assets in the books and WDV for income tax purposes. 14,76,98,079 82,771,811
82,771,811
Net deferred tax asset 5,41,44,350 5,53,06,111
However on a prudent basis, the company has not accrued the said deferred tax asset in these accounts.
10. 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 atMarch 31, 2005 are as follows:
Particulars Rupees
i. Payable not later than 1 year 87,964
ii. Payable later than 1 year and not later than 5 years 2,08,426
Total minimum Lease payments 2,96,390
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.
11. Segment Reporting – The Company is in the business of operating a Toll bridge and Bypass and the majority of its income represents toll collections.Hence, operations are under single segment.
12. Exchange gain arising on account of foreign currency transactions amounting to Rs.82,01,565/- has been credited to Profit and Loss account(previous year exchange loss Rs.1,48,09,890).
13 Disclosure of Related Party transactions
Notes forming part of accounts
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(A) List of related parties
Holding company : Larsen & Toubro LimitedSubsidiary company : NILAssociates : NILFellow subsidiaries : L&T Infrastructure Development Projects limited
Cyber Park Development & Construction limitedTractor Engineers LimitedL&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHNarmada Infrastructure Construction Enterprise LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedIndia Infrastructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndhra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHD.Bhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedRaykal Aluminium Company Private LimitedL&T Infocity Infrastructure LimitedL&T Infocity Lanka Private LimitedL&T Overseas Projects Nigeria LimitedLarsen & Toubro Qatar LLCZubair Kilpatrick LLC
(B) Transactions with Holding company:Charges for deputation of employees paid – Rs.13,05,240Rent paid – Rs.2,54,000Purchase of goods & services – Rs.77,57,712ROB claim settled – Rs.28,06,312Purchase of Assets – Rs.2,000
(C) Transaction with fellow subsidiary:L&T Infrastructure Development Projects Limited
Interest received on ICDs Rs.7,09,973L&T Finance Limited
Lease rentals paid Rs.87,964L&T Capital Company Limited
Service & Agency fees (incl. service tax) Rs.13,13,212
(D) Transaction with Fellow Associates:L&T-Ramboll Consulting Engineers Limited
Service and Agency fees paid (incl. Service Tax) Rs.3,13,515The Dharma Port Company Limited:
ICD due – Rs.3,65,00,000Interest accrued on ICD – Rs.12,53,000
Amount due to and from related parties:Accounts payable
Larsen & Toubro Ltd. – Holding company – Rs. 13,99,605Loans & Advances recoverableThe Dhamra Port Company Limited
ICD due – Rs.3,65,00,000Interest accrued on ICD – Rs.12,53,000
No amount has been written off or written back during the year.
14. The Company has reviewed the cashflow from its assets based on value in use and satisfied that there is no impairment loss required to be providedfor the year.
15. Figures for the previous year have been regrouped/re-classified where necessary.
Notes forming part of accounts
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Notes forming part of accounts16. Balance Sheet Abstract and Company’s General Business Profile
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 5
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 Rs. Thousands)
Total Liabilities Total Assets
1 0 3 7 3 8 4 1 0 3 7 3 8 4
Sources of Funds Paid-up Capital Reserves & Surplus
4 1 4 0 0 0 N I L
Deferred Tax Liabilities
N I L
Secured Loans Unsecured Loans
6 2 3 3 8 4 N I L
Application of Funds
Net Fixed Assets Investments
8 0 7 5 9 9 2 0 9 3
Net Current Assets Misc. Expenditure
1 2 3 3 6 3 N I L
Accumulated Losses
1 0 4 3 2 9
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
1 5 6 8 7 3 1 0 6 2 1 4
+ - Profit/Loss before tax + - Profit/Loss after tax
✔ 5 0 6 5 9 ✔ 5 0 2 6 3
Earnings per Share in Rs. Dividend Rate %
1 . 2 2 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
As per our report attachedSHARP & TANNANChartered Accountants
V.R. LALITHA K. SRINATHANPartner Secretary(Membership No. 18284)
Place : ChennaiDate : April 21, 2005
K. VENKATESHDirectors
B. RAMAKRISHNAN
Place : ChennaiDated : April 21, 2005
}
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L&T WESTERN INDIA TOLLBRIDGE LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Accounts for the year ended March 31, 2005.
I. FINANCIAL RESULTS:
RupeesDescription 2004-05 2003-04
Profit before depreciation & tax 74,038,605 70,704,997
Depreciation 59,333,473 59,159,902
Profit / (Loss) before tax 14,705,132 11,545,095
Provision for tax 1,153,066 8,87,529
Profit / (Loss) after tax 13,552,066 10,657,566
Balance brought forward from previous year 6,301,350 8,143,784
Balance carried to Balance Sheet 19,853,416 6,301,350
II. DIVIDEND:
The Company intends to utilize the surplus funds to augment revenue and hence, the Directors do not recommend any dividend for the year 2004-05.
III. PERFORMANCE OF THE COMPANY:
The performance of the Company during the year 2004-05 was affected by the opening of the Nadiad-Vadodara section of Ahmedabad-VadodaraExpressway during September 2004 and the week long strike by the truckers during August 2004. The Company put up few check plazas whichenabled it to lessen the impact of lower revenue due to the reason stated above. Barring the above the operations of the Company were normal.
The Company has taken steps to collect revenue from Gujarat State Road Transport Corporation and also the expansion of the existing StateHighway from Dholka to Bagodhara is expected to yield additional revenue. With these initiatives the Company expects to better the performanceof previous year.
IV. CAPITAL EXPENDITURE:
As at March 31, 2005, the gross fixed assets stood at Rs. 5,173 lakh and the net fixed assets at Rs.2,813 lakh. Additions during the year amountedto Rs.33,000.
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 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 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, 2005 and of the profit of the Company forthe year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of 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.
X. DIRECTORS:
Mr. K. Venkatesh retires from the Board of Directors by rotation and is eligible for re-appointment.
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XI. AUDIT COMMITTEE:
The Audit Committee consists of three non executive directors. The present members of the Committee are:
1. Mr. K. V. Rangaswami Member2. Mr. K. Venkatesh Member3. 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 year and had 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, 1956.
XIII. ACKNOWLEDGEMENTS:
The Directors acknowledge the invaluable support extended to the Company by the Bankers, employees of the company & staff and managementof the parent company.
For and on behalf of the board
K. VENKATESHB. RAMAKRISHNAN
Directors
Place : Chennai.Date : April 21, 2005
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 March 31, 2005, 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 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.In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:1. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) 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.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 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 accounts and cash flow statement dealt with by this report are in agreement with the books of account;(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;(e) on the basis of the written representations received from the Directors of the Company as on March 31, 2005, and taken on record by the Board
of Directors, we report that none of the Directors is disqualified as on March 31, 2005 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 March 31, 2005 ;(ii) in the case of the profit and loss account, of the profit for the year ended on that date; and(iii) in case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
V.R.LALITHAPlace: Chennai PartnerDate: April 21, 2005 Membership No.18284
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L&T WESTERN INDIA TOLLBRIDGE 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 Western India Tollbridge Limited on theaccounts for the year ended March 31, 2005, 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.
(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. Hence reporting under clause 4(iii)(a) to (g) dose not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of fixed assets and sale of services. In our opinion, and according to theinformation and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.
(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 Registerin pursuance of Section 301 of the Companies Act, 1956 and hence reporting under clause (b) dose not arise .
(vi) The Company has not accepted deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of theCompanies Act, 1956.
(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 servicesof 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, Service tax and other statutory duesduring the year with the appropriate authorities. As at March 31, 2005, there are no undisputed statutory dues payable for a period of morethan six months from the date they became payable.
(b) According to the information and explanations given to us, there are no disputed statutory liabilities in respect of income tax, service tax andcess.
(x) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in theimmediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to financial institution or bank or debenture holders, 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 or financial institutions.
(xvi) In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purposesfor which they were obtained.
(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 did not have any outstanding secured 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) During the course of our examination of the books and the records of the Company, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
SHARP & TANNANChartered Accountants
V.R.LALITHAPlace: Chennai PartnerDate: April 21, 2005 Membership No.18284
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L&T WESTERN INDIA TOLLBRIDGE LIMITED
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 139,500,070 150,000,070
Reserves & Surplus B 30,778,416 18,801,350
Loan Funds
Secured Loans C 125,706,425 163,798,787
Total 295,984,911 332,600,207
APPLICATION OF FUNDS :
Fixed Assets: D
Gross Block 517,308,733 517,275,731
Less : Depreciation 235,987,218 176,653,745
Net Block 281,321,515 340,621,986
Capital Work-In-Progress - 281,321,515 - 340,621,986
Investments E 26,000 9,112,895
Current Assets, Loan and Advances F
Cash and bank balances 11,911,025 4,096,147
Loans and advances 7,199,106 3,597,412
19,110,131 7,693,559Less : Current liabilities and provisions G
Liabilities 2,411,588 22,406,714
Provisions 2,061,147 2,421,519
4,472,735 24,828,233
Net Current Assets 14,637,396 (17,134,674)
Total 295,984,911 332,600,207
Significant Accounting Policies 1
Notes forming part of Accounts 2
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA V. RAVICHANDRANPartner SecretaryMembership No : 18284
Place : ChennaiDated : April 21, 2005
K. VENKATESH
B. RAMAKRISHNANDirectors
Place : ChennaiDated : April 21, 2005
}
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Profit and Loss Account for the year ended March 31, 20052004-05 2003-04
Schedule Rupees Rupees
INCOME
Fee collection from users of facilities 101,189,907 104,078,346
Other income H 1,178,897 487,736
TOTAL 102,368,804 104,566,082
EXPENDITURE
Operating & maintenance expenses I 15,695,659 16,579,634
Interest 12,634,540 17,281,451
Depreciation 59,333,473 59,159,902
TOTAL 87,663,672 93,020,987
Profit before taxes 14,705,132 11,545,095
Provision for taxes 1,153,066 887,529
Profit after taxes 13,552,066 10,657,566
Add : Balance brought forward from previous year 6,301,350 8,143,784
Profit available for appropriation 19,853,416 18,801,350
Less: Transfer to General reserve - 12,500,000
Profit available for distribution 19,853,416 6,301,350
Balance carried to Balance Sheet 19,853,416 6,301,350
Earnings per share - Basic and Diluted 0.97 0.71
Significant Accounting Policies 1
Notes forming part of Accounts 2
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA V. RAVICHANDRANPartner SecretaryMembership No : 18284
Place : ChennaiDated : April 21, 2005
K. VENKATESH
B. RAMAKRISHNANDirectors
Place : ChennaiDated : April 21, 2005
}
S-93
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Cash Flow Statement for the year ended March 31, 2005
2004-05 2003-04Rupees Rupees
A. Cash Flow from operating activitiesNet Profit/(Loss) Before Tax & extraordinary items 14,705,132 11,545,095Adjustment for :Dividend Received (104,801) (174,129)Depreciation 59,333,473 59,159,902Interest paid 12,634,540 17,281,451Interest received (369,351) (236,280)(Profit) / Loss on sale of investments (net) (37,100) (6,494)
Operating Profit before Working Capital changes 86,161,893 87,569,546
Adjustments For :(Increase) / Decrease in Loans and Advances (3,601,694) 832,812Increase / (Decrease) in trade payables (20,355,498) (1,318,685)
Cash generated from operations 62,204,701 87,083,673Direct taxes refund/( paid) net (1,153,066) (887,529)
.
Net Cash from operating activities (A) 61,051,635 86,196,144
B Cash Flow from Investing activities :Purchase of Fixed Assets (33,002) (330,644)(Interest Capitalised Rs. Nil previous year : Rs. Nil)Purchase of investments - (55,850,000)Sale of investments 9,123,995 46,769,598Interest received 369,351 236,280Dividend received from other investments 104,801 174,129
Net Cash from investing activities (B) 9,565,145 (9,000,637)
C Cash Flow from Financing activities :Buyback of Equity shares (12,075,000) -(Repayment )/Proceeds from other borrowings (38,092,362) (59,427,214)Interest Paid (12,634,540) (17,281,451)
Net cash from financing activities (C) (62,801,902) (76,708,665)
Net increase in cash and cash equivalents (A+B+C) 7,814,878 486,842Cash and Cash equivalents as at the beginning 4,096,147 3,609,305
Cash and Cash equivalents as at the end 11,911,025 4,096,147
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. Cash and cash eqivalents represent cash and bank balances.
3. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA V. RAVICHANDRANPartner SecretaryMembership No : 18284
Place : ChennaiDated : April 21, 2005
K. VENKATESH
B. RAMAKRISHNANDirectors
Place : ChennaiDated : April 21, 2005
}
S-94
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees
SCHEDULE - A
Share Capital
Authorised:
21,000,000 Equity Shares of Rs. 10/- each 210,000,000 210,000,000
Issued and Subscribed:
13,950,007 Equity Shares of Rs. 10/- each fully paid up 139,500,070 150,000,070
100% of shares are held by Larsen & Toubro Limited(the Holding Company) and its nominees
139,500,070 150,000,070
SCHEDULE - B
Reserves and Surplus
Capital Redemption Reserve Account 10,500,000 -(Transfer from General Reserve)
General Reserve
As per last Balance Sheet 12,500,000 -
Add : Transferred during the year - 12,500,000
Less: Transfer to CRR 10,500,000 -Buyback premium 15,75,000 -
425,000 12,500,000
Profit and Loss Account 19,853,416 6,301,350
30,778,416 18,801,350
SCHEDULE - C
Secured Loans
From Banks
Term Loan-State Bank of Hyderabad 125,680,227 163,693,224Interest Accrued and due on Term Loan 26,198 125,706,425 105,563 163,798,787
125,706,425 163,798,787(Secured by pari passu charge on the Company’smovable assets, present and future)
Schedule - D Rupees
Fixed Assets Cost Depreciation Book Value
As at Additions As at Upto For the year upto As at As at01.04.2004 31.03.2005 31.03.2004 2004-05 31.03.2005 31.03.2005 31.03.2004
Building 513,979,371 - 513,979,371 175,243,429 58,910,599 234,154,028 279,825,343 338,735,942Plant & Machinery 1,522,719 - 1,522,719 531,517 172,384 703,901 818,818 991,202Furniture & Fixtures 1,773,641 33,002 1,806,643 878,799 250,490 1,129,289 677,354 894,842
Total 517,275,731 33,002 517,308,733 176,653,745 59,333,473 235,987,218 281,321,515 340,621,986
Previous Year 516,206,405 1,069,326 517,275,731 117,493,843 59,159,902 176,653,745 340,621,986 -
Building includes bridge over river Watrak constructed on land provided by Government of Gujarat under the Concession Agreement dated March 1,1999with Ministry 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.
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L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees
Schedule - E
Investments
Unquoted:Intertoll ICS (Ahmedabad Mehasana) Toll ManagementCompany Pvt. Ltd. - 2600 Equity shares of Rs.10 each 26,000 26,000Mutual Funds
Sundaram Money Fund - Dividend reinvestment daily - 9,086,895(900464.25 Units of Rs.10 each sold during the year)
26,000 9,112,895
Note:As at As at
31.03.2005 31.03.2004
Quoted investmentsBook value - 9,086,895Market value - 9,087,575
Unquoted investmentsBook value 26,000 -
Face value CostDetails of investments purchased and sold during the year Rs. Per unit Nos. Rupees
Mutual funds:Sundaram Money Fund - Dividend reinvest Scheme 10 4,714,491 47,594,753Sundaram Money Fund - Appreciation Scheme 10 475,942 6,433,576Sundaram Floater Fund 10 50,000 500,000Standard Chartered Mutual Fund - Grindlays Cash Fund 10 246,669 2,610,227
As at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSchedule - F
Current Assets, Loans and Advances:
Cash and bank balancesCash on hand 616,326 686,972
Balances with scheduled bankOn Current Account 3,037,825 1,177,658On fixed deposits 8,013,315 2,003,726Including interest accrued thereon Rs. 13,315/-.(Previous year Rs. 3,726/-)On margin money 243,559 227,791Including the interest accrued thereon Rs.387/-.(Previous year - Rs.27,791/-) 11,911,025 4,096,147
Loans & AdvancesAdvances recoverable in cash or in kind 2,699,106 3,597,412Inter Corporate Deposit 4,500,000 -
19,110,131 7,693,559
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L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSchedule - G
Current Liabilities and Provisions:Current LiabilitiesSundry Creditors
- Small scale industrial undertakings - -- Others 2,411,588 2,411,588 22,406,714 22,406,714
Provisions for:Leave Encashment 20,552 44,302Taxation 2,040,595 2,377,217
2,061,147 2,421,519
4,472,735 24,828,233
2004-2005 2003-2004Rupees Rupees
Schedule - H
Other income
Dividend from Mutual Funds 104,801 174,129
Other Receipts 667,645 70,834
Profit / (Loss) on Sale of Investments 37,100 6,494
Interest 369,351 236,280
Tax Deducted at Source - Rs.59,649/-(previous year Rs.32,474/-)
1,178,897 487,737
Schedule - I
Operating & Maintenance Expenses
Toll Management Fees 3,534,748 3,014,899
Security Services 2,662,074 2,261,695
Salaries & wages 3,187,151 3,240,020
Rates & taxes 2,939 4,311
Printing & stationery expenses 285,133 365,836
Travelling & conveyance 468,168 503,388
Electricity charges 535,076 509,549
Insurance 1,531,090 1,669,971
Repairs & Maintenance to
Building 1,356,842 2,951,923
Plant and Machinery 383,162 365,874
Others 959,564 994,831
Postage & telephone expenses 102,832 105,053
Miscellaneous Expenses 686,880 592,284
15,695,659 16,579,634
S-97
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsSCHEDULE ‘1’
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 (“GAAP”) except for the revaluation of certain fixed assets , and in compliance with the Accounting Standards referred to in Section211 (3C) and other requirements of the Companies Act, 1956. However certain escalation and other claims , which are not ascertainable /acknowledged by customers , are not taken into account The preparation of financial statements in conformity with GAAP requires that themanagement of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period , thereported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examplesof such estimates include useful lives of fixed assets and intangible assets, provision for doubtful debts / advances , future obligations in respectof retirement benefit plans etc. Actual results could differ from these estimates
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 liability basis..
4. Fixed Assets
Fixed Assets are recorded at cost. The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excessof their recoverable amount. Where carrying values exceed this recoverable amount assets are written down to their recoverable amount.
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 rightsgiven under the concession agreement dated 1st March, 1999 with the Ministry of Surface Transport, Government of India and Public WorksDepartment, Government of Gujarat.Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periodsso as to allocate the assets revised carrying amount over its remaining useful life.
6. Investments Long term investments are carried at cost after providing for any diminution in value , if such diminution is of permanent nature .Current Investments are carried 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. 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 imported 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.
9. 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 provisionsof the 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 thetax rates 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 ‘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.
S-98
L&T WESTERN INDIA TOLLBRIDGE LIMITED
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 SurfaceTransport, Government of India and Roads and Buildings Department, Government of Gujarat. The construction was completed in February,2001and the concession is valid till December, 2009.
4. During the year, the Company bought back 7% of Equity capital, i.e. 10,50,000 shares @ Rs.11.50 per equity share including Rs1.50 premiumper share and completed the formalities. Consequently, an amount of Rs.1,05,00,000 equal to the face value of equity bought back was transferredto Capital Redemption Reserve as required by section 77AA of the Companies Act 1956.
5. 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.
6. Manager’s salary and perquisites on deputation of Rs. 3,11,845/- (Previous year Rs.2,40,214 /-) have been charged to accounts.
7. Auditor’s remuneration:Rupees
2004-2005 2003-2004
Audit Fees 50,000 50,000
Tax Audit Fees 9,367 7,500
Certification Fee Nil 76,000
Reimbursement of Expenses 3,785 1,500
8. The Company is governed by the provisions of Sec 115JB of the Income Tax Act, 1961. Accordingly provision for income tax has been madeunder the provisions of Minimum Alternative Tax under the said Act. No provision for Wealth Tax has been made since the Company does nothave taxable wealth under the provisions of the Wealth Tax Act,1957.
9. Since none of the employees have completed 5 years of service, the provisions of Gratuity Act are not applicable.
10. Borrowing cost capitalised during the year is NIL.
11. Segment Reporting – The Company operates in a single business segment of Toll Collection. Hence no segment details could be furnished.
12. Disclosure of Related Party Transactions.
A List of related parties
Holding company : Larsen & Toubro LimitedSubsidiary company : NILAssociates : NILFellow subsidiaries : L&T Infrastructure Development Projects limited
Cyber Park Development & Construction LimitedTractors Engineers LimitedL&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHNarmada Infrastructure Construction Enterprise LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedIndia Infrasructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndhra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHD.Bhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedRaykal Aluminium Company Private LimitedLarsen & Toubro Qatar LLCZubair Kilpatrick LLCL&T Infocity Infrastructure LimitedL&T Overseas Projects Nigeria Limited
Schedules forming part of accounts
S-99
L&T WESTERN INDIA TOLLBRIDGE LIMITED
B. Following are the transactions with Related Parties during the year ended 31.03.2005 Rupees
Sl. Controlling Relation Nature of Amount Amount AmountNo. Company ship transaction Due to Due from
1 Larsen & Toubro Limited Holding Company Cost of Services 10,72,686 9,01,643 -
2 The Dhamra Port Company Limited Associate Company ICD given 45,00,000 - 45,00,000154,479 - 1,54,479
3. L&T Infrastructure Development Fellow Subsidiary ICD given 10,00,000 - -Projects Limited Interest received 2,887 - -
4. L&T-Ramboll Consulting Engineers Ltd. Associate Company Traffic Study on NH – 8 3,22,287 - -
(No amounts have been written off or written back during the year)
13. The Company has not entered into any lease transaction and hence AS19 is not applicable.
14. As per Accounting Standard 22 on Accounting for Taxes on Income – the Company has a deferred tax liability as detailed below:
31.03.2005 31.03.2004
Rupees RupeesDeferred Tax liabilitiesDifference between carrying amount of 4,49,08,159 5,15,30,370fixed assets in the books and the income tax return.
Total (A) 4,49,08,159 5,15,30,370
Less : Deferred tax assets
Unabsorbed loss / deprecation as per income tax return 2,58,76,764 3,65,33,995Difference between carrying amount of preliminary - 45,774expenses
Total (B) 2,58,76,764 3,65,79,769
Net deferred tax liability 1,90,31,395 1,49,50,601
No provision for the said liability is made since the Company is eligible for benefit u/s 80IA of the Income Tax Act, 1961 for the entire periodof its operations as per the Concession Agreement.
15. The Company has reviewed the cash flow from its assets based on value in use and satisfied that there is no impairment loss required tobe provided for the year.
16. Figures of the previous year have been regrouped / re-classified where necessary.
Schedules forming part of accounts
S-100
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsNOTES ON ACCOUNTS
SCHEDULE - 2
17 Balance Sheet Abstract and Company’s General Business Profile
I Registration Details
Registration No. 1 8 - 4 2 5 1 8 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 5
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 Rs.Thousands)
Total Liabilities Total assets
2 9 5 9 8 5 2 9 5 9 8 5
Sources of Funds Paid-Up Capital Reserves & Surplus
1 3 9 5 0 0 3 0 7 7 8
Deferred Tax Liability Secured Loans
N I L 1 2 5 7 0 6
Unsecured Loans
N I L
Net Fixed Assets Investments
Application of Funds 2 8 1 3 2 1 2 6
Net Current Assets Misc. Expenditure
1 4 6 3 7 N I L
Accumulated Losses
N I L
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
1 0 2 3 6 9 8 7 6 6 4
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
✓✓✓✓✓ 1 4 7 0 5 ✓✓✓✓✓ 1 3 5 5 2
(Please Tick Appropriate box + for Profit, - for Loss)
+ - Earning Per Share in Rs. Dividend rate %
✓✓✓✓✓ 0 . 9 7 - - -
V Generic Names of Three Principles Products / Services of Company
(as per monetary terms)
Item code No. N A
(ITC Code)
Product INFRASTRUCTURE PROJECTS ON BOT BASIS
Description
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA V. RAVICHANDRANPartner SecretaryMembership No : 18284
Place : ChennaiDated : April 21, 2005
K. VENKATESH
B. RAMAKRISHNANDirectors
Place : ChennaiDated : April 21, 2005
}
S-97
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsSCHEDULE ‘1’
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 (“GAAP”) except for the revaluation of certain fixed assets , and in compliance with the Accounting Standards referred to in Section211 (3C) and other requirements of the Companies Act, 1956. However certain escalation and other claims , which are not ascertainable /acknowledged by customers , are not taken into account The preparation of financial statements in conformity with GAAP requires that themanagement of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period , thereported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examplesof such estimates include useful lives of fixed assets and intangible assets, provision for doubtful debts / advances , future obligations in respectof retirement benefit plans etc. Actual results could differ from these estimates
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 liability basis..
4. Fixed Assets
Fixed Assets are recorded at cost. The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excessof their recoverable amount. Where carrying values exceed this recoverable amount assets are written down to their recoverable amount.
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 rightsgiven under the concession agreement dated 1st March, 1999 with the Ministry of Surface Transport, Government of India and Public WorksDepartment, Government of Gujarat.Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periodsso as to allocate the assets revised carrying amount over its remaining useful life.
6. Investments Long term investments are carried at cost after providing for any diminution in value , if such diminution is of permanent nature .Current Investments are carried 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. 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 imported 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.
9. 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 provisionsof the 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 thetax rates 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 ‘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.
S-98
L&T WESTERN INDIA TOLLBRIDGE LIMITED
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 SurfaceTransport, Government of India and Roads and Buildings Department, Government of Gujarat. The construction was completed in February,2001and the concession is valid till December, 2009.
4. During the year, the Company bought back 7% of Equity capital, i.e. 10,50,000 shares @ Rs.11.50 per equity share including Rs1.50 premiumper share and completed the formalities. Consequently, an amount of Rs.1,05,00,000 equal to the face value of equity bought back was transferredto Capital Redemption Reserve as required by section 77AA of the Companies Act 1956.
5. 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.
6. Manager’s salary and perquisites on deputation of Rs. 3,11,845/- (Previous year Rs.2,40,214 /-) have been charged to accounts.
7. Auditor’s remuneration:Rupees
2004-2005 2003-2004
Audit Fees 50,000 50,000
Tax Audit Fees 9,367 7,500
Certification Fee Nil 76,000
Reimbursement of Expenses 3,785 1,500
8. The Company is governed by the provisions of Sec 115JB of the Income Tax Act, 1961. Accordingly provision for income tax has been madeunder the provisions of Minimum Alternative Tax under the said Act. No provision for Wealth Tax has been made since the Company does nothave taxable wealth under the provisions of the Wealth Tax Act,1957.
9. Since none of the employees have completed 5 years of service, the provisions of Gratuity Act are not applicable.
10. Borrowing cost capitalised during the year is NIL.
11. Segment Reporting – The Company operates in a single business segment of Toll Collection. Hence no segment details could be furnished.
12. Disclosure of Related Party Transactions.
A List of related parties
Holding company : Larsen & Toubro LimitedSubsidiary company : NILAssociates : NILFellow subsidiaries : L&T Infrastructure Development Projects limited
Cyber Park Development & Construction LimitedTractors Engineers LimitedL&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHNarmada Infrastructure Construction Enterprise LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedIndia Infrasructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndhra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHD.Bhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedRaykal Aluminium Company Private LimitedLarsen & Toubro Qatar LLCZubair Kilpatrick LLCL&T Infocity Infrastructure LimitedL&T Overseas Projects Nigeria Limited
Schedules forming part of accounts
S-99
L&T WESTERN INDIA TOLLBRIDGE LIMITED
B. Following are the transactions with Related Parties during the year ended 31.03.2005 Rupees
Sl. Controlling Relation Nature of Amount Amount AmountNo. Company ship transaction Due to Due from
1 Larsen & Toubro Limited Holding Company Cost of Services 10,72,686 9,01,643 -
2 The Dhamra Port Company Limited Associate Company ICD given 45,00,000 - 45,00,000154,479 - 1,54,479
3. L&T Infrastructure Development Fellow Subsidiary ICD given 10,00,000 - -Projects Limited Interest received 2,887 - -
4. L&T-Ramboll Consulting Engineers Ltd. Associate Company Traffic Study on NH – 8 3,22,287 - -
(No amounts have been written off or written back during the year)
13. The Company has not entered into any lease transaction and hence AS19 is not applicable.
14. As per Accounting Standard 22 on Accounting for Taxes on Income – the Company has a deferred tax liability as detailed below:
31.03.2005 31.03.2004
Rupees RupeesDeferred Tax liabilitiesDifference between carrying amount of 4,49,08,159 5,15,30,370fixed assets in the books and the income tax return.
Total (A) 4,49,08,159 5,15,30,370
Less : Deferred tax assets
Unabsorbed loss / deprecation as per income tax return 2,58,76,764 3,65,33,995Difference between carrying amount of preliminary - 45,774expenses
Total (B) 2,58,76,764 3,65,79,769
Net deferred tax liability 1,90,31,395 1,49,50,601
No provision for the said liability is made since the Company is eligible for benefit u/s 80IA of the Income Tax Act, 1961 for the entire periodof its operations as per the Concession Agreement.
15. The Company has reviewed the cash flow from its assets based on value in use and satisfied that there is no impairment loss required tobe provided for the year.
16. Figures of the previous year have been regrouped / re-classified where necessary.
Schedules forming part of accounts
S-100
L&T WESTERN INDIA TOLLBRIDGE LIMITED
Schedules forming part of accountsNOTES ON ACCOUNTS
SCHEDULE - 2
17 Balance Sheet Abstract and Company’s General Business Profile
I Registration Details
Registration No. 1 8 - 4 2 5 1 8 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 5
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 Rs.Thousands)
Total Liabilities Total assets
2 9 5 9 8 5 2 9 5 9 8 5
Sources of Funds Paid-Up Capital Reserves & Surplus
1 3 9 5 0 0 3 0 7 7 8
Deferred Tax Liability Secured Loans
N I L 1 2 5 7 0 6
Unsecured Loans
N I L
Net Fixed Assets Investments
Application of Funds 2 8 1 3 2 1 2 6
Net Current Assets Misc. Expenditure
1 4 6 3 7 N I L
Accumulated Losses
N I L
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
1 0 2 3 6 9 8 7 6 6 4
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
✓✓✓✓✓ 1 4 7 0 5 ✓✓✓✓✓ 1 3 5 5 2
(Please Tick Appropriate box + for Profit, - for Loss)
+ - Earning Per Share in Rs. Dividend rate %
✓✓✓✓✓ 0 . 9 7 - - -
V Generic Names of Three Principles Products / Services of Company
(as per monetary terms)
Item code No. N A
(ITC Code)
Product INFRASTRUCTURE PROJECTS ON BOT BASIS
Description
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA V. RAVICHANDRANPartner SecretaryMembership No : 18284
Place : ChennaiDated : April 21, 2005
K. VENKATESH
B. RAMAKRISHNANDirectors
Place : ChennaiDated : April 21, 2005
}
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Directors’ ReportThe Directors have pleasure in presenting their Report and Accounts for the year ended March 31, 2005.
I. FINANCIAL RESULTS:Amount in Rupees
Description 2004-05 2003-04
Profit before depreciation & tax 14,17,46,101 11,46,59,461Depreciation 11,83,24,284 11,81,04,107
Profit / (Loss) before tax 2,34,21,817 (34,44,646)Provision for tax 18,36,563 -
Profit / (Loss) after tax 2,15,85,254 (34,44,646)Balance brought forward from Previous year (16,35,39,958) (16,00,95,312)
Balance carried to Balance Sheet (14,19,54,704) (16,35,39,958)
II. DIVIDEND:
The Directors do not recommend dividend in view of the accumulated losses.
III. PERFORMANCE OF THE COMPANY:
The Directors are pleased to inform, that the Company has made profits for the first time since inception. There has been an increase in the tollfee collection in the current year in comparison to the previous year. During the year, there has been exchange gain of Rs.2,40,97,408 arising onaccount of foreign currency transactions which has increased the other income for the year.
IV. CAPITAL EXPENDITURE:
As at March 31, 2005, the gross fixed assets stood at Rs.1,417,895,361/- and the net fixed assets at Rs.897,664,659/-. Additions during the yearamounted to Rs.42,721.
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 materialdeparture;
ii. that the selected accounting policies were applied consistently and the Directors made judgments 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, 2005 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; and
iv. that the annual accounts have been prepared on a going concern basis.
X. DIRECTORS:
Mr. B. Ramakrishnan 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 directors. The present members of the Committee are
1. Mr. K. V. Rangaswami Member2. Mr. K. Venkatesh Member3. Mr. K. Ramchand Member
(Mr. Mukund Sapre, Alternate Director)
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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.
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, 1956.
XIII. ACKNOWLEDGEMENTS:
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, employees of the company & staffand management of the parent company.
K. V. RANGASWAMI
K. VENKATESH
B. RAMAKRISHNANDirectors
K. RAMCHAND
Place: ChennaiDate : April 21, 2005
}Auditors’ ReportTO THE MEMBERS OF NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
We have audited the attached balance sheet of Narmada Infrastructure Construction Enterprise Limited as at March 31, 2005, 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.
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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:
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 which, to the best of our knowledge and belief, were necessary for the purposes of theaudit;
(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 of thosebooks;
(c) the balance sheet, profit and loss accounts and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standardsreferred 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 March 31, 2005, and taken on record by the Boardof Directors, we report that none of the Directors is disqualified as on March 31, 2005 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 March 31, 2005;
(ii) in the case of the profit and loss account, of the profit for the year ended on that date; and
(iii) in case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
V.R.LALITHAPlace: Chennai PartnerDate: April 21, 2005 Membership No.18284
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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 Narmada Infrastructure Construction EnterpriseLimited on the accounts for the year ended March 31, 2005, 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.
(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. Hence reporting under clause 4(iii)(a) to (g) dose not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of fixed assets and sale of services. In our opinion, and according to theinformation and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.
(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 Registerin pursuance of Section 301 of the Companies Act, 1956 and hence reporting under clause (b) dose not arise.
(vi) The company has not accepted deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the CompaniesAct 1956.
(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 servicesof 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 March 31, 2005, 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 statutory liabilities in respect of income tax, service tax andcess.
(x) The Company has accumulated losses of less than fifty percent of its networth as at the end of the financial year and has not incurred cash lossesin the financial year and in the immediately preceding financial year.
(xi) The Company has not defaulted in repayment of dues to financial institution or bank or debenture holders, 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 in 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) II In our opinion and according to the information and explanation given to us, on an overall basis, the term loans have been applied for the purposesfor which they were obtained.
(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) During the course of our examination of the books and the records of the Company, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNANChartered Accountants
V.R.LALITHAPlace: Chennai PartnerDate: April 21, 2005 Membership No.18284
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Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:
Shareholders’ Funds
Share Capital A 473,500,070 473,500,070
Loan Funds
Secured Loans B 836,413,009 972,756,861
Total 1,309,913,079 1,446,256,931
APPLICATION OF FUNDS:
Fixed Assets: C
Gross Block 1,417,895,361 1,417,852,640
Less : Depreciation 520,230,702 401,906,418
Net Block 897,664,659 1,015,946,222
Capital work-in-progresss - 897,664,659 - 1,015,946,222
Current Assets, Loan and Advances D
Cash and bank balances 235,767,903 277,671,016
Loans and advances 109,585,948 6,853,782
345,353,857 284,524,798
Less : Current liabilities and provisions E
Liabilities 73,209,726 17,151,535
Provisions 1,850,409 602,512
75,060,135 17,754,047
Net Current Assets 270,293,716 266,770,751
Profit & Loss Account 141,954,704 163,539,958
Total 1,309,913,079 1,446,256,931
Significant Accounting Policies H
Notes forming part of Accounts I
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA K. R. PARTHASARATHY K. VENKATESH B. RAMAKRISHNANPartner Secretary DirectorsMembership No.18284
Place: Chennai Place: ChennaiDate: April 21, 2005 Date: April 21, 2005
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Profit and Loss Account for the period ended March 31, 20052004-05 2003-04
Schedule Rupees Rupees Rupees Rupees
INCOME
Fee collection from users of facility 233,994,648 214,464,754
Other income F 41,570,867 15,065,389
TOTAL 275,565,515 229,530,143
EXPENDITURE
Operating & Maintenance Expenses G 72,419,796 50,009,043
Interest & Finance Charges 61,399,618 64,861,639
Depreciation 118,324,284 118,104,107
TOTAL 252,143,698 232,974,789
Profit / (Loss) before taxes 23,421,817 (3,444,646)
Provision for taxes 1,836,563 -
Profit / (Loss) after taxes 21,585,254 (3,444,646)
Add:Profit/(Loss) carried forward from previous year (163,539,958) (160,095,312)
Balance carried to Balance Sheet (141,954,704) (163,539,958)
Earnings per share-Basic and Diluted 0.46 (0.07)
Significant Accounting Policies H
Notes forming part of Accounts I
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA K. R. PARTHASARATHY K. VENKATESH B. RAMAKRISHNANPartner Secretary DirectorsMembership No.18284
Place: Chennai Place: ChennaiDate: April 21, 2005 Date: April 21, 2005
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Cash Flow Statement for the year ended March 31, 2005Rupees
2004-05 2003-04
A. Cash Flow from operating activitiesNet Profit/(Loss) before tax & extraordinary items 23,421,817 (3,444,646)Adjustments for:Depreciation 118,324,284 118,104,107Unrealised foreign exchange difference - net (gain) / loss (9,784,800) 15,826,487Interest paid 61,399,618 64,861,639Interest received (10,722,742) (14,835,439)
Operating Profit before Working Capital changes 182,638,177 180,512,148Adjustments For:(Increase) / Decrease in Loans and Advances (102,018,922) (1,919,061)Increase / (Decrease) in trade payables 54,756,281 (20,602,483)
Cash generated from operations 135,375,536 157,990,604Direct taxes paid (net of refund) - -
Net Cash from operating activities (A) 135,375,536 157,990,604
B. Cash Flow from investing activities:Purchase of Fixed Assets (42,721) (196,373)Interest received 10,722,742 14,835,439
Net Cash (used in) / from investing activities (B) 10,680,021 14,639,066
C. Cash Flow from financing activities :(Repayment ) / Proceeds from other borrowings (124,674,452) -Realised foreign exchange difference - gain (net) (1,884,600) -Interest Paid (61,399,618) (64,861,639)
Net cash from financing activities (C) (187,958,670) (64,861,639)
Net increase in cash and cash equivalents (A+B+C) (41,903,113) 107,768,031Cash and Cash equivalents as at the beginning 277,671,016 169,902,985(including cash credit from banks)
Cash and Cash equivalents as at the end 235,767,903 277,671,016(including cash credit from banks)
NOTES
1. Cash flow statement has been prepared under the Indirect Method as set of in the Accounting Standard 3 issued by the Institute of CharteredAccountants of India.
2. Cash and cash equivalents represent cash and bank balances.
3. Purchse of fixed assets includes movement of capital work-in-progress during the year.
4. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA K. R. PARTHASARATHY K. VENKATESH B. RAMAKRISHNANPartner Secretary DirectorsMembership No.18284
Place: Chennai Place: ChennaiDate: April 21, 2005 Date: April 21, 2005
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Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees
SCHEDULE - A
Share Capital
Authorised :
6,00,00,000 Equity Shares of Rs. 10/- each 600,000,000 600,000,000
Issued and Subscribed:
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 & ToubroLimited, its subsidiaries and its nominees)
473,500,070 473,500,070
SCHEDULE - B
Secured Loans
Loans from Banks 372,127,295 472,756,861
Loans from Financial Institutions 464,285,714 500,000,000
(Above loans are secured by a pari passu charge on allthe movable and immovable properties of the Company,present and future)
836,413,009 972,756,861
SCHEDULE - C Rupees
Fixed Assets Cost Depreciation Net Book Value
As at Additions As at Upto For the As at As at As at01.04.2004 31.3.2005 31.03.2004 year 31.3.2005 31.3.2005 31.3.2004
Building * 1,391,113,933 - 1,391,113,933 395,228,795 115,802,236 511,031,031 880,082,902 995,885,138
Plant & Machinery 24,001,082 - 24,001,082 5,447,077 2,167,069 7,614,146 16,386,936 18,554,005
Furniture & Fixturesand Office Equipment 2,034,560 42,721 2,077,281 1,002,343 288,188 1,290,531 786,750 1,032,217
Vehicles 703,065 - 703,065 228,203 66,791 294,994 408,071 474,862
Total 1,417,852,640 42,721 1,417,895,361 401,906,418 118,324,284 520,230,702 897,664,659 1,015,946,222
Previous year 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
Note:
* Building includes bridge over river Narmada constructed on land provided by Government of Gujarat under the Concession Agreement dated November21, 1997 with Ministry of Surface Transport, Government of India and Public Works Department, Government of Gujarat amortised equally over a periodof 12 years commencing from November 11, 2000.
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Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees
Schedule - D
Current Assets, Loans and Advances
Cash and bank balances
Cash on hand 1,150,809 1,230,502
Balances with scheduled bank
on current account 58,338,976 7,120,848
on fixed deposits (including interest accrued thereonRs.12,19,394 (Previous year Rs.2,00,74,661) 175,219,394 268,306,100
on margin money deposit accounts (including interestRs. 58,724 (Previous year Rs.13,566) 1,058,724 235,767,903 1,013,566 277,671,016
Loans & Advances
Advances recoverable in cash or in kind 95,585,948 6,853,782ICD - L&T Infrastructure Development Projects Ltd. 100,000,000 -
109,585,948 6,853,782
345,353,851 284,524,798
Schedule - E
Current Liabilities and Provisions:
Liabilities
Sundry Creditors
- Small scale industrial undertakings - -
- Others 65,069,433 6,076,192
- Interest accrued but not due on loans 8,140,293 73,209,726 11,075,343 17,151,535
Provisions
Provision for taxation 1,836,563 568,043
Provision for Leave Encashment 13,846 1,850,409 34,469 602512
75,060,135 17,754,047
2004-05 2003-04
Rupees RupeesSchedule - F
Other income
Interest on fixed deposit 10,722,742 14,835,439
(tax deducted at source - Rs.25,22,580)
(previous year Rs. 28,25,330/-)
Exchange Gain 24,097,408 -
Other income 6,750,717 229,950
41,570,867 15,065,389
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Schedules forming part of accounts2004-05 2003-04
Rupees RupeesSchedule - GOperating Maintenance Expenses
Toll management fees 5,164,349 4,845,706Security Services 2,627,431 2,329,488Salaries & wages 3,995,318 3,106,217Rates & taxes 300 2,098Printing & stationery 756,282 713,342Travelling & conveyance 310,678 281,675Electricity charges 372,948 325,116Exchange Loss - 21,670,381Professional Fees 51,572,770 7,469,510Insurance 4,177,405 4,439,336Repairs & Maintenance
Building 1,274,843 2,314,493Plant & Machinery 56,782 89,357Others 393,523 248,632
Postage & Telephone Expenses 96,000 119,571Miscellaneous Expenses 1,621,167 2,054,121
72,419,796 50,009,043
SCHEDULE - H
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 (“GAAP”) except for the revaluation of certain fixed assets, and in compliance with the Accounting Standards referred to in Section211(3C) and other requirements of the Companies Act, 1956. However certain escalation and other claims, which are not ascertainable/acknowledgedby customers, are not taken into account
The preparation of financial statements in conformity with GAAP requires that the management of the company makes estimates and assumptionsthat affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relatingto contingent liabilities as of the date of the financial statements. Examples of such estimates include useful lives of fixed assets and intangibleassets, provision for doubtful debts/advances, future obligations inrespect of retirement benefit plans etc. Actual results could differ from theseestimates.
2. Income
Fee collections from users of facilities are accounted for as and when the amount is due and recovery of which is certain.
3. Retirement Benefits
Contributions to Provident Fund are accounted on actual liability basis. Leave encashment provision has been made on actual liability basis.
4. Fixed Assets
Fixed Assets are recorded at cost. The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excessof their recoverable amount. Where carrying values exceed this recoverable amount assets are written down to their recoverable amount.
5. Depreciation
Depreciation 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 and acquired/installed thereon are amortised over a period of the rights givenunder the concession agreement dated November 21, 1997 with the Ministry of Surface Transport, Government of India and Public WorksDepartment, Government of Gujarat.
Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods so as to allocate the assets revisedcarrying amount over its remaining useful life.
6. 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 sale. All otherborrowing costs are recognised as an expense in the period in which they are incurred.
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7. 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 imported 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.
8. 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 / 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 certainity that sufficient future taxable income willbe available 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 acrossthe River Narmada on National Highway - 8, under the Concession Agreement dated November 21, 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 periodis for 12 years from that date.
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 30 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, 1956has not been furnished.
4. Manager’s salary and perquisites (on deputation) of Rs.2,60,044/- (previous year - Rs.2,18,233/-) for the year ended March 31, 2005 has beencharged to the accounts.
5. None of the employees have completed five years of service, hence the provisions of Payment of Gratuity Act, 1972 are not applicable.
6. Auditor’s Remuneration Rupees
2004-2005 2003-2004
Audit Fees 77,140 50,000
Tax Audit Fees 7,500 8,100
Certification Expenses 1,000 9,180
Reimbursement of Expenses - 1,962
7. Income tax provision amounting to Rs.18,36,563 has been made in the Accounts under Minimum Alternate Tax as per the provisions of the Incometax Act, 1961. No provision for wealth tax has been made for the current year in these accounts as there is no taxable wealth under the provisionsof the Wealth Tax Act, 1957.
8. Expenditure in Foreign currency: Rupees
2004-2005 2003-2004
Interest on Term Loan (FCNRB) Rs. 90,53,103 Rs.93,44,757
9. Exchange gain (net) arising on account of foreign currency transactions amounting to Rs.2,40,97,408 has been credited to Profit and Loss Account.(Previous year exchange loss Rs. 2,16,70,381)
10. The Company has entered into certain derivative transactions involving foreign currencies. These derivative transactions being considered as off -balance sheet transactions, the cah flow arising there from are recognised with books of account - as and when the settlement take face inaccordance with the terms of the respective contracts over the tenor thereof.
Schedules forming part of accounts
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11. As per Accounting Standard 22 on Taxes on Income - the Company has a deferred tax asset as below:Rupees
31.03.05 31.03.04Deferred Tax AssetsOn account of Unabsorbed loss / depreciation as per income tax return 216,284,803 234,023,500Preliminary expenses not written off 306,047 391,424Unpaid statutory liabilities debited to Profit & Loss A/c. 4,661 —Total 216,595,511 234,414,924Less: Deferred Tax liabilitiesDifference between carrying amountof fixed assets in the books and the income tax 169,080,619 175,451,700Net deferred tax asset 47,514,892 58,963,224The Company has not accrued the above deferred tax asset in the accounts, since the Company is eligible for benefit under Section 80IA of theIncome Tax Act, 1961, during the entire concession period under the Concession Agreement and the deferred tax asset will get reversed during theperiod.
12. The Company has not taken any asset on finance / operating lease. The income from cancellable operating lease is accounted on accrual basis.13. Segment Reporting - the Company is in the business of operating and maintaining a toll bridge and the majority of its income represents toll
collections. Hence, operations are under single segment.14. Disclosure of Related Party transactions
A. List of related partiesHolding company : Larsen & Toubro LimitedSubsidiary company : NILAssociates : NILFellow subsidiaries : L&T Infrastructure Development Projects Limited
Cyber Park Development & Construction LimitedTractor Engineers LimitedL&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHL&T Transportation Infrastructure LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedIndia Infrastructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndhra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHD.Bhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedRaykal Aluminium Company Private LimitedLarsen & Toubro Qatar LLCZubair Kilpatrick LLCL&T Infocity Lanka Private LimitedL&T Infocity Infrastructure LimitedL&T Overseas Projects Nigeria Limited
B. Transactions with related parties:(i) Larsen & Toubro Ltd.
Purchase of goods & services – Rs. 5,15,72,770Charges for deputation of employees – Rs. 24,89,979Rental income received (gross) – Rs. 2,08,356Transaction with fellow subsidiary:
(ii) L&T Infrastructure Development Projects LimitedInterest received on ICDs – Rs.51,59,825Cyber Park Development & Construction limitedInterest received from ICDs – Rs.2,20,932
C. Amount due to and from related parties:(i) Accounts payable
Larsen & Toubro Ltd – Holding Company – Rs.5,80,80,571L&T Infrastructure DevelopmentProjects Limited – Fellow Subsidiary – Rs.7,13,244
(ii) Loans & Advances recoverableL&T Infrastructure Development Projects Ltd. –Fellow Subsidiary(No amount has been written off or written back) – Rs.10,00,19,178
15. The Company has reviewed the cash flow from its assets based on value in use and satisfied that there is no impairment loss required to be providedfor the year.
16. Figures for the previous year have been regrouped/reclassified where necessary.
Schedules forming part of accounts
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NARMADA INFRASTRUCTURE CONSTRUCTION ENTERPRISE LIMITED
Schedules forming part of accounts17. Balance Sheet Abstract and Company’s General Business Profile
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 5
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 Rs. Thousands)
Total Liabilities Total Assets
1 3 0 9 9 1 3 1 3 0 9 9 1 3
Sources of Funds Paid-up Capital Reserves & Surplus
4 7 3 5 0 0 N I L
Deferred Liabilities
N I L
Secured Loans Unsecured Loans
8 3 6 4 1 3 N I L
Application of Funds
Net Fixed Assets Investments
8 9 7 6 6 5 N I L
Net Current Assets Misc. Expenditure
2 7 0 2 9 4 N I L
Accumulated Losses
1 4 1 9 5 4
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
2 7 5 5 6 6 2 5 2 1 4 4
+ - Profit/Loss before tax + - Profit/Loss after tax
✔ 2 3 4 2 2 ✔ 2 1 5 8 5
Earnings per Share in Rs. Dividend Rate %
0 . 4 6 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
(Signatures to Schedules A to I)
As per our report attachedSHARP & TANNANChartered Accountants
V. R. LALITHA K. R. PARTHASARATHY K. VENKATESH B. RAMAKRISHNANPartner Secretary DirectorsMembership No.18284
Place: Chennai Place: ChennaiDate: April 21, 2005 Date: April 21, 2005
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Third Report and Accounts for the year ended March 31, 2005.
1. FINANCIAL RESULTS
(Rupees)
2004-05 2003-04
Sales Turnover NIL NILLoss : Before Income Tax (33,11,543) (11,08,509)Provision for Income Tax - -Profit after Income Tax (33,11,543) (11,08,509)
2. REVIEW OF OPERATIONS
The Company has entered into a Development Agreement for the construction of Software Development Park at Bangalore on June 16, 2003 withSoftware Technology Park of India, Bangalore. The phase I of the project for the construction of 3.12 lakh square feet of built up area of Cyber Parkat Bangalore has been completed. The Company is yet to commence commercial operations.
3. CAPITAL EXPENDITURE
During the year Company has incurred capital expenditure of Rs.6,01,99,852.
4. DEPOSITS
The Company has not accepted any deposits from the public.
5. DISCLOSURE OF PARTICULARS
The Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988, require the disclosure of particulars regarding Conservationof Energy in Form A and Technology Absorption in Form B prescribed by the Rules. The Company, not being a manufacturing company, is advisedthat Forms A and B are not applicable to it.
6. 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.
7. 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 and prudentso as to give a true and fair view of the state of affairs of the Company as at March 31, 2005 and of the loss of the Company for the yearended 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; and
d. that the annual accounts have been prepared on a going concern basis.
8. DIRECTORS
Mr. V. B. Gadgil, Director retires from the Board of Directors by rotation and being eligible offers himself for re-election.
9. 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 being eligible, are recommended for reappointment. Certificate from Auditors has been received to the effect that theirappointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
10. SECRETARIAL COMPLIANCE CERTIFICATE
The Secretarial Compliance Certificate for the year ended March 31, 2005 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.
11. ACKNOWLEDGEMENT
The Directors acknowledge the valuable support extended by the two promoters of L&T Infrastructure Development Projects Limited andJ.K. Bros Constrafin Limited and STPI, Bangalore. Your Directors express their grateful thanks for the assistance, co-operation and support extendedto your Company by the Government of India, Government of Karnataka, HDFC, commercial banks and all others who are associated with theCompany. The Board wishes 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 RANGASWAMIB. RAMACHANDER RAOV.B.GADGIL DirectorsM.RAVIK.VENKATESH
Place : BangaloreDate : April 21, 2005
}
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Compliance CertificateName of the Company : CYBER PARK DEVELOPMENT & CONSTRUCTION LIMITEDRegistration No. : 08-30180Authorized Capital : Rs.1,00,00,000/-Paid-up Capital : Rs.1,00,00,000/-
ToThe MembersMESSRS. CYBER PARK DEVELOPMENT & CONSTRUCTION LIMITED19, I & II Floors,Kumarakurpa Road,Bangalore –560 001
We have examined the registers, records, books and papers of MESSRS. CYBER PARK DEVELOPMENT & CONSTRUCTION LIMITED (theCompany) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made there under and also the provisions containedin the Memorandum and Articles of Association of the Company for the financial year ended 31st March 2005. In our opinion and to the best of ourinformation and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certifythat in respect of the aforesaid financial year:
1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions and the rules made thereunder and all entries therein have been recorded.
2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director,Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under.
3. The Company is a public limited company and has the minimum paid up capital.
4. The Board of Directors met Four (4) times on 4th May 2004, 30th September 2004, 20th November 2004 and 18th March 2005 in respect of whichmeetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.
5. The Company was not required to close its Register of Members during the financial year ended 31st March 2005.
6. The Second Annual General Meeting for the financial year ended 31st March 2004 was held on 11th June 2004 after giving due notice to themembers of the Company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose.
7. No extra-ordinary general meeting was held during the financial year ended 31st March 2005.
8. The Company has not advanced any loans or given any guarantees or provided any securities to its directors or persons or firms or companiesreferred under Section 295 of the Act.
9. The Company has not entered into any contract falling within the purview of Section 297 of the Act.
10. The Company was not required to make any entries in the register maintained under Section 301 of the Act.
11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Boardof directors, members or Central Government.
12. The Company has not issued any duplicate share certificates during the financial year ended 31st March 2005.
13. The Company:
(i) has not effected allotment/transfer /transmission of securities during the financial year ended 31st March 2005.However, during the financialyear under review the company has effected the change of name and has complied with the provisions of the Act.
(ii) has not deposited any amount in a separate Bank Account as no dividend was declared in respect of the financial year ended 31st March2005.
(iii) was not required to post warrants to any member of the Company as no dividend was declared in respect of the financial year ended 31st
March 2005.
(iv) has not declared any dividend, has not issued shares/debentures and has not accepted any deposits and hence, the question of transferof dividend to unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accruedthereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund does not arise.
(v) has complied with the requirements of Section 217 of the Act.
14. The Board of Directors of the Company is duly constituted. The appointment of Messrs.Bikumalla Ramachander Rao and Mandava Ravi asdirectors in the Second Annual General Meeting held on 11th June 2004 who were earlier appointed as Additional Directors at the Board Meetingheld on 16th July 2003 have been duly made. There was no appointment of additional director/alternate director or director to fill casual vacancyduring the financial year under review.
15. The Company has not appointed any Managing Director / Whole-time Director / Manager during the financial year under review.
16. The Company has not appointed any Sole Selling Agents during the financial year ended 31st March 2005.
17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and / orsuch authorities prescribed under the various provisions of the Act during the financial year ended 31st March 2005.
18. The directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rulesmade there under.
19. The Company has not issued any shares/ debentures/or other securities during the financial year ended 31st March 2005.
20. The Company has not bought back any shares during the financial year ended 31st March 2005 and hence the question of complying with thebuy back provisions does not arise.
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
21. The Company has not issued any preference shares / debentures and hence the question of redemption of preference shares/ debentures doesnot arise during the financial year under review.
22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pendingregistration of transfer of shares.
23. The Company has not invited / accepted any deposits including any unsecured loans falling within the purview of Section 58A during the financialyear ended 31st March 2005.
24. The amount borrowed by the Company from banks and other bodies corporates during the financial year ended 31st March 2005 are within theborrowing limits of the Company and that necessary approval under Section 293(1)(d) of the Act was obtained from the shareholders in dulyconvened First Annual General Meeting held on 30th May 2003.
25. The Company has not made any loans, investments or given guarantees or provided securities to other bodies corporate and consequently noentries have been made in the register kept for the purpose.
26. The Company has not altered the provisions of the Memorandum of Association with respect to situation of the Company’s registered office fromone State to another during the financial year under scrutiny.
27. The Company has not altered the provisions of the Memorandum of Association with respect to the objects of the Company during the financialyear under scrutiny.
28. The Company has not altered the provisions of the Memorandum of Association with respect to name of the Company during the financial yearunder scrutiny.
29. The Company has not altered the provisions of the Memorandum of Association with respect to share capital of the Company during the financialyear under scrutiny.
30. The Company has not altered its Articles of Association during the financial year ended 31st March 2005.
31. There was no prosecution initiated against or show cause notices received by the Company and no fines or penalties or any other punishmentwas imposed on the Company during the financial year, for offences under the Act.
32. The Company has not received any money as security from its employees during the financial year ended 31st March 2005.
33. The Company has not constituted a separate provident fund trust for its employees or class of its employees as contemplated under Section 418of the Act.
FOR R. SRIDHARAN & ASSOCIATESCOMPANY SECRETARIES
PLACE: CHENNAI R.SRIDHARANDATE : 20th April 2005 C.P. NO: 3239
‘Annexure A’
Name of the Company : CYBER PARK DEVELOPMENT & CONSTRUCTION LIMITEDRegistration No. : 08-30180Authorized Capital : Rs.1,00,00,000/-Paid-up Capital : Rs.1,00,00,000/-
Registers as maintained by the Company
Sl. No. Section Number Name of the Register
1. 108 Share Transfer Register
2. 143 Register of Charges
3. 150 Register of Members
4. 193 Minutes of the Meetings of Board of Directors
5. 193 Minutes of the meetings of the Members
6. 301 Register of Contracts
7. 303 Register of Directors
8. 307 Register of Directors’ Shareholding
9. - Board Meeting Attendance Register
10. - General Meeting Attendance Register
FOR R. SRIDHARAN & ASSOCIATESCOMPANY SECRETARIES
PLACE: CHENNAI R.SRIDHARANDATE : 20th April 2005 C.P. NO: 3239
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
‘Annexure B’
Name of the Company : CYBER PARK DEVELOPMENT & CONSTRUCTION LIMITED
Registration No. : 08-30180
Authorized Capital : Rs.1,00,00,000/-
Paid-up Capital : Rs.1,00,00,000/-
Returns/ Documents/ Forms filed with the Registrar of Companies, Regional Director, Central Government or other authorities during thefinancial year ended 31ST March 2005
FOR THE FINANCIAL YEAR 2005 [1.4.2004 to 31.3.2005]
REGISTRAR OF COMPANIES
Sl. Form Relevant Description Date of Whether If delay in RemarksNo. No. Section filing filed within filing whether (ROC
prescribed requisite Receipt No./time additional Amount Paid)Yes/No fee paid
Yes/No
1. Sch VI 220 Balance Sheet for the financial 09.07.04 YES NA 384114year ended 31st March 2004. Rs.500/-(N)
2. - 383A Compliance Certificate issued by 09.07.04 YES NA 384114Mr.R.Sridharan, M/s.R.Sridharan & Rs.500/-(N)Associates, Company Secretaries,Chennai for the financial year ended31st March 2004.
3. 32 303 Appointment of Mr. Mandava Ravi 09.07.04 YES NA 384114and Mr.Bikumalla Ramachander Rao Rs.500/-(N)as directors at the Annual GeneralMeeting held on 11th June 2004
4. Sch V 159 Annual Return made upto 09.08.04 YES NA 38717611th June 2004 (Date of AGM) Rs.500/-(N)
5. 8 & 13 135 Modification of charge created in 13.04.05 YES NA 425955favour of Housing Development Rs.500/-(N)Finance corporation Limited, Rs.500/-(A)on 1st March 2005 for enhancement Rs.50/-(N)of Loan amount from Rs.49.35 Croresto Rs.51.35 Crores.
REGIONAL DIRECTOR, CENTRAL GOVERNMENT & OTHER AUTHORITIESNIL
FOR R. SRIDHARAN & ASSOCIATESCOMPANY SECRETARIES
PLACE: CHENNAI R.SRIDHARANDATE : 20th April 2005 C.P. NO: 3239
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Auditors’ ReportTO THE MEMBERS OF CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
We have audited the attached balance sheet of Cyberpark Development & Construction Limited as at March 31, 2005, 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.
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) We 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 of thosebooks;
(c) The balance sheet, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the balance sheet 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 March31, 2005, and taken on record by the Boardof Directors, we report that none of the director is disqualified as on March 31, 2005 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 March 31, 2005; and
ii) in the case of the profit and loss account, of the loss 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
FOR SHARP & TANNANChartered Accountants
L.VAIDYANATHANPartner
(Membership No.16368)Place : BangaloreDate : April 21, 2005
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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 a 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 such verification.(c) No fixed asset have been disposed off during the year and therefore do not affect the going concern assumption.
(ii) (a) As explained to us inventory representing property development land and construction work-in-progress have been physically verified by themanagement at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable.
(b) As per information given to us the procedures of physical verification of inventory followed by management are in our opinion reasonable andadequate in relation to the size of the Company and the nature of its business.
(c) Since the company is in business of infrastructure development and as it had not purchased any construction materials, no stock records aremaintained by the Company.
(iii) (a) The Company has not granted any loans secured / unsecured to companies, firms or other parties listed in the register maintained underSection 301 of the Companies Act, 1956.Since the Company has not granted any loans to the Companies, firms and parties listed in the register maintained under Section 301 of theCompanies Act, 1956 reporting under paragraph 4, clause (iii)(b), (c) & (d) of the Order does not arise.
(b) According to the information and explanations given to us, the Company has not taken any loans secured / unsecured from companies, firmsor other parties listed in the register maintained under Section 301 of the Companies Act, 1956.Since the Company has not taken or granted any loans from the Companies, firms and parties listed in the register maintained under Section301 of the Companies Act, 1956 reporting under paragraph 4, clause (iii)(f) and (g) of the Order does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business for the construction expenses and fixed assets. In our opinion, and according to the informationand explanations given to us, there is no continuing failure to correct major weaknesses in internal control. The Company has not sold any goodsor rendered services during the year.
(v) In our opinion, and according to the information and explanations given to us, the Company has not entered into any contract or arrangement,particulars of which need to be entered into the register maintained in pursuance of Section 301 of the Companies Act,1956. Accordingly reportingunder paragraph 4, clause (v) (a) and (b) does not arise.
(vi) The Company has not accepted / renewed any deposits from the public.(vii) The Company does not have an internal audit system at present. Management has represented that the Company plans to establish an internal
audit system commensurate with the size of the Company and nature of its business.(viii) As informed to us, maintenance of cost records has not been prescribed by the Central Government under paragraph 4(d) of subsection (1) of
the Section 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 has
been regular in depositing undisputed statutory dues including Provident Fund, Income-Tax, cess and other statutory dues applicable to itduring the year with appropriate authorities. There are no undisputed dues as at March 31, 2005 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 amounts in respect of Income Tax, Customs Duty, Wealth Tax, ServiceTax and Cess 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 paragraph 4, clause (x) does not arise, even thoughthe Company has incurred cash losses during the year.
(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company hasno instalment due for repayment in respect of loans taken from financial institutions. The Company did not have any outstanding debentures orany outstanding loans from 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 by the management, the Company is not dealing or trading in shares, securities, debentures
& other investments.(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or
financial institutions.(xvi) In our opinion, the term loans have been applied for the purpose for which they were obtained.(xvii) According to the information and explanations given by the management, the funds raised by the Company on short-term basis have not been used
for long term investments.(xviii) The Company has not made any preferential allotment of shares to parties or companies to be covered in the register maintained under Section
301 of the Companies Act, 1956.(xix) The Company did not have outstanding debentures. Accordingly, no security or charge has been created.(xx) The Company has not raised any money by public issue during the year.(xxi) According to the information and explanations given to us 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
(Membership No.16368)Place : BangaloreDate : April 21, 2005
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Balance Sheet as at March 31, 2005Schedules As at As at
31.03.2005 31.03.2004
Rupees Rupees Rupees RupeesSOURCES OF FUNDS :
Shareholders’ Funds
Share Capital A 10,000,000 10,000,000
Loan Funds
Secured Loan B 513,500,000 210,800,000
Unsecured Loans C 101,564,450 94,557,076
Total 625,064,450 315,357,076
APPLICATION OF FUNDS :
Fixed Assets: D
Gross Block 60,559,807 359,955
Less : Depreciation 212,387 37,227
Net Block 60,347,420 322,728
Current Assets, Loans and Advances E
Inventories 686,068,122 407,819,355
Cash and bank balances 9,656,807 972,406
Loans and advances 13,255,998 36,824,336
708,980,928 445,616,097Less : Current liabilities and provisions F
Liabilities 148,669,582 131,684,633
Provisions 14,367 5,625
148,683,949 131,690,258
Net Current Assets 560,296,979 313,925,839
Miscellaneous expenditure(To the extent not written off or adjusted.) - -
Profit & Loss account 4,420,052 1,108,509
Total 625,064,450 315,357,076
Significant Accounting Policies 1
Notes forming part of Accounts 2
As per our report attachedSHARP & TANNANChartered Accountants
L.VAIDYANATHANPartner(Membership No. 16368)
Place : BangaloreDated : April 21, 2005
For and on behalf of the Board
K.V.RANGASWAMI
B.RAMACHANDER RAO
V.B.GADGIL Directors
M. RAVI
K.VENKATESH
Place : BangaloreDated : April 21, 2005
}
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
As per our report attachedSHARP & TANNANChartered Accountants
L.VAIDYANATHANPartner(Membership No. 16368)
Place : BangaloreDated : April 21, 2005
For and on behalf of the Board
K.V.RANGASWAMI
B.RAMACHANDER RAO
V.B.GADGIL Directors
M. RAVI
K.VENKATESH
Place : BangaloreDated : April 21, 2005
}
Profit and Loss Account for the year ended March 31, 2005Schedules 2004-05 2003-04
Rupees Rupees Rupees RupeesINCOME
Other income G 282,128 652,074
TOTAL 282,128 652,074
EXPENDITURE
Opening work in progress 407,819,355 3,270,386
Add : Construction expenses during the year 278,248,767 404,548,969
686,068,122 407,819,355
Less : Closing work in progress H 686,068,122 407,819,355
0 0
Staff Expenses I 316,051 227,879
Sales, Administration and Other Expenses J 3,277,620 1,532,704
TOTAL 3,593,671 1,760,583
Profit /(Loss) before taxes (3,311,543) (1,108,509)
Provision for tax - -
Profit /(Loss) after tax (3,311,543) (1,108,509)
Add : Profit /Loss carried forward from previous year (1,108,509) -
Balance carried to Balance Sheet (4,420,052) (1,108,509)
Earning per Share -Basic/Diluted (3.31) (1.56)
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
Rs. Rs.A. Cash Flow from Operating Activities:
Net Profit / (Loss) before tax & extraordinary items (3,311,543) (1,108,509)Adjustments for :Dividend Received - -Depreciation - -Interest paid - -Interest received (282,128) (652,074)(Profit) / Loss on sale of investments (net) - -
Operating Profit before Working Capital changes (3,593,671) (1,760,583)Adjustments For :(Increase) / Decrease in Loans and Advances 23,568,338 (36,824,336)Increase / (Decrease) in trade payables 16,993,691 128,200,971
Cash generated from operations 36,968,358 89,616,052Direct taxes refund/(paid) net - -
Net Cash from operating activities (A) 36,968,358 89,616,052
B. Cash Flow from Investing Activities:Purchase of fixed assets (338,273,459) (404,854,988)(Interest Capatilised Rs. Nil Previous Year Rs. Nil)Purchase of investments - -Sale of investments - -Interest received 282,128 652,074Dividend received from other investments - -
Net Cash from investing activities (B) (337,991,331) (404,202,914)
C. Cash Flow from Financing Activities:Increase in Share Capital - 9,500,000(Repayment)/Proceeds from other borrowings 309,707,374 305,357,076Interest Paid - -Misc. Expenditure written off - 202,192
Net cash from financing activities (C) 309,707,374 315,059,268
Net increase in cash and cash equivalents (A+B+C) 8,684,401 472,406Cash and Cash equivalents as at the beginning 972,406 500,000
Cash and Cash equivalents as at the end 9,656,807 972,406
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. Cash and cash equivalents represent cash and bank balances.
3. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountants
L.VAIDYANATHANPartner(Membership No. 16368)
Place : BangaloreDated : April 21, 2005
For and on behalf of the Board
K.V.RANGASWAMI
B.RAMACHANDER RAO
V.B.GADGIL Directors
M. RAVI
K.VENKATESH
Place : BangaloreDated : April 21, 2005
}
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Schedules forming part of accountsAs at As at
31.03.2005 31.03.2004
Rupees Rupees RupeesSCHEDULE - A
Share Capital
Authorised :
1,000,000 Equity Shares of Rs.10/- each 10,000,000 10,000,000
Issued, Subscribed and Paid-up
1,000,000 Equity Shares of Rs.10/- each fully paid 10,000,000 10,000,000
Of the above 510,000 shares of Rs.10/- each is held by theholding company L&T Infrastructure Development ProjectsLimited.
10,000,000 10,000,000
SCHEDULE - B
Secured Loan
Term Loan from Financial Institution 513,500,000 210,800,000
The above loan is secured by equitable mortgage ofundivided share of leasehold land and building in Phase Iconstructed thereon.
513,500,000 210,800,000
SCHEDULE - C
Unsecured Loans
Loans from
Holding Company - L&T Infrastructure Development 45,200,000 45,200,000
Projects Limited
Others- JK Constrafin Limited 43,400,000 43,400,000
88,600,000 88,600,000
Interest accrued but not due on the above loans 12,964,450 5,957,076(refer Note No.11 of Schedule 2)
101,564,450 94,557,076
SCHEDULE - D (Figures in Rupees)
Fixed Assets Cost Depreciation Book Value
As at Additions As at Upto For the year Upto As at As at01.04.2004 2004-05 31.3.2005 31.03.2004 2004-05 31.03.2005 31.03.2005 31.03.2004
Plant and Machinery - 60,194,552 60,194,552 - 109,670 109,670 60,084,882 -Computers & Office
equipments 342,700 5,300 348,000 35,589 64,398 99,987 248,013 307,111
Furniture and fixture 17,255 - 17,255 1,638 1,092 2,730 14,525 15,617
Total 359,955 60,199,852 60,559,807 37,227 175,160 212,387 60,347,420 322,728
Previous year 17,255 342,700 359,955 546 36,681 37,227 322,728 16,709
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Schedules forming part of accountsAs at As at
31.03.2005 31.03.2004
Rupees Rupees RupeesSchedule - E
Current Assets, Loans and Advances
Current Assets
Inventories
(At lower of cost or net resaleable value ascertified by a Director)Work-in-progress 686,068,122 407,819,355
Cash and bank balances
Cash on hand 1,714 1,579
Balance with scheduled bankon current account 2,153,671 970,827
on deposit account including interest accrued 7,501,423 -thereon. Deposit of Rs.3,390,920/- is held bya bank under lien towards bank guarantee
9,656,807 -Loans & Advances
Unsecured, considered good
Advances recoverable in cash or in kind 13,255,998 36,824,336
708,980,928 445,616,097
Schedule - F
Current Liabilities and Provisions
Liabilities
Sundry Creditors
- Small scale industrial undertakings - -
- Larsen & Toubro Limited-Ultimate Holding Company 134,746,597 123,953,285
- Others 9,670,783 6,123,319
- Interest accrued but not due 4,252,202 1,608,029
Provisions 148,669,582 131,684,633
- Provision for Leave encashment 14,367 5,625
148,683,949 131,690,258
2004-05 2003-04
Schedule - G
Other Income
Interest Income 282,128 652,074
(Tax deducted at Source-Rs.57,655/-Previous year Rs.124,046/-)
282,128 652,074
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Schedules forming part of accountsOpening Balance Additions During Closing BalanceAs at 1.04.2004 the year As at March 31, 2005
Schedule - H
Work-in-progress
Construction expenses 353,042,429 220,179,586 573,222,015
Consultancy fee 20,553,000 1,975,050 22,528,050
Fee paid for Power Connection 5,697,000 244,110 5,941,110
Professional Charges 2,022,854 2,874,386 4,897,240
Rent, Rates and Taxes 1,002,698 143,872 1,146,570
Printing & Stationery 23,057 - 23,057
Travelling & Conveyance 1,343,294 608,576 1,951,870
Miscellaneous expenses 590,508 38,808 629,316
Finance & Interest charges 23,507,288 52,009,219 75,516,507
Depreciation 37,227 175,160 212,387
TOTAL 407,819,355 278,248,767 686,068,122
2004-05 2003-04
Schedule- I
Staff Expenses
Salaries, Wages and Bonus 294,309 219,274
Provision for Leave Encashment 8,742 5,625
Welfare and Other Expenses 13,000 2,980
316,051 227,879
Schedule- J
Sales, administration and other expenses
Rates & taxes 6,105 12,710
Insurance 599 599
Membership and Subscription 10,824 22,397
Printing and stationery 53,692 50,031
Travelling and conveyance 27,815 34,627
Recruitment expenses - 154,715
Postage and Telephone Expenses 127,180 96,504
Sales Promotion Expenses 2,391,557 702,196
Preliminary expenses - 202,192
Miscellaneous Expenses 659,848 256,733
3,277,620 1,532,704
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Schedules forming part of accountsSCHEDULE-1
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING :
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with the provisionsof Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted for on accrual, includingfor committed obligations.
These financial statements have been prepared in confirmity with Generally Accepted Accounting Principles, which require management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. FIXED ASSETS :
Fixed Assets are stated at original cost.
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 such asset,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 of time toget 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 Cyber Park project from the Software Technology Park 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 June 16, 2003 for a consideration of 42665 sq. ft. being 8.57% of the total super built up area of the project in the said land tobe allotted to STPI with abosolute rights.
2. Capital Commitment as at March 31, 2005 is Rs.Nil (Previous year 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 (Previous Year Rs.Nil).
4. Auditors remuneration and expenses reckoned in the accounts.2004-05 2003-04
Rs. Rs.Audit fee (excluding service tax) 50,000 50,000Reimbursement of out of pocket expenses 11,480 7,765
5. Expenditure in Foreign Currency Rs.Nil (Previous year Rs.Nil).
6. The Company does not have any dealings with small scale industrial undertakings and hence reporting interest on delayed payments and amountsdue 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.40,835/- pertaining to timing difference on account of preliminary expenses has not been recognised by the managementin the accounts as a measure of prudence.
9. Disclosure in respect of related parties as per Accounting Standard (AS) 18 - Annexure - I attached
10. Basic and Diluted Earnings per Share computed in accordance with Accounting Standard 20-Earnings per Share
2004-05 2003-04Profit after tax (Rupees) (3,311,543) (1,108,509)Weighted average number of Shares outstanding (Nos) 1,000,000 709,290Basic and Diluted EPS (Rupees) (3.31) (1.56)
11. Interest accrued but not due of Rs.12,964,450 included under unsecured loan represents interest @10% p.a. payable together with principal amountafter repayment of all dues to the secured loan lenders as per Shareholders’ Agreement dated April 30, 2003.
12. Managers salary and perquisites are nil.
13. Figures for the previous year have been re-classified/re-grouped where necessary.
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
Annexure- I
Disclosure of Related Party Transactions
List of related partiesHolding Company : L&T Infrastructure Development Projects LimitedSubsidiary Company : NILAssociates : NILFellow subsidiaries : Tractor Engineers Limited
L&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHL&T Transportation Infrastructure LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedNarmada Infrastructure Construction Enterprise LimitedIndia Infrastructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndhra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHDBhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedRaykal Aluminium Company Private LimitedLarsen & Toubro Qatar LLCL&T Overseas Projects Nigeria LimitedL&T Infocity Infrastructure LimitedZubair Kilpatrick LLCL&T Infocity Lanka Private Limited
Transactions with Ultimate Holding Company:Paid towards construction contract - Rs.220,945,036Purchase of goods & services - Rs.60,194,552Charges for deputation of employees - Rs.2,681,388Rent for premises paid to BAO - Rs.5,20,000
Transaction with Fellow Subsidiary Company:Narmada Infrastructure Construction Enterprise LimitedInterest paid on ICDs (gross) - Rs.2,20,932
Amount due to and from related parties:Accounts payable / Accounts Receivable Payable ReceivableLarsen & Toubro Limited -Ultimate Holding Company - Rs. 134,746,597 NilL&T Infrtastructure DevelopmentProjects Limited - Holding Company - Rs. 53,456,466 NilNarmada Infrastructure ConstructionEnterprise Ltd - Fellow Subsidiary Company Nil Nil
No amounts pertaining to the related parties have been written off or written back during the year.
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CYBERPARK DEVELOPMENT & CONSTRUCTION LIMITED
14. BALANCE SHEET ABSTRACT AND COMPANY’S BUSINESS PROFILE
I Registration Details
Registration No : C I N - U 4 5 2 0 2 K A 2 0 0 2 P L C 0 3 0 1 8 0
Balance Sheet Date 3 1 - 0 3 - 2 0 0 5 State Code 0 8
II Capital raised during the year (Amount in Rupees 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 Rs.Thousands)
Total liabilities Total Assets
6 2 5 0 6 4 6 2 5 0 6 4
Source of Funds
Paid up Capital Reserves and Surplus
1 0 0 0 0 N I L
Secured/Unsecured Loans Deferred tax liability
6 1 5 0 6 4 N I L
Application of Funds
Net Fixed Assets Investments
6 0 3 4 7 N I L
Net Current Assets Accumulated Losses Miscellaneous expenditure
5 6 0 2 9 7 4 4 2 0 N I L
IV Performance of Company (Amount Rupees in Thousands)
Turnover (including other income) Total expenditure
2 8 2 3 5 9 4
✓ Profit before tax ✓ Profit after tax
+ - 3 3 1 2 + - 3 3 1 2
✓ Earnings per share Dividend rate %
+ - 3 . 3 1 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 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
Schedules forming part of accounts
As per our report attachedSHARP & TANNANChartered Accountants
L.VAIDYANATHANPartner(Membership No. 16368)
Place : BangaloreDated : April 21, 2005
For and on behalf of the Board
K.V.RANGASWAMI
B.RAMACHANDER RAO
V.B.GADGIL Directors
M. RAVI
K.VENKATESH
Place : BangaloreDated : April 21, 2005
}
S-128
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Directors’ ReportThe Directors have pleasure in presenting their Report and Accounts for the year ended March 31, 2005.
I. FINANCIAL RESULTS
Amount in Rs. Lakh
Description 2004-05 2003-04
Profit before depreciation & tax (335.27) (238.32)
Depreciation 0.18 -
Profit / (Loss) before tax (335.45) (238.32)
Provision for deferred tax 0.21 0.04
Profit / (Loss) after tax (335.66) (238.36)
Balance brought forward from previous year (471.00) (232.64)
Balance carried to Balance Sheet (806.66) (471.00)
II. DIVIDEND
Dividend is not declared by the Company due to accumulated losses.
III. PERFORMANCE OF THE COMPANY
During the year under review, the Company had earned an income of Rs.397 lakh by rendering project advisory services to its parent company(previous year Rs.182 lakh). The Company has reported a loss of Rs.335.66 lakh (previous year Rs 238.36 lakh) for the year. The loss is mainlyon account of interest on borrowings raised for investment in infrastructure projects.
Following are some of the projects in which investments /advances have been made during the year:
Kakinada Seaports Limited:
During the year, the Company has invested Rs.660 lakh in Kakinada Seaports Limited. This project is for the operation of the existing deepwaterport at Kakinada on operate, manage, share and transfer basis with provision for development of further facilities on BOOT basis.
Dhamra Port Limited:
The Project is for the development and operation of the existing minor port of Dhamra, in the state of Orissa under build, own, operate, share andtransfer basis for a period of 34 years (including 4 years of construction). During the year, shareholders agreement between Larsen & Toubro Ltd.and TATA Steel for 50:50 partnership has been signed for the development of the Port. The construction work is about to commence shortly.
Bangalore International Airport Limited:
Bangalore International Airport Limited (BIAL) is a special purpose vehicle promoted by a consortium comprising of Siemens AG Germany (40%),Unique Zurich Airport (17%) and Larsen & Toubro Limited (17%) for developing a new Greenfield Airport at Bangalore. The Consortium shall design,construct, maintain, and operate the facility. AAI and KSIIDC will each hold 13% equity in BIAL. The financial closure for the project is expected tobe completed shortly.
During the year under review, the Company raised long-term borrowing of Rs.8500 lakh to make further investments in areas of roads, ports andairport.
On account of the rapid development and growth in theinfrastructure sector, the Company foresees good potential for its participation in this sectorand is well poised to have a diversified portfolio of its investments in areas of roads & bridges, ports, airports, valued added infrastructure andindustrial water supply sectors.
IV. CAPITAL EXPENDITURE:
The Company has incurred capital expenditure of Rs.0.80 lakh (previous year: Rs.12.50 lakh) during the year.
V. DEPOSITS:
The Company has not accepted any deposits from the public.
VI. DISCLOSURE OF PARTICULARS:
There are no particulars to be disclosed as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
VII. 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.
VIII. 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;
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L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
ii. that the selected accounting policies were applied consistently and the directors made judgments 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, 2005 and of the loss 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; and
iv. that the annual accounts have been prepared on a going concern basis.
IX. DIRECTORS:
Mr. K. V. Rangaswami, retires from the Board of Directors by rotation and is eligible for reappointment.
X. AUDIT COMMITTEE:
The Audit Committee consists of three non-executive 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.
XI. AUDITORS:
The 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. ACKNOWLEDGEMENTS:
The Directors acknowledge the invaluable support extended to the Company by the Reserve bank of India, Financial Institutions, Bankers, BusinessAssociates and the various Government Agencies. The Directors are pleased to place on record their appreciation for the support received from theparent company and their employees.
Y. M. DEOSTHALEEK. V. RANGASWAMI DirectorsR. SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
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L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Auditors’ ReportTO THE MEMBERS OF L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (FORMERLY L&T HOLDINGS LIMITED)
We have audited the attached balance sheet of L&T Infrastructure Development Projects Limited as at March 31, 2005, the profit and loss account andthe cash flow statement for the year ended on that date annexed thereto. The financial statement is the responsibility of the Company’s management.Our responsibility is to express an opinion on the 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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:
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 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 it appears from our examination of thosebooks;
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and loss account and the cash flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
(e) on the basis of the written representations received from the Directors of the Company as on March 31, 2005, and taken on record by the Boardof Directors, we report that none of the Directors is disqualified as on March 31, 2005 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 March 31, 2005;
(ii) in the case of the profit and loss account, of the loss for the year ended on that date; and
(iii) in case of the cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
L. VAIDYANATHANPlace: Mumbai PartnerDate: April 29, 2005 Membership No.16368
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L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Annexure to the Auditors’ ReportWith reference to the Annexure referred to in paragraph 1 of the report of the Auditor’s to the Members of L&T Infrastructure Development Projects Limitedon the accounts for the year ended March 31, 2005, we report that:
(i) (a) The Company is maintaining proper records to show full particulars including quantitative details and situations of fixed assets.
(b) The management has physically verified its fixed assets during the year. No material discrepancies were noticed on such verification.
(c) None of the fixed assets of the Company has been disposed off during the year and hence do not affect going concern status.
(ii) The Company is engaged in the business of providing consultancy service in infrastructure. Hence, reporting on clauses relating to inventory 4 (ii)(a) (b) and (c) of the Companies (Auditor’s Report) Order, 2003 does not arise.
(iii) (a) According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to / fromcompanies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(b) Since the Company has not taken / granted loans, commenting on clause 4 (iii) (b), (c), (d), (e), (f) and (g) does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business for the purchase of fixed assets. In our opinion and according to the information and explanationsgiven to us there is no continuing failure to correct major weaknesses in the internal control system.
(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 registerin pursuance of Section 301 of the Companies Act, 1956. Hence reporting on clause 4 (V) (b) of the Companies (Auditor’s Report) Order, 2003does not arise.
(vi) The Company has not accepted any deposit from the public within the meaning of Sections 58A, 58AA of the Companies Act, 1956.
(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 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 Income tax, Service-tax, and any other statutory dues during the year with the appropriate authorities.
(b) According to the information and explanations given to us, there are no dues of income tax, wealth tax, service tax and cess, which has notbeen deposited with the appropriate authorities on account of any disputes.
(x) The Company is registered for a period less than five years and hence reporting on the accumulated loss and cash loss incurred for the financialyear and the immediate preceding year does not arise.
(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank or debenture holders.The Company has not availed any loans from 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 and hence commenting on clause 4(xiii), (a), (b), (c) & (d) does not arise.
(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly, provisions of clause 4 (xiv) of the Companies (Auditor’s 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 obtained term loan and has applied the same for the purpose for which they were obtained.
(xvii) The Company has raised Rs.10 crore on short term basis during the year to bridge the gap in availing long term loans for long term investments.
(xviii) The Company has not made any allotment of shares during the year under audit and hence reporting whether preferential allotments made tocompanies covered in register maintained under Section 301 of the Act does not arise.
(xix) The Company has issued debentures and securities or charges have been created where necessary.
(xx) The Company has not raised any money by public issue.
(xxi) During the course of our examination of the books and the records of the Company, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraudon or by the Company, noticed or reported during the year, nor have we been informed of such case by management.
SHARP & TANNAN
Chartered Accountants
L. VAIDYANATHANPlace: Mumbai PartnerDate: April 29, 2005 Membership No.16368
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L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital A 840,500,000 840,500,000
Loan Funds
Secured loans B - 600,000,000
Unsecured loans C 1,450,000,000 500,000,000
Deferred Tax Liability 12,178 -
TOTAL 2,290,512,178 1,940,500,000
APPLICATION OF FUNDS
Fixed Assets D 1,329,550 -
Less:Depreciation 18,050 1,311,500 - -
Capital Work-in-Progress - 1,250,000
Investments E 1,840,203,849 1,643,772,112
Deferred Tax Asset - 8,788
Current Assets, Loans and Advances F
Cash and bank balances 10,172,947 109,401
Loans and Advances 369,284,268 255,303,076
379,457,215 255,412,477
Less : Current liabilities and provisions G
Liabilities 11,126,964 7,043,831
Provisions - -
11,126,964 7,043,831
Net Current Assets 368,330,251 248,368,646Profit & Loss Account 80,666,578 47,100,454
TOTAL 2,290,512,178 1,940,500,000
Significant Accounting Policies 1Notes forming part of accounts 2
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN R. SRIDHARPartner SecretaryMembership No.16368
Place: MumbaiDate: April 29, 2005
Y.M.DEOSTHALEE
K. V. RANGASWAMI Directors
R.SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
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L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Profit and Loss Account for the year ended March 31, 20052004-05 2003-04
Schedule Rupees Rupees Rupees Rupees
INCOME
Income from Operations 39,701,000 18,242,195
Other Income H 5,563,319 3,858,520
TOTAL 45,264,319 22,100,715
EXPENDITURE
Operating Expenses I 622,240 1,322,584
Interest & Finance Charges J 78,169,188 44,610,370
Depreciation 18,050 -
TOTAL 78,809,478 45,932,954
Profit / (Loss) before taxes (33,545,159) (23,832,239)
Provision for taxes
Current Tax - -
Deferred Tax 20,966 4,393
Profit after Tax (33,566,125) (23,836,632)
Add: Balance brought forward from previous year (47,100,454) (23,263,822)
Balance carried to Balance Sheet (80,666,578) (47,100,454)
Earnings per share (Basic and Diluted) (0.40) (0.28)
Significant Accounting Policies 1
Notes forming part of Accounts 2
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN R. SRIDHARPartner SecretaryMembership No.16368
Place: MumbaiDate: April 29, 2005
Y.M.DEOSTHALEE
K. V. RANGASWAMI Directors
R.SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
S-134
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
Rs. Rs.A. Cash Flow from Operating Activities:
Net Profit / (Loss) before tax & extraordinary items (33,545,159) (23,832,239)Adjustments for :Depreciation 18,050 -Interest paid 78,169,188 44,610,370Interest received (4,652,348) (3,858,520)(Profit) / Loss on sale of investments (net) (853,971) -
Operating Profit before Working Capital changes 39,135,760 16,919,611Adjustments For :(Increase) / Decrease in loans and advances (113,981,192) 97,735,771Increase / (Decrease) in trade payables 4,083,133 (2,822,083)
Cash generated from operations (70,762,299) 111,833,299Direct taxes paid (net of refund) - -
Net Cash from operating activities (A) (70,762,299) 111,833,299
B. Cash Flow from Investing Activities:Purchase of fixed assets (79,550) (1,250,000)Purchase of investments (286,092,150) (850,463,560)Sale of investments 90,514,384 556,039,587Interest received 4,652,348 3,858,520
Net Cash (used in) / from investing activities (B) (191,004,968) (291,815,453)
C. Cash Flow from Financing Activities:Proceeds from other borrowings 350,000,000 224,620,000Interest Paid (78,169,188) (44,610,370)
Net cash (used in) / from financing activities (C) 271,830,812 180,009,630
Net increase in cash and cash equivalents (A+B+C) 10,063,546 27,476Cash and Cash equivalents as at the beginning 109,401 81,925
Cash and Cash equivalents as at the end 10,172,947 109,401
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. Cash and cash equivalents represent cash and bank balances.
3. Purchase of fixed assets includes movement of capital work in progress during the year.
4. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN R. SRIDHARPartner SecretaryMembership No.16368
Place: MumbaiDate: April 29, 2005
Y.M.DEOSTHALEE
K. V. RANGASWAMI Directors
R.SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
S-135
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees
SCHEDULE - AShare CapitalAuthorised :
17,50,00,000 Equity Shares of Rs.10/- each 1,750,000,000 1,750,000,000
Issued and Subscribed:
8,40,50,000 Equity Shares of Rs.10/- each fully paid 840,500,000 840,500,000
(The entire equity shares are held by the holding
company Larsen & Toubro Limited and its nominees)
840,500,000 840,500,000
SCHEDULE - BSecured loans
Debentures
5.35% Redeemable non convertible Debentures of
Rs.1 crore each redeemed during the year - - 600,000,000
- 600,000,000
SCHEDULE - CUnsecured loans
Debentures
8% Redeemable non convertible Debentures - Series I 300,000,000 300,000,000
7.85 % Redeemable non convertible Debentures - Series II 200,000,000 500,000,000 200,000,000 500,000,000
Other loans
From Banks - -
From Others 850,000,000 -
Inter Corporate Deposits 100,000,000 -
1,450,000,000 500,000,000
(Figures in Rupees)SCHEDULE - D
Fixed Assets Cost Depreciation Book Value
As at Additions As at Upto For the year As at As at As at01.04.2004 31.3.2005 31.03.2004 31.3.2005 31.3.2005 31.3.2004
Building - 1,329,550 1,329,550 - 18,050 18,050 1,311,500 -
Total - 1,329,550 1,329,550 - 18,050 18,050 1,311,500 -
Note : Cost of Buildings represents ownership accommodation in a co-operative soceity including 5 shares of Rs. 50 each. Share Certificates are yet tobe transferred in favour of the Company.
S-136
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSCHEDULE - EInvestmentsLong Term Investments (At Cost)Trade investments - UnquotedFully paid equity shares :
L&T Transportation Infrastructure Limited 407,751,014 407,751,014(20,286,000 equity shares of Rs.10/- each )
Narmada Infrastructure Construction Enterprise Limited 248,402,835 248,402,835(1,37,31,500 equity shares of Rs.10/- each)
Bangalore International Airport Limited 650,000 650,000(65,000 equity shares of Rs.10/- each)
Ahmedabad Mehsana Toll Road Company Limited 214,300,000 214,300,000(2,14,30,000 equity shares of Rs.10/- each)
International Seaports Haldia (Private) Limited 98,300,000 98,300,000(98,30,000 equity shares of Rs.10/- each)
GVK Jaipur Kishengarh Expressway Ltd. 341,200,000 214,000,000(3,41,20,000 equity shares of Rs.10/- each of which1,27,20,000 equity shares acquired during the year)
Second Vivekananda Bridge Tollway Company Ltd. 323,500,000 323,500,000(3,23,50,000 equity shares of Rs.10/- each)
Kakinada Seaports Limited(66,00,000 equity shares of Rs.10 each 66,000,000 -acquired during the year)
Vishakhapatnam Industrial Water Supply Company Ltd. 135,000,000 42,107,850(1,35,00,000 equity shares of Rs.10/- each of which92,89,215 shares purchased during the year) 1,835,103,849 1,549,011,699
Subsidiary companyCyberpark Development & Construction Limited
(5,10,000 equity shares of Rs.10/- each) 5,100,000 5,100,000Others - Mutual Fund
JM Floater Fund - Short Term plan - Growth Option - 89,660,4138647545 units of Rs.10/- each redeemed during the year
- 89,660,413As at 31.03.05 As at 31.03.04
Quoted investmentsBook value - 89,660,413Market value - 89,832,428Unquoted invetmentsBook value 1,840,203,849 1,554,111,699
1,840,203,849 1,643,772,112
SCHEDULE - FCurrent Assets, Loans and AdvancesCash and bank balances
Balances with scheduled bank on current account 10,172,947 109,401Loans & Advances:
Unsecured considered good:Holding company 150,302 11,029,945Subsidiary Companies:
Loans (including interest accrued thereon) 52,485,329 48,194,340Others - 500,000
Advances towards equity commitmentAssociate Companies 147,800,000 172,864,000
Inter Corporate DepositsHolding Company (Refer Note No.5 in Schedule 2) 31,00,000 -Others 10,00,000 -Advances recoverable in cash or in kind 164,748,637 22,714,791
369,284,268 255,303,076
379,457,215 255,412,477
S-137
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSCHEDULE - G
Current Liabilities and Provisions:
Liabilities
Sundry Creditors
- Small scale industries - -
- Others 9,699,019 5,615,886
- Interest accrued but not due 1,427,945 11,126,964 1,427,945 7,043,831
Provisions - -
11,126,964 7,043,831
2004-05 2003-04Rupees Rupees
SCHEDULE - H
Other Income
Interest Income 4,652,348 3,858,520
(tax deducted at source - Rs.9,72,681 - Previous year - Rs.7,94,219)
Profit on Sale of Investments 853,971 -
Other Income 57,000 -
5,563,319 3,858,520
SCHEDULE - I
Operating Expenses
Rates & Taxes 5,966 33,486
Professional Fees 491,235 216,000
Service & Agency Fee - 956,678
Miscellaneous Expenses 125,039 116,420
622,240 1,322,584
SCHEDULE - J
Interest & Finance Charges
Interest on fixed loans 71,340,199 41,127,945
Interest - others 6,828,989 3,403,422
Finance charges - 79,003
78,169,188 44,610,370
S-138
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Schedules forming part of accountsSchedule 1
Significant Accounting Policies:
a. Basis of Accounting
The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accountingprinciples (“GAAP”) except for the revaluation of certain fixed assets , and in compliance with the Accounting Standards referred to in Section211 (3C) and other requirements of the Companies Act, 1956. However certain escalation and other claims , which are not ascertainable /acknowledged by customers , are not taken into account
The preparation of financial statements in conformity with GAAP requires that the management of the company makes estimates and assumptionsthat affect the reported amounts of income and expenses of the period , the reported balances of assets and liabilities and the disclosures relatingto contingent liabilities as of the date of the financial statements. Examples of such estimates include useful lives of fixed assets and intangibleassets, provision for doubtful debts / advances , future obligations inrespect of retirement benefit plans etc. Actual results could differ from theseestimates.
b. Revenue Recognition:
Consultancy / Advisory fee for Project Development is accounted based on agreement with customers.
c. Fixed Assets
Fixed Assets are recorded at cost. The carrying amounts are reviewed at balance sheet date to assess whether they are recorded in excess oftheir recoverable amount. Where carrying values exceed this recoverable amount assets are written down to their recoverable amount.
d Depreciation
Depreciation on asset has been provided on straight line basis at the rates and in the manner specified in the schedule XIV of the CompaniesAct 1956
Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods so as to allocate the assets revisedcarrying amount over its remaining useful life.
e. Investments
Long 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
f. Leases
(i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases.Such assets are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments anda liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost , so as to obtaina constant 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.
g. Taxes on income
Taxes on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisionsof 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 date.Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
Schedule – 2
Notes forming part of Accounts
1. The Company had no transactions during the year with any small scale industrial undertaking and hence reporting details on outstandingexceeding 30 days and interest on over due outstanding does not arise.
2. The Company is a service company and accordingly information required under paragraph 4(C) of Part II of Schedule VI of the Companies Act,1956 has not been furnished.
3. Unsecured loan includes
a. Loan of Rs 85 crores from a body corporate , repayable after five years against corporate guarantee to be issued by the holding company,Larsen & Toubro Limited.
S-139
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
b. 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 issuedon 31.3.03) 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 31.3.03) are redeemable at par on 31.03.06 or on exercise of a conditional put option by the subscriber.
4. Since the above debentures are privately placed, creation of Debenture Redemption Reserve does not arise.
5. The Company has given inter-corporate deposit to M/s. Larsen & Toubro Limited, the holding company, during the year. Maximum amountoutstanding at any time during the year was Rs.31 Lacs (Previous year NIL)
6. a. The Company had pledged its investment in the equity shares of Second Vivekananda Bridge Tollway Company Private Limited (SVBTC)of Rs.32.35 Crores to the Senior Lenders as security for the Term Loans sanctioned by them to SVBTC, an associate company.
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 the theSVBTC . However, no investment has been made as at March 31, 2005
c. The Company has given the following undertakings jointly with Pacific Alliance Stradec Group Infrastructure Company LLC and SVBTC tothe term 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.
7. The Company has pledged its investment in the equity shares of GVK Jaipur Kishengarh Expressway Limited of Rs.21.40 crore to the SeniorLenders as security for the Term Loans sanctioned by them to GVK Jaipur Kishengarh Expressway Ltd., an associate company
8. 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:
i. not to reduce their joint shareholding in LTTIL & NICE below 51% until the financial assistance received from the term lenders is repaid infull by LTTIL & NICE and
ii. to jointly meet the shortfall in the Working Capital requirements of LTTIL & NICE until the financial assistance received from the term lendersis repaid in full by LTTIL & NICE.
9. Auditor’s Remuneration:
2004-05 2003-04
Audit fees Rs.77140 Rs.50,000
Certification Rs.45870 Rs.4,320
Tax Audit Fee Rs.8265 Rs.8,100
Reimbursement of expenses - Rs.1,305
10. Deferred Tax
Taxes on income have been accounted for in accordance with the provisions of Accounting Standard 22, as per the details given below:(Rupees)
As at 31.3.05 As at 31.3.04
Deferred Tax Asset
Preliminary Expenses 4122 8,788
Less Deferred Tax Liabilities (DTL)
Difference between carrying amount of fixed
Assets in books and WDV for income tax
Purposes. 16,300 Nil
Net Deferred Tax Asset (12,178) 8,788
Deferred tax liability provided 20,966 4,393
Deferred Tax Assets of Rs 1,13,42,235 on carried forward unabsorbed loss is not considered on prudent basis.
11. Segmental reporting: The company is engaged in developing and investing in Infrastructure projects and hence falling under single segment.
Schedules forming part of accounts
S-140
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
12. Related Party Disclosure:
A. List of related parties.
Holding Company : Larsen & Toubro Limited
Subsidiary Company : Cyber Park Development & Construction Limited
Fellow subsidiaries : Tractors Engineers LimitedL&T Finance LimitedL&T Capital Company LimitedL&T-Sargent & Lundy LimitedLarsen & Toubro Infotech LimitedLarsen & Toubro Infotech GmbHL&T Transportation Infrastructure LimitedHPL Cogeneration LimitedL&T Western India Tollbridge LimitedIndia Infrasructure Developers LimitedLarsen & Toubro LLCLarsen & Toubro International FZEL&T Infocity LimitedHyderabad International Trade Expositions LimitedAndra Pradesh Expositions Private LimitedL&T-ECC Construction (M) SDN.BHDBhilai Power Supply Company LimitedLarsen & Toubro (Oman) LLCL&T Power Investments Private LimitedNarmada Infrastructure Construction Enterprise limitedRaykal Aluminium Company Private Limited
Associates : Ahmedabad Mehasana Toll Road Company LimitedInternational Seaports Haldia (Private) LimitedGVK Jaipur Kishengarh Expressway LimitedSecond Vivekanada Bridge Tollway Company Private LimitedVisakapatnam Industrial Water Supply Company LimitedKakinada Seaports Limited
B. Details as to the transactions:Amount in Rs.
Transaction Holding Subsidiary Fellow subsidiariescompany Company
(L&T) (Cyberpark) NICE LTTIL WIT DHAMRA
Purchase of fixed asset 12,50,000Project development fees received(including service tax of Rs.40,49,502) 4,37,50,502ICD due from 31,00,000 10,00,000ICD due to 10,00,00,000Interest paid on ICD 9,56,314 51,40,647 7,09,973 2,877Interest payable on ICD 19,178Interest on ICD receivable 595 2,877Rent received 57,000Interest Accrued 42,90,989
C. Amount due to and due from related parties:Accounts payableL&T Ltd – Holding company - Rs.1,50,302Accounts receivableDue from fellow subsidiary Rs. 7,13,244Loans & AdvancesDue from subsidiary Cyber Park Rs 5,24,85,329No amount due to or due from has been written off or written back during the year.
13. Impairment of Assets
The Company has reviewed the cash flow from its assets based on net sellisng price and satisfied that there is no impairment loss required tobe provided for the year.
14. Figures for the previous year have been regrouped / re-classified where necessary.
Schedules forming part of accounts
S-141
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Schedules forming part of accounts15. Balance Sheet Abstract and Company’s General Business Profile
I Registration Details
Registration No. U65993TN2001PLC46691 State Code 1 8
Balance Sheet Date 3 1 0 3 2 0 0 5
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 Rs.Thousands)
Total Liabilities Total assets
2 2 9 0 5 1 2 2 2 9 0 5 1 2
Sources of Funds Paid-Up Capital Reserves & Surplus
8 4 0 5 0 0 N I L
Secured Loans Unsecured Loans
N I L 1 4 5 0 0 0 0
Deferred Tax Asset / (Liability)
- 1 2
Application of Funds Net Fixed Assets Investments
1 3 1 2 1 8 4 0 2 0 4
Net Current Assets Misc. Expenditure
3 6 8 3 3 0 N I L
Accumulated Losses
8 0 6 6 6
IV Performance of Company (Amount in Rs. Thousands)
Turnover (including other income) Total Expenditure
4 5 2 6 4 7 8 8 0 9
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
✔ 3 3 5 4 5 ✔ 3 3 5 6 6
(Please Tick Appropriate box + for Profit, - for Loss)
+ - Earning Per Share in Rs. Dividend rate %
✔ 0 . 4 0 - -V Generic Names of Three Principles Products / Services of Company
(as per monetary terms)Item code N A(ITC Code)Product Infrastructure Projects DevelopmentDescription
As per our report attached
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN R. SRIDHARPartner SecretaryMembership No.16368
Place: MumbaiDate: April 29, 2005
Y.M.DEOSTHALEE
K. V. RANGASWAMI Directors
R.SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
S-142
L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LIMITED (Formerly L&T Holdings Limited)
Statement pursuant to Section 212 of the Companies Act, 1956, relating tosubsidiary companiesName of the subsidiary company: Cyberpark Development & Construction Limited
Financial year of the subsidiary company ended on March 31, 2005
Number of Shares in the subsidiary company held by L&T Infrastructure Development Projects Limited
at the above date - Equity shares 510000
- Preference shares
The net aggregate of profits, less losses, of the subsidiary company so far as it concerns the membersof L&T Infrastructure Development Projects Limited:
Rs. crore
(i) Dealt with in the accounts of L&T Infrastructure Development Projects Limited amounted to :
(a) for the subsidiary’s financial year ended March 31, 2005 0.00
(b) for previous financial years of the subsidiary since it became subsidiary ofL&T Infrastructure Development Projects Limited 0.00
(ii) Not dealt with in the accounts of L&T Infrastructure Development Projects Limited amounted to:
(a) for the subsidiary’s financial year ended March 31, 2005 (0.17)
(b) for previous financial years of the subsidiary since it became subsidiary ofL&T Infrastructure Development Projects Limited (0.06)
Changes in the interest of L&T Infrastructure Development Projects Limited between the endof the subsidiary’s financial year and March 31, 2005
Number of shares acquired NA
Material changes between the end of the subsidiary’s financial year and March 31, 2005
(i) Fixed assets (net additions) NA
(ii) Investments (Fixed deposit with scheduled bank) NA
(iii) Moneys lent by the subsidiary NA
(iv) Moneys borrowed by the subsidiary company other than for meeting current liabilities NA
R. SRIDHARSecretary
Y.M.DEOSTHALEE
K. V. RANGASWAMI Directors
R.SHANKAR RAMAN
Place: MumbaiDate: April 29, 2005
}
S-143
L&T INFOCITY LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Annual Report and Audited Accounts for the year ended March 31, 2005.
FINANCIAL RESULTS
2004 – 2005 2003 – 2004Rs. Lakh Rs. Lakh
Profit before depreciation 1536.96 4191.38
Depreciation 337.33 387.16
Profit before Tax 1199.63 3804.22
Provision for Current Tax and Deferred Tax 9.66 148.15
Profit after Tax 1189.97 3656.08
Add: Balance brought forward from previous years 4616.28 2174.80
Balance available for disposal which the directors appropriate as follows: 5806.25 5830.87
Bonus Shares - 900.00
Dividend 324.00 270.00
Dividend Tax 45.44 34.59
Transfer to General Reserve 30.00 10.00
Balance to be carried forward 5406.81 4616.28
DIVIDEND
The Directors recommend payment of dividend of Rs.1.20 per share of Rs.10/- each on 2,70,00,000 shares.
PERFORMANCE OF THE COMPANY
The year 2004-2005 saw the Company making headway with implementation of various projects after successful development and marketing of 13 Lac sq. ft.of office space in Cyber Towers and Cyber Gateway. During the year under review, apart from implementing the first international project - a built-to-suitcampus for HSBC Lanka in Colombo, through a subsidiary L&T Infocity Lanka Private Ltd. (while rendering project management services) the Companycommenced development of a ‘Built-to-Suit’ campus of 4.3 Lac sq. ft. for HSBC in HITEC City, Hyderabad, which shall be completed by October 2005 andleased out for a period of 9 years. The Company has commenced ground works for development of a Mega Residential project in Hyderabad on 31.29 acresof land, near HITEC City and entered into a Development Agreement for the same. The Company incorporated ‘L&T Infocity Infrastructure Limited’ a 51%subsidiary, to undertake development of an IT Park of 1.8 Lac sq. ft. for HSBC in Salt Lake, Kolkata. The Company with its experience and expertise gainedin building management services has undertaken these services beyond HITEC City. During the year 2004-05, the Company was awarded the Operation &Maintenance Services contract for Delhi Metro Rail Corporation (DMRC) IT Park, New Delhi.
PROSPECTS FOR 2005-2006
The Company has marketed development of 2 independent Built-to-Suit (BTS) campuses to prestigious MNC’s namely Motorola (1.75 Lac Sq.ft) andDeloitte Consulting (2 Lac Sq.ft) in HITEC City, Hyderabad. The BTS facilities shall be leased out to these customers for a term of over 9 years. Apart fromthis, the Company shall be engaged in the development of 10 Lac sq. ft. constituting Phase I of the Mega Residential project. Construction of 10 Lakh sq. ft.in Phase I of the project consisting of 500 flats shall commence during 2005-06. Besides providing O&M services to Phase I of the DMRC IT Park, theCompany shall render Consultancy services for design and architecture for Phase II of the DMRC IT Park. The Company is exploring new avenues ofdevelopment by possible tie-ups at various destinations, such as development of Infopark at Kochi through L&T Infocity Infrastructure Ltd. (a 51% subsidiaryof the Company) by further investment into L&T Infocity Infrastructure Ltd., creation of land Bank through tie-ups, which shall spin out future developmentsat various other attractive locations.
FINANCE
During the year, the Company raised funds aggregating to Rs.16.89 Crore from Banks and repaid term loans to the extent of Rs.4.99 Crore out of amountsgenerated from operations.
CAPITAL EXPENDITURE
As at March 31, 2005 the gross fixed assets stood at Rs.110 Crore and the net fixed assets at Rs.97.71 Crore Additions of fixed assets during the yearamounted to Rs.7.70 Crore and Capital work in progress of Rs.39.04 Crore.
DEPOSITS
During the period under review the Company has not accepted any deposits from the public.
SUBSIDIARY COMPANIESDuring the year under review the Company incorporated L&T Infocity Infrastructure Limited on October 25, 2004. The Company subscribed to 43,50,000equity shares (51%) of Rs.10/- each in L&T Infocity Infrastructure Limted. Further the Company subscribed to 91,00,000 shares of Sri Lankan Rupees 10/- in L&T Infocity Lanka Private Limited, making it a 52% 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 of thesubsidiary companies are annexed.
S-144
L&T INFOCITY LIMITED
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 per theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
PERSONNEL
There are no employees covered by the provisions of the 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 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 soas to give a true and fair view of the state of affairs of the Company as at March 31, 2005 and of the profits 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; and
iv) that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Dr.A.Ramakrishna resigned from the Board of Directors of the Company on March 23, 2005.
In terms of Section 256 of the Companies Act 1956, Mr.K.V.Rangaswami and Mr.L.V.Subrahmanyam retire by rotation and being eligible, offer themselvesfor reappointment.
FOREIGN EXCHANGE EARNINGS AND OUTGO
2004-2005 2003-2004Rs. Rs.
Foreign exchange earnings 95,79,784 Nil
Foreign exchange used
Travel 6,05,957 4,45,771
Consultancy - 1,00,458
Others - 6,05,957 8,248 5,54,477
AUDIT COMMITTEE
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. The Committee metperiodically during the year and had discussions with the auditors on internal control systems and internal audit report and given its report and recommendationsto 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 Section 224(1B)of the Companies Act, 1956.
ACKNOWLEDGEMENT
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Vendors, Suppliers and Customers. TheDirectors 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
K. VENKATESH L. V. SUBRAHMANYAMDirectors
Place : HyderabadDate : April 19, 2005
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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 March 31, 2005, the profit and loss account and the cash flowstatement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform 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 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 Companies 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 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 account and the cash flow statement dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet, profit and loss account and the cash flow statement dealt with by this report comply with the accounting standardsreferred 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 March 31, 2005, and taken on record by the Board ofDirectors, we report that no director is disqualified as on March 31, 2005 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 by theCompanies 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 March 31, 2005;
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 the cash flow statement, of the cash flows for the year ended on that date. SHARP & TANNAN
Chartered Accountants
Place: Hyderabad L. VAIDYANATHANDate: April 19, 2005 Partner
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 for the yearended March 31, 2005, 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) Fixed assets disposed off during the year, though material, has not affected 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 size of theCompany 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 no companies, firms or other parties of the nature required to be coveredin the Register maintained under Section 301 of the Companies Act, 1956.
(b) Since the Company has not taken / granted loans, commenting on clause (b), (c), (d), (e), (f) and (g) does not arise.
(Iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the sizeof the Company and nature of its business for the purchase of inventory and fixed assets and there are no sale of goods. In our opinion, and accordingto the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.
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(v) The Company has maintained the Register u/s 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 Section 58AAof the Companies Act, 1956 and rules framed thereunder 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.
(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 has beengenerally regular in depositing undisputed statutory dues including Provident Fund, Income-tax, Wealth Tax, Custom Duty, Cess and any otherdues during the year with the appropriate authorities. As at March 31, 2005, there are no undisputed 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 amounts in respect of income tax / customs duty / wealth tax / cess thathave not been deposited with the appropriate authorities on account of any dispute.
(x) The Company has no accumulated losses and has not incurred cash loss during the year and the immediate previous year and hence commenting onthis 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 banks and financial institutions.
(xvi) The Company has obtained term loans and the same has been applied for the purpose for which it was obtained.
(xvii) According to the information and explanations given to us, the Company has not raised any funds on short-term during the year. However, long termloan raised during the year has been utilised for the purpose for which it was raised.
(xviii)The Company is a closely held limited company and hence commenting on the preferential allotment does not arise.
(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) During the course of Audit of the books of accounts and other records of the Company carried out in accordance with the generally accepted auditingpractices in India, we have not come across any instance of fraud on or by the Company, noticed or reported during the year nor have we beeninformed of such cases by the Management.
SHARP & TANNANChartered Accountants
Place : Hyderabad L. VAIDYANATHANDate : April 19, 2005 Partner
Membership No.16368
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Balance Sheet as at March 31, 2005Sch. AS AT 31.3.2005 AS AT 31.03.2004No Rs. Rs
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS :
Share Capital 1 270,000,000 270,000,000
Reserves & Surplus 2 674,902,528 553,449,196
LOAN FUNDS
Secured Loans 3 607,089,739 551,914,403
DEFERRED TAX LIABILITY 8,206,391 17,959,489
TOTAL 1,560,198,658 1,393,323,089
APPLICATION OF FUNDS
FIXED ASSETS 4
GROSS BLOCK 1,100,065,530 1,137,392,340
Less: Depreciation 122,953,951 94,995,961
NET BLOCK 977,111,579 1,042,396,379
Capital Work in Progress 390,437,992 -
1,367,549,571 1,042,396,379
INVESTMENTS 5 343,555,203 164,549,980
CURRENT ASSETS, LOANS & ADVANCES 6
CURRENT ASSETS
a) Inventories 34,280,184 4,157,388
b) Cash and Bank Balances 77,555,641 40,444,436
Loans and Advances 256,196,598 356,808,973
368,032,423 401,410,797
Less: CURRENT LIABILITIES & PROVISIONS 7
a) Current Liabilities 470,774,020 153,319,808
b) Provisions 48,164,519 61,714,259
518,938,539 215,034,067
NET CURRENT ASSETS (150,906,116) 186,376,730
TOTAL 1,560,198,658 1,393,323,089
SIGNIFICANT ACCOUNTING POLICIES 14
NOTES ON ACCOUNTS 15
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L .Vaidyanathan U.Ramakrishna K.Venkatesh L.V.SubrahmanyamPartner Company Secretary DirectorsMembership No.16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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Profit & Loss Account for the year ended March 31, 2005Sch. 2004 - 2005 2003-2004No. Rs. Rs.
INCOME
Sales, Service & Lease rentals 8 245,179,606 615,591,934
Other Income 9 58,833,491 218,960,790
TOTAL 304,013,097 834,552,724
EXPENDITURE
Cost of Sale of Space sold 10 — 226,853,346
Staff Expenses 11 8,343,970 5,713,027
Sales, Administration and Other Expenses 12 72,815,658 80,430,657
Interest & Brokerage 13 41,503,505 97,006,358
Depreciation 33,732,857 38,715,670
Preliminary Expenses written off — 865,945
Provision for doubtful advances — 4,545,492
Bad debts written off 27,654,071 —
TOTAL 184,050,061 454,130,495
Profit / (Loss) for the Year 119,963,036 380,422,229
Provision for Taxes:
Current Tax 10,718,702 30,446,673
Deferred Tax (9,753,098) (15,632,054)
Profit after Tax 118,997,432 365,607,610
Balance brought forward (Profit / (Loss)) 461,628,047 217,479,812
Profit available for appropriation 580,625,479 583,087,422
Appropriation
Bonus Shares — 90,000,000
Proposed Dividend 32,400,000 27,000,000
Tax on dividend 4,544,100 3,459,375
Transfer to General Reserve 3,000,000 1,000,000
Balance Carried to Balance Sheet 540,681,379 461,628,047
Earning per Share - Basic & Diluted 4.41 13.54
SIGNIFICANT ACCOUNTING POLICIES 14
NOTES ON ACCOUNTS 15
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN U. RAMAKRISHNA K. VENKATESH L. V. SUBRAHMANYAMPartner Company Secretary DirectorsMembership No.16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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Cash Flow Statement for the year ended March 31, 20052004-2005 2003-2004
Rs. Lakh Rs. Lakh
A. Cash Flow from Operating ActivitiesNet Profit Before Tax 1,199.63 3,804.22Adjustments for:Dividend Received (23.40) —Depreciation (including obsolescence) and amortisation 337.33 387.16Unrealised foreign exchange difference - net (gain/loss) —Interest (net) 415.04 970.06(Profit)/Loss on sale of fixed assets (net) (346.41) (2,162.11)(Profit)/Loss on sale of Investments (net) (31.60) (21.34)Provision for Leave Encashment & Gratuity 0.46 2.91Operating Profit before Working Capital Changes 1,551.05 2,980.90Adjustiments for:(Increase)/Decrease in Loans & Advances 1,006.12 56.10(Increase)/Decrease in Inventories (301.23) 2,807.57(Increase)/Decrease in Miscellaneous Expenditure — 8.66Increase/(Decrease) in Trade Payables 3,174.54 (794.31)Cash generated from OperationsDirect Taxes refund/(paid) (net) (304.48) (73.91)Net Cash From Operating Activities 5,126.00 4,985.01
B. Cash Flow from Investing Activities:Purchase of Fixed Assets (4,280.08) (951.01)Sale of Fixed Assets (including monies received as advance) 1,431.63 7,268.59Purchase of Investments (2,708.73) (1,000.00)Sales of Investments 2,358.73 —Loans/Deposits made with Subsidiaries/Associates (net) (1,440.05) —Advance towards Equity Commitment — (1,203.47)Interest Received 46.52 35.30Dividend Received from Subsidiaries 23.40 —Dividend Received from other Investments 31.60 21.34Net Cash used in/from Investing Activities (4,536.98) 4,170.75
C. Cash Flow from Financing ActivitiesProceeds from issue of Share Capital — —Proceeds from Long Term Borrowings 1,689.13 510.00Repayment of Long Term Borrowings (1,137.37) (8,638.10)Repayments/Proceeds from other Borrowings (net) — —Gratuity paid (3.52) —Dividends Paid (270.00) —Additional Tax on Dividend (34.59) —Interest Paid (461.55) (1,005.37)Net Cash used in/from Financing Activities (217.90) (9,133.47)Net Decrease/Increase in cash and Cash Equivalents (A+B+C) 371.12 22.29Cash and Cash Equivalents at the beginning of the year 404.44 382.15Less: Transfers, if any — —Cash and Cash Equivalents at the end of the year 775.56 404.44
Notes:1 Cash flow statement has been prepared under the indirect method as set out in the Accounting
Standard (AS 3):”Cash Flow Statements” issued by the Institute of Chartered Accountants of India.2 Purchase of Fixed Assets includes movement of Capital Work-in-Progress during the year.3 Cash and Cash equivalents represent cash and bank balances.
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L .Vaidyanathan U.Ramakrishna K.Venkatesh L.V.SubrahmanyamPartner Company Secretary DirectorsMembership No.16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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Schedules forming part of accountsAS AT AS AT
31.03.2005 31.03.2004Rs. Rs.
SCHEDULE - 1SHARE CAPITALAUTHORISED:
6,00,00,000 Equity Shares of Rs.10 each 600,000,000 600,000,000
ISSUED, SUBSCRIBED AND PAID UP:2,70,00,000 Equity Shares of Rs.10 each 270,000,000 270,000,000
Out of the above1) 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/- each have been issued as Bonus shares.
AS AT AS AT31.03.2005 31.03.2004
Rs. Rs. Rs. Rs.
SCHEDULE - 2RESERVES AND SURPLUSCAPITAL RESERVE 39,400,000 —
(Refer note 16 of Schedule 15)GENERAL RESERVE
As per last Balance Sheet 91,821,149 90,821,149Add: Transfer from Profit & Loss Account 3,000,000 94,821,149 1,000,000 91,821,149
PROFIT & LOSS ACCOUNT 540,681,379 461,628,047
TOTAL 674,902,528 553,449,196
SCHEDULE - 3SECURED LOANSTerm Loan fromHDFC Limited 382,993,972 439,795,290Union Bank of India — 29,992,602Andhra Bank 144,662,950 82,126,511(Including Interest accrued thereon Rs.929,850/-Previous year Rs.622,376/-)State Bank of Indore 79,432,817 —(Including Interest accrued thereon Rs.432,817/-)
TOTAL 607,089,739 551,914,403
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 8.65 acresand 6 acres, situated at Madhapur Village Serlingampally Mandal Ranga Reddy District, Andhra Pradesh, with construction present there on and future, tothe extent owned by the Company.
Term Loan of Rs.144,662,950/- from Andhra Bank includes Rs.5,51,81,578/- secured by a second charge on 39,370 sft of space given on lease to variouscustomers in Cyber Towers including lease rentals and Rs.8,94,81,372/- secured by parri-passu charge by way of equitable mortgage on 7.88 acres of landsituated in Plot No.3, 4 and 8, Hitec City Layout, Madhapur Village, Serilingampally Mandal, Ranga Reddy District, Andhra Pradesh with constructionpresent there on and future.
Term Loan from State Bank of Indore is secured by pari passu charge by way of equitable mortgage on 7.88 acres of land situated in Plot no: 3, 4 & 8,HITEC CIty layout, Madhapur Village, Serlingampally Mandal, Ranga Reddy District, Andhra Pradesh, together with construction of building present andfuture thereon.
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SCHEDULE - 4FIXED ASSETS
GROSS BLOCK DEPRECIATION NET BLOCKRs. Rs. Rs.
AS AT ADDITIONS DISPOSALS AS AT AS AT FOR ON AS AT AS AT AS ATFIXED ASSETS 1.04.2004 DURING DURING 31.03.2005 1.04.2004 THE YEAR DISPOSALS 31.03.2005 31.03.2005 31.03.2004
THE YEAR THE YEAR
Owned Assets:Free Hold Land 32,685,513 74,433,950 5,526,016 101,593,447 — — — — 101,593,447 32,685,512Buildings 14,390,102 — — 14,390,102 1,146,368 234,559 — 1,380,927 13,009,175 13,243,734Computers 1,457,715 727,431 146,000 2,039,146 774,769 243,800 146,000 872,569 1,166,577 682,946Furnitures & Fixtures 7,016,550 910,982 — 7,927,532 2,027,666 470,399 — 2,498,065 5,429,467 4,988,884Plant & Machinery 133,237,467 — — 133,237,467 15,693,256 6,328,780 — 22,022,036 111,215,431 117,544,211Electrical Items 352,801,410 780,330 — 353,581,740 50,862,407 16,787,665 — 67,650,072 285,931,668 301,939,004Office Equipment 2,767,285 117,490 — 2,884,775 841,345 196,740 — 1,038,085 1,846,690 1,925,940Vehicles 206,045 — — 206,045 45,945 19,521 — 65,466 140,579 160,100Leased Assets:Buildings 592,830,253 — 108,624,977 484,205,276 23,604,205 9,451,393 5,628,867 27,426,731 456,778,545 569,226,048
TOTAL 1,137,392,340 76,970,183 114,296,993 1,100,065,530 94,995,961 33,732,857 5,774,867 122,953,951 977,111,579 1,042,396,378
Previous year 1,572,625,055 95,101,242 530,333,958 1,137,392,340 75,966,101 38,715,670 19,685,810 94,995,961 1,042,396,378 1,496,658,954
Capital Work inProgress 390,437,992 —
Schedules forming part of accounts
SCHEDULE - 5INVESTMENTS
AS AT AS AT31.03.2005 31.03.2004
Rs. Rs.
Long Term Investments : (At cost)UnquotedA) Hyderabad International Trade Expositions Limited
(49,998 Shares of Rs. 10/- each fully paid up) 499,980 499,980B) L&T Infocity - Ascendas Limited
(1) 25,000 Shares of Rs. 10/- each fully paid up 250,000 250,000(2) 9,88,000 Redeemable Cumulative Preference 98,800,000 63,800,000
Shares of Rs.100/- each, out of which 350,000 weresubscribed during the year
C) Vizag IT Park Ltd 23,400,000 —23,40,000 Shares of Rs. 10/- each fully paid up,subscribed during the year
D) L&T Infocity Lanka Pvt. Ltd 42,255,223 —91,00,000 Shares of Sri Lankan Rupees 10/- each fully paid up, subscribed during the year
D) L&T Infocity Infrastructure Ltd 43,350,000 —43,35,000 Shares of Rupees 10/- each fully paid up, subscribed during the year
Current Investments - At costQuotedMutual Funds:
Alliance Cash Manager-Growth — 100,000,000(6437359.28 units of face value Rs. 10.00 each sold during the year)HDFC Cash Management Fund - Savings Plan Growth 50,000,000 —(3655195.62 units of face value Rs. 10.00 each purchased during the year)Principal Cash Management Fund-Liquid Option Growth 5,000,000 —(391828.035 units of face value of Rs. 10.00 each purchased during the year)
HDFC Cash Management Fund - Savings Plus Plan Growth 80,000,000 —(5573359.34 units of face value Rs. 10.00 each purchased during the year)
TOTAL INVESTMENT 343,555,203 164,549,980
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Schedules forming part of accounts
Details of Investments in Mutual Funds No. of Units Purchase No. of Units Sale Balance Nopurchased and sold during the year Purchased Amount Sold Amount of Units
Rs. Rs.Alliance Cash Manager-Growth — — 6,437,359.28 100,873,420 —HDFC Cash Management Fund 1,510,749.82 20,000,000 1,510,749.82 20,163,676 —HDFC Cash Management Fund- Savings Plan-Growth 5,823,404.39 80,163,676 2,168,208.77 30,324,436 3,655,195.62Alliance Cash Manager- Institutional Plan Growth 10,496,007.37 110,873,420 10,496,007.37 112,341,297 —ING Vysya Floating Rate Fund 4,986,679.41 50,000,000 4,986,679.41 50,588,865 —DSPML Floating Rate Fund-Growth 2,785,373.10 30,000,000 2,785,373.10 30,263,914 —Principal Cash Management Fund-LO Growth 391,828.04 5,000,000 — — 391,828.04Principal Cash Management Fund-IP LO Growth 1,377,397.82 15,000,000 1,377,397.82 15,082,093 —HDFC Cash Management Fund - Savings Plus Plan 5,573,359.34 80,000,000 — — 5,573,359.34
TOTAL 32,944,799 391,037,096 29,761,776 359,637,702
SCHEDULE - 6CURRENT ASSETS, LOANS & ADVANCES
AS AT AS AT31.03.2005 31.03.2004
Rs. Rs. Rs. Rs.INVENTORIES(At lower of cost or net realisablevalue as certified by a Director)Completed Property 918,302 918,303Work In Progress 33,361,882 3,239,086
34,280,184 4,157,388CASH AND BANK BALANCES
Cash on hand - -Bank Balances with scheduled Banks
on current accounts 38,776,649 10,031,820on fixed deposits (including interest 38,778,992 77,555,641 30,412,616 40,444,436accrued thereon Rs. 4,20,522/-Previous Year Rs. Rs.3,61,896/-) 77,555,641 40,444,436
LOANS AND ADVANCESAdvances recoverable in cash or in kind 256,196,598 356,808,973or for value to be received.(Unsecured considered good)Advances considered Doubtful - 17,179,692Less: Provision for doubtful advances - - 17,179,692 -
256,196,598 356,808,973
TOTAL 368,032,423 401,410,797
-SCHEDULE -7CURRENT LIABILITIES & PROVISIONSA) CURRENT LIABILITIES
a) Sundry Creditors 253,915,863 58,503,256b) Advances from Customers 89,418,157 94,816,552c) Security deposit from a customer 127,440,000 -
(Refer note 17 of Schedule 15)470,774,020 153,319,808
B) PROVISIONSa) Taxation 10,718,702 30,446,673b) Proposed Dividend 32,400,000 27,000,000c) Tax on Dividend 4,544,100 3,459,375d) Leave encashment 501,717 455,571e) Gratuity - 352,640
48,164,519 61,714,259
TOTAL 518,938,539 215,034,067
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Schedules forming part of accounts2004-2005 2003-2004
Rs. Rs.
SCHEDULE - 8SALES, SERVICE AND LEASE RENTALS
Sales - 300,274,508
Lease Rentals(Tax Deducted at Source Rs. 84,20,603; Previous Year Rs. 1,72,18,616) 129,436,746 214,761,197
Maintenance Recovery(Tax Deducted at Source Rs.4,28,808; Previous Year Rs. 9,13,978) 71,373,286 57,469,047
Parking Charges(Tax Deducted at Source Rs.12,06,786; Previous Year Rs. 7,97,025) 16,738,563 8,317,675
Consultancy Income(Tax Deducted at Source Rs.6,05,955; Previous Year Rs. 2,82,072) 27,631,011 34,769,507
TOTAL 245,179,606 615,591,934
SCHEDULE - 9
OTHER INCOME
Miscellaneous Income(Tax Deducted at Source Rs.74,884; Previous Year Rs. 26,624) 1,513,332 615,597
Provision for Doubtful Debts written back 17,179,692 -
Income from Mutual Funds 3,159,777 2,134,274
Dividend Income 2,340,000 -
Profit on Sale of Fixed Asset (net) 34,640,690 216,210,919
TOTAL 58,833,491 218,960,790
SCHEDULE - 10COST OF SALE OF SPACE SOLD
Opening Stock 4,113,399 271,660,960Add: Expenses on Construction during the year 325,254,821 35,577,680Others 95,305,967 3,239,086
Total 424,674,187 310,477,726Less: Internal Capitalisation during the yearBuildings - 68,132,501Plant & Machinery - 21,076,920Capital Work in Progress 390,437,992 -
Total 34,236,195 221,268,304Less: Closing Stock 34,236,194 4,113,399
Cost of space sold (A) 0 217,154,905
Cost of LandOpening Stock 43,990 13,252,597Add: Additions during the year 74,433,950 -
Total 74,477,940 13,252,597Less : Capitalised 74,433,950 3,510,167
Total 43,990 9,742,431Less: Closing Stock 43,990 43,990
Cost of Land sold (B) 0 9,698,441
TOTAL (A+B) 0 226,853,346
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Schedules forming part of accounts
SCHEDULE - 13
INTEREST AND BROKERAGE
Interest on Term Loan 20,650,807 68,953,305
Interest on others 25,504,441 31,583,336
46,155,248 100,536,641Less: Interest received (Tax Deducted at Source Rs.2,71,439;
Previous Year Rs. 1,68,313) 4,651,743 3,530,283
TOTAL 41,503,505 97,006,358
2004-2005 2003-2004Rs. Rs. Rs. Rs.
SCHEDULE - 11STAFF EXPENSESSalaries, Wages and Bonus 7,133,471 4,437,782Contribution to and Provision forProvident Fund 281,072 239,084Superannuation Fund 269,222 178,604Gratuity Fund - 139,619Leave Encashment 46,146 596,440 151,259 708,566
Welfare and other expenses 614,059 566,679
TOTAL 8,343,970 5,713,027
SCHEDULE - 12SALES, ADMINISTRATION AND OTHER EXPENSESRent 666,543 730,388Electricity & Water Charges 4,876,445 1,511,677Rates & Taxes 2,079,661 3,528,311Telephone Postage & Telegrams 460,146 454,889Advertisement & Publicity 4,232,843 433,902Sundries Others 1,349,504 1,351,839Travelling & Conveyance 3,758,532 3,744,187Property Maintenance 48,757,989 42,582,041Professional & Consultancy Fees 2,482,490 21,923,000Insurance Charges 4,151,505 4,170,424
72,815,658 80,430,658
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SCHEDULE - 14
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING:
The Financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956.
The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during the period.Actual reports could differ from those estimated. Any revision to accounting estimates is recognised prospectively in the current and future periods.
2. FIXED ASSETS:
Fixed Assets are stated at original cost including preoperative expenses incurred up to the date of commencement of commercial operations. Thecarrying amounts of fixed assets are reviewed at each balance sheet date to ascertain whether they are recorded in excess of their recoverableamount based on value in use method. Where carrying values exceed this recoverable amount, assets are written down to their recoverable amount.
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.
Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods so as to allocate the assets revised carryingamount over its remaining useful life.
4. INVESTMENTS:
Long term investments are stated at cost. Short term 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. Service income is accounted for based on agreements with customers.Income from lease of premises is accounted for, based on lease agreements with the lessees.
7. RETIREMENT BENEFITS:
Contributions to Superannuation Fund under LIC Group Superannuation Scheme is made based on the actual liability basis.
Contribution to Gratuity is made to the Employees’ Group Gratuity Scheme of the Life Insurance Corporation of India.
Contributions to Provident Fund are made on actual liability basis.
Leave encashment is accounted for based on actuarial 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 such asset.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 borrowing costs arerecognised 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 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 tax ratesand 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 certainity that sufficient future taxable income will beavailable 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
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SCHEDULE - 15NOTES ON ACCOUNTS:
1. a) The Company does not have taxable wealth, hence no provision for 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 115JB of the Income Tax Act, 1961, since the taxable income as per normal computationis Nil, hence Income Tax for the year has been provided under Minimum Alternate Tax.
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.
2. Additional information pursuant to paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 has been furnished to the extent applicable sincethe Company is engaged in construction and sale of immovable property together with land.
3. Expenditure in Foreign Currency2004-2005 2003-2004
Rs. Rs.(i) Travel 6,05,957 4,45,771(ii) Consultancy Nil 1,00,458(iii) Others Nil 8,248
TOTAL 6,05,957 5,54,477
4. Earnings in Foreign Currency:
(i) Consultancy 95,79,784 Nil
5. Managerial remuneration includes:(i) Salary 7,82,496 4,59119(ii) Perquisites 3,75,226 3,59,824(iii) Contribution to Provident / Superannuation Fund 90,972 62,836
TOTAL 12,48,694 9,17,779
6. 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.
7. Auditors’ remuneration and expenses charged to the accounts:2004-2005 2003-2004
Rs. Rs.(i) Audit fees (excluding service tax) 2,00,000 2,00,000(ii) Taxation matters 2,66,000 1,67,320(iii) Expenses reimbursed 10,400 63,240
8. Segment Reporting:
A. PRIMARY SEGMENT INFORMATION (Rs. in Lakh)
S.No Particulars Sale of Space Lease Rental Total
2004-05 2003-04 2004-05 2003-04 2004-05 2003-04
1 SEGMENT REVENUE - 3,002.75 1,294.37 2,147.61 4,297.12 5,150.36
2 SEGMENT RESULT - 734.21 1,173.76 1,958.12 1,907.97 2,692.33Less: Unallocated expensesnet of recoveries and other Income - - - - 25.87 1,111.89PROFIT BEFORE TAX - - - - 1,199.63 3,804.22Provision for Taxes:Current Tax - - - - 107.19 304.47Deferred Tax - - - - (97.53) (156.32)PROFIT AFTER TAX - - - - 1,189.97 3,656.08
3 SEGMENT ASSETS - - 5,113.65 6,255.16 5,113.65 6,255.16Unallocated assets - - 5,887.01 5,118.77 5,887.01 5,118.77TOTAL ASSETS - - 11,000.66 11,373.92 11,000.66 11,373.92
4 SEGMENT LIABILITIES - - - - - -Unallocated Liabilities - - - - 11342.35 7,544.49TOTAL LIABILITIES - - - - - -
B. SECONDARY SEGMENT INFORMATIONThe Company is engaged in the business of developing and operating Industrial Parks/Software Technology Park, and hence does not haveany exports. Therefore disclosure of secondary segment information does not arise.
Schedules forming part of accounts
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9. The disclosure regarding the Related Party Transactions are as follows:
A. Controlling Companies: Relationship(i) Larsen & Toubro Limited Holding Company
B. Subsidiaries controlled by the Company:(i) Hyderabad International Trade Expositions Limited
(ii) Andhra Pradesh Expositions Private Limited
(iii) L&T Infocity Lanka Private Limited
(iv) L&T Infocity Infrastructure Limited
C. Associate Companies:(i) L&T Infocity – Ascendas Limited
(ii) Vizag IT Park Limited
D. Transactions with Related Parties:
(Rs. in Lac)
S.No Nature of transaction / Relationship 2004-2005 2003-2004
Amount Amount Amount Amount Amount Amountof transaction due to due from of transaction due to due from
1 Larsen & Toubro LimitedHolding companyi) Contract for Building Construction 2718.97 1087.78 Nil 802.44 211.93 Nilii) Dividend 288.36 288.36 Nil 240.30 240.30 Niliii) Consultancy for
Design & Architecture 23.69 8.82 Nil 64.19 24.62 Niliv) Syndication of loan Nil 131.45 Nil Nil 131.45 Nilv) Obtaining Staff & other services 34.77 13.85 Nil 36.27 32.47 Nilvi) Providing staff & other services 8.40 Nil Nil 3.79 Nil Nil
2 Hyderabad International TradeExpositions LimitedSubsidiary Companyi) Providing Staff & other services 16.21 Nil 16.21 26.87 Nil 26.87
3 L&T Infocity-Ascendas LtdAssociate Companyi) Reimbursement of expenses 0.85 Nil 0.1 1.23 Nil 1.36ii) Lease of office space 15.75 Nil Nil 16.57 Nil 0.13iii) Consultancy Services 73.68 Nil 18.55 10.86 Nil Niliv) Lease deposit Nil 4.54 Nil Nil 4.54 Nil
4 Vizag IT Park LimitedAssociate Companyi) Providing Consultancy Services - - - - - -ii) Dividend 23.4 Nil Nil - - -iii) Reimbursement of expenses 0.73 Nil 0.73 15 Nil Nil
5 Andhra Pradesh Expositions Private Ltd.Subsidiary’s wholly owned subsidiaryi) Reimbursement of expenses Nil Nil 1.11 Nil Nil 1.11
6 L&T Infocity Lanka Private LimitedSubsidiaryi) Project Facilitation fee 68.12 Nil Nil - - -ii) Project Management Fee 27.68 Nil Nil - - -iii) Reimbursement of expenses 10.71 Nil 17.31 - - -
7 L&T Infocity Infrastructure LimitedSubsidiaryi) Equity Share Capital 433.5 Nil Nil - - -ii) Reimbursement of expenses 8.93 Nil Nil - - -
(No amounts pertaining to the related parties have been written off or written back during the period.)
10. Value of Imports on CIF basis in respect of:Capital goods Rs. NILSupplies Rs. NIL
Schedules forming part of accounts
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11. Estimated amount of contracts remaining to be executed on Capital account and not provided for Rs.13837 lakh net of advances. (Previous year NIL)
12. Contingent Liability as at March 31, 2005 is Rs.NIL (previous year NIL)
13. 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 rental expensesin respect of these operating leases was Rs.7,26,522/- (Previous year Rs.5,54,850/-)
14. Major components of Deferred Tax Assets and Deferred Tax Liabilities:
AS AT 31.03.2005 AS AT 31.03.2004Rs. Rs.
Deferred Tax Deferred Tax Deferred Tax Deferred TaxAssets Liabilities Assets Liabilities
Difference between Depreciation on Assets as per booksof account and as per provisions of Income Tax Act. 11,807,397 22,960,957Provision for Doubtful Advances debited to Profit & Loss Account - 1,630,695Provision for Leave encashment debited to Profit & Loss Account 134,761 -Preliminary expenditure deductible u/s 35D 95,472 -
Total 230,234 11,807,397 1,630,695 22,960,957
Net Deferred Tax Liability 11,577,163 21,330,261
Net decrease in Deferred Tax liability charge to Profit & Loss Account (9,753,098) (15,632,054)
15. Details of Earning per Share:Particulars 2004-2005 2003-2004
Rs. Rs.
Profit before Tax 119,963,036 380,422,229Less: Provision for Tax 10,718,702 30,446,673Less: Provision for Deferred Tax (9,753,098) (15,632,054)Profit after Tax 118,997,432 365,607,610No. of Equity Shares 27,000,000 27,000,000Earning per share – Basic 4.41 13.54
16. The Company has entered into an Agreement of Sale dated December 27, 2004 with Andhra Pradesh Industrial Infrastructure Corporation (APIIC)Limited, a Government Company, for purchase of 7.88 acres of land in HITEC City layout, Madhapur, for a consideration of Rs. 3,94,00,000/-. Thesaid amount of consideration was satisfied by fulfilling the conditions laid down in GO. Ms. No:5 dated 29-1-2002 and confirmed by APIIC vide theirletter no: 1539/PM(IPU)/APIIC/2003 dated December 6, 2004.
The Company’s Management, having considered the above facts, has accounted for the cost of land as capital receipt since no payment by way ofconsideration is required to be made as per Government Order.
17. Security deposit of Rs.12,74,40,000/- received from a customer represents rent deposit towards lease of building for a period of nine years videMemorandum of Understanding dt. September 21, 2004, with a lock-in period of 4 years.
18. Loans and Advances include Rs.10,46,62,500 /- due from the Govt. of Andhra Pradesh Industrial Infrastructure Fund, towards recovery of InfrastructureDevelopment cost vide GO.Ms.No.7 dated February 4, 2002, for 69.775 acres of land in HITEC City area alloted for Mega IT Projects by theGovernment of Andhra Pradesh.
19. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount is morethan the amount carried in the books. Accordingly, no provision required to be made for the impairment in the accounts.
20. Pursuant to the Employees Stock Options Scheme established by the holding company (i.e. Larsen & Toubro Limited), stock options have beengranted to the employees of the Company in respect of which, cost of Rs. 7,64,100 has been incurred by the holding company during the year.
Schedules forming part of accounts
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21 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
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 5
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 Rs.Thousands)
Total Liabilities Total Assets
1 5 6 0 1 9 9 1 5 6 0 1 9 9
Sources of Funds
Paid-up Capital Reserves & Surplus
(incl. Share Appl. Money)
2 7 0 0 0 0 6 7 4 9 0 3
Secured Loans Deferred Tax
6 0 7 0 9 0 8 2 0 6
Application of Funds
Net Fixed Assets Capital Work in Progress
9 7 7 1 1 2 3 9 0 4 3 8
Investments Net Current Assets
3 4 3 5 5 5 ( 1 5 0 9 0 6 )
Misc. Expenditure Accumulated Losses
N I L N I L
IV. Performance of Company (Amount in Rs.Thousands)
Turnover Total Expenditure
(incl. other income) (incl. prior year adj.)
3 0 4 0 1 3 1 8 4 0 5 0
+ – Profit / (Loss) before tax + – Profit / (Loss) after tax (incl. Def. Tax)
✓ 1 1 9 9 6 3 ✓ 1 1 8 9 9 7
+ – Earning per share (in Rs.) (Basic) Dividend rate %
✓ 4 . 4 1 1 2
V. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No. N A
(ITC Code)
Product D E V E L O P M E N T O F
Description S O F T W A R E P A R K
22. Previous year figures have been regrouped wherever necessary.
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered AccountantsL. VAIDYANATHAN U. RAMAKRISHNA K. VENKATESH L.V. SUBRAHMANYAMPartner Company Secretary DirectorsMembership No.16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
Schedules forming part of accounts
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Statement pursuant to Section 212 of the Companies Act, 1956
Name of the Subsidiary Company Hyderabad Andhra Pradesh L&T Infocity L&T InfocityInternational Trade Expositions Lanka InfrastructureExpositions Limited Private Limited * Private Limited* Limited *
Financial year of the subsidiary ended on March 31, 2005 March 31, 2005 March 31, 2005 March 31, 2005
Number of shares of the subsidiary company held byL&T Infocity Ltd. and / or its nominee at the above date 49,998 - 9,100,000 4,335,000
The net aggregate of profits/(losses), of the subsidiarycompany so far as it concerns the members of L&T Infocity Ltd.
(i) Dealt with in the accounts of L&T Infocity Ltd. amounted:
a) for the subsidiary’s financial year ended March 31, 2005 Nil Nil Nil Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T Infocity Ltd. Nil Nil Nil Nil
(ii) Not dealt with in the accounts of L&T Infocity Ltd.a) for the subsidiary’s financial year ended March 31, 2005 Loss Rs.284.06 Lacs Nil Nil Nil
b) for the previous financial years of the subsidiarysince it became subsidiary of L&T Infocity Ltd. Loss Rs.332.63 Lacs Nil Nil Nil
* Company yet to commence commercial operations
U. RAMAKRISHNA K. VENKATESH L. V. SUBRAHMANYAMCompany Secretary Directors
Place: HyderabadDated: April 19, 2005
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Directors’ ReportThe Directors have pleasure in presenting their second Annual Report and Audited Accounts for the year ended March 31, 2005.
OPERATIONAL RESULTS
As the construction of the built-to-suit building for HSBC is still in progress, the Company is yet to commence the operations as at the date of BalanceSheet and no Profit & Loss account has been drawn for the period under review.
YEAR IN RETROSPECT
During the period under review, the Company was engaged in the development of a built-to-suit facility of 183,000 sq. ft. for HSBC in Colombo, whichshall be leased out from April 1, 2005. The Company could complete the project almost within the scheduled time in spite of all odds.
FINANCE
During the year the Company borrowed an amount of US Dollars 34,97,206.04 from State Bank of India, Colombo, for funding the construction of thebuilt-to-suit facility for HSBC.
CAPITAL EXPENDITURE
During the year the capital expenditure incurred by the Company was Rs. 27.61 crores and the cumulative capital expenditure as on March 31, 2005stands at Rs.2961.71 lacs including pre-operative expenses pending capitalization of Rs.22.14 lacs.
AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
DISCLOSURE OF PARTICULARS
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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 andprudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2005;
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
In terms of Section 256 of the Companies Act, 1956 Mr.K.Venkatesh and Mr.T.S.Sundaresan retire by rotation and being eligible, offer themselves forreappointment.
AUDITORS
The Auditors, M/s. Amerasekara & Co., hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.
ACKNOWLEDGEMENT
The Directors acknowledge the invaluable support extended to the Company by the Bankers, vendors, suppliers and appreciate the contribution madeby the employees of the Company.
For and on behalf of the Board
K.VENKATESH T.S.SUNDARESANDirectors
Place : HyderabadDate : April 19, 2005
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L&T INFOCITY LANKA PRIVATE LIMITED
Auditors’ ReportTO THE MEMBERS OF L&T INFOCITY LANKA PRIVATE LIMITED
The financial statements of L&T Infocity Lanka (Private) Limited, Srilanka for the year ended March 31, 2005, being a company registered in Srilanka,are audited by Amerasekara & Co., Chartered Accountants, Srilanka and we have been furnished with their audit report dated April 19, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212of the Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of L&T Infocity Lanka Private limited, Srilanka as at March 31, 2005 and the cash flow statement forthe 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 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 providesa reasonable 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 (Auditor’s 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 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 purposesof 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 cash flow statement dealt with by this report are in agreement with the books of account;
d. In our opinion, the said Balance Sheet and cash flow statement, comply with the accounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Indian Companies Act, 1956, since the company is registeredin Srilanka, no reporting is required to be made under the above section.
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 theSignificant Accounting Policies in Schedule 9 and Notes in Schedule ‘10’ and elsewhere in the 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 generallyaccepted in India.
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2005;
(ii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Chennai PartnerDate : April 19, 2005 Membership No.16368
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(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence does not affect the going concern statusof the Company.
(ii) (a) The Company does not have an inventory and hence, reporting on clause 4(ii) (a) (b) & (c) of the order does not arise.
(iii) In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In ouropinion, and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internalcontrol system.
(iv) The Company has not accepted any deposit from the public.
(v) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(vi) (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 towards Income-tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutorydues were in arrears as at March 31, 2005 for a period of more than 6 months from date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax which have not been deposited with theappropriate authorities on account of any dispute.
(vii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial yearcovered by our audit and the immediately preceding financial year.
(viii) In our opinion and accordingly to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.The Company has not borrowed any amount from financial institution or debenture holders.
(ix) 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.
(x) 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.
(xi) 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.
(xi) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xii) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for thepurpose for which the same has been obtained.
(xiii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short term basis. Hence reporting on the usage of the same does not arise.
(xiv) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xv) The Company has not raised any money by public issue during the year covered by our audit.
(xvi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course ofour audit.
(xvii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registeredin Srilanka and is operating outside India.
Clause: (iii), (v), (viii) & (xviii)
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Chennai PartnerDate : April 19, 2005 Membership No.16368
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
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L&T INFOCITY LANKA PRIVATE LIMITED
Balance Sheet as at March 31, 2005Schedule As at 31.03.2005 As at 31.03.2004
No.Rs. Rs.
SHAREHOLDERS’ FUNDS
Share Capital 1 80,645,161 -
Share Application money - 80,645,161 81,403,632 81,403,632
LOAN FUNDS
Secured Loans 2 153,489,514 -
Unsecured Loans 3 7,456,140 -
Forex Fluctuation Reserve 3,002,694 394,503
TOTAL 244,593,509 81,798,135
APPLICATION OF FUNDS
FIXED ASSETS 4
GROSS BLOCK 178,544 -
Add : Capital Work in Progress 293,778,210 17,675,470
Pre-operative expenses 5 2,213,841 640,025
296,170,595 18,315,495
CURRENT ASSETS, LOANS & ADVANCES 6
Current Assets
Cash and Bank Balances 19,804,857 39,485,206
Loans and Advances 34,491,460 41,000,424
54,296,317 80,485,630
Less: CURRENT LIABILITIES 7
Current Liabilities 105,873,403 17,002,990
105,873,403 17,002,990
NET CURRENT ASSETS (51,577,086) 63,482,640
TOTAL 244,593,509 81,798,135
SIGNIFICANT ACCOUNTING POLICIES 8
NOTES ON ACCOUNTS 9
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered Accountants
L. VAIDYANATHAN K.VENKATESH T.S.SUNDARESANPartner DirectorsMembership No.16368
Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
SLR INR SLR INRA. Cash Flow from Operating Activities
Net Profit Before TaxAdjustments for:Dividend Received - -
- -Depreciation (including obsolescence) and amortisation - -
- -Unrealised foreign exchange difference - net (gain/loss) 14,704,076 2,608,191 856,072 394,503Interest (net) - - (35,426) (16,325)(Profit)/Loss on sale of fixed assets (net) - - - -(Profit)/Loss on sale of Investments (net) - - - -Provision for Leave encashment & Gratuity - - - -Operating Profit before Working Capital Changes 14,704,076 2,608,191 820,646 378,178Adjustiments for:(Increase)/Decrease in Loans & Advances 10,330,391 6,508,964 (88,970,919) (41,000,424)(Increase)/Decrease in Inventories - - - -(Increase)/Decrease in Miscellaneous Expenditure - - - -Increase/(Decrease) in trade Payables 204,494,870 88,870,413 36,896,489 17,002,990Cash generated from OperationsDirect Taxes refund/(paid) (net) - - - -Net Cash From Operating Activities 229,529,337 97,987,568 (51,253,784) (23,619,256)
B. Cash Flow from Investing Activities:Purchase of Fixed Assets (407081) (178544)Construction Work in Progress (630,523,618) (275,692,683) (38,355,770) (17,675,470)Pre Operative Expenses (3,501,741) (1,573,816) (1,388,857) (640,025)Sale of Fixed Assets (including monies received as advance - - - -Purchase of Investments - - - -Sales of Investments - - - -Loans/Deposits made with Subsidiaries/Associates (net) - - - -Advance towards Equity Commitment - - - -Interest Received - - 35,426 16,325Dividend Received from Subsidiaries - - - -Dividend Received from other Investments - - - -Net Cash used in/from Investing Activities (634,432,440) (277,445,043) (39,709,201) (18,299,170)
C. Cash Flow from Financing ActivitiesProceeds from issue of Share Capital - - - -Receipts/Issues of Share Application Money - - 176,645,881 81,403,632Refund of Share Application Money (1,645,881) (758,471) - -Proceeds from Long Term Borrowings 349,021,162 153,079,457 - -Proceeds from unsecured loans (BOI, Sri Lanka ) 17,000,000 7,456,140 - -Repayment of Long Term Borrowings - - - -Repayments/Proceeds from other Borrowings (net) - - - -Gratuity paid - - - -Dividends Paid - - - -Additional Tax on Dividend - - - -Interest Paid - - - -Net Cash Used in/From Financing Activities 364,375,281 159,777,126 176,645,881 81,403,632Net Decrease/Increase in cash and Cash Equivalents (A+B+C) (40,527,822) (19,680,349) 85,682,896 39,485,206Cash and Cash Equivalents at the beginning of the year 85,682,896 39,485,206 - -Less: Transfers if any - - - -Cash and Cash Equivalents at the end of the year 45,155,074 19,804,857 85,682,896 39,485,206
31.3.2005 31.3.2004 Change 31.3.2004 31.3.2003 ChangeCash in Hand 11,853 - 11,853 - - -SBI S.L.Rs.A/c 16,797,755 36,759,043 (19,961,288) 36,759,043 - 36,759,043SBI US $ A/c 501,591 48,923,853 (48,422,262) 48,923,853 - 48,923,853Bank Guarantee Security 17,000,000 - 17,000,000 - - -L C Margin Money 10,843,875 - 10,843,875 - - -Total 45,155,074 85,682,896 (40,527,822) 85,682,896 - 85,682,896Coverted to INR 19,804,857 39,485,206 (19,680,349) 39,485,206 - 39,485,206Conversion Rate 2.28 2.17 2.17
Notes:1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS)3:”Cash Flow Statements” issued by
the Institute of Chartered Accountants of India .2 Purchase of Fixed Assets includes movement of Capital Workin Progress during the year.3 Cash and Cash equivalents represent cash and bank balances.
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered AccountantsL. VAIDYANATHAN K.VENKATESH T. S. SUNDARESANPartner DirectorsMembership No.16368Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Schedules forming part of Balance SheetAs at As at
31.03.2005 31.03.2004
Rs. Rs.SCHEDULE - 1
SHARE CAPITAL
Authorised20,000,000 Equity Shares of Sri Lankan Rupees 10/- each 92,165,899 92,165,899
Issued, Subscribed and Paid-up17,500,000 Equity Shares of Sri Lankan Rupees 10/- each 80,645,161 -
Out of the above91,00,000 shares of Sri Lankan Rupees 10/- each are held byL&T Infocity Limited, the Holding Company
SCHEDULE - 2
SECURED LOANS
Term loan from
State Bank of India 153,489,514 -(Including Interest accrued thereon Rs.4,10,057/-)
TOTAL 153,489,514 -
Term loan from State Bank of India is secured by mortgage over leasehold rights over land and1st Mortgage charge over buildings, existing thereon and future.
SCHEDULE - 3
UNSECURED LOANS
Board of Investment, Sri Lanka 7,456,140 -
Refer Note No. 4 of Schedule 9
TOTAL 7,456,140 -
SCHEDULE - 4
FIXED ASSETS
GROSS BLOCKRs.
As at Additions As atDESCRIPTION 1.04.2004 during the year 31.03.2005
Computers - 49,430 49,430Furnitures & Fixtures - 26,276 26,276Vehicles - 32,290 32,290Office Equipment - 70,548 70,548
TOTAL - 178,544 178,544
Add: Capital Work in Progress 293,778,210
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Schedules forming part of Balance SheetAs at 31.03.2005 As at 31.03.2004
SCHEDULE - 5 Rs. Rs.PRE-OPERATIVE EXPENSESPre operative expenses pending allocationto fixed assets
Travelling & Transport 71,164 15,118Audit Fee 33,708 4,608Bank Charges - 1,477Board Meeting Expenses 190,417 -BOI Annual Fee & Processing Charges - 293,548Consultancy Fees 64,719 -Company Formation - 340,528E.P.F / E.T.F 24,978 -Entertainment 1,072 -Gifts & Donations 14,762 -Land Lease 759,551 -Office Upkeep 1,665 -Other Expenses 1,114 -Secretarial Fees 19,492 -Staff Salaries 322,022 -Staff Welfare 6,427 -Stationery 6,826 -Telephone & Courier Charges 39,831 1,071Vehicle Running & Maintenance 16,068 1,573,816 - 656,350
Less: Interest received - 16,325
1,573,816 640,025Add: Balance brought forward 640,025 -
2,213,841 640,025
SCHEDULE - 6CURRENT ASSETS, LOANS & ADVANCESCash and Bank BalancesCash on hand 5,199 -Bank Balances with scheduled Banks
on current accounts 7,587,432 39,485,206on fixed deposits (including interest 12,212,226 19,804,857 - 39,485,206
accrued thereon Rs.4,20,522/-Previous Year Rs. Nil /-)
19,804,857 39,485,206
Loans and AdvancesAdvances recoverable in cash or in kind 34,491,460 41,000,424or for value to be received.(Unsecured considered good)
34,491,460 41,000,424
TOTAL 54,296,317 80,485,630
SCHEDULE -7CURRENT LIABILITIES & PROVISIONSCurrent Liabilities
a) Sundry Creditors 63,579,982 17,002,990b) Advances from Customers 42,293,421 -
105,873,403 17,002,990
TOTAL 105,873,403 17,002,990
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Schedules forming part of accountsSCHEDULE – 8
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956.
The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during the period.Actual reports could differ from those estimated. Any revision to accounting estimates is recognised prospectively in the current and future periods.
2. FOREIGN CURRENCY TRANSACTIONS
Opening balances are converted to Indian Rupees at the opening exchange rate and closing balances are converted at the closing exchange rate.Transactions during the year are converted into Indian Rupees at the average exchange rate.
3. FIXED ASSETS
Fixed Assets are stated at original cost.Pre-operative expenses will be capitalized upon commencement of commercial operations.
SCHEDULE - 9
NOTES ON ACCOUNTS
1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.67.05 Lakh net of advances. (Previous yearRs.2580.78).
2. Contingent Liability as at March 31, 2005 is Rs. NIL (previous year Rs. NIL)
3. The disclosure regarding the Related Party Transactions are as follows:
A. Controlling Companies Relationship
(i) L&T Infocity Limited Holding Company
(ii) Larsen & Toubro Limited Ultimate Holding Company
B. Transactions with Related Parties
(Rs. in Lakh)
S. No. Nature of Transaction / Relationship 2004-2005
Amount Amount Amountof transaction due to due from
1. L&T Infocity Limited
i) Project Facilitation Fee 64.77 Nil Nil
ii) Project Management Fee 26.33 Nil Nil
iii) Reimbursement of Expenses 17.52 17.19 Nil
2. Larsen & Toubro Limited
Contract for Building Construction 2580.78 592.35 Nil
(No amounts pertaining to the related parties have been written off or written back during the period.)
4. The Board of Investment of Sri Lanka has granted an amount of Rs. 74,56,140/- towards part funding for the construction of a Sewage TreatmentPlant on the land leased to the Company. As no decision has been arrived with regard to it’s ownership as at the Balance Sheet date, the Companyis treating the grant as an interest free ‘Unsecured Loan’ . Expenditure of Rs. 35,39,016/- incurred for the Sewage Treatment Plant is included in‘Loans & Advances’.
5. Depreciation will be provided when asset is put to use.
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Schedules forming part of accounts6. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:
I. Registration Details:
Registration No. State Code No.
N A N A
Balance Sheet Date
3 1 0 3 2 0 0 5
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 ( 7 5 8 )
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
2 4 4 5 9 4 2 4 4 5 9 4
SOURCES OF FUNDS
Paid up Capital Forex Fluctuation Reserve
(incl.Share Appl. Money)
8 0 6 4 5 3 0 0 3
Secured Loans Unsecured Loans
1 5 3 4 9 0 7 4 5 6
APPLICATION OF FUNDS Capital Work in Progress
Gross Fixed Assets incl. Pre-operative expenses
1 7 9 2 9 5 9 9 2
Investments Net Current Assets
N I L ( 5 1 5 7 7 )
Misc.Expenditure Accumulated Losses
N I L N I L
IV. Performance of Company (Amount in Rs. Thousands)
Turnover (incl. other income) Total Expenditure (incl. Prior year Adj.)
N I L N I L
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
N I L N I L
+ - Earning per share (in Rs.) (Basic) Dividend Rate %
✓ N A N A
V. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code)
N A
Product Description
D E V E L O P M E N T O F I T P A R K S
7. Previous year figures have been regrouped wherever necessary.
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered AccountantsL. VAIDYANATHAN K.VENKATESH T. S. SUNDARESANPartner DirectorsMembership No.16368Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Directors’ ReportThe Directors have pleasure in presenting their second Annual Report and Audited Accounts for the year ended March 31, 2005.
OPERATIONAL RESULTS
As the construction of the built-to-suit building for HSBC is still in progress, the Company is yet to commence the operations as at the date of BalanceSheet and no Profit & Loss account has been drawn for the period under review.
YEAR IN RETROSPECT
During the period under review, the Company was engaged in the development of a built-to-suit facility of 183,000 sq. ft. for HSBC in Colombo, whichshall be leased out from April 1, 2005. The Company could complete the project almost within the scheduled time in spite of all odds.
FINANCE
During the year the Company borrowed an amount of US Dollars 34,97,206.04 from State Bank of India, Colombo, for funding the construction of thebuilt-to-suit facility for HSBC.
CAPITAL EXPENDITURE
During the year the capital expenditure incurred by the Company was Rs. 27.61 crores and the cumulative capital expenditure as on March 31, 2005stands at Rs.2961.71 lacs including pre-operative expenses pending capitalization of Rs.22.14 lacs.
AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
DISCLOSURE OF PARTICULARS
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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 andprudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2005;
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
In terms of Section 256 of the Companies Act, 1956 Mr.K.Venkatesh and Mr.T.S.Sundaresan retire by rotation and being eligible, offer themselves forreappointment.
AUDITORS
The Auditors, M/s. Amerasekara & Co., hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.
ACKNOWLEDGEMENT
The Directors acknowledge the invaluable support extended to the Company by the Bankers, vendors, suppliers and appreciate the contribution madeby the employees of the Company.
For and on behalf of the Board
K.VENKATESH T.S.SUNDARESANDirectors
Place : HyderabadDate : April 19, 2005
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Auditors’ ReportTO THE MEMBERS OF L&T INFOCITY LANKA PRIVATE LIMITED
The financial statements of L&T Infocity Lanka (Private) Limited, Srilanka for the year ended March 31, 2005, being a company registered in Srilanka,are audited by Amerasekara & Co., Chartered Accountants, Srilanka and we have been furnished with their audit report dated April 19, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212of the Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of L&T Infocity Lanka Private limited, Srilanka as at March 31, 2005 and the cash flow statement forthe 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 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 providesa reasonable 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 (Auditor’s 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 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 purposesof 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 cash flow statement dealt with by this report are in agreement with the books of account;
d. In our opinion, the said Balance Sheet and cash flow statement, comply with the accounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Indian Companies Act, 1956, since the company is registeredin Srilanka, no reporting is required to be made under the above section.
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 theSignificant Accounting Policies in Schedule 9 and Notes in Schedule ‘10’ and elsewhere in the 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 generallyaccepted in India.
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2005;
(ii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Chennai PartnerDate : April 19, 2005 Membership No.16368
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L&T INFOCITY LANKA PRIVATE LIMITED
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence does not affect the going concern statusof the Company.
(ii) (a) The Company does not have an inventory and hence, reporting on clause 4(ii) (a) (b) & (c) of the order does not arise.
(iii) In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In ouropinion, and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internalcontrol system.
(iv) The Company has not accepted any deposit from the public.
(v) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(vi) (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 towards Income-tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutorydues were in arrears as at March 31, 2005 for a period of more than 6 months from date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax which have not been deposited with theappropriate authorities on account of any dispute.
(vii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial yearcovered by our audit and the immediately preceding financial year.
(viii) In our opinion and accordingly to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.The Company has not borrowed any amount from financial institution or debenture holders.
(ix) 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.
(x) 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.
(xi) 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.
(xi) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xii) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for thepurpose for which the same has been obtained.
(xiii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short term basis. Hence reporting on the usage of the same does not arise.
(xiv) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xv) The Company has not raised any money by public issue during the year covered by our audit.
(xvi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course ofour audit.
(xvii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registeredin Srilanka and is operating outside India.
Clause: (iii), (v), (viii) & (xviii)
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Chennai PartnerDate : April 19, 2005 Membership No.16368
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
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Balance Sheet as at March 31, 2005Schedule As at 31.03.2005 As at 31.03.2004
No.Rs. Rs.
SHAREHOLDERS’ FUNDS
Share Capital 1 80,645,161 -
Share Application money - 80,645,161 81,403,632 81,403,632
LOAN FUNDS
Secured Loans 2 153,489,514 -
Unsecured Loans 3 7,456,140 -
Forex Fluctuation Reserve 3,002,694 394,503
TOTAL 244,593,509 81,798,135
APPLICATION OF FUNDS
FIXED ASSETS 4
GROSS BLOCK 178,544 -
Add : Capital Work in Progress 293,778,210 17,675,470
Pre-operative expenses 5 2,213,841 640,025
296,170,595 18,315,495
CURRENT ASSETS, LOANS & ADVANCES 6
Current Assets
Cash and Bank Balances 19,804,857 39,485,206
Loans and Advances 34,491,460 41,000,424
54,296,317 80,485,630
Less: CURRENT LIABILITIES 7
Current Liabilities 105,873,403 17,002,990
105,873,403 17,002,990
NET CURRENT ASSETS (51,577,086) 63,482,640
TOTAL 244,593,509 81,798,135
SIGNIFICANT ACCOUNTING POLICIES 8
NOTES ON ACCOUNTS 9
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered Accountants
L. VAIDYANATHAN K.VENKATESH T.S.SUNDARESANPartner DirectorsMembership No.16368
Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
SLR INR SLR INRA. Cash Flow from Operating Activities
Net Profit Before TaxAdjustments for:Dividend Received - -
- -Depreciation (including obsolescence) and amortisation - -
- -Unrealised foreign exchange difference - net (gain/loss) 14,704,076 2,608,191 856,072 394,503Interest (net) - - (35,426) (16,325)(Profit)/Loss on sale of fixed assets (net) - - - -(Profit)/Loss on sale of Investments (net) - - - -Provision for Leave encashment & Gratuity - - - -Operating Profit before Working Capital Changes 14,704,076 2,608,191 820,646 378,178Adjustiments for:(Increase)/Decrease in Loans & Advances 10,330,391 6,508,964 (88,970,919) (41,000,424)(Increase)/Decrease in Inventories - - - -(Increase)/Decrease in Miscellaneous Expenditure - - - -Increase/(Decrease) in trade Payables 204,494,870 88,870,413 36,896,489 17,002,990Cash generated from OperationsDirect Taxes refund/(paid) (net) - - - -Net Cash From Operating Activities 229,529,337 97,987,568 (51,253,784) (23,619,256)
B. Cash Flow from Investing Activities:Purchase of Fixed Assets (407081) (178544)Construction Work in Progress (630,523,618) (275,692,683) (38,355,770) (17,675,470)Pre Operative Expenses (3,501,741) (1,573,816) (1,388,857) (640,025)Sale of Fixed Assets (including monies received as advance - - - -Purchase of Investments - - - -Sales of Investments - - - -Loans/Deposits made with Subsidiaries/Associates (net) - - - -Advance towards Equity Commitment - - - -Interest Received - - 35,426 16,325Dividend Received from Subsidiaries - - - -Dividend Received from other Investments - - - -Net Cash used in/from Investing Activities (634,432,440) (277,445,043) (39,709,201) (18,299,170)
C. Cash Flow from Financing ActivitiesProceeds from issue of Share Capital - - - -Receipts/Issues of Share Application Money - - 176,645,881 81,403,632Refund of Share Application Money (1,645,881) (758,471) - -Proceeds from Long Term Borrowings 349,021,162 153,079,457 - -Proceeds from unsecured loans (BOI, Sri Lanka ) 17,000,000 7,456,140 - -Repayment of Long Term Borrowings - - - -Repayments/Proceeds from other Borrowings (net) - - - -Gratuity paid - - - -Dividends Paid - - - -Additional Tax on Dividend - - - -Interest Paid - - - -Net Cash Used in/From Financing Activities 364,375,281 159,777,126 176,645,881 81,403,632Net Decrease/Increase in cash and Cash Equivalents (A+B+C) (40,527,822) (19,680,349) 85,682,896 39,485,206Cash and Cash Equivalents at the beginning of the year 85,682,896 39,485,206 - -Less: Transfers if any - - - -Cash and Cash Equivalents at the end of the year 45,155,074 19,804,857 85,682,896 39,485,206
31.3.2005 31.3.2004 Change 31.3.2004 31.3.2003 ChangeCash in Hand 11,853 - 11,853 - - -SBI S.L.Rs.A/c 16,797,755 36,759,043 (19,961,288) 36,759,043 - 36,759,043SBI US $ A/c 501,591 48,923,853 (48,422,262) 48,923,853 - 48,923,853Bank Guarantee Security 17,000,000 - 17,000,000 - - -L C Margin Money 10,843,875 - 10,843,875 - - -Total 45,155,074 85,682,896 (40,527,822) 85,682,896 - 85,682,896Coverted to INR 19,804,857 39,485,206 (19,680,349) 39,485,206 - 39,485,206Conversion Rate 2.28 2.17 2.17
Notes:1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS)3:”Cash Flow Statements” issued by
the Institute of Chartered Accountants of India .2 Purchase of Fixed Assets includes movement of Capital Workin Progress during the year.3 Cash and Cash equivalents represent cash and bank balances.
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered AccountantsL. VAIDYANATHAN K.VENKATESH T. S. SUNDARESANPartner DirectorsMembership No.16368Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Schedules forming part of Balance SheetAs at As at
31.03.2005 31.03.2004
Rs. Rs.SCHEDULE - 1
SHARE CAPITAL
Authorised20,000,000 Equity Shares of Sri Lankan Rupees 10/- each 92,165,899 92,165,899
Issued, Subscribed and Paid-up17,500,000 Equity Shares of Sri Lankan Rupees 10/- each 80,645,161 -
Out of the above91,00,000 shares of Sri Lankan Rupees 10/- each are held byL&T Infocity Limited, the Holding Company
SCHEDULE - 2
SECURED LOANS
Term loan from
State Bank of India 153,489,514 -(Including Interest accrued thereon Rs.4,10,057/-)
TOTAL 153,489,514 -
Term loan from State Bank of India is secured by mortgage over leasehold rights over land and1st Mortgage charge over buildings, existing thereon and future.
SCHEDULE - 3
UNSECURED LOANS
Board of Investment, Sri Lanka 7,456,140 -
Refer Note No. 4 of Schedule 9
TOTAL 7,456,140 -
SCHEDULE - 4
FIXED ASSETS
GROSS BLOCKRs.
As at Additions As atDESCRIPTION 1.04.2004 during the year 31.03.2005
Computers - 49,430 49,430Furnitures & Fixtures - 26,276 26,276Vehicles - 32,290 32,290Office Equipment - 70,548 70,548
TOTAL - 178,544 178,544
Add: Capital Work in Progress 293,778,210
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Schedules forming part of Balance SheetAs at 31.03.2005 As at 31.03.2004
SCHEDULE - 5 Rs. Rs.PRE-OPERATIVE EXPENSESPre operative expenses pending allocationto fixed assets
Travelling & Transport 71,164 15,118Audit Fee 33,708 4,608Bank Charges - 1,477Board Meeting Expenses 190,417 -BOI Annual Fee & Processing Charges - 293,548Consultancy Fees 64,719 -Company Formation - 340,528E.P.F / E.T.F 24,978 -Entertainment 1,072 -Gifts & Donations 14,762 -Land Lease 759,551 -Office Upkeep 1,665 -Other Expenses 1,114 -Secretarial Fees 19,492 -Staff Salaries 322,022 -Staff Welfare 6,427 -Stationery 6,826 -Telephone & Courier Charges 39,831 1,071Vehicle Running & Maintenance 16,068 1,573,816 - 656,350
Less: Interest received - 16,325
1,573,816 640,025Add: Balance brought forward 640,025 -
2,213,841 640,025
SCHEDULE - 6CURRENT ASSETS, LOANS & ADVANCESCash and Bank BalancesCash on hand 5,199 -Bank Balances with scheduled Banks
on current accounts 7,587,432 39,485,206on fixed deposits (including interest 12,212,226 19,804,857 - 39,485,206
accrued thereon Rs.4,20,522/-Previous Year Rs. Nil /-)
19,804,857 39,485,206
Loans and AdvancesAdvances recoverable in cash or in kind 34,491,460 41,000,424or for value to be received.(Unsecured considered good)
34,491,460 41,000,424
TOTAL 54,296,317 80,485,630
SCHEDULE -7CURRENT LIABILITIES & PROVISIONSCurrent Liabilities
a) Sundry Creditors 63,579,982 17,002,990b) Advances from Customers 42,293,421 -
105,873,403 17,002,990
TOTAL 105,873,403 17,002,990
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Schedules forming part of accountsSCHEDULE – 8
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956.
The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during the period.Actual reports could differ from those estimated. Any revision to accounting estimates is recognised prospectively in the current and future periods.
2. FOREIGN CURRENCY TRANSACTIONS
Opening balances are converted to Indian Rupees at the opening exchange rate and closing balances are converted at the closing exchange rate.Transactions during the year are converted into Indian Rupees at the average exchange rate.
3. FIXED ASSETS
Fixed Assets are stated at original cost.Pre-operative expenses will be capitalized upon commencement of commercial operations.
SCHEDULE - 9
NOTES ON ACCOUNTS
1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.67.05 Lakh net of advances. (Previous yearRs.2580.78).
2. Contingent Liability as at March 31, 2005 is Rs. NIL (previous year Rs. NIL)
3. The disclosure regarding the Related Party Transactions are as follows:
A. Controlling Companies Relationship
(i) L&T Infocity Limited Holding Company
(ii) Larsen & Toubro Limited Ultimate Holding Company
B. Transactions with Related Parties
(Rs. in Lakh)
S. No. Nature of Transaction / Relationship 2004-2005
Amount Amount Amountof transaction due to due from
1. L&T Infocity Limited
i) Project Facilitation Fee 64.77 Nil Nil
ii) Project Management Fee 26.33 Nil Nil
iii) Reimbursement of Expenses 17.52 17.19 Nil
2. Larsen & Toubro Limited
Contract for Building Construction 2580.78 592.35 Nil
(No amounts pertaining to the related parties have been written off or written back during the period.)
4. The Board of Investment of Sri Lanka has granted an amount of Rs. 74,56,140/- towards part funding for the construction of a Sewage TreatmentPlant on the land leased to the Company. As no decision has been arrived with regard to it’s ownership as at the Balance Sheet date, the Companyis treating the grant as an interest free ‘Unsecured Loan’ . Expenditure of Rs. 35,39,016/- incurred for the Sewage Treatment Plant is included in‘Loans & Advances’.
5. Depreciation will be provided when asset is put to use.
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Schedules forming part of accounts6. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:
I. Registration Details:
Registration No. State Code No.
N A N A
Balance Sheet Date
3 1 0 3 2 0 0 5
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 ( 7 5 8 )
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
2 4 4 5 9 4 2 4 4 5 9 4
SOURCES OF FUNDS
Paid up Capital Forex Fluctuation Reserve
(incl.Share Appl. Money)
8 0 6 4 5 3 0 0 3
Secured Loans Unsecured Loans
1 5 3 4 9 0 7 4 5 6
APPLICATION OF FUNDS Capital Work in Progress
Gross Fixed Assets incl. Pre-operative expenses
1 7 9 2 9 5 9 9 2
Investments Net Current Assets
N I L ( 5 1 5 7 7 )
Misc.Expenditure Accumulated Losses
N I L N I L
IV. Performance of Company (Amount in Rs. Thousands)
Turnover (incl. other income) Total Expenditure (incl. Prior year Adj.)
N I L N I L
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
N I L N I L
+ - Earning per share (in Rs.) (Basic) Dividend Rate %
✓ N A N A
V. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code)
N A
Product Description
D E V E L O P M E N T O F I T P A R K S
7. Previous year figures have been regrouped wherever necessary.
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered AccountantsL. VAIDYANATHAN K.VENKATESH T. S. SUNDARESANPartner DirectorsMembership No.16368Place : Chennai Place: ChennaiDate : April 19, 2005 Date : April 19, 2005
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Directors’ ReportThe Directors have pleasure in presenting their First Annual Report and Audited Accounts for the period ended March 31, 2005.
FINANCIAL RESULTS
Since the Company was incorporated on October 25, 2004 and the construction of the Built to Suit building for HSBC is still in progress, no Profit & LossAccount has been drawn for the period under review.
PERFORMANCE OF THE COMPANY
During the period under review, the Company commenced the construction of a built-to-suit facility of 180,000 sq.ft. for HSBC in Kolkata. This buildingwith a built-up area of 1.80 Lakh sq.ft. shall be ready for occupation by Sep’2005.
PROSPECTS FOR 2005-2006
On completion of construction of the building the same will be leased out to HSBC for its operations for back office / call centre project for a Lease periodof 9 years. During the year 2005-2006 the Company is expected to commence commercial operations with receipt of Lease Rentals with effect from October2005.
FINANCE
During the period, the Company has approached State Bank of Patiala for financing the project and in principal sanction obtained from them for Term Loanof 9 years.
CAPITAL EXPENDITURE
As at March 31, 2005 the gross fixed assets stood at Rs.1.31 Crore being the cost of land given by Government of West Bengal on long term lease fora period of 99 years and Capital Work in Progress of Building stood at Rs.13.54 Crore.
DEPOSITS
During the period under review, the Company has neither invited nor accepted any deposits from the public falling within the purview of Section 58A of theCompanies Act, 1956.
SUBSIDIARY COMPANIES
The Company does not have any subsidiary company.
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 per theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
PERSONNEL
There are no employees covered by the provisions of the 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 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 prudent
so as to give a true and fair view of the state of affairs of the Company as at March 31, 2005;iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; andiv) that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Mr. R. Sridaran, Mr. U. Ramakrishna and Mr. P. Ravishankar were appointed as First Directors of the Company under the Articles of Association of theCompany, hold office upto the date of the Annual General Meeting and are eligible for reappointment.
FOREIGN EXCHANGE EARNINGS AND OUTGO2004-2005
Foreign exchange earnings NilForeign exchange expenditure Nil
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AUDIT COMMITTEE
The Audit Committee consists of three directors. The present members of the Audit Committee are Mr. R. Sridaran, Mr. U. Ramakrishna &Mr. P. Ravi Shankar, Mr. R. Sridaran 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 Committeemet periodically during the year and had discussions with the auditors on internal control systems and internal audit report and given its report andrecommendations 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 being eligible 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 underSection 224(1B) of the Companies Act, 1956.
ACKNOWLEDGEMENTS
The Board of Directors acknowledge with thanks the invaluable support extended to the Company by the Financial Institutions, Bankers, Vendors, Suppliersand Customers.
For and on behalf of the Board
R. SRIDARAN P. RAVI SHANKARDirectors
Place : HyderabadDate : April 19, 2005
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L&T INFOCITY INFRASTRUCTURE LIMITED
Auditors’ ReportTO THE MEMBERS OF L&T INFOCITY INFRASTRUCTURE LIMITED
We have audited the attached balance sheet of L & T Infocity Infrastructure Limited (the Company) as at March 31, 2005. The financial statementis the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statement 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 purposes of ouraudit;
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 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 comply with the accounting standards referred to in sub-section (3C) of Section 211 ofthe Companies Act, 1956;
e) On the basis of the written representations received from directors of the Company as at March 31, 2005, and taken on record by the Board ofDirectors, we report that no director is disqualified as on March 31, 2005 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 acceptedin India:
i) In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2005;
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Hyderabad PartnerDate : April 19, 2005 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 Infrastructure Limited on theaccounts for the year ended March 31, 2005, we report that:
(i) (a) The Company is in the process of acquiring / building its assets and hence records showing full particulars, including quantitative detailsand situation of fixed assets are under updation.
(b) The Company does not have any assets during the period and hence commenting on physical verification and material discrepancies onsuch verification does not arise.
(c) The Company has no Fixed assets and hence commenting or disposal during the period and reporting on going concern assumption doesnot arise.
(ii) The Company does not have any inventory and hence commenting on physical verification, procedure followed by the management andmaintenance of proper record does not arise.
(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) Since the Company has not taken / granted loans commenting on clause (b), (c), (d), (e), (f) and (g) 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 fixed assets. Since this being the first period of operations commentingon continuing failure to correct major weaknesses in internal control does not arise.
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L&T INFOCITY INFRASTRUCTURE LIMITED
(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 registerin pursuance of Section 301 of the Companies Act, 1956. Hence reporting on clause 4 (V) (b) of the Companies (Auditor’s report) order 2003does not arise.
(vi) The Company has not accepted any deposit 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 Company is a services company providing infrastructure facilities and the Government has not prescribed maintenance of cost recordsunder Section 209(1)(d) of the Companies Act, 1956. Hence reporting under 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, Income-tax, Service-tax, and any other statutory dues during the year with the appropriate authorities.Since the company is registered for less than six months commenting on disputed dues payable for a period of more than six months doesnot arise.
(b) This being the first period of operation commenting on clause 4 (IX) (b) of the Companies (Auditor’s Report) Order, 2003 does not arise.
(x) The Company is yet to commence commercial operation and hence commenting on clause 4 (X) of the Companies (Auditor’s Report) Order,2003 does not arise. Hence commenting on default in repayment does not arise.
(xi) The Company did not have any outstanding debentures. There are no loans availed from bank or financial institution 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 and hence commenting on clause 4(XIII), (a), (b), (c) & (d) does not arise.
(xiv) According to the information and explanations given to us, the Company has not dealt or traded in shares, securities, debentures and othersecurities.
(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xvi) The Company has not availed term loan and hence commenting on the purpose for which they were raised does not arise.
(xvii) According to the information and explanations given to us, the Company has not raised funds on short term / long term during the period.
(xviii) The Company is a closely held limited company and hence commenting on preferencial allotment does not arise.
(xix) The Company did not have outstanding debentures during the period. Accordingly, no securities have been created.
(xx) The Company is a closely held limited company and has not raised any money by Public issue during the year.
(xxi) During the course of audit of the books of account and other records of the company carried out inaccordance with the generally acceptedauditing practices in India, we have not come across any instance of fraud on or by the company, noticed or reported during the year, nor havewe been informed of such cases by the management.
SHARP & TANNANChartered Accountants
Sd/-L. VAIDYANATHAN
Place : Hyderabad PartnerDate : April 19, 2005 Membership No.16368
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L&T INFOCITY INFRASTRUCTURE LIMITED
Balance Sheet as at March 31, 2005Schedules As at 31.03.2005
Rupees RupeesSOURCES OF FUNDS
Shareholders’ Funds
Share Capital 1 85,000,000
Reserves & Surplus -
Loan Funds
Secured Loans -
Unsecured Loans -
TOTAL 85,000,000
APPLICATION OF FUNDS
Fixed Assets
GROSS BLOCK 2 13,115,400
Less: Depreciation 88,319
Net Block 13,027,081
Add:Capital Work in Progress 3 136,538,220 149,565,301
CURRENT ASSETS, LOANS & ADVANCES 4
Current Assets
a) Cash and Bank Balances 11,904,228
b) Loans and Advances 21,458,823
33,363,051Less: CURRENT LIABILITIES & PROVISIONS 5
Current Liabilities 97,928,352
97,928,352
NET CURRENT ASSETS (64,565,301)
TOTAL 85,000,000
SIGNIFICANT ACCOUNTING POLICIES 6
NOTES ON ACCOUNTS 7
As per our report attachedSHARP & TANNAN For and on behalf of the BoardChartered Accountants
R. SRIDARAN U. RAMAKRISHNADirector Director
L. VAIDYANATHANPartnerMembership No.16368 P. RAVI SHANKAR
Director
Place: Hyderabad Place: HyderabadDate : April 19, 2005 Date : April 19, 2005
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L&T INFOCITY INFRASTRUCTURE LIMITED
Schedules forming part of Balance SheetAs at 31.03.2005
Rs.SCHEDULE - 1
SHARE CAPITAL
Authorised
1,00,00,000 Equity Shares of Rs.10 each 100,000,000
Issued, Subscribed and Paid-up
85,00,000 Equity Shares of Rs.10 each 85,000,000
Out of the above
43,35,000 shares are held by L&T Infocity Limited, the Holding Company
SCHEDULE - 2
FIXED ASSETS
GROSS BLOCK DEPRECIATION NET BLOCK
Additions Disposals As at For the On As at As atDescription during the during the 31.03.2005 Period disposals 31.03.2005 31.03.2005
Year period for the periodRs. Rs. Rs. Rs. Rs. Rs. Rs.
Lease Assets Leasehold Land 13,115,400 - 13,115,400 88,319 - 88,319 13,027,081
TOTAL: 13,115,400 - 13,115,400 88,319 - 88,319 13,027,081
Add: Capital Work in Progress 135,401,175
Pre-operative expenses 1,137,045
149,565,301
Note: Leasehold land represents land taken on sub lease from West Bengal Electronics Industry Development Corporation Limited for a period of 99 yearswith a right to renew for a further period of two terms of 99 years each vide Memorandum of Understanding dated August 18, 2004. Pendingexecution of Sub Lease Deed the company has paid the full consideration and taken possession of the land for execution of the project.
SCHEDULE - 3
CAPITAL WORK-IN-PROGRESSAs at 31.03.2005
Rupees
Building under construction 135,401,175
Pre-operative expenses pending allocation to fixed assets(For the period from October 25, 2004 to March 31, 2005)
Incorporation Expenses 611,534
Travelling Expenses 394,123
Miscellaneous Expenses 43,069
Depreciation 88,319 1,137,045
136,538,220
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L&T INFOCITY INFRASTRUCTURE LIMITED
Schedules forming part of Balance SheetAs at 31.03.2005
Rupees
SCHEDULE - 4CURRENT ASSETS, LOANS & ADVANCESCash and Bank BalancesCash on hand -Bank Balances with scheduled Bankson current accounts 11,904,228Loans and AdvancesAdvances recoverable in cash or in kind 21,458,823or for value to be received. 33,363,051(Unsecured considered good)
TOTAL 33,363,051
As at 31.03.2005Rupees
SCHEDULE - 5CURRENT LIABILITIES & PROVISIONSCurrent Liabilities
Sundry CreditorsDue to Small Scale Industries -Others 50,948,352
Security Deposit from a Customer (Refer Note No. 13 in Schedule 7) 46,980,000 97,928,352
TOTAL 97,928,352
SCHEDULE - 7
NOTES ON ACCOUNTS
1. 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.
2. Profit and Loss account has not been prepared as the Company has not commenced commercial operations.
3. Additional information pursuant to paragraph 4(c) of Part II of Schedule VI to the Companies Act, 1956 such as licensed capacity installed capacityproduction, opening and closing stock turnover etc., has not been furnished since the Company is a service company engaged in construction andleasing of building.
SCHEDULE - 6
SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Accounting
The Financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956
The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during the period.Actual reports could differ from those estimated. Any revision to accounting estimates is recognised prospectively in the current and future periods.
2. Fixed Assets
Fixed Assets are stated at cost, the value represents the total cost include in the development of such facilities plus proportionate pre-operativeexpenses.
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.
Premium paid on leasehold land is amortised over the primary lease period as per agreement with Government of West Bengal.
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L&T INFOCITY INFRASTRUCTURE LIMITED
4. Manager’s salary and perquisites – Nil.
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:
25.10.2004 to 31.3.2005Rs.
Audit fees (excluding service tax) 25,000Taxation matters NilExpenses reimbursed Nil
7. The disclosure regarding the Related Party Transactions are as follows:
A. Controlling Companies: Relationship
(i) Larsen & Toubro Limited Ultimate Holding Company(ii) L&T Infocity Limited Holding Company
B. Transactions with Related Parties
(Rs. in Lakh)
S. No. Name of the Party Relationship Nature of Amount Amount AmountTransaction due to due from
1. L&T Infocity Limited Holding Company i) Equity Share 433.5 Nil NilCapital
ii) Reimbursement 8.93 Nil Nilof expenses
2. Larsen & Ultimate i) Construction 1354.01 491.17 NilToubro Limited Holding Company Bill
(No amounts pertaining to the related parties have been written off or written back during the period.)
8. Expenditure in Foreign Currency for the period is NIL.
9. Value of Imports on CIF basis in respect of :
Capital goods Rs.NILSupplies Rs.NIL
10. Estimated amount of contracts remaining to be executed on Capital account and not provided for Rs.1430.58 lakh.
11. Company has not entered into any Finance lease / operating lease. Accordingly AS – 19 – Accounting for Leases is not applicable for the period.
12. Contingent Liability as at March 31, 2005 is NIL.
13. Security deposit of Rs. 469.80 lacs from a customer represents rent deposit towards lease of building for a period of nine years vide Memorandumof Understanding dated August 18, 2004 with a lock in period of six years.
14. This being the first period, of accounts giving comparative figures for the previous year does not arise.
15. The following Accounting Standards are not applicable to the company for the period since the company is yet to commence its commercialoperations.
1 Segment Reporting AS 17
2 Earnings Per Share AS 20
3 Accounting for Taxes on Income AS 22
4 Impairment of Assets AS 28
Notes on accounts
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16. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:I. Registration Details
Registration No. State Code No.0 1 - 4 4 4 8 8 0 1Balance Sheet Date
3 1 0 3 2 0 0 5Date Month Year
II. Capital raised during the year (Amount in Rs.Thousands)Public Issue Rights Issue
N I L N I LBonus Issue Private Placement
N I L 8 5 0 0 0III. Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities Total Assets8 5 0 0 0 8 5 0 0 0
SOURCES OF FUNDSPaid up Capital Reserves & Surplus
(incl.Share Appl. Money) N I L8 5 0 0 0
Unsecured Loans Deferred Tax LiabilityN I L N I L
APPLICATION OF FUNDSNet Fixed Assets Investments
1 3 0 2 7 N I LCapital Work in Progress Net Current Assets
1 3 6 5 3 8 ( 6 4 5 6 5)Miscellaneous Expenditure Accumulated Losses
N I L N I LIV. Performance of Company (Amount in Rs.Thousands)
Turnover Total Expenditure(incl.other income) (incl.Prior year Adj.)
N I L N I L+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax (incl. Def. Tax)✔ N I L ✔ N I L+ - Earning per share (in Rs.) (Basic) Dividend Rate %✔ N I L 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 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
Notes on accounts
As per our report of even date attachedSHARP & TANNAN For and on behalf of the BoardChartered Accountants
R. SRIDARAN U. RAMAKRISHNADirector Director
L. VAIDYANATHANPartnerMembership No.16368 P. RAVI SHANKAR
Director
Place: Hyderabad Place: HyderabadDate : April 19, 2005 Date : April 19, 2005
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Directors’ Report
Your Directors have pleasure in presenting their Third Report and Accounts for the year ended March 31, 2005.
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 be reported.
PROSPECTS OF THE COMPANY
Your Company will function as the marketing arm of HITEX and its core activity will be in marketing for bringing events in collaboration with national,international event management companies in organizing, conducting events at Hyderabad.
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 Board 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 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, 2005;
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
Shri K.V.Rangaswami and Shri Vivek Bhaskar Gadgil retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves forre-appointment.
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 the prescribedlimits 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 and HyderabadInternational Trade Expositions Limited.
For and on behalf of the Board
K.V. RANGASWAMIDirectors
V.B. GADGIL
Place : HyderabadDate : April 19, 2005
}
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Auditors’ Report
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 March 31, 2005. 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 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 (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.
Further to our comments in the Annexure referred to above, we report that:
a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of ouraudit;
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of thosebooks;
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 March 31, 2005, and taken on record by the Board ofDirectors, we report that no director is disqualified as on March 31, 2005 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 acceptedin India:
i) In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2005;
SHARP & TANNANChartered Accountants
Place : HyderabadDate : April 19, 2005 L. VAIDYANATHAN
PartnerMembership 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 Andhra Pradesh Expositions Private Limitedon the accounts for the year ended March 31, 2005, 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 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) Since the Company has not taken / granted loans commenting on clause (b), (c), (d), (e), (f) and (g) 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.
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
(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.
(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 the Company has not started any operations. 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, servicetax, cess and other statutory dues that 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 availed any loans and hence commenting on the purpose for which the loan was raised does not arise.
(xvii) According to the information and explanations given to us, the Company has not raised any funds on short term / long term basis.
(xviii) The Company is a closely held Private Limited Company and hence commenting on preferential allotment does not arise.
(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) During the course of audit of the books of account and other records of the Company carried out in accordance with the generally acceptedauditing practices in India, we have not come across any instance of fraud on or by the Company, noticed or reported during the year, nor havewe been informed of such cases by the management.
SHARP & TANNANChartered Accountants
Place : HyderabadDate : April 19, 2005 L. VAIDYANATHAN
PartnerMembership No.16368
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Schedule As at 31.03.2005 As at 31.03.2004
No. Rs. Rs. Rs. Rs.SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital 1 100,000 100,000
TOTAL 100,000 100,000
Pre-Operative Expenses 2 133,882 10,900
CURRENT ASSETS, LOANS & ADVANCES 3
Current Assetsa) Cash and Bank Balances 99,778 99,800
99,778 99,800
Less: Current Liabilities & Provisions 4
a) Current Liabilities 133,660 127,250
133,660 (33,882) 127,250 (27,450)
NET CURRENT ASSETS
Miscellaneous Expenditure
Preliminary Expenses - 116,550
TOTAL 100,000 100,000
SIGNIFICANT ACCOUNTING POLICIES 5
NOTES ON ACCOUNTS 6
Balance Sheet as at March 31, 2005
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered Accountants
L. VAIDYANATHAN K.V. RANGASWAMIPartner V.B. GADGIL
Directors
Membership No.16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
Directors
}
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Schedules forming part of Balance Sheet
SCHEDULE - 1SHARE CAPITAL As at 31.03.2005 As at 31.03.2004
Rs. Rs.AUTHORISED
1,00,000 Equity Shares of Rs.10 each 1,000,000 1,000,000
ISSUED SUBSCRIBED & PAIDUP
10,000 Equity Shares of Rs 10 each fully paid up 100,000 100,000
Issued during the year
All shares are held by Hyderabad International Trade Expositions Limited, the Holding Company
SCHEDULE - 2PREOPERATIVE EXPENSES
PARTICULARS As at 31.03.2004 For the Year As at 31.03.2005
Rs. Rs. Rs.
Filling Fees & Other Expenses 500 117,472 117,972
Audit Fees 10,400 5,510 15,910
TOTAL 10,900 122,982 133,882
SCHEDULE - 3CURRENT ASSETS, LOANS & ADVANCES
As at 31.03.2005 As at 31.03.2004
Rs. Rs.CASH AND BANK BALANCES
a) Cash on hand 20 20
b) Bank Balances with Scheduled Banks 99,758 99,780
in current account 99,778 99,800
TOTAL 99,778 99,800
SCHEDULE - 4CURRENT LIABILITIES & PROVISIONS
As at 31.03.2005 As at 31.03.2004
Rs. Rs.CURRENT LIABILITIESSundry Creditorsa) Due to Small Scale Industrial Undertakings - -b) Due to others 133,660 127,250
TOTAL 133,660 127,250
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
Schedules forming part of Balance Sheet
SCHEDULE - 5SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING:
The Financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956.
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 servicecompany.
2. 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.
3. Auditors’ remuneration and expenses charged to the accounts:2004-2005 2003-2004
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
(iii) Larsen & Toubro Limited Holding Company of L&T Infocity Limited
B. Transactions with Related Parties(Rs. in Lakh)
S.No. Name of Relationship Nature of Amount Amount Amountthe Party Transaction due to due from
1. Hitex Limited Holding Company NA Nil Nil Nil
2. L&T Infocity Limited Ultimate Holding Company NA Nil Nil Nil
3. Larsen & Toubro Limited Holding Company ofL&T Infocity Limited NA Nil Nil Nil
(No amounts pertaining to the related parties have been written off or written back during the period.)
5. Previous year figures have been regrouped wherever necessary.
6. The Company is yet to commence its commercial operations and hence no Profit & Loss Account has been made.
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ANDHRA PRADESH EXPOSITIONS PRIVATE LIMITED
7. Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details:
Registration No. 0 1 - 3 8 4 8 7 State Code No. 0 1
Balance Sheet Date 3 1 0 3 2 0 0 5Date Month Year
II. Capital raised during the year (Amount in Rs.Thousands)
Public Issue Rights Issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in. Rs.Thousands)
Total Liabilities Total Assets
1 0 0 1 0 0Sources of Funds
Paid up Capital(incl.Share Appl. Money) Reserves & Surplus
1 0 0 N I L
Secured Loans Unsecured Loans
N I L N I LApplication of Funds
Net Fixed Assets(including CWIP &Pre-operative expenses) Investments
1 3 4 N I L
Net Current Assets Misc.Expenditure
- 3 4 N I L
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs.Thousands)Turnover Total Expenditure
(incl.other income)
N I L N I L
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
N I L N I L
Earning per share Dividend Rate %
N I L N I LV. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code) N A
ProductDescription /Service 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
For and on behalf of the BoardSHARP & TANNANChartered Accountants
L. VAIDYANATHAN K.V. RANGASWAMIPartner V.B. GADGIL
Directors
Membership No. 16368
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
}
Notes on accounts
S-186
HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Directors’ ReportYour Directors have pleasure in presenting their Third Annual Report and the Audited Statement of Accounts for the year ended March 31, 2005.
FINANCIAL RESULTS
2004-2005 2003-2004Rs. Rs.
Income 55,754,458 55,264,970
Profit/(Loss) before depreciation (5,758,317) 1,840,633
Less : Depreciation & Miscellaneous Expenditure written off 97,48,144 9,772,325
Profit/(Loss) after depreciation (15,506,461) (7,931,692)
RESERVES
No transfer to Reserves have been made during the year.
DIVIDEND
Your Directors have not recommended any dividend as the Company has not made any profits during the year.
PERFORMANCE OF THE COMPANY
During the year fifteen events were conducted by prominent organizers like Dubai World Trade Centre, Department of Horticulture, Government of AndhraPradesh, CIDEX Trade Fairs Pvt. Ltd., Department of Export Promotion, Ministry of Commerce, Thai Trade Centre, Bangkok. Your Company itself hasconducted the Hyderabad Shopping Carnival which was well conceived and was a successful show. Your Company has conducted the Bus & Truck Showjointly with Unitech Pvt. Ltd., which was also a successful event. During the year, some shows were cancelled due to unavoidable circumstances and theSmall Medium Enterprises (SME) show planned to be conducted during February was postponed to August, 2005 due to Tsunami.
OUTLOOK
Your Company has a confirmed order booking for fifteen events for the financial year 2005-2006 and 6 shows to be developed by the Company.
FINANCE
During the financial year the Company received a sum of Rs.100 lakh from Hyderabad Urban Development Authority (HUDA), Rs 50 lakh from the NationalAcademy of Construction (NAC) as Equity amount.
CAPITAL EXPENDITURE
As at March 31, 2005 the gross fixed assets stood at Rs. 520,244,998 and the net fixed assets at Rs.498,703,004. Additions during the year amounted toRs.1,26,99,357.
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 of Directors and Auditors of AndhraPradesh Expositions Private 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 (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988.
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
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 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 prudentso as to give a true and fair view of the state of affairs of the Company at March 31, 2005 and of the losses 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; and
iv) that the annual accounts have been prepared on a going concern basis.
DIRECTORS
Shri. C.T.Chari, who was appointed as Director in casual vacancy holds office upto the ensuing Annual General Meeting.During the year, Shri. L.V. Subrahmanyam and Shri. G. Asok Kumar were appointed as Additional Directors and hold office upto the ensuing Annual GeneralMeeting. (Resolution proposing their appointment will be placed before the shareholders for their approval.)During the year, Shri. P.V.Rao, Chairman and Shri. A. Ramakrishna have resigned from the Board and Shri. G. Asok Kumar was appointed in place ofMs. Lakshmi Parthasarathy. The Directors send their appreciation of the contribution made by Shri. P. V. Rao, Shri. A. Ramakrishna and Ms. LakshmiParthasarathy to the Company.Mr. K. Venkatesh is liable to retire by rotation and is eligible for re-appointment.
FOREIGN EXCHANGE EARNINGS AND OUTGO2004-2005 2003-2004
Rs. Rs.
Foreign exchange earnings - 15,35,521 Nil NilForeign exchange used:Travel 2,91,928 2,49,179Consultancy 10,85,285 13,77,213 23,22,211 25,71,390
AUDIT COMMITTEE
The Audit Committee has met periodically during the year and given its report and recommendations to the Board of Directors for Corporate Governanceand overall improvement in the functioning of the Company.
AUDITORS’ REPORT
The Auditors Report to the shareholders does not contain any qualifications.
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/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 L&T Infocity Limited, Housing Development FinanceCorporation and the Government of Andhra Pradesh to the Company. The Directors place on record their appreciation of the valuable contribution made bythe employees of the Company.
For and on behalf of the Board
Place : Hyderabad L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHDate : April 19, 2005 Directors
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Auditors’ ReportTO THE MEMBERS OF HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
We have audited the attached balance sheet of Hyderabad International Trade Expositions Limited (the Company) as at March 31, 2005, the profit and lossaccount and 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.
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,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 Companies 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 purposes of our 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 those books;
c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standardsreferred 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 March 31, 2005, and taken on record by the Board ofDirectors, we report that no director is disqualified as on March 31, 2005 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 by theCompanies 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 March 31, 2005;
ii) In the case of the profit and loss account, of the loss 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.
SHARP & TANNANChartered Accountants
Place : HyderabadDate : April 19, 2005 L. VAIDYANATHAN
PartnerMembership No.16368
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS 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 Hyderabad International Trade Expositions Limitedon the accounts for the year ended March 31, 2005, 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 be coveredin the register maintained under Section 301 of the Companies Act, 1956.
(b) Since the Company has not taken / granted loans commenting on clause (b), (c), (d), (e), (f) and (g) 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 for the services. In our opinion,and according 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 Section 58AAof 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.
(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 has beengenerally regular in depositing undisputed statutory dues including Provident Fund, Income-Tax, Wealth Tax, Custom Duty, Service Tax, Cessand any other statutory dues during the year with the appropriate authorities. As at March 31, 2005, there are no undisputed statutory duespayable for 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, service taxand cess that have not been deposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses less than fifty percent of its net worth and has incurred cash losses during the financial year and cash profitin the immediately preceding financial year.
(xi) The Company did not have any outstanding debentures or any outstanding loans from any financial institution or bank.
(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 and financial institutions.
(xvi) The Company has obtained term loans and the same has been applied for the purpose for which it was obtained.
(xvii) According to the information and explanations given to us, the Company has not raised any funds on short term basis. However, long term loanraised has been utilised for the purpose for which it was raised.
(xviii) The Company is a closely held limited company and hence commenting on preferential allotment does not arise.
(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) During the course of audit of the books of account and other records of the Company carried out in accordance with the generally excepted auditingpractices in India, we have not come across any instance of fraud on or by the company, noticed or reported during the year, nor have we beeninformed of such cases by the management.
SHARP & TANNANChartered Accountants
L. VAIDYANATHANPlace : Hyderabad PartnerDate : April 19, 2005 Membership No.16368
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Balance Sheet as at March 31, 2005Schedule As at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.
SOURCES OF FUNDS
Shareholders’ Funds:
Share Capital 1 500,000 500,000
Share Application Money 135,700,060 136,200,060 120,700,060 121,200,060
Reserves & Surplus - -
Loan Funds
Secured Loans 2 400,000,000 400,000,000
Unsecured Loans 3 1,059,590 1,059,590
Deferred Tax Liability 38,229,979 25,330,934
TOTAL 575,489,629 547,590,584
APPLICATION OF FUNDS
Fixed Assets 4
GROSS BLOCK 520,244,998 507,563,264
Less: Depreciation 21,541,994 11,811,473
NET BLOCK 498,703,004 495,751,791
Capital Work in Progress 2,893,310 2,893,310
501,596,314 498,645,101
Investments 5 100,000 100,000
CURRENT ASSETS, LOANS & ADVANCES 6
Current Assets
a) Sundry Debtors 7,970,735 6,697,234
b) Cash and Bank Balances 35,161,484 32,402,456
c) Loans & Advances 2,035,818 1,859,713
45,168,037 40,959,403
Less: Current Liabilities & Provisions 7
a) Sundry Creditors 30,597,231 22,981,428
b) Provisions 83,123 32,618
30,680,354 23,014,046
NET CURRENT ASSETS 14,487,683 17,945,357
Profit and Loss Account 59,305,632 30,900,126
TOTAL 575,489,629 547,590,584
SIGNIFICANT ACCOUNTING POLICIES A
NOTES ON ACCOUNTS B
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHPartner Directors(Membership No.16368)
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Profit & Loss Account for the year ended March 31, 2005
Schedule Year ended Year ended31.03.2005 31.03.2004
Rs. Rs.
INCOMEIncome from Services 54,824,288 54,601,645Other Income 8 930,170 663,325
TOTAL 55,754,458 55,264,970
EXPENDITURE
Staff Expenses 9 4,281,070 2,365,381Sales, Administration and Other Expenses 10 21,228,245 16,741,265Interest & Brokerage 11 36,003,460 34,317,691Depreciation 9,748,144 9,676,731Preliminary Expenses written off - 95,594
TOTAL 71,260,919 63,196,662
Profit / (Loss) for the Year (15,506,461) (7,931,692)
Provision For Taxes - -Provision for Deferred Tax Liability 12,899,045 25,330,934Profit after Tax (28,405,506) (33,262,626)
Balance brought forward fromprevious year (30,900,126) 2,362,500
Balance Carried to Balance Sheet (59,305,632) (30,900,126)
Earning per Share - Basic (568.11) (665.25)Earning per Share - Diluted (2.09) (2.74)
SIGNIFICANT ACCOUNTING POLICIES ANOTES ON ACCOUNTS B
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHPartner Directors(Membership No.16368)
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
Rs. Lakh Rs. Lakh
A. Cash Flow from Operating ActivitiesNet Profit Before Tax (155.06) (79.32)Adjustments for:Dividend Received - -Depreciation (including obsolescence) and amortisation 97.48 96.77Unrealised foreign exchange difference - net (gain/loss) - -Interest (net) 360.03 343.18(Profit)/Loss on sale of fixed assets (net) - -(Profit)/Loss on sale of Investments (net) - -Provision for Leave encashment & Gratuity 0.51 0.33
Operating Profit before Working Capital Changes 302.96 360.95Adjustiments for:(Increase)/Decrease in trade and other receivables (59.97) (119.97)(Increase)/Decrease in Inventories - -(Increase)/Decrease in Miscellaneous Expenditure - -Increase/(Decrease) in trade Payables (382.08) (227.11)Cash generated from OperationsDirect Taxes refund/(paid) (net) 0.96 21.62
Net Cash From Operating Activities (138.14) 35.49
B. Cash Flow from Investing Activities:Purchase of Fixed Assets 6.82 4.06Sale of Fixed Assets (including monies received as advance - -Purchase of Investments - -Sales of Investments - -Loans/Deposits made with Subsidiaries/Associates (net) - -Advance towards Equity Commitment - -Interest Received 8.91 1.96Dividend Received from Subsidiaries - -Dividend Received from other Investments - -
Net Cash used in/from Investing Activities 15.73 6.02
C. Cash Flow from Financing ActivitiesProceeds from issue of Share Capital 150.00 250.00Proceeds from Long Term Borrowings - -Repayment of Long Term Borrowings - -Repayments/Proceeds from other Borrowings (net) - -Gratuity paid - -Dividends Paid - -Additional Tax on Dividend - -Interest Paid - -
Net Cash Used in/From Financing Activities 150.00 250.00
Net Decrease/Increase in cash and Cash Equivalents (A+B+C) 27.59 291.51Cash and Cash Equivalents at the beginning of the year 324.02 32.52Less: Transfers if any - -
Cash and Cash Equivalents at the end of the year 351.61 324.02
Notes:1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS)3:”Cash Flow Statements” issued by
the Institute of Chartered Accountants of India.2 Purchase of Fixed Assets includeds movement of Capital Workin Progress during the year.3 Cash and Cash equivalents represent cash and bank balances.
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHPartner Directors(Membership No.16368)
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accounts
As at 31.03.2005 As at 31.03.2004
Rs. Rs.
SCHEDULE 1 - SHARE CAPITAL:AUTHORISED :
1,52,00,000 Equity Shares of Rs.10/- each 152,000,000 152,000,000
ISSUED, SUBSCRIBED AND PAID-UP:50,000 Equity Shares of Rs.10/- each fully paid-up. 500,000 500,000
49,998 Shares are held by L&T Infocity Limited- holding company and its nominees.
SCHEDULE 2 - SECURED LOANS:
Term Loan fromHDFC Limited 400,000,000 400,000,000
(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.)
TOTAL 400,000,000 400,000,000
SCHEDULE 3 - UNSECURED LOANS
Unsecured LoanInterest free loan from M/s Cidex Trade Fairs Pvt Limited repayableat the end of the 10th year from April 17, 2003 being the date ofreceipt of the loan amount vide Memorandum of Understandingdated May 23, 2002. 1,059,590 1,059,590
TOTAL 1,059,590 1,059,590
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accountsSCHEDULE 4 - FIXED ASSETS
GROSS BLOCK (Rs.) DEPRECIATION (Rs.) NET BLOCK (Rs.)
DESCRIPTION AS AT ADDITIONS DISPOSALS AS AT AS AT FOR THE ON DISPOSALS AS AT AS AT AS AT01.04.2004 DURING THE DURING THE 31.03.2005 01.04.2004 YEAR 31.03.2005 31.03.2005 31.03.2004
YEAR YEAR Rs.
BUILDINGS ** 466,480,300 2,017,353 - 468,497,653 9,207,682 7,610,115 - 16,817,797 451,679,856 457,272,618PLANT & MACHINERY 36,655,895 10,000,000 - 46,655,895 2,108,467 1,742,456 - 3,850,923 42,804,972 34,547,428FURNITURES& FIXTURES 2,958,891 250,235 - 3,209,126 244,543 193,837 - 438,380 2,770,746 2,714,348COMPUTERS 721,662 251,700 - 973,362 166,190 142,371 - 308,561 664,801 555,472OFFICE EQUIPMENTS 728,893 180,069 - 908,962 66,968 59,365 - 126,333 782,629 661,925
TOTAL 507,545,641 12,699,357 - 520,244,998 11,793,850 9,748,144 - 21,541,994 498,703,004 495,751,791
PREVIOUS PERIOD - 558,983 - 507,545,641 - 9,676,731 - 11,793,850 - -Capital Work in Progess 2,893,310 2,893,310
Note : ** The Building is constructed on lease hold land (90.36 Acres) on a 66 years Lease Agreement entered with National Academy ofConstruction (NAC). A sum of Rs.100/- per year for the periodCommencing 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 agreementdated 01.10.2001 for balance unexpired period of lease.
As at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.SCHEDULE 5 - INVESTMENTS
Long Term Investments : (At cost)UnquotedAndhra Pradesh Expositions Private Limited 100,000 100,000(10,000 shares of Rs.10/- each fully paid up)
TOTAL 100,000 100,000
SCHEDULE 6 - CURRENT ASSETS, LOANS & ADVANCES
Sundry Debtors- Debts outstanding for a period exceeding six months - -- Other Debts 7,970,735 6,697,234
7,970,735 6,697,234
Cash and Bank BalancesCash on hand - 4,468Bank Balances with scheduled Bankson current accounts 4,817,716 12,242,139Fixed deposits account(incl interest accrued thereon) 30,343,768 20,155,849
35,161,484 32,402,456Loans and AdvancesAdvances recoverable in cash or in kind 2,035,818 1,859,713or for value to be received.(Unsecured considered good)
TOTAL 45,168,037 40,959,403
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.SCHEDULE 7 - CURRENT LIABILITIES & PROVISIONS
A) CURRENT LIABILITIES & PROVISIONSSundry Creditors
a) Due to Small Scale industrialundertakings - -
b) Due to Others1) Larsen & Toubro Limited 22,314,102 12,381,2202) L&T Infocity Limited 1,620,782 2,686,7963) Advances from Customers 2,241,058 2,399,8214) Others 4,421,289 5,513,591
30,597,231 22,981,428
B) PROVISIONSProvision for Current Taxes - -Provision for Leave Encashment 83,123 32,618
TOTAL 30,680,354 23,014,046
Year ended 31.03.2005 Year ended 31.03.2004
Rs. Rs. Rs. Rs.
SCHEDULE 8 - OTHER INCOME
Maintenance Recovery (Tax Deducted at Source Rs. Nil ) 372,600 292,924(Previous Year Rs.4615/-)Electricity Recovery 416,570 370,400Internet Charges Recovery 141,000 -
TOTAL 930,170 663,324
SCHEDULE 9 - STAFF EXPENSES
Salaries, Wages and Bonus 2,293,439 1,514,272Contribution to and Provision forProvident Fund 83,312 55,863Leave Encashment 50,505 32,618
2,427,256 1,602,753
Welfare and other expenses 1,853,814 762,628
TOTAL 4,281,070 2,365,381
SCHEDULE 10 - SALES, ADMINISTRATION AND OTHER EXPENSES
Rent 100 100Power and Water charges 4,345,221 3,790,789Repairs & Maintenance - others 116,422 206,648Sundries - Others 529,792 471,967Property Maintenance 5,145,766 4,151,819Advertisement Expenses 6,647,341 4,892,922Telephone, Postage & Telegrams 578,370 550,885Travel & Conveyance 1,682,744 1,861,356Professional & Consultancy Charges 673,972 426,499Printing & Stationary 1,058,966 100,346Insurance Charges 449,551 287,934
TOTAL 21,228,245 16,741,265
SCHEDULE 11 - INTEREST AND BROKERAGE
Interest and Finance Charges on Term Loan 36,000,000 34,247,535Interest on others 3,460 70,156
TOTAL 36,003,460 34,317,691
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accounts
SCHEDULE - A
SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING:
The Financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical costconvention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and theother provisions of the Companies Act, 1956.
The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during theperiod. Actual reports could differ from those estimated. Any revision to accounting estimates is recognised prospectively in the current and futureperiods.
2. FIXED ASSETS:
Fixed Assets are stated at original cost including preoperative expenses incurred up to the date of commencement of commercial operations. Thecarrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amount. Wherecarrying values exceed this recoverable amount assets are written down to their recoverable amount.
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.
Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods so as to allocate the assets revisedcarrying amount over its remaining useful life.
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 provisionsof 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 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 certainity that sufficient future taxable income willbe available against which such deferred tax assets can be realized.
.
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accounts
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 and the taxable income as per normalcomputation and u/s 115 JB is Nil. Hence, no provision for income tax has been made.
2. Additional information pursuant to paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 is not applicable to the Company.
3. Expenditure in Foreign Currency2004-2005 2003-2004
Rs. Rs.
Travel 2,91,928 2,49,179
Consultancy 10,85,285 23,22,211
4. 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.
5. Auditors’ remuneration and expenses charged to the accounts:2004-2005 2003-2004
Rs. Rs.
Audit Fees (including Service Tax) 44,080 43,200
Certification — 1,000
Tax Audit 7,500 7,500
6. 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. Name of the Party Relationship Nature of Opening Transactions Amount due AmountNo Transaction Balance for the year as at 31.03.05 due from
Rs. Rs. Rs. Rs.
1. L&T Infocity Limited Holding Company Providing StaffServices 26,86,796 16,20,782 16,20,782 —
2. Larsen & Toubro Limited Ultimate Holding Company BuildingConstructionContract 123,81,220 1,00,00,000 2,21,72,120 —
Providing Staff — 12,87,713 1,41,982 —Services
(No amounts pertaining to the related parties have been written off or written back during the period.)
7. Manager’s Salary and Perquisites :2004-2005 2003-2004
Rs. Rs.
a) Salary 4,48,993 3,83,741
b) Perquisites 2,76,239 2,77,760
8. 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.
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
9. We confirm that we are not aware of the existance of any condition which could indicate that any of the assets may be impaired.
10. Deferred Tax Liability of Rs.3,82,29,979/- including for the Current year Rs.1,28,99,045/-, pertaining to timing difference on accounts of depreciationhas been recognized and Deferred Tax Asset has not been recognized by the management in the accounts as a measure of prudence.
Particulars 31.03.2005 31.03.2004Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
Difference between bookDepreciation and taxDecreciation - 3,83,21,584 - 7,06,08,875
Provision forLeave Encashment 50,505 - - -
Preliminary Expenses 23,898 - - -(1/5th of Actual Exp.)
Total 74,403 3,83,95,987 - 7,06,08,875
Tax rate (incl. ST+E.Cess) - 33.66% - 35.875%
Defered Tax Liability - 1,28,99,045 - 2,53,30,934
Net Defered Tax Liability - 3,82,29,979 - -
11. Details of Earning per Share:
Particulars 2004 – 2005 2003 – 2004Rs. Rs.
Profit before Tax (1,55,06,461) (79,31,692)
Less: Provision for Tax — —
Less: Provision for Deferred Tax 1,28,99,045 2,53,30,934
Profit after Tax (2,84,05,506) (3,32,62,626)
No. of Equity Shares issued 50,000 50,000
Earning per share - Basic (568.11) (665.25)
Share Capital including shareapplication money 13,62,00,060 12,12,00,060
No: of Equity Shares 1,36,20,006 1,21,20,006
Earning per share - Diluted (2.09) (2.74)
Schedules forming part of accounts
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Schedules forming part of accounts
12. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINSS PROFILE
I. Registration Details:Registration No. 0 1 - 3 7 1 0 5 State Code 0 1
Balance Sheet Date 3 1 0 3 2 0 0 5Date 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 7 5 4 9 0 5 7 5 4 9 0Sources of Funds
Paid up Capital (incl. Share Appl. Money) Reserves & Surplus
1 3 6 2 0 0 N I L
Secured Loans Unsecured Loans
4 0 0 0 0 0 1 0 6 0
Deferred Tax Liability
3 8 2 3 0Application of Funds
Net Fixed Assets Investments(including CWIP)
5 0 1 5 9 6 1 0 0
Net Current Assets Misc.Expenditure
1 4 4 8 8 N I L
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs.Thousands)Turnover (incl.other income) Total Expenditure
5 5 7 5 4 7 1 2 6 1
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
- 1 5 5 0 7 - 2 8 4 0 6
Earning Per Share in (Rs.) - Diluted Dividend Rate %
( 2 . 0 9 ) 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
13. Previous year figures have been regrouped wherever necessary.
As per our report attached For and on behalf of the Board
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHPartner Directors(Membership No.16368)
Place : Hyderabad Place : HyderabadDate : April 19, 2005 Date : April 19, 2005
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HYDERABAD INTERNATIONAL TRADE EXPOSITIONS LIMITED
Statement pursuant to Section 212 of the Companies Act, 1956 relating toSubsidiary CompaniesName of the Subsidiary company Andhra Pradesh Expositions Private Limited
Financial year of the subsidiary ended on March 31, 2005
Number of shares of the subsidiary company held by Hyderabad International Trade Expositions Limitedand / or its nominee at the above date 10,000
The net aggregate of profits/(losses), of the subsidiary company so far as it concerns the members ofHyderabad International Trade Expositions Limited
(i) Dealt with in the accounts of Hyderabad International Trade Expositions Limited amounted to:
a) for the subsidiary’s financial year ended March 31, 2005 Nil
b) for the previous financial years of the subsidiary since it became subsidiary ofHyderabad International Trade Expositions Limited Not applicable
(ii) Not dealt with in the accounts of Hyderabad International Trade Expositions Limited amounted to:
a) for the subsidiary’s financial year ended March 31, 2005 Nil
b) for the previous financial years of the subsidiary since it became subsidiary ofHyderabad International Trade Expositions Limited Not applicable
For and on behalf of the Board
L. V. SUBRAMANYAM C. T. CHARI K. VENKATESHDirectors
Place : HyderabadDate : April 19, 2005
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HPL COGENERATION LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2005.
1. FINANCIAL RESULTS
Rs. In Lakh
2004 - 2005 2003 - 2004Profit before depreciation and tax 9956.81 9700.53Less : Depreciation on Fixed Assets 2763.82 2749.12
Profit before tax 7192.99 6951.41Provision for current tax 564.02 534.39Provision for deferred tax (net) (5735.16) (5171.14) 2443.03 2977.42
Profit after Tax 12364.13 3973.99Add: Balance Brought forwardfrom last year 138.94 739.79Balance available for disposalof which the Directors appropriate asfollows: 12503.07 4713.78General Reserve 1236.41 397.40Dividend 3861.00 3703.00Additional Tax on Dividend 579.96 474.44
5677.37 4574.84
Balance to be carried forward 6825.70 138.94
2. DIVIDEND
The Company paid interim dividend as under :
Rs.23,00,00,000 on 28-09-2004Rs.15,61,00,000 on 31-03-2005
Thus for the whole year, total dividend paid amounted to Rs. 29,43,00,000 on 6,12,00,000 Equity shares of Rs.10 each and Rs.9,18,00,000 on6,12,00,000 Preference 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. TheSales and Other Income for the financial year under review were Rs.14,095.39 Lakh. Profit before Tax and Profit after Tax for the financial year underreview was Rs.7,192.99 Lakh and Rs.12,364.13 Lakh respectively.
4. FINANCE
There has not been any borrowings during the year under review. The Company repaid loan instalments of Rs.5,139.82 Lakh during the year.
5. CAPITAL EXPENDITURE
As at March 31, 2005 the gross fixed assets stood at Rs.52,755.95 Lakh and the net fixed assets at Rs.38,574.64 Lakh. Additions during the yearamounted to Rs.341.48 Lakh.
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 andtherefore do 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.
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HPL COGENERATION LIMITED
10. 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 departuretherefrom;
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, 2005 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; and
iv) that the annual accounts have been prepared on a going concern basis.
11. DIRECTORSMr. A. Bose resigned as the Director of the Board with effect from March 31, 2005. Mr. Bose was Director since December 30, 2002.
The Directors place on record their appreciation of the valuable services rendered by Mr. A. Bose.
The Company has received a notice from a member under the provisions of Section 257 of the Companies Act, 1956 proposing the candidature ofMr. Bani Banerjee for the office of a Director.
Mr. K.Venkataramanan, Mr. V.K.Magapu, Mr. N.Sivaraman and Mr. Swapan K Bhowmik retire by rotation and are eligible for re-appointment.
12. AUDIT COMMITTEEDuring the year under review, consequent to Mr. A. Bose’s resignation from the Board of Directors, the Audit Committee was re-constituted. Accordingly,Mr. Bani Banerjee was appointed as a member of the Committee in place of Mr. A. Bose. The Audit Committee consists of threenon-executive directors, namely Mr.V.K.Magapu, Mr.N.Sivaraman and Mr.Bani Banerjee.
The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of Section 292A 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. AUDITORSThe Auditors, M/s.S.R.Batliboi & Co, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and beingeligible are recommended for re-appointment. A 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.
14. 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.
For and on behalf of the Board
K. VENKATARAMANAN N. SIVARAMANDirectors
Place : MumbaiDate : May 14, 2005
Annexure – A to the Directors’ ReportA. CONSERVATION OF ENERGY
a) Energy Conservation measures taken
1) Energy Audit conducted.
2) Stopping of standby pumps without affecting reliability.
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 of thegoods:
Total energy savings during the year is 1585000 KWH.
d) Total energy consumption and energy consumption per unit of production as per Form A of the Annexure in respect of the industriesspecified 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.
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HPL COGENERATION LIMITED
Auditors’ Report
TO THE MEMBERS OF HPL COGENERATION LIMITED
1.0 We have audited the attached Balance Sheet of HPL COGENERATION LIMITED, as at March 31, 2005 and also the Profit and Loss Account andthe 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, ona test 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 ouraudit provides a reasonable basis for our opinion.
3.0 As required by the Companies (Auditor’s Report) Order, 2003 (as amended) 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 paragraphs 4 and 5 of the said Order.
4.0 Without qualifying our opinion, we draw attention to Note No. II, 1 of Schedule M to the financial statements regarding claims from Haldia PetrochemicalsLimited, which are under discussion against which the Company does not expect to incur any significant liability. The ultimate outcome of the mattercannot presently be determined and no provision for any liability, that may result, has been made in the financial statements.
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 thepurposes of our audit;
(ii) Subject to accounting for certain payments on cash basis as referred to vide Accounting Policy I (a) of Schedule M, 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 ofaccount;
(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
(v) On the basis of written representations received from the directors, as on March 31, 2005, and taken on record by the Board of Directors, wereport that none of the directors is disqualified as on March 31, 2005 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, 2005;
(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
22, Camac Street PerBlock ‘C’, 3rd Floor RAHUL ROYKolkata – 700 016. PartnerDate : May 14, 2005 Membership No.53956
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF HPL COGENERATION LIMITEDREFERRED TO IN OUR REPORT OF EVEN DATE
(i) (a) The Company maintains 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 sizeof 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 during the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of theCompany and the nature of its business.
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HPL COGENERATION LIMITED
(c) The Company maintains proper records of inventory and no material discrepancies were noticed on physical verification.
(iii) (a) As informed to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the registermaintained under Section 301 of the Companies Act, 1956 and as such clauses (iii) (b) to (iii) (d) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the Company.
(e) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956 and as such clauses (iii) (f) to (iii) (g) of the Companies (Auditor’sReport) Order, 2003 are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, the internal control systems for the purchase of inventory requirefurther strengthening. Further, in our opinion and according to the information and explanations given to us, there are adequate internal controlsystems commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of goods andservices. There is no continuing failure to correct major weakness in the internal control.
(v) According to the information and explanations provided by the management, we are of the opinion that there have been no transactions that needto be entered in the register maintained under Section 301 of the Companies Act, 1956 and hence clause (v) (b) is not applicable.
(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of theCompanies 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 rules made by the Central Government for themaintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accountsand 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, Employees’State Insurance, Income-Tax, Service Tax, Custom Duty,Cess and other material statutory dues applicable to it with the appropriate authorities.
(b) According to the information and explanations given to us, except for the cases stated below, there are no undisputed amounts payable inrespect of provident fund, employees’ state insurance, income-tax, service tax, customs duty, cess and other statutory dues which wereoutstanding, 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 amount relates(Rs. in lakh)
Research & Development Cess on foreign remittances to O&M 55.29 2001-2002, 2002 - 2003, 2003-2004Cess Act,1986 contractors provided but not paid in & 2003-2005
view of an approval letter received by its holding company i.e. L&T from RBI
According to the information and explanations given to us, there is no amount payable in respect of sales tax, wealth tax and excise duty fora period of more than six months.
(c) According to the records of the Company, the dues outstanding of income-tax, sales tax, wealth tax, service tax, custom duty, excise dutyand cess on account of any dispute, are as follows:
Name of the statute Nature of dues Amount Period to which Forum where dispute is(Rs. in lakh) the amount pending
relates
Customs Act,1962 Claim raised by the customs authorities 2570.50 1999 -2000 The company has receivedconsidering the plant as “Captive revised demand onConsumption Power Plant” March 7, 2005
from the AssistantCommissioner of Customs,Appraising Group-6 (ArrearCell) for the payment of thesaid amount. The companyintends to file an appealagainst such demand. Lastdate to file an appealagainst this order is May 6,2005. ( Refer Note 1 (i) ofSchedule M to accounts)
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(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediatelypreceding financial year.
(xi) As per the 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, 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, 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’s Report) Order, 2003 (as amended) are not applicable to the Company.
(xiv) As informed and explained to us, the Company has not dealt/traded in securities or debentures during the year. In our opinion and according to theinformation and explanations given to us, proper records have been maintained of the transactions and contracts relating to dealing / tradings inShares and Other investments and timely entries have been made therein. The shares and other investments have been held by the Company, inits 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 or others 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 were obtained.
(xvii) On the basis of information received from the management and based on our examination of the balance sheet of the Company as atMarch 31, 2005 we find that the funds raised on a short-term basis have not been used for long term investment.
(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained underSection 301 of the Companies Act, 1956.
(xix) The Company does 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 upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the informationand explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of ouraudit.
S. R. BATLIBOI & CO.Chartered Accountants
22, Camac Street PerBlock ‘C’, 3rd Floor RAHUL ROYKolkata – 700 016. PartnerDate : May 14, 2005 Membership No.53956
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HPL COGENERATION LIMITED
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedules Rs. Rs. Rs. Rs.
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital A 1,224,000,000 1,224,000,000
Reserves & Surplus B 913,855,016 121,537,905
LOANS
Secured Loans C 2,058,570,669 2,572,553,335
Deferred Tax Liability (net) 368,365,535 941,881,720
(Refer Note No. 9 on Schedule M)
TOTAL 4,564,791,220 4,859,972,960
APPLICATION OF FUNDS
FIXED ASSETS D
Gross Block 5,275,595,445 5,241,447,735
Less : Depreciation 1,418,131,558 1,141,749,379
Net Block 3,857,463,887 4,099,698,356
INVESTMENTS E - 552,722,575
CURRENT ASSETS, LOANS AND ADVANCES F
Inventory 45,681,559 39,405,441
Cash and Bank Balances 378,478,737 265,678,072
Loans and Advances 520,442,247 142,096,333
944,602,543 447,179,846
LESS : CURRENT LIABILITIES AND PROVISIONS G
Current Liabilities 156,640,776 138,716,932
Provisions 80,634,434 100,910,885
237,275,210 239,627,817
NET CURRENT ASSETS 707,327,333 207,552,029
TOTAL 4,564,791,220 4,859,972,960
Accounting Policies & Notes to the Accounts M
As per our report attached of even date
S.R. BATLIBOI & CO.Chartered Accountants
PerRAHUL ROY P.R.LILAOONWALA S.M.SHAMIM EQBAL K.VENKATARAMANAN N.SIVARAMANPartner Secretary Manager Directors
Place : Kolkata Place : KolkataDate : May 14, 2005 Date: May 14, 2005
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Profit and Loss Account for the year ended March 31, 20052004-2005 2003-2004
Schedules Rs. Rs. Rs. Rs.
INCOME
Earnings from facilitation charges 1,409,327,786 1,350,810,856
(Refer Note No.10 on Schedule M)
Other Income H 211,157 897,545
1,409,538,943 1,351,708,401
EXPENDITURE
Operating Expenses I 174,083,794 114,139,807
Staff Expenses J 767,353 496,477
Administration & Other Expenses K 53,660,151 46,167,488
Interest L 185,346,719 220,851,701
Depreciation 276,382,182 274,911,382
690,240,199 656,566,855
Profit before Tax 719,298,744 695,141,546
Provision for Tax
- Current 56,401,933 53,439,005
- Deferred (Net) (573,516,185) (517,114,252) 244,303,463 297,742,468
(Refer Note No. 9 on Schedule M)
Profit after tax 1,236,412,996 397,399,078
Add/(Less): Balance brought forward from previous year 13,894,057 73,979,575
Profit available for appropriation 1,250,307,053 471,378,653
Less: Transferred to General Reserve 123,641,300 39,739,908
Profit available for distribution 1,126,665,753 431,638,745
Preference dividend 91,800,000 91,800,000
Interim Equity dividend 294,300,000 278,500,000Tax on dividend 57,995,885 47,444,688
Balance carried to Balance Sheet 682,569,868 13,894,057
Accounting Policies & Notes to the Accounts M
Earning Per Share - Basic & Diluted (Rs.) 18.48 4.77
Face Value of Shares 10.00 10.00
As per our report attached of even date
S.R. BATLIBOI & CO.Chartered Accountants
PerRAHUL ROY P.R.LILAOONWALA S.M.SHAMIM EQBAL K.VENKATARAMANAN N.SIVARAMANPartner Secretary Manager Directors
Place : Kolkata Place : KolkataDate : May 14, 2005 Date: May 14, 2005
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Cash Flow Statement for the year ended March 31, 2005
2004-2005 2003-2004Rs. Rs.
A. Cash Flow from Operating activitiesNet Profit before Taxation and extraordinary item 719,298,744 695,141,546Adjustments for:Depreciation 276,382,182 274,911,382Interest 185,346,719 220,851,701Miscellaneous Expenditure written off - 799,791Loss on Insurance claim 3,955,399 -Operating Profit before Working Capital changes 1,184,983,044 1,191,704,420Adjustments for:(Increase)/Decrease in Trade and Other Receivables 456,837 42,551,855(Increase)/Decrease in Inventories (6,276,118) (3,189,212)Increase/(Decrease) in Payables 21,010,586 (12,269,606)Cash generated from operations 1,200,174,349 1,218,797,457Direct Taxes paid 54,860,020 30,149,829(net of refund for earlier years Rs.Nil (Rs.19,344,164))Net Cash from Operating activities 1,145,314,329 1,188,647,628
B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (28,635,010) (124,862,842)Realisation against discard of fixed assets 36,248,019 32,500,000Puchase of Investments (4,218,181,312) (2,166,778,283)(including Fixed Deposits when considerd as investments)Disposal of investments 4,273,996,684 2,151,499,436Interest received 28,090,036 53,055,316Net Cash (used in)/ from Investing activities 91,518,417 (54,586,373)
C. Cash Flow from Financing ActivitiesRepayment of Long Term Borrowings (519,495,667) (525,760,983)Dividend paid (386,100,000) (370,300,000)Tax on Dividend (81,243,971) -Interest paid (234,194,119) (288,242,389)Net Cash (used in)/from Financing Activities (1,221,033,757) (1,184,303,372)Net(decrease)/Increase in cash & cash equivalents (A+B+C) 15,798,989 (50,242,117)Cash & cash equivalents at the beginning of the year 48,201,616 98,443,733Cash & cash equivalents at the end of the year 64,000,605 48,201,616
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 Chartered
Accountants of India.2. Previous year’s figures have been regrouped / rearranged wherever necessary.
As per our report attached of even date
S.R. BATLIBOI & CO.Chartered Accountants
PerRAHUL ROY P.R.LILAOONWALA S.M.SHAMIM EQBAL K.VENKATARAMANAN N.SIVARAMANPartner Secretary Manager Directors
Place : Kolkata Place : KolkataDate : May 14, 2005 Date: May 14, 2005
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HPL COGENERATION LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.
Schedule A - Share Capital:Authorised :63,800,000 (previous year: 63,800,000) Equity Shares of Rs.10 each 638,000,000 638,000,00061,200,000 (Previous year: 61,200,000) Preference Shares of Rs.10 each 612,000,000 612,000,000
1,250,000,000 1,250,000,000
Issued, Subscribed and Paid-up:61,200,000 Equity Shares of Rs.10 each fully paid[Of the above, 31,212,000 (Previous year: 31,212,000) shares are held by Larsen &Toubro Limited (the holding company)] 612,000,000 612,000,00061,200,000 (Previous year: 61,200,000) 15% Cumulative Redeemable Preference Shares 612,000,000 612,000,000of Rs.10 each fully paid.[Of the above, 31,212,000 (Previous year: 20,512,000) shares are held by Larsen &Toubro Limited (the holding company)]
1,224,000,000 1,224,000,000
Note:(1) 15% Cumulative Redeemable Preference Shares are redeemable at par on 11.10.2007.
Schedule B - Reserves & Surplus:General ReserveAs per last Balance Sheet 107,643,848 67,903,940Transferred from Profit & Loss Account 123,641,300 231,285,148 39,739,908 107,643,848
Profit & Loss Account Balance 682,569,868 13,894,057
913,855,016 121,537,905
Schedule C - Secured Loans:Term Loans from Banks- Foreign Currency loan 839,904,000 1,049,220,000- Rupee loan 1,218,666,669 2,058,570,669 1,523,333,335 2,572,553,335
2,058,570,669 2,572,553,335
Note:
1. The above Term Loans are secured by equitable mortgage of all immovable properties of the Company and by hypothecation of all its movable assetsincluding book debts.
2. Out of the above Rs.514,642,667 (Previous Rs.514,510,667) is due for repayment within 1 year.
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Schedules forming part of accountsSchedule D - Fixed Assets
Gross Block Depreciation Net BlockAs at As at As at As at As at As at
Particulars 1.4.04 Additions Deductions 31-3-2005 1.4.04 Additions Deductions 31-03-2005 31.3.05 31.3.04Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Leasehold Land 1 - - 1 0 - - 0 1 1Building-Freehold 160427173 172859 - 160600032 22192328 5355444 - 27547771 133052261 138234845-Leasehold 19139900 19529 - 19159429 1381287 319993 - 1701280 17458149 17758613Plant, Machinery 5060295910 33954141 299 5094249752 1117783578 270604641 85 1388388134 3705861618 3942512332& EquipmentsFurniture & Fixtures 1584751 1480 - 1586231 392186 102188 - 494373 1091858 1192565Sub Total 5241447735 34148009 (a) 299 5275595445 1141749379 276382267(b) 85 1418131558 3857463887 4099698356Total 5241447735 34148009 299 5275595445 1141749379 276382267 85 1418131558 3857463887 4099698356Previous Year 5286541695 124862842 169956802 5241447735 866837998 276162911 1251529 1141749379 4099698356
Notes :(a) Exchange fluctation capitalised during the year Rs.55,12,999 [previous year (Rs.97,253,683)](b) Depreciation includes Rs.1,540,530 for earlier years
As at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.Schedule 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 - 200,000,00011901817.473 no. of units of Rs.14.2335 each in SBI Mutual Fund - 169,404,51911885863.893 no. of units of Rs.15.4232 each in Reliance Mutual Fund - 183,318,056 552,722,575
- 552,722,575
Schedule F - Current Assets, Loans and Advances:Current Assets:(a) Inventories:
- Stores & Spare Parts 45,681,559 39,405,441(b) Cash and Bank Balances:
Cash in Hand 8,540 17,204With scheduled Banks on :- on Current accounts * ( Refer Note No. 5 On Schedule M) 63,992,065 48,184,412- on Fixed Deposits 314,263,475 217,356,272Interest accrued on Fixed Deposits 214,657 378,478,737 120,184 265,678,072
Loans and AdvancesUnsecured, considered good- Loans to employees 40,000 40,000- Advances recoverable in cash or in kind 107,238,411 101,853,214or for value to be received- Insurance claim receivable - 40,203,119- Intercorporate Deposits including accrued interest thereon 413,163,836 520,442,247 - 142,096,333
944,602,543 447,179,846
* (including cheques in hand of Rs.Nil (Previous Rs.30,000,000))
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Schedules forming part of accounts
As at 31.03.2005 As at 31.03.2004
Rs. Rs. Rs. Rs.Schedule G - Current Liabilities and ProvisionsCurrent Liabilities:- Sundry Creditors 3,862,137 13,996,291- Interest accrued but not due on loans 43,045,890 50,544,945- Other liabilities 95,108,857 54,084,995- Advance received from Customers 14,623,892 156,640,776 20,090,701 138,716,932
Provisions:
-Provisions for Taxation 56,401,933 53,439,005-Tax on Dividend 24,196,602 47,444,688-Gratuity 20,859 15,885-Leave Encashment 15,040 80,634,434 11,307 100,910,885
237,275,210 239,627,817
2004-2005 2003-2004
Rs. Rs. Rs. Rs.SCHEDULE H - OTHER INCOMEProvision no longer required - 311,436Miscellaneous Income:Miscellaneous Scrap Sale 211,157 191,239Exchange Gain - 258,870Others - 136,000
211,157 897,545
2004-2005 2003-2004
Rs. Rs. Rs. Rs.SCHEDULE I - Operating ExpensesStores & SparesOpening Stock 39,405,441 36,216,229Add: Purchases 39,346,144 24,053,140Less: Closing Stock 45,681,559 33,070,026 39,405,441 20,863,928
Expenses for O&M operator 141,013,768 93,275,879
174,083,794 114,139,807
SCHEDULE J- Staff Expenses2004-2005 2003-2004
Rs. Rs. Rs. Rs.
Salaries 424,905 292,472Contribution to and provision for Provident & other Funds 32,354 30,123Welfare & Other Expenses 310,094 173,882
767,353 496,477
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Schedules forming part of accounts
SCHEDULE K - Administration & Other Expenses2004-2005 2003-2004
Rs. Rs. Rs. Rs.Rent:
Rent Subsidy 487,125 483,905
Lease Rental 223,971 711,096 362,957 846,862
Rates & Taxes 1,295,674 175,564
Travelling & Conveyance 2,685,648 3020723
Courier Charges 89,119 189,219
Telephone 391,210 449,774
Gift Articles 42,570 33,467
Stationary & Printing 170,163 183,813
Insurance 24,427,460 20,410,675
Bank Charges 83,875 540,013
Repairs & Maintenance 2,598,061 3,982,174
Miscellaneous Expenses
Auditor Expenses 399,200 414,500
Research & Development Expenses - -
Entertainment Expenses 19,490 41,909
Professional Fees 11,052,468 8,883,259
Security Charges 1,134,938 1,069,350
Safety Expenses 37,538 141,782
Inspection & Licence Fees 704,134 408,712
Exchange Loss 297,553 -
Miscellaneous expenditure written off - 799,792
Sundries:
Books & Periodicals 10,618 15,587
Computer Hire Charges 60,600 74,517
Others 7,448,736 21,165,275 4,485,796 16,335,204
53,660,151 46,167,488
SCHEDULE L - Interest2004-2005 2003-2004
Rs. Rs. Rs. Rs.Term Loans 226,101,103 273,362,054Others 593,961 226,695,064 - 273,362,054
Less:(1) Received on Inter-Corporate deposits, customers & others
(tax deducted at source Rs.58,10,177 Previous year Rs.10,776,861) 41,348,345 52,510,353
185,346,719 220,851,701
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Schedules forming part of accounts
SCHEDULE M : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS
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, exceptfor Insurance claims and Interest on delayed payments received from customer which are accounted for on cash basis.
(b) Revenue Recognition
In terms of the Power Agreement entered into with Haldia Petrochemicals Limited, facilitation earnings are recognised upon availability offacilities for the generation of electricity and steam.
(c) Fixed Assets
Fixed Assets are stated at the cost of acquisition, inclusive of duties, taxes, incidental expenses, erection/commissioning expenses andinterest upto the date the asset is ready for intended use. Fixed assets are net off decapitalisation, if any, during the year valued at bestestimates of value of 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 anddepreciation 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) Inventories
Inventories of Stores and Spare parts are valued at weighted average cost or net realisable value whichever is lower.
(f) Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All otherinvestments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on anindividual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise adecline other than temporary in the value of the investments.
(g) Foreign Currency Transactions
Foreign currency transactions are recorded on the basis of average of the exchange rates in force during the relevant month.
Foreign Currency assets and liabilities (other than those covered by Forward Contracts) as on the Balance Sheet date are revalued in theaccounts on the basis of exchange rates prevailing at the balance sheet date and exchange difference arising there from is charged to theProfit & Loss Account.
In the case of transactions covered by forward contracts, the difference between the contract rate and the exchange rate prevailing on thedate of transaction is charged to Profit & Loss Account, proportionately over the contract period.
Exchange fluctuation on imported fixed assets is adjusted to the cost of fixed assets.
(h) Retirement Benefits
Liability for Leave encashment and Gratuity is provided for on the basis of actuarial valuation.
(i) Research & Development(i) Research costs are expensed as and when incurred.
(ii) Developmental expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regardedas assured. Any expenditure carried forward is amortised over the period of expected future benefits from the related project, notexceeding ten years.
(j) Miscellaneous Expenditure
Preliminary 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, iscarried forward under Deferred Revenue Expenditure to be amortised over a period of 5 years from the date of commencement ofcommercial operations.
(k) Contingencies
Material Potential Liabilities whose future outcome cannot be ascertained with reasonable certainity, are treated as contingent and disclosedby way of notes to the accounts.
(l) 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 theprovisions of the Income Tax Act, 1961, and based on expected outcome of assessments / appeals.
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Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using thetax rates and laws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognised and carried forward to the extent that there is a virtual certainity that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
Deferred Tax Liability on timing differences reversing during the tax holiday period u/s 80IA of the Income Tax Act, 1961 is not recognized.
(m) Borrowing Cost
Borrowing Costs that are not eligible for capitalisation under Accounting Policy I (c) are recognised as an expense in the period in which theyare incurred.
(n) Segment Reporting
The Company is engaged in generation of Power & Steam for the consumption of Haldia Petrochemicals Limited which is the only Businessand Geographical segment.
II Notes forming Part of Accounts
1. Contingent Liability not provided for:
Claims against the Company not acknowledged as debts –
(i) The Company has received demand towards customs duty of Rs.257,049,919 (previous year Rs.257,049,919) along with interest asapplicable. The Demand Order also provides time limit for preferring an appeal, and such period has not lapsed. The Company intends to filean appeal against such demand, pending which, the demand has been treated as a contingent liability. The Company has also recourse toHaldia Petrochemicals Limited in the event of such claim devolving on the Company.
(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.36.90 crore.
2. Leasehold land represents 16.29 acres given on lease by Haldia Petrochemicals Limited for twenty years at lease premium of Re.1.
3. Miscellaneous Expenses shown in Schedule L includes payment to auditors as follows:
2004-2005 2003-2004Rs. Rs.
Audit Fees 170,000 170,000
Tax Audit Fees 55,100 54,000
Other Services 148,600 164,500
Expenses Reimbursed 25,500 26,000
Total 399,200 414,500
4. Expenditure in foreign currency (considered on payment basis):
2004-2005 2003-2004Rs. Rs.
Technical Fees (Gross) 46,368,696 52,050,244
Tax Deducted at source 12,194,727 10,670,280
5. Balances with scheduled banks on current account are net of book overdrawn balance of Rs. 41,525,225 (previous year Nil) in one of the bankaccounts of the Company.
6. Details of Power and Steam generated, consumed and delivered:Units 2004-2005 2003-2004
Quantity Quantity
(a) Total number of units generated during the year.Steam Tons 1617668 1610495Power Kwhr 537152000 499613000
(b) Total number of units consumed in Generating Stations.Steam Tons 731992 707201Power Kwhr 20379000 21198000
(c) Total number of units delivered to the system.
Steam Tons 885677 903284Power Kwhr 528873000 499676000
(d) Total number of units imported from theGridPower Kwhr 12099900 21261000
Schedules forming part of accounts
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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 at116 MW.
8. Managerial Remuneration:
Professional charges for reimbursement of emoluments paid to Manager by Larsen & Toubro Limited – Rs.969,189 (Previous year Rs.808,473).
9. The Company is eligible and has decided to avail the tax benefit under section 80IA of the Income Tax Act, 1961, starting from the current year.Consequent to such decision, deferred tax liabilities amounting to Rs.573,516,185, which are to reverse during the tax holiday period of ten years,have been reversed during the year. The remaining balance of deferred tax liabilities as on March 31, 2005, as detailed below is to reverse aftersuch tax holiday period.
Deferred Tax Liability (Net) as on 01.04.2005 Rs.941,881,720
Less : Reversal of Deferred Tax provision Rs.573,516,185
Deferred Tax Liability (Net) as on 31.03.2005 Rs.368,365,535
The Closing balance above is represented by timing difference between Book Depreciation and the tax depreciation
10. During the year the Company has raised claims on Haldia Petrochemicals Limited towards Fuel savings, as per the Power Agreement, amountingto Rs.8,17,32,370 for the period upto 31.03.2004, which were till now under dispute and not certain of collection. Consequently the Company hasalso accounted for corresponding charges payable to the O&M contractor towards such fuel savings for the said period amounting to Rs.32,172,650.
11. Related Party relationships/transactions, warranting disclosures under AS-18 issued by Institute of Chartered Accountants of India are as follows:
Sl.No. Name of the Related Party Relationship Nature of transactions Transaction Outstanding as onAmount 31/03/05
(Rs.) (Rs.)1 Larsen & Toubro Limited Holding Company with 51% equity shares Purchase of spares 5,723,044 2,171,565
(2,881,296) (1,034,225)Purchase of Fixed Assets 30,78,536 Nil
(10,201,295) (10,201,295)Interest received on Inter Corporate Deposits Nil Nil
(21,628,871) (Nil)Inter Corporate Deposits given Nil Nil
(1,300,700,000) (Nil)Inter Corporate Deposits Redeemed Nil -
(1,655,500,000) -Manpower Deployment 4,406,892 187,308
(2,787,918) (185,121)Administrative & Mgt Expenses 2,514,631 668,864
(4,682,233) (1,884,519)Dividend – Equity Shares 150,093,000 -
(142,035,000)Dividend – Preference Shares 46,818,000 -
(46,818,000)Equity Shareholding - 312,120,000
(312,120,000)Preference Shareholding - 312,120,000
(205,120,000)2 Haldia Petrochemicals Limited Promoter with 49% equity shares Earnings from Facilitation charges 1,409,838,217 14,623,892 Cr.
(1,350,810,856) (20,090,701)Cr.Dividend – Equity Shares 144,207,000 -
(136,465,000)Dividend – Preference Shares 44,982,000 -
(44,982,000)Equity Shareholding - 299,880,000
(299,880,000)Preference Shareholding - 299,880,000
(299,880,000)3 L&T Finance Limited Subsidiary of Holding Company Interest received on Inter Corporate Deposits 26,258,134 13,163,836
(30,542,464) (Nil)Inter Corporate Deposits given 400,000,000 400,000,000
(Nil) (Nil)Inter Corporate Deposits Redeemed Nil -
(400,000,000)Lease Rent 316,384 Nil
(590,710) (92,867)4 Larsen & Toubro Infotech Limited Subsidiary of Holding Company Software Development Expenses 836345 750,594
(Nil) (Nil)
5 L&T-Sargent & Lundy Limited Subsidiary of Holding Company Engineering Services 395,885 Nil(24,398) (Nil)
Schedules forming part of accounts
S-216
HPL COGENERATION LIMITED
12. Inter-Corporate Deposits including Accrued Interest thereon (Refer Schedule - F) includes Rs.413,163,836 (Rs. Nil ) held for debt servicing requirementsof the lenders. Bank balances includes Rs.314,263,475 (Rs.217,306,272) in designated accounts for the same purpose.
13. 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.
14. Earnings Per Share (EPS)
2004-05 2003-04Rs. Rs.
Profit as per Profit & Loss Account 1,236,412,996 397,399,078
Less : Preference Dividend including Dividend Tax 105,602,209 105,290,323
Profit attributable to Equity Shareholders 1,130,810,787 292,108,755
Weighted Average Number of Equity Shares 61,200,000 61,200,000
Basic & Diluted Earning Per Share (Rs.) 18.48 4.77
Nominal Value of Shares (Rs.) 10.00 10.00
15. Previous year figures have been regrouped & rearranged wherever necessary.
Schedules forming part of accounts
S-217
HPL COGENERATION LIMITED
16. Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details:
Registration No. 2 1 - 8 3 4 3 4 State Code No. 2 1
Balance Sheet Date 3 1 0 3 2 0 0 5Date Month Year
II. Capital raised during the year (Amount in Rupees)
Public Issue Rights Issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rupees)
Total Liabilities Total Assets
4 5 6 4 7 9 1 2 2 0 4 5 6 4 7 9 1 2 2 0Sources of Funds
Paid up Capital Reserves & Surplus
1 2 2 4 0 0 0 0 0 0 9 1 3 8 5 5 0 1 6Secured Loans Unsecured Loans
2 0 5 8 5 7 0 6 6 9 N I LApplication of Funds
Net Fixed Assets Investments
3 8 5 7 4 6 3 8 8 7 N I L
Net Current Assets Misc.Expenditure
7 0 7 3 2 7 3 3 3 N I L
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rupees)Turnover Total Expenditure
(including other income)
1 4 0 9 5 3 8 9 4 3 6 9 0 2 4 0 1 9 9
Profit/Loss Before Tax Profit/Loss After Tax
7 1 9 2 9 8 7 4 4 1 2 3 6 4 1 2 9 9 6
Earning per share Dividend Rate %
1 8 . 4 8 4 8
V. Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code) N A
ProductDescription P O W E R & S T E A MService
As per our report attached of even date
S.R. BATLIBOI & CO.Chartered Accountants
PerRAHUL ROY P.R.LILAOONWALA S.M.SHAMIM EQBAL K.VENKATARAMANAN N.SIVARAMANPartner Secretary Manager Directors
Place : Kolkata Place : KolkataDate : May 14, 2005 Date: May 14, 2005
Schedules forming part of accounts
S-218
BHILAI POWER SUPPLY COMPANY LIMITED
Directors’ ReportThe Directors have pleasure in presenting the Tenth Annual Report along with the Accounts for the year ended March 31, 2005.
FINANCE
During the year under review, the Company did not carry out any commercial activities and accordingly no Profit and Loss Account has been prepared.
SECURITY DEPOSIT
In respect of the Execution Proceedings filed by the Company against Madhya Pradesh State Electricity Board (MPEB) before the District Court atJabalpur for refund of security deposit, the High Court directed the District Court to execute the order of the Supreme Court (SC).
MPEB filed a petition in the District Court praying for dismissal of the execution application and impleadment of Chhatisgarh State Electricity Board(CSEB) as a party to execution proceedings. The District Court ordered that neither MPEB can be exonerated from the liability nor CSEB is required tobe impleaded for the recovery of the money.
MPEB challenged the aforesaid order by filing a revision petition in Madhya Pradesh High Court (HC) which was dismissed by the HC. MPEB then filedan application for grant of leave of Court to appeal before the SC which was granted by HC.
The Company filed a Special Leave Petition (SLP) in SC praying that the aforesaid HC Order be quashed and MPEB be directed to deposit the entireamount of security deposit of Rs.55.32 crore along with interest. In the meantime, as per the notification dated November 4, 2004 issued by theGovernment of India re-bifurcation of assets and liabilities between MPEB & CSEB, the liability of refund of money was passed on to CSEB. Based onthis notification, MPEB also filed a SLP in SC.
The aforesaid SLPs were heard and the SC directed MPEB to deposit Rs.27.66 crore i.e. 50% of the principal amount in the court and also stayed theexecution proceedings of District Court till the next hearing in SC.
As per SC direction, MPEB deposited the amount of Rs.27.66 crore in the registry of SC. The said amount has been invested in a Fixed Deposit withUCO Bank as directed by SC.
At the next hearing, SC issued a notice to CSEB allowing CSEB to file a counter affidavit and further stayed the execution proceedings till next SChearing.
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 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 could not commence commercial operations, 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 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 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, 2005;
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. K. Venkataramanan 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. MAGAPUPlace : Mumbai DirectorsDate : April 19, 2005
S-219
BHILAI POWER SUPPLY COMPANY LIMITED
Auditors’ Report to the Shareholders
We have audited the attached Balance Sheet of Bhilai Power Supply Company Limited as at March 31, 2005. No Profit and Loss Account has beenprepared for the year ended March 31, 2005 for the reason referred to in Note No.1 on Schedule E to the accounts. These financial statements are theresponsibility 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 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.
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) ofSection 227 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.
(2) Further to our comments in the Annexure referred to above, we report that:
a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
b) in our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of thosebooks;
c) the Balance Sheet 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 Section 211of the Companies Act, 1956;
e) on the basis of written representations received from the directors as on March 31, 2005 and taken on record by the Board of Directors, wereport that none of the directors is disqualified as on March 31, 2005 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 with thesignificant accounting policies in Schedule D, note 4 regarding termination notice received from Steel Authority of India Limited, note 5 withrespect to the interest on security deposit with Madhya Pradesh State Electricity Board and the other notes appearing in Schedule E, give theinformation required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2005.
SHARP & TANNANChartered Accountants
By the hand ofPAVAN K. AGGARWAL
Place : New Delhi PartnerDate : April 21, 2005 (Membership No.91466)
S-220
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 in theregister 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. 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 thereunder and the directives of Reserve Bank of India does not arise.
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 not grantedloans 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 and 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 public issues during the year.
16. Based upon the audit procedures performed by us for expressing our opinion on these financial statements and information and explanations givenby 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 ofPAVAN K. AGGARWAL
Place : New Delhi PartnerDate : April 21, 2005 (Membership No.91466)
S-221
BHILAI POWER SUPPLY COMPANY LIMITED
Balance Sheet as at March 31, 2005
}
As at 31-3-05 As at 31-3-04
SOURCES OF FUNDS Schedules (Rupees) (Rupees)
SHAREHOLDERS’ FUNDS
Share Capital A 5,00,000 5,00,000
LOAN FUNDSUnsecured Loans B 86,94,27,078 82,22,51,852
TOTAL 86,99,27,078 82,27,51,852
APPLICATION OF FUNDS
CURRENT ASSETS, LOANS AND ADVANCESBank Balances :
On current account with Standard Chartered Bank 92,580 97,000On current account with State Bank of India 9,500 9,500
Security Deposit with Madhya Pradesh State Electricity Board 86,94,27,078 82,22,51,852(including Rs.27,66,00,000 deposited with Hon’ble Supreme Court)
Interest accrued but not due on Security Deposit 2,43,628 43,75,234
TOTAL 86,97,72,786 82,67,33,586
Less : CURRENT LIABILITIES AND PROVISIONSSundry Creditors-Others 5,15,535 8,07,474Advances from promoters:
Larsen and Toubro Limited 65,680 —-
Steel Authority of India Limited 11,96,014 11,96,014
Other Liabilities 85,50,400 82,08,922
Interest accrued but not due on loans 2,43,628 43,75,234
TOTAL 1,05,71,257 1,45,87,644
Net Current Assets 85,92,01,529 81,21,45,942
MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Preliminary Expenses and Pre-operative Expenses C 1,07,25,549 1,06,05,910
TOTAL 86,99,27,078 82,27,51,852
SIGNIFICANT ACCOUNTING POLICIES D
NOTES FORMING PART OF ACCOUNTS E
As per our report attached
SHARP & TANNANChartered Accountants
By the hand ofPAVAN K. AGGARWAL K. VENKATARAMANAN V.K. MAGAPUPartner Directors(Membership No. 91466)
Place : New Delhi Place :MumbaiDate : April 21, 2005 Date:April 19, 2005
S-222
BHILAI POWER SUPPLY COMPANY LIMITED
Schedules forming part of accounts
SCHEDULE - AAs at 31.03.2005 As at 31.03.2004
(Rupees) (Rupees)
SHARE CAPITALAuthorised
100 Preference Shares of Rs.10/- each 1,000 1,00050,00,000 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 up50,000 Equity Shares of Rs.10/- each 5,00,000 5,00,000(Of the above 49,950 equity shares (same as previous year) areheld by Laresn & Toubro Limited, the holding company)
SCHEDULE - BUNSECURED LOANS
(a) Larsen & Toubro Limited :
i) Principal Amount 52,55,40,000 52,55,40,000
ii) Interest accrued 30,04,15,724 25,55,99,259
Sub-Total 82,59,55,724 78,11,39,259
(b) Steel Authority of India Limited
i) Principal Amount 2,76,60,000 2,76,60,000
ii) Interest Accrued 1,58,11,354 1,34,52,593
Sub-Total 4,34,71,354 4,11,12,593
TOTAL of (a) + (b) 86,94,27,078 82,22,51,852
S-223
BHILAI POWER SUPPLY COMPANY LIMITED
Upto 31-3-2004 2004-2005 As at 31-3-05SCHEDULE - C (Rupees) (Rupees) (Rupees)
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 20,18,04,023 Nil 20,18,04,023
Commitment Charges 2,41,08,700 Nil 2,41,08,700
Rent, Rates and Taxes 12,19,227 1,000 12,20,227
Repairs and Maintenance 23,36,467 Nil 23,36,467
Auditors’ Remuneration 3,60,735 94,463 4,55,198
Sundry Expenses 19,26,610 24,176 19,50,786
Total - B 25,25,00,350 1,19,639 25,26,19,489
SUB-TOTAL (A+B) 25,26,60,800 1,19,639 25,27,80,439
Less : Arrangement with Promoters for
reduction of Liabilities :
(a) Larsen & Toubro Limited 12,35,96,429 Nil 12,35,96,429
(b) PSEG Bhilai Energy Company Limited 11,84,58,461 Nil 11,84,58,461
Total - C 24,20,54,890 Nil 24,20,54,890
TOTAL : (A + B) – C 1,06,05,910 1,19,639 1,07,25,549
Schedules forming part of accounts
S-224
BHILAI POWER SUPPLY COMPANY LIMITED
SCHEDULE - 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 currency liabilitiesare translated at exchange rate prevailing at the year end. The exchange variations, if any, arising out of such transactions is adjusted in 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 the Companyhave been carried forward as pre-operative expenses. Legal and incidental expenses incurred during the year in getting the refund of securitydeposit from MPSEB have been borne by the holding company, Larsen & Toubro Limited.
2004-05 2003-04
2. Expenditure in foreign currency :- Nil Nil
3. Auditors’ Remuneration (excluding Service Tax) and expenses charged to the accounts includes:-
2004-05 2003-04
Audit Fee Rs. 20,000 Rs. 20,000
Tax Audit Fee Rs. 5,000 Rs. 5,000
Other Services Rs. 52,500 Rs. 50,000
Reimbursement of Expenses Rs. 16,963 Rs. 4,225
4. The Board of Directors of the Company in their meeting held on the June 29, 2000, has not accepted the notice of termination of May 25, 2000given to them by Steel Authority of India Ltd. The treatment in the accounts for SAIL’s share as a continuing partner for the year ended onMarch 31, 2005 is given accordingly as in past.
5. No confirmation has been received from MPSEB for the Security Deposit including interest thereon kept by the Company with them as onMarch 31, 2005. However the interest on Security Deposit has been computed in the accounts as per State Bank of India norms for a maturityperiod of six months.
The Hon’ble Supreme Court had directed Madhya Pradesh State Electricity Board (MPSEB) to pay a sum of Rs.55.32 crore to the Company alongwith interest at the rate charged by the State Bank of India for fixed deposits in 12 equal monthly instalments commencing from March 1, 2003.Inspite of serving repeated demand notices on MPSEB, refund of money was not made. The Company filed a petition in District Court at Jabalpurfor execution of the Supreme Court Order. The Hon’ble District Judge, Jabalpur referred the matter to the Hon’ble High Court, Jabalpur. TheHon’ble High Court and District Court, Jabalpur pronounced their judgements in favour of the Company for enforcing the Hon’ble Supreme Court’sOrder on MPSEB for refund of the Security Deposit with interest. MPSEB went in appeal to Supreme Court against the High Court Judgement,when the Supreme Court directed MPSEB to first deposit half of the principal amount with the Supreme Court in order to consider their plea.Pursuant to this MPSEB has deposited on 29.03.05 half of the principal amount, Rs.27.66 crore with Registry of the Supreme Court, which shallbe kept by Registrar General of the Supreme Court in short term deposit in the bank to earn interest.
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.
Schedules forming part of accounts
S-225
BHILAI POWER SUPPLY COMPANY LIMITED
Schedules forming part of accounts8. 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 transactions were carried out during the year and description of relationship
Larsen & Toubro Limited Holding Companyc) Disclosure of related party transactions
Transactions/Nature of relationshipTransaction Relationship Value of transaction (Rs./lacs)Interest accrued Holding company 408.91 (400.44)Reduction in liability Holding Company Nil (1235.96)
d) Amount due to related parties
Transaction Relationship Amount Due
i) Unsecured loan Holding company 8259.56 (7811.39)
ii) Interest accrued but not due on loans Holding Company 2.31 (41.56)
iii) Account payable Holding Company 0.66 (Nil)
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.
S-226
BHILAI POWER SUPPLY COMPANY LIMITED
10. Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details:
Registration No. 5 5 0 7 0 7 0 4 State Code No. 5 5
Balance Sheet Date 3 1 0 3 2 0 0 5
II. Capital Raised during the Year (Amount in Rs. Thousands)
Public issue Rights issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
8 6 9 9 2 7 8 6 9 9 2 7Sources of Funds
Paid up Capital Reserves & Surplus
5 0 0 N I L
Secured Loans Unsecured Loans
N I L 8 6 9 4 2 7Application of Funds
Net Fixed Assets Investments
N I L N I L
Net Current Assets Misc.Expenses
8 5 9 2 0 1 1 0 7 2 6
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs. Thousands)
Turnover (incl.other income) Total Expenditure
N I L N I L
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
N I L N I L
Please tick Appropriate box + for Profit, - for Loss
Earning Per Share in Rs. Dividend Rate %
N A N A
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms)
No activities during the year
As per our report attached
SHARP & TANNANChartered Accountants
By the hand ofPAVAN K. AGGARWAL K. VENKATARAMANAN V.K. MAGAPUPartner Directors(Membership No. 91466)
Place : New Delhi Place : MumbaiDate : April 21, 2005 Date : April 19, 2005
Schedules forming part of accounts
S-227
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2005.
1. FINANCIAL RESULTS
Year ended Year ended31-03-2005 31-03-2004
(Rs.lakh) (Rs.lakh)
Gross Income 4954.40 6392.60
Profit before depreciation 2364.81 2847.80
Depreciation 2298.89 2413.03
Profit/(Loss) before tax 65.93 434.77
Less : Provision for taxation
- Current year 5.25 35.00
Profit/(Loss) after taxation 60.68 399.77
Add : Deferred tax liability for prior Nil Nil
years written back
Add : Debit balance brought forward (1062.67) (1462.44)
from previous years
Loss carried forward to Balance Sheet (1001.99) (1062.67)
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.The lease rentals are received in time. During the year ended March 31, 2005 the Company registered a total income of Rs.49.54 Crs, profit beforetax of Rs.0.66 Crs and profit after tax of Rs.0.61 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 December 6, 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 Court of Judicature at Chennai. Anote to this 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. 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.
8. 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 as at March 31, 2005 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; and
IV. that the Annual Accounts have been prepared on a going concern basis.
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9. DIRECTORS
Mr.K. Venkataramanan retires from the Board of Directors and is eligible for re-appointment.
10. 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 confirmity 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.
11. 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 prescribedunder Section 224(1B) of the Companies Act, 1956.
12. NON-BANKING FINANCIAL COMPANIES AUDITORS’ REPORT (RESERVE BANK) DIRECTIONS, 1998
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 andPrudential Norms as prescribed under the Reserve Bank of India Act, 1934.
13. 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 : MumbaiDate : April 19, 2005
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Auditors’ Report to the MembersWe have audited the attached Balance Sheet of India Infrastructure Developers Limited as at March 31, 2005, 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 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 (Auditor’s 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, which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of thosebooks;
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the profit and loss account, balance sheet and cash flow statement dealt with by this report comply with the accountingstandards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable, except in respect of Accounting Standard (AS)22 - Accounting for Taxes on Income (Refer Note 5 of Schedule 8);
(e) on the basis of written representations received from the directors as on March 31, 2005, and taken on record by the Board of Directors, wereport that none of the directors is disqualified as on March 31, 2005 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 accounts read together with theSignificant Accounting Policies in Schedule - 7 and other Notes appearing in Schedule - 8 thereon, give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally acceptedin India:
(i) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2005;
(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.
SHARP & TANNANChartered Accountants
by the hand of
R. D. KAREPartner
Place : Mumbai (Membership No 08820)Date : April 19, 2005
ANNEXURE TO THE AUDITORS’ 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 respectof leased assets, the Company has formulated a programme of physical verification of fixed assets at regular intervals, which in our opinion,is reasonable and no material discrepancies were noticed on such verification.
(c) We are informed that the Company has not disposed off any fixed assets during the year and accordingly, reporting on the going concerndoes 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 aforesaidOrder are not applicable.
3. During the year, the Company has neither granted nor taken any loans, secured or unsecured to / from companies, firms or other parties in theregister maintained under Section 301 of the Companies Act, 1956. Accordingly, Clause (iii) (a) to (g) of the aforesaid Order is not applicable.
4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and the nature of its business for the purchase of fixed assets and for services. The Company, in the normal course ofbusiness does not purchase or sale the goods. Further, we have neither came across nor have been informed of any continuing failure to correctmajor weakness in internal control system.
5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements referred to in Section 301 ofCompanies Act 1956, that needs to be entered in the register maintained under that Section. Accordingly, reporting on Clause (v) (b) of theaforesaid Order does not arise.
6. The Company has not accepted deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder apply.
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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 aforesaid Order is not applicable to the Company with respect to maintenance of cost records under Section 209(1)(d) of theCompanies Act, 1956.
9. (a) According to the information and explanations given to us, the Company is regular in depositing undisputed statutory dues, namely, incometax with the appropriate authorities.
(b) According to the information and explanations given to us, there are no dues in respect of income tax, sales tax and service tax that have notbeen deposited with the appropriate authorities on account of dispute.
10. The accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred cash losses during theyear and in the immediately preceding 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 noamounts due 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 ofpledge of 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 notcomplied with.
14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and otherinvestments.
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 not raised funds on short 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 maintainedunder Section 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
Place : Mumbai (Membership No 08820)Date : April 19, 2005
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Balance Sheet as at March 31, 2005Schedule As at 31.3.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSOURCES OF FUNDS:Shareholders’ FundsShare Capital 1 350,000,000 350,000,000Loan FundsSecured Loans14.25% Secured RedeemableNon-Convertible Debentures 1,480,418,950 2,085,642,080(Due within one year Rs.47,34,36,167;previous year Rs.60,52,23,130)Unsecured LoansTerm loan - (holding company) 363,269,439 363,269,439
1,843,688,389 2,448,911,519
Total 2,193,688,389 2,798,911,519
APPLICATION OF FUNDS:Fixed Assets 2Gross Block 4,399,646,238 4,399,646,238Less : Depreciation 1,222,169,649 992,280,940
Net Block 3,177,476,589 3,407,365,298Less : Lease Terminal Adjustment 1,377,515,038 992,228,118
1,799,961,551 2,415,137,180Current Assets, Loans and Advances 3Sundry Debtors 67,389,423 66,654,452Cash and Bank Balances 82,564 134,303Loans and Advances 337,578,842 321,953,346
405,050,829 388,742,101
Less: Current Liabilities and Provisions 4Liabilities 107,498,625 107,734,994Provisions 4,025,000 3,500,000
111,523,625 111,234,994
Net Current Assets 293,527,204 277,507,107Miscellaneous Expenditure(to the extent not written off or adjusted)Preliminary Expenses - -Profit and Loss Account 100,199,634 106,267,232
Total 2,193,688,389 2,798,911,519
Significant accounting policies 7Notes forming part of accounts 8
As per our report attachedSHARP & TANNANChartered Accountants A. N. MANI K.VENKATARAMANAN V.K.MAGAPU N.SIVARAMANby the hand of Manager Director Director Director
R.D. KAREPartner(Membership No. 08820)
Place: Mumbai Place: MumbaiDate : April 19, 2005 Date : April 19, 2005
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Profit & Loss Account for the year ended March 31, 2005Schedule 2004-05 2003-04
Rupees Rupees
INCOME
Lease rentals 423,356,355 491,912,261
(Tax deducted at source Rs.2,488,441;
Previous year Rs.479,857)
Interest 32,714,076 32,331,990
(Tax deducted at source Rs.785,523;
Previous year Rs.328)
Profit on sale of asset - 34,242,518
Other income 39,369,098 80,773,049
495,439,529 639,259,818
EXPENDITURE
Administration Expenses 5 3,478,390 9,581,071
Interest 6 255,479,832 344,546,805
Depreciation 229,888,709 241,302,881
Preliminary Expenses written off - 352,251
488,846,931 595,783,008
Profit / (Loss) before taxation 6,592,598 43,476,810
Provision for income tax 525,000 3,500,000
Profit / (Loss) after taxation 6,067,598 39,976,810
Add : Debit balance brought forward from the previous year (106,267,232) (146,244,042)
Debit balance carried to Balance Sheet (100,199,634) (106,267,232)
Basic / diluted earnings per share 0.17 1.14
Nominal value per share 10 10
Significant accounting policies 7
Notes forming part of accounts 8
As per our report attachedSHARP & TANNANChartered Accountants A. N. MANI K.VENKATARAMANAN V.K.MAGAPU N.SIVARAMANby the hand of Manager Director Director Director
R.D. KAREPartner(Membership No. 08820)
Place: Mumbai Place: MumbaiDate : April 19, 2005 Date : April 19, 2005
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Cash Flow Statement for the year ended March 31, 20052004-05 2003-04Rupees Rupees
A. Cash Flow from operating activities
Profit / (Loss) before taxation and extraordinary item 6,592,598 43,476,810
Add :
Depreciation 229,888,709 241,302,881
Lease Equalisation 385,286,920 322,180,782
Miscellaneous Expenditure written off - 352,251
Operating Profit before working capital changes 621,768,227 607,312,724
Add /(Less):
(Increase)/Decrease in Sundry Debtors (734,971) 5,154,085
(Increase)/Decrease in Loans and Advances (15,625,496) (33,714,931)
(Increase)/Decrease in Trade Payables (236,369) (85,432,688)
Cash generated from operations 605,171,391 493,319,190
Direct Tax paid - 4,417,750
Net Cash from Operating Activities 605,171,391 488,901,440
B. Cash flow from investing activities :
Sale of fixed assets - 50,006,482
Net Cash (used in)/from Investing Activities - 50,006,482
C. Cash flow from financing activities :
Repayment of long term borrowings (605,223,130) (584,832,075)
Proceed from other borrowings (Net) - -
Net Cash (used in)/from Financing Activities (605,223,130) (584,832,075)
Net (decrease)/increase in cash and cash equivalents (A+B+C) (51,739) (45,924,153)
Cash and cash equivalents at beginning of the year 134,303 46,058,456
Cash and cash equivalents at end of the year 82,564 134,303
(51,739) (45,924,153)
Notes :
1. Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 Cash Flow Statement, issuedby the Institute of Chartered Accountants of India.
2. Cash and cash equivalents represent cash and bank balances.
3. Previous year’s figures have been regrouped/reclassified wherever applicable.
As per our report attachedSHARP & TANNANChartered Accountants A. N. MANI K.VENKATARAMANAN V.K.MAGAPU N.SIVARAMANby the hand of Manager Director Director Director
R.D. KAREPartner(Membership No. 08820)
Place: Mumbai Place: MumbaiDate : April 19, 2005 Date : April 19, 2005
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As at 31-03-2005 As at 31-03-2004
Rupees Rupees Rupees RupeesSCHEDULE - 3
CURRENT ASSETS, LOANS AND ADVANCESSundry DebtorsDebts outstanding for a period exceeding six monthsConsidered good - -Considered doubtful 5,126,656 5,176,656
5,126,656 5,176,656Other debts, considered good 67,389,423 66,654,452
72,516,079 71,831,108Less : Provision for non-performing assets 5,126,656 5,176,656
67,389,423 66,654,452Cash and Bank BalancesCash on hand - -Balances with Scheduled Bankson current accounts 82,564 134,303
82,564 134,303
Schedules forming part of accountsAs at As at
31-03-2005 31-03-2004Rupees Rupees
SCHEDULE - 1
SHARE CAPITALAuthorised35,000,000 Equity Shares of Rs.10 each 350,000,000 350,000,000
Issued and Subscribed35,000,000 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
Gross Block Depreciation Net Block Lease Net Block afterTerminal Lease Terminal Adjustment
FIXED ASSETS Adjustment
As at Additions Deductions As At Upto For the Deductions 31-03-2005 As at As at As at As at As at01-04-2004 31-03-2005 31-03-2004 year 31-03-2005 31-03-2004 31-03-2005 31-03-2005 31-03-2004
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Owned Assets:Building 833,000 - - 833,000 65,827 13,578 - 79,405 753,595 767,173 - 753,595 767,173Computer 35,700 - - 35,700 26,593 5,787 - 32,380 3,320 9,107 - 3,320 9,107
868,700 - - 868,700 92,420 19,365 - 111,785 756,915 776,280 - 756,915 776,280
Leased Assets:Building 106,133,487 - - 106,133,487 15,340,347 3,544,858 - 18,885,205 87,248,282 90,793,140 35,810,291 51,437,991 69,409,500Plant and Machinery 4,292,644,051 - - 4,292,644,051 976,848,173 226,324,486 - 1,203,172,659 3,089,471,392 3,315,795,878 1,341,704,747 1,747,766,645 2,344,951,400
4,398,777,538 - - 4,398,777,538 992,188,520 229,869,344 - 1,222,057,864 3,176,719,674 3,406,589,018 1,377,515,038 1,799,204,636 2,414,360,900
Total 4,399,646,238 - - 4,399,646,238 992,280,940 229,888,709 - 1,222,169,649 3,177,476,589 3,407,365,298 1,377,515,038 1,799,961,551 2,415,137,180
Previous year 4,832,001,248 - 432,355,009 4,399,646,239 853,705,607 241,302,881 102,727,548 992,280,940 3,407,365,298 3,978,295,641 992,228,118 2,415,137,180 -
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Schedules forming part of accountsAs at 31-03-2005 As at 31-03-2004
Rupees Rupees Rupees RupeesSCHEDULE - 3
CURRENT ASSETS, LOANS AND ADVANCES (Contd.)
Loans and Advances, unsecuredConsidered good:Loans including interest accrued thereon 328,564,454 314,109,529Advances recoverable in cash or in kind or forvalue to be received 9,014,388 7,843,817
337,578,842 321,953,346Considered doubtful:Advances recoverable in cash or in kind or forvalue to be received - 5,588,794
337,578,842 327,542,140Less : Provision for non-performing assets - 5,588,794
337,578,842 321,953,346
405,050,829 388,742,101
SCHEDULE - 4
CURRENT LIABILITIES AND PROVISIONSLiabilitiesSundry creditors 94,456,475 94,834,132Unmatured lease rentals 13,042,150 12,900,862
107,498,625 107,734,994ProvisionsProvision for taxation 4,025,000 3,500,000
111,523,625 111,234,994
SCHEDULE - 5 2004-05 2003-04Rupees Rupees Rupees Rupees
ADMINISTRATION EXPENSESService charges 1,662,024 1,653,000Rent 12,000 12,000Rates and taxes 225,191 159,475Legal and professional charges 1,074,441 1,909,300Auditors remuneration (excluding service tax)
- Audit fees 60,000 50,000- Tax audit fees 12,500 12,500- Certification 37,000 17,000
109,500 79,500Travelling and conveyance 7,685 -Bank charges 172,952 3,165Miscellaneous expenses 214,596 184,837Provision for non performing assets - 5,579,794
3,478,389 9,581,071
SCHEDULE - 6
INTERESTDebentures 255,456,020 344,546,805Others 23,812 -
255,479,832 344,546,805
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Schedules forming part of accountsSCHEDULE – 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.
SCHEDULE – 8
NOTES FORMING PART OF ACCOUNTS
1. 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 January 31, 2000 as per debenture redemptionschedule. The Company has repaid Rs.2,609,581,050 as per the repayment schedule upto March 31, 2005.
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 Indian Petrochemicals CorporationLimited (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 of the debentures.
2. Lease rentals are net of lease equalisation Rs. 385,286,920; (Previous year Rs. 322,180,782)
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 for the year has been made in terms of Section 115JB of the Income Tax Act, 1961.
5. As per the terms of the interim injunction dated December 6, 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 theAssociation of Leasing and Financial Services Companies. Pending final disposal of this Petition (till date), there is no provision for deferred taxliability.
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6. Related Party Disclosures:
Related party disclosures in terms of Accounting Standards (AS) 18 “Related Party Disclosures”, issued by the Institute of Chartered Accountantsof India are as under:
Name of the Relationship Nature of (Due to) / (Due to) /Company Transactions from from
2004-05 2003-04 2004-05 2003-04Rupees Rupees Rupees Rupees
Larsen & Holding - Inter CorporateToubro Limited company deposits 998,064,022 1,142,801,000 57,995,000 84,905,000
Income :- Interest oninter corporate deposits 17,334,795 10,860,460 340,967 270,680
L&T Finance Fellow Purchase ofLimited subsidiary receivables 151,577,877 150,687,835 4,979 -
Income :
- Interest on intercorporate deposits - 2,292,568 - -
Expenditure :
- Service charges 1,440,000 1,440,000 - -
- Interest on credit balance 23,812 - - -
Note : No amounts pertaining to the related parties have been written off or written back during the year.
7. Segment Reporting:
As the Company’s business activity falls within a single primary business segment namely, financial services, and a single geographicalsegment, i.e. India, the disclosure requirement of Accounting Standard (AS) 17 - “Segment Reporting”, issued by the Institute of CharteredAccountants of India, is not applicable.
8. Earnings Per Share:
Calculation in accordance with the Accounting Standard (AS) 20 “Earnings Per Share”, issued by the Institute of Chartered Accountants ofIndia, are as under:
Net Profit after tax and extra ordinary items Rs.6,067,598
Number of Equity Shares outstanding 35,000,000
Basic / Diluted earnings per share Rs.0.17
Nominal value per Equity Share Rs.10
Schedules forming part of accountsSCHEDULE – 8
NOTES FORMING PART OF ACCOUNTS (Contd.)
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9. Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 9BB of Non-Banking FinanceCompanies Prudential Norms (Reserve Bank) Directions, 1998
Particulars RupeesLiabilities side: Amount Amount
Outstanding Overdue
(A) Loans and advances availed by the NBFC inclusive ofinterest accrued thereon but not paid:
(a) Debentures : Secured 1,480,418,950 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 depositsinclusive 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 NILdebentures where there is a shortfall in the value of security.
(c) Other public deposits NIL NIL
Assets Side: RupeesAmount
Outstanding
(C) Break-up of Loans and Advances including billsreceivables (other than those included in (D) below)(a) Secured NIL(b) Unsecured 328,564,454
(D) Break-up of Leased Assets and stock on hire andHypothecation loans counting towards EL/HP activities
(i) Lease assets including lease rentals under sundry debtors:(a) Financial Lease 1,866,588,810(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 accountsSCHEDULE – 8
NOTES FORMING PART OF ACCOUNTS (Contd.)
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Schedules forming part of accounts
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
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 58,335,967 58,335,967
(c) Other related parties NIL NIL NIL
2. Other than related parties 1,866,588,810 270,228,487 2,136,817,297
Total 1,866,588,810 328,564,454 2,195,153,264
(G) 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 of
fair 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
SCHEDULE – 8NOTES FORMING PART OF ACCOUNTS (Contd.)
RupeesAmount
Outstanding
S-240
INDIA INFRASTRUCTURE DEVELOPERS LIMITED
(H) Other information Rupees
Particulars Amount
(i) Gross Non-Performing Assets
(a) Related parties NIL
(b) Other than related parties 5,126,656
(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 11
c) Balance Sheet Date 31-03-2005
II. Capital raised during the period (Amount in Rupees thousands)
a) Public Issue Nil b) Right Issue Nil
c) Bonus Issue Nil d) Private Placement Nil
III. Position of Mobilisation and Deployment of funds (Amount in Rupees thousands)
a) Total Liabilities 2,193,688 b) Total Assets 2,193,688
Sources of funds
a) Paid-up Capital 350,000 b) Reserves and Surplus Nil
c) Secured Loans 1,480,419 d) Unsecured Loans 363,269
e) Others -
Application of funds
a) Net Fixed Assets 1,799,962 b) Investments Nil
c) Net Current Assets 293,527 d) Miscellaneous Expenditure Nil
e) Accumulated Losses 100,200
IV. Performance of Company (Amount in Rupees thousands)
a) Turnover (including other income) 495,440 b) Total Expenditure 488,847
c) Profit before tax 6,593 d) Profit after tax 6,068
e) Earning per share (Rs.) 0.17 f) Dividend Rate % Nil
V. Generic Names of three principal products/services of the Company
Item Code No. : N.A.
(ITC Code)
Product Description : Leasing
11. Previous year figures are regrouped wherever necessary.
Schedules forming part of accountsSCHEDULE – 8
NOTES FORMING PART OF ACCOUNTS (Contd.)
As per our report attachedSHARP & TANNANChartered Accountants A. N. MANI K. VENKATARAMANAN V. K. MAGAPU N.SIVARAMANby the hand of Manager Directors
R. D. KAREPartnerMembership No.08820
Place: Mumbai Place: MumbaiDate : April 19, 2005 Date : April 19, 2005
S-241
L&T POWER INVESTMENTS PRIVATE LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Accounts for the year ended March 31, 2005.
1. The Financial Results of the Company is summarized below:
Particulars Rs. in Lakh
Gross Turnover 600.02
Less: Operating & Establishment Expenses (591.91)
Less: Preliminary Expenses Written off (3.75)
Profit before Tax 4.36
Provision for Tax 0.17
Profit after Tax 4.19
2. Review of Operations:
During the year under review, the Company invested in Power Project, a sum of Rs. 21 Crore towards 2,10,00,000 Equity Shares in the Share Capitalof Konaseema EPS Oakwell Power Limited. Also, the Company executed a contract from Vemagiri Power Generation Company Limited for undertakingInland Transportation of material for its Power Project for a consideration of Rs. 9 Crore.
3. Dividend:
The Directors do not propose any dividend for the financial year 2004-2005.
4. Capital Expenditure:
During the period under review, the Company did not incur any capital expenditure.
5. Subsidiary:
As required by Section 212 of the Companies Act, 1956, the Audited Statement of Accounts, the reports of Board of Directors and Auditors of RaykalAluminium Company Private Limited are annexed.
6. 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.
7. Disclosure of Particulars:Since the Company is not engaged in the business of manufacturing activities or engaged in any activity involving direct consumption of fuel,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 not furnished.
8. 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.
9. 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 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, 2005 and of the profits of the Company forthe year ended on that date;
III. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of 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.
10. Directors:
Mr. R. Chandramouli is liable to retire by rotation and is eligible for re-appointment.
11. Auditors:
The Auditors, M/s. Sharp & Tannan, Chartered Accountants, retire at the Annual General Meeting and are eligible for re-appointment.
12. Acknowledgement:
The Directors acknowledge the invaluable support extended to the Company by the bankers, suppliers and customer. The Directors are pleased toplace on record their appreciation for the valuable contribution made by employees of the Company.
For and on behalf of the Board
S. V. SUBRAMANIAN N. SIVARAMAN
DirectorsPlace: MumbaiDate: April 26, 2005
S-242
L&T POWER INVESTMENTS PRIVATE LIMITED
Auditors’ ReportTO THE SHAREHOLDERS
We have audited the attached Balance Sheet of L&T Power Investments Private Limited as at March 31, 2005 and the Profit & 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 the Company’smanagement. Our responsibility is to 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 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.
1. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act,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 and the Cash Flow Statement are in agreement with the books of account;
(d) In our opinion the said Balance Sheet and Profit and Loss Account and the Cash Flow Statement comply with the mandatory accountingstandards referred to in Section 211(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 March 31, 2005 and taken on record by the Boardof Directors, none of the directors is disqualified from being appointed as a director of the Company under Section 274(1)(g) of the CompaniesAct, 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 the significantaccounting policies in Schedule H and the notes appearing thereon in Schedule I give the information required by the Companies Act, 1956in 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 March 31, 2005 and
(ii) In case of the Profit & Loss Account, of the profit for the year ended on that date.
(iii) In case of Cash Flow Statement, of the cash flows for the year ended on that date.
SHARP AND TANNANChartered Accountants
By the hand of
R.D.KAREPartner
Place: Mumbai (Membership No. 8820)Date: April 26, 2005
S-243
L&T POWER INVESTMENTS PRIVATE LIMITED
Annexure to the Auditors’ Report(Referred to in paragraph (1) of our Report of even date)
1. The Company is not holding any fixed assets as at March 31, 2005.
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 neither granted to nor taken any loans, secured or unsecured, 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 is adequate internal control system commensurate with the sizeof the Company and the nature of its business for the purchase of plant and machinery, equipment, other assets and sale of services. There wereno sales of goods during the period. In our opinion and according to the information and explanations given to us, there is no continuing failure tocorrect major weaknesses in internal control system.
5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred toin Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section and;
(b) In our opinion and According to the information and explanations given to us, transactions made in pursuance of such contracts or arrangementshave been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
6. The Company has not accepted any deposits from public and provisions of Section 58A, 58AA and any other relevant provisions of the CompaniesAct, 1956 are not applicable.
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 the Company.
9. (a) The Company is regular in depositing undisputed statutory dues including Income Tax, Service Tax, Cess and any other statutory dues withthe appropriate authorities.
(b) According to the information and explanations given to us, there were no undisputed amount payables as on March 31, 2005 in respect ofIncome Tax, Service Tax and Cess.
10. The Company has no accumulated losses as at March 31, 2005 and also in the immediately preceding financial year.
11. The Company has not raised any loans from a financial institution or bank.
12. The Company has not granted any loans or 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. The Company is not dealing or trading in shares or securities. However, other investments in shares and mutual fund units are held in its own name.
15. 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.
16. The Company has not taken any term loans.
17. The Company has not utilized funds raised on short term basis for long term uses.
18. The Company has not made preferential allotment of shares to company covered in the Register maintained under Section 301 of the Act.
19. The Company has not issued any debentures.
20. The Company has not raised any money by public issue.
21. 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: April 26, 2005
S-244
L&T POWER INVESTMENTS PRIVATE LIMITED
Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rupees Rupees Rupees Rupees
SOURCES OF FUNDS:
Shareholders’ Funds:
Share Capital A 210,600,000 600,000
Reserves and Surplus:
Profit and Loss Account 418,557 -
Total 211,018,557 600,000
APPLICATION OF FUNDS:
Fixed Assets - -
Investments B 221,435,557 9,300,000
Current Assets, Loans and Advances C 34,624,709 277,632
Less: Current liabilities and provisions D 46,543,812 10,642,110
Net current assets (11,919,103) (10,364,478)
Miscellaneous expenditure E 1,502,102 1,664,478(to the extent not written-off or adjusted)
Total 211,018,557 600,000
Significant Accounting Policies H
Notes forming part of Accounts I
As per our report attached
SHARP & TANNAN For and on behalf of the BoardChartered AccountantsBy the hand of
R. D. KARE R. CHANDRAMOULI S.V.SUBRAMANIAN N.SIVARAMANPartner Manager DirectorsMembership No.8820
Place: Mumbai Place: MumbaiDate: April 26, 2005 Date: April 26, 2005
S-245
L&T POWER INVESTMENTS PRIVATE LIMITED
Profit & Loss Account for the year ended March 31, 20052004-05 2003-04
Schedule Rupees Rupees
INCOME
Sales & Services 59,566,475 -
Other Income F 435,557 -
Total 60,002,032 -
EXPENDITURE
Operating & Establishment Expenses G 59,190,949 -
Preliminary Expenses written off 375,526 -
PROFIT BEFORE TAX 435,557 -
PROVISION FOR TAX - -
- Current Tax 17,000 -
- Deferred Tax - -
PROFIT AFTER TAX 418,557 -
Add : Balance brought forward from previous year - -
PROFIT AVAILABLE FOR APPROPRIATION 418,557 -
Less : - -
Transferred to General Reserve - -
BALANCE CARRIED TO BALANCE SHEET 418,557 -
Earnings per Share - Basic (Rupees) 0.02 -
SIGNIFICANT ACCOUNTING POLICIES H
NOTES FORMING PART OF ACCOUNTS I
As per our report attached
SHARP & TANNAN For and on behalf of the BoardChartered AccountantsBy the hand of
R. D. KARE R. CHANDRAMOULI S.V.SUBRAMANIAN N.SIVARAMANPartner Manager DirectorsMembership No.8820
Place: Mumbai Place: MumbaiDate: April 26, 2005 Date: April 26, 2005
S-246
L&T POWER INVESTMENTS PRIVATE LIMITED
Cash Flow Statement for the year ended March 31, 20052004-05 2003-04Rupees Rupees
A CASH FLOW FROM OPERATING ACTIVITIES:
Profit / (Loss) before Taxation and extra ordinary item 435,557 -
Less: Profit on sale of Investments (435,557) -
Add: Miscellaneous Expenditure written off 375,526 -
Operating Profit before Working Capital Changes 375,526 -
Add / Less: (Increase) / Decrease in Sundry Debtors (33,062,827) -
Add / Less: (Increase) / Decrease in Loans & Advances (648,587) (190,000)
Add / Less: Increase / (Decrease) in Trade Payables 35,884,701 10,622,079
Creditors 41,721,960 1,622,079
TDS 119,389 -
Advances from Customers (5,956,648) 9,000,000
Net Cash flow from operating activities (A) 2,548,813 10,432,079
B CASH FLOW FROM INVESTING ACTIVITIES:
Investments (211,700,000) (8,800,000)
Increase in Share Capital 210,000,000 -
Net Cash flow from Investing activities (B) (1,700,000) (8,800,000)
C CASH FLOW FROM FINANCING ACTIVITIES:
Expenditure incurred for increase in Authorised Capital (213,150) (1,644,247)
Net Cash flow from Financing activities (C) (213,150) (1,644,247)
Net increase in cash & cash equivalents (A+B+C) 635,663 (12,168)
Cash & cash equivalents at beginning of the year 83,632 95,800
Cash & cash equivalents at end of the year 719,295 83,632
As per our report attached
SHARP & TANNAN For and on behalf of the BoardChartered AccountantsBy the hand of
R. D. KARE R. CHANDRAMOULI S.V.SUBRAMANIAN N.SIVARAMANPartner Manager DirectorsMembership No.8820
Place: Mumbai Place: MumbaiDate: April 26, 2005 Date: April 26, 2005
S-247
L&T POWER INVESTMENTS PRIVATE LIMITED
Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSCHEDULE ‘A’SHARE CAPITALAuthorised:22,000,000 Equity Shares of Rs.10 each 220,000,000 220,000,000
(Previous year - 22,000,000 Equity Shares of Rs.10 each)
Issued and Subscribed:210,60,000 Equity Shares of Rs.10 each fully paid 210,600,000 600,000
(All the shares are held by Larsen & Toubro Limited,the holding Company and its nominees)
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 500,000 500,000Others:Konaseema (EPS) Oakwell Power Limited 210,000,000 -
2,10,00,000 shares of Rs.10/- eachCurrent Investments at cost:Mutual Funds:Deutsche Insta Cash Plus Fund - Growth Plan 10,935,557 8,800,000985,149.770Units of Rs.11.1004 each (purchased during the year)
221,435,557 9,300,000
SCHEDULE ‘C’CURRENT ASSETS, LOANS AND ADVANCESSundry Debtors
UnsecuredDebts outstanding for more than 6 months
Considered goodOther Debts (less than 6 months) - -
Considered good 33,062,827 -Cash and Bank balances:
Cash in hand - -Balances with scheduled banks:
On current account with Bank of India 83,517 83,632On current account with CitiBank 635,778 -
Loans and Advances:Unsecured:
Considered good:Subsidiary company - other advances 9,500 9,500
Advance receivable in cash or kindTax Deducted at source 614,138 184,500Other Claims Receivable 218,949 -
34,624,709 277,632
S-248
L&T POWER INVESTMENTS PRIVATE LIMITED
As at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees RupeesSCHEDULE ‘D’CURRENT LIABILITIES AND PROVISIONSLiabilities:Sundry Creditors
Liability for expenses 26,236,093 -
Suppliers Ledger balanceLarsen & Toubro Limited 16,278,645 1,639,950Others 849,333 2,160
43,364,070 1,642,110TDS Contractor - Corp 116,617 -TDS Contractor - Non Corp 2,772 -Advance from Vemagiri Power Generation Limited 3,043,352 9,000,000Provisions
Tax 17,000 -
46,543,812 10,642,110
SCHEDULE ‘E’MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)Filing fees, Stamp duty, Registration charges 1,847,750 1,634,600Printing charges 2,200 2,200Audit fees (including service tax) 5,310 5,310Bank charges 22,368 1,877,628 22,368 1,664,478
Less : Preliminary expenses written off (375,526) -
1,502,102 1,664,478
SCHEDULE ‘F’OTHER INCOMEProfit on Sale of Investments 435,557 -Duetsche Insta Cash Mutual Fund - Growth Option - -
435,557 -
SCHEDULE ‘G’OPERATING & ESTABLISHMENT EXPENSES -Transport Charges - Local 46,444,753 -Clearing Agent’s Charges 4,653,441 -Custom Duty Paid 3,909,712 -Port Rent Charges 4,081,288 -Overheads charged by S&A Companies 58,000 -Bank Charges 225 -Bank Guarantee Charges 27,000 -Audit Fees 16,530 -
59,190,949 -
Schedules forming part of accounts
S-249
L&T POWER INVESTMENTS PRIVATE LIMITED
Schedules forming part of accountsSCHEDULE ‘H’SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING:
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)
During the year, Company has changed its policy for amortising the expenditure incurred under this head from ten years to five years.
3. INVESTMENTS
i. Long term investments are carried at cost.
ii. Current Investments are carried at lower of cost or market value.
SCHEDULE ‘I’NOTES FORMING PART OF ACCOUNTS
1. Contingent liabilities not provided for Rs. NIL.
2. Previous year’s figures have been regrouped wherever necessary.
3. Additional information required to be disclosed under para 3(ii) of Part II of Schedule VI of the Companies Act, 1956, is not presently applicable tothe Company.
4. Due to the change in accounting policy in respect of amortisation of miscellaneous expenditure, the profit for the year is understated by Rs.1,87,763/-.
5. Disclosure of related parties / related party transactions:
i. List of related parties over which control exists:Subsidiary Company : Raykal Aluminium Co. Pvt. Ltd.
ii. Names of the Related Parties with whom transactions were carried out during the year and description of relationship:Holding Company: Larsen & Toubro Limited
iii. Disclosure of related party transactions: 2004-05Sr. No. Nature of transaction / relationship Rupees
1 Purchase of goods & services (including Commission paid)Holding Company – Larsen & Toubro Limited 58000
TOTAL 58000
iv. Amount due to / from related partiesSr. No. Particulars / Relationship1 Accounts payable to related parties
Holding Company – Larsen & Toubro Limited 16278645Associates 0Key Management Personnel [“KMP’] 0Relatives of KMP 0
TOTAL 16278645
6. Basic and Diluted Earnings per share [“EPS”] computed in accordance with Accounting Standard (AS) 20 ‘Earnings per Share’:
2004-05 2003-04Basic
ParticularsProfit after tax as per Accounts (Rupees) A 418,557 -Number of shares subscribed B 21,060,000 60000Basic EPS (Rupees) A / B 0.02 N.A.
DilutedSame as above
S-250
L&T POWER INVESTMENTS PRIVATE LIMITED
Schedules forming part of accounts7. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details:
Registration No. 1 1 - 1 2 5 6 5 2 State Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 5
Date MonthYear
II. Capital raised during the year (Amount in Rs.Thousand)
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 Rs. Thousands)
Total Liabilities Total Assets
2 1 1 0 1 9 2 1 1 0 1 9
Sources of Funds
Paid-up Capital Reserves & Surplus
2 1 0 6 0 0 4 1 9
Secured LoansUnsecured Loans
N I L N I L
Application of Funds
Net Fixed Assets Investments
N I L 2 2 1 4 3 6
Net Current Assets Miscellaneous Expenditure
- 1 1 9 1 9 1 5 0 2
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs. Thousands)
Turnover Total Expenditure
6 0 0 0 2 5 9 5 6 6
Profit/Loss Before TaxProfit/Loss After Tax
+ - + -
+ 4 3 6 + 4 1 9
Please tick Appropriate Box + for Profit, - for Loss
Earnings per share in Rs. Dividend Rate %
0 . 0 2 N I L
V. Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
Power Projects
Investments
Contracting & Transportation Services
As per our report attached
SHARP & TANNAN For and on behalf of the BoardChartered AccountantsBy the hand of
R. D. KARE R. CHANDRAMOULI S.V.SUBRAMANIAN N.SIVARAMANPartner Manager DirectorsMembership No.8820
Place: Mumbai Place: MumbaiDate: April 26, 2005 Date: April 26, 2005
S-251
L&T POWER INVESTMENTS PRIVATE LIMITED
Statement pursuant to Section 212 of the Companies Act, 1956 relating toSubsidiary Companies
For and on behalf of the Board
S. V. SUBRAMANIAN N. SIVARAMAN
DirectorsPlace: MumbaiDate: April 26, 2005
Name of the subsidiary company Raykal Aluminium Company Private Limited
Financial year of the subsidiary company ended on March 31, 2005
Number of shares of the Subsidiary Companyheld by L&T Power Investments Private Limited 50,000and/or its nominees at the above date – Equity Shares
The net aggregate of profits/ (losses), of the SubsidiaryCompany so far as it concerns the members of L&T PowerInvestments Private Limited: Rupees
(i) Dealt with in the accounts of L&T Power Investments Private Limited amounted to:a) for the subsidiary’s financial year ended March 31, 2005 Nilb) for the previous financial years of the subsidiary since it became subsidiary of L&T Power
Investments Private Limited Nil
(ii) Not dealt with in the accounts of L&T Power Investments Private Limited amounted to:a) for the subsidiary’s financial year ended March 31, 2005 Nilb) for the previous financial years of the subsidiary since it became subsidiary of L&T Power
Investments Private Limited Nil
Changes in the interest of L&T Power Investments Private Limited between the end of the subsidiary’s financial year and March 31, 2005:
Number of shares acquired Nil
Material changes between the end of the subsidiary’s financial year and March 31, 2005. NA
S-252
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
Directors’ Report
Your Directors present the Annual Report and Balance Sheet for the year ended March 31, 2005.
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 nomaterial 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, 2005;
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.
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 next Annual General Meeting of the Company.
For and on behalf of the Board
A.K.CHHATWANI W.D.RODRIGUESDirectors
Place : MumbaiDate : April 21, 2005
S-253
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
Auditors’ Report to the Shareholders
We have audited the attached Balance Sheet of Raykal Aluminium Company Private Limited as at March 31, 2005. 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 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 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 theCompanies Act, 1956, to the extent applicable;
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 the notesthereon, gives the 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, of the state of Company’s affairs as at March 31, 2005.
SHARP & TANNANChartered Accountants
by the hand of
R.D. KAREPartner
Membership No.008820Place : MumbaiDate : April 21, 2005
S-254
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
As at 31.3.2005 As at 31.3.2004
Rupees Rupees Rupees RupeesSOURCES OF FUNDS:Shareholders’ Funds:Share Capital
Authorised1,00,000 Equity Shares of Rs.10 each 1,000,000 1,000,000
Issued, Subscribed & Paid up50,000 Equity Shares of Rs.10 each fully paid-up 500,000 500,000(All the shares are held by L&T Power InvestmentsPrivate Limited and its nominees)
Unsecured LoanLoan from Directors — 28,800
Total 500,000 528,800
APPLICATION OF FUNDS:Current Assets, Loans and Advances:Cash and bank balances
Cash in hand — —Balance with Scheduled Bank in Current Account 27,548 3,700
27,548 3,700Loans and Advances
Unsecured and considered goodAdvances recoverable in cash or in kindLoan given to L&T (incl.interest accrued: Rs.27,041) 527,041 527,041TDS certificate receivable 607 —
527,648 527,041
555,196 530,741Less: Current Liabilities
Larsen & Toubro Limited 54,269 7,051L&T Power Investments Private Limited 9,500 9,500Income Tax payable 9,895 9,701Audit Fees payable 2,204 2,160
75,868 28,412
Net Current Assets 479,328 502,329Miscellaneous Expenditure(to the extent not written off or adjusted)Preliminary & Pre-operative Expenses 20,672 26,471
Total 500,000 528,800
Balance Sheet as at March 31, 2005
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered Accountantsby the hand of
R. D. KARE A. K. CHHATWANIPartner W. D. RODRIGUES
Directors
Membership No.008820
Place : Mumbai Place: MumbaiDate : April 21, 2005 Date: April 21, 2005
}
S-255
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
Notes forming part of accounts
1. The 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 Sec. 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.
3. Details of preliminary & pre-operative expenses: Rupees
Opening balance as at 1.4.2004 26,471
Add: Expenses during the year
ROC fees 1,800
Audit Fees 2,204
Legal Fees 6,500
Other Expenses 3,802
14,306
Less: Income during the year
Interest received / accrued on ICD with L&T 30,000
Add: Provision for tax on interest accrued 9,895
TOTAL 20,672
S-256
RAYKAL ALUMINIUM COMPANY PRIVATE LIMITED
4. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details:
Registration No. 1 5 - 0 5 6 7 3 State Code 1 5
Balance Sheet Date 3 1 0 3 2 0 0 5Date Month Year
II. Capital Raised during the Year (Amount in Rs.Thousands)
Public issue Rights issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
5 0 0 5 0 0Sources of Funds
Paid-up Capital Reserves & Surplus
5 0 0 N I L
Secured Loans Unsecured Loans
N I L N I LApplication of Funds
Net Fixed Assets Investments
N I L N I L
Net Current Assets Miscellaneous Expenditure
4 7 9 2 1
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs.Thousands)
Turnover Total Expenditure
N I L N I L
+ - Profit/Loss Before Tax + - Profit/Loss After Tax
N I L N I L
Please tick appropriate box + for profit, - for loss
Earning 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)
No activities during the year
As per our report attached For and on behalf of the BoardSHARP & TANNANChartered Accountantsby the hand of
R. D. KARE A. K. CHHATWANIPartner W. D. RODRIGUES
Directors
Membership No.008820
Place : Mumbai Place: MumbaiDate : April 21, 2005 Date: April 21, 2005
}
Notes forming part of accounts
S-257
LARSEN & TOUBRO LLC
Directors’ ReportThe Directors have pleasure in presenting their Annual Report and Audited Accounts for the year ended December 31, 2004.FINANCIAL RESULTS
Year ended Year ended31.12.2004 31.12.2003
Rupees Rupees
Gross Profit 996627 775706
Less: Depreciation on Fixed Assets 738516 744146
Profit before taxes 258111 31560
Provision for current & deferred taxes - -
Profit after taxes 258111 31560
SALES
Income from sales amounted to Rs.7,56,94,632/- for the year ended December 31, 2004 against Rs.3,95,80,137/- during the previous year.
DIVIDEND
The Directors do not recommend payment of any dividend for the year.
CAPITAL EXPENDITURE
As at December 31, 2004 the gross fixed assets stood at Rs.41,65,668/- and the net fixed assets at Rs.19,36,522/-. Additions during the year amountedto Rs.5,05,744/-.
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
As the Company is engaged in trading activities outside India, there are no particulars to be disclosed as per the Companies (Disclosure of Particularsin 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 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 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 December 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; and
iv) that the annual accounts have been prepared on a going concern basis.
For and on behalf of the Board
K. SURENDRADirector
Place : ChennaiDated : May 11, 2005
S-258
LARSEN & TOUBRO LLC
Auditors’ ReportThe financial statements of LARSEN & TOUBRO LLC, USA for the year ended December 31, 2004, being a company registered in Delaware, USA areaudited by ABERCROMBIE & ASSOCIATES, P.C. USA, and we have been furnished with their audit report dated March 25, 2005.
We are presented with the Accounts in Indian Rupees prepared by the management on the basis of aforesaid accounts to comply with the requirementsof Section 212 of the Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of LARSEN & TOUBRO LLC, USA as at December 31, 2004 and also the Profit & Loss Account and thecash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the 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.
In accordance with the provisions of section 227 of the Companies Act, 1956, we report as under:
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 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 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement comply with the accounting standards referred to insub-section (3c) of section 211 of the Companies Act, 1956;
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Indian Companies Act, 1956, since the company is registered inDelaware, USA, no reporting is required to be made under the above section;
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 noteNo. 14 in Schedule H to the accounts regarding the preparation of accounts on a going concern basis despite the erosion of networth as atDecember 31, 2004, the appropriateness of which we are not able to comment and the notes in Schedule ‘G’ regarding going concern conceptand the other notes elsewhere in the accounts give the information required by the Companies Act, 1956, in the manner so required and givesa 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the loss for the year ended on the date; and
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Place : Chennai L. VAIDYANATHANDate : May 11, 2005 Partner
Membership No.16368
S-259
LARSEN & TOUBRO LLC
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concern status
of the Company.(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of theCompany and the nature of its business.
(c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification between the physical stocks andbook records were not material.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize 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 system.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.(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 has
been generally regular in depositing undisputed statutory dues towards Income Tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutory dueswere in arrears as at December 31, 2004 for a period of more than 6 months from the date they became payable.
(c) According to the information and explanations given to us, there are no dues of Income Tax and other statutory dues, which have not beendeposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses at the end of the financial year. However, the Company has earned cash profit during the year and alsoin the immediately preceding previous year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from a bank. The Company did not haveany outstanding debentures and 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’s Report)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 of clause4(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 availed any term loans during the year and hence reporting on the purpose for which they were raised does not arise.(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that
no funds have been raised on short term or long term basis. Hence reporting on the usage of the same does not arise.(xix) The Company do not have outstanding debentures. Accordingly, no security or charge need be created.(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 our
audit.The clauses 4.(iii),(v),(vi),(viii) and (xviii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since it is registered outsideIndia and hence no reporting has been made.
SHARP & TANNANChartered Accountants
Place : Chennai L. VAIDYANATHANDate : May 11, 2005 Partner
Membership No.16368
S-260
LARSEN & TOUBRO LLC
Balance Sheet as at December 31, 2004As at As at
Schedule 31.12.2004 31.12.2003
SOURCES OF FUNDS Rupees Rupees
Shareholders’ funds
Share capital A 2438475 2438475
Translation reserve 283879 182190
Loan funds
Unsecured loans ( From holding company including 285576 631286interest accrued thereon)
TOTAL 3007930 3251951
APPLICATION OF FUNDS
Fixed assets BGross block 4165668 4214734
Less: Depreciation 2229146 1823534
Net block 1936522 2391200
Current assets, loans and advances C
Inventories 21129513 22921296
Sundry debtors 19756264 21438110
Cash and bank balances 7776472 1772335
Loans and advances 250938 269222
48913187 46400964Less: Current liabilities and provisions
Current Liabilities D 50490263 48446808
Net current Liabilities (1577076) (2045844)
Profit & Loss account 2648485 2906595
TOTAL 3007930 3251951
Significant Accounting Policies G
Notes on Accounts H
As per our report attachedSHARP & TANNANChartered Accountants
L. VAIDYANATHANPartner K. SURENDRA SUNIL PANDEMembership No.16368 Directors
Place : Chennai Place : ChennaiDate : May 11, 2005 Date : May 11, 2005
S-261
LARSEN & TOUBRO LLC
Profit and Loss Account for the year ended December 31, 2004Schedule Year Ended Year Ended
31.12.2004 31.12.2003
Rupees Rupees
INCOME
Sales 75694632 39580137
75694632 39580137
EXPENDITURE
Cost of goods sold E 67015913 32727849
Sales and administration expenses F 7682092 6076582
Depreciation and obsolescence 738516 744146
75436521 39548577
Profit/(Loss) before taxes 258111 31560
Provision for tax - -
Profit/(Loss) after taxes 258111 31560
Add: Balances brought forward from previous years (2906595) (2938154)
Balance carried to Balance Sheet (2648485) (2906595)
Earnings per share 5 1
Significant Accounting Policies G
Notes on Accounts H
As per our report attachedSHARP & TANNANChartered Accountants
L. VAIDYANATHANPartner K. SURENDRA SUNIL PANDEMembership No.16368 Directors
Place : Chennai Place : ChennaiDate : May 11, 2005 Date : May 11, 2005
S-262
LARSEN & TOUBRO LLC
Cash Flow Statement for the year ended December 31, 2004Year Ended Year Ended
31.12.2004 31.12.2003
(Rs.Lakh) (Rs.Lakh)A. Cash Flow from operating activities
Net Profit/(Loss) Before Tax & extraordinary items 5.42 2.14Adjust ment for :Depreciation 7.39 7.44Exchange difference on translation (2.84) (1.83)Interest (Net) - -Dividend Received - -Interest on income tax refund - -Deferred credit 0.98 -(Profit)/Loss on sale of fixed assets (net) - -Operating Profit before Working Capital changes 10.95 7.75Adjustments for:Increase/(Decrease) in trade and other receivables 16.82 (100.28)Increase/(Decrease) in inventories 17.92 (43.85)Increase/(Decrease) in loans and advances 0.18 (0.18)Increase/(Decrease) in trade payables 20.44 126.28Cash generated from operations 66.31 (10.28)Direct taxes paid (net of refund) - -Net Cash from operating activities (A) 66.31 (10.28)Cash Flow from Investing activities:Purchase of Fixed Assets (5.05) (13.46)(Interest Capitalised Rs.Nil previous year: Rs. Nil)Sale of Fixed Assets 2.23 -Interest received - -Dividend received from other investments - -Net Cash from investing activities (B) (2.82) (13.46)Issue of Equity shares - (0.04)(Repayment )/Proceeds from other borrowings (3.45) 6.31Dividend Paid - -Tax on distributed porfits - -Interest Paid - -Net cash from financing activities (C) (3.45) 6.27Net increase in cash and cash equivalents (A+B+C) 60.04 (17.47)Cash and Cash equivalents as at the beginning 17.72 35.19(including cash credit from banks)Cash and Cash equivalents as at the end 77.76 17.72(including cash credit from banks)
NOTES1. Cash flow statement has been prepared under the Indirect Method as set of in the Accounting Standard 3 issued by the Institute of Chartered
Accountants of India.2. Cash and cash eqivalents represent cash and bank balances.3. Previous year’s figures have been regrouped/reclassified wherever applicable.
K. SURENDRA SUNIL PANDEDirectors
ToThe Board of DirectorsLARSEN & TOUBRO LLCWe have examined the attached Cash Flow Statement of Larsen & Toubro LLC for the year December 31, 2004. The statement has been prepared bythe Company in accordance with the requirements of AS 3 and is based on and in agreement with the corresponding Profit & Loss Account and BalanceSheet of the Company covered by our report of even date to the members of the Company.
SHARP & TANNANChartered Accountants
by the hand of
L. VAIDYANATHANPlace : Chennai PartnerDate : May 11, 2005 Membership No.16368
S-263
LARSEN & TOUBRO LLC
Schedules forming part of accountsAs at As at
31.12.2004 31.12.2003
SCHEDULE A Rupees RupeesSHARE CAPITALAuthorised
52,500 Equity shares of US $ 1 each 2438475 2438475
Issued and subscribed52,500 Equity shares of US $ 1 each fully paid up. 2438475 2438475(All the shares are held by Larsen & Toubro Limited, the holding companyand one of its subsidiary company)
SCHEDULE BFIXED ASSETS
Plant Furniture As at As atand and 31.12.2004 31.12.2003
Machinery Fixtures Vehicles Total Total
Rupees RupeesAt cost:As at 1.1.2004 2704905 282389 1227440 4214734 2883259Additions 53152 82704 369888 505744 1331475Deductions - - 554810 554810 -
As at 31.12.2004 2758057 365093 1042518 4165668 4214734
Depreciation:Upto 1.1.2004 979751 141984 701799 1823534 1079387For the year 486709 47415 204392 738516 744147Less: on assets deducted - - 332904 332904 -
Total upto 31.12.2004 1466460 189399 573287 2229146 1823534
Balance as at 31.12.2004 1291597 175694 469231 1936522 2391200
Previous year 1725154 140405 525641 2391200 -
As at As at31.12.2004 31.12.2003
SCHEDULE C Rupees RupeesCURRENT ASSETS, LOANS AND ADVANCES
Current AssetsStock-in-trade at lower of cost or net realisable value
Trading goods 21129513 22921296Sundry debtors, unsecured, considered good:
Outstanding for more than six months - -Other debts 19756264 21438110
Cash and Bank balancesBalances with non-schedule banks held in current account 7776472 1772335
maximum amount outstanding at any time during the year- Wood Forest National Bank., USA Rs.174.45 lakhs
(previous year Rs.81.67 lakhs)- Citi Bank, USA Rs.32.82 lakhs (Previous year Rs.Nil)
Loans and Advances (Unsecured)Advances recoverable in cash or in kind or for value to be received- considered good 250938 269222
48913187 46400964
SCHEDULE DCURRENT LIABILITIES AND PROVISIONS
Current LiabilitiesSundry creditors 50490263 48446808
S-264
LARSEN & TOUBRO LLC
Schedules forming part of accounts31.12.2004 31.12.2003
Rupees RupeesSCHEDULE ECOST OF GOODS SOLD
Opening Stock 22921296 18308250Add: Purchases 65224130 37340895Less: Closing Stock 21129513 22921296
Cost of goods sold 67015913 32727849
SCHEDULE FSALES AND ADMINISTRATION EXPENSES
Rent 3035120 2661034Salaries 1751588 -Rates and taxes 498958 670825Telephone 187738 318198Utilities 321907 315438Travelling and conveyance 241931 100858Insurance 562859 484734Forwarding charges (net) 156523 690613Professional fees 734745 662264Sales Promotion expenses 744720 1094558Contract Labour 272969 330033Commission to Distributors/Representatives 3836349 1152425Interest 114932 -Miscellaneous expenses 701793 801762
13162132 9282743Less
Reimbursed overheads by holding company (5480040) (3206161)
- Larsen and Toubro Limited, India 7682092 6076582
SCHEDULE GSIGNIFICANT ACCOUNTING POLICIESBasis of accountingThe accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with the provision ofSection 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted for on accrual, including forcommitted obligations.
These financial statements have been prepared in conformity with the Generally Accepted Accounting Principles which require management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Opening / closing balances of assets and liabilities are converted at opening / closing rates respectively. Transactions during the year are converted atthe average rate.
Fixed AssetsFixed assets are capitilised at acquisition cost.
DepreciationDepreciation on assets are provided on WDV balance based on the useful life of the assets as determined by the management.
The useful lives of property and equipment for the purpose of computing depreciation are:
YearsLeasehold improvements 39Machinery and Equipment 5 - 7Furniture and Fixtures 5 - 7Trucks and Autos 5
The above rates are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956.
InventoriesInventories are stated at the lower of cost or net realisable value.
Revenue recognitionRevenues from sales are recognised when the property in the goods are transferred to the buyer and no significant uncertainty exists regarding ultimatecollection.
S-265
LARSEN & TOUBRO LLC
Schedules forming part of accountsTax 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 USIncome Tax Laws and based on expected outcome of assessments / appeals.
Deferred tax is recognised on timing differences 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 asset are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be availableagainst which such deferred tax asset can be realised.
SCHEDULE HNOTES ON ACCOUNTS
1. Out of the total shares issued, 50,000 Equity Shares (previous year 50,000) are held by the holding company – Larsen & Toubro Limited and 2,500Equity Shares (previous year NIL) are held by Tractor Engineers Limited, a subsidiary of the holding company.
2. Auditors’ remuneration and expenses charged to accounts
Rs. Lakh2004 2003
Audit fees 2.81 4.82Others 3.18 1.80
5.99 6.62
3. Borrowing costs capitalised during the year Rs.Nil.
4. Amounts due to small scale industries (SSI) outstanding for more than 30 days as on December 31, 2004 is Rs.Nil. Further, interest on overdueamounts to SSI units remaining unpaid as on December 31, 2004 is Rs. Nil.
5. No provision for tax is made in the current year due to carried forward losses.
6. Deferred Tax Asset of Rs.299874/- representing future tax savings on accumulated losses, calculated based on US tax laws, has not been reckonedas a matter of prudence.
7. The Company has entered into cancelable operating lease for its office and warehouse premises which is renewable on expiry. The Company hasno other lease transactions requiring reporting under Accounting Standard on leases (AS 19).
8. The Company is trading in one product. Hence segment reporting is not applicable.
9. There are no contingent liabilities existing as at the balance sheet date.
10. Accounts are translated in Indian Rupees as follows:a. Share capital is retained at the initial contribution amount.b. Fixed and current assets & current liabilities are translated at year end rates.c. Revenue transactions are translated at the average rates.d. The resultant difference is accounted as translation reserve in the balance sheet.
11. Details of stocks, purchases and turnover –
Opening ClosingClass of goods Unit Stock Stock Purchases Turnover
1.1.2004 31.12.2004 2004 2004
Valves Unit 1205 832 3612 3985(638) (1205) (2549) (1982)
Rs. Lakh 229.21 211.30 652.24 756.95(183.08) (229.21) (373.41) (395.80)
Notes: Figures in brackets are for previous year
12. Related Party Transactions
a. The company has entered into transactions with the following related parties:
S.No. Name of the Related Party Relationship1. Larsen & Toubro Limited (L&T), India Holding company2. Audco India Limited, India Associate of L&T3. L&T Infotech Limited, India Subsidiary of L&T4. Tractor Engineers Limited, India Subsidiary of L&T
b. Details of transactions with Shareholders & Subsidiaries: Rs. Lakh1. Purchase of Goods 652.242. Reimbursement of overheads 54.80
13. Figures for the previous year have been regrouped/reclassified wherever necessary.
14. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amountsand classification of liability that may be necessary if the company is unable to continue as a going concern.
S-266
LARSEN & TOUBRO LLC
15 BALANCE SHEET ABSTRACT AND GENERAL BUSINESS PROFILE
I. Registration Details
Registration No. 5 1 - 0 4 0 5 5 7 7 State Code N A
(Registed as a Limited Liability Compay in the State of Delaware, USA)
Balance Sheet Date 3 1 1 2 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 Rs.Thousands)
Total Liabilities Total Assets
3 0 0 8 3 0 0 8
Sources of Funds
Paid-up Capital Reserves & Surplus
2 4 3 8 2 8 4
Deferred Tax Secured Loans
N I L N I L
Unsecured Loans
2 8 6
Application of Funds
Net Fixed Assets Investments
1 9 3 7 N I L
Net Current Assets Accumulated Losses
- 1 5 7 7 2 6 4 8
IV. Performance of Company (Amount in Rs.Thousands)
Turnover Total Expenditure
7 5 6 9 5 7 5 4 3 7
Profit / Loss before tax Profit / Loss after tax
+ 2 5 8 + 2 5 8
Basic Earning per Share in Rs. Dividend rate %
+ 5
V. Generic Names of Three Principal Products
Item Code No.
(ITC Code) 8 4 8 1 8 0 0 3
Product
Description I N D U S T R I A L V A L V E S
SHARP & TANNANChartered Accountantsby the hand of
L. VAIDYANATHANPartner K. SURENDRA SUNIL PANDEMembership No.16368 Directors
Place : Chennai Place : ChennaiDate : May 11, 2005 Date : May 11, 2005
Schedules forming part of accounts
S-267
L&T–ECC CONSTRUCTION (M) SDN. BHD.
The Directors have pleasure in submitting their report and the audited financial statements of the Company for the year ended December 31, 2004.
PRINCIPAL ACTIVITIES
The principal activities of the Company consist of engineering and construction. There have been no significant changes in the nature of these activitiesduring the financial year.
RESULTS
INR
Loss for the year after taxation (3,547,065)
Accumulated losses brought forward (8,770,961)
(12,318,026)
RESERVES AND PROVISIONS
There 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 inrelation to writing off of bad debts and the making of allowance for doubtful debts, and that all known bad debts had been written off and adequateallowance 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 bad debts,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, otherthan debts, were unlikely to realize in the ordinary course of business their value as shown in the accounting records of the Company and to theextent so ascertained, were written down to an amount they might be expected to realize.
(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 METHODS
At 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 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 tomeet its obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At 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 financial statements misleading.
DIRECTORS OF THE COMPANY
(a) Directors who served since the date of the last report are:-Mr. Sivajothi A/L Muhtiah RajendramMr. Anumolu RamakrishnaMr. Kodiyalam Vasudevan RangawamiMr. Pallipuram Krishnaiyer VenkatakrishnanMr. Rajasingam A/L MayilvaganamEn. Syed Mohsen B. Abdul Rahman Alhabshi
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(b) According to the Register of Director’s Shareholdings, particulars of interest of directors who held office at the end of the financial year in theshares of the Company is as follows: -
Name Balance at Balance at31.12.2004 31.12.2003
Sivajothi A/L Muhtiah Rajendram 150,001 150,001
Rajasingam A/L Mayilvaganam 150,000 150,000
Syed Mohsen B. Abdul Rahman Alhabshi 225,000 225,000
The other Directors do not have any interest in the shares of the Company.
(c) In accordance with the Company’s Articles of Association, Mr. Sivajothi A/L Muhtiah Rajendram and Mr. Pallipuram Krishnaiyer Venkatakrishnanretire 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 (other than thosedisclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm ofwhich the Director is a member, or with a company in which the Director has a substantial financial interest other than those disclosed in thefinancial statements.
(b) Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquirebenefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements are drawn up in accordance with Applicable approved Accounting Standards so as to give a trueand fair view of the state of affairs of the Company as at December 31, 2004 and the results and the cash flow for the year then ended.
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-explanatoryand therefore do not call for any further comments of Directors.
DISCLOSURE OF PARTICULARS
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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 December 31, 2004 and of the losses 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
AUDITORS
The 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,
P. K. VENKATAKRISHNAN K. V. RANGASWAMIDirectors
Place: ChennaiDate: May 12, 2005
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Auditors’ Report
The financial statements of L&T-ECC CONSTRUCTION (M) SDN. BHD, MALAYSIA for the year ended December 31, 2004, being a company registered inMalaysia, are audited by AHMAD ABDULLAH & GOH, CHARTERED ACCOUNTANTS, KUALALUMPUR, MALAYSIA and we have been furnished with theiraudit report dated April 7, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212 of theCompanies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of L&T-ECC CONSTRUCTION (M) SDN. BHD, MALAYSIA, as at December 31, 2004 and also the Profit & LossAccount and 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.
We conducted our audit in accordance with auditing standards generally accepted in India. 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 significant estimatesmade by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
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 to the extent applicable to theCompany.
2. Further to our comments in the Annexure referred to 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 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement, comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Companies Act, 1956, since the Company is registered in Malaysia, noreporting is required to be made under the above section.
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 Para 2 aboveregarding going concern concept and other notes in Schedule ‘Q’ and elsewhere in the accounts give the information required by the CompaniesAct, 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the loss for the year ended on the date; and
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
Sharp & TannanChartered Accountants
L. VaidyanathanPlace : Chennai PartnerDate : May 12, 2005 Membership No.16368
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}
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concern status ofthe Company.
(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of thecompany and the nature of its business.
(c) The company has maintained proper records of inventory. The discrepancies were noticed on physical verification between the physical stocksand book records were not material.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the sizeof the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion, andaccording to the information and explanations given us, there is no continuing failure to correct major weaknesses in internal control system.
(vi) The company has not accepted any deposit from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(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 has beengenerally regular in depositing undisputed statutory dues towards Income tax and any other statutory dues during the year with the appropriateauthorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutory dueswere in arrears as at December 31, 2004 for a period of more than 6 months from the date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax and other statutory dues, which have not beendeposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses at the end of the financial year and also incurred cash losses during the year and in the immediately precedingprevious year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from a Banks/Financial Institutions. TheCompany has not issued any 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 of pledgeof 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’s Report)Order, 2003 are not applicable to the Company.
(xiv) In our opinion and as per information obtained from management, the Company is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly, the provision of clause 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 availed any term loans during 2004 and hence reporting on the purpose for which they were raised does not arise.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that no fundshave been raised on short term or long-term basis. Hence, reporting on the usage of the same does not arise.
(xix) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue.
(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 our audit.
(xxii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registered inMalaysia and is operating outside India. Clauses : (iii), (v), (viii), (xviii)
Sharp & TannanChartered Accountants
L. VaidyanathanPlace : Chennai PartnerDate : 12.05.2005 Membership No.16368
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Balance Sheet as at December 31, 2004As at 31.12.2004 As at 31.12.2003
Schedules Rs. Rs. Rs. Rs.
SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDS:
Share Capital A 8,558,020 8,558,020
Reserves & Surplus - -
8,558,020 8,558,020
Translation Reserve 945,824 886,865
TOTAL 9,503,844 9,444,885
APPLICATION OF FUNDS:
Fixed assets: E1
Gross block 1,763,738 1,833,767
Less: Depreciation 1,367,656 1,051,924
Less: Impairment - -
Net block 396,082 781,843
Capital work-in-progress - -
396,082 781,843
Current assets, loans and advances: G
Sundry debtors - 2,180,106
Cash and bank balances 330,967 1,613,956
Inventories - -
Loans and advances 342,999 219,520
673,966 4,013,582
Less: Current liabilities and provisions: H 4,724,809 4,962,080
Net current assets (4,050,843) (948,498)
Profit & Loss Account 13,158,605 9,611,540
TOTAL 9,503,844 9,444,885
Notes on accounts Q
The schedules referred to above and the notes attachedform an intergral part of the Balance Sheet.
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN K. V. RANGASWAMI P. K. VENKATAKRISHNANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Profit and Loss Account for the year ended December 31, 2004Jan - Dec 2004 Jan - Dec 2003
Schedules Rs. Rs. Rs. Rs.
INCOME:
Sales & Service K - 2,718,039
Other income L 1,532,497 1,150,869
1,532,497 3,868,908
EXPENDITURE:
Construction and operating expenses M 20,086 4,368,680
Staff expenses N 1,830,962 1,726,529
Sales, administration and other expenses O 2,770,477 2,328,594
Interest and brokerage P 33,830 38,744
Depreciation 424,207 430,755
Impairment - -
5,079,562 8,893,302
Profit / (Loss) before tax (3,547,065) (5,024,394)
Provision for current taxes - -
Provision for deferred tax - -
- -
Profit/ (Loss) after tax (3,547,065) (5,024,394)
Add: Balance brought forward from previous year (9,611,540) (4,587,146)
Balance carried to Balance Sheet (13,158,605) (9,611,540)
Earnings per equity share - Basic & Diluted (4.73) (6.70)
Notes on accounts Q
The schedules referred to above and the notes attachedform an integral part of the Profit and Loss Account.
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN K. V. RANGASWAMI P. K. VENKATAKRISHNANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Cash Flow Statement for the year ended December 31, 2004Amount in Rupees
2004 2003A. Cash Flow from Operating Activities
Net profit before tax (3,547,065) (5,024,394)
Adjustments for:
Depreciation 424,207 430,755
Interest (net) 33,830 38,744
(Profit) / Loss on sale of fixed assets - -
Translation Reserve 121,753 (54,422)
Operating profit before working capital changes (2,967,275) (4,609,317)
(increase) / decrease in trade and other receivables 2,056,627 1,401,469
increase / (decrease) in trade payables (237,271) (1,356,010)
Cash generated from operations (1,147,919) (4,563,858)
B. Cash Flow from Investing Activities
Purchase of Fixed Assets (101,240) (148,291)
Sale of fixed assets -
Interest received 1,936 11,127
Net Cash (used in) / from investing activities (99,304) (137,164)
C. Cash Flow from Financing Activties
Interest paid (35,766) (49,871)
Net cash (used in) / from financing activities (35,766) (49,871)
Net (decrease) / increase in cash and cash equivalents (1,282,989) (4,750,893)
(A+B+C)
Cash and cash equivalents at beginning of the year 1,613,956 6,364,849
Cash and cash equivalents at end of the year 330,967 1,613,956
Actual Cash Balance 330,967 1,613,956
DifferenceAs per our attached report of even date
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN K. V. RANGASWAMI P. K. VENKATAKRISHNANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Schedules forming part of accounts
Schedule A As at 31.12.2004 As at 31.12.2003Rs. Rs. Rs. Rs.
Share Capital:
Authorised:
750,000 Equity Shares of RM 1 each 8,558,020 8,558,020
Issued, Subscribed and Paid-up
750,000 Equity Shares of RM 1 each 8,558,020 8,558,020
Note: 30% of the above equity shares are held by Larsen & Toubro Limited,and the balance 70% by residents of Malaysia. 8,558,020 8,558,020
Schedule G As at 31.12.2004 As at 31.12.2003Rs. Rs. Rs. Rs.
Current Assets, Loans and Advances:
Current Assets:
Sundry Debtors:
Unsecured:
Debts outstanding for more than 6 months - -
Other Debts:
Considered good - 2,180,106
- 2,180,106Cash and bank balances:
Cash on hand 127,758 241,614
Balances with non-scheduled banks 203,209 1,372,342
330,967 1,613,956Loans and advances:
Unsecured:
Considered good:
Advances recoverable in cash or in kind 342,999 219,520
342,999 219,520
673,967 4,013,583
Schedule E1
Cost / Valuation Depreciation Book Value
Fixed Assets As at Additions Deductions As at Upto For the As at As at As at01-01-2004 31-12-2004 01-01-2004 Year 31-12-2004 31-12-2004 31-12-2003
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Other Equipments 325,385 35,925 - 361,311 257,830 85,415 343,245 18,066 74,227Vehicles 1,183,861 - - 1,183,861 542,606 295,957 838,563 345,298 707,552Computers 153,251 65,315 - 218,566 143,013 42,835 185,848 32,718 64
Total 1,662,498 101,240 - 1,763,738 943,449 424,207 1,367,656 396,082 781,843
Previous Year 1,685,476 148,291 - 1,833,767 621,169 430,755 1,051,924 781,843 -
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Schedules forming part of accounts
As at 31.12.2004 As at 31.12.2003Schedule H Rs. Rs. Rs. Rs.
Current Liabilities and Provisions:
Liabilities:
Acceptances
Sundry creditors :
Due to Holding Company 221,487 -
Others 4,503,322 4,962,080
4,724,809 4,962,080
4,724,809 4,962,080
Jan - Dec 2004 Jan - Dec 2003Schedule K Rs. Rs. Rs. Rs.
Sales & Service:
Construction, project related activity - 2,718,039
- 2,718,039
Schedule L
Other Income:
Miscellaneous Income 1,532,497 1,150,869
1,532,497 1,150,869
Schedule M
Construction & Operating Expenses:
Sub contracts - 4,339,965
Stores, spares and tools - 5,915
Power & fuel 20,086 22,800
20,086 4,368,680
Schedule N
Staff Expenses:Salaries, wages and bonus 1,769,766 1,294,791
Contribution to and provisions for:
Provident fund and pension fund 23,555 26,084
Welfare and other expenses 37,641 405,654
1,830,962 1,726,529
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Schedules forming part of accountsSchedule O Jan - Dec 2004 Jan - Dec 2003
Rs. Rs. Rs. Rs.Sales, Administration and Other Expenses:
Rent 925,781 762,186
Rates and taxes - 15,193
Travelling and conveyance 361,723 417,971
Telephone, postage and telegrams 366,621 276,841
Stationery and printing 193,793 38,284
Insurance 70,113 48,071
Bank charges 1,078 21,991
General repairs and maintenance 113,133 174,565
Miscellaneous expenses 738,235 573,492
Less : Reimbursement of Expenses - -
2,770,477 2,328,594
Schedule P
Interest & Brokerage:
Others 35,766 49,871
Less: Received - Others - Interest on fixed deposit 1,936 11,127
33,830 38,744
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Schedules forming part of accountsSchedule Q
Notes on Accounts
1. General Information
a. The Company is a private limited liability company, incorporated and domiciled in Malaysia. The registered office of the Company is located atBlock B, Unit B-3A-10, Phileo Damansara 1, Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan.
b. The principal activities of the Company consist of engineering and construction.
2. Significant Accounting Policies
a. Basis of Preparation
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with theprovisions of Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted for onaccrual, including for committed obligations.
These financial statements have been prepared in conformity with Generally Accepted Accounting Principles, which require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.
b. Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost comprises their purchase cost and any incidental cost incurred.
The carrying amounts are reviewed at Balance Sheet date to assess whether they are recorded in excess of their recoverable amount. Wherecarrying values exceed this recoverable amount, assets are written down to their recoverable amount.
c. Depreciation
Fixed assets are depreciated on the straight-line basis at rates designed to write off the cost of the assets over the estimated useful lives of theassets concerned. Additions are depreciated proportionately for the year from the month of addition. The principal annual rates used are asfollows: -
Motor vehicles 25%
Computers and office equipment 50%
The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956, for the respective categories.
d. Revenue Recognition
Revenue from construction and project related activities is recognised by applying percentage of completion to the contract value. Percentage ofcompletion is determined as a proportion of cost incurred to date to the total estimated cost. Full provision is made for any loss in the year inwhich it is foreseen.
e. Taxation
Provision for current taxes has not been made as the Company has suffered loss during the year.
Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainity that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
f. Hire Purchase
The cost of assets acquired under hire purchase is capitalised as fixed assets and depreciated over their respective estimated useful lives. Therelated financing charges are charged to the income statement over the hire purchase terms.
g. Employee Benefits
Wages, 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 are renderedby employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences suchas sick leave are recognised when the absences occur. As required by law, companies in Malaysia make contributions to the social securityfund.
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h. Foreign Currency Translation
Accounts are translated in Indian Rupees as follows:
a. Share Capital is retained at the initial contribution amount
b. Fixed and Current assets & Current liabilities are translated at year-end rates.
c. Revenue transactions are translated at the average rates.
d. The resultant difference is accounted as translation reserve in the balance sheet
3. Disclosure of Related Party Transactions
The Company has recovered an amount of Rs.1,532,497 /- (PY Rs.191246) towards share of office space from M/s Larsen & Toubro Limited
4. Balances with non-scheduled banks
a. Current accounts
As at 31.12.2004 Maximum amountoutstanding at any
time during the yearRs. Rs.
Standard Chartered Bank, Jalan Anpang 196886 2249539
Bank of Nova Scortia 6323 6781
b. Fixed Deposit with Standard Chartered Bank 356,064
5. Taxation
No provision for current taxes has been made in view of taxable loss for the year.
6. Deferred Taxation
Details of deferred taxation assets relate to the following temporary differences :-
2004 2003Rs. Rs.
Temporary difference between depreciation and corresponding taxation allowances (86,285) 57,929Unrelieved losses (34,069,167) (32,639,222)Unabsorbed capital allowance 741,951 (511,956)
Total difference (34,897,403) (33,093,249)
Deferred taxation assets at 26.69% (2003: 20%) not recognised in the financial statements (9,313,774) (6,618,650)
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 recognized as a matter of prudence.
7. Borrowing Cost capitalised during the year Rs. Nil.
8. There are no amounts due to the small-scale industries outstanding for more than 30 days.
9. Accounting standard 17 (AS 17) – The Company is in the business of Construction activity only.
10. Finance Leases:
Asset acquired on finance lease is car.
The cost of the assets taken on lease is Rs 1,183,861 the future lease obligation against which is Rs 426,436 as at December 31, 2004.
Schedules forming part of accounts
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Schedules forming part of accountsThe minimum lease rentals as at December 31, 2004 and the present value as at December 31, 2004 of minimum lease payments in respect of assetsacquired under finance leases are as follows:
Amount in Rs.
Minimum Lease Present Value ofPayments Minimum Lease
Payments
2004 2003 2004 2003
i. Payable not later than 1 year 196817 196817 174033 169872ii. Payable later than 1 year and not later than 5 years 229619 426436 219440 416380iii. Payable later than 5 years - - - -
Total 426436 623253 393473 586252
Less: Future finance charges 32963 37001 - -
Present Value of Minimum Lease Payments 393473 586252 - -
11. The Company has not taken any asset on operating / finance lease. Commercial / Residential premises taken on cancelable operating lease arerenewed at the end of the lease period.
12. Audit fees Rs. 49,219/- (Previous year Rs. 51,872)
13. Construction activity is a service activity and therefore the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act, 1956.
14. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount is morethan the amount carried in the books. Accordingly, no provision is required for the impairment in the accounts.
15. Previous periods figures have been regrouped/reclassified wherever necessary to conform to the presentation adopted in the current year.
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16. Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details:
Registration No. 3 9 0 3 5 4 7 - T State Code No. N A
Incorporated in Malaysia
Balance Sheet Date 3 1 1 2 2 0 0 4
II. Capital Raised during the Year (Amount in Rs.)
Public issue Rights issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs.)
Total Liabilities Total Assets
9 5 0 3 8 4 4 9 5 0 3 8 4 4Sources of Funds
Paid up Capital Translation Reserve
8 5 5 8 0 2 0 9 4 5 8 2 4
Secured Loans Unsecured Loans
N I L N I LApplication of Funds
Net Fixed Assets and Net Intangible Assets Investments
3 9 6 0 8 2 N I L
Net Current Assets Deferred Tax
- 4 0 5 0 8 4 3 N I L
Misc. Expenditure Accumulated Losses
N I L 1 3 1 5 8 6 0 5
IV. Performance of Company (Amount in Rs.)
Turnover (incl.other income) Total Expenditure
1 5 3 2 4 9 7 5 0 7 9 5 6 2
+ - Profit/Loss Before Tax*@ + - Profit/Loss After Tax *@
– 3 5 4 7 0 6 5 – 3 5 4 7 0 6 5
Please tick Appropriate box + for Profit, - for Loss
Basic Earning Per Share in Rs. Dividend Rate %
- 4 . 7 3 N I L
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms)
Item Code No. N A
(ITC Code)
Product Description Construction and Project Related Activity
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. VAIDYANATHAN K. V. RANGASWAMI P. K. VENKATAKRISHNANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
Schedules forming part of accounts
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Directors’ ReportIt gives us great pleasure to present to you the Annual Report and Audited Accounts of Larsen & Toubro (Oman) LLC (LTO) for the year endedDecember 31, 2004.OVERVIEW OF THE YEAR:The year 2004 witnessed significantly high level of activity for the construction industry. The year 2004 has been another record year for LTO. During thedecade, LTO has placed itself on a solid foundation and has opened itself to greater opportunity throughout the country and has demonstrated its abilityto win tenders and compete with international contractors.YEAR IN RETROSPECT:FINANCIAL RESULTS
Rupees2004 2003
Total Income 2,370,111,840 1,459,539,546Operating Profit (PBIDT) 126,237,423 76,718,106Less : Interest - 335,604Less : Depreciation and amortisation 16,077,353 7,889,624
Profit Before Tax (PBT) 110,160,070 68,492,878Less : Provision for current year taxes 12,553,087 80,06,145Less: Provision for previous year taxes 3,041,857 -
Profit After Tax (PAT) 94,565,126 60,486,733Add : Balance brought forward from previous year 50,372,144 13,195,119
Balance available for appropriation which the Directors appropriate as follows: 144,937,270 73,681,852Transfer to Statutory Reserve - 6,048,673Proposed Dividend 16,448,606 17,261,035
16,448,606 23,309,708
Balance to be carried forward 128,488,664 50,372,144
The Board of Directors recommend payment of a dividend of RO 0.40 per equity share on 3,64,286 equity shares of RO 1 each.
The sales and other income for the financial year under review were INR 2.34 Bn as against RO 1.46 Bn for the previous year registering an impressivegrowth of 70%. The profit before tax of INR 110,160,170 for the financial year under review as against INR 68,492,878 for the previous year registers anincrease of 71% over last year.The Company has achieved Return on Equity (ROE) of 52% and ROCE of 53%. All these improved performance could be achieved by the Company mainlydue to the exemplary dedication and hard work exhibited by our employees.Major orders secured and under execution during the financial year 2004 includes the following:
• Construction of Toyata Showroom at Buraimi for Saud Bahwan Group for INR 737.80 Mn• Construction of Al Hoti Caves for Ministry of Tourism for INR 159.62 Mn• Construction of Buraimi Sub-station for MHEW for INR 34.09 Mn• Construction of Tank Form at Salalah for INR 61.86 Mn• Construction of 33 KV Transmission Line for MHEW for INR 246.76 Mn• Construction of Sewage Treatment Plant at Rass Al Hadd for INR 58.13 Mn.• Construction of Cement Plant at Salalah for Raysut Cement for INR 468.46 Mn• Construction of Sub-station for Saud Bahwan Group for INR 112.66 Mn• Construction of Villa No.1 for Diwan of Royal Court for INR 1.78 Bn
During the year 2004, the Company has completed the following projects.
Client Project Description Value(INR in Mn)
Diwan of Royal Court Royal Flight Hangar 1524.027Muscat Municipality Construction of Al Khoudh Flyover 425.23Ministry of Regional Municipalities & Environment Sewage Treatment Plant at Wadi Bani Khalid 20.21Oman Refinery Company Shut down works 5.42Ministry of Health, Water & Electricity Sub-station at Al Iraqi 4.74Daleel Petroleum Piping works 3.27
FINANCE:
During the year 2004, the Company has worked zealously in controlling the working capital. This has strengthened our position to have financial resilienceto create value-enhancing opportunities.
CAPITAL EXPENDITURE:
As at December 31, 2004, the gross fixed assets stood at INR 1,67,667,877 and net fixed assets at INR 80,504,524.
CURRENT BUSINESS SCENARIO:
The year 2004 witnessed a number of international events that had its impact on the national arena. The oil price peaked to historical levels during 2004and substantial rise witnessed in the oil price boosted the revenue for the country. The higher inflows from the higher oil price realization has given furtherimpetus to the development spending of the Government and is apparent from the budget for 2005. According to the official statistics, the GDP growthis seen at 12.5% in 2004 and Government’s spending on Infrastructure and Tourism development projects for the year 2005 is to be at INR 97.87 Bn.Higher development spending by the Government is expected to push up the demand for capital equipment and consumer goods alike.
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AUDITORS’ REPORT:
The Auditors’ Report to the Shareholders does not contain any qualifications.
DISCLOSURE OF PARTICULARS:
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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.
PERSONNEL:
The strength of any company lies in its people and I am pleased to say that at LTO, we have a group whose dedication and enthusiasm will ensure goodperformance of the Company in future.
The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the Company duringthe year.
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 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 December 31, 2004 and of the profits 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
FUTURE OUTLOOK:
The Government’s Budget for 2005 clearly reveals Government’s determination to boost spending. The amount of INR 97.87 Bn has been earmarked forseveral Infrasturctural and Tourism development projects for the year 2005, which happens to be the last year of the current financial year plan. Theincreased expenditure in these segments is aimed to augment economic growth and LTO expects to have its market share maintained in the ensuing year.
We also hope to see clear outcomes from the pursuit of our growth ambitions that may re-define the size, structure and shape of the Company in a mannerthat is build to last, grow and prosper for the years ahead.
V. B. GADGIL K. V. RANGASWAMIPlace: Chennai DirectorsDate : May 12, 2005
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Auditors’ ReportThe financial statements of LARSEN & TOUBRO (OMAN) LLC, Oman for the year ended December 31, 2004, being a company registered in Oman, areaudited by RSM & Co., Chartered Accountants, Oman and we have been furnished with their audit report datedFebruary 22, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212 ofthe Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of LARSEN & TOUBRO (OMAN) LLC, Oman as at December 31, 2004 and also the Profit & 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.
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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
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 theCompanies Act, 1956 we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extentapplicable to the Company.
2. Further to our comments in the Annexure referred to 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement, comply with the accounting standards referred toin sub-section (3C) of Section 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Companies Act, 1956, since the Company is registered in Oman,no reporting is required to be made under the above section.
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 notesin Schedule ‘Q’ and elsewhere in the accounts give the information required by the Companies Act, 1956, in the manner so required and givea 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on the date; and
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Place : Chennai L. VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
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Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concern statusof the Company.
(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of theCompany and the nature of its business.
(c) The Company has maintained proper records of inventory. The discrepancies were noticed on physical verification between the physical stocksand book records were not material.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion,and according to the information and explanations given us, there is no continuing failure to correct major weaknesses in internal control system.
(vi) The Company has not accepted any deposit from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(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 towards Income-tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutory dueswere in arrears as at December 31, 2004 for a period of more than 6 months from the date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax, which have not been deposited with theappropriate authorities on account of any dispute.
(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 coveredby our audit and the immediately preceding financial year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from Banks/ Financial Institutions. TheCompany has not issued any 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. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the Company.
(xiv) In our opinion, and as per information obtained from management, the Company is not dealing in or trading in shares, securities, debentures andother investments. Accordingly, the provision of clause 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 availed any term loans during 2004 and hence reporting on the purpose for which they were raised does not arise.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short-term or long-term basis. Hence reporting on the usage of the same does not arise.
(xix) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue.
(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.
(xxii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registered in Omanand in operating outside India.
Clause Nos. (iii), (v), (viii) & (xviii)
SHARP & TANNANChartered Accountants
Place : Chennai L. VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
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LARSEN & TOUBRO (OMAN) LLC
Balance Sheet as at December 31, 2004As at 31.12.2004 As at 31.12.2003
Schedules Rs. Rs. Rs. Rs.SOURCES OF FUNDS:Shareholders’ Funds:
Share capital A 45,691,693 45,691,693Reserves and surplus B 144,370,936 66,254,416
190,062,629 111,946,109
TOTAL 190,062,629 111,946,109
APPLICATION OF FUNDS:Fixed assets: E1
Gross block 167,394,289 111,041,587Less: Depreciation 86,889,765 75,290,165Less: Impairment - -
Net block 80,504,524 35,751,422Capital work-in-progress - -
80,504,524 35,751,422
Current assets, loans and advances: GSundry debtors 1,074,613,627 534,409,994Cash and bank balances 109,929,383 166,455,012Inventories 132,562,169 68,526,243Loans and advances 107,123,568 166,778,374
1,424,228,747 936,169,623Less: Current liabilities and provisions: H 1,328,143,126 865,875,151
Net current assets 96,085,621 70,294,472Translation Loss 13,472,484 5,900,215
TOTAL 190,062,629 111,946,109
Notes on accounts Q
The schedules referred to above and the notes attached form an intergral part of the Balance Sheet.
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V. B. GADGIL K.V.RANGASWAMIPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Profit and Loss Account for the year ended December 31, 2004Jan - Dec 2004 Jan - Dec 2003
Schedules Rs. Rs. Rs. Rs.INCOME:Sales & Service K 2,366,516,150 1,458,321,161Other income L 3,306,339 1,218,385Interest Income P 289,351 -
2,370,111,840 1,459,539,546
EXPENDITURE:Construction and operating expenses M 1,904,614,078 1,177,149,128Staff expenses N 184,821,487 151,411,685Sales, administration and other expenses O 154,438,852 54,260,627Interest and brokerage P - 335,604Depreciation 16,077,353 7,889,624
2,259,951,770 1,391,046,668
Profit before tax 110,160,070 68,492,878Provision for current year taxes 12,553,087 8,006,145Provision for previous year taxes 3,041,857 -
15,594,944 8,006,145
Profit after tax 94,565,126 60,486,733Add: Balance brought forward from previous year 50,372,144 13,195,119
Profit available for appropriation 144,937,270 73,681,852Less: Transferred to: Statutory Reserve - 6,048,673 Proposed Dividend 16,448,606 17,261,035
Balance carried to Balance Sheet 128,488,664 50,372,144
Earnings per equity share - Basic and Diluted 259.59 166.04
Notes on accounts Q
The schedules referred to above and the notes attached form an integral part of the Profit and Loss Account.
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V. B. GADGIL K.V.RANGASWAMIPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Cash Flow Statement for the year ended December 31, 20042004 2003
Rs. Rs.A. Cash Flow from Operating Activities
Net profit before tax 110,160,070 68,492,877
Adjustments for:
Depreciation 16,077,353 7,889,624
Interest (net) (289,351) 335,604
Profit on disposal of Property, Plant & Equipment (164,045) -
Tax Paid (10,127,254) -
Translation Reserve (11,740,762) (5,763,710)
Operating profit before working capital changes 103,916,011 70,954,395
(increase) / decrease in trade and other receivables (480,548,827) (284,150,372)
(increase) / decrease in inventories (64,035,926) (20,676,215)
increase / (decrease) in trade payables 462,267,975 399,307,767
Cash generated from operations 21,599,233 165,435,575
B. Cash Flow from Investing ActivitiesPurchase of fixed assets (63,034,943) (26,258,949)
Sale of fixed assets 1,069,336 -
Interest received 311,814 625,233
Net Cash (used in) / from investing activities (61,653,793) (25,633,716)
C. Cash Flow from Financing ActivtiesDividends paid (16,448,606) 14,275,693
Interest paid (22,463) (960,837)
Net cash (used in) / from financing activities (16,471,069) 13,314,856
Net (decrease) / increase in cash and cash equivalents (56,525,629) 153,116,715
(A+B+C)
Cash and cash equivalents at beginning of the year 166,455,012 13,338,297
Cash and cash equivalents at end of the year 109,929,383 166,455,012
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V. B. GADGIL K.V.RANGASWAMIPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Schedules forming part of accountsAs at 31.12.2004 As at 31.12.2003
Schedule: A Rs. Rs. Rs. Rs.Share Capital:Authorised:364,286 Equity Shares of RO. 1 each 45,691,693 45,691,693Issued, Subscribed and Paidup364,286 Equity Shares of RO. 1 each 45,691,693 45,691,693
45,691,693 45,691,693
Note:65% of equity is held by Larsen & Toubro Limitedand balance 35% is held by Zubair Corporation
Schedule: BReserves and SurplusStatutory ReserveBalance as per last balance sheet 15,882,272 9,833,599Add: Transfer from P&L account - 6,048,673
15,882,272 15,882,272Profit & Loss AccountProfit & Loss Account 128,488,664 50,372,144
144,370,936 66,254,416
Schedule E1in Rupees
Cost / Valuation Depreciation Book Value
Fixed Assets As at Additions Deductions As at Upto For the Deductions As at As at As at01-01-2004 during during 31-12-2004 01-01-2004 Year during 31-12-2004 31-12-2004 31-12-2003
the year the year the year
Building at Site 4,863,473 3,926,166 - 8,789,639 1,529,472 984,446 - 2,513,918 6,275,721 3,473,886
Machinery 63,073,368 34,793,321 - 97,866,689 47,422,787 6,151,117 - 53,573,904 44,292,785 16,267,887
Other Equipments 19,210,401 8,818,832 - 28,029,233 10,504,401 2,631,001 - 13,135,402 14,893,831 9,069,580
Furniture 2,209,820 170,678 - 2,380,498 1,576,442 447,609 - 2,024,051 356,447 653,293
Vehicles 16,184,956 15,325,944 1,182,670 30,328,230 10,052,711 5,863,180 273,401 15,642,490 14,685,740 6,286,776
Total 105,542,018 63,034,941 1,182,670 167,394,289 71,085,813 16,077,353 273,401 86,889,765 80,504,524 35,751,422
Previous Year 84,782,638 26,258,949 - 111,041,587 67,400,541 7,889,624 - 75,290,165 35,751,422 -
Schedule: GCurrent Assets, Loans and Advances:Current Assets:
Sundry Debtors:Unsecured:Debts outstanding for more than 6 months - -Other Debts:Considered good 1,074,613,627 534,409,994
1,074,613,627 534,409,994Cash and bank balances:
Cash on hand 1,412,647 975,853Balances with non-scheduled banks 108,516,736 165,479,159
109,929,383 166,455,012Inventories:
Stores, spares and consumables 89,875,502 19,575,457Work in Progress - Due from customers 14,652,775 42,035,355Construction Materials 28,033,892 6,915,431
132,562,169 68,526,243Loans and advances:Unsecured:
Considered good:Advances recoverable in cash or in kind 104,977,709 113,920,150Due from Holding Company 2,145,859 52,858,224
107,123,568 166,778,374
1,424,228,748 936,169,624
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As at 31.12.2004 As at 31.12.2003
Schedule: H Rs. Rs. Rs. Rs.Current Liabilities and Provisions:Liabilities:
Acceptances - -Sundry creditors :
Due to Holding company 17,738,906 30,254,916Others 800,659,938 637,358,954
Due to customers 122,616,584 2,703,200Advance from customers 333,734,830 156,718,654
1,274,750,258 827,035,724Provisions for: Taxes 12,553,087 8,006,146 Proposed dividend 16,448,606 17,261,035 Gratuity 13,667,412 6,741,285 Leave encashment 10,723,763 6,830,961
53,392,868 38,839,427
1,328,143,126 865,875,151
Jan - Dec 2004 Jan - Dec 2003
Schedule K Rs. Rs. Rs. Rs.Sales & Service:Construction, project related activity 2,366,516,150 1,458,321,161
2,366,516,150 1,458,321,161
Schedule LOther Income:Recovery of Bad Debts 2,082,060 -Profit on sale of fixed assets 164,045 -Miscellaneous Income 895,448 1,218,385Exchange Gain 164,786 -
3,306,339 1,218,385
Schedule MConstruction & Operating Expenses:Construction materialsOpening Stock 6,915,431 5,426,236Add : Purchases 627,223,400 103,873,103
634,138,831 109,299,339Less: Closing Stock 28,033,892 606,104,939 6,915,431 102,383,908
Sub contracts 1,210,952,906 1,037,669,812Stores, spares and toolsOpening Stock 19,575,457 2,897,222Add: Purchases 137,526,966 45,642,202
157,102,423 48,539,424Less: Closing Stock 89,875,502 67,226,921 19,575,457 28,963,967
Direct expenses on jobs 16,311,214 6,815,380Power & fuel 4,018,098 1,316,061
1,904,614,078 1,177,149,128
Schedules forming part of accounts
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Schedule Q
1. Legal Status And Business Activity
Larsen & Toubro (Oman) LLC is a limited liability company registered in the Sultanate of Oman and is engaged in civil, mechanical and electricalcontract works. The ultimate parent company is Larsen & Toubro Limited – India, a company incorporated in India. The registered address of thecompany is P.O.Box 598, Ruwi, Postal Code 112, Sultanate of Oman.
2. Significant Accounting Policies
a. Basis of preparation
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with theprovisions of Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted for onaccrual, including for committed obligations.
These financial statements have been prepared in conformity with Generally Accepted Accounting Principles, which require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.
b. Fixed Assets and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation. The carrying amounts are reviewed at Balance Sheet date toassess whether they are recorded in excess of their recoverable amount. Where carrying values exceed this recoverable amount, assets arewritten down to their recoverable amount. Depreciation is calculated on a straight-line basis over the estimated useful lives of assets as follows:
a. Buildings, Machinery and other Equipment at 15%
b. Vehicles and Furniture & Fixtures at 33.33 %
The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956, for the respective categories.
Jan - Dec 2004 Jan - Dec 2003
Schedule N Rs. Rs. Rs. Rs.Staff Expenses:Salaries, wages and bonus 163,344,083 130,451,205Contribution to and provisions for:
Provident fund and pension fund 2,800,725 865,430Welfare and other expenses 18,676,679 20,095,050
184,821,487 151,411,685
Schedule OSales, Administration and Other Expenses:Rent 18,120,564 7,517,105Rates and taxes 1,986,019 2,457,117Travelling and conveyance 24,418,802 11,349,107Telephone, postage and telegrams 9,487,739 6,643,099Stationery and printing 2,514,484 1,402,569Insurance 11,109,174 3,863,834Bank charges 9,285,872 1,352,064General repairs and maintenance 4,813,058 1,804,163Miscellaneous expenses 72,703,140 17,871,569
154,438,852 54,260,627
Schedule PInterest & Brokerage:On bank overdrafts 22,463 960,837Less:interest received - Fixed Deposits (311,814) 625,233
(289,351) 335,604
Schedules forming part of accounts
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Schedules forming part of accountsc. Inventories
Inventories 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
Construction WIP At cost till a major portion of the job is completed and thereafter atrealisable value. Net realizable value is based on estimated sellingprice less any further estimated costs expected to be incurred on disposal.
d. Employee Benefits
Payment 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 in accordancewith company’s rules and is based on the liability, which would arise if the employment of all staff were terminated at the year-end.
e. Taxation
Tax on income for the current period is determined on the basis of taxable income and tax credits is computed in accordance with law of incometax of companies in Oman.
f. Revenue Recognition
Contract revenue comprising the total value of construction work performed during the year is recognized on a percentage of completion basis.The percentage of completion is determined on the basis of progress of each contract measured by reference to proportion that contract costsincurred for work performed to date bear to the estimated total contract costs. No profit is recognized until a contract has progressed to thepoint where the ultimate realizable profit can be reasonably determined. Provision is made for all losses incurred to the accounting date togetherrecorded on the basis of progress bills prepared by the Company and are considered as revenue to the extent that they are probable of beingcertified and recovered.
Interest revenue is recognized as it accrues.
g. Foreign currencies
Accounts are translated in Indian Rupees as follows:
a. Share capital is retained at the initial contribution amount.
b. Fixed and Current assets & Current liabilities are translated at year-end rates.
c. Revenue transactions are translated at the average rates.
d. The resultant difference is accounted as translation reserve in the balance sheet
3. Contract Work-In-Progress
Rs.
Contract costs incurred plus recognised profits 3,138,280,594
Progress billing 3,248,910,390
Advances received 312,502,897
Retentions receivable 87,745,486
4. Related Parties
During the year, the Company had transactions with the Holding Company, M/s Larsen & Toubro Limited. The nature of significant related partytransactions and the amounts involved are as follows:
2004 2003Rs. Rs.
Sale of Services 73,176,196 372,852,904
Cost of goods and service 121,683,452 32,379,063
Purchase of property, plant and equipment 9,594,335 3,430,459
Rent expense 235,967 364,568
Amounts due from related parties 199,736,779 52,858,224
Amounts due to related parties 82,622,088 30,254,993
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Schedules forming part of accounts5. Balances with non-scheduled banks
As at 31.12.2004 Maximum amountoutstanding at
any time duringthe year
Rs. Rs.a. Current accounts
Bank Muscat, RO - Current Account 10,255,410 313,400,920Bank Muscat, USD - Current Account 4,865,117 203,268,316Bank Muscat, RO - Hangar 1,686,365 1,686,365Bank Muscat, RO - C/A – Al Khudh 63,166 63,166Oman Arab Bank 102,107 102,107Bank Muscat-RO-C/A - Buraimi 22,100 22,100Arab Bank PLC-RO - Current Account 83,617 83,617Bank Muscat-RO - Current Account RCC 3,238,458 3,238,458
b. Call Deposits
Bank Muscat 56,450,080 114,470,289
6. Taxation
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/payableto Larsen & Toubro, India has been considered as fully deductible expenditure for tax purposes. However, in the assessments issued by the taxdepartment for tax years 1994 to 1998 the tax department has disallowed a major portion of technical fees paid. The Company has filed an appealwith the Tax Committee in respect of technical fees disallowed in the assessment for tax years 1994 to 1998. Based on the decision of the TaxCommittee on the appeal, additional tax for the earlier years has been paid and accounted for in current year’s financial statements (Rs.3,041,857),and tax computation for the years 1999 to 2004 suitably revised.
7. Borrowing Cost capitalized during the year Rs. Nil
8. There are no amounts due to the small-scale industries outstanding for more than 30 days.
9. Accounting Standard 17 (AS-17) – The entire business of the Company is in Construction activity.
10. Operating leases:
The Company has taken porta cabin accommodation at Barka farm.
The Company has taken on non-cancellable operating leases the above, the future minimum lease payments in respect of which, as at December31, 2004 are as follows:
Minimum Lease Payments Rs.
i. Payable not later than 1 year 1,693,238
ii. Payable later than 1 year and not later than 5 years 2,878,504
iii. Payable later than 5 years -
Total Minimum Lease Payments 4,571,742
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. The rental expense in respect of operating leases was Rs.1,693,238.
11. Auditor’s remuneration and expenses charged to the accounts:
2004 2003Rs. Rs.
Audit fees 243386 -
Certification work 52,052 353518
Taxation 335,443 54762
Expenses reimbursed - 119709
12. Construction activity is a service activity and therefore the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act, 1956.
13. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount is morethan the amount carried in the books. Accordingly, no provision required to be made for the impairment in the accounts.
14. Previous year’s figures have been reclassified wherever necessary to conform with the presentation adopted in the current year.
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15. Balance Sheet Abstract and Company’s General Business ProfileI Registration Details
Registration No. 0 0 6 7 State Code N AIncorporated in Sultanate of Oman
Balance Sheet Date 3 1 1 2 2 0 0 4II 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 Rs.)Total Liabilities Total Assets
1 9 0 0 6 2 6 2 9 1 9 0 0 6 2 6 2 9Sources of Funds Paid-Up Capital Reserves & Surplus
4 5 6 9 1 6 9 3 1 4 4 3 7 0 9 3 6Secured Loans Unsecured Loans
N I L N I LApplication of Funds Net Fixed Assets and Net Intangible Assets Investments
8 0 5 0 4 5 2 4 N I LNet Current Assets Deferred Tax
9 6 0 8 5 6 2 1 N I LMisc. Expenditure Accumulated Losses
N I L N I LTranslation Reserve
1 3 4 7 2 4 8 4IV Performance of Company (Amount in Rs.)
Turnover (Including other income) Total Expenditure2 3 7 0 1 1 1 8 4 0 2 2 5 9 9 5 1 7 7 0
Profit/Loss Before Tax * @ Profit/Loss After Tax * @+ - + -+ 1 1 0 1 6 0 0 7 0 + 9 4 5 6 5 1 2 6
Please tick Appropriate box + for Profit, - for LossBasic Earnings Per Share in Rs. Dividend Rate %
2 5 9 . 5 9 4 0V Generic Names of Three Principal Products/Services of the Company
(as per monetary terms)Item Code No. N . A .(ITC Code)Product Description Construction and project related activity
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V. B. GADGIL K.V.RANGASWAMIPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
Schedules forming part of accounts
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Directors’ ReportREVIEW OF OPERATIONS:
On behalf of the Board of Directors, it gives us great pleasure to present to you the Annual Report and Audited Accounts of Larsen & Toubro InternationalFZE (LTIFZE) for the year ended December 31, 2004.
OVERVIEW OF THE YEAR:
In 2004, the Middle East has witnessed significantly high level of activity for the construction industry, resulting in plenty of opportunities for Larsen & ToubroLimited (L&T) and its subsidiary and associate companies in the region.
It has been decided that the Company would act as the investment vehicle for overseas investments by L&T. Towards achieving this, the Company hasproposed to acquire L&T’s stake in the existing overseas JV companies namely Larsen & Toubro (Oman) LLC (LTO), Larsen & Toubro Qatar WLL (LTQ),Larsen & Toubro (Saudi Arabia) LLC (LTSA), L&T-ECC Construction (M) SDN.BHD and L&T Overseas Projects Nigeria Limited.
The Board has also approved the acquisition of 65% stake in Zubair Kilpatrick LLC, a company registered in Oman, as it was felt that the Companysynergies with the existing operations of L&T in the region.
As of date all the above mentioned acquisitions have been effected and the legal procedures for transferring of shares is in process.
The Company was registered and licensed to carry out the activity of import and hire of plant & machinery and other equipment. During the year underreview, the Company also obtained licenses from the Hamriyah Free Zone authorities for project consultancy, repairs of plant & machinery and generaltrading in commodities.
In order to facilitate this action plan, the Board of Directors has approved the increase in authorized share capital from the existing INR 13.038 Millionto INR 434.6 Million.
YEAR IN RETROSPECT:
During the year under review, the Company has leased out just one equipment to the ECC Division of L&T. Though there was no formal agreement enteredinto, the lease was for a period of one year till December 31, 2004.
The Company has also acquired plant & machinery as well as vehicles amounting to INR 8,223,067 at the fag end of the year and the same will be leasedout to ECC Division of L&T in 2005.
The Company has entered into transactions that involve derivative financial instruments and these include forward contracts and options for buying andselling of commodities.
The Company has reported an income of INR 2.03 Million comprising of income from hiring of plant & machinery and commodity trading operations. Theprofit for the year was INR 0.78 million.
FINANCE:
During the year under review, the Company received an amount of INR 86,920,000 towards equity share capital.
During the year 2004, the Company has been sanctioned working capital facilities (both funded and non-funded) by HSBC Bank Middle East Limited,Dubai.
CAPITAL EXPENDITURE:
As at December 31, 2004, the gross fixed assets stood at INR 10,828,277 and net fixed assets at INR 9,608,572.
CURRENT BUSINESS SCENARIO & FUTURE OUTLOOK:
The year 2004 has witnessed a spurt in construction activity in the Middle East. Given the tremendous business potential in the Middle East, it is essentialfor L&T to have requisite resource base comprising of critical equipments, plant & machinery, human resources, etc to respond quickly to the businessopportunities. In view of the delays in mobilization of resources from India, it has been proposed to make LTIFZE the resource base for equipment andproject staff in the Middle East as a centralized resource base would assist in speedy and world-class execution of projects.
To achieve the above, the Company is planning to purchase critical equipment required for construction projects.
PERSONNEL:
The Directors and Manager of the Company are working in ex-officio capacity and are employees of the parent company i.e. L&T. Currently the Companyhas no employees on its rolls.
AUDITORS’ REPORT:
The Auditors’ Report to the Shareholders does not contain any qualifications.
DISCLOSURE OF PARTICULARS:
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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.
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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 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 December 31, 2004 and of the profits 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
V. B. GADGIL K. VENKATARAMANDirectors
Place: ChennaiDate: May 12, 2005
Auditors’ Report
The financial statements of LARSEN & TOUBRO INTERNATIONAL FZE, SHARJAH, UAE for the year ended December 31, 2004, being a company registeredin Sharjah, UAE, are audited by PANNEL KERR FORSTER, CHARTERED ACCOUNTANTS, Abu Dhabi, UAE and we have been furnished with their auditreport dated March 5, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212 of theCompanies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of LARSEN & TOUBRO INTERNATIONAL FZE, SHARJAH, UAE, as at December 31, 2004 and also the Profit& Loss Account and the cash flow statement 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 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
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 to the extent applicable to theCompany.
2. Further to our comments in the Annexure referred to 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 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement, comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Companies Act, 1956, since the Company is registered in Sharjah,UAE, no reporting is required to be made under the above section.
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 notesin Schedule ‘Q’ and elsewhere in the accounts give the information required by the Companies Act, 1956, in the manner so required and give atrue 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on the date; and
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
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LARSEN & TOUBRO INTERNATIONAL FZE
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concernstatus of the Company.
(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification isreasonable.
(b) The procedures of physical verification of inventories 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. The discrepancies were noticed on physical verification between the physicalstocks and book records were not material.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system 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 and services. Inour opinion, and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internalcontrol system.
(vi) The Company has not accepted any deposit from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(ix) (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 towards Income-tax and any other statutory dues during the year withthe appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutorydues were in arrears as at December 31, 2004 for a period of more than 6 months from the date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax and other statutory dues, which have notbeen deposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses at the end of the financial year and also incurred cash losses during the year and in the immediatelypreceding previous year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from a banks/ Financial Institutions. TheCompany has not issued any 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 wayof pledge 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, and as per the information obtained from management, the Company is not dealing in or trading in shares, securities, debenturesand other investments. Accordingly, the provision of clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to theCompany.
(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xvi) The Company has not availed any term loans during 2004 and hence reporting on the purpose for which they were raised does not arise.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short-term or long-term basis. Hence reporting on the usage of the same does not arise.
(xix) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue.
(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 ofour audit.
(xxii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registered inSharjah, UAE Clauses (iii), (v), (viii) & (xviii)
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
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LARSEN & TOUBRO INTERNATIONAL FZE
Balance Sheet as at December 31, 2004As at 31.12.2004 As at 31.12.2003
Schedules Rs. Rs. Rs. Rs.SOURCES OF FUNDS:
Shareholders’ Funds:
Share Capital A 14,388,000 14,388,000Share Application Money 86,920,000 -
101,308,000 14,388,000
TOTAL 101,308,000 14,388,000
APPLICATION OF FUNDS:
Fixed assets: E1
Gross block 10,828,277 6,951,263
Less: Depreciation 1,219,705 434,474Less: Impairment - -
Net block 9,608,572 6,516,789
Capital work-in-progress - -
9,608,572 6,516,789
Current assets, loans and advances: G
Sundry debtors 830,912 367,536
Cash and bank balances 95,292,265 5,317,826
Loans and advances 674,500 191,338
96,797,677 5,876,700
Less: Current liabilities and provisions: H
Liabilities 7,081,243 62,472
Provisions - -
7,081,243 62,472
Net current assets 89,716,434 5,814,228
Profit & Loss Account 773,369 1,557,632
Translation Loss 1,209,625 499,351
TOTAL 101,308,000 14,388,000
Notes on accounts Q
The Schedules referred to above and the notes attached form an integral part of the Balance Sheet.
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate: May 12, 2005 Date: May 12, 2005
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Profit and Loss Account for the year ended December 31, 2004
January - December 2004 January - December 2003Schedules Rs. Rs. Rs. Rs.
INCOME:
Sales & Service K 2,033,062 - 1,070,845
2,033,062 1,070,845
EXPENDITURE:
Sales, administration and other expenses O 415,643 191,189
Depreciation 833,156 434,474
Impairment - -
1,248,799 625,663
Profit/(Loss) before tax 784,263 445,182
Provision for current taxes - -
Provision for deferred tax - -
- -
Profit/(Loss) after tax 784,263 445,182
Add: Balance brought forward from previous year (1,557,632) (2,002,814)
Balance carried to Balance Sheet (773,369) (1,557,632)
Earnings per equity share : basic and diluted 392,132 222,591
Notes on accounts Q
The schedules referred to above and the notes attached form an integral part of the Profit and Loss Account.
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate: May 12, 2005 Date: May 12, 2005
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Cash Flow Statement for the year ended December 31, 2004Amount in Rupees
2004 2003
A. Cash Flow from Operating Aactivities
Net profit before tax 784,263 445,182
Adjustments for:
Depreciation 833,156 434,474
Interest (net) - -
(Profit) / Loss on sale of fixed assets - -
Translation Reserve (311,725) (507,316)
Operating profit before working capital changes 1,305,694 372,340
(Increase) / Decrease in trade and other receivables (946,538) (558,874)
Increase / (Decrease) in trade payables 7,018,771 (3,234)
Cash generated from operations 7,377,927 (189,768)
B. Cash Flow from Investing Activities
Purchase of Fixed assets (4,323,488) (6,951,263)
Sale of fixed assets - -
Interest received - -
Net Cash (used in) / from investing activities (4,323,488) (6,951,263)
C. Cash Flow from Financing Activties
Interest paid - -
Share Application Money received 86,920,000 -
Net cash (used in) / from financing activities 86,920,000 -
Net (decrease) / increase in cash and cash equivalents 89,974,439 (7,141,031)
(A+B+C)
Cash and cash equivalents at beginning of the year 5,317,826 12,458,857
Cash and cash equivalents at end of the year 95,292,265 5,317,826
Actual Cash Balance 95,292,265 5,317,826
As per our attached report of even date
SHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate: May 12, 2005 Date: May 12, 2005
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Schedules forming part of accounts
As at 31.12.2004 As at 31.12.2003Schedule A Rs. Rs. Rs. Rs.Share Capital:
Authorised:
10,000,000 Equity Shares of USD 150,000/- each 434,600,000 14,388,000
Issued, Subscribed and Paidup:
2 Equity Shares of USD 150,000/- each 14,388,000 14,388,000
Note: All the above equity shares are held by Larsen & Toubro Limited,the holding company. 14,388,000 14,388,000
As at 31.12.2004 As at 31.12.2003Rs. Rs. Rs. Rs.
Schedule G
Current Assets, Loans and Advances:
Current Assets:
Sundry Debtors:
Unsecured:
Outstanding for more than 6 months - -
Other Debts:
Considered good 830,912 367,536830,912 367,536
Cash and bank balances:
Balances with non-scheduled banks 8,372,265 -
Fixed deposit with non-scheduled banks 86,920,000 5,317,826
95,292,265 5,317,826Loans and advances:
Unsecured:
Considered good:
Advances recoverable in cash or in kind 674,500 191,338674,500 191,338
96,797,677 5,876,700
Schedule E1in Rupees
Cost / Valuation Depreciation Book Value
Fixed Assets As at Additions As at Upto For the As at As at As at01.04.2004 during the year 31-12-2004 01.01.2004 year 31-12-2004 31-12-2004 31-12-2003
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Plant & Machinery 6,504,789 1,718,278 8,223,067 386,549 833,156 1,219,705 7,003,362 6,516,789Vehicles - 2,605,210 2,605,210 - - - 2,605,210 -
Total 6,504,789 4,323,488 10,828,277 386,549 833,156 1,219,705 9,608,572 6,516,789
Previous year - 69,51,263 69,51,263 - 4,34,474 4,34,474 65,16,789 -
Add: Capital Work in Progress - -
9,608,572 6,516,789
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January - December 2004 January - December 2003Rs. Rs.
Schedule KSales & Service:Hire charges 2,033,062 1,070,845
2,033,062 1,070,845
Schedule OSales, Administration and Other Expenses:Rent 285,081 98,453Bank charges 4,364 28,538Other Rates & Taxes 65,058 -Audit Fees 61,140 -Miscellaneous expenses - 64,198
415,643 191,189
As at 31.12.2004 As at 31.12.2003Rs. Rs. Rs. Rs.
Schedule H
Current Liabilities and Provisions:
Liabilities:
Acceptances - -
Sundry creditors :
Due to holding company - -
Small Scale Industrial Undertakings - -Others 7,081,243 62,472
7,081,243 62,472
7,081,243 62,472
Schedules forming part of accounts
Schedule Q
Notes on Accounts
1. Legal Status And Business Activity
(a) LARSEN & TOUBRO INTERNATIONAL FZE (the “enterprise”) was incorporated on September 25, 2001 in the Hamriyah Free Zone, Sharjahas a Free Zone Establishment with Limited Liability under the Hamriyah Free Zone implementing Rules and Regulations issued pursuant toSharjah Emiri Decree No.6 of 1995. The enterprise is a wholly owned subsidiary of Larsen & Toubro Ltd, a company incorporated in India,which is the ultimate parent company.
(b) The enterprise is licensed to carry on business of import and hire of plant, machinery and other equipment.
2. Significant Accounting Policies
a. Basis of Preparation
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with theprovisions of Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted foron accrual, including for committed obligations.
These financial statements have been prepared in conformity with Generally Accepted Accounting Principles, which require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ fromthose estimates.
b. Fixed Assets
Fixed assets represent Plant & Machinery, which are capitalized at acquisition cost including directly attributable costs such as freight,insurance and specific installation charges for bringing the assets to its working condition for use.
The carrying amounts are reviewed at Balance Sheet date to assess whether they are recorded in excess of their recoverable amount.Where carrying values exceed this recoverable amount, assets are written down to their recoverable amount.
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Schedules forming part of accountsc. Depreciation
Fixed assets are depreciated on the straight-line basis at rates designed to write off the cost of the assets over the estimated useful life of theassets concerned. Additions are depreciated proportionately for the year from the month of addition. The principal annual rates used are asfollows:Plant & Machinery 12.50%The above rate is higher than the rates specified in Schedule XIV of the Companies Act, 1956, for the respective category.
d. Foreign Currency TranslationAccounts are translated in Indian Rupees as follows:a. Share capital is retained at the initial contribution amount.b. Fixed and Current assets & Current liabilities are translated at year end rates.c. Revenue transactions are translated at the average rates.d. The resultant difference is accounted as translation reserve in the balance sheet.
e. Revenue Recognition
Revenue represents the amount invoiced for hire charges of equipment during the year based on contract with the customers.
3. Disclosure of Related Party transactions
The Company has given equipment on hire basis to its holding company, M/s Larsen & Toubro Limited. Such charges amount to Rs.2,033,062/-(PY Rs. 1,070,845) for the year. As at the balance sheet date an amount of Rs.830,912/- (PY Rs. 367,536) is due from the holding company,M/s Larsen & Toubro Limited and Rs.138,898 is due to the holding Company.
4. Balances with non-scheduled banks
a. Current accounts
As at 31.12.2004 Maximum amountoutstanding at any time
during the year
AbuDhabi Commercial Bank, Abu Dhabi 5,819,207 91,856,021
HSBC Bank Middle East, UAE 2,553,058 2,553,058
b. Fixed Deposits
Abudhabi Commercial Bank 86,920,000 86,920,000
5. Operating Lease
a. The Company has entered into non-cancellable operating lease for rent of plot of land situated at Hamriyah Free Zone. The total of the futurelease payment is as follows:
Rupees2004 2003
Not later than one year 354,981 385,049
Between one and five years 1,774,863 1,925,243
Later than five years 946,602 1,026,796
b. Rental expense recognized Rs.285,081/- (PY Rs.98,453/-)
c. Contingent rent recognized in Profit and Loss account Rs.Nil (PY Rs.Nil)
6. Taxation:
There are no income tax payable in UAE where the Company is registered and hence no provision for current tax / deferred tax has been made inthese accounts.
7. Borrowing Cost capitalised during the year Rs. Nil.
8. There are no amounts due to the small-scale industries outstanding for more than 30 days.
9. Accounting Standard 17 (AS-17) – The Company is in the business of hiring of plant & equipment only.
10. The Company has not taken any asset on operating / finance lease. Commercial / Residential premises taken on cancellable operating lease arerenewed at the end of the lease period.
11. Audit fees Rs.61,140 (Previous year Rs. 64,198).
12. Construction activity is a service activity and therefore the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act,1956.
13. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount ismore than the amount carried in the books. Accordingly, no provision required to be made for the impairment in the accounts.
14. Previous periods figures have been regrouped/reclassified wherever necessary to conform to the presentation adopted in the current year.
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15. Balance Sheet Abstract and Company’s general business profile
I Registration Details
Registration No. 0 0 6 7 Status Code N A
Incorporated in Sharjah, UAE
Balance Sheet Date 3 1 - 1 2 - 0 5
II Capital Raised during the year (Amount in Rs.)
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 Rs.)
Total Liabilities Total Assets
1 0 1 3 0 8 0 0 0 1 0 1 3 0 8 0 0 0
Sources of Funds
Paid-up Capital (including Share Application Money) Reserves & Surplus
1 0 1 3 0 8 0 0 0 N I L
Secured Loans Unsecured Loans
N I L N I L
Application of Funds
Net Fixed Assets & Net Intangible Assets Investments
9 6 0 8 5 7 2 N I L
Net Current Assets Deferred Tax
8 9 7 1 6 4 3 4 N I L
Misc. Expenditure Accumulate Losses
N I L 7 7 3 3 6 9
Translation Loss
1 2 0 9 6 2 5
IV Performance of Company (Amount in Rs.)
Turnover (including other income) Total Expenditure
2 0 3 3 0 6 2 1 2 4 8 7 9 9
+ - Profit/Loss Before Tax*@ + - Profit/Loss After Tax*@
+ 7 8 4 2 6 3 + 7 8 4 2 6 3
Please tick Appropriate box + for Profit, - for Loss
Basic Earnings Per Share in Rs. Dividend Rate %
+ 3 9 2 1 3 2 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 Hiring of equipments
As per our report attachedSHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate: May 12, 2005 Date: May 12, 2005
Schedules forming part of accounts
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LARSEN & TOUBRO QATAR LLC
Directors’ ReportYour Directors have pleasure in presenting their First Report and Audited Accounts for the period ended December 31, 2004.
FINANCIAL RESULTS:The Company has started its operation only in the current year and no income has been accrued since the activities in respect of projects on hand, areat the initial stages. The net loss of INR 0.7 Mn is on account of overheads.
However, we are executing one strategically important and national importance project Doha 2006 Asian Games Village / Hamad Medical City job worthINR 1755.18 Mn, in association with a local company, HBK contracting Co WLL, under a separate CR in 50:50 partnership in the project.
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:
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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 December 31, 2004 and of the losses 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
PROSPECTS FOR THE COMPANY:
The country in which your Company is registered and operating has adopted sound and balanced economic policy aiming at achievement of sustainableeconomic development by increasing private sector contribution in economic development and encouraging inflows of direct foreign investment.
The country has proposed an ambitious investment plan of over US $ 100 billion by 2012 to develop the economy under energy, tourism, roads, and otherinfrastructure facilities.
Since the government is committed for the comprehensive economic and social development, large potential is available in oil & gas sector, establishingof heavy industries in petrochemicals & steel.
The government is providing a package of incentives for foreign capitals to play a major role in achieving the objectives of the country’s economicdevelopment plan, particularly for establishing projects in the field of medium and small industries.
Your Company has already secured 2 new jobs namely, Al-Jazeera Towers (INR 1150.18 Mn), Civil work in Ras Laffan ‘B’ CCPP for Siemens(INR 553.06 Mn) during the first quarter of 2005.
V. B. GADGIL K. P. RAGHAVANDirectors
Place: Chennai
Date: May 12, 2005
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LARSEN & TOUBRO QATAR LLC
Auditors’ ReportThe financial statements of LARSEN & TOUBRO QATAR LLC, QATAR for the period from March 31, 2004 to December 31, 2004, being a companyregistered in QATAR, are audited by DAWOUD & CO., Doha, Qatar and we have been furnished with their audit report dated March 12, 2005.
We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212 ofthe Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of LARSEN & TOUBRO QATAR LLC, QATAR as at December 31, 2004 and also the Profit & Loss Accountand the cash flow statement for the period from March 31, 2004 to December 31, 2004 annexed thereto. 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 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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
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 theCompanies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extentapplicable to the Company.
2. Further to our comments in the Annexure referred to 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement, comply with the accounting standards referred toin sub-section (3C) of Section 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Companies Act, 1956, since the Company is registered in QATAR,no reporting is required to be made under the above section.
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 notesin Schedule ‘Q’ and elsewhere in the accounts give the information required by the Companies Act, 1956, in the manner so required and givea 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the Loss for the period from March 31, 2004 to December 31, 2004; and
(iii) in the case of cash flow statement, of the cash flows for the period from March 31, 2004 to December 31, 2004.
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No.16368
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LARSEN & TOUBRO QATAR LLC
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concern statusof the Company.
(ii) The Company does not have an inventory & hence, reporting on clause 4(ii)(a), (b) and (c) of the Order does not arise.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion,and according to the information and explanations given us, there is no continuing failure to correct major weaknesses in internal control system.
(vi) The Company has not accepted any deposit from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(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 towards Income tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutory dueswere in arrears as at December 31, 2004 for a period of more than 6 months from the date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax and other statutory dues, which have not beendeposited with the appropriate authorities on account of any dispute.
(x) The Company has accumulated losses at the end of the financial year and also incurred cash losses during the year and in the immediatelypreceding previous year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from Banks/Financial Institutions. TheCompany has not issued any 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. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the Company.
(xiv) In our opinion and as per the information obtained from management, the Company is not dealing in or trading in shares, securities, debenturesand other investments. Accordingly, the provision of clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to theCompany.
(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposesfor which they were obtained.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short-term basis have not been used for long-term investments.
(xix) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue.
(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.
(xxii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registered in Qatarand is operating outside India.
Clauses : (iii), (v), (viii) & (xviii)
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No.16368
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LARSEN & TOUBRO QATAR LLC
Balance Sheet as at December 31, 2004As at 31.12.2004
Schedules Rs. Rs.SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDS:
Share capital A 2,388,000
Translation Reserve 17,015
2,405,015LOAN FUNDS:
Secured Loan -
Unsecured Loan D 9,337,080
TOTAL 11,742,095
APPLICATION OF FUNDS:
Fixed assets: E1
Gross block 991,916
Less: Depreciation -
Less: Impairment -
Net block 991,916
Capital work-in-progress -
991,916Investments F 1,194,000
1,194,000Current assets, loans and advances: G
Sundry debtors -
Cash and bank balances 7,376,242
Inventories -
Loans and advances 5,042,191
12,418,433
Less: Current liabilities and provisions: H 3,570,848
8,847,585Net current assets
Profit & Loss Account 708,594
TOTAL 11,742,095
Notes on accounts Q
The schedules referred to above and the notes attached form an intergral part of the Balance Sheet.
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V.B.GADGIL K.P.RAGHAVANPartner DirectorsMembership No.16368Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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LARSEN & TOUBRO QATAR LLC
Profit and Loss Account for the period March 31, 2004 toDecember 31, 2004
March 31 to December 31, 2004
Schedules Rs. Rs.INCOME:
Sales & Service K
Other income L 6,128,668
6,128,668EXPENDITURE:
Construction and operating expenses M 274,697
Staff expenses N 3,205,238
Sales, administration and other expenses O 3,357,327
Interest and brokerage P -
Depreciation -
Impairment -
6,837,262
LOSS (708,594)
Provision for current taxes -
Provision for deferred tax -
LOSS (708,594)
Add: Balance brought forward from previous year -(708,594)
Less: Transferred to:Statutory Reserve -Proposed Dividend -
Balance carried to Balance Sheet (708,594)
Earnings per equity share - Basic / Diluted (3,542.97)
Notes on accounts Q
The schedules referred to above and the notes attached form an integral part of the Profit and Loss Account.
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V.B.GADGIL K.P.RAGHAVANPartner DirectorsMembership No.16368Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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LARSEN & TOUBRO QATAR LLC
Cash Flow Statement for the period ended December 31, 20042004
Rs.A. Cash Flow from Operating Activities
Net profit before tax (708,594)
Adjustments for:
Depreciation -
Interest (net) -
(Profit) / Loss on sale of fixed assets -
Translation Reserve 17,015
Operating profit before working capital changes (691,579)(increase) / decrease in trade and other receivables (5,042,191)
increase / (decrease) in trade payables 3,570,848
Cash generated from operations (2,162,922)
B. Cash Flow from Investing ActivitiesPurchase of Fixed assets (991,916)
Investments made (1,194,000)
Sale of fixed assets -
Interest received -
Net Cash (used in) / from investing activities (2,185,916)
C. Cash Flow from Financing ActivtiesInterest paid -
Issue of Share Capital 2,388,000
Loan from Arab Bank 955,200
Long Term Loan from Bank Muscat 7,164,000
Unsecured Loan 1,217,880
Net cash (used in) / from financing activities 11,725,080
Net (decrease) / increase in cash and cash equivalents 7,376,242
(A+B+C)
Cash and cash equivalents at beginning of the year -
Cash and cash equivalents at end of the year 7,376,242
Actual Cash Balance 7,376,242
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V.B.GADGIL K.P.RAGHAVANPartner DirectorsMembership No.16368Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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LARSEN & TOUBRO QATAR LLC
Schedules forming part of accountsAs at 31.12.2004
Rs. Rs.Schedule: A
Share Capital:
Authorised:200 Shares of Qatari Riyal 1000 each 2,388,000
Issued, Subscribed & Paid up 2,388,000200 shares of Qatari Riyal 1000 each issued during the year.51% of the above equity held by Al-zajeera International Trading Co. andthe balance 49% held by Larsen & Toubro Limited. 2,388,000
Schedule: D
Unsecured Loans
Loan from Bank Muscat 7,164,000Loan from Arab Bank 955,200Loan from related parties 1,217,880
9,337,080
9,337,080
Schedule: E1
Cost/Valuation Depreciation Book Value
Fixed Assets Additions As at For the As at As atfor the period 31-12-2004 Year 31-12-2004 31-12-2004
Rs. Rs. Rs. Rs. Rs.
Other Equipments 36,716 36,716 - - 36,716
Vehicles 955,200 955,200 - - 955,200
Total 991,916 991,916 - - 991,916
Note: No depreciation has been provided as the assets have been put to use only at the end of the period.
Schedule: F
Investments
Investment in Larsen & Toubro Qatar & HBK Contracting LLC 1,194,00050% holding in the Joint Venture.
1,194,000
Schedule: G
Current Assets, Loans and Advances:
Cash and bank balances:Cash on hand 128,701Balances with non-scheduled banks 7,247,541
7,376,242Loans and advances:
Unsecured:Considered good:Advances recoverable in cash or in kind 2,087,423Due from related parties 2,954,768
5,042,191
12,418,434
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LARSEN & TOUBRO QATAR LLC
Schedules forming part of accountsAs at 31.12.2004
Rs. Rs.
March 31 to December 31, 2004
Rs. Rs.Schedule: KSales & Service:Construction, project related activity -
-
Schedule: LOther Income:Miscellaneous Income 6,128,668
6,128,668
Schedule: MConstruction & Operating Expenses:Construction materials 17,250Sub contracts 48,323Stores, spares and tools 170,123Power & fuel 39,001
274,697
Schedule: NStaff Expenses:Salaries, wages and bonus 2,596,136Contribution to and provision for:Provident funds and pension fund 106,189Welfare and other expenses 502,913
3,205,238
Schedule: OSales, Administration and Other Expenses:Rent 975,629Rates and taxes 39,478Travelling and conveyance 774,757Telephone, postage and telegrams 276,495Stationery and printing 57,009Bank charges 218,999General repairs and maintenance 49,284Miscellaneous expenses 965,676
3,357,327
Schedule: H
Current Liabilities and Provisions:
Liabilities:Acceptances -Sundry creditors :Due to Holding company 1,444,143Small Scale Industrial Undertakings 1,445,194Others 681,511
3,570,848
3,570,848
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LARSEN & TOUBRO QATAR LLC
Schedules forming part of accountsSchedule QNotes on Accounts
1. General Information
a. The Company is registered in the state of Qatar under commercial registration number 27454 on 31.03.2004. The registered office of theCompany is located at Souq Najd, Doha, Qatar.
b. The principal activities of the Company consist of oil and gas services, trading in raw material, tools and equipments, general contracting, airportconstruction, electrical & mechanical works.
2. Significant Accounting Policiesa. Basis of Preparation
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with theprovisions of Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted for onaccrual, including for committed obligations.
These financial statements have been prepared in conformity with Generally Accepted Accounting Principles, which require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates
b. Fixed AssetsFixed assets are stated at cost less accumulated depreciation. Cost comprises their purchase cost and any incidental cost incurred.
The carrying amounts are reviewed at Balance Sheet date to assess whether they are recorded in excess of their recoverable amount. Wherecarrying values exceed this recoverable amount, assets are written down to their recoverable amount.
c. Depreciation
Fixed assets are depreciated on the straight-line basis at rates designed to write off the cost of the assets over the estimated useful lives ofthe assets concerned. Additions are depreciated proportionately for the year from the month of addition. The principal annual rates used areas follows: -
Machinery and Equipments 20%
Motor Vehicle 20%
The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956 for the respective categories.
d. Revenue RecognitionRevenue from construction and project related activities is recognised by applying percentage of completion to the contract value. Percentageof completion is determined as a proportion of cost incurred to date to the total estimated cost. Full provision is made for any loss in the yearin which it is foreseen.
e. TaxationProvision for current taxes are made on taxable income.
f. Foreign Currency TranslationAccounts are translated in Indian Rupees as follows:a. Share capital is retained at the initial contribution amount.b. Fixed and Current assets & Current liabilities are translated at year-end rates.c. Revenue transactions are translated at the average rates.d. The resultant difference is accounted as translation reserve in the balance sheet.
3. Disclosure of Related Party Transactionsa. Due from related parties: Rs.2,954,768/- is receivable from M/s Larsen & Toubro Qatar & HBK Contracting Co. W.L.L., an incorporated Joint
Venture, engaged in construction work of Doha 2006, Asian Games, Athletes Village/ Hamad Medical City, awarded by Public Works Authority.
b. Due to related parties: Rs.1,444,143/- is payable to Larsen & Toubro Limited, India for expenses met on Larsen & Toubro Qatar LLC’s behalf.
c. Loans : The Company has obtained Rs.1,217,880 as Loan from Larsen & Toubro Limited, India (Holding Company).
4. Balances with non-scheduled banksa. Current accounts
As at 31.12.2004 Maximum amountoutstanding at any
time duringthe year
Rs. Rs.Arab Bank, Doha, Qatar 7,247,541 10,185,701
5. Taxation
No provision for current taxes has been made in view of taxable loss for the year.
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LARSEN & TOUBRO QATAR LLC
6. Borrowing Cost capitalised during the year Rs.1,898,460/-
7. There are no amounts due to the small-scale industries outstanding for more than 30 days.
8. Accounting Standard 17 (AS-17) – The Company is engaged in the business of Construction activity only.
9. The Company has not taken any asset on operating / finance lease. Commercial / Residential premises taken on cancellable operating lease arerenewed at the end of the lease period.
10. Audit fees Rs. 61,169/-.
11. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount is morethan the amount carried in the books. Accordingly, no provision required to be made for the impairment in the accounts.
12. Construction activity is a service activity and therefore the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act, 1956.
Schedules forming part of accounts
13. Balance Sheet Abstract and Company’s General Business Profile:I. Registration Details:
Registration No. State Code No.2 7 4 5 4 N A
Incorporated in QatarBalance Sheet Date 3 1 1 2 2 0 0 4
II Capital Raised during the Year (Amount in Rs.)Public Issue Rights Issue
N I L N I LBonus Issue Private Placement
N I L 2 3 8 8 0 0 0III Position of Mobilisation and Deployment of funds (Amount in Rs.)
Total Liabilities Total Assets1 1 7 4 2 0 9 5 1 1 7 4 2 0 9 5
Sources of Funds Paid-Up Capital Translation Reserve2 3 8 8 0 0 0 1 7 0 1 5
Secured Loans Unsecured LoansN I L 9 3 3 7 0 8 0
Application of Funds Net Fixed Assets and Net Intangible Assets Investments9 9 1 9 1 6 1 1 9 4 0 0 0Net Current Assets Deferred Tax
8 8 4 7 5 8 5 N I LMisc. Expenditure Accumulated Losses
N I L 7 0 8 5 9 4IV Performance of Company (Amount in Rs.)
Turnover (Including other income) Total Expenditure6 1 2 8 6 6 8 6 8 3 7 2 6 2
Profit/Loss Before Tax * @ Profit/Loss After Tax * @+ - + -
- 7 0 8 5 9 4 - 7 0 8 5 9 4Please tick Appropriate box + for Profit, - for Loss
Basic Earnings Per Share in Rs. Dividend Rate %- 3 5 4 2 . 9 7 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 Construction and project related activity
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. VAIDYANATHAN V.B.GADGIL K.P.RAGHAVANPartner DirectorsMembership No.16368Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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ZUBAIR KILPATRICK LLC
Directors’ ReportREVIEW OF OPERATIONS:
On behalf of the Board of Directors, it gives me great pleasure to present to you the Annual Report and Audited Accounts of Zubair Kilpatrick LLC forthe year ended December 31, 2004.
OVERVIEW OF THE YEAR:
Due to difficult market conditions and intense competition, the Company has progressively reduced its skilled western expatriate staff and the scale ofcontracting operations. The Company presently focuses on facility management and maintenance of Electrical, Mechanical and Civil works. The Companyhas long-term maintenance contracts with two reputed customers viz., Petroleum Development of Oman and Ministry of Defence, from which approximately75% of the revenues are generated.
YEAR IN RETROSPECT:
The sales and other income for the financial year under review were INR 489.98 Mn as against INR 421.09 Mn for the previous year registering a growthof 23%. The profit before tax of INR 8,313,898 for the financial year under review as against INR 32,965,076 for the previous year.
Major orders under execution and secured during the financial year 2004 includes the following:
During the year, the Company has successfully completed Suwaihat Sub-station upgrade-Petroleum Development Oman (PDO) and Saih Nihayda & AmalTransformer – PDO.
During 2004, the Company has bagged the orders from Oil & Gas Sector for a value of INR 282.21 Mn. for E&I works and Facilities Management.
CAPITAL EXPENDITURE:
As at December 31, 2004, there are no additions in Plant & Machineries and the gross fixed assets stood at INR 105,208,295 and net fixed assets atINR 5,952,745.
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:
As per the Company, the Company being registered outside India, the disclosures required to be made in accordance with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are not relevant. Hence the same has not been furnished.
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 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 December 31, 2004 and of the losses 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; and
iv. that the Annual Accounts have been prepared on a going concern basis.
CURRENT BUSINESS SCENARIO:
Riding the remunerative oil prices, Oman Government is now focused on active diversification of the economy. Major investments are envisaged in Industrialand Infrastructure projects with emphasis on tourism. This will offer ample opportunity for the Company to grow.
FUTURE OUTLOOK:
In the last few years, many local contracting companies have increased their market share, resulting fierce unhealthy competition in a small market, withintense, pressure on job margins. In our main area of Asset Maintenance, the Company has fierce competition from major local players in the Industryand it appears that our main source of clients are slowly moving towards awarding a single maintenance contract to one contractor for its entiremaintenance activities, rather than giving different maintenance activities to various contractors. Hence, we propose to concentrate more on the core areaof MEP activities in the years to come.
We also hope to see clear outcomes from the pursuit of our growth ambitions that may re-define the size, structure and shape of the Company in a mannerthat is build to last, grow and prosper for the years ahead.
V. B. GADGIL K. VENKATARAMANDirectors
Place : ChennaiDate : May 12, 2005
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ZUBAIR KILPATRICK LLC
Auditors’ ReportThe financial statements of ZUBAIR KILPATRICK LLC, Oman for the year ended December 31, 2004, being a company registered in Oman, are auditedby Ernst & Young, Chartered Accountants, Oman and we have been furnished with their audit report dated February 28, 2005.We are presented with the Accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with the requirements of Section 212 ofthe Companies Act, 1956. We give our report hereunder:
We have audited the attached Balance Sheet of ZUBAIR KILPATRICK LLC, Oman as at December 31, 2004 and also the Profit & Loss Account andthe cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the 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.
In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:
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 theCompanies Act, 1956 we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extentapplicable to the Company.
2. Further to our comments in the Annexure referred to 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 said 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 said Balance Sheet, Profit and Loss Account and cash flow statement, comply with the accounting standards referred toin sub-section (3C) of Section 211 of the Companies Act, 1956.
e. As regards reporting on the disqualification of Directors u/s 274(1)(g) of the Companies Act, 1956, since the Company is registered in Oman,no reporting is required to be made under the above section.
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 notesin Schedule ‘Q’ and elsewhere in the accounts give the information required by the Companies Act, 1956, in the manner so required and givea 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 December 31, 2004;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on the date; and
(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
Annexure to the Auditors’ Report(Referred to in paragraph 1 of our Report of even date)
(i) (a) The Company has maintained 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) During the year, the Company has not disposed off any part of the plant and machinery and hence has not affected the going concern statusof the Company.
(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of theCompany and the nature of its business.
(c) The Company has maintained proper records of inventory. The discrepancies were noticed on physical verification between the physical stocksand book records were not material.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with thesize of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion,and according to the information and explanations given us, there is no continuing failure to correct major weaknesses in internal control system.
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(vi) The Company has not accepted any deposit from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
(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 towards Income tax and any other statutory dues during the year with theappropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax and other statutory dueswere in arrears as at December 31, 2004 for a period of more than 6 months from the date they become payable.
(c) According to the information and explanations given to us, there are no dues of income tax, which have not been deposited with theappropriate authorities on account of any dispute.
(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 coveredby our audit and the immediately preceding financial year.
(xi) According to the information and explanations given to us, the Company has not borrowed any amount from Banks/Financial Institutions. TheCompany has not issued any 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. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the Company.
(xiv) In our opinion, and as per information obtained from management, the Company is not dealing in or trading in shares, securities, debentures andother investments. Accordingly, the provision of clause 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 availed any term loans during the year and hence reporting on the purpose for which they were raised does not arise.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report thatno funds have been raised on short term or long term basis. Hence, reporting on the usage of the same does not arise.
(xix) The Company did not have outstanding debentures. Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue.
(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.
(xxii) The following clauses of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company since the Company is registered in Omanand is operating outside Inida.
Clauses (iii), (v), (viii), (xviii)
SHARP & TANNANChartered Accountants
Place : Chennai L.VAIDYANATHANDate : May 12, 2005 Partner
Membership No. 16368
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ZUBAIR KILPATRICK LLC
Balance Sheet as at December 31, 2004As at 31.12.2004 As at 31.12.2003
Schedules Rs. Rs. Rs. Rs.
SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDS:
Share Capital A 35,560,200 35,560,200Reserves and Surplus B 11,853,400 11,853,400
47,413,600 47,413,600
TOTAL 47,413,600 47,413,600
APPLICATION OF FUNDS:
Fixed assets: E1
Gross block 105,208,295 105,229,626
Less: Depreciation 99,255,550 98,110,948
Less: Impairment - -
Net block 5,952,745 7,118,678
Capital work-in-progress - -
5,952,745 7,118,678
Current assets, loans and advances: G
Sundry debtors 91,415,778 128,204,122
Cash and bank balances 36,814,482 23,659,386
Inventories 45,004,560 126,334,130
Loans and advances 19,828,261 1,221,019
193,063,081 279,418,657
Less: Current liabilities and provisions: H 168,329,255 262,817,141
Net current assets 24,733,826 16,601,516
Profit & Loss Account 14,492,932 22,806,830
Translation Loss 2,234,097 886,576
TOTAL 47,413,600 47,413,600
Notes on accounts Q
The schedules referred to above and the notes attached form an intergral part of the Balance Sheet
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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Profit and Loss Account for the year ended December 31, 2004Jan - Dec 2004 Jan - Dec 2003
Schedules Rs. Rs. Rs. Rs.
INCOME:
Sales & Service K 489,978,120 421,097,170
Interest Income P 1,609,317 -
491,587,437 421,097,170
EXPENDITURE:
Contract Costs & Tendering Costs M 456,766,834 364,493,883
Staff Expenses N 17,456,338 13,935,851
Sales, administration and other expenses O 3,084,225 2,462,217
Interest and brokerage P - 2,322,186
Depreciation 5,966,142 4,917,957
Impairment - -
483,273,539 388,132,094
Profit before tax 8,313,898 32,965,076
Provision for current taxes - -
Provision for deferred tax - -
- -
Profit after tax 8,313,898 32,965,076
Add: Balance brought forward from previous year (22,806,830) (55,771,906)
Profit/ (Loss) available for appropriation (14,492,932) (22,806,830)
Balance carried to Balance Sheet (14,492,932) (22,806,830)
Earnings per equity share - Basic / Diluted 277.13 1,098.84
Notes on accounts Q
The schedules referred to above and the notes attached form an integral part of the Profit and Loss Account.
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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ZUBAIR KILPATRICK LLC
Cash Flow Statement for the year ended December 31, 2004Amount in Rupees
2004A. Cash Flow from Operating Activities
Net profit before tax 8,313,898
Adjustments for:
Depreciation 5,966,142
Interest (net) (1,609,317)
(Profit) / Loss on sale of fixed assets
Provision for end of services benefits
Translation Reserve (1,151,889)
Operating profit before working capital changes 11,518,834
(increase) / decrease in trade and other receivables 99,510,672
increase / (decrease) in trade payables (94,487,886)
Cash generated from operations 16,541,620
B. Cash Flow from Investing Activities
Purchase of Fixed assets (4,995,841)
Sale of fixed assets -
Interest received 1,631,641
Net Cash (used in) / from investing activities (3,364,200)
C. Cash Flow from Financing Activties
Interest paid (22,324)
Net cash (used in) / from financing activities (22,324)
Net (decrease) / increase in cash and cash equivalents 13,155,096
(A+B+C)
Cash and cash equivalents at beginning of the year 23,659,386
Cash and cash equivalents at end of the year 36,814,482
Actual Cash Balance 36,814,482
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
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ZUBAIR KILPATRICK LLC
Schedules forming part of accountsAs at 31.12.2004 As at 31.12.2003
Rs. Rs. Rs. Rs.Schedule A
Share Capital
Authorised30,000 Equity Shares of RO. 10 each 35,560,200 35,560,200
Issued, Subscribed and Paid-up
30,000 Equity Shares of RO. 10 each 35,560,200 35,560,200
35,560,200 35,560,200
Schedule B
Reserves and Surplus
Statutory Reserve 11,853,400 11,853,400
11,853,400 11,853,400
Schedule E1
Cost / Valuation Depreciation Book Value
Fixed Assets As at Additions As at Upto For the As at As at As at01-01-2004 During the Year 31-12-2004 01-01-2004 Year 31-12-2004 31-12-2004 31-12-2003
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Tools & Equipment 36,926,914 - 36,926,914 34,697,085 1,229,803 35,926,888 1,000,026 2,310,346
Motor Vehicles 59,075,927 4,995,841 64,071,768 54,382,710 4,736,339 59,119,049 4,952,719 4,808,332
Furniture & Fixtures 4,209,614 - 4,209,614 4,209,614 - 4,209,614 - -
Total 100,212,455 4,995,841 105,208,295 93,289,408 5,966,142 99,255,550 5,952,745 7,118,678
Schedule G
Current Assets, Loans and Advances
Current Assets:Sundry Debtors:
Unsecured:Debts outstanding for more than 6 months - -Other Debts:Considered good 92,093,720 128,204,122Less: Bad debts provision (677,942) -
91,415,778 128,204,122Cash and bank balances:
Cash on hand 8,466 10,600Balances with non-scheduled banks 36,806,016 23,648,786
36,814,482 23,659,386Inventories:
Work in Progress 45,004,560 126,334,130
Loans and advances:Unsecured:Considered good:Advances recoverable in cash or in kind 19,828,261 1,221,019
193,063,082 279,418,658
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ZUBAIR KILPATRICK LLC
Schedules forming part of accountsAs at 31.12.2004 As at 31.12.2003
Rs. Rs. Rs. Rs.
Jan - Dec 2004 Jan - Dec 2003
Rs. Rs. Rs. Rs.Schedule K
Sales & ServiceConstruction, project related and property development activity 489,978,120 421,097,170
489,978,120 421,097,170
Schedule M
Construction & Operating ExpensesContract Costs 453,042,838 361,520,920
Tendering Costs 1,426,211 1,138,581
Labour Levy 2,297,785 1,834,382
456,766,834 364,493,883
Schedule N
Staff Expenses & OverheadsSalaries, wages and bonus 17,456,338 13,935,851
17,456,338 13,935,851
Schedule O
Sales, Administration and Other ExpensesP/L on Exchange 14,112 11,266
Corporate Charges 2,313,400 1,846,848
Bank charges 78,771 62,884
Bad and doubtful debts 677,942 541,219
3,084,225 2,462,217
Schedule P
Interest & BrokerageOn bank overdrafts 22,324 2,322,186
Less:Interest received - Fixed Deposits (1,631,641) -
(1,609,317) 2,322,186
Schedule H
Current Liabilities and Provisions
Liabilities:Acceptances - -Sundry creditors:Others 168,329,255 262,817,141
168,329,255 262,817,141
168,329,255 262,817,141
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ZUBAIR KILPATRICK LLC
Schedules forming part of accounts1. Legal Status And Business Activity
Zubair Kilpatrick LLC is a limited liability company registered and incorporated in the Sultanate of Oman and is engaged in the business of civil,mechanical and electrical engineering works. The registered address of the company is P.O.Box 1999, Ruwi, Sultanate of Oman.
2. Significant Accounting Policies
a. Basis of preparation
The accounts have been prepared using historical cost convention and on the basis of going concern, and is made in accordance with theprovisions of Section 211(3C) and the other provisions of the Companies Act, 1956, with revenues recognised and expenses accounted foron accrual, including for committed obligations.
These financial statements have been prepared in conformity with Generally Accepted Accounting Principles, which require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ fromthose estimates.
b. Fixed Assets and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation. The carrying amounts are reviewed at balance sheet date toassess whether they are recorded in excess of their recoverable amount. Where carrying values exceed this recoverable amount, assets arewritten down to the recoverable amount. Depreciation is calculated on a straight-line basis over the estimated useful lives of assets as follows:
a. Tools and Equipment 20%
b. Motor Vehicles 33.33%
c. Second hand Motor Vehicles 100%
d. Furniture & Fixtures 50%
The above rates are higher than the rates specified under Schedule XIV of the Companies Act, 1956 for the respective categories.
c. Inventories
Inventories are stated at the lower of cost and net realizable value after making due allowance for obsolete and slow moving items. Costsare those expenses incurred in bringing each product to its present location and condition, as follows:
Construction WIP At cost till a major portion of the job is completed and thereafter at realisablevalue. Net realizable value is based on estimated selling price less any furtherestimated costs expected to be incurred on disposal.
d. Employee Benefits
Payment 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 in accordancewith company’s rules and is based on the liability, which would arise if the employment of all staff were terminated at the year-end.
e. Taxation
Tax on income for the current period is determined on the basis of taxable income and tax credits is computed in accordance with law of incometax of companies in Oman.
f. Revenue Recognition
Contract revenue comprising the total value of construction work performed during the year is recognized on a percentage of completion basis.The percentage of completion is determined on the basis of progress of each contract measured by reference to proportion that contract costsincurred for work performed to date bear to the estimated total contract costs. No profit is recognized until a contract has progressed to thepoint where the ultimate realizable profit can be reasonably determined. Provision is made for all losses incurred to the accounting date togetherrecorded on the basis of progress bills prepared by the Company and are considered as revenue to the extent that they are probable of beingcertified and recovered.
Interest revenue is recognized as it accrues.
g. Foreign currencies
Accounts are translated in Indian Rupees as follows:
a. Share capital is retained at the initial contribution amount.
b. Fixed and Current assets & Current liabilities are translated at year-end rates.
c. Revenue transactions are translated at the average rates.
d. The resultant difference is accounted as translation reserve in the balance sheet.
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3. Work-in-Progress
Work in progress is stated at cost, either plus attributable profit or less losses incurred or foreseen in bringing contracts to completion, less interimapplications received or receivable. Cost includes materials, on site and consumed labour and other direct costs. For any contracts where receiptsplus receivables exceed the book value of work executed, the excess is included in accounts payable.
4. Related Parties
There are no related party transactions during 2004.
5. Balances with non-scheduled banks
a. Current accounts
As at 31.12.2004 Maximum amountoutstanding at
any timeduring the year
Rs. Rs.
Bank Muscat, Ghala-RO-C/A 564 564
Bank Muscat, Civil – Current Account 24,496 25,511
Bank Muscat- Salalah- RO- C/A 38,493 39,057
Bank Muscat – Sterling Account 92,112 95,273
HSBC Bank – Sterling Account 124,058 124,058
HSBC Bank- RO – Current Account 356,144 1,050,710
Bank Muscat-RO-Current Account 36,164,844 54,239,138
b. Call Deposits
Bank Muscat -USD 5,305 7,563
6. Taxation
The Company has taxation losses available for offset against future taxable profits as follows:
2004Rs.
Available to 31 December 2004 (declared) 53,841,679
Available to 31 December 2005 (declared) 71,505,420
Available to 31 December 2006 (declared) 49,814,031
Available to 31 December 2007 (estimated) 1,261,575
176,422,705
The tax rate applicable to the Company is 12%(2003 – 12%). The Company has earned an accounting profit during the year but due to accumulatedlosses available for setting off against it, the applicable tax rate is nil. The average effective tax rate is also nil for the year.
7. Borrowing Cost capitalized during the year Rs. Nil
8. There are no amounts due to the small-scale industries outstanding for more than 30 days.
9. Accounting standard 17 (AS-17) – The entire business of the Company is in Electro-Mechanical Maintenance.
10. The Company has not taken any asset on operating/finance lease. Commercial / Residential premises taken on cancellable operating lease arerenewed at the end of the lease period.
11. Audit fee is Rs.393,278/- (PY Rs.414,154)
12. Construction activity is a service activity and therefore the same is covered under para 3(ii)(c) of Part II of Schedule VI to the Companies Act,1956
13. The Company has reviewed the future discounted cash flows based on value in use of fixed assets and satisfied that the recoverable amount ismore than the amount carried in the books. Accordingly, no provision is required to be made for the impairment in the accounts.
14. Previous year’s figures have been reclassified wherever necessary to conform with the presentation adopted in the current year.
Schedules forming part of accounts
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ZUBAIR KILPATRICK LLC
15 Balance Sheet Abstract and Company’s General Business ProfileI Registration Details
Registration No. N . A . State Code N AIncorporated in Sultanate of Oman
Balance Sheet Date 3 1 1 2 2 0 0 4II 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 Rs.)Total Liabilities Total Assets
4 7 4 1 3 6 0 0 4 7 4 1 3 6 0 0Sources of Funds Paid-Up Capital Reserves & Surplus
3 5 5 6 0 2 0 0 1 1 8 5 3 4 0 0Secured Loans Unsecured Loans
N I L N I LApplication of Funds Net Fixed Assets and Net Intangible Assets Investments
5 9 5 2 7 4 5 N I LNet Current Assets Deferred Tax
2 4 7 3 3 8 2 6 N I LMisc. Expenditure Accumulated Losses
N I L 1 4 4 9 2 9 3 2Translation Loss
2 2 3 4 0 9 7IV Performance of Company (Amount in Rs.)
Turnover (Including other income) Total Expenditure4 9 1 5 8 7 4 3 7 4 8 3 2 7 3 5 3 9Profit/Loss Before Tax * @ Profit/Loss After Tax * @
+ - + -+ 8 3 1 3 8 9 8 + 8 3 1 3 8 9 8Please tick Appropriate box + for Profit, - for LossBasic Earnings Per Share in Rs. Dividend Rate %
+ 2 7 7 . 1 3 N I LV Generic Names of Three Principal Products/Services of the Company
(as per monetary terms)Item Code No. N . A .(ITC Code)Product Description Maintenance activity
As per our attached report of even dateSHARP & TANNANChartered Accountants
L. Vaidyanathan V. B. GADGIL K. VENKATARAMANPartner DirectorsMembership No. 16368
Place: Chennai Place: ChennaiDate : May 12, 2005 Date : May 12, 2005
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
The Directors have pleasure in presenting their Annual Report and Audited Accounts for the year ended March 31, 2005.
1. FINANCIAL RESULTS2004-2005 2003-2004
Rupees Rupees
Profit Before Depreciation & Tax 90,782,382 57,658,140
Less/(Add): Depreciation and Amortization 9,008,191 8,969,969
Profit Before Tax 81,774,191 48,688,171
Provision for Current Tax 29,495,000 18,590,000
Provision for Deferred Tax (179,933) 64,207
(Write back)/Provision of/for prior years (2,916,785) 73
Profit After Tax 55,375,909 30,033,891
Add: Balance brought forward from previous year 30,657,429 13,632,108
Balance available for disposal which the directors appropriate as follows: 86,033,338 43,665,999
Dividend 13,600,000 10,200,000
Dividend Tax 1,868,853 1,306,875
General Reserve 4,153,193 1,501,695
19,622,046 13,008,570
Balance carried to Balance Sheet 66,411,292 30,657,429
Dividend
The directors had declared on September 23, 2004 an interim dividend of Rs.100 eachper share of Rs.1000 each on 68,000 shares 6,800,000 —
The directors further recommend payment of final dividend of Rs.100 each per shareof Rs.1000 each on 68,000 shares 6,800,000 10,200,000
2. YEAR IN RETROSPECT/ PERFORMANCE OF THE COMPANY
Sales and other income for the financial year under review were Rs.640,434,517 as against Rs.520,009,646 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.81,774,191 against Rs.48,688,171 for the previous financial year.
In the current year, sales of undercarriage systems and apron conveyors showed good growth resulting in increased sales and profits. In theDefence area Company was working on seven different projects out of which six were successfully completed and invoiced. Further, one set oftrack module for Road Paver was successfully developed and exported to M/s. Pavement Recycling Systems Inc, USA.
The Company had discontinued its operations at Navi Mumbai Plant. Consequently, the fixed assets located there, were retired from active useand are being held for sale.
The Company intends to consolidate its position in the undercarriage market by catering to new variants introduced by the Original Equipmentmanufacturers and also increase its share in the after market. Further, the Company plans to improve its presence in Apron Feeders bybroadening its product range. These are identified as the main focus areas to achieve higher growth in coming years.
3. CAPITAL EXPENDITURE
As at March 31, 2005, the gross fixed and intangible assets stood at Rs.178,524,097 and the net fixed assets at Rs.53,800,371 (after excludingassets at Navi Mumbai plant). Assets at Navi Mumbai plant are being held for disposal and are valued at Rs.37,798,973 as on March 31, 2005.Additions during the year amounted to Rs.14,558,519.
4. DEPOSITS
9 deposits totalling Rs.75,000 due for payment on or before March 31, 2005 remained unclaimed. As on the date of this report, none of the abovehas been claimed and paid.
5. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
During the year, the Company has transferred a sum of Rs.40,318 being the amount due & payable and remaining unpaid for a period of 7 years,as provided in Section 205C of the Companies Act, 1956.
Directors’ Report
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6. AUDITORS’ REPORT
The Auditors’ Report to the Shareholders does not contain any qualifications.
7. 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.
8. PERSONNEL
The Board of Directors wishes to express its appreciation to all the employees of the Company for their contribution to the operations of theCompany during the year. There are no employees coming within the purview of Section 217(2A) of the Companies Act, 1956 as amended byCompanies (Particulars of Employees) Rules, 1975.
9. 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 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, 2005 and of the profit of the Company forthe year ended on that date;
iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of 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. T. S. Sundaresan retires by rotation and being eligible offers himself for re-appointment.
11. AUDIT COMMITTEE
The 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. AUDITORS
The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing 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, would be within the limitsprescribed under Section 224(1B) of the Companies Act, 1956.
13. ACKNOWLEDGEMENTS
The Directors acknowledge the invaluable support extended to the Company by the Financial Institutions, Bankers, Vendors, Suppliers andCustomers. 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
J.P. NAYAKM.S. KRISHNAMOORTHY DirectorsT.S. SUNDARESAN
Place : Mumbai,Date : April 21, 2005
Directors’ Report
}
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TRACTOR ENGINEERS LIMITED
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:
i. The power factor has been improved up to 1.0 replacing old capacitor with mixed die-electric type having longer life. Unity power factorreduces the electrical losses.
ii. The existing tube lights are replaced whenever due with high lumen output (30% more than conventional) without increasing thewattage.
iii. Replaced DC variable speed drive with inverter type (AC variable).
b) Proposals:
i. Technical feasibility of replacing double heat treatment of track pins by a single shot one has been confirmed. Consequently, appropriatemodifications to the current in-house facility are being studied. This should result in significant reduction in energy consumption.
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 theSchedule.
- Not applicable.
B. TECHNOLOGY ABSORPTION
e) Efforts made in technology absorption as per Form B
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
Development of new products/ designs (two new variants of u/c models, sealed & grease lubricated tracks, bimetallic spun cast liners)/processes (new automated link induction hardening facility, new generation washing machine for pre-assembly cleaning of parts)/product testing (testing UTS of different models of link assemblies)/ methods/ material / tools, improvement of systems in existingproducts/ 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
• Improved product service life.
• Reducing manufacturing / delivery time
• Improved product quality.
• Cost reduction / improved utilisation of material & energy.
3. Future plan of action
• Continuation of the present work in R&D for introduction of new products and processes, improvement in existing products andprocesses in various areas in which the Company is operating.
• Faster introduction of new products and processes.
• Actively associating with the Defence Ministry (indigenisation plans) for parts for Combat Crawler Equipments, Design work forproducts used by various Defence forces.
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}
4. Expenditure on R&D (Rs.)
2004-05 2003-04
i) Capital — —
ii) Recurring 4,340,762 3,843,080
iii) Total 4,340,762 3,843,080
iv) Total R&D Expenditure as a 1% 1%percentage of total turnover
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation:
• Product and process technology developed through in-house R&D i.e. for design and manufacture of undercarriage for excavators has beenabsorbed and 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 substitution, etc.:
• Improvement in existing processes and product quality, performance, safety and serviceability.
• Import substitution and reduced dependence on technology.
• Introduction of new products with indigenous know-how.
3. Information regarding technology imported during the last five years
The 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 services andexport plans:
• Exported first machine set of complete track modules to Pavement Recycling Systems, USA.
• Working to increase our export competitiveness with improved volumes and larger batch production.
g) Total foreign exchange earned and used (Rs.)
2004-2005 2003-2004Foreign exchange earned 1,056,723 15,517,262Foreign exchange used 113,145,776 61,171,808
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AUDITORS’ REPORT TO THE SHAREHOLDERS OF TRACTOR ENGINEERS LIMITED
We have audited the attached Balance Sheet of Tractor Engineers Limited, as at March 31, 2005, and also 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.
As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (together the‘Order’) issued by the Central Government of India under sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, astatement 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:
1) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of ouraudit;
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 thosebooks;
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 accountingstandards referred to 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 March 31, 2005 and taken on record by the Board of Directors, we reportthat none of the directors is disqualified as on March 31, 2005 from being appointed as a director in terms of clause (g) of sub-section (1) ofSection 274 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,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 March 31, 2005;
(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.
SHARP & TANNANChartered Accountants
by the hand ofA.B. CHOPRA
PartnerMembership No.38159
Place : MumbaiDate : April 21, 2005
Auditors’ Report
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As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of section (4A) of Section 227 of theCompanies Act, 1956, we report as under:
1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of all fixed assets.
(b) We are informed that the fixed assets have been physically verified by the management at reasonable intervals during the year and nomaterial discrepancies were noticed on such verification.
(c) During the year, the Company has disposed off certain plant and machinery and furniture and fixtures. Based on the information andexplanation given by the management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the saidfixed assets has not affected the going concern status of the Company.
2. (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 of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of theCompany and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records ofinventory. No material discrepancies were noticed on physical verification of inventory as compared to book records.
3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained undersection 301 of the Companies Act, 1956. Accordingly the provisions of clause 4(iii) (b) to (d) of the Companies (Auditor’s Report) Order, 2003are not applicable to the Company.
(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained underSection 301 of the Company Act, 1956. Accordingly the provisions of clause 4(iii)(f) to (g) of the Companies (Auditor’s Report) Order, 2003are not applicable to the Company.
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, with regards to purchase of inventory and fixed assets and for the sale of goods andservices. In our opinion, and according to the information and explanations given to us, no major weakness has been noticed in the internalcontrols.
5. In our opinion, and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered intoa register in pursuance of Section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4(v) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the Company.
6. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions ofSections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to depositsaccepted from the public. According to the information and explanation given to us, no order has been passed by the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.
7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
8. According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section209(1)(d) of the Companies Act, 1956 for any of the products of the Company.
9. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has generallybeen regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other materialstatutory dues applicable to it.
10. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax,Sales Tax, Customs Duty, Excise Duty, Cess were outstanding, as at March 31, 2005 for a period of more than six months from the date theybecame payable.
11. According to the information and explanations given to us, there are no amounts in respect of Sales Tax, Wealth Tax, Service Tax, Custom Dutyand Excise Duty that have not been deposited with the appropriate authorities on account of any dispute. However, the following disputed dues ofincome tax and cess have not been deposited by the Company:
Annexure to the Auditors’ Report
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Name of the Statute Nature of dues Amount Forum where dispute is (Rs.) pending
Bombay Provincial Cess & Interest 1,208,627 Bombay High CourtMunicipal Corporation thereon(Cess on entry ofGoods) Rules, 1966Income Tax Act,1961 Income Tax & 1,521,913 Commissioner of
Interest for Income Tax (Appeals)AY2002-03
12. The Company does not have any accumulated losses as at the end of the financial year. The Company has not incurred cash losses during thefinancial year covered by our audit and the immediately preceding financial year.
13. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company hasnot defaulted in repayment of dues to a financial institution, bank or debenture holders.
14. 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.
15. In our opinion, the Company is not a chit fund/ nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies(Auditor’s Report) Order, 2003 are not applicable to the Company.
16. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have beenmaintained of the transactions and contracts in relation to dealing in shares, securities, debentures and other investments and timely entries havebeen made in those records. We also report that the Company has held the shares, securities, debentures and other investments in its own name.
17. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank orfinancial institutions.
18. The Company has not taken any term loans.
19. Based on an overall examination of the Balance Sheet and the information and explanations 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.
20. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301of the Companies Act, 1956.
21. The Company has not created any security or charge in respect of debentures issued during the year, as the same were redeemed within ninetydays of issue.
22. The Company has not raised any money by public issue during the year. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company.
23. According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during theyear.
SHARP & TANNANChartered Accountants
by the hand ofA.B. CHOPRA
PartnerMembership No.38159
Place : MumbaiDate : April 21, 2005
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Balance Sheet as at March 31, 2005
}
As at 31.3.2005 As at 31.3.2004Rupees Rupees
SOURCES OF FUNDS: SchedulesShareholders’ Funds:
Share capital A 68,000,000 68,000,000Reserves and surplus B 249,153,611 209,246,555
317,153,611 277,246,555Loan Funds:
Secured loans C 53,238,238 40,553,625Unsecured loans D 30,075,000 3,955,000
83,313,238 44,508,625Deferred Tax Liabilities (net) 14,185,224 14,365,157
(See Note No. 17 in Schedule R)
TOTAL 414,652,073 336,120,337
APPLICATION OF FUNDS:Fixed Assets : E1
Gross block 175,556,597 163,829,698Less : Depreciation and Impairment 124,056,726 116,452,078
Net Block 51,499,871 47,377,620Add:Capital Work-in Progress 187,500 51,687,371 - 47,377,620
Fixed Assets held for sale 37,798,973 37,798,973(See Note No. 6 in Schedule R)
Intangible Assets : E2Gross block 2,000,000 -Less : Amortisation and Impairment 667,000 -
Net Block 1,333,000 -Add:Capital Work-in Progress 780,000 2,113,000 500,000 500,000
Investments F 56,177,386 76,179,974Current assets, Loans and advances : G
Inventories 252,098,824 155,641,576Sundry debtors 136,531,542 109,075,546Cash and bank balances 124,025 273,699Loans and advances 40,200,743 27,799,066
428,955,134 292,789,887
Less : Current liabilities and provisions : HLiabilities 142,133,587 88,048,562Provisions 23,182,149 33,671,821
165,315,736 121,720,383
Net current assets 263,639,398 171,069,504Deferred Revenue Items:
Miscellaneous expenditure I 3,235,945 3,194,266(To the extent not written off or adjusted)
TOTAL 414,652,073 336,120,337
CONTINGENT LIABILITIES JSIGNIFICANT ACCOUNTING POLICIES QNOTES FORMING PART OF ACCOUNTS R
As per our report attachedSHARP & TANNANChartered Accountants
by the hand of
A.B. CHOPRA D.D. UPPONIPartner ManagerMembership No.38159
Mumbai, April 21, 2005
For and on behalf of the Board
J.P. NAYAKM.S. KRISHNAMOORTHY DirectorsT.S. SUNDARESAN
Mumbai, April 21, 2005
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Profit and Loss Account for the year ended March 31, 2005
2004-05 2003-04Rupees Rupees Rupees Rupees
SchedulesINCOME:Sales and Services K 746,133,017 601,124,109Less:Excise duty 107,637,332 638,495,685 84,416,597 516,707,512
Other Income L 1,938,832 3,302,134
640,434,517 520,009,646
EXPENDITURE:Materials, manufacturing and
operating expenses M 434,925,505 344,289,373Staff expenses N 71,352,270 73,849,333Sales, administration and other expenses O 47,915,579 41,773,641Interest & brokerage P (4,541,219) 2,439,159Depreciation and obsolescence 8,341,191 8,969,969Amortisation of Intangible Assets 667,000 -
558,660,326 471,321,475
PROFIT BEFORE TAX 81,774,191 48,688,171Provision for Tax- Current tax - including Wealth Tax 29,495,000 18,590,000
Rs.36,000 (previous year Rs.37,500)- Deferred Tax (179,933) 64,207- (Write Back)/Provision of/for tax pertaining to prior
years (2,916,785) 73
26,398,282 18,654,280
PROFIT AFTER TAX 55,375,909 30,033,891
Add:Balance brought forward from previous year 30,657,429 13,632,108
PROFIT AVAILABLE FOR APPROPRIATION 86,033,338 43,665,999Less : Transferred to General Reserve 4,153,193 1,501,695
PROFIT AVAILABLE FOR DISTRIBUTION 81,880,145 42,164,304Interim Dividend 6,800,000 -
Proposed Dividend 6,800,000 10,200,000Additional tax on dividend 1,868,853 1,306,875
Balance carried to Balance Sheet 66,411,292 30,657,429
Basic and Diluted Earnings Per Equity Share (Rs.) R 814.35 441.67
SIGNIFICANT ACCOUNTING POLICIES Q
NOTES FORMING PART OF ACCOUNTS R
As per our report attachedSHARP & TANNANChartered Accountants
by the hand of
A.B. CHOPRA D.D. UPPONIPartner ManagerMembership No.38159
Mumbai, April 21, 2005
}For and on behalf of the Board
J.P. NAYAKM.S. KRISHNAMOORTHY DirectorsT.S. SUNDARESAN
Mumbai, April 21, 2005
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Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
A CASH FLOW FROM OPERATING ACTIVITIES: Rupees RupeesNet Profit before tax & extraordinary activities 81,774,191 48,688,171Adjustments for:Depreciation (including obsolescence) and amortisation 9,008,191 8,969,969Interest (Net) (4,541,219) 2,439,159Provision for diminution in value of investments (10,544) 10,544Dividend received (362,954) (1,162,578)(Profit)/Loss on Sale of Fixed Assets 70,718 (212,048)(Profit)/Loss on Sale of Investments (354,876) (271,347)
Operating profit before working capital changes 85,583,507 58,461,870Adjustments for:
(Increase)/Decrease in Trade & other receivables (39,505,228) (15,399,173)(Increase)/Decrease in Inventories (96,457,248) (41,973,166)(Increase)/Decrease in Miscellaneous Expenditure (41,679) 836,810Increase/(Decrease) in Trade Payables 52,307,446 26,982,196
Cash Generated from Operations 1,886,798 28,908,537Direct taxes paid (Net) (31,889,918) (17,158,027)
Net Cash from Operating Activities (30,003,120) 11,750,510
B CASH FLOW FROM INVESTING ACTIVITIES:Purchase of fixed assets including CWIP (15,026,019) (7,832,840)Sale of Fixed Assets 24,359 271,462Sale of Investments 20,368,008 (3,573,541)Dividend Received 362,954 1,162,578Interest Received 8,260,468 1,445,780
Net Cash (used in)/from Investing Activities 13,989,770 (8,526,561)
C CASH FLOW FROM FINANCING ACTIVITIES:Proceeds from Short Term & other borrowings 38,804,613 618,911Dividend Paid (17,000,000) -Additional tax on dividend (2,221,688) -Interest paid (3,719,249) (3,884,939)
Net Cash (used in)/from Financing Activities 15,863,676 (3,266,028)
D Net (decrease)/increase in cash & cash equivalents (A+B+C) (149,674) (42,079)Cash & Cash equivalents at the beginning of the year 273,699 315,778Cash & Cash equivalents at the end of the year 124,025 273,699
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 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 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 attachedSHARP & TANNANChartered Accountants
by the hand of
A.B. CHOPRA D.D. UPPONIPartner ManagerMembership No.38159
Mumbai, April 21, 2005
}For and on behalf of the Board
J.P. NAYAKM.S. KRISHNAMOORTHY DirectorsT.S. SUNDARESAN
Mumbai, April 21, 2005
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Schedules forming part of accountsSCHEDULE A As at 31.3.2005 As at 31.3.2004
Rupees RupeesShare Capital:Authorised:
70,000 Equity shares of Rs.1,000 each. 70,000,000 70,000,000Issued & subscribed:
68,000 Equity shares of Rs.1,000 each fully paid-up 68,000,000 68,000,000
SCHEDULE B
Reserves & Surplus:General Reserve :As per last Balance Sheet 178,589,126 177,087,431Add : Transferred from:
Profit and Loss Account 4,153,193 182,742,319 1,501,695 178,589,126
Profit & Loss Account 66,411,292 30,657,429
249,153,611 209,246,555
SCHEDULE C
Secured Loans:Secured Redeemable Non-convertible Debentures - 20,000,000From Banks:
Cash Credits 53,238,238 20,553,625
53,238,238 40,553,625
SCHEDULE D
Unsecured Loans:Fixed Deposits:
Due for not more than one year 75,000 3,955,000Other deposits - 75,000 - 3,955,000
Inter Corporate Deposits 30,000,000 -
30,075,000 3,955,000
SCHEDULE E1 - Tangible Assets Rupees
COST DEPRECIATION Book Book FIXED ASSETS Value Value
As at Additions Deductions As at As at For the On dedu- As at As at As at1.4.2004 31.3.2005 1.4.2004 year ctions 31.3.2005 31.3.2005 31.3.2004
Buildings 20,870,753 - - 20,870,753 11,322,006 524,390 - 11,846,396 9,024,357 9,548,747Plant & Machinery 134,213,213 12,008,670 643,021 145,578,862 99,713,072 7,424,611 633,251 106,504,432 39,074,430 34,500,141Furniture &Fixtures 8,399,442 549,849 188,599 8,760,692 5,253,783 333,458 93,525 5,493,716 3,266,976 3,145,659Vehicles 346,290 - - 346,290 163,217 48,965 - 212,182 134,108 183,073
Total 163,829,698 12,558,519 831,620 175,556,597 116,452,078 8,331,424 726,776 124,056,726 51,499,871 47,377,620
Previous Year 157,244,622 7,632,840 1,047,764 163,829,698 108,470,459 8,969,969 988,350 116,452,078
Add: Capital work-in-progress (including advance of Rs.187,500 (previous year Rs.Nil) ) 187,500 -
51,687,371 47,377,620
Note : Tangible Fixed Assets schedule does not include assets located at Navi Mumbai Plant which are held for sale.
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SCHEDULE F As at 31.3.2005 As at 31.3.2004
Rupees RupeesInvestments:Long TermTrade, Unquoted at costNarmada Infrastructure Construction Enterprise Limited(2,822,750 shares of Rs.10 each ) 53,900,411 53,900,411Larsen & Toubro LLC(2,500 shares of USD 1 each) 119,475 119,475BondsNonTrade, Unquoted at cost6.75 % Tax Free US 64 2,157,500 2,157,500
(21,575 bonds of Rs.100 each acquired during the year) 56,177,386 56,177,386CurrentUnquoted at costMutual fundsDeutsche Premier Bond Fund Institutional Plan - QD - 10,000,000(957,698 units of Rs.10 each sold during the year)HDFC Monthly Income Plan - Long Term - QD(479,294 units of Rs.10 each sold during the year)
Cost - 5,000,000Less: Provision for Diminution in value - 10,544
- 4,989,456Grindlays Cash Fund-Growth option(430,013 units of Rs.10 each sold during the year) - 5,013,132
- 20,002,588
56,177,386 76,179,974
Details of Investments purchased and sold during the yearFace Value No. of CostRs.per unit Units Rupees
Mutual FundsDeutsche Insta Cash Plus Fund - Regular Dividend Plan 10 997,828 10,142,218Reliance Liquid Fund Treasury Plan Weekly Dividend Reinvestment 10 734,408 7,582,570HDFC Cash Management Fund - Savings Plan Daily Dividend Reinvestment 10 1,414,895 15,049,390
Schedules forming part of accounts
SCHEDULE E2 - Intangible Assets Rupees
FIXED ASSETS COST AMORTISATION Book BookValue Value
As at Additions Deduc- As at As at For the On dedu- As at as at as at1.4.2004 tions 31.3.2005 1.4.2004 year ctions 31.3.2005 31.3.2005 31.3.2004
Specialised Software - 2,000,000 - 2,000,000 - 667,000 - 667,000 1,333,000 -
Total - 2,000,000 - 2,000,000 - 667,000 - 667,000 1,333,000 -
Previous Year - - - - - - - -
Add: Capital work-in-progress (including advance of Rs.Nil (previous year Rs.500,000) ) 780,000 500,000
2,113,000 500,000
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SCHEDULE G As at 31.3.2005 As at 31.3.2004
Rupees Rupees
Current Assets, Loans and Advances:Inventories : At lower of cost and net realisable value
Loose tools 1,246,485 1,140,261Consumables stores & spare parts 608,130 578,911Raw materials 166,700,828 109,368,146Finished goods 74,820,351 31,671,032Work-in-progress 8,723,030 12,883,226
252,098,824 155,641,576
Sundry Debtors:Unsecured, considered good:Outstanding for more than six months 3,414,049 1,200,639Other debts 133,117,493 107,874,907
136,531,542 109,075,546
Cash and bank balancesCash on hand 85,723 228,760Balances with scheduled banks oncurrent accounts 38,302 44,939
124,025 273,699Loans and Advances:
Secured, Considered good :Loans against mortgage of house property 3,533,660 3,716,862Unsecured, considered good:Advances recoverable in cash or in kind 36,266,094 24,032,660Taxes (net) 352,445 -Interest accrued on Investments 48,544 48,544Deposit with Industrial DevelopmentBank of India - 1,000
40,200,743 27,799,066
428,955,134 292,789,887
SCHEDULE HCurrent Liabilities and Provisions:Current Liabilities:Sundry Creditors
Due to Small Scale Industrial Undertakings 2,727,632 3,278,130Others 131,760,484 82,791,408
134,488,116 86,069,538Acceptances 6,650,471 -Interest accrued, but not due on loans 46,027 244,438Pension payable under Voluntary retirement cumpension scheme(Payable within one year Rs.471,444 948,973 142,133,587 1,734,586 88,048,562Previous year Rs.785,613 )
Provisions for:Leave encashment 14,593,000 13,384,700Gratuity 835,109 3,820,988Taxes (net) - 4,959,258Proposed dividend 6,800,000 10,200,000Additional tax on dividend 954,040 1,306,875
23,182,149 33,671,821
165,315,736 121,720,383
Schedules forming part of accounts
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As at 31.3.2005 As at 31.3.2004
Rupees RupeesSCHEDULE IMiscellaneous expenditure(To the extent not written off or adjusted)Voluntary Retirement Pension Scheme 3,235,945 3,194,266
3,235,945 3,194,266
SCHEDULE JContingent LiabilitiesFor Income Tax matter in appeal 272,995 -For Excise matters in appeal - 787,745For Cess payable to Navi Mumbai Municipal Corporation, in appeal 1,208,627 1,208,627
2004-2005 2003-2004
SCHEDULE K Rupees RupeesSales & Service - -Manufacturing & Trading activity 735,298,717 588,189,097Servicing 10,834,300 12,935,012
746,133,017 601,124,109
SCHEDULE LOther Income:Income from current investments 362,954 1,162,578Provision for diminution in value of current investments 10,544 -written backProfit on sale of current investments 354,876 271,347Profit on sale of fixed tangible assets - 212,048Miscellaneous income 1,210,458 1,656,161
1,938,832 3,302,134
SCHEDULE MMaterials, Manufacturing and Operating expenses:Raw material consumed:
Opening stock 109,368,146 73,667,910Add: Purchases 485,150,482 352,546,397
594,518,628 426,214,307Less: Closing stock 166,700,828 109,368,146
427,817,800 316,846,161Add: Purchase of trading goods 2,464,883 760,431Increase in manufacturing and trading stocks
Closing stocks:Finished goods 74,820,351 31,671,032Work-in-progress 8,723,030 12,883,226
83,543,381 44,554,258Less: Opening stocks:
Finished goods 31,671,032 27,486,179Work-in-progress 12,883,226 11,196,791
44,554,258 38,682,970(38,989,123) (5,871,288)
391,293,560 311,735,304Less: Scrap sales 3,124,451 1,742,165
388,169,109 309,993,139Stores, spares and tools 11,417,734 8,298,386Excise duty 2,341,543 (652,536)Power and fuel 19,033,036 17,508,422Hire Charges - Plant & Machinery and others 1,041,151 898,391Repairs to plant and machinery 7,374,503 6,237,356Repairs to buildings 5,548,429 2,006,215
434,925,505 344,289,373
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
2004-2005 2003-2004
SCHEDULE N Rupees RupeesStaff Expenses:
Salaries, wages and bonus 53,866,079 51,456,642
Contribution to:
Provident funds and pension fund 3,789,503 3,844,347
Superannuation fund 828,153 581,054
Gratuity funds 879,104 3,764,983
5,496,760 8,190,384
Provision for Leave encashment 1,208,300 3,372,700
Welfare and other expenses 10,781,131 10,829,607
71,352,270 73,849,333
SCHEDULE OSales, Administration & Other Expenses:
Rent (including lease rentals Rs.549,473 1,631,094 1,003,785
previous year Rs.680,523)
Rates and taxes 1,745,227 1,725,152
Travelling and conveyance 8,817,780 7,229,267
Directors’ fees 42,000 34,000
Telephone, Postage & Telegram 1,093,809 894,627
Advertising and Sales Promotion 259,048 264,318
Stationery & Printing 866,657 924,994
Insurance 1,324,072 1,224,141
Commission 6,053,455 5,976,235
Bank Charges 1,150,675 1,458,983
General Repairs & Maintenance 169,334 154,811
Bad Debts and advances written off 56,471 -
Miscellaneous expenses 14,657,067 11,472,809
Loss on sale of fixed assets (net) 70,718 -
Provision for diminution in value of current investments - 10,544
Packing and forwarding 9,978,172 9,399,975
47,915,579 41,773,641
SCHEDULE PInterest & Brokerage
Fixed Deposits & Debentures 1,738,795 2,525,815
Others 1,980,454 3,719,249 1,359,124 3,884,939
Less:
Interest from others 8,114,836 1,324,421
(Tax deducted at source Rs.15,813
previous year Rs.1584)
Interest on Long Term Investments 145,632 8,260,468 121,359 1,445,780
(4,541,219) 2,439,159
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
SCHEDULE Q
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 [“GAAP”] and in compliance with the Accounting Standards referred to in Section 211(3C) and other requirements of the CompaniesAct, 1956.
The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptionsthat affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relatingto contingent liabilities as of the date of the financial statements. Examples of such estimates include useful lives of fixed assets & intangibleassets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans etc. Actual results could differ from theseestimates.
2. FIXED ASSETS
Fixed assets are stated at original cost net of tax / duty credits availed, if any, less depreciation / impairment.
Interest on borrowings for fixed assets acquisition and revenue expenses incurred at project site for the period prior to commencement ofcommercial production are capitalised as part of asset cost. Fluctuations in exchange rates are adjusted to the cost of the fixed assets.
3. DEPRECIATION
Depreciation on fixed 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 September 30, 1987 and on straight line method on assets acquired from October 1, 1987 exceptin the case of vehicles which are depreciated at 14.14%. Depreciation on additions/deductions is calculated pro rata from/to the month ofadditions/ deductions.
4. INTANGIBLE ASSETS AND AMORTISATION
Intangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 ‘Intangible Assets’ issued by the Institute ofChartered Accountants of India and are amortised as follows:
i. The value of leasehold land is amortised over the period of the lease.
ii. Specialised software is amortised over a period of three years.
5. BORROWING COSTS
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of cost of suchassets till such time as the assets is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantialperiod of time to get ready for its intended use or sale. All other borrowing costs are recognised as expense in the period in which they areincurred.
6. INVESTMENTS
i) Long Term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanent nature.
ii) Current investments are carried at lower of cost or market value.
7. INVENTORIES
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, stores & spare parts Weighted average cost method.
Work in progress & Finished Goods Weighted average cost method
The cost include costs directly related toproduction and a systematic allocation offixed and variable production overheads.Finished Goods Inventory is inclusive of exciseduty paid/payable.
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
8. FOREIGN CURRENCY TRANSACTIONS
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.
Premium or discount on forward exchange contracts that are intended for hedging purposes are amortised as expense or income over the life ofthe contract.
9. RETIREMENT BENEFITS
Contributions are made to the Provident Funds and Superannuation Fund on actual liability basis and to the Gratuity Funds on actuarial valuationbasis. Provision for Leave Encashment on retirement is made on actuarial valuation basis.
10. PRIOR PERIOD AND EXTRAORDINARY ITEMS
Income and expenditure pertaining to prior period as well as extraordinary items, where material, are disclosed separately.
11. DEFERRED REVENUE EXPENDITURE
Future pensions under Voluntary Retirement cum Pension scheme are amortised over the period for which such pensions are payable. Lumpsum compensation paid under Voluntary Retirement Scheme is amortised over a period of five years.
12. 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 provisionsof the Income 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 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 reasonable certainity that sufficient future taxable income willbe available against which such deferred tax assets can be realised.
13. PROVISIONS
Provisions are recognised in the financial statements when the Company has a present obligation as a result of past event and it is probable thatan outflow of economic benefits will be required to settle the obligation. The provisions are determined on the basis of a reliable estimate ofexpected outflows of economic benefits after considering the risks specific to the liability. The accounting policy is respect of certain materialclasses of provisions is as follows:
a) Provision for Warranties:
A provision for warranties is recognized when the underlying products and services are sold. The provision is based on historicalinformation on the nature, frequency, and average cost of warranty claims and a weighting of all possible outcomes against their associatedliabilities. In case of products where the historical information reveals an uncertain pattern, the provision is recognised when the claims arelodged by the customers.
b) Provision for Litigations:
The provision for obligations arising on account of various litigations under Sales tax laws, Excise law and Service tax law, Income-tax law,Customs law and Employment matters is recognised when it is probable that an outflow of economic benefits will be required to settle theobligation based on management’s judgment in the similar cases and / or advice of independent experts.
Schedules forming part of accounts
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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 & ToubroLimited.
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. Pursuant to the Employees Stock Options (ESOP) Scheme established by the holding company (i.e., Larsen & Toubro Limited), stock optionshave been granted to the employees of the Company in respect of which, cost of Rs.784,476 has been incurred by the holding company during theyear (Previous year Rs.Nil).
4. Sundry creditors include interest of Rs.Nil (previous year Rs.Nil) on overdue amounts payable to Small Scale and Ancillary Industrial Undertakings.
5. Estimated amount of contracts remaining to be executed on capital account (net of advances) is :
Fixed Assets: Rs.597,396 (previous year Rs.Nil)
Intangible Assets: Rs.520,000 (previous year Rs.1,500,000).
6. The Company had discontinued its operations at Navi Mumbai Plant, consequently, fixed assets located at the Navi Mumbai plant have beenretired from active use and are being held for disposal. Accordingly, the Company, as on March 31, 2005, has valued fixed assets located at theNavi Mumbai plant based on estimated net realisable value or net book value, whichever is less.
7. Cash credit facilities from banks are secured by hypothecation of stocks, stores and book-debts.
8. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2005.
9. Expenditure on research and development activities, as certified by the Management is Rs.4,340,762 (previous yearRs.3,843,080).
10. The Company has taken on operating lease certain assets comprising cars and personal computers costing Rs.2,031,493 (previous yearRs.678,978). Total minimum future lease payments in this respect are as follows :
2004-05 2003-04
Due :Not later than one year 548,944 172,296Later than one year but not later than five years 1,538,123 584,099Later than five years Nil Nil
Total 2,087,067 756,395
11. Loans and advances include:
As at 31.3.2005 As at 31.3.2004Rupees Rupees
Due from an Officer of the Company(Maximum amount outstanding at any time during the year Rs.907,819 )(previous year Rs.1,027,788) 853,541 907,819
12. The Company owes a sum which is outstanding for more than 30 days to the following small scale industrial undertakings:1. Srinivas Engineering 9. Dashmesh Engineering Co2. Gala Springs Private Limited 10. Ronomats (India)3. Electoscope Systems 11. Jaywant Engg Works4. Kohinoor Mech. Elec. & Engg. Works 12. Rehal Engineering Works5. Vako seals 13. Speciality Uretheans Pvt. Ltd.6. Heattreaters & Engineers 14. Accurate Equipment Manufacturers Private Limited7. Precitrurn Systems 15. S K Corporation8. Swastik Heavy Structurals 16. Union Engineering Pvt. Ltd.
The above information and that given in schedule H – current liabilities regarding small scale industrial undertakings has been determined to theextent such parties have been identified on the basis of information available with the Company. This is relied on by the auditors.
13. The exchange gain (net) arising on foreign currency transactions amounting to Rs.555,474 has been provided for in the respective revenueaccounts. (previous year loss (net) Rs.2,936,205)
14. Segment Reporting
The Company’s activities fall within a single segment, viz. undercarriage and related products. Accordingly, Segment Reporting is not applicable.
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
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
4. Larsen & Toubro Infotech Limited Fellow Subsidiary
5. L&T Transportation Infrastructure Limited Fellow Subsidiary
6. HPL Cogeneration Limited Fellow Subsidiary
7. Narmada Infrastructure Construction Enterprise Fellow Subsidiary
8. L&T Western India Tollbridge Limited Fellow Subsidiary
9. India Infrastructure Developers Limited Fellow Subsidiary
10. Larsen & Toubro LLC, USA Fellow Subsidiary
11. Larsen & Toubro International FZE Fellow Subsidiary
12. L&T Infocity Limited Fellow Subsidiary
13. Hyderabad International Trade Exposition Limited Fellow Subsidiary
14. Andhra Pradesh Expositions Private Limited Fellow Subsidiary
15. L&T – ECC Construction (M) SDN.BHD. Fellow Subsidiary
16. Bhilai Power Supply Company Limited Fellow Subsidiary
17. Larsen & Toubro (Oman) LLC Fellow Subsidiary
18. L&T Power Investments Private Limited Fellow Subsidiary
19. Raykal Aluminium Company Private Limited Fellow Subsidiary
20. Cyberpark Development & Construction Limited Fellow Subsidiary
21. L&T-Sargent & Lundy Limited Fellow Subsidiary
22. L&T Overseas Projects Nigeria Limited Fellow Subsidiary
23. L&T Qatar LLC Fellow Subsidiary
24. Zubair Kilpatrick LLC Fellow Subsidiary
25. L&T Infocity Lanka Private Limited Fellow Subsidiary
26. L&T Information Technology GmbH Fellow Subsidiary
27. L&T Infocity Infrastructure Limited Fellow Subsidiary
28. L&T Infrastructure Development Projects Limited Fellow Subsidiary
29. Key Management Personnel and his relatives
Mr. Deepak D. Upponi Chief Executive and Manager
Mrs. Kanchan D. Upponi Wife
Mr. Abhijit D. Upponi Son
Mrs. Anuprita V. Honavar Daughter
Mr. Prakash D. Upponi Brother
Mrs. Lalita D. Upponi Mother
Mr. Dattatraya N. Upponi Father
II. Names of the Related Parties with whom transactions were carried out during the year and description of relationship:
Sr. Name of the Related Party RelationshipNo.
1. Larsen & Toubro Limited Holding Company
2. L&T Finance Limited Fellow Subsidiary
3. Larsen & Toubro Infotech Limited Fellow Subsidiary
4. Mr. D. D. Upponi Key Management Personnel (KMP)
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
III. Disclosure of related party transactions: Rupees
Sr. Nature of transaction Holding Fellow Key TotalNo. Company Subsidiaries Management
Personnel
1. Sale of goods 95,593,622 NIL NIL 95,593,622(65,806,859) (NIL) (NIL) (65,806,859)
2. Sale of fixed assets NIL NIL NIL NIL(NIL) (NIL) (NIL) (NIL)
3. Rendering of services / Other income 10,987,300 NIL NIL 10,987,300(10,700,000) (NIL) (NIL) (10,700,000)
4. Receiving of services : 13,931,051 - NIL 18,190,051(13,349,131) - (NIL) (14,208,374)
L&T Finance Limited - 204,000 - -- (209,311) - -
Larsen & Toubro Infotech Limited - 4,055,000 - -- (649,932) - -
5. Leasing or hire purchase arrangements -L&T Finance Limited NIL 325,841 NIL 325,841
(NIL) (161,015) (NIL) (161,015)
6. Interest cost on Inter Corporate Deposits 191,781 NIL NIL 191,781(481,644) (NIL) (NIL) (481,644)
7. Finance (including loans and equitycontributions in cash or in kind) –
a) Inter Corporate Deposits 70,000,000 NIL NIL 70,000,000taken from L&T (10,000,000) (NIL) (NIL) (10,000,000)
b) Inter Corporate Deposits 40,000,000 NIL NIL 40,000,000repaid to L&T (26,000,000) (NIL) (NIL) (26,000,000)
8. Interim & Proposed Dividend 13,600,000 NIL NIL 13,600,000(payable to holding Co.) (10,200,000) (NIL) (NIL) (10,200,000)
9. Management contracts 8,207,043 NIL NIL 8,207,043(including for deputation of employees) (3,384,565) (NIL) (NIL) (3,384,565)
10. Payment of Salary & Perquisites NIL NIL 1,440,509 1,440,509(NIL) (NIL) (1,160,273) (1,160,273)
11. Amounts due from / (due to) related parties :a) Accounts receivable 20,299,108 NIL NIL 20,299,108
(19,861,839) (NIL) ((NIL) (19,861,839)
b) Accounts payable : 13,799,546 - NIL 15,467,680(8,863,209) - (NIL) (9,150,316)
L&T Finance Limited - 1,419 - -- (NIL) - -
Larsen & Toubro Infotech Limited - 1,666,715 - -- (287,107) - -
c) Inter Corporate Deposit taken 30,000,000 NIL NIL 30,000,000(NIL) (NIL) (NIL) (NIL)
d) Dues in respect of Advances given NIL NIL 853,541 853,541(NIL) (NIL) (907,819) (907,819)
12. Bad Debts written off 11,500 NIL NIL 11,500(NIL) (NIL) (NIL) (NIL)
Note : Figures in bracket relate to previous year
16. Earnings Per Share: 2004-05 2003-04
1. Basic Earnings Per Share (Rs.) 814.35 441.67
2. Diluted Earnings Per Share (Rs.) 814.35 441.67
3. Profit/(Loss) After Tax as per Profit & Loss Account (Rs.) 55,375,909 30,033,891
4. Weighted average number of equity shares outstanding 68,000 68,000
5. Nominal Value per Equity Share Rs.1,000 Rs.1,000
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
17. The Company has during the year, in accordance with Accounting Standard (AS-22),”Accounting for Taxes on Income” issued by the Institute ofChartered Accountants of India, recognised in the Profit & Loss Account, the difference of Rs.179,933 between net deferred tax liabilities ofRs.14,185,224 as at March 31, 2005 and net deferred tax liabilities of Rs.14,365,157as at March 31, 2004.
Deferred Tax Assets and Liabilities are on account of the following timing differences: 2004-2005 2003-2004Rupees Rupees
Deferred Tax LiabilitiesDepreciation 13,456,151 13,620,656Expenditure claimed on payment basis for tax purposes 1,562,526 1,048,105Voluntary Retirement Pension Scheme 267,346 515,156
Total 15,286,023 15,183,917
Deferred Tax Assets
Unabsorbed Long Term Capital Loss 0 20,330Voluntary Retirement Scheme 306,426 794,647Expenditure on Software 794,373 -
Provision for Diminution in Value of Investments - 3,783
Total 1100,799 818,760
Deferred Tax Liabilities (Net) 14,185,224 14,365,157
18. Contractual Product Warranties: The Company gives warranties on its products, undertaking to repair or replace the items thatfail to perform satisfactorily during the warranty period. A provision of Rs.1,480,267/- (previous year Rs.520,878/-) (included in Sundry Creditors –Others of Schedule H) has been recognised for expected warranty claims on products sold during the year / represents the estimated amount ofcosts for meeting such obligations of rectification / replacement. As the historical information reveals an uncertain pattern, the provision isrecognised when the claims are lodged by the customers. Most of them are expected to be settled in the next financial year. The movement duringthe year is as below :
Carrying amount at the beginning of the year 520,878 0Less : Amount used against the opening provision (520,878) 0New provision for the current year 1,480,267 520,878Carrying amount at the end of the year 1,480,267 520,878
Charged for the year 1,534,236 1,200,770
19. SCHEDULE J – Contingent Liabilities:
a) Income tax matter in appeal : Rs. 272,995/- for AY 2001-02 & 2002-03
b) Cess payable to Navi Mumbai Municipal Corporation for 1998-99, in appeal - Rs.1208,627/-
20. Manager’s salary & perquisites
Salaries 1,064,602 868,249Perquisites 94,683 158,564Retirement Benefits 281,224 133,460
1,440,509 1,160,273
21. Auditors’ Remuneration (excluding service tax and education cess) :
Audit fees 175,000 175,000Taxation matters — 16,000Certification work 6,500 76,875Tax audit fees 40,000 40,000Expenses reimbursed 17,526 13,275
239,026 321,150
22. Details of licensed capacity, installed capacity, production and turnover:
Product Licensed capacity *Installed capacity
(i) Crawler Tractor parts For replacement For replacementneeded for 2,000 needed for 2,000(two thousand) (two thousand)
track type tractors track type tractors (2,000) (2,000)
* As certified by a Director, on which certificate the auditors have placed reliance.
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
(ii) Actual production and opening/closing stocks:
Production Opening stock Closing stockQty. Qty. Value Qty. ValueNos. Nos. Rupees Nos. Rupees
Form of sets 30,604 938 8,546,980 1,879 26,884,974(26,453) (1,326) (10,156,566) (938) (8,546,980)
Loose parts 61,469 43,956 23,073,930 87,648 47,925,272(69,237) (38,879) (17,226,363) (43,956) (23,073,930)
Trading goods NA — 50,122 — 10,105(NA) (—) (103,250) (—) (50,122)
Figures in brackets are in respect of previous year.
(iii) Turnover: 2004-2005 2003-2004Qty. Value Qty. ValueNos. Rupees Nos. Rupees
(net of excise) (net of excise)
Form of sets 29,663 548,874,715 26,841 434,339,083Loose parts — 76,036,670 — 68,249,326Trading goods — 2,750,000 — 1,184,091
627,661,385 503,772,500
23. Raw materials consumed: 2004-2005 2003-2004Qty. Value Qty. Value
M.Tons Rupees M.Tons RupeesSpecial steels 5,812 209,314,668 5,236 150,586,406Iron & Steel castings 252 14,291,767 252 12,218,318Bronze castings 24 6,484,782 23 5,275,441Others 197,726,583 148,765,996
427,817,800 316,846,161
24. Purchases: 2004-2005 2003-2004Qty. Value Qty. Value
Rupees RupeesTrading goods — 2,464,883 — 760,431
25. Value of imported and indigenous materials consumed and percentage thereof:Raw Materials Stores & Spare parts% Value % Value
Rupees RupeesImported 23 96,959,498 0 0.00
(24) (75,154,882) (0) (0.00)Indigenous 77 330,858,302 100 11,417,734
(76) (241,691,279) (100) (8,298,386)100 427,817,800 100 11,417,734
(100) (316,846,161) (100) (8,298,386)
Figures in brackets are in respect of previous year.
26. Value of imports (on C.I.F. basis): 2004-2005 2003-2004Rupees Rupees
Raw materials 111,973,089 60,661,853
27. Expenditure in foreign currency:Repairs — 72,482
Other matters 1,172,687 437,473
Total 1,172,687 509,955
28. Earnings in foreign exchange: 2004-2005 2003-2004Rupees Rupees
Export of goods on F.O.B. basis 1,056,723 14,591,062Tooling Costs — 926,200
1,056,723 15,517,262
29. Figures for the previous year have been regrouped/reclassified wherever necessary.
Schedules forming part of accounts
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TRACTOR ENGINEERS LIMITED
30. Balance sheet abstract and company’s general businss profile
I. Registration Details:
Registration No. 0 8 8 9 3 State Code No. 1 1
Balance Sheet Date 3 1 0 3 2 0 0 5Date Month Year
II. Capital raised during the year (Amount in Rs.Thousands)
Public Issue Rights Issue
N I L N I LBonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities Total Assets(including Paid-up Capital)
4 1 4 6 5 2 4 1 4 6 5 2Sources of Funds
Paid up Capital Reserves & Surplus
6 8 0 0 0 2 4 9 1 5 4
Secured Loans Unsecured Loans
5 3 2 3 8 3 0 0 7 5Deferred Tax Liabilities (net)
1 4 1 8 5Application of Funds
Net Fixed Assets Investments
9 1 5 9 9 5 6 1 7 7
Net Current Assets Misc.Expenditure
2 6 3 6 4 0 3 2 3 6
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs.Thousands)Turnover Total Expenditure
(incl.other income)
6 4 0 4 3 4 5 5 8 6 6 0
Profit/(Loss) before Tax Profit/(Loss) after Tax
8 1 7 7 4 5 5 3 7 6
Earning per share Rs. Dividend Rate %
8 1 4 3 5 2 0
V. Generic Names of three Principal Products / Services of Company (as per monetary terms)
Item Code No.(ITC Code) 8 4 . 3 1
Product P A R T S O F M O V I N G M A C H I N E R Y
Description 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
O I L F I E L D E Q U I P M E N T
Signatures to Schedules A to R
As per our report attachedSHARP & TANNANChartered Accountantsby the hand ofA.B. CHOPRA D.D. UPPONIPartner ManagerMembership No.38159Mumbai, April 21, 2005
}For and on behalf of the Board
J.P. NAYAKM.S. KRISHNAMOORTHY DirectorsT.S. SUNDARESAN
Mumbai, April 21, 2005
Schedules forming part of accounts
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L&T–SARGENT & LUNDY LIMITED
Directors’ ReportThe Directors have pleasure in presenting their Report and Audited Accounts for the year ended March 31, 2005.
FINANCIAL RESULTS
2004-2005 2003-2004(Rs. Million) (Rs. Million)
Profit before depreciation and tax 13.23 5.03
Less : Depreciation on Fixed Assets 5.02 3.77
Profit before tax 8.21 1.26
Provision for Current & Earlier Years Tax 1.22 0.33
Provision for Deferred Tax (0.34) (1.11)
Profit after tax 7.33 2.04
Add: Balance brought forward from the previous year 21.65 29.65
Less: Deferred Tax Liability as on 1-Apr-2002 NIL NIL
Leaving the balance available for disposal which the directors appropriate as follows: 28.99 31.69
Dividend NIL NIL
Tax on Dividend NIL NIL
Premium on buyback of shares NIL NIL
Transfer to General Reserve NIL NIL
Transfer to Capital Redemption Reserve NIL 10.04
Leaving a balance to be carried forward 28.99 21.65
DIVIDEND
The Directors do not propose any dividend for the financial year 2004-2005.
PERFORMANCE OF THE COMPANY
The Sales and other income for the financial year under review, were Rs.152.40 Million (including exports of Rs.61.07 Million), as against Rs.119.19 Million(including exports of Rs.29.54 Million) for the previous financial year. The profit before tax (after depreciation) was Rs.8.21 Million against Rs.1.26 Millionfor the previous financial year. After making provisions for tax (including deferred tax) of Rs. 0.88 Million, profit after tax was Rs.7.33 Million.
The improved performance of the Company is attributable to increased proportion of export sales during the year.
CAPTIAL EXPENDITURE
As at March 31, 2005 the gross fixed assets stood at Rs.67.63 Million and the net fixed assets at Rs.19.70 Million. Additions during the year amountedto Rs.16.40 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, technologyabsorption and 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.
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 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, 2005 and of the profits of the Company for the year endedon that date;
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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
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 viz. Mr. K. Venkataramanan, Mr. A. K. Chhatwani, Mr. B. Ramachandran, Mr.W. B. Paschal and Mr. R. E. Herbster.
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.
ACKNOWLEDGEMENT
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 of the valuable contribution made by employees of the Company.
For and on behalf of the Board
A. K. CHHATWANI B. RAMACHANDRAN
DirectorsPlace : VadodaraDate : April 22, 2005
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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: The company provides
Engineering from an(b) Additional investments & proposals, if any, being Engineering office. It is,
implemented for reduction of consumption of energy : therefore, not a significant(c) Impact of the measures at (a) & (b) above for reduction user of Energy. All
of energy consumption and consequent impact on the computers used in thecost of production of goods: office has built-in energy
saving features.
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 The Company’s primary2. Benefits derived as a result of the above R&D activity is the provision of3. Future plan of action Engineering services in4. Expenditure on R&D : field of power generating
(a) Capital plants. The services(b) Recurring provided fall in the(c) Total R&D expenditure as a percentage of category of Design and
total turnover Engineering and as suchthe Company’s totaloperations can bedeemed to be R&D.
Technology Absorption, Adaptation & Innovation1. Efforts in brief, made towards technology absorption, We are absorbing
adaptation and innovation technology transferred2. Benefits derived as a result of the above efforts, e.g. from our principals which
product improvement cost-reduction, product improvement will result in innovativeetc. design of power plants.
C. FOREIGN EXCHANGE EARNINGS & OUTGO(1) Activities relating to exports; initiatives taken to increase Efforts are continuing to
exports; development of new export markets for product secure export orders.and services; and export plans
(2) Total Foreign Exchange used and earned:- Foreign Exchange earned Rs.61.39 Million.- Foreign Exchange used Rs. 9.74 Million.
}
}
}
}
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Auditors’ Report to the ShareholdersWe have audited the attached Balance Sheet of L&T-Sargent & Lundy Limited as at March 31, 2005 and the Profit & Loss Account of the Company 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 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 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.
1. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act,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 March 31, 2005 and taken on record by the Boardof Directors, none of the directors is disqualified from being appointed as a director of the Company under Section 274(1)(g) of the CompaniesAct, 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 the significantaccounting policies in Schedule M and the notes appearing thereon in Schedule N give the information required by the Companies Act, 1956in 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 March 31, 2005 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. KAREPlace: Vadodara PartnerDate: April 22, 2005 (Membership No.8820)
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 informed thatthese fixed assets have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.We were informed that no material discrepancies were noticed on such verification. Fixed assets disposed of during the year are not substantial soas to effect the going concern status of the Company.
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 neither granted to nor taken any loans, secured or unsecured, 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 is adequate internal control system commensurate with the sizeof the Company and the nature of its business for the purchase of plant and machinery, equipment, other assets and sale of services. There wereno sales of goods during the period. In our opinion and according to the information and explanations given to us, there is no continuing failure tocorrect major weaknesses in internal control system.
5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred toin Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained undesr that section and;
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(b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contracts or arrangementshave been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
6. The Company has not accepted any deposits from public and provisions of Sections 58A, 58AA and any other relevant provisions of the CompaniesAct, 1956 are not applicable.
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 the Company.
9. (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Income Tax, Service Tax, Cess and any otherstatutory dues with the appropriate authorities.
(b) According to the information and explanations given to us, there were no undisputed amount payables as on March 31, 2005 in respect ofIncome Tax, Service Tax and Cess.
In respect of Income Tax, demands amounting to Rs.4.19 Lakh are in appeal with CIT Appeals and Rs.8.09 Lakh with ITAT.
10. The Company has no accumulated losses as at March 31, 2005 and also in the immediately preceding financial year.
11. The Company has not defaulted in the repayment of dues to a financial institution or bank.
12. The Company has not granted any loans or 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. The Company is not dealing or trading in shares or securities. However, other investments in mutual fund units are held in its own name.
15. 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.
16. The term loan was applied for the purpose for which the loan was obtained.
17. The Company has not utilized funds raised on short term basis for long term uses.
18. The Company has not made preferential allotment of shares to company covered in the Register maintained under Section 301 of the Act.
19. The Company has not issued any debentures.
20. The Company has not raised any money by public issue.
21. 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. KAREPlace: Vadodara PartnerDate: April 22, 2005 (Membership No.8820)
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Balance Sheet as at March 31, 2005As at 31.03.2005 As at 31.03.2004
Schedule Rs. Rs. Rs. Rs.(’000) (’000) (’000) (’000)
SOURCES OF FUNDS
SHAREHOLDERS FUNDS
Share Capital A 57,938 57,939Reserves and Surplus B 46,992 104,930 39,658 97,597
LOAN FUNDSSecured Loans C 2,099 3,562Unsecured Loans D 1,403 3,502 2,001 5,563
TOTAL 108,432 103,160
APPLICATION OF FUNDS
FIXED ASSETS E
Gross Block 67,628 51,232Less : Depreciation 47,888 42,866
Net Block 19,740 8,366
INVESTMENTS F 28,109 42,462
DEFERRED TAX
Deferred tax assets (Refer Note 14) 1,802 1,456
CURRENT ASSETS LOANS AND ADVANCES G
Inventories 11,380 18,754Sundry Debtors 52,839 43,772Cash and Bank balances 2,426 2,516Loans and Advances 84,497 78,017
151,142 143,059
LESS : CURRENT LIABILITIES AND PROVISIONS H
Liabilities 30,373 31,998Provisions 62,766 61,317
93,139 93,315
NET CURRENT ASSETS 58,003 49,744
DEFERRED REVENUE ITEMS
Miscellaneous Expenditure(to the extend not written-off or adjusted) I 778 1,132
TOTAL 108,432 103,160
SIGNIFICANT ACCOUNTING POLICIES N
NOTES FORMING PART OF ACCOUNTS O
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
A. K. CHHATWANIR.D.KARE P. M. MANOHAR P. K. MUKHERJI B. RAMACHANDRANPartner Secretary Manager Directors(Membership No.8820)
Place : Vadodara Place : VadodaraDate : April 22, 2005 Date : April 22, 2005
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Profit & Loss Account for the year ended March 31, 20052004-2005 2003-2004
Schedule Rs. Rs. Rs. Rs.(’000) (’000) (’000) (’000)
INCOME
SALES (Income from Engineering Services) 155,133 84,617
INCREASE/(DECREASE) IN
WORK-IN-PROGRESS (Engineering Services)
Closing Work-in-Progress 11,380 18,754
Less: Opening Work-in-Progress 18,754 (7,374) 196 18,558
OTHER INCOME J 4,643 16,016
152,402 119,191
EXPENDITURE
OPERATION & ESTABLISHMENT EXPENSES K 78,643 58,066
STAFF EXPENSES L 60,184 55,259
DEPRECIATION 5,023 3,774
INTEREST M 344 834
144,194 117,933
PROFIT BEFORE TAX 8,208 1,258
PROVISION FOR CURRENT TAX 950 330
PROVISION FOR TAX FOR EARLIER YEARS 268
PROVISION FOR DEFERRED TAX (344) (1,116)
PROFIT AFTER TAX 7,334 2,044
Add : Balance brought forward from previous year 21,658 29,652
Less : Deferred tax liability as on 01.04.2002 0 21,658 0 29,652
PROFIT AVAILABLE FOR APPROPRIATION 28,992 31,696
Less : Premium on buy back of shares 0 0
Transferred to General Reserve 0 0
Transferred to Capital Redemption Reserve 0 10,038
Interim dividend paid 0 0
Additional Tax on dividend 0 0 0 10,038
BALANCE CARRIED TO BALANCE SHEET 28,992 21,658
Earnings Per Share (Basic) (Rs.) 1.27 0.35
SIGNIFICANT ACCOUNTING POLICIES N
NOTES FORMING PART OF ACCOUNTS O
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
A. K. CHHATWANIR.D.KARE P. M. MANOHAR P. K. MUKHERJI B. RAMACHANDRANPartner Secretary Manager Directors(Membership No.8820)
Place : Vadodara Place : VadodaraDate : April 22, 2005 Date : April 22, 2005
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Cash Flow Statement for the year ended March 31, 20052004-05 2003-04
PARTICULARS (Rs.in ‘000) (Rs.in ‘000)
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Tax 8,208.00 1,258.00
Depreciation including obsolescence 5,023.00 3,774.00
Amortisation of Miscellaneous Expenditure 354.00 -
Interest (Net) (208.00) 521.00
(Profit)/Loss on sale of Investment (Net) (1,565.00) (12,687.00)
(Profit)/Loss on sale of Fixed Assets (Net) - 19.00
Dividend Received from Investment (356.00) (1,024.00)
Operating Profit Before Working Capital Changes 11,456.00 (8,139.00)
Adjustments for:
(Increase) / Decrease in Trade Receivables (9,067.00) 9,838.00
(Increase) / Decrease in Other Current Assets (6,480.00) (3,112.00)
(Increase) / Decrease in Work in Progress 7,374.00 (18,558.00)
Increase / (Decrease) in Current Liabilities (1,625.00) 6,906.00
Increase / (Decrease) in Provisions 1,449.00 1,218.00
Cash Generated from Operations 3,107.00 (11,847.00)
Direct Taxes Refund/(Paid) - Net 1,218.00 330.00
Net Cash from Operating Activities 1,889.00 (12,177.00)
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (16,396.00) (175.00)
Sale of Fixed Assets - 227.00
Purchase of Investment 14,353.00 (8,791.00)
Profit/(Loss) on sale of Investment 1,565.00 12,687.00
Dividend Received from Investment 356.00 1,024.00
Interest Received 549.00 312.00
Net Cash (used in) / from investing activities 427.00 5,284.00
C. CASH FLOW FROM FINANCING ACTIVITIES
Buy-Back of Shares including premium - (28,799.00)
Proceeds/ (Repayment) of Long Term borrowings (598.00) (815.00)
Proceeds/ (Repayment) of Short Term borrowings (1,464.00) 3,562.00
Dividend paid - -
Interest Paid (344.00) (834.00)
Net Cash (used in) / from financing activities (2,406.00) (26,886.00)
Net increase in cash and cash equivalents (A+B+C) (90.00) (33,779.00)
Cash and Cash Equivalents at the beginning of the period 2,516.00 36,295.00
Cash and Cash Equivalents at the end of the period 2,426.00 2,516.00
As per our report attachedSHARP & TANNANChartered Accountantsby the hand of
A. K. CHHATWANIR.D.KARE P. M. MANOHAR P. K. MUKHERJI B. RAMACHANDRANPartner Secretary Manager Directors(Membership No.8820)
Place : Vadodara Place : VadodaraDate : April 22, 2005 Date : April 22, 2005
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Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. (‘000) Rs. (‘000)SCHEDULE AShare capital :
Authorised :150,00,000 Equity Shares of Rs. 10 each 150,000 150,000
Issued and Subscribed :75,93,750 (Previous Year 75,93,750) Equity Shares of Rs.10 each 75,938 75,938fully paidLess : 18,00,000 (Previous Year 18,00,000) Equity Shares acquired under Buy Back Rules 18,000 18,000
57,938 57,938Add: NIL (Previous Year 100) Equity Shares of Rs.10/- Each at par issued toLarsen & Toubro Limited on Preferential basis 0 157,93,850 (Previous Year 57,93,850) Equity Shares of Rs.10 each 57,938 57,939
(Out of the above 28,96,975 Equity Shares are held by Larsen & Toubro Limited,the Holding Company)
As at 31.03.2005 As at 31.03.2004
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)SCHEDULE BReserves and Surplus:General ReserveAs per last Balance Sheet 0 18,763Add : Transferred from Profit & Loss Account 0 0
0 18,763Less : Transferred to Capital Redemption Reserve 0 7,963Less : Utilised for Premium on Buyback of shares 0 0 10,800 0
Capital Redemption ReserveAs per last Balance Sheet 18,000 0Add : Transferred from Profit & Loss Account 0 10,038(on buy back of shares)
18,000 10,038Add : Transferred from General Reserve Account 0 18,000 7,962 18,000(on buy back of shares)
Profit & Loss Account 28,992 21,658
46,992 39,658
As at 31.03.2005 As at 31.03.2004SCHEDULE C Rs. (‘000) Rs. (‘000)Secured LoansLoan from BanksCash credit 2,099 3,562
2,099 3,562
SCHEDULE DUnsecured LoansFrom Housing Development Finance Corporation Limited 132 263Lease Finance 1271 1738
1,403 2,001
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Schedules forming part of accountsSCHEDULE E Rs. (’000)
Cost Additions Sales Cost Depreciation Net Block Net BlockFixed Assets As at During During As at Upto For the Total upto As at As at
01.04.2004 the year the year 31-03-2005 31-03-2004 year Deductions 31.03.2005 31-03-2005 31-03-2004
A. Tangible Assets
Owned Assets:
- Plant and Machinery 37,201 1,851 0 39,052 32,759 1,927 0 34,686 4,367 4,442
- Office Equipments 3,296 200 0 3,496 1,665 288 0 1,953 1,543 1,631
- Furniture & Fixtures 4,123 30 0 4,153 3,390 137 0 3,526 626 733
Leased Assets:
(From L&T FinanceLimited)
- Motor Cars 2,612 0 0 2,612 1,186 444 0 1,630 982 1,427
- Computers 174 52 0 226 96 65 0 161 65 77
47,405 2,134 0 49,539 39,096 2,861 0 41,956 7,583 8,310
Previous year 47,554 175 324 47,405 35,438 3,736 78 39,096 8,310 12,116
B. Intangible Assets
Owned Assets:
-Computer Software 3,826 14,263 0 18,089 3,769 2,162 0 5,931 12,158 57
3,826 14,263 0 18,089 3,769 2,162 0 5,931 12,158 57
Previous year 3,826 0 0 3,826 3,731 38 0 3,769 57 95
A+B 51,232 16,397 0 67,628 42,865 5,023 0 47,888 19,742 8,366
Previous Year 51,380 175 324 51,232 39,169 3,774 78 42,866 8,366 -
As at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees(’000) (’000) (’000) (’000)
SCHEDULE FInvestments (At cost) :Long Term Investments :Bonds - -Mutual funds - - - -
Current Investments :Mutual funds 28,109 42,462
28,109 42,462
NOTE : As at 31.03.2005 As at 31.03.2004Rs. Rs.
(’000) (’000)Quoted Investments
Book Value 28,109 42,462Market Value 0 0
Unquoted InvestmentsBook Value 0 0
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As at 31.03.2005 As at 31.03.2004
Rupees Rupees Rupees Rupees(’000) (’000) (’000) (’000)
Particulars of investments :A. Mutual Fund:1 Kotak Mahindra Mutual Fund “Flexi Debt Fund - Growth” 19 0
1,893 units of Rs.10 each(2,50,000 units of Rs.10 each purchased during the yearand 2,48,107 units redeemed during the year)
2 Kotak Mahindra Mutual Fund “K-Bond Floater - LT Growth” 6513 199066,32,074 units of Rs.10 each(43,47,689 units of Rs.10 each purchased during the yearand 56,43,031 units redeemed during the year)
3 Kotak Mahindra Mutual Fund “K-Bond Dynamic - Growth” 0 85988,53,811 units of Rs.10 each(8,53,811 units redeemed during the year)
4 Grindlays Dynamic Bond Fund - Growth 1350 53161,13,029 units of Rs.10 each(3,33,294 units redeemed during the year)
5 Templeton India Floating Rate Fund-Growth 0 2236(1,97,281 units of Rs.10 each redeemed during the year)
6 HDFC Floating Rate Fund - Short Term - Growth 0 1101(1,04,457 units of Rs.10 each redeemed during the year)
7 HDFC Floating Rate Fund - Long Term - Growth 18164 200016,49,133 units of Rs.10 each(34,20,412 units of Rs.10 each purchased during the year)(19,62,050 units of Rs.10 each redeemed during the year)
8 Templeton India Treasury Management Account-Growth 0 1418(918 units of Rs.10 each redeemed during the year)
9 Franklin Bluechip - Dividend Reinvestment 156 1388,016 units of Rs.10 each(831 units of Rs.10 each purchased during the year)
10 Franklin Prima Fund - Dividend Reinvestment 827 69927,254 units of Rs.10 each(10,753 units of Rs.10 each purchased during the yearand 15,686 units of Rs.10 each redeemed during the year)
11 HDFC Equity Fund - Dividend Reinvestment 1080 105067,188 units of Rs.10 each(12,949 units of Rs.10 each purchased during the year)21,747 units of Rs.10 each redeemed during the year)
28,109 42,462Less: Provision for diminution in the value 0 0
28,109 42462
28,109 42,462
Schedules forming part of accounts
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Schedules forming part of accountsAs at 31.03.2005 As at 31.03.2004
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)SCHEDULE G
Current Assets, Loans and Advances:Current Assets:InventoriesWork-in-Progress - Engineering Services,-at estimated realisable value on sale 11,380 2,852-at cost 0 11,380 15,902 18,754
Sundry DebtorsUnsecured :Debts outstanding for more than six months :Considered Good 5,185 7,478Others Debts :Considered Good 47,654 52,839 36,294 43,772
Cash and Bank balances:Cash in hand 18 96Balances with scheduled banksOn current accounts 365 464On fixed deposit accounts ( includinginterest accrued thereon Rs.8 (Previous Year Rs.8) ) 2,043 1,956
2,426 2,516Loans and Advances:Secured, Considered GoodLoans to employees against mortgage of house property 2,198 2,317Unsecured, Considered GoodAdvances recoverable in cash or kind 82,299 84,497 75,700 78,017
151,142 143,059
SCHEDULE H
Current Liabilities and Provisions:
Liabilities:Sundry creditors 29,394 31,243Advance from customers 979 30,373 755 31,998
Provisions for :Taxation 56,284 55,066Gratuity 1,000 684Leave encashment 5,482 62,766 5,567 61,317
93,139 93,315
2004-2005 2003-2004
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)SCHEDULE I
Deferred Revenue Items
Miscellaneous expenditure(to the extend not written-off or adjusted) - -Voluntary Retirement Scheme 778 778 1,132 1,132
778 1,132
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2004-2005 2003-2004
Rs. (‘000) Rs. (‘000) Rs. (‘000) Rs. (‘000)
SCHEDULE J
Other Income:
Income from investments 456 1,132Tax deducted at source Rs.21/- (Previous Year Rs.22/-)Profit on Sale / Redemption of Investments (Net) 1,565 12,687Profit on sale of fixed assets 0 0Miscellaneous Income 2,622 2,197
4,643 16,016
4,643 16,016
2004-2005 2003-2004
Rs. (‘000) Rs. (‘000)
SCHEDULE K
Operation & Establishment Expenses
Rent (Including Lease Rentals Rs.651/-) 13,311 13,822Previous Year Rs.835/-)Insurance 1,228 282Travelling & conveyance 16,797 13,070Establishment Expenses 10,466 7,143Telecommunication Expenses 3,440 2,273Rates & Taxes 438 150Power & Fuel 4,472 4,418Printing & Stationery 3,360 2,836Technical Services & Project Expenses 10,688 2,120Repairs & Maintenance 9,057 9,991Directors’ Fees 32 24Bad Debts written off 113 0Loss on sale of Fixed Assets 0 19Other Miscellaneous expenses 5,241 1,918
78,643 58,066
SCHEDULE L
Staff Expenses:
Salaries & Allowances 50,406 46,666Contribution to and provision for :Provident fund and pension fund 3,088 3,038Sueprannuation fund 1,670 1,316Gratuity fund 1,000 657Leave Encashment 709 1,864Staff Welfare Expenses 3,311 1,718
60,184 55,259
SCHEDULE M
Interest :
Interest on Fixed Loans 29 42Interest on Lease Finance 232 376Others 83 416
344 834
Schedules forming part of accounts
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Schedules forming part of accountsSCHEDULE N
SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
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 recognized based on time spent in man-hours or man months and billed to customersas per the terms of specific contracts.
Revenue earned from services performed on “fixed price” basis is recognized 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 amortized 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 carriedat lower 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 realizable 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 amortized 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 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 extend that there is a reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realized.
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Schedules forming part of accountsSCHEDULE O (Amount in Rs. ’000)
NOTES FORMING PART OF ACCOUNTS
1. Sales (Income from Engineering Services) is net of estimated future job revision cost as at 31st March, 2005 Rs. 6,266 (Previous Year Rs. 6,356).
2. Remuneration (including perquisites) to the Manager and Directors:2004-2005 2003-2004
1. Salaries and allowances 1041 9442. Perquisites 374 1973. Retirement benefits etc. 195 1494. Director sitting fees 32 24
3. Auditors remuneration and expenses charged to the accounts:Audit Fees 38 38Tax Audit Fees 30 30Other Services 09 09Certification Work 50 41Reimbursement of expenses 3 2
4. Earnings in foreign exchangeEngineering services 61,070 29,543Reimbursement of Expenses 320 670
5. Expenditure in foreign currencyTravelling 2939 1,913Software license fees 5229 5,081JV Administration Expenditure 1269 NILOther Expenses 298 123
6. Business Profile:(i) The company carries on the business of providing Engineering and associated services for thermal, hydro 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 activities
mentioned in (i) above, the company is not a “manufacturing” or a “trading” company falling under sub-clause (a) and (b) thereof, but it isa company 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 toit.
7. Contingent Liability in respect of Income Tax that may arise for which the company is in appeal is Rs. 1,227. (Previous Year Rs. 2,154). Thecompany is confident of getting a favorable order from Appellate Authority in this regard.
8. Estimated amounts of contracts remaining to be executed on capital account Rs.Nil (Previous Year Rs. Nil).9. Accounting Standard – 18 – Disclosure of related parties / related party transactions:
i. Names of the Related Parties with whom transactions were carried out during the year and description of relationship:Holding Company : LARSEN & TOUBRO LIMITEDAssociate Companies : L&T–CHIYODA LIMITEDKey Management Personnel & their relatives : Mr. K. VENKATARAMANAN
ii. Disclosure of related party transactions:
Sr No Nature of transaction / relationship C.Y.
1 Purchase of goods & services (including Commission paid)Name of Holding Company – Larsen & Toubro Limited 5,741Name of Associates – L&T–Chiyoda Limited 1,670
TOTAL 7,4112 Sale of goods/power/contract revenue & services
Name of Holding Company – Larsen & Toubro Limited 79,847Name of Associates – L&T–Chiyoda Limited 3,737
TOTAL 83,584
3 Rent paid, including lease rentals under leasing / hire purchase arrangementsincluding loss-sharing on equipment financeName of Subsidiary of L&T – L&T Finance Limited 533Name of Associates & Joint Ventures 0Name of Key Management Personnel [‘KMP’] 0Names of Relatives of KMP 0
TOTAL 533
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4 Amounts written offName of Holding Company – Larsen & Toubro Limited 108Name of Associates & Joint Ventures 0Name of Key Management Personnel [“KMP’] 0Names of Relatives of KMP 0
TOTAL 108
5 Any Other transaction (Infrastructure Charges)Name of Holding Company – Larsen & Toubro Limited 7,752Name of Associates & Joint Ventures 0Name of Key Management Personnel [“KMP’] 0Names of Relatives of KMP 0
TOTAL 7,752
iii. Amount due to / from related parties
Sr No Particulars / Relationship C.Y.
1 Accounts receivable from related partiesName of Holding Company – Larsen & Toubro Limited 27,444Name of Associates – L&T–Chiyoda Limited 0Name of Key Management Personnel [“KMP’] 0Names of Relatives of KMP 0
TOTAL 27,444
2 Accounts payable to related partiesName of Holding Company – Larsen & Toubro Limited 7,752Name of Associates – L&T–Chiyoda Limited 161Name of Key Management Personnel [“KMP’] 0Names of Relatives of KMP 0
TOTAL 7,913
3 Advances received in capacity of supplier of goods / services classified as “advances from customers” in the Balance SheetName of Holding Company – Larsen & Toubro Limited 52Name of Associates & Joint Ventures 0Name of Key Management Personnel [‘KMP’] 0Names of Relatives of KMP 0
TOTAL 52
4 Any Other transaction (Deposits with L&T)Name of Holding Company – Larsen & Toubro Limited 10,178Name of Associates & Joint Ventures 0Name of Key Management Personnel [‘KMP’] 0Names of Relatives of KMP 0
TOTAL 10,178
10. Company has taken on lease certain assets upto 31.03.2001, the liability for future rentals on account of which is Rs. 616. (Previous YearRs. 586).
11. Assets acquired prior to April 1, 2001 under finance leases have been accounted in accordance with the “Guidance Note on Leases” issued bythe Institute of Chartered Accountants of India. The cost of the assets taken on lease is Rs.2,679, the future lease obligation against, which isRs. 1,515 as at March, 2005.
12. Disclosure in respect of finance lease (LTSL as a lessee) as required by AS – 19
a) Finance lease liabilities – Minimum lease payments:
2004-2005 2003-20041. Payable not later than 1 year 758 7572. Payable later than 1 year and not later than 5 years 757 1,4633. Payable later than 5 year Nil Nil
Total Minimum lease payments 1515 2,220Less : Future finance charge of finance leases 244 482Present value of finance lease liabilities 1271 1,738
Schedules forming part of accounts
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b) Present value of finance lease liabilities:2004-2005 2003-2004
Sl. Present value of finance lease liabilities1. Payable not later than 1 year 678 6782. Payable later than 1 year and not later than 5 years 593 1,0603. Payable later than 5 year Nil Nil
Total Present value of finance lease liabilities 1271 1,738
13. Operatig leases
The Company has taken on non - cancelable operating leases certain assets the liabilities in respect of which are as follows:Operating lease liabilities – Future minimum lease payments:
2004-2005 2003-2004Sl. Minimum Lease payments1. Payable not later than 1 year 158 1582. Payable later than 1 year and not later than 5 years 276 4333. Payable later than 5 years NIL NIL
14. Deferred Tax
Major components of Deferred Tax Assets and Deferred Tax Liabilities:As at 31.03.2005 As at 31.03.2004
Deferred Tax Deferred Tax Deferred Tax Deferred TaxAssets Liabilities Assets Liabilities
1) Difference between book value of depreciable assets as per books ofaccounts and written down value for tax purpose 573 - 195 -
2) Capital Loss carried forward - - - -3) Provision for doubtful debts and advances 102 - 101 -4) Preliminary Expenses 0 - 26 -5) Provision for Leave Encashment 1126 - 1134 -6) Other items giving rise to timing differences - - - -
Total 1801 - 1456 -
Net Deferred tax Asset / Liability 1801 - 1456 -
Net decrease in liability credited to Profit & Loss Account - 344 - -
15. Loans and Advances include amount due from officers of the company Rs.787 (Previous year Rs.860). Maximum amount outstanding at any timeduring the year Rs.860 (Previous Year Rs. 953).
16. The exchange difference arising on foreign currency transactions amounting to Rs. 142 (net loss) has been accounted under the respectiverevenue heads.
17. The Cash Credit facilities from Bank are secured by hypothecation of book debts. The charge on these assets also extends to out-standing BankGuarantees upto Rs. 7,169.
18. Sundry Creditors include Rs. NIL payable to small-scale industrial units.
19. Segment Reporting of revenues for the Company is on the basis of the Geographical Location of Customers:
Particulars Domestic Overseas Total2004-05 2003-04 2004-05 2003-04 2004-05 2003-04
Total Sales by location of Customers 93,973 51,413 61,070 29,543 155,043 80,956
Increase/Decrease in Provision for Job Revision - - - - 90 3661
Increase/Decrease in WIP by location of Customers:
- Closing Work in Progress 5,403 18,754 5,977 - 11,380 18,754
- Less : Opening Work in Progress 18,754 - - 196 18,754 196
Total 80,622 70,167 67,047 29,347 147,759 103,175
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 interchangeable among other segments.
20. Pursuant to the Employees Stock Options Scheme established by the holding company (i.e. Larsen & Toubro Limited), stock options have beengranted to the employees of the Company in respect of which, cost of Rs. 20,88,540 has been incurred by the holding company during the year.
Schedules forming part of accounts
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21. Balance Sheet Abstract and Company’s General Business ProfileI Registration Details
Registration No. 0 8 8 0 9 9 State Code 1 1Balance Sheet Date 3 1 0 3 2 0 0 5
II Capital Raised during the Year (Amount in Rs. Thousand)Public Issue Rights Issue
N I L N I LBonus Issue Preferential Issue
N I L N I LIII Position of Mobilisation and Deployment of funds (Amount in Rs. Thousand)
Total Liabilities Total Assets1 0 8 4 3 2 1 0 8 4 3 2
Sources of Funds Paid-Up Capital Reserves & Surplus5 7 9 3 8 4 6 9 9 2
Secured Loans Unsecured Loans2 0 9 9 1 4 0 3
Application of Funds Net Fixed Assets Investments1 9 7 4 0 2 8 1 0 9
Deferred Tax Assets Net Current Assets1 8 0 2 5 8 0 0 3
Deferred Revenue Items7 7 8
IV Performance of Company (Amount in Rs. Thousand)Turnover (Including other income) Total Expenditure
1 5 2 4 0 2 1 4 4 1 9 4Profit Before Tax Profit after Tax
8 2 0 8 7 3 3 4Earnings Per Share in Rs. Dividend Rate %
1 . 2 7 N I LV Generic Names of Three Principal Products/Services of the Company
(as per monetary terms)Item Code No. N . A .(ITC Code)Product Description Engineeering Services
22. Figures for the previous year have been regrouped/reclassified wherever necessary.
Schedules forming part of accounts
As per our report attached
SHARP & TANNANChartered Accountantsby the hand of
A. K. CHHATWANIR.D.KARE P. M. MANOHAR P. K. MUKHERJI B. RAMACHANDRANPartner Secretary Manager Directors(Membership No.8820)
Place : Vadodara Place : VadodaraDate : April 22, 2005 Date : April 22, 2005
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