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L&T SPECIAL STEELS AND HEAVY FORGINGS PRIVATE LIMITED

DIRECTORS’ REPORT

The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2013.

FINANCIAL RESULTSThe Company has commenced its commercial operations for Phase I from 1st October 2012. As per the extant accounting policy pre-operative expenditure (including staff cost) incurred during the first 6 months of current year R 2,216.38 Lakhs (Prev. Year R 778.93 Lakhs) respectively has been charged to the Profit & Loss Account for period ended March 31, 2013.

R Lakhs

Head 2012-13 2011-12

Total Income 1,451.69 –

Profit / (loss) before tax (15,573.84) (1,127.86)

Less: Provision for tax – 21.44

Profit / (Loss) after tax (15,573.84) (1,149.30)

DEPOSITSDuring the year under review, the Company has not accepted any deposit from the Public.

CAPITAL EXPENDITURECumulative Expenditure incurred up to March 31, 2013 is R 1,55,367.90 Lakhs (Prev. year R 1,29,508.51 Lakhs).

SHARE CAPITAL AND FINANCEDuring the year, the Company has allotted 9,00,00,000 shares of R 10/- each aggregating R 9,000.00 Lakhs.

During the year the Company has availed further disbursement of secured loan of R 5,000.00 Lakhs from a consortium of Indian banks and external commercial borrowing of R 5,598.00 Lakhs (USD 10 mio) from a foreign bank.

AUDITORS’ REPORTThe 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 PARTICULARSThe Company was in project stage till 30th September 2012. The particulars to be disclosed as per Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are disclosed in Annexure A.

PARTICULARS OF EMPLOYEES U/S 217 (2A)

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 STATEMENTThe Board of Directors of the Company confirms:

I. that in the preparation of the annual accounts, the accounting standards have been followed to the extent applicable and there has been no 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, 2013 and of the loss of the Company for that period.;

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;

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

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

VI. that as required under the Voluntary Corporate Governance Guidelines, 2009- the Board hereby states that the details of all the related party transactions form part of the accounts as required under AS18, please refer to Note No – Q(5) of the annual report.

DIRECTORSDuring the year, Mr. K. R. Anilkumar was appointed as Director in place of vacancy caused by resignation of Mr. M. K. Kannan.

Mr. V. C. Bedi has resigned as Director pursuant to his attaining superannuation from the services of Larsen & Toubro Limited. Mr. Y. S. Trivedi is appointed as Director in place of vacancy caused by resignation of Mr. V. C. Bedi.

Mr. M. V. Kotwal and Mr. Y. S. Trivedi are liable to retirement at the ensuing Annual General Meeting (AGM) and all are eligible for re-appointment.

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COMPLIANCE WITH VOLUNTARY CORPORATE GOVERNANCE GUIDELINES, 2009The Company has familiarized itself with the requirement of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and it is in the process of implementing many of the suggestions. Our compliance with the said guidelines is given below-

A. INDEPENDENT DIRECTORS All the members of the Board of the Company are independent in the sense that none of them are involved in the day-to-day management of

the Company.

B. NUMBER OF COMPANIES IN WHICH AN INDIVIDUAL CAN BECOME A DIRECTOR The Directors of the Company comply with the requirements of the maximum number of other directorship prescribed under the guidelines.

C. INTERNAL AUDITORS The Corporate Audit Services department of Larsen & Toubro Limited provides internal audit services to all its group companies including the

Company.

D. INTERNAL CONTROL The Board ensures the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls

and risk management systems.

E. STATUTORY AUDITORS The Company has obtained a certificate from the auditors certifying their independence.

AUDIT COMMITTEEThe Audit Committee consists of three non executive directors. The present members are Mr. Preman Dinaraj, Mr. Satish A Gune and Mr. J. D. Patil

The role, terms of reference, the authority and power of the Audit Committee are in conformity with the requirements of the Companies Act, 1956 for an audit committee.

The Committee met periodically during the year and had discussions with the auditors on internal control systems and internal audit report.

AUDITORSThe Auditors, M/s M.P. Chitale & Co., hold office until the conclusion of the ensuing Annual General Meeting. The Directors recommend that M/s M.P. Chitale & Co., Chartered Accountants be appointed as the Statutory Auditors of the Company at the forthcoming Annual General Meeting of the Company to hold office till the conclusion of the next Annual General Meeting of the Company.

ACKNOWLEDGEMENTSThe Directors take this opportunity to thank Banks, govt. authorities, stakeholders and the employees for their continued support to the Company.

For and on behalf of the Board

M. V. KOTWALDirector

PREMAN DINARAJDirector

J. D. PATILDirector

Place: MumbaiDate: May 9 , 2013

K. R. ANILKUMARDirector

SATISH A. GUNEDirector

Y. S. TRIVEDIDirector

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ANNEXURE-A TO THE DIRECTORS’ REPORT(Additional information given in terms of notification issued by the Ministry of Company Affairs)

[A] CONSERVATION OF ENERGY:

(a) Energy Conservation measures taken:

Improving energy effectiveness / efficiency of equipment and systems and of Manufacturing Processes - Installed a robust Power Management System (PMS) for effective management of electrical energy for integrated plant operations - Maintained Unity power factor during furnace operations and >0.98 power factor during rest of plant operations - Set up of lighting distribution network dedicated by independent lighting transformers resulting in saving of energy and increase in

life of luminaries. - Use of intelligent office lighting and air-conditioning systems to save energy - Extensive use of poly carbonate translucent sheets on shop roofs to get natural light of around 1000 lux in day time thus saving

power in day time inside shop area. - Use of high masts for area lighting, eliminating street lights - Installation of 44 KWp Roof Top Solar Power Plant in Administration Building resulting in annual Renewable/GREEN Energy Source

having power generation of around 57600 KWh. - Constructed Administration Building with concept of GREEN Building aiming Platinum rating. - Used VFD for FES motors and cranes to improve motor efficiency and enhance energy saving. - Use of Energy efficient re-generative furnace burner technology to save 25-30 % energy (natural gas). - Used new-generation energy efficient air compressors. - Mist cooling system set up in place of conventional cooling tower to save energy consumed by fan. - Optimum Boiler chimney height to avoid need of ID fans - Selected refrigerant type air-dryers instead of externally heated desiccant air- dryers to save energy - Selection of single primary pumping circuit instead of double circuit (primary-secondary) for cooling tower thus saving the power-

cost of double pumping.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: - Installation of VFD for compressor HT motor. - VAM for re-use of exhaust gases for air-conditioning of offices - RH furnace exhaust gas usage for ladle pre-heating - Usage of ladle pre-heater exhaust gas for pre-heating of moulds and pads

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

- Measures taken are likely to result in savings in energy consumption, reduction in carbon emission and cost of production.

(d) Total energy consumption and energy consumption per unit of production as per Form-A of the Annexure to the Rules in respect of Industries specified in the schedule thereto:

2012-2013(6 months)$

Electricity (a) Purchased- (Variable Cost) Units (MWh) 12028 Total Amount (R In Lakh.) 660.1 Rate(R/KWh) 5.49 (b) Own Generation NILNatural Gas Units (MMBTU) 114514 Total Amount (R In Lakh.) 1062.1 Rate(R/MMBTU) 927.44Consumption per Unit of ProductionLiquid Metal (EAF,LF,VD-VOD,FES and auxiliaries) Electricity (kWH /MT) 1044 NG (SCM/ MT) 68Forgings Electricity (kWH / MT) 2261.1 NG (SCM / MT) 1316.4

$ Note- The Company has commenced commercial operations from 1st October 2012.

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[B] TECHNOLGY ABSORBTION:

Efforts made in technology absorption as per Form B FORM B – (Disclosure of particulars with respect to Technology Absorption)

RESEARCH & DEVELOPMENT (R&D)

1. Specified area in which R&D carried out by the Company: - Since the Company has started its operations during current financial year, there will be more focus in this area, going forward.

2. Benefits derived as a result of above R&D: - Not applicable

3. Future plan of action: - The Company intends to develop technology in the area of

• Hollow Ingots of 100 MT and more in weight

• Ingots with less h/d ratio having high yield

• Development of castings of SG iron

• Development of Rotor forgings for Power Plants above 500MW

4. Expenditure on R&D: - During the financial year, the Company has not spent any amount towards R&D.

Technology Absorption, Adaptation and Innovation:

1. Efforts in brief made towards technology absorption, adaptation and innovation: - Interaction with external agencies / consultants for exposure to the latest products, designs, manufacturing technologies, processes and

engineering protocols

- Active participation in international forge masters meet (IFM)

- Knowledge sharing through national and international conferences, seminars and exhibitions

- Collaborative efforts with educational / research institutions for research projects – M Tech. projects with IIT/NIT and other institutions

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

- Analyzing feedback from users to improve processes and services

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution, etc:

- Indigenization (import substitution) of heavy forgings required in critical equipments in hydrocarbon industry and nuclear power plants

- Establishment of state- of- the art laboratory facilities for metallurgical, mechanical and chemical testing including NABL certification

3. Information regarding technology imported during the last 5 years: The Company has not imported any technology.

The Company had engaged experienced consultants in the area of steel making and making of heavy forgings. These consultants have shared their knowledge and know-how with the Company and have helped Company in making of high quality steel and forgings.

[C] FOREIGN EXCHANGE EARNINGS AND OUTGO:Activities relating to exports, initiatives taken to increase exports; development of new exports markets for products and services; and the export plans.

Overview:The Company has started its commercial operations in the current financial year. The Company has been set up with the purpose of making of high quality forgings, required in critical equipments in hydrocarbon industry and in nuclear power plants. This will not only reduce the dependence on foreign suppliers but also save valuable foreign exchange for the country.

A few initiatives detailed:The following initiatives are being followed on a continuous basis by the Company-1. Identifying areas for exports opportunities and import substitutions2. Implementation of internal processes towards operational excellence and creating a high performance organization3. Using L&T group’s international net-work to spread awareness of the Company’s facilities and capabilities

Total foreign exchange used and earned: R Lakhs

2012-13

Foreign exchange earned –

Foreign exchange saved 752.85

Total 752.85

Foreign exchanged used 8,124.23

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INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF L&T SPECIAL STEELS AND HEAVY FORGINGS PRIVATE LIMITED

1. REPORT ON THE FINANCIAL STATEMENTS We have audited the attached financial statements of L&T SPECIAL STEELS AND HEAVY FORGINGS PRIVATE LIMITED “the Company”,

which comprise the Balance Sheet as at 31 March 2013, the Statement of Profit and Loss and Cash Flow Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

2. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial

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

3. AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with

the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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

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

4. OPINION In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information

required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

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

(ii) in the case of the Statement of Profit and Loss, 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.

5. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS (i) As required by the Companies (Auditors’ Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of Section

227(4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(ii) As required by section 227(3) of the Act, we report that :

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, Statement of Profit and Loss 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, Statement of Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations from the Directors as on March 31, 2013 and taken on record by the Board of Directors in its meeting held on April 26th 2013, none of the Directors is disqualified as on March 31, 2013, from being appointed as a Director u/s 274 (1)(g) of the Companies Act, 1956.

FOR M. P. CHITALE & COChartered Accountants

Firm Regn No. 101851W

ANAGHA THATTE Partner

ICAI M No. 105525Place : Mumbai Date : May 9, 2013

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ANNEXURE TO THE AUDITORS’ REPORT(Referred to paragraph (5) of our report of even date,)

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

(b) According to the information and explanations given to us, the fixed assets were physically verified during the year by the management as per its planned program and we are informed that no material discrepancies were noticed on such verification. The discrepancies noticed on such verification have been properly dealt with in the books of account.

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

ii) (a) As explained to us, the inventories, excluding materials and stores in transit have been physically verified by the management at regular intervals during the year.

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

(c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been properly dealt with in the books of account.

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

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

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for purchase of inventory and fixed assets and for sale of goods. Further, on the basis of our examination of the books and records of the Company, there is no continuing failure to correct major weaknesses in the internal control system during the year.

v) (a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, there are no transactions that need to be entered into the register maintained under Section 301. Consequently, para (b) is not applicable.

vi) The Company has not accepted deposits from the public in terms of provisions of sections 58A and 58AA of the Companies Act, 1956.

vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of all its manufacturing activities and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us.

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

(b) As at the year-end according to the records of the Company and information and explanations given to us, the following are particulars of disputed dues on account of income tax, which have not been paid on account of a pending dispute.

Statute Nature of the Dues Amount Period to which the amounts relate

Forum where dispute is pending

Income Tax Act, 1961 Dispute pertaining to disallowance made u/s 14A

565,710/- A.Y. 2010-11 CIT, (Appeals) (Mumbai)

x) The Company has not been registered for more than five years, hence paragraph 4 (x) is not applicable.

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

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 pledge of shares, debentures and other securities.

xiii) The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

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

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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 purposes for which they were obtained other than R 127,261,047/-crores which have been temporarily invested in mutual funds pending utilisation for the intended use.

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

xviii) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

xix) The Company has not issued any debentures during the year.

xx) The Company has not raised any money by public issues during the year.

xxi) To the best of our knowledge and belief and according to the information and explanations given to us and on the basis of representation of the management which we have relied upon no fraud on or by the Company was noticed or reported during the year.

FOR M. P. CHITALE & COChartered Accountants

Firm Regn No. 101851W

ANAGHA THATTE Partner

ICAI M No. 105525Place : Mumbai Date : May 9, 2013

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BALANCE SHEET AS AT MARCH 31, 2013 As at 31.03.2013 As at 31.03.2012 Note no. R R R R

EQUITY AND LIABILITIESShareholders’ Funds Share Capital A 5,400,000,000 4,500,000,000 Reserves & Surplus B (1,758,495,172) (190,663,484)

3,641,504,828 4,309,336,516Share Application Money pending for Allotment Q(17) – 200,000,000Non-Current Liabilities Long-term borrowings C(I) 11,115,557,606 9,572,102,329 Deferred Tax liabilities Q(8) – – Other long term liabilities C(II) 2,652,640 1,821,126

11,118,210,246 9,573,923,455Current Liabilities Short-term Borrowings D(I) 1,057,295,156 – Current Maturities of Long-term Borrowings D(II) 149,285,000 – Trade payables D(III) 309,620,130 194,145,102 Other current liabilities D(IV) 1,029,788,961 892,342,040 Short-term provisions D(V) 52,033,557 17,786,878

2,598,022,804 1,104,274,020

TOTAL 17,357,737,878 15,187,533,991

ASSETSNon-Current AssetsFixed Assets Tangible assets E(I) 13,960,147,127 326,681,713 Intangible assets E(II) 151,284,220 19,470,832 Capital-work-in-progress E(I) 947,916,309 12,558,712,838 Intangible assets under development E(II) 18,460,461 33,754,671

15,077,808,117 12,938,620,054 Long-term loans and advances F 133,031,970 298,562,686Current Assets Current Investments G(I) 127,261,047 – Inventories G(II) 930,235,990 319,976,869 Trade receivables G(III) 149,883,012 178,303 Cash and bank balances G(IV) 24,659,217 887,622,573 Short-term loans and advances G(V) 27,686,625 19,713,020 Other current assets G(VI) 887,171,900 722,860,486

2,146,897,791 1,950,351,251

TOTAL 17,357,737,878 15,187,533,991

COMMITMENTS (Capital and others) Q(1)CONTINGENT LIABILITIES Q(9)SIGNIFICANT ACCOUNTING POLICIES P –

The accompanying notes form an integral part of the Balance Sheet.

As per our Report attached For and on behalf of the BoardM. P. CHITALE & CO.Chartered Accountants Regn. No. 101851W

ANAGHA THATTE R. G. KULKARNI M. V. KOTWAL PREMAN DINARAJ SATISH A GUNEPartner Manager Director Director DirectorMembership No. 105525 K. R. ANILKUMAR J. D. PATIL Y. S. TRIVEDI Director Director Director

Place : Mumbai Place : MumbaiDate : May 9, 2013 Date : May 9, 2013

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The accompanying notes form an integral part of Profit & Loss Account.




STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED ON MARCH 31, 2013 2012-2013 2011-2012 Note No. R R R R

REVENUE

Revenue from Operations (Gross) H 163,663,444

Less: Excise Duty 22,944,308

Revenue from Operations (Net) 140,719,136

Other income I 4,449,780 –

TOTAL REVENUE 145,168,916 –

EXPENSES

Manufacturing and operating expenses J 383,029,038 –

Employee benefits expense [ Note Q(10) ] K 94,573,886 17,350,836

Sales, administration & other expenses L 70,583,507 –

Pre-operative expenses [ Note Q(10) ] M 209,533,675 60,542,356

Finance costs [ Note Q(10) ] N 498,070,176 26,032,834

Depreciation & amortisation expense [ Note Q(10) ] 446,763,040 8,860,186

1,702,553,322 112,786,212

TOTAL EXPENSES 1,702,553,322 112,786,212

Loss for the year before tax (1,557,384,406) (112,786,212)

Provision for current tax – 2,143,762

Loss for the year after tax (1,557,384,406) (114,929,974)

Earnings per Share (Basic & Diluted) Q(7) (3.19) (0.30)

Face value per Equity Share (R) 10 10

SIGNIFICANT ACCOUNTING POLICIES P

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CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 20132012-2013

R2011-2012

R

A. Cash Flow from Operating ActivitiesNet Profit/(Loss) before tax (1,557,384,406) (112,786,212)Adjustment for :Depreciation and Amortisation 446,763,040 8,860,187Income from Investments (4,440,641) –Interest Expense 429,519,886 90,739Exchange (Gain) Loss - Unrealised 74,082,748 25,942,095Profit on sale of assets (9,139) –Deferred Borrowing Cost Amortisation 10,220,751 –

Operating Profit before working capital changes (601,247,761) (77,893,191)Adjustment for :(Increase) / decrease in trade and other receivables (149,704,709) (178,303)(Increase) / decrease in Inventories (610,259,121) (319,976,869)(Increase) / decrease in short term loans & advances (10,106,889) (12,718,750)Increase / decrease in trade payables and customer advances 172,968,124 188,943,639Cash (used in) / generated from operations (1,198,350,356) (221,823,474)Direct taxes refund/(paid)-net – (2,143,762)

Net Cash from Operating Activities (A) (1,198,350,356) (223,967,236)

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets - including CWIP (2,050,016,312) (6,100,374,965)Sale of fixed assets 31,500 –Purchase of Investments (net) (127,261,047) 1,032,882,418Income from Investments 17,381,066 41,364,749

Net Cash / (used in) from Investing Activities (B) (2,159,864,793) (5,026,127,798)

C. Cash Flow from Financing ActivitiesProceeds from Issue of Share Capital 700,000,000 1,700,000,000Proceeds from long term borrowings - NPCIL 300,000,000Proceeds from long term borrowings - Banks 1,059,800,000 4,749,100,000Proceeds from short term borrowings - L&T 458,000,000 –Proceeds from short term borrowings - Banks 599,295,156 –Interest paid (net) (621,843,363) (353,014,025)

Net cash/ (used in) from Financing Activities (C) 2,495,251,793 6,096,085,975

Net (decrease)/ increase in cash and cash equivalents (A+B+C) (862,963,356) 845,990,941Cash and Cash equivalents as at the beginning 887,622,573 41,631,632

Cash and Cash equivalents at end of the year 24,659,217 887,622,573

Notes:

1. Cash Flow Statement has been prepared under the Indirect Method as set out in the AS 3 “Cash Flow Statements” issued by the Institute of Chartered Accountants of India.

2. Cash and cash equivalents represent cash and bank balances.




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NOTES FORMING PART OF FINANCIAL STATEMENTSA SHARE CAPITAL A(I) Authorised, Issued and Subscribed

As at 31.03.2013 As at 31.03.2012

Number of Shares R Number of Shares R

Authorised Capital

Equity Shares of Rs10 each 575,000,000 5,750,000,000 575,000,000 5,750,000,000

Issued Capital

Equity Shares of Rs10 each 566,600,000 5,666,000,000 500,000,000 5,000,000,000

Subscribed & fully paidup Capital

Equity share of R 10 each fully paid up 540,000,000 5,400,000,000 450,000,000 4,500,000,000

A(II) Reconciliation of Equity Shares

2012-2013 2011-2012

Number of Shares R Number of Shares R

Subscribed & fully paid at the beginning of the year 450,000,000 4,500,000,000 300,000,000 3,000,000,000

Add: Additions during the year 90,000,000 900,000,000 150,000,000 1,500,000,000

Subscribed & fully paid at the end of the year 540,000,000 5,400,000,000 450,000,000 4,500,000,000

A(III) Shareholding more than 5% of the shares as at the end of the year

As at 31.03.2013 As at 31.03.2012

Number of Shares Shareholding % Number of Shares Shareholding %

Larsen & Toubro Limited (Holding Company) 399,600,000 74 333,000,000 74

Nuclear Power Corporation of India Limited 140,400,000 26 117,000,000 26

TOTAL 540,000,000 100 450,000,000 100

The Company has only one class of equity shares having a par value of R10/- per share. There is no restriction on payment of dividend & repayment of capital.

B RESERVES AND SURPLUS

As at 31.03.2013 As at 31.03.2012

R R R R

Hedging Reserve

As per last Balance Sheet 18,534,749 22,790,447

Addition/ (deduction) during the year (10,447,282) (4,255,698)

8,087,467 18,534,749

Profit & Loss Account

As per last Balance Sheet (209,198,233) (94,268,259)

Loss for the year (1,557,384,406) (114,929,974)

(1,766,582,639) (209,198,233)

TOTAL (1,758,495,172) (190,663,484)

S-402


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.) As at 31.03.2013 As at 31.03.2012

R R R R

C NON-CURRENT LIABILITIES

C(I) Long term borrowings

Term Loans (Secured)

Borrowings from related party

Loan from related party 3,300,000,000 3,000,000,000

Interest on related party Loan 500,592,606 287,102,329

3,800,592,606 3,287,102,329

Borrowing from Banks

Rupee term loans 4,655,000,000 4,250,000,000

External commercial borrowing 2,659,965,000 2,035,000,000

7,314,965,000 6,285,000,000

TOTAL 11,115,557,606 9,572,102,329

C(I)(a) Terms : Loan from related party

Lender As at 31.03.2013 Rate of Interest Repayment

Nuclear Power Corporation of India Limited Interest on related party loan

3,300,000,000 7% annual compounded

From the commencement of commercial operations -

- Principal to be paid in 5 equal installments at the end of 10th year and

- Accrued but not due Interest to be paid in 5 equal installments at the end of 11th year.

500,592,606

3,800,592,606

Previous year 3,287,102,329 Security : First ranking pari passu charge on all assets (other than current assets) of the Company, present & future & second charge on current assets.

C(I)(b) Terms : Rupee term Loans

Bank Name As at 31.03.2013 Rate of Interest Repayment

Bank of Baroda 1,280,125,000 Base Rate + predetermined

spread

Structured payment from December 2013 till September 2019

Axis Bank 1,251,031,250

Canara Bank 1,251,031,250

State Bank of Hyderabed 872,812,500

4,655,000,000

Previous year 4,250,000,000

Security : First ranking pari passu charge on all assets (other than current assets) of the Company, present & future & second charge on current assets.

S-403


C(I)(c) Terms : External Commercial Borrowing

Bank Name As at 31.03.2013 Rate of Interest Repayment

DBS Bank Limited, Singapore 2,659,965,000 LIBOR + predetermined

spread

Structured payment from December 2013 till September 2019

2,659,965,000

Previous year 2,035,000,000 Security : First ranking pari passu charge on all assets (other than current assets) of the Company, present & future & second charge on current assets.

C(II) Other long term liabilities

As at 31.03.2013 As at 31.03.2012

R R

Employee deposits - PC, Car acquisition 2,652,640 1,821,126

TOTAL 2,652,640 1,821,126

D CURRENT LIABILITIES

D(I) Short Term Borrowings

Secured

Loans payable on demand from banks [Note D(I)(a)] 599,295,156 –

Unsecured

Short Term Borrowings - Related party [Note D(I)(b)] 458,000,000 –

TOTAL 1,057,295,156 –

Note - D (I) (a) - Loans repayable on demand from banks include fund based working capital facilities viz. cash-credits and demand loans. The secured portion of working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit are secured by hypothecation of inventories, book debts and receivables. D(I)(b) Terms : Short term loan from related party

Lender As at 31.03.2013 Rate of Interest Repayment

Larsen & Toubro Limited 458,000,000 RBI bank rate, currently 8.75%

Principal to be repaid latest by Mar 31, 2014 along with interest.

458,000,000

Previous year – As at 31.03.2013 As at 31.03.2012

R R

D(II) Current Maturities of Long Term Borrowings

Current Maturities of Long Term Borrowing - Others 149,285,000 –

[Refer to Note C(I)(b) & C(I)(c)]

TOTAL 149,285,000 –

NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)

S-404


As at 31.03.2013 As at 31.03.2012

R R R R

D(III) Trade payables

Acceptances 40,038,704

Due to related parties 119,640,351 77,850,525

Micro and small enterprises [ Note Q(15) ] 20,920,683 28,801,183

Due to others 129,020,392 87,493,394

309,620,130 194,145,102

TOTAL 309,620,130 194,145,102

D CURRENT LIABILITIES

D(IV) Other Current liabilities

Interest accrued but not due

On rupee term loan borrowings 12,849,632 3,399,851

On short term borrowings related party 2,879,214 –

15,728,846 3,399,851

Advance from customers

Related party 23,000,000 –

Others 2,976,824 162,070

25,976,824 162,070

Liabilities for Capital Goods

Related party 548,064,086 308,171,090

Micro and small enterprises [ Note Q(15) ] 2,779,784 5,198,206

Others 437,239,421 575,410,823

988,083,291 888,780,119

TOTAL 1,029,788,961 892,342,040

D(V) Short term provisions

Provision for employee benefits

Gratuity [ Note Q(3)(b) ] 2,178,252 971,470

Compensated absences 15,760,496 9,058,220

Interest rate guarentee - Provident Fund [ Note Q(3)(a) ] 8,842 –

17,947,590 10,029,690

Others

Forward cont. Payables 16,950,000 3,716,284

Other provisions 17,135,967 4,040,904

34,085,967 7,757,188

TOTAL 52,033,557 17,786,878


S-405


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)E(I) Asset class - wise details of Tangible Assets

Cost

Depreciation / Amortisation Written Down Value

Written Down Value

Particulars As at 01.04.2012

Addition Deduction As at 31.03.13

As at 01.04.2012


As at 31.03.13

As at 31.03.12

R R R R R R R R R R

Land

Leasehold 279,706,945 – – 279,706,945 1,647,908 2,825,325 – 4,473,233 275,233,712 278,059,037

Sub-total land 279,706,945 – – 279,706,945 1,647,908 2,825,325 – 4,473,233 275,233,712 278,059,037

Buildings 17,179,350 4,795,631,768 – 4,812,811,118 350,104 77,829,512 – 78,179,616 4,734,631,502 16,829,246

Plant and Equipment 3,033,219 9,211,939,730 – 9,214,972,949 222,161 339,866,152 – 340,088,313 8,874,884,636 2,811,058

Computers 15,681,563 14,791,723 35,000 30,438,286 3,569,941 4,240,619 12,639 7,797,921 22,640,365 12,111,622

Furniture and fixtures 13,226,092 33,787,013 – 47,013,105 3,091,858 3,675,217 – 6,767,075 40,246,030 10,134,234

Vehicles 4,779,777 3,465,504 – 8,245,281 850,614 922,978 – 1,773,592 6,471,689 3,929,163

Office Equipment 3,732,689 5,265,677 – 8,998,366 925,336 2,033,838 – 2,959,174 6,039,192 2,807,353

TOTAL 337,339,635 14,064,881,415 35,000 14,402,186,050 10,657,922 431,393,640 12,639 442,038,923 13,960,147,127 326,681,713

Previous Year 40,659,594 296,680,041 – 337,339,635 3,179,462 7,478,460 – 10,657,922 As at 31.03.13 As at 31.03.12

Add : Capital work in progress 947,916,309 12,558,712,838

TOTAL 14,908,063,436 12,885,394,551 Notes:

1. Cost of Buildings includes ownership accommodation in a cooperative society Rs 1,71,79,350/- for which shares are yet to be issued.

2. Capital work in progress includes R 2,44,88,539 (Prev. year R 60,65,89,535), being borrowing cost capitalised in accordance with Accounting Standard AS 16 on “Borrowing Costs” as specified in the Companies (Accounting Standards) Rules, 2006.

E(II) Asset class - wise details of Intangible Assets

Cost

Depreciation / Amortisation Written Down Value

Written Down Value



As at 01.04.2012


As at 31.03.13

As at

31.03.12

R R R R R R R R R R

Specialised Softwares

21,043,962 8,703,546 – 29,747,508 1,573,130 4,339,270 – 5,912,400 23,835,108 19,470,832

Technical Knowhow

– 123,185,032 – 123,185,032 – 10,265,419 – 10,265,419 112,919,613 –

Others (Right to Use) – 15,294,210 – 15,294,210 – 764,711 – 764,711 14,529,500 –

TOTAL 21,043,962 147,182,788 – 168,226,750 1,573,130 15,369,400 – 16,942,530 151,284,220 19,470,832

Previous Year 1,553,742 19,490,220 – 21,043,962 191,403 1,381,727 – 1,573,130

As at 31.03.13 As at 31.03.12

Add : Intangible assets under development 18,460,461 33,754,671

TOTAL 169,744,681 53,225,503

S-406



R R R R

F LONG TERM LOANS AND ADVANCES

Unsecured

Considered good

Capital advances

Related party 18,622,170 39,119,024

Others 8,479,011 150,038,594

27,101,181 189,157,618

Security Deposits 15,011,000 15,011,000

Unamortised Expense [ Note P(17) ] 90,919,789 94,394,068

TOTAL 133,031,970 298,562,686

G CURRENT ASSETS

G(I) Current Investments (at lower of cost and market value)

As at 31.03.2013 As at 31.03.2012

R R

Units Value Units Value

Mutual Funds (Face value Rs 100/-)

ICICI Prudential Flexible Income DDR plan (un-quoted) 482,208 50,986,239 – –

Birla Sunlife cash plus DDR plan(un-quoted) 761,264 76,274,808 – –

TOTAL 1,243,472 127,261,047 – –

G(II) Inventories (at cost or net realisable value whichever is lower)

As at 31.03.2013 As at 31.03.2012

R R R R

Raw Materials 242,795,056 301,317,604

Includes goods in transit Rs 1,05,82,371/- (PY 1,93,63,896/-)

Consumables, stores and spares and tools 248,381,920 18,659,265

Includes goods in transit Rs 8,08,544/- (PY 69,71,643/-)

Manufacturing work-in-progress [ Note Q(16)(d) ] 439,059,014 –

930,235,990 319,976,869

TOTAL 930,235,990 319,976,869

S-407



R R R R

G(III) Trade receivables

Unsecured

Outstanding for more than 6 months – –

Other debts

Considered good - related party 131,796,332 178,303

Considered good - Customers 18,086,680 –

149,883,012 178,303

TOTAL 149,883,012 178,303

G(IV) Cash and bank balances

Cash and cash equivalent

Balance with banks 24,643,632 33,305,588

Bank deposits with less than 3 months maturity (including interest accrued)

– 402,262,294

Cash on hand 15,585 13,050

24,659,217 435,580,932

Other bank balances

Deposits with more than 3 months maturity including interest accrued (Includes R NIL of bank deposits with more than 12 month maturitiy) – 452,041,641

– 452,041,641

TOTAL 24,659,217 887,622,573

G CURRENT ASSETS

G(V) Short term loans and advances

Unsecured considered good

Advances recoverable - related party 1,890,000 –

Advances recoverable- others 8,178,097 –

Others - considered good 10,068,097 –

Security deposits 1,100,000 3,165,900

Unamortised expense 16,518,528 16,547,120

17,618,528 19,713,020

TOTAL 27,686,625 19,713,020

S-408



R R R R

G(VI) Other current assets

Considered Good

Indirect Tax set-off 859,573,957 719,083,638

Income Tax TDS receivable (net of provision) 2,643,738 282,915

Others 24,954,205 3,493,933

887,171,900 722,860,486

TOTAL 887,171,900 722,860,486

2012-2013 2011-2012

R R

H REVENUE FROM OPERATIONS

H(I) Revenue from Operations

Sales & services

Manufacturing 162,299,681 –

Services 1,363,763 –

TOTAL 163,663,444 –

I OTHER INCOME

Interest 32,878 –

Dividend 4,407,763 –

Profit on Sale of fixed assets 9,139 –

TOTAL 4,449,780 –

2012-13 2011-12

R R R R

J MANUFACTURING AND OPERATING EXPENSES

Materials consumed

Raw materials

Opening stock 301,317,604 –

Add: Purchases 350,863,971 –

Less: Closing Stock (242,795,056) –

Raw material consumed [Note Q(16)(b)] 409,386,519 –

Less: Scrap sales (1,128,071) –

408,258,448 –

Consumables, stores, spares and tools consumed 92,108,813 –

Sub-contracting Charges 23,041,309 –

S-409


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.) 2012-13 2011-12

R R R R

Changes in inventories of finished goods & work-in-progress

Opening stock:

Finished goods – –

Work-in-progress – –

– –

Less: Closing stock:

Finished goods – –

Work-in-progress 439,059,014 –

439,059,014 –

Other Manufacturing & operating expenses:

Power 113,552,535 –

Gas 98,793,056 –

Contract jobs 41,482,479 –

Insurance[ Note:O ] 6,394,577 –

Hire charges plant & machinery 2,773,414 –

Hire charges others [ Note:O ] 6,838,222 –

Engineering, Professional, Technical & Consultancy Fees [ Note:O ]

6,417,349 –

Repaires to plant & machinery 3,083,756 –

Repaires to building 1,371,608 –

General repair & maintenance expenses [ Note:O ] 1,094,396 –

Overhead charged related party [ Note:O ] 12,742,469 –

Other Manufacturing operating expenses 4,135,621 –

298,679,482 –

TOTAL 383,029,038 –

K EMPLOYEES BENEFITS EXPENSES

Salaries, wages and bonus 68,942,864 11,332,480

Contribution to and provision for:

Provident fund and pension fund 2,678,603 689,031

Gratuity fund [ Note - Q(3) ] 1,705,943 129,112

Leave Encashment Provision 4,243,939 633,175

8,628,485 1,451,318

Expense on Employee stock scheme 4,357,311 1,469,092

Staff welfare expense 4,805,848 2,967,595

Overheads charged related party [ Note:O ] 6,121,550 –

Insurance expenses - Medical & others [ Note:O ] 1,717,828 130,351

TOTAL 94,573,886 17,350,836

S-410



R R

L SALES, ADMINISTRATION & OTHER EXPENSES

Professional fees [ Note:O ] 11,152,742 –

Packing & forwarding [ Note:O ] 979,929 –

Insurance [ Note:O ] 101,555 –

Lease rentals & hire charges [ Note:O ] 2,808,454 –

Auditors’ remuneration [ Note:O ] 282,500 –

Overheads charged related party [ Note:O ] 21,499,471 –

Rates & taxes [ Note:O ] 832,747 –

Estate Maintenance& horticulture expenses [ Note:O ] 481,445 –

Exchange (gain) / Loss [ Note:O ] 1,197,626 –

Travelling and conveyance [ Note:O ] 7,331,782 –

Telephone postage and telegrams [ Note:O ] 2,069,045 –

Advertising and publicity [ Note:O ] 1,683,043 –

Stationery and printing [ Note:O ] 731,860 –

Bank charges [ Note:O ] 1,030,169 –

Forward premiums [ Note:O ] 5,282,855 –

General repairs and maintenance [ Note:O ] 2,202,484 –

Subscription charges [ Note:O ] 108,679 –

Miscellaneous expenses [ Note:O ] 10,807,121 –

TOTAL 70,583,507 –

M PRE-OPERATIVE EXPENSES

Professional fees [ Note:O ] 3,371,742 3,114,487

Lease Rentals & hire charges [ Note:O ] 327,497 1,405,863

Auditors’ remuneration [ Note:O ] 160,006 210,081

Overheads charged related party [ Note:O ] 5,981,697 8,755,366

Rates & taxes [ Note:O ] 489,107 1,636,500

Estate Maintenance& horticulture expenses [ Note:O ] 456,913 1,150,227

Exchange (gain) / Loss [ Note:O ] 18,976,165 13,135,528

Travelling and conveyance [ Note:O ] 1,322,530 3,135,637

Telephone postage and telegrams [ Note:O ] 704,325 1,261,939

Advertising and publicity [ Note:O ] 555,021 374,485

Stationery and printing [ Note:O ] 713,200 1,230,560

Bank charges [ Note:O ] 1,135,344 1,082,765

Forward premiums [ Note:O ] 7,668,523 19,254,341

General repairs and maintenance [ Note:O ] 514,017 522,599

Subscription charges [ Note:O ] 373,062 1,272,605

220 KV switching written off 164,917,167 –

Miscellaneous expenses [ Note:O ] 1,867,359 2,999,373

TOTAL 209,533,675 60,542,356

S-411



R R

N FINANCE COSTS

Finance Cost

Interest Expense

Interest on NPCIL Loan 114,342,373 –

Interest on Short Term Loan - L&T 3,199,127 –

Interest on rupee term Loans 223,952,610 –

Interest on External Commercial Borrowings 57,938,793 –

Interest on cash -credit facilities 30,086,983 –

Others

Interest paid to MSMED 612,181 –

Amortisation of borrowing cost 10,220,751 –

Exchange loss (attributable to finance costs) 56,666,786 25,942,095

Other Interest 1,050,572 90,739

TOTAL 498,070,176 26,032,834

O AGGREGATION OF EXPENSES DISCLOSED VIDE NOTES J, K, L & M

Sr. No. Particulars

Note No. - J Manufacturing

Expenses

Note No. - K Staff Expenses

Note No. - L Sales & admin.

Expenses

Note No. - M Pre-operatives

expenses TOTAL

R

1 Professional fees 6,417,349 – 11,152,742 3,371,742 20,941,833

2 Packing & forwarding – – 979,929 – 979,929

3 Insurance 6,394,577 1,717,828 101,555 – 8,213,960

4 Lease rentals & hire charges 6,838,222 – 2,808,454 327,497 9,974,173

5 Auditors’ remuneration – – 282,500 160,006 442,506

6 Overheads charged related party 12,742,469 6,121,550 21,499,471 5,981,697 46,345,187

7 Rates & taxes – – 832,747 489,107 1,321,854

8 Estate Maintenance& horticulture expenses – – 481,445 456,913 938,358

9 Exchange (gain) / Loss – – 1,197,626 18,976,165 20,173,791

10 Travelling and conveyance – – 7,331,782 1,322,530 8,654,312

11 Telephone postage and telegrams – – 2,069,045 704,325 2,773,370

12 Advertising and publicity – – 1,683,043 555,021 2,238,064

13 Stationery and printing – – 731,860 713,200 1,445,060

14 Bank charges – – 1,030,169 1,135,344 2,165,513

15 Forward premiums – – 5,282,855 7,668,523 12,951,378

16 General repairs and maintenance 1,094,396 – 2,202,484 514,017 3,810,897

17 Subscription charges – – 108,679 373,062 481,741

18 Miscellaneous expenses – – 10,807,121 1,867,359 12,674,480

TOTAL 33,487,013 7,839,378 70,583,507 44,616,508 156,526,406

S-412


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)P 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 accounting

principles (“GAAP”) and in compliance with the Accounting Standards as specified in the Companies (Accounting Standards) Rules 2006 prescribed by the Central Government.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year except stated specifically in the notes, if any.

2. Presentation of financial statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI to the

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

3. Use of Estimates The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions

that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

4. Operating Cycle for current and non-current classification All assets and liabilities are presented as Current or Non-Current as per the Company’s normal operation cycle and the other criteria set out

in the Revised Schedule VI of the Companies Act, 1956. Based on the nature of the products and the time between acquisition of assets for processing and their realization, the Company has ascertained its operating cycle as 12 months for the purpose of Current / Non-Current classification of assets and liabilities.

5. Tangible Fixed Assets Fixed assets are stated at cost of net of tax/duty credits availed if any less accumulated depreciation/ amortisation and cumulative impairment,

if any. Specific know-how fees paid, if any, relating to plant & equipment is treated as a part of cost thereof.

Administrative and other overhead costs that are specifically attributable to construction or acquisition of fixed assets or bringing the fixed assets to working condition for its intended use are allocated and capitalized as part of the cost of fixed assets.

Own manufactured assets are capitalized at cost including an appropriate share of overheads.

The overhead costs towards project capitalization incurred by holding Company on behalf of the Company are on actual costs without any internal mark ups and on proportionate basis.

Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as ‘Capital Work in Progress’.

6. Depreciation Depreciation on assets has been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956 on straight line basis.However,

in respect of the following asset categories, the depreciation is provided at higher rates in line with their estimated useful lives-

Furniture fixtures - 10.00%

Office Equipment - 25.00%

Air Conditioning & Refrigeration equipments 8.33%

Motor Cars 14.14%

Computers & Laptops– Employee scheme 33.33%

Other Laptops 25.00%

Tools, Moulds 10% & 20.00%

Diesel Generators 8.33%

Laboratory and Canteen Equipments 12.50%

Leasehold land is amortized over the period of lease.

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

S-413


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)7. Capital Work in Progress Capital work in progress includes –

- Expenditure, direct or indirect incurred on assets, which are yet to be brought into working condition for its intended use

- Interest during construction netted of income earned on temporary investment of borrowed funds

- Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs

8. Intangible assets and amortization Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise

and the cost of the assets can be measured reliably. Intangible assets are stated at original cost net of tax / duty credits availed, if any, less accumulated amortization and cumulative impairment. The amortization is recognized over the estimated useful life as follows:

a. Specialised software are amortised over a period of 6 years.

b. Lump-sum fees for foreign know-how is amortised over a period of 6 years.

c. Gas/water pipelines costs are amortized over the period of agreement to use, but not exceeding 10 years

Administrative and other overhead costs that are specifically attributable to acquisition of intangible assets are allocated and capitalized as part of the cost of intangible assets.

Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as ‘Intangible Assets under Development’.

Amortisation on impaired assets is provided by adjusting the amortisation charges in the remaining periods so as to allocate the asset’s revised carrying amount over its remaining useful life.

9. Impairment of assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

(a) The provision for impairment loss, if any; and

(b) The reversal of impairment loss recognized in the previous periods, if any.

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:

(a) In the case of an individual asset, at the higher of the net selling price and the value in use;

(b) In the case of a cash generating unit (a group of assets that generates identified, independent cash-flows), at the higher of the cash generating unit’s net selling price and the value in use.

(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life).

10. Investments Investments which are readily realizable and intended to be held for not more than one year from the date of acquisition are classified as

Current Investments. All other are classified as Long Term Investments.

Long Term Investments are carried at cost, after providing for any diminution in value, if such diminution is permanent in nature.

Current Investments if any are carried at Lower of Cost and market value. The determination of the carrying cost of such investment is done on the basis of specific identification.

11. Inventories Inventories are valued after providing for obsolescence, as under:

a) Raw materials, stores, spares and loose tools at lower of weighted average cost and net realisable value.

b) Manufacturing work-in-progress is valued at lower of cost (including related overheads) and net realisable value.

c) Finished goods at lower of weighted average cost and net realisable value. Cost includes related overheads.

Net Realisable Value is the estimated selling price in the ordinary course of business.

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 provisions

of the Income Tax Act, 1961 and based on expected outcome of assessments / appeals.

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

Deferred tax assets on unabsorbed depreciation or carried forward losses are recognized and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

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

S-414


NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)13. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if -

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated.

Reimbursementexpected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of -

(a) a probable obligation arising from a past event, when it is probable that an outflow of resources will be required to settle the obligation

(b) a present obligation arising out of a past events, when reliable estimate is possible

(c) a possible obligation, unless the probability of outflow of resources is remote.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

14. Commitments Commitments are future liabilities for contractual expenditure.

Commitments are classified and disclosed as under-

a. Estimated amount of contracts remaining to be executed on capital account and not provided for

b. Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion on management

Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details.

15. Revenue Recognition The Company has commenced its commercial operations during the year.

Revenue is recognized based on nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery.

- Revenue from sale of goods is recognized when the substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract.

- Revenue from services is recognized as and when the services are rendered.

- Interest income is recognized on a time proportion basis taking in to account the amount outstanding and the applicable interest rate.

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

16. Employee Benefits The Company has set up Employees’ Group Gratuity –cum-Life Assurance Scheme with Life Insurance Corporation of India. The Provident

Fund Scheme is being managed by the Holding Company Larsen & Toubro Limited.

The following are the Company policies on employee benefits-

(A) Short Term Employee Benefit i. All employee benefits payable within one year like salaries, wages, accumulating short term compensated absences (“leave

entitlements”) etc. which are expected to be utilized within next 12 months are treated as short term benefits and are recognized in the period in which the employee renders the related service which entitles him to avail such benefits.

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

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

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

ii. Defined benefit Plan: The Employees’ Group Gratuity-cum-Life Assurance Scheme with Life Insurance Corporation of India and Provident Fund Scheme managed by the Holding Company (Larsen & Toubro Limited) are the Company’s defined benefit Plan.Wherever applicable, the present value of the obligation under such defined benefit plans, is determined based on actuarial valuation using the Projected Unit Credit Method.

(C) Long term employee benefits - The obligation for long term employee benefits such as long term compensated absences, long service awards etc. is recognized in the same manner as in case of defined benefit plan as mention in (B) (ii)above.

(D) Termination benefits - Termination benefits if any are recognized as expense in the same year when it occurs.

Wherever applicable, the present value of obligation under such defined benefit plans are determined based on actuarial valuation.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognize the obligation on the net basis.

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NOTES FORMING PART OF FINANCIAL STATEMENTS (Contd.)17. Borrowing costs Borrowing costs include interest, commitment charges, amortization of ancillary costs and exchange differences arising from foreign currency

borrowing, to the extent they are regarded as an adjustment to interest costs.

Borrowing costs that are attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of such assets till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial time to get ready for its intended use. All other borrowing costs are recognized as expense in the year in which it is incurred. Expenses incurred in connection with the arrangement of borrowings are written off over the period of borrowing.

18. Lease The determination of whether an agreement is, or contains, a lease is based on the substance of the agreement at the date of inception.

Finance Leases:

The Company has not taken any assets on finance lease during the year.

Operating leases:

Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on accrual basis.

19. Foreign Currency Transactions a. The reporting currency of the Company is Indian Rupee.

b. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate.

Non-monetary items, carried at historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.

Exchange difference that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet date at the closing rate are recognized as incom e or expense in the period in which they arise.

c. Forward contracts, other than those entered to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted as per Accounting Standard -11. Exchange differences on such contracts are recognized in the period in which they arise.

Gains or losses on account of rollover / cancellation of forward contracts are recognized as income or expense of the period in which such rollover or cancellation takes place.

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

d. All other derivative contracts, including forward contracts entered to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions are recognized in the financial statement at fair value as on Balance Sheet date in pursuance of the announcement by the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives. The Company has adopted Accounting Standard-30 for accounting of such derivative contracts, not covered under Accounting Standard -11, as mandated by the ICAI in aforesaid announcement.

Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts covered under Accounting Standard (AS) 30 [“Financial Instruments: Recognition and Measurement”] are recognised in the Profit and Loss Account or Balance Sheet as the case may be after applying the test of hedge effectiveness. Where the hedge is effective, the gains or losses are recognised in the “Hedging Reserve” which forms part of “Reserves and Surplus” in the Balance Sheet, while the same is recognised in the Profit & Loss Account where the hedge is ineffective. The amount recognised in the “Hedging Reserve” is transferred to Profit and Loss Account in the period in which the underlying hedged item affects the Profit and Loss Account. Gains / losses on effective hedges for capital goods are adjusted to asset cost.

20. Earnings per Share Basic Earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average

number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

21. Cash-flow statement Cash-flow statement is prepared segregating the cash-flows from operating, investing and financing activities. Cash-flow from operating

activities is reported using indirect method. Under the indirect method, net profit is adjusted for the effects of:

a. transactions of a non-cash nature

b. any deferrals or accruals of any past or future operating cash-receipts or payments and

c. items of income and expense associated with investing or financing activities

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Cash and cash equivalents (including bank balances) are reflected as such in Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on date of the Balance Sheet are also included under this category with a specific disclosure.

Q NOTES FORMING PART OF ACCOUNTS All amounts in R

1. Estimated amount of contracts remaining to be executed on capital account (net of advances):- R111,632,033/- (Prev. year R1,425,435,953/-)

2. In line with the Company’s risk management policy, the financial risks related to change in foreign exchange rates, are hedged byusing a combination of forward contracts, swaps and other derivative contracts, besides the natural hedges.

The particulars of derivative contracts entered into for hedging purposes outstanding as at March 31, 2013 are as under:

Category of derivative instruments Amount of exposures hedged

31.3.2013 31.3.2012

i) For hedging foreign currency risks

a) Forward contracts for receivables including firm commitments and highly probable forecastedtransactions

– –

b) Forward contracts for payables including firm commitments and highly probable forecasted transactions

295,127,040 199,003,982

c) Currency swaps 542,850,000 –

Un-hedged foreign currency exposures as at March 31, 2013 are as under:

Un-hedged foreign currency exposures As at 31.3.2013 As at 31.3.2012

i) Receivables, including firm commitments and highly probable forecasted transactions – –

ii) Payables, including firm commitments and highly probable forecasted transactions 2,106,335,131 2,594,350,254

3. Employee Benefits – Provision for / contributions to retirement benefit schemes are made as follows (As per AS – 15)

(a) Trust-managed provident fund plan on actual liability

(b) Gratuity plan on actuarial valuation

(a) Trust-managed provident fund plan: All eligible employees of the Company are members of the Trust Managed Provident Fund of Larsen & Toubro Limited.

a. Net (Liability) / Asset recognized in the Balance Sheet-

A As at 31.3.2013 As at 31.3.2012

a) Present Value of Funded Obligations (18,834,152) (9,679,983)

b) Fair Value of Plan Assets 18,619,412 9,540,675

c) Present value of unfunded Obligations – –

d) Unrecognized past service cost – –

e) Excess of Assets over liabilities not to be recognized as asset – –

f) Excess of liabilities over Assets (214,739) (139,308)

Net (Liability) / Assetrecognized in the Balance Sheet (736,895) (544,913)

b. Amount recognized in Profit & Loss Account-

2012-13 2011-12

1. Current Service Cost 4,333,855 2,408,397

2. Interest Cost 2,298,827 1,288,824

3. Expected Return on Plan Assets (2,298,827) (1,288,824)

4. Actuarial Losses / (Gains) recognized in the year (116,646) (187,487)

5. Actuarial Losses / (Gains) not recognized in books 116,646 187,487

6. Total Included in Staff Expenses (1 to 4) 4,333,855 2,408,397

Transfer in 1,181,305 219,555

Expenses recognized in the statement of Profit & Loss Account 3,152,550 2,188,842


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

As at 31.3.2013 As at 31.3.2012

Opening balance of the present value of defined benefit obligation 9,679,983 2,500,000

Add: Current Service Cost& transfer in 4,333,855 2,408,397

Add: Interest Cost 2,298,827 1,288,824

Add: Contribution by Plan participants 6,464,845 3,725,205

Add / (Less): actuarial (Gains) / Losses

Less: Benefit paid (3,943,358) (242,443)

Closing Balance of the present value of defined benefit obligation 18,834,152 9,679,983

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

As at 31.3.2013 As at 31.3.2012

Opening balance of fair value of the Plan Assets 9,540,580 2,449,671

Add: Expected Return of Plan Assets 2,298,827 1,288,824

Less: Actuarial Gains / (Loss) 116,646 187,487

Add: Contribution by the Employer 4,244,146 2,300,163

Add: Contribution by Plan Participants 6,362,572 3,556,973

Less: Benefit paid (3,943,358) (242,443)

Closing Balance of fair value of assets 18,619,412 9,540,675

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

Category Provident FundPlan

Govt. of India Securities 24%

State Govt. Securities 13%

Special Deposit Scheme 14%

Public Sector Unit Bond 42%

Corporate Bonds 7%

Mutual Funds 0%

Others (to specify) 0%

100%

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

Discount rate as at March 31 8.05%Expected Return on Plan Assets as at March 31 8.36%Attrition Rate NASalary Growth Rate 5%

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

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

Particulars As at 31.03.2013 As at 31.03.2012

Defined Benefit Obligation 18,834,152 9,679,983

Plan assets 18,619,412 9,540,675

Surplus / (Deficit) (214,740) (139,308)

Add: Expected Contribution March,13 736,895 544,913

Surplus / (Deficit) after expected Contribution for March,2013 522,156 405,605

Note: An amount of R 8,842/- has been provided based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan.


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(b) Gratuity plan: The Company makes contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation

of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment of employees at retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed 5 years in service.

a. Amount recognized in the Balance Sheet-

A As at 31.03.2013 As at 31.03.2012

a) Present value of defined benefit obligations

Wholly Funded 5,850,101 1,494,119

TOTAL 5,850,101 1,494,119

b) Fair value of plan assets 3,671,849 522,649

Amount to be recognized as (liability) or asset (a-b) (2,178,252) (971,470)

B Amount reflected in the Balance Sheet Liabilities Assets

(2,178,252) (971,470)

Net (liability) / asset (2,178,252) (971,470)

b. Amount recognized in Profit & Loss Account.

2012-13 2011-12

1. Current Service Cost 1,085,849 728,648

2. Interest Cost – –

3. Actual Return on Plan Assets – –

4. Actuarial Losses / (Gains) 1,070,094 562,471

Total Expenses for the year 2,155,943 1,291,119

5. Total Included in Staff Expenses (1 to 4) 2,155,943 1,291,119

Out of total charge of R 2,155,943/-, R 450,000/- is recognized in CWIP & R 1,705,943/- is recognized in profit & loss account.

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

As at 31.03.2013 As at 31.03.2012

Opening balance of the present value of defined benefit obligation 1,494,119 203,000

Add: Current Service Cost 1,085,849 728,648

Add: Interest Cost – –

Add: Past liability (towards service in L&T) 2,200,039 –

Add: Contribution by Plan participants – –

Add / (Less): actuarial (Gains) / Losses 1,070,094 562,471

Less: Benefit paid – –

Closing Balance of the present value of defined benefit obligation 5,850,101 1,494,119

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

As at 31.03.2013 As at 31.03.2012

Opening balance of fair value of the Plan Assets 522,649 203,000

Add: Expected Return of Plan Assets – –

Add: Actuarial Gains / (Loss) 4,066 –

Add: Contribution by the Employer 3,145,134 319,649

Add: Contribution by Plan Participants – –

Less: Benefit paid – –

Closing Balance of fair value of assets 3,671,849 522,649


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

Gratuity Plan

Govt. of India Securities Scheme with Life Insurance CorporationState Govt. Securities

Corporate Bonds

Public Sector Bonds

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

Discount rate as at March 31 8%

Expected Return on Plan Assets as at March 31 Nil

Attrition Rate NA

Salary Growth Rate 5%

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

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

Particulars As at 31.03.2013 As at 31.03.2012

Defined Benefit Obligation 5,850,101 1,494,119

Plan assets 3,671,849 522,649

Surplus / (Deficit) (2,178,252) (971,470)

There are certain employees who have been transferred from Larsen & Toubro Limited to the Company. The liability for these employees as on date of transfer will be settled by Larsen & Toubro Limited.

4. The Company is engaged mainly in manufacturing of Heavy Forgings and after considering the category ofproducts and class of customers, the Company is of the view that the Company’s products are covered under a single reportable segment as per Accounting Standard on segment reporting AS-17 issued by ICAI.

5. Related party disclosure:

a. List of related parties who exercise control:

Larsen & Toubro Limited

Nuclear Power Corporation of India Limited

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

Larsen & Toubro Limited- Holding Company

Nuclear Power Corporation of India Limited- Promoter Company

L&T-MHI Turbine Generators Private Limited- Group Company

c. Disclosure of related party transactions:

Head 2012-13 2011-12

Larsen & Toubro Limited

- For Overheads charged 106,080,370 51,436,938

- For Building &equipments purchased 773,450,436 2,202,237,406

- Unsecured Loan taken during the year 458,000,000 –

- Interest charged on loan 3,199,127 –

- Purchase of goods & services 63,215,591 106,710,064

- ESOP charge 9,155,359 14,690,917

- Charges for deputation of employees 7,493,273 –

- Sale of goods & services 109,049,291 117,493


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Head 2012-13 2011-12

Nuclear Power Corporation of India Limited

- Secured Loan 300,000,000 –

- Interest on Loan 237,211,418 216,879,304

L&T-MHI Boilers Private Limited

- Purchase of goods & services – 142,913

- Sale of Service – 1,050

L&T-MHI Turbine Generators Private Limited

- Purchase of goods & services 3,296,260 3,778,861

- Sale of goods &services 31,588,985 3,268,700

Manager’s remuneration

Mr. R. G. Kulkarni 4,782,990 4,256,109

d. Amount due to / from related parties:

Particulars 2012-13 2011-12

Accounts receivable

- Larsen & Toubro Limited 117,596,765 –

- L&T-MHI Turbine Generators Private Limited 14,199,567 178,303

Accounts payable

- Larsen & Toubro Limited 666,322,584 385,833,235

- L&T-MHI Turbine Generators Private Limited 1,381,853 188,381

Loans & advances recoverable

- Larsen & Toubro Limited 15,238,170 39,119,024

- L&T-MHI Turbine Generators Private Limited 5,274,000 –

Unsecured loans (including interest accrued)

Larsen & Toubro Limited 460,879,214 –

Secured Loan from-

Nuclear Power Corporation of India Limited 3,800,592,606 3,287,102,329

Advances received in the capacity of supplier of goods/services classified as “advances from customers” in the Balance Sheet

Nuclear Power Corporation of India Limited 23,000,000 –

6. Operating leases: (i) The Company has taken someequipments under cancellable operating leases. These lease agreements are normally renewed on

expiry.

(ii) The Company has taken certain assets like Gas tanks on non-cancellable operating lease,the future minimum lease payments in respect of which are as follows-

Particulars Minimum lease payments

As at 31.3.2013

1. Payable not later than 1 year 2,310,000

2. Payable later than 1 year and not later than 5 years 9,432,500

3. Payable later than 5 years –

Total 11,742,500


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The lease agreement provides for an option to the Company to review the lease period at the end of the non-cancellable period. There are no exceptional/ restrictive covenants in the lease agreements.

(iii) Lease rental expense in respect of operating leases: R 2,449,717/-.

7. Basic & Diluted Earnings per share [“EPS”] computed in accordance with Accounting Standard (AS) 20 “Earnings per share”.


Profit/(loss) after tax as per Accounts (1,557,384,406) (114,929,974)

Weighted average number of shares outstanding 488,767,123 349,590,164

Basic & Diluted EPS R (3.19) (0.33)

8. Major components of deferred tax liabilities and deferred tax assets pursuant to Accounting Standard (AS-22) :

Tax Deferred Tax Liabilities / Deferred Tax (Assets):


Charge / (credit) to P&L account

Charge / (credit) to Hedge Reserves

As at 31.03.2013

Deferred Tax Liabilities:

Difference between book and tax depreciation – 1,119,272,009 – 1,119,272,009

Other items giving rise to timing differences – – – –

Total – 1,119,272,009 – 1,119,272,009

Deferred Tax (Assets)

Carry forward loss including unabsorbed depreciation – (1,506,739,687) – (1,506,739,687)

Other items giving rise to timing differences – (1,311,378) – (1,311,378)

Total – (1,508,051,065) (1,508,051,065)

Restricted to level of Deferred tax liabilities (1,119,272,009) – (1,119,272,009)

Net Deferred tax liabilities/(assets) – – –

Note- The deferred tax (assets) have been recognized to the extent a virtual certainty exists that the same will be recovered in future.

9. There is no Contingent Liability as at Balance Sheet date.

10. Preliminary and Pre-operative expenditure incurred (net of income earned) prior to commencement of commercial business operations are charged to Profit and Loss Account.

The Company commenced its commercial operations from October 1, 2012.

The following are the details of pre-operative expenses charged to Profit & Loss Account during April 1, 2012 and September 30, 2012.

Particulars 2012-13 (6 months)

2011-12

Staff Expenses 12,104,194 17,350,836

Administration & Other expenses 209,533,675 60,542,356

Finance expenses 5,045,010 26,032,834

Depreciation and amortization 7,005,102 8,860,186

Total – Pre-operative expenses 233,687,981 112,786,212

11. Auditors’ remuneration and expenses charged to Accounts-


Audit fees 200,000 100,000

Tax audit fees 25,000 25,000

Other Services 172,500 85,081

Expenses Reimbursed 70,000 –

Note – Tax audit fees for FY 2011-12 provided for has been reversed during the year.


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12. Value of Imports on CIF basis-


Raw Materials 161,641,426 43,248,537

Components and spare parts 49,479,499 10,052,788

Capital Goods 454,026,881 1,178,309,785

13. Expenditure in Foreign Currency-


Interest on ECB 66,927,658 3,399,851

Professional / Consultation fees 16,407,139 1,607,796

Other Matters 63,940,625 75,299,779

14. Pursuant to the Employees Stock Options Scheme established by the holding Company (i.e. Larsen & Toubro Limited), stock options were granted to the employees of the Company. Total cost incurred by the holding Company, in respect of the same is R 46,835,695 (Prev. Year R 46,492,176). The same is being recovered over the period of vesting by the holding Company. Accordingly, cost of R 33,374,018 (P.Y. R 24,218,659) has been recovered by the holding Company upto current year, out of which, R 9,155,359 (P.Y. R 14,690,917) was recovered during the year. Balance R 13,461,677 (Prev. Year R 22,273,517) will be recovered in future periods.

15. The Company has amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 (MSED Act) as at March 31, 2013. The disclosure pursuant to that Act is as under-


Principal amount due to suppliers 23,598,969 33,999,389

Interest accrued, due but not paid 101,498 –

Payment made beyond the appointed date 27,537,921 15,247,384

Interest paid suppliers under MSMED (other than Sec:16) – –

Interest paid suppliers under MSMED (Sec:16) 510,684 72,522

Interest due & payable towards the suppliers under MSMED Act for payments already made – –

Interest accrued& remaining unpaid at the end of the year 101,498 –

16. Details of sales and raw materials: a) Details of Sales (Net) & Servicing Income:

Class of Goods 2012-13

Heavy Forgings 117,869,668

Ingots 6,105,455

Molten Metal 15,380,250

Servicing Income 1,363,763

Total 140,719,136

b) Details of Raw materials consumed:

Class of goods 2012-13

Heavy melting scrap 129,142,138

DRI 86,742,569

Ferro alloys 137,787,576

All others 55,714,236

Total 409,386,519


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c) Classification of goods:

Classification of goods2012-13

% of Total consumption R

Imported 31% 126,390,951

Indigenous 69% 282,995,568

Total 100% 409,386,519

d) Details of Work-in-progress:

Class of goods 2012-13 2011-12

Ingots 73,326,714 –

Forgings in progress 365,732,300 –

Total 439,059,014 –

17. Disclosure pertaining Share application money pending allotment:

There is no application money received pending allotment of shares.

18. Figures for the previous year have been re-grouped where necessary.





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