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Larsen & Toubro

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Auditor's Report (Larsen & Toubro) Year End : Mar '16
We have audited the accompanying standalone financial statements of
 Larsen & Toubro Limited (the Company), which comprise the Balance
 Sheet as at March 31, 2016, the Statement of Profit and Loss and the
 Cash Flow Statement for the year then ended, and a summary of the
 significant accounting policies and other explanatory information.
 
 Management''s Responsibility for the Standalone Financial Statements
 
 The Company''s Board of Directors is responsible for the matters stated
 in Section 134(5) of the Companies Act, 2013 (the Act) with respect
 to the preparation of these standalone 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 principles
 generally accepted in India, including the Accounting Standards
 prescribed under section 133 of the Act, as applicable.
 
 This responsibility also includes maintenance of adequate accounting
 records in accordance with the provisions of the Act for safeguarding
 the assets of the Company and for preventing and detecting frauds and
 other irregularities; selection and application of appropriate
 accounting policies; making judgments and estimates that are reasonable
 and prudent; and design, implementation and maintenance of adequate
 internal financial controls, that were operating effectively for
 ensuring the accuracy and completeness of the accounting records,
 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.
 
 Auditors'' Responsibility
 
 Our responsibility is to express an opinion on these standalone
 financial statements based on our audit.
 
 We have taken into account the provisions of the Act, the accounting
 and auditing standards and matters which are required to be included in
 the audit report under the provisions of the Act and the Rules made
 thereunder and the Order under section 143 (11) of the Act.
 
 We conducted our audit of the standalone financial statements in
 accordance with the Standards on Auditing specified under Section
 143(10) of the Act. Those Standards require that we comply with ethical
 requirements and plan and perform the audit to obtain reasonable
 assurance about whether the financial statements are free from material
 misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements.  The
 procedures selected depend on the auditors'' 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 auditors'' considers internal financial control
 relevant to the Company''s preparation of the financial statements that
 give a true and fair view in order to design audit procedures that are
 appropriate in the circumstances. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, 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 on the standalone
 financial statements.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as
 at March 31, 2016, and its profit and its cash flows for the year ended
 on that date.
 
 Other Matters
 
 a) The Standalone financial statements include the financial
 statements/information of 9 jointly controlled entities whose financial
 statements/financial information reflect the Company''s share in net
 assets of v 474.73 crore as at March 31, 2016 and share in profit (net)
 v 221.15 crore for the year ended on that date. The financial
 statements/information of these jointly controlled entities have been
 audited by the auditors of jointly controlled entities whose reports
 have been furnished to us, and our opinion in so far as it relates to
 the amounts and disclosures included in respect of these jointly
 controlled entities, is based solely on the report of such auditors of
 jointly controlled entities.
 
 b) The Standalone financial statements include the financial
 statements/information of 7 jointly controlled entities whose financial
 statements/financial information reflect the Company''s share in net
 assets of v 296.62 crore as at March 31, 2016 and share in profit (net)
 v 24.79 crore for the year ended on that date. These financial
 statements/information have been furnished to us by management and our
 opinion on the standalone financial statements, in so far as it relates
 to the amounts and disclosures included in respect of these jointly
 controlled entities is based solely on such financial
 statements/information certified by management. In our opinion and
 according to the information and explanations given to us by the
 management, these financial statements are not material to the Company.
 
 Our opinion is not modified in respect of these matters.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by Section 143 (3) of the Act, we report that:
 
 a) We have sought and 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 it appears from our examination of those
 books.
 
 c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement dealt with by this Report are in agreement with the
 books of account.
 
 d) In our opinion, the aforesaid standalone financial statements comply
 with the Accounting Standards prescribed under section 133 of the Act,
 as applicable.
 
 e) On the basis of the written representations received from the
 directors as on March 31, 2016 taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2016
 from being appointed as a director in terms of Section 164 (2) of the
 Act.
 
 f) With respect to the adequacy of the internal financial controls over
 financial reporting of the Company and the operating effectiveness of
 such controls, refer to our separate Report in Annexure A. Our report
 expresses an unmodified opinion on the adequacy and operating
 effectiveness of the Company''s internal financial controls over
 financial reporting.
 
 g) With respect to the other matters to be included in the Auditors''
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in our opinion and to the best of our information and
 according to the explanations given to us:
 
 i.  The Company has disclosed the impact of pending litigations on its
 financial position in its financial statements;
 
 ii.  The Company has made provision, as required under the applicable
 law or accounting standards, for material foreseeable losses, if any,
 on long-term contracts including derivative contracts; and
 
 iii.  There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2016 (the
 Order) issued by the Central Government in terms of Section 143(11) of
 the Act, we give in Annexure B a statement on the matters specified
 in paragraphs 3 and 4 of the Order.
 
 ANNEXURE B TO THE INDEPENDENT AUDITORS'' REPORT
 
 (Referred to in paragraph 2 under ''Report on Other Legal and Regulatory
 Requirements'' section of our report of even date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a program of verification of fixed assets to cover
 all the items in a phased manner over a period of 3 years which, in our
 opinion, is reasonable having regard to the size of the Company and the
 nature of its assets. Pursuant to the program, certain fixed assets
 were physically verified by the Management during the year. According
 to the information and explanations given to us, no material
 discrepancies were noticed on such verification.
 
 (c) According to the information and explanations given to us and the
 records examined by us and based on the examination of the registered
 sale deed / transfer deed / conveyance deed provided to us, we report
 that, the title deeds, comprising all the immovable properties of land
 and buildings (including land whose title deed have been pledged as
 security against debentures issued by the Company), are held in the
 name of the Company as at the balance sheet date, except the following:
  
                                                               Rs. crore
 
 Type of 
 asset      Total no. of   Leasehold /   Gross 
                                         block 
                                         as at   Net 
                                                 block
                                                 as at   Remarks
            cases          freehold      March
                                         31,
                                         2016    March 
                                                 31, 
                                                 2016
 
 Land           2          Freehold       0.27    0.27   Conveyance deed 
                                                         pending to be
                                                         executed.
 
 Buildings     16          Freehold       3.94    1.43   Conveyance deed
                                                         pending to be 
                                                         executed.
 
 In respect of immovable properties of land and buildings that have been
 taken on lease and disclosed as fixed asset in the financial
 statements, the lease agreements are in the name of the Company, where
 the Company is the lessee in the agreement.
 
 (ii) As explained to us, the inventories were physically verified
 during the year by the Management at reasonable intervals and no
 material discrepancies were noticed on physical verification.
 
 (iii) According to the information and explanations given to us, the
 Company has granted loans, secured or unsecured, to companies, firms,
 Limited Liability Partnerships or other parties covered in the register
 maintained under section 189 of the Companies Act, 2013, in respect of
 which:
 
 (a) The terms and conditions of the grant of such loans are, in our
 opinion, prima facie, not prejudicial to the Company''s interest.
 
 (b) The schedule of repayment of principal and payment of interest has
 been stipulated and repayments or receipts of principal amounts and
 interest have been regular as per stipulations.
 
 (c) There is no overdue amount remaining outstanding as at the balance
 sheet date.
 
 (iv) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 185 and 186 of the Companies Act, 2013 in respect of grant of loans,
 making investments and providing guarantees and securities, as
 applicable.
 
 (v) According to the information and explanations given to us, the
 Company has not accepted any deposit during the year and hence
 reporting under clause (v) of CARO 2016 is not applicable to the
 Company.
 
 (vi) The maintenance of cost records has been specified by the Central
 Government under section 148(1) of the Companies Act, 2013.  We have
 broadly reviewed the cost records maintained by the Company pursuant to
 the Companies (Cost Records and Audit) Rules, 2014, as amended
 prescribed by the Central Government under sub-section (1) of Section
 148 of the Companies Act, 2013, and are of the opinion that, prima
 facie, the prescribed cost records have been made and maintained. We
 have, however, not made a detailed examination of the cost records with
 a view to determine whether they are accurate or complete.
 
 (vii) According to the information and explanations given to us, in
 respect of statutory dues:
 
 (a) The Company has been generally regular in depositing undisputed
 statutory dues, including Provident Fund, Employees'' State Insurance,
 Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value
 Added Tax, cess and other material statutory dues applicable to it to
 the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Provident
 Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax,
 Customs Duty, Excise Duty, Value Added Tax, cess and other material
 statutory dues in arrears as at March 31, 2016 for a period of more
 than six months from the date they became payable.
 
 (c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs
 Duty, Excise Duty, and Value Added Tax which have not been deposited as
 on March 31, 2016 on account of disputes are given below:
 
 Name of            Nature of Dues                      Forum where
 Statute                                                Dispute is
                                                        Pending
 
 Central Sales      Taxability of sub-contractor 
                    turnover,                           Supreme Court
 Tax Act, Local     rate of tax for declared goods,
 Sales Tax Acts     inter-state sales and non-
                    submission
 and Works          of forms
 Contract Tax       Dispute regarding question of       High Court
 Act                law, non-submission of forms,
                    classification dispute, tax
                    deducted at source at lower rate,
                    sales in transit, high seas sales, 
                    labour turnover, local VAT, rate 
                    of tax on declared goods and 
                    other matters.
 
                    Non-submission of forms,            Sales Tax/ VAT
                    classification disputes,
                    disallowance                        Tribunal
                    of sales occasioning import, 
                    arbitrary demand raised, 
                    sub-contractors turnover 
                    disallowed, pumping and
                    freight charges, inter-state
                    sales turnover, tax deducted 
                    at source disallowed, rates 
                    of tax of declared goods, 
                    classification dispute,
                    disallowance of Entry tax and
                    other matters.
 
                    Dispute regarding question of       Commissioner
                    law, non-submission of forms,      (Appeal)
                    classification dispute, 
                    disallowance                        Commissioner 
                    of setoff, sales in transit 
                    and high seas sales, and other 
                    matters.
 
                    Non Submission of Forms and 
                    other                               Additional/ 
                    matters.                            Assistant
                                                        Commissioner
 
                    Dispute regarding question of       Joint
                    law, non-submission of forms,       Commissioner
                    classification dispute and
                    disallowances made for credit 
                    notes and occasioning imports,
                    Input credit reversals, sales in
                    transit, high seas sales, 
                    deficiency in documents, local 
                    VAT, rate of tax on declared
                    goods and other matters.
 
                    Non-submission of forms, 
                    additional                          Deputy 
                    demands for pending forms,
                    rate of                             Commissioner 
                    tax dispute, disallowance 
                    of branch                          (Appeal)
                    transfer, sub-contractors 
                    turnover, considering supply 
                    agreement as Works Contract 
                    Tax, disallowance of sales in 
                    transit, stock transfer and 
                    other matters.
 
                    Non-submission of forms,            Assessing/
                    disallowance of sales occasioning   Commercial 
                    imports, rate of tax dispute,       Tax Officer
                    deficiency in documents, sales in 
                    transit, high seas sales and other
                    matters.
 
 The Central        Excise Duty dispute on site mix     Supreme Court
 Excise Act,        concrete & PSC grinder.
 1944, Service
                    Export rebate claim, service tax on High Court 
 Tax under          commercial construction services, 
 Finance Act,       service tax liability against rate 
 1994               change and penalty imposed for
                    wrong availment of CENVAT credit.
 
                    Demand of excise duty on            CESTAT
                    Fabrication of Cable tray supports/ 
                    ED exemption/ Export rebate 
                    disallowance / Service Tax on 
                    Business Auxiliary Services/
                    Valuation Dispute pertaining to 
                    Excise/ Duty on Supply of Bolts & 
                    nuts/ GTA services, site jobs, 
                    export rebate disallowance, MRP 
                    valuation disputes, CENVAT credit 
                    availed, non-maintenance of 
                    separate records, and other matters.
 
                    Disallowance of CENVAT credit,      Commissioner
                    excise duty refund, excise duty    (Appeal)
                    on site jobs, short payment of      Additional/ 
                    service tax, service tax rate 
                    dispute,                            Assistant 
                    valuation dispute and other
                    matters.                            Commissioner
 
                    Disallowance of CENVAT Credit.      Commissioner
                                                       (Appeal)
 
 Income-tax         Assessment under section 143(3),    ITAT 
 Act, 1961          Assessment under section 143(3)
                    read with section 147, Assessment
                    under section 143(3) read with
                    section 144C(13) and demand of
                    tax deducted at source on Internet
                    Charges, Reimbursement of Data
                    card expenses and Bank Guarantee
                    Charges.  
 
 
 Name of Statute    Period to which              Amount       Amount
                    Amount Relates               Involved     Unpaid
                                                (Rs. crore)  (Rs. crore)
 
 Central Sales Tax 
 Act                1991-92, 1995-96,              15.53        3.19
                    1997-98, 1999-00 to 2006-07
 
                    1986-87 to 1999-00,            65.23       48.51
                    2005-06 to 2010-11, 2012-13
 
                    1989-90 to 2012-13            373.09      326.54
 
                    2003-04 to 2011-12             16.42       15.77
 
                    2008-09, 2010-11,               7.01        4.57 
                    2011-12
 
                    1995-96 to 2012-13             16.32       15.11
 
                    1994-95 to 2013-14            139.92       91.71
 
                    1996-97 to 2013-14          1,541.53    1,493.20
 
                    1999-00 to 2015-16            486.02      484.76
 
 The Central 
 Excise Act, 1944   1997-98                         0.97        0.27
 
                    2003-04, Oct 2005 to           42.48       42.48 
                    Aug 2007
 
                    1991-92 to 2014-15            611.84      608.98
 
                    2006-07 to 2014-15              4.73        4.55
 
                    2015-16                         0.14        0.14
 
                    2003-04 to 2011-12              3.94        3.80
 
 Income Tax Act, 
 1961               2002-03, 2003-04,           1,462.11      833.77 
                    2006-07 to 2010-11
 
 (viii) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of loans or
 borrowings to financial institutions, banks and government and dues to
 debenture holders.
 
 (ix) In our opinion and according to the information and explanations
 given to us, the Company has not raised money by way of initial public
 offer or further public offer (including debt instruments) and money
 raised by way of the term loans have been applied by the Company during
 the year for the purposes for which they were raised.
 
 (x) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no material fraud
 on the Company by its officers or employees has been noticed or
 reported during the year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has paid / provided managerial remuneration in
 accordance with the requisite approvals mandated by the provisions of
 section 197 read with Schedule V to the Companies Act, 2013.
 
 (xii) The Company is not a Nidhi Company and hence reporting under
 clause (xii) of the CARO 2016 is not applicable.
 
 (xiii) In our opinion and according to the information and explanations
 given to us the Company is in compliance with Section 188 and 177 of
 the Companies Act, 2013, where applicable, for all transactions with
 the related parties and the details of related party transactions have
 been disclosed in the financial statements etc. as required by the
 applicable accounting standards.
 
 (xiv) According to the information and explanations given to us, during
 the year the Company has not made any preferential allotment or private
 placement of shares or fully or partly convertible debentures and hence
 reporting under clause (xiv) of CARO 2016 is not applicable to the
 Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, during the year the Company has not entered into any
 non-cash transactions with its directors or persons connected with him
 and hence provisions of section 192 of the Companies Act, 2013 are not
 applicable.
 
 (xvi) The Company is not required to be registered under section 45-IA
 of the Reserve Bank of India Act, 1934.
 
 For DELOITTE HASKINS & SELLS LLP     For SHARP & TANNAN
 
 Chartered Accountants                Chartered Accountants
 
 (Firm Registration No. 117366W/
 W-100018)                           (Firm Registration No. 109982W)
 
 P. R. RAMESH                         FIRDOSH D. BUCHIA
 
 (Partner)                           (Partner)
 
 (Membership No. 70928)              (Membership No. 38332)
 
 MUMBAI, May 25, 2016
Source : Dion Global Solutions Limited
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