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Larsen and Toubro
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« Mar 13
Auditor's Report (Larsen and Toubro) Year End : Mar '14
Report on the financial statements
 
 We have audited the accompanying financial statements of Larsen &
 Toubro Limited (“the Company”), which comprise the balance sheet as at
 March 31, 2014, and the statement of profit and loss and the cash flow
 statement for the year then ended, and a summary of significant
 accounting policies and other explanatory information.
 
 Management’s responsibility for the financial 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 notified under the Companies Act, 1956 (“the
 Act”) read with the General Circular 15/2013 dated 13 September 2013,
 of the Ministry of Corporate Affairs, in respect of section 133 of the
 Companies Act, 2013. This responsibility includes the design,
 implementation and maintenance of internal control relevant to the
 preparation and presentation of the financial statements that give a
 true and fair view and are free from material misstatement, whether due
 to fraud or error.
 
 Auditor’s 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 misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and disclosures in the financial statements. The procedures
 selected depend on the auditor’s judgment, including the assessment of
 the risks of material misstatement of the financial statements, whether
 due to fraud or error. In making those risk assessments, the auditor
 considers internal control relevant to the Company’s preparation and
 fair presentation of the financial statements in order to design audit
 procedures that are appropriate in the circumstances, but not for the
 purpose of expressing an opinion on the effectiveness of the Company’s
 internal control. 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.
 
 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:
 
 (a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2014;
 
 (b) in the case of the statement of profit and loss, of the profit for
 the year ended on that date; and
 
 (c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Report on other legal and regulatory requirements
 
 1.  As required by the Companies (Auditor’s Report) Order, 2003 (“the
 Order”) issued by the central government of India in terms of
 sub-section (4A) of section 227 of the Act, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 2.  As required by section 227(3) of the Act, we report that:
 
 a.  we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 b.  in our opinion proper books of account as required by law have been
 kept by the Company so far as appears from our examination of those
 books;
 
 c.  the balance sheet, statement of profit and loss and cash flow
 statement dealt with by this Report are in agreement with the books of
 account;
 
 d.  in our opinion, the balance sheet, statement of profit and loss,
 and cash flow statement comply with the Accounting Standards notifed
 under the Act read with the General Circular 15/2013 dated 13 September
 2013, issued by the Ministry of Corporate Affairs, in respect of
 section 133 of the Companies Act, 2013; and
 
 e.  on the basis of written representations received from the directors
 as on March 31, 2014, and taken on record by the board of directors,
 none of the directors is disqualified as on March 31, 2014, from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 section 274 of the Companies Act, 1956.
 
 2 (a) As explained to us, inventories have been physically verified by
 management at reasonable intervals during the year. In our opinion, the
 frequency of such verification is reasonable.
 
 (b) As per the information given to us, the procedures of physical
 verification of inventory followed by management are, in our opinion,
 reasonable and adequate in relation to the size of the Company and the
 nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 3 (a) According to the information and explanations given to us, the
 Company has not granted any loans, secured or unsecured, to companies,
 firms and other parties covered in the register maintained under
 section 301 of the Companies Act, 1956. Accordingly, paragraphs
 4(iii)(b), (c) and (d) of the Order are not applicable.  (b) According
 to the information and explanations given to us, the Company has not
 taken any loans, secured or unsecured from companies, firms and other
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956.  Accordingly, paragraphs 4(iii)(f) and (g) of the
 Order are not applicable.
 
 4 In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control systems.
 
 5 According to the information and explanations given to us, we are of
 the opinion that there are no contracts or arrangements that need to be
 entered in the register maintained under section 301 of the Companies
 Act, 1956; accordingly paragraph 4(v) (b) of the Order is not
 applicable.
 
 6 The Company had accepted deposits from the public and in our opinion
 and according to the information and explanations given to us, the
 directives issued by the Reserve Bank of India and the provisions of
 section 58A and 58AA and the relevant provisions of the Companies Act,
 1956 and rules framed thereunder, where applicable, have been complied
 with. We are informed that no order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 court or any other tribunal. As of the date of the balance sheet, the
 Company has no fixed deposits other than unclaimed matured deposits.
 
 7 In our opinion, the Company has an internal audit system commensurate
 with its size and the nature of its business.
 
 8 We have broadly reviewed the books of account and records maintained
 by the Company pursuant to the rules prescribed by the central
 government for the maintenance of cost records under section 209(1)(d)
 of the Companies Act, 1956 in respect of all its manufacturing and
 construction 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.
 
 9 (a) According to the information and explanations given to us and the
 records of the Company examined by us, in our opinion, the Company is
 generally regular in depositing undisputed statutory dues including
 provident fund, investor education and protection fund, employees state
 insurance, income tax, sales tax, wealth tax, service tax, custom duty,
 excise duty, cess and other material statutory dues as applicable with
 the appropriate authorities.  According to the information and
 explanations given to us, there were no undisputed amounts payable in
 respect of provident fund, investor education and protection fund,
 employees state insurance, income tax, sales tax, wealth tax, service
 tax, custom duty, excise duty, cess and other statutory dues
 outstanding as at 31 March 2014 for a period of more than six months
 from the date they became payable.  (b) According to the information
 and explanations given to us and the records of the Company examined by
 us, the particulars of sales tax, excise duty, service tax, customs
 duty, income tax and profession tax as at 31 March 2014 which have not
 been deposited on account of a dispute pending are as under:
 
 Name of the 
 statute        Nature of the 
                disputed dues                                 Amount
 
                                                              Rs. crore*
 
 Central Sales 
 Tax            Non-submission of forms                        1.46
 Act, Local 
 Sales Tax
 
 Acts and Works Non-submission of forms, dispute related 
                to sales in transit,                           3.56
 
                Contract Tax Act rejection of exemption 
                certificates, rate of tax dispute and 
                other matters
 
                Non-submission of forms, additional demand 
                for pending                                  399.00 
                forms, rate of tax dispute, disallowance of 
                branch transfer, sub-contractor’s
                turnover, interest demand on road permit, 
                disallowance of exemptions on
                sale of assets, transit sale and other 
                matters
 
                Non-submission of forms, disallowance of 
                transit sales, high                           51.65 
                seas
                sales, classification dispute and other 
                matters Non-submission of forms                8.52
 
                Non-submission of forms, dispute 
                related to sales in transit and                0.52
                other matters
 
                Non-submission of forms, labour and
                service charges, sub-                        325.24
                contractors turnover, pumping and 
                freight charges, inter-state
                sales turnover, arbitrary demand 
                raised, TDS disallowed, rate
                dispute, classification dispute, 
                disallowance of works contract
                tax and other matters
 
                Classification dispute,tax deducted at 
                source at lower rate, sales                  259.46
                in transit, local VAT, local WCT, rate 
                of tax of declared goods
 
 Name           Period to which the amount
                relates                         Forum where disputes
                                                are pending
 
 Central Sales 
 Tax            1991-92, 1992-93, 1994-95, 
                1996-97 to 2003-04,             Commercial Tax Officer
                2005-06 to 2009-10
 
                1991-92, 1992-93, 1993-94, 
                1996-97, 1997-98                Assistant Commissioner 
                and 1999-00 to 2011-12         (Appeals)
 
                1989-90, 1991-92 to 2011-12     Deputy
                                                Commissioner(Appeals)
 
                1993-94, 1996-97, 1997-98, 
                1999-00, 2001-02                Joint
                to 2009-10                      Commissioner(Appeals)
 
                1997-98, 2002-03 to 2011-12     Additional
                                                Commissioner(Appeals)
 
                2001-02 to 2004-05, 2006-07 
                and 2008-09                     Commissioner (Appeals)
 
                1987-88, 1989-90 to 2011-12     Sales Tax Tribunal
 
                1986-87, 1987-88, 1998-99 to
                2011-12                         High Court
 
 10 The Company has no accumulated losses as at March 31, 2014 and it
 has not incurred cash losses in the financial year ended on that date
 or in the immediately preceding financial year.
 
 11 According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 12 According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 13 The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 14 In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities. The
 Company has invested surplus funds in marketable securities and mutual
 funds. According to the information and explanations given to us,
 proper records have been maintained of the transactions and contracts
 and timely entries have been made therein. The investments in
 marketable securities and mutual funds have been held by the Company in
 its own name.
 
 15 In our opinion and according to the information and explanations
 given to us, the terms and conditions of guarantees given by the
 Company for loans taken by subsidiary companies from banks or financial
 institutions are not prima facie prejudicial to the interests of the
 Company.
 
 16 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.
 
 17 According to the information and explanations given to us and on an
 overall examination of the balance sheet of the Company, we report that
 no funds raised on short term basis have been used for long term
 investments.
 
 18 The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act, 1956 during the year.
 
 19 According to the information and explanations given to us and the
 records examined by us, security or charge has been created in respect
 of the debentures issued.
 
 20 The Company has not raised any money by public issues during the
 year.
 
 21 During the course of our examination of the books and records of the
 Company, carried out in accordance with the generally accepted auditing
 practices in India, and according to the information and explanations
 given to us, we have neither come across any instances of material
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by management.
 
                                                     SHARP & TANNAN
 
                                              Chartered Accountants
 
                                     Firm’s Registration No.109982W
 
                                                     by the hand of
 
                                                   MILIND P. PHADKE
 
                                                            Partner
 
 Mumbai, May 30, 2014                          Membership No. 33013
Source : Dion Global Solutions Limited
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