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Larsen and Toubro
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« Mar 14
Auditor's Report (Larsen and Toubro) Year End : Mar '15
We have audited the accompanying standalone financial statements of
 Larsen & Toubro Limited (the Company), which comprise the balance
 sheet as at 31 March 2015, the statement of profit and loss, 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
 specified under section 133 of the Act, read with Rule 7 of the
 Companies (Accounts) Rules, 2014. 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.
 
 Auditor''s 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.
 
 We conducted our audit 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 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 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, but not for the purpose of expressing
 an opinion on whether the Company has in place an adequate internal
 financial controls system over financial reporting and the operating
 effectiveness of such controls. 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 31 March 2015, and its profit and its 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, 2015 (the
 Order) issued by the central government of India in terms of
 sub-section (11) of section 143 of the Act, we give in the Annexure a
 statement on the matters specified in paragraphs 3 and 4 of the Order.
 
 2 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 specified under section 133 of the
 Act, read with rule 7 of the Companies (Accounts) Rules, 2014.
 
 (e) On the basis of the written representations received from the
 directors as on 31 March 2015 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March 2015
 from being appointed as a director in terms of section 164 (2) of the
 Act.
 
 (f) With respect to the other matters to be included in the Auditor''s
 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 - refer notes I, note
 (II) in Q(16) and Q(17) to the 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 - refer notes
 C(II), D(IV) and Q(7)(a) to the financial statements; and
 
 iii. There has been no delay in transferring amounts required to be
 transferred to the Investor Education and Protection Fund by the
 Company.
 
 Annexure to the Independent Auditors'' report (Referred to paragraph (1)
 under ''Report on other legal and regulatory requirements'' of our report
 of even date)
 
 1 (a) The Company is maintaining proper records to show full
 particulars including quantitative details and situation of all fixed
 assets.
 
 (b) We are informed that the Company has formulated a programme of
 physical verification of all the fixed assets over a period of three
 years which, in our opinion, is reasonable having regard to the size of
 the Company and nature of its assets. Accordingly, the physical
 verification of the fixed assets has been carried out by management
 during the year and no material discrepancies were noticed on such
 verification.
 
 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 According to the information and explanations given to us, there are
 no companies, firms and other parties covered in the register
 maintained under section 189 of the Companies Act, 2013. Accordingly,
 paragraphs 3(iii)(a) and (b) 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 and 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, the
 Company has not accepted deposits from the public and accordingly,
 paragraph 3(v) of the Order is not applicable.
 
 6 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 148(1) of
 the Companies Act, 2013 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.
 
 7 (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, employees state insurance, income-tax, sales-tax,
 wealth tax, service tax, duty of customs, duty of excise, value added
 tax, 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, employees state insurance, income-tax, sales-tax,
 wealth tax, service tax, duty of customs, duty of excise, cess and
 other statutory dues outstanding as at 31 March 2015 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 income-tax,
 sales-tax, wealth tax, service tax, duty of custom, duty of excise,
 value added tax or cess as at 31 March 2015 which have not been
 deposited on account of a dispute pending are as under:
 
 Name of the        Nature of the disputed dues                Amount
 statute                                                      Rs. crore*
 
 Central Sales 
 Tax             Taxability of sub-contractor turnover,
                  rate of tax  for                              3.20
 Act, Local 
 Sales Tax       declared goods, inter-state sales and non-
                 submission of Acts and Works forms
 
 Contract Tax 
 Act             Dispute regarding question of law, 
                 non-submission of                            260.26
                 forms, classification dispute, tax deducted 
                 at source at lower rate, sales in transit, 
                 high seas sales, labour turnover, local VAT, 
                 local WCT, rate of tax on declared
                 goods and other matters
 
                 Non-submission of forms, classification 
                 disputes,                                    344.55
                 disallowance 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 WCT and other matters
 
                 Forms submitted but rejected by Assessing
                 Officer                                        0.78
 
 
 
 
 
 Name of the
 statute         Period to which the amount relates  Forum where disputes
                                                      are pending
 
 Central Sales Tax
 Act, Local Sales Tax
 Acts and Works
 Contract Tax Act   1991-92, 1995-96, 1997-98,     
                    1999-2000                        Supreme Court
                    to 2005-06
 
                    1986- 87 to 2011-12              High Court
 
                    1987- 88 to 1991-92, 1994-95 
                     to 2011-12                      Sales Tax Tribunal
 
                    2008-09                          Commissioner
                                                      (Appeals)
 
 
 
 Name of the        Nature of the disputed dues                Amount
 statute                                                      Rs. crore*
 
                    Non-submission of forms                    13.92
 
                    Non-submission of forms, disallowance
                    of sales in transit,                      158.19
                    high seas sales, sales occasioning 
                    imports and other matters
 
                    Non-submission of forms, additional 
                    demands for                               986.17
                    pending forms, rate of tax dispute, 
                    disallowance of branch transfer, 
                    sub-contractors turnover, interest
                    demand on road permit, disallowance of 
                    sales in transit, sales occasioning 
                    imports and other matters
 
                    Non-submission of forms, disallowance
                    of sales                                    1.83
                    occasioning imports, rate of tax dispute
                    and other matters
 
                    Non-submission of forms and dispute 
                    related to sales                            1.73
                    in transit
 
 The Central Excise Dispute of excise duty on site mix 
                    concrete and PSC                            0.27
 Act, 1944,         Service grinder
 
 Tax under Finance  Demand of excise duty on site fabricated
                    steel structures,                         565.06
  Act, 1994         export rebate disallowance, valuation 
                    disputes, excise duty on concrete mix made 
                    at site, non-maintenance of
                    separate records and other matters
 
                    Disallowance of cenvat credit, excise
                    duty refund, short                          1.76
                    payment of service tax, excise duty on
                    concrete mix made at site, service tax 
                    rate dispute and other matters
 
                    Export rebate claim, service tax on 
                    commercial                                 42.48
                    construction services, service tax 
                    liability against rate change and penalty 
                    imposed for wrong availment of cenvat credit
 
                    Demand of service tax including penalty, 
                    interest on                                15.24
                    lump-sum turnkey jobs, demand of penalty 
                     on late payment of service tax and other 
                    matters
 
 Income-tax Act,    Assessment under section 143(3) read with
                    section                                   454.90
 1961               144C(13) and demand of tax deducted at
                    source on bank guarantee charges and 
                    internet charges Dispute regarding tax 
                    deducted at source at lower rates           0.05
 
 
 Name of the
 statute         Period to which the amount relates  Forum where disputes
                                                      are pending
 
 
                 1995-96, 1997-98, 2001-02 to 
                 2004-05,                         Additional Commissioner
                 2006-07 to 2012-13                (Appeals)
 
                 1997-98, 1999-2000, 2001-02, 
                 2003-04                          Joint Commissioner
                 to 2011-12                       (Appeals)
 
                 1991-92, 1992-93, 1994-95, 
                 1996-97,                         Deputy Commissioner
 
                 1997-98, 1999-2000 to 2013-14    (Appeals)
 
                 1991-92, 1992-93, 1996-97 to 
                 2005-06                          Assistant Commissioner
                 and 2008-09                      (Appeals)
 
                 1994-95 to 2014-15               Commercial Tax Officer
 
 The Central Excise
 Act, 1944, Service
 Tax under Finance
 Act, 1994       1997-98                          Supreme Court
 
                 1991-92, 2001-02 to 2011-12      CESTAT
 
                 2006- 07, 2008-09 to 2012-13
                 and 2014-15                      Commissioner (Appeals)
 
                 2003- 04, 2005-06 and 2006-07    High Court
 
                 2004- 05 to 2010-11              CESTAT
 
 Income-tax Act,
 1961            2007- 08 to 2012-13              ITAT
 
                 2005- 06                         Commissioner (Appeals)
 
 *Net of pre-deposit paid in getting the stay/appeal admitted
 
 (c) The amounts required to be transferred to the investor education
 and protection fund in accordance with the relevant provisions of the
 Companies Act, 1 956 (1 of 1 956) and rules made thereunder are
 transferred to such fund within time.
 
 8 The Company has no accumulated losses as at 31 March 2015 and it has
 not incurred cash losses in the financial year ended on that date or in
 the immediately preceding financial year.
 
 9 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.
 
 10 I n 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 others from banks or financial institutions
 are prima facie not prejudicial to the interests of the Company.
 
 11 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.
 
 12 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
 
 Membership No.33013
 
 Mumbai, May 30, 2015     
 
 
 
Source : Dion Global Solutions Limited
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