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Larsen and Toubro Directors Report, Larsen Reports by Directors
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Larsen and Toubro
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Download Annual Report PDF Format 2014 | 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '14    « Mar 13
The Directors have pleasure in presenting their Annual Report and
 Accounts for the year ended March 31, 2014.
 
 FINANCIAL RESULTS
 
                                            2013-14     2012-13
                                                       (Restated#) 
                                            Rs.crore   Rs. crore
 
 Profit before depreciation, exceptional
 and extraordinary items and tax            7,471.83     6,405.68
 
 Less: Depreciation, amortisation and
 obsolescence                                 793.36       728.69
 
                                            6,678.47     5,676.99
 
 Add: Transfer from Revaluation Reserve         0.94         0.95
 
 Profit before exceptional and
 extraordinary items and tax                 6,679.41    5,677.94
 
 Add: Exceptional items                        588.50      176.24
 
 Profit before extraordinary items and tax   7,267.91    5,854.18
 
 Add: Extraordinary items                       78.11
 
 Profit before tax                           7,267.91    5,932.29
 
 Less: Provision for Tax                     1,774.78    1,547.80
 
 Profit after Tax from continuing
 
 operations                                  5,493.13    4,384.49
 
 Profit from discontinued operations           778.86
 
 Tax expenses on discontinued operations       252.70
 
 Profit from discontinued operations
 
 (after tax)                                   526.16
 
 Profit for the period carried to Balance
 
 Sheet                                       5,493.13   4,910.65
 
 Add: Balance brought forward from
 
 previous year                                 285.75     152.39
 
 Less: Dividend paid for the previous year 
 (including dividend
 distribution tax)                               2.78       2.71
 
 Balance available for disposal              5,776.10   5,060.33
 
 (which the directors appropriate as
 follows): Debenture Redemption Reserve         44.00      50.25
 
 Proposed Dividend                           1,320.85   1,138.47
 
 Dividend Tax                                   77.80      85.86
 
 General Reserve                             4,000.00   3,500.00
 
                                             5,442.65   4,774.58
 
 Balance to be carried forward                 333.45     285.75
 
 Dividend                                    1,320.85   1,138.47
 
 The Directors recommend payment of 
 final dividend of ? 14.25 per equity
 share of X 2/- each on                  92,69,12,658 
 shares.
 
 # The figures for the year ended March 31, 2013 have been restated as
 per the requirement of Accounting Standard (AS) 24 to exclude the
 financial results of erstwhile Hydrocarbon business undertaking.
 
 YEAR IN RETROSPECT
 
 The gross sales and other income for the financial year under review
 were ? 59,045 crore as against ? 54,083 crore for the previous
 financial year registering an increase of 9%.  The Profit before tax
 from continuing operations including extraordinary and exceptional
 items was X 7,268 crore and the Profit after tax from continuing
 operations including extraordinary and exceptional items of ? 5,493
 crore for the financial year under review as against ? 5,932 crore and
 ? 4,385 crore respectively for the previous financial year, registering
 an increase of 23% and 25% respectively.
 
 TRANSFER OF HYDROCARBON BUSINESS
 
 During the year, the Company completed the transfer of it’s Hydrocarbon
 Independent Company undertaking along with related assets, liabilities
 and specific identified reserves through a Scheme of Arrangement
 between Larsen & Toubro Limited and L&T Hydrocarbon Engineering
 Limited, a wholly owned subsidiary of the Company (“LTHE”) and their
 respective Shareholders and Creditors under the provisions of Sections
 391 to 394 of the Companies Act, 1956. The Appointed Date of the Scheme
 was April 1, 2013 and the Effective Date was January 16, 2014.
 
 DIVIDEND
 
 The Directors recommend payment of dividend of X 14.25 per equity share
 of ? 2/- each on the share capital.
 
 DEPOSITORY SYSTEM
 
 As the members are aware, the Company’s shares are compulsorily
 tradable in electronic form. As on March 31, 2014, 97.58% of the
 Company’s total paid-up Capita representing 90,44,84,644 shares are in
 dematerialized form. In view of the numerous advantages offered by the
 Depository system, members holding shares in physical mode are advised
 to avail of the facility of dematerialization from either of the
 Depositories.
 
 CAPITAL & FINANCE
 
 During the year under review, the Company allotted 32,32,101 equity
 shares upon exercise of stock options by the eligible employees under
 the Employee Stock Option Schemes.
 
 The shareholders of the Company approved the issue of bonus shares in
 the ratio of 1:2 through postal ballot on July 3, 2013. The Company
 accordingly issued 30,82,94,576 bonus shares on July 15, 2013.
 
 During the year under review, the Company raised ? 100 crore via
 issuance of Non-Convertible Debentures. Further, the Company has drawn
 down long term foreign currency loans in USD equivalent to
 approximately ? 296 crore. The Company also refinanced its foreign
 currency loans of approximately US$ 360 million in order to reduce its
 interest cost.
 
 During the year, the Company repaid a part of its long term foreign
 currency loans, equivalent to about ? 775 crore and redeemed
 Non-Convertible Debentures of ? 500 crore.
 
 CAPITAL EXPENDITURE
 
 As at March 31, 2014, the gross fixed and intangible assets, ncluding
 leased assets, stood at ? 12,226 crore and the net fixed and intangible
 assets, including leased assets, at ? 8,237 crore. Capital expenditure
 during the year amounted to ? 1,015 crore.
 
 DEPOSITS
 
 There are no deposits which were due for repayment on or before March
 31, 2014. All unclaimed deposits were transferred to Investor Education
 & Protection Fund during the year.
 
 TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
 
 The Company sends letters to all shareholders whose dividends are
 unclaimed so as to ensure that they receive their rightful dues.
 Efforts are also made in co-ordination with the Registrar to locate the
 shareholders who have not claimed their dues.
 
 During the year, the Company has transferred a sum of ? 94,49,482 to
 Investor Education & Protection Fund, the amount which was due &
 payable and remained unclaimed and unpaid for a period of seven years,
 as provided in Section 205C(2) of the Companies Act, 1956. Despite the
 reminder letters sent to each shareholder, this amount remained
 unclaimed and hence was transferred. Cumulatively, the amount
 transferred to the said Fund was ? 11,58,07,343 as on March 31, 2014.
 
 SUBSIDIARY COMPANIES
 
 During the year under review, the Company subscribed to / acquired
 equity / preference shares in various subsidiary companies. These
 subsidiaries include SPVs executing projects secured through Build
 Operate Transfer (BOT) route, companies in shipbuilding, technology
 services or holding companies making investments in companies such as
 those engaged in power, financial services, real estate businesses,
 etc. The details of investments in subsidiary companies during the year
 are as under:
 
 A) Shares acquired during the year- 
 
 Name of the company              Type of 
                                  Shares           No. of shares
 
 L&T Construction 
 Equipment Limited                Equity          6,00,00,000
 
 (see Note 1)
 
 L&T General Insurance 
 Company Limited                  Equity          8,00,00,000
 
 L&T Hydrocarbon Engineering 
 Limited                          Equity        100,00,00,000
 
 L&T Hydrocarbon Engineering 
 Limited                          Preference     50,00,00,000
 
 Name of the 
 company                        Type of
                                Shares            No. of shares
 
 L&T Infrastructure 
 Development Projects           Special Equity         10,000
 Limited
 
 L&T Metro Rail (Hyderabad) 
 Limited                        Equity              62,53,980
 
 L&T-MHI Turbine Generators 
 Private Limited                Equity            2,04,00,000
 
 L&T Power Development Limited  Equity           93,03,00,000
 
 L&T Seawoods Private Limited   Equity          150,50,90,000
 
 L&T Shipbuilding Limited       Preference        9,00,00,000
 
 L&T Special Steels and Heavy 
 Forgings                       Equity            1,96,84,000
 
 Private Limited
 
 L&T Technology Services 
 Limited                        Equity           10,24,50,000
 
 L&T Technology Services 
 Limited                        Preference       40,00,00,000
 
 Larsen & Toubro Hydrocarbon    Equity                    450
 
 International Limited LLC
 
 B) Equity Shares sold / transferred during the year:
 
 Name of the company                           Number of shares
 
 Narmada Infrastructure 
 Construction Enterprise                        1,26,48,507
 Limited
 
 L&T Finance Holdings Limited (See Note 2)     10,04,34,612
 
 Note:
 
 1.  During the year, the Company acquired 50% stake in L&T Construction
 Equipment Limited (formerly known as L&T-Komatsu Limited) from the JV
 partner. With this acquisition, L&T Construction Equipment Limited is
 now a wholly owned subsidiary of the Company.
 
 2.  The Company has to comply with the SEBI minimum public shareholding
 requirement in L&T Finance Holdings Limited by August 2014. Towards
 meeting this objective, it has sold shares of L&T Finance Holdings
 Limited during the year.
 
 The Ministry of Corporate Affairs (MCA), vide it’s circular No. 2/2011
 dated February 8, 2011, has granted general exemption under Section
 212(8) of the Companies Act, 1956, subject to certain conditions being
 fulfilled by the Company. As required under the circular, the Board of
 Directors has, at its meeting held on January 22, 2014, passed a
 resolution giving consent for not attaching the Balance Sheet of the
 subsidiary companies. We have also given the required information on
 subsidiary companies in this Annual Report. Shareholders who wish to
 have a copy of the full report and accounts of the subsidiaries will be
 provided the same on receipt of a written request from them. These
 documents will be uploaded on the Company’s Website viz.
 www.Larsentoubro.com and will also be available for inspection by any
 shareholder at the Registered Office of the Company, on any working day
 during business hours.
 
 AUDITORS’ REPORT
 
 The Auditors’ Report to the Shareholders does not contain any
 qualification.
 
 DISCLOSURE OF PARTICULARS
 
 Information as per the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988, relating to Conservation of
 Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is
 provided in Annexure ‘A’ forming part of this Report.
 
 OTHER DISCLOSURES
 
 The disclosures required to be made under the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999, together with a certificate obtained
 from the Statutory Auditors, confirming compliance, is provided in
 Annexure ‘B’ forming part of this Report.
 
 Pursuant to Clause 49 of the Listing Agreement entered into with the
 Stock Exchanges, a Report on Corporate Governance and a certificate
 obtained from the Statutory Auditors confirming compliance, is provided
 in Annexure ‘C’ forming part of this Report.
 
 PERSONNEL
 
 The Board of Directors wishes to express its appreciation to all the
 employees for their outstanding contribution to the operations of the
 Company during the year. The information required under Section 217(2A)
 of the Companies Act, 1956 and the Rules made thereunder, is provided
 in Annexure forming part of the Report. In terms of Section 219(1)(b)
 (iv) of the Act, the Report and Accounts are being sent to the
 shareholders excluding the aforesaid Annexure. Any Shareholder
 interested in obtaining copy of the same may write to the Company
 Secretary. None of the employees listed in the said Annexure is related
 to any Director of the Company.
 
 BUSINESS RESPONSIBILITY REPORTING
 
 As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
 separate section on Business Responsibility Reporting forms a part of
 this Annual Report (refer pages 18-35). The activities carried out by
 the Company as a part of its CSR initiatives during 2013-14 are covered
 in the same.
 
 SUSTAINABILITY REPORTING
 
 The Company has been one of the first engineering and construction
 companies in India to publish its report on Corporate Sustainability.
 The detailed Corporate Sustainability Report is also available on the
 Company’s website www.Larsentoubro.com.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 The Board of Directors of the Company confirms:
 
 i. that in the preparation of the annual accounts, the applicable
 Accounting Standards have been followed and there has been no material
 departure;
 
 ii. that the selected accounting policies were applied consistently and
 the Directors made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as at March 31, 2014 and of the profits of the Company for
 the year ended on that date;
 
 iii. that proper and sufficient care has been taken for the maintenance
 of adequate accounting records in accordance with the provisions of 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; and
 
 v. that the Company has adequate internal systems and controls in place
 to ensure compliance of laws applicable to the Company.
 
 DIRECTORS
 
 During the year under review, Mr. N. Mohan Raj, the Nominee Director
 representing ‘Life Insurance Corporation of India’, resigned with
 effect from October 21, 2013. Mr. N. Mohan Raj would have been liable
 for retirement by rotation at the ensuing Annual General Meeting (AGM)
 of the Company.  The said vacancy is not proposed to be filled at the
 ensuing AGM. The Board places on record its appreciation of his immense
 contribution to the Company
 
 Mr. S. Rajgopal and Mr. S. N. Talwar, Independent Directors have
 desired to retire at the ensuing AGM. The Board places on record its
 appreciation of their immense contribution to the Company.
 
 Name of Director         Tenure upto   Remarks
 
 Mr. Subodh               29.03.2017    To retire on attaining
                                        Bhargava age of 75 years as per
                                        Company policy, on 29.03.2017.
 
 Mr. M. M. Chitale        31.03.2019    As per revised Clause
                                        49, for one term of 5 years
                                        from 01.04.2014 to 31.03.2019.
 
 Mr. M. Damodaran         31.03.2019    As per revised Clause 49,
                                        the first term of 5 years is
                                        from 01.04.2014 to 31.03.2019.
 
 Name of Director    Tenure upto   Remarks
 
 Mr. Vikram Singh    31.03.2019    As per revised Clause 49, 
                                   Mehta the first
                                   term of 5 years is from 01.04.2014
                                   to 31.03.2019.
 
 The Board has appointed Mr. Adil Zainulbhai as an Independent Director
 of the Company from May 30, 2014 to May 29, 2019. Mr. Zainulbhai,
 appointed as an Additional Director, will hold office till the ensuing
 AGM and is eligible for re-appointment.
 
 The notice convening the AGM includes the proposal for appointment /
 re-appointment of Directors.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 Your Directors have pleasure in attaching the Consolidated Financial
 Statements pursuant to Clause 32 of the Listing Agreement entered into
 with the Stock Exchanges and prepared in accordance with the Accounting
 Standards prescribed by the Institute of Chartered Accountants of
 India, in this regard.
 
 The Auditors’ Report to the Shareholders does not contain any
 qualification.
 
 AUDITORS
 
 The Auditors, M/s. Sharp & Tannan (S&T), hold office until the
 conclusion of the ensuing Annual General Meeting. As per the provisions
 of the Companies Act, 2013, S&T are eligible to be appointed for a
 maximum further period of 3 years. Certificate from the Auditors has
 been received to the effect that they are eligible to act as auditors
 of the Company under Section 141 of the Companies Act, 2013.  The Board
 recommends the appointment of S&T as Auditors of the Company from the
 conclusion of the ensuing AGM until the conclusion of the next AGM.
 
 S&T has submitted the Peer Review Certificate dated February 6, 2014
 issued to them by Institute of Chartered Accountants of India (ICAI).
 
 COST AUDITORS
 
 The Cost Audit Report from M/s R. Nanabhoy & Co., Cost Accountants for
 FY 2012-13 was filed with MCA on September 23, 2013.
 
 The Company has appointed M/s R. Nanabhoy & Co., Cost Accountants, for
 conducting the audit of cost records of the Company for FY 2013-14, for
 applicable Product Groups covered under Cost Audit Order
 No.52/26/CAB-2010 dated November 6, 2012. The Report of the Cost
 Auditors is under finalization and will be filed within the prescribed
 period.
 
 The Board, on the recommendation of the Audit Committee, has approved
 the appointment and remuneration of M/s R.  Nanabhoy & Co. as the Cost
 Auditors of the Company for the financial year ending March 31, 2015.
 In case of any material revision in scope pursuant to notification of
 the Companies (Cost Audit Report) Rules, 2013, the Audit Committee is
 empowered to finalise the revised remuneration subject to approval by
 the Board. Hence, proposal for ratification of remuneration of the Cost
 Auditor is not being placed in the ensuing Annual General Meeting and
 will be placed before the shareholders subsequently.
 
 ACKNOWLEDGEMENT
 
 Your Directors take this opportunity to thank the customers, supply
 chain partners, employees, Financial Institutions, Banks, Central and
 State Government authorities, Regulatory authorities, Stock Exchanges
 and various stakeholders for their continued co-operation and support
 to the Company.  Your Directors also wish to record their appreciation
 for the continued co-operation and support received from the Joint
 Venture partners / Associates.
 
                                     For and on behalf of the Board
 
                                              A. M. Naik
 
                                      Group Executive Chairman
 
 Mumbai, May 30, 2014
Source : Dion Global Solutions Limited
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