DIRECTORS' REPORT The Directors have pleasure in presenting their Annual Report and Accounts for the year ended March 31, 2012. YEAR IN RETROSPECT The gross sales and other income for the financial year under review were Rs. 55,076 crore as against Rs. 45,444 crore for the previous financial year registering an increase of 21 %. The Profit before tax excluding extraordinary and exceptional items was Rs. 6,255 crore and the Profit after tax excluding extraordinary and exceptional items of Rs. 4,413 crore for the financial year under review as against Rs. 5,569 crore and Rs. 3,676 crore respectively for the previous financial year, registering an increase of 12% and 20% respectively. DIVIDEND The Directors recommend payment of dividend of Rs. 16.50 per equity share of Rs. 2/- each. DEPOSITORY SYSTEM As the members are aware, the Company's shares are compulsorily tradable in electronic form. As on March 31, 2012, 97.19% of the Company's total paid-up Capital representing 59,52,14,789 shares is 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 35,46,773 equity shares upon exercise of stock options by the eligible employees under the Employee Stock Option Schemes. During the year under review, Rs. 540 crore were drawn by the Company under the partly-paid Non-Convertible Debentures issued in 2010-2011. Further the Company tied up long term foreign currency loans equivalent to approximately USD 145 million, half of which was drawn during the year, the balance to be drawn in 2012-2013. During the year, the Company repaid a part of the long term foreign currency loans, equivalent to about Rs. 615 crore and redeemed Non-Convertible Debentures of Rs. 250 crore. CAPITAL EXPENDITURE As at March 31, 2012, the gross fixed and intangible assets, including leased assets, stood at Rs. 11,295 crore and the net fixed and intangible assets, including leased assets, at Rs. 8,364 crore. Additions during the year amounted to Rs. 1,725 crore. DEPOSITS 7 Deposits totaling Rs. 71,000 which were due for repayment on or before March 31, 2012 were not claimed by the depositors on that date. As on the date of this report, none of these deposits have been claimed and paid. 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. As provided in Section 205C(2) of the Companies Act, 1956, dividend amount which was due and payable and remained unclaimed and unpaid for a period of seven years has to be transferred to Investor Education & Protection Fund. Despite the reminder letters sent to each shareholder, an amount of Rs. 1,10,97,033/- remained unclaimed and was transferred to Investor Education & Protection Fund by the Company during the year. Cumulatively, the amount transferred to the said fund was Rs. 9,90,45,963/- as on March 31, 2012. SUBSIDIARY COMPANIES During the year under review, the Company subscribed to / sold / acquired equity shares in various subsidiary companies. These subsidiaries are either SPVs executing projects secured through Build Operate Transfer (BOT) route, or holding companies making investments in companies such as those engaged in power and financial services business. The Ministry of Corporate Affairs (MCA), vide its 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 23, 2012, 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. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES By complying with the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company is complying with all the major clauses of the Corporate Governance Voluntary Guidelines, 2009. We have reported in Annexure 'O to the Directors' Report -Corporate Governance, the extent of our compliance of the Corporate Governance Voluntary Guidelines, 2009 under the following heads: 1. Nomination & Remuneration Committee 2. Other Information 3. Audit Committee 4. General Shareholders' Information CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES MCA had released a set of guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company is substantially complying with the guidelines laid down. The Company has been one of the first engineering and construction companies in India to publish its report on Corporate Sustainability. The activities carried out by the Company as a part of its CSR initiatives are briefly described on pages 14 to 19 and 106 of the Annual Report. 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, 2012 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. K. V. Rangaswami Whole-time Director of the Company retired as Director of the Company on June 30, 2011. Mr. S. N. Subrahmanyan was inducted as Whole-time Director of the Company w.e.f. July 1, 2011. Mr. Y. M. Deosthalee, Chief Financial Officer and Whole-time Director of the Company retired on September 5, 2011. The Board has appointed Mr. R. Shankar Raman as Chief Financial Officer w.e.f. September 6, 2011 and as a Whole-time Director of the Company w.e.f. October 1, 2011. Pursuant to the Articles of Association of the Company, Mr. A. M. Naik is proposed to be appointed as a Director liable to retire by rotation, with effect from October 1, 2012, in the forthcoming Annual General Meeting, in view of his appointment as Executive Chairman from October 1, 2012 upto September 30, 2017. Mr. K. Venkataramanan is appointed as Chief Executive Officer and Managing Director of the Company w.e.f. April 1, 2012 upto September 30, 2015. Pursuant to the Articles of Association of the Company he will not be liable to retire by rotation. Mr. Shailendra Roy was inducted as a Whole-time Director of the Company w.e.f. March 9, 2012. Consequent to her retirement from General Insurance Company Limited (GIC), Mrs. Bhagyam Ramani resigned as a Director w.e.f. May 8, 2012. Mr. Thomas Matthew TV, Mr. M.V. Kotwal, Mr. V. K. Magapu and Mr. Ravi Uppal retire from the Board by rotation and are eligible for re-appointment at the forthcoming Annual General Meeting. Mr. J. S. Bindra retires from the Board of Directors but has not sought re-appointment at the forthcoming Annual General Meeting. Accordingly, a suitable resolution will be placed before the shareholders for their approval. The notice convening the Annual General Meeting 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 and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956. S&T has submitted the Peer Review Certificate dated September21, 2010 issued to them by Institute of Chartered Accountants of India (ICAI). COST AUDITORS The Ministry of Corporate Affairs (MCA) has introduced The Companies (Cost Audit Report) Rules, 2011 vide its notification no. GSR 430(E) dated June 3, 2011. These rules make it mandatory for industries to appoint a Cost Auditor within 90 days of the commencement of the financial year. The Cost Audit Order No. 52/26/CAB/2010 dated January 24, 2012 covers engineering machinery (including electrical and electronic products) due to which some of the Company's manufacturing operations will get covered w.e.f. April 1, 2012. Based on the Audit Committee recommendations at its meeting held on May 2, 2012, the Board has approved the appointment of M/s R. Nanabhoy & Co. as the Cost Auditors of the Company for the financial year 2012-2013, subject to approval of the Central Government. ACKNOWLEDGEMENT Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the 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 Chairman & Managing Director Mumbai, May 14, 2012 |