FINANCE: During the year 2012, the Company had taken all initiatives in controlling the working capital and overhead expenses.

Transcription

1 DIRECTORS REPORT REVIEW OF OPERATIONS: On behalf of the Board of s, it gives me great pleasure to present to you the Annual Report and Audited Accounts of L&T Electrical & Automation FZE (LTEAFZE) for the year ended 31st December OVERVIEW OF THE YEAR: During the year the Company strengthened its Telecom vertical and bagged many projects as well as successfully executed a major Telecom project in UAE through Korean Contractor. During the year the Company received and executed new orders from National Petroleum Construction Company, Ilk-Inshat Turkey and other existing customers. Market sentiments in general were sluggish. YEAR IN RETROSPECT: The Company was able to secure order inflows of AED Mn during the year and sales were AED Mn. The Company made a net profit of AED Mn during the year. FINANCE: During the year 2012, the Company had taken all initiatives in controlling the working capital and overhead expenses. CAPITAL EXPENDITURE: At the year end the Gross Fixed Assets stood at AED Mn and Net Fixed Assets at AED Mn. No major capital expenses were incurred during the year. CURRENT BUSINESS SCENARIO: The Oil & Gas, Utility and Infrastructure segments are looking up in KSA, UAE, Qatar and Kuwait markets with significant investments announced over next 3-5 years. With major customer approvals in place, LTEAFZE is focusing as a Turnkey Automation, Telecommunication & Electrical Subcontractor with EPC players and with end users for new and brown field projects. PERFORMANCE PARAMETERS: Particulars Value in AED / Mn Value in AED / Mn Order Booking Sales Order Backlog PERSONNEL: There are 131 staff employed as on 31st December 2012 FUTURE OUTLOOK: Industry Major investments are happening in infrastructure in KSA and Qatar and also in security and surveillance systems in UAE. This along with its focus on Korean and Turkish EPCs will help the Company to secure orders and create healthy order book for the next year. Company LTEAFZE remains competitive in high end turnkey Automation, Electrical & Telecommunication Solutions and Systems business and has created a niche in the market place with its on-time Project Execution capabilities in Oil & Gas and Utility & Infrastructure solutions. The Telecom and Infrastructure competency are being strengthened and the Company aims to expand its business landscape and new geographies Iraq and CIS through Turkish and Korean regional sales offices. For and on behalf of the Board S C BHARGAVA VIJAY K ARORA S-1180

2 AUDITORS REPORT TO THE MEMBERS OF L&T ELECTRICAL & AUTOMATION FZE The financial statement of L&T ELECTRICAL & AUTOMATION FZE for the year ended 31 December 2012, being a Company registered in the Jebel Ali Free Zone, Dubai with limited liability under the Law No.9 of 1992 and implementing regulations issued there under by the Jebel Ali Free Zone prepared by management and are audited by the statutory auditors in the Dubai by PKF Accountants & Business advisers dated 26 February, We are presented with the accounts in Indian R prepared on the basis of the aforesaid accounts to comply with the requirement of Section 212 of the Companies Act, We give our report as under We have audited the attached Balance Sheet of L&T Electrical & Automation FZE as at 31 December 2012 and also the statement of profit and loss and the Profit and Loss Account for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that: 1 As required by the Companies (Auditor s Report) Order, 2003, issued by the central government of India under sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2 Further to our comments in Annexure above, we report as under: a) we have 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 appears from our examination of those books; c) the said Balance Sheet, statement of profit and loss and Cash Flow Statement dealt with by the report are in agreement with the books of account; d) in our opinion, the Balance Sheet, the statement of profit and loss and Profit and Loss Account comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable; and e) as regard reporting on the disqualification of director under Section 274(1)(g) of Companies Act 1956 are not applicable, since the Company is registered in the Jabel Ali Free Zone, Dubai. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with significant accounting policy in note A and other notes forming part of accounts gives the information required by the Companies Act, 1956, in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India: 1 in the case of the Balance Sheet, of the state of the Company s affairs as at 31 December 2012; 2 in the case of the statement of Profit and Loss Account, of the profit for the year ended on that date; and 3 in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. SHARP & TANNAN Chartered Accountants Firm registration no W By the hand of EDWIN AUGUSTINE Partner Membership no S-1181

3 ANNEXURE TO THE AUDITORS REPORT (Referred to paragraph (1) 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 physically verified fixed assets so as to affect going concern status. (c) The Company has not disposed any substantial part of fixed assets during the year. 2 (a) As explained to us, inventories have been physically verified by management at reasonable interval 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 the business (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material. 3 There are no loans secured or unsecured, either granted to or taken from companies, firms or other parties. However, no registered is required to be maintained under Section 301 of the Companies Act, 1956 since the Company is incorporated and doing business only in the Dubai. 4 In our opinion and according to the information given to us, there is adequate internal control system commensurate with the size of the Company and nature of its business for purchase of inventory, fixed assets and for sale goods. 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 weakness in the aforesaid internal system. 5 The Company is incorporated in the Dubai and accordingly, maintenance of records under Section 301 of the Companies Act, 1956 is not applicable. 6 The Company has not accepted deposits and the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed The there under are not applicable. 7 In our opinion the Company has an internal audit system commensurate with its size and nature of its business. 8 The Company is not required to maintain cost records under Section 209(1)(d) of the Companies Act, 1956 as the Company is incorporated in Dubai. 9 The Company being registered in Dubai has no statutory liability in India and accordingly reporting for paragraph 4 (ix) (a) and (b) is not required. 10 The Company has been registered for less than five years and hence clause 4(x) of the Order is not applicable. 11 The Company has not defaulted in repayment of dues to financial institutions. 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 The Company is not dealing or trading in shares or securities. 15 The Company has not given guarantees for loans taken by others from banks or financial institutions. 16 In our opinion and according to the information and explanations given to us, 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 any party during the year. 19 The Company has not issued any debentures during the year. 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 registration no W By the hand of EDWIN AUGUSTINE Partner Membership no S-1182

4 BALANCE SHEET AS AT DECEMBER 31, 2012 As at As at Schedule V V V V EQUITY AND LIABILITIES: Shareholders Funds Share capital B 10,872,110 10,872,110 Reserves and surplus C 1,015,805, ,089,291 1,026,677, ,961,401 Non-current liabilities Long-term borrowings D(1) 67,589,296 91,752,387 Long-term provisions D(2) 11,569,608 7,180,388 79,158,904 98,932,775 Current liabilities Short-term borrowings and current maturity of long E(1) term borrowing borrowing 27,525, ,913,618 Trade payables E(2) 860,841, ,800,629 Other current liabilities E(3) 5,513, ,459 Short-term provisions E(4) 199,699,563 95,370,467 1,093,580, ,573,173 TOTAL 2,199,417,112 1,546,467,349 ASSETS: Non-current assets Fixed Assets F Tangible assets 159,209, ,082,609 Capital work-in-progress 576, ,785, ,082,609 Current assets Inventories G(1) 34,107,438 27,436,028 Trade receivables G(2) 1,676,561,795 1,241,844,336 Cash and bank balances G(3) 259,350,013 5,092,928 Short term loans and advances G(4) 69,612, ,011,448 2,039,631,441 1,374,384,740 TOTAL 2,199,417,112 1,546,467,349 CONTINGENT LIABILITIES COMMITMENTS (Capital and others) SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS N O A-Z The schedules referred to above and the notes attached form an integral part of the financial statements. As per our report attached SHARP & TANNAN Chartered Accountants Firm registration number W by the hand of For and on behalf of the Board EDWIN AUGUSTINE Partner Membership No SHARAT C BHARGAVA V. K. ARORA S-1183

5 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, to to Schedule R R R R REVENUE: Revenue from operations (gross) H 2,524,335,768 1,113,267,932 Less: Excise duty Revenue from operations (net) 2,524,335,768 1,113,267,932 Other income I 54,739 TOTAL REVENUE 2,524,335,768 1,113,322,671 EXPENSES: Manufacturing, construction and operating expenses: J Cost of raw materials, components consumed 1,458,475, ,894,373 Other manufacturing, construction and operating expenses 330,518, ,555,799 1,788,994, ,450,172 Employee benefits expense K 221,158, ,577,399 Sales, administration and other expenses L 142,518, ,703,663 Finance costs M 3,519,544 4,052,646 Depreciation amortisation and obsolescence F 26,825,054 20,578,336 TOTAL EXPENSES 2,183,016, ,362,216 Profit before exceptional and extraordinary items and tax 341,319, ,960,455 Exceptional items Profit before extraordinary items and tax 341,319, ,960,455 Extraordinary items Profit before tax 341,319, ,960,455 Tax expenses Current tax Deferred tax PROFIT AFTER TAX CARRIED TO BALANCE SHEET 341,319, ,960,455 Basic and Diluted Earning per share T 341,319, ,960,455 Face value per equity share AED 1,000,000 1,000,000 SIGNIFICANT ACCOUNTING POLICIES AND OTHER NOTES The schedules referred to above and the notes attached form an integral part of the financial statements. As per our report attached A-Z SHARP & TANNAN Chartered Accountants Firm registration number W by the hand of For and on behalf of the Board EDWIN AUGUSTINE Partner Membership No SHARAT C BHARGAVA V. K. ARORA S-1184

6 CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012 A. Cash Flow from operating activities Profit before tax 341,319, ,960,455 Adjustments for: Interest Income Translation reserve & other reserves 32,849,780 84,956,719 Amortisation Depreciation (including obsolescence) 26,825,054 20,578,336 Interest paid 3,519,544 4,052,646 Unrealised foreign exchange difference - net (gain/loss) 3,984,068 11,391,066 (Profit) / loss on sale of fixed assets (net) (Profit)/Loss on sale of Investments (net) Provision for Leave encashment & Gratuity 4,006,909 2,374,743 Operating profit before working capital changes 412,505, ,313,963 Adjustments for: (Increase) / decrease in inventories (6,671,410) (17,163,824) (Increase) / decrease in receivables and loans (404,318,206) (480,885,650) Increase / (decrease) in current liabilities 300,007,168 (3,223,418) (Increase)/Decrease in Pre-operative Expenses Cash generated from operations 301,522,595 (206,958,928) Direct taxes refund / (paid) (net) Cash (used in)/generated from operations 301,522,595 (206,958,928) B. Cash flow from investing activities Purchase of fixed assets (8,594,299) (22,219,380) Purchase of property and equipment - Capital WIP (576,356) Sale of fixed assets Interest income 596,070 Exchange difference in opening value of fixed assets (7,569,520) (26,691,176) Cash (used in)/from investing activities (16,740,174) (48,314,486) C. Cash flow from financing activities Receipt/(Repayment) of term loan (27,462,624) 160,559,864 Exchange difference on translation of loan 1,909,833 11,265,330 Dividend Paid (1,453,000) Interest paid (3,519,544) (4,453,820) Net cash (used in)/from financing activities (30,525,335) 167,371,374 Net (decrease)/increase in cash and cash equivalents (A + B + C) 254,257,085 (87,902,040) Cash and cash equivalents at beginning of the year 5,092,928 92,994,968 Cash and cash equivalents at end of the year 259,350,013 5,092,928 Notes: 1 Cash Flow Statement has been prepared under the indirect method as set out in the accounting Standard (AS)3: Cash Flow Statements issued by the Institute of Chartered Accountants of India. 2 Cash and cash equivalents represent cash and bank balances. 3 Previous year figures are regrouped and reclassified where ever necessary R 2011 R As per our report attached SHARP & TANNAN Chartered Accountants Firm registration number W by the hand of EDWIN AUGUSTINE Partner Membership No SHARAT C BHARGAVA For and on behalf of the Board V. K. ARORA S-1185

7 SCHEDULES FORMING PART OF ACCOUNTS NOTE - A SIGNIFICANT ACCOUNTING POLICIES 1 LEGAL STATUS a. L&T ELECTRICAL & AUTOMATION FZE (the entity ) was incorporated on 7 April 2008 in the Jebel Ali Free Zone, Dubai as a Free Zone Establishment with Limited Liability pursuant law No. 9 of 1992 and implementing regulations issued there under by the Jebel Ali Free Zone. The registered office is P.O.Box , Jebel Ali Free Zone, Dubai, U.A.E. b. The entity is a wholly owned subsidiary of Larsen and Toubro International FZE, an entity registered in Hamriyah Free Zone, Sharjah. The ultimate parent Company is Larsen and Toubro Limited, a Company incorporated in India. c. The entity is licensed to do business of Assembly, Integration, Testing of Electrical & Automation and Communication of Systems. 2. BASIS OF ACCOUNTING The financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) followed in India under historical cost convention, on accrual basis and are in accordance with the mandatory accounting standards referred to in sub section 3C of Section 211 and the other provisions of the Companies Act, The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported amount of expenses during the period. Actual reports could differ from those estimated. 3. CHANGE IN ACCOUNTING POLICY, PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS During the year ended 31 December 2012, the revised schedule VI notified under the Companies Act 1956 has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosures made in financial statements. The Company has also reclassified previous year figures in accordance with the requirements applicable in the current year. 4. FOREIGN CURRENCY TRANSACTIONS Reporting currency used by the Company is United Arab Emirates Dirham. The financial statements are translated in Indian Rupees as follows: Share capital is retained at initial contribution amount. Other Balance Sheet items are translated at rates prevailing on the date of Balance Sheet. Revenue transactions are translated at the average rates. The resultant differences are accounted as translation reserve in the Balance Sheet. 5. REVENUE RECOGNITION Revenue from sale of goods is recognized when the substantial risks and rewards of ownership is transferred to the buyer. 6. FIXED ASSETS & DEPRECIATION Fixed assets are stated at original cost net of tax/ duty credits availed, if any, less accumulated depreciation. Depreciation is calculated using the straight line method. This rate use for deprriciation is higher than the rates specified under schedule XIV of the Companies Act, The rate of depreciation considered for assets are as follows: Category of assets Rate of Depreciation Lease hold building Over the period of lease Furniture, fixture and office equipments 33.33% Motor vehicles 33.33% 7. INVENTORIES Raw materials and Components are valued at weighted average cost or net realizable value whichever is lower. Finished goods are valued at lower of cost or net realizable value. 8. LEASES Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on a straight line basis over the period of the lease. S-1186

8 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) As at As at Number of shares R Number of shares R NOTE - B SHARE CAPITAL (i) Share capital authorised, issued, subscribed and paid up: Authorised: Equity shares of AED 1 million each 1 10,872, ,872,110 Issued, subscribed and fully paid up: Equity shares of AED 1 million each 1 10,872, ,872,110 (ii) Share holder holding more than 5% of equity share The Entity is a wholly owned subsidiary of Larsen & Toubro International FZE, an entity registered in Humriya Free Zone, Sharjah. The ulitimat parent Company is Larsen & Toubro Limited, a Company incorporated in India. (iii) Trrm/right attached to equity shares: The Company has only one class of share capital, i.e. equity shates having face value of AED 1 million each. Share holder entitled to one vote per share. (iv) The agreegate number of equity share alloted as fully paid up by way of bonus shares in immediately preceding five years ended March 2013 are NIL. (v) The agreegate number of equity share issued pursunt to conteract, without payment being recived in cash in immediately preceding five years ended March 2013 are NIL. As at As at R R R R NOTE - C RESERVES AND SURPLUS Reserves and surplus Foreign currency translation reserve (See Note:Z ) 72,455,604 (12,501,115) Add: Additions during the year 32,849,780 84,956, ,305,384 72,455,604 Surplus Statement of Profit and Loss As per last Balance Sheet 570,633, ,673,232 Profit for the year 341,319, ,960,455 Less: Dividends paid for previous year (1,453,000) 910,500, ,633,687 TOTAL 1,015,805, ,089,291 NOTE - D D1 LONG-TERM BORROWINGS D1(i) Particulars Term loan (Note C1 (ii) and (iii)) 27,555,246 53,108,037 Loan from Shareholders (Note C1(iv) 40,034,050 38,644,350 TOTAL 67,589,296 91,752,387 D1(ii) The loan is repayable in 12 quarterly installments of R 6,881,438 each commencing from 9th March 2012, after an initial moratorium period of 12 months from the date of first utilisation on 9th Dec The installments are payable quarterly in arrears. D1(iii) The loan is secured by a corporate guarantee from a related party and is subject to certain financial covenants including total term debt to tangible net worth ratio, debt service coverage ratio and fixed assets coverage ratio. D1(iv) The loan from the share holder is interest free and is for the term of the entity. S-1187

9 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE - D2 LONG-TERM PROVISIONS Provision for employee benefits Provisions for end of service indemnity 11,569,608 7,180,388 TOTAL 11,569,608 7,180,388 NOTE - E1 SHORT TERM BORROWINGS AND CURRENT MATURITY OF LONG TERM BORROWING Short term loans and advances from banks 160,343,368 Current maturities of long term borrowings 27,525,750 26,570,250 (Note C 1 (ii) and (iii)) TOTAL 27,525, ,913,618 NOTE - E2 TRADE PAYABLES Due to related parties: Due to fellow subsidiaries 36,092,033 Due to parent 1,786,895 36,092,033 1,786,895 Due to others Liability for revenue goods 573,318, ,264,561 Liability for capital goods Liability for other expenses (other accruals) 251,431, ,749, ,749, ,013,734 TOTAL 860,841, ,800,629 NOTE - E3 OTHER CURRENT LIABILITIES Advances from customers 4,306,795 Other payables 1,206, ,459 TOTAL 5,513, ,459 NOTE - E4 SHORT TERM PROVISIONS Provisions for expenses 199,699,563 95,370,467 TOTAL 199,699,563 95,370,467 S-1188

10 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) L&T ELECTRICAL & AUTOMATION FZE NOTE - F TANGIBLE ASSETS Figures in V Particulars COST / VALUATION DEPRECIATION BOOK VALUE As at Exchange difference included in translation reserve Additions Deductions As on As at Exchange difference included in translation reserve Additions Deductions As on As on As on Buildings 172,881,047 10,849, ,730,104 17,419,491 4,882,489 15,426,109 37,728, ,461, ,002,016 Plant and machinery general 1,092, ,508 74,840 1,279, ,214 51, , , , ,669 Computers 6,489, ,354 3,934,340 36,686 10,620,034 2,513, ,574 2,653,875 36,686 5,303,100 3,975,690 5,316,934 Office Equipments 8,490, ,987 1,504,630 10,280,618 4,233, ,870 3,068,998 7,575,101 4,256,767 2,705,517 Aircondition and Refrigeration 1,710,257 1,020, ,100 3,405,314 1,274, , ,156 2,878, , ,892 Canteen Equipments 12,321 (12,321) 6,741 6,741 12,321 (12,304) ,172 Furniture and fixtures 17,067,969 (5,018,806) 2,399,648 14,448,811 10,308,120 (4,194,566) 4,204,909 10,318,464 6,759,849 4,130,347 Vehicles 2,746,966 98,784 2,845,751 2,229,240 95, ,026 2,826, ,726 18,770 Total 210,490,026 7,569,520 8,594,299 36, ,617,159 38,407,418 2,212,057 26,825,054 36,686 67,407, ,082, ,209,316 Previous year 161,579,470 26,691,175 22,219, ,490,026 12,901,399 4,927,681 20,578,338 38,407, ,678, ,082,607 F ii Borrowing cost capitalized during the period is Nil. (previous year Nil) As at As at R R R R NOTE - G1 Inventories (at cost or net realisable value whichever is lower) Inventory [Includes goods in transit R 2,623,657 and previous year R Nil] 34,107,438 27,436,028 TOTAL 34,107,438 27,436,028 NOTE - G2 TRADE RECEIVABLES Unsecured: Debts outstanding for more than 6 months Considered good 713,187, ,739,154 Considered doubtful 1,396, ,583, ,739,154 Other debts: [Note no.h(iii)(a)] Considered good 963,374, ,105,182 1,677,958,111 1,241,844,336 Less: Allowance for doubtful debts 1,396,316 1,676,561,795 1,241,844,336 TOTAL 1,676,561,795 1,241,844,336 S-1189

11 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) As at As at R R R R NOTE - G3 CASH AND BANK BALANCES Cash and cash equivalent Balance with banks 258,994,029 4,855,032 Cash on hand 355, , ,350,013 5,092,928 TOTAL 259,350,013 5,092,928 NOTE - G4 SHORT TERM LOANS AND ADVANCES Considered good: Advances recoverable in cash or kind Prepaid expenses 6,227,965 4,599,437 Deposits paid 16,769,421 12,436,207 Advances 46,614,809 82,975,804 TOTAL 69,612, ,011, R R R R NOTE - H REVENUE FROM OPERATIONS Sales & service: Manufacturing & trading 2,524,335,768 1,113,267,932 TOTAL 2,524,335,768 1,113,267,932 NOTE - I OTHER INCOME Miscellaneous income 54,739 TOTAL 54,739 NOTE - J MANUFACTURING AND OPERATING EXPENSES Raw materials and components 1,458,475, ,894,373 Stores, spares and tools consumed Other manufacturing and operating expenses: Freight 18,149,176 14,372,234 Rent 12,861,070 10,506,756 Other Direct Cost 299,508, ,676,809 TOTAL 1,788,994, ,450,172 S-1190

12 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) L&T ELECTRICAL & AUTOMATION FZE R R R R NOTE - K EMPLOYEE BENEFITS EXPENSE Salaries, wages and bonus 217,151, ,202,656 Contribution to and provision for: Provision for end of service indemnities 4,006,909 2,374,743 TOTAL 221,158, ,577,399 NOTE - L SALES, ADMINISTRATION AND OTHER EXPENSES Rent 6,661,526 5,481,398 Travelling and conveyance 54,122,623 30,471,674 Power other than Manufacturing activity 2,498,898 2,571,473 Telephone postage and telegrams 4,768,673 3,928,083 Advertising and publicity 1,865,725 2,560,449 Stationary and printing 1,313,919 1,430,381 Commission 16,622,887 9,747,972 Bank charges 7,352,790 4,935,115 General repairs and maintenance 5,918,200 4,749,448 Audit fees 2,598, ,429 Packing & forwarding expenses 1,996,771 2,682,198 Visa & Legal charges 11,554,416 5,288,055 Insurance charges 7,144,270 4,753,026 Exchange (gain) / Loss 4,916,385 10,402,816 Provision for doubtfull debts 1,354,370 Miscellaneous expenses 11,828,001 26,954,146 TOTAL 142,518, ,703,663 NOTE - M FINANCE COSTS Interest expenses Interest on loan 3,519,544 4,648,716 Interest Income 596,070 TOTAL 3,519,544 4,052,646 NOTE - N CONTINGENT LIABILITY Particulars As at 31 December, 2012 R As at 31 December, 2011 R Letter of guarantees & performance bonds 45,96,33,123 45,25,59,826 S-1191

13 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) NOTE - O Capital Commitments as on 31 December, 2012 amounted to R Nil. NOTE - P Borrowing cost capitalized during the period is Nil. NOTE - Q SEGMENTAL REPORTING The Company operates wholly in United Arab Emirates and manufactures industrial electronic control panels and accessories. Hence segment reporting is not applicable. NOTE - R RELATED PARTY DISCLOSURES: I. List of related parties who exercise control: Larsen & Toubro Limited Ultimate Holding Company Larsen & Toubro International FZE Holding Company II. III. List of related parties with whom transactions were carried out and description of relationship: Larsen & Toubro Limited Ultimate Holding Company Larsen & Toubro International FZE Holding Company Larsen & Toubro (Oman) LLC Fellow Subsidiary Larsen & Toubro (Electromech) LLC Fellow Subsidiary L&T Electrical Saudi Arabia Company Ltd Fellow Subsidiary Tamco Switchgear Malaysia (SDN) Fellow Subsidiary Disclosure of transactions with related parties: Related Party Nature of Relationship Amount in R Nature of Transaction Larsen & Toubro Limited Ultimate Holding Company 4,82,68,660 Sale of finished goods Larsen & Toubro Limited (Oman) LLC Fellow Subsidiary Company 53,96,122 Sale of finished goods Larsen & Toubro (Electromech) LLC Fellow Subsidiary Company 24,99,76,605 Sale of finished goods L&T Electrical Saudi Arabia Company Ltd Fellow Subsidiary Company 7,26,558 Sale of finished goods Larsen & Toubro Limited Ultimate Holding Company 50,94,683 Purchase of goods Tamco Switchgear Malaysia (SDN) Fellow Subsidiary Company 3,36,28,305 Purchase of goods IV. Amount outstanding with related parties: Related Party Larsen & Toubro International FZE Larsen & Toubro Limited Larsen & Toubro Limited (Oman) LLC Larsen & Toubro (Electromech) LLC L&T Electricals Saudi Arabia Company Ltd Tamco Switchgear Malaysia (SDN) Larsen & Toubro Atco Saudi Amount in R 4,00,34,050 Cr 11,63,09,004 Dr 9,33,12,802 Dr 20,80,51,857 Dr 7,49,060 Dr 3,56,07,745 Cr 4,84,288 Cr S-1192

14 SCHEDULES FORMING PART OF ACCOUNTS (Contd.) L&T ELECTRICAL & AUTOMATION FZE NOTE - S OPERATING LEASE COMMITMENTS The entity has entered into non cancelable operating lease for 15 years. The total of the future lease payments is as follows: v Not later than one year 84,25,501 Between one and five years 4,21,27,505 Later than five years 3,51,06,259 NOTE - T EARNINGS PER SHARE Basic & Diluted earnings per share Profit after tax as per accounts (R) 34,13,19,686 17,09,60,455 No. of share outstanding 1 1 EPS (R) 34,13,19,686 17,09,60,455 Face value of share (AED) 1,000,000 1,000,000 NOTE - U There is no income tax payable in UAE where the Company is registered and hence no provision for current tax / deferred tax has been made in these accounts. NOTE - V The Company has entered into forward foreign exchange contracts to hedge its exposure to exchange rate movements on settlement of amounts payable in foreign currencies to suppliers. At the reporting date, the Company had entered into following contracts In pounds sterling's Average exchange rate R Amount to be paid in R Average exchange rate R Amount to be paid in R 3 months of less ,58,32,033 Nil Nil Over 3 months ,45,90,595 Nil Nil NOTE - W There are no transactions with small scale industries or micro small and medium enterprises during the year. NOTE - X Auditor s remuneration charged to the accounts amounting to R 9,22,655 (AED 63,500) during the year. NOTE - Y The Company is considered as a non integral operation of Larsen & Toubro Limited the ultimate holding Company). In accordance with Accounting Standard - 11 (revised 2003) the exchange differences on translation are accounted in Foreign Currency Translation Reserve in the Reserves & Surplus. NOTE - Z Previous year s figures are re-grouped wherever necessary. As per our report attached SHARP & TANNAN Chartered Accountants Firm registration number W by the hand of EDWIN AUGUSTINE Partner Membership No SHARAT C BHARGAVA For and on behalf of the Board V. K. ARORA S-1193