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to the members of Larsen & Toubro Limited
We have audited the attached Balance Sheet of Larsen & Toubro Limited as at March
31, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company
for the year 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 test basis, evidence supporting the amounts and disclosures in
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 the Annexure referred to above, 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 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 Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by
this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report comply with the accounting standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956; and
(e) on the basis of written representations received from directors as on March 31,
2011, and taken on record by the board of directors, we report that none of the directors
is disqualified as on March 31, 2011 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
In our opinion and to the best of our information and according to the explanations
given to us, the said accounts read together with the significant accounting policies in
schedule Q and the notes appearing thereon, give the information required by the Companies
Act, 1956, in the manner so required and give 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 affairs of the Company as at
March 31, 2011;
2) in the case of the Profit and Loss Account, of the profit of the Company 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 |
|
ICAI Registration no.109982W |
|
by the hand of |
|
R. D. KARE |
|
Partner |
| Mumbai, May 19, 2011 |
Membership no.8820 |
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 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 have been carried out by
management during the year and no material discrepancies were noticed on such
verification.
(c) The Company has not disposed off any substantial part of its fixed assets so as to
affect its going concern status.
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 (a) According to the information and explanations given to us, we are of the opinion
that the particulars of contracts or arrangements that need to be entered in the register
maintained under section 301 of the Companies Act, 1956 have been entered.
(b) In our opinion and according to the information and explanations given to us, the
transactions made in pursuance of such contracts or arrangements entered in the register
maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees
five lakhs in respect of any party during the year, have been made at prices which are
reasonable having regard to the prevailing market prices at the relevant time.
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 unpaid 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 electronic
products viz. industrial electronics including all control instrumentation and automation
equipment 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 March 31,
2011 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 and income tax as at March 31, 2011 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* |
Period to which the amount relates |
Forum where disputes are pending |
| Central Sales Tax Act, Local Sales Tax Acts and Works Contract Tax Act |
Non-submission of forms, dispute regarding rate of tax and other matters |
1.37 |
1996-1997 to 2005-2006 |
Commercial Tax Officer |
|
Non-submission of forms, disallowance of deemed inter-state sales, classification
dispute and other matters |
141.51 |
1991-1992 to 1994-1995,1997-1998, 1999-2000 to 2007-2008 and 2009-2010 |
Assistant Commissioner (Appeals) |
|
Non-submission of forms, additional demand for pending forms, rate of tax dispute,
disallowance of branch transfer, transit sale, export claim disallowance and other matters |
33.61 |
1989-1990 and 1993-1994 to 2010-2011 |
Deputy Commissioner (Appeals) |
|
Non-submission of forms, disallowance of transit sales, classification dispute and
other matters |
10.27 |
1993-1994, 1994-1995, 1997-1998 to 2007-2008 and 2009-2010 |
Joint Commissioner (Appeals) |
|
Non-submission of forms, additional demand for pending forms, disallowance of
inter-state sales and other matters |
2.85 |
1991-1992, 1992-1993, 1996-1997 and 2000-2001 to 2006-2007 |
Additional Commissioner (Appeals) |
|
Non-submission of forms, dispute related to sales in transit and other matters |
19.95 |
2003-2004 to 2007-2008 |
Commissioner (Appeals) |
|
Non-submission of forms, inter-state sales, sub-contractors turnover, rate dispute,
disallowance under composition scheme and other matters |
65.28 |
1987-1988 to 1996-1997, 1998-1999 to 2003-2004 and 2005-2006 |
Sales Tax Tribunal |
|
Inter-state sales, classification dispute and disallowance of deemed sales in course
of imports and taxability of sub- contractors turnover |
495.03 |
1987-1988 to 2006-2007 |
High Court |
|
Taxability of sub-contractor turnover, rate of tax for declared goods and inter-state
sales |
2.35 |
1991-1992, 1995-1996, 1997-1998 and 1999-2000 to 2004-2005 |
Supreme Court |
| The Central Excise Act,1944, Service |
Demand for custom duty for fuel, software and on export under rebate |
0.70 |
2006-2007 to 2008-2009 |
Commissioner (Appeals) |
| Tax under Finance Act, 1994 and Customs Act, 1962 |
Classification dispute, exemptions denied, valuation disputes and other matters |
40.71 |
1991-1992, 2001-2002, 2003-2004 to 2006-2007, 2008-2009 and 2009-2010 |
CESTAT |
|
Dispute on site mix concrete and PSC grinder |
0.27 |
1997-1998 |
Supreme Court |
|
Valuation dispute and disallowance of cenvat against service tax on freight onward |
219.96 |
1997-1998, 2003-2004 to 2010-2011 |
Commissioner (Appeals) |
|
Demand of service tax including penalty and interest on lumpsum turnkey jobs and
demand of penalty on late payment of service tax |
124.19 |
2002-2003 to 2006-2007 |
CESTAT |
|
Export rebate claim, service tax on commercial construction service |
0.07 |
2003-2004 |
High Court |
| Income-tax Act, |
Dispute regarding tax not deducted on purchase of software |
0.52 |
2006-2007 to 2009-2010 |
Assessing Officer |
| 1961 |
Dispute regarding tax deducted at source at lower rate on maintenance charges |
0.03 |
2005-2006 |
Commissioner (Appeals) |
|
Difference in rate of tax deducted at source |
1.90 |
2007-2008 and 2008-2009 |
Director of Income Tax (International Taxation) |
* Net of pre-deposit paid in getting the stay/appeal admitted.
10 The Company has no accumulated losses as at March 31, 2011 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 |
|
ICAI Registration no.109982W |
|
by the hand of |
|
R. D. KARE |
|
Partner |
| Mumbai, May 19, 2011 |
Membership no.8820 |