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Larsen & Toubro Ltd.

BSE: 500510 Sector: Engineering
NSE: LT ISIN Code: INE018A01030
BSE 00:00 | 18 Oct 1448.05 23.80
(1.67%)
OPEN

1428.00

HIGH

1456.50

LOW

1425.80

NSE 00:00 | 18 Oct 1447.80 23.45
(1.65%)
OPEN

1428.00

HIGH

1457.00

LOW

1425.40

OPEN 1428.00
PREVIOUS CLOSE 1424.25
VOLUME 126990
52-Week high 1606.70
52-Week low 1183.40
P/E 32.24
Mkt Cap.(Rs cr) 203,198
Buy Price 1448.05
Buy Qty 2.00
Sell Price 1448.05
Sell Qty 7.00
OPEN 1428.00
CLOSE 1424.25
VOLUME 126990
52-Week high 1606.70
52-Week low 1183.40
P/E 32.24
Mkt Cap.(Rs cr) 203,198
Buy Price 1448.05
Buy Qty 2.00
Sell Price 1448.05
Sell Qty 7.00

Larsen & Toubro Ltd. (LT) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

LARSEN & TOUBRO LIMITED.

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of LARSEN &TOUBRO LIMITED (the "Company") which also includes 29 Joint Operationsaccounted on a proportionate basis which comprise the Balance Sheet as at March 312018the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofCash Flows and the Statement of Changes in Equity for the year then ended and a summaryof the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Ind AS Financial Statements

The Board of Directors of the Company and those charged with governance of the jointoperation referred to above which is a company incorporated in India are responsible forthe matters stated in Section 134(5) of the Companies Act 2013 (the "Act") withrespect to the preparation of these standalone Ind AS financial statements that give atrue and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity in accordance with the IndianAccounting Standards (Ind AS) prescribed under section 133 of the Act read with thecompanies (Indian Accounting Standards) Rules 2015 as amended and other accountingprinciples generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the respectivecompanies and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder and the Orderissued under section 143(11) of the Act.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe other auditors in terms of their reports referred to in the Other Matters paragraphbelow is sufficient and appropriate to provide a basis for our audit opinion on thestandalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of reports of the other auditors on financialinformation of joint operations referred to in the Other Matters paragraph below theaforesaid standalone Ind AS financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with Ind AS andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 312018 and its profit total comprehensive income its cash flowsand the changes in equity for the year ended on that date.

Other Matters

a) We did not audit the financial information of 25 joint operations included in thestandalone Ind AS financial statements of the Company whose financial information reflecttotal assets of Rs.4583.15 crore as at March 31 2018 and total revenues of Rs.5285.06crore and net cash inflows of Rs.203.19 crore for the year ended on that date asconsidered in the standalone Ind AS financial statements. The financial information ofthese joint operations has been audited by the other auditors whose reports have beenfurnished to us and our opinion in so far as it relates to the amounts and disclosuresincluded in respect of these joint operations and our report in terms of subsection (3) ofSection 143 of the Act in so far as it relates to the aforesaid joint operations isbased solely on the report of such other auditors.

Our opinion on the standalone financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of this matter.

b) The Statement includes the unaudited financial information of 3 joint operationsincluded in the standalone Ind AS financial statements of the Company whose financialinformation reflect total assets of Rs.34.28 crore as at March 312018 and total revenuesof Rs.5.32 crore and net cash outflows of less than Rs.0.01 crore for the year ended onthat date as considered in the standalone Ind AS financial statement.

The financial information of these joint operations is unaudited and have beenfurnished to us by the Management and our opinion on the Statement in so far as itrelates to the amounts and disclosures included in respect of these joint operations isbased solely on such unaudited financial information. In our opinion and according toinformation and explanation given to us by the Management such financial information isnot material to the Company.

c) The audit of standalone financial statements for the year ended March 312017 werecarried out by us jointly with another firm of chartered accountants and the report hadexpressed an unmodified opinion in relation thereto.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit and on theconsideration of the reports of the other auditors on the financial information of jointoperation referred to in the Other Matters paragraph above we report to the extentapplicable that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany and its joint operation companies so far as it appears from our examination ofthose books and the reports of the other auditors;

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of accounts;

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act;

e) On the basis of the written representations received from the Directors of theCompany as on March 312018 taken on record by the Board of Directors and the report ofstatutory auditor of its joint operation company incorporated in India none of thedirectors is disqualified as on March 31 2018 from being appointed as a director in termsof Section 164(2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and joint operation which are companies incorporated in India andthe operating effectiveness of such controls refer to our separate Report in"Annexure A". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's and its joint operation internal financialcontrols over financial reporting; and

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts and

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm Registration No. 117366W/W-100018)

P. R. RAMESH

(Partner)

(Membership No. 70928)

MUMBAI May 28 2018

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Larsen& Toubro Limited (the "Company") as at March 31 2018 in conjunction withour audit of the standalone Ind AS financial statements of the Company as for the yearended on that date which includes internal financial controls over financial reporting of1 of the 29 joint operations which is a Company incorporated in India.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company and those charged with governance of the jointoperation referred to above which is a Company incorporated in India are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to respective Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company and its joint operation Companyincorporated in India based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained bythe other auditor of the joint operation which is a Company incorporated in India interms of their reports referred to in the Other Matters paragraph below is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us and based on the consideration of the report of the other auditor on internalfinancial controls system over financial reporting of the joint operation referred to inthe Other Matters paragraph below the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2018 basedon the internal control over financial reporting established by the respective Companyconsidering the essential components of internal control stated in the Guidance Note.

Other Matters

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to 1 joint operation which is a Company incorporated in India is solely based onthe report furnished to us by the other auditor of such Company.

Our opinion is not modified in respect of this matter.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm Registration No. 117366W/W-100018)

P. R. RAMESH

(Partner)

(Membership No. 70928)

MUMBAI May 28 2018.

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Larsen & Toubro Limited of even date)

(i) In respect of the Company's property plant and equipment:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The Company has a program of physical verification of its property plant andequipment to cover all the items of property plant and equipment in a phased manner overa period of 3 years which in our opinion is reasonable having regard to the size of theCompany and the nature of its property plant and equipment. Pursuant to the programcertain property plant and equipment were physically verified by the Management duringthe year. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/transfer deed/conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings (including land whose title deed have been pledged assecurity against debentures issued by the Company) are held in the name of the Company asat the balance sheet date except the following:

Rs. crore
Type of asset Total no. of cases Leasehold/freehold Gross block as at March 31 2018 Net block as at March 31 2018 Remarks
Land 3 Freehold 1.27 1.27 Conveyance deed pending to be executed as the matter is sub judice.
Buildings 2 Freehold 3.52 0.73

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as property plant and equipment in the financial statements the leaseagreements are in the name of the Company where the Company is the lessee in theagreement.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification between the physical stock and the books of accounts.

(iii) According to the information and explanations given to us the Company has notentered into any contracts or arrangements covered under section 189 of the Act and hencereporting under paragraph 3 (iii) of the Order is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits during the year and does not have any unclaimed deposits as at March312018 and hence the provisions of the clause 3 (v) of the Order is not applicable tothe Company.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amended andprescribed by the Central Government under sub-section (1) of Section 148 of the Act andare of the opinion that prima facie the prescribed cost records have been made andmaintained by the company. We have however not made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Service TaxGoods and Service Tax Customs Duty Excise Duty Value Added Tax cess and otherstatutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Goods and Service Tax Customs DutyExcise Duty Value Added Tax cess and other statutory dues in arrears as at March 312018 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyGoods and Service Tax and Value Added Tax which have not been deposited as on March 312018 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which Amount Relates Amount Involved Amount Unpaid
(Rs. crore) (Rs. crore)
Central Sales Tax Act Local Sales Tax Acts Entry Tax and Works Contract Tax Act Taxability of sub-contractor turnover rate of tax for declared goods inter-state sales and non-submission of forms Supreme Court 2000-01 to 2006-07 12.12 3.13
Central Sales Tax Act Local Sales Tax Acts Entry Tax and Works Dispute regarding question of law classification dispute local VAT and Works contract disputes. High Court 1986-87 to1987-88 1993-94 1994-95 1998-99 to 2002-03 2005-06 2006-07 to 2012-13 61.96 54.43
Contract Tax Act Non-submission of forms classification disputes inter-state sales turnover rates of tax of declared goods classification dispute disallowance of Entry Tax and other matters Sales Tax/ VAT Tribunal 1989-90 to 2013-2014 505.84 442.41
Dispute regarding question of law non-submission of forms classification dispute disallowance of setoff valuation of goods sales in transit and high sea sales and other matters. Commissioner (Appeal) 1995-1996 to 2013-2016 35.27 34.36
Commissioner 1994-1995 to 2016-2017 8.67 8.67
Additional Commissioner 2011-12 to 2012-13 2.62 1.99
Joint Commissioner 2012-2013 to 2015-2016 10.87 6.27
Joint Commissioner (Appeal) 1995-96 to 2012-13 1414.85 1325.03
Non submission of forms and other matters Assistant / Deputy Commissioner 1996-97 to 2013-14 499.29 497.10
Assessing/ Commercial Tax Officer 1999-00 to 2001-02 2013-2014 0.94 0.93
The Central Excise Act1944 Dispute regarding question of law classification dispute and other matters. High Court 2005-062007-2008 2009 to 2011 113.87 85.13
Service Tax under Finance Act 1994 and Customs Act 1962 Disallowance of CENVAT credit short payment of service tax MRP Valuation disputes dispute regarding classification of services and other matters. CESTAT 1991-92 2001-02 to 2011-12 413.35 408.54
Disallowance of CENVAT credit short payment of service tax service tax rate dispute valuation dispute and other matters Commissioner (Appeal) 2006-07 to 2014-15 25.92 24.85
Commissioner 2012-2013 2.05 2.05
Mine and Minerals (Regulation and Development) Act 1957 Demand notice for royalty on alleged use of excavated minor minerals. High Court 2013-2014 to 2015-2016 20.79 10.39
Income-tax Act 1961 Demand arising out of Regular Assessment/Reassessment ITAT 2004-2005 2007-2008 to 2012-2013 1564.30 482.31

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks and dues to debenture holders. The Company has not borrowed anyfunds from the government.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) or term loans and hence reporting under paragraph 3 (ix) ofthe Order is not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company and no material fraud on the Company by itsofficers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and hence reporting under paragraph 3 (xii) of the Order isnot applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Act where applicable forall transactions with related parties and the details of such related party transactionshave been disclosed in the financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given to us during the year theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures and hence reporting under paragraph 3 (xiv) of the Order isnot applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of the Act isnot applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm Registration No. 117366W/W-100018)

P.R. RAMESH

(Partner)

(Membership No. 70928)

MUMBAI May 28 2018.