ANNUAL REPORT 2015-16
Let’s S lve Inside Message from the 1. Corporate Overview Founder Chairman 01 Message from the Founder Chairman 02 Let’s Solve 04 The Journey So Far… 06 At a Glance 10 Message from the CEO 12 Board of Directors 15 Key Leadership Team 16 Corporate Information 17 Key Financial Highlights 18 Corporate Social Responsibility
2. Our DNA 20 Client-Centricity 21 Digital Leadership 22 Best Place to Learn, Evolve, Grow
3. Statutory Reports 26 Directors’ Report 55 Corporate Governance Report 62 Management Discussion and Analysis 76 Risk Management Framework
4. Financial Statements Mr. A. M. Naik, Founder Chairman, was conferred the Order of the Standalone Dannebrog as Knight First Class by Her Majesty, Queen Margrethe of 77 Independent Auditor’s Report Denmark. The knighthood is royal acknowledgement of Mr. Naik’s role in 82 Balance Sheet fostering Indo-Danish ties in the fields of business, commerce and culture. 83 Statement of Profit & Loss 84 Cash Flow Statement 86 Notes forming part of accounts Prior experience in enabling Consolidated technology-driven growth across 118 Independent Auditor’s Report 122 Balance Sheet multiple businesses gave your 123 Statement of Profit & Loss 124 Cash Flow Statement company an unmatched 126 Notes forming part of accounts ‘Business-to-IT connect’ Message from the Founder Chairman
The management team at L&T Infotech is increasingly building competencies in new-age technologies like Digital & Automation
Dear Shareholders,
Information Technology is increasingly becoming the axis on which a clear differentiator in markets where services were vulnerable our world rotates. Technology pervades multiple aspects - building to commoditisation. The L&T heritage has also served as an communication platforms, accelerating processes, expanding inspirational force across Team Infotech, motivating it to live up outreach, adding ‘intelligence’ to functions and contributing to to a seven-decade-old legacy of customer-centricity, professional delivering superior outcomes. The speed at which IT developments excellence, and the consciousness of larger social obligations even have transited from lab to life indicate a growing acceptance that as it vigorously pursued business goals. the old order will be disrupted and replaced with a new ‘digital’ way. Going forward, I am confident that the relationship between parent and subsidiary will become increasingly symbiotic - each I am very happy that your company - L&T Infotech - is playing complementing and augmenting the other. As L&T Infotech forays an increasingly important role in a sector of critical significance into uncharted geographies, it could well play the role of a flag- around the globe. bearer for the entire Group.
Our technology journey really began when we formulated an IT As we enter an era of growing convergence, the future presents vision for the L&T Group, and committed ourselves to nurturing the a canvas of unprecedented change. The management team at newly-formed subsidiary. We recognised early that our IT initiative L&T Infotech is increasingly building competencies in new-age was uniquely positioned. Prior experience in enabling technology- technologies like Digital & Automation. The team comprises of driven growth across multiple businesses gave your company an high-calibre technology professionals with global experience, as unmatched ‘Business-to-IT connect’. I place on record, the pivotal well as experts possessing deep domain knowledge. We believe role of the Company’s former CEO & MD, Mr. V.K. Magapu, in that this blend of talent, bolstered by a strong management providing leadership and direction in the formative years of this culture, will help the Company successfully address the challenge organisation. of change and scale new heights.
Brand L&T has undoubtedly proved to be a key asset all along the journey. It has opened doors, providing access to new markets, A.M. Naik secured credibility among first-time customers and functioned as Founder Chairman Annual Report 2015-16
Let’s Solve
This is the age of disruption. Emerging technologies have turned business models upside down. Start-ups are threatening the behemoths. Corporations today are racing to disrupt themselves.
At the core of this disruption is technology which is connecting business with customers in ways, never fathomed before. Augmented Reality, 3D Printing, Internet-driven cars, Wearable devices, Smart Cities – technology phrases which were science fiction a few years ago, are a reality and here to stay. Technology is changing. The familiar and successful organisations will be those who will transform themselves to be able to thrive at the convergence of physical and digital worlds.
To navigate such change, businesses need a partner, who solves complex business problems, wherever they are.
At L&T Infotech, we solve.
We Solve Digital. We Solve IoT. We Solve Automation.
Let’s Partner. Let’s Solve.
2 Corporate Overview - Let’s Solve Our DNA Statutory Reports Financial Statements
Solving complex problems is embedded deeply in the DNA of Larsen & Toubro.
Our enduring group legacy of over seventy five years has seen us work closely with core industries like engineering, technology, construction, manufacturing and financial services. The L&T legacy has translated into a deep domain experience and institutional knowledge, giving us a unique real-world expertise of diverse industries ranging from automotive to aerospace, construction to consumer goods, housing to healthcare and ship-building to sciences.
At L&T Infotech, we enable and engage with clients to create winning and enduring solutions for their complex challenges.
Emanating from client-centricity, driven by digital leadership and reinforced by a culture of excellence in the form of best professionals in the industry, we believe in crafting far-reaching solutions for our clients. Solutions that help build innovative business models, enhance operational efficiencies and create captivating customer experiences. Let’s Solve
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The Journey So Far…
The confident steps taken in 1997 picked up pace and became swift strides, as we covered many miles and created memorable milestones.
Acquisition of Achieved GDA Tech Inc., USA- SEI CMM-L5 Electronic design Certification services company
1997 2004 2008 2002 2007
Company was Was awarded the Established incorporated in initial multi-year business Dec, 1996, by spin-off annuity contract by in South Africa of Information Systems Global Fortune 100 Division of L&T Oil & Gas Corporation
Where We are among the TOP 20 we stand Global IT Services companies with an We work with today… annual revenue of 258 clients, $ 887Mn + including 49 Fortune 500 Companies
4 Corporate Overview - The journey so far… Our DNA Statutory Reports Financial Statements
Positioned among the Top 20 IT Service Re-organisation of providers by Everest Achieved SEI CMMi verticals. Introduction Group v1.2 Level 5 of Media & certification for all Entertainment and Positioning to cater development centres Travel & Logistics to Smart Cities in India verticals Opportunities
2011 2015 2010 2013 2016
Acquisition of Acquisition of transfer agency Information Systems business unit from Research Centre (ISRC), Citigroup in Canada a unit of UTC Group (L&T Infotech Financial Services Technologies Inc.)
Note: The above information has been presented on Financial Year basis.
We have 20,000+ employees 44 Working out of Sales Offices 22 Delivery Centres across the Globe
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At a Glance
Our Promise We solve complex business challenges at the convergence of digital and physical WORLD with our real-world expertise and client-centricity.
Our Pedigree
We are part of Larsen & Toubro Limited Today, L&T continues to be engaged in (L&T), a diversified conglomerate of the core sectors of the economy. It is Larsen& revenue over USD 15 Billion. Tracing its augmenting its presence in infrastructure, roots back to 1938, the company has been defence and technology sectors and sees involved in nation-building over the last an expansive role in building of smart Toubro seven decades. The company is a leader in cities and communications. Engineering, Construction, Manufacturing, Limited Finance and Technology. L&T has consistently contributed to India’s a diversified progress over the decades. From setting up cement plants and building offshore conglomerate oil platforms in the 1980s to creating tracing its roots Knowledge Cities and Business Parks, L&T’s profile and portfolio has been in line back to 1938. with its strategic vision of contributing to nation-building.
6 Corporate Overview - At a Glance Our DNA Statutory Reports Financial Statements
Our Real-World Expertise – Our Business-to-IT Connect Leveraging Domain Experience and Institutional Knowledge of the L&T Group
Heavy Engineering Power Construction
Construction Defence Equipment Ship Building
Finance & Housing & Insurance Real Estate Hydrocarbons
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At a Glance
Global Presence Europe 12 Sales offices 2 Delivery centres
North America 14 Sales offices 8 Delivery centres India 9 Sales offices & Delivery centres
Middle East & South Africa APAC 4 Sales offices 5 Sales offices 1 Delivery centre 2 Delivery centres
Banking & Insurance Energy & Automotive Financial Services Process and Aerospace
Where we Utilities Engineering and Consumer Packaged Media and Solve Construction Goods, Retail & Entertainment Pharmaceuticals
Travel and Hi-Tech Plant Equipment Logistics
8 Corporate Overview - At a Glance Our DNA Statutory Reports Financial Statements
How we Solve Awards & Recognitions
Application Development Maintenance Digital Solutions Application Development SMAC Application Maintenance & Support Big Data Application Outsourcing loT Enterprise Integration Our success with new-age technologies, Cognitive Computing our client-centric approach and our Enterprise Solutions institutionalised processes have earned us, SAP numerous awards and recognitions during Oracle Infrastructure Management Services the year. Notable among these are: Microsoft Business 1st Methodology Cloud Apps Tech & Ops Transformation o ‘Innovation in Big Data Award’ at the Command-centric Global Ops NetApp Innovation Awards, 2015 Data Centre Codified Testing & Validation o ‘Best Analytics Service/Solution Core Testing Provider’ Award in Predictive Modelling Test Advisory Platform-Based Solutions at the World Marketing Congress, 2015 Specialised testing SaaS-Based Transfer o Three awards at the World Innovation Agency Platform Congress 2016. Our Digital Solutions won awards in three categories; Core services supported by critical alliances, partnerships and certifications • Financial Crime EDD Automation - Best Innovation in Information Technology Category CIO Advisory • MyCar - Most Innovative Product of the year Category Organisational Change Management Digital Innovation • MediaHub Most Promising New Thought Product - Technology Category Partnership o Five awards at the World HRD Congress & Consulting o Indian Merchants’ Chambers’ Business Ramakrishna Bajaj National Quality Operational Transformation Award 2015 in Service Category Efficiency o Positioned among Top 20 IT Service Providers in 2015 by the Everest Group Application Strategy
o Positioned in Leadership zone in Broadcasting segment by Zinnov
9 Annual Report 2015-16
Message from the CEO
Dear Shareholders,
These are exciting times. Industries are being disrupted, leaders are being upended. Powered by the innovative use of technologies, new companies are rapidly rising to the top in every sector. The IT Services sector is not immune to this transformation and it is undergoing a metamorphosis of its own. As someone who has been closely involved with the evolution of this sector during the last 25 years, I have seen more changes in the last 5 years than I witnessed in the previous 20. Periods of such transformation occur only once in each generation and it is my privilege to lead the company during this remarkable phase.
Late last year, when I walked into my office for the first time at the company’s headquarters in Mumbai, I knew I was a member of one of the most respected conglomerates in the nation. L&T is among the best known brands in the country and is often referred to as the ‘Builder of India in the 21st century’. I also understood that as L&T Infotech, we inherit much more than just our name from the L&T Group. We derive strength, synergies, and most importantly, the priceless asset of trust.
Sanjay Jalona Chief Executive Officer & Managing Director
As we help our clients stay competitive, we are continuing to cement our position in the industry as a growing and financially stable organisation
10 Corporate Overview - Message from the CEO Our DNA Statutory Reports Financial Statements
Revenue (USD Million) 887.2
809.9
746.6 Our Revenue Growth 9.5% in Dollar terms over increase the previous year 2013-14 2014-15 2015-16
Over the next few months, I met hundreds With deeper understanding of digital ecosystems. We will help our clients of extremely talented people and was engagements like these, my appreciation stay ahead of the technology curve by inspired by their passion for achieving for our achievements has grown manifold. making early investments in exponential client’s objectives and how well they It is the strength of our digital, analytics technologies. represent L&T values all over the world. and automation solutions like these that As I immersed myself into the company’s has won us several recognitions during the We are a company with strong foundation operations and met with long-standing year. In 2015, the Everest Group positioned and tremendous potential. My role as clients across continents, I was amazed by us amongst the Top 20 IT Services providers the CEO of L&T Infotech is to unlock this the depth of our relationships and respect globally, three of our Digital solutions potential and catapult the company into the next higher orbit. As a team, we have that we have earned for our unparalleled won recognition at the World Innovation a once-in-a-lifetime opportunity to build industry knowledge. I was also impressed Congress 2016 and we were adjudged a next generation technology company, by the tools, platforms and innovative Leaders in Digital Transformation by CEBIT, known for its client-centricity and deep solutions that are saving millions of India. domain understanding. We are excited dollars for our clients and improving their about the times ahead. We turn 20 this As we help our clients stay competitive, competitiveness. I learnt about several year; just the right time to say goodbye to engagements that make us their chosen we are continuing to cement our position our teenage years and commence a new partner. A few being: in the industry as a growing and financially journey of transformation and growth. As stable organisation. During the last financial we step into this marvellous journey, I look o Establishment of ‘Smart Factory’ year, our revenue grew by about 9.5% in forward to your continued support and best initiative for a Global Automotive Dollar terms to USD 887.2 million. At the wishes. Original Equipment manufacturer threshold of the coveted One Billion-dollar milestone, our scale and agility makes us Let’s Solve. o Providing services in areas of Digital the ideal partner for global companies. Oilfield, Pipeline Management, We will continue to draw upon our rich Sanjay Jalona Digital Refinery for a Global Oil & Gas technology and real-world experience Chief Executive Officer & Corporation to lead the convergence of physical and Managing Director
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Board of Directors
A. M. Naik Sanjay Jalona Non-Executive Chairman Chief Executive Officer & Managing Director
A. M. Naik is the Non-Executive Chairman of our Company. Sanjay Jalona is the Chief Executive Officer & Managing Director He obtained his graduate degree in mechanical engineering from of our Company. He has obtained a degree of Master of Science the Birla Vishvakarma Mahavidyalaya, Sardar Patel University of (Technology) in computer science from the Birla Institute of Gujarat. He has been associated with Larsen & Toubro Limited Technology and Science, Pilani. Mr. Jalona has over 25 years for over five decades. He rapidly rose to secure the position of of experience in the IT industry. Prior to joining our Company, Managing Director & CEO, followed by Chairman in 2004 and he worked at Infosys Limited as the Executive Vice President culminating in Group Executive Chairman in 2012. and Global Head of High-Tech, Manufacturing and Engineering Mr. Naik is the Hon. Consul General for Denmark in Mumbai and Services. He also served as a member of the Board of Lodestone was awarded the Order of the Dannebrog as Knight 1st Class Holding AG, the management consulting subsidiary of Infosys in by Queen Margrethe of Denmark. He has been awarded an Europe and has also chaired the Board of Infosys Technologies Honorary Degree of Doctor of Letters from Veer Narmad South (China) Company Limited and Infosys Technologies (Shanghai) Gujarat University. Mr. Naik has made several contributions for Company Limited. He was appointed as a Director of our social upliftment and has contributed to the setting up of certain Company with effect from August 10, 2015 as an Additional educational facilities and hospitals such as the Kharel Education Director. Society, the Manibhai Nichhabhai Naik Higher Secondary School, the Anil Naik Technical Training Centre and the Nirali Memorial Radiation Centre. Mr. Naik has secured several global, national and professional honours, including the “Padma Bhushan”, “Gujarat Garima Award” – Gujarat’s highest civilian honour, “Asia Business Leader of the Year Award” and “India’s Business Leader of the Year Award” by CNBC Asia, “Business Leader of the Year (Building India) Award” by NDTV Profit and “Business Leader of the Year Award” by the Economic Times. He has been a Director of our Company since December 23, 1996.
12 Corporate Overview - Board of Directors Our DNA Statutory Reports Financial Statements
S. N. Subrahmanyan R. Shankar Raman Samir Desai Non-Executive Director Non-Executive Director Independent Director
S. N. Subrahmanyan is a Non-Executive R. Shankar Raman is a Non-Executive Samir Desai is an Independent Director of Director of our Company. He has obtained Director of our Company. He is a qualified our Company. He has obtained a post- a graduate degree in civil engineering from Chartered Accountant. He has over 28 years graduate degree in electrical engineering the Kurukshetra University, Haryana and of experience in various capacities in the from the Illinois Institute of Technology. has completed a post-graduate course in field of finance. Mr. Shankar Raman joined He also holds a post-graduate degree business administration from Symbiosis the L&T group on November 14, 1994 for in business administration from Loyola Institute of Business Management, Pune. incorporating L&T Finance Limited. He was University, Chicago. Mr. Desai has over Mr. Subrahmanyan has over 30 years appointed as the Chief Financial Officer of 30 years of experience in management. of experience in the infrastructure and L&T in September 2011 and subsequently Prior to joining our Company, he worked construction industry. He joined the L&T elevated to the board of directors of L&T at Motorola for over 30 years and has also group in 1984. He is a member of the on October 1, 2011. He presently oversees served as a Chief Information Officer at Governing Council of the Construction the finance functions in L&T. Mr. Shankar Motorola. He has also served as general Skill Development Council of India. He is Raman holds the position of director in manager of iDEN® Networks & Devices. also a member of the Board of Governors several companies within the L&T group. He was appointed as a Director of our of the National Institute of Construction He was ranked amongst the top three Company on January 27, 2007. Management and Research. CFOs in Asia by the Institutional Investor Mr. Subrahmanyan is a Fellow of the magazine in the infrastructure sector in Institution of Civil Engineers - United 2013 and in the industrials sector in 2014 Kingdom. He was the Chairman of the and 2015. In 2013, Mr. Shankar Raman CII Gulf Committee for the Financial Year won CNBC TV18’s ‘CFO of the Year Award’ 2012 and was a member of the Working and Business Today’s Best CFO Award for Committee, Projects Exports Promotion Consistent Liquidity Management under Council. Mr. Subrahmanyan was awarded Large Companies category. He ceased to be the “Leadership Award” by the Qatar the Director of our Company on September Contractors Forum in 2014. He was ranked 26, 2015 and was re-appointed on October 36th in the “2014 Construction Week Power 28, 2015 as an Additional Director. 100” in the global construction sector in a survey by international publication the Construction Week, in its issue dated June 22, 2014. In 2012, he was awarded with the “Outstanding Contribution to Industry (Infrastructure)” by the Construction Week Magazine. He was appointed as Director of our Company on January 10, 2015.
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Board of Directors
M. M. Chitale Vedika Bhandarkar Arjun Gupta Independent Director Independent Director Independent Director
M. M. Chitale is an Independent Director of Vedika Bhandarkar is an Independent Arjun Gupta is an Independent Director of our Company. He has obtained a graduate Director of our Company. She has our Company. He has obtained a graduate degree in commerce from the University obtained her graduate degree in science degree (Phi Beta Kappa) and a post of Mumbai. He is a qualified Chartered from the Mohanlal Sukhadia University, graduate degree in computer science from Accountant. He has over 40 years of Udaipur and completed a two-year post- Washington State University and a post experience as a Chartered Accountant in graduate programme in management graduate degree in business administration practice. Mr. Chitale has been a fellow from the Indian Institute of Management, from Stanford University. He was also an member of the ICAI and has served as Ahmedabad. She has over 25 years Advanced Leadership Fellow from Harvard the President of ICAI in the year 1997-98. of experience in the financial services University and a 2001 Henry Crown Fellow He was also associated as a member of industry. Prior to joining our Company, she from the Aspen Institute. Prior to moving governing council of Banking Codes and held the position of the Managing Director to USA, he had obtained a graduate degree Standards Board of India. Mr. Chitale and Vice-Chairman, India, of Credit Suisse in economics (Honors) from St. Stephen’s was also the Chairman of the Ethics Securities (India) Private Limited (“Credit College, Delhi University. Mr. Gupta is the Committee of the Stock Exchange, Mumbai. Suisse”). She has served as the head of managing partner of TeleSoft Partners, a He was a member of Advisory Board on Indian investment banking and global special situations venture capital firm he Bank, Commercial and Financial Frauds. markets solution group, India, at Credit founded in 1997. He has over 27 years He was also a member of the group for Suisse from July 2010 to February 2015. of experience working with technology Amalgamation of Urban Co-operative She has also worked with JP Morgan India companies in venture capital, consulting Banks. He was a member of the Working Private Limited in India as the Managing and engineering roles. Mr. Gupta was Group on Restructuring of Weak Public Director from May 1998 to July 2010. ranked by Forbes Magazine in the Top- Sector Banks appointed by RBI (Verma She was appointed as a Director of our 100 technology venture investors on the Committee) and the Committee on Company with effect from March 16, 2015. 2006, 2007, 2008 and 2009 Midas Lists. He Procedures and Performance Audit of serves on the boards of various companies Public Services appointed by RBI (Dr. in USA such as Calient Technologies Inc., Tarapore Committee) as well. He was Jumpstart Games Inc. (formerly Knowledge appointed as the Chairman of National Adventure) and Nexant Inc.; and he is an Advisory Committee on Accounting advisor of DocuSign. He was appointed as Standards. He was appointed as a Director an Additional Director of our Company on of our Company on October 17, 2011. October 28, 2015.
14 Corporate Overview - Board of Directors | Key Leadership Team Our DNA Statutory Reports Financial Statements Key Leadership Team
Corporate Vertical Heads
Chief Executive Officer & Managing Director Chief Business Officer – Insurance & Testing, Americas Sanjay Jalona Anil Vazirani
Chief Operating Officer Chief Business Officer – BFS, Americas Aftab Ullah Harsh Naidu
Chief Financial Officer Chief Business Officer – Tech, Media, CRP & Digital, Americas Ashok Kumar Sonthalia Siddharth Bohra
Global Human Resources Head Chief Business Officer – Manufacturing & ERP, Americas Manoj Biswas Rohit Kedia
Company Secretary Chief Business Officer – Europe Subramanya Bhatt Makarand Deolalkar
Chief Marketing Officer Chief Business Officer – Nordic Region Peeyush Dubey Sarbajit Deb
Chief Business Officer – Emerging Markets Rajat Mathur
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Corporate Information
Board of Directors Committee Positions
A. M. Naik Audit Committee Corporate Social Responsibility Committee Non-Executive Chairman M. M. Chitale S. N. Subrahmanyan Independent Director (Chairman) Non-Executive Director (Chairman) Sanjay Jalona Chief Executive Officer & Samir Desai Sanjay Jalona Managing Director Independent Director Chief Executive Officer & S. N. Subrahmanyan Managing Director S. N. Subrahmanyan Non-Executive Director M. M. Chitale Non-Executive Director Vedika Bhandarkar Independent Director R. Shankar Raman Independent Director Non-Executive Director Risk Management Committee Samir Desai Nomination and Remuneration Committee S. N. Subrahmanyan Independent Director Samir Desai Non-Executive Director (Chairman) Independent Director (Chairman) Sanjay Jalona M. M. Chitale Chief Executive Officer & Independent Director A. M. Naik Non-Executive Chairman Managing Director Vedika Bhandarkar S. N. Subrahmanyan Ashok Kumar Sonthalia Independent Director Non-Executive Director Chief Financial Officer Arjun Gupta M. M. Chitale IPO Committee Independent Director Independent Director A. M. Naik Stakeholders’ Relationship Committee Non-Executive Chairman (Chairman) S. N. Subrahmanyan S. N. Subrahmanyan Non-Executive Director (Chairman) Non-Executive Director Vedika Bhandarkar Sanjay Jalona Independent Director Chief Executive Officer & Managing Director Sanjay Jalona Chief Executive Officer & Managing Director
Corporate Information Corporate Office of our Company Bankers to our Company L&T Technology Centre, Gate No. 5, Citibank N.A. Saki Vihar Road, Powai, Mumbai - 400 072 Standard Chartered Bank Registered Office of our Company Tel: (91 22) 6776 6776 Barclays Bank PLC L&T House Fax: (91 22) 2858 1130 ICICI Bank Limited Ballard Estate The Hongkong and Shanghai Banking Mumbai - 400 001 Auditors to our Company Corporation Limited Tel: (91 22) 6752 5656 M/S Sharp & Tannan Fax: (91 22) 6752 5893 Registrar & Share Transfer Agent E-mail: [email protected] Corporate Identification Number: Link Intime India Private Limited Website: www.lntinfotech.com U72900MH1996PLC104693 Registration Number: 104693
16 Corporate Overview - Corporate Information | Key Financial Highlights Our DNA Statutory Reports Financial Statements Key Financial Highlights
Revenue Revenue from Profit After Tax from (USD Million) Continuing Operations Continuing Operations (` Million) (` Million)
887.2 58,471 9,223
49,681 7,600 809.9 45,352 6,598
746.6
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Earnings Per Share Total Headcount Clientele from Continuing (Nos.) (Nos.) Operations (Diluted) (`) 56.13 20,072 258 232 19,479 45.10 204 39.16
17,627
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
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Corporate Social Responsibility
As responsible corporate citizens, we share our success with our Generate recurring society and communities we live and work with. The thrust areas income for of our CSR initiatives are Employability through IT and soft skills Education, Women Empowerment and the Environment. 150 women
Employability Women and Education Empowerment
Today, we have 45 locations from where we We have created infrastructure to generate impart computer skills – the primary thrust recurring income for 150 women. We also area. This year, 1,144 youth passed out assisted 2,800 women to generate income from 18 centres set up and dedicated for throughout the year from sale of their youth for employability and 123 who were products. inclined to take jobs, were placed. Another 27 computer centres were set up in schools for teaching 3,401 school children IT Assisted curriculum. Volunteers and partner NGOs 1,144 taught Science, English, Mathematics in youth passed out additional 11 schools-cum-study covering 2,800 17,098 children. Our projects would scale women to generate income 18 up during the subsequent years. computer centres were set up for youth 27 computer centres were set up in schools for teaching 3,401 school children enrolled in IT curriculum
18 Corporate Overview - Corporate Social Responsibility Our DNA Statutory Reports Financial Statements
1Step Chennai, provided Reconstructing school kits to 18 1,209 schools in Sadras region students in government schools
Chennai Fresh Environment and Flood Relief Initiatives Sustainability
1. We have helped in reconstructing During the last quarter of FY16, we have 1. Green Initiative-Achieved United States 18 schools in Sadras region. This would launched a few scalable digital literacy Green Building Council’s LEED - Gold ensure students go back to school and projects in partnership with leading Green Building Certification for Powai study. NGOs and educational content provider office on 1st February, 2016. This focussed on using digital technology. project helped in energy and water 2. We have helped in reconstructing The programmes are designed such that savings, waste and e-waste streamlining Gandhi Study Centre – a unique study they are scalable allowing us to reach and management, switching to green centre of Gandhian values where the outskirts of Tier I, II, III, IV cities. But certified products and consumables, and thousands come to study. the focus is on measurement of impact aiding employee comfort. outcomes. 3. Women Empowerment for Rural 2. Occupational Health Safety Initiative-We women in Thiruvallur District. achieved BS OHSAS 18001: 2007 We provided sewing machines and also certification for Powai on 17th training for a year that would help them December, 2015. It is aimed at gain their livelihood back. Occupational Health and Safety of all stakeholders working in Powai. 4. 1Step Chennai provided school kits to 1,209 students of government schools.
5. Company and employees also contributed to one day’s salary.
6. 1Step also supported the office staff with relief kits.
Let’s Share
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Client-Centricity
At the core of everything that we think and do is our client. We believe that satisfied and happy clients are both our key differentiators as well as best validators of our enduring success. We have many clients who have trusted us to solve problems for their critical programmes. Many of our client-relationships are more than a decade old, with some as long as 19 years! We will continue to strive, to provide unmatched client experience and surpass their expectations.
20 Corporate Overview Our DNA - Client-Centricity | Digital Leadership Statutory Reports Financial Statements Digital Leadership
The digital world is evolving at lightning speed. Every day, newer technology and innovations are creating applications and solutions that are rendering yesterday’s products and solutions redundant. In this constantly changing digital space, we are at the forefront of adopting and adapting to change. We are agile and responsive to embracing cutting-edge advances. We are Our Digital competencies launching new services and solutions, in areas of span right from IoT, Automation, Robotics, Big Data & Analytics Transformation advisory and other Digital Services, while continuing to through Implementation build on our core services. In this space, we are to Operations. Our also building a strong ecosystem of partners with experience ranges from niche capabilities so as to be able to address a transforming supply chain wide spectrum of client requirements. management, improving operational efficiency, end- to-end Business process digitalisation, enhancing customer experience. Our automation competencies range from Human Task automation, Straight- through processing to Process digitalisation and Machine intelligence.
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Best Place to Learn, Evolve, Grow
Underpinning our focus on Customer-centricity and Digital We have always been a learning Leadership is our single-minded determination to make L&T organisation. We have an integrated Talent Management initiative that focusses on Infotech as the best place where top technology professionals career-building for our employees, on come together to learn, evolve and grow. We believe that it is our both domain skills-related learning and PEOPLE who will create a truly global impact through a culture leadership skills. We have embarked upon a People Manager journey aimed at of excellence and performance that will make us the preferred building better line managers and directly partners for our clients as we continue with our Promise of - improving the engagement level of the Let’s Solve team members.
Talent Acquisition Talent Development o Campus hiring o Top talent management o Experienced hiring o Performance Management System o Employee development & Enrichment o Employee engagement
PEOPLE TRANSFORMATION STRATEGY Create an integrated Global HR framework to enable growth through Innovation, Excellence and Employee Total Rewards engagement Digital and Analytics o Awards o HR systems o Rewards o Predictive analytics o HR Social strategy
L&T INFOTECH VALUES – FOUNDATION FOR SUCCESS Meritocracy & Fair play | Dependability | Passion | Team Work | Innovation | Agility | Integrity
22 Corporate Overview Our DNA - Best Place to Learn, Evolve, Grow Statutory Reports Financial Statements
People Building and Grooming Leaders
Manager Journey The success of any organisation lies in the strength of its leadership.
The People Manager Journey is a focussed L&T Infotech has reinforced its stature as a company that prides itself on developing programme for first line managers. The leadership competencies of its talent pool across the board, employing creative programme helps delivery track to build methodologies. awareness and provide a framework for competency development in order to We focus on building and grooming talent through a bouquet of programmes aimed at enable line managers to be effective and building leadership capabilities. These are categorised into role-based, cadre/strata-based, accountable people managers by: location-based and competency-based offerings. o Engaging employees, enable learning Through strategically planned interventions, we aim at improving the efficiency and and adaptability to change efficacy of our business operations. Our interventions are steered to increase the overall o Ensuring clarity of goals and role effectiveness of our Business Units (BU) by identifying the root cause of challenges faced expectations within the team and by them, aligning their strategies with our organisation’s goal, co-creating solutions and driving performance thereby partnering with Business Units (BUs) to reach a shared vision. We serve as an o Establishing two-way communication internal consultant, fulfilling the requirements of our Business Units (BUs). with employees for continuous improvement & development Leadership and Talent o Managing highest level of compliance within the team in all aspects of Development Role/BU Specific operations Programmes for Account Development Management The programme uses blended learning to Programmes for ensure maximum reach and learning. Leadership High-Performers o Excellence Development Programmes o Empowered Managers o HR FLAME Programme Programme o Leadership Journeyman o Leadership Excellence o People Manager Programme Series Programme Journey o Leadership Express o OD Interventions Modules o Talent Guru o Competency Suite Programmes
Behavioural BU Specific Calendar Project Need Training Customised Programmes Behavioural Offerings Based Programmes
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Best Place to Learn, Evolve, Grow
Enhancing Capabilities of Employees by Aligning Specific Role-based Competencies
Aligning the skill-sets and talents of our people based on competencies is a key focus area to unlock the capabilities of our people.
Niche Skill Role-based V-Learn – A one-stop development Competency shop for all training programmes: development activities and process:
Strategic skill development offerings: This was an automation project for programmes were offered such as: automating all learning process and Role-based competency programme activities online. offerings include competency o Power Programmer development in areas such as: o effective Proposal writing o Training and Assessment catalogues o Lean Kanban o Business Analyst o Training records o ITIL o Project Management o Online Training Feedback o TOGAF- Enterprise Architecture o Programme Management o Raising training requests o Supply Chain Management o Software Architect o Training certificate of attendance o Certification and assessment records o Certification reimbursement
24 Corporate Overview Our DNA - Best Place to Learn, Evolve, Grow Statutory Reports Financial Statements
Managing within Empowered constraints Managers Programme: and realities Difficult Manage self conversations, to manage Empowered Managers Programme is a including expectations role-based initiative designed to enhance feedback of all the people management skills of managers. stakeholders
Objective of the Programme is: o Enhancing understanding of HR Key Focus people policies & processes Areas o Examining current people management approach in creating enhanced performance in Understanding Expand circle business through effective people team of influence management aspirations o Embracing self-development for Balancing improved people performance at people work place management within Project Delivery
25 Annual Report 2015-16
DIRECTORS’ REPORT
Your Directors have pleasure in presenting the Annual Report along with the Audited Financial Statements of Larsen & Toubro Infotech Limited for the year ended March 31, 2016.
FINANCIAL RESULTS (` Million) Unconsolidated Consolidated Particulars 2015-16 2014-15 2015-16 2014-15 Revenue from operations 55,695.20 47,444.03 58,470.60 49,780.36 Other Income 3,386.06 887.80 2,959.61 915.00 Total Income 59,081.26 48,331.83 61,430.21 50,695.36 Operating Profit 12,669.79 10,436.79 13,315.76 10,959.57 Less: Finance Cost 103.57 104.18 103.57 104.19 Less: Depreciation and amortization 1,034.48 907.30 1,739.52 1,579.40 Profit before extraordinary items and tax 11,531.74 9,425.31 11,472.67 9,275.98 Extraordinary item - - - 93.95 Profit Before Tax (PBT) 11,531.74 9,425.31 11,472.67 9,369.93 Less: Provision for Tax 2,150.43 1,695.69 2,249.61 1,682.77 Profit for the year before minority interest 9,381.31 7,729.62 9,223.06 7,687.16 Minority Interest - - 1.29 1.90 Profit for the year (PAT) 9,381.31 7,729.62 9,221.77 7,685.26 Add: Balance brought forward from previous year 13,453.81 11,445.86 14,193.21 12,229.63 Add: Profit and loss account of ISRC on amalgamation 100.58 - - - Add: Transfer due to amalgamation (pertaining to period October 17, 2014 to March 31, 2016) 27.35 - - - Balance available for disposal which Directors appropriate as follows: 22,963.05 19,175.48 23,414.98 19,914.89 Less: Depreciation & Deferred tax charged to retained earnings - 10.10 - 10.10 Interim Dividends (excluding tax) 5,467.30 4,805.25 5,467.30 4,805.25 Proposed Dividend* (excluding tax) 441.52 - 441.52 - Tax on Dividends (interim & proposed) 1,106.73 906.32 1,106.73 906.32 Balance to be carried forward 15,947.50 13,453.81 16,399.43 14,193.22
* The Directors recommend payment of final dividend of ` 2.60 per equity share of ` 1 each on 169,816,188 equity shares.
26 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Directors’ Report Financial Statements
PERFORMANCE OF THE COMPANY to the revenue was 52.4% (previous year 51.6%) from Services Cluster and 47.6% (previous year 48.4%) from Industrials Cluster, STATE OF COMPANY AFFAIRS on unconsolidated basis. On consolidated basis, the contribution On unconsolidated basis, revenue from operations and other income to the revenue was 53.9% (previous year 52.8%) from Services for the financial year under review were ` 59,081.26 Million as against Cluster, 46.1% (previous year 47.0%) from Industrials Cluster ` 48,331.83 Million for the previous financial year registering an and 0.0% (previous year 0.2%) from Telecom (PES Discontinued increase of 22.2%. The profit before tax was ` 11,531.74 Million and Business). the profit after tax was ` 9,381.31 Million for the financial year under review as against ` 9,425.31 Million and ` 7,729.62 Million respectively The detailed segmental performance is referred in Note No. T(9) of for the previous financial year. There were no material changes and the Notes forming part of the unconsolidated financial statements commitments affecting the financial position of the company, between and T(6) of the consolidated financial statements provided in this the end of the financial year and the date of the report. Annual Report.
On consolidated basis, revenue from operations and other income for GEOGRAPHICAL PERFORMANCE the financial year under review were ` 61,430.21 Million as against ` 50,695.36 Million for the previous financial year registering an increase The Revenue contribution of the Company from the various of 21.2%. The profit before tax was` 11,472.67 Million and the profit after Geographies is mentioned herein below: tax was ` 9,221.77 Million for the financial year under review as against Unconsolidated ` 9,369.93 Million and ` 7,685.26 Million respectively for the previous financial year. There were no material changes and commitments S. N. Geography 2015-16 2014-15 affecting the financial position of the company, between the end of the 1 North America 68.6% 67.5% financial year and the date of the report. 2 Europe 17.4% 18.6% 3 Asia Pacific 2.1% 2.5% SEGMENTAL PERFORMANCE 4 India 6.1% 4.4% During the year, the Company had two Business Segments namely, 5 Rest of the World 5.8% 7.0% Services Cluster and Industrials Cluster of which contribution
Consolidated Revenue from continuing Revenue from discontinued Total Revenue S. N. Geography business business 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 1 North America 69.0% 68.6% - - 69.0% 68.5% 2 Europe 17.4% 17.9% - 100.0% 17.4% 18.0% 3 Asia Pacific 2.0% 2.4% - - 2.0% 2.4% 4 India 5.8% 4.2% - - 5.8% 4.2% 5 Rest of the World 5.8% 6.9% - - 5.8% 6.9%
INITIAL PUBLIC OFFERING OF YOUR COMPANY ` 7,910.24 Million) out of which assets amounting to ` 1,014.19 During the year ended March 31, 2016, your Company had filed Draft Million (previous year ` 1,377.63 Million) were added during Red Herring Prospectus (‘DRHP’) with the Securities & Exchange the year. Board of India (‘SEBI’) for the proposed Initial Public Offer (‘IPO’) of your Company through an Offer for Sale (‘the Offer’) by Larsen On consolidated basis, as at March 31, 2016, the gross fixed and & Toubro Limited. Due to change in the Offer structure and other intangible assets stood at ` 14,209.88 Million (previous year considerations, the said DRHP was withdrawn on April 11, 2016 and ` 13,379.21 Million) out of which assets amounting to ` 1,346.97 pursuant to the approval of the IPO Committee, the Company has Million (previous year ` 2,243.52 Million) were added during filed a revised DRHP on April 12, 2016. the year.
CAPITAL EXPENDITURE DIVIDEND On unconsolidated basis, as at March 31, 2016, the gross fixed The Directors recommend payment of final dividend of ` 2.60 per and intangible assets stood at ` 8,419.33 Million (previous year equity share of ` 1 each on the share capital.
27 Annual Report 2015-16
The total dividend on equity shares including interim dividend and new industry sectors, new prospects, and also with the Analyst proposed dividend for the year ended March 31, 2016 would aggregate Community. to ` 5,908.82 Million (previous year ` 4,805.25 Million) and outflow towards dividend distribution tax would aggregate to` 1,106.73 Million Your Company’s ability to solve complex business challenges at (previous year ` 906.32 Million). the convergence of digital and physical with real-world expertise, leadership in domain and technology, and building the best TRANSFER TO RESERVES organization to learn & grow will help create the Company to be The Directors do not propose to transfer any amount to reserve. No.1 in Client-centricity. This will further enhance your Company’s brand value as one of the most recognized IT companies in DEPOSITS the world. During the year ended March 31, 2016, the Company has not QUALITY INITIATIVES accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the Quality is an all-pervasive commitment of the Company. We date of the Balance Sheet. translate this commitment into seamless service delivery for our clients. The vision of improvement in Quality and delivery is driven PEOPLE from top to bottom across the organization. We have added new certifications along with sustaining existing ones. We continue on the journey to make the Company the best place to learn and grow. This year we have laid emphasis on personal development and growth of our employees, besides focusing on The Company was successfully appraised for CMMI SVC Level 5 hiring, engaging and retaining key talent. In order to do so, we in September 2015 for Application support and Infrastructure have initiated the process of capturing the development needs of Management services. The focus for the year was to mature the employees in our Performance Management System. application support and Infrastructure management services. Effective tools, techniques and predictive models are built and The Company has put in efforts to continuously simplify all people deployed for estimation and project management decision policies and make them more current and transparent, by seeking making. Statistical techniques are deployed for monitoring inputs from employees, in order to retain our best talent across the the key project processes. The Company continues to maintain globe and build a pipeline of leaders. and is now ready to be re-appraised for CMMI Dev Level 5 in May 2016. We continue to recruit top talent and also recruit from top Universities. We also focus to foster gender diversity in our The Company continues to adhere to International quality recruitment drive. This year we have launched a program titled - certifications, namely ISO9001:2008, ISO/IEC27001:2013, ‘Catalyst’, to hear the voice of the employees and provide them an ISO14001:2004 & ISO/IEC20000-1:2011 through a combined opportunity to shape their workplace. external audit conducted by Bureau Veritas. As per specific client needs and requirements, your company has sustained the ISAE3402 The Directors express their appreciation to all the employees of the certification for projects of Insurance domain across Business Units Company for their outstanding contribution to the operations of the and few specific client engagements. Company during the year. We continue to deliver value to our clients through continuous INFRASTRUCTURE improvements and value additions. The company has adopted The Company has been expanding its facilities to keep pace with various initiatives such as Lean methodology levers and Extreme revenue growth. Emphasis has been on adding capacity in SEZ locations Automation to optimize delivery execution and improve for the new & incremental business. The new units at Mindspace SEZ- productivity. These initiatives are governed and monitored Airoli, Hinjewadi-Pune and DLF SEZ Chennai were made operational through dashboards and periodic reviews at various levels. On during the year ended March 31, 2016. Total capacity at Indian centers an ongoing basis, we conduct project level and Leadership level stands at 21,585 Seats as on March 31, 2016. client satisfaction surveys to assess the client expectations. Survey results are analyzed to arrive at action plans and initiatives to BRANDING improve client experience. Brand ‘L&T Infotech’ has grown steadily across the globe, riding strongly on the value added to its Global clients in terms of CORPORATE SOCIAL RESPONSIBILITY (CSR) enabling them build innovative business models, enhance operational The Board has constituted CSR Committee in terms of the efficiencies, and creating captivating experiences for their customers. requirements of the Companies Act, 2013. The details relating to This has significantly enhanced your Company’s visibility across the same are given in Annexure H.
28 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Directors’ Report Financial Statements
The Annual Report on CSR is annexed as Annexure A to d. Mr. V. K. Magapu ceased to be the Managing Director of the this Report. CSR Policy of the Company is available on the Company’s Company w.e.f. September 26, 2015. website http://www.lntinfotech.com/aboutus/Corporate_social_ e. Mr. R. Shankar Raman ceased to be a Director of the Company responsibility.html. w.e.f. September 26, 2015.
CORPORATE SUSTAINABILITY The Board places on record valuable contribution made by the Green Initiative Directors during their tenure. During the year, the Company achieved United States Green Building C. Key Managerial Personnel: Council’s LEED - Gold Green Building Certification for Powai office in February 2016. This project helped in energy and water savings, The following were the changes in the Key Managerial Personnel: waste and e-waste streamlining and management, switching to green a. Ms. Angna Arora ceased to be the Company Secretary w.e.f. certified products and consumables, and aiding employee comfort. May 08, 2015.
Occupational Health Safety Initiative b. Mr. P. S. Kapoor was appointed as Head-Finance & Accounts & Company Secretary w.e.f. May 08, 2015 and was designated We achieved BS OHSAS 18001:2007 certification for Powai in as the Chief Financial Officer. He ceased to be Head-Finance December 2015. It is aimed at Occupational Health and Safety of all & Accounts & Company Secretary and also the Chief Financial stakeholders working in Powai. Officer w.e.f. August 26, 2015. DIRECTORS & KEY MANAGERIAL PERSONNEL c. Mr. Ashok Kumar Sonthalia was appointed as Head-Finance & A. Appointment/ Re-appointment: Accounts w.e.f. August 26, 2015 and has been designated as the Chief Financial Officer. During the year, following appointments were made on the Board: a. Mr. Sanjay Jalona as the Chief Executive Officer & Managing d. Mr. Subramanya Bhatt was appointed as the Company Director of the Company w.e.f. August 10, 2015 to August 09, Secretary w.e.f. August 26, 2015. 2020. Mr. Jalona, appointed as an Additional Director, will hold office till the ensuing Annual General Meeting (AGM) and is DIRECTORS’ RESPONSIBILITY STATEMENT eligible for appointment. The Board of Directors hereby confirm that: b. Mr. Arjun Gupta as an Independent Director of the Company (i) in the preparation of the annual accounts, the applicable w.e.f. October 28, 2015 to October 27, 2020, subject to the accounting standards have been followed and there has been approval of the shareholders. Mr. Gupta, appointed as an no material departure; Additional Director, will hold office till the ensuing AGM and is eligible for appointment. (ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are c. Mr. R. Shankar Raman as a Non-Executive Director of the reasonable and prudent so as to give a true and fair view of the Company w.e.f. October 28, 2015, subject to the approval state of affairs of the Company as on March 31, 2016 and of the of the shareholders. Mr. Shankar Raman, appointed as an profit of the Company for the year ended March 31, 2016; Additional Director, will hold office till the ensuing AGM and is eligible for appointment. (iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance Mr. A. M. Naik, Director of the Company, retires by rotation and being with the provisions of the Companies Act, 2013 for safeguarding eligible, offers himself for re-appointment at the ensuing Annual the assets of the Company and for preventing and detecting General Meeting of the Company. fraud and other irregularities; The notice convening the AGM includes the proposal for (iv) the Directors have prepared the annual accounts on a going appointment/ re-appointment of Directors. concern basis; and B. Cessation: (v) the Directors had devised proper systems to ensure compliance a. Mr. K. R. L. Narasimham ceased to be an Executive Director of with the provisions of all applicable laws and that such systems the Company w.e.f. April 08, 2015. were adequate and operating effectively. b. Mr. Sunil Pande ceased to be an Executive Director of the STATUTORY AUDITORS Company w.e.f. August 26, 2015. The Auditors, M/s. Sharp & Tannan, hold office until the conclusion c. Mr. Chandrashekara Kakal ceased to be an Executive Director of the ensuing Annual General Meeting. A certificate from them has of the Company w.e.f. August 27, 2015. been received to the effect that their re-appointment, if made, would
29 Annual Report 2015-16
be in line with the requirement laid under section 139 & 141 of the the Company becoming effective from September 21, 2015. Companies Act, 2013. The Board, based on the recommendation of However, there was no change in the paid-up share capital the Audit Committee, recommends the appointment of M/s. Sharp pursuant to the scheme. & Tannan as Auditors of the Company from the conclusion of the ensuing AGM until the conclusion of the next AGM. d. During the year 8,566,188 equity shares were allotted on exercise of the vested options under the employees stock The Auditor’s Report to the Shareholders does not contain any options schemes of the Company. Hence, the paid-up share qualification and therefore does not call for any comments from capital of the Company increased from ` 161.25 Million to Directors. ` 169.82 Million.
CONSOLIDATED FINANCIAL STATEMENTS DISCLOSURES UNDER THE COMPANIES ACT, 2013 The Consolidated Financial Statements pursuant to Section 129(3) 1. EXTRACT OF ANNUAL RETURN of the Companies Act, 2013, prepared in accordance with the The details forming part of the extract of annual return is Accounting Standards prescribed by the Institute of Chartered annexed as Annexure C to this Report. Accountants of India, forms part of this Annual Report. The Auditors report to the shareholders does not contain any qualification, 2. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS observation or adverse comment. The Board of Directors met 6 (six) times during the financial year. The details of the Board meetings and the attendance SECRETARIAL AUDITOR of Directors are provided in Annexure H - Report on The Secretarial Audit Report issued by Ms. Naina Desai, Practicing Corporate Governance Report forming part of this Annual Company Secretary does not contain any qualification and is Report. annexed as Annexure B to this Report.
3. AUDIT COMMITTEE DEPOSITORY SYSTEM The Board has constituted the Audit Committee in terms As on March 31, 2016, 99.23% of the Company’s total paid-up of the requirements of the Companies Act, 2013 and SEBI capital representing 168,511,518 shares are in dematerialized (Listing Obligations and Disclosure Requirements) form. In view of the numerous advantages offered by the Regulations, 2015. The details relating to the same are given Depository system, members holding shares in physical mode are in Annexure H. advised to avail of the facility of dematerialization from either of the depositories. In accordance with the requirements of the Companies Act, 2013, the Company has in place a vigil mechanism framework CHANGES IN SHARE CAPITAL for directors and employees to report genuine concerns. During the year, the following changes have occurred in the authorised and the paid-up equity share capital of the Company: 4. RELATED PARTY TRANSACTIONS The Audit Committee and the Board of Directors have a. The authorised share capital of the Company was sub-divided approved the Related Party Transactions Policy and all the from 32,750,000 equity shares of ` 5 each to 163,750,000 related party transactions have been entered in accordance equity shares of 1 each. Consequently, the paid up share ` thereof and were in the ordinary course of business and at capital was also sub-divided from 32,250,000 equity shares of arm’s length. The details of material contracts or arrangement ` 5 each fully paid-up to 161,250,000 equity shares of ` 1 each or transactions at arm’s length basis as per Form AOC-2 as per fully paid-up. The sub-division was effected from June 22, 2015. Companies (Accounts) Rules, 2014 is annexed as Annexure D to this report. b. The authorised share capital was increased from ` 163.75 Million divided into 163,750,000 equity shares of 5. SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES ` 1 each to ` 200.00 Million divided into 200,000,000 equity shares of ` 1 each with effect from June 22, 2015. As at March 31, 2016, the Company has 9 subsidiaries including a Joint Venture. There has been no material change in the c. The authorised share capital was further increased to nature of the business of subsidiaries. ` 240.00 Million divided into 240,000,000 equity shares of ` 1 each, pursuant to the Scheme of Amalgamation of During the year ended March 31, 2016, the Company subscribed Information Systems Resource Centre Private Limited with to/acquired equity shares in subsidiary companies as under:
30 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Directors’ Report Financial Statements
A) Shares acquired: 6. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED Name of the Company Type of No. of Shares shares The Company has disclosed the full particulars of the loans given, Larsen & Toubro Infotech Austria GmbH Equity N. A.* investments made or guarantees given or security provided in the notes forming part of the financial statements provided in this L&T Information Technology Spain SL Equity 50,000 Annual Report.
*Note: The amount of investment made by the Company is EURO 35,000 which is also reflected in Annexure E to this report. As per the local 7. EMPLOYEE STOCK OPTION SCHEMES regulations in Austria, the entity being a limited liability company, no share The disclosure relating to the Employee Stock Option Schemes certificate is required to be issued. of the Company as required under the Companies Act, 2013 and rules made thereunder is annexed as Annexure F to B) Equity shares sold/transferred: this Report. Name of the Company Number of shares Nil Nil Pursuant to the resolution passed by the Board on July 27, 2015 and the shareholders on September 14, 2015, the Company C) Performance and Financial Position of each subsidiary/ has instituted the Larsen & Toubro Infotech Limited Employee associate and joint venture companies: Stock Option Scheme, 2015 (“ESOP Scheme, 2015”) for issue of options to eligible employees which may result in issue of A statement containing the salient features of the financial Equity Shares of up to 8,062,500 equity shares of face value of statement of subsidiaries/ associate/ joint venture companies 1 each. Under the ESOP Scheme 2015, no options have been as per form AOC-1 is annexed as Annexure E to this Report. ` granted as on the date of this report. During the year ended March 31, 2016, operations of following subsidiaries were reviewed and a restructuring process was 8. COMPANY POLICY ON DIRECTOR APPOINTMENT AND carried out: REMUNERATION The Company has constituted the Nomination and AMALGAMATION OF ISRC WITH THE COMPANY Remuneration Committee (NRC) in accordance with Ø Pursuant to the Scheme of Amalgamation sanctioned by the the requirements of the Companies Act, 2013 and Hon’ble High Court of Bombay vide its order dated September 04, SEBI (Listing Obligations and Disclosure Requirements) 2015, Information Systems Resource Centre Private Limited (ISRC) Regulations, 2015. The details relating to the same are was amalgamated with the Company with effect from September given in Annexure H. 21, 2015. The appointed date for the Scheme was October 17, 2014. Consequently, the entire business, assets, liabilities, duties The Committee has formulated a policy on Director’s and obligations of ISRC have been transferred to and vested in the appointment and remuneration including recommendation Company with effect from October 17, 2014. of remuneration of key managerial personnel and the criteria for determining qualifications, positive attributes and Ø ISRC was engaged in the business of software services with independence of a Director. respect to application development, information technology support and maintenance services to OTIS Elevator Company, 9. DECLARATION BY INDEPENDENT DIRECTORS USA and other companies of UTC group and was acquired by The Company has received Declaration of Independence from the Company on October 16, 2014. its Independent Directors as stipulated under Section 149(7) AMALGAMATION OF GDA TECHNOLOGIES LIMITED WITH THE of the Companies Act, 2013 confirming that they meet the COMPANY criteria of Independence. Ø The Board of Larsen & Toubro Infotech Limited and GDA 10. INDEPENDENT DIRECTORS MEETING Technologies Limited in their meetings held on October 17, 2014, respectively, approved the Scheme of amalgamation of The meeting of the Independent Directors was held on January GDA Technologies Limited with the Company under Section 22, 2016, as per schedule IV of the Companies Act, 2013. 391 to 394 of the Companies Act, 1956. The Hon’ble High Court of Bombay has sanctioned the Scheme of Amalgamation 11. COMPLIANCE WITH SECRETARIAL STANDARDS vide its order dated April 01, 2016. The approval of the Scheme The Company has complied with Secretarial Standards issued by the Hon’ble High Court of Madras is awaited. The appointed by the Institute of Company Secretaries of India on Board date for the proposed scheme is April 1, 2016. Meetings and Annual General Meetings.
31 Annual Report 2015-16
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, CORPORATE GOVERNANCE REPORT FOREIGN EXCHANGE EARNINGS AND OUTGO A report on Corporate Governance is annexed as Annexure H to this Information as per Section 134 of the Companies Act, 2013 Report. read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption, ACKNOWLEDGEMENTS foreign exchange earnings and outgo is given in Annexure G to this report. The Directors thank the Company’s customers, vendors and academic institutions for their support to the Company. The 13. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY Directors also acknowledge the support and co-operation from the THE REGULATORS OR COURTS OR TRIBUNALS Government of India and the Governments of various countries, the During the year under review, there were no material concerned State Governments and other Government Departments and significant orders passed by the regulators or courts and Governmental Agencies. The Directors appreciate and value the or tribunals impacting the going concern status and the contributions made by every member of the L&T Infotech family Company’s operations in future. globally.
For and on behalf of the Board
Sanjay Jalona R. Shankar Raman Chief Executive Officer & Director Place: Mumbai Managing Director (DIN: 00019798) Date: April 26, 2016 (DIN: 07256786)
32 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement ANNEXURE A TO THE DIRECTORS’ REPORT
Annual Report on Corporate Social Responsibility (CSR) Activities Volunteers and partner NGOs taught Science, English and Maths in for FY16 additional 11 schools-cum-study covering 17,098 children (3,902 during FY15). Kindly see Table 1 below. 1. A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a We have added higher level of IT courses covering popular financial reference to the web-link to the CSR policy and projects or package in India and also value added course on computer hardware programs. and networking.
The Company’s primary focus is on ‘Computer Literacy & Education’ We have set up projects in Q4FY16 which would scale up during for employment as part of its CSR programme which includes, subsequent years and thus take us closer to the target spend amongst others, the following verticals: on CSR. a) Skills Development & Employability - may include but not limited to programmes covering computer literacy and training These projects launched in Q4FY16 leverage internet, audio / programmes for employability for disadvantaged youth. video technologies, open source software and are based on unique engagement models including community learning, which are aimed b) Education - may include but not limited to support to at employment through digital literacy. Further the technology educational institutions, educational programmes & nurturing now allows us to do projects in locations away from our office talent at various levels for disadvantaged youth. locations where CSR interventions are needed but are otherwise not c) Educational aids - supporting differently-abled and other possible. But in such locations we do depend and involve the local students by providing IT infrastructure support for specific community. programmes. d) Environment - may include but not limited to programmes for Women Empowerment conservation and preservation of environment. As part of woman empowerment program we have created infrastructure to generate recurring income for 150 women. We e) Women Empowerment - supporting eligible NGOs with also assisted 2,800 women to generate income throughout the year infrastructure and facilitating market reach. from sale of their products.
During the period under review, the Company’s CSR initiative “1Step” organized several projects in the above thrust areas, as per details Visually impaired youth given below. But the most important aspect was level of involvement For visually impaired youth; volunteers record audio books from of CSR team and volunteers at every step of these projects that gives text books which enables them to access study material through us a close understanding of the community issues and the goals we these audio books. The number of Talking Books recorded so far are trying to meet. This way of working also allowed us to learn a lot were 58 (30 in FY15). The audio books reached 4,500 students who on how to handle projects. The experience from these interactions were directly benefitted from it. Volunteers also wrote examination would help us when we are scaling up projects in FY17. papers of competitive examinations and assisted them in getting jobs. IT Skills and Education Overall we now have 45 locations (12 in FY15) from where we impart Employee volunteering and beneficiaries computer skills – the primary thrust area. From these 45, 18 centers During the year 4,576 Volunteers (3,442 in FY15) of 1Step, L&T are set-up and dedicated for youth for employability. From these Infotech employee-volunteering program, participated in all the centers 1,144 (320 From FY15) youth passed out and 123 who were above projects. The hours contributed by them were 11,852. Last inclined to take jobs were placed. The balance 27 computer centers year we were advised to monitor volunteering hours which we were set up in schools for teaching IT curriculum and covered 3,401 started this year. 1Step projects directly impacted 35,258 (18,282 school children (300 during FY15). in FY15) beneficiaries.
33 Annual Report 2015-16
Table 1 For Financial Year 2016 2015 Particulars Total Youth School Total Youth School Children Children Computer skills Number of computer center locations 45 18 27 12 6 6 project Beneficiaries 4,545 1,144 3,401 620 320 300 Educational programs covering Science, Maths, and 17,098 - 17,098 3,902 - 3,902 English – Beneficiaries Talking Books for Visually impaired – Number of books 58 30 Talking Books for Visually impaired – Number of 4,500 3,500 beneficiaries Total Beneficiaries 35,258 18,282 Volunteers 4,576 3,442
2. The Composition of the CSR Committee: (i) Mr. S. N. Subrahmanyan - Chairman (ii) Mr. Sanjay Jalona - Member (iii) Mr. M. M. Chitale - Member 3. Average net profit of the Company for last three financial years:` 7,473.72 Million 4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above): ` 149.47 Million 5. Details of CSR spent during the financial year: i. Total amount spent for the financial year : ` 23.45 Million ii. Amount unspent, if any : ` 126.02 Million iii. Manner in which the amount spent during the financial year : attached 6. In case the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board report. The objective of our CSR Policy is to create a visible impact in the focus areas for the beneficiaries and not just spending the requisite amount. The Company has made efforts to identify projects in line with its CSR focus areas. However, the Company could not spend the requisite money as considerable time is taken in evaluating and implementing projects that are closer to beneficiaries. The Company since last year has been working in collaboration with credible partners and other stakeholders and has identified and built a pipeline of such projects. The implementation of initial batch of projects has begun in Q4FY16. These projects have the potential to scale up during subsequent years. Further, we will pick up new projects for implementation from the already identified projects in the pipeline. Together it would help us in meeting to our target spend on CSR. 7. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company. The CSR Committee hereby affirms that: • The Company has duly formulated a CSR Policy Framework which includes formulation of a CSR Theme, CSR budget and roles and responsibilities of the Committee, CSR team formed for implementation of the CSR policy; • The Company has constituted a mechanism to monitor and report on the progress of the CSR programs; The activities undertaken by the Company as well as the implementation and monitoring mechanisms are in compliance with its CSR objectives and CSR policy & its Framework.
S. N. Subrahmanyan Sanjay Jalona Director & Chief Executive Officer & Chairman – CSR Committee Managing Director (DIN: 02255382) (DIN: 07256786)
34 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
5 (iii) Manner in which the amount spent during the financial year is detailed below: (in ` Million)
S.N. CSR Project Sector in Projects or programs Amount Direct Overheads Cumulative Amount spent: or activity which the 1) Local area or other Outlay expenses Expenditure Direct or through identified project is 2) Specify the State and (Budget) up to the implementing covered District where project project or reporting agency was undertaken programs period wise 1 Computer Education Mumbai, Navi Mumbai, 11.76 6.61 0.39 7.00 Direct, Pratham Skills Pune, Maharashtra, NGO Bangalore, Chennai, Karnataka and Tamil Nadu 2 Educational Education Mumbai, Navi Mumbai, 13.24 8.53 0.39 8.92 Direct, Adhyayan Maharashtra, Wai, NGO, Sevalaya Mangaon, Bilaspur, NGO Chennai, Karnataka, Chhatisgarh and Tamil Nadu 3 Women Women Maharashtra and Tamil 3.60 0.89 0.39 1.28 Aarambh NGO, empowerment empowerment Nadu Sevalaya NGO 4 Environment Environment Maharashtra, Karnataka, 1.70 0.10 - 0.10 Say Trees NGO, projects projects Tamil Nadu and Rajasthan Pariyavaran Shala NGO 5 Nepal Prime - - 6.15 - 6.15 Direct Earthquake Minister's Relief * National Relief Fund Total 30.30 22.28 1.17 23.45
NOTE: * The contribution towards Nepal Earthquake Relief fund includes contribution made by Information Systems Resource Centre Private Limited, which got amalgamated with the Company with effect from September 21, 2015.
35 Annual Report 2015-16
ANNEXURE B TO THE DIRECTORS’ REPORT Form No. MR-3
SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2016
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]
To, a) The Securities and Exchange Board of India (Substantial The Members, Acquisition of Shares and Takeovers) Regulations, 2011; LARSEN & TOUBRO INFOTECH LIMITED b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; presently, I have conducted the secretarial audit of the compliance of (Prohibition of Insider Trading) Regulations, 2015; applicable statutory provisions and the adherence to good corporate practices by LARSEN & TOUBRO INFOTECH LIMITED (hereinafter c) The Securities and Exchange Board of India (Issue of called the Company). Secretarial Audit was conducted in a manner Capital and Disclosure Requirements) Regulations, 2009; that provided me a reasonable basis for evaluating the corporate conduct/ statutory compliances and expressing my opinion thereon. d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Based on my verification of the Company’s books, papers, minute Scheme) Guidelines, 1999; presently, (Share Based books, forms and returns filed and other records maintained by the Employee Benefits) Regulations, 2014; Company and also the information provided by the Company, its e) The Securities and Exchange Board of India (Issue and officers, agents and authorized representatives during the conduct Listing of Debt Securities) Regulations, 2008; of secretarial audit, I hereby report that in my opinion, the company has, during the audit period covering the financial year ended f) The Securities and Exchange Board of India (Registrars on March 31, 2016, complied with the statutory provisions listed to an Issue and Share Transfer Agents) Regulations, 1993 hereunder and also that the Company has proper Board-processes regarding the Companies Act and dealing with client; and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter. g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial h) The Securities and Exchange Board of India (Buyback of year ended on March 31, 2016 according to the provisions of: Securities) Regulations, 1998;
(i) The Companies Act, 2013 (the Act) and the rules made (vi) Other specific business/industry related laws that are thereunder; applicable to the company, viz. The Information Technology Act, 2000. (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; The Special Economic Zone Act, 2005. Policy relating to Software Technology Parks of India and (iii) The Depositories Act, 1996 and the Regulations and Bye-laws its regulations. framed thereunder; The Indian Copyright Act, 1957. (iv) Foreign Exchange Management Act, 1999 and the rules The Patents Act, 1970. and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External The Trade Marks Act, 1999. Commercial Borrowings; Indian Telegraph Act. (v) The following Regulations and Guidelines prescribed under the Telecom Regulatory Authority of India (TRAI)/Department Securities and Exchange Board of India Act, 1992 (‘SEBI Act’), of Telecommunication (DOT) Guidelines. as applicable:- Other Service Provider Guidelines (Governed by DOT)
36 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
I have also examined compliance with the applicable clauses of the (iv) Merger / amalgamation / reconstruction, etc.– following: Amalgamation of Information Systems Resource Centre i. Secretarial Standards issued by The Institute of Company Private Limited with the Company with effect from Secretaries of India. September 21, 2015; ii. The Securities and Exchange Board of India (Listing Obligations Petitions for sanctioning the Scheme of Amalgamation and Disclosure Requirements) Regulations, 2015 and the of GDA Technologies Limited with the Company with Listing Agreements entered into by the Company with Stock Appointed Date being April 1, 2016, admitted with the Exchange(s), if applicable. This is not applicable. Hon’ble High Courts of Judicature at Bombay and Madras. The Bombay High Court has approved the Scheme vide During the period under review the Company has complied with the its Order dated April 1, 2016, while the approval from provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. Madras High Court is awaited. mentioned above. (v) Foreign technical collaborations – NIL. I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non- (vi) Other Event – Executive Directors and Independent Directors. The changes in During FY 2015-16, the Company has filed Form ODI with the composition of the Board of Directors that took place during respect to the investment CAD 171,500 made in October the period under review were carried out in compliance with the 2005 in Larsen & Toubro Infotech Canada Limited. Also provisions of the Act. Annual Performance Reports for the said entity for FY 2005- 06 till 2014-15 have been filed. Compounding application, Adequate notice is given to all directors to schedule the Board under FEMA regulation for the above mentioned delay Meetings, agenda and detailed notes on agenda were sent at least in reporting, to be re-submitted, on receipt of directions seven days in advance, and a system exists for seeking and obtaining from the Reserve Bank of India; further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. The Board and the shareholders in their meetings held Majority decision is carried through while the dissenting members’ on June 16, 2015 and June 22, 2015, respectively, had views are captured and recorded as part of the minutes. approved the following:
I further report that, in my opinion, there are adequate systems a) Adopted a new set of Articles of Association of the and processes in the company commensurate with the size and Company in line with the Companies Act, 2013 and operations of the company to monitor and ensure compliance with Listing Agreement. applicable laws, rules, regulations and guidelines. b) Sub-division of face value of equity shares from ` 5 to I further report that during the audit period the following events ` 1 per share; / actions have taken place which have a major bearing onthe c) Increase in Authorised Share Capital from equity share Company’s affairs in pursuance of the above referred laws, rules, capital of ` 163.75 Million to ` 200.00 Million of face value regulations, guidelines, standards, etc., like - ` 1 per equity share.
(i) Public/Right/Preferential issue of shares / debentures/sweat The Authorised share capital of the Company was further equity, etc.– increased to ` 240.00 Million divided into 240,000,000 Equity Shares of ` 1 each with effect from September The Company in its Board meeting held on June 16, 2015 21, 2015, pursuant to the approval of the the Scheme of has taken approval for the Offer for Sale by Larsen & Amalgamation of Information Systems Resource Centre Toubro Limited in the Initial Public Offer of the Company. Private Limited with the Company, by the Bombay High Pursuant to the same, the Company had filed its Draft Court vide its Order dated September 4, 2015. Red Herring Prospectus (DRHP) on September 28, 2015. Due to change in the Offer structure and other NAINA R DESAI considerations, the said DRHP was withdrawn on April Practising Company Secretary 11, 2016 and the revised DRHP filed on April 12, 2016. Place: Mumbai Membership No. 1351 Date: April 20, 2016 Certificate of Practice No.13365 (ii) Redemption / buy-back of securities. – NIL.
(iii) Major decisions taken by the members in pursuance to section This report is to be read with our letter of even date which is 180 of the Companies Act, 2013. – NIL. annexed as Annexure A and forms an integral part of this report.
37 Annual Report 2015-16
Annexure A TO THE sECRETARIAL AUDIT REPORT
To, The Members LARSEN & TOUBRO INFOTECH LIMITED
Our report of even date is to be read along with this letter. 4) Where ever required, we have obtained the Management representation about the compliance of laws, rules and 1) Maintenance of secretarial record is the responsibility of regulations and happening of events etc. the management of the Company. Our responsibility is to express an opinion on these secretarial records based on 5) The compliance of the provisions of Corporate and our audit. other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to 2) We have followed the audit practices and processes as the verification of procedures on test basis. were appropriate to obtain reasonable assurance about the 6) The Secretarial Audit report is neither an assurance as to correctness of the contents of the Secretarial records. The the future viability of the Company nor of the efficacy or verification was done on test basis to ensure that correct effectiveness with which the management has conducted the facts are reflected in secretarial records. We believe that the affairs of the Company. processes and practices, we followed provide a reasonable basis for our opinion. NAINA R DESAI Practising Company Secretary 3) We have not verified the correctness and appropriateness of Place: Mumbai Membership No. 1351 financial records and Books of Account of the Company. Date: April 20, 2016 Certificate of Practice No.13365
38 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement ANNEXURE C TO THE DIRECTORS’ REPORT Form No. MGT-9
EXTRACT OF ANNUAL RETURN as on the financial year ended on March 31, 2016 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS: S.N. Particulars 1 CIN U72900MH1996PLC104693 2 Registration Date 23rd December 1996 3 Name of the Company Larsen & Toubro Infotech Limited 4 Category / Sub-Category of the Company Company limited by shares Indian Non-Government Company 5 Address of the Registered office and contact details L&T House, Ballard Estate, Mumbai-400001 Tel: +91 22 6776 6138 Email: [email protected] 6 Whether listed Company No 7 Name, Address and Contact details of Registrar and Transfer Agent, Link Intime India Private Limited if any Address: C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 400078, Maharashtra, India Tel: +91 22 2594 6970 Fax: +91 22 2594 6969 Email: [email protected]
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY: All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-
NIC Code of the % to total turnover S. N. Name and Description of main products / services Product/ service of the company 1 Computer programming, consultancy and related activities 620 100.00
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES: Holding/ % of Applicable S. N. Name and Address of the Company CIN/GLN Subsidiary/ shares Section Associate held 1 Larsen & Toubro Limited L99999MH1946PLC004768 Holding 94.96 2(46) Add: L&T House, N. M. Marg, Ballard Estate, Company Mumbai-400001 2 Larsen & Toubro Infotech GmbH - Subsidiary 100.00 2(87) Add: Euro-Asia Business Center, Messe-Allee 2, D-04356, Leipzig, Germany
39 Annual Report 2015-16
Holding/ % of Applicable S. N. Name and Address of the Company CIN/GLN Subsidiary/ shares Section Associate held 3 Larsen & Toubro Infotech Canada Limited - Subsidiary 100.00 2(87) Add: 2810, Matheson Blvd East, Suite 500, Mississauga, ON L4W 4X7, Canada 4 Larsen & Toubro Infotech LLC - Subsidiary 100.00 2(87) Add: 1220, N. Market St., Suite 806, Wilmington, DE 19801, Country of New Castle, United State of America 5 L&T Infotech Financial Services Technologies - Subsidiary 100.00 2(87) Inc. Add: 2810, Matheson Blvd East, Suite 500, Mississauga, ON L4W 4X7, Canada 6 Larsen And Toubro Infotech South Africa - Subsidiary 74.90 2(87) (Pty) Limited Add: 6th Floor, 119 Hertzog Boulevard, Foreshore 8001, South Africa 7 L&T Information Technology Services - Subsidiary 100.00 2(87) (Shanghai) Co., Ltd. Add: Room 1100m Building 2, No.1388, Xingxian Road, Jaiding District, Shanghai, China 8 GDA Technologies Limited U72200TZ1997PLC008145 Subsidiary 100.00 2(87) Add: No.9-A, Chinthamani Nagar, K. K. Pudur, Coimbatore-641 038, India 9 Larsen & Toubro Infotech Austria GmbH - Subsidiary 100.00 2(87) Add: c/o Oberhammer Rechtsanwälte GmbH, Karlsplatz 3/1, 1010 Vienna, Austria 10 L&T Information Technology Spain SL - Subsidiary 100.00 2(87) Add: C/JOSÉ ABASCAL 56 2nd Floor, Madrid, Spain
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) No. of shares held at the beginning of the year No. of shares held at the end of the year % No. of No. of Total No. of % of No. of No. of Total No. of % of Total Change Category Category of during Code Shareholder(s) shares in shares shares Total shares in shares in shares Share Dematerilised in Physical Share Dematerilised Physical the Form Form Form Form year (A) Shareholding of Promoter and Promoter Group (1) Indian (a) Individuals/ Hindu 0 0 0 0.00 0 0 0 0.00 0.00 Undivided Family (b) Central Government/ 0 0 0 0.00 0 0 0 0.00 0.00 State Government(s) (c) Bodies Corporate 0 32,250,000 32,250,000 100.00 161,250,000 0 161,250,000 94.96 (5.04) (d) Financial Institutions/ 0 0 0 0.00 0 0 0 0.00 0.00 Banks (e) Others 0 0 0 0.00 0 0 0 0.00 0.00 SUB TOTAL (A1) 0 32,250,000 32,250,000 100.00 161,250,000 0 161,250,000 94.96 (5.04)
40 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
No. of shares held at the beginning of the year No. of shares held at the end of the year % No. of No. of Total No. of % of No. of No. of Total No. of % of Total Change Category Category of during Code Shareholder(s) shares in shares shares Total shares in shares in shares Share Dematerilised in Physical Share Dematerilised Physical the Form Form Form Form year (2) Foreign (a) Individuals (Non- 0 0 0 0.00 0 0 0 0.00 0.00 Residents Individuals/ Foreign Individuals) (b) Bodies Corporate 0 0 0 0.00 0 0 0 0.00 0.00 (c) Financial Institutions/ 0 0 0 0.00 0 0 0 0.00 0.00 Banks (d) Others 0 0 0 0.00 0 0 0 0.00 0.00 SUB TOTAL (A2) 0 0 0 0.00 0 0 0 0.00 0.00 TOTAL Shareholding 0 32,250,000 32,250,000 100.00 161,250,000 0 161,250,000 94.96 (5.04) of Promoter and Promoter Group (A1 + A2) (B) Public Shareholding (1) Institutions (a) Mutual Funds/ UTI 0 0 0 0.00 0 0 0 0.00 0.00 (b) Financial Institutions 0 0 0 0.00 0 0 0 0.00 0.00 / Banks (c) Central Government/ 0 0 0 0.00 0 0 0 0.00 0.00 State Government(s) (d) Venture Capital 0 0 0 0.00 0 0 0 0.00 0.00 Funds (e) Insurance Companies 0 0 0 0.00 0 0 0 0.00 0.00 (f) Foreign Institutional 0 0 0 0.00 0 0 0 0.00 0.00 Investors (g) Foreign Venture 0 0 0 0.00 0 0 0 0.00 0.00 Capital Investors (j) Others 0 0 0 0.00 0 0 0 0.00 0.00 SUB TOTAL (B1) 0 0 0 0.00 0 0 0 0.00 0.00 (2) Non - Institutions (a) Bodies Corporate (i) Indian 0 0 0 0.00 11,049 0 11,049 0.01 0.01 (ii) Overseas 0 0 0 0.00 0 0 0 0.00 0.00 (b) Individuals (i) Individual 0 0 0 0.00 4,938,210 443,944 5,382,154 3.17 3.17 Shareholders holding nominal share capital up to ` 1 Lakh (ii) Individual 0 0 0 0.00 701,250 0 701,250 0.41 0.41 Shareholders holding nominal share capital in excess of ` 1 Lakh (c) Others (i) Directors and their 0 0 0 0.00 871,875 0 871,875 0.51 0.51 relatives
41 Annual Report 2015-16
No. of shares held at the beginning of the year No. of shares held at the end of the year % No. of No. of Total No. of % of No. of No. of Total No. of % of Total Change Category Category of during Code Shareholder(s) shares in shares shares Total shares in shares in shares Share Dematerilised in Physical Share Dematerilised Physical the Form Form Form Form year (ii) Non Resident 0 0 0 0.00 634,824 377,670 1,012,494 0.60 0.60 Repatriates (iii) Non Resident Non 0 0 0 0.00 104,310 158,166 262,476 0.15 0.15 Repatriates (vi) Foreign Nationals 0 0 0 0.00 0 324,890 324,890 0.19 0.19 SUB TOTAL (B2) 0 0 0 0.00 7,261,518 1,304,670 8,566,188 5.04 5.04 TOTAL Public 0 0 0 0.00 7,261,518 1,304,670 8,566,188 5.04 5.04 Shareholding (B1 + B2) TOTAL (A+B) 0 32,250,000 32,250,000 100.00 168,511,518 1,304,670 169,816,188 100.00 0.00 (C) Shares held by 0 0 0 0.00 0 0 0 0.00 0.00 Custodians and against which Depository Receipts have been issued SUB TOTAL (C) 0 0 0 0.00 0 0 0 0.00 0.00 GRAND TOTAL 0 32,250,000 32,250,000 100.00 168,511,518 1,304,670 169,816,188 100.00 0.00
Note: The equity shares of the Company have been subdivided from face value of ` 5 each to ` 1 each with effect from June 22, 2015. i) Shareholding of Promoters
Shareholding at the Shareholding at the Beginning of the year End of the year % change in No. of % of total % of Shares No. of % of total % of Shares shareholding S. N. Shareholder’s Name Shares Shares of Pledged/ Shares Shares of Pledged/ during the the encumbered the encumbered Year company to total company to total shares shares 1 Larsen & Toubro Limited 32,250,000 100.00 0.00 161,250,000 94.96 0.00 (5.04) Total 32,250,000 100.00 0.00 161,250,000 94.96 0.00 (5.04)
Note: The equity shares of the Company have been subdivided from face value of ` 5 each to ` 1 each with effect from June 22, 2015. ii) Change in Promoters’ Shareholding: There was no change in the shareholding during the year
Shareholding at the Cumulative Shareholding Beginning of the year during the year S. N. Particulars No. of % of total No. of % of total Shares Shares of Shares Shares of the company the company 1 At the beginning of the year 32,250,000 100.00 Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase / decrease (e.g. Not Applicable* allotment / transfer / bonus/ sweat equity etc) At the End of the year 161,250,000 94.96
42 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
*Notes: Ø While there is no change in the shareholding of the Promoter & Promoter Group, there is a change in the percentage of the total outstanding shares of the Company due to periodic allotment of shares during the financial year 2015-16 pursuant to exercise of Stock Options by the employees.
Ø The equity shares of the Company have been subdivided from face value of ` 5 each to ` 1 with effect from June 22, 2015. iii) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
Shareholding at the Cumulative Shareholding Beginning of the year during the year S. N. For Each of the Top 10 Shareholders No. of % of total No. of % of total Shares Shares of Shares Shares of the company the company 1 VIJAY KUMAR MAGAPU At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 25.11.2015 420,000 0.26 420,000 0.26 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 420,000 0.25 2 YESHWANT MORESHWAR DEOSTHALEE At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 281,250 0.17 281,250 0.17 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 281,250 0.17 3 VINA BADAMI At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 05.12.2015 140,000 0.08 140,000 0.08 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 140,000 0.08 4 VIVEK SHANTARAM SHIROOR At the beginning of the year - - - - Date wise Increase / Decrease in 05.12.2015 127,000 0.08 127000 0.08 Shareholding during the year specifying 25.12.2015 (4,000) (0.00) 123000 0.07 the reasons for increase / decrease (e.g. allotment / transfer / bonus / 18.01.2016 15,000 0.00 138000 0.08 sweat equity etc): At the End of the year - - 1,38,000 0.08 5 MAKARAND G DEOLALKAR At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 10.11.2015 128,937 0.08 128,937 0.08 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 128,937 0.08
43 Annual Report 2015-16
Shareholding at the Cumulative Shareholding Beginning of the year during the year S. N. For Each of the Top 10 Shareholders No. of % of total No. of % of total Shares Shares of Shares Shares of the company the company 6 SHRINIVASAN VENKATARAMAN At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 125,000 0.07 125,000 0.07 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 125,000 0.07 7 KAVINDRA SHARMA At the beginning of the year - - - - Date wise Increase / Decrease in 25.11.2015 75,312 0.05 75,312 0.05 Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 39,375 0.02 114,687 0.07 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 114,687 0.07 8 HAE RYONG JEONG At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 111,250 0.07 111,250 0.07 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 111,250 0.07 9 KASUKHELA SITAPATI RAO At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 110,500 0.07 110,500 0.07 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 110,500 0.07 10 (i) GOPA KUMAR PERIYADAN At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 10.11.2015 100,000 0.06 100,000 0.06 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 100,000 0.06 10 (ii) RAVIKUMAR R THUMMARUKUDY At the beginning of the year - - - - Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease 15.12.2015 100,000 0.06 100,000 0.06 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 100,000 0.06
44 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement iv) Shareholding of Directors and Key Managerial Personnel: Shareholding at the Cumulative Shareholding Beginning of the year during the year S. N. For Each of the Directors and KMP No. of % of total No. of % of total Shares Shares of Shares Shares of the company the company 1 ANILKUMAR MANIBHAI NAIK At the beginning of the year - - - - Date wise Increase /Decrease in Shareholding during the year specifying the reasons for increase / decrease 25.11.2015 871,875 0.53 871,875 0.53 (e.g. allotment / transfer / bonus / sweat equity etc): At the End of the year - - 871,875 0.51
V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (` Million) Secured Loans Unsecured Deposits Total Particulars Excluding deposits Loans Indebtedness Indebtedness at the beginning of the financial year: i) Principal Amount 877.78 1,297.48 - 2,175.26 ii) Interest due but not paid 0.85 0.09 - 0.94 iii) Interest accrued but not due 1.34 0.13 - 1.47 Total (i+ii+iii) 879.97 1,297.70 - 2,177.67 Change in Indebtedness during the financial year: - • Addition 1,300.64 1,055.73 2,356.37 - • Reduction 1,898.68 2,088.19 3,986.87 Net Change (598.04) (1,032.46) - (1,630.50) Indebtedness at the end of the financial year: i) Principal Amount 279.74 265.02 - 544.76 ii) Interest due but not paid 0.14 - - 0.14 iii) Interest accrued but not due 0.86 0.07 - 0.93 Total (i+ii+iii) 280.74 265.09 - 545.83
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (DURING THE FINANCIAL YEAR 2015-16) A. Remuneration to Managing Director (MD), Whole-time Directors (WTD) and/or Manager: (` Million) Name of MD/ WTD/ Manager Mr. V. K. Mr. K. R. L. Mr. Chandrashekara Mr. Sunil Mr. Sanjay Total S. N. Particulars of Remuneration Magapu1 Narasimham2 Kakal3 Pande4 Jalona5 Amount (MD) (WTD) (Chief Operating (WTD) (Chief Executive Officer & WTD) Officer & MD) 1 Gross salary: (a) Salary as per provisions contained in - 0.17 10.85 5.33 19.56 35.91 section 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) of ------Income-tax Act, 1961 (c) Profits in lieu of salary under section ------17(3) of Income-tax Act, 1961
45 Annual Report 2015-16
Name of MD/ WTD/ Manager Mr. V. K. Mr. K. R. L. Mr. Chandrashekara Mr. Sunil Mr. Sanjay Total S. N. Particulars of Remuneration Magapu1 Narasimham2 Kakal3 Pande4 Jalona5 Amount (MD) (WTD) (Chief Operating (WTD) (Chief Executive Officer & WTD) Officer & MD) 2 Stock Option ------3 Sweat Equity ------4 Commission: - as % of profit - - - - 12.32 12.32 - others, ------
5 Others (please specify): - - - - - 1. Portion of Advisory fees charged by 7.35 - - - - 7.35 Holding Company 2. Contribution to Provident Fund & - - - - 1.73 1.73 Superannuation Fund Total (A) 7.35 0.17 10.85 5.33 33.61 57.31 Overall Ceiling as per the Act (` 1,162.98 Million) 10% of Net Profits of the Company
Notes: 1. Mr. V. K. Magapu receives Advisory fees from Larsen & Toubro Limited (Holding Company) and approx. 80% of the fees is charged to the Company. Mr. V. K. Magapu ceased to be the Managing Director w.e.f. September 26, 2015. 2. Mr. K. R. L. Narasimham ceased to be an Executive Director w.e.f. April 08, 2015. 3. Mr. Chandrashekara Kakal ceased to be an Executive Director w.e.f. August 27, 2015. 4. Mr. Sunil Pande ceased to be an Executive Director w.e.f. August 26, 2015. 5. Mr. Sanjay Jalona was appointed as the Chief Executive Officer & Managing Director w.e.f. August 10, 2015.
B. Remuneration to other directors: (` Million) Fee for attending Board / Commission Others, S. N. Particulars of Remuneration Total Amount Committee Meetings please specify 1 Independent Directors Mr. Samir Desai 0.53 3.57 - 4.10 Mr. M. M. Chitale 0.55 - - 0.55 Ms. Vedika Bhandarkar 0.25 0.83 - 1.08 Mr. Arjun Gupta1 0.10 1.41 - 1.51 Total (1) 1.43 5.81 - 7.24 2 Other Non-Executive Directors Mr. A. M. Naik - - - - Mr. R. Shankar Raman2 - - - - Mr. S. N. Subrahmanyan - - - - Total (2) - - - - Total (B)=(1+2) 1.43 5.81 - 7.24 Total Managerial Remuneration - 5.81 - - Overall Ceiling as per the Act (` 116.30 Million) 1% of Net Profits of the Company
Notes: 1. Mr. Arjun Gupta was appointed as an Independent Director w.e.f. October 28, 2015. 2. Mr. R. Shankar Raman was appointed as a Non-Executive Director w.e.f. October 28, 2015.
46 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD: (` Million) Key Managerial Personnel Mr. Ashok Mr. Mr. P. S. Kapoor Ms. Angna Kumar Subramanya (CFO & Company Arora Total S. N. Particulars of Remuneration Sonthalia Bhatt Secretary)3 (Company Amount (CFO)1 (Company Secretary)4 Secretary)2 1 Gross salary: (a) Salary as per provisions contained in section 17(1) of 5.96 3.12 0.66 0.11 9.85 the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) Income-tax Act, 1961 2.42 0.01 0.10 0.00 2.53 (c) Profits in lieu of salary under section 17(3) Income-tax - - - - - Act, 1961 2 Stock Option - - - - - 3 Sweat Equity - - - - - 4 Commission: - as % of profit ------others, - - - - - 5 Others, please specify: Contribution to Provident Fund & Superannuation Fund 0.12 0.10 0.08 0.00 0.30 Total (A) 8.50 3.23 0.84 0.11 12.68
Notes: 1. Mr. Ashok Kumar Sonthalia was appointed as Head-Finance & Accounts w.e.f. August 26, 2015 and has been designated as the Chief Financial Officer. 2. Mr. Subramanya Bhatt was appointed as the Company Secretary w.e.f. August 26, 2015. 3. Mr. P. S. Kapoor was appointed as Head-Finance & Accounts & Company Secretary w.e.f. May 08, 2015 and was designated as the Chief Financial Officer. He ceased to be Head-Finance & Accounts & Company Secretary and also the Chief Financial Officerw.e.f. August 26, 2015. 4. Ms. Angna Arora ceased to be the Company Secretary w.e.f. May 08, 2015.
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: There were no penalties, punishment or compounding of offences during the year ended March 31, 2016.
47 Annual Report 2015-16
ANNEXURE D TO THE DIRECTORS’ REPORT
Form AOC-2 Related Party Transactions Statement
Details of material contracts or arrangement or transactions at arm’s length basis for the year ended March 31, 2016 are as follows:
S. N. Name(s) of Nature of contracts/ Duration of the Salient terms of Date(s) of Amount Amount the related arrangements/ contracts/ arrangements/ the contracts or approval by paid as (` in Million) party transactions transactions arrangements the Board, advances, and nature of or transactions if any: if any: relationship including the value, if any: 1 Larsen & Sale of Software & 1 year As per Not - 1,073.57 Toubro Limited Other services / commercial Applicable (Holding products terms in line Company) with business practices and comparable with unrelated parties 2 L&T Purchase of Software & 1 year As per Not - 694.17 Technology Other services / commercial Applicable Services Ltd. products terms in line (Fellow with business Subsidiary practices and Company) comparable with unrelated parties
For and on behalf of the Board
Sanjay Jalona R. Shankar Raman Chief Executive Officer & Director Managing Director (DIN: 00019798) (DIN: 07256786)
48 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement ANNEXURE E TO THE DIRECTORS’ REPORT
Form AOC-I (Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) Statement containing salient features of the financial statement of Subsidiary Companies
(Amount in ` Million) 1 Sl. No. 1 2 3 4 5 6 7 8 9 2 Name of Larsen & Larsen & GDA Larsen & L&T Infotech Larsen And L&T Larsen & L&T Subsidiary Toubro Toubro Technologies Toubro Financial Toubro South Information Toubro Information Infotech Infotech Limited Infotech LLC Services Africa (Pty) Technology Infotech Technology GmbH Canada Technologies Limited Services Austria Spain SL1 Limited Inc.2 (Shanghai) GmbH1 Co. Ltd. 3 Reporting 31/03/2016 31/03/2016 31/03/2016 31/03/2016 31/03/2016 31/03/2016 31/12/2015 31/03/2016 31/03/2016 period for the subsidiary concerned, if different from the holding company’s reporting period 4 Reporting EUR CAD INR USD CAD ZAR CNY EUR EUR currency Exchange rate as 75.10 51.02 - 66.38 51.23 4.50 10.20 75.10 75.10 on the last date of the relevant Financial year in the case of foreign subsidiaries 5 Share capital 1.14 0.00 1.68 - 2,799.97 2.67 10.96 2.60 3.65 6 Reserves & 280.63 100.34 369.07 112.62 471.06 17.98 (5.99) (0.51) (0.61) surplus 7 Total assets 326.23 165.22 370.90 118.99 3,782.56 246.78 24.00 2.46 4.15 8 Total Liabilities 44.47 64.88 0.14 6.37 511.53 226.13 19.03 0.37 1.11 9 Investments - - 361.85 ------10 Turnover 932.70 675.56 - 133.45 2,296.93 564.09 41.58 - - 11 Profit before 65.03 40.66 19.06 12.47 270.86 8.24 2.16 (0.51) (0.85) taxation 12 Provision for 8.26 9.88 0.69 - 77.38 3.08 - - (0.24) taxation 13 Profit after 56.76 30.78 18.37 12.47 193.48 5.16 2.16 (0.51) (0.61) taxation 14 Proposed ------Dividend 15 % of 100.00 100.00 100.00 100.00 100.00 74.90 100.00 100.00 100.00 shareholding
Notes: 1. Following Subsidiaries are yet to commence business: a. Larsen & Toubro Infotech Austria GmbH b. L&T Information Technology Spain SL 2. L&T Infotech Financial Services Technologies Inc. has paid interim dividends amounting to` 486.69 Million
49 Annual Report 2015-16
ANNEXURE F TO THE DIRECTORS’ REPORT
Particulars of Employee Stock Option Scheme (as per section 62(1)(b) read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014)
A. Employee Stock Ownership Scheme - 2000 (ESOS Plan)* S. N. Particulars ESOP Series I,II & III ESOP Series IV- XXI 1 Grant Price per share (`) 5 2 2 Options Granted# 2,003,262 10,411,787 3 Options Vested 82,660 340,666 4 Options exercised 1,851,855 6,407,483 5 Total number of shares arising as a result of exercise of option 1,851,855 6,407,483 6 Options lapsed 68,747 1,654,198 7 Exercise price per share (`) 5 2 8 Variation of terms of options No variations have been made in the Scheme since the date of notification of the Companies Act, 2013 i.e. w.e.f. April 1, 2014. 9 Money realized by exercise of options ` 9.26 Million ` 12.81 Million 10 Total number of options in force: Vested 82,660 340,666 Unvested 0 2,009,440 Total 82,660 2,350,106 11 Employee wise details of options granted to: (i) Key managerial personnel (KMP as per Companies Act, 2013):# Nil Nil (ii) Any other employee who recieves a grant of options in any one Nil Nil year of option amounting to 5% or more of options granted during that year:# (iii) Identified employees granted option, during any one year, equal Nil Nil to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant
Notes: # No stock options were granted to employees during the year ended March 31, 2016. * The equity shares of the Company have been sub-divided from the face value of ` 5 per share to face value of ` 1 per share w.e.f. June 22, 2015. Consequently, the adjustment of sub-division is made to the options granted, vested and alloted under the ESOP Schemes.
50 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
B. Employee Stock Ownership Scheme - 2006 U.S. Stock Option Sub-Plan* S.N. Particulars U.S. Sub-Plan 2006 1 Grant Price USD 2.4 2 Options Granted# 5,20,400 3 Options Vested 1,43,650 4 Options exercised 3,06,850 5 Total number of shares arising as a result of exercise of option 3,06,850 6 Options lapsed 69,900 7 Exercise price USD 2.4 8 Variation of terms of options No variations have been made in the Scheme since the date of notification of the Companies Act, 2013 i.e. w.e.f. 1st April 2014. 9 Money realized by exercise of options ` 47.20 Million 10 Total number of options in force 1,43,650 11 Employee wise details of options granted to: (i) Key managerial personnel (KMP as per Companies Act, 2013) during Nil the year:# (ii) Any other employee who recieves a grant of options in any one year of Nil option amounting to 5% or more of options granted during that year:# (iii) Identified employees granted option, during any one year, equal to or Nil exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant
Notes: # No stock options were granted to employees during the year ended March 31, 2016. * The equity shares of the Company have been sub-divided from the face value of ` 5 per share to face value of ` 1 per share w.e.f. June 22, 2015. Consequently, the adjustment of sub-division is made to the options granted, vested and alloted under the ESOP Schemes.
51 Annual Report 2015-16
ANNEXURE G TO THE DIRECTORS’ REPORT
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO A. CONSERVATION OF ENERGY (i) Steps taken or impact on conservation of energy: The Company’s operations are not energy-intensive. However, measures have been taken to reduce energy consumption in the following manner:
1. Replacement of CFL with LED in passage lift/ Toilet Blocks/ Conference rooms.
2. Replacement of Halogen / Metal halide Street light with LED at Powai, Mahape & Bangalore.
3. Installation of Motion sensors to switch off toilets lights when not used in Powai & Bangalore.
4. Installation of Variable frequency drive for AHUs reduce power consumption when loaded partially.
5. Addition of frigitech solution to improve AC efficiency at Airoli.
6. Installation of Electromiser to reduce lighting power consumption.
7. Implementation of LED lights in new office at Hinjewadi.
8. Reducing AC temperature by 1 degree.
9. Maintaining Unity Power factor.
(ii) Steps taken by the company for utilising alternate sources of energy: The Company’s operations being not energy-intensive, no steps have been taken by the Company for utilising alternate source of energy.
(iii) Capital investment on energy conservation equipments: ` 3.08 Million
B. TECHNOLOGY ABSORPTION (i) Efforts made towards technology absorption: The Company has expanded its services in next generation technologies under Digital Solutions and Services group since the consolidation during last financial year. The Company operates Centers of Excellence in emerging technologies such as Digital Experience, Big Data, Machine / Cognitive Intelligence, Business Process Automation, Cloud, Internet of Things, Analytics, Mobile etc. and existing technologies which collate, disseminate and spread knowledge to all employees in the Company. Employees are trained using state of the art methodologies for faster onboarding. The Company has deployed crowdsourcing platform and social collaboration platform for inviting and processing innovation ideas driving new technology initiatives and new service lines. The Company has invested in automation and digital framework in areas of Internet of Things, Big Data, Digital Experience, API Management, Application Lifecycle Management and Infrastructure Management, Test Automation and Business Process Automation to ensure delivery efficiency with highest quality and reliability for its Customers.
(ii) Benefits derived like product improvement, cost reduction, product development or import substitution: Participation in transformation programs led by emerging digital technologies and new platform based service lines driving alternate revenue sources. Reduced time to market due to availability of ready frameworks and solutions for faster implementation, productivity improvement through use of latest proprietary and third party automation frameworks and tools.
52 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report | Annexures Financial Statements - Consolidated Cash Flow Statement
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): As part of sustained efforts for optimizing operational efficiencies, improving employee engagement and modernizing IT systems and infrastructure, Company has invested in variety of imported technologies. The details of Technology imported is given below:
Year of Whether the If not fully absorbed, areas where S.N. Details of Technology imported import technology been absorption has not taken place, and the fully absorbed reasons thereof 1 Enterprise BI for Analytics and reporting: With 2014 Fully absorbed a vision to establishing integrated Information Management System, Company has implemented BI solution for dashboard and reporting through IBM Cognos BI and supported by backed Data warehouse implemented using Microsoft SQL server 2012. 2 Sales automation: Company has embarked Sales 2015 Fully absorbed process and productivity improvement through modernization of its existing Sales engine by implementing Microsoft Dynamics CRM 2015. This is currently rolled out for India Sales, providing significant improvement in user Experience and Productivity 3 Employee Engagement Portal: Company has 2015 Fully absorbed adopted SharePoint as enterprise wide collaboration and knowledge management portal. Company recently launched in-house developed integrated “Gamification Engine” to encourage and motivate associates to contribute to enhance the systems and build the knowledgebase, and in return earn chance to win exciting gift vouchers. Company has also launched an internal video channel leveraging in-house developed “Media Hub” solution and cloud based Microsoft Azure media Service. 4 Unify Program: Company has embarked on 2015 Partially absorbed Unify program got started in Jan 2015. eliminating all point to point integration through As of now 52 out of total 92 interfaces are implementation of unified integration platform using migrated on to ESB platform. By end of Sep Oracle Fusion middle ware ESB. The initiative also 2016, it’s planned to migrate all remaining includes Business Process Automation leveraging interfaces onto ESB. Oracle Fusion Middleware BPM. Business process Employee onboarding is planned to be rolled out by June 2016 on OFMW BPM platform. Few other critical processes are being identified for implementing by Mar 2017. 5 Human Capital Management: Company has 2013 Fully absorbed implemented SAP HCM, thus streamlining its Current HCM processes. The implementation aims at providing automation for self-service processes across HCM operations.
53 Annual Report 2015-16
Year of Whether the If not fully absorbed, areas where S.N. Details of Technology imported import technology been absorption has not taken place, and the fully absorbed reasons thereof 6 Connexions: New communication & collaboration 2016 Partially absorbed Program Connexions has been recently platform based on Facebook at Work was launched launched and is operational across the for transforming and fostering culture of innovation organization, it is expected to be fully and collaboration at workplace. absorbed by end of second quarter of FY17. 7 Microsoft Dynamics AX: Implemented to make ease 2015 Fully absorbed of operation in admin process. 8 Digite SwiftALM: “Compass” initiative is taken up for 2015 Partially Absorbed Configuration is done for almost all process implementing specialized product Digite SwiftALM lifecycles. It’s already implemented for 30% for Application Lifecycle Management function of projects. It’s planned to be implemented as applicable to growing future business needs of in phases across entire organization by our organization and it’s replacing legacy in-house Dec-2016 developed Splice-M application. 9 SAP BPC: SAP’s Budgeting Planning & Control module 2016 Partially absorbed BPC implemented for all corporate services is being implemented for setting up, tracking, BEUs. Planned to implement the same for monitoring and controlling annual budgets across BUs by Dec 2016. entire organization.
(iv) Research and Development: a. Specific areas in which R&D carried out by the Company: The Company carries out R&D in areas of latest technologies such as Machine Learning, Internet of Things, Big Data, Analytics, Mobility, Cloud, Next generation User Experience, Service automation, Manufacturing Execution Systems, etc. b. Benefits derived as a result of the above R&D:New opportunity creation through over the horizon technologies, creation of ready frameworks and solutions for faster time to market, Brand positioning, incubation and creation of new service lines.
c. Future plan of action: Proliferation of enterprise social and crowd sourcing platform for collaborative R&D and Innovation. Technology Governance across business units for sustainable R&D. Investment in new emerging technologies like Cognitive Computing, Augment Reality and Virtual Reality, Location Services etc., creation of accelerators and solutions in the areas of Digital Experience, Natural Language Processing, Internet of Things and others. d. Total Expenditure on R&D: (` Million) S. N. Expenditure on R&D Amount a. Capital 122.60 b. Recurring 244.00 Total R & D expenditure (a+b) 366.60
C. FOREIGN EXCHANGE EARNINGS AND OUTGO The Company exports IT professional services mainly to North America, Europe, South Africa, Middle East, Japan, Australia and Singapore. (` Million) Particulars 2015-16 2014-15 Foreign Exchange Earned 52,785.78 45,395.45 Foreign Exchange Used 26,471.20 21,819.13
54 ANNEXURE H TO THE DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORT
Your Company derives its values from the rich legacy of fair and 1 Director is Executive, 3 are Non-Executive and 4 are Independent transparent governance and disclosure practices followed by Directors. The Board is chaired by Mr. A. M. Naik as a Non-Executive the L&T group. In line with the group philosophy, the Company Chairman. The Board meets at least, four times during the financial constantly endeavors to benchmark itself with the best practices in year and gap between 2 consecutive meetings is not more than 120 the IT industry. The Company will continue to focus its resources, days. Additional meetings are held, if deemed necessary to conduct strengths and strategies to achieve its vision of becoming a true the business. global leader in software services, while upholding the core values of excellence, integrity, responsibility, unity and understanding, During the year ended March 31, 2016 the Board met 6 (Six) times on which are fundamental to the L&T group. May 8, 2015, June 16, 2015, July 27, 2015, August 26, 2015, October 28, 2015 and January 22, 2016. The composition of the Board, and BOARD OF DIRECTORS Directors’ attendance at the Board Meetings held during the year is as As on March 31, 2016, the Board comprises of 8 Directors, of which, follows:
Name of Director Category Attendance at Board Meetings Mr. A. M. Naik Non-Executive Chairman 6 Mr. V. K. Magapu1 Managing Director 4 Mr. S. N. Subrahmanyan Non-Executive Director 4 Mr. R. Shankar Raman2 Non-Executive Director 4 Mr. Sanjay Jalona3 Chief Executive Officer & Managing Director 3 Mr. Chandrashekara Kakal4 Chief Operating Officer & Executive Director 4 Mr. K. R. L. Narasimham5 Executive Director 0 Mr. Sunil Pande6 Executive Director 2 Mr. Samir Desai Independent Director 5 Mr. M. M. Chitale Independent Director 6 Ms. Vedika Bhandarkar Independent Director 5 Mr. Arjun Gupta7 Independent Director 2
Note: 1. Mr. V. K. Magapu ceased to be the Managing Director w.e.f. September 26, 2015. 2. Mr. R. Shankar Raman ceased to be a Director w.e.f. September 26, 2015 and was re-appointed as a Non-Executive Director w.e.f. October 28, 2015. 3. Mr. Sanjay Jalona was appointed as the Chief Executive Officer & Managing Director w.e.f. August 10, 2015. 4. Mr. Chandrashekara Kakal ceased to be an Executive Director w.e.f. August 27, 2015. 5. Mr. K.R.L. Narasimham ceased to be an Executive Director w.e.f. April 8, 2015. 6. Mr. Sunil Pande ceased to be an Executive Director w.e.f. August 26, 2015. 7. Mr. Arjun Gupta was appointed as an Independent Director w.e.f. October 28, 2015.
55 Annual Report 2015-16
BOARD COMMITTEES a) Matters required to be included in the Director’s The Board currently has 5 Committees: 1) Audit Committee; 2) Responsibility Statement to be included in the Board’s Nomination and Remuneration Committee; 3) Corporate Social report in terms of clause (c) of sub-section 3 of Section Responsibility Committee; 4) Stakeholders’ Relationship Committee 134 of the Companies Act, 2013; and 5) IPO Committee. Your Company has also constituted a Risk b) Changes, if any, in accounting policies and practices and Management Committee which is chaired by a member ofthe reasons for the same; Board and also comprises of Senior Executives such as the Chief c) Major accounting entries involving estimates based on Financial Officer amongst its members. The Board is responsible the exercise of judgment by management; for constituting, assigning and appointing the members ofthe Committees. d) Significant adjustments made in the financial statements arising out of audit findings; AUDIT COMMITTEE e) Compliance with listing and other legal requirements During the year, the Audit Committee was re-constituted and as on relating to financial statements; March 31, 2016 comprises of 2 Independent Directors and 1 Non- f) Disclosure of any related party transactions; Executive Director as its members. The Chairman of the Committee is an Independent Director. The role, terms of reference, the authority and g) Modified opinion(s) in the draft audit report. power of the Audit Committee were also amended/ modified to be in conformity with the requirements of the Companies Act, 2013 and SEBI 5. Reviewing, with the management, the quarterly financial (Listing Obligations and Disclosure Requirements) Regulations, 2015. statements before submission to the board for approval; 6. Reviewing, with the management, the statement of uses / During the year ended March 31, 2016, the Audit Committee met 4 application of funds raised through an issue (public issue, rights (Four) times on May 8, 2015, July 27, 2015, October 27, 2015 and issue, preferential issue, etc.), the statement of funds utilised January 21, 2016. The composition of the Committee as on March for purposes other than those stated in the offer document / 31, 2016 is as follows: prospectus / notice and the report submitted by the monitoring Name of Director Position in the Category agency monitoring the utilisation of proceeds of a public or Committee rights issue, and making appropriate recommendations to the Mr. M. M. Chitale Chairman Independent Board to take up steps in this matter; Mr. Samir Desai Member Independent 7. Review and monitor the auditor’s independence and Mr. S. N. Subrahmanyan1 Member Non-Executive performance, and effectiveness of audit process; Note: 8. Approval or any subsequent modification of transactions of (1) Mr. S. N. Subrahmanyan was inducted as a member w.e.f. August 26, 2015. the Company with related parties; (2) Mr. R. Shankar Raman ceased to be Chairman and member w.e.f. July 9. Scrutiny of inter-corporate loans and investments; 27, 2015 and August 26, 2015, respectively. (3) After March 31, 2016 Ms. Vedika Bhandarkar was inducted asa 10. Valuation of undertakings or assets of the company, wherever member w.e.f. April 18, 2016. it is necessary;
The terms of reference of the Audit Committee include the following: 11. Evaluation of internal financial controls and risk management systems; 1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the 12. Reviewing, with the management, performance of statutory financial statement is correct, sufficient and credible; and internal auditors, adequacy of the internal control systems; 2. Recommendation for appointment, re-appointment and 13. Reviewing the adequacy of internal audit function, if any, replacement, remuneration and terms of appointment of including the structure of the internal audit department, auditors of the company; staffing and seniority of the official heading the department, 3. Approval of payment to statutory auditors for any other reporting structure coverage and frequency of internal audit; services rendered by the statutory auditors; 14. Discussion with internal auditors of any significant findings and 4. Reviewing, with the management, the annual financial follow up there on; statements and auditor’s report thereon before submission to 15. Reviewing the findings of any internal investigations by the the board for approval, with particular reference to: internal auditors into matters where there is suspected fraud
56 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Corporate Governance Report Financial Statements
or irregularity or a failure of internal control systems of a Note: material nature and reporting the matter to the board; (1) Mr. Samir Desai was appointed as Chairman in place of Mr. M. M. 16. Discussion with statutory auditors before the audit Chitale w.e.f. August 26, 2015. commences, about the nature and scope of audit as well as (2) Mr. A. M. Naik was inducted as a member w.e.f. August 26, 2015 post-audit discussion to ascertain any area of concern; (3) Mr. S. N. Subrahmanyan was inducted as a member w.e.f. August 26, 2015. 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (4) Mr. V. K. Magapu and Mr. R. Shankar Raman ceased to be members w.e.f. August 26, 2015. (in case of non-payment of declared dividends) and creditors; Terms of Reference 18. To establish and review the functioning of the Whistle Blower The terms of reference of the Nomination and Remuneration mechanism; Committee include the following:
19. Approval of appointment of the chief financial officer (i.e., the 1. Formulation of the criteria for determining qualifications, whole-time Finance Director or any other person heading the positive attributes and independence of a director and finance function or discharging that function) after assessing recommend to the Board a policy relating to the remuneration the qualifications, experience and background, etc. of the of the directors, key managerial personnel and other candidate; and employees;
20. Carrying out any other function as is mentioned in the terms 2. Formulation of criteria for evaluation of Independent Directors of reference of the Audit Committee and any other terms and the Board of directors; of reference as may be decided by the Board or specified/ 3. To consider and approve Employee Stock Option Schemes and provided under the Companies Act, 2013 or by the SEBI to administer and supervise the same; (Listing Obligations and Disclosure Requirements) Regulations, 4. Devising a policy on diversity of Board of Directors; 2015 or by any other regulatory authority. 5. Identifying persons who are qualified to become directors and NOMINATION AND REMUNERATION COMMITTEE who may be appointed in senior management in accordance During the year, the Nomination and Remuneration Committee with the criteria laid down, and recommend to the Board their was re-constituted and as on March 31, 2016 comprises of appointment and removal; 2 Independent Directors, 1 Non-Executive Director and the 6. To consider whether to extend or continue the term of Non-Executive Chairman as its members. The Chairman of appointment of the independent director, on the basis of the Committee is an Independent Director. The role, terms the report of performance evaluation of independent of reference, the authority and power of the Nomination and directors; Remuneration Committee were also amended / modified to 7. Performing such other activities as may be delegated by the be in conformity with the requirements of the Companies Act, Board or specified/ provided under the Companies Act, 2013 2013 and SEBI (Listing Obligations and Disclosure Requirements) or by the SEBI (Listing Obligations and Disclosure Regulations, 2015. Requirements) Regulations, 2015 or by any other regulatory authority. During the year ended March 31, 2016 the Committee met 5 (Five) times on May 8, 2015, July 27, 2015, August 26, 2015, October 27, CORPORATE SOCIAL RESPONSIBLITY (‘CSR’) COMMITTEE 2015 and January 22, 2016. The composition of the Committee as on March 31, 2016 is as follows: During the year, the CSR Committee was reconstituted and as on March 31, 2016 comprises of 1 Independent Director, 1 Non- Name of Director Position in the Category Executive Director and the Chief Executive Officer & Managing Committee Director as its members. The Chairman of the Committee is a Non- 1 Mr. Samir Desai Chairman Independent Executive Director. Mr. A. M. Naik2 Member Non-Executive Chairman The Committee met once during the year on April 7, 2015. Mr. S. N. Subrahmanyan3 Member Non-Executive The composition of the Committee as on March 31, 2016 isas Mr. M. M. Chitale1 Member Independent follows:
57 Annual Report 2015-16
Name of Director Position in the Category Mr. Subramanya Bhatt, Company Secretary is the Compliance Officer Committee who deals with Shareholders’ grievance matters. Mr. S. N. Subrahmanyan1 Chairman Non-Executive There was no meeting of the Stakeholders’ Relationship Committee Mr. Sanjay Jalona1 Member Chief Executive Officer & Managing held during the year. Director Mr. M. M. Chitale Member Independent The terms of reference of the Stakeholders’ Relationship Committee include the following: Note: 1. To redress grievances of shareholders, debenture holders and (1) Mr. S. N. Subrahmanyan and Mr. Sanjay Jalona were inducted as Chairman and member, respectively w.e.f. August 26, 2015. other security holders; (2) Mr. V. K. Magpau and Mr. Chandrashekara Kakal ceased to be 2. Investigating complaints relating to allotment of shares, Chairman and member, respectively w.e.f. August 26, 2015. approval of transfer or transmission of shares, debentures or Terms of Reference any other securities; The terms of reference of the Corporate Social Responsibility 3. Issue of duplicate certificates and new certificates on split/ Committee include the following: consolidation/renewal; 1. To formulate and recommend to the Board, a Corporate 4. To consider and resolve grievances related to non-receipt Social Responsibility Policy which shall indicate the activities of declared dividends, annual report of the Company or any to be undertaken by the Company as specified in Schedule VII of other documents or information to be sent by the Company to the Companies Act, 2013 including any amendments thereto; its shareholders; and
2. To recommend the amount of expenditure to be incurred on 5. Carrying out any other function as may be decided by the CSR activities referred to in the above clause; and the Board or specified/ provided under the Companies 3. To monitor CSR policy of the Company including instituting Act, 2013 or SEBI (Listing Obligations and Disclosure a transparent monitoring mechanism for implementation of Requirements) Regulations, 2015 or by any other CSR projects or programs or activities undertaken by the Company. regulatory authority.
STAKEHOLDERS’ RELATIONSHIP COMMITTEE IPO COMMITTEE During the year, the Company constituted Stakeholders’ Relationship IPO Committee was constituted during the year and as on March 31, Committee which as on March 31, 2016 comprises of aNon- 2016 comprises of the Non-Executive Chairman as the Chairman of Executive Director, 1 Independent Director and the Chief Executive the Committee, 1 Non-Executive Director and the Chief Executive Officer & Managing Director as its members. The Chairman of the Officer & Managing Director as its members. Committee is a Non-Executive Director. The Committee met 2 (Two) times on August 26, 2015 and September The composition of the Committee as on March 31, 2016 isas 27, 2015. The composition of the Committee as on March 31, 2016 follows: is as follows:
Name of Director Position in the Category Name of Director Position in the Category Committee Committee 1 Mr. S. N. Subrahmanyan Chairman Non-Executive Mr. A. M. Naik Chairman Non-Executive Chairman 1 Ms. Vedika Bhandarkar Member Independent Mr. S. N. Subrahmanyan1 Member Non-Executive 1 Mr. Sanjay Jalona Member Chief Executive Mr. Sanjay Jalona2 Member Chief Executive Officer & Managing Officer & Managing Director Director
Note: Note: (1) Mr. S. N. Subrahmanyan was appointed as Chairman whilst Ms. Vedika (1) Mr. S. N. Subrahmanyan was inducted as a member w.e.f. August 26, 2015. Bhandarkar & Mr. Sanjay Jalona were inducted as members w.e.f. August 26, 2015. (2) Mr. Sanjay Jalona was inducted as a member w.e.f. September 26, 2015. (2) Mr. R. Shankar Raman and Mr. V. K. Magapu ceased to be Chairman (3) Mr. V. K. Magapu and Mr. R. Shankar Raman ceased to be members and member respectively w.e.f. August 26, 2015. w.e.f. August 26, 2015 and September 26, 2015, respectively.
58 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Corporate Governance Report Financial Statements
Terms of Reference paid by peer companies, the qualification of the appointee(s), their The IPO Committee of the Company was constituted to handle experience, past performance and other relevant factors. matters related to the IPO of the Company such as the appointment The Independent Directors are paid sitting fees of ` 50,000/- for of various intermediaries including book running lead managers, each Board Meeting and ` 25,000/- for each Committee Meeting. registrar to the offer, underwriters, legal counsels and bankers to The details of remuneration paid / payable to the Directors have the Offer, to negotiate, finalise and to execute various agreements been disclosed in Annexure C to the Directors Report. such as offer agreement, share and cash escrow agreements and syndicate agreement, to make applications to statutory and other DETAILS OF SHARES HELD BY NON-EXECUTIVE DIRECTORS AS ON authorities from time to time, determination of the price band and MARCH 31, 2016: the offer price and other aspects related thereto such as settlement Name of the Director No. of shares of all questions, difficulties or doubts in regard to the Offer and any Mr. A. M. Naik 871,875 such matters incidental to the same. PERFORMANCE EVALUATION OF BOARD RISK MANAGEMENT COMMITTEE The Board has voluntarily adopted a formal mechanism for evaluating The Risk Management Committee as on March 31, 2016 comprises its performance as well as that of its Committees and individual of Mr. S. N. Subrahmanyan, Non-Executive Director as the Chairman Directors, including the Chairman of the Board. The exercise was and Mr. Sanjay Jalona, Chief Executive Officer & Managing Director carried out through a structured evaluation process covering various and Mr. Ashok Kumar Sonthalia, Chief Financial Officer as its aspects such as Board Composition and its structure, its culture, members. The majority of members including the Chairman are Board effectiveness, Board functioning, information availability, etc. Board members. The Committee met 3 (Three) times during the The results were discussed in the meeting of the Nomination and year on April 14, 2015, June 18, 2015 and October 27, 2015. Remuneration Committee and the Board.
Terms of Reference INFORMATION TO DIRECTORS The terms of reference of the Risk Management Committee include Systems, procedures and resources are in place to ensure that every the following: Director is supplied, in a timely manner, with precise and concise 1. Framing, implementing, reviewing and monitoring the risk information in a form and of a quality appropriate to effectively management plan for the Company; enable / discharge his / her duties. The Directors are given time to study the data and contribute effectively to the Board discussions. 2. Laying down risk assessment and minimization procedures The Non-Executive Directors through their interactions and and the procedures to inform Board of the same; deliberations give suggestions for improving overall effectiveness of 3. Oversight of the risk management policy/ enterprise risk the Board and its Committees. management framework (identification, impact assessment, monitoring, mitigation & reporting); ANNUAL GENERAL MEETINGS 4. Review key strategic risks at domestic/international, macro- The details of last three Annual General Meetings of the Company economic & sectoral level (including market, competition, are as under: political & reputational issues); For the Financial Venue of AGM Date and Time 5. Review significant operational risks; and Year ended 6. Performing such other activities as may be delegated by the 2014-15 L&T House, June 12, 2015 Ballard Estate, at 10.00 a.m. Board or specified/ provided under the Companies Act, 2013 or Mumbai – 400 001. by the SEBI (Listing Obligations and Disclosure Requirements) 2013-14 L&T House, September 10, 2014 Regulations, 2015 or statutorily prescribed under any other Ballard Estate, at 10.00 a.m. law or by any other regulatory authority. Mumbai – 400 001. The details of the risk management framework form part of this 2012-13 L&T House, August 26, 2013 Annual Report. Ballard Estate, at 9.00 a.m. Mumbai – 400 001. REMUNERATION OF DIRECTORS The remuneration of the Directors is based on the Company’s size, No Special Resolutions were passed by the shareholders during the global presence, its economic and financial position, compensation past 3 Annual General Meetings.
59 Annual Report 2015-16
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN In order to monitor compliances in a more robust way, the Company AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) has initiated deployment of a third party Compliance tool, with ACT, 2013 advanced features & enhanced Compliance checklist. The Company has in place an Anti-Sexual Harassment Policy in line ADEQUACY OF INTERNAL FINANCIAL CONTROLS with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’). The Company has designed and implemented a process driven Internal Complaints Committee (‘ICC’) has been constituted as framework for Internal Financial Controls (‘IFC’) within the meaning per the Act, to redress the complaints received regarding sexual of the explanation to Section 134(5)(e) of the Companies Act, 2013. harassment. All employees (permanent, contractual, temporary, For the year ended March 31, 2016, the Board is of the opinion that trainees) are covered under this policy. the Company has sound IFC commensurate with the nature and size of its business operations and operating effectively and no material The ICC team resolved one complaint filed in March 2015 by taking weaknesses exist. The Company has a process in place to continuously suitable action. During the year under review there was no case monitor the same and identify gaps, if any, and implement new and/ reported under the Act. or improved controls wherever the effect of such gaps would have a material effect on the Company’s operations.
COMPLIANCE MONITORING SYSTEM GENERAL SHAREHOLDER INFORMATION The Company believes that statutory compliance has become a) Share Transfer System: a catalyst for Corporate Governance and that a good statutory The Company’s investor services are handled by Link Intime compliance system has become vital for effective conduct of India Private Limited who are the Company’s Registrar and business operations. As a major portion of the Company’s business Share Transfer Agent. The Board has delegated the authority is conducted abroad, apart from ensuring compliance with Indian for approving transfer, transmission etc. of the Company’s statutes, the Company also has to comply with the statutes of the securities to the Transfer Committee which comprises of countries where the Company has presence. the Chief Executive Officer & Managing Director, the Chief Keeping this in mind, the Company has instituted a Compliance Financial Officer and the Company Secretary. Monitoring System. Under this system, a certificate is presented to b) Dematerialization Of Shares: the Board every quarter, confirming that the Company has complied The Company has dematerialized its Equity Shares with NSDL with all relevant provisions and requirements of various statutes and CDSL and the Company’s ISIN is INE214T01019. as they are applicable to the business of the Company in India and abroad as well as with the contractual obligations binding on the The share transfers of dematerialized shares can be made Company. The certificate to the Board is based on back toback through your Depository Participant. certificates received from various compliance owners representing As on March 31, 2016, 99.23% of the Company’s total paid-up Business Heads, Overseas Branches, Subsidiary Companies and capital was held in the dematerialized form with NSDL and CDSL. other support functions. As regards to the services availed from the professional service providers engaged in various countries, The number of shares held in dematerialized and physical the Company follows a practice of obtaining compliance certificates mode is as under: from them on quarterly basis. Particulars No. of shares % of total capital issued The Compliance Monitoring System which was rolled out by the Held in Dematerialized 167,558,937 98.67 Company during the year ended March 31, 2010 in form of the form in NSDL Compliance Portal is being extensively used by all the Compliance Held in Dematerialized 952,581 0.56 owners. The Compliance portal provides the users a web–based form in CDSL access with access controls based on a defined authorization Physical 1,304,670 0.77 matrix. Besides connecting all the compliance owners across time Total 169,816,188 100.00 zones to a common platform, the portal is expected to serve as a repository of the compliance exercise yielding substantial Members are requested to convert their physical holdings into saving in resources and efforts for tracking compliance going electronic holdings which will negate risks associated with physical forward. certificates.
60 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Corporate Governance Report Financial Statements
Members holding shares in dematerialized form are requested to intimate all changes viz. pertaining to change of address, change in e-mail id, bank details etc. to their Depository Participants whilst those holding shares in physical form are requested to intimate such changes to the Company’s Registrar and Share Transfer Agent. c) Address for Correspondence:
Address of the Registrar and Share Transfer Agent Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 400078, Maharashtra, India Tel: +91 22 2594 6970 Fax: +91 22 2594 6969 E-mail: [email protected] Address of the Compliance Officer Subramanya Bhatt, Company Secretary Larsen & Toubro Infotech Limited L&T Technology Center Gate No.5, Saki Vihar Road, Powai, Mumbai 400072, Maharashtra, India Tel: +91 22 6776 6776 Fax: +91 22 2858 1130 E-mail: [email protected] d) Shareholder Grievances: The Company has designated an e-mail id viz. [email protected] to enable shareholders to contact incase of any queries/ complaints.
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Management Discussion & Analysis
Company Overview provide services globally from North America, Europe, Asia Pacific L&T Infotech is one of India’s global IT services and solutions and the rest of the world. As of March 31, 2016, we had 22 Delivery companies. In 2015, NASSCOM ranked our company as the sixth Centres and 44 sales offices globally. largest Indian IT services company in terms of export revenues. We were amongst the top 20 IT service providers globally in I. economic Overview 2015 according to the Everest Group’s PEAK Matrix for IT service global Economic Scenario: providers. Our clients comprise some of the world’s largest and Post the economic crisis of 2008, the global economy has well-known organisations, including 49 of the Fortune Global 500 continued to be on the recovery path, however the pace companies. of this recovery has been extremely sluggish and fragile. We offer an extensive range of IT services to our clients in diverse The key economic events that have defined and driven industries such as banking and financial services, insurance, energy the world economy in the past one year and a few months and process, consumer packaged goods, retail and pharmaceuticals, are slowdown of the Chinese economic juggernaut due to media and entertainment, hi-tech and consumer electronics rebalancing and a prolonged slump in energy and commodity and automotive and aerospace. Our range of services includes prices, especially oil. These two developments have application development, maintenance and outsourcing, enterprise severely impacted the developing economies, especially the solutions, infrastructure management services, testing, digital energy and commodity exporters such as Brazil, Russia, etc. solutions and platform-based solutions. We serve our clients However, this has been balanced, albeit partially, by modest across these industries, leveraging our domain expertise, diverse revival in growth of many developed countries, especially technological capabilities, wide geographical reach, an efficient the United States of America. This kind of a mixed bag global delivery model, thought partnership and “new age” digital scenario has been further complicated by the volatility in offerings. the global financial markets, which have reacted with wild swings especially during the last months of 2015 and initial We were incorporated in 1996 and are headquartered in Mumbai, part of 2016 in the background of mixed economic news India. We leverage the strengths and heritage of our Promoter, and major decisions by the US Federal Reserve to increase Larsen & Toubro Limited, a leading Indian conglomerate in the interest rates from 0% to 0.25% - 0.5% and Chinese engineering, construction, manufacturing, finance and technology. Central Bank’s move to devalue the Yuan. As per the IMF The L&T group provides us with access to professionals with deep report, global growth during the second half of 2015, at industry knowledge in the sectors in which we do business. We have 2.8 percent, was weaker due to slowdown during Q4. In also inherited from L&T group, it’s corporate and business culture their assessment, this weakness reflected, to a significant and corporate governance practices, which in our view places us in degree, softening of economic activity in major advanced good stead in relation to our business. In addition, we benefit from economies of United States and Japan. However, economic the commonality of business verticals with our Promoter. sentiments have recovered and prospects for the world economy in 2016 are expected to be better Our growth has been marked by significant expansion of business than 2015, although marginally so and with significant verticals and geographies in which we do business. Besides India, we downside risks.
62 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
indian Economic Overview: • Social, Mobile, Analytics & Cloud (SMAC) adoption across With the economy growing by 7.2% in 2014-15 and expected industries became all pervasive driving growth in IT to grow by 7.6% in 2015-16 (based on revised base to 2011- services. 12), India overtook China as the fastest growing large economy. • Enterprise applications becoming increasingly consumer The revival in growth momentum has however underwhelmed oriented, mobile and on-the-go; applications’ delivery on account of the sluggish global economic scenario, no major mechanism shifting to cloud-based environment. uptick in domestic demand and subdued investments from the private sector due to balance sheets overburdened with debt. • Demand for migration, porting and re-platforming of However, the new Government has managed to improve the traditional on premise application to SaaS from both overall macroeconomic health of the economy by reducing the clients and ISVs provide significant opportunity. fiscal deficit and current account deficit being curtailed due to • Agile testing is growing in acceptance even though it is reduced oil price decline. Going forward some of the factors yet to fully mature. that will drive the Indian growth story especially in 2016 will be as follows: • Crowd-sourced testing is gaining popularity and testing automation as well as data management are adapting to • Jump in public investments by Government in the major the new technology demands. infrastructure sectors • Key drivers for third party and GICs are cloud based • Potential increase in consumption on account of 7th pay testing, IP-led testing, testing-as-a-service, automated commission and One Rank One Pension implementation testing and testing in domain-specific niche services along with transformational programs using SMAC • Expected normal monsoon after two continuous rainfall and Internet of Things (IoT). deficient years and Government’s focus on rural sector • The year was marked by spinoffs, buyouts, divestitures will drive rural demand and focused acquisitions among service providers which • Continued reform measures and Government’s initiatives helped bolster the bottom line for the vendors and their to attract foreign investments customers. Technology M&A deals in volume registered a record high of USD 713 billion in 2015 on a global basis. • Decline in interest rates on account of drop in inflation Driven by increased competition, some other firms took the restructuring of businesses route to improve profits In addition to this, further reforms and policy initiatives of the and reduce costs. Government are likely to ensure uptick in growth for the Indian economy. Some of the important initiatives such as ‘Make in (Source: NASSCOM Report) India’, ‘Digital India’, ‘Skill India’ and ‘Start-Up India’ mission are being aggressively promoted by the Indian government. III. Significant Factors Affecting Our Results of Operations On the negative side, overhang of debt related stress in the This section sets out certain key factors that our management major sectors of the economy, including banking, and further believes have historically affected our results of operations tapering of exports due to fragile economic scenario globally during the year under review, or which could affect our results will continue impact negatively for some more time. of operations in the future.
II. industry Overview Client relationships global IT-BPM Industry in 2015: Client relationships are at the core of our business. We have Key trends in the Global IT-BPM Market noted by NASSCOM a history of high client retention and derive a significant were as follows: proportion of our revenues from repeat business built on our successful execution of prior engagements. In the year ended • Increasing number of firms are using custom application March 31, 2016 we generated 96.9% of our revenue from development as a means to enhance customer service existing clients. with tailored solutions. The need to be differentiate their company and competitors and the need to comply with As a client relationship matures and deepens, we seek to regulations and industry mandates are driving growth in the maximise our revenues and profitability by expanding the segment. scope of IT services offered to that client with the objective • CADM services using cloud computing, mobility considered of winning more business from our clients, particularly in as a strategic tool to enhance business processes and relation to our more substantive and value-added IT service improve customer satisfaction and acquisition. offerings.
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Composition of revenue portfolio a currency where corresponding expenses or revenues are denominated in different currencies. Such transactions are Our ability to achieve growth in our revenues is dependent on denominated in currencies such as USD, Euro, Canadian composition of the proportion of work performed onsite and Dollars, British Pound Sterling and South African Rand. offshore through our global delivery model. In addition, the overall competitiveness of the Indian IT Our offshore export service revenues consist of revenues industry in the global market is also significantly dependent on from IT services performed in our facilities in India. Our favourable exchange rates. onsite export service revenues consist of revenues from software services performed at clients’ premises or Tax benefits for Indian IT companies from our Delivery Centres outside India. Onsite services We have historically benefited from the direct and indirect typically generate higher revenues than the same services tax benefits given by the Government for the export of IT performed offshore, and our profit margins are typically services from SEZs, including for our business. As a result, higher if work is performed offshore as compared to a substantial portion of our profits is exempt from income onsite. Accordingly, the mix of IT services performed tax leading to a lower overall effective tax rate than that onsite and offshore has an impact on our ability to achieve which we would otherwise enjoy if we were doing business higher profit margins. outside SEZs, and we will continue to enjoy these benefits in the near future. Our effective tax rate was 19.6% and 18.0%, The following table shows the proportionate contribution respectivelyin the year ended March 31, 2016 and March from our onsite and offshore export service revenue on 31, 2015. consolidated basis for the periods indicated: Until March 31, 2011, direct and indirect tax benefits were Percentage of export service also available for the export of IT services from software revenue from operations development centres registered under the STPI Scheme, 2015-16 2014-15 including for our business. From April 1, 2011 onwards, we Onsite 52.3% 51.8% have enjoyed only indirect tax benefits for our business Offshore 47.7% 48.2% through software development centers registered under the STPI Scheme. employees and employee costs A principal component of our ability to compete effectively IV. Financial Conditions Consolidated is our ability to attract and retain qualified employees. Our Sources of Funds number of employees increased to 20,072 as of March 31, 2016 from 19,479 as of March 31, 2015. 1. Share Capital (` Million) Employee benefit expenses constituted 57.5% and 57.7% As at As at of our total income in the year ended March 31, 2016 March 31, 2016 March 31, 2015 and March 31, 2015. Wage costs in India, including in Authorised : the IT services industry, have historically been more 240,000,000 equity shares competitive than wage costs in the United States, Europe 240.00 163.75 of ` 1 each (Previous year and other developed economies. 32,750,000 of ` 5 each) In addition, we continue to invest in the recruitment and Issued, paid up and retention of sales and administration staff in line withour subscribed 169,816,188 growth and expand our markets. equity shares of ` 1 each 169.82 161.25 (Previous year 32,250,000 Foreign currency fluctuations of ` 5 each) Since our key clients are foreign corporate and the majority EQUITY SHARE CAPITAL 169.82 161.25 of our revenues are generated outside of India we are exposed to translation and transaction foreign exchange a) The board of directors at their meeting held on June risks. Although we partly benefit from a natural hedge for 16, 2015 approved sub-division of the equity shares our foreign currency revenues against our foreign currency of face value of ` 5 each to face value of ` 1 each. The expenses, we also have an exposure to foreign exchange shareholders approved the sub-division on June 22, 2015 rate risk in respect of revenues or expenses entered into in at the extraordinary general meeting.
64 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
b) The authorised share capital of the Company was Systems Research Centre Private Limited, the authorised increased by ` 36.25 Million comprising of 36,250,000 share capital of the Company was increased by ` 40.00 equity shares of ` 1 each at the board meeting held Million comprising of 40,000,000 equity shares of ` 1 on June 16, 2015 and approved by the shareholders each on amalgamation. at the extraordinary general meeting held on June d) The Issued, paid up and subscribed share capital 22, 2015. increased by ` 8.57 Million on account of shares issued c) In accordance with the order of the Hon’ble High Court on exercise of employee stock options during the year of Judicature at Bombay for amalgamating Information ended March 31, 2016.
2. Reserves and Surplus (` Million) As at As at March 31, 2016 March 31, 2015 General reserve 4,490.31 4,490.26 Hedging reserve (net of tax) (2,695.03) (366.97) Securities premium account 1,385.40 1,181.24 Surplus statement of profit and loss 16,399.43 14,193.22 Foreign currency translation reserve 423.59 266.07 Employee stock options outstanding 53.32 338.41 Reserves & Surplus 20,057.02 20,102.23
During the year, reserves and surplus at the end of March 31, 2016 stood at ` 20,057.02 Million as against ` 20,102.23 Million at the end of at March 31, 2015.
3. Long Term and Short Term Borrowings (` Million) As at March 31, 2016 As at March 31, 2015 Non-current Current Total Non-current Current Total Long-Term Borrowings Secured loans Term loans from bank - 147.23 147.23 138.89 138.89 277.78 - 147.23 147.23 138.89 138.89 277.78 Short-Term Borrowings Secured loans Other loans from banks - 132.51 132.51 - 600.00 600.00 Unsecured Loans Other loans from banks - 265.02 265.02 - 1,297.48 1,297.48 - 397.53 397.53 - 1,897.48 1,897.48 Total - 544.76 544.76 138.89 2,036.37 2,175.26
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The Company’s long-term borrowings decreased to ` 147.23 Current liabilities consisting of trade payables, other current Million as at March 31, 2016 from ` 277.78 Million as at March liabilities and short term provisions stood at ` 11,212.23 31, 2015 on account of repayment of external commercial Million as of March 31, 2016 from ` 7,258.39 Million as of borrowing to the extent of ` 130.55 Million during the year as March 31, 2015. per repayment schedule. Other current liabilities as of March 31, 2016 include proposed The Company’s short-term borrowings stood at ` 397.53 dividend along with dividend distribution tax which has been Million at March 31, 2016 from ` 1,897.48 Million as at March represented as the final dividend. The Board of Directors, 31, 2015 on account of net repayment of loans. in its meeting held on April 26, 2016, have proposed a final dividend of ` 2.60 per equity share. The proposal is subject to 4. Deferred tax liabilities / assets the approval of shareholders at the Annual General Meeting to (` Million) be held on May 31, 2016. As at As at Short term provisions comprise of provisions for employee March 31, 2016 March 31, 2015 benefits on account of gratuity and compensated absences Deferred Tax Liability 1,206.25 238.03 and income tax provision. Deferred Tax Asset 2.37 10.29 6. Fixed Assets Deferred tax liability or asset is recognised on timing differences (` Million) between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates As at As at and laws enacted or substantively enacted as on the Balance March 31, 2016 March 31, 2015 Sheet date. Tangible assets 2,791.89 2,749.82 Intangible assets 3,583.23 4,084.52 Other deferred tax assets are recognised and carried forward Capital work-in-progress 6.95 53.33 to the extent that there is a reasonable certainty that sufficient Intangible assets under 188.41 198.45 future taxable income will be available against which such development deferred tax assets can be realised. Net Fixed Assets 6,570.48 7,086.12
During the year, the increase in Deferred Tax liability is mainly Additions: on account of: Additions to the gross block in the year ended March 31, 2016 • Premia earned on forward contracts: - Pursuant to amounted to ` 1,346.97 Million. The Company has been Income Computation and Disclosure Standards, premia continuously investing in infrastructure facilities on account of earned on forward contracts is taxable on settlement computers, office equipment, expansion of development centres and not at the time of entering the forward contract and and overseas offices, in order to meet growing business needs. this creates a timing difference for which Deferred Tax Deductions: liability has been created During the year, the company disposed various assets with a 5. Current liabilities gross block of ` 728.50 Million, particularly on vacancy of an (` Million) office space in Chennai location in India. As at As at 7. Trade Receivables March 31, 2016 March 31, 2015 Trade payables 3,276.40 2,719.47 Trade receivables amounted to ` 11,659.87 Million (net of provision for doubtful debts amounting to ` 160.69 Other current liabilities 2,764.95 1,723.48 Million) as at March 31, 2016, compared to ` 10,901.16 Short-term provisions 5,170.88 2,815.44 Million (net of provision for doubtful debts amounting to Current Liabilities 11,212.23 7,258.39 ` 175.30 Million) as at March 31, 2015.
66 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
Debtors are at 19.9% of revenue from operations for the Million as at March 31, 2016 from ` 2,009.21 Million as year ended March 31, 2016, compared to 21.9% as at at March 31, 2015 March 31, 2015. 10. Loans & advances (` Million) 8. Unbilled Revenue As at As at Unbilled revenue primarily comprise of costs and March 31, 2016 March 31, 2015 earnings in excess of billings to the clients on fixed- Long-term loans and 4,249.13 2,439.79 price, fixed-time frame, and time-and-material contracts. advances Unbilled revenue stood at 3,787.89 Million as at March Short-term loans and ` 5,837.47 5,554.52 31, 2016 as against ` 1,544.50 Million at March 31, advances 2015 since the composition of fixed price and system Total Loans & Advances 10,086.60 7,994.31 integration contracts increased during the year. Loans and advances as at March 31, 2016 increased by ` 2,092.29 Million arising out of increase in long-term loans and advances by 9. Cash & Bank ` 1,809.34 Million and increase in short-term loans and The bank balances in India include both rupee accounts advances of ` 282.95 Million. and foreign currency accounts. The bank balances in overseas accounts are maintained to meet the The increase in loans and advances was primarily attributable to expenditure of the overseas operations. premia on forward contract and MAT recoverable. Under ICDS, tax treatment for premia earned on forward contracts has changed and premia earned on forward contracts is taxable on settlement Deposits with financial institutions represent surplus and not at the time of earning. Prior to the application of ICDS, money deployed in form of deposits and collaterals such premia were taxable when earned. Due to this change, MAT kept against open ended bank guarantees issued to credit recoverable has increased, and tax charge has decreased customers. The cash & bank balance stood at ` 2,033.66 with corresponding increase in deferred tax provision.
V. Results of our operations Consolidated The following table shows a breakdown of our results of operations (including results from our discontinued operations) and each item as a percentage of total income for the years indicated: 2015-16 2014-15 (` Million) % of total (` Million) % of total income income Income Revenue from operations 58,470.60 95.2% 49,780.36 98.2% Other income 2,959.61 4.8% 915.00 1.8% Total Income 61,430.21 100.0% 50,695.36 100% Expenses Employee benefit expenses 35,346.58 57.5% 29,242.73 57.7% Operating expenses 6,710.80 10.9% 4,885.63 9.6% Sales, administration and other expenses 6,057.07 9.9% 5,607.43 11.1% Total Expenses 48,114.45 78.3% 39,735.79 78.4% Operating profit 13,315.76 21.7% 10,959.57 21.6% Finance costs 103.57 0.2% 104.19 0.2% Depreciation on tangible assets 736.67 1.2% 741.55 1.5% Amortisation of intangible assets 1,002.85 1.6% 837.85 1.7% 1,843.09 3.0% 1,683.59 3.3% Profit before extraordinary items and tax 11,472.67 18.7% 9,275.98 18.3% Profit from continuing operations before tax 11,472.67 18.7% 9,266.26 18.3%
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2015-16 2014-15 (` Million) % of total (` Million) % of total income income Extraordinary items - - 93.95 0.2% Profit from continuing operations before tax 11,472.67 18.7% 9,360.21 18.5% Tax expenses for continuing operations - Current tax 1,649.17 2.7% 1,645.32 3.2% - Deferred tax 600.44 1.0% 35.76 0.1% 2,249.61 3.7% 1,681.08 3.3% Profit from continuing operations after tax 9,223.06 15.0% 7,679.13 15.0% Profit from discontinued operations before tax - - 9.72 0.02% Tax expenses for discontinued operations - Current tax - - 1.69 0.003% Profit from discontinued operations after tax - - 8.03 0.002% Profit for the year before minority interest 9,223.06 15.0% 7,687.16 15.2% Minority Interest 1.29 0.002% 1.90 0.004% PROFIT FOR THE YEAR 9,221.77 15.0% 7,685.26 15.2%
Financial Year 2016 Compared to Financial Year 2015 operations and other income primarily on account of 1. Income foreign exchange gain. Our total income comprises of revenue from operations Revenue from operations and other income. We generate revenue from our continuing Our total income increased by 21.2% to ` 61,430.21 operations through time-and-materials contracts Million for the year ended March 31, 2016 from and fixed-price contracts by providing IT services ` 50,695.36 Million for the year ended March 31, and solutions to our clients in our industrials and 2015, primarily due to an increase in our revenue from services clusters.
% of service revenue from operations 2015-16 2014-15 Fixed-Price 45.0% 40.3% Time and Materials 55.0% 59.7% Total 100.0% 100.0%
` Million ` Million Revenue Contribution by Verticals Revenue Contribution by Services 58,471 58,471 49,681 11,473 49,681 2,297 7,522 6,494 6,658 2,029 5,749 6,104 5,419 4,697 4,615 4,702 5,655 7,427 4,344 8,047 13,834 12,093 12,326 9,939
13,454 15,401 21,583 24,442
2014-15 2015-16 2014-15 2015-16 BFS Insurance Energy ADM Enterprise Solutions IMS CPG, Retail & High-Tech, Auto Aero & Pharma Media & Entertainment Others Testing Digital Platform Based Solutions 68 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
Our revenue from continuing operations increased by 17.7% to Revenue from continuing operations in the rest of the world ` 58,470.60 Million for the year ended March 31, 2016 from ` decreased by 1.8% to ` 3,384.88 Million for the year ended 49,680.94 Million for the year ended March 31, 2015, primarily March 31, 2016 from ` 3,445.41 Million for the year ended as a result of growth in our revenues in our banking and financial March 31, 2015, primarily as a result of currency devaluation services, insurance, automotive and aerospace, media and of the South African Rand against the Indian Rupee which entertainment and plant equipment business verticals, as well negatively impacted our revenue from continuing operations as our digital solutions, testing and IMS service lines, which was in South Africa and due to the completion of implementation partially offset by lower revenues from continuing operations in of projects for few large clients in the Middle East. our energy and process business vertical. Our USD revenue from continuing operations comprise ` Million revenues denominated in USD, in addition to amounts in Revenue Contribution by Geography foreign currencies across our operations, that are converted into USD using the month-end/day-end exchange rates for the 58,471 relevant period. Such revenues increased by 9.5% to USD887.2 3,385 Million for the year ended March 31, 2016 from USD809.9 49,681 3,400 Million for the year ended March 31, 2015. 3,445 1,191 2,076 10,125 Other Income 1,199 8,863 Our other income primarily consists of income from foreign exchange gains (or losses), investments in mutual funds, profit on sale of fixed assets, interest received and miscellaneous income. 34,098 40.370 Our other income increased to ` 2,959.61 Million for the year ended March 31, 2016 from ` 915.00 Million for the year ended March 31, 2015. This was primarily due to foreign 2014-15 2015-16 exchange gain of ` 2,795.57 Million in the year ended March North America Europe Asia Pacific 31, 2016 compared with a foreign exchange gain of ` 667.81 India RoW Million in the year ended March 31, 2015.
Revenue from continuing operations in North America In order to mitigate our foreign exchange risk, we have a long- increased by 18.4% to ` 40,370.47 Million for the year ended term hedging policy. We hedge the major currencies in which March 31, 2016 from ` 34,097.77 Million for the year ended we transact business (for example, the US dollar and the Euro) March 31, 2015, primarily as a result of growth in our banking by entering into forward contracts. Our forward contracts are and financial services, insurance, media and entertainment and run on a net exposure basis, typically for a period of up to three automotive and aerospace business verticals. Revenue from years. These forward contracts provide for payments by banks to continuing operations in Europe increased by 14.2% to us in the situations where the spot exchange rate on maturity is ` 10,124.59 Million for the year ended March 31, 2016 from lower than the rate at which forward contracts were entered and ` 8,862.74 Million for the year ended March 31, 2015, payment by us to the banks in situations where the spot exchange primarily as a result of increase in revenues from existing rate on maturity is higher than the rate at which forward contracts clients and revenues from new clients in Nordics, Germany were entered. Such forward contracts are treated as foreign and France. currency transactions and accounted for accordingly. Exchange differences arising on such contracts are recognised in the period Revenue from continuing operations in Asia-Pacific in which they arise and the premium paid/received is accounted decreased by 0.7% to ` 1,190.47 Million for the year ended as expense/income over the period of the contract and the March 31, 2016 from ` 1,199.12 Million for the year ended impact is reversed upon maturity of the contract. March 31, 2015, primarily as a result of completion of projects for a large client. Revenue from continuing operations in In the year ended March 31, 2016, the depreciation of major India increased by 63.8% to ` 3,400.19 Million for the year currencies in which we transact business against the US dollar, ended March 31, 2016 from ` 2,075.90 Million for the year was offset by the forward rates contracted with banks in the ended March 31, 2015, primarily as a result of increase in past. This, coupled with higher volume of forward contracts revenue attributable to system integration projects from entered into and maturing in this period, led to a higher gain new clients in the banking and financial services, plant on settlement under our forward contracts and higher premia equipment and the defence business verticals. income, which we recognised as part of our other income. As a
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result of this, our foreign exchange gain was ` 2,795.57 Million professional charges; telephone charges and postage; rates and in the year ended March 31, 2016. taxes; power and fuel and other miscellaneous expenses.
2. Expenses Our sales, administration and other expenses increased by 8.0% to ` 6,057.07 Million for the year ended March 31, 2016 Our expenses include employee benefit expenses, (which represented 9.9% of our total income for such year) from operating expenses, sales, administration and other ` 5,607.43 Million for the year ended March 31, 2015 (which expenses, finance costs, depreciation and amortisation represented 11.1% of our total income for such year), primarily and tax expenses. Our total expenses increased by 21.1% to as a result of increase in repairs to building in Vashi and transit ` 48,114.45 Million for the year ended March 31, 2016 houses in Airoli and other locations, increase in general repairs from ` 39,735.79 Million for the year ended March 31, and maintenance expenses for new units which became fully 2015, primarily as a result of an increase in employee operational in the year ended March 31, 2016, higher tax rates benefit expenses, which was attributable to the growth of and taxes payable in relation to the growth of our operations our operations. offset by reversal of provision made in the year ended March Employee benefit expenses 31, 2015 for California state taxes pursuant to a final judicial order received in our favour. The increase in miscellaneous Employee benefit expenses comprise salaries (including expenses is due to certain one-time expenses and increase in overseas staff expenses); staff welfare; contributions to expenditure made on account of CSR activities. provident and other funds; contributions to superannuation funds and contributions to gratuity funds. Finance costs Finance costs comprise interest paid on fixed loans, external Our employee benefit expenses increased by 20.9% to commercial borrowings and lease finance charges. Exchange ` 35,346.58 Million for the year ended March 31, 2016 (which losses on borrowings are also accounted for as part of represented 57.5% of our total income for such year) from finance costs. ` 29,242.73 Million for the year ended March 31, 2015 (which represented 57.7% of our total income for such year), primarily as Our finance costs decreased by 0.6% to ` 103.57 Million for a result of increase in salaries, including overseas staff expenses, the year ended March 31, 2016 from ` 104.19 Million for the to ` 33,997.84 Million from ` 28,056.30 Million. Due to the year ended March 31, 2015, primarily due to repayment of growth of our operations, our usage of local hires and increase in loans during the year. company level annual increments has impacted costs. Depreciation and amortization Operating expenses Tangible and intangible assets are amortised over periods Operating expenses comprise communication expenses; operating corresponding to their estimated useful lives. lease charges; consultancy charges; cost of software packages for Our depreciation on tangible assets decreased by 0.7% to own use; insurance; and the cost of bought-out items for resale. ` 736.67 Million for the year ended March 31, 2016 from Our operating expenses increased by 37.4% to ` 6,710.80 ` 741.55 Million for the year ended March 31, 2015, and Million for the year ended March 31, 2016 (which represented our amortisation of intangible assets increased by 19.7% to 10.9% of our total income for such year) from ` 4,885.63 ` 1,002.85 Million for the year ended March 31, 2016 from Million for the year ended March 31, 2015 (which represented ` 837.85 Million for the year ended March 31, 2015 primarily 9.6% of our total income for such year). This was primarily as a as a result of amortization of certain software purchased at result of an increase in the costs of bought-out items for resale the beginning of the year ended March 31, 2016 which were (which relates to the purchase of hardware and software leased from third parties during the year ended March 31, license) to ` 1,982.12 Million for the year ended March 31, 2015 and consequently, we did not record any amortization 2016 from ` 742.76 Million for the year ended March 31, relating to such software in our financial accounts forsuch 2015 and a 16.6% increase in our consultancy charges to period. ` 4,032.97 Million for the year ended March 31, 2016 from ` 3,458.95 Million for the year ended March 31, 2015, in both Profit before extraordinary items and tax cases, primarily as a result of increase in services performed As a result of the above mentioned factors, our profit before for clients requiring us to work with external sub-contractors. extraordinary items and tax was ` 11,472.67 Million for the year ended March 31, 2016 (which represented 18.7% of our total Sales, administration and other expenses income for such year) and ` 9,275.98 Million for the year ended Sales, administration and other expenses primarily comprise rent March 31, 2015 (which represented 18.3% of our total income for and establishment expenses; travelling and conveyance; legal and such year).
70 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
Profit from continuing operations before tax Earnings per share (EPS) As a result of the foregoing factors, our profit from continuing Our Basic EPS before extraordinary items has increased by 19.3% operations before tax increased by 23.8% to ` 11,472.67 to ` 56.26 per share in the year ended March 31, 2016 from Million for the year ended March 31, 2016 (which represented ` 47.17 per share in the year ended March 31, 2015. 18.7% of our total income for such year) from ` 9,266.26 Correspondingly, the Diluted EPS has increased by 24.3% to Million for the year ended March 31, 2015 (which represented ` 56.13 per share in the year ended March 31, 2016 from 18.3% of our total income for such year). ` 45.14 per share in the year ended March 31, 2015. The Tax expenses weighted average number of potential equity shares on account of employee options has reduced from 7,270,100 Tax expenses comprise of current tax and deferred tax. Current shares in the year ended March 31, 2016 to 392,052 shares income tax is the amount expected to be paid to the tax in the year ended March 31, 2016 due to exercise of stock authorities in accordance with the applicable tax laws in relevant options. jurisdictions. Deferred income tax reflects the impact of timing differences between taxable income and accounting income. Our Basic EPS after extraordinary items has increased by Our current tax increased by 0.2% to ` 1,649.17 Million for the 18.0% from ` 47.66 per share to ` 56.26 per share in the year year ended March 31, 2016 from ` 1,645.32 Million for the ended March 31, 2016. Correspondingly, the Diluted EPS has year ended March 31, 2015. This decrease was primarily due increased by 23.1% from ` 45.60 per share to ` 56.13 per to an increase in the overseas taxes corresponding to increase share in the year ended March 31, 2016. in operations and increase in overseas withholding taxes which was offset by reduction in current tax provision in India due to Segmental Reporting application of ICDS with effect from April 1, 2015. Under ICDS, Business segmentation tax treatment for premia earned on forward contracts has changed and premia earned on forward contracts is taxable We report our continuing business operations in two on settlement and not at the time of earning. Prior tothe business segments, which we term “clusters”: an application of ICDS, such premia were taxable when earned. industrials cluster (comprising the business verticals of Due to this change, current tax provision is reduced (and MAT energy and process, consumer packaged goods, retail credit entitlement has increased), with corresponding increase and pharmaceuticals, hi-tech and consumer electronics, in deferred tax provision. Thus, there is no impact on total tax automotive and aerospace, plant equipment, and utilities, provision (current plus deferred) due to application of ICDS. engineering and construction) and a services cluster (comprising the business verticals of banking and financial Our deferred tax charge for the year ended March 31, 2016 was services, insurance, media and entertainment, travel and ` 600.44 Million as against our deferred tax charge for the logistics and other miscellaneous business verticals). year ended March 31, 2015 of ` 35.76 Million owing to the The business units within each cluster include certain application of ICDS as explained above. horizontals from an organisational structure perspective, Our total tax expense has increased by 33.8% to ` 2,249.61 Million which are responsible for serving clients across both for the year ended March 31, 2016 from ` 1,681.08 Million clusters. In addition, our results of operations presented for for the year ended March 31, 2015 primarily due to increase the year ended March 31, 2015 also included our telecom in profit before tax by 23.8% to ` 11,472.67 Million for the year cluster, which constituted our discontinued operations from ended March 31, 2016 from ` 9,266.26 Million for the year ended Product Engineering Services transferred to L&T Technology March 31, 2015. Services Limited on January 1, 2014.
Net profit after tax The following table shows a breakdown of our segmental As a result of the foregoing factors, our net profit was revenue by our business clusters, with each item represented ` 9,221.77 Million for the year ended March 31, 2016 and as a percentage of revenue from operations for the periods ` 7,685.26 Million for the year ended March 31, 2015. indicated:
2015-16 2014-15 (` Million) % of revenue (` Million) % of revenue from operations from operations Revenue from operations Industrials Cluster 26,937.56 46.1% 23,391.05 47.0% Services Cluster 31,533.04 53.9% 26,289.89 52.8% Telecom Cluster1 - 0.0% 99.42 0.2% Total revenue from operations 58,470.60 100.0% 49,780.36 100.0% 1 Revenue from operations from our telecom cluster represents revenue from our discontinued operations which will not be recognised in future periods.
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The following table shows a breakdown of our segmental operating profit by our business clusters, with each item represented as a percentage of total operating profit for the periods indicated:
2015-16 2014-15 (` Million) % of total (` Million) % of total operating profit operating profit Segmental Profit Industrials Cluster 6,896.37 48.10% 6,123.58 52.8% Services Cluster 7,439.75 51.90% 5,456.21 47.1% Telecom Cluster1 - 0.0% 9.72 0.1% Segmental Operating Profit 14,336.12 100.0% 11,589.51 100.0% 1 Operating profit from our telecom cluster represents operating profit from our discontinued operations, which will not be recognised in future periods.
Geographic segmentation The following tables show a breakdown of our revenue Our revenues are generated from four main geographic from continuing operations and discontinued operations markets: North America, Europe, Asia Pacific and India. We separately, on the basis of the geographic location of our present our revenues by client location based on the location clients, with each item represented as a percentage of of the specific client site that we serve, irrespective of the revenue from continuing operations and revenue from location of the headquarters of the client or the location of the discontinued operations, as applicable, for the periods Delivery Centre where the work is performed. indicated:
2015-16 2014-15 (` Million) % of revenue (` Million) % of revenue from continuing from continuing operations operations North America 40,370.47 69.0% 34,097.77 68.6% Europe 10,124.59 17.4% 8,862.74 17.9% Asia Pacific 1,190.47 2.0% 1,199.12 2.4% India 3,400.19 5.8% 2,075.90 4.2% Rest of the world 3,384.88 5.8% 3,445.41 6.9% Revenue from continuing operations (A) 58,470.60 100.0% 49,680.94 100.0%
(` Million) % of revenue (` Million) % of revenue from from discontinued discontinued operations operations North America - - - - Europe - - 99.42 100.0% Asia Pacific - - - - India - - - - Rest of the world - - - - Revenue from discontinued operations (B) - - 99.42 100.0% Revenue from Operations (A + B) 58,470.60 - 49,780.36 - 1 We did not recognise any revenue from discontinued operations in the year ended March 31, 2016 and will not recognise in future periods.
72 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
VI. Liquidity We have historically met our working capital and other capital expenditure requirements primarily from cash generated by operating activities, short-term and long-term bank borrowings. Cash flows The table below summarizes our consolidated cash flows for the periods indicated: (` Million) Cash Flow Data 2015-16 2014-15
Net cash (used) / generated from operating activities before extraordinary items (A) 8,633.03 6,422.54
Net cash from / (used) in investing activities (after extraordinary item) (B) (441.35) (1,028.63) Net cash (used) in financing activities (C) (8,167.23) (4,973.81) Net increase / (decrease) in cash and cash equivalents (D = A+B+C) 24.45 420.10 Opening cash and cash equivalents (E) 2,009.21 1,589.11 Closing cash and cash equivalents (D + E) 2,033.66 2,009.21
Cash flow from operating activities borrowings of ` 1,662.61 Million and the payment of dividend Net cash generated from our operating activities before tax of ` 1,048.71 Million. extraordinary item was ` 8,633.03 Million for the year VII. Outlook, risks and concerns ended March 31, 2016. Our net profit before tax (excluding extraordinary items), was ` 11,472.67 Million for the year This section lists forward-looking statements that involve risks ended March 31, 2016, which was adjusted mainly for and uncertainties. Our actual results could differ materially from depreciation and amortization of ` 1,739.52 Million and those anticipated in these statements as a result of certain factors. unrealised foreign exchange gain of ` 901.57 Million. As a This section list our outlook, risks and concerns as follows: result, our operating profit before working capital changes was Internal Risks: ` 12,225.69 Million for the year ended March 31, 2016. This was further adjusted primarily for a decrease in our working 1. Our business will suffer if we fail to anticipate and develop new services and enhance existing services in capital of ` 935.67 Million. The decrease in our working capital was primarily attributable to an increase in trade order to keep pace with rapid changes in technology and the industries on which we focus. and other payables of ` 2,123.04 Million partially set-off by increase in trade receivables and unbilled revenue by 2. Intense competition in the market for technology ` 3,069.79 Million. Cash generated from our operations was services could affect our pricing, which could reduce our ` 11,290.02 Million in the year ended March 31, 2016, adjusted share of business from clients and decrease our revenues for direct taxes paid of ` 2,656.99 Million. As a result, our and profitability. net cash generated from operating activities before extraordinary item was ` 8,633.03 Million for the year ended 3. Our revenues, expenses and profitability may be subject March 31, 2016. to significant fluctuation and hence may be difficult to predict. This increases the likelihood that our results of Cash flow used for/from investing activities operations could fall below the expectations of investors Net cash used for investing activities (after extraordinary and market analysts, which could cause the market price items) was ` 441.35 Million for the year ended March 31, of the Equity Shares to decline. 2016, which was primarily attributable to our purchase of 4. Exchange rate fluctuations in various currencies in which fixed assets amounting to` 1,290.54 Million. This was partially we do business could negatively impact our business, offset by proceeds from the sale of current investments of financial condition and results of operations. ` 674.75 Million in the year ended March 31, 2016. 5. Our revenues are highly dependent on clients primarily Cash flow used in financing activities located in North America and Europe, as well as on Net cash used in financing activities was ` 8,167.23 Million clients concentrated in certain industries, notably for the year ended March 31, 2016, mainly consisting of the banking and financial services, insurance, energy and payment of dividends of ` 5,467.30 Million, the repayment of process, and consumer packaged goods, retail and
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pharmaceuticals. Our revenues are also dependent on 14. Any inability to manage our growth could disrupt our two service lines; therefore, an economic slowdown or business and reduce our profitability. factors that affect the economic health of North America or Europe, these industries or these service lines could 15. We may face difficulties in providing end-to-end business adversely affect our business, financial condition and solutions for our clients that could cause clients to results of operations. discontinue their work with us, which, in turn, could adversely impact our business, financial condition and 6. Challenges in relation to immigration may affect our results of operations. We may also be required to pay ability to compete for, and provide services to, clients in damages for deficient services or for violating intellectual the United States and/or other countries, partly because property rights. we may be required to hire locals instead of using our 16. If we are unable to collect our dues and receivables from, existing work force, which could result in lower profit or invoice our unbilled services to, our clients, our results margins, delays in, or losses of, client engagements and of operations and cash flows could be adversely affected. otherwise adversely affect our ability to meet our growth, revenue and profit projections. We cannot assure you 17. If there is a change in tax regulations, our tax liabilities that we will not be subject to penalties in relation to may increase and thus adversely affect our financial employment visa violations in the future. position and results of operations. We would indeed realize lower tax benefits if the special tax holiday scheme 7. Our pricing structures do not accurately anticipate the for units set up in special economic zones is substantially cost and complexity of performing our work and if we modified. are unable to manage costs successfully, then certain of our contracts could be or become unprofitable. 18. Any increase in or realization of our contingent liabilities could adversely affect our financial condition. 8. Some of our client contracts contain benchmarking and most favoured customer provisions which, if 19. Our business is based on the trust and confidence of our triggered, could result in lower contractual revenues and customers and any damage to that trust and confidence profitability in the future. whether in relation to our personnel or our brand may materially and adversely affect our business, future 9. Our Company has amended the ESOP Scheme 2000 financial performance and results of operations. and changed the vesting schedule and exercise period of options and has exercised discretion with respect to 20. Adverse changes to our relationships with key alliance the vesting and exercise of certain options; any of these partners could adversely affect our revenues and results actions have resulted in and may continue to result in of operations. claims under the Existing Employee Stock Option Plans 21. We may be liable to our clients for damages caused by that may adversely impact our reputation, business, system failures, disclosure of confidential information or financial condition and results of operations data security breaches, which could harm our reputation 10. Our revenue depends to a large extent on a limited and cause us to lose clients. number of clients, and our revenue could decline if we 22. Disruptions in telecommunications could harm our lose a major client. service model, which could result in a reduction of our revenue. 11. Wage increases in India may diminish our competitive advantage against companies located in the United 23. We may engage in acquisitions that may not be successful States and Europe and may reduce our profit margins. or meet our expectations.
12. Our profitability could suffer if we are not able to 24. Our global operations expose us to numerous and maintain favorable employee utilization. sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our 13. Our success depends in large part upon the strength of our business. management team and other highly skilled professionals. If we fail to attract, retain and manage transition of these 25. Our work with government clients exposes us to personnel, our business may be unable to grow and our additional risks inherent in the government contracting revenue could decline. environment.
74 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Management Discussion & Analysis Financial Statements
26. Our insurance coverage may not be adequate to protect 32. We may be affected by competition law in India and any us against all potential losses to which we may be adverse application or interpretation of the Competition subject, and this may have a material adverse effect Act could adversely affect our business. on our business, financial condition and results of 33. Indian law limits our ability to raise capital outside of operations. India and may limit the ability of others to acquire us, 27. Compliance with, and changes in labour laws and which could prevent us from operating our business or regulations could materially and adversely affect our entering into a transaction that is in the best interests of business, future financial performance and results of our shareholders. operations, while we face further labour risks, such as 34. Significant differences exist between Indian GAAP, the risk of our employees joining a labour union and used throughout our financial information and other engaging in collective bargaining. accounting principles with which investors may be more 28. Our debt financing agreements contain restrictive familiar. covenants that may adversely affect our business, credit 35. Public companies in India, including us, are required ratings, prospects, results of operations and financial to prepare financial statements under Ind AS and condition. compute Income Tax under the Income Computation and Disclosure Standards (the “ICDS”). The transition to External Risks: Ind AS and ICDS in India is very recent and we may be negatively affected by such transition. 29. The markets in which we operate are subject to the risk of earthquakes, floods, tsunamis, storms and other 36. We may be unsuccessful in protecting our intellectual natural and manmade disasters. property rights in India. Unauthorised use of our intellectual property may result in the development of 30. Changing laws, rules and regulations and legal technology, products or services which compete with our uncertainties, including adverse application of tax laws products. We may also be subject to third-party claims of and regulations, may adversely affect our business and intellectual property infringement. financial performance.
31. Our business is substantially affected by prevailing VIII. Material developments in Human Resources economic, political and other prevailing conditions in This has been elaborated in the Human Resources section India. of the Annual Report.
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Risk Management Framework
Overview: Risk Avoidance: The risks with high severity are avoided Our objective of Risk Management framework is to address risks in a by exiting the activities or situations which give rise to proactive manner to sustain business growth. The Risk Management such risks. framework is established to ensure that the risk that would impact Risk Reducton: The risks are reduced with appropriate the key business objectives are minimized through continuous risk mitigations plans. identification, assessment, quantification and its mitigation. Risk Transfer: Transfer the total or partial risk to external Risk Management – Our Approach: third party vendor. Risk Management Process comprises of the following steps: Risk Acceptance: The risks with low severity are accepted where the cost of risk mitigation is higher than the risk exposure. Identificati Risk on 4. Risk Monitoring and Review: The risks are revisited at defined frequencies to validate whether the existing mitigation controls
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Risk Mitigation Audit Committee
1. Risk Identification: Risks that impact the Company’s business objectives are broadly classified into Strategic, Business and Risk Management Committee Operational risks: Strategic: Strategic risks are the risks arising due to the decisions the management makes w.r.t. market, business Risk Management Head growth, delivery model, etc. which can have adverse effect on the business objectives. Ownership of these risks shall be with the Top Management. Business Heads Business: Business risks are the risks which impose uncertainty in profits or danger of loss that could cause business to fail, e.g. Client preferences, increased competition, etc. Ownership of these risks shall be with Business Heads. The risk governance structure of the Company is headed by Board of Directors who formed the Risk Management Committee Operatonal: Operational risks are the risks arising from people, systems and processes through which the (‘RMC’). RMC is responsible for framing, implementing and Company operates. Ownership of these risks shall be monitoring the Risk Management framework for the Company. with Operations Teams. The RMC is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has 2. Risk Analysis and Evaluation: The risks are analyzed in terms of additional oversight in the area of financial risks and controls. probability of occurrence and magnitude of impact. ‘Impact’ Risk Management Head (‘RMH’) acts as a nodal point for and ‘Probability’ determines the ‘Severity of Risk’ which aids coordinating risk management activities. RMH also appraises to prioritize the risks and its mitigation action. the Audit Committee with identified risks, its mitigation and 3. Risk Mitigation: Based on the ‘Severity of Risk’, they are effectiveness of mitigation. RMH is supported by Business Heads prioritized and mitigation action is planned. Accordingly, the who are the Risk Managers and owners to implement the Risk risks are avoided, reduced, transferred or accepted. Management framework in their respective Business Units.
76 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Independent Auditor’s Report INDEPENDENT AUDITOR’S REPORT
To the members of Larsen & Toubro Infotech Limited and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Report on the standalone financial statements We have audited the accompanying standalone financial statements An audit involves performing procedures to obtain audit evidence of Larsen & Toubro Infotech Limited (‘the Company’), which about the amounts and the disclosures in the financial statements. comprise the balance sheet as at March 31, 2016, the statement The procedures selected depend on the auditor’s judgment, including of profit and loss, the cash flow statement for the year then ended, the assessment of the risks of material misstatement of the financial and a summary of the significant accounting policies and other statements, whether due to fraud or error. In making those risk explanatory information. assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give Management’s responsibility for the standalone financial a true and fair view in order to design audit procedures that are statements appropriate in the circumstances. An audit also includes evaluating the The Company’s board of directors is responsible for the matters appropriateness of the accounting policies used and the reasonableness stated in section 134(5) of the Companies Act, 2013 (‘the Act’) of the accounting estimates made by the Company’s Directors, as well with respect to the preparation of these standalone financial as evaluating the overall presentation of the financial statements. statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in We believe that the audit evidence we have obtained is sufficient accordance with the accounting principles generally accepted in and appropriate to provide a basis for our audit opinion on the India, including the Accounting Standards specified under section standalone financial statements. 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of Opinion adequate accounting records in accordance with the provisions In our opinion and to the best of our information and according of the Act for safeguarding the assets of the Company and for to the explanations given to us, the aforesaid standalone financial preventing and detecting frauds and other irregularities; selection statements give the information required by the Act in the manner and application of appropriate accounting policies; making so required and give a true and fair view in conformity with the judgments and estimates that are reasonable and prudent; and accounting principles generally accepted in India, of the state of design, implementation and maintenance of adequate internal affairs of the Company as at March 31, 2016, and its profit and its financial controls, that were operating effectively for ensuring the cash flows for the year ended on that date. accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that Report on other legal and regulatory requirements give a true and fair view and are free from material misstatement, 1 As required by the Companies (Auditor’s Report) Order, 2016 whether due to fraud or error. (“the Order”) issued by the central government of India in terms of sub-section (11) of section 143 of the Act, we give in Auditor’s responsibility Annexure A a statement on the matters specified in paragraphs Our responsibility is to express an opinion on these standalone 3 and 4 of the Order. financial statements based on our audit. 2 As required by section 143 (3) of the Act, we report that: We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be (a) We have sought and obtained all the information included in the audit report under the provisions of the Act and the and explanations which to the best of our knowledge Rules made thereunder. and belief were necessary for the purposes of our audit; We conducted our audit in accordance with the Standards (b) in our opinion, proper books of account as required by on Auditing specified under section 143(10) of the Act. Those law have been kept by the Company so far as it appears Standards require that we comply with ethical requirements from our examination of those books;
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(c) the balance sheet, the statement of profit and loss, and i. The Company has disclosed the impact of pending the cash flow statement dealt with by this report are in litigations on its financial position in its financial agreement with the books of account; statements – refer note R to the financial statements;
(d) in our opinion, the aforesaid standalone financial ii. The Company has made provision, as required statements comply with the Accounting Standards under the applicable law or accounting standards, specified under section 133 of the Act, read with rule 7 for material foreseeable losses, if any, on long-term of the Companies (Accounts) Rules, 2014; contracts including derivative contracts – refer note (e) on the basis of the written representations received from T(2)(ii) to the financial statements; and the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as iii. There are no amounts required to be transferred on 31 March 2016 from being appointed as a director in to the Investor Education and Protection Fund terms of section 164 (2) of the Act; by the Company refer note T(14) to the financial statements. (f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B; and Sharp & Tannan Chartered Accountants (g) with respect to the other matters to be included in Firm’s registration no. 109982W the Auditor’s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our Firdosh D. Buchia opinion and to the best of our information and according Partner to the explanations given to us: Mumbai, 26 April 2016 Membership No. 38332
78 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Independent Auditor’s Report Annexure ‘A’ to the Independent Auditor’s Report
(Referred to in paragraph (1) under ‘Report on other legal and 3 (a) According to the information and explanations given to regulatory requirements’ of our report of even date) us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing 1 (a) The Company is maintaining proper records to show full undisputed statutory dues including provident fund, particulars including quantitative details and situation of employees state insurance, income-tax, sales-tax, service all fixed assets. tax, duty of customs, duty of excise, value added tax, cess (b) We are informed that the Company has formulated a and other material statutory dues as applicable with the programme of physical verification of all the fixed assets appropriate authorities. According to the information over a period of two years which, in our opinion, is and explanations given to us, there were no undisputed reasonable having regard to the size of the Company and amounts payable in respect of provident fund, employees nature of its assets. Accordingly, the physical verification state insurance, income-tax, sales-tax, service tax, duty of the fixed assets has been carried out by management of customs, duty of excise, cess and other statutory dues during the year and no material discrepancies were outstanding as at March 31, 2016 for a period of more noticed on such verification. than six months from the date they became payable. (c) The title deeds of immovable properties are held in the (b) According to the information and explanations given to name of the Company. us and the records of the Company examined by us, the particulars of income-tax, sales-tax, service tax, duty of 2 In our opinion and according to the information and custom, duty of excise or value added tax as at March explanations given to us, in respect of loans, investments, 31, 2016 which have not been deposited on account of a guarantees and security the provisions of section 185 and 186 dispute pending are as under: of the Act have been complied with.
Name of the Nature of the disputed dues Amount Period to which the Forum where disputes statute (` Million)* amount relates are pending Central Sales Tax Software exports and service income revenue 11.16 2002-2003 Maharashtra Sales Tax and local sales considered as domestic sales and other classification Tribunal, Mumbai tax Acts , disputes Service tax Service tax demand under reverse charge mechanism 1.99 2008-2009 to The Commissioner of on the Agency commission paid in foreign currency 2013-2014 Central Excise (Appeals) Income-tax Disallowance of exemption under section 10 A 139.18 2005-2006 and ITAT Act, 1961 2008-2009 Disallowance of exemption under section 10 A 45.13 2006-2007 and Commissioner (Appeals) 2010-2011 Disputes regarding calculation of notional interest on 1.21 2010-2011 transactions with related party and disallowance of FTC Disputes regarding short fall in tax deducted at source 5.14 2010-2011 and Deputy Commissioner of 2011-2012 Income Tax (TDS) Disputes regarding exclusion of interest income from 3.59 2007-2008 and Asst. Commissioner Of section 10A calculation, addition of notional interest 2008-2009 Income Tax on transactions with related party and disallowance of FTC Dispute regarding wrong calculation of interest 0.13 2011-2012 Deputy Commissioner of Income Tax *Net of pre-deposit paid in getting the stay/appeal admitted
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4 According to the records of the Company examined by us and 8 According to the records of the Company examined by us and the information and explanations given to us, the Company the information and explanations given to us, all transactions has not defaulted in repayment of loans or borrowing to any with related parties are in compliance with sections 177 and financial institution, bank, government or debenture holders 188 of the Act and the details have been disclosed in the as at the balance sheet date. financial statements as required by the applicable accounting standards. 5 The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during 9 According to the records of the Company examined by us and the year. In our opinion and according to the information and the information and explanations given to us, the Company explanations given to us, the term loans were applied for the has not entered into any non-cash transactions with directors purpose for which they were taken. or persons connected with them.
6 During the course of our examination of the books and records 10 According to the information and explanations given to us, the of the Company, carried out in accordance with the generally Company is not required to be registered under section 45-IA accepted auditing practices in India, and according to the of the Reserve Bank of India Act, 1934. information and explanations given to us, we have neither come across any instances of material fraud by the Company 11 Paragraphs 3(ii), (iii), (v), (vi), (xii) and (xiv) of the Order are not nor on the Company by its officers or employees, noticed or applicable to the Company. reported during the year, nor have we been informed of such case by management. Sharp & Tannan Chartered Accountants 7 According to the records of the Company examined by Firm’s registration no. 109982W us and the information and explanations given to us, the Company has paid/provided managerial remuneration Firdosh D. Buchia in accordance with the requisite approvals mandated by Partner the provisions of section 197 read with schedule V to Mumbai, 26 April 2016 Membership No. 38332 the Act.
Annexure ‘B’ to the Independent Auditor’s Report
(Referred to in paragraph 2(f) under ‘Report on other legal and Chartered Accountants of India (‘the ICAI’). These responsibilities regulatory requirements’ of our report of even date) include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for Report on the internal financial controls under clause (i) of sub- ensuring the orderly and efficient conduct of its business, including section (3) of section 143 of the Companies Act, 2013 (‘the Act’) adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and We have audited the internal financial controls over financial completeness of the accounting records, and the timely preparation reporting of Larsen & Toubro Infotech Limited (‘the Company’) as of reliable financial information, as required under the Act. of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that Auditor’s responsibility date. Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our Management’s responsibility for internal financial controls audit. We conducted our audit in accordance with the Guidance The Company’s management is responsible for establishing and Note and the Standards on Auditing, issued by ICAI and deemed maintaining internal financial controls based on the internal to be prescribed under section 143(10) of the Act, to the extent control over financial reporting criteria established by the Company applicable, to an audit of internal financial controls, both applicable considering the essential components of internal control stated to an audit of internal financial controls and both issued by the ICAI. in the Guidance Note on Audit of Internal Financial Controls Over Those Standards and the Guidance Note require that we comply Financial Reporting (‘the Guidance Note’) issued by the Institute of with ethical requirements and plan and perform the audit to obtain
80 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Independent Auditor’s Report reasonable assurance about whether adequate internal financial authorisations of management and directors of the company; and controls over financial reporting was established and maintained (3) provide reasonable assurance regarding prevention or timely and if such controls operated effectively in all material respects. detection of unauthorised acquisition, use, or disposition ofthe company’s assets that could have a material effect on the financial Our audit involved performing procedures to obtain audit evidence statements. about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of Inherent limitations of internal financial controls over financial internal financial controls over financial reporting included obtaining reporting an understanding of internal financial controls over financial Because of the inherent limitations of internal financial controls over reporting, assessing the risk that a material weakness exists, and financial reporting, including the possibility of collusion or improper testing and evaluating the design and operating effectiveness of management override of controls, material misstatements due to internal control based on the assessed risk. The procedures selected error or fraud may occur and not be detected. Also, projections depend on the auditor’s judgment, including the assessment of the of any evaluation of the internal financial controls over financial risks of material misstatement of the financial statements, whether reporting to future periods are subject to the risk that the internal due to fraud or error. financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance We believe that the audit evidence we have obtained is sufficient with the policies or procedures may deteriorate. and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting. Opinion In our opinion, the Company has, in all material respects, an Meaning of internal financial controls over financial reporting adequate internal financial controls system over financial reporting A company’s internal financial control over financial reporting is a and such internal financial controls over financial reporting were process designed to provide reasonable assurance regarding the operating effectively as at March 31, 2016, based on the internal reliability of financial reporting and the preparation of financial control over financial reporting criteria established by the Company statements for external purposes in accordance with generally considering the essential components of internal control stated in accepted accounting principles. A company’s internal financial the Guidance Note issued by the ICAI. control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in Sharp & Tannan reasonable detail, accurately and fairly reflect the transactions and Chartered Accountants dispositions of the assets of the company; (2) provide reasonable Firm’s registration no. 109982W assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally Firdosh D. Buchia accepted accounting principles, and that receipts and expenditures Partner of the company are being made only in accordance with Mumbai, 26 April 2016 Membership No. 38332
81 Annual Report 2015-16
Balance Sheet AS AT MARCH 31, 2016 (` Million) Particulars Note As at As at No. 31-03-2016 31-03-2015 EQUITY AND LIABILITIES Shareholders' Funds Share capital B 169.82 161.25 Reserves and surplus C 18,462.89 19,093.28 Total Equity 18,632.71 19,254.53 Non-current liabilities Long-term borrowings D(i) - 138.89 Deferred tax liabilities (net) I 958.53 76.84 Other long-term liabilities E(ii) 1,250.52 538.35 Long Term Provisions F 124.29 103.71 2,333.34 857.79 Current liabilities Short-term borrowings D(ii) 397.53 1,897.48 Current maturities of long-term borrowings D(i) 147.23 138.89 Trade payables E(i) 3,141.47 2,528.52 Other current liabilities E(ii) 2,678.38 1,599.53 Short-term provisions F 5,049.64 2,791.97 11,414.25 8,956.39 TOTAL EQUITY AND LIABILITIES 32,380.30 29,068.71 ASSETS Non-current assets Fixed assets G Tangible assets 2,649.90 2,617.02 Intangible assets 553.51 755.47 Capital work-in-progress 1.00 47.63 Intangible assets under development 187.56 195.37 3,391.97 3,615.49 Non-current investments H(i) 3,156.22 3,953.11 Long-term loans and advances L 4,249.13 2,387.26 10,797.32 9,955.86 Current assets Current investments H(ii) 67.35 622.32 Trade receivable J(i) 10,895.97 10,314.39 Unbilled revenue J(ii) 3,699.69 1,434.59 Cash and bank K 1,221.75 1,334.34 Short-term loans and advances L 5,698.22 5,407.21 21,582.98 19,112.85 TOTAL ASSETS 32,380.30 29,068.71 Significant accounting policies A Contingent liabilities R Commitments (capital and others) S Notes forming part of accounts T As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
82 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Balance Sheet | Statement of Profit & Loss Statement of Profit & Loss for the year ended March 31, 2016 (` Million) Particulars Note 2015-16 2014-15 No. INCOME: Revenue from operations M 55,695.20 47,444.03 Other income N 3,386.06 887.80 Total Income 59,081.26 48,331.83 EXPENSES: Employee benefit expenses O(i) 33,838.37 28,064.72 Operating expenses O(ii) 6,670.62 4,605.35 Sales, administration and other expenses O(iii) 5,902.48 5,224.97 46,411.47 37,895.04 Operating profit 12,669.79 10,436.79 Finance cost P 103.57 104.18 Depreciation on tangible assets G 654.60 659.89 Amortisation of intangible assets G 379.88 247.41 1,138.05 1,011.48 Profit before tax 11,531.74 9,425.31 Tax expense Current tax (net) Q 1,627.13 1,602.82 Deferred tax 523.30 92.87 2,150.43 1,695.69 NET PROFIT FOR THE YEAR 9,381.31 7,729.62 EARNING PER EQUITY SHARE T(7) Basic Basic earning per equity share 57.23 47.94 Diluted Diluted earning per equity share 57.10 45.87 Significant accounting policies A Notes forming part of accounts T
As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
83 Annual Report 2015-16
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016
(` Million) Particulars 2015-16 2014-15 A Cash flow from operating activities Net profit before tax 11,531.74 9,425.31 Adjustments for: Depreciation and amortisation 1,034.48 907.30 Employees stock options amortised (141.59) - Interest (net) 48.98 38.23 Unrealised foreign exchange loss (gain) (960.22) (558.20) (Profit)/loss on sale of current investments (47.94) (119.62) Dividend received from subsidiary (472.38) - Miscellaneous expenditure amortised/(capitalised) - 6.35 (Profit)/Loss on sale of fixed assets 26.82 3.16 Operating profit before working capital changes 11,019.89 9,702.53 Changes in working capital (Increase)/decrease in trade receivables and unbilled revenue (2,838.55) (2,226.73) (Increase)/decrease in other receivables 21.95 (44.55) Increase/(decrease) in trade & other payables 2,124.08 1,016.45 (Increase)/decrease in working capital (692.52) (1,254.83) Cash generated from operations 10,327.37 8,447.70 Direct taxes paid (2,633.61) (2,643.01) Net cash from operating activities 7,693.76 5,804.69
B. Cash flow from investing activities Purchase of fixed assets (959.74) (1,114.24) Sale of fixed assets 149.35 24.99 (Purchase)/sale of current investments 673.25 899.41 Investment in subsidiaries (10.07) (806.96) Dividend received from subsidiary 472.38 - Interest received 17.25 17.99 Net cash used in investing activities 342.42 (978.81)
84 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Cash Flow Statement
(` Million) Particulars 2015-16 2014-15 C. Cash flow from financing acivities Proceeds from issue of share capital 69.28 - Proceeds from/(repayment) of borrowings (1,662.61) 1,040.09 Interest paid (57.89) (56.22) Dividend paid (5,467.30) (4,805.25) Tax on dividend paid (1,048.71) (1,125.56) Net cash from financing activities (8,167.23) (4,946.94)
Net increase in cash and cash equivalents (131.05) (121.06) Cash and cash equivalents at 31 March 2015 1,334.34 1,455.40 Increase in Cash and Cash Equivalents on Amalgamation 18.46 - Cash and cash equivalents at 31 March 2016 1,221.75 1,334.34
Notes: 1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3: “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. 2 Purchase of fixed assets includes movements of capital work-in-progress during the year. 3 Cash and cash equivalents represent cash and bank balances. 4 Bank balances include revaluation gain of` 36.70 Mn (Previous year gain ` 3.44 Mn). 5 Amount of corporate social responsibility related expenses spent during the year in cash ` 20.79 Mn (Note T (13) (b)).
As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
85 Annual Report 2015-16
Notes forming part of accounts
A. Significant Accounting Policies b) Other income 1. Basis of accounting i. Interest income is accrued at applicable interest These financial statements have been prepared in accordance rate. with the Generally Accepted Accounting Principles in India ii. Dividend income is accounted in the period in (‘Indian GAAP’) to comply with the Accounting Standards which the right to receive the same is established. specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 iii. Other items of income are accounted as and when and the relevant provisions of the Companies Act, 2013. the right to receive arises. Further the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also 4. Employee benefits considered wherever applicable. The Company maintains a) Short term employee benefits its accounts on accrual basis following the historical cost All employee benefits falling due wholly within twelve convention. months of rendering the service are classified as short The preparation of financial statements in conformity with term employee benefits. The benefits like salaries, wages, GAAP requires management of the Company to make short term compensated absences and performance estimates and assumptions that affect the income and incentives are recognised in the period in which the expense reported for the period and assets and liabilities employee renders the related service. reported as of the date of the financial statements. Examples b) Post-employment benefits of such estimates include the useful lives of the fixed assets, i) Defined contribution plan: provision for doubtful debts, future obligations in respect of retirement benefit plans, etc. Actual results could vary from The Company’s superannuation fund and state these estimates. governed provident fund scheme are classified as defined contribution plans. The contribution paid 2. Presentation of financial statements / payable under the schemes is recognised during the period in which the employee renders the The balance sheet and the statement of profit and loss are related service. prepared and presented in the format prescribed in the schedule III to the Companies Act, 2013. ii) Defined benefit plans:
The cash flow statement has been prepared and presented The provident fund scheme managed by trust, as per the requirements of Accounting Standard (AS) 3 “Cash employees gratuity fund scheme managed by LIC Flow Statements”. The disclosure requirements with respect and post-retirement medical benefit scheme are to items in the balance sheet and statement of profit and loss, the Company’s defined benefit plans. Wherever as prescribed in the schedule III to the Act, are presented by applicable, the present value of the obligation under way of notes forming part of accounts along with the other such defined benefit plans is determined based on notes required to be disclosed under the notified Accounting actuarial valuation using the Projected Unit Credit Standards. Method, which recognizes each period of service as giving rise to additional unit of employee benefit 3. Revenue recognition entitlement and measures each unit separately to build up the final obligation. a) Revenue from contracts priced on time and material basis are recognised when services are rendered and The obligation is measured at the present value of the related costs are incurred. estimated future cash-flows. The discount rates used for determining the present value of the obligation Revenue from services performed on “fixed-price” under defined benefit plans, is based on the market basis is recognised using the proportionate completion yields on government bonds as at the balance sheet method. date, having maturity periods approximating to the Unbilled revenue represents value of services performed terms of related obligations. Actuarial gains and in accordance with the contract terms but not billed. losses are recognised immediately in the profit and
86 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
loss account. In case of funded plans, the fair value of Tangible - leased assets the plan assets is reduced from the gross obligation Assets acquired under finance leases are depreciated at the under the defined benefit plans to recognize the rates applicable to similar assets owned by the Company as obligation on net basis. there is reasonable certainty that the Company shall obtain Gains or losses on the curtailment or settlement of ownership of the assets at the end of the lease term. any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is • Leasehold land Over the residual period of the lease recognised as expense on a straight-line basis over the average period until the benefits become vested. Intangible assets The basis of amortization of intangible assets is as follows: (iii) Long term employee benefits: The obligation for long term employee benefits like • Computer software 33.33% long term compensation absences is recognised in the similar manner as in the case of defined benefit • Intellectual Property Rights (IPR) 33.33% plans as mentioned in (b) (ii) above. • Business Rights Over a period of 5. Fixed assets five years Tangible Depreciation / amortization on additions / disposals are Fixed assets are stated at cost less accumulated depreciation. calculated pro-rata from / to the month of additions / disposals. Intangible 8. Investment Computer software, internally developed software is capitalised at cost. Trade investments comprise investments in subsidiary companies. 6. Leases Long-term investments including trade investments are stated Finance lease at cost, less provision for other than temporary diminution Assets acquired under leases where the Company has in value, if any. Current investments are stated at the lower substantially all the risks and rewards of ownership are of cost or market value, determined on the basis of specific classified as finance leases. Such assets are capitalised at the identification. inception of the lease at the lower of the fair value and the present value of minimum lease payments and a liability is Investments, which are readily realisable and are intended to created for an equivalent amount. Each lease rental paid is be held for not more than one year from the date of acquisition, allocated between the liability and the interest cost, so as to are classified as current investments. All other investments are obtain a constant periodic rate of interest on the outstanding classified as long term investments. liability for each period. 9. Employee stock ownership schemes Operating lease In respect of stock options granted pursuant to the Company’s Assets acquired under lease where a significant portion of the stock option schemes, the excess of fair value of the share risks and rewards of ownership are retained by the lessor are over the exercise price of the option is treated as discount and classified as operating leases. Lease rentals are charged to the accounted as employee compensation cost over the vesting profit and loss account on accrual basis. period.
7. Depreciation 10. Foreign currency transactions Tangible - owned assets a) Foreign currency transactions are initially recorded Depreciation on assets has been provided based on useful life at the rates prevailing on the date of the transaction. prescribed in schedule II to the Companies Act, 2013 except At the balance sheet date, foreign currency monetary for the leasehold improvements which is depreciated over the items are reported using the closing rate. Non-monetary lease period. items which are carried at historical cost denominated in
87 Annual Report 2015-16
Notes forming part of accounts
foreign currency are reported using the exchange rate at income for the year, and quantified using the tax rates and laws the date of the transaction. enacted or substantively enacted as on the Balance Sheet date.
Translation of foreign currency transaction of overseas Other deferred tax assets are recognised and carried forward branches is as under: to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such • Revenue items at the average rate for the period; deferred tax assets can be realised. • Fixed assets and investments at the rates prevailing on 12. Borrowing costs the date of the transaction; and Borrowing costs include interest, commitment charges, • Other assets and liabilities at year end rates finance charges in respect of assets acquired on finance Exchange difference on settlement / year end conversion is lease and exchange differences arising from foreign currency adjusted to profit and loss account. borrowings, to the extent they are regarded as an adjustment to interest costs. b) Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments 13. Provisions, contingent liabilities and contingent assets or of highly probable forecast transactions are treated as Provisions are recognised for liabilities that can be measured foreign currency transactions and accounted accordingly. only by using a substantial degree of estimation, if Exchange differences arising on such contracts are a) the Company has a present obligation as a result of a past recognised in the period in which they arise and the event; premium paid / received is accounted as expense / income over the period of the contract. Profit or loss b) a probable outflow of resources is expected to settle the on such forward contracts is accounted as income or obligation; and expense for the period. c) the amount of the obligation can be reliably estimated
c) All the other derivative contracts, including forward Reimbursement expected in respect of expenditure required contracts entered into to hedge foreign currency risks to settle a provision is recognised only when it is virtually on unexecuted firm commitments and highly probable certain that the reimbursement will be received. forecast transactions are recognised in the financial statements at fair value as on the balance sheet date. Contingent liability is disclosed in the case of In pursuance of the announcement of the Institute of a) a present obligation arising from a past event when Chartered Accountants of India (ICAI) dated March 29, it is not probable that an outflow of resources will be 2008 on accounting of derivatives, the Company has required to settle the obligation; or adopted Accounting Standard 30 for applying the test of hedge effectiveness of the outstanding derivative b) a possible obligation unless the probability of outflow of contracts. Accordingly, the resultant gains or losses on resources is remote fair valuation of such contracts are recognised in the Contingent assets are neither recognised nor disclosed. profit and loss account or balance sheet as the case may be. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date. 11. Taxes on income Tax on income for the current period is determined on 14. Segment accounting the basis of taxable income and tax credits computed Segment accounting policies are in line with the accounting in accordance with the provisions of the Income Tax Act, policies of the Company. In addition, the following specific 1961 and based on the expected outcome of assessments/ accounting policies have been followed for segment appeals. reporting:
Deferred tax is recognised on timing differences between the i. Segment revenue includes sales and other income income accounted in financial statements and the taxable directly identifiable with/allocable to the segment.
88 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
ii. Expenses that are directly identifiable with/allocable to 15. Cash flow statement segments are considered for determining the segment Cash flow statement is prepared segregating the cash flows result. Expenditure which relate to the Company as a from operating, investing and financing activities. Cashflow whole and not allocable to segments are included under from operating activities is reported using indirect method. “unallocable corporate expenditure”. Under the indirect method, the net profit is adjusted for the effects of: iii. Income which relates to the Company as a whole and not allocable to segments is included in “unallocable i. transactions of a non-cash nature corporate income”. ii. any deferrals or accruals of past or future operating cash receipts or payments and iv. Fixed assets used and liabilities contracted for performing the Company’s business have not been iii. items of income or expense associated with investing or identified to any of the above reported segments as financing cash flows. the fixed assets and services are used interchangeably Cash and cash equivalents (including bank balances) are among segments. reflected as such in the cash flow statement.
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B. Share capital B(i) Share capital authorised, issued, subscribed and paid up: (` Million) As at As at 31-03-2016 31-03-2015 Authorised : 240,000,000 equity shares of ` 1 each 240.00 163.75 (Previous year 32,750,000 of ` 5 each) Issued, paid up and subscribed 169,816,188 equity shares for ` 1 each 169.82 161.25 (Previous year 32,250,000 of ` 5 each) EQUITY SHARE CAPITAL 169.82 161.25 Notes : a) The board of directors at their meeting held on June 16, 2015 approved sub-division of the equity shares of face value of` 5 each to face value of ` 1 each. The shareholders approved the sub-division on June 22, 2015 at the extraordinary general meeting.
b) The authorised share capital of the Company was increased by ` 36.25 Mn comprising 36,250,000 equity shares of ` 1 each at the board meeting held on June 16, 2015 and approved by the shareholders at the extraordinary general meeting held on June 22, 2015.
c) In accordance with the order of the Hon’ble High Court of Judicature at Bombay for amalgamating Information Systems Research Centre Private Limited (refer note T(7)), the authorised share capital of the Company was increased by ` 40.00 Mn comprising 40,000,000 equity shares of ` 1 each on amalgamation.
B(ii) Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of ` 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.
B(iii) Shareholders holding more than 5% of equity shares as at the end of the year: Name of shareholder As at 31-03-2016 As at 31-03-2015 Number of shares* Shareholding % Number of shares** Shareholding % Larsen & Toubro Limited 161,250,000 94.96% 32,250,000 100%
* Face value of ` 1 ** Face value of ` 5
90 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
B(iv) Reconciliation of the number of equity shares and share capital Due to allotment of shares on exercise of stock options by employees, there was a movement in share capital for the year ended March 31, 2016.
As at As at 31-03-2016 31-03-2015 Issued, subscribed and fully paid up equity shares outstanding at the beginning 161,250,000 161,250,000 Add: shares issued on exercise of employee stock options 8,566,188 - Issued, subscribed and fully paid up equity shares outstanding at the end 169,816,188 161,250,000
B(v) Shares reserved for issue under options outstanding as at the end of the year on un-issued share capital : Particulars As at 31-03-2016 As at 31-03-2015 *Number of equity Exercise price ** Number of Exercise price shares to be issued equity shares to be as fully paid issued as fully paid # Employee stock options granted and 82,660 5 393,003 25 outstanding under Employee Stock Ownership Scheme “ESOS Plan” 2,350,106 2 1,873,467 10 Employees Stock Ownership Scheme – 2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) 143,650 $2.4 90,100 $12
# Refer note no.B(ix) * Face value of ` 1 ** Face value of ` 5
B(vi) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2016 are Nil (previous period of five years ended March 31, 2015 - Nil)
B(vii) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding five years ended March 31, 2016 – Nil (previous period of five years ended March 31, 2015 - Nil)
B(viii) (a) During the year ended March 31, 2016, the amount of interim dividend distributed to equity shareholder was ` 32.65 per share at face value of ` 1 (Previous year ` 149 per share at face value of ` 5)
(b) The Directors recommended payment of final dividend of` 2.60 per equity share of ` 1 each on the number of shares outstanding on the record date. Provision for final dividend has been made in the books of account for 169,816,188 equity shares outstanding as at March 31, 2016 amounting to` 441.52 Mn.
B(ix) Stock option plans 1. Employee Stock Ownership Scheme (‘ESOS Plan’) Under the Employee Stock Ownership Scheme (ESOS) 2,432,766 options are outstanding as at March 31, 2016. The grant of options to the employees under ESOS is on the basis of their performance and other eligibility criteria. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of ` 1 each.
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All vested options can be exercised on the first exercise date. The Nomination & Remuneration Committee had decided September 28, 2015 as the first exercise date. The details of the grants under the aforesaid scheme are summarised below:
ESOP Series I,II & III IV-XXI 2015-16 2014-15 2015-16 2014-15
1 Face value (`) 1 5 1 5
2 Grant Price (`) 5 25 2 10 3 Options granted and outstanding at the beginning of the year 1,965,015 393,003 9,367,335 1,880,484
4 Options reinstated during the year * 3,500 - 454,580 -
5 Options granted during the year - - - -
6 Options cancelled/ lapsed during the year 34,000 - 1,064,326 7,017 7 Options exercised and shares allotted during the year 1,851,855 - 6,407,483 - 8 Options granted and outstanding at the end of the year of which - 82,660 393,003 2,350,106 1,873,467
Options vested 82,660 393,003 340,666 970,917
Options yet to vest - - 2,009,440 902,550
* The Company had lapsed unvested options with the employees who had resigned from the Company. Based on the legal advice, the Company has exercised its discretion in determining that the former employees in the United States will be allowed to exercise their deferred options and accordingly, 258,080 options at face value of ` 1 (51,616 options at face value of ` 5) exercisable by such former employees have been re- instated and vested.
* The Company had erroneously lapsed 200,000 options at face value of` 1 (40,000 options at face value of` 5). Subsequently, the Company has decided that these options be restored and vested.
2. Employees Stock Ownership Scheme – 2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) The Company had instituted the Employees Stock Ownership Scheme – 2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) for the employees and Directors of its erstwhile subsidiary, GDA Technologies Inc, USA. The term of option was 5 years from the date of grant. As per vesting schedule, the options had to vest over a period of five years, subject to fulfilment of certain conditions specified in the respective Option agreement. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of ` 1 each at an exercise price of USD 2.4 per share. Under the said plan, options granted and outstanding as at the end of the year are 143,650 options, all of which are vested.
3. Employees Stock Options granted and outstanding as at the end of the year on unissued share capital represent options 2,576,416 (previous year 11,782,850) at face value of ` 1.
92 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
C. Reserves & surplus (` Million) As at 31-03-2016 As at 31-03-2015 C(i) General reserve As per last balance sheet 4,486.78 4,486.78 Add: general reserve of ISRC on amalgamation {refer note T (11)} 56.4 - Less: amalgamation adjustment {refer note T (11)} (771.96) - Add: transferred from employee stock options outstanding 0.05 - 3,771.27 4,486.78 C(ii) Capital reserve As per last balance sheet - - Add: capital reserve of ISRC on amalgamation {refer note T (11)} 0.42 - 0.42 - C(iii) Hedging reserve (net of tax) Opening balance (366.96) (2,923.11) Deduction/(Addition) during the year (net) (2,328.06) 2,556.15 (2,695.02) (366.96) C(iv) Securities premium account Opening balance 1,181.24 1,181.24 Addition during the year 204.16 - 1,385.40 1,181.24 C(v) Surplus statement of profit and loss Opening balance 13,453.81 11,445.86 Add: profit and loss account of ISRC on amalgamation {refer note T (11)} 100.58 - Add: transfer due to amalgamation (pertaining to period 17 October 14 to 31 27.35 - March 2015 {refer note T(11)} Add: Profit for the year 9,381.31 7,729.62 Less: Depreciation charged against retained earnings - (12.27) Add : Deferred tax charged against retained earnings - 2.17 22,963.05 19,165.38 Less: Appropriations (a) Proposed dividend 441.52 - (b) Interim dividend 5,467.30 4,805.25 (c) Tax on dividend 1,048.71 906.32 (d) Additional tax on dividend 58.02 - 15,947.50 13,453.81 C(vi) Employee stock options outstanding As per last balance sheet 338.41 338.41 Less : deductions during the year (285.04) - Less: transferred to general reserve (0.05) - 53.32 338.41 RESERVES & SURPLUS 18,462.89 19,093.28
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D. Borrowings (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total D(i) Long-term borrowings Secured loans* Term loans from bank (Refer note D(iii)) - 147.23 147.23 138.89 138.89 277.78 - 147.23 147.23 138.89 138.89 277.78 D(ii) Short-term borrowings Secured loans * Other loans from banks - 132.51 132.51 - 600.00 600.00 Unsecured loans Other loans from banks - 265.02 265.02 - 1,297.48 1,297.48 - 397.53 397.53 - 1,897.48 1,897.48 Total - 544.76 544.76 138.89 2,036.37 2,175.26
* The secured loans from banks are secured against hypothecation of the Company’s movable assets and accounts receivables.
Details of term loans Nature of term loan ` Million Rate of interest Terms of repayment of term loan Repayable in equal half-yearly instalments of USD 1.11 million External commercial 147.23 USD LIBOR each commencing from 19 October 2012 and ending on 14 borrowings (ECB) (3 months) + 2.5% October 2016. Previous Year (277.78)
E. Liabilities (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total E(i) Trade payables Due to holding company - - - - 174.23 174.23 Due to others - 3,141.47 3,141.47 - 2,354.29 2,354.29 - 3,141.47 3,141.47 - 2,528.52 2,528.52 E(ii) Other payables Forward contract payable 1,148.52 1,574.11 2,722.63 447.46 89.22 536.68 Interest accrued but not due on borrowings - 1.08 1.08 - 2.41 2.41 Unclaimed dividend - 0.62 0.62 - - - Other payables 102.00 1,102.57 1,204.57 90.89 1,507.90 1,598.79 1,250.52 2,678.38 3,928.90 538.35 1,599.53 2,137.88 Total 1,250.52 5,819.85 7,070.37 538.35 4,128.05 4,666.40
94 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
F. Provisions (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total F(i) Provisions for employee benefits Gratuity - 86.76 86.76 - 92.42 92.42 Compensated absences - 507.16 507.16 - 453.57 453.57 Post-retirement medical benefits 124.29 0.24 124.53 103.71 0.24 103.95 Others - 3,945.24 3,945.24 - 2,235.04 2,235.04 124.29 4,539.40 4,663.69 103.71 2,781.27 2,884.98 F(ii) Other provisions Proposed equity dividend - 441.52 441.52 - - - Additional tax on dividend - 58.02 58.02 - - - Others * - 10.70 10.70 - 10.70 10.70 - 510.24 510.24 - 10.70 10.70 Total 124.29 5,049.64 5,173.93 103.71 2,791.97 2,895.68
F (iii) * Disclosure pursuant to Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets” Movement in provisions: (` Million) Sr. Particulars Class of provisions No Sales Tax Others Total 1 Balance as at 1-4-2015 4.00 6.70 10.70 2 Additional provision during the year - - - 3 Provision used during the year - - - 4 Provision reversed during the year - - - 5 Balance as at 31-03-2016 4.00 6.70 10.70
Nature of provisions: i) Provision for sales tax pertains to claim made by the authorities on certain transaction of capital nature for the year 2002-03. ii) Provision for others represents liabilities relating to matters in dispute
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- - 9.64 As at 47.63 125.77 234.28 644.03 439.46 293.92 583.29 286.63 755.47 195.37 750.48 950.84 2,698.48 2,664.65 31-Mar-15 Net Block Net ( ` Million) - - 9.51 1.00 As at 117.37 254.22 550.94 577.37 300.87 554.17 285.45 553.51 187.56 950.84 741.07 2,664.65 2,650.90 31-Mar-16 Net Block Net - 2.76 As at 90.01 94.35 98.05 302.90 587.65 577.75 182.63 1,723.89 3,301.70 1,555.93 1,236.06 3,561.94 1,653.98 31-Mar-16 - - - On 3.22 5.82 5.82 22.61 64.38 32.64 130.50 123.76 138.27 361.31 161.83 515.38 Deductions - - 0.13 8.40 year year 89.67 35.65 56.49 For the For 110.72 249.53 104.01 672.16 379.88 247.41 654.60 379.88 ------5.69 0.37 Depreciation/Amortisation 15.10 11.98 87.87 43.87 43.87 (T)(11) 121.01 subsidiary subsidiary note Refer Pursuant to to Pursuant acquisition of 2.63 As at As at 81.61 46.82 22.61 98.05 343.73 588.71 606.32 158.41 1,450.87 2,990.85 1,138.00 1,150.48 3,301.71 1,236.05 01-Apr-15 - As at As at 12.27 98.05 207.38 348.57 853.84 888.52 468.08 ` Nil) being borrowing cost capitalised in accordance with Accounting Standard (AS) 16 on 2,301.26 1,131.92 5,918.72 2,109.44 1,991.52 6,211.84 2,207.49 31-Mar-16 - - - 5.83 5.83 15.95 65.44 22.61 70.76 229.06 126.26 161.45 389.44 161.85 691.53 Deductions - - - - Nil (previous year year ` Nil (previous 68.32 95.14 93.10 92.08 10.10 Mn) representing the carrying amount of assets with revised useful life as nil, has been charged to the opening the to charged been has nil, as life useful revised with assets of amount carrying the representing Mn) 10.10 ` 119.22 371.81 706.95 174.52 670.68 839.67 174.52 Additions Gross Block Gross ------1.72 15.10 12.93 10.66 47.28 47.28 (T)(11) 104.56 144.97 subsidiary subsidiary note Refer Pursuant to to Pursuant acquisition of As at As at 12.27 22.61 98.05 281.10 207.38 882.63 987.76 445.04 12.27 Mn (net of tax of tax of (net Mn 12.27 ` 1,890.33 1,189.61 5,601.21 1,893.47 1,482.69 5,918.73 1,991.52 01-Apr-15 70.30 Mn. Further, an amount of of amount an Further, Mn. 70.30 reserves as on April 1, 2014 pursuant to the provisions of the Companies Act, 2013. the provisions to as on April 1, 2014 pursuant reserves ` “Borrowing Costs” prescribed under section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014. read with rule 7 of the Companies (Accounts) under section 133 of the Companies Act, 2013, prescribed Costs” “Borrowing Consequent to the adoption of schedule IIto the Companies Act, 2013, the depreciation for the year ended March 31, 2015 is higher and theprofit before tax lower is by Impairment up to 31-03-2016 - NIL up to Impairment Additions during theyear &capital work-in-progress include Fixed and Intangible Assets and Intangible Fixed Tangible Assets Assets Tangible Leasehold Land Leasehold Improvements Buildings Office Equipments Office Plant and machinery Plant Computers a. Owned b. Leased Furniture and fixtures Furniture Vehicles Capital Work in Progress Work Capital Assets Of Tangible Total Year) (Previous Assets Of Tangible Total Intangible Assets Intangible Software Intangible Assets under Development Assets Intangible Business Rights Assets of intangible Total Year) (Previous Assets Of Intangible Total 3. Notes: 1. 2. G - Fixed Assets Assets G - Fixed
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H. Investments (` Million) As at 31-03-2016 As at 31-03-2015 H(i) Non-current investments Trade investments (at cost) Long term investment in subsidiaries 1, fully paid equity share of Euro 25,000 in Larsen & Toubro Infotech GmbH 1.14 1.14 100, fully paid equity shares of CAD 1 each in Larsen & Toubro Infotech Canada Limited 6.61 6.61 168,197 equity shares of ` 10 each in GDA Technologies Limited 323.00 323.00 1,000,000, equity shares at no par value in L&T Infotech Financial Services Technologies Inc. 2,806.32 2,806.32 332,350, equity shares at no par value in Larsen And Toubro Infotech South Africa (Proprietary) Limited 2.01 2.01 Investment in L&T Information Technology Services (Shanghai) Co. Limited* 10.89 7.07 3,500,000 equity shares of ` 10 each in Information Systems Resource Centre Private Limited (refer note T (11)) - 806.96 Investment in Larsen & Toubro Infotech Austria GmbH # 2.60 - 50,000 equity shares of Euro 1 in L&T Information Technology Spain, Sociedad Limitada $ 3.65 - Total non-current investments 3,156.22 3,953.11
* Investment in this entity is not denominated in number of shares as per laws of the People’s Republic of China. # The Company has formed a new entity “Larsen & Toubro Infotech Austria GmbH” in Austria on June 18, 2015. Investment in this entity is not denominated in number of shares as per the local laws of Austria. $ The Company has formed a new entity “L&T Information Technology Spain, Sociedad Limitada” in Spain on February 1, 2016.
h (ii) Current Investments (` Million) Particulars/ Scheme name Face Value per Units as at Amount as at Amount as at unit 31-03-2016 31-03-2016 31-03-2015 Liquid investments – quoted Birla Sun Life Cash Plus – DDR 100 369,518.38 37.02 - Reliance Medium Term Fund – MDR 10 2,794,062.26 30.33 - L&T Liquid Super IP DDR 1000 - - 202.13 Templeton India Ultra Short Bond Fund- Super IP-D 10 - - 100.00 Templeton India TMA - Super IP- DDR 1000 - - 100.15 Religare Invesco Liquid Fund - DDR 1000 - - 100.04 IDFC Ultra Short Term Fund - Reg - DDR 10 - - 100.00 Total (A) 3,163,580.64 67.35 602.32 Fixed maturity plans – quoted UTI Fixed Term Income Fund Series XVIII - X (366 days)-Growth 10 - - 20.00 Total (B) - - 20.00 Total (A+B) 3,163,580.64 67.35 622.32
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Details of quoted investments: (` Million) Amount As at Amount As at 31-03-2016 31-03-2015 (a) Aggregate amount of quoted current investments and market value thereof; Book Value 67.35 622.32 Market Value 67.51 623.96
I. Deferred tax assets/liabilities (` Million) Particulars Deferred tax asset/ Deferred tax asset/ Current year (Charge) / credit to Deferred tax asset/ (liability) as at (liability) pursuant (charge) / credit Hedging Reserve (liability) as at March 31,2015 to amalgamation March 31, 2016 Deferred tax liabilities Depreciation / amortisation (15.34) 5.72 41.86 - 32.24 Gain on derivative transactions (304.09) - - 121.16 (182.93) Branch profit tax (323.40) - (103.53) - (426.93) Premia on derivative transactions - - (570.42) - (570.42) Others - - (1.41) - (1.41) Total (642.83) 5.72 (633.50) 121.16 (1,149.45) Deferred tax assets Provision for doubtful debts and advances 7.19 - 24.07 - 31.26 Provision for employee benefits 60.50 2.43 34.80 - 97.73 Loss on derivative transactions 498.30 - - (487.70) 10.60 Realised gain on derivative transactions - - 41.36 - 41.36 Others 9.97 - 9.97 Total 565.99 2.43 110.20 (487.70) 190.92 Net deferred tax assets/(liabilities) (76.84) 8.15 (523.30) (366.54) (958.53)
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J. Trade receivables and unbilled revenue (` Million) Amount As at Amount As at 31-03-2016 31-03-2015 J(i) Trade receivables Unsecured Debts outstanding for a period exceeding six months Considered good 325.46 64.46 Considered doubtful 156.56 69.27 482.02 133.73 Other debts Considered good - Due from holding company 450.38 - - Due from subsidiaries 160.22 195.22 - Due from fellow subsidiaries 55.34 84.67 - Others 9,904.57 9,970.04 10,570.51 10,249.93 Less : Allowance for bad & doubtful debts (156.56) (69.27) 10,895.97 10,314.39
J(ii) unbilled revenue Unbilled revenues comprise revenue recognised in relation to services performed in accordance with contract terms but not billed.
K. cash and bank balances (` Million) Amount As at Amount As at 31-03-2016 31-03-2015 Cash and cash equivalent Cash on hand 0.62 0.65 Balances with bank - in current accounts Overseas 872.93 650.14 Domestic 223.45 217.48 Remittances in transit 94.82 221.58 Fixed deposits (maturity less than 3 months) 4.28 125.12 1,196.10 1,214.97 Other bank balance - in deposit accounts Earmarked balances with banks-unclaimed dividend 0.62 - *Cash and bank balance not available for immediate use 25.03 119.37 1,221.75 1,334.34
* Other bank balance not available for immediate use being in nature of security for guarantees issued by bank on behalf of the Company, collaterals etc.
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L. Loans and advances (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total Unsecured Considered good Loans against mortgage of house property - - - - 0.10 0.10 Premia on forward contracts 1,280.43 2,385.73 3,666.16 874.90 1,723.63 2,598.53 Interest receivable - 0.80 0.80 - 6.67 6.67 Deposits 393.14 150.55 543.69 359.38 123.96 483.34 Capital advances 1.25 - 1.25 6.64 - 6.64 Advance tax current year (net of provision) - 82.13 82.13 - 159.95 159.95 Advances recoverable in cash or in kind 2,574.31 3,079.01 5,653.32 1,146.34 3,392.90 4,539.24 - Considered doubtful - - - - 6.06 6.06 Less : Provision for bad & doubtful loans & advances - - - (6.06) (6.06) 4,249.13 5,698.22 9,947.35 2,387.26 5,407.21 7,794.47
M. Revenue (` Million) 2015-16 2014-15 Overseas 52,295.01 45,368.13 Domestic 3,400.19 2,075.90 55,695.20 47,444.03
N. Other income (` Million) 2015-16 2014-15 Income from current investment in mutual funds 47.94 119.62 Interest received 17.25 17.99 Foreign exchange gain 2,776.13 685.56 Provision no longer required for doubtful debts 1.08 - Dividend from subsidiary 472.38 - Miscellaneous income 71.28 64.63 3,386.06 887.80
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O. Expenses (` Million) 2015-16 2014-15 O(i) Employee benefit expenses Salaries including overseas staff expenses 32,491.86 26,889.46 Staff welfare 863.72 790.11 Contribution to provident and other funds 344.99 247.01 Contribution to superannuation fund 52.05 44.71 Contribution to gratuity fund 85.75 93.43 33,838.37 28,064.72 (` Million) 2015-16 2014-15 O(ii) Operating expenses Communication expenses 177.38 151.27 Consultancy charges 4,133.23 3,366.86 Cost of software packages for own use 386.62 344.47 Cost of bought-out items for resale 1,973.39 742.75 6,670.62 4,605.35 (` Million) 2015-16 2014-15 O(iii) Sales, administration and other expenses Travelling and conveyance 1,387.88 1,155.63 Rent and establishment expenses 1,525.22 1,381.30 Telephone charges and postage 362.22 330.87 Legal and professional charges 536.15 517.62 Printing and stationery 24.94 28.06 Advertisement 112.19 89.94 Entertainment 70.26 54.43 Recruitment expenses 143.09 129.61 Repairs to building 199.36 134.90 Repairs to computers 60.26 85.02 General repairs and maintenance 317.69 250.51 Power and fuel 347.83 287.19 Equipment hire charges 12.90 10.15 Insurance charges 159.51 161.64 Rates and taxes 194.91 330.67 Allowance for doubtful debts and advances 86.13 74.07 Bad debts 4.90 39.13 Less : Provision written back (4.90) (39.13) Commission paid 6.99 0.62 Books, periodicals and subscriptions 17.80 27.43 Directors fees 1.43 0.93 Commission to directors 5.81 3.60 Loss on sale of fixed assets 26.82 3.16 Miscellaneous expenses 303.09 161.27 Amortisation of cost of long term projects * - 6.35 5,902.48 5,224.97
* Cost incurred for long term projects mainly comprise of legal and employee related costs to secure long term projects. These costs are amortised over a period of two years commencing from the date of securing the project.
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P. Finance cost (` Million) 2015-16 2014-15 P(i) Interest expenses 31.91 46.94 On others 25.98 9.28 57.89 56.22 P(ii) Exchange loss on borrowings (net) 45.68 47.96 103.57 104.18
Q. Provision for taxation (` Million) 2015-16 2014-15 Current tax 2,676.97 2,117.82 MAT credit entitlement for current year (1,086.70) (505.04) Provision for earlier years 36.86 (9.96) Total current taxes 1,627.13 1,602.82
a) The current year tax charge includes ` 616.76 Mn (previous year ` 405.29 Mn) payable outside India.
b) The Central Board of Direct Taxes (CBDT) has notified the Income Computation and Disclosure Standards (ICDS) with effect from April 1, 2015 and shall accordingly apply for assessment year 2016-17 onwards. Accordingly, the Company has accounted for the impact of ICDS in its tax computation.
R. Contingent liabilities - (` Million) 2015-16 2014-15 1. Income tax liability that may arise in respect of which the Company is in appeal* 1,338.80 1,164.82 2. Corporate guarantee given on behalf of subsidiary** 5,998.76 5,395.70 3. Service tax refund disallowed, in respect of which the Company is in appeal # 12.48 4.52 4. Sales tax liability in respect of which the Company is in appeal 1.28 - 5. Legal notice served by vendor for unpaid dues, disputed by the Company. 0.02 - 7,351.34 6,565.04
* Out of contingent tax liability disclosed above, ` 1,280.69 Mn (including interest of ` 202.48 Mn), pertains to the tax demand arising on account of disallowance of exemption under section 10A on profits earned by STPI Units on onsite export revenue. Company is pursuing appeal against these demands before the relevant Appellate Authorities. The Company believes that its position is likely to be upheld by appellate authorities and considering the facts, the ultimate outcome of these proceedings is not likely to have material adverse effect on the results of operations or the financial position of the Company.
** The Company has given a Corporate guarantee on behalf of its wholly owned subsidiary, L&T Infotech Financial Services Technologies Inc., Canada. The guarantee is for performance of all obligations by L&T Infotech Financial Services Technologies Inc. in connection with the long term annuity services contracts obtained by them. The obligation under this guarantee is limited in aggregate to the amount of CAD 70,000,000.
The Company has given a Corporate guarantee on behalf of its subsidiary, Larsen And Toubro Infotech South Africa (Proprietary) Limited. The guarantee is for performance of all obligations by Larsen And Toubro Infotech South Africa (Proprietary) Limited in connection with the Application Testing Service contract. The obligation under this guarantee is limited in aggregate to the amount of USD 31,414,785.
102 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Accounts Notes forming part of accounts
The Company has given a corporate guarantee on behalf of its subsidiary, Larsen And Toubro Infotech South Africa (Proprietary) Limited. The guarantee is for performance of all obligations by Larsen & Toubro Infotech South Africa (Proprietary) Limited in connection with software development services & related services. The obligation under this guarantee is limited in aggregate to USD 5,000,000.
# The Company had filed refund of accumulated service tax credit in accordance with relevant CENVAT Credit Rules. However, the department has disallowed certain portion of such refunds considering the same as ineligible as not related with export and output services. The Company is in appeal against these disallowances before the relevant Authorities and hopeful of getting a favourable order.
S. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for: ` 131.87 Mn (previous year: ` 310.76 Mn)
T (1) Employee benefits a) The amounts recognised in balance sheet are as follows
(` Million) As at March 31, 2016 (March 31,2015) Gratuity plan Post retirement Self-managed medical benefit provident fund plan plan A a) Present value of defined benefit obligation as on March 31, 2016 - Wholly funded 579.76 - 4,253.92 (497.01) - (3,776.10) - Wholly unfunded - 124.53 - (-) (103.95) (-) 579.76 124.53 4,253.92 (497.01) (103.95) (3,776.10) b) Fair value of plan assets as on March 31, 2015 492.99* - 4,264.26 * (409.85) ( -) (3,778.70) Amount to be recognised as liability or (asset) (a-b) 86.77 124.53 (10.34) (92.42) (103.95) (2.60) B Amounts reflected in the balance sheet Liability 86.77 124.53 55.66 (92.42) (103.95) (46.59) Assets - - - (-) (-) (-) Net liability/(asset) 86.77 124.53 55.66 # (92.42) (103.95) (46.59) Net liability/(asset)-current 86.77 0.24 55.66 (92.42) (0.24) (46.59) Net liability/(asset)- non current - 124.29 - (-) (103.71) (-)
* Asset is not recognised in the balance sheet. # Employer’s and employee’s contribution for March 2016 paid in April 2016.
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b) The amounts recognised in statement of profit and loss are as follows: (` Million) Gratuity plan Post retirement Self-managed medical benefit provident fund plan plan 1 Current service cost 91.34 21.99 257.11 (77.00) (18.66) (232.40) 2 Interest cost 43.07 9.94 315.53 (40.67) (9.66) (252.26) 3 Expected return on plan assets -27.86 - -315.53 (-26.67) (-) (-252.26) 4 Actuarial losses/(gains) -15.48 -11.13 - (10.62) (-12.94) (-42.43) Total expense for the year included in staff cost 91.07 20.80 257.11 (101.62) (15.38) (189.97)
c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: (` Million) Gratuity plan Post retirement Self-managed medical benefit provident fund plan plan Opening balance of the present value of defined benefit obligation 497.01 103.95 3,776.10 (408.57) (88.79) (3,412.68) Add : Current service cost 91.34 21.99 257.11 (77.00) (18.66) (232.40) Add : Interest cost 43.07 9.94 315.53 (40.67) (9.66) (252.26) Add : Contribution by plan participants - - 580.57 (-) (-) (456.33) Add/(Less) : actuarial (gains)/losses -2.39 -11.13 - (16.09) (-12.94) (-42.43) Less: other adjustments (refer note below (d)) - - 181.75 - - (-) Add : Liabilities assumed on acquisition/(settled on divestiture) 5.12 - - (-) (-) (-221.93) Less : Benefits paid 54.39 0.22 493.64 (45.32) (0.22) (313.21) Closing balance of the present value of defined benefit obligation 579.76 124.53 4,253.92 (497.01) (103.95) (3,776.10)
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(d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: (` Million) 2015-16 (2014-15) Gratuity plan Self-managed provident fund plan Opening balance of the fair value of the plan assets 404.59 3,778.70 (379.19) (3,352.80) Add : expected return on plan assets 27.86 315.53 (26.67) (252.26) Add/(Less) : actuarial gains/(losses) 13.09 26.56 (5.45) (19.23) Add : Contribution by the employer 96.73 244.32 (38.60) (228.83) Less: other adjustments (refer note below (d)) 181.75 (-) Less : Assets acquired on acquisition/(distributed on divestiture) 5.12 - (-) (215.38) Add : Contribution by plan participants - 574.54 (-) (454.17) Less : Benefits paid 54.39 493.64 (45.32) (313.21) Closing balance of the plan assets 492.99 4,264.26 (404.59) (3,778.70)
The Company expects to contribute ` 86.76 Mn (previous year ` 92.42 Mn) towards its gratuity. The Company’s share of defined benefit obligation/fair value of plan assets adjusted by the Trust of the holding company. e) The major categories of plan assets as a percentage of total plan assets are as follows:
2015-16 (2014-15) Gratuity plan Self-managed provident fund plan Government of India securities 25.3% (24.7%) State government securities 15.8% Scheme (15.1%) Corporate bonds with 10.3% LIC (7.6%) Fixed deposits under Special Deposit Scheme framed by Central Government for provident 9.3% funds (10.3%) Public sector bonds 39.3% (42.3%)
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Principal actuarial assumptions at the balance sheet date (expressed as weighted averages): 2015-16 2014-15 1 Discount rate as at March 31 For gratuity 7.75% 7.90% For post-retirement medical benefits 7.75% 7.90% 2 Annual increase in healthcare costs (see note below) 5.0% 5.0% 3 Attrition rate Varies between 2% Varies between 2% to 18% for various to 18% for various age groups age groups 4 Salary growth rate 5.0% 5.0%
The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Although the obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits, assumed healthcare cost trend rates may affect the amounts recognised in the statement of profit and loss. At present, healthcare costs, as indicated in the principal actuarial assumption given above, are expected to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: (` Million) Particular Effect of 1% increase 1% decrease Effect on the aggregate of the service cost and interest cost 7.93 -6.06 (6.85) (-5.24) Effect on defined benefit obligation 22.86 -17.85 (19.22) (-15.01)
a) The amounts pertaining to defined benefit plans for the current year are as follows: Post-retirement medical benefit plan (non-funded) (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 Defined benefit obligation 124.53 103.95 8 8 . 7 9 90.81 42.19
Gratuity plan (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 1 Defined benefit obligation 579.76 497.01 408.57 384.12 297.59 2 Plan assets 492.99 404.59 379.19 296.11 156.90 3 (Surplus)/deficit 86.77 92.42 29.38 88.01 140.69
Self-managed provident fund plan (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 1 Defined benefit obligation 4,253.92 3,776.10 3,412.68 2,710.62 2,178.30 2 Plan assets 4,264.26 3,778.70 3,352.80 2,685.76 2,142.59 3 (Surplus)/deficit (10.34) (2.60) 59.88 24.86 35.71
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Experience adjustments Gratuity (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 Defined benefit obligation 579.76 497.01 408.57 384.12 297.59 Plan assets 492.99 404.59 379.19 296.11 156.90 (Surplus) / deficit 86.77 92.42 29.38 88.01 140.69 Experience adjustments on plan liabilities (7.53) (14.36) (6.21) 5.05 95.81 Experience adjustments on plan assets 13.09 5.45 8.19 8.56 2.34
General descriptions of defined benefit plans: a) Gratuity plan The Company makes contributions to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to employees at retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed five years in service. b) Post-retirement medical benefit plan The post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling limit sanctioned at the time of retirement. The ceiling limits are based on cadre of the employee at the time of retirement. c) Self-managed provident fund plan The Company’s provident fund plan is managed by its holding company through a Trust permitted under the Provident Fund Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service. The interest payment obligation of trust managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial loss. Any loss arising out of the investment risk and actuarial risk associated with the plan is also recognised as expense in the period in which such loss occurs. Further, on amount of ` Nil has been provided based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan.
T.(2) (i) In line with the Company’s Financial Risk Management Policy, financial risks relating to changes in the exchange rates, are hedged by forward contracts, besides the natural hedges. The loss on fair valuation of the derivative contracts which are designated and are effective as hedges, amounting to ` 2,695.02 Mn (net of deferred tax) (Previous year ` 366.96 Mn (net of deferred tax)) has been accounted in retained earnings in balance sheet. The loss/ (gain) of ` (1,297.52 Mn) (Previous year gain of ` 243.04 Mn) on settlement of the forwards is recognised in statement of profit and loss.
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The particulars of derivative contracts entered into for hedging foreign currency risks outstanding as at March 31, 2016 are as under: (` Million) Sr. Category of derivative instruments Notional amount Notional amount March 31, 2016 March 31, 2015 a) Forward contracts for receivables 43,470.51 58,583.85 Un-hedged foreign currency exposures as at March 31, 2016 are as under: (` Million) Sr. Un-hedged foreign currency exposures March 31, 2016 March 31, 2015 1 Receivables including firm commitments and highly probable forecast transactions 41,271.25 30,001.71 2 Payables including firm commitments and highly probable forecast transactions 28,796.36 24,474.66
T.(2) (ii) The Company has made provision, as required under the applicable law or accounting standard for material foreseeable losses on long term derivative contracts. T(3) Income/expenditure in foreign currency T.(3) (i) Expenditure in foreign currency: (` Million) 2015-16 2014-15 Overseas staff costs 19,650.52 16,661.19 Foreign travel 330.66 305.56 Agency commission 6.96 0.62 Subcontracting expenses 3,776.21 2,923.75 Overseas office expenses (including others) 2,706.86 1,928.01 26,471.21 21,819.13
T.(3) (ii) Earnings in foreign currency: (` Million) 2015-16 2014-15 Software exports 52,295.01 45,368.13 Other income 490.77 27.32 52,785.78 45,395.45
T.(4) Auditors’ remuneration (excluding service tax) charged to the accounts include: (` Million) 2015-16 2014-15 Audit fees 1.65 1.65 Tax audit fees 0.65 0.65 Other services 2.32 3.58 Expense reimbursement 0.09 0.05 4.71 5.93
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T.(5) Value of imports on C.I.F. basis (` Million) 2015-16 2014-15 Capital goods 64.13 1.81 Others 41.72 20.98 105.85 22.79
T.(6) Leases Finance leases In accordance with Accounting Standard 19 “Leases” issued by the Institute of Chartered Accountants of India, the assets acquired under finance leases on or after April 1, 2001 are capitalised and a loan liability is recognised for an equivalent amount. Consequently depreciation is provided on such assets. Lease rentals paid are allocated to the liability and the interest is charged to statement of profit and loss.
Operating leases The Company has taken employee used cars under non-cancellable operating leases. The rental expense in respect of operating leases was ` 0.06 Mn (previous year ` 1.21 Mn) and the future rentals payable are as follows:
(` Million) 2015-16 2014-15 Minimum lease payments - Payable not later than 1 year - 0.16 - Payable after 1 year but not later than 5 years - - - 0.16
T.(7) Basic and diluted earnings per share (EPS) at face value of ` 1
2015-16 2014-15 Profit after tax` ( Million) 9,381.31 7,729.62 Weighted average number of shares outstanding 163,914,663 161,250,000 Basic EPS (`) 57.23 47.94
Weighted average number of shares outstanding 163,914,663 161,250,000 Add : weighted average number of potential equity shares on account of employee options 392,052 7,270,100 Weighted average number of shares outstanding 164,306,715 168,520,100 Diluted EPS (`) 57.10 45.87
EPS for the previous year is after considering sub-division of equity shares from face value of ` 5 each to face value of ` 1 each per equity share (refer note B(1)).
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T.(8) Related party disclosure: T.(8) (i) List of related parties over which control exists/exercised: Name Relationship Larsen & Toubro Infotech GmbH Wholly owned subsidiary Larsen & Toubro Infotech Canada Limited Wholly owned subsidiary GDA Technologies Limited Wholly owned subsidiary Larsen & Toubro Infotech LLC Wholly owned subsidiary L&T Infotech Financial Services Technologies Inc Wholly owned subsidiary Larsen & Toubro Infotech South Africa (Proprietary) Limited Subsidiary L&T Information Technology Services (Shanghai) Co. Limited Wholly owned subsidiary Information Systems Resource Centre Private Limited (Refer note T (11)) Wholly owned subsidiary Larsen & Toubro Infotech Austria GmbH Wholly owned subsidiary L&T Information Technology Spain, Sociedad Limitada. Wholly owned subsidiary
T.(8) (ii) Key Management personnel: Name Status Mr. V. K. Magapu Managing Director* Mr. Sanjay Jalona Chief Executive Officer & Managing Director ** Mr. Chandrashekara Kakal Chief Operating Officer & Executive Director *** Mr. K. R. L. Narasimham Executive Director # Mr. Vivek Chopra Chief Executive (Industrials Cluster) & Executive Director $ Dr. Mukesh Aghi Chief Executive (Services Cluster) & Executive Director ^ Mr. Sunil Pande Executive Director ^^
* Ceased to be Director w.e.f. the close of working hours of September 25, 2015 ** Appointed as Chief Executive Officer & Managing Director w.e.f. August 10, 2015 *** Ceased to be Director w.e.f. the close of working hours of August 26, 2015 # Ceased to be Director w.e.f. the close of working hours of April 7, 2015 $ Ceased to be Director w.e.f. the close of working hours of December 31, 2014 ^ Ceased to be Director w.e.f. the close of working hours of February 28, 2015 ^^ Ceased to be Director w.e.f. the close of working hours of August 25, 2015
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T.(8) (iii) List of related parties with whom there were transactions during the year: Name Relationship Larsen & Toubro Limited Holding Company Larsen & Toubro Infotech Canada Limited Wholly owned subsidiary Larsen & Toubro Infotech GmbH Wholly owned subsidiary Larsen & Toubro Infotech LLC Wholly owned subsidiary GDA Technologies Limited Wholly owned subsidiary L&T Infotech Financial Services Technologies Inc Wholly owned subsidiary L&T Information Technology Services (Shanghai) Co. Limited Wholly owned subsidiary Larsen & Toubro Infotech South Africa (Proprietary) Limited Subsidiary Information Systems Resource Centre Private Limited (Refer note T (11)) Wholly owned subsidiary Larsen & Toubro Infotech Austria GmbH Wholly owned subsidiary L&T Information Technology Spain, Sociedad Limitada Wholly owned subsidiary Larsen & Toubro (East Asia) SDN.BHD Fellow Subsidiary L&T Hydrocarbon Engineering Limited Fellow Subsidiary L&T Electricals and Automation Saudi Arabia Company LLC Fellow Subsidiary L&T Finance Limited Fellow Subsidiary L&T General Insurance Company Limited Fellow Subsidiary L&T Infrastructure Development Projects Limited Fellow Subsidiary L&T Power Development Limited Fellow Subsidiary Larsen & Toubro Kuwait Construction General Contracting Company, With Limited Liability Fellow Subsidiary L&T Infrastructure Finance Company Limited Fellow Subsidiary L&T Metro Rail (Hyderabad) Limited Fellow Subsidiary L&T Technology Services Limited Fellow Subsidiary L&T Valves Limited Fellow Subsidiary L&T Investment Management Limited Fellow Subsidiary L&T Construction Equipment Limited Fellow Subsidiary Larsen & Toubro LLC Fellow Subsidiary Nabha Power Limited Fellow Subsidiary L&T Electrical & Automation FZE Fellow Subsidiary Spectrum Infotech Private Limited Fellow Subsidiary Family Credit limited Fellow Subsidiary PT. Tamco Indonesia Fellow Subsidiary L&T Special Steels and Heavy Forgings Private Limited Fellow Subsidairy Larsen & Toubro ATCO Saudi LLC Fellow Subsidiary L&T Thales Technology Services Private Limited Fellow Subsidiary L&T Capital Markets Limited Fellow Subsidiary L&T Housing Finance Limited Fellow Subsidiary Larsen & Toubro Electromech LLC Fellow Subsidiary Tamco Electrical Industries Australia Pty Limited Fellow Subsidiary L&T Technology Services LLC Fellow Subsidiary
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T.(8) (iv). Related Party Transactions (` Million) Transaction Holding Company Subsidiaries Fellow Subsidiaries Sale of services / products 1,101.09 1,499.50 423.59 (352.00) (1,500.90) (324.91) - L&T Metro Rail (Hyderabad) Limited 63.60 - L&T Technology Services Limited 50.50 - L&T Hydrocarbon Engineering Limited 78.80 - L&T Thales Technology Services Private Limited 95.70 - Larsen & Toubro Infotech GmbH 493.31 - L&T Infotech Financial Services Technologies Inc. 330.55 - Larsen And Toubro Infotech South Africa (Proprietary) Limited 391.73 - Larsen & Toubro Infotech Canada Limited 278.03
Sale of assets 108.62 - 7.70 (-) (-) (-) - L&T Technology Services Limited - - 7.70 Purchase of services 275.43 347.68 694.17 (1,034.96) (454.97) (686.46) - Larsen & Toubro Infotech LLC 133.45 - Larsen & Toubro Infotech Canada Limited 193.64 - L&T Technology Services Limited 694.17 Overheads charged by 635.01 21.78 38.11 (125.82) (163.58) (44.45) - Larsen & Toubro Infotech GmbH 19.55 - Larsen & Toubro (East Asia) SDN.BHD 24.03 - L&T Electrical & Automation FZE 7.19 - Larsen & Toubro Kuwait Construction General Contracting Company, With Limited Liability 6.23 Overheads charged to 82.49 145.54 422.61 (60.77) (99.64) (613.95) - Larsen & Toubro Infotech Canada Limited 51.64 - Larsen & Toubro Infotech GmbH 64.49 - Larsen & Toubro Infotech South Africa (Proprietary) Limited 20.91 - L&T Technology Services Limited 421.30 Commission charged to - 3.62 5.26 (-) (-) (11.81) - Larsen & Toubro Infotech South Africa (Proprietary) Limited - 3.62 - - L&T Technology Services Limited - - 5.26 Lease rent - - 0.07 (-) (-) (0.52) Commission - - - (-) (-) (0.62) Trademark fees 104.89 - - (-) (-) (-)
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Transaction Holding Company Subsidiaries Fellow Subsidiaries Investments - 10.07 - (806.96) - Larsen &Toubro Information Technology Services (Shanghai) Co. Limited - 3.82 - Larsen & Toubro Infotech Austria GmbH - 2.60 - Larsen & Toubro Information Technology Spain, Sociedad Limitada - 3.65 Trade receivable 450.38 160.22 55.34 - (195.22) (84.67) Trade payable - - - (174.23) - - Interim dividend 5,264.81 - - (4,805.25) Dividend received - 472.38 - L&T Infotech Financial Services Technologies Inc. - 472.38 -
T.(8) (v) Managerial remuneration (` Million) Particular 2015-16 2014-15 Total managerial remuneration 57.31 183.69 Amount for major parties Salaries, commission and perquisites :- Mr. V K Magapu 7.35 15.12 Mr. Sanjay Jalona 33.61 - Mr. Chandrashekara Kakal 10.85 10.48 Mr. Vivek Chopra 68.52 Dr. Mukesh Aghi 68.56
T.(9) Segmental reporting The Company had 2 business segments. Services Cluster includes Banking & Financial services, Insurance, Media & Entertainment, Travel & Logistics and Healthcare. Industrials Cluster includes Hi Tech and Consumer Electronics, Consumer, Retail & Pharma, Energy & Process, Automobile & Aerospace, Plant Equipment & Industrial Machinery, Utilities and E&C.
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T. (9) (i) Revenues represented along industry classes comprise the primary basis of segmental information set out in these financial statements. The revenue and operating profit by segment is as under: (` Million) Services Cluster Industrials Cluster Total Revenue 29,190.68 26,504.52 55,695.20 (24,468.34) (22,975.69) (47,444.03) Segmental operating profit 6,513.66 6,701.72 13,215.38 (5,521.28) (5,966.68) (11,487.96) Unallocable expenses (net) 3,931.65 (1,938.97) Other income 3,386.06 (887.80) Operating profit 12,669.79 (10,436.79) Finance cost 103.57 (104.18) Depreciation 654.60 (659.89) Amortization of intangible assets 379.88 (247.41) Profit before tax 11,531.74 (9,425.31)
T.(9) (ii) Segmental reporting of revenues on the basis of the geographical location of the customers and is as under: (` Million) Geography FY16 FY15 North America 38,191.34 32,024.48 Europe 9,702.52 8,839.21 India 3,400.19 2,075.90 APAC 1,188.61 1,198.13 ROW 3,212.54 3,306.31 Total 55,695.20 47,444.03 Fixed assets used and liabilities contracted for performing the Company’s business have not been identified to any of the above reported segments as the fixed assets and services are used interchangeably among segments.
T.(10) Based on the information and records available with the Company, there are no amounts payable to micro and small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.
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T.(11) On October 16, 2014, the Company acquired entire share capital of Information Systems Resource Centre Private Limited (‘ISRC’), thereby making it a wholly owned subsidiary. Larsen & Toubro Infotech Limited is engaged in software development & related services. ISRC is engaged in software services with respect to application development, information technology support and maintenance services to OTIS Elevator Company Inc. (OTIS) and certain other group companies of OTIS, which are part of United Technologies Corporation (UTC) group. The Company believes that acquisition will strengthen its relationship with UTC group. The acquisition was executed through a share purchase agreement for a consideration of ` 806.96 Mn.
The Board of Directors of the Company and ISRC have approved the scheme of amalgamation of ISRC with the Company on October 17, 2014 and December 4, 2014, respectively, with October 17, 2014 as the appointed date. Accordingly, a petition for sanctioning the scheme of amalgamation had been filed with the Hon’ble High Court of Judicature at Bombay.
The Scheme has been sanctioned by the Hon’ble High Court of Judicature at Bombay vide its order dated September 4, 2015. The Scheme was filed with the Registrar of the Companies on September 21, 2015 and came into effect on that day with appointed date being October 17, 2014. Pursuant thereto, the entire business and all the assets and liabilities, duties and obligations of ISRC have been transferred to and vested in the Company with effect from October 17, 2014. In accordance with the Scheme, the investment held in the subsidiary has been cancelled and ISRC being a wholly owned subsidiary of the Company, no equity shares were exchanged to effect the amalgamation in respect thereof.
The amalgamation is accounted in accordance with ‘pooling of interest method’ as per Accounting Standard 14 ‘Accounting for Amalgamations’ and in accordance with scheme approved by the Hon’ble High Court of Bombay. 1) All assets and liabilities (including contingent liabilities),reserves, benefits under income-tax, benefits for under special economic zone registrations, duties and obligations of ISRC have been recorded in the books of account of the Company at their carrying amounts. 2) The amount of share capital of ISRC has been adjusted against the corresponding investment balance held by the Company in the amalgamating company and the excess of share capital over the investment has been adjusted against general reserve. 3) Accordingly, the amalgamation has resulted in transfer of assets and liabilities as on October 17, 2014 in accordance with the terms of the Scheme at the following summarised values: (` Million) Particulars Amount Amount Non-current Assets Fixed assets (net) 37.58 Deferred tax asset (set-off against deferred tax liabilities) 6.07 Long-term loans and advances 23.09 Current assets Trade receivables 120.39 Cash and cash equivalents 35.89 Short-term loans and advances 22.43 178.71 Total assets 245.45 Non-current liabilities Long-term provisions 6.29 Current Liabilities Trade payables 26.54 Other current liabilities 2.21 Short-term provisions 18.00 46.75 Total liabilities 53.04 Net assets 192.41
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The following balances as on October 17, 2014 have been added to the respective opening balances of the Company: (` Million) Capital reserve 0.42 General reserve 56.40 Profit & loss balance 100.58
The amount charged against general reserve of the Company pursuant to amalgamation is as follows: (` Million) Investment in the amalgamating company 806.96 Share capital taken over from the amalgamating company 35.00 Amount charged against general reserve 771.96
Pursuant to scheme of amalgamation, the appointed date of amalgamation being October 17, 2014, net profit after tax of ISRC for the period October 17, 2014 to March 31, 2015 has been transferred to statement of profit & loss account in the books of the company upon amalgamation.
Profit and loss account for the period October 17, 2014 to March 31, 2015 is as below: (` Million) Particulars Amount Revenue from services 191.00 Other income 2.77 Total revenue 193.77 Expenses: (a) Employee benefits expense 81.32 (b) Operating and other expenses 66.99 (c) Depreciation and amortisation expense 6.06 Total expenses 154.37 Profit before tax 39.40 Tax expense: (a) Current tax 14.12 (b) Deferred tax (2.07) Net profit after tax 27.35
As the scheme has become effective from September 21, 2015, the figures for the year ended March 31, 2016 are after giving effect to the merger, hence are not comparable with corresponding period of earlier year as well as for the year ended March 31, 2015.
T.(12) The Board of Directors of the Company and GDA Technologies Limited (GDA) have approved the scheme of amalgamation of GDA with the Company on October 17, 2014, respectively, with April 1, 2016 as the appointed date. Accordingly, a petition for sanctioning the scheme of amalgamation has been filed with the Hon’ble High Court of Judicature at Bombay & the Hon’ble High Court of Judicature at Madras. The Scheme has been sanctioned by the Hon’ble High Court of Judicature at Bombay vide its order dated April 1, 2016. The approval of the Scheme by the Hon’ble High Court of Madras is awaited.
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T.(13) (a) Amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year` 149.22 Mn. (b) The amount recognised as expense in the statement of profit & loss on CSR related activities during the year ended March 31, 2016 is ` 23.45 Mn, which comprises of: (` Million) Particulars Disclosed under In cash Yet to be paid in cash Total General purposes Miscellaneous expenses in Note O(iii) 20.79 2.66 23.45
T.(14) The Company is not required to transfer any amount to Investor Education & Protection Fund.
T.(15) The Company in its board meeting held on June 16, 2015 has taken approval for the Offer for Sale (‘the Offer’) by Larsen & Toubro Limited in the Initial Public Offering of the Company. Pursuant to the same, the Company had filed its Draft Red Herring Prospectus (‘DRHP’) on September 28, 2015. Owing to change in the Offer structure and other considerations, the said DRHP was withdrawn on April 11, 2016 and pursuant to the approval of the IPO Committee, the Company filed a revised DRHP on April 12, 2016.
T.(16) Previous year’s figures have been regrouped / reclassified wherever necessary.
As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
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INDEPENDENT AUDITOR’S REPORT
To the members of Larsen & Toubro Infotech Limited management either intends to liquidate the Group or to cease operations, or has no realistic alternative to do so. Report on the audit of the consolidated financial statements The respective board of directors of the companies included in the We have audited the accompanying consolidated financial statements Group are responsible for overseeing the financial reporting process of Larsen & Toubro Infotech Limited (‘the Holding Company’) and of the Group. its subsidiaries (the Holding Company and its subsidiaries together referred to as ‘the Group’) which comprise the consolidated balance Auditor’s responsibilities for the audit of the consolidated financial sheet as at March 31, 2016, and the consolidated statement of profit statements and loss and the consolidated cash flow statement for the year then Our objectives are to obtain reasonable assurance about whether ended, and notes to the consolidated financial statements, including the consolidated financial statements as a whole are free from a summary of the significant accounting policies (‘the consolidated material misstatement, whether due to fraud or error, and to issue financial statements’). an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit Management’s responsibility for the consolidated financial conducted in accordance with Standards on Auditing will always statements detect a material misstatement when it exists. Misstatements can The Holding Company’s board of directors is responsible for arise from fraud or error and are considered material if, individually the preparation of these consolidated financial statements in or in the aggregate, they could reasonably be expected to influence terms of the requirements of the Companies Act, 2013 (‘the the economic decisions of users taken on the basis of these Act’) that give a true and fair view of the consolidated financial consolidated financial statements. position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting We conducted our audit in accordance with the Standards on principles generally accepted in India, including the Accounting Auditing (SAs) specified under section 143(10) of the Act. Those Standards specified under section 133 of the Act, read with Standards require that we comply with ethical requirements rule 7 of the Companies (Accounts) Rules, 2014. The respective and plan and perform the audit to obtain reasonable assurance board of directors of the companies included in the Group are about whether the financial statements are free from material responsible for maintenance of adequate accounting records in misstatement. accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and We believe that the audit evidence we have obtained is sufficient other irregularities; the selection and application of appropriate and appropriate to provide a basis for our opinion. accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and Opinion maintenance of adequate internal financial controls, that were In our opinion, and to the best of our information and according operating effectively for ensuring the accuracy and completeness to the explanations given to us, the aforesaid consolidated financial of the accounting records, relevant to the preparation and statements give the information required by the Companies Act, presentation of the financial statements that give a true and 2013 (the ‘Act’) in the manner so required and give a true and fair fair view and are free from material misstatement, whether view in conformity with the accounting principles generally accepted due to fraud or error, which have been used for the purpose in India, of their consolidated state of affairs of the Company as at of preparation of the consolidated financial statements by the March 31, 2016, of consolidated profit and its consolidated cash Directors of the Holding Company, as aforesaid. flows for the year then ended.
In preparing the consolidated financial statements, the respective Other matters board of directors of the companies included in the Group are We did not audit the financial statements of nine subsidiaries, responsible for assessing the ability of the Group to continue as a whose financial statements reflect total assets of ` 4,920.18 Mn as going concern, disclosing, as applicable, matters related to going at March 31, 2016, total revenues of ` 4,338.76 Mn and net cash concern and using the going concern basis of accounting unless outflows amounting to ` 474.73 Mn for the year ended on that
118 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Independent Auditor’s Report date, as considered in the consolidated financial statements. These auditors of its subsidiary companies incorporated in financial statements have been audited by other auditors whose India, none of the directors of the Group companies, reports have been furnished to us by management and our opinion incorporated in India is disqualified as on 31 March 2016 on the consolidated financial statements, in so far as it relates to the from being appointed as a director in terms of section amounts and disclosures included in respect of these subsidiaries 164(2) of the Act; and our report in terms of section 143(3) and (11) of the Act, in so far as it relates to the aforesaid subsidiaries is based solely on the (f) with respect to the adequacy of the internal controls reports of the other auditors. over financial reporting of the Holding Company and the operating effectiveness of such controls, refer to our Our opinion on the consolidated financial statements, and our report separate report in Annexure ‘A’; and on other legal and regulatory requirements below, is not modified (g) with respect to the other matters to be included in in respect of the above matters with respect to our reliance on the the Auditor’s Report in accordance with rule 11 of the work done and the reports of the other auditors. Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according Report on other legal and regulatory requirements to the explanations given to us: 1. As required by section 143(3) of the Act, we report, tothe extent applicable, that: (1) the consolidated financial statements disclose the impact of pending litigations on the consolidated (a) we have sought and obtained all the information and financial position of the Group - refer note R of the explanations which to the best of our knowledge and consolidated financial statements; belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements; (2) the Company has made provision, as required under the applicable law or accounting standards, (b) in our opinion, proper books of account as required by for material foreseeable losses, if any, on long- law relating to preparation of the aforesaid consolidated term contracts including derivative contracts – financial statements have been kept so far as it appears refer notes T(2) (ii) of the consolidated financial from our examination of those books and the reports of statements; and the other auditors; (c) the consolidated balance sheet, the consolidated (3) there are no amounts required to be transferred statement of profit and loss, and the consolidated cash to the Investor Education and Protection Fund by flow statement dealt with by this report are in agreement the Holding Company and its subsidiary company with the relevant books of account maintained for the incorporated in India– refer notes T(10) of the purpose of preparation of the consolidated financial consolidated financial statements. statements; (d) in our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards Sharp & Tannan specified under section 133 of the Act, read with rule 7 Chartered Accountants of the Companies (Accounts) Rules, 2014; Firm’s registration no. 109982W by the hand of (e) on the basis of the written representations received from the directors of the Holding Company as on March Firdosh D. Buchia 31, 2016 taken on record by the board of directors of Partner the Holding Company and the reports of the statutory Mumbai, 26 April 2016 Membership No. 38332
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(Referred to in paragraph 2(f) under ‘Report on other legal and and maintained and if such controls operated effectively in all regulatory requirements’ of our report of even date) material respects.
Report on the internal financial controls under clause (i) of sub- Our audit involved performing procedures to obtain audit evidence section (3) of section 143 of the Companies Act, 2013 (‘the Act’) about the adequacy of the internal financial controls system over We have audited the internal financial controls over financial financial reporting and their operating effectiveness. Our audit of reporting of Larsen & Toubro Infotech Limited (‘the Holding internal financial controls over financial reporting included obtaining Company’) and its subsidiary company which is incorporated in an understanding of internal financial controls over financial India as of March 31, 2016 in conjunction with our audit of the reporting, assessing the risk that a material weakness exists, and standalone financial statements of the Company for the year testing and evaluating the design and operating effectiveness of ended on that date. internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the Management’s responsibility for internal financial controls risks of material misstatement of the financial statements, whether due to fraud or error. The respective board of directors of the Holding company and its subsidiary company which is incorporated in India, are responsible We believe that the audit evidence we have obtained is sufficient for establishing and maintaining internal financial controls based and appropriate to provide a basis for our audit opinion on the on the internal control over financial reporting criteria established Company’s internal financial controls system over financial reporting. by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Meaning of internal financial controls over financial reporting Financial Controls Over Financial Reporting (the ‘Guidance Note’) A company’s internal financial control over financial reporting is a issued by the Institute of Chartered Accountants of India (ICAI). process designed to provide reasonable assurance regarding the These responsibilities include the design, implementation and reliability of financial reporting and the preparation of financial maintenance of adequate internal financial controls that were statements for external purposes in accordance with generally operating effectively for ensuring the orderly and efficient conduct accepted accounting principles. A company’s internal financial of its business, including adherence to the Company’s policies, the control over financial reporting includes those policies and safeguarding of its assets, the prevention and detection of frauds procedures that: (1) pertain to the maintenance of records that, and errors, the accuracy and completeness of the accounting in reasonable detail, accurately and fairly reflect the transactions records, and the timely preparation of reliable financial information, and dispositions of the assets of the company; (2) provide as required under the Act. reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Auditor’s responsibility generally accepted accounting principles, and that receipts and Our responsibility is to express an opinion on the Company’s expenditures of the company are being made only in accordance internal financial controls over financial reporting based on with authorisations of management and directors of the company; our audit. We conducted our audit in accordance with the and (3) provide reasonable assurance regarding prevention or Guidance Note and the Standards on Auditing, issued by ICAI timely detection of unauthorised acquisition, use, or disposition and deemed to be prescribed under section 143(10) of the of the company’s assets that could have a material effect on the Act, to the extent applicable, to an audit of internal financial financial statements. controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and Inherent limitations of internal financial controls over financial the Guidance Note require that we comply with ethical reporting requirements and plan and perform the audit to obtain Because of the inherent limitations of internal financial controls reasonable assurance about whether adequate internal over financial reporting, including the possibility of collusion financial controls over financial reporting was established or improper management override of controls, material
120 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Independent Auditor’s Report misstatements due to error or fraud may occur and not be operating effectively as at March 31, 2016, based on the internal detected. Also, projections of any evaluation of the internal control over financial reporting criteria established by the Company financial controls over financial reporting to future periods considering the essential components of internal control stated in are subject to the risk that the internal financial control over the Guidance Note issued by the ICAI. financial reporting may become inadequate because of changes Sharp & Tannan in conditions, or that the degree of compliance with the policies Chartered Accountants or procedures may deteriorate. Firm’s registration no. 109982W by the hand of Opinion In our opinion, the Company has, in all material respects, an Firdosh D. Buchia adequate internal financial controls system over financial reporting Partner and such internal financial controls over financial reporting were Mumbai, 26 April 2016 Membership No. 38332
121 Annual Report 2015-16
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2016 (` Million) Particulars Note As at As at No. 31-03-2016 31-03-2015 EQUITY AND LIABILITIES Shareholders' funds Share capital B 169.82 161.25 Reserves and surplus C 20,057.02 20,102.23 Total Equity 20,226.84 20,263.48 Minority interest 5.18 3.88 Non-current liabilities Long-term borrowings D(i) - 138.89 Deferred tax liabilities I 1,206.25 238.03 Other long term liabilities E(ii) 1,250.52 538.35 Long term provisions F 124.29 103.71 2,581.06 1,018.98 Current liabilities Short-term borrowings D(ii) 397.53 1,897.48 Current maturities of long-term borrowings D(i) 147.23 138.89 Trade payables E(i) 3,276.40 2,719.47 Other current liabilities E(ii) 2,764.95 1,723.48 Short-term provisions F 5,170.88 2,815.44 11,756.99 9,294.76 TOTAL EQUITY AND LIABILITIES 34,570.07 30,581.10 ASSETS Non-current assets Fixed assets G Tangible assets 2,791.89 2,749.82 Intangible assets 3,583.23 4,084.52 Capital work-in-progress 6.95 53.33 Intangible assets under development 188.41 198.45 6,570.48 7,086.12 Non-current investments H(i) - - Deferred tax assets I 2.37 10.29 Long-term loans and advances L 4,249.13 2,439.79 10,821.98 9,536.20 Current assets Current investments H(ii) 429.20 1,035.51 Trade receivable J(i) 11,659.87 10,901.16 Unbilled revenue J(ii) 3,787.89 1,544.50 Cash and bank K 2,033.66 2,009.21 Short-term loans and advances L 5,837.47 5,554.52 23,748.09 21,044.90 TOTAL ASSETS 34,570.07 30,581.10
Significant accounting policies A Contingent liabilities R Commitments (capital and others) S Notes forming part of accounts T As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016 122 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Consolidated Balance Sheet | Consolidated Statement of Profit and Loss CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2016 (` Million) Particulars Note 2015-16 2014-15 No. INCOME: Revenue from operations M 58,470.60 49,780.36 Other income N 2,959.61 915.00 Total income 61,430.21 50,695.36 EXPENSES: Employee benefit expenses O(i) 35,346.58 29,242.73 Operating expenses O(ii) 6,710.80 4,885.63 Sales, administration and other expenses O(iii) 6,057.07 5,607.43 48,114.45 39,735.79 OPERATING PROFIT 13,315.76 10,959.57 Finance cost P 103.57 104.19 Depreciation on tangible assets G 736.67 741.55 Amortisation of intangible assets G 1,002.85 837.85 1,843.09 1,683.59 Profit before extraordinary items and tax 11,472.67 9,275.98 Profit from continuing operations before tax 11,472.67 9,266.26 Extraordinary item T(8) - 93.95 Profit from continuing operations before tax 11,472.67 9,360.21 Tax expense for continuing operations Current tax (net) Q 1,649.17 1,645.32 Deferred tax I 600.44 35.76 2,249.61 1,681.08 Profit from continuing operations after tax 9,223.06 7,679.13 Profit from discontinued operations before tax T(8) - 9.72 Tax expense for discontinued operations Current tax Q - 1.69 Profit from discontinued operations after tax T(8) - 8.03 PROFIT FOR THE YEAR BEFORE MINORITY INTEREST 9,223.06 7,687.16 Minority Interest 1.29 1.90 PROFIT FOR THE YEAR 9,221.77 7,685.26 EARNING PER EQUITY SHARE T(4) Basic Basic earning per equity share before extraordinary items 56.26 47.17 Basic earning per equity share after extraordinary items 56.26 47.66 Diluted Diluted earning per equity share before extraordinary items 56.13 45.14 Diluted earning per equity share after extraordinary items 56.13 45.60 Face value per equity share 1.00 1.00 Significant accounting policies A Notes forming part of accounts T As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016 123 Annual Report 2015-16
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016
(` Million) Particulars 2015-16 2014-15 A. Cash flow from operating activities Net profit before tax (excluding extraordinary items) 11,472.67 9,275.98 Adjustments for: Depreciation and amortisation 1,739.52 1,579.41 Employees stock options amortised (141.59) - Interest (net) 41.17 33.42 Unrealised foreign exchange loss/(gain) (901.57) (568.72) (Profit)/loss on sale of current investments (68.44) (141.26) Miscellaneous expenditure amortised/(capitalised) - 6.35 (Profit)/loss on sale of fixed assets 27.28 7.18 Translation Reserve 56.65 (80.26) Operating profit before working capital changes 12,225.69 10,112.10 Changes in working capital (Increase)/decrease in trade receivables and unbilled revenue (3,069.79) (1,979.71) (Increase)/decrease in other receivables 11.08 (107.57) Increase/(decrease) in trade & other payables 2,123.04 1,164.84 (Increase)/decrease in working capital (935.67) (922.44) Cash generated from operations 11,290.02 9,189.66 Direct taxes paid (2,656.99) (2,767.12) Net cash from operating activities (excluding extraordinary items) 8,633.03 6,422.54
B. Cash flow from investing activities Purchase of fixed assets (1,290.54) (1,964.04) Sale of fixed assets 149.38 25.13 (Purchase)/sale of current investments 674.75 793.52 Interest received 25.06 22.81 Net cash used in investing activities (before extraordinary items) (441.35) (1,122.58) Extraordinary item Proceeds from sale of PES Business(net) - 93.95 Net cash used in investing activities (after extraordinary items) (441.35) (1,028.63)
124 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Consolidated Cash Flow Statement
(` Million) Particulars 2015-16 2014-15 C. Cash flow from financing activities Issue of share capital (including share application) 69.28 - Proceeds from/(repayment) of borrowings (1,662.61) 1,013.23 Interest paid (57.89) (56.23) Dividend paid (5,467.30) (4,805.25) Dividend tax (1,048.71) (1,125.56) Net cash from financing activities (8,167.23) (4,973.81) Net increase in cash and cash equivalents 24.45 420.10 Cash and cash equivalents at 31 March 2015 2,009.21 1,589.11 Cash and cash equivalents at 31 March 2016 2,033.66 2,009.21
Notes: 1 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3: “Cash Flow Statements” as specified in the Companies (Accounting Standards) Rules, 2006. 2 Purchase of fixed assets includes movements of capital work-in-progress during the year. 3 Cash and cash equivalents represent cash and bank balances. 4 Bank balances include revaluation gain of ` 45.13 Mn (Previous year loss ` 2.73 Mn).
As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
125 Annual Report 2015-16
Notes forming part of consolidated accounts
A. Significant Accounting Policies 3. Principles of consolidation 1. Basis of accounting a) The financial statements of the Parent Company These financial statements have been prepared in and its subsidiaries have been consolidated on accordance with the Generally Accepted Accounting line-by-line basis by adding together the book Principles in India (‘Indian GAAP’) to comply with the values of the like items of the assets, liabilities, Accounting Standards specified under Section 133 of the income and expenses, after eliminating intra-group Companies Act, 2013, read with Rule 7 of the Companies balances and the unrealised profits/losses on (Accounts) Rules, 2014 and the relevant provisions of intra-group transactions, and are presented to the the Companies Act, 2013. Further the guidance notes/ extent possible, in the same manner as the Parent announcements issued by the Institute of Chartered Company’s independent financial statements. Accountants of India (ICAI) are also considered wherever applicable. The Company maintains its accounts on b) Minority interest in the net assets of subsidiaries accrual basis following the historical cost convention. consists of the amount of equity attributable to the minority shareholders at the date on which The preparation of financial statements in conformity investment is made by company in the subsidiary with GAAP requires the management of the Company to Company and further movements in their share in make estimates and assumptions that affect the income the equity, subsequent to the date of investment. and expense reported for the period and assets and liabilities & disclosures relating to contingent liabilities c) Goodwill on consolidation represents the difference reported as of the date of the financial statements. between the Group’s share in the net worth of a Examples of such estimates include carrying value of subsidiary and the cost of acquisition at each point tangible & intangible fixed assets, provision for doubtful of time of making the investment in the subsidiary debts, future obligations in respect of retirement benefit as per Accounting Standard (AS) 21 “Consolidated plans, etc. Difference, if any, between the actual results Financial Statements”. For this purpose, the and estimates is recognised in the period in which the Group’s share of net worth is determined on the results are known. basis of the latest financial statements, prior to the acquisition, after making necessary adjustments The accounts of Indian subsidiaries have been prepared for material events between the date of such in compliance with the Accounting Standards specified financial statements and the date of respective under Section 133 of the Companies Act, 2013, read acquisition. Goodwill arising on consolidation as with Rule 7 of the Companies (Accounts) Rules, 2014 and per Accounting Standard (AS) 21 “Consolidated the relevant provisions of the Companies Act, 2013, and Financial Statements” is tested for impairment at those of the foreign subsidiaries have been prepared in every balance sheet date. In the event of cessation compliance with the local laws and applicable Accounting of operations of a subsidiary, the unimpaired Standards. Necessary adjustments for differences in the goodwill is written off fully. accounting policies, wherever applicable, have been made in the Consolidated Financial Statements. 4. Extraordinary items Income or expenses that arise from events or transactions 2. Presentation of financial statements that are clearly distinct from the ordinary activities of the The balance sheet and the statement of profit and loss Company are classified as extraordinary items. Specific are prepared and presented in the format prescribed in disclosure of such events/transactions is made in the the schedule III to the Companies Act, 2013. The cash financial statements. Similarly, any external event beyond flow statement has been prepared and presented as per the control of the Company, significantly impacting the requirements of Accounting Standard (AS) 3 “Cash income or expense, is also treated as extraordinary item Flow Statements”. The disclosure requirements with and disclosed as such. respect to items in the balance sheet and statement of profit and loss, as prescribed in the schedule IIIto 5. Revenue recognition the Act, are presented by way of notes forming part a) Revenue from contracts priced on time and material of accounts along with the other notes required to be basis are recognised when services are rendered disclosed under the notified Accounting Standards. and related costs are incurred.
126 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
Revenue from services performed on “fixed- each unit separately to build up the final price” basis is recognised using the proportionate obligation. completion method. The obligation is measured at the present Unbilled revenue represents value of services value of the estimated future cash-flows. performed in accordance with the contract terms The discount rates used for determining the but not billed. present value of the obligation under defined benefit plans, is based on the market yields b) Other income on government bonds as at the balance sheet i. Interest income is accrued at applicable date, having maturity periods approximating interest rate. to the terms of related obligations. Actuarial gains and losses are recognised immediately ii. Dividend income is accounted in the period in the profit and loss account. In case of in which the right to receive the same is funded plans, the fair value of the plan assets established. is reduced from the gross obligation under iii. Other items of income are accounted as and the defined benefit plans to recognize the when the right to receive arises. obligation on net basis.
6. Employee benefits Gains or losses on the curtailment or a) Short term employee benefits settlement of any defined benefit plan All employee benefits falling due wholly within are recognised when the curtailment or twelve months of rendering the service are settlement occurs. Past service cost is classified as short term employee benefits. The recognised as expense on a straight-line basis benefits like salaries, wages, and short term over the average period until the benefits compensated absences and performance incentives become vested. are recognised in the period in which the employee renders the related service. (iii) Long term employee benefits: The obligation for long term employee b) Post-employment benefits benefits like long term compensation i) Defined contribution plan: absences is recognised in the similar manner The Company’s superannuation fund and as in the case of defined benefit plans as state governed provident fund scheme are mentioned in (b) (ii) above. classified as defined contribution plans. The 7. Fixed assets contribution paid / payable under the schemes is recognised during the period in which the Tangible employee renders the related service. Fixed assets are stated at cost less accumulated depreciation. ii) Defined benefit plans: The provident fund scheme managed by Intangible trust, employees gratuity fund scheme Assets like customer relationship, computer software, managed by LIC and post-retirement medical and internally developed software are stated at cost, less benefit scheme are the Company’s defined accumulated depreciation & amortisation. benefit plans. Wherever applicable, the present value of the obligation under such Goodwill on acquisition represents the cost of defined benefit plans is determined based on acquired businesses in excess of the fair value of net actuarial valuation using the Projected Unit identifiable assets acquired. Goodwill is not amortised Credit Method, which recognizes each period but is tested for impairment if events or changes of service as giving rise to additional unit of in circumstances indicate that an impairment loss employee benefit entitlement and measures may have occurred.
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8. Investments B. Foreign Subsidiaries Long-term investments are stated at cost, less provision for Depreciation has been provided on methods and at other than temporary diminution in value, if any. Current the rates required/permissible by the local laws so investments are stated at the lower of cost or market as to write off the assets over their useful life. value, determined on the basis of specific identification. 11. Intangible Assets and amortization 9. Leases The basis of amortization of intangible assets is as follows: Finance lease • Computer software Over a period of 3 years Assets acquired under leases where the Company has • Intellectual property rights Over a period of 3 years substantially all the risks and rewards of ownership are (IPR) classified as finance leases. Such assets are capitalised at • Acquired software Over a period of 10 years the inception of the lease at the lower of the fair value and the present value of minimum lease payments and a • Internally developed Over a period 1 to 5 years liability is created for an equivalent amount. Each lease software rental paid is allocated between the liability and the • Business rights Over a period of 5 years interest cost, so as to obtain a constant periodic rate of • Customer contracts Over a period of 10 interest on the outstanding liability for each period. years
Operating lease 12. Employee stock ownership schemes Assets acquired under lease where a significant portion In respect of stock options granted pursuant to the of the risks and rewards of ownership are retained by the Company’s stock option schemes, the excess of fair lessor are classified as operating leases. Lease rentals are value of the share over the exercise price of the option charged to the profit and loss account on accrual basis. is treated as discount and accounted as employee compensation cost over the vesting period. 10. Depreciation 13. Foreign currency transactions A. Indian Companies : a) Foreign currency transactions are initially I. Tangible - owned assets recorded at the rates prevailing on the date of the Depreciation on assets has been provided transaction. At the balance sheet date, foreign based on useful life prescribed in schedule currency monetary items are reported using the II to the Companies Act, 2013 except for the closing rate. Non-monetary items which are carried leasehold improvements which is depreciated at historical cost denominated in foreign currency over the lease period. are reported using the exchange rate at the date of the transaction. Depreciation / amortization on additions / disposals are calculated pro-rata from / to the Translation of foreign currency transaction of month of additions / disposals. overseas branches & subsidiaries is as under:
II. Tangible - leased assets • Revenue items at the average rate for the period; Assets acquired under finance leases are depreciated at the rates applicable to similar • Fixed assets and investments at the rates assets owned by the Company as there is prevailing on the date of the transaction; and reasonable certainty that the Company shall • Other assets and liabilities at year end rates obtain ownership of the assets at the end of the lease term. Exchange difference on settlement / year end conversion is adjusted to profit and loss Leasehold land - Over the residual period of account. the lease
128 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
b) Forward contracts other than those entered into Foreign Subsidiaries to hedge foreign currency risk on unexecuted Foreign Subsidiaries recognise current tax/ deferred tax firm commitments or of highly probable forecast liabilities and assets in accordance with the applicable transactions are treated as foreign currency local laws. transactions and accounted accordingly. Exchange differences arising on such contracts are recognised 15. Borrowing costs in the period in which they arise and the premium Borrowing costs include interest, commitment charges, paid / received is accounted as expense / income finance charges in respect of assets acquired on finance over the period of the contract. lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as Profit or loss on such forward contracts is accounted an adjustment to interest costs. as income or expense for the period. 16. Provisions, contingent liabilities and contingent assets c) All the other derivative contracts, including Provisions are recognised for liabilities that can forward contracts entered into to hedge foreign be measured only by using a substantial degree of currency risks on unexecuted firm commitments estimation, if and highly probable forecast transactions are recognised in the financial statements at fair value a) the Company has a present obligation as a result of as on the balance sheet date. In pursuance of a past event; the announcement of the Institute of Chartered b) a probable outflow of resources is expected to Accountants of India (ICAI) dated March 29, 2008 settle the obligation; and on accounting of derivatives, the Company has adopted Accounting Standard 30 for applying the c) the amount of the obligation can be reliably test of hedge effectiveness of the outstanding estimated derivative contracts. Accordingly, the resultant Reimbursement expected in respect of expenditure gains or losses on fair valuation of such contracts required to settle a provision is recognised only when it is are recognised in the profit and loss account or virtually certain that the reimbursement will be received. balance sheet as the case may be.
Contingent liability is disclosed in the case of: 14. Taxes on Income a) a present obligation arising from a past event when Tax on income for the current period is determined on it is not probable that an outflow of resources will the basis of taxable income and tax credits computed be required to settle the obligation; or in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of b) a possible obligation unless the probability of assessments/appeals. outflow of resources is remote Contingent assets are neither recognised nor Deferred tax is recognised on timing differences between disclosed. the income accounted in financial statements and the taxable income for the year, and quantified using the tax Provisions, contingent liabilities and contingent rates and laws enacted or substantively enacted as on assets are reviewed at each balance sheet date. the Balance Sheet date. 17. Segment accounting Segment accounting policies are in line with the Other deferred tax assets are recognised and carried accounting policies of the Company. In addition, the forward to the extent that there is a reasonable following specific accounting policies have been followed certainty that sufficient future taxable income will be for segment reporting: available against which such deferred tax assets can be realised. a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment.
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b) Expenses that are directly identifiable with/ 18. Cash flow statement allocable to segments are considered for Cash flow statement is prepared segregating the cash determining the segment result. Expenditure which flows from operating, investing and financing activities. relate to the Company as a whole and not allocable Cash flow from operating activities is reported using to segments are included under “unallocable indirect method. Under the indirect method, the net corporate expenditure”. profit is adjusted for the effects of: c) Income which relates to the Company as a whole i. transactions of a non-cash nature and not allocable to segments is included in “unallocable corporate income”. ii. any deferrals or accruals of past or future operating cash receipts or payments and d) Fixed assets used and liabilities contracted for performing the Company’s business have not been iii. items of income or expense associated with identified to any of the reported segments as the investing or financing cash flows. fixed assets and services are used interchangeably Cash and cash equivalents (including bank balances) are among segments. reflected as such in the cash flow statement.
130 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
A (II) Basis of preparation The Consolidated financial statements (CFS), comprising the Company and its subsidiaries, are prepared in accordance with Accounting Standard (AS) 21 – “Consolidated Financial Statements” as specified by the Companies (Accounting Standards) Rules, 2014. Reference in these notes to “the Company” shall mean Larsen & Toubro Infotech Limited and “the Group” shall mean the Company and its subsidiaries.
A (III) The list of subsidiaries included in the consolidated financial statements are as under:-
Name of the subsidiary company Country of incorporation Proportion of Proportion of ownership as at ownership as at March 31, 2016 March 31, 2015 (%) (%) 1 Larsen & Toubro Infotech Canada Limited Canada 100 100 2 Larsen & Toubro Infotech GmbH Germany 100 100 3 Larsen & Toubro Infotech LLC USA 100 100 4 L&T Infotech Financial Services Technologies Inc. Canada 100 100 5 Larsen And Toubro Infotech South Africa (Proprietary) South Africa 74.9 74.9 Limited 6 L&T Information Technology Services (Shanghai) Co. Limited China 100 100 7 GDA Technologies Limited India 100 100 8 Information Systems Resource Centre Private Limited* India - 100 9 Larsen & Toubro Infotech Austria GmbH** Austria 100 - 10 L&T Information Technology Spain, Sociedad Limitada*** Spain 100 -
* Refer note T(7) ** The Company has formed a new entity “Larsen & Toubro Infotech Austria GmbH” in Austria on June 18, 2015. Investment in this entity is not denominated in number of shares as per the local laws of Austria. *** The Company has formed a new entity “L&T Information Technology Spain, Sociedad Limitada in Spain on February 1, 2016.
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A (IV) Additional disclosure as per schedule III of the Companies Act, 2013: (` Million) Name of the entity Net assets, i.e total assets minus total Share in profit liabilities As % of Amount As % of Amount consolidated net consolidated profit assets or loss A - Parent Larsen & Toubro Infotech Limited 92.12% 18,632.71 101.73% 9,381.31 Subsidiaries B - Indian GDA Technologies Limited 1.83% 370.75 0.20% 18.37 Sub Total 1.83% 370.75 0.20% 18.37 C-Foreign 1. Larsen & Toubro Infotech GmbH 1.39% 281.77 0.62% 56.76 2. Larsen & Toubro Infotech Canada Limited 0.50% 100.34 0.33% 30.78 3. Larsen & Toubro Infotech LLC 0.56% 112.62 0.14% 12.47 4. L&T Infotech Financial Services 16.17% 3,271.03 2.10% 193.48 Technologies Inc. 5. Larsen And Toubro South Africa 0.10% 20.65 0.06% 5.16 (Proprietary) Limited 6. L&T Information Technology Services 0.03% 5.24 0.03% 2.91 (Shanghai) Co. Limited 7. Larsen & Toubro Infotech Austria GmbH 0.01% 2.08 (0.01)% (0.51) 8. L&T Information Technology Spain, 0.02% 3.05 (0.01)% (0.61) Sociedad Limitada Sub Total 18.77% 3,796.78 3.26% 300.44 Total A+B+C 112.72% 22,800.24 105.19% 9,700.11 Less : CFS adjustments and eliminations (12.72)% (2,573.40) (5.19)% (478.34) Total 100% 20,226.84 100% 9,221.77
B. Share capital B. (i) Share capital authorised, issued, subscribed and paid up: (` Million) As at As at 31-03-2016 31-03-2015 Authorised : 240,000,000 equity shares of ` 1 each 240.00 163.75 (Previous year 32,750,000 of ` 5 each)
Issued, paid up and subscribed 169,816,188 equity shares for ` 1 each 169.82 161.25 (Previous year 32,250,000 of ` 5 each) EQUITY SHARE CAPITAL 169.82 161.25
132 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
Notes : a) The board of directors at their meeting held on June 16, 2015 approved sub-division of the equity shares of face value of ` 5 each to face value of ` 1 each. The shareholders approved the sub-division on June 22, 2015 at the extraordinary general meeting. b) The authorised share capital of the Company was increased by ` 36.25 Mn comprising 36,250,000 equity shares of ` 1 each at the board meeting held on June 16, 2015 and approved by the shareholders at the extraordinary general meeting held on June 22, 2015. c) In accordance with the order of the Hon’ble High Court of Judicature at Bombay for amalgamating Information Systems Research Centre Private Limited (refer note T(7)), the authorised share capital of the Company was increased by ` 40.00 Mn comprising 40,000,000 equity shares of ` 1 each on amalgamation.
B(ii) Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of ` 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.
B(iii) Shareholders holding more than 5% of equity shares as at the end of the year
Name of shareholder As at 31-03-2016 As at 31-03-2015 Number of shares* Shareholding % Number of shares** Shareholding % Larsen & Toubro Limited 161,250,000 94.96% 32,250,000 100
* Face value of ` 1 ** Face value of ` 5
B(iv) Reconciliation of the number of equity shares and share capital Due to allotment of shares on exercise of stock options by employees, there was a movement in share capital for the year ended March 31, 2016. As at As at 31-03-2016 31-03-2015 Issued, subscribed and fully paid up equity shares outstanding at the beginning 161,250,000 161,250,000 Add: Shares issued on exercise of employee stock options 8,566,188 - Issued, subscribed and fully paid up equity shares outstanding at the end 169,816,188 161,250,000
B(v) Shares reserved for issue under options outstanding as at the end of the year on un-issued share capital : Particulars As at 31-03-2016 As at 31-03-2015 * Number of Exercise price ** Number of Exercise price equity shares to equity shares to be issued as fully be issued as fully paid paid # Employee stock options granted and outstanding 82,660 5 393,003 25 under Employee Stock Ownership Scheme “ESOS 2,350,106 2 1,873,467 10 Plan” Employees Stock Ownership Scheme – 2006 U.S. 143,650 $2.4 90,100 $12 Stock Option Sub-Plan (‘Sub-Plan’)
# Refer note no. B (ix) * Face value of ` 1 ** Face value of ` 5
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B(vi) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2016 are Nil (previous period of five years ended March 31, 2015 - Nil)
B(vii) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding five years ended March 31, 2016 – Nil (previous period of five years ended March 31, 2015 - Nil)
B(viii) (a) During the year ended March 31, 2016, the amount of interim dividend distributed to equity shareholder was ` 32.65 per share at face value of ` 1 (Previous year ` 149 per share at face value of ` 5).
(b) The Directors recommended payment of final dividend of ` 2.60 per equity share of ` 1 each on the number of equity shares outstanding on the record date.
Provision for final dividend has been made in the books of account for 169,816,188 equity shares outstanding as at March 31, 2016 amounting to` 441.52 Mn.
B(ix) Stock option plans 1. Employee Stock Ownership Scheme (‘ESOS Plan’) Under the Employee Stock Ownership Scheme (ESOS) 2,432,766 options are outstanding as at March 31, 2016. The grant of options to the employees under ESOS is on the basis of their performance and other eligibility criteria. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of ` 1.
All vested options can be exercised on the first exercise date. The Nomination & Remuneration Committee had decided September 28, 2015 as the first exercise date. The details of the grants under the aforesaid scheme are summarised below:
ESOP Series I,II & III IV-XXI 2015-16 2014-15 2015-16 2014-15 1 Face value (`) 1 5 1 5 2 Grant Price (`) 5 25 2 10 3 Options granted and outstanding at the 1,965,015 393,003 9,367,335 1,880,484 beginning of the year 4 Options reinstated during the year * 3,500 - 454,580 - 5 Options granted during the year - - - - 6 Options cancelled/ lapsed during the year 34,000 - 1,064,326 7,017 7 Options exercised and shares allotted during 1,851,855 - 6,407,483 - the year 8 Options granted and outstanding at the end 82,660 393,003 2,350,106 1,873,467 of the year of which - Options vested 82,660 393,003 340,666 970,917 Options yet to vest - - 2,009,440 902,550
* The Company had lapsed unvested options with the employees who had resigned from the Company. Based on the legal advice, the Company has exercised its discretion in determining that the former employees in the United States will be allowed to exercise their deferred options and accordingly, 258,080 options at face value of `1 (51,616 options at face value of ` 5) exercisable by such former employees have been re- instated and vested.
* The Company had erroneously lapsed 200,000 options at face value of` 1 (40,000 options at face value of` 5). Subsequently, the Company has decided that these options be restored and vested.
134 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
2. Employees Stock Ownership Scheme – 2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) The Company had instituted the Employees Stock Ownership Scheme – 2006 U.S. Stock Option Sub-Plan (‘Sub-Plan’) for the employees and Directors of its erstwhile subsidiary, GDA Technologies Inc, USA. The term of option was 5 years from the date of grant. As per vesting schedule, the options had to vest over a period of five years, subject to fulfilment of certain conditions specified in the respective Option agreement. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of ` 1 each at an exercise price of USD 2.4 per share. Under the said plan, options granted and outstanding as at the end of the year are 143,650 options, all of which are vested.
3. Employees Stock Options granted and outstanding as at the end of the year on unissued share capital represent options 2,576,416 (previous year 11,782,850) at face value of ` 1.
C. Reserves & surplus (` Million) As at 31-03-2016 As at 31-03-2015 C(i) General reserve As per last balance sheet 4,490.26 4,490.26 Add: transferred from employee stock options outstanding 0.05 - 4,490.31 4,490.26 C(ii) Hedging reserve (net of tax) : [Note I] Opening balance (366.97) (2,923.11) Deduction/(addition) during the year (net) (2,328.06) 2,556.14 (2,695.03) (366.97) C(iii) Securities premium account Opening balance 1,181.24 1,181.24 Addition during the year 204.16 - 1,385.40 1,181.24 C(iv) Surplus statement of profit and loss Opening balance 14,193.21 12,229.63 Add: Profit for the year 9,221.77 7,685.26 Less: Depreciation charged against retained earnings - 12.27 Add : Deferred tax credit on depreciation charged to retained earnings - 2.17 23,414.98 19,904.79 Less: Appropriation (a) Proposed dividend 441.52 - (b) Interim dividend 5,467.30 4,805.25 (c) Tax on dividend 1,048.71 906.32 (d) Additional tax on dividend 58.02 - 16,399.43 14,193.22 C(v) Foreign currency translation reserve Opening balance 266.07 631.60 Add/(less):for the year 157.52 (365.53) 423.59 266.07 C(vi) Employee stock options outstanding As per last balance sheet 338.41 338.41 Less : deductions during the year 285.04 - Less: transferred to general reserve 0.05 - 53.32 338.41 RESERVES & SURPLUS 20,057.02 20,102.23
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D. Borrowings (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total D(i) Long-term borrowings Secured loans* Term loans from bank (Refer note D(iii)) - 147.23 147.23 138.89 1 3 8 . 8 9 277.78 - 147.23 147.23 138.89 138.89 277.78
D(ii) Short-term borrowings Secured loans * Other loans from banks - 132.51 132.51 - 600.00 600.00 Unsecured loans Other loans from banks - 265.02 265.02 - 1,297.48 1,297.48 - 397.53 397.53 - 1,897.48 1,897.48 Total - 544.76 544.76 138.89 2,036.37 2,175.26
* The secured loans from banks are secured against hypothecation of the Company’s movable assets and accounts receivables.
D(iii) Details of term loans
Nature of term loan ` Million Rate of interest Terms of repayment of term loan External commercial borrowings (ECB) 147.23 USD LIBOR (3 months) + Repayable in equal half-yearly instalments 2.5% of USD 1.11 million each commencing from 19 October 2012 and ending on 14 October 2016. Previous year (277.78)
E. Liabilities (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total E(i) Trade payables Due to holding company - - - - 174.22 174.22 Due to others - 3,276.40 3,276.40 - 2,545.25 2,545.25 - 3,276.40 3,276.40 - 2,719.47 2,719.47
E(ii) Other payables Forward contract payable 1,148.52 1,574.11 2,722.63 447.46 89.22 536.68 Interest accrued but not due - 1.08 1.08 - 2.41 2.41 on borrowings Unclaimed dividend - 0.62 0.62 - - - Other payables 102.00 1,189.14 1,291.14 90.89 1,631.85 1,722.74 1,250.52 2,764.95 4,015.47 538.35 1,723.48 2,261.83 1,250.52 6,041.35 7,291.87 538.35 4,442.95 4,981.30
136 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
F. Provisions : F(i) – Provisions for employee benefits (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total F(i) Gratuity - 86.76 86.76 - 97.33 97.33 Compensated absences - 507.16 507.16 - 455.72 455.72 Post-retirement medical 124.29 0.24 124.53 103.71 0.24 103.95 benefits Others - 4,046.57 4,046.57 - 2,236.75 2,236.75 124.29 4,640.73 4,765.02 103.71 2,790.04 2,893.75 F(ii) Other provisions Proposed equity dividend - 441.52 441.52 - - - Additional tax on dividend - 58.02 58.02 - - - Income tax - 19.91 19.91 - 14.70 14.70 Others * - 10.70 10.70 - 10.70 10.70 - 530.15 530.15 - 25.40 25.40 Total 124.29 5,170.88 5,295.17 103.71 2,815.44 2,919.15
F (iii) * Disclosure pursuant to Accounting Standard (AS) 29 “Provisions, Contingent Liabilities and Contingent Assets” Movement in provisions: (` Million) Sr. Particulars Class of provisions No. Sales Tax Others Total 1 Balance as at 1-4-2015 4.00 6.70 10.70 2 Additional provision during the year - - - 3 Provision used during the year - - - 4 Provision reversed during the year - - - 5 Balance as at 31-03-2016 4.00 6.70 10.70
Nature of provisions: i) Provision for sales tax pertains to claim made by the authorities on certain transaction of capital nature for the year 2002-03. ii) Provision for others represents liabilities relating to matters in dispute.
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- - 9.64 As at 53.33 583.89 198.45 287.98 628.05 610.31 295.19 334.55 542.61 644.04 234.28 125.77 2,538.03 2,803.15 2,889.08 4,282.97 4,165.85 Net Block Net 31-Mar-15 ( ` Million)
- - 6.95 9.51 As at 503.96 188.41 285.45 628.05 573.59 300.88 349.54 698.67 552.20 254.22 117.37 2,101.68 2,798.84 2,803.15 3,771.64 4,282.97 Net Block Net 31-Mar-16
- - - - - 2.76 As at 98.05 94.34 90.01 557.01 182.63 603.68 587.81 302.91 3,321.90 1,993.66 3,857.80 3,656.17 2,888.70 3,976.96 31-Mar-16
------0.95 21.93 69.31 10.02 10.97 91.24 reserve reserve Foreign Foreign (20.71) currency currency (174.62) translation translation
------On 5.83 3.22 5.83 32.64 22.61 94.08 138.75 124.21 130.50 546.01 385.62 199.04 Deductions
------0.13 8.40 Depreciation/Amortisation ` 19.84 Mn and for the year ended March 31, 2016 is higher and year year 56.49 89.69 35.65 For the For 899.34 103.51 112.12 110.74 323.45 736.67 753.83 837.85 1,002.85
- - - - 2.63 As at 98.05 22.61 61.91 81.61 431.57 158.78 629.36 601.28 343.72 2,359.08 1,754.27 3,656.17 3,308.67 2,888.70 2,424.51 01-Apr-15
- - - As at 98.05 12.27 468.08 628.05 888.69 349.54 855.11 348.56 207.38 5,423.58 1,060.97 1,177.27 2,692.33 6,649.69 6,405.99 7,560.19 6,973.22 ` Nil) being borrowing cost capitalised in accordance with AccountingStandard (AS) 16 on 31-Mar-16 ` 0.73 Mn) representing thecarrying amount of assets withrevised useful life as nil, has been
------1.73 45.51 14.99 12.02 13.75 32.75 137.95 198.45 reserve Foreign Foreign currency currency (471.44) translation translation
------5.83 5.83 Nil (previous year year ` Nil (previous 70.76 22.61 95.18 15.95 127.00 162.11 229.06 722.67 416.85 200.12 Deductions Gross Block Gross
------92.08 97.98 96.41 68.32 394.35 119.22 478.61 394.35 952.62 722.29 1,521.23 Additions - As at 98.05 22.61 12.27 446.76 628.05 896.47 334.55 987.76 296.19 207.38 ` 12.27 Mn (additionaltax deferred charge of 1,015.46 4,897.11 1,239.67 2,296.88 6,973.22 6,405.99 6,133.30 6,123.56 01-Apr-15 charged to the opening reserves as on April 1, 2014 pursuant to the provisions of the Companies Act, 2013. the provisions to as on April 1, 2014 pursuant the opening reserves to charged change to Owing year. 1 to years 5 from system Pendo as named asset intangible an of life useful the changed company subsidiary a 2015, 31, March ended year previous the During in the useful life, the amortisation for the year ended March 31, 2015 is higher and taxprofitbefore lower is by by ` 10.70 Mn. is lower tax before profit Impairment upto 31-03-2016 - NIL. upto Impairment Additions during the year capital & work-in-progress include “Borrowing Costs” prescribed under section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014. read with rule 7 of the Companies (Accounts) under section 133 of the Companies Act, 2013, prescribed Costs” “Borrowing Consequent to the adoption of schedule IIto the Companies Act,` 2013,69.21 Mn. an theFurther, amount of depreciation for the year ended March 31, 2015 is higher and theprofit before tax lower is by b. Leased a. Owned Intangible assets under development assets Intangible Business Rights Total of intangible assets assets of intangible Total Capital Work in Progress Work Capital Customer contracts Customer Software Vehicles Furniture and fixtures Furniture Goodwill on consolidation Office Equipments Office Total Of tangible assets Of tangible Total Total of tangible assets (Previous year) year) (Previous assets of tangible Total Intangible Assets Intangible Goodwill on acqusition
Computers Plant and machinery Plant Leasehold Improvements Total of intangible assets (Previous year) year) (Previous assets of intangible Total Fixed and Intangible Assets and Intangible Fixed Assets Tangible Leasehold Land Buildings 4. 1. 2. 3. G. Fixed Assets G. Fixed
138 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
H. Investments (` Million) As at 31-03-2016 As at 31-03-2015 H(i) Non-current investments Trade investments (at cost) Long term investment 100,000 fully paid equity shares of USD 1 (` 53) each in Pan Health, U.S.A. - - Total non-current investments - -
H(ii) Current investments (` Million) Particulars/ Scheme name Face Value Units as at Amount as at Amount as at per unit 31-03-2016 31-03-2016 31-03-2015 Liquid investments - quoted Birla Sun Life Cash Plus – DDR 100 369,518.38 37.02 - Reliance Medium Term Fund – MDR 10 2,794,062.26 30.33 - L&T Liquid Super IP DDR 1000 - 202.13 Templeton India Ultra Short Bond Fund- Super IP-D 10 - 100.00 Templeton India TMA - Super IP- DDR 1000 - 100.14 Religare Invesco Liquid Fund - DDR 1000 - 100.04 IDFC Ultra Short Term Fund - Reg - DDR 10 - 100.00 L&T Ultra Short Term Fund - Daily Dividend 10.1660 - 60.26 Reinvestment Plan L&T Liquid Fund - Daily Dividend Reinvestment Plan 1,011.6349 - 10.08 Franklin India Savings Plus Fund 11.0640 0.01 - Franklin Templeton IUSFB-Super IP 61.28 57.61 L&T Liquid Fund- DDR 300.56 285.24 Total (A) 429.20 1,015.51 Fixed maturity plans - quoted UTI Fixed Term Income Fund Series XVIII - X (366 days)- 10 - 20.00 Growth Total (B) - 20.00 Total (A+B) 429.20 1,035.51 Less : Diminution in value of investments - - Grand total 429.20 1,035.51 Market value of investments 429.36 1,037.02
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I. Deferred tax liabilites/ assets I(i) Deferred tax liabilities (` Million) Particulars Deferred tax asset Current year (Charge) / credit to Deferred tax asset/ / (liability) as at (charge) / credit hedging reserve (liability) as at March 31, 2015 March 31, 2016 Deferred tax liabilities Depreciation / amortisation (411.15) 130.50 - (280.65) Gain on derivative transactions (304.09) - 121.16 (182.93) Branch profit tax (323.40) (103.53) - (426.93) Premia on derivative transaction - (570.42) - (570.42) Others - (1.41) - (1.41) Total (1,038.64) (544.86) 121.16 (1,462.34) Deferred tax assets Non capital losses and deferred expenses 234.65 (169.43) - 65.22 Provision for doubtful debts and advances 7.19 24.07 - 31.26 Provision for employee benefits 60.50 37.23 - 97.73 Loss on derivative transactions 498.30 - (487.70) 10.60 Realised gain on derivative transaction - 41.36 - 41.36 Others (0.03) 9.95 - 9.92 Total 800.61 (56.82) (487.70) 256.09 Net deferred tax assets/(liabilities)(A) (238.03) (601.68) (366.54) (1,206.25)
I(ii) Deferred tax assets (` Million) Particulars Deferred tax asset/ Current year (Charge) / credit to Deferred tax asset/ (liability) as at (charge) / credit hedging reserve (liability) as at March 31, 2015 March 31, 2016 Deferred tax liabilities Depreciation / amortisation 0.69 (0.69) - - Allowance on income received in advance (2.27) - - (2.27) Total (1.58) (0.69) - (2.27) Deferred tax assets Provision for employee benefits 3.53 (1.49) - 2.04 Income received in advance 2.34 - - 2.34 Depreciation / amortisation 5.72 (5.72) - - Others 0.28 (0.02) - 0.26 Total 11.87 (7.23) - 4.64 Net deferred tax assets/(liabilities)(B) 10.29 (7.92) - 2.37 Net deferred tax assets/(liabilities)(A+B) (227.74) (609.60) (366.54) (1,203.88) Exchange (gain)/loss on translation (9.16) Net deferred tax assets/(liabilities) as per (600.44) statement of profit and loss
140 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
J. Trade receivables and unbilled revenue (` Million) As at 31-03-2016 As at 31-03-2015 J(i) Trade receivables Unsecured Debts outstanding for a period exceeding six months Considered good 327.30 65.16 Considered doubtful 160.69 175.30 487.99 240.46 Other debts Considered good - Due from holding company 450.38 - - Due from fellow subsidiaries 53.40 87.91 - Others 10,828.79 10,748.08 11,332.57 10,836.00 Less : Provision for doubtful debts (160.69) (175.30) 11,659.87 10,901.16
J(ii) Unbilled revenue Unbilled revenues comprise revenue recognised in relation to services performed in accordance with contract terms but not billed.
K. Cash and bank (` Million) As at 31-03-2016 As at 31-03-2015 Cash and cash equivalent Cash on hand 0.62 0.67 Balances with bank - in current accounts Overseas 1,120.98 1,078.30 Domestic 223.49 235.72 Remittances in transit 94.82 221.58 Fixed deposits (maturity less than 3 months) 322.09 125.57 1,762.00 1,661.84 Other bank balance - in deposit accounts Fixed deposit with bank with more than 3 months but less than 12 months maturity 245.90 - - Earmarked balances with banks-unclaimed dividend 0.62 - *Cash and bank balance not available for immediate use 25.14 347.37 2,033.66 2,009.21
* Other bank balance not available for immediate use being in nature of security for guarantees issued by bank on behalf of the Company, collaterals etc.
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L. Loans and advances (` Million) As at 31-03-2016 As at 31-03-2015 Non-current Current Total Non-current Current Total Unsecured Considered good Loans against mortgage of house property - - - - 0.10 0.10 Premia on forward contracts 1,280.43 2,385.73 3,666.16 874.90 1,723.63 2,598.53 Interest receivable - 1.81 1.81 - 6.86 6.86 Deposits 393.14 155.20 548.34 372.39 126.43 498.82 Capital advances 1.25 - 1.25 6.64 - 6.64 Advance tax (net of provision) - 88.68 88.68 35.65 163.04 198.69 Advances recoverable in cash or 2,574.31 3,206.05 5,780.36 1,150.21 3,534.46 4,684.67 in kind - Considered doubtful - - - - 6.06 6.06 Less : Provision for bad & doubtful - - - - (6.06) (6.06) loans & advances 4,249.13 5,837.47 10,086.60 2,439.79 5,554.52 7,994.31
M. Revenue (` Million) 2015-16 2014-15 Overseas 55,070.41 47,704.46 Domestic 3,400.19 2,075.90 58,470.60 49,780.36
N. Other income (` Million) 2015-16 2014-15 Income from current investment in mutual funds 68.44 141.26 Interest received 25.06 22.81 Foreign exchange gain/(loss) 2,795.57 667.81 Provision no longer required for doubtful debts 1.08 - Miscellaneous income 69.46 83.12 2,959.61 915.00
O. Expenses (` Million) 2015-16 2014-15 O(i) Employee benefit expenses Salaries including overseas staff expenses 33,997.84 28,056.30 Staff welfare 865.95 799.93 Contribution to provident and other funds 344.99 249.93 Contribution to superannuation fund 52.05 44.71 Contribution to gratuity fund 85.75 91.86 35,346.58 29,242.73
142 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
(` Million) 2015-16 2014-15 O(ii) Operating expenses Communication expenses 191.68 168.11 Lease finance charges 53.97 112.16 Consultancy charges 4,032.97 3,458.95 Cost of software packages for own use 450.06 403.65 Cost of bought-out items for resale 1,982.12 742.76 6,710.80 4,885.63
(` Million) 2015-16 2014-15 O(iii) Sales, administration and other expenses Travelling and conveyance 1,409.02 1,202.05 Rent and establishment expenses 1,591.39 1,459.43 Telephone charges and postage 377.84 344.52 Legal and professional charges 585.27 562.58 Printing and stationery 25.88 29.21 Advertisement 115.49 92.69 Entertainment 72.37 57.29 Recruitment expenses 147.69 132.70 Repairs to building 199.36 135.43 Repairs to computers 65.97 93.16 General repairs and maintenance 320.36 253.51 Power and fuel 347.92 290.26 Equipment hire charges 12.90 10.19 Insurance charges 162.91 165.74 Rates and taxes 204.40 358.46 Allowance for doubtful debts and advances 30.29 190.47 Bad debts 51.93 39.13 Less : Provision written back (50.95) (39.13) Commission paid 6.99 0.62 Books, periodicals and subscriptions 19.79 29.09 Directors fees 1.43 0.93 Commission to directors 5.81 3.60 Loss on sale of fixed assets 27.28 7.18 Miscellaneous expenses 325.80 181.98 Amortisation of cost of long term projects* - 6.35 6,057.07 5,607.43
* Cost incurred for long term projects mainly comprise of legal and employee related costs to secure long term projects. These costs are amortised over a period of two years commencing from the date of securing the project.
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P. Finance cost (` Million) 2015-16 2014-15 P(i) Interest expenses 31.90 46.94 On others 25.99 9.29 57.89 56.23 P(ii) Exchange loss on borrowings (net) 45.68 47.96 103.57 104.19
Q. Provision for taxation (` Million) 2015-16 2014-15 Current tax 2,697.81 2,141.09 MAT credit entitlement for current year (1,086.70) (505.04) Capital gains tax on sale of PES Business Unit - 14.87 Provision for earlier years 38.06 (5.60) Total current taxes 1,649.17 1,645.32
The Central Board of Direct Taxes (CBDT) has notified the Income Computation and Disclosure Standards (ICDS) with effect from April 1, 2015 for companies resident in India and shall accordingly apply for assessment year 2016-17 onwards. Accordingly, the Company has accounted for the impact of ICDS in its tax computation.
R. Contingent liabilities (` Million) 2015-16 2014-15 1. Income tax liability that may arise in respect of which the Company is in appeal * 1,343.99 1,167.47 2. Corporate guarantee given on behalf of subsidiary ** 5,998.76 5,395.70 3. Service tax refund disallowed, in respect of which the Company is in appeal # 1 2 . 4 8 4.52 4. Sales tax liability, in respect of which the Company is in appeal 1.28 1.28 5. Legal notice served by a vendor for unpaid dues, disputed by the Company 0.02 0.02 7,356.53 6,568.99
* Out of contingent tax liability disclosed above, ` 1,280.69 Mn (including interest of ` 202.48 Mn), pertains to the tax demand arising on account of disallowance of exemption under section 10A on profits earned by STPI Units on onsite export revenue. Company is pursuing appeal against these demands before the relevant Appellate Authorities. The Company believes that its position is likely to be upheld by appellate authorities and considering the facts, the ultimate outcome of these proceedings is not likely to have material adverse effect on the results of operations or the financial position of the Company.
Out of the total income tax liability, ` 5.19 Mn (including interest of ` 0.65 Mn) pertains to a wholly owned subsidiary incorporated in Canada. The Canada Revenue Agency (“CRA”) had conducted a tax audit for the three years ending March 31, 2013 and has disallowed/reallocated certain expenses due to which carry forward non-capital losses have been reduced. Since the company has carry forward losses, the taxable income should have been offset against the carry forward losses resulting in nil taxable income and no interest payable. A notice of objection (“NOO”) has been filed with Chief of Appeals, Canada Revenue Agency and the company is confident that the disallowed expenses will be allowed as a deductible expense. Consequently income tax may not be payable for the three years ending March 31, 2013.
** The Company has given a corporate guarantee on behalf of its wholly owned subsidiary L&T Infotech Financial Services Technologies Inc. The guarantee is for performance of all obligations by L&T Infotech Financial Services Technologies Inc. Canada in connection with the long term annuity services contracts obtained by them. The obligation under this guarantee is limited in aggregate to the amount of CAD 70,000,000.
144 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
The Company has given a corporate guarantee on behalf of its subsidiary Larsen And Toubro Infotech South Africa (Proprietary) Limited. The guarantee is for performance of all obligations by Larsen And Toubro Infotech South Africa (Proprietary) Limited in connection with the Application Testing Service contract. The obligation under this guarantee is limited in aggregate to the amount of USD 31,414,785.
The Company has given a corporate guarantee on behalf of its subsidiary, Larsen And Toubro Infotech South Africa (Proprietary) Limited. The guarantee is for performance of all obligations by Larsen And Toubro Infotech South Africa (Proprietary) Limited in connection with software development services & related services. The obligation under this guarantee is limited in aggregate to USD 5,000,000.
# The Company had filed refund of accumulated service tax credit in accordance with relevant CENVAT Credit Rules. However, the department has disallowed certain portion of such refunds considering the same as ineligible as not related with export and output services. The Company is in appeal against these disallowances before the relevant Authorities and is hopeful of getting a favourable order.
S. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for: ` 131.87 Mn (previous year: ` 310.76 Mn)
T(1) Employee benefits a) The amounts recognised in balance sheet are as follows (` Million) As at March 31, 2016 (March 31,2015) Gratuity plan Post-retirement Self-managed medical benefit provident fund plan plan A. a) Present value of defined benefit obligation as on March 31, 2016 - Wholly funded 589.94 - 4,253.92 (507.19) (-) (3,776.10) - Wholly unfunded - 124.53 - (-) (103.95) (-) 589.94 124.53 4,253.92 (507.19) (103.95) (3,776.10) b) Fair value of plan assets as on March 31, 2016 498.26* - 4,264.26 * (409.85) (-) (3,778.70) Amount to be recognised as liability or (asset) (a-b) 91.68 124.53 (10.34) (97.34) (103.95) (2.60) B. Amounts reflected in the balance sheet Liability 91.68 124.53 55.66 (97.34) (103.95) (46.59) Assets - - - (-) (-) (-) Net liability/(asset) 91.68 124.53 55.66 # (97.34) (103.95) (46.59) Net liability/(asset)-current 91.68 0.24 55.66 (97.34) (0.24) (46.59) Net liability/(asset)- non current - 124.29 - (-) (103.71) (-)
* Asset is not recognised in the balance sheet. # Employer’s and employee’s contribution for March 2016 paid in April 2016.
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b) The amounts recognised in statement of profit and loss are as follows: (` Million) Gratuity plan Post-retirement Self-managed medical benefit provident fund plan plan 1. Current service cost 91.34 21.99 257.11 (79.09) (18.66) (232.40) 2. Interest cost 43.07 9.94 315.53 (41.55) (9.66) (252.26) 3. Expected return on plan assets -27.86 - -315.53 (-27.20) (-) (-252.26) 4. Actuarial losses / (gains) -15.48 -11.13 - (11.11) (-12.94) (-42.43) 5. Total expense for the year included in staff cost 91.07 20.80 257.11 (104.55) (15.38) (189.97)
c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: (` Million) Gratuity plan Post-retirement Self-managed medical benefit provident fund plan plan Opening balance of the present value of defined benefit obligation 507.19 103.95 3,776.10 (408.57) (88.79) (3,412.68) Add : current service cost 91.34 21.99 257.11 (77.00) (18.66) (232.40) Add : interest cost 43.07 9.94 315.53 (40.67) (9.66) (252.26) Add : contribution by plan participants - - 580.57 (-) (-) (456.33) Add/(Less) : actuarial (gains)/losses -2.39 -11.13 - (16.09) (-12.94) (-42.43) Add : business combination/acquistion - - - (10.20) (-) (-) Less: other adjustments (refer note below (d)) - - 181.75 (-) (-) (-) Add : liabilities assumed on acquisition/(settled on divestiture) 5.12 - - (-) (-) (-221.93) Less : benefits paid 54.39 0.22 493.64 (45.34) (0.22) (313.21) Closing balance of the present value of defined benefit obligation 589.94 124.53 4,253.92 (507.19) (103.95) (3,776.10)
146 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: (` Million) 2015-16 (2014-15) Gratuity plan Self-managed provident fund plan Opening balance of the fair value of the plan assets 409.85 3,778.70 (379.19) (3,352.80) Add : expected return on plan assets 27.86 315.53 (26.67) (252.26) Add/(Less) : actuarial gains/(losses) 13.09 26.56 (5.47) (19.23) Add : contribution by the employer 96.73 244.32 (38.60) (228.83) Add : business combination/acquistion - - (5.26) (-) Less: other adjustments (refer note below (d)) - 181.75 (-) (-) Add : assets acquired on acquisition/(distributed on divestiture) 5.12 - (-) (215.38) Add : contribution by plan participants - 574.54 (-) (454.17) Less : benefits paid 54.39 493.64 (45.34) (313.21) Closing balance of the plan assets 498.26 4,264.26 (409.85) (3,778.70)
The Company expects to contribute ` 86.76 Mn (previous year: ` 97.33 Mn) towards its gratuity. The Company’s share of defined benefit obligation/fair value of plan assets adjusted by the Trust of the holding company. e) The major categories of plan assets as a percentage of total plan assets are as follows:
2015-16 (2014-15) Gratuity plan Self-managed provident fund plan Government of India securities 25.3% (24.7%) State government securities 15.8% Scheme (15.1%) Corporate bonds with 10.3% LIC (7.6%) Fixed deposits under Special Deposit Scheme framed by Central Government for provident funds 9.3% (10.3%) Public sector bonds 39.3% (42.3%)
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Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):
2015-16 2014-15 1 Discount rate as at March 31 For gratuity 7.75% 7.90% For post -retirement medical benefits 7.75% 7.90% 2 Annual increase in healthcare costs (see note below) 5.0% 5.0% 3 Attrition rate : Varies between 2% Varies between 2% to 18% for various to 18% for various age groups age groups 4 Salary growth rate 5.0% 5.0%
The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Although the obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits, assumed healthcare cost trend rates may affect the amounts recognised in the statement of profit and loss. At present, healthcare costs, as indicated in the principal actuarial assumption given above, are expected to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation: (` Million) Effect of 1% increase 1% decrease Effect on the aggregate of the service cost and interest cost 7.93 -6.06 (6.85) (-5.24) Effect on defined benefit obligation 22.86 -17.85 (19.22) (-15.01)
a) The amounts pertaining to defined benefit plans for the current year are as follows: Post-retirement medical benefit plan (non-funded)
(` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 Defined benefit obligation 124.53 103.95 88.79 90.81 42.19
Gratuity plan (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 1 Defined benefit 589.94 507.19 408.57 384.12 297.59 obligation 2 Plan assets 498.26 409.85 379.19 296.11 156.90 3 (Surplus)/deficit 91.68 97.34 29.38 88.01 140.69
148 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
Self-managed provident fund plan (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 1 Defined benefit 4,253.92 3,776.10 3,412.68 2,710.62 2,178.30 obligation 2 Plan assets 4,264.26 3,778.70 3,352.80 2,685.76 2,142.59 3 (Surplus)/deficit (10.34) (2.60) 59.88 24.86 35.71
Experience adjustments Gratuity (` Million) 2015-16 2014-15 2013-14 2012-13 2011-12 Defined benefit obligation 589.94 507.19 408.57 384.12 297.59 Plan assets 498.26 409.85 379.19 296.11 156.90 (Surplus) / deficit 91.68 97.34 29.38 88.01 140.69 Experience adjustments on plan liabilities (7.53) (13.91) (6.21) 5.05 95.81 Experience adjustments on plan assets 13.09 6.04 8.19 8.56 2.34
General descriptions of defined benefit plans: a) Gratuity plan The Company makes contributions to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to employees at retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed five years in service.
b) Post-retirement medical benefit plan The post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling limit sanctioned at the time of retirement. The ceiling limits are based on cadre of the employee at the time of retirement.
c) Self-managed provident fund plan The Company’s provident fund plan is managed by its holding company through a Trust permitted under the Provident Fund Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.
The interest payment obligation of trust managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial loss. Any loss arising out of the investment risk and actuarial risk associated with the plan is also recognised as expense in the period in which such loss occurs. Further, on amount of ` Nil has been provided based on actuarial valuation towards the future obligation arising out of interest rate guarantee associated with the plan.
T(2)(i) In line with the Company’s Financial Risk Management Policy, financial risks relating to changes in the exchange rates are hedged by forward contracts, besides the natural hedges. The loss on fair valuation of the derivative contracts which are designated and are effective as hedges, amounting to ` 2,695.02 Mn (net of deferred tax) (Previous year ` 366.96 Mn (net of deferred tax)) has been accounted in retained earnings in balance sheet. The loss/(gain) of ` (1,297.52) Mn (Previous year gain of ` 243.04 Mn) on settlement of the forwards is recognised in statement of profit and loss.
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The particulars of derivative contracts entered into for hedging foreign currency risks outstanding as at March 31, 2016 are as under:
(` Million) Sr. Category of derivative instruments Notional amount Notional amount March 31, 2016 March 31, 2015 a) Forward contracts for receivables 43,470.51 58,583.85
Un-hedged foreign currency exposures as at March 31, 2016 are as under: (` Million) Sr. Un-hedged foreign currency exposures March 31, 2016 March 31, 2015 1 Receivables including firm commitments and highly probable forecast transactions 41,271.25 30,013.24 2 Payables including firm commitments and highly probable forecast transactions 28,796.36 24,474.93
T(2) (ii) The Company has made provision, as required under the applicable law or accounting standard for material foreseeable losses on long term derivative contracts
T(3) Leases Finance leases In accordance with Accounting Standard 19 “Leases” issued by the Institute of Chartered Accountants of India, the assets acquired under finance leases on or after April 1, 2001 are capitalised and a loan liability is recognised for an equivalent amount. Consequently depreciation is provided on such assets. Lease rentals paid are allocated to the liability and the interest is charged to statement of profit and loss.
Operating leases The Company has taken certain premises, office equipments and employee cars under non-cancellable operating leases. The rental expense in respect of operating leases was` 54.02 Mn (previous year ` 134.79 Mn) and the future rentals payable are as follows:
(` Million) 2015-16 2014-15 Minimum lease payments - Payable not later than 1 year 62.12 73.43 - Payable after 1 year but not later than 5 years 389.52 474.16 Total 451.64 547.59
T(4) Basic and diluted earnings per share (EPS) at face value of ` 1 Before extraordinary items 2015-16 2014-15 Profit after tax` ( Million) 9,221.77 7,606.18 Weighted average number of shares outstanding 163,914,663 161,250,000 Basic EPS (`) 56.26 47.17
2015-16 2014-15 Weighted average number of shares outstanding 163,914,663 161,250,000 Add : weighted average number of potential equity shares on account of employee options 392,052 7,270,100 Weighted average number of shares outstanding 164,306,715 168,520,100 Diluted EPS (`) 56.13 45.14
150 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
After extraordinary items 2015-16 2014-15 Profit after tax` ( Million) 9,221.77 7,685.26 Weighted average number of shares outstanding 163,914,663 161,250,000 Basic EPS (`) 56.26 47.66
2015-16 2014-15 Weighted average number of shares outstanding 163,914,663 161,250,000 Add : weighted average number of potential equity shares on account of employee options 392,052 7,270,100 Weighted average number of shares outstanding 164,306,715 168,520,100 Diluted EPS (`) 56.13 45.60
Earnings per share for the year 2014-15 include results of discontinued operations up to date of its transfer. EPS for the previous year is after considering sub-division of equity shares from face value of` 5 each to face value of ` 1 each per equity share (refer note B(1)).
T(5) Related party disclosure: (i) Key Management Personnel: Name Status Mr. V. K. Magapu Managing Director* Mr. Sanjay Jalona Chief Executive Officer & Managing Director** Mr. Chandrashekara Kakal Chief Operating Officer & Executive Director*** Mr. K. R. L. Narasimham Executive Director# Mr. Vivek Chopra Chief Executive (Industrials Cluster) & Executive Director$ Dr. Mukesh Aghi Chief Executive (Services Cluster) & Executive Director^ Mr. Sunil Pande Executive Director^^
* Ceased to be Director w.e.f. the close of working hours of September 25, 2015 ** Appointed as Chief Executive Officer & Managing Director w.e.f. August 10, 2015 *** Ceased to be Director w.e.f. the close of working hours of August 26, 2015 # Ceased to be Director w.e.f. the close of working hours of April 7, 2015 $ Ceased to be Director w.e.f. the close of working hours of December 31, 2014 ^ Ceased to be Director w.e.f. the close of working hours of February 28, 2015 ^^ Ceased to be Director w.e.f. the close of working hours of August 25, 2015
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(ii) List of related parties with whom there were transactions during the year: Name Relationship Larsen & Toubro Limited Holding Company L&T Hydrocarbon Engineering Limited Fellow Subsidiary Larsen & Toubro (East Asia) SDN.BHD Fellow Subsidiary L&T Electricals and Automation Saudi Arabia Company LLC Fellow Subsidiary L&T Finance Limited Fellow Subsidiary L&T General Insurance Company Limited Fellow Subsidiary L&T Infrastructure Development Projects Limited Fellow Subsidiary L&T Power Development Limited Fellow Subsidiary Larsen & Toubro Kuwait Construction General Contracting Company, With Limited Liability Fellow Subsidiary L&T Infrastructure Finance Company Limited Fellow Subsidiary L&T Metro Rail (Hyderabad) Limited Fellow Subsidiary L&T Technology Services Limited Fellow Subsidiary L&T Valves Limited Fellow Subsidiary L&T Investment Management Limited Fellow Subsidiary L&T Construction Equipment Limited Fellow Subsidiary Larsen & Toubro LLC Fellow Subsidiary Nabha Power Limited Fellow Subsidiary L&T Electrical & Automation FZE Fellow Subsidiary Spectrum Infotech Private Limited Fellow Subsidiary Family Credit Limited Fellow Subsidiary PT. Tamco Indonesia Fellow Subsidiary L&T Special Steels and Heavy Forgings Private Limited Fellow Subsidiary Larsen & Toubro ATCO Saudi LLC Fellow Subsidiary L&T Thales Technology Services Private Limited Fellow Subsidiary L&T Capital Markets Limited Fellow Subsidiary L&T Housing Finance Limited Fellow Subsidiary Larsen & Toubro Electromech LLC Fellow Subsidiary Tamco Electrical Industries Australia PTY Limited Fellow Subsidiary L&T Technology Services LLC Fellow Subsidiary
152 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
A summary of transactions with related parties is given below: Transaction Holding Company Fellow Subsidiaries Sale of services / products 1,101.01 423.59 (352.00) (324.91) - L&T Metro Rail (Hyderabad) Limited - 63.60 - L&T Technology Services Limited - 50.50 - L&T Hydrocarbon Engineering Limited - 78.80 - L&T Thales Technology Services Private Limited - 95.70 Sale of assets 108.62 7.70 (-) (-) -L&T Technology Services Limited - 7.70 Purchase of services 275.43 694.17 (1,034.96) (788.45) - L&T Technology Services Limited - 694.17 Overheads charged by 635.01 38.36 (125.82) (44.84) - Larsen & Toubro (East Asia) SDN.BHD - 24.03 - L & T Electrical & Automation FZE - 7.19 - Larsen & Toubro Kuwait Construction General Contracting Company, With Limited - 6.23 Liability Overheads charged to 82.49 441.42 (65.57) (715.18) - L&T Technology Services Limited 440.12 Commission charged - 5.26 (-) (18.40) Lease rent - 0.07 (-) (0.52) Commission - - (-) (0.62) Trademark fees 104.89 - (-) (-) Trade receivable 450.38 53.40 (0.01) (88.80) Trade payable - - (174.23) (0.89) Interim dividend 5,264.81 - (4,805.25) (-)
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T(6) Segmental reporting The Group has 2 business segments. Services Cluster includes Banking, Financial services, Insurance, Media & Entertainment, Travel & Logistics and Healthcare. Industrials Cluster includes Hi Tech and Consumer Electronics, Consumer, Retail & Pharma, Energy & Process, Automobile & Aerospace, Plant Equipment & Industrial Machinery, Utilities and E&C.
T(6) (i) Revenues represented along industry classes comprise the primary basis of segmental information set out in these financial statements. The revenue and operating profit by segment is as under:
(` Million) Services Cluster Industrial Cluster Telecom (PES Total Discontinued Business) Revenue 31,533.04 26,937.56 - 58,470.60 (26,289.89) (23,391.05) (99.42) (49,780.36) Segmental operating profit 7,439.75 6,896.37 - 14,336.12 (5,456.21) (6,123.58) (9.72) (11,589.51) Unallocable expenses (net) 3,979.97 (1,544.93) Other income 2,959.61 (915.00) Operating profit 13,315.76 (10,959.58) Finance cost 103.57 (104.19) Depreciation 736.67 (741.55) Amortization of intangible assets 1,002.85 (837.85) Profit before tax 11,472.67 (9,275.98)
T(6) (ii) Segmental reporting of revenues on the basis of the geographical location of the customers is as under:
(` Million) Geography Revenue from Continuing Business Revenue from Discontinued Total Revenue Business 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 North America 40,370.47 34,097.77 - - 40,370.47 34,097.77 Europe 10,124.59 8,862.74 - 99.42 10,124.59 8,962.16 India 3,400.19 2,075.90 - - 3,400.19 2,075.90 APAC 1,190.47 1,199.12 - - 1,190.47 1,199.12 ROW 3,384.88 3,445.41 - - 3,384.88 3,445.41 Total 58,470.60 49,680.94 - 99.42 58,470.60 49,780.36
154 Corporate Overview Our DNA - Performance Highlights Statutory Reports - Director’s Report Financial Statements - Notes Forming Part of Consolidated Accounts Notes forming part of consolidated accounts
Fixed assets used and liabilities contracted for performing the Company’s business have not been identified to any of the above reported segments as the fixed assets and services are used interchangeably among segments.
T(7) On October 16, 2014, the Company acquired entire share capital of Information Systems Resource Centre Private Limited (‘ISRC’), thereby making it a wholly owned subsidiary. ISRC is engaged in software services with respect to application development, information technology support and maintenance services to OTIS Elevator Company Inc. (OTIS) and certain other group companies of OTIS, which are part of United Technologies Corporation (UTC) group. The Company believes that acquisition will strengthen its relationship with UTC group. The acquisition was executed through a share purchase agreement for a consideration of ` 806.96 Mn.
The Board of Directors of the Company and ISRC have approved the scheme of amalgamation of ISRC with the Company on October 17, 2014 and December 4, 2014, respectively, with October 17, 2014 as the appointed date. Accordingly, a petition for sanctioning the scheme of amalgamation has been filed with the Hon’ble High Court of Judicature at Bombay.
The Scheme has been sanctioned by the Hon’ble High Court of Judicature at Bombay vide its order dated September 4, 2015. The Scheme was filed with the Registrar of the Companies on September 21, 2015 and came into effect on that day with appointed date being October 17, 2014. Pursuant thereto, the entire business and all the assets and liabilities, duties and obligations of ISRC have been transferred to and vested in the Company with effect from October 17, 2014. In accordance with the Scheme, the investment held in the subsidiary has been cancelled and ISRC being a wholly owned subsidiary of the Company, no equity shares were exchanged to effect the amalgamation in respect thereof.
The excess of purchase consideration paid over the net assets acquired is accounted as goodwill amounting to` 614.56 Mn. (Also refer note A (3) (c)).
T(8) (i) As part of business restructuring undertaken within Larsen & Toubro Group in 2013-14, Product Engineering Services (PES) Business Unit was transferred to L&T Technology Services Limited (LTTS) effective January 1, 2014 by way of slump sale for total purchase consideration of ` 4,895.27 Mn based on fair valuation. GDA Technologies Inc., USA (GDA Inc.), a wholly owned subsidiary of the Company was a part of PES business. The performance of GDA Inc. was affected due to the recession and subsequent to the transfer of PES business, it was therefore decided to wind up this subsidiary. The Indian subsidiary of GDA Inc. called GDA Technologies Ltd., India was taken over by the Company in 2013-14 based on fair valuation carried out by external chartered accountants. Consequently GDA Inc. was wound up in USA with effect from March 28, 2014. The Company’s subsidiary, Larsen & Toubro Infotech GmbH, also had PES business. PES business transfer in Germany was dependent upon LTTS registering its branch in Germany. The German branch of LTTS became operational in the month of May 2014. Since valuation of PES business in Germany is required to be carried out as per German laws, Business Transfer Agreement was signed between Larsen & Toubro Infotech GmbH and LTTS, for transfer of PES business in Germany effective September 1, 2014.
The PES business was transferred by way of slump sale for total purchase consideration of ` 129.20 Mn based on fair valuation carried out by external valuer based in Germany. The purchase consideration was determined based on the Discounted Cash Flow (DCF) method of valuation of business.
Larsen & Toubro Infotech GmbH has transferred the following assets and liabilities to L&T Technology Services Limited: (` Million) Current assets Trade receivables 45.79 Short term loans and advances 0.17 45.96 Current liabilities and provisions Other current liabilities 10.71 Net current assets 35.25 Net Assets transferred 35.25
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The results of discontinued business are as under: (` Million) For the period April 2014-August 2014 Total revenues 99.42 Total expenses (89.70) Profit before taxes 9.72 Income taxes (1.69) Profit after tax 8.03
T(8) (ii) Extra -ordinary item The above has given rise to extraordinary gain of ` 93.95 Mn being recognised in the financial statements.
T(9) The Board of Directors of the Company and GDA Technologies Limited have approved the scheme of amalgamation of GDA Technologies Limited with the Company on October 17, 2014, with April 1, 2016 as the appointed date. Accordingly, a petition for sanctioning the scheme of amalgamation has been filed with the Hon’ble High Court of Judicature at Bombay and the Hon’ble High Court of Judicature at Madras.
The Scheme has been sanctioned by the Hon’ble High Court of Judicature at Bombay vide its order dated April 01, 2016. The approval of the Scheme by the Hon’ble High Court of Judicature at Madras is awaited.
T(10) The Company is not required to transfer any amount to Investor Education and Protection Fund.
T(11) The Company in its board meeting held on June 16, 2015 has taken approval for the Offer for Sale (‘the Offer’) by Larsen & Toubro Limited in the Initial Public Offering of the Company. Pursuant to the same, the Company had filed its Draft Red Herring Prospectus (‘DRHP’) on September 28, 2015. Owing to change in the Offer structure and other considerations, the said DRHP was withdrawn on April 11, 2016 and pursuant to the approval of the IPO Committee, the Company filed a revised DRHP on April 12, 2016.
T(12) Previous year’s figures have been regrouped / reclassified wherever necessary.
As per our report attached SHARP & TANNAN Chartered Accountants Firm’s Registration No. 109982W by the hand of
FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya Bhatt Partner Chief Executive Officer Director Chief Financial Officer Company Secretary Membership No: 38332 & Managing Director
Mumbai Mumbai April 26, 2016 April 26, 2016
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Let’s S lve ANNUAL REPORT 2015-16
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