L&T SHIPBUILDING LIMITED

DIRECTORS REPORT
Your Directors have pleasure in presenting the Third Annual Report and Accounts for the year ended March 31, 2010. FINANCIAL RESULTS The Company is in the project implementation phase. The Profit and Loss Account has been drawn to comply with the provisions of the Companies Act, 1956. However, the Company has not commenced commercial operation. The key financial parameters for the period ended March 31, 2010 are: Description For the year ended 31.03.2010 (Rs. Lakhs) (5.12) 0.48 (5.60) (223.92) 30,747.19 390.07 3,933.95 49,846.52 For the year ended 31.03.2009 (Rs. Lakhs) (11.30) 6.96 (18.26) (218.32) 24,787.55 54.90 1,110.99 521.02

Profit / (Loss) before Tax Provision for Tax Profit / (Loss) after Tax Balance carried to Balance Sheet Gross Fixed Assets Depreciation / Amortisation Pre-operative Expenses Capital Work-in-Progress

PERFORMANCE OF THE COMPANY During the year under review, the Company has further acquired 19.58 acres of land on 98.15 years lease basis from Tamilnadu Industrial Development Corporation Limited (TIDCO). With this, the total leasehold land acquired from TIDCO as at the Balance Sheet date is 1142.74 acres which will be used for setting up an integrated state-of-the-art Shipyard Cum Minor Port complex at Kattupalli Village, near Chennai, Tamilnadu. The Company has been granted SEZ status for 317.715 hectares (784.76 acres) of leasehold land vide gazette notification no. S.O.3118(E) F.1/113/ 2008-SEZ dated December 4, 2009 by the Ministry of Commerce & Industry, Govt. of India, New Delhi for setting up sector specific Special Economic Zone for Heavy Engineering at Kattupalli Village, near Chennai, Tamilnadu . The SEZ area will be used for Shipyard operations and its related facilities. During the year under review, the Company has obtained Coastal Regulatory Zone (CRZ) and Environmental Clearance from Ministry of Environment & Forests, Govt. of India, New Delhi in July 2009 and also Consent to Establish from Tamilnadu Pollution Control Board in August 2009, for setting up an integrated state-of-the-art Shipyard Cum Minor Port complex at Kattupalli Village, near Chennai, Tamilnadu. The Company has completed the Re-settlement and Rehabilitation of Katupallikuppam by constructing 110 dwelling units and other related facilities to the satisfaction of villagers in accordance with the condition stipulated in the Government order. The construction activity at project site has commenced in October 2009, capital orders were being placed for various equipments and civil works on vendors, capital dredging along the harbour basin has commenced in January 2010 and the project is progressing as per schedule. The Company has tied up entire equity and debt funds for the project and achieved financial closure in April 2010. DIVIDEND The Company has not commenced commercial operations and is in the process of implementing the project. Hence the Directors do not recommend any dividend for the current period. DEPOSITS The Company has not accepted any deposits from the public. AUDITORS REPORT The Auditors Report to the Shareholders does not contain any qualifications. DISCLOSURE OF PARTICULARS There are no particulars to be disclosed as per the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. PARTICULARS OF EMPLOYEES There are no employees covered by the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors of the Company confirms: i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure;

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ii.. iii. iv. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010; that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and that the annual accounts have been prepared on a going concern basis.

DIRECTORS Pursuant to provisions of the Companies Act, 1956, Mr. V. C. Bedi, Director, retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for reappointment. AUDITORS The Auditors, M/s Sharp & Tannan, Chartered Accountants, being statutory auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are recommended for reappointment. Certificate from Auditors has been received to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. ACKNOWLEDGEMENTS The Directors acknowledge the invaluable support extended to the Company by the financial institutions, bankers, employees of the Company and staff & management of the parent Company. For and on behalf of the Board

K. VENKATESH Director Place : Chennai Date : April 26, 2010

N. S. SIVARAMAN Director

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AUDITORS REPORT
TO THE MEMBERS OF L&T SHIPBUILDING LIMITED We have audited the attached Balance Sheet of L&T SHIPBUILDING LIMITED, as at March 31, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order. Further to our comments in the Annexure referred to above, we report that: a) b) c) d) e) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; in our opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of those books; the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; on the basis of written representation received from the Directors of the Company as at March 31, 2010 and taken on record by the Board of Directors, we report that none of the Director is disqualified as on March 31. 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies in Schedule H and Notes on Accounts in Schedule I give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) ii) iii) in case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010 in the case of profit and loss account, of the loss for the year ended March 31, 2010; and in case of the Cash Flow Statement, of the cash flows for the year ended on that date. SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S)

f)

Place : Chennai Date : April 26, 2010

L. VAIDYANATHAN Partner Membership No. 16368

ANNEXURE TO THE AUDITORS REPORT

With reference to the Annexure referred to in paragraph 1 of the report to the Members of L&T SHIPBUILDING LIMITEd on the accounts for the period ended March 31, 2010 we report that: (i) (a) The Company is maintaining proper records to show full particulars including quantitative details and situations of fixed assets.

(b) The management has physically verified its fixed assets during the year. No material discrepancies were noticed on such verification. (c) (ii) The Company has not disposed off any of its fixed assets during the year and hence commenting on clause 4(i)(c) does not arise.

The Company has not commenced commercial operations. Hence reporting on clause 4(ii)(a), (b) and (c) of the Companies (Auditors Report) Order, 2003, regarding inventory does not arise. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to or from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iii) (a)

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(b) Since the Company has not taken / granted loans reporting on clause 4(iii)(b) to (g) of the Companies (Auditors Report) Order, 2003 does not arise. (iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business for purchase of fixed assets. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system. (v) (a) In our opinion and according to the information and explanations given to us there are no transactions that need to be entered into a register in pursuance of Section 301 of Companies Act, 1956.

(b) Since there are no transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 reporting on transactions with related parties under clause 4(v)(b) of the Companies (Auditors Report) Order, 2003 does not arise. (vi) The Company has not accepted any deposit from the public and hence reporting compliance under the provisions of Section 58A, Section 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under and the directives of Reserves Bank of India does not arise. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.. (viii) The Company has not commenced commercial operations and hence, reporting under Clause 4(viii) of the Companies (Auditors Report) Order, 2003 on maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 does not arise. (ix) a) b) (x) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has no undisputed statutory dues outstanding as at March 31,2010 for a period of more than six months from the date they became payable. According to the information and explanations given to us and the records of the Company examined by us, there are no statutory dues that has not been deposited on account of a dispute.

The Company is registered for a period less than five years and hence reporting on the accumulated loss and cash loss incurred for the financial year does not arise.

(xi) The Company did not have any outstanding debentures or any outstanding loans from any financial institution or bank during the year. (xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society and hence reporting on Clause 4(xiii) of the Companies (Auditors Report) Order, 2003 does not arise. (xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 does not arise. (xv) The Company has not given any guarantee for loans taken by others from banks and financial institution. (xvi) The Company has not availed any loans and hence commenting on the purpose for which loan was raised does not arise. (xvii) According to the information and explanations given to us, the Company has not raised any funds on short-term basis and hence reporting under Clause 4(xvii) of the Companies (Auditors Report) Order, 2003 does not arise. (xviii) The Company has not made any preferential allotment of shares during the year under audit and hence reporting under clause 4(xviii) of the Companies (Auditors Report) Order, 2003 does not arise. (xix) The Company has not issued any debentures during the period. Hence, reporting on creation of securities does not arise. (xx) The Company has not raised any money by public issues during the year. (xxi) During the course of our audit of the books and records of the Company carried out in accordance with Generally Accepted Auditing Practices followed in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed by us or reported during the year, nor have we been informed of such cases by the management. SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S)

Place : Chennai Date : April 26, 2010

L. VAIDYANATHAN Partner Membership No. 16368

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BALANCE SHEET AS AT MARCH 31, 2010

As at 31.03.2010 Schedule SOURCES OF FUNDS Shareholders Funds Share capital Advance against Share Capital TOTAL APPLICATION OF FUNDS Fixed Assets Tangible assets Gross Block Less: Depreciation Net Block Capital Work-in-progress Intangible assets Gross Block Less: Amortisation Net Block Capital work-in-progress Pre-operative Expenses Current Assets, Loans & Advances Current Assets Cash and Bank Balances Loans and Advances Less: Current Liabilities & Provisions Liabilities Provisions Net Current Assets Profit and Loss Account TOTAL SIGNIFICANT ACCOUNTING POLICIES NOTES FORMING PART OF ACCOUNTS H I C B (ii) 3,066,353,446 38,274,619 3,028,078,827 3,028,078,827 393,395,478 2,476,698,144 5,277,591 2,471,420,553 2,110,017 2,473,530,570 111,098,901 A 500,000 6,230,800,000 6,231,300,000 500,000 2,485,000,000 2,485,500,000 Rupees Rupees As at 31.03.2009 Rupees Rupees

B (i) 8,366,147 732,415 7,633,732 4,984,651,842 4,992,285,574 2,057,222 212,376 1,844,846 49,991,988 51,836,834

D E F

51,641,265 4,309,879 55,951,144 2,260,754,949 48,140 2,260,803,089 (2,204,851,945) 22,392,066 6,231,300,000

3,819,475 16,811,466 20,630,941 192,733,404 695,638 193,429,042 (172,798,101) 21,831,796 2,485,500,000

The Schedules referred to above and the notes attached form an integral part of the Balance Sheet. As per our report attached SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S) For and on behalf of the Board

L. VAIDYANATHAN Partner Membership No. 16368 Place : Chennai Mumbai Date : April 26, 2010

K. VENKATESH Director Place : Chennai Date : April 26, 2010

N. S. SIVARAMAN Director

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
2009-2010 Schedule INCOME Interest Income (Tax deducted at source - Rs. 5,903 ; (Previous Year Rs. 9,066)) EXPENDITURE Administration and other expenses Profit / (Loss) before Tax Provision for Current tax Fringe Benefit Tax 48,140 48,140 Profit / (Loss) after Tax before prior period items Prior period items - Preliminary expenses Profit / (Loss) after tax and prior period items Add: Balance brought forward from previous year Balance carried to Balance Sheet Earnings per share (Basic / Diluted) Face Value per share SIGNIFICANT ACCOUNTING POLICIES NOTES ON ACCOUNTS H I (560,270) (560,270) (21,831,796) (22,392,066) (11.21) 10 26,409 669,229 695,638 (1,825,796) (20,006,000) (21,831,796) (21,831,796) (36.52) 10 G 653,761 (512,130) 1,207,855 (1,130,158) Rupees Rupees 2008-2009 Rupees Rupees

141,631

77,697

The Schedules referred to above and the notes attached form an integral part of the Profit and Loss Account. As per our report attached SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S) For and on behalf of the Board

L. VAIDYANATHAN Partner Membership No. 16368 Place : Chennai Mumbai Date : April 26, 2010

K. VENKATESH Director Place : Chennai Date : April 26, 2010

N. S. SIVARAMAN Director

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CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
2009-2010 Rupees A. Cash Flow from Operating Activities Net Profit / (Loss) before tax & extraordinary items Operating Profit before Working Capital changes Adjustments for (Increase) / Decrease in Loans and Advances Increase / (Decrease) in Trade Payables Cash generated from Operations Direct taxes paid (net of refund) Net Cash from Operating Activities (A) B. Cash Flow from Investing Activities Pre-operative Expense Purchase of Fixed Assets (including CWIP) Net Cash (used in) / from Investing Activities (B) C. Cash Flow from Financing Activities Advance against Share Capital Net Cash (used in) / from Financing Activities (C) Net increase in Cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents as at the beginning Cash and Cash Equivalents as at the end NOTES 1. 2. 3. 4. 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. Cash and Cash Equivalents represent Cash and Bank Balances. Purchase of fixed assets includes movement of Capital Work-in-Progress during the year. Previous years figures have been regrouped / reclassified wherever applicable. 3,745,800,000 3,745,800,000 47,821,790 3,819,475 51,641,265 2,485,000,000 2,485,000,000 3,316,237 503,238 3,819,475 (282,296,576) (5,494,996,997) (5,777,293,573) (90,395,705) (2,525,367,404) (2,615,763,109) 12,501,587 2,068,021,545 2,080,523,132 (695,638) 2,079,315,364 (16,811,466) 152,022,147 135,210,681 (1,177) 134,079,346 (512,130) (512,130) (1,130,158) (1,130,158) 2008-2009 Rupees

As per our report attached SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S) For and on behalf of the Board

L. VAIDYANATHAN Partner Membership No. 16368 Place : Chennai Mumbai Date : April 26, 2010

K. VENKATESH Director Place : Chennai Date : April 26, 2010

N. S. SIVARAMAN Director

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SCHEDULES FORMING PART OF BALANCE SHEET

As at 31.03.2010 Rupees SCHEDULE - A SHARE CAPITAL Authorised 1,00,00,00,000 Equity Shares of Rs. 10 each Issued, Subscribed & Paid-up 50,000 Equity Shares of Rs. 10 each fully Paid-up (The entire equity shares are held by Larsen & Toubro Limited, the Holding Company and its nominees) TOTAL 10,000,000,000 10,000,000,000 As at 31.03.2009 Rupees

500,000

500,000

500,000

500,000

SCHEDULE - B(i) FIXED ASSETS

PARTICULARS GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

As at 01.04.2009 Rupees Tangible Assets Computers Office Equipment Air Conditioner Plant & Machinery Furniture & Fixtures TOTAL Previous Year Add: Capital Work in Progress 2,057,222 2,057,222

Additions Rupees 4,252,448 1,057,887 430,500 470,590 97,500 6,308,925 2,057,222

As at 31.03.2010 Rupees 6,309,670 1,057,887 430,500 470,590 97,500 8,366,147 2,057,222

Up to 01.04.2009 Rupees 212,376 212,376

For the Year Rupees 453,035 38,895 20,449 2,003 5,657 520,039 212,376

Up to 31.03.2010 Rupees 665,411 38,895 20,449 2,003 5,657 732,415 212,376

As at 31.03.2010 Rupees 5,644,259 1,018,992 410,051 468,587 91,843 7,633,732 4,984,651,842 4,992,285,574

As at 31.03.2009 Rupees 1,844,846 1,844,846 49,991,988 51,836,834

SCHEDULE - B(ii) FIXED ASSETS

PARTICULARS GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

As at 01.04.2009 Rupees
Intangible Assets Land - Leasehold TOTAL Previous Year Add: Capital Work in Progress 2,476,698,144 2,476,698,144

Additions Rupees
589,655,302 589,655,302 2,476,698,144

As at 31.03.2010 Rupees
3,066,353,446 3,066,353,446 2,476,698,144

Up to 01.04.2009 Rupees
5,277,591 5,277,591

For the Year Rupees

32,997,028 32,997,028 5,277,591

Up to 31.03.2010 Rupees
38,274,619 38,274,619 5,277,591

As at 31.03.2010 Rupees
3,028,078,827 3,028,078,827 3,028,078,827

As at 31.03.2009 Rupees
2,471,420,553 2,471,420,553 2,110,017 2,473,530,570

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SCHEDULES FORMING PART OF BALANCE SHEET (Contd.)

As at 31.03.2009 Rupees SCHEDULE - C PRE-OPERATIVE EXPENSES Cost of Services Professional fees Rent Rates & Taxes Repairs & Maintenance Printing & Stationery Postage & Telephone charges Travel & Conveyance Miscellaneous expenses Establishment charges Licence Fee Insurance Depreciation Amortisation 27,973,837 42,567,532 4,950,218 36,246 6,022,587 321,278 771,590 12,558,949 3,540,729 4,265,101 2,592,083 11,071 212,376 5,277,591 111,101,188 Less: Interest on fixed deposits 3,464 111,097,724 Add: Income Tax TOTAL 1,177 111,098,901 68,127,237 118,774,165 13,610,796 641,828 9,014,427 530,631 1,449,183 16,652,270 5,008,977 2,006,787 12,960,417 2,792 520,039 32,997,028 282,296,577 282,296,577 282,296,577 96,101,074 161,341,697 18,561,014 678,074 15,037,014 851,909 2,220,773 29,211,219 8,549,706 6,271,888 15,552,500 13,863 732,415 38,274,619 393,397,765 3,464 393,394,301 1,177 393,395,478 For the Year Rupees As at 31.03.2010 Rupees

As at 31.03.2010 Rupees SCHEDULE - D CASH AND BANK BALANCES Balances with scheduled banks On Current account On Fixed deposit TOTAL 2,941,265 48,700,000 51,641,265

As at 31.03.2009 Rupees

3,309 3,816,166 3,819,475

SCHEDULE - E LOANS AND ADVANCES Unsecured, considered good Advances recoverable in cash or kind or for value to be received TOTAL 4,309,879 4,309,879 16,811,466 16,811,466

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SCHEDULES FORMING PART OF BALANCE SHEET (Contd.)

As at 31.03.2010 Rupees SCHEDULE - F CURRENT LIABILITIES & PROVISIONS Current Liabilities Sundry Creditors Due to Micro,Small & Medium Enterprises Due to Holding Company Due to Others 1,880,246,198 380,508,751 2,260,754,949 Provisions for Income Tax Fringe Benefit Tax 48,140 48,140 TOTAL 2,260,803,089 26,409 669,229 695,638 193,429,042 189,445,945 3,287,459 192,733,404 As at 31.03.2009 Rupees

SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT

2009-2010 Rupees SCHEDULE - G ADMINISTRATION AND OTHER EXPENSES Rates & Taxes Miscellaneous expenses TOTAL 74,220 579,541 653,761 78,939 1,128,916 1,207,855 2008-2009 Rupees

SCHEDULES FORMING PART OF ACCOUNTS

SCHEDULE - H SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Accounting The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles ("GAPP") in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable are not taken into account. The preparation of financial statements in conformity with GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the year, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful advances etc. Actual results could differ from these estimates. 2. Fixed Assets Fixed assets are stated at original cost less accumulated depreciation. Pre-operative expenses incurred up to the date of commencement of commercial operation are capitalised. 3. Depreciation Depreciation on assets has been provided on straight-line basis at the rates specified in the Schedule XIV of the Companies Act, 1956. Depreciation on additions / deductions is calculated pro-rata from / to the month of additions / deductions.

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SCHEDULES FORMING PART OF ACCOUNTS (Contd.)

4. Intangible Assets and Amortization Intangible assets are recognized as per the criteria specified in Accounting Standard (AS) 26 "Intangible Assets" issued by the Institute of Chartered Accountants of India. Leasehold land amortised over the primary lease period. 5. Taxes on Income Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisions of Income Tax Act, 1961. 6. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if a) b) c) the Company has a present obligation as a result of a past event; a probable outflows of resources is expected to settle the obligation; and the amount of the obligation can be reliably estimated.

Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received. Contingent Liability is disclosed in the case of : a) b) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation. a possible obligation, unless the probability of outflow of resources is remote.

Contingent Assets are neither recognized, nor disclosed. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

SCHEDULE - I NOTES FORMING PART OF ACCOUNTS 1) 2) Profit & Loss Account has been drawn to comply with the provisions of the Companies Act, 1956. However, the Company has not commenced commercial operations. The Shareholders of the Company viz. Larsen & Toubro Limited and Tamilnadu Industrial Development Corporation Limited (TIDCO) have entered into an Associate Sector Agreement on April 15, 2008 to form a Joint Venture Company under the provisions of the Companies Act, 1956 in the State of Tamilnadu for implementation of Shipyard cum Minor Port Complex and related facilities at Kattupalli Village in Tiruvallur District . The conditions relating to Financial participation by way of Share Capital by TIDCO referred to in Para 1 and 2 of the said agreement are yet to be achieved. The Company has been given approval by Ministry of Commerce & Industry, Govt. of India for setting up of a sector specific Special Economic Zone for Heavy Engineering at Kattupalli Village, near Ennore, Tiruvallur District, Tamilnadu, vide letter dated February 27, 2009 followed by Gazette Notification on December 4, 2009 for 317.72 hectares (784.76 Acres). The Company paid in the year 2008-2009 an upfront lease rent of Rs. 244.62 crores to TIDCO for 1123.16 acres of land for a period of 99 years from January 14, 2009. The additions during the year to leasehold land represents balance consideration of Rs 4.27 crores paid to TIDCO in respect of 19.58 acres of land taken on lease for 98.15 years from November 19, 2009 . These lands has been divided into - one relating to SEZ of 784.76 acres and the other 357.98 acres relating to non-SEZ. The Company has settled during the year the interest claim by TIDCO on the delayed payment of consideration for land taken on lease for the project by paying an amount of Rs. 26.83 crores in full settlement of TIDCO's claim and included the same as additions to leasehold land. During the year, the Company has received a letter dated December 4, 2009 from M/s Tamilnadu Electricity Board (TNEB) claiming advance of Rs. 75 Lakhs against sharing cost of North Chennai Thermal Power Station road maintained by TNEB. Joint Venture Partner TIDCO has represented the matter to Government of Tamilnadu to resolve the same vide their letter dated December 21, 2009. No provision has been made in these accounts since the management is confident of resolving the matter in favour of the Company. During the year, the Company has received a letter dated December 18, 2009 from M/s Ennore Port Limited claiming Rs. 12.31 crores towards cost of sharing the road formation and for maintenance cost thereafter for use of the approach road to Company's project site . Joint Venture Partner TIDCO has represented the matter to Government of Tamilnadu to resolve the same vide their letter dated December 21, 2009. No provision has been made in these accounts since the management is confident of resolving the matter in favour of the Company. During the year, the Company has received a letter dated March 30, 2010 from M/s. Tamilnadu Maritime Board (TNMB) claiming Rs. 14.70 crores towards consultation fee on the cost of marine structure being constructed at Kattupalli Port. The Company has taken up the matter with TNMB stating its inability to meet with the claim of 0.50% consultation fee on the cost of marine structure. No provision has been made in these accounts since the management is confident of resolving the matter in favour of the Company.

3)

4)

5) 6)

7)

8)

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SCHEDULES FORMING PART OF ACCOUNTS (Contd.)

9) Auditor's Remuneration (excluding service tax) Particulars Audit Fees Certification Fees 10) Expenditure in foreign currency Particulars Professional fees Other matters 11) Disclosure of related parties / related party transactions Name of related party with whom transactions were entered into during the period Name of Company Larsen & Toubro Limited L&T Infrastructure Finance Company Limited Transactions during the year Nature of Transactions Larsen & Toubro Limited Fixed Assets / Capital Work-in-progress Cost of Services Reimbursement of Expenses L&T Infrastructure Finance Company Limited Financial Advisory services (Figures in bracket relate to previous year) No amount due to or due from has been written off or written back during the period. 12) The provisions of the following Accounting Standards are not applicable since Company is yet to commence commercial operations. Valuation of Inventories Revenue Recognition Segment Reporting Deferred Tax Impairment of Assets AS 2 AS 9 AS 17 AS 22 AS 28 3,54,45,000 (NIL) 466,44,62,105 (20,57,222) 5,86,95,629 (2,12,14,596) 9,55,20,703 (6,47,09,758) NIL (NIL) NIL (NIL) 2009-2010 Rupees Due to Rupees 188,02,46,198 (18,94,45,945) Due from Rupees NIL (NIL) Nature of Relationship Holding Company Fellow Subsidiary 2009-2010 Rupees 12,27,804 97,98,206 2008-2009 Rupees 2009-2010 Rupees 1,00,000 13,500 2008-2009 Rupees 1,00,000

13) Company does not have transactions attracting provisions of the following Accounting Standards. The Effects of Changes in Foreign Exchange Rates Employee benefits Accounting for Contingent Liabilities / Assets AS 11 AS 15 AS 29

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SCHEDULES FORMING PART OF ACCOUNTS (Contd.)

14) a) b) No provision has been made for Wealth Tax as the company has no taxable wealth under the provisions of the Wealth Tax Act, 1957. Provision for Current Tax has been made on interest income on short term deposits as per the provisions of the Income Tax Act, 1961.

15) There have been no transactions during the year with Micro and Small Enterprises covered under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Hence, reporting details of principal and interest does not arise. 16) Estimated amount of Contracts remaining to be executed on capital account (net of advances) as of March 31, 2010 is Rs. 16,771,437,347 (Previous year Rs. NIL). 17) Figures of the previous year have been re-grouped / re-classified wherever necessary.

As per our report attached SHARP & TANNAN Chartered Accountants (ICAI Registration No. 003792S) For and on behalf of the Board

L. VAIDYANATHAN Partner Membership No. 16368 Place : Chennai Mumbai Date : April 26, 2010

K. VENKATESH Director Place : Chennai Date : April 26, 2010

N. S. SIVARAMAN Director

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BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE

I. Registration Details Registration No. Balance Sheet Date II. U74900TN2007PLC065356 3 1 Date 0 3 Month 2 0 1 0 Year Rights Issue N I Private Placement N I III. L Total Assets 6 2 3 1 3 0 0 Reserves & Surplus 5 0 0 Advance against Share Capital 6 2 3 0 8 0 0 Application of Funds Net Fixed Assets (including pre-operative expenses) 8 4 1 3 7 6 0 + Net Current Assets (Liabilities) 2 2 0 4 8 5 2 Accumulated Losses 2 2 3 9 2 IV. Performance of Company (Amount in Rs. Thousands) Turnover (including other income) 1 4 1 + + V. Profit / Loss before Tax 5 1 2 Earning Per Share in Rs. 1 1 . 2 1 + Dividend Rate % N . A . Total Expenditure 6 5 3 Profit / Loss after Tax 5 6 0 Investments N I L Secured Loans N I L N I L N I L L State Code 1 8

Capital raised during the year (Amount in Rs. Thousands) Public Issue N I Bonus Issue Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities 6 2 3 1 3 0 0 Sources of Funds Paid-up Capital L

Miscellaneous Expenditure N I L

Generic Names of Three Principal Products / Services of the Company (as per monetory terms) Item Code No. Product Description N . A . MANUFACTURE, REPAIR AND MAINTENANCE OF MARINE VESSELS

For and on behalf of the Board

Place : Chennai Date : April 26, 2010

K. VENKATESH Director

N. S. SIVARAMAN Director

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