L&T Infotech Annual Report 2015-16

ANNUAL REPORT 2015-16

Let ’s S lve

1. Corporate Overview01 Message from the Founder Chairman 02 Let’s Solve 04 The Journey So Far…06 At a Glance 10 Message from the CEO12 Board of Directors15 Key Leadership Team16 Corporate Information17 Key Financial Highlights18 Corporate Social Responsibility

2. Our DNA 20 Client-Centricity21 Digital Leadership22 Best Place to Learn, Evolve, Grow

3. Statutory Reports 26 Directors’ Report 55 Corporate Governance Report62 Management Discussion and Analysis76 Risk Management Framework

4. Financial Statements Standalone77 Independent Auditor’s Report82 Balance Sheet83 Statement of Profit & Loss 84 Cash Flow Statement 86 Notes forming part of accounts

Consolidated118 Independent Auditor’s Report122 Balance Sheet123 Statement of Profit & Loss 124 Cash Flow Statement 126 Notes forming part of accounts

Inside

Prior experience in enabling technology-driven growth across multiple businesses gave your company an unmatched ‘Business-to-IT connect’

Message from the Founder Chairman

Mr. A. M. Naik, Founder Chairman, was conferred the Order of the Dannebrog as Knight First Class by Her Majesty, Queen Margrethe of Denmark. The knighthood is royal acknowledgement of Mr. Naik’s role in fostering Indo-Danish ties in the fields of business, commerce and culture.

Dear Shareholders,

Information Technology is increasingly becoming the axis on which our world rotates. Technology pervades multiple aspects - building communication platforms, accelerating processes, expanding outreach, adding ‘intelligence’ to functions and contributing to delivering superior outcomes. The speed at which IT developments have transited from lab to life indicate a growing acceptance that the old order will be disrupted and replaced with a new ‘digital’ way.

I am very happy that your company - L&T Infotech - is playing an increasingly important role in a sector of critical significance around the globe.

Our technology journey really began when we formulated an IT vision for the L&T Group, and committed ourselves to nurturing the newly-formed subsidiary. We recognised early that our IT initiative was uniquely positioned. Prior experience in enabling technology-driven growth across multiple businesses gave your company an unmatched ‘Business-to-IT connect’. I place on record, the pivotal role of the Company’s former CEO & MD, Mr. V.K. Magapu, in providing leadership and direction in the formative years of this organisation.

Brand L&T has undoubtedly proved to be a key asset all along the journey. It has opened doors, providing access to new markets, secured credibility among first-time customers and functioned as

a clear differentiator in markets where services were vulnerable to commoditisation. The L&T heritage has also served as an inspirational force across Team Infotech, motivating it to live up to a seven-decade-old legacy of customer-centricity, professional excellence, and the consciousness of larger social obligations even as it vigorously pursued business goals.

Going forward, I am confident that the relationship between parent and subsidiary will become increasingly symbiotic - each complementing and augmenting the other. As L&T Infotech forays into uncharted geographies, it could well play the role of a flag-bearer for the entire Group.

As we enter an era of growing convergence, the future presents a canvas of unprecedented change. The management team at L&T Infotech is increasingly building competencies in new-age technologies like Digital & Automation. The team comprises of high-calibre technology professionals with global experience, as well as experts possessing deep domain knowledge. We believe that this blend of talent, bolstered by a strong management culture, will help the Company successfully address the challenge of change and scale new heights.

A.M. NaikFounder Chairman

The management team at L&T Infotech is increasingly building competencies in new-age technologies like Digital & Automation

Message from the Founder Chairman

Let’s SolveThis 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.

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Annual Report 2015-16

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

Corporate Overview - Let’s Solve Our DNAStatutory ReportsFinancial Statements

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The Journey So Far…

Where we stand today…

The confident steps taken in 1997 picked up pace and became swift strides, as we covered many miles and created memorable milestones.

We work with 258 clients,including

49 Fortune 500 Companies

We are among the

TOP 20 Global IT Services

companies with an annual revenue of

$ 887Mn +

Company was incorporated in Dec, 1996, by spin-off of Information Systems Division of L&T

Was awarded the initial multi-year annuity contract by Global Fortune 100 Oil & Gas Corporation

Established business in South Africa

Acquisition of GDA Tech Inc., USA-Electronic design services company

Achieved SEI CMM-L5 Certification

2002 2007

2004 20081997

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Corporate Overview - The journey so far… Our DNAStatutory ReportsFinancial Statements

We have

20,000+ employees

Working out of

across the Globe

44 Sales Offices

22 Delivery Centres

Achieved SEI CMMi v1.2 Level 5 certification for all development centres in India

Re-organisation of verticals. Introduction of Media & Entertainment and Travel & Logistics verticals

Acquisition of Information Systems Research Centre (ISRC), a unit of UTC Group

Positioned among the Top 20 IT Service providers by Everest Group

Positioning to cater to Smart Cities Opportunities

Acquisition of transfer agency business unit from Citigroup in Canada (L&T Infotech Financial Services Technologies Inc.)

2010 2013

20152011

2016

Note: TheaboveinformationhasbeenpresentedonFinancialYearbasis.

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At a Glance

Our PromiseWe SOLve COmPLex bUSIneSS ChALLENGES AT ThE CONvERGENCE OF DIGITAL AND PhySICAL WORLD WITh OUR ReAL-WORLD exPeRTISe AnD CLIenT-CenTRICITy.

Our PedigreeWe are part of Larsen & Toubro Limited (L&T), a diversified conglomerate of revenue over USD 15 Billion. Tracing its roots back to 1938, the company has been involved in nation-building over the last seven decades. The company is a leader in Engineering, Construction, Manufacturing, Finance and Technology.

L&T has consistently contributed to India’s progress over the decades. From setting up cement plants and building offshore oil platforms in the 1980s to creating Knowledge Cities and Business Parks, L&T’s profile and portfolio has been in line with its strategic vision of contributing to nation-building.

a diversified conglomerate tracing its roots back to 1938.

Larsen & Toubro Limited

Today, L&T continues to be engaged in the core sectors of the economy. It is augmenting its presence in infrastructure, defence and technology sectors and sees an expansive role in building of smart cities and communications.

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Corporate Overview - At a GlanceOur DNAStatutory ReportsFinancial Statements

Our Real-World expertise – Our business-to-IT Connect

Leveraging Domain experience and Institutional Knowledge of the L&T Group

Heavy Engineering

Defence

Finance & Insurance

Power

Housing & Real Estate

Construction

Ship Building

Hydrocarbons

Construction Equipment

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Where we Solve

Global Presence

North America14 Sales offices8 Delivery centres

Europe 12 Sales offices2 Delivery centres

Middle East & South Africa 4 Sales offices1 Delivery centre

India 9 Sales offices &Delivery centres

APAC 5 Sales offices2 Delivery centres

At a Glance

Banking & Financial Services

Insurance Energy & Process

Media and Entertainment

Utilities Engineering andConstruction

Consumer Packaged Goods, Retail & Pharmaceuticals

Hi-Tech Plant EquipmentTravel andLogistics

Automotive and Aerospace

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Corporate Overview - At a GlanceOur DNAStatutory ReportsFinancial Statements

how we Solve Awards & Recognitions

Our success with new-age technologies, our client-centric approach and our institutionalised processes have earned us, numerous awards and recognitions during the year. Notable among these are:

o ‘Innovation in Big Data Award’ at the NetApp Innovation Awards, 2015

o ‘Best Analytics Service/Solution Provider’ Award in Predictive Modelling at the World Marketing Congress, 2015

o Three awards at the World Innovation Congress 2016. Our Digital Solutions won awards in three categories;

• Financial Crime EDD Automation - Best Innovation in Information Technology Category

• MyCar - Most Innovative Product of the year Category

• MediaHub Most Promising New Product - Technology Category

o Five awards at the World HRD Congress

o Indian Merchants’ Chambers’ Ramakrishna Bajaj National Quality Award 2015 in Service Category

o Positioned among Top 20 IT Service Providers in 2015 by the Everest Group

o Positioned in Leadership zone in Broadcasting segment by Zinnov

Platform-based SolutionsSaaS-Based Transfer Agency Platform

Application Development maintenanceApplication DevelopmentApplication Maintenance & SupportApplication Outsourcing

Infrastructure Management ServicesBusiness 1st MethodologyTech & Ops TransformationCommand-centric Global OpsData Centre Codified

Digital SolutionsSMACBig DataloTEnterprise Integration Cognitive Computing

Testing & validation Core TestingTest AdvisorySpecialised testing

enterprise SolutionsSAPOracleMicrosoftCloud Apps

Core services supported by critical alliances, partnerships and certifications

Thought Partnership

& Consulting

CIO Advisory

Digital Innovation

Business Transformation

Application Strategy

Operational Efficiency

Organisational Change Management

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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.

Message from the CEO

As we help our clients stay competitive, we are continuing to cement our position in the industry as a growing and financially stable organisation

Sanjay JalonaChief Executive Officer & Managing Director

10


9.5%increase

Over the next few months, I met hundreds of extremely talented people and was inspired by their passion for achieving client’s objectives and how well they represent L&T values all over the world. As I immersed myself into the company’s operations and met with long-standing clients across continents, I was amazed by the depth of our relationships and respect that we have earned for our unparalleled industry knowledge. I was also impressed by the tools, platforms and innovative solutions that are saving millions of dollars for our clients and improving their competitiveness. I learnt about several engagements that make us their chosen partner. A few being:

o Establishment of ‘Smart Factory’ initiative for a Global Automotive Original Equipment manufacturer

o Providing services in areas of Digital Oilfield, Pipeline Management, Digital Refinery for a Global Oil & Gas Corporation

With deeper understanding of engagements like these, my appreciation for our achievements has grown manifold. It is the strength of our digital, analytics and automation solutions like these that has won us several recognitions during the year. In 2015, the Everest Group positioned us amongst the Top 20 IT Services providers globally, three of our Digital solutions won recognition at the World Innovation Congress 2016 and we were adjudged Leaders in Digital Transformation by CEBIT, India.

As we help our clients stay competitive, we are continuing to cement our position in the industry as a growing and financially stable organisation. During the last financial year, our revenue grew by about 9.5% in Dollar terms to USD 887.2 million. At the threshold of the coveted One Billion-dollar milestone, our scale and agility makes us the ideal partner for global companies. We will continue to draw upon our rich technology and real-world experience to lead the convergence of physical and

digital ecosystems. We will help our clients stay ahead of the technology curve by making early investments in exponential technologies.

We are a company with strong foundation and tremendous potential. My role as the CEO of L&T Infotech is to unlock this potential and catapult the company into the next higher orbit. As a team, we have a once-in-a-lifetime opportunity to build a next generation technology company, known for its client-centricity and deep domain understanding. We are excited about the times ahead. We turn 20 this year; just the right time to say goodbye to our teenage years and commence a new journey of transformation and growth. As we step into this marvellous journey, I look forward to your continued support and best wishes.

Let’s Solve.


Our Revenue Growth in Dollar terms over the previous year

Corporate Overview - Message from the CEOOur DNAStatutory ReportsFinancial Statements

Revenue (USD Million)

2013-14

746.6

2014-15

809.9

887.2

2015-16

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Board of Directors

A. M. Naik is the Non-Executive Chairman of our Company. He obtained his graduate degree in mechanical engineering from the Birla Vishvakarma Mahavidyalaya, Sardar Patel University of Gujarat. He has been associated with Larsen & Toubro Limited for over five decades. He rapidly rose to secure the position of Managing Director & CEO, followed by Chairman in 2004 and culminating in Group Executive Chairman in 2012. Mr. Naik is the Hon. Consul General for Denmark in Mumbai and was awarded the Order of the Dannebrog as Knight 1st Class by Queen Margrethe of Denmark. He has been awarded an Honorary Degree of Doctor of Letters from Veer Narmad South Gujarat University. Mr. Naik has made several contributions for social upliftment and has contributed to the setting up of certain educational facilities and hospitals such as the Kharel Education 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.

A. M. Naik Non-Executive Chairman

Sanjay Jalona Chief Executive Officer & Managing Director

Sanjay Jalona is the Chief Executive Officer & Managing Director of our Company. He has obtained a degree of Master of Science (Technology) in computer science from the Birla Institute of Technology and Science, Pilani. Mr. Jalona has over 25 years of experience in the IT industry. Prior to joining our Company, he worked at Infosys Limited as the Executive Vice President and Global Head of High-Tech, Manufacturing and Engineering Services. He also served as a member of the Board of Lodestone Holding AG, the management consulting subsidiary of Infosys in Europe and has also chaired the Board of Infosys Technologies (China) Company Limited and Infosys Technologies (Shanghai) Company Limited. He was appointed as a Director of our Company with effect from August 10, 2015 as an Additional Director.

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S. N. Subrahmanyan non-executive Director

R. Shankar Raman non-executive Director

Samir DesaiIndependent Director

Corporate Overview - Board of Directors Our DNA Statutory ReportsFinancial Statements

Samir Desai is an Independent Director of our Company. He has obtained a post-graduate degree in electrical engineering from the Illinois Institute of Technology. He also holds a post-graduate degree in business administration from Loyola University, Chicago. Mr. Desai has over 30 years of experience in management. Prior to joining our Company, he worked at Motorola for over 30 years and has also served as a Chief Information Officer at Motorola. He has also served as general manager of iDEN® Networks & Devices. He was appointed as a Director of our Company on January 27, 2007.

R. Shankar Raman is a Non-Executive Director of our Company. He is a qualified Chartered Accountant. He has over 28 years of experience in various capacities in the field of finance. Mr. Shankar Raman joined the L&T group on November 14, 1994 for incorporating L&T Finance Limited. He was appointed as the Chief Financial Officer of L&T in September 2011 and subsequently elevated to the board of directors of L&T on October 1, 2011. He presently oversees the finance functions in L&T. Mr. Shankar Raman holds the position of director in several companies within the L&T group. He was ranked amongst the top three CFOs in Asia by the Institutional Investor magazine in the infrastructure sector in 2013 and in the industrials sector in 2014 and 2015. In 2013, Mr. Shankar Raman won CNBC TV18’s ‘CFO of the Year Award’ and Business Today’s Best CFO Award for Consistent Liquidity Management under Large Companies category. He ceased to be the Director of our Company on September 26, 2015 and was re-appointed on October 28, 2015 as an Additional Director.

S. N. Subrahmanyan is a Non-Executive Director of our Company. He has obtained a graduate degree in civil engineering from the Kurukshetra University, Haryana and has completed a post-graduate course in business administration from Symbiosis Institute of Business Management, Pune. Mr. Subrahmanyan has over 30 years of experience in the infrastructure and construction industry. He joined the L&T group in 1984. He is a member of the Governing Council of the Construction Skill Development Council of India. He is also a member of the Board of Governors of the National Institute of Construction Management and Research. Mr. Subrahmanyan is a Fellow of the Institution of Civil Engineers - United Kingdom. He was the Chairman of the CII Gulf Committee for the Financial Year 2012 and was a member of the Working Committee, Projects Exports Promotion Council. Mr. Subrahmanyan was awarded the “Leadership Award” by the Qatar Contractors Forum in 2014. He was ranked 36th in the “2014 Construction Week Power 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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M. M. Chitale Independent Director

vedika Bhandarkar Independent Director

Arjun Gupta Independent Director

Board of Directors

Arjun Gupta is an Independent Director of our Company. He has obtained a graduate degree (Phi Beta Kappa) and a post graduate degree in computer science from Washington State University and a post graduate degree in business administration from Stanford University. He was also an Advanced Leadership Fellow from Harvard University and a 2001 Henry Crown Fellow from the Aspen Institute. Prior to moving to USA, he had obtained a graduate degree in economics (Honors) from St. Stephen’s College, Delhi University. Mr. Gupta is the managing partner of TeleSoft Partners, a special situations venture capital firm he founded in 1997. He has over 27 years of experience working with technology companies in venture capital, consulting and engineering roles. Mr. Gupta was ranked by Forbes Magazine in the Top-100 technology venture investors on the 2006, 2007, 2008 and 2009 Midas Lists. He serves on the boards of various companies in USA such as Calient Technologies Inc., Jumpstart Games Inc. (formerly Knowledge Adventure) and Nexant Inc.; and he is an advisor of DocuSign. He was appointed as an Additional Director of our Company on October 28, 2015.

Vedika Bhandarkar is an Independent Director of our Company. She has obtained her graduate degree in science from the Mohanlal Sukhadia University, Udaipur and completed a two-year post-graduate programme in management from the Indian Institute of Management, Ahmedabad. She has over 25 years of experience in the financial services industry. Prior to joining our Company, she held the position of the Managing Director and Vice-Chairman, India, of Credit Suisse Securities (India) Private Limited (“Credit Suisse”). She has served as the head of Indian investment banking and global markets solution group, India, at Credit Suisse from July 2010 to February 2015. She has also worked with JP Morgan India Private Limited in India as the Managing Director from May 1998 to July 2010. She was appointed as a Director of our Company with effect from March 16, 2015.

M. M. Chitale is an Independent Director of our Company. He has obtained a graduate degree in commerce from the University of Mumbai. He is a qualified Chartered Accountant. He has over 40 years of experience as a Chartered Accountant in practice. Mr. Chitale has been a fellow member of the ICAI and has served as the President of ICAI in the year 1997-98. He was also associated as a member of governing council of Banking Codes and Standards Board of India. Mr. Chitale was also the Chairman of the Ethics Committee of the Stock Exchange, Mumbai. He was a member of Advisory Board on Bank, Commercial and Financial Frauds. He was also a member of the group for Amalgamation of Urban Co-operative Banks. He was a member of the Working Group on Restructuring of Weak Public Sector Banks appointed by RBI (Verma Committee) and the Committee on Procedures and Performance Audit of Public Services appointed by RBI (Dr. Tarapore Committee) as well. He was appointed as the Chairman of National Advisory Committee on Accounting Standards. He was appointed as a Director of our Company on October 17, 2011.

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Key Leadership Team

Chief Executive Officer & Managing DirectorSanjay Jalona

Chief Operating OfficerAftab Ullah

Chief Financial OfficerAshok Kumar Sonthalia

Global Human Resources HeadManoj Biswas

Company SecretarySubramanya bhatt

Chief Marketing OfficerPeeyush Dubey

Chief Business Officer – Insurance & Testing, AmericasAnil vazirani

Chief Business Officer – BFS, Americasharsh Naidu

Chief Business Officer – Tech, Media, CRP & Digital, AmericasSiddharth Bohra

Chief Business Officer – Manufacturing & ERP, AmericasRohit Kedia

Chief Business Officer – EuropeMakarand Deolalkar

Chief Business Officer – Nordic RegionSarbajit Deb

Chief Business Officer – Emerging MarketsRajat Mathur

Corporate vertical Heads

Corporate Overview - Board of Directors | Key Leadership Team Our DNA Statutory ReportsFinancial Statements

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Corporate Information

Board of DirectorsA. M. NaikNon-Executive Chairman


S. N. SubrahmanyanNon-Executive Director

R. Shankar RamanNon-Executive Director

Samir Desai Independent Director



Arjun Gupta Independent Director

Committee PositionsAudit Committee M. M. Chitale Independent Director (Chairman)

Samir Desai Independent Director

S. N. Subrahmanyan Non-Executive Director


nomination and Remuneration Committee

Samir Desai Independent Director (Chairman)

A. M. Naik Non-Executive Chairman



Stakeholders’ Relationship Committee

S. N. Subrahmanyan Non-Executive Director (Chairman)



Corporate Social Responsibility CommitteeS. N. Subrahmanyan Non-Executive Director (Chairman)



Risk management Committee

S. N. Subrahmanyan Non-Executive Director (Chairman)


Ashok Kumar Sonthalia Chief Financial Officer

IPO Committee

A. M. Naik Non-Executive Chairman (Chairman)



Corporate InformationRegistered Office of our Company L&T HouseBallard EstateMumbai - 400 001Tel: (91 22) 6752 5656Fax: (91 22) 6752 5893

e-mail: [email protected]: www.lntinfotech.com

Corporate Office of our CompanyL&T Technology Centre, Gate No. 5, Saki Vihar Road, Powai, Mumbai - 400 072Tel: (91 22) 6776 6776Fax: (91 22) 2858 1130

Auditors to our Company M/S Sharp & Tannan

Bankers to our CompanyCitibank N.A.Standard Chartered BankBarclays Bank PLC ICICI Bank LimitedThe Hongkong and Shanghai Banking Corporation Limited

Registrar & Share Transfer AgentLink Intime India Private LimitedCorporate Identification number:

U72900MH1996PLC104693

Registration number: 104693

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Key Financial highlights

Revenue

(USD Million)

887.2

809.9

746.6

Revenue from Continuing Operations(` Million)

58,471

49,68145,352

Profit After Tax from Continuing Operations(` Million)

9,223

7,600

6,598

Earnings Per Share

from Continuing Operations (Diluted)

(`) 56.13

45.10

39.16

Total headcount (Nos.)

20,072

19,479

17,627

Clientele(Nos.)

258

232

204

Corporate Overview - Corporate Information | Key Financial Highlights Our DNA Statutory ReportsFinancial Statements

2013-14 2014-15 2015-16

2013-14 2014-15 2015-16

2013-14 2014-15 2015-16

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 society and communities we live and work with. The thrust areas of our CSR initiatives are employability through IT and soft skills education, Women empowerment and the environment.

Employability and education

Women Empowerment

Today, we have 45 locations from where we impart computer skills – the primary thrust area. This year, 1,144 youth passed out from 18 centres set up and dedicated for youth for employability and 123 who were inclined to take jobs, were placed. Another 27 computer centres were set up in schools for teaching 3,401 school children IT curriculum. Volunteers and partner NGOs taught Science, English, Mathematics in additional 11 schools-cum-study covering 17,098 children. Our projects would scale up during the subsequent years.

We have created infrastructure to generate recurring income for 150 women. We also assisted 2,800 women to generate income throughout the year from sale of their products.

Generate recurring income for

150 women

Assisted

2,800 women to generate income

1,144 youth passed out

18 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

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Let’s Share

Chennai Flood Relief

Fresh Initiatives

Environment and Sustainability

1. We have helped in reconstructing 18 schools in Sadras region. This would ensure students go back to school and study.

2. We have helped in reconstructing Gandhi Study Centre – a unique study centre of Gandhian values where thousands come to study.

3. Women Empowerment for Rural women in Thiruvallur District. We provided sewing machines and also training for a year that would help them gain their livelihood back.

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.

During the last quarter of FY16, we have launched a few scalable digital literacy projects in partnership with leading NGOs and educational content provider focussed on using digital technology. The programmes are designed such that they are scalable allowing us to reach the outskirts of Tier I, II, III, IV cities. But the focus is on measurement of impact outcomes.

1. Green Initiative-Achieved United States Green Building Council’s LEED - Gold Green Building Certification for Powai office on 1st February, 2016. This project helped in energy and water savings, waste and e-waste streamlining and management, switching to green certified products and consumables, and aiding employee comfort.

2. Occupational Health Safety Initiative-We achieved BS OHSAS 18001: 2007 certification for Powai on 17th December, 2015. It is aimed at Occupational Health and Safety of all stakeholders working in Powai.

Reconstructing

18 schools in Sadras region

1Step Chennai, provided school kits to

1,209 students in government schools

Corporate Overview - Corporate Social Responsibility Our DNA Statutory ReportsFinancial Statements

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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.

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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 launching new services and solutions, in areas of IoT, Automation, Robotics, big Data & Analytics and other Digital Services, while continuing to build on our core services. In this space, we are also building a strong ecosystem of partners with niche capabilities so as to be able to address a wide spectrum of client requirements.

Our Digital competencies span right from Transformation advisory through Implementation to Operations. Our experience ranges from transforming supply chain 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.

Corporate OverviewOur DNA - Client-Centricity | Digital LeadershipStatutory ReportsFinancial Statements

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Best Place to Learn, evolve, Grow

Underpinning our focus on Customer-centricity and Digital Leadership is our single-minded determination to make L&T Infotech as the best place where top technology professionals come together to learn, evolve and grow. We believe that it is our PEOPLE who will create a truly global impact through a culture of excellence and performance that will make us the preferred partners for our clients as we continue with our Promise of -

Let’s Solve

We have always been a learning organisation. We have an integrated Talent Management initiative that focusses on career-building for our employees, on both domain skills-related learning and leadership skills. We have embarked upon a People Manager journey aimed at building better line managers and directly improving the engagement level of the team members.

L&T InFOTeCH vALUeS – FOUnDATIOn FOR SUCCeSSMeritocracy & Fair play | Dependability | Passion | Team Work | Innovation | Agility | Integrity

o Campus hiringo Experienced hiring

Talent Acquisition

Total Rewardso Awardso Rewards

Talent Developmento Top talent managemento Performance Management Systemo Employee development & Enrichmento Employee engagement

Digital and Analyticso HR systemso Predictive analyticso HR Social strategy

PEOPLE TRANSFORMATION

STRATEGyCreate an integrated

Global HR framework to enable growth through Innovation,

Excellence and Employee engagement

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Corporate Overview Our DNA - Best Place to Learn, Evolve, GrowStatutory ReportsFinancial Statements

People Manager JourneyThe People Manager Journey is a focussed programme for first line managers. The programme helps delivery track to build awareness and provide a framework for competency development in order to enable line managers to be effective and accountable people managers by:

o Engaging employees, enable learning and adaptability to change

o Ensuring clarity of goals and role expectations within the team and driving performance

o Establishing two-way communication with employees for continuous improvement & development

o Managing highest level of compliance within the team in all aspects of operations

The programme uses blended learning to ensure maximum reach and learning.

Building and Grooming LeadersThe success of any organisation lies in the strength of its leadership.

L&T Infotech has reinforced its stature as a company that prides itself on developing leadership competencies of its talent pool across the board, employing creative methodologies.

We focus on building and grooming talent through a bouquet of programmes aimed at building leadership capabilities. These are categorised into role-based, cadre/strata-based, location-based and competency-based offerings.

Through strategically planned interventions, we aim at improving the efficiency and efficacy of our business operations. Our interventions are steered to increase the overall effectiveness of our Business Units (BU) by identifying the root cause of challenges faced by them, aligning their strategies with our organisation’s goal, co-creating solutions and thereby partnering with Business Units (BUs) to reach a shared vision. We serve as an internal consultant, fulfilling the requirements of our Business Units (BUs).

Leadership and Talent Development

Behavioural Training

Leadership Development Programmes

o Leadership Journeyman Programme Series

o Leadership Express Modules

o Talent Guruo Competency Suite

Programmes

Development Programmes for high-Performers

o HR FLAME Programmeo Leadership Excellence

Programme

Role/bU Specific Programmes for Account Management

o Excellenceo Empowered Managers

Programmeo People Manager

Journeyo OD Interventions

bU Specific Customised Programmes

Calendar behavioural Offerings

Project Need Based Programmes

23

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 development programmes:Strategic skill development programmes were offered such as:

o Power Programmer

o effective Proposal writing

o Lean Kanban

o ITIL

o TOGAF- Enterprise Architecture

o Supply Chain Management

v-Learn – A one-stop shop for all training activities and process:This was an automation project for automating all learning process and activities online.

o Training and Assessment catalogues

o Training records

o Online Training Feedback

o Raising training requests

o Training certificate of attendance

o Certification and assessment records

o Certification reimbursement

Role-based Competency development offerings:Role-based competency programme offerings include competency development in areas such as:

o Business Analyst

o Project Management

o Programme Management

o Software Architect

24


Corporate Overview Our DNA - Best Place to Learn, Evolve, Grow Statutory ReportsFinancial Statements

Managing within

constraints and realities

Difficult conversations,

including feedback

Understanding team

aspirations

Balancing people

management within Project

Delivery

Manage self to manage

expectations of all

stakeholders

Expand circle of influence

Key Focus Areas

Empowered Managers Programme:

Empowered Managers Programme is a role-based initiative designed to enhance the people management skills of managers.

Objective of the Programme is:

o Enhancing understanding of hR people policies & processes

o Examining current people management approach in creating enhanced performance in business through effective people management

o Embracing self-development for improved people performance at work place

25

26


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)

ParticularsUnconsolidated Consolidated

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.

DIRECTORS’ REPORT

27

PERFORMANCE OF THE COMPANY

STATE OF COMPANY AFFAIRS

On unconsolidated basis, revenue from operations and other income for the financial year under review were ` 59,081.26 Million as against ` 48,331.83 Million for the previous financial year registering an increase of 22.2%. The profit before tax was ` 11,531.74 Million and 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 for the previous financial year. There were no material changes and commitments affecting the financial position of the company, between the end of the financial year and the date of the report.

On consolidated basis, revenue from operations and other income for the financial year under review were ` 61,430.21 Million as against ` 50,695.36 Million for the previous financial year registering an increase of 21.2%. The profit before tax was ̀ 11,472.67 Million and the profit after tax was ` 9,221.77 Million for the financial year under review as against ` 9,369.93 Million and ` 7,685.26 Million respectively for the previous financial year. There were no material changes and commitments affecting the financial position of the company, between the end of the financial year and the date of the report.

SEGMENTAL PERFORMANCE

During the year, the Company had two Business Segments namely, Services Cluster and Industrials Cluster of which contribution

to the revenue was 52.4% (previous year 51.6%) from Services Cluster and 47.6% (previous year 48.4%) from Industrials Cluster, on unconsolidated basis. On consolidated basis, the contribution to the revenue was 53.9% (previous year 52.8%) from Services Cluster, 46.1% (previous year 47.0%) from Industrials Cluster and 0.0% (previous year 0.2%) from Telecom (PES Discontinued Business).

The detailed segmental performance is referred in Note No. T(9) of the Notes forming part of the unconsolidated financial statements and T(6) of the consolidated financial statements provided in this Annual Report.

GEOGRAPHICAL PERFORMANCE

The Revenue contribution of the Company from the various Geographies is mentioned herein below:

Unconsolidated

S. N. Geography 2015-16 2014-15

1 North America 68.6% 67.5%

2 Europe 17.4% 18.6%

3 Asia Pacific 2.1% 2.5%

4 India 6.1% 4.4%

5 Rest of the World 5.8% 7.0%

Corporate Overview Our DNA - Performance HighlightsStatutory Reports - Directors’ ReportFinancial Statements

Consolidated

S. N. GeographyRevenue from continuing

businessRevenue from discontinued

businessTotal Revenue

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

During the year ended March 31, 2016, your Company had filed Draft Red Herring Prospectus (‘DRHP’) with the Securities & Exchange Board of India (‘SEBI’) for the proposed Initial Public Offer (‘IPO’) of your Company through an Offer for Sale (‘the Offer’) by Larsen & Toubro Limited. Due 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 has filed a revised DRHP on April 12, 2016.

CAPITAL EXPENDITURE

On unconsolidated basis, as at March 31, 2016, the gross fixed and intangible assets stood at ` 8,419.33 Million (previous year

` 7,910.24 Million) out of which assets amounting to ` 1,014.19 Million (previous year ` 1,377.63 Million) were added during the year.

On consolidated basis, as at March 31, 2016, the gross fixed and intangible assets stood at ` 14,209.88 Million (previous year ` 13,379.21 Million) out of which assets amounting to ` 1,346.97 Million (previous year ` 2,243.52 Million) were added during the year.

DIVIDEND

The Directors recommend payment of final dividend of ` 2.60 per equity share of ` 1 each on the share capital.

28


The total dividend on equity shares including interim dividend and proposed dividend for the year ended March 31, 2016 would aggregate to ` 5,908.82 Million (previous year ` 4,805.25 Million) and outflow towards dividend distribution tax would aggregate to ̀ 1,106.73 Million (previous year ` 906.32 Million).

TRANSFER TO RESERVES

The Directors do not propose to transfer any amount to reserve.

DEPOSITS

During the year ended March 31, 2016, the Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

PEOPLE

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 hiring, engaging and retaining key talent. In order to do so, we have initiated the process of capturing the development needs of employees in our Performance Management System.

The Company has put in efforts to continuously simplify all people policies and make them more current and transparent, by seeking inputs from employees, in order to retain our best talent across the globe and build a pipeline of leaders.

We continue to recruit top talent and also recruit from top Universities. We also focus to foster gender diversity in our recruitment drive. This year we have launched a program titled - ‘Catalyst’, to hear the voice of the employees and provide them an opportunity to shape their workplace.

The Directors express their appreciation to all the employees of the Company for their outstanding contribution to the operations of the Company during the year.

INFRASTRUCTURE

The Company has been expanding its facilities to keep pace with revenue growth. Emphasis has been on adding capacity in SEZ locations for the new & incremental business. The new units at Mindspace SEZ- Airoli, Hinjewadi-Pune and DLF SEZ Chennai were made operational during the year ended March 31, 2016. Total capacity at Indian centers stands at 21,585 Seats as on March 31, 2016.

BRANDING

Brand ‘L&T Infotech’ has grown steadily across the globe, riding strongly on the value added to its Global clients in terms of enabling them build innovative business models, enhance operational efficiencies, and creating captivating experiences for their customers. This has significantly enhanced your Company’s visibility across

new industry sectors, new prospects, and also with the Analyst Community.

Your Company’s ability to solve complex business challenges at the convergence of digital and physical with real-world expertise, leadership in domain and technology, and building the best organization to learn & grow will help create the Company to be No.1 in Client-centricity. This will further enhance your Company’s brand value as one of the most recognized IT companies in the world.

QUALITY INITIATIVES

Quality is an all-pervasive commitment of the Company. We translate this commitment into seamless service delivery for our clients. The vision of improvement in Quality and delivery is driven from top to bottom across the organization. We have added new certifications along with sustaining existing ones.

The Company was successfully appraised for CMMI SVC Level 5 in September 2015 for Application support and Infrastructure Management services. The focus for the year was to mature the application support and Infrastructure management services. Effective tools, techniques and predictive models are built and deployed for estimation and project management decision making. Statistical techniques are deployed for monitoring the key project processes. The Company continues to maintain and is now ready to be re-appraised for CMMI Dev Level 5 in May 2016.

The Company continues to adhere to International quality certifications, namely ISO9001:2008, ISO/IEC27001:2013, ISO14001:2004 & ISO/IEC20000-1:2011 through a combined external audit conducted by Bureau Veritas. As per specific client needs and requirements, your company has sustained the ISAE3402 certification for projects of Insurance domain across Business Units and few specific client engagements.

We continue to deliver value to our clients through continuous improvements and value additions. The company has adopted various initiatives such as Lean methodology levers and Extreme Automation to optimize delivery execution and improve productivity. These initiatives are governed and monitored through dashboards and periodic reviews at various levels. On an ongoing basis, we conduct project level and Leadership level client satisfaction surveys to assess the client expectations. Survey results are analyzed to arrive at action plans and initiatives to improve client experience.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board has constituted CSR Committee in terms of the requirements of the Companies Act, 2013. The details relating to the same are given in Annexure H.

29

The Annual Report on CSR is annexed as Annexure A to this Report. CSR Policy of the Company is available on the Company’s website http://www.lntinfotech.com/aboutus/Corporate_social_responsibility.html.

CORPORATE SUSTAINABILITY

Green Initiative

During the year, the Company achieved United States Green Building Council’s LEED - Gold Green Building Certification for Powai office in February 2016. This project helped in energy and water savings, waste and e-waste streamlining and management, switching to green certified products and consumables, and aiding employee comfort.

Occupational Health Safety Initiative

We achieved BS OHSAS 18001:2007 certification for Powai in December 2015. It is aimed at Occupational Health and Safety of all stakeholders working in Powai.

DIRECTORS & KEY MANAGERIAL PERSONNEL

A. Appointment/ Re-appointment:

During the year, following appointments were made on the Board:

a. Mr. Sanjay Jalona as the Chief Executive Officer & Managing Director of the Company w.e.f. August 10, 2015 to August 09, 2020. Mr. Jalona, appointed as an Additional Director, will hold office till the ensuing Annual General Meeting (AGM) and is eligible for appointment.

b. Mr. Arjun Gupta as an Independent Director of the Company w.e.f. October 28, 2015 to October 27, 2020, subject to the approval of the shareholders. Mr. Gupta, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

c. Mr. R. Shankar Raman as a Non-Executive Director of the Company w.e.f. October 28, 2015, subject to the approval of the shareholders. Mr. Shankar Raman, appointed as an Additional Director, will hold office till the ensuing AGM and is eligible for appointment.

Mr. A. M. Naik, Director of the Company, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting of the Company.

The notice convening the AGM includes the proposal for appointment/ re-appointment of Directors.

B. Cessation:

a. Mr. K. R. L. Narasimham ceased to be an Executive Director of the Company w.e.f. April 08, 2015.

b. Mr. Sunil Pande ceased to be an Executive Director of the Company w.e.f. August 26, 2015.

c. Mr. Chandrashekara Kakal ceased to be an Executive Director of the Company w.e.f. August 27, 2015.

d. Mr. V. K. Magapu ceased to be the Managing Director of the Company w.e.f. September 26, 2015.

e. Mr. R. Shankar Raman ceased to be a Director of the Company w.e.f. September 26, 2015.

The Board places on record valuable contribution made by the Directors during their tenure.

C. Key Managerial Personnel:

The following were the changes in the Key Managerial Personnel:

a. Ms. Angna Arora ceased to be the Company Secretary w.e.f. May 08, 2015.

b. 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 Officer w.e.f. August 26, 2015.

c. 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.

d. Mr. Subramanya Bhatt was appointed as the Company Secretary w.e.f. August 26, 2015.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors hereby confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

(ii) the Directors have selected such accounting policies and applied them consistently and 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 on March 31, 2016 and of the profit of the Company for the year ended March 31, 2016;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on a going concern basis; and

(v) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY AUDITORS

The Auditors, M/s. Sharp & Tannan, hold office until the conclusion of the ensuing Annual General Meeting. A certificate from them has been received to the effect that their re-appointment, if made, would


30


be in line with the requirement laid under section 139 & 141 of the Companies Act, 2013. The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. Sharp & Tannan as Auditors of the Company from the conclusion of the ensuing AGM until the conclusion of the next AGM.

The Auditor’s Report to the Shareholders does not contain any qualification and therefore does not call for any comments from Directors.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013, prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, forms part of this Annual Report. The Auditors report to the shareholders does not contain any qualification, observation or adverse comment.

SECRETARIAL AUDITOR

The Secretarial Audit Report issued by Ms. Naina Desai, Practicing Company Secretary does not contain any qualification and is annexed as Annexure B to this Report.

DEPOSITORY SYSTEM

As on March 31, 2016, 99.23% of the Company’s total paid-up capital representing 168,511,518 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories.

CHANGES IN SHARE CAPITAL

During the year, the following changes have occurred in the

authorised and the paid-up equity share capital of the Company:

a. The authorised share capital of the Company was sub-divided

from 32,750,000 equity shares of ` 5 each to 163,750,000

equity shares of ` 1 each. Consequently, the paid up share

capital was also sub-divided from 32,250,000 equity shares of

` 5 each fully paid-up to 161,250,000 equity shares of ` 1 each

fully paid-up. The sub-division was effected from June 22, 2015.

b. The authorised share capital was increased from

` 163.75 Million divided into 163,750,000 equity shares of

` 1 each to ` 200.00 Million divided into 200,000,000 equity

shares of ` 1 each with effect from June 22, 2015.

c. The authorised share capital was further increased to

` 240.00 Million divided into 240,000,000 equity shares

of ` 1 each, pursuant to the Scheme of Amalgamation of

Information Systems Resource Centre Private Limited with

the Company becoming effective from September 21, 2015.

However, there was no change in the paid-up share capital

pursuant to the scheme.

d. During the year 8,566,188 equity shares were allotted on

exercise of the vested options under the employees stock

options schemes of the Company. Hence, the paid-up share

capital of the Company increased from ` 161.25 Million to

` 169.82 Million.

DISCLOSURES UNDER THE COMPANIES ACT, 2013

1. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of annual return is annexed as Annexure C to this Report.

2. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met 6 (six) times during the financial year. The details of the Board meetings and the attendance of Directors are provided in Annexure H - Report on Corporate Governance Report forming part of this Annual Report.

3. AUDIT COMMITTEE

The Board has constituted the Audit Committee in terms of the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure H.

In accordance with the requirements of the Companies Act, 2013, the Company has in place a vigil mechanism framework for directors and employees to report genuine concerns.

4. RELATED PARTY TRANSACTIONS

The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy and all the related party transactions have been entered in accordance thereof and were in the ordinary course of business and at arm’s length. The details of material contracts or arrangement or transactions at arm’s length basis as per Form AOC-2 as per Companies (Accounts) Rules, 2014 is annexed as Annexure D to this report.

5. SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

As at March 31, 2016, the Company has 9 subsidiaries including a Joint Venture. There has been no material change in the nature of the business of subsidiaries.

During the year ended March 31, 2016, the Company subscribed to/acquired equity shares in subsidiary companies as under:

31

A) Shares acquired:

Name of the Company Type of Shares

No. of shares

Larsen & Toubro Infotech Austria GmbH Equity N. A.*

L&T Information Technology Spain SL Equity 50,000

*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 regulations in Austria, the entity being a limited liability company, no share certificate is required to be issued.

B) Equity shares sold/transferred:

Name of the Company Number of shares

Nil Nil

C) Performance and Financial Position of each subsidiary/ associate and joint venture companies:

A statement containing the salient features of the financial statement of subsidiaries/ associate/ joint venture companies as per form AOC-1 is annexed as Annexure E to this Report.

During the year ended March 31, 2016, operations of following subsidiaries were reviewed and a restructuring process was carried out:

AMALGAMATION OF ISRC WITH THE COMPANY

Ø Pursuant to the Scheme of Amalgamation sanctioned by the Hon’ble High Court of Bombay vide its order dated September 04, 2015, Information Systems Resource Centre Private Limited (ISRC) was amalgamated with the Company with effect from September 21, 2015. The appointed date for the Scheme was October 17, 2014. Consequently, the entire business, assets, liabilities, duties and obligations of ISRC have been transferred to and vested in the Company with effect from October 17, 2014.

Ø ISRC was engaged in the business of software services with respect to application development, information technology support and maintenance services to OTIS Elevator Company, USA and other companies of UTC group and was acquired by the Company on October 16, 2014.

AMALGAMATION OF GDA TECHNOLOGIES LIMITED WITH THE COMPANY

Ø The Board of Larsen & Toubro Infotech Limited and GDA Technologies Limited in their meetings held on October 17, 2014, respectively, approved the Scheme of amalgamation of GDA Technologies Limited with the Company under Section 391 to 394 of the Companies Act, 1956. The Hon’ble High Court of Bombay has sanctioned the Scheme of Amalgamation vide its order dated April 01, 2016. The approval of the Scheme by the Hon’ble High Court of Madras is awaited. The appointed date for the proposed scheme is April 1, 2016.

6. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED

The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided in the notes forming part of the financial statements provided in this Annual Report.

7. EMPLOYEE STOCK OPTION SCHEMES

The disclosure relating to the Employee Stock Option Schemes of the Company as required under the Companies Act, 2013 and rules made thereunder is annexed as Annexure F to this Report.

Pursuant to the resolution passed by the Board on July 27, 2015 and the shareholders on September 14, 2015, the Company has instituted the Larsen & Toubro Infotech Limited Employee Stock Option Scheme, 2015 (“ESOP Scheme, 2015”) for issue of options to eligible employees which may result in issue of Equity Shares of up to 8,062,500 equity shares of face value of ` 1 each. Under the ESOP Scheme 2015, no options have been granted as on the date of this report.

8. COMPANY POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Company has constituted the Nomination and Remuneration Committee (NRC) in accordance with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details relating to the same are given in Annexure H.

The Committee has formulated a policy on Director’s appointment and remuneration including recommendation of remuneration of key managerial personnel and the criteria for determining qualifications, positive attributes and independence of a Director.

9. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received Declaration of Independence from its Independent Directors as stipulated under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of Independence.

10. INDEPENDENT DIRECTORS MEETING

The meeting of the Independent Directors was held on January 22, 2016, as per schedule IV of the Companies Act, 2013.

11. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.


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12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as per Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo is given in Annexure G to this report.

13. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations in future.

CORPORATE GOVERNANCE REPORT

A report on Corporate Governance is annexed as Annexure H to this

Report.

ACKNOWLEDGEMENTS

The Directors thank the Company’s customers, vendors and

academic institutions for their support to the Company. The

Directors also acknowledge the support and co-operation from the

Government of India and the Governments of various countries, the

concerned State Governments and other Government Departments

and Governmental Agencies. The Directors appreciate and value the

contributions made by every member of the L&T Infotech family

globally.

For and on behalf of the Board

Sanjay Jalona R. Shankar Raman Chief Executive Officer & DirectorPlace: Mumbai Managing Director (DIN: 00019798)Date: April 26, 2016 (DIN: 07256786)

33

Annual Report on Corporate Social Responsibility (CSR) Activities

for FY16

1. A brief outline of the Company’s CSR policy, including overview

of projects or programs proposed to be undertaken and a

reference to the web-link to the CSR policy and projects or

programs.

The Company’s primary focus is on ‘Computer Literacy & Education’

for employment as part of its CSR programme which includes,

amongst others, the following verticals:

a) Skills Development & Employability - may include but not

limited to programmes covering computer literacy and training

programmes for employability for disadvantaged youth.

b) Education - may include but not limited to support to

educational institutions, educational programmes & nurturing

talent at various levels for disadvantaged youth.

c) Educational aids - supporting differently-abled and other

students by providing IT infrastructure support for specific

programmes.

d) Environment - may include but not limited to programmes for

conservation and preservation of environment.

e) Women Empowerment - supporting eligible NGOs with

infrastructure and facilitating market reach.

During the period under review, the Company’s CSR initiative “1Step”

organized several projects in the above thrust areas, as per details

given below. But the most important aspect was level of involvement

of CSR team and volunteers at every step of these projects that gives

us a close understanding of the community issues and the goals we

are trying to meet. This way of working also allowed us to learn a lot

on how to handle projects. The experience from these interactions

would help us when we are scaling up projects in FY17.

IT Skills and Education

Overall we now have 45 locations (12 in FY15) from where we impart

computer skills – the primary thrust area. From these 45, 18 centers

are set-up and dedicated for youth for employability. From these

centers 1,144 (320 From FY15) youth passed out and 123 who were

inclined to take jobs were placed. The balance 27 computer centers

were set up in schools for teaching IT curriculum and covered 3,401

school children (300 during FY15).

ANNEXURE A TO THE DIRECTORS’ REPORT

Corporate OverviewOur DNA - Performance HighlightsStatutory Reports - Director’s Report | AnnexuresFinancial Statements - Consolidated Cash Flow Statement

Volunteers and partner NGOs taught Science, English and Maths in

additional 11 schools-cum-study covering 17,098 children (3,902

during FY15). Kindly see Table 1 below.

We have added higher level of IT courses covering popular financial

package in India and also value added course on computer hardware

and networking.

We have set up projects in Q4FY16 which would scale up during

subsequent years and thus take us closer to the target spend

on CSR.

These projects launched in Q4FY16 leverage internet, audio /

video technologies, open source software and are based on unique

engagement models including community learning, which are aimed

at employment through digital literacy. Further the technology

now allows us to do projects in locations away from our office

locations where CSR interventions are needed but are otherwise not

possible. But in such locations we do depend and involve the local

community.

Women Empowerment

As part of woman empowerment program we have created

infrastructure to generate recurring income for 150 women. We

also assisted 2,800 women to generate income throughout the year

from sale of their products.

Visually impaired youth

For visually impaired youth; volunteers record audio books from

text books which enables them to access study material through

these audio books. The number of Talking Books recorded so far

were 58 (30 in FY15). The audio books reached 4,500 students who

were directly benefitted from it. Volunteers also wrote examination

papers of competitive examinations and assisted them in

getting jobs.

Employee volunteering and beneficiaries

During the year 4,576 Volunteers (3,442 in FY15) of 1Step, L&T

Infotech employee-volunteering program, participated in all the

above projects. The hours contributed by them were 11,852. Last

year we were advised to monitor volunteering hours which we

started this year. 1Step projects directly impacted 35,258 (18,282

in FY15) beneficiaries.

34


Table 1

Particulars

For Financial Year2016 2015

Total Youth School Children

Total Youth School Children

Computer skills project

Number of computer center locations 45 18 27 12 6 6

Beneficiaries 4,545 1,144 3,401 620 320 300Educational programs covering Science, Maths, and English – Beneficiaries

17,098 - 17,098 3,902 - 3,902

Talking Books for Visually impaired – Number of books 58 30Talking Books for Visually impaired – Number of beneficiaries

4,500 3,500

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)

35

5 (iii) Manner in which the amount spent during the financial year is detailed below: (in ` Million)

S.N. CSR Project or activity identified

Sector in which the project is covered

Projects or programs 1) Local area or other 2) Specify the State and District where project was undertaken

Amount Outlay

(Budget) project or programs

wise

Direct expenses

Overheads Cumulative Expenditure

up to the reporting

period

Amount spent: Direct or through implementing agency

1 Computer Skills

Education Mumbai, Navi Mumbai, Pune, Maharashtra, Bangalore, Chennai, Karnataka and Tamil Nadu

11.76 6.61 0.39 7.00 Direct, Pratham NGO

2 Educational Education Mumbai, Navi Mumbai, Maharashtra, Wai, Mangaon, Bilaspur, Chennai, Karnataka, Chhatisgarh and Tamil Nadu

13.24 8.53 0.39 8.92 Direct, Adhyayan NGO, Sevalaya NGO

3 Women empowerment

Women empowerment

Maharashtra and Tamil Nadu

3.60 0.89 0.39 1.28 Aarambh NGO, Sevalaya NGO

4 Environment projects

Environment projects

Maharashtra, Karnataka, Tamil Nadu and Rajasthan

1.70 0.10 - 0.10 Say Trees NGO, Pariyavaran Shala NGO

5 Nepal Earthquake Relief *

Prime Minister's National Relief Fund

- - 6.15 - 6.15 Direct

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.


36


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]

ANNEXURE B TO THE DIRECTORS’ REPORTFORM NO. MR-3

To,

The Members,

LARSEN & TOUBRO INFOTECH LIMITED

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by LARSEN & TOUBRO INFOTECH LIMITED (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conduct/ statutory compliances and expressing my opinion thereon.

Based on my verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the company has, during the audit period covering the financial year ended on March 31, 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’), as applicable:-

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; presently, (Prohibition of Insider Trading) Regulations, 2015;

c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; presently, (Share Based Employee Benefits) Regulations, 2014;

e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

(vi) Other specific business/industry related laws that are applicable to the company, viz.

The Information Technology Act, 2000.

The Special Economic Zone Act, 2005.

Policy relating to Software Technology Parks of India and its regulations.

The Indian Copyright Act, 1957.

The Patents Act, 1970.

The Trade Marks Act, 1999.

Indian Telegraph Act.

Telecom Regulatory Authority of India (TRAI)/Department of Telecommunication (DOT) Guidelines.

Other Service Provider Guidelines (Governed by DOT)

37

I have also examined compliance with the applicable clauses of the following:

i. Secretarial Standards issued by The Institute of Company Secretaries of India.

ii. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Listing Agreements entered into by the Company with Stock Exchange(s), if applicable. This is not applicable.

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.

I further report that, in my opinion, there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the audit period the following events / actions have taken place which have a major bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc., like -

(i) Public/Right/Preferential issue of shares / debentures/sweat equity, etc.–

The Company in its Board meeting held on June 16, 2015 has taken approval for the Offer for Sale by Larsen & Toubro Limited in the Initial Public Offer of the Company. Pursuant to the same, the Company had filed its Draft Red Herring Prospectus (DRHP) on September 28, 2015. Due to change in the Offer structure and other considerations, the said DRHP was withdrawn on April 11, 2016 and the revised DRHP filed on April 12, 2016.

(ii) Redemption / buy-back of securities. – NIL.

(iii) Major decisions taken by the members in pursuance to section 180 of the Companies Act, 2013. – NIL.

(iv) Merger / amalgamation / reconstruction, etc.–

Amalgamation of Information Systems Resource Centre Private Limited with the Company with effect from September 21, 2015;

Petitions for sanctioning the Scheme of Amalgamation of GDA Technologies Limited with the Company with Appointed Date being April 1, 2016, admitted with the Hon’ble High Courts of Judicature at Bombay and Madras. The Bombay High Court has approved the Scheme vide its Order dated April 1, 2016, while the approval from Madras High Court is awaited.

(v) Foreign technical collaborations – NIL.

(vi) Other Event –

During FY 2015-16, the Company has filed Form ODI with respect to the investment CAD 171,500 made in October 2005 in Larsen & Toubro Infotech Canada Limited. Also Annual Performance Reports for the said entity for FY 2005-06 till 2014-15 have been filed. Compounding application, under FEMA regulation for the above mentioned delay in reporting, to be re-submitted, on receipt of directions from the Reserve Bank of India;

The Board and the shareholders in their meetings held on June 16, 2015 and June 22, 2015, respectively, had approved the following:

a) Adopted a new set of Articles of Association of the Company in line with the Companies Act, 2013 and Listing Agreement.

b) Sub-division of face value of equity shares from ` 5 to ` 1 per share;

c) Increase in Authorised Share Capital from equity share capital of ̀ 163.75 Million to ̀ 200.00 Million of face value ` 1 per equity share.

The Authorised share capital of the Company was further increased to ` 240.00 Million divided into 240,000,000 Equity Shares of ` 1 each with effect from September 21, 2015, pursuant to the approval of the the Scheme of Amalgamation of Information Systems Resource Centre Private Limited with the Company, by the Bombay High Court vide its Order dated September 4, 2015.

NAINA R DESAIPractising Company Secretary

Place: Mumbai Membership No. 1351Date: April 20, 2016 Certificate of Practice No.13365

This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.


38


Our report of even date is to be read along with this letter.

1) Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2) We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3) We have not verified the correctness and appropriateness of financial records and Books of Account of the Company.

ANNExURE A TO THE SECRETARIAL AUDIT REPORT

To,

The Members

LARSEN & TOUBRO INFOTECH LIMITED

4) Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5) The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6) The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

NAINA R DESAIPractising Company Secretary

Place: Mumbai Membership No. 1351Date: April 20, 2016 Certificate of Practice No.13365

39

ExTRACT OF ANNUAL RETURNas 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]

ANNEXURE C TO THE DIRECTORS’ REPORTFORM NO. MGT-9

I. REGISTRATION AND OTHER DETAILS:

S.N. Particulars1 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 sharesIndian Non-Government Company

5 Address of the Registered office and contact details L&T House, Ballard Estate, Mumbai-400001Tel: +91 22 6776 6138Email: [email protected]

6 Whether listed Company No

7 Name, Address and Contact details of Registrar and Transfer Agent, if any

Link Intime India Private Limited Address: C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 400078, Maharashtra, IndiaTel: +91 22 2594 6970 Fax: +91 22 2594 6969Email: [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:-

S. N. Name and Description of main products / servicesNIC Code of theProduct/ service

% to total turnover of the company

1 Computer programming, consultancy and related activities 620 100.00

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

S. N. Name and Address of the Company CIN/GLNHolding/

Subsidiary/Associate

% of sharesheld

Applicable Section

1 Larsen & Toubro LimitedAdd: L&T House, N. M. Marg, Ballard Estate, Mumbai-400001

L99999MH1946PLC004768 Holding Company

94.96 2(46)

2 Larsen & Toubro Infotech GmbHAdd: Euro-Asia Business Center, Messe-Allee 2, D-04356, Leipzig, Germany

- Subsidiary 100.00 2(87)


40


S. N. Name and Address of the Company CIN/GLNHolding/

Subsidiary/Associate

% of sharesheld

Applicable Section

3 Larsen & Toubro Infotech Canada LimitedAdd: 2810, Matheson Blvd East, Suite 500, Mississauga, ON L4W 4X7, Canada


4 Larsen & Toubro Infotech LLCAdd: 1220, N. Market St., Suite 806, Wilmington, DE 19801, Country of New Castle, United State of America


5 L&T Infotech Financial Services Technologies Inc.Add: 2810, Matheson Blvd East, Suite 500, Mississauga, ON L4W 4X7, Canada


6 Larsen And Toubro Infotech South Africa (Pty) LimitedAdd: 6th Floor, 119 Hertzog Boulevard, Foreshore 8001, South Africa


7 L&T Information Technology Services (Shanghai) Co., Ltd.Add: Room 1100m Building 2, No.1388, Xingxian Road, Jaiding District, Shanghai, China


8 GDA Technologies LimitedAdd: No.9-A, Chinthamani Nagar, K. K. Pudur, Coimbatore-641 038, India

U72200TZ1997PLC008145 Subsidiary 100.00 2(87)

9 Larsen & Toubro Infotech Austria GmbH Add: c/o Oberhammer Rechtsanwälte GmbH, Karlsplatz 3/1, 1010 Vienna, Austria


10 L&T Information Technology Spain SLAdd: C/JOSÉ ABASCAL 56 2nd Floor, Madrid, Spain


IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

Category Code

Category of Shareholder(s)

No. of shares held at the beginning of the year No. of shares held at the end of the year % Change during

the year

No. of shares in

Dematerilised Form

No. of shares

in PhysicalForm

Total No. of shares

% of Total

Share

No. of shares in

Dematerilised Form

No. of shares in Physical

Form

Total No. of shares

% of Total Share

(A) Shareholding of Promoter and Promoter Group

(1) Indian

(a) Individuals/ Hindu Undivided Family

0 0 0 0.00 0 0 0 0.00 0.00

(b) Central Government/ State Government(s)

0 0 0 0.00 0 0 0 0.00 0.00

(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/ Banks

0 0 0 0.00 0 0 0 0.00 0.00

(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)

41

Category Code



the year

No. of shares in

Dematerilised Form

No. of shares

in PhysicalForm

Total No. of shares

% of Total

Share

No. of shares in

Dematerilised Form


Form

Total No. of shares

% of Total Share

(2) Foreign

(a) Individuals (Non-Residents Individuals/Foreign Individuals)

0 0 0 0.00 0 0 0 0.00 0.00

(b) Bodies Corporate 0 0 0 0.00 0 0 0 0.00 0.00

(c) Financial Institutions/ Banks

0 0 0 0.00 0 0 0 0.00 0.00

(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 of Promoter and Promoter Group (A1 + A2)

0 32,250,000 32,250,000 100.00 161,250,000 0 161,250,000 94.96 (5.04)

(B) Public Shareholding

(1) Institutions

(a) Mutual Funds/ UTI 0 0 0 0.00 0 0 0 0.00 0.00

(b) Financial Institutions / Banks

0 0 0 0.00 0 0 0 0.00 0.00

(c) Central Government/ State Government(s)

0 0 0 0.00 0 0 0 0.00 0.00

(d) Venture Capital Funds

0 0 0 0.00 0 0 0 0.00 0.00

(e) Insurance Companies 0 0 0 0.00 0 0 0 0.00 0.00

(f) Foreign Institutional Investors

0 0 0 0.00 0 0 0 0.00 0.00

(g) Foreign Venture Capital Investors

0 0 0 0.00 0 0 0 0.00 0.00

(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 Shareholders holding nominal share capital up to ` 1 Lakh

0 0 0 0.00 4,938,210 443,944 5,382,154 3.17 3.17

(ii) Individual Shareholders holding nominal share capital in excess of ` 1 Lakh

0 0 0 0.00 701,250 0 701,250 0.41 0.41

(c) Others

(i) Directors and their relatives

0 0 0 0.00 871,875 0 871,875 0.51 0.51


42


Category Code



the year

No. of shares in

Dematerilised Form

No. of shares

in PhysicalForm

Total No. of shares

% of Total

Share

No. of shares in

Dematerilised Form


Form

Total No. of shares

% of Total Share

(ii) Non Resident Repatriates

0 0 0 0.00 634,824 377,670 1,012,494 0.60 0.60

(iii) Non Resident Non Repatriates

0 0 0 0.00 104,310 158,166 262,476 0.15 0.15

(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 Shareholding (B1 + B2)

0 0 0 0.00 7,261,518 1,304,670 8,566,188 5.04 5.04

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 Custodians and against which Depository Receipts have been issued

0 0 0 0.00 0 0 0 0.00 0.00

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

S. N. Shareholder’s Name

Shareholding at theBeginning of the year

Shareholding at theEnd of the year

% change in shareholding

during theYear

No. ofShares

% of total Shares of

the company

% of SharesPledged/

encumberedto totalshares

No. ofShares


the company

% of SharesPledged/

encumberedto totalshares

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

S. N. Particulars


Cumulative Shareholding during the year

No. ofShares


the company

No. ofShares


the company1 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. allotment / transfer / bonus/ sweat equity etc)

Not Applicable*

At the End of the year 161,250,000 94.96

43

*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):

S. N. For Each of the Top 10 Shareholders



No. ofShares


the company

No. ofShares


the company1 VIJAY KUMAR MAGAPU At the beginning of the year - - - -

Date wise Increase / Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

25.11.2015 420,000 0.26 420,000 0.26

At the End of the year - - 420,000 0.25

2 YESHWANT MORESHWAR DEOSTHALEE At the beginning of the year - - - -


15.12.2015 281,250 0.17 281,250 0.17


3 VINA BADAMI At the beginning of the year - - - -


05.12.2015 140,000 0.08 140,000 0.08


4 VIVEK SHANTARAM SHIROOR At the beginning of the year - - - -


05.12.2015 127,000 0.08 127000 0.08

25.12.2015 (4,000) (0.00) 123000 0.07

18.01.2016 15,000 0.00 138000 0.08

At the End of the year - - 1,38,000 0.08

5 MAKARAND G DEOLALKAR At the beginning of the year - - - -


10.11.2015 128,937 0.08 128,937 0.08



44


S. N. For Each of the Top 10 Shareholders



No. ofShares


the company

No. ofShares


the company6 SHRINIVASAN VENKATARAMAN At the beginning of the year - - - -


15.12.2015 125,000 0.07 125,000 0.07


7 KAVINDRA SHARMA At the beginning of the year - - - -


25.11.2015 75,312 0.05 75,312 0.05

15.12.2015 39,375 0.02 114,687 0.07


8 HAE RYONG JEONG At the beginning of the year - - - -


15.12.2015 111,250 0.07 111,250 0.07


9 KASUKHELA SITAPATI RAO At the beginning of the year - - - -


15.12.2015 110,500 0.07 110,500 0.07


10 (i) GOPA KUMAR PERIYADAN At the beginning of the year - - - -


10.11.2015 100,000 0.06 100,000 0.06


10 (ii) RAVIKUMAR R THUMMARUKUDY At the beginning of the year - - - -


15.12.2015 100,000 0.06 100,000 0.06


45

iv) Shareholding of Directors and Key Managerial Personnel:

S. N. For Each of the Directors and KMP


Cumulative Shareholdingduring the year

No. ofShares


the company

No. ofShares


the company1 ANILKUMAR MANIBHAI NAIK At the beginning of the year - - - -

Date wise Increase /Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

25.11.2015 871,875 0.53 871,875 0.53


V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

(` Million)

ParticularsSecured Loans

Excluding depositsUnsecured

LoansDeposits Total

IndebtednessIndebtedness at the beginning of the financial year:i) Principal Amountii) Interest due but not paidiii) Interest accrued but not due

877.780.851.34

1,297.480.090.13

---

2,175.260.941.47

Total (i+ii+iii) 879.97 1,297.70 - 2,177.67

Change in Indebtedness during the financial year:• Addition• Reduction

1,300.641,898.68

1,055.732,088.19

--

2,356.373,986.87

Net Change (598.04) (1,032.46) - (1,630.50)

Indebtedness at the end of the financial year:i) Principal Amountii) Interest due but not paidiii) Interest accrued but not due

279.740.140.86

265.02-

0.07

---

544.760.140.93

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)

S. N. Particulars of Remuneration

Name of MD/ WTD/ Manager

TotalAmount

Mr. V. K.Magapu1

(MD)

Mr. K. R. L. Narasimham2

(WTD)

Mr. Chandrashekara Kakal3

(Chief Operating Officer & WTD)

Mr. SunilPande4

(WTD)

Mr. Sanjay Jalona5

(Chief Executive Officer & MD)

1 Gross salary:

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

-0.17 10.85 5.33 19.56 35.91

(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

-- - - - -


46



Name of MD/ WTD/ Manager

TotalAmount

Mr. V. K.Magapu1

(MD)

Mr. K. R. L. Narasimham2

(WTD)

Mr. Chandrashekara Kakal3

(Chief Operating Officer & WTD)

Mr. SunilPande4

(WTD)

Mr. Sanjay Jalona5

(Chief Executive Officer & MD)

2 Stock Option - - - - - -

3 Sweat Equity - - - - - -

4 Commission:- as % of profit- others,

--

--

--

--

12.32-

12.32-

5 Others (please specify): - - - - -

1. Portion of Advisory fees charged by Holding Company

7.35- - - - 7.35

2. Contribution to Provident Fund & Superannuation Fund

-- - - 1.73 1.73

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)

S. N. Particulars of RemunerationFee for attending Board /

Committee MeetingsCommission Others,

please specifyTotal Amount

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.

47

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD:(` Million)


Key Managerial Personnel

Total Amount

Mr. Ashok Kumar

Sonthalia (CFO)1

Mr. Subramanya

Bhatt (Company

Secretary)2

Mr. P. S. Kapoor(CFO & Company

Secretary)3

Ms. Angna Arora

(CompanySecretary)4

1 Gross salary:

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

5.96 3.12 0.66 0.11 9.85

(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 0.30Total (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 Officer w.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.


48


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 the related partyand nature of relationship

Nature of contracts/arrangements/ transactions

Duration of the contracts/ arrangements/ transactions

Salient terms of the contracts or arrangements or transactions including the value, if any:

Date(s) of approval bythe Board,

if any:

Amount paid as

advances, if any:

Amount(` in Million)

1 Larsen & Toubro Limited(Holding Company)

Sale of Software &Other services / products

1 year As per commercial terms in line with business practices and comparable with unrelated parties

NotApplicable

- 1,073.57

2 L&T Technology Services Ltd.(Fellow Subsidiary Company)

Purchase of Software &Other services / products

1 year As per commercial terms in line with business practices and comparable with unrelated parties

NotApplicable

- 694.17

For and on behalf of the Board

Sanjay Jalona R. Shankar Raman Chief Executive Officer & Director Managing Director (DIN: 00019798) (DIN: 07256786)

ANNEXURE D TO THE DIRECTORS’ REPORT

49

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 Subsidiary

Larsen & Toubro

Infotech GmbH

Larsen & Toubro

Infotech Canada Limited

GDA Technologies

Limited

Larsen & Toubro

Infotech LLC

L&T Infotech Financial Services

Technologies Inc.2

Larsen And Toubro South

Africa (Pty) Limited

L&T Information Technology

Services (Shanghai)

Co. Ltd.

Larsen & Toubro

Infotech Austria GmbH1

L&T Information Technology

Spain SL1

3 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

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

4 Reporting currency

EUR CAD INR USD CAD ZAR CNY EUR EUR

Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries

75.10 51.02 - 66.38 51.23 4.50 10.20 75.10 75.10

5 Share capital 1.14 0.00 1.68 - 2,799.97 2.67 10.96 2.60 3.65

6 Reserves & surplus

280.63 100.34 369.07 112.62 471.06 17.98 (5.99) (0.51) (0.61)

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 taxation

65.03 40.66 19.06 12.47 270.86 8.24 2.16 (0.51) (0.85)

12 Provision for taxation

8.26 9.88 0.69 - 77.38 3.08 - - (0.24)

13 Profit after taxation

56.76 30.78 18.37 12.47 193.48 5.16 2.16 (0.51) (0.61)

14 Proposed Dividend

- - - - - - - - -

15 % of shareholding

100.00 100.00 100.00 100.00 100.00 74.90 100.00 100.00 100.00

Notes:1. Following Subsidiaries are yet to commence business: a. Larsen & Toubro Infotech Austria GmbH b. L&T Information Technology Spain SL2. L&T Infotech Financial Services Technologies Inc. has paid interim dividends amounting to ` 486.69 Million

ANNEXURE E TO THE DIRECTORS’ REPORT


50


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- xxI1 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 year of option amounting to 5% or more of options granted during that year:#

Nil Nil

(iii) Identified employees granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Nil Nil

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.

ANNEXURE F TO THE DIRECTORS’ REPORT

51

B. Employee Stock Ownership Scheme - 2006 U.S. Stock Option Sub-Plan*

S.N. Particulars U.S. Sub-Plan 20061 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 the year:#

Nil

(ii) Any other employee who recieves a grant of options in any one year of option amounting to 5% or more of options granted during that year:#

Nil

(iii) Identified employees granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant

Nil

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.


52


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.

ANNExURE G TO THE DIRECTORS’ REPORT

53

(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:

S.N. Details of Technology importedYear of import

Whether the technology been fully absorbed

If not fully absorbed, areas where absorption has not taken place, and the reasons thereof

1 Enterprise BI for Analytics and reporting: With 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.

2014 Fully absorbed

2 Sales automation: Company has embarked Sales 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

2015 Fully absorbed

3 Employee Engagement Portal: Company has 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.

2015 Fully absorbed

4 Unify Program: Company has embarked on eliminating all point to point integration through implementation of unified integration platform using Oracle Fusion middle ware ESB. The initiative also includes Business Process Automation leveraging Oracle Fusion Middleware BPM.

2015 Partially absorbed Unify program got started in Jan 2015. As of now 52 out of total 92 interfaces are migrated on to ESB platform. By end of Sep 2016, it’s planned to migrate all remaining interfaces onto ESB.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 implemented SAP HCM, thus streamlining its Current HCM processes. The implementation aims at providing automation for self-service processes across HCM operations.

2013 Fully absorbed


54


S.N. Details of Technology importedYear of import

Whether the technology been fully absorbed

If not fully absorbed, areas where absorption has not taken place, and the reasons thereof

6 Connexions: New communication & collaboration platform based on Facebook at Work was launched for transforming and fostering culture of innovation and collaboration at workplace.

2016 Partially absorbed Program Connexions has been recently launched and is operational across the organization, it is expected to be fully absorbed by end of second quarter of FY17.

7 Microsoft Dynamics Ax: Implemented to make ease of operation in admin process.

2015 Fully absorbed

8 Digite SwiftALM: “Compass” initiative is taken up for implementing specialized product Digite SwiftALM for Application Lifecycle Management function as applicable to growing future business needs of our organization and it’s replacing legacy in-house developed Splice-M application.

2015 Partially Absorbed Configuration is done for almost all process lifecycles. It’s already implemented for 30% of projects. It’s planned to be implemented in phases across entire organization by Dec-2016

9 SAP BPC: SAP’s Budgeting Planning & Control module is being implemented for setting up, tracking, monitoring and controlling annual budgets across entire organization.

2016 Partially absorbed BPC implemented for all corporate services BEUs. Planned to implement the same for BUs by Dec 2016.

(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 122.60b. 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 2014-15Foreign Exchange Earned 52,785.78 45,395.45

Foreign Exchange Used 26,471.20 21,819.13

55

Your Company derives its values from the rich legacy of fair and transparent governance and disclosure practices followed by the L&T group. In line with the group philosophy, the Company constantly endeavors to benchmark itself with the best practices in the IT industry. The Company will continue to focus its resources, strengths and strategies to achieve its vision of becoming a true global leader in software services, while upholding the core values of excellence, integrity, responsibility, unity and understanding, which are fundamental to the L&T group.

BOARD OF DIRECTORS

As on March 31, 2016, the Board comprises of 8 Directors, of which,

ANNEXURE H TO THE DIRECTORS’ REPORT

CORPORATE GOVERNANCE REPORT

1 Director is Executive, 3 are Non-Executive and 4 are Independent Directors. The Board is chaired by Mr. A. M. Naik as a Non-Executive Chairman. The Board meets at least, four times during the financial year and gap between 2 consecutive meetings is not more than 120 days. Additional meetings are held, if deemed necessary to conduct the business.

During the year ended March 31, 2016 the Board met 6 (Six) times on 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 Directors’ attendance at the Board Meetings held during the year is as follows:

Name of Director Category Attendance at Board MeetingsMr. A. M. Naik Non-Executive Chairman 6Mr. V. K. Magapu1 Managing Director 4Mr. S. N. Subrahmanyan Non-Executive Director 4Mr. R. Shankar Raman2 Non-Executive Director 4Mr. Sanjay Jalona3 Chief Executive Officer & Managing Director 3Mr. Chandrashekara Kakal4 Chief Operating Officer & Executive Director 4Mr. K. R. L. Narasimham5 Executive Director 0Mr. Sunil Pande6 Executive Director 2Mr. Samir Desai Independent Director 5Mr. M. M. Chitale Independent Director 6Ms. Vedika Bhandarkar Independent Director 5Mr. 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.

56


BOARD COMMITTEES

The Board currently has 5 Committees: 1) Audit Committee; 2)

Nomination and Remuneration Committee; 3) Corporate Social

Responsibility Committee; 4) Stakeholders’ Relationship Committee

and 5) IPO Committee. Your Company has also constituted a Risk

Management Committee which is chaired by a member of the

Board and also comprises of Senior Executives such as the Chief

Financial Officer amongst its members. The Board is responsible

for constituting, assigning and appointing the members of the

Committees.

AUDIT COMMITTEE

During the year, the Audit Committee was re-constituted and as on

March 31, 2016 comprises of 2 Independent Directors and 1 Non-

Executive Director as its members. The Chairman of the Committee is

an Independent Director. The role, terms of reference, the authority and

power of the Audit Committee were also amended/ modified to be in

conformity with the requirements of the Companies Act, 2013 and SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year ended March 31, 2016, the Audit Committee met 4

(Four) times on May 8, 2015, July 27, 2015, October 27, 2015 and

January 21, 2016. The composition of the Committee as on March

31, 2016 is as follows:

Name of Director Position in the Committee

Category

Mr. M. M. Chitale Chairman IndependentMr. Samir Desai Member IndependentMr. S. N. Subrahmanyan1 Member Non-Executive

Note:

(1) Mr. S. N. Subrahmanyan was inducted as a member w.e.f. August 26, 2015.

(2) Mr. R. Shankar Raman ceased to be Chairman and member w.e.f. July

27, 2015 and August 26, 2015, respectively.

(3) After March 31, 2016 Ms. Vedika Bhandarkar was inducted as a

member w.e.f. April 18, 2016.

The terms of reference of the Audit Committee include the following:

1. Oversight of the Company’s financial reporting process and

the disclosure of its financial information to ensure that the

financial statement is correct, sufficient and credible;

2. Recommendation for appointment, re-appointment and

replacement, remuneration and terms of appointment of

auditors of the company;

3. Approval of payment to statutory auditors for any other

services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial

statements and auditor’s report thereon before submission to

the board for approval, with particular reference to:

a) Matters required to be included in the Director’s

Responsibility Statement to be included in the Board’s

report in terms of clause (c) of sub-section 3 of Section

134 of the Companies Act, 2013;

b) Changes, if any, in accounting policies and practices and

reasons for the same;

c) Major accounting entries involving estimates based on

the exercise of judgment by management;

d) Significant adjustments made in the financial statements

arising out of audit findings;

e) Compliance with listing and other legal requirements

relating to financial statements;

f) Disclosure of any related party transactions;

g) Modified opinion(s) in the draft audit report.

5. Reviewing, with the management, the quarterly financial

statements before submission to the board for approval;

6. Reviewing, with the management, the statement of uses /

application of funds raised through an issue (public issue, rights

issue, preferential issue, etc.), the statement of funds utilised

for purposes other than those stated in the offer document /

prospectus / notice and the report submitted by the monitoring

agency monitoring the utilisation of proceeds of a public or

rights issue, and making appropriate recommendations to the

Board to take up steps in this matter;

7. Review and monitor the auditor’s independence and

performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of

the Company with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the company, wherever

it is necessary;

11. Evaluation of internal financial controls and risk management

systems;

12. Reviewing, with the management, performance of statutory

and internal auditors, adequacy of the internal control systems;

13. Reviewing the adequacy of internal audit function, if any,

including the structure of the internal audit department,

staffing and seniority of the official heading the department,

reporting structure coverage and frequency of internal audit;

14. Discussion with internal auditors of any significant findings and

follow up there on;

15. Reviewing the findings of any internal investigations by the

internal auditors into matters where there is suspected fraud

57

or irregularity or a failure of internal control systems of a

material nature and reporting the matter to the board;

16. Discussion with statutory auditors before the audit

commences, about the nature and scope of audit as well as

post-audit discussion to ascertain any area of concern;

17. To look into the reasons for substantial defaults in the

payment to the depositors, debenture holders, shareholders

(in case of non-payment of declared dividends) and

creditors;

18. To establish and review the functioning of the Whistle Blower

mechanism;

19. Approval of appointment of the chief financial officer (i.e., the

whole-time Finance Director or any other person heading the

finance function or discharging that function) after assessing

the qualifications, experience and background, etc. of the

candidate; and

20. Carrying out any other function as is mentioned in the terms

of reference of the Audit Committee and any other terms

of reference as may be decided by the Board or specified/

provided under the Companies Act, 2013 or by the SEBI

(Listing Obligations and Disclosure Requirements) Regulations,

2015 or by any other regulatory authority.

NOMINATION AND REMUNERATION COMMITTEE

During the year, the Nomination and Remuneration Committee

was re-constituted and as on March 31, 2016 comprises of

2 Independent Directors, 1 Non-Executive Director and the

Non-Executive Chairman as its members. The Chairman of

the Committee is an Independent Director. The role, terms

of reference, the authority and power of the Nomination and

Remuneration Committee were also amended / modified to

be in conformity with the requirements of the Companies Act,

2013 and SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015.

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,

2015 and January 22, 2016. The composition of the Committee as

on March 31, 2016 is as follows:


Category

Mr. Samir Desai1 Chairman IndependentMr. A. M. Naik2 Member Non-Executive

ChairmanMr. S. N. Subrahmanyan3 Member Non-ExecutiveMr. M. M. Chitale1 Member Independent

Note:

(1) Mr. Samir Desai was appointed as Chairman in place of Mr. M. M. Chitale w.e.f. August 26, 2015.

(2) Mr. A. M. Naik was inducted as a member w.e.f. August 26, 2015


(4) Mr. V. K. Magapu and Mr. R. Shankar Raman ceased to be members w.e.f. August 26, 2015.

Terms of Reference

The terms of reference of the Nomination and Remuneration

Committee include the following:

1. Formulation of the criteria for determining qualifications,

positive attributes and independence of a director and

recommend to the Board a policy relating to the remuneration

of the directors, key managerial personnel and other

employees;

2. Formulation of criteria for evaluation of Independent Directors

and the Board of directors;

3. To consider and approve Employee Stock Option Schemes and

to administer and supervise the same;

4. Devising a policy on diversity of Board of Directors;

5. Identifying persons who are qualified to become directors and

who may be appointed in senior management in accordance

with the criteria laid down, and recommend to the Board their

appointment and removal;

6. To consider whether to extend or continue the term of

appointment of the independent director, on the basis of

the report of performance evaluation of independent

directors;

7. Performing such other activities as may be delegated by the

Board or specified/ provided under the Companies Act, 2013

or by the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 or by any other regulatory

authority.

CORPORATE SOCIAL RESPONSIBLITY (‘CSR’) COMMITTEE

During the year, the CSR Committee was reconstituted and as on

March 31, 2016 comprises of 1 Independent Director, 1 Non-

Executive Director and the Chief Executive Officer & Managing

Director as its members. The Chairman of the Committee is a Non-

Executive Director.

The Committee met once during the year on April 7, 2015.

The composition of the Committee as on March 31, 2016 is as

follows:

Corporate Overview Our DNA - Performance HighlightsStatutory Reports - Corporate Governance ReportFinancial Statements

58



Category

Mr. S. N. Subrahmanyan1 Chairman Non-ExecutiveMr. Sanjay Jalona1 Member Chief Executive

Officer & Managing Director

Mr. M. M. Chitale Member Independent

Note:

(1) Mr. S. N. Subrahmanyan and Mr. Sanjay Jalona were inducted as Chairman and member, respectively w.e.f. August 26, 2015.

(2) Mr. V. K. Magpau and Mr. Chandrashekara Kakal ceased to be Chairman and member, respectively w.e.f. August 26, 2015.

Terms of Reference

The terms of reference of the Corporate Social Responsibility

Committee include the following:

1. To formulate and recommend to the Board, a Corporate

Social Responsibility Policy which shall indicate the activities

to be undertaken by the Company as specified in Schedule VII of

the Companies Act, 2013 including any amendments thereto;

2. To recommend the amount of expenditure to be incurred on

the CSR activities referred to in the above clause; and

3. To monitor CSR policy of the Company including instituting

a transparent monitoring mechanism for implementation of

CSR projects or programs or activities undertaken by the Company.

STAKEHOLDERS’ RELATIONSHIP COMMITTEE

During the year, the Company constituted Stakeholders’ Relationship

Committee which as on March 31, 2016 comprises of a Non-

Executive Director, 1 Independent Director and the Chief Executive

Officer & Managing Director as its members. The Chairman of the

Committee is a Non-Executive Director.

The composition of the Committee as on March 31, 2016 is as

follows:


Category

Mr. S. N. Subrahmanyan1 Chairman Non-ExecutiveMs. Vedika Bhandarkar1 Member IndependentMr. Sanjay Jalona1 Member Chief Executive


Note:

(1) Mr. S. N. Subrahmanyan was appointed as Chairman whilst Ms. Vedika Bhandarkar & Mr. Sanjay Jalona were inducted as members w.e.f. August 26, 2015.

(2) Mr. R. Shankar Raman and Mr. V. K. Magapu ceased to be Chairman and member respectively w.e.f. August 26, 2015.

Mr. Subramanya Bhatt, Company Secretary is the Compliance Officer

who deals with Shareholders’ grievance matters.

There was no meeting of the Stakeholders’ Relationship Committee

held during the year.

The terms of reference of the Stakeholders’ Relationship Committee

include the following:

1. To redress grievances of shareholders, debenture holders and

other security holders;

2. Investigating complaints relating to allotment of shares,

approval of transfer or transmission of shares, debentures or

any other securities;

3. Issue of duplicate certificates and new certificates on split/

consolidation/renewal;

4. To consider and resolve grievances related to non-receipt

of declared dividends, annual report of the Company or any

other documents or information to be sent by the Company to

its shareholders; and

5. Carrying out any other function as may be decided by

the Board or specified/ provided under the Companies

Act, 2013 or SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 or by any other

regulatory authority.

IPO COMMITTEE

IPO Committee was constituted during the year and as on March 31,

2016 comprises of the Non-Executive Chairman as the Chairman of

the Committee, 1 Non-Executive Director and the Chief Executive

Officer & Managing Director as its members.

The Committee met 2 (Two) times on August 26, 2015 and September

27, 2015. The composition of the Committee as on March 31, 2016

is as follows:


Category

Mr. A. M. Naik Chairman Non-Executive ChairmanMr. S. N. Subrahmanyan1 Member Non-ExecutiveMr. Sanjay Jalona2 Member Chief Executive


Note:


(2) Mr. Sanjay Jalona was inducted as a member w.e.f. September 26, 2015.

(3) Mr. V. K. Magapu and Mr. R. Shankar Raman ceased to be members

w.e.f. August 26, 2015 and September 26, 2015, respectively.

59

Terms of Reference

The IPO Committee of the Company was constituted to handle

matters related to the IPO of the Company such as the appointment

of various intermediaries including book running lead managers,

registrar to the offer, underwriters, legal counsels and bankers to

the Offer, to negotiate, finalise and to execute various agreements

such as offer agreement, share and cash escrow agreements and

syndicate agreement, to make applications to statutory and other

authorities from time to time, determination of the price band and

the offer price and other aspects related thereto such as settlement

of all questions, difficulties or doubts in regard to the Offer and any

such matters incidental to the same.

RISK MANAGEMENT COMMITTEE

The Risk Management Committee as on March 31, 2016 comprises

of Mr. S. N. Subrahmanyan, Non-Executive Director as the Chairman

and Mr. Sanjay Jalona, Chief Executive Officer & Managing Director

and Mr. Ashok Kumar Sonthalia, Chief Financial Officer as its

members. The majority of members including the Chairman are

Board members. The Committee met 3 (Three) times during the

year on April 14, 2015, June 18, 2015 and October 27, 2015.

Terms of Reference

The terms of reference of the Risk Management Committee include

the following:

1. Framing, implementing, reviewing and monitoring the risk

management plan for the Company;

2. Laying down risk assessment and minimization procedures

and the procedures to inform Board of the same;

3. Oversight of the risk management policy/ enterprise risk

management framework (identification, impact assessment,

monitoring, mitigation & reporting);

4. Review key strategic risks at domestic/international, macro-

economic & sectoral level (including market, competition,

political & reputational issues);

5. Review significant operational risks; and

6. Performing such other activities as may be delegated by the

Board or specified/ provided under the Companies Act, 2013 or

by the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 or statutorily prescribed under any other

law or by any other regulatory authority.

The details of the risk management framework form part of this

Annual Report.

REMUNERATION OF DIRECTORS

The remuneration of the Directors is based on the Company’s size, global presence, its economic and financial position, compensation

paid by peer companies, the qualification of the appointee(s), their experience, past performance and other relevant factors.

The Independent Directors are paid sitting fees of ` 50,000/- for each Board Meeting and ` 25,000/- for each Committee Meeting. The details of remuneration paid / payable to the Directors have

been disclosed in Annexure C to the Directors Report.

DETAILS OF SHARES HELD BY NON-EXECUTIVE DIRECTORS AS ON

MARCH 31, 2016:

Name of the Director No. of shares

Mr. A. M. Naik 871,875

PERFORMANCE EVALUATION OF BOARD

The Board has voluntarily adopted a formal mechanism for evaluating its performance as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects such as Board Composition and its structure, its culture, Board effectiveness, Board functioning, information availability, etc. The results were discussed in the meeting of the Nomination and Remuneration Committee and the Board.

INFORMATION TO DIRECTORS

Systems, procedures and resources are in place to ensure that every

Director is supplied, in a timely manner, with precise and concise

information in a form and of a quality appropriate to effectively

enable / discharge his / her duties. The Directors are given time to

study the data and contribute effectively to the Board discussions.

The Non-Executive Directors through their interactions and

deliberations give suggestions for improving overall effectiveness of

the Board and its Committees.

ANNUAL GENERAL MEETINGS

The details of last three Annual General Meetings of the Company

are as under:

For the Financial Year ended

Venue of AGM Date and Time

2014-15 L&T House, Ballard Estate, Mumbai – 400 001.

June 12, 2015 at 10.00 a.m.


September 10, 2014 at 10.00 a.m.


August 26, 2013 at 9.00 a.m.

No Special Resolutions were passed by the shareholders during the

past 3 Annual General Meetings.


60


DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN

AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL)

ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line

with the requirements of The Sexual Harassment of Women at

Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’).

Internal Complaints Committee (‘ICC’) has been constituted as

per the Act, to redress the complaints received regarding sexual

harassment. All employees (permanent, contractual, temporary,

trainees) are covered under this policy.

The ICC team resolved one complaint filed in March 2015 by taking

suitable action. During the year under review there was no case

reported under the Act.

COMPLIANCE MONITORING SYSTEM

The Company believes that statutory compliance has become

a catalyst for Corporate Governance and that a good statutory

compliance system has become vital for effective conduct of

business operations. As a major portion of the Company’s business

is conducted abroad, apart from ensuring compliance with Indian

statutes, the Company also has to comply with the statutes of the

countries where the Company has presence.

Keeping this in mind, the Company has instituted a Compliance

Monitoring System. Under this system, a certificate is presented to

the Board every quarter, confirming that the Company has complied

with all relevant provisions and requirements of various statutes

as they are applicable to the business of the Company in India and

abroad as well as with the contractual obligations binding on the

Company. The certificate to the Board is based on back to back

certificates received from various compliance owners representing

Business Heads, Overseas Branches, Subsidiary Companies and

other support functions. As regards to the services availed from

the professional service providers engaged in various countries,

the Company follows a practice of obtaining compliance certificates

from them on quarterly basis.

The Compliance Monitoring System which was rolled out by the

Company during the year ended March 31, 2010 in form of the

Compliance Portal is being extensively used by all the Compliance

owners. The Compliance portal provides the users a web–based

access with access controls based on a defined authorization

matrix. Besides connecting all the compliance owners across time

zones to a common platform, the portal is expected to serve

as a repository of the compliance exercise yielding substantial

saving in resources and efforts for tracking compliance going

forward.

In order to monitor compliances in a more robust way, the Company

has initiated deployment of a third party Compliance tool, with

advanced features & enhanced Compliance checklist.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has designed and implemented a process driven

framework for Internal Financial Controls (‘IFC’) within the meaning

of the explanation to Section 134(5)(e) of the Companies Act, 2013.

For the year ended March 31, 2016, the Board is of the opinion that

the Company has sound IFC commensurate with the nature and size

of its business operations and operating effectively and no material

weaknesses exist. The Company has a process in place to continuously

monitor the same and identify gaps, if any, and implement new and/

or improved controls wherever the effect of such gaps would have a

material effect on the Company’s operations.

GENERAL SHAREHOLDER INFORMATION

a) Share Transfer System:

The Company’s investor services are handled by Link Intime

India Private Limited who are the Company’s Registrar and

Share Transfer Agent. The Board has delegated the authority

for approving transfer, transmission etc. of the Company’s

securities to the Transfer Committee which comprises of

the Chief Executive Officer & Managing Director, the Chief

Financial Officer and the Company Secretary.

b) Dematerialization Of Shares:

The Company has dematerialized its Equity Shares with NSDL

and CDSL and the Company’s ISIN is INE214T01019.

The share transfers of dematerialized shares can be made

through your Depository Participant.

As on March 31, 2016, 99.23% of the Company’s total paid-up

capital was held in the dematerialized form with NSDL and CDSL.

The number of shares held in dematerialized and physical

mode is as under:

Particulars No. of shares % of total capital issued

Held in Dematerialized form in NSDL

167,558,937 98.67

Held in Dematerialized form in CDSL

952,581 0.56

Physical 1,304,670 0.77TOTAL 169,816,188 100.00

Members are requested to convert their physical holdings into

electronic holdings which will negate risks associated with physical

certificates.

61

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.


62


Company Overview

L&T Infotech is one of India’s global IT services and solutions companies. In 2015, NASSCOM ranked our company as the sixth largest Indian IT services company in terms of export revenues. We were amongst the top 20 IT service providers globally in 2015 according to the Everest Group’s PEAK Matrix for IT service providers. Our clients comprise some of the world’s largest and well-known organisations, including 49 of the Fortune Global 500 companies.

We offer an extensive range of IT services to our clients in diverse industries such as banking and financial services, insurance, energy and process, consumer packaged goods, retail and pharmaceuticals, media and entertainment, hi-tech and consumer electronics and automotive and aerospace. Our range of services includes application development, maintenance and outsourcing, enterprise solutions, infrastructure management services, testing, digital solutions and platform-based solutions. We serve our clients across these industries, leveraging our domain expertise, diverse technological capabilities, wide geographical reach, an efficient global delivery model, thought partnership and “new age” digital offerings.

We were incorporated in 1996 and are headquartered in Mumbai, India. We leverage the strengths and heritage of our Promoter, Larsen & Toubro Limited, a leading Indian conglomerate in engineering, construction, manufacturing, finance and technology. The L&T group provides us with access to professionals with deep industry knowledge in the sectors in which we do business. We have also inherited from L&T group, it’s corporate and business culture and corporate governance practices, which in our view places us in good stead in relation to our business. In addition, we benefit from the commonality of business verticals with our Promoter.

Our growth has been marked by significant expansion of business verticals and geographies in which we do business. Besides India, we

ManageMent DisCussiOn & ANALySIS

provide services globally from North America, Europe, Asia Pacific and the rest of the world. As of March 31, 2016, we had 22 Delivery Centres and 44 sales offices globally.

i. economic Overview

global economic scenario:

Post the economic crisis of 2008, the global economy has continued to be on the recovery path, however the pace of this recovery has been extremely sluggish and fragile. The key economic events that have defined and driven the world economy in the past one year and a few months are slowdown of the Chinese economic juggernaut due to rebalancing and a prolonged slump in energy and commodity prices, especially oil. These two developments have severely impacted the developing economies, especially the energy and commodity exporters such as Brazil, Russia, etc. However, this has been balanced, albeit partially, by modest revival in growth of many developed countries, especially the United States of America. This kind of a mixed bag scenario has been further complicated by the volatility in the global financial markets, which have reacted with wild swings especially during the last months of 2015 and initial part of 2016 in the background of mixed economic news and major decisions by the US Federal Reserve to increase the interest rates from 0% to 0.25% - 0.5% and Chinese Central Bank’s move to devalue the Yuan. As per the IMF report, global growth during the second half of 2015, at 2.8 percent, was weaker due to slowdown during Q4. In their assessment, this weakness reflected, to a significant degree, softening of economic activity in major advanced economies of United States and Japan. However, economic sentiments have recovered and prospects for the world economy in 2016 are expected to be better than 2015, although marginally so and with significant downside risks.

63

indian economic Overview:

With the economy growing by 7.2% in 2014-15 and expected to grow by 7.6% in 2015-16 (based on revised base to 2011-12), India overtook China as the fastest growing large economy.The revival in growth momentum has however underwhelmed on account of the sluggish global economic scenario, no major uptick in domestic demand and subdued investments from the private sector due to balance sheets overburdened with debt. However, the new Government has managed to improve the overall macroeconomic health of the economy by reducing the fiscal deficit and current account deficit being curtailed due to reduced oil price decline. Going forward some of the factors that will drive the Indian growth story especially in 2016 will be as follows:

• Jump in public investments by Government in the major infrastructure sectors

• Potential increase in consumption on account of 7th pay commission and One Rank One Pension implementation

• Expected normal monsoon after two continuous rainfall deficient years and Government’s focus on rural sector will drive rural demand

• Continued reform measures and Government’s initiatives to attract foreign investments

• Decline in interest rates on account of drop in inflation

In addition to this, further reforms and policy initiatives of the Government are likely to ensure uptick in growth for the Indian economy. Some of the important initiatives such as ‘Make in India’, ‘Digital India’, ‘Skill India’ and ‘Start-Up India’ mission are being aggressively promoted by the Indian government. On the negative side, overhang of debt related stress in the major sectors of the economy, including banking, and further tapering of exports due to fragile economic scenario globally will continue impact negatively for some more time.

ii. industry Overview

global it-BPM industry in 2015:

Key trends in the Global IT-BPM Market noted by NASSCOM were as follows:

• Increasing number of firms are using custom application development as a means to enhance customer service with tailored solutions. The need to be differentiate their company and competitors and the need to comply with regulations and industry mandates are driving growth in the segment.

• CADM services using cloud computing, mobility considered as a strategic tool to enhance business processes and improve customer satisfaction and acquisition.

• Social, Mobile, Analytics & Cloud (SMAC) adoption across industries became all pervasive driving growth in IT services.

• Enterprise applications becoming increasingly consumer oriented, mobile and on-the-go; applications’ delivery mechanism shifting to cloud-based environment.

• Demand for migration, porting and re-platforming of traditional on premise application to SaaS from both clients and ISVs provide significant opportunity.

• Agile testing is growing in acceptance even though it is yet to fully mature.

• Crowd-sourced testing is gaining popularity and testing automation as well as data management are adapting to the new technology demands.

• Key drivers for third party and GICs are cloud based testing, IP-led testing, testing-as-a-service, automated testing and testing in domain-specific niche services along with transformational programs using SMAC and Internet of Things (IoT).

• The year was marked by spinoffs, buyouts, divestitures and focused acquisitions among service providers which helped bolster the bottom line for the vendors and their customers. Technology M&A deals in volume registered a record high of USD 713 billion in 2015 on a global basis.Driven by increased competition, some other firms took the restructuring of businesses route to improve profits and reduce costs.

(Source: NASSCOM Report)

III. SignificantFactorsAffectingOurResultsofOperations

This section sets out certain key factors that our management believes have historically affected our results of operations during the year under review, or which could affect our results of operations in the future.

Clientrelationships

Client relationships are at the core of our business. We have a history of high client retention and derive a significant proportion of our revenues from repeat business built on our successful execution of prior engagements. In the year ended March 31, 2016 we generated 96.9% of our revenue from existing clients.

As a client relationship matures and deepens, we seek to maximise our revenues and profitability by expanding the scope of IT services offered to that client with the objective of winning more business from our clients, particularly in relation to our more substantive and value-added IT service offerings.

Corporate Overview Our DNA - Performance HighlightsStatutory Reports - Management Discussion & AnalysisFinancial Statements

64


Compositionofrevenueportfolio

Our ability to achieve growth in our revenues is dependent on composition of the proportion of work performed onsite and offshore through our global delivery model.

Our offshore export service revenues consist of revenues from IT services performed in our facilities in India. Our onsite export service revenues consist of revenues from software services performed at clients’ premises or from our Delivery Centres outside India. Onsite services typically generate higher revenues than the same services performed offshore, and our profit margins are typically higher if work is performed offshore as compared to onsite. Accordingly, the mix of IT services performed onsite and offshore has an impact on our ability to achieve higher profit margins.

The following table shows the proportionate contribution from our onsite and offshore export service revenue on consolidated basis for the periods indicated:

Percentageofexportservicerevenuefromoperations

2015-16 2014-15

Onsite 52.3% 51.8%

Offshore 47.7% 48.2%

employees and employee costs

A principal component of our ability to compete effectively is our ability to attract and retain qualified employees. Our number of employees increased to 20,072 as of March 31, 2016 from 19,479 as of March 31, 2015.

Employee benefit expenses constituted 57.5% and 57.7% of our total income in the year ended March 31, 2016 and March 31, 2015. Wage costs in India, including in the IT services industry, have historically been more competitive than wage costs in the United States, Europe and other developed economies.

In addition, we continue to invest in the recruitment and retention of sales and administration staff in line with our growth and expand our markets.

Foreigncurrencyfluctuations

Since our key clients are foreign corporate and the majority of our revenues are generated outside of India we are exposed to translation and transaction foreign exchange risks. Although we partly benefit from a natural hedge for our foreign currency revenues against our foreign currency expenses, we also have an exposure to foreign exchange rate risk in respect of revenues or expenses entered into in

a currency where corresponding expenses or revenues are denominated in different currencies. Such transactions are denominated in currencies such as USD, Euro, Canadian Dollars, British Pound Sterling and South African Rand.

In addition, the overall competitiveness of the Indian IT industry in the global market is also significantly dependent on favourable exchange rates.

TaxbenefitsforIndianITcompanies

We have historically benefited from the direct and indirect tax benefits given by the Government for the export of IT services from SEZs, including for our business. As a result, a substantial portion of our profits is exempt from income tax leading to a lower overall effective tax rate than that which we would otherwise enjoy if we were doing business outside SEZs, and we will continue to enjoy these benefits in the near future. Our effective tax rate was 19.6% and 18.0%, respectively in the year ended March 31, 2016 and March 31, 2015.

Until March 31, 2011, direct and indirect tax benefits were also available for the export of IT services from software development centres registered under the STPI Scheme, including for our business. From April 1, 2011 onwards, we have enjoyed only indirect tax benefits for our business through software development centers registered under the STPI Scheme.

IV. FinancialConditionsConsolidated

SourcesofFunds

1. ShareCapital(` Million)

as atMarch31,2016

as atMarch31,2015

Authorised :240,000,000 equity shares of ` 1 each (Previous year 32,750,000 of ` 5 each)

240.00 163.75

Issued, paid up and subscribed 169,816,188 equity shares of ` 1 each(Previous year 32,250,000 of ` 5 each)

169.82 161.25

EQUITYSHARECAPITAL 169.82 161.25

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.

65

b) The authorised share capital of the Company was increased by ̀ 36.25 Million comprising of 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, the authorised share capital of the Company was increased by ` 40.00 Million comprising of 40,000,000 equity shares of ` 1 each on amalgamation.

d) The Issued, paid up and subscribed share capital increased by ` 8.57 Million on account of shares issued on exercise of employee stock options during the year ended March 31, 2016.

2. ReservesandSurplus

(` Million)

as atMarch31,2016

as atMarch31,2015

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. LongTermandShortTermBorrowings(` Million)

AsatMarch31,2016 AsatMarch31,2015non-current Current total non-current Current total

Long-TermBorrowings

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-TermBorrowings

Secured loans

Other loans from banks - 132.51 132.51 - 600.00 600.00

UnsecuredLoans

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


66


The Company’s long-term borrowings decreased to ` 147.23 Million as at March 31, 2016 from ` 277.78 Million as at March 31, 2015 on account of repayment of external commercial borrowing to the extent of ` 130.55 Million during the year as per repayment schedule.

The Company’s short-term borrowings stood at ` 397.53 Million at March 31, 2016 from ` 1,897.48 Million as at March 31, 2015 on account of net repayment of loans.

4. Deferredtaxliabilities/assets(` Million)

as atMarch31,2016

as atMarch31,2015

Deferred Tax Liability 1,206.25 238.03

Deferred Tax Asset 2.37 10.29

Deferred tax liability or asset is recognised on timing differences between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

During the year, the increase in Deferred Tax liability is mainly on account of:

• Premia earned on forward contracts: - Pursuant to Income Computation and Disclosure Standards, premia earned on forward contracts is taxable on settlement and not at the time of entering the forward contract and this creates a timing difference for which Deferred Tax liability has been created

5. Currentliabilities(` Million)

as atMarch31,2016

as atMarch31,2015

Trade payables 3,276.40 2,719.47

Other current liabilities 2,764.95 1,723.48

Short-term provisions 5,170.88 2,815.44

CurrentLiabilities 11,212.23 7,258.39

Current liabilities consisting of trade payables, other current liabilities and short term provisions stood at ` 11,212.23 Million as of March 31, 2016 from ` 7,258.39 Million as of March 31, 2015.

Other current liabilities as of March 31, 2016 include proposed dividend along with dividend distribution tax which has been represented as the final dividend. The Board of Directors, in its meeting held on April 26, 2016, have proposed a final dividend of ` 2.60 per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on May 31, 2016.

Short term provisions comprise of provisions for employee benefits on account of gratuity and compensated absences and income tax provision.

6. FixedAssets(` Million)

as atMarch31,2016

as atMarch31,2015

Tangible assets 2,791.89 2,749.82

Intangible assets 3,583.23 4,084.52

Capital work-in-progress 6.95 53.33Intangible assets under development

188.41 198.45

NetFixedAssets 6,570.48 7,086.12

Additions:

Additions to the gross block in the year ended March 31, 2016 amounted to ` 1,346.97 Million. The Company has been continuously investing in infrastructure facilities on account of computers, office equipment, expansion of development centres and overseas offices, in order to meet growing business needs.

Deductions:

During the year, the company disposed various assets with a

gross block of ` 728.50 Million, particularly on vacancy of an

office space in Chennai location in India.

7. TradeReceivables

Trade receivables amounted to ` 11,659.87 Million (net

of provision for doubtful debts amounting to ` 160.69

Million) as at March 31, 2016, compared to ` 10,901.16

Million (net of provision for doubtful debts amounting to

` 175.30 Million) as at March 31, 2015.

67

Debtors are at 19.9% of revenue from operations for the

year ended March 31, 2016, compared to 21.9% as at

March 31, 2015.

8. UnbilledRevenue

Unbilled revenue primarily comprise of costs and

earnings in excess of billings to the clients on fixed-

price, fixed-time frame, and time-and-material contracts.

Unbilled revenue stood at ` 3,787.89 Million as at March

31, 2016 as against ` 1,544.50 Million at March 31,

2015 since the composition of fixed price and system

integration contracts increased during the year.

9. Cash&Bank

The bank balances in India include both rupee accounts

and foreign currency accounts. The bank balances

in overseas accounts are maintained to meet the

expenditure of the overseas operations.

Deposits with financial institutions represent surplus

money deployed in form of deposits and collaterals

kept against open ended bank guarantees issued to

customers. The cash & bank balance stood at ` 2,033.66

Million as at March 31, 2016 from ` 2,009.21 Million as

at March 31, 2015

10. Loans&advances(` Million)

as atMarch31,2016

as atMarch31,2015

Long-term loans and advances

4,249.13 2,439.79

Short-term loans and advances

5,837.47 5,554.52

TotalLoans&Advances 10,086.60 7,994.31

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 ` 1,809.34 Million and increase in short-term loans and advances of ` 282.95 Million.

The increase in loans and advances was primarily attributable to 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 and not at the time of earning. Prior to the application of ICDS, such premia were taxable when earned. Due to this change, MAT credit recoverable has increased, and tax charge has decreased with corresponding increase in deferred tax provision.

V. ResultsofouroperationsConsolidated

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) %oftotal

income(` Million) %oftotal

incomeincomeRevenue 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%ExpensesEmployee 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%TotalExpenses 48,114.45 78.3% 39,735.79 78.4%Operatingprofit 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%Profitbeforeextraordinaryitemsandtax 11,472.67 18.7% 9,275.98 18.3%Profitfromcontinuingoperationsbeforetax 11,472.67 18.7% 9,266.26 18.3%


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income(` Million) %oftotal

income

Extraordinary items - - 93.95 0.2%Profitfromcontinuingoperationsbeforetax 11,472.67 18.7% 9,360.21 18.5%Taxexpensesforcontinuingoperations- 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%Profitfromcontinuingoperationsaftertax 9,223.06 15.0% 7,679.13 15.0%Profitfromdiscontinuedoperationsbeforetax - - 9.72 0.02%Taxexpensesfordiscontinuedoperations- Current tax - - 1.69 0.003%Profitfromdiscontinuedoperationsaftertax - - 8.03 0.002%Profitfortheyearbeforeminorityinterest 9,223.06 15.0% 7,687.16 15.2%Minority interest 1.29 0.002% 1.90 0.004%PROFITFORTHEYEAR 9,221.77 15.0% 7,685.26 15.2%

BFS Insurance Energy

CPG, Retail & Pharma

High-Tech, Media & Entertainment

Auto Aero & Others

49,681

58,471

2014-15 2015-16

13,454

9,939

8,047

4,6156,104

7,522

11,473

6,6585,419

7,427

12,093

15,401

` MillionRevenue Contribution by Verticals

49,681

58,471

2014-15 2015-16

ADM Enterprise Solutions IMS

Testing Digital Platform Based Solutions

21,583

12,326

4,3444,7024,6972,029

24,442

13,834

5,6555,7496,4942,297

` MillionRevenue Contribution by Services

FinancialYear2016ComparedtoFinancialYear2015

1. income

Our total income comprises of revenue from operations and other income.

Our total income increased by 21.2% to ` 61,430.21 Million for the year ended March 31, 2016 from ` 50,695.36 Million for the year ended March 31, 2015, primarily due to an increase in our revenue from

operations and other income primarily on account of foreign exchange gain.

Revenuefromoperations

We generate revenue from our continuing operations through time-and-materials contracts and fixed-price contracts by providing IT services and solutions to our clients in our industrials and services clusters.

%ofservicerevenuefromoperations

2015-16 2014-15Fixed-Price 45.0% 40.3%Time and Materials 55.0% 59.7%TOTAL 100.0% 100.0%

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Our revenue from continuing operations increased by 17.7% to ` 58,470.60 Million for the year ended March 31, 2016 from ` 49,680.94 Million for the year ended March 31, 2015, primarily as a result of growth in our revenues in our banking and financial services, insurance, automotive and aerospace, media and entertainment and plant equipment business verticals, as well as our digital solutions, testing and IMS service lines, which was partially offset by lower revenues from continuing operations in our energy and process business vertical.

North America Europe Asia Pacific

India RoW

49,681

58,471

2014-15 2015-16

` MillionRevenue Contribution by Geography

34,098

8,8631,199

2,0763,445

40.370

10,125 1,1913,4003,385

Revenue from continuing operations in North America increased by 18.4% to ` 40,370.47 Million for the year ended March 31, 2016 from ` 34,097.77 Million for the year ended March 31, 2015, primarily as a result of growth in our banking and financial services, insurance, media and entertainment and automotive and aerospace business verticals. Revenue from continuing operations in Europe increased by 14.2% to ` 10,124.59 Million for the year ended March 31, 2016 from ` 8,862.74 Million for the year ended March 31, 2015, primarily as a result of increase in revenues from existing clients and revenues from new clients in Nordics, Germany and France.

Revenue from continuing operations in Asia-Pacific decreased by 0.7% to ` 1,190.47 Million for the year ended March 31, 2016 from ` 1,199.12 Million for the year ended March 31, 2015, primarily as a result of completion of projects for a large client. Revenue from continuing operations in India increased by 63.8% to ` 3,400.19 Million for the year ended March 31, 2016 from ` 2,075.90 Million for the year ended March 31, 2015, primarily as a result of increase in revenue attributable to system integration projects from new clients in the banking and financial services, plant equipment and the defence business verticals.

Revenue from continuing operations in the rest of the world decreased by 1.8% to ` 3,384.88 Million for the year ended March 31, 2016 from ` 3,445.41 Million for the year ended March 31, 2015, primarily as a result of currency devaluation of the South African Rand against the Indian Rupee which negatively impacted our revenue from continuing operations in South Africa and due to the completion of implementation of projects for few large clients in the Middle East.

Our USD revenue from continuing operations comprise revenues denominated in USD, in addition to amounts in foreign currencies across our operations, that are converted into USD using the month-end/day-end exchange rates for the relevant period. Such revenues increased by 9.5% to USD887.2 Million for the year ended March 31, 2016 from USD809.9 Million for the year ended March 31, 2015.

Other Income

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.

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 exchange gain of ` 2,795.57 Million in the year ended March 31, 2016 compared with a foreign exchange gain of ` 667.81 Million in the year ended March 31, 2015.

In order to mitigate our foreign exchange risk, we have a long-term hedging policy. We hedge the major currencies in which we transact business (for example, the US dollar and the Euro) by entering into forward contracts. Our forward contracts are run on a net exposure basis, typically for a period of up to three years. These forward contracts provide for payments by banks to us in the situations where the spot exchange rate on maturity is lower than the rate at which forward contracts were entered and payment by us to the banks in situations where the spot exchange rate on maturity is higher than the rate at which forward contracts were entered. Such forward contracts are treated as foreign currency transactions and accounted for accordingly. Exchange differences arising on such contracts are recognised in the period in which they arise and the premium paid/received is accounted as expense/income over the period of the contract and the impact is reversed upon maturity of the contract.

In the year ended March 31, 2016, the depreciation of major currencies in which we transact business against the US dollar, was offset by the forward rates contracted with banks in the past. This, coupled with higher volume of forward contracts entered into and maturing in this period, led to a higher gain on settlement under our forward contracts and higher premia 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 in the year ended March 31, 2016.

2. Expenses

Our expenses include employee benefit expenses, operating expenses, sales, administration and other expenses, finance costs, depreciation and amortisation and tax expenses. Our total expenses increased by 21.1% to ` 48,114.45 Million for the year ended March 31, 2016 from ` 39,735.79 Million for the year ended March 31, 2015, primarily as a result of an increase in employee benefit expenses, which was attributable to the growth of our operations.

Employeebenefitexpenses

Employee benefit expenses comprise salaries (including overseas staff expenses); staff welfare; contributions to provident and other funds; contributions to superannuation funds and contributions to gratuity funds.

Our employee benefit expenses increased by 20.9% to ` 35,346.58 Million for the year ended March 31, 2016 (which represented 57.5% of our total income for such year) from ` 29,242.73 Million for the year ended March 31, 2015 (which represented 57.7% of our total income for such year), primarily as a result of increase in salaries, including overseas staff expenses, to ` 33,997.84 Million from ` 28,056.30 Million. Due to the growth of our operations, our usage of local hires and increase in company level annual increments has impacted costs.

Operatingexpenses

Operating expenses comprise communication expenses; operating lease charges; consultancy charges; cost of software packages for own use; insurance; and the cost of bought-out items for resale.

Our operating expenses increased by 37.4% to ` 6,710.80 Million for the year ended March 31, 2016 (which represented 10.9% of our total income for such year) from ` 4,885.63 Million for the year ended March 31, 2015 (which represented 9.6% of our total income for such year). This was primarily as a result of an increase in the costs of bought-out items for resale (which relates to the purchase of hardware and software license) to ` 1,982.12 Million for the year ended March 31, 2016 from ` 742.76 Million for the year ended March 31, 2015 and a 16.6% increase in our consultancy charges to ` 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 cases, primarily as a result of increase in services performed for clients requiring us to work with external sub-contractors.

Sales,administrationandotherexpenses

Sales, administration and other expenses primarily comprise rent and establishment expenses; travelling and conveyance; legal and

professional charges; telephone charges and postage; rates and taxes; power and fuel and other miscellaneous expenses.

Our sales, administration and other expenses increased by 8.0% to ` 6,057.07 Million for the year ended March 31, 2016 (which represented 9.9% of our total income for such year) from ` 5,607.43 Million for the year ended March 31, 2015 (which represented 11.1% of our total income for such year), primarily as a result of increase in repairs to building in Vashi and transit houses in Airoli and other locations, increase in general repairs and maintenance expenses for new units which became fully operational in the year ended March 31, 2016, higher tax rates and taxes payable in relation to the growth of our operations offset by reversal of provision made in the year ended March 31, 2015 for California state taxes pursuant to a final judicial order received in our favour. The increase in miscellaneous expenses is due to certain one-time expenses and increase in expenditure made on account of CSR activities.

Financecosts

Finance costs comprise interest paid on fixed loans, external commercial borrowings and lease finance charges. Exchange losses on borrowings are also accounted for as part of finance costs.

Our finance costs decreased by 0.6% to ` 103.57 Million for the year ended March 31, 2016 from ` 104.19 Million for the year ended March 31, 2015, primarily due to repayment of loans during the year.

Depreciationandamortization

Tangible and intangible assets are amortised over periods corresponding to their estimated useful lives.

Our depreciation on tangible assets decreased by 0.7% to ` 736.67 Million for the year ended March 31, 2016 from ` 741.55 Million for the year ended March 31, 2015, and our amortisation of intangible assets increased by 19.7% to ` 1,002.85 Million for the year ended March 31, 2016 from ` 837.85 Million for the year ended March 31, 2015 primarily as a result of amortization of certain software purchased at the beginning of the year ended March 31, 2016 which were leased from third parties during the year ended March 31, 2015 and consequently, we did not record any amortization relating to such software in our financial accounts for such period.

Profitbeforeextraordinaryitemsandtax

As a result of the above mentioned factors, our profit before extraordinary items and tax was ̀ 11,472.67 Million for the year ended March 31, 2016 (which represented 18.7% of our total income for such year) and ̀ 9,275.98 Million for the year ended March 31, 2015 (which represented 18.3% of our total income for such year).

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Profitfromcontinuingoperationsbeforetax

As a result of the foregoing factors, our profit from continuing operations before tax increased by 23.8% to ` 11,472.67 Million for the year ended March 31, 2016 (which represented 18.7% of our total income for such year) from ` 9,266.26 Million for the year ended March 31, 2015 (which represented 18.3% of our total income for such year).

Taxexpenses

Tax expenses comprise of current tax and deferred tax. Current income tax is the amount expected to be paid to the tax authorities in accordance with the applicable tax laws in relevant jurisdictions. Deferred income tax reflects the impact of timing differences between taxable income and accounting income.

Our current tax increased by 0.2% to ` 1,649.17 Million for the year ended March 31, 2016 from ` 1,645.32 Million for the year ended March 31, 2015. This decrease was primarily due to an increase in the overseas taxes corresponding to increase in operations and increase in overseas withholding taxes which was offset by reduction in current tax provision in India due to application of ICDS with effect from April 1, 2015. Under ICDS, tax treatment for premia earned on forward contracts has changed and premia earned on forward contracts is taxable on settlement and not at the time of earning. Prior to the application of ICDS, such premia were taxable when earned. Due to this change, current tax provision is reduced (and MAT credit entitlement has increased), with corresponding increase in deferred tax provision. Thus, there is no impact on total tax provision (current plus deferred) due to application of ICDS.

Our deferred tax charge for the year ended March 31, 2016 was ` 600.44 Million as against our deferred tax charge for the year ended March 31, 2015 of ` 35.76 Million owing to the application of ICDS as explained above.

Our total tax expense has increased by 33.8% to ̀ 2,249.61 Million for the year ended March 31, 2016 from ` 1,681.08 Million for the year ended March 31, 2015 primarily due to increase in profit before tax by 23.8% to ` 11,472.67 Million for the year ended March 31, 2016 from ̀ 9,266.26 Million for the year ended March 31, 2015.

Netprofitaftertax

As a result of the foregoing factors, our net profit was ` 9,221.77 Million for the year ended March 31, 2016 and ` 7,685.26 Million for the year ended March 31, 2015.

Earningspershare(EPS)

Our Basic EPS before extraordinary items has increased by 19.3% to ` 56.26 per share in the year ended March 31, 2016 from ` 47.17 per share in the year ended March 31, 2015. Correspondingly, the Diluted EPS has increased by 24.3% to ` 56.13 per share in the year ended March 31, 2016 from ` 45.14 per share in the year ended March 31, 2015. The weighted average number of potential equity shares on account of employee options has reduced from 7,270,100 shares in the year ended March 31, 2016 to 392,052 shares in the year ended March 31, 2016 due to exercise of stock options.

Our Basic EPS after extraordinary items has increased by 18.0% from ` 47.66 per share to ` 56.26 per share in the year ended March 31, 2016. Correspondingly, the Diluted EPS has increased by 23.1% from ` 45.60 per share to ` 56.13 per share in the year ended March 31, 2016.

SegmentalReporting

Businesssegmentation

We report our continuing business operations in two business segments, which we term “clusters”: an industrials cluster (comprising the business verticals of energy and process, consumer packaged goods, retail and pharmaceuticals, hi-tech and consumer electronics, automotive and aerospace, plant equipment, and utilities, engineering and construction) and a services cluster (comprising the business verticals of banking and financial services, insurance, media and entertainment, travel and logistics and other miscellaneous business verticals). The business units within each cluster include certain horizontals from an organisational structure perspective, which are responsible for serving clients across both clusters. In addition, our results of operations presented for the year ended March 31, 2015 also included our telecom cluster, which constituted our discontinued operations from Product Engineering Services transferred to L&T Technology Services Limited on January 1, 2014.

The following table shows a breakdown of our segmental revenue by our business clusters, with each item represented as a percentage of revenue from operations for the periods indicated:

2015-16 2014-15(` Million) %ofrevenue

fromoperations(` Million) %ofrevenue

fromoperationsRevenuefromoperationsIndustrials 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%Totalrevenuefromoperations 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 berecognisedinfutureperiods.


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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:


operatingprofit(` Million) %oftotal

operatingprofitSegmentalProfitIndustrials 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%SegmentalOperatingProfit 14,336.12 100.0% 11,589.51 100.0%

1 Operatingprofitfromourtelecomclusterrepresentsoperatingprofitfromourdiscontinuedoperations,whichwillnotberecognisedinfutureperiods.

Geographicsegmentation

Our revenues are generated from four main geographic markets: North America, Europe, Asia Pacific and India. We present our revenues by client location based on the location of the specific client site that we serve, irrespective of the location of the headquarters of the client or the location of the Delivery Centre where the work is performed.

The following tables show a breakdown of our revenue from continuing operations and discontinued operations separately, on the basis of the geographic location of our clients, with each item represented as a percentage of revenue from continuing operations and revenue from discontinued operations, as applicable, for the periods indicated:

2015-16 2014-15(` Million) %ofrevenue

fromcontinuingoperations

(` Million) %ofrevenuefromcontinuing

operationsNorth 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%Revenuefromcontinuingoperations(A) 58,470.60 100.0% 49,680.94 100.0%

(` Million) %ofrevenuefrom

discontinuedoperations

(` Million) %ofrevenuefrom

discontinuedoperations

North America - - - -Europe - - 99.42 100.0%Asia Pacific - - - -India - - - -Rest of the world - - - -Revenuefromdiscontinuedoperations(B) - - 99.42 100.0%RevenuefromOperations(A+B) 58,470.60 - 49,780.36 -

1 WedidnotrecogniseanyrevenuefromdiscontinuedoperationsintheyearendedMarch31,2016andwillnotrecogniseinfutureperiods.

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(` Million)

CashFlowData 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 Closingcashandcashequivalents(D+E) 2,033.66 2,009.21

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.

Cashflows

The table below summarizes our consolidated cash flows for the periods indicated:

Cashflowfromoperatingactivities

Net cash generated from our operating activities before extraordinary item was ` 8,633.03 Million for the year ended March 31, 2016. Our net profit before tax (excluding extraordinary items), was ` 11,472.67 Million for the year ended March 31, 2016, which was adjusted mainly for depreciation and amortization of ` 1,739.52 Million and unrealised foreign exchange gain of ` 901.57 Million. As a result, our operating profit before working capital changes was ` 12,225.69 Million for the year ended March 31, 2016. This was further adjusted primarily for a decrease in our working capital of ` 935.67 Million. The decrease in our working capital was primarily attributable to an increase in trade and other payables of ` 2,123.04 Million partially set-off by increase in trade receivables and unbilled revenue by ` 3,069.79 Million. Cash generated from our operations was ` 11,290.02 Million in the year ended March 31, 2016, adjusted for direct taxes paid of ` 2,656.99 Million. As a result, our net cash generated from operating activities before extraordinary item was ` 8,633.03 Million for the year ended March 31, 2016.

Cashflowusedfor/frominvestingactivities

Net cash used for investing activities (after extraordinary items) was ` 441.35 Million for the year ended March 31, 2016, which was primarily attributable to our purchase of fixed assets amounting to ` 1,290.54 Million. This was partially offset by proceeds from the sale of current investments of ` 674.75 Million in the year ended March 31, 2016.

Cashflowusedinfinancingactivities

Net cash used in financing activities was ` 8,167.23 Million for the year ended March 31, 2016, mainly consisting of the payment of dividends of ` 5,467.30 Million, the repayment of

borrowings of ` 1,662.61 Million and the payment of dividend tax of ` 1,048.71 Million.

VII. Outlook,risksandconcerns

This section lists forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these statements as a result of certain factors. This section list our outlook, risks and concerns as follows:

InternalRisks:

1. Our business will suffer if we fail to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and the industries on which we focus.

2. Intense competition in the market for technology services could affect our pricing, which could reduce our share of business from clients and decrease our revenues and profitability.

3. Our revenues, expenses and profitability may be subject to significant fluctuation and hence may be difficult to predict. This increases the likelihood that our results of operations could fall below the expectations of investors and market analysts, which could cause the market price of the Equity Shares to decline.

4. Exchange rate fluctuations in various currencies in which we do business could negatively impact our business, financial condition and results of operations.

5. Our revenues are highly dependent on clients primarily located in North America and Europe, as well as on clients concentrated in certain industries, notably banking and financial services, insurance, energy and process, and consumer packaged goods, retail and


74


pharmaceuticals. Our revenues are also dependent on two service lines; therefore, an economic slowdown or factors that affect the economic health of North America or Europe, these industries or these service lines could adversely affect our business, financial condition and results of operations.

6. Challenges in relation to immigration may affect our ability to compete for, and provide services to, clients in the United States and/or other countries, partly because we may be required to hire locals instead of using our existing work force, which could result in lower profit margins, delays in, or losses of, client engagements and otherwise adversely affect our ability to meet our growth, revenue and profit projections. We cannot assure you that we will not be subject to penalties in relation to employment visa violations in the future.

7. Our pricing structures do not accurately anticipate the cost and complexity of performing our work and if we are unable to manage costs successfully, then certain of our contracts could be or become unprofitable.

8. Some of our client contracts contain benchmarking and most favoured customer provisions which, if triggered, could result in lower contractual revenues and profitability in the future.

9. Our Company has amended the ESOP Scheme 2000 and changed the vesting schedule and exercise period of options and has exercised discretion with respect to the vesting and exercise of certain options; any of these actions have resulted in and may continue to result in claims under the Existing Employee Stock Option Plans that may adversely impact our reputation, business, financial condition and results of operations

10. Our revenue depends to a large extent on a limited number of clients, and our revenue could decline if we lose a major client.

11. Wage increases in India may diminish our competitive advantage against companies located in the United States and Europe and may reduce our profit margins.

12. Our profitability could suffer if we are not able to maintain favorable employee utilization.

13. Our success depends in large part upon the strength of our management team and other highly skilled professionals. If we fail to attract, retain and manage transition of these personnel, our business may be unable to grow and our revenue could decline.

14. Any inability to manage our growth could disrupt our business and reduce our profitability.

15. We may face difficulties in providing end-to-end business solutions for our clients that could cause clients to discontinue their work with us, which, in turn, could adversely impact our business, financial condition and results of operations. We may also be required to pay damages for deficient services or for violating intellectual property rights.

16. If we are unable to collect our dues and receivables from, or invoice our unbilled services to, our clients, our results of operations and cash flows could be adversely affected.

17. If there is a change in tax regulations, our tax liabilities may increase and thus adversely affect our financial position and results of operations. We would indeed realize lower tax benefits if the special tax holiday scheme for units set up in special economic zones is substantially modified.

18. Any increase in or realization of our contingent liabilities could adversely affect our financial condition.

19. Our business is based on the trust and confidence of our customers and any damage to that trust and confidence whether in relation to our personnel or our brand may materially and adversely affect our business, future financial performance and results of operations.

20. Adverse changes to our relationships with key alliance partners could adversely affect our revenues and results of operations.

21. We may be liable to our clients for damages caused by system failures, disclosure of confidential information or data security breaches, which could harm our reputation and cause us to lose clients.

22. Disruptions in telecommunications could harm our service model, which could result in a reduction of our revenue.

23. We may engage in acquisitions that may not be successful or meet our expectations.

24. Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business.

25. Our work with government clients exposes us to additional risks inherent in the government contracting environment.

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26. Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, and this may have a material adverse effect on our business, financial condition and results of operations.

27. Compliance with, and changes in labour laws and regulations could materially and adversely affect our business, future financial performance and results of operations, while we face further labour risks, such as the risk of our employees joining a labour union and engaging in collective bargaining.

28. Our debt financing agreements contain restrictive covenants that may adversely affect our business, credit ratings, prospects, results of operations and financial condition.

ExternalRisks:

29. The markets in which we operate are subject to the risk of earthquakes, floods, tsunamis, storms and other natural and manmade disasters.

30. Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws and regulations, may adversely affect our business and financial performance.

31. Our business is substantially affected by prevailing economic, political and other prevailing conditions in India.

32. We may be affected by competition law in India and any adverse application or interpretation of the Competition Act could adversely affect our business.

33. Indian law limits our ability to raise capital outside of India and may limit the ability of others to acquire us, which could prevent us from operating our business or entering into a transaction that is in the best interests of our shareholders.

34. Significant differences exist between Indian GAAP, used throughout our financial information and other accounting principles with which investors may be more familiar.

35. Public companies in India, including us, are required to prepare financial statements under Ind AS and compute Income Tax under the Income Computation and Disclosure Standards (the “ICDS”). The transition to Ind AS and ICDS in India is very recent and we may be negatively affected by such transition.

36. We may be unsuccessful in protecting our intellectual property rights in India. Unauthorised use of our intellectual property may result in the development of technology, products or services which compete with our products. We may also be subject to third-party claims of intellectual property infringement.

VIII. MaterialdevelopmentsinHumanResources

This has been elaborated in the Human Resources section of the Annual Report.


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Overview:

Our objective of Risk Management framework is to address risks in a proactive manner to sustain business growth. The Risk Management framework is established to ensure that the risk that would impact the key business objectives are minimized through continuous risk identification, assessment, quantification and its mitigation.

Risk Management – Our Approach:

Risk Management Process comprises of the following steps:

Risk MAnAgeMent FRaMewORk

Risk

Mon

itor

ing

and

Revi

ew

Risk ident f cat on

Risk

Ana

lysi

s

Risk Mit gat on

and

eval

uat o

n

1. Risk Identification: Risks that impact the Company’s business objectives are broadly classified into Strategic, Business and Operational risks:

strategic: Strategic risks are the risks arising due to the decisions the management makes w.r.t. market, business growth, delivery model, etc. which can have adverse effect on the business objectives. Ownership of these risks shall be with the Top Management.

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.

Operatonal: Operational risks are the risks arising from people, systems and processes through which the Company operates. Ownership of these risks shall be with Operations Teams.

2. Risk analysis and evaluation: The risks are analyzed in terms of probability of occurrence and magnitude of impact. ‘Impact’ and ‘Probability’ determines the ‘Severity of Risk’ which aids to prioritize the risks and its mitigation action.

3. Risk Mitigation: Based on the ‘Severity of Risk’, they are prioritized and mitigation action is planned. accordingly, the risks are avoided, reduced, transferred or accepted.

Risk Avoidance: The risks with high severity are avoided by exiting the activities or situations which give rise to such risks.

Risk Reducton: The risks are reduced with appropriate mitigations plans.

Risk transfer: Transfer the total or partial risk to external third party vendor.

Risk Acceptance: The risks with low severity are accepted where the cost of risk mitigation is higher than the risk exposure.

4. Risk Monitoring and Review: The risks are revisited at defined frequencies to validate whether the existing mitigation controls are sufficient and whether any new risks are envisaged.

Risk governance structure:

Board Of Directors

Audit Committee

Risk Management Committee

Risk Management Head

Business Heads

The risk governance structure of the Company is headed by Board of Directors who formed the Risk Management Committee (‘RMC’). RMC is responsible for framing, implementing and monitoring the Risk Management framework for the Company. The RMC is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit Committee has additional oversight in the area of financial risks and controls. Risk Management Head (‘RMH’) acts as a nodal point for coordinating risk management activities. RMH also appraises the audit Committee with identified risks, its mitigation and effectiveness of mitigation. RMH is supported by Business Heads who are the Risk Managers and owners to implement the Risk Management framework in their respective Business Units.

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INDEPENDENT AUDITOR’S REPORT

To the members of Larsen & Toubro Infotech Limited

Report on the standalone financial statements

We have audited the accompanying standalone financial statements of Larsen & Toubro Infotech Limited (‘the Company’), which comprise the balance sheet as at March 31, 2016, the statement of profit and loss, the cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s responsibility for the standalone financial statements

The Company’s board of directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1 As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the central government of India in terms of sub-section (11) of section 143 of the Act, we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

2 As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

Corporate OverviewOur DNA - Performance HighlightsStatutory Reports - Director’s ReportFinancial Statements - Independent Auditor’s Report

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(c) the balance sheet, the statement of profit and loss, and the cash flow statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of section 164 (2) of the Act;

(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

(g) with respect to the other matters to be included in the Auditor’s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – refer note R to the financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – refer note T(2)(ii) to the financial statements; and

iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company refer note T(14) to the financial statements.

Sharp & TannanChartered Accountants

Firm’s registration no. 109982W

Firdosh D. BuchiaPartner

Mumbai, 26 April 2016 Membership No. 38332

79

(Referred to in paragraph (1) under ‘Report on other legal and regulatory requirements’ of our report of even date)

1 (a) The Company is maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

(b) We are informed that the Company has formulated a programme of physical verification of all the fixed assets over a period of two years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by management during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company.

2 In our opinion and according to the information and explanations given to us, in respect of loans, investments, guarantees and security the provisions of section 185 and 186 of the Act have been complied with.

ANNExuRE ‘A’ TO ThE INDEPENDENT AUDITOR’S REPORT

Name of the statute

Nature of the disputed dues Amount (` Million)*

Period to which the amount relates

Forum where disputes are pending

Central Sales Tax and local sales tax Acts , Service tax

Software exports and service income revenue considered as domestic sales and other classification disputes

11.16 2002-2003 Maharashtra Sales Tax Tribunal, Mumbai

Service tax demand under reverse charge mechanism on the Agency commission paid in foreign currency

1.99 2008-2009 to 2013-2014

The Commissioner of Central Excise (Appeals)

Income-tax Act, 1961

Disallowance of exemption under section 10 A 139.18 2005-2006 and 2008-2009

ITAT

Disallowance of exemption under section 10 A 45.13 2006-2007 and 2010-2011

Commissioner (Appeals)

Disputes regarding calculation of notional interest on transactions with related party and disallowance of FTC

1.21 2010-2011

Disputes regarding short fall in tax deducted at source 5.14 2010-2011 and 2011-2012

Deputy Commissioner of Income Tax (TDS)

Disputes regarding exclusion of interest income from section 10A calculation, addition of notional interest on transactions with related party and disallowance of FTC

3.59 2007-2008 and 2008-2009

Asst. Commissioner Of Income Tax

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

3 (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, cess and other statutory dues outstanding as at March 31, 2016 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of income-tax, sales-tax, service tax, duty of custom, duty of excise or value added tax as at March 31, 2016 which have not been deposited on account of a dispute pending are as under:


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4 According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to any financial institution, bank, government or debenture holders as at the balance sheet date.

5 The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion and according to the information and explanations given to us, the term loans were applied for the purpose for which they were taken.

6 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud by the Company nor on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of such case by management.

7 According to the records of the Company examined by us and the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Act.

8 According to the records of the Company examined by us and the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of the Act and the details have been disclosed in the financial statements as required by the applicable accounting standards.

9 According to the records of the Company examined by us and the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them.

10 According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

11 Paragraphs 3(ii), (iii), (v), (vi), (xii) and (xiv) of the Order are not applicable to the Company.





(Referred to in paragraph 2(f) under ‘Report on other legal and regulatory requirements’ of our report of even date)

Report on the internal financial controls under clause (i) of sub-section (3) of section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of Larsen & Toubro Infotech Limited (‘the Company’) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s responsibility for internal financial controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (‘the Guidance Note’) issued by the Institute of

ANNExuRE ‘B’ TO ThE INDEPENDENT AUDITOR’S REPORT

Chartered Accountants of India (‘the ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable, to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain

81

reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involved performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with

authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls over financial reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.






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BALANcE ShEET

As per our report attached ShARP & TANNAN Chartered Accountants Firm’s Registration No. 109982Wby the hand of

FIRDOSH D. BUCHIA Sanjay Jalona R. Shankar Raman Ashok Kumar Sonthalia Subramanya BhattPartner ChiefExecutiveOfficer Director ChiefFinancialOfficer CompanySecretaryMembership No: 38332 &ManagingDirector

Mumbai MumbaiApril 26, 2016 April 26, 2016

(` Million)

Particulars Note No.

As at 31-03-2016

As at 31-03-2015

EQuITY AND LIABILITIESShareholders' 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 ASSETSNon-current assetsFixed 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 assetsCurrent 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 RCommitments (capital and others) SNotes forming part of accounts T

AS AT MARCH 31, 2016

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(` Million)


2015-16 2014-15

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)BasicBasic earning per equity share 57.23 47.94DilutedDiluted earning per equity share 57.10 45.87Significant accounting policies ANotes forming part of accounts T

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2016

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cASh FLOW STATEMENT(` 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)

FOR THE YEAR ENDED MARCH 31, 2016

85




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)).

(` 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

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A. Significant Accounting Policies

1. Basis of accounting

These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (‘Indian GAAP’) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. Further the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered wherever applicable. The Company maintains its accounts on accrual basis following the historical cost convention.

The preparation of financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that affect the income and expense reported for the period and assets and liabilities reported as of the date of the financial statements. Examples of such estimates include the useful lives of the fixed assets, provision for doubtful debts, future obligations in respect of retirement benefit plans, etc. Actual results could vary from these estimates.

2. Presentation of financial statements

The balance sheet and the statement of profit and loss are prepared and presented in the format prescribed in the schedule III to the Companies Act, 2013.

The cash flow statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the balance sheet and statement of profit and loss, as prescribed in the schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards.

3. Revenue recognition

a) Revenue from contracts priced on time and material basis are recognised when services are rendered and related costs are incurred.

Revenue from services performed on “fixed-price” basis is recognised using the proportionate completion method.

Unbilled revenue represents value of services performed in accordance with the contract terms but not billed.

NOTES FORMING PART OF ACCOUNTS

b) Other income

i. Interest income is accrued at applicable interest rate.

ii. Dividend income is accounted in the period in which the right to receive the same is established.

iii. Other items of income are accounted as and when the right to receive arises.

4. Employee benefits

a) Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences and performance incentives are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan:

The Company’s superannuation fund and state governed provident fund scheme are classified as defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employee renders the related service.

ii) Defined benefit plans:

The provident fund scheme managed by trust, employees gratuity fund scheme managed by LIC and post-retirement medical benefit scheme are the Company’s defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash-flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government bonds as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the profit and

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Corporate OverviewOur DNA - Performance HighlightsStatutory Reports - Director’s ReportFinancial Statements - Notes Forming Part of Accounts

loss account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested.

(iii) Long term employee benefits:

The obligation for long term employee benefits like long term compensation absences is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

5. Fixed assets

Tangible

Fixed assets are stated at cost less accumulated depreciation.

Intangible

Computer software, internally developed software is capitalised at cost.

6. Leases

Finance lease

Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

Operating lease

Assets acquired under lease where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the profit and loss account on accrual basis.

7. Depreciation

Tangible - owned assets

Depreciation on assets has been provided based on useful life prescribed in schedule II to the Companies Act, 2013 except for the leasehold improvements which is depreciated over the lease period.

Tangible - leased assets

Assets acquired under finance leases are depreciated at the rates applicable to similar assets owned by the Company as there is reasonable certainty that the Company shall obtain ownership of the assets at the end of the lease term.

• Leasehold land Over the residual period of the lease

Intangible assets

The basis of amortization of intangible assets is as follows:

• Computer software 33.33%

• Intellectual Property Rights (IPR) 33.33%

• Business Rights Over a period of five years

Depreciation / amortization on additions / disposals are calculated pro-rata from / to the month of additions / disposals.

8. Investment

Trade investments comprise investments in subsidiary companies.

Long-term investments including trade investments are stated at cost, less provision for other than temporary diminution in value, if any. Current investments are stated at the lower of cost or market value, determined on the basis of specific identification.

Investments, which are readily realisable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments.

9. Employee stock ownership schemes

In respect of stock options granted pursuant to the Company’s stock option schemes, the excess of fair value of the share over the exercise price of the option is treated as discount and accounted as employee compensation cost over the vesting period.

10. Foreign currency transactions

a) Foreign currency transactions are initially recorded at the rates prevailing on the date of the transaction. At the balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in


88


foreign currency are reported using the exchange rate at the date of the transaction.

Translation of foreign currency transaction of overseas branches is as under:

• Revenue items at the average rate for the period;

• Fixed assets and investments at the rates prevailing on the date of the transaction; and

• Other assets and liabilities at year end rates

Exchange difference on settlement / year end conversion is adjusted to profit and loss account.

b) Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on such contracts are recognised in the period in which they arise and the premium paid / received is accounted as expense / income over the period of the contract. Profit or loss on such forward contracts is accounted as income or expense for the period.

c) All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions are recognised in the financial statements at fair value as on the balance sheet date. In pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives, the Company has adopted Accounting Standard 30 for applying the test of hedge effectiveness of the outstanding derivative contracts. Accordingly, the resultant gains or losses on fair valuation of such contracts are recognised in the profit and loss account or balance sheet as the case may be.

11. Taxes on income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/appeals.

Deferred tax is recognised on timing differences between the income accounted in financial statements and the taxable

income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.


12. Borrowing costs

Borrowing costs include interest, commitment charges, finance charges in respect of assets acquired on finance lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs.

13. Provisions, contingent liabilities and contingent assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated

Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of

a) 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; or

b) a possible obligation unless the probability of outflow of resources is remote

Contingent assets are neither recognised nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

14. Segment accounting

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales and other income directly identifiable with/allocable to the segment.


89

ii. Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenditure which relate to the Company as a whole and not allocable to segments are included under “unallocable corporate expenditure”.

iii. Income which relates to the Company as a whole and not allocable to segments is included in “unallocable corporate income”.

iv. 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.

15. Cash flow statement

Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of:

i. transactions of a non-cash nature

ii. any deferrals or accruals of past or future operating cash receipts or payments and

iii. items of income or expense associated with investing or financing cash flows.

Cash and cash equivalents (including bank balances) are 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 at31-03-2016

As at31-03-2015

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 :


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 31-03-2015Number 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


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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 at31-03-2016

As at31-03-2015

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 shares to be issued

as fully paid

Exercise price ** Number of equity shares to be issued as fully paid

Exercise price

# Employee stock options granted and outstanding under Employee Stock Ownership Scheme “ESOS Plan”

82,660 5 393,003 25

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.



92


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-xxI2015-16 2014-15 2015-16 2014-15

1 Face value (`) 1 5 1 5

2 Grant Price (`) 5 25 2 103 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 7,0177 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.


93

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 March 2015 {refer note T(11)}

27.35 -

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



94


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 borrowingsSecured loans*

Term loans from bank

(Refer note D(iii)) - 147.23 147.23 138.89 138.89 277.78

- 147.23 147.23 138.89 138.89 277.78D(ii) Short-term borrowings

Secured loans *

Other loans from banks - 132.51 132.51 - 600.00 600.00unsecured loans Other loans from banks - 265.02 265.02 - 1,297.48 1,297.48

- 397.53 397.53 - 1,897.48 1,897.48Total - 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

External commercial borrowings (ECB)

147.23 USD LIBOR (3 months) + 2.5%

Repayable in equal half-yearly instalments of USD 1.11 million each commencing from 19 October 2012 and ending on 14 October 2016.

Previous Year (277.78)

E. Liabilities(` Million)


E(i) Trade payables Due to holding company - - - - 174.23 174.23Due to others - 3,141.47 3,141.47 - 2,354.29 2,354.29

- 3,141.47 3,141.47 - 2,528.52 2,528.52E(ii) Other payables

Forward contract payable 1,148.52 1,574.11 2,722.63 447.46 89.22 536.68Interest accrued but not due on borrowings - 1.08 1.08 - 2.41 2.41Unclaimed 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 2,137.88Total 1,250.52 5,819.85 7,070.37 538.35 4,128.05 4,666.40


95

F. Provisions(` Million)


F(i) Provisions for employee benefits

Gratuity - 86.76 86.76 - 92.42 92.42

Compensated absences - 507.16 507.16 - 453.57 453.57Post-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. No

Particulars class of provisions 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



96


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12.27

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207.3

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1,

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9 57

7.37

439.4

6

b.

Leas

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22.61

-

22.61

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2.63

12.93

11

9.22

126.2

6 88

8.52

588.7

1 11

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110.7

2 12

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587.6

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1 13

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577.7

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1.72

92

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70.76

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8.08

158.4

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97

h. Investments

(` Million)

As at 31-03-2016 As at 31-03-2015h(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 1.14100, 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 2,806.32332,350, 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 7.073,500,000 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 unit

units as at 31-03-2016

Amount as at 31-03-2016


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



98


Details of quoted investments:

(` Million)

Amount As at 31-03-2016


(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/(liability) as at

March 31,2015

Deferred tax asset/(liability) pursuant

to amalgamation

current year (charge) / credit

(charge) / credit to hedging Reserve

Deferred tax asset/(liability) as at

March 31, 2016

Deferred tax liabilitiesDepreciation / amortisation (15.34) 5.72 41.86 - 32.24Gain 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 assetsProvision for doubtful debts and advances 7.19 - 24.07 - 31.26Provision for employee benefits 60.50 2.43 34.80 - 97.73Loss on derivative transactions 498.30 - - (487.70) 10.60Realised gain on derivative transactions - - 41.36 - 41.36

Others 9.97 - 9.97

TOTAL 565.99 2.43 110.20 (487.70) 190.92Net deferred tax assets/(liabilities) (76.84) 8.15 (523.30) (366.54) (958.53)


99

J. Trade receivables and unbilled revenue

(` Million)



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

482.02 133.73Other 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 10,249.93Less : 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)



cash and cash equivalent

Cash on hand 0.62 0.65Balances with bank

- in current accounts

Overseas 872.93 650.14 Domestic 223.45 217.48Remittances in transit 94.82 221.58Fixed deposits (maturity less than 3 months) 4.28 125.12

1,196.10 1,214.97Other 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.



100


L. Loans and advances

(` Million)


unsecured

considered good

Loans against mortgage of house property - - - - 0.10 0.10Premia 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 6.67Deposits 393.14 150.55 543.69 359.38 123.96 483.34

Capital advances 1.25 - 1.25 6.64 - 6.64Advance tax current year (net of provision) - 82.13 82.13 - 159.95 159.95Advances 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 6.06Less : 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 2014-15Overseas 52,295.01 45,368.13Domestic 3,400.19 2,075.90

55,695.20 47,444.03

N. Other income

(` Million)

2015-16 2014-15Income from current investment in mutual funds 47.94 119.62Interest received 17.25 17.99Foreign exchange gain 2,776.13 685.56Provision no longer required for doubtful debts 1.08 -Dividend from subsidiary 472.38 -Miscellaneous income 71.28 64.63

3,386.06 887.80


101

O. Expenses(` Million)

2015-16 2014-15O(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 2014-15O(ii) Operating expenses

Communication expenses 177.38 151.27Consultancy charges 4,133.23 3,366.86Cost of software packages for own use 386.62 344.47Cost of bought-out items for resale 1,973.39 742.75

6,670.62 4,605.35

(` Million)

2015-16 2014-15O(iii) Sales, administration and other expenses

Travelling and conveyance 1,387.88 1,155.63Rent and establishment expenses 1,525.22 1,381.30Telephone charges and postage 362.22 330.87Legal and professional charges 536.15 517.62Printing and stationery 24.94 28.06Advertisement 112.19 89.94Entertainment 70.26 54.43Recruitment expenses 143.09 129.61Repairs to building 199.36 134.90Repairs to computers 60.26 85.02General repairs and maintenance 317.69 250.51Power and fuel 347.83 287.19Equipment hire charges 12.90 10.15Insurance charges 159.51 161.64Rates and taxes 194.91 330.67Allowance for doubtful debts and advances 86.13 74.07Bad debts 4.90 39.13Less : Provision written back (4.90) (39.13)Commission paid 6.99 0.62Books, periodicals and subscriptions 17.80 27.43Directors fees 1.43 0.93Commission to directors 5.81 3.60Loss on sale of fixed assets 26.82 3.16Miscellaneous expenses 303.09 161.27Amortisation 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.



102


P. Finance cost

(` Million)

2015-16 2014-15P(i) Interest expenses 31.91 46.94

On others 25.98 9.2857.89 56.22

P(ii) Exchange loss on borrowings (net) 45.68 47.96103.57 104.18

Q. Provision for taxation

(` Million)

2015-16 2014-15Current tax 2,676.97 2,117.82MAT 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 2014-151. Income tax liability that may arise in respect of which the Company is in appeal* 1,338.80 1,164.822. 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 4.524. 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.


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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 (March31,2015)Gratuity plan Post retirement

medical benefit plan

Self-managed provident fund

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 medical benefit

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 medical benefit

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:


provident fund plan

Government of India securities

SchemewithLIC

25.3%(24.7%)

State government securities 15.8%(15.1%)

Corporate bonds 10.3%(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 2014-151 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%

to 18% for various age groups

Varies between 2% to 18% for various

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 88.79 90.81 42.19

Gratuity plan(` Million)

2015-16 2014-15 2013-14 2012-13 2011-12

1 Defined benefit obligation 579.76 497.01 408.57 384.12 297.592 Plan assets 492.99 404.59 379.19 296.11 156.903 (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 2,178.302 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 579.76 497.01 408.57 384.12 297.59Plan assets 492.99 404.59 379.19 296.11 156.90(Surplus) / deficit 86.77 92.42 29.38 88.01 140.69Experience adjustments on plan liabilities (7.53) (14.36) (6.21) 5.05 95.81Experience 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 amountMarch 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, 20151 Receivables including firm commitments and highly probable forecast transactions 41,271.25 30,001.712 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 2014-15Overseas staff costs 19,650.52 16,661.19Foreign travel 330.66 305.56Agency commission 6.96 0.62Subcontracting expenses 3,776.21 2,923.75Overseas 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 2014-15Software exports 52,295.01 45,368.13Other 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 2014-15Audit fees 1.65 1.65Tax audit fees 0.65 0.65Other services 2.32 3.58Expense 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 2014-15Capital goods 64.13 1.81Others 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 2014-15Minimum 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 2014-15Profit after tax (` Million) 9,381.31 7,729.62Weighted average number of shares outstanding 163,914,663 161,250,000Basic EPS (`) 57.23 47.94

Weighted average number of shares outstanding 163,914,663 161,250,000Add : weighted average number of potential equity shares on account of employee options 392,052 7,270,100Weighted average number of shares outstanding 164,306,715 168,520,100Diluted 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 RelationshipLarsen & Toubro Infotech GmbH Wholly owned subsidiaryLarsen & Toubro Infotech Canada Limited Wholly owned subsidiaryGDA Technologies Limited Wholly owned subsidiary Larsen & Toubro Infotech LLC Wholly owned subsidiaryL&T Infotech Financial Services Technologies Inc Wholly owned subsidiaryLarsen & Toubro Infotech South Africa (Proprietary) Limited SubsidiaryL&T Information Technology Services (Shanghai) Co. Limited Wholly owned subsidiaryInformation Systems Resource Centre Private Limited (Refer note T (11)) Wholly owned subsidiaryLarsen & Toubro Infotech Austria GmbH Wholly owned subsidiaryL&T Information Technology Spain, Sociedad Limitada. Wholly owned subsidiary

T.(8) (ii) Key Management personnel:

Name StatusMr. 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 RelationshipLarsen & Toubro Limited Holding CompanyLarsen & Toubro Infotech Canada Limited Wholly owned subsidiaryLarsen & Toubro Infotech GmbH Wholly owned subsidiaryLarsen & Toubro Infotech LLC Wholly owned subsidiaryGDA Technologies Limited Wholly owned subsidiaryL&T Infotech Financial Services Technologies Inc Wholly owned subsidiaryL&T Information Technology Services (Shanghai) Co. Limited Wholly owned subsidiaryLarsen & Toubro Infotech South Africa (Proprietary) Limited SubsidiaryInformation Systems Resource Centre Private Limited (Refer note T (11)) Wholly owned subsidiaryLarsen & Toubro Infotech Austria GmbH Wholly owned subsidiaryL&T Information Technology Spain, Sociedad Limitada Wholly owned subsidiaryLarsen & Toubro (East Asia) SDN.BHD Fellow SubsidiaryL&T Hydrocarbon Engineering Limited Fellow SubsidiaryL&T Electricals and Automation Saudi Arabia Company LLC Fellow SubsidiaryL&T Finance Limited Fellow SubsidiaryL&T General Insurance Company Limited Fellow SubsidiaryL&T Infrastructure Development Projects Limited Fellow SubsidiaryL&T Power Development Limited Fellow SubsidiaryLarsen & Toubro Kuwait Construction General Contracting Company, With Limited Liability Fellow SubsidiaryL&T Infrastructure Finance Company Limited Fellow SubsidiaryL&T Metro Rail (Hyderabad) Limited Fellow SubsidiaryL&T Technology Services Limited Fellow SubsidiaryL&T Valves Limited Fellow SubsidiaryL&T Investment Management Limited Fellow SubsidiaryL&T Construction Equipment Limited Fellow SubsidiaryLarsen & Toubro LLC Fellow SubsidiaryNabha Power Limited Fellow SubsidiaryL&T Electrical & Automation FZE Fellow SubsidiarySpectrum Infotech Private Limited Fellow SubsidiaryFamily Credit limited Fellow SubsidiaryPT. Tamco Indonesia Fellow SubsidiaryL&T Special Steels and Heavy Forgings Private Limited Fellow SubsidairyLarsen & Toubro ATCO Saudi LLC Fellow SubsidiaryL&T Thales Technology Services Private Limited Fellow SubsidiaryL&T Capital Markets Limited Fellow SubsidiaryL&T Housing Finance Limited Fellow SubsidiaryLarsen & Toubro Electromech LLC Fellow SubsidiaryTamco Electrical Industries Australia PTY Limited Fellow SubsidiaryL&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 - - 7.70Purchase 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 - -

(-) (-) (-)


113

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 2014-15Total managerial remuneration 57.31 183.69Amount for major partiesSalaries, commission and perquisites :-Mr. V K Magapu 7.35 15.12Mr. Sanjay Jalona 33.61 -Mr. Chandrashekara Kakal 10.85 10.48Mr. Vivek Chopra 68.52Dr. 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 TotalRevenue 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 FY15North 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.


115

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 AmountNon-current Assets

Fixed assets (net) 37.58Deferred tax asset (set-off against deferred tax liabilities) 6.07Long-term loans and advances 23.09

current assetsTrade receivables 120.39Cash and cash equivalents 35.89Short-term loans and advances 22.43 178.71

Total assets 245.45Non-current liabilities

Long-term provisions 6.29Current Liabilities

Trade payables 26.54Other current liabilities 2.21Short-term provisions 18.00 46.75

Total liabilities 53.04NET ASSETS 192.41



116


The following balances as on October 17, 2014 have been added to the respective opening balances of the Company:(` Million)

Capital reserve 0.42General reserve 56.40Profit & 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 806.96Share capital taken over from the amalgamating company 35.00Amount 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 AmountRevenue from services 191.00Other income 2.77Total revenue 193.77Expenses:(a) Employee benefits expense 81.32(b) Operating and other expenses 66.99(c) Depreciation and amortisation expense 6.06Total expenses 154.37Profit before tax 39.40Tax 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.


117

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 TotalGeneral 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.






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To the members of Larsen & Toubro Infotech Limited

Report on the audit of the consolidated financial statements

We have audited the accompanying consolidated financial statements of Larsen & Toubro Infotech Limited (‘the Holding Company’) and its subsidiaries (the Holding Company and its subsidiaries together referred to as ‘the Group’) which comprise the consolidated balance sheet as at March 31, 2016, and the consolidated statement of profit and loss and the consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary of the significant accounting policies (‘the consolidated financial statements’).

Management’s responsibility for the consolidated financial statements

The Holding Company’s board of directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (‘the Act’) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014. The respective board of directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

In preparing the consolidated financial statements, the respective board of directors of the companies included in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless

INDEPENDENT AUDITOR’S REPORT

management either intends to liquidate the Group or to cease operations, or has no realistic alternative to do so.

The respective board of directors of the companies included in the Group are responsible for overseeing the financial reporting process of the Group.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 (the ‘Act’) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of their consolidated state of affairs of the Company as at March 31, 2016, of consolidated profit and its consolidated cash flows for the year then ended.

Other matters

We did not audit the financial statements of nine subsidiaries, whose financial statements reflect total assets of ` 4,920.18 Mn as at March 31, 2016, total revenues of ` 4,338.76 Mn and net cash outflows amounting to ` 474.73 Mn for the year ended on that

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date, as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries 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 reports of the other auditors.

Our opinion on the consolidated financial statements, and our report on other legal and regulatory requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

Report on other legal and regulatory requirements

1. As required by section 143(3) of the Act, we report, to the extent applicable, that:

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

(b) in our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;

(c) the consolidated balance sheet, the consolidated statement of profit and loss, and the consolidated cash flow statement dealt with by this report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements;

(d) in our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors of the Holding Company as on March 31, 2016 taken on record by the board of directors of the Holding Company and the reports of the statutory

auditors of its subsidiary companies incorporated in India, none of the directors of the Group companies, incorporated in India is disqualified as on 31 March 2016 from being appointed as a director in terms of section 164(2) of the Act;

(f) with respect to the adequacy of the internal controls over financial reporting of the Holding Company and the operating effectiveness of such controls, refer to our separate report in Annexure ‘A’; and

(g) with respect to the other matters to be included in the Auditor’s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(1) the consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group - refer note R of the consolidated financial statements;

(2) the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – refer notes T(2) (ii) of the consolidated financial statements; and

(3) there are no amounts required to be transferred to the Investor Education and Protection Fund by the Holding Company and its subsidiary company incorporated in India– refer notes T(10) of the consolidated financial statements.


Firm’s registration no. 109982Wby the hand of



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(Referred to in paragraph 2(f) under ‘Report on other legal and regulatory requirements’ of our report of even date)

Report on the internal financial controls under clause (i) of sub-section (3) of section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of Larsen & Toubro Infotech Limited (‘the Holding Company’) and its subsidiary company which is incorporated in India as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s responsibility for internal financial controls

The respective board of directors of the Holding company and its subsidiary company which is incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable, to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established

ANNExuRE ‘A’ TO ThE INDEPENDENT AUDITOR’S REPORT

and maintained and if such controls operated effectively in all material respects.

Our audit involved performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls over financial reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material

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misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were

operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.


Firm’s registration no. 109982Wby the hand of




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CONSOLIDATED BALANCE SHEET(` Million)


As at 31-03-2016

As at 31-03-2015

EQuITY AND LIABILITIESShareholders' 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 ASSETSNon-current assets

Fixed assets GTangible 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 AContingent liabilities RCommitments (capital and others) SNotes forming part of accounts T

AS AT MARCH 31, 2016




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(` Million)


2015-16 2014-15

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)BasicBasic earning per equity share before extraordinary items 56.26 47.17Basic earning per equity share after extraordinary items 56.26 47.66DilutedDiluted earning per equity share before extraordinary items 56.13 45.14Diluted earning per equity share after extraordinary items 56.13 45.60Face value per equity share 1.00 1.00Significant accounting policies ANotes forming part of accounts T

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2016

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CONSOLIDATED CASH FLOW STATEMENT (` 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)

FOR THE YEAR ENDED MARCH 31, 2016

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Corporate OverviewOur DNA - Performance HighlightsStatutory Reports - Director’s ReportFinancial 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



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).




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NOTES FORMING PART OF CONSOLIDATED ACCOUNTS

A. Significant Accounting Policies

1. Basis of accounting

These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (‘Indian GAAP’) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. Further the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered wherever applicable. The Company maintains its accounts on accrual basis following the historical cost convention.

The preparation of financial statements in conformity with GAAP requires the management of the Company to make estimates and assumptions that affect the income and expense reported for the period and assets and liabilities & disclosures relating to contingent liabilities reported as of the date of the financial statements. Examples of such estimates include carrying value of tangible & intangible fixed assets, provision for doubtful debts, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known.

The accounts of Indian subsidiaries have been prepared in compliance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013, and those of the foreign subsidiaries have been prepared in compliance with the local laws and applicable Accounting Standards. Necessary adjustments for differences in the accounting policies, wherever applicable, have been made in the Consolidated Financial Statements.

2. Presentation of financial statements

The balance sheet and the statement of profit and loss are prepared and presented in the format prescribed in the schedule III to the Companies Act, 2013. The cash flow statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the balance sheet and statement of profit and loss, as prescribed in the schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards.

3. Principles of consolidation

a) The financial statements of the Parent Company and its subsidiaries have been consolidated on line-by-line basis by adding together the book values of the like items of the assets, liabilities, income and expenses, after eliminating intra-group balances and the unrealised profits/losses on intra-group transactions, and are presented to the extent possible, in the same manner as the Parent Company’s independent financial statements.

b) Minority interest in the net assets of subsidiaries consists of the amount of equity attributable to the minority shareholders at the date on which investment is made by company in the subsidiary Company and further movements in their share in the equity, subsequent to the date of investment.

c) Goodwill on consolidation represents the difference between the Group’s share in the net worth of a subsidiary and the cost of acquisition at each point of time of making the investment in the subsidiary as per Accounting Standard (AS) 21 “Consolidated Financial Statements”. For this purpose, the Group’s share of net worth is determined on the basis of the latest financial statements, prior to the acquisition, after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Goodwill arising on consolidation as per Accounting Standard (AS) 21 “Consolidated Financial Statements” is tested for impairment at every balance sheet date. In the event of cessation of operations of a subsidiary, the unimpaired goodwill is written off fully.

4. Extraordinary items

Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such.

5. Revenue recognition

a) Revenue from contracts priced on time and material basis are recognised when services are rendered and related costs are incurred.

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Revenue from services performed on “fixed-price” basis is recognised using the proportionate completion method.

Unbilled revenue represents value of services performed in accordance with the contract terms but not billed.

b) Other income

i. Interest income is accrued at applicable interest rate.

ii. Dividend income is accounted in the period in which the right to receive the same is established.

iii. Other items of income are accounted as and when the right to receive arises.

6. Employee benefits

a) Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, and short term compensated absences and performance incentives are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan:

The Company’s superannuation fund and state governed provident fund scheme are classified as defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employee renders the related service.

ii) Defined benefit plans:

The provident fund scheme managed by trust, employees gratuity fund scheme managed by LIC and post-retirement medical benefit scheme are the Company’s defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures

each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash-flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government bonds as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the profit and loss account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested.

(iii) Long term employee benefits:

The obligation for long term employee benefits like long term compensation absences is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

7. Fixed assets

Tangible

Fixed assets are stated at cost less accumulated depreciation.

Intangible

Assets like customer relationship, computer software, and internally developed software are stated at cost, less accumulated depreciation & amortisation.

Goodwill on acquisition represents the cost of acquired businesses in excess of the fair value of net identifiable assets acquired. Goodwill is not amortised but is tested for impairment if events or changes in circumstances indicate that an impairment loss may have occurred.

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8. Investments

Long-term investments are stated at cost, less provision for other than temporary diminution in value, if any. Current investments are stated at the lower of cost or market value, determined on the basis of specific identification.

9. Leases

Finance lease

Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

Operating lease

Assets acquired under lease where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the profit and loss account on accrual basis.

10. Depreciation

A. Indian Companies :

I. Tangible - owned assets

Depreciation on assets has been provided based on useful life prescribed in schedule II to the Companies Act, 2013 except for the leasehold improvements which is depreciated over the lease period.

Depreciation / amortization on additions / disposals are calculated pro-rata from / to the month of additions / disposals.

II. Tangible - leased assets

Assets acquired under finance leases are depreciated at the rates applicable to similar assets owned by the Company as there is reasonable certainty that the Company shall obtain ownership of the assets at the end of the lease term.

Leasehold land - Over the residual period of the lease

B. Foreign Subsidiaries

Depreciation has been provided on methods and at the rates required/permissible by the local laws so as to write off the assets over their useful life.

11. Intangible Assets and amortization

The basis of amortization of intangible assets is as follows:

• Computer software Over a period of 3 years

• Intellectual property rights (IPR)

Over a period of 3 years

• Acquired software Over a period of 10 years

• Internally developed software

Over a period 1 to 5 years

• Business rights Over a period of 5 years

• Customer contracts Over a period of 10 years

12. Employee stock ownership schemes

In respect of stock options granted pursuant to the Company’s stock option schemes, the excess of fair value of the share over the exercise price of the option is treated as discount and accounted as employee compensation cost over the vesting period.

13. Foreign currency transactions

a) Foreign currency transactions are initially recorded at the rates prevailing on the date of the transaction. At the balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

Translation of foreign currency transaction of overseas branches & subsidiaries is as under:

• Revenue items at the average rate for the period;

• Fixed assets and investments at the rates prevailing on the date of the transaction; and

• Other assets and liabilities at year end rates

Exchange difference on settlement / year end conversion is adjusted to profit and loss account.


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b) Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on such contracts are recognised in the period in which they arise and the premium paid / received is accounted as expense / income over the period of the contract.

Profit or loss on such forward contracts is accounted as income or expense for the period.

c) All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions are recognised in the financial statements at fair value as on the balance sheet date. In pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives, the Company has adopted Accounting Standard 30 for applying the test of hedge effectiveness of the outstanding derivative contracts. Accordingly, the resultant gains or losses on fair valuation of such contracts are recognised in the profit and loss account or balance sheet as the case may be.

14. Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/appeals.

Deferred tax is recognised on timing differences between the income accounted in financial statements and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.


Foreign Subsidiaries

Foreign Subsidiaries recognise current tax/ deferred tax liabilities and assets in accordance with the applicable local laws.

15. Borrowing costs

Borrowing costs include interest, commitment charges, finance charges in respect of assets acquired on finance lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs.

16. Provisions, contingent liabilities and contingent assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated

Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of:

a) 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; or

b) a possible obligation unless the probability of outflow of resources is remote

Contingent assets are neither recognised nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

17. Segment accounting

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

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/allocable to segments are considered for determining the segment result. Expenditure which relate to the Company as a whole and not allocable to segments are included under “unallocable corporate expenditure”.

c) Income which relates to the Company as a whole and not allocable to segments is included in “unallocable corporate income”.

d) Fixed assets used and liabilities contracted for performing the Company’s business have not been identified to any of the reported segments as the fixed assets and services are used interchangeably among segments.

18. Cash flow statement

Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of:

i. transactions of a non-cash nature

ii. any deferrals or accruals of past or future operating cash receipts or payments and

iii. items of income or expense associated with investing or financing cash flows.

Cash and cash equivalents (including bank balances) are reflected as such in the cash flow statement.


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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 ownership as at March 31, 2016

(%)

Proportion of ownership as at March 31, 2015

(%)1 Larsen & Toubro Infotech Canada Limited Canada 100 1002 Larsen & Toubro Infotech GmbH Germany 100 1003 Larsen & Toubro Infotech LLC USA 100 1004 L&T Infotech Financial Services Technologies Inc. Canada 100 1005 Larsen And Toubro Infotech South Africa (Proprietary)

LimitedSouth Africa 74.9 74.9

6 L&T Information Technology Services (Shanghai) Co. Limited China 100 1007 GDA Technologies Limited India 100 1008 Information Systems Resource Centre Private Limited* India - 1009 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.



132


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 liabilities

Share in profit

As % of consolidated net

assets

Amount As % of consolidated profit

or loss

Amount

A - Parent Larsen & Toubro Infotech Limited 92.12% 18,632.71 101.73% 9,381.31SubsidiariesB - Indian GDA Technologies Limited 1.83% 370.75 0.20% 18.37Sub Total 1.83% 370.75 0.20% 18.37C-Foreign1. Larsen & Toubro Infotech GmbH 1.39% 281.77 0.62% 56.762. Larsen & Toubro Infotech Canada Limited 0.50% 100.34 0.33% 30.783. Larsen & Toubro Infotech LLC 0.56% 112.62 0.14% 12.474. L&T Infotech Financial Services

Technologies Inc.16.17% 3,271.03 2.10% 193.48

5. Larsen And Toubro South Africa (Proprietary) Limited

0.10% 20.65 0.06% 5.16

6. L&T Information Technology Services (Shanghai) Co. Limited

0.03% 5.24 0.03% 2.91

7. Larsen & Toubro Infotech Austria GmbH 0.01% 2.08 (0.01)% (0.51)8. L&T Information Technology Spain,

Sociedad Limitada0.02% 3.05 (0.01)% (0.61)

Sub Total 18.77% 3,796.78 3.26% 300.44Total A+B+C 112.72% 22,800.24 105.19% 9,700.11Less : 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 at31-03-2016

As at 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 subscribed169,816,188 equity shares for ` 1 each 169.82 161.25 (Previous year 32,250,000 of ` 5 each)EQUITY SHARE CAPITAL 169.82 161.25


133

Notes :


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 31-03-2015Number 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 31-03-2016

As at 31-03-2015

Issued, subscribed and fully paid up equity shares outstanding at the beginning 161,250,000 161,250,000Add: 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 shares to be issued as fully

paid

Exercise price ** Number of equity shares to be issued as fully

paid

Exercise price

# Employee stock options granted and outstanding under Employee Stock Ownership Scheme “ESOS Plan”

82,660 5 393,003 252,350,106 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



134


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 2014-151 Face value (`) 1 5 1 52 Grant Price (`) 5 25 2 103 Options granted and outstanding at the

beginning of the year1,965,015 393,003 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 7,0177 Options exercised and shares allotted during

the year1,851,855 - 6,407,483 -

8 Options granted and outstanding at the end of the year

82,660 393,003 2,350,106 1,873,467

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.


135

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 reserveAs per last balance sheet 4,490.26 4,490.26Add: transferred from employee stock options outstanding 0.05 -

4,490.31 4,490.26C(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 1,181.24Addition during the year 204.16 -

1,385.40 1,181.24C(iv) Surplus statement of profit and loss

Opening balance 14,193.21 12,229.63Add: Profit for the year 9,221.77 7,685.26Less: Depreciation charged against retained earnings - 12.27Add : Deferred tax credit on depreciation charged to retained earnings - 2.17

23,414.98 19,904.79Less: 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 14,193.22C(v) Foreign currency translation reserve Opening balance 266.07 631.60 Add/(less):for the year 157.52 (365.53) 423.59 266.07C(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



136


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 borrowingsSecured 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 borrowingsSecured loans *Other loans from banks - 132.51 132.51 - 600.00 600.00unsecured loansOther loans from banks - 265.02 265.02 - 1,297.48 1,297.48

- 397.53 397.53 - 1,897.48 1,897.48Total - 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 loanExternal commercial borrowings (ECB) 147.23 USD LIBOR (3 months) +

2.5%Repayable in equal half-yearly instalments of USD 1.11 million each commencing from 19 October 2012 and ending on 14 October 2016.

Previous year (277.78)

E. Liabilities(` Million)


E(i) Trade payablesDue to holding company - - - - 174.22 174.22Due 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 payablesForward 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 1,189.14 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 2,261.831,250.52 6,041.35 7,291.87 538.35 4,442.95 4,981.30


137

F. Provisions :

F(i) – Provisions for employee benefits(` Million)

As at 31-03-2016 As at 31-03-2015Non-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 benefits

124.29 0.24 124.53 103.71 0.24 103.95

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 provisionsProposed equity dividend - 441.52 441.52 - - -Additional tax on dividend - 58.02 58.02 - - -Income tax - 19.91 19.91 - 14.70 14.70Others * - 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. No.

Particulars Class of provisions Sales Tax Others Total

1 Balance as at 1-4-2015 4.00 6.70 10.702 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.



138


G. F

ixed

Ass

ets

(` M

illio

n)

Gros

s Blo

ckDe

prec

iation

/Am

ortis

ation

Net B

lock

Net B

lock

As at

01

-Apr

-15

Addi

tions

D

educ

tions

Fo

reign

cu

rrenc

y tra

nslati

on

rese

rve

As at

31

-Mar

-16

As at

01

-Apr

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For t

he

year

On

De

ducti

ons

Fore

ign

curre

ncy

trans

lation

re

serv

e

As at

31

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-16

As at

31

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-16

As at

31

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-15

Fixed

and I

ntan

gible

Asse

ts

Tang

ible

Asse

ts

Leas

ehold

Land

12.27

-

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12.27

2.

63

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-

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76

9.51

9.

64

Build

ings

207.3

8 -

- -

207.3

8 81

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8.40

-

- 90

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117.3

7 12

5.77

Leas

ehold

Impr

ovem

ents

296.1

9 68

.32

15.95

-

348.5

6 61

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35.65

3.

22

- 94

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254.2

2 23

4.28

Plant

and m

achin

ery

987.7

6 96

.41

229.0

6 -

855.1

1 34

3.72

89.69

13

0.50

- 30

2.91

552.2

0 64

4.04

Com

pute

rs

a.

Owne

d 2,

296.8

8 47

8.61

95.18

12

.02

2,69

2.33

1,75

4.27

323.4

5 94

.08

10.02

1,

993.6

6 69

8.67

542.

61

b.

Leas

ed 22

.61

- 22

.61

- -

22.61

-

22.61

-

- -

-

Office

Equip

men

ts 89

6.47

119.2

2 12

7.00

- 88

8.69

601.2

8 11

0.74

124.2

1 -

587.8

1 30

0.88

295.

19

Furn

iture

and fi

xtur

es 1,

239.6

7 97

.98

162.1

1 1.

73

1,17

7.27

629.3

6 11

2.12

138.7

5 0.

95

603.6

8 57

3.59

610.

31

Vehic

les 44

6.76

92.08

70

.76

- 46

8.08

158.7

8 56

.49

32.64

-

182.6

3 28

5.45

287.

98

Capit

al W

ork i

n Pro

gres

s -

- -

- -

- -

- -

6.95

53

.33

Tota

l Of t

angib

le as

sets

6,40

5.99

95

2.62

72

2.67

13

.75

6,64

9.69

3,

656.

17

736.

67

546.

01

10.9

7 3,

857.

80

2,79

8.84

2,

803.

15

Tota

l of t

angib

le as

sets

(Pre

vious

year

) 6,

133.

30

722.

29

416.

85

32.7

5 6,

405.

99

3,30

8.67

75

3.83

38

5.62

(2

0.71

) 3,

656.

17

2,80

3.15

2,

889.

08

Inta

ngib

le As

sets

Good

will o

n acq

usiti

on 33

4.55

- -

14.99

34

9.54

- -

- -

- 34

9.54

334.

55

Good

will o

n con

solid

ation

628.0

5 -

- -

628.0

5 -

- -

- -

628.0

5 62

8.05

Softw

are

4,89

7.11

394.3

5 5.

83

137.9

5 5,

423.5

8 2,

359.0

8 89

9.34

5.83

69

.31

3,32

1.90

2,10

1.68

2,53

8.03

Custo

mer

cont

racts

1,01

5.46

- -

45.51

1,

060.9

7 43

1.57

103.5

1 -

21.93

55

7.01

503.9

6 58

3.89

Busin

ess R

ights

98.05

-

- -

98.05

98

.05

- -

- 98

.05

- -

Inta

ngibl

e ass

ets u

nder

deve

lopm

ent

- -

- -

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- -

- -

188.4

1 19

8.45

Tota

l of i

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asse

ts 6,

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22

394.

35

5.83

19

8.45

7,

560.

19

2,88

8.70

1,

002.

85

5.83

91

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3,97

6.96

3,

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64

4,28

2.97

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ntan

gible

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ts (P

revio

us ye

ar)

6,12

3.56

1,

521.

23

200.

12

(471

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6,97

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2,

424.

51

837.

85

199.

04

(174

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2,88

8.70

4,

282.

97

4,16

5.85

1.

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irm

ent u

pto

31-0

3-20

16 -

NIL

.

2.

Add

ition

s du

ring

the

yea

r &

cap

ital

wor

k-in

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s in

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e `

Nil

(pre

viou

s ye

ar `

Nil)

bei

ng b

orro

win

g co

st c

apita

lised

in

acco

rdan

ce w

ith A

ccou

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Sta

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S) 1

6 on

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win

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pre

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unde

r se

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133

of t

he C

ompa

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3, re

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the

Com

pani

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Rul

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3.

Cons

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e ad

optio

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sch

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e II

to t

he C

ompa

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Act

, 20

13,

the

depr

ecia

tion

for

the

year

end

ed

Mar

ch 3

1, 2

015

is h

ighe

r an

d th

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ofit

befo

re t

ax is

low

er b

y `

69.2

1 M

n. F

urth

er, a

n am

ount

of

` 1

2.27

Mn

(add

ition

al d

efer

red

tax

char

ge o

f `

0.73

Mn)

rep

rese

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the

car

ryin

g am

ount

of

asse

ts w

ith r

evis

ed u

sefu

l life

as

nil,

has

been

ch

arge

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the

open

ing

rese

rves

as

on A

pril

1, 2

014

purs

uant

to th

e pr

ovis

ions

of t

he C

ompa

nies

Act

, 201

3.

4.

Dur

ing

the

prev

ious

yea

r end

ed M

arch

31,

201

5, a

sub

sidi

ary

com

pany

cha

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the

usef

ul li

fe o

f an

inta

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le a

sset

nam

ed a

s Pe

ndo

syst

em fr

om 5

yea

rs to

1 y

ear.

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to c

hang

e in

the

use

ful l

ife, t

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r th

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Mar

ch 3

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is h

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ch 3

1, 2

016

is h

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efor

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x is

low

er b

y `

10.7

0 M

n.


139

h. Investments

(` Million)

As at 31-03-2016 As at 31-03-2015

h(i) Non-current investmentsTrade investments (at cost)Long term investment100,000 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 per unit

units as at 31-03-2016



Liquid investments - quotedBirla 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 - 100.00Templeton India TMA - Super IP- DDR 1000 - 100.14Religare Invesco Liquid Fund - DDR 1000 - 100.04 IDFC Ultra Short Term Fund - Reg - DDR 10 - 100.00L&T Ultra Short Term Fund - Daily Dividend Reinvestment Plan

10.1660 - 60.26

L&T Liquid Fund - Daily Dividend Reinvestment Plan 1,011.6349 - 10.08Franklin India Savings Plus Fund 11.0640 0.01 -Franklin Templeton IUSFB-Super IP 61.28 57.61L&T Liquid Fund- DDR 300.56 285.24Total (A) 429.20 1,015.51Fixed maturity plans - quotedUTI Fixed Term Income Fund Series XVIII - X (366 days)-Growth

10 - 20.00

Total (B) - 20.00Total (A+B) 429.20 1,035.51Less : Diminution in value of investments - -Grand total 429.20 1,035.51Market value of investments 429.36 1,037.02



140


I. Deferred tax liabilites/ assets

I(i) Deferred tax liabilities

(` Million)

Particulars Deferred tax asset / (liability) as at March 31, 2015

Current year (charge) / credit

(Charge) / credit to hedging reserve

Deferred tax asset/ (liability) as at

March 31, 2016

Deferred tax liabilitiesDepreciation / 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 assetsNon capital losses and deferred expenses 234.65 (169.43) - 65.22Provision for doubtful debts and advances 7.19 24.07 - 31.26Provision for employee benefits 60.50 37.23 - 97.73Loss on derivative transactions 498.30 - (487.70) 10.60Realised gain on derivative transaction - 41.36 - 41.36Others (0.03) 9.95 - 9.92Total 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/(liability) as at

March 31, 2015

Current year (charge) / credit

(Charge) / credit to hedging reserve

Deferred tax asset/ (liability) as at

March 31, 2016

Deferred tax liabilitiesDepreciation / amortisation 0.69 (0.69) - -Allowance on income received in advance (2.27) - - (2.27)Total (1.58) (0.69) - (2.27)Deferred tax assetsProvision for employee benefits 3.53 (1.49) - 2.04Income received in advance 2.34 - - 2.34 Depreciation / amortisation 5.72 (5.72) - -Others 0.28 (0.02) - 0.26Total 11.87 (7.23) - 4.64Net deferred tax assets/(liabilities)(B) 10.29 (7.92) - 2.37Net 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 statement of profit and loss

(600.44)


141

J. Trade receivables and unbilled revenue

(` Million)

As at 31-03-2016 As at 31-03-2015

J(i) Trade receivablesUnsecuredDebts outstanding for a period exceeding six monthsConsidered good 327.30 65.16Considered doubtful 160.69 175.30

487.99 240.46Other debtsConsidered 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 10,836.00Less : 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 equivalentCash on hand 0.62 0.67Balances with bank- in current accounts

Overseas 1,120.98 1,078.30Domestic 223.49 235.72

Remittances in transit 94.82 221.58Fixed deposits (maturity less than 3 months) 322.09 125.57

1,762.00 1,661.84Other 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.



142


L. Loans and advances(` Million)


unsecuredConsidered goodLoans against mortgage of house property - - - - 0.10 0.10Premia 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 35.65 163.04 198.69Advances recoverable in cash or in kind

2,574.31 3,206.05 5,780.36 1,150.21 3,534.46 4,684.67

- Considered doubtful - - - - 6.06 6.06Less : Provision for bad & doubtful loans & advances

- - - - (6.06) (6.06)

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 47,704.46Domestic 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 68.44 141.26Interest received 25.06 22.81 Foreign exchange gain/(loss) 2,795.57 667.81Provision 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 expensesSalaries including overseas staff expenses 33,997.84 28,056.30Staff welfare 865.95 799.93Contribution to provident and other funds 344.99 249.93Contribution to superannuation fund 52.05 44.71Contribution to gratuity fund 85.75 91.86

35,346.58 29,242.73


143

(` Million)

2015-16 2014-15

O(ii) Operating expenses Communication expenses 191.68 168.11Lease finance charges 53.97 112.16Consultancy charges 4,032.97 3,458.95Cost of software packages for own use 450.06 403.65Cost 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 expensesTravelling and conveyance 1,409.02 1,202.05Rent and establishment expenses 1,591.39 1,459.43Telephone charges and postage 377.84 344.52Legal and professional charges 585.27 562.58Printing and stationery 25.88 29.21Advertisement 115.49 92.69Entertainment 72.37 57.29Recruitment expenses 147.69 132.70Repairs to building 199.36 135.43Repairs to computers 65.97 93.16General repairs and maintenance 320.36 253.51Power and fuel 347.92 290.26Equipment hire charges 12.90 10.19Insurance charges 162.91 165.74Rates and taxes 204.40 358.46Allowance for doubtful debts and advances 30.29 190.47Bad debts 51.93 39.13Less : Provision written back (50.95) (39.13)Commission paid 6.99 0.62Books, periodicals and subscriptions 19.79 29.09Directors fees 1.43 0.93Commission to directors 5.81 3.60Loss on sale of fixed assets 27.28 7.18Miscellaneous expenses 325.80 181.98Amortisation 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.



144


P. Finance cost(` Million)

2015-16 2014-15

P(i) Interest expenses 31.90 46.94On others 25.99 9.29

57.89 56.23P(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 2,141.09MAT credit entitlement for current year (1,086.70) (505.04)Capital gains tax on sale of PES Business Unit - 14.87Provision 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 1,167.472. Corporate guarantee given on behalf of subsidiary ** 5,998.76 5,395.703. 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 1.285. 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.


145

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

medical benefit 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.



146


b) The amounts recognised in statement of profit and loss are as follows:(` Million)

Gratuity plan Post-retirement medical benefit

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 medical benefit

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)


147

d) Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows:(` Million)


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:


provident fund plan

Government of India securities

SchemewithLIC

25.3%(24.7%)

State government securities 15.8%(15.1%)

Corporate bonds 10.3%(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%)



148


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%

to 18% for various age groups

Varies between 2% to 18% for various

age groups4 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 of1% 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 obligation

589.94 507.19 408.57 384.12 297.59

2 Plan assets 498.26 409.85 379.19 296.11 156.903 (Surplus)/deficit 91.68 97.34 29.38 88.01 140.69


149

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

Experience adjustments Gratuity(` Million)

2015-16 2014-15 2013-14 2012-13 2011-12Defined benefit obligation 589.94 507.19 408.57 384.12 297.59Plan assets 498.26 409.85 379.19 296.11 156.90(Surplus) / deficit 91.68 97.34 29.38 88.01 140.69Experience adjustments on plan liabilities (7.53) (13.91) (6.21) 5.05 95.81Experience 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.



150


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 March 31, 2016

Notional amount 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 30,013.242 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 389.52 474.16Total 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 7,606.18Weighted average number of shares outstanding 163,914,663 161,250,000Basic EPS (`) 56.26 47.17

2015-16 2014-15



151

After extraordinary items

2015-16 2014-15

Profit after tax (` Million) 9,221.77 7,685.26Weighted average number of shares outstanding 163,914,663 161,250,000Basic EPS (`) 56.26 47.66

2015-16 2014-15


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 StatusMr. 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



152


(ii) List of related parties with whom there were transactions during the year:

Name RelationshipLarsen & Toubro Limited Holding CompanyL&T Hydrocarbon Engineering Limited Fellow SubsidiaryLarsen & Toubro (East Asia) SDN.BHD Fellow SubsidiaryL&T Electricals and Automation Saudi Arabia Company LLC Fellow SubsidiaryL&T Finance Limited Fellow SubsidiaryL&T General Insurance Company Limited Fellow SubsidiaryL&T Infrastructure Development Projects Limited Fellow SubsidiaryL&T Power Development Limited Fellow SubsidiaryLarsen & Toubro Kuwait Construction General Contracting Company, With Limited Liability Fellow SubsidiaryL&T Infrastructure Finance Company Limited Fellow SubsidiaryL&T Metro Rail (Hyderabad) Limited Fellow SubsidiaryL&T Technology Services Limited Fellow SubsidiaryL&T Valves Limited Fellow SubsidiaryL&T Investment Management Limited Fellow SubsidiaryL&T Construction Equipment Limited Fellow SubsidiaryLarsen & Toubro LLC Fellow SubsidiaryNabha Power Limited Fellow SubsidiaryL&T Electrical & Automation FZE Fellow SubsidiarySpectrum Infotech Private Limited Fellow SubsidiaryFamily Credit Limited Fellow SubsidiaryPT. Tamco Indonesia Fellow SubsidiaryL&T Special Steels and Heavy Forgings Private Limited Fellow SubsidiaryLarsen & Toubro ATCO Saudi LLC Fellow SubsidiaryL&T Thales Technology Services Private Limited Fellow SubsidiaryL&T Capital Markets Limited Fellow SubsidiaryL&T Housing Finance Limited Fellow SubsidiaryLarsen & Toubro Electromech LLC Fellow SubsidiaryTamco Electrical Industries Australia PTY Limited Fellow SubsidiaryL&T Technology Services LLC Fellow Subsidiary


153

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

Liability- 6.23

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) (-)



154


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 Discontinued

Business)

Total

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 Business

Total Revenue

2015-16 2014-15 2015-16 2014-15 2015-16 2014-15

North America 40,370.47 34,097.77 - - 40,370.47 34,097.77Europe 10,124.59 8,862.74 - 99.42 10,124.59 8,962.16India 3,400.19 2,075.90 - - 3,400.19 2,075.90APAC 1,190.47 1,199.12 - - 1,190.47 1,199.12ROW 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


155

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

45.96Current liabilities and provisions Other current liabilities 10.71Net current assets 35.25Net 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 99.42Total expenses (89.70)Profit before taxes 9.72Income 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.





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L&T Infotech Annual Report 2015-16

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Transcript of L&T Infotech Annual Report 2015-16