L&T GENERAL INSURANCE COMPANY LIMITED ANNUAL REPORT 2009-2010 DIRECTOR'S REPORT To The Members Your Directors have pleasure in presenting the Third Annual Report with audited accounts for the year ended March 31, 2010. FINANCIAL RESULTS: The summarised financial results of your Company for the year ended March 31, 2010 are as under: Particulars For the year ended For the period ended 31.03.2010 31.03.2009 Rs. Lakhs Rs. Lakhs Gross Income 3.33 - Profit/(Loss) Before Tax (731.42) (75.31) Provision for Tax - - Profit/(Loss)After Tax (731.42) (75.31) Add : Preliminary expenses/Credit/(Debit) balance brought forward from the previous year (77.22) (1.91) Balance carried to Balance Sheet (808.64) (77.22) DIVIDEND: None PERFORMANCE OF THE COMPANY: Your Company is yet to commence its commercial operations. RESOURCES: During the year under review, your Company had allotted 2,89,50,000 Equity Shares of Rs. 10 each, for cash at par, aggregating to Rs. 2,895 lakh to Larsen & Toubro Limited, the Holding Company. This resulted in increase of paid-up equity share capital by Rs. 2,895 lakh. FIXED DEPOSITS: Your Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009: Your Company has familiarized itself with the requirement of the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India and is in the process of implementing many of the suggestions. A gist of our compliance with the said guidelines is given below : Remuneration of Directors: All the Directors were nominated by Larsen & Toubro Limited (L&T) and are in the services of L&T. The Directors are not paid any sitting fees for attending the Meetings of the Board and / or any Committees thereof and are not drawing any remuneration. Independent Directors: All the members of the Board of the Company are independent in the sense that none of them is involved in the day-to-day management of the Company. Number of Companies in which an Individual may become a Director: The Company has apprised its Board members about the restriction on number of other directorships and expects in due course to comply with the same. Responsibilities of the Board: Presentations to the Board in areas such as financial results, budgets, business prospects, etc., give the Directors, an opportunity to interact with senior managers and other functional heads. Directors are also updated about their role, responsibilities and liabilities. The Company ensures necessary training to the Directors relating to its business through formal/informal interactions. Systems, procedures and resources are available 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 duties. The Directors are given time to study the data and contribute effectively to Board discussions. The Non-Executive Directors through their interactions and deliberations give suggestions for improving overall effectiveness of the Board and its Committees. Their inputs are also utilized to determine the critical skills required for prospective candidates for election to the Board. The system of risk assessment and compliance with statutory requirements are in place. Statutory Auditors: The Company has obtained a certificate from the auditors certifying its independence and arm's length relationship with the Company. The Company does not advocate rotation of Auditors as envisaged in these guidelines in view of the domain knowledge acquired by the Auditors over a period of time. However, the signing partners are rotated at regular frequency. Internal Auditors: The Corporate Audit Services department of L&T provides internal audit services to the Company. Internal Control: The Board ensures the effectiveness of the Company's system of internal controls including financial, operational and compliance controls and risk management controls. Secretarial Audit: The Secretarial Audit, at regular intervals, is conducted by the Corporate Secretarial Department of L&T, which has competent professionals to carry out the said audit. Details of related party transactions: The Board hereby states that the details of all the related party transactions form part of the accounts as required under AS-18 and the same are given in note (C) of Schedule 10 of the attached Financial Statements. DIRECTORS: Pursuant to the provisions of the Companies Act, 1956, Mr. R. Shankar Raman, Director of your Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. AUDITORS: M/s. Sharp & Tannan, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and have expressed their willingness to continue as Auditors, if re-appointed. The Board commends re-appointment of the firm as Statutory Auditors. PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND THE RULES MADE THEREUNDER: The information required under Section 217(2A) of the Companies Act, 1956 & the rules made thereunder, is given in a separate Annexure to this Report and forms part of the Report. None of the employees listed in the said Annexure is related to any Director of the Company. The same will be furnished to the shareholders on request. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, concerning conservation of energy and technology absorption respectively, are not applicable to the Company. There were no foreign exchange earnings and expenditure during the year. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors based on the representations received from the Operating Management, and after due enquiry, confirm that: 1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there has been no material departure; 2. 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 your Company at the end of the financial year and of the profit or loss of your Company for that year; 3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; 4. The Directors have prepared the annual accounts on a going concern basis; and 5. Proper systems are in place to ensure compliance of all laws applicable to the Company. AUDITORS' REPORT: The Auditors' Report is unqualified. The notes to the Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further clarifications under Section 217(3) of the Companies Act, 1956. ACKNOWLEDGEMENT: Your Company maintained cordial relationships with Regulatory Authorities during the period under review. Your Directors are grateful for the support extended by them and look forward to receiving their continued support. For and on behalf of the Board Y.M. DEOSTHALEE N. SIVARAMAN Director Director Place : Mumbai Date : April 26, 2010