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Notes to Accounts of A2Z Infra Engineering Ltd.

Mar 31, 2016

Note 1.: The Company has only one class of equity shares having a par value of Rs 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Note 2.: No shares have been allotted as fully paid up pursuant to contracts without payment being received in cash or as bonus shares for the period of 5 years immediately preceding March 31, 2016.

Note 3.: During the year, the Company has allotted 24,695,780 warrants convertible into equal number of equity shares of Rs. 10 each (exercisable in one or more tranches) at the option of the holder thereof at any time within 18 (eighteen) months after the allotment at an issue price of Rs. 21.66 each on preferential basis to persons other than the Promoters and Promoter group. In this regard, the Company had received Rs. 133,727,646 in September, 2015 being 25% of the subscription amount as per the SEBI (ICDR) Regulations, 2009. The said warrants are to be converted into equity shares on the exercise of the conversion rights by the allottees at the time of payment of remaining 75% subscription amount.

Further, the Company has received the remaining 75% of the subscription amount for 8,250,786 warrants amounting Rs 134,034,019 and have allotted 8,250,786 equity shares against these warrants.

Note 4.: During the year, The Company has allotted 8,100,000 equity shares on preferential basis to one of the banks as per SEBI (ICDR) Regulations, 2009 as amended from time to time, on the conversion of Funded Interest Term Loan (FITL) as per the Master Restructuring Agreement with the banks under the Corporate Debt Restructuring Scheme (CDR Scheme) in terms of approval granted by the shareholders of the Company by the way of postal ballot.

Note 5.: During the year, the Company has allotted 1,825,500 equity shares of face value of Rs. 10 each to the eligible employees of the Company who have exercised their stock options under the a2z Employee Stock Option Plan 2013 (Tranche I and Tranche

II). These shares are pari-passu with the existing equity shares of the Company, in all respects.

Note 6.: The Company has following stock option plans:

(a) A2Z Stock Option Plan 2010 (‘the plan’)

During the year ended March 31, 2010, the Company had formulated Employee Stock Option Scheme referred as ''A2Z Stock Option Plan 2010 (''the plan'')'' for all eligible employees/ directors of the Company except an employee who is promoter or belongs to the promoter group of the Company and its subsidiaries in pursuance of the special resolution duly approved by the shareholders on March 30, 2010.

The plan shall be administered and supervised by the Nomination & Remuneration Committee under the powers delegated by Board. Each option shall entitle the option grantee to apply for and be transferred Equity Shares of the Company. On or from the time of the listing of the Equity Shares of the Company, the maximum number of options that can be granted to any employee in any year under the A2Z ESOP shall be less than 5% of the issued share capital of the Company (excluding any outstanding warrants or other securities convertible into Equity Shares) at the time of grant of options, subject to the overall ceiling of 2,865,056 options in the aggregate.

The members of the Company vide special resolution at the Annual General Meeting held on September 28, 2013 had approved the A2Z Employees Stock Option Plan, 2013. The ESOP Compensation Committee in its meeting held on February 3, 2014 has granted 1,695,000 stock options convertible into equivalent number of equity shares of Rs 10 each to the eligible employees / directors of the Company and its subsidiary companies at the exercise price of Rs 10.35 each which is NSE closing market price on January 31, 2014 (i.e. previous trading day of the grant date). The entire granted stock options shall vest and will be exercisable on the first anniversary of the grant date till completion of five years since then;

The members of the Company vide special resolution at the Annual General Meeting held on September 28, 2013 had approved the A2Z Employees Stock Option Plan, 2013. The ESOP Compensation Committee in its meeting held on July 3, 2014 has granted 1,905,000 stock options convertible into equivalent number of equity shares of Rs 10 each to the eligible employees / directors of the Company and its subsidiary companies at the exercise price of Rs 19.95 each which is NSE closing market price on July 02, 2014 (i.e previous trading day of the grant date). The entire granted stock options shall vest and will be exercisable 30% on the first anniversary, 30% on the second anniversary & 40% on the third anniversary of the grant date till completion of four years since then;

The members of the Company vide special resolution at the Annual General Meeting held on September 27, 2014 had approved the A2Z Employees Stock Option Plan, 2014. The ESOP Compensation Committee in its meeting held on July 6, 2015 has granted 45,00,000 stock options convertible into equivalent number of equity shares of Rs 10 each to the eligible employees / directors of the Company and its subsidiary companies at the exercise price of Rs 15.50 each which is NSE closing market price on July 03, 2015 (i.e. previous trading day of the grant date). The entire granted stock options shall vest and will be exercisable 30% on the first anniversary, 30% on the second anniversary & 40% on the third anniversary of the grant date till completion of five years since then;

(e) Since the enterprise uses the intrinsic value method, the impact on the reported net profit and earnings per share by applying the fair value based method has been disclosed below:

In March 2005, the ICAI has issued a guidance note on “Accounting for Employees Share Based Payments” applicable to employee based share plan, the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

Details of terms of repayment for the long-term borrowings and security provided in respect of the secured long-term borrowings:

Note 7.: Term loans from banks:

1) Term loan from bank amounting to Rs 858,000,000 (Previous year - Rs 880,000,000) having an interest rate of 10.15% -10.75% per annum as per CDR Scheme is repayable in 32 quarterly installments, first installment was due in March 2015.

The above loan is secured against (i) First pari passu charge on both present and future current assets as well as fixed assets of the biomass based power projects situated at Fazilka, Nakodar and Morinda in the state of Punjab. (ii) Second pari-passu charge on fixed assets and current assets on EPC business.

2) Term loan from bank amounting to Rs 923,378,781 (Previous year - Rs 1,038,511,491) having an interest rate from 12.75% -13.25% per annum during the year is repayable in 24 quarterly installments, first installment was due in June 2015.

The above loan is secured against:

(a) First charge on pari - passu basis: (i) by way of hypothecation of all current assets of the Company including but not limited to receivables and inventory, relating to the projects both present and future; (ii) on all intangible assets including but not limited to goodwill pertaining to the projects (to the extent permissible by the Punjab state Co-operative sugar mills).

(b) First charge (i) on all the insurance contracts with respect to the projects together with any receivables there under; (ii) on all the accounts (including but not limited to the project accounts) with respect to the projects

(c) An assignment of: (i) all rights and interest by way of first charge on pari passu basis on the book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature and wherever arising, relating to the projects, present and future; (ii) the rights and interest in the project site to the extent permissible by law; (iii) all its rights and obligations under the assignment orders and memorandum of understandings and; (iv) the rights and interest by way of first charge on pari passu basis into and under each of the project documents, and all the rights under each letter of credit/ guarantee or performance bond that may be posted by any party to a project document for the Company''s benefit and all the rights under the approvals in connection with the project (having value above Rs 100,000,000) to the extent permissible by law

(d) Personal guarantee of Mr. Amit Mittal (Managing Director).

3) Term loans from banks amounting to Rs 151,985,500 (Previous year - Rs 96,700,000) having interest rate of 10.15% - 10.75% per annum during the year are repayable in 28 quarterly installments, first installment is due in March 2016.

The above loan is secured against (i) First charge ranking pari passu on present and future fixed assets of the Power projects situated at Fazlika, Nakodar and Morinda in the state of Punjab. (ii) Second charge ranking pari passu on present and future current assets of the Power projects situated at Fazilka, Nakodar and Morinda in the state of Punjab. (iii) Second charge ranking pari passu on both present and future current assets, as well as fixed assets of Company other than assets exclusively financed to other lenders.

4) Term loans from banks amounting to Rs 139,779,185 (Previous year - Rs 13,100,000) having interest rate from 10.15% to 10.75% per annum during the year are repayable in 21 quarterly installments, first installment is due in March 2016.

The above loan is secured against (i) First charge ranking pari passu on both present and future current assets as well as fixed assets of the Company other than assets exclusively charged to other lenders. (ii) Second charge ranking pari passu on both present and future current assets of the power projects situated at Fazilka, Nakodar and Morinda in the state of Punjab.

5) Term loans from banks amounting to Rs 160,000,000 (Previous year - Rs Nil) having interest rate from 12.75%- 13.25% per annum during the year are repayable in 28 quarterly installments, first installment is due in March 2016.The above loan is secured against (i) First pari passu charge on present and future fixed assets of the Power projects at Fazilka, Nakodar and Morinda. (ii) Second pari passu charge on present and future current assets of the Power projects at Fazilka, Nakodar and Morinda. (iii) Second pari passu charge on both present and future current assets as well as fixed assets of the company other than assets exclusively charged to other lenders. (iv) Personal Guarantee of Mr. Amit Mittal.

Note 8.: Term loans from financial institution:

1) The loan amounting to Rs 500,000,000 (Previous year - Rs 500,000,000) is secured by a first charge by way of hypothecation and escrow of the entire retention money receivables both present and future. The interest rate is 15% per annum and the loan was repayable in April 2015.

2) The loans amounting to Rs Nil (Previous year - Rs 14,309,636) is secured against hypothecation of equipments acquired out of loan. The interest rate is 11.50% to 13.00% per annum and the loans are repayable in 12 quarterly and 48 monthly installments.

Note 9. (a) : Working Capital Term Loan:

Working capital term loans from bank amounting to Rs 478,466,414 (Previous year - Rs 582,103,818) having an interest rate of 10.15% - 10.75% per annum as per CDR Scheme are repayable in 29 quarterly installments. First installment was due in March 2015.The above loan is secured against (i) First pari passu charge on both present and future fixed assets as well as current assets of the Company or Borrower other than assets exclusively charged to other lenders. (ii) Second pari passu charge on both present and future current assets as well as fixed assets of the Power projects situated at Fazlika, Nakodar and Morinda in the state of Punjab.

Note 10. (b) (i) : Funded Interest Term Loan -1 (EPC):

Funded interest team loans from bank amounting to Rs 895,899,320 (Previous year - Rs 989,769,512) having an interest rate of 10.15% - 10.75% per annum as per CDR Scheme are repayable in 25 quarterly installments. First installment was due in March 2015. The above loan is secured against (i) First charge by way of mortgage ranking pari passu on both present and future fixed assets as well as current assets of the Company other than assets exclusively charged to other lenders. (ii) Second charge ranking pari passu on both present and future current assets as well as fixed assets of the Power projects situated at Fazlika, Nakodar and Morinda in the state of Punjab.

Note 11. (b) (ii) : Funded Interest Term Loan -2 (EPC):

Funded interest team loans from bank amounting to Rs 31,123,606 (Previous year - Rs Nil) having an interest rate of 10.15% -10.75% per annum as per CDR Scheme are repayable in single installment, which will due in March 2021.

The above loan is secured against (i) First charge pari passu on both present and future current asset as well as fixed assets of the EPC business other than assets exclusively charged to lenders. (ii) Second charge pari passu on both current assets and fixed assets of the 3 biomass power plant projects situated at Fazlika, Nakodar and Morinda in the state of Punjab. (iii) Second charge pari passu on land property first charged to DBS and SCB given for term loan.

Note 12.: Working capital loans from banks and other secured loans

a) The working capital loans and cash credit facilities from banks are secured against whole of the assets (both current as well as fixed) of the Company, namely stock of raw material, stock in process, semi-finished and finished goods, stores and spares (consumable stores and spares), bills receivables and book debts and all other movables and fixed assets (except fixed assets exclusively financed by other lenders) both present and future stored or to be stored at the Company''s godown, premises and division at O-116, first floor shopping mall, Arjun Marg, DLF city phase - I, Gurgaon or wherever else the same may be by way of first pari - passu charge amongst the consortium members. The charge is also additionally secured by first charge over following immovable properties i.e.

i) Plot No. G-1030 A having 1500 sq mtr. area situated at Industrial Area, Bhiwadi Phase-III, Bhiwadi, Rajasthan in the name of M/s. Balaji Pottery Private Limited;

ii) Plot No. G-1030 having 1500 sq mtr. area situated at Industrial Area, Bhiwadi Phase-III, Bhiwadi, Rajasthan in the name of M/s. Shree Hari Om Utensils Private Limited;

iii) Office space on 7th Floor of a B G 7 storied commercial building on east side of LA-VIDA Mall at CK-3,4, 48, 49 Salt Lake City, Sector-II, Kolkata

iv) Mortgage of following properties :

(i) Land measuring 17 Bigha-1 Biswa, situated at village Morinda, Tehsil Chamkur Sahib, District Roop Nagar, Punjab;

(ii) Land measuring about 5.309 Hectare situated at village Palsora, District Indore;

(iii) Village Mandela Chhota, Tehsil Fatehpur, District Seekar, Rajasthan admeasuring about 6.065 Hectare;

(iv) Land with Boundary wall, Gata No. 70, Vill Sherpur Madho urf Ghania Khera, Near India Brick Kiln, Pargana & Tehsil Bilari, District Moradabad admeasuring about 1.465 Hectare or 3.62 acre;

(v) Land with Boundary wall, at Gata No. 184, 188, 189, Vill Sherpur Madho urf Ghaniakhera, Near India Brick Kiln, Pargana & Tehsil Bilari, District Moradabad admeasuring about 2.391 Hectare or 5.91 acre.

Further secured by Corporate Guarantees of M/s. Shree Hariom Utensils Private Limited and M/s. Balaji Pottery Private Limited. The rate of interest vary from 10.15% per annum to 13.25% per annum and these loans are repayable on demand.

b) Second charge on pari-passu basis over all rights, titles, interest, benefits, claims and demands in respect of projects and insurance contracts and over all movable and immoveable properties, accounts, plant and machinery, all other tangible moveable assets both present and future, project book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature in respect of project.

Note 13.: The management has performed impairment assessment of three cogeneration power plants set up in collaboration with certain sugar mills on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years. As at March 31, 2016, such plants have a power generation capacity of 15 MW each. The assessment has been done on the basis of assumptions of useful life of assets, discounted cash flows with significant underlying assumptions, achievement of certain operating capacity and the ability of new technology to perform on a consistent basis.

Based on the assessment and advice from an independent legal counsel on the availability of concession period, excluding the available renewal period by exercising the option for renewal/extension of the concession period, the management, is confident, that there exists reasonable certainty that arrangement shall be extended for a term of 5 years. The management has filed an application with the sugar mills for the appointment of an arbitrator for the extension of the concession period. The management believes that the estimates of the useful lives are reasonable and no impairment exists in the carrying value of power generation plants.

Note 14.: The management has committed to provide continued operational and financial support to its subsidiary companies for meeting their working capital and other financing requirements and based upon approved future projections of the subsidiaries, believes that the diminution (if any) is temporary in nature and accordingly, no further provision is considered necessary in respect of carrying value of investments.

Note 15.: During the year ended March 31, 2016, the Company has sold the investments in two wholly owned subsidiaries i.e. A2Z Singapore Waste Management Holdings Private Limited and A2Z Maintenance & Engineering Services (Uganda) Private Limited.

Note 16.: During the year ended March 31, 2016, one of the lenders of A2Z Green Waste Management Limited (formerly A2Z Infrastructure Limited and hereinafter referred to as AGWML), IL&FS Financial Service Limited (“IFIN”) has invoked pledge on 45,75,015 equity shares of AGWML constituting 20.11% of the paid up equity share capital of AGWML and have adjusted/appropriated an amount of Rs. 94,014,913/- (Rupees Nine Crore Forty Lacs Fourteen Thousand Nine Hundred and Thirteen only) towards interest payable from A2Z Green Waste Management Limited (Formerly A2z Infrastructure Limited) for the period from 1 April, 2015 to 30th September, 2015 & small portion of Interest for the next quarter ended 31 December, 2015.

Note 17: The Company doesn''t have any quoted investments.

Note 18: Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

Note 19.: The Company has a process whereby periodically long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/accounting standards for the material foreseeable losses on such long term contracts has been made in the books of accounts. The Company does not have any derivative contracts at the end of the year.

Note 20.: As the future liability for gratuity is provided on an actuarial basis for the Company as a whole, the amount pertaining to the directors are not included above.

Note 21.: Due to unexpected change in the profitability of the Company during the financial year 2012-13 and 2013-14, the managerial remuneration paid to the Managing Director exceeded the limits in terms of the provision of Section 198, 309, 310 read with schedule XIII of the erstwhile Companies Act, 1956. Subsequent to the approval by shareholders in the 13th Annual General Meeting of the Company duly held on September 27, 2014, the Company had made an application for the approval from the Central Government for the waiver of excess remuneration so paid. During the year, the Central Government has rejected the Company''s application for the waiver of the excess remuneration so paid amounting to Rs. 18,948,240 which is being held in trust by the Managing Director. Out of the entire excess remuneration paid Rs. 1,000,000 has been received from the Managing Director during the year and the balance outstanding as at March 31, 2016 is Rs 17,948,240.

Note 22.

The following are the details of loans and advances in the nature of loans given to subsidiaries and associates and firms / Companies in which directors are interested and are outstanding at the end of the year in terms of Securities and Exchange Board of India''s circular dated January 10, 2003

Note 23.(a).1:

As per joint venture agreements, the scope and value of work of each partner has been clearly defined and accepted by the clients. The Company''s share in assets, liabilities, income and expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly and severally liable to clients for any claims in these projects.

Note 24.(b):

The Company holds 60% interest in an Association of Person (AOP), formed between A2Z Infra Engineering Limited (formerly known as A2Z Maintenance & Engineering Services Limited) and Satya Builders, a jointly controlled entity which is involved in waste water projects at Alwar and Chittorgarh, Rajasthan.

Note 25.: RELATED PARTY

Names of related parties Subsidiary Companies

a) A2Z Infraservices Limited

b) A2Z Green Waste Management Limited (formerly known as A2Z Infrastructure Limited)

c) A2Z Powertech Limited

d) A2Z Powercom Limited

e) Selligence Technologies Services Private Limited

f) Mansi Bijlee & Rice Mills Limited

g) Star Transformers Limited

h) Chavan Rishi International Limited

i) A2Z Maintenance & Engineering Services (Uganda) Private Limited (till March 30, 2016) j) Magic Genie Services Limited (formerly known as A2Z Water Solutions Limited)

k) A2Z Singapore Waste Management Holdings Private Limited (till March 17, 2016)

l) A2Z Waste Management (Nainital) Private Limited

m) A2Z Maintenance & Engineering Services Limited and Satya Builders (Association of person)

Subsidiaries of A2Z Green Waste Management Limited (formerly known as A2Z Infrastructure Limited):

a) A2Z Waste Management (Meerut) Limited

b) A2Z Waste Management (Moradabad) Limited

c) A2Z Waste Management (Varanasi) Limited

d) A2Z Waste Management (Aligarh) Limited

e) A2Z Waste Management (Badaun) Limited

f) A2Z Waste Management (Balia) Limited

g) A2Z Waste Management (Fatehpur) Limited

h) A2Z Waste Management (Jaunpur) Limited

i) A2Z Waste Management (Loni) Limited

j) A2Z Waste Management (Mirzapur) Limited

k) A2Z Waste Management (Ranchi) Limited

l) A2Z Waste Management (Sambhal) Limited

m) Green Waste Management Private Limited (formerly A2Z Waste Management (Haridwar) Private Limited)

n) A2Z Waste Management (Dhanbad) Private Limited

o) A2Z Waste Management (Ludhiana) Limited

p) A2Z Waste Management (Jaipur) Limited

q) A2Z Mayo SNT Waste Management (Nanded) Private Limited

r) A2Z Waste Management (Ahmedabad) Limited

s) Earth Enviornment Management Services Private Limited

t) Shree Balaji Pottery Private Limited

u) Shree Hari Om Utensils Private Limited

Joint Venture (unincorporated)

a) UB Engineering Limited

b) SPIC - SMO Limited

c) Cobra Instalaciones Y Servicios, S.A

d) Karamtara Engineering Private Limited

e) Richardson & Cruddas (1972) Limited

Key Management Personnel (‘KMP’)

a) Mr. Amit Mittal (Managing director)

b) Mrs. Dipali Mittal (Whole time director)

c) Mr. Rajesh Jain (CEO and Whole time director)

d) Dr. Ashok Kumar Saini (with effect from February 15, 2015)

Relative of Key Management Personnel

a) Mrs. Sudha Mittal (Mother of Mr. Amit Mittal)

Enterprise in control of relatives of Key Management Personnel

a) Mestric Consultants Private Limited


Mar 31, 2015

*Based on discussions with the solicitors / favorable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

**The Income tax authorities conducted a search and survey at certain premises of the Company under section 132 and 133 of the Income Tax Act, 1961 in April 2012. During year ended March 31, 2015, the Company received the Assessment Orders for the assessment years 2007-08 to 2013-14 from the Deputy Commissioner of Income Tax (DCIT). The Company has filed Appeals with Commissioner of Income Tax (CIT) (Appeals) challenging the Orders for last five assessment years.

Based on their assessment and upon consideration of advice from the independent legal counsel, the management believes that the Company has reasonable chances of succeeding before the CIT (Appeals) and does not foresee any material liability.

Pending the final decision on the matter, no adjustment has been made in the financial statements.

Note 34.1: The Company has a process whereby periodically long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/accounting standards for the material foreseeable losses on such long term contracts has been made in the books of accounts. The Company does not have any derivative contracts at the end of the year.

Note 1: As the future liability for gratuity is provided on an actuarial basis for the Company as a whole, the amount pertaining to the directors are not included above.

Note 2: Due to unexpected change in the profitability of the Company during the financial year 2012-13 and 2013-14, the managerial remuneration being paid to the Managing Director exceeded the limits in terms of the provision of Section 198, 309, 310 read with schedule XIII of the erstwhile Companies Act, 1956. The shareholders in the 13th Annual General Meeting of the Company duly held on September 27, 2014, had approved the waiver of excess remuneration so paid during the period from April 1, 2012 to November 30, 2013 and the Company has made an application for the approval from the Central Government for the waiver of excess during the staid period. Pending approval from Central Government, the excess remuneration so paid is being held in trust by the Managing Director.

Note 3

The following are the details of loans and advances in the nature of loans given to subsidiaries and associates and firms / Companies in which directors are interested and are outstanding at the end of the year in terms of Securities and Exchange Board of India's circular dated January 10, 2003

Note 4

As per joint venture agreements, the scope and value of work of each partner has been clearly defined and accepted by the clients. The Company's share in assets, liabilities, income and expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly and severally liable to clients for any claims in these projects.

Note 5

The Company holds 60% interest in an Association of Person (AOP), formed between A2Z Infra Engineering Limited and Satya Builders, a jointly controlled entity which is involved in waste water projects at Alwar and Chittorgarh, Rajasthan.

Note 6

Trade receivable, trade payables, advance to suppliers and advances from customers are subject to confirmation / reconciliation as at year end or any time during the year. As explained, the Company follows a process of informal confirmation with its customers / suppliers and based on such informal confirmations/ discussions, believes that amount recoverable appearing as outstanding at year end are good of recovery, while the amounts payable are due. The management believes that no material adjustments are likely on formal confirmation / reconciliation of these balances.

Note 7

Pursuant to the approval of Corporate Debt Restructuring scheme (CDR) during the financial year ended 31st March 2014, the Company has complied with majority of the conditions precedent and is in advanced stages of complying with the remaining conditions. From the "cut- off date" the interest on the restructured debts has been recomputed and provided at the effective interest rates as per the CDR Scheme. Interest reversal of Rs. 45,363,039 (Previous year - Rs 18,440,166) pertaining to period from cut-off dates to March 31, 2014 have been disclosed as an exceptional item during the year.

Note 8

Previous year figures have also been regrouped / reclassified wherever considered necessary.


Mar 31, 2014

Note 1 : NATURE OF OPERATIONS

A2Z Maintenance & Engineering Services Limited (''A2Z or the Company'') was incorporated at National Capital Territory of Delhi and Haryana on January 7, 2002 for providing maintenance and engineering services. The Company commenced its business with the facility management services and entered into engineering business during the year 2005-06.

The Company''s engineering business segment primarily includes supply, erection and maintenance of electrical transmission lines and allied services to power distribution companies. The Company has also entered into collaboration with sugar mills for setting up 3 Cogeneration (Cogen) power plants on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years.

Note 2: There is no movement in the number of equity shares and the amount outstanding during the current or previous year.

Note 3. : The Company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividend in indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Note 4. : The Company has two stock option plans:

(a) A2Z Stock Option Plan 2010 (''the plan'')''

During the year ended March 31, 2010, the Company had formulated Employee Stock Option Scheme referred as ''A2Z Stock Option Plan 2010 (''the plan'')'' for all eligible employees/ directors of the Company except an employee who is promoter or belongs to the promoter group of the Company and its subsidiaries in pursuance of the special resolution duly approved by the shareholders on March 30, 2010.

The plan shall be administered and supervised by the Remuneration-cum-Compensation Committee under the powers delegated by Board. Each option shall entitle the option grantee to apply for and be transferred Equity Shares of the Company. On or from the time of the listing of the Equity Shares of the Company, the maximum number of options that can be granted to any employee in any year under the A2Z ESOP shall be less than 5% of the issued share capital of the Company (excluding any outstanding warrants or other securities convertible into Equity Shares) at the time of grant of options, subject to the overall ceiling of 2,865,056 options in the aggregate.

Details of terms of repayment for the long-term borrowings and security provided in respect of the secured long-term borrowings:

Note 5: Term loans from banks:

1) Term loan from bank amounting to Rs. 880,000,000 (Previous year - Rs. 880,000,000) having an interest rate of 10.75% as per CDR Scheme is repayable in 33 quarterly installments first installment being due in March 2015.

2) Term loan from bank amounting to Rs. 1,038,511,491 (Previous year - Rs. 840,195,594) having an interest rate of 13% per annum during the year is repayable in 24 quarterly installments first installment being due in June 2015.

The above loans are secured against:

(a) First charge on pari - passu basis: (i) by way of hypothecation of all current assets of the Company including but not limited to receivables and inventory, relating to the projects both present and future; (ii) on all intangible assets including but not limited to goodwill pertaining to the projects (to the extent permissible by the Punjab state Co-operative sugar mills).

(b) First charge (i) on all the insurance contracts with respect to the projects together with any receivables thereunder; (ii) on all the accounts (including but not limited to the project accounts) with respect to the projects.

(c) An assignment of: (i) all rights and interest by way of first charge on pari passu basis on the book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature and wherever arising, relating to the projects, present and future; (ii) the rights and interest in the project site to the extent permissible by law; (iii) all its rights and abligations under the assignment orders and memorandum of understandings and; (iv) the rights and interest by way of first charge on pari passu basis into and under each of the project documents, and all the rights under each letter of credit/ guarantee or performance bond that may be posted by any party to a project document for the Company''s benefit and all the rights under the approvals in connection with the project (having value above Rs. 100,000,000) to the extent permissible by law.

(d) Personal guarantee of Mr Amit Mittal (Managing Director).

Note 6. : Term loans from financial institution:

1) The loan amounting to Rs. 500,000,000 (Previous year - Rs. 500,000,000) is secured by a first charge by way of hypothecation and escrow of the entire Retention money receivables both present and future. The interest rate is 15% per annum and the loan is repayable after 3 years.

2) The loans amounting to Rs. 15,217,157 (Previous year - Rs. 22,510,861) is secured against hypothecation of equipments acquired out of loan. The interest rate is 11.50% to 12.66% per annum and the loans are repayable in 12 quarterly and 48 monthly installments.

Note 7. : Working capital and funded interest term loans from banks

The Corporate debt restructuring (CDR) proposal to re-structure existing debt obligations, including interest, additional funding and other terms (hereafter referred to as "the CDR Scheme") of the Company, having January 01, 2013 as the "cut-off date", was approved by the CDR Cell vide its Letter of Approval (LOA) dated December 28, 2013 as further modified dated February 03, 2014. Out of seventeen lenders, twelve lenders (herein after termed as ''CDR lenders'') agreed to be part of the CDR scheme. On the basis of Master Restructuring Agreement (MRA) executed with the CDR lenders, the Company has accounted for impact of the CDR scheme (reclassifications and interest calculations) in the financial results for the year ended March 31, 2014 up to the extent agreed with those CDR lenders.

a) From the "cut- off date" the interest on the restructured debts has been recomputed and provided at the effective interest rates as per the CDR Scheme.

b) The interest due on term loan from one of the bank w.e.f. January 1, 2013 till March 31, 2014 at revised rates amounting to Rs. 117,926,028 and has been converted into Funded Interest Term Loan (FITL).

c) Letter of Credits devolved has been restructured/ reconstituted for an amount aggregating to Rs. 414,400,000 into Working Capital Term Loan.

d) The interest on the restructured debts / fund based working capital loans has been recomputed w.e.f. January 1, 2013 till March 31, 2014 at revised rates amounting to Rs. 380,219,020 and has been converted into Funded Interest Term Loan (FITL).

Note 8. : Other Loans (Vehicle loans) Vehicle loans amounting to 2,120,866 (Previous year - Rs. 12,392,150) is secured against hypothecation of Vehicles. The loans are having interest rate of 8.25% - 13.84% per annum and are repayable in 35 - 60 monthly installments.

Note 9. : (i) The Company has defaulted in repayment of interest in respect of term loan from bank as on March 31, 2014 amounting to Rs. 11,466,305 for two months and Rs. 10,356,663 for one month. (ii) The interest on term loan from financial institution aggregate to Rs. 72,510,626 falling due in each month is unpaid for the entire financial year. Also, the Company has defaulted in repayment of principal amount of term loan from financial institution amouting to Rs. 6,674,922 for nine months and Rs. 6,874,963 for six months.

Note 10: Working capital loans from banks and other secured loans

a) The working capital loans and cash credit facilities from banks are secured against whole of the assets (both current as well as fixed) of the Company, namely stock of raw material, stock in process, semi-finished and finished goods, stores and spares (consumable stores and spares), bills receivables and book debts and all other movables and fixed assets (except fixed assets exclusively financed by other lenders) both present and future stored or to be stored at the Company''s godown, premises and division at O-116, first floor shopping mall, arjun marg, DLF city phase - I, Gurgaon or wherever else the same may be by way of first pari - passu charge amongst the consortium members. The charge is also additionally secured by first charge over Company''s immovable properties i.e. part of Plot / House No 740-A, Block- B, Scheme No 40, Panki, Kanpur Nagar admeasuring 7031.56 sq mts with 74 constructed flats. The rate of interest vary from 9.50% per annum to 16% per annum and these loans are repayable on demand.

b) Second charge on pari-passu basis bais over all rights, titles, interest, benefits, claims and demands in respect of projects and insurance contracts and over all movable and immoveable properties, accounts, plant and machinery, all other tangible moveable assets both present and future, project book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature in respect of project.

c) Letter of Credits devolved has been restructured/ reconstituted for an amount aggregating to Rs. 197,583,867 into Working Capital Term Loan as per CDR Scheme.

Note 3.1: The Company has defaulted in repayment of interest in respect of cash credit facility as on March 31, 2014 amounting to Rs. 13,251,541 for seven months and amounting to Rs. 3,269,056 for five months. Also, the Company has defaulted in repayment of interest in respect of working capital loan from banks as on March 31, 2014 amounting to Rs. 1,393,166 for fifteen months and amouting to Rs. 39,551,693 for eight months.

Note 11: During the year ended March 31, 2010, the Company had entered into three business transfer agreement to purchase the entire business of M/s Surender Chowdhury & Brothers, M/s Mohd. Rashid Contractors and En-Tech Engineers and Contractors for a consideration of Rs. 20,000,000, Rs. 2,000,000 and Rs. 3,000,000 respectively. The difference between the carrying values of Investment and value of net assets acquired amounting to Rs. 23,961,858 was carried as goodwill.

Note 12: The above capital work in progress represents expenditure incurred on setting up 3 cogeneration power plants of 15 MW each on Built, Own, Operate and Transfer (BOOT) basis with the respective cooperative sugar mills for a period of fifteen years at Fazilka, Morinda and Nakodar in Punjab.

Note 13: Borrowing cost capitalised during the year amounting to Rs. 164,435,769 (Previous year - Rs. 342,890,208).

Note 14: The management has committed to provide continued operational and financial support to its subsidiary Companies for meeting their working capital and other financing requirements and based upon approved future projections of the subsidiaries, believes that the diminution (if any) is temporary in nature and accordingly, no provision is required to be created except as already created.

Note 15: During the year ended March 31, 2013, pursuant to the Share Purchase Agreement along with addendums thereto executed by and between the Company, Weensure Asset Recovery Private Limited (formerly Sardana Recycling Private Limited) (the "buyer"), Weensure E Waste Limited (formerly A2Z E Waste Management Limited) and Dataserv APAC Limited (formerly A2Z Dataserv Limited), the Company decided to dispose off the entire shareholding in the paid up Equity and Preference Share Capital to the buyer in multiple tranches at a total consideration of Rs. 230,000,000.

During the year ended March 31, 2014, equity shares comprising 22.81% of total paid up equity share capital of Weensure E Waste Limited have been transferred to the buyer and as a consequence, the Company''s holding has reduced to 22.81% from existing 45.63% (as on March 31, 2013) in the paid up Equity Share Capital of Weensure E Waste Limited. Accordingly, the Company has recognized a profit of Rs. 52,272,359 (previous year - Rs. 101,655,590) and classified this as an exceptional item as per the accepted accounting principles and practices.

Note 16: During the year, the Company has incurred a loss of Rs. 63,042,251 (Previous year - Rs. 29,171,477) due to theft of material at various project sites against which the Company has filed an insurance claim with the insurance company. The Company has received an amount of Rs. 12,969,907 (Previous year - Rs. 23,477,102) as insurance claim from the insurance company during the year out of the above mentioned claim and from the insurance claim recoverable as on March 31, 2013 and amount of Rs. 17,991,265 (Rs. 17,170,555) has been written off / capitalised in the books. The balance of Rs. 60,654,927 (Previous Year - Rs. 22,521,463) has been appearing as insurance claim recoverable in the books. The management believes that it has made reasonable judgment and no further adjustment is expected in the financial statements.

Note 17: Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy. The following tables summaries the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

Particulars As at As at March 31, 2014 March 31, 2013

Note 18: CONTINGENT LIABILITIES AND COMMITMENTS NOT PROVIDED FOR:

a) The details of contingent liabilities are as follows:

Corporate guarantees given to banks on account of facilities granted by said banks to subsidiaries 6,326,300,000 6,394,300,000

Right to recompense (CDR Scheme) (Refer note 45) 396,600,000 -

Liquidated damages deducted by customers not accepted by the Company and pending final settlement* - 14,073,312

Open letters of credit 13,699,793 108,073,376

Litigations under workmen compensation act** 1,177,120 1,177,120

Litigations with contractors and others** 4,169,760 4,259,760

Sales tax demand under dispute 395,101,190 71,892,925

Total 7,137,047,863 6,593,776,493

* excludes possible liquidated damages which can be levied by customers for delay in execution of the projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

**Based on discussions with the solicitors / favourable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

b) Commitments outstanding:

(i) Estimated amount of contracts to be executed and not provided for:

Particulars For the year ended For the year ended March 31, 2014 March 31, 2013

Other commitments 1,272,100,000 2,338,932,000

Total 1,272,100,000 2,338,932,000

(ii) The management has committed to provide continued operational and financial support to its subsidiary companies for meeting their working capital and other financing requirements.

Note 11 The managerial remuneration of Managing Director as approved by shareholders in earlier year, for the year ended March 31, 2013 and March 31, 2014 was in excess of limits prescribed under the Companies Act, 1956. The Company''s application for the approval from Central Government for the waiver of excess remuneration so paid was not approved pending the requisite details from the Company. The Company is in the process of filing the revision application with requisite information and pending approval from Central Government, the excess remuneration so paid is being held in trust by the Managing Director.

Note 19:

As per joint venture agreements, the scope and value of work of each partner has been clearly defined and accepted by the clients. The Company''s share in assets, liabilities, income and expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly and severally liable to clients for any claims in these projects.

Note 20 (a):

The Company holds 60% interest in an Association of Person (AOP), formed between A2Z Maintenance & Engineering Services Limited and Satya Builders, a jointly controlled entity which is involved in waste water projects at Alwar and Chittorgarh, Rajasthan.

Note 21:

Trade receivable, trade payables, advance to suppliers and advances from customers are subject to confirmation / reconciliation as at year end or any time during the year. As explained, the Company follows a process of informal confirmation with its customers / suppliers and based on such informal confirmations/ discussions, believes that amount recoverable appearing as outstanding at year end are good of recovery, while the amounts payable are due. The management believes that no material adjustments are likely on formal confirmation / reconciliation of these balances.

Note 22:

The Income tax authorities conducted a search and survey at certain premises of the Company under section 132 and 133 of the Income Tax Act, 1961 during the previous year. Pending receipt of further communication from the authorities, management is of the opinion that the income tax provision carried in the books is adequate.

Note 23:

The Company has incurred a net loss of Rs. 1,949,631,502 during the year ended March 31, 2014 and is presently facing liquidity problems on account of delayed realisation of trade receivables coupled with delays in commencement of commercial production at its biomass based power generation plants. Management is evaluating various options and in addition to consolidation of business by focusing on core operations and disposing off the noncore assets, had also made reference to Corporate Debt Restructuring Cell (''CDR Cell'') for restructuring of its existing debt obligations, including interest and other related terms and conditions (hereinafter referred to as the ''CDR scheme''). Management believes that the approved CDR scheme (refer note 45 for further details on the same) of the Company and the aspects like inviting strategic investors, disposal of non-core assets would also bring in the additional cash flows into the system, and hence no adjustments are required in the financial statements and accordingly, these have been prepared on a going concern basis.

Note 24:

The Corporate debt restructuring (CDR) proposal to re-structure existing debt obligations, including interest, additional funding and other terms (hereafter referred to as "the CDR Scheme") of the Company, having January 01, 2013 as the "cut-off date", was approved by the CDR Cell vide its Letter of Approval (LOA) dated December 28, 2013 as further modified dated February 03, 2014. Out of seventeen lenders, twelve lenders (herein after termed as ''CDR lenders'') agreed to be part of the CDR scheme.

One of the non CDR lenders filed a civil suit in the Hon''ble High Court of Delhi on the Company against creation of second charge on power plants under the CDR scheme inter alia other matters. The Hon''ble High Court vide its Order dated March 20, 2014 has permitted the signing of MRA keeping the hearing in the suit adjourned to August 21, 2014. Upon execution of the Master Restructuring Agreement (MRA) with ten CDR lenders Company started the process of fulfilling the other conditions precedent. Pursuant to the CDR Scheme, inter alia other conditions, the promoters were required to bring in Promoter contribution out of which substantial contribution has been brought in. On the basis of MRA executed with the CDR lenders, the Company has accounted for impact of the CDR scheme (reclassifications and interest calculations) in the financial results for the year ended March 31, 2014 up to the extent agreed with those CDR lenders. From the "cut- off date" the interest on the restructured debts has been recomputed and provided at the effective interest rates as per the CDR Scheme. Interest reversal of Rs. 18,440,166 pertaining to period from cut-off dates to March 31, 2013 has been shown as an exceptional item during the year. Reclassification and other adjustments as recorded above are subject to reconciliation with the lender banks. Management is confident that all the conditions precedents are in the process of being complied with and are at advance stage.


Mar 31, 2013

Note 1 NATURE OF OPERATIONS

A2Z Maintenance & Engineering Services Limited (‘A2Z or the Company’) was incorporated at National Capital Territory of Delhi and Haryana on January 7, 2002 for providing maintenance and engineering services. The Company commenced its business with the facility management services and entered into engineering business during the year 2005-06.

The Company’s engineering business segment primarily includes supply, erection and maintenance of electrical transmission lines and allied services to power distribution companies. The Company has also entered into collaboration with sugar mills for setting up 3 Cogeneration (Cogen) power plants on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years.

Note 2.1 During the year, the Company has incurred a loss of Rs 29,171,477 (Previous year – Rs 38,560,431) due to theft of material at various project sites against which the Company has fled an insurance claim with the insurance company. The Company has received an amount of Rs 23,477,102 (Previous year - Rs 3,287,649) as insurance claim from the insurance company during the year out of the above mentioned claim and from the insurance claim recoverable as on March 31, 2012 and the non-recoverable amount of Rs 17,170,555 (Rs 10,514,805) has been written off / capitalised in the books. The balance of Rs 22,521,463 (Previous Year – Rs 24,757,977) has been appearing as insurance claim recoverable in the books. The management believes that it has made reasonable judgment and no further adjustment is expected in the fnancial statements.

Note 3 CONTINGENT LIABILITIES AND COMMITMENTS NOT PROVIDED FOR:

a) The details of contingent liabilities are as follows:

Particulars As at As at March 31, 2013 March 31, 2012

Corporate guarantees given to banks on account of facilities 6,394,300,000 6,269,041,842 granted by said banks to subsidiaries

Liquidated damages deducted by customers not accepted by the 14,073,31 14,073,312

Company and pending fnal settlement*

Open letters of credit 108,073,376 883,671,986

Litigations under workmen compensation act** 1,177,120 1,177,120

Litigations with contractors and others** 4,259,760 4,240,128

Sales tax demand under dispute 71,892,925 71,892,925

Total 6,593,776,493 7,244,097,313

* Excludes possible liquidated damages which can be levied by customers for delay in execution of the projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

** Based on discussions with the solicitors / favourable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

Note 4 RELATED PARTY

Names of related parties Subsidiary Companies

A2Z Infraservices Limited*

A2Z Infrastructure Limited

A2Z Powertech Limited

A2Z Powercom Limited

Selligence Technologies Services Private Limited

Mansi Bijlee & Rice Mills Limited

Madhya Bijlee Private Limited

Mirage Bijlee Private limited

Star Transformers Limited

Chavan Rishi International Limited

A2Z Maintenance & Engineering Services (Uganda) Private Limited

A2Z E Waste Management Limited (Till March 24, 2013)

A2Z Water Solutions Limited

A2Z Singapore Waste Management Holdings Private Limited

A2Z Disaster Management and Innovative Response Education Private Limited

Pioneer Waste Management Private Limited

A2Z Waste Management (Nainital) Private Limited

A2Z Maintenance & Engineering Services Limited and Satya Builders (Association of person)

*Imatek Solutions Private Limited , CNCS Facility Solutions Private Limited, A2Z Infra Management & Services Limited have been amalgamated with A2Z Infraservices Limited effective from August 6, 2012 (Refer note 15.2).

Subsidiaries of A2Z Infrastructure Limited:

a) A2Z Waste Management (Merrut) Limited

b) A2Z Waste Management (Moradabad) Limited

c) A2Z Waste Management (Varanasi) Limited

d) A2Z Waste Management (Aligarh) Limited

e) A2Z Waste Management (Badaun) Limited

f) A2Z Waste Management (Balia) Limited

g) A2Z Waste Management (Basti) Limited h) A2Z Waste Management (Fatehpur) Limited i) A2Z Waste Management (Jaunpur) Limited j) A2Z Waste Management (Loni) Limited k) A2Z Waste Management (Mirzapur) Limited l) A2Z Waste Management (Ranchi) Limited m) A2Z Waste Management (Sambhal) Limited n) A2Z Waste Management (Haridwar) Private Limited o) A2Z Waste Management (Dhanbad) Private Limited p) A2Z Waste Management (Ludhiana) Limited

q) A2Z Waste Management (Jaipur) Limited (with effect from July 10, 2012) r) A2Z Mayo SNT Waste Management (Nanded) Private Limited (with effect from August 7, 2012) s) A2Z Waste Management (Ahmedabad) Limited (with effect from October 15, 2012)

Subsidiary of A2Z Singapore Waste Management Holdings Private Limited:

a) A2Z Waste Management Private Limited

Subsidiary of A2Z E Waste Management Limited (Till March 24, 2013):

a) Dataserv APAC Limited (formerly A2Z Dataserv Limited)

Subsidiary of A2Z Waste Management (Moradabad) Limited:

a) Shree Balaji Pottery Private Limited (with effect from April 30, 2012)

Subsidiary of A2Z Waste Management (Varanasi) Limited:

a) Shree Hari Om Utensils Private Limited (with effect from April 30, 2012)

Joint Venture (unincorporated)

M/s UB Engineering Limited M/s SPIC-SMO Limited M/s Shyama Power (India) Private Limited M/s Linkwell Telesystems Private Limited M/s Cobra Instalaciones Y Servicios, S.A M/s Karamtara Engineering Pvt. Ltd M/s Richardson & Cruddas (1972) Ltd. M/s Satya Builders

Individual having signifcant infuence

Mr. Rakesh Radheyshyam Jhunjhunwala

Key Management Personnel (‘KMP’)

Mr. Amit Mittal (Managing director) Mrs. Dipali Mittal (Whole time director)

Relative of Key Management Personnel

Mrs. Sudha Mittal (Mother of Mr. Amit Mittal)

Mr. Manoj Gupta (Sister’s husband of Mrs. Dipali Mittal)

Note 4 SEGMENTAL INFORMATION

Business segments

The primary reporting of the Company has been performed on the basis of business segment. Segments have been identifed and reported based on the nature of the products, the risks and returns, the organization structure and the internal fnancial reporting systems. The Company is operating into following segments – (i) Engineering Service (ES), (ii) Power generation projects (‘PGP’) and (iii) Others represents trading of goods, renting of equipments and providing housekeeping services.

Note 5 During the year ended March 31, 2010, the Company had formulated Employee Stock Option Scheme referred as ‘A2Z Stock Option Plan 2010 (‘the plan’)’ for all eligible employees/ directors of the Company except an employee who is promoter or belongs to the promoter group of the Company and its subsidiaries in pursuance of the special resolution duly approved by the shareholders on March 30, 2010.

The plan shall be administered and supervised by the Remuneration-cum-Compensation Committee under the powers delegated by Board. Each option shall entitle the option grantee to apply for and be transferred Equity Shares of the Company. On or from the time of the listing of the Equity Shares of the Company, the maximum number of options that can be granted to any employee in any year under the A2Z ESOP shall be less than 5% of the issued share capital of the Company (excluding any outstanding warrants or other securities convertible into Equity Shares) at the time of grant of options, subject to the overall ceiling of 2,865,056 options in the aggregate.

Note 6: Trade receivable, trade payables, advance to suppliers and advances from customers are subject to confrmation / reconciliation as at year end or any time during the year. As explained, the Company follows a process of informal confrmation with its customers / suppliers and based on such informal confrmations/ discussions, believes that amount recoverable appearing as outstanding at year end are good of recovery, while the amounts payable are due. The management believes that no material adjustments are likely on formal confrmation / reconciliation of these balances.

Note 7: The Income tax authorities conducted a search and survey at certain premises of the Company under section 132 and 133 of the Income Tax Act, 1961 during the year. Pending receipt of further communication from the authorities, management is of the opinion that the income tax provision carried in the books is adequate.

Note 8: The Company has incurred a net loss of Rs. 538,104,867 for the year ended March 31, 2013 and is presently facing acute liquidity problems on account of delayed realisation of trade receivables coupled with delays in commencement of commercial production at its biomass based power generation plants. Management is evaluating various options and in addition to consolidation of business by focusing on core operations and disposing off the non- core assets, has also made reference to Corporate Debt Restructuring Cell (‘CDR Cell’) under the Master Circular on Corporate Debt Restructuring issued by Reserve Bank of India for restructuring of its existing debt obligations, including interest and other related terms and conditions pursuant to the approval of Board of Directors in their meeting held on March 22, 2013, the CDR cell has accepted the Company’s application in the meeting held on April 26, 2013. The Company is still in the process of complying with the conditions precedent to the restructuring process and obtaining the approval of the lending banks and the CDR Cell Empowered Group.

Pending the requisite approvals from the CDR cell, no effect of the proposed restructuring has been given in these fnancial statements. Management believes that the Company will be able to receive the approval of the CDR cell in the due course and in view of the proposed restructuring of debt obligations, no adjustments are required in the fnancial statements and accordingly, these have been prepared on a going concern basis.

Note 9: Pursuant to the provisions of Clause 43 of listing Agreement with the Exchanges, the utilization of the net proceeds is as follows:

# revised pursuant to the resolutions passed by Board of Directors on July 25, 2011 and February 5, 2013 and corresponding approvals vide postal ballot from shareholders on August 30, 2011 and March 22, 2013.

* represents share capital invested in A2Z Infrastructure Limited, a subsidiary company. A part of the said amount is yet to be spent by A2Z Infrastructure Limited and its subsidiaries on relevant projects. Note

10: Previous year fgures have also been regrouped / recast wherever considered necessary.


Mar 31, 2012

A2Z Maintenance & Engineering Services Limited ('A2Z or the Company') was incorporated at National Capital Territory of Delhi on January 7, 2002 for providing maintenance and engineering services. The Company commenced its business with the facility management services and entered into engineering business during the year 2005-06.

The Company's engineering business segment primarily includes supply, erection and maintenance of electrical transmission lines and allied services to power distribution companies. The Company has also entered into collaboration with sugar mills for setting up 3 Cogeneration (Cogen) power plants on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years.

* During the previous year, the Company had made an Initial Public Offer (IPO) and allotted 16,845,189 equity shares of face value Rs 10 each, at a premium of Rs 390 per equity share and has also allotted 31,380 equity shares of face value Rs 10 each, at a premium of Rs 370 per equity share to employees aggregating to Rs 6,750,000,000. Consequently, the paid up Equity Share Capital and Share Premium Account has been increased by Rs 168,765,690 and Rs 6,581,234,310 respectively. The Company's shares were listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange Limited (NSE) on December 23, 2010.

Note 1.1: The Company has only one class of equity shares having a par value of Rs 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividend in indian rupees. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

During the year, the amount of per share dividend recognised as distributions to equity shareholders was Rs Nil (Previous year - Rs 2)

Note 2.1 (a) : During the previous year, the Company had incurred Rs 318,851,232 towards share issue expenses for its Initial Public Offer (IPO). Same has been shared on pro rata basis between the Company and the selling shareholders, who offered the shares in the offer for sale of the Company's IPO. An amount of Rs 30,337,389 (excluding printing, advertisement and media expenses with respect to the IPO which are borne entirely by the Company) has been recovered from selling shareholders as their share of share issue expenses and the balance of Rs 288,513,843 has been adjusted against the securities premium received on the issue of shares in terms of Section 78 of the Companies Act, 1956.

Details of terms of repayment for the long-term borrowings and security provided in respect of the secured long-term borrowings:

Term loans from banks:

1. Term loan from bank amounting to Rs 880,000,000 (Previous year - Rs Nil) having an interest rate of bank base rate plus 4% per annum (varying between 13.5% to 15.05% during the year) is repayable in 28 quarterly installments first installment being due in june 2012.

2. Term loan from bank amounting to Rs 663,904,344 (Previous year - Rs 650,000,000) having an interest rate of bank PLR less 5.5% per annum (varying between 13% to 14.25 % per annum during the year) is repayable in 28 quarterly installments first installment being due in June 2012.

The above loans are secured against:

(a) First charge on pari - passu basis: (i) by way of hypothecation of all current assets of the Company including but not limited to receivables and inventory, relating to the projects both present and future; (ii) on all intangible assets including but not limited to goodwill pertaining to the projects (to the extent permissible by the Punjab state Co-operative sugar mills).

(b) First charge (i) on all the insurance contracts with respect to the projects together with any receivables thereunder; (ii) on all the accounts (including but not limited to the project accounts) with respect to the projects

(c) An assignment of: (i) all rights and interest by way of first charge on pari passu basis on the book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature and wherever arising, relating to the projects, present and future; (ii) the rights and interest in the project site to the extent permissible by law; (iii) all its rights and obligations under the assignment orders and memorandum of understandings and; (iv) the rights and interest by way of first charge on pari passu basis into and under each of the project documents, and all the rights under each letter of credit/ guarantee or performance bond that may be posted by any party to a project document for the Company's benefit and all the rights under the approvals in connection with the project (having value above Rs 100,000,000) to the extent permissible by law

(d) Personal guarantee of Mr Amit Mittal (Managing Director).

3. Term loan from bank amounting to Rs 21,708,320 (Previous year - Rs 66,708,320) is secured against: (i) exclusive charge by way of earmark on commercial office at 7th Floor, Tower B, Medicity, Gurgaon; (ii) personal guarantee of Mr Amit Mittal, Ms Dipali Mittal, Ms Suman Goel and Mr Manoj Gupta.

The loan is having an interest rate of bench mark prime lending rate (BPLR) less 3.75% per annum (varying between 13% to 14% during the year) and is repayable in 16 equal quarterly installments and first installment became due in March 2011.

Term loans from financial institution:

The loans amounting to Rs 47,296,455 (Previous year - Rs 65,615,376) is secured against hypothecation of equipments acquired out of loan. The interest rate is 11.50% to 12.69% per annum and the loans are repayable in 12 quarterly and 48 monthly installments.

Note 3.1 : Secured loans from bank

The working capital loans, cash credit facilities and vendor financing facilities from banks are secured against whole of the assets (both current as well as fixed) of the Company, namely stock of raw material, stock in process, semi- finished and finished goods, stores and spares (consumable stores and spares), bills receivables and book debts and all other movables and fixed assets (except fixed assets exclusively financed by other lenders) both present and future stored or to be stored at the Company's godown, premises and division at O-116, First foor shopping mall, Arjun Marg, DLF city Phase - I, Gurgaon or wherever else the same may be by way of first pari - passu charge amongst the consortium members. The charge is also additionally secured by first charge over Company's immovable properties i.e. part of Plot / House No 740-A, Block- B, Scheme No 40, Panki, Kanpur Nagar admeasuring 7031.56 sq mts with 74 constructed fats. The rate of interest vary from 11.50% per annum to 15.75% per annum and these loans are repayable on demand.

Note 3.2 : Unsecured loan

During the year ended March 31, 2010, the Company had entered into business transfer agreement dated May 1, 2010 to purchase, as a going concern, the entire business of M/s Surender Chowdhury & Brothers, a partnership frm, engaged in the business of construction of electrical substations and railway electrification work for a consideration of Rs 20,000,000. Out of this Rs 17,500,000 was paid till March 31, 2011 and the balance was disclosed as unsecured loan.

Note 4.1: Leasehold land represents land acquired on lease from Orissa Industrial Infrastructure Development Corporation for the lease period of 66 years.

Note 4.2 : Disclosure of assets given under operating leases:

a) The Company had entered into operating lease agreement for leasing its plant and equipments set up on the leasehold land at Medinipur (West Bengal) at a consideration of Rs. 200,000 per annum each. The lease agreement for Medinipur (West Bengal) was terminated with effect from July 1, 2010. The Gross rental income aggregate to Rs Nil (Previous Year – Rs 66,667).

b) During the year, the Company has entered into operating lease agreement for leasing its 24 Flats at Kanpur to one of its subsidiaries, A2Z Infrastructure Limited at a consideration of Rs 100,000 per month with effect from July 1, 2011. The Gross rental income aggregate to Rs 900,000 (Previous year – Rs Nil).

Note 5.1: During the year ended March 31, 2010, the Company had entered into three business transfer agreement to purchase the entire business of M/s Surender Chowdhury & Brothers, M/s Mohd. Rashid Contractors and En-Tech Engineers and Contractors for a consideration of Rs 20,000,000, Rs 2,000,000 and Rs 3,000,000 respectively. The difference between the carrying values of Investment and value of net assets acquired amounting to Rs 23,961,858 was carried as goodwill.

Note 5.1 : The management has committed to provide continued operational and financial support to its subsidiary Companies for meeting their working capital and other financing requirements and based upon approved future projections of the subsidiaries, believes that the diminution (if any) is temporary and there is no need to carry any provision against the investments.

Note 5.2 : During the year, the Company has acquired (i) 100% stake in A2Z Disaster Management and Innovative Response Education Private Limited, Pioneer Waste Management Private Limited and A2Z Singapore Waste Management Holdings Private Limited (ii) 48% stake in A2Z Waste Management (Nainital) Private Limited, (iii) additional 20% stake in A2Z Infraservices Limited and Imatek Solutions Private Limited and (iv) the Company has sold its 2% stake in Star Transformers Limited.

Note 5.3 : The Board of Directors of A2Z Infraservices Limited in its meeting held on January 21, 2012 pursuant to Section 391 & 394 of the Companies Act, 1956 (the "Act") approved the Scheme of Arrangement for the Amalgamation ("the Scheme") of A2Z Infra Management & Services Limited, Imatek Solutions Private Limited and CNCS Facility Solutions Private Limited ("Transferor Companies") with A2Z Infraservices Limited (i.e. Transferee Company) on a going concern basis.

The Hon'ble High Court of Punjab and Haryana vide its order dated July 19, 2012 has approved the Scheme with effect from April 1, 2011 (i.e. the appointed date). The order has been fled with Registrar of Companies on August 6, 2012 (i.e. the effective date). As the amalgamation was in process as on March 31, 2012, therefore, no effect of the amalgamation has been given in these financial statements in accordance with the Accounting Standard -14 "Accounting for amalgamations" of the Companies (Accounting Standard) Rule 2006.

Note 20.1: Trade receivables include retention money of Rs 3,689,747,586 (Previous year- Rs 3,947,983,164) which are due on completion of erection / contracts / final acceptance by the customers. The management is confdent of recovering these amounts upon erection / contract completion.

Note 6.1: The Company has outstanding recoverables of Rs. 64,381,729 and Rs. 83,071,884, being deductions proposed/ made by the respective customers on invoices raised by Company for services rendered, price escalations on certain supply items and certain other items. In one of the cases, involving amount of Rs. 64,381,729, the Company had fled an application with the High Court for appointment of arbitrator in response to which the high court had appointed an arbitrator to settle the dispute. In the other case, involving outstanding receivables of Rs. 83,071,884, the Company has fled a Special leave petition with the Hon'ble Supreme Court against the Hon'ble High Court's order for appointment of arbitrator, accordingly the Hon'ble Supreme Court has given stay on the proceedings of the arbitrator appointed by the customer. In the latter case, subsequent to March 31, 2012, the Company has recovered Rs 22,432,544 from the customer, however, no settlement has been arrived at with the customer The management, based on legal advice, believes that the outcome of legal matters is likely to be in its favor and has thus classified the said amounts as recoverable in the books and no adjustments have been made with respect of the same in the financial statements of the Company.

Note 7.1: During the year, the Company has incurred a loss of Rs 38,560,431 (Previous Year – Rs 19,292,915) due to theft of material at various sites of projects against which the Company has fled an insurance claim with the insurance Company. Out of the same, the Company has received an amount of Rs 3,287,649 and accounted for an advance recoverable of Rs 24,757,977 (Previous Year – Rs 3,738,713) in its books, while the balance amount of Rs 10,514,805 (Previous Year – Rs 10,421,536) have been accounted for as an expense in the financial statements. Out of the total amount of Rs 3,738,713 shown as recoverable as on March 31, 2011, the Company has received Rs 3,219,926 from insurance Company, while an amount of Rs 518,787 has been written off in the financial statement. The management believes that it has made reasonable judgement and no further adjustment is expected in the financial statements.

Note 7.2: Defined benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy. The following tables summaries the components of net benefit expense recognised in the statement of Profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

Note 8.1 : The Company has entered into various short-term cancellable lease agreements at a notice period up to three months for leased premises. Gross rental expenses aggregate to Rs 106,411,903 (Previous Year – Rs. 82,811,354).

Note 8.2 : It includes amount paid to erstwhile auditor Rs 1,698,440 (Previous year - Rs 6,285,455).

Note 9

CONTINGENT LIABILITIES AND COMMITMENTS NOT PROVIDED FOR

a) The details of contingent liabilities are as follows:

As at As at March 31, 2012 March 31, 2011

Corporate guarantees given to banks on account of facilities 6,269,041,842 2,532,300,000 granted by said banks to subsidiaries

Liquidated damages deducted by customers not accepted by the 14,073,312 14,073,312 Company and pending final settlement*

Open letters of credit 883,671,986 588,624,262

Litigations under workmen compensation act** 1,177,120 1,177,120

Litigations with contractors and others** 4,240,128 3,787,536

Sales tax / VAT demand under dispute 71,892,925 9,700,000

7,244,097,313 3,149,662,230

* Excludes possible liquidated damages which can be levied by customers for delay in execution of the projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

** Based on discussions with the solicitors / favourable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

Note 10.1: As the future liability for gratuity is provided on an actuarial basis for the Company as a whole, the amount pertaining to the directors are not included above.

Note 10(a).1: As per joint venture agreements, the scope and value of work of each partner has been clearly defined and accepted by the clients. The Company's share in Assets, Liabilities, Income and Expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly and severally liable to clients for any claims in these projects.

Note 10(b): The Company holds 60% interest in an Association of Person (AOP), formed between A2Z Maintenance and Engineering Services Limited and Satya Builders, a jointly controlled entity which is involved in waste water proj- ects at Alwar and Chittorgarh, Rajasthan.

Note 11

RELATED PARTY

Names of related parties

Subsidiary Companies

A2Z Infraservices Limited

A2Z Infrastructure Limited

A2Z Powertech Limited

A2Z Powercom Limited

Selligence Technologies Services Private Limited

Imatek Solutions Private Limited

Mansi Bijlee & Rice Mills Limited (formerly Mansi Bijlee & Rice Mills Private Limited)

Madhya Bijlee Private Limited (with effect from October 18, 2010)

Mirage Bijlee Private limited (with effect from September 15, 2010)

Star Transformers Limited (formerly Star Transformers Private Limited) (with effect from January 21, 2011)

Chavan Rishi International Limited (with effect from March 2, 2011)

A2Z Maintenance & Engineering Services (Uganda) Private Limited (with effect from August 27, 2010)

A2Z E Waste Management Limited (with effect from February 10, 2011)

A2Z Water Solutions Limited (with effect from February 10, 2011)

A2Z Singapore Waste Management Holdings Private Limited (with effect from September 1, 2011)

A2Z Disaster Management and Innovative Response Education Private Limited (formerly Mithila Bijlee Private Limited) (with effect from November 15, 2011)

Pioneer Waste Management Private Limited (formerly Mattri Bijlee Private Limited) (with effect from November 15, 2011)

A2Z Waste Management (Nainital) Private Limited (formerly Maratha Bijlee Private Limited) (with effect from October 28, 2011)

A2Z Maintenance & Engineering Services Limited and Satya Builders (Association of person)

Subsidiaries of A2Z Infrastructure Limited:

a) A2Z Waste Management (Merrut) Limited

b) A2Z Waste Management (Moradabad) Limited

c) A2Z Waste Management (Varanasi) Limited

d) A2Z Waste Management (Aligarh) Limited

e) A2Z Waste Management (Badaun) Limited (with effect from November 10, 2010)

f) A2Z Waste Management (Balia) Limited (with effect from November 10, 2010)

g) A2Z Waste Management (Basti) Limited (with effect from November 10, 2010) h) A2Z Waste Management (Fatehpur) Limited (with effect from November 10, 2010) i) A2Z Waste Management (Jaunpur) Limited (with effect from November 9, 2010) j) A2Z Waste Management (Loni) Limited (with effect from November 10, 2010) k) A2Z Waste Management (Mirzapur) Limited (with effect from November 10, 2010)

l) A2Z Waste Management (Ranchi) Limited (with effect from March 1, 2011)

m) A2Z Waste Management (Sambhal) Limited (with effect from November 10, 2010)

n) A2Z Waste Management (Haridwar) Private Limited (formerly Mahrishi Bijlee Private Limited) (with effect from November 17, 2011)

o) A2Z Waste Management (Dhanbad) Private Limited (formerly Mahanadi Bijlee Private Limited) (with effect from October 28, 2011)

p) A2Z Waste Management (Ludhiana) Limited (with effect from July 14, 2011) Subsidiary of Imatek Solutions Private Limited:

a) CNCS Facility Solutions Private Limited

Subsidiary of A2Z Infraservices Limited:

a) A2Z Infra Management & Services Limited (formerly IL&FS Property Management & Services Limited) (with effect from October 1, 2010)

Subsidiary of A2Z Singapore Waste Management Holdings Private Limited:

a) A2Z Waste Management Private Limited (formerly Mandakini Bijlee Private Limited) (with effect from January 16, 2012)

Subsidiary of A2Z E Waste Management Limited:

a) A2Z Dataserv Limited (with effect from December 15, 2011)

Joint venture partners

M/s UB Engineering Limited

M/s SPIC – SMO Limited

M/s Shyama Power (India) Private Limited

M/s Linkwell Telesystems Private Limited

M/S Cobra Instalaciones Y Servicios, S.A

M/S Karamtara Engineering Pvt. Ltd

M/S Richardson & Cruddas (1972) Ltd.

M/S Satya Builders

Individual having significant infuence Mr. Rakesh Radheyshyam Jhunjhunwala

Enterprise over which individual having significant infuence in the Company have substantial control Rare Enterprises

Key Management Personnel ('KMP') Mr. Amit Mittal (Managing director) Mrs. Dipali Mittal (Whole time director)

Relative of Key Management Personnel

Mrs. Sudha Mittal (Mother of Mr. Amit Mittal)

Mr. Manoj Gupta (Sister's husband of Mrs. Dipali Mittal)

Note 12

During the year ended March 31, 2010, the Company had formulated Employee Stock Option Scheme

referred as 'A2Z Stock Option Plan 2010 ('the plan')' for all eligible employees/ directors of the Company except an employee who is promoter or belongs to the promoter group of the Company and its subsidiaries in pursuance of the special resolution duly approved by the shareholders on March 30, 2010.

The plan shall be administered and supervised by the Remuneration-cum-Compensation Committee under the powers delegated by Board. Each option shall entitle the option grantee to apply for and be transferred Equity Shares of the Company. On or from the time of the listing of the Equity Shares of the Company, the maximum number of options that can be granted to any employee in any year under the A2Z ESOP shall be less than 5% of the issued share capital of the Company (excluding any outstanding warrants or other securities convertible into Equity Shares) at the time of grant of options, subject to the overall ceiling of 2,865,056 options in the aggregate.

Note 13: Trade receivable, trade payables, advance to suppliers and advances from customers are subject to confrmation / reconciliation as at year end or any time during the year. As explained, the Company follows a process of informal confrmation with its customers / suppliers and based on such informal confrmations/ discussions, believes that amount recoverable appearing as outstanding at year end are good of recovery, while the amounts payable are due. The management believes that no material adjustments are likely on formal confrmation / reconciliation of these balances.

Note 14: The Company is executing a EPC contract for its customer at Leh and Kargil. Material purchased specifically for the project is invoiced to the customer basis their approved delivery instructions. In accordance with its contract with the customer, the Company has taken a joint insurance policy for the project value awarded by the customer.

During the previous year, Leh had a massive cloudburst and certain inventories at site were got damaged and was lying submerged inside pile of debris. Even though the exact quantum of loss is yet to be assessed by the insurance Company, the management had assessed that inventories with estimated valuation of Rs. 130,016,796 invoiced to the customer was damaged.

Pending determination of insurance claim, the management has, in view of the constructive obligation upon the Company to execute the project and on account of prudence, recognised the cost of replacement material of Rs. 130,016,796 and deferred tax credit thereon of Rs. 43,188,329, thereby presenting net amount of Rs. 86,828,467 in the statement of Profit and loss as an 'Extraordinary Item'.

Note 15 : Subsequent to the year ended March 31, 2012, the Income tax authorities conducted a search and survey at certain premises of the Company under section 132 and 133 of the Income Tax Act, 1961. Pending receipt of further communication from the authorities, management is of the opinion that the income tax provision carried in the books is adequate.

Note 16: During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company for the preparation and presentation of its financial statements, accordingly previous year figures have also been regrouped/recast wherever considered necessary.


Mar 31, 2011

1. Nature of Operations

A2Z Maintenance & Engineering Services Limited (formerly A2Z Maintenance & Engineering Services Private Limited)('A2Z or the Company') was incorporated at National Capital Territory of Delhi on January 7, 2002 for providing maintenance and engineering services. The Company commenced its business with the facility management services and entered into engineering business during the year 2005-06.

The Company's engineering business segment primarily includes supply, erection and maintenance of electrical transmission lines and allied services to power distribution companies.The Company has also entered into collaboration with sugar mills for setting up 3 Cogeneration (Cogen) power plants on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years.

During the year, the Company has acquired (i) 100% stake in Chavan Rishi International Limited, Mansi Bijlee & Rice Mills Private Limited (Formerly Mansi Bijlee Private Limited) and Mirage Bijlee Private Limited (ii) 90% stake in Madhya Bijlee Private Limited and (iii) 51% stake in Star Transformers Private Limited.

2. Business acquisitions during the year

During the year, the Company had entered into following three acquisitions,details of which are as follows:

i) Pursuant to Business Transfer Agreement dated May 1, 2010, the Company purchased as a going concern the entire business of M/s Surender Chowdhury & Brothers, a partnership firm constituted pursuant to a deed of partnership dated December 2, 2004, engaged in the business of construction of electrical substations and railway electrification work for a consideration of Rs 20,000,000.

a. All the assets, including goodwill, business contracts and employees of M/s Surender Chowdhury & Brothers were transferred to the Company and the original owners were employed by the Company.

b. The original owners have agreed not to compete with, and solicit the employees of, the Company for a period of ten years from the date of termination of their employment with the Company.

c. The original owners have agreed to indemnify the Company from and against any loss and damages as a result of breach of the terms and conditions of the business transfer agreement.

d. The difference between the carrying value of Investment in M/s Surender Chowdhury & Brothers and value of net assets acquired of Rs 19,012,620 has been carried as goodwill.

e. Further, an amount of Rs 7,500,000 was paid on the date of agreement, and Rs 12,500,000 was considered as an interest free unsecured loan to be paid post completion of financial and technical DDR in accordance with the terms of the agreement. Out of this Rs 10,000,000 has been paid, while an amount of Rs 2,500,000 has been disclosed as unsecured loan under Schedule 4 "Unsecured Loans".

ii) Pursuant to Business Transfer Agreement dated June 10, 2010, the Company purchased as a going concern the business of M/s Mohd. Rashid Contractors, a partnership firm constituted pursuant to a partnership deed dated June 10, 2003 engaged in the business of telecom cable laying, civil works and other engineering, procurement and construction business for a consideration of Rs 2,000,000.

a. All the assets, including goodwill, business contracts and employees of M/s Mohd. Rashid Contractors were transferred to the Company and the original owners were employed by the Company.

b. The original owners have agreed not to compete with, and solicit the employees of, the Company for a period of ten years from the date of termination of their employment with the Company.

c. The original owners have agreed to indemnify the Company from and against any loss and damages as a result of breach of the terms and conditions of the business transfer agreement.

d. The difference between the carrying values of Investment in M/s Mohd. Rashid Contractors and value of net assets acquired of Rs 1,950,251 has been carried as goodwill.

iii) Pursuant to Business Transfer Agreement dated June 10, 2010, the Company purchased as a going concern the business of En-Tech Engineers and Contractors, a partnership firm, constituted pursuant to a partnership deed dated June 10, 2003 engaged in the business of telecom cable laying, civil works and other engineering, procurement and construction business for a consideration of Rs 3,000,000.

a. All the assets, including goodwill, business contracts and employees of En-Tech Engineers and Contractors were transferred to the Company and the original owners were employed by the Company.

b. The original owners have agreed not to compete with, and solicit the employees of, the Company for a period of ten years from the date of termination of their employment with the Company.

c. The original owners have agreed to indemnify the Company from and against any loss and damages as a result of breach of the terms and conditions of the business transfer agreement.

d. The difference between the carrying value of Investment in En-Tech Engineers and Contractors and value of net assets acquired of Rs 2,998,988 has been carried as goodwill.

e. Further, an amount of Rs 1,000,000 was paid on the date of agreement, while an amount of Rs 2,000,000 was considered as an interest free unsecured loan to be paid post completion of financial and technical DDR in accordance with the terms of the agreement and the entire loan amount has been paid by the Company.

These acquisitions have helped the Company to get pre-qualification to bid for various tenders and considering long term benefits arising to the Company by gaining eligibility for biddings,the management is of the opinion that the goodwill is not impaired as at March 31, 2011. 5. Disclosure of Open Contracts:

In order to hedge its exposure to commodity price risk in purchase of fabricated steel, fabricated aluminium and fabricated copper items used in its operations, the Company has entered into the commodity forwards for base commodities - Steel, Aluminium and Copper during the year.

3. Contingent liabilities not provided for: The details are as follows:

Particulars As at As at

March 31, 2011 March 31, 2010

Performance and Financial Bank Guarantees 10,160,510,720 7,910,489,213

Outstanding amounts against counter guarantees / corporate 2,087,334,013 684,177,858 guarantees amounting to Rs. 2,874,246,781 (Previous Year – Rs 1,391,798,302) given to Banks on account of facilities granted by said banks to subsidiaries

Liquidated Damages deducted by customers not accepted by the 14,073,312 102,320,984 Company and pending final settlement*

Open Letters of Credit 588,624,262 768,970,627

Litigations under Workmen Compensation Act** 1,177,120 1,177,120

Litigations with contractors and others** 3,787,536 3,632,661

Sales tax demand under dispute 9,700,000 -

12,865,206,963 9,470,768,463

* excludes possible liquidated damages which can be levied by customers for delay in execution of the projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

**Based on discussions with the solicitors / favourable decisions in similar cases/legal opinions taken by the Company, the management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

4. Capital Commitments :

Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs 1,137,981,618 as at March 31, 2011 (Previous Year – Rs 2,130,210,311).

5. During the year, the Company has incurred a loss of Rs 19,292,915 (Previous Year– Rs 4,950,837) due to theft of material at various sites of projects against which the Company has fled an insurance claim with the Insurance Company. Out of the same, the Company has received an amount of Rs 5,132,666 and accounted for an advance recoverable of Rs 3,738,713 (Previous Year – Rs 4,628,069) in its books, while the balance amount of Rs 10,421,536 (Previous Year – Rs 322,768) have been accounted for as an expense in the financial statements. Out of the total amount of Rs 10,493,510 shown as recoverable as on March 31, 2010, the Company has received Rs 4,104,288 from insurance Company, while an amount of Rs 6,389,222 has been written off in the financial statement. The management believes that it has made reasonable judgement and no further adjustment is expected in the financial statements.

Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy.The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

The estimates of future salary increases considered in actuarial valuation take account of infation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The overall expected rate of return on assets is determined based on the actual rate of return during the current year. The Company expects to contribute Rs 8,500,000 (Previous year- Rs 8,261,060) to gratuity during next year.

6. Operating Leases

Company as a Lessee

The Company has entered into various short-term cancellable lease agreements at a notice period upto three months for leased premises. Gross rental expenses aggregate to Rs 82,811,354 (Previous Year– Rs 42,247,502).

Company as a Lessor

The Company has entered into operating lease agreement for leasing its plant & machinery set up on the leasehold land at Jind (Haryana) & Cuttack (Orissa) at a consideration of Rs. 200,000 per month each and at Giridih (Jharkhand) & Medinipur (West Bengal) at a consideration of Rs. 200,000 per annum each. The Lease agreement for Jind (Haryana) and Cuttack (Orissa) has been terminated with effect from April 1, 2009 and July 1, 2009 respectively and the Lease agreement with Giridih (Jharkhand) has been terminated with April 1, 2010. As per the arrangement, the lessee would supply its substantial portion of manufacture to the lessor at a price agreed between the parties from time to time. The Gross rental income aggregate to Rs 66,667 (Previous Year – Rs 893,972).

The gross book value, accumulated depreciation and depreciation charged during the year of the above assets amounts to Rs 29,193,346 (Previous Year – Rs 29,193,346), Rs 14,328,801 (Previous Year – Rs 11,214,688) and Rs 3,114,113 (Previous year Rs 4,384,080) respectively.

7. Related Party

Names of related parties

Subsidiary Companies

A2Z Infraservices Limited (Formerly a2z Infraservices Private Limited)

A2Z Infrastructure Limited (Formerly a2z Infrastructure Private Limited)

A2Z Powertech Limited (Formerly a2z Powertech Private Limited)

A2Z Powercom Limited (Formerly a2z Powercom Private Limited)

Selligence Technologies Services Private Limited

Imatek Solutions Private Limited

Mansi Bijlee & Rice Mills Private Limited (Formerly Mansi Bijlee Private Limited) (with effect from July 20, 2010)

Madhya Bijlee Private Limited (with effect from October 18, 2010)

Mirage Bijlee Private limited (with effect from September 15, 2010)

Star Transformers Private Limited (with effect from January 21, 2011)

Chavan Rishi International Limited (with effect from March 2, 2011)

A2Z Maintenance & Engineering Services (Uganda) Private Limited (with effect from August 27, 2010)

A2Z E Waste Management Limited (with effect from February 10, 2011)

A2Z Water Solutions Limited (with effect from February 10, 2011)

Subsidiaries of A2Z Infrastructure Limited:

a) A2Z Waste Management (Merrut) Limited (Formerly A2Z Waste Management (Merrut) Private Limited)

b) A2Z Waste Management (Moradabad) Limited (Formerly A2Z Waste Management (Moradabad) Private Limited)

c) A2Z Waste Management (Varanasi) Limited (Formerly A2Z Waste Management (Varanasi) Private Limited)

d) A2Z Waste Management (Aligarh) Limited (Formerly A2Z Waste Management (Aligarh) Private Limited)

e) A2Z Waste Management (Badaun) Limited (Formerly A2Z Waste Management (Badaun) Private Limited) (w.e.f November 10, 2010)

f) A2Z Waste Management (Balia) Limited (Formerly A2Z Waste Management (Balia) Private Limited) (w.e.f November 10, 2010)

g) A2Z Waste Management (Basti) Limited (Formerly A2Z Waste Management (Basti) Private Limited) (w.e.f November 10, 2010)

h) A2Z Waste Management (Fatehpur) Limited (Formerly A2Z Waste Management (Fatehpur) Private Limited) (w.e.f November 10, 2010)

i) A2Z Waste Management (Jaunpur) Limited (Formerly A2Z Waste Management (Jaunpur) Private Limited) (w.e.f November 9, 2010)

j) A2Z Waste Management (Loni) Limited (Formerly A2Z Waste Management (Loni) Private Limited) (w.e.f November 10, 2010)

k) A2Z Waste Management (Mirzapur) Limited (Formerly A2Z Waste Management (Mirzapur) Private Limited) (w.e.f November 10, 2010)

l) A2Z Waste Management (Ranchi) Limited (w.e.f March 1, 2011)

m) A2Z Waste Management (Sambhal) Limited (Formerly A2Z Waste Management (Sambhal) Private Limited) (w.e.f November 10, 2010)

Subsidiary of Imatek Solutions Private Limited:

a) CNCS Facility Solutions Private Limited Subsidiary of A2Z Infraservices Limited:

a) IL&FS Property Management& Services Limited (w.e.f. October 1, 2010)

Joint Venture M/s UB Engineering Limited

M/s SPIC – SMO Limited

M/s Shyama Power (India) Private Limited

M/s Linkwell Tele systems Private Limited

M/S Cobra Instalaciones Y Servicios, S.A

M/S Karamtara Engineering Pvt. Ltd

M/S Richardson & Cruddas (1972) Ltd.

M/S Satya Builders

Individual having significant infuence

Mr. Rakesh Jhunjhunwala

Enterprise over which individual having significant infuence in the Company have substantial control

Rare Enterprises

Relatives of Individual having significant infuence in the Company

Rajesh Kumar Jhunjhunwala Rekha Jhunjhunwala

Key Management Personnel ('KMP')

Mr. Amit Mittal

Mr. Sanjeev Sharma (Till March 30, 2010)

Mrs. Dipali Mittal

Relative of Key Management Personnel

Ms. Priya Goel Mrs. Sudha Mittal Mr. Manoj Gupta

8. During the year ended March 31, 2010, the Company has formulated Employee Stock Option Scheme referred as 'A2Z Stock Option Plan 2010 ('the plan')' for all eligible employees/ directors of the Company except an employee who is promoter or belongs to the promoter group of the Company and its subsidiaries in pursuance of the special resolution duly approved by the shareholders on March 30, 2010.

The plan shall be administered and supervised by the Remuneration-cum-Compensation Committee under the powers delegated by Board. Each option shall entitle the option grantee to apply for and be transferred Equity Shares of the Company. On or from the time of the listing of the Equity Shares of the Company, the maximum number of options that can be granted to any employee in any year under the A2Z ESOP shall be less than 5% of the issued share capital of the Company (excluding any outstanding warrants or other securities convertible into Equity Shares) at the time of grant of options, subject to the overall ceiling of 2,865,056 options in the aggregate.

9. Debtors, Advance to suppliers, Advances from customers and Sundry Creditors are subject to confrmation / reconciliation as at year end or any time during the year. As explained, the Company follows a process of informal confrmation with its customers / suppliers and based on such informal confrmations/ discussions, believes that amount recoverable appearing as outstanding at year end are good of recovery, while the amounts payable are due. The management believes that no material adjustments are likely on formal confrmation / reconciliation of these balances.

10. The following are the details of loans and advances in the nature of loans given to subsidiaries and associates and firms / Companies in which directors are interested and are outstanding at the end of the year interms of Securities and Exchange Board of India's circular dated January 10, 2003:

11. Prior period revenue reversal netted off against current years's revenue aggregate to Rs Nil (Previous year -Rs 43,898,517) (gross tax impact of Rs. Nil) (Previous year - Rs14,921,106).

12. The Company has, on certain contracts, undertaken additional supplies of material basis approval by its customers and also incurred additional cost on site erection basis the surveys undertaken by its customers. In accordance with its contracts with the customers, the quantity variation upto specifed thresholds have been envisaged and accordingly, the management has reassessed the value of its contracts and accounted for additional revenue of Rs 85,767,314 (Previous Year – Rs 738,576,578) on these contracts. In respect of these contracts, the quantities supplied have been approved by the customers before dispatch. The management expects that these variations shall be soon approved by these customers and no material adjustments are likely upon such approvals.

Also, consequent to change in margin due to change in budgeted estimated cost of a specific project, the Company has recorded additional revenue of Rs179,261,680 during the year.

13. As at the year-end, the Company is carrying unbilled revenue of Rs 377,394,051 (Previous Year – Rs 234,305,626) against certain contracts for over a year. The management is confdent of recovering these amounts upon completion of surveys by the customers / third parties.

14. The Company is executing a construction contract for its customer at Leh and Kargil. Material purchased specifically for the project is invoiced to the customer basis their approved delivery instructions. In accordance with its contract with the customer, the Company has taken a joint insurance policy for the project value awarded by the customer.

During the year, Leh had a massive cloud burst and certain inventories at site have been damaged and are presently lying submerged inside pile of debris. Even though the exact quantum of loss is yet to be assessed by the insurance Company, the management has assessed that inventories with estimated valuation of Rs. 130,016,796 invoiced to the customer have been damaged. In accordance with customers' agreement, the responsibility of coordinating with the insurance company on behalf of the customer has been assigned to the Company.The management expects to recover the entire amount on behalf of its customer.

Pending determination of insurance claim, the management has, in view of the constructive obligation upon the Company to execute the project and on account of prudence, recognised the cost of replacement material of Rs. 130,016,796 and deferred tax credit thereon of Rs. 43,188,329 thereby presenting net amount of Rs. 86,828,467 in the profit and loss account as an 'Extraordinary Item'.

(d) Material Consumed

These comprise of miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, individually being less than 10% in value, it is not practicable to disclose the quantitative information in respect thereof. These comprises of 100% indigenous material.

15. The Company is executing a contract for supply and erection of existing Low Tension lines into High Voltage Distribution System. Subsequent to introduction of Voluntary Disclosure Scheme by the customer during the year 2009-10, there are fewer requirements of lower rating transformers and enhanced requirement of higher rating transformers than originally envisaged in the contract. The Company had, basis the Delivery Instructions (DI) issued by the customer, already purchased 3,634 No's of 6.3 KVA & 10KVA transformers at purchase cost of Rs. 156,861,704. Based upon the discussions with the customer, the Company has accounted for the surplus material amounting to Rs. 156,861,704 as inventories.

Further, in respect of another contract, while processing the final bill, the customer has identifed few items as surplus inventory and asked the Company to take them back at purchase cost of Rs. 28,411,801. Basis the approval of the said customer, the Company has sold inventory of Rs. 11,346,313 at a loss of Rs. 1,143,538 during the year, while the balance inventory of Rs. 16,023,644 has been carried at purchase price.

The management believes that these transformers and other surplus items returned by another customers have net realisable value higher than their cost as prices of steel & copper have gone up from the time these items were purchased and accordingly, no adjustments are deemed necessary to financial statements in this regard and these inventories have been carried at cost as at March 31, 2011.

16. The Company has entered into contract for providing manpower and consumables for cleaning services with Organising Committee of Common Wealth Games and recognized revenue of Rs. 148,379,563 from the contract during the year, against which there is outstanding receivable of Rs. 87,308,652 from the Organizing Committee.

The management believes that they have adequate backups / supportings available with them in respect of outstanding dues and thus, are confdent of recovering these outstanding receivables and accordingly believe that no provision is required against these receivables in the financial statements in this regard.

17. Capital work in progress includes Rs 1,234,889,102 (Previous year – Rs 51,697,401) represents expenditure incurred on setting up 3 Cogeneration power plants of 15 MW each on Built, Own, Operate and Transfer (BOOT) basis with the respective cooperative sugar mills for a period of ffiteen years at Fazilka, Morinda and Nakodar in Punjab.

18. The management has committed to provide continued operational and financial support to its subsidiary Companies for meet their working capital and other financing requirements and based upon approved future projections of the subsidiaries, believes that the diminution is temporary and there is no need to carry any provision against the investments.

19. During the year, in accordance with Section 81(1A) of the Companies Act, 1956, certain subsidiaries, (A2Z Infrastructure Limited, A2Z Infraservices Limited, Imatek Solutions Private Limited, A2Z Powercom Limited and A2Z Powertech Limited) have made preferential allotment of around 5% to 26% of their share capital to directors and employees of these companies, of their holding company, of their fellow subsidiaries and certain outsiders at a fair price which has been approved by the shareholders and Board of directors of the respective companies. This has resulted in dilution of shareholding percentage of the Company in these subsidiary companies.

20. During the year, the Company has made an Initial Public Offer (IPO) and allotted 16,845,189 equity shares of face value Rs 10/-, at a premium of Rs 390/- per equity share and has also allotted 31,380 equity shares of face value Rs 10/-, at a premium of Rs 370/- per equity share to employees aggregating to Rs 6,750,000,000. Consequently the paid up Equity Share Capital and Share Premium Account has been increased by Rs 168,765,690 and Rs 6,581,234,310 respectively. The Company's shares have been listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange Limited (NSE) on December 23, 2010.

21. The Company has incurred Rs 318,851,232 towards share issue expenses for its Initial Public Offer (IPO). Same has been shared on pro rata basis between the Company and the selling shareholders, who offered the shares in the offer for sale of the Company's IPO. An amount of Rs 30,337,389 (excluding printing, advertisement and media expenses with respect to the IPO which are borne entirely by the Company) has been recovered from selling shareholders as their share of share issue expenses and the balance of Rs 288,513,843 has been adjusted against the securities premium received on the issue of shares in terms of Section 78 of the Companies Act, 1956.

22. Previous year's fgures have been regrouped where necessary to confrm to this year's classification.