Notes to Accounts of Hindustan Dorr-Oliver Ltd.

Mar 31, 2016

1. During the previous year, Andhra Bank (consortium partner) vide their letter dated July 20, 2013 (‘sanction/restructuring of working capital limits’) has approved the company’s financial restructuring package in respect of credit facilities effective from April 1, 2013. As per the restructuring package, a part of the debts outstanding in respect of cash credit facilities aggregating to Rs. 294.66 million and Rs. 3.65 million have been converted into working capital term loan and funded interest term loan (i.e. WCTL and FITL) respectively.

2. Nature of security

3. External commercial borrowings is secured by first charge over the land and building situated at Mumbai (the company’s corporate office) along with other assets of the company with current value not less than 1.25x of the facility amount. Borrowing is further secured by first charge over the existing fixed assets and current assets of DavyMarkham Limited, UK.

4. Working capital term loan and Funded interest term loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future). The loan is further secured by fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate guarantee of the holding company and HDO Technologies Limited (subsidiary company) and pledge of 29.38 percent shares of the company held by IVRCL Limited (holding company).The facility carries interest @11 percent p.a.

5. Terms of repayment

6. External commercial borrowings:-Repayable in sixteen equal quarterly installments with the first installment due on April 17, 2013 (i.e. at the end of fifteenth month from the date of disbursement) and ending on January 17, 2017, three months USD LIBOR as prevailing at the start of every interest period plus margin (300 bps) payable in arrears at the end of every interest period net of withholding tax or deductions, if any.

7. Working capital term loan:- Repayable in twenty four quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and twelve months (in case of Bank of India), commencing from April 01, 2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India), with the first installment due on March 2014 and ending on December 2019.

8. Funded interest term loan:- Repayable in ten equal quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and twelve months (in case of Bank of India), commencing from April 01, 2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India), with the first installment due on March 2014 and ending on June 2016.

9. During the previous year Andhra Bank (Consortium partner) vide their letter dated July 20, 2013 (‘sanction/restructuring of working capital limits’) has approved the company’s financial restructuring package in respect of credit facilities effective from April 01, 2013. Pursuant to ‘sanction/restructuring of working capital limits’, fund based and non fund based credit facilities aggregating to Rs. 180 million and Q772 million respectively, have been carved out from the existing sanctioned limits of the company and accordingly the same stands vested with wholly owned subsidiary company.

10. Nature of security Consortium of Bank of India and Andhra Bank

Working capital loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future), fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate guarantee of the holding company and HDO Technologies Limited (subsidiary company) and pledge of 29.38 percent shares of the company held by IVRCL Limited (holding company).The facility carries interest @12.75 percent p.a.

ICICI Bank

Working capital loan from banks are secured by first and exclusive charge on all the current assets (including receivables) and movable fixed assets related to OPaL project and second paripassu charge on factory land and building owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), and building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility carries interest @ 13 percent p.a.

11. Includes WCTL, FITL, WCL and interest of Rs. 1,505.44 million, Rs. 66.77 million, Rs. 4,076.95 million and Rs. 312 million respectively of Bank of India due to recovery proceedings initiated against the Company on February 18, 2016 under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Commitments on account of letter of credit as at March 31, 2016 is Rs. 393.96 million (previous year Rs. 1,182.90 million)

12. Impact of pending legal cases

The company is party to several cases with clients as well as contractors, pending before various forums /courts/ arbitration proceedings. It is not possible to make a fair assessment of the likely financial impact of these pending disputes/litigations until the cases are decided by the appropriate authorities.

13. During the year the Company has incurred a Net Loss of Rs. 1,632.62 million (previous year Rs. 7,731.56 million) resulting in to accumulated losses of Rs. 11,043.23 million (previous year Rs. 9,410.61 million) and erosion of its net worth. The Company has obligations towards borrowings aggregating to Rs. 9,704.37 million (previous year Rs. 8,455.76 million) which includes working capital loan from banks of Rs. 2,816.32 million (previous year Rs. 4,376.59 million) outstanding letters of credit/bill discounting from banks of Rs.384.85 million (previous year Rs.1,057.45 million) and current maturities of long term debts/liabilities towards WCTL, FITL and WCL of Rs. 6,314.92 million (previous year Rs. 1,188.23 million) falling due over next twelve months period, obligations pertaining to operations including unpaid creditors and statutory dues as at March 31, 2016. These matters require the Company to generate additional cash flows to fund the operations as well as other statutory obligations notwithstanding the current level of low operating activities. The Company has been unable to obtain financing for this purpose. The situation indicates the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as going concern and therefore the company may be unable to realize its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustment in this respect.

14. Investment and advances in its Indian wholly owned subsidiary company, (HDO Technologies Limited) having book value aggregating to Rs. 1,538 million (previous year Rs. 1,538 million) and Rs. 50 million (previous year Rs. 50 million) having negative net worth, are carried at fair value. Considering a long term investment/advances, no provision for diminution /bad debts in value of investment/advances is considered necessary by the management.

15. National Stock Exchange of India Limited vide its letters dated June 19, 2014 and May 5, 2015 has directed the company to rectify the qualification raised by the Statutory Auditors. Accordingly the Company has rectified the qualification related to recognition of Deferred Tax Assets of Rs.1,089.37 million, Investment and Loans and advances to Foreign Subsidiary of Rs.1,495.88 million and Trade and Other Receivable of Rs. 515.28 million by providing for the same in the Books of Account.

16. The balances in Trade Receivables, Retention Money, Trade Payable, Advances and certain Bank balances are subject to reconciliation/confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

17. The Company has not received any confirmation from one of the lender having outstanding of Rs. 1,520.10 million (including interest accrued of Rs. 276.36 million) as at March 31, 2016. In the opinion of the management there will be no material adjustment on the confirmation by the lender.

18. In respect of certain customers, the company has initiated discussion with the customer related to encashment of bank guarantee by the customers. The trade receivables, retention, withheld money, unbilled revenue and other receivables from such customers as at March 31, 2016 aggregates to Rs. 538.60 million. Further, bank guarantee of Rs. 526.70 million was encashed subsequent to this year. The management is confident that the outcome of the negotiation will be favorable and no provision is considered necessary at this stage.

19. In respect of invocation of corporate guarantees of Rs. 1,411.80 million and initiation of recovery actions against the company in respect of such guarantees extended / executed for its one subsidiary in favour of the lender. The management has not made any provision in respect of this invoked corporate guarantee as the management is under discussion with the lender and confident that the same shall be settled amicably.

20. One lender has initiated recovery proceedings against the Company under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of outstanding loan aggregating to Rs. 5,961.16 million (including interest on WCTL and FITL of Rs. 177.92 million). The Bank has however demanded Rs. 6,545 million. The difference of [ 583.84 million being penal and other charges, the company has not provided for the same as it is in the process of reconciliation of the difference amount as stated above.

21. Trade receivables and Retention as at March 31, 2016 include overdue amounts aggregating to Rs.350.85 million (previous year [ 322.84 million) and [ 225.29 million (previous year [ 212.09 million) respectively for a long period of time, receivable from contractee/clients.These have been considered good and fully recoverable by the management as the Company is in continuous engagement with the parties and taking necessary steps for realization of its dues. Accordingly no provision has been made in books of account.

22. Unbilled revenue as at March 31, 2016 includes Rs. 867.27 million (previous year Rs. 839.60 million) in respect of certain projects where progress is insignificant during the year and the billing is pending for a long period/years. In the opinion of the management such unbilled revenue has been considered good and fully recoverable.

23. In the opinion of the Board, Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

24. Certain creditors have filed winding up petitions against the Company under section 433 and 439 of the Companies Act, 1956 before the Hon’ble High Court of Mumbai. The company is taking necessary steps including signing of Memorandum of Understanding and/ or filing the Consent Terms in the High Court with the creditors for withdrawal of such petitions. The matter is subjudice and the outcome of which is subject to the Company fulfilling the payment conditions of Memorandum of Understanding/ Consent Terms.

25. Related Party Disclosure

Information regarding Related Party Transactions as per Accounting Standard (AS)18 “Related Party Disclosures”

26.1 List of related parties

27. Holding Company

IVRCL Limited

28. Subsidiary Companies -(The ownership, directly or indirectly through subsidiaries)

Name of the Company

HDO Technologies Limited HDO (UK) Limited DavyMarkham India Private Limited HDO Zambia Limited

29. Remuneration has not been paid to the executive director after the approved period. Pending approval from the Central Government, the excess amount of Rs. 10.12 million (previous year Rs. 10.12 million) relating to the erstwhile Director has been included under ‘Short term Loans and advances’ (note 19).

Notes:

30. Related party relationship is as identified by the Company and relied upon by the Auditors.

31. Disclosure as per regulation 34 (3) and 53 (f) of the listing obligation and Disclosure Requirement :

33. Segment Reporting

Primary Segment - Business

As per Accounting Standard on Segment Reporting (AS) 17, “Segment Reporting”, segment information is being reported.

Accordingly, the Company has identified two reportable segments viz. Engineering, Procurement and Construction (EPC) and Trading. Segments have been identified and have been reported taking into account nature of product and services.

Secondary Segment - Geographical

The operation of the company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard (AS) 17 (Segment Reporting).

34. The previous year’s figures have been regrouped/rearranged wherever necessary.

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Mar 31, 2015

1. COMPANY OVERVIEW

The Company, is engaged in the business of providing Engineering and Turnkey solutions, technology and EPC installations in liquid solid separation applications in various industry segments like mineral processing and beneficiation, pulp and paper processing, fertilizer and chemicals and environmental management.

2. Rights, preferences and restrictions attached to equity shares :

The Company has only one class of Equity Shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Details of Shares Reserved for issue under options

As part of restructuring of working capital limits approved by consortium of Banks, T 150 million towards share application money of Promoters.

4. During the previous year, Andhra Bank (consortium partner) vide their letter dated July 20, 2013 ('sanction/restructuring of working capital limits') has approved the company's financial restructuring package in respect of credit facilities effective from April 1, 2013. As per the restructuring package, a part of the debts outstanding in respect of cash credit facilities aggregating to Rs.294.66 million and Rs.3.65 million have been converted into working capital term loan and funded interest term loan (i.e. WCTL and FITL) respectively.

5. Nature of security

a. External commercial borrowings is secured by first charge over the land and builiding situated at Mumbai (the company's corporate office) along with other assets of the company with current value not less than 1.25x of the facility amount. Borrowing is further secured by first charge over the existing fixed assets and current assets of DavyMarkham Limited, UK.

b. Working capital term loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future). The loan is further secured by fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate guarantee of the holding company and pledge of 29.38 percent shares of the company held by IVRCL Limited (holding company).The facility carries interest @11 percent p.a.

6. Terms of repayment

a. External commercial borrowings:-Repayable in sixteen equal quarterly installments with the first installment due on April 17, 2013 (i.e. at the end of fifteenth month from the date of disbursement) and ending on January 17, 2017, three months USD LIBOR as prevailing at the start of every interest period plus margin (300 bps) payable in arrears at the end of every interest period net of withholding tax or deductions, if any.

b. Working capital term loan:- Repayable in twenty four quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and twelve months (in case of Bank of India), commencing from April 01,2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India), with the first installment due on March 2014 and ending on December 2019.

c. Funded interest term loan:- Repayable in ten equal quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and twelve months (in case of Bank of India), commencing from April 01, 2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India), with the first installment due on March 2014 and ending on June 2016.

7. During the previous year Andhra Bank (Consortium partner) vide their letter dated July 20, 2013 ('sanction/restructuring of working capital limits') has approved the company's financial restructuring package in respect of credit facilities effective from April 01, 2013. Pursuant to 'sanction/restructuring of working capital limits', fund based and non fund based credit facilities aggregating to Rs. 180 million and Rs. 772 million respectively, have been carved out from the existing sanctioned limits of the company and accordingly the same stands vested with wholly owned subsidiary company.

8. Nature of security

Consortium of Bank of India and Andhra Bank

Working capital loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future), fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate guarantee of the holding company and pledge of 29.38 percent shares of the company held by IVRCL Limited (holding company).The facility carries interest @12.75 percent p.a.

ICICI Bank

Working capital loan from banks are secured by first and exclusive charge on all the current assets (including receivables) and movable fixed assets related to OPaL project and second paripassu charge on factory land and building owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), and building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility carries interest @ 13 percent p.a.

a. During the previous year the company has revalued its land situated at Chakala, Andheri (East) , Mumbai at Rs. 1047.19 million thereby increasing land value by Rs. 905.67 million and creating revaluation reserve of the same amount.

b. Buildings include company owned residential flats of the book value of Rs. 8.85 million (previous year Rs. 8.85 million) including face value of shares held in Co-operative housing societies of Rs.0.01 million in respect of which documents lodged with the Registrar of properties for registration are yet to be received back.

c. In accordance with the requirements of Schedule II of the Companies Act, 2013, the Company has re-assessed the useful lives of the fixed assets. Hence, Rs. 0.89 million ( net of Deferred Tax of Rs. 0.40 million) has been adjusted to the opening balance of the retained earnings where the remaining useful life of the assets was nil as at April 01, 2014.

d. The Company had provided additional depreciation of Rs. 2.44 million on network equipments aginst which claim was received from the insurance company.

9. Contingent liabilities and commitments (to the extent not provided for)

a. Contingent liabilities

Sl. As at As at No. Particulars March 31, March 31, 2015 2014

I Claims against the Company not acknowledged as debt 83.87 68.50

II Guarantees

Corporate Guarantees 242.87 133.85

Bank Guarantees 1,789.47 2,510.30

III Other money for which the Company is contingently liable

*Income-tax matters 16.65 33.22

*Sales-tax / WCT / VAT matters 833.41 474.83

*Excise/Service Tax matters 213.60 405.24

*Customs duty matters 0.08 0.08

IV Corporate Guarantee issued by the company on behalf of its subsidiary 2,745.60 2,745.60

* Excluding interest / penalty as may be determined / levied on the conclusion of the matters.

b. There are no amounts of contracts which are remaining to be executed on capital account and not provided for. Commitments on account of letter of credit as at March 31, 2015 is Rs. 1182.90 million (previous year Rs.2,233.50 million)

c. Impact of pending legal cases

The company is party to several cases with clients as well as contractors, pending before various forums /courts/ arbitration proceedings. It is not possible to make a fair assessment of the likely financial impact of these pending disputes/litigations until the cases are decided by the appropriate authorities.

10. During the year the Company has incurred a Net Loss of Rs.731.56 million resulting in to accumulated losses of Rs.9410.61 million and erosion of its net worth. The Company has obligations towards borrowings aggregating to Rs.8455.76 million which includes working capital loan from banks of Rs.4376.59 million, outstanding letters of credit/bill discounting from banks of Rs. 1057.45 million and current maturities of long term debts of Rs. 1188.23 million falling due over next twelve months period, obligations pertaining to operations including unpaid creditors and statutory dues as at March 31, 2015. These matters require the Company to generate additional cash flows to fund the operations as well as other statutory obligations notwithstanding the current level of low operating activities. The Company has been unable to obtain financing for this purpose. The Company's ability to continue as going concern and to realize its assets and discharge its liabilities in the normal course of business dependent upon the arrangement of finances and improvement in operations. The financial statements do not include any adjustment in this respect.

11. During the year the Company has investment in its Indian wholly owned subsidiary company, (HDO Technologies Limited) having book value aggregating to Rs.1,538 million as at March 31, 2015, which were carried at fair value. The management believes that, no provision for diminution in value of investment is necessary considering the fulltime business prospects.

12. National Stock Exchange of India Limited vide its letters dated June 19, 2014 and May 5, 2015 has directed the company to rectify the qualification raised by the Statutory Auditors. Accordingly the Company has rectified the qualification related to recognition of Deferred Tax Assets of Rs.1089.37 million, Investment and Loans and advances to Foreign Subsidiary of Rs. 1495.88 million and Trade and Other Receivable of Rs.515.28 million by providing for the same in the Books of Account.

13. The balances in Trade Receivables, Retention Money, Trade Payable, Advances and certain Bank balances are subject to reconciliation/confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

14. Trade receivables and Retention as at March 31, 2015 include amounts aggregating to Rs.322.84 million and Rs.212.09 million respectively, receivable from contractee clients, considered good and receivable. The company has been in continuous engagement with the parties and taking necessary steps for realization of its dues. The Company is of the view that the receivables are good and realizable.

15. Unbilled revenue as at March 31, 2015 includes Rs.839.60 million in respect of certain projects where progress is insignificant during the year and the billing is pending for a long period/years. In the opinion of management such unbilled revenue has been considered good and fully recoverable.

16. In the opinion of the Board Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

17. Certain creditors have filed winding up petitions against the Company under section 433 and 439 of the Companies Act, 1956 before Hon'ble High Court of Mumbai. The company is taking necessary steps including signing of Memorandum of Understanding and/ or filing the Consent Terms in the High Court with the creditors for withdrawal of such petitions. The matter is subjudice and outcome of which is subject to the Company fulfilling the payment conditions of Memorandum of Understanding/ Consent Terms.

In view of the large number and heterogeneous types of spares, accessories and components, it has not been considered necessary to furnish separately the respective quantitative information.

18. Related Party Disclosure

Information regarding Related Party Transactions as per Accounting Standard (AS)18 "Related Party Disclosures ". 44.1 List of related parties

A. Parent Company

IVRCL Limited

B. Subsidiary Companies -(The ownership, directly or indirectly through subsidiaries)

Name of the Company

HDO Technologies Limited HDO (UK) Limited DavyMarkham India Private Limited HDO Zambia Limited

Sl. Name of the Company No. 1 IVRCL PSC Pipes Private Limited

2 IVR Enviro Projects Private Limited

3 Chennai Water Desalination Limited

4 Salem Tollways Limited

5 Kumarapalyam Tollways Limited

6 IVRCL Steel Construction & Services Limited

7 Jalandhar Amritsar Tollways Limited

8 IVRCL Indore Gujarat Tollways Limited

9 IVRCL Chengapalli Tollways Limited

10 IVRCL Patalaganga Truck Terminals Pvt. Limited

11 IVRCL Goa Tollways Limited

12 IVRCL-Cadagua Hogenakkal Water Treatment Company Private Limited

13 Alkor Petroo Limited

14 IVRCL Building Products Limited

15 IVRCL Chandrapur Tollways Limited

16 Sapthashva Solar Limited

17 RIHIM Developers Private Limited

18 IVRCL TLT Private Limited

19 IVRCL Raipur Bilaspur Tollways Limited

20 IVRCL Narnual Bhiwani Tollways Limited

21 IVR Hotels and Resorts Limited

22 SPB Developers Private Limited

23 IVRCL Multilevel Car Parking Pr B26ivate Limited

24 IVRCL Lanka (Private) Limited

25 First STP Private Limited

26 IVRCL Gundugolanu Rajahmundry Tollways Limited

27 IVRCL Patiala Bathinda Tollways Limited

28 IVR Prime Developers (Tambram) Private Limited

29 IVR Prime Developers (Palakkad) Private Limited

30 IVR Prime Developers (Guindy) Private Limited

31 IVRCL Mega Malls Limited

32 Agaram Developers Private Limited

33 Mummidi Developers Private Limited

Sl. No. Name of the Company

34 Samatteri Developers Private Limited

35 Annupampattu Developers Private Limited

36 Tirumani Developers Private Limited

37 Ilavampedu Developers Private Limited

38 Gajuwaka Developers Private Limited

39 Chodavaram Developers Private Limited

40 Simhachalam Prime Developers Private Limited

41 Siripuram Developers Private Limited

42 Bibinagar Developers Private Limited

43 IVR Prime Developers (Erode) Private Limited

44 IVR Prime Developers (Guntur) Private Limited

45 IVR Prime Developers (Araku) Private Limited

46 Absorption Aircon Engineer Private Limited

47 IVR Vaanaprastha Private Limited

48 IVR PUDL Resorts & Clubs Private Limited

49 IVRCL Solar Energy Private Limited

50 IVR Prime Developers (Amalapuram) Private Limited

51 IVR Prime Developers (Red Hills) Private Limited

52 IVR Prime Developers (Tuni) Private Limited

53 IVR Prime Developers (Bobbilli) Private Limited

54 IVR Prime Developers (Bhimavaram) Private Limited

55 IVR Prime Developers (Adayar) Private Limited

56 IVR Prime Developers (Egmore ) Private Limited

57 Geo IVRCL Engineering Limited

58 Duvvda Developers Private Limited

59 Kunnam Developers Private Limited

60 Vedurwada Developers Private Limited

61 Rudravaram Developers Private Limited

62 Geo Prime Developers Private Limited

63 Theata Developers Private Limited

64 Kasibugga Developers Private Limited

65 Vijayawada Developers Private Limited

66 Eluru Developers Private Limited

D. Companies Under Common Control

Sl. No. Name of the Company

1 Indus Palm Hotels & Resorts Limited

2 S.V. Equities Limited

3 Palladium Infrastructures & Projects Limited

4 Soma Hotels & Resorts Limited

5 Eragam Holdings Limited

6 Eragam Finlease Limited

7 A P Enercon Engineers Private Limited

E. Key Managerial Personnel and their relatives

Name of the Key Personnel Relationship

Mr E Sudhir Reddy Vice Chairman

Mr. S C Sekaran Executive Director

Mr. R Balrami Reddy Director

Mr. Hemish Purushottam Company Secretary

Mr. S.C. Mundhekar Chief Financial Officer

Mr. E Ella Reddy

Mrs. E Sujatha Reddy

Mrs. E Indira Reddy

Mr. E. Sunil Reddy

Relative of Vice Chairman

Mr. E Siddhanth Reddy Mr. E Sanjeeth Reddy Ms. E Suha Reddy Ms. E. Soma Reddy

Mrs. R Vani Relative of the Director

Material transactions with companies under common control

19. Rs.12.07 million (Rs. 10.01million) - Palladium Infrastructures & Projects Limited.

20. Rs.Nil million (Rs. 0.36million) - A P Enercon Engineers Private Limited.

21. Rs.2.02 million (T 2.02million) - A P Enercon Engineers Private Limited and Rs. 0.60 million (Rs. 0.60 million) - Indus Palm Hotels and Resorts Private Limited.

22. Rs.52.63 million (T 45.28 million)- Palladium Infrastructures & Projects Limited, T 3.42 million (Rs. 1.58 million) - A P Enercon Engineers Private Limited and T 0.54 million (Rs. 0.09 million) - Indus Palm Hotels and Resorts Private Limited.

23. Rs.50 million HDO Technologies Limited and Rs. 1422.37 million HDO UK limited.

24. The shareholders of the Company, through a special resolution, have approved the remuneration of executive directors in the Annual General Meeting held on December 29, 2012. Due to inadequate profits during the year ended March 31, 2015, managerial remuneration paid to the executive directors aggregating to Rs. 0.11 million was in excess of the prescribed limits specified under Schedule XIII of the Companies Act, 1956, and is subject to the Central Government approval. Pending approval from the Central Government, the excess amount of T 10.48 million (including Rs. 10.37 million relating to the previous year and Rs.0.11 million for the current year) has been included under due from directors and relatives in 'Short-term Loans and Advances' (Note 19).

Notes:

1. Related party relationship is as identified by the Company and relied upon by the Auditors.

2. No amount pertaining to related parties which have been provided for as doubtful debts or written off in respect of related parties.

25. Segment Reporting

Primary Segment - Business

Accordingly, the Company has identified two reportable segments viz. Engineering, Procurement and Construction (EPC) and Trading. Segments have been identified and have been reported taking into account nature of product and services.

Secondary Segment - Geographical

The operation of the company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard (AS) 17 (Segment Reporting).

In view of the large number and heterogeneous types of steel, it has not been considered necessary to furnish separately the respective quantitative information.

26. The previous year's figures have been regrouped/rearranged wherever necessary.

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Mar 31, 2014

1. COMPANY OVERVIEW

The Company is engaged in the business of providing Engineering & Turnkey solutions, technology and EPC installations in liquid solid separation applications in various industry segments like mineral processing and beneficiation, pulp and paper processing, fertilizer & chemicals and environmental management.

2 Rights, preferences and restrictions attached to equity shares :

The Company has only one class of Equity Shares having a par value of T 2 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3 During the year, Andhra Bank (consortium partner) vide their letter dated July 20, 2013 (''sanction/restructuring of working capital limits'') has approved the Company''s financial restructuring package in respect of credit facilities effective from April 01, 2013. As per the restructuring package, a part of the debts outstanding in respect of cash credit facilities aggregating to Rs 294.66 million and Rs 3.65 million have been converted into working capital term loan and funded interest term loan (i.e. WCTL and FITL) respectively.

4 Nature of security

a. External commercial borrowings is secured by first charge over the land and builiding situated at Mumbai (the Company''s Corporate office) along with other assets of the Company with current value not less than 1.25x of the facility amount. Borrowing is further secured by first charge over the existing fixed assets and current assets of DavyMarkham Limited, UK {a wholly owned subsidiary of HDO (UK) Limited (a wholly owned foreign subsidiary of the Company)}

b. Working capital term loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future). The loan is further secured by fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate gaurantee of the holding Company and pledge of 29.38 percent shares of the Company held by IVRCL Limited (holding Company).The facility carries interest @11percent p.a.

5 Terms of repayment

a. External commercial borrowings:- Repayable in sixteen equal quarterly installments with the first installment due on April 17, 2013 (i.e. at the end of fifteenth month from the date of disbursement) and ending on January 17, 2017, three months USD LIBOR as prevailing at the start of every interest period plus margin (300 bps) payable in arrears at the end of every interest period net of withholding tax or deductions, if any.

b. Working capital term loan:- Repayable in twenty four quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and and twelve months (in case of Bank of India), commencing from April 01, 2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India) with the first installment due on March 2014 and ending on December 2019.

c. Funded interest term loan:- Repayable in Ten equal quarterly installments after moratorium period, of nine months (in case of Andhra Bank) and twelve months (in case of Bank of India), commencing from April 01, 2013 (in case of Andhra Bank) and December 31, 2012 (in case of Bank of India) with the first installment due on March 2014 and ending on June 2016.

6 Default in repayment of dues to banks

Delay in repayment of working capital term loan from Andhra bank & Bank of India aggregating to T 4.38 million & T 23.28 million respectively and funded interest term loans from Andhra bank aggregating to T 0.81 million & from Bank of India aggregating to T 8.54 million which were due in the month of March 2014, is by one day as at March 31, 2014.

Quarterly installments of External commercial borrowings aggregating to Rs 225.37 million {i.e. quarterly installement of Rs 75.12 million each (i.e. USD 1.25 million each)} falling due on 17th of July 2013, October 2013 and January 2014 were unpaid as at March 31, 2014.

Quarterly interest on External commercial borrowings aggregating to Rs 54.93 million {i.e. quarterly interest of Rs 18.31 million each (i.e. USD 0.30 million each)} falling due on 17th of July 2013, October 2013 and January 2014 were unpaid as at March 31, 2014.

7 During the year Andhra Bank (Consortium partner) vide their letter dated July 20, 2013 (''sanction/restructuring of working capital limits'') has approved the Company''s financial restructuring package in respect of credit facilities effective from April 01, 2013. Pursuant to ''sanction/restructuring of working capital limits'', fund based and non fund based credit facilities aggregating to Rs 180 million and Rs 772 million respectively, have been carved out from the existing sanctioned limits of the company and accordingly the same stands vested with wholly owned subsidiary company.

8 Nature of security

Consortium of Bank of India and Andhra Bank

Working capital loan from banks are secured by hypothecation of entire stocks, book debts, outstanding money receivable, claims and bills (both present and future), fixed assets owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), residual charge over building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility is further secured by corporate gaurantee of the holding Company and pledge of 29.38 percent shares of the Company held by IVRCL Limited (holding Company).The facility carries interest @11percent to @13 percent p.a.

ICICI Bank

Working capital loan from banks are secured by first and exclusive charge on all the current assets (including receivables) and movable fixed assets related to OPaL project and second paripassu charge on factory land and building owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat), and building at Andheri, Mumbai and flats situated in Mumbai and flat owned by wholly owned subsidiary company situated at Vatva, Ahmedabad (Gujarat). The facility carries interest of 13 percent.

9 Dafault in repayment of dues to banks

Rs 17.34 milion & Rs 46.39 million in respect of working capital loan from Bank of India & Andhra Bank were overdrawn on March 12, 2014 & March 26, 2014 which become Rs 96.56 million & Rs 38.03 million as at March 31, 2014 i.e. continuous overdrawn upto twenty days & six days respectively .

10. The Board of Directors of the Company vide resolution dated March 27, 2012 had approved extension of financial year 2011-2012 of the Company by a period of three months i.e. June 30, 2012 and previous financial period for a period of nine months i.e., July 01, 2012 to March 31, 2013. Accordingly, the financial statements of the Company for the previous financial period were prepared for a period of nine months. In view of this, the figures for the current year are strictly not comparable with those of the previous period

11. Dues to micro and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) information relating to Micro and Small Enterprises have been determined based on the information available with the Company. The required details are given below:

S. As at As at No. Particulars March 31, 2014 March 31, 2013

(a) Principal amount 19.27 13.91 remaining unpaid

(b) Interest due thereon 7.42 5.14

(c) Interest paid by the Company in terms of Section 16 of MSMED Act, along with the amount of the payment made to the suppliers and service providers beyond the appointed day during the year. - -

(d) Interest due and payable for the period of delay in making payment (which has been paid but beyond the appointed day during the year) but without adding the interest specified under MSMED Act. - -

(e) Interest accrued and remaining unpaid. 7.42 5.14

(f) Further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise. - -

12. Earnings per share (EPS)

S. Particulars For the For the No. Year Ended Period Ended March 31, 2014 March 31, 2013

(a) (Loss)/profit after (1015.04) (1,209.43) tax for calculation of basic and diluted EPS

(b) Weighted average 72,005,808 72,005,808 number of equity shares outstanding for calculation of EPS

(c ) Basic and diluted EPS (14.10) (16.80)

13. Contingent liabilities and commitments (to the extent not provided for)

a. Contingent liabilities

S. Particulars As at As at No. March 31, 2014 March 31, 2013

(a) Claims against the 68.50 43.15 Company not acknowledged as debt

(b) Guarantees

Corporate Guarantees 133.85 133.85

Bank Guarantees 494.33 482.33

(c) Other money for which the Company is contingently liable

*Income-tax matters 33.22 26.38

*Sales-tax / WCT / VAT matters 474.83 107.89

*Excise/Service Tax matters 405.24 360.94

*Customs duty matters 0.08 0.08

* Excluding interest / penalty as may be determined / levied on the conclusion of the matters.

b. There are no amounts of contracts which are remaining to be executed on capital account and not provided for. Commitments on account of letter of credit as at March 31, 2014 is Rs 2233.50 million (previous period Rs 1170.58 million)

14. The accumulated losses of the Company as at March 31, 2014 have eroded its net worth. The management of the Company is confident of improvement in the Company''s future operations and the financial statements have been prepared on going concern basis. The appropriateness of assumption of going concern is dependent upon improvement of the Company''s future operations and ability to raise requisite finance/generate cash flows in future to meet its obligations, including financial support to its subsidiaries. The Company intend to operate efficiently and is confident of implementing its business plan.

15. During the year the Company has made further investment of Rs 237.50 million in its Indian wholly owned subsidiary company, (HDO Technologies Limited) having book value aggregating to Rs 1538 million as at March 31, 2014, which were carried at fair value. The management believes that, no provision for diminution in value of investment is necessary considering the fulltime business prospects.

16. The Company has equity investments aggregating to Rs. 73.51 million and an amount of Rs. 1422.37 million advanced as interest free loans as at March 31, 2014 in HDO (UK) Limited, a wholly owned subsidiary. HDO (UK) Limited, and its wholly owned subsidiary, DavyMarkham Limited, UK, during the year, suffered losses which resulted an increase in accumulated losses exceeding the consolidated net worth of the subsidiary company as at the balance sheet date. The management, considering the future business prospects believes that, growth in operations of the Company will result into increase in its revenue and consequently profitability. The management is of the view that no provision for is required at this stage.

17. Deferred tax assets, on business losses, aggregating to Rs. 1,089.37 million have been recognized on the basis of business plan prepared by the management. The management believes that, growth in operations of the Company will result into increase in its revenue & profitability and consequently sufficient future taxable income will be available against which such deferred tax assets can be realized.

18. The balances in trade receivables, retention money, sundry creditors and advances are subject to reconciliation/ confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

19. Trade receivables and other receivables as at March 31, 2014 include amounts aggregating to Rs 360 million and Rs 155.30 million respectively, receivable from contractee clients, considered good and receivable. The Company has been in continuous engagement with the parties and taking necessary steps for realization of its dues. The Company is of the view that the receivables are good and realizable.

20. Unbilled revenue as at March 31, 2014 includes Rs. 461 million in respect of certain projects where progress is insignificant during the year and the billing is pending for a period of more than two years. In the opinion of management such unbilled revenue has been considered good and fully recoverable.

21. In the opinion of the board current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

22. During the previous period ended on March 31, 2013, due to significant revision of estimated cost, exceptional items aggregating to T 763.06 million comprising of provision for expected losses on ongoing projects and certain claims of vendor/sub-contractor in case of recently completed projects had been charged off to statement of profit and loss while the company continues to pursue its entitlements.

23. Certain creditors have filed winding up petitions against the Company under section 433 and 439 of the Companies Act, 1956 before Hon''ble High Court of Bombay. The Company is taking necessary steps including signing of Memorandum of Understanding and/ or filing the consent terms in the High Court with the creditors for withdrawal of such petitions. The matter is subjudice and outcome of which is subject to the Company fulfilling the payment conditions of Memorandum of Understanding/ Consent Terms.

24. Related Party Disclosure

Information regarding related party transactions as per Accounting Standard (AS) 18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules, 2006, (as amended).

25. The shareholders of the Company, through a special resolution, have approved the remuneration of executive directors in the Annual General Meeting held on December 29, 2012. Due to inadequate profits during the period ended June 30, 2012, managerial remuneration paid to the executive directors aggregating to Rs 10.26 million was in excess of the prescribed limits specified under Schedule XIII of the Companies Act, 1956, and is subject to the Central Government approval. Pending approval from the Central Government, the excess amount of Rs 10.37 million (including Rs 10.26 million relating to the previous period and Rs 0.11 million for the current year) has been included under due from directors and relatives in ''Short term loans and advances'' (Note 19).

Notes:

1. Related party relationship is as identified by the Company and relied upon by the Auditors.

2. No amount pertaining to related parties which have been provided for as doubtful debts or written off in respect of related parties.

26. Segment Reporting

Primary Segment - Business

The Company is primarily engaged in the business of supply of equipment including erection and commissioning and providing engineering services. As such, there is no separate reportable segment as per the Accounting Standard (AS) 17 (Segment Reporting) issued by The Institute of Chartered Accountants of India and notified under Section 211(3C) of the Companies Act, 1956.

Secondary Segment - Geographical

The operation of the Company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard (AS) 17 (Segment Reporting) notified in Companies (Accounting Standards) Rules, 2006.

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Mar 31, 2013

1. COMPANY OVERVIEW

The Company is engaged in the business of providing Engineering & Turnkey solutions, technology and EPC installations in liquid solid separation applications in various industry segments like mineral processing and Beneficiation, Pulp and paper processing, Fertilizer & Chemicals and environmental management.

2. The Board of Directors of the Company vide resolution dated March 27, 2012 have approved extension of financial year 2011-12 of the company by a period of three months i.e. June 30, 2012 and current period of nine months i.e., July 01, 2012 to March 31, 2013. Accordingly, the financial statements of the Company for the current period are prepared for a period of nine months.

In View of the scheme of arrangement between the Company and the HDO Technologies Limited (refer note 29) and extension of financial year 2011-12 to a period of fifteen months ended June 30, 2012 and current financial period for a period of nine months, the figures for the current period are strictly not comparable with those of the previous period.

3. During the previous period, pursuant to the Scheme of Arrangement ("the scheme") between the Hindustan Dorr-Oliver Limited (The "Company") and HDO Technologies Limited (a wholly owned subsidiary of the Company) and their respective shareholders to transfer manufacturing undertaking of the Company to the wholly owned subsidiary Company, which was sanctioned by the Hon''ble High Court of Bombay vide its order dated July 18, 2012 and is effective from April 01, 2011 (the Appointed Date):

i. all the properties, assets and liabilities of the Manufacturing Undertaking of the Company have been transferred to and vested with wholly owned subsidiary HDO Technologies Limited with effect from April 01, 2011.

ii. the Transferee Company has, during the period allotted 1,000,000 equity share of Rs. 10 each which have been recorded at their fair value determined by the Board.

4. Contingent liabilities and commitments (to the extent not provided for)

a. Contingent liabilities

S. No. Particulars As at As at March 31, 2013 June 30, 2012

a Claims against the Company not acknowledged as debt 43.15 34.61 b Guarantees

Bank Guarantees/Letters of Credit issued by the bank on behalf of the Company (Net of margin money aggregating to Rs. 5.05 Million.

Previous year k 8.92 Million) 2,936.32 1,406.76

Corporate Guarantees 133.85 133.85

c Other money for which the Company is contingently liable

Income-tax matters 26.38 23.84

*Sales-tax / WCT / VAT matters 107.89 81.30

*Excise/Service Tax matters 360.94

*Customs duty matters 0.08 0.08

* Excluding interest / penalty as may be determined / levied on the conclusion of the matters.

b. There are no amounts of contracts which are remaining to be executed on capital account and not provided for.

5. The Company has incurred substantial losses and accumulated losses of the Company as at March 31, 2013 have substantially eroded its free reserves. The ability of the Company to continue as a going concern is predominantly dependent on the improvement of the Company''s future operations. The Company has also drawn up plans to operate efficiently and to improve future operations. The management is confident of implementing its business plan and considering the future prospects, the financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities.

6. The Company has equity investments aggregating toRs. 73.51 million and an amount of Rs. 1172.67 million advanced as interest free loans as at March 31, 2013 in HDO (UK) Limited, a wholly owned subsidiary. The Subsidiary Company, HDO (UK) Limited, and its wholly owned subsidiary, DavyMarkham Limited, during the period suffered losses which resulted an increase in accumulated losses exceeding the consolidated net worth of the Subsidiary Company as at the balance sheet date. The management, considering the fulltime business prospects believes that, growth in operations of the Company will result into increase in its revenue and consequently profitability and net worth. Accordingly, the financial statements of Subsidiary Company, which have been prepared on "Going Concern" basis, are considered for consolidation. The said Subsidiary Company is confident of achieving the target and in the opinion of the Company, the carrying value of Goodwill arising on consolidation in this subsidiary represents its recoverable amount and in the opinion of the management no provision for impairment is required at this stage.

7. The balances in Trade Receivables, Retention Money, Sundry Creditors and Advances are subject to confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

8. Trade receivables and other non-current assets as at March 31, 2013 include amounts aggregating to Rs.180 million and Rs. 474.71 million respectively, relating to claims receivables from certain contractee clients. The claims are on account of deviation in design, additional overheads, interest due to overstay and idle cost. In the opinion of management, the claims are considered as good and realizable based on favourable developments arising out of continuous contract management steps taken by the Company.

9. In the opinion of the Board, Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

10. During the period, due to significant revision of estimated cost, exceptional items aggregating to Rs. 763.05 million comprising of provision for expected losses on ongoing projects and certain claims of vendor/sub-contractor in case of recently completed projects have been charged off to statement of profit and loss while the company continues to pursue its entitlements.

11. Related Party Disclosure

Information regarding Related Party Transactions as per Accounting Standard (AS) 18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules, 2006, (as amended).

11.1. List of related parties

A. Parent Company

IVRCL Limited

B. Subsidiary Companies –(The ownership, directly or indirectly through subsidiaries) Name of the Company

HDO Technologies Limited HDO (UK) Limited DavyMarkham Limited, (UK) DavyMarkham (India) Private Limited HDO Zambia Limited

D. Joint Ventures Name of the Company

Sai Sudhir HDO (JV)

E. Companies Under Common Control Name of the Company

Indus Palm Hotels & Resorts Limited

S.V. Equities Limited

Palladium Infrastructures & Projects Limited

Soma Hotels & Resorts Limited

Eragam Holdings Limited

Eragam Finlease Limited

A P Enercon Engineers Private Limited

12. Segment Reporting

Primary Segment – Business

The Company is primarily engaged in the business of supply of equipment including erection and commissioning and providing engineering services. As such, there is no separate reportable segment as per the Accounting Standard (AS) - 17 (Segment Reporting) issued by The Institute of Chartered Accountants of India and notified under Section 211(3C) of the Companies Act, 1956.

Secondary Segment – Geographical

The operation of the company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard (AS) 17 (Segment Reporting) notified in Companies (Accounting standards) Rules, 2006.

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Mar 31, 2011

COMPANY OVERVIEW

The Company, Hindustan Dorr-Oliver Limited is engaged in the business of providing Engineering & Turnkey solutions, Technology and EPC installations in liquid solid separation applications in various industry segments like mineral processing and Beneficiation, Pulp and paper processing, Fertilizer & Chemicals and environmental management.

1. Contingent liabilities not provided for in respect of: (Rs. in Million)

Particulars As at As at March 31, 2011 March 31, 2010

i) Bank Guarantees/Letters of Credit issued by the bank on behalf of the Company (Net of margin money aggregating to Rs. 9.19 Million. Previous year Rs. 8.84 Million) 4,784.11 4,907.31

ii) Corporate Guarantees 1,502.09 1,562.59

iii) *Claims against the Company not acknowledged as debts, to the extent quantifiable. 14.17 22.27

iv) *Income-tax matters 20.88 20.88

v) *Sales-tax / WCT / VAT matters 80.20 28.73

vi) *Excise/Service Tax matters 5.86 5.86

vii) *Labour Cess - 5

viii)*Customs duty matters 0.77 0.77

* Excluding interest / penalty as may be determined / levied on the conclusion of the matters.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 80.05 Million (previous year Rs. 15.51 Million).

Note: By virtue of endorsements made on its Industrial License, the Company within its overall capacity is also permitted to manufacture (i) Pressure Vessels, Reactors, Columns, Horton Spheres and Storage tanks, including glass lined equipments. (ii) Heat transfer equipment and systems. (iii) Solid Liquid Gas Separation Plants including Filteration Systems (iv) Mixing Homogenizing Equipments (v) Natural Gas Crackers including primary reformers (vi) Concentrating and Drying Systems consisting of Evaporator Systems (vii) Dryers and Drying Systems (viii) Mixers Agitators and Aerators up to 750 MT p.a.

3. Managerial Remuneration and Computation of net profit in accordance with section 309(5) of the Companies Act, 1956.

4. The balances in Sundry Debtors, Retention Money, Sundry Creditors and Advances are subject to confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

5. In the opinion of the Board, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

6. The Company has equity investments aggregating to Rs. 73.51 Million and an amount of Rs. 462.05 Million advanced as interest free loan as on March 31, 2011 in HDO (UK) Limited, a wholly owned subsidiary. The said subsidiary and its wholly owned subsidiary, DavyMarkham Limited, during the year ended March 31, 2011, suffered losses which resulted in increase in accumulated losses exceeding the consolidated net worth of the subsidiary company. The Company has plans to support growth plans of the subsidiary company which, management believe, will result into increase in its revenue and consequently profitability and net worth. Accordingly its financial statements have been prepared on "Going Concern" basis. The said subsidiary company is confident of achieving the target and in the opinion of the Company, no provision is considered necessary at this stage in respect of its investments and loans outstanding from the said subsidiary company at the year end.

7. Related Party Disclosure

Information regarding Related Party Transactions as per Accounting Standard AS-18 "Related Party Disclosures" notified by Companies (Accounting Standards) Rules, 2006, (as amended).

7.1. List of related parties

A. Holding Company

IVRCL Limited

B. Subsidiary Companies -The ownership, directly or indirectly through subsidiaries)

Name of the Company

HDO Technologies Limited

HDO (UK) Limited,

DavyMarkham Limited, (UK) (Subsidiary of HDO (UK) Limited)

DavyMarkham Holding Limited 1

DavyMarkham India Private Limited2 (w.e.f. May 26, 2010)

Note:

1 Closed operations during the year.

2 Subsidiary Incorporated during the year.

C. Fellow Subsidiaries

Name of the Company

IVRCL PSC Pipes Private Limited

IVR Enviro Projects Private Limited

IVRCL Assets & Holdings Limited

IVRCL Steel Constructions & Services Limited

IVRCL Holdings & Services Pte. Limited

IVRCL Cadagua Hogenakkal Water Private Limited

Alkoor Petroo Limited

IVRCL Building Product Limited

IVRCL Patalganga Truck Terminals Private Limited

D. Subsidiaries of Fellow Subsidiaries

Name of the Company

IVRCL Chengapalli Tollways Limited

Salem Tollways Limited

Kumarapalyam Tollways Limited

Chennai Water Desalination Limited

First STP Private Limited

Sion Panvel Tollways Private Limited

IVRCL Indore Gujarat Tollways Limited

IVR Hotels and Resorts Limited

Geo IVRCL Engineering Limited

IVRCL Mega Malls Limited

Agaram Developers Private Limited

Papankuzhi Developers Private Limited

SPB Developers Private Limited

Mummidi Developers Private Limited

Samatteri Developers Private Limited

Annupampattu Developers Private Limited

Kunnam Developers Private Limited

Tirumani Developers Private Limited

Ilavampedu Developers Private Limited

Haripuram Developers Private Limited

Chodavaram Developers Private Limited

Vedurwada Developers Private Limited

Rudravaram Developers Private Limited

Gajuwaka Developers Private Limited

Geo Prime Developers Private Limited

Theata Developers Private Limited

Duvvda Developers Private Limited

IVR Prime Developers (Mylapore) Private Limited

IVR Prime Developers (Palakkad ) Private Limited

IVR Prime Developers ( Guindy ) Private Limited

Gamaa Developers Private Limited

Simhachalam Prime Developers Private Limited

Siripuram Developers Private Limited

Kasibugga Developers Private Limited

Vijayawada Developers Private Limited

Eluru Developers Private Limited

IVR Prime Developers ( Nellore ) Private Limited

IVR Prime Developers ( Amalapuram ) Private Limited

IVR Prime Developers ( Erode ) Private Limited

IVR Prime Developers ( Guntur ) Private Limited

IVR Prime Developers ( Kakinada ) Private Limited

Jalandhar Amritsar Tollways Limited

IVRCL Goa Tollways Limited

IVRCL Chandrapur Tollways Limited

IVR Prime Developers ( Araku ) Private Limited

IVR Prime Developers ( Pudukkottai ) Private Limited

Absorption Aircon Engineer Private Limited

IVR Prime Developers ( Vanaprastha ) Private Limited

IVR PUDL Resorts & Clubs Private Limited

IVR Prime Developers (Thandiarpet) Private Limited

IVR Prime Developers (Gummidipundy ) Private Limited

IVR Prime Developers (Kodambakkam) Private Limited

IVR Prime Developers (Arumbakkam ) Private Limited

IVR Prime Developers (Anna Nagar) Private Limited

IVR Prime Developers (Pallavaram ) Private Limited

IVR Prime Developers (West Mambalam ) Private Limited

Bibinagar Developers Private Limited

IVR Prime Developers (Anakapalle ) Private Limited

IVR Prime Developers (Rajampeta) Private Limited

IVR Prime Developers (Tanuku) Private Limited

IVR Prime Developers (Red Hills) Private Limited

IVR Prime Developers (Rajahmundry) Private Limited

IVR Prime Developers (Tuni) Private Limited

IVR Prime Developers (Bobbilli) Private Limited

IVR Prime Developers (Bhimavaram) Private Limited

GSVK Manpower Supply & Services Private Limited

(Formerly known as IVR Prime Developers (Valasaravakkam) Private Limited)

IVR Prime Developers (Adayar) Private Limited

IVR Prime Developers (Ananthapuram) Private Limited

IVR Prime Developers (Perumbadur) Private Limited

IVR Prime Developers (Egmore ) Private Limited

IVR Prime Developers (Tambram) Private Limited

IVR Prime Developers (Ashram) Private Limited

IVR Prime Developers (Retiral Homes) Private Limited

IVR Prime Developers (Avadi) Private Limited

IVR Prime Developers (Alwarpet) Private Limited

IVRCL International (FZE)

E. Joint Ventures Name of the Company

Sai Sudhir HDO

F. Companies Under Common Control

Name of the Company

Indus Palm Hotels & Resorts Limited

S.V Equities Limited

Palladium Infrastructures & Projects Limited

Soma Hotels & Resorts Limited

Eragam Holdings Limited

Eragam Finlease Limited

A P Enercon Engineers Private Limited

G Key Managerial Personnel and their relatives

Name of the Person Relationship

Mr. E Sudhir Reddy Vice Chairman

Mr. E Sunil Reddy Managing Director

Mr. S C Sekaran Executive Director

Mr. R Balrami Reddy Director

Mr. E Ella Reddy

Mrs. E Sujatha Reddy

Mrs. E Indira Reddy

Mr. E Siddhanth Reddy

v.. Relative of Managing Director

Mr. E Sanjeeth Reddy

Ms. E Suha Reddy

Ms. E Soma Reddy y

Mrs. RVani Relative of the Director

8. Segment Reporting

Primary Segment - Business

The Company is primarily engaged in the business of manufacturing, supply of equipment including erection and commissioning and providing engineering services. As such, there is no separate reportable segment as per the Accounting Standard - 17 (Segment Reporting) issued by The Institute of Chartered Accountants of India and notified under Section 211(3C) of the Companies Act, 1956.

Secondary Segment - Geographical

The operation of the company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard - 17 (Segment Reporting) notified in Companies (Accounting Standards) Rules, 2006.

9. Deferred Tax

The Company has carried out deferred tax computation in accordance with Accounting Standard 22- 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India.

10. Employees Share Based Plan

1. Method used for accounting for share based plan:

The Company has used intrinsic value method to account for the compensation cost of stock option to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options granted during the year is recognised as deferred compensation expense with a corresponding liability as Stock Options.

Deferred employee compensation expense is amortised on a straight line basis over a vesting period of the option granted.

2. Employees Stock Options Scheme, 2005

Under ESOP 2005 Scheme, the members had approved 10,00,000 options of face value Rs. 2 each to the permanent employees of the Company. During the previous year 5,04,000 options were granted to certain employees of the Company at a single exercise price of Rs. 41.51 per stock option with a vesting period of 1 year.

3. Movement in the options during the year:

4. Fair value Methodology:

The fair value of options used to compute pro forma net income and earnings per equity share have been estimated on the date of granting using Black-Scholes model. The key assumptions used in Black-Scholes model for computing the fair value are; (a) Risk free interest rate of 6.6% p.a. (b) Expected life of 1 year and (c) Expected volatility of share price of 61.55%. The weighted average fair value of the option works out to Rs. 45.34.

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Mar 31, 2010

The Company, Hindustan Dorr-Oliver Limited is engaged in the business of providing Engineering & Turnkey solutions, Technology and EPC installations in liquid solid separation applications in various industry segments like Mineral processing and Beneficiation, Pulp and Paper processing, Fertilizer & Chemicals and Environmental management.

1. Contingent liabilities not provided for in respect of:

Particulars As at As at

March 31, 2010 March 31, 2009 (Rs. in Lacs) (Rs. in Lacs)

1.1 i) Bank Guarantees/Letters of Credit issued by the bank on

behalf of the Company [Net of margin money aggregating

to Rs.88.37. (Previous year Rs. 91.24)] 49,073.14 27,358.82

ii) Corporate Guarantees 15,625.85 -

iii) *Claims against the Company not acknowledged as debts,

to the extent quantifiable. 222.66 268.78

iv) Income-tax matters 208.84 314.04

(-) 10.86} 31404

v) *Sales-tax / WCT / VAT matters 287.26 258.98

vi) Excise/Service Tax matters 58.58 35.85

vii) Labour Cess 53.12 -

viii) Custom duty matters 7.65 3.42

* Excluding interest / penalty as may be determined / levied on the conclusion of the matters.

1.2. The claim made by a client against the Company seeking compensation for the alleged breach of contract has been settled by the Company. Consequently, all claims and counter claims relating to the contract and the related proceedings pending in the Courts at Bombay and Goa have been withdrawn / settled.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.155.13 (previous year Rs. 205.32).

3. Disclosure of provisions as per AS-29 "Provisions, Contingent Liabilities and Contingent Assets" is as follows:

4. The balances in Sundry Debtors, Retention Money, Sundry Creditors and Advances are subject to confirmation and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

5. In the opinion of the Board, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

6. Managerial Remuneration and Computation of net profit is in accordance with section 309(5) of the Companies Act, 1956

7. There were no dues to Micro Enterprises and Small Enterprises as at March 31, 2010. This information required to be disclosed under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the company.

8. Sundry creditors includes amount of suppliers bill discounted aggregating to Rs 6,600.07 (Previous Year Pis 5,876.08) within secured non fund based limits availed from the banks.

9. Related Party Transactions

a. List of related parties

i. Holding Company

IVRCL Infrastructures & Projects Limited

ii. Subsidiary [The ownership, directly or indirectly through subsidiary (ies)

HDO Technologies Limited

IMCO (22010) Limited, (UK) - (with effect from February 28, 2010)

DavyMarkham Holdings Limited, (UK) - Subsidiary of IMCO (22010) Limited, UK

(with effect from February 28, 2010)

DavyMarkham Limited, (UK) - Subsidiary of DavyMarkham Holdings Limited, UK.

(with effect from February 28, 2010)

iii. Fellow Subsidiaries

IVRCL PSC Pipes Private Limited

IVR Enviro Projects Private Limited

IVRCL Assets & Holdings Limited

(formerly IVR Prime Urban Developers Limited)

IVRCL Steel Constructions & Services Limited

IVRCL Chengapalli Tollways Limited

IVRCL Holdings & Services Pte. Limited

IVRCL Infrastructures & Projects (Botswana) (Pty) Limited

iv. Company under common control

Indus Palm Hotels & Resorts Limited

S.V. Equities Limited

Palladium Infrastructures & Projects Limited

Soma Hotels & Resorts Limited

Eragam Holdings Limited

Eragam Finlease Limited

A P Enercon Engineers Private Limited

v. Subsidiaries of Fellow Subsidiaries

Jalandhar Amritsar Tollways Limited Alkoor Petro Limited Salem Tollways Limited Kumarapalyam Tollways Limited Chennai Water Desalination Limited First STP Private Limited Sion Panvel Tollways Private Limited IVRCL Building Products Limited IVRCL Indore Gujarat Tollways Limited IVR Hotels and Resorts Limited

Geo IVRCL Engineering Limited

IVRCL Mega Malls Limited

HDO Technologies Limited

Agaram Developers Private Limited

Papankuzhi Developers Private Limited

SPB Developers Private Limited

Mummidi Developers Private Limited

Samatteri Developers Private Limited

Annupampattu Developers Private Limited

Kunnam Developers Private Limited

Tirumani Developers Private Limited

llavampedu Developers Private Limited

Haripuram Developers Private Limited

Chodavaram Developers Private Limited

Vedurwada Developers Private Limited

Rudravaram Developers Private Limited

Gajuwaka Developers Private Limited

Geo Prime Developers Private Limited

Theata Developers Private Limited

Duvvda Developers Private Limited

IVR Prime Developers (Mylapore) Private Limited

IVR Prime Developers (Palakkad) Private Limited

IVR Prime Developers (Guindy) Private Limited

Gamaa Developers Private Limited

Simhachalam Prime Developers Private Limited

Siripuram Developers Private Limited

Kasibugga Developers Private Limited

Vijayawada Developers Private Limited

Eluru Developers Private Limited

IVR Prime Developers (Nellore) Private Limited

IVR Prime Developers (Amalapuram) Private Limited

IVR Prime Developers (Erode) Private Limited

IVR Prime Developers (Guntur) Private Limited

IVR Prime Developers (Kakinada) Private Limited

IVR Prime Developers (Araku) Private Limited

IVR Prime Developers (Pudukkottai) Private Limited

Absorption Aircon Engineer Private Limited

IVR Prime Developers (Vanaprastha) Private Limited

IVR PUDL Resorts & Clubs Private Limited

IVR Prime Developers (Thandiarpet) Private Limited

IVR Prime Developers (Gummidipundy) Private Limited

IVR Prime Developers (Kodambakkam) Private Limited

IVR Prime Developers (Arumbakkam) Private Limited

IVR Prime Developers (Anna Nagar) Private Limited

IVR Prime Developers (Pallavaram) Private Limited

IVR Prime Developers (West Mambalam) Private Limited

Bibinagar Developers Private Limited

IVR Prime Developers (Anakapalle) Private Limited

IVR Prime Developers (Rajampeta) Private Limited

IVR Prime Developers (Tanuku) Private Limited

IVR Prime Developers (Red Hills) Private Limited

IVR Prime Developers (Rajahmundry) Private Limited

IVR Prime Developers (Tuni) Private Limited

IVR Prime Developers (Bobbilli) Private Limited

IVR Prime Developers (Bhimavaram) Private Limited

IVR Prime Developers (Valasaravakkam) Private Limited

IVR Prime Developers (Adayar) Private Limited

IVR Prime Developers (Ananthapuram) Private Limited

IVR Prime Developers (Perumbadur) Private Limited

IVR Prime Developers (Egmore ) Private Limited

IVR Prime Developers (Tambram) Private Limited

IVR Prime Developers (Ashram) Private Limited

IVR Prime Developers (Retiral Homes) Private Limited

IVR Prime Developers (Avadi) Private Limited

IVR Prime Developers (Alwarpet) Private Limited

vi. Joint Ventures of Holding Company

Bhanu - IVRCL Associates

IVRCL - Tantia

IVRCL, Sew & Prasad

IVRCL, Navayuga & Sew

Navayuga, IVRCL & Sew

IVRCL Harsha

SPCL- IVRCL

IVRCL JL

UAN Raju IVRCL Construction

IVRCL KBL

IVRCL KBL MEIL

IVRCL CR18G

IVRCL SEW &WPIL

IVRCL MBL

IVRCL BATPASCO WPIL & MHI

IVRCL BATPASCO ABB &AAG

IVRCL CR18G Consortium

MEIL IVRCL HCC& WPIL

IVRCL-KIPL

IVRCL-SAISUDHIR

UNITY-IVRCL

IVRCL- RAJ

CR 18 G-IVRCL

vii. Key Management Personnel

Mr. E. Sudhir Reddy- Vice Chairman Mr. E. Sunil Reddy- Managing Director Mr. S. C. Sekaran - Executive Director

viii. Relatives of Key Management Personnel

Mr. E. Ella Reddy Mrs. E. Sujatha Reddy Mrs. E. Indira Reddy Mr. E. Siddhanth Reddy Mr. E. Sanjeeth Reddy Mr. E. Suha Ella Reddy Mrs. E. Vani Ms. E. Soma Reddy

Notes:

1. Related party relationship is as identified by the Company and relied upon by the Auditors.

2. No amount pertaining to related parties which have been provided for as doubtful debts or written off in respect of related parties.

3. Disclosure as per clause 32 of the listing agreement: Loans and Advances given.

10. Segment Reporting

Primary Segment - Business

The Company is primarily engaged in the business of manufacturing, supply of equipment including erection and commissioning and providing engineering services. As such, there is no separate reportable segment as per the Accounting Standard - 17 (Segment Reporting) issued by The Institute of Chartered Accountants of India and notified under Section 211(3C) of the Companies Act, 1956.

Secondary Segment - Geographical

The operation of the company is mainly in India. Therefore, there is no reportable geographical segment as per the Accounting Standard - 17 (Segment Reporting) notified in Companies (Accounting standards) Rules, 2006.

11. Deferred Tax

The Company has carried out deferred tax computation in accordance with Accounting Standard 22- Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India.

12. Employees Share Based Plan

1. Method used for accounting for share based plan:

The Company has used intrinsic value method to account for the compensation cost of stock option to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options granted during the year is recognised as deferred compensation expense with a corresponding liability as Stock Options.

Deferred employee compensation expense is amortised on a straight line basis over a vesting period of the option granted.

2. Employees Stock Options Scheme, 2005:

Under ESOP 2005 Scheme, the members had approved 500,000 options of face value Rs. 2 each to the permanent employees of the Company. During the previous year 2,52,000 options were granted to certain employees of the Company at a single exercise price of Rs. 41.52 per stock option with a vesting period of 1 year.

Note: By virtue of endorsements made on its Industrial License, the Company within its overall capacity is also permitted to manufacture (i) Pressure Vessels, Reactors, Columns, Horton Spheres and Storage tanks, including glass lined equipments,

(ii) Heat transfer equipment and systems,

(iii) Solid Liquid Gas Separation Plants including Filtration Systems

(iv) Mixing Homogenizing Equipments

(v) Natural Gas Crackers including primary reformers

(vi) Concentrating and Drying Systems consisting of Evaporator Systems

(vii) Dryers and Drying Systems.

i) Mixers Agitators and Aerators up to 750 Metric Tons p.a.

Notes:

i. Sales are net of credit notes issued to customers relating to discounts, allowances, etc.

ii. Turnover of equipments, system and spares include sales of equipments aggregating to Rs. 3,581.08 (Previous year Rs. 1,991.67) on account of long term contracts

iii. In view of the large number and heterogeneous types of equipments and services, it has not been considered necessary to furnish separately the respective quantitative information.

13. Staff salaries and General expenses include Rs. 165.35 lacs (previous year Rs. 122.64 lacs) for Research & Development activities.