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Directors Report of IL&FS Transportation Networks Ltd.

Mar 31, 2016

The Directors have pleasure in presenting the Sixteenth Annual Report alongwith the Audited Financial Statements for the year ended March 31, 2016

Financial Results

The financial highlights of the Company are as under:

Particulars For the year ended For the For the year ended For the year ended 31.03.2016 year ended 31.03.2016 31.03.2015

(Rs. in Crore) 31.03.2015 (Rs. in Crore) (Rs. in Crore)

(Rs. in Crore) Standalone Standalone Consolidated Consolid ated

Total Income 5,262.24 3,881.83 8,732.03 6,828.22

Earnings before Interest, Tax, Depreciation and 1,367.43 1,132.12 3,235.39 2,465.78 Amortisation (EBITDA)

Profit Before Tax 250.55 384.13 429.14 480.54

Profit After Tax 173.49 318.66 311.54 443.60

Balance Brought Forward 735.98 762.46 1,683.88 1,561.68

Profit available for appropriation 909.47 1,081.12 1,995.42 2,005.28

Appropriation:

Dividend Proposed/Paid - Equity Shares (65.79) (98.69) (65.79) (99.77)

Tax on Dividend - Equity Shares (13.39) (20.09) (19.30) (26.26)

Dividend Proposed - Preference Shares (78.86) (78.86) (78.86) (78.86)

Tax on Dividend - Preference Shares (16.05) (16.05) (16.05) (16.05)

General Reserve - (31.87) - (31.87)

Debenture Redemption Reserve (0.15) (98.95) (19.03) (119.69)

Consolidation Adjustments - - (9.14) 51.10

Adjustment relating to fixed assets - (0.63) - -

Balance carried forward 735.23 735.98 1,787.25 1,683.88

Dividend

Your Directors have recommended dividend on Equity Shares at the rate of Rs. 2/- per share (Previous Year: Rs. 4/-per share) for the year under review. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 79.18 Crore including tax on dividend of Rs. 13.39 Crore (Previous Year: Rs. 118.78 Crore including dividend tax of Rs. 20.09 Crore)

Your Directors had declared an interim dividend on Preference

Shares of Rs. 94.91 Crore including tax on dividend ofRs. 16.05 Crore (Previous Year: Rs. 94.91 Crore including dividend tax ofRs. 16.05 Crore)

Issue of Equity Shares on rights basis

During the year under review, the Company had offered 8,22,40,007 equity shares of the face value of Rs. 10 each to the Members of the Company on a rights basis in the ratio of 1:3 at a price of Rs. 90 per share (including premium ofRs. 80 per share) aggregating to approximately, Rs. 740.16 Crore. Your Directors are pleased to inform that the issue was fully subscribed

Issue of Debentures

During the year under review, the Company issued five series of Unsecured, Redeemable, Non- Convertible Debentures ("NCD''s") for refinancing the short term loans availed by the Company, the details of which are given below:

Sr. No. No. of Debentures Face Value (In Rs.) Date of Allotment

1 2,250 10,00,000 27-April-2015

2 1,250 10,00,000 08-May-2015

3 1,000 10,00,000 10-July-2015

4 7,800 5,00,000 23-March-2016

5 4,250 10,00,000 30-March-2016

Operational Performance Review

The year 2015-16 started with a muted growth on the Public Private Partnership (PPP) front, taking off from the previous year, with very few BOT projects being tendered till the third quarter. Out of around 8,000 km of road projects awarded last year, less than 1,000 km were awarded on PPP basis, some of which were in the form of re- bidding due to non-receipt of bids through earlier bidding process or termination. Considering the current market scenario, only the bidders with sound financial position and sufficient strength for undertaking the PPP projects submitted realistic bids. The Company was successful in securing award for two projects of National Highway Authority of India (NHAI) on BOT Toll basis in the State of Maharashtra

The last quarter witnessed beginning of a new era in the development of road infrastructure in the country. NHAI successfully completed the bidding process for few projects on Hybrid Annuity Model (HAM), a new and much talked about format of concession which did not receive any response initially. After many deliberations amongst the private sector players and the authorities, HAM received a limited response as few construction companies submitted their bid for projects. NHAI had tendered about 20 more projects on HAM basis in March 2016, however, most of them were postponed to April / May 2016. It was observed that the projects tendered were in the form of packages with TPC ranging from Rs. 500 Crore to Rs. 800 Crore. The Company had undertaken analysis for these tenders on selective basis by assessing the hurdles in implementation of the projects and likely competition

The Company had evaluated 52 bids tendered by the NHAI and other State Authorities on Build, Operate, Transfer (BOT) (Toll/Annuity/Hybrid Annuity)/ Output Performance based Road Contract (OPRC)/ Engineering Procurement and Construction (EPC) basis. Out of the 52 projects, 7 failed to attract even a single bidder and some were offered for rebid. After careful evaluation of all the bids based on the viability and strong strategic content, the Company submitted 20 bids. In June 2015, the Company secured 2 Four Laning road projects namely (i) Amravati-Chikli (Package - I) section of NH-6 from km. 166.000 to km. 360.000 and (ii) Fagne-Guj/Maharashtra Border (Package-Ill) section of NH-6 from Km. 510.000 to Km. 650.794, both in the State of Maharashtra to be executed as BOT (Toll) basis on DBFOT pattern under NHDP Phase-IV

The Company''s portfolio increased to 37 projects as compared to 33 projects in last Fiscal year, which includes 31 Road projects and 6 Non Road projects. Presently, 22 Road projects and 4 Non Road projects are Operational, 5 Road projects and 1 Non Road project are under Implementation and 4 Road projects and 1 Non Road project are under development. The total portfolio in terms of length stands at 14,680 lane-km of which 11,549 lane-km are Toll based and 3,131 lane-km is Annuity based out of the aforesaid total length, (i) 10,176 lane-km projects are operational, (ii) 2,232 lane-km are under implementation and (iii) 2,262 lane-km are under development

During the year under review, the Company commissioned three road projects viz. (i) Sikar Bikaner Road Project in Rajasthan, (ii) Baleshwar Kharagpur Road Project in Odisha & West Bengal and (iii) Jorabat Shillong Road Project in Assam & Meghalaya

The Company also commissioned eight Border Check Posts in Madhya Pradesh during the financial year taking the total tally of operational check posts to 19

On the International front, ITNL Infrastructure Developer LLC received a Letter of Award from Dubai Courts Authority for development of office space for Dubai Supreme Courts and automated car parks on DBFOT basis. The Company in joint venture with ELSAMEX SA was awarded works of US$ 220 Million on Output based Performance Road Contract basis in Ethiopia. Other existing international operations under Elsamex SA and YuHe Expressway continued to contribute positively to the Company''s financials

Environmental, Health & Safety

The Company''s business processes are certified as compliant with ISO 9001:2008, ISO 14001:2007 & OHSAS 18001:2008 standards. In its endeavor to bring about continual improvement in its business processes, the Company plans to upgrade its Quality and Environment, Health & Safety (EHS) Management systems to the newly released standards namely, ISO 9001:2015 and ISO 14001:2015 and amalgamate them into an Integrated Management System. These systems will be further complimented by the Environmental and Social Policy Framework (ESPF) adopted by the Company which helps to identify and mitigate Environmental and Social concerns relating to a project at bidding stage itself. The implementation of this system is also audited and certified by Ernst & Young LLP

EHS audits are conducted on a regular basis at the project sites to ensure implementation and adherence to the Management System and Safety standards. The EHS Committee of the Board reviews the findings of the audit and advise on improving safety aspects and mitigation measures on a quarterly basis to help achieve the Company''s EHS objectives. The Company had engaged experts to undertake studies to ascertain the cause of accidents on the project roads based on Behavioural characteristics of road users and to suggest remedial measures. The interventions suggested by them were implemented on select road stretches which have helped in reducing the number of fatalities

Subsidiaries, Joint Ventures & Associate Companies

In terms of Section 129(3) of the Companies Act, 2013 and Regulation 34 (2) (b) of SEBI (LODR) Regulations, 2015, the Consolidated Financial Statements of the Company forms part of this Report. The copies of Audited Financial Statements of the Subsidiaries, Joint Ventures and Associates are available on the website of the Company: www. itnlindia.com and a copy of the same will be provided upon written request to the Company Secretary

During the year under review, the Company acquired entire equity stake in GRICL Rail Bridge Development Co. Ltd and Rajasthan Land Holdings Limited

The Performance and financial position of the Subsidiaries, Joint Venture and Associate companies is provided in Annexure I of this Report

Statutory Auditors

Deloitte Haskins & Sells LLP, Statutory Auditors, were appointed as the Auditors of the Company to hold office from the conclusion of the Annual General Meeting (AGM) held on August 21, 2014 till the conclusion of the 17th AGM of the Company to be held in 2017 for a period of three years, subject to ratification of their appointment by the Members at every AGM. A certificate confirming their eligibility under Section 141 of the Companies Act, 2013 and Rules framed thereunder to continue as Auditors for FY 2016-17 has been received from the Auditors. The Members are requested to ratify the appointment of Deloitte Haskins & Sells LLP as Statutory Auditors of the Company till the conclusion of the next AGM and to authorize the Board to determine their remuneration

Cost Auditor And Cost Audit Report

Pursuant to Section 148 of the Companies Act 2013 and the Companies (Cost Records and Audit) Rules 2014framed thereunder, the Board of Directors at their Meeting held on May 15, 2015 had appointed Mr. Dattatray D Chivilkar, Cost Accountant as the Cost Auditor of the Company for FY 2015-16. Mr. Chivilkar has also confirmed his eligibility for appointment for the FY 2016-17 and that he is free from any disqualifications for being appointed as Cost Auditor under the provisions of the Companies Act, 2013. The Board of Directors has recommended to the Members that the remuneration payable to Mr. Chivilkar, Cost Auditor for FY 2016-17 be approved at the ensuing Annual General Meeting

Secretarial Audit & Secretarial Audit Report

M/s. Jayshree Dagli & Associates, Company Secretaries in whole-time practice was appointed to carry out the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 for the Financial Year 2015-16. The report of the Secretarial Auditor is set out herewith as Annexure II to this report. The report does not contain any qualification

Extract of Annual Return

The details forming part of the extract of the Annual Return as on March 31, 2016 in Form MGT - 9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure III to this report

Policy on Director''s Appointment And Remuneration

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force) for selection and appointment of Directors, Senior Management and their remuneration. The remuneration paid to the Directors and the Senior Management is as per the Managerial Remuneration Policy of the Company. Brief details of the Managerial Remuneration Policy are provided in the Corporate Governance Report

Performance Evaluation of the Board

Upon recommendation by the Nomination & Remuneration Committee, the Board of Directors at its meeting held on November 11, 2014 had laid down criteria for performance evaluation of Independent, Non-independent & Executive Directors

The process and the manner of evaluation of Directors and the Board level Committees are given in detail in the report of Corporate Governance, which forms part of the Annual Report

The performance evaluation of all the Directors, Committees and the Board was carried out by the Nomination & Remuneration Committee, Independent Directors and Board at their respective meetings

Corporate Governance

The Company believes in adhering to good governance practices and has fully complied with the requirements/ disclosures that have to be made in this regard. A Report on Corporate Governance is enclosed and forms part of this Annual Report. A certificate from the Statutory Auditor on compliance with the provisions of Corporate Governance is also annexed to this Report

Directors

Mr. Hari Sankaran (DIN: 00002386) and Mr. Arun K Saha (DIN: 00002377), Directors, are liable to retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Your Directors recommend their re- appointment

Key Managerial Persons

During the year under review, the Board of Directors at its Meeting held on August 10, 2015 had appointed Mr. Dilip Bhatia as Chief Financial Officer of the Company effective January 1, 2016 in place of Mr. George Cherian, who had expressed his intention to step down from his position effective from December 31, 2015

Pursuant to Section 203 of the Companies Act, 2013, the Board at its Meeting held on August 10, 2015 also designated him as Key Managerial Personnel

Related Party Transactions

All related party transactions during the year have been entered into in the ordinary course of business and on an arm''s length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI(LODR) Regulations, 2015. There are no materially significant Related Party Transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel, which may have a potential conflict with the interest of the Company at large

Accordingly, there are no contracts or arrangements with related parties to be disclosed in Form AOC-2 pursuant to Clause (h) of Sub section (3) of Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014

The Company has developed a Related Party Transactions Policy & Framework for the purpose of identification and approval of such transactions. All related party transactions entered into by the Company in terms of the Policy are placed before the Audit Committee every quarter for their approval. The Related Party Transactions Policy as approved by the Board has been uploaded on the Company''s website and is available on the web link: http://www.itnlindia.com/ invrelation.aspxRs.page ID=25&Sec ID=5

Policy for Prevention of Sexual Harassment at Workplace

The Company has provided a safe and dignified work environment for its employees which is free of discrimination, intimidation and abuse. The Company has adopted a Policy for Prevention of Sexual Harassment of Women at Workplace under the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Act"). The objective of this policy is to provide protection against sexual harassment of women at workplace and for redressal of complaints of any such harassment. The Internal Complaints Committee to redress the complaints received under the Act is in place

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Whistle Blower Policy

In accordance with the provisions of Section 177 (10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, the Company has established a vigil mechanism by adopting a Whistle Blower Policy to report concerns or grievances. The administration of the vigil mechanism is ensured through the Audit Committee

The Whistle Blower Policy adopted by the Company is posted on the website of the Company at www. itnlindia.com

Risk Management

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. There are no risks which in the opinion of the Board affect the Company operations on going concern basis

The Board periodically reviews the risks and measures are taken for mitigation

Particulars of Loans, Guarantees or Investments Under Section 186

During the year under review, the Company has not made any investments nor given any loans / guarantees /provided security in connection with a loan granted to any person or body corporate in terms of Section 186 of the Companies Act, 2013

Deposits

Your Company has not accepted any Fixed Deposits during the year under review

Energy Conservation, Technology Absorption And Foreign Exchange Earnings and Outgo

Since the Company does not own any manufacturing facility, the Energy Conservation and Technology Absorption particulars in the Companies (Accounts) Rules, 2014, are not applicable

During the year under review, your Company''s foreign exchange income and expenditure was Rs. 0.12 Crore and Rs. 25.81 Crore respectively

Particulars of Employees

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Annual Report and is provided as Annexure IV in this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure V to this Report

Corporate Social Responsibility

In an effort to proactively add value, reduce risk and enhance sustainability in its projects, the Board of Directors of Infrastructure Leasing & Financial Services Limited ("IL&FS"), the parent company had approved an Environmental and Social Report ("ESR") as early as 1995. The objectives of the ESR were (a) to mainstream Environmental and Social ("E&S") considerations in the overall project cycle, (b) to set examples of environmentally sound and socially acceptable practices and (c) to inspire and encourage all stakeholders, including partners and co-investors

Subsequent thereto, in 2008, the Environmental and Social Policy Framework ("ESPF") was formulated to establish an outcome-oriented framework that guides integration of E&S considerations within all businesses of IL&FS which guidelines were then formulated and adopted by the Company

The endeavor is to extend E&S efforts to the community in general and incorporate Corporate Social Responsibility ("CSR") as a part of the DNA of the organization. In order to empower the community along its road projects, the Company launched its CSR initiative in the year 2010 by the name of "Parivartan". For the Company, CSR expands beyond responsibility within business operations, to include all voluntary actions undertaken to benefit the community and the environment around the project areas. The Company strongly believes that the surface transportation infrastructure it is building and financing today will shape the communities of tomorrow

CSR is, therefore, the organization''s commitment to operate in an economically, socially and environmentally sustainable manner, while recognizing the interest of its stakeholders

The CSR Policy and Framework has been adopted by the Company and is available on the website of the Company. The same can be viewed through the link: http://www. itnlindia.com

The Annual Report on CSR Activities is annexed herewith marked as Annexure VI

Directors'' Responsibility Statement

In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial control to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Acknowledgments

The Directors place on record their appreciation for the continued support and co-operation received from the various Government Authorities, including National Highways Authority of India and other Regulatory Authorities, Banks, Financial Institutions and Members of the Company

The Directors would also like to place on record their appreciation for the contribution and dedication of the employees of the Company at all levels.

By the Order of the Board

Deepak Dasgupta

Chairman

Mumbai.May 13, 2016


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Fifteenth Annual Report along with the Audited Financial Statements for the year ended March 31,2015

Financial Results

The financial performance of the Company is summarised below :

(Rs. in Million)

Particulars For the year For the year ended ended 31.03.2015 31.03.2014 Standalone Standalone

Total Income 38,818.26 36,719.67

Earnings before Interest, 11,321.27 8,534.82 Tax, Depreciation and Amortisation (EBITDA)

Profit Before Tax 3,841.25 3,229.06

Profit After Tax 3,186.62 2,660.27

Balance Brought Forward 7,624.57 7,253.88

Profit available for 10,811.19 9,914.15

appropriation Appropriation:

Dividend Proposed/Paid - (986.88) (986.88)

Equity Shares

Tax on Dividend - Equity (200.91) (167.72)

Shares

Dividend Proposed - (788.63) (305.11)

Preference Shares

Tax on Dividend - (160.55) (51.85)

Preference Shares

General Reserve (318.66) (266.03)

Debenture Redemption (989.50) (486.37)

Reserve

Redemption premium on - (25.62)

Cumulative Redeemable Preference Shares

Adjustment relating to (6.30) -

fixed assets

Consolidation Adjustment - -

Balance carried forward 7,359.76 -



Particulars For the year For the year ended ended 31.03.2015 31.03.2014 Consolidated Consolidated

Total Income 68,282.24 68,024.82

Earnings before Interest, 24,657.88 21,051.23 Tax, Depreciation and Amortisation (EBITDA)

Profit Before Tax 4,805.46 4,831.42

Profit After Tax 4,436.01 4,630.48

Balance Brought Forward 15,616.77 13,652.73

Profit available for 20,052.78 18,283.21

appropriation Appropriation:

Dividend Proposed/Paid - (997.71) (990.74)

Equity Shares

Tax on Dividend - Equity (262.63) (197.87)

Shares

Dividend Proposed - (788.63) (305.11)

Preference Shares

Tax on Dividend - (160.55) (51.85)

Preference Shares

General Reserve (318.66) (279.91)

Debenture Redemption (1,196.87) (874.43)

Reserve

Redemption premium on - (37.63)

Cumulative Redeemable Preference Shares

Adjustment relating to - -

fixed assets

Consolidation Adjustment 511.00 71.10

Balance carried forward 16,838.72 15,616.77

Dividend

Your Directors have recommended payment of dividend at the rate of Rs. 4/- per share (Previous Year: Rs. 4/- per share) for the year under review. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 1,187.79 Million including tax on dividend of Rs. 200.91 Million (Previous Year: Rs. 1,154.60 Million including dividend tax of Rs. 167.72 Million)

Your Directors had declared an interim dividend of Rs. 788.63 Million including tax on dividend of Rs. 134.03 Million (Previous Year: Rs. 356.96 Million including dividend tax of Rs. 51.85 Million) for payment to the Preference Shareholders

Debenture Issue

During the year under review, the Company issued 6 series of Unsecured, Redeemable, Non-Convertible Debentures ("NCD's") with a face value of Rs. 1,000,000/- each for refinancing the short term loans availed by the Company, the details of which are given below:

Sr. No. of Date of Allotment No. Debentures

1 2,000 22 - July - 2014

2 1,250 21 - Oct - 2014

3 1,250 22 - Nov - 2014

4 2,500 22 - Jan - 2015

5 2,500 04 - Feb - 2015

6 1,500 12 - Feb - 2015

Performance Review

The year under review saw the economy back on the growth track, which however failed to provide the much desired impetus to road infrastructure sector, largely owing to the bleak project award scenario. The Ministry of Road Transport and Highways(MoRT&H) alongwith the National Highways Authority of India (NHAI), had an internal target of awarding projects upto 5,500 kms for the Financial Year 2014-15, of which approximately 2,000 kms was expected through the Build Operate Transfer route. However, the Government was only able to award projects to the extent of 700 kms by March 2015. The Government has attempted to revive private sector participation by introducing measures such as rescheduling of upfront premium, easier exit norms, expediting dispute resolution and speedy clearances to enable commencement of work,amongst other initiatives. The sector continued to witness investor apathy due to liquidity constraints of the road developers, including lack of support from Lending Institutions for funding the projects

The Company had submitted bids for projects that are viable with strong strategic content. The Company had evaluated 73 bids tendered by the NHAI and other State Authorities on Build, Operate Transfer (BOT) / Output Performance based Road Contract (OPRC) basis. Out of the 73 projects, 10 failed to attract even a single bidder and some were offered for rebid. After careful evaluation of all the bids,the Company submitted 27 bids (12 - BOT and 15 - OPRC),but was unable to secure any projects. In February 2015,the Company's subsidiary secured an Annuity project in Gujarat on Swiss Challenge Basis for development of 8 Rail over bridges, with a project cost of Rs. 2,500 Million

At the close of the financial year, the Company's portfolio comprised of 28 projects at various stages of development and operation, aggregating 12,865 lane kms of which 8,924 lane kms are under operation, 2,978 lane kms are under implementation and 963 lane kms under development. The portfolio also includes other surface transportation projects such as the Metro Rail projects in Gurgaon, Haryana, the Border Check Post Project in Madhya Pradesh and a City Bus transport system in Nagpur, Maharashtra

During the year under review, the Company commissioned 5 road projects viz. (i) Patratu Dam to Ramgarh, (ii) Chaibasa - Kandra to Chowka both in Jharkhand, (iii) Warora Chandrapur Ballarpur in Maharashtra, (iv) Moradabad to Bareilly in Uttar Pradesh and (v) Thiruvanantapuram City Roads Phase III. The Company also commissioned four Border Check Posts in Madhya Pradesh viz. (i) Seoni - Nagpur, (ii) Chhindwara- Nagpur, (iii) Kabir Chabuthara and (iv) Sagar - Kanpur

On the international front, the Company emerged as the lowest bidder for 2 projects, one each in Kenya and Nepal. The Company also commenced physical operations of a project in Botswana and actively continues to pursue projects in other developed and developing markets

Environmental, Health & Safety

The Company follows an integrated Management System on Environment, Occupational Health and Safety (EHSMS) based on globally recognized ISO 14001:2004 and OHSAS 18001:2007 standards. The Company has a EHS Policy and framed procedures for implementation of the EHSMS across all projects. Prior to the commencement of work at any of the projects, a comprehensive assessment of all risks pertaining to environment, occupational health & safety are undertaken. Hazards are identified and actions are initiated to mitigate such risks. Dedicated EH&S Officers are appointed to monitor and implement the management system at project sites. The compliances under environmental laws and also under the Environment Management Plan are part of the construction agreements to ensure adherence by the Contractors. Regular internal audits are carried out, wherein each project is evaluated and rated on EH&S parameters. The EH&S Committee of Directors periodically review the findings of the audit reports & EHS performance reports

The Company had engaged an agency to undertake studies for ascertaining the cause of accidents at the project roads based on Behaviour Architecture, which is built on the principles of cognitive neuroscience and behavioral economics, to identify key behavioral aspects of the road users, blackspots with high accident probability and suggest measures to reduce the impact & frequency of road accidents. During the year, the identified measures were implemented at some of the operational project roads, which has resulted in reduction in the number of road accidents

Subsidiaries

As per Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement, the Consolidated Financial Statements of the Company forms part of this Report. The copies of Audited Financial Statements of the Subsidiaries, Joint Ventures and Associates are available on the website of the Company: www.itnlindia.com and a copy of the same will be provided upon written request to the Company Secretary

During the year under review, (i) ITNL Offshore Two Pte. Ltd, (ii) ITNL Offshore Three Pte. Ltd. were incorporated as wholly owned subsidiaries and (iii) Srinagar Sonamarg Tunnelway Ltd became an Associate Company. GRICL Rail Bridge Development Co. Ltd, ceased to be subsidiary and Empresas Pame sa De CV, as Associate of the Company

The Performance and financial position of the Subsidiaries, Joint Venture and Associate companies is provided in Annexure I of this Report

Statutory Auditors

Deloitte Haskins & Sells LLP, Statutory Auditors, were appointed as the Auditor of the Company to hold office from the conclusion of the Annual General Meeting (AGM) held on August 21,2014 till the conclusion of the 17 th AGM of the Company to be held in 2017 for a period of three years subject to ratification of their appointment by the Members at every AGM.A Certificate confirming their eligibility under Section 141 of the Companies Act, 2013 and Rules framed thereunder to continue as Auditors for FY 2015-16 has been received from the Auditors. The Members are requested to ratify the appointment of Deloitte Haskins & Sells LLP as Statutory Auditors of the Company to enable them to continue as the Statutory Auditors of the Company till the conclusion of the AGM to be held in FY 2016-17 and to authorise the Board to determine their remuneration

Cost Auditor and Cost Audit Report

Pursuant to Section 148 of the Companies Act 2013 and the Companies (Cost Records and Audit) Rules 2014 framed thereunder, the Board of Directors at their Meeting held on August 13, 2014 had appointed Mr. Dattatray D Chivilkar, Cost Accountant as the Cost Auditor of the Company for FY 2014-15. Mr. Chivilkar has also confirmed his eligibility for appointment for the FY 2015-16 and that he is free from any disqualifications for being appointed as Cost Auditor under the provisions of the Companies Act, 2013. The Board of Directors has recommended to the Members that the remuneration payable to Mr. Chivilkar, Cost Auditor for FY 2014-15 & FY 2015- 16 be approved at the ensuing Annual General Meeting

Secretarial Audit & Secretarial Audit Report

The Board had appointed M/s. Jayshree Dagli & Associates, Company Secretaries in whole-time practice to carry out the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 for the Financial Year 2014-15

The report of the Secretarial Auditor is enclosed as Annexure II. The report does not contain any qualification

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The remuneration paid to the Directors and the Senior Management is as per the Managerial Remuneration Policy of the Company. Brief details of the Managerial Remuneration Policy are provided in the Corporate Governance Report

Performance Evaluation Of The Board

Upon recommendation by the Nomination & Remuneration Committee, the Board of Directors at its meeting held on November 11,2014 had laid down criteria for performance evaluation of Independent, Non- Independent & Executive Directors

The process and the manner of evaluation of Directors and the Board level Committees are given in detail in the Corporate Governance report, which forms part of the Annual Report

The performance evaluation of all the Directors, Committees and the Board was carried out by the Nomination & Remuneration Committee, Independent Directors and the Board at their respective meetings held from time to time

Corporate Governance

The Company believes in adhering to good governance practices and has fully complied with the requirements/ disclosures that have to be made in this regard. A Report on Corporate Governance is enclosed and forms part of this Annual Report. A certificate from the Statutory Auditor on compliance with the provisions of Corporate Governance is also annexed to this Report

Directors

The Board of Directors had on the recommendation of the Nomination & Remuneration Committee appointed Ms. Neeru Singh as Independent Director with effect from November 11,2014 for a period of five years

Mr. Vibhav Kapoor and Mr. Pradeep Puri, Directors, are liable to retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Your Directors recommend their re-appointment

Key Managerial Persons

Pursuant to Section 203 of the Companies Act, 2013, the Board of Directors at its Meeting held on May 13, 2014, have appointed Mr. K. Ramchand, Managing Director, Mr. Mukund Sapre, Executive Director, Mr. George Cherian, Chief Financial Officer and Mr. Krishna Ghag, Vice President & Company Secretary as the Key Managerial Personnel of the Company

Related Party Transactions

All related party transactions during the year have been entered into in the ordinary course of business and on an arm's length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. There are no materially significant Related Party Transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel, which may have a potential conflict with the interest of the Company at large

Accordingly,there are no contracts or arrangements with related parties to be disclosed in Form AOC-2 pursuant to Clause (h) of Sub section (3) of Section 134 of the Companies Act,2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014

The Company has developed a Related Party Transactions Policy & Framework for the purpose of identification and approval of such transactions. A Statement of all related party transactions consummated as per the Related Party Transactions Policy & Framework is placed before the Audit Committee every quarter for their approval.The Related Party Transactions Policy as approved by the Board has been uploaded on the Company's website and is available on the weblink: http://www.itnlindia.com/invrelation. aspx page_ID=25&Sec_ID=5

Policy for Prevention of Sexual Harassment at Workplace

The Company has provided a safe and dignified work environment for its employees which is free of discrimination, intimidation and abuse. The Company has adopted a Policy for Prevention of Sexual Harassment of Women at Workplace under the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this policy is to provide protection against sexual harassment of women at workplace and for redressal of complaints of any such harassment. The Internal Complaints Committee to redress the complaints received under this Act is in place

Whistle Blower Policy

In accordance with the provisions of the Companies Act, 2013, the Company has established a vigil mechanism by adopting a Whistle Blower Policy to report concerns or grievances.The administration of the vigil mechanism is ensured through the Audit Committee The Whistle Blower Policy adopted by the Company is posted on the website of the Company at www.itnlindia.com

Particulars of Loans, Guarantees or Investments under Section 186

During the year under review, the Company has not made any investments nor given any loans / guarantees / provided security in connection with a loan granted to any person or body corporate in terms of Section 186 of the Companies Act, 2013

Deposits

Your Company has not accepted any Fixed Deposits during the year under review

Energy Conservation, Technology absorption and Foreign Exchange Earnings and Outgo

Since the Company does not own any manufacturing facility, the Energy Conservation and Technology Absorption particulars in the Companies (Accounts) Rules, 2014, are not applicable

During the year under review, your Company's foreign exchange income and expenditure was Rs. 0.18 Million and Rs. 253.61 Million respectively

Particulars of Employees

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Annual Report and is provided as Annexure III in this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure IV to this Report

Corporate Social Responsibility

In an effort to proactively add value, reduce risk and enhance sustainability in its projects, the Board of Directors of Infrastructure Leasing & Financial Services Limited ("IL&FS"), the parent company had approved an Environmental and Social Report ("ESR") as early as 1995. The objectives of the ESR were (a) to mainstream Environmental and Social ("E&S") considerations in the overall project cycle, (b) to set examples of environmentally sound and socially acceptable practices and (c) to inspire and encourage all stakeholders, including partners and co-investors

The endeavor is to extend E&S efforts to the community in general and incorporate Corporate Social Responsibility ("CSR") as a part of the DNA of the organization. In order to empower the community along its road projects, the Company launched its CSR initiative in the year 2010 by the name of "Parivartan". For the Company, CSR expands beyond responsibility within business operations, to include all voluntary actions undertaken to benefit the community and the environment around the project areas. The Company strongly believes that the surface transportation infrastructure it is building and financing today will shape the communities of tomorrow

CSR is, therefore, the organization's commitment to operate in an economically, socially and environmentally sustainable manner, while recognizing the interest of its stakeholders

The CSR Policy and framework adopted by the Company may be accessed on the Company's website at the link http://www.itnlindia.com/invrelation. aspx page_ID=25&Sec_ID=5

The Annual Report on CSR Activities is annexed herewith marked as Annexure V

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure VI to this Report

Directors' Responsibility Statement

In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial control to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Acknowledgments

The Directors place on record their appreciation for the continued support and co-operation received from the various Government Authorities, including National Highways Authority of India and other Regulatory Authorities, Banks, Financial Institutions and Members of the Company

The Directors would also like to place on record their appreciation for the contribution and dedication of the employees of the Company at all levels

By the Order of the Board

DEEPAK DASGUPTA Chairman

Mumbai, May 15, 2015


Mar 31, 2014

The Members

IL&FSTransportation Networks Limited

The Directors have pleasure in presenting the Fourteenth Annual Report, alongwith the Audited Financial Statements For the year ended March 31,2014

FINANCIAL RESULTS

The financial results of the Company are as under:

(Rs in Million)

For the Year ended For the Year ended 31.03.2014 31.03.2013

Total Income 36,719.67 35,662.13

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) 8,534.82 8,433.90

Profit Before Tax 3,229.06 4,392.27

Profit After Tax 2,660.27 2,711.64

Balance Brought Forward 7,253.88 6,183.90

Profit available for appropriation 9,914.15 8,895.54

Appropriation;

Dividend Proposed/Paid - Equity Shares (986.88) (777.07)

Tax on Dividend - Equity Shares (167.72) (132.06)

Dividend Proposed - Preference Shares (305.11) (-)

Tax on Dividend - Preference Shares (51.85) (-)

General Reserve (266.03) (271.16)

Debenture Redemption Reserve (486.37) (461.37)

Redemption premium on 20.50% Cumulative Redeemable Preference (25.62) (-) Shares

Balance carried forward 7,624.57 7,253.88

DIVIDEND

Your Directors have recommended payment of dividend of Rs. 4/- per share (Previous Year: Rs. 4/- per share) For the year under review. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum oFRs. 1,154.60 Million including tax on dividend oF Rs. 167.72 Million (Previous Year: Rs. 909.13 Million including dividend tax oF Rs. 132.06 Million)

The redeemable preFerence shares, allotted during the year under review were entitled to pro-rata dividend For the Financial year 2013-14. Your Directors had thereFore declared an interim dividend oFa sum oFRs. 356.96 Million including tax on dividend oF Rs. 51.85 Million For payment to the PreFerence Shareholders

ISSUE OF EQUITY SHARES ON RIGHTS BASIS

During the current financial year, the Company had ofered 52,452,288 equity shares of the face value of Rs. 10 each to the Members of the Company on a rights basis in the ratio of 27:100 at a price of Rs. 100 per share (including a premium of Rs. 90 per share) aggregating to approximately, Rs. 5,250 Million. Your Directors are pleased to inform that the issue was oversubscribed

ISSUE OF PREFERENCE SHARES

Pursuant to the approval of the Members sought by way of a Postal Ballot for issue of Non-convertible Redeemable Preference Shares aggregating to a nominal amount of Rs. 10,000 Million, your Company had issued 376,450,000 Cumulative Non-convertible Redeemable Preference Shares (CNCRPs) with a face value of Rs. 10/- each at a premium of Rs. 10/- per share in tranches as detailed below:

The aggregate amount of Rs. 7,529 Million raised from the aforesaid issue of CNRCPS was utilised for refnancing the short term loans availed by the Company

ISSUE OF DEBENTURES

During the year under review, your Company issued 1,000 Rated, Listed, Unsecured, Redeemable, Non-Convertible Debentures ("NCD''s") with a face value of Rs. 1,000,000/- each at a discount of Rs. 45,000 per debenture, aggregating to Rs. 955 Million on March 4, 2014, for refnancing the short term loans availed by the Company. The NCD''s carry a coupon rate of 11.50% per annum and are due for redemption on February 4, 2024

PERFORMANCE REVIEW

During the reporting year, the sector continued to be under severe pressure due to regulatory challenges, project development and implementation challenges and fnancing challenges. The economic slowdown coupled with declining trafc further added to the woes. The Ministry of Road Transport and Highways (MoRTH) along with National Highways Authority of India (NHAI) had an internal target of 9,000 km for the FY 2013-14, of which around 7,500 km was expected through BOT route. However, the government was able to award only 11 projects to the tune of 1,116 km. The Government has attempted to revive private sector participation by modifying existing guidelines relating to forest clearances, environment clearances, etc. Still the sector continued to witness investor''s apathy due to lack of equity with road construction companies and the overall economic environment which afected sentiments including that of lenders

Your Company had evaluated all the 42 bids which came for submission from NHAI and various other State Authorities. We bid for projects that are viable and have strong strategic content. Out of the 42 projects which came for submission, nine failed to attract even a single bidder. After a careful evaluation of all bids, we felt only 5 bids were worth submission as per our strategy, but were unable to secure any of these projects. In some of the tenders the trafc estimates and the Total Project Cost turned out to be highly unrealistic. These numbers made us very cautious; we refrained from aggressive bidding and focused more on the implementation aspect. At the close of the financial year, your Company''s project portfolio remained at 26 projects at various stages of development and operation, aggregating to 13,161 lane kilometers, of which 3,160 lane km comes under annuity portfolio and 10,001 under toll portfolio. Your company is also actively involved in other surface transportation projects such as the Metro Rail projects in Gurgaon, the Madhya Pradesh Border Check post Projects, Car Park Concessions, Urban Bus transport system among others

On the operational front, your Company commenced construction at three of its projects during the year, two of which were financially closed within the same period as well. This is a major achievement, given the failure of many other established sectoral players to achieve financial closure for their projects. The situation has been even more challenging, with bankers tightening their purses and adopting an extremely cautious approach towards lending to the sector. Additionally, your Company also operationalised four road projects, one of which was 145 days ahead of schedule, and a total of seven checkposts in Madhya Pradesh. All of these projects have successfully commenced commercial operations subsequently

The international markets for your Company performed relatively better. Your Company successfully managed to convert two leads in the short period that we have been operational in the foreign markets. Your Company is nearing closure on a few other leads as well. The results of these eforts will be witnessed in the coming year. To further augment this vertical, your Company also made some changes in the organisational structure and allocated dedicated resources to this efect

Your Company''s Spanish subsidiary, Elsamex S.A., witnessed a nearly 70% jump in Profit after Tax owing to the reorganised structure that was effected during the year. Your Company looked at low-yielding sectors in greater detail and a few projects were closed. The priority for the year was to improve the operation of existing projects and set benchmark standards for future projects. Elsamex S.A. commenced operations and started work on a project to improve the Abu Dhabi to Al-Ain highway. This is a performance-based payment contract, which will give Elsamex S.A. an opportunity to showcase its micro surfacing capabilities to the authorities in the region

The Metro Rail project in Gurgaon commenced commercial operations with effect from November 14,2013. Although the passenger count has been less than anticipated, the non-fare income has spruced up the revenue numbers. At the same time, various measures have been implemented to increase the passengercount. Work has also commenced on the 7-km extension of the Metro track in Gurgaon. The civil works and other key contracts have already been awarded and the remaining few are under process. The land for the project has been fully handed over, paving the way for unhindered construction related progress

SUBSIDIARIES

The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards 21, 23 and 27 of the Institute of Chartered Accountants of India. As required under Section 212(8) of the Companies Act, 1956, the Statement of holdings in subsidiaries and Consolidated Accounts, pursuant to the Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, form a part of the Annual Report. In terms of the Notification dated February 8,2011 issued by the Ministry of Corporate Affairs (MCA), amending Section 212 of the Companies Act, 1956, the Board of Directors of the Company at its Meeting held on May 13, 2014, noted the provisions of the Circular of the MCA and passed the necessary resolution granting the requisite approvals for not attaching a copy of the Balance Sheet, Profit and Loss Account and Reports, etc. of the subsidiaries, along with the Annual Report of the Company for the financial year 2013-14. The disclosure relating to financials of the subsidiaries is included in the consolidated balance sheet. The accounts of subsidiary companies are, therefore, not attached with this Annual Report. However, the accounts of the subsidiaries will be made available on the website of the Company and on request, for inspection to Members seeking such information, at the Registered Office of the Company

DIRECTORS

Mr. Ravi Parthasarathy and Mr. Hari Sankaran, Directors, are liable to retire by rotation at the forthcoming Annual

General Meeting of the Company and being eligible, offer themselves for re-appointment. Your Directors recommend their re-appointment

Mr. Deepak Dasgupta, Mr. R. C. Sinha, Mr. H. P. Jamdar and Mr. Deepak Satwalekar, Independent Directors of the Company, shall be appointed as Independent Directors not liable to retire by rotation for a fresh term of five years in accordance to Section 149 of the Companies Act, 2013. Declaration to the effect that the proposed appointee meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 has been received from each of the aforesaid Directors

AUDITORS

Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors, retire at the ensuing Annual General Meeting and have expressed their willingness to continue as Statutory Auditors, if re-appointed

The Company has also received a certificate from Deloitte Haskins & Sells LLP under Section 139(1) and Section 141 of the Companies Act, 2013 confirming their eligibility for re-appointment. Accordingly, Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai, are proposed to be re-appointed at the Annual General Meeting, for a period of three years, subject to annual ratification of their appointment by the Members

DEPOSITS

Your Company has not accepted any Fixed Deposits during the year under review

CORPORATE GOVERNANCE

Your Company believes in adhering to good governance practices and has fully complied with the requirements/ disclosures that have to be made in this regard. A Report on Corporate Governance is enclosed and forms part of this Annual Report. A certificate from the Statutory Auditors on compliance with the provisions of Corporate Governance is also annexed to this Report

ENVIRONMENTAL AND SOCIAL POLICY

FRAMEWORK

In its endeavour to set up an environmentally and socially sustainable business, your Company had adopted the Environmental and Social Policy Framework (ESPF) based on the guidelines laid down by IL&FS, to address the environmental and social risks associated with the business of the Company. During the year, this was integrated with the existing Environmental, Health and Safety Management Systems (EHSMS - ISO 14001:2004 and OHSAS 18001:2007 standards) and the implementation and monitoring of projects commenced under these modified standards.

Your Company''s practices and standards in this regard were also certified by a third party auditor during the year

ESPF will enable the Company to identify E&S risks associated with projects prior to submission of bids and depending on the outcome of the Risk Rating and its impact, the Company would be able to address the relevant E&S impact and initiate suitable mitigation measures through its EHSMS

SAFETY

Providing an accident-free workplace for its workforce and a hazard-free project road for its users has been the safety ideology of your Company. This is done through an integration of the various management systems implemented by your Company. Your Company possesses valid ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certifications for its Quality Management System and Environmental Health and Safety Management System. Your Company carried out regular Safety Audits/ Inspection and Safety Awareness Training Programmes for its employees and also for the contract workmen. Additional eforts were taken to reduce road user accidents on the operational project roads by employing the services of specialist consultants who studied the accident patterns on a few select stretches and suggested behavioral interventions to reduce accidents. These recommendations have already been implemented and have yielded positive results. Your Company draws satisfaction from the fact that it has managed to save the lives of many road users due to its untiring eforts and unwavering diligence to reducing accidents on its project roads. During the year under review, the Safety Committee constituted by the Board, comprising of the Independent Directors with technical expertise in the Sector to look into the safety aspects for all the project sites, met four times and reviewed the status of the safety measures adopted by the Management. The Committee had advised on various measures to be taken from time to time in this regard. Precautions were taken across the Company''s project sites to avoid accidents

PARTICULARS OF EMPLOYEES

The information regarding particulars of remuneration, among others, of certain employees required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, is given in an Annexure which forms a part of this report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Director''s Report and Accounts are being sent to the Members without this Annexure. Any Shareholder interested in obtaining this Annexure may write to the Company Secretary at the Registered Ofce of the Company

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(1) in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures

(2) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the Company at the end of the financial year and of the profit of the Company for that period

(3) they have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

(4) they have prepared the annual accounts on a going concern basis

FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Your Company''s foreign exchange income during the year was Rs. 514.15 Million and expenditure during the year was Rs. 425.54 Million

Since the Company does not have any manufacturing facility, the other particulars required to be provided in terms of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable

ACKNOWLEDGMENTS

The Directors place on record their appreciation for the continued support and co-operation received from the various Government Authorities, including National Highways Authority of India and other Regulatory Authorities, Banks, Financial Institutions and Members of the Company

The Directors would also like to place on record their appreciation for the contribution and dedication of the employees of the Company at all levels

By the Order of the Board

Deepak Dasgupta Mumbai, May 13, 2014 Chairman


Mar 31, 2013

The SharehoLders of IL&FS Transportation Networks limited

The Directors have pLeasure in presenting the Thirteenth AnnuaL Report aLong with the Audited Statements of Accounts for the year ended March 31, 2013

FINANCIAL RESULTS

The financial results of the Company are as under:

(Rs. in million)

For the For the Year ended Year ended 31.03.2013 31.03.2012

Total Income 35,662.13 29,102.46

Earnings before Interest, 8,433.90 6,898.51 Tax, Depreciation and Amortisation (EBITDA)

Profit Before Tax 4,392.27 4,136.48

Profit After Tax 2,711.64 2,522.98

Balance Brought Forward 6,183.90 4,816.35

Profit available for 8,895.54 7,339.33 appropriation

Appropriation:

Dividend Proposed/Paid (777.07) (777.07)

Tax on Dividend (132.06) (126.06)

General Reserve (271.16) (252.30)

Debenture Redemption (461.37) - Reserve

Balance carried forward 7,253.88 6,183.90

DIVIDEND

Your Directors have recommended payment of dividend of Rs. 4/- per share (Previous Year: Rs. 4/- per share) for the year under review. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 909.13 million including tax on dividend of Rs. 132.06 million (Previous Year: Rs. 903.13 million including dividend tax of Rs. 126.06 million)

DEBENTURE ISSUE

During the year under review, your Company issued 4,000 and 6,000 Rated, Listed, Unsecured, Redeemable, Non- Convertible Debentures ("NCD''s") having a face value of Rs. 1,000,000/- each, aggregating to Rs. 10,000 million on January 23, 2013 and March 18, 2013, respectively, by way of long term funds essentially for refinancing the existing short term loans avaiLed by the Company

The 4,000 NCD''s issued on January 23, 2013 carry a coupon rate of 12.00% per annum and are due for redemption on January 23, 2019. The NCD''s issued on March 18, 2013 were in two series, namely, 700 NCD''s under Series I and 5,300 NCD''s under Series II with a coupon rate of 12.25% per annum and 12.00% per annum and are due for redemption on April 2, 2015 and March 18, 2019, respectively

PERFORMANCE REVIEW

The year can be summed up as turbuLent for the sector your Company operates in. Starting with the NHAI, the principal Concession grantor for highways, falling well short of its annual target, to many of the benchmark highway projects awarded to other premier road deveLopers in the country failing to achieve financial closure or commence work owing to the inability to secure statutory clearances, the sector witnessed a fair share of downturns

Despite these trying times, your Company continues to maintain its growth story and the leading position in the Surface Transport Sector with 25 projects in its portfolio in various stages aggregating to 13,161 lane kilometers, of which 6,318 lane kilometers are under operation. All the projects that were awarded during 2009-10 are in advanced stages of construction and one of the projects achieved commercial operation 4.5 months ahead of schedule

At a sectoral level, besides the National highways, the State highways - though having tremendous potential, have not fructified into awarded Concessions in the year gone by. The year has seen the sector consolidating, with significant infrastructure assets being available in the market and a variety of buyers remaining available for acquiring these assets

On the bidding front, the sector has seen reduced competition and rationalization of bids. In fact the year gone by saw projects worth Rs. 160,000 million not attracting any bids. Thus, projects which were adjudged to be unviable by the industry players did not attract any bids. The domestic market saw lesser projects being bid out by State highway development companies

The Company has undertaken efforts in furtherance of its international initiatives and has established offices in Dubai and Nigeria through one of its subsidiary based in Singapore. The International office based out of Dubai will be responsible for pursuing international mandates. The Company is pursuing projects in UAE, Nigeria and other parts of the world. The Company is also pursuing an airport expansion project in the UAE

Elsamex S.A., a subsidiary in Spain has been awarded its first road maintenance project in UAE, which is from Abu Dhabi to Al-Ain highway, on performance based payment. Elsamex has commenced mobilization and is likely to take over the stretch from the Department of Transportation, Abu Dhabi in June 2013. This project is expected to pave the way for many more of such projects in the very attractive road operation & maintenance market that UAE has to offer

The Metro Rail project in Gurgaon is nearing completion and is scheduled to commence operations in the coming year. The Company also secured the 7 kms long Phase II of the Metro project in the region

SUBSIDIARIES

The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards 21, 23 and 27 of the Institute of Chartered Accountants of India. As required under Section 212(8) of the Companies Act, 1956, the Statement of holdings in subsidiaries and Consolidated Accounts pursuant to Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, form part of the Annual Report. In terms of the Notification dated February 8, 2011 issued by the Ministry of Corporate Affairs (MCA), amending Section 212 of the Companies Act, 1956, the Board of Directors of the Company at its Meeting held on May 7, 2013 noted the provisions of the Circular of the MCA and passed the necessary resolution granting the requisite approvals for not attaching a copy of the Balance Sheet, Profit and Loss Account and Reports etc of the subsidiaries along with the Annual Report of the Company for the financial year 2012-13. The disclosure relating to financials of the subsidiaries is included in the consolidated balance sheet. The accounts of subsidiary companies are therefore not attached with this Annual Report. However, the accounts of the subsidiaries will be made available on the website of the Company and on request, for inspection to Shareholders seeking such information, at the Registered Office of the Company

DIRECTORS

Mr. Arun K Saha, Mr. R C Sinha and Mr. H P Jamdar, Directors are liable to retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible offer themselves for re-appointment. Mr. K Ramchand and Mr. Mukund Sapre were re-appointed as Managing Director and Executive Director respectively for a period of five years effective April 1, 2013 subject to approval of the Shareholders. Your Directors recommend their re-appointment

AUDITORS

Messrs. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors, retire at the ensuing Annual General Meeting and have expressed their willingness to continue as Statutory Auditors, if re-appointed

DEPOSITS

Your Company has not accepted any Fixed Deposits during the year under review

CORPORATE GOVERNANCE

Your Company believes in adhering to good governance practices and has fully complied with the requirements/ disclosures that have to be made in this regard. A Report on Corporate Governance is enclosed and forms part of this Annual Report. A certificate from the Statutory Auditors on compliance with the provisions of Corporate Governance is also annexed to this Report

ENVIRONMENTAL AND SOCIAL POLICY FRAMEWORK

In its pursuit of following the best business practices, your Company has adopted the Environmental and Social Policy Framework (ESPF) to address the environmental and social risks associated with the business of the Company. ESPF has been founded on the concept of Sustainable Development and recognizes Environmental and Social (E&S) considerations in its business operations so as to add value and minimize any adverse impact and risks on the business. Your Company being a Pan India Developer, Operator and Facilitator of infrastructure projects, recognizes the importance of ensuring proper management of E&S risk for each of its projects. ESPF will enable the Company to identify E&S risks associated with projects prior to submission of bids and depending on the outcome of Risk Rating and its impact, the Company would be able to address the relevant E&S impact and initiate suitable mitigation measures

SAFETY

Accomplishing excellence for environmental protection, health and safety at all levels is a high priority for the Company. The Company has obtained ISO 9001:2008 certification, ISO 14001:2004 and OHSAS 18001:2007 certifications for its Environmental Health and Safety Management System. The Company carries out Safety Audits/Inspection and Safety awareness training programmes for the employees and also for the contract workmen. During the year under review, the Board has constituted a Safety Committee comprising of the Independent Directors with technical expertise in this area to look into the safety aspects for all the project sites. The Committee meets on a regular basis along with the technical team of the Company to review and recommend the steps required for improving the safety to reduce accidents

PARTICULARS OF EMPLOYEES

The information regarding particuLars of remuneration etc of certain employees required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder is given in an Annexure which forms part of this report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Director''s Report and Accounts are being sent to the SharehoLders without this Annexure. Any SharehoLder interested in obtaining this Annexure may write to the Company Secretary at the Registered Office of the Company

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(1) in the preparation of the annual accounts, the applicable accounting standards have been foLLowed aLong with proper expLanation reLating to materiaL departures

(2) they have seLected such accounting poLicies and appLied them consistentLy and made judgements and estimates that are reasonabLe and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for that period

(3) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irreguLarities

(4) they have prepared the annuaL accounts on a going concern basis

FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The foreign exchange income during the year was Rs. 182.85 million and expenditure during the year was Rs. 59.40 million

Since the Company does not have any manufacturing facility, the other particulars required to be provided in terms of the Companies (DiscLosure of ParticuLars in the Report of Board of Directors) Rules, 1988 are not applicable

ACKNOWLEDGMENTS

The Directors pLace on record their appreciation for the continued support and co-operation received from the various Government Authorities including National Highways Authority of India and other Regulatory Authorities, Banks, Financial Institutions and SharehoLders of the Company

The Directors would also like to place on record their appreciation for the contribution and dedication of the empLoyees of the Company at aLL LeveLs

By the Order of the Board

Deepak Dasgupta

Bengaluru, May 7, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Twelfth Annual Report along with the Audited Statements of Accounts for the year ended March 31, 2012

financial results

The financial results of the Company are as under:

(Rs.in million)

For the Year ended For the Year ended

March 31, 2012 March 31, 2011 Total Income 29,102.46 17,009.80

Earnings before Interest, Tax, 6,898.51 6,170.55 Depreciation and Amortization (EBITDA)

Profit Before Tax 4,136.48 4,517.39

Profit After Tax 2,522.98 2,880.36

Balance Brought Forward 4,816.35 3,014.27

Profit available for appropriation 7,339.33 5,894.63 Appropriation:

Dividend Proposed/Paid (777.07) (679.94)

Tax on Dividend (126.06) (110.30)

General Reserve (252.30) (288.04)

Balance carried forward 6,183.90 4,816.35

DIVIDEND

Your Directors have recommended payment of dividend of Rs 4 per share (Previous Year: Rs 3.50 per share) for the year under review. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs 903.13 million including tax on dividend of Rs 126.06 million (Previous Year: Rs 790.24 million including dividend tax of Rs 110.30 million)

performance review

Your Company continues to maintain its leading position in the Surface Transport Sector with 28 projects in its portfolio in various stages aggregating to around 11,859 lane kms (including around 2,621 lane kms in respect of which your Company is the lowest/preferred bidder). During the year gone by, the Company operationalised 460 lane kms under RIDCOR Phase ii projects, received provisional completion certificate for 173 lane kms of the EHEL project and added 235 lane kms to its portfolio by acquisition of 49% stake in Yuhe Expressway Company through ITNL international Pte Ltd., a wholly owned subsidiary in Singapore. As at March 31, 2012, 14 projects have been operational with an aggregate length of approximately 5,453 lane kms

FY 2012 witnessed a spurt in the award of Projects by the Government with emphasis on the PPP route. The Government, through its various instrumentalities awarded 7,957 kms in 62 Projects, which is an improvement of 54% over the previous year. This comprises of 6,491 km by NHAi (49 projects) and 1,466 kms (13 projects) by Ministry of Road Transport and Highways. The Company was awarded 2 projects by NHAI, namely, Kiratpur Ner Chowk project in the State of Himachal Pradesh and Baleshwar Kharagpur Road Project in the states of West Bengal and Orissa. in addition to these, the Company was also awarded the development and operation of Sikar - Bikaner stretch of NH 11, a project of 237.57 kms with a Project cost of Rs 6.51 billion by NH Division, PWD, Rajasthan. Also, Government of Rajasthan awarded 2 projects to RIDCOR, aggregating to 303.50 kms with a total project cost of Rs 22.89 billion

NHAI, the key highway implementation arm of the Government of India has implemented the e-tendering process for price proposals and have continued with the annual pre-qualification of bidders. This has led to a substantial reduction in the effort required for bid submission. in the annual pre-qualification process undertaken by NHAI, the Company has been qualified to bid for projects having an estimated cost of up to Rs 53,592.9 million, which enables the Company to participate in virtually all projects on its own

Your Company through ITNL international Pte Ltd, Singapore (IIPL), a wholly owned subsidiary acquired 49% equity stake in Chongqing YUHE Expressway Company Ltd, which owns a 58 km expressway connecting downtown Chongqing with Hechuan County in Chongqing, in the People's Republic of China with toll concession rights till June 2032

The Company also acquired a 61.22% equity stake in Future age infrastructure India Limited (FIIL) for developing an Automated Car Parking facility for about 440 cars, at Hyderabad in the vicinity of Charmin. Amongst the other sectors of transport in the ambit of the Company, construction on the Rail project in Gurgaon continued during the financial year. The Urban Bus Transport system in the city of Nagpur continued its slow progress

Elsamex is following up for Contracts in Abu Dhabi and Mexico and continues to have orders in Operations & Maintenance of Roads & Buildings in Spain that are at levels similar to that in the previous year. A number of other leads are being pursued and efforts are being made to stabilize the operations. Elsamex has signed a contract for Road Rehabilitation Works in Haiti for Euro 40.72 million in January 2012. This project is being funded by the European Union. The profit after tax for FY2012 stands at Euro 1.97 million

Your Company has adopted two of Elsamex's technologies viz "Micro surfacing" and "Warm Mix Asphalt Technology" which are environmental friendly and specifically designed to reduce energy consumption

Your Company closely monitors investments made in the BOT projects and continuously reviews and strengthens its systems and procedures and has obtained ISO 9001:2008 certification. During the year under review, your Company was also awarded ISO 14001:2004 and OHSAS 18001:2007 certifications for its Environmental, Health and Safety Management System

subsidiaries

The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards 21, 23 and 27 of the institute of Chartered Accountants of India. As required under Section 212(8) of the Companies Act, 1956, the Statement of holdings in subsidiaries and Consolidated Accounts pursuant to Accounting Standard (AS-21) issued by the institute of Chartered Accountants of India, form part of the Annual Report. in terms of the Notification dated February 8, 2011 issued by the Ministry of Corporate Affairs (MCA), amending Section 212 of the Companies Act, 1956, the Board of Directors of the Company at its Meeting held on May 4, 2012 noted the provisions of the Circular of the MCA and passed the necessary resolution granting the requisite approvals for not attaching a copy of the Balance Sheet, profit and Loss Account and Reports etc of the subsidiaries along with the Annual Report of the Company for the financial year 2011-12. The disclosure relating to financials of the subsidiaries is included in the consolidated balance sheet. The accounts of subsidiary companies are therefore not attached with this Annual Report. However, the accounts of the subsidiaries will be made available on the website of the Company and on request, for inspection to Shareholders seeking such information, at the Registered office of the Company

DIRECTORs

Mr. Deepak Dasgupta, Mr. Deepak Satwalekar, Mr. Vibhav Kapoor and Mr. pradeep puri, Directors are liable to retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible offer themselves for re-appointment. Your Directors recommend their re- appointment

auditors

Messrs Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors, retire at the ensuing Annual General Meeting and have expressed their willingness to continue as Statutory Auditors, if re-appointed

deposits

Your Company has not accepted any Fixed Deposits during the year under review

corporate governance

Your Company believes in adhering to good governance practices and has fully complied with the requirements/ disclosures that have to be made in this regard. A Report on Corporate Governance is enclosed and forms part of this Annual Report. A certificate from the Statutory Auditors on compliance with the provisions of Corporate Governance is also annexed to this Report

ENVIRONMENTAL AND social policy framework

in its pursuit of following the best business practices, your Company has adopted the Environmental and Social policy Framework (ESPF) to address the environmental and social risks associated with the business of the Company. ESPF has been founded on the concept of Sustainable Development and recognizes Environmental and Social (E&S) considerations in its business operations so as to add value and minimize any adverse impact and risks on the business. Your Company being a pan India Developer, operator and Facilitator of infrastructure projects, recognizes the importance of ensuring proper management of E&S risk for each of its projects. ESPF will enable the Company to identify E&S risks associated with projects prior to submission of bids and depending on the outcome of Risk Rating and its impact, the Company would be able to address the relevant E&S impact and initiate suitable mitigation measures

particulars of employees

The information regarding particulars of remuneration etc of certain employees required under Section 217(2A) of the Companies Act, 1956 and the rules made there under is given in an Annexure which forms part of this report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report and Accounts are being sent to the Shareholders without this Annexure. Any Shareholder interested in obtaining this Annexure may write to the Company Secretary at the Registered Office of the Company directors' responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures

(2) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for that period

(3) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

(4) they have prepared the annual accounts on a going concern basis

FOREIGN exchange EARNINGs AND expenditure

The foreign exchange income during the year was Rs 64.51 million and expenditure during the year was Rs 210.24 million

Since the Company does not have any manufacturing facility, the other particulars required to be provided in terms of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable

acknowledgments

The Directors place on record their appreciation for the continued support and co-operation received from the various Government Authorities including National Highways Authority of India and other Regulatory Authorities, Banks, Financial Institutions and Shareholders of the Company

The Directors would also like to place on record their appreciation for the contribution and dedication of the employees of the Company at all levels

By the Order of the Board

Deepak Dasgupta

Bengaluru, May 4, 2012 Chairman

 
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