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Notes to Accounts of KEC International Ltd.

Mar 31, 2023

Note 8.1 Brands include brand of the power transmission business amounting '' 240 crore which was acquired by the Company under the High Court approved Composite Scheme of Arrangement (the âSchemeâ) in an earlier year. In terms of the Scheme, the brand is being amortised by the Company over its useful life, which based on an expert opinion is estimated to be of 20 years. The remaining amortisation period is 2 years (as at March 31,2022 - 3 years).

Note 8.2 Non Compete fees paid on acquisition of KEC Spur Infrastructure Private Limited. (formerly known as Spur Infrastructure Private Limited) are amortized on straight line basis over the term of Non Compete agreement i.e. 3 years. The remaining amortisation period is 1 year (as at March 31, 2022 - 2 years).

Note 9.1 During the year, the Company has acquired 17,661,765 shares of USD 1 each (previous year 11,176,768 shares of USD 1 each) of KEC Investment Holding, Mauritius.

Note 9.2 This represents investment in preference shares of KEC Investment Holdings, Mauritius. These shares are compulsorily convertible into equity shares with a conversion ratio of one is to four. The issuer has the option of early conversion as well with above fixed ratio. There is no mandatory dividend payout year on year. Considering the said terms, the investment has been classified as equity.

Note 9.3 As per Article of Association of the âRP Goenka Group of Companies Employees Welfare Association (Entity)â, no portion of income or property shall be paid or transferred directly or indirectly, by way of dividend, bonus or otherwise by way of profit to members of the Entity. Any surplus upon winding up or dissolution of the Entity shall not be distributed amongst the members of the Entity but shall be given or transferred to such other companies having objects similar to the objects of this Entity, to be determined by the members of the Entity at or before the time of dissolution or in default thereof, by the High Court of Judicature that has or may acquire jurisdiction in the matter.

As, there are significant restrictions on the ability of the Entity to transfer funds to the Company in the form of cash dividends, the fair value of the Companyâs investment in the Entity is concluded to be equal to cost.

Note 9.4 a) As at March 31,2023 The Company has made impairment provision of '' 172.79 crore (previous year : '' 97.34 crore) for its investments in KEC Investment Holdings, Mauritius, due to significant losses incurred by the Companyâs step down subsidiary in Brazil i.e. SAE Towers Brasil Torres de Transmissao Ltda (a wholly owned subsidiary of SAE Towers Holdings LLC, USA). Provision for impairment of investment is recognised to the extent the recoverable value of investments is lower than the carrying value of investments. The recoverable value of investments was calculated using value in use method. The value in use is determined based on discounted cash flow projections prepared after considering significant judgments while finalizing assumptions on growth in revenues, EBITDA and discount rates. Provision for impairment of investments in subsidiary company has been presented as an Exceptional Item. (Refer note 47).

b) The Company has also made below impairment provisions for its investments in various subsidiaries. Impairment is provided due to losses incurred by these subsidiaries from its operations. Provision for impairment of investment is calculated by comparing the recoverable value of these investments (as per value in use) and the carrying value of investments. Provision for impairment of investments in subsidiary companies has been presented as an Exceptional Item. (Refer note 47). Details of impairment provision as at March 31,2023 is as follows :

i) Impairment of Investment in RPG Transmission Nigeria Limited : '' 0.17 crore (Previous year '' 0.17 crore)

ii) I mpairment of Investment in KEC Global FZ-LLC-Ras UL Khaimah, United Arab Emirates : '' Nil (Previous year '' 1.19 crore)

iii) Impairment of Investment in KEC Power India Private Limited : '' 0.50 crore (Previous year '' 0.50 crore)

iv) Impairment of Investment in KEC Global Mauritius '' 0.12 crore (Previous year '' Nil). The Company is under liquidation.

Note 9.5 The Company, on October 13, 2021, acquired 100% equity shares of KEC Spur Infrastructure Private Limited (formerly known as Spur Infrastructure Private Limited) (âSpurâ) for purchase consideration of '' 56.93 crore. Consequently, Spur became a wholly owned subsidiary of the Company from the aforesaid date.

Note 9.6 The liquidation process of KEC Global FZ, LLC has been completed and the said entity has been de-registered effective March 8, 2023. Accordingly, investment in equity instruments of the said subsidiary amounting to '' 1.19 Cr has been written off on the aforesaid date.

Note 9.7 KEC Global Mauritius undertook buyback of 348,000 shares for total consideration of '' 2.78 crore [(Refer note 9.4b(iv)]. The Company is in the process of liquidation.

Note 15.1 Transfer of financial assets

The Company has discounted trade receivables with an aggregate carrying amount of '' 177.54 crore (during the previous year ended March 31, 2022 '' 153. 19 crore) with banks for cash proceeds of ''175.47 crore during the current year (during the previous year ended March 31, 2022 is '' 151.95 crore). These arrangements are ânon-recourseâ to the Company and accordingly, the Company has derecognised these receivables as at March 31, 2023. Amount of interest charged to profit and loss with respect to the underlying debtors (purchased by bank) is '' 2.07 crore. (during the previous year ''1.24 crore).

Further the Company has discounted certain trade receivables with the banks âwith recourseâ to the Company. The carrying amount of such receivables as at March 31, 2023''68.05 crore (As at March 31, 2022''42.88 crore) are recognised as trade receivables and corresponding carrying amount of associated liabilities of '' 68.05 crore (As at March 31,2022''42.88 crore) are recognised as secured borrowings and there are restrictions on further selling and pledging of these receivables.

Note 15.2 Receivable from related party is '' 143.78 crore (As at March 31,2022''23.67 crore).

The contract assets represents amount due from customer, primarily relate to the Companyâs rights to consideration for work executed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional, that is when invoice is raised on achievement of contractual milestones. This usually occurs when the Company issues an invoice to the customer.

The contract liabilities represents amount due to customer, primarily relate to invoice raised on customer on achievement of milestones for which revenue to be recognised over the period of time. (Refer note 34)

(a) The Company has signed Memorandum of understanding (MOU) against which the Company had received sales consideration amounting to '' 9.41 crore (as at March 31,2022''9.41 crore) [Refer note 35 (a)]. However, the title and possession of the land is yet to be transferred due to pending approvals from regulatory authorities.

(b) Land situated at plot no. A03 of Raebareli plant was held for sale as on March 31, 2022. During the current year, this land has been sold for sales consideration of '' 4.15 crore and resulting profit on sale of land of '' 2.32 crore recognised in other income. (Refer note 39)

Note 23.3 The Company has only one class of Equity Shares having a face value of '' 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid- up equity share capital of the Company. The Company in its General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in its General Meeting may declare a lower dividend.

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.

(a) Term loans*From banks: Secured

(i) '' 32.87 crore (As at March 31, 2022 ''45.62 crore) External Commercial Borrowing loan secured by first and excluve

charge over construction Equipments both present and future at all projects site relating to its Transsmission, Railway and Civil business in India. Repayment terms are three equal yearly installments starting from August, 2023. Interest rate is 3M LIBOR 160 bps.

Unsecured:

'' Nil (As at March 31, 2022 ''150 crore) unsecured Term loan from Axis Bank. Repayment terms are in two equal half yearly installments September 05, 2023 and March 14, 2024. The Fixed interest rate is 6.80% p.a.

(b) From Other Parties Secured:

'' 200 crore (As at March 31,2022 '' Nil) Loan from a financial instution which is secured by security stated against Note 30.1.(i) Repayment will be on April 29, 2024 and September 24, 2024. The interest rates are in the ranges from 8.46% to 8.87% p.a.

As at March 31, 2023 and March 31,2022, the Company was in compliance with all of its debt covenants for borrowings

Note 30.1 Loans repayable on demand from banks :Secured:

(i) '' 1,023.68 crore (As at March 31,2022 ''570.89 crore) obtained from consortium of banks which are secured by first pari passu

charge on the entire current assets of the Company, both present and future (except specific export receivables financed by financial institutions and banks), second pari passu charge on fixed assets of the Companyâs manufacturing facilities situated at Jaipur, Jabalpur and Nagpur factories and further secured by first pari passu charge on flat situated at Juhu, Mumbai in favour of working capital consortium bankers. The interest rates are in the ranges from 5% to 8.70% p.a. (previous year ranges from 5 % to 9.15% p.a).

(ii) '' 13.80 crore (As at March 31, 2022 '' Nil), pertains to a jointly controlled operation at Saudi Arabia secured by irrevocable

Corporate Guarantee from the Company. The interest rates were in the ranges of 6.87% p.a to 7.25% p.a.

(iii) '' Nil (As at March 31, 2022 '' 100 crore), secured by GST receivable. The interest rates were in the ranges from 5.10%

p.a. to 5.15% p.a.

Note 30.2 Other short-term borrowings

(a) From Banks-secured

(i) '' 415.21 crore (As at March 31,2022''502.48 crore) PCFC and FCNRB loans secured by security stated in Note 30.1(a) (i) above. The interest rates are in the ranges from 3.81% to 6.22% p.a. (previous year ranges from 0.50% to 1.70% p.a.).

(ii) '' 9.17 crore (As at March 31,2022''42.88 crore) debtors bill discounting secured by assignment of certain book debt at Abu Dhabi projects. The interest rates are in the ranges from 3.30% to 7.53% p.a. (previous year interest rate ranges between 2.90% to 3.30 % p.a.).

(iii) '' 38.49 crore (As at March 31,2022 '' Nil) pertains to a jointly controlled operation at Saudi Arabia secured by irrevocable Corporate Guarantee from the Company. The interest rates were in the ranges of 6.87% p.a to 7.25% p.a.

(iv) ''15.68 crore (As at March 31,2022 '' 1.90 crore) secured by assignment of certain book debts and irrevocable Corporate Guarantee from the Company. The interest rates are in the ranges from 4.20% to 7.90% p.a. (previous year rate ranges from 4.20% to 7.90% p.a.).

(v) '' 43.55 crore - (As at March 31,2022 '' Nil) debtors bill discounting secured by assignment of certain book debt for Cable projects. The interest rates are in ranges from 8.00% to 8.55% p.a.

Unsecured:

(i) ''16.95 crore (As at March 31,2022 65.93) unsecured purchase and service bill discounting from various banks registered under Receivable Exchange of India Limited (RXIL) portal for Micro & Small Enterprises vendors. The interest rates ranges from 4.29% to 8.00 % p.a. (previous year interest rate ranges from 4.39% to 6.50 % p.a.)

(ii) '' 450 crore (As at March 31, 2022 '' Nil). The interest rates ranges from 7.00% to 8.05% p.a.

(b) From Other PartiesSecured:

(i) '' Nil (As at March 31,2022''190.80 crore) loan from a financial institution secured by security stated against Note 30.1 (i)

above. The interest rates were in the ranges from 3.05% to 5% p.a.

Unsecured:

(i) '' 296.18 crore (As at March 31, 2022''768.28 crore) being listed commercial papers which carries interest rate ranges between 7.90% p.a. to 8.20% p.a. (previous year 4.53% p.a. to 5.18% p.a.). Maturity for current year commercial paper ranges from 85 days to 90 days (Previous year maturity ranges from 90 days to 180 days).

(ii) '' 0.47 crore (As at March 31, 2022 '' Nil) being unsecured loan taken from a wholly owned subsidiary. Interest rate is 8.20% p.a.

Note 30.3 Current Maturities of Long Term BorrowingsSecured:

'' 16.44 crore (As at March 31,2022 - Nil) External Commercial Borrowing loan secured by first charge over construction Equipments

present at all projects site relating to its Transmission, Railway and Civil business in India. Repayment terms are in three equal yearly

instalments starting from August, 2023. Interest rate is 3M LIBOR 160 bps.

Unsecured:

'' 150 crore (As at March 31,2022 - Nil) Loan repayment is in Two equal installment due on September 05, 2023 and March 14, 2024.

The Fixed interest rate is 6.80% p.a.

b) (i) KEC International Limited (the Company) holds 51.10% share capital in âAl-Sharif Group and KEC Limitedâ, located in Saudi Arabia (Al Sharif JV), having a joint arrangement with the JV partner Power Line Contracting Company which hold 48.90% in Al Sharif JV. Al Sharif JV is a âSubsidiaryâ of the Company under the Companies Act, 2013. However, based on the control assessment under Ind AS, considering the nature of arrangement, Al Sharif JV has been classified as jointly controlled operation. In addition to this, Al Sharif JV is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for the execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form, and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

ii) The Company accounts for assets, liabilities, revenue and expenses relating to its interest in jointly controlled operations based on the internal agreements/ arrangements entered into between the parties to the joint arrangements for execution of projects, which in some cases are different than the ownership interest disclosed above. Accordingly, the Company has recognised its share in total income from operations ''2,280.49 crore (for the year ended March 31, 2022 ''1,346.18 crore), total expenditure (including tax) '' 2,209.20 crore (for the year ended March 31, 2022 '' 1,332.01 crore), total assets as at March 31, 2023''2,083.08 crore (as at March 31, 2022 '' 1,251.99 crore) and total liabilities as at March 31,2023 ''1,805.99 crore (as at March 31,2022 '' 1,063.23 crore) in Jointly Controlled Operations.

iii) Apart from the Joint Venture (JV) agreements disclosed above in note no. 50 (a), the Company has entered into certain Joint Venture (JV) agreements with other entities for execution of various projects. Though the legal form of all these joint arrangements is a âjoint ventureâ, these JVs are not jointly controlled by both the parties as per the requirements of âIND-AS 111 - Joint Arrangementsâ. The work is carried out by each JV partner based on the scope defined for respective parties. Accordingly, the Company has recognised revenue, expenses, assets and liabilities related to its own share of work in financial statements and respective financial statements of these JVs are not considered for the purpose of consolidation.

iv) Figures in respect of the Companyâs Jointly Controlled Operations as mentioned above, have been incorporated on the basis of financial statements audited by the auditors of the respective Jointly Controlled Operations.

NOTE 51 - REVENUE FROM CONTRACTS WITH CUSTOMERS51.1 Disaggregation of revenue from contracts with customers

The Company has determined the categories for disaggregation of revenue considering the types / nature of contracts. The Company derives revenue from the transfer of goods and services âover timeâ or âin timeâ based on an assessment of the transfer of control as per the terms of the contract in the following major product lines and geographical regions:

The Company recognised revenue amounting to '' 483.38 crore (for the year ended March 31,2022, '' 345.13 crore) in the current reporting period that was included in the Amount due to customers for contract works balance i.e. contract liabilities as of March 31,2022.

51.2 Unsatisfied performance obligations

The aggregate amount of transaction price allocated to performance obligations that are unsatisfied as at the end of reporting period March 31, 2023 is '' 27,447 crore (for the year ended March 31, 2022, '' 21,137 crore). On an average, transmission, distribution, railway and civil composite contracts have a life cycle of 2-3 years and other businesses performance obligations are met over a period of one or less than one year. Management expects that around 50% to 60% of the transaction price allocated to unsatisfied contracts as of March 31,2023 will be recognised as revenue during next reporting period depending upon the progress on each contract. The remaining amount is expected to be recognised in subsequent years, largely in year 2. The amount disclosed above does not include variable consideration.

51.3 There are no reconciliation items of revenue recognised from contracts with customers and contract price.

51.4 I n case of transmission and distribution projects, where the goods are procured from a third party, the Company makes an assessment on the impact of revenue recognition with respect to uninstalled materials. Considering the Company is significantly involved in designing and manufacturing the procured material and there is no significant time gap involved between transfer of control and installation, there is no impact on revenue recognized. There is significant judgement involved in making this assessment.

(a) Total cash outflow for leases during current financial year is '' 14.79 crore (previous year ''14.77 crore).

(b) Additions to the right of use assets during the current financial year is '' 0.21 crore (previous year ''44.92 crore).

(d) Payments associated with short-term leases of equipment, vehicles and all leases of low-value assets are recognised on straight line basis as an expense in profit or loss.

(e) Short term leases are leases with a lease of 12 months or less. There are no low value assets during the current year.

(f) When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate. The weighted average incremental borrowing rate applied is 7.23% p.a. (Previous year: 7.25% p.a.).

Note 52.1

The Company has applied the practical expedient for all qualifying rent concessions and the concessions have been accounted as variable lease payments in the period in which they are granted.

NOTE 53 - CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity. The capital structure of the Company consists of net debt (borrowings as detailed in Notes 25 and 30 offset by cash and cash equivalents in Notes 16 and 17) and total equity of the Company. The Company is not subject to any externally imposed capital requirements.The Company monitors capital using a gearing ratio, which is net debt divided by total equity.

The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

The carrying amounts of current trade receivables, current financial assets, cash and bank balances, loans, trade payables, current borrowings, current financial liabilities and current lease liabilities are considered to be approximately equal to their fair value.

III. Assets and liabilities which are measured at FVPL or FVOCI

This note provides information about how the Company determines fair values of various financial assets and financial liabilities measured at FVPL or FVOCI. Fair value of the Companyâs financial assets and financial liabilities are measured on a recurring basis at the end of each reporting period.

B Financial risk management

Sensitivity for above net exposures:

The Companyâs Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk.

54B.1 Market risk

The Company seeks to minimise the effects of currency risk and commodity price risk by using derivative and non derivative financial instruments to hedge risk exposures. The Company has Risk Management Policies to mitigate the risks in commodity prices and foreign exchange. The use of financial derivatives and non-derivatives is governed by the Companyâs policies approved by the Board of Directors (BOD), which provide written principles to use financial derivatives and non-derivative financial instruments, to hedge currency risk and commodity price risk. The Company does not enter into or trade financial instruments, including derivative financial instruments and non-derivative financial instruments, for speculative purposes.

The Treasury Department prepares and submits the report on performance along with the other details relating to forex and commodity transaction to the Risk Management Committee. The periodical forex management report and commodity risk report as reviewed and approved by the Risk Management Committee is placed before the Audit Committee for review.

The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates (see Notes 54B.1 (a) and 54B.1 (b) below) and commodity prices (see Note 54B.1 (c) below). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, interest rate risk and commodity price risk including:

- foreign currency forward contracts to hedge the exchange rate risk arising from execution of international projects.

(b) Interest rate risk management

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates. The Companyâs exposure to changes in interest rates relates primarily to the Companyâs outstanding floating rate debt. While most of the Companyâs outstanding debt in local currency is on fixed rate basis and hence not subject to interest rate risk, a major portion of foreign currency debt is linked to international interest rate benchmarks like SOFR. Companyâs rupee borrowings are linked to variability in Bank MCLR rate, repo rate and T bill rates.

- Commodity Over the Counter (OTC) derivative contracts to hedge the price risk for base metals such as Copper, Aluminium, Zinc and Lead.

Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the approved guidelines set by the Board of Directors.

(a) Foreign currency risk management

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions in various currencies. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the INR cash flows.

Interest rate sensitivity

The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for the purpose of sensitivity analysis.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs :

Profit for the year ended March 31,2023 would decrease/increase by '' 3.94 crore (for the year ended March 31,2022: decrease/ increase by '' 3.64 crore). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

The Company is exposed to movement in metal commodity prices of Copper, Aluminium, Zinc and Lead. Most of our contracts with the Indian customers are backed by a price variation for most of these metals. However, profitability in case of firm price orders is impacted by movement in the prices of these metals. The Company has a well defined hedging policy approved by Board of Directors of the Company, which to a large extent takes care of the commodity price fluctuations and minimizes the risk. For base metals like Aluminium, Copper, Zinc and Lead, the Company either places a firm order on the supplier or hedges its exposure on the London Metal Exchange (LME) directly. Refer note 54C, for further details on commodity derivative contracts

54B.2 Liquidity risk management

The Board of Directors of the Company have established an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of the financial assets and liabilities.

The following table details the Companyâs remaining contractual maturity for its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are linked to floating rate, the undiscounted amount is derived from interest rate at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The Company has used practical expedient by computing expected credit loss allowance for trade receivable and contract assets by taking into consideration payment profiles of sales over a period of 36 months before the reporting date and the corresponding historical credit loss experiences within this period for each Strategic Business Unit (SBU). The historical loss rates are adjusted to reflect current and forward looking information taking into account the macro economic factors affecting the ability of the customers to settle the receivables. The expected credit loss is based on the ageing of the days, the receivables due and the expected credit loss rate. In addition, in case of event driven situation as litigations, disputes, change in customerâs credit risk history, specific provisions are made after evaluating the relevant facts and expected recovery.

The Company has access to various fund/non-fund based bank financing facilities. The amount of unused borrowing facilities (fund and non-fund based) available for future operating activities and to settle commitments is '' 8,987.52 crore as at March 31, 2023 ('' 8,274.64 crore as at March 31,2022).

54B.3 Credit Risk Management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments. The Companyâs major customers includes government bodies and public sector undertakings. Further, many of the International projects are funded by the multilateral agencies such as World Bank, African Development Bank, Asian Development Bank, etc. For private customers, the Company evaluates the creditworthiness based on publicly available financial information and the Companyâs historical experiences. The Companyâs exposure to its counterparties are continuously reviewed and monitored by the Chief Operating Decision Maker (CODM).

Credit period varies as per the contractual terms with the customers. Company doesnât have significant financing component in the contracts with customers.

Concentration risk: As at the year ending March 31, 2023 only one customer is exceeding 10% of the Companyâs total trade receivables, which were one as at March 31,2022.

In addition the Company is exposed to credit risk in relation to financial guarantees given by the Company on behalf of its subsidiaries and jointly controlled operations (net of Companyâs share). The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (net of Companyâs share in jointly controlled operations), as at March 31,2023 is 2,227.21 crores (as at March 31,2022; '' 925.64 crore). These financial guarantees have been issued to the banks / customers on behalf of the subsidiaries and jointly controlled operations under the agreements entered into by the subsidiaries/ jointly controllled operations with the banks / customers. Based on managementâs assessment as at the end of the reporting period, the Company considers the likelihood of any claim under the guarantee is remote.

Cash and cash equivalents:

The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.

Other Bank Balances:

Other bank balances are held with bank and financial institution counterparties with good credit rating.

Derivatives:

The derivatives are entered into with bank and financial institution counterparties with good credit rating.

Other financial assets:

Other financial assets are neither past due nor impaired.

Brief description of the plans1 Defined contribution plans

(A) Superannuation

(B) Provident Fund

The Company makes contribution to respective regional provident fund commissioners in relation to the workers employed at factories located at Butibori, Jaipur, Jabalpur, Mysore and Vadodara. The Company recognises such contributions as an expense when incurred. The Company has no further obligations beyond its yearly contribution.

The Company makes contribution towards Employees State Insurance scheme operated by ESIC Corporation. The contributions payable to these plans by the Company are at rates specified in the rules of the scheme. The Company recognises such contributions as an expense when incurred. The Company has no further obligations beyond its yearly contribution.

2 Defined Benefit Plans

(A) Gratuity

(i) Company and its Jointly Controlled Operations in India

The Company & its jointly controlled operations (JCO) in India has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days / one month salary, as applicable, payable for each completed year of service or part thereof in excess of six months in terms of the Gratuity scheme of the Company/JCOs in India or as per payment of the Gratuity Act, 1972 whichever is higher. Vesting occurs upon completion of four years & 240 days of service.

(ii) Jointly Controlled operation in Saudi (Al Sharif JV)

The Jointly Controlled Operation has an obligation towards an unfunded defined benefit retirement plan i.e. End Service Benefit plan, (akin to gratuity) covering eligible employees. The benefits payable are as under:

For Service Less Than 5 years 1/2 * Service * Applicable salary

For Service more Than 5 years First Five Years: 1/2 * Service * Applicable Salary

Beyond 5 Years: Service * Applicable Salary

The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method as at March 31,2023.

(B) Provident Fund

The Company has established âKEC International Limited Provident Fundâ in respect of employees, other than factory workers, to which both the employee and the employer make contribution equal to 12% of the employeeâs basic salary respectively. The Companyâs contribution to the provident fund for all employees, are charged to the Statement of Profit and Loss. In case of any liability arising due to shortfall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company.

NOTE 61 - Figures in respect of the Companyâs overseas branches in Abu Dhabi, Afghanistan, Algeria, Bangladesh, Bhutan, Burkina Faso, Burundi, Cameroon, Egypt, Ethiopia, Georgia, Ghana, Guinea, Ivory Coast, Jordan, Kenya, Kuwait, Lebanon, Libya, Malaysia, Mali, Moldova, Morocco, Mozambique, Nepal, Nicaragua, Nigeria, Oman, Papua New Guinea, Philippines, Senegal, Sierra Leone, South Africa, Sri Lanka, Tanzania, Thailand, Togo, Tunisia, Uganda, and Zambia have been incorporated on the basis of financial statements (the Branch Returns) audited by the auditors of the respective branches.

NOTE 59 - The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to infrastructure interalia products, projects and systems and related activities for power transmission, distribution, railway, civil, cable and other EPC businesses. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) i.e. Managing Director for the purpose of resource allocation and assessing performance focuses on the Company as a whole. The CODM reviews the Companyâs performance on the analysis of profit before tax at an overall entity level. Accordingly, there is no other separate reportable segment as defined by Ind AS 108. âSegment Reportingâ. As the Company also prepares the consolidated financial statements (CFS), other relevant segment information is disclosed in the CFS.

NOTE 62 - During previous year ended March 31, 2022, the Company had recorded a charge of '' 43.64 crore net of provision towards write-off of its receivables, consequent to the order of the Supreme Court of South Africa, dated October 6, 2021, in a case with a customer in South Africa.

NOTE 63 - The Company has issued unsecured Commercial Papers from time to time. These Commercial Papers are having a Credit Rating of CRISIL A1 and IND A1 and are Listed on BSE Limited. During the year ended March 31,2023, the Company has repaid interest and principal of all Commercial Papers on their respective due dates. Refer note 30.2.

NOTE 64 -

(a) The Company is executing a few projects in Afghanistan, which are currently on hold due to force majeure event. The Company is closely monitoring the situation and expects to resume work once the geopolitical environment in Afghanistan is resolved. The Company does not expect any material financial impact due to this event as the projects are funded by international funding agencies (Asian Development Bank, USAID and World Bank). As at March 31,2023, the Company has a net exposure of '' 252 crore (translated at period end exchange rate) including Afghanistan branch exposure of '' 79.20 crore, after netting off advances, liabilities (including contract liabilities) and proposed settlement with a funding agency. The Company is in regular discussions with its customer and the funding agencies to release payments against the outstanding receivables, which has been responded positively by them. Further, the bank guarantees issued for the projects in view of the ongoing force majeure are not being renewed beyond their existing validity date(s) except bank guarantees in respect of one project which has been renewed pursuant to the direction of the Honâble Bombay High Court. In respect of all projects under execution, the Honâble Bombay High Court has injuncted the banks and the customer from invoking, making or receiving payment under the bank guarantees.

(b) The following note has been included in the financial statement of Afghanistan branch, which is reproduced as under:

âThe KEC International Ltd- Afghanistan Branch (the âCompanyâ) is executing few projects in Afghanistan. These projects are currently on hold due to force majeure event. The Company is closely monitoring the situation and expects to resume work once the geopolitical environment in Afghanistan is resolved. These Projects are funded by international funding agencies such as Asian Development Bank, USAID, and World Bank. Therefore, the Company does not expect any material financial impact.

The Company has a net exposure of USD 90,87,881 (equivalent to INR.79.20 crores) after netting off advances, liabilities (including contract liabilities) and insurance cover as at Mar 31,2023. The Company is in regular discussion with the funding agencies and the customers for releasing payment against the outstanding receivables, which has been responded positively by them. Further, the bank guarantees issued for the aforesaid ongoing projects are currently not enforceable due to force majeure event.â

NOTE 66 - The Auditors of Branches located in Sri Lanka, South Africa and a jointly controlled operation at South Africa have given an Emphasis of matter paragraph, in relation to going concern assumption used for preparation of financial statements. Basis Companyâs assessment, the Company can adequately source the funding required at the mentioned branches and the Jointly Controlled Operation.

NOTE 67 - During the previous year ended March 31, 2022, the Company had received '' 0.50 crore towards government grant from Government of Rajasthan for setting up an Oxygen plant under Special package for Medical oxygen. The Company has amortised the grant based on useful life of the plant and recognised income for current year of '' 0.02 crore under other income (Refer note 39). The balance amount of grant is shown as âDeferred Grantâ in non-current liability '' 0.45 crores (Refer note 29) and other current liability of '' 0.02 crore (Refer note 35). The Company doesnât have any unfulfilled conditions and other contingencies attached to the same.

NOTE 68 - DETAILS OF BENAMI PROPERTY HELD:

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

NOTE 69 - WILFUL DEFAULTER:

The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

forming part of the Financial Statements as at and for the year ended March 31, 2023 NOTE 71 - DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY:

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

NOTE 72 - COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

NOTE 73 - UNDISCLOSED INCOME:

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

NOTE 74 - VALUATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSET:

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

NOTE 75 - REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES:

There are certain charges which are historic in nature, and it involves practical challenges in obtaining no-objection certificates (NOCs) and/or getting requisite formalities completed towards charge satisfaction from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of getting the charge satisfaction e-form filed and processed with MCA, within the timelines, as and when it receives NOCs/confirmation from the respective charge holders.

NOTE 76 - UTILISATION OF BORROWINGS AVAILED FROM BANKS AND FINANCIAL INSTITUTIONS:

The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.

NOTE 77 - The Company has approved its financial statements in its board meeting dated May 03, 2023.

Signatures to Notes 1 to 77 which form an integral part of financial statements.

Mar 31, 2022

Note 8.1 Brands include brand of the power transmission business amounting '' 240 crore which was acquired by the Company under the High Court approved Composite Scheme of Arrangement (the âSchemeâ) in an earlier year. In terms of the Scheme, the brand is being amortised by the Company over its useful life, which based on an expert opinion is estimated to be of 20 years. The carrying amount of the brand as on March 31,2022''36 crore (as at March 31,2021''48 crore) and the remaining amortisation period is 3 years (as at March 31,2021 - 4 years).

Note 8.2 Non compete fees paid on acquisition of KEC Spur Infrastructure Private Limited (formerly known as Spur Infrastructure Private Limited) are amortized on straight line basis over the term of non compete agreement i.e. 3 years.

Note 9.1 During the year, Company has acquired 2,30,000 shares, 20,32,591 shares, 35,08,772 shares and 54,05,405 shares (previous year 32,25,806) of USD 1 each at a premium of USD 1.29, 1.47, 1.85 and 0.85 respectively (previous year USD 0.55) per share of KEC Investment Holding, Mauritius. During previous year, the Company has converted loan given to its Subsidiary into equity 1,979,592 shares of USD 1 each at a premium of USD 1.45 per share of KEC Investment Holding, Mauritius.

Note 9.3 During the year, Company had acquired 28,735 shares of AED 100 each at a premium of AED 74 per share of KEC Tower LLC, Dubai. During the previous year, the Company has converted loan given to its Subsidiary into Equity 6,00,000 shares at AED 100 each of KEC Tower LLC, Dubai.

Note 9.4 As per Article of Association of the âRP Goenka Group of Companies Employees Welfare Association (Entity)â, no portion of income or property shall be paid or transferred directly or indirectly, by way of dividend, bonus or otherwise by way of profit to members of the Entity. Any surplus upon winding up or dissolution of the Entity shall not be distributed amongst the members of the Entity but shall be given or transferred to such other Companies having objects similar to the objects of this Entity, to be determined by the members of the Entity at or before the time of dissolution or in default thereof, by the High Court of Judicature that has or may acquire jurisdiction in the matter.

As, there are significant restrictions on the ability of the Company to transfer funds to the RP Goenka Group of Companies in the form of cash dividends, the fair value of the RP Goenka Group of Companies interest in the Company is concluded to be equal to cost.

Note 9.5 a) The Company has made impairment provision of '' 97.34 crore (previous year: '' Nil) for its investments in KEC Investment Holdings, Mauritius, due to significant losses incurred by the Companyâs step down subsidiary in Brazil i.e. SAE Towers Brazil Torres de Transmissao Ltda (a wholly owned subsidiary of SAE Towers Holdings LLC, USA). Provision for impairment of investment is recognised to the extent recoverable value of investments is lower than the carrying value of investments. The recoverable value of investments was calculated using value in use method. The value in use is determined based on discounted cash flow projections prepared after considering significant judgments while finalizing assumptions on growth in revenues, EBITDA and discount rates. Provision for impairment of investments in subsidiary company has been presented as an Exceptional Item. (Refer Note. 47).

b) During the current year, the Company has also made below impairment provisions for its investments in various subsidiaries. Impairment is provided due to losses incurred by these subsidiaries from its operations. Provision for impairment of investment is calculated by comparing the networth of the company and the carrying value of investments. Provision for impairment of investments in subsidiary company has been presented as an Exceptional Item. (Refer Note. 47).

Details of impairment provision is as follows:

i) Impairment of Investment in RPG Transmission Nigeria Limited '' 0.17 crores (Previous year Nil)

ii) Impairment of Investment in KEC Global FZ-LLC-Ras UL Khaimah, United Arab Emirates '' 1.19 crores (Previous year Nil)

iii) Impairment of Investment in KEC Power India Private Limited '' 0.50 crores (Previous year Nil)

Note 9.6 The Company, on October 13, 2021, acquired 100% equity shares of KEC Spur Infrastructure Private Limited (formerly known as Spur Infrastructure Private Limited) (âSpurâ) for purchase consideration of '' 56.93 crore. Consequently, Spur became wholly owned subsidiary of the Company from the aforesaid date.

# Includes '' 12.27 crore (As at March 31, 2021''12.27 crore) towards adjustment on account of fair value of financial guarantees issued to subsidiaries and step down subsidiaries, as applicable.

Note 9.8 Other than the information disclosed in Note 9.7, the Company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall :

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall :

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

During the current year, the Company has discounted trade receivables with an aggregate carrying amount of '' 153.19 crore with banks for cash proceeds of '' 151.95 crore. These arrangements are ânon-recourseâ to the Company and accordingly, the Company has derecognised these receivables as at March 31,2022. Amount of interest charged to profit and loss with respect to the underlying debtors (purchased by bank) is '' 1.24 crore.

Note 18.1: The Company has provided short term loans to wholly owned subsidiaries for the purpose of providing working capital and other business requirements. These loans are given at rates comparable to the average commercial rate of interest.

Note 18.2: Loans to Jointly Controlled Operations have been provided by the Company to meet the short term working capital requirements for execution of projects by the Jointly controlled operations.

(a) The Company has signed Memorandum of understanding (MOU) against which the Company had received sales consideration amounting to '' 9.41 crore (as at March 31, 2021 '' 9.41 crore) [Refer Note 35 (a)]. However, the title and possession of the land is yet to be transferred due to pending approvals from regulatory authorities.

(b) Land situated at plot no. A03 of Raebareli plant was held for sale. The Company is looking for potential buyer and negotiations are in advanced stage with few buyers. The Company is planning to conclude the deal in next financial year.

3,750 fully paid up Equity Shares of '' 2 each were allotted to a trustee against 1,688 equity shares of the erstwhile RPG Transmission Limited (RPGT), since merged in the Company in 2007-08, where rights were kept in abeyance by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

Note 23.4

The Company has only one class of Equity Shares having a face value of '' 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid- up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

Note (a) Capital reserve was created on account of merger of RPG Cables Limited (RPGCL) with the Company pursuant to the Scheme of Amalgamation in the financial year 2009- ¹⁰

2010.

Note (b) Securities premium is used to record the premium on issue of shares. The reserve utilized in accordance with the provisions of the Companies Act, 2013.

Note (c) Capital redemption reserve was created for redemption of preference shares. The preference shares were redeemed in the financial years 2007-08 and 2008-09.

Note (d) Debentures redemption reserve was created towards redemption of debentures. Accumulated amount was transferred to General reserves on account of repurchase of all outstanding debentures.

Note (e) General reserve is created from time to time by way of transfer of profits from retained earnings. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

Note (f) Statutory reserve pertains to the Jointly Controlled Operation at Saudi Arabia. In accordance with the Saudi Arabian Companies law and the Articles of Association, 10 % of the annual net income is required to be transferred to the Statutory Reserve until the reserve reaches 50 % of the capital of the Jointly Controlled Operation.

Note (g) Retained earnings represents accumulated profit as on reporting date. The reserve can be utilised in accordance with the provision of the Companies Act, 2013.

Note (h) The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges, as described in accounting policy Note 3.21

Note (i) Foreign currency translation reserve pertains to exchange difference arising on translation of the foreign operation are recognised in other comprehensive income as described in accounting policy Note 3.7 and accumulated in a separate reserve within equity. The cumulative amount reclassified to profit or loss when the net investment is disposed-off.

Note (j) Reserve for remeasurement of defined benefit obligations represents the effects of remeasurement of defined benefit obligations on account of actuarial gains and losses.

Secured :

'' 45.62 crore (As at March 31,2021 '' 21.94 crore) External Commercial Borrowing loan from State Bank of India the loan is secured by first charge over construction Equipments present at all projects site relating to its Transsmission, Railway and Civil bussiness in India. Repayment terms is three equal yearly instalments starting from August, 2025. Interest rates ranges from 1.71900% to 2.06386% p.a. (previous year 1.77550% to 1.85613% p.a.)

Unsecured :

'' 150 crore (As at March 31, 2021 '' 150 crore) unsecured Term loan from Axis Bank. Repayment terms is two equal half yearly instalments starting from September, 2023. The Fixed interest rate is 6.80% p.a.

As at March 31,2022 and March 31, 2021, the Company was in compliance with all of its debt covenants for borrowings.

Secured:

(i) '' 570.89 crore (As at March 31,2021 '' 12.28 crore) secured by first charge on the entire current assets of the Company, both present and future (except specific export receivables financed by financial institutions and banks), second charge on fixed assets of the Companyâs manufacturing facilities situated at Jaipur, Jabalpur and Nagpur factories and further secured by first charge on flat situated at Juhu, Mumbai in favour of working capital consortium bankers. The interest rates are in the ranges from 5% to 9.15% p.a. (previous year ranges from 5% to 9.15% p.a)

(ii) '' 1.90 crore (As at March 31, 2021 '' 1.85 crore) secured by assignment of certain book debts and irrevocable Corporate Guarantee from the Company. The interest rates are in the ranges from 4.20% to 7.90% p.a. (previous year rate ranges from 4.20% to 7.90% p.a.).

(iii) Nil (As at March 31, 2021 '' 12.80 crore), pertains to a jointly controlled operation at Saudi Arabia secured by assignment of certain book debt and irrevocable Corporate Guarantee from the Company. The interest rates were in the ranges of 3.50% p.a to 4.50% p.a.

(iv) '' 100 crore (As at March 31,2021 '' NIL), secured by GST receivable. The interest rates are in the ranges from 5.10% p.a. to 5.15% p.a.

Unsecured:

i) Nil (As at March 31,2021 '' 100 crore) Unsecured loan from Bank of India. The interest rate was 6.60% p.a.

Note 30.2 Other short-term borrowings

(a) From Banks-secured

(i) '' 502.48 crore (As at March 31, 2021 '' 698.50 crore) secured by security stated against Note 30.1 (i) above. The interest

rates are in the ranges from 0.50% to 1.70% p.a. (previous year ranges from 0.50% to 3.50% p.a.)

(iii) '' 42.88 crore (As at March 31,2021 '' 67.77 crore) loan secured by assignment of certain book debt at Abu Dhabi projects. The interest rates are in the ranges from 2.90% to 3.30% p.a. (previous year interest rate ranges between 2.95% to 3.20 % p.a)

Unsecured:

(i) '' 65.93 crore (As at March 31, 2021 Nil) unsecured purchase and service bill discouting from various banks registered

under Receivable Exchange of India Limited (RXIL) portal for Micro and Small Enterprises vendors. The interest rates ranges from 4.39% to 6.50% p.a.

(b) From Other PartiesSecured:

(i) '' 190.80 crore (As at March 31,2021 '' 208.35 crore) secured by security stated against Note 30.1(i) above. The interest rates are in the ranges from 3.05% to 3.75% p.a. (previous year ranges from 3.50% to 3.75% p.a.) (maturity are in ranges from 90 days to 180 days).

Unsecured:

(ii) '' 768.28 crore (As at March 31, 2021 '' 497.57 crore) being listed commercial papers which carries interest rate ranges between 4.53% p.a. to 5.18% p.a. (previous year 4.50% p.a. to 5.05% p.a.) (maturity ranges from 90 days to 180 days).

Note 30.3 The Company has borrowings from banks and financial institutions on the basis of security of current assets. The

quarterly returns or statements of current assets filed by the Company with banks and financial institutions are in agreement with the

books of accounts during current and previous years.

Note 46.1: Miscellaneous expenses shown above include fees of '' 1.92 crore (Previous year '' 1.98 crore) paid to branch auditors, fees of '' 0.40 crore for auditors of jointly controlled operations (Previous year '' 0.29 crore) and fees of '' 0.07 crore (Previous year '' 0.07 crore) paid to the cost auditors.

Note 46.2: Net gain on foreign currency transactions includes gain on derivative instruments '' 17.23 crore (Previous year gain '' 1.20 crore)

In addition to this, Al Sharif JV is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for the execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

ii) The Company account for assets, liabilities, revenue and expenses relating to its interest in jointly controlled operations based on the internal agreements/ arrangements entered into between the parties to the joint arrangements for execution of projects, which in some cases are different than the ownership interest disclosed above.

Accordingly, the Company has recognised its share in total income from operations '' 1,346.18 crore (for the year ended March 31,2021 '' 1,129.84 crore), total expenditure (including tax) '' 1,332.01 crore (for the year ended March 31,2021 '' 1,103.17 crore), total assets as at March 31,2022''1,251.99 crore (as at March 31,2021 '' 987.25 crore) and total liabilities as at March 31,2022 '' 1,063.23 crore (as at March 31,2021 '' 821.78 crore) in Jointly Controlled Operations.

iii) The Company has entered into certain Joint Venture (JV) agreements with other entities for execution of various projects. Though the legal form of all these joint arrangements is a âjoint ventureâ, these JVs are not jointly controlled by both the parties as per the requirements of âIND-AS 111 - Joint Arrangementsâ. The work is carried out by each JV partner based on the scope defined for respective parties. Accordingly, the Company has recognised revenue, expenses, assets and liabilities related to its own share of work in financials and respective financials of these JVs are not considered for the purpose of consolidation.

The remaining amount is expected to be recognised in subsequent years, with largely in year 2.

The amount disclosed above does not include variable consideration.

51.3 There are no reconciliation items of revenue recognised from contracts with customers and contract price.

51.4 In case of transmission and distribution projects, where the goods are procured from a third party, the Company makes an assessment on the impact of revenue recognition with respect to uninstalled materials. Considering the Company is significantly involved in designing and manufacturing the procured material and there is no significant time gap involved between transfer of control and installation, there is no impact on revenue recognized. There is significant judgement involved in making this assessment.

The Company recognised revenue amounting to '' 345.13 crore (for the year ended March 31, 2021, '' 317.48 crore) in the current reporting period that was included in the Amount due to customers for contract work balance as of March 31, 2021.

51.2 Unsatisfied performance obligations

The aggregate amount of transaction price allocated to performance obligations that are unsatisfied as at the end of reporting period March 31, 2022 is '' 21,137 crore (for the year ended March 31, 2021 '' 17,685 crore). On an average, transmission, distribution, railway and civil composite contracts have a life cycle of 2-3 years and other businesses performance obligations are met over a period of one or less than one year. Management expects that around 50% to 60% of the transaction price allocated to unsatisfied contracts as of March 31, 2022 will be recognised as revenue during next reporting period depending upon the progress on each contract.

a. Total cash outflow for leases during current financial year is '' 14.77 crore (Previous year '' 14.34 crore)

b. Additions to the right-of-use assets during the current financial year is '' 44.92 crore (Previous year '' 4.74 crore)

c. There are no sale and leaseback transactions.

d. Payments associated with short-term leases of equipment, vehicles and all leases of low-value assets are recognised on straight line basis as an expense in profit or loss.

e. Short term leases are leases with a lease of 12 months or less. There are no low value assets during the current year.

f. When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate. The weighted average incremental borrowing rate applied is 7.25% (Previous year: 8.75%)

Note 52.1

The Company has applied the practical expedient for all qualifying rent concessions and the concessions have been accounted as variable lease payments in the period in which they are granted.

53.3 Financial risk management objectives

NOTE 53 - FINANCIAL INSTRUMENTS 53.1 Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity.

The capital structure of the Company consists of net debt (borrowings as detailed in Notes 25 and 30 offset by cash and bank balances in Notes 16 and 17) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital.

The Company seeks to minimise the effects of currency risk and commodity price risk by using derivative and non derivative financial instruments to hedge risk exposures. The Company has Risk Management Policies to mitigate the risks in commodity and foreign exchange. The use of financial derivatives and non-derivatives is governed by the Companyâs policies approved by the Board of Directors (BOD), which provide written principles to use financial derivatives and non-derivative financial instruments, to hedge currency risk and commodity price risk. The Company does not enter into or trade financial instruments, including derivative financial instruments and non-derivative financial instruments, for speculative purposes.

53.4 Market risk

The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates (see Notes 53.5 and 53.10 below) and commodity price (see Note 53.8 below). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, interest rate risk and commodity price risk including:

- foreign currency forward contracts to hedge the exchange rate risk arising from execution of international projects.

- Commodity Over the Counter (OTC) derivative contracts to hedge the price risk for base metals such as Copper, Aluminium, Zinc and Lead.

Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the approved guidelines set by the Board of Directors.

53.5 Foreign currency risk management

53.6 Sensitivity for above exposures:

5% appreciation / depreciation in the functional currency of the Company, with respect to foreign currency, will have following impact on profit / (loss) before tax and equity [gains / (losses)]:

53.7 Forward exchange contracts

The Company has adopted a Risk Management Policy approved by the Board of Directors of the Company for managing foreign currency exposure. The policy enumerates the mechanism for Risk Identification, Risk Measurement and Risk Monitoring. The policy has approved a set of financial instruments for hedging foreign currency risk. The Company mainly uses forward contracts to manage the foreign currency risk.

For the year ended March 31,2022, the aggregate amount of realised gain under foreign currency forward contracts recognised in the Statement of Profit and Loss is '' 60.07 crore (for the year ended March 31,2021: '' 11.96 crore).

In respect of the Companyâs foreign currency forward contract (buy), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate loss/(gain) of ('' 2.99 crore) / '' 6.51 crore and loss of '' 1.58 crore / '' 4.59 crore for the year ended March 31,2022 and the year ended March 31,2021 respectively, in the Companyâs Statement of Profit and Loss.

In respect of the Companyâs foreign currency forward contract (sell), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate (loss) / gain of ('' 47.89 crore) / '' 77.07 crore and (loss) /gain of ('' 51.48 core) / '' 59.70 crore for the year ended March 31,2022 and the year ended March 31,2021 respectively, in the Companyâs Statement of Profit and Loss.

In respect of the Companyâs foreign currency forward contract (Buy), a 5% appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate (loss) / gain of '' 3.45 crore / ('' 2.74 crore) for the year ended March 31,2022 in the Companyâs Statement of Other Comprehensive Income.

In respect of the Companyâs foreign currency forward contract (sell), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate (loss) / gain of ('' 8.40 crore) / '' 17.53 crore and (loss) /gain of ('' 1.71 crore) / '' 24.96 crore for the year ended March 31,2022 and for the year ended March 31,2021, in the Companyâs Statement of Other Comprehensive Income.

53.8 Commodity price risk

Concentration risk: As at the year ending March 31, 2022, only one customer is exceeding 10% of the Companyâs total trade receivables, which were two as at March 31, 2021.

In addition the Company is exposed to credit risk in relation to financial guarantees given by the Company on behalf of its subsidiaries and jointly controlled operations (net of Companyâs share). The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (net of Companyâs share in jointly controlled operations), as at March 31,2022 is '' 925.64 crore (as at March 31,2021; '' 225.95 crore). These financial guarantees have been issued to the banks / customers on behalf of the subsidiaries and jointly controlled operations under the agreements entered into by the subsidiaries/ jointly controlled operations with the banks / customers. Based on managementâs assessment as at the end of the reporting period, the Company considers the likelihood of any claim under the guarantee is remote.

Cash and cash equivalents:

As at the year end, the Company held cash and cash equivalents of '' 156.50 crore (March 31, 2021 '' 133.06 crore). The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.

Other Bank Balances:

Other bank balances are held with bank and financial institution counterparties with good credit rating.

Derivatives:

The derivatives are entered into with bank and financial institution counterparties with good credit rating.

Other financial assets:

Other financial assets are neither past due nor impaired.

53.10 Interest rate risk management

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates.

53.9 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments. The Companyâs major customers include government bodies and public sector undertakings. Further, many of the International projects are funded by the multilateral agencies such as World Bank, African Development Bank, Asian Development Bank, etc. For private customers, the Company evaluates the creditworthiness based on publicly available financial information and the Companyâs historical experiences. The Companyâs exposure to its counterparties are continuously reviewed and monitored by the Chief Operating Decision Maker (CODM).

Credit period varies as per the contractual terms with the customers.

The Company has used practical expedient by computing expected credit loss allowance for trade receivable by taking into consideration payment profiles of sales over a period of 36 months before the reporting date and the corresponding historical credit loss experiences within this period. The historical loss rates are adjusted to reflect current and forward looking information on macro economic factors affecting the ability of the customers to settle the receivables. The expected credit loss is based on the ageing of the days, the receivables due and the expected credit loss rate. In addition, in case of event driven situation as litigations, disputes, change in customerâs credit risk history, specific provisions are made after evaluating the relevant facts and expected recovery.

53.11 Interest rate sensitivity

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs :

Profit for the year ended March 31,2022 would decrease/increase by '' 14.45 Crore (for the year ended March 31,2021: decrease/ increase by '' 11.74 Crore). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

During the year, the Companyâs sensitivity in interest rate has increased due to increase in variable debt instruments compared to last year.

53.12 Liquidity risk management

The following table details the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are linked to floating rate, the undiscounted amount is derived from interest rate at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The Company has access to various fund/non-fund based bank financing facilities. The amount of unused borrowing facilities (fund and non-fund based) available for future operating activities and to settle commitments is '' 8,274.64 crore as at March 31, 2022 ('' 8,387.62 crore as at March 31,2021).

53.13 Fair value measurements

This note provides information about how the Company determines fair values of various financial assets and financial liabilities. Fair value of the Companyâs financial assets and financial liabilities are measured on a recurring basis.

Some of the Companyâs financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).

NOTE 55 - EMPLOYEE BENEFIT PLANS Brief description of the plans1 Defined contribution plans

(A) Superannuation

(B) Provident Fund

2 Defined Benefit Plans (A) Gratuity

(i) Company & itâs Jointly Controlled Operations

The Company & itâs jointly controlled operations in India (i.e. CCECC-KEC JV & Longjian-KEC JV) has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days / one month salary, as applicable, payable for each completed year of service or part thereof in excess of six months in terms of Gratuity scheme of the Company or as per payment of the Gratuity Act, whichever is higher. Vesting occurs upon completion of five years of service.

The Company has set up an income tax approved trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan. The Company makes contribution to the plan. There are no minimum funding requirement for the plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Besides this, if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

In respect of the plan in India [the Company and itâs jointly controlled operations in India (i.e. CCECC-KEC JV & Longjian-KEC JV)] and jointly controlled operation in Saudi, the most recent actuarial valuation of the present value of the defined benefit obligation were carried out as at March 31,2022 by an actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(B) Provident Fund

Sensitivity analysis method

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years and same data, method and assumptions have been used in preparing the sensitivity analysis which are used to determine period end defined benefit obligation.

(B) Provident Fund

The Company has established âKEC International Limited Provident Fundâ in respect of employees other than factory workers to which both the employee and the employer make contribution equal to 12% of the employeeâs basic salary respectively. The Companyâs contribution to the provident fund for all employees, are charged to the Statement of Profit and Loss. In case of any liability arising due to shortfall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. In accordance with the recent actuarial valuation, there is no deficiency in the interest cost as the present value of expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest.

NOTE 61 - Figures in respect of the Companyâs overseas branches in Abu Dhabi, Afghanistan, Algeria, Bangladesh, Bhutan, Burkina Faso, Burundi, Congo, Cameroon, Egypt, Ethiopia, Georgia, Ghana, Guinea, Indonesia, Ivory Coast, Jordan, Kenya, Kuwait, Kazakhstan, Laos, Lebanon, Libya, Malaysia, Mali, Moldova, Morocco, Mozambique, Nepal, Nicaragua, Nigeria, Oman, Papua New Guinea, Philippines, Senegal, Sierra Leone, South Africa, Sri Lanka, Tanzania, Thailand, Togo, Tunisia, Uganda, and Zambia have been incorporated on the basis of financial statements (the Branch Returns) audited by the auditors of the respective branches.

NOTE 62 - The Board of Directors of the Company at its meeting held on May 03, 2022 have recommended a Dividend of '' 4/- per equity share of '' 2/- each for the year ended March 31,2022, subject to approval of the shareholders.

NOTE 63 - During the quarter ended September 30, 2021, the Company has recorded a charge of '' 43.64 crore, net of provision towards write-off of its receivables, consequent to the order of the Supreme Court of South Africa, dated October 6, 2021, in a case with a customer in South Africa.

NOTE 64 - The Company has issued unsecured Commercial Papers from time to time. These Commercial Papers are having a Credit Rating of CRISIL A1 and IND A1 and are Listed on BSE Limited. During the year ended March 31,2022, the Company has repaid interest and principal of all Commercial Papers on their respective due dates.

NOTE 65 - Based on the assessment performed by the Company and considering the strong order book and available liquidity, the Company believes that the impact of Covid-19 is not material. Accordingly, the pandemic is not likely to have a significant impact on the Companyâs future operations, its profitability and recoverability of the carrying value of its assets, as at March 31,2022 and on its control environment. The Company will continue to closely monitor material changes to future economic conditions, if any, as and when they arise.

NOTE 66 - The Company is executing few projects in Afghanistan, which are currently on hold due to force majeure event. The Company is closely monitoring the situation and expects to resume work once the geopolitical environment in Afghanistan is resolved. The Company does not expect any material financial impact due to this event as the projects are funded by international funding agencies (Asian Development Bank, USAID and World Bank). The Company has a net exposure of '' 233 crore after netting off advances, liabilities (including contract liabilities) and insurance cover as of March 31,2022. The Company is in regular discussions with its customer and the funding agencies to release payments against the outstanding receivables, which has been responded positively by them. Further, the bank guarantees issued for the aforesaid ongoing projects are currently not enforceable due to force majeure event.

NOTE 68 - The Auditors of Branches located in Sri Lanka, South Africa and a jointly controlled operation at South Africa have given an Emphasis of matter paragraph, in relation to going concern assumption used for preparation of financial statements. Basis Companyâs assessment, Company can adequately source the funding required at the mentioned branches and jointly controlled operations.

NOTE 69 - (i) During the year, the Company has received '' 0.50 crores towards government grant from Government of Rajasthan for setting up of Oxygen plant under Special package for Medical oxygen. The Company has amortised the grant based on useful life of the plant and recognised income for current year of '' 0.01 crore under other income (Refer Note No. 39).The balance amount of grant is shown as âDeferred Grantâ in non-current liability '' 0.47 crores (Refer Note 29) and other current liability of '' 0.02 crore (Refer Note 35). The company doesnât have any unfulfilled conditions and other contingencies attaching to same.

(ii) The Company had imported capital assets worth '' 1.76 crore during the previous year under EPCG license against which revenue of '' 0.15 crores (Refer Note 39) was deferred since conditions and other contingencies attached to the same were not fulfilled in the previous year. During the current year the said income is recognised since all conditions related to the license are fulfilled.

NOTE 70 - DETAILS OF BENAMI PROPERTY HELD:

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

NOTE 71 - WILFUL DEFAULTER:

The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority. NOTE 72 - RELATIONSHIP WITH STRUCK OFF COMPANIES:

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

NOTE 73 - DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY:

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

NOTE 74 - COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

NOTE 75 - UNDISCLOSED INCOME:

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

NOTE 76 - VALUATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSET:

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

NOTE 77 - REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES:

There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period except the charges pertaining to erstwhile Jay Railways Projects Private Limited (merged with the Company) in favour of Dena Bank (now Bank of Baroda) amounting to '' 6.25 crore and that of erstwhile National Information Technologies Limited (merged with the Company) in favour of State Bank of India, amounting to '' 0.07 crore. Both these charges have remained unsatisfied in the record of the Registrar of Companies on account of delay in receipt of no dues certificates from respective banks, though there are no outstanding to these banks on account of the above mentioned amounts.

NOTE 78 - UTILISATION OF BORROWINGS AVAILED FROM BANKS AND FINANCIAL INSTITUTIONS:

The borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were taken.

NOTE 79 - The Company has implemented the decision given in the Supreme Court Judgement in case of âVivekananda Vidyamandir and Others Vs The Regional Provident Fund Commissioner (II) West Bengalâ and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employeesâ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to provident fund under the Employeesâ Provident Funds & Miscellaneous Provisions Act, 1952 w.e.f. April 01,2019. Basis the assessment of the management, which is supported by legal advice, the aforesaid matter is not likely to have significant impact in respect of earlier periods.

NOTE 80 - The Company has approved its financial statements in its board meeting dated May 03, 2022.

Signatures to Notes 1 to 80 which form an integral part of financial statements.

Mar 31, 2019

1. GENERAL INFORMATION

KEC International Limited (âthe Companyâ) is a public limited company incorporated and domiciled in India. The registered office of the Company is located at RPG House, 463, Dr. Annie Besant Road, Worli, Mumbai- 400 030.

2. STANDARDS ISSUED BUT NOT YET EFFECTIVE

2.1 In March 2019, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Second Amendment Rules, 2019, notifying Ind AS 116, âLeasesâ. This will replace Ind AS 17, Leases. Ind AS 116 sets out the principles of recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases on their balance sheet. The standard includes two recognition exemptions for lessees - leases of âlow-valueâ assets and âshort-termâ leases. At the commencement date of a lease, lessees are required to recognise a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-to-use asset.

The new standard is mandatory for financial years commencing on or after April 01, 2019. The standard permits either full retrospective or a modified retrospective approach for the adoption. The Company plans to adopt Ind AS 116 using modified retrospective approach.

The Company is in the process of identifying and implementing changes to processes to meet the standardâs updated reporting and disclosure requirements, as well as evaluating the internal control changes required, if any, during the implementation and continued application of new standard. The Company will elect to use the exemptions proposed by the standard on lease contracts for which the lease terms ends within 12 months as on the date of initial application, and lease contracts for which the underlying asset is of low value.

New standards adopted by the Company:

The Company has applied the following standards and amendments for the first time for the annual reporting period commencing April 01, 2018:

- Ind AS 115, Revenue from Contracts with Customers

- Appendix B, Foreign Currency Transactions and Advances Consideration to Ind AS 21, The Effects of Changes in Foreign Exchange Rates

- Amendment to Ind AS 40, Investment Property

- Amendment to Ind AS 12, Income Taxes

Amendments listed above did not have any material impact on the current period and are not expected to significantly affect the future period.

Note 3.1

^AThe title deeds of freehold land and buildings, having gross carrying amount aggregating Rs. 26.35 crore (as at March 31, 2018 Rs. 26.35 crore) and net carrying amount aggregating Rs. 25.74 crore (as at March 31,2018 Rs. 25.78 crore) have been transferred to and vested in the Company, pursuant to the Schemes of Amalgamation/Arrangement in earlier years and the procedural formalities for transfer in the name of the Company is pending.

Note 3.2

For details of Property, plant and equipment having gross carrying amount aggregating Rs. 671.61 crore (As at March 31, 2018 Rs. 578.45 crore), which are pledged as security for borrowings - Refer Notes 23 and 26.

Note 3.3

Adjustments represents foreign currency exchange translation adjustment on account of jointly controlled operations which have different functional currency.

Note 4.1

Brands include brand of the power transmission business amounting Rs. 240 crore which was acquired by the Company under the High Court approved Composite Scheme of Arrangement (the âSchemeâ) in an earlier year. In terms of the Scheme, the brand is being amortised by the Company over its useful life, which based on an expert opinion is estimated to be of 20 years. The carrying amount of the brand as on March 31, 2019 Rs. 72 crore (as at March 31, 2018 Rs. 84 crore) and the remaining amortisation period is 6 years (as at March 31, 2018 - 7 years).

Note 5.1: Investments in equity instruments in subsidiaries is at cost.

Note 5.2: The Company had given a loan of USD 22,092,099 to KEC Investment Holdings, Mauritius, a wholly owned subsidiary of the Company. The aforesaid loan has been converted by the subsidiary into 14,927,094 equity shares of USD 1 each at a premium of USD 0.48 per share as on August 31, 2018.

Note 5.3: This represents investment in preference shares of KEC Investment Holdings, Mauritius. These shares are compulsorily convertible into equity shares with a conversion ratio of one is to four. The issuer has the option of early conversion as well with above fixed ratio. These is no mandatory dividend payout year on year. Considering the said terms, the investment has been classified as equity.

Note 5.4: These shares were offered on a private placement basis and it carries a fixed non-cumulative dividend at a rate of 1% per annum. The Company has an option to convert each OCPS into one equity shares of Rs 10 each and to demand for the redemption of these shares after a lock in period of 5 years. Fair value is determined in the manner described in Note 46.13.

Note 5.5: During the year Company has disposed off its entire stake in the subsidiary âKEC Bikaner Sikar Transmission Private Limitedâ for net sale consideration of Rs. 57.37 crore and accordingly, Rs. 9.98 crore has been recognised as profit on sale of subsidiary (Refer note 33)

# Includes Rs. 11.80 crore (As at March 31, 2018 Rs.12.36 crore) towards adjustment on account of fair value of financial guarantees issued to subsidiaries and step down subsidiaries, as applicable.

Note 6.1 Transfer of financial assets

During the current year, the Company has discounted trade receivables with an aggregate carrying amount of Rs. 101.48 crore with banks for cash proceeds of Rs. 100.08 crore. These arrangements are ânon-recourseâ to the Company and accordingly, the Company has derecognised these receivables as at March 31, 2019. Further the Company has discounted certain trade receivables with the banks âwith recourseâ to the Company. The carrying amount of such receivables as at March 31, 2019 Rs. 100.84 crore (As at March 31, 2018 Rs. Nil) are recognised as trade receivables and corresponding carrying amount of associated liabilities of Rs. 93.20 crore (As at March 31, 2018 Rs. Nil) are recognised as secured borrowings (Note 26) and there are restriction on further selling and pledging of these receivables.

Note 6.2 Receivable from related party is Rs. 41.10 crore (As at March 31, 2018 Rs.11.12 crore). [Refer Note 49 (c)]

Note 7.1 The Company has provided short-term loans to wholly owned subsidiary for the purpose of providing loans to and/or making strategic investments in the step down subsidiaries. These loans are given at rates comparable to the average commercial rate of interest.

Note 7.2 Loans and advances to Joint operations have been provided by the Company to meet the short-term working capital requirements for execution of projects by the joint operations.

Note 7.3 Disclosure required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Contract assetsâ, as disclosed in current year representing âAmount due from customers for contract worksâ, â Contractually reimbursable expensesâ and âProvision for expected loss on construction contractsâ have been presented as part of âOther financial assetsâ and âProvisionsâ respectively, in the Previous Year.

Contract liabilities as disclosed in current year representing âAdvance from customerâ, âAmount due to customers for contract worksâ and âInterest on customer advanceâ have been presented as part of other current liabilities and other financial liabilities respectively, in the Previous Year.

Note 7.4 3,750 fully paid-up Equity Shares of Rs. 2 each were allotted to a trustee against 1,688 equity shares of the erstwhile RPG Transmission Limited (RPGT), since merged in the Company in 2007-08, where rights were kept in abeyance by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

Note 7.5 The Company has only one class of Equity Shares having a face value of Rs. 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

Note 7.6 Debentures:

2,500, Secured, Rated, Listed, Redeemable Non-Convertible Debentures (âNCDâ) of face value of Rs. 0.10 crore each aggregating Rs. 250 crore issued by the Company during the earlier year are secured by first charge on the immovable properties at Vadodara and Mysore and further secured by hypothecation of movable fixed assets of the Company situated at Mysore and Vadodara. 500 NCD Rs. 0.10 crore each aggregating Rs.50 crore are repayable on December 20, 2021, 500 NCD Rs. 0.10 crore each aggregating Rs.50 crore are repayable on April 20, 2021 and 1,500 NCD of Rs. 0.10 crore each aggregating Rs.150 crore are repayable on April 20, 2020. Debentures are Zero Coupon with yield on maturity of 9.33% p.a. monthly compounded and payable at maturity (with a yield to maturity @ 9.74% p.a.)

Note 7.7 Term loans from banks:

(a) Rs. 87.12 crore (As at March 31, 2018 Rs. 104.92 crore) loan of a jointly controlled operation at Saudi Arabia, secured by unconditional and irrevocable Corporate Guarantee from the Company. Loan is repayable in 10 equal quarterly instalments started from December 2018. The present interest rate is 4.86% p.a.

(b) Rs. 33.27 crore (As at March 31, 2018 Rs. 50.19) loan of a jointly controlled operation at Saudi Arabia, secured by unconditional and irrevocable Corporate Guarantee from the Company. Quarterly instalment has started from December 2017 and loan will be repaid in 10 equal quarterly installments. The present interest rates are in the range of 4.54% to 5.14% p.a.

Note 7.8 Finance Lease Obligations:

Rs. Nil (As at March 31, 2018 Rs. 0.91 crore) secured against certain vehicles of a jointly controlled operation at Saudi Arabia and repaid during the current year.

Note 7.9 Loans repayable on demand from banks:

(a) Secured

(i) Rs. 225.49 crore (As at March 31, 2018 Rs. 113.75 crore) secured by first charge on the whole of the current assets of the Company, both present and future (except specific receivables financed by financial institutions and banks), second charge on fixed assets of the Companyâs immovable properties situated at Jaipur, Jabalpur and Nagpur factories and further secured by first charge on flat situated at Juhu, Mumbai. The present interest rates ranges from 7.90% to 12.85% p.a.

(ii) Rs. 11.78 crore (As at March 31, 2018 Rs. 2.27 crore) secured by assignment of certain book debts of the Company. The present interest rates ranges from 4.20% to 7.90% p.a.

(iii) Rs. Nil (As at March 31, 2018 Rs. 132.27 crore), pertains to certain projects of a jointly controlled operation at Saudi Arabia and repaid during the current year.

Note 7.10 Other short-term borrowings

(a) From Banks-Secured

(i) Rs. 404.64 crore (As at March 31, 2018 Rs. 499.84 crore) secured by security stated against Note 26.1 (a) (i) above. The present interest rates ranges from 6M EURibor 100bps (all inclusive net 1.00% to 4.30% p.a.)

(ii) Rs. 93.20 crore (As at March 31, 2018 Rs. Nil) loan of a jointly controlled operation at Saudi Arabia Rs. 90.96 crore and Oman branch Rs. 2.24 crore, secured by unconditional and irrevocable Corporate Guarantee from the Company. Repayment will be started for Saudi Arabia from June 2019 and Oman branch is repaid in AprilRs.19. The present interest rates are in the range of 4.54% to 4.87% p.a.

(b) From Bank-unsecured

Rs. Nil (As at March 31, 2018 Rs. 44.07 crore), pertaining to a joint operation at Saudi Arabia and repaid during the current year.

(i) Rs. 247.34 crore (As at March 31, 2018 Rs. Nil) being commercial papers issued against standby facilities from certain banks which in turn is secured by security stated against Note 26.1 (a) (i) above. Said Commercial papers carries interest rate of 7.55% p.a.

(ii) Rs. 161.39 crore (As at March 31, 2018 Rs. 100.36 crore) secured by security stated against Note 26.1 (a) (i) above. The present interest rates are in the range of 4.28% to 5.30% p.a.

Note 8.1

Provision for litigation claims represents liabilities that are expected to materialise on completion of negotiation/matters in appeals with judicial authorities.

Note 8.2

It includes provision of Rs. 12.63 crore related to an arbitration award passed against the Company. The same is challenged by the Company before HonRs. ble Delhi High Court. The balance provision relate to various sales tax matters and civil suits. The cashflows against the said matters are dependent upon conclusion of the litigations.

Note 9.1 Excise duty shown above includes Nil (Previous Year Rs. (1.34) crore) being excise duty related to the difference between the closing stock and opening stock of finished goods.

Note 9.2 Miscellaneous expenses shown above include fees of Rs. 1.85 crore (Previous Year Rs. 1.63 crore) paid to branch auditors, fees of Rs. 0.39 crore for auditors of joint operations (Previous Year of Rs.0.47 crore) and fees of Rs. 0.07 crore (Previous Year Rs.0.07 crore) paid to the cost auditors.

Note 9.3 Net (gain)/loss on foreign currency transactions includes gain on derivative instruments Rs. 95.64 crore (Previous year loss Rs.13.26 crore).

b) KEC International Limited (the Company) holds 51.10% share capital in âAl-Sharif Group and KEC Limitedâ, located in Saudi Arabia (Al Sharif JV), having a joint arrangement with the JV partner Power Line Contracting Company which hold 48.90% in Al Sharif JV. Al Sharif JV is âSubsidiaryâ of the Company under the Companies Act, 2013. However, based on the control assessment under Ind AS, considering the nature of arrangement, Al Sharif JV has been classified as jointly controlled operation. In addition to this, Al Sharif JV is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

c) The Company accounts for assets, liabilities, revenue and expenses relating to its interest in joint operations based on the internal agreements/arrangements entered into between the parties to the joint arrangements for execution of projects, which in some cases are different than the ownership interest disclosed above. Accordingly, the Company has recognised its share in total income from operations Rs. 522.30 crore (for the year ended March 31, 2018 Rs.1,017.90 crore), total expenditure (including tax) Rs. 476.88 crore (for the year ended March 31, 2018 â 901.93 crore), total assets as at March 31, 2019 Rs. 1,146.16 crore (as at March 31, 2018 Rs. 1,462.74 crore) and total liabilities as at March 31, 2019 Rs. 763.55 crore (as at March 31, 2018 Rs. 989.53 crore) in Jointly Controlled Operations.

(B) - Finance Leases

(i) The Jointly controlled operation of the Company at Saudi Arabia had taken certain vehicles and equipment under finance lease. The average lease term was 3 years. There was an option to purchase the assets at the end of lease terms. Accordingly Jointly controlled operation has exercised the option to purchase the assets at the end of lease term in the current financial year.

The Financial lease liability pertaining to the above mentioned assets has been fully repaid during the financial year.

For net carrying amount of assets acquired under finance lease as at March 31, 2019 - Refer Note 5 Property, Plant and Equipment.

NOTE 10 - REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company applied Ind AS 115 for the first time by using the modified retrospective method of adoption with the date of initial application of April 01, 2018. Under this method, comparative period has not been adjusted. The adoption of the new standard did not have a material impact on retained earnings as at April 01, 2018 for the revenue contracts that are not completed as at that date, except in case of presentation / disclosure of the balances in relation to construction contracts, which has been explained in note 45.4 below. Also refer note 3.5 for accounting policy on revenue recognition.

Note 10.1 Disaggregation of revenue from contracts with customers

The Company has determined the categories for disaggregation of revenue considering the types / nature of contracts. The Company derives revenue from the transfer of goods and services over time in the following major product lines and geographical regions:

Note 10.2 Unsatisfied performance obligations

The aggregate amount of transaction price allocated to performance obligations that are unsatisfied as at the end of reporting period is Rs.18,204 crore. On an average, transmission, distribution and railway composite contracts have a life cycle of 2-3 years and other businesses performance obligations are met over a period of one or less than one year. Management expects that around 50% to 60% of the transaction price allocated to unsatisfied contracts as of March 31, 2019 will be recognised as revenue during next reporting period depending upon the progress on each contracts.

The remaining amount is expected to be recognised in subsequent years, with largely in year 2.

The amount disclosed above does not include variable consideration.

Note 10.3 There are no reconciliation items between revenue from contracts with customers and revenue recognised with contract price.

Note 10.4 The Company has changed the presentation of certain amounts in the balance sheet to reflect the terminology of Ind AS 115:

(a) âContract assetsâ namely âAmount due from customers for contract worksâ, âContractually reimbursable expensesâ and âProvision for expected loss on construction contractsâ were previously presented as part of âother financial assetsâ and âprovisionsâ respectively amounting to Rs.2,009.22 crore, Rs. 71.66 crore and Rs.42.84 crore as at March 31, 2018 (Refer Notes 17, 18 and 30).

(b) âContract liabilitiesâ namely âAdvance from customerâ, âAmount due to customers for contract worksâ and âInterest on customer advanceâ were previously presented as part of âother current liabilitiesâ and âother financial liabilitiesâ respectively amounting to Rs.1,082.87 crore, Rs.420.10 crore and Rs.6.84 crore as at March 31, 2018 (Refer Notes 18 and 29).

Note 10.5 In case of transmission and distribution projects, where the goods are procured from a third party, the Company makes an assessment on the impact of revenue recognition with respect to uninstalled materials. Considering the Company is significantly involved in designing and manufacturing the procured material and there is no significant time gap involved between transfer of control and installation, there is no impact on revenue recognised. There is significant judgement involved in making this assessment.

Note 10.6 Under the modified retrospective method, the comparative information in the financial statements would not be restated and would be presented based on the requirements of the previous standard i.e. Ind AS 11, as follows:

NOTE NO 11 - FINANCIAL INSTRUMENTS

Note 11.1 Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity.

The capital structure of the Company consists of net debt (borrowings as detailed in Notes 23 and 26 offset by cash and bank balances in Notes 14 and 15) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital.

Note 11.2 Financial risk management objectives

The Company seeks to minimise the effects of currency risk and commodity price risk by using derivative and non derivative financial instruments to hedge risk exposures. The Company has Risk Management Policies to mitigate the risks in commodity and foreign exchange. The use of financial derivatives and non-derivatives is governed by the Companyâs policies approved by the Board of Directors (BOD), which provide written principles to use financial derivatives and non-derivative financial instruments, to hedge currency risk and commodity price risk. The Company does not enter into or trade financial instruments, including derivative financial instruments and non-derivative financial instruments, for speculative purposes.

Note 11.3 Market risk

The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates (see Notes 46.5 and 46.10 below) and commodity price (see Note 46.8 below). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, interest rate risk and commodity price risk including:

- forward foreign exchange contracts to hedge the exchange rate Risk arising from execution of international projects.

- Commodity Over the Counter (OTC) derivative contracts to hedge the Price Risk for base metals such as Copper, Aluminium, Zinc and Lead.

Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the approved guidelines set by the Board of Directors .

Note 11.4 Foreign currency risk management

Note 11.5 Sensitivity for above exposures:

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from financial instruments in the books of jointly controlled operations, Packing Credit in Foreign Currency (PCFC) instruments and forward contracts denominated in hedge relationship. 5% appreciation / depreciation in the functional currency of the Company, with respect to foreign currency, will have following impact on profit / (loss) before tax and equity [gains / (losses)]:

Note 11.6 Forward exchange contracts

In respect of the Companyâs foreign currency forward contract (buy), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate gain/(loss) of Rs.3.76 crore / (Rs.3.76 crore) and Rs.10.85 crore / (Rs. 10.85 crore) for the year ended March 31, 2019 and the year ended March 31, 2018 respectively, in the Companyâs Statement of Profit and Loss/Other Comprehensive Income.

In respect of the Companyâs foreign currency forward contract (sell), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate (loss)/gain of (Rs.8.58 crore) / Rs.8.58 crore and an approximate (loss)/gain of (Rs.21.41 crore) / Rs. 21.41 crore for the year ended March 31, 2019 and the year ended March 31, 2018 respectively, in the Companyâs Statement of Profit and Loss/Other Comprehensive Income.

The line-items in the balance sheet that include the above instruments are âOther financial assetsâ and âOther financial liabilitiesâ.

For the year ended March 31, 2019, the aggregate amount of realised gain under forward foreign exchange contracts recognised in the Statement of Profit and Loss is Rs. 42.95 crore (for the year ended March 31, 2018: Loss of Rs. 22.96 crore).

Note 11.7 Commodity price risk

The Company is exposed to movement in metal commodity prices of Copper, Aluminium, Zinc and Lead. Most of our contracts with the Indian customers are backed by a price variation for most of these metals. However, profitability in case of firm price orders is impacted by movement in the prices of these metals. The Company has a well defined hedging policy approved by Board of Directors of the Company, which to a large extent takes care of the commodity price fluctuations and minimises the risk. For base metals like Aluminium, Copper, Zinc and Lead, the Company either places a firm order on the supplier or hedges its exposure on the London Metal Exchange (LME) directly.

In respect of the Companyâs commodity derivative contracts, a 10% appreciation/depreciation of all commodity prices underlying such contracts, would have resulted in an approximate gain/(loss) of Rs.20.92 crore / (Rs.11.24 crore) and an approximate gain/(loss) of Rs.5.65 crore / (Rs.5.65 crore) in the Statement of Profit and Loss/other comprehensive income for the year ended March 31, 2019 and for the year ended March 31, 2018 respectively.

Note 11.8 Credit risk management

Credit period varies as per the contractual terms with the customers. No interest is generally charged on overdue trade receivables.

The Company directly reduces the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The amounts of financial assets are net of an allowance for doubtful accounts, estimated by the Company and based, in part, on the age of specific receivable balance and the current and expected collection trends. When assessing the credit risk associated with its receivables, the Company also considers the other financial and non-financial assets and liabilities recognised within the same project to provide additional indications on the Companyâs exposure to credit risk. As such, in addition to the age of its Financial Assets, the Company also considers the age of its contracts in progress, as well as the existence of any deferred revenue or down payments on contracts on the same project or with the same client. The Company has used practical expedient by computing expected credit loss allowance for trade receivable by taking into consideration payment profiles of sales over a period of 36 months before the reporting date and the corresponding historical credit loss experiences within this period. The historical loss rates are adjusted to reflect current and forward looking information on macro economic factors affecting the ability of the customers to settle the receivables. The expected credit loss is based on the ageing of the days, the receivables due and the expected credit loss rate. In addition, in case of event driven situation as litigations, disputes, change in customerâs credit risk history, specific provisions are made after evaluating the relevant facts and expected recovery.

Refer Note 8, 9 and 13 for ECL provisioning and its movement on financial assets carried at amortised cost.

Concentration of credit risk related to the customer in Saudi Arabia, Afghanistan and India exceeds 10% of the trade receivables of the Company. Concentration of credit risk to any other customer did not exceed 10% of the trade receivables at any time during the year.

In addition the Company is exposed to credit risk in relation to financial guarantees given by the Company on behalf of its subsidiaries and joint operations ( net of Companyâs share). The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (net of Companyâs share in joint operations), as at March 31, 2019 Rs.301.09 crore (as at March 31, 2018; Rs.731.92 crore). These financial guarantees have been issued to the banks on behalf of the subsidiaries and joint operations under the agreements entered into by the subsidiaries/ Joint operations with the banks. Based on managementâs assessment as at the end of the reporting period, the Company considers the likelihood of any claim under the guarantee is remote.

Cash and cash equivalents:

As at the year end, the Company held cash and cash equivalents of Rs.146.80 crore (March 31, 2018 Rs.176.31 crore). The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.

Other Bank Balances:

Other bank balances are held with bank and financial institution counterparties with good credit rating.

Derivatives:

The derivatives are entered into with bank and financial institution counterparties with good credit rating.

Other financial assets:

Other financial assets are neither past due nor impaired.

Note 11.9 Interest rate risk management

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates.

Note 11.10 Interest rate sensitivity

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs:

Profit for the year ended March 31, 2019 would decrease/increase by Rs.9.71 crore (for the year ended March 31, 2018: decrease/increase by Rs.15.64 crore ). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

During the year, the Companyâs sensitivity in interest rate has increased due to increase in variable debt instruments compared to previous year.

Note 11.11 Liquidity risk management

The Company has access to various fund/non-fund based bank financing facilities. The amount of unused borrowing facilities (fund and non-fund based) available for future operating activities and to settle commitments is Rs. 6,312.47 crore as at March 31, 2019 (Rs.5,257.58 crore as at March 31, 2018).

Note 11.12 Fair value measurements

NOTE 12 - EMPLOYEE BENEFIT PLANS

Brief description of the plans

1 Defined contribution plans

(A) Superannuation

(B) Provident Fund

The Company makes contribution to respective regional provident fund commissioners in relation to the workers employed at factories located at Butibori, Jaipur, Jabalpur, Mysore and Vadodara.The Company recognises such contributions as an expense when incurred. The Company has no further obligations beyond its yearly contribution.

2 Defined Benefit Plans

(A) Gratuity

(i) Company

The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days / one month salary, as applicable, payable for each completed year of service or part thereof in excess of six months in terms of Gratuity scheme of the Company or as per payment of the Gratuity Act, whichever is higher. Vesting occurs upon completion of five years of service.

There are no minimum funding requirement for the plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Besides this, if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

(ii) Jointly Controlled Operation in Saudi

The Jointly Controlled Operation has an obligation towards an unfunded defined benefit retirement plan (akin to gratuity) covering eligible employees. The benefits payable are as under:

In respect of the plan in India and jointly controlled operation in Saudi, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2019 by an actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(B) Provident Fund

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Currently, for the plan in India, it has a relatively balanced mix of investments in Insurance related products.

Interest rate risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

Sensitivity analysis method

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumption may be correlated. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years and same data, method and assumptions have been used in preparing the sensitivity analysis which are used to determine period end defined benefit obligation.

(B) Provident Fund

3 Short-Term Employee Benefits (Compensated Absences)

The short-term employee benefits cover the Companyâs liability for sick and earned leave.

The amount of the provision of Rs. 21.61 crore (as at 31st March, 2018 Rs.20.10 crore) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

NOTE 13 - The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to infrastructure interalia products, projects and systems for power transmission, distribution, and related activities. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) i.e. Managing Director for the purpose of resource allocation and assessing performance focuses on the business as a whole. The CODM reviews the Companyâs performance on the analysis of profit before tax at an overall entity level. Accordingly, there is no other separate reportable segment as defined by Ind AS 108. âSegment Reportingâ. As the Company also prepares the consolidated financial statements (CFS), other relevant segment information is disclosed in the CFS.

NOTE 14 - Figures in respect of the Companyâs overseas branches in Abu Dhabi, Afghanistan, Algeria, Bangladesh, Egypt, Ethiopia, Georgia, Ghana, Guinea, Indonesia, Ivory Coast, Senegal, Kenya, Jordan, Laos, Lebanon, Libya, Malaysia, Mali, Mozambique, Nepal, Nicaragua, Nigeria, Oman, Papua New Guinea, Philippines, Sierra Leone, South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Uganda, and Zambia have been incorporated on the basis of financial statements (the Branch Returns) audited by the auditors of the respective branches.

NOTE 15 - The Board of Directors at its meeting held on May 8, 2019, have recommended a Dividend of Rs.2.70/- per equity share of Rs.2 each for the year ended March 31, 2019, subject to approval of shareholders at the ensuing Annual General Meeting.

NOTE 16 - The Company is in the process of evaluating the impact of the recent Supreme Court Judgement in case of âVivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengalâ and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employeesâ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to provident fund under the Employeesâ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

NOTE 17 - In an old legal dispute between Joint Venture (JV) of the Company located in South Africa and its customer, a sole arbitrator had passed an order on October 5, 2018 against the JV reversing a favorable adjudication award of Rs. 62 crore dated March 17, 2017. The JV has filed a notice of motion before the High Court of South Africa on November 16, 2018 against the said arbitration order. Pending the final legal outcome and based on the legal opinion obtained from the attorney by the management of the Company, no provision is considered necessary in the books.

NOTE 18 - The Company was awarded a contract to complete 880 km 765 KV and 400 KV transmission line in July 2017. This project is of strategic importance for grid connectivity and stability of the southern grid. The Company has completed almost 50% of the total project work involving critical activities including foundation, tower supply and erection. The project construction has substantially slowed down since January 2019 subsequent to delayed payments from the customer due to liquidity issues. As on March 31, 2019, the Company has an exposure of Rs. 145 crore. The current sponsor and lenders are in the process of discussion with various parties to identify a new sponsor and the timing/amount of recovery of the amounts outstanding are largely dependent upon finalisation of the new sponsor.

Management is confident of a positive resolution and does not foresee a material impact on the financial statements, due to strategic nature of the project and considering the number of potential suitors for the project are in active discussion with the lenders and the sponsor of the project.

NOTE 19 - The Company has approved its financial statements in its board meeting dated May 8, 2019. Signatures to Notes 1 to 59 which form an integral part of financial statements.

Mar 31, 2018

1. GENERAL INFORMATION

2. STANDARDS ISSUED BUT NOT YET EFFECTIVE

2.1 I n March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018 (âInd ASâ), notifying Ind AS 115, âRevenue from Contracts with Customers.â This will replace Ind AS 18, Revenue Recognition, which covers contracts for goods and services and Ind AS 11 which covers construction contracts. Ind AS 115, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers. Revenue is recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18, Revenue and Ind AS 11, Construction contracts and related appendices.

A new five-step process must be applied before revenue can be recognised:

i. Identify contracts with customers

ii. Identify the separate performance obligation

iii. Determine the transaction price of the contract

iv. Allocate the transaction price to each of the separate performance obligations, and

v. Recognise the revenue as each performance obligation is satisfied.

The new standard is mandatory for financial years commencing on or after 1 April, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.

We have established an implementation team to implement the standard related to the recognition of revenue from contracts with customers, where the existing revenue contracts are being evaluated to determine revenue recognition under the new standard. Additionally, we are in the process of identifying and implementing changes to our processes to meet the standardâs updated reporting and disclosure requirements, as well as evaluating the internal control changes required, if any, during the implementation and continued application of the new standard.

2.2 The MCA has notified Appendix B to Ind AS 21, Foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.

For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt.

Management is currently evaluating the effects of applying the appendix to its foreign currency transactions for which consideration is received in advance.

The Company intends to adopt the amendments prospectively to items in scope of the appendix that are initially recognised on or after the beginning of the reporting period in which the appendix is first applied (i.e. from 1 April, 2018).

2.3 The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 (the âRulesâ) on 28 March, 2018 regarding Ind AS 40- Investment property - transfers of investment property. The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that it supported by evidence.

Management has assessed the effects of the amendment on classification of existing property at 1 April, 2018 and concluded that no reclassifications are required.

2.4 The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 (the âRulesâ) on 28 March, 2018 regarding Ind AS 12- Income taxes regarding recognition of deferred tax assets on unrealized losses. The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base.

The management is in process of assessing the impact of above amendment. The Company will adopt the amendments from April 1, 2018.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3. CRITICAL ESTIMATES AND JUDGEMENTS

In the application of the Companyâs accounting policies, which are described in Note 3, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical estimates and judgements, that have the significant effect on the amounts recognised in the financial statements.

3.1 Classification of Joint Arrangement as a Joint Operation

In terms of Ind AS 111, âJoint Arrangementâ, the following joint arrangements have been classified as joint operations as the contractual arrangements between the parties specify that parties have rights to the assets, and obligations for the liabilities, relating to the arrangement:

i) Al- Sharif Group and KEC Ltd. Company, Saudi Arabia* [refer Note 43]

ii) EJP KEC Joint Venture, South Africa

iii) KEC - ASSB JV

iv) KEC - ASIAKOM - UB JV

v) KEC - ASIAKOM JV

vi) KEC - DELCO - VARAHA JV

vii) KEC - VARAHA - KHAZANA JV

viii) KEC - VALECHA - DELCO JV

ix) KEC-SIDHARTH JV

x) KEC - TRIVENI - KPIPL JV

xi) KEC - UNIVERSAL JV

xii) KEC - DELCO - DUSTAN JV

xiii) KEC - ANPR - KPIPL JV

xiv) KEC - PLR - KPIPL JV

xv) KEC - BJCL JV

xvi) KEC-KIEL JV

xvii) KEC - ABEPL JV

xviii) KEC - TNR Infra JV

xix) KEC - SMC JV

xx) KEC - WATERLEAU JV

* KEC International (Company) held 49% share capital of Al Sharif Group and KEC Ltd. Company, Saudi Arabia (âAl Sharif JVâ), having a joint arrangement located in Saudi Arabia, with the JV partner Al Sharif Group (ASG) [also refer Note 43]. On March 26, 2018, the Company has acquired additional 6,300 shares representing 2.10 percent of the total share capital of

Al Sharif JV. Pursuant to acquisition of these additional shares, Companyâs shareholding in the joint arrangement has increased to 51.10 percent. By virtue of increase in shareholding, Al Sharif JV has become subsidiary of the Company as per the definition of âsubsidiaryâ under the Companies Act, 2013.

Al Sharif JV is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

Accordingly, for financial reporting purposes, Al Sharif JV is classified as jointly controlled operation as per the requirements of Ind AS 111 Joint Arrangements.

3.2 Revenue recognition for construction contracts

As described in Note 3.5, revenue and costs in respect of construction contracts are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

3.3 Useful lives of property, plant and equipment and intangible assets

As described in Notes 3.11 and 3.12 above, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period. There was no change in the useful life of property, plant and equipment and intangible assets as compared to previous year.

3.4 Contingencies

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Guarantees are also given in the normal course of business. There are certain obligations which management has concluded based on all available facts and circumstances are treated as contingent liabilities and disclosed in the Notes but are not provided for in the financial statements. Although there can be no assurance of the final outcome of the legal proceedings in which the company is involved it is not expected that such contingencies will have a material effect on its financial position or profitability.

3.5 Income taxes

In preparing the financial statements, the Company recognises income taxes in each of the jurisdictions in which it operates. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. The uncertain tax positions are measured at the amount expected to be paid to taxation authorities when the Company determines that the probable outflow of economic resources will occur. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

3.6 Impairment of trade receivables

The impairment provisions for trade receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Groupâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

3.7 Defined benefit obligations

The present value of defined benefit obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of reporting period that have terms approximating to the terms of the related obligation.

Note 4.1

Brands include brand of the power transmission business amounting Rs.24,000 lakh which was acquired by the Company under the High Court approved Composite Scheme of Arrangement (the âSchemeâ) in an earlier year. In terms of the Scheme, the brand is being amortised by the Company over its useful life, which based on an expert opinion is estimated to be of 20 years. The carrying amount of the brand as on March 31, 2018 Rs.8,400 lakh (as at March 31, 2017 Rs.9,600 lakh) and the remaining amortisation period is 7 years (as at March 31, 2017 - 8 years).

Note 5.1 :- Investments in equity instruments in subsidiaries is at cost.

Note 5.2 :- Includes 5,100,000 equity shares pledged in respect of term loan availed by KEC Bikaner Sikar Transmission Private Limited.

Note 5.3 :- This reprsents investment in preference shares of KEC Investment Holdings, Mauritius. These shares are compulsarily convertible into equity shares with a conversion ratio of one is to four. The issuer has the option of early convert as well with above fixed ratio. These is no mandatory dividend payout year on year. Considering the said terms, the investment has been classified as equity.

Note 5.4 :- These shares are offered on a private placement basis and it carries a fixed non-cumulative dividend at a rate of 1% per annum. The Company has an option to convert each OCPS into one equity shares of Rs.10 each and to demand for the redemption of these shares after a lock in period of 5 years. Fair value is determined in the manner described in Note 45.13. The loss on fair valuation of preference shares of Rs.225.00 (As at March 31, 2017 Rs.429.00 lakh) is recognised in âOther expensesâ (Note 39).

Includes Rs.1,235.67 lakh (As at March 31, 2017 Rs.979.14 lakh) towards adjustment on account of fair value of financial guarantees issued to subsidiaries and step down subsidiaries, as applicable.

6.1 Transfer of financial assets

During the current year the Company has discounted trade receivables related to a joint operation with an aggregate carrying amount of Rs.8,623.53 lakh with banks for cash proceeds of Rs.8,352.35 lakh. These arrangements are non-recourse to the Company and accordingly, the Company has de-recognized these receivables as at March 31, 2018. Further, the Company has discounted certain trade receivables with the banks with recourse to the Company. The carrying amount of such receivables as at March 31, 2018 â Nil (As at March 31, 2017 Rs.10,606.41 lakh) are recognised as trade receivables and the corresponding carrying amount of associated liabilities are recognised as secured borrowings (Note 25) and there was restriction on further selling and pledging of these receivables.

6.2 Receivable from related party is Rs.231.18 (As at March 31, 2017 Rs.9.51 lakh) {Refer Note 48 (C)}

7.1 The Company has provided short term loans to wholly owned subsidiary for the purpose of providing loans to and/or making strategic investments in the step down subsidiaries. These loans are given at rates comparable to the average commercial rate of interest.

7.2 Loans and advances to Joint operations have been provided by the Company to meet the short term working capital requirements for execution of projects by the joint operations.

7.3 Disclosure required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

(i) Loans and advances in the nature of loans given to the wholly owned subsidiary.

The Company has signed Memorandum of understanding (MOU) against which the Company had received sales consideration amounting to Rs.940.94 lakh (as at March 31, 2017 Rs.940.94 lakh). However, the title and possession of the land is yet to be transferred due to pending approvals from regulatory authorities.

8.1 3,750 fully paid up Equity Shares of Rs.2 each were allotted to a trustee against 1,688 equity shares of the erstwhile RPG Transmission Limited (RPGT), since merged in the Company in 2007-08, where rights were kept in abeyance by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

8.2 The Company has only one class of Equity Shares having a face value of Rs.2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid- up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend. 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.

9.1 Debentures:

(a) 2,500, Secured, Rated, Listed, Redeemable Non-Convertible Debentures of face value of Rs.10 lakh each (âNCDâ) aggregating Rs.25,000 lakh issued during the previous year are secured by first charge on the immovable properties at Vadodara and Mysore and further secured by hypothecation of movable fixed assets of the Company situated at Mysore and Vadodara. 500 NCD Rs.10 lakh each aggregating Rs.5,000 lakh are repayable on December 20, 2021, 500 NCD Rs.10 lakh each aggregating Rs.5,000 lakh are repayable on April 20, 2021 and 1,500 NCD of Rs.10 lakh each aggregating Rs.15,000 lakh are repayable on April 20, 2020. Debentures are Zero Coupon with yield on maturity of 9.33% p.a. monthly compounded and payable at maturity (with a yield to maturity @9.74% p.a.)

9.2 Term loans from banks:

(a) Rs.10,491.97 Lakh (As at March 31, 2017 â Nil) loan of a jointly controlled operation at Saudi Arabia, secured by unconditional and irrevocable Corporate Guarantee from KEC International Limited. Loan is repayable in 10 equal quarterly instalments starting from December 2018. The present interest rate renges from 4.28% to 4.38% p.a.

(b) Rs.5,017.90 Lakh (As at March 31, 2017 â Nil) loan of a jointly controlled operation at Saudi Arabia, secured by unconditional and irrevocable Corporate Guarantee from KEC International Limited. Quarterly instalment has started from December 2017 and loan will be repaid in 10 equal quarterly installments. The present interest rate is 3.88% p.a.

9.3 Finance Lease Obligations:

(a) Rs. Nil (As at March 31, 2017 Rs.8.51 lakh) secured against equipment of a jointly controlled operation at Saudi Arabia. The lease obligation has been fully paid in the current year.

(b) Rs.91.28 lakh (As at March 31, 2017 Rs.412.35 lakh) secured against certain vehicles of a jointly controlled operation at Saudi Arabia. The lease obligations are repayable in monthly installments starting from December 2018 and the present interest rates are in the range of 10.64% to 14.84% p.a.

10.1 Loans repayable on demand from banks:

(a) Secured:

(i) Rs.11,374.25 lakh (As at March 31, 2017 Rs.5,088.32 lakh) secured by first charge on the whole of the current assets of the Company, both present and future (except specific receivables financed by financial institutions and banks), second charge on fixed assets of the Companyâs immovable properties situated at Jaipur, Jabalpur and Nagpur factories and further secured by first charge on flat situated at Juhu, Mumbai. The present interest rates ranges from 9.50% to 13.50% p.a.

(ii) Rs. Nil (As at March 31, 2017 Rs.1.53 lakh) guaranteed by banks by Indian bank for a loan related to jointly controlled operation, which in turn is secured by security stated against Note 25.1 (a) (i) above.

(iii) Rs.226.95 lakh (As at March 31, 2017 Rs.1,489.00 lakh) secured by assignment of certain overseas book debts of the Company. The present interest rate is 4.20% p.a.

(iv) Rs.13,226.49 lakh (As at March 31, 2017 Rs.20,091.42 lakh), secured by the contract receivables of certain projects of a jointly controlled operation at Saudi Arabia and corporate guarantee of the Company. In last year, the borrowing was further secured by bank guarantee given by bankers of the Company which in turn is secured by security of the Company stated against Note 25.1

(a) (i). The present interest rates ranges from 3.50% to 4.50% p.a.

10.2 Other short-term borrowings

(a) From Banks-secured

(i) Rs.49,984.39 lakh (As at March 31, 2017 Rs.44,281.45 lakh) secured by security stated against Note 25.1 (a) (i) above. The present interest rates ranges from 1.42% to 3.45% p.a.

(ii) Rs. Nil (As at March 31, 2017 Rs.10,606.41 lakh), secured by the contract receivables of certain projects of a joint operation at Saudi Arabia discounted with the banks. Also secured by corporate guarantee given by the Company.

(b) From Bank-unsecured

(i) Rs. Nil (As at March 31, 2017 Rs.4,559.71 lakh), pertains to the Company.

(ii) Rs.4,407.41 lakh (As at March 31, 2017 Rs.5,530.89 lakh), pertaining to a joint operation at Saudi Arabia. The present interest rates ranges from 2.00% to 4.40% p.a.

(i) Rs.10,036.18 lakh (As at March 31, 2017 Rs.13,589.90 lakh) secured by security stated against Note 25.1 (a) (i) above. The loan of Rs.2,606.80 lakh carries interest rate of 3.76% p.a., loan of Rs.4,236.05 lakh carries interest rate of 3.90% p.a., and loan of Rs.3,193.33 lakh carries interest rate of 3.95% p.a.

(ii) Rs. Nil (As at March 31, 2017 Rs.14,831.58 lakh) being commercial papers issued against standby facilities from certain banks which in turn is secured by security stated against Note 25.1 (a) (i) above. The present interest rates ranges from 6.75% to 7.25% p.a.

Note: 11.1

Provision for litigation claims represents liabilities that are expected to materialise on completion of negotiation/matters are in appeals with judicial authorities.

12.1 Excise duty shown above includes Rs. (134.49) lakh (Previous Year â (67.99) lakh) being excise duty related to the difference between the closing stock and opening stock of finished goods.

12.2 Other expenses shown above include fees of Rs.163.44 lakh (Previous Year Rs.152.26 lakh) paid to branch auditors, fees of Rs.46.55 lakh for auditors of joint operations (Previous Year of Rs.49.92 lakh) and fees of Rs.7.00 lakh (Previous Year Rs.7.00 lakh) paid to the cost auditors.

The tax rate used for the financial years 2017-18 and 2016-17 reconciliations above is the corporate tax rate of 34.61% payable by the corporate entities in India on taxable profits under the Indian tax law.

b) (i) The Company held 49% share capital of Al Sharif JV, having a joint arrangement located in Saudi Arabia, with the JV partner Al-Sharif Group (ASG). During the year, the Company has acquired additional 6,300 shares representing 2.10% of the total share capital of Al Sharif JV. Pursuant to acquisition of these additional shares, Companyâs stake in the joint arrangement has increased to 51.10% making it a subsidiary as per the definition of âsubsidiaryâ under the Companies Act, 2013. However, based on the control assessment under Ind AS, considering the nature of arrangement, Al Sharif JV has been continued to be classified as jointly controlled operation. In addition to this, Al Sharif JV is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

(ii)The Company accounts for assets, liabilities, revenue and expenses relating to its interest in joint operations based on the internal agreements/ arrangements entered into between the parties to the joint arrangements for execution of projects, which in some cases are different than the ownership interest disclosed above. Accordingly, the Company has recognised total income from operations Rs.101,790.03 lakh (for the year ended March 31, 2017 â119,343.53 lakh), total expenditure (including tax) Rs.90,193.30 lakh (for the year ended March 31, 2017 Rs.100,665.36 lakh), total assets as at March 31, 2018 Rs.146,274.22 lakh (as at March 31, 2017 Rs.178,725.71 lakh) and total liabilities as at March 31, 2018 Rs.98,953.18 lakh (as at March 31, 2017 Rs.138,356.72 lakh).

(B) - Finance Leases

(i) The Joint operation of the Company at Saudi Arabia has taken certain vehicles and equipment under finance lease. The average lease term is 3 years. There is option to purchase the assets at the end of lease terms. The obligation under finance leases are secured by the leased assets. There are no restrictions such as those concerning dividends, additional debt and further leasing imposed by the lease agreement.

Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 5.00% to 22.80% p.a For net carrying amount of assets acquired under finance lease as at March 31, 2018 - Refer Note 5 Property, Plant and Equipment.

(ii) The maturity profiles of finance lease obligations are as follows:

NOTE 13 - FINANCIAL INSTRUMENTS

13.1 Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity.

The capital structure of the Company consists of net debt (borrowings as detailed in Notes 22 and 25 offset by cash and bank balances in Notes 14 and 15) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital.

13.2 Financial risk management objectives

The Company seeks to minimise the effects of currency risk and commodity price risk by using derivative and non derivative financial instruments to hedge risk exposures. The Company has Risk Management Policies to mitigate the risks in commodity and foreign exchange. The use of financial derivatives and nonderivatives is governed by the Companyâs policies approved by the Board of Directors (BOD), which provide written principles to use financial derivatives and non-derivative financial instruments, to hedge currency risk and commodity price risk. The Company does not enter into or trade financial instruments, including derivative financial instruments and non-derivative financial instruments, for speculative purposes.

13.3 Market risk

The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates (see Notes 45.5 and 45.10 below) and commodity price (see Note 45.8 below). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, interest rate risk and commodity price risk including:

- forward foreign exchange contracts to hedge the exchange rate Risk arising from execution of international projects.

- Commodity Over the Counter (OTC) derivative contracts to hedge the Price Risk for base metals such as Copper, Aluminium, Zinc and Lead.

Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set by the Board of Directors.

13.4 Foreign currency risk management

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions in various currencies. Foreign currency risk arises from future commecial transactions and recognised assets and liabilities denominated in a currency that is not the Companyâs functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the INR cash flows.

13.5 Sesitivity for above exposures:

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from financial instruments in the books of jointly controlled operations, packing credit in foreign currency (PCFC) instruments and forward contracts denominated in hedge relationship. 5% appreciation / depreciation in the functional currency of the Company, with respect to foreign currency, will have following impact on profit / (loss) before tax and equity [gains / (losses)]:

13.6 Forward exchange contracts

The Company has adopted a Risk Management Policy approved by the Board of Directors for managing foreign currency exposure. The policy enumerates the mechanism for Risk Identification, Risk Measurement and Risk Monitoring. The policy has approved a set of financial instruments for hedging foreign currency risk. The Company mainly uses forward contracts to manage the foreign currency risk.

In respect of the Companyâs foreign currency forward contract (buy), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate gain/(loss) of Rs.1,085.69 lakh / (Rs.1,085.69 lakh) and an approximate gain/(loss) of Rs.1,182.50 lakh/(Rs.1,182.50 lakh) for the year ended March 31, 2018 and the year ended March 31, 2017 respectively, in the Companyâs Statement of Profit and Loss/Other Comprehensive Income.

In respect of the Companyâs foreign currency forward contract (sell), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate gain/(loss) of Rs.2,141.31 lakh / (Rs.2,141.31 lakh) and an approximate (loss)/gain of (Rs.73.73 lakh)/Rs.73.73 lakh for the year ended March 31, 2018 and the year ended March 31, 2017 respectively, in the Companyâs Statement of Profit and Loss/Other Comprehensive Income.

The line-items in the balance sheet that include the above instruments are âOther financial assetsâ and âOther financial liabilitiesâ.

For the year ended March 31, 2018, the aggregate amount of loss under forward foreign exchange contracts recognised in the Statement of Profit and Loss is Rs.2,295.85 lakh (for the year ended March 31, 2017: gains of Rs.1,364.70 lakh).

The Company has designated following forward contracts as cash flow hedges which are outstanding as under:

13.7 Commodity price risk

The Company is exposed to movement in metal commodity prices of Copper, Aluminium, Zinc and Lead. Most of our contracts with the Indian customers are backed by a price variation for most of these metals. However, profitability in case of firm price orders is impacted by movement in the prices of these metals. The Company has a well defined hedging policy approved by Board of Directors, which to a large extent takes care of the commodity price fluctuations and minimizes the risk. For base metals like Aluminium, Copper, Zinc and Lead, the Company either places a firm order on the supplier or hedges its exposure on the London Metal Exchange (LME) directly.

In respect of the Companyâs commodity derivative contracts, a 10% appreciation/depreciation of all commodity prices underlying such contracts, would have resulted in an approximate gain/(loss) of Rs.565.21 lakh / (Rs.565.21 lakh) and an approximate gain/(loss) of Rs.512.04 lakh /(Rs.512.04 lakh) in the Statement of Profit and Loss/ other comprehensive income for the year ended March 31, 2018 and for the year ended March 31, 2017 respectively.

13.8 Credit risk management

Credit period varies as per the contractual terms with the customers. No interest is generally charged on overdue trade receivables.

The Company directly reduces the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The amounts of financial assets are net of an allowance for doubtful accounts, estimated by the Company and based, in part, on the age of specific receivable balance and the current and expected collection trends. When assessing the credit risk associated with its receivables, the Company also considers the other financial and non-financial assets and liabilities recognized within the same project to provide additional indications on the Companyâs exposure to credit risk. As such, in addition to the age of its Financial Assets, the Company also considers the age of its contracts in progress, as well as the existence of any deferred revenue or down payments on contracts on the same project or with the same client. The Company has used practical expedient by computing expected credit loss allowance for trade receivable by taking into consideration historical credit loss experience and adjusted for forward looking information. The expected credit loss is based on the ageing of the days, the receivables due and the expected credit loss rate.

Ageing of non-current (Note 8) and current (Note 13) trade receivables considered by the Management for this purpose are as under:

Other financial assets:

Other financial assets are neither past due nor impaired.

13.9 Interest rate risk management

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates.

The Companyâs exposures to interest rates changes at the end of the reporting period are as follows.

Apart from the largest customer of the Company in Saudi Arabia (which is a state controlled enterprise) and a major customer in India (which is a public sector undertaking), the Company does not have significant credit risk exposure to any single customer. Concentration of credit risk related to the customer in Saudi Arabia exceeds 20% of the trade receivables of the Company and credit risk related to the major customer in India exceeds 10% of the trade receivables of the Company. Concentration of credit risk to any other customer did not exceed 10% of the trade receivables at any time during the year.

In addition the Company is exposed to credit risk in relation to financial guarantees given by the Company on behalf of its subsidiaries and joint operations (net of Companyâs share). The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (net of Companyâs share in joint operations), as at March 31, 2018 Rs.73,191.87 lakh (as at March 31, 2017; â76,797.28 lakh). These financial guarantees have been issued to the banks on behalf of the subsidiaries and joint operations under the agreements entered into by the subsidiaries/ Joint operations with the banks. Based on managementâs assessment as at the end of the reporting period, the Company considers the likelihood of any claim under the guarantee is remote.

Cash and cash equivalents:

As at the year end, the Group held cash and cash equivalents of Rs.17,631.36 lakh (March 31, 2017 Rs.12,302.48 Lakh). The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.

Other Bank Balances:

Other bank balances are held with bank and financial institution counterparties with good credit rating.

Derivatives:

The derivatives are entered into with bank and financial institution counterparties with good credit rating.

13.10 Interest rate sensitivity

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs:

Profit for the year ended March 31, 2018 would decrease/ increase by Rs.1,563.59 Lakh (for the year ended March 31, 2017: decrease/increase by Rs.1,107.04 lakh). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

During the year, the Companyâs sensitivity in interest rate has increased due to increase in variable debt instruments.

13.11 Liquidity risk management

Board of Directors of the Company has established an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of the financial assets and liabilities.

The Company has access to various fund/non-fund based bank financing facilities. The amount of unused borrowing facilities (fund and non-fund based) available for future operating activities and to settle commitments is Rs.525,757.71 lakh as at March 31, 2018 (Rs.556,674.58 lakh as at March 31, 2017).

13.12 Fair value measurements

NOTE 14 - EMPLOYEE BENEFIT PLANS 1 Defined contribution plans Superannuation

All eligible employees are entitled to benefits under Superannuation, a defined contribution plan. The Company makes yearly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligations beyond its yearly contribution. The Company contributed Rs.110.25 Lakh and Rs.103.74 Lakh to the Employeesâ Superannuation fund for the year ended March 31, 2018 and March 31, 2017, respectively.

2 Defined Benefit Plan

a. A general description of the Employee Benefit Plan:

(i) Company

The Company has set up an income tax approved trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan. The Company makes contribution to the plan. There are no minimum funding requirement for the plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the Income tax and rules. Besides this if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

(ii) Joint operation in Saudi

The Joint Operation has an obligation towards an unfunded defined benefit retirement plan (akin to gratuity) covering eligible employees. The benefits payable are as under:

b. These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

Interest rate risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.

Longevity risk

Salary risk

No other post-retirement benefits are provided to the employees.

In respect of the plan in India and joint operation in Saudi, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by an actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Sensitivity analysis method

e. Provident Fund

The Company has established âKEC International Limited Provident Fundâ in respect of certain employees to which both the employee and the employer make contribution equal to 12% of the employeeâs basic salary respectively. The Companyâs contribution to the provident fund for all employees, are charged to the Statement of Profit and Loss. In case of any liability arising due to shortfall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. In accordance with the recent actuarial valuation, there is no deficiency in the interest cost as the present value of expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest.

f. Compensated absences

The Compensated absences cover the Companyâs liability for sick and earned leave.

The amount of the provision of Rs.2,010.42 lakh (as at 31st March, 2017 - Rs.2,438.90 lakh) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

NOTE 15 - RELATED PARTY DISCLOSURES

Related party disclosures as required by IND AS 24 âRelated Party Disclosuresâ are given below:

(A) Name and nature of relationship of the parties where control exists

(B) Details of related parties with whom transactions have taken place

Entity having significant influence over the Company

Swallow Associates LLP

Subsidiaries

KEC Power India Private Limited

KEC Global FZ-LLC, Ras UL Khaimah

RPG Transmission Nigeria Limited

SAE Towers Mexico S de RL de CV, Mexico

SAE Towers Limited

KEC Investment Holdings, Mauritius

KEC Global, Mauritius

KEC Bikaner Sikar Transmission Private Limited

Key Management Personnel (KMP)

Mr. H. V. Goenka- Chairman

Mr. Vimal Kejriwal - Managing Director & CEO

Mr. A. T. Vaswani - Non - Executive Director

Mr. D. G. Piramal - Non - Executive Director Mr. G. L. Mirchandani - Non - Executive Director Ms. Nirupama Rao - Non - Executive Director Mr. R. D. Chandak - Non - Executive Director Mr. S. M. Kulkarni - Non - Executive Director Mr. S. M. Trehan - Non - Executive Director

Mr. S. S. Thakur - Non - Executive Director (upto November 06, 2017)

Ms. Manisha Girotra - Non - Executive Director (w.e.f. February 06, 2018)

Mr. Vinayak Chatterjee - Non - Executive Director

List of other related parties Post - employment benefit plan

KEC International Ltd. Employeesâ Group Gratuity Scheme KEC International Limited - Provident Fund KEC International Ltd. Superannuation Scheme

Relatives of Key Management Personnel

Mr. Anant Goenka - Relative of Mr. H. V. Goenka

Entities where control / significant influence by KMPs and their relatives exists and with whom transactions have taken place

STEL Holdings Limited

Chattarpati Investments LLP Harsh Anant Goenka HUF CEAT Limited B. N. Elias & Co. LLP Palacino Properties LLP RPG Enterprises Limited Raychem RPG Private Limited Ceat Speciality Tyres Limited Spencers and Company Limited Zensar Technologies Limited

NOTE 16 - The details of amounts which are expected by the Company to be recovered or settled after twelve months in respect of assets and liabilities relating to long-term contracts which are classified as current are as under:

NOTE 17

The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to infrastructure interalia products, projects and systems for power transmission, distribution, and related activities. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) i.e. Managing Director for the purpose of resource allocation and assessing performance focuses on the business as a whole. The CODM reviews the Companyâs performance on the analysis of profit before tax at an overall entity level. Accordingly, there is no other separate reportable segment as defined by Ind AS 108. âSegment Reportingâ. As the Company also prepares the consolidated financial statements (CFS), other relevant segment information is disclosed in the CFS.

NOTE 18

Note 18.1 - Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act).

Note 18.2 - Disclosure on Specified Bank Notes (SBNs)

The details of SBNs held and transacted during the period from 8th November, 2016 to 30th December, 2016, is provided in table below:

NOTE 19 - RECLASSIFICATIONS

Note 19.1 Reclassification - Acceptances

Acceptances comprises of credit availed for payment to suppliers for materials (including project bought outs) purchased and services availed by the company. The said balances have been regrouped in the current year under trade payables as compared to being shown separately based on the terms of the arrangements and as it is more consistent with peers.

Note 19.2 Reclassification - Unbilled Revenue

During the year, the Company has reclassified the unbilled receivables from âAmount due from customers for contract worksâ to âOther Financial Assetsâ considering Companyâs contractual rights, historical trends and the said disclosure being more relevant to the users of the financial statements. This change doesnât result in any impact on the total current assets.

NOTE 20

Expenditure towards Corporate Social Responsibility Activities

NOTE 21

Figures in respect of the Companyâs overseas branches in Abu Dhabi, Afghanistan, Algeria, Bangladesh, Egypt, Ethiopia, Georgia, Ghana, Indonesia, Ivory Coast, Jordan, Kenya, Laos, Lebanon, Libya, Malaysia, Mozambique, Nepal, Nigeria, Oman, Philippines, Senegal, South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Uganda, and Zambia have been incorporated on the basis of financial statements (the Branch Returns) audited by the auditors of the respective branches.

NOTE 22

The Board of Directors at its meeting held on May 14, 2018, have recommended a Dividend of Rs.2.40/- per equity share of Rs.2/- each for the year ended March 31, 2018, subject to approval of shareholders at the ensuing Annual General Meeting.

NOTE 23

The Company has approved its financial statements in its Board meeting dated May 14, 2018.

Mar 31, 2017

1. General information

2. Application of new and revised Indian Accounting Standards (Ind ASs)

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of Cash Flowsâ. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of Cash Flowsâ. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of the financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

3. First-time adoption - mandatory exceptions, optional exemptions Overall principle

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.

Derecognition of financial assets and financial liabilities

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2015 (the transition date).

Classification of debt instruments:

The Company has determined the classification of financial instruments in terms of whether they meet the amortised cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.

Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, âFirst Time Adoption of Indian Accounting Standardsâ, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS101.

Assessment of embedded derivatives

The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.

Determining whether an arrangement contains a lease

The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

Cumulative translation differences on foreign operations

The Company has elected the option to reset the cumulative translation differences on foreign operations that exist as of the transition date to zero.

Joint operation- Transition provisions in the financial statements.

Under the previous GAAP, the Company has accounted investment in Al Sharif Group and KEC Limited Company, being a jointly Controlled Entity as an investment at cost. Under Ind AS, this joint arrangement has been classified as joint operation (Refer Note 5.1.1).

Accordingly, the Company has de-recognised the investment and recognised the assets and liabilities in respect of its interest in joint operation. The effect of this transition provision at the date of transition to Ind AS i.e. April 1, 2015 is as under:

4. Critical accounting judgements and key sources of estimation uncertainty

4.1 Critical judgements in applying accounting policies

The following are the critical judgements, apart from those involving estimations (see Note 5.2 below), that the directors have made in the process of applying the Companyâs accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

4.1.1 Classification of Joint Arrangement as a Joint Operation

In terms of Ind AS 111, âJoint Arrangement¹, the following joint arrangements have been classified as joint operations as the contractual arrangements between the parties specify that parties have rights to the assets, and obligations for the liabilities, relating to the arrangement:

i) Al- Sharif Group and KEC Ltd. Company, Saudi Arabia

ii) EJP KEC Joint Venture, South Africa

iii) KEC-ASSBJV

iv) KEC-ASIAKOM-UBJV

v) KEC-ASIAKOMJV

vi) KEC - DELCO - VARAHAJV

vii) KEC-VARAHA-KHAZANAJV

viii) KEC-VALECHA-DELCOJV

ix) KEC-SIDHARTHJV

x) KEC-TRIVENI-KPIPLJV

xi) KEC - UNIVERSALJV

xii) KEC - DELCO - DUSTANJV

xiii) KEC-ANPR-KPIPLJV

xiv) KEC-PLR-KPIPLJV

xv) KEC - BJCLJV

xvi) KEC-KIELJV

xvii) KEC-ABEPLJV

xviii) KEC-TNR Infra JV

xix) KEC-SMCJV

xx) KEC-WATERLEAUJV

Although Al Sharif Group and KEC Ltd. Company, Saudi Arabia is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself, the internal agreements (contractual arrangements) entered into between the parties to the joint arrangements for execution of projects (turnkey contracts) reverses or modifies the rights and obligations conferred by the legal form and establishes and define their respective rights and obligations on these projects. As per these contractual arrangements, the parties to the joint arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Accordingly, Al Sharif Group and KEC Ltd. Company, Saudi Arabia is classified as a joint operation of the Company.

4.2 Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

4.2.1 Revenue recognition for construction contracts

4.2.2 Useful lives of property, plant and equipment and intangible assets

4.2.3 Contingencies

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Guarantees are also given in the normal course of business. There are certain obligations which managements have concluded based on all available facts and circumstances are treated as contingent liabilities and disclosed in the Notes but are not provided for in the financial statements. Although there can be no assurance of the final outcome of the legal proceedings in which the company is involved it is not expected that such contingencies will have material effect on its financial position or profitability.

4.2.4 Income taxes

Note 5.1

The title deeds of freehold land and buildings, having gross carrying amount aggregating Rs. 2,634.79 lakh (as at March 31, 2016 Rs. 2,634.79 lakh, as at April 1, 2015 Rs. 2,634.79 lakh) and net carrying amount aggregating Rs. 2,582.45 lakh (as at March 31, 2016 Rs. 2,586.81 lakh, as at April 1, 2015 Rs. 2,591.26 lakh) have been transferred to and vested in the Company, pursuant to the Schemes of Amalgamation/ Arrangement in earlier years and the procedural formalities for transfer in the name of the Company in the relevant documents are in process.

Note 5.2

For details of Property, plant and equipment having gross carrying amount aggregating Rs. 86,222.33 lakh (As at March 31, 2016 Rs. 86,064.38 lakh, as at April 1, 2015 Rs. 85,863.30 lakh), which are pledged as security for borrowings - refer Notes 23 and 27.

Note 6.1

Brands includes brand of the power transmission business amounting Rs.24,000 lakh which was acquired by the Company under the High Court approved Composite Scheme of Arrangement (the âSchemeâ) in an earlieryear. In terms of the Scheme, the brand is being amortised by the Company over its useful life, which based on an expert opinion is estimated to be of 20 years. The carrying amount of the brand as on March 31, 2017 is Rs.9,600 lakh (as at March 31, 2016 Rs.10,800 lakh, as at April 1, 2015 Rs.12,000 lakh) and the remaining amortisation period is 8 years (as at March 31, 2016 - 9 years, as at April 1, 2015-10 years).

7.1 Investments in equity instruments in subsidiaries and associate is at cost.

7.2 Includes 5,100,000 equity shares pledged in respect of term loan availed during the year by KEC Bikaner Sikar Transmission Private Limited.

7.3 These shares are offered on a private placement basis and it carries a fixed non-cumulative dividend at a rate of 1% per annum. The Company has an option to convert each OCPS into one equity share of Rs.10 each and to demand for the redemption of these shares after a lock in period of 5 years. Fair value is determined in the manner described in Note 48.13. The loss on fair valuation of preference shares of Rs.429.00 lakh is recognised in âOther expensesâ (Note 42).

8.1 The cost of inventories recognised as an expense during the year was Rs.360,155.30 lakh (for the year ended March 31, 2016 Rs.366,795.43 lakh).

8.2 The cost of inventories recognised as expense includes Rs.1,894.06 lakh (for the year ended March 31, 2016 Rs. 712.79 lakh) in respect of write-downs of inventory to net realisable value, and has been reduced by Rs.271.86 lakh (for the year ended March 31, 2016 Rs.Nil) in respect of reversal of such write downs.

8.3 The above inventories have been pledged as security for borrowings (Refer Notes 23 and 27)

9.1 Transfer of financial assets

During the current year the Company discounted trade receivables with an aggregate carrying amount of Rs. 34,076.25 lakh to banks for cash proceeds of Rs. 32,840.37 lakh. These arrangements are non-recourse to the Company and accordingly, the Company has de-recognized these receivables as at March 31, 2017. Further, the Company has discounted certain trade receivables with the banks with recourse to the Company. The carrying amount of such receivables as at March 31,2017 Rs.10,606.41 lakh (As at March 31, 2016 Rs.33,979.54 lakh, As at April 1, 2015 Rs.15,297.64 lakh) are recognized as trade receivables and the corresponding carrying amount of associated liabilities are recognized as secured borrowings (Note 27).

10.1 The Company had provided short term loans to wholly owned subsidiary for the purpose of providing loans to and/or making strategic investments in the step down subsidiaries. These loans are given at rates comparable to the average commercial rate of interest.

10.2 Loans and advances to Joint operations have been provided by the Company to meet the short term working capital requirements for execution of projects by the joint operations.

10.3 Disclosure required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

(i) Loans and advances in the nature of loans given to the wholly owned subsidiary.

(ii) KEC Investment Holdings, Mauritius has no investment in the Company. It has investment of 1 Ordinary Share of USD 50 in KEC International Holdings LLC, USA, its wholly owned subsidiary. During the previous year ended March 31, 2016, KEC Investment Holdings, Mauritius has made investment in SAE Towers Holdings LLC, its wholly owned step-down subsidiary, amounting to USD 10,000,000 Liabilities associated with assets classified as held for sale (i.e. advance against assets classified as held for sale)Rs.940.94 lakh (As at March 31, 2016, Rs.940.94 lakh, As at April 1, 2015, Rs.940.94 lakh) included under Note 31 âOther current liabilitiesâ

11.1 3,750 fully paid up Equity Shares of Rs. 2 each were allotted to a trustee against 1,688 equity shares of the erstwhile RPG Transmission Limited (RPGT), since merged in the Company in 2007-08, where rights were kept in abeyance by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

11.2 The Company has only one class of Equity Shares having a face value of Rs. 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid- up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

Note (a) Capital reserve was created on account of merger of RPG Cables Limited (RPGCL) with the Company pursuant to the Scheme of Amalgamation in the financial year 2009-2010.

Note (b) Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act.

Note (c) This reserve was created for redemption of preference shares. The preference shares were redeemed in the financial years 2007-08 and 2008-09.

Note (d) Debentures redemption reserve is created towards redemption of debentures referred to in Note 23.

Note (e) General reserve is created from time to time by way of transfer profits from retained earnings. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

Note (f) This reserve pertains to the Joint Operation at Saudi Arabia. In accordance with the Saudi Arabian Companies law and the Articles of Association, 10 % of the annual net income is required to be transferred to the Statutory Reserve until the reserve reaches 50 % of the capital of the Joint Operation.

12.1 Debentures

(a) 2,500, Secured, Rated, Listed, Redeemable Non-Convertible Debentures (âNCDâ) of face value of Rs.10 lakh each aggregating Rs.25,000 lakh issued during the year are secured by first charge on the immovable properties at Vadodara and Mysore. Further secured by hypothecation of movable assets of the Company situated at Mysore and Vadodara. 500 NCD of Rs.10 lakh each aggregating Rs.5,000 lakh are repayable on December 20, 2021, 500 NCD of Rs.10 lakh each aggregating Rs.5,000 lakh are repayable on April 20, 2021 and 1,500 NCD of Rs. 10 lakh each aggregating to Rs.15,000 lakh are repayable on April 20, 2020. Debentures are Zero Coupon with yield on maturity of 9.33% p.a. monthly compounded and payable at maturity (with a yield to maturity @9.74% p.a.)

(b) Rs.Nil (As at March 31, 2016 Rs.7,500 lakh, As at April 1, 2015 Rs.7,500 lakh) 750,11.65%, Privately Placed, Secured, Redeemable Non-Convertible Debenture (âNCDâ) of Rs. 10 lakh each aggregating Rs.7,500 lakh, secured by first charge on the Companyâs immovable property located at Mysore and hypothecation of all fixed and movable assets of the Company located at Mysore. 350 Debentures of Rs. 10 lakh each aggregating Rs.3,500 lakh which were repayable on June 15, 2018 and 400 Debentures of Rs. 10 lakh each aggregating Rs. 4,000 lakh which were repayable on June 14, 2017 have been repaid during the year.

12.2 Term loans from banks

(a) Rs. Nil (As at March 31, 2016 Rs. 5,006.27 lakh, As at April 1, 2015 Rs. 6,313.55 lakh) secured by first charge on land, building and plant & machinery at Jabalpur and Nagpur factories. The term loan which was repayable by September 28, 2018 has been repaid during the year.

(b) Rs. Nil (As at March 31, 2016 Rs. 4,241.27 lakh, As at April 1, 2015 Rs. 4,736.05 lakh) secured by first charge on land, building and plant & machinery situated atjaipur factory. The term loan which was repayable by March 31, 2019 has been repaid during the year.

(c) Rs. Nil (As at March 31, 2016 Rs. Nil, As at April 1, 2015 Rs. 2,798.50 lakh) secured by first charge on movable assets of Telecom Division including Telecom Towers.

(d) Rs. Nil (As at March 31, 2016 Rs. Nil, As at April 1, 2015 Rs. 564.31 lakh) secured by first charge on movable fixed assets i.e construction equipment pertaining to the Transmission, Distribution and Railway business situated at various projects sites in India.

12.3 Term loans from other parties

(a) Rs. Nil (As at March 31, 2016 Rs. 4,595.65 lakh, As at April 1, 2015 Rs. 6,160.87 lakh) secured by exclusive first charge on the project assets, including immovable properties at Cable factory, Vadodara. The term loan which was repayable by March 20, 2018 has been repaid during the year.

(b) Rs. Nil (As at March 31, 2016 Rs. Nil, As at April 1, 2015 Rs. 807.69 lakh) secured by first charge over the fixed assets pertaining to Tower Testing Station situated in Nagpur.

12.4 Finance Lease Obligations

(a) Rs.8.51 lakh (As at March 31, 2016 Rs.22.40 lakh, As at April 1, 2015 Rs.286.47 lakh) secured against equipment of a joint operation at Saudi Arabia. The lease obligation is repayable in monthly instalments through November, 2017 and the present interest rate is 10.63% p.a.

(b) Rs.412.35 lakh (As at March 31, 2016 Rs.828.45 lakh, As at April 1, 2015 Rs.176.19 lakh) secured against certain vehicles of a joint Operation at Saudi Arabia. The lease obligations are repayable in monthly instalments through December, 2018 and the present interest rates are in the range of 10.63% to 14.84% p.a.

13.1 Loans repayable on demand from banks :

(a) Secured

(i) Rs.5,088.32 lakh (As at March 31, 2016 Rs.90,468.99 lakh, As at April 1, 2015 Rs.51,931.78 lakh) secured by first charge by hypothecation on the whole of the current assets of the Company, both present and future (except specific receivables financed by financial institutions and banks) and second charge on all the movable fixed assets of the Company. Further secured by first charge on fiat situated at Juhu, Mumbai and second charge created on the Companyâs immovable properties situated atjaipur, Jabalpur and Nagpur factories. The present interest rates are in the range of 9.50% to 13.50% p.a.

(ii) Rs.1.53 lakh (As at March 31,2016 Rs. 19,138.39 lakh, As at April 1, 2015 Rs.12,735.79 lakh) guaranteed by banks, which in turn is secured by security stated against Note 27.1 (a) (i) above. The present interest rates are in the range of 2.41% to 3.48% p.a.

(iii) Rs.1,489.00 lakh (As at March 31, 2016 Rs.983.10 lakh, As at April 1, 2015 Rs.4,046.69 lakh) secured by assignment of certain overseas book debts of the Company. The present interest rate is 6.00% p.a.

(iv) Rs.20,091.42 lakh (As at March 31,2016 Rs. 14,805.73 lakh, As at April 1, 2015 Rs.1,096.09 lakh), secured by the contract receivables of certain projects of a joint operation at Saudi Arabia. Also secured by bank guarantee given by bankers of the Company which in turn is secured by security of the Company stated against Note 27.1 (a) (i), corporate guarantee of the Company. The present interest rates are in the range of3.50% to 4.50% p.a.

13.2 Other short-term borrowings

(a) From Banks-secured

(i) Rs.44,281.45 lakh (As at March 31,2016 Rs. 46,025.58 lakh, As at April 1, 2015 Rs. 63,143.99 lakh) secured by security stated against Note 27.1 (a) (i) above. The present interest rates are in the range of 1.44% to 2.50% p.a.

(ii) Rs.10,606.41 lakh (As at March 31, 2016 Rs.13,832.76 lakh, As at April 1, 2015 Rs.4,331.08 lakh), secured by the contract receivables of certain projects of a joint operation at Saudi Arabia discounted with the banks. Also secured by corporate guarantee given by the Company. The present interest rates are in the range of3.88% to 4.31% p.a.

(iii) Rs.Nil (As at March 31, 2016 Rs.20,146.78 lakh, As April 1, 2015 Rs.10,966.56 lakh) secured by contract receivables of certain projects of the Company discounted with the banks.

(b) Unsecured

(i) Rs.4,559.71 lakh (As at March 31, 2016 Rs.14,008.76 lakh, As at April 1, 2015 Rs.3,408.94 lakh), pertains to the Company. The present interest rates are in the range of9.50% to 10.50% p.a.

(ii) Rs.5,530.89 lakh (As at March 31, 2016 Rs.484.00 lakh , As at April 1, 2015 Rs.Nil), pertaining to a joint operation at Saudi Arabia. The present interest rates are in the range of2.00% to 4.40% p.a.

(c) From Other Parties-secured

(i) Rs.13,589.90 lakh (As at March 31, 2016 Rs.14,341.61 lakh, As at April 1, 2015 Rs. 15,141.18 lakh) secured by security stated against Note 27.1 (a) (i) above. The loan of Rs. 3,894.74 lakh carries interest rate of 3.82% p.a, loan of Rs.4,857.67 lakh carries interest rate of 3.51% p.a and loan of Rs. 4,837.49 lakh carries interest rate of3.54% p.a.

(ii) Rs.14,831.58 lakh (As at March 31,2016 Rs. Nil , As at April 1, 2015 Rs.25,987.28 lakh) being commercial papers issued against standby facilities from certain banks which in turn is secured by security stated against Note 27.1 (a) (i) above. The present interest rates are in the range of 6.75% to 7.25% p.a. Maximum balance outstanding anytime during the year is Rs.80,000 lakh (during the year ended March 31, 2016 Rs.80,000 lakh)

Acceptances comprises of credit availed for payment to suppliers for materials (including project bought outs) purchased and services availed by the Company. The arrangements are payable as per agreed credit terms. The fair value of acceptances is not materially different from the carrying values presented.

Credit period varies as per the contractual terms of various suppliers/vendors. No interest is generally charged by the suppliers/ vendors. The Company has appropriate policy in place to ensure that all dues are paid within the credit terms agreed with the parties.

14.1 Excise duty shown above includes Rs. (67.99) lakh (Previous Year Rs. (371.98) lakh) being excise duty related to the difference between the closing stock and opening stock of finished goods.

14.2 Other expenses shown above include fees of Rs.152.26 lakh (Previous YearRs.164.54 lakh) paid to branch auditors, fees of Rs.49.92 lakh for auditors of joint operations (Previous Year of Rs. 23.07 lakh) and fees of Rs. 7.00 lakh (Previous YearRs.7.00 lakh) paid to the cost auditors.

Note 15 - Joint Operations

Details of the Companyâs joint Operations are as under:

a) The Company accounts for the assets, liabilities, revenue and expenses relating to its interest in joint operations based on the internal agreements / arrangements entered into between the parties to the joint arrangements for execution of projects, which in some cases are different than the ownership interest disclosed above. Accordingly the Company has recognised total income from operations Rs.119,343.53 lakh (for the year ended March 31, 2016 Rs.165,052.02 lakh), total expenditure (including tax) Rs.100,665.36 lakh (for the year ended March 31, 2016 Rs.146,252.15 lakh), total assets as at March 31, 2017 Rs.178,725.71 lakh (as at March 31, 2016 Rs.165,598.36 lakh, as at April 1, 2015 Rs.129,114.57 lakh) and total liabilities as at March 31, 2017 Rs.138,356.72 lakh (as at March 31, 2016 Rs.142,932.10 lakh, as at April 1, 2015 Rs.111,048.36 lakh).

Note 16 - Leases (A) - Operating Leases

(i) The Company has entered into various long term lease agreements for land. The Company does not have an option to purchase the leased land at the expiry of the lease period. The unamortised operating lease prepayments as at March 31, 2017 aggregating Rs.4,123.77 lakh (as at March 31, 2016 Rs.4,201.33 lakh, as at April 1, 2015 Rs. 4,270.21 lakh) is included in other non current/current assets.

(ii) The Company has also entered into agreements for taking on operating lease a factory facility, residential premises, office premises, warehouses, furniture and fixtures and machinery, etc.

(B) - Finance Leases

(i) The joint operation of the Company has taken certain vehicles and equipment under finance lease. The average lease term is 3 years. There is option to purchase the assets at the end of lease terms. The obligation under finance leases are secured by the leased assets. There are no restrictions such as those concerning dividends, additional debt and further leasing imposed by the lease agreement.

Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 10.63% to 14.84% p.a

For net carrying amount of assets acquired under finance lease as at March 31, 2017 - Refer Note 6 Property, Plant and Equipment.

(ii) The maturity profiles of finance lease obligations are as follows:

Note 17 - Financial Instruments

17.1 Capital Management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity.

The capital structure of the Company consists of net debt (borrowings as detailed in Notes 23 and 27 offset by cash and bank balances in Notes 15 and 16) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital.

17.2 Financial risk management objectives

The Company seeks to minimise the effects of currency risk and commodity price risk by using derivative and non derivative financial instruments to hedge risk exposures. The Company has Risk Management Policies to mitigate the risks in commodity and foreign exchange. The use of financial derivatives and non-derivatives is governed by the Companyâs policies approved by the Board of Directors (BOD), which provide written principles to use financial derivatives and non-derivative financial instruments, to hedge currency risk and commodity price risk. The Company does not enter into or trade financial instruments, including derivative financial instruments and non-derivative financial instruments, for speculative purposes.

17.3 Market risk

The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates (see Notes 48.5 and 48.10 below) and commodity price (see Note 48.8 below). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, interest rate risk and commodity price risk including:

- forward foreign exchange contracts to hedge the exchange rate risk arising from execution of international projects.

- Commodity Over the Counter (OTC) derivative contracts to hedge the Price Risk for base metals such as Copper, Aluminium and Zinc.

Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set by the Board of Directors.

17.4 Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as under:

17.5 Sensitivity for above exposures

5% appreciation / depreciation in the functional currency of the Company i.e rupee with respect to the respective foreign currencies would result in decrease/ increase in the Companyâs profit before tax and equity by Rs.15,809.86 lakh and Rs.12,643.89 lakh for financial assets and financial liabilities respectively, for the year ended March 31, 2017. 5% appreciation / depreciation in the functional currency of the company i.e rupee with respect to the respective foreign currencies would result in decrease/ increase in the Companyâs profit before tax and equity by Rs.14,924.04 lakh and Rs.12,503.81 lakh for financial assets and financial liabilities respectively, for the year ended March 31, 2016. 5% appreciation / depreciation in the functional currency of the company i.e rupee with respect to the respective foreign currencies would result in decrease/ increase in the Companyâs equity by Rs.15,179.68 lakh and Rs.14,549.84 lakh for financial assets and financial liabilities respectively, as at April 1, 2015.

17.6 Forward exchange contracts

The following table details the forward foreign currency (FC) contracts as fair value hedges outstanding at the end of the reporting period:

The line-items in the balance sheet that include the above instruments are âOther financial assetsâ and âOther financial liabilitiesâ.

For the year ended March 31, 2017, the aggregate amount of gains under forward foreign exchange contracts recognised in the Statement of Profit and Loss is Rs.438.85 lakh (for the year ended March 31, 2016 gain of Rs. 138.54 lakh).

In respect of the Companyâs foreign currency forward contract (buy), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate gain/(loss) of Rs. 1,182.50 lakh/( Rs. 1,182.50 lakh) and an approximate gain/(loss) of Rs. 57.65 lakh/ ( Rs. 57.65 lakh) for the year ended March 31, 2017 and the year ended March 31, 2016 respectively in the Companyâs Statement of Profit and Loss/Other Comprehensive Income.

In respect of the Companyâs foreign currency forward contract (sell), a 5 % appreciation/depreciation of the foreign currency underlying such contracts would have resulted in an approximate (loss)/gain of ( Rs. 73.73 lakh)/ Rs. 73.73 lakh and an approximate (loss)/gain of( Rs. 407.32 lakh)/ Rs. 407.32 lakh for the year ended March 31, 2017 and the year ended March 31, 2016 respectively in the Companyâs Statement of Profit and Loss/ Other Comprehensive Income.

17.7 Commodity price risk

The Company is exposed to movement in metal commodity prices of Copper, Aluminium, Steel and Zinc. Most of our contracts with the Indian customers are backed by a price variation for most of these metals. However, profitability in case of firm price orders is impacted by movement in the prices of these metals. The Company has a well defined hedging policy approved by Board of Directors, which to a large extent takes care of the commodity price fluctuations and minimizes the risk. For base metals like Aluminium, Copper and Zinc, the Company either places a firm order on the supplier or hedges its exposure on the London Metal Exchange (LME) directly. For Steel, the Company either places a long term firm price order with the suppliers or builds stocks on need basis to mitigate the risk.

In respect of the Companyâs commodity derivative contracts, a 10 % appreciation/depreciation of all commodity prices underlying such contracts, would have resulted in an approximate gain/ (loss) of Rs. 512.04 lakh/ (Rs.512.04 lakh) and an approximate gain/(loss) of Rs. 1,179.75 lakh/ ( Rs. 1,179.75 lakh) in the Statement of Profit and Loss/other comprehensive income for the year ended March 31, 2017 and for the year ended March 31, 2016 respectively.

17.8 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments. The Companyâs major customers includes government bodies and public sector undertakings. Further, many of the International projects are funded by the multilateral agencies such as World Bank, African Development Bank, Asian Development Bank etc. For private customers, the Company evaluates the creditworthiness based on publicly available financial information and the Companyâs historical experiences. The Companyâs exposure to its counterparties are continuously reviewed and monitored by the Chief operating decision maker (CODM).

Credit period varies as per the contractual terms with the customers. No interest is generally charged on overdue trade receivables.

The Company directly reduce the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The amounts of financial assets are net of an allowance for doubtful accounts, estimated by the Company and based, in part, on the age of specific receivable balance and the current and expected collection trends. When assessing the credit risk associated with its receivables, the Company also considers the other financial and non-financial assets and liabilities recognized within the same project to provide additional indications on the Companyâs exposure to credit risk. As such, in addition to the age of its Financial Assets, the Company also considers the age of its contracts in progress, as well as the existence of any deferred revenue or down payments on contracts on the same project or with the same client. The Company has used practical expedient by computing expected credit loss allowance for trade receivable by taking into consideration historical credit loss experience and adjusted for forward looking information. The expected credit loss is based on the ageing of the days, the receivables are due and the expected credit loss rate.

In addition the Company is exposed to credit risk in relation to financial guarantees given by the Company on behalf of its subsidiaries and joint operations (net of Companyâs share). The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on (net of Companyâs share in joint operations), as at March 31, 2017 Rs.76,797.28 lakh (as at March 31, 2016, Rs.58,437.96 lakh, as at March 31, 2015, Rs.46,840.07 lakh). These financial guarantees have been issued to the banks on behalf of the subsidiaries and joint operations under the agreements entered into by the subsidiaries/ Joint operations with the banks. Based on expectations at the end of the reporting period, the Company considers the likelihood of any claim under the guarantee is remote.

17.9 Interest rate risk management

The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates.

The Companyâs exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management (Refer Note 48.12) of this Note.

17.10 Interest rate sensitivity

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs profit for the year ended March 31, 2017 would decrease/ increase by Rs.1,211.89 lakh (for the year ended March 31, 2016 decrease/increase by Rs.1,678.90 lakh). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

During the year, the Companyâs sensitivity in interest rate has decreased due to reduction in variable debt instruments.

17.11 Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of the financial assets and liabilities.

The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The amounts included above for financial guarantee contracts are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee (Refer Note 48.9).

The amounts included above for variable interest rate instruments for non-derivative financial liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.

The Company has access to various fund/non-fund based bank financing facilities. The amount of unused borrowing facilities (fund and non fund based) available for future operating activities and to settle commitments as at March 31, 2017 Rs.556,674.58 lakh, (as at March 31, 2016 Rs.441,198.22 lakh, as at April 1,2015 Rs. 381,946.82 lakh).

17.12 Fair value measurements

Fair value of the Companyâs financial assets and financial liabilities that are measured at fair value on a recurring basis. This note provides information about how the Company determines fair values of various financial assets and financial liabilities.

Note 18 - Employee Benefit Plans

1. Defined contribution plans Superannuation

The Company contributed Rs.103.74 lakh and Rs.107.02 lakh to the Employeesâ Superannuation fund for the year ended March 31, 2017 and March 31, 2016, respectively.

Provident Fund

All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company contributes as specified under the law to the Provident Fund where set up as a trust and to the respective Regional Provident Fund Commissioner. The Company contributes to the Provident Fund where set up as a trust are liable for future provident fund benefits to the extent of its annual contribution and any short fall in fund assets based on government specified minimum rates of return relating to the current period service and recognizes such contributions and any shortfall, if any, as an expense in year incurred. In accordance with the recent actuarial valuation, there is no deficiency in the interest cost as the present value of expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest. The Company contributed Rs.894.03 lakh and Rs.838.92 lakh towards the provident fund and family pension fund during the year ended March 31, 2017 and March 31, 2016 respectively.

2. Defined Benefit Plan

a. A general description of the Employee Benefit Plan:

(i) Company (Funded)

The Company has set up an income tax approved trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan. The Company makes contribution to the plan. There are no minimum funding requirement for the plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the Income tax and rules. Besides this if the Company is covered by the payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

(ii) Joint operation in Saudi (Unfunded)

The Joint Operation has an obligation towards a defined benefit retirement plan (akin to gratuity) covering eligible employees. The benefits payable are as under:

b. These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk: Investment risk

Interest rate risk

A decrease in the bond interest rate will increase the plan liability;however, this will be partially offset by an increase in the return on the planâs debt investments.

Longevity risk

Salary risk

No other post-retirement benefits are provided to the employees.

In respect of the plan in India and joint operation in Saudi, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2017 by an actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Note 19 - Related Party Disclosures

Related party disclosures as required by IND AS 24âRelated Party Disclosuresâ are given below:

(A) Name and nature of relationship of the parties where control exists

(B) Details of related parties with whom transactions have taken place Entity having significant influence over the Company

Swallow Associates LLP

Subsidiaries

KEC Power India Private Limited

KEC Global FZ-LLC, Ras UL Khaimah

RPG Transmission Nigeria Limited

SAE Towers Ltd, USA

KEC Transmission LLC, USA

KEC US LLC, USA

SAE Towers Mexico S de RL de CV, Mexico

KEC Investment Holdings, Mauritius

KEC Global, Mauritius

KEC Bikaner Sikar Transmission Private Limited

Key Management Personnel (KMP)

Mr. H. V. Goenka- Chairman

Mr. Vimal Kejriwal - Managing Director & CEO

Mr. A. T. Vaswani - Non - Executive Director

Mr. D. G. Piramal - Non - Executive Director

Mr. G.L. Mirchandani - Non - Executive Director

Ms. Nirupama Rao - Non - Executive Director

Mr. R. D. Chandak - Non - Executive Director (Managing Director upto April 1, 2015)

Mr. S. M. Kulkarni - Non - Executive Director

Mr. S. M. Trehan - Non - Executive Director

Mr. S. S. Thakur - Non - Executive Director

Mr.Vinayak Chatterjee - Non - Executive Director

List of other related parties Post - employment benefit plan

KEC International Ltd. Employeesâ Group Gratuity Scheme

KEC International Limited - Provident Fund

KEC International Ltd. Superannuation Scheme

Relative of Key Management Personnel

Mr. Anant Goenka- Relative of Mr. H. V. Goenka

Entities where control / significant influence by KMPs and their relatives exists and with whom transactions have taken place

Harsh Anant Goenka HUF

Chattarpati Investments LLP

Atlantus Dwellings & Infrastructure LLP

CEAT Limited

B. N. Elias & Co. LLP

Palacino Properties LLP

RPG Enterprises Limited

Raychem RPG Private Limited

Ceat Speciality Tyres Limited

Spencers and Company Limited

Zensar Technologies Limited

Notes:

1. Under Previous GAAP, all joint arrangements (referred to in Note 5.1.1) were classified as jointly controlled entities and accounted for using proportionate consolidation method in the Consolidated Financial Statements. Based on assessment under Ind AS 111 âJoint Arrangementsâ, these Joint Arrangements have been classified as joint operations and have been accounted accordingly in this financial statements.

Consequently total assets as at March 31, 2016 aggregating Rs. 165,598.36 lakh (as at April 1, 2015 Rs. 129,114.57 lakh), and total liabilities as at March 31, 2016 Rs. 142,932.10 lakh (as at April 1, 2015 Rs. 111,048.36 lakh) and total income (net of consolidated adjustments) Rs. 112,685.90 lakh and total expenditure (net of consolidated adjustments) for the year ended March 31, 2016 aggregating Rs. 107,627.77 lakh of Joint Operations have been proportionately consolidated. As a result, the total equity as at March 31, 2016 increased by Rs. 22,666.26 lakh (As at April 1, 2015 Rs. 18,066.21 lakh) and profit after tax for the year ended March 31, 2016 increased by Rs. 5,058.13 lakh.

2. Under Previous GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue were recognised in the financial statements as a liability. Under Ind AS, such dividends are recognised when declared by the members in a general meeting. The effect of this change is an increase in total equity as at March 31, 2016 of Rs. Nil (as at April 1, 2015 Rs. 2,784.83 lakh), but does not affect Profit after tax for the year ended March 31, 2016.

3. Under Previous GAAP, mark to market gain on outstanding commodity contracts are not recognised, until realised, on ground of prudence. Under Ind AS, since these contracts are measured at fair value, the Company has recognised gain of Rs. 404.31 lakh as at transition date and the same got reversed during the year ended March 31, 2016.

Further under Previous GAAP, in respect of forward exchange contracts the Company has recognised the mark to market loss by comparing the spot rates on booking date with the reporting date and also amortised forward premium over the life of the contract. Under Ind AS, the Company has fair valued the forward contracts. As a result the Company has recognised gain of Rs. 17.98 lakh as at March 31, 2016 (As at April 1, 2015 Rs. 31.87 lakh which got reversed during the year ended March 31, 2016).

The above have resulted in increase in equity as at March 31,2016by Rs. 17.98 lakh (as at April 1,2015 Rs. 436.18 lakh) and decrease in profit for the year ended March 31, 2016 by Rs. 418.20 lakh.

4. Under Previous GAAP, the Scheme of Amalgamation (the Scheme) between Jay Railway Projects Private Limited and the Company which was effective from April 1, 2014 was accounted in the year ended March 31, 2016 since the Scheme became operative from December 30, 2015 upon filing of the certified copy of the order of the High Court with the Registrar of Companies. Accordingly, the Company has recorded all the assets and liabilities of Jay Railway Projects Private Limited at their respective book values on the transition date. This has resulted in decrease in equity as on the transition date by Rs. 114.34 lakh.

5. Under Previous GAAP, the Company has created provision for doubtful debts on receivables on the basis of incurred loss. Under Ind AS, loss allowance on financial assets has been determined on the basis of Expected Credit Loss (ECL). Consequently, the Company has recognised ECL on its financial assets as at March 31, 2016 aggregating Rs. 4,498.66 lakh (As at April 1, 2015 Rs. 4,191.86 lakh). The above has resulted decrease in equity and financial assets as at March 31, 2016 by Rs. 4,498.66 lakh (As at April 1,2015 Rs. 4,191.86 lakh) and decrease in profit before tax for the year ended March 31, 2016by Rs. 306.80 lakh

6. Others includes impact of fair value of financial guarantee contracts in respect of guarantees given on behalf of the subsidiaries which under Previous GAAP were disclosed under contingent liability. This has resulted in increase in carrying amount of certain investments and equity as at March 31, 2016 by Rs. 510.80 lakh (As at April 1, 2015 Rs. 161.69 lakh) and increase in profit before tax for the year ended March 31,2016by Rs. 349.11 lakh.

7. Under Previous GAAP, there is no concept of Other Comprehensive Income (OCI). Under Ind-AS specified items of income, expenses, gains and losses are required to be presented in OCI.

Under Previous GAAP, for designated hedging relationships, the Company has recognised mark to market gain on derivative and non-derivative instruments which are designated in hedging relationship under the Hedging Reserve. Under Ind-AS, movement in this reserve during the year ended March 31, 2016 of Rs. 256.41 lakh (net of deferred tax of Rs. 134.03 lakh) is shown under OCI. Further, exchange loss in translating assets and liabilities of joint operations outside India which are denominated in foreign currency as at March 31, 2016 aggregating Rs. 325.60 lakh (net of deferred tax of Rs. 201.20 lakh) is also recognised in OCI.

Under Previous GAAP, re-measurement of defined benefit plans (gratuity) arising primarily due to change in actuarial assumptions was recognised as employee benefit expenses in the Statement of Profit and Loss. Under Ind-AS, such re-measurements changes relating to defined benefit plans is recognised in the OCI. This change does not affect equity, but there is increase in profit before tax for the year ended March 31, 2016 by Rs.315.51 lakh and corresponding decrease in OCI along with the related deferred tax charge of Rs. 109.19 lakh.

The above has resulted in decrease in OCI (net of tax) for the year ended March 31, 2016 by Rs.275.51 lakh and increase in profit by Rs.315.51 lakh

8. Consequent to classification of Joint arrangements as Joint operations referred to in Note 1 above, the Company has recognised deferred tax liability on undistributed profits as at March 31, 2016 amounting to Rs.5,919.99 lakh (As at April 1, 2015 Rs.4,644.74 lakh). The Company has also recognised deferred tax assets on all other transition adjustments mentioned above aggregating Rs.1,575.49 lakh (as at April 1, 2015 Rs.1,244.22 lakh).

The above has impacted decrease in equity as at March 31, 2016 by Rs. 4,344.87 lakh (As at April 1,2015 Rs. 3,400.52 lakh) and decrease in profit after tax for the year ended March 31, 2016 by Rs.1,254.74 lakh. Further deferred tax credit of Rs. 310.39 lakh recognised in OCI.

9. Under the previous GAAP, excise duty on sale of goods was reduced from sales to present the revenue from operations. Whereas, under Ind AS, this excise duty is included in the revenue from operations and the corresponding expense is included as part of total expenses. The change does not affect total equity as at April 1, 2015 and profit for the year ended March 31, 2016.

(c) Except for Ind AS adjustment mentioned in Note 1 which resulted in net cash outflow of Rs. 3,505.84 lakh for the year ended March 31, 2016, other Ind AS adjustments are either non-cash adjustments or regrouping among the cash flows from operating, investing and financing activities.

Note 20

The details of amounts which are expected by the Company (and relied upon by the Auditors) to be recovered or settled after twelve months in respect of assets and liabilities relating to long-term contracts which are classified as current are as under:

Note 21

The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to infrastructure interalia products, projects and systems for power transmission, distribution, and related activities. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) i.e. Managing Director for the purpose of resource allocation and assessing performance focuses on the business as a whole. The CODM reviews the Comapnyâs performance on the analysis of profit before tax at an overall entity level. Accordingly, there is no other separate reportable segment as defined by Ind AS 108.â Operating Segmentsâ. As the Company also prepares the consolidated financial statements (CFS), other relevant segment information is disclosed in the CFS.

Note 22

Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act).This has been relied upon by the auditors.

Note 23

The execution of the construction works under contracts of the Company with General Electric Company Libya (a Government of Libya undertaking) is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, trade receivables etc.] as at March 31, 2017 of the Company relating to these contracts aggregate Rs.2,557.11 lakh (As at March 31, 2016 Rs.3,134.86 lakh, As at April 1, 2015 Rs.5,125.96 lakh) The Company has been receiving time extension from the client, from time to time, for completion of the contracts. The Company is confident of completing these projects.

Note 24

In terms of the agreement entered into, in an earlier year, by the Company with the another joint operator, the Company had funded (including for the other operatorâs share) its joint operation at South Africa viz. EJP KEC Joint Venture, South Africa (JO) for smooth execution of the transmission line projects at South Africa referred to in the said agreement, which was ultimately completed by the JO in April 2014. The Companyâs share of loss accounted in retained e

Mar 31, 2016

1.1 3,750 fully paid up Equity Shares of Rs. 2 each were allotted to a trustee against 1,688 equity shares of the erstwhile RPG Transmission Limited (RPGT), since merged in the Company in 2007-08, where rights were kept in abeyance by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

2. The Company has only one class of Equity Shares having a face value of Rs. 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

3. 750, 11.65% Privately Placed, Secured, Redeemable Non-Convertible Debentures of Rs. 10 lacs each aggregating Rs. 7,500 lacs (Previous Year - Rs. 7,500 lacs) are secured by an equitable mortgage on land situated at Cable factory, Mysore and hypothecation of all movable fixed assets situated at Cable factory, Mysore. 350 Debentures of Rs. 10 lacs each aggregating Rs. 3,500 lacs are repayable on June 15, 2018 and 400 Debentures of Rs. 10 lacs each aggregating to Rs. 4,000 lacs are repayable on June 14, 2017.

4. Term loans from banks :

(a) Rs. NIL (Previous Year Rs. 2,798.50 lacs) secured by first charge on movable assets of Telecom Division including Telecom Towers.

(b) Rs. NIL (Previous Year Rs. 564.13 lacs) secured by first charge on movable fixed assets i.e. construction equipment pertaining to the Transmission, Distribution and Railway business situated at various project sites in India.

(c) Rs. 5,015.00 lacs (Previous Year Rs. 6,327.50 lacs) secured by first charge on land, building and plant & machinery at Jabalpur and Nagpur factories, both present and future. The term loan is repayable in remaining 10 quarterly structured installments by September 28, 2018 and the present interest rate is 10.60% p.a.

(d) Rs. 4,250.00 lacs (Previous Year Rs. 4,750.00 lacs) secured by first charge on land, building and plant & machinery situated at Jaipur factory, both present and future. The term loan is repayable in remaining 12 quarterly structured installments by March 31, 2019 and the present interest rate is 11.20% p.a.

5. Term loans from other parties includes :

(a) Rs. Nil (Previous Year Rs. 807.69 Lacs) secured by first charge over the fixed assets pertaining to Tower Testing Station situated at Nagpur.

(b) Rs. 4,595.65 lacs (Previous Year Rs. 6,160.87 lacs) secured by exclusive first charge on the project assets including immovable properties at Cable factory, Vadodara both present and future. The term loan is repayable in remaining 8 equal quarterly installments by March 20, 2018 and the present interest rate is 10.50% p.a.

6. Loans repayable on demand from banks :

(a) Rs. 99,782.20 lacs (Previous Year Rs. 52,086.63 lacs) secured by first charge by hypothecation of all the present and future current assets excluding those covered under Note 4.2 (a) above and first charge on flat situated at Juhu, Mumbai and second charge created on fixed assets situated at Jaipur, Jabalpur & Nagpur factories. The present interest rates are in the range of 9.90% to 13.70% p.a.

(b) Rs. 9,987.42 lacs (Previous Year Rs. 12,735.79 lacs) guaranteed by banks, which in turn is secured by security stated against Note 7.1 (a) above. The present interest rates are in the range of 2.41% to 3.48% p.a.

(c) Rs. 983.10 lacs (Previous Year Rs. 4,046.69 lacs) secured by assignment of certain overseas book debts. The present interest rates are in the range of is 3.50% to 6.00% p.a.

7. Other short-term borrowings

(a) From Banks-secured

(i) Rs. 16,776.52 lacs (Previous Year Rs. 12,109.29 lacs)secured by security stated against Note 7.1 (a) above. The present interest rates are in the range of 1.45% to 2.02% p.a.

(ii) Rs. 3,312.50 lacs (Previous Year Rs. 3,124.75 lacs)secured by security stated against Note 7.1 (b) above. The present interest rate is 3.38% p.a.

(b) From Banks-unsecured

Rs. 7,947.16 lacs (Previous Year Rs. Nil) is repayable by December 2016 and carries interest rate of 1.93% p.a.

(c) From other parties

(i) Rs. 14,341.61 lacs (Previous Year Rs. 15,141.18 lacs) secured by security stated against Note 7.1 (a) above. The loans of Rs. 9,378.69 lacs carries interest of 3.91% p.a and loan of Rs. 4,962.92 lacs carries interest of 3.16% p.a.

(ii) Rs. Nil (Previous Year Rs. 26,000.00 lacs) being commercial paper against standby facilities from certain banks which in turn is secured by security stated against Note 7.1 (a) above. Maximum balance outstanding anytime during the year is Rs. 80,000 lacs (Previous Year Rs. 31,000 lacs)

8. Balances with banks includes deposits amounting to Rs. 115.92 lacs (Previous Year Rs. 153.86 lacs) and margin money or security against the borrowings, guarantees and other commitments Rs. 222.01 lacs (Previous Year Rs. 101.01 lacs) which have an original maturity of more than 12 months.

9. Balances with banks includes deposits amounting to Rs. Nil (Previous Year Rs. 5.92 lacs) which have a maturity of more than 12 months from the Balance Sheet date.

10. : Excise duty shown above includes Rs. (371.98) lacs (Previous Year Rs. 79.94 lacs) being excise duty related to the difference between the closing stock and opening stock of finished goods.

11. : Other expenses shown above include fees of Rs. 164.54 lacs (Previous Year Rs. 154.41 lacs) paid to branch auditors and fees of Rs. 7.00 Lacs (Previous Year Rs. 9.00 Lacs) paid to the cost auditors.

12.: Miscellaneous expenses shown above includes Rs. Nil (Previous Year Rs. 133.00 lacs) being contribution made for political party through an Electoral Trust.

2 Defined Benefit Plan (Funded)

a. A general description of the Employee Benefit Plan:

The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days / one month salary, as applicable, payable for each completed year of service or part thereof in excess of six months in terms of gratuity scheme of the Company or as per the Payment of the Gratuity Act, whichever is higher. Vesting occurs upon completion of five years of service.

NOTE 13. - The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to products, projects and systems for power transmission, distribution and related activities. Further, the Company''s business is managed across multiple geographies on a worldwide basis and the same is monitored on individual project basis. Accordingly, there is no other separate reportable segment as defined by Accounting Standard (AS) 17 "Segment Reporting". However, in the Consolidated Financial Statements, for the purpose of geographical segments, the consolidated revenue from operations are broadly divided into two segments- India and Outside India and disclosed accordingly.

NOTE 14. - Basic / diluted earnings per share has been calculated by dividing the profit for the year after tax of Rs. 15,800.96 lacs (Previous Year Rs. 11,073.50 lacs), by 25,70,88,370 (Previous Year 25,70,88,370) being the weighted average number of equity shares (having face value of Rs.2/- each) outstanding during the year.

NOTE 15. - Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act).This has been relied upon by the auditors.

NOTE 16. - SCHEME OF AMALGAMATION:

1. A Scheme of Amalgamation (the Scheme) between Jay Railway Projects Private Limited (Jay Railway) (engaged in EPC business relating to railways signaling automation systems and technology) and the Company and their respective shareholders under Section 391 to 394 of the Companies Act, 1956 was sanctioned by the Hon''ble High Court of Judicature at Bombay on December 30, 2015. The Scheme, which has become operative from December 30, 2015 upon fling of the certified copy of the Order of the Hon''ble High Court of Judicature at Bombay with the Registrar of Company in the Maharashtra, is effective from April 01, 2014 (The Appointed date).

2. Pursuant to the Scheme, with effect from the appointed date Jay Railway (Transferor Company) is amalgamated in the Company, as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein.

3. Upon the Scheme being effective, the shares held by the Company and its nominees in the Transferor Company have been cancelled and extinguished and no share was issued by the Company in consideration for the Scheme of Amalgamation. Further intercompany loans and balances between the Transferor Company and the Company have been cancelled.

The Company recorded all the assets and liabilities of Jay Railway and transferred to and vested in the Company at their respective book values. Further, the debit balance in Statement of profit and Loss of the Transferor Company as on the appointed date i.e. April 01, 2014 of Rs. 90.63 lacs and for the financially year 2014-15 of Rs. 22.98 lacs has been adjusted against the Surplus in Statement of profit and Loss of the Company.

4. The amalgamation being "Amalgamation in the nature of merger" has been accounted for under the pooling of interest method as prescribed in the Accounting Standard (AS-14) - "Accounting for Amalgamations".

NOTE 17. - The execution of the construction works under contracts of the Company with General Electric Company Libya (a Government of Libya undertaking) is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, trade receivables etc.] as at March 31, 2016 of the Company relating to these contracts aggregate Rs. 3,134.86 lacs (Previous Year Rs. 5,125.96 lacs) The Company has been receiving time extension from the client, from time to time, for completion of the contracts. The Company is confident of completing these projects.

NOTE 18. - In terms of the agreement entered into, in an earlier year, by the Company with the joint venture partner, the Company has funded EJP KEC Joint Venture, South Africa (JV) (including for the other venturer''s share) for smooth execution of the transmission line project at South Africa referred to in the said agreement, which was ultimately completed by the JV in April, 2014.

The JV suffered the loss in execution of the aforesaid project, interalia, on account of unexpected weather and terrain conditions, breach of contract by the client (e.g. changes in the specification, withholding payment due to JV).

During the previous year, the JV lodged various claims (viz. compensation and damages claims) on the client to recover additional costs incurred/ damages suffered by the JV during the execution of the project. During the year, the adjudication proceedings have commenced. Based on the claim expert/ legal advice received, the Company is confident that the JV will ultimately succeed in getting these claims from the client and thereby the Company will realise its dues from the JV. Accordingly, amount recoverable (net of provision) from the JV aggregating Rs. 10,998.22 lacs (Previous Year Rs. 13,022.97 lacs) as appearing under ''Short-term loans and advances'' - Note 18, has been considered good and recoverable by the management.

NOTE 19.- The Corporate Social Responsibility (CSR) obligation for the year as computed by the Company and relied upon by the auditors is Rs. Nil (Previous Year Rs. Nil). CSR amount spent during the year is Rs. 93.00 Lacs (Previous Year Rs. 39.50 Lacs).

NOTE 20. Â The transaction for sale of telecom tower assets at 381 sites in the states of Chhattisgarh, Meghalaya and Mizoram to ATC Telecom Tower Corporation Private Limited has been completed at a total consideration of Rs. 8,230 Lacs on July 22, 2015. profit on sale of these assets (net of related expenses) of Rs. 536.06 lacs is included under "Other Income" Note 21.

NOTE 21. Â During the previous year, pursuant to the notification of Schedule II to the Companies Act, 2013 (the Act) with effect from April 1, 2014, the Company revised the estimated useful life of its assets as mentioned in Note 1(F)(i). Pursuant to the transition provisions prescribed in Schedule II to the Act, the Company had fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1, 2014, and adjusted an amount of Rs. 199.01 lacs (net of deferred tax of Rs. 102.48 lacs) against the opening Surplus balance in the Statement of profit and Loss as at March 31, 2014 under Reserves and Surplus. The depreciation expense in the Statement of profit and Loss for the previous year was higher by Rs. 395.51 lacs consequent to the change in the useful life of the assets.

NOTE 22.- Previous Year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2014

1.1 Balances with banks includes deposits amounting to Rs. 8.92 lacs (Previous year Rs. 9.28 lacs) and margin money or security against the borrowings, guarantees and other commitments Rs. 240.78 lacs (Previous year Rs. 201.18 lacs) which have an original maturity of more than 12 months.

1.2 Balances with banks includes deposits amounting to Rs. 5.16 lacs (Previous year Rs. 5.16 lacs) which have a maturity of more than 12 months from the Balance Sheet date.

2.1 : Excise duty shown above includes Rs. 354.48 lacs (Previous year Rs. 59.52 lacs) being excise duty related to the difference between the closing stock and opening stock of finished goods.

2.2 : Professional fees shown above include fees of Rs. 133.30 lacs (Previous year Rs. 110.87 lacs) paid to branch auditors and fees of Rs. 9.00 lacs (Previous year Rs. 8.00 lacs) paid to the cost auditors.

NOTE 3 - Contingent Liabilities and Commitments (To the Extent not Provided for)

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debts :

Sr. Nature of Claims Relating to various years Current Year Previous Year No. comprise in the period Rs. in lacs Rs. in lacs

1 Sales Tax / Value Added Tax* 1993Â2012 6,599.87 (Tax/Penalty/ Interest) 1993Â2011 4,920.31

2 Excise Duty * 1994Â2014 3,408.22 (Tax/Penalty/ Interest) 1994Â2013 2,629.36

3 Service Tax * 1998Â2013 16,983.40 (Tax/Penalty/ Interest) 1998Â2013 16,882.72

4 Entry Tax * 2001Â2014 1,974.94 (Tax/Penalty/ Interest) 1995Â2013 1,788.80

5(i) Income Tax matters mainly in respect of A.y. 2006-07 2,416.10 - allowance of depreciation etc. relating to Power Transmission Business acquired by the Company where during the year Department has fled appeal in the Supreme Court

(ii) Income Tax matters at overseas unit/s 2002Â2008 3,143.53 2000Â2008 3,462.58

6 Customs Duty 1995Â1996 60.14 1995Â1996 60.14

7 Civil Suits 1993Â2004 72.02 1993Â2006 72.02

8 Demands of employees/ subcontractors Amount not determinable

*These claims mainly relate to the issues of applicability, issue of disallowance of cenvat / VAT credit and in case of Sales Tax / Value added tax, also relate to the issue of submission of relevant forms and the Company''s claim of exemption for MVAT on export sales and services.

2 Defined Benefit Plan (Funded)

a. A general description of the employee Benefit Plan :

The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days / one month salary, as applicable, payable for each completed year of service or part thereof in excess of six months in terms to gratuity scheme of the Company or as per the Payment of the Gratuity Act, whichever is higher. Vesting occurs upon completion of five years of service.

XI Contribution expected to be paid to the Plan during the year ending March 31, 2015 Â Rs. 337 lacs.

NOTE 4

The Company is primarily engaged in Engineering, Procurement and Construction business (EPC). Further, the Company''s business is managed across multiple geographies on a worldwide basis and the same is monitored on individual project basis. Accordingly, there is no other separate reportable segment as defined by Accounting Standard -17 "Segment Reporting".

NOTE 5 - Related Party Disclosures

(a) Name and nature of relationship of the party where Control exists Subsidiaries- wholly owned :

(i) RPG Transmission Nigeria Limited, Nigeria

(ii) KEC Global FZ Â LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited

(iv) KEC Investment Holdings, Mauritius

(v) KEC Global Mauritius, Mauritius

(vi) KEC Power India Private Limited

(vii) KEC International Holdings LLC, USA

(viii) KEC Brazil LLC, USA

(ix) KEC Mexico LLC, USA

(x) KEC Transmission LLC, USA

(xi) KEC US LLC, USA

(xii) SAE Towers Holdings, LLC, USA

(xiii) SAE Towers Brazil Subsidiary Company LLC, USA

(xiv) SAE Towers Mexico Subsidiary Holding Company LLC, USA

(xv) SAE Towers Mexico S de RL de CV, Mexico

(xvi) SAE Towers Brazil Torres de Transmission Ltda, Brazil

(xvii) SAE Prestadora de Servicios Mexico, S de RL de CV, Mexico

(xviii) SAE Towers Ltd, USA

(xix) SAE Towers Panama Holdings LLC, USA

(xx) SAE Towers Panama S de RL, Panama

(xxi) SAE Engenharia E Construcao Ltda, Brazil (Incorporated on October 29, 2012)

(xxii) SAE Engineering & Construction Services, S de RL de CV (Incorporated on November 8, 2013)

(xxiii) KEC International (Malaysia) SDN BHD (Incorporated on April 19, 2013)

Associate :

(i) RP Goenka Group of Companies Employees Welfare Association (incorporated on May 21, 2012)

key Management Personnel: Mr. R.D. Chandak Â Managing Director

(b) Parties with whom transactions have taken place :

Subsidiaries :

(i) RPG Transmission Nigeria Limited, Nigeria

(ii) KEC Global FZ Â LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited

(iv) KEC Investment Holdings, Mauritius

(v) KEC Power India Private Limited

(vi) SAE Towers Mexico S de RL de CV, Mexico

Joint Ventures :

(i) Al-Sharif Group and KEC Ltd. Company, Saudi Arabia (formerly known as Faiz Abdul Hakim Al-Sharif Group and KEC Company Ltd., Saudi Arabia)

(ii) EJP KEC Joint Venture, South Africa

(iii) KEC - ASSB JV, Malaysia

(iv) KEC - ASIAKOM Â UB JV

(v) KEC - ASIAKOM JV

(vi) KEC - JEI JV

(vii) KEC - DELCO - VARAHA JV

(viii) KEC - VARAHA - KHAZANA JV

(ix) KEC - VALECHA - DELCO JV

(x) KEC - SIDHARTH JV

(xi) KEC - TRIVENI - KPIPL JV

(xii) KEC - UNIVERSAL JV

(xiii) KEC - DELCO - DUSTAN JV

(xiv) KEC - ANPR - KPIPL JV

(xv) KEC - PLR - KPIPL JV

(xvi) KEC - BJCL JV

(xvii) KEC - KIEL JV

(xviii) KEC - ABEPL JV

(xix) KEC - TNR INFRA JV

(xx) KEC - SMC JV

(xxi) KEC - WATERLEAU JV

Associate :

(i) RP Goenka Group of Companies Employees Welfare Association

key Management Personnel: Mr. R. D. Chandak Â Managing Director

c) In respect of contracts as referred to in Note 1(C) (iii), the Company has recognised revenue from operations Rs. 2,326.25 lacs (Previous year Rs. 6,914.82 lacs), total expenditure Rs. 2,258.61 lacs (Previous year Rs. 7,323.26 lacs), total assets aggregating Rs. 9,333.78 lacs (Previous year Rs. 14,652.75 lacs) and total liabilities aggregating Rs. 9,262.76 lacs (Previous year Rs. 15,076.69 lacs).

NOTE 6

Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). This has been relied upon by the auditors.

NOTE 7

The execution of the construction works under contracts of the Company with General Electric Company Libya (a Government of Libya undertaking) is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, trade receivable, etc] as at March 31, 2014 of the Company relating to these contracts aggregate Rs. 6,378.26 lacs (Previous year Rs. 5,589.30 lacs). The situation in Libya is returning to normal and the Company is confident of completing these projects.

NOTE 8

The production of Cables at Thane factory has been discontinued from February 11, 2013 and during the year, the Company has given voluntary retirements to all the workers at a cost of Rs. 1,816.42 lacs. The complete range of products manufactured at Thane factory is now being manufactured at new cable factory at Vadodara.

Further the Company signed an ''Agreement for Sale" dated March 29, 2014 for sale of land (book value Rs. 6,313 lacs) to M/s Ardent Properties Pvt. Ltd. (a 100% subsidiary of Tata Housing Development Company Limited) for a consideration of approx. Rs. 21,234 lacs. The Company expects to complete all formalities shortly.

NOTE 9

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2013

1.1 3,750 fully paid up Equity Shares of Rs. 2 each were allotted to a trustee against 1,688 equity shares of RPGT, since merged in the Company in 2007-08, where rights were kept in abeyance under section 206A(b) of the Companies Act, 1956 by RPGT. On settlement of the relevant court cases/issues, the Equity Shares issued to the trustee will be transferred.

1.2 The Company has only one class of Equity Shares having a face value of Rs. 2 each. Every member shall be entitled to be present, and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. The Company in General Meeting may declare dividends to be paid to members according to their respective rights, but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

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.

2.1 Term loans from banks :

(a) Rs. 8,395.50 lacs (Previous Year Rs. 8,395.50 lacs) secured by first charge on movable assets of Telecom Division including Telecom Towers, both present and future. The term loan is repayable in 12 equal quarterly installments commencing from April 24, 2013 and carries interest rate of 7.25% p.a.

(b) Rs. 5,831.56 lacs (Previous Year Rs. 9,167.00 lacs) secured by way of first charge on fixed assets situated at Thane and Mysore. The term loan is repayable in remaining 7 equal quarterly installments by December 9, 2014 and the present interest rate is 11.75 % p.a.

(c) Rs. 1,260.00 lacs (Previous Year Rs. 2,940.00 lacs) secured by way of first charge on land, building and plant and machinery situated at Jaipur. The term loan is repayable in remaining 3 equal quarterly installments by December 31, 2013 and carries interest rate of 10.25% p.a.

(d) Rs. 2,854.92 lacs (Previous Year Rs. 4,000.00 lacs) secured by first charge on movable fixed assets i.e. construction equipment pertaining to the Transmission, Distribution and Railway business situated at various project sites in India, both present and future. The term loan is repayable in remaining 10 equal quarterly installments by September 27, 2015 and the present interest rate is 10.75% p.a.

(e) Rs. 3,700.00 lacs (Previous Year Rs. NIL) collaterally secured by first charge to be created on land, building and plant & machinery situated at Thane and Mysore. The term loan is repayable in 13 quarterly structured installments commencing from March 31, 2015 and the present interest rate is 10.50% p.a.

(f) Rs. 4,700.00 lacs (Previous Year Rs. NIL) secured by first charge to be created on land, building and plant & machinery situated at Nagpur and Jabalpur factories. The term loan is repayable in 20 quarterly structured installments commencing from December 28, 2013 and the present interest rate is 10.85% p.a.

(g) Rs. NIL (Previous Year Rs. 0.32 lacs) secured by hypothecation of vehicles.

2.2 term loans from other parties includes :

(a) Rs. 2,961.54 lacs (Previous Year Rs. 3,500.00 lacs) secured by first charge over the fixed assets pertaining to Tower Testing Station situated at Nagpur both present and future. The term loan is repayable in remaining 11 equal quarterly installments by December 09, 2015. The term loan of Rs. 1,692.32 lacs and Rs. 1269.22 lacs carry interest of 10% p.a. and 12.25% p.a. resepectively.

(b) Rs. 3.44 lacs (Previous Year Rs. 7.14 lacs) secured by hypothecation of vehicles. Out of these, the term loan of Rs. 0.77 lacs is repayable in remaining 5 equal monthly installments by August 03, 2013, Rs. 0.42 lacs is repayable in remaining 5 equal monthly installments by August 09, 2013 and Rs. 2.25 lacs is repayable in remaining 21 equal monthly installments by December 11, 2014 and carry interest rate of 13.20 % p.a.

(c) Rs. 10,334.78 lacs (Previous Year Rs. 7,400 lacs) secured by exclusive first charge on the project assets including immovable properties at Cable factory, Vadodara both present and future. The term loan is repayable in remaining 20 equal quarterly installments by March 20, 2018 and the present interest rate is 11.33% p.a.

3.1 Loans repayable on demand from banks :

(a) Rs. 37,739.19 lacs (Previous Year Rs. 5,640.56 lacs) secured by first charge by hypothecation of all the present and future current assets of the Company excluding those covered under Note 4.1 (a) above and second charge on the Company''s fixed assets situated at Jaipur, Jabalpur & Nagpur factories. The present interest rates are in the range of 10% to 16% p.a.

(b) Rs. 3,488.43 lacs (Previous Year Rs. 2,034.80 lacs) guaranteed by banks, which in turn is secured by security, stated against Note 7.1 (a) above. The present interest rate is 3.00% to 3.50% p.a.

(c) Rs. 2,395.45 lacs (Previous Year Rs. NIL ) secured by assignment of certain overseas book debts. The present interest rate is 3.64% p.a.

3.2 Other short-term borrowings

(a) From Banks

(i) Rs. 7,055.75 lacs (Previous Year Rs. 4,018.52 lacs) secured by security stated against Note 7.1 (a) above. The present interest rates are in the range of 3% to 4% p.a.

(ii) Rs. 2,500.00 lacs (Previous Year Rs. NIL) being commercial paper issued against stand by facility from a bank which in turn is secured by security stated against Note 7.1 (a) above and it carries rate of interest of 9.70% p.a. Maximum balance outstanding any time during the year is Rs. 5,000 lacs (Previous Year Rs. 1,25,000 lacs)

(iii) Rs. 11,394.23 lacs (Previous Year Rs. 15,769.70 lacs) secured by security stated against Note 7.1 (b) above. The present interest rates are in the range of 3% to 4% p.a.

(b) From other parties

Rs. 4,971.00 lacs (Previous Year Rs. 5,000.00 lacs) secured by security stated against Note 7.1 (a) above. The present interest rates are in the range of 4.00% to 10.50% p.a.

4.1 Balances with banks includes deposits amounting to Rs. 9.28 lacs (Previous Year Rs. 8.62 lacs) and margin money or security against the borrowings, guarantees and other commitments Rs. 201.18 lacs (Previous Year Rs. 249.25 lacs) which have an original maturity of more than 12 months.

4.2 Balances with banks includes deposits amounting to Rs. 5.16 lacs (Previous Year Rs. 3.61 lacs) which have a maturity of more than 12 months from the Balance Sheet date.

5.1 : Excise duty shown above includes Rs. 59.52 lacs (Previous Year Rs. 107.62 lacs) being excise duty related to the difference between the closing stock and opening stock of finished goods.

5.2 : Miscellaneous expenses include fees of Rs. 110.87 lacs (Previous Year Rs. 85.75 lacs) paid to branch auditors.

NOTE 6

The Company is primarily engaged in the business of Engineering, Procurement and Construction business (EPC). As such there is no other separate reportable segment as defined by Accounting Standard -17 "Segment Reporting".

RELATED PARTY DISCLOSURES

(a) Name and nature of relationship of the party where Control exists:

Subsidiaries- wholly owned

(i) RPG Transmission Nigeria Limited, Nigeria

(ii) KEC Global FZ - LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited

(iv) KEC Investment Holdings, Mauritius

(v) KEC Global Mauritius, Mauritius

(vi) KEC International Holdings LLC, USA

(vii) KEC Brazil LLC, USA

(viii) KEC Mexico LLC, USA

(ix) KEC Transmission LLC, USA

(x) KEC US LLC, USA

(xi) SAE Towers Holdings, LLC, USA

(xii) SAE Towers Brazil Subsidiary Company LLC, USA

(xiii) SAE Towers Mexico Subsidiary Holding Company LLC, USA

(xiv) SAE Towers Mexico S de RL de CV, Mexico

(xv) SAE Towers Brazil Torres de Transmission Ltda, Brazil

(xvi) SAE Prestadora de Servicios Mexico, S de RL de CV, Mexico

(xvii) SAE Towers Ltd, USA

(xviii) SAE Towers Panama Holdings LLC, USA

(xix) SAE Towers Panama S de RL, Panama

(xx) SAE Engenharia E Construcao Ltda, Brazil (Incorporated on October 29, 2012)

(xxi) KEC Power India Private Limited (Status changed from Joint Venture to Subsidiary w.e.f. March 31, 2012)

(b) Parties with whom transactions have taken place :

Subsidiaries:

(i) RPG Transmission Nigeria Limited, Nigeria

(ii) KEC Global FZ - LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited

(iv) KEC Investment Holdings, Mauritius

(v) KEC Global Mauritius, Mauritius

(vi) SAE Towers Holdings, LLC, USA

(vii) KEC Power India Private Limited (Status changed from Joint Venture to Subsidiary w.e.f. March 31, 2012)

(viii) SAE Towers Mexico S de RL de CV, Mexico Joint ventures:

(i) Al-Sharif Group and KEC Ltd. Company, Saudi Arabia (formerly known as Faiz Abdul Hakim Al-Sharif Group and KEC Company Ltd., Saudi Arabia)

(ii) KEC Power India Private Limited (Status changed from Joint Venture to Subsidiary w.e.f. March 31, 2012)

(iii) EJP KEC Joint Venture, South Africa

(iv) KEC - ASSB JV Malaysia

(v) KEC - ASIAKOM - UB JV

(vi) KEC - ASIAKOM JV

(vii) KEC - JEI JV

(viii) KEC - DELCO - VARAHA JV

(ix) KEC - VARAHA - KHAZANA JV

(x) KEC - VALECHA - DELCO JV

(xi) KEC - SIDHARTH JV

(xii) KEC - TRIVENI - KPIPL JV

(xiii) KEC - UNIVERSAL JV

(xiv) KEC - DELCO - DUSTAN JV

(xv) KEC - ANPR - KPIPL JV

(xvi) KEC - PLR - KPIPL JV

(xvii) KEC - BJCL JV

(xviii) KEC - KIEL JV

Key Management Personnel: Mr. R.D. Chandak - Managing Director

NOTE 7

Basic / diluted earnings per share has been calculated by dividing the profit for the year after taxation of Rs. 455.84 lacs (Previous Year Rs. 18,183.87 lacs), by 25,70,88,370 (Previous Year 25,70,88,370) being the weighted average number of equity shares outstanding during the year.

NOTE 8

Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). This has been relied upon by the auditors.

The execution of the construction works under contracts of the Company with General Electric Company Libya (a Government of Libya undertaking) is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, debtors etc] as at March 31, 2013 of the Company relating to these contracts aggregate Rs. 5,589.30 lacs (Previous Year Rs. 7,688.72 lacs). The situation in Libya is returning to normal and the Company is confident of completing these projects. Further, during the year the Company has realised Rs. 2,155.91 lacs from the customer.

(i) Members of the Company in the Annual General Meeting held on July 05, 2011 accorded consent subject to approval of the Central Government for payment of commission to non- executive directors up to 5% of the net profits of the Company computed as per the provisions of the Companies Act, 1956, at the end of each financial year, for a period of five years commencing from financial year 2010-11 in such manner and upto such extent as the remuneration committee of the Board of Directors of the Company recommends and the Board of Directors determine from time to time.

The Board of Directors in its meetings held on May 08, 2013 and May 03, 2012 determined commission of Rs. 97.55 lacs and Rs. 880 lacs for the financial years ended March 31, 2013 and March 31, 2012 respectively and accordingly provided for the same in the books. The said provisions include commission of Rs. 78.04 lacs and Rs. 695.18 lacs in excess of 1% of the net profit computed under Section 349 of the Companies Act, 1956 which are subject to the approval of the Central Government under the relevant provisions of the Companies Act, 1956. No payments have been made pending receipt of the said approval.

(ii) Remuneration of Rs. 277.74 lacs paid to the Managing Director and debited to the Statement of Profit and Loss for the financial year 2012-13 includes Rs. 180.19 lacs in excess of the limits specified in Section 309 of the Companies Act, 1956. The excess payment is as a result of lower profit for the year due to additional costs incurred in respect of certain contracts which was not envisaged during the year. An application has been made by the Company to the Central Government under Section 309 (5B) of the Companies Act, 1956 to waive the recovery of the said excess remuneration. Pending such approval the Managing Director holds the excess remuneration paid in trust for the Company.

NOTE 9

The production of Cables at Thane plant has been discontinued from February 11, 2013. The complete range of products manufactured at Thane plant is now being manufactured at new cable plant at Vadodara.

Previous Year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2011

1. Scheme of Amalgamation:

1.1 A Scheme of Amalgamation (the Scheme) between RPG Cables Limited (RPGCL) and the Company and their respective Shareholders under Section 391 to 394 of the Companies Act, 1956 was sanctioned by the HonÃble High Court of Judicature at Bombay on February 26, 2010 and at Karnataka, Bangalore on March 17, 2010. The Scheme, which has become operative from March 31, 2010 upon fling of the certified copies of the Orders of the HonÃble High Courts with the Registrar of Companies in the respective States, is effective from March 1, 2010 (The Appointed date).

1.2 Pursuant to the Scheme, with effect from the Appointed date RPGCL (Transferor Company) is amalgamated in the Company, as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein subject to existing charges thereon in favour of banks and financial institutions.

1.3 Also refer Note 2 (c) below.

2. Share Capital: Share Capital includes:

a) 18,81,79,270 equity shares of Rs. 2/- each (previous year 3,76,35,854 equity shares of Rs. 10/- each) allotted in an earlier year for consideration other than cash for acquisition of Power Transmission Business.

b) 5,82,90,010 equity shares of Rs. 2/- each (previous year 1,16,58,002 equity shares of Rs. 10/- each) allotted in an earlier year for consideration other than cash to the shareholders of the erstwhile RPG Transmission Limited (RPGT) and the erstwhile National Information Technologies Limited.

3,750 fully paid up equity shares of Rs. 2/- each (previous year 750 equity shares of Rs. 10/- each) were allotted to a trustee against 1,688 equity shares of RPGT, where rights were kept in abeyance under section 206A(b) of the Companies Act, 1956 by RPGT. On settlement of the relevant court cases/issues, the equity shares issued to the trustee will be transferred.

c) 1,03,65,340 equity shares of Rs. 2/- each (previous year 20,73,068 equity shares of Rs. 10/- each shown as Equity Share Suspense) allotted on April 26, 2010 in consideration for the amalgamation referred to in Note 1 above to the shareholders of the erstwhile RPG Cables Limited (RPGCL).

3. Secured Loans:

3.1 Loans and advances from Banks:

a) Rs. 37,997.54 lacs (previous year Rs. 14,153.79 lacs) secured by first charge by hypothecation of all the present and future current assets of the Company excluding those covered under (g) and (k) and 3.2 (c) below and second charge on the CompanyÃs fixed asset situated at Jaipur, Jabalpur and Butibori factories.

b) Rs. 17,580.12 lacs (previous year Rs. 25,104.69 lacs) guaranteed by banks, which in turn is secured by security, stated against (a) above.

c) Rs. 393.33 lacs (previous year Rs. Nil ) secured by assignment of certain overseas book debts.

d) Rs. Nil (previous year Rs. 119.00 lacs) secured by a first charge by way of hypothecation of specific movable plant and machinery, equipment and other assets acquired by the Company under the Asset Credit Scheme together with machinery spares, tools and accessories and other movables.

e) Rs. 1,161.80 lacs (previous year Rs. 1,907.72 lacs) secured by hypothecation of whole of movables (save and except current assets of the Company including book debts) [excluding those covered under (g),(k) and 3.2 (c) below] and equitable mortgage of the CompanyÃs immovable properties at the CompanyÃs factory at Butibori, Nagpur and subject to prior charge referred to in (a) above on movable assets.

f) Rs. 891.64 lacs (previous year Rs. 1,426.62 lacs) secured by (i) hypothecation of whole movables (save and except current assets of the Company including book debts) at Jabalpur and Gurgaon, subject to prior charge in respect of loans referred in (a) above (ii) hypothecation of whole of movables at Coimbatore and (iii) equitable mortgage of the CompanyÃs certain immovable properties at Jabalpur and Coimbatore.

g) Rs. 8,395.50 lacs (previous year Rs. 8,395.50 lacs) secured by first charge on moveable assets of Telecom Division including Telecom Towers, both present and future.

h) Rs. 10,080.68 lacs (previous year Rs. 10,015.62 lacs) secured by way of first charge on fixed assets situated at Thane and Mysore.

i) Rs. 4,400.00 lacs (previous year Rs. 5,000.00 lacs) secured by way of first charge on land, building and plant and machinery situated at Jaipur.

j) Rs. Nil (previous year Rs. 5,000.00 lacs) being commercial paper issued against stand by facilities from certain banks which in turn is secured by security stated against (a) above. Maximum balance outstanding any time during the year is Rs. 25,000.00 lacs (previous year Rs. 20,000.00 lacs).

k) Rs. 858.82 lacs (previous year Rs. 858.82 lacs) secured by way of first charge on land and building situated at Raebareli and further secured by all tangible movable properties and assets of Raebereli unit, both present and future.

l) Rs. 3.77 lacs (previous year Rs. 8.43 lacs) secured by hypothecation of vehicles.

m) Rs. 4,000.00 lacs (previous year Rs. Nil) secured by first charge on movable fixed assets i.e. construction equipment pertaining to the Transmission, Distribution and Railway business situated at various project sites in India, both present and future.

3.2 Loans and advances from others:

a) Rs. 3,000.00 lacs (previous year Rs. 2,919.15 lacs) secured by security stated against 3.1 (a) above.

b) Rs. 2,000.00 lacs (previous year Rs. Nil) secured by first charge over the fixed assets pertaining to Tower Testing Station situated at Butibori, Nagpur both present and future.

c) Rs. Nil (previous year Rs. 2,619.95 lacs) secured by way of first charge on present and future current assets of Cables division.

d) Rs. 6.62 lacs (previous year Rs. 21.60 lacs) secured by hypothecation of vehicles.

4. Fixed Assets:

a. A plot of leasehold land stated to measure 41 bighas and 1 biswas per deed dated January 17, 1968, was found short by 24 bighas and 18 biswas on actual measurements, for the possession of which the suit was fled on October 19, 1976 in the District Court against the vendors in occupation of the adjacent land. On dismissal of the suit, an appeal has been preferred in the Rajasthan High Court on December 7, 1998, against the order of the District Court.

b. Buildings at Jaipur, Butibori, Bhopal, Raebareli and Vashi, Navi Mumbai are constructed on Leasehold land.

5. Contingent Liabilities in respect of:

(a) Claims against the Company not acknowledged as debts:

Sr. Nature of Claims Relating to various years Current No Year Previous Year comprise in the period Rs. in lacs Rs. in lacs

1 Sales Tax* 1993-2010 2,678.22

(Tax/Penalty/ Interest) 1995-2009 679.06

2 Excise Duty* 1994-2011 1,969.14

(Tax/Penalty/ Interest) 1994-2010 1,316.10

3 Service Tax* 2004-2010 14.84

(Tax/Penalty/ Interest) 2006-2008 24.57

4 Entry Tax 1995-2008 60.43

(Tax/Penalty/ Interest) 1995-2005 32.00

5 (i) Income Tax matters mainly in respect A.Y.2006-07 to 2009-10 7,241.44 of disallowance of depreciation etc. A.Y.2006-07 and 2007-08 5,579.60 relating to Power Transmission Business acquired by the Company

(ii) Income Tax matters at overseas 2002 1,089.79 unit/s 2007 1,104.97

6 Civil Suits 1993-1994 5.00

1993-1994 5.00

7 Demands of employees/ subcontractors Amount not determinable

* These claims mainly relate to the issues of applicability, issue of disallowance of cenvat credit and in case of Sales Tax, also relate to the issue of submission of ÃC forms.

(b) Other matters for which the Company is contingently liable:

Current Year Previous Year Rs. in lacs Rs. in lacs

1 Bills discounted 3,521.17 16,695.61

2 Guarantees given to banks for credit facilities extended/loans given to the wholly owned subsidiary companies Rs. 60,034.21 lacs (previous year Rs. 5,135.64 lacs)

Facilities / loans outstanding at the year end 47,326.57 -

3 Performance guarantee given to a customer of the wholly owned subsidiary Company 19,671.14 19,817.46

4 Bank guarantees provided by the Company to customers of the wholly owned subsidiary companies in connection with the respective contracts awarded/bids made 2,237.42 1,822.11

5 Performance guarantee provided by a bank to the customer of the wholly owned subsidiary Company by utilising the CompanyÃs credit facility with that bank 191.86 -

6 Contingent liability of Income Tax taken over by the Company in terms of the Composite Scheme of Arrangement under which the Power Transmission Business was acquired by the Company 731.25 752.78

Foot Note for 5 (a) and (b) above:

Future ultimate outflow of resources embodying economic benefits in respect of the above matters are

uncertain as it depends on the final outcome of the matters involved.

6. Estimated amount of contracts remaining to be executed on capital account not provided for (net of capital advances) Rs. 8,057.65 lacs (previous year Rs. 410.24 lacs)

7. The amount of interest capitalised during the year Rs. 90.90 lacs (previous year Rs. 432.26 lacs) is included in Fixed assets/ capital work in progress.

8. Excise duty shown in Schedule-16 ÃOther ExpensesÃ includes Rs. 58.62 lacs (previous year net of Rs. 47.73 lacs) being excise duty related to the difference between the closing stock and opening stock of the finished goods.

11. Managerial remuneration:

Notes:

# Excludes provision for gratuity and compensated absences, which is determined on the basis of actuarial valuation done on overall basis for the Company.

* Excludes sitting fess of Rs. 0.05 lac paid to a director of the erstwhile RPG Cables Limited during the period March 1, 2010 (the appointed date) to March 31, 2010 (the effective date), borne by the Company in terms of the Scheme of Amalgamation referred to in Note 1 above.

Calculation of Net Profit under Section 349 of the Companies Act, 1956

# Footnote: Members of the Company in the Annual General Meeting held on June 27, 2008 and the Central Government vide its letter dated June 30, 2009 approved payment of commission to Non-Executive Directors up to a ceiling of 1% of the net profits of the Company. The Board of Directors in its meeting held on May 06, 2011 has approved payment of commission up to 5% of the net profits of the Company subject to approval of members in the forthcoming Annual General Meeting and of the Central Government as required under section 310 of the Companies Act, 1956. Accordingly, commission of Rs. 625.81 lacs in excess of 1% of the net profits included above, is subject to approval of members and of the Central Government as stated above.

16. There is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). This information and that given in Schedule11-ÃCurrent Liabilities and ProvisionsÃ has been determined based on the details regarding the status of the supplier obtained by the Company. This has been relied upon by the auditors.

2 Defned Benefit Plan (Funded)

a. A general description of the Employees Benefit Plan:

The Company has an obligation towards gratuity, a funded defned benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of the employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

XI Contribution expected to be paid to the Plan during the year ending March 31, 2012 Ã Rs. 94.58 lacs

20. Related Party Disclosures:

(a) Name and nature of relationship of the party where Control exists: Subsidiaries- wholly owned

(i) RPG Transmission Nigeria Limited

(ii) KEC Global FZ Ã LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited (formerly known as Jay Railway Signaling Private Limited) (w.e.f. September 14, 2010)

(iv) KEC Investment Holdings, Mauritius (w.e.f. August 2, 2010)

(v) KEC International Holdings LLC, USA*

(vi) KEC Brazil LLC, USA*

(vii) KEC Mexico LLC, USA*

(viii) KEC Transmission LLC, USA* (ix) KEC US LLC, USA*

(x) SAE Towers Holdings, LLC, USA#

(xi) SAE Towers Brazil Subsidiary Company LLC, USA#

(xii) SAE Towers Mexico Subsidiary Holding Company LLC, USA#

(xiii) SAE Towers Mexico S de RL de CV, Mexico # (xiv) SAE Towers Brazil Torres de Transmission Ltda, Brazil #

(xv) SAE Prestadora de Servicios Mexico, S de RL de CV, Mexico #

(xvi) SAE Towers 2 Investmentos e Participacoes Ltda, Brazil#

(xvii) SAE Towers Limited, USA #

(xviii) SAE Towers Panama Holdings LLC, USA #

(xix) SAE Towers Panama S de RL, Panama #

*w.e.f. September 7, 2010

# w.e.f. September 23, 2010

(b) Parties with whom transactions have taken place:

Subsidiaries

(i) RPG Transmission Nigeria Limited

(ii) KEC Global FZ Ã LLC, Ras UL Khaimah

(iii) Jay Railway Projects Private Limited

(iv) KEC Investment Holdings, Mauritius

(v) SAE Towers Holdings, LLC, USA

(vi) KEC Transmission LLC, USA

(vii) KEC US LLC, USA

Joint Ventures

(i) Al-Sharif Group and KEC Ltd. Company, Saudi Arabia (formerly known as Faiz Abdul Hakim Al-Sharif Group and KEC Company Ltd., Saudi Arabia)

(ii) Hilltop Infrastructure Inc. USA (Upto February 9, 2011)

(iii) KEC Power India Private Limited

(iv) EJP KEC Joint Venture, South Africa

(v) KEC Ã ASSB JV, Malaysia

(vi) KEC Ã ASIAKOM Ã UB JV

(vii) KEC Ã ASIAKOM JV

(viii) KEC Ã JEI JV

(ix) KEC Ã DELCO Ã VARAHA JV

(x) KEC Ã VARAHA Ã KHAZANA JV

(xi) KEC Ã VALECHA Ã DELCO JV

(xii) KEC Ã SIDHARTH JV

(xiii) KEC Ã TRIVENI Ã KPIPL JV

(xiv) KEC Ã UNIVERSAL JV

(xv) KEC Ã DELCO Ã DUSTAN JV

(xvi) KEC Ã ANPR Ã KPIPL JV

(xvii) KEC Ã PLR Ã KPIPL JV

Key Management Personnel: Mr. R. D. Chandak Ã Managing Director

23. Disclosure in respect of Joint Ventures under Accounting Standard 27 - "Financial Reporting of Interests in Joint Ventures"

c) In respect of contracts as referred to in Note 2(c) of Schedule 18, the Company has recognised sales and services Rs. 29,528.97 lacs (previous year Rs. 56,481.61 lacs), total expenditure Rs. 27,059.54 lacs (previous year Rs. 54,908.79 lacs), total assets aggregating Rs. 28,098.29 lacs (previous year Rs. 28,857.76 lacs) and total liabilities aggregating Rs. 25,636.51 lacs (previous year Rs. 27,378.94 lacs).

24. Basic/diluted earnings per share has been calculated by dividing the profit for the year after taxation of Rs. 14,709.01.lacs (previous year Rs. 17,099.12 lacs), by 25,70,88,370 (previous year 24,76,03,375) being the weighted average number of equity shares outstanding during the year. For this purpose, equity shares allotted on April 26, 2010 in consideration for the amalgamation referred to in Note 2(c ) above have been considered in the calculation of weighted average number of equity shares in the previous year. Further, as during the year each equity share of face value of Rs. 10/- has been split/subdivided into face value of Rs. 2/-each, the basic/diluted earnings per share for the previous year has been adjusted in accordance with Accounting Standard -20 ÃEarnings Per ShareÃ.

25. The Company is primarily engaged in the business of Engineering, Procurement and Construction business (EPC). As such there is no other separate reportable segment as defned by Accounting Standard -17 ÃSegment ReportingÃ.

26. The execution of the construction works under contracts with General Electric Company, Libya is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, debtors etc] as at March 31, 2011 of the Company relating to these contracts aggregate Rs. 6,865 lacs. The Company is hopeful to recommence and complete the balance work of the projects on restoration of normalcy in Libya.

27. In view of the matter stated in Note 1 above, the figures of the previous year are not directly comparable with those of the current year. Further previous year figures have been regrouped where necessary to conform to those of the current year.

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