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Directors Report of Lanco Infratech Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the Twenty Second Annual Report on the Business and Operations of the Company together with the Audited Accounts for the year ended March 31, 2015.

FINANCIAL RESULTS

(Rs. Crores)

CONSOLIDATED STANDALONE

PARTICULARS Year ended March 31 Year ended March 31 2015 2014 2015 2014

INCOME

Revenue from operations and other income 9,510.75 10,597.85 1,530.71 2,339.37

Profit Before Taxation (2,218.06) (2,441.42) (717.63) (959.99)

Provision for Taxation (117.05) (129.44) (45.40) -

Net Profit after Taxation 2,101.01) (2,311.98) (672.23) (959.99)

Less: Prior period items 42.52 43.50 - -

Add: Share of Profit/(Loss) of Associates (3.29) (33.89) - -

Less: Elimination of Unrealized Profit on Transactions with (9.76) 0.15 - - Associate Companies

Less: Share of Minority Interest (100.32) (115.64) - -

Net Profit/ (Loss) after Taxation, Minority Interest and (2,036.74) (2,273.88) (672.23) (959.99) Share of Profit/ (Loss) of Associates (Balance Carried to Balance Sheet)

Surplus brought forward (1,891.65) 382.23 519.11 1,479.10

Depreciation Transitional Adjustment 10.05 - 8.25 -

Balance carried to Balance Sheet (3,938.44) (1,891.65) (161.37) 519.11

FINANCIAL PERFORMANCE AND THE STATE OF THE COMPANY'S AFFAIRS

On a Consolidated basis, your Company has reported Gross Revenues of Rs.9,510.75 Crores as against Rs.10,597.85 Crores of Revenues registered in the previous year. Total Expenditure for the Year was Rs.11,851.96 Crores as against Rs.12,860.01 Crores in the previous year. The Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to Rs.1,832.75 Crores while the same was Rs.1,671.87 Crores for the previous year i.e. a increase of 9.62%. The Profit before taxation stood at Rs.(2,218.06) Crores, a increase of 9.15 % as compared to Rs.(2,441.42) Crores in the previous year.

The Net Profit/(Loss) after Tax after adjustment of Minority Interest and Share of Profits of Associates was Rs.(2,036.74) Crores as against Rs.(2,273.88) Crores for the previous year.

Gross Interest and Finance charges on consolidated basis amounted to Rs.3,060.21 Crores in comparison to Rs.2,762.12 Crores due to increase in Loans and Working Capital requirements for Project Execution.

During the year, your Company sold 70 (2*35) MW Lanco Budhil Hydro Power Private Limited situated in Chamba District of Himachal Pradesh.

During the year, your Company along with other shareholders of Udupi Power Corporation Limited (UPCL) has entered into a definitive Share Purchase Agreement (SPA) on August 13, 2014 with Adani Power Limited (APL) for sale of 100% stake in UPCL. The receipt of full share sale consideration and transfer of shares to APL was completed on April 20, 2015.

After the reporting period, an associate company i.e. Lanco Vidarbha Thermal Power Limited and a fellow subsidiary i.e. Lanco Babandh Power Limited became Subsidiary of the Company's step down subsidiary i.e. Lanco Thermal Power Limited.

A detailed discussion on the results of the operations, financial condition and business review is included in the Management Discussion and Analysis section placed at Annexure-1 to this Report.

Except the above, there are no material changes and commitments, affecting the financial position of the Company which have occurred after March 31, 2015 till the date of this Report.

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

CDR PACKAGE:

Corporate Debt Restructuring Empowered Group (CDR EG) in its meeting held on December 11, 2013 has approved the CDR package submitted by the Company and issued letter of approval on December 20, 2013. As on March 31, 2015, CDR related documents have been executed and creation of security has been completed.

The approval of CDR Package is only for the Company and not for any of its subsidiaries and associates.

Terms of CDR

- Re-schedule of Term loan and short term loans having moratorium period of 2 years from the cut of date of April 1, 2013 and are repayable in 30 quarterly instalments starting from June 30, 2015.

- Portion of CDR Working Capital Loans on the cut of date i.e. April 01, 2013, has been carved out as Working Capital Term Loan - I (WCTL- I). LC/ BC/ BG devolved from cut of date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL-II).

- Funded Interest on Term Loans, WCTL - I and WCTL - II are funded for a period of 2 years from cut of date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cut of date to September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL is to be paid on monthly basis from April 30, 2013.

- Rs. 2,500 Crores Priority Loan sanctioned with a moratorium period of 2 years at an interest rate of 12.5% and is repayable in 18 quarterly instalments starting from June 30, 2015. As a part of the sanctioned Priority Loan, the Company has received an amount of Rs.1,678.17 Crores as on March 31, 2015.

- Rate of interest on restructured facilities being 11% p.a. to be increased in a stepped up manner up to 16% p.a. starting from financial year 2016-17.

- Waiver of penal charges from the cut-of date to the date of implementation of the package.

- The Company shall raise funds by sale of assets / divestment of shares in SPV's / securitisation / QIP / IPO etc., to repay the above restructured facilities under CDR scheme.

In relation to the amount outstanding as at March 31, 2015 against the loans restructured by the CDR lenders, a total amount of Rs.2,894.41 Crores would qualify for the conversion into 464.59 Crores shares at the sole discretion and on demand of the CDR lenders at a Price of Rs. 6.23 per equity share.

In terms of CDR scheme, the promoters brought into the company as unsecured loan a total amount to Rs.167.06 Crores and the same would qualify for the conversion of shares at the sole discretion of the promoters.

The CDR gives your Company critical support to tide over the present difficult business environment. The decision of the banks to consider and approve CDR also reflects the faith these institutions have in the long term business model of the Company.

DIVIDEND

Your Directors have not recommended dividend for the year ended March 31, 2015.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is enclosed as Annexure-1 to this Report.

SUBSIDIARY COMPANIES

During the reporting period, Lanco Hoskote Highway Limited and Lanco Devihalli Highways Limited had become subsidiaries of the Company. Further, Lanco Budhil Hydro Power Private Limited, SolarFi SP 07, SolarFi SP 06, Lanco Solar International Limited, Lanco Solar International GMBH, Lanco US PV Investments B.V., Lanco Solar Holdings LLC (USA), Lanco Virgin Islands- 1 LLC and Lanco SP PV 1 Investments B.V. had ceased to be Subsidiaries of the Company.

Policy for determining Material Subsidiaries of the Company has been provided in the following link:

http://www.lancogroup.com/pdf/Policy_on_Material_Subsidiaries.pdf

Report on the performance and financial position of each of the Subsidiaries, Associates and Joint Venture Companies has been provided in Form AOC-1.

INCREASE OF PAID-UP SHARE CAPITAL

On December 29, 2014, 5,45,74,639 (Five Crore Forty Five Lakhs Seventy Four Thousand Six Hundred and Thirty Nine only) Equity Shares of Face Value of Rs.1/- each and on June 23, 2015, 2,17,72,493 (Two Crore Seventeen Lakhs Seventy Two Thousand Four Hundred and Ninety Three only) Equity Shares of Face Value of Rs.1/- each were allotted at an Issue Price of Rs.6.23 Per Equity Share (including Rs.5.23 Per Equity Share towards Share Premium) to ICICI Bank Limited under the CDR Package approved for the Company.

In view of the above corporate actions, the Paid-up Capital of the Company increased from Rs.240.78 Crores to Rs.248.42 Crores as on June 30, 2015.

HEALTH, SAFETY AND ENVIRONMENT

Your Company has taken an integrated approach towards Health, Safety & Environment (HSE), based on various National & International standards. This helps us to achieve our goal of going beyond the legal compliance. We have implemented British 5 star Safety Programs. This has not only enhanced our reputation as a group but also set ourselves new standards in HSE. The entire leadership steadfastly supported this initiative and various sites personnel were instrumental in giving a perfect shape to this important initiative. We aim to be a global leader in environmental standards and practices.

All our Operational Power Plants, EPC Division, Lanco Hills and Lanco Solar are OHSAS-18001 & ISO-14001 certified.

Further details are provided in Management Discussion and Analysis section placed at Annexure-1 to this Report.

RISK MANAGEMENT POLICY

The Company had adopted the Standard Operating Procedures to standardise the Risk Management Process across all Business units in terms of process, formats, documentation, reporting, identification of elements of risk and monitoring Risk Mitigation plans, as part of the Risk Management Policy developed and implemented by the Company. Further details are provided in Management Discussion and Analysis section placed at Annexure-1 to this Report.

INTERNAL FINANCIAL CONTROLS

Your Company had put in place adequate Internal Financial Controls commensurate with the size of the Company with reference to the Financial Statements.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. L. Madhusudhan Rao and Mr. S. C. Manocha retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for appointment.

Mr. R. M. Premkumar and Mr. Prakash P. Mallya were appointed as Additional Directors in the Category of Independent Directors with effect from October 15, 2014.

Mr. Yashpal Gupta was appointed as Nominee Director of IDBI Bank Limited on behalf of the CDR Lenders, with effect from January 01, 2015.

Mr. D. L. Rawal and Mr. Gurbir Singh Sandhu were appointed as Additional Directors in the Category of Independent Directors and Smt. L. Ramalakshmamma was appointed as Additional Director in the category of Woman Director, with effect from March 28, 2015.

Mr. Vijoy Kumar and Mr. Pawan Chopra were appointed as Additional Directors in the Category of Independent Directors with effect from June 23, 2015.

The Independent Directors have given a declaration to the Company under Section 149(7) of the Companies Act, 2013 and Clause 49 of the Listing Agreement regarding meeting the criteria of independence prescribed under Section 149(6) of the Companies Act, 2013.

Mr. Prakash P. Mallya and Mr. P. Abraham resigned as Directors of the Company with effect from March 28, 2015 and April 01, 2015 respectively. Your Directors place on record their appreciations for the valuable contribution by Mr. Prakash P. Mallya and Mr. P. Abraham during their tenure as Directors.

During the reporting period, Mr. G. Venkatesh Babu, Managing Director, Mr. T. Adi Babu, Chief Financial Offer and Mr. A. Veerendra Kumar, Company Secretary were designated/appointed as Key Managerial Personnel (KMP) of your Company.

Your Company is awaiting approval from the Central Government regarding the payment of remuneration to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice- Chairman, Promoter Directors of the Company from April 01, 2014 till March 31, 2016.

During the financial year 2014-15, 5 (five) Board Meetings were held. These meetings were held on May 23, 2014, August 14, 2014, September 26, 2014, November 14, 2014 and February 12, 2015.

The Nomination and Remuneration Committee had devised the criteria and the process for performance evaluation of the non- Independent Directors, the Board as a whole and its Committees.

A separate meeting of Independent Directors was held on February 12, 2015 without the presence of non-Independent Directors and members of the management.

The details of Familiarization Programme for Independent Directors of the Company is disclosed on the Company's website. Members can access the details of Familiarization Programme on the website of the Company at

http://www.lancogroup.com/pdf/Familiarization_Programme_for_ Independent_Directors.pdf

COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Nomination and Remuneration Committee had recommended to the Board a Policy relating to the Appointment and Remuneration of Directors, Key Managerial Personnel and other Employees. The Nomination and Remuneration Policy forms part of this Report as Annexure-2.

CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

The Board has laid down separate Code of Conduct for Directors and Senior Management Personnel of the Company and the same is posted on the Company's Website. All Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct. The Managing Director has also confirmed and certified the same. The certification forms part of the Report on Corporate Governance.

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of The Companies (Accounts) Rules, 2014, is as below:

Conservation of Energy and Technology Absorption

New technologies were planned and implemented with a two pronged strategy of achieving operational excellence and environment & energy conservation.

Some of the measures and technologies worth highlighting were:

(i) Selection of equipment that consume minimum energy and adoption of integrated energy management system to measure, monitor and take corrective action for minimizing auxiliary power consumption.

(ii) Adoption of suitable conveyor technologies for cross country coal conveying using pipe conveyor, combination of tripper conveyors & reclaim conveyor in stockyard and adoption of coal shed in the stockyard to avoid coal dust pollution.

(iii) Ash utilization in earth filling.

(iv) Adoption of sub-sea marine pipeline instead of overhead pipelines/ jetty structures, velocity caps for intake facility to avoid impact on marine environment.

(v) Adoption of best practices in project management with the help of reputed consultants for efficient project delivery.

(vi) Improved fire safety by adopting simple methods of increased gravel fill in oil collection pits in transformer yards and cables supported on isolated structures in coal handling plants.

(vii) Adoption of zero liquid discharge schemes to prevent water pollution.

(viii) Electro chlorination instead of gas chlorination to avoid hazards while handling chlorine containers.

Foreign Exchange Earnings and Outgo:

(Rs. in Crores)

Particulars Year ended March 31, 2015

Foreign Exchange Earnings 18.28

Foreign Exchange outgo 15.73

DISCLOSURE ON COMPANY'S EMPLOYEES STOCK OPTION PLANS

The Employees Stock Option Plan - 2006 and the Employees Stock Option Plan–2010 were approved by members by passing Special Resolutions in the Extraordinary General Meeting held on June 07, 2006 and Annual General Meeting held on July 31, 2010, respectively.

There were no grants made under the Employees Stock Option Plans of the Company during the Financial Year 2014-15.

The required information pursuant to SEBI ESOP Guidelines is enclosed as Annexure-3 to this Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

As required under Section 197 (12) of the Companies Act, 2013, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of the remuneration drawn by the employees in excess of the limits prescribed, forms part of this report.

Pursuant to Section 136 of the Companies Act, 2013, the Annual Report is being sent to the members after excluding the aforesaid details. The same is available for inspection at the Registered Office of the Company during office hours and any member desirous of the said information may write to the Company Secretary at the Registered Office of the Company.

Disclosure of the information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure-4.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and the Listing Agreement, the Company has formulated a 'Policy on Related Party Transactions' and the same is uploaded on the Company's website at http://www.lancogroup.com/pdf/Policy_on_Related_ Party_Transactions.pdf

Details of Related Party Transactions as per Form AOC-2 is Nil for the Company during the reporting period.

DEPOSITS

During the year under review, your Company has not accepted deposits from Public.

LOANS, GUARANTEES, SECURITIES AND INVESTMENTS

The granting of loans and giving of guarantee and providing of security by your Company is exempted in terms of Section 186(11) (a) of the Companies Act, 2013, as the Company is providing infrastructural facilities specified in Schedule VI of the Companies Act, 2013. The details of Investments forms part of the Schedules to the Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 of the Companies Act, 2013 and Rule 12 of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9, provided as Annexure-5 to this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the reporting year, the Board had constituted the CSR Committee with Dr. Uddesh Kumar Kohli, Independent Director, Mr. R.M. Premkumar, Independent Director, Mr. G. Bhaskara Rao, Executive Vice-Chairman and Mr. G. Venkatesh Babu Managing Director as its Members. Dr. Uddesh Kumar Kohli, Independent Director is the Chairman of the CSR Committee.

Members can access the CSR Policy on the website of the Company at http://www.lancogroup.com/pdf/LITL_CSR_Policy.pdf.

There are no average net profits for the Company made during the previous three financial years. Hence, there is no requirement of spending specific funds towards CSR activities by the Company during the year under review.

Details of CSR activities by the group companies is included in Management Discussion and Analysis section as Annexure - 1 to this report.

AUDITORS

The Members are requested to ratify the appointment of Brahmayya & Co., Chartered Accountants, (Firm Registration No. 000511S) as Auditors of the Company for the Financial Year 2015-16 as per item No.4 of the Notice.

COST AUDITORS

DZR & Co., Cost and Management Accountants have been appointed as the Cost Auditors for the year ending March 31, 2014. The Cost Audit Report for the year ended March 31, 2014 was due for fling on September 30, 2014 and was fled on September 24, 2014.

DZR & Co., have been appointed as Cost Auditors of the Company for the Financial Year 2014-15 and Financial Year 2015-16, based on the recommendation of Audit Committee.

SECRETARIAL AUDIT REPORT

M/s. dvmgopal & associates, Company Secretaries, were appointed as Secretarial Auditors to conduct Secretarial Audit of records and documents of the Company for the Financial Year 2014-15. The Secretarial Audit Report is given as Annexure-6 to this Report.

CORPORATE GOVERNANCE

In compliance with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreements with Stock Exchanges, the Report on Corporate Governance with the Certificate from a Practicing Company Secretary certifying compliance in this regard forms part of this Report as Annexure-7.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

With a view to implement the highest ethical standards in the course of business, the Company has formed and adopted a whistle blower policy which provides a platform for reporting concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. Directors, employees, vendors or any person having dealings with the Company may report non- compliance to the Chairperson of Audit Committee, who reviews the report. Confidentiality is maintained of such reporting and it is ensured that the whistle blowers are not subjected to any discrimination.

POLICY ON PREVENTION OF SEXUAL HARASSMENT AGAINST WOMEN AT WORKPLACE OF THE COMPANY

Pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company had adopted the "Policy on Prevention of Sexual Harassment against Women at workplace" inter alia to seek to protect women from sexual harassment at their place of work.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by Section 134(5) of the Companies Act, 2013, your Directors hereby confirm that:

(a). In the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards have been followed and that no material departures are made from the same;

(b). The Company have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2014-15 and of the profit and loss of the Company for that period;

(c). The Company have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d). The annual accounts have been prepared on a going concern basis;

(e). The Company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and

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

INFORMATION ON AUDITORS' QUALIFICATIONS:

The information and explanations of your Directors on the qualifications by the Auditors on the Consolidated Financial Statements are as follows:

Qualification on Capitalization of Borrowing cost by step down subsidiary:

The step down subsidiary is implementing gas based power project expansion which is yet to complete commissioning activities due to non-availability of required resources and fuel which are beyond the control of Lanco Kondapalli Power Limited (LKPL). The activities are still not completed to test for capability and suitability of its intended use of the plant. Therefore the asset is eligible to capitalise its borrowing costs till the completion of required commissioning activities. The lenders of the project approved the above interest during construction as a part of the project cost. LKPL has re approached Ministry of Corporate Affairs (MCA) to seek clarification on the applicability of provisions of Accounting Standard 16 to continue the capitalisation of borrowing costs. The management is of the view that the interest capitalization is as per Accounting Standard 16.

Qualification on Unaudited financials of SPV's in Consolidation:

The qualification by the Auditor is not about deviation from the Accounting Standards but on the consolidation of the un- audited financials of some of the foreign subsidiary companies as on the reporting date. During the year ended March 31, 2015, some of the foreign subsidiaries could not complete the audit of their financial statements, on or before the reporting date, hence the financial statements prepared by the Management have been considered in consolidation.

ACKNOWLEDGEMENT AND APPRECIATION

Your Directors take this opportunity to thank all the stakeholders including Shareholders, Financial Institutions, Banks, Customers, Suppliers, Service Providers and Regulatory and Governmental Authorities for their consistent co-operation. Your Directors also wish to place on record the sincere appreciation of the hard work, dedication and commitment of Employees at all levels. We look forward to your continued support in the future.

For and on behalf of the Board

L. Madhusudhan Rao G. Venkatesh Babu

Executive Chairman Managing Director

DIN - 00074790 DIN - 00075079

Place: Gurgaon

Date: July 29, 2015


Mar 31, 2014

Dear Members,

The Directors are pleased to present the Twenty First Annual Report on the Business and Operations of the Company together with the Audited Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

(Rs. Crores) CONSOLIDATED STANDALONE PARTICULARS Year ended March 31 Year ended March 31 2014 2013 2014 2013

INCOME

Revenue from operations and other income 10,597.85 13,887.66 2,339.37 4,822.75

Profit Before Taxation (2,441.42) (893.92) (959.99) 10.23

Provision for Taxation (129.44) 179.62 - (3.11)

Net Profit after Taxation (2,311.98 (1,073.54) (959.99) 13.34

Less: Prior period items 43.50 (12.62) - -

Add: Share of Profit/(Loss) of Associates (33.89) (2.88) - -

Less: Elimination of Unrealized Profit on Transactions with 0.15 20.72 - -

- Associate Companies

Less: Share of Minority Interest (115.64) (11.22) - -

Net Profit/ (Loss) after Taxation, Minority Interest and (2,273.88) (1,073.30) (959.99) 13.34 Share of Profit/ (Loss) of Associates (Balance Carried to Balance Sheet)

Surplus brought forward 382.23 1,455.54 1,479.10 1,465.76

Balance carried to Balance Sheet (1,891.65) 382.23 519.11 1,479.10



OPERATIONS AND BUSINESS REVIEw

On a Consolidated basis, your Company has reported Gross Revenues of Rs. 10,597.85 Crores as against Rs. 13,887.66 Crores of Revenues registered in the previous year. Total Expenditure for the Year was Rs. 12,860.01 Crores as against Rs. 14,781.58 Crores in the previous year. The Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to Rs. 1,671.87 Crores while the same was Rs. 2,653.33 Crores for the previous year i.e. a decrease of 37%. The Profit before taxation stood at Rs. (2,441.42) Crores, a decrease of 173.11 % as compared to Rs. (893.92) Crores in the last year.

The Net Profit/(Loss) after Tax after adjustment of Minority Interest and Share of Profits of Associates was Rs. (2,273.88) Crores as against Rs. (1,073.30) Crores for the previous year.

Gross Interest and Finance charges on consolidated basis amounted to Rs. 2,762.12 Crores in comparison to Rs. 2,421.44 Crores due to increase in loans and Working Capital Requirements for Project Execution.

During the year your company sold 10 MW wind based power plant situated near Tirunalveli, Tamilnadu and recognised the Profit on sale of assets of Rs. 8.99 Crores.

A detailed discussion on the results of the operations, financial condition and business review is included in the Management Discussion and Analysis section placed at Annexure-II to this Report.

CDR PACKAGE:

Corporate Debt Restructuring Empowered Group (CDR EG) in its meeting held on December 11, 2013 has approved the CDR package submitted by the Company and issued letter of approval on December 20, 2013. As on March 31, 2014 CDR related documents have been executed and creation of security has been completed partly and the balance is in the process.

The proposal is only for the Company and not for any of its subsidiaries and associates.

Terms of CDR

Re-schedule of Term loan and short term loans are having moratorium period of 2 years from the cut of date of April 1, 2013 and are repayable in 30 quarterly instalments starting from June 30, 2015.

Portion of CDR Working Capital Loans on the cut of date i.e. April 1, 2013, has been carved out as Working Capital Term Loan - I (WCTL- I). LC/ BC/ BG devolved from cut of date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL- II).

Funded Interest on Term Loans, WCTL - I and WCTL - II can be funded for a period of 2 years from cut of date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cut of date i.e. April 1, 2013 to

September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL to be paid on monthly basis from April 30, 2013.

Rs. 2,500 Crores Priority Loan sanctioned with a moratorium period of 2 years at an interest rate of 12.5% and is repayable in 18 quarterly instalments starting from June 30, 2015.

Rate of interest on restructured facilities being 11% p.a. to be increased in a stepped up manner up to 16% p.a. starting from financial year 2016-17.

Waiver of penal charges from the cut-of date to the date of implementation of the package.

The Company shall raise funds by sale of assets/divestment of shares in SPV''s/securitisation/QIP/IPO etc. to repay the above restructured facilities under CDR scheme.

In relation to the amount outstanding as at March 31, 2014 against the loans restructured by the CDR lenders, a total amount of Rs. 2,224.89 Crores would qualify for the conversion into 354.50 Crores shares at the sole discretion and on demand of the CDR lenders.

In terms of CDR Package, the promoters brought into the company as unsecured loan a total amount of Rs. 152.00 Crores and the same would qualify for the conversion into 24.40 Crores shares at the sole discretion of the promoters.

The CDR gives your Company critical support to tide over the present difcult business environment. The decision of the banks to consider and approve CDR also refects the faith these institutions have in the long term business model of the Company.

RESOLUTIONS PASSED THROUGH POSTAL BALLOT

During the reporting period, your Company had obtained shareholders approval by passing of resolutions through Postal Ballot. The results of the Postal Ballot were announced on April 17, 2014. The details of the resolutions passed through Postal Ballot forms part of the Report on Corporate Governance, annexed to this report.

AMEMDMENT TO MEMORANDUM AND ARTICLES OF ASSOCIATION

During the period under review, the Memorandum of Association of the Company was amended to increase the Authorised Share Capital of the Company from Rs. 500,00,00,000/- (Rupees Five Hundred Crores only) to Rs. 12,000,00,00,000/- (Rupees Twelve Thousand Crores only). This increase was necessitated to provide option to the CDR Lenders for conversion of loans into equity. The Articles of Association of the Company was also amended to refect the increase of Authorised Capital and to provide option for buy-back of securities of the Company.

DIRECTORS

Mr. G. Bhaskara Rao and Mr. L. Sridhar retire by rotation at the ensuing Annual General Meeting and being eligible ofer themselves for appointment. Dr. Pamidi Kotaiah retires by rotation at the ensuing

Annual General Meeting. Your Directors place on record their appreciations of the valuable contribution by Dr. Pamidi Kotaiah during his tenure as Director.

Mr. P. Abraham, Dr. Uddesh Kumar Kohli and Mr. R. Krishnamoorthy were appointed as Independent Directors of the Company in terms of Section 149 of the Companies Act, 2013.

The Company had received approvals from the Ministry of Corporate Afairs, Government of India, New Delhi, in respect of waiver from recovery of excess remuneration paid to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice-Chairman, by the Company for the financial year 2012-13 and for payment of managerial remuneration to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice-Chairman for the financial year 2013-14, by the Company.

Applications are being submitted to the Ministry of Corporate Afairs, Government of India, New Delhi, seeking approval for payment of managerial remuneration to Mr. L. Madhusudhan Rao, Executive Chairman, Mr. G. Bhaskara Rao, Executive Vice-Chairman, Mr. G. Venkatesh Babu, Managing Director and Mr. S.C. Manocha, Deputy Managing Director, for the period starting from April 01, 2014 till the tenure of their current appointment.

Dr. B. Vasanthan resigned as Director of the Company with efect from May 23, 2014.

DIVIDEND

Your Directors have not recommended dividend for the year ended March 31, 2014.

SUBSIDIARY COMPANIES

During the year under review, Tasra Mining & Energy Company Private Limited and Sirajganj Electric (Pvt) Limited had become subsidiaries of the Company. Further, Approve Choice Investments Limited, Apricus S.R.L, Bar Mount Trading (Pty.) Limited, Barrelake Investments (Pty.) Limited, Belara Trading (Pty.) Limited, Caelamen (Pty.) Limited, Dupondius (Pty.) Limited, Gamblegreat Trading (Pty.) Limited, Lexton Trading (Pty.) Limited, Lanco Rocky Face Land Holdings LLC and Lanco Tracy City Land Holdings LLC, had ceased to be Subsidiaries of the Company. Also during the reporting period, Lanco Teesta Hydro Power Limited, Subsidiary of the Company had changed its status from Private Limited to Public Limited Company.

The Ministry of Corporate Afairs vide their General Circular No. 2/2011, dated February 08, 2011 had granted general exemption to the Companies under Section 212(8) of the Companies Act, 1956 from the requirement to attach detailed financial statements of each subsidiary. The detailed financial statements and audit reports of each subsidiary are available for inspection at the Registered office of the Company during office hours and upon written request from shareholder(s), your Company will arrange to send the financial statements of subsidiary companies to the said shareholder(s).

In terms of the Ministry of Corporate Afairs, General Circular 08/2014 No.1/19/2013-CL-V, dated April 04, 2014, the Auditors Report and Board''s Report in respect of financial years that commenced earlier than April 01, 2014 shall be governed by the relevant provisions/ Schedules/rules of the Companies Act, 1956. The financial information of the Subsidiaries of the Company was provided accordingly.

INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, pursuant to Section 205C and other applicable provisions of the Companies Act, 1956, an amount of Rs. 1,16,640/- (Rupees One Lakh Sixteen Thousand Six Hundred and Forty only) was transferred to Investor Education and Protection Fund, with respect to share application money remained unclaimed for a period of 7 years by the unsuccessful bidders of the Initial Public Ofering (IPO) of the Company.

HEALTH, SAFETY AND ENVIRONMENT

Lanco has taken up a very good initiative in implementing a world- class Health, Safety & Environment (HSE) Management System by implementing British 5 Star Safety Programs. The entire leadership supported this initiative and sites personnel were instrumental in giving a perfect shape to this new initiative.

The group has started its process improvement programs in HSE and is in process to bring out a compliance based tool to enhance the HSE performance across the group.

Lanco''s HSE performance is realized with an excellent recognition of our eforts in HSE and its sustenance. The world renowned "Sword of Honour" by British Safety Council, UK was conferred to Lanco''s Tanjore Site soon after getting awarded with 5-Star rating. Also, Lanco''s HSE culture got further boost as Kondapalli & Anuppur sites won the Prestigious "Prashansha Patra" conferred by National Safety Council of India (NSCI). Other sites, which have participated in various HSE awards and won during the year, make us proud. A brief description is below:

Company Award

Lanco Infratech

NSCI Safety Awards, "Prashansha Patra" Limited-

EPC Division to Anuppur Site

Lanco Tanjore Power

"Sword of Honour" by British Safety

Company Limited Council

Environment protections and management award from Government of Tamilnadu

CII 4 Star ESH Awards, Southern Region

Lanco Amarkantak l NSCI Safety Awards, "Prashansha Patra"

Power Limited

Udupi Power

CII 4 Star ESH Awards, Southern Region

Corporation Limited

Golden Peacock "Environment

Management Award"

Lanco Kondapalli

SCI Safety Awards, "Prashansha Patra"

Power Limited

FIXED DEPOSITS

Your Company has not accepted fixed deposits falling within the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, during the year under review.

AUDITORS

The Auditors of the Company, Brahmayya & Co., Chartered Accountants, (Firm Registration No. 000511S) retire at the conclusion of the ensuing Annual General Meeting of the Company and have confirmed their willingness and eligibility for appointment for the four consecutive years and have also confirmed that their appointment, if made, will be within the limits prescribed under the Companies Act, 2013.

COST AUDITORS

DZR & Co., Cost and Management Accountants have been reappointed as the Cost Auditors for the year ending March 31, 2014, as recommended by the Audit Committee. The Cost Audit Report for the year ended March 31, 2013 was due for fling on September 30, 2013 and was fled on September 29, 2013.

DISCLOSURE OF PARTICULARS wITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN ExCHANGE EARNINGS AND OUTGO

Your Directors present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Government''s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Companies Act, 1956, the Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 have not been provided. However, these particulars are available for inspection at the Registered office of the Company and upon written request from a shareholder, we will arrange to mail these details.

DISCLOSURE ON COMPANY''S EMPLOYEES STOCK OPTION PLANS

The Employees Stock Option Plan - 2006 and the Employees Stock Option Plan–2010 were approved by shareholders by passing Special Resolutions in the Extraordinary General Meeting held on June 07, 2006 and Annual General Meeting held on July 31, 2010, respectively.

The required information pursuant to Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, is enclosed as Annexure-I to this Report.

PARTICULARS OF EMPLOYEES

Your Directors present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Government''s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Act, the Particulars of Employees as required by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 have not been provided. However, these particulars are available for inspection at the Registered office of the Company and upon written request from a shareholder, we will arrange to mail these details.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is enclosed as Annexure-II to this Report.

CORPORATE GOVERNANCE

In compliance with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreements with Stock Exchanges, the Report on Corporate Governance with the Certifcate from a Practicing Company Secretary certifying compliance in this regard forms part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required by Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same;

(ii) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of afairs of the Company at the end of the financial year and of the Profit/loss of the Company for the period;

(iii) we have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) we have prepared the annual accounts on a going concern basis.

INFORMATION ON AUDITORS'' QUALIFICATIONS:

The information and explanations of your Directors on the Qualifications by the Auditors on Abridged and Consolidated Statements are as follows:

l Qualification on reorganization of Investments in Power SPV''s:

The Qualification by the Auditor is not about deviation from the Accounting Standards but on the pending approval of the lenders for the shares transfer to wholly owned subsidiaries. To meet the business requirements of augmenting the equity funding from private equity investors, strategic investors, the Power Holding Company structure was created and shares were transferred to the wholly owned subsidiaries. The share transfer does not alter the financial statements at the consolidated level/standalone level. The Company''s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to Rs. 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confdent of receiving balance approvals

from lenders and customer in near future and has taken the efect of these transfers while preparing these consolidated financial results.

The delay in getting the balance lenders approval is only procedural and the Management is confdent of getting the same.

The Company is hopeful of resolving the Qualification during current financial year 2014-15.

The above Qualification is also a Qualification in Abridged Stand alone Financial Statements.

Qualification on Revenue Recognition by a step down subsidiary:

The Qualification by the Auditor is not about deviation from the Accounting Standards but on the interpretation of the realisability of the revenue. There is a dispute between a step down subsidiary company and a customer on the method of tarif determination apart from other issues.

During the financial year, Appellate Tribunal for Electricity, India ordered the HERC (state regulatory commission of the customer) to re-determine the tarif as per HERC Tarif Regulations, 2008 and CERC Regulations, 2009 where no Specific operational or financial norms have been specified in the HERC Tarif Regulations. The power tarif determination under HERC Regulations by and large follows the same principles and methodology of tarif determination as per the CERC Regulations.

Relied upon the legal opinions obtained and taking into consideration the latest APTEL order, the management opines that there is no significant uncertainty in recoverability of the recognised revenue for the power supplies made as per the judicial orders. In addition to that the Management is confdent of obtaining the tarif approvals in near future and the rate to be determined by HERC will be the same rate as adopted by the step down subsidiary company on provisional basis as per the CERC norms.

Qualification on Capitalization of Borrowing cost by step down subsidiary:

Due to non availability/non allocation of natural gas by Government of India to the step down subsidiary Company''s Phase-III Project and considering present economic conditions of Power Sector, the step down subsidiary company has made an application to the Ministry of Corporate Afairs (MCA) requesting to provide relaxation from Accounting Standard - 16 and allow the Company to capitalize the borrowing costs till commencing its commercial operations. The application is under consideration of MCA.

The management is of the opinion that the Government of India is likely to respond positively on the said request by considering the Specific problems being faced by Gas based power plants in the country.

l Qualification on Unaudited financials of SPV''s consideration in Consolidation:

The Qualification by the Auditor is not about deviation from the Accounting Standards but on considering some of the foreign subsidiary companies non-audited financials in the consolidation.

Out of those, some subsidiary companies were acquired by the company in February, 2011. These companies were "under administrator" before acquisition. On account of this, audited financial statements were not available for 2008-09 and 2009-10. After acquisition, audit was completed for 5 years and audit for the current year is under progress.

The remaining entities are either non-material/non-operational during the year and audit for all these entities is under process.

Hence forth the management is expecting the audited financials of these companies in time and consolidation can be done with the audited accounts which will avoid the Qualification in future.

ACKNOwLEDGEMENT AND APPRECIATION

Your Directors take this opportunity to thank all the stakeholders including Shareholders, Financial Institutions, Banks, Customers, Suppliers, Service Providers and Regulatory and Governmental Authorities for their consistent co-operation. Your Directors also wish to place on record the sincere appreciation of the hard work, dedication and commitment of Employees at all levels. We look forward to your continued support in the future.

For and on behalf of the Board

L. Madhusudhan Rao G. Venkatesh Babu Executive Chairman Managing Director DIN - 00074790 DIN - 00075079

Place: Gurgaon Date: August 14, 2014


Mar 31, 2013

Dear Members,

The Directors are pleased to present the Twentieth Annual Report on the Business and Operations of the Company together with the Audited Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

(Rs.Lakhs)

CONSOLIDATED STANDALONE Year ended March 31 Year ended March 31 2013 2012 2013 2012

INCOME

Revenue from operations and other income 13,88,765.63 10,28,657.33 4,82,275.29 8,66,924.77

Profit Before Taxation (89,391.92) 34,838.31 1,023.15 10,626.40

Provision for Taxation 17,961.65 22,462.24 (311.29) (940.84)

Net Profit after Taxation (1,07,353.57) 12,376.07 1,334.44 11,567.24

Less: Prior period items (1,262.05) 360.34

Add: Share of Profit/(Loss) of Associates (287.81) (6,021.81)

Less: Elimination of Unrealized Profit on Transactions with Associate 2,072.24 3,768.96

Companies

Less: Share of Minority Interest (1,122.11) 13,428.43

Net Profit/(Loss) after Taxation, Minority Interest and Share of Profit/ (1,07,329.46) (11,203.47) 1,334.44 11,567.24 (Loss) of Associates (Balance Carried to Balance Sheet)

Surplus brought forward 1,45,551.56 1,61,417.24

Profit Available for Appropriation 38,222.10 1,50,213.77 1,334.44 11,567.24

Transfer (from)/to Capital Redemption Reserve 1,677.32

Transfer to General Reserve (0.42) 2,803.75

Premium paid on buy back of shares by a subsidiary 179.28

Proposed dividend and Dividend distribution tax 1.86 1.86

Balance Carried to Balance Sheet 38,220.66 1,45,551.56 1,334.44 11,567.24

OPERATIONS AND BUSINESS REVIEW

On a Consolidated basis your Company has reported Gross Revenues of Rs.13,88,765.63 Lakhs as against Rs.10,28,657.33 Lakhs of Revenues registered in the previous year. Total Expenditure for the Year was Rs.14,78,157.55 Lakhs as against Rs.10,05,462.19 Lakhs in the previous year. The Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to Rs.2,65,333.45 Lakhs while the same was Rs.1,84,859.78 Lakhs for the previous year i.e. a increase of 44 %. The Profit before tax stood at Rs.(89,391.92) Lakhs, as compared to Rs.34,838.31 Lakhs in the previous year.

The Net Profit/(Loss) after Tax and adjustment of Minority Interest and Share of Profits of Associates was Rs.(1,07,329.46) Lakhs as against Rs.(11,203.47) Lakhs for the previous year.

Gross Interest and Finance charges on consolidated basis amounted to Rs.2,42,144.25 Lakhs in comparison to Rs.1,05,385.10 Lakhs due to increase in loans and Working Capital Requirements for Project Execution.

A detailed discussion on the results of the operations, financial condition and business review is included in the Management Discussion and Analysis section placed at Annexure-III to this Report.

DIVIDEND

Your Directors have not recommended dividend for the year ended March 31, 2013.

SUBSIDIARY COMPANIES

During the year, the following Companies have become subsidiaries of the Company:

Lanco Virgin Islands I, LLC, Bhola Electricity (Pvt.) Limited, Western Australia Coal Terminal Pty. Ltd., Lanco Rambara Hydro Power Private Limited and Portia Properties Private Limited.

During the year, the status/name of the following subsidiaries have been changed:

Lanco Hydro Power Limited (earlier known as Lanco Hydro Power Private Limited) and Lanco Thermal Power Limited (earlier known as Vamshi Industrial Power Limited).

Note on particulars required as per Section 212 of the Companies Act, 1956:

The Ministry of Corporate Affairs vide their General Circular No. 2/2011 dated February 8, 2011 had granted general exemption to the Companies under Section 212(8) from the requirement to attach detailed financial statements of each subsidiary. The detailed financial statements and audit reports of each subsidiary are available for inspection at the Registered Office of the Company during office hours and upon written request from shareholder(s), your Company will arrange to send the financial statements of subsidiary companies to the said shareholder(s).

HEALTH, SAFETY AND ENVIRONMENT

Your Company had been progressing well with respect to our programs laid to enhance the culture of Health, Safety and Environment (HSE). The entire leadership supports gives a comfortable platform to encourage the team in getting the success in different fronts. Corporate HSE has been driving various initiatives like HSE Audit Management, Contractor HSE Management and ‘Train the Trainer'' Programme to propel awareness on HSE at sites.

The group has started its process improvement programs in HSE processes with a sense of leveraging its IT platform. Many of our site personnel participate in various national level HSE competitions and make the group proud. A new initiative in sharing the best HSE practices among sites, which are of significant value to enhance HSE performance and give a new value and methods to improve the organizational value.

The HSE performance is realised with recognition of our efforts in HSE and towards their sustenance. The true reflection of our HSE culture is more evident at our Amarkantak site when it won the Prestigious "Sarvashreshtha Suraksha Puraskar" conferred by National Safety Council of India (NSCI). Several sites, which have participated in various HSE awards and won during the year make us proud. A brief description is below:

Company Award

Lanco Infratech - NSCI Safety Awards, Sarvashreshtha Limited- EPC Division Suraksha Puraskar (Golden Trophy) (Amarkantak Site)

NSCI Safety Awards (Anupur Site)

Lanco Amarkantak - Green Tech Safety Awards, Gold Power Limited Category

Golden Peacock Occupational Health & Safety Award

Udupi Power - CII HSE Excellence Award in Southern Corporation Limited Region _

Lanco Tanjore Power - 5 star Rating by National Safety Company Limited Council, UK

Green Tech Safety Awards, Gold

Category

NSCI Safety Awards, Tamilnadu Chapter

Golden Peacock Environmental Excellence Award

Lanco Kondapalli - NSCI Safety Awards, Prashansa Patra

Power Limited - Green Tech Safety Awards, Gold

Category

Golden Peacock Environmental Excellence Award

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. L. Madhusudhan Rao, Mr. S.C. Manocha and Mr. G. Venkatesh Babu, Directors retire by rotation and being eligible, offer themselves for re-appointment.

The Company had filed applications, subject to approval of shareholders, with the Ministry of Corporate Affairs, New Delhi seeking waiver for recovery of excess remuneration paid in financial year 2012-13 and approval for payment of remuneration from the financial year 2013-14 onwards, to Mr. L Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice- Chairman. Further, necessary approvals from the shareholders of the Company are being obtained for waiver of recovery of excess remuneration paid to all the managerial personnel of the Company, under Schedule XIII of the Companies Act, 1956 and for payment of remuneration w.e.f. April 1, 2013. The resolutions for approval of the shareholders for the above, forms part of the Notice for the ensuing Annual General Meeting.

DEPOSITS

Your Company has not accepted deposits falling within the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, during the year under review.

AUDITORS

The Auditors of the Company, M/s. Brahmayya & Co., Chartered Accountants, (Firm Registration No. 000511S) retire at the conclusion of the ensuing Annual General Meeting of the Company and have confirmed their willingness and eligibility for appointment and have also confirmed that their appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

COST AUDITORS

M/s.DZR & Co., Cost and Management Accountants have been reappointed as the Cost Auditors for the year ending March 31, 2014, as recommended by the Audit Committee. The Cost Audit Report for the year ended March 31, 2012 was due for filing on February 28, 2013 and was filed on February 9, 2013.

The Central Government has approved the appointment of M/s.DZR & Co., Cost and Management Accountants as Cost Auditors for conducting Cost Audit for the Financial Year 2013-14. The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arm''s length relationship with the Company.

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is enclosed as Annexure-I to this Report.

DISCLOSURE ON COMPANY''S EMPLOYEES STOCK OPTION PLAN

The Employees Stock Option Plan - 2006 and the Employees Stock Option Plan – 2010 were approved by shareholders by passing Special Resolutions in the Extraordinary General Meeting held on June 7, 2006 and Annual General Meeting held on July 31, 2010, respectively.

The required information pursuant to Clause 12 of the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, is enclosed as Annexure-II to this Report.

PARTICULARS OF EMPLOYEES

Pursuant to the Companies (Central Government''s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Act, the Particulars of Employees as required by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 have not been provided. However, these particulars are available for inspection at the Registered Office of the Company and upon written request from a shareholder, we will arrange to mail these details.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is enclosed as Annexure-III to this Report.

CORPORATE GOVERNANCE

In compliance with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreements with Stock Exchanges, the Report on Corporate Governance with the Certificate from a Practicing Company Secretary certifying compliance in this regard forms part of this Annual Report.

REGISTRAR AND SHARE TRANSFER AGENT

The Company has appointed M/s. Aarthi Consultants Private Limited, Hyderabad as the Registrar and Share Transfer Agent of the Company in place of M/s. Link Intime India Private Limited, with effect from May 10, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required by Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same;

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

(iii) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) we have prepared the annual accounts on a going concern basis.

INFORMATION ON AUDITORS'' QUALIFICATIONS:

The information and explanations of your Directors on the qualifications by the Auditors on Standalone and Consolidated Financial Statements are as follows:

- Qualification (a):

To meet the business requirements of augmenting the equity funding from private equity investors, strategic investors, the Power Holding Company structure was required. Accordingly the Power Holding Company structure was put in place to have first balance sheet of Power Holding Company as at March 31, 2012. The Company approached the lenders for approval for the said restructuring. The Company could obtain approval from all 5(five) lead lenders and also from 100 (one hundred), out of 133 (one hundred thirty three) participating lenders. The delay in getting the balance lenders approval is only procedural and the Management is confident of getting the same.

- Qualification (b):

One of the Subsidiary Company is recognizing revenue calculated as per the CERC norms. There is a dispute between the Subsidiary Company and HPGCL on the method of tariff determination apart from other issues. The Auditor is of the view that the revenue is disputed. Based on the legal opinions, the Management is confident that tariff fixation shall happen as per CERC guidelines which support the revenue recognition by the Subsidiary Company.

- Qualification (c):

Your Company was a profit making company to pay the Managerial Remuneration to its Whole Time Directors as approved by the shareholders. Though the remuneration being paid to the professionally qualified Whole Time

Directors is at par with the industry, during the FY 2012-13, due to lower profits on account of lower EPC business due to infrastructure sector related problems, the remuneration paid has exceeded the limits prescribed under Sections 198 & 309 of the Companies Act, 1956. However, the Company approached Ministry of Corporate Affairs for waiver of the recovery of excess remuneration paid under Schedule XIII of the Companies Act, 1956 to Executive Chairman and Executive Vice Chairman of the Company. Further, necessary approvals from the shareholders of the Company are being obtained in the ensuing Annual General Meeting for waiver of recovery of excess remuneration paid to all the managerial personnel of the Company, under Schedule XIII of the Companies Act, 1956. The Management is confident of getting the waiver.

- Qualification (d):

The renewable energy industry particularly solar power is an upcoming industry in India with aggressive growth prospects. The remuneration to the Professional Whole Time Director of your Subsidiary has been fixed by shareholders as per market standards exceeded the limits prescribed under Section 198 and Section 309 of the Companies Act, 1956. As a onetime waiver, the Subsidiary Company approached Ministry of Corporate Affairs for waiver of excess remuneration paid to the Professional Whole Time Director. The Management is confident of getting the waiver.

- Qualification (e):

Your Company acquired the Griffin Coal Mine which was under Administrator at the time of acquisition. The Griffin Coal Mining Pty Limited and Carpenter Mine Management Pty Limited were under Administrator and the audit for FY 2008-2009 and FY 2009-2010 was not completed at the time of acquisition. Due to non-availability of Audited Financial statements for FY 2010-2011 and FY 2011-2012, the Management Financial Statements were offered for consolidation. Your Company could complete the audit of FY 2008-2009, FY 2009-2010, FY 2010-2011 and FY 2011-2012 subsequent to acquisition. Post completion of the audit, there were no significant differences between the Audited Financial Statements and Management Financial Statements for the years ended March 31, 2011 and March 31, 2012. The audit of Griffin financials for the year ended March 31, 2013 is under progress and expected to be completed shortly.

Qualifications (a) and (c) are also qualifications in Standalone Financial Statements.

ACKNOWLEDGEMENT AND APPRECIATION:

Your Directors take this opportunity to thank all the stakeholders including Shareholders, Financial Institutions, Banks, Customers, Suppliers, Service Providers and Regulatory and Governmental Authorities for their consistent co-operation. Directors also wish to place on record the sincere appreciation of the hard work, dedication and commitment of Employees at all levels. We look forward to your continued support in the future.

For and on behalf of the Board

L. Madhusudhan Rao G. Venkatesh Babu

Executive Chairman Managing Director

DIN - 00074790 DIN - 00075079

Place : Gurgaon

Date : July 22, 2013


Mar 31, 2010

The Directors have pleasure in presenting the Seventeenth Annual Report on the business and operations of the Company together with the Audited Accounts for the year ended March 31, 2010.

CONSOLIDATED FINANCIAL RESULTS

Rs. Millions

Year ended 31st March,

2010 2009 Change (%) INCOME

Sales, Operating

and Other Income 82,914.99 61,262.04 35

Less: Elimination

of Unrealised Profit

on Transactions with

Associate Companies 755.31 647.59 17

Total 82,159.68 60,614.45 36

EXPENDITURE

Construction, Generation

and Operating Expenses 61,493.77 49,075.83 25

Administrative and

Other Expenses 4,311.48 2,750.21 57

Interest and Finance

Charges 3,554.11 2,184.90 63

Depreciation 3,478.80 1,073.39 224

Total 72,838.16 55,084.33 32

Profit Before Taxation,

Minority Interest and

Share of Profits of

Associates 9,321.52 5,530.12 69

Provision for Taxation

- Current Tax 2,658.53 1,651.46 61

- Relating to Previous

Years 151.97 16.76 807

- Fringe Benefit Tax

[including Rs. 4.12

Million (2009: Nil)

relating to previous year] 4.12 20.49 (80)

- Deferred Tax 828.22 1.69 48,831

Net Profit after

Taxation, before

Minority Interest and

Share of Profits of

Associates 5,678.69 3,839.72 48

Less: Share of

Minority Interest 915.24 1,040.83 (12)

Add: Share of Profits

of Associates (177.97) 4.68 (3,904)

Net Profit after

Taxation, Minority

Interest and

Share of Profits

of Associates 4,585.48 2,803.57 64

Surplus brought forward 7,795.53 5,297.87 47

Less: Exchange Fluctuation

Gain netted in Fixed

Assets relating to

earlier year - 183.90 (100)

Profit Available for

Appropriation 12,381.01 7,917.54 56

Transfer (from) / to

Debenture Redemption

Reserve (24.23) (17.99) 35

Transferred to General

Reserve 190.00 140.00 36

Balance Carried to

Consolidated Balance Sheet 12,215.24 7,795.53 57

Rs. Millions

Year ended 31st, March

2010 2009 Change (%)

INCOME

Operating Income

& Other Income 59,982.14 40,976.47 46

Total 59,982.14 40,976.47 46

EXPENDITURE

Construction and

Operating Expenses 46,433.08 32,900.92 41

Administrative and

Other Expenses 3,770.92 2,253.83 67

Interest and Finance

charges 1,979.40 1,386.12 43

Depreciation 597.71 405.26 47

Total 52,781.11 36,946.13 43

Profit Before Taxation 7,201.03 4,030.34 79

Provision for Taxation

Current Tax

For the year 2,441.91 1,342.26 82

Earlier years 19.57 15.16 29

Deferred Tax (124.27) 7.12 (1,845)

Fringe Benefit Tax - 17.12 (100)

Profit after Taxation 4,863.82 2,648.68 84

Balance of Profit

brought forward 5,853.82 3,205.14 83

Balance of profit

Carried to Balance

Sheet 10,717.64 5,853.82 83

OPERATIONS REVIEW

On a Consolidated basis your Company has reported Gross Revenues of Rs.82,159.68 Millions as against Rs.60,614.45 Millions of Revenues registered in the Previous Year up by 36%. Total Expenditure for the Year was Rs.72,838.15 Millions as against Rs.55,084.33 Millions in the Previous Year an increase of 32% on the back of increased execution activities of various projects. The Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to Rs.16,354.44 Millions while the same was Rs.8,788.41 Million for the Previous Year i.e. an increase of 86%. The Profit Before Taxation stood at Rs.9,321.53 Millions, an increase of 69% as compared to Rs.5,530.12 Millions in the Last Year.

The Net Profit After Tax after adjustment of Minority Interest and Share of Profits of Associates was Rs.4,585.48 Millions as against Rs.2,803.57 Millions for the Previous Year, increase by 64%.

Gross Interest and Finance charges on consolidated basis amounted to Rs.3,554.11 Millions in comparison to Rs.2,184.90 Millions due to increase in loans and Working Capital Requirements for Project Execution.

A detailed discussion on the results of the operations and the financial condition is included in the Management Discussion and Analysis section placed at Annexure-II to this report.

BUSINESS REVIEW

A detailed business review is being given in the Management Discussion and Analysis Section of the Annual Report.

SUBSIDIARY COMPANIES

During the Year - (1) Coral Orchids Private Limited, (2) Cressida Properties Private Limited, (3) Jupiter Infratech Private Limited, (4) Leda Properties Private Limited, (5) Thebe Properties Private Limited, (6) Uranus Infratech Private Limited, (7) Lanco Enterprise Pte. Limited, Singapore, (8) Lanco Infratech (Mauritius) Limited and (9) Pt. Lanco Indonesia Energy have become Subsidiaries of the Company.

During the year, the names of the following Subsidiaries have been changed.

(1) Lanco Power Trading Limited (Formerly Lanco Electric Utility Limited),

(2) Lanco Amarkantak Power Limited (Formerly Lanco Amarkantak Power Private Limited), (3) Lanco Vidarbha Thermal Power Limited (Formerly Lanco Mahanadi Power Private Limited).

HEALTH, SAFETY AND ENVIRONMENT

The Groups concern for environment was recognized, as Aban Power Company Limited, a Subsidiary of the Company, won Teri Corporate Award for "Excellence in Environment and CSR Activities" in June, 2009.

The Group is consciously making forays in Renewable Energy Sector, into Solar Power Projects in addition to the on-going Hydro Projects.

The coveted certification like OHSAS 18001 in respect of Environment Management System was bestowed, in recognition of the commitment of the Group in respect of issues of Health, Safety & Environment.

DIRECTORS

In accordance with the Provisions of the Companies Act, 1956 and the Articles of Association of the Company Mr. L. Madhusudhan Rao, Mr. L. Sridhar and Mr. G. Venkatesh Babu, Directors, retire by rotation and being eligible offer themselves for re-appointment.

Mr. D.V. Rao, Joint Managing Director, resigned to his position from the Board with effect from 7th August, 2009.

DEPOSITS

Your Company has not accepted deposits falling within the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of the Deposits) Rules, 1975 during the year under review.

AUDITORS

Brahmayya & Co., Chartered Accountants, and Price Waterhouse, Chartered Accountants, Auditors of the Company, will retire at the conclusion of the Annual General Meeting.

Price Waterhouse, Chartered Accountants, vide their Letter Dated 11th June, 2010, conveyed their inability to be considered for re-appointment as Auditors.

Special Notices, under Section 190 of the Companies Act, 1956, were received, proposing an Ordinary Resolution to appoint S.R. Batliboi &

Associates, Chartered Accountants, and Brahmayya & Co., Chartered Accountants, as Auditors from the conclusion of the Annual General Meeting to the conclusion of the next Annual General Meeting, in place of the retiring Auditors.

S.R. Batliboi & Associates, Chartered Accountants, conveyed their willingness to accept appointment and confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

Brahmayya & Co., Chartered Accountants, conveyed their willingness to accept appointment and confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

We present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Governments) General Rules & Forms, 1956 read with Section 219 of the Companies Act, 1956, the Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required by Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 have not been provided. However, these particulars are available for inspection at the Registered Office of the Company and upon written request from a shareholder, we will arrange to mail these details.

DISCLOSURE ON COMPANYS EMPLOYEES STOCK OPTION PLAN- 2006

The Employee Stock Option Plan-2006 was approved by a Special Resolution passed by the Shareholders in the Extraordinary General Meeting held on 7th June, 2006.

The required information relating to the said scheme pursuant to Clause 12 of the SEBI (ESOS/ESPS ) Guidelines,1999, is enclosed as an Annexure-I.

PARTICULARS OF EMPLOYEES

We present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Governments) General Rules & Forms, 1956 read with Section 219 of the Companies Act, 1956, the Particulars of Employees as required by Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 have not been provided. However, these particulars are available for inspection at the Registered Office of the Company and upon written request from a shareholder, we will arrange to mail these details.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause-49 (IV)(f)is enclosed as Annexure-II.

CORPORATE GOVERNANCE

The Report on Corporate Governance is given separately in this Annual Report. The Certificate of Practising Company Secretary certifying compliance in this regard is annexed to this report.

Note on Particulars required as per Section 212 of the Companies Act, 1956

As per Section 212 of the Companies Act, 1956, we are required to attach the directors report, balance sheet, and profit and loss account of the subsidiaries. We had applied to the Government of India for an exemption from such attachment as we present the audited consolidated financial statements in the annual report. We believe that the consolidated accounts present a full and fair picture of the state of affairs and the financial condition and is accepted globally. The Government of India has granted exemption from complying with Section 212. Accordingly, the annual report does not contain the financial statements of these subsidiaries. The Annual Accounts of the Subsidiary Companies and the related detailed information will be made available to the Holding and Subsidiary Companies investors seeking such information at any point of time and will be put on the Website of the Company at www.

lancogroup.com. The Annual Accounts of the Subsidiary Companies will also be kept for inspection by any investor at our Registered Office and that of Subsidiary Companies concerned.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that :

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same;

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

(iii) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) We have prepared the annual accounts on a going concern basis.

INFORMATION ON OBSERVATIONS IN ANNEXURE TO AUDITORS REPORT

In Item No. 21 of the Annexure to the Auditors Report, the facts are stated giving fullest information and are self explanatory. It is confirmed that systems have been further strengthened to exercise better control to prevent such instances in future.

DEVELOPMENTS DURING THE YEAR

On 7th August, 2009, 1,84,18,587 (One Crore Eighty Four Lakhs Eighteen Thousand Five Hundred and Eighty Seven) Equity Shares of Face Value of Rs.10/- each were allotted at an Issue Price of Rs.394.90 Per Equity Share (including Rs.384.90 Per Equity Share towards Share Premium) under the Qualified Institutions Placement.

One Equity Share of the Company of face value of Rs.10/- each fully paid-up was sub-divided into 10 (Ten) Equity Shares of Re.1/- each face value as fully paid-up, pursuant to the resolutions passed through Postal Ballot on 14th December, 2009, the record date being 5th January, 2010.

Approval was accorded to the Board of Directors pursuant to Section 293(1)(a) of the Companies Act, 1956, through Postal Ballot on 19th March, 2010 to Sell, Transfer and/or dispose of the whole or substantially whole of the Investments held by the Company in Subsidiaries, Associates and other Group Companies in the Power Segment to any Wholly Owned Subsidiary of the Company in the Power Segment.

ACKNOWLEDGEMENT AND APPRECIATION

The Directors take this opportunity to thank the Shareholders, Financial Institutions, Banks, Customers, Suppliers and Regulatory & Governmental Authorities for their continued support to the Company. Further, the Directors wish to place on record their appreciation of Employees at all levels for their hard work, dedication and commitment.

FOR AND ON BEHALF OF THE BOARD

Dr. P. KOTAIAH G. VENKATESH BABU

Director Managing Director

Place: Gurgaon,

Date: 11.06.2010.

 
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