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Notes to Accounts of Patel Engineering Ltd.

Mar 31, 2015

1 EMPLOYEE BENEFITS

I Brief description of the Plans

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Company's defined contribution plans are provident fund, employee state insurance and employees' pension scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company's defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company's policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, any shortfall in the interest income over the interest obligation is recognised immediately in the statement of profit & loss as actuarial loss. Any loss/gain arising out of the investment with the plan is also recognised as expense or income in the period in which such loss/gain occurs.

2 (i) Income-tax assessments are completed up to A.Y. 2012-2013. Several appeals for the earlier assessment years are pending before the Appellate Authorities and out of the aggregate demand of Rs. 3256.18 Million, Rs. 1,050.69 Million (P.Y. Rs. 1,584.95 Million) has been already adjusted / paid. The Company has made a provision for tax of Rs. 171.18 Million (P.Y. Rs. 149.63 Million) (net of Rs. Nil. (P.Y. Rs. 7.07 Million) reversal of excess liability of earlier years) under all proceeding under the Income Tax Act, 1961 , and Deferred Tax Assets of Rs. 72.23 Million (P.Y. Rs. 40.64 Million). The Company has been advised that it is not liable to Wealth-Tax except on Motor Cars. Accordingly, Wealth Tax of Rs. 0.89 Million (P.Y. Rs. 3.37 Million) has been provided including liability of Rs. Nil ( P.Y. Rs. 2.27 Millions ) of previous years under all proceeding under the act.

(ii) The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available. The company has fled a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted. Recently the appellate authority held that the company is eligible for the said deduction on certain projects. Accordingly, the corresponding excess provision for the tax of Rs. 600.64 Million (P.Y. Rs. 981.31 Million) has been adjusted and credited to Reserves.

3 In view of the amendment in the Service Tax Act, certain projects which were hitherto not liable for service tax became liable to tax by virtue of the said amendment effective 1st July 2012. The amount of service tax payable on such projects is reimbursable by the client as per the contract conditions and the same has been reflected as receivables. However in few cases where the client has not accepted this liability, the same has been debited to the profit & loss account.

4 LEASE

The Company has taken various construction equipments under non cancellable operating leases. The future minimum lease payment in respect of these as at March 31, 2015 are as follows:

5 The Company has main reportable business segment namely "Civil Construction".

6 Income consisting of Construction income of Rs. Nil (P.Y. Rs. 50.69 Million) and Other Income of Rs.60.66 Million (P.Y. Rs. 13.35 Million) and Expenses consisting of Piece Rate Expenses Rs.33.38 millions (P.Y. Rs. 10.37 Million), Store material purchases Rs. 14.67 millions and Other Expenses Rs. 189.58 Million (P.Y. Rs. 213.80 Million) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

7 In accordance with "The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011 and further amended on December 29, 2011, the Company has carried over exchange (gain)/loss of Rs. 3.89 million (P.Y. Rs. 104.73 million) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2020. Further exchange loss (net) of Rs. Nil (P.Y. Rs. 22.38 million) has been added to the cost of the respective fixed asset.

8 In terms of Provisions of Section 135 of the companies Act 2013 and rules thereunder, the company is required to spend an amount of Rs. 8.90 Million during the financial year on Corporate Social Responsibility (CSR). However, the company has not spent the requisite amount during this financial year.

9 The Company is engaged in providing infrastructural facilities as hence, as per Section 186(11) of Companies Act, 2013, nothing in Section 186 shall apply to the Company except sub-section (1) of Section 186. Accordingly, a separate disclosure has not been given in the financial statements as required under Section 186(4) with regard to particulars of loan given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security.

10 Confirmation letters have been sent in respect of Sundry Debtors / Loans and Advances / Sundry Creditors of which certain confirmations have been received which are accordingly accounted and reconciled. The remaining balances have been shown as per books of accounts and are subject to reconciliation adjustments, if any. In the opinion of the Management, the realizable value of the current assets, loans and advances in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

11 Additional information pursuant to the provision of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, (wherever applicable).

12 Disclosure required in accordance with Accounting Standard – 7 (Revised). In respect of contracts entered into on or after 1st April 2003, contract revenue recognized as gross construction Rs. 21,581.62 Million (P.Y. Rs. 24,724.63 Million) contract costs incurred and recognized profit (less recognized losses) Rs. 111,450.01 Million (P.Y. Rs. 109,818.75 Million) advance received Rs. 838.63 Million (P.Y. Rs. 1373.33 Million) retention deposit Rs. 2,026.18 million (P.Y. Rs. 2,005.99 Million) and gross amount due from clients for contract works included under current assets Rs. 19,950.36 Million (P.Y. Rs. 14,246.76 Million).

13 a) Unbilled Work in Progress includes stock of land under development (including held in the name of directors/relatives of directors/employees, as nominees of the company).

b) Turnover includes, construction of multi purpose projects, water supply projects, Irrigation projects, building projects, road and railway projects, on item rate or EPC basis and sale of development rights (net of rebate / cancellation of Rs. 1068.00 Million). It also includes duty drawback and entitlement etc but excludes VAT, Service Tax etc.

c) During the Financial year 2010-11, two of Company's hydropower projects in Loharinagpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors / vendors for further submission to the government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2015 Rs. 1849.70 Million (P.Y. Rs. 1,865.38 Million) (including hedging cost of Rs. 458.71 millions (P.Y. Rs. 458.71 Millions)) are considered recoverable and billable to the client and hence included under work in progress.

d) Arbitration awards received in favour of the Company amounting to Rs. 783.56 million ( P.Y. Rs. 61.71 million) is accounted for as construction Receipts.

14 Derivative transactions :

a. For Interest Rate Related Risks:

Nominal amounts of interest rate swaps entered into by the company and outstanding as on 31st March 2015 amounts to Rs. Nil ( P.Y. Rs.554.24 Million).

b. Foreign Currency Exposure that are not hedged by derivative instruments as on March 31, 2015 amounting to Rs. -330.54 Million (P.Y Rs. 1,160.83 Million).

15 Contingent Liabilities

(a) Commitment for capital expenditure is Rs. 169.72 Million (P.Y. Rs. 204.21 Million), advance paid Rs. 36.47 Million (P.Y. Rs. 7.81 Million).

(b) Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is Rs. 6,670.47 Million (P.Y. Rs. 7,203.70 Million) including Customs Rs. 120.64 Million (P.Y. Rs. 305.81 Million) Entry Tax Rs. 67.57 Million ( P.Y. Rs. 37.57 Million) for the current year includes guarantees given in US$ 10 Million ( P.Y. US$ 10.00 Million). Corporate guarantees / Letter of Credit on behalf of subsidiaries and others is Rs. 11,135.34 Million ( P.Y. Rs. 14,034.69 Million) against which the Company has obtained counter indemnities for Rs. 4,821.06 Million (P.Y. Rs. 4802.69 Million) and towards Custom Duty Rs. 71.62 Million (P.Y. Rs. 71.62 Million).

(c) The Company has received an amount of Rs. 12.74 Million in 1997 against arbitration award in its favour. The client has preferred an appeal against above award claiming an amount of Rs. 213.32 Million (P.Y. Rs. 213.32 Million) before the Hon'ble appeal court. However the management feels that the likelihood of outflow of resources is remote.

(d) Service tax liability that may arise on matters in appeal Rs. 1085.92 Million (P.Y. Rs. 654.55 Million) and advance paid Rs. 20.00 Million (P.Y. Rs. 2.68 Million). However, this amount is contractually recoverable from the Clients.

(e) Sales tax Rs. 99.56 Million (P.Y. Rs. 88.00 Million) (Advance paid Rs. 17.09 Million (P.Y. Rs. 18.51 Million)), Cess Rs. 78.55 Million (P.Y. Rs. 53.70 Million), Custom Duty Rs. 17.62 Million (P.Y. Nil) (Advance paid Rs. 8.46 Million (P.Y. Nil)).

(f) Income tax liability that may arise on matters in appeal Rs. 2,819.73 Million (P.Y. Rs. 981.31 Million).

(g) Trade Receivables/ Client Retention to the extent of Rs. 179.47 Million (P.Y. Rs. Nil) have been discounted with Bank on Recourse Basis.

(h) Allowances due to employees in remote areas (North East) may accrue in future maximum to the extent of Rs.0.37 million (Rs. 4.56 Million). The same will be paid to the employees who continue to be on the payrolls upto July 1, 2014 (previously October, 1).

(i) Provident Fund liability that may arise on matter in appeal Rs. 9.52 Million ( P.Y. Rs. 9.52 Million) and advance Paid Rs. 2.38 Millions (P.Y. 2.38 Millions)

(j) Claims not acknowledged as debt Rs. 485 Million (any liability herein shall be borne by the Principal Contractor).

(k) Entry Tax liabilities on purchase of goods of Rs. 11.35 Millions (against which amount of Rs. 3.78 Millions have been paid and for the balance amount of Rs. 7.60 Millions bank guarantee has been furnished) for A.Y. 2010 - 11 which has been stayed by Hon'ble High Court of H.P. The Company has not provided any further liability from the relevant assessment year as the amount for same is not ascertainable.

16 Disclosures as required under Clause 32 of listing agreements:

Loans and Advances in the nature of loans given to Subsidiaries and Associates:

17 Previous year's figures have been regrouped, rearranged and reclassified wherever necessary.


Mar 31, 2014

1 BASIS OF PREPARATION

The financial statements are prepared under historical cost convention, on accrual basis of accounting, to comply in all material aspects with all the applicable Accounting Principles in India, the applicable Accounting Standards notified U/S 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

LONG TERM BORROWINGS

1 Debentures

a) 9.8% Secured Redeemable Non Convertible Debentures was allotted on July 20, 2009 for a period of 7 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. 900 Million (P.Y. Rs. 900 Million) and are to be redeemed on July 20, 2016 in a single instalment, with a put / call option available and exercisable at par at the end of 5th year from the date of allotment i.e. July 20, 2014. The same is secured against immovable property of the Company.

b) 9.55% Secured Redeemable Non Convertible Debentures was allotted on April 26, 2010 for a period of 5 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. 700.00 Million(P.Y. Rs. 1,000 Million). These Debentures will be redeemed as follows - April 26, 2014- Rs. 300 Million, and April 26, 2015 - Rs. 400 Million. The same is secured against immovable property and subservient charge on all the Fixed assets of the Company.

c) 10.75% Secured Redeemable Non Convertible Debentures was allotted on March 3, 2011 for a period of 5 years.

These debentures have a face value of Rs. 0.10 Million each aggregating to Rs. 350.00 Million(P.Y. Rs. 500 Million). These Debentures will be redeemed as follows- March 3, 2015 - Rs. 150 Million and March 3, 2016 - Rs. 200 Million. The same is secured against immovable property and subservient charge on all the Fixed asset of the Company. Interest rate has been revised to 13% (P.Y. 12%) w.e.f. 18th Oct. 2013.

d) 11.40% Secured Redeemable Non Convertible Debentures was allotted on July 11, 2011 for a period of 5 years.

These debentures have a face value of Rs. 0.10 Million each aggregating to Rs. 1,500.00 Million. These Debentures will be redeemed as follows- July 11, 2014 - Rs. 500 million, July 11, 2015 Rs. 500 million and July 11, 2016 Rs. 500 million. The same is secured against immovable property of the Company and its subsidiaries. Interest rates revised to 13% w.e.f. October 2013.

e) 11.30% Secured Redeemable Non Convertible Debentures was allotted on September 17, 2012 for a period of 10 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. 1,500.00 Million and are to be redeemed in September 17, 2022. The same is secured against charge on immovable assets of the Company and of its subsidiaries.

The above debentures are listed on The National Stock Exchange of India.

As per Section 117C of the Companies Act, 1956 the Company has created adequate Debenture Redemption Reserve for both the above series of Secured Redeemable Non Convertible Debenture issued during the year. Further, in terms of clarification vide circular no. 04/2013 dated 11.2.2013 issued by the Ministry of Corporate Affairs, Government of India, the Company had not made the required deposit/ investment to secure the repayment of debentures maturing during 2013-14. However, the Company has redeemed/paid all its debentures maturing in 2013-14 in time.

2 Term Loan From Banks

a) The Term loans are secured by first charge on the specific assets acquired out of the term loan along with unencumbered assets & guarantees. The rate of Interest for these loans vary between 10% - 14% on an average, with a repayment period of 3-5 years respectively. Term Loan includes Working Capital Term Loan secured by a First Pari-passu charge on the receivables and WIP, mortgage over certain Lands owned by Subsidiary companies and pledge of 30% shareholding of subsidiaries owning real estate Lands.

The Promoters Mr. Pravin Patel and Mr. Rupen Patel has provided personal guarantees for the above loan. Subsequently, the Company has counter indemnified the guarantees provided by the Promoters.

3 Term Loan From Others

a) Includes funds from Financial Institutions on Equipments, secured against the said Equipments. These loans carry an interest rate of average between 10%- 13% on an average, with a repayment period of 3-5 years respectively.

4 Unsecured Loans -From Bank

Includes Rs. NIL Millions (P.Y. 1,000 Millions) Loans repayable within a period of 2 years carrying an average Interest rate of 11-13% p.a.

Short Term Loan

1 Includes Loans against Equipments Financed and by earmarking from bank Guarantee limits, at Interest rate of 12.25% -12.75% (P.Y. 12.25%) payable within a year.

2 Loans Repayable on Demand

Includes Cash Credit and Working Capital Demand Loan from various Banks. These loans have been given against hypothecation of stocks, spare parts, book debts, work in progress & guarantees;

Terms of Repayment :

Cash Credit- Yearly Renewal , except for a Cash Credit taken from IDBI Bank Short Term Loan - EARMARK CC" which is payable within 90 days. Rate of Interest-Ranges between 11% to 14%. (P.Y. 9.75% to 13.75%)

3 Unsecured Loan

a Includes loans from Banks which are payable at yearly rests with an average Interest cost ranging between 12.60% to 13.75% (P.Y. 11% - 12%)

b Includes loans from related parties carrying nil Interest rates, which are payable on demand. Such loan amount to be appropriated upon exercise of the option of conversion of Optional Covertible Preference Shares into Equity Shares (refer note # 39).

OTHER CURRENT LIABILITIES

1 a) The Company has no amounts due to suppliers under the Micro Small and Medium Enterprise Development Act, 2006, as at March 31, 2014.

Note: The above information has been determined to the extent such parties had been identified on the basis of information available with the Company.

b) Other Liabilities includes statutory dues and advances received against sale of assets.

c) Includes Rs. Nil (P.Y. Rs. 87.13 Million) against lease of office premises.

OTHER INVESTEMENTS :

Aggregated amount of Unquoted Investments as at 31st March 2014 Rs. 5,586.07 Million (Rs. 5,381.46 Million)

II Aggregated amount of Quoted Investments as at 31st March 2014 Rs. 310.31 Million, Market value Rs. 151.20 Million (P.Y. Rs. 330.24 Million, Market value Rs. 177.30 Million)

III Includes Investment in National Saving Certificates, in the name of Directors , lodged with Project Authorities

IV A firm AHCL - PEL having fixed capital of Rs. 75,000 (P.Y. Rs. 75,000), profit sharing is as follows :- the company 5% (P.Y. 5%), Ace Housing & Const. Ltd. 45% (P.Y. 45%) & P.Patel 50% (P.Y. 50%).

A firm Patel Advance JV having nil fixed capital, profit sharing is as follows : the Company 27% (P.Y.27%), Advance Const. Co. Pvt. Ltd. 26% (P.Y. 26%) Patel Realty (I) Ltd. 26% (P.Y. 26%) & Apollo Buildwell Pvt. Ltd. 21% (P.Y. 21%)

LOANS AND ADVANCES

a) Advances Recoverable in Cash or in kind or for value to be received includes Rs. 13.88 Million (P.Y. Rs. 7.73Million) due from officers of the Company and Rs. 0.13 Million (P.Y. Rs. 164.52 million) due from company in which Directors are Directors.

b) Includes secured advance to piece workers Rs. 91.39 Million (P.Y. Rs. 18.43 Million)

c) includes share application Money in Raichur Sholapur Transmission Company Ltd. Rs. 26.67 Million - Pending allotment

TANGIBLE ASSETS

1 Land includes Rs. 9.04 Million (P.Y. Rs. 9.04 Million) held in the name of Directors, relatives of Directors and employees for and on behalf of the Company

2 a) Building includes Building [Gross Block - Rs. 133.06 million (P.Y. Rs. 210.07 Million), Accumulated Depreciation Rs. 19.93 Million (P.Y. Rs. 28.42 Million)] and Factory Building [ Gross Block - Rs. 156.01 million (Rs. 142.13 Million), Accumulated Depreciation Rs. 29.31 million (P.Y. Rs. 23.77 Million)]

b) Includes Rs. 0.02Million (P.Y. Rs. 0.02 Million) being the value of 30 shares and share deposits in Co - operative Societies 24 EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

I Brief description of the Plans

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Company''s defined contribution plans are provident fund, employee state insurance and employees'' pension scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company''s policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, any shortfall in the interest income over the interest obligation is recognised immediately in the statement of profit & loss as actuarial loss. Any loss/gain arising out of the investment with the plan is also recognised as expense or income in the period in which such loss/gain occurs.

(i) Income-tax assessments are completed up to A.Y. 2011-2012. Several appeals for the earlier assessment years are pending before the Appellate Authorities and the aggregate demand for the same amounting to Rs. 1,584.95 Million (P.Y. Rs. 692.49 Million) has been already adjusted / paid. The Company has made a provision for tax of Rs. 149.63 Million net of Rs. 7.07 million reversal of excess liability of earlier years (P.Y. Rs. 330.50 Million including liability for earlier years of Rs. 100.50 Million) under all proceeding under the Income Tax Act, 1961 , and Deferred Tax Liability (Assets) of Rs. (40.64) Million (P.Y. Rs. 56.28 Million). The Company has been advised that it is not liable to Wealth-Tax except on Motor Cars. Accordingly, Wealth Tax of Rs. 3.37 Million (P.Y. Rs. 1.15 Million) has been provided including liability of Rs. 2.27 Million (P.Y. Rs. Nil) of pervious years under all proceeding under the act.

(ii) The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available. The impact of Rs. 1,485.11 Million upto March 31, 2009 due to the above amendment, though being subjudice, has been provided and adjusted out of the Surplus in Profit and Loss Account in earlier years. Interest liability of Rs. 935.06 million has not been provided considering the Company has legally contested the validity of the above amendment and intention of the said section. Recently the appellate authority held that company is eligible for the said deduction on certain projects. Accordingly, the corresponding excess provision for the tax of Rs. 981.31 Million has been adjusted and credited to Reserves. Further, the company has filed a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted.

* In view of the amendment in the Service Tax Act, certain projects which were hitherto not liable for service tax became liable to tax by virtue of the said amendment effective 1st July 2012. The amount of service tax on such projects is reimbursable by the client as per the contract conditions and the same has been reflected as Trade Receivables. However in few cases where the client has not accepted this liability, the same has been debited to the profit & loss account.

DEFFERED TAX

The Company is entitled to deductions under the Income Tax Act, which are in nature of permanent benefits. However, deferred tax adjustments on account of timing differences as described in Accounting Standard - 22 ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India, is made.

* The Company has main reportable business segment namely "Civil Construction ".

* Income consisting of Construction income of Rs. 50.69 Million ( P.Y. Rs. 3.43 Million) and Other Income of Rs. 13.35 Million (P.Y. Rs. 14.10 Million) and Expenses consisting of Piece Rate Expenses Rs. 10.37 (P.Y. Rs. Nil) and Other Expenses Rs. 213.80 Million (P.Y. Rs. 49.47 Million) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

* In accordance with "The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011 and further amended on December 29, 2011, the Company has carried over exchange (gain)/loss of Rs. 104.73 million (P.Y. Rs. 65.27 million) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2020. Further exchange loss (net) of Rs. 22.38 million (P.Y. Rs. 1.69 million) has been added to the cost of the respective fixed asset.

* Debit and Credit Balances are subject to confirmation from creditors, debtors and sub contractors. The management does not expect any material difference affecting the financial statements for the year.

* Disclosure required in accordance with Accounting Standard - 7 (Revised). In respect of contracts entered into on or after 1st April 2003, contract revenue recognized as gross construction Rs. 24,724.63 Million contract costs incurred and recognized profit (less recognized losses) Rs. 109,818.75 Million advance received Rs.Rs. 1,373.33 Million retention deposit Rs. 2,005.99 million and gross amount due from clients for contract works included under current assets Rs. 14,246.76 Million.

a) Unbilled Work in Progress includes stock of land under development (including held in the name of directors/relatives of directors/employees, as nominees of the company).

b) Turnover includes, construction of multi purpose projects, water supply projects, Irrigation projects, building projects, road and railway projects, on item rate or EPC basis and sale of development rights (net of rebate). It also includes duty drawback and entitlement etc but excludes VAT, Service Tax etc.

c) During the Financial year 2010-11, two of Company''s hydropower projects in Loharina gpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors / vendors for further submission to the government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2014 Rs. 1865.38 Million (P.Y. Rs. 1,865.38 Million) (including hedging cost of Rs. 458.71 million (P.Y. Rs. 458.71 Million) are considered recoverable and billable to the client and hence included under work in progress.

d) Arbitration awards received in favour of the Company amounting to Rs. 61.71 million (P.Y. Rs. 778.52 million) is accounted for as construction Receipts.

e) The company is executing a contract for development of real-estate project for the Client viz Terra Land Developers Pvt. Ltd. The Client is in process of changing purpose of project from commercial to residential project, as a result of this cost incurred of Rs. 285.13 million (P.Y. Rs. 231.32 million), pending achievement of milestone as per the contract, is included in closing Work-in-Progress.

* The Allotment Committee of Directors of the Company at their meeting held on March 21, 2014 has converted unsecured loan from the Promoters entities by allotment of 69,79,131 Zero Coupon Optional Convertible Preference shares(OCPS) of Re. 1 each fully paid up aggregating to Rs. 69,79,131 to the Promoter entities of the Company on Preferential basis with an option to convert into Equity shares, partially or fully, in one or more trenches, in one or more financial year at price of Rs. 57.50 per share (including premium of Rs. 56.50 per share). The Promoter entities have exercised their option and the Committee on March 31, 2014 has allotted 64,17,174 shares and the balance 5,61,957 shares has been allotted on April 15, 2014.

Derivative transactions :

a. For Interest Rate Related Risks:

Nominal amounts of interest rate swaps entered into by the Company and outstanding as on 31st March 2014 amounts to Rs. 554.24 Million (P.Y. Rs. 505.75 Million).

Contingent Liabilities

(a) Commitment for capital expenditure is Rs. 204.21 Million (P.Y. Rs. 442.06 Million), advance paid Rs. 7.81 Million (P.Y. Rs. 17.59 Million)

(b) Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is Rs. 7,203.70 million ( P.Y. Rs. 7,502.76 million) (including Customs Rs. 305.81 million (P.Y. Rs. 285.75 million) Entry Tax Rs. 37.57 Million (P.Y. Rs. 37.57 Million) for the current year includes guarantees given in US$ 10 Million (P.Y. US$ 10.00 million). Corporate guarantees on behalf of subsidiaries and others is Rs. 14,034.69 million (P.Y. Rs. 10,397.29 million) (against which the Company has obtained counter indemnities for Rs. 4,802.69 million (P.Y. Rs. 3,002.69 Million) and towards Custom Duty Rs. 71.62 million (P.Y. Rs. 71.62 million).

(c) The Company has received an amount of Rs. 12.74 Million in 1997 against arbitration award in its favour. The client has preferred an appeal against above award claiming an amount of Rs. 213.32 ('' 213.32 Million) before the hobble appeal court. However the management feels that the likelihood of outflow of resources is remote.

(d) Service tax liability that may arise on matters in appeal Rs. 654.55 Million and advance paid Rs. 2.68 Million. However, this amount is contractually recoverable from the Clients.

(e) Sales tax Rs. 88.00 Million (P.Y. Rs. 33.51 Million (Advance paid Rs. 18.51 Million(P.Y. Rs. 18.51 million). Cess Rs. 53.70 Million (P.Y. Rs. 7.46 Million).

(f) Income tax liability that may arise on matters in appeal Rs. 981.31 Million (P.Y. Rs. Nil) refer note # 25 (ii).

(g) Trade Receivables/ Client Retention to the extent of Rs. Nil (P.Y. Rs. 475.00 Million) have been discounted with Bank on Recourse Basis.

(h) Allowances due to employees in remote areas (North East) may accrue in future maximum to the extent of Rs. 4.56 Million (Rs. 2.30 Million).

The same will be paid to the employees who continue to be on the payrolls upto July 1, 2014 (previously October, 1).


Mar 31, 2013

1 BASIS OF PREPERATION

The financial statements are prepared under historical cost convention, on accrual basis of accounting, to comply in all material aspects with all the applicable Accounting Principles in India, the applicable Accounting Standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

2 EMPLOYEE BENEFITS

I Brief description of the Plans

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Company''s defined contribution plans are provident fund, employee state insurance and employees'' pension scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company''s policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, any shortfall in the interest income over the interest oligation is recognised immediately in the statement of profit & loass as acturial loss. Any loss/gain arising out of the investment with the plan is also recognised as expense or income in the period in which such loss/gain occurs.

3 (i) Income-tax assessments are completed up to assessment year 2011-2012. Several appeals for the earlier assessment years are pending before the Appellate Authorities and the aggregate demand for the same amounting to Rs. 692.49 million has been already adjusted / paid. The Company has made a provision for tax of Rs. 330.50 million (P.Y. Rs. 320.00 million) including liability of Rs. 100.50 million (P.Y. Rs. Nil) of previous years under all proceeding under the Income Tax Act, 1961 , and Deferred Tax Liability (Assets) of

Rs. (56.58) million (P.Y. 31.31 million). The Company has been advised that it is not liable to Wealth-Tax except on Motor Cars. Accordingly, Wealth Tax ofRs. 1.15 million (P.Y. Rs. 1.50 million) has been provided.

(ii) The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available. The impact ofRs. 1,485.11 million upto March 31, 2009 due to the above amendment, though being subjudice, has been provided and adjusted out of the Surplus in Profit and Loss Account. Interest liability of Rs. 732 million has not been provided considering the Company has legally contested the validity of the above amendment and intention of the said section. Further, the Company has filed a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted.

4 In view of the amendment in the Service Tax act with effect from July 1, 2012, company is in the process of obtaining an expert opinion with respect to its liability thereunder. The same is contracutally recoverable from the Clients, however, out of prudence the Company has made a provision of Rs. 280.11 million (net of input tax credit) towards this liability. Based upon the expert opinion the Company will discharge its liability, if required.

5 DEFFERED TAX

The Company is entitled to deductions under the Income Tax Act, which are in nature of permanent benefits. However, deferred tax adjustments on account of timing differences as described in Accounting Standard - 22 ''Accounting for Taxes on Income'' issued by the Institute of Chartered Accountants of India, is made.

6 LEASE

The Company has taken various construction equipements under non cancelable operating leases. The future minimum lease payament in respect of these as at March 31, 2013 are as follows:

The operating lease arrangement, are renewable on a periodic basis and it provides for an option to the Company to renew the lease at the end of the non cancellable period. There is no exceptional / restrictive covenants under the lease arrangment.

7 RELATED PARTY DISCLOSURE

Related party disclosures, as required by Accounting Standard 18, ''Related Party Disclosures'', are given below: A. Name of Related Parties and nature of relationship :- Direct Subsidiaries

1 Patel Realty (India) Ltd

2 Patel Energy Resources Ltd

3 Michigan Engineers Pvt. Ltd

4 Pan Realtors Pvt. Ltd

5 Energy Design Pvt. Ltd

6 Patel Lands Ltd

7 Patel Patron Pvt. Ltd

8 Patel Engineers Pvt. Ltd

9 Pandora Infra Pvt. Ltd

10 Shashvat Land Projects Pvt. Ltd

11 Patel Engineering Lanka Pvt. Ltd

12 Shreeanant Construction Pvt. Ltd1

13 Vismaya Constructions Pvt. Ltd

14 Bhooma Realties Pvt. Ltd

15 Friends Niraman Pvt. Ltd

16 Patel Concrete and Quarries Pvt. Ltd

17 ASI Constructors Inc

18 Patel Engineering Infrastructure Ltd

19 Patel Engineering (Mauritius) Ltd

20 Patel Engineering (Singapore) Pte. Ltd

21 Patel Engineering Inc

22 Zeus Minerals Trading Pvt. Ltd

(earlier known as Zeus Land Projects Pvt. Ltd)

"ceases to be subsidiary w.e.f March 12, 2013 Subsidiaries of Patel Realty (India) Limited

1 Bellona Estate Developers Pvt. Ltd

2 Hebe Infracon Pvt. Ltd

3 Hera Realcon Pvt. Ltd

4 Lucina Realtors Pvt. Ltd

5 Apollo Buildwell Pvt. Ltd

6 Arsen Infra Pvt. Ltd

7 Praval Developers Pvt. Ltd

8 Nirman Constructions Pvt. Ltd

9 Azra Land Projects Pvt. Ltd

10 Waterfront Developers Ltd

11 Les Salines Development Ltd

12 La Bourade Development Ltd

13 Ville Magnifique Development Ltd

14 Sur La Plage Development Ltd

15 Capacit''e Infraprojects Pvt. Ltd.

16 Capacit''e Engineering Pvt. Ltd.

17 Nirmal Capacite Construction Pvt. Ltd.

Subsidiaries of Patel Engineers Private Limited

1 Phedra Projects Pvt. Ltd

Subsidiaries of Patel Energy Resources Limited

1 Patel Hydro Power Pvt. Ltd

2 PEL Power Ltd

3 Patel Energy Assignment Pvt. Ltd

4 Patel Energy Projects Pvt. Ltd

5 Patel Energy Operations Pvt. Ltd

6 Patel Thermal Energy Pvt. Ltd

7 Dirang Energy Pvt. Ltd

8 West Kameng Energy Pvt. Ltd

9 Digin Hydro Power Pvt. Ltd

10 PEL Port Private Ltd

11 Patel Energy Ltd

12 Laksha Infra Projects Pvt. Ltd

13 Jayshe Gas Power Pvt. Ltd

14 Patel Energy Trading Pvt. Ltd.(upto 28 Mar. ''13)

15 Naulo Nepal Hydro Electric Pvt. Ltd

16 Meyong Hydro Power Pvt. Ltd

17 Saskang Rong Energy Pvt. Ltd

Subsidiaries of ASI Constructors Inc

1 ASI Constructors Australia Pty Ltd

2 Engineering & Construction Innovations Inc.

3 HCP Constructors Inc.

Subsidiaries of Patel Engineering (Singapore) Pte Ltd

1 Patel Surya (Singapore) Pte. Ltd

2 PT PEL Minerals Resources

3 Patel Param Minerals Pte Ltd

4 PT Patel Surya Minerals,Pte,Ltd

5 PT Surya Geo Minerals

6 PT Surpat Geo Minerals

7 Patel Param Energy Pte Ltd

8 PT Patel Surya Jaya

9 Patel Param Natural Resources Pte Ltd

10 Mineral Resources Holding Ltd

11 PT Patel Engineering Indonesia, Pte ltd

Subsidiaries of Patel Engineering Inc

1 ASI RCC Inc

2 ASI RCC India Ltd

3 Westcon Microtunelling Inc

Subsidiaries of Patel Engineering (Mauritius) Ltd

1 Patel Mining (Mauritius) Ltd

2 Enrich Mining Vision Lda

3 Patel Mining Privledge, Lda

4 Patel Infrastructure, Lda

5 Trend Mining Projects, Lda

6 Accord Mines Venture, Lda

7 Netcore Mining Operations, Lda

8 Metalline Mine Works, Lda

9 Patel Mining Assignments, Lda

10 Chivarro Mines Mozambique, Lda

11 Fortune Mines Concession, Lda

12 Omini Mines Enterprises, Lda

13 Quest Mining Activities, Lda

Associates:

1 En pro Ltd

2 Patel KNR Infrastructure Ltd

3 ACP Tollways Pvt. Ltd.

4 Patel KNR Heavy Infrastructure Ltd

5 Raichur Sholapur Transmission Company Ltd

6 Terra Land Developers Ltd.

Joint Ventures: Refer Note (36)

Partnership

1. AHCLPEL

2. Patel Advance JV

Others

1 Patel Corporation LLP

2 Praham India LLP

Key Management Personnel (KMP)

Mr. Pravin A Patel Non-Executive Chairman

Mr. Rupen Patel Managing Director

Ms. Silloo Patel Whole Time Director

Mr. Nimish Patel Whole Time Director

Ms. Sonal Patel

Mr. Shiraz Patel J Relatives of KMP

Mr. Bhim Batra J

8 The Company has main reportable business segment namely "Civil Construction ".

9 Income consisting of Construction income of

Rs. 3.43 million (P.Y. Rs. 153.69 million) and Other Income ofRs. 14.10 million (P.Y. Rs. 65.92 million) and Expenses consisting of Piece Rate Expenses Rs. Nil (P.Y. Rs. 72.36 million) and Other Expenses Rs. 49.47 million (P.Y. Rs. 8.83 million) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

10 In accordance with "The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011, the Company has carried over exchange (gain)/loss of Rs. 2.95 million (P.Y. Rs. 5.90 million) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2020. Further exchange loss (net) of Rs. 1.69 million (P.Y. Rs. 1.59 million) has been added to the cost of the respective fixed asset.

11 Debit and Credit Balances are subject to confirmation from creditors, debtors and sub contractors. The management does not expect any material difference affecting the financial statements for the year.

12 Additional information pursuant to the provision of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, (wherever applicable).

13 Disclosure required in accordance with Accounting Standard - 7 (Revised). In respect of contracts entered into on or after April 1, 2003, contract revenue recognized as construction Rs. 26,426.36 million contract costs incurred and recognized profit (less recognized losses) Rs. 128,168.20 million advance received Rs. 1,449.79 million retention deposit Rs. 1,040.23 million and gross amount due from clients for contract works included under current assets Rs. 11,112.02 million.

14 a) Unbilled Work in Progress includes stock of

land under development (including held in the name of directors/relatives of directors/ employees, as nominees of the Company)

b) Turnover includes, construction of multi purpose projects, water supply projects,Irrigation projects, building projects, road and railway projects, on item rate or EPC basis and sale of development rights (net of rebate). It also includes duty drawback and entitlement etc but excludes VAT, Service Tax etc.

c) During the Financial year 2010-11, two of Company''s hydropower projects in Loharinagpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors / vendors for further submission to the government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2013 Rs. 1,865.38 million (P.Y. Rs. 1,965.63 million) (including hedging cost of Rs. 458.71 million (P.Y. Rs. 458.71 million)) are considered recoverable and billable to the client and hence included under Work-in- Progress.

d) Arbitration awards received in favour of the Company amounting to Rs. 778.52 million (P.Y. Rs. 2514.76 million) is accounted for as Construction Receipts.

15 The Company and Patel Realty (India) Ltd. (PRIL), a subsidiary, have entered into definitive agreements with a foreign investor and the promoters of the Company for investment in shares of PRIL. The investments are subject to certain conditions precedent and required consents to be complied by the promoters and PRIL. The promoters have fulfilled their obligation. Presently, the foreign investor is expected to invest Rs. 800 million including Rs. 300 million in the Company as initial advance towards purchase 30 million shares of PRIL. The remaining consideration by the foreign investor will be based on the future performance of PRIL.

16 During the current year, Company has changed the method of valuation of Stores, embedded goods and spares parts using weighted average method from erstwhile FIFO method. Due to this changes, consumption of stores and spares is lower by

Rs. 8.13 million and the profit for the current year and closing value of Stores and Spares inventory is higher by Rs. 8.13 million.

17 CONTINGENT LIABILITIES

(a) Commitment for capital expenditure is Rs. 442.06 million (P.Y. Rs. 54.81 million), advance paid Rs. 17.59 million (P.Y. Rs. 12.59 million)

(b) Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is

Rs. 7,502.76 million (P.Y. Rs. 7,722.54 million) (including Customs Rs. 285.75 million (P.Y. Rs. 286.02 million) for the current year includes guarantees given in US$ 10.00 million (P.Y. US$ 12 million) . Corporate guarantees on behalf of subsidiaries and others is Rs. 10,397.29 million (P.Y. Rs. 9,552,09 million) (against which the Company has obtained counter indemnities for Rs. 3,002.69 million (P.Y. Rs. Nil) and towards Custom Duty Rs. 71.62 million (P.Y. Rs. 71.62 million).

(c) The Company has received an amount of Rs. 12.74 million in 1997 against arbitration award in its favor. The client has preferred an appeal against above award claiming an amount ofRs. 213.32 (Rs. 213.32 million) before the Hon''ble appeal court. However the management feels that the likelihood of outflow of resources is remote.

(d) Outstanding Letter of Credit amounts to Rs. 1029.08 million (P.Y. Rs. 251.11 million)

(e) Sales tax Rs. 33.51 million (P.Y. Rs. 33.51 million (Advance paid Rs. 18.51 million (P.Y. Rs. 18.51 million)). Cess Rs. 7.46 million (P.Y. Rs. 7.46 million).

(f) Trade Receivables/ Client Retention to the extent of Rs. 475.00 million (P.Y. Rs. 1,568.39 million) have been discounted with bank on Recourse Basis.

(g) Allowances due to employees in remote areas (Arunachal Pradesh) may accrue in future maximum to the extent of Rs. 2.30 million

(Rs. 2.66 million). The same will be paid to the employees who continue to be on the payrolls upto October 1, 2013.

(h) Provident Fund liablity that may arise on matter in appeal Rs. 9.52 million (P.Y. Rs. 9.52 million) and advance Paid Rs. 2.38 million (P.Y. Nil)

18 Previous year''s figures have been regrouped, rearranged and reclassified wherever necessary.


Mar 31, 2012

1 BASIS OF PREPARATION

The financial statements are prepared under historical cost convention, on accrual basis of accounting, to comply in all material aspects with all the applicable Accounting Principles in India, the applicable Accounting Standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

The Revised Schedule VI notified under the Companies Act, 1956, for preparation and presentation of financial statements has become applicable to the Company effective from April 1, 2011. The adoption of revised Schedule VI does not impact recognition and measurement principles, however, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable for the current year.

1 Debentures

a) 9.8% Secured Redeemable Non Convertible Debentures was allotted on July 20, 2009 for a period of 7 year These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 950 mn and are to be redeemed on July 20, 2016 in a single installment, with a put / call option available and exercisable at par at the end of 5th year from the date of allotment i.e. July 20, 2014. The same is secured against immovable property and third party security.

b) 10.75% Secured Redeemable Non Convertible Debentures was allotted on March 3, 2011 for a period of 3 year These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 500.00 mn. These Debentures will be redeemed as follows- March 3, 2016 - Rs. 200 mn, March 3, 2015-Rs. 150 mn and March 3, 2014-Rs. 150 mn. The same is secured against immovable property and subservient charge on asset.

c) 9.55% Secured Redeemable Non Convertible Debentures was allotted on April 26, 2010 for a period of 3 year These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 1,000.00 mn. These Debentures will be redeemed as follows -April 26, 2015 - Rs. 400 mn, April 26, 2014- Rs. 300 mn, and April 26, 2013- Rs. 300 mn. The same is secured against immovable property and subsiervient charge on assets.

d) 9.5% Secured Redeemable Non Convertible Debentures was allotted on June 01, 2009 for a period of 3 year These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 1,050.0 mn and are to be redeemed on June 1, 2012. The same is secured against immovable property and third party security.

e) 11.40% Secured Redeemable Non Convertible Debentures was allotted on July 7, 2011 for a period of 5 year These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 1,500.0 mn and are to be redeemed in three installments of 30 : 30 : 40 every year starting from July 11, 2014. The same is secured against charge on movable and immovable asset of the company.

The above debentures are listed on The National Stock Exchange of India.

As per Section 117C of the Companies Act, 1956 the Company has created adequate Debenture Redemption Reserve for both the above series of Secured Redeemable Non Convertible Debenture issued during the year.

2 Term Loan Banks

The Term loans are secured by first charge on the specific assets acquired out of the term loan alongwith unencumbered assets & guarantees. The rate of Interest for these loans vary between 10%-14% on an average, with a repayment period of 3-5 years respectively.

3 From Others

Includes funds from Financial Institutions on Equipments, secured against the said Equipments. These loans carry an interest rate of average between 10%-12% with a repayment period of 3-5 years respectively.

4 Unsecured Loans -From Bank

Includes Loans repayable over a period of 2-3 years carrying an Interest rate of 10%

* includes Provision for Tax which is Net of Advance Tax and TDS - Rs. Nil (P.Y. Rs. 416.54 mn). Balance pertains to Proposed Dividend Rs. 20.95mn (P.Y. Rs. 69.83 mn) and Corporate Dividend Tax - Rs. 3.40mn (P.Y. Rs. 11.33 mn)

1 Short term loan - From Bank

Includes Loans against Equipments financed and by earmarking from Bank Guarantee limits, at an average Interest rate ranging between 9.50%-10.50% p.a. payable within a year.

2 commercial Paper- From Others

Includes Commercial Paper of Rs. Nil (P.Y.r Rs. 495.48 mn from LIC Mutual Fund which carries interest @ 6.50% p.a., with a 364 days maturity payable on May 25, 2011). The Loan was secured against immovable properties

3 loans Repayable on Demand

"Cash Credit and Working Capital Demand Loan from various Banks. These loans have been given against hypothecation of stocks, spare parts,book debts,work in progress & guarantees; Terms of Repayment : Cash Credit- Yearly Renewal, except for Cash Credit taken from IDBI Bank Short Term Loan - EARMARK CC" which is payable within 90 days. Rate of Interest-ranges between 9.75% to 13.75% p.a."

4 Unsecured loan - From Bank

Includes Loans which are payable at yearly rests with an average Interest cost ranging between 8.50%- 10.25% p.a.

5 commercial Paper

a) Includes Commercial Papers from Banks with a maturity period of 364 days with an average Interest rate ranging between 7.60% and 10.15 % p.a.

b) Includes Commercial Paper from various Financial Institutions with a maturity period of 364 days with an average interest rate between 7.60% and 10.15 % p.a.

c) Maximum amount outstanding for Commercial papers during the year was Rs. 2,957.20 mn.

1 trade Payable

a) On the basis of information compiled to the extent that they could be identified as Small Scale and Ancillary Industrial Undertaking, the Company has no such amounts payable in excess of Rs. 0.10 mn and outstanding for a period of more than 30 days.

b) The Company has no amounts due to suppliers under the Micro Small and Medium Enterprise Development Act, 2006, as at March 31, 2012.

Note: The above information has been determined to the extent such parties had been identified on the basis of information available with the Company.

2 Other liabilities

Includes Rs. 87.13 mn (P.Y. Rs. 11.83 mn ) against lease of office premises.

I Aggregated amount of Quoted Investments as at March 31, 2012 Rs. 340.10 mn, Market value 238.87 mn (P.Y. Rs. 340.10 mn, Market Value- Rs. 227.41 mn)

II Aggregated amount of Unquoted Investments as at March 31, 2012 Rs. 5,198.54 mn (P.Y. Rs. 4460.38 mn)

III Includes Investment in National Saving Certificates, in the name of Directors , lodged with Project Authorities.

IV. The Company had entered into a partnership with ACE Housing and Construction Ltd in name of M/s AHCL - PEL for development and construction of residential buildings. The Company's Share of Profit and loss is 55%. Both the partners has eqully contributed Rs. 0.025 mn towards the Captial.

# Pending for transfer

1 Advances Recoverable in Cash or in kind or for value to be received.

a) includes Rs. 13.84 mn (P.Y. Rs. 7.67 mn) due from officers of the Company and Rs. 264.95 mn (P.Y. Rs. 169.24 mn) due from company in which Directors are Director

b) includes secured advance to piece workers Rs. 26.774 mn (P.Y. Rs. 10.32 mn)

1 Land includes ? 15.68 (P.Y. ? 19.45 mn) held in the name of Directors,relatives of Directors and employees for and on behalf of the Company

2 a) Building includes Building [ Gross Block 228.77 mn (P.Y. ? 223.94 mn),Accumulated Depreciation ? 26.66 (P.Y. ? 25.21 mn)] and Factory Building [ Gross Block 142.13 (P.Y. ? 142.13 mn), Accumulated Depreciation ? 18.69 (P.Y. ? 13.62 mn)]

b) Includes ? 0.02 (P.Y. ? 0.02 mn) being the value of 30 shares and share deposits in Co - operative Societies.

1 Includes Miscellaneous expenses which includes Other Repairs- Rs. 27.34 mn (P.Y. Rs. 57.92 mn), Tender fees, office and General Charges, Entertainment and rebate to clients, and Donation to CPI (M) is Rs. 0.65 mn (P.Y. Rs. 0.20 mn).

1 employee Benefits

I Brief description of the Plans

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income Tax authorities and administered through appropriate authorities/ insurers. The Company's defined contribution plans are provident fund, employee state insurance and employees' pension scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company's defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company's policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, any shortfall in the interest income over the interest obligation is recognised immediately in the statement of profit & loss as acturial loss. Any loss/gain arising out of the investment with the plan is also recognised as expense or income in the period in which such loss/gain occurs.

2 (i) Income-tax assessments are completed up to A.Y. 2007-2008. Several appeals for the earlier assessment years are pending before the Appellate Authorities. The aggregate demand for the same amounting to Rs. 692.49 mn has been already adjusted / paid. The Company has made a provision for tax of Rs. 320.00 mn (P.Y. Rs. 363.50 mn), and Deferred Tax Liability of Rs. 31.31 mn (P.Y. reversed 30.46 mn). The Company has been advised that it is not liable to Wealth-Tax except on Motor Car Accordingly, Wealth Tax of Rs. 1.50 mn (P.Y. Rs. 1.50 mn) has been provided.

(ii) During the previous year ended March 31, 2011, out of prudence the company has made a provision for Rs. 450 mn, on account of the liability that may arise under the proceedings under Section 132 of the Income Tax Act, 1961 out of the Surplus in Profit & Loss Account.

(iii) The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available. The impact of Rs. 1,485.11 mn upto March 31, 2009 due to the above amendment, though being subjudice, has been provided and adjusted out of the Surplus in Profit and Loss Account. The Company has legally contested the validity of the above amendment and intention of the said section. Further, the company has filed a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted.

3 DEFFERED Tax

The Company is entitled to deductions under the Income Tax Act, which are in nature of permanent benefits. However, deferred tax adjustments on account of timing differences as described in Accounting Standard - 22 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India, is made.

4 The Company has main reportable business segment namely "Civil Construction

5 Income consisting of Construction income of Rs. 153.69 mn (P.Y. Rs. 35.66 mn) and other income of Rs. 65.92 mn (P.Y. Rs. Nil) and Expenses consisting of Piece Rate Expenses Rs. 72.36 mn (P.Y. Rs. 24.93 mn) and other expenses Rs. 8.83 mn (P.Y. Rs. 7.19 mn) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

6 The Company has some contract revenues receivable in foreign currency. To reduce various financial risks the Company has entered into hedging transactions. Due to delay in payments, changes in drawings, changes in design all on account of the client, the hedging position got exposed incurring loss on such transactions. The said hedging loss of Rs. Nil (P.Y. Rs. 493.04 mn) has been debited to profit and loss account as interest expense, as a prudent and conservative accounting policy. The aforementioned is claimable from the clients and are carried in work - in - progress.

7 In accordance with "The Companies (Accounting Standards) Amendment Rules, 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011, the Company has carried over exchange (gain)/loss of Rs. 5.90 mn (P.Y. Rs. 8.50 mn) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2012. Further exchange loss (net) of Rs. 1.59 mn (P.Y. Rs. Nil) has been added to the cost of the respective fixed asset.

8 Debit and Credit Balances are subject to confirmation from creditors, debtors and sub contractors. The management does not expect any material difference affecting the financial statements for the year.

9 Additional information pursuant to the provision of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, (wherever applicable).

10 Disclosure required in accordance with Accounting Standard - 7 (Revised). In respect of contracts entered into on or after April 1, 2003, contract revenue recognized as construction Rs. 19,638.22 mn contract costs incurred and recognized profit (less recognized losses) Rs. 102,053.87 mn advance received Rs. 431.78 mn retention deposit Rs. 1297.69 mn and gross amount due from clients for contract works included under current assets Rs. 8,980 mn.

11 a) Unbilled Work in Progress includes stock of land under development (including held in the name of directors relatives of directors/employees, as nominees of the company).

b) Turnover includes, construction of multi purpose projects, water supply projects,Irrigation projects, building projects, road and railway projects, on item rate or EPC basis and sale of development rights. It also includes duty drawback and entitlement etc but excludes VAT, Service Tax etc.

c) During the Financial year 2010-11, two of Company's hydropower projects in Loharinagpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors / vendors for further submission to the government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2012 Rs. 1,965.63 mn (P.Y. Rs. 1,892.22 mn) are considered recoverable and billable to the client and hence included under work in progress.

d) Arbitration awards received in favour of the Company amounting to Rs. 2,514.76 mn (P.Y. Rs. 2,330.36 mn) hitherto shown as Working-in-progress is now accounted for as Construction Receipts.

12 contingent Liabilities

(a) Commitment for capital expenditure is Rs. 54.81 mn (P.Y. Rs. 480.89 mn) , advance paid Rs. 12.59 mn (P.Y. Rs. 15.74 mn)

(b) Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is Rs. 5,187.62 mn (P.Y. Rs. 6,420.35 mn) (including Customs Rs. 204.52 mn (P.Y. Rs. 347.57 mn) for the current year includes guarantees given in US$ 12mn (P.Y. US$ 7.50 mn). Corporate guarantees on behalf of subsidiaries and others is Rs. 9,552.09 mn (P.Y. Rs. 8,079.52 mn) (against which the Company has obtained counter indemnities for Rs. Nil (P.Y. Rs. 105.00 mn) and towards Custom Duty Rs. 71.62 mn (P.Y. Rs. 71.62 mn).

(c) The Company has received an amount of Rs. 12.74 mn in 1997 against arbitration award in its favour. The client has preferred an appeal against above award claiming an amount of Rs. 213.32 mn (P.Y. Rs. 213.32 mn) before the Hon'ble appeal court. However the management feels that the likelihood of outflow of resources is remote.

(d) Outstanding Letter of Credit amounts to Rs. 251.11 mn (P.Y. Rs. 50.25 mn)

(e) Sales tax Rs. 37.26 mn (P.Y. Rs. 33.51 mn (Advance paid Rs. 18.52 mn (P.Y. Rs. 18.52 mn). Cess Rs. 7.46 mn (P.Y. Rs. 7.46 mn).

(f) Custom liability that may arise on matter in appeal Rs. 7.61 mn (P.Y Rs. 7.61 mn).

(g) Trade Receivables to the extent of Rs. 1,568.39 mn (P.Y. Rs. 1,565.90 mn) have been discounted with Bank on Recourse Basis.

(h) Allowances due to employees in remote areas (Arunachal Pradesh) may accrue in future maximum to the extent of Rs. 2.66 mn (P.Y. Rs. 1.86 mn). The same will be paid to the employees who continue to be on the payrolls upto October 1, 2012.

(i) Provident Fund liablity that may arise on matter in appeal Rs. 9.2 mn ( P.Y. Rs. Nil)

13 Previous year's figures have been regrouped, rearranged and reclassified wherever necessary.


Mar 31, 2011

1. Contingent Liabilities:

a. Commitment for capital expenditure is Rs 480.89 mn (P.Y. Rs 320.74 mn), advance paid Rs 15.74 mn (P.Y. Rs8.95 mn).

b. Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is Rs 6,420.35 mn (P.Y. Rs 3,875.15 mn) (including Customs Rs 347.57 mn (P.Y. Rs 248.71 mn) for the current year includes guarantees given in USD 7.50 mn (P.Y. US$ 7.50 mn). Corporate guarantees on behalf of subsidiaries and others is Rs 8,079.52 mn (P.Y. Rs 7,799.52 mn) (against which the Company has obtained counter guarantee forRs 105.00 mn (P.Y. 1,760 mn)) and towards Custom DutyRs 71.62 mn (P.Y. Rs 71.62 mn).

c. The Company has received an amount of Rs 12.74 mn in 1997 against arbitration award in its favor. The client has preferred an appeal against above award claiming an amount ofRs 213.32 mn (P.Y. Rs 213.32 mn) before the Hon'ble appeal court. However the management feels that the likelihood of outflow of resources is remote.

d. Outstanding Letter of Credit amounts to Rs 50.25 mn (P.Y. Rs 189.94 mn).

e. Sales tax Rs 33.51 mn (P.Y. Rs 20.18 mn) (Advance paid Rs 18.52 mn (P.Y. Rs 10.51 mn)). Cess Rs 7.46 mn (P.Y. Rs 16.17 mn).

f. Custom liability that may arise on matter in appeal Rs 7.61 mn (P.Y. Rs 7.61 mn).

g. Client withheld to the extent of Rs 1,565.90 mn (P.Y. Rs Nil) have been discounted with Bank on Recourse Basis.

h. Allowances due to employees in remote areas (Arunachal Pradesh) may accrue in future maximum to the extent of Rs 1.86 mn (P.Y. Rs Nil). The same will be paid to the employees who continue to be on the payrolls upto October 1, 2011.

2. i. Turnover includes, construction of multi purpose projects, water supply projects, Irrigation projects, building projects, road and railway projects, on item rate and EPC basis. It also includes duty drawback and entitlement etc but excludes vat, service tax etc.

ii. Stores, embedded goods and Spares etc., consumed include materials issued to Sub Contractors.

iii. Auditors Remuneration comprises of Statutory Audit Fees (including Consolidation) Rs 3.27 mn (P.Y. Rs 3.27 mn); Tax Audit Fees Rs 0.87 mn (P.Y. Rs 0.88 mn); Taxation Matters Rs 3.39 mn (P.Y. Rs 1.65 mn); Other Capacity Rs 1.10 mn (P.Y. Rs 1.10 mn); Certification Rs 1.10 mn (P.Y. Rs 1.10 mn) and out of pocket expenses Rs 0.12 mn (P.Y. Rs 0.06 mn).

iv. Miscellaneous expenses includes Other Repairs Rs 57.92 mn (P.Y. Rs 46.96 mn), Tender fees, office and General Charges, Entertainment and rebate to clients, Bank charges and Bank Guarantee Charges (Net) etc., Donation of Rs Nil (P.Y. 2.50 mn) to trusts in which Director is trustee and Donation to CPI (M) is Rs 0.20 mn (P.Y.Nil) and to BJP Rs Nil (P.Y. Rs 0.25 mn).

v. Stores, embedded goods and Spare Parts include Rs 67.87 mn (P.Y. Rs 17.14 mn) in transit.

vi. Maximum Balance held in current account with non-scheduled banks viz. 1. Key Bank (USA) Rs 15.73 mn (P.Y. Rs 15.50 mn) 2. Barclays Bank (Mauritius) Rs 159.45 mn (P.Y. Rs 121.10 mn) 3. Balances with Scheduled banks in current account include Rs 31.76 mn in transit/in hand (P.Y. Rs 48.16 mn). Balances with Scheduled Banks in Fixed Deposits Account include Rs 14.53 mn, lying with various government authorities/banks (P.Y. Rs 16.65 mn).

vii. Advances Recoverable in Cash or in kind or for value to be received includes Rs 7.67 mn (P.Y. Rs 25.75 mn) due from officers of the Company. Maximum amount due during the yearRs 26.65 mn (P.Y. Rs 33.88 mn). Also includes secured advance to piece workers Rs 10.32 mn (P.Y. Rs 10.34 mn).

viii. Sundry Creditors includes Rs Nil book over draft in current account with bank (P.Y. Rs 4.08 mn), Includes Rs 11.83 mn against lease of office premises (P.Y. Rs 125.08 mn).

3. i. Income-tax assessments are completed up to A.Y. 2007-2008. Several appeals for the earlier assessment years are pending before the Appellate Authorities. The aggregate demand for the same amounting to Rs 692.49 mn has been already adjusted/paid.

The Company has made a provision for tax ofRs 363.50 mn (P.Y. Rs 740.00 mn), and reversed Deferred Tax Liability ofRs 30.46 mn (P.Y. reversed Rs 31.40 mn). The Company has been advised that it is not liable to Wealth-Tax except on Motor Cars. Accordingly, Wealth Tax of Rs 1.50 mn (P.Y. Rs 1.20 mn) has been provided.

ii. Out of prudence, the company has made a provision for Rs 450 mn, on account of the liability that may arise under the proceedings under section 132 of the Income Tax Act, 1961 out of the Surplus in Profit & Loss Account.

iii. The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available.

The impact ofRs 1,485.11 mn upto March 31, 2009 due to the above amendment, though being subjudice, has been provided and adjusted out of the Surplus in Profit and Loss Account. The Company has legally contested the validity of the above amendment and intention of the said section.

Further, the company has filed a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted.

iv. The Company is entitled to deductions under the Income Tax Act, which are in nature of permanent

benefits. However, deferred tax adjustments on account of timing differences as described in Accounting Standard - 22 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India, is made.

4. Income consisting of Construction income of Rs 35.66 mn (P.Y. Rs Nil) and other income of Rs Nil (P.Y. Rs 3.40 mn) and Expenses consisting of Piece Rate Expenses Rs 24.93 mn (P.Y. Rs 24.12 mn) and other expenses Rs 7.19 mn (P.Y. Rs 12.68 mn) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

5. The Company has some contract revenues receivable in foreign currency. To reduce various financial risks the Company has entered into hedging transactions. Due to delay in payments, changes in drawings, changes in design all on account of the client, the hedging position got exposed incurring loss on such transactions. The said hedging loss ofRs 493.04 mn (P.Y. Rs 258.37 mn) has been debited to profit and loss account as interest expense, as a prudent and conservative accounting policy. The aforementioned is claimable from the clients and are carried in work-in-progress.

6. In accordance with "The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011, the Company has carried over exchange (gain)/loss of Rs 8.50 mn (P.Y. Rs 30.55 mn) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2012. Further exchange loss (net) ofRs Nil (P.Y.

Rs 16.34 mn) has been added to the cost of the respective fixed asset.

7. Unbilled Work in Progress includes stock of land under development (including held in the name of directors/ relatives of directors/employees, as nominees of the company).

8. In accordance with AS 16 - "Borrowing Costs", Rs 197.08 mn (P.Y. Rs 202.02 mn) interest has been capitalized on project development cost incurred.

9. Debit and Credit Balances are subject to confirmation from creditors, debtors and sub contractors.

14. Disclosure required in accordance with Accounting Standard - 7 (Revised). In respect of contracts entered into on or after 1st April 2003, contract revenue recognized as construction Rs 22,089.94 mn contract costs incurred and recognized profit (less recognized losses) Rs 82,293.59 mn advance received Rs 428.52 mn retention deposit Rs 965.21 mn and gross amount due from clients for contract works included under current assets Rs 10,329.66 mn.

15. During the year, two of Company's hydropower projects in Loharinagpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors/ vendors for further submission to the government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2011 are considered recoverable and billable to the client and hence included under work in progress.

Arbitration award in case of four projects amounting to Rs 2,330.36 mn (P.Y. Rs 2,296.91 mn) represented as work in progress will be accounted for as contruction receipts as and when received.

16. The Company has following outstanding Debentures as on March 31, 2011:

a. 9.5% Secured Redeemable Non Convertible Debentures was allotted on June 01, 2009 for a period of 3 years. These debentures have a face value ofRs 1.0 mn each aggregating to Rs 1,050.0 mn and are to be redeemed on June 1, 2012.

b. 9.8% Secured Redeemable Non Convertible Debentures was allotted on July 20, 2009 for a period of 7 years. These debentures have a face value ofRs 1.0 mn each and are to be redeemed on July 20, 2016 in a single installment, with a put/call option available and exercisable at par at the end of 5th year from the date of allotment i.e. July 20, 2014.

c. 9.55% Secured Redeemable Non Convertible Debentures was allotted on April 26, 2010 for a period of 3 years. These debentures have a face value ofRs 1.0 mn each aggregating to Rs 1,000.00 mn. Out of which Rs 300 mn, Rs 300 mn and Rs 400 mn are to be redeemed on April 26, 2013, April 26, 2014 and April 26, 2015 respectively.

d. 10.75% Secured Redeemable Non Convertible Debentures was allotted on March 3, 2011 for a period of 3 years. These debentures have a face value of Rs 1.0 mn each aggregating to Rs 500.00 mn Out of which Rs 150 mn, Rs 150 mn and Rs 200 mn are to be redeemed on March 3, 2014, March 3, 2015 and March 3, 2016 respectively.

18. Employee Benefits:

I. Brief description of the Plans:

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Company's defined contribution plans are provident fund, employee state insurance and employees' pension scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company's defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company's policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, for which shortfall has been provided for as at the Balance Sheet date.

19. On the basis of information compiled to the extent that they could be identified as Small Scale and Ancillary Industrial Undertaking, the Company has no such amounts payable in excess of Rs 0.10 mn and outstanding for a period of more than 30 days.

20. The Company has no amounts due to suppliers under the Micro Small and Medium Enterprise Development Act, 2006, as at March 31, 2011.

Note: The above information has been determined to the extent such parties had been identified on the basis of information available with the Company.

21. The Company has main reportable business segment namely "Civil Construction".


Mar 31, 2010

1. Contingent Liabilities

(a) Commitment for capital expenditure is Rs. 320.74 mn (P.Y. Rs. 181.68 mn), advance paid Rs. 8.95 mn (P.Y. Rs. 16.14 mn).

(b) Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business Rs. 3,875.15 mn (P.Y. Rs. 2,655.25 mn) (including Customs Rs. 248.71 mn (P.Y. Rs. 248.71 mn) for the current year includes guarantees given in USD 7.50 mn (P.Y. USD 18.85 mn). Corporate guarantees for third parties Rs. 7,799.52 mn (P.Y. Rs. 6,494.73 mn) (against which the Company has obtained counter guarantee for Rs. 1,760 mn (P.Y. 1,760 mn)) and towards Custom Duty Rs. 71.62 mn (P.Y. Rs. 71.62 mn).

(c) The Company has received an amount of Rs. 12.74 mn in 1997 against arbitration award in its favor. The client has preferred an appeal against above award claiming an amount of Rs. 213.32 mn (P.Y. Rs. 213.32 mn) before the Honorable appeal court. However the management feels that the likelihood of outflow of resources is remote.

(d) Outstanding Letter of Credit amounts to Rs. 189.94 mn (P.Y. Rs. 61.07 mn).

(c) Sales tax Rs. 20.18 mn (P.Y. Rs. 181.97 mn) (Advance paid Rs. 10.51 mn (P.Y. Rs. 90.98 mn)). Cess Rs. 16.17 mn (P.Y Rs. 41.48 mn)

(d) Entry Tax Rs. Nil (P.Y. Rs. 40.11 mn).

(e) Custom liability that may arise on matter in appeal Rs. 7.61 mn (P.Y. Rs. 7.61 mn).

2. (i) Turnover includes construction of multi purpose projects, water supply projects, irrigation projects, building projects construction, road and railway projects on item rate and EPC basis, duty drawback and entitlement etc. and excludes vat, service tax etc.

(ii) Stores, embedded goods and spares etc., consumed includes materials issued to sub contractors.

(iii) Auditors Remuneration comprises of

Statutory Audit Fees Rs. 3.27 mn (P.Y. Rs. 2.76 mn); Tax Audit Fees Rs. 0.88 mn (P.Y. Rs. 0.77 mn ); Taxation Matters Rs. 1.65 mn (P.Y. Rs. 1.44 mn); Other Capacity Rs. 1.10 mn (P.Y. Rs. 1.10 mn); Certification Rs. 1.10 mn (P.Y. Rs. 1.10 mn) and out of pocket expenses Rs. 0.06 mn (P.Y. Rs. 0.16 mn).

(iv) Miscellaneous expenses includes Other Repairs Rs. 46.96 mn (P.Y Rs. 41.08 mn), Tender fees, office and General Charges, Entertainment and rebate to clients, Bank charges and Bank Guarantee Charges (Net) etc., Donation of Rs. 2.50 mn (P.Y. 12.30 mn) to trusts in which the director is trustee, Donation to CPI (M) Rs. Nil (P.Y. Rs. 0.50 mn) and to BJP Rs. 0.25 mn (P.Y Rs. 0.20 mn).

(v) Stores, embedded goods and Spare Parts include Rs. 17.14 mn (P.Y. Rs. 9.23 mn) in transit.

(vi) Maximum Balance held in current account with non-scheduled banks viz.

1. Thane District Co. Op. Bank Ltd. Rs. Nil (P.Y Rs. 0.03 mn)

2. Key Bank Rs. 15.50 mn (P.Y Rs. 3.16 mn)

3. Barclays Bank Rs. 121.10 mn (P.Y. Rs. 74.08 mn)

Balances with Scheduled banks in current account include Rs. 48.16 mn in transit /in hand (P.Y. Rs. 126.35 mn). Balances with Scheduled Banks in Fixed Deposits Account include Rs. 16.65 mn, lying with various government authorities/banks (P.Y. Rs. 1.62 mn).

(vii) Advances Recoverable in Cash or in kind or for value to be received includes Rs. 25.75 mn (P.Y. Rs. 20.98 mn) due from officers of the Company. Maximum amount due during the year Rs. 33.88 mn (P.Y. Rs. 26.35 mn). Also includes secured advance to piece workers Rs. 96.95 mn (P.Y. Rs. 56.22 mn).

(viii) Sundry Creditors includes Rs. 4.08 mn book over draft in current account with bank (P.Y Rs. 7.46 mn), includes Rs. 125.08 mn against lease of office premises (P.Y. Rs. 125.15 mn).

3. (i) Income-tax assessments are completed up to A.Y. 2007-2008. Several appeals for the earlier assessment years are pending before the Appellate Authorities. The aggregate demand for the same amounting to Rs. 524.15 mn has been already adjusted/paid.

The Company has made a provision for tax of Rs. 740.00 mn (P.Y. Rs. 225.00 mn), Fringe Benefit Tax of Rs. Nil (P.Y Rs. 9.00 mn) and reversed excess Deferred Tax Liability of Rs. 31.40 mn (P.Y created Rs. 7.66 mn), short provision of tax of earlier years Rs. Nil (P.Y Rs. 5.18 mn). The Company has been advised that it is not liable to Wealth-Tax except on Motor Cars. Accordingly, Wealth Tax of Rs. 1.20 mn (P.Y. Rs. 1.50 mn) has been provided.

(ii) The Finance Act, 2009 has amended Section 80(IA) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available.

The Company has legally contested the validity of the above amendment and intention of the said section. The impact of Rs. 1,485.11 mn upto March 31, 2009 due to the above amendment, though being subjudice, has been provided and adjusted out of the Surplus in Profit and Loss Account.

(iii)The Company is entitled to deductions under the Income Tax Act, which are in nature of permanent benefits. However, deferred tax adjustments as described in Accounting Standard 22 Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India, is made.

4. Income consisting of Construction income of Rs. Nil (P.Y. Rs. 9.70 mn) and other income of Rs. 3.40 inn and Expenses consisting of P/W wages Rs. 24.12 (P.Y. Rs. 9.49 mn) and other expenses Rs. 12.68 mn (P.Y. Rs. 23.32 mn) pertaining to prior periods credited and debited respectively to Profit and Loss Accounts under various heads of accounts.

5. The Company has some contract revenues receivable in foreign currency. To reduce various financial risks the Company entered into hedging transactions. Due to delay in payments, changes in drawings, changes in design all on account of the client, the hedging position got exposed incurring loss on such transactions. The said hedging loss of Rs. 258.37 mn (P.Y. Rs. 521.23 mn after utilizing Rs. 325.00 mn from contingency reserve) has been debited to profit and loss account as interest expense, as a prudent and conservative accounting policy. The aforementioned is claimable from the client.

6. In accordance with "The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009, the Company has carried over exchange gain/loss of Rs. 30.55 mn (P.Y. Rs. 126.31 mn) through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2011. Further exchange loss (net) of Rs. 16.34 mn (P.Y. Rs. 50.53 mn) has been added to the cost of the respective fixed asset.

7. Work in Progress includes stock of land under development.

8. In accordance with AS 16 "Borrowing Costs", Rs. 202.02 mn (P.Y. Rs. 289.40 mn) interest has been capitalized on project development cost incurred.

9. Debit and Credit Balances are subject to confirmation from third parties.

10. From the current year, the Company has discontinued the accounting for the effect of Market Value of materials/resources supplied by its client at fixed cost or no cost to the Company as cost of construction and as construction revenue. This has no impact on the profit of the Company.

11. Disclosure required in accordance with Accounting Standard 7 (Revised). In respect of contracts entered into on or after 1st April 2003, contract revenue recognized as construction Rs. 21,803.04 mn contract costs incurred and recognized profit (less recognized losses) Rs. 61,351.22 mn advance received Rs. 1,520.10 mn retention deposit Rs. 738.82 mn and gross amount due from clients for contract works included under current assets Rs. 7,389.84 mn.

12. During the year, the Company has privately placed:

a) 9.5% Secured Redeemable Non Convertible Debentures was allotted on June 01, 2009 for a period of 3 years. These debentures have a face value of Rs. 1.0 mn each aggregating to Rs. 1,050.0 mn and are to be redeemed on June 1, 2012.

b) 9.8% Secured Redeemable Non Convertible Debentures was allotted on July 20, 2009 for a period of 7 years. These debentures have a face value of Rs. 1.0 mn each and are to be redeemed on July 20, 2016 in a single installment, with a put/call option available and exercisable at par at the end of 5th year from the date of allotment i.e. July 20, 2014.

The above debentures are listed on The National Stock Exchange of India. As per Section 117C of the Companies Act, 1956 the Company has created adequate Debenture Redemption Reserve for both the above series of Secured Redeemable Non Convertible Debenture issued during the year.

13. Related Party Disclosures: Related party disclosures, as required by Accounting Standard 18, Related Party Disclosures, are given below:

A. Name of Related Parties and nature of relationship:

No. Name of the Related Party Direct Subsidiaries

1 Patel Realty(IndiaYLTxL

2 Patel Energy Resources Ltd.

3 Michigan Engineers Pvt. Ltd. 4 ASIInc.

5 Patel Engineering (Singapore) Pte. Ltd.

6 Shreeanant Construction Pvt. Ltd.

7 Pan Realtors Pvt. Ltd.

8 Patel Engineering Inc.

9 Patel Engineering (Mauritius) Ltd.

10 Patel Engineering Infrastructure Pvt. Ltd.

11 Zeus Land Projects Pvt. Ltd.

12 Patel Concrete and Quarries Pvt. Ltd.

13 Friends Nirman Pvt. Ltd.

14 Energy Design Pvt. Ltd.

Subsidiaries of Patel Realty (India) Ltd.

1 Bellona Estate Developers Pvt. Ltd.

2 Hebe Infracon Pvt. Ltd.

3 Hera Realcon Pvt. Ltd.

4 Terminus Realcon Pvt. Ltd.

5 Ares Infradevelopers Pvt. Ltd.

6 Lucina Realtors Pvt. Ltd.

7 Apollo Buildwell Pvt. Ltd.

8 Arsen Infra Pvt. Ltd.

9 Praval Developers Pvt. Ltd.

10 Pandora Infra Pvt. Ltd.

11 Patel Engineers Pvt. Ltd.

12 Phedra Projects Pvt. Ltd.

13 Patel Patron Pvt. Ltd.

14 Vismaya Constructions Pvt. Ltd.

15 Nirman Constructions Pvt. Ltd.

16 Azra Land Projects Pvt. Ltd.

17 Bhooma Realties Pvt. Ltd.

18 Shashvat Land Projects Pvt. Ltd.

19 Waterfront Developers Ltd.

20 Les Salines Development Ltd.

21 La Bourade Development Ltd.

22 Ville Magnifique Development Ltd.

23 Sur La Plage Development Ltd.

Subsidiaries of Patel Energy Resources Limited

1 Dirang Energy Pvt. Ltd.

2 West Kameng Energy Pvt. Ltd.

3 Patel Energy Assignment Pvt. Ltd.

4 Patel Energy Projects Pvt. Ltd.

5 Patel Energy Operations Pvt. Ltd. 6 Patel Energy Works Pvt Ltd.

7 Patel Energy Ventures Pvt. Ltd.

No.; Name of the Related Party

8 Shree Balaji Power Services Pvt. Ltd.9 Naulo Nepal Hydro Electric Pvt. Ltd.

10 PEL Power Ltd.

11 PEL Port Private Ltd.

12 Patel Energy Ltd.

13 Laksha Infra Projects Pvt. Ltd.

Subsidiaries of AS! Inc.

1 ASI Australia Pty. Ltd.

Subsidiaries of Patel Engineering (Singapore) Pte. Ltd.

1 Patel Surya (Singapore) Pte. Ltd.

2 PT PEL Minerals Resources

3 Patel Param Minerals Pte. Ltd.

4 PT Patel Surya Minerals

5 Patel Param Energy Pte. Ltd.

6 PT Patel Surya Jaya

7 Patel Param Natural Resources Pte. Ltd.

Associates

1 Praharn India Pvt. Ltd.

2 Patel Realtors Pvt. Ltd.

3 Enpro Ltd.

4 Patel KNR Infrastructure Ltd.

5 Patel KNR Heavy Infrastructure Pvt. Ltd.

No. Name of the Related Party

Subsidiaries of Patel Engineering Inc.

1 ASI RCC Inc.

2 ASI RCC India Ltd.

3 Westcon Microtunelling Inc.

Subsidiaries of Patel Engineering (Mauritius) Ltd.

1 Pate! Mining (Mauritius) Ltd.

2 Patel Mining Vision, Ida

3 Patel Mining Division, Ida

4 Patel Mining Privilege, Ida

5 Patel Mining Projects, Ida

6 Patel Mining Ventures, Ida

7 Patel Mining Operations, Ida

8 Patel Mining Works, Ida

9 Patel Mining Assignments, Ida

10 Patel Mining Mozambique, Ida

11 Patel Mining Concession, Ida

12 Patel Mining Enterprise, Ida

13 Patel Mining Activities, Ida

18. Employee Benefits:

I. Brief description of the Plans:

The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Companys defined contribution plans are provident fund, employee state insurance and employees pension scheme (under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions.

The Companys defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Companys policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, for which shortfall has been provided for as at the Balance Sheet date.

8. On the basis of information compiled to the extent that they could be identified as Smail Scale and Ancillary Industrial Undertaking, the Company has no such amounts payable in excess of Rs. 0.10 mn and outstanding for a period of more than 30 days.

9. The Company has no amounts due to suppliers under the Micro Small and Medium Enterprise Development Act, 2006, as at March 31, 2010.

Note: The above information has been determined to the extent such parties had been identified on the basis of information available with the Company.

10. The Company has a single segment namely "Civil Construction ". Therefore, the Companys business does not fall under different segment as defined under AS 17- Segmental Reporting" issued by institute of Chartered Accountants of India.

11. The Company has issued 7,218,061 fully paid up equity shares of Re. 1 each on October 26, 2009 to Qualified Institutional Buyers at a price of Rs. 477.03 per equity share (including a premium of Rs. 476.03 per equity share). The said funds have been used for the purpose for which it was raised.

12. The Company issued 2,950,000 fully paid up equity shares of Re. 1 each on October 29, 2009 to Patel Engineering Employee Welfare Trust (ESOP Trust) at a price of Re. 1 per equity share for issue of stock options to eligible employees.

Shares for ESOP have been already allotted to the trust and therefore there is no effect on EPS. However, as and when the options are given by the trust to the employees, the necessary accounting for expense will be made.

13. Previous years figures have been regrouped, rearranged and reclassified wherever necessary.

 
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