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Directors Report of Petron Engineering Construction Ltd.

Mar 31, 2014

Dear Members,

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-Eighth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2014.

A. FINANCIAL RESULTS

During the year under review, the Income from Operations / Sales have declined to Rs. 37,587 Lacs as compared to Rs. 52,427 Lacs in the previous year (down by 28.31%). The Other Income has also decreased to Rs. 355 Lacs in the current year from Rs. 1,340 Lacs in the previous year. The Profit before Interest, Depreciation and Tax has improved to Rs. 4,278 Lacs in the current year as compared to Rs. 4,176 Lacs in the previous year. However, the Finance Cost has increased to Rs. 2,437 Lacs in the current year as compared to Rs. 2,236 Lacs in the previous year. The profit before Depreciation and Tax is Rs. 1,841 Lacs in the current year as compared to Rs. 1,940 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 183 Lacs in the current year as compared to Rs. 310 Lacs in the previous year. However, after providing tax expenses for the current year and writing back of earlier years, the profit for the year is Rs. 379 Lacs as compared to Rs. 9 Lacs in the previous year.

Financial Results For The Year Ended For The Year Ended 31.03.2014 31.03.2013 (Amount Rs ) (Amount Rs )

Income from Operations 3,758,717,359 5,242,660,310

Other Income 35,492,656 133,951,269

Total Income 3,794,210,015 5,376,611,579

Profit before Interest, Depreciation and Taxes 427,798,869 417,574,537

Finance Cost 243,657,138 223,619,594

Profit before Depreciation and Taxes 184,141,731 193,954,943

Depreciation 165,873,997 162,933,472

Profit before Tax 18,267,734 31,021,471

Tax Expenses (Including Taxes of Earlier Years) (19,667,259) 30,141,876

Profit for the Year 37,934,993 879,595

B. DIVIDEND

No Dividend has been recommended by the Board due to inadequate profits for the year.

1. OPPORTUNITIES

Your Company though operating in midst of challenging market situation, is uniquely placed to survive & take its business forward. This is mainly due to the range of services it offers and to the variety of industries it caters to.

CEMENT

Globally the Cement Industry is witnessing the creation of a cement giant with the consolidation of Lafarge and Holcim. This will have an effect in the Indian Cement Sector which is also the world''s second largest producer and consumer of Cement. Cement industry in India is poised for continuous growth to keep its pace with infrastructure growth in the country. Major Companies are implementing expansion by awarding EPC Contracts and therefore, Petron is taking necessary steps to participate in such EPC Contracts. Petron is focused to achieve considerable volume in this Sector. With Cement Company''s trend of adding Offsite Grinding Units, Petron is also concentrating in this sector.

OIL& GAS, REFINERIES, PETROCHEMICALS

Currently, although Indian Refining Industry has reached a refining capacity to meet domestic demand and potential of exports of refined products demand, few strategic expansions are under way in India.

Large sized Petro-chemical Projects are expected to be implemented in the coming years as the demand for Fibers, Plastic, Rubber, Resins, and Specialty Chemicals are expected to rise. Your Company''s experience in Heaters, Crackers and related construction areas will result in good amount of business opportunity.

India is also poised to increase capacities in LNG terminals as an added Natural Gas supply source in some locations. Your Company with its past experience is well placed to do some business in this area as well.

Coal Gasification, Coal Bed Methane (CBM) and Coal to Liquid (CTL) are also gaining focus in India as alternative energy source to depleting Natural Gas source. Your Company will look out for business opportunity in this Sector also.

POWER

There is a large opportunity in Power Sector as there is a huge shortage of power due to increasing population and increased industrial consumption. However, due to supply constraints of coal and gas, major projects in the area of Thermal Power are not taking off. Major Corporate are tying up with foreign countries for their coal requirements so as to meet the power generation capacity. With the new Government in place, changes in the overall scenario are expected. Your Company can expect to get orders in this Sector.

FERTILIZER

India is primarily an agricultural country. The requirement of Fertilizer is very huge for the growth of Agriculture Sector as the consumption of food grains has increased due to the increased population.

Normal monsoons will lead to enhanced requirement of Fertilizer and therefore the growth in Fertilizer Sector is expected. Your Company is well placed to execute projects in Fertilizer Sector in the coming years.

STEEL

The per capita consumption of steel in India is still at about 1/3rd of Global Average and to meet further demand from various infrastructure projects, the Indian Steel Industry has a major potential growth. In the last few years, Steel Industry is facing acute shortage of iron ore and coal on account of environmental considerations which is badly affecting further expansion. However, the Central Government and State Government are clearing some of the hurdles which will help for development of Steel Industry. Your Company, with its vast experience in other major sectors shall look out for opportunities in Steel Industry.

2. RISKS & CHALLENGES

Mechanical Construction Companies are facing difficulty due to difficult market conditions, increased inflation, sporadic labour wage increase, fluctuating supply of feed-stocks, cost overruns due to the delay in Government approvals, land acquisition etc. Clients and consultants are also adopting the "Wait and Watch" situation and have become averse to take risky decisions due to the dynamic environment.

The cumulative effects of these conditions will have to be borne by your Company. Due to the uncertainty in the Indian Infrastructure Industry, your Company is also looking out to explore opportunities in the Middle East, Far East and Africa etc.

3. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization & safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has engaged independent firms of Chartered Accountants apart from the in-house internal audit team who conduct audits across all locations, project sites and business units of the Company throughout the year to test check the internal control system.

Your Company has an Audit Committee whose Chairman is an Independent Director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company''s program of internal audits, findings & recommendations made in the auditors'' (both internal & statutory) reports and the follow-up & compliance status of its earlier observations.

4. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1)(e) of the Companies Act, so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis Rs. 52,706,082

ii) Expenditure in Foreign Currency Rs. 2,884,744

iii) Foreign Exchange earned Rs. 24,836,584

5. DIRECTORS

In terms of Section 149 of the Companies Act, 2013, Mr. Sanjay Jain and Mr. Sudhir Kumar Jain were categorized as Independent Directors as per the definition contained in the Equity Listing Agreement.

The provisions of Section 149(4) of the Companies Act, 2013, pertaining to the appointment of Independent Directors have been notified by the Ministry of Corporate Affairs w.e.f. Aprii 1, 2014. The Company has re-assessed the status of its Directors with a view to determining their qualifying for classification as Independent Directors in terms of Section 149(6) of the Companies Act, 2013. Accordingly, Mr. Sanjay Jain and Mr. Sudhir Kumar Jain fulfil the criteria laid out in Section 149(6) of the Companies Act, 2013.

Section 149(10) of the Companies Act, 2013 restricts the tenure of Independent Director to two terms of upto ten years, with a single term not exceeding five years w.e.f. April 1, 2014. The revised Clause 49 of the Equity Listing Agreement issued by Securities & Exchange Board of India (SEBI), pursuant to Circular No. CIR/CFD/POLICY ceii/2/2014 dated April 17, 2014 also contains the same provisions. Mr. Sanjay Jain retires by rotation at the forthcoming Annual General Meeting (AGM) and he being eligible has offered himself for appointment as Independent Director of your Company, pursuant to the provisions of the Companies Act, 2013, to hold office upto March 31, 2019.

Pursuant to the provisions of Section 161 of the Companies Act, 2013, read with relevant provisions in the Articles of Association, Mr. Sudhir Kumar Jain was appointed as Additional Director by the Board of Directors of the Company w.e.f. October 4, 2013. He holds Office as Director upto the date of the forthcoming AGM. Your Company has received a Notice in writing from a member proposing his candidature for the Office of Independent Director.

Mr. Sudhir Kumar Jain qualifies to be an Independent Director pursuant to the provisions of Section 149(6) of the Companies Act, 2013, to hold office upto March 31, 2019.

Additional Information and brief profile, as stipulated under the Equity Listing Agreement for each of the above Directors seeking re-appointment / appointment, is annexed to the Notice of the AGM. Further, the business items relating to the re-appointment / appointment of above Directors have been included in the Notice of the AGM.

6. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co. LLP (Registration No. 301003E), Chartered Accountants, Mumbai - the Statutory Auditors of the Company holds office until the conclusion of the ensuing Annual General Meeting.

The Auditors, M/s. S. R. Batliboi & Co. LLP, in their Report have drawn attention to Note No. 32 and 33 on the following matter:

Auditors'' Qualification No. 1:

"In respect of a contract, as at December 31,2013, trade receivables (net of mobilization advance of Rs. 2,926 Lacs), unbilled revenue and trade payables of Rs. 1,267 Lacs, Rs. 6,256 Lacs and Rs. 1,844 Lacs respectively, are subject to final confirmation as the said contract is under negotiation. In the absence of such confirmations and pending final outcome of the negotiations, we are unable to comment upon the amounts ultimately receivable/payable in respect of this contract and the consequential impact, if any, on the reported profit for the quarter ended December 31, 2013 and corresponding assets and liabilities as at that date. Our Audit Report on the financial statements for the year ended March 31, 2013 and our review reports on results for the quarters ended June 30, 2013 and September 30, 2013 were modified in respect of the above matter."

The Company''s response with regard to above qualifications is as under :

The Company has received a written communication in May, 2013 from the customer affirming their intent to revive the subject mega project (the largest private investment in the region) - which is nearly 60% complete - within this year, which had hit a temporary roadblock because of the cost escalation, natural disaster and financial constraints. As per the communication, the customer is persistently endeavoring to get required equity infusion from current and/or new investors to eventually do a financial closure. Apart from the above letter, the same has also been reaffirmed by the top executives of the customer in discussions. As qualified by the auditors in their report on the realization of trade receivables and unbilled revenue, the management hereby informs that the amount outstanding in the form of trade receivables is duly confirmed by the customer as payable while the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery in due course of time.

Further, the accounts payable shall be subject to the reconciliation of the work performed at the said project and can be accurately ascertained after re-negotiation upon restart of the project or otherwise, as the case may be.

Auditors'' Qualification No. 2

"The Company has recognized revenue and receivables of Rs. 3,811 Lacs on certain projects arising out of design changes and/or scope variations for which acceptances by the clients are awaited. The amount of such acceptances cannot therefore be measured reliably. In the absence of sufficient appropriate audit evidence regarding the extent to which such claims /scope variations will be accepted by the clients, we are unable to comment on the appropriateness of such revenues as recognized in the financial statements, the amounts that will be ultimately realized and the consequential impact, if any, on the reported profit for the quarter ended March 31, 2014 and the reported profit for the year ended March 31, 2014 and corresponding assets and liabilities as at that date. Our review report on result for the quarter ended December 31, 2013 was modified in respect of the above matter."

The Company''s response with regard to above qualification is as under :

"Management is confident of receiving the recognized revenue after completion of pending formalities in due course of time. Therefore, there will not be any impact on reported profit for the quarter ending 31st March, 2014 / period ending 31st March, 2014 and on corresponding assets as at that date."

M/s. S. R. Batliboi & Co. LLP., shall resign at the conclusion of the ensuing Annual General Meeting.

Your company is proposing to appoint M/s. S.R.B.C. & Co. LLP (Registration No. 324982E) as a Statutory Auditors of your company from the conclusion of the ensuing Annual General Meeting to the next Annual General Meeting. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 139(1) of the Companies Act and that, they are not disqualified within the meaning of Section 141 of the Act.

7. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

8. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. that the selected accounting policies were applied consistently and the directors 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 as at March 31, 2014 and of the Profits of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis.

9. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

10. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors'' Report.

11. ACKNOWLEDGEMENTS

Your Directors wish to convey their appreciation to the Company''s employees at all levels for their enormous personal efforts as well as their collective contribution to the Company''s performance.

The Directors would also like to offer its sincere thanks to the Company''s shareholders, bankers, customers, dealers, suppliers and all other business associates for their unstinted support and continued confidence in the Company.

12. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company''s objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual resuits could, however, differ materially from those expressed or implied.

By Order of the Board

Ajay Hans Managing Director

Ravi Keswani Mumbai, May 29, 2014 Director


Mar 31, 2013

TO THE MEMBERS,

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty- Seventh Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2013.

A. FINANCIAL RESULTS

During the year under review, the Income from Operations / Sales have declined to Rs. 52,427 Lacs as compared to Rs. 67,156 Lacs in the previous year (down by 21.95 %). However, the Other Income has increased to Rs. 1,340 Lacs in the current year from Rs. 134 Lacs in the previous year. The Profit Before Interest, Depreciation and Tax has declined to Rs. 4,176 Lacs in the current year as compared to Rs. 7,642 Lacs in the previous year. However, the Finance Cost has increased to Rs. 2,236 Lacs in the current year as compared to Rs. 1,273 Lacs in the previous year. The profit before Depreciation and Tax is Rs. 1,940 Lacs in the current year as compared to Rs. 6,369 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 310 Lacs in the current year as compared to Rs. 4,772 Lacs in the previous year. However, after providing tax expenses for the current year and earlieryears, the profit for the year is Rs. 8.79 Lacs as compared to Rs. 3,200 Lacs in the previous year.

For The Year Ended For The Year Ended 31st March, 2013 31st March, 2012 (Amount Rs. ) (Amount Rs.}

Income from Operations 5,242,660,309 6,715,639,333

Otherlncome 133,951,269 13,422,787

Total Income 5,376,611,578 6,729,062,120

Profit before Interest, Depreciation and Taxes 417,574,537 764,151,878

Finance Cost 223,619,595 127,259,555

Profit before Depreciation and Taxes 193,954,943 636,892,323

Depreciation 162,933,472 159,721,570

Profit before Tax 31,021,471 477,170,754

Tax Expenses (Including Taxes for Earlier Years) 30,141,879 157,156,239

Profit for the Year 879,592 320,014.515

B. DIVIDEND

No Dividend has been recommended by the Board due to inadequate profit during the year.

MANAGEMENT DISCUSSION AND ANALYSIS

- 1. INDUSTRY TRENDS & DEVELOPMENTS

With Indian Government''s view to renew focus on Infrastructure development and prioritize the need for greater Infrastructure development, Infrastructure Industry in India is surely poised for Growth. Petron is optimistic in meeting its share of Engineering Construction business under a major challenging scenario.

Power, Cement and Refineries are considered major concentration areas for further business volumes for Petron. To bridge the ever increasing Gas demand and supply situation in Natural Gas, new LNG Terminals are being planned in India and Petron is focusing this sector. Few Fertilizer plants expansion projects are announced, this being one of its core area, Petron is also working in this sector.

Thus, Petron is geared up to align to participate for such Projects to achieve a sustainable business in its challenging times.

- 2. DIVISION WISE PERFORMANCE ENGINEERING & CONSTRUCTION

The work on the following projects substantially progressed during the year:

a) Erection and associated works of Boiler and Auxiliaries and TG Auxiliaries of Unit No. 01 & 03 for 3 x 660 MW Tiroda Thermal Power Project of Adani Power Maharashtra Limited at Tiroda, Dist. Gondia, Maharashtra.

b) Engineering, Procurement, Construction and Commissioning Assistance (EPCC) of Fired Heaters for VGO-HDT unit of Paradip Refinery Project, for Indian Oil Corporation Limited at Paradip, Orissa.

c) Engineering, Procurement, Construction and Commissioning Assistance (EPCC) of AVU Fired Heaters of Paradip Refinery Project for Indian Oil Corporation Limited at Paradip, Orissa.

d) Engineering, Procurement, Construction & Commissioning Assistance (EPCC) of NHT/CCR Fired Heaters for Paradip Refinery Project at Paradip, Orissa for Indian Oil Corporation Limited, Paradip.

e) Erection of Boiler Island, Boiler BOP for SEPCO Electric Power Construction Corporation in 3 x 600MW Power Plant at Nariyara, Champa, Chattisgarh.

f) Mechanical Erection & Electrical Installation at Chittaurgarh Cement Plant Project, Rajasthan of Laf arge India Pvt. Ltd., Chittaurgarh, Rajasthan.

g) Erection, testing, Commissioning, trial operations and handing over 2 x 600 MW Boilers for DVC Raghunathpur Power Project as Sub-contractors to Utility Energytech and Engineers Private Limited.

h) Composite works for Gas Processing Unit for Petrochemical Complex -II of Gail (India) Limited at Pata.Uttar Pradesh.

i) Composite works for Gas Cracker Unit for Petrochemical Complex -II of Gail (India) Limited at Pata, Uttar Pradesh.

j) Cracker Furnace Package for Petrochemical Complex -II of Gail (India) Limited, at Pata, Uttar Pradesh

k) Erection, Testing, Commissioning and performance Guarantee (PG) Tests of Boiler and its Auxiliaries alongwith Critical Piping for Unit 1 & 2 of 1320 MW (Phase-I, 2 x 660MW) Kawai Thermal Power Project, for Adani Infra (India) Limited, at Kawai, Rajasthan.

The Work on the following recently awarded projects have commenced:

a) Mechanical, Electrical and Instrumentation, Fabrication and Erection works for the proposed cement Grinding Unit at Anakapalli.Visakhapatnam of Madras Cements Limited, Chennai.

b) Erection, Testing, Commissioning, Performance and Guarantee testing for Boiler and Auxiliaries Packagesfor NCC Power Project ( 2x 660MW) Unit I & Unit II at Nellore, Andhra Pradesh for NCC limited

PETRON MECHANICAL INDUSTRIES

During the year, the Division has successfully executed the following contracts:

a) Design, Engineering, Manufacturing , Supply, Erection andCommissioning of 6 numbers of EOT Cranes of 10 T, 15 T and 20 T Capacities for Inox India Ltd, Kalol, Gujarat.

b) Design, Manufacturing and Supply of 10 T Capacity, Double Girder Gantry Crane for Hydac (India ) Pvt. Ltd., Bhiwandi, Maharashtra.

c) Manufacture and Supply of Skid Mounted Modules to Sterling & Wilson Co-Gen Solutions Pvt. Ltd, MumbaifortheirAlusa Power Project at Nigeria.

d) Erection of various capacities of EOT Cranes at Bharat Aluminium Company Ltd, Korba, Chhattisgarh.

ELECTRICAL & INSTRUMENTATION

During the year following contract has been completed:

Erection, Testing and Commissioning of Electrical and Lighting equipment and instrumentation equipment at AriyalurLine-2 Project of Madras Cements Limited, Tamil Nadu.

Presently, the following Orders of the Division are under execution:

a) Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee Tests for Vindyachal Super Thermal Power Project, Stage IV (2x500) MW for National Thermal Power Corporation Limited, Madhya Pradesh.

b) Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee tests for Rihand Super Thermal Power Project, Stage III (2x500 MW) for National Thermal Power Corporation Limited, Uttar Pradesh.

c) Supply of Electrical Equipment Package (Part -1 - Cabling, Earthing and Lightning Protection, Part- II - Electrical Equipment and Part - III - Illumination system) for 2 x 371 MW combined cycle power plant - Stage III at Lanco Inf ratech Limited, Kondapalli, IDA, Dist. Krishna, Andhra Pradesh.

d) Erection, testing and commissioning of Electrical Erection Package (Part-1 - Cabling, Earthing and Lightning Protection, Part - II - Electrical Equipment and Part - III - Illumination System) for 2 x 371 MW Combined Cycle Power Plant - Stage III at Lanco Infratech Limited, Kondapalli IDA, Dist Krishna, Andhra Pradesh.

e) Electrical works for INDMAX(FCC) and PRU of Paradip Refinery Project, for Indian Oil Corporation Limited, Paradip, Orissa

f) Electrical works for off-sites and utilities at Indian Oil Corporation Ltd., Paradip Refineries for KazStroyService Infrastructure India Pvt. Ltd, Gurgaon, Haryana.

g) Supply and Erection of Electrical Equipment Package for CCR Projects for Bharat Petroleum Corporation Limited at Mahul, Chembur, Mumbai, Maharashtra.

h) Electrical Installation Work for Purified Terepthalic Acid (PTA) 5 at Reliance Industries Ltd, Dahej Manufacturing Complex, Gujarat.

I Design, Engineering, Procurement, Manufacture, Supply, Inspection and P. T. 0. Testing of Electrical Installation work package for Prayagraj Thermal Power Project (3 x 660 MW) at Tehsil - Bara, Allahabad, Uttar Pradesh.

R0CKW00L INSULATION & REFRACTORY

During the year, the division has successfully executed the following contracts:

a) Supply and Application of Wrapping and Coating material UG Pipes for Reliance Industries Ltd, Dahej, Gujarat.

b) Installation of Refractories for 10000 TPD Cement Plant for ABG Cement Ltd., Thumdi, Kutch, Gujarat.

c) Supply and application of Hot Insulation for Turbines of 3 x800 MW Ultra Mega Power Project of CGPL (TataPower),Mundra,Gujarat.

d) Refractory and Insulation Jobs at Reliance Industries Ltd at Jamnagar and Hazira Gujarat.

e) Refractory and Insulation Jobs at Essar Oil Ltd, Jamnagar, Gujarat.

f) Application of Refractories in Pallet Plant of BMM Ispat Ltd, Bella ry, Karnataka.

g) Wrapping and Coating of UG Pipelines at Reliance Industries Ltd, Silvasa, Union Territory.

Presently, the following orders of the Division are under execution:

a) Application of Refractory and Insulation work for Lafarge Cement Plant - Chittorgarh.Rajasthan.

b) VGO, AVU, NHT7 CCR Heaters and Insulation work for Indian Oil Corporation Ltd, Paradeep, Orissa.

c) Design Engineering, Supply and Application of Refractories for 3 Nos. Ethylene Gas Crackers at GAIL (India) Ltd, Pata, Uttar Pradesh.

d) Insulation for composite works - GCU and GPU for GAIL(lndia) Ltd, Pata, Uttar Pradesh.

e) Insulation jobs (ARC) at Reliance Industries Ltd, Jamnagar, SEZ and Hazira, Gujarat.

f) lnsulationjobs(ARC)atEssarOil Ltd,Jamnagar,Gujarat.

g) Application of Hot Insulation job for Piping/Equipment for PFY Project, at Reliance Industries Ltd, Silvasa Union Territory.

h) Wrapping and Coating for UG Pipelines at IDC for Reliance Industries Ltd, Jamnagar., Gujarat.

i) Supply and Application of Insulation and Refractory material along with all ancillaries for BTG and its auxiliaries for 660 MW Unit of Adani Infra Power Project, Kawai Thermal Power Project, Kawai, Rajasthan.

PETROFAB DIVISION

During the year, this Division has successfully completed the below mentioned projects:

a) Supply and Fabrication of Structures including Copper Slag Blasting and Painting for Daniel Measurement Solutions (Pvt.) Limited, Vadodara, Gujarat.

b) Fired Heater Steel Fabrication for Indian Oil Corporation Limited, Paradip FCC RR/Fresh Feed Pre- heaterfor JNK India Pvt. Ltd., Maharashtra for I0CL Paradip, Orissa.

c) Fired Heaters Steel Fabrication for OMPL MRAC-LSTK1 for JNK India Pvt. Ltd., Maharashtra for OMPL, Mangalore, Karnataka.

d) Supply and fabrication of Reformer Steel Structure and Combustion Air Ducts for Uhde India Pvt. Ltd., forlOCLParadip.Orissa.

e) Supply of convection Module for Modification of VBU to CDU Heater for Revamp Project and Supply of convection modules through Heurtey Petrochem India Pvt. Ltd, for Essar Projects Limited, Gujarat.

f) Design, Supply, Fabrication, Blasting, Painting and Transportation of Convection Bundle for Jhaghadia Plant for Linde Ltd., Vadodara, Gujarat.

Presently, the following orders of the Division are under execution:

a) Design, Fabrication Testing and Transportation of Helium Gas Pressure Vessel Installation for Government of India, DAE, Kolkata, West Bengal.

b) Fabrication, Testing, Painting and Assembly of Piping spools and Supply, Fabrication, Testing, Inspection of Structures including Surface preparation and Painting for Daniel Measurement Solutions (Pvt.) Ltd., Vadodara, Gujarat.

c) Detailing and Supply of Air Grid Distributor for Regenerator for Indian Oil Corporation Limited, Vadodara.

d) Supplyof Refractory MaterialsforAdani Infra Power Project, Kawai-Rajasthan.

e) Supply of 2 ton Capacity Overhead Crane of 19.5 M Span for JSC "OGCC KazStroyService", Kazakhstan.

- 3. ACHIEVEMENTS

a) Your Company has achieved 33.2 Million Man hours, in the FY 2012-13 and with ZERO fatality.

b) The Company has been re-certified for the Integrated Management System - combining both QMS ISO 9001:2008,OHSAS18001:2007and ISO 14001:2004.

* 4. OUTLOOK

Your Company has booked orders aggregating to Rs. 204 Crores during the year 2012-2013 compared to order book of Rs. 575 Crores during Financial Year 2011-12. The Company has accumulated orders of about Rs. 872 Crores of which EPC orders contributes apprx. 37%. The major orders received are given below:

Mechanical,Electrical,lnstrumentation,

1 Madras Cements Limited Fabrication and Erection work for a Cement 4,150

Grinding unit at Vishakapatnam.

Erection.Testing, Comissioning, Performance irnim;t„j and Guarantee Testing for Boiler and Auxiliary i-Kcn

2 NCC Limited Package for 2 x 660 MW power plant at 12''650

Nellore, Andhra Pradesh.

The sectors in which your Company is active are, oil and gas, petrochemicals, power and cement industries.

Out of these, Petro-chemicals, Power and Cement seems to be promising Sectors forthe year 2013-14. Power Sector was expected to move faster but due to inadequate supply of coal and gas, the Power Sector has not progressed in the past. However, various Power Companies are tying up with foreign countries for Coal. The Power Sector is expected to throw ample opportunities to your Company for growth.

With Indian government focusing on bringing reforms in Coal mining sector being opened to private participation coupled with government''s ambitious plan for independent Freight Corridor should be a boon to the Power sector.

In the coming years, with the growth in Agriculture, Fertilizer Industry is also expected to grow. Your

Company is expected to undertake EPC and Construction jobs in the Fertilizer Industry.

* S. OPPORTUNITIES

Your Company though operating in midst of challenging market situation, is uniquely placed to survive and take its business forward. This is mainly due to the range of services it offers and to the variety of industries it caters to.

CEMENT

Cement industry in India is poised for continuous growth to keep its pace with infrastructure growth in the country. Major Companies are implementing expansion by awarding EPC Contracts and therefore, Petron is taking necessary steps to participate in such EPC Contracts. Petron is focused to achieve considerable volume in this Sector. With Cement Company''s trend of adding Offsite Grinding Units, Petron is also concentrating in this sector.

OIL & GAS, REFINERIES, PETROCHEMICALS

Currently, although Indian Refining Industry has reached a Refining capacity to meet domestic demand and potential of exports of refined products demand, few strategic expansions are underway in India.

Large sized Petro-chemical Projects are expected to be implemented in the coming years as the demand for Fibers, Plastic, Rubber, Resins, and Specialty Chemicals are expected to rise. Your company''s experience in Heaters, Crackers and related construction areas will result in good amount of business opportunity.

India is also poised to increase capacities in LNG terminals as an added Natural Gas supply source in some locations. Your Company with its past experience is well placed to do some business in this area as well.

Coal Gasification, Coal Bed Methane (CBM) and Coal to Liquid (CTL) are also gaining focus in India as alternative energy source to depleting Natural Gas source. Your Company will look out for business opportunity in this Sector.

POWER

There is a large opportunity in Power Sector as there is a huge shortage of power due to increasing population and increased industrial consumption. However, due to supply constraints of coal and gas, major projects in the area of Thermal Power are not taking off. Major Corporates are tying up with foreign countries for their coal requirements so as to meet the power generation capacity. Your Company can expect to get orders in this Sector.

There is also a big scope in Hydro, Solar, Wind and Nuclear Power which is also expected to grow in the coming years.

FERTILIZER

India is primarily an agricultural country. The requirement of Fertilizer is very huge for the growth of Agriculture Sector as the consumption of food grains has increased due to the increased population. Normal monsoons will lead to enhanced requirement of Fertilizer and therefore the growth in Fertilizer Sector is expected. Your Company is well placed to execute projects in Fertilizer Sector in the coming years.

STEEL

The per capita consumption of steel in India is still at about 1/3rd of Global Average and to meet further demand from various infrastructure projects, the Indian Steel Industry has a major potential growth. In the last few years, Steel Industry is facing acute shortage of iron ore and coal on account of environmental considerations which is badly affecting further expansion. However, the Central Government and State Government are clearing some of the hurdles which will help for development of Steel Industry. Your Company, with its vast experience in other major sectors shall look out for opportunities in Steel Industry.

* 6. RISKS & CHALLENGES

Mechanical Construction Companies are facing difficulty due to difficult market conditions, increased inflation, sporadic labour wage increase, fluctuating supply of feed-stocks, cost overruns due to the delay in Government approvals, land acquisition etc.

The cumulative effects of these conditions will have to be borne by your Company, i

Due to the uncertainty in the Indian Infrastructure Industry, Your Company is also looking out to explore opportunities in the Middle East, Far East and Africa etc.

A challenging year is ahead foryour Company to come out with success.

* 7. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization and safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has engaged an independent firm of Chartered Accountants apart from the in-house internal audit team who conduct audits across all locations, project sites and business units of the Company throughouttheyearto test checkthe internal control system.

The Board of directors has an Audit Committee whose Chairman is an Independent Director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company''s program of internal audits, findings and recommendations made in the auditors'' (both internal and statutory) reports and the follow-up and compliance status of its earlier observations.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering and construction projects, the disclosure of particulars under Section 217(1)(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

a. Value of Imports on CIF basis - 317,162,688

b. Expenditure in Foreign Currency X 14,649,349

c. Foreign Exchange earned NIL

9. DIRECTORS

Mr. Ajay Hans has been appointed as an Additional Director and designated as the Managing Director of the Company with effect from 5th October, 2012 for a period of 3 years. His appointment is subject to approval by Shareholders at the ensuing 37th Annual General Meeting.

Mr. Ajay Hans is a Mechanical Engg. Graduate with Masters in Business Finance (MBF) and Masters in Business Administration ( MBA) with specialization in Marketing. He is a versatile professional having more than 20 yrs of work experience in Business Development, Tendering and Estimation, Contracts Management, Project Management and Execution, Finance Management, Procurement and Materials Management of Engg, Procurement and Construction (EPC) Projects on various National and International Projects.

He has worked with KazStroyService Group in Almaty, Kazakhstan as Executive Director / Director - Contracts andCommercial. He had also worked with other reputed MNCs like DLF, Sumitomo Corporation, Enron, Dodsal, HIRCO etc.

He has worked with Petron Civil Engg. Pvt. Ltd., India as Jt. Managing Director andhas contributed in expanding the operations including EPC developments in India andOverseas.

He has been an honorable recipient of "Udyog Ratan Award" for outstanding performance in the field of Industrial Development.

In terms of Article 127 of the Articles of Association of the Company, Mr. Ravi Keswani, Director of the Company retires by rotation andbeing eligible offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. T. S. Das was appointed as an Additional Director with effect from 14th May, 2007. He was a Managing Director w.e.f. 10th January, 2008 andresigned on 5th October, 2012.

Mr. R. Sankaran was appointed as an Additional Director being Non-Executive (Independent) Director with effect from on 29th June, 2009, He expired on 28th February, 2013.

Mr. G. K. Roy was appointed as an Additional Director anddesignated as Director (Operations) w.e.f. 5th October, 2012. He has resigned from the Board on 8th March, 2013.

Dr. S. Rama Iyer, was appointed as an Additional Director being Non-Executive (Independent) Director with effect from on 30th January, 2009. He has resigned from the Board w.e.f. 17th May, 2013.

Mr. Sanjay Jain has been appointed as an Additional Director being Non-Executive (Independent) Director w.e.f. 17th May, 2013. His appointment is subject to approval by Shareholders at the ensuing 37th Annual General Meeting.

- 10. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co. LLP (Registration No - 301003E), Chartered Accountants, Mumbai - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1B) of the Act &that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The Auditors in their Report have drawn attention to Note No. 3 on the following matter

Auditors'' Qualification:

We report that as at March 31,2013 Trade receivables of Rs. 1,278 lacs (net of mobilization advance of Rs. 2,926 Lacs), unbilled revenue being dues receivable from a customer amounting to Rs. 6,256 Lacs andtrade payables of Rs. 1,866 Lacs relating to a contract, are subject to final confirmations from the

respective parties as the matter is under negotiation. In the absence of such confirmation andpending final outcome of the negotiations, we are unable to comment upon the amounts ultimately receivable / payable in respect of this contract andthe consequential impact, if any, on the reported loss for the quarter ended March 31, 2013 andthe reported profit for the year ended March 31, 2013 andcorresponding Assets andLiabilities as at that date.

Company''s Response

The Company has received a written communication in May, 2013 from the customer affirming their intent to revive the subject mega project (the largest private investment in the region) - which is nearly 60% complete - within this year, which had hit a temporary roadblock because of the cost escalation, natural disaster and financial constraints. As per the communication, the customer is persistently endeavoring to get required equity infusion from current and/or new investors to eventually do a financial closure. Apart from the above tetter, the same has also been reaffirmed by the top executives of the customer in discussions. As qualified by the auditors in their report on the realization of trade receivables and unbilled revenue, the management hereby informs that the amount outstanding in the form of trade receivables is duly confirmed by the customer as payable while the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery in due course of time.

Further, the accounts payable shall be subject to the reconciliation of the work performed at the said project andean be accurately ascertained after re-negotiation upon restart of the project or otherwise, asthecase maybe.

11. PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(l)(b)(iv) of the Act, the Report andAccounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

12. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. that the selected accounting policies were applied consistently and the directors 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 as at March 31,2013 and of the profit of the Company fortheyearended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis.

¦ 13. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

*- 14. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance andCertificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors'' Report.

15. ACKNOWLEDGMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels.

The Company takes this opportunity to offer its sincere thanks to the Company''s bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients fortheir co-operation.

- 16. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company''s objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.

By Order of the Board

Mumbai, 29th May, 2013 Ajay Hans Ravi Keswani

Managing Director Director


Mar 31, 2012

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-sixth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2012.

A.FINANCIAL RESULTS

During the year under review, the Income from Operations Sales have increased toRs. 71,313 Lacs as compared to Rs.49,910 Lacs in the previous year (up by 42.88%). The Other Income has declined toRs. 134 Lacs in the current year from Rs. 233 Lacs in the previous year. The Profit Before Interest, Depreciation and Tax has increased to Rs. 7,642 Lacs in the current year as compared to Rs. 6,089 Lacs in the previous year. However, the Finance Cost has increased to Rs. 1,273 Lacs in the current year as compared toRs. 381 Lacs in the previous year. The profit before Depreciation and Tax isRs. 6,369 Lacs in the current year as compared to Rs. 5,708 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 4,772 Lacs in the current year as compared to Rs. 4,615 Lacs in the previous year. However, after providing for tax expenses for the current year, the profit for the year is Rs. 3,200 Lacs as compared toRs. 3,095 Lacs in the previous year.

For The For The Year Ended Year Ended 31-Mar-12 3l-Mar-11 amountRs. amountRs.

Income from Operations 7,131,315,207 4,991,040,073

Other income 13,422,787 23,254,663

Total Income 7,1447,737,994 5,014,294,736

Profit before Interest, Depreciation and Taxes 764,151,878 608,888,959

Finance Cost 127,259,555 38,092,134

Profit before Depreciation and Taxes 636,892,323 570,796,825

Depreciation 159,721,570 109,267,359

Profit before Tax 477,170,754 461,529,466

Tax Expenses 157,156,239 151,991,936

Profit for the Year 320,014,515 309,537,530

B. DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 2/- (20%) per Equity Share on 7538400 Equity Shares of Rs. 10/- each for the year ended 31st March, 2012 for declaration by the Shareholders at the Thirty-sixth Annual General Meeting. The Dividend will absorb Rs. 15,076,800/- and Corporate Dividend Tax thereon will be Rs. 2,445,834/-, aggregating toRs. 17,522,634/-.

6. RISKS & CHALLENGES

Mechanical construction companies in India are facing more difficulties due to difficult market conditions, currency fluctuations, countries sloping growth rate & increase in inflation, sporadic labour wage increase, increase in project overlays, fluctuating supplies of fuel & feed-stocks, pending Govt, policy on coal allotments, land acquisition etc. The cumulative effects of these conditions are to be borne by the Company like yours., inspite of being one among many of the critical contributors to the Infrastructure industry and to the country's economy.

With uncertainties prevailing in the Indian Infrastructure industry, your Company is embarking upon to explore opportunities abroad, mainly in the Middle East, Far East, Africa etc. Your Company is hopeful of getting suitable opportunities only in its core areas, as these are restricted markets, the emphasis would be in selecting the right partner . This could be a challenge for your Company to counter the trend and come out with good success.

7. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization & safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has already engaged two independent firms of Chartered Accountants apart from the in- house internal audit team who conduct audits across all locations, project sites and business units of the Company throughout the year to test check the internal control system.

The Board of directors has an Audit Committee whose Chairman is an independent director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company's program of internal audits, findings & recommendations made in the auditors' (both internal & statutory) reports and the follow-up & compliance status of its earlier observations.

8. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1 )(e) of the Act (hereinafter referred to as the Act], in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

9. DIRECTORS

Mr.Arvind Dabar was appointed as an Additional Director on 29th October, 2010. He has resigned from the Board with effect from 17th May, 2011.

In terms of Article 127 of the Articles of Association of the Company, Mr. Ravi Keswani, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

10. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co., Chartered Accountants, Mumbai - (Registration No - 301003E), the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re- appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1 B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The Auditors in their Report have drawn attention to Note No.k on the following matter:

The balance of the Sundry Creditors are in process of confirmation/reconciliation. Consequently we are unable to comment on the carrying values of these balances as recorded in these financial statements and accordingly the impact of the consequential adjustments, if any, on the Profit and Assets /Liabilities cannot be ascertained.

The management expects to receive confirmation of balances from sundry creditors in due course of time and does not expect any material impact on profit and assets/liabilities.

11. PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Act read with the Companies (Particulars of Employees] Rules 1975 forms part of this Report. As per provisions of Section 219(1 )(b](iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217 [2A] of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

12. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. That in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. That the selected accounting policies were applied consistently and the directors 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 as at March 31, 2012 and of the profit of the Company for the year ended on that date;

c. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. That the annual accounts have been prepared on a going concern basis.

13. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund [I EPF) established by the Central Government pursuant to Section 205C of the Act.

14. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors' Report.

15. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Company's performance.

The Company takes this opportunity to offer its sincere thanks to the Company's bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

16. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company's objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.

BY ORDER OF THE BOARD

T. S. Das Ravi Keswani

Mumbai, 18th May, 2012 MANAGING DIRECTOR DIRECTOR


Mar 31, 2011

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-fifth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2011.

A) FINANCIAL RESULTS

During the year under review, though the total revenue has declined to Rs. 50143 Lacs from Rs. 53376 Lacs in the previous year (down by 6.06%), the profit has increased to Rs. 6089 Lacs before interest, depreciation, tax and transfer from revaluation reserve as compared to Rs. 5165 Lacs in the previous year (increased by 17.89%). The interest has declined to Rs. 381 Lacs (Previous Year Rs. 675 Lacs) (Lower by 43.56%) and depreciation has increased to Rs. 1093 Lacs (previous year Rs. 903 Lacs) (Higher by 21.04%).

The improvement in the operational efficiency and reduction in interest cost has resulted into higher profit of Rs. 4615 Lacs as compared to Rs. 3587 Lacs in the previous year before providing for tax. The Net Profit for the year is higher at Rs. 3095 Lacs as compared to Rs. 2388 Lacs in the previous year.

For the year For the year ended 31st ended 31st March, 2011 March, 2010 (Rs.) (Rs.)

Total turnover (Sales & Other income) 5,014,294,736 5,337,551,115

Profit before interest, depreciation, tax & 608,888,959 516,476,770 transfer from revaluation reserve

Interest 38,092,133 67,506,454

Profit before depreciation, tax and transfer 570,796,826 448,970,316 from revaluation reserve

Depreciation 109,267,359 90,320,057

Profit/(Loss) before tax 461,529,466 358,650,259

Provision for taxation: Current tax 181,883,760 121,328,108

Deferred tax (38,738,185) (1,510,563)

Income-tax for earlier year 8,846,361

Profit/(Loss) after tax 309,537,530 238,832,714

Balance in profit & loss account brought forward 480,935,746 283,683,900

Amount available for appropriation 790,473,276 52,25,16,614

Proposed dividend for the year 15,076,800 15,076,800

Corporate dividend tax thereon 2,445,834 2,504,068

General reserve 32,500,000 24,000,000

Surplus carried over to balance sheet 740,450,642 480,935,746

790,473,276 522,516,614

B) DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 2 (20%) per Equity Share of Rs. 10 each for the year ended 31st March, 2011 for declaration by the Shareholders at the Thirty-fifth Annual General Meeting. The Dividend will absorb Rs. 15,076,800 and Corporate Dividend Tax thereon will be Rs. 2,445,834, aggregating to Rs. 17,522,634.

8) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1)(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

9) RESTRUCTURING AND CHANGE IN CONTROL

Petron Engineering Construction Limited is a subsidiary of Petron Investments Private Limited ("PIPL"). (PIPL is owned by Amritha Sharanya Leasing & Investments Pvt. Ltd. ("ASLI"), SRA Finance & Investments Pvt. Ltd. ("SRA") and KazStroyService Hungary Kft. in the ratio 40:40:20.

Fraseli Investments S.a.r.l. ("Fl") acquired 33.34% of the issued and fully paid- up A ordinary share capital of KazStroyService Global B.V. ("KSS Global") from KazStroyService Holding B.V.("KSS Holding") and KazStroyService Infrastructure B.V. ("KSS Infra") pursuant to a share purchase agreement dated March 2, 2011. Consequent to the acquisition, there was a restructuring within the KazStroyService group whereby KSS Global acquired ASLI, SRA, PIPL and KazStroy Engineering (UK) Ltd. KSS Global thereby indirectly acquired the legal ownership of 52.47% of Petron Engineering Construction Limited.

Pursuant to the investment by Fl in KSS Global and the restructuring, the following constitute the group of Petron Engineering Construction Limited for purposes of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997:

- KazStroyService Global B.V. - SRA Finance and investments Private Limited

- KazStroyService Infrastructure B.V. - Petron Investments Private Limited

- KazStroyService Holding B.V. - KazStroyService Hungary Kft.

- CIS Drilling Pte Limited - Petron Civil Engineering Private

- Steppe Capital Pte Limited Limited

- Fraseli Investments S.a.r.l. - KazStroyService Infrastructure India Pvt. Ltd

- Mittal Investments S.a.r.l. - KazStroy Engineering India Pvt. Ltd

- Mr. ArvindTiku - JSC OGCC KazStroyService

- Mr. TimurKulibayev - KazStroyService Management

- KazStroy Engineering (UK) Limited Services Pte Ltd

- KazStroyService Limited - Bhubaneshwar Expressways Pvt. Limited

- Amritha Sharanya Leasing and Investments Private Limited - KazStroyService Investment Pte Ltd

In terms of the requirements of Regulations 10 & 12 of Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulation 1997, KSS Global along with persons acting in concert with it has appointed Citigroup Global Markets India Pvt. Ltd., Bakhtawar, 8/12th Floor, Nariman Point, Mumbai 400 021 as its Merchant Banker and made a public announcement on 23rd May, 2011 of an open offer to the public shareholders of Petron Engineering Construction Limited to acquire up to 20% of the paid-up share capital of the company.

10) DIRECTORS

Mr. Arvind Dabar was appointed as an Additional Director on 29th October, 2010. He has resigned from the Board with effect from 17th May, 2011.

Mr. D. K. Khare has resigned with effect from 12th October, 2010.

In terms of Article 127 of the Articles of Association of the Company, Mr. R. Sankaran, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

11) AUDITORS

M/s. Lodha & Co., Chartered Accountants, New Delhi - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

12) PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

13) DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a) that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b) that the selected accounting policies were applied consistently and the directors 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 as at March 31, 2011 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act

for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis.

14)TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

15) CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors Report.

16) ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Companys performance.

The Company takes this opportunity to offer its sincere thanks to the Companys bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

17) CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Companys objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.



By order of the Board

T. S. Das Ravi Keswani Managing Director Director

Mumbai, 25th May, 2011


Mar 31, 2010

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-fourth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2010.

A. FINANCIAL RESULTS

During the year under review your Companys total revenue has increased to Rs. 53,376 Lacs from Rs. 46,176 Lacs in the previous year (higher by 15.6%). The profit before interest, depreciation, tax and transfer from revaluation reserve were Rs. 5,165 Lacs as compared to Rs. 2,538 Lacs in the previous year (103% higher). The interest has declined to Rs. 675 Lacs (Previous year: Rs. 709 lacs) (lower by 5%) and depreciation has increased to Rs. 903 Lacs (Previous year Rs. 683 Lacs) (higher by 32%). The rise in turnover and improved operational efficiency has resulted into higher profit of Rs. 3,587 Lacs as compared to Rs. 1,146 Lacs in the previous year before providing for tax. The Net Profit for the year is higher at Rs. 2388 Lacs as compared to Rs.647 Lacs in the previous year.

for the year ended for the year ended 31st March, 2010 31st March, 2009 Rupees Rupees

Total turnover (Sales & Other income) 5,33,75,51,115 4,61,76,45,843

Profit before interest, depreciation, tax and transfer from revaluation 51,64,76,770 25,37,78,820 reserve

Interest 6,75,06,454 7,08,87,339

Profit before depreciation, tax and transfer from revaluation reserve 44,89,70,316 18,28,91,481

Depreciation 9,03,20,057 6,82,76,692

Profit/(Loss) before tax 35,86,50,259 11,46,14,789

Provision for taxation

Fringe benefit tax -- 4,000,000

Current tax 12,13,28,108 1,73,38,052

Deferred tax (15,10,563) 2,46,28,558

Income-tax for earlier year -- 3,977,679

Profit/(Loss) after tax 23,88,32,714 6,46,70,500

Balance in profit and loss account brought forward 28,36,83,900 21,90,13,400

Amount available for appropriation 52,25,16,614 28,36,83,900

Proposed dividend for the year 1,50,76,800 -

Corporate dividend tax thereon 25,04,068 -

General reserve 2,40,00,000 -

Surplus carried over to balance sheet 48,09,35,746 283,683,900

Total 52,25,16,614 28,36,83,900

B. DIVIDEND

Your Directors are please to recommend a Dividend of Rs.2 (20%) per Equity Share of Rs.10 each for the year ended 31st March, 2010 for declaration by the Shareholders at the Thirty-fourth Annual General Meeting. The Dividend will absorb Rs. 1,50,76,800 and Corporate Dividend Tax thereon will be Rs.25,04,068, aggregating to Rs.1,75,80,868.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1 )(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below: Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis Rs.15,75,94,126

ii) Expenditure in Foreign Currency Rs.1,37,41,136

iii) Foreign Exchange earned Rs.5,93,63,803

8. DIRECTORS

Mr. Ravi Keswani is a qualified Chartered Accountant and a law graduate. He is having an overall experience of 23 years working with large corporate in Finance & Treasury, Accounts, Taxation. Commercial. Project Costing & Budgetary Control, Corporate Strategy. Mergers & Acquisitions etc. He was involved in successful completion of IPO; private equity transaction with group of prestigious investors; subsequent fund raising in rough FCCBs and QIPs: setting up strategy and business plan development: acquisition cf a large desgn and construction company in Singapore and UK, Mergers and Demergers in the Group, both domestic and cross border, hiving off some of the non-core businesses, new ventures and initiatives; implementation of ERP system and continuous process and control improvements. He is currently employed with KazStroyService Group - since March, 2010 as Group CFO. Prior, to joining KSS Group he was working with Punj Lloyd Limited as President - Investors Relations and Group Accounts. He has also worked with Hero Cycles Limited as Assistant General Manager.

Mr. Dinesh Kumar Khare was appointed as an Additional Director being Non- Executive Director with effect from 27th April, 2010. He is 57 year old, qualified B.E. (Civil) and has an experience of 34 years in large infrastructure projects. Presently, he is the CEO of the associate companies in KSS Group and leading a team in the areas of infrastructure, industrial parks, SEZs, real estate and environmental management. He possesses in-depth exposure to power plant projects from Captive to Mega power plants. Hes also experienced in EPC, PPP models and international projects with specific reference to Gulf & South African regions.

Mr. Pravin Jain has resigned with effect from 16th November, 2009.

Mr. D. K. De Chaudhuri has resigned with effect from 27th April, 2010.

In terms of Article 127 of the Articles of Association of the Company, Dr. S. Rama Iyer, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

9. AUDITORS AND THEIR REPORT

M/s. Lodha & Co., Chartered Accountants, New Delhi - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1 B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The auditors have drawn attention vide clause no. 2(f) on the following matters:

i. Change in Accounting Policy

The auditors had, in earlier years, qualified that the Company was not following accrual basis of accounting for certain indirect taxes (i.e. service tax, VAT & sales tax etc.). During the year, the Company has changed its accounting policy in respect of these taxes to accrual basis, which has resulted into higher charge to the Profit & Loss a/c by Rs.1,648 lacs for the year. Further reference is drawn to the Note No. B8(a) of Schedule 21 to the Financial Statements.

ii. The auditors have qualified their opinion vide clause no. 2(g) in their report in respect of non- provision for shortfall, if any, in recovery against certain debtors and detention of the fixed assets.

The Company has initiated legal action for recovery of its dues and release of the assets detained and the management is hopeful of their recovery. Further reference is drawn to the Note No. B10 of Schedule 21 to the Financial Statements.

10. PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

11. DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a) that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b) that the selected accounting policies were applied consistently and the directors 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 as at March 31, 2010 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis.

12. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

13. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors Report.

14. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Companys performance.

The Company takes this opportunity to offer its sincere thanks to the Companys bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

BY ORDER OF THE BOARD

T.S. Das Ravi Keswani Managing Director Director

PLACE : MUMBAI

DATED : 31st May, 2010