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Notes to Accounts of Punj Lloyd Ltd.

Mar 31, 2015

(A) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/members, the above shareholding represents both legal and beneficial ownerships of shares.

(B) Shares reserved for issue under options

The vesting period of all the stock options has expired and there are no options in force as at the reporting date. For further details, please refer note 25.

(e) No bonus shares or shares issued for consideration other than cash or shares bought back over the last five years immediately preceding the reporting date.

*After setting off deferred tax assets aggregating Nil (Previous year Rs. 2.41 crores) in respect of certain branches.

# The Company has accounted for deferred tax assets on timing differences, including those on unabsorbed depreciation and business losses, to the extent of deferred tax liability recognized at the balance sheet date, for which it is virtually certain that future taxable income would be generated by reversal of such deferred tax liability.

1. Gross block of plant and equipment includes Rs. 5.82 crores and accumulated depreciation includes Rs. 5.82 crores (Previous year Rs. 5.82 crores and Rs. 4.66 crores respectively) on account of revaluation of assets carried out in earlier years. The said revaluation was carried out during the year ended March 31,1998 by an external agency using "price indices released by the Economic Advisor's Office, Ministry of Industry/Verbal Quotation/Comparison/Estimation or any other method considered prudent in specific cases". Consequent to the said revaluation, there is an additional charge of depreciation of Rs. Nil (Previous year Rs. 0.23 crores). In accordance with the option given in the guidance note on accounting for the depreciation in companies, the Company has recouped such additional deprecation out of asset revaluation reserve until March 31,2014. There is additional profit of Rs. Nil (Previous year Rs. 0.13 crores) on account of sale of assets, an equivalent amount has been withdrawn from revaluation reserve and credited to statement of profit and loss.

2. Gross block of land includes Rs. 2.10 crores (Previous year Rs. 2.10 crores) on account of revaluation carried out in earlier years. The said revaluation was carried out during the year ended March 31,2002 by an external agency using "price indices released by the Economic Advisor's Office, Ministry of Industry/Verbal Quotation/Comparison/estimation or any other method considered prudent in specific cases".

3. In compliance with the notification dated March 31, 2009 (as amended) issued by MCA, the Company has exercised the option available under paragraph 46 to the Accounting Standards 11- The effect of changes in foreign exchange rates. Accordingly, during the current year, the foreign exchange loss of Rs. 2.46 crores (Previous year Rs. 10.11 crores) has been added to gross block of plant and equipment.

4. Gross block of land includes leasehold land of cost Rs. 6.41 crores (Previous year Rs.6.41 crores). Accumulated depreciation thereon is Rs. 1.14 crores (Previous year Rs. 0.92 crores).

5. Gross block of vehicles includes vehicles of cost Rs. 1.27 crores (Previous year Rs. 6.55 crores) taken on finance lease. Accumulated depreciation there on is Rs. 0.90 crores (Previous year Rs. 3.36 crores).

6. Gross block of plant and equipment includes equipments of cost Rs. 114.16 crores (Previous year Rs. 109.93 crores) taken on finance lease. Accumulated depreciation thereon is Rs. 75.90 crores (Previous year Rs. 27.92 crores).

7. Gross block of buildings includes building of cost Rs. 98.76 crores (Previous year Rs. 98.76 crores) taken on finance lease. Accumulated depreciation thereon is Rs. 4.04 crores (Previous year Rs. 2.39 crores).

8. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Under the plan, every employee who has completed at least five years of service gets a gratuity on separation at 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance companies in the form of qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss, the funded status and the amounts recognized in the balance sheet for the plan.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The options under the ESOP 2005 (Plan 1) and ESOP 2006 (Plan 2), (Plan 3), (Plan 4) and (Plan 5) had expired on or before March 31, 2013 and hence there are no activities to report under these plans.

The vesting period of all the stock options expired before March 31,2015. Also, the weighted average share price at the date of exercise is not applicable since there are no stock options in force as at the current and previous balance sheet date.

For the purpose of valuation of the options granted upto year ended March 31,2015 under ESOP 2005 and ESOP 2006, the compensation cost relating to Employee Stock Options, calculated as per the intrinsic value method, is Rs. Nil.

In March 2005, the Institute of Chartered Accountants of India has issued a Guidance Note on "Accounting for Employees Share Based Payments" applicable to employee share based plan the grant date in respect of which falls on or after April 1,2005. The said Guidance Note requires the Pro-forma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. As the Company has used the intrinsic value method and the management has obtained fair value of the options at the date of grant from an independent valuer, using the 'Black Scholes Valuation Model' at "Rs. Nil" per option, there is no impact on the reported profits/(losses) and earnings per share.

9. Leases

a) Finance lease

The Company has finance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is included in the gross block of plant and equipment, vehicles and buildings respectively under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements.

b) Operating lease

The Company has entered into commercial leases for office premises. There are no contingent rents in the lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements.

The break-up of the future minimum lease payments outstanding as at reporting date is as under:

10. Interest in joint ventures:

The Company's interest and share in joint ventures in the jointly controlled entities/operations are as follows:

Notes:

* Capital Commitments - Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances).

11. Segment Information

Primary segment: Business segments -

The Company has identified the business segment as its primary reportable segment. The Company's operating businesses are organized and managed separately according to the nature of products and services provided. The Company has identified Engineering, procurement and construction services and Trading of goods as its two reportable segments. A description of the types of products and services provided by each reportable segment is as follows:

Engineering, procurement and construction segment includes providing of engineering, procurement and construction services in oil, gas and infrastructure sectors.

Trading of goods segment includes purchase and sale of steel, mainly outside India.

Secondary segment: Geographical segments* -

Although the Company's major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas of the world, in India, its home country, and the other countries.

The following table presents revenue from operations, unbilled revenue (work-in-progress) and trade receivables regarding geographical segments as at March 31,2015 and March 31,2014.

12. Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Subsidiary Companies

Spectra Punj Lloyd Limited

Punj Lloyd Industries Limited

Atna Investments Limited

PLN Construction Limited

Punj Lloyd International Limited

Punj Lloyd Kazakhstan, LLP

Punj Lloyd Pte. Limited

PL Engineering Limited

Punj Lloyd Infrastructure Limited

Punj Lloyd Upstream Limited

Punj Lloyd Aviation Limited

Sembawang Infrastructure (India) Private Limited

Indtech Global Systems Limited

Shitul Overseas Placement and Logistics Limited (formerly Punj Lloyd Systems Limited)

PLI Ventures Advisory Services Private Limited

Dayim Punj Lloyd Construction Contracting Company Limited

Punj Lloyd Infrastructure Pte. Limited (w.e.f August 31,2014)

Step Down Subsidiary Companies

PT Punj Lloyd Indonesia

PT Sempec Indonesia

Punj Lloyd Oil & Gas (Malaysia) Sdn. Bhd.

Punj Lloyd Sdn. Bhd.

Punj Lloyd Engineers and Constructors Pte. Limited

Punj Lloyd Engineers and Constructors Zambia Limited Buffalo Hills Limited Indtech Trading FZE PLI Ventures Limited

Punj Lloyd Infrastructure Pte. Limited (upto August 31,2014)

Punj Lloyd Aviation Pte. Limited (w.e.f. January 02, 2014)* Christos Aviation Limited

Punj Lloyd (B) Sdn. Bhd. (w.e.f. August 02, 2014)*

Punj Lloyd Kenya Limited

Sembawang Group Pte. Limited (upto March 31,2014)*

PL Global Developers Pte. Limited

Christos Trading Limited (upto March 31,2014)*

Graystone Bay Limited

Punj Lloyd Thailand (Co.) Limited

Punj Lloyd Delta Renewables Pte. Limited

Punj Lloyd Delta Renewables Private Limited

Punj Lloyd Delta Renewables Bangladesh Limited

Punj Lloyd Raksha Systems Private Limited (w.e.f. February 04, 2015)*

Punj Lloyd Engineering Pte. Limited

Simon Carves Engineering Limited

PL Delta Technologies Limited @

Punj Lloyd Solar Power Limited

Khagaria Purnea Highway Project Limited

Indraprastha Metropolitan Development Limited

PL Surya Urja Limited (w.e.f. September 03, 2013)*

PL Sunshine Limited (w.e.f. March 05, 2015)*

Sembawang Engineers and Constructors Pte. Limited

Sembawang Development Pte. Limited

Sembawang Libya for General Contracting & Real Estate

Investment Joint Stock Company

Contech Trading Pte. Limited

PT Contech Bulan (upto March 31,2014) *

Construction Technology (B) Sdn. Bhd.

Sembawang Mining (Kekal) Pte. Limited PT Indo Precast Utama PT Indo Unggul Wasturaya

Sembawang (Tianjin) Construction Engineering Co. Limited Sembawang Infrastructure (Mauritius) Limited Sembawang UAE Pte. Limited

Sembawang Consult Pte. Limited (formerly SC Architects and Engineers Pte. Limited)

Sembawang (Malaysia) Sdn. Bhd.

Jurubina Sembawang (M) Sdn. Bhd.

Tueri Aquila FZE

Sembawang Bahrain SPC

Sembawang Equity Capital Pte. Limited

Sembawang of Singapore - Global Project Underwriters Pte. Limited

Sembawang of Singapore - Global Project Underwriters Limited

Sembawang Australia Pty. Limited (upto February 20, 2014)

Sembawang Hong Kong Limited

Sembawang (Tianjin) Investment Management Co. Limited PT Sembawang Indonesia

Sembawang International Limited (upto June 27, 2014)*

Sembawang Tianjin Pte. Limited (upto March 12, 2014)

Sembawang Tianjin Heping Pte. Limited (upto March 12, 2014)

Sembawang Commodities Pte. Limited (upto April 16, 2014)*

Reliance Contractors Private Limited

Sembawang E&C Malaysia Sdn. Bhd. (w.e.f. July 25, 2014)*

Joint Ventures

Thiruvananthpuram Road Development Company Limited

Ramprastha Punj Lloyd Developers Private Limited

Punj Lloyd Dynamic LLC

AeroEuro Engineering India Private Limited

PLE TCI Engineering Limited (upto March 31,2014)@

PLE TCI Engenharia Ltda

PT Kekal Adidaya

Sembawang Precast System LLC

Sembawang Caspi Engineers and Constructors LLP

Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd

Limited

Punj Lloyd PT Sempec

Total-CDC-DNC Joint Operation

Kumagai-Sembawang-Mitsui Joint Venture

Kumagai-SembCorp Joint Venture

Philipp Holzmann-SembCorp Joint Venture

Kumagai-SembCorp Joint Venture(DTSS)

Semb-Corp Daewoo Joint Venture

Sime Engineering Sdn. Bhd. Sembawang Malaysia Sdn.

Bhd. Joint Venture

Sime Engineering Sdn. Bhd. SembCorp Malaysia Sdn.

Bhd. Joint Venture

Total Sempec Joint Operations (upto December 31,2013)

Punj Lloyd Group Joint Venture

Public Works Company Tripoli Punj Lloyd Joint Venture

Sembawang - Leader Joint Venture

Associates

Olive Group India Private Limited (upto August 12, 2013)

Hazaribagh Ranchi Expressway Limited (upto March 31, 2015)*

Air Works India (Engineering) Private Limited

Olive Group Capital Limited (upto October 16, 2013)

Ventura Development (Myanmar) Pte Limited (upto March 12, 2014)

Reco Sin Han Pte Limited

* These entities have been incorporated / formed/ disposed off during the year.

@ Investment held for sale in the near future.

Key Managerial Personnel with whom transactions have taken place during the year:

Atul Punj - Chairman

Luv Chhabra - Director (Corporate Affairs)

Pawan Kumar Gupta (upto December 31,2013) - Whole Time Director

P. N. Krishnan (w.e.f. November 01,2013) - Director - Finance

J. P. Chalasani (w.e.f. January 31,2014 and upto May 19, 2014 ) - Director and Group CEO

J. P. Chalasani (w.e.f. May 20, 2014) - Managing Director & Group CEO

Enterprises over which Key Managerial Personnel or their relatives exercise significant influence and with whom transactions have taken place during the year:

Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of Chairman

PTA Engineering and Manpower Services Private Limited - Shareholding of Chairman

PLE Hydraulics Private Limited - Shareholding of Chairman

Artcon Private Limited - Shareholding of Chairman

Mangalam Equipment Private Limited - Shareholding of Chairman

Petro IT Limited - Shareholding of Brother of Chairman

13. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) is Rs 0.20 crores (Previous year Rs. 5.30 crores).

(b) For commitments relating to lease arrangements, please refer note 26.

(c) Financial support given to a wholly owned subsidiary, Punj Lloyd Pte Limited, the outflow of which as at the reporting date is not practicable to ascertain in view of the uncertainties involved.

Contingent liabilities:

As at March 31,2015 As at March 31, 2014

a) Liquidated damages deducted by customers not accepted by the Company and pending final settlement. 170.05 170.05

b) Corporate guarantees given on behalf of subsidiaries, joint ventures and associates 2,730.27 3,020.20

c) Sales tax demands: *

on disallowance of deduction on labour and services of the works contracts pending with sales tax authorities and High Court 39.29 23.71

for non submission of statutory forms 0.11 0.11

for purchases against sales tax forms not accepted by department 8.76 8.82

against the central sales tax demand on sales in transit/ sale in the course of import 2.84 2.84

d) Entry tax demands against entry of goods into the local area not accepted by department. 4.68 4.56

# excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, financial position or liquidity of the Company.

* The management believes that the claims made are untenable and is contesting them. As of the reporting date, the management is unable to determine the ultimate outcome of the above matters. However, based on favorable decisions/outcomes in similar cases earlier and based on legal opinions taken /consultations done with solicitors, the management believes that there are good chances of success in above mentioned cases and hence, no provision there against is considered necessary.

e) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income tax Act, 1961. During the search and seizure operation, statements of Company's officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The Company believes that the above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has filed fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department ("the Department"). The Department had completed the assessments for the assessment years 2004-05 to 2010-11 and issue demands aggregating to Rs. 229.13 crores, by making some frivolous additions to the total income of the Company, which has been adjusted against the income tax refunds of the said/subsequent years. The Company had filed the appeals against these additions on January 27, 2012 and June 12, 2013. During the second quarter of FY 2014-15, favorable orders have been received from the CIT (Appeals) dated August 29, 2014 for the assessment year 2004-05 to 2006-07 on all the additions made except for the addition of permanent establishment for which further appeal has been filed by the Company to ITAT, Delhi dated October 31,2014 and based on the expert opinion, the Company is hopeful that it will get relief in appeal.

f) The Company, directly or indirectly through its subsidiaries, is severally or jointly involved in certain legal cases with its customers / vendors in the ordinary course of business. The management believes that due to the nature of these disputes and in view of numerous uncertainties and variables associated with certain assumptions and judgments, and the effects of changes in the regulatory and legal environment, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. The Company regularly monitors its estimated exposure to such loss contingencies and, as additional information becomes known, changes its estimates accordingly. In view of aforesaid reasons, as of the reporting date, it is unable to determine the ultimate outcome of these matters.

14. Derivative instruments and un-hedged foreign currency exposure

The Company, in addition to its Indian operations, operates outside India through its branches and an unincorporated joint venture established in United Arab Emirates (UAE), Oman, Qatar, Libya, Thailand, Bahrain, Kuwait and Saudi Arabia.

a) Particulars of un-hedged foreign currency exposures of the Indian operations as at the Balance Sheet date:

b) The income and expenditure of the foreign branches and unincorporated joint venture are denominated in currencies other than reporting currency. Accordingly, the Company enjoys natural hedge in respect of its foreign branches and unincorporated joint ventures' assets and liabilities. The Company's un-hedged foreign currency exposure in these branches and un-incorporated joint venture is limited to the net investment (assets - liabilities) in such operations, the particulars of which are as under:

15. a) The Company had executed certain projects in earlier years on which the customers have made deductions/ withheld amounts aggregating to Rs. 49.35 crores (Previous year Rs. 53.91 crores), which are being carried as trade receivables. The Company has commenced arbitration/legal proceedings for recovery of amounts withheld and also for settlement of additional claims filed against these Customers. Pending outcome of arbitration/legal proceedings, amounts withheld/ deductions made are being carried forward as recoverable. The Company has been legally advised that there is no justification in imposition of deductions by these customers and hence the above amounts are considered good of recovery.

b) The Company has accrued claims amounting to Rs. 735.80 crores (Previous year Rs. 735.80 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management's assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it is of the view that the delay in execution of the project is attributable to the customer. Due to the said reasons, certain differences and dispute arose between both the parties and several rounds of discussions were held to explore the possibility of amicable resolution of the dispute mutually. The matter was referred to an Outside Expert Committee (OEC). Based on developments during the year, the Company has come to the view that the settlement process can be best resolved in finality, expeditiously and with legal enforceability only through arbitration and hence has re-commenced the arbitration proceedings, which were kept in abeyance owing to proceedings by the OEC. The management is confident of satisfactory settlement of the dispute and recovery of the said amounts, accordingly no adjustments have been considered necessary in these financial statements.

c) During the previous year, the Company's branch in Thailand had received a termination notice for the Fourth Transmission Pipeline Project (the Project) with PTT Thailand (the Customer) on the grounds of delay in execution of the Project for reasons solely attributable to the Branch and for not honoring the contractual obligations of the Project. The Branch had retracted the notice by stating that the said grounds of termination were without merit and in turn there was a material breach on the part of the Customer in honoring the obligations. The Branch, in the best interest of the Project, had been executing the works but in view of the continuing breach of the contract terms by the Customer and no efforts to ratify the same, the branch had terminated the project and accounted a claim amounting to Rs. 391.09 crores for additional costs incurred due to the above stated reasons.

During the current year, the Customer, in continuation to the differences that arose between both parties and as mentioned above, has exercised its contractual rights to encash the performance bond amounting to Rs. 171.08 crores. The management is taking appropriate steps for the recovery of the said amounts and, based on the expert inputs, is confident of recovery of the amounts exceeding the recognized claim and performance bonds. Accordingly, no adjustments have been considered necessary in these financial statements.

16. a) The Company has an investment in the equity and preference capital amounting to Rs. 950.43 crores (Previous year Rs. 1,182.81 crores) and has loans outstanding to Rs. 313.83 crores (Previous year Rs. 433.58 crores) as at March 31,2015 from Punj Lloyd Pte Limited, a subsidiary in Singapore. The subsidiary has accumulated losses of Rs. 1,194.30 crores as at March 31,2015 (Previous year Rs. 681.62 crores). However, the subsidiary is holding certain strategic investments and considering the intrinsic value, based on the valuation carried out by an independent valuer, of such investments and also considering the long term business plan of the subsidiary, including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account.

b) The Company has an investment in the equity capital amounting to Rs. 17.09 crores (Previous year Rs. 17.09 crores) and has loans outstanding to Rs. 6.94 crores (Previous year Rs. 6.76 crores) from PT Punj Lloyd Indonesia, a step-down subsidiary in Indonesia. The step-down subsidiary has accumulated losses of Rs. 467.85 crores as at March 31, 2015 (Previous year Rs. 440.40 crores). However, considering the long term business plan of the step down subsidiary, including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account

17. The Company has unbilled revenue (work-in-progress) of Rs. 196.61 crores (Previous year Rs. 188.95 crores) on certain projects on account of variation orders arising due to change in scope of work and delays, which the management believes is attributable to the customers. The Management, based on the expert inputs, is of the view that the Company would collect the above stated amount upon completion of the processing of the claims by the clients. Accordingly, the above amounts are considered good of recovery.

18. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/ Accounting Standards for the material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

19. The Company has defaulted in repayment of principal and interest amounting to Rs. 71.28 crores (Previous year Rs. 6.57 crores) and Rs. 21.27 crores (Previous year Rs. 0.14 crores) respectively, as on March 31,2015.

20. Additional information required to be disclosed under paragraph 5 (viii) of general instructions for preparation of Statement of Profit and Loss as per Schedule III to the 2013 Act.

a) Projects materials consumed

These comprise miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, it is not practicable to disclose the quantitative information in respect thereof.

b) Traded goods

Sales of traded goods comprise of large number of items of different nature and specifications and hence it is not practicable to furnish information in respect thereof. The cost of such material amounting to Rs. 931.55 crores (Previous year Rs. 918.09 crores) has been included under Project material consumed and cost of goods sold.

g) Net dividend remitted in foreign exchange is Nil (Previous year Nil) as the Company had not declared any dividend for the years ended March 31,2014 and 2013.

21. Others

a) Details of loan given, investments made and guarantee given covered u/s 186(4) of the 2013 Act has been disclosed under the respective heads of 'Related party transactions' given in note 29.

b) Contract revenues include Rs. 83.89 crores (Previous year Rs. 236.28 crores) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms and conditions of the projects.

c) Micro and small enterprises have been identified by the Company from the available information, which has been relied upon by the auditors. According to such identification, there are no dues to micro and small enterprises that are reportable as per the Micro, Small and Medium Enterprises Development Act, 2006 as at the year end.

d) The Company has international and domestic transaction with 'Associated Enterprises' which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with Associated Enterprises are at arm's length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of.


Mar 31, 2014

1. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Under the plan, every employee who has completed at least five years of service gets a gratuity on separation at 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance companies in the form of qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

As on March 31, 2014, no stock options are in force as the vesting period of the same has expired. The weighted average share price at the date of exercise is not applicable since no option is exercised (Previous year not applicable since no options were exercised).

For the purpose of valuation of the options granted upto year ended March 31, 2014 under ESOP 2005 and ESOP 2006, the compensation cost relating to Employee Stock Options, calculated as per the intrinsic value method, is Rs. Nil.

In March 2005, the Institute of Chartered Accountants of India has issued a Guidance Note on ACI-Accounting for Employees Share Based Payments ACI- applicable to employee share based plan the grant date in respect of which falls on or after April 01, 2005. The said Guidance Note requires the Pro-forma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. As the Company has used the intrinsic value method and the management has obtained fair value of the options at the date of grant from an independent valuer, using the ''Black Scholes Valuation Model'' at ACI-Rs. Nil ACI- per option, there is no impact on the reported profits and earnings per share.

2. Leases

a) Finance lease

The Company has finance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is included in the gross block of plant and equipment, vehicles and buildings respectively under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

b) Operating lease

The Company has entered into commercial leases for office premises. There are no contingent rents in the lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

3. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of tangible asset/capital work-in- progress. Consequently, expenses disclosed under the respective notes are net of amounts capitalized.

4. Segment Information

Primary segment: Business segments -

The Company has identified the business segment as its primary reportable segment. The Company''s operating businesses are organized and managed separately according to the nature of products and services provided. The Company has identified Engineering, procurement and construction services and Trading of goods as its two reportable segments. A description of the types of products and services provided by each reportable segment is as follows:

Engineering, procurement and construction segment include providing of engineering, procurement and construction services in oil, gas and infrastructure sectors.

Trading of goods includes purchase and sale of steel, mainly outside India.

5. Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not

Subsidiary Companies

Spectra Punj Lloyd Limited

Punj Lloyd Industries Limited

Atna Investments Limited

PLN Construction Limited

Punj Lloyd International Limited

Punj Lloyd Kazakhstan, LLP

Punj Lloyd Pte. Limited

PL Engineering Limited

Punj Lloyd Infrastructure Limited

Punj Lloyd Upstream Limited

Punj Lloyd Aviation Limited

Sembawang Infrastructure (India) Private Limited

Indtech Global Systems Limited

Punj Lloyd Systems Limited

PLI Ventures Advisory Services Private Limited

Dayim Punj Lloyd Construction Contracting Company Limited

Step Down Subsidiary Companies

PT Punj Lloyd Indonesia

PT Sempec Indonesia

Punj Lloyd Oil ACY- Gas (Malaysia) Sdn. Bhd.

Punj Lloyd Sdn. Bhd.

Punj Lloyd Engineers and Constructors Pte Limited

Punj Lloyd Engineers and Constructors Zambia Limited (w.e.f. January 14, 2013)

Buffalo Hills Limited

Indtech Trading FZE LLC

PLI Ventures Limited

Punj Lloyd Infrastructure Pte Limited

Punj Lloyd Kenya Limited

Sembawang Group Pte Limited (upto March 31, 2014) ACo-

PL Global Developers Pte Limited (Formerly known as Punj Lloyd Singapore Pte Ltd)

Christos Trading Limited (upto March 31, 2014) ACo-

Christos Aviation Limited ( w.e.f. October 24, 2012)

Graystone Bay Limited ( w.e.f. February 05, 2013)

Punj Lloyd Thailand (Co.) Limited

Punj Lloyd Aviation Pte Limited (w.e.f. January 02, 2014) ACo-

Punj Lloyd Delta Renewables Pte. Limited

Punj Lloyd Delta Renewables Private Limited

Punj Lloyd Delta Renewables Bangladesh Limited

Punj Lloyd Engineering Pte Limited

Simon Carves Engineering Limited

PL Delta Technologies Limited (from September 10, 2012 to March 01, 2013) AEA-

Punj Lloyd Solar Power Limited

Khagaria Purnea Highway Project Limited

Indraprastha Metropolitan Development Limited

PL Surya Urja Limited (w.e.f. September 03, 2013) ACo-

Sembawang Engineers and Constructors Pte. Limited

Sembawang Development Pte Limited

Sembawang Libya General Contracting ACY- Investment Company

Contech Trading Pte Limited

PT Contech Bulan (upto March 31, 2014) ACo-

Construction Technology (B) Sdn Bhd

Sembawang Mining (Kekal) Pte Limited

PT Indo Precast Utama

PT Indo Unggul Wasturaya

Sembawang (Tianjin) Construction Engineering Co. Limited

Sembawang Infrastructure (Mauritius) Limited

Sembawang UAE Pte Limited

SC Architects and Engineers Pte Limited

Sembawang (Malaysia) Sdn Bhd

Jurubina Sembawang (M) Sdn Bhd

Tueri Aquila FZE

Sembawang Bahrain SPC

Sembawang Equity Capital Pte. Limited

Sembawang of Singapore - Global Project Underwriters Pte Limited

Sembawang of Singapore - Global Project Underwriters Limited (w.e.f. August 09, 2012)

Sembawang Australia Pty. Limited (upto February 20, 2014) ACo-

Sembawang Hong Kong Limited

Sembawang (Tianjin) Investment Management Co. Limited

PT Sembawang Indonesia

Sembawang International Limited

Sembawang Tianjin Pte Limited (upto March 12, 2014) ACo-

Sembawang Tianjin Heping Pte Limited (upto March 12, 2014) ACo-

Sembawang Commodities Pte Ltd. (w.e.f. December 04, 2012)

Reliance Contractors Private Limited (w.e.f. August 05, 2013) ACoAKg-

Joint Ventures

Thiruvananthpuram Road Development Company Limited

Kaefer Punj Lloyd Limited ACM-

Ramprastha Punj Lloyd Developers Private Limited

Asia Drilling Services Limited (upto June 30, 2012)

Punj Lloyd Dynamic LLC

AeroEuro Engineering India Private Limited

PLE TCI Engineering Limited (upto March 31, 2014) AEA-

PLE TCI Engenharia Ltda

PT Kekal Adidaya

Sembawang Precast System LLC

Sembawang Caspi Engineers and Constructors LLP

Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited

Punj Lloyd PT Sempec

Total-CDC-DNC Joint Operation

Kumagai-Sembawang-Mitsui Joint Venture

Kumagai-SembCorp Joint Venture

Philipp Holzmann-SembCorp Joint Venture

Kumagai-SembCorp Joint Venture (DTSS)

Semb-Corp Daewoo Joint Venture

Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture

Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture

Total Sempac Joint Operations (upto December 31, 2013) ACo-

Punj Lloyd Group Joint Venture

Public Works Company Tripoli Punj Lloyd Joint Venture

Sembawang - Leader Joint Venture(w.e.f August 03, 2012)

Associates

Olive Group India Private Limited (upto August 12, 2013) ACo-

Hazaribagh Ranchi Expressway Limited (upto January 23, 2014) AEA-

Air Works India (Engineering) Private Limited

Olive Group Capital Limited (upto October 16, 2013) ACo-

Reliance Contractors Private Limited (upto August 05, 2013) ACoAKg-

Ventura Development (Myanmar) Pte Limited (upto March 12, 2014) ACo-

Reco Sin Han Pte Limited

ACo- These entities have been incorporated / formed/ disposed off during the year.

ACoAKg- The Company acquired additional stake in this entity to make it its subsidiary on August 05, 2013. Before this date the said entity was an associate.

ACM- The Company has ceased to have the control over the operations of the joint venture w.e.f. February 15, 2013. AEA- Investment held for sale in the near future.

Key Managerial Personnel

Atul Punj - Chairman

Luv Chhabra - Director (Corporate Affairs)

Pawan Kumar Gupta (upto December 31, 2013) - Whole Time Director

P. N. Krishnan (w.e.f. November 01, 2013) - Director - Finance

J. P. Chalasani (w.e.f. January 31, 2014) - Managing Director ACY- Group CEO

Relatives of Key Managerial Personnel

S.N.P. Punj - Father of Chairman

Arti Singh - Sister of Chairman

Indu Rani Punj - Mother of Chairman

Navina Punj - Wife of Chairman

Uday Punj - Brother of Chairman

Manglam Punj - Wife of Brother of Chairman

Jai Punj - Son of Brother of Chairman

Dev Punj - Son of Brother of Chairman

Jyoti Punj - Sister of Chairman

Enterprises over which Key Managerial Personnel or their relatives are exercising significant influence

Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of Chairman

Spectra Punj Finance Private Limited - Shareholding of Chairman

Cawdor Enterprises Limited - Shareholding of Chairman

Uday Punj (HUF) - HUF of Brother of Chairman

K.R. Securities Private Limited - Shareholding of Brother of Chairman

Atul Punj (HUF) - HUF of Chairman

PTA Engineering and Manpower Services Private Limited - Shareholding of Chairman

PLE Hydraulics Private Limited - Shareholding of Chairman

Petro IT Limited - Shareholding of Brother of Chairman

Artcon Private Limited - Shareholding of Chairman

Mangalam Equipment Private Limited - Shareholding of Chairman

Intramural Design Limited - Shareholding of Sister of Chairman

6. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) is Rs 18.88 crores (Previous year Rs. 9.95 crores).

(b) Estimated future investments in joint venture and other companies in terms of respective shareholders agreements is Rs. Nil (Previous year Rs. 24.99 crores).

(c) Comfort letter given for utilization of export benefit obligations of a subsidiary company is Rs. Nil (Previous year Rs. 2.99 crores).

(d) For commitments relating to lease arrangements, please refer note 26.

7. Contingent liabilities

As at March As at March 31,2014 31,2013

a) Liquidated damages deducted by customers not accepted by the Company and pending final settlement. ACM- 170.05 171.75

b) Corporate guarantees given on behalf of subsidiaries, joint ventures and associates 3,020.20 4,389.74

c) Sales tax demands: ACo-

on disallowance of deduction on labour and services of the works contracts pending with sales tax authorities and High Court 22.35 22.82

for non submission of statutory forms - 6.60

for purchases against sales tax forms not accepted by department 8.61 8.61

against the central sales tax demand on sales in transit 0.07 0.07

for non-admissible of deduction of supply turnover 2.77 2.77

d) Entry tax demands against entry of goods into the local area not accepted by department. ACo- 4.08 4.49

ACM- excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, financial position or liquidity of the Company.

ACo-Based on favourable decisions in similar cases/legal opinions taken by the Company/consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision there against is considered necessary.

e) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income tax Act, 1961. During the search and seizure operation, statements of Company''s officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The Company believes that the above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has filed fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department ( ACI-the Department ACI-). The Department has completed the assessments for the assessment years 2004-05 to 2010-11 and has issue demands aggregating to Rs. 229.13 crores, by making some frivolous additions to the total income of the Company, which has been adjusted against the income tax refunds of the said/ subsequent years. The Company has filed the appeals against these additions on January 27, 2012 and June 12, 2013 and based on the expert opinion, the Company is hopeful that it will get relief in appeal.

f) On January 20, 2014, the Company was subjected to an investigation by Directorate General of Central Excise Intelligence (DGCEI) on various service tax compliance matters. The Company is furnishing the requisite information and the same is currently being scrutinized/ inquired by DGCEI as per the provisions of the Finance Act, 1994 (as amended). The amount of demand, if any, can be ascertained only upon completion of the said inquiry.

g) The Company, directly or indirectly through its subsidiaries, is severally or jointly involved in certain legal cases with its customers / vendors. The management believes that due to the nature of these disputes and in view of significant uncertainty over the ultimate outcome of the said cases, the amount of exposure, if any, is not currently determinable.

h) The Company has undertaken to provide continued financial support to its below mentioned subsidiaries and step-down subsidiaries:

i) Punj Lloyd Pte Limited

ii) PT Punj Lloyd Indonesia

iii) PT Sempec Indonesia

iv) Punj Lloyd Aviation Pte Limited

v) PL Delta Renewables Pte Limited

vi) PL Global Developers Pte Limited (formerly known as Punj Lloyd Singapore Pte Limited)

vii) Punj Lloyd Infrastructure Pte Limited

viii) Punj Lloyd Engineers and Constructors Pte Limited

ix) PLI Ventures Limited

x) PLI Ventures Advisory Services Private Limited

8. Derivative instruments and un-hedged foreign currency exposure

The Company, in addition to its Indian operations, operates outside India through its branches and an unincorporated joint venture established in United Arab Emirates, Oman, Qatar, Libya, Thailand and Bahrain.

9. The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 53.91 crores (Previous year Rs. 58.02 crores) on account of deductions made/amount withheld by some customers, which are being carried as trade receivables. The Company has also fi led certain claims against these customers. The Company has gone into arbitration/legal proceedings against these customers for recovery of amounts withheld and for claims lodged by the Company . Pending outcome of arbitration/legal proceedings, amounts withheld for deductions made are being carried forward as recoverable. The Company has been legally advised that there is no justification in imposition of deductions by these customers and hence the above amounts are considered good of recovery.

10. The Company has an investment in the equity and preference capital amounting to Rs. 1,182.81 crores (Previous year Rs. 299.71 crores) and has loans and advance outstanding to Rs. 433.58 crores (Previous year Rs. 1,538.71 crores) as at March 31, 2014 from Punj Lloyd Pte Limited, a subsidiary in Singapore. The subsidiary has accumulated losses of Rs. 681.62 crores (Previous year Rs. 413.27 crores) as at March 31, 2014. However, the subsidiary is holding certain strategic investments. Considering the intrinsic value of the investments held by the subsidiary, based on the valuation carried out by an independent valuer, and also considering the long term business plan of the subsidiary including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account.

11. The Company has unbilled revenue (work-in-progress) of Rs. 188.95 crores on certain projects on account of variation arising due to change in scope of work and delays, which the management believes is attributable to the customers. The Management, based on the expert inputs, is of the view that the Company would collect the above stated amount upon completion of the processing of the claims by the clients. Accordingly, the above amounts are considered good of recovery.

12. Sales include Rs. 236.28 crores (Previous year Rs. 275.53 crores) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms and conditions of the projects.

13. The Company has accrued claims amounting to Rs. 733.98 crores (Previous year Rs. 250.33 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management''s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it is of the view that the delay in execution of the project is attributable to the customer. Due to the said reasons certain differences and dispute arose between both the parties and several rounds of discussions were held to explore the possibility of amicable resolution of the dispute mutually. In pursuant to it, the dispute has now been referred to a new Outside Expert Committee. The management, based on the developments so far in the said matter, is confident of a satisfactory settlement of the dispute and recovery of the said amounts exceeding the recognized claim.

14. During the year ended March 31, 2014, the Company''s branch in Thailand has received a termination notice for the Fourth Transmission Pipeline Project (the Project) with PTT Thailand (the Customer) on the grounds of delay in execution of the Project for reasons solely attributable to the Branch and for not honouring the contractual obligations of the Project. The Branch has retracted the notice by stating that the said grounds of termination are without merit and in turn there is a material breach on the part of the Customer in honouring the obligations. The Branch, in the best interest of the Project, had been executing the works but in view of the continuing breach of the contract terms by the Customer and no efforts to ratify the same, the branch has terminated the project and accounted a claim amounting to Rs. 389.86 crores for additional costs incurred due to the above stated reasons through the Civil Court of Thailand on February 25, 2014. The management, based on the expert inputs, is confident of recovery of the amounts exceeding the recognized claim.

15. The Company has an investment in the equity capital amounting to Rs. 17.09 crores (Previous year Rs. 17.09 crores) and has loans and advances outstanding to Rs. 6.76 crores (Previous year Rs. 5.54 crores) from PT Punj Lloyd Indonesia, a step-down subsidiary in Indonesia. The step-down subsidiary has accumulated losses of Rs. 440.40 crores (Previous year Rs. 235.96 crores) as at March 31, 2014. However, considering the long term business plan of the step down subsidiary, including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account.

16. Asset of Rs. 7.83 crores, (Previous year Rs. 8.23 crores) recognized by the Company as ''Minimum alternate tax credit entitlement'' under ''Loans and advances'', in respect of Minimum alternate tax payment for current and earlier years, represents that portion of Minimum alternate tax liability which can be recovered and set off in subsequent periods based on the provisions of Section 115JAA of the Income tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize Minimum alternate tax credit assets.

17. The Company has defaulted in repayment of principal and interest amounting to Rs. 6.57 crores and Rs. 0.14 crores respectively, as on March 31, 2014. The said amounts have been paid subsequent to the balance sheet date.

18. Projects materials consumed

These comprise miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, it is not practicable to disclose the quantitative information in respect thereof.

19. Traded goods

Sales of traded goods comprise of large number of items of different nature and specifications and hence it is not practicable to furnish information in respect thereof. The cost of such material amounting to Rs. 918.09 crores (Previous year Rs. 273.23 crores) has been included under Project material consumed and cost of goods sold.

20. Amount in the financial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 million.

21. Previous year figures have been regrouped/reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2013

1. Corporate information

Punj Lloyd Limited (the Company) is a public limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. the Company is engaged in the business of engineering, procurement and construction in the oil and gas sector and infrastructure sector. the Company caters to both domestic and international markets.

2. Basis of preparation

These financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) and comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 (the "Act"). The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of certain fixed assets which are being carried at their revalued amounts and derivative financial instruments which have been measured at fair value. the accounting policies adopted in the preparation of financial statements have been consistently applied by the Company and are consistent with those of previous year.

1. Gross block of Plant and equipment includes Rs. 6.27 crores and accumulated depreciation includes Rs. 2.66 crores (Previous year Rs. 24.02 crores and Rs. 20.14 crores respectively) on account of revaluation of assets carried out in earlier years. The said revaluation was carried out during the year ended March 31, 1998 by an external agency using "price indices released by the Economic Advisor''s Office, Ministry of Industry/verbal Quotation/Comparison/estimation or any other method considered prudent in specific cases". Consequent to the said revaluation, there is an additional charge of depreciation of Rs. 0.25 crores (Previous year Rs. 0.25 crores). In accordance with the option given in the guidance note on accounting for the depreciation in companies, the Company recoups such additional deprecation out of asset revaluation reserve. There is additional profit of Rs. 0.02 crores (Previous year Rs. 0.10 crores) on account of sale of assets, an equivalent amount has been withdrawn from revaluation reserve and credited to Statement of Profit and Loss.

2. Gross block of Land includes Rs. 2.10 crores (Previous year Rs. 2.10 crores) on account of revaluation of assets carried out in earlier years. the said revaluation was carried out during the year ended March 31, 2002 by an external agency using "price indices released by the Economic Advisor''s Office, Ministry of Industry/Verbal Quotation/Comparison/estimation or any other method considered prudent in specific cases".

3. In compliance with the notification dated March 31, 2009 (as amended) issued by Ministry of Corporate Affairs, the Company has exercised the option available under paragraph 46 to the Accounting Standards 11- the effect of changes in foreign exchange rates. Accordingly, during the current year, the foreign exchange loss of Rs. 8.59 crores (Previous year Rs. 10.67 crores) has been added to gross block of Plant and equipment.

4. Gross block of Land includes leasehold land Rs. 6.41 crores (Previous year Rs.6.41 crores).

5. Gross block of Vehicles includes vehicles of cost Rs. 6.71 crores (Previous year Rs. 6.25 crores) taken on finance lease. Accumulated depreciation there on is Rs. 2.10 crores (Previous year Rs. 0.71 crores).

6. Gross block of Plant and equipment includes equipments of cost Rs. 10.02 crores (Previous year Rs. 6.25 crores) taken on finance lease. Accumulated depreciation thereon is Rs. 2.25 crores (Previous year Rs. 0.31 crores).

7. Gross block of Buildings includes building of cost Rs. 98.76 crores (Previous year Nil) taken on finance lease. Accumulated depreciation thereon is Rs. 0.79 crores (Previous year Nil).

8. During the year, the Company has revised estimated useful life of cranes (included under Plant and equipments) based on technical estimates made by the management. Accordingly, additional depreciation of Rs. 2.25 crores has been accounted for in the financial statements. Had the Company continued to use earlier basis of providing depreciation, the change to the statement of profit and loss for the current year would have been lower by Rs. 2.25 crores and net block correspondingly would have been higher by same amount.

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Under the plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance companies in the form of qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

The weighted average share price at the date of exercise is not applicable since no option is exercised (Previous year not applicable since no options were exercised).

For the purpose of valuation of the options granted upto year ended March 31, 2013 under ESOP 2005 and ESOP 2006, the compensation cost relating to Employee Stock Options, calculated as per the intrinsic value method, is Rs. Nil.

In March 2005, the Institute of Chartered Accountants of India has issued a Guidance Note on "Accounting for Employees Share Based Payments" applicable to employee share based plan the grant date in respect of which falls on or after April 1, 2005. The said Guidance Note requires the Pro-forma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. Since the enterprise used the intrinsic value method and the management has obtained fair value of the options at the date of grant from a valuer, using the ''Black Scholes Valuation Model'' at "Rs. Nil" per option, there is no impact on the reported profits and earnings per share.

4. Leases

a) Finance Lease: Company as lessee

The Company has finance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is included in the gross block of plant and equipment, vehicles and buildings respectively under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

b) Operating lease: Company as lessee

The Company had entered into commercial leases on certain project equipment and office premises. There were no contingent rents in the lease agreements. The lease term was for 1-3 years and was renewable at the mutual agreement of both the parties. There was no escalation clause in the lease agreements. There were no restrictions imposed by lease arrangements.

5. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of tangible asset/capital work-in- progress. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

6. Segment Information Business Segments:

The Company''s business activity falls within a single business segment i.e. Engineering and Construction. Therefore, segment reporting in terms of Accounting Standard 17 on Segmental Reporting is not applicable.

Geographical Segments*:

Although the Company''s major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas of the world, in India, its home country, and the other countries.

7. Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not

Subsidiary Companies

Spectra Punj Lloyd Limited

Punj Lloyd International Limited

Punj Lloyd Kazakhstan LLP

Punj Lloyd Industries Limited

Punj Lloyd Aviation Limited

Punj Lloyd Infrastructure Limited

Atna Investments Limited

Punj Lloyd Upstream Limited

PT Punj Lloyd Indonesia (upto December 31, 2012)

PLN Construction Limited

Punj Lloyd Pte Limited

PL Engineering Limited

Sembawang Infrastructure (India) Private Limited

Indtech Global Systems Limited

Punj Lloyd Systems Limited

PLI Ventures Advisory Services Private Limited

Dayim Punj Lloyd Construction Contracting Company Limited

Step Down Subsidiary Companies

Sembawang Engineers and Constructors Pte. Limited

PT Punj Lloyd Indonesia (w.e.f. January 01, 2013)

PT Sempec Indonesia

Sembawang Development Pte Limited

PT Indo Precast Utama

PT Indo Unggul Wasturaya

Sembawang (Tianjin) Construction Engineering Co. Limited

Contech Trading Pte Limited

Pt Contech Bulan

Construction Technology (B) Sdn Bhd

Sembawang Infrastructure (Mauritius) Limited

Sembawang UAE Pte Limited

SC Architects and Engineers Pte Limited

Sembawang (Malaysia) Sdn Bhd

Jurubina Sembawang (M) Sdn Bhd

Simon Carves Limited- under liquidation (upto July 07, 2011)

Tueri Aquila FZE (formerly Sembawang Engineers and Constructors Middle East FZE)

Simon Carves Singapore Pte Limited (upto March 31, 2012)

Sembawang Bahrain SPC

Punj Lloyd Oil and Gas (Malaysia) Sdn Bhd

Punj Lloyd Engineers & Constructors Pte Limited

Punj Lloyd Engineers & Constructors Zambia Limited (w.e.f. January 14, 2013) *

Punj Lloyd Delta Renewables Private Limited Punj Lloyd Delta Renewables (Bangladesh) Limited Punj Lloyd Delta Renewables Pte Limited Buffalo Hills Limited

PLE TCI Engineering Limited (upto March 18, 2012)

Sembawang Libya General Contracting and Investment Company

Sembawang Australia Pty Limited

Sembawang Hong Kong Limited

Sembawang of Singapore - Global Project Underwriters Pte Limited (formerly known as Sembawang Securities Pte Limited)

Sembawang of Singapore - Global Project Underwriters Limited (w.e.f. August 09, 2012) *

Sembawang Equity Capital Pte Limited

Sembawang Commodities Pte Limited (w.e.f. December 04, 2012) *

Punj Lloyd Solar Power Limited

Khagaria Purnea Highway Project Limited

Indraprastha Metropolitan Development Limited (w.e.f. February 25, 2012)

Indtech Trading FZ LLC

Sembawang (Tianjin) Investment Management Co. Limited

Sembawang Mining (Kekal) Pte Limited

Sembawang Tianjin Pte Limited

PLI Ventures Limited

PT Sembawang Indonesia

Punj Lloyd Kenya Limited

Punj Lloyd Infrastructure Pte Limited

Punj Lloyd Engineering Pte Limited

PL Delta Technologies Limited (from September 10, 2012 to March 01, 2013)*

Sembawang International Limited

Punj Lloyd Sdn Bhd

Punj Lloyd Thailand Co. Limited (w.e.f. June 06, 2011)

Punj Lloyd Iraq Pte Limited (upto September 25, 2012)*

Sembawang Group Pte Limited (w.e.f. May 10, 2011)

Simon Carves Engineering Limited (w.e.f. April 08, 2011)

Punj Lloyd Singapore Pte Limited (w.e.f. February 15, 2012)

Sembawang Tianjin Heping Pte Limited (w.e.f. July 07, 2011)

Christos Trading Limited (w.e.f. February 23, 2012)

Christos Aviation Limited (w.e.f. October 24, 2012) **

Graystone Bay Limited (w.e.f. February 05, 2013) **

Joint Ventures

Thiruvananthpuram Road Development Company Limited Asia Drilling Services Limited (upto June 30, 2012)*

Kaefer Punj Lloyd Limited (upto February 15, 2013)#

Swissport Punj Lloyd India Private Limited (under liquidation) (upto September 30, 2011)

Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited Ramprastha Punj Lloyd Developers Private Limited Total-CDC-DNC Joint Operation Kumagai-Sembawang-Mitsui Joint Venture Kumagai-SembCorp Joint Venture (DTSS)

Kumagai-SembCorp Joint Venture Philipp Holzmann-SembCorp Joint Venture Semb-Corp Daewoo Joint Venture

Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture

Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture

Punj Lloyd PT Sempec Indonesia

PT Kekal Adidaya

Punj Lloyd Group Joint Venture

Public Works Company Tripoli Punj Lloyd Joint Venture

Sembawang Precast System LLC

Total Sempac joint Operation

Aero Euro Engineering India Private Limited (w.e.f. May 13, 2011)

Punj Lloyd Dynamic LLC (w.e.f. March 19, 2012)

Sembawang Caspi Engineering and Construction LLP PLE TCI Engineering Limited (w.e.f. March 19, 2012)

Sembawang-Leader Joint Venture (w.e.f. August 03, 2012)*

PLE TCI Engenharia Ltda (w.e.f. March 09, 2012)

Associates

Reliance Contractors Private Limited

Ventura Development (Myanmar) Pte Limited

Reco Sin Han Pte Limited

Air Works India (Engineering) Private Limited

Olive Group Capital Limited

Olive Group India Private Limited

Hazaribagh Ranchi Expressway Limited

* These entities have been incorporated / formed/ disposed off during the year.

** These entities have been acquired during the year.

# The Company has ceased to have the control over the operations of the joint venture w.e.f. February 15, 2013. Key Managerial Personnel

Atul Punj - Chairman

Luv Chhabra - Director (Corporate Affairs)

Pawan Kumar Gupta - Whole Time Director

Relatives of Key Managerial Personnel

S.N.P. Punj - Father of Chairman

Arti Singh - Sister of Chairman

Indu Rani Punj - Mother of Chairman

Navina Punj - Wife of Chairman

Uday Punj - Brother of Chairman

Manglam Punj - Wife of Brother of Chairman

Shiv Punj - Son of Chairman

Jai Punj - Son of Brother of Chairman

Dev Punj - Son of Brother of Chairman

Jyoti Punj - Sister of Chairman

Enterprises over which Key Managerial Personnel or their relatives are exercising significant influence

Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of Chairman Collectible @ The Inside Story - Owned by Sister of Chairman

Spectra Punj Finance Private Limited - Shareholding of Chairman

Cawdor Enterprises Limited - Shareholding of Chairman

Uday Punj (HUF) - HUF of Brother of Chairman

K.R. Securities Private Limited - Shareholding of Brother of Chairman

Atul Punj (HUF) - HUF of Chairman

Vishwadeva Builders and Promoters Private Limited - Shareholding of Sister of Chairman

PTA Engineering and Manpower Services Private Limited - Shareholding of Chairman

PLE Hydraulics Private Limited - Shareholding of Chairman

Petro IT Limited - Shareholding of Brother of Chairman

Artcon Private Limited - Shareholding of Chairman

Mangalam Equipment Private Limited - Shareholding of Chairman

Intramural Design Limited - Shareholding of Sister of Chairman

8. Contingent liabilities not provided for :

As at March 31, 2013 As at March 31, 2012

a) Liquidated damages deducted by customers not accepted by the Company and pending final settlement. * 171.75 171.75

b) Corporate guarantees given on behalf of subsidiaries, joint ventures and associates 4,389.74 4,498.97

* excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have a material adverse effect on the results of operations, financial position or liquidity of the Company.

c) (i) Sales tax demands of Rs. 22.82 crores (Previous year Rs. 68.76 crores) on disallowance of deduction on labour and services of the works contracts pending with Sales Tax Authorities and High Court.*

(ii) Sales tax demands of Rs. 6.60 crores (Previous year Rs. 6.70 crores) for non submission of statutory forms.*

(iii) Sales tax demands of Rs. 8.61 crores (Previous year Rs. 29.66 crores) for purchases against sales tax forms not accepted by department.*

(iv) Entry tax demands of Rs. 4.49 crores (Previous year Rs. 4.26 crores) against entry of goods into the local area not accepted by department.*

(v) Sales tax demands of Rs. 0.07 crores (Previous year Rs 0.07 crores) against the central sales tax demand on sales in transit.*

(vi) Sales tax demands of Rs. 2.77 crores (Previous year Rs. 2.77 crores) for non-admissible of deduction of supply turnover.*

* Based on favorable decisions in similar cases/legal opinions taken by the Company/consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision there against is considered necessary.

d) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income Tax Act, 1961. During the search and seizure operation, statements of Company''s officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has filed fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department ("the Department"). Till the previous year ended March 31, 2012, the Department has completed the assessments for the assessment years 2004-05 to 2006-07 and has raised demands aggregating to Rs. 146.57 crores by making some frivolous additions to the total income of the Company which has been adjusted against the income tax refunds of the subsequent years. The Company had filed the appeals against these additions on January 27, 2012 and based on the expert opinion, the Company is hopeful that it will get relief in appeal. During the current year, the assessment proceedings for the assessment years 2007-08 to 2010-11 have been completed and the draft assessment orders have been issued by the Department. The amount of demand, if any, can be ascertained only upon issue of the final orders by the Department.

9. Derivative Instruments and Un-hedged Foreign Currency Exposure

The Company, along with its Indian Operations, is operating outside India through its branches and an unincorporated joint venture established in Abu Dhabi, Oman, Qatar, Libya, Thailand, Dubai, Bahrain, Columbia and Mexico.

10. The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 58.02 crores (Previous year Rs. 308.57 crores) on account of deductions made/amount withheld by some customers, which are being carried as trade receivables. The Company has also filed certain claims against these customers. The Company has gone into arbitration/legal proceedings against these customers for recovery of amounts withheld and for claims lodged by the Company. Pending outcome of arbitration/legal proceedings, amounts withheld for deductions made/old work in progress are being carried forward as recoverable. The Company has been legally advised that there is no justification in imposition of deductions by these customers and hence the above amounts are considered good of recovery.

11. The Company has an investment in the equity and preference capital amounting to Rs. 299.71 crores (Previous year Rs. 299.71 crores) in its subsidiary at Singapore and has loans and advance outstanding to Rs. 1,538.71 crores (Previous year Rs. 1,466.31 crores) as at March 31, 2013 from the said subsidiary. The subsidiary has accumulated losses of Rs. 413.27 crores (Previous year Rs. 625.75 crores) as at March 31, 2013. However, the subsidiary is holding certain strategic investments. Considering the intrinsic value of the investments held by the subsidiary, based on the valuation carried out by an independent valuer, and also considering the long term business plan of the subsidiary including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account.

12. The Company has unbilled revenue (work-in-progress) of Rs. 532.86 crores on certain projects on account of variation arising due to change in scope of work and delays which is attributable to the customers. The Management, based on the expert inputs, is of the view that the Company would collect the above stated amount upon completion of the processing of the claims by the clients. Accordingly, the above amounts are considered good of recovery.

13. Sales include Rs. 275.53 crores (Previous year Rs. 198.52 crores) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms & conditions of the projects.

14. The Company had during an earlier year accounted for a claim of Rs. 243.03 crores (Previous year Rs. 243.03 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management''s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the project and had also not accounted for liquidated damages amounting to Rs. 7.30 crores (Previous year Rs. 7.30 crores) deducted by the customer since it is of the view that the delay in execution of the project is attributable to the customer. The Company had initiated arbitration proceedings against the customer during an earlier year, which has, on mutual agreement with the client, been adjourned. The dispute has been referred to the Outside Expert Committee which is likely to resolve the same in an expeditious manner. The management, based on the expert inputs, is confident of recovery of amounts exceeding the recognized claim and waiver of liquidated damages.

15. Asset of Rs. 8.23 crores, (Previous year Rs. 7.29 crores) recognized by the Company as ''Minimum alternate tax credit entitlement'' under ''Loans and advances'', in respect of minimum alternate tax payment for current and earlier years, represents that portion of minimum alternate tax liability which can be recovered and set off in subsequent periods based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize Minimum alternate tax credit assets.

16. Projects materials consumed

These comprise miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, it is not practicable to disclose the quantitative information in respect thereof.

17. Amount in the financial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 million.

18. Previous year figures

Previous year figures have been regrouped/reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2012

1. Corporate Information

Punj Lloyd Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is primarily engaged in the business of engineering, procurement & construction in the oil & gas sector and infrastructure sector. The Company caters to both domestic and International markets.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of certain fixed assets for which revaluation had been carried out.

The accounting policies adopted in the preparation of financial statements have been consistently applied by the Company and are consistent with those of previous year, except for the change in accounting policy explained below.

1. Gross block of Tangible Assets includes Rs. 24.02 crores and accumulated depreciation includes Rs. 20.14 crores (Previous year Rs. 24.82 crores and Rs. 20.59 crores respectively) on account of revaluation of assets carried out in earlier years. The said revaluation was carried out during the year ended March 31, 1998 by an external agency using "price indices released by the Economic Advisor's Office, Ministry of Industry/verbal Quotation/Comparison/ estimation or any other method considered prudent in specific cases". Consequent to the said revaluation, there is an additional charge of depreciation of Rs. 0.25 crore (Previous year Rs. 0.27 crore) and equivalent amount has been withdrawn from revaluation reserve and credited to Statement of Profit and Loss and there is additional profit of Rs. 0.10 crore (Previous year Rs. 0.22 crore) on account of sale of assets, an equivalent amount has been withdrawn from revaluation reserve and credited to Statement of Profit and Loss.

2. Gross block of land includes Rs. 2.10 crores (Previous year Rs. 2.10 crores) on account of revaluation of assets carried out in earlier years. The said revaluation was carried out during the year ended March 31, 2002 by an external agency using "price indices released by the Economic Advisor's Office, Ministry of Industry/verbal Quotation/Comparison/estimation or any other method considered prudent in specific cases".

3. In compliance with the notification dated March 31, 2009 (as amended) issued by Ministry of Corporate Affairs, the Company has exercised the option available under paragraph 46 to the Accounting Standards 11- The effect of changes in foreign exchange rates. Accordingly, the foreign exchange loss of Rs. 10.67 crores (Previous year Rs. 0.08 crore) has been added to Gross block of tangible assets.

4. Gross block of Land includes leasehold land Rs. 6.41 crores (Previous year Rs.6.41 crores).

5. Furniture, Fixtures and Office Equipment includes leasehold equipments of the cost of Rs. Nil (Previous year Rs. Nil) given on lease, accumulated depreciation thereon is Rs. Nil (Previous year Rs. Nil). Depreciation thereon for the year included Rs. Nil (Previous year Rs. 0.79 crore).

6. Vehicles of the cost of Rs. 6.25 crores (Previous year Rs. Nil) are acquired on hire purchase basis. Accumulated depreciation there on is Rs. 0.71 crore (Previous year Rs. Nil).

7. During the year, the Company has revised the estimated useful life of air conditioners (included under office equipments) based on technical estimates made by the management. Accordingly, additional depreciation of Rs. 0.64 crore has been accounted for in the financial statements. Had the Company continued to use earlier basis of providing depreciation, the charge to the statement of profit and loss for the current year would have been lower by Rs. 0.64 crore and net block of fixed assets would correspondingly have been higher by same amount.

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Under the plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance companies in the form of qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan.

For the purpose of valuation of the options granted upto year ended March 31, 2012 under ESOP 2005 and ESOP 2006, the compensation cost relating to Employee Stock Options, calculated as per the intrinsic value method, is Rs. Nil.

In March 2005, the Institute of Chartered Accountants of India has issued a Guidance Note on "Accounting for Employees Share Based Payments" applicable to employee share based plan the grant date in respect of which falls on or after April 1, 2005. The said Guidance Note requires the Pro-forma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. Since the enterprise used the intrinsic value

method and the management has obtained fair value of the options at the date of grant from a valuer, using the 'Black Scholes Valuation Model' at "Rs. Nil" per option, there is no impact on the reported profits and earnings per share.

4. Leases

a) Finance Lease: Company as lessee

The Company has finance leases and hire purchase contracts for certain Project Equipment, the cost of which is included in the gross block of Plant & Machinery under Tangible Assets. The lease term is for 1-3 years. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

5. Interest in Joint Ventures:

The Company's interest and share in joint ventures in the jointly controlled entities / operations are as follows:

Notes:

1) Figures in bracket relate to previous year

2) * The Company's share of Assets, Liabilities, Revenue and Expenditure has been included on the basis of unaudited financial statements received from the joint ventures.

3) ** Capital Commitments- Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances).

6. Segment Information Business Segments:

The Company's business activity falls within a single business segment i.e. Engineering and Construction. Therefore, segment reporting in terms of Accounting Standard 17 on Segmental Reporting is not applicable.

Geographical Segments*:

Although the Company's major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas of the world, in India, its home country, and the other countries.

7. The Micro and Small Enterprises have been identified by the Company from the available information, which has been relied upon by the auditors.

According to such identification, the disclosures in respect to Micro and Small Enterprise as per Micro, Small and Medium Enterprise Development Act, 2006 is as follows:

8. The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 308.57 crores (Previous year Rs. 72.51 crores) on account of deductions made/ amount withheld by some customers and pending billing against certain old work in progress, which are being carried as trade receivables/ work in progress. The Company has also filed certain claims against these customers. The Company has gone into arbitration/ legal proceedings against these customers for recovery of amounts withheld and for claims lodged by the Company. Pending outcome of arbitration/ legal proceedings, amounts withheld for deductions made/ old work in progress are being carried forward as recoverable. The Company has been legally advised that there is no justification in imposition of deductions by these customers and hence the above amounts are considered good of recovery.

9. Other current assets include Rs. 0.42 crore (Previous year Rs. 0.42 crore) recoverable pursuant to agreements for sale of 128,400 shares (Previous year 128,400 shares) of Panasonic Energy India Company Limited entered into on March 27, 1992, which are subject matter of a dispute in the Honourable High Court at Bombay, wherein the Company has been restrained from transferring these shares till the final disposal of the suit. These shares remain in the possession of the Company and the market value thereof at close of the year is Rs. 0.63 crore (Previous year Rs. 0.85 crore).

10. During an earlier years, the Company had entered into agreements to sell its investments in the shares of certain companies of the cost of Rs. 7.64 crores (Previous year Rs.7.64 crore) and had received advances representing consideration for the future sale of shares (as defined in the above agreements) in these companies, including all accretions thereto till the date of sale. Through the above agreements to sell, the Company had agreed to give all the powers and rights in these shares to purchasers. In terms of the above arrangement, the Company in those years have accounted for Rs. 5.92 crores, being the amount received in excess of book value of shares (for all the companies) as income on transfer of the powers and rights in the underlying shares to purchasers and the balance consideration of Rs. 7.64 crores (Previous year Rs. 7.64 crores) against investment in above shares appearing in the books is shown as deposits under Current Liabilities to be adjusted against the transfer of shares in the above companies on the closing date as defined in the above agreement.

11. The Company has an investment in the equity and preference capital amounting to Rs. 299.71 crores (Previous year Rs. 299.71 crores) in its subsidiary at Singapore and has loans and advance outstanding to Rs. 1,466.31 crores (Previous year Rs. 1,329.04 crores) as at March 31, 2012 from the said subsidiary. The subsidiary has accumulated losses of Rs. 631.55 crores (Previous year Rs. 808.11 crores) as at March 31, 2012. However, the subsidiary is holding certain strategic investments. Considering the intrinsic value of the investments held by the subsidiary, based on the valuation carried out by an independent valuer, and also considering the long term business plan of the subsidiary including the forecasts of profitability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the financial statements at this stage on the above account.

12. The Company's branch at Libya has tangible assets (net) and current assets aggregating to Rs. 593.05 crores as at March 31, 2012 in relation to certain projects being executed in that country. The overall civil and political disturbances and unrest in Libya is getting stabilised after a period of civil and political disturbance and unrest. The management, after considering the present environment and economic conditions in Libya, is confident of realisation of above amounts and accordingly, no adjustments have been considered necessary in these financial statements. The Company has also filed the details of the outstanding assets with the Ministry of External Affairs, Government of India.

13. Foreign Currency Convertible Bonds

a. During an earlier year, the Company had issued at par, 5 years and 1 day Zero Coupon US $ denominated Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 125,000 thousand (Rs. 554.38 crores as on the date of issue) comprising 1,250 bonds of US $ 100,000 each to invest in capital goods, repayment of international debts, possible acquisitions outside India, investment in BOOT projects, any other use as may be permitted under applicable law or by the regulatory bodies from time to time. The bond holders had an option of converting these bonds into equity shares. For the purpose, the number of equity shares to be issued shall be determined taking the initial conversion price of Rs. 1,362.94 per equity share (Face value Rs. 10) and a fixed rate of exchange conversion of Rs. 44.35 = US $ 1.00, at any time on or after July 1, 2006 and prior to close of business on April 07, 2011, unless redeemed, repurchased and cancelled or converted. This rate is used to determine dilutive Equity Shares against outstanding bonds.

b. Subsequent to the issue of these FCCBs, the Company, during the year ended March 31, 2007, sub-divided the face value of equity shares from Rs. 10 to Rs. 2.

c. During the current year, Zero Coupon Convertible Bonds have been redeemed at a redemption premium equal to 125.86% of the outstanding principal amount on the maturity date. The Company up to the date of redemption, adjusted the amount of redemption premium of Rs. 57.66 crores (Previous year Rs. 59.27 crores) by the amount appearing in securities premium account in pursuance of Section 78 of the Companies Act, 1956 since the bonds were considered as monetary liability.

14. On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income Tax Act, 1961. During the search and seizure operation, statements of Company's officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has filed fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department. Assessments for the assessment years 2004-05 to 2006- 07 have been completed by the Income Tax Department by making some frivolous additions to the total income of the Company. The Income Tax Department has raised demands aggregating to Rs.146.57 crores, out of which Rs. 101.21 crores have been adjusted against the income tax refunds of the subsequent years. The Company had filed the appeals against these additions on January 27, 2012 and based on the expert opinion, The Company is hopeful that it will get relief in appeal. Assessment proceedings for the assessment years 2007-08 to 2010-11 are going on.

15. Sales include Rs. 198.52 crores (Previous year Rs. 71.58 crores) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms & conditions of the projects.

16. The Company had during an earlier years accounted for a claim of Rs. 243.03 crores (Previous year Rs. 243.03 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management's assessment of cost over-run arising due to design changes and consequent changes in the scope of work on a project and had also not accounted for liquidated damages amounting to Rs. 7.30 crores (Previous year Rs. 65.49 crores) deducted by the customer since it is of the view that the delay in execution of the project is attributable to the customer. The Company had initiated arbitration proceedings against the customer during the previous year, which has, on mutual agreement with the client, been adjourned. The dispute is being referred to the Outside Expert Committee which is likely to resolve the dispute in an expeditious manner. The management, based on the expert inputs, is confident of recovery of amounts exceeding the recognized claim and waiver of liquidated damages.

17. The Company had during the previous year accounted for claims of Rs. 89.73 crores (Previous year Rs. 89.73 crores) on two contracts, based upon management's assessment of cost over-run arising due to delay in supply of free issue material by the customer, changes in scope of work and/or price escalation of materials used in the execution of the projects. Further, the Company has also withheld Rs. 39.43 crores (Previous year Rs. 50.01 crores) of its vendors, involved in above projects, which would be released after recovery/settlement of aforesaid claims. The management, based on its assessment, is confident of recovery of amounts exceeding the recognized claims.

18. The Company has unbilled work-in- progress inventory of Rs. 1,000.10 crores (Previous year Rs. 1,084.60 crores) on certain projects which are completely executed/ nearing completion. The Company is of the view that the Company would collect at least the above stated amount after completion of certain pending formalities. Further, Rs. 58.77 crores (Previous year Rs. 25.45 crores) withheld by certain customers on account of miscellaneous deductions, the Company is of the view that there is no justification in imposition of such deductions by the customers. Accordingly, the above amounts are considered good of recovery.

19. The Company had made a commitment to make contributions to Indian School of Business, Mohali amounting to Rs. 50.00 crores (Previous year Rs.50.00 crores) in a phased manner over a period of three years vide a resolution passed in the meeting of Board of Directors dated May 30, 2008. Out of above, the Company has contributed Rs. 45.00 crores (up to previous year Rs. 21.00 crores) till the close of the year.

20. Asset of Rs. 7.29 crores, (Previous year Rs. 12.60 crores) recognized by the Company as 'MAT Credit Entitlement' under 'Loans and Advances', in respect of MAT payment for earlier years, represents that portion of MAT liability which can be recovered and set off in subsequent periods based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

21. Projects materials consumed

These comprise miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, it is not practicable to disclose the quantitative information in respect thereof.

22. Amount in the financial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 million.

23. Previous year figures

Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet. Previous year's figures have been regrouped wherever necessary to conform to this year's classification.


Mar 31, 2011

1. [7] Contingent liabilities not provided for :

Amount in INR'000

2010-11 2009-10

a) i) Bank Guarantees given by the Com- 8,321,696 7,303,547 pany

ii) Bank Guarantees given on behalf of 179,500 179,000 subsidiaries and joint ventures

b) Liquidated damages deducted by cus- 2,206,562 2,709,427 tomers not accepted by the Company and pending final settlement. (Also refer notes 5, 6 and 12 below)*

c) Corporate Guarantees given on behalf of 48,292,915 61,874,700 subsidiaries, joint ventures and associates

* excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

d) Estimated future investments in joint venture & other companies in terms of respective shareholder agreements amount in aggregate to Rs. 249,870 thousand (Previous year Rs. 289,919 thousand).

e) (i) Sales tax demand of Rs. 298,408 thousand (Previous year Rs. 285,948 thousand) on disallowance of deduction on labour and services of the works contracts pending with Sales Tax Authorities and High Court.*

(ii) Sales tax demand of Rs. 66,969 thousand (Previous year Rs. 66,006 thousand) for non submission of statutory forms.*

(iii) Sales Tax liability of Rs. 86,086 thousand (Previous year Rs. 84,946 thousand) for purchases against sales tax forms not accepted by department.*

(iv) Entry Tax liability of Rs. 42,649 thousand (Previous year Rs. 32,806 thousand) against entry of goods into the local area not accepted by department.*

(v) Sales Tax liability of Rs. 720 thousand (Previous year Rs 720 thousand) against the Central Sales Tax demand on sales in transit.*

(vi) Demand for nonpayment of excise duty on coating of pipes Rs. 9,567 thousand (Previous year Rs. Nil).*

(vii) Sales tax demand of Rs. 27,710 thousand (Previous year Rs. Nil) for non-admissible of deduction of supply turnover.*

(viii) Penalty for late deposit of Service Tax of Rs. 172,796 thousand (Previ- ous year Rs. 172,796 thousand) and Rs. 15,915 thousand (Previous year Rs. 15,915 thousand) as disallowance of deduction of supply turnover.*

(ix) Sales tax demand in respect of erstwhile Internet Service Division re- garding taxability of internet services Rs. Nil (Previous year Rs. 39,877 thousand).* * Based on favorable decisions in similar cases / legal opinions taken by the Company / consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision there against is considered necessary.


Mar 31, 2010

1. Nature of Operations

Punj Lloyd Limited is a Company registered under Indian Companies Act, 1956. The Company is primarily engaged in the business of engineering & construction in the oil & gas sector and infrastructure sector.

The Company, along with its subsidiaries, Sembawang Engineers & Constructors Pte. Limited, Singapore, Simon Carves Limited, United Kingdom, and other joint ventures and associates, is entitled to bid for verticals of infrastructure sectors and EPC capabilities in Petrochemical domain including LDPE, PVC, Styrene and Refinery Process. The Company along with its subsidiaries has strong presence in its home country India and in South East Asia, Middle East and Europe.

2. Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not Subsidiary Companies Spectra Punj Lloyd Limited

Punj Lloyd International Limited

Punj Lloyd Kazakhstan LLP

Punj Lloyd Industries Limited

Punj Lloyd Aviation Limited

Punj Lloyd Infrastructure Limited

Atna Investments Limited

Spectra Net Limited (upto May 31, 2008)

Punj Lloyd Upstream Limited

PT Punj Lloyd Indonesia

PLN Construction Limited

Punj Lloyd Pte Limited

PL Engineering Limited (Formerly known as Simon Carves India Limited)

Sembawang Infrastructure (India) Private Limited (w.e.f March 31, 2009)

Spectra ISP Networks Private Limited (Formerly known as PL Engineering Private Limited (w.e.f. October 23, 2008))

Indtech Global Systems Limited (Formerly known as Punj Lloyd Systems Private Limited (w.e.f. March 31, 2009)

Punj Lloyd SKIL Marine Systems Limited (w.e.f July 01, 2009)*

Names of related parties where control exists irrespective of whether transactions have occurred or not Step Down Subsidiary Companies

Spectra Net Holding Limited (upto May 31, 2008)

Spectra Punjab Limited (upto May 31, 2008)

Sembawang Engineers and Constructors Pte. Limited

PT Sempec Indonesia

Sembawang Development Pte Limited

PT Indo Precast Utama

PT Indo Unggul Wasturaya

Sembawang (Tianjin) Construction Engineering Co. Limited

Construction Technology Pte Limited

Contech Trading Pte Limited

PT Contech Bulan

Construction Technology (B) Sdn Bhd

Sembawang (Hebei) Building Materials Co. Limited

Sembawang Infrastructure (Mauritius) Limited

Sembawang Infrastructure (India) Private Limited (upto March 31, 2009)

Sembawang-JTCI (China) Pte Limited (upto February 04, 2010)*

Sembawang UAE Pte Limited

SC Architects and Engineers Pte Limited

Sembawang (Malaysia) Sdn Bhd

Jurubina Sembawang (M) Sdn Bhd

Simon Carves Limited

Sembawang Simon-Carves De Mexico S.A DE. CV

Sembawang Engineers and Constructors Middle East FZE

Simon Carves Singapore Pte Limited

Sembawang Bahrain SPC

Sembawang Precast System LLC

Punj Lloyd Oil and Gas (Malaysia) Sdn Bhd

Punj Lloyd Engineers & Constructors Pte Limited. (Formerly known as Abudhabi

Engineers & Construction Pte. Limited. (w.e.f. November 26, 2008)

Technodyne International Limited (w.e.f. June 02, 2008)

Punj Lloyd Delta Renewables Private Limited (w.e.f. November 5, 2009)**

Delta Solar (Bangladesh) Limited (w.e.f November 5, 2009)**

Punj Lloyd Delta Renewables Pte Limited (w.e.f. November 5, 2009)**

Buffalo Hills Limited. (w.e.f September 30, 2009)**

Technodyne Engineers Limited (w.e.f March 9, 2010)*

Sembawang Caspi Engineers and Constructors LLP (w.e.f. January 11, 2010)*

Sembawang Libya General Contracting & Investment Company (w.e.f. August 11, 2009)*

Sembawang Australia Pty Limited (w.e.f. November 5, 2009)*

Sembawang Hong Kong Limited (w.e.f. October 13, 2009)*

Sembawang Securities Pte Limited (w.e.f. February 5, 2010)*

Sembawang Equity Capital Pte Limited (w.e.f. August 1, 2009)*

Names of other related parties with whom transactions have taken place during the year Joint Ventures

Thiruvananthpuram Road Development Company Limited

Persys-Punj Lloyd JV

Asia Drilling Services Limited (Joint Venture of Punj Lloyd International Limited) Kaefer Punj Lloyd Limited

Swissport Punj Lloyd India Private Limited (under liquidation)

Dayim Punj Lloyd Construction Contracting Co. Limited

Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited

Ramprastha Punj Lloyd Developers Private Limited

Syna Petrochemical Engineering Company (up to January 25, 2010)

Total-CDC-DNC Joint Operation

Kumagai-Sembawang-Mitsui Joint Venture

Kumagai-SembCorp Joint Venture (DTSS)

Kumagai-SembCorp Joint Venture

Philipp Holzmann-SembCorp Joint Venture

Semb-Corp Daewoo Joint Venture

Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture

Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture

Punj Lloyd PT Sempec Indonesia

Associates

Gaitry Cable Network Private Limited (upto May 31, 2008)

City Vision Private Limited (upto May 31, 2008)

Shitul Engineering Private Limited (upto May 31, 2008)

Sunstar Network & Technologies Private Limited (upto May 31, 2008)

Dot Com Holdings Private Limited (upto May 31, 2008)

Satellite Vision Private Limited (upto May 31, 2008)

Reliance Contractors Private Limited

Ventura Development (Myanmar) Pte Limited

Regional Hotel Pte Limited (up to April 15, 2009)*

System-Bilt (Myanmar) Limited (up to April 15, 2009)*

Realand Pte Limited (up to May 06, 2009)*

Reco Sin Han Pte Limited

Pipavav Shipyard Limited ( up to March 27, 2010)*

Air Works India Engineering Private Limited

Olive Group BV (w.e.f. August 18, 2008)

Olive Group India Private Limited (w.e.f. June 25, 2009)**

Hazaribagh Ranchi Expressway Limited (w.e.f August 01, 2009)**

Ethanol Ventures Grimsby Limited (w.e.f. February 27, 2009)

* These entities have been incorporated / formed/ disposed off during the year.

**These entities have been acquired during the year.

Key Managerial Personnel

Atul Punj Chairman

VK. Kaushik Managing Director (up to December 16, 2009)

Luv Chhabra Director (Corporate Affairs)

P K Gupta Director

Relatives of Key Managerial Personnel

S.N.P.Punj - Father of Chairman

Arti Singh - Sister of Chairman

Indu Rani Punj - Mother of Chairman

Navina Punj- Wife of Chairman

Uday Punj - Brother of Chairman

Manglam Punj - Wife of Brother of Chairman

Shiv Punj - Son of Chairman

Jai Punj - Son of brother of Chairman

Dev Punj - Son of brother of Chairman

Jyoti Punj- Sister of Chairman

Kumkum Kaushik - Wife of Managing Director (up to December 16, 2009)

Enterprises over which relatives of Key Managerial Personnel are exercising significant influence

Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of father of Chairman

Collectible @ The Inside Story - Owned by Sister of Chairman

Indtech Global Systems Limited (Formerly known as Punj Lloyd Systems Private Limited (upto March 31, 2009) - Shareholding of Chairman Spectra Punj Finance Private Limited - Shareholding of Chairman

Cawdor Enterprises Limited - Shareholding of Chairman

Uday Punj (HUF) - HUF of brother of Chairman

K.R.Securities Private Limited - Shareholding of Brother of Chairman

Atul Punj (HUF) - HUF of Chairman

Vishwadeva Builders and Promoters Private Limited - Shareholding of sister of Chairman

PTA Engineering and Manpower Services Private Limited - Shareholding of Chairman

PLE Hydraulics Private Limited - Shareholding of Chairman

Special Steel Forgings Private Limited - Shareholding of Chairman

Petro IT Limited - Shareholding of Brother of Chairman

3. Interest in joint ventures:

Note: (a) As per joint venture agreements, the scope & value of work of each partner has been clearly defined and accepted by the clients. The Companys share in Assets, Liabilities, Income and Expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly & severally liable to clients for any claims in these projects.

4. Contingent liabilities not provided for : (Amount in INR 000)

2009-10 2008-09

a) i) Bank Guarantees given by the Company 7,303,547 4,743,929

ii) Bank Guarantees given on behalf of subsidiaries and joint ventures 179,000 234,456

b) Liquidated damages deducted by customers not accepted by the Company and pending final 2,709,427 508,835 settlement. (Also refer note 11 and 31 below)*

c) Corporate Guarantees given on behalf of subsidiaries, joint ventures and associates 61,874,700 60,768,392

* excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management believes that there exist strong reasons why no liquidated damages shall be levied by these customers.

d) Estimated future investments in joint venture & other companies in terms of respective shareholder agreements amount in aggregate to Rs. 289,919 thousand (Previous year Rs. 289,999 thousand).

e) (i) Sales tax demand of Rs. 68,403 thousand (Previous year Rs. 52,173 thousand) on the material components of the works contracts pending with Sales Tax Authorities and High Court. *

(ii) Sales tax demand of Rs. 66,006 thousand (Previous year Rs. 66,006 thousand) for non submission of statutory forms.*

(iii) Sales tax demand of Rs. 217,545 thousand (Previous year Rs. 41,159 thousand) for disallowance of deduction on purchases.*

(iv) Sales Tax liability of Rs. 84,946 thousand (Previous year Rs. 84,946 thousand) for purchases against sales tax forms not accepted by department.*

(v) Entry Tax liability of Rs. 23,735 thousand (Previous year Rs 32,806 thousand) against entry of goods into the local area not accepted by department.*

(vi) Sales Tax liability of Rs. 720 thousand (Previous year Rs 720 thousand) against the Central Sales Tax demand on sales in transit.*

(vii) Penalty for late deposit of Service Tax of Rs. 172,796 thousand (Previous year Rs. 108,068 thousand) and Rs. 15,915 thousand (Previous year Rs. Nil) as disallowance of deduction of supply turnover.*

(viii) Sales tax demand in respect of Internet Service Division regarding taxability of internet services Rs. 39,877 thousand (Previous year Rs. 39,877 thousand). The same is contested by the Company in view of similar matter decided by the Honble Supreme Court of India in the case of Bharat Sanchar Nigam Limited & another Vs Union of India & others wherein it was held that internet services are not taxable as goods. * *Based on favourable decisions in similar cases / legal opinions taken by the Company / consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision thereagainst is considered necessary.

5. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days basic salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

6. The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 587,863 thousand (Previous year Rs. 605,083 thousand) on account of liquidated damages and other deductions, which are being carried as sundry debtors. Some of these customers had also not certified the final bills amounting to Rs. 31,455 thousand (Previous year Rs. 95,455 thousand), which are being carried forward under Work in Progress Inventory. The company has also filed certain claims against these customers. The Company had gone into arbitration against these customers for recovery of amounts withheld as liquidated damages and other deductions and for claims of the Company. Pending outcome of arbitration, amounts withheld for liquidated damages and other deductions are being carried forward as recoverable. The Company has been legally advised that there is no justification in imposition of liquidated damages and other deductions by these customers and hence the above amounts are considered good of recovery.

7. The Company had executed a pipeline project for Petronet MHB Limited in an earlier year. The customer had withheld Rs.4,440 thousand from the running bills, which are being carried forward under sundry debtors. The customer had also not certified the final bill amounting to Rs.64,000 thousand which is being carried forward under Work in Progress inventory. During the year, arbitration award has been pronounced in favour of the Company and accordingly the Company has accounted for additional sums of Rs. 96,988 thousand and Rs. 72,999 thousand as contract revenue and interest income respectively over and above what is already shown as recoverable in books as receivable and work in progress. The amount is yet to be received by the Company.

8. Current Assets include Rs 4,225 thousand (Previous year Rs 4,225 thousand) recoverable pursuant to agreements for sale of 128,400 shares (Previous year 128,400 shares) of Panasonic Energy India Company Limited entered into on March 27, 1992, which are subject matter of a dispute in the Honourable High Court at Bombay, wherein the Company has been restrained from transferring these shares till the final disposal of the suit. These shares remain in the possession of the Company and the market value thereof at close of the year is Rs. 7,967 thousand (Previous year Rs. 4,102 thousand).

9. (a) Donations include an amount of Rs 33,000 thousand (Previous year Rs. Nil) paid for political purposes to Bhartiya Janta Party - Rs. 16,000 thousand (Previous year Rs. Nil), Indian National Congress - Rs. 14,000 thousand (Previous year Rs. Nil), Shiromani Akali Dal - Rs. 2,000 thousand (Previous year Rs. Nil), Mahesh Jethmalani - Rs. 500 thousand (Previous year Rs. Nil) and Yashodhara Raje Scindia - Rs. 500 thousand (Previous year Rs. Nil).

(b) The Company had made a commitment to make contributions to Indian School of Business, Mohali amounting to Rs. 500,000 thousand in a phased manner over a period of three years vide a resolution passed in the meeting of Board of Directors dated May 30, 2008. Out of above, the Company has contributed Rs. 50,000 thousand (Previous year Rs. 50,000 thousand) till the close of the year.

10. a) During an earlier year, the Company had entered into agreements to sell its investments in the shares of certain Companies of the cost of Rs.111,974 thousand and had received advances representing consideration for the future sale of shares (as defined in the above agreements) in these companies, including all accretions thereto till the date of sale. Through the above agreements to sell, the Company had agreed to give all the powers and rights in these shares to purchasers. In terms of the above arrangement, the Company in that year had accounted for Rs. 20,300 thousand, being the amount received in excess of book vale of shares (for all the companies) as income on transfer of the powers and rights in the underlying shares to purchasers and the balance consideration of Rs. 111,974 thousand equivalent to the amount of investment in above shares appearing in the books is shown as deposit under Current Liabilities to be adjusted against the sale of shares in the above companies on the date of sale.

b) During the year, the Company has entered into agreements to sell its investments in the shares of certain Companies of the cost of Rs. 37,700 thousand and has received advances representing consideration for the future sale of shares (as defined in the above agreements) in these companies, including all accretions thereto till the date of sale. Through the above agreements to sell, the Company has agreed to give all the powers and rights in these shares to purchasers. In terms of the above arrangement, the Company has accounted for Rs. 38,877 thousand, being the amount received in excess of book value of shares (for all the companies) as income on transfer of the powers and rights in the underlying shares to purchasers and the balance consideration of Rs. 37,700 thousand equivalent to the amount of investment in above shares appearing in the books is shown as deposit under Current Liabilities to be adjusted against the sale of shares in the above companies on the date of sale.

11. Pursuant to an agreement dated March 27, 2010, entered into with some parties (Purchasers), the Company agreed to sell its investments in 49,999,000 equity shares of a company to Purchasers subject to fulfilment of certain conditions by the Company and the Purchasers. The Company has booked the sale of investment amounting to Rs. 2,537,300 thousand during the year, while the conditions precedent to such sales have been fully complied with and the Company has received full consideration against sale of these shares after the close of year. The Company has recognized profit of Rs 1,187,476 thousand on sale of such shares.

12. Foreign Currency Convertible Bonds

a. During an earlier year, the Company had issued at par, 5 years and 1 day Zero Coupon US $ denominated Foreign Currency Convertible Bonds (FCCB) aggregating to US $ 125,000 thousand (Rs. 5,543,750 thousand as on the date of issue) comprising 1,250 bonds of US $ 100,000 each to invest in capital goods, repayment of international debts, possible acquisitions outside India, investment in BOOT projects, any other use as may be permitted under applicable law or by the regulatory bodies from time to time. The bond holders have an option of converting these bonds into equity shares. For the purpose, the number of equity shares to be issued shall be determined taking the initial conversion price of Rs. 1,362.94 per equity share (Face value Rs 10) and a fixed rate of exchange conversion of Rs 44.35 = US $ 1.00, at any time on or after July 1, 2006 and prior to close of business on March 24, 2011, unless redeemed, repurchased and cancelled or converted. This rate is used to determine dilutive Equity Shares against outstanding bonds.

b. Subsequent to the issue of these FCCBs, the Company, during the year ended March 31, 2007, sub-divided the face value of equity shares from Rs. 10 to Rs. 2.

c. Zero Coupon Convertible Bonds due 2011 amounting to USD 49,700 thousand (Rs. 2,246,440 thousand) (Previous year USD 49,700 thousand (Rs. 2,520,287 thousand)) are pending for redemption as on March 31, 2010. Unless these Bonds have been previously converted, redeemed, repurchased and cancelled, the Company will redeem these Bonds at a redemption premium equal to 125.86% of the outstanding principal amount on the maturity date. The Company as a matter of abundant caution has provided for redemption premium of Rs. 451,400 thousand (Previous year Rs. 370,445 thousand) upto March 31, 2010 and adjusted the same against Securities Premium Account in pursuance of section 78 of the Companies Act, 1956. The bonds are considered monetary liability. The bonds are redeemable only if there is no conversion of the bonds earlier.

13. The Company, as per the Companies Accounting Standard Rules, 2009, had exercised the option of deferring the charge to Profit & Loss Account arising on exchange differences in respect of accounting periods commencing on or after December 07, 2006, on long term foreign currency monetary items. As per the option, exchange differences related to long term foreign currency monetary items and so far as they relate to the acquisition of depreciable capital assets are capitalized and depreciated over the useful life of the assets and in other cases, have been transferred to Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term assets/liabilities but not beyond accounting period ending on or before March 31, 2011. The unamortized balance in this account as at March 31, 2010 is Rs. 2,319 thousand (Previous year Rs. (462,946 )thousand).

14. Loans to Subsidiaries include Rs. 1,084,503 thousand (Previous year Rs. 1,193,057 thousand) (including interest thereon) on account of loan given by the Company to its step-down subsidiary, Simon Carves Limited, (Simon) and also encashment of bank guarantee given by the Company to a customer of such step down subsidiary. As per the audited financial statements of Simon as at March 31, 2010, it has incurred substantial losses during the current year and the previous year, resulting in its accumulated losses far exceeding its net worth. The Company is hopeful that in view of the restructuring undertaken by Simon and its future profitability projections, Simon would be able to repay the above amount.

In any case, Punj Lloyd Pte Ltd, Singapore, a subsidiary of the Company and the immediate holding Company of Simon, has guaranteed the payment of above outstanding to the Company in case Simon is unable to pay the same.

15. During the previous year,the Company had entered into an agreement to sell its Internet Services Division (ISP) with Citycom Networks Private Limited. As per the terms of agreement effective from June 01, 2008, the operations and controls of ISP division have been transferred to the acquirer and all profits/losses that arise after that date are to the account of the acquirer.

The Company had accordingly not included the results of operation of ISP Division in its financial statement from June 01, 2008.

For implementation of sale, the Company had filed a Scheme of arrangement and demerger under Sections-391-394 and other relevant provisions of the Companies Act, 1956 with the Honble High Court of Delhi, for demerger of the ISP division of the Company and vesting of the same in Spectra ISP Networks Private Limited (Formerly PL Engineering Private Limited), its wholly owned subsidiary, with effect from the appointed date i.e. June 01, 2008. During the year the Company has received the order from the Honble High Court of Delhi, for demerger of the ISP division of the Company and vesting of the same in Spectra ISP Networks Private Limited w.e.f. the appointed date of June 01, 2008.

16. On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income Tax Act, 1961. During the search and seizure operation, statements of Companys officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The Company is of the view that the above statements were made under undue mental pressure and physical exhaustion and it has retracted the above statements subsequently. In view of the above, tax liability, if any that may arise on this account is presently unascertainable.

17. During the year, the Company has issued 27,900,920 equity shares to Qualified Institutional Buyers @ Rs 240.20 per share on August 11, 2009 under chapter XIII A of SEBI (DIP) Guidelines 2000 as amended from time to time. Accordingly, Rs. 6,645,999 thousand has been transferred to Securities Premium Account. Expenses of Rs. 192,760 thousand incurred in connection with the issue have been adjusted against Securities Premium Account in terms of Section 78 of the Companies Act, 1956.

18. The Company had during an earlier year obtained approval of Central Government for a contract entered with a private company in which a director of the Company is a director, to execute a project for them for values not exceeding Rs.1,410,000 thousand. The scope of the project has been enhanced and as at March 31, 2010, it has exceeded the Central Government approval by Rs. 19,476 thousand. The management is in the process of informing the scope enhancements to the Central Government and seeking their approval for the same.

19. Sales include Rs. 1,348,221 thousand (Previous year Rs. 1,819,116 thousand) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms & conditions of the projects.

20. The Company has during the year accounted for a claim of Rs. 2,430,300 thousand on a contract, based upon managements assessment of cost over-run arising due to design changes and consequent changes in the scope of work on a project and has also not accounted for liquidated damages amounting to Rs. 654,891 thousand deducted by the customer since it is of the view that the delay in execution of the project is attributable to the customer. The management, based on the expert inputs, is confident of recovery of amounts exceeding the recognized claim which they shall pursue once they have fully executed the project and is also confident of waiver of liquidated damages.

21. a) During the current year, in one of the projects being executed by the Company, consequent to revision in estimates of the project costs and revenue on the project has gone up by Rs. 2,248,595 thousand and Rs. 171,981 thousand respectively.

b) During the current year, in one of the projects being executed by one of the branches of the Company, consequent to revision in estimates of the project, costs and revenue on the project has gone down by Rs. 2,855,900 thousand (QAR 218,508 thousand) and Rs. 256,290 thousand (QAR 19,609 thousand) respectively.

c) During the current year, in one of the projects being executed by one of the branches of the Company, consequent to revision in estimates of the project, costs and revenue on the project has gone up by Rs. 1,734,521 thousand (LYD 45,442 thousand) and Rs. 842,680 thousand (LYD 22,077 thousand) respectively.

22. Previous years figures have been regrouped wherever necessary to conform to this years classification.











 
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