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Notes to Accounts of Sadbhav Engineering Ltd.

Mar 31, 2016

1. The company has adopted an option under para 46A of AS 11 - "The Effect of Changes in Foreign Exchange Rates", inserted by notification no G.S.R. 914(E) dated December 29, 2011 issued by Ministry of Corporate Affairs, and accordingly the exchange difference arising on reporting of long term foreign currency monitory items, in so far as they relate to the acquisition of depreciable asset, is added or deducted from the cost of the asset and shall be amortized over the balance life of asset. During the year company has added Rs. 637.07 Lakh (Rs. 445.97 Lakhs) to the capital asset towards such exchange differences. The unamortized amount of such exchange difference included into the carrying amount of asset is Rs. 1220.18 Lakhs (862.34 Lakhs).

2. The Company has applied the different estimated useful lives as specified in Schedule II in respect of certain assets as disclosed in accounting policy on depreciation on the basis of working of machineries in very tough condition at project sites. In support of that Company has also taken an opinion of Chartered Engineer & Value regarding the different useful life. Accordingly the unamortized carrying value of those assets is being depreciated over the remaining useful life as adopted by the Company instead of useful life specified in the Schedule II. This changes result in a higher depreciation of Rs. 784.99 lakhs (Rs. 537.89 lakhs) charged to profit and loss account.

3. Land purchase includes the amount of Rs. 618.06 Lakhs which was wrongly capitalized in Building during the year 2014-15 and depreciation of Rs. 8.17 Lakhs has been provided in last year on the same, was written back and adjusted from current year depreciation of building.

4. All property plant and equipments are pledged as security through first charge and/or second charges for liability of Rs. 97088.63 Lakhs (Rs. 100826.02 Lakhs).

5. Contingent Liabilities and commitments

A Contingent Liabilities

(a) Claims against the company not acknowledge as debt:-

(i) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has filed a suit for recovery of Rs. 46.42 Lakhs (Rs. 46.42 Lakhs) against the company and its directors and officers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed Rs. 46.42 Lakhs (Rs. 46.42 Lakhs) balance to be paid and filed Civil Suit at Civil Court, Nagpur. The company has challenged the jurisdiction of the court along with an application for stay of the Impugned Order. The Bombay High Court, Nagpur bench, through its interim order, granted a stay pending the decision of the appeal and directed the company to deposit 50% of the amount of the decree passed by the Civil Judge. The company has paid Rs. 21.20 Lakhs. The matter is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts.

(ii) Company has received order of the Commissioner of service tax on 1st April, 2013 wherein Commissioner upheld the demand of Rs. 199.13 Lakhs (Rs. 199.13 Lakhs) and imposed penalty of Rs. 345.92 Lakhs (345.92 Lakhs). Company filed appeal before CESTAT and received unconditional stay order on order of Commissioner; hence no provision has been made.

(iii) The ACIT, Central Circle - 1(1), Ahmadabad served an assessment order upon SEL in relation to adjustment of losses incurred by the undertaking of SEL against the eligible income of the undertakings while computing the deductions and other expenses for the assessment year 2005-06 ,2006 - 07 & 2007-08 (the "Impugned Order"). SEL preferred an appeal before the CIT (Appeals) - XIV (the "CIT Appeals") challenging the Impugned Order. The CIT Appeals, through its order, partly disallowed SEL''s claim for deduction and other expenses under Section 80-IA of the IT Act and other expenses, (the "CIT(A) Order"). Subsequently, SEL preferred an appeal before the ITAT challenging CIT (A) Order and the ACIT, Central Circle - 1(1), Ahmadabad also preferred an appeal before the ITAT against the CIT(A) Order. The ITAT, through its order, allowed deductions under Section 80-IA of the IT Act (the "ITAT Order"). The CIT filed a review petition before the ITAT. Subsequently, the CIT preferred an appeal before the Gujarat High Court against the ITAT Order. The aggregate amount of Tax Liability for all the 3 Asst. years involved is Rs. 611.03 Lakhs. The matter is currently pending.

(iv) The DCIT, Central Circle 1(1), Ahmadabad issued a show cause notice to SEL seeking reasons for not imposing a penalty under Section 271(1)(c) of the IT Act with respect to the alleged concealment of particulars of income and inaccurate particulars being furnished for assessment year AY 2011-12. SEL filed a reply to the show cause notice. The DCIT, Central Circle 1(1), Ahmadabad passed orders for AY 2011-12 imposing total penalty of Rs. 13.25 Lakhs (the "Penalty Order"). Subsequently, SEL has preferred an appeal before the CIT, Appeals-11, Ahmadabad against the Penalty Orders. CIT Appeals-11 has passed the order and drop the penalty proceedings. The DCIT, Central Circle 1(1) filled the appeal with ITAT, Ahmadabad. The matters are currently pending.

(v) The ACIT, Central Circle 1(1), Ahmadabad served five assessment orders to SEL along with five demand notices for an aggregate amount of Rs. 1277 Lakhs in relation to the assessment years 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12 on account of disallowance of some expenditure and deductions under Section 80-IA of the IT Act. SEL preferred an appeal before the CIT (Appeals). The CIT Appeals, through its order, allowed the expenditure and deductions amounting to Rs. 5746.80 Lakhs. Subsequently, the ACIT, Central Circle 1(1), Ahmadabad preferred an appeal before the ITAT. The aggregate amount involved is Rs. 1953.30 Lakhs. The matter is currently pending.

(vi) The DCIT, Central Circle 1(1), Ahmadabad has reopened the case for AY 2011-12 and passed the order by disallowing the expenditure of Rs. 378.99 Lakhs. Subsequently, SEL has preferred an appeal before the CIT, Appeals-11, Ahmadabad against the said Orders. The aggregate amount of tax involved is Rs. 244.64 Lakhs. The matter is currently pending.

(vii) The DCIT, Central Circle 1(1), Ahmadabad, through its order, disallowed expenses of Rs. 450.73 Lakhs and disallow SEL''s claim for deduction for a sum of Rs. 379.47 Lakhs under Section 80IA(4) of the IT Act for assessment years 201213 with respect to agreements entered with GoI and state governments for construction of highways and roads. The DCIT, Central Circle 1(1), Ahmadabad further held that SEL is a contractor who executed the work and was not eligible for such deductions. SEL preferred an appeal before the CIT, Central Circle- 1(1). The CIT Appeals, through its order, allowed the expenditure and deductions amounting to Rs. 829.90 Lakhs. Subsequently, the ACIT, Central Circle 1(1), Ahmadabad preferred an appeal before the ITAT. The aggregate amount of tax involved is Rs. 269.36 Lakhs. The matter is currently pending.

(viii) The DCIT, Central Circle 1(1), Ahmadabad, through its order, disallowed expenses of Rs. 377.87 Lakhs and disallow SEL''s claim for deduction for a sum of Rs. 7716.78 Lakhs under Section 80IA(4) of the IT Act for assessment year 2013-14. SEL has preferred an appeal before the CIT(A), Ahmadabad. The aggregate amount of tax involved is Rs. 836.74 Lakhs. The matter is currently pending.

(ix) The DCIT, Central Circle 1(1), Ahmadabad, through its order, disallowed expenses of Rs. 448.85 Lakhs and disallowed SEL''s claim for deduction for a sum of Rs. 2993.28 Lakhs under Section 80IA(4) of the IT Act for assessment year 2014-15. SEL has preferred an appeal before the CIT(A), Ahmadabad. The aggregate amount of tax involved is Rs. 1048.50 Lakhs. The matter is currently pending.

(x) The Deputy Commercial Tax Commissioner, Audit Divison-1 Ahmadabad has passed order against "Jilin Sadbhav JV" for VAT demand of Rs. 702.00 Lakhs inclusive of interest Rs. 330.18 Lakhs and Penalty of Rs. 74.36 Lakhs. In Jilin-Sadbhav JV, Sadbhav Engineering Limited is having 48% share. Against this Order the Joint Venture has filed an appeal in the Gujarat Value Added Tax Tribunal at Ahmadabad. The Tribunal, through its order, granted a stay against the recovery of outstanding demand on payment of Rs. 15 Lakhs. The company has paid Rs. 15.00 Lakhs. hence no provision has been made.

(xi) The Company has received a show cause notice from the office of Mining Engineer, Mines and Geology Department, Udaipur on 05/02/2014 imposing penalty of Rs. 81.32 Lakhs under rule 63, 37A (IX) of Rajasthan Minor Mineral Concession Rules, 1986. The Company has filed a Civil Writ Petition No.2635/2014 in The High Court of Rajasthan against the said notice. The Company has deposited Rs. 30.00 Lakhs with the Mining Engineer, Mines and Geology Department, Udaipur as per stay order of the Honorable Court. Further proceeding is pending, hence no provision has been made.

(xii) The Deputy commissioner of Commercial Taxes, Jharkhand has passed an Assessment Order under Jharkhand Value Added Tax, 2005 for FY 2010-11 for demand of Rs. 77,40,217 and also has passed order for FY 2011-12 with demand of Rs. 1,52,83,176/-. The company has filled Revision Application against both the orders to the "The Commissioner, Commercial Taxes Department - Jharkhand" therefore the same has not been provided in the Books of Accounts.

(xiii) The Dy. Excise & Taxation Commissioner cum Provisional Authority Sirsa has passed the Revised Order u/s 34(2) of Haryana Value Added Tax Act 2003 for FY 2010-11 with demand of Rs. 10,44,692 which includes Interest of Rs. 5,22,346/-. The same Authority has also passed the Revised Order for FY 2011-12 for demand of Rs. 1,49,40,414/which includes the Interest of Rs. 67,31,395/- The Company has filled the Appeal against these orders to the Honorable "VAT Tribunal, Haryana", therefore the same has not been provided in the Books of Accounts.

(xiv) The Assessing Authority, Sirsa (Haryana) has passed the Order u/s 15(2) of Haryana Value Added Tax Act, 2003 for the FY 2012-13 with demand of Rs. 1,43,50,963 which includes interest of Rs. 55,01,977. The Company has filed the Appeal against this order to The Appellate Authority Haryana other than Tribunal, u/s 33 of HVAT Act, 2003.

(xv) (i) A case before Workmen Compensation Commissioner, Udaipur was filled for compensation of Rs. 11.69 Lakhs under Employees Compensation Act, 1923. The matter is currently pending.

(ii) A case before Labor Court, Jabalpur was filed for compensation of Rs. 15.40 Lakhs under Industrial Dispute Act, 1947. The matter is currently pending.

(iii) An employee has filed case before Labor court at Balaghat for compensation of Rs. 13.20 Lakhs under Workmen Compensation Act, 1923. The matter is currently pending.

(b) Other Money for which the company is contingently liable:-

(i) The Finance Act (2), 2009 has amended Section 80IA(4) of the Income Tax Act, 1961 by substituting an explanation to Section 80IA with retrospective effect from 01.04.2000. On the basis of legal opinion and decided cases, the Company has continued to claim deduction under section 80-IA(4) of the Act on eligible projects and consequently the Company considers it appropriate not to create a liability for provision of Income Tax. However an amount of Total income tax of Rs. 5362.73 Lakhs on claim of deduction/s 80IA for the AY 2013-14 to AY 2016-17 has been consider as contingent liability for which assessment is not completed.

(ii) Siddhartha Infraprojects Private Limited (the "Claimant") has initiated an arbitration proceeding against SEL in relation to a sub-contract agreement dated October 31, 2007 between the Claimant and SEL. Pursuant to the aforesaid sub-contract agreement, SEL sub contracted the work under the main contract between SEL and MPRDC for rehabilitation and up gradation of package 11 of Seoni Chiraidongri Road. The Claimant has alleged that SEL had committed breaches of the terms of the sub-contract agreement by unilaterally reducing its scope of work covered under the sub-contract agreement without the permission of the MPRDC. The Claimant has claimed an aggregate amount of Rs. 8160 Lakhs on account of, inter alia: (i) amount not paid for the work done; (ii) overhead losses suffered by the Claimant; (iii) losses suffered on account of profit not earned at appropriate time; (iv) loss of productivity; (v) opportunity losses; (vi) compensation for interest charges paid to the bank; (vii) loss due to underutilized tools, plants and machineries. SEL has been submitted its statement of defense before the Arbitral Tribunal. The aggregate amount involved is Rs. 8160 Lakhs. The matter is currently pending.

(c) Guarantees

Company has given corporate guarantee to banks for Rs. 57757.00 Lakhs (Rs. 76136.00 Lakhs) against the finance facility given by the banks to subsidiary companies.

(d) During the FY 2013-14, minority shareholders of Bijapur Hungud Tollway Private Limited (''BHTPL'') (a step down subsidiary of the Company) has filed company petition no 78 of 2013 under section 347 and 398 of the Companies Act, 1956 with the Company Law Board - Mumbai Bench against Sadbhav Engineering Ltd a holding Company and its associates/affiliates wherein the company is also defendant. The Company Law Board (CLB) passed an order in favor of the minority shareholder although company pleaded that matter should be referred for arbitration as per shareholder agreement (SHA). Against the CLB order the company filled Special Civil Application (SCA) with Hon''ble High Court of

Gujarat that matter of minority shareholder should be referred as per SHA. Hon''ble High Court accepted SCA of the company and granted interim relief where by further proceeding of CLB have been stayed. Currently the matter is pending before Hon''ble High Court of Gujarat. The management believes that, based on legal advice, the outcome of above contingencies will be favorable and that any loss is not probable. Accordingly, no amounts have been accrued or paid in regard to dispute.

6. As per the Accounting Standard 11, "The effect of Change in Foreign Exchange Rates", the required disclosure are given below:-

The company uses Interest Rate Swap and Currency Option to hedge the interest and currency related risks on its capital account. Such transactions are governed by the strategy approved by the board of directors which provide principles on the use of these instruments, consistent with the Company''s Risk Management Policy. The company does not use these contracts for speculative purposes. Outstanding Currency Option and Interest Swap to hedge against foreign currency exchange rates and fluctuations in interest rate changes are as under:

ECB from Standard Chartered Bank is hedged for currency movements from the range of Rs. 65.50 to Rs. 80/-, ECB of USD 15mn from DBS is hedged for currency movements from the range of Rs. 44.50 to Rs. 52/- and ECB from ICICI is hedged for currency movements from the range of Rs. 53.7125 to 61.7125.

7. Employee Benefits

As per Accounting Standard -15 "Employee Benefits", the disclosures of Employee Benefits as defined in the accounting Standard is given as below:-

(a) Defined Contribution Plan:-

8. Segment Reporting

As permitted by Paragraph 4 of Accounting Standard -17, "Segment Reporting ", notified pursuant to the Companies (Accounting Standard) Rules 2006, if a single financial report contains both consolidated financial statement and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. This financial report contains both standalone & consolidated financial statements of the parent, hence segment wise Revenue Results and Capital employed are given in consolidated financial statements.

9. List of Related Parties

(a) Related Party with whom Control Exists Subsidiary:

Sadbhav Infrastructure Project Limited and Mysore-Bellary Highway (P) Ltd.

Step-down Subsidiaries:

Nagpur-Seoni Express Way Limited, Ahmedabad Ring Road Infrastructure Limited, Aurnagabad-Jalna Tollway Limited, Rohtak Panipat Tollway Pvt. Ltd., Bijapur Hungund Tollway Pvt. Ltd, Hyderabad Yadgiri Tollway Pvt. Ltd. Maharashtra Border Check Post Network Ltd., Shreenathji Udaipur Tollway Pvt. Ltd, Bhilwara Rajsamand Tollway Pvt. Ltd.,Dhule Palesner Tollway Ltd. and Rohtak-Hissar Tollway (P) Ltd.

Joint Ventures:

SEL-GKC JV, Sadbhav-Annapurna, Sadbhav-Vishnushiva, Sadbhav-Vaishnovi, Corsan Corviam Construction SA - Sadbhav and SADBHAV-PIPL (JV).

(b) Related Party with whom transaction during the year Key Management Personnel (KMP):

Shri Vishnubhai M. Patel, Shri Nitin R. Patel, Shri Shashinbhai V. Patel, Shri Vasistha C. Patel, Shri Vikram R. Patel, Shri Tushar D. Shah.

Relatives of KMP:

Smt. Shantaben V. Patel, V. M. Patel (HUF), Alpa Dharmin Patel, Bhavna V. Patel, Rekhaben V. Patel, Truptiben V. Patel, Rajeshriben Patel, Girishbhai N. Patel.

Entities in which KMP / relatives of KMP can exercise significant influence:

Sarjan Infracon Pvt. Ltd., Veer Procon Ltd., Sadbhav Finstock Pvt.Ltd., Sadbhav Realty Pvt. Ltd., Sadbhav Quarry Works Pvt. Ltd., Sadbhav Public Charitable Trust, Bhavna Engineering Company Pvt. Ltd., Saakar Infra Nirman Pvt. Ltd.

(b) The Company has recognized lease payment of Rs. 66.77 lakhs (Rs. Nil) in the statement of profit and loss under the head "Machinery Rent" during the year.

(c) The general discrimination of significant leasing arrangements:

At the conclusion of the Term, Lessee has right to exercise one or more of the following options.

(i) Request Lesser to agree to a renewal of Term or

(ii) Surrender the Equipment as provided. Upon receipt of the Equipment by lesser or Leaser’s agent, the Rental Schedule shall terminate with no further obligation or liability on Lessee.

(iii) Purchase the Equipment at the Fair Market Value. In cases, wherever Minimum Value is specified in the applicable Rental Schedule, Lessee shall have the option to buy the Equipment at higher of the Minimum Value or Fair Market value.

10. There was no impairment Loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard-28 "Impairment of Assets "

11. Pursuant to Restated Share Purchase Agreement dated October 27, 2015 between Dhule Palesner Tollway Limited (DPTL), Sadbhav Infrastructure Projects Limited (SIPL), a subsidiary company of SEL, Sadbhav Engineering Limited (SEL), the SIPL has acquired 60% equity stake from HCC Group, JLL Group in Dhule Palesner Tollway Limited (DPTL). After acquiring the said shares DPTL become 100% subsidiary of SIPL.

Pursuant to the Binding Term Sheet dated January 22, 2015 between Company, SIPL and Gammon Infrastructure Projects Company has transferred 1,04,00,000 Shares of Mumbai Nasik Expressway Limited, held on behalf of SIPL, to BIF India Holdings Pte. Ltd for consideration of Rs. 7200.00 lakhs.

12. Details of Exceptional Items:

Income of Rs. 140.00 lakhs: Company and Reliance Industries Limited (Reliance) settled the dispute out of court in regards to civil application filed by Reliance in District Court against the Arbitration award, in favor of the Company. Reliance paid the amount of Rs. 140.00 lakhs as full and final settlement.

Excess Provision of Rs. 984.83 Lakhs has been written back during the year.

Expenses of Rs. 1178.20 lakhs: Osho Ventures FZE, Ocean Bright Corporation Limited and Sadbhav Engineering Limited (collectively referred as "parties") had entered in arbitration proceedings in accordance with Shareholder''s agreement dated 15/05/2008 to resolve certain dispute. Arbitral Tribunal has passed an award dated 10th March, 2015 and allowing partial claims of the parties. Thereafter parties desirous to settle the dispute mutually, entered into a Settlement agreement dated 14th July, 2015 and in accordance with it the Company has written off Rs. 1178.20 lakh due from Ocean Bright Corporation Limited against sale of assets.

The Company has written off advance outstanding Rs. 1891.25 Lakhs during the year.

13. No Provision has been made for losses made by subsidiary companies as it is temporary diminution in the value of investments in subsidiaries.

14. In the opinion of the Management, trade receivables and loans and Advances have a realizable value in the ordinary course of business not less than the amount at which they are stated in the balance sheet and provision for all known liabilities and doubtful assets have been made.

15. All amounts in the financial statements are presented in Rupees Lakhs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confirm to the figures presented in the current year.


Mar 31, 2014

Corporate Information:

The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in areas of canals, irrigations projects, roads, bridge, irrigations projects, roads, bridge, mining activities on contract basis, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. Company also establish, maintain, operate, lease or transfer the above infrastructure facilities on BOT, BOLT and BOOT basis. Company is also engaged in business of energy generation through Wind Power Project.

1. Contingent Liabilities and commitments

A Contingent Liabilities

(a) Claims against the company not acknowledge as debt:-

(i) The Dy. Commissioner of Custom has passed the order for Demand of Custom duty towards import of Machineries Rs. 104.95 Lakh (Rs. 104.95 Lakh) & Interest of Rs. 174.05 Lakh (Rs. 174.05 Lakh). The Company has filled the Appeal to Commissioner of Customs against the said order, hence no provision is made in the books of accounts.

(ii) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has filed a suit for recovery of Rs. 46.42 Lakh (Rs. 46.42 Lakh) against the company and its directors and officers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed Rs. 46.42 Lakh (Rs. 46.42 Lakh) balance to be paid and filed Civil Suit at Civil Court, Nagpur. The company has challenged the jurisdiction of the court. The matter is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts

(b) Guarantees:-

Company has given corporate guarantee to banks for Rs. 29825.00 Lakh (Rs. 28850.00 Lakh) against the finance facility given by the banks to subsidiary companies.

(c) Other Money for which the company is contingently liable:-

(i) Demand under Service Tax Act, 1994 Rs. 67.29 Lakh (Rs. 67.29 Lakh)

(ii) Company has received order of the Commissioner of service tax on 01st April, 2013 wherein Commissioner upheld the demand of Rs. 199.13 Lakh (Rs. 199.13 Lakh) and impose penalty of Rs. 345.92 Lakh (Nil). Company filed appeal before CESTAT and received unconditional stay order on order of Commissioner hence no provision has been made.

(iii) The Company has received Show-Cause Notice on 13th April, 2013 for imposing penalty of Rs. 19.84 Lakh (Nil) under Rule 26 of the Central Excise Rules, 2002. Company filed appeal before appropriate authority hence no provision has been made.

(iv) Income Tax of Rs. 3566.92 Lakhs on the claim made of the deduction u/s 80IA (4) of the Income Tax Act, 1961. The Finance Act (2), 2009 has amended Section 80IA(4) of the Income Tax Act, 1961 by substituting an explanation to Section 80IA with restrospective effect from 01.04.2000. On the basis of legal opinion and decided cases, the Company has continued to claim deduction under section 80-IA(4) of the Act on eligible projects and consequently the Company considers it appropriate not to create a liaility for provision of Income Tax. However an amount of income tax of Rs. 858.40 Lakhs for the current year and of Rs. 2708.51 Lakhs for the earlier years since FY 2007-08 has been disclosed as contingent liability.

(v) The Deputy Commercial Tax Commissioner, Audit Divison-1 Ahmedabad has passed order against "Jililn Sadbhav JV" for VAT demand of Rs. 702.00 Lakh inclusive of interest Rs. 330.18 lakh and Penalty of Rs. 74.36 lakh. In Jilin-Sadbhav JV, Sadbhav Engineering Limited is having 48% share. Against this Order the Joint Venture has filed an appeal in the Gujarat Value Added Tax Tribunal at Ahmedabad, hence no provision has been made.

(vi) The Company has received a show cause notice from the office of Mining Engineer, Mines and Geology Department, Udaipur on 05/02/2014 imposing penalty of Rs. 81.32 Lakh under rule 63, 37A (IX) of Rajasthan Minor Mineral Concession Rules, 1986. The Company has filed a Civil Writ Petition No.2635/2014 in The High Court of Rajasthan against the said notice. The Company has deposited Rs. 30.00 Lakh with the Mining Engineer, Mines and Geology Department, Udaipur as per stay order of the Honourable Court. Further proceeding is pending, hence no provision has been made.

(d) During the year, minority shareholders of Bijapur Hungud Tollway Private Limited (''BHTPL'') (a subsidiary of the Company) has filed company petition under section 347 and 398 of the Companies Act, 1956 with the Company Law Board Mumbai Bench against Sadbhav Engineering Ltd a holding Company and its associates/affiliates wherein the company is also defendant. The Company Law Board (CLB) passed an order in favour of the minority shareholder although company pleaded that matter should be referred for arbitration as per shareholder agreement (SHA). Against the CLB order the company filled Special Civil Application (SCA) with Hon''ble High Court of Gujarat that matter of minority shareholder should be referred as per SHA. Hon''ble High Court accepted SCA of the company and granted interim relief where by further proceeding of CLB have been stayed. Currently the matter is pending before Hon''ble High Court of Gujarat. The management believes that, based on legal advice, the outcome of above contingencies will be favourable and that any loss is not probable. Accordingly, no amounts have been accrued or paid in regard to dispute.

B Capital & other Commitments

The followings are the estimated amount of contractual commitments of the company:-

(Rs. in Lakhs)

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

(i) Loan Commitments 0.00 0.00

(ii) Sub Ordinate Debt/Equity Shares in Subsidiarieses 30774.37 83249.84

C During the year ended March 31, 2014 the amount of per share dividend recognised as distribution to equity share holders is Re 0.70 (0.60) which comes to Rs. 1061.64 Lakh (Rs. 905.67 Lakh)

2. Segment Reporting

As permitted by Paragraph 4 of Accounting Standard -17, "Segment Reporting ", notified persuant to the Companies (Accounting Standard) Rules 2006, if a single financial report contains both consolidated financial statement and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. This financial report contains both standalone & consolidated financial statements of the parent, hence segment wise Revenue Results and Capital employed are given in consolidated financial statements.

3. There was no impairment Loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard-28 "Impairment of Assets".

4. Borrowing Cost:

During the year, company has capitalized borrowing cost Rs. 290.22 (303.89) Lakh according to AS-16 Borrowing Cost.

5. Some of the Balances of Advance to Contractors, Debtors & Advance received from clients are subject to confirmatin from parties.

6. No Provision has been made for losses made by subsidiary companies as it is temporary diminution in the value of investments in subsidiaries.

7. In the opinion of the Management, trade receivables and loans and Advances have a realizable value in the ordinary course of business not less than the amount at which they are stated in the balance sheet and provision for all known liabilities and doubtful assets have been made.

8. All amounts in the financial statements are presented in Rupees Lakhs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confirm to the figures presented in the current year.


Mar 31, 2013

Corporate Informaton:

The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilites in areas of canals, irrigatons projects, roads, bridge, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstructon, renovaton, demolitons and constructon of canals, irrigatons projects, roads, bridge, dams. Company also establish, maintain, operate, lease or transfer the above infrastructure facilites on BOT, BOLT and BOOT basis. Company is also engaged in mining actvites on contract basis and business of energy generaton through Wind Power Project.

1.1 Contngent Liabilites and commitments

A Contngent Liabilites

(a) Claims against the company not acknowledge as debt

(i) The dy. Commissioner of Custom has passed the order for Demand of Custom duty towards import of Machineries Rs.104.95 (Rs.104.95) & Interest of Rs. 174.05 (Nil). The Company has flled the Appeal to Commissioner of Customs against the said order , hence no provision is made in the books of accounts

(ii) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has fled a suit for recovery of Rs. 46.42 Lakhs against the company and its directors and ofcers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the later claimed Rs. 46.42 Lakhs balance to be paid and fled Civil Suit at Civil Court, Nagpur. The company has challenged the jurisdicton of the court. The mater is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts

(b) Guarantees

Company has given corporate guarantee to banks for Rs. 28850 Lakhs (Rs. 10500 Lakhs) against the fnance facility given by the banks to subsidiary companies.

(c) Other Money for which the company is contngently liable

(i) Demand under Service Tax Act, 1994 Rs.67.29 Lakhs (Rs. 67.29 Lakhs)

(ii) Company has received order of the Commissioner of service tax on 01st April, 2013 wherein Commissioner upheld the demand of Rs. 199.13 lakhs (Rs. 199.13 Lakhs) and impose penalty of Rs. 345.92 Lakhs (Nil). Company is in the process of fling of appeal before appropriate authority hence no provision has been made.

(iii) Company has received Show-Cause Notce on 13th April, 2013 for imposing penalty of Rs. 19.84 Lakhs (Nil) under Rule 26 of the Central Excise Rules, 2002. Company is in the process of fling of appeal before appropriate authority hence no provision has been made.

(iv) With regards to inserton of explanatons with retrospectve efect from 01-04-2000 in secton 80-IA (4) of the Income Tax Act, 1961 read with sub secton (13), the Company has received Notce under secton 148 of the Income Tax Act, 1961 in Financial Year 2009-10 for re-opening of assessment from Assessment Year 2003-04 to 2007-08, against which Company has fled a Special Civil Applicatons in the High Court of Gujarat. High Court of Gujarat has quashed the Notce issued under secton 148 for the Assessment Year 2003-04 & 2004-05 and for remaining assessment years it has directed the department of Income Tax to complete the assessments without serving the notce of demand on the company. Accordingly Income Tax Department has completed the assessments from A.Y.2005-06 to 2007-08 and intmated to the company without serving notce of demand. Further, the company has fled writ petton with High Court of Gujarat for challenging consttutonal validity for inserton of explanatons with retrospectve efect and writ has been admited. At present the mater is sub judies, hence quantfcaton of liability cannot be ascertained.

(v) During the year Company has received Income Tax Assessment order u/s 143(3) r.w.s. 153A dated 28.03.2013 for the FY 2004-05 to FY 2009-10 and Income Tax Assessment order u/s 143(3) r.w.s. 153B(1)(b) for the FY 2010-11 dt. 28.03.2013. As per the Order additonal Income Tax liability including interest for all the seven fnancial years was Rs. 565.90 Lacs. The company has fled the appeal with higher authority. Hence no provision has been made in the books of accounts.

1.2 Segment Reportng

As permited by Paragraph 4 of Accountng Standard -17, "Segment Reportng ", notfed persuant to the Companies (Accountng Standard) Rules 2006, if a single fnancial report contains both consolidated fnancial statement and the separate fnancial statements of the parent, segment informaton need be presented only on the basis of the consolidated fnancial statements. This fnancial report contains both standalone & consolidated fnancial statements of the parent, hence segment wise Revenue Results and Capital employed are given in consolidated fnancial statements.

1.3 List of Related Partes

Subsidiaries :

Sadbhav Infrastructure Project Limited, Nagpur-Seoni Express Way Limited,

Ahmedabad Ring Road Infrastructure Limited, Aurnagabad-Jalna Toll Way Limited, Rohtak-Panipat Tollway Ltd., Bijapur Hungund Tollway Pvt. Ltd., Hyderabad Yadgiri Toll Way Pvt. Ltd., Maharashtra Border Check Post Network Ltd., Shreenathji Udaipur Tollway Pvt. Ltd., Bhilwara Rajsamand Tollway Pvt. Ltd. and Solapur Bijapur Tollway Pvt. Ltd.

Associate Companies

Mumbai Nasik Expressway Ltd., Dhule Palesner Tollway Ltd.,

Joint Ventures:

SEL-GKC JV

Key Management Personnel (KMP):

Shri Vishnubhai M. Patel, Shri Girish N. Patel, Shri Nitn R. Patel, Shri Shashinbhai V. Patel, Smt. Rajeshriben Patel, Shri Vasistha C. Patel, Shri Vikram R. Patel.

Relatves of KMP:

Smt. Shantaben V. Patel, V. M. Patel (HUF), Alpa Dharmin Patel, Bhavna V. Patel, Tosha Patel, Rekhaben V. Patel, Truptben V. Patel, Vipulbhai H. Patel.

1.4 Borrowing Cost:

During reported year, company has capitalized borrowing cost Rs. Nil (31.51 Lakh) according to AS-16 Borrowing Cost.

1.5 Exceptonal Item pertains to the Performance Bonus received on early executon of work contracts. Bonus Received/Income Rs. 10973.98 Lakh

Bonus Expenses Rs. 4880.00 Lakh

Net Bonus Income Rs. 6093.98 Lakh

1.6 Some of the Balances of Advance to Contractors, Debtors & Advance received from clients are subject to confrmatn from partes.

1.7 No Provision has been made for losses made by subsidiary companies as it is temporary diminuton in the value of investments in subsidiaries.

1.8 In the opinion of the Management, trade receivables and loans and Advances have a realizable value in the ordinary course of business not less than the amount at which they are stated in the balance sheet and provision for all known liabilites and doubtul assets have been made.

1.9 All amounts in the fnancial statements are presented in Rupees Lakhs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year fgures in respect of Proft & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confrm to the fgures presented in the current year.


Mar 31, 2012

Corporate information:

The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in areas of canals, Irrigation projects, roads, bridges, dams which include civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and Construction of canals, Irrigation projects, roads, bridges, dams. Company also establish, maintain, operate, lease or transfer the above infrastructure facilities on BOT, BOLT and BOOT basis. Company is also engaged in mining actives on contract basis and business of energy generation through Wind Power Project.

1.1 Contingent Liabilities and commitments

A Contingent Liabilities

(a) Claims against the company not acknowledge as debt

(i) Demand of Custom duty towards import of Machineries Rs. 104.95 (Rs. 104.95)

(ii) The Regional Transport officer, Surat (RTO) issued a Notice for payment of road tax and penalty under the Bombay Motor Vehicles Act, 1958 on forty (40) dumpers used by the Company at the excavation of mining sites around Surat. The Company fled a Special Civil application in the Gujarat High Court against the Commissioner of Transport and the RTO. The Gujarat High Court directed Company to deposit the road tax (without penalty). The Company has complied with the order and has deposited Rs. 49.20 Lakhs. The hearing of the mater has not yet commenced before authority. The Company has not made provision for penalty in its Books of Accounts.

(iii) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has fled a suit for recovery of Rs. 46.42 Lakhs against the company and its directors and officers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the later claimed Rs. 46.42 Lakhs balance to be paid and fled Civil Suit at Civil Court, Nagpur. The company has challenged the jusdiction of the court. The mater is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts.

(b) Guarantees

Company has given corporate guarantee to banks for Rs. 10500 Lakhs (Rs. 21200 Lakhs) against the finance facility given by the banks to subsidiary companies.

(c) Other Money for which the company is contingently liable

(i) Demand under Service Tax Act,1994 Rs. 67.29 Lakhs (Rs. 67.29 Lakhs)

(ii) During the year Company has Received Show cause cum Demand Notice of Rs. 199.13 Lakhs under the Service Tax Act, 1994.

(iii) With regards to insertion of explanations with retrospective effect from 01-04-2000 in section 80-IA (4) of the Income Tax Act, 1961 read with sub section (13), the Company has received Notice under section 148 of the Income Tax Act, 1961 in Financial Year 2009-10 for re-opening of assessment from Assessment Year 2003-04 to 2007-08, against which Company has fled a Special Civil Applications in the High Court of Gujarat. High Court of Gujarat has quashed the Notice issued under section 148 for the Assessment Year 2003-04 & 2004-05 and for remaining assessment years it has directed the department of Income Tax to complete the assessments without serving the Notice of demand on the company. Accordingly Income Tax Department has completed the assessments from A.Y. 2005-06 to 2007-08 and intimated to the company without serving Notice of demand. Further, the company has fled writ petting with High Court of Gujarat for challenging constitutional validity for insertion of explanations with retrospective effect and writ has been admitted. At present the mater is sub judies, hence quantification of liability cannot be ascertained.

1.2 Employee benefits

As per Accounting Standard-15 "Employee benefits", the disclosures of Employee benefits as defined in the Accounting Standard as given as below:

(b) defined benefit Plan:

The company made annual contributions to the employee's Group Gratuity cash accumulation Scheme of the Life Insurance Corporation of India, a funded benefit plan for qualifying employees.

The present value of the defined benefit obligation and the related current service cost were measured using the projected unit credit method as per actuarial valuation carried out at balance sheet date.

The following tables sets out the funded status of the gratuity plan and the amount recognised by the company's financial statements as at March 31, 2012.

1.3 Segment Reporting

As permited by Paragraph 4 of Accounting Standard -17, "Segment Reporting ", notified pursuant to the Companies (Accounting Standard ) Rules 2006, if a single financial report contains both consolidated financial statement and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. This financial report contains both standalone & consolidated financial statements of the parent, hence segment wise Revenue Results and Capital employed are given in consolidated financial statements.

1.4 List of Related Parties

Subsidiaries & Fellow Subsidiaries:

Sadbhav Infrastructure Project Limited, Nagpur-Seoni Express Way Limited,

Ahmedabad Ring Road Infrastructure Limited, Aurnagabad-Jalna Toll Way Limited, Rohtak-Panipat Tollway Pvt. Ltd., Bijapur Hungund Tollway Pvt. Ltd, Hyderabad Yadgiri Tollway Pvt. Ltd., Maharashtra Border Check Post Network Ltd. and Shreenathji Udaipur Tollway Pvt. Ltd.

Associate Companies

Mumbai Nasik Expressway Ltd., Dhule Palesner Tollway Ltd.,

Joint Ventures:

SEL-GKC JV

Key Management Personnel:

Shri Vishnubhai M. Patel, Shri Girish N. Patel, Shri Nitn R. Patel, Shri Shashinbhai V. Patel, Smt. Rajeshriben Patel

relatives of Key Management Personnel

Smt. Shantaben V. Patel, V. M. Patel (HUF), Shri Vikram R. Patel, Shri Vasistha C. Patel

1.5 There was no impairment Loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard-28 "Impairment of Assets".

1.6 Borrowing Cost:

During reported year, company has capitalized borrowing cost Rs. 31.51 Lakhs (19.17 Lakhs) according to AS-16 Borrowing Cost.

1.7 No Provision has been made for losses made by subsidiary companies as it is temporary diminution in the value of investments in subsidiaries.

1.8 In the opinion of the Management, trade receivables and loans and Advances have a realizable value in the ordinary course of business not less than the amount at which they are stated in the balance sheet and provision for all known Liabilities and doubtful assets have been made.

1.9 All amounts in the financial statements are presented in Rupees Lakhs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confirm to the figures presented in the current year.

1.10 Revised Schedule VI and Previous year figures

Till the year ended 31 March 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 31 March 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 confirm to this year's classification. The adoption of the revised schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosure made in the financial statements, particularly presentation of Balance sheet.


Mar 31, 2011

Company Overview:

The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in the line of canals, irrigations projects, roads, bridge, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. Company also establishes maintain, operate, lease or transfer the above infrastructure facilities on BOT, BOLT and BOTT basis. Company is also engaged in mining activities on contract basis.

1) All amounts in the financial statements are presented in Rupees Lacs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confrm to the figures presented in the current year.

2) As the Company is engaged in Construction business, the provision of Para 3 and Para 4C of Part II of Schedule VI to The Companies Act, 1956 regarding quantitative details, license capacity and installation capacity are not applicable.

3) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated if realized in ordinary course of business. Provision for known liabilities are adequate and not in excess of the amount reasonably necessary.

4) Details of Securities given in respect of Secured Loans

1. Redeemable Non Convertible Debentures

The debentures are secured by the frst legal Registered Mortgage and charge on the specific movable fixed assets of the Company and specific immovable properties i.e. Bunglow (Manorama Retreat) and Flat (Abhimanyu) belonging to the Company.

2. Term Loans From Banks & Financial Institutions

Secured by way of hypothecation of specific machineries and equipments purchased.

3. Working Capital From Banks

a. Secured by hypothecation of stock of construction materials lying at sites, books debts and other receivables

b. First charge by way of mortgage of immovable property (Sadbhav House) and immovable property situated at Village Ognaj alongwith furnitures, fixtures etc. owned by company and second charge on machineries owned by the company.

c. Freehold land admeasuring 1,15,556 Sq. mts. of Group company Sadbhav Quarry Works Pvt. Ltd. situated at Tulsigam, Tal. Savli, Dist. Baroda.

d. Corporate Guarantee of Group Company Sadbhav Quarry Works Pvt. Ltd.

e. All the limits are also secured by Personal Guarantee and certain properties of Promoter Directors.

6) Contingent Liability:

a) The Company has given counter guarantee to the Bank for Rs. 127024.82 Lacs (Rs. 85427.56 Lacs) against the guarantee given by the Bank.

b) Outstanding Balance of Letter of Credit is Rs. 477.67 Lacs (Rs. Nil).

c) Demand under Orissa Sales Tax Act Rs. 4.55 Lacs (Rs. 4.55 Lacs)

d) Demand under Orissa Sales Tax Act for Entry Tax Rs. 0.75 Lacs (Rs. 0.75 Lacs)

e) Demand of Custom duty towards import of Machineries Rs.104.95 Lacs (Rs.104.95 Lacs)

f) Demand under Income Tax Act,1961 Rs. 192.72 Lacs (Rs. 157.02 Lacs)

g) Demand under Service Tax Act,1994 Rs. 67.29 Lacs (Rs. 67.29 Lacs)

h) Company has given corporate guarantee to banks for Rs. 212 crores (Rs. 171 Crores) against the finance facility given by the banks to our subsidiary companies.

i) The Regional Transport Officer, Surat (RTO) issued a notice for payment of road tax and penalty under the Bombay Motor Vehicles Act, 1958 on forty (40) dumpers used by the Company at the excavation of mining sites around Surat. The Company fled a Special Civil application in the Gujarat High Court against the Commissioner of Transport and the RTO. The Gujarat High Court directed Company to deposit the road tax (without penalty). The Company has complied with the order and has deposited Rs. 49.20 Lacs. The hearing of the matter has not yet commenced before authority. The Company has not made provision for penalty in its Books of Accounts.

j) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has fled a suit for recovery of Rs. 46.42 Lacs against the company and its directors and Officers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed Rs. 46.42 Lacs balance to be paid and fled Civil Suit at Civil Court, Nagpur. The company has challenged the jurisdiction of the court. The matter is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts.

7) Company is purchasing its bulk construction material like steel, cement, diesel and bitumen etc. from big government undertaking companies and private sector companies and hence there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the company owes any dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identifed on the basis of information available with the company. This has been relied upon by the auditors.

8) With regards to insertion of explanations with retrospective effect from 01-04-2000 in section 80-IA (4) of the Income Tax Act, 1961 read with sub section (13), the Company has received Notice under section 148 of the Income Tax Act, 1961 in Financial Year 2009-10 for re-opening of assessment from Assessment Year 2003-04 to 2007-08, against which Company has fled a Special Civil Applications in the High Court of Gujarat. High Court of Gujarat has quashed the Notice issued under section 148 for the Assessment Year 2003-04 & 2004-05 and for remaining assessment years it has directed the department of Income Tax to complete the assessments without serving the notice of demand on the company. Accordingly Income Tax Department has completed the assessments from A.Y. 2005-06 to 2007-08 and intimated to the company without serving notice of demand. Further, the company has fled writ petition with High Court of Gujarat for challenging constitutional validity for insertion of explanations with retrospective effect and writ has been admitted. At present the matter is sub judies, hence quantification of liability cannot be ascertained.

9) As per the Accounting Standard 11, "The effect of Change in Foreign Exchange Rates", the required disclosure are given below:

The company uses Currency Option and interest rate swap to hedge the interest and currency related risks on its capital account. Such transactions are governed by the strategy approved by the board of directors which provide principles on the use of these instruments, consistent with the Company's Risk Management Policy. The company does not use these contracts for speculative purposes. Outstanding Currency Option and Interest Swap to hedge against foreign currency exchange rates and fuctuations in interest rate changes:

(b) Defined Beneft Plan:

The company made annual contributions to the employee's Group Gratuity cash accumulation Scheme of the Life Insurance Corporation of India, a funded beneft plan for qualifying employees.

The present value of the defined beneft obligation and the related current service cost were measured using the projected unit credit method as per actuarial valuation carried out at balance sheet date.

The following tables sets out the funded status of the gratuity plan and the amount recognised by the company's financial statements as at March 31, 2011.

11) As per Accounting Standard-17, "Segment Reporting, Company who is dealing in multiple products/service and operates in different geographical areas are required to report under this Accounting Standard, hence no disclosure is required as the company operates in a single primary business segment namely "Engineering, Construction & Infrastructure development" activities and at single geographical area namely India.

12) As per Accounting Standard 18, "Related Party Disclosure", the disclosures of transactions with the Related Parties as defined in the Accounting Standard are given below:

I. List of Related Parties

Associate Companies/Entities:

Sadbhav Finstock Pvt. Ltd., Sadbhav Quarry Works Pvt. Ltd., Sadbhav Public Charitable Trust, Santokba Trust, Mumbai Nasik Expressway Ltd., Dhule Palesner Tollway Ltd.

Subsidiary:

Sadbhav Infrastructure Project Limited, Nagpur-Seoni Express Way Limited, Sadbhav Mining Limitada Mozambique.

Subsidiaries of Subsidiary:

Ahmedabad Ring Road Infrastructure Limited, Aurnagabad-Jalna Toll Way Limited, Rohtak-Panipat Tollway Pvt. Ltd, Bijapur- Hungund Tollway Pvt. Ltd, Hydrabad-Yadgiri Toll Way Pvt. Ltd. and Maharashtra Border Check Post Network Ltd.

Joint Ventures:

Sadbhav-Prakash JV and SEL-GKC JV

Key Management Personnel:

Shri Vishnubhai M. Patel, Shri Girish N. Patel, Shri Nitin R. Patel, Shri Shashinbhai V. Patel, Smt. Rajeshriben Patel

Relatives of Key Management Personnel and Enterprises over which Relatives of Key Managerial Persons having significant infuence:

Smt. Shantaben V. Patel, Montecarlo Construction Ltd., V. M. Patel (HUF), Sarjan Infracon Pvt. Ltd., Shri Vikram R. Patel, Shri Vasistha C. Patel, Veer Trans, Veer Procon Ltd.

13) Disclosures as per Clause 32 of the Listing Agreements with the stock exchanges

b) Company has not given any loans and advances to any associates and frms/companies in which directors are interested.

c) None of the loanees have made investments in shares of the Company.

14) During the year, pursuant to the shareholders agreement and share subscription agreement dated 18th August, 2010, private equity investor's have acquired 36,21,004 equity shares on fully diluted basis & acquired 22,50,774 - 0.01% Compulsory Convertible Cumulative Preference Shares (CCCPS) by investing Rs. 400/- crores in Sadbhav Infrastructure Project Limited, a Company's subsidiary.

15) Investment:

i. During the year, as a part of group restructuring investment made in following project specific SPVs have been transferred to a company's subsidiary Sadbhav Infrastructure Project Limited.

Against aforesaid pending transfer of shares, amount received from Sadbhav Infrastructure Project Limited have been shown as "Advance Received from subsidiary against sale of shares in other subsidiaries" in Schedule–12 under Current Liabilities.

ii. 96,00,000 Shares have been pledged out of 2,44,79,940 shares held in Nagpur-Seoni Express way Ltd. with their lenders

iii. Entire 1,04,00,000 shares held in Mumbai Nasik Expressway Ltd., are pledged with lenders of Mumbai Nasik Expressway Ltd.

iv. 68,850 Shares have been pledged out of 64,61,000 shares held in Dhule Palesner Tollway Ltd. with lenders.

17) Details of share of % holding in the Joint Venture Entities are as under.

(a) The audited/ provisional financial statements of the above entities are not available at time of finalisation of accounts, hence share in Assets, Liabilities, Income and expenditure of the Company in its Joint Venture Entity has not been given.

(b) In case of MNEL, commercial operations are started during the year. And in case of DTPL , the project is under construction and commercial activities are not started.

19) There was no impairment Loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard-28 "Impairment of Assets"

24) Borrowing Cost:

During reported year, company has capitalized borrowing cost Rs. 19,16,720 (NIL) according to AS-16 Borrowing Cost.

25) Right Issue Expenses :

During the current year, company has allotted 62,50,000 Right Shares having face value of Re 1 each at Premium of Rs. 71.50 per shares and alloted 1,86,25,800 equity shares of Re 1 each at a premium of Rs. 41.50 per shares against the conversion of 1,86,25,800 warrants. The company has written off Right issue expenses aggregating Rs. 144.37 Lacs in Securities Premium Account.

26) Remuneration to Managing Director is paid on monthly basis and therefore statement showing computation of net Profit U/s 349 of the Companies Act, 1956 is not given.


Mar 31, 2010

Company Overview:

The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in the line of canals, irrigations projects, roads, bridge, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. Company also establishes maintain, operate, lease or transfer the above infrastructure facilities on BOT, BOLT and BOTT basis. Company is also engaged in mining activities on contract basis.

1) All amounts in the financial statements are presented in Rupees Lacs except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary to confirm to the figures presented in the current year.

2) As the Company is engaged in Construction business, the provision of Para 3 and Para 4C of Part II of Schedule VI to The Companies Act, 1956 regarding quantitative details, licence capacity and installation capacity are not applicable.

3) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated if realized in ordinary course of business. Provision for known liabilities are adequate and not in excess of the amount reasonably necessary.

4) Details of Securities given in respect of Secured Loans

1. Redeemable Non Convertible Debentures

The debentures are secured by the first legal Registered Mortgage and charge on the specific movable fixed assets of the Company and specific immovable properties i.e. Bunglow (Manorama Retreat) and Flat (Abhimanyu) belonging to the Company. The security has been created on the said assets on 29th May, 2009 and same has been registered with Registrar of Company on 2nd June, 2009.

2. Term Loans From Banks & Financial Institutions

Secured by way of hypothecation of specific machineries and equipments purchased.

3. Working Capital From Banks

a. Secured by hypothecation of stock of construction materials lying at sites, books debts and other receivables

b. First charge by way of mortgage of immovable property(Sadbhav House) and immovable property situated at Village Ognaj alongwith furnitures, fixtures etc. owned by company and second charge on machineries owned by the company.

c. Freehold land admeasuring 1,15,556 Sq. mts. of Group company Sadbhav Quarry Works Pvt. Ltd. situated at Tulsigam, Tal. Savli, Dist. Baroda.

d. Corporate Guarantee of Group Company Sadbhav Quarry Works Pvt. Ltd.

e. All the limits are also secured by Personal Guarantee and certain properties of Promoter Directors.

6) Contingent Liability:

a) The Company has given counter guarantee to the Bank for Rs. 85,427.56 Lacs (Rs. 45,012.06 Lacs) against the guarantee given by the Bank.

b) Demand under Orissa Sales Tax Act Rs. 4.55 Lacs (Rs. 4.55 Lacs).

c) Demand under Orissa Sales Tax Act for Entry Tax Rs. 0.75 Lacs (Rs. 0.75 Lacs).

d) Demand of Custom duty towards import of Machineries Rs.104.95 Lacs (Rs.104.95 Lacs).

e) Demand under Income Tax Act, 1961 Rs. 157.02 Lacs (Rs. 56.03 Lacs).

f) Demand under Service Tax Act, 1994 Rs. 67.29 Lacs (Rs. 67.29 Lacs).

g) Company has given corporate guarantee to HDFC bank against loan of Rs. 400 Lacs given by the bank to Seven Hills Construction and to ABN Amro bank against loan of Rs. 106.56 Lacs given to same party.

h) Company has given corporate guarantee to banks for Rs. 17,100 Lacs (Rs. 4,000 Lacs) against the finance facility given by the banks to our subsidiary companies.

i) The Regional Transport Officer, Surat (RTO) issued a notice for payment of road tax and penalty under the Bombay Motor Vehicles Act, 1958 on forty (40) dumpers used by the Company at the excavation of mining sites around Surat. The Company fled a Special Civil application in the Gujarat High Court against the Commissioner of Transport and the RTO. The Gujarat High Court directed Company to deposit the road tax (without penalty). The Company has complied with the order and has deposited Rs. 49.20 Lacs. The hearing of the matter has not yet commenced before authority. The Company has not made provision for penalty in its Books of Accounts.

j) Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has fled a suit for recovery of Rs. 46.42 Lacs against the company and its directors and officers holding them jointly and severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed Rs. 46.42 Lacs balance to be paid and fled Civil Suit at Civil Court, Nagpur. The company has challenged the jurisdiction of the court. The matter is pending before the Civil Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts.

k) The Finance Act, 2009 has amended an explanation of section 80(1A) of the Income Tax Act, 1961 by giving retrospectively effect from 01-04-2000. Due to aforesaid retrospective amendment estimated Tax liability would be Rs. 7.30 cr. For the A.Y. 2003-04 to A.Y. 2007-08. However, no demand notice has been raised by the department. (Refer Note No. 8).

7) Company is purchasing its bulk construction material like steel, cement, diesel and bitumen etc. from big government undertaking companies and private sector companies and hence there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the company owes any dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

8) The Finance Act, 2009 has amended an explanation of section 80(1A) of the Income Tax Act, 1961 by giving retrospectively effect from 01-04-2000. Assessment u/s 143(3) of the Income Tax Act for the A.Y. 2008-09 has been completed during the year and liability as per assessment order has been paid and provided in books of accounts by debiting Income Tax of earlier years. The Company has also provided liability of Income Tax for A.Y. 2009-10 by debiting Income Tax of earlier years. Tax liability for the current year has been provided as per the current tax provisions. The Company has received Notice u/s 148 of the Income Tax Act for re-opening of assessment for the A.Y. 2003-04 to A.Y. 2007-08, against which Company has fled a Special Civil Applications in the High Court of Gujarat and hence estimated tax liability of Rs. 7.30 Crores has not been provided in books of accounts.

9) As per Accounting Standard 18, "Related Party Disclosure" issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the Related Parties as defined in the Accounting Standard are given below:

I. List of Related Parties

Associate Companies/Entities:

Sadbhav Finstock Pvt. Ltd., Sadbhav Quarry Works Pvt. Ltd., Sadbhav Public Charitable Trust, Santokba Trust, Dhule Palasner Tollway Limited.

Subsidiaries:

Ahmedabad Ring Road Infrastructure Limited, Sadbhav Infrastructure Project Limited, Aurnagabad-Jalna Tollway Limited, Nagpur-Seoni Express Way Limited, Maharashtra Border Check Post Network Ltd., Sadbhav Mining Limitada, Mozambique, Rohtak-Panipat Tollway Pvt. Ltd, Bijapur-Hungund Tollway Pvt. Ltd, and Hydrabad-Yadgiri Tollway Pvt. Ltd.

Joint Ventures:

Sadbhav-Prakash JV, HCC-SEL JV, Jilin-Sadbhav JV, JMC-Sadbhav JV & SEL-GKC JV

Key Management Personnel:

Shri Vishnubhai M. Patel, Shri Girish N. Patel, Shri Nitin R. Patel, Shri Shashinbhai V. Patel, Smt. Rajeshriben Patel

NOTE:-

1. Sub - Contract Expenditure of relatives of Key Managerial Personnel includes Rs. 1737.77 Lacs (Rs. 135.23) payable to Sarjan Infracon. and Rs. 215.03 (NIL) to Veer Trans, at the year end Rs. 8.59 Lacs (Rs. 20.00 Lacs) and Rs. 51.83 (NIL) are outstanding respectively of the above parties.

10) Disclosures as per Clause 32 of the Listing Agreements with the stock exchanges

(Note :- Loans to Subsidiaries includes interest free loan to Aurangabad-Jalna Tollway Ltd. to the tune of Rs. 1419.70 Lacs).

b) Company has not given any loans and advances to any associates and frms/companies in which directors are interested.

c) None of the loanees have made investments in shares of the Company.

11) There was no impairment loss on fixed assets on the basis of review carried out by the management in accordance with Accounting Standard-28 issued by the Institute of Chartered Accountants of India.

12) Investment:

i) During the year Company invested unutilized Q.I.P. issue proceeds in high quality interest/dividend bearing liquid Quoted Money Market Mutual Funds till the date of full utilization of QIP Proceeds.

ii) Income earned from above investment is Rs. 46.88 Lacs (Rs. 116.99 Lacs.).

iii) 25,10,400 Shares has been pledged out of 83,67,940 shares held in Ahmedabad Ring Road Infrastucture Ltd. with their lenders.

iv) 5,14,496 Shares has been pledged out of 10,05,207 shares held in Aurangabda Jalna Tollway Ltd. with their lenders.

v) 96,00,000 Shares has been pledged out of 2,44,79,940 shares held in Nagpur Seoni Expressway Ltd. with their lenders.

vi) Entire 1,04,00,000 shares held in Mumbai Nasik Expressway Ltd., are pledged with lenders of Mumbai Nasik Expressway Ltd

vii) Movement in investments made by the Company during the year :

Note:- All above figures are provisional as the audited accounts of the above companies are not available at time of signing the annual accounts of the company.

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

13) Borrowing Cost:

During reported year, company has capitalized borrowing cost Rs. NIL (NIL) according to AS-16 Borrowing Cost.

14) As per Accounting Standard-17, "Segment Reporting" issued by The Institute of Chartered Accountants of India, Company who is dealing in multiple products/service and operates in different geographical areas are required to report under this Accounting Standard, hence no disclosure is required as the company operates in a single primary business segment namely "Engineering, Construction & Infrastructure development" activities and at single geographical area namely India.

15) Remuneration to Managing Director is paid on monthly basis and therefore statement showing computation of net profit U/s 349 of the Companies Act, 1956 is not given.

Notes :

1. Hyderabad-Yadgiri TollWay Pvt.Ltd., Rohtak-Panipat Tollway Pvt.Ltd. and Bijapur-Hungund Tollway Pvt. Ltd. was incorporated on 20th Janauary, 2010, 25th January, 2010 and 22nd February, 2010. Their first financial year would end on 31st March 2011.

2. All the Companies have face value of Rs. 10 each, save and except for Sadbhav Mining Limitada where the value is represented in amount only and no specific face value has been defined as per local laws, applicable to the Company.

3. Amount of investment made in Sadbhav Mining Limitada is Rs. 80,396 (50000 MTn @ Rs. 1.608 per MTn).

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