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Notes to Accounts of SREI Infrastructure Finance Ltd.

Mar 31, 2016

1. Rights, preferences and restrictions in respect of each class of shares

The Company''s authorised capital consists of two classes of shares, referred to as Equity Shares and Preference Shares having par value of Rs. 10/- and Rs. 100/- each respectively. Each holder of equity shares is entitled to one vote per share. Preference Shareholder has a preferential right over equity share holders, in respect of repayment of capital and payment of dividend. However, no such preference shares have been issued by the Company during the year ended 31st March, 2016 and 31st March, 2015.

The Company declares and pays dividend in Indian rupees. The dividend, if any, 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 any of the 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.

2. Shares allotted as fully paid-up without payment being received in cash/by way of bonus shares (during 5 years preceding 31st March, 2016)

Pursuant to amalgamation of Quippo Infrastructure Equipment Limited (Transferor Company) into and with the Company, approved by the Equity Shareholders of the Company and sanctioned by the Hon''ble High Court of Calcutta on 18th January, 2011, the Company issued and allotted 92,915,839 equity shares of Rs. 10/- par value, as fully paid up bonus shares, to the pre-amalgamation equity shareholders of the Company on 5th March, 2011.

Further, the Company issued and allotted 294,025,696 equity shares of Rs. 10/- par value, as fully paid-up, towards consideration for the aforesaid amalgamation, to the shareholders of the Transferor Company on 5th March, 2011. This includes 48,600,000 equity shares allotted to Srei Growth Trust, a Trust settled by the Company on 4th March, 2011, to receive equity shares of the Company in exchange of the Company''s shareholding in the Transferor Company. The beneficial interest in the Trust amounting to Rs. 1,851.50 Lacs, representing the cost of shares of the Transferor Company, is shown under ''Non-Current Investments''in the Balance Sheet.

3. Bond / Debenture Redemption Reserve

As per terms of Issue, Company creates Bond / Debenture Redemption Reserve ("DRR") towards redemption of Long- Term Infrastructure Bonds and Secured Non-Convertible Debentures issued through Public Issue, as statutorily required.

The Company had, in the past years, also created DRR towards redemption of Unsecured Subordinated Bonds / Debentures / Debt (Tier II Capital) as per management discretion, by virtue of which during FY 2015-16, no amount was required to be transferred to DRR since, as at March 2016, the DRR was in excess of the statutory requirements.

4. Long-Term Infrastructure Bonds – Secured, Redeemable, Non-convertible Debentures

During the financial year 2011-12, the Company had raised fund through Public issue of Long-Term Infrastructure Bonds in the nature of Secured, Redeemable Non-Convertible Debentures, eligible for deduction under section 80 CCF of the Income-Tax Act, 1961. Fund raised has been utilised for the purposes of infrastructure lending as per terms in the year of the issue.

5. Nature of certain provisions and their movement

Provision for Bad Debts / Advances is made in the financial statements according to the Prudential Norms prescribed by RBI for NBFCs. The Company also makes additional provision based on the management''s best estimate, to the extent considered necessary.

The Company creates a general provision at 0.30% of the standard assets outstanding on the balance sheet date, as per the RBI Prudential Norms.

6. Working capital facilities from banks, including working capital demand loans earmarked against such facilities, are secured by hypothecation of underlying assets (short-term as well as long-term loan assets) covered by hypothecation loan and operating lease agreements with customers and receivables arising therefrom, ranking pari passu (excluding assets specifically charged to others). As per the prevalent practice, these facilities are renewed on a year-to-year basis and therefore, are revolving in nature.

7. Face value of Commercial Paper outstanding as at 31st March, 2016 is Rs. 45,865 Lacs (Previous year Rs. 8,350 Lacs). Face value of maximum outstanding at any time during the year was Rs. 412,775 Lacs (Previous year Rs. 287,470 Lacs). Face value of Commercial Paper repayable within one year is Rs. 45,865 Lacs (Previous year Rs. 8,350 Lacs).

8. To be credited to Investor Education and Protection Fund as and when due.

9. In order to qualify for registration as an ''Infrastructure Finance Company'', the Company decided not to accept or renew public deposits w.e.f. 20th April, 2010. The amount of public deposits outstanding as on 19th April, 2010 (including matured and unclaimed deposits) along with accrued and future interest thereof is kept in the form of a Fixed Deposit, under lien, with Axis Bank Limited, a scheduled commercial bank, for the purpose of making payment to the depositors. The outstanding balance of the Fixed Deposit as at 31st March, 2016 is Rs. 25 Lacs (Previous year: Rs. 25 Lacs).

10. LEASES

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises and equipments, which range between 11 months to 15 years and are usually renewable by mutual consent, on mutually agreeable terms. Some of these lease agreements have rent escalation upto 5% p.a. or 10% p.a. on renewals. Lease payments charged to the Statement of Profit and Loss with respect to such leasing arrangements aggregate to Rs. 831 Lacs (Previous year Rs. 735 Lacs).

Contingent rent recognised for agreements which stipulate rent payment based on usage is Rs. 32 Lacs (Previous year Rs. Nil).

(ii) Further, the Company also has certain non-cancellable operating lease arrangements for office premises, which is of 21 years and is usually renewable by mutual consent on mutually agreeable terms. In respect of such arrangements, lease payments for the year aggregating to Rs. 8 Lacs (Previous year Rs. 9 Lacs) have been recognised in the Statement of Profit and Loss.

(iii) Sub lease payments received (or receivable) recognised in the Statement of Profit and Loss for the year is Rs. 2,856 Lacs (Previous year Rs. 2,675 Lacs). Future minimum sublease payments expected to be received under non- cancellable subleases is Rs. 449 Lacs (Previous year Rs. 436 Lacs).

b. In the capacity of Lessor

(i) The Company has given assets on Operating lease (refer Note No. 12) for periods ranging between 5 to 15 years. Some of these lease agreements stipulate rental computation on the basis of earnings of the Lessee. Such contingent rent recognised during the year is Rs. 237 Lacs (Previous year Rs. 3,014 Lacs).

(ii) Further, the Company also has cancellable operating lease arrangements for office premises, which range between 1 to 3 years and are usually renewable by mutual consent on mutually agreeable terms. In respect of non-cancellable arrangements, lease earning for the year aggregating to Rs. Nil (Previous year Rs. 25 Lacs) have been recognised in the Statement of Profit and Loss.

11. During the month of April 2016, the Company has exited its investment in Viom Networks Limited and the consequential impact will be refl cted in the financial statements for FY 2016-17.

12. Information as required by Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 and Non-Banking Financial Companies - Corporate Governance (Reserve Bank) Directions, 2015 is furnished vide Annexure – II attached herewith.

13. Figures pertaining to the previous year have been rearranged / regrouped, wherever necessary, to make them comparable with those of current year.


Mar 31, 2015

Explanations:

1. The above Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard 3 ''Cash Flow Statements''.

2. Previous year figures have been rearranged / regrouped wherever necessary to conform to the current year''s classification.

This is the Cash Flow Statement referred to in our report of even date.

1(a) Corporate Information

Srei Infrastructure Finance Limited (the ''Company'') is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is also a Public Financial Institution (PFI) notified under section 4A of the Companies Act, 1956. The Company received a Certificate of Registration from the Reserve Bank of India (''RBI'') on 1st August, 1998 to commence / carry on the business of Non-Banking Financial Institution (''NBFI'') and was subsequently classified as Infrastructure Finance Company vide Certificate of Registration dated 11th May, 2010.

2.1 Reconciliation of the Number of Equity Shares outstanding

The reconciliation of the number of equity shares outstanding and the corresponding amount thereof, as at the Balance Sheet date is set out below:

2.2 Rights, preferences and restrictions in respect of each class of shares

The Company''s authorised capital consists of two classes of shares, referred to as Equity Shares and Preference Shares having par value of Rs. 10/- and Rs. 100/- each respectively. Each holder of equity shares is entitled to one vote per share. Preference Shareholder has a preferential right over equity share holders, in respect of repayment of capital and payment of dividend. However, no such preference shares have been issued by the Company during the year ended 31st March, 2015 and 31st March, 2014.

The Company declares and pays dividend in Indian rupees. The dividend, if any, 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 any of the 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.

2.3 Shares allotted as fully paid-up without payment being received in cash / by way of bonus shares (during 5 years preceding 31st March, 2015)

Pursuant to amalgamation of Quippo Infrastructure Equipment Limited (Transferor Company) into and with the Company, approved by the Equity Shareholders of the Company and sanctioned by the Hon''ble High Court of Calcutta on 18th January, 2011, the Company issued and allotted 92915839 equity shares of Rs. 10/- par value, as fully paid-up bonus shares, to the pre-amalgamation equity shareholders of the Company on 5th March, 2011.

Further, the Company issued and allotted 294025696 equity shares of Rs. 10/- par value, as fully paid-up, towards consideration for the aforesaid amalgamation, to the shareholders of the Transferor Company on 5th March, 2011. This includes 48600000 equity shares allotted to Srei Growth Trust, a Trust settled by the Company on 4th March, 2011, to receive equity shares of the Company in exchange of the Company''s shareholding in the Transferor Company. The beneficial interest in the Trust amounting to Rs. 1,851.50 Lacs, representing the cost of shares of the Transferor Company, is shown under ''Non-Current Investments'' in the Balance Sheet.

3.1 Bond / Debt Redemption Reserve

As per terms of Issue, Company creates Bond / Debt Redemption Reserve towards redemption of Long-Term Infrastructure Bonds and Secured Non-Convertible Debenture issued through Public Issue. Company had also created Bond / Debt Redemption Reserve towards redemption of Unsecured Subordinated Bonds / Debentures / Debt (Tier II Capital) as per management discretion. Details of movement is as below:

4.1 Long-Term Infrastructure Bonds - Secured, Redeemable, Non-Convertible Debentures

During the financial year 2011-12, the Company had raised fund through Public Issue of Long-Term Infrastructure Bonds in the nature of Secured, Redeemable Non-Convertible Debentures, eligible for deduction under section 80 CCF of the Income Tax Act, 1961. Fund raised has been utilised for the purposes of infrastructure lending as per terms in the year of the issue.

Maturity profile and rate of interest of these Bonds are as set out below:

(Rs. in Lacs)

Bonds with interest rate of 8.90% have an overall tenure of 10 years and those with 9.15%, 15 years. Buyback option is available for all bonds at the end of 5 years i.e. on 22.03.2017. Bonds are secured by exclusive charge on specific receivables of the Company & pari-passu mortgage / charge on immovable property.

4.2 Non-Convertible Debentures

* Includes current maturities

1 Secured against Receivables / Assets of the Company and mortgage of immovable property.

2 Secured against Mortgage of immovable property.

3 Secured against Receivables / Assets of the Company and mortgage of immovable property. NCD''s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017.

4 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest.

5 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest. NCD''s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017.

6 Secured against Mortgage of immovable property. NCD''s have an overall tenure of 5 years and having put / call option at the end of 3 years i.e. on 08-06-2015.

7 Secured against Receivables / Assets of the Company and mortgage of immovable property. As interest rate during the tenor of bond is different i.e. Year 1: 12.50%, Year 2: 12%, Year 3: 11.50%, Year 4: 11.25%, Year 5: 11.25%, interest rate for 1st year considered for disclosure.

8 Secured against Receivables / Assets of the Company.

9 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and / or are equity shareholder(s) of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by investors on the relevant record date of interest payment.

10 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and / or are equity shareholder(s) of Company and / or senior citizens on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by the investors on the relevant record date of interest payment.

Funds raised Rs. 47,614 Lacs through public issue of Secured, Redeemable Non-Convertible Debentures have been utilised for the purposes as per the terms of the issue.

All the above debentures are redeemable at par.

1 Secured against Receivables / Assets of the Company and mortgage of immovable property.

2 Secured against Mortgage of immovable property.

3 Secured against Receivables / Assets of the Company and mortgage of immovable property. NCD''s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017.

4 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest.

5 Secured against Receivables / Assets of the Company and mortgage of immovable property. Due to cumulative Interest bonds wherein interest is payable on maturity, yield has been considered as rate of interest. NCD''s have an overall tenure of 7 years and having put / call option at the end of 5 years i.e. on 05-11-2017.

6 Secured against Mortgage of immovable property. NCD''s have an overall tenure of 5 years and having put / call option at the end of 3 years i.e. on 08-06-2015.

7 Secured against Receivables / Assets of the Company and mortgage of immovable property. As interest rate during the tenor of bond is different i.e. Year 1: 12.50%, Year 2: 12%, Year 3: 11.50%, Year 4: 11.25%, Year 5: 11.25%, interest rate for 1st year considered for disclosure.

8 Secured against Receivables / Assets of the Company and mortgage of immovable property. In case investor fall under individual category and who are holder of NCD(s) / Bond(s) previously issued by the Company in past public issues and / or are equity shareholder(s) of Company on the date of allotment, shall be eligible for additional coupon rate of 0.25% p.a. provided the NCD(s) / Bond(s) are held by investors on the relevant record date of interest payment.

Funds raised Rs. 33,635 Lacs through public issue of Secured, Redeemable Non-Convertible Debentures have been

utilised for the purposes as per the terms of the issue.

All the above debentures are redeemable at par.

* Includes current maturities

The above Term Loans are secured by charge on specific assets covered by loan / lease agreements with customers and / or receivables arising therefrom.

1 Includes loans of Rs. 9,817 Lacs (Previous year: Rs. 12,299 Lacs) guaranteed by Export Import Bank of the United States.

4.4 Unsecured Subordinated bonds / debentures (Tier II Capital)

During the year, the Company raised subordinated debt qualifying for Tier II capital amounting to Rs. Nil (Previous year: Rs. 11,530 Lacs). The following table sets forth the details of the outstanding:

5. DEFERRED TAX LIABILITIES (Net)

In terms of Accounting Standard 22, the net Deferred Tax Liability (DTL) recognised during the year is Rs. 1,041 Lacs (Previous year: Rs. 660 Lacs). Consequently, the net DTL as at year-end stands at Rs. 11,182 Lacs (Previous Year Rs. 10,144 Lacs). The break-up of major components of net DTL is as follows:

7.1 Nature of certain provisions and their movement

Provision for Bad Debts / Advances is made in the financial statements according to the Prudential Norms prescribed by RBI for NBFCs. The Company also makes additional provision based on the management''s best estimate, to the extent considered necessary.

The Company creates a general provision at 0.25% of the standard assets outstanding on the balance sheet date, as per the RBI Prudential Norms.

The following table sets forth the movement of aforesaid Provisions:

8.1 Working capital facilities from banks, including working capital demand loans earmarked against such facilities, are secured by hypothecation of underlying assets (short-term as well as long-term loan assets) covered by hypothecation loan and operating lease agreements with customers and receivables arising therefrom, ranking pari passu (excluding assets specifically charged to others). As per the prevalent practice, these facilities are renewed on a year-to-year basis and therefore, are revolving in nature.

8.2 Face value of Commercial Paper outstanding as at 31st March, 2015 is Rs. 8,350 Lacs (Previous year Rs. Nil Lacs). Face value of maximum outstanding at any time during the year was Rs. 287,470 Lacs (Previous year Rs. 60,000 Lacs). Face value of Commercial Paper repayable within one year is Rs. 8,350 Lacs (Previous year Rs. Nil Lacs)

9.1 The Company has not received any memorandum from ''Suppliers'' (as required to be filed by the ''Suppliers'' with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status as on 31st March, 2015 as micro, small or medium enterprises. Consequently, the interest paid / payable by the company to such Suppliers, during the year is Rs. Nil (Previous year: Rs. Nil).

10.1 To be credited to Investor Education and Protection Fund as and when due.

10.2 In order to qualify for registration as an ''Infrastructure Finance Company'', the Company decided not to accept or renew public deposits w.e.f. 20th April, 2010. The amount of public deposits outstanding as on 19th April, 2010 (including matured and unclaimed deposits) along with accrued and future interest thereof is kept in the form of a Fixed Deposit, under lien, with Axis Bank Limited, a scheduled commercial bank, for the purpose of making payment to the depositors. The outstanding balance of the Fixed Deposit as at 31st March, 2015 is Rs. 25 Lacs (Previous year: Rs. 25 Lacs).

** There is no system of issuance of distinctive shares in the country of registration.

All the Investments mentioned above are fully paid-up

# Attivo Economic Zone (Mumbai) Private Limited (Formerly Mumbai Futuristic Economic Zone Private Limited) became an associate w.e.f. 30.12.2014

## The Company has an investment of Rs. 1,051 Lacs (Previous year Rs. 1,051 Lacs) in the shares of Sahaj e-village Limited ("Sahaj"), an Associate of the Company in terms of Accounting Standard 23, "Accounting for Investments in Associates in Consolidated Financial Statements". Further, the Company has advanced loans amounting to Rs. 20,937 Lacs (Previous year Rs. 25,942 Lacs) to Sahaj.

Sahaj is a long-gestation rural e-governance initiative and due to the accumulated losses, it''s net worth has eroded as at 31st March, 2015. However, Sahaj has informed the Company that it is in the process of implementing a revamped business plan, based upon detailed study on the present and future business model, operations and financial plan, as suggested by a renowned consultant and that it shall continue to be a going concern in the foreseeable future.

Considering the long-term strategic nature of investment and also in view of the revamped business plan of Sahaj as enumerated above, no provision is considered necessary by the Company at present, for any diminution in the value of investments and against loans advanced to Sahaj.

1 Secured by underlying assets and in certain cases are additionally secured by immovable properties and / or pledge of equity shares of the borrowers by way of collateral security. Exposures which are secured by a charge over future toll revenue / cash flows / receivables etc. have been considered as secured.

2 Loans to Others includes assets aggregating Rs. 22,028 Lacs (Previous year Rs. 33,325 Lacs) acquired in satisfaction of debt and held for sale.

3 Includes Non-Performing Assets of Rs. 77,813 Lacs (Previous year Rs. 38,683 Lacs).

Notes:

i) There are no restructured accounts under "CDR Mechanism" and under "SME Debt Restructuring Mechanism" categories.

ii) Other than the aforesaid, the Company has created further provision of Rs. Nil (Previous year Rs. 38 Lacs) towards diminution in fair value of re-structured advances.

27. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs. in Lacs) As at As at Particulars 31st March 31st March, 2015 2014

A. Contingent Liabilities

(a) Claims against the Company not acknowledged as debts:

Disputed Income Tax1 5,928 3,990

Fringe Benefit Tax2 226 226

Disputed Service Tax3 302 302

Central Sales Tax4 406 211

Entry Tax5 2 2

(b) Guarantees:

Bank Guarantees6 3,124 1,858

Guarantees to Banks and Others against credit facilities extended by them to third parties 18,522 12,706

Guarantees to Banks and others, in the form of Put Option against loan facilities 39,189 40,704

Total 67,699 59,999

1 Certain Assessment Orders disallowing Special Reserve (created as per Section 45-IC of the RBI Act, 1934), Debt Redemption Reserve, Non-taxability of amount received on assignment of rights, Provision for Standard Assets, Disallowances under section 14A, Disallowance of Provision for NPA, etc. for the purpose of determining tax liability as per the provisions of Section 115JB of the Income Tax Act, 1961 have been challenged by the company before the appropriate authorities.

Similarly, disallowances under section 14A, Disallowance of Provision for NPA, Disallowance of Provision for earned leave encashment, matter relating to deduction u/s 36(1)(viii), Education Cess, Upfront Fees on borrowings, Long-Term Capital Gain arising out of transaction under a Scheme of Arrangement sanctioned by the Hon''ble Calcutta High Court on 28th January, 2008, etc. under normal provisions of the Income Tax Act, 1961 have also been challenged by the company before the appropriate authorities.

Pending disposal of the cases filed, the Company has not provided for the Income Tax liabilities arising out of the same.

2 The Company has challenged the constitutional validity of Fringe Benefit Tax (FBT) before the Hon''ble High Court at Calcutta and the Hon''ble Court has granted interim stay on levy of such FBT on the Company. In view of this, the Company has not provided for any liability against FBT since its inception upto the date of its abolition i.e. 31st March, 2009.

3 Service Tax department had issued a Show Cause Notice (SCN) cum Demand Notice for Rs. 450 Lacs, on 20th April, 2012

with regards to availment of Cenvat Credit, considering the observations of auditors appointed u/s 14AA of the Central Excise

Act, 1944. The Company had filed it''s reply followed by personal hearings. An Order dated 31st March, 2014 was passed by the Commissioner of Service Tax, Kolkata confirming a demand of Rs. 151 Lacs along with penalty of Rs. 151 Lacs. The

Company has filed an Appeal and Stay Application before the Customs, Excise and Service Tax Appelate Tribunal (CESTAT), Kolkata.

4 A demand of Rs. 211 lacs has been raised for the period 2010-11 by the Assessing Officer following disallowance of exemption claimed u/s 5(2) of the Central Sales Tax Act, 1956 vide assessment order dated 28.06.2013. An appeal against the said assessment order filed on 07.10.2013 before Senior Joint Commissioner of Commercial Taxes, West Bengal has been rejected. An appeal against rejection has been filed by the Company before West Bengal Sales Tax Appellate and Revisional Board and hearing is awaited.

A demand of Rs. 195 lacs has been raised for the period 2011-12 by the Assessing Officer following disallowance of exemption claimed u/s Sec 5(2) of the Central Sales Tax Act, 1956 vide assessment order dated 30.06.2014. An appeal against the assessment order has been filed before the Appellate Authority on 07.11.2014.

5 Entry Tax in West Bengal was held unconstitutional by the Hon''ble Calcutta High Court in June, 2013 and the Govt. of West Bengal has appealed before a Division Bench of the Hon''ble High Court. Till further order, the deposit of tax has been kept in abeyance.

6 Includes Rs. 697 Lacs (Previous year Rs. 697 Lacs) issued on Company''s behalf by the Banker of Joint Venture Company.

28. The Company has entered into Options / Swaps / Forward contracts (being derivative instruments) which are not intended for trading or speculation, for the purpose of hedging currency and interest rate related risks. Options, Swaps and Forward contracts outstanding as at year end are as follows:

33. LEASES

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises and equipments, which range between 11 months to 15 years and are usually renewable by mutual consent, on mutually agreeable terms. Lease payments charged to the Statement of Profit and Loss with respect to such leasing arrangements aggregate to Rs. 735 Lacs (Previous year Rs. 706 Lacs).

Some of the above cancellable lease agreements have rent escalation upto 5% p.a. or 10% p.a. on renewals. None of the operating lease agreements entered into by the Company provide for any contingent rent payment and hence, the Company has not paid any contingent rent in the current and previous year.

(ii) Further, the Company also has certain non-cancellable operating lease arrangements for office premises, which is of 21 years and is usually renewable by mutual consent on mutually agreeable terms. In respect of such arrangements, lease payments for the year aggregating to Rs. 9 Lacs (Previous year Rs. 10 Lacs) have been recognised in the Statement of Profit and Loss.

(iii) Sub lease payments received (or receivable) recognised in the Statement of Profit and Loss for the year is Rs. 2,675 Lacs (Previous year Rs. 2,349 Lacs). Future minimum sublease payments expected to be received under non- cancellable subleases is Rs. 436 Lacs (Previous year Rs. 400 Lacs).

b. In the capacity of Lessor

(i) The Company has given assets on Operating lease (refer Note No. 12) for periods ranging between 5 to 15 years. Some of these lease agreements stipulate rental computation on the basis of earnings of the Lessee. Such contingent rent recognised during the year is Rs. 3,014 Lacs (Previous year Rs. 3,679 Lacs).

(ii) Further, the Company also has certain non-cancellable operating lease arrangements for office premises, which range between 1 to 3 years and are usually renewable by mutual consent on mutually agreeable terms. In respect of such arrangements, lease earning for the year aggregating to Rs. 25 Lacs (Previous year Rs. 189 Lacs) have been recognised in the Statement of Profit and Loss.

34. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 15 - EMPLOYEE BENEFITS

The trustees of the gratuity scheme for the employees of the Company have entrusted the administration of the scheme to the Life Insurance Corporation of India (LIC).

(g) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

(h) The amount provided for defined contribution plan is as follows:

35. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 18 - RELATED PARTY DISCLOSURES Related Parties:

Holding Company Country of origin

Adisri Commercial Private Limited (w.e.f. 26.02.2015) India

Srei Capital Markets Limited India

Sunsidiaries & Setop -down Subsidiries Country of origin

Srei Alternative Investment Managers Limited India

Srei Infrastructure Advisors Limited India

Attivo Economic Zones Private Limited (Formerly Global Investment Trust India Limited) (ceased to be Subsidiary w.e.f. 21.11.2014)

Attivo Economic Zone (Mumbai) Private Limited (Formerly Mumbai Futuristic India

Economic Zone Private Limited) (ceased to be Subsidiary w.e.f. 30.12.2014) Controlla Electrotech Private Limited India

Srei Mutual Fund Asset Management Private Limited India

Srei Mutual Fund Trust Private Limited India

Srei International Infrastructure Services GmbH, Germany Germany

Srei Forex Limited India

Srei Insurance Broking Private Limited India

Bengal Srei Infrastructure Development Limited (Subsidiary of Srei India Infrastructure Advisors Limited)

Hyderabad Information Technology Venture Enterprises Limited (Subsidiary of India

Srei Alternative Investment Managers Limited) Cyberabad Trustee Company Private Limited (Subsidiary of Srei Alternative India Investment Managers Limited)

ZAO Srei Leasing,Russia Subsidiary of Srei International Infrastructure Russia Services GmbH, Germany)

Srei Advisors Pte Limited, Singapore (Subsidiary of Srei International Singapore

Infrastructure Services GmbH, Germany) y H Goldensons Construction Private Limited India

Quippo Oil & Gas Infrastructure Limited India

Performance Drilling International Private Limited (Subsidiary of Quippo Oil & I Gas Infrastructure Limited w.e.f. 23.01.2015) Nigeria

Quippo Energy Private Limited India Quippo Mauritius Private Limited (ceased to be Subsidiary of Quippo Energy Mauritius Private Limited w.e.f. 25.02.2015)

Quippo Energy Nigeria Private Limited (Subsidiary of Quippo Private Limited, ceased to be Step-down subsidiary of Quippo Energy Private Limited Mauritius w.e.f. 25.02.2015)

Quippo CJ Exploration & Production Private Nigeria Limited (ceased to be Subsidiary of Quippo Oil & Gas Infrastructure Limited w.e.f. 08.07.2014)

Srei Asset Reconstruction Private Limited (Subsidiary between 30.06.2014 to , India 01.09.2014 and w.e.f. 31.03.2015)

Srei Equipment Finance Limited India Country of origin Sahaj e-Village Limited India

Attivo Economic Zone (Mumbai) Private Limited (Formerly Mumbai Futuristic Economic Zone Private Limited) (ceased to be Subsidiary and has become India Associate w.e.f. 30.12.2014)

Quippo Construction Equipment Limited (ceased to be Associate w.e.f. India 29.09.2014)

Srei Mutual Fund Trust India

Srei Growth Trust India

Name Designation

Mr. Hemant Kanoria Chairman & Managing Director

Mr. John Moses Harding (w.e.f. 01.04.2014) Group Chief Executive Officer-Liability & Treasury Management

Mr. Bijoy Kumar Daga (w.e.f. 01.04.2014) Chief Executive Officer-Infrastructure Project Finance

Mr. Bajrang Kumar Choudhary (w.e.f. 01.04.2014) Chief Executive Officer - Infrastructure Project Development

Mr. Sanjeev Sancheti (from 01.04.2014 to 09.11.2014) Group Head - Corporate Strategy and Planning

Mr. Rajdeep Khullar (from 01.04.2014 to 09.11.2014) Group Head - Legal

Mr. Deepak Chatrath (from 22.05.2014 to 09.11.2014) Sr. Vice-President - Internal Audit

Mr. Shashi Bhushan Tiwari (from 01.04.2014 to 09.11.2014) Chief Operating Officer

Mr. Rajesh Jain (from 01.04.2014 to 09.11.2014) Head - Human Resources

Mr. Kishore Kumar Lodha Chief Financial Officer

Mr. Sandeep Lakhotia (w.e.f. 01.04.2014) Company Secretary Viom Networks Limited

* Refer Note No. 35

@ The outstanding are interest bearing except that of Controlla Electrotech Private Limited. Loan repayment beyond seven years is Rs. 33,749 Lacs.

# The outstanding are interest bearing except that of Controlla Electrotech Private Limited, Srei Alternative Investment Managers Limited and Srei Insurance Broking Private Limited. Loan repayment beyond seven years is Rs. 47,996 Lacs.

37. Disclosure in respect of Company''s Joint Venture in India pursuant to Accounting Standard 27 ''Financial Reporting of Interest in Joint Ventures'':

38. During the year the Company has purchased from an associate receivables amounting to Rs. 12,333 Lacs at Rs. 11,800 Lacs along with all rights attached to it from the date of such purchase. The receivables are due from State Government undertakings and are recoverable along with interest on delayed payment. These have been grouped under Other Receivables.

39. Information as required by Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 and Non-Banking Financial Companies - Corporate Governance (Reserve Bank) Directions, 2015 is furnished vide Annexure - II attached herewith.

40. Figures pertaining to the previous year have been rearranged / regrouped, wherever necessary, to make them comparable with those of current year.

Notes:

1 Advances represent the maturity pattern of loan assets and rentals on operating lease assets.

2 The maturity pattern of Investments has been considered on the basis of Managements best estimates.

3 The maturity pattern of working capital facilities sanctioned by the banks has been apportioned in ratio of the maturity pattern of Advances.

14. Disclosures on Risk Exposure in Derivatives

(i) Qualitative Disclosure

The structure and organization for management of risk in derivatives trading, is not applicable since the Company is not engaged in derivative trading.

Besides other market risks / core functions, Asset Liability Committee (ALCO) manages the Foreign Currency and Interest Rate Risks also. The Company has put in place the policies for hedging / mitigating risks / strategies and processes for continuous monitoring of risks, which will enable the Company to quantify risk, both on account of Foreign Currency and Interest Rate Risks. Apart from ALCO there is a Risk Committee of the Board which guides the Company in these risks.

The Board has delegated authority to company officials in the Forex Treasury department for entering into Generic derivative products besides Forward Contracts, on behalf of the Company, to hedge the Foreign Currency and Interest Rate Risk exposures.

The Company has a Market Risk Policy which paves the way for risk reporting and risk monitoring systems. The marked-to-market values are obtained from the banks with whom the hedge deals are done.

The Company, in order to hedge itself against the adverse impact of fluctuations in foreign currency rates / variable interest benchmark on underlying liability, enters into the derivative contracts in the nature of forward exchange contracts. The Company does not enter into derivative contracts for speculation or trading purposes. Derivate contracts which are closely linked to the existing assets and liabilities are accounted for as per the policy stated for foreign currency transactions and translation.

In accordance with the ICAI announcement, derivative contracts, other than foreign currency forward contracts covered under AS 11, are "marked-to-market" on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedged item, is charged to the Statement of Profit and Loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored. The Company believes that the above treatment reflects the true effect of the hedge and also reflects the economic substance of the impact of derivative contracts.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense in the year in which it is cancelled or renewed.


Mar 31, 2014

1. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(Rs. in Lacs)

Particulars As at 31st As at 31st March 2014 March 2013

A. Contingent Liabilities

(a) Claims against the Company not acknowledged as debts:

Disputed Income Tax1 3,990 3,779

Fringe Benefit Tax2 226 226

Disputed Service Tax3 302 450

Central Sales Tax4 211 -

Entry Tax5 2 -

(b) Guarantees:

Bank Guarantees6 1,858 1,637

Corporate Guarantees to Banks and Others 12,706 8,286

Guarantees to Banks and Others, in the form of Put Option against loan facilities 40,704 8,750

Total 59,999 23,128

B. Commitments

Estimated amount of capital contracts remaining to be executed and not

provided for (Net of advances) 508 1,157

On account of Letter of Credit 68,608 45,177

On account of Derivative Instruments (refer note 28)

1 Certain Assessment Orders disallowing Special Reserve (created as per Section 45-IC of the RBI Act, 1934), Debt Redemption Reserve, Disallowances under section 14A and Disallowance of Provision for NPA for the purpose of determining tax liability as per the provisions of Section 115JB, Disallowances under section 14A, Disallowance of Provision for NPA, Disallowance of Provision for earned leave encashment, matter relating to deduction U/s 36(1)(viii), Upfront Fees on borrowings and Long- Term Capital Gain arising out of transaction under a Scheme of Arrangement sanctioned by the Hon''ble Calcutta High Court on 28th January, 2008 under normal provisions of the Income Tax Act, 1961 have been challenged by the Company before the appropriate authorities. Pending disposal of the cases filed, the Company has not provided for the Income Tax liabilities arising out of the same.

2 The Company has challenged the constitutional validity of Fringe Benefit Tax (FBT) before the Hon''ble High Court at Calcutta and the Hon''ble Court has granted interim stay on levy of such FBT on the Company. In view of this, the Company has not provided for any liability against FBT since its inception upto the date of its abolition i.e. 31st March, 2009.

3 Service Tax department had issued a Show Cause Notice (SCN) cum Demand Notice for Rs. 450 lacs, on 20th April, 2012 with regards to availment of Cenvat Credit, considering the observations of auditors appointed U/s 14AA of the Central Excise Act, 1944. The Company had filed it''s reply followed by personal hearings. An Order dated 31st March, 2014 was passed by the Commissioner of Service Tax, Kolkata confirming a demand of Rs. 151 lacs along with penalty of Rs. 151 lacs. The Company is in the process of filing an appeal before the Appellate Authority against the said Order.

4 A demand of Rs. 211 lacs has been raised for the period 2010-11 by the Assessing Officer following disallowance of exemption claimed U/s 5(2) of the CST Act, 1956 vide assessment order dated 28.06.2013. An appeal against the said assessment order has been filed before the Appellate Authority on 07.10.2013.

5 Entry Tax in West Bengal was held unconstitutional by the Hon''ble Calcutta High Court in June, 2013 and the Govt. of West Bengal has appealed before a Division Bench of the Hon''ble High Court. Till further order, the deposit of tax has been kept in abeyance.

6 Includes Rs. 697 Lacs (Previous year Rs. 697 Lacs) issued on Company''s behalf by the Banker of Joint Venture Company.

2. LEASES

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises and equipments, which range between 11 months to 15 years and are usually renewable by mutual consent, on mutually agreeable terms. Lease payments charged to the Statement of Profit and Loss with respect to such leasing arrangements aggregate to Rs. 706 Lacs (Previous year Rs. 1,259 Lacs).

Some of the above cancellable lease agreements have rent escalation upto 5% p.a. or 10% p.a. on renewals. None of the operating lease agreements entered into by the Company provide for any contingent rent payment and hence, the Company has not paid any contingent rent in the current and previous year.

(ii) Further, the Company also has certain non-cancellable operating lease arrangements for office premises, which range between 5 to 21 years and are usually renewable by mutual consent on mutually agreeable terms. In respect of such arrangements, lease payments for the year aggregating to Rs. 10 Lacs (Previous year Rs. 10 Lacs) have been recognised in the Statement of Profit and Loss.

(iii) Sub lease payments received (or receivable) recognised in the Statement of Profit and Loss for the year is Rs. 2,349 Lacs (Previous year Rs. 2,114 Lacs). Future minimum sublease payments expected to be received under non-cancellable subleases is Rs. 400 Lacs (Previous year Rs. 549 Lacs).

b. In the capacity of Lessor

(i) The Company has given assets on Operating lease (refer note 12) for periods ranging between 5 to 15 years. Some of these lease agreements stipulate rental computation on the basis of earnings of the Lessee. Such contingent rent recognised during the year is Rs. 3,679 Lacs (Previous year Rs. 1,895 Lacs).

(ii) Further, the Company also has certain non-cancellable operating lease arrangements for office premises, which range between 1 to 3 years and are usually renewable by mutual consent on mutually agreeable terms. In respect of such arrangements, lease earning for the year aggregating to Rs. 189 Lacs (Previous year Rs. 73 Lacs) have been recognised in the Statement of Profit and Loss.

3. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD (AS) 15 (REVISED) - EMPLOYEE BENEFITS

The trustees of the gratuity scheme for the employees of the Company have entrusted the administration of the scheme to the Life Insurance Corporation of India (LIC).

(g) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

4. Information as required by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 is furnished vide Annexure - II and III attached herewith.

5. Figures pertaining to the previous year have been rearranged / regrouped, reclassified and restated, wherever necessary, to make them comparable with those of current year.


Mar 31, 2013

1. Contingent Liabilities And Commitments (to the extent not provided for)

(Rs.in Lakh)

Particulars As at 31st March, 2013 As at 31st March, 2012 Contingent Liabilities

Bank Guarantees1 1,637 1,707

Corporate Guarantee to Banks 8,286 4,915

Guarantee in the form of Put Option to Banks against loan facilities 8,750 8,900

Disputed Income Tax 2 3,779 3,654

Fringe Benefit Tax 226 226

Disputed Service Tax 4450

Total 23,128 19,402

Commitments

Estimated amount of capital contracts remaining to be executed and not provided for (Net of advances) 1,157 2,782 Commitment on account of Derivative Instruments (refer note 28)

1 Includes Rs. 697 Lakh (Previous year Rs. 892 Lakh) issued on Company''s behalf by a Joint Venture Company.

2 Certain Assessment Orders disallowing Special Reserve (created as per Section 45-IC of the RBI Act, 1934), Debt Redemption Reserve, Disallowances under section 14A and Disallowance of Provision for NPA for the purpose of determining tax liability as per the provisions of Section 115JB, Disallowances under section 14A, Disallowance of Provision for NPA, Disallowance of Provision for earned leave encashment, matter relating to deduction U/s 36(1)(viii), Upfront Fees on borrowings and Long-Term Capital Gain arising out of transaction under a Scheme of Arrangement sanctioned by the Hon''ble Calcutta High Court on 28.01.08 under normal provisions of the Income Tax Act, 1961 have been challenged by the Company before the appropriate authorities. Pending disposal of the cases filed, the Company has not provided for the Income Tax liabilities arising out of the same.

3 The Company has challenged the constitutional validity of Fringe Benefit Tax (FBT) before the Hon''ble High Court at Calcutta and the Hon''ble Court has granted interim stay on levy of such FBT on the Company. In view of this, the Company has not provided for any liability against FBT since its inception upto the date of its abolition i.e., 31st March, 2009.

4 Service Tax Department has issued a Show Cause Notice (SCN) cum Demand Notice for Rs. 450 Lakh, on 20th April, 2012 with regards to availment of Cenvat Credit, considering the observations of auditors appointed u/s 14AA of the Central Excise Act. The Company has filed it''s reply followed by personal hearing on 11th April, 2013.

2. Leases

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises and equipments, which range between 11 months to 15 years and are usually renewable by mutual consent, on mutually agreeable terms. Lease payments charged to the Statement of Profit and Loss with respect to such leasing arrangements aggregate to Rs. 1,259 Lakh (Previous year Rs. 592 Lakh).

Some of the above cancellable lease agreements have rent escalation upto 5% p.a. or 10% p.a. on renewals. None of the operating lease agreements entered into by the Company provide for any contingent rent payment and hence, the Company has not paid any contingent rent in the current and previous year.

3. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) - Employee Benefits

The trustees of the gratuity scheme for the employees of the Company have entrusted the administration of the scheme to the Life Insurance Corporation of India (LIC).

(a) The estimate of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employee market.

4. Loans & Advances include Loan of Rs. Nil (Previous year Rs. 3,175 Lakh) due from a private company having at least one common director with the Company.

5. Information as required by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 is furnished vide Annexure - II and III attached herewith.

6. Figures pertaining to the previous year have been rearranged / regrouped, reclassified and restated, wherever necessary, to make them comparable with those of current year.

 
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