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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.


Mar 31, 2012

1.1 Reconciliation of Equity Shares outstanding

The reconciliation of the number of equity shares outstanding and the corresponding amount thereof, as at the Balance Sheet

1.2 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. The preference shareholders have 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 years ended 31st March, 2011 & 31st March, 2012.

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.

Dividend per equity share proposed for the current year is Rs. 0.50 (Previous year: Rs. 0.75).

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.

1.3 Shares allotted as fully paid-up without payment being received in cash / by way of bonus shares (during 5 years preceding 31st March, 2012)

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 lakh, representing the cost of shares of the Transferor Company, is shown under 'Non-Current Investments' in the Balance Sheet.

2.1 Bond / Debt Redemption Reserve

During the year, the Company has created Bond / Debt Redemption Reserve of Rs. 3,797 lakh (Previous year: Rs. 3,020 lakh) towards redemption of Unsecured Subordinated Bonds / Debentures / Debt (Tier II Capital). Debt Redemption Reserve of Rs. 792 lakh (Previous year: Rs. 792 lakh) has been reversed due to repayment of Bond / Debt during the year.

During the year, the Company has also created Bond / Debt Redemption Reserve of Rs. 21 lakh (Previous year: Rs. Nil) towards redemption of Long-Term Infrastructure Bonds, which were raised during the year.

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

During the year, the Company has raised Rs. 2,489 lakh (Previous year: Rs. Nil) 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 the terms of the issue.

* Includes current maturities

1 Secured against Receivables of the Company.

2 Secured against Receivables of the Company and mortgage of immovable property. 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 there from.

1 Includes Rs. 2,111 lakh (Previous year Rs. 2,372 lakh) guaranteed by subsidiary company.

2 Includes loans of Rs. 14,333 lakh (Previous year Rs. 13,713 lakh) guaranteed by Export Import Bank of the United States.

4.1 Public Deposits

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, 2012 is Rs. 88 lakh (Rs. 250 Lakh as at 31st March, 2011).

4.2 Buyer's credit from Banks (Foreign Currency Loan)

These foreign currency loans from banks are repayable by bullet payment and have tenures ranging from 1-3 years. These loans are secured by import documents covering title to capital goods and extension of pari passu charge towards working capital facilities.

4.3 Unsecured Subordinated bonds / debentures (Tier II Capital)

During the year ended 31st March, 2012, the Company raised subordinated debt qualifying for Tier II capital amounting to Rs. 35,000 lakh (31st March, 2011: Rs. 5,000 lakh). The following table sets forth the details of the outstanding as at 31st March, 2012:

(Rs. in Lakh)

*The interest rate is floating and is computed based on average yield to maturity (YTM) calculated from the balance maturity of 12 year Government of India (GOI) security paper for the remaining tenure of the Bonds.

*Each bond is having an overall tenure of 12 years, reckoned from the date of allotment. The bonds shall be redeemed at a premium of 20% of the original face value.

5. DEFERRED TAX LIABILITIES (Net)

In terms of Accounting Standard 22, the net Deferred Tax Liability (DTL) recognised during the year is Rs. 1,198 lakh (Previous year: Rs. 3,350 lakh). Consequently, the net DTL as at year-end stands at Rs. 7,988 lakh (31st March, 2011 Rs. 6,790 lakh). The break- up of major components of net DTL is as follows:

6.1 Nature of certain provisions and their movement year-on-year.

Provision for non-performing assets (NPAs) 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 year-on-year:

7.1 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 of agreements and operating lease agreements with customers and receivables arising there from, 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.

7.2 Short-Term Loans from banks are secured by charge on specific assets covered by loan/ facility agreements with customers and / or receivables arising there from.

7.3 Face value of Commercial Paper outstanding as at 31st March, 2012 is Rs. 67,850 lakh (as at 31st March, 2011 Rs. 26,120 lakh). Face value of maximum outstanding at any time during the year ended 31st March, 2012 was Rs. 207,850 lakh (Previous year Rs. 63,500 lakh). Face value of Commercial Paper repayable within one year is Rs. 67,850 lakh (Previous year Rs. 26,120 lakh).

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, 2012 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).

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.

2 Includes Non-Performing Assets of Rs. 10,997 Lakh (Previous year Rs. Nil)

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

Particulars 31st March, 2012 31st March, 2011

Contingent Liabilities

Bank Guarantees1 1,707 1,929

Corporate Guarantee to Banks 13,815 4,795

Disputed Income Tax2 3,654 2,364

Fringe Benefit Tax3 226 226

Total 19,402 9,314

1 Includes Rs. 892 lakh (31st March, 2011: Rs. 1,017 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) and Debt Redemption Reserve for the purpose of determining tax liability as per the provision of Section 115JB, Disallowances under section 14A, Disallowance of Provision for NPA, Disallowance of Provision for earned leave encashment, matters relating to deduction u/s 36(i)(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 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.

10. 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:

11. Dividend Remitted In Foreign Currencies

The company remits the equivalent of the dividend payable to equity shareholders and holders of GDRs. For GDR holders, the dividend is remitted in Indian rupees to the custodian bank.

12. Leases

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises, 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. 592 lakh (Previous year: Rs. 677 lakh).

Some of the above cancellable lease agreements have escalation clause of 5% p.a. 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 lakh (Previous year: Rs. 10 lakh) 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. 1,701 lakh (Previous year: Rs. 1,451 lakh). Future minimum sublease payments expected to be received under non-cancellable subleases as at 31st March, 2012 is Rs. 887 lakh (31st March, 2011: Rs. 1,327 lakh).

b. In the capacity of Lessor

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. 1,514 lakh (Previous year Rs. Nil).

(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.

13. Related Party Disclosures Related Parties:

Subsidiaries & Step-down Subsidiaries: Country of Origin

Srei Capital Markets Limited India

Srei Venture Capital Limited India

Srei Infrastructure Advisors Limited India

Global Investment Trust Limited India

Controlla Electrotech Private Limited India

Srei Mutual Fund Asset Management Private Limited India

Srei Mutual Fund Trust Private Limited India

IIS International Infrastructure Services GmbH, Germany Germany

Srei Forex Limited India

Srei Insurance Broking Private Limited (Subsidiary w.e.f. 31.03.2012) India

Srei Sahaj e-Village Limited India

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

Quippo Infocomm Limited (ceased to be a subsidiary of Srei Infrastructure

Advisors Limited w.e.f 16.07.2011) India

Hyderabad Information Technology Venture Enterprises Limited

(Subsidiary of Srei Venture Capital Limited) India

Cyberabad Trustee Company Pvt. Limited (Subsidiary of Srei Venture Capital Limited) India

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

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

Services GmbH, Germany) Singapore

Quippo Valuers and Auctioneers Private Limited India

Quippo Oil & Gas Infrastructure Limited India

Quippo Energy Private Limited India

Quippo Construction Equipment Limited India

Mumbai Futuristic Economic Zone Private Limited India

Quippo Prakash Marine Holdings Pte. Limited (Subsidiary of Quippo Oil & Gas Infrastructure Limited) Singapore

Quippo Prakash Pte. Limited (Subsidiary of Quippo Prakash Marine Holdings Pte. Limited) Singapore

Quippo Holding Cooperatief U.A. (Subsidiary of Quippo Oil & Gas Infrastructure Limited, liquidated on 13.02.2012) Netherlands

Quippo International B.V. (Subsidiary of Quippo Holding Cooperatief U.A., liquidated on 13.02.2012) Netherlands

Quippo Energy Middle East Limited (Subsidiary of Quippo Energy Private Limited) Dubai

Quippo Energy Yemen Limited (Subsidiary of Quippo Energy Private Limited) Yemen

Kasco Steel Limited(ceased to be a subsidiary of Quippo Construction

Equipment Limited w.e.f. 22.09.2011) India

Quippo Mara Infrastructure Limited (Subsidiary of Quippo International B.V., Ceased to be

Sub-subsidiary w.e.f. 13.02.2012 on account of liquidation of its holding company) British Virgin Islands

Quippo Mauritius Private Limited (Subsidiary of Quippo Energy Private Limited w.e.f. 05.03.2012) Mauritius

Quippo Energy Nigeria Private Limited (Subsidiary of Quippo Mauritius

Private Limited w.e.f. 22.03.2012) Nigeria

14. Assets for Operating lease include gross value of assets pending to be leased out, amounting to Rs. Nil (Previous year Rs. 6,487 lakh).

15. Loans & Advances include Loan of Rs. 3,175 lakh (Previous year Rs. 1,199 lakh) due from a private company having at least one common director with the Company.

16. 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.

17. As notified by the Ministry of Corporate Affairs of the Government of India, revised Schedule VI under the Companies Act, 1956 is applicable to all financial statements for the financial year commencing on or after 1st April, 2011. Accordingly, the financial statements for the year ended 31st March, 2012 are prepared in accordance with the aforesaid revised Schedule VI.

18. 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, 2011

1. Scheme of Amalgamation

The Board of Directors of the Company at its meeting held on 28th January, 2010 had, based on the recommendation of the Committee of Independent Directors, approved amalgamation of Quippo Infrastructure Equipment Limited (Transferor Company) into and with the Company in terms of a Scheme of Amalgamation (the Scheme) under Sections 391 to 394 of the Companies Act, 1956. The Scheme was approved by the Equity Shareholders of the Company in the meeting held on 31st May, 2010, convened by the Honble High Court at Calcutta (the Court).

Pursuant to the sanction of the scheme by the Court vide its Order made on January 18, 2011, all the assets, rights, obligations, liabilities and the entire business of the Transferor Company were transferred to and vested in the Company, as a going concern with effect from 1st April, 2010 (Appointed Date) and accordingly, the sanctioned Scheme has been given effect to in these financial statements. The Transferor Company alongwith its subsidiaries had been primarily engaged in the business of infrastructure equipment rental and matters incidental and ancillary thereto.

As per the Scheme of Amalgamation, the Effective Date is the date on which all the conditions and matters referred to in the Scheme are fulfilled and the Scheme becomes operative and effective from the Effective Date. All the conditions and matters prescribed in the Scheme were fulfilled on 4th March, 2011. Accordingly, the Scheme became effective from 4th March, 2011. Pending completion of relevant formalities of transfer of certain assets and liabilities acquired pursuant to the Scheme, in the Companys name, such assets and liabilities remain included in the books of the Company in the name of the Transferor.

In accordance with the Scheme and as per the sanction by the Court:

a) The Company has issued and allotted 92,915,839 equity shares of Rs. 10/- each fully paid up as bonus shares to the pre- amalgamation equity shareholders of the Company in the ratio of 4:5, by way of capitalisation of Securities Premium on 5th March, 2011.

b) Further, the Company has issued and allotted 294,025,696 equity shares of Rs. 10/- each fully paid up as consideration for the amalgamation to the shareholders of the Transferor Company on 5th March, 2011.

c) A Trust in the name of "Srei Growth Trust" has been settled by the Company on 4th March, 2011 to inter alia, receive equity shares of the Company in exchange of the Companys shareholding in the Transferor Company. The Company, in lieu of its shareholding in the Transferor Company, is entitled to be allotted equity shares of itself on amalgamation. However, since a company cannot hold its own shares, the Company settled the aforesaid Trust to hold such shares. Consequently, 48,600,000 equity Shares of the Company of Rs.10/- each fully paid up were issued and allotted to Srei Growth Trust, which is holding such shares in trust for the benefit of the Company and/or the shareholders of the Company. The beneficial interest in the Trust amounting to Rs. 1,851.50 Lakh representing the cost of shares of the Transferor Company is shown under Investments in the Balance Sheet.

d) Accounting for Amalgamation:

The amalgamation of Transferor Company with the Company has been accounted for on the basis of the Purchase Method as stated in the Accounting Standard (AS) -14 on Accounting for Amalgamations as below:

(i) All assets and liabilities of the Transferor Company were transferred to and vested in the Company at their respective fair values as on 31st March 2010, w.e.f. 1st April, 2010.

(ii) Excess of the fair value of net assets taken over by the Company, over the paid up value of Equity Shares issued & allotted to the shareholders of the Transferor Company, being Rs. 137,870 Lakh has been credited to General Reserves of the Company. Had the Scheme, sanctioned by the Court, not prescribed this accounting treatment, this amount would have been credited to Capital Reserve, with no impact on net profit for the year.

(iii) Inter Company balance of Rs. 100 Lakh on account of loan given by the Company to the Transferor Company has been cancelled.

(iv) The Authorised Share Capital of the Company has increased from Rs. 70,000 Lakh to Rs. 81,000 Lakh divided into 710,000,000 Equity Shares of Rs. 10/- each and 10,000,000 Preference Shares of Rs. 100/- each.

In view of the above, the figures of current year are not comparable with those of the previous year.

2. Tier II Capital

Unsecured Subordinated Redeemable Non Convertible Bonds

2.1 During the year, the Company has allotted 500 Unsecured Subordinated Redeemable Non-Convertible Bonds in the nature of Debentures of face value Rs. 10 Lakh each on private placement basis, forming part of Tier II Capital, aggregating to Rs. 5,000 Lakh for cash at par on 10th November, 2010.

Each bond is having an overall tenure of 10 years, reckoned from the date of allotment. The bonds shall be redeemed at face value at the end of 10 years from the date of allotment i.e. 10th November, 2020. Interest is payable semi annually @ 10.50% p.a.

2.2 The Company has allotted 2,000 Unsecured Subordinated Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10 Lakh each on private placement basis forming part of Tier II Capital aggregating to Rs. 20,000 Lakh for cash at par on 23rd March, 2010.

Each bond is having an overall tenure of 10 years, reckoned from the date of allotment. The bonds shall be redeemed at face value at the end of 10 years from the date of allotment i.e. 23rd March, 2020. Interest is payable semi annually @ 10.20% p.a.

2.3 The Company has allotted 500 Unsecured Subordinated Redeemable Non- Convertible Bonds in the nature of Debentures of Rs. 10 Lakh each on private placement basis forming part of Tier II Capital aggregating to Rs. 5,000 Lakh for cash at par on 30th March, 2007.

Each bond is having an overall tenure of 10 years, reckoned from the date of allotment. The bonds shall be redeemed at face value at the end of 10 years from the date of allotment i.e. 29th March, 2017. Interest is payable annually @ 12% p.a.

2.4 The Company has allotted 5,266,075 Unsecured Subordinated Bonds to the equity shareholders in the nature of Tier II Capital of Rs. 100 each aggregating to Rs. 5,266 Lakh for cash at par on 25th August, 2000 on rights basis.

Each bond is having an overall tenure of 12 years, reckoned from the date of allotment. The bonds shall be redeemed in 7 installments at a premium of 20% of the original face value starting from 6th year on 25th August, 2006 at the rate of 15% of the face value and premium thereon for 6 years and balance 10% in the year thereafter.

The fifth such installment of Rs. 948 Lakh representing 15% of the face value together with 20% of the premium towards redemption has been paid on 25th August, 2010. The face value of the aforesaid Bonds stands reduced to Rs. 25/- per Bond.

Premium payable on redemption of these Subordinated Bonds is provided over the tenure of the bond.

The unsecured subordinated bonds redeemable within one year amounts to Rs. 790 Lakh (Previous year Rs. 790 Lakh)

3. Borrowings

3.1 Working Capital facilities from banks are secured by hypothecation of assets covered by hypothecation agreements and operating lease agreement with the customers and receivables arising therefrom ranking pari passu (excluding assets which are specifically charged to others).

3.2 Term loans from Foreign Banks & Foreign Financial Institutions are secured by hypothecation of specific assets covered by hypothecation agreements and operating lease agreements with the customers and receivables arising therefrom.

3.3 Term loans from Domestic Banks are secured by hypothecation/assignment of specific assets covered by hypothecation agreements and operating lease agreements and receivables arising therefrom.

3.4 In April 2010, the Company decided to convert itself into a non-deposit taking NBFC in order to qualify for registration as an Infrastructure Finance Company and hence 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 has been 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 on 31st March, 2011 is Rs. 250 Lakh. Public deposits (including matured and unclaimed deposits) repayable within one year, aggregate to Rs. 71 Lakh (previous year Rs. 468 Lakh).

3.5 Unsecured Short Term Loans and Advances represent amount repayable within one year amounting to Rs. 37,991 Lakh (Previous year Rs. 12,145 Lakh).

3.6 The Company has issued Non-Convertible Debentures (NCDs) on private placement basis aggregating to Rs. 820,500 Lakh during the year ended 31st March, 2011 (Previous year Rs. 637,300 Lakh).

3.7 Face value of Commercial Paper outstanding as at 31st March, 2011 is Rs. 26,120 Lakh (as at 31st March 2010 Rs. 12,500 Lakh). Face value of maximum outstanding at any time during the year ended 31st March, 2011 was Rs. 63,500 Lakh (Previous year Rs. 18,000 Lakh). Face value of Commercial Paper repayable within one year is Rs. 26,120 Lakh (Previous year Rs. 12,500 Lakh).

4. Debt Redemption Reserve

During the year, the Company has created Debt Redemption Reserve of Rs. 3,020 Lakh (Previous year Rs. 742 Lakh) towards redemption of Unsecured Subordinated Bonds/ Debentures/ Debt (Tier II Capital). Debt Redemption Reserve of Rs. 792 Lakh (Previous year Rs. 792 Lakh) has been reversed due to repayment of loan during the year.

5. Securitisation

No securitisation contract has been entered into by the Company during the current and previous year.

6. Provisioning / Write-off of assets

Provision for non performing assets (NPAs) is made in the financial statements according to the Prudential Norms prescribed by RBI for NBFCs. Additional provision of 0.25% on Standard assets has also been made during the year, as per a new stipulation of RBI on Standard assets. The Company also makes additional provision towards loan assets, based on the managements best estimate, unlike previous years when provision on loan assets was made as per the norms of Foreign Financial Institutions (FFIs).

7. Leasing Arrangements

a. In the capacity of Lessee

(i) The Company has certain cancellable operating lease arrangements for office premises, which range between 11 months to 15 years and are usually renewable by mutual consent on mutually agreeable terms. Lease payments charged to the Profit and Loss Account with respect to such leasing arrangements aggregate Rs. 677 Lakh (Previous year Rs. 433 Lakh).

(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 Lakh (Previous year Rs. 10 Lakh) have been recognised in the Profit & Loss Account.

Some of the above cancellable and non-cancellable lease agreements have escalation clause of 5% p.a. 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.

(iii) Sub lease payments received (or receivable) recognised in the Profit and Loss Account for the year is Rs. 1,451 Lakh (Previous year Rs. 642 Lakh). Future minimum sublease payments expected to be received under non-cancellable subleases as at 31st March, 2011 is Rs. 1,327 Lakh (Previous year Rs. Nil).

b. In the capacity of Lessor

The Company has given assets on Operating lease (Refer Schedule 5 to Balance Sheet) for periods ranging between 5 to 15 years. These agreements for Operating leases do not have a clause for contingent rent and hence, the Company has not recognised any contingent rent as income in the current and previous year.

8. Assets for Operating lease include gross value of assets pending to be leased out, amounting to Rs. 6,487 Lakh (Previous year Rs. Nil).

9. Loans & Advances include Loan of Rs. 1,199 Lakh (Previous year Rs. 3,793 Lakh) due from a private company having at least one common director with the Company.

10. Impairment of Fixed Assets

None of the Companys Fixed Assets are considered impaired as on the Balance Sheet date.

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

Contribution to Regional Provident Fund Authority charged to Profit and Loss Account during the year is Rs. 143 Lakh (Previous year Rs. 104 Lakh). Contribution to Employee State Insurance Corporation charged to Profit and Loss Account is Rs. 1.02 Lakh (Previous year Rs. 0.19 Lakh).

Gratuity benefit to employees has been funded under separate arrangement with the Life Insurance Corporation of India (LIC).

The following table sets out the details of amount recognised in the financial statements in respect of employee benefit schemes.

The Company has adopted the actuarial valuation for sick leave benefit from the current financial year. The profit for the year would have been higher by Rs. 50 Lakh had the valuation method not been changed.

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

12. 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 2011 as micro, small or medium enterprises. Consequently, the amount paid / payable to these parties during the year is Rs. Nil (Previous year Rs. Nil).

13. Interest income includes Rs. 12 Lakh (Previous year Rs. 26 Lakh) on long term investments.

14. Deferred Tax

In terms of Accounting Standard 22, net deferred tax liability (DTL) of Rs. 3,350 Lakh (Previous year Rs. 3,440 Lakh) has been recognised during the year and consequently, the net DTL as at March 31, 2011 stands at Rs. 6,790 Lakh (as at March 31, 2010 Rs. 3,440 Lakh).

19. Capital Work-in-Progress Rs. 599 Lakh represents advance against capital expenditure (previous year Rs. Nil).

20. Contingent Liabilities

(Rs. in Lakh)

Particulars As at 31st March, 2011 As at 31st March, 2010

a. Bank Guarantees @ 1,929 4,575

b. Corporate Guarantee to Banks 4,795 1,095

c. Disputed income tax and Interest tax demand # 2,364 1,878

d. Fringe Benefit Tax ## 226 -

Total 9,314 7,548

@ includes Rs. 1,017 Lakh (previous year Rs. 1,326 Lakh) issued on Companys behalf by a Joint Venture Company.

# The Assessment Orders disallowing Special Reserve (created as per Section 45IC of the RBI Act, 1934) and Debt Redemption Reserve for the purpose of determining tax liability as per the provision of Section 115JB, Disallowances under section 14A, Disallowance of Provision for NPA, Provision for earned leave encashment and Interest on certain loans under the normal provisions of the Income Tax Act 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.

## The Company has challenged the constitutional validity of Fringe Benefit Tax (FBT) before the Honble High Court at Calcutta and the Honble 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.

*Refer Note II 25 of Schedule 18

# The amounts are receivable on demand.

The outstanding loans and advances are interest bearing except that of Controlla Electrotech Private Ltd.

22. Other financial charges include Rs. 2,281 Lakh (Previous year Rs. 1,264 Lakh) towards upfront fees on loan processing and Rs. 2,327 Lakh (Previous year Rs. 175 Lakh) towards interest on Commercial paper.

Similarly, Quippo Valuers and Auctioneers Private Limited (Formerly GoIndustry Quippo Valuers and Auctioneers Private Limited) (QVAPL) which was a 50:50 joint venture between Quippo and Go Industry Limited, UK became a Joint Venture between the Company and Go Industry Limited, UK w.e.f. March 04, 2011. Thereafter, the entire shareholding of Go Industry Limited, UK has been acquired by the Company and consequently, QVAPL has become a 100% subsidiary of the Company w.e.f. March 31, 2011. The name has been changed to "Quippo Valuers and Auctioneers Private Limited" w.e.f. April 16, 2011.

28. Uncalled liability on partly paid shares held as stock for trade is Rs. 1 lakh, net of advance (Previous year Rs. Nil).

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

33. The Company has been classified by RBI as Infrastructure Finance Company – Non Deposit Taking within the overall classification of Non Banking Finance Company w.e.f. 31st March, 2011.

34. Previous years financial statements have been audited by M/s Deloitte Haskins & Sells, Chartered Accountants.

35. Previous years figures have been regrouped / rearranged, wherever considered necessary.


Mar 31, 2010

1. Issue of Warrants on Preferential Allotment basis

The Company on 30th October, 2007 issued and allotted 25,000,000 warrants of Rs. 10/- each to the Promoters Group of the Company by way of Preferential Allotment . Each warrant was convertible into Equity shares of Rs. 10/- each in one or more tranches at a price of Rs. 100/- per share (including premium of Rs. 90/-) within a period of 18 months from the date of allotment of the warrants.

Out of 25,000,000 warrants, conversion option for 7,200,000 warrants was exercised in 2007-08. Conversion option for balance 17,800,000 warrants were not exercised during the year ended 31st March, 2009 and has since expired and hence forfeited on 29th April, 2009. The amount of Rs. 1,780 Lakh received as subscription money has been transferred to Capital Reserve.

2. Tier II Capital

2.1 Unsecured Subordinated Redeemable Non Convertible Bonds

2.1.1 During the year, the Company has allotted 2,000 Unsecured Subordinated Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10 Lakh each on private placement basis forming part of Tier II Capital aggregating to Rs. 20,000 Lakh for cash at par on 23rd March, 2010.

Each bond is having an overall tenure of 10 years, reckoned from the date of allotment. The face value of the bonds shall be redeemed at the end of 10 years from the date of allotment i.e. 23rd March, 2020. Interest is payable semi annually @ 10.20% p.a.

2.1.2 The Company has allotted 500 Unsecured Subordinated Redeemable Non- Convertible Bonds in the nature of Debentures of Rs. 10 Lakh each on private placement basis forming part of Tier II Capital aggregating to Rs. 5,000 Lakh for cash at par on 30th March, 2007.

Each bond is having an overall tenure of 10 years, reckoned from the date of allotment. The face value of the bonds shall be redeemed at the end of 10 years from the date of allotment i.e. 29th March, 2017. Interest is payable annually @ 12% p.a.

2.1.3 The unsecured subordinated redeemable non convertible bonds repayable within one year amounts to Rs Nil (Previous year Nil).

2.2 Unsecured Subordinated Bonds

2.2.1 The Company has allotted 5,266,075 Unsecured Subordinated Bonds to the equity shareholders in the nature of Tier II Capital of Rs. 100 each aggregating to Rs. 5,266 Lakh for cash at par on 25th August, 2000 on right basis.

Each bond is having an overall tenure of 12 years, reckoned from the date of allotment. The face value of the bonds shall be redeemed in 7 installments at a premium of 20% of the original face value starting from 6th year on 25th August, 2006 at the rate of 15% of the face value and premium thereon for 6 years and balance 10% in the year thereafter.

The fourth such installment of Rs. 948 Lakh representing 15% of the face value together with 20% of the premium towards redemption has been paid on 25th August, 2009 being fourth redemption date. The face value of the aforesaid Bonds stands reduced to Rs. 40/- per Bond.

Premium payable on redemption of these Subordinated Bonds is provided over the tenure of the bond.

2.2.2 The unsecured subordinated bonds redeemable within one year amounts to Rs. 790 Lakh (Previous year Rs. 790 Lakh)

3. Loans

3.1 Working Capital facilities from banks are secured by hypothecation of assets covered by loan assets/ hypothecation/ Operating Lease agreements and receivables arising there from ranking pari passu (excluding assets which are specifically charged to others).

3.2 Term loan from Foreign Banks & Foreign Financial Institutions are secured by hypothecation of specific assets covered by loan assets/ hypothecation agreements and Operating Lease agreement and receivables arising there from.

3.3 Term loan from Domestic Banks are secured by hypothecation/assignment of specific assets covered by loan assets/ hypothecation agreements and Operating Lease agreement and receivables arising there from.

3.4 Public Deposits are secured by pledge of certain Government Securities as per RBI Circular dated 04.01.2007. Public Deposits (including matured and unclaimed) repayable within one year aggregate to Rs. 468 Lakh (Previous year Rs. 488 Lakh).

3.5 Secured Loans and advances from Domestic Banks include Rs Nil Lakh (Previous year Rs. 30,000 Lakh) guaranteed by the directors.

3.6 Unsecured Short Term Loans and Advances include amount repayable within one year amounting to Rs. 12,650 Lakh (Previous year Rs. 11,204 Lakh).

4. In accordance with the Accounting Standard 19 on Leases as notified by the Companies (Accounting Standards) Rules, 2006 the following disclosures in respect of Operating Leases is made :

a. In the capacity of Lessee

The Company has leasing arrangements in respect of operating leases for office premises. These leasing arrangements which are not non-cancellable in nature range between 11 months and 21 years, generally and are usually renewable by mutual consent on mutually agreeable terms. Minimum lease payments charged to the Profit and Loss Account with respect to the leasing arrangements referred to above aggregate Rs. 443 Lakh (Previous year Rs. 150 Lakh).

Sub lease payments received or receivable recognised in the Profit and Loss Account for the year ended 31 March, 2010 aggregates Rs. 642 Lakh (Previous year Rs. 464 Lakh).

b. In the capacity of Lessor

The Company has given assets on Operating lease for periods ranging between 5 to 6 years based on the nature of equipment.

5. The Company is of the opinion that Service-tax on property rental received is not payable based on legal opinion obtained and accordingly is not collecting Service-tax on such rental received.

6. Loans & Advances include amounts of Rs. 3,793 Lakh (Previous year Rs. 2,528 Lakh) due from private companies having at least one common director with the Company.

7. None of the Companys Fixed Assets are considered impaired as on the Balance Sheet date.

8. Disclosure pursuant to Accounting Standard (AS) 15 (Revised): Contribution to Regional Provident Fund Authority charged to Profit and Loss Account aggregates to Rs. 104 Lakh (Previous year Rs. 28 Lakh). Besides, Rs.1 Lakh (Previous year Rs. 14 Lakh) has been paid to “Srei International Finance Provident Fund Trust” towards Companys share of shortfall between the return from the investments of the trust and the Government notified interest rate. Contribution to Employee State Insurance Corporation charged to Profit and Loss Account aggregates to Rs. 0.19 Lakh (Previous year Rs. 0.07 Lakh).

9. The Company has challenged constitutional validity of Fringe Benefits Tax before the Honble High Court at Calcutta and the Honble Court has granted interim stay on levy of such Fringe Benefits Tax on the Company. In view of this, the Company has not provided for any liability against Fringe Benefits Tax till 31st March, 2009. However, consequent upon abolition of Fringe Benefit Tax from Financial Year 2009-10, no liability arises for the year.

10. No interest was payable by the Company during the year to the suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to enquiries made by the Company for this purpose.

11. Interest income includes Rs. 26 Lakh (Previous year Rs. 27 Lakh) on long term investments.

12. Interest from Government Securities/Banks, Loan Assets, fee based income and other income wherever applicable includes tax deducted at source of Rs. 2,268 Lakh (Previous year Rs. 1,029 Lakh).

* recognised to the extent of deferred tax liability

16.2 Provision for Income Tax has been computed on the basis of Minimum Alternate Tax (MAT) in accordance with Sec 115JB of the Income Tax Act, 1961. Considering the future profitability and taxable positions in the subsequent years, the Company has recognised MAT credit entitlement of Rs. 2,190 Lakh (Previous year Rs. 211 Lakh) as an asset by crediting to the Profit and Loss account an equivalent amount and included under “Loans & Advances” in accordance with the Guidance Note on “Accounting for credit available in respect of Minimum Alternate Tax under Income Tax Act, 1961” issued by The Institute of Chartered Accountants of India.

(c) Salary includes provision of Rs. 35 Lakh (Previous year Rs. 35 Lakh) towards commission payable to non-executive directors of the Company, in terms of approval from Shareholders and Central Government.

(d) Provision for gratuity in respect of Directors is not included above, as actuarial valuation is done on an overall basis.

13. Contingent Liabilities (Rupees in Lakh)

Particulars As at As at 31st March, 2010 31st March, 2009

a. Bank Guarantee 4,575 3,088

b. Corporate Guarantee to bank 1,095 5,180 c. Disputed income tax demand for AY 2006-07 # 82 287

d. Disputed income tax demand for AY 2007-08 # 389 462

e. Disputed income tax demand for AY 2008-09 # 1,407 -

Total 7,548 9,017

# The Assessment Orders disallowing Special Reserve (created as per Section 45IC of the RBI Act, 1934) and Debt Redemption Reserve for the purpose of determining tax liability as per the provision of Section 115JB, Disallowances under section 14A, Disallowance of Provision for NPA, Provision for earned leave encashment and Interest on certain loans under the normal provision of the Income Tax Act 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.

14. The Company is a Non Banking Finance Company (NBFC) and being currently classified as Asset Finance Company (Deposit Taking). In terms of Reserve Bank of India (RBI) Circular DNBS.PD.CC.No.168/03.02.089/2009-10 dated 12th February, 2010, the Company has approached RBI for change in classification as Infrastructure Finance Company (IFC) based on the asset pattern for the year ended 31st March, 2009. However the Company has been advised by RBI to convert into non deposit taking NBFC in order to qualify for classification as IFC in terms of the captioned circular. Accordingly, the Company has complied with the steps advised by RBI and has requested RBI for change in classification as Infrastructure Finance Company.

As a result, the Company has decided that it would not accept any further public deposits or renew the maturing deposits in any manner w.e.f. 20th April, 2010.

15. The Board of Directors of the Company at its meeting held on 28th January, 2010 has, based on the recommendation of the Committee of Independent Directors, approved amalgamation of Quippo Infrastructure Equipment Limited (Quippo) into and with the Company in terms of a Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. The Appointed Date of the amalgamation shall be 1st April, 2010.

16. Previous year figures have been regrouped / rearranged, wherever considered necessary.

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