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Notes to Accounts of Tecpro Systems Ltd.

Mar 31, 2014

1. Company overview

Tecpro Systems Limited is an engineering company primarily engaged in designing, engineering, manufacturing, supply, installation and erection of material handling systems, power plants including balance of plant packages in power sector.

2. (a) The Authorized Share Capital of the Company has been reclassified and divided into 8,11,50,000 Equity Shares of Rs. 10 each amounting to Rs. 81,15,00,000and 50,00,000 Preference Share of Rs, 100 each amounting to Rs.50,00,00,000 during the year.

(b) During the five years period ended 31 March 2014 Company has issued equity shares for consideration other than cash as follows:-

1,65,26,291 equity shares of Rs. 10 issued during the year 2009-10 as fully paid-up shares to shareholders of erstwhile Tecpro Ashtech Limited and erstwhile Tecpro Power Systems Limited, pursuant to a scheme of amalgamation, for consideration other than cash.

3. Nature of security

Working capital facility comprises cash credit, buyer''s credit, export packing credit and bills discounted from banks.

* Working Capital facilities are secured by first charge on the present and future current assets of the company on pari passu basis.

* Cash credit, short term loans and buyers credit from certain banks are further primarily / collaterally secured by way of hypothecation / mortagage of moveable / immoveable fixed assets of the Company on a pari passu basis other than those specifically funded through term loans and charged to State Bank of India and by way of equitable mortgage over certain assets of certain directors (includes a relative of a director) of the Company on pari passu basis.

* Packing Credit loan from DBS Bank is secured by second charge on the current assets and moveable fixed assets of the Company.

* The facilities are also secured by personal guarantee of Mr. Amul Gabrani (director), Mr. Ajay Kumar Bishnoi (director) and Mrs. Bhagwanti Gabrani (relative of director, except for facility availed from DBS Bank)

* Further, facilties from SBI are also secured by pledge of certain shares by Mr. Amul Gabrani and Mr. Ajay Kumar Bishnoi (directors of the Company) and the loan from SBI is also secured by corporate guarantee given by Fusion Fittings (I) Limited.

4. (i) The Company has incurred a loss during the year and has had to face a very tight liquidity position arising out of, among other things, overall deceleration in the economy, lower industrial growth, delayed decisions at various levels affecting the project progress. With delayed recoveries from customers, the Company was unable to service interest and ensure prompt repayment of principal amount due to bankers. In the circumstances, the board of directors in its meeting held on 28.12.2013 had decided to approach the banks through the corporate debt restructuring (CDR) process for restructuring of the Company''s debt. The CDR empowered group in its meeting held on March 29,2014 has admitted the Company''s proposal under the CDR which is under consideration. The restructuring of debt under CDR supports the continued assumption of going concern'' in drawing up the financial statements and will ensure that the company meets its obligations as and when it falls due.

(ii) The circumstances of tight liquidity detailed in (i) above has:

(a) Resulted in delays in project execution on account of funding difficulty and increased costs due to stretched time frames. Certain customers have therefore encashed Bank Guarantees of Rs.295,57,00,000 including performance guarantee of Rs. 117,27,55,000 for the delays.These are however considered realizable based on continuous steps / engagement with the customers for realisation of dues.

(b) Necessitated certain customers to make direct payments to Company''s vendors to avoid delays in deliverables.The Company has initiated steps to obtain confirmation of payment from such vendors for adjustment of payments made by customers.

(iii) Recoverability of debts and Unbilled Revenue including Rs. 165,63,02,000 outstanding for a period of more than three years,debts for additional supplies/work made upon request by customers outside of the contract, debts from certain customers who have encashed bank guarantees and Rs.39,42,68,165 recognized as interest income arising from delayed payments made by certain customers (included in Note 22) is considered realisable based on interactions with the customers and negotiations/discussions.

(iv) An exercise of circularization of balances of vendors/Creditors/Debtors and reconciliation of the balances with the books of account has been initiated subsequent to the end of the year and adjustments, if any, will be made upon completion of the said exercise.

(v) In respect of certain contracts, there have been significant delays in completion of the projects beyond the contracted dotes. This could lead to levy of liquidated damages by the customers as per the terms of contract with them. Till date the company has not been made aware of significant liquidated damages being levied by its customers and accordingly no provision is considered necessary in this regard by the Management.

5. The gross block of leasehold land includes Rs. 7,60,86,192 (previous year Rs. 7,60,86,192) on account of revaluation of leasehold land belonging to erstwhile Blossom Automotive Private Limited which has been transferred to the Company on amalgamation with effect from 1 April 2008. Consequent to the same, there is an additional charge of depreciation of Rs. 10,01,034 (previous year Rs. 10,01,034) and an equivalent amount has been withdrawn from revaluation reserve. This has no impact on profit for the year.

6. Contingent liabilities and commitments (to the extent not provided for)

As at As at 31 March 2014 31 March 2013

(i) Claims against the company not acknowledged as debt: Sales tax matters 242,844,937 242,844,937

(ii) Claims against the company not acknowledged as debt: Entry tax matters 48,556,771 48,556,771

(iii) Claims against the company not acknowledged as debt: Central excise matters 1,049,990 1,049,990

(iv) Claims against the company not acknowledged as debt: Service tax matters 6,536,536 6,536,536

(v) Claims against the company not acknowledged as debt: Others 197,561,000 -

(vi) Demand for additional price/ enhancement cost in respect of factory plots situated in Bawal* 9,885,115 9,885,115

(vii) Sales tax liability against which forms to be collected 2,817,994,489 3,227,603,543

(viii) Income tax laibility disputed (refer Note 39) 501,400,000 -

* The Company had received notices dated 4 December 2007 and 29 December 2007 from HSIIDCL for additional price/ enhancement cost amounting to Rs.98,85,115 (previous year Rs. 98,85,115 {including interest}), in respect of factory plots situated in Bawal. The Company filed a writ petition in the Punjab and Haryana High Court on 8 January 2008 and obtained a stay order on 9 January 2008. This matter is under adjudication. Pursuant to above, Rs.98,85,115 (previous year Rs. 98,85,115) have been disclosed as ''Contingent liability'' in the notes to the accounts.

7. The company has paid remuneration to a managerial person in excess of limits specified in provisions of Companies Act 1956 by Rs. 51,94,660. Pending the approval from the shareholders and the Central Government the excess remunaration paid has been included under Note 16

8. On March 6,2012 search proceedings under Section 132 of the Income Tax Act, 1961 ("the Act") were undertaken in respect of the Company. The search proceedings were effectively concluded vide last Panchnama drawn on May 3,2012.The Company had furnished during the earlier year return of income for six assessment years beginning from assessment year 2006 07 pursuant to notices received from the Income Tax Department. Tax assessments upto 2010-11 was completed with no ad- ditional demand. As regards Assessment Years 2011 -12 and 2012-13 the assessments have been completed and a demand of Rs 50,14,00,000 has been raised on the Company. This demand is being disputed and has accordingly been disclosed under contingent liability.

9. The Company has adopted the principles of Accounting Standard 30 - Financial instruments: Recognition and measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1,2013, in respect of designated contracts meeting necessary criteria as "Cash flow hedges". The gain and losses on effective Cash flow hedges are recognised in Hedge Reserve Account till the underlying forecasted transaction occurs. This is different from the earlier year practice of reckoning all gains and losses on such contracts in the Statement of Profit and Loss. However, there is no impact due to the aforesaid change on the results for the year ended March 31,2014 due to the ineffectiveness of the hedges. ''

10. General description of gratuity plan:

Gratuity Plan (Defined benefit plan)

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. The Company has set a limit of Rs. 10,00,000 (previous year Rs. 10,00,000) per employee.

11. Disclosure in respect of operating leases under Accounting Standard (AS) - 19 "Leases" prescribed by the Companies (Accounting Standards) Rules, 2006.

a) General description of the Company''s operating lease arrangements:

The Company enters into operating lease arrangements for leasing area offices, factory building, equipments and residential premises for its employees.

Some of the significant terms and conditions of the arrangements are:

* agreements for most of the premises may generally be terminated by the lessee or either party by serving one to six month''s notice or by paying the notice period rent in lieu thereof.

* the lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement.

* the Company shall not sublet, assign or part with the possession of the premises without prior written consent of the lessor.

b) Lease rent charged to the statement of profit and loss on account of Minimum lease rentals Rs. 25,23,31,549 (previous year Rs. 44,09,77,858).

12. Segment reporting

The Company''s primary segment is identified as business segment based predominantly on nature of product and services and secondary segment is identified based on the geographical location of the customer as per Accounting Standard 17. The revenue from individual segments is less than 10% of total revenue from external sales and inter-segment sales and therefore there are no reportable segments for the current and previous year.

# Company has given a letter of comfort for various facilities taken by Hythro Power Corporation Limited from a bank with limit of Rs. Nil (previous year Rs. 32,00,00,000)

## Guarantees and collateral security given by Ajay Kumar Bishnoi and Amul Gabrani for various facilities taken by the Company from banks with a limit of Rs. 5273,18,00,000 (previous year Rs. 4903,08,00,000 and Bhagwanti Gabrani (relative of a Director) for various facilties taken by the Company from banks with a limit of Rs. 5056,00,00,000 (previous year Rs.4471,58,00,000).

A Guarantees given by Fusion Fittings (I) Limited for various facilities taken by the Company from a bank with a limit of Rs. 2201,64,00,000 (previous year Rs. 2166,58,00,000)

@ Ajay Kumar Bishnoi and Amul Gabrani have pledged their shares in the Company with a bank for credit facilities taken by the Company with a limit of Rs. 2201,64,00,000 (previous year Rs. 2166,58,00,000)

Figures in bracket refer to previous year 31 March 2013

13. Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances of Rs. NIL (previous year Rs. 5,46,12,843)] is Rs. NIL- (previous year Rs. 10,22,81,190).

14. Previous year figures in balance sheet have been regrouped / recast wherever necessary to conform to the current year''s classification/presentation. Further, the current year figures are not comparable with previous year on account of amalgamation.

15. The figures for the previous year are drawn from accounts audited by a different firm of chartered accountants.


Mar 31, 2013

1. Company overview

Tecpro Systems Limited is an engineering company primarily engaged in designing, engineering, manufacturing, supply, installation and erection of material handling systems, power plants including balance of plant packages in power sector.

2. Amalgamation during the previous year

a) Background and nature of business

The Hon''ble High Court of Delhi approved the Scheme of Amalgamation of Company''s wholly owned subsidiary Microbase Infosolution Private Limited (Amalgamating Company or Microbase) with Tecpro Systems Limited ("Amalgamated Company or Company or TSL") vide its order dated 17 October 2011. The order of Hon''ble High Court of Delhi was duly fled with the Registrar of Companies and the Scheme of Amalgamation became efective on 24 December 2011. Prior to amalgamation Microbase was not carrying out any major activity.

b) Salient features of the Scheme

The salient features of the Scheme of Amalgamation of Microbase with the Company are as follows:

(i) The Appointed Date for the amalgamation is 1 April 2011.

(ii) On and from the Appointed Date, authorized share capital of the Amalgamating Company has been merged with those of the Amalgamated Company.

(iii) With efect from the Appointed Date and upon this Scheme becoming efective, all the assets and liabilities and the entire business of the Amalgamating Company shall stand transferred to and vest in the Amalgamated Company, as a going concern, without any further act or deed, as per the provisions contained herein.

(iv) All suits, claims, actions and proceedings by or against the Amalgamating Company, pending and /or arising on or before the efective date shall be continued and be enforced by or against the Amalgamated Company as efectually as the same had been instituted by or pending against the Amalgamated Company.

(v) Upon the Scheme becoming efective, any loan or other obligation due between or amongst the Amalgamating Company and the Amalgamated Company, if any, shall stand discharged and there shall be no liability in that behalf.

c) Consideration

Amalgamating Company (Microbase Infosolution Private Limited) was a wholly owned subsidiary of Amalgamated Company. On the Appointed Date, the entire equity share capital of the Amalgamating Company was held by the Amalgamated Company. On amalgamation of the Amalgamating Company with the Amalgamated Company, the share capital of the Amalgamating Company will be extinguished since all the shares of the Amalgamating Company are held by the Amalgamated Company. Since the Amalgamating Company was a wholly owned subsidiary of the Amalgamated Company, no share will be issued by the Amalgamated Company to the shareholders of the Amalgamating Company as a result of the amalgamation.

d) Accounting treatment

The Company has accounted for the merger in its books as per the Pooling of Interest Method of Accounting prescribed under the Accounting Standard 14 – "Accounting for Amalgamation".

(i) All the assets and liabilities recorded in the books of Microbase Infosolution Private Limited as at appointed date have been transferred to and vested in the Company pursuant to the Scheme and have been recorded by the Company at their book values as appearing in the books of Microbase Infosolution Private Limited

(ii) On and from the Appointed Date, the reserves and the balance in the Proft and Loss Account of Microbase Infosolution Private Limited have been merged with those of the Company in the same form as they appear in the fnancial statements of Microbase Infosolution Private Limited.

(iii) In relation to the scheme of amalgamation, the diference between the amount recorded as investments in the Company and the amount of share capital of Microbase Infosolution Private Limited, on amalgamation, has been adjusted in the reserves in the books of the Company.

3. Amalgamation during the current year

a) Background and nature of business

A Scheme of Amalgamation of TECPRO TREMA LIMITED ("Trema") and AMBIKA PROJECTS (INDIA) PRIVATE LIMITED ("Ambika"), the Transferor Companies with TECPRO SYSTEMS LIMITED ("Tecpro"), the Transferee Company under sections 391 to 394 of the Companies Act, 1956 ("the Scheme") was approved by the shareholders of the respective companies and sanctioned by the Honorable High Court of Delhi (vide its Order dated 4 February 2013) and Madras (vide its Orders dated 28 February 2013).

Trema was engaged in the business of air and environment pollution control systems and related plants and systems and allied activities. Ambika was engaged in the business of providing water and waste water treatment plants for the industrial and municipal segments.

b) Salient features of the Scheme

The Scheme became efective on 25 March 2013 ("Efective Date") on fling of the certifed copies of the Orders with the Registrar of'' Companies the Appointed Date from which the Scheme became operative was 1 April 2011 (the "Appointed Date").

Consequent to the Scheme becoming efective from the Appointed Date, the entire business and undertakings of the Transferor Companies, including all assets, debts, liabilities, duties and obligations have, without further act, instrument or deed, but subject to the charges afecting the same as on the Efective Date, been transferred and vested in the Company. On the Scheme becoming efective, all staf, workmen and employees of the Transferor companies in service on the Efective Date were deemed to have become staf, workmen and employees of the Company.

During the period from the Appointed Date to the Efective Date, the transferor companies were deemed to have carried on their respective businesses and activities for and on account of and in trust for the Company. Accordingly, the revenue from operations of Rs. 182,546,822 and 37,089,810 for the years ended 31 March 2013 and 31 March 2012 respectively, and loss before tax of Rs. 16,066,776 and Rs. 31,379,153 for the years ended 31 March 2013 and 31 March 2012 respectively of the Transferor Companies are included in the fnancial statements of the Company.

In terms of the Scheme, the authorised share capital of the Company increased to Rs. 131,15,00,000/- (Rupees One hundred thirty one crore ffteen lakhs only) divided into 13,11,50,000 (Thirteen crore eleven lakhs ffty thousand only ) equity shares of Rs. 10/- (Rupees Ten) each.

c) Consideration

Since both the Transferor Companies were wholly owned subsidiaries of the Transferee Company no new shares were allotted on account of amalgamation to the shareholders of Transferor Companies.

d) Accounting treatment

(i) The Company has accounted for the merger in its books as per the pooling of interest method of accounting prescribed under the Accounting Standard 14 - "Accounting for Amalgamation".

(ii) All the assets and liabilities recorded in the books of the Transferor Companies have been recorded by the Company at their respective book values as per details given below;

(iii) The identity of the reserves of the Transferor Companies as on the Appointed Date, if any, were preserved and they appeared in the fnancial statements of the Company in the same form and manner, in which they appeared in the Financial Statements of the Transferor Companies.

(iv) The surplus arising between the aggregate values of assets of the Transferor Companies acquired, net of the aggregate of the liabilities of the Transferor Companies acquired together with the share capital issued, and reserves of the Transferor Companies recorded by the Company (i.e. the diference between the amount recorded as share capital issued and the amount of share capital of the Transferor Companies), were adjusted to the General Reserve Account of the Company.

4. The gross block of leasehold land includes Rs. 76,086,192 (previous year Rs. 76,086,192) on account of revaluation of leasehold land belonging to erstwhile Blossom Automotive Private Limited which has been transferred to the Company on amalgamation with efect from 1 April 2008. Consequent to the same, there is an additional charge of depreciation of Rs. 1,001,034 (previous year Rs.1,001,034) and an equivalent amount has been withdrawn from revaluation reserve. This has no impact on proft for the year.

As at As at 31 March 2013 31 March 2012

5. Contingent liabilities and commitments (to the extent not provided for)

(i) Claims against the company not acknowledged as debt : Sales tax matters 242,844,937 81,602,639

(ii) Claims against the company not acknowledged as debt : Entry tax matters 48,556,771 20,408,275

(iii) Claims against the company not acknowledged as debt : Central excise matters 1,049,990

(iv) Claims against the company not acknowledged as debt : Service tax matters 6,536,536 6,536,536

(v) Demand for additional price/ enhancement cost in respect of factory plots situated in Bawal * 9,885,115 9,207,821

(vi) Sales tax liability against which forms to be collected 3,227,603,543 2,102,176,396

* The factory plots belonging to the Company, situated at Bawal were allotted by the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDCL) in favour of the Company through Regular Letters of Allotment (RLA) dated 23 January 2004 and 9 July 2004.

The Company had received notices dated 4 December 2007 and 29 December 2007 from HSIIDCL for additional price/ enhancement cost amounting to Rs. 9,885,115 {including interest} (previous year Rs. 9,207,821 {including interest}) , in respect of factory plots situated in Bawal. The Company fled a writ petition in the Punjab and Haryana High Court on 8 January 2008 and obtained a stay order on 9 January 2008. This matter is under adjudication. Pursuant to above, Rs. 9,885,115 (previous year Rs. 9,207,821) have been disclosed as ‘Contingent liability'' in the notes to the accounts.

6. In the previous year, the operating cycle was determined to be 12 months in view of the varying nature of contracts, customers, payment terms, project duration etc. Basis further analysis and considering additional guidance / clarity available related to implementation of revised schedule VI, the management is of the view that the Company has multiple operating cycles which are determined on the basis of the distinguishing features and characteristics of various categories of contracts.

Due to change in operating cycle during the current year, fgures for the previous year have been regrouped for meaningful comparison of current and previous year classifcation. The impact of regrouping on signifcant fnancial statement items is summarized below:

7. On March 6, 2012, search proceedings under Section 132 of the Income Tax Act, 1961 ("the Act") were undertaken in respect of the Company. The search proceedings were efectively concluded vide last Panchnama drawn on May 03, 2012. During the year the Company has furnished the return of income of six assessment years begninning from assessment year 2006-2007 pursuant to notices received from the Income Tax Department. At this stage, no tax demand has been determined pursuant to the present search proceedings.

8. Till the previous year, the exchange diferences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest cost, were treated as borrowing cost in terms of the AS – 16, "Borrowing Costs". Pursuant to a clarifcation dated 9 August 2012 from the MCA, the Company has changed the accounting policy, w.e.f. from 1 April 2011, to treat the same as "foreign exchange fuctuation" accounted as per AS – 11 "Efect of Changes in Foreign Exchange Rates" instead of the "borrowing costs". This has resulted into reversal of fnance costs of Rs. 23,950,274 for the year ended 31 March 2012 and higher depreciation by Rs. 312,292 for the year ended 31 March 2012. The aforesaid reversal of fnance cost of Rs. 23,950,274 has been included in ‘Other income'' in the current year fnancial statements.

9. Disclosure in respect of employee benefts under Accounting Standard (AS) – 15 (Revised) "Employee Benefts" prescribed by the Companies (Accounting Standards) Rules, 2006.

(a) Defned Contribution Plans: Amount of Rs. 87,329,724 (previous year Rs. 73,058,220) pertaining to employers'' contribution to Provident Fund, Employees State Insurance Fund and Superannuation Fund is recognised as an expense and included in "Employee beneft expenses" in note 27.

(b) Defned beneft plan: The discloures for gratuity cost is given below:

(i) The changes in the present value of obligation representing reconciliation of opening and closing balances thereof are as follows:

10. Disclosure in respect of operating leases under Accounting Standard (AS) – 19 "Leases" prescribed by the Companies (Accounting Standards) Rules, 2006.

a) General description of the Company''s operating lease arrangements:

The Company enters into operating lease arrangements for leasing area ofces, factory building, equipments and residential premises for its employees.

Some of the signifcant terms and conditions of the arrangements are:

- agreements for most of the premises may generally be terminated by the lessee or either party by serving one to six month''s notice or by paying the notice period rent in lieu thereof.

- the lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement.

- the Company shall not sublet, assign or part with the possession of the premises without prior written consent of the lessor.

b) Lease rent charged to the statement of proft and loss on account of Minimum lease rentals Rs. 440,977,858 (previous year Rs. 338,284,407).

c) Company also enters into non- cancellable operating leases, the total of future minimum lease payments under non-cancellable operating leases is given below :

Provision for estimated losses on incomplete contracts relates to provision made for expected losses wherein, the total cost of the incompleted construction contract, based on the technical and other estimates, is expected to exceed the corresponding contract value. Accodingly, such excess is provided during the year.

Figures in bracket refer to previous year ending 31 March 2012.

11. Segment reporting

The Segment reporting policy is in conformity with Accounting Standard-17 on "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006. The risk-return profle of the Company''s business is determined predominantly by the nature of their products and services. Accordingly, the following primary segmentation is based on the business in which the Company operate:

Primary segment (Business segment)

A Material handling systems

This segment is primarily engaged in manufacturing, supply, erection and commissioning of material handling systems (including balance of plant), viz;

a. Supply of conveyor belt, slat conveyors, bucket elevators;

b. Manufacture and / or supply of crushers, screens, conveyor components like idlers and pulleys (rollers);

c. Fabricated steel structures ;

d. Providing the services of design, engineering, procurement, construction and maintenance for air and gas pollution control systems attached to the industrial plants;

e. Manufacture of ash handling equipments and undertakes turnkey projects for ash handling system;

f. Erection and commissioning of all of above.

B Setting up of complete power plant on Engineering, Procurement and Construction (EPC) basis

This segment is primarily engaged in purchasing, selling, producing, trading, manufacturing or otherwise dealing in all aspects of research, design, engineering, installation, commissioning, construction, operation and maintenance of power generation plants and power systems.

Secondary segment (Geographical segment)

The businesses are organized into two key geographic segments (reportable secondary segment) i.e. domestic and exports. Revenues are attributable to individual geographic segments based on the location of the customer within India (domestic) and outside India (exports).

The following specifc accounting policies have been followed for segment reporting :

1. Segment revenue includes sales of manufactured goods, sales of traded goods, service income, contract revenue and other income directly identifable to the segment.

2. Expenses that are directly identifable with the segments are considered for determining segment results.

3. Other income including interest income, dividend income and proft on sale of fxed assets that are not identifable to segments is included in unallocable other income.

4. Segment assets and segment liabilities include those directly identifable with the respective segments. Unallocated assets include cash and bank, loans and advances to subsidiaries, accrued interest on fxed deposit, share application money pending allotment, deferred tax assets, advance for share purchase and investments. Unallocated liabilities include secured loans, unsecured loans, bank overdraft, deferred interest accrued but not due, provision for proposed dividend and income tax liabilities.

12. Related party disclosures

a) Related party and nature of relationship where control exists.

Subsidiary Tecpro Energy Limited

Tecpro International FZE (up to 11 January 2012)

Tecpro Trema Limited (refer note 31)

Ajmer Waste Processing Company Private Limited

Tecpro Systems (Singapore) Pte. Ltd.

Bikaner Waste Processing Company Private Limited

Ambika Projects (India) Private Limited (refer note 31)

Eversun Energy Private Limited (w.e.f. 24 Febuary 2012)

PT. Tecpro Systems Indonesia (w.e.f. 6 January 2012)

Related party and nature of the related party relationship with whom transactions have taken place during the year

Subsidiaries Tecpro Energy Limited

Tecpro International FZE (up to 11 January 2012)

Tecpro Trema Limited (refer note 31)

Ajmer Waste Processing Company Private Limited

Tecpro Systems (Singapore) Pte. Ltd.

Bikaner Waste Processing Company Private Limited

Ambika Projects (India) Private Limited (refer note 31)

Eversun Energy Private Limited (w.e.f. 24 Febuary 2012)

PT. Tecpro Systems Indonesia (w.e.f. 6 January 2012)

Key management personnel Ajay Kumar Bishnoi

Amul Gabrani Arvind Kumar Bishnoi Aditya Gabrani Amar Banerjee

Relatives of key management personnel Bhagwanti Gabrani

Amita Bishnoi

Goldie Gabrani

Rashmi Singh Enterprises over which key management Tecpro Energy Limited* personnel exercise signifcant infuence Tecpro Trema Limited (refer note 31)*

Tecpro International FZE (up to 11 January 2012)*

Tecpro Systems (Singapore) Pte. Ltd.*

Ambika Projects (India) Private Limited (refer note 31)*

Eversun Energy Private Limited (w.e.f. 24 Febuary 2012)*

PT. Tecpro Systems Indonesia (w.e.f. 6 January 2012)*

Tecpro Engineers Limited

T&H Education Private Limited

Hythro Power Corporation Limited

Tecpro Stones Private Limited

Fusion Fittings (I) Limited

Shriram Cement Limited

Tecpro Infra-Projects Limited

G.E.T. Power Limited

HIQ Power Associates Private Limited (w.e.f. 27 April 2011)

Avadh Transformers Private Limited

* Transactions with these enterprises have been disclosed under subsidiaries

13. Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances of Rs. 54,612,843 (previous year Rs. 11,027,924)] is Rs. 102,281,190 (previous year Rs. 379,260,473).

14. Previous year fgures in balance sheet have been regrouped / recast wherever necessary to conform to the current year''s classifcation/presentation. Further, the current year fgures are not comparable with previous year on account of amalgamation.


Mar 31, 2012

1. Company overview

Tecpro Systems Limited is an engineering company primarily engaged in designing, engineering, manufacturing, supply, installation and erection of material handling systems, power plants including balance of plant packages in power sector.

(i) Pursuant to the approval of the shareholders of the Company granted in their Extra-ordinary General Meeting held on 25 March 2010, the Company came out with an Initial Public Offer ("IPO") of 7,550,000 equity shares of Rs. 10 each at a premium of Rs. 345 per share including Offer for Sale of 1,300,000 equity shares by Metmin Investments Holdings Limited and made allotment of 6,250,000 equity shares on 8 October 2010. The allotment of 6,250,000 equity shares included allotment of 66,945 equity shares of Rs. 10 each at a premium of Rs. 328 per share to employees. The issue was made in accordance with the terms of the Company's prospectus dated 29 September 2010 and the shares of the Company got listed on The Bombay Stock Exchange Limited and The National Stock Exchange of India Limited on 12 October 2010.

(ii) The Company has only one class of equity shares, having a par value of Rs.10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. Each shareholder is eligible to one vote per share held. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(c) Pursuant to SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, an aggregate of 20% of the post offer capital of the Company held by the promoters is locked in for a period of three years. Accordingly, 10,094,759 equity shares held by Mr. Ajay Kumar Bishnoi and Mr. Amul Gabrani are under lock in period for three years beginning 8 October 2010. Further, in addition to the above equity shares, that are locked in for three years, 26,954,328 equity shares out of pre-offer capital of the Company were locked in for a period of one year beginning 8 October 2010.

(d) Above equity shares of Rs.10 each include:

i) 12,698,750 (previous year 12,698,750) equity shares have been allotted as fully paid up by way of bonus shares during the year 2007-2008 and 9,739,000 (previous year 9,739,000) equity shares during the year 2006-2007 out of securities premium account.

ii) 16,526,291 (previous year 16,526,291) equity shares issued during the year 2009-10 as fully paid-up shares to shareholders of erstwhile Tecpro Ashtech Limited and erstwhile Tecpro Power Systems Limited, pursuant to a scheme of amalgamation, for consideration other than cash.

Nature of security ---

Working capital facility comprises cash credit, buyer's credit, export packing credit and bills discounted from banks. Such facilities are secured by first charge on the current assets of the Company on pari passu basis. Cash credit, short term loans and buyers credit from certain banks are further primarily / collaterally secured by way of hypothecation / mortgage of moveable / immoveable fixed assets of the Company on a pari passu basis other than those specifically funded through term loans and charged to State Bank of India and by way of equitable mortgage over certain assets of certain directors (includes a relative of a director) of the Company on pari passu basis. The facility is also secured by personal guarantee of Mr. Amul Gabrani (Director), Mr. Ajay Kumar Bishnoi (Director) and Mrs. Bhagwanti Gabrani (relative of Director, except for facility availed from DBS). Further, the loan from SBI and Central Bank of India is also secured by corporate guarantee given by Fusion Fittings (I) Limited. Working capital facility from banks also include an amount of Rs. 498,503,106 (previous year Rs. 428,358,208) taken by erstwhile Tecpro Ashtech Limited secured by a pari-passu charge on present and future goods, books debts, all other moveable assets, outstanding monies, claims, investments etc. of erstwhile Tecpro Ashtech Limited in terms of the deed of hypothecation and further secured by corporate guarantee given by Fusion Fittings (I) Limited, holding Company of erstwhile Tecpro Ashtech Limited and collaterally secured by hypothecation of moveable fixed assets owned by the Company and equitable mortgage over certain assets of certain directors (includes a relative of a director) of the Company.

* Share application money aggregarting to Rs. 2,113 (previous year Rs. 751) relates to application made for equity shares in Tecpro Systems (Singapore) Pte. Ltd., Rs. Nil (previous year Rs. 485,000) relates to application made for equity shares in Bikaner Waste Processing Company Private Limited.

A includes advances to related parties amounting to Rs. 138,000,000 (previous year Rs. Nil)

** Loans and advances in the nature of loans given to subsidiaries

2. Amalgamation

a) Background and nature of business

The Hon'ble High Court of Delhi approved the Scheme of Amalgamation of Company's wholly owned subsidiary Microbase Infosolution Private Limited (Amalgamating Company or Microbase) with Tecpro Systems Limited ("Amalgamated Company or Company or TSL") vide its order dated 17 October 2011. The order of Hon'ble High Court of Delhi was duly filed with the Registrar of Companies and the Scheme of Amalgamation became effective on 24 December 2011. Prior to amalgamation Microbase was not carrying out any major activity.

b) Salient features of the Scheme

The salient features of the Scheme of Amalgamation of Microbase with the Company are as follows:

(i) The Appointed Date for the amalgamation is 1 April 2011.

(ii) On and from the Appointed Date, authorized share capital of the Amalgamating Company has been merged with those of the Amalgamated Company.

(iii) With effect from the Appointed Date and upon this Scheme becoming effective, all the assets and liabilities and the entire business of the Amalgamating Company shall stand transferred to and vest in the Amalgamated Company, as a going concern, without any further act or deed, as per the provisions contained herein.

(iv) All suits, claims, actions and proceedings by or against the Amalgamating Company, pending and /or arising on or before the effective date shall be continued and be enforced by or against the Amalgamated Company as effectually as the same had been instituted by or pending against the Amalgamated Company.

(v) Upon the Scheme becoming effective, any loan or other obligation due between or amongst the Amalgamating Company and the Amalgamated Company, if any, shall stand discharged and there shall be no liability in that behalf.

c) Consideration

Amalgamating Company (Microbase Infosolution Private Limited) was a wholly owned subsidiary of Amalgamated Company. On the Appointed Date, the entire equity share capital of the Amalgamating Company was held by the Amalgamated Company. On amalgamation of the Amalgamating Company with the Amalgamated Company, the share capital of the Amalgamating Company will be extinguished since all the shares of the Amalgamating Company are held by the Amalgamated Company. Since the Amalgamating Company was a wholly owned subsidiary of the Amalgamated Company, no share will be issued by the Amalgamated Company to the shareholders of the Amalgamating Company as a result of the amalgamation.

d) Accounting treatment

The Company has accounted for the merger in its books as per the Pooling of Interest Method of Accounting prescribed under the Accounting Standard 14 - "Accounting for Amalgamation".

(i) All the assets and liabilities recorded in the books of Microbase Infosolution Private Limited as at appointed date have been transferred to and vested in the Company pursuant to the Scheme and have been recorded by the Company at their book values as appearing in the books of Microbase Infosolution Private Limited (details given below);

(ii) On and from the Appointed Date, the reserves and the balance in the Profit and Loss Account of Microbase Infosolution Private Limited have been merged with those of the Company in the same form as they appear in the financial statements of Microbase Infosolution Private Limited.

3. Pursuant to the approval of the shareholders of the Company granted in their Extra-ordinary General Meeting held on 25 March 2010, the Company came out with an Initial Public Offer ("IPO") of 7,550,000 equity shares of Rs. 10 each at a premium of Rs. 345 per share including Offer for Sale of 1,300,000 equity shares by Metmin Investments Holdings Limited and made allotment of 6,250,000 equity shares on 8 October 2010. The allotment of 6,250,000 equity shares included allotment of 66,945 equity shares of Rs. 10 each at a premium of Rs. 328 per share to employees. The issue has been made in accordance with the terms of the Company's prospectus dated 17 August 2010 and the shares of the Company got listed on The Bombay Stock Exchange Limited and The National Stock Exchange of India Limited on 12 October 2010.

Share issue expenses incurred during the financial year ended 31 March 2011 amounting to Rs. 141,172,454 (previous year Rs. 3,666,987) pertain to expenses incurred in connection with the public issue of equity shares of the Company. In accordance with the provisions of Section 78 of the Companies Act, 1956, these expenses were charged off against the available balance in the 'Securities premium reserve' account.

4. The gross block of leasehold land includes Rs. 76,086,192 (previous year Rs. 76,086,192) on account of revaluation of leasehold land belonging to erstwhile Blossom Automotive Private Limited which has been transferred to the Company on amalgamation with effect from 1 April 2008. Consequent to the same, there is an additional charge of depreciation of Rs. 1,001,034 (previous year Rs.1,001,034) and an equivalent amount has been withdrawn from revaluation reserve. This has no impact on profit for the year.

As at As at

5. Contingent liabilities and commitments (to the extent not provided for) 31 March 2012 31 March 2011

(i) Claims against the company not acknowledged as debt :

Sales tax matters 81,602,639 83,197,573

(ii) Claims against the company not acknowledged as debt :

Entry tax matters 20,408,275 29,397,049

(iii) Claims against the company not acknowledged as debt :

Income tax matters - 346,677

(iv) Claims against the company not acknowledged as debt : Labour matters - 1,200,000

(v) Claims against the company not acknowledged as debt :

Service tax matters 6,536,536 8,976,817

(vi) Demand for additional price/ enhancement cost in respect of factory plots situated in Bawal * 9,207,821 8,528,672

(vii) Sales tax liability against pending forms 2,102,176,396 1,685,549,342

*The factory plots belonging to the Company, situated at Bawal were allotted by the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDCL) in favour of the Company through Regular Letters of Allotment (RLA) letter dated 23 January 2004 and 9 July 2004.

The Company has received notices dated 4 December 2007 and 29 December 2007 from HSIIDCL for additional price/ enhancement cost amounting to Rs. 9,207,821 {including interest} (previous year Rs. 8,528,672 {including interest}), in respect of factory plots situated in Bawal. The Company has filed a writ petition in the Punjab and Haryana High Court on 8 January 2008 and has obtained a stay order on 9 January 2008. This matter is under adjudication. Pursuant to above, Rs. 9,207,821 (previous year Rs.8,528,672) has been disclosed as 'Contingent liability' in the notes to the accounts.

6A.Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances of Rs. 11,027,924 (previous year Rs. 34,324,562)] are Rs. 379,260,473 (previous year Rs. 192,827,193).

7. On March 6, 2012, search proceedings under Section 132 of the Income Tax Act, 1961 ("the Act") were undertaken in respect of the Company. The search proceedings were effectively concluded vide last Panchnama drawn on May 03, 2012. At this stage, no tax demand has been determined pursuant to the present search proceedings.

8. Disclosure in respect of operating leases under Accounting Standard (AS) - 19 "Leases" prescribed by the

Companies (Accounting Standards) Rules, 2006.

a) General description of the Company's operating lease arrangements:

The Company enters into operating lease arrangements for leasing area offices, factory building, equipments and residential premises for its employees.

Some of the significant terms and conditions of the arrangements are:

- agreements for most of the premises may generally be terminated by the lessee or either party by serving one to six month's notice or by paying the notice period rent in lieu thereof.

- the lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement.

- the Company shall not sublet, assign or part with the possession of the premises without prior written consent of the lessor.

b) Lease rent charged to the Statement of Profit and Loss on account of minimum lease rentals Rs. 338,284,407 (previous year Rs. 258,558,707).

Provision for estimated losses on incomplete contracts relates to provision made for expected losses wherein, the total cost of the in completed construction contract, based on the technical and other estimates, is expected to exceed the corresponding contract value. Accordingly, such excess is provided during the year.

Figures in bracket refer to previous year 31 March 2011.

9. Segment reporting

The Segment reporting policy is in conformity with Accounting Standard-17 on "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006. The risk-return profile of the Company's business is determined predominantly by the nature of their products and services. Accordingly, the following primary segmentation is based on the business in which the Company operate.

Primary segment (Business segment)

A Material handling systems

This segment is primarily engaged in manufacturing, supply, erection and commissioning of material handling systems (including balance of plant) , viz;

a. Supply of conveyor belt, slat conveyors, bucket elevators;

b. Manufacture and / or supply of crushers, screens, conveyor components like idlers and pulleys (rollers);

c. Fabricated steel structures;

d. Providing the services of design, engineering, procurement, construction and maintenance for air and gas pollution control systems attached to the industrial plants;

e. Manufacture of ash handling equipments and undertakes turnkey projects for ash handling system;

f. Erection and commissioning of all of above.

B Setting up of complete power plant on Engineering, Procurement and Construction (EPC) basis

This segment is primarily engaged in purchasing, selling, producing, trading, manufacturing or otherwise dealing in all aspects of research, design, engineering, installation, commissioning, construction, operation and maintenance of power generation plants and power systems.

Secondary segment (Geographical segment)

The businesses are organized into two key geographic segments (reportable secondary segment) i.e. domestic and exports. Revenues are attributable to individual geographic segments based on the location of the customer within India (domestic) and outside India (exports).

The following specific accounting policies have been followed for segment reporting :-

1. Segment revenue includes sales of manufactured goods, sales of traded goods, service income, contract revenue and other income directly identifiable to the segment. Segment results and capital employed includes amounts directly identifiable to each of the segments and which can be allocated on reasonable basis. Unallocable income includes interest income and other income that are not identifiable to the segments. Unallocable expenditure includes corporate expenditure which is not identifiable to any of the segments.

2. Unallocable capital employed includes assets and liabilities which are not specifically allocable to individual segments.

3. Segment assets and segment liabilities include those directly identifiable with the respective segments. Unallocated assets include cash and bank, loans and advances to subsidiaries, accrued interest on fixed deposit, share application money pending allotment, deferred tax assets, advance for share purchase and investments. Unallocated liabilities include secured loans, unsecured loans, bank overdraft, interest accrued but not due, provision for proposed dividend and income tax liabilities.

10. The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29 December 2011 to AS-11 'The Effects of Change in Foreign Exchange Rates' to allow companies capitalization of exchange differences arising on long term foreign currency monetary items. In accordance with the amendment/earlier amendment to AS 11, the Company has capitalized exchange loss, arising on long term foreign currency loan, amounting to Rs. 25,581,726 (previous year Rs. Nil) to the cost of work in progress (building).

11. Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification.

 
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