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Notes to Accounts of UB Engineering Ltd.

Mar 31, 2014

1.1 Rights of Shareholder :

Every Shareholder is entitled to Dividend when declared. The other rights are governed by the Articles of Association of the Company and the Companies Act, 1956.

2) In terms of "Accounting Treatment" referred to in the Scheme of Arrangement sanctioned by the Bombay High Court in its Order dated 6th March, 2009, the following accounting entries were made in the accounts.

(a) Land, Building and Plant & Machinery, other Assets & Liabilities were revalued / reviewed as on 1st January, 2009 at their fair market values in respect of the Company and the erstwhile subsidiary and the notional appreciation representing the difference between the revalued values and their original cost amounting to Rs. 222.47 Million (net) was credited to General Reserve which otherwise would have been taken to Fixed Asset Revaluation Reserve during F.Y. 2008-09.

(b) Arrears of Deferred Tax Asset of Rs.121.15 Million relating to pre-merger period has been deducted from the above General Reserve instead of recognizing in the Profit and Loss Account during F.Y. 2009 - 10.

The above treatment is however at variance with the Accounting Standard Nos. 10 and 22 and the Generally Accepted Accounting principles, and the General Reserve is not an appropriation out of profits, available for dividend.

3) Going Concern

The company has incurred loss of Rs. 1,710.57 Million for the year ended March 31,2014 and its negative net worth was Rs. 570.87 Million as on 31st March 2014. Notwithstanding the same, the accounts have been prepared on principles applicable to Going concern on account of the following :

a) Company is having large Receivables amounting to Rs. 2,488.67 Million as on March 31,2014. The Management is confident of realizing the same.

b) Infusion of funds by prospective investor.

c) Restructuring of loans by lenders.

4) The Company has obtained necessary permission from the Registrar of Companies, Pune vide their letter dated 19th September 2014 for holding Annual General Meeting on or before 27th December 2014 for approval of Annual Accounts.

5) A Bank Guarantee of Rs. 191.65 Million was invoked by a Customer in August 2012 and the same was contested before the High Court of Punjab & Haryana at Chandigarh. The matter has been referred for Arbitration. A Presiding Arbitrator, mutually agreed to by both parties, has been appointed and arbitration proceedings are expected to commence shortly.

6) The Company is engaged in execution of Mechanical and Electrical projects in the engineering industry. The Company had also put up a metal fabrication unit at Durg, Chattisgarh state for manufacturing customized metal components.

7) Company has classified Term Loans, Cash Credits and other facilities availed from Banks in "Other Current Liabilities".

8) UB Ostan (India) Private Limited, a joint-venture in which the company has a 35 % stake, has not yet commenced operations. No financial results have been prepared for UB Ostan (India) Private Limited, hence there is no impact on accounts of the Company. Additionally, the accounts of the company are not considered for consolidation under AS 27.

9) The Company has Service Tax outstanding dues of Rs.353.10 Million upto December 31, 2013 and for payment of these dues, company is taking all efforts. Delayed Interest Provisions up to March 31,2014 has been considered in the books.

Statutory Dues aggregating to Rs. 495.00 Million outstanding as on 31.03.2014 comprising of Service Tax, T.D.S, Indirect Taxes, Provident Fund, Gratuity etc.

10) Receivables

Recoverability of sums withheld by various clients as liquidated damages for various projects aggregates to Rs. 150.81 Million. The management is of the opinion that the above liquidated damages and other receivables are fully recoverable.

11) The Company has following exposure in foreign currencies -

1. Bank Account - Nepalese Rupee - 14,215.51.

2. EEFC Bank Account - Euro 2,611.48

3. Imported Letter of Credit opened with Axis Bank - GBP 111,414 and Corporation Bank - GBP 8,185

The Company has not taken hedge cover for the above amounts and has not entered into speculative derivative transactions.

b. With regard to disputed Sales Tax demands pending in various states, the Management is of the view that demands are not sustainable and hence no provision is presently considered necessary. Against above demands conservative provision of Rs. 16.50 Million till date, has been made in the books.

c. Cases filed by employees separated from the company in respect of their dues and such amounts has been considered as Contingent Liability and included in Note No. 29 a.V above.

In one of the cases above, a demand for Rs. 1.28 Million has been decided against the Company , against which Rs. 1.00 Million has been deposited in the Court in December 2013.

Several cases filed by Ex-employee on various grounds, have not been included in the above, as the amounts in such cases are not quantifiable.

12) Employee Benefits :

The Company has made provision in the accounts for liability of Gratuity and Leave encashment based on Actuarial Valuation, but has not funded the amounts. The particulars under the AS 15 (revised) furnished below are those which are relevant and available to the Company for this year.

13) a) Liability towards Gratuity, Superannuation and Employee''s Deposit Linked Insurance has been fully provided in the accounts. Unfunded liabilities as at March 31, 2014 were Gratuity Rs.36.14 Million (Previous year - Rs.38.64 Million ), SuperannuationRs. 47.65 Million (Previous year - Rs. 45.51 Million ), Employee''s Deposit Linked Insurance Rs. 6.98 Million ( Previous year Rs. 6.50 Million ). Out of above amounts, Gratuity is being paid by the Company, as and when claimed by the employees. As on March 31, 2014 Gratuity of Rs. 7.14 Million claimed by employees is remaining unpaid.

b) Present Valuation of Leave Encashment obligation as determined by Actuarial valuation is Rs. 12.50 Million, against which no funding is done, though fully provided for and dues are being paid as and when arises.

c) Provision in respect of separated employees towards Final Dues payable has been made till date to the extent of Rs. 19.00 Million which in opinion of management is reasonably adequate.

14) Balances under the head Loans and Advances, Other Current Assets ( Other Deposits ), Trade Receivables and Trade Payables are taken as per books and are subject to confirmation. In the opinion of the Management, these are realisable in the ordinary course of business at the values stated.

15) The Company has consistently not been disclosing the details of contract cost under broad natural heads, being a sensitive matter. To this extent there has been a variance with the generally accepted accounting principles.

16) Bank balances include:

(a) Fixed Deposits with Banks Rs.46.21 Million ( Previous year Rs.64.92 Million ) lodged as margin money deposits. Interest Income of Rs. 2.56 Million for F.Y. 2013- 14 is being negotiated with bank and not accrued in the books.

(b) Balances with Indian Scheduled Banks in foreign currency account Rs. 0.21 Million (Previous year - Rs. 0.18 Million ).

Maximum Balance during the year Rs. 0.01 Million ( Previous year - Rs.0.38 Million ) in Foreign Currency.

17) Events subsequent to Balance Sheet date :

Post 31st March 2014 various bank guarantees aggregating to Rs. 353.44 Million issued by the Company towards performance / mobilisation advance / security invoked by various clients / vendors.

Devolved Letters of Credit issued to vendors as on March 31,2014 was Rs.113.14 Million. As on date the same has increased to Rs. 237.71 Million due to continuing difficult financial conditions.

18) Two numbers creditors winding up petitions have been filed in Bombay High Court and consent terms have been filed.

Claims by Micro and Small and Medium enterprises totaling Rs. 5.66 Million along with applicable interest, is filed against the company and is being suitably represented.

19) Segment Reporting :

The Company has classified Operations into two Primary Business Segments i.e. Mechanical Erection and EPC Electrical , besides fabrication contracts which is a reportable segment and two Secondary Segments i.e. Domestic and Overseas , in accordance with the requirement of AS 17 - Segment Reporting issued by the Institute of Chartered Accountants of India.

Secondary Segment Reporting:

With regard to Secondary segment ( Domestic and Overseas ), there are no Overseas Operations during the year.

20) Related Party Disclosures :

a) Names of related parties and description of relationship

i) Associate Companies:

United Breweries (Holdings) Limited, Bangalore UB Infrastructure Projects Limited, Bangalore Kingfisher Finvest India Limited, Bangalore UB Ostan ( India ) Private Limited , Mumbai

ii) Subsidiary Companies:

UB Infrastructure Limited, Pune

Bhopal-Berasia-Sironj Highway Private Limited, New Delhi (Step down subsidiary) Sendhwa-Khetia Road Development Company Private Limited, Pune (Step down subsidiary)

iii) Directors / Key Management Personnel:

Mr. J.K.Sardana - Managing Director

21) Additional information pursuant to the provisions of Para 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is not given as construction being service activity is not covered under Para 3(ii) (C) of Schedule VI to the Companies Act, 1956.

22) Managerial Remuneration:

Although, the remuneration is in excess of limits with reference to Schedule XII Companies Act, 1956 but is permissible under the Notification No. GSR 534 (E) 14, 2011 issued by Ministry of Corporate Affairs; and approval of shareholders . previous Annual General Meeting held on 27th Sept. 2013.

23) Deferred Taxation:

As a matter of prudence, additional Deferred Tax asset during the year is not considered.

24) Previous year figures have been reclassified / regrouped / restated wherever necessary to conform to Schedule VI ( as amended) of the Companies Act, 1956.


Mar 31, 2013

1) The Company is engaged in execution of Mechanical and Electrical projects of engineering industry. The Company has metal fabrication unit which manufactures custom made engineering components.

2) In terms of “Accounting Treatment" referred to in the Scheme of Arrangement sanctioned by the Bombay High Court in its order dated 6th March, 2009, the following accounting entries were made in the accounts.

(a) Land, Building and Plant & Machinery, other Assets & Liabilities were revalued / reviewed as on 1st January, 2009 at their fair market values in respect of the Company and the erstwhile subsidiary and the notional appreciation representing the difference between the revalued values and their original cost amounting to Rs. 222.47 Million (net) was credited to General Reserve which otherwise would have been taken to Fixed Asset Revaluation Reserve during F.Y. 2008-09.

(b) Arrears of Deferred Tax Asset of Rs. 121.15 Million relating to pre-merger period has been deducted from the above General Reserve instead of recognizing in the Proft and Loss Account during F.Y. 2009 - 10.

The above treatment is however at variance with the Accounting Standard Nos. 10 and 22 and the Generally Accepted Accounting principles, and the General Reserve is not an appropriation out of profits, available for dividend.

3) During the F.Y. 2011-12, two bank guarantees given by the Company on behalf of Company''s Subsidiaries were invoked / paid , involving outflow of Rs. 138.60 Million. Recoverability of 80 % of the said invoked / paid guarantees, is matter of Writ Petitions pending before Madhya Pradesh High Court and hence the same has not been absorbed in the accounts. The projects for which these two Subsidiaries were incorporated, could not be commenced due to non-achievement of fnancial closure.

4) Bank Guarantees invoked by Customers Rs. 208.27 Million (including Rs. 191.65 Million invoked in August 2012, which is being contested before Chandigarh High Court.)

5) The Mechanical Erection Engineering and Electrical divisions which are the main activities of the Company, have in common with allied industries, suffered economic slowdown, leading to significant reduction in cash fows resulting in, amongst others, delays in payments to creditors, banks and statutory dues. The matter is being seriously addressed by the Board of Directors. The position is expected to ease in the coming months.

6) UB Ostan (India) Private Limited, a Joint Venture Company in which the Company has 35 % Interest. As the UB Ostan (India) Private Limited has not yet commenced operations, there is no impact on Accounts of the Company or on consolidated accounts of the Company.

7) During the year, the Company''s branch situated at Dubai was closed consequent to cessation of operations.

8) The Company has the exposure in foreign currency as under:-

1. Sudan – Euro 302,701.04

2. u.A.E. – Dirham 28,358.50.

3. Nepal – Nepalese Rupee 6,906,691.51. ( Amount fully provided in books )

The Company has not taken hedge cover for the above amounts and has not entered into speculative derivative transactions.

9) Employee Benefts :

The Company has made provision in the accounts for liability of Gratuity and Leave encashment based on Actuarial Valuation, but has not funded the amounts. The particulars under the AS 15 (revised) furnished below are those which are relevant and available to the Company for this year.

10) Liability towards Gratuity, Superannuation and Employee''s Deposit Linked Insurance has been fully provided in the accounts. Unfunded liabilities as at March 31, 2013 are Gratuity Rs. 38.64 Million (previous year - Rs. 36.47 Million, Superannuation Rs. 45.51 Million (previous year – Rs. 43.18 Million ), Employee''s Deposit Linked Insurance Rs. 6.50 Million (previous year Rs. 5.78 Million). Out of above amounts, Gratuity is being paid by the Company, as and when claimed by employee.

11) Balances under the head Loans and Advances, Other Current Assets ( Other Deposits ), Trade Receivables and Trade Payables are taken as per books and are subject to confrmation. In the opinion of the Management, these are realisable in the ordinary course of business at the values stated.

12) The Company has consistently not been disclosing the details of contract cost under broad natural heads, being a sensitive matter. To this extent there has been a variance with the generally accepted accounting principles.

13) Bank balances include:

(a) Fixed Deposits with Banks include Rs. 64.92 Million ( Previous year - Rs. 141.92 Million ) lodged as margin money deposits.

(b) Balances with Indian Scheduled Banks in foreign currency account Rs. 0.18 Million (previous year – Rs. 0.14 Million) which are incorporated in the accounts as appearing in the books.

14) Events subsequent to Balance Sheet date :

The Company has received notice of demand for Rs. 20.99 Million (including Penalty but excluding Interest) , from Central Excise & Customs commissionerate , Rajkot by its order dated 24th May 2013. The Company has been advised by legal counsel that demand is not sustainable in law and the Company is preferring an appeal before the Service Tax Appellate, Ahmedabad bench.

15) Segment Reporting :

The Company has classified Operations into two Primary Business Segments i.e. Mechanical Erection and EPC Electrical, besides fabrication contracts which is a reportable segment and two Secondary Segments i.e. Domestic and Overseas , in accordance with the requirement of AS 17 – Segment Reporting issued by the Institute of Chartered Accountants of India.

16) Related Party Disclosures :

a) Names of related parties and description of relationship i) Associate Companies:

united Breweries (Holdings) Limited, Bangalore UB Infrastructure Projects Limited, Bangalore Kingfsher Finvest India Limited, Bangalore uB ostan (India) private Limited, Mumbai

ii) Subsidiary Companies:

UB Infrastructure Limited, Pune

Bhopal-Berasia-Sironj Highway private Limited, New Delhi (Step down subsidiary)

Sendhwa-Khetia Road Development Company private Limited, pune

(Step down subsidiary)

iii) Directors / Key Management Personnel:

Mr. J.K.Sardana – Managing Director

17) Additional information pursuant to the provisions of Para 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is not given as construction being service activity is not covered under Para 3(ii) (C) of Schedule VI to the Companies Act, 1956.

18) Deferred Taxation:

Deferred Tax Liability and Asset amounting to Rs. 5.39 Million and Rs. 24.14 Million respectively, represents timing difference on account of Depreciation and deferment of deductions / allowances under Income Tax Act. As a matter of prudence, additional Deferred Tax asset during the year is not considered.

19) Previous year figures have been reclassified / regrouped / restated wherever necessary to conform to Schedule VI ( as amended) of the Companies Act, 1956.


Mar 31, 2012

1.1 Rights of Shareholder :

Every Shareholder is entitled to Dividend when declared. The other rights are governed by the Articles of Association of the Company and the Companies Act, 1956.

Term Loan from Bank of Rs. 26.25 Crores is secured by exclusive charge on Fixed Assets. Further, Term Loan from Bank of Rs. 38.50 Crores is secured by exclusive charge on Current and Fixed Assets of Fabrication Unit at Chhattisgarh.

Other Term loans from Consortium Banks are secured by (i) Pari pasu charge, on all the Fixed and Current Assets of the Company. (ii) Corporate Guarantees / Comfort Letter from United Breweries (Holdings) Limited

Loans from Others, is Secured by hypothecation of specific asset.

* Includes statutory dues, employee dues, advance from customers etc.

Term Loan from Corporation Bank of Rs. 26.25 Crores is secured by exclusive charge on Fixed Assets.

Term Loan from Corporation Bank of Rs. 38.50 Crores is secured by exclusive charge on Current and Fixed Assets of Fabrication Unit at Chattisgarh.

Other Term loans from Consortium Banks are secured by

(i) Pari pasu charge, on all the Fixed and Current Assets of the Company.

(ii) Corporate Guarantees / Comfort Letter from United Breweries (Holdings) Limited

Finance cost are netted of Capitalization of Rs. 24.85 Million carried under Capital Work in Progress (Previous Year Rs. Nil)

1) In terms of “Accounting Treatment” referred to in the Scheme of Arrangement sanctioned by the Bombay High Court in its Order dated 6th March, 2009, the following accounting entries were made in the accounts.

(a) Land, Building and Plant & Machinery, other Assets & Liabilities were revalued / reviewed as on 1st January, 2009 at their fair market values in respect of the Company and the erstwhile subsidiary and the notional appreciation representing the difference between the revalued values and their original cost amounting to Rs. 222.47 Million (net) was credited to General Reserve which otherwise would have been taken to Fixed Asset Revaluation Reserve during F.Y. 2008-09.

(b) Arrears of Deferred Tax Asset of Rs. 121.15 Million relating to pre-merger period has been deducted from the above General Reserve instead of recognizing in the Profit and Loss Account during F.Y. 2009 - 10.

The above treatment is however at variance with the Accounting Standard Nos. 10 and 22 and the Generally Accepted Accounting principles, and the General Reserve is not an appropriation out of profits, available for dividend.

2) Events subsequent to Balance Sheet date : (i) Bank Guarantees invoked by Customers Rs. 208.27 Million (including Rs. 191.65 Million invoked in August 2012, which is being contested before Chandigarh High Court) (ii) Devolvement of Letter of Credit of Rs. 256.58 Million pertaining July/August 2012.

3) During the year, two bank guarantees given by the Company on behalf of Company’s Subsidiaries were invoked / paid, involving the outflow of Rs. 138.60 Million. Recoverability of 80 % of the said invoked / paid guarantees, is matter of Writ Petitions pending before Madhya Pradesh High Court and hence the same has not been absorbed in the accounts.

4) Kuwait Tax Authorities had raised demands aggregating to Rs. 50.98 Million relating to years 1996 to 1999 which were contested on Appeals. The Court of Cessation finally decided the appeals against the Company during the year and hence the provision has been made in the accounts for the demands.

5) During the year, UB Ostan (India) Private Limited ceased to be wholly owned Subsidiary of the Company and has been converted to Joint Venture Company, with Company’s Interest therein to the extent of 35 %. The Joint Venture Company has not commenced operation, and hence No Impact on the current year profitability.

6) (a) During the year, following, completion of project, Sudan branch was closed (b) Considering prospects of future operations a branch has been opened in Nepal.

7) The overseas operations are not exposed to material loss on exchange in view of natural hedging, accordingly the Company has not hedged Overseas Financial Exposures against Currency Fluctuation. The amount outstanding as on March 31, 2012 Rs. 34.02 Million (Previous year Rs. 61.44 Million)

The Company has not entered into speculative derivative transactions.

8) Contingent Liabilities :

(a) Guarantees and Statutory Dues: (Rs. Million)

Sr. Particulars Current Previous No. year year

I Bank Guarantees / Counter Guarantees issued and Letters of Credit outstanding (Bank Guarantees are secured by Charge on Fixed Assets 4,376.06 3,825.31 and Current Assets of the Company.)

IIBills discounted 25.22 122.46

III Corporate Guarantees / Counter Guarantees

--- Group Company 650.00 1,060.00

--- Government of India(Customs) 54.31 54,31

--- Others 54.80 50.25

IV Sales tax demands of various years in different states, under appeal against which Rs. 0.70 Million (Previous year

- Rs. 0.70 Million) has been paid and included under Other 156.74 165.71 Deposits.

Company’s Sales Tax assessments are pending in various states. The additional liability, if any, on completion of assessments, if accepted, will be considered in accounts.

V Claims against the Company not acknowledged as debts. 88.13 85.00

VI Disputed Income Tax Demand under appeal 5.42 5.42

VII Estimated amount of Capital Commitments to be executed 52.02 137.79 on Capital account and not provided for

With regard to disputed Sales Tax / Income Tax demands pending in various states, as the Management is of the view that demands are not sustainable and hence no provision is presently considered necessary.

b) The re-opening of the assessment for the assessment year 1995-96 has been questioned on appeal at various stages. The Company approached for a settlement under KVSS and deposited Rs. 11.00 Million (Previous year - Rs. 11.00 Million), which is included under loans and advances. As per directives of the Appellate Authority, the matter has been remitted to the Assessing Officer for re-doing the assessment.

c) The Company had filed arbitration proceedings against Bharat Heavy Electricals Limited (BHEL) in the year 2003 to recover Rs. 366.35 Million (Previous year - Rs. 366.35 Million) with interest, against which BHEL had filed counter-claims of Rs. 607.47 Million (Previous year - Rs. 607.47 Million). The arbitration award is awaited.

9) Employee Benefits :

The Company has made provision in the accounts for liability for Gratuity and Leave encashment based on Actuarial Valuation, but has not funded the amounts. The particulars under the AS 15 (revised) furnished below are those which are relevant and available to the Company for this year.

10) Liability towards Gratuity, Superannuation and Employee's Deposit Linked Insurance has been fully provided in the accounts. Unfunded liabilities as at March 31, 2012 are Gratuity Rs. 36.47 Million (Previous year- Rs. 32.75 Million), Superannuation Rs. 43.18 Million (Previous year - Rs. 40.79 Million), EmployeeRs.s Deposit Linked Insurance Rs. 5.78 Million (Previous year Rs. 5.69 Million). The payment of Gratuity is made by the Company to the employees directly, when it is due for payment.

11) Balances under the head Loans and Advances, Other Current Assets (Other Deposits), Trade Receivables and Trade Payables are taken as per books and are subject to confirmation. In the opinion of the Management, these are realizable in the ordinary course of business at the values stated.

12) As per consistent practice followed by the Company, the entire expenditure incurred at or for contract sites are shown under “Contract Costs” without classifying the same under nominal heads of expenditure as referred to under Para 3 (x) of Part II of Schedule VI to the Companies Act, 1956.

13) On the basis of responses received to circulars sent and information received, there are no amount due to, Micro, Small and Medium enterprises.

As regards Small Scale Industries, there is a disputed claim made by Small Scale Industrial Undertaking M/s. Vindhyachal Air Products Limited of Rs. 5.37 Million and the matter is pending in the High Court. However, in the considered view of the management and as relied by the Auditors, impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

14) Bank balances include:

(a) Certain accounts aggregating Rs. Nil (Previous year - Rs. 0.004 Million) for which neither statement of account nor confirmations of balances have been received.

(b) Fixed Deposits with Banks include Rs. 141.92 Million (Previous year - Rs. 215.00 Million) lodged as margin money deposits.

(c) Balances with Indian Scheduled Banks in foreign currency account Rs. 0.14 Million (Previous year - Rs. 4.80 Million) which are incorporated in the accounts as appearing in the books.

15) Segment Reporting :

The Company has classified Operations into two Primary Business Segments i.e. Mechanical Erection and EPC Electrical, and two Secondary Segments i.e. Domestic and Overseas, in accordance with the requirement of AS 17 — Segment Reporting issued by the Institute of Chartered Accountants of India.

16) Related Party Disclosures :

a) Names of related parties and description of relationship

i) Associate Companies:

United Breweries (Holdings) Limited, Bangalore UB Infrastructure Projects Limited, Bangalore Kingfisher Finvest India Limited, Bangalore UB Ostan (India) Private Limited, Mumbai

ii) Subsidiary Companies:

UB Infrastructure Limited, Pune

Bhopal-Berasia-Sironj Highway Private Limited, New Delhi (Step down subsidiary) Sendhwa-Khetia Road Development Company Private Limited, Pune (Step down subsidiary)

iii) Directors / Key Management Personnel :

Mr. J.K.Sardana — Managing Director

17) Additional information pursuant to the provisions of Para 3,4C and 4D of Part II of Schedule

VI to the Companies Act, 1956 is not given as construction being service activity is not covered under Para 3(ii) (C) of Schedule VI to the Companies Act, 1956.

18) Deferred Taxation :

Deferred Tax Liability and Asset amounting to Rs. 5.39 Million and Rs. 24.14 Million respectively, represents timing difference on account of Depreciation and deferment of deductions / allowances under Income Tax Act. As a matter of prudence, additional Deferred Tax asset during the year is not considered.

19) Previous year figures have been reclassified / regrouped / restated wherever necessary to conform to Schedule VI (as amended) of the Companies Act, 1956.


Mar 31, 2011

1) Contingent Liabilities:

(a) Guarantees and Statutory Dues: Rs Million

Sr. Particulars Current year Previous year No.

i Bank Guarantees / Counter Guarantees issued and Letters of Credit outstanding (Bank Guarantees are secured by Charge on Fixed Assets and Current Assets of the Company.) 6,709.97 2,083.29

ii Bills discounted 122.46 90.14

iii Corporate Guarantees / Counter Guarantees

— Group Company 1,060.00 2,160.00

— Government of India( Customs) 54.31 —

— Others 50.25 15.32

iv Sales tax demands of various years in different states ,under appeal 165.71 157.35 against which Rs. 0.70 Million ( Previous year - Rs. 0.70 Million) has been paid and included under Other Deposits. Company's Sales Taxes assessments are pending in various states. The additional liability, if any, on completion of assessments, if accepted, will be considered in accounts.

v Claims against the Company not acknowledged as debts. 85.00 82.83

vi Overseas Tax Demands under appeal (hedged to the extent 44.56 42.82 Retention amounting to Rs. 24.70 Million (Previous Year Rs. 23.74Million)).

vii Disputed Income Tax Demand under appeal 5.42 31.18

Full provision is not considered, with regard to disputed Sales Tax / Income Tax demands pending in various states , as the management is of the view that demands are not sustainable and hence rib provision is presently considered necessary.

b) The re-opening of the assessment for the assessment year 1995-96 has been questioned on appeal at various stages. The company approached for a settlement under KVSS and deposited Rs. 11.00 Million (Previous year - Rs. 11.00 Million), which is included under loans and advances. As per directives of the Appellate Authority, the matter has been remitted to the assessing officer for re-doing the assessment.

c) The Company had filed arbitration proceedings against Bharat Heavy Electricals Limited (BHEL) in the year 2003 to recover Rs. 366.35 Million (Previous year - Rs. 366.35 Million) with interest, against which BHEL had filed counter-claims of Rs. 607.47 Million (Previous year - Rs. 607.47 Million). The arbitration order is awaited.

2) Employee Benefits:

The Company has made provision in the accounts for liability for Gratuity and Leave encashment based on Actuarial valuation, but has not funded the amounts. The particulars under the AS 15 (revised) furnished below are those which are relevant and available to the Company for this year.

3) Liability towards Gratuity, Superannuation and Employees Deposit Linked Insurance has been fully provided in the accounts. Unfunded liabilities as at March 31, 2011 are Gratuity Rs. 32.75 Million (Previous year- Rs.29.50 Million ), Superannuation Rs. 40.79 Million (Previous year - Rs. 38.37 Million ), Employees Deposit Linked , Insurance Rs. 5.69 Million (Previous year Rs. 5.69 Million). The payment of Gratuity is made by the Company to the employees directly, when it is due for payment.

4) Balances under the head Loans and Advances, Other Current Assets (Other Deposits) , Debtors and Creditors are taken as per books and are subject to confirmation. In the opinion of the management, these are realisable in the ordinary course of business at the values stated.

5) As per consistent practice followed by the Company, the entire expenditure incurred at or for contract sites is shown under "Contract Costs" without classifying the same under nominal heads of expenditure as referred to under Para 3 (x) of Part II of Schedule VI to the Companies Act, 1956.

6) On the basis of responses received to circulars sent and information received, there are no amount due to,Micro, Small and Medium enterprises.

As regards Small Scale Industries, there is a disputed claim made by Small Scale Industrial Undertaking M/s. Vindhyachal Air Products Limited of Rs. 5.37 Million and the matter is pending in the High Court.

However, in the considered view of the management and as relied by the Auditors, impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

7) Bank balances include:

(a) Certain accounts aggregating Rs. 0.004 Million (Previous year - Rs.0.003 Million ) {including in-operative accounts aggregating Rs. NIL ( Previous year - Rs. 0.003 Million)} for which neither statement of account nor confirmations of balances have been received.

(b) Fixed Deposits with Banks include Rs. 215.00 Million ( Previous year - Rs. 242.57 Million ) lodged as margin money deposits.

(c) Balances with Indian Scheduled Banks in foreign currency account Rs. 4.80 Million (Previous year - Rs. 1.67 Million) which are incorporated in the accounts as appearing in the books.

8) Segment Reporting:

The Company has classified Operations into two Primary Business Segments i.e. Mechanical Erection and EPC Electrical, and two Secondary Segments i.e. Domestic and Overseas, in accordance with the requirement of AS 17 - Segment Reporting issued by the Institute of Chartered Accountants of India.

9) Related Party Disclosures :

a) Names of related parties and description of relationship

i) Associate Companies:

United Breweries (Holdings) Limited, Banglore

UB Infrastructure Projects Limited, Banglore

Kingfisher Finvest India Limited, Banglore

UB Electronic Instruments Limited, Secunderabad

ii) Subsidiary Companies:

UB Infrastructure Limited, Pune

Bhopal-Berasia-Sironj Highway Private Limited, New Delhi ( Step down subsidiary)

UB Ostan (India ) Private Limited, Mumbai.

iii) Directors / Key Management Personnel:

Mr. J.K.Sardana - Managing Director

10) Orders placed of Capital Equipments not provided for Rs. 137.79 Million (Previous year - Rs. 1.20 Million).

11) Additional information pursuant to the provisions of Para 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is not given as construction being service activity is not covered under Para 3(ii) (C) of Schedule VI to the Companies Act, 1956.

12) Deferred Taxation:

Deferred Tax Liability and Asset amounting to Rs. 5.39 Million and Rs. 24.14 Million respectively , represents timing difference on account of Depreciation and deferment of deductions / allowances under Income Tax Act.

13) Previous year figures have been reclassified / regrouped / restated wherever necessary to conform to the current period classification.


Mar 31, 2010

1) In terms of "Accounting Treatment" referred to in the Scheme of Arrangement sanctioned by the Bombay High Court in its Order dated 6th March, 2009, the following accounting entries were made in the accounts.

(a) Land, Building and Plant & Machinery, other Assets & Liabilities were revalued / reviewed as on 1st January, 2009 at their fair market values in respect of the Company and the erstwhile subsidiary and the notional appreciation representing the difference between the revalued values and their original cost amounting to Rs. 222.47 Million (net) was credited to General Reserve which otherwise would have been taken to Fixed Asset Revaluation Reserve.

(b) Arrears of Deferred Tax Asset of Rs.121.15 Million relating to pre-merger period has been deducted from the above General Reserve during the current year instead of recognizing in the Profit and Loss Account.

The above treatment is however at variance with the Accounting Standard Nos. 10 and 22 and the Generally Accepted Accounting principles, and the General Reserve is not an appropriation out of profits.

2) The overseas operations are not exposed to material loss on exchange in view of natural hedging , accordingly the Company has not hedged Overseas Financial Exposures against Currency Fluctuation. The amount outstanding as on March 31, 2010 Rs. 96.46 Million ( Previous year Rs. 37.59 Million ).

The Company has not entered into speculative derivative transactions.

3) Rights Issue proceeds of Rs. 597.34 Million have been utilized fully for the purposes stated in Letter of Offer.

4) Tax Expenses include Income Tax ( Net of MAT credit ) and Deferred Tax.

5) Contingent Liabilities :

(a) Guarantees and Statutory Dues: ( Rs.Million )

Sr.

No. Particulars Current year Previous year

i Bank Guarantees / Counter Guarantees issued and

Letters of Credit outstanding 2,083.29 857.79

(Bank Guarantees are secured by Charge on Fixed Assets and Current Assets of the Company.)

ii Bills discounted (since, run off) 90.14 NIL

iii Corporate Guarantees / Counter Guarantees

--- Group Company 2,160.00 1,210.00

--- Others 15.32 20.91

iv Sales Tax demands of various years in different states, under appeal against which Rs.0.70 Million (Previous year - Rs.0.55

Million) has been paid and included under Other Deposits. 157.35 93.08

Company’s Sales Tax assessments are pending in various states. The additional liability, if any, on completion of assessments, if accepted, will be considered in accounts.

v Claims against the Company not acknowledged as debts. 82.83 45.66

vi Overseas Tax Demands under appeal (hedged to the extent

Retention amounting to Rs. 23.74 Million 42.82 49.12

(Previous Year Rs. 27.23 Million))

vii Disputed Income Tax Demand under appeal 31.18 25.34

Full provision is not considered, with regard to disputed Sales Tax / Income Tax demands pending in various states , as the management is of the view that demands are not sustainable and hence no provision is presently considered necessary.

b) The re-opening of the assessment for the assessment year 1995-96 has been questioned on appeal at various stages. The company approached for a settlement under KVSS and deposited Rs.11.00 Million (Previous year - Rs. 11.00 Million ), which is included under loans and advances. As per directives of the Appellate Authority, the matter has been remitted to the assessing officer for re-doing the assessment.

c) The Company had filed arbitration proceedings against Bharat Heavy Electricals Limited (BHEL) in the year 2003 to recover Rs. 366.35 Million (Previous year - Rs. 366.35 Million ) with interest, against which BHEL had filed counter-claims of Rs. 607.47 Million ( Previous year - Rs. 607.47 Million ). The arbitration order is awaited.

d) The Associate Company has provided letters of comfort to bankers of the Company.

6) Employee Benefits :

The Company has made provision in the accounts for liability for Gratuity and Leave encashment based on Actuarial valuation, but has not funded the amounts. The particulars under the AS 15 ( revised ) furnished below are those which are relevant and available to the Company for this year.

7) Liability towards Gratuity, Superannuation and Employees Deposit Linked Insurance has been fully provided in the accounts. Unfunded liabilities as at March 31, 2010 are Gratuity Rs. 29.50 Million (Previous year- Rs.29.12 Million ), Superannuation Rs. 38.37 Million (Previous year - Rs. 36.69 Million ), Employees Deposit Linked Insurance Rs. 5.69 Million ( Previous year Rs. 3.97 Million ). The payment of Gratuity is made by the Company to the employees directly, when it is due for payment.

8) Balances under the head Loans and Advances, Deposits, Debtors and Creditors are taken as per books and are subject to confirmation. In the opinion of the management, these are realisable in the ordinary course of business at the values stated.

9) As per consistent practice followed by the Company, the entire expenditure incurred at or for contract sites is shown under “Contract Costs” without classifying the same under nominal heads of expenditure as referred to under Para 3 (x) of Part II of Schedule VI to the Companies Act, 1956.

10) Accounts of Sudan Branch are audited by Branch Auditors i.e. M/s. Hassabo & Company, Sudan and the same are incorporated in the accounts.

11) On the basis of responses received to circulars sent , there are no amount due to , Micro , Small and Medium enterprises. As regards Small Scale Industries, there is a disputed claim made by a Small Scale Industrial Undertaking M/s. Vindhyachal Air Products Limited of Rs.5.37 Million and the matter is pending in the High Court.

However, in the considered view of the management and as relied by the Auditors, impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

12) Bank balances include:

(a) Certain accounts aggregating Rs. 0.003 Million ( Previous year - Rs.0.08 Million ) {including in- operative accounts aggregating Rs. 0.003 Million ( Previous year - Rs. 0.02 Million ) } for which neither statement of account nor confirmations of balances have been received.

(b) Fixed Deposits with Banks include Rs. 242.57 Million ( Previous year - Rs. 115.62 Million ) lodged as margin money deposits.

(c) Balances with Indian Scheduled Banks in foreign currency account Rs. 1.67 Million ( Previous year - Rs. 2.15 Million ) which are incorporated in the accounts as appearing in the books.

13) Segment Reporting :

The Company has classified Operations into two Primary Business Segments i.e. Mechanical Erection and EPC Electrical , and two Secondary Segments i.e. Domestic and Overseas , in accordance with the requirement of AS 17 - Segment Reporting issued by the Institute of Chartered Accountants of India.

14) Related Party Disclosures :

a) Names of related parties and description of relationship i) Associate Companies:

United Breweries (Holdings) Limited, Banglore UB Infrastructure Projects Limited, Banglore Kingfisher Finvest India Limited,Banglore UB Electronic Instruments Limited, Secunderabad

ii) Directors / Key Management Personnel :

Mr. J.K.Sardana – Executive Director ( up to 28th October 2009 ) Managing Director ( from 29th October 2009 )

15) Orders placed of Capital Equipments not provided for Rs. 1.20 Million (Previous year - Rs. 0.15 Million).

16) Additional information pursuant to the provisions of Para 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 is not given as construction being service activity is not covered under Para 3(ii) (C) of Schedule VI to the Companies Act, 1956.

17) Deferred Taxation :

Deferred Tax Liability for the year of Rs.5.39 Million represents timing difference on account of Depreciation and deferment of deductions / allowances under Income Tax Act.

18) Previous year figures have been reclassified / regrouped / restated wherever necessary to conform to the current period classification.

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