Notes to Accounts of SEPC Ltd.

Mar 31, 2017

Management is of the opinion that the Appeals preferred by the Company will be decided in its favour. Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

Estimated amount of contracts remaining to be executed on capital account (Net of advances) and not provided for Rs.340.63 lakhs (31 March 2016: Rs 309.52 lakhs )

Though the Company had obtained its Shareholders’ approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Leitwind Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognized the Profit/ Loss in the Statement of Profit and Loss for the year ended 31 March 2017.

1. The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project at Rajasthan with technology support from M/s EnerT international limited, Israel. The contract should have been executed by 28^th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The amount outstanding under Trade Receivables, Unbilled revenue and Short Term loans and advance net of advance received from APRL aggregates to Rs.9,867.91 lakhs. The Company and the customer have been in negotiations with potential financial and strategic investors which would enable the company to recover its dues. However, there has been no progress in these negotiations. Consequently, considering the increasing uncertainty in the ultimate realization of the said dues, the company as a matter of abundant caution has made a provision of Rs. 6,707.38 lakhs in the previous year - Refer Note No. 7, (after adjusting the value of trade liabilities in respect of this project), which has been included in exceptional items in the statement of Profit and Loss for the year ended 31^st March 2016.

(a) The Company''s investment in its associate, Haldia Coke and Chemicals Private Limited is Rs. 4,007.22 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment as at 31 March 2016 in the associate is other than temporary in nature. Consequently the company made a provision for diminution in the previous year , for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.

2. (b) The Company''s investment in Leitwind Shriram Manufacturing Limited (a related party) is Rs. 407.56 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment in that entity is other than temporary in nature and accordingly, the Company has made a provision for diminution, for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.

ii The Company was in the course of executing project for Governorate of Basra, Government of Iraq (‘the customer’). There were some delays in commencement of the project due to regulatory compliances. However the said contract has been cancelled by the Customer during February 2014. The construction activities has been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, are in progress. The Government of India has also been extremely supportive for revival of the project. The customer has opened a Letter of credit (‘LC’) for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 100% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the company. Further, Company has also filed a claim with concerned authorities and insurers towards compensation for cancellation of contract. The total amounts due to Company recorded under Trade Receivables, Unbilled revenue representing the actual cost incurred (after excluding the margin which has been written off) and Short Term loans and advances, in respect of this project, aggregate to Rs. 12,141.62 Lakhs. For the above reasons, the management is confident of realizing the monies and do not expect any shortfall in realization.

The Company entered into a contract to construct Ammonia plant for Bharath Coal and Chemicals Limited (BCCL) (related party). The project is stalled due to delay in statutory approvals. The total exposure in this project recorded under Unbilled Revenue and Contract Work In Progress is Rs. 8,300.19 lakhs. Considering the positive development in BCCL’s efforts in identifying alternate options to complete the project, the management is of the view that BCCL will be in a position to complete the Ammonia Plant project and thereby the Company will be able to realize these amounts in full.

3. Ka) Long term Loans and advances include Rs. 12,309.62 Lakhs (including interest accrued up to 31 March 2016 of Rs. 2,489.57 Lakhs), and Other Non - Current Assets includes Trade Receivables(Net) of Rs. 1,023.58 Lakhs, due from Leitwind Shriram Manufacturing Limited (LSML) (a related party). As part of the Corporate Debt Restructuring (CDR) package entered into by LSML with its bankers, the dues to SEPC is subordinated to the dues to Bankers and hence expected to be recovered substantially before March 2030 and the balance thereafter. Considering the extended repayment period and future business potential for Wind Energy Business, the management is confident of realizing the dues. However as a matter of prudence, the Company has stopped recognizing interest from 01^st April 2016 on the principal amount outstanding.

4. (b) Long term loans and advances include Rs 78,011.70 lakhs due from an associate company and its subsidiary. In order to secure these dues the company has entered into an arrangement, effective from 1^st March 2017, with the said associate and another wholly owned subsidiary of the associate which is engaged in coal mining operations in USA by which the company has acquired absolute and unconditional mining operation rights to exploit the coking coal reserves in relation to the mines of the said subsidiary, and the right to surplus cash flows, (after meeting subsidiary’s commitments), to the extent of the above mentioned dues. Also the associate company has given an undertaking that it will not divest its holdings in the said subsidiary company till the dues to the company are settled. Based on the projected operations of the mines and consequential projected cash flows, the outstanding dues are expected to be recoverable over a period of 11 years. In view of a mining asset and its cash flows being secured towards the outstanding due to the Company, no provision is considered necessary for these dues at this stage. However, as a matter of prudence the company has stopped recognizing interest from April 1, 2016 on principal amounts outstanding.

5. The Company had entered into a Turnkey contract with a customer in Chennai, in an earlier year for construction of a thermal power plant. The project is on hold, as the customer is awaiting project financial closure from the banks. The total exposure in this project included under Trade Receivables and Unbilled Revenue (Net of advances received and Trade Liabilities) is Rs. 5,634.41 Lakhs .Considering the long standing relationship with the customer and history of prompt realization of dues in respect of projects completed for the customer in earlier years, the management is confident of realizing the monies due under this project within one year.

6. Previous period figures have been regrouped / reclassified to be in conformity with current year classification/ disclosure, wherever necessary.

7. The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the noncurrent assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 30 May 2017.

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Mar 31, 2016

Notes:

a. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

b. The discount rate is based on the prevailing market rate as applicable for risk free investments as at balance sheet date for the estimated term of the obligation.

1. Employee Stock Compensation Expenses

The Company has two Employee Stock Option Schemes (A) Employee stock option scheme 2006,(B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

2. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)

In Pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on November 20, 2006 the Company instituted an ESOP Scheme for all its eligible employees including those of its subsidiaries and associates Companies.

In accordance with the 2006 Scheme the Company has granted on November 22, 2006 (Grant date) options to eligible employees at an exercise price of ''10/- per equity share. Under the terms of the 2006 Scheme the options will vest in the employees in the following proportion :

The employees stock options granted shall be capable of being exercised within a period of eight years from the date of grant. Modifications in the Terms of the 2006 Scheme

The Company has carried out a modification in "The 2006 scheme" and accordingly additional grants of 424,952 options were made during the year ended March 31, 2008. Those grants have been made as at April 1, 2007 and will vest with the employees in same proportion as in the original scheme.

Deferred Stock Compensation Expense

During the period , an amount of '' Nil (Previous period: '' Nil ) being employee compensation expense to the extent of options vested net off lapses, has been charged to Statement of Profit and Loss.

The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.

3. Shriram EPC Limited - 2007 - ESOP Scheme (the 2007 Scheme)

The Company instituted another Scheme for all eligible employees in pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on September 20, 2007.

In accordance with the 2007 Scheme the Company has granted on October 1, 2007 and January 1, 2008 (grant dates) options to eligible employees including those of its subsidiaries and associate companies at an exercise price of Rs.10/- per equity share. Under the terms of the 2007 Scheme the options will vest in the employees in the following proportion :

Modification in the Terms of the 2007 Scheme

The Company has carried out a modification in "The 2007 scheme" in an earlier year and accordingly additional grants of 10,000 options have been made. These grants have been made as at June 14, 2010 and will vest with the employee in 2 years in equal proportion from the end of 1 year from the date of grant.

Deferred Stock Compensation Expense

During the period, Rs. Nil (Previous Year Rs. Nil Lakhs) being employee compensation expense to the extent of options vested net off lapses, has been charged to Statement of Profit and Loss.

4. Fair value of Options Granted:

The estimated fair value of each stock option granted under the employee stock option Scheme 2006 is Rs.80. The fair value was arrived at based on a transaction entered into between a willing buyer and a seller for purchase of shares recent to the grant date of the options.

The estimated fair value of each stock option granted under the employee stock option Scheme 2007 is Rs.68.42 as per the Fair value method. The model inputs were the weighted average price arrived under the following methods :

5. Related Party Disclosures under Accounting Standard 18

6. Disclosure of related party transactions in accordance with Accounting Standard -18 - Related Party Disclosures notified by Central Government of India under Companies (Accounting Standards) Rules, 2006.

7 Leases

8. Operating Lease

The Company has operating lease arrangements primarily for office premises, the lease period of which is about 6 to 8 years. An amount of Rs.402 Lakhs (Previous period - Rs.524.71 lakhs) has been debited towards lease rental and other charges. The future expected minimum lease payments under operating leases are given below.

9. International Transactions

The Company has entered into transactions with related parties. The Management is of the opinion that the Company maintains the necessary documents as prescribed by the Income Tax Act, 1961 to prove that these international transactions are at arm''s length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on account of tax expense and provision for taxation.

10. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (Net of advances) and not provided for Rs.309.52 lakhs (31 March 2015: Rs Nil lakhs )

11. Sale of WEG Business

Though the Company had obtained its Shareholders'' approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Leitwind Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognized the Profit/Loss in the Statement of Profit and Loss for the year ended 31 March 2016.

12. Dues from Subsidiaries and Associates - Disclosure under clause 32 of the listing agreement

13. Details on derivative instruments and unhedged foreign currency exposures

(i) Outstanding forward exchange contracts entered into by the Company and outstanding as on 31 March 2016 - Nil (PY - USD 979,943)

(ii) Unhedged foreign currency exposure Rs.in Lakhs

14. The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project at Rajasthan with technology support from M/s EnerT international limited, Israel. The contract should have been executed by 28th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The amount outstanding under Trade Receivables, Unbilled revenue and Short Term loans and advance net of advance received from APRL aggregates to Rs.9,867.91 lakhs. The Company and the client have been in negotiations with potential financial and strategic investors which would enable the Company to recover its dues.However,there has been no progress in these negotiations. Consequently, considering the increasing uncertainty in the ultimate realization of the said dues, the Company as a matter of abundant caution has made a provision of Rs. 6,707.38 lakhs (after adjusting the value of trade liabilities in respect of this project), which has been disclosed under exceptional items in the statement of Profit and Loss.

15. The Company''s investment in its associate, Haldia Coke and Chemicals Private Limited is Rs. 4,007.22 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment in the associate is other than temporary in nature. Consequently the Company has made a provision for diminution, for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.

16. The Company was in the course of executing project for Governorate of Basra, Government of Iraq (''the customer''). There were some delays in commencement of the project due to regulatory compliances. However they said contract has been cancelled by the Customer during February 2014. The construction activities has been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, are in progress. The Government of India has also been extremely supportive for revival of the project. The customer has opened a Letter of credit (''LC'') for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 100% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the Company. Further, Company has also filed a claim with concerned authorities and insurers towards compensation for cancellation of contract.

The total amounts due to Company recorded under Trade Receivables, Unbilled revenue representing the actual cost incurred (after excluding the margin which has been written off/not recognized during the year) and Short Term loans and advances, in respect of this project, aggregate to Rs. 12,208.22 Lakhs. For the above reasons, the management is confident of realizing the monies and do not expect any shortfall in realization.

17. The Company entered into a contract to construct Ammonia plant for Bharath Coal and Chemicals Limited (BCCL, Fellow subsidiary). The project is stalled due to delay in statutory approvals. The total exposure in this project recorded under Unbilled Revenue and Contract Work In Progress is Rs 8,300.19 lakhs. Apart from various options/ plans considered by BCCL to commence the project, BCCL has submitted proposal to set up a Coal gasification based plant to a third party and also parallely considering the option of re-export of the equipments. In addition BCCL has received a letter from Industrial Promotion and Investment Corporation of Odisha Limited , dated 06th November 2015, offering land for setting up the project in Odisha and the matter is under negotiation. Considering these developments, management is of the view that BCCL will be in a position to complete the Ammonia Plant project and thereby the Company will be able to realize these amounts in full.

18. Previ ous period figures have been regrouped / reclassified to be in conformity with current year classification/ disclosure, wherever necessary.

19. The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the noncurrent assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 23 May 2016.

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Mar 31, 2015

1. Employee Stock Compensation Expenses

The Company has two Employee Stock Option Schemes (A) Employee stock option scheme 2006,(B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

2. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)

In Pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on November 20, 2006 the Company instituted an ESOP Scheme for all its eligible employees including those of its subsidiaries and associates Companies.

3. Segment Information

The Company has considered business segment as the primary segment for disclosure. The Company's operations comprises of three segments namely Construction Contracts, Wind Turbine Generators and Trading. The above segment has been identified taking into account the organization structure as well as the differing risks and return of these segments. Separate secondary segment disclosure is not required as more than 98% of the company's sale is in the Domestic Market.

4. Related Party Disclosures under Accounting Standard 18

5. Disclosure of related party transactions in accordance with Accounting Standard -18 - Related Party Disclosures notified by Central Government of India under Companies (Accounting Standards) Rules, 2006.

6. The Company accounts for costs incurred by Related parties based on the actual invoice/debit notes raised and accruals as confirmed by such parties. The related parties have confirmed to the Management that as at 31 March 2015 and as at 31 March 2014, there are no further amounts payable to/receivable from them, other than disclosed above.

7 Leases

7.1 Operating Lease

The company has operating lease arrangements primarily for office premises, the lease period of which is about 6 to 8 years. An amount of Rs.524.71 Lakhs (Previous period - Rs.509.80 lakhs) has been debited towards lease rental and other charges. The future expected minimum lease payments under operating leases are given below.

8 Taxes on income

8.1 Current Tax

The Current tax has been computed based on the estimated taxable income for the year ended 31 March 2015. However, Company is not liable to current tax in view of losses incurred.

9. International Transactions

The Company has entered into transactions with related parties. The Management is of the opinion that the Company maintains the necessary documents as prescribed by the Income Tax Act, 1961 to prove that these international transactions are at arm's length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on account of tax expense and provision for taxation.

10 Contingent Liabilities Rs.in Lakhs

Particulars As at March 31, 2015 As at March 31, 2014

Arrears of Fixed Cumulative Dividend 3,780.82 780.82

Compensation payable in lieu of bank sacrifice (Refer Note 5.1) 18,500.00 -

Corporate Guarantees issued 1,600.00 1,600.00

Claims against the Company not acknowledged as debts 12,482.32 8,126.60

Central Excise, Service tax and Custom duties demands contested in 428.82 322.21

Appeals, not provided for

Disputed VAT/Central Sales Tax demands contested in Appeals, not 10,179.02 3,574.65 provided for

Income tax demands contested in Appeals, not provided for 1,732.88 1,366.16

Management is of the opinion that the Appeals preferred by the Company will be decided in its favour. Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

11 Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (Net of advances) and not provided for Rs. Nil (31 March 2014: Rs.503.87 lakhs)

12 Sale of WEG Business

Though the Company had obtained its Shareholders' approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Lietner Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognised the Profit/Loss in the Statement of Profit and Loss for the year ended 31 March 2015.

13 Dues from Subsidiaries and Associates - Disclosure under clause 32 of the listing agreement

14 Details on derivative instruments and unhedged foreign currency exposures

I. The following derivative positions were open as at 31 March, 2014. These transactions have been undertaken to act as economic hedges for the Company's exposures to various risks in foreign exchange markets and may qualify to be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.21

Forward exchange contracts (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

15 The Company has granted advances/loans to its subsidiaries and group companies for the purpose of carrying on operations, based on the business needs and exigencies of those Companies. Some of these advances/loans are interest free. However in the opinion of the management, all these advances/loans (including the interest free loans) are conducive to the interest and development of the business of the group and hence are not prejudicial to the interests of the company.

16 The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project at Rajasthan with technology support from M/s EnerT international limited, Israel. The contract should have been executed by 28th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The effort of the Company and APRL to identify potential financial and strategic investor which would enable the company to complete the project is still in process and a banker has been identified to take this proposal forward. During the year, the Company has reviewed the outstanding dues from APRL and written off Rs.5,948 Lakhs as irrecoverable. The balance amount outstanding after this write off under Trade Receivables, Unbilled revenue and Short Term loans and advance (net of advance received) aggregates to Rs.9,538.08 lakhs. Considering the steps initiated by the Company along with the customer to complete the project the dues are considered good and recoverable by the Management.

17 The Company was in the course of executing project for Governorate of Basra, Government of Iraq ('the customer'). There were some delays in commencement of the project due to regulatory compliances. However the said contract has been cancelled by the Customer during February 2014. The construction activities for the project has been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, was decided in our favour at the trial court. Governorate of Basra went on appeal and the appeal court reversed the decision of the trial court and Company has gone on appeal to Supreme Court in Iraq. Based on legal advice company is confident that if the Basra Court decides against restoration of the contract, the court would award a compensation or damages to us as per existing Iraqi law The Government of India has also been extremely supportive for revival of the project.

The customer has opened a Letter of credit ('LC') for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 100% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the company. Further, the Company has also filed a claim with concerned authorities and insurers towards compensation for cancellation of contract. The total amounts due to Company under Trade Receivables, Unbilled revenue representing the actual cost incurred and Short Term loans and advances aggregate to Rs.12,257.73 Lakhs. For the reasons mentioned above, the management is confident of realizing the monies and do not expect any shotfall in realization of the dues

18. The Company has an exposure amounting to Rs.8,300.19 Lacs in respect of a project which has been inordinately delayed. Company is considering various options available with the Company to recommence the project and financial and operation support extended by the Holding Company, the Company's management believes that the project is viable and these dues are considered fully realizable.

19. The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 28 May 2015.

20. Current year figures are for a period of twelve months as against previous period of nine months and hence not comparable. Previous period figures have been regrouped and reclassified wherever necessary to conform with the current year's presentation / disclosure.

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Mar 31, 2014

Corporate Information

Shriram EPC Limited (the "Company" or "SEPC") is the flagship company of the Shriram Group. The Shriram Group has diverse interests across Financial Services, IT Services, Project Engineering & Construction, Property Development, Life Insurance and General Insurance. Company provides end-to-end solutions to engineering challenges, offering multi disciplinary design, engineering, procurement, construction and project management services. SEPC is focused on providing turnkey solutions for ferrous & non ferrous, cement, aluminium, copper and thermal power plants, water treatment & transmission, renewable energy, cooling towers & material handling.

1. Terms/rights attached to the shares

The Company has issued equity shares having a par value of Rs. 10 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting rights.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Preference shares have a face value of Rs. 100 each, and are entitled to receive a cumulative dividend at the rate of 10%. The preference shares shall have a maximum tenure of 10 years. The preference shares are redeemable before 1 0 years at the option of the shareholders.

2. Employee Stock Compensation Expenses

The Company has two Employee Stock Option Schemes (A) Employee stock option scheme 2006, (B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India,the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

3. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)

In Pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on November 20, 2006 the Company instituted an ESOP Scheme for all its eligible employees including those of its subsidiaries and associate Companies.

Modifications in the Terms of the 2006 Scheme

The Company has carried out a modification in "The 2006 scheme" and accordingly additional grants of 424,952 options were made during the year ended March 31, 2008. Those grants have been made as at April 1, 2007 and will vest with the employees in same proportion as in the original scheme.

4. Contingent Liabilities in respect of Jointly Controlled entities as at 31 March 2014

Rs. in Lakhs

As at 31 March 2014 As at 30 June 2013 Particulars LSML HSCL LSML HSCL

Directly incurred by the Company - - - 2,100.00

Share of the company - - 8,044.07 573.53 in contingent liabilities incurred by jointly controlled entity

Share of other venturers in contingent - - 8,213.15 573.77 liabilities incurred by jointly controlled entity

5. Contingent Liabilities

Particulars Year

Corporate Guarantees issued

Claims against the Company not acknowledged as debts

Disputed Service tax demands contested in Appeals, not provided for *

Appeal pending before

Customs Excise and Service Tax Appellate 2006-07 to 2008-09 Tribunal - Tamil nadu

Commissioner of Service Tax (Appeals) 2008-09 to 2011-12

Customs Excise and Service Tax Appellate 2006-07 to 2008-09 Tribunal - West Bengal

Disputed VAT/Central Sales Tax demands contested in Appeals, not provided for *

Appeal pending before

Supreme Court 2008-09 to 2009-10

High court of Madras 2008-09 to 2012-13

West Bengal Commercial Taxes Appellate & Revisional Board

Joint Commissioner (Appeals) 2008-09 to 2010-11

Ld. Joint Commissioner (Appeals) of West 2008-09 & 2010-11 Bengal Commercial Taxes

Deputy Commissioner of Commercial Taxes 2007-08 to 2008-09 Bokaro

Commercial Tax Officer, Ranchi 2007-08 - 2009-10

Appellate Deputy Commissioner (CT), Kurnool 2008-09 & 2011-12

Disputed income tax demands contested in Appeals not provided for*

Appeal pending before

Commissioner of Income Tax ( Appeals) 2005-06

Commissioner of Income Tax ( Appeals) 2006-07

Commissioner of Income Tax ( Appeals) 2007-08

Commissioner of Income Tax ( Appeals) 2008-09

Commissioner of Income Tax ( Appeals) 2009-10

Commissioner of Income Tax ( Appeals) 2010-11

Commissioner of Income Tax ( Appeals) 2011-12

Rs. in Lakhs

As at As at Particulars 31 March 30 June 2014 2013

Corporate Guarantees issued 1,600.00 6,100.00

Claims against the Company not 8,126.60 9,300.14 acknowledged as debts

Disputed Service tax demands contested in Appeals, not provided for * Appeal pending before

Appeal pending before

Customs Excise and Service Tax Appellate 207.67 261.73 Tribunal - Tamilnadu

Commissioner of Service Tax (Appeals 114.54 114.54

Customs Excise and Service Tax Appellate - 106.61 Tribunal - West Bengal

Disputed VAT/Central Sales Tax demands contested in Appeals, not provided for *

Appeal pending before

Supreme Court 223.33 223.33

High court of Madras 1,123.31 -

West Bengal Commercial Taxes Appellate & 558.45 558.45 Revisional Board

Joint Commissioner (Appeals) 500.39 500.39 Bengal Commercial Taxes

Ld. Joint Commissioner (Appeals) of West 408.00 86.63 Bengal Commercial Taxes

Deputy Commissioner of Commercial Taxes, - 412.95 Bokaro

Commercial Tax Officer, Ranchi 721.00 -

Appellate Deputy Commissioner (CT), Kurnool 40.17 -

Disputed income tax demands contested in Appeals not provided for*

Appeal pending before

Commissioner of Income Tax ( Appeals) 76.52 76.52

Commissioner of Income Tax ( Appeals) 91.96 91.96

Commissioner of Income Tax ( Appeals) 130.19 130.19

Commissioner of Income Tax ( Appeals) 519.95 519.95

Commissioner of Income Tax ( Appeals) 11.48 11.48

Commissioner of Income Tax ( Appeals) 156.12 156.12

Commissioner of Income Tax ( Appeals) 312.43 -

Management is of the opinion that the Appeals preferred by the Company will be decided in its favour.

5 Capital Commitments

5.1 Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 503.87 Lakhs (30 June 2013: Rs. 1,437.84 lakhs )

6 Sale of WEG Business

Though the Company had obtained its Shareholders'' approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its erstwhile Joint Venture, Leitwind Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognised the Profit/Loss in the Statement of Profit and Loss for the nine months period ended March 31, 2014

7 Details on derivative instruments and unhedged foreign currency exposures

The following derivative positions are open as at 31 March, 2014. These transactions have been undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may qualify to be designated as hedging instruments. The accounting for these transactions is stated in Notes 2.20 Forward exchange contracts (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

8 The Company has granted advances/loans to its subsidiaries and group companies for the purpose of carrying on operations, based on the business needs and exigencies of those Companies. Some of these advances/loans are interest free. However in the opinion of the management, all these advances/loans (including the interest free loans) are conducive to the interest and development of the business of the group and hence are not prejudicial to the interests of the company.

9 The Company was in the course of executing project for Governorate of Basra, Government of Iraq (''the customer''). There were some delays in commencement of the project due to regulatory compliances. However the said contract has been cancelled by the Customer during February 2014, and the company has filed a legal suit in the High Court of Madras and with the Higher Judicial Council, Iraq, for stay on the invocation of the performance bank guarantee. The construction activities have been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, are in progress. The Government of India has also been extremely supportive for revival of the project. The customer has opened a Letter of credit(''LC'') for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 1 00% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the company. The total amounts due to Company recorded under Trade Receivables, Unbilled revenue representing the actual cost incurred (after excluding the margin which has been written off/not recognized during the year) and Short Term loans and advances, in respect of this project, aggregate to Rs. 15,696.02 Lakhs. For the above reasons, the management is confident of realizing the monies and do not expect any shortfall in realization.

10 The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project

at Rajasthan with technology support from M/s Ener T international limited, Israel. The contract should have been executed by 28th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The amount outstanding under Trade Receivables, Unbilled revenue and Short Term loans and advance net of advance received from APRL aggregates to Rs. 16,486.69 lakhs. The Company and the client are in negotiations with potential financial and strategic investors which would enable the company to recover its dues. Accordingly, the company is hopeful of recovering all the amounts due to them and does not expect any short fall in the recovery of the dues.

11 The Company has over the years made investments in certain companies (Refer Note 13) and has given advances to certain companies (Refer Note 14). The interest on these advances is also receivable by the Company. The limits upto which the loans and investments are made are subject to Section 372A of the Companies Act, 1956 and also the resolution passed by the members of the company on 27 August 2012 by Postal Ballot. The said resolution gives the company the right to make loans and investments in certain companies within the limits stated against each companies, in the said resolution. The limits stated in the resolution is over and above the limits contemplated by Section 372A of the Companies Act, 1 956. The aggregate amount of loans and advances, in the view of the company, as at 31st March, 2014 is within the overall limits granted by the shareholders and is not within the limits specified against each companies. Howeever, necessary approvals will be obtained from the members, in the ensuing Annual General Meeting.

12 Current and previous period financial statements are for a period of nine months and fifteen months respectively and hence not comparable. Previous period''s figures have been regrouped and reclassified wherever necessary to correspond with the current period''s classification/disclosure.

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Jun 30, 2013

1 Corporate Information

Shriram EPC Limited (the "Company" or "SEPC") is the flagship company of the Shriram Group. The Company provides end-to-end solutions to engineering challenges, offering multi disciplinary design, engineering, procurement, construction and project management services. SEPC is focused on providing turnkey solutions for ferrous & non ferrous, cement, aluminum, copper and thermal power plants, water treatment & transmission, renewable energy, cooling towers & material handling.

2 Basis of Preparation

The abridged financial statements have been prepared, on the basis of the complete set of audited standalone financial statements for the period ended June 30, 2013, (hereinafter referred to as ''Annual Standalone Financial Statements''), in accordance with the requirements of Rule 7 A of the Companies (Central Government''s) General Rules and Forms, 1956.

3.1 [19.1] Balances with banks include margin monies amounting to Rs.1,818.11 lakhs (March 31, 2012. Rs.2,418.83) which have an original maturityrof more than 12 months.

4.1 Pursuant to an ''Agreement for Sale'' dated 1 June 2013, the investments held by the Company in Orient Green Power Company Limited aggregating to Rs.2,827.50 Lakhs have been agreed to be sold to Shriram Industrial Holdings Limited (Investing Party), for a consideration of Rs.44.22 Lakhs. The resultant loss of Rs.2,783.28 Lakhs has been disclosed above.

4.2 [39.3] The Company has carry forward losses and unabsorbed depreciation, which give rise to deferred tax asset of Rs.11,383.21 lakhs (Previous Year Rs. Nil). However in the absence of virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized, the said deferred tax asset that can be recognized is restricted to the net deferred tax liability of Rs.4.00 lakhs (Previous Year Rs. Nil).

Pursuant to the approval of shareholders obtained by means of a Postal Ballot on 5 August 2013, the Company has recognized deferred tax asset on long term capital losses as at 30 June 2013 considering the Long term capital gains, arising on sale of Power generation business on a slump sale basis on August 05, 2013 pursuant to the approval of shareholders obtained by means of postal ballot on the said date. Further, consequent to the above there has been a significant reversal in deferred tax liability arising on account of depreciation subsequent to Balance Sheet date.

5 [44] Sale of WEG Business

Though the Company had obtained its Shareholders'' approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Lietner Shriram Manufacturing Limited (LSML) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognised the Loss / Profit in the Statement of Profit and Loss for the fifteen months period ended June 30, 2013.

6 [52] Subsequent Events

6.1 [52.1] Investment, receivables and Interest accrued

in Sree Jayajothi Cements Limited and Spark Environmental Technology Limited.

6.1.1 [52.1.1] The Company had in an earlier year executed an EPC contract for Sree Jayajothi Cements Limited (''SJCL'') and an aggregate amount of Rs.42,325.42 was due from it, which was outstanding for a considerable period of time. Apart from this, the company has investment in Equity shares of SJCL amounting to Rs.10,856.45 lakhs. Further, on 19th April 2012, company had invested an amount of Rs.25,676.56 lakhs in Optionally Convertible Debentures (OCD) issued by Spark Environmental Technology Limited (''Spark'' a group company and a fellow Shareholder in SJCL), who in turn had subscribed to 256,765,645 shares of Rs.10 each in SJCL.

6.1.2 [52.1.2] The company along with Spark and the original promoter of SJCL has entered into an Agreement to sell their invesments in equity in SJCL, to My Home Industries Ltd (MHIL) vide agreement dated 11th August 2013. Based on this agreement the Company assessed the realisability of trade and other receivables and the carrying amount of its investments in SJCL and Spark, and has made the following adjustments in the financial statements as an ''exceptional item'':

i) Rs.16,725.60 lakhs has been provided for diminution in value of investments in SJCL and Spark.

ii) Trade Receivables to the extent of Rs.6,1 76.34 lakhs has been written off."

6.1.3(52.1.3] In addition, the interest accrued on Optionally Convertible Debentures amounting to Rs.3,689.98 lakhs for the period 19th April 2012 to 31st March 2013 has now been derecognized.

6.2 [52.2] Issue of Optionally Convertible Debentures and Issue of Cumulative Redeemable Preference Shares

6.2.1 [52.2.1] Board of Directors in their meeting held on August 29th, 2013, subject to approval of the Shareholders of the Company and other regulatory authorities have approved Issue of Optionally Convertible Debentures amounting to Rs.10,000 lakhs and Issue of Cumulative Redeemable Preference Shares amounting to Rs.20,000 lakhs, on preferential basis to the investing party/parties.

7 [53] Current financial statements are for a period of fifteen months and hence not comparable with the Previous Year. Previous Year''s figures have been regrouped and reclassified wherever necessary to correspond with the current period''s classification/ disclosure.

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Mar 31, 2012

1. Corporate Information

Shriram EPC Limited (the "Company" or lSEPC"), the flagship Company of the Shriram Group. The Shriram Group has diverse interests across Financial Services, IT Services, Project Engineering & Construction, Property Development, Life Insurance and General Insurance. Company provides end-to-end solutions to engineering challenges, offering multi-disciplinary design, engineering, procurement, construction and project management services. SEPC is focussed on providing turnkey solutions for Ferrous & Non-Ferrous, Cement, Aluminium, Copper and Thermal power plants, Water Treatment & Transmission, Renewable energy, Cooling towers & Material Handling.

An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The normal operating cycle of the entity for Construction Contracts is the duration of 2 to 3 years depending on each contract. For all other segments, the normal operating cycle has been considered as a duration of 1 2 months.

1.1 Terms/rights attached to the Equity Shares

The Company has issued equity shares having a par value of Rs.1 0 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting rights.

For the year ended March 31, 2012, the amount of dividend recognized as distributions to equity share holders is Rs.1.20 per share (March 31, 201 1 Rs.1.20 per share). The dividend proposed by the Board of Directors is subject to the approval of the Share Holders at the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2.1 Balances with banks include margin monies amounting to Rs.2,41 8.83 Lakhs (March 31, 201 1: Rs.1,276.63 Lakhs) which have an original maturity of more than 1 2 months.

3 Employee Stock Compensation Expenses

The Company has two Employee Stock Option Schemes (A) Employee stock option scheme 2006, (B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

3.1 Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)

In Pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on November 20, 2006 the Company instituted an ESOP Scheme for all its eligible employees including the subsidiaries and associates Companies.

In accordance with the 2006 Scheme the Company has granted on November 22, 2006 (Grant date) options to eligible employees at an exercise price of Rs.1 0/- per equity share. Under the terms of the 2006 Scheme the options will vest in the employees in the following proportion :

Modifications in the Terms of the 2006 Scheme

The Company has carried out a modification in 'The 2006 scheme" and accordingly additional grants of 4,24,952 options were made during the year ended March 31, 2008. Those grants have been made as at April 1, 2007 and will vest with the employees in same proportion as in the original scheme.

#Out of lapsed options during the previous year, Employee Compensation Expense of Rs. 1 5.06 Lakhs recognised till date in respect of 21,508 options has been transferred to General Reserve.

Deferred Stock Compensation Expense

During the year, an amount of Rs.Nil Lakhs (March 31, 201 1: Rs.267.04 Lakhs) being employee compensation expense to the extentof options vested net off lapses, has been charged to Statement of Profitand Loss.

The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.

3.2 Shriram EPC Limited - 2007 - ESOP Scheme (the 2007 Scheme)

The Company instituted another Scheme for all eligible employees in pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on September 20, 2007.

In accordance with the 2007 Scheme the Company has granted on October 1, 2007 and January 1, 2008 (grant dates) options to eligible employees including subsidiaries and associate companies at an exercise price of Rs.1 0/- per equity share. Underthe terms ofthe 2007 Scheme the options will vest in the employees in the following proportion :

The employees stock options granted shall be capable of being exercised within a period of eight years fom the date of grant. Modification in the Terms of the 2007 Scheme

The company has carried out a modification in "The 2007 scheme" in the previous year and accordingly additional grants of

10,000 options have been made. These grants have been made as at June 14, 201 0 and will vest with the employee in 2 years in equal proportion from the end of 1 yearfrom the date of grant.

Deferred Stock Compensation Expense

During the year, an amount of Rs.1 4.43 Lakhs (Previous Year Rs.14.63 Lakhs) being employee compensation expense to the extent of options vested net off lapses, has been charged to Statement of Profit and Loss.

3.3 Fair valur of Options Granted :

The estimated fair value of each stock option granted under the employee stock option Scheme 2006 is Rs.80. The fair value was arrived at based on a transaction entered into between a willing buyer and a seller for purchase of shares recent to the grant date ofthe options.

The estimated fair value of each stock option granted under the employee stock option Scheme 2007 is Rs.68.42 as per the Fair value method. The model inputs were the weighted average price arrived under thefollowing methods :

4 The Company has considered business segment as the primary segment for disclosure. The Company's operations comprises of three segments namely Construction Contracts, Wind Turbine Generators and Trading. The above segment has been identified taking into account the organisation structure as well as the differing risks and return of these segments.

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

5 Related Party Disclosures under Accounting Standard 18

5.1 Disclosure of related party transactions in accordance with Accounting Standard -1 8 notified by Central Government of India under Companies (Accounting Standards) Rules, 2006.

5.2 Contingent Liabilities In Respect Of Jointly Controlled Entities As On 31 st March, 2012 Rs. in Lakhs

I Mar 31,2012 I Mar 31,2011 Particulars r HSCL LSML HSCL

(i) Directly incurred by the Company - 2,100.00 - 2,100.00

(ii) Share of the Company in contingent liabilities incurred by jointly controlled 8,044.07 573.55 6,440.20 264.50 entity

(iii) Share of other venturers in contingent liabilities incurred by jointly controlled 8,213.15 573.77 6,575.56 264.61 entity

6 Sale Of Weg Business

Though the Company had obtained its Shareholders' approval through Postal Ballot on August 21, 2008, fortransfer of 250 KW Wind Turbine Business to its Joint Venture, Leitner Shriram Manufacturing Limited ( LSML) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognised the Loss / Profit in the Statement of Profit and Loss forthe yearended March 31,2012.

7 During the first quarter of the previous year, the company had sold its entire investment in Ennore Coke Ltd. to Haldia Coke & Chemicals Pvt. Ltd (HCCL). The profit on this sale (Rs.2,336.28 Lakhs) is disclosed as an exceptional item.

8 The company has granted advances/loans to its subsidiaries and group companies for the purpose of carrying on operations, based on the business needs and exigencies on those Companies. Some of these advances/loans are interest free. However in the opinion ofthe management, all these advances/loans(including the interest free loans) are conducive to the interest and development of the business of the group and hence are not prejudicial to the interests of the company.

9 Subsequent to the date of approval of the annual accounts for the year ended March 31, 201 2 by the Board and before the book closure date 32,559 Equity Shares (March 31, 201 1: 28,1 49 Equity Shares) were allotted under the Shriram EPC Limited Employee Stock option Scheme 2006 & 2007 to employees and dividends of Rs.0.59 Lakhs (March 31, 2011: Rs.0.65 Lakhs) on these shares were paid. The total amount of Rs.0.70 Lakhs (March 31, 2011: Rs.0.76 Lakhs) including dividend distribution tax have been appropriated from the Surplus in Statement of Profit and Loss.

10 Subsequent Events

10.1 Subsequent to the date of Balance Sheet 2,450 Equity Shares were allotted under the Shriram EPC Employee Option Scheme 2006 & 2007.

10.2 Investment in Sree Jayajothi Cement Limited and Spark Environmental Technology Limited

10.2.1 The company had executed an EPC contract for Sree JayaJothi Cement Limited ('SJCL') in an earlier year and the total amount outstanding under Trade Receivables of Rs.30,472.62 Lakhs, Debentures of Rs.Nil (Net of cheques in transit of Rs. 12,1 86 Lakhs) and loans and advances of Rs.Nil (Net of cheques in transit of Rs. 1 7,978 Lakhs) is outstanding for a considerable period of time. Apart from this the company also has investment in Equity shares of SJCL amounting to Rs. 1,500 Lakhs. These amounts aggregating to Rs.31,972.62 Lakhs have been secured by assets ofthe investee company.

10.2.2 On April 2, 201 2, the company has invested Rs.9,323.45 Lakhs in SJCL constituting 1 7.81 % of the entire issued, subscribed and paid up capital of SJCL. The company has also entered into an agreement with SJCL, for recovering its balance dues over a period of time. The company has appointed its representative as a member on the Board of Directors in SJCL, to monitor the operations of the company and to ensure recovery of its dues. The company is convinced about the viability of cement vertical and accordingly, the company is hopeful of recovering all the amounts due to them and does not expect any shortfall in the recovery of the dues. With respect to the investment, the management is of the view that there is significant upside potential in the business and as the investment is of long term nature, the diminution in the value of investment is not other than temporary in nature.

10.2.3 On April 19, 2012, the company has invested an amount of Rs.25,676.56 Lakhs in Spark Environmental Techonology Limited ('Spark' a fellow Shareholder in SJCL), towards subscription of 2,56,76,565 Optionally Convertible Debentures (OCD) of a face value of Rs.100 each, carrying an interest rate of 12%. The terms of Debentures are as follows:

- On the expiry of 5 years from date of allotment, all OCD shall be either be converted to Equity Shares, redeemed in full, or partly converted and partly redeemed.

- At or prior to maturity date, the holder of OCD has the option to either convert into Equity Shares or redeem, all or part of the OCD.

- Upon conversion, each debenture shall be converted into 10 Equity Shares.

10.2.4 Spark has subscribed to 25,67,65,645 shares of Rs.10 each constituting 49.05 % of SJCL Equity during April 201 2.

11. The revised Schedule VI has become effective from April 1,2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous Year's figures have been regrouped and reclassified wherever necessary to correspond with the current year's classification/disclosure.

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Mar 31, 2011

1. A. CONTINGENT LIABILITIES:

Sl. Particulars As at Mar As at Mar No. 31,2011 31,2010

(a) Letters of Guarantee issued by the Banks 22,219.83 25,458.50

(b) Letters of Credit issued by the Banks 20,181.70 49,049.67

(c) Bills discounted 22,710.00 -

(d) Corporate Guarantees issued 3,400.00 9,500.00

(e) Claims against the Company not acknowledged as debts 905.80 1,205.11

(f) Disputed Income Tax demands contested in Appeals not provided for Civil Cases. * 1,052.86 982.74

Assessment yean Appeal pending before

2000-01 Appellate Tribunal 48.08 55.94

2001-02 Appellate Tribunal - 21.59

2002-03 Appellate Tribunal 49.15 51.90

2003-04 Appellate Tribunal 155.33 163.25

2004-05 Commissioner of Income Tax (Appeals) 26.24 30.58

2005-06 Commissioner of Income Tax (Appeals) 298.48 340.53

2006-07 Commissioner of Income Tax (Appeals) 219.68 318.95

2007-08 Commissioner of Income Tax (Appeals) 192.24 -

2008-09 Commissioner of Income Tax (Appeals) 63.56 -

* Management is of the opinion that the Appeals preferred by the Company will be decided in its favour.

B. The Company has in addition to (d) above issued letters of comfort /awareness to banks, with reference to compliance of terms and conditions of the facilities granted to its Associate.

2. CAPITAL COMMITMENTS

A) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for: NIL( Previous year Rs. Nil lakhs)

B) Debenture Purchase Obligations

Particulars As at 31-03-2011 As at 31-03-2010

Debenture Purchase Obligations 11,000 21,000

3. SECURED LOANS:

3.1 Banks

a) Cash Credit facilities:

Cash credit facilities are secured by hypothecation of current assets, Inventories of Raw Materials, work in progress, finished goods, stores, spares and consumables and Receivable on a pari passu basis with other participating lenders and a first charge on the Company's fixed assets on a pan-possu basis with other lending banks.

b) Term Loans

SI. Bank Name Nature of Security No. 1 Jammu and Kashmir Subservient charge on Current Assets Bank Limited of the Company.

2 Syndicate Bank Subservient charge on movable fixed Assets of the Company.

3 DBS Bank Ltd First pari passu Charge on the Current assets including stock and receivables (both present and future), second pari passu charge on the Fixed Assets.

4 UCO Bank Subservient charge on the assets of the company.FDR of Rs.500 Lakhs under lien to Bank with matching tenor of loan as collateral security

5 State Bank of Subservient charge on all the movable assets Bikener and of the Company Jaipur

6 Lakshmi Vilas First charge by way of hypothecation of Bank Ltd inventories,receivables and other current assets and unencumbered fixed assets of the company on pari passu basis with other lending banks

7 Axis Bank Ltd Hypothecation of the equipment financed under this loan facility

8 Induslnd bank Exclusive charge over the Wind Energy Generator Ltd acquired out of this Term Loan Hypothecation charge(first charge) over receivables from TNEB and Karnataka State Electricity Board

9 IDBI Bank Ltd First pari passu charge on current assets of the company and other securities offered to other Banks under multiple Banking. Second charge on fixed assets as collateral

10 Punjab National First charge on the immovable properties Bank Ltd and assets of the project, present and future First pari-passu charge on the entire fixed assets of the company including Project assets other than those specifically charged to the Term Lenders

11 State Bank of Subservient charge on all the movable assets Mysore Ltd of the company with a minimum cover of 1.25 times during : the entire tenure of the loan

4.2 Financial Institutions

SREI Infrastructure Finance Limited:

Loan is secured by way of mortgage of land to the satisfaction of the Lender. Further, Promissory note is given covering the principal repayment and interest.

4.3 Hire Purchase Finance:

Hire Purchase Finance is secured by hypothecation of the Assets acquired under Hire Purchase Agreement.

5. SALE OF WEG BUSINESS

Pursuant to the approval of the board, the Company obtained Shareholders' approval through Postal Ballot on 21st August 2008 to transfer the business of 250 KW Wind Turbines effective April 1, 2008, to its Associate, Leitner Shriram Manufacturing Limited (LSML). The Company continues to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell 250 KW Wind Turbines, and the gross margins on such sales are transferred to Leitner Shriram Manufacturing Limited.

6. The total amount required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

7. The Company has considered business segment as the primary segment for disclosure. The Company's operations comprises of three segments namely Construction Contracts, Wind Turbine Generators and Trading. The above segment has been identified taking into account the organisation structure as well as the differing risks and return of these segments. Separate secondary segment disclosure also is not reguired as more than 98% of the Company's sale is in the Domestic Market.

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

8. Related Party Disclosures under Accounting Standard 18

Disclosure of related party transactions in accordance with Accounting Standard -18 notified by Central Government of India under Companies (Accounting Standards) Rules, 2006.

(As identified by the management and relied upon by the auditors) Name Name of Related Party 2010-11

Subsidiaries Shriram EPC (Singapore) Pte Ltd

Blackstone Group Technologies (Pvt) Limited Chemprojects Consulting Pvt Ltd.

Jointly Controlled Entities Hamon Shriram Cottrell Private Limited

Leitner Shriram Manufacturing Limited

Associates Haldia Coke and Chemicals Pvt Limited (with effect from 29.06.2010)

Ennore Coke Limited (upto 21.06.2010)

Ennore Coke Limited (Subsidiary of Haldia Coke and Chemicals Pvt Limited with effect from 01.07.2010)

Shriram SEPL Composites Pvt Ltd

Shriram Angerlehner Composites P Ltd

Enterprise over which Key Orient Green Power Company Limited Management Personnel is able to exercise significant influence Subsidiaries of Orient Green Power Company Limited

P S R Green Power Projects P Ltd

Amrit Environmental Technologies Private Limited

SM Environmental Technologies Private Limited

Orient Bio Power Limited

Orient Green Power Company (Ra-jasthan) Private Limited

Sanjog Sugars and Eco Power Private Limited

Bharath Wind Farm Limited

Clarion Windfarms Private Limited

Gamma Green Power Private Limited

Beta Wind Farm Private Limited

Key Management Personnel T.Shivaraman - Managing Director

M.Amjad Sbariff - Joint Managing Director



Name

Subsidiaries Shriram EPC (Singapore) Pte Ltd

Blackstone Group Technologies (Pvt) Limited

Chemprojects Consulting Pvt Ltd.

Jointly Hamon Shriram Cottrell Private Ltd Controlled Entities Leitner Shriram Manufacturing Limited

Associates Ennore Coke Limited

Shriram SEPL Composites Pvt Ltd

Shriram Angerlehner Composites P Ltd

Enterprise over Orient Green Power'Company Limited which Key Management Personnel is able to exercise significant influence

Key Management T.Shivaraman - Managing Director Personnel M.Amjad Shariff - Joint Managing Director

21. EMPLOYEE STOCK COMPENSATION EXPENSES

The Company has two Employee Stock option Schemes (A) Employee stock option scheme 2006, (B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

A. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)

In pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on 20th November, 2006 the Company instituted an ESOP Scheme for all its eligible employees including the subsidiaries and associates Companies.

The employees stock options granted shall be capable of being exercised within a period of eight years from the date of the grant.

Modification in the Terms of the 2006 Scheme

The Company has carried out a modification in "The 2006 scheme" and accordingly additional grants of 424,952 options were made during the year ended 31 -03-2008. Those grants have been made as at 1st April 2007 and will vest with the employees in same proportion as in the original scheme.

Deferred Stock Compensation Expense

During the year, an amount of Rs.267.04 Lakhs (Previous year Rs. 248.08 Lakhs) being employee compensation expense to the extent of options vested net off lapses, has been charged to profit and loss account.

The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.

B. Shriram EPC Limited 2007 ESOP Scheme (the2007Scheme)

The Company instituted another Scheme for all eligible employees in pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on 20th September, 2007.

The employees stock options granted shall be capable of being exercised within a period of eight years from the date of the grant.

Modification in the Terms of the 2007 Scheme

The company has carried out a modification in "The 2007 scheme" in the current year and accordingly additional grants of 10,000 options have been made. These grants have been made as at June 14,2010 and will vest with the employee in 2 years in equal proportion from the end of 1 year from the date of grant.

Deferred Stock Compensation Expense

During the year, an amount of Rs.1 4.63 Lakhs (Previous year Rs.27.92 Lakhs) being employee compensation expense to the extent of options vested net off lapses, has been charged to profit and loss account.

The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.

C. Fair value of Options Granted:

The estimated fair value of each stock option granted under the employee stock option Scheme 2006 is Rs.80. The fair value was arrived at based on a transaction entered into between a willing buyer and a seller for purchase of shares recent to the grant date of the options.

9. The Company has granted advances/loans to its subsidiaries and group companies forthe purpose of carrying on operations, based on the business needs and exigencies of those Companies. Some of these advances/ loans are interest free. However in the opinion of the management, all these advances /loans (including the interest free loans) are conducive to the interest and development of the business of the group and hence are not prejudicial to the interests of the company.

10. Subsequentto the date of balance sheet 32,559 equity shares were allotted underthe Shriram EPC Limited Employee stock Option Scheme 2006 & 2007.

11. Subsequentto the date of approval of the annual accounts for the year ended March 31, 2010 by the Board and before the book closure date, 28,149 equity shares (Previous Year 70,575 equity shares) were allotted under the Shriram EPC Limited Employee Stock Option Scheme 2006 & 2007 to employees and dividends of Rs.0.65 Lakhs (Previous Year Rs.0.84 Lakhs) on these shares were paid. The total amount of Rs.0.76 Lakhs (Previous Year Rs.0.99 Lakhs) including dividend distribution tax have been appropriated from the opening balance of Profit and Loss Account.

12. Figures of the previous year have been reclassified and regrouped wherever necessary to conform to the classification and groupings adopted in the current year.

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Mar 31, 2010

1. Contingent Liabilities : Amount in Rs. lakhs

Sl. No Particulars As at As at 31.03.2010 31.03.2009

(a) Letters of Guarantee issued by the Banks 25,458.50 16,812.23

(b) Letters of Credit issued by the Banks 49,049.67 17,379.47

(c) Bills discounted - 1,833.72

(d) Corporate Guarantees issued 9,500.00 9,192.50

(e) Claims against the Company not acknowledged as debts 1,205.11 910.70

(f) Disputed Income Tax demands contested in Appeals not provided for. * 982.74 982.74



As at As at

31st March 2010 31st March 2009

Assessment Appeal pending year before Rs. Lakhs. Rs. Lakhs.

2000-01 Appellate Tribunal 55.94 55.94

2001-02 Appellate Tribunal 21.59 21.59

2002-03 Appellate Tribunal 51.90 51.90

2003-04 Appellate Tribunal 163.25 163.25

2004-05 Commissioner of Income Tax (Appeals) 30.58 30.58

2005-06 Commissioner of Income Tax (Appeals) 340.53 340.53

2006-07 Commissioner of Income Tax (Appeals) 318.95 318.95

2. Secured Loans:

2.1 Banks

a) Cash Credit facilities:

Cash credit facilities are secured by hypothecation of current assets, Inventories of Raw Materials, work in progress, finished goods, stores, spares and consumables and Receivable on a pari passu basis with other participating lenders and a first charge on the Companys fixed assets on a pari-passu basis with other lending banks.

b) Term Loans

Term loans from Banks are for meeting working capital requirements and are secured by a first pari-passu charge on the current assets of the Company.

c) IndusInd Bank Limited:

Term Loan from IndusInd Bank Limited is secured by an exclusive charge over the 1.35 MW Wind Electric Generators acquired out of the Term Loan and an hyphothecation charge (first charge) over receivables from Tamilnadu Electricity Board.

d) Punjab National Bank :

Term Loan from Punjab National Bank sanctioned for setting up a windmill project is secured by the windmills procured and in addition collateral security by way of pari- passu first charge on Block assets other than vehicles and windmills specifically charged to Term Lenders, pari-passu with other working capital bankers.

Corporate Term Loan of Rs 15,000 lakhs sanctioned for meeting working capital requirements against exclusive charge on specific deferred receivable from M/s Shree Jayajyothi Cements Ltd. and a second charge by way of hypothecation on other current assets.

2.2 Financial Institutions

L & T Infrastructure Finance Company Limited :

Term Loan from L & T Infrastructure Finance Company Limited is secured by a first pari - Passu charge on all the movable assets of the Company.

2.3 Hire Purchase Finance:

Hire Purchase Finance is secured by hypothecation of the Assets acquired under Hire Purchase Agreement.

3. Sale of WEG Business

During the Previous Year, pursuant to the approval of the board, the Company obtained Shareholders approval through Postal Ballot on 21st August 2008 to transfer the business of 250 KW Wind Turbines effective April 1, 2008, to its subsidiary Shriram Leitwind Ltd. (SLL) and Associate Leitner Shriram Manufacturing Ltd. (LSML). The Company continues to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell 250 KW Wind Turbines, and the gross margins on such sales are transferred to Leitner Shriram Manufacturing Ltd.

4. Segment Financials - (A) Primary Segment Analysis

The Companys operations are organised into major divisions - Construction Contracts and manufacturing of wind turbine generators. Accordingly, the divisions comprise the primary basis of segmental information. Secondary segmental reporting of Revenue is based on geographical location of customers.

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

5. Employee Stock Compensation Expenses

The Company has two Employee Stock option Schemes – A. Employee stock option scheme 2006. B. Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.

A. Shriram EPC Limited 2006 ESOP Scheme ( the 2006 Scheme)

a. In pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on 20th November, 2006 the Company instituted an ESOP Scheme for all its eligible employees including the subsidiaries and associates Companies.

In accordance with the 2006 Scheme the Company has granted on November 22, 2006 ( Grant date) options to eligible employees at an exercise price of Rs.10/- per equity share. Under the terms of the 2006 Scheme the options will vest in the employees in the following proportion:

Deferred stock compensation expense:

Options granted under the 2006 Scheme gives rise to a Deferred stock compensation expense of Rs. 1,045.55 lakhs. For the year ended 31st March, 2010, an amount of Rs.248.08 lakhs ( Previous year Rs. 247.13 lakhs), (including Rs. Nil lakhs, (Previous year Rs. 53.74 lakhs on account of the above modification) being proportionate employee compensation expense to the extent of options vested, has been charged to profit and loss account.

The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.

B. Shriram EPC Limited 2007 ESOP Scheme (the 2007 Scheme)

The Company instituted another Scheme for all eligible employees in pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on 20th September, 2007.

In accordance with the 2007 Scheme the Company has granted on October 1, 2007 and January 1, 2008 (Grant dates) options to eligible employees including susbidiaries and associate companies at an exercise price of Rs. 10/- per equity share. Under the terms of the 2007 Scheme the options will vest in the employees in the following proportion:

C. Fair value of Options Granted:

The estimated fair value of each stock option granted under the employee stock option Scheme 2006 is Rs. 80. The fair value was arrived at based on a transaction entered into between a willing buyer and a seller for purchase of shares recent to the grant date of the options.

NOTES:

Previous year figures not furnished since both the entities become Jointly Controlled Entities only during the current year. In respect of LSML, the Income and Expenditure pertains to the period of fourteen months ended 31st March 2010.

6. Subsequent to the date of approval of the annual accounts by the Board and before the book closure date 70,575 equity shares were allotted under the Shriram EPC Ltd. Employee stock Option Plan 2006 & 2007 to employees and dividends of Rs. 0.84 lakhs on these shares were paid. The total amount of Rs. 0.99 lakhs including dividend distribution tax have been appropriated from the opening balance of Profit and Loss Account.

7. Figures of the previous year have been reclassified and regrouped wherever necessary to conform to the classification and groupings adopted in the current year.